Warning! Your Trademark is Expiring. Or Is It?
Summary: A lot of time and expense are put into registering trademarks. Here are some best practices for registering and protecting your business from scammers.
Published in Southern California Professional
For small business owners and start-ups, registering a trademark is fairly straightforward if you do your due diligence before filing and meet generous trademark office deadlines. However, there are minor nuances of the application process business owners can get tripped up on.
The U.S. Patent and Trademark Office (USPTO) provides clear directions for registering a trademark online, and an applicant’s first concern is ensuring the trademark isn’t already in use in the same International Class. A thorough trademark search by a reputable search firm is crucial to a smooth registration process. The USPTO maintains a database of all registered trademarks in the Trademark Electronic Search System (TESS). Although applicants can search TESS themselves, it is easy to miss conflicting marks.
Scammers are another potential pitfall. TESS provides the information about trademark owners publicly available to anyone for free. This makes it easy for scam companies to obtain information and target trademark owners. These scammers utilize official-looking documents and misleading statements in attempts to scare trademark owners into paying thousands of dollars for unnecessary and worthless services.
Here are some best practices for registering and monitoring your trademark to avoid issues.
Conducting a Trademark Search
Conducting a trademark search is not simply a matter of running the letters in your mark on TESS, finding no matches in the applicable class of goods or services, and thinking “I’m okay.” Minor things, such as a comma or apostrophe, may not come up in search results. Therefore, it is important to hire a reputable trademark search company. Comprehensive trademark searches range in price from $350 to $600 per mark, per class. A search is particularly important if you want to trademark a design logo or stylized mark. You may be able to get away with doing it on your own for a word mark, but you can run into trouble with more complex marks and the trademark office could reject your application on the grounds that it could cause confusion in the marketplace.
Once you’ve completed the search, you file the application, which costs $225 per mark, per class of goods/services if you use the Trademark Electronic Application System (TEAS) Plus system (https://teas.uspto.gov/forms/teasplus). TEAS Plus is an online filing option that promotes electronic communication and application processing while giving applicants more flexibility in identifying their goods and/or services. If you have a product that spans more than one class, you’re again better off having specialist research your mark because you could inadvertently not designate within the right class. The good news is the trademark office will assign an examiner who will conduct another trademark search and then if it checks out, the trademark will be published for opposition, giving opposers 30-days to file an opposition to registration of your mark. Anyone who opposes the registration has an opportunity to file a challenge to the registration with the trademark office. A proceeding follows where the applicant has an opportunity to argue why the mark will not cause consumer confusion and thus, should still be registered in spite of the opposition.
Protecting Your Trademark
After registration, monitoring your trademark class can be a challenge. At this stage, you need to consider whether you’re comfortable investing the time to monitor yourself, or hire a firm to monitor for you for around $200 per year. A lot of small businesses don’t hire outside firms and don’t appropriately monitor, which leaves the door open to having a competing mark registered without filing an opposition during the opposition period. If this occurs, it’s not your last opportunity to challenge it; you can still challenge the competing mark, but the challenge can be more costly than if you challenge during the opposition period. So while you’re not precluded from challenging, it’s easier to do it during the application stage versus after registration is completed.
Another stop gap to protecting your mark is the USPTO examiner, who performs a trademark search and issues an office action if there is a problem. Once you receive an office action, you have six months to respond. In this case, it’s best to use an attorney to respond. Oftentimes it’s an easy fix where the office examiner offers language to change on the application to pave the way to registration; this is something you can probably handle yourself. But sometimes it’s more complicated and worth noting even the seemingly simple fixes the examiner suggests can be problematic because there may be some legal ramifications to changing the language as the examiner suggests. The examiner’s suggestion is not necessarily in your business’s interest; the examiner is simply saying this is what will be approved.
On a positive note, the examiner is there to serve you. One, the examiner wants to ensure there are no competing marks and two, if the examiner sees any potential issues or flaws that could leave the mark open to problems later, the examiner is a good measure of whether your mark will survive a challenge later because it passed through their specifications. Personally, I welcome office actions to the extent that I’ve always found them to be helpful and there’s open dialogue—you can call the examiner and talk through concerns and next steps. Although problematic in terms of dealing with issues and fighting for your mark, the examiner always wants to be helpful.
