The Three Things You Need to Know about Trademarks

TM ... I'll bet you've seen that before. You probably also know that it stands for trademark. But does seeing the TM mean that that mark is registered? And what do you do when you're ready to establish a trademark? There are certainly no shortage of web profiteers who will offer to help you with the process, and tell you the last thing you need is an attorney - because after all, they'll cost a fortune, and they're only needed if you've got something really complex, right? Wrong.

Consulting an attorney is exactly what you should do when you're considering trademark registration. After helping a number of clients with intellectual property matters, I have come up with three things you must know about trademarks. And if after reading them, you've still got questions (or still want help), it's time to call that attorney.

1. A trademark might not really be what you're looking for.

Copyrights and trademarks are frequently confused, and many of the self-help legal services offered online are unable and/or unwilling to help people distinguish between the two - and happy to charge you for the mistake if you make the wrong filing. The information offered here is simply a basic explanation of the two types of intellectual property - but if you want a definitive answer, contact a lawyer with your facts. A distinction between the two with regard to your specific facts shouldn't cost you a dime. But as a starting point:

Copyright - refers to the rights that you have to "original works of authorship", including the rights to reproduce those works, prepare derivative works, distribute copies of that work, perform the work publicly, etc. Copyright protects only the form of expression and not the subject matter of it. For example, if you write a paragraph describing a building, your copyright protection does not extend to alternate descriptions of the same building, or someone actually building it based on your description.

Trademark - refers the use of words, names, symbols etc. in the trade of goods to identify the source of those goods and to distinguish them from other similar goods. A service mark is the same thing - except used for services rather than goods. The name and symbols for auto manufacturers are a good example. When you see the BMW blue and white field on a car, you know it was manufactured by Bavarian Motor Works, and not made by GM (thank goodness). Trademarks are used to prevent others from selling similar goods/services under the same or confusingly similar marks, but not from selling those same good/services under a clearly different mark.

So, for example, if you're planning a clothing line using a number of original designs, the name and logo of your clothing line is going to be a trademark and the designs themselves enjoy copyright protection.

2. Name searching and registration are not difficult and can be accomplished online - and are cheaper than you think.

As before, there are many willing to strip you of your money if you don't know how to perform a search of the US Patent and Trademark Office database to ensure your proposed trademark isn't already registered to somebody else for the same goods/services. For example, LegalZoom will charge you $199.00 for the search, which you can accomplish on your own, online in about 30 seconds. In fairness to LegalZoom, though, they do bind the results and send you a canned essay on how to interpret the results.

The USPTO maintains a free database of all of all trademark & service mark filings, and offers free, unlimited searching of that database online (the Trademark Electronic Search System - TESS) located at http://tess2.uspto.gov/bin/gate.exe?f=tess&state=4009:v6vk4q.1.1

You can use their Basic Search function, type in your proposed mark, and literally get results instantaneously. So, keep your 200 bucks, and save yourself the 5-7 business days LegalZoom will make you wait just to print your results out and staple them together.

Filing, while a little more difficult and not free, can also be accomplished online, via the TEAS or Trademark Electronic Application System (http://www.uspto.gov/teas/index.html). What's more, filing online will afford you an immediate serial number and an email copy of your application - whereas if you file by mail, it will take 2-3 weeks just to get a filing receipt and even longer to get a serial number. You can use the serial number of your application to track its progress online. The online application is a little more challenging than the name search - and may take you a couple of hours, but there is a free tutorial at the site which walks you through step-by-step (http://www.uspto.gov/teas/eTEAStutorial.htm). The fee for the filing is either $275 or $325 based on the nature of your filing and application. Many sites will gladly charge you $150-$250 on top of the filing fee to fill out the web form for you - and will require you to give them most of the same information - so how much time are you really saving?

3. You do not need a monitoring service, and not everything that looks official is official.

As you may have guessed, the USPTO records are public records - which is good because it means you have free access, but also bad because everyone else has access, too. So as soon as you file your mark for registration, everyone knows it. So who cares? Well, there are a lot of businesses who target new filers with ancillary services that they don't really need, and do so with very official looking papers.

