By David H. Cooper, Corporate Business Attorney at the Law Office of David H. Cooper
A portion of my corporate/business/transactional law practice involves the organization and/or syndication of new businesses. All too often, many attorneys, who are not specialists in this area of the law, casually dismiss the importance of, or are otherwise not sophisticated enough to realize, that the charter name selected for the new company, or any service marks or trademarks to be used in the business, must be cleared from a substantive trademark law perspective. Making sure that a charter name and/or the trademarks or service marks used in the new business are available for the client’s use is imperative in order to minimize the likelihood that the new business owner will receive a cease and desist letter from a third party who claims an infringement based upon their prior and superior rights, whether pursuant to their common law rights and/or the legal presumptions accorded by a federal registration from the United States Patent and Trademark Office (“USPTO”).
Just because a charter name for a new limited liability company or cooperation may be available in any jurisdiction does not necessarily mean that such charter name does not infringe the charter name or mark of another entity in the same or different state. The filing clerks, in all Secretary of State Offices, do not typically render their charter name “availability decisions” based upon substantive trademark law standards.
In my prior representation of Tumbleweed, Inc., a Louisville based restaurant chain, my client advised me of an unrelated Indiana corporation, doing business south of Indianapolis, which operated a full service restaurant under the common law designation TUMBLEWEED STEAK AND GRILL™ serving both steaks and Tex-Mex foods. At that time, Tumbleweed, Inc., which also served steaks and Tex-Mex foods, had over 30 company owned and//or franchised store units, several of which were in Indiana. Tumbleweed then owned over 20 incontestable federal registrations of the mark TUMBLEWEED® for full service restaurants and food products which accorded Tumbleweed, Inc. the exclusive right to use TUMBLEWEED® for restaurant services and specified food products throughout the United States (with such incontestable registrations providing conclusive proof of its exclusive right to use the mark TUMBLEWEED® in interstate commerce).
I issued a cease and desist letter to the Indianapolis entity. Its attorney, who rarely performed “corporate work” and was primarily a personal injury lawyer, initially stated “my client has the absolute right to use its charter name in Indiana”. Under established jurisprudence, his analysis was flawed because of the legal effect of Tumbleweed, Inc.’s federal registrations (and for other reasons under state and federal law). As a consequence of Tumbleweed, Inc.’s legitimate demands, the Indiana entity had to rebrand its operations, incurring crippling expenses after its start-up which included new signage, new menus, napkins, advertising and legal fees. In fact, this start-up entity changed its name to LOST NAME SALOON™ (obviously, not at all confusingly similar to TUMBLEWEED®)~~~and this case remains one of the more humorous outcomes of my legal career.
Whether one mark is “confusingly similar” to another designation should be determined only by an experienced trademark attorney who is qualified to make this subjective evaluation. As a prior Trademark Examiner Attorney in the USPTO, I can attest to the difficulty of determining whether conflicting marks are “confusingly similar”. One must compare the marks in terms of sound, meaning and appearance and, furthermore, determine whether the competing goods and/or services are within the same channels of trade and/or sold to the same class of purchasers.
In my practice, I routinely conduct “spot check” searches of records in the USPTO and investigate common law references to other related marks using various Internet search engines, all to assess whether a likelihood of confusion exists. For some clients, who want more assurances (and willing to incur more expense), I’ll commission an outsourced, computerized report that generates all possible phonetic equivalents and even searches design components. Ignoring such basic trademark matters, particularly in the start-up of any business, could cause its failure. Charter name and trademark clearance is imperative.
©Copyright; 2016; Law Office of David H. Cooper; All Rights Reserved. Email: firstname.lastname@example.org; (502) 419-1969
Cooper has over 30 years of combined experience in (i) the private practice of corporate/business law; (ii) serving as senior in-house legal counsel; and (iii) participating in entrepreneurial start-ups. As the prior owner and operator of seven businesses, and having participated in many other types of investments and ventures, he providse value added services for his clients by rendering practical, business consultation advice and, furthermore, minimizing the personal exposure of his clients in organizing and expanding their businesses.