Having a trademark may provide business owners protection to create a unique brand for their company, but at what cost? Having and maintaining a trademark comes with financial burdens that may create a roadblock for entrepreneurs looking to build their brand.
Trademarks In a Nutshell
But first, what is a trademark? A trademark is any word, phrase, symbol, or design used in commerce on goods or services that identifies and distinguishes those goods or services in the marketplace. The trademark indicates that the particular good or service came from a specific source. For example, the brand name “Starbucks,” the McDonald’s “golden arches” logo, and the Nike “Just Do It” slogan are all trademarks.
Further, a trademark can be federally registered with the United States Patent and Trademark Office (USPTO) for maximum protection by submitting an application (and fee) that establishes a trademark that meets the above definition and is not otherwise statutorily barred. Registration with the USPTO gives the public notice of the registrant’s ownership of the trademark, gives the owner an enhanced ability to exclude others from using the same or similar mark on or in connection with the goods or services listed in the registration, and more.
While registering a trademark may seem easy enough, it often requires careful searches of existing trademarks, or “marks” for short. Because trademark applications can be rejected if the applied-for trademark is too similar to an existing trademark, applicants have to be sure that the mark they are applying for will not be confused with existing marks.
For example, a trademark attorney should conduct an initial search (often called a “clearance search”) before applying for a trademark to ensure that there are no confusingly similar marks. This entails searching the USPTO’s trademark database and even simple Google searches to look for already-existing marks that may prevent the applicant’s mark from being registered. These attorney searches will often be billed to the client by the attorney’s hourly rate. Depending on the attorney’s seniority level and experience, hourly rates can range in the low hundreds of dollars to even close to $1,000 per hour! Some attorneys or firms may also provide a single “flat rate” to conduct initial trademark searches and complete the application.
Even further, an attorney may suggest that the client pay for a search service, which returns a formal booklet with any potentially confusing marks in the marketplace. For those applicants who really want to do their due diligence, commissioned searches are the gold standard for ensuring that their potential mark will register with the USPTO. Unfortunately, they are not cheap — typically around $800. That means that an applicant can easily spend well over $1,000 on legal costs before even filing an application.
Once initial research on existing marks is complete, an applicant may be ready to file. But before filing with the USPTO, applicants should be ready to pull out their credit cards. The typical filing fee for a new trademark is $225 per class of goods or services. What does this mean? Basically, an applicant needs to specify each class that it intends to use the trademark in. A class is a way to categorize various goods and services for which a trademark might be used in connection with. The USPTO provides descriptions of each class to help a registrant figure out exactly which class or classes she wants to register in. Registrants should keep in mind that they may want to register their mark in multiple classes.
For example, an entrepreneur who wishes to create an all-inclusive sports line that encompasses gyms, clothes, and health supplements will need to specify with the USPTO that it intends to use the trademark in each of these three classes. Each class an applicant applies for costs $225 each, so this application is already adding up to $675. Not cheap!
This does not include any attorneys’ fees the applicant pays for initial research conducted, which can easily reach thousands of dollars. For a large, already established business, these costs may not be a problem. But for a small start-up business, these costs can add up quickly when cash may already be tight.
Is that the end of the expenses and fees? Not so fast. Once an applicant has gone through the process of registering a trademark, which can take several months (even years) if the applicant and USPTO debate whether the trademark can be registered, an applicant must monitor the trademark to keep its registration active. If the owner of a trademark does not keep the mark’s registration active with the USPTO, the mark can be “abandoned” and may lose its registration. Thus, it is important to stay on top of important deadlines for upkeep of federal trademark registrations.
Between the fifth and sixth years of a trademark’s registration, the owner must file a statement alleging that the trademark is still being used in commerce. The cost for this is $125 per class of goods and services. Again, more filing fees, and likely more attorneys’ fees as well.
But it doesn’t end there. Between the ninth and tenth years of registration, the owner must again file a statement alleging that the trademark is still being used in commerce, as well as an application for renewal. This cost is the steepest of them all, ringing in at $425 for each class of goods or services in the registration. And you guessed it, likely more attorneys’ fees. This same process must be repeated every ten years in order to keep the trademark active.
In addition to keeping up with USPTO requirements, trademark owners should also “police” their mark. Once a mark is registered with the USPTO, it is in the trademark owner’s best interest to make sure that there are no similar marks being used in the marketplace that may confuse consumers, i.e., infringing marks. For this reason, some trademark owners utilize monitoring or “watchdog” services, which constantly survey the marketplace and alert the owner if there is a mark that is similar in the marketplace. This will require a monthly or yearly fee. Additionally, if a trademark owner does find a potentially infringing use, an attorney will often draft a cease and desist letter to tell the owner of the potentially infringing mark to stop its use. As suspected, this includes even more attorneys’ fees and costs. Moreover, if the infringing use does not continue, this needs to be followed up with a trademark infringement suit. As you can see, the costs of having a trademark often don’t end once the trademark is registered with the USPTO.
Bite the Bullet
After all those fees and costs, you may wonder: is it all really worth it? The answer: YES! Having a federally registered trademark provides invaluable protection. It will protect you from other people who want to use your name, logo, slogan, or whatever your trademark may be. Without a trademark registration, a pricey battle over who has the rights to a certain logo, for example, can be far more expensive than the previously discussed costs. Having a federal trademark registration has several benefits, including that fact that it creates a legal presumption that you own the mark nationwide. Bottom line: bite the bullet and save yourself time and money in the long run by seeking trademark registration.
Loyola University Chicago School of Law, J.D. 2020