A related note from the USPTO:

You may receive unsolicited communications from companies requesting fees for trademark related services, such as monitoring and document filing. Although solicitations from these companies frequently display customer-specific information, including USPTO serial number or registration number and owner name, companies who offer these services are not affiliated or associated with the USPTO or any other federal agency. The USPTO does not provide trademark monitoring or any similar services.

Such companies typically charge a service fee in addition to applicable USPTO fees. In many instances, applicants and registrants have mistakenly believed that the USPTO has issued these communications or that these companies are affiliated with the USPTO. Complaints about such companies or communications may be made to the Federal Trade Commission, at http://www.ftccomplaintassistant.gov/.

You can file documents electronically directly with the USPTO using forms available through the Trademark Electronic Application System (TEAS). Only applicable fees required by law, and no service fees, are charged. You can monitor status directly at no cost through Trademark Application Registration Retrieval (TARR). For general information on filing and maintenance requirements for trademark applications and registrations, including required fees, please consult the USPTO website.

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The marketplace has gotten a lot more entrepreneurial over the past year, and there are small businesses starting up everywhere. Now, more than ever, the protections offered by a small investment in registered trademark and copyright now can save you big later. Unfortunately, this reality can also cost you far too much up front, if you're not properly informed. The information above is a great place to start, but asking a few questions of an attorney, to find out whether or not it makes sense for you to use them, shouldn't cost you anything, and is the best thing to do if you're wondering about trademark.

On Self-Help Legal

I often get asked about a certain self-help legal site, where they offer legal forms that they fill out on your behalf once you've answered a few questions about the party or parties involved. And at the prices they offer, it sounds like a fantastic deal! I mean, you don't need some big fancy document, and they even guarantee your satisfaction! Well, here's what you won't read unless you scroll to the bottom of their homepage, and they click on the "Full Disclaimer" link:

Disclaimer

LegalZoom is not a law firm, and the employees of LegalZoom are not acting as your attorney. LegalZoom's legal document service is not a substitute for the advice of an attorney.

LegalZoom.com, Inc. ("LegalZoom") is a registered and bonded legal document assistant, #0104, Los Angeles County (exp. 12/09). LegalZoom cannot provide legal advice and can only provide self-help services at your specific direction.

LegalZoom is not permitted to engage in the practice of law. LegalZoom is prohibited from providing any kind of advice, explanation, opinion, or recommendation to a consumer about possible legal rights, remedies, defenses, options, selection of forms or strategies.

This site is not intended to create an attorney-client relationship, and by using LegalZoom, no attorney-client relationship will be created with LegalZoom. Instead, you are representing yourself in any legal matter you undertake through LegalZoom's legal document service.

LegalZoom provides an online legal portal to give visitors a general understanding of the law, as well as to provide an automated software solution to individuals who choose to prepare their own legal documents. To that extent, the site publishes general information on legal issues commonly encountered.

LegalZoom's document service also includes a review of your answers for completeness, spelling and grammar, as well as internal consistency of names, addresses and the like. At no time do we review your answers for legal sufficiency, draw legal conclusions, provide legal advice or apply the law to the facts of your particular situation. LegalZoom and its services are not a substitute for the advice of an attorney.

Although LegalZoom takes every reasonable effort to ensure that the information on our website and documents are up-to-date and legally sufficient, the legal information on this site is not legal advice and is not guaranteed to be correct, complete or up-to-date. Because the law changes rapidly, is different from jurisdiction to jurisdiction, and is also subject to varying interpretations by different courts and certain government and administrative bodies, LegalZoom cannot guarantee that all the information on the site is completely current. The law is a personal matter, and no general information or legal tool like the kind LegalZoom provides can fit every circumstance.

Therefore, if you need legal advice for your specific problem, or if your specific problem is too complex to be addressed by our tools, you should consult a licensed attorney in your area. Visitors to our site may obtain information regarding free or low cost representation through your state bar association or local legal aid office.

This site and some of the articles on this site contain links to other resources and businesses on the Internet. Those links are provided as citations and aids to help you identify and locate other Internet resources that may be of interest, and are not intended to state or imply that LegalZoom sponsors, is affiliated or associated with, guarantees, or is legally authorized to use any trade name, registered trademark, logo, legal or official seal, or copyrighted symbol that may be reflected in the links.

