Federal trademarks provide a slew of advantages---less confusion, better infringement, and more effective trademarks.

In general, trademarks can lead to economic benefits, including an owner's right to exclusive use and reducing consumer search costs. A trademark can also lead to a higher, more consistent quality of products.

1. Economic Benefits of Trademarks

A trademark is a property right; therefore, there are economic benefits to owning one. 62 "A property right is a legally enforceable power to exclude others from using a resource, without need to contract with them." 63 The property right to a trademark is similar to a property right to a piece of land: an owner has the legal right to exclude or permit others from trespassing on her land because it is the owner's to use exclusively. 64 The same principle applies to trademarks: if an individual owns a trademark, she can forbid others from infringing on that trademark. 65

Trademarks also reduce consumer search costs. 66 Having a brand name is analogous to having a last name. 67 For example, suppose one likes to drink Sanka TM, which is a decaffeinated coffee made by General Foods. 68 If this drink had no name or brand, then to order it in a restaurant, one would have to ask for "the decaffeinated coffee made by General Foods." 69 If General Foods makes more than one brand of decaffeinated coffee (which it does), it only exacerbates the problem. 70

2. Consistent Quality of Trademarked Products

To effectively reduce consumer search costs, trademarks require producers to invest in their products and maintain consistent quality over time. 71 Imagine a consumer who had a favorable experience with Brand X and would like to purchase it again, or who wants to buy Brand X because of a recommendation. 72 Rather than researching all goods to determine which one is Brand X, the consumer can simply identify the trademark and buy the corresponding brand, which is less time consuming. 73 But for this system to [*248] be effective, "past experience must be a good predictor of the likely outcome of current consumption choices--that is, the brand must exhibit consistent quality." 74 Therefore,

[a] trademark conveys information that allows the consumer to say to himself: I need not investigate the attributes of the brand I am about to purchase because the trademark is a shorthand way of telling me that the attributes are the same as that of the brand I enjoyed earlier. 75

Creating a reputation of consistency requires producers to spend money and invest in their product's "quality, service, and advertising." 76 Once a producer creates a reputation, "repeat purchases and word-of-mouth" references will create more sales because "consumers will be willing to pay higher prices for lower search costs and . . . assurance of consistent quality." 77 Trademarks are valuable because they signify "consistent quality," and a producer is incentivized to develop a trademark only if she can maintain this "consistent quality." 78

D. Benefits of Federal Trademarks

While there are benefits to trademarks in general, there are also benefits to federal trademarks more specifically. These benefits include mitigating consumer confusion, putting other owners on notice, easier legal processes to bring infringement claims, stronger legal remedies for infringement, and overall better trademarks.

1. Federal Trademarks Mitigate Consumer Confusion

The American system of trademarks incorporates both state common law rights and a federal registration system under the Lanham Act. 79 The main benefit of the federal registration system is that notice is likely to be more widespread, which helps prevent product duplication. 80 With both state and federal options for obtaining trademarks, there is a risk that consumers may be confused as to how to find the same brand. 81 Imagine producer A makes Brand X lamps. 82 She only sells her product in New York, though she has plans to eventually sell throughout the country. 83 B, operating only in California, then sells lamps under Brand X's name because A is not yet using the [*249] trademark there. 84 If A eventually begins to sell lamps in California, one may question who truly owns Brand X. 85

State courts resolve this issue in a costly and confusing manner. 86 Assuming A and B's products are too similar to share the same name without confusing the consumer, courts consider the closeness between A's original and expansion uses, A's unreasonable delay (if any) in enforcing her trademark against B, and B's good or bad faith (whether the copying was a coincidence or intentional). 87 If courts deny A's trademark after expanding her markets geographically, A may have to adopt a whole new trademark. 88

Registering a federal trademark under the Lanham Act, however, mitigates this issue of geographic overlap. 89 Courts have interpreted the Act to eliminate the good faith defense if someone uses a trademark listed in the federal registry. 90 Before using a mark, the new producer can check the registry, and if another producer is using the mark on the same product, the new producer cannot use a good faith defense if sued for infringement. 91

