Introduction: The Sale of Search Terms
Like everyone else schooled in a brick-and-mortar world, trademark attorneys and the courts are struggling to apply decades-old trademark law principles to the universe of the World Wide Web. Case in point: how would you advise a client who just discovered that customers searching for her products on the Internet are being directed instead to her competition—via her own trademark?
This is the position Internet vendors American Blind and Wallpaper Factory and GEICO Insurance found themselves in when competitors’ ads appeared right along side their own as a response to Internet searches employing their trademarked names “American Blinds” and “GEICO.” It is the result of a practice by the search engine giant Google (and other search sites including Yahoo!, Ask Jeeves and others) to sell trademarked names as part of their advertising program “AdWords.”
Internet search engines allow computer users to type various search terms or “keywords” when they attempt to locate Web sites on the Internet. The search engine compares those keywords to various Internet databases, looking for relevant matches. When found, those matches are displayed on the users screen in the form of “links” to Web sites the user can then access.
Keywords often incorporate trademarked terms as a way to better retrieve links to a particular vendor’s product or service. The AdWords program allows that vendor’s competitors to purchase those same keywords from Google and “attach” them to their links as well. As a result, when keywords that are trademarks are entered into the search engine, the program creates what Google labels “sponsored links” which display links to the competitor’s Web sites, either along side of, or above links to the original vendor’s Web site in the response to the user’s Google search. Those who purchase the keywords then pay Google based upon the number of times the user clicks on their sponsored link.
American Blinds and GEICO took Google and various third-party defendants to court over Google’s selling words in the AdWords program that plaintiffs claimed as trademarks. In separate actions, the plaintiffs alleged various violations of the Lanham Act, including trademark infringement, unfair competition, and trademark dilution. In essence, they claimed Google and the others profited from the sale of their marks and enabled competitors to siphon away business by creating on-screen displays that can lead the unwary Internet user astray, and straight towards the competition.
Slowly, a new body of trademark law is evolving to address the legality of using a trademarked name as an Internet keyword to trigger a competitor’s link. While the cases have yet to produce clear guidance in this area, they illustrate the novel legal issues attorneys will face trying to prove it in court. This article will discuss three of those issues: 1) whether selling the keywords constitutes “use” for trademark purposes; 2) if so, whether a search engine’s use of keywords is “likely to confuse” customers; and 3) what theories of liability are available to trademark plaintiffs.
Is Selling A Trademarked Term “Use In Commerce”?
To prevail on a claim of trademark infringement or unfair competition, a plaintiff must prove that: (1) it possessed the mark, (2) the defendant used the mark, (3) defendant’s use of the mark occurred in interstate commerce, (4) defendant used the mark in connection with the sale, offering for sale, distribution or advertising of goods or services, and (5) the defendant used the mark in a manner likely to confuse consumers.2
A threshold matter for the parties here is whether or not using a trademark as a keyword qualifies as “use in commerce” under the Lanham Act. If it does not, then as a matter of law, plaintiffs will not be able to sustain claims for federal trademark infringement and unfair competition. Attorneys for Google argued just that. In Rule 12(b)(6) motions, Google cited a number of Internet trademark cases supporting its argument that it did not “use” the marks for Lanham Act purposes because it did not use the marks to identify the source of its own goods and services.3 Instead, Google argued that it only utilized the trademarks in its internal computer algorithms used to determine which links to display, a process unseen by the computer user.
American Blind and GEICO championed a broader interpretation of “use in commerce” in the Internet context and won the day, at least enough for the judges in their respective cases to deny Google’s motions to dismiss. They argued that Google did in fact use their trademarks unlawfully by allowing competitors to bid on the marks and pay to be linked to them.
