Tag: phoenix trademark lawyer

  • Registered Trade Name vs Registered Trademark: Who Wins?

    “Kum & Go,” photo by Dustin Murrell Broadcast Journalist (Creative Commons License)

    Last week, I wrote about intellectual property disputes where one side had the website domain and the other side has the registered trademark. Someone asked me how do registered trade names factor into these situations.

    What’s a Trade Name?

    In general, a trade name is something you register with your state. This is different than registering a trademark with the U.S. Patent and Trademark Office (USPTO). This is a way to register the name of your company or your product with your state. It typically takes only a matter of days to get and is cheap. In Arizona, the filing fee for a trade name is $10.00, whereas the minimum filing fee to register a trademark with the USPTO is $250, and it takes months (if not longer) for the USPTO to process your application. Your state may also give you the ability to register a state-level slogan or logo.

    Value of Registering a Trade Name

    To be honest, there’s little value in registering a trade name at the state level. It could be helpful in situations where the name of your legal entity is different than the company or product name. For example, if your entity was XYZ Company LLC and your did business as Green Ice Marketing, if you registered Green Ice Marketing as your trade name, your state might not let another company use the same name and compete with you ask Green Ice Marketing LLC.

    Even if you have a state-level trade name, it does not automatically give you statewide common law trademark rights. Common law trademark rights are based on your established geographic market, based on where you’re using the mark in commerce. Thus, if you register a trade name with your state, but you’re only using it commerce in your county, your common law trademark rights may only be that county, not the whole state.

    Registering a trade name creates a third-party record of when you started using a trademark, which may be helpful in a trademark dispute, but there are other ways to demonstrate when you began using a particular trademark in commerce.

    Trade Name vs Trademark

    In a trademark dispute, timing is often a deciding factor when two companies are selling similar products using the same or confusingly similar trademarks. In a trade name vs trademark dispute, there are two ways it could go down.

    Option #1: You Registered a Trade Name Before They Registered the Trademark.

    As stated above, when you only register a trade name with your state, there are no associated federal trademark rights that come with that registration. You only get common law trademark rights based on the established geographic market where you’re using your trade name in commerce.

    The moment your competition registered the trademark with the USPTO, you become “frozen” in your established geographic market. The registrant gets the exclusive right to use the trademark everywhere else in the United States except within the geographic market you established prior to their registration.

    It’s like a snow globe dropped over your area at that moment. They can’t go into your area, and you can’t expand beyond that invisible barrier unless you rebrand. This is what happened in the Burger King situation.

    Option #2: You Registered a Trade Name After They Registered the Trademark.

    Once someone registered a trademark with the USPTO, they have the right to keep competitors from entering the marketplace in the U.S. while using their trademark or one that is confusingly similar to it.

    Once they get their trademark, you can’t start using it too for a similar product or service.

    Here’s the rub. You state probably will not cross-check the USPTO database if you try to register the same mark as a trade name. They will deny your trade name application only if it matches something in their database of registered trade names in that state. Similar to the web domain situation, a lot people get a false sense of security when they can get a state-level trade name, but it won’t provide any protection from an accusation of trademark infringement in this situation.

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    Ruth Carter

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  • You Have the Domain. They Have the Trademark. Who Wins in the IP Dispute?

    “Stone Stacks – Lindisfarne” by Linton Snapper from Flickr (Creative Common License)

    I saw this scenario come through my Reddit feed. Two U.S. companies are in the same industry and using the same name for their brand. One has the dot-com web domain. The other has registered the brand as a trademark with the U.S. Patent and Trademark Office (USPTO). Which company should get to use the brand and force the other to change their name?

    Timing Matters: Who Was First

    The answer to every legal question starts with “It depends,” and here it depends on which company was using the mark in commerce first. By “use” I mean which company made the first bona fide offer for sale to the public, not who came up with the idea for the brand first.

    Option #1: You Started Using the Domain Before They Registered the Trademark

    If two companies in the same industry the U.S. are using the same trademark, but not one has registered it with the USPTO, then each one can establish what are called common law rights in the mark in the geographic areas where they are respectively using the trademark. They can co-exist peaceful as long as one doesn’t try to infiltrate the other’s established geographic market.

    Here’s what happens when they register the trademark with the USPTO – they get the exclusive right to use the trademark everywhere in the U.S., except within your established geographic area at that time. It’s like a snow globe drops over your geographic market. They can’t go into your area, but you can’t expand your market beyond that boundary. This is what happened when the chain Burger King registered their trademark and there was a mom-and-pop restaurant with the same name already in existence. If you want to expand your geographic market beyond that invisible boundary, you have to rebrand.

