If your company makes a product, it’s increasingly likely that someone will copy it or produce counterfeit versions.
“I can’t think of any industry that isn’t being affected,” says Timothy L. Skelton, a partner with Ropers Majeski Kohn & Bentley PC. “I bought a $40 bicycle chain that was a counterfeit. It came in a similar-looking package to the chain I normally buy, but when you looked at it closely it was slightly different.”
One client had a medical device copied by another business.
“It was absolutely identical in every way to my client’s product except one letter in the trademark was changed. So it wasn’t actually a counterfeit because it didn’t use my client’s trademark, but it did infringe on the trade dress and product design,” Skelton says.
Smart Business spoke with Skelton about trade dress and how companies can protect themselves from unfair competition.
What is trade dress and how does it differ from trademarks?
Trade dress is the design and appearance of a product together with the elements that comprise its overall image in identifying the product to consumers. Broadly speaking, it’s the product’s look and feel and can include size, shape, color, or combination of colors, texture and graphics. Trade dress can either be the product itself or its packaging.
A trademark is any word, symbol or device indicating the source of a product. For example, the word ‘Coca-Cola’ and the Coca-Cola swoosh are trademarks, but the bottle is trade dress. The shape of the glass bottle is unique and readily identifiable by consumers as being the source of the product.
Do companies have to take specific action to protect trade dress?
No. Trademark and trade dress are protected when used, not when registered. However, both can be registered, which confers certain benefits. If the trade dress is registered, the burden of proof is in the owner’s favor, and the company may be entitled to remedies that wouldn’t otherwise be available.
Where do businesses run into trouble with product infringement?
There is very thin trade dress protection for websites. Web pages look similar — there are only so many ways to arrange them.
But the biggest problem in the last 10 years is not really a legal change; it’s the business landscape changing because of offshore manufacturing. Counterfeiting touches almost every business. One of the most common occurrences is that a company manufacturing your products will just make more without your name. Those items are sold out the back door of the factory.
It used to be that only expensive items like Rolex watches were counterfeited. Nowadays, it’s almost anything. A current client has a case involving curling irons — a sub-$100 product. Most products are now made overseas and, although laws are changing, historically many foreign countries have not respected intellectual property rights. As a result, many overseas companies don’t even realize when they’ve done something wrong.
How can companies fight counterfeiting and trade dress infringement?
Add clauses in supply agreements that prohibit manufacturers from making your product for anyone else. That may or may not provide protection, but it puts the manufacturer on notice that you’re watching.
If copies of your product are entering the U.S., use whatever business intelligence possible to determine their origin. It’s virtually impossible to shut down manufacturing operations overseas, so try to cut it off at the import stage. Write a cease-and-desist letter to the first link you can find. Make sure that the letter invites a dialogue — it’s always preferable to resolve matters without litigation.
Trade shows are a good place to find the source of problems. An attorney friend goes to a show for automotive aftermarket manufacturers every year and is paid to walk around and look for infringing products.
Counterfeits can slip into the supply chain anywhere. Even the most respectable vendors are having problems. Be reasonable — don’t assume people are acting in bad faith — and in a surprising number of cases you can get the problem resolved.
Timothy L. Skelton is a partner at Ropers Majeski Kohn & Bentley PC. Reach him at (213) 312-2055 or email@example.com. Learn more about Timothy L. Skelton.
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Competitive intelligence aims to provide as much insight as possible into the trends of an industry and into the strengths, weaknesses and current activities of direct competitors. Such programs can be as simple as monitoring the intellectual property (IP) filings within the U.S. of a single competitor, or as sophisticated as gathering and analyzing IP information for many competitors in different countries throughout the world. Either way, there is business value in establishing and maintaining a competitive intelligence program to understand how competitors are behaving through their IP habits.
Smart Business spoke with Matthew P. Dugan, a partner at Fay Sharpe LLP, about competitive intelligence programs.
What is competitive intelligence?
The term refers to a program to develop and maintain a body of data and information that can be organized and analyzed to provide a better understanding of one or more aspects of a company's business environment. The analysis can provide a broad, high-level view of an industry by identifying trends in a particular area of technology. It also can give a focused view of the activities of a particular competitor or group of competitors. Often, the strategy includes both.
What types of information are included?
Information described in patents and published patent applications often form the backbone of the program. While records from the U.S. Patent and Trademark Office are easily accessible and can provide valuable data for a competitive intelligence program, in some cases other sources may provide access to information on a shorter time frame. For example, companies with foreign competitors should consider searching for patent applications in the competitor’s home country, since patent filings are often made and published there before a corresponding U.S. application is available for review.
Is just the technical information of the patent documents evaluated?