Their argument was consistent with a Ninth Circuit decision which previously held the use of plaintiff’s trademarked terms as keywords by search engines constituted “use” for trademark purposes. In a similar case, the Ninth Circuit found “no dispute” that search engine companies Netscape and Excite used trademarked terms in Commerce when they sold Playboy Enterprise’s marks “playboy” and “playmate” to advertisers as keywords that triggered banner ads whenever a user typed them into an Internet search.4
While potential trademark plaintiffs appear to have the upper hand on this threshold issue, it may be too soon to call it settled law and is just the first obstacle that plaintiffs must overcome. Even in refusing to dismiss the case, the court in American Blinds cautioned that the law on this issue was in an “uncertain state” and expressed “no opinion” as to whether Google would ultimately be found liable on the claims.”5
Does The Use Of Sponsored Links Cause A Likelihood Of Confusion?
Assuming plaintiffs can survive challenges to their pleadings, they must still prove the “core element of trademark infringement,” that defendants used their marks in a manner likely to confuse consumers.6 This is where the more significant (and more difficult) battle begins for plaintiffs. Here, they must litigate questions of fact.
In trademark law, it is not necessary to show consumers were actually confused by the use of the mark. Proving they were likely to be confused is enough. In trademark law involving the Internet, it may not be necessary to show that consumers were confused when they actually made their on-line purchase. Courts have recognized the concept of “initial interest confusion.” It describes an instance where potential customers are only initially led astray by the use of the mark, even though they quickly realize their mistake and could rectify it with the simple click of a mouse. This momentary “initial interest” confusion can be actionable under the Lanham Act, and plaintiff’s attorneys have seized on it.
While the burden for plaintiffs here may appear easy enough to meet, attempts to prove initial interest confusion have been mixed at best. In its pleadings, American Blinds alleged the Internet consumer’s ability to tell the difference between the sponsored links and the links to their own Web site was frustrated by the fact that the sponsored links were placed either higher than, or next to, theirs on screen; and all of the links were displayed in the same color, type face, and font size. Even the label “sponsored links” was argued to imply a sponsorship or authorization by American Blinds. Any lessons to be gleaned from these arguments are muted however, because American Blinds and Google have yet to litigate this issue to conclusion.
The issue of likelihood of confusion was litigated in the GEICO case, but the results bring small comfort to plaintiff’s attorneys. During a bench trial, GEICO presented survey evidence it claimed proved initial interest confusion caused by the placement of sponsored links along side of GEICO’s own. Survey participants were shown the screen result of an actual Google search using the term “GEICO.” They were then asked questions designed to see if they believed the sponsored links were associated with GEICO. According to the survey, over 60 percent said they were.7
GEICO’s attorneys argued this proved their claim. The court disagreed--mostly. Citing numerous weaknesses in the survey, the court ruled that GEICO failed to prove a likelihood of confusion from Google’s use of GEICO’s trademark solely as a keyword. However, the court also ruled that GEICO presented sufficient evidence to prove a likelihood of confusion where the trademark actually appeared in the sponsored link itself. Ironically, Google had stopped allowing this practice before the court heard the case.8
Whether or not GEICO would have prevailed in its remaining claims is unknown. Both sides took the half of the loaf the court gave them and settled the case soon after. Attorneys looking for guidance on this issue should take note. Empirical evidence seems to be the order of the day, but it does not guarantee success. Courts hearing survey evidence of consumer confusion in other Internet trademark cases have ruled both for and against the plaintiffs who proffered it.9 One thing is certain, plaintiffs endeavoring to present such evidence should narrowly tailor it to measure the effect of the mark only, with the expectation that it will be challenged and scrutinized in court.
Should The Search Engine Company Be Contributorily Liable?
Perhaps with an eye on hedging their bets, American Blinds and GEICO also pled that Google should be found liable for contributory trademark infringement. They alleged Google either intentionally induced, or at least knew, the advertisers made trademark use of their marks. Each court addressed this issue, but only in holding these alternative liability claims could survive Google’s motion to dismiss. In the Playboy case, the Ninth Circuit addressed this issue with equal brevity. In reversing the District Court’s grant of summary judgment, it held simply that Netscape and Excite could be found either directly or contributorily liable for trademark infringement.
