Say you started a business in southern Arizona and have come up with a unique mark for a product sold by your company in commerce, and the mark successfully operates to identify your company as the source of the product. Have you obtained ownership of that mark? Under common law rules, that is exactly how you acquire ownership of that trademark in your market area (subject to prior rights of others),

So, do you need to file a formal application with the US Patent and Trademark Office (“USPTO”) to register that mark to solidify your company’s ownership? And the answer is “not necessarily.” If you are content with your market area in southern Arizona and have no desire to expand outside that area, then it is likely not worth the expense to seek federal registration of that mark.

However, if you do intend to expand your market area across the country or might do so in the future if things go well, then there may be a reason to consider filing an application for registration of the trademark with USPTO. Say that you decide to wait to file a USPTO application and in the meantime someone in Texas starts using the same mark for selling a similar product. You really don’t like that and consult with your lawyer about what you can do to stop that usage in Texas. Unfortunately, you would likely not be able to keep that person from using your mark in Texas. However, if you had filed your application to register your trademark with the USPTO prior to that person in Texas using your mark, you would be able to claim one of the benefits of federal registration, which is that your company would be entitled to nationwide priority based on the filing date of your application to register the mark.

The converse could also apply. Say in the example above that the person in Texas applies for federal registration of the mark soon after your sales commence, but prior to your taking any action on a federal registration. How could that impact you? You would likely retain your narrow market in the southern Arizona. But, unfortunately, you would never be able to expand. That could be a potential problem for you when selling your business in the future as far as agreeing with the potential buyer on what the company is worth.

It is clear that many important decisions need to be made by the business owner early on in developing trademarks for products or services being marketed or to be marketed.

Michael Margrave 

mmargrave@mclawfirm.com 

480-994-2000

Disclaimer: This blog is for information purposes only. Legal advice is provided only through a formal, written attorney/client agreement.