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
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