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IP Tips: From Startup to Legal Experts

Considering that the economy is moving faster than usual, more and more entrepreneurs are turning their dreams into reality. Small businesses, though, unfortunately tend to take a hit and get taken advantage of because they often start their business with little to nothing. One of the main areas where they see that hit is in their unprotected intellectual property.

Intellectual property issues are often among the most critical considerations that online businesses will experience. Follow these tips to keep you, your business and your products and services protected.

Use legal disclaimers: When starting your small business, you’ll want and need legal disclaimers on your services and products. This protects you and makes sure that the consumer acknowledges and understands that your product or service isn’t in control of their outcomes — or under their control. Essentially, it clarifies the responsibilities that both parties have once money has been transferred and the service or product has been purchased.

Understand what can be patented: To be patentable, an idea, service or product must be new and inventive. It must also be a patent-eligible topic. What constitutes a patent-eligible topic varies depending on the country where you live. Do your research to learn what issues might be challenges in your country and be sure to consider these issues with when developing your IP plan.

Don’t just rely on patents: Though patents are valuable benefits to startups, they are only a small piece of protecting your business. To be a successful startup, you will first need a quality product or service — and getting a patent does not mean that your service or product is necessarily a good invention, nor does it mean that anyone will even buy it. Essentially, make sure you are protecting a product or service that is worth protecting.

Intellectual property is, in most cases, the most valuable advantage to an online startup. Protecting intellectual property can be essential to preventing competitors from any unfair competing. Without protection, you risk having your ideas and products taken from you. It’s usually a good idea to discuss your ideas with an IP professional, who can go over types of IP protection that will work best for your business.

Seven Things Every Entrepreneur Should Know About Trade Secrets

The term “trade secret” is often tossed around without a true understanding of what it is and why it is important — especially for small, online businesses. Trade secrets protect your valuable, and often confidential, information from getting into the wrong hands and being used inappropriately. Every entrepreneur can benefit from knowing these important details about trade secrets.

1. What are Trade Secrets?

Not all of the information pertaining to your company can be considered a trade secret. Trade secrets generally are information that you reasonably want to remain confidential and is valuable because of its confidential nature. Trade secrets can also provide their owners with a competitive advantage in the marketplace.

Another way to look at trade secrets is that they can be treated in a way that competitors or the general public are prevented from learning about them, unless they’re doing something illegal or nefarious. Trade secret law usually covers, but isn’t limited to, both technical and non-technical data, formulas, programs, methods, lists and presentations.

2. How are Trade Secrets Protected?

Remember, just because you consider something to be a trade secret does not automatically make it so. You need to treat it in a way that makes it clear you want to keep the information a secret (such as keeping a formula locked in a safe). So, take some extra precautions to protect any information you consider to be a trade secret. It is not difficult to do. Your best course of action is to follow these simple guidelines:

  • Limit the number of people who have access to the information
  • Place a “CONFIDENTIAL” stamp mark on important papers
  • Maintain computer security
  • Lock the information up, especially after business hours
  • Limit access to people on a need-to-know basis
  • Use non-disclosure agreements with everyone who has access to the information.

3. Misappropriation of Trade Secrets

When you have a trade secret, you also need to prevent misappropriation of the secret, which means preventing others from using it inappropriately. Usually this happens when someone:

  • Acquires it without your consent
  • Uses it without your consent
  • Discloses it to others without your consent

If anyone violates your rights to a trade secret, you may be able to seek an injunction against the perpetrator. In some cases, you will even be able to seek monetary compensation.

4. Putting Trade Secrets to Use

Trade secrets can protect information that is not otherwise protected under other types of intellectual property law, such as copyrights, trademarks and patents. Trade secrets also perform the following functions:

  • Protect ideas that give businesses a competitive advantage
  • Keep competitors from learning about a new product or formula that is in development
  • Protect valuable business information, such as cost or price, marketing plans and customer lists
  • Keep competitors from learning about functional or technical attributes of a product
  • Protect information regarding which strategies and practices do not work (negative know-how)
  • Protect other information that has value and is generally not known by competitors.