    These rules are easier to follow when businesses were brick and mortar establishments. Now that commerce is largely internet-based, a company is likely to naturally expand merely by being online. You probably can’t add any new social media platforms using the trademark without them claiming your infringing on their intellectual property rights.

    If you come to me with this situation, unless you’ve established nationwide common law rights before they registered the trademark, it’s often best to save your money on litigation and rebrand instead.

    Option #2: They Registered the Trademark Before You Start Using the Domain

    Remember, when they registered their trademark with the USPTO, they got the exclusive right to use their trademark everywhere in the U.S. except any geographic area where you established your market for the same mark prior to that date. If they registered before you started using the mark at all, you can’t enter the marketplace using that trademark in that industry. They win. You lose. You have to rebrand.

    What if it’s the same situation, but you were using the mark before they registered but you hadn’t created the website yet? Publishing the website after they registered, even if you were already selling the product using that brand, would be an act that would expand your market beyond your now-limited established geographic area, which is not allowed. I would expect them to send you a cease and desist letter demanding that you take down the website.

    Getting the Domain is Not Proof to Trademark Availability

    A lot of people make the mistake of thinking that if they can get the dot com domain they want that there aren’t any trademark issues that they need to worry about. There are many reasons why a company might not get the dot com of the trademark, even if it was available:

    • They are using another type of domain, like .org.
    • They are only use companyname.com for their website and not get separate domains for each of their brands or other trademarks used by the company.
    • You and they have trademarks that sound the same but spelled slightly different.
    • You and they have slightly different domains, such as XYZ.com and TheXYZ.com.

    When I’m working with a client on selecting a company name, product name, or other trademark, I encourage them to search for their prospective trademark on the internet as well as on the USPTO database. What’s tricky about this is that even if you don’t find an exact match to the trademark you want to use, there could be one out there that is confusingly similar to the one you want to use. It’s best to do as thorough of a search as possible before investing your time and money into your brand.

    Can the Trademark Owner Force You to Give Them the Domain?

    There are lots of reasons why a person or company would have a domain that matches your registered trademark that don’t violate your intellectual property rights. If it’s a situation where your website infringes on their rights, they can demand that you remove the website. It doesn’t mean they can force you to give them the domain, though that is something you can try to leverage. They can always offer to buy it off you. (I often advise my clients wait for them to offer to buy it first so as to avoid looking like a cybersquatter.)

    If they are willing to fight you for the domain, there is a risk that they may file a claim against you in court or under the Uniform Domain-Name Dispute-Resolution Policy (UDRP). If you find yourself in a trademark dispute where you have the coveted domain, it’s best to consult a trademark attorney who can examine your specific situation, explain your options, and advocate on your behalf.

    Question of the Day: Two Companies Using the Same Trademark 

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  • What Zach Kornfeld is Doing Right with his New Business

    “Thumbs Up!” by Kevin Gale from Flickr (Creative Commons License)

    This week, Zach Kornfeld of The Try Guys announced that he is starting a new tea company in two months or less, without leaving his apartment, and spending less than $500. The goal is to create and sell two original blends: “one for energy and one for chillin’ out.”

    Constraints are Good for Creativity

    It’s intriguing to watch someone create a new company is real time, particularly in this situation where Zach has a limited budget and is sheltering in place. These limitations are not necessarily bad things. On the contrary, entrepreneur and keynote speaker Jay Acunzo regularly talks about how “Constraints are a strength.” They increase the need for thoughtfulness and creativity. Also, check out his fantastic book Break the Wheel. It has an entire chapter dedicated to constraints and decision-making.  

    Zach started by consulting Jason D’Mello at the Fred Kiesner Center for Entrepreneurship for business advice, who advised him to create a DBA (doing business as) as the start of his company. (I recommend that every entrepreneur create a separate business entity – LLC or corporation – for their company, but in California, that comes with a hefty annual fee that would break Zach’s budget, so I get why he’s starting with a DBA.)

    Before filing DBA, Zach needed a name for this new company. Zach’s first idea was to name his tea company Turtle Tea because it doesn’t matter how you start or how many times you fail. What matters is that you keep trying – slow and steady.

    What Zach Did Right – Legally Speaking

    Trademark laws apply to branding in the U.S. – company names, product names, logos, slogans, etc. There are many legal issues that can crop up when selecting a brand. Before Zach ran with Turtle Tea as his brand, he did a lot of things right.

    He Checked the USPTO Trademark Database

    Zack used the Trademark Electronic Application System (TEAS) on the U.S. Patent and Trademark Office  (USPTO) website, to try to register Turtle Tea as a trademark. He didn’t just submit an application but checked the USPTO’s trademark database first to see if anyone else had already registered that name.

