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What if My New Trademark or Business Name is Already in Use?

by Clifford D. Hyra on January 27, 2010

So you have come up with a name for your new business or new product, and you love it. It is the perfect brand and trademark to propel your business to widespread success. But wisely, you have a trademark search conducted, and you find that you are not the first person to come up with it. Your new name is not quite as unique or original as you had hoped- some other business is using a similar name. We will call that other business “First User, Inc.”

What should you do? Do you have to drop the name? Change it? Contact First User? Or can you just go ahead with your registration and marketing plans as if nothing had changed? There are a few factors you must weight when making that decision:

  1. What First User can do to you if they find out you are using a similar trademark
  2. How likely First User is to find out or decide to go after you
  3. Just how good the name you came up with is

The first factor is the potential cost to you of using the trademark, the second is the probability of incurring that cost, and the third factor is the benefit from using that trademark. You can then make the classic calculation: is the cost multiplied by the probability greater than the benefit to you?

1) Penalties for Trademark Infringement

If you decide to begin using a trademark (business name, logo, brand name, etc.) that is confusingly similar to the trademark of another business in the U.S., that other business can cause you a lot of problems. It can stop you from registering your trademark and it may be able to stop you from using the trademark.

  • Preventing You From Registering Your Trademark

Trademark Examining Attorney Refusal to Register

The Trademark Office will not register a trademark if it is confusingly similar to another registered trademark. Therefore, if First User has registered their trademark, it may be difficult for you to get your application allowed by the PTO. The Trademark Examining Attorney assigned to your application is likely to refuse registration of your mark.

Trademark Opposition / Cancellation

Even if the PTO allows your trademark application, First User can oppose your registration, regardless of whether it has a registration and regardless of where in the U.S. it is located. A trademark opposition is an administrative proceeding before the Trademark Trial and Appeal Board (TTAB) and is essentially a mini-trial.

To go all the way through an opposition you can expect to spend $50,000 to $100,000, depending on what law firm you use. If First User can prove that your mark is confusingly similar to theirs and that it began using the mark in commerce before you, it is likely to succeed in preventing your registration.

Even if your mark is successfully registered without an opposition, First User can come back and petition to cancel your registration up to five years later. A cancellation proceeding is very similar to an opposition in expense, etc.

  • Preventing You From Using Your Trademark

Although registering your trademark is very important, the right to use your trademark is even more important. If First User has registered their trademark, they have exclusive rights to that mark nationwide. Regardless of whether you are operating in the same geographic area, your use of a confusingly similar mark in the United States constitutes trademark infringement.

In that case, First User can sue you and, if it can prove confusing similarity, force you to stop using your trademark. You would then have to redo your marketing materials and marketing campaign and devote a lot of money to rebranding.

As you are probably beginning to understand, it is generally a bad idea to use a trademark that seriously conflicts with an existing registered trademark. More frequently, you will have to make a decision regarding a trademark that is used by another business, but not registered. In that case, you can only be sued for trademark infringement if you do business in the same geographic area as First User, and only in state court. First User will have to prove confusing similarity and first use.

Defending a trademark infringement lawsuit can easily run six figures. Monetary damages could also be awarded against you, although they are uncommon.

2) Likelihood That Trademark Infringement Will Be Discovered or Prosecuted

Whether First User is likely to discover your use of a similar mark or pursue you if they do depends on a number of factors, including:

  • Is First User big or small?
  • Is First User brand-focused?
  • How close are the marks / how strong is First User’s legal position?
  • Does First User do business in your geographic area?
  • Do you have a significant web presence?
  • Is First User a direct competitor?
  • How big will your business become, and how fast?

These factors will be discussed in more depth in a subsequent post. Generally, large corporations are very likely to find out about trademark infringement and take action, whereas very small businesses are very unlikely to.

If you are able to register your trademark and keep that registration for five years, your registration will become incontestable, meaning that First User will no longer be able to cancel it for confusing similarity to their own mark. Your registration will also allow you to prevent First User from expanding beyond their geographic area.

3) How Important Is It To Keep Your Trademark?

Finally, you should consider the importance of the trademark you have selected. Are you wedded to it? Would you be open to tweaking it in order to differentiate it from First User’s trademark? If there are good alternatives and you have nto spent much money on putting together your branding materials, often it is better to avoid potential conflicts by choosing a new trademark.

On the other hand, if you have a really good and meaningful trademark that you have spent money to develop and build a marketing campaign around, it may be worth taking the risk of going ahead with it. This is particularly true when the risk is low, for example if First User is a small business that is not a direct competitor and is unlikely to discover the similarity.

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Steps for Getting a Patent (Part 2)

by Clifford D. Hyra on January 13, 2010

This is part two of a two-part podcast I recently filmed for LegalRiver on the steps for getting a patent. In this part I address the last two steps, preparing and filing your application and getting your application through the examination process at the United States Patent and Trademark Office. In the first part, I addressed patent searches and opinions and selecting the right type of patent application to file.

