ALP: What is a trademark and why is it important to my business?

February 2006

Trademarks and service marks are among the most valuable assets owned by a business. These assets are a type of property included within the category commonly known as "intellectual property." Intellectual property also includes copyrights, patents, trade names, trade secrets and know-how.

Most people think of trademarks as merely a brand name. A "trademark" is any word, name, symbol or device, or any combination of words, names and symbols, which is used to identify and distinguish a person's goods, including a unique product, from those manufactured or sold by others, and to indiĀ­cate the source of the goods, even if that source is unknown. A service mark is simply a trademark used on a service, like a retail store.

Many business people assume, incorrectly, that if they incorporate under a name or register a trade name with the secretary of state, they are protected under trademark law. They are wrong. Even if you have incorporated and registered your trade name, using that name for your product or service does not protect you from liability for trademark infringement by someone who has prior use.

We have seen many people build up small businesses and get ready to sell them, only to find out that they can not be expanded under their name outside of their current local market. The purchase price drops significantly.

In selecting marks, companies should be aware that courts have divided marks into several classifications based on strength: generic, descriptive, suggestive and arbitrary or fanciful. The stronger the selected mark, the broader the scope of protection it will be afforded under the law. Generic terms can never function as trademarks and cannot be registered. For example, "light" cannot be protected as a trademark for beer.