5. What Rights do Trade Secret Owners Have?

When you own a trade secret, you can prevent groups of people from using, copying or benefiting from it, or letting others know about it, without your permission. These groups include:

  • People who are automatically bound by confidentiality not to use or disclose the information
  • People who acquire the trade secret through improper means
  • People who knowingly learn the information from people who did not have the right to share it
  • People who mistakenly learn about the trade secret and have no reason to know that the information is protected
  • People who sign non-disclosure agreements

The only group of people who cannot be prevented from using trade secret information are those who discover the information on their own without using any illegal means.

6. How Can You Enforce Your Trade Secret Rights?

Every state has laws preventing people from stealing or disclosing trade secrets. So, if you believe someone has violated your trade secret rights, you can seek an injunction against the person or group.

7. Is Stealing Trade Secrets a Crime?

Intentionally stealing someone’s trade secret is, indeed, considered a crime under both state and federal law. It is covered under the Economic Espionage Act of 1996. This act gives the U.S. Attorney General sweeping powers to prosecute any company or individual involved in trade secret misappropriation. Violators of this law can be subject to a fine of up to $500,000 for individuals or $5 million for corporations. Violators may also face up to ten years in prison. The penalties are even stiffer if the theft was done on behalf of a foreign government or agency.

Smart Approaches to Take When Dealing With Intellectual Property

Intellectual property (IP) is an important aspect of any business. If you have developed IP as part of your business, you have the right to have it protected. Here are some key ways to make sure your IP stays with you and your business.

1. IP Assignment and Nondisclosure Agreements

The first step you can (and should) take to protect your IP is to require everyone who is associated with it to enter into IP assignment and nondisclosure agreements. Most of the time, these agreements are short, to the point and contain standard terms. Even better, most people understand these agreements and are willing to sign them without any coaxing. It is easy to overlook these agreements, but if you do, it can be quite costly to your company. Plus, it can also mean the loss of ownership of any or all of your IP. So, err on the side of caution, and be insistent and vigilant about obtaining signed agreements.

2. IP Prosecution and Registration

Every company that has IP needs a plan for managing it. The ideal time to form a plan for dealing with IP is at the company’s inception. But, if you are past that point, it does not mean that you are too late to put a plan together. Your plan should include details such as when and how to submit applications for patents, copyrights and trademarks. You also want to make sure to register your IP federally as well as with any foreign equivalents. The application and registration process can be time-consuming and expensive. So, be sure to plan accordingly. Once the process is complete, it will be easy for your company to manage its IP portfolio and remain aware of any and all application deadlines, as well as other important IP-related information.

3. IT Systems Security

Not only do you need to secure the ownership of your IP through registration, but you should also make sure it cannot be accessed by breaching your IT systems security. To do so, you need to:

  • Use secure and encrypted cloud storage, email and file storage applications
  • Require everyone to use strong passwords on their computers and mobile devices
  • Encrypt portable media such as flash drives
  • Create and enact a policy for document retention and destruction.

4. Employee Retention and Post-Termination Obligations

One of the best ways to protect your company’s IP is to retain the people who work for the company. But, it is impossible to keep all of your employees forever. To ensure your IP remains protected, you should obtain non-competition, non-solicitation and non-disparagement agreements that extend for a significant length of time. Do not reserve these agreements for soon-to-be former employees who leave on negative terms. Even your most faithful employees need to sign them, too.

5 Things Every Entrepreneur Should Know About Copyrights

When starting an online business, one of your top priorities is ensuring that your ideas and creations are protected. Having someone else steal and profit off your ideas is frustrating at best and devastating at worst. It’s vital that entrepreneurs understand how to protect themselves by making use of legal tools like trademarks and copyrights.