    Unfortunately, someone else already owns a trademark for Turtle Herbal Tea. If he tried to register Turtle Tea with the USPTO, he would have been throwing money away. If Zach used Turtle Tea as a trademark anyway, he would have set himself up to get a cease and desist letter (or worse) from this trademark owner and would have had to rebrand his company.

    He Checked Alternative Spellings for Potential DBAs

    Now that Turtle Tea was off the table, Zach started running trademark searches for other potential names. One thing he did was check alternative spellings. A primary rule in trademark is you’re not allowed to have a trademark that is confusing similar to someone else’s such that consumers will be confused about whose product they’re buying. You can’t register a trademark if it sounds confusingly similar to someone else’s – different spelling but sounds the same.

    When Zach looked up “Zach,” he also had to check “Zack.” Likewise, when he looked up “Zach’s” he had to look up “Zax.” When I research my client’s trademarks, I try to look up alternative spellings to make sure a sound-alike trademark hasn’t already been registered.

    He Checked Related Products for Similar Trademarks

    When someone has a registered trademark, they have the right to use their name on their goods/services as well as on the ones they would logically expand into. For example, if someone sold milk, a product they’d like expand into is cheese or ice cream.

    Likewise, Zach needed to consider not just tea companies that had registered similar marks to what he wanted, but also other beverages. One of the names he was considering had to be rejected because it was already registered by a coffee brand.

    By the end of this video, Zach didn’t have a name for his company despite his many searches. This frequently happens. (Zach’s fans are suggesting names for his company via social media. The best one I’ve seen so far is Korndidtea – a take on his Twitter handle, @korndiddy.) Many clients send me dozens of trademarks to search against the USPTO database for them before deciding on a name. You don’t want to waste time and energy on a brand that have already been claimed as a trademark by someone else.

    I love that Zach’s experience shows that Joe Average people can use the USPTO trademark database to do their own preliminary searches when considering a name for company or product. I don’t recommend filing a trademark without consulting a lawyer, but you can definitely your basic research yourself.  

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    Ruth Carter

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  • Let’s Talk About Trademarks

    https://www.flickr.com/photos/trippinlarry/5987691227
    “Lemonade, anyone?” by trippinlarry from Flickr (Creative Commons License)

    I’m going to say “no” a lot today. I’ve seen many trademark questions lately, many of which make me cringe.

    Here’s what you need to know about trademarks. They are synonymous with branding. Your trademarks are the names, logos, slogans, etc. that you put on your products or services that differentiate you from the competition. They inform consumers about the origin and quality of the product or service.

    When you apply to register a trademark, you have to tell the U.S. Patent and Trademark Office (USPTO) what you’re claiming as a trademark and on what products or services you’re using it. The USPTO won’t register your trademark if it’s too similar to a previously registered trademark. If they have a problem with your application, they’ll send you an Office Action with an explanation of the problem, and they give you 6 months to submit a response.

    This is also why it’s possible for two companies to use the same trademark when they’re products and services are so different that no one would think they came from the same company, like Delta Airlines, Delta Faucet, and Delta Dental.

    Onto the questions . . .

    How would an Unregistered Trademark be Better for “Brand Image” than a Registered Trademark?

     A trademark is a trademark regardless of whether you register it or not. What changes is the rights you get with your brand when it’s a registered trademark. Having a registered trademark gives you the ability to stop competitors from entering the marketplace in the U.S. while using a trademark that is confusingly similar to yours. (Trademark rights are limited by country. If you have a registered trademark in the U.S., that doesn’t mean someone couldn’t register the same trademark for the same goods somewhere else.)

    When you don’t register your trademark, you only can get common law trademark rights based on the geographic area where you are using the mark in commerce. You won’t have the ability to stop a competitor from using the same or a confusingly similar trademark in another geographic area in the U.S. like you’d be able to do if you had a registered trademark.

    Additionally, if you don’t register your mark, there’s a risk that your competitor will, which will limit your ability to use your trademark to the area established by your common law rights when the other mark was registered. This happened to the first Burger King restaurant. The first Burger King was “frozen” in its established area when the franchise registered the trademark. If the first Burger King company wanted to expand beyond that area, it must do so with a different trademark than “Burger King.”

    If your company is going to license its trademark to others, having a registered trademark is more valuable that an unregistered trademark. For many companies, their most important asset is their intellectual property.

    If I Want to Apply to Register a Trademark and There’s a Competitor That’s Already Registered a Similar Name, Will I have a Better Chance with the USPTO if I Apply to Register my Logo that Contains the Company Name?

    Why do you want to a brand that’s similar to your competition? It baffles me when companies knowingly pick a name that’s like one that’s already in use. It makes wonder if the owners are trying to ride a competitors’ coattails (which is illegal) or if they don’t understand how branding works.