LegalZoom is not responsible for any loss, injury, claim, liability, or damage related to your use of this site or any site linked to this site, whether from errors or omissions in the content of our site or any other linked sites, from the site being down or from any other use of the site. In short, your use of the site is at your own risk.

Wow. Well, if you made it through that whole thing - congratulations, and I'll bet you're even more scared than you were before. And you should be, the site was founded, and is run, by very successful attorneys. They didn't get where they are by not knowing how to cover themselves. On the off chance you didn't make it through the whole thing, here are some of the "Greatest Hits":

LegalZoom is prohibited from providing any kind of advice, explanation, opinion, or recommendation to a consumer about possible legal rights, remedies, defenses, options, selection of forms or strategies.

So, guess who's responsible if you pick the wrong form? And who are you supposed to ask if you don't even know where to start? Well the answer to both of those questions is not the folks at LegalZoom.

At no time do we review your answers for legal sufficiency, draw legal conclusions, provide legal advice or apply the law to the facts of your particular situation.

So, among the "questions" they ask you to fill out your forms, they don't ask you about the facts of your situation? Even the person who does your hair asks that before they offer to help.

...the legal information on this site is not legal advice and is not guaranteed to be correct, complete or up-to-date. Because the law changes rapidly, is different from jurisdiction to jurisdiction, and is also subject to varying interpretations by different courts and certain government and administrative bodies, LegalZoom cannot guarantee that all the information on the site is completely current.

So, seeing as how the forms they're offering don't have to be "correct, complete, or up-to-date" (all things that can invalidate your document) the "Satisfaction Guarantee" they're offering guarantees what exactly?

Okay, besides the Draconian disclaimer, what's the problem?

They offer cookie-cutter solutions to often complicated legal problems. The formation of a company can be extremely complicated, and usually involves multiple owners, and a host of other threshold matters which should be addressed in the foundation documents.

Say, for example, that you want to form a company with three owners. Two of them will be contributing expertise and goodwill (client lists), and one will be contributing starting capital. Although the profits will be shared in equal parts, the starting capital is expected to be paid back in full before profits are distributed, and the "capital" owner will be managing the company. All three owners will be taking different salaries (based on personal need), which will be "trued up" at the time of any distributions. And as a final part of this hypothetical, let's say you order an "Express Gold" all inclusive LLC kit from LegalZoom ($359.00 + state fees).

The "custom" operating agreement they purport to provide is only "customized" with the names and addresses of the parties. All decisions of the proposed LLC default to being made by a "majority" of the members, including the election of the "Manager" of the company. There are no provisions regarding capital accounting, or what, if any, obligations will need to be satisfied prior to the distribution of monies. All the initial capital accounts are defaulted to $0. Well, that's a lot of legal talk - so what does it mean???

For the hypothetical LLC in question, it means that the non-capital members have the absolute authority to remove the capital member from her position as Manager and replace her with one of them. It means that the money paid in by the capital member will not be accounted for, nor will it be repaid preferentially to equal distributions from the company (e.g., if the capital member put in $50,000 in start-up capital, and the company makes $120,000 profit to be distributed at the end of the year - each member will get $40,000, leaving the capital member with a $10,000 loss for the year). What's more, if the company books a loss for the year, that loss is allocated to the members in equal part for tax purposes (e.g. if the capital member contributes $120,000 and it's all lost, that member will only be able to account for $40,000 of that loss for income tax purposes - potentially paying regular income tax on an additional $80,000!).

That LLC Operating Agreement doesn't sound so "custom" anymore, does it?

What's more, you paid about $300 too much. Attorney's Corporation Service is a legal service provider with a much smaller marketing budget and much less well-known founder. It is also the service used by thousands of California attorneys to get their corporate filings accomplished in an expeditious manner. (http://www.attorneyscorpservice.com). Their highest priced LLC kit? $105.00 and in-person filing for $45.00. LegalZoom's "expedited" service is ACS's "standard" service (7-10) days, and costs $100 more. For $25 with ACS, you can be filed in 3-4 days.

