The Benefits of Federal Trademark Registration

Trademarks Are Valuable Intangible Assets Requiring  Protection

A trademark is any recognizable sign, design, expression or other “device” (or any combination of the forgoing) that identifies products or services of a particular source from those of others.  Since the essential function of a trademark is to exclusively identify the commercial source or origin of products or services, a trademark serves as a “badge of origin.”  Trademarks, and the goodwill they represent, are intangible assets and can be enormously valuable to the companies that own them.

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Generally, trademark rights accrue with use of the actual mark; as such, they are rightfully owned by the party first using it for the respective goods and/or services. This principle has long been recognized at common law and is often referred to as “superior rights.”

Since trademark rights accrue with use as a matter of common law and are statutorily recognized under the federal Lanham Trademark Act, see, e.g., 15 U.S.C. §1125 (civil liability for false designations of origin, importation, false descriptions, and dilution of marks), one may question why time and expense should be expended towards registering a mark with the United States Patent and Trademark Office (the “USPTO”).  In short, registration of a trademark with the USPTO confers substantial benefits and legal presumptions under the law, as specifically set forth in the Lanham Act.

While registration is not required to maintain ownership in a trademark, the benefits conferred by federal registration are numerous and significant – so much so that registration alone increases the value of the trademark, in addition to the goodwill it represents, thereby increasing its value as an asset of the business.

While there are differences between the Principal and Supplemental Registers of the USPTO – a topic that I will address in at least one future post – registration of trademarks and service marks with the USPTO generally confers the following benefits (among others) to the registrant of the mark:

  • Use of the ® symbol to denote federal registration (the ™ symbol is to be used for marks not registered).  15 U.S.C. §1111.
  • The registration is prima facie evidence of the validity of the registered mark, of the registrant’s ownership of the mark, and of the registrant’s exclusive right to use the registered mark.   15 U.S.C. §1115.
  • The registration is constructive notice of a claim of ownership, eliminating any justification or defense of good faith adoption and use made after the Registration date.  15 U.S.C. §1072.
  • Original jurisdiction in the federal District Courts for trademark infringement actions.  15 U.S.C. §1121.
  • Original jurisdiction in the federal District Courts for claims under state common law for unfair competition when they are joined with a substantial and related claim under the Lanham Act.  15 U.S.C. §1121.
  • Monetary remedies as provided by the Lanham Act, including infringer’s profits, damages, and costs, and in appropriate cases, treble damages and attorney’s fees.  15 U.S.C. §1114 and 15 U.S.C. §1117.
  • The registrant may seek to have the registration made incontestable after five (5) years of registration on the Principal Register by filing of the appropriate affidavit or declaration of continuous use.  15 U.S.C. §1065. Incontestability status is conclusive evidence of the registrant’s exclusive right to use the mark, subject to certain statutory defenses.  15 U.S.C. §1115. Incontestability is not available to Supplemental Register registrations.  15 U.S.C. §1094.
  • The registration may be used as a basis to obtain registration in foreign countries.  15 U.S.C. §1141a.
  • The registration may be filed with U.S. Customs Service to prevent importation of infringing foreign goods.  15 U.S. Code § 1124; see also 15 U.S. Code § 1096 (Registration on supplemental register not used to stop importations).

While registration is not required to maintain ownership in a trademark, the benefits conferred by federal registration are numerous and significant – so much so that registration alone increases the value of the trademark, in addition to the goodwill it represents, thereby increasing its value as an asset of the business. If and when it comes time to sell the business, registered trademarks will noticeably increase the value of the company and comprise significant assets in the business’s intellectual property portfolio.

WIPO’s 2016 Annual Survey of Intellectual Property Activity Around the World

More Than 3 Million Patent Applications Filed Worldwide

For the first time ever, more than three (3) million patent applications were filed in a single year. According to a report issued on December 7, 2017 by the World Intellectual Property Organization (“WIPO”), more than 3.1 million patent applications were filed worldwide in calendar year 2016, an increase of above 8.3% over 2015.

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2016 Patent Filings Worldwide. Source: WIPO Statistics Database. Courtesy of 2017 WIPO Report: World Intellectual Property Indicators, Patent Highlights.

China led all countries with 1,338,503 domestic patent applications being filed with China’s State Intellectual Property Office (SIPO) in 2016.  The number of filings in China is a record number of patent applications received by any patent office in a single year.  Significantly, more patent applications were filed in China than the next four (4) countries combined.  After China, the following four top countries/regional patent offices for patent filings in 2016 include: (2) the United States with 605,571 patent filings; (3) Japan with 318,381 filings; (4) South Korea with 208,830 filings; and (5) the European Patent Office (“EPO”) with 159,358 filings.  These five jurisdictions accounted for 84 percent of all patent applications filed during 2016.

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2016 Patent Filings – Top 5 Patent Offices. Source: WIPO Statistics Database. Courtesy of 2017 WIPO Report: World Intellectual Property Indicators, Patent Highlights.

The WIPO report clearly underscores the growing dominance of China as a forum for patent application filings, supporting the increasing divergence with respect to intellectual property policies, in general, and patent policies, in particular, between China and the U.S.  As reported by Steve Brachman at IP Watchdog yesterday (WIPO Stats on Patent Application Filings Shows China Continuing to Lead the World) and August 1, 2017 (China streamlines patent examination for Internet, big data patent applications) and Paul Morinville and Randy Landreneau on December 10, 2017 (Patent Reform: U.S. Inventor Act goes to Congress), China’s patent system is more streamlined than that of the U.S. and structured to effectively resolve claims of infringement and related disputes faster and at far less cost.  Contrary to conditions more than a decade ago, China has made enormous strides in implementing an innovation protection system that may be more effective than that in the U.S.

As noted by Paul Morinville and Randy Landreneau, there are two important statistics regarding China’s patent policy.  First is that 100% of foreign plaintiffs were awarded injunctive relief last year in patent infringement cases (almost all of which are fully adjudicated within one year at a cost of less than $500,000).  A second important statistic is that approximately thirty-five percent (35%) of China’s patents are issued to individual inventors, many of whom will use their patented technology to form start-up companies.  From these statistics alone, the conclusion may be drawn that China is surpassing the U.S. in its ability to provide greater and more efficient protection and enforcement means to patent holders.  Indeed, as noted in our post on December 11, 2017, Supreme Court to Decide Constitutionality of USPTO Inter Partes Proceedings, patent holders seeking to enforce their rights against infringers in the U.S. can expect to spend perhaps tens of millions of dollars in round after round of litigation and inter partes review proceedings comprising many years before the Patent Trial and Appeal Board of the USPTO.

Patent reform legislation is again in the offing and the U.S. Supreme Court is addressing issues arising concerning the PTAB’s inter partes review proceedings under the America Invents Act.  Time will tell if such measures will foster a more “innovation friendly” intellectual property policy in the U.S.