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Photo: Susan Goldsmith and LeMar Moore Photo Credit: Courtesy McCarter & English
Susan Goldsmith and LeMar Moore | Courtesy McCarter & English

Why startups and businesses should file trademark applications early on

You debated your cofounders over it. You spent hours wracking your brain to find the best one. It is the first thing people learn about your company, and it needs to be meaningful and memorable.

Don’t let the name you’ve so carefully chosen for your brand be snatched away.

Trademark rights don’t come from buying a domain name or hanging a sign on a building, and failure to file trademark applications early on could leave your mark vulnerable to appropriation by a competitor.  

Entrepreneurs hoping to build and protect a product brand need to think about trademark registration at the time they acquire domain names and register their company names. 

It is not at all unusual for two entrepreneurs to have the same idea for a mark at similar times, and it does not necessarily mean that one is stealing an idea from the other.  Often it is just coincidence.

It is possible to get priority through the trademark registration process, but neither company name registration nor domain name registration confer the same legal rights as a trademark registration application. Priority comes either from large scale public use and recognition of the brand or from the filing of a trademark application.

In one recent cautionary case, a subscription service provider (we'll call it "Domain Name Owner") purchased a brand-specific domain name at considerable expense, began working on its customer-facing website and got ready to launch and fill orders.  Domain Name Owner did not file a trademark registration application, however. Just before Domain Name Owner’s first product shipped, a competitor (whom we’ll call “First Filer”) filed an application covering the same brand name, for the same service. First Filer either didn’t know or didn’t care about Domain Name Owner’s registration of the domain name. Domain Name Owner formally opposed First Filer’s trademark application, arguing that it had sufficient prior rights in the name to win a priority battle. It eventually settled with First Filer at a cost far higher than it would have paid had Domain Name Owner itself sought trademark protection when it bought that domain name.

In another case, one company was able to buy a domain name, which we’ll call Domain.NET, not knowing that Domain.COM had been purchased by a competitor who sat behind a whois privacy shield.  Domain.net was brought live and had sales just a few weeks before Domain.com did, but again the competitor filed a trademark application first.  An expensive battle ensued and eventually the case settled.  Today, the companies co-own the trademark registration, continue to use their separate domains, and live in a state of constant low-level unease.

Some entrepreneurs fear that filing a trademark application might tip off competitors too soon, or they have other strategic desires to keep their intentions secret. There are ways to file surreptitiously for some period of time. Multinational companies such as Apple do this routinely, and some of their techniques can be used by smaller companies. Consultation with an experienced trademark lawyer at the time the domain name is purchased can help determine what can and should be done, and when.

If you have invested time and resources into branding around a memorable name, there is no reason not to take immediate action to protect it. Filing a trademark application early can prevent that memorable name from being reduced to an unpleasant memory.

Susan Okin Goldsmith is a partner in McCarter & English. Her practice focuses on intellectual property, including global registration and enforcement strategy, domestic and foreign trademark clearance and registration, infringement matters, and intellectual property licensing. Moore is an associate in the corporate department at McCarter & English. Both are members of the Venture Capital and Emerging Growth Companies Practice Group.

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