Imagine being ordered by a court to immediately stop using your name. How difficult would it be to: (1) choose a new name; (2) notify everyone of your new name without referencing your prior name; and (3) destroy all materials containing your prior name?
Now imagine being ordered by a court to immediately stop using a trademark in which you have invested substantial time, money, and effort to build brand recognition and goodwill. How difficult and expensive would it be to: (1) start over with a new brand; (2) notify customers, vendors, licensees, franchisees, referral sources, and others of your new brand without referencing the prior brand; and (3) recall, delete, and destroy all infringing products, advertising materials, social media posts, and other materials containing or referencing the prior brand?
How expensive would it be to pay the following amounts to a trademark owner with priority rights whose mark you infringed or diluted:
- profits that you made from using the mark;
- actual damages that the prior trademark owner suffered as a result of your use of the mark;
- litigation costs that the prior owner incurs (in addition to your own costs);
- attorney fees that the prior owner incurs (in addition to your own attorney fees); or
- prejudgment and post-judgment interest that accrues before you pay a damages award?
How expensive, time consuming, stressful, disruptive, and damaging would it be to your business for you and your employees to be tied up in litigation for years, regardless of whether you win or lose at trial or on appeal?
How expensive would it be for you to satisfy contract obligations to defend, indemnify, and hold harmless any sellers, vendors, licensees, franchisees, or other parties who may be sued for using an infringing mark with your permission?
How would your financial and retirement plans be altered if you planned to sell your business but could not find a buyer willing to buy your business or pay your proposed sale price due to concerns that your business, trademarks, and related goodwill are at risk or overvalued because you: (1) adopted a mark that is identical or confusingly similar to a prior mark; (2) adopted a mark that is unenforceable or weak; (3) failed to register your trademarks; or (4) waited too long to apply for registration and may now be unable to use or register the marks in territories that are important to the success and future growth of the business?
Trademark Due Diligence
Every trademark owner should conduct a reasonable level of due diligence before adopting or applying to register a mark.
Internet research can be a helpful preliminary step to see if you uncover prior marks that may warrant considering a different brand or help you narrow down a list of potential alternative brands. However, Internet research has limitations and is not a substitute for a trademark search and legal advice by experienced trademark counsel.
There are a number of different trademark search options available that vary in scope and cost, which trademark counsel can explain. Although no amount of due diligence can guarantee freedom from objections to use or registration of a mark, a trademark search by experienced trademark counsel may uncover conflicting marks and avoid liability risk that could devastate your business and profitability and prevent future opportunities to expand, franchise, or sell your business. A trademark search by counsel may also minimize willful infringement liability exposure.
Trademark infringement is not a risk to be taken lightly. By way of anecdote, a federal jury recently returned a $95.5 million verdict in a trademark infringement lawsuit in February 2019. In a 2008 trademark infringement case, a jury rendered a verdict in excess of $300 million. Although the court later reduced the 2008 jury award (to $65.3 million), cases like these are noteworthy to focus attention on the potential costs and risks of trademark infringement litigation, as well as the potential value that trademarks may acquire if properly selected and protected.
It is not uncommon for business owners or marketing professionals to get excited about a potential brand idea and put the cart before the horse by skipping (or skimping on) trademark due diligence and investing time, money, and effort in launching a brand only to find out the hard way that there are prior conflicting trademarks. Before launching a new brand, retain experienced trademark counsel to advise and assist with trademark due diligence and protection of your marks in territories where you do business or wish to expand.
The Beggs & Lane Intellectual Property Group assists clients with U.S. and international trademark searches, registration, licensing, litigation, and other intellectual property (IP) matters.