A business might have the best products and services in the world. But unless consumers recognize and remember the business, it will struggle to survive and grow. Trademarks are critical to developing brand recognition. Learn more about what trademarks are, what they can protect, and what they cannot protect.

What Is a Trademark?

A trademark is any word, phrase, symbol, or design (or a combination thereof) that identifies the source of goods or services. A mark that identifies services is sometimes known as a "service mark," though it is often used interchangeably with "trademark."

Examples of trademarks are easy to spot: The New York Times as the name of a newspaper, Microsoft as a computing company, and GAP as a clothing company, to name just a few famous. Trademark law protects not only the names of these companies, but also their equally famous logos.

If an infringing company attempts to use the same name or logo, the "real" company that holds the trademark would be able to go to court and seek an injunction—essentially a court order preventing further infringing conduct.

Trademark law is supported by two primary public policy ideas: First, and most importantly, it seeks to prevent consumer confusion. Consumers may be "tricked" into buying inferior goods if competitor companies are permitted to "steal" trademarks of established companies. Second, the companies themselves will suffer if they invest significant resources into their products only to have their goodwill "stolen" by an infringing company.

Businesses will often register their trademarks with the U.S. Patent and Trademark Office (USPTO), the federal agency charged with administering trademarks. As you will see below, such registration has many benefits. However, it's not required. In fact, if your business does not register its trademark, it will still enjoy certain localized protections against unfair competition.

As an example, imagine that you open a clothing store in your community called "Nancy's Nest." Your store features that trade name, along with a matching motif—images of birds and nests in the windows and on the walls. Now imagine that another clothing store opens across the street with an identical name and motif. In this situation, you would be able to sue for trademark infringement and unfair competition in state court even if you did not have a federal registration on the mark "Nancy's Nest." You could seek a court order to force the competing business to either change its name or move into a different geographic territory so that consumers would not be confused.

Importance of Registering a Trademark

Despite the common-law trademark rights that your business may automatically enjoy by using its name, there are significant benefits to federal registration through the USPTO, including:

1. Frightening off competitors. Your mark will be listed on the USPTO's register of trademarks, which will come up when others attempt to search for available marks. It will also allow you to use the ® symbol. Between the registration listing and the ®, you are likely to ward off businesses that might try to infringe on your mark, since they will see that you are invested in your legal rights.
2. Nationwide validity. Your mark will enjoy the presumption of validity nationwide, rather than just in your local geographic area. This is particularly helpful for businesses that seek to expand, or businesses that sell their goods or services online. It also provides some legal protection if you face international counterfeit importations, allowing a court to order certain border protections.
3. Possibility of additional money damages after a lawsuit. Not only does your mark have the presumption of validity (shifting the burden of proof to the defendant), but you will also be entitled to certain damages if you prevail against an infringing defendant in court.

The USPTO offers a comprehensive roadmap to registration that will help guide you through the process. Note that registration requires the payment of certain fees to the agency, though these fees are relatively nominal.

Limits of Trademark Protection

Trademarks do not protect everything that is "unique" about your business. For example, if your business is famous because it makes the best chocolate chip cookies in the state, trademark law does not help to guard the recipe (though trade secret law might help). If your business is the only manufacturer of a particular type of machine, the configuration of that machine is not protected by trademark (though possibly by patent law). And if your business publishes books, the "unique" stories contained in those books are not protected by trademark (though possibly by copyright).

Trademark is primarily a protection of your brand, not your core products and services. Other forms of intellectual property must be employed to safeguard those aspects of your business.

Moreover, remember that not all aspects of your "brand" are automatically eligible for trademark protection. Trademarks must be distinctive. Merely using the color burgundy on your business cards and website, for instance, does not mean that no other business can do so, even if a direct competitor begins to use it.

Consider, as just one example, the many similar colleges and universities that use some variation of burgundy as their color: Vassar, Harvard, Stanford, and the University of Chicago, to name a handful. These schools are direct competitors for elite students and faculty. Yet they cannot sue one another over their use of similar color schemes.

There are other types of words and marks that cannot be registered. For example, you cannot register a name that is overly broad, such as "Computers" or "Clothing" to describe your business. Such a category is too generic. Also, you cannot register the name of any living person without permission. For example, you cannot name your fashion business after Anna Wintour, the famous editor of Vogue, without her permission.