Trade Secrets, Trademarks and Service Marks — What’s the Big Difference?

In the business world, what’s in a name can be more valuable than the product or service being offered. Customer awareness of the brand, and confidence in the quality of the product or service equate to the value of the good will, which in turn, determines to a great extent, the value of the company, it’s stock, and its purchase price. For this reason (and others), it’s very important early on, and certainly during the life of the entity, to protect the intellectual property that incapsulates and monetizes this good will.

In short, the entity should determine early on what it will use to identify its products or services. For many entities, it’s a symbol such as Swoosh for Nike or bitten apple for Apple. Trademarks may also be comprised of designs, colors, sounds or combinations thereof. These items are trademarked, at minimum in the state in which the product or service is offered, but preferably through the federal PTO (Patent and Trademark Office). Moreover, the trademark should be further protected in the countries outside the U.S. where the product or service is being marketed.

A Trade Name is the name that is used to identify the company marketing the product or service. This may be different than the official name of the corporation, which is typically protected in the state in which it is incorporated  or where it is registered as a foreign corporation. Many Trade Names are actually fictitious business names for the entity that operates the business. For example, Twinkies is the Trade Name used bu Hostess Brands, LLC.

Service Marks are used to simply identify the entity’s services. Some examples are Fed-X on trucks, United Airlines on its airplanes. The distinction here is that there is no product per se, but rather some service they provide.

Definitions under the Federal trademark Act of 1946:

Trademark: Any word, name or symbol or device or any combination thereof adopted and used by a manufacturer or merchant to identify and distinguish his goods, including a unique product, from those manufactured and sold by others nd to indicated the source of the goods, even if that source is unknown.

Service Mark: Similar as trademark but used to signify a service rather than a product.

Under the Uniform Trade Secret Act, Trade Secret is defined as “information, including a formula, pattern, compilation, program, device, method, technique, or process, that derives independent economic value, actual or potential, from not being generally known to or readily ascertainable through appropriate means by other persons who might obtain economic value from its disclosure or use; an is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.”