What is a 'Trademark'

A trademark is a recognizable insignia, phrase or symbol that denotes a specific product or service and legally differentiates it from all other products. A trademark serves to exclusively identify a product or service with a specific company, and is a recognition of that company's ownership of the brand. Trademarked products are generally considered a form of property.

Breaking Down 'Trademark'

One of the main purposes of having a product trademarked is to protect the product from being used without permission of the source company. Most countries have patent laws which are designed to protect against copyright infringement. International copyright regulation is much more complicated, as there exists no universally recognized patent office.

Most countries have agencies through which businesses can have their products trademarked. In the United States, this function is served by the United States Patent and Trademark Office. A trademark can be a logo, like the Nike Swoosh, a slogan, or simply the name of a product. Some brands, like Kleenex, are so prominent and have such successful brand identities that they have almost replaced the original word (tissue) in everyday language. 

Trademarks and Patents

To register a patent in the United States, a business must submit a patent application to the Patent Office, which will be reviewed by an attorney to determine that the patent has been registered in accordance with federal regulations and that it is a distinct product and does not infringe on the trademark rights of an existing patent. After the application has been reviewed, the patent is "published for opposition" for 30 days, during which time other companies can oppose the registration of the new patent.

Trademarks can be bought and sold. Famously, Nike purchased the instantly recognizable Swoosh logo for only $35. Trademarks can also be licensed to other companies for an agreed-upon period of time or under certain conditions, which can result in crossover brands. Lego, a distinct company, has licensed many famous brands like Star Wars and DC Comics to produce Lego versions of popular products. These are also examples of the importance of branding products from a marketing perspective. Trademarks help distinguish products not only within the legal system, but to the consumer.

Trademark History

Trademark, as the word implies, is a mark that shows the trade of the maker. In 1266, King Henry III of England passed a law requiring all bakers to make a distinctive mark for all the bread they sold. The Löwenbraü brewery in Munich, Germany claims it has used a lion (Löwenbraü means "lion's brew") as its trademark since 1383. The logo of Bass Brewery, which was trademarked in 1876, is the first image to be registered as a trademark in the United Kingdom.

The first modern trademark law was promulgated in France in 1857, and Britain first issued its trademark law, the Merchandise Marks Act, in 1862. The British act made it a criminal offense to try and sell a product under the auspices of another manufacturer.

In the U.S., Congress tried to pass a trademark law in 1870, but it was struck down by the Supreme Court that year. Congress tried again in 1881, which was revised into the Trademark Act in 1905.

RELATED TERMS
  1. Service Mark

    A brand name or logo that identifies the provider of a service. ...
  2. Invisible Assets

    An item of value that is intangible and that cannot be seen, ...
  3. Logo

    A logo is a graphic mark, emblem, symbol or stylized name used ...
  4. Patent Reexamination

    A process conducted by the U.S. Patent and Trademark Office (USPTO) ...
  5. Medical Patent

    A legal protection against market competition that a government ...
  6. Patent Share

    The percentage share of a universe of patents owned or created ...
Related Articles
  1. Managing Wealth

    Trade Name Vs. Trademark: Know the Difference

    Understand the differences between a trade name and a trademark, the different functions they serve and registration considerations for business owners.
  2. Small Business

    How to Pick a Winning Name for Your Business

    Many entrepreneurs are big picture people and have a hard time choosing a company name. Here are two major strategies for naming a business.
  3. Investing

    Patents are assets, so learn how to value them

    Find out how companies protect their innovative ideas with patents and how to figure out how much they're worth to the overall value of a business.
  4. Insights

    Amazon Was the Biggest Gainer in Patents Last Year

    The Seattle company registered a 46% growth in its patent count.
  5. Small Business

    Who Are Patent Trolls & How Do They Work?

    Patent trolls are in the business of patent litigation, enforcing their patent rights against alleged infringers through license fees and lawsuits.
  6. Small Business

    What's The Cost To File A Patent?

    When filing a patent, be ready to pay attorney fees, filing fees and other related expenses. Usually the total bill is a few thousand dollars.
  7. Small Business

    From Idea To Product: 4 Steps To Success

    These steps will help you bring your million-dollar invention to life, without breaking the bank.
  8. Investing

    Will McDonald's Sell Big Mac Sauce by the Bottle?

    While Aussies had a brief opportunity back to purchase bottles of McDonald's (NYSE: MCD) Big Mac "special sauce" in January, a recent trademark application filing by the burger chain hints at ...
  9. Insights

    Google Creates Community License to Unify Android Makers

    The PAX license is an agreement between its signatories for peace in patent litigation.
  10. Insights

    See How China Overtook the World in Patent Applications

    Not so long ago Japan was the clear global leader in IP. China took its place (and the U.S. took the Soviet Union's).
RELATED FAQS
  1. What are typical forms of capital assets within a manufacturing company?

    Learn the typical forms of capital assets for a manufacturing company, such as land, buildings, equipment, goodwill and trademarks. Read Answer >>
  2. What are typical examples of capitalized costs within a company?

    Learn examples of capitalized costs such as expenses incurred to put fixed assets to use as well as software development ... Read Answer >>
  3. What is the difference between tangible and intangible assets?

    Tangible assets are physical assets such as land, vehicles, equipment, machinery, furniture, inventory, stock, bonds and ... Read Answer >>
  4. Why is brand equity considered an intangible asset?

    Brand equity is an intangible asset because the value of the brand is not a physical asset and is instead determined by consumer ... Read Answer >>
  5. How do intangible assets appear on a balance sheet?

    Understand how various types of intangible assets are handled in a company's accounting and which of them you can find on ... Read Answer >>
Hot Definitions
  1. Ethereum

    Ethereum is a decentralized software platform that enables SmartContracts and Distributed Applications (ĐApps) to be built ...
  2. Cryptocurrency

    A digital or virtual currency that uses cryptography for security. A cryptocurrency is difficult to counterfeit because of ...
  3. Financial Industry Regulatory Authority - FINRA

    A regulatory body created after the merger of the National Association of Securities Dealers and the New York Stock Exchange's ...
  4. Initial Public Offering - IPO

    The first sale of stock by a private company to the public. IPOs are often issued by companies seeking the capital to expand ...
  5. Cost of Goods Sold - COGS

    Cost of goods sold (COGS) is the direct costs attributable to the production of the goods sold in a company.
  6. Profit and Loss Statement (P&L)

    A financial statement that summarizes the revenues, costs and expenses incurred during a specified period of time, usually ...
Trading Center