Another avenue for plaintiffs is to target the advertisers themselves. Plaintiffs in two other sponsored links cases did exactly that and named the advertisers themselves as defendants. In one, a pro se litigant claimed trademark infringement against three search engine providers and two advertisers. Thus far, the only trademark issue decided has been the court’s denial of defendants’ motion to dismiss on the grounds the trademark term was generic as a matter or law.10 Here in Illinois, a company selling naming rights for stars won a ruling against a rival star registration company for violating a consent injunction against using its trademarks in advertising. The court based its ruling on, among other things, defendant’s use of the marks to generate a sponsored link in a Google search.11 Whether a plaintiff may prevail under any or all of these theories of liability remains unclear until these issues have been fully litigated.
Where Does This Leave Us?
Getting back to that client whose trademarks have been auctioned off by a search engine company, there is no definitive answer to give her. Like the Internet itself, this legal problem is evolving, and it may take some time before a sufficient body of case law is established to carry trademark law into the on-line era. In the mean time, practitioners should take note that change, however slight, may be in the air providing some avenues of relief short of litigation. The Internet search company, Yahoo!, recently notified its advertisers in the United States that they may no longer purchase competitors’ trademarked keywords.
Google, on the other hand, continues to allow advertisers to purchase trademarked terms for use as keywords—so long as the marks do not appear in the content of the sponsored link itself. Attorneys whose clients believe their marks have been misappropriated should note that in the United States and Canada at least, this is where Google draws its line. If it receives a complaint from a trademark owner, Google will require advertisers to remove the trademarked term from the content of the sponsored link but not from use as a keyword to trigger the link. Those wishing to learn more about Google’s trademark policy and complaint procedure can access that information by typing in the following Web address: <www.google.com/tm_complaint.html>.
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1. Mr. Baron, SBaron@mandellmenkes.com, is a partner in the Chicago law firm of Mandell Menkes, LLC. Mr. Beattie, wlmbeattie@aol.com, is a recovering public defender who has shifted his practice to commercial litigation.
2. Government Employees Insurance Company v. Google Inc., 330 F. Supp. 700, 702 (E.D.V.A. 2004), (citing People for the Ethical Treatment of Animals v. Doughney, 263 F.3d. 359, 364 (4th Cir. 2001)).
3. Google v. American Blind & Wallpaper Factory, 2005 U.S. Dist. LEXIS 6228 (N.D.Ca. Mar. 30, 2005), GEICO, 330 F. Supp. at 703.
4. Playboy Enterprises, Inc. v. Netscape Comm. Corp., 354 F.3d 1020, 1024 (9th Cir. 2004)
5. Google v. American Blind & Wallpaper Factory, 2005 U.S. Dist. LEXIS 6228 (N.D.Ca. Mar. 30, 2005)
6. Playboy, 354 F.3d at 1024. (citing Brookfield Communications., Inc. v. West Coast Entertainment Corporation, 174 F.3d.1036, 1053 (9th Cir. 1999).
7. Government Employees Insurance Company v. Google,. Inc., et al, 205 U.S. Dist. LEXIS 18642
8. Id.
9. In Playboy, the Ninth Circuit Court of Appeals held plaintiff’s survey evidence of confusion illustrated a genuine issue of fact sufficient to survive a motion for summary judgment. Playboy, 354 F 3d. at 1027. By contrast, in Wells Fargo & Co. v. WhenU.com Inc., the U.S. District Court for the Eastern District of Michigan found plaintiff’s survey evidence of confusion flawed and unpersuasive and denied their motion for preliminary injunction. Wells Fargo & Co. v. WhenU.con Inc., 293 F.Supp.2d 734, 765 (E.D. Mich. 2003).
