For most of us, when we think of trademarks, we think of iconic brands such as Nike, Coca-Cola, Apple, or McDonald’s—all of which are for-profit businesses. But what about the Salvation Army, the United Way, or the infamous “Livestrong” bracelet? Nonprofits, especially in recent years, have started to realized the importance of protecting their intellectual property and using trademarks to distinguish themselves.
Broadly speaking, there are two things all nonprofits should be aware of when it comes to trademarks. First, nonprofits should make sure that they are not violating anyone else’s trademark rights. Second, nonprofits should make sure that they are taking proactive measures to protect their own brands, for example, by applying for trademark registration.
Your brand says a lot about you. Whether it’s through your website, marketing materials, or direct experience with your services, your brand is your first point of contact with the public. In a competitive, high-tech economy, businesses must do everything they can to distinguish themselves. Trademarks and service marks are the most powerful and effective tools businesses can use in meeting this goal.
This is even truer for a nonprofit, for whom goodwill, reputation, and image are its lifeblood. Branding will often play an integral role in helping your organization advance its message, raise funds, and fulfill its charitable, educational, or religious purpose.
Finally, it’s important for tax-exempt organizations to remember some unique considerations with respect to trademarks that don’t apply to for-profits. The following are some examples of IRS-specific rules that raise particular concerns, especially in instances where a nonprofit is generating significant revenue in licensing fees from its trademark(s):
- UBIT. The IRS levies an “unrelated business income tax” (“UBIT”) on income earned from activities regularly carried on that are not substantially related to the organization’s tax exempt purpose. Income derived from trademark licensing could, under some circumstances, fall into this category.
- Joint ventures. When developing licensing or co-branding strategies, nonprofits should be careful to avoid creating a “joint venture” which is regulated by the Internal Revenue Code.
- Private benefit transactions are those that benefit individuals to the detriment of the tax-exempt organization. Trademark licensing agreements should be constructed in a way that does not benefit an individual(s) to the detriment of the nonprofit.
The following are some resources that nonprofits can use to get a better idea of whether someone else has trademark rights in a particular name or slogan: The United States Patent and Trademark Office (USPTO) search engine, various state corporations bureaus, internet search engines such as Google, and domain name availability search engines such as Network Solutions.
Please feel free to contact Elliott & Davis, PC with all of your questions about nonprofit law or trademark law.
We currently offer all of our trademark registration services at affordable flat rates—well below the rates charged by many larger law firms. Typically, our rate for all-inclusive trademark registration packages is $1200. Phone consultations are always free, so feel free to give us a call at 412.434.4911 ext. 11 with any questions about trademark law.
