Business franchising
Trademarks and service marks are at the heart of the modern day marketing of consumer goods and services. Trademarks can be symbols, words, numerals, pictures, slogans, colours, configurations, sounds, scents, the appearance of three dimensional objects or virtually any other indicia that identify the goods or services of a particular party be at a manufacturer, merchant or provider of services and that distinguish these from the goods and services of others. Simply put, trademarks and service marks help consumers select goods or services by identifying those that have been satisfactory in the past while rejecting those that have not.
By identifying the source of goods or services, trademarks convey valuable information to consumers while reducing the costs of acquiring information about particular goods or services, since consumers can come to rely on a trademark and the brand image it conveys. Moreover, trademarks fix responsibility, thereby inducing higher quality goods and services and provide a framework for effective advertising.
Trade names
A trade name is a word, name, symbol, device or other designation that is distinctive of a business and is used in a way that identifies the business and distinguishes it from others. Thus, a trade name is the name by which is legal entity does business or is known to franchises, shareholders, the public, suppliers or creditors. It is usually the same as a corporate name, although this is not always the case, especially in situations involving assumed names, partnerships or sole proprietors. It often, but not necessarily, contains the key trademark of the business francising system.
Trademark value and goodwill
A well recognized and respected trademark can become a business asset of incalculable value, usually referred to as goodwill. Goodwill in a trademark develops as a result of favourable consumer recognition and association. Trademark law is designed to protect business goodwill by protecting consumers from confusing various producers of goods or providers of services. The owner of a well recognized trademark is more likely to attract business partners willing to make an investment and pay royalties because of their desire to market goods or services under an already established brand with goodwill.
Licensing and FranchisingTrademark owners may license the use of their trademarks to others provided that the owner maintains control over the quality of the goods and services provided by the licensee under the trademark. Trademark licensing is, in almost all cases, the cornerstone of a franchise system. A trademark license agreement is a legally sanctioned business agreement between the owner of a trademark and another party that desires to use the trademark, including its associated goodwill, as the central element in its business to identify its products and services to the public while guaranteeing a uniform level of quality.
Franchising, in its simplest terms, is a more sophisticated form of trademark licensing. Most business francising agreements grant the franchisee the right to use one or more of the franchisor\'s trademarks in connection with certain goods and services, in accordance with standards and practices that have been established by the franchisor. In return, the trademark owner or franchisor, obtains new sources of capital, new distribution markets and motivated vendors of its products or services. The legal exclusivity that trademark rights afford to the franchisor and its franchisees offers a competitive advantage that is essential to a successful business francising.
II. Overview of trademark law Common law
Trademark rights in the United States, unlike in most other countries, arise through use of the trademark on or in connection with particular goods or services. Trademark rights accrue automatically that is, without any formality or paperwork to the first business using a particular trademark to identify its goods and services. The first or senior user has the right to prevent competitors, including subsequent federal registrants, from using that trademark or a confusingly similar trademark in the geographic area in which the first user\'s trademark has become well known, as well as in the first user s area of natural expansion. Trademark rights that come into existence in this manner are called "common law rights". In addition to being limited to certain specific geographic areas, common law rights are also subject to the rights of other parties who have previously filed applications for federal registrations or have used the trademark in a different geographic area to which one\'s use and reputation have not yet extended.
Registration
Although not mandatory for the protection of trademark rights, federal trademark registration on the Principal Register of the United States Patent and Trademark Office (PTO) provides many substantive and procedural benefits and is therefore, highly recommended, especially if more than local use is contemplated. Importantly for franchised businesses, it provides constructive notice of the registrant\'s registration, thereby giving the trademark owner preemptive nationwide superior rights even if the owner does not use the trademark throughout the entire United States. State trademark registrations are also available, but offer few benefits beyond common law rights and are generally recommended only in particular situations.
An application for federal registration of a trademark may be based either on actual use of the trademark or on a bona fide intention to use the trademark. An intent-to-use application will not issue as a registration until use of the trademark has been initiated in connection with the goods and services for which registration is sought. However, if the application matures to registration, whether it is based on actual use or a bona fide intent to use, the trademark is deemed to have been constructively used throughout the United States as of the applications filing date. Therefore, the first applicant can obtain a key priority date over intervening users. This may be of considerable importance, particularly in the case of an intent-to-use application because often long periods of time elapse before a product or service is ready for market and years may pass between the filing of an intent-to-use application and the initiation of commercial use of a trademark and the issuance of the registration. Thus, the trademark may be protected while test marketing is being conducted, sites are under construction or business francising are being offered and sold.
III. Clearance of trademarks The search process
Before incurring the expense of adopting a trademark, preparing packaging and promotional material and filing a trademark application, a commercial search should be conducted to determine the availability of the trademark. Commercial searches of marks consisting of words, letters or numbers often encompass trademarks registered and pending in the PTO, state trademark registrations, trademarks that are in use but not registered trade names and domain names and are available through a number of searching services. Commercial searches of trademarks consisting solely of a design or logo are presently limited to marks registered and pending in the PTO. Commercial searches can be conducted outside of the
IV. Domain Names
Domain names are merely addresses on the internet and their registration is handled on a global basis that exists separately from trademark registration. Merely obtaining a domain name does not generate trademark rights unless the domain name is also capable of being a trademark and used as a trademark to identify specific goods or services on a web site or in the bricks-and-mortar world. Not all domain names consist of or incorporate trademarks. In fact, many of the most valuable domain names consist of purely generic terms.
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