Trademark

As a business owner, protecting your company’s intellectual property is of paramount importance. Trademarking your names and logos can go a long way in safeguarding your brand identity. In a perfect world, we would all have the resources to immediately file applications for each and every brand-identifying element right at the launch of any business venture. Unfortunately, we live in the real world, where resources are not always available all at once and prioritizing is key. The question this very real set of circumstances often brings with it is “do I file for my name or logo first?” While both play important roles in characterizing your business, the answer, in most cases, is to file for a standard word mark before proceeding with a trademark application for your logo. Here’s why:

1. Flexibility of Use

A “standard word mark” is a trademark that protects your brand name itself. It does not matter how the words are stylized, what font or color is used, or if they are featured in conjunction with artwork, so long as the words (and punctuation, if applicable) remain the same. Once this trademark registers, the name is protected.
A design mark, on the other hand, protects the specific design elements as submitted, including the stylization of the text and any images or graphics. If you change the design of your logo (even in small ways, like adding or removing elements or updating the layout), protection conferred by a registered logo trademark becomes irrelevant, as you are using a different, unregistered design. Without use, the previously registered trademark can be considered abandoned.
Particularly in the early days of a business, or in the initial stages of a rebrand, the logo you start with might not be the logo you ultimately wind up using in commerce. Therefore, prioritizing your word mark, and filing a trademark application for this first, offers brand protection while allowing flexibility for future design changes.

2. Broad Protection

Word marks simply offer a broader range of protection than design marks. While visual branding is invaluable, and you certainly want to protect your logos, if you only have a design mark, your scope of protection is limited. Even if your logo features your brand or product name, without a standard word mark, you have not protected the name by itself. Competitors could potentially use the same or similar words in their branding. If you have a word mark, no one else can use it, regardless of the design, font, or color they use – doing so would be infringement on your trademark rights.

3. Cost Efficiency

Trademarks are a cornerstone of any business’s IP portfolio and integral to most marketing strategies, but the process of trademark registration can be costly and time-consuming. Therefore, it is sometimes necessary to be strategic in how and when you allocate funds for new applications. Presumably, the name of your business or flagship brand will remain the same, if not forever, for a very long time. Logos, on the other hand, can sometimes be more fluid. Rebrands happen, and this potential eventuality should not deter you from registering a design you plan to use for an extended period. However, if you aren’t fully committed to one version of a design and need to file a new application with every iteration, the costs can quickly add up. Until you have decided on a permanent logo, a standard word mark can do a lot of heavy lifting on the trademark front.

4. Easier Enforcement

Part of trademark maintenance is remaining vigilant about enforcing your trademark rights. This means keeping an eye out for other users infringing on your trademarks and either reaching out to these unauthorized users directly or consulting with legal counsel to do so. But trademark enforcement can be tricky when there is any room for interpretation and enforcing a word mark can be easier than a design mark since it focuses on something more concrete (specific words in a specific order for a specific thing). Unauthorized use of a similar logo can sometimes be skirted by arguing minor differences in composition or layout. A word mark is less open to interpretation, and can thus be more straightforward to enforce, something you want when it comes to your primary brand. Focusing on – and enforcing – a word trademark can also help bolster your ability to enforce future design marks that incorporate your name.
While both word and design marks are important components of any brand’s trademark strategy, there are clear advantages to prioritizing the registration of your word mark. This initial step provides flexibility for future logo changes, broad protection against potential infringements, cost efficiency in filing, and an easier path to trademark enforcement. Once a standard word mark is secured, you can look ahead to fleshing out your trademark portfolio from a relatively secure vantage point, ensuring robust and well-rounded protection for your brand.

If you’ve ever browsed the aisles of a grocery store, chances are you’ve passed by a few dozen registered trademark symbols without even noticing. Look around right now, wherever you are. Is there a can of Coca-Cola sitting on your end table? A bottle of Advil there on your desk? Are you drinking water from a Nalgene water bottle? Any of these items will bear the subtle but familiar ® denoting a registered trademark of the brand.  This is the symbol you can (and should) use once your trademark registers with the USPTO, whether it is a word mark or design mark and whether it is for goods or services. It establishes “constructive knowledge” of your registration and helps protect your trademark rights, notifying customers and competitors alike that you hold a federally registered trademark and unauthorized use of this mark constitutes trademark infringement.