10. Novak v. Overture Servs., 309 F. Supp.2d 446 (E.D.N.Y. 2004)
11. International Star Registry of Illinois, Ltd. v. SLJ Group, Inc., 325 F.Supp.2d 879 (N.D. Ill. 2004).
[Ed Note. The world is reportedly shrinking, NAFTA may be furthering commerce in this hemisphere, exports are an important segment of the Illinois economy, and the Hispanic consumer market is growing. Jaime Castillo summarizes some common mistakes made by US trademark owners in Mexico, and even answers how to avoid them.]
Obtaining a Trademark Registration in Mexico is not a complicated process. However, some points should be considered when filing Mexican trademark applications, since mistakes that are apparently simple may have dire consequences. The following are some of the details which often cause confusion amongst US Trademark Owners and lead them to making costly mistakes when seeking protection in Mexico, and valuable information that should help avoiding them.
Different Types of Registrations
When looking for adequate protection for a trademark in Mexico, a good starting point is to be able to identify the four different types of Registrations that exist according to Mexican Industrial Property Law:
It is essential to be aware of the differences between these figures in order to obtain adequate protection through registration. A common mistake is to register a slogan as a trademark, but then use it for the purposes of a commercial slogan. This entails the risk of the registration to be cancelled by a third interested party for lack of use (even if it has been used in the market), since its owner would be unable to prove its use as a trademark. It should be noticed that a Commercial Slogan is a phrase used solely for advertising purposes. Any phrase used for advertising a product or service, but not to identify it as a trademark, would and should be considered a Commercial Slogan.
It should also be noted that Certification and Membership marks as such do not exist in the Mexican Trademark Law system. A Collective Trademark, however, would be quite similar to these figures.
If the Mexican Trademark Office does not issue objections or formal requirements after an application is filed, the typical time frame for registration to be granted is four months. If, on the other hand, formal requirements and/or objections exist, registration could take from six to nine months.
Government fees for filing a trademark application are of US $231 (per mark per class; no separation of application and issue fees), and typical fees charged by a Mexican law firm for filing the application would be of approximately US $450. Filing a renewal would typically cost US $269 in government fees and approximately US $450 in lawyer fees. [March 2006 exchange rate was 100 Mexican pesos equal US $9.55 –Ed.]
Date of first use
This is a point that tends to cause confusion with US trademark owners that have used a certain trademark in the United States and apply for registration in Mexico. The date of first use to be stated in a Mexican Trademark application is not the date in which the mark was actually used for the first time in the United States or elsewhere. It is the date in which the mark was first used in Mexico, if any. Thus, if the mark has never been used in Mexico, the applicant should state that the mark has not been used. It is very important to note that once a date of first use has been stated in an application, it cannot be modified or eliminated by the Applicant (or, eventually, Registrant) at any time.
Incurring in a mistake on this point can prove costly, not at the application level (since the Trademark Office will not request evidence regarding the stated date of first use during prosecution), but once registration of the trademark has been granted by the Trademark Office. Mexican Trademark Law establishes that a Registration can be cancelled if false data was provided in the corresponding application. Thus, if a third party can prove sufficient legal interest in having such a registration cancelled (such as having an application objected on the basis of likelihood of confusion with the existing registration), it could file a cancellation action arguing that the date of first use declared when applying for registration is false. If the owner of the challenged registration was then unable to prove use of the mark in Mexico on the stated date, the Trademark Office would have said registration cancelled.
Furthermore, no use of the mark is required in Mexico to obtain a Registration. However, use of the mark is required to maintain the Registration. When the Registration is due for renewal, the Applicant must declare (under oath) that the mark has been in use in order to obtain renewal.
To be able to prove use of a mark in Mexico, the product or service covered by the mark has to be effectively available in the Mexican market. The only exception to this rule is exportation of Mexican products. If a product is manufactured in Mexico but sold only in the U.S.A., the mark identifying said product would be considered to be in use. On the other hand, if, for example, goods or services offered under a certain mark were advertised in a trade show but not actually sold, the mark would not be in use according to Trademark Law. Likewise, the mere signing of a contract for goods to be manufactured and sold would not be valid proof of use, only the actual sale (or exportation) of the product would.
