Why Proper Brand Name Clearing Is Essential
As a trademark attorney, I have found there is often a misperception among small business owners and start-ups that trademarks are reserved for major corporations that spend thousands or more on intellectual property protection every year. They often see trademarks as luxuries they will pursue once they have launched their business or product and started to turn a profit. The problem with that mindset is successful small businesses eventually become large businesses, and by the time they have started to turn a profit, it is often too late to go back and consider the legal ramifications of their naming choices. They have invested heavily in their chosen name by purchasing the domain names, Sunbiz registration, and marketing collateral, and to go back and rebrand would be incredibly expensive. Or worse, a new company pops up in the same field with a confusingly similar name. Or even worse, they have received a letter from trademark counsel for a corporation demanding they turn over profits they have earned or pay a royalty or other damages.
There is no law that requires a business to analyze a business name before adopting it for use. However, failure to do so can lead to all sorts of headaches and unexpected expenses down the road. To understand why name clearing is important, it is helpful to understand a bit about trademark law. In order to be protectable and usable in the United States, a trademark must be distinctive, and must not create a likelihood of confusion with other trademarks. Proper trademark clearing involves analyzing two factors: strength of the name and availability for use.
Distinctiveness Analysis — How strong is the mark?
Words or names that merely describe features of a product or service are generally not entitled to trademark protection and are not really considered trademarks at all. For example, if I started a business selling apples and named it “The Apple Company,” I could not prevent another business selling apples from using the same name. There are varying levels of distinctiveness, which are beyond the scope of this article, but the key requirement is that the name does not describe the product or service it is used in connection with. In the same example, if I were selling computers, “The Apple Company” would be a distinctive name for my business, as “apple” does not describe “computers.”
Maybe you do not want a distinctive name — that is totally fine. Many business owners want their name to tell their customer what they do. There is nothing wrong with choosing a descriptive name for your business, so long as you understand you will not necessarily be able to prevent others from using the name. If you can show that you have used the descriptive name exclusively and continuously for a period of five years, you may be able to prove you have acquired distinctiveness in the name and are entitled to protection in the mark. Indeed, there are some very famous examples of descriptive names that have acquired distinctiveness, including The Weather Channel, Hotels.com, and Bank of America, to name a few.
Likelihood of Confusion Analysis — Is the mark available for use?
So, from my computer business example above, I have a distinctive name, The Apple Company, but that is not the end of the analysis. Clearing a product or service name for use also involves determining whether the proposed mark is likely to be confused with another trademark already in use in commerce. Of course, my company name fails this test, as it is likely to be confused with The Apple. You know, your iPhone’s creator.
While that answer may seem obvious with this particular example due to the fame of the Apple mark, let me explain. The likelihood of confusion analysis involves balancing a number of factors, although two are primary — the similarity of the marks in appearance, sound, connotation and commercial impression, and the similarity of the goods and services. In our Apple example, the company names are substantially similar, as are the goods each company offers under their marks — computers. While my company name is distinctive, it is not available for use.
But say Apple did not sell computers and only sold iPhones. Although the goods Apple and The Apple Company each sell are different, famous and well-known marks like the Apple mark are entitled to heightened protection and can be protected against uses in connection with goods or services that do not compete with those connected to the famous mark.
While there are other factors involved in choosing a legally protectable and defensible brand name, distinctiveness and likelihood of confusion — strength and availability — are two main areas of concern that should be carefully analyzed by business owners.
Alexandrea “Alex” R. Simser graduated magna cum laude with a Bachelor of Arts in History and Political Science from Florida State University and received her Juris Doctorate (J.D.) with a Certificate of Concentration in Advocacy from Stetson University College of Law. She also holds a Master of Business Administration from Stetson University.