What Is a Trademark?

In a nutshell, trademark law—which is really a catchall term referring to a large body of statutes, regulations, and court decisions—prevents a business from using a name or logo that is likely to be confused with one that a competing business already uses. This general rule applies both to the name of a business and to the names of any of its products or services.

Allowing businesses to have exclusive use of certain names helps consumers to identify and recognize goods in the marketplace. When you buy Racafrax brand of wood glue, for instance, you'll know that it will be similar in quality to the Racafrax glue you bought last time. By contrast, if any company were allowed to call its glue "Racafrax Glue," customers would never know what they were getting. And because customers would never know when they were using the Racafrax company's glue, the Racafrax company wouldn't be able to build customer trust or goodwill, even if its glue was the best available. In this way, consumers and businesses alike benefit from trademark protection.

The definition of "trademark" is simple: Any word, phrase, logo, or other device used to identify products or services in the marketplace is a trademark. This includes the names of products or services themselves and often the name of the business that's selling them. Using a name in public commerce to identify goods or services for sale is enough to make it a trademark; there is no registration requirement. However, registration with the U.S. Patent and Trademark Office will greatly strengthen your power to enforce your rights to the trademark. For example, if you federally register your trademark, you can stop any subsequent user in your field from using the same or a confusingly similar mark anywhere in the United States.

Keep in mind, however, that a key part of the definition of a trademark is that it must be used in public to identify goods or services for sale. So if you don't use the name of your business or product or service in public in conjunction with something you're trying to sell, it isn't considered a trademark. For example, if a software company called ZZP Web Masters markets bookmarking software for the Internet called "WebWorm," then the name WebWorm is a trademark. If the only marketing done for WebWorm is an ad that reads, "Manage your bookmarks with WebWorm," then the business name ZZP Web Masters will not be a trademark, because it's not used in public to sell WebWorm. But an ad that reads, "WebWorm: The best bookmarking software on Earth, by ZZP Web Masters," includes two trademarks: the product name WebWorm and the trade name ZZP Web Masters.

By the same token, a name that appears only in nonpublic documents—such as an internal memo or a product sample that isn't available to the public—isn't a trademark. For practical purposes, many if not most business names are also considered trademarks, since most businesses do use their names to promote or sell their product or service.

The main reason to learn the basics of trademark law is not so you can successfully defend your name in court against another business that tries to use it. Even if you were to win a complex and expensive court fight, you'd be a huge loser when it comes to time, worry, and legal fees. Far better to avoid disputes in the first place by choosing a safe name that has a very low likelihood of leading to customer confusion and, therefore, an infringement lawsuit.

Excerpted from The Small Business Start-Up Kit, by Peri Pakroo (Nolo).

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