When starting your first business, some new owners get excited and want to immediately file a trademark with the USPTO or their state trademark office, while others focus entirely on success of their new business and let intellectual property protection wait for a later date. The good news is that both will be able to achieve some sort of protection assuming that the mark they are using does not infringe on the rights of a preceding mark. Under South Carolina state law, trademarks can be protected under, (1) the common law without registering the mark or (2) state law by registering with the South Carolina Secretary of State.
South Carolina Common Law Trademark
Common law trademarks come into existence through using trademark in commerce; it requires no registration to afford protections of the South Carolina Code. Putting your trademark in commerce typically requires starting a business associated with the sale of goods or services. From here, your protection will be based on first use of the mark and will be protected by the state code.
The definition of common law trademarks would seem to lead to the conclusion that they are only protected by case law that developed protection for unregistered trademarks, but express provisions of the South Carolina Code provide for statutory protection as well. These provisions in the South Carolina Code cause some uncertainty of whether registering your trademark is worth the money; however, the registered state trademark does still provide additional protection that the common law mark does not receive.
South Carolina Registered Trademark
The main purpose of registering your trademark is to notify the public of your use of a mark and claiming exclusive use of the mark. Here, you essentially will put the public on notice compared to a common law trademark, where you will likely have to take more action to assert your trademark rights. Additionally, the trademark will have further protection in the extent of geographic protection by providing statewide coverage while the common law trademark is typically limited to the immediate geographic extent of use.
State registered trademarks often attract more small businesses than USPTO registered trademarks because these businesses are more likely to intend to operate in only one state. This preference comes from the significantly cheaper registration fees in state trademark departments and the lack of need for nationwide protection of the mark. Most federal trademarks cost $275 to $375 to file excluding attorney’s fees, while a South Carolina trademark costs $15 excluding attorney’s fees.
The USPTO’s registration process also takes much more time for review and publication and has a higher likelihood of being denied due to technicalities and minor deficiencies. In South Carolina, a trademark usually processes in fifteen days, and trademark owners are given prompt notification of deficiencies making the application and registration process much easier than its federal counterpart.
Protection Under South Carolina Law
Under SC Code Ann. § 39-5-20(a), “Unfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce are hereby declared unlawful.” This standard has been interpreted to protect trademark infringement when a subsequent trademark has a significant likelihood to cause confusion. The following cases have helped to clarify how this standard is applied:
- Taylor v. Hoppin’ Johns, Inc. 304 S.C. 471, 477, 405 S.E.2d 410, 413 (S.C. App. 1991) (holding that likelihood of confusion has been found to exist in trademark cases under state law “when consumers viewing the mark would probably assume that the product or service it represents is associated with the source of a different product or service identified by a similar mark”); and
- Global Protection Corp. v. Halbersberg 332 S.C. 149, 156, 503 S.E.2d 483, 487 (S.C. App. 1998) (“To be actionable under the UTPA, the unfair or deceptive act or practice must have an impact upon the public interest [and must] have the potential for repetition.”) (quoting York v. Conway Ford, Inc., 325 S.C. 170, 173, 480 S.E.2d 726, 728 (1997)).
These cases in connection with the relevant South Carolina Code provisions, suggest that the most important considerations in determining whether trademark infringement exists is the likelihood of confusion of who actually provides the services and would repeatedly make this mistake. This becomes a matter of public interest where individuals would reasonably be misled by the deceptive trademark and feel that their ability to tell the true source of goods or services has been affected.
Additionally, SC Code Ann. § 39-15-1180 clarifies that state trademark laws will apply equally to those created as common law trademarks through first use. This is stated explicitly where the code says, “Nothing in this article may adversely affect the rights or the enforcement of rights in marks acquired in good faith at any time at common law.”
South Carolina Code § 39-15-1165 sets forth the following factors in determining whether to grant injunctive relief to state trademarks:
(1) the degree of inherent or acquired distinctiveness of the mark in this State;
(2) the duration and extent of use of the mark in connection with the goods and services;
(3) the duration and extent of advertising and publicity of the mark in this State;
(4) the geographical extent of the trading area in which the mark is used;
(5) the channels of trade for the goods or services with which the registrant’s mark is used;
(6) the degree of recognition of the registrant’s mark in its and in the other’s trading areas and channels of trade in this State; and
(7) the nature and extent of use of the same or similar mark by third parties.
This section of the code serves as a limitation of sorts to how far your trademark may be protected. Each factor listed above focuses on elements such as the mark’s use in commerce, geographic limitations, how distinct or similar it is compared to the infringing mark, which helps show its intent to not grant broader protection than needed. By setting this limitation, the courts will set the minimum protection for the mark to continue normal use without infringement, but also avoiding broad limitations that would unduly burden other businesses.
This section also highlights a key difference between registered state trademarks and common law trademarks, the extent of protection. Registered trademarks will typically be protected throughout the state, while common law trademarks are narrowed down to a more precise geographic location to ensure that the protection does not exceed the use of the mark.
Additionally, state law trademark owners may pursue additional damages where “the subsequent user wilfully intended to trade on the registrant’s reputation or to cause dilution of the owner’s mark. If wilful intent is proven, the owner is entitled to the remedies set forth in this article, subject to the discretion of the court and the principles of equity.”
After reviewing the trademark laws of South Carolina, it would not be unreasonable to have a hard time discerning the benefits of registering your trademark because common law marks have been included in the statutory protections of South Carolina trademarks. However, registering your trademark provides notice to all, gives greater geographic protection, and provides a higher level of deterrence as the registered trademark shows more legitimacy to competitors and would-be infringers.
The decision may seem like splitting hairs, and it might be just that for some, but when your goals are to expand further than your first storefront and outside of your current city or county, then the small price of registering your trademark in your state may be worth it. However, many local businesses will feel completely comfortable with being protected under the common law, and this might not result in any issues. While this is true, if a legal action is necessary, then a registered trademark will make your action easier and as a result may reduce legal fees and provide more certainty regarding the extent of the injunctive relief that a court may grant.
George Fowler is an associate at Henderson & Henderson. Contact him at 843-212-3188 for your trademark needs.