If your trademark is not yet registered, you cannot use the ® symbol in association with your mark, but you do have the option (which you should take) of using ™ (or ℠ for service-only marks) to claim common law trademark rights. ™/℠ does not signify the same level of trademark protection, just like common law rights are not equivalent to a federal trademark registration, but this is a way of publicly demonstrating your claim to a mark while it is [hopefully] on its way to registration.

In either case, whether your mark is registered or not, the symbol you use should appear in the upper right-hand corner of the mark (DRUMM LAW®) or, if that will look strange, as may be the case with some design marks, the lower right-hand corner.

Wondering what the little © and ℗ symbols mean and how they factor into all of this? © denotes a registered non-audio copyright, while ℗ is the “phonographic copyright” symbol, or the symbol used especially for audio copyrights such as music and audiobook recordings. So you won’t be using these in conjunction with your trademark unless it is the name of an artistic work for which you also hold a copyright.

It’s important to note that, when it comes to international commerce, many countries have different and specific rules and regulations surrounding the use of these symbols, so if you are considering an international trademark, or just distributing your goods to other countries, it may be wise to consult with a trademark attorney first.

You should have a Financial Performance Representation, or Item 19, in your Franchise Disclosure Document. The FPR is the first step in the communication process between you and your potential franchisee regarding the revenue or profits of the franchised business. Here is what you need to know about item 19 in FDD.

Why Item 19 is Important

Accurate representation of your franchised business in your Item 19 FDD is vital if you want to build a positive relationship with prospective franchisees and attract the right kind of franchisee. Additionally, without an FPR, you are not permitted to discuss any earnings claims or related details on your outlets’ historical or projected performance.

What is an Item 19?

Formerly known as the “earnings claims” and renamed in 2007 as a financial performance representation or “FPR.” Item 19 is the financial picture of your franchised business: the good, the bad, and the ugly. Painting an accurate picture for your possible buyer is essential; this will be the first stepping stone of positive communication between you.

What Does Item 19 Look Like?

Your FPR can take many forms and is as individualized as you are. At Drumm Law, we can help you find the format that best suits the telling of your story. Item 19 in FDD can show the elements of your business that complete the financial picture, like average net profit, the average cost of goods, and the average revenue reported by your company-owned outlets or franchisees. 

Your Item 19 FDD paperwork could be a profit and loss statement for individual outlets, a chart, or anything in between, as long as it paints an accurate picture and complies with applicable franchise laws and regulations.

What Does Item 19 Do?

When you sell your franchise, you will give your Franchise Disclosure Document to your potential buyer so that they know essential information regarding your business. 23 items in the FDD are necessary for any prospective buyer to understand. But the most important of all is Item 19. It provides an overview to potential buyers of the possible earnings if they buy into your franchise. And because it is the first communication the two of you have regarding the financial performance of your franchise, it must tell the whole story.

How Can Item 19 Affect The Buyer?

Before signing on with your franchise, prospective buyers should understand what they are getting into. Our powerful franchise team at Drumm Law can help you tell your story well so that there are no surprises down the road for your prospective buyers. A buyer needs to know if it is the kind of business where she will need to manage on location from dawn to dusk to generate a profit or if she will only need to work a few hours a week and enjoy a nice side hustle. Then they can make an informed decision about purchasing your franchise.

Conclusion

There is no expectation that your FPR shows perfect profit margins or that all units in your franchise system will perform well. No one will buy your franchise thinking they will be the worst performer. Tell the story well, and let Drumm Law help you with the grey areas to get the best possible franchisees on board with your business. Ultimately, that will be the best for all of you in the long run.

Hire Drumm Law to Help You With Item 19 FDD Questions

Drumm Law is a virtual law firm. Unlike our competitors, we do not have an expensive downtown office and the overhead that comes along with it. We call, email, text, Skype, chat, “goto,” webinar, Facebook, Linkedin, meet, tweet, and greet our clients. We have attorneys throughout the country. While we have conference rooms available when needed, we prefer to meet our clients over lunch or drinks. Contact us to book a consultation!