You can read more about trademarks in my post here. But today, we’re going to focus on copyrights and what you need to know to take advantage of this powerful tool.

Firstly though, if you’re new to the world of online businesses, you may be looking to design a fresh website or upgrade your existing one. Moreover, to ensure you’re getting the best deal, it’s important to weigh up all the different options. With this in mind, why not check out some of the Wix pricing packages? Wix is a website building brand used by businesses all over the world and offers lots of plans to suit the needs of your company.

So, once you’re up and running online, here are the top five things every entrepreneur should know about copyrights. Hopefully, these will help you get started – or serve as a refresher if you need to brush up on copyright law.

1. Content is Automatically Copyrighted Upon Creation

In the United States, content is protected by copyright law as soon as it is created. At the moment of creation, the rights to the content belong exclusively to the “author.” One instance where this is slightly different is in the case of an employee creating content for their job – in that case, the employer is the “author,” since they are paying the employee to create the content.

If you are working with others to create something – like in a group project or in most work settings – then everyone who participated in that creation is a co-owner of the rights. It’s wise in these instances to draw up a contract ahead of time spelling who will be the owner of the copyright. You might also want to get in touch with someone similar to Bonamark to learn more about copyright law.

For solo projects, the copyright term is your (the author) lifetime, plus 50 years. In co-ownership situations, it’s a lifetime protection plus 50 years after the last owner’s death. If copies of the content are made available to the public, the copyright term is 100 years from the date of creation or 75 from the date of publication, whichever is shorter. (For more information on the duration of copyrights, look at this document from the United States Copyright Office.)

2. Registering Your Copyright Isn’t Required, But it’s Helpful

Because your content is automatically protected, registering it with the United States Copyright Office isn’t required – but it is recommended. If you ever found yourself in a situation where someone had plagiarized your work, having it registered with the U.S. Copyright Office would be helpful. You’ll need that evidence and proof of authorship in order to bring a successful lawsuit against any infringers. Read more here.

3. You Don’t Have to Use the Copyright Symbol – But You Should

United States law no longer requires that you provide a copyright notice – that little symbol, © – but it can still be beneficial to include it. Why? Well, if you do include a copyright notice, it’s another layer of protection should you ever bring suit against an infringer. If there is a public copyright notice attached to your content, the judge will give no credence to a defendant’s claim that the infringement was unintentional or that they did not know the content was under copyright. It’s not difficult to include and it may save you a headache in the long run.

4. Copyrighting Only Applies to Certain Types of Content

You cannot copyright an idea. In order to obtain or claim copyright on something, it must be:
– Original
– Tangible
– In a protected category

The categories of copyright protection are:
– Literary works
– Musical works
– Dramatic works
– Pantomimes and choreographic works
– Pictorial, sculptural and graphic works
– Audiovisual works, including motion pictures
– Architectural works
– Sound recordings

This is a pretty all-encompassing list, but it does rule out your ability to copyright facts or ideas – only the way that you as an individual express them.

5. The Process for Copyrighting Your Work is Simple

If you want the added protection of registering for a copyright, then the process is straightforward. But also know – the ratio of registered works to total works created in the world is very small. Most companies don’t bother going through the process for copyright except for their most valuable and important content.

Visit the U.S. Copyright Office website and follow the registration process for the category of your work. You will need to submit a completed application form as well as a copy or copies of your work – these copies will not be returned to you, so be sure you don’t send your original or only copy. The fees for copyright registration vary, but if it is a simple registration of a work by the sole author, the fee for an online registration is $35.

Hopefully this has given you a starting point for understanding copyright law in the United States and how it applies to you. Overall, the important thing to know is that you can rest easy – the moment you create your work, it is covered by copyright law. However, there are additional steps you can take, such as a copyright notice and registering your work, that will ensure you are fully protected in the case of infringement.

