The choice of a corporate name, trade name or trademark is an important decision that can have far-reaching consequences. Legal protection extends not only to words functioning as trademarks or service marks, but also to corporate names, logos, designs and advertising slogans. All too often, however, a person will choose a company name or trademark without more than a cursory investigation of name availability, or worse yet no search at all, only to find himself in litigation and/or in a position of having to change the name. Business owners and attorneys unfamiliar with trademark law often misjudge the importance of a comprehensive name search prior to choosing a name. This article is the first of a three-part series dealing with the importance of searching new business names and trademarks before adoption. The next two editions of the McLane Intellectual Property Newsletter will feature articles on the differences between state versus federal registration and the benefits of federal registration.
Although most experienced business attorneys and sophisticated business owners are aware of the necessity of conducting a search prior to the adoption of a new name or mark, many attorneys neglect to recommend to clients that a search be undertaken prior to adoption of use of a name. Searching should not be confined to companies intending to launch a new product. Because legal protection is given to a broad range of business and trade identifiers, "at a minimum a preliminary search of federal and state names and trademarks should be undertaken prior to adoption and use of any company name, slogan, trademark, trade name or service mark." Before a company commits money to advertise a proposed mark and incurs the expense of filing an application for state or federal registration, or incorporates a business, a company is well advised to conduct an availability search as far in advance of the use of the name as possible.
To minimize the possibility of infringement and expensive and time-consuming legal battles over registration or common law rights, a company should have its trademark attorney conduct a search to see whether the proposed mark conflicts with any pre-existing rights. A trademark attorney will normally start with a "preliminary search" or "screening search" to quickly determine whether there are any obvious conflicts that would appear to present a risk if the client used the mark. If the preliminary search does not reveal a conflict, the attorney should then normally proceed with ordering a comprehensive search report from one of the professional trademark search firms.
Most trademark attorneys are able to conduct "preliminary searches" or "screening searches" in their office on computerized databases. These databases consist of pending federal applications, issued federal registrations, state registrations and trade directories. Using computerized databases, the trademark attorney can quickly determine whether a mark appears to be unavailable. The preliminary search can be done for a fraction of the cost of a comprehensive search. Preliminary searches are especially useful where a company has a list of several possible names or marks from which it intends to select one mark for use. If a conflict is found at the preliminary search level, the attorney will advise the client to consider an alternative name, thereby saving the client the expense of a comprehensive search for each potential name. If the preliminary search does not reveal a conflict, the attorney will recommend that a comprehensive search be conducted.
Comprehensive searches are typically the last step taken before the adoption of a mark and filing for federal registration. Professional trademark search firms are available to conduct comprehensive searches which consist of pending federal applications, issued federal registrations, state trademark and trade name registrations, state incorporation records, and various common law non-registered names reflected in trade directories and journals, company name listings, Dun & Bradstreet records, specialized dictionaries, industry specific publications, buyers guides and Internet domain names. The search report should be evaluated, not only by the client who is familiar with the goods/services and the realities of the marketplace, but also by a trademark attorney who can use his expert judgment and trademark experience to determine whether potential problems exist. If the search report reveals a potential conflict it is usually necessary to go beyond the search and gather additional information. With an anonymous telephone call to a company, one can oftentimes ascertain detailed information about a mark, including whether it is still in use, channels of distribution, marketing and advertising information and manner of use. All of this information will be helpful in analyzing whether likelihood of confusion (infringement) is possible between the two marks.
Although the law imposes no obligation to conduct a search prior to use or registration of a mark, a recent court decision in the Second Circuit has indicated that failure to follow an attorney's advice and conduct a full comprehensive trademark search prior to launching a product may constitute bad faith sufficient for an award of profits. See International Star Class Yacht Racing Ass'n v. Tommy Hilfiger U.S.A., Inc., 80 F.3d 749 (2nd Cir. 1996).
Even if a full comprehensive trademark search does not reveal a conflict, there can be no absolute certainty that a conflicting non-registered name or mark does not exist. For example, it is almost impossible to find out with total certainty whether anyone in the United States has previously used a non-registered trade name. However, a preliminary search and comprehensive search is better than no search at all. Companies spend many thousands, and even millions of dollars, promoting marks or names which they adopt. The prospect of a company's having to cease using a mark or its name after building name recognition (goodwill) and spending money to market and advertise its goods/services should be enough incentive to conduct a search prior to adoption and use of a mark or company name.
With hundreds of thousands of products and services available in the marketplace, it is becoming increasingly difficult to find marks and names that are completely risk free. As the marketplace becomes more complex and global, the need for a sophisticated approach to trademark selection, clearance and protection (federal registration) is more important than ever. Discovery of a business in another state with an identical or similar name should cause a person to reconsider its proposed mark or new corporate name. Changing the mark or business name will be less inconvenient and far less costly if the discovery is made early in the selection or incorporation process, rather than later.