May It Please the Mozzers,

Welcome to another edition of Legal Mondays! I’m very pleased to be back in town with all systems go.

Before I left for vacation in February, we were looking at trademark law basics. Today, we’re building on the basics and moving into problem sets. Today's topic is How screwed am I? Another business has the same name as mine.

Chances are that many of you will receive a nastygram or threatening email from somebody accusing you of infringing on his trademark by copying his business name, slogan, or logo. It's only a matter of time in the online world. Cease and Desist letters are ubiquitous. After reading this post, you will be able to evaluate your potential risk and respond in a a smart, business-like manner.

Before we get into the meat of the post, I need to do that disclaimer thing. This post is not legal advice and I am not your attorney. I am providing you information about the law. If you’re facing a trademark issue, you should consult a qualified attorney. Hopefully, after reading this post, you’ll know what kind of information to gather for your attorney and what questions to ask.

Another Business Has the Same Name As Mine. How Screwed Am I?

The short answer is, “it depends.” It depends on (1) Whether the other business is in the same industry; (2) Whether the other business is in the same geographical market; (3) Who was using the mark first; and (4) Who registered the trademark first.

Let's go over a few basic assumptions:

1. This post is equally informative for other kinds of trademarks as it is for business names. Thus, you could substitute "slogan," "logo," or "trade dress" for "business name" in any of the examples below.
   
2. None of the examples below apply to "very famous marks." For reasons described in my basic trademark law post, very famous marks are treated differently under the law. If you've named your business after a very famous mark, it would be a good idea to pick a new name. Even if you had a good argument as to why you were not infringing the very famous mark, the other company could certainly outspend you on attorneys' fees and court costs. My advice is just don't go there. It's not worth it.
   
3. All of the examples below assume that your business name is eligible for trademark. Obviously, the first step when looking at a trademark problem is to determine whether the alleged marks are even protectable. "Best SEO" is not a protectable mark, so you can't keep someone else from using it and they can't keep you from using it. It's purely descriptive. The examples below assume there is at least some potential for trademarkability and that the only remaining question is who trumps who with conflicting marks.
   

Remember, it is possible for two businesses to own the same or similar marks (e.g., Delta Airlines and Delta Faucets). The guiding principle is consumer confusion. If the two marks identify different products and operate in different markets, consumers are not likely to be confused. However, if the business operate in overlapping markets and have similar names, there are a series of factors we must consider to determine who has priority.

1. Does the business claiming infringement operate in the same industry as your business?

Remember that trademark's guiding principle is "do not confuse the consumer." Thus, if it is really unlikely that the other business's customers are going to be confused because you have the same name, then there really isn't a trademark issue. One of the factors courts look at to determine likelihood of customer confusion is whether the two businesses are in the same industry.

If your business name is identical to another SEO business, then you could be screwed; It certainly requires caution! However, if you provide SEO/M services and the business claiming infringement designs cookware or provides financial services, then there is really not a trademark issue. You're not screwed.

If the other business does website design or traditional marketing, the issue is arguable. It's possible that customers may get confused by the names. You should consider settlement.

2. Does the business claiming infringement operate in the same geographic market?

If your customers are in different geographical areas, there is less likely to be customer confusion because you don't have the same customers. For example, in the old days, a traditional Californian marketing firm was not competing for customers in Florida. Thus, you could have AAA Marketing in Florida and in California without any infringement concerns. They both had a right to the trademark.

However, this kind of traditional analysis has become complicated by the internet. If your business is online and the other business is online, then you may be screwed because your markets may overlap. Exercise caution and analyze the other factors carefully.

If the other business is a traditional marketing firm based out of Florida that has not done much business over the web, then you're probably less screwed. You may be forbidden from performing marketing services in Florida. (Ever wonder why you can’t eat at Burger King anywhere 40 miles south of Chicago?) However, you could use the same name and offer marketing services everywhere else.

3. Which business was using the business name first?

If after looking at the two questions above you've determined that the other business shares your market, then you need to determine who was using the business name first. Trademark rights are established on a first-come, first-serve basis. You want to be the first business to have used the mark so that you can establish yourself as the senior rights holder. If you started using the business name before the other guy, then you're in great legal shape (assuming you can prove it!). On the other hand, if the other guy used the business name first, then you're pretty dang screwed.

4. Who registered the business name first?

This question is related to the third factor, above. In a perfect world, before registering a trademark, you conduct a thorough search of your market to make sure that nobody other than you has been using the trademark. Thus, in the ideal world it would never be the case that you have registered the trademark, but someone else was using it before you. Because the first person to use the business name gets dibs on it, the trademark registry would be a completely accurate database of who owns what mark. Unfortunately, life is messy and sometimes people register trademarks that were being used by other businesses first.