No. Often, useful information can be ascertained from what patents and patent applications a competitor decides not to aggressively pursue. So, once a potentially relevant patent application is identified, the application’s progress can be monitored to try to determine whether the competitor is moving away from that technology. With such an assessment, it can be helpful to ask:
- Has the competitor continued to pursue its initial patent applications for a new concept? Or, did the initial applications go abandoned without further activity?
- Did the competitor file just a single application for this new concept? Or, did it file a whole family of applications that cover a variety of aspects and variations of the concept?
- Did the competitor pursue patent protection in a very limited number of countries? Or, did it go to the expense of filing the application all over the world?
What other information can be included in a competitive intelligence program?
News and announcements, regulatory filings and even domain name registrations can add to the overall effectiveness of a program.
Useful insight can be gained from the trademark and service mark applications filed by a competitor. They are normally available within days or weeks of being filed, so a company can be alerted to the possibility of activity by a competitor much earlier than by monitoring patents alone.
Also, in cases of new products and product lines, trademark applications are often filed in the U.S. based on an intention to use the trademark or service mark with a particular list of goods or services. Such information can be useful in determining that a competitor is working toward offering an updated product or expanded product line.
Why should a company undertake this?
Insight gathered through a competitive intelligence program can help business leaders make more informed decisions about a company’s strategic direction and where to focus marketing and product development resources. It can help identify trends in the evolution of existing technologies, which can impact existing product lines; find developing technologies near core businesses, which could lead to new products and business opportunities; and identify new or emerging players in the industry, which can help in preparing for new competitive threats and eliminate surprises.
Matthew P. Dugan is a partner at Fay Sharpe LLP. Reach him at (216) 363-9167 or firstname.lastname@example.org.
Insights Legal Affairs is brought to you by Fay Sharpe LLP.
Securing trademark protection provides a company with legal rights to market and sell its services or products, and offers this same company an opportunity to stop other companies from marketing or selling services or products that are, or could be, infringing upon its protected marks.
However, each country has different criteria guiding the trademark process, which introduces varied time and cost elements that can be difficult to navigate. Ignoring these laws could mean forever losing legal protection and the opportunity to market and sell goods or services under a valued brand name in key markets.
“There is no such thing as an international trademark, but U.S. copyrights can be enforced internationally,” says Tom Speiss, a shareholder at Stradling Yocca Carlson & Rauth, who works as a business adviser and brand manager.
Smart Business spoke with Speiss about managing domestic and global brand portfolios for companies operating at home and abroad.
How can companies protect their brands domestically?
Companies can protect their brands domestically through both trademark and copyright law. For trademark, the U.S. is a common-law country, which means trademark rights begin to be established as soon as a company starts using a mark in commerce. But it’s important to conduct a trademark availability search and, if the mark doesn’t infringe upon another’s mark and appears to be available as a federal trademark, then file an application with the U.S. Patent and Trademark Office to acquire federal trademark protection.
In addition, companies also can file for federal copyright protection through the Copyright Office. To start this process, product packaging, website material or other advertising material can be used as part of a copyright application. Once a copyright registration issues, the registration potentially can protect a company’s product packaging, Web content and advertising content, as well as the design elements of a trademark. The U.S. copyright registrations then may be enforced internationally, through a treaty known as the Berne Convention Treaty.
If a company has plans to expand in foreign markets, when should management consult an intellectual property (IP) attorney?
A company should bring in an IP attorney as soon as it starts thinking about foreign market expansion, even if the plan’s realization is years away. Companies must be advised concerning all trademark rules for the countries in consideration, including possible infringement issues; whether the brand name is even available; the timelines and costs for applications; how use and non-use might affect the rights being granted; and when a company is required to exercise any rights it has been granted before a mark is vulnerable to cancelation. Each of these steps can be measured in years and have a lot of moving pieces, so — as ideas are generated — counsel needs to be involved.
What are the criteria for foreign market selection?
Companies can point to home successes with their products, including sales and brand equity, as they venture out. However, the mark used in their home country may be unavailable in a foreign market, which means the company won’t be able to transfer that equity even though it’s a proven brand.
The recourse is to develop a new name. But that brings risk because then its history at home won’t translate to the new market. This is another reason to bring in an IP attorney at the onset of brand expansion to assist in successful brand development or expansion.
What should you ask your attorney regarding brand management in other countries?
The most important first step is determining whether the target country’s trademark laws are governed by the principle of first-to-use or first-to-file. IP attorneys also can help companies establish timelines, such as when a company needs to start using or selling a product in the target country. Good counsel will thoroughly search to discover if the mark to be used in the foreign market is already in use for the same or similar goods or services. Along the way, counsel can help clients understand what other regulations might be advantageous or impede selling in foreign markets.
Tom Speiss is a shareholder at Stradling Yocca Carlson & Rauth. Reach him at (424) 214-7042 or email@example.com.