    The purpose of having a trademark is to prevent consumer confusion. The USPTO does not want to grant companies the similar trademarks if they’re selling similar products or services.

    For a lot of companies, I recommend filing the word mark for just their name (assuming it’s trademarkable) as well as the logo, because logos often change over time. The name of the product or company usually doesn’t.

    The USPTO requires separate applications for the logo and the word mark if you want both as registered trademarks. When a logo contains words, those often are given more weight than the rest of the logo in terms of whether there’s confusion because that’s often the most prominent part of the logo. The logo components may help differentiate your trademark from the competition, but it may not be enough. You can always apply and see what happens.

    Can I use a Cancelled Trademark if the Owner is still Manufacturing the Product?

    When you do a search on the USPTO trademark database, it will show the trademarks that are “live” and “dead.” A dead trademark may be “abandoned” or “cancelled.” An abandoned trademark was one that was applied-for but never registered. A cancelled trademark was registered at one time but not anymore.

    When a company has a cancelled trademark but is still using it, it likely means that they registered the trademark and did not file the renewal when it was due. The company still has common law trademark rights based on its geographic market.

    It may be possible to use a cancelled mark that’s still in use as long as you’re not in the competitor’s established geographic market, but I usually don’t recommend it. It sounds like a situation where you’d be setting yourself up to get a cease and desist letter and/or sued for common law trademark infringement and unfair competition.

    On the flip side, I have seen companies use trademarks that have been cancelled and the previous owner has long since stopped using the trademark or the previous owner went out of business. A few years ago, I saw popsicle companies doing this – claiming abandoned trademarks and bringing the product back to market.

    Is it OK if my Trademark is Barely Different than Someone Else’s – Like Adding or Removing a Space or Adding a Word?

    The key to whether your trademark is different enough is based on whether consumers will be confused. As such, the USPTO treats trademarks that look and sound the same as being the same. You can’t take a registered mark and change the spelling slightly and have a valid trademark for the same product or service.

    When you take someone’s trademark and add a word to it, the USPTO will consider how similar the marks are. If the main part of the mark matches an existing registered mark for the same type of product or service, it’s less likely that the USPTO will register your trademark as well.

    There is no equation or formula you can use to guarantee that your trademark application will be approved by the USPTO.

    Can I File my Own Trademark Application?

    Yes. You don’t have to be a lawyer to submit a trademark application to the USPTO, though I recommend using one. At the very least, it’s best to have a lawyer review the application before you submit it. I’ve run into too many people who submitted a trademark application by themselves for trademarks that aren’t registerable. They could have saved themselves time and money by consulting a lawyer.

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    Ruth Carter

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  • How to Write a Decent Trademark Cease and Desist Letter

    https://www.flickr.com/photos/tangi_bertin/541603067/
    Stop by tangi_bertin from Flickr (Creative Commons License)

    A friend recently forwarded me a trademark cease and desist letter he received and asked if it was anything they needed to worry about. Now, I always tell my clients to take such letters seriously, and give them their due consideration, but then I read this particular letter. It was possibly the worst cease and desist letter I’ve ever read. It was written by an entrepreneur, not a lawyer, so I automatically mentally cut the sender some slack, but still, it was bad.

    If you’re in a situation where you suspected a competitor is violating your trademark rights, please get your lawyer involved. And if you’re going to write your own cease and desist letter, make it a decent one.

    Make Sure Your Trademark has Likely been Infringed

    A trademark has two components. It’s the name, logo, slogan, etc. that you’re claiming as a trademark plus the product or service on which you’re using it. (It’s possible for two completely different companies to have the same trademark, like Delta Dental and Delta Airlines.) For many companies, the first trademark they register is just the word or phrase that is the name of your company or product/service. This is called a “word mark.” It’s just words, no images, graphics, or sounds.

    When you have a registered word mark and someone uses the same word or phrase, it’s not automatically a violation of your trademark rights. For example, Paris Hilton has registered trademarks for “That’s Hot” for “multimedia entertainment services” and apparel. These trademarks do not give her the ability to stop everyone from ever using the phrase “that’s hot,” as a descriptor. If a person is not using the word or phrase you registered as a trademark for their business, it’s likely not trademark infringement.

    What to include in a Cease and Desist Letter

    While I don’t endorse the idea of business owners writing their own cease and desist letters, it happens. If you’re going to write your own, these are some of the things I’d tell my client to include in their letter if they insisted on doing it themselves:

    • Provide the legal name of the person or company that owns the trademark,
    • Identify your trademark including the registration number and a screenshot of the trademark listing from the USPTO database,
    • Identify the alleged infringing activity, preferably with a URL and/or screenshot if it’s online or photographs if it is not, and
    • Clearly state what you want the recipient to do in response to your letter with a due date for compliance.

