A key component of the strategy of almost any business is branding: building a name or logo that consumers associate with your business. The law recognizes that words or symbols that demonstrate a business's commercial identity are valuable components of a company's goodwill and are often relied on by consumers in making their purchasing decisions.

A trademark is "any word, name, symbol, or device" that identifies the source of goods or services. Although trademarks are most frequently words or logos, the U.S. Patent and Trademark Office has recognized trademarks in shapes (Coca-Cola bottle), sounds (NBC's three chimes) and even scents.

Trademark registration not required

A common misunderstanding is that you must register a trademark with the U.S. Patent and Trademark Office for a mark to be legally valid. This is incorrect. A trademark is acquired through use of the mark in the normal course of business, such as using the mark in retail packaging or on a website. Businesses can indicate they are claiming a non-registered trademark by placing a “TM” in superscript after the mark, but a mark does not have to have a TM after it to be valid.

In general, the person or business who first used a valid mark in commerce will have the right to continue using it, at least within the particular geographic area and product or service category in which the mark was used. However, there are many exceptions to the "first-in-time" rule.

Distinctive trademarks are more likely to be recognized

The likelihood a trademark will be recognized as valid depends largely on the distinctiveness of the mark. Trademarks that are arbitrary and fanciful and have no logical connection to the goods or services being sold ("Starbucks" or "Kodak") are inherently distinctive. Trademarks that subtly suggest a connection to the product ("Whirlpool" for washing machines) also are broadly protected under trademark laws.

However, a business does not have the right to trademark generic or descriptive terms for a product, unless the descriptive term achieves "secondary meaning" with consumers. A descriptive mark can only be trademarked if the public comes to associate the descriptive term with a particular company, rather than the product in general (McDonald's "Filet-O-Fish").

Process for federal trademark registration

When you see a trademark or logo with a ® after it, that designates the mark has been examined, approved and registered with the U.S. Patent and Trademark Office. The application fee is $275 and can be submitted online. Although it is possible to apply to register a federal trademark yourself, there are potential pitfalls in the process such that most businesses choose to hire a trademark lawyer to file the application on their behalf.

On average, the process takes about six months from the initial application to final registration. If the application is rejected, the rejection can be appealed to the Trademark Trial and Appeal Board, an administrative body that in many ways is similar to a court.

If the application is allowed, the trademark is "published" in the Trademark Official Gazette. This gives other companies that might wish to oppose the trademark notice of the proposed registration of the mark. Members of the public have 30 days from publication to oppose the registration of the mark. Any opposition of the mark by a third party is also reviewed by the Trademark Trial and Appeal Board in what effectively becomes a court proceeding.

Benefits of federal trademark registration

Although registered and non-registered trademarks are both eligible for protection under the law, there are a host of benefits to federal registration. Among the most significant benefits of federal registration are:

• Nationwide rights in the mark

• Evidence of the ownership of the mark

• Notice to others that the mark exists

• A presumption that the mark is valid

• A presumption that the mark has not been abandoned through non-use

• After five years of unopposed registration, a mark is eligible to become "incontestable" and immune from challenge on the basis that the mark is merely descriptive

• The right to sue in federal court if the mark is infringed upon

• The possibility of triple damages and criminal penalties for counterfeiting

• The right to have the U.S. Customs Services block the importation of goods bearing infringing marks

Federal registration must be renewed every 10 years, within one year of the expiration of the registration, in order to maintain the registration. However, in contrast to copyrights or patents, trademarks do not have a set duration and can be renewed indefinitely.

Registration with the Michigan Secretary of State

For small businesses that only operate in Michigan, state registration of a trademark with the Secretary of State is often a more cost-effective alternative to federal registration. Indeed, a business can only register a trademark with the U.S. Patent and Trademark Office if the mark is being used in interstate commerce across state lines.

Registration with the Michigan Secretary of State can be done online. It costs $50 for the application and can be fairly easily filled out by non-lawyers. An applicant can search the Secretary of State's database online to determine whether a mark has been registered with the state previously.

A common pitfall is for a startup company to attempt to register a mark before it actually starts selling goods or services in the marketplace. A business cannot obtain a trademark until the mark has been used in connection with the sale of goods or services.

Registration of a trademark with the Michigan Secretary of State does not provide the same benefits as federal trademark registration. The main benefit of registration with the Secretary of State is to provide objective evidence of the time at which a business first started using a mark in Michigan, and the owner of the mark, in the event of a future dispute.

Trademark infringement

Whether a new trademark is deemed to unlawfully infringe on an existing mark is determined by the "likelihood of confusion" test. A new trademark is deemed to infringe when it is similar enough to the original mark that consumers are likely to confuse the two and mistakenly purchase goods or services from the wrong company. 

In addition to damages caused by an infringing mark, a business may also obtain an injunction prohibiting the use of an infringing mark in the marketplace.