First isn’t always good enough for brands, and that’s a lesson many small businesses learn the hard way.
That’s because “first” means something different in the United States than it does in most other countries around the world.
I’m talking about first-to-use versus first-to-file as it pertains to U.S. trademark law. And it’s a distinction every small business owner needs to understand.
The risks are simply too great to ignore.
U.S. Trademark Law: First to Use Versus First to File
Unlike most countries, the United States gives rights to the person or entity (like your small business) that uses a brand or specific mark in commerce first.
In other countries, rights go to the person or entity who registered the mark first.
This distinction is huge and many businesses have gone under because they didn’t understand it.
A Lesson in Critical Branding Mistakes to Avoid
Imagine you own a marketing company, which you’ve named Ampic. You’ve registered your business name as a trade name in your state, gotten a domain name with your business name in it, and secured a number of social media profiles and pages with your business name.
You’re ready to start building your business and your brand, right? Not so fast.
Your business name might already be in use by another company. If you start marketing your business online and offline, particularly on the social Web, it is highly likely that the other company will find out about it.
Guess what happens next?
They’ll send a cease-and-desist letter telling you that you need to stop using your business name in commerce because it conflicts with theirs and could cause confusion in the marketplace.
Admitting that you missed a very important part in naming your business, products, and so on, you realize that you should have conducted a trademark search to ensure that no one else was using the same brand name.
To cover your tracks, you visit the U.S. Patent and Trademark Office website and search its electronic database to confirm that the other business actually owns the trademark for your business name. When no matches are found, you think you’re in the clear. Nope.
Remember, in the U.S. what matters is who used the mark in commerce first. That’s the person or entity who owns the rights to it even if they haven’t formally trademarked it yet. This is referred to as common law, and it trumps everything.
Even if the other company never formally trademarked the name and you rush to do so now in an attempt to save your business from the expensive quagmire you’ve gotten it into, you’ll be out of luck. Why? Because the other company used the mark first in commerce and yours is confusingly similar.
If yours wasn’t a U.S. business, you could register your trademark now and the other company would have to stop using the mark, but you live in the U.S. where first to use is what establishes trademark rights. At this point, you need to rebrand or work out a licensing deal with the other company if you want to try to continue using your business name.
What Should Small Businesses Do?
Before you invest a lot of time and money into building your business and brand name, make sure you can trademark that name, and then register it.
Keep in mind, common law matches won’t come up in a simple, knock-out trademark search. That’s why the Ampic name didn’t come up in the U.S. Patent and Trademark Office search in the example above.
You need to invest in a comprehensive trademark search that looks at active and inactive trademarks, business names in all states, social media profiles, domain names, and more. That’s the only way to be sure that you can secure the legal rights to that name by registering it as a trademark.
Once your trademark has been registered, you can keep others from using it. Don’t fall victim to the same fate as your fictitious Ampic company.
It costs a lot less money to protect your brand and business today with trademarks than it will to rebrand in the future after being accused of infringing on someone else’s mark.
Trademarks Photo via Shutterstock
More in: Branding, Content Marketing
Just shows that you’ve got to do your research, and be thorough about it, in order to avoid legal hoopla.
Robert, You’re absolutely correct. Investing time and money into researching your brand identity elements to ensure they’re clear for you to use in the marketplace is critical. You’ll end up spending a lot more money later than you would if you just made that investment up front. It’s a huge risk that is not worth it. I can’t tell you how many clients I’ve had that had to learn this lesson the hard (and very expensive) way.
Hi Kelly, So Im in the middle of creating a social networking app. In the midst of doing some research. I came across a slogan from another app that is similar to one that I was going to use. They are also in social networking. But they aim to be more like Facebook. And that is not what I’m creating. Can slogans be trademarked? There app isn’t very popular and has been around for about 2 years. Is worst case scenario them asking me not to use the slogan at a later date? Any help is greatly appreciated
Nice Informative Article. Levels of accuracy & comprehensiveness in Search results are important critical factors. As to get highest accuracy & maximum comprehensiveness in trademark search results, we must have to employ an optimized mix of “Automation tools + Manual Analysis” in execution process. This combination not only save the working hours or professional efforts, but also helps in generating best quality reports at comparatively low prices.
I’m a little concerned. There is a personal training place in town with the name Elyte. They focus on personal training with fitness and nutrition. They have been around for about 2 years. I have a sports facility called Elyte Sports Academy and have been in business for about 5 months under that name. We rent our space to soccer teams and run soccer training for youth. They don’t do soccer training and they don’t do turf rental. We rent for birthday parties, etc. I received and trademark infringement letter to stop using the name.
Without knowing all of the facts of the case, I can only give you a general answer about how the law works. If the other company has been using the name in commerce and there is likelihood that consumers could confuse your brand with theirs, then it could very well be a case of infringement. However, every story has more details that a very experienced intellectual property attorney should review to advise you appropriately.