If you start using the business name first, but the other business registered it first, then you still have the right to use the name, but only in the market you were operating in at the time the other business registered the name. Thus, you're only sort of screwed. You basically have no right to expand your market. The business who federally registered the name has priority everywhere else and can prevent you from using the mark in new areas. Thus, it's never too late to register your trademarks!

If the other company registers the mark before you even started using it, then you are very screwed. By registering the name, the other business puts you and everyone else on constructive notice that it owns the mark. Thus, you may find that a competitor has already registered, so settle the claim quickly and efficiently.

Problem Sets

Let's run through some examples.

1. I do not have a federally registered mark, and neither does the other business with the same name.

Let's assume that you own Trojan SEO, a search engine optimization company. You began your business by launching your website in October 2004. However, you didn't get around registering your trademark. Lo and behold, in October 2004, another SEO started the company Three Trojans SEO. This other company with the similar name is also unregistered. Both companies provide SEO services in North America and primarily advertise for clients through their websites.

In this example, both businesses could be sort of screwed. There is clearly potential for consumer confusion because the names are similar and the businesses are operating in the same market. In situations like this, where neither can prove superiority, courts will ultimately adjust one of the marks to lessen the risk of confusion and allow both businesses to continue their operations with minimum of disruption. For example, the Court may order you to change your name to War Horse SEO.

There would be a very different result if either party could prove that it was the first to use the name. For example, if you were using Trojan SEO since 1997 and Three Trojans SEO didn't start until 2001, you would have clear priority over them. You would be entitled to use the name Trojan SEO in that market.

2. Even though I was the first to use the mark in commerce, the other business federally registered the trademark before I could get to it.
Let's assume that Three Trojans SEO has a website they started in 2001 and they federally registered the name at the same time. Your company, Trojan SEO, went online in 1997 and never registered anything. You're the first in time, but how does that stack up against a federally registered trademark?

Well, chances are you will be allowed to continue to use the name in the marketing territory that existed at the time Three Trojans registered. However, you will not have priority in any markets beyond what you were using at the time Three Trojans registered the domain name. Your growth is capped.

Further, if you can prove that Three Trojans SEO knew that you were using the name Trojan SEO before it started using Three Trojans, you will be in a very strong position. Willful infringement is punished severely. Three Trojans SEO might have to cancel its trademark registration if it willfully infringed your trademark.

3. My competitor began using and federally registered the business name before me.

If Three Trojans SEO both registered the mark and was using it before Trojan SEO, then it can force Trojan SEO to stop using the similar name. It may even be entitled to an award of damages. In this situation, you're very screwed. Get out of this situation as gracefully as possible.

4. Both businesses, operating in overlapping markets, registered the same or similar names.
Very rarely, two businesses operating in overlapping markets will register similar marks. It's not supposed to happen, but things slip through the cracks. It usually takes either an administrative proceeding with the Patent and Trademark Office ("PTO") or a lawsuit to resolve the situation. The outcome is difficult to predict and usually depends on how the situation developed in the first place. Unless you have deep pockets for litigation, you should think very carefully about reaching a negotiated settlement as quickly as possible to keep costs low.

5. The other business filed an "intent to use" application before I used the mark.
If you're putting together a business plan and have found a business name you want to use, it is a good idea to file an Intent To Use application with the PTO. If you file an Intent To Use and someone starts to use the same or similar business name before you launch, your rights are protected. Thus, "intent to use" applications are an important part of putting together a viable business plan and protecting your interests during the process.

Conclusion

In summary, friends, the first thing you need to determine is whether you are competitors with the business who holds the conflicting mark. If you are competitors, then you have more analysis to do. If you're not competitors, then there isn't much to worry about. Trademark is designed to prevent consumer confusion. If there is no chance for consumer confusion, then you have very very low risk.

If you determine that you are competitors, then you need to find out who began using the mark first and who registered the mark first. The best case scenario is that you both used and registered the mark first. Alternatively, the next best thing is that you have used the mark first. This will secure your right to use the mark in the market you were using before the other business registered the mark.

If you determine that your competitor has both used and registered the mark before you, then you should probably focus on reaching a negotiated settlement as quickly as possible. You're basically screwed. Sorry.

I hope this post gives you some guidance in evaluating trademark infringement threats. We still have a lot to discuss about trademark, including domains names, cyber-squatting, the various forms of dispute resolution available, and the registration process.

Thanks so much for your kind attention. I look forward to your questions and comments.

Best Regards,

Sarah

p.s. If any of you have worked with an attorney who has a good grasp on technology issues that you would recommend, please email or private message me his or her contact information. I receive a lot of requests for referrals to attorneys for cyber law issues. I would like your help in finding excellent attorneys from all over the world to refer people to. Thanks for your help!

Once you've got your business name sorted out, take a trial of Moz Pro to track your website's SEO progress!