Trademark law guards your goods and services, but do you need state or federal protection?

By Jessica Smith

So you are ready to get a trademark, but you’re not sure whether you need a federal or state trademark? You are not alone. There are pros and cons to both avenues and determining the right method for your company is a balancing act. Remember for both a federal and state trademark, your mark must be distinctive and capable of identifying the source of goods or services. The mark cannot be merely descriptive or generic.

State trademark

To obtain a state trademark, the mark must be used in intrastate commerce. State trademarks are governed by the laws of each state and afford protection for use solely within that state. The benefits of a state trademark are that the cost is typically below $100 for anywhere from 1 to 5 years of protection. The registration does provide a record of use and may provide protection from a subsequent federal trademark registration. The cons of a state trademark are that the protection is limited to the state. Any use of the mark outside of the state, including the Internet, is protected. Additionally, a subsequently filed federal mark could preclude expansion in neighboring states.

Federal trademark

To obtain a federal trademark, the mark must be used in interstate commerce. Federal trademarks are governed by the federal trademark law called the Lanham Act and afford protection within the U.S.

The benefits of a federal trademark are that the protection is across the United States. The registration provides presumption that

• The mark is protectable and distinctive;
• The mark is valid, and
• The owner has the exclusive right to use the mark. Additionally, the federal registration provides constructive notice of your mark and eliminates any good faith defense of another party. One of the biggest benefits is that the Lanham Act provides for statutory damages of up to $100,000 and treble damages for infringing acts. This hefty penalty can be very effective in negotiating settlements.

The cons of the federal trademark are that the registration is extensive and time-consuming. The cost of registering the mark can vary depending on the number of classes or goods of services claimed. Although the USPTO charges approximately $300 per claim, there are additional fees if your application is not immediately accepted.
The chance of having your application accepted is increased by using an attorney to insure the application is providing the protection sought and filed correctly. See www.uspto.gov for more info.

Which registration is right for you?

Let’s go through a couple examples. Company A sells flowers in their New York hometown, has no plans to expand and does not use the Internet. To protect the company’s trademark rights, the company should consider filing a state trademark.

This would protect the company’s name from:

• Anyone in the state that attempts to trade off their goodwill and
• Another party that filed a federal registration after Company A filed the state registration (i.e.: a company in Florida and Alabama with the same name and federally registered trademark would likely be prohibited from expanding into the hometown.)

Company B sells T-shirts on the border between Pennsylvania and Ohio. Although Company B could obtain a state trademark in both bordering states, the costs of both trademarks and having to deal with both Pennsylvania and Ohio trademark law would weigh toward obtaining a federal trademark. If Company B also had an Internet business that encompassed sales across the nation, a federal mark would be the best protection.

Unfortunately, the determination of which mark to use is not always clear-cut. The general rule is if you intend to expand to multiple states the federal mark is worth the time and effort.

This article is not intended to be legal advice; as such advice can only be properly given by an attorney who is fully aware of the company’s particular circumstances.