    When to get the Lawyers Involved

    If you encounter suspected trademark infringement, call your lawyer. Even if you want to send a cease and desist letter yourself, call your lawyer first. They can help you make sure there’s a real trademark issue that requires your attention and help you craft the cease and desist letter.

    Many of my clients want to reach out to the alleged infringer to speak business owner to business owner, first. They want to send friendly but clear cease and desist letter, and give the other side a chance to resolve the matter “without having to get the lawyers involved.” I have helped write many a letter that included that phrase. The other side doesn’t need to know that I’m already involved.

    If they don’t respond favorably to my client’s friendly letter, then I will follow it up with a strongly worded nastygram that demands that they cease all uses of my client’s intellectual property and failure to do so will result in litigation (or whatever consequences my client has selected).

    My recommendation for clients is to refrain from making threats in cease and desist letters unless they’re willing to follow through with it. Otherwise, if the other side calls your bluff and you don’t follow through, you will lose all credibility and any further demand letters will likely be ignored.

    If you threaten litigation in your cease and desist letter, be ready to pull the trigger if the suspected infringer doesn’t comply with your demands. Some people won’t take you seriously until a lawsuit has been filed. A lawsuit will force them to deal with the situation because of the court-imposed due dates or risk the effects of a default judgment if they ignore it.

    Thanks for reading this post. If you liked this post and want to know more about my work, please subscribe to the Carter Law Firm newsletter where I share behind-the-scenes information and readers get exclusive access to me.

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    Ruth Carter

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  • Legal Checklist to Protect Online Entrepreneurs

    Labib Ittihadul from Flickr (Public Domain)

    I was recently asked to create a list of what legal steps an entrepreneur should take if they operate solely online to protect their business. The person who asked appears to be primarily a YouTuber. Here’s the list I created for him: 

    1. Consider having Two LLCs. One is a holding company for the intellectual property and licenses the IP to the other LLC to use it. This way if the holding company is sued for infringement, there are no assets to be collected if the holding company loses the lawsuit. We recommend this tactic for many businesses, not just online entrepreneurs.

    2. Create an Operating Agreement if the LLC has more than One Owner.  Yes, this includes if you go into business with relatives, best friend, or romantic partner. This is a master document that lays out how the company will operate, each person’s obligations and responsibilities, and how the owners will address problems when they occur.

    3. Move your Website to a Server Outside the U.S. The reason for doing is if there is ever a court order against the website, it will be more difficult to enforce if the website is house by a company outside the U.S. and not bound by U.S. law.

    4. Register your Trademarks with the USPTO. So many legal issues could be minimized or avoided if every company properly registered their trademarks. This could include company names, product names, event names, logos, and slogans. When you have a registered trademark, you can stop a competitor from entering the marketplace while using a trademark that is confusingly similar to yours. If you have a strong international presence, it may be wise to register your trademarks in multiple countries.

    5. Create a Copyright Strategy. Many professional content creators do guest posts for and collaborations with others and allow guest posts on their sites. It’s best to have contract templates for these situations that include clarification about who owns the copyright, what the other person gets, any limitations regarding the content, and an indemnification clause if appropriate.

    Additionally, your copyright strategy should address when and how you can use others’ materials. You should have an understanding about fair use and where to look for materials that come with a license to modify the original as well as a license to use it for commercial purposes.

    6. Consider Registering your Copyrights. You do not have to register your copyright to get your copyright rights, and you do not have to register everything you create; however, it’s beneficial to have the discussion about what you might want to register. You are required to register your copyright if you want to sue for infringement. Additionally, I frequently recommend registration to people who want to license or sell their copyrights.

    7. Create an Action Plan for Addressing Suspected IP Infringement. Decide how you want to respond to suspected infringement before it occurs, so that you or your lawyer can be prepared to respond based on your desired outcome when it happens. Depending on how you want to respond, there may be things you need to do before the infringement occurs to best protect your rights.

    8. Have a Contributor Contract Template. This is the contract you will use with people who contribute content to you, your site, your channel, or a social media account. It will state what rights each party has to use the content – most likely that they own it, and they grant you a license to use for certain purposes. It should also have an indemnification clause to protect you in the event you’re accused of violating another person’s IP rights or other legal wrong by using what the contributor provided to you.

    9. Have an Influencer Contract Template. This is the contract to use when brands hire you so that the expectations on both sides are clear, and you state that you comply with FTC regulations. (You should probably have internal documents about FTC compliance as well.) Companies that hire influencers may have their own contracts that they want to use, but having your own template will help you analyze their contract to see how well it addresses your needs and concerns.

