By the Book

IS YOUR BUSINESS NAME SECURE?

BY CRAIG FIESCHKO

You receive a letter from a law firm alleging that the name of your establishment infringes on its client’s trademark. It demands that you immediately cease use of the name, including removing the name from all of your signage, advertising, social media pages, online listings, etc., or else the law firm will sue you to make you do so and seek damages. Can it?

Incorporation Does Not Provide Trademark Rights

Forming your limited liability company (LLC), corporation or other entity with the state does not give you full legal rights to your name. This may secure your trade name with the state — the legal name of your business — and prevent others from forming a business with the same trade name. However, this doesn’t create rights to your trademark (the “public-facing” name advertised to, and known by, the public).

When Trademark Rights Arise

You may develop “common law” trademark rights — rights to use your trademark locally — provided you’re the first to use it in the tavern or restaurant field. Stronger rights arise if you register your trademark with the state or particularly with the federal government. Federal trademark registration can effectively provide you with the exclusive right to use your trademark nationwide, giving you a shield against others’ allegations that your trademark is infringing, as well as a sword against others’ use of the same (or even a similar) trademark.

Benefits of Registration

Problems can arise if someone registers your trademark before you do: This will typically preclude your registration. Even if you have common law rights as the first user of the trademark, the next registration will often freeze your use of your trademark to whatever usage you had prior to the next registration. For example, you may not be able to use or advertise your trademark in new locations, or expand to new forms of marketing on the web or elsewhere. This is why it’s useful to register your trademark — it protects your ability to continue use of your trademark without threat and to expand if you wish to do so. While there are expenses associated with registration, they’re relatively small for the insurance that registration provides. Moreover, these expenses are often recouped many times over if you sell your business, as buyers will typically pay more if they know they can continue (and expand) use of the business’ trademark without problems.

Minor Trademark Differences Can Still Be Major Problems

A common myth about trademarks is that there’s no infringement if one trademark differs from another by a letter or two, or if words are added or subtracted. However, trademark infringement occurs when marks are “confusingly similar,” meaning whether a reasonable number of average consumers (who typically don’t memorize the exact forms of trademarks) would regard two trademarks as coming from the same or related providers. Different trademarks can still infringe.

Why Trademark Problems Are Becoming More Frequent

Recent events have led to a sharp increase in trademark disputes. Many providers expanded their online activities during the pandemic, expanding their partnerships with delivery services, and offering online ordering and even virtual kitchens, for example. As one’s online footprint grows, so does the opportunity to run into conflict with others having the same or similar trademarks.

The pandemic also prompted food and beverage conglomerates to expand their product lines, and they tend to secure and aggressively protect their trademarks. The boom in microbreweries and micro-distilleries, and in restaurant and tavern franchises, also added to the land rush in trademarks. Consider whether you should register your claim before someone else does.

More Than Just a Name

You may have trademarks beyond the name of your business, such as logos or slogans used to promote your business, and unique names of drinks, plates or other products. It’s useful to consider whether these should be registered as well. Ask yourself: How badly would you be impacted if you had to drop their use and adopt substitutes? TLW

Craig Fieschko is a partner and intellectual property attorney at DeWitt LLP. He secures and litigates patents, trademarks and copyrights.