Trademarks 101: How to protect your good name

May 13, 2009: 12:29 PM ET

Registering your company's name as a trademark isn't legally required, but it can pay off down the road.

Nick, Seattle
I am starting a clothing company and need to copyright the brand name. What is the best way to do this on a tight budget?

By Kathleen Ryan O'Connor, CNNMoney.com contributor
The difference between copyright and trademark isn't always obvious, but the distinction matters here.

Both are ways of protecting intellectual property, but copyright generally protects "original works of authorship" like a book, song or poem. A trademark covers the right of such things as brands, titles and logos. In your case, establishing and protecting the brand name of your clothing company is clearly a trademark issue.

There are plenty of low-cost ways of accomplishing this, none of which even require a lawyer. Do-it-yourself legal sites like LegalZoom or Nolo can be great resources for registering a trademark. The do-it-yourself cost ranges from $150 or so for a basic package to around $400 for more bells and whistles. LegalZoom, for example, will search the federal trademark database for direct conflicts - if you try to give your clothing company a name another clothing company has already trademarked, your application will be rejected - and perform a comprehensive state and common-law search. Absent conflicts, you, a lawyer or a legal service will prepare a federal trademark application and file it with the U.S. Patent and Trademark Office. The USPTO Web site has a wealth of information, including an extensive FAQ section and a fee schedule if you choose to file directly on your own.

There is nothing that says you must trademark your name, says Oliver Herzfeld, chief legal officer for The Beanstalk Group, a brand licensing consultancy in New York. You technically gain rights and protection just by using the mark - but there are advantages to owning a federal trademark registration. The registration will give you an exclusive right to use the name nationwide, certain overseas rights, and a legal presumption of ownership.

Registering your trademark is only the start of defending your corporate name. For your rights to a trademark to continue, you have to use it, protect it against infringers, and renew it. The history of brand names is littered with aspirins, cellophane and crock-pots - all former trademarks that lost their protection because their use became generic.

The most fraught venue for trademark disputes is the Internet. In that realm, trademark fights pop up constantly, according to Mark A. Lemley, a professor at Stanford Law School.

First, take keyword advertising. Companies frequently buy ads that appear on search results for competitors' trademarks. "If a consumer searches for Honda, a Toyota ad might come up if Toyota has purchased the right to place an ad there," Lemley says. "There is a lot of litigation on this, with inconsistent results so far."

Another trademark issue on the Internet is the problem of geography.

"Your name may be unique in your hometown, but someone across the country or across the world may use the same name, and online there are no geographic boundaries," he says. "So we get all kinds of conflicts - does the domain name delta.com go to the Delta Faucet company, Delta Airlines, or Delta Dental plans, for instance?" So far, the tendency is to register domain names on a first-come, first-served basis.

"But we also have circumstances in which a small company who is first runs into a large company that comes later. Amazon (AMZN), for instance, is the name of a long-standing women's bookstore in Minneapolis," Lemley says. "When Amazon.com began selling globally, the bookstore sued because it was confusing their Minneapolis consumers, and Amazon.com had to buy out their rights to online sales."

As you pick out your company name, it pays to plan ahead and chose the strongest possible trademark. Very specific and descriptive names are easier to defend than broader ones, and the strongest trademarks are extremely unique. "Fanciful" marks like Exxon (XOM) or Kodak, essentially made up words, are the easiest trademarks to protect, Herzfeld says.

Once you have your name, be sure to police it. Patents last 20 years and copyrights live on for 70 years past the death of the author, but trademarks can last forever as long as you monitor them and follow the rules. "That's a huge benefit," Herzfeld says.

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