    10. Create Website Terms and a Privacy Policy. These documents may need to comply with U.S. privacy laws, the Canadian Anti-Spam Legislation (CASL), and the General Data Protection Regulation (GDPR), and manage the expectations of visitors to your website. Many of the new privacy laws interfere with how many companies collect and use others’ personal information. These issues are complicated. Many people copy another content creator’s terms and privacy policy, but that could be a recipe for disaster if what you use is insufficient for your needs.

    This may not be a complete or comprehensive list of legal steps to take to protect your business. It’s always best to consult a lawyer who understands the legal implications related to your business, preferably someone to specializes in business, intellectual property, and internet law. Hopefully this list gives you a place to start to evaluate your legal needs as a professional content creator or online entrepreneur.

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    Ruth Carter

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  • If You’re Going to “Wing It” as an Entrepreneur

    “Yay!!” by Subharnab Majumdar from Flickr (Creative Commons License)

    Plenty of entrepreneurs start out as a person or two, a business idea, and a shoestring budget. They know their craft but have limited or not experience starting or running a business. They don’t know what they don’t know – and that’s what gets them into trouble.

    Many entrepreneurs employ the “we’ll learn as we go” approach to operating a business. Often times these are smart people, but if they get too focused on doing their business that they don’t take care of business within their operation, it can lead to costly mistakes: thousands of dollars in legal expenses and painful heartache to try to fix a problem that was completely avoidable.

    Real-Life Facepalm Moments
    I’ve had countless times where a business owner comes to me for help and I cringe and think, “We could have helped you avoid this if you had come to us sooner.” This is just a sample of my facepalm moments as a lawyer:

    KAWS “At This Time” Sculpture by Guilhem Vellut from Flickr (Creative Commons License)

    • Owners who don’t create a business entity: put their personal assets at risk if the business gets sued;
    • LLC with multiple owners and no operating agreement: painful business “divorce” when things didn’t work out between owners;
    • Filing a trademark application with the USPTO that wasn’t trademarkable: the application might have had a chance if the description of the products and services was written more effectively;
    • Not filing a trademark and your competition files a trademark application that’s confusingly similar to or the same as yours: costly to make a claim against them and it may not be successful, which could force you to rebrand even though you were using it first;
    • Flawed customer contracts: doesn’t fully protect the company’s interests or address all likely contingencies;
    • Hiring a third-party contractor without a contract: if the person is hired to create an original work for the company, the company won’t own the copyright in what they hired the person to create and may have to pay to acquire it;
    • Working without a contract: so many problems. Whenever I get a call about a business deal gone bad, my first question is usually, “What does your contract say?” (Ideally, you want to be in a situation where, if the other side doesn’t perform as you agreed you can essentially respond with, “F*ck you, pay me.”)

    If You’re Going to “Wing It”
    If you are starting a business, my unsolicited advice is “Do your homework.” Invest the time to learn what goes into running your business and figure out what you don’t know. Reach out to established entrepreneurs to ask for their advice and avail yourself to resources in your community. In Arizona, we have dozens of these organizations like Arizona Small Business Association, Local First Arizona, and SCORE.

    Even if you don’t think you can afford it, look into hiring a business and intellectual property lawyer for an hour. Bring them your ideas of what you want to do, and ask for their recommendations on how to make it happen. A good lawyer will respect your budget and tell you what you can do yourself and what you should hire a lawyer do for you. They can also recommendations resources to help you based on their experiences helping others.

    If I’ve learned one thing as a lawyer it is that it’s easier and cheaper to prevent problems than to fix them.

    True Story
    Years ago, I worked with a new company where the owners hired me to create their operating agreement. I asked a lot of questions about things like intellectual property rights, compensation, and worst-case scenarios (e.g. disability of an owner) to create custom provisions for this document.

    A few years later, the owners realized it wasn’t working out between then and decided to part ways. Their operating agreement dictated how they would address this situation, and they hired us again to revise the agreement to account for the exit of one of the owners. The process was professional, respectful, and cost-effective. I’m sure there were hurt feelings on both sides, but having this operating agreement helped the owners mange them and made for a smooth transition.

    If you want more information about the legal dos and don’ts of starting and running a business, you can send me an email (Note: I can’t give advice to non-clients), and I maintain a mailing list where I share my thoughts about being a lawyer/entrepreneur, updates about projects I’m working on, upcoming speaking engagements, and I may provide information about products, services, and discounts. You can also connect with me on Twitter, Facebook, YouTube, or LinkedIn.