Once the application process is completed, your application will be published for opposition. After the opposition period runs without challenge, your mark will be registered. Between the 5th and 6th year of trademark ownership—measured from the approved registration date—you have to file an Affidavit of Use, which states that you’ve been using it in commerce for the past five years. The five-year mark is also your first opportunity to file a Declaration of Incontestability, which helps make your mark more impervious to challenge. These filings have small fees associated with them—the Affidavit of Use fee is $125 per mark, per class, and the Declaration of Incontestability fee is $200 per mark, per class.
Recently, my client received an official-looking letter stating their trademark was about to expire (it wasn’t) and offering services to file the renewal. The required filing the letter referenced—filing the five-year affidavit of use—would take about fifteen minutes of attorney time, plus the $125 fee. The scammer company offered to do that filing for $925—a whopping $800 surcharge. This is exploitative and greatly impacts small businesses who are trying to do all of this on their own. Business owners are trying to save money by not using an attorney and end up spending more money through these services. The worst part is you don’t know if the filing is being done right because these fly-by-night companies have no kind of fiduciary obligation to do it correctly. They likely have assets completely protected and if you lose your mark because of something they do or don’t do, you could have a serious problem.
Unfortunately, this is a larger issue and not a scam that’s limited to trademarks. It’s a theme of attacking small businesses that may not have lawyers. These companies use publicly available information on government websites, create an official government-sounding name and send a letter with misleading, alarmist messages to cause a business owner to think licenses and registrations are at risk. The USPTO has issued a warning about these companies: https://www.uspto.gov/trademark/trademark-updates-and-announcements/warning-uspto-customers-trademark-monitoring-and.
To avoid spending more money than necessary, sign onto the USPTO site (www.uspto.gov) and look up the status of any trademark. All documents filed with respect to each mark are publicly available, as well as any actions litigated with the Trademark Trial and Appeals Board. The USPTO also provides a clear list of all upcoming deadlines to maintain your mark. Beyond that, the USPTO emails reminders of upcoming deadlines to the email contact designated by the registrant. For my clients, I’m the contact of record so I get emails reminding me of deadlines. My clients can also be copied directly from the USPTO. Because of this, applicants should always be sure to keep their electronic contact information current with the USPTO. The takeaway is, if you’re doing this yourself, you shouldn’t rely on the USPTO to remind you; calendar all of the deadlines. As mentioned, the key deadlines are between the 5th and 6th year after registration, at which time an Affidavit of Use must be filed to maintain the mark. Also after the 5th year of registration, an applicant can file a Declaration of Incontestability, which further protects the mark. Thereafter, another affidavit of use and application for renewal is due between the 10th and 11th year after registration, and then every ten years after that. The fee is $300 per mark, per class.
Hiring a reputable search company can go a long way in ensuring your mark is safe. You should always try and use a specialist. Just like you wouldn’t go to a podiatrist for hearing loss, you shouldn’t use your real estate lawyer to do your search. If you do turn to a lawyer to conduct the search, use an intellectual property or trademark attorney, or at least a generalist who has trademark experience.
There are two ways lawyers can charge for filing trademarks. Many charge a flat fee—$2,500–$3,500—which includes responding to all office actions. This can turn out to be a large net hourly fee to the lawyer, because typically there aren’t going to be any registration issues or they will be minimal. The other option is an hourly rate that could end up costing you much less than the flat fee. However, if an office action requires a significant amount of attorney time to craft a response, an hourly engagement could wind up costing much more than the flat fee. So the flat fee is a bit like insurance because then you’re covered and don’t have to worry about possible issues in the event that your application generates office actions. The reality is, if you receive an office action, you’re most likely going to need to hire an attorney. Your odds of not having an office action go way down if you use an attorney who is knowledgeable in trademarks. An hourly fee with a cap is the best of both worlds, if your lawyer will agree to it.
A seemingly attractive, cost-effective alternative is using a company like LegalZoom. While its basic search fees run just a bit higher than the norm, office actions can get pricey. Depending on the extent of your issues, costs can be around the same as attorney fees, however with an attorney, you’re relying on someone with whom you have a relationship that’s offering specific advice tailored to your business needs, rather than a LegalZoom-designated attorney who only offers suggestions. The attorney will take time to understand your business and will be another resource to think through what works best for you because they’ve had experience in this area.
Understanding the plusses and minuses to handling your own trademark or hiring specialists will go a long way in ensuring you’re doing what’s best for your business. In either situation, educate yourself on the process so you can be proactive and avoid potential issues.
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