First and foremost, I would like to thank my nemesis LegalZoom for this week’s blog post. I swear, the only good thing about LegalZoom is its uncanny ability to continually provide me with fodder to write about on this blog. Just when I think I have nothing interesting to talk about, LegalZoom swoops in to save the day!
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.
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Related Article: Is LegalZoom Legit for Preparing My Trademark Application?
Related Article: LegalZoom and Trademark Registration: A Match Made in Hell