I often am called upon to work on trademark issues, many times only after the advisor has received a cease-and-desist from a lawyer alleging infringement. I recently asked my partner expert Rachel Lilienthal Stark about these registration issues.
Advisory firms need to be careful when choosing a name (along with logos, taglines and other identifiers) and ensuring that they are protected from being challenged or used by others. She discussed three steps to the registration process.
1. Choosing a name Advisors must realize upfront that the process of choosing a name is both challenging and expensive. We often are asked if it is worthwhile to go through a full trademark clearance and registration process. Our response is: “If you are forced to change your firm’s name in five years, would it cost you more, both in hard costs and goodwill, then it would cost to go through the process of selecting a good name and protecting it now?”
As the goal of a new firm is to build both the client base and goodwill of the firm beyond a particular advisor, the answer almost always is that it will cost more later.
The first step to the trademark clearance process is choosing a name. Under trademark law, names that are “merely descriptive” will be refused trademark registration and are considered to be “weak” trademarks. This includes surnames (Stark Investment Management), geographic locations (Princeton Investment Management), or words that are synonymous with a quality of the service or product being provided (Best Advisor).
Of course, other common words used in the name of an investment advisory firm, such as “Investment Management,” “Advisors,” and “Wealth Management,” also are considered to be merely descriptive, but used together with a non-descriptive word, are acceptable.
The other types of marks, all which may be registered, are “suggestive,” “arbitrary,” and “fanciful.” “Suggestive” marks hint at the nature or some aspect of the services, without merely describing them (Longview Investment Management). An arbitrary mark is a word whose meaning has no connection to the goods or services (Piano Investment Management). A fanciful mark is completely made up (Gitvig Investment Management).
From a trademark perspective, the less descriptive, and the more arbitrary or fanciful, the stronger the mark will be.
2. Confirming it is available Next, Rachel advises that a trademark search should be conducted to determine if a name is available for use. The test of whether a firm’s use of a proposed name infringes on the rights of a prior user of a same or similar name, is whether there is “likelihood of confusion” between the prior user’s mark and the proposed mark. In other words, would a client wrongly assume that the two firms are connected due to the similarity of your names?
3. Registering the name as a trademark After a search is conducted, and the mark is cleared for use, a federal trademark registration should be filed. Among other benefits, federal trademark registration provides notice to the public of the firm’s claim of ownership of the mark, a legal presumption of ownership nationwide, and the exclusive right to use the mark on or in connection with the goods or services listed in the registration.
A federal trademark registration is particularly important for firms that seek to expand beyond their current geographic location, because without a federal trademark registration, protection is limited to where the firm currently is doing business and its natural zone of expansion, which may be more limited.
Once a federal trademark registration is received, the name can be used with an ®, designating the mark as a federal trademark registration. While it is still possible for others to challenge the use of the firm’s name during the first five years after registration, by going through the search and registration process, the firm should be comfortable that the selected name is both available and protected for use nationwide.
Thomas D. Giachetti is chairman of the Securities Practice Group of Stark & Stark, a law firm with offices in Princeton, New York and Philadelphia that represents investment advisors and other financial firms, and is a regular contributor to Investment Advisor. He can be reached at email@example.com.