Why This Matters to Your Bottom Line
If you spent a fortune to build a new headquarters for your business, should you save money by not maintaining and securing the property? Would it be better to let the building be looted and crumble?
Of course not. Yet, business owners commonly choose such false savings when it comes to their marks.
We’ll leave how to choose a good mark for another day, but, in a nutshell, you need to choose a distinctive mark and then have legal clearance research performed to make certain no identical or similar marks are being used to sell similar products or services. And then you should federally register it.
Unfortunately, many business owners stop at registration. Big mistake.
Just as buildings don’t maintain themselves, marks don’t monitor and police themselves. A mark owner needs to watch for, and take prompt action against, infringements of its mark. If you don’t, the mark will weaken and may eventually die.
We see this unfortunate situation frequently: A new client comes to our firm to get help with a new infringement – a confusingly similar product, service or company name that recently popped up and that’s causing a problem, such as confused consumers and lost sales. When we investigate that client’s mark, we discover that (even if the mark has already been federally registered) the client has allowed too many infringement “weeds” to grow up around the mark over the years.
If those weeds had been pulled consistently, we could have stopped the new, hurtful infringement. But the new client allowed weeds to proliferate, sometimes unknowingly. Because of the weeds, usually the new problem can’t be stopped.
Another big mistake we see is a mark owner taking too long to confront an infringement target. Often the mark owner waits to see if the target gets traction before contacting counsel – probably to avoid spending on legal fees until the infringement hurts. Unfortunately, waiting can kill the infringement claim in some cases, due to legal doctrines such as laches and estoppel. Also, waiting allows the target to get more invested in the infringing use, which makes it more resistant to changing its mark with confronted by counsel.
Mark monitoring and policing can improve the bottom line of your business:
- Boosts the Sale Value of Your Company. If your exit strategy is to sell your business, then your registered marks will be key assets in the sale. If your marks are federally registered, and if you can show you have continually defended them from infringing encroachment, that should raise the value of your business. The prospective buyer will see that it will have the legal power to keep mark copycats at a safe distance.
- Disclosure During Sale. When you sell your company, it will be Trademark Judgment Day. You will be asked by the prospective buyer to disclose the marks your company owns and uses, whether these marks are registered, whether those registrations cover all of your important products and services, and all information in your knowledge or possession about any infringements of, or challenges to, your marks.
- Enables Franchising and Boosts Your Franchise Value. If you will franchise your business, it also will be Trademark Judgment Day. Your marks will be the core assets in the franchising. You will have to disclose in your franchise documents any problematic issues with your marks. If the problems with your marks have grown big enough, you might be foreclosed from franchising. Also, a franchisor generally must take legal responsibility for any trademark trouble encountered by the franchisee that arises from using the franchisor’s marks. Thus, use regular monitoring and policing to keep your marks clean and strong in order to keep the franchising option open and attractive.
- Boosts Sales Through Your Brand Distinctiveness. Well protected marks should boost sales of your worthy products and services. If consumers like your trademarked products or services, your sales should be stronger if you consistently keep competitors from adopting confusingly similar product names. A distinctive and well-maintained mark is a powerful beacon to potential customers. On the other hand, if competitors crowd you by adopting similar marks, consumers might view your products and services as generic. The image of poor quality that might be created by competitor’s products might rub off on you. (If your strong and well-maintained marks boost sales, those stronger sales records should lead to a higher sale price if you sell your company, or your ability to charge higher franchise fees if you franchise.)
- Helps Protect You in Social Media and Cyberspace Generally. In the future, you may need to wrestle for control over a key presence in social media or elsewhere online, such as a Facebook page address, Instagram Handle, Twitter handle, or domain name that matches your company, product or service name. That fight is often a trademark fight, so having a federally registered, well-maintained mark will be invaluable.