I have a great marketing plan for your company. You can choose one of these options:
A) I jump out of a burning plane, without a parachute, into a shark tank, filled with poisonous razor blades, with your corporate logo emblazoned across the back of my suit; OR
B) YOU do it.
Excitedly, you select option “A,” comfortable in the knowledge that whether I make it or not, it is great public relations for you. Unfortunately, the next thing you know, you wake up in a hospital bed, with everything but your left pinkie toe deep fried and gnawed to the gristle.
I see this scenario when a company hires a new marketing firm. If the marketing firm does not have a handle on trademarks issues, problems arise quickly.
But I thought
More often than not, when a problem does arise, you thought the marketing firm was handling trademark clearance and the marketing firm thought you were handling the clearance. Thankfully, most of the time you both get lucky and neither of you gets sued over an uncleared infringing trademark. If you do get sued, however, the marketing firm will be quick to highlight for you the portion of the marketing firm contract shifting all trademark infringement liability back onto you.
Wait, it gets better
Not only that, but you likely agreed to indemnify the marketing firm if it gets drawn into the fray. So, you have to change your name, ditch your domain name, destroy all of your marketing materials and try to avoid writer’s cramp from writing all of those checks for infringement, indemnification, punitive damages and attorney fees.
The most important step to take to avoid spending the next couple years in court, or emptying your corporate bank account, is to make sure you and your marketing firm are in written agreement as to who is clearing all of the intellectual property (issues of domain names and copyright clearance are also important). If the marketing firm is taking care of the clearance, be sure that they are doing a national trademark clearance search. Google searches and state trademark searches are simply not going to to cut it. If you have a trademark attorney provide a written opinion of trademark non-infringement to you, you can also avoid liability for punitive damages and attorney fees in the event you are sued.
The value of the trademark does not always justify the cost of a full written opinion. In some circumstances, it is worth a small amount of risk to avoid the additional up-front costs of a full search. Under these circumstances, however, it is still advisable to conduct a low cost knock-out trademark search to identify any obvious problems. While the knock-out search will not insulate you from liability, it may offer you the opportunity to choose a different trademark before you find yourself shredding thousands of dollars worth of marketing materials and begging a registered trademark owner not to sue you.
Build Your Portfolio
If you plan on using a trademark for a long time, it is probably worth investing in a federal trademark registration. After five years, you can make your federal registration incontestable. Incontestability substantially reduces the chance you may get sued for trademark infringement.
Additionally, if someone else starts using your federally registered trademark on similar goods or services, you have the potential of obtaining triple damages AND attorney fees. Having one or more federally registered trademarks in your portfolio can add appreciably to your bottom line.
It does not matter if you do a simple knock out search or end up registering your trademark. The important thing is to determine whether you or your marketing firm is responsible for trademark clearance. Once you know who is responsible, you can decide how much risk you want to undertake, how likely it is you might run into an infringement situation and how much you are willing to spend to avoid litigation.