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Trademarking a color has become more common — UPS and brown, Target and red, John Deere and green and yellow.
However, Sandra M. Koenig, a partner at Fay Sharpe LLP, says it’s important to remember that trademarking a color isn’t limited to big companies, especially if you have a specific audience and can show the color is distinctive in a smaller segment of the industry.
Smart Business spoke with Koenig about trademarking colors and the law surrounding it.
What can be a trademark other than a word or logo?
Some nontraditional trademarks can be an overall appearance or trade dress, such as color, product shape, scent and sound. When trademarking color, it can be a combination of colors applied to products, packaging or something that represents a service, as well as just one color, called color per se. Consumers should be able to easily associate color with a product or service, or its source. You might be asked to prove the connection, perhaps with surveys.
What does it take to make a color a trademark?
There are certain criteria to get a color registered. It cannot be a color required in an area or acting as an industry standard, such as green’s association with the environment (for an environmental product). The color needs to be used consistently, but your use shouldn’t limit competitors. If it’s the cheapest color to use when manufacturing a product, you can’t keep it for yourself. The color should be unexpected and not related to its function.
Some companies get color or product configuration trademarks as a way to extend protection to something no longer covered by a patent, or never covered. Trademarks last forever, as long as you keep using and renewing them, while patents are good for 20 years from the day of filing and design patents last 14 years. Therefore, when a patent runs out, trademarking the color or shape is a way to keep a unique look under protection.
The registration process can take years, especially if it’s a single color or there are appeals. Last year, in one noteworthy case, Louboutin v. Yves Saint Laurent, a federal appeals court limited Christian Louboutin’s color trademark to shoes with a lacquered red sole and contrasting upper. However, once you have a registration for your color, you’ve got national prima facie exclusive rights.
Is it easy to prove you have a trademark in a color?
It depends on your field and with what the color is associated. Areas where products are supposed to have color, such as fashion or paint, are difficult. It’s also sometimes harder to trademark a product going to general consumers. A logo with a color like the yellow Shell gas station logo is fairly straightforward, a combination of colors absent shape or configuration is more difficult, and one color without limitation to shape or configuration is hardest to prove.
Another consideration is whether you’re registering a particular shade by the pantone number, a range of pantone numbers or a color without limitation to shade. Like with traditional trademark infringement, it comes down to the likelihood of confusion. If you registered the color orange per se and somebody has peach, is that confusingly similar? If you did a pantone range of a yellow, how far outside of that range is confusing?
If you want to protect the color of your product, how can you establish rights in order to register it?
Be proactive and consistent. Don’t dilute the color by offering the same product in an array of colors. If you want to be the supplier of a magenta-colored product, don’t sell the same product in purple, green, yellow and gray.
Promote it in advertising, including saying the color word. Use ‘look for’ advertising, like ‘look for the color red on your grocer’s shelves’ or ‘we’re the green people.’ It helps if your company colors are the same as the product you’re trying to protect. You also can tie the color with something relevant like Owens Corning did with the Pink Panther and its pink insulation. Anything to drive home the association with the color and you and your product.
Sandra M. Koenig is a partner at Fay Sharpe LLP. Reach her at (216) 363-9000 or firstname.lastname@example.org.
Insights Legal Affairs is brought to you by Fay Sharpe LLP.
Regardless of where you are at in your company’s life cycle, it is prudent to protect your brand by obtaining state or federal registration for your mark or company name. State or federal registration helps ensure that your business and reputation are not tarnished, or that you do not lose clients as a result of others encroaching upon your area by using a name or mark that is confusingly similar to yours.
“There exists common-law rights that take effect from the moment you start your business, but to enhance your protection it is best to obtain federal or state registration for your brand to better enforce your right of ownership,” says Timothy Jordan, a shareholder at Garan Lucow Miller PC. “Registration establishes that you own the mark and anything confusingly similar can be barred from entering the market.”
Smart Business spoke with Jordan about registering a trademark and the consequences of not doing so.
What are common-law rights and what protections do they offer?
As soon as a company uses a name or mark, it’s developing common-law rights of use. However, the protection of that mark under such rights is limited.
Say you have been using your name in the Detroit area for six years without obtaining federal or state registration. Suddenly a businessman from California, independent of you, comes up with the same or similar name and applies for and obtains federal registration. That registration can provide for the blanket use of that name throughout the United States. Your competitor may now be able to stop you from expanding the use of your mark outside of the geographic area in which you are currently operating, if the business appears related. You can still use your name and continue to do business in your geographic area, but you cannot expand your business beyond that point.
In a similar scenario, another company in the same field and state obtains a state registration after you have been using your mark. That company can prevent you from expanding into the other company’s territory within the state.
