Why Even Local Businesses Should Register Their Trademark

keyboard button that reads register

Every so often, I’m asked by colleagues or other firms to consult on trademark issues or disputes. A recent dispute our Phoenix intellectual property law firm helped out on highlights the importance of registering your trademark in Arizona and, for local businesses, offers some key lessons on registering your trademark with the Secretary of State.

When a competitor is using a same or similar name as yours

The law firm we were called in to assist with represents a local contractor specializing in a specific trade. In order to protect client confidentiality, let’s just say their name is “United States’ Plumbing” (which we’ll just call “U.S.” for short). The generic-ness and lack of originality of this name aside, U.S. had been doing business here in Arizona since the late 1990s and had been consistently engaged in commerce using their name since that time, building itself into one of the largest plumbing businesses in the State.

Unfortunately, in about 2019 a new company opened up to compete with U.S. that we’ll say named itself “United Plumbing” (although the actual name of this competitor was much closer than in this hypothetical example) (which we’ll just call “United”).

Our friend U.S. advertised broadly, including on Valley radio news station KTAR. So did United. To make matters worse, United had (deliberately or not) chosen a logo for their company which was stylistically very similar in design and color to the existing logo of U.S.

The problems caused by a confusingly similar trademark

The similarity of the two business’ names as well as identical channels of trade they operated in was bound to lead to confusion among customers. In fact, according to U.S., on a number of occasions, some general contractors with which they had worked in the past had called U.S. to ask why U.S. had not bid on a particular job. After looking into the matter, U.S. realized that these GCs had mistakenly requested United to bid instead of U.S., as was their intention. In another instance, a representative of one of U.S.’s non-trade vendors had expressed confusion regarding the trademarks displayed on U.S.’s trucks and that of United.

As a result, U.S. claimed that it had lost business from its trade and non-trade partners due to their mistakenly asking United to bid instead of U.S. They had their law firm send a cease and desist letter demanding that United change its name and cease all further use of their brand name or else risk a legal action for trademark infringement, namely under Arizona Revised Statutes §44-1451, as well as under the Federal Lanham Act.

They registered their trademark, right?

However, in reviewing U.S. demand and doing a little research, we noticed a few challenges for our friend U.S.. First off, although U.S. had been in business and using their name for more than 20 years before United, it seemed United had had the presence of mind to register their trademark with the United States Patent and Trademark Office (USPTO), while U.S. had not registered their trademark with…anybody. That’s right; U.S. had not even bothered to register their trademark locally here in Arizona.

To put things another way, U.S. was threatening sue United for infringement under a State statute that specifically spoke to a “mark registered under this article”. Since U.S. had not registered under Article 3 (of Chapter 10 of Title 44 of the A.R.S.), its demand kind of put the proverbial cart before the trademark infringement horse.

Fortunately for U.S., they still had very solid grounds for what we call “common law” infringement, and especially unfair competition, under Arizona law, as well as potential claims under the previously mentioned Lanham Act. It is also possible that U.S. had potential claims under Arizona’s trademark dilution statute (§44-1448.01), however that would require their trademark being determined to be “famous” and, despite their ample advertising budget and media presence, would be rather debatable.

Why bother to register your trademark with the State?

The lesson for Arizona business owners is that if you have either a company name or even a trade name or logo (or really any combination of letters, words, numbers, graphical elements, or even color scheme) that help to distinguish your company and its goods or services from that of your competitors, you should consider registering it with the Secretary of State.

For one thing, registration here in Arizona is pretty easy to do and, in fact, can be done online. Secondly it’s inexpensive, especially in relation to Federal registration. Thirdly, it plants your flag locally and sets up potential competitors or what we call “junior” users who might try to use an identical or confusingly similar trademark to yours for an infringement action under §44-1451. If you win in such a suit, the statute specifically says that the court can require the infringer to pay you their profits, any damages which you might’ve sustained from the infringement, as well as costs of the legal action in certain circumstances.

Even if your business is only operating locally and has no immediate plans to expand outside of Arizona, it can still be beneficial to have an official registration with the Secretary of State. Why? Many companies or entrepreneurs with deeper pockets considering using your exact trademark (or one very similar) for their own business will often (if they’re represented by an attorney knowledgeable in trademark law) order a comprehensive trademark search using an actual search firm. These comprehensive trademark searches will almost always include a search of state and local databases, including the records of state secretaries of state. This means that your locally registered trademark may likely come up in a comprehensive search, and that once their legal counsel or internal legal department sees this potential conflict, it is possible (although not guaranteed by any means) that they may very well decide that it’s not worth the potential conflict (legal or otherwise) and choose a different trademark from yours entirely. Thus registration at the state level, although considered by many to be functionally worthless, may actually serve as a deterrent to someone else’s future registration of that same trademark with the USPTO.

Arizona businesses ignore trademark registration at their own peril

Most of the registrations our Phoenix trademark law firm does are at the Federal level because the vast majority of our clients operate online and thus require protection that is interstate or nationwide in scope. However, if your business is strictly local, like in the example of our friend U.S., there is really no excuse to not take some time out to go ahead and register your trademark here in Arizona.

Ben Bhandhusavee is the Founder of BHANDLAW, PLLC, a technology and e-commerce law practice advising founders and management teams on select e-commerce and intellectual property matters, as well as corporate and technology transactions. The firm serves corporate and individual clients throughout Arizona, the United States, and internationally. For more information, feel free to reach out using the contact form on the right or call us at (602) 222-5542 to schedule a meeting. Connect with Ben on LinkedIn or Avvo.