Scope of goods or services to be covered by a registration
When applying for a trademark registration in Mexico, US Trademark owners often state only the specific goods or services in relation to which the trademark will effectively be used. However, in order to give the trademark broader protection, it is recommendable to apply for the whole class, as this would limit the possibility of a similar registration being granted in the same class, on the basis of the difference in goods or services to be covered.
If, on the other hand, an application covering the whole class is objected on the basis of a pre-existing registration in that class, the applicant has the possibility to limit the scope of goods or services to be protected in order for registration to be eventually granted.
It is also very important to note that the concept of a multi-class trademark application does not exist in Mexican Trademark Law. A separate application is required for each class if the Applicant intends to obtain protection for goods or services covered in different classes.
Licenses
A frequent mistake incurred in by US Corporations that own trademark registrations in Mexico, is not granting a license to the Mexican company that is effectively using the mark in Mexico (which could be its subsidiary or commercial partner). The Mexican Trademark Office will only consider direct exportation of products into Mexico by a US Company as proof of use of the mark by that Company. Otherwise, if no license has been granted by the US trademark owner to the Mexican company using the mark in Mexico, the US Corporation as such will be unable to adequately prove use of a trademark in Mexico, and would thus be in serious risk of losing the registration if an interested third party were to file a cancellation action against that registration on the basis of lack of use over three consecutive years. Even if the trademark has been actually used in Mexico, use proved by an un-licensed entity would not be considered proof of use by the Trademark Office, even if links between the trademark owner and the un-licensed company using it could be proved otherwise. In this sense, a recorded license agreement is the only valid instrument to prove use of the mark through an entity different to the owner of the registration.
In synthesis, it is essential for a US Company that owns a trademark registration in Mexico to execute and record a license agreement with the entity that will be actually using the trademark in Mexico. Otherwise, use would be impossible to prove if the registration was challenged on the basis of lack of use. The typical timeframe for a license filed for recording to be effectively recorded by the Mexican Trademark Office is three months.
There are no restrictions on transfer of royalties from Mexico to the U.S.A. There is, however, a withholding tax amounting to 32 percent. This tax is taken against income tax on revenue. The licensee is responsible for retaining the tax and paying it. Treaties to reduce double taxation may apply.
The license agreement can only be terminated on the following conditions:
1. Mutual consent between licensor and licensee.
2. Cancellation of the licensed Registration.
3. Through a judicial ruling (in case one of the parties decided to terminate the agreement through a civil action).
Searches
Searches are typically carried out before applying for registration, in order to determine if there are any pre-existing confusingly similar registrations or applications. Access to the Mexican Trademark Office’s online database, www.impi.gob.mx, is fast and easy, and the costs for the search are approximately US$ 125.00 per mark, per class. However, searches conducted for design marks have to be done manually at the Trademark Office and take more time to conduct.
When conducting a search, the analysis to determine possible likelihood of confusion is generally not limited to registrations or applications listed in the same class, or protecting exactly the same goods and services as the application, but broadened to include goods and services not actually in the same class but related to the goods and services sought for protection.
Priority
It is important to note that for a priority to be valid in Mexico, the Mexican application has to be filed within the six months following the date of filing of the corresponding trademark application in the United States, and, of course, the corresponding priority has to be claimed in accordance with the Paris Convention. If the priority is claimed timely, the date of filing of the trademark in the United States can eventually be used to overcome objections on the basis of identical or confusingly similar applications filed prior to the US Applicant’s Mexican application, but after the priority date.
A certified copy of the priority document has to be filed within the three months following the filing of the corresponding application. No extensions are available for this requirement, and the Mexican Trademark Office will not issue an official notice in this regard. If the priority document is not timely filed within the mentioned three-month period, priority will be irrevocably lost.
