There are many reasons why a franchisor should register its trademarks and service marks with the United States Patent and Trademark Office (USPTO). But since not all marks can be registered, there are a few things that franchisors should keep in mind when applying.
First, only the owner of the mark may apply for registration. According to the USPTO, “the key to ownership is the nature and extent of the control by the applicant over the goods or services to which the mark is applied.” Because ownership is tied to control, a franchisor must have proper franchise agreements, license agreement and other contracts in place to ensure that it (or its licensor) controls and owns the marks. So control over franchisees is not just important for business reasons such as brand consistency—it is also essential for maintaining the franchisor’s legal ownership of the system trademarks. Otherwise, as the USPTO states, “a trademark owner who fails to exercise sufficient control over licensees or franchisees may be found to have abandoned its rights in the mark.”
Second, because ownership of a trademark is tied to control, in most cases franchisees are ineligible to apply for registration of a system trademark. This is good for franchisors because a franchisor usually does not want a franchisee to have a trademark registration. However, since the USPTO does not screen applicants for control, there have been situations where franchisees have obtained trademark registrations. Although there are ways to remedy this situation, it is best to avoid it altogether. Franchisors should make sure that their franchise agreements prohibit the franchisee from registering system marks.
Third, most trademarks and service marks must actually be used across state lines to be registered with the USPTO. This requirement can pose a challenge for smaller franchise systems. However, use is not limited to use by the owner of the mark. The USPTO will accept applications from parties who claim to be owners of marks through use by “controlled licensees,” which means that a franchisor (with a proper franchise agreement) can rely on a franchisee’s use of the mark for trademark registration. This can be particularly helpful for a franchisor that may have company-owned locations in a single state but franchised locations elsewhere.
Sources:
- USPTO Trademark Manual of Examining Procedure §803.1
- USPTO Trademark Manual of Examining Procedure §1201.3(e)
