Trademarks as Assets: Selecting or Changing a Mark in the United States

As part of our series on trademarks as critical assets for businesses, this article discusses the importance of selecting and clearing a new or altered trademark for use and registration in the United States. Trademark selection and clearance are essential steps for avoiding costly and time-consuming disputes, securing exclusive rights, and building a strong brand identity.

The Spectrum of Distinctiveness

A key consideration in selecting a trademark is its distinctiveness, or its ability to identify and distinguish the source of goods or services. The more distinctive a mark, the easier and less costly it is to protect and register. The spectrum of distinctiveness ranges from inherently distinctive marks, such as fanciful, arbitrary, or suggestive marks, to descriptive or generic marks, which are weak or unprotectable.

For example, a fanciful (or made-up) mark like “Exxon” is inherently distinctive and receives the broadest protection, while a descriptive mark like “Private Equity Fund” standing alone is generally unprotectable unless it acquires distinctiveness through extensive use.

Availability of a Mark

Another consideration for selecting a trademark is whether it is available for use and registration. The concern here is infringement- or dilution-related litigation risk and costly rebranding. Searching and clearing a mark for availability is a critical step for managing the costs and risks of adopting a new mark. A search identifies other marks that the subject mark may conflict with, and a clearance review assesses related risk, working to identify the likelihood of confusion or dilution.

Trademark Review Checklist

At minimum, companies looking to adopt a new mark — or to make significant alterations to a mark already in use — might consider the following:

• Preliminary searches: Before engaging trademark counsel, companies should conduct internet searches for obvious conflicts with the selected name, reserve the name with the Secretary of State in relevant states, and consider registering corresponding domain names, if available.
• Review by trademark counsel: Companies should retain trademark counsel to conduct a formal search and analysis and to advise on the availability, protectability, and registrability of the name. Trademark counsel can also assist with obtaining consent or coexistence agreements with third parties, seeking cancellation of existing registrations, or purchasing or licensing existing marks.
• Similar marks may not be fatal: A similar pre-existing trademark does not always preclude use or registration if the likelihood of confusion is low, such as when the marks are used for different types of services or in different geographic markets. For example, two arguably similar marks may coexist if they are well-known and distinguished by their respective reputations and clientele.
• Registration: Companies should consider applying for trademark registration with the United States Patent and Trademark Office for exclusive rights and benefits, such as nationwide priority, certain enhanced remedies, and basis for international registration. Registration is not required for all infringement claims, but it offers advantages over common law rights. Applications are typically filed in the name of an entity sitting at or near the top of an enterprise’s structure (for example, in the name of fund management firm), which centralizes ownership and allows for licensing to affiliated entities.
• Implementation: Trademark protection does not end with registration. Companies should properly implement the new mark with appropriate use, maintenance, and enforcement policies, such as using the ® symbol for registered marks, renewing registrations as required, and monitoring the market for infringing or diluting uses. Companies should also amend records and notify third parties as necessary, such as the Securities and Exchange Commission and the Internal Revenue Service.

What This Means for You

Selecting a new trademark is a crucial decision for any company, as it affects its brand identity, market position, and legal rights in the long term.

The process can be complex and challenging, and requires the assistance of experienced trademark counsel. At Vinson & Elkins, our lawyers can assist with all aspects of trademark selection, registration and enforcement. We work to provide practical advice, tailored to your specific business needs and goals.

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This information is provided by Vinson & Elkins LLP for educational and informational purposes only and is not intended, nor should it be construed, as legal advice.