In an earlier blog post on common law trademarks, I mentioned that less than 5% of US businesses register their trademarks with the US Patent and Trademark Office. I’m sure this figure surprised a lot of people, but it wasn’t a misprint.
A full 95% of US Businesses don’t have federal trademark protection. And that’s a conservative estimate; the real number is probably significantly higher.
So why is this? Well we’ve covered the main reason before: it’s expensive (starting at $275 to file electronically). It’s also complicated and time consuming. If you don’t feel comfortable filling out the application yourself, you need to hire a lawyer, turning a few hundred dollars into nearly $1,000.
Let’s consider a software startup. They practice lean startup methodology, are live testing a MVP with paying customers, and using a company name they agreed on simply for the testing process. Every dollar they make either gets reinvested into the company or goes towards the living expenses of the founders. Spending $1,000 to protect the name of a company – that a) might not be around in three months and b) might change names in the near future – simply isn’t an option.
Let’s say 8 months later they close a round of funding. Now that they can afford it, they’ll want federal protection since they know they’ll be moving forward with this name, they’ll be doing business nationwide, and the company will be around for the foreseeable future. But up until this time, they’ve done nothing to actively protect one of their most important assets: the business’s name. This leaves them vulnerable to someone else accidentally using their mark, or more malicious forms of infringement.
For most companies, it’s simply matter of need. Most businesses don’t need to be federally registered because they’re not doing business outside of their immediate geographic region. A deli, a convenience store, a toyshop, a hardware store, or a dry cleaner will almost never require federal registration. Since they do business locally, many of the benefits of federal registration are unnecessary (like having exclusive rights to use the mark nationwide, or the ability to record your registration with US Customs to prevent the importation of infringing foreign goods).
But that doesn’t mean these businesses couldn’t or shouldn’t do something to claim their trademark rights. Most local companies will have legally earned common law trademark rights. They should register a claim to their rights so potential infringers take notice of their claim, without having to break the bank.
We don’t think trademark registrations should be reserved for only the top 5% of US businesses who can afford to throw hundreds of dollars at lawyers and a federal trademark registration. Trademark registration doesn’t have to be all or nothing.