Over the past decade, the popularity of living in a common interest community, particularly condominium and homeowners associations, has risen significantly. According to recent statistics provided by Community Associations Institute, there are over 340,000 community associations, over 26 million housing units, and over 68 million residents living in these associations in the United States. As these numbers continue to grow, the range of differences between associations grows larger. With so many new associations forming each year, and so many residents choosing to live in these types of developments, every condominium and homeowners association should consider trademarking its name and logo.
WHAT IS A TRADEMARK?
A trademark includes names, slogans, and/or symbols that identify and distinguish goods and/or services. A trademark grants the exclusive right to use the name or logo to the owner of the mark. Owning a trademark is important because it puts the world on notice that a particular name or logo is owned and being used to identify a specific product or service. Owning a trademark also allows the owner to file a lawsuit in federal court to seek recourse against anyone who has unlawfully used the trademark. Upon being granted a trademark by the United States Patent and Trademark Office, the owner has the exclusive right to use the trademark throughout the entire country. Additionally, as the owner of the trademark, you can use the ® symbol which indicates to others that the name or logo is a registered trademark. If one has not yet applied for registration but nonetheless wishes to put the world on notice of its claim and use of a name or logo, the ™ symbol may be used, although it does not confer the exclusive right to use the name or logo.
DIFFERENCES BETWEEN APPLYING FOR A TRADEMARK AND INCORPORATING UNDER STATE LAW
Incorporation under state law provides some protections for business entities wishing to utilize a specific name or logo. Most condominium and homeowners associations are formed as nonprofit corporations in Michigan. In order to form the corporation, the association must file Articles of Incorporation with the State and select a unique name. The State will not permit any business entity to form using a name that is already in use by another entity. Accordingly, if an association is formed in one state with a particular name, no other entity may be formed using that same name in the same state. However, nothing prevents another entity from using the same name, or similar names, in a different state. Additionally, individuals might use the name without registering as a business entity with the state.
WHY APPLY FOR A TRADEMARK?
Many people are surprised to learn that the cost of obtaining a trademark is extremely reasonable in light of all the benefits it confers. The cost of submitting an application for a trademark ranges between $225 and $400. The process can require a legal analysis but many times will not be extremely time consuming which means the cost of hiring an attorney should not be prohibitive. If a particular association is affiliated with or administers the affairs for multiple developments, a specific brand name and logo will be very important. Trademarks are particularly important in this situation to protect associations that have expended resources in creating and maintaining a positive reputation in the community from having competitors steal their names and/or logos in order to profit or trick the public into believing that the two entities are related.
Condominium projects now include (1) site condominiums with detached buildings, (2) a number of identical or similarly constructed smaller buildings, each housing 2 or more Units, (3) large high rise buildings with potentially hundreds or thousands of Units, (4) strictly residential developments, (5) strictly commercial developments, (6) mixed-use developments, (7) condominiums dedicated to mobile homes and other recreational vehicles, and (8) condominiums created specifically for boat docks. Whether your association is small or large, in order to prevent others from using the association name, obtaining a trademark is the best way to protect your rights.
For smaller associations that only manage one development, a trademark is still an important tool for the association to protect itself against hostile or uncooperative members. As far too many associations and board members are familiar, it is not uncommon for an angry member of the association to go rogue and create a website or social media accounts in the association’s name. The member might do this for a number of reasons but often times it is done merely to cause trouble and to provide a platform to bad-mouth the association and its board members. Pursuant to the Lanham Act, 15 U.S.C. § 1125, obtaining a trademark in the association’s name prohibits any other person or entity from creating a domain name that infringes upon said trademark. In these situations, having a trademark of the association’s name provides the association with significantly greater resources to take swift action to prevent this behavior.
For example, in Board of Directors of Sapphire Bay Condominiums West v Simpson, 328 F Supp 2d 571 (D.V.I. 2004), affirmed by 129 F App’x 711 (3d Cir 2005), a condominium association sued an unhappy co-owner and obtained a preliminary injunction preventing the co-owner from operating a website under the name of the association. In that case, the co-owner registered the domain name “sapphirebaycondos.com” and used that name to operate a website where he made negative statements about the association and its board of directors. However, because the association did not have a registered trademark, the association’s options for recovery against the co-owner were more limited.
The Association eventually lost at trial and was unable to obtain a permanent injunction or monetary damages against the co-owner. Board of Directors of Sapphire Bay Condominiums West v Simpson, No. CV 04-62, 2014 WL 4067175 (D.V.I. 2014), affirmed by, 641 F App’x 113 (3d Cir 2015). The association may have been successful if it had a registered trademark as opposed to simply relying on common law protections. Even if the association in the Sapphire Bay case had prevailed at trial, it may not have been able to prevent someone in another state from using that domain name. Furthermore, because there was no registered trademark, nothing prevents another entity from attempting to obtain a trademark in the association’s name.
As mentioned, having a registered trademark provides the ultimate protection. Registration of a trademark provides constructive notice to all others throughout the country that the trademark is in use as well as the name of the owner. Having a registered mark also provides the opportunity to recover monetary damages for infringement including attorney’s fees and treble damages in certain cases. Additionally, using a registered trademark for five continuous years can grant the owner of the mark “incontestable” status meaning the exclusive right to use of the trademark is conclusively established.
Whether your association only operates in one state and only manages a single small development, or whether your association is managing a large number of properties throughout the country, obtaining a trademark of the association’s name and logo will undoubtedly be a valuable asset. Associations can use the trademark to protect their brand and reputation from being confused with competitors and can protect property values from nefarious, difficult co-owners. Additionally, associations can use the trademark to prevent others from hijacking the association’s name online. Because of the affordability of obtaining a trademark, it is something every association should at least consider and discuss with legal counsel.
Brandan A. Hallaq is an attorney with Hirzel Law, PLC where he dedicates the majority of his practice to representing condominium and homeowner’s associations. He frequently litigates cases involving contract disputes, shareholder/member disputes, quiet title actions to determine interests in property, enforcement of restrictive covenants, real estate foreclosure actions, and bankruptcy matters representing creditors. He also has experience preparing documents for business and real estate transactions including purchase agreements, franchise agreements, loan/financing documents and commercial and residential leases and mortgages. In 2018, he was recognized as a Rising Star by Super Lawyers, a designation that is given to no more than 2.5% of attorneys in the State of Michigan. Mr. Hallaq obtained his Juris Doctor degree, cum laude, from Wayne State University Law School where he served as an editor on the Wayne Law Review. He can be reached at (248) 478-1800 or at firstname.lastname@example.org.