Trademarking 101: 9 Red Flags Before Naming Your Startup

Every time Apple is denied an international trademark to ones of its eponymous products—the iPad, the iPhone, even the iPod—the business world shakes its head.

How could it be possible that a brand-name so well known could be stopped from using its own labels in an official capacity? For many, it simply doesn’t make sense. But for intellectual property attorneys and trademark experts each denial is a teachable moment in the importance of securing official trademark protection for brands, businesses and product names to avoid denials—and increasingly costly legal battles—down the road.

“Think about today’s young entrepreneurs,” says IP attorney Justin McCabe with Vermont-based Dunkiel Saunders. “For tech companies—think apps and social startups—who are going to want to expand into other markets, one of the most critical decisions early on is in considering international copyright strategy.” In other words, where should you apply for protection now to avoid shooting yourself in the foot, Apple-style later?

Many pinned the 2012 (and ongoing) squabble over Apple’s iPad on “trademark squatting,” the practice of Chinese companies grabbing up  trademarks under China’s rules that allow whoever registers them first to own them. Essentially, China’s intellectual property laws err on the side of “you snooze, you lose.” While Apple’s trouble seems to be a bit more complex than that (the Taiwanese company that owns the copyright “IPAD” has held it since 1988 so doesn’t really qualify as a nefarious “squatter”) Apple’s failure to purchase the rights to that trademark in China has become a lesson in IP and trademark law.

As it turns out, a little-known rule about trademarking names is this: there is a six month window after applying for a domestic (U.S.) trademark during which you can safely apply for a trademark in another country and it will be backdated to the date of the U.S. registration. For a business like Apple, which unfolds its products around the globe (or, say Facebook, which has over 50 live trademarks registered with the U.S. patent office and dozens more internationally), getting branding on the record can be a make-or-break issue.

With all this in mind I set out to query legal, marketing and startups minds on the most critical considerations for choosing, registering and maintaining the integrity of a trademarked company name.

No. 1 The Descriptive Paradox

Company names should be clever, but not so clever they’re vague, say the experts. But in order to secure a trademark they’ve also got to be clear, but not so clear that they’re simply descriptive. Sound confusing? It is.

“You can’t register a trademark that is either a generic term or a descriptive term (like Eddie’s Car Repair),” says McCabe. “This creates a problem for many new companies in coming up with the best name because they want to say what your company does and what it’s about, but you’re limited because trademarks at their core must be unique.”

The goal, he says, in dreaming up potential names for your startup product or services, is something that’s both “unique” and “nondescriptive” and then committing yourself to building a brand around. “Take the new product Mio,” he says. “In no way does the name ‘Mio’ say a it’s a droplet of flavor that you can add to water, but Kraft has committed its time and, sure, enormous resources to promoting the association between the name ‘Mio,’ and the product.” Every founder has to be committed to making that connection for people.”

No. 2 Do, Do, Do, Do, Do Your Due Diligence

“You do have to do the research,” says Peter Lamotte, SVP at digital public relations firm LEVICK and cofounder of crowdsourced marketing solution Genius Rocket. “Is the name out there; is your logo out there?” The process can be grueling he says, but the research is imperative—and so is flexibility. “Don’t fall in love with the first name you come up with because there’s a huge chance you’re going to have to pivot.”

Before you invest time and money into building a brand, making sure the trademark is available is priority number one. A comprehensive search will help to avoid: violating the rights of other business owners, being sued for trademark infringement down the road, or perhaps the worst, being forced to change your name and rebrand once your company is established. Without a doubt every one of those options are bothersome—not to mention expensive as all get out.

Everyone agrees that the first check on every name you consider should be a google search—which should turn up most existing websites or branding using the name. Second stop, the USPTO registry, which will reveal all current trademarks held under that name with details on the type of business it is.

There are agencies that do full searches, and it’s possible to go it alone, but every expert I spoke to agreed that this is the moment in the process when most founders consider bringing on an attorney to usher them through the process.

No. 3 On-Board An Expert Or Go It Alone?

“Submitting a search is something a founder can do on their own,” McCabe says, “But when analyzing those results it’s best to get an attorney involved.” How to tell whether a similar trademark is a threat? How to know where your trademark stands with competition? McCabe says it’s hard for someone without an IP background to navigate.

