To be eligible for any level of trademark protection, a mark must be “distinctive” and not merely “descriptive” of goods or services. Whether a mark is distinctive and “how” distinctive or strong mark is can be determined by a sliding scale. Marks can be (1) fanciful; (2) arbitrary; (3) suggestive; (4) descriptive; or (5) generic. Whether a particular mark is protected by trademark law depends on strength category into which it falls.

A fanciful mark is one that is invented for sole purpose of being a trademark. For example, EXXON is a fanciful mark. It is a word that does not exist in English language and was created only for purpose of identifying oil and gas company.

An arbitrary mark is typically an existing word that is arbitrarily applied to a product or service that has nothing to do with word. For example, mark APPLE as applied to sales of computers.

A suggestive mark is a mark that suggests a quality or characteristic of goods or services. Suggestive marks require some level of imagination to bridge connection between mark and product. For example, mark PENGUIN as applied to refrigerators.

A descriptive mark is a word that merely describes a quality or characteristic of a product. Descriptive marks are not entitled to trademark protection unless they have obtained “secondary meaning” under trademark law. An example of a descriptive mark would be LIGHT to identify a lightweight notebook computer.

A generic mark simply identifies by name a particular product. Generic marks are never entitled to trademark protection. An example of a descriptive mark would be MODEM in connection with modem sales. If trademark protection were allowed in this instance, company could essentially remove word “modem” from English language.

o Budgets, business plans or projections (for Company and any of its subsidiaries) made on a quarterly, annual or other basis during past 3 fiscal years.

4. Contracts & Leases

o Real estate leases. Consider term of lease and quality and location of space and decide whether your business needs would be satisfied;

o Equipment leases;

o Purchase and sale contracts for goods and services [uniforms; food suppliers]

5. Tax Matters

o Are back taxes owed?

o Are there any pending tax suits?

o Does any local, state or federal taxing authority have any liens against real property or business personal property you would be acquiring? If so penalties, interest and attorney’s fees could greatly increase cost of satisfying tax lien.

6. Identities of All Directors, Officers & Shareolders

o You ought to perform a background check on each of these people to see whether there is any pending litigation against them.

7. Owned Real Estate

o Need a list of owned real estate to help in valuing business and determining liabilities.

8. Insurance

o You would want to have copies of insurance policies, as well as name and contact information for insurance agent, going back four years from time of purchasing business. Check to see whether insurance policies would cover you, as new company, for any damages alleged to have occurred before you acquired business.

Finally, many other factors related to financial and other matters must be considered before taking plunge.