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New Study: Trademark Registration Helps Your Business Grow

The US Patent and Trademark Office (“USPTO”) just published a new study that found a higher growth and success rate for businesses that register trademarks. See study here. Highlights of the study include:

  • Trademark registrants statistically tend to have higher revenue growth rates than the control group of non-registrants
  • Trademark registrants tend to employ more workers
  • First-time trademark registrants tend to experience higher growth and revenue returns on research and development post-registration
  • First-time trademark registrants experience the revenue growth at a higher rate

Here is a discussion of the study and theories on why trademark registration can significantly enhance growth and business success.

San Diego Corporate Law: Trademark Basics

As we have said here on this blog, trademarks are an important part of any portfolio of intellectual property (“IP”). Examples of trademarks are logos and symbols and other marks places on goods (and services) that help consumers identify your business as the unique and sole commercial source of the product or service. You need a good and trusted business attorney to provide legal guidance on how to acquire, maintain, and expand your IP.

To be fully protected legally, trademarks must be registered with the USPTO pursuant to the federal Trademark Act generally known as the Lanham Act. See 15 U.S.C. § 1051 et seq. Trademarks can also be registered with the State of California under California’s version of the Lanham Act. In general, federal registration is recommended over state registration. In general, the owner of a trade or service mark completes an application for registration along with copies of the mark and the registration fee. The USPTO trademark examiners process the application. To be accepted, the proposed trademark must meet the various definitions under the statute, must be unique, actually function as a mark, not already be in use or confusingly similar to other marks in use, etc. In terms of functioning “as a mark” this means that the proposed mark must not be generic or merely descriptive. As a couple of examples, without more, the letter “A” or the number “2” would be too generic and non-specific to be allowable as trademarks. Likewise, “Blue Water” without more — such as acquired distinctiveness — would be denied registration since it is too general and too descriptive to actually function as a trademark in the minds of consumers. In a famous example, Miller Brewing was denied trademark registration for “lite beer” because it was merely descriptive of what Miller was selling. See Miller Brewing Co. v. G. Heileman Brewing Co., 561 F.2d 75 (7th Cir.1977).

San Diego Corporate Law: Why Trademark Registration Helps Your Business Grow

The authors of the USPTO study linked above offered several theories on why trademark registration helps a business grow. First, they argued that trademark registration helps with customer acquisition and loyalty. According to the authors, trademarking creates a focus and uniformity to marketing and advertising that better reaches, targets, and retains customers. Second, the authors argued that trademarking helps maintain price margins. Since trademarks identify your business as the unique source of a commercial product or service, customers become loyal to your brand AND — importantly — will pay, in theory, a higher price for the product/service that they have come to trust. Starbucks is a good example here since its coffee is well-known to be more expensive than other coffees, but many customers are willing to pay the higher price. This falls under the category of “price elasticity of demand.” Loyal customers are less affected by price which allows a business to retain its customers in the face of cost reduction strategies initiated by competitors.

Contact San Diego Corporate Law Today

If you need legal advice and services related to registering trademarks or your company’s other intellectual property, call business attorney Michael Leonard, Esq., of San Diego Corporate Law. Mr. Leonard was named “best of the bar” four years running by the San Diego Business Journal. To schedule a consultation, contact us via email or call at (858) 483-9200.

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