Almost every business needs to develop a brand. Perhaps the most basic features of a company's brand are its name and often its logo, often referred to as "trademarks." Names and logos are immediately recognizable to consumers, appearing on the company's letterhead, signage, products, and business cards. Not only does good branding allow a company to remain memorable, but names and logos also allow consumers to quickly identify the source of certain goods and services.

Many businesses choose to register their names and logos with the United States Patent and Trademark Office (USPTO), the federal agency that is charged with overseeing trademark administration. Should you do the same?

What Is a Trademark?

A trademark is any word, name, or symbol used to identify and distinguish goods and services in the marketplace. "Google" is a trademark. So are the McDonald's golden arches. So is the crest of Harvard University. All of these names and icons distinguish the source of goods or services in the marketplace. Consumers see the trademark, and immediately have an idea of the product's source.

There are least three business purposes served by trademark law. First, trademarks are efficient. Consumers can quickly see the McDonald's sign on the highway and know that if they stop for fries, the quality and price will be highly predictable. This allows consumers to make quick choices. Second, trademarks create accountability. If consumers begin going to McDonald's and the fries are terrible, word will eventually get around the marketplace. Consumers will begin to avoid McDonald's when they see those signs on the highway. Third, trademarks encourage businesses to invest in their products and services. McDonald's is likely to invest in its recipes, formulas, efficiency, and quality, because it knows that consumers will quickly form their opinions based on the brand.

In short, trademarks are key aspects of branding for most businesses.

Must a Trademark Be Federally Registered?

This is an easy question: No! Trademarks do not need to be legally registered. Your state may require you to register the name of your business, typically with the state's secretary of state. However, there is no requirement that you submit a formal trademark application to the federal government.

Indeed, most American businesses do not have a formal federal trademark. Instead, they simply name themselves, give themselves a logo, and carry on within their communities.

Imagine that you own a small office supplies store in your local town called "The Little Paper Shoppe," and the great majority of your business comes from foot traffic. You likely have no need to obtain a federal trademark. What would happen if someone copied the name of your business, and opened up right across the street? Fortunately, states do have unfair competition laws. You would be able to sue in your local state court for an injunction, essentially an order that the competitor business change its name or location.

Benefits of Federal Registration

Given that federal registration is optional, why bother? There are many reasons that businesses choose to register their trademarks with the USPTO. Here are four of the most common ones:

1. Nationwide protection. Not surprisingly, the most significant benefit of federal registration is federal protection. If you have a federal trademark over "The Paper Shoppe" for an office supplies store, for example, you could potentially sue a business using the same mark for the same type of business anywhere in the United States. This is particularly important if your business anticipates expanding to multiple states, or if your business does significant business online. In either case, the federal trademark will help you to prevent consumer confusion.
2. Frighten possible competitors or infringers. Seeing the "®" symbol on a product or service, indicating that a mark is "Registered" with the USPTO, is likely to frighten competitors who are "inspired" by your clever business name. This symbol will deter them from infringing on your trademarked name or logo, since it demonstrates that you have invested in your intellectual property rights.
3. Likelihood of success in a lawsuit. Obtaining a federal trademark is extremely helpful should you ever need to sue an infringer. First, having trademark registration is required before you can sue in federal (instead of state) court. Second, the registration permits you to seek special kinds of damages and even win attorney's fees in some situations. Third, the registration gives your mark the presumption of validity nationwide; in other words, the burden of proof to demonstrate otherwise will fall to the infringer, which will be legally helpful to your claim.
4. Ability to license your mark. Often, companies will realize that a trademark is even more valuable through a licensing scheme. Imagine that you have developed a pasta sauce that is the hit of your hometown called "Ready Hot Pasta Mix." While you have the capacity to manufacture enough to sell in local supermarkets, you are not in a position to expand so that you can sell regionally. If you have a federal trademark on "Ready Hot Pasta Mix," you can license the name to a larger manufacturer and/or distributor, and then collect a share of the profits.

The USPTO's website offers many educational resources on trademarks, and allows you to submit your application entirely online.

There are some downsides to federal registration, however. Most obviously, it takes some time. Several steps are involved, as you will see from the Process Overview section of the USPTO's website. You will need to perform a trademark search to ensure that there are no conflicting trademarks for your category of goods or services. Then you will need to fill out an application describing your mark. And then you will need to engage with a sometimes bureaucratic process if the trademark examiners object to any aspect of your proposed mark.

Moreover, you run the risk that a competitor business with a similar name could initiate a legal action to stop your registration, which could be costly. On top of all of this, there are mandatory application fees to the USPTO.

In short, federal trademark registration does not make sense for every business. But if you are likely to engage in business online or across multiple regions or states, federal protection offers worthwhile benefits.