When should you apply for state and/or federal registration?
A state registration is relatively inexpensive and fairly easy to obtain. If you are a startup that has any realistic hopes of getting your business out of your garage, spend the money to obtain a state registration. If things are taking off within the first year apply for federal registration, a process which can take between eight months to a year and a half.
But first, find out if the name you would like to use is already registered or in use. You do not want to spend the money on a website, materials and advertising only to find out there is another business with the same or similar name doing similar work or selling a similar product.
How do you search for a name?
There is a federal database maintained by the U.S. Patent and Trademark Office that you can access and search to determine if the word or phrase you would like is ‘live,’ in other words is in use as a trademark. You can navigate the site as you would most any Internet search engine.
Trademarks are valid for 10 years but require a notice of renewal be filed in the fifth year to maintain it, and again between the ninth and 10th years for each additional 10 years of protection. If you do not file for renewal after five years, the mark can become part of the public domain and will eventually expire, which means someone else can use that name.
How do you protect a slogan or phrase associated with your business prior to registration?
Companies that have tag lines or a slogan that accompanies their mark often put the initials ‘TM’ or ‘SM’ at the end of it. By doing so the company is using the phrase as if it were a trademark or service mark. While there is no registration in place, the company is putting the world on notice that the phrase is viewed as a trademark or service mark.
The phrase attached to your company name has to develop secondary meaning before registration is possible. Once the word or slogan conjures up a meaning different than the literal words or slogan, such as Levi’s® representing jeans, then your mark has developed secondary meaning and you can seek registration.
Make a note of when your phrase or tag line was posted to your website or used on some other material viewed by the public because it will help establish the date of your initial use, which will be noted by the trademark office.
When is it appropriate to seek registration for a new product or line?
If you are a large, existing business and you are going to expand into a new product line, from the get-go it is worth the time and money to obtain registration on the new product name. It may cost you a few thousand dollars, but it will save you more down the road. However, if you’re only making $10,000 annually, it might be more prudent to use the TM designation because that is free.
You have to look at your market, your perception of your future success and your resources. If you work only in Michigan, and not all over the country, a state registration may be sufficient. If your product takes off, then you have to decide when it is right for you to invest the money to obtain a federal registration. It’s a personal decision to determine when you are successful enough to need to protect your name.
Timothy Jordan is a shareholder at Garan Lucow Miller PC. Reach him at (313) 446-5531 or email@example.com.
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In the Information Age, every business has a website that is available to any person in the world who points a Web browser to its address. As a result, businesses must understand how to create an online presence that enables customers to find them and distinguish them from their competitors.
“Basic knowledge concerning trademark rights, website addresses and how they work together is key for any business in establishing and defending its online identity,” says John Haarlow, Jr., an attorney at Novack and Macey LLP.
Smart Business spoke with Haarlow about how to establish a strong Web presence.
What is a trademark?
The term trademark generally refers to a name or symbol used to identify a business or the goods and services it provides. For example, the name Nike and its swoosh symbol are both identified with Nike Inc. The concept of trademarks recognizes that consumers associate symbols and words with particular businesses, goods and services. One reason trademark law exists is to prevent consumer confusion caused by the use of similar words or symbols in association with competing or related goods.
What is a registered trademark?
A registered trademark is a mark that has completed the federal registration process before the U.S. Patent and Trademark Office. During registration, the proposed registered trademark must pass various substantive standards, such as not creating a likelihood of confusion with other registered trademarks for related goods or services. Registration does not require the assistance of an attorney, but one can be helpful during the process.
Why should a trademark be registered?
Every trademark used grants some rights automatically, including the exclusive right to use the mark within the user’s geographic market area. However, federal registration provides a more powerful group of rights, such as exclusive use of the mark in commerce nationwide in connection with the registered goods and services, so other businesses cannot use a similar mark in connection with similar goods or services. A registered trademark also provides notice to others that it is in use, making it is less likely that they will adopt or register similar marks. Should a controversy arise, a registered trademark enjoys a presumption of validity in litigation.
What is the connection between a trademark and a website?
When looking for a particular company or product website, many consumers expect that typing the company or product name, followed by .com in a browser’s address bar will take them to the right place. Thus, owning a domain name that corresponds with a trademark designating the name of a business or product is likely to make it easier for consumers to find them on the Web.
If possible, every business should own domain names corresponding with both its name and its products’ names. Consider registering multiple domain names to increase the chances consumers find your business or product on the Web and reduce the chances that others might obtain similar domain names.
How do companies obtain domain names?
It is easy to find one of the many companies that provide domain name registration. What can be difficult is finding an available domain name, as registration is on a first-come, first-served basis. Thus, while Delta Air Lines and Delta Faucet Co. can coexist in the marketplace because they sell different goods and services, only one of them can own delta.com. Moreover, owning trademark or other rights to a name is not a prerequisite for registration.
