Stating the not-so-obvious

Michael Atkins Seattle Trademark AttorneyI have always been dubious of the value of state trademark registration.  I promise to explain what I was mainly thinking.  But thanks to Michael Atkins, I think it’s important to consider an informed and careful use of this approach, especially in light of a point he made in a recent post at Seattle Trademark Lawyer.

First, the basics.  They’re laid out very nicely by Michael in this post from a few years ago.  It’s an old post, but nothing’s changed; here are his bullet points (see the original post for the full content), in which he compares certain aspects of state registration to the gold standard, i.e., federal registration:

  • It’s cheaper.
  • It’s quicker.
  • It’s easier.
  • It offers statewide protection.
  • It offers regional dilution protection.
  • It can provide for attorney’s fees.

As far as all that goes, not bad.  But I’ve always had responses to some of these points:

  • It’s cheaper — unless you start stacking up multiple states. This may not be all that much of an issue for medium or small businesses, say,  in the Seattle area — near the coast of a big state such as Washington.  But for clients operating in metropolitan New York, where I practice, it could be hard to justify not taking care of three, and probably four, states (i.e., New York, New Jersey, Connecticut and Pennsylvania) , as part of such a program.  Cheapness begins to recede.
  • It is quicker, because you’re not really getting much more than a record of your assertion of trademark rights, akin to a corporate name registration (more on that below).
  • It’s easier for the same reason it’s quicker.
  • It offers statewide “protection” — well, it just might do that, actually, and depending on the state trademark statute, that could be pretty useful.  This, again, could depend on how much your client, or its competition (including infringers), operates beyond state lines.  Does it have a website, by the way?  So much for state lines.
  • It can provide for attorney’s fees?  That’s actually pretty good.

The thrust of my criticism on state registrations should be amenable to divining from the above.  In short, they don’t travel all that well, and they aren’t much more than a marker or assertion of rights.  On the other hand, in-state rights could be very valuable, and indeed a critical tipping point, in an adversarial context.  The assertion of rights could also be a helpful bit of evidence in a first-use test.  Certainly, if the budget justifies it, a multi-state registration program could be a nice little ace in the hole if done properly.

One problem I have with all this, however, as a litigator, is that — again, positing something other than an unlimited budget for legal or paralegal help — I am skeptical of the capacity of most organizations properly to monitor and manage a mutli-state portfolio of state registrations, and that, failing the same, I could actually see the strategy blowing up in the markholder’s face.  How so?  Because trademarks change; they evolve.  Logos metamorphose; goods and services shift; ownership and mailing addresses are confounded; products are revised, use of the mark changes — all stuff that is difficult enough to manage when focusing on a federal portfolio of marks.

All these changes have to be managed, maintained, and harmonized across the portfolio and in accordance with the different procedural rules of one or more state recording offices.  Because if they aren’t, and you’ve exposed that many flanks to an alleged infringer, his attorney is going to take advantage of any gap in the recordation record by arguing that it indicates an inference, respecting the rights being asserted, that are exactly the opposite of what you were hoping for.  

I think this is one reason that most famous trademarks aren’t registered by state:  Ultimately, it’s a potential mess, and the more states involved, the potentially messier.

Having said all that, I think Michael, and the many others who counsel the use of state registration, are right:  There is a place for it, for the right client.  This includes the client whose market is mainly restricted to one or maybe two states; who is having trouble, for one reason or another, snagging a federal registration and has reason to believe that there is a real potential for infringement; and, importantly, who is mainly using that one trademark, or a couple of them, in a relatively stable way, so the maintenance challenge is minimal.

Now I want to add a point Michael makes in a more recent post which, I believe, makes his argument even stronger.  He presumably believes that as well:

Here’s another reason why they can be useful: enforcing your rights with online portals like Amazon, eBay, and Google. Generally, these providers only act on complaints about counterfeiting or trademark infringement if the complaining party can establish its superior rights by supplying a registration number. At least with Amazon (with whom I’ve recently dealt), this includes state trademark registrations.

Assuming state registrations continue to do the trick (and are similarly acted on by eBay, Google, and other providers), they can be an attractive option for a trademark owner if its goal is to stop online infringement. They’re quick (in Washington, you can get a registration certificate within a week or two), they’re cheap ($105 in filing fees in Washington, including expedited processing), and they’re almost automatically granted.

Well, this is huge, of course.  And I don’t know how far Google is willing to accepting state registrations, or for how long — you can easily imagine the potential chaos.  But it’s a great point, and one I wish I had made.

Here’s one I will make, though:  State trademark registration is not the same as business or corporate name “registration” or “reservation,” which are services provided by or which are a standard part of corporate recording systems in most states.  I wish I could say that only non-lawyers confuse these two things, but they don’t:  Last year I provided an expert’s report, in fact, in a legal malpractice case (eventually settled) involving a general business law firm that gave advice concerning the use of a trademark (whether they really “cleared” it or not was disputed) based on that mark’s “availability” as a business name in a state corporations database.  What ensued was not hilarity — it was a multi-million-dollar payout for trademark infringement that could have been avoided very easily.

No, no, no!  The main purpose of these “reservations” or “registrations,” which can include either the names of entities (corporations, LLC, etc.) formed by the state, or doing-business-as (d/b/a) designations (also called “fictional names”), or registered to do business as a foreign entity, is to make sure only one entity has a given business name at a time.  These “availabilities,” however, have nothing at all to do with whether and how goods and services are used in commerce — which often has nothing at all to do with a business’s “name.”

So yes, for purposes of a “knockout search,” i.e., seeing if anyone is making any use at all of the proposed mark, checking the free state corporate databases for the proposed mark and reasonable variations of it is often worth the trouble.  This is especially true if you’re anticipating a state trademark filing.

But that’s nothing but a first step, and has almost nothing to do with clearance.  For even if someone has registered a business name that is likely to be confused, on its face, with your trademark, that business  – if it is in operation at all — could very well not be using its name as a trademark, i.e., in connection with goods or services (in the relevant class or market) in commerce, at all.  If you get a hit, counselor, hit the Web at least and find out if there’s any there there (something else the defendant law firm in the case I mentioned failed to do on an earlier “search”).

And you see, it’s hard for me to see the unsupervised client (sorry) and, frankly, the unsophisticated general practitioner of business law keeping these distinctions straight once they get involved with state trademark registrations.  But yes, there is a place for them, and of course, there’ s a place for federal registrations — though, as I always remind, not always, or at least not immediately.  Advice like this needs to be rendered in the context of a realistic understanding of the mark or marks in question, the nature and scope of their use, who has maintenance responsibility, the up and down sides of registration, and, yes, the budget.

This need not lead to a state of, if you will, confusion.  You just have to know what you’re doing, just as in anything else!

And that might sound like stating the obvious, but believe me, it’s not. If only!

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Author:Ron Coleman

I write this blog.

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