What Happens When You Don’t Do Due Diligence on Your Trademark

by / ⠀Startup Advice / April 3, 2012

Many – too many – entrepreneurs and business owners I encounter have the following mindset when it comes to adopting a new trademark:

“There were no exact matches on the USPTO database and the .com domain name was available, and that’s good enough for me.”

While that may all be true, it may or may not be good enough for the USPTO, and it’s certainly not good enough for pre-existing trademark owners who have enforceable trademark rights. As a result, and regardless of the stage of your business’s development, it is absolutely critical to perform thorough trademark clearance research and analysis.

Long story short, one trademark does not need to be identical to another in order to create liability for trademark infringement. It is enough if the two trademarks are “confusingly similar” – in terms of one or more of their: (i) sight, (ii) sound, (iii) meaning and (iv) overall commercial impression. As a result, proper trademark due diligence (trademark clearance research) is a complex creative and legal process that requires both forethought and critical reactive analysis.

The follow real-life example demonstrates what can go wrong if you don’t conduct proper trademark clearance research before deciding on a new trademark for your business:

Skyride, an online service that connects skydivers with skydiving operations across the United States, got sued for using the phrase “Skydive Arizona” in its online marketing efforts – for $6.1 million. As it turns out, the “Skydive Arizona” trademark is owned by an outfit outside of the Skyride network, and when Skydive Arizona started getting customers trying to redeem Skyride certificates, they were none too pleased. Skydive Arizona pursued its trademark infringement claims against Skyride through litigation, and recently had a judge uphold its $6.1 million award.

It’s possible that Skyride performed trademark clearance research and either (i) missed the issue, or (ii) decided it wasn’t going to be an issue; but, regardless, this is the outcome that results if you don’t perform trademark clearance research before adopting a new trademark and it turns out that someone else beat you to the punch.

So, before you go ahead with that software development plan or aggressive branding campaign, consider whether you’re setting yourself up for a potential disaster by not finding out if someone else has already claimed exclusive rights in a confusingly similar trademark.

Jeff Fabian helps business owners protect their intellectual property so that they can stay focused on running their businesses. Visit http://fabianip.com for more information, and follow Jeff on Twitter @FabianOnIP.

This article is provided for informational purposes only, and does not constitute legal advice.

About The Author

Matt Wilson is Co-Founder of Under30Experiences, a travel company for young people ages 21-35. He is the original Co-founder of Under30CEO (Acquired 2016). Matt is the Host of the Live Different Podcast and has 50+ Five Star iTunes Ratings on Health, Fitness, Business and Travel. He brings a unique, uncensored approach to his interviews and writing. His work is published on Under30CEO.com, Forbes, Inc. Magazine, Huffington Post, Reuters, and many others. Matt hosts yoga and fitness retreats in his free time and buys all his food from an organic farm in the jungle of Costa Rica where he lives. He is a shareholder of the Green Bay Packers.

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