What exactly is a trademark? In short, it is something consumers can look at to know the source of the product they are buying. The United States Patent and Trademark Office ("USPTO") explains "[a] trademark is a word, phrase, symbol, and/or design that identifies and distinguishes the source of the goods of one party from those of others. A service mark is a word, phrase, symbol, and/or design that identifies and distinguishes the source of a service rather than goods. Some examples include: brand names, slogans, and logos. The term 'trademark' is often used in a general sense to refer to both trademarks and service marks." Let's unravel that a bit and see why trademarks can be so valuable.
A trademark can be a "word, phrase, symbol, and/or design." The name Starbucks® is a word consumers associate with coffee. The phrase Just Do It® is known for products produced by Nike®, as is the "swoosh" symbol below:
Each of these trademarks has little value inherently — Starbuck is merely a character from Herman Melville's Moby Dick, "just do it" is simply an encouraging phrase, Nike the Greek goddess of victory, and the swoosh a simple sketch. What gives them value is their role: to identify and distinguish the source of a product. As these companies grew and developed their offerings, they came to be known for particular products with characteristics a customer was seeking. Consumers wanting a darker roast of coffee in the late 1980's soon learned that the rapidly-expanding Starbucks brand was the place to look. Importantly, they also learned that the coffee was consistent from location to location, and that they could find a similar cup at any storefront marked by the Starbucks name. With competitors entering the market, Starbucks could differentiate itself by prominently displaying the word "Starbucks" on signage, advertising, cups, and more. In time, the Starbucks name became synonymous with quality coffee — it distinguished a cup of coffee produced by them from one produced by any other company.
That said, keep in mind that the mark which is associated with the product does not need to be related in any way to the company name itself. A consumer could recognize the "swoosh" above and soon determine that anything with the "swoosh" is in line with what they want to buy, even if they never hear the name Nike. They know, simply by a visual symbol, that the "swoosh" shoes are offered by the same company with the "swoosh" shirts, the "swoosh" basketball, or the "swoosh" water bottle. In fact, the symbol can be central to a product identity without knowing the name of the company. Recognize this?
Registered trademark of Turner Broadcasting System
Of course, you know CNN as a source of news and entertainment content, and you may even recall the phrase "Cable News Network." It may not matter to you that the channel is owned by Turner Broadcasting System, so long as the symbol itself is familiar to you as a source identifier.
Trademarks are a shorthand we use to help customers understand how to choose the good or service they prefer. Their business value grows with the underlying offering, and that value ca increase dramatically as the mark's ability to be a differentiator becomes essential to the protection of a brand. A small company just starting out may not see the need to carve out this identity at the beginning, but early success and increasing recognition often leads to imitation. Choosing and protecting a trademark can be a small investment now leading to significant dividends later. After all, with all the hard work necessary to stand out from the crowd with a new product or service, the name you choose may just end up being your greatest asset.