The Value of Protecting your Intellectual Property

Some entrepreneurs may not know the true value of their business’ branding image – but this can be a powerful tool that impacts your ultimate success. Developing a brand image should not be left as the last priority; it should be tended to after a business is established and taking off. Businesses should protect themselves from the risk of loss associated with assets by getting insurance — and since intellectual property is one of the most valuable business resources out there, many owners are taking into consideration that IP is truly worth the investment.

Your IP rights can:

  • Set your business aside from competitors
  • Be sold or licensed, issuing an important revenue stream
  • Give customers something new and unique
  • Form an essential part of your branding
  • Be used as security for loans

Intellectual property law principles make sure your name, your content and your products belong to you in a way that prevents competitors from copying your ideas. How? Intellectual property is made up of numerous areas, from logos and corporate identity, to blogs, products, services and processes that make your business stand out from other online companies and competitors. Your business size and specialty don’t matter, either — whether you’re a small artist or an online podcaster with thousands of listeners, you need to be cautious of not only the potential value of what you create, but also how to maintain that value to keep your brand something strong and unique.

However, it’s especially important if you have a small business that you protect any unique properties or products from your competitors because the results can decrease your company’s growth or even cause you to lose revenue. Losing retail share early on in a business’s growth can be time consuming, especially if you’re trying to find the guilty party — and provide guilt — without any legal protection. Unfortunately, if you haven’t protected your IP, it is your responsibility to make sure no one is using your selling points.

In short, protecting your IP rights is simply securing your business. Obviously, the kind of business you own will decide what your business needs are when it comes to IP protection, whether it is a patent, trademark, or copyright. It is what highlights the product or service that means the most to your business — and it’s in your best interest to keep that special and secure.

 

 

10 Things Every Entrepreneur Should Know About Trademarks

10 Things Every Entrepreneur Should Know About Trademarks

If you are an entrepreneur, you should hopefully already have a good idea of how important intellectual property can be to any business. Just in case you aren’t familiar with the value of trademarks and need to brush up on your intellectual property, we’ve got you covered.

These are the top ten things that every entrepreneur should know about trademarks, which will help you protect yourself, your business, your brand and your intellectual property. And for more answer to questions on business such as ‘define infrastructure as a service‘ take a look at TrustRadius.com.

1) What is the Difference Between Copyrights, Trademarks, and Patents?

This is a common question that we get a lot, and it is actually pretty simple to be able to tell the difference between what each of these are and what they can protect. Copyrights protect creative pieces that usually take the form of literature, music, art, etc. Patents are used to protect processes or inventions. A trademark protects brand names, logos, and slogans.

2) The Difference Between Trademarks and Trade Secrets

This is another great point that entrepreneurs need to distinguish between. Trademarks legally protect your branding. Trade secrets can add additional economic value to a business by giving them something unique that no one else is doing. For instance, if you own a barbeque restaurant or chain of restaurants, the name of your restaurant may be protected by a trademark. Your signature sauce may be an old family recipe, which is a trade secret.

3) Why You Need to Register Your Trademark

Just because you have the name of your brand or your business on your website or on a building does not mean that it is fully protected by trademark law. You need to register your trademark/name with the United States Patent and Trademark Office to get maximum protection. This will make sure that you can pursue any infringers of your trademark, and take them to federal court to sue them for unauthorized use of your trademark. It also gives you the right to recover attorneys fees and any damages incurred by infringers.

4) Does Incorporating Provide You With a Trademark?

This is a fairly common misconception that many online entrepreneurs have. Just because you file paperwork for your business and open up a bank account doesn’t mean that you own the name or have the trademark for your name.

5) Does the Trademark Have to Be in Use to be Trademarked?

The short answer is yes, you must be using the name that you are intending to trademark to get the certificate of registration. The long answer is that you can actually file the paperwork with the USPTO before the name is in use, as long as you have the intent to use the trademark for commerce. But if you file under the intent to use prong, you won’t actually get protection until you start using the trademark.

6) How Long Does a Trademark Last?