2. Federal Trademarks Put Others on Notice

A federal registration creates nationwide priority. 92 The date of federal registration signifies the date after which everyone is on constructive notice of the registrant's claim of rights. 93 After five years of registration, most federal registrations can receive "incontestable" status, which limits an alleged infringer's defenses. 94 This allows for a producer to more easily expand her mark. 95

Another benefit to federal registration is the ability to file an intent-to-use application. 96 Prior to November 1989, federal applicants could only file an application if they had a prior use of the mark in commerce. 97 Thus, a registrant's priority in a mark varied based on where it was geographically used in commerce. 98 The revised Lanham Act added a new way to file a federal [*250] application, which requires the applicant's "bona fide intent" to use the mark in commerce. 99 This creates a constructive use from the date of a registrant's application, rather than its literal prior use in commerce. 100 This constructive use date can be much earlier than the date the applicant will use the mark in commerce, so a registrant is protected even earlier than under the previous version of the Act. 101

3. Federal Processes Make It Easier to Bring Infringement Claims

Ordinarily, if one wants to bring an infringement claim regarding her trademark, she must prove the following: (1) validity of the mark; (2) ownership of the mark; and (3) the exclusive right to use the mark in commerce. 102 However, a trademark registration on the Federal Principal Register indicates prima facie evidence that a plaintiff has standing over her mark. 103 In other words, these aspects of a trademark are rebuttable, but a federal registration certificate "provides sufficient proof of rights in litigation" if there is not enough rebutting evidence from the defendant. 104

4. Federal Trademarks Lead to Stronger Legal Remedies for Infringement

State remedies for trademark infringement range widely from those that resemble the common law to others that resemble the Lanham Act. 105 "Under the common law, recovery of actual damages often requires proof of actual confusion," but "intent to cause confusion may suffice." 106 The typical remedies for infringement of common law rights include an injunction and, in certain cases, monetary awards in the form of: (1) damages "caused to the plaintiff as a result of the infringement, including lost profits"; (2) "defendant's profits earned as a result of the infringement[;]"; or (3) sometimes both. 107 Monetary remedies and injunctive relief are "not mandatory under the common law" and are up to the court's discretion. 108 In many states, punitive damages are available to punish "egregious tortious conduct." 109 Many state statutes are "no more generous than the common law," only allowing the award of the "registrant's [*251] damages and the infringer's profits." 110 Case law research indicates that "financial awards are relatively rare in state trademark litigation" because, in most states, they require bad faith or knowing infringement. 111 For trademark owners under federal protection, the "enhanced remedies under the Lanham Act are potentially more generous standards." 112 Under the Lanham Act:

[w]hen a violation of any right of the registrant of a mark registered in the Patent and Trademark Office . . . shall have been established in any civil action arising under this chapter, the plaintiff shall be entitled . . . to recover (1) defendant's profits, (2) any damages sustained by the plaintiff, and (3) the costs of the action. 113

A federal court may grant an injunction to prevent infringement according to the "principles of equity" and as the courts deem reasonable. 114 Courts have "the power to award up to three times the amount" of plaintiff's actual damage as compensation because punitive damages are not available under a Lanham Act claim. 115 Courts may also award attorneys' fees to the prevailing party in "exceptional cases." 116

5. Better Trademarks Are Produced at the Federal Level

State application fees to register trademarks are very low, ranging from $ 30 to $ 125. 117 On the other hand, the least expensive filing option at the federal trademark office costs $ 275. 118 The difference between state and federal fees signifies either or both of two possible scenarios: (1) states are not conducting a "substantive examination of the trademarks"; and/or (2) state trademark offices operate by relying on other sources of funding. 119

These two possibilities explain why low state fees can be harmful. 120 In the first scenario, the low cost of registration may reflect the lack of a thorough review at the state level. 121 Trademarks issued without proper examination may result in the registration of invalid marks that would not meet the federal [*252] registration standard. 122 In the second scenario, registrations that are properly examined "but at a cost exceeding that paid by the registrants" use taxpayer dollars, without any of the registrations' benefits returning to the public. 123 Due to the benefits of federal trademarks, owners of marijuana products in states where marijuana is legal are disadvantaged by not having access to federal trademarks.