Thursday, February 28, 2013

The importance of conducting trademark searches.

In starting a company, it is imperative to have a good business name. It is common to think that yours is an original name. But assumed originality should not take the place of due diligence. You should always search to determine whether another company uses the same name. There are a lot of people in the world, and all of them can file for trademark registration in the U.S. There is a reasonable chance that a seemingly original business name is in fact not that original.

Not every company has the same goals. Some have no limitations. Accordingly, they seek to become preeminent in their industry. Some have more modest goals and never intend to extend beyond a small geographic area. If you do not conduct a trademark search, you may be limiting how successful your business can become.

If your company shares a name with a federally registered mark, it depends on the competitive proximity of the products and services, among other things, to determine whether you infringe on their mark. If the competitive proximity of the products is close, the markholder will almost certainly sue you should your company become very successful while using their mark. If the competitive proximity of the products is not close, they may still sue you. The more famous and successful your company becomes using another company's mark, the more likely it is you will get sued by that company for trademark infringement. Ultimately, you may be required to change the company's name. All of the goodwill you built among customers and the community could be gone.

Trademark law is not always intuitive, either. There are circumstances when you would be prohibited from using your own last name as the name of your business. If your last name is already in a federally registered mark in a similar industry as your business, you probably cannot use it. For instance, I would likely be prohibited from using my last name if I were to start a company that sold athletic-wear, because "Russell Athletic" is used in three different federal trademark registrations.

People assume their name is their property. They do not think that another company could prohibit the use of their own name in a company name. But for this and other reasons, it is important to conduct due diligence and search for other marks.

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