Search before You Use: A Prudent Entrepreneur Should Conduct a Trademark Screening Search before Using a Business Name and Developing a Business Brand

By Tara Pelan, Esq.

Selecting a business name is an important first step in starting a business.  However, many businesses have learned the hard way that it isn’t as simple as generating options, picking a favorite option and using it.  Before using a business name, the prudent entrepreneur should conduct a trademark screening search to determine if any other individuals or businesses already have trademark rights in the proposed name.

In most cases, your business name functions as a trademark.  A trademark (sometimes referred to as a service mark when used in connection with services) is any word, name, symbol or device (or any combination thereof) that identifies and distinguishes the source of the goods or services of one party from those of others.  Time and again a budding entrepreneur will forgo a trademark screening search and simply start operating his or her new business under a chosen business name.  A few years later, after spending hundreds and thousands of dollars on branding and generating public recognition of the name and brand, the entrepreneur might discover that his or her business is infringing upon another business’ trademark.  A business typically discovers it has been infringing another business’ trademark when it receives a cease and desist letter.  A cease and desist letter, in the most simple terms, is a letter requesting that that a business stop doing something, or else – in this scenario, a request that a business stop using the sender’s trademark, or else be sued for damages.  In most cases, ignoring a cease and desist letter doesn’t make it go away, and the recipient has limited options for proceeding.  The recipient can comply with the sender’s request, respond to the cease and desist letter and attempt a negotiated settlement agreement, or, if a negotiated settlement agreement cannot be reached, risk being sued in court.

If you receive a cease and desist letter requesting that you stop using your business name because it infringes another business’ trademark, in a best case scenario, you prove to the sender that your business name and its trademark are not confusingly similar, or you reach an agreement with the business permitting continued use of your business name within certain guidelines and restrictions.  Even in a best case scenario you will likely spend thousands of dollars on attorneys’ fees.  In a worst case scenario, you fail to reach an agreement with the business and are sued in federal court for trademark infringement and unfair competition.  You end up losing lawsuit and are required to stop using your business name and select a new business name.  All that time and money you previously spent branding and generating public recognition flies out of the window.  To add insult to injury, you are also liable to the business who sued you for monetary damages, including its lost profits.  At the end of it all, you have spent or are on the hook for tens or hundreds of thousands of dollars.  Ouch!

EmbarkLaw_2501

Spending a little extra money on the front end – literally a few hundred dollars at most – to determine whether or not your business name is available for use before you begin using it can save you thousands of dollars on legal fees, damages, and name-change and re-branding costs on the back end.  Moreover, fighting a trademark infringement matter removes your focus from operating and growing your business, which is a sacrifice most businesses can’t afford.

Your best option for conducting a trademark screening search is to hire an attorney with trademark experience to do it for you.  While the United States Patent and Trademark Office (USPTO) offers a searchable database of registered marks and prior pending applications, the USPTO search engine is clunky, difficult to use, and fails to deliver adequate hits (results) of confusingly similar marks.  An experienced trademark attorney will use a specialized trademark database search tool, optimized to generate a maximum number of relevant results.  The attorney will then analyze and report those results to you, and provide you with a recommendation for proceeding.  Due to the complexities of trademark law, an attorney’s opinion is invaluable when it comes to determining whether or not your proposed business name is confusingly similar to another trademark.  You or your attorney should also conduct a web search for the proposed business name to determine if another individual or business is using a confusingly similar trademark, regardless of whether they have applied for or obtained a federal trademark registration for it.  An experienced trademark attorney also has access to specialized web screening search tools for web searches if a more in depth search is recommended or required.

Trademark screening searches are also available for design marks (e.g. business logos) and should be conducted prior to using any word or design capable of functioning as a trademark.  In other words, the practice of conducting trademark screening searches should be utilized prior to using any source-identifying name or logo, which is affixed to a specific product or used in connection with a specific service offered for sale to the public.

This article is not intended to be a source of legal advice.  You should not act or rely upon any information appearing in this article without seeking the independent advice of an attorney. Receipt of information from this article does not create an attorney-client relationship.  The author is an attorney with Embark Law LLP and can be reached by email at tara@embarklaw.com.

 

Sponsored Article Posted by the San Diego Entrepreneur Center

Tweet Comments to @RayHivoral

LinkedIn_logo600linkedin.com/in/raymondhivoral