A trademark lasts for ten years, with the option to extend it for successive ten-year chunks of time, as long as the trademark remains in use for commerce.

7) How Can I Start Protecting My Trademark Now?

The first step that you can take is registering your trademark with the USPTO. The next steps involve making sure that you protect your trademark and pursue infringers. If you choose not to protect your trademark when you are aware of infringers, you could be at risk of losing all of the rights of your trademark.

8) Does Registration Guarantee International Protection?

You are going to need to register your name with the trademark office in every country that your trademark is being used. Just because you register with the USPTO does not mean that you are going to be protected in China or India.

9) Protect Your Digital Property

So, if you have the trademark for your brand or business name, do you need to protect your website address under trademark law as well? That all depends on whether the trademark of that domain name is already taken or not. Make sure to search online to see if someone has already registered for the trademark for the domain name that you want or are using for your brand. Make sure that you check if that domain is already trademarked or in use. If it is, you could be at risk of infringement.

10) Work With an Attorney

Not to say that you can’t go through the filing process by yourself, but going through this process with an attorney will help you make sure that you do everything right from the very beginning. Using an attorney that specializes in intellectual property can even expedite the process of filing and obtaining the rights to your trademark.

How IP Can Increase your Company’s Market Value

Intellectual property is an extremely valuable asset for any business — especially for creative businesses, like design, writing, art or handmade items. If you’ve developed or obtained the rights to any intellectual property that is critical to your business or your industry, you’ll find that having that IP can dramatically increase the market value of your business — and open up even more doors to opportunities for future profits.

In addition, when there’s a high demand for your service- or product-based IP already in the marketplace or industry, securing legal protection can be even more important.

Here are just a few of the ways that IP can be leveraged to increase your company’s market value

1) IP Gives you Revenue Options

Intellectual property can generate income for your online business in a variety of different fashions, all of which can increase it’s profits and market value.

One popular way is to license out your IP to different companies and organizations so that they can use your plans, processes or services. This gives your company the ability to collect either large one-time payments or recurring revenue from licensing out your intellectual property. In return, this can increase your market share, raise your profit margins or do both.

2) IP Gives Your Business Street Appeal

One of the most powerful things that IP can do for your business is give it more appeal and a higher face value to financing institutions and investors. If you control a powerful or influential piece of intellectual property that provides value to your business, market or industry, investors are going to be interested and, in turn, will be willing to shell out more for what you have.

3) IP Gives You Support in Unique Circumstances

In the event that you have to sell your business, go through a merger or be acquired, your intellectual property may guarantee you more money and protection. IP assets can noticeably increase the value of your business and, in these unique circumstances, may be the primary or only asset of value that you have.

Getting the Full Value of Your Intellectual Property

Intellectual property should be treated just like any other valuable asset of your business, if you want it to enhance your business’s market value. You should be taking every opportunity that you have to utilize and protect your IP so that you don’t lose it. If you have intellectual property that brings value to the table of your business, make sure that you manage it, maintain it and monitor it closely so that you can reap all of the benefits of having it.

8 Things Every Entrepreneur Should Know About Patents

If you are an entrepreneur with an innovative new product or service you are ready to take to the market, you know about the race to your establishing your patent. The pressure to get a patent for your product before somebody else is very real – and can also be very stressful. I often hear people come to me saying that they felt process to getting a patent was difficult to navigate, and they weren’t always sure what they could and couldn’t do with the patent once it was secured.

If you’re ready to start the patent process, keep these eight things in mind.

1. The Definition of a Patent

Though it may seem obvious, not everyone has a clear understanding of a patent before they set out to get one. Before seeking out a patent, it is best to know exactly what it is, to avoid confusion and frustration later.

A patent is a legal document and right granted to an inventor that protects the inventor’s ideas. It provides protection for the inventor’s product, the inventor’s process, the inventor’s manufactured product or the inventor’s recipe. The patent also spells out set number of years for which the ideas will be legally protected and under the monopoly of the inventor.