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    Ruth Carter

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  • The 10 Legal Commandments of Entrepreneurship

    “Stained Glass Window Full of Light and Color” by Stock Photos for Free from Flickr (Creative Commons License)

    Since becoming a lawyer in 2011, I’ve had the privilege of working with businesses on a variety of legal issues. Looking back at some of the most cringe-worthy moments I’ve experiences I’ve had and heard about from other business and intellectual property lawyers, I’ve come up with a list of the 10 legal commandments of entrepreneurship:

    1. Thou shall have a business entity.

    When you start a business, create a business entity – an LLC or corporation. Your accountant can tell you which option is best for you. By separating the business from your personal assets, you limit your personal liability if the business is sued. If you open a business without an entity (aka a sole proprietorship), you don’t have this layer of protection.

    2. Thou shall maintain your corporate veil.

    Creating a business entity is how you begin to limit your liability, and you perfect that protection with a “corporate veil.” This means having a separate bank account and credit card for the business, and the business accounts pay for business expenses and your personal accounts pay for personal expenses. This creates a clear delineation between where the company ends and the person begins in terms of your finances. If the company is sued and loses, it’s clear which assets belong to the company and your person assets are protected.

    3. Thou shall have a signed contract at the beginning of a business relationship.

    When you are hired by a client or hire someone, start with a signed contract. A contract is a relationship-management document. It is your master document that puts everyone on the same page regarding their responsibilities. This will help you avoid confusion and resolve problems. When a client comes to me with a problem with a customer, I often start by asking “What does your contract say?”

    4. Thou shall be thoughtful and careful about looking online for a contract template.

    Looking at templates online is a good place to get ideas about terms you might want to have in your contract, but don’t indiscriminately use any contract you find. You don’t know where it came from or whether it’s suitable for your needs.

    5. Thou shall take the time to fully read and understand a contract before signing it.

    Never be afraid to ask questions or request changes when considering a contract offered to you. Don’t sign anything you don’t understand, because if you sign it and later regret it, you may be stuck with it.

    6. Thou shall respect others’ copyrights.

    Do not use others’ work without permission. Create your own original content. It’s ok to be inspired by and quote others, but add something to the conversation. If we’re talking about images, do not pull any image you find using a regular Google search. Seek out sources that provide licenses for use, including images available under Creative Commons. If there is an image you want to use that’s not available, contact the copyright holder and ask for permission. To date, I’ve never had anyone say, “No.”

    7. Thou shall check the USPTO before branding a company or product.

    When entrepreneurs think “branding,” lawyers think “trademark.” The United States Patent and Trademark Office (USPTO) has a database where you can see what company names, product names, and logos others have applied for and registered for their products and services. You don’t want to fall in love with, or invest a lot of time and money in, a branding idea to find out that it’s already been claimed by someone else.

    8. Thou shall outsource your taxes.

    Every entrepreneur needs an accountant. Let them do what they’re good at.

    In the time it would take you to try to do your own taxes, you could make more than enough money to pay an accountant to do your taxes for you.

    9. Thou shall consult thy attorney.

    Even when you want to do things yourself, talk to your lawyer to make sure you’re not setting yourself and your business up for future problems. My most cringe-worthy moments as a lawyer have been problems clients created for themselves that we could have helped them avoid completely if they had told us what they were thinking about doing. It is easier and cheaper to prevent legal problems than to fix them.

    10. Thou shall act with integrity.

    Put your energy into your own business, creating quality products or services for your audience.

    You don’t need to stoop to bad-mouthing the competing, using trademarks that are confusing similar to others, or ride other’s coattails by doing things like using a web domain that will allow you to pull an audience based on someone else’ popularity (e.g., cybersquatting). Be so good at what you do that you don’t need to use others to make a name for yourself.

    One last note: If you’re an entrepreneur, don’t be afraid to ask for help. Accountants help you make money, lawyers help you keep it, and your peers will share their experiences so you can learn from them. If you are an entrepreneur, or have plans to become one, I hope you have people around you who can help you be successful.

    If you want additional information about the legal dos and don’ts of starting and running a business, I maintain a mailing list where I share my thoughts about being a lawyer/entrepreneur, updates about projects I’m working on, upcoming speaking engagements, and I may provide information about products, services, and discounts. Please add yourself if you’re interested. You can also contact me directly or connect with me on Twitter, Facebook, YouTube, or LinkedIn.

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    Ruth Carter

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  • Trademark Rights in Website Domains

    Business Entrepreneurs by Airsoftpal.com (Creative Commons License)

    I regularly get questions about whether a person should use a business name based on whether their desired website domain in available. There is also the reverse – if a company has a registered trademark, is it a deal-breaker if you want to use a similar name for your business? For example, if a company has a registered trademark for The Ooga Booga and the domain theoogabooga.com for their children’s book series, does that mean you can’t have the domain, oogabooga.com for your business?

