In the digital commerce world, a company’s domain name is even more important than the signage above an actual storefront.  It is what is used by customers globally to search for, and locate a digital commerce business online.

If you are planning to start a new business, registering for a federal trademark should be one of your first considerations.  Before investing extensive time and money developing your brand, it is essential for you to determine whether your brand infringes on any existing business.  Registering a federal trademark is also the first step in the process of protecting your own business from the unlawful infringement of others, both at home and around the world.

Josh Gerben

Josh Gerben, founder of Gerben Law Firm

Never has registering a federal trademark been more important than in today’s age of digital commerce.  The ease with which a fraudulent digital commerce business can form has left some legitimate business owners scrambling to protect their brands. From cyber-squatting to global counterfeiters, digital commerce businesses can face a continual threat to their brands and reputations if left unprotected.

 

While all businesses benefit from the essential protections of a federal trademark, some distinct challenges are facing those with digital and online exposure.  Whether you have an existing digital commerce business, you are planning on shifting your business model to a digital platform, or you are just now jumping on the digital and e-commerce train, consider these benefits of registering a trademark, unique to your business.

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Legal protection from cyber-squatters

In the digital commerce world, a company’s domain name is even more important than the signage above an actual storefront.  It is what is used by customers globally to search for, and locate a digital commerce business online.  Cyber-squatting involves the registering, selling, or use of a domain name with the intent to profit from someone else’s mark.  Typically, a cyber-squatter will buy up the domain names of existing businesses with the sole intent to turn a profit when selling the domain name back to the business.

The practice of cyber-squatting has been around since the dawn of the internet, but the World Intellectual Property Organization reported cyber-squatting cases hit a record high in 2016.  Fortunately, registered trademark holders have the law on their sides when it comes to these domain squatters.  The Anticybersquatting Consumer Protection Act, or ACPA, enacted in 1999, allows trademark owners to sue alleged cyber-squatters to transfer the domain back to the trademark owner, as long as the trademark owner can prove that the domain was registered in bad faith (which typically means the domain was registered after the trademark registration was filed).  This protection only applies to businesses that hold a federal trademark.  Those doing business without a trademark will have little recourse in protecting themselves from the act of cyber-squatting.

International protection

Digital commerce businesses are global by design.  While business owners with federal trademarks are protected within the United States, they may have little protection from infringement overseas.  For small, bricks-and-mortar businesses, the damages outside the U.S. could be minimal, but to businesses that essentially live online, the costs could be much greater.  Any companies that wish to do business outside the United States should consider filing for a trademark internationally as well.

Fortunately, the process to file for a trademark in multiple countries isn’t as difficult as you might think, especially if the trademark has already been registered in the United States.  The Madrid Protocol is an international treaty that has simplified the trademark registration process worldwide.  Business owners can now fill out a single application as a means to register a trademark in over 90 countries.  Each country then decides whether or not to approve the trademark registration individually.

Discourage imitators

Digital commerce is a rapidly growing industry, and many entrepreneurs are eager to grab their share of the market.  Because all registered trademarks appear in the public USPTO database, even those doing the most basic internet trademark search may be discouraged from choosing a similar mark.

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Counterfeiters from China and other countries are quick to duplicate the business model, brand, names, and logos from existing companies.  Typically, their strategy is to target businesses in the United States that do not have a registered trademark.  While not all businesses holding a federal trademark are immune from overseas counterfeiters, in many instances, this has proven to be a successful deterrent from “bad actors” wishing to make a quick profit.

Continual renewal

Unlike its brick-and-mortar counterparts, a digital commerce business could live indefinitely online.  Trademarks, unlike patents and copyrights, can be continually renewed and last for the life of the business.  This should provide peace of mind to digital commerce business owners, knowing that they will have brand protection for the life of their business.  As their businesses grow and evolve, the trademark with move with them.

Manage your online reputation

Often, with digital or e-commerce businesses, there is no “face” or “place” to represent the company’s brand.  The reputation of the business, therefore, resides solely online.  It is important for businesses to continually monitor and manage their online reputation.  As customers type a business name into a search engine, will they be directed to the business they are looking for, or another business looking to profit from their brand?  Customer acquisition costs are an essential part of doing business online, but financial losses due to a competitor skimming customers from a business online will always have an effect on the bottom line.

In addition, a large portion of digital commerce business comes from recurring subscriptions of returning customers.  This means that managing its reputation becomes a critical factor for online businesses.  A customer that can easily find and access a successful business will return again and again, without becoming distracted by competitors.  A federal trademark will provide the necessary protections for businesses to manage their reputations online.

More businesses are going digital, and e-commerce companies are now the preferred shopping solution for millions worldwide.  It is important to remember, however, that while the structure of business has changed, the means to protect your investment has not.  Having a registered federal trademark helps businesses better manage infringement, from taking legal action against cyber-squatters to deterring counterfeiters down the street and around the world.

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As you consider your new or shifting digital business plan, be sure that you have protected your brand and your reputation with a federal trademark.   Think locally about how your customers will find your business online, and the imitators they may run into while they search.  Also, be sure to think globally, registering your trademark in the countries you hope to reach worldwide. Get ahead of those looking to profit off of your brand and reputation.  This simple step will ensure your investment is protected now, and as your business grows in the future.

Josh Gerben is a trademark attorney and the founder of Gerben Law Firm.  

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