In other words, if you’ve got an idea or product that’s never been created, a patent will give you exclusive rights to make and sell your idea or product, for a limited number of years.

2. To Receive Your Patent, You Need to Proceed Quickly

When it comes to filing for a patent, the “need for speed” is very real. The United States Patent and Trademark Office (USPTO) grants patents to the first individual (or group of individuals) who applies. Even if you can prove you were the first to invent a product or develop an idea, the first to file successfully will be granted the patent.

3. A Patent Is Not Permanent

While patents are not required for an inventor to sell an invented product or use an invented process in the United States, a patent keeps others from capitalizing on your invention for an extended period of time. For this time, only you can manufacture and sell your invention or use your method.

However, since this is technically a temporary monopoly, anti-monopoly laws mean you cannot hold this right forever. Utility and plant patents last for twenty years, while design patents issued after May 13, 2015 will last fifteen years.

4. A Business Does Not Own A Patent Without A Written Agreement

Patents are generally issued to individuals, not businesses. The assumption is that a patent will be awarded to an individual or a group of individuals who are the “inventors,” so long as they are the first to apply for the patent. For a business to gain ownership of a patent, the patent holders must sight a written assignment of rights. A business cannot involve itself with the invention or invented process until this happens.

5. There Is More Than One Type of Patent

Before applying for a patent, you should know which will suit your needs. The United States has three types of patents: utility, plant and design. In China, there are two types: invention and utility. Know the benefits and drawbacks of each type and which will work best for you before applying.

6. The Best Kinds of Patents Are Versatile

If you do not want your competitors to capitalize on your invention(s), or if your invention consists of many original parts, you may need to apply for multiple patents. Using strategic wording also decreases the chance that a competitor will be able to get by the regulations with a subtle variation on your invention. For this reason, it is wise to work with a professional patent lawyer when applying.

7. It Takes a Long Time to Be Awarded a Patent

If you are lucky enough to be the first to apply for a patent, it will be a long time before you receive the official patent. It is not unusual for it to take up to three years to be awarded a patent by the USPTO (they’ve put together a list of the eight-step process you’ll need to follow if you want to be awarded a patent).

8. Patents Will Not Greatly Increase Company Value

Just because you apply for a patent does not mean that your company will experience an immediate dramatic increase in value.

That doesn’t mean, though, that patents aren’t important. The value in applying for a patent is that it grants you the sole right to use the product, plant, design or process you’ve developed for a given number of years. It gives you a temporary monopoly. Your company value will not inherently
increase just because you have a patent; rather, holding a patent allows you to solely reap profits that would otherwise go to your competitors for your invention. It also shows potential investors in your company that you really do own what you say you own.

So, while a patent does not guarantee that you will become rich, and being awarded one is a slow process – the benefits still outweigh those few challenges. Applying for a patent ensures that your invention or invented process can only be used by you, so that you can be the only one who can capitalize on the resulting profits. With careful planning and a clear understanding of what a patent will and will not grant you, you can more completely reap the benefits of your hard work.

Your Platform Is Your Business, But Is It Protected?

If you are like most online entrepreneurs, you don’t spend much time focusing on your company’s intellectual property. You go about your days building your business, perfecting your product or service such as your invoice template excel, and executing your business plan. You probably have some sense that your business has intangible assets and that those assets have value, but you have not taken the time to create a plan for how to handle intellectual property issues.

If that description fits you, it’s time to wake up because you are ignoring your most valuable assets. It’s time for you to stop being like most online entrepreneurs. You need to be thinking about your intellectual property and taking steps to protect it.

As An Online Entrepreneur, Your Intellectual Property IS Your Business

Online entrepreneurship is all about building on an online platform to showcase your “genius” and then leveraging that platform to make money. Given that business model, your entire business is built around creating and protecting your “genius” online.

