The New Trademark Law Impacting Franchising

The United States Patent and Trademark Offices (USPTO) defines a trademark as “any word, phrase, symbol, design, or a combination of these things that identifies your goods or services.” 

The use of a trademark is critical for franchises as well as nearly any business that provides goods and services. It is how customers recognize the company in the marketplace and how it distinguishes itself from its competitors. 

Business owners who are ready to expand their brands through franchising should register their trademarks to protect their tradenames, logos, and other identifying branding, especially since they will become more visible and possibly cross state lines. Let’s discuss the basics of a trademark, the impact of a recent federal law on franchising and how it may benefit new franchisors.

Trademark Basics

The word “trademark” can refer to both trademarks and service marks. A trademark is used for goods, while a service mark is used for services.

According to the USPTO, a trademark:

  • Identifies the source of your goods or services.
  • Provides legal protection for your brand.
  • Helps you guard against counterfeiting and fraud.

As a local business owner with one (or very few) locations in one territory, you may not have needed to register your trademark. But if you intend to expand your reach and since consistent, identical branding is critical to the success of a franchise, registering with the USPTO is the best way to create and protect your trade name on a nationwide scale. 

The Trademark Modernization Act

The Trademark Modernization Act (TMA) was signed into federal law in 2020 and implemented by the USPTO in December 2021. Its purpose is to reduce and remove unused trademarks from the federal trademark register. The implementation of this statute is positive news for new franchisors; trademarks that are no longer in use should not present a roadblock for a new franchisor looking to establish its branding. 

Say you are opening a pizza franchise and want to include an image of a circular pepperoni slice to dot the ‘i’ in the name, but a competitive business previously filed a similar mark for use in marketing its brand. If that business is no longer actively using its mark, you may be able to proceed with registering your mark as a result of the TMA. 

Expungement and Reexamination

The TMA offers two types of ex parte proceedings to cancel unused registered trademarks – reexamination and expungement. 

Reexamination must be requested within the first five years after registration. 

Expungement, according to the USPTO, refers to the cancellation of “some or all of the goods or services in a registration because the registrant never used the trademark in commerce with those goods or services.” The current time limit to request an expungement is between three and 10 years after the registration date, but the 10-year limit will be removed at the end of 2023. 

Best Practices for Trademark Research

Although it is always best to consult with knowledgeable counsel, the USPTO offers tips on how to prepare a petition for reexamination or expungement under the TMA:

Documentation. You will need to demonstrate nonuse by the registrant and provide evidence of your investigation. You should provide files like Word documents, PDFs, images, or screenshots evidencing the non-appearance of a trademark in your searches. This may include screenshots from (via its “Wayback Machine”) demonstrating nonuse.

Submit relevant evidence. Create a direct, easy-to-follow narrative based on your findings. Put some thought into it and, as the USPTO urges: “Don’t do a data dump.” Just a few paragraphs to contextualize what you want, what you found, and why you need USPTO action should suffice.

Once you have ample evidence that a similar trademark is not active, speak with your NY franchise lawyer, who, along with your trademark lawyer can guide your submission to the USPTO and further ensure a smooth franchise launch. 

Contact Lusthaus Law

Lusthaus Law P.C. has a proven record of assisting franchisors and franchisees with their business operations at every stage of development. Lusthaus Law has advised on the basics of franchise trademarks and has collaborated with trademark lawyers when helping clients launch their franchise systems.

Contact us today to learn more about how Lusthaus Law P.C. can help you navigate a clear path for your franchise’s successful future.


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