Editor’s Note: We welcome Jeffrey Jacobson, an attorney, as our newest contributor. Jacobson is an expert in Internet and ecommerce law with Parmenter O’Toole, a Michigan-based law firm. He will contribute monthly on legal topics important to ecommerce merchants. His first piece, “Legal: Domain Names, Trade Names, and Trademarks,” follows below.
When choosing a name for your business, product, or website, careful consideration is key. A basic search should be done to determine how the name is being used before you start building your brand. It is important to research a name before you start using it, not only to guard against infringement of another’s mark, but also to start your business with a name that will not be confused with your competitors’ brands.
Most businesses spend thousands, or even millions, of dollars every year to promote their products or services and create name recognition. They are creating a “brand,” which can be a very valuable company asset. For example, the brand name Apple® is probably worth more to the company than any patent it owns. If another company is using a similar name, a potential customer could mistake your advertising for that of your competitor’s products or services. Also, this confusion by customers can be the basis of a trademark infringement claim.
At a minimum, search the major Internet search engines and at the United States Patent and Trademark Office (USPTO). Perform an in-depth search of state registrations, phone directories, and county records to discover any registered marks that may be confusingly similar to the mark you have chosen.
Protecting Your Trade Name
Unregistered names are protected by common law. To enforce your rights to a name under common law, you must prove that another business is using a name that is confusingly similar to yours, and that the similarity is likely to result in confusion among consumers. In other words, the burden is on you to prove that you used the name first, and that customers will be confused by the use of the name by the other business.
There are several advantages to registering a mark with USPTO. First, registration gives notice to the world that you claim the mark in association with your product or service. Second, if your name is intentionally used to cause confusion, you may receive triple the amount of damages in a suit for infringement and you may be entitled to attorney fees. Third, and most important, registration creates several presumptions, including that the mark is valid, and that you (as the registered owner) have superior rights to use the mark.
Lastly, if you plan to use your mark outside the U.S. (e.g., Internet sales), a registered mark allows you to file applications for foreign registration based on your U.S. registration. So, if you compete against foreign companies in the U.S., registration with the USPTO allows you to prevent the importation of goods using a mark that is confusingly similar to your mark by registration with U.S. Customs.
Trademarking Your Domain Name
Domain names can also be trademarks, and may be registered with the USPTO. However, the domain name has to be used as a trademark. This means it needs to designate the source of a product or service, not just the address of your website. The company or product name needs to be the same or similar for you to claim trademark rights to the domain name.
For example, Amazon.com is a trademark because the company sells products under the name Amazon.com. Trademark registration for a domain name can be important because trademarks trump domain registrations. In other words, if you register a domain name that is the same or similar to another company’s trademark, the company that owns that trademark may be able to force you to transfer or stop using the domain name.
Of course, there are many “cyber squatters” who try to extort money from trademark owners. Therefore, it is advisable to register similar variations of your name as well. It can be much cheaper and less aggravating to secure several variations of your name now than to end up later fighting with an unscrupulous Internet scammer.
Ecommerce Makes Name Protection Even More Important
It is most important for ecommerce businesses to protect their trade names. A business that was once just local can now be national or global. Companies selling over the Internet are now invading local markets, taking business away from the mom-and-pop corner store.
If another company is using a name similar to yours, it can cause real confusion among Internet shoppers. But, with careful selection of a name and proper protection, you can guard against a competitor profiting from the hard work and money you spent to create your brand name.