Your platform IS YOUR BUSINESS. There are no ifs, ands, or buts about it. If you lost your platform, you would lose your business. Well guess what, your platform is nothing but intellectual property.

Let me drive the point home another way. In today’s world, 80% of the value of a typical company comes from intangible assets (read: intellectual property). But if you are an online entrepreneur, you are not running a typical business. You probably don’ have a brick and mortar facility, you don’t own expensive equipment to make your business run, and you don’t have a ton of inventory.

Nope, you are running a lean ship where you are largely selling your know-how. You don’t spend your days making physical products. No, you spend your day creating virtual assets. You’ve no doubt created lead magnets, blog posts, podcasts episodes, white papers, online courses, and a slew of other “knowledge” products that you offer to the world. All of those assets are intangible assets that are protected (if at all) as intellectual property.

You’ve also probably spent countless hours building “your list” and cultivating relationships with customers and potential customers. Believe it or not, your list and CRM database are valuable intellectual property – but you can lose them if you don’t take the right steps to protect them.

In my own business, I’d estimate that about 90-95% of the value comes from my intellectual property. If you’re beyond the first stages of online entrepreneurship, you’re are likely in the same boat.

How Can You Possibly Justify Ignoring Your Most Valuable Assets?

With that in mind, how can you possibly justify not having a plan for your intellectual property? No seriously, I am asking. I’ve yet to hear an online entrepreneur who can come up with a good explanation for not making a plan for their intellectual property.

The reality is that most entrepreneurs don’t take steps to protect their intellectual property either because they don’t think about its value, because they don’t understand its strategic value, or because they are worried that they’ll have to spend too much money to hire an attorney to do the work.

Now that you’ve gotten this far through this post, I know you don’t fall into the first category. You understand the value of intellectual property and understand that your entire business is built on your intellectual property.

The second group of entrepreneurs tend to think that intellectual property is an issue that can be dealt with as it arises. They take an “ad hoc” approach, addressing issues from time to time, but they don’t have an overall vision for their IP. This is a mistake. There are so many problems with this approach. To begin, if you don’t take certain key steps early (like getting the right confidentiality procedures in place), you could lose your protection. You can’t just wait until an issue comes up; you have to be proactive.

An “ad hoc” approach also tends to result in entrepreneurs spending their money and resources in the wrong places. Let’s be honest, you have a limited budget and a limited amount of time. You can’t possibly protect everything. Without a strategic vision and a plan, you are likely to spend money haphazardly and you may end up out of resources when it’s time to protect something truly meaningful. A little bit of planning goes a long way.

The third reason entrepreneurs don’t do anything about their intellectual property is probably the most widespread. I get it, hiring a lawyer is expensive and we don’t exactly have a great reputation as a group. I’m not here to tell you that you have to hire an attorney to put together a plan for your intellectual property. You certainly can hire an attorney if you want to, but there are all kinds of free resources out there for you to get the information to do it yourself.

You can get some really great free resources here on my website. Among other things, you could:

Download a copy of my book The Entrepreneur’s IP Planning Playbook for free

Take my e-mail course about the 5 Legal Mistakes That Could Sink Your Business

Or you could just poke around in the Entrepreneurs Intellectual Property Academy to learn some of the basics. Whether here or somewhere else, you can get tons of free information that will let you get started. If you can’t afford to hire an attorney, get the information and do it yourself. It may not be perfect, but it will be better than if you don’t do anything.

 

Trademark

Consumer Confusion – The Touchstone for Trademark Infringement

The purpose of a trademark is to designate the source of a good or service. It provides information to consumers regarding the particular good – i.e., it helps distinguish the good from others. Because the purpose of trademarks is to distinguish between goods, the touchstone for an infringement action is whether there is a likelihood of consumer confusion between the marks.

As noted in our Trademark Basics Page (a part of our Entrepreneur’s Intellectual Property Academy), an application for a trademark application is reviewed for, among other things, competing marks – also known as confusingly similar trademarks. So the registration system is built to avoid consumer confusion. This review is not 100% effective, but it certainly has some success in reducing the situations in which competitors are using confusingly similar trademarks that have been registered.