Power of Attorney
Requirements for Powers of Attorney in Mexico often cause confusion with US Trademark Owners. Three specific points should be taken into account in this regard:
Mistakes related to the points stated above are unfortunately common and their consequences severe. However, they can be easily avoided by following these simple rules.
[Editor’s Note. Although the fundamentals of intellectual property law have remained fairly set for decades, the cutting edges both of IP law and of society provide many fascinating issues to resolve. Yet busy IP professionals may sometimes forget that some clients are still confused by the differences among patents, trademarks, copyrights, trade secrets, confidentiality, privilege, publicity, privacy, and the Internet. In this issue of the IP newsletter Justin Lampel discusses a basic trademark issue, when to apply for federal trademark registration.]
A trademark is a name, symbol or other device (called a “mark”) used to identify a product or service which is legally restricted to use by the owner. A business may obtain trademark protection by merely using a name or logo. In fact, the business may use the “TM” symbol as long as the business is currently using the mark in “good faith.” However, the business may only use the “®” symbol after the mark has been registered by the United States Trademark Office.
It is a common misconception that having a business name approved by the Secretary of State’s Office provides trademark rights. Unfortunately, this is not the law. When articles of incorporation are filed in Illinois, the Secretary of State’s Office is concerned about identical or nearly identical business names. This generally does not provide your client with exclusive rights to the name the business. In fact, merely using the name granted by the state may subject your client to trademark infringement claims from a business inside or outside of Illinois.
The standard of review for a business name at the Secretary of State’s Office of Illinois is a completely different standard of review from that at the United States Trademark Office. The Trademark Office is mainly concerned about “likelihood of confusion.” Thus, the Secretary of State might approve “Alex’s Muffler Shop” even though there is a business in your state called “Alexander’s Muffler Shop.” Such similar registrations would almost certainly be denied by the United States Trademark Office. Therefore, in order to best protect your client’s business name, an application for trademark registration should be filed in the United States Trademark Office. Preferably, a trademark search should be conducted prior to filing the articles of incorporation.
Attorneys are often confronted with situations where their clients receive “cease and desist” letters demanding that they stop using the name of their business well after the Secretary of State’s Office has approved their Articles of Incorporation. These businesses often spend years and thousands of dollars on marketing their business, only to be put in the situation where they have to change their business name or defend their business name in court. Further, a successful plaintiff in a trademark action could receive legal fees and costs. Therefore, prior to incorporating or using a business name, logo or slogan, a trademark clearance is often advisable. Practice tip: when incorporating a client send a letter to the client warning of the possible consequences of not conducting a trademark clearance. [Better yet, have the trademark cleared before incorporating. –Ed.]
I recently received a call from a panicked client who had a motion for a temporary restraining order filed against him for his use of the business name granted to him by the Illinois Secretary of State’s Office. The complaint alleged that my client was infringing upon the trademark rights of the plaintiff. My client was facing substantial expense in defending this action. Although the case ultimately settled prior to a decision on the merits, my client still was forced to spend a good deal of time and money. Most of this, if not all, might have been avoided if my client would have looked into the trademark issues when he began trading under his business name.
Business owners should ask themselves this question “Is the name of my business, brand name, logo or slogan important to my business?” If so, then the business should address trademark issues before spending a great deal of money on marketing. If the business is, for example, a dry cleaner and the neon sign out front of the store reads “Dry Cleaners,” then the answer to this question is probably no. However, if the neon sign out front of the dry cleaners reads, for example, “Dirt Destroyer Dry Cleaners,” then the answer to this question is probably yes. In short, trademark issues revolve around marketing. Heavy marketing = heavy trademark issues. Light marketing = light trademark issues.