Anyone can register any domain name, regardless of whether he or she has recognized rights to the words registered. While there are legal remedies for cybersquatting — the improper registration of a domain name that is the same as or similar to a trademark with the bad faith intent to profit — they require resources that are not available to all businesses. As a result, the availability of domain names should be a consideration when choosing the name for a new product or business.
How does trademark registration help a business defend its rights on the Internet?
A federally registered trademark provides the exclusive right to use the mark nationwide. Thus, a domain name cannot use a registered trademark in a way that is likely to cause confusion between the domain name and the mark. In such circumstances, the holder of the federal registration will most likely be able to force the owner of the website to relinquish all rights to the offending domain name. This is true even when the two businesses use the marks at bricks-and-mortar locations in two different geographical areas.
For example, assume that the fictitious Beta Widget Co., marketing its products at beta.com, sells widgets in stores in Illinois and Wisconsin and obtains a registered trademark for the use of Beta in connection with widgets. Subsequently, Gamma Widget Co. begins selling a new line of widgets in North and South Dakota that it calls Beta Widgets and launches the website betawidgets.com. Consumers looking for Beta’s widgets might type betawidgets.com into their browsers, only to find themselves at Gamma’s website and be confused as to the source of the goods.
Should this chain of events come to pass, Beta would likely be successful in forcing Gamma to cease using the name Beta Widgets to refer to its new widget line and would likely be able to force Gamma to stop using the betawidgets.com website. However, if Beta did not have registered rights, these remedies would be in far greater doubt because only registered rights provide a national right to exclude, precluding Gamma from mounting a defense on the basis of the two companies’ distinct markets.
John Haarlow, Jr. is a commercial litigation and intellectual property attorney with Novack and Macey LLP. Reach him at (312) 419-6900 or firstname.lastname@example.org.
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Your intellectual property may be safe at home, but do those patents and trademarks sink or swim once they reach international waters? Businesses may want to pursue a patent or trademark outside the United States to preclude a competitor from using their trademark or from making, using or selling whatever is protected by their patent.
“You have to take proactive steps to protect your patents and trademarks outside the United States, because coverage is generally on a country-by-country basis.” says Scott McCollister, a partner with Fay Sharpe LLP.
“For example, if you have a patent in the U.S., it doesn’t have any extra territorial effect. Trademarks are generally similar. Some countries may have common-law rights which develop based on your use in that jurisdiction, but many countries are registration-based, so you have to procure a registration through that country’s national trademark office before you have any chance to preclude a third party from using your trademark.”
Smart Business spoke with McCollister about how companies can take their intellectual property international.
In what situations would it makes sense for a business to pursue international protection for its IP?
If a business is selling or anticipates selling in a particular territory, it may want to pursue patent or trademark protection in that jurisdiction .
Similarly, companies should consider procuring protection in areas where you and/or your competitor manufacture. Even if it’s not a large sales region, or if the products are shipped elsewhere for distribution, having patent protection in a jurisdiction where the relevant goods are manufactured can be extremely beneficial. If you or your competitor don’t manufacture or sell in a particular country, pursuing patent or trademark protection there is most likely an unnecessary expenditure of funds.
What are the main considerations for a business preparing to take its IP international?
Even in countries where you are commercially active, before you consider pursuing patent or trademark protection, you should do a cost-benefit analysis. Patents, in particular, are expensive to obtain and maintain. There are foreign agent fees, translation fees, government fees, prosecution fees and annuities.
Protecting a small volume of product sales in a country by filing a patent application probably doesn’t make a lot of sense if the cost of obtaining the patent is even a measurable fraction of the sales volume.
Furthermore, consider the lifespan of your product. If your product has a five-year lifespan, it doesn’t make a lot of sense to file an application in a country that takes years to grant a patent.
How can using a regional or international office reduce cost?
For each country you file in, you generally need a local agent who submits the patent or trademark application to that country’s patent/trademark office. Accordingly, for every national filing there are associated governmental expenditures and service fees paid to a local agent. However, using Europe as an example, we have the option of filing through a regional office, the European Patent Office (EPO), that has the ability to grant one patent that can be extended to any selected country within the European Community. In this manner, we can submit all patentability arguments before one examiner and employ only one European agent to perform the bulk of the work in the European region. Similarly, a significant cost savings can be achieved using the European Community Trademark Office to obtain a ‘European Community’ trademark registration rather than pursuing and maintaining multiple national registrations.
I also recommend using the Patent Cooperation Treaty (PCT) for international patent filings. One year after you file your U.S. application, you can file a PCT application. It is effectively an 18-month placeholder. I refer to it as a placeholder because the application cannot directly mature into a national patent. Rather, at the end of the 18-month period, you will need to file in any country (or region, if available) in which you are interested in obtaining coverage. Advantageously, during the 18-month period you receive a preliminary report on whether the idea is patentable or not.
