Trademarks are often in the news; you might have come across articles about businesses getting trademarks for their name or logo, or becoming involved in trademark disputes. With this rise in popularity, you might wonder whether you should get a trademark for your nonprofit organization.
While trademarks offer many benefits, they can also be costly. When deciding whether your nonprofit should get a trademark, you will need to weigh the costs and the benefits to decide whether your nonprofit is ready to take that step.
What Is a Trademark?
A trademark is any name, slogan, design, or logo that helps the general public identify a business and the products or services it offers. Many popular nonprofits have trademarks and use them to help the public identify with their business. For example, the American Red Cross not only has its name trademarked, but it also has the red cross emblem trademarked.
What Are the Benefits of Registering a Trademark for Your Nonprofit?
Trademark rights come from use, not registration, which means you automatically get trademark rights just from using your trademark. So in order to secure your trademark rights, all you need to do is start using your trademarks in a way that represents your nonprofit organization. But the rights you automatically get just from using your trademarks are actually very limited.
For example, you will be able to claim trademark rights only where you use your trademark. If you use your trademark only in Los Angeles, California, then you have rights only in Los Angeles and nowhere else. If you use your trademark in the entire state of California, then you have rights in that state only. That may be okay for some nonprofits, but many nonprofits cross state borders and will want to have protection in more than one state. For that, we turn to federal trademark registration.
Having a federal trademark registration can provide your nonprofit with valuable branding and legal benefits.
Branding Benefits of Federally Registered Trademarks
A nonprofit might want a registered trademark for the following reasons:
- Branding awareness. A federal trademark adds branding awareness for the public, making it easy for the public to identify the nonprofit and distinguish it from others.
- Licensing. You have better control over licensing your nonprofit's name and logo for fundraising and marketing purposes once they're trademarked. You can also license your nonprofit's name and logo for merchandising, which can bring in more money for your organization (but be sure to check with a tax professional before merchandising).
- Expansion. Having a federal trademark will help you to expand your nonprofit organization. If you choose to expand, you can license your nonprofit's trademarks to affiliates, which will allow your organization to reach a broader audience.
- Value. A federal trademark will add value to your nonprofit organization—it becomes an asset just like any other asset your nonprofit owns. If you ever did expand, or if you decided to merge or sell your nonprofit, the value of your nonprofit would be higher with a federally registered trademark than without one.
Legal Benefits of Federally Registered Trademarks
A nonprofit might want the legal protection a registered trademark offers for the following reasons:
- Protection. You get trademark protection in all 50 states, even if you're only using your trademark in two or more states.
- Notice to public of trademark rights. You're putting the entire public on notice that you are claiming trademark rights.
- Evidence with which to resolve disputes. You may be able to resolve trademark disputes easier when you have a federal trademark registration certificate.
- Federal court access. If another business is using your nonprofit's trademarks, you will be able to go to federal court to stop it. If you win in court, having a federally registered trademark might get you more money than if you hadn't registered the trademark, and you might be able to have your attorney's fees paid for.
As you can see, there are many benefits to having a federal trademark registration for your nonprofit organization. But these benefits don't come without a cost.
What Are the Costs of Registering a Trademark for Your Nonprofit?
Here's a rundown of the costs you'll likely face:
- Initial costs. Before choosing a trademark, you will first need to run a trademark search. A search can run anywhere from a couple hundred dollars to several thousand. While it's tempting to cut corners and run your own search, this is actually the most important part of the process. You should use a professional for this step.
- Application filing fees. There are filing fees associated with filing your initial federal trademark application. Those range from $250-$750 and can add up quickly. In addition, if you hire an attorney to file and monitor your application for you, you will have to pay attorney's fees on top of the filing fees, whether hourly or on a flat-fee basis. Don't be surprised to pay up to $3,000 to the lawyer.
- Maintenance fees. Once you have obtained your federal trademark registration, there is required paperwork that must be filed every few years in order to keep your trademark registration active. The current fee is $525. Again, you'll need to pay attorney's fees if you choose to use an attorney.
- Miscellaneous fees. You will likely want to have an attorney draft a standard cease-and-desist letter in advance for you, so you can send it out on your own if and when you discover that someone is using your nonprofit's trademarks. And of course if that doesn't work, you will have to enlist an attorney to help resolve your dispute. Those fees can get high, especially if your dispute leads to litigation.
As you can see, trademarks aren't cheap. Trademark fees can add up quickly and will continue to add up over the life of your trademarks.
Whether a nonprofit should trademark its name or logo depends largely on whether the nonprofit has the funds to do so. Many new businesses, especially nonprofits, do not have a budget for registering a trademark, much less to maintain and enforce it.
If you're a new nonprofit, the most practical move is often to just continue using your trademarks without registration and begin building your brand. As your nonprofit grows, revisit your budget to see whether you have room for a trademark registration. While the costs can be high, a federal trademark registration will provide your nonprofit with valuable branding and legal benefits, ultimately making the benefits outweigh the costs.