    Ooga Booga is my default fake trademark when describing trademark concepts. As of this writing (3/5/2017), no one has a registered trademark in the U.S. for “Ooga Booga.”

    Two Parts to a Trademark
    There are two elements to every trademark – the mark itself and the product or service with which you are using it. It’s possible for two different companies to use the same trademark so long as the products and services with which they are using it are so different that no consumer will be confused about what they’re buying. That’s why it’s possible to have Delta Faucet, Delta Airlines, and Delta Dental. No one would think these products and services come from the same company.

    Do your Homework when Selecting a Domain
    When it comes to selecting your company or product name and the corresponding domain, be thoughtful. Do you some searches to see if other companies have similar domains and how they are using them.

    If you see someone using a domain that is similar to yours, or a product or company domain that has a corresponding registered trademark, it’s not necessarily a deal-breaker for your business plans, but you may want to do further research. There’s nothing wrong with two companies have similar websites as long as you have a legitimate reason for using it and you’re not violating the other company’s rights.

    Let’s say you wanted oogabooga.com as your website, examine the difference between your product or service and the registered trademark for The Ooga Booga. They sell children’s books; so as long as your product or service isn’t in the arena as children’s entertainment, education, or related products, you could be ok. Most likely, no one will think that your affiliated with this other company if you’re selling something like wetsuits, wine, or financial planning services.

    If you’re in a situation where you don’t want other companies having a similar domain as yours, spend the money to buy these other domains. It’s cheaper and easier to have a slew of domains related to your product rather than invest time and money monitoring, sending cease and desist letter, or pursuing other legal action against these other companies.

    Only the Trademark Holder is a Threat
    The good news in this type of situation is only the person who owns the trademark or other intellectual property rights can go after you for suspected infringement. If they don’t know or don’t care about what you’re doing, you face any legitimate legal threats.

    Of course, when in doubt, consult a trademark lawyer to discuss your thoughts about your business or product name and website domains. If you’re interested in discussing your trademark needs, you can contact me directly or an intellectual property lawyer in your community. I regularly post about legal issues impacting entrepreneurs on Twitter, Facebook, YouTube, and LinkedIn. You can also get access to more exclusive content that is available only to people on my mailing list, by subscribing here.

    More Information about Trademarks:

    Photo credit: Airsoft Pal

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    Ruth Carter

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  • Trademarks: Register or Rebrand

    WordPress Swag by Caspar Hübinger from Flickr (Creative Commons License)

    One of my entrepreneur friends recently asked me if he “had to” register the logo for his company. I responded with, “How much would it suck if you had to rebrand?”

    Why Register your Trademark
    Your trademark is the name, logo, and other branding you put on your products so consumers can tell the difference between your brand and your competition’s. When you have a registered trademark for your brand, you can stop anyone from entering the market with a similar brand on a similar product as you. The law doesn’t like it when your competition tries to ride your coattails by looking too similar to your brand. When you register your trademark, your rights extend to everywhere in the United States, even if you’re not doing business everywhere in the country yet.

    If you don’t register your brand, you can only get “common law” trademark rights that are limited to where you’re doing business with your mark. Your competition can use the same or similar brand where you haven’t established yourself. And if they register the brand before you, you may find yourself frozen only to your established marketplace, which may be quite small. Just ask the original Burger King restaurant what that’s like.

    Cheaper than Rebranding
    What does it cost to have a logo designed?
    What about a website?

    The fee to submit a trademark application to the U.S. Patent and Trademark Office (USPTO) is $225-400, if it’s only for one type of product or service. Even with the fee to have a proper trademark lawyer submit and track the application, it’s often cheaper to apply for a registered trademark instead of rebrand. If someone else registers your trademark before you, you may be forced to rebrand if you want to continue to grow your business and expand your marketplace to reach more potential customers.

    Brand Theft Happens
    I have seen and worked on a number of situations where a company could have avoided a lot of heartache and legal bills if they had registered their trademark, because their competition registered the same or similar trademark before they did. Turner Barr essentially had his trademark, Around the World in 80 Jobs, stolen out from under him. He had to cease operations to address the situation. Thankfully for him, his story had a happy ending. Other companies are not as lucky.

    A substantial portion of my work involves analyzing, registering, and challenging trademarks. If you need help with your trademark situation, you can contact me directly. I also post about these issues on Twitter, Facebook, YouTube, and LinkedIn. You can also get access to more exclusive content that is available only to people on my mailing list, by subscribing here.

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    Ruth Carter

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