Is it Time to Change Your Name and Move On?
Could be, hard to say. There are a million sad stories out there about successful small businesses that decide, after several years of relying on common law trademark protection, to register the name of the business for federal trademark protection. The application is denied because somebody else owns that name. Suddenly, there’s no room for expansion. Worse still, the small business may receive a cease and desist letter from the larger competitor, even if that competitor does no business in the immediate geographical area. Losing the name of the business means losing years of goodwill. In theory, the small business could litigate, but who has the money for that? This is legal bullying. Cue up the sad music. Yes, it really is time to change your name and move on.
No Need to Go There, Though
Well, that was dreary. Let’s imagine another story. Ellie and Fran have put together a business plan for a retail shoe store, tentatively named HighHeels. As imagined, the store will begin with a small brick-and-mortar showroom, a significant online presence and an initial marketing strategy that depends heavily on social media. Until certain financial benchmarks are reached, all sales will occur online. With such a small (but well-dressed) physical footprint, the virtual identity of the business is clearly key.
Let’s get rid of two bad ideas at the very beginning. No, relying on common law trademark protection is not enough, and no, California trademark registration, although it provides protection within the state, is not enough for a business with an important online component. Protecting the identity of your start-up through federal trademark registration is an investment well worth the cost.
You Can Protect a Business Name, a Domain Name that Becomes Part of Your IP Address and a Hashtag
If you want to go further, you could add a tagline (“Kick up Your Heels”) and a logo. At the outset, though, these may be less essential to your identity. Each layer of federal trademark protection effectively sanitizes a larger area around your business identity. Trademarking your business name, for example, may provide some protection for an unregistered domain name that is similar, but maybe not against competing ones that are slightly different. If you buy several similar domain names and trademark them, you will have still wider protection, and so on. According to the U.S. Patent and Trade Office, fees are relatively inexpensive, ranging upward from $325. You can also research the availability of domain names and hashtags yourself, using the internet and the USPTO database, at least to the point of excluding certain choices.
As you consider your business name, think about corporate structure, too. Ellie and Fran may be comfortable with a limited partnership. Their investors may prefer a “C” corporation. It might be worthwhile to do a name search with the Secretary of State to determine if HighHeels, Inc. or some plausible variation is available. Although you may be able to get started on your own, as your planning becomes more layered, it may be better to work with an attorney.
Hold Onto Your Lunch Money (or Manolo Blahniks)
An initial investment in securing your identity is much cheaper than litigation or the risk of losing the goodwill you have been carefully tending. Of course, trademark law is not self-enforcing. Your trademarks are worth what you’re willing to do to defend them. With many layers of protection, though, you may be able to answer incursions with steps that fall short of expensive litigation. You’ll have options to work through situations as they happen, which beats just surrendering the goods, anytime. No sad music this time around.
Episode 9 of Legally Sound | Smart Business