As some of you know, in addition to having my own law practice, I work as an independent contractor to another trademark attorney here in St. Louis and frequently assist her clients with a variety of intellectual property matters.  A few weeks ago, she was hired by a client to respond to a routine communication he received from the Trademark Office (called an “office action”) requesting some additional information and clarifications regarding his trademark and the products with which his mark is used.  I later learned that this client had used LegalZoom (which is an online legal document preparation service and NOT a law firm) to prepare and file his trademark application.  Of course, when he received this office action from the Trademark Office in his mailbox, he had no idea what it was or how to properly respond to it.

This is probably a good time to give you some essential background information about trademark ownership and how it relates to trademark registration.  The very first question on the trademark application asks for the “owner” of the mark.  The owner of a mark may be an individual but, in many cases, the owner is a corporation or limited liability company (LLC) which has been legally organized under the laws of a particular state.  For instance, the trademark COCA-COLA is owned by The Coca-Cola Company, which is a Delaware corporation.  Not surprisingly, only the owner of a trademark may apply to register the mark with the Trademark Office.  If the person or entity applying to register the mark is not the owner of the mark on the date the application is filed, the application is void and any resulting registration is void.  Unfortunately, when an application is filed in the name of the wrong party, the mistake cannot be cured by simply amending the application or assigning it to the proper party.  And, even worse, the filing fee submitted with the trademark application will not be refunded.

When I am hired by a client to prepare and file a trademark application, I usually ask whether he/she has already formed a corporation or LLC under which they are currently doing business or intend to do business.  When the answer is yes, I then inquire as to the legal name of the entity and the state in which the entity is incorporated so that I am able to properly identify the owner of the trademark on the application form.  Having learned the hard way early in my career, I now always check the online corporate records (which are maintained by each of the 50 states) to make sure that the information provided by the client is accurate.  You would be astonished by the number of people who either don’t know the exact legal name of their corporate entity, or who thought they had formed a corporate entity but never completed all the steps or paid all of the necessary government fees.

Now let’s return to the story.  As I routinely do when a client comes to us with an already-filed application, I reviewed the application in its entirety and noted that it was filed in the name of an Illinois corporation.  I then pulled up the Illinois Secretary of State’s website to make sure that the name of the corporation listed on the trademark application matched the legal name of the corporation in the Illinois corporate records.  It did.  Only problem was that the corporation was formed two weeks after the client had filed his trademark application through LegalZoom.  In other words, the corporation wasn’t even in existence on the filing date of the trademark application and, therefore, it could not logically have been the owner of the trademark.  Clearly, this application was void the very second LegalZoom filed it with the Trademark Office.

When I called the client to deliver the bad news, he admitted that he told LegalZoom that the corporation was the owner of the trademark.  He thought he could put the trademark application in the name of the corporation since he would be forming it pretty much momentarily.  Now, did LegalZoom do what any responsible and experienced attorney would do and check the corporate records before filing the application.  No.  Even more to the point, did LegalZoom attempt to verify any of the information provided to it by the client in order to ensure that the application would be prepared with truthful and accurate information so that the client’s interests would be protected?  Again, the answer is no.  LegalZoom doesn’t think, ask questions, or make inquiries.  The sole function of LegalZoom is to prepare documents in a machine-like fashion with whatever information is given to it.  LegalZoom is like a computer program; if you plug garbage in, it will spit garbage out.  On the other hand, trademark attorneys know what questions to ask and what investigations to undertake in order to get the job done right the first time so that their clients’ interests are not prejudiced.

Finally, some of you may be wondering why the Trademark Office didn’t reject the client’s application on the basis that it was filed in the name of the wrong party.  Well, that’s because the Trademark Office doesn’t independently investigate whether the person or entity named as the owner of the mark is correct or, in this case, even exists.  Unless there is something else about the application that raises a red flag regarding ownership of the mark, the Trademark Office will not question ownership.  And what’s really scary is that, had I not caught this error and just responded to the office action, the client’s void trademark application would have matured into an equally void trademark registration.  He would have been operating his business as if he had all the protections and benefits of federal trademark registration when, in fact, he would have had none.  This could have been disastrous for him had he ever wanted to franchise under the trademark or found himself either a plaintiff or defendant in a trademark infringement suit

So, in conclusion, unless you care about me so much that you want to ensure that I have something to write about week in and week out, please stay away from LegalZoom and encourage your friends, family, and colleagues to do the same.

Here’s the way LegalZoom’s trademark application service works.  LegalZoom asks you a series of questions similar to those asked on the Trademark Office’s official application form.  Once you answer those questions and make your payment, a non-attorney at LegalZoom logs onto the Trademark Office’s website, retypes the information you already provided into the proper spaces, and then electronically transmits the application to the Trademark Office.  So easy a caveman could do it, right?

Not exactly.  Ever hear of the phrase, “garbage in, garbage out?”  Well, that’s exactly what you get with LegalZoom.   If you answer one of LegalZoom’s questions incorrectly or inaccurately, then such incorrect or inaccurate information will be submitted to the Trademark Office by LegalZoom and will form the basis of any resulting trademark registration.  If a trademark registration contains materially false information, it is basically worthless and subject to cancellation by the first person who happens to like the trademark you registered and would much prefer that you not have exclusive rights to use the mark throughout the United States.