This episode from the Circle Legal Business Fix-It Show provides a lot of information about choosing a strong trademark that doesn’t infringe on an existing mark that should help you understand why the other company decided to send you this letter: http://www.circlelegal.com/choosing-a-business-or-brand-name-you-can-trademark/
I know that this is an old article, but I’m going through this right now, as I have been using my business name in commerce for two years now but never registered a trademark. Recently someone else registered a trademark with something very close to my name, and contacted me to buy the trademark from them. My attorney told me that the first to use vs first to file laws were changed in 2013 so that first to file people had more rights. Is this true? From your article which was written last year it seems like that’s not the case. Any help would be appreciated.
Hi Johanna — Thank you so much for your comment. The filing rules for patents were changed in 2013 (we went from a first-to-invent to first-to-file system), but the trademark laws have not changed. The first to use a mark commercially can claim prior rights to a newcomer who starts to use the same or similar mark for competitive products or services. I do hope this helps! Best, Kelley
Thanks for writing this article. I had a question regarding the comment in your article:
“If yours wasn’t a U.S. business, you could register your trademark now and the other company would have to stop using the mark”
I was in the process of setting up a brand and company name for a range of products in the UK and had purchased the .com domain name.
However in the meantime another company in the US has setup selling a particular product with almost the same name, except it has an “s” on the end i.e. as in plural. They also have the same domain name but with an “s” on the end which they purchased after I bought mine.
They have not trademarked the name in the US, as it only applies to one of a number of products they sell.
My intention had been to eventually sell in the US in addition to the UK. Based on your comment about not being a U.S business. If I wanted to register my company/product name as US trademark to my UK business would I still be able to do so, without being at risk of the first to use principle.
Your question is a multi-layered one since it involves US and UK and/or EU trademark law. What’s important to note is that trademark rights are territorial, that is trademark rights in the US are only enforceable in the US and trademark rights in the UK are only enforceable in the UK, and so forth. However, there are international treaties that allow trademark owners in one country, i.e. the U.S., or region/jurisdiction, i.e. the EU, to file corresponding applications in other countries within 6 months of the home country application and receive the same filing date. These are called priority applications. In your case, based on the information you provided and noting that I’m not serving as your attorney, if you want to secure trademark rights in the U.S. before you use the mark in U.S. commerce, you have to file an application directly with the U.S. Patent and Trademark Office, or file with your home country/jurisdiction followed by a U.S. application based on your home country application. The rules are a little different and the way commercial use for purposes of priority is a little different. Bottom line, though, the first to use a mark in interstate commerce in the U.S. is the true mark owner, whether you are domiciled in the US or not. Again, this is a complicated area of law and you’ll want to be sure you consult with a trademark lawyer in the UK and/or US to be sure you understand what you need to do for your specific situation.
Great question! And, good luck!
Apologies for the delay in responding to this comment — hope this helps!
I would love to see a response to Chris’s question above. I’m in a similar, though more formal dilemma. I filed my application for a trademark via WIPO which can take a while to be received by the US office (I’m a UK business). My priority filing date is March 23rd 2015. In the meantime, a US company filed for a similar mark on April 15th and claimed first use of February 1st 2015! Had the mark not been registered the USPTO would have pulled their mark, however, as the mark is registered the rules stipulate that they can’t pull the mark and it’s now up to me to file for cancellation. I don’t particularly want to file to cancel the other mark. Although it is very similar, I believe with care we could co-exist. Please can you advise my options to overcome the class refusal? Or would you advise me to cancel the other mark?
Hi Rose —
I answered Chris’s question, so hopefully that sheds some light on the situation. Here also, there are many factors that go into how you pursue your legal protection in the U.S. and what the best strategy is for you. I highly recommend you hire an attorney to help you determine whether there are good legal arguments to support coexistence and/or whether the U.S. application with a prior first use date will ultimately defeat yours. Looks like the international question is a popular one, so I’ll work on a new post explaining this a bit more. Would that be helpful?
Thanks again for your comment.
How might this be resolved?
Organization A registers as a nonprofit in state X with a particular hybridized word in its title. The full name is used when people write checks to it in connection with its activities. It’s on the organization’s other financial accounts, as well as in state documents, and so it is today.
Four years later, organization B in state Y registers just the hybridized word with the USPTO. Organization B’s activities are national in scope; organization A’s are regional and are expected to so remain.
Can organization A continue to use the hybridized word in relation to its activities, despite B’s occasional, informal complaints? If A can use the word, where might the appropriate TM symbol be used? After the entire organization name? Not at all? Something in between?
Thanks for any thoughts you might have.
What happens when you are first to use a name and have written a business plan with the name, but another company is the first to use it in commerce and gets a trademark after they find out you are using the name?
So my questions is if you come up with a logo “xyz” and start selling apparel with that logo on it. You’ve already searched the TESS and nothing comes up so you register your logo “xyz”. A year later you find out someone has been selling apparel with the same logo “xyz” and have been doing it prior to you. Is it true that they have trademark rights to it?
I think it’s great that you point out that it is the person who used the mark in commerce first who owns the rights to it. I would imagine that getting a mark for your business in the US will need proper research. Perhaps someone who wants to start a mark should consult a trademark lawyer before they market their brand.