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It’s Good to Be Popular (But Not Too Popular)—Choosing a Trademark for your Franchise System

For new franchisors, standing out from the crowd can be a task of epic proportions. Selecting a strong and memorable trademark is certainly an important (indeed, critical) first step, but for the relatively unknown, picking a trademark that is too abstract can occasionally be viewed as a step in the wrong direction—you want to stand out, but you also want people to actually know what you do or sell.

With this concern in mind, and with the burgeoning growth of new enterprises, a growing trend among franchisors (and business owners in general) seems to be to select trademarks that serve to both identify the business and shed light on the goods or services it provides. This makes sense and can be a strong trademark strategy—as long as it isn’t taken too far.

As I have discussed in a prior post, proposed “trademarks” that are merely generic or descriptive of the products or services the franchise system provides are not subject to trademark protection for new franchisors. This is a basic principle of trademark law that prevents one company from trying to prevent others from using ordinary, everyday terms that are functionally necessary to describing their goods or services. For example, a fast food franchise could not claim trademark rights in “burger” alone, because all restaurant chains need to be able to use the word “burger” to state what the sell.

Now, this example might be a little bit too obvious, but it is important to note that whether a term is “generic” depends on its usage in the relevant industry. As a result, even if the common public might not consider a word to be generic, the usage in the trade is what needs to be taken into consideration. This might not be as relevant to burger chains, but in specialty retail outlets and service-based franchises it can come into play. Deciding whether a term that you want to claim as a trademark is actually generic in your industry requires an honest and realistic assessment of industry discourse and standards.

A recent case involving laser-guided bombs makes this point clear: Raytheon attempted to register the term “Paveway” as a trademark for laser-guided bombs. Lockheed Martin opposed the application, citing evidence demonstrating that “Paveway” was actually generic in the industry for that particular item. The USPTO accepted Lockheed Martin’s evidence, and Raytheon’s trademark registration application was denied—despite the fact that (I would suspect) the general public would not be familiar with the “Paveway” term.

For franchisors—whose trademarks are some of the most valuable aspects of the business opportunities they sell—claiming trademark rights only to have that claim opposed and eventually denied can have drastic implications. Accordingly, franchisors are well-served to perform a critical and thorough analysis before deciding on a trademark for their franchise system.

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

Jeff Fabian is the owner of Fabian, LLC, a boutique law firm serving active and prospective franchisors and franchisees. Visit fabianlegal.com or thefranchisecafe.com for more information, or follow Jeff on Twitter @jsfabian.

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