Michael J. Foycik Jr., Esq.

An important decision facing new startup companies is what to do about trademarks.  The question is, should they apply for a federal trademark registration.  The answer to that depends very much on the goals for the startup. 

If the goal of the owner of the startup company is to succed and then sell at a profit, then a federal trademark is essential.  Think about it from the perspective of a buyer: without a trademark, that buyer cannot get the goodwill of the startup company.  That goodwill includes such things as name recognition by customers, and loyalty all those dealing with the existing company.  But, without official trademark rights, the buyer may not have exclusive rights to the use of the trademark, and imitators could flourish.

Some startups need investors, and investors are more comfortable when they see rights owned by the startup.  After all, what are they investing in, if not intellectual property rights of some kind?  Those rights commonly are from a good trade name or trademark.  Other such IP rights can include trade secrets, patents, or copyrights. 

A registered trademark is also a good way to lessen the possibility of trademark litigation.  And, it is a way to prevent others from copying the business.  Often, a good business trademark is valuable, and I have seen startups fail when competing businesses were able to simply appropriate essential elements of the business trademark. 

In future articles, I will discuss the differences between federal and common law trademark rights.  This is the difference between the “r in a circle” trademark and the “TM” type of trademark.  Both have value, and both confer rights.