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Trademarks: Legal, Financial, and Tax Points You Need to Know

Trademarks: Legal, Financial, and Tax Points You Need to Know

By BarbaraWeltman, Guest Blogger
Published: May 18, 2010 Updated: January 20, 2016

Intellectual property, or IP, can be your most valuable business asset, even though you ca;t see, smell, or touch it. Trademarks are a type of IP that protects your logo, brand, name, or other mar-but only if you follow the rules necessary to obtain legal protection. Before you invest in a website, brochures or marketing, or take other actions that will use a mark to brand you, here are key things you need to know.


Legal Protection Is-t Infinite

You can protect your compan's name, the name of a product or service you offer, a tag line you use in marketing, a logo, or a distinctive mark for your business. I's vital to select a good trademark; this is one that is unique enough to be capable of being registered and is not already in use by another business. It can be a word or phrase, but you may not, for example, register a common word, such as pizza.


Protection gives you the exclusive right to use what yo've trademarked. If anyone else uses it commercially, potentially you can receive compensation (this is't automatic and may necessitate legal action). This protection runs for as long as you file required affidavits and renewals (every 10 years), and continue to guard your mark and do't let it fall into generic use (explained later). You can learn about trademark protection by taking a free online tutorial at StopFakes.gov.


Protection through the federal government is only valid in the United States. If you sell goods and services, or manufacture products in other countries, you may want to register your trademark there. Registration overseas usually must be undertaken on a country-by-country basis. However, under an international agreement called the'Madrid Protocol' you can obtain protection for your mark in multiple countries through filing a single application with a single fee. Learn more here.


You Can Obtain Protection Yourself or Use an Attorney

You can do some or all of the work required to register your trademark. However, because of the importance of a trademark to your business, i's usually wise to work with an attorney through the registration process. You can, however, minimize your costs by doing some of the legwork yourself.


Start by going to the U.S. Patent and Trademark Office and using the Trademark Electronic Search System (TESS), do an initial search of existing trademarks; it's free. Also, do a basic search engine search (through Google, Bing, etc.) to see if any company is already using the mark you want to protect.

There are several commercial sites you can also use to check usage of the mark you want to register (and also register your mark):
¢ *Biz Filings' Trademark Explorer searches both federal and state trademark databases. Cost: Initial results are free, but a detailed report costs $19.95.
¢ *Legal Zoom's Trademark Search also searches federal and state databases; you can also do an international search. Cost: Starting at $199.


Or, you can engage an attorney who specializes in trademarks and other IP to do a thorough search as well as take you through the registration process.


You can gain a common law-type of protection by simply using your mark designated by the symbol ?. (Service marks, which are trademarks for services, are designated by SM.) Common law protection is not as broad as the protection you have through registration. Once you complete the registration through the federal government, you can use the symbol ®.


You Have to Remain Vigilant

Getting protection is only step one; it doesn't guarantee that you'll enjoy protection forever. In order to keep legal protection, you have to prevent others from using your mark without your permission. This entails using the registration symbol when you use your trademark. If you let the mark fall into generic use, you'll lose protection. Examples of formerly trademarked items that lost protection because of generic use include yo-yo, thermos, and most recently, netbook.


Also, patrol the Internet to see whether any other business is using your mark. Companies such as Coca Cola® have armies of employees whose job is to check continually for any generic usage. You'll have to do this yourself by periodic checks on the web (consider using *Google Alerts to help you).


If you learn that someone else is using your mark without referencing your trademark (i.e., they're using it as if it's their own), send a cease and desist letter immediately. The letter should demand that they stop using your mark and let them know that you'll pursue legal action if they fail to do so. You can ask your attorney to draft a letter that you can use for this purpose. Keep it on file and use it whenever you need to. You can also find sample letters at sites such as *Free Legal Documents.


If the letter doesn't do the trick, consider using alternative dispute resolution to avoid costly court action. Learn more from the *International Trademark Association (click on ADR).


Protection Isn't Free

Getting trademark protection isn't a quick or inexpensive process. Costs depend on whether or not you use an attorney.

¢ If you opt to do it yourself, it will involve considerable time, plus the government's filing fees. Find a list of fees here. Fees start at a few hundred dollars (it's less costly to register electronically than by paper).
¢ If you use an attorney who specializes in trademarks and other IP, you could pay several thousand dollars (attorney's fees plus government filing fees) to secure your mark.


Tax Write-offs Take Time

The tax law helps you defray the cost by allowing you to write-off the expenses associated with obtaining trademark protection. While you can't deduct the costs all at once, you can amortize the legal fees and registration costs for your mark over 15 years. This means you deduct 1/15th of the costs each year for 15 years.


As always, be sure to consult with your tax advisor for details.


Additional resources:

Trade Names and Trademarks - What's the Difference?

Protect your Invention or Product - Patents, Trademarks, and Copyright

Tips for Choosing a Business Name that is Unique, Web-Ready, and Legally Yours! - Part 1

Tips for Choosing a Business Name that is Unique, Web-Ready, and Legally Yours! - Part 2

How to Legally Protect Your Business Name on a Local, State, National, and International Level


*Denotes a non-government site.


Barbara Weltman is an attorney, author of several business books including J.K. Lasser's Small Business Taxes, and trusted professional advocate for small businesses and entrepreneurs. She is also the publisher of Idea of the Day? and her monthly e-newsletter Big Ideas for Small Business?; both are available at www.barbaraweltman.com, and host of Build Your Business Radio. Follow her on Twitter at twitter.com/BarbaraWeltman.

About the Author:

Barbara Weltman

Guest Blogger

Barbara Weltman is an attorney, prolific author with such titles as J.K. Lasser's Small Business Taxes, J.K. Lasser's Guide to Self-Employment, and Smooth Failing as well as a trusted professional advocate for small businesses and entrepreneurs. She is also the publisher of Idea of the Day® and monthly e-newsletter Big Ideas for Small Business® and host of Build Your Business Radio. She has been included in the List of 100 Small Business Influencers for three years in a row. Follow her on Twitter: @BarbaraWeltman.