The most egregious bit of misinformation on LegalZoom's site is their assertion that an LLC formation will cost you approximately $1740.00 to have an attorney do it. Which they base on an average rate of $266.00 per hour, and a 6.5 hour bill to form an LLC. This is plain fear-mongering. If a lawyer tells you they need to bill 6.5 hours to form a basic LLC, find a different lawyer. In truth, every lawyer has access to standard LLC forms, and doesn't need to spend any time drafting them. What's more, they can actually take your factual situation into consideration to make sure you don't fall victim to some of the situations mentioned above.

What you can be certain of with LegalZoom is that you won't get any advice, protection or guarantees. You won't get a good price, you won't get honest service and you won't get the thing you really wanted in the first place: a little help.

What You Don't Know CAN Hurt You...

Have you ever been handed a contract and been told one of the following?

“It’s not necessary to read the form. . . ”
“It just restates what I’ve already told you. . .”
“This is necessary for us to open your account. . . they’re merely standard forms, that just repeat what we’ve already discussed. . .”
“This is just a formality for opening your account. . .”

I know what you’re thinking: you’d still read the contract, right? And even if there’s something in there that you missed, something they didn’t mention, you’re still covered because of what they said. The contract would be void because you were defrauded, right?

Wrong.

What’s more, the statements above are far from just literary license and imagination on behalf of this author. They were the actual quotes taken from the controlling case in California law: Rosenthal v. Western Financial Securities Corporation (1996), 14 Cal. 4th 394, 926 P.2d 1061. In Rosenthal, the California Supreme Court held, in relevant part, that “one party’s unreasonable reliance on the other’s misrepresentations resulting in a failure to read a written agreement before signing it, is an insufficient basis, under the doctrine of fraud in the execution, for permitting that party to avoid [a provision] contained in the contract.” The Court held additionally that “misrepresentation does not render the contract void unless the misled party, before making the agreement, lacked a reasonable opportunity to learn its terms.”

Right, and if that meant something to you, you probably wouldn’t be reading this. So what does it mean? It means that if you take the other party’s word for anything in a contract, you do so at your own peril. The court considers you not reading something you sign as patently unreasonable behavior – and will therefore hold you accountable.

In the case of Rosenthal, a large number of investors were misled into signing a contract in connection with an investment opportunity presented to them at their bank that ultimately went south. When they went to sue the securities brokers, they found out that they had all unwittingly signed an agreement with an arbitration clause; a clause which barred their lawsuits in favor of binding arbitration; a circumstance much more favorable to the potential defendant brokers.

So what does this have to do with you? Maybe nothing. But, the Rosenthal holding mentioned above was cited and affirmed in 2004 in Larian v. Larian (2004) 123 Cal. App. 4th 751, and is currently the guiding precedent for this issue in California. So, in simple terms, it means that if you’ve been presented with a contract, no matter what someone tells you, if you fail to read that contract before you sign it, you’re responsible for what’s in it. Their assurances do not constitute fraud and their explanations, if incorrect, are not binding.

Of course, this doesn’t mean that they can put things that are non-enforceable or illegal in it. You always enjoy the protection by the law from those sorts of provisions. But there are a number of things that you can lose. These may include:

The right to bring your claims against the other party in a court of law;

The right to oppose the other party’s estimation of the damages they can claim in the event of a breach of the contract;

The right to have the laws of your state govern the administration of the contract;

The right to terminate the contract without penalty;

The right to require your approval for any changes to be made to the material terms of the contract;

The ownership of your intellectual property (copyright, trademark, or patent);

And many others…

So what can you do to protect yourself? The answer is simple: always read before you sign a contract. I don’t mean that you need to go over each and every provision of a liability release before you go go-kart racing or on the back of your parking stub – but, if it doesn’t fit on a single page (with regular sized print), you probably ought to take the time to go through it. Most of the time, the things that are there are either easy to figure out, or can be decoded with a little Internet research. But when you find yourself with questions, it’s clear from the California Supreme Court’s holding in Rosenthal that the one person you should not go to for answers is the party who presented you with the contract.

So, who do you ask? That’s when it’s time to find a lawyer, because what you don’t know can hurt you.