By Los Angeles Trademark Attorney Robert G. Klein

When trying to identify what your most valuable business asset is, most people might fail to recognize the value of their company’s goodwill. Goodwill is what makes people return to your company for repeat sales. The greatest symbol of your goodwill is your trademark, which brings us to define what exactly a trademark is and why is it so valuable.

A trademark is a symbol, word or a combination of the two that identifies your goods or services and distinguishes them from others. A trademark also signifies that all goods bearing the mark as coming from or controlled by a single source, that all goods bearing that trademark are of an equal level of quality, and it is a prime instrument in advertising and selling the goods.

A perfect example of a symbol that is an effective trademark is McDonald’s golden arches. When we see those golden arches we immediately make the mental association to McDonald’s hamburgers. This mental association is called “secondary meaning”. In order to obtain secondary meaning, some companies spend millions of dollars over long periods of time attempting to create this brand name recognition.

Because a company’s trademark is a symbol of the company’s goodwill, trademarks are extremely valuable intangible assets worth protecting. In order to successfully protect your trademark it is advisable that you start by selecting a strong mark. A strong trademark is one that is inherently distinctive. Marks that are arbitrary or fanciful are by their nature “inherently distinctive”. A fanciful mark is a word or symbol that is coined for the express purpose of functioning as a trademark. An example of a fanciful mark is “Clorox” for bleach.

Arbitrary marks standing alone would not provide any clue of the type of goods or services associated with that mark. Arbitrary marks comprise of words, symbols, or pictures that are in common linguistic use, but which when used with the goods or services in issue, neither suggest or describe any ingredient, quality or characteristic of those goods or services. An example of an arbitrary mark is “V-8″ on juice made from different kinds of vegetables.

By contrast, marks that are descriptive of the types of goods or services one offers are by definition “weak” trademarks. For example, a mark “Le Croissant Shop” for restaurant services which comprises the generic name of food that is the specialty was held by the courts as being a descriptive or weak trademark.

Trademark infringement occurs when one uses a mark of a senior user in a way that is likely to cause confusion among consumers as to the source, affiliation or sponsorship of the goods. In the example of V-8 vegetable juice, if a newcomer into the juice business uses the name “B-8″ associated with its vegetable juice, and a consumer familiar with V-8 mistakenly bought B-8 at a convenient store, the V-8 company lost a sale and the company using B-8 made a sale by trading off the goodwill of the first user who spent time and money creating that brand. For this reason trademark infringement is considered “unfair competition”.

Victims of trademark infringement and unfair competition need to take action to protect their trademark rights. Failure to enforce your trademark rights can result in a loss of your trademark and damage to the goodwill of your business.

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