But what happens where an entity who holds a registered mark discovers a competitor who is using a similar mark (most likely one that has not been registered). That is where a trademark infringement lawsuit is likely to arise.

Consumer Confusion Comes In Many Forms

There are various types of consumer confusion.

The most obvious example of consumer confusion is where consumers are literally confused about the ultimate source – i.e., the manufacturer – of a good. The most obvious example of these situations are in the case of knockoffs, where the infringer is literally trying to create a product that can be passed off as the real thing.

A more subtle form of confusion stems from confusion as to the sponsorship of the good. This form of confusion comes up in the context of trademarks that are often licensed to others. A company that is using sports logos or trademarks without a license, for example, is creating confusion about whether the team has sponsored or endorsed the particular sale.

These first forms of consumer confusion arise in the context that the alleged infringer is using the trademark owner’s brand to sell the allegedly infringing products.

Reverse confusion arises in a different context where the trademark owner is the “little guy” and the alleged infringer is the large, national company. If the large company starts using a confusingly similar mark it will cast a shadow over the actual trademark holder and will tend to lead consumers to believe that the large company’s mark is the real mark (and was the first on the market).

Proving Consumer Confusion

In a trademark infringement case, courts look at whether there is a likelihood of consumer confusion between the valid trademark and the mark accused of infringement.  In determining a likelihood of confusion, courts examine a variety of factors:

Strength of the plaintiff’s trademark – Does the suing person or entity have a trademark that is distinctive? As discussed in a previous post, trademarks are ranked based upon how distinctive they are from generic, descriptive, suggestive, or fanciful or arbitrary? In an infringement suit, the more distinctive, the better.

Proximity of the goods – How similar are the goods at issue? The more similar the products, the more likely consumers will associate the source of the products. This is especially true where the goods are substitutes or complements to each other.

Similarity of the marks – How similar are the marks at issue? Do the marks look similar? Sound similar? Have similar meanings?

Evidence of actual consumer confusion – What is the evidence of actual consumer confusion? Are there sales numbers, advertising campaigns, or other evidence to support confusion?

Marketing channels used by both parties – How do the suing party and the accused party market their products to consumers?  If the parties go to the same trade shows, advertise in the same publications, use the same sale methods, offer their goods around the same price, etc., the more likely there is consumer confusion.

Type of goods and the degree of care likely to be exercised by the purchaser of the good – What kind of good is the one at issue? Do consumers usually do some research before buying that kind of good or exercise some kind of degree of caution before buying? The more caution consumers would exercise before buying the good, the harder it will be to prove likelihood of confusion. Where buyers are using more care, they are less likely to be confused by the mark. Think of the care you would exercise in buying a car versus buying a box of microwave popcorn.

Defendant’s intent in selecting its mark – Was the accused party acting in good faith or bad faith in selecting its mark? This is not a particularly significant factor, but if the accused party intended its mark to be deceptive, then it is presumed that there will be a likelihood of consumer confusion. The “Oapley” sunglasses that look exactly like Oakley’s are a perfect example. The entire purpose is to serve as a knockoff.

Likelihood of expansion of product lines – What is the competition between the suing party and the accused party? Will their respective businesses expand into each other’s market? The higher the likelihood of expansion, the higher the likelihood of confusion.

These factors are non-exhaustive and flexible. The exact analysis will differ from court to court, but these factors will generally shape the analysis.

Conclusion

As the analysis demonstrates, trademark infringement is not exactly an exact science. Outside the context of clear knockoff products, trademark infringement cases often involve complicated questions and are expensive cases to prosecute or defend. In light of the high costs involved, the best bet is to take reasonable steps to avoid the issue in the first place. That is why we highly recommend that startups and entrepreneurs take the time to consider trademark clearance as part of their intellectual property planning process.

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