This provides two primary advantages. First, if the review finds the idea is not patentable, you’ve spent a relatively small amount of money on a PCT application instead of a large amount of money filing the application in multiple countries.
Second, it buys you another year and a half to evaluate if the product is commercially relevant. Does it deserve protection or did it fizzle? It may have been a good idea at the time, but the marketplace didn’t accept it. Buying that extra year-and-a-half lets you evaluate how interested you really are in protecting the invention.
The same is true on the trademark side. Based on your company’s U.S. trademark filing, the Madrid protocol allows you to file on a worldwide basis through a single international agency, and have the trademark extended into countries you designate. A significant savings is achieved by avoiding hiring of a lawyer in every country.
What other steps do you recommend for businesses going international?
Assuming you satisfy these criteria and want to proceed, you can still be wise in how you spend your money. For example, procuring a patent in the eight countries with the largest economies in Europe and keeping that patent alive for 20 years is an expenditure in excess of $100,000.
However, if we pursue the patent in Germany, England, France and maybe a country where your competitor is headquartered (preferably through an EPO filing), we can achieve similar results for roughly half the cost. Moreover, your competitor may be unlikely to introduce product X in Europe if they are precluded by your patent from selling in a large percentage of the market. I believe with a little analysis we can often achieve the same result in Asia or South America, for example.
Lastly, I strongly encourage any company considering pursuit of IP coverage outside the U.S. to have an open dialogue regarding costs, risks, advantages, objectives and expectations with a patent and/or trademark attorney. Moreover, this is a complex topic and many of the observations outlined above are not applicable to all situations and can have certain limitations.
Scott McCollister is a partner with Fay Sharpe LLP. Reach him at (216) 363-9115 or email@example.com.
Trademarks (™ or ®), trade names (Band-Aid or Kleenex), service marks (SM) and the like can be valuable brand assets of an organization or its CEO for that matter. They are not unlike patents that protect an inventor from someone duplicating an innovative process or product. The difference is that although you have to file post registration documentation at specified periods of time, trademarks do not have a limited right of use.
And like patents, the ownership of a trademark, trade name or service mark, as long as it is registered, can be assigned to anyone or anything: the person who created it, the shareholders or the company who markets the products and/or services.
So what defines a trademark?
By definition, trademarks, trade names or service marks are interchangeable terms and provide market differentiation, define proprietary processes, brand products and define ownership. The definition found at the U.S. Patent and Trademark Office, www.uspto.gov/faq/trademarks.jsp, states: “A trademark is a work, phrase, symbol or design, or a combination thereof that identifies and distinguishes the source of the goods of one party from those of another.”
An attorney who specializes in trademark law can best guide you on securing a trademark or you can go to the aforementioned website and manage the registration process yourself. The good news is it as long as there are not any complications, the process generally takes two years or less.
My focus on the importance of writing on this subject really promotes the marketing side of why using trademarks can provide a strong competitive advantage, lead to market differentiation and become an extremely valuable asset. The power of a name, phrase or company mark can be a game changer for some companies.
Using trademarks as a smart marketing strategy
Not unlike the days of sticking a flag in the ground to lay claim to a tract of land, using trademarks, trade names and/or service marks lays claim to company names, product and service names, positioning taglines, characters and artwork and more.
A good example of this would be McDonald’s. Try using a “Mc” in front of anything and see what happens. As consumers, when we hear something with the prefix “Mc,” we automatically connect with McDonald’s because of the way the company has branded its products.
What would happen if McDonald’s had not claimed that as is distinguishable mark? An example of a phrase, “It’s The Real Thing” was claimed by Coke, whose product, wave symbol and company name, Coca-Cola, are all registered trademarks. Laying claim protects the advertising investment these companies are putting into building name recognition and product differentiation.
What’s involved in making a claim?
So how does this apply to your company? You can benefit in very much in the same way. Take an inventory of your marketing assets. What is trademarked? What should be trademarked? Do you have product and service names for what you offer the marketplace? If you do, how could that change your market position and brand preference? Do you have a logo mark? What about brand-defining graphics? All you need to do to make a claim is add a “™” or “SM.”
If you decide to complete the paperwork, pay the fee and register the trademark with the USPTO. Once approved, you can (and should) use the ® or registered symbol. Not using the symbols associated with evidence of claim of your trademarks can put them at risk.
Trademarks have hard asset value
I find that this point is best expressed by John Stuart, former CEO of Quaker Oats: “If this business were split up, I would give you the land and the bricks and mortar, and I would take the brands and trademarks, and I would fare better than you.”