Some of the benefits of federal trademark registration include:
1. Registration is constructive notice that the owner of the mark has the right to use the mark throughout the entire United States, even if the mark is not being used in a specific geographical area. This means that the owner may prevent a person or entity from using the same mark or a confusingly similar mark anywhere in the U.S., unless the other mark was used before the date of fist use of the registered mark. 15 U.S.C. §1115
2. The right to use the ® symbol in connection with the mark, which may deter potential infringers. 15 U.S.C. §1111
3. In a successful trademark infringement action, the registrant may obtain increased statutory damages and attorney fees. 15 U.S.C. §1117
4. The registrant may use the power of federal government (via the U.S. Customs Service) to prevent the importation of goods that contain infringing marks. 15 U.S.C. §1124
5. Registration is prima facie evidence that the registered mark is valid, the registrant owns the mark and has the exclusive right to use the mark in commerce. 15 U.S.C. §1072
6. After five years of continuous use in commerce, the mark becomes incontestable, which means that the registration of the mark cannot be attacked on the basis of prior use or descriptiveness. 15 U.S.C. §1065
7. The mark is easily discoverable by those doing trademark searches. This often prevents third parties from adopting confusingly similar marks.
8. The registrant of the mark may sue for trademark infringement in federal court when diversity does not exist. 15 U.S.C. §1121
9. Certain rights under the Paris Convention that assist overseas registration of the mark. 15 U.S.C. §1141
10. Registration is prima facie evidence that the mark has been used continuously in commerce since the filing date of the application.
As your client’s business grows, it will acquire a wide variety of assets ranging from office furniture to inventory. However, your client’s trademark may very well be its most valuable asset. Despite this fact, many business owners neglect to file for trademark registration with the United States Trademark Office. As a result of not filing for registration, your client’s business may be legally restricted in its ability to expand geographically. Further, failure to file for trademark registration may allow competitors with similar marks to enter and co-exist in the marketplace. Filing for trademark registration may be your client’s best business investment.
So, when should you advise your client not to file for federal trademark registration?
There are a number of reasons to advise your clients not to file for federal trademark registration. For example, filing a federal trademark application is not advisable if your client is only interested in offering goods or services under a generic name. As stated above, if your client operates a dry cleaners and the neon sign outside his or her store reads “Dry Cleaners,” then your client is probably only concerned about informing the public what services are performed in the store, and probably not concerned with the public associating his or her store with a brand name.
In addition, filing a federal trademark application is probably not advisable if your client’s mark is similar or identical to a known mark used to identify similar or identical goods or services. Besides the infringement risk, if a trademark search reveals an existing application or registered mark which would create a “likelihood of confusion” with your client’s mark, your client’s application will be rejected. The Trademark Office will not advise you if your clients mark will be rejected prior to filing the application. Instead, you must file the application and wait approximately seven months before the Trademark Office indicates if your client’s mark is rejected based on a “likelihood of confusion” with an existing application or registered mark.
If your client has no plans of expanding his or her business, then registration is probably not necessary. One of the biggest reasons for filing a trademark application is to obtain the right to expand nationally (minus areas of prior use). Therefore, if your client only wishes to operate from a small geographic area, registration may not be advisable. (Of course, your client may still want the right to use the ® symbol or may want other benefits of federal registration). Additionally, if your client’s goods or services are wholly intrastate and do not impact interstate commerce, that federal trademark registration is typically not available.
I sometimes advise a client to delay a federal trademark filing if he or she plans on using a mark in commerce in the near future. Although an “Intent To Use” application may be filed prior to establishing use of a mark, there is an additional expense to this type trademark application. More specifically, the client will have to pay additional government fees of $100 per class per six month period, during the three-year limit to establish bona fide use) and wait longer for official registration. Therefore, if a client is going to enter the market place in, for example, a couple months, it may be advisable to wait to avoid having to file the “Intent To Use” application. Of course, waiting to file may allow a third party to obtain rights to your client’s mark while your client is waiting to establish use. Therefore, this practice is only advisable if your client 1) plans on entering the market very soon 2) the mark is not likely to be filed by a third party 3) your client is not established enough to pay the additional expense and 4) you fully advise your client on the risk of waiting to file until after use has been established.