*cue Jurassic Park theme*
It’s difficult or impossible to make money off of purely licensing a trademark. You may have heard of people licensing patents for inventions they never ever created - well that does not fly for trademarks! This is because to obtain a trademark, you must be using the trademark in commerce.
The United States differs from many countries by requiring proof of use before registering a mark. The US values "blood and sweat" behind the creation of a business, while other countries historically had their trademarks handed out by a Queen or King without the owners having to do anything. Lots of my client get frustrated with the US system, but as an American, I wouldn't have it any other way. You've got to earn your trademark here!
The two main reasons people apply for trademarks when they shouldn’t:
They don’t have a lot of money, so should set up an LLC or focus on their business before they spend any capital on a trademark.
They only want a trademark to license it and never plan to use it.
If you only want a trademark for the point of selling it, you probably shouldn’t apply in the first place.
Obtaining a registered trademark takes work and money, thus if you just want to "reserve a name" or "license a name" with no work towards making that brand profitable, a trademark application is not for you.
The Curious Case of Area Code Doctors
Steven Lazar offers a cautionary tale for trademark applicants as he likely has spent over $600,000 and will only successfully register 2 trademarks out of his 312 applications.
In 2017, industry giants such as Mattel, Samsung, and Amazon dominated the list for most filed trademark applications. Individuals rarely file as many trademark application as a Fortune 500 companies. When an individual got 2nd place for most filled marks in 2017 with 312 application, it was more than just unusual. Steven Lazar filed 311 different applications that are nearly identical in Class 035 for providing an internet website portal featuring health care information. Examples of his marks include 253DOCTORS, 620DOCTORS, and 801DOCTORS.
There are around 316 state area codes in the US, and Lazar applied for 311 different combinations of 3 numbers. All of his applications correlate to US area codes, except 123DOCTORS and AREACODEDOCTORS. From his applications, it is clear his intent was to register area codes in front of the word “doctors.”
On all 310 applications that are real US area codes, the Examining Attorney has issued an Office Action refusing registration. One of the reasons for the refusal is likelihood of confusion with 1-800-DOCTORS. Lazar applied for 802DOCTORS thru 806DOCTORS suggesting that he knew about the cited mark before filing.
Lazar filed a TEAS-Reduced application for his 312 marks at $225, which totals to $70,200 in government fees. A non-profit law firm (such as ASU Teaching Law Firm) will likely charge a $500 flat fee per application. If we assume Lazar’s attorney charged the same amount, then Lazar’s legal fees costed $156,000. If the marks are accepted, then Lazar must submit an Allegation of Use, which costs $400 if his attorney offers a low rate, which totals $124,800. In addition, the Examining Attorney has rejected the application and Lazar’s attorney has responded twice. If the attorney charged the average rate of $650 then that would cost $374,400. In total, Lazar has probably already spent over $444,600 and will spend over $300,000 before his marks register or abandon. Even more if he appeals to the Trademark Trial and Appeals Board.
TLDR - To get a trademark you must eventually use the brand name.
The trademark applications of Steven Lazar serve as a warning to anybody who wants to apply for a trademark for the sole purpose of licensing. I don’t know the parties involved and it’s fully possible these applications were made in good faith, but I personally have had to explain more than once to clients that the federal trademark registry is not a name reservation system - you have to use it or you lose it.
If you want to reserve a name or slogan you like simply to license it, you won't be able to register your trademark - you have to be using it eventually. But if you're not quite ready yet, that's okay! But if you plan on never using the brand name, you shouldn't waste your money.