Trademarks are marketing assets, and those assets can be owned by either you or by your company.
A smart transition strategy for business owners shared in a Vistage meeting by presenter Patrick Ungashick, author of “Dance in the End Zone,” suggested taking your company name and intellectual property and assigning them to a separate LLC. And since ownership of registered marks is transferable, that’s one smart business idea.
Kelly Borth is CEO and chief strategy officer for Greencrest, a 21-year-old brand development, strategic marketing and digital media firm that turns market players into market leaders. Borth has received numerous honors for her business and community leadership. She serves on several local advisory boards and is one of 25 certified brand strategists in the United States. Reach her at (614) 885-7921 or firstname.lastname@example.org, or for more information, visit www.greencrest.com.
Your trademarks are what customers use to recognize your company, your product, and/or your services. Wouldn’t you want to take the necessary steps to protect your hard-earned brand identity? Many businesses, especially startups, do not think about this subject until their products are ready to launch. Some do not consider trademark protection until even later, when they run into a conflict.
If you have reached that point, you are late, says Colleen Flynn Goss, Counsel at Fay Sharpe LLP. “It needs to happen early in the process,” Goss says. “Certainly not when the business is still a ‘shower idea,’ but definitely before your product is well on its way to market.”
Smart Business spoke with Goss about why registering your marks — whether trademarks or service marks — is important for emerging companies, and how to ensure it’s done right.
Why should these companies consider seeking federal registration?
Your trademark is your company and product identity. You may not realize it but as soon as you use your trademark, it’s yours. In the United States, trademark rights are based on use — not registration. This means that the first person to use a mark on a product or a service is considered the owner of the mark for those goods and services. These are ‘common law’ rights, and they are geographically limited to where you are actually selling or offering products and services under the mark.
Let’s say that you lead a startup company based in Northeast Ohio that produces and sells rain gauges in the Great Lakes region. With record-breaking rainfall, your company grows quickly and two years down the road you decide that expanding to the Pacific Northwest might be a good idea. But unbeknownst to you, an Oregon company has been using the same mark as yours in the region for the last year. If you had filed for a federal trademark registration two years previously, you would have been able to stop the Oregon company from using the mark. Instead, you are now entering into costly negotiations to work out a deal surrounding using the mark and selling your product in this new geographic region, or, even worse, re-branding.
So, even though trademark rights spring from use, by spending a relatively small amount of money and federally registering your mark with the U.S. Patent and Trademark Office you can obtain the nationwide right to the mark to the exclusion of later users of the same or similar mark for the same or similar products and services, even if you are not using the mark in every state. Federal registration also grants you other rights including the right to use the registered symbol, ®, next to your mark, which tends to deter others from copying your mark.
How can a company protect the mark it intends to use before actually using it?
As the leader of a startup you might wonder how thinking about federal registration affects you when you haven’t even brought a product to market. You’ve come up with this wonderful idea, kicked it around and it’s beginning to get some traction. But you haven’t used your mark yet. How can you protect yourself going forward against the company in Oregon (or someone right down the street) using your mark before you get a chance to use it?
That is where the ‘intent-to-use’ application comes into play. United States trademark law allows you to file an application to register a mark before you’ve used it. That way, you effectively reserve the mark for those products and services for which you intend to use the mark.
You must still put the mark into use on those products or services before the registration will issue, but the beauty of the intent-to-use application is that the date you file the application will be deemed to be the date you first used the mark. Upon issuance of your registration, the Oregon company that started using the mark one year after you filed your application will be precluded from using the same or a similar mark on rain gauges.
What are the risks of not filing for a federal trademark registration?
Some companies will still say, ‘I have common law rights to use this trademark. I’m not going to bother.’ And they do, but as I mentioned earlier those rights are geographically limited. The ‘great water gauge idea’ has been funded by your family, friends, or personal savings. When the idea blossoms with this infusion of capital and the product is commercialized, the pace at which business moves becomes quite quick. Now imagine that after investing all that time and money, you discover that someone other than the Oregon company has a federal trademark registration for what you thought was your mark and has been using the mark for ten years. That is a financial and timing nightmare that you don’t want to have to deal with. There you are, just about to launch, and all of a sudden you have no name for your product.
What steps can companies take to ensure a trademark is safe to use?
When you’ve had the ‘shower idea,’ and your plan to take that idea and create a company surrounding it is in its infancy, but it looks like it’s going to happen — that’s when you should start thinking about branding.
Think about the brand name — the mark — for your products or services, and the reasonable breadth of products and services on which you plan to use that brand name. You may start off with rain gauges, but plan to move from rain gauges for Northeast Ohio and the Pacific Northwest to smoke detectors in Texas under the same brand name. You should cover all those potential ventures in your intent-to-use application.