And he’s not just blowing his own attorney horn—having an expert on your side in early stages can pay of majorly long-term. His firm, he says, generally charges businesses $700 for the trademarking process on top of the $325 federal filing fee. If that sounds steep, consider the alternative: Apple, which is currently battling the Chinese legal system over trademark of the term “Siri,” paid more than $60 million to settle 2012’s “iPad” trademark infringement case.

“In the end the decision depends on your resources and the products and services you’re offering,” agrees Michelle Rakiec, managing director and cofounder of AdValum, a financial consulting service with a focus on valuations and intellectual property issues.”If you have the resources and you don’t have a background in IP law though, it’s well worth it.”

No. 4 Crossing Borders

It’s called the “use in commerce” requirement, says McCabe—the imperative in seeking trademarks through the U.S. Patent and Trademark Office that companies prove they do business in more than one state.

“The most frequent assumption among entrepreneurs is that the commerce requirement just means that you do business,” he says. “But because federal trademarks are just that—federal, the company must prove the transmission of money or goods over state lines.” For founders building tech startups this is a particularly easy hurdle: representation in the app store or even an established website can demonstrate intent to sell beyond your home state.

No. 5 Building Buzz

“Use in commerce is the basis of an accepted trademark filing,” says Kelly Kocinski Trager a business and intellectual property who founded her own practice in 2010, “So it’s important to put it out there in the world, on your emails, on the goods or services you are selling, everywhere you can think of.”

This is particularly important, she says if the name you’re using does happen to border on “too descriptive,” a la “New York Closet Organizers, Inc.” Even if a company name seems at first to be too descriptive for trademark purposes, building buzz around your brand can help you prove what’s known as a “secondary meaning,” and the freedom to seek trademark.

Case in point: “Georgetown Cupcakes.” It’s as descriptive as it gets: the founders opened their first cupcake shop in Georgetown in 2008. Since building brand buzz and expanding across state lines, the founders have acquired secondary meaning (or quantifiable brand association) and currently hold five separate trademarks under the company name.

No. 6 Get That Paper (Work)

Here’s the drill. A federal trademark filing costs roughly $325 per classification group of goods and services (read: if you’re tech startup that also makes baked goods, that’s two!) and takes about eight months from the day you send in paperwork until you receive confirmation of approval.

And that’s if you’re lucky. If you’re refused for any reason, you will receive a refusal notice approximately four months after filing. But hope is not lost! In trademark law, there are second chances.

“One of the main reasons trademarks are denied is the descriptive issue,” Kocinski Trager says, “Of the need to disclaim a part of their mark except in the context of the full mark.” Say what? “Take ‘Special Delivery NYC,’” she says. “You have to disclaim the ‘NYC’ because of course you can’t own ‘NYC,’ no one can.” Rejection letters, she says, will be include the reason why—and founders the opportunity ro revamp the application.

No. 7 International Relations

(see intro). You’ve got six months, people. Use it or lose it.

No. 8 Use It Or Lose It

You’ve got it, now you’ve got to flaunt your trademark all over town. LaMotte says it’s all about embracing traditional marketing tactics as well as public relations—ie getting your brand into hands of ambassadors and evangelists, from the media to the girl next door. But the best tactic of all, and the one more and more brands are adopting lately, is creating content to do the work for you.

“Start creating content that talks about your products, your values and your brand,” he says. Through blog or video content, get the name out there and it will come back to you in terms of social media awareness and search engine optimization, which, as is obviously the end-game, will ultimately drive sales.  It’s said everywhere: Content is King, and Lamotte is a believer. “It all leads back to establishing your brands in the minds of consumers and staying right within the IP law.”

Of course, doing your own hard work isn’t enough. As the parent of a new trademark, it’s now your responsibility to protect it. Stay vigilant for possible infringement and take immediate action to prevent others from using it. Failure to monitor your own trademark can cause complete loss of trademark rights, regardless of how official your paperwork is.

No. 9 Keep Up The Good Work

In addition to setting google alerts to stalk potential trademark squatters, set long-term reminders to renew your paperwork. First up: the fifth anniversary of filing. Next: The 10^thanniversary. And if you’re lucky enough for long-term success, every five years after that.

In every country you do business in. You don’t want to be caught in a (very expensive) legal battle 20 years down the road. The deeper your pockets get, the deeper the damage a legal battle can inflict.

Just ask Apple.

Forbes.com