I know what you’re saying to yourself.  You’re thinking that Morris just wants to scare people away from using LegalZoom so that perhaps they will retain him to prepare and file their trademark applications for significantly more money than what LegalZoom charges.  Trust me, I have no problem admitting that, YES, I am trying to dissuade people from using LegalZoom.  And, YES, my fee is approximately two and half times that of LegalZoom.  But the reason I and other attorneys charge more than LegalZoom is because we aren’t scribes, we’re lawyers who offer advice and consultation to our clients, who know what questions to ask our clients, what follow-up questions to ask our clients, and who are available to answer all of our clients’ questions and address their concerns.  Seriously, if all you want is someone to fill out the blanks on the application form, then look no further than the closest mirror and save yourself the $169 LegalZoom fee.

But doesn’t LegalZoom file hundreds of trademark applications per year?  Well, in some of its pay-per-click advertisements, LegalZoom claims to have filed over 75,000 federal trademark applications.  While that number certainly sounds impressive and likely lulls consumers into a false sense of security, it really doesn’t mean a whole heck of a lot.  Why?  Because that number doesn’t tell us how many of these 75,000 applications actually matured into federal trademark registrations.  It’s very possible (and probable) that a huge portion of these applications are either (1) rejected by the Trademark Office, (2) challenged by a third-party, or (3) inadvertently abandoned due to the trademark owner blowing one of the various deadlines for filing a response to an inquiry from the Trademark Office or for filing the Statement of Use.  Of course, because LegalZoom is not a law firm, it cannot perform the legal work necessary to overcome a substantive rejection by the Trademark Office, nor can it help a trademark owner defend an opposition by a third-party.  So, please don’t get too giddy about the number of trademark applications LegalZoom has filed.  A trademark application that doesn’t mature into a trademark registration is like a popcorn kernel that fails to pop.

Finally, if for some reason you’re still considering using LegalZoom for your trademark application, I encourage you to check out one of LegalZoom’s own pending trademark applications (Serial No. 77476052).  If you scroll down all the way to the bottom, you’ll see that LegalZoom actually hired a law firm to help it with its trademark application.  Oh the irony!!  I think LegalZoom now needs to change its tagline from “We put the law on your side” to “We put the law on your side…and ours.”

I recently received a call from someone who wanted to file a federal trademark application to register a mark he was intending to use in connection with his start-up business.  Of course, I advised him that we should at least perform a federal trademark registration search prior to filing the application so that we know whether anybody owns a federal registration for an identical or confusingly similar trademark.  Much to my surprise, he informed me that he had already paid LegalZoom $299 to conduct a comprehensive trademark search.  Only problem was that he couldn’t make heads or tails of it.

When I met with him a couple of days later, he handed me two large books labeled “LegalZoom Comprehensive Trademark Search Report.”  By the looks of it, the search certainly appeared “comprehensive.”  LegalZoom had conducted federal, state, and common law trademark searches, as well as a corporate name search, fictitious name search, and domain name search.  All together, the search report was a whopping 1273 pages!  Since he shelled out $299 for the search, that came to less than $.24 per page of valuable and insightful information!  Unbelievable value, right?

Wrong.  In reviewing the search report, it quickly became clear that it was merely a collection of data that 99.9% of the population would find incomprehensible.  It was filled with numbers, dates, and legal references that only a trademark law practitioner could possibly understand.  Yep, that “comprehensive trademark search report” was certainly chock-full of information.  Too bad my client didn’t have a law degree, a few years experience practicing trademark law, and about a month to actually read the search report.

I think everyone reading this understands that LegalZoom’s “comprehensive” trademark search report was missing two essential pieces of information: (1) an interpretation of the search results, and (2) a recommendation as to whether the trademark being searched is available for use in connection with my client’s new business.  Unfortunately, most consumers don’t realize that LegalZoom cannot provide such information.  Why?  Because LegalZoom is not a law firm and, therefore, cannot dispense legal advice.  To be sure, LegalZoom cannot advise their customers whether their trademarks infringe upon another previously used and/or registered trademark.  All LegalZoom can do is compile 1273 pages of data, tell their customers that the search is “comprehensive” to make them feel all warm and fuzzy inside, and pocket $299 each time one is ordered, leaving their customers to figure out what to do with the voluminous search report other than to curl it like a dumbbell.

Since it would have cost my client substantially more for me to actually review the entire LegalZoom search report rather than to conduct a brand new federal and state trademark search myself, I told him I would gladly do my part for the environment by recycling the LegalZoom search report and issuing him a new search report based on my own research, which he happily accepted.  Of course, since I usually charge around $300 for this type of search and my report is generally 2 pages in length, I hope he doesn’t mind paying $150 per page rather than 24 cents.  Hey, I have very high-quality letterhead!

Anyway, I plan on posting another entry about the evils of LegalZoom sometime next week.  If any of you have any experience using LegalZoom and want to share your stories, please feel free to post a comment or send me an email.