What Is a Trademark?

A trademark is a recognizable insignia, phrase, word, or symbol that denotes a specific product and legally differentiates it from all other products of its kind. A trademark exclusively identifies a product as belonging to a specific company and recognizes the company's ownership of the brand.

Similar to a trademark, a "service mark" identifies and distinguishes the source of a service rather than a product, and the term “trademark” is often used to refer to both trademarks and service marks. Trademarks are generally considered a form of intellectual property.

Understanding Trademarks

A trademark can be a corporate logo, a slogan, a brand, or simply the name of a product. For example, few would think of bottling a beverage and naming it Coca Cola or of using the famous wave from its logo. It is clear by now that the name "Coca Cola," and its logo belong to The Coca-Cola Company (NYSE: KO).

Trademarking, however, does contain some fuzzy boundaries because it prohibits any marks that have a “likelihood of confusion” with an existing one. A business cannot thus use a symbol or brand name if it looks similar, sounds similar, or has a similar meaning to one that’s already on the books—especially if the products or services are related.

Trademarks, Patents, and Copyrights

A trademark protects words and design elements that identify the source, owner, or developer of a product or service. Different than a trademark, a patent safeguards an original invention for a certain period of time, and there can be many different types of patents. Unlike patents, copyrights protect “works of authorship,” such as writing, art, architecture, and music.

Why Use a Trademark?

Individuals and companies have products or services trademarked to protect the product from being used without the permission of the source company. Most countries have patent laws that are designed to protect against copyright infringement. In the United States, the United States Patent and Trademark Office (USPTO) serves this function.

Although most countries have agencies through which businesses can have their products trademarked, international copyright regulation is more complicated than in the U.S., as there exists no universally recognized patent office, rules, or consistency.

More About Trademarks

A company or individual does not need to register a trademark to receive protection rights, but there are certain legal benefits to registering the mark with the USPTO. Trademark and copyright law rarely overlap, but it can happen—for instance, when a graphic illustration is used as a logo, the design may be protected both under copyright and trademark law.

Trademarks can be bought and sold. Famously, Nike, Inc. (NYSE: NKE) purchased the instantly recognizable Swoosh logo in 1971 from a graphic arts student for a one-time price of $35. Trademarks also can be licensed to other companies for an agreed-upon time or under certain conditions, which can result in crossover brands.

Key Takeaways

  • A trademark is an easily recognizable symbol, phrase, or word that denotes a specific product.
  • It legally differentiates a product, or service, from all others of its kind, and recognizes the source company's ownership of the brand.

Brand Phenomena

Examples of well-known, effective brands are myriad. The power of branding in business is critical and can fill volumes, and brands' use in marketing is legendary. For instance, the LEGO® name itself is a brand. Further, the iconic privately held LEGO Group has licensed many famous sub-brands (or co-brands)—like Star Wars and DC Comics—to produce LEGO versions of popular products. Trademarks not only help distinguish products within the legal and business systems—but just as significantly—with consumers.

Kleenex

Some brands, like Kleenex, are so prominent and have such successful brand identities that they have almost replaced the noun that was the original word for the item or service—for example, when someone asks, "Do you have any Kleenex? instead of "Do you have any facial tissue?"

The Kimberly-Clark Corporation (NYSE: KMB) owns the Kleenex trademark and launched the brand in 1924 as a disposable tissue for removing cosmetics. In 1930, the company launched the brand again—this time as a substitute for handkerchiefs. Since then, Kleenex has been the number-one selling facial tissue in the world.

Band-Aid

Similarly, we generally don't ask for a "self-adhesive bandage with sterile cotton liner." We're more apt to ask, "Do you have a band-aid?" Consumer goods and pharma giant Johnson & Johnson (NYSE: JNJ) had been making sterile gauze dressings as early as 1887. But it wasn't until 1920 that the company launched its BAND-AID® Brand adhesive bandage. A cotton buyer for Johnson & Johnson, Earle Dickson, invented the band-aid:

Dickson's wife was prone to cutting her fingers in the kitchen. So, Dickson wanted a bandage that his wife could apply easily. He combined two of the company’s early products (adhesive tape and gauze) by placing a strip of gauze down the middle of a long piece of surgical tape that he covered with fabric to keep the adhesive from sticking. His wife could then bandage her wounds with a piece cut from the tape and gauze pad. Dickson demonstrated the invention to his boss, who told company president James Wood Johnson, and a new product was born.

A trademark does not need to be actually registered for the owner to prevent others from using it, or a confusingly similar mark; however, federal registration provides certain legal advantages to the owner when pursuing infringers.

Trademark: History

Trademarks and their modern symbols—TM for trademark and SM for service mark—signify legal protection, but forms of trademarks have been around since ancient times.

Early Use

  • 5000 B.C.: The Chinese made pottery that included the name of the emperor currently in power, along with the place where it was made, and the name of the person who manufactured each piece.
  • 3100 B.C.: In ancient Egypt, craftsmen would include unique images and signs on their products to identify a product's origin as well as its maker.
  • 1266 C.E.: King Henry III of England passed a law that required all bakers to develop and use a distinctive mark in their loaves of bread.
  • 1383: The Löwenbraü brewery in Munich, Germany began using a lion (Löwenbraü means "lion's brew") as its trademark.
  • 1857: France declared its first modern trademark law.
  • 1862: Britain first issued its trademark law, the Merchandise Marks Act, making it a crime to try to sell an item under the auspices of another manufacturer.
  • 1876: The logo of Bass Brewery, which was trademarked is the first image to be registered as a trademark in the United Kingdom.
  • 1401–1500: In 15th-century Europe, it was quite popular to add emblems and symbols to military attire, including horses' harnesses.

Since colonial times, the United States had been protecting trademarks informally under common law.

In the United States

  • 1791: The conversation about trademark legislation in the U.S. began in earnest during President Thomas Jefferson's office.
  • 1870: Congress proposed a formal trademark law, but it the Senate squashed it because the bill conflicted with constitutional rights.
  • 1881: Congress passed a new trademark act.
  • 1905: Congress revised it and drafted the final Trademark Act.
  • 1946: Congress passed the Lanham Act, which defined federal trademark rules and gave the USPTO administrative authority over trademark registration.