Before you file the application though, you still need to be certain that someone else has not already used and/or registered the same or similar mark for similar products. A trademark availability search will determine if there are prior state or federal trademark registrations or common law uses which would impede the use and/or registration of your proposed mark. Once you have determined that the mark is available, if you decide to seek federal registration, you can start the application process and move toward having your federally registered trademark soon after your product goes to market. The application process is fairly straightforward. From application through registration (excluding the availability search) it generally will take from nine to 18 months.
Colleen Flynn Goss is Counsel at Fay Sharpe LLP, can be reached at (216) 363-9132 or email@example.com.
Companies everywhere are going over their budgets with a fine-toothed comb. So where does intellectual property fit in?
Your IP assets are one of the most valuable parts of your business and you should treat them as such, says Steven M. Haas, a partner with Fay Sharpe LLP.
“The overriding factor to keep in mind is that your intellectual property budget should not be considered overhead,” Haas says. “It should be considered part of your overall strategic plan, generating assets for the company.”
Smart Business spoke with Haas about how companies should evaluate the budget for their intellectual property.
What should companies keep in mind when developing an IP budget?
Your IP assets can slow down your competitors and increase their cost and uncertainty, and hopefully provide you with a proprietary market position. Another thing to consider is that banks and financial institutions love to see IP assets for financing, and for mergers and acquisitions. Patents, trademarks and copyrights are all critical assets. Also, by being proactive with your IP you can prevent problems down the road.
Your IP assets can be not only a sword but a shield for you, relative to your competitors.
How should companies determine how much should be allotted to their IP budget?
As your company develops new products and as you work with an outside counsel, it’s important to develop a plan to protect those innovations within whatever budget you can afford. Your outside counsel can certainly help you prioritize. There is no rule of thumb for how much you should be spending on your IP, like a certain percentage of total sales or something similar.
Businesses should keep in mind that these costs are often cyclical. For small and medium-size companies, it’s common for IP costs to ramp up when new products come out. But over time, things even out. There will be a cycle with fewer fees. The costs follow your product innovation cycle.
There are trends in industries where technological advances and customer-driven improvements contribute to a cycle with more fees. The budget for patents in particular is very cyclical for small and medium-size businesses.
What are some tips for controlling your IP budget?
There are several strategies companies can use. First, it's important to have a patent committee or person at your company responsible for interfacing with outside counsel to make sure that you are protecting what you need to protect and not wasting money on things that are no longer important. Depending on the size of the company, most companies have a person or committee that will interface between inventors, engineers and the business units on one hand and outside counsel on the other. That way you have a single point of contact with the firm, preventing mistakes, duplication of effort, and funds being spent where they shouldn't be.
With high turnover at today's companies, it's not uncommon for the patent lawyer/outside counsel to have been there longer than many others at the company, as a constant presence over many years and stages of the company. Rely on that experience.
Another tip: maintaining old patents is very costly. Once you receive a patent you have to pay maintenance fees four, eight, and 12 years after the patent is granted. The fees increase each time, so if a patent is no longer relevant to your product mix, you should cull your portfolio and make sure you are not spending your budget on these items.
Small companies — defined as companies with fewer than 500 employees — can receive a small entity discount from the U.S. Patent and Trademark Office.
What should companies do about international patents?
Foreign patent costs are very expensive. You have to be rigorous in terms of deciding to pursue patents and other intellectual property in other countries. The decision has to be justified by your sales or distribution in that country. You also must have a realistic ability to enforce the patent in that country, because the maintenance costs are so huge.
Most foreign patents require yearly fees, known as annuities, to keep them in effect. Many companies spend too much on foreign protection and ignore new projects, a decision that rarely makes the most business sense.
What are some other tips for patent budgeting?
Try to eliminate layers. Work with the lawyer at your outside counsel who is directly responsible for your matters. If you eliminate layers, you eliminate cost.
For some companies, using the provisional patent application can reduce costs. It is a less formal patent application, with a lower expense, but it can preserve patent rights — temporarily at least.
It's important to be proactive and avoid litigation, which can be extremely expensive from a direct cost aspect and because of the time involved. Work with patent counsel to avoid IP conflicts with your competitors. It can save you tons of money and headaches down the road. The earlier we see these issues, the more we can do to help you design around someone else's patent, invalidate the patent or come up with an alternative way forward.
All companies are very focused on budget right now. Outside firms are very willing to work within a set budget and to provide and build target billing estimates or fixed fees. We are very flexible about working with company's budgets, because that is what companies demand now. So don't be afraid to discuss budget issues with your outside counsel. There is always a plan that works for both the client and the lawyers.
Steven M. Haas is a partner with Fay Sharpe LLP. Reach him at (216) 363-9149 or firstname.lastname@example.org.