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demark rights are said to arise out of use, that is to say that one begins to enjoy rights to a trademark as soon as the mark is used in commerce. These rights are derived from state common law. Common law is essentially law that is embodied in the opinions our state courts issue. In addition, federal Trademark Law, embodied in the Lanham Act, provides protection to unregistered marks, i.e., you can file a lawsuit under that statute for trademark infringement without having ever applied for federal registration. As a result, some business owners start to wonder why it makes sense for them to invest money in registering their trademark.
The answer is quite simple. When a business invests heavily in its branding or its name, it can be disastrous if they later find out that someone is using a similar business or brand name in another part of the country. This scenario is particularly troublesome when the other party has already registered their mark and begins threatening a trademark infringement lawsuit. It is not unheard of for a business that has been using a particular company name for years to receive a cease and desist letter from a competing business advising the local business to stop using the name. At that point, the party without the registration is left choosing to fight an expensive battle regarding priority of rights, work out a co-existence agreement or completely change their branding. All of these scenarios can lead to a disruption of the company’s business and resulting revenue.
Simply registering the name with the North Carolina Secretary of State does not resolve the problem. The NCSOS will perform a search to ensure you have not selected a company name that is already in use. They will not search their trademark database to see if someone has registered a similar trademark. They certainly will not perform a nationwide trademark search prior to registering the businesses name.
In addition, the United States has entered into treaties that obligate it to allow a trademark owner/registrant from another country to register their mark in the United States prior to using the trademark here. In doing so, they can rely on a priority date that pre-dates the date they apply for registration in the United States, resulting in a trademark registration with an effective date extending back before any record of the mark being used in the U.S. exists.
The best way to preserve the investment a company makes in its name and the branding associated with its products and/or services is to perform a trademark search prior to expending large sums of money on branding or advertising efforts. If the name appears to be available, then an application for trademark registration should be filed with the United States Patent and Trademark Office (USPTO). Once the trademark is registered, the USPTO will not register another similar mark for similar goods and services.
Should you need additional guidance or individualized advice, please contact the law firm directly to discuss your individual legal needs.