Naming rights Featured

7:00pm EDT January 26, 2009

Determining the most unique name for your new business can take a lot of time and effort. But what if, after all that work, you find out you’re not allowed to use that name because it belongs to someone else?

“A lot of people, especially smaller companies, come up with what they perceive to be a unique or ‘cool’ name,” says Jonathan Polak, attorney and member of the intellectual property group at Taft Stettinius & Hollister LLP. “But sometimes that name is already in use.”

Smart Business spoke with Polak about some of the biggest IP issues facing start-up companies and how you can protect your name, ideas, Web presence and other materials that define who you are as a company.

What are some of the top IP issues facing start-up companies?

Companies may not take the time at the beginning to confirm they actually have the right to use a name. Trademark protection can end up being several thousand dollars or more, depending on what types of objections the name draws from either the United States Patent and Trademark Office (USPTO) or other companies that might be using it or something similar. A company can operate for six months to a year and then get a letter saying, ‘You can’t operate under the name you’re operating under, because it infringes my rights.’ Then it has to redo its marketing, change its name and hire a lawyer, making the cost exponentially more than what it would have been had the company done what was necessary when it first got started. When creating the business plan, set aside money as a monthly expense to pay for these things at the outset.

How do you protect your name?

There are two processes. One is to go to the Secretary of State’s office and secure the name for organizational purposes, but that’s only half the battle. You should also register that name as a trademark with the state and/or federal government. Filing with the USPTO will give you (in most instances) nationwide coverage and protection for your name or logo. State registrations are only good for the state in which you register it. Before going through any registration process, we recommend our clients perform a search to determine whether or not there’s anybody else out there using that name or something similar. In consultation with an attorney, you can get a pretty good idea whether or not that’s a name you can use. Then you file your application, and that takes about a year to 18 months (but upon registration, your rights relate back to the date of filing the application).

Do start-up companies need to be concerned with protecting their ideas?

Yes. Protecting your ideas implicates patent law and trade secret law, and it applies to ‘start-up’ and mature companies alike. Patents give you the right to exclude others from using a particular technology. If your company is using a new technology or has developed a new technology, you have a year from the first date that you are publicly selling or disclosing that idea to file your patent application. The flip side is, maybe you have an idea that you want to keep confidential, then patent protection isn’t what you want. Once you disclose the technology in a patent application, it’s there for everyone to see. Instead, you should consider protecting your ideas through trade secret laws. This can be tricky, and it is important to have an attorney thoroughly advise you on how to best secure those rights, such as through the use of confidentiality agreements with all employees or interested persons.

How do you establish and protect your Web presence and materials?

Even if you’re not immediately planning on having a Web presence, you should still determine whether or not the relevant domain names are available. You should focus on registering your company name as a domain and its most important trademarks. Sometimes you will find someone else has already purchased a domain name that is the same as or substantially similar to your company name or trademarks. There are a number of legal options available to you if you want to fight those registrations. For one, you can file suit in federal court. That’s pretty expensive, so another option is to initiate private arbitration against whomever is squatting on your name. You can’t recover damages or attorneys’ fees, but you generally can get an answer from the arbitrator within two to three months of filing, and registered trademark owners prevail in these proceedings more than 90 percent of the time.

Also, you should make sure you place a copyright notice on all of your marketing materials and Web content. Copyright registrations are relatively inexpensive — about $35 per application.

JONATHAN POLAK is a member of the intellectual property group at Taft Stettinius & Hollister LLP. Reach him at (317) 713-3532 or jpolak@taftlaw.com.