Steps for Getting A Patent – Part 2 from Legal River on Vimeo.

Please leave your comments and questions below!

<a href=”http://vimeo.com/8033071″>Steps For Getting A Patent – Part I</a> from <a href=”http://vimeo.com/user1324941″>Legal River</a> on <a href=”http://vimeo.com”>Vimeo</a>.

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Steps for Getting a Patent (Part I)

by Clifford D. Hyra on January 8, 2010

I recently filmed this short (<5 min.) video for LegalRiver on the steps for getting a patent. In this part I address the first two steps, having a patentability search report and opinion prepared and deciding what type of application to file. In the next video, I discuss the last two steps, preparing and filing your application and getting your application through the examination process at the United States Patent and Trademark Office.

Steps For Getting A Patent – Part I from Legal River on Vimeo.

Please leave your comments and questions below!

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Does Intellectual Property Protection Still Matter?

by Clifford D. Hyra on December 16, 2009

In a recent blog post, Seth Godin seems to question whether trademarks, copyrights, and patents have value. He begins with the question “If we’re in the idea business, how to protect those ideas?” and ends with “Don’t.” Instead, he recommends, “spread them. Build a reputation as someone who creates great ideas.” Along the way, he attacks the trifecta of trademarks, copyrights, and patents.

This is Terrible Advice

No Fortune 500 companies are going to read Seth Godin’s blog, see the light, and decide that those cease & desist letters really were not worth it after all, and maybe they should stop sending them out. To the extent that Godin’s readership consists of people who actually might seek intellectual property (IP) protection, I imagine they are primarily entrepreneurs and small business owners. Godin’s article will encourage them not to seek out such protection.

These people do not need anyone to convince them NOT to protect their IP. Not protecting your IP is easy-just don’t do anything! Lots of people do that because they are not aware of the importance IP can have to the success of their business. Not protecting your IP because Coca-Cola or MGM is sending out 10 cease and desist letters today is a mistake of monumental proportions and it is irresponsible to encourage entrepreneurs to make that mistake.

What Entrepreneurs Need to Know About IP Protection

Entrepreneurs need to know up front what IP protections are available and what their costs and benefits are. And there are benefits- potentially enormous benefits. Recent estimates place the total value of patents in the U.S. at $200 Billion. Brand value (integrally tied to trademarks) makes up a third of the total value of fortune 500 companies (that’s well over $1 trillion folks).

Registering a trademark is not about suing everyone who says the words “thank you”, it is about protecting your brand from competitors and avoiding costly legal conflicts. Patenting an invention allows you to lock your competitors out of the marketplace for a period of 20 years, and if you can get a patent for a valuable invention you came up with in the shower, more power to you.

An initial patent search and provisional application are essential to any entrepreneur planning to start a business around an innovative new product. They cost a lot less than “tens of thousands of dollars” (try ~$2,000) and without them potential investors and partners will not even talk to you. Without a search, you do not even know if your invention has any value. These protections are just part of the cost of entering that kind of business, and they are far from the largest cost involved (try prototyping or manufacturing an initial run).

So don’t dismiss IP protection out of hand. Figure out the costs involved and the likely benefits and do a cost/benefit analysis.

Should I Spread My “Ideas” Around as Godin Suggests?

Not if they have value to you. If, considering the risks involved, the cost of trying to protect your idea is greater than its benefit to you, then sure you should find something else to do with it. Maybe, as Godin suggests, telling everyone about it will build your reputation and be beneficial to you.

But for a company to spread its brand around freely or spread its new, heavily researched product around to its competitors in order to “Build a reputation as someone who creates great ideas” would be destroying enormous value- and insane. In this digital age, IP protection matters more than ever.

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IP News: Global Copyrights, Innovation, and Do Patents Matter?

by admin on December 14, 2009

Some good, thought-provoking reads from the IP blogs:

  • Over at IP Watchdog, Stephon Sharon discusses the future of global copyrights. Sharon looks at the challenging issues presented by an increasingly global, networked economy. What does Sharon pinpoint as the best solution? Consistency, to start:

“It pains us to see our intellectual property ripped off in front of our faces, but even more so when it is done overseas and we feel powerless to stop the infringement. We have made small steps toward achieving some level of consistency, but looking at the big picture we are not heading down the right path.”

  • Dennis Crouch at Patently-O details the implications of US patent filings falling in 2009 – for the first time in 13 years.  Does that signal a step back in innovation? Not necessarily, says Crouch – the lag between invention and patent filing, changes in patent law independent of innovation, and the multi-year lag between foreign innovation and US patent filings discounts the concern that the US just isn’t as creative.

“It’s a real crapshoot to spend tens of thousands of dollars to patent an idea you thought up in the shower one day.

So, how to protect your ideas in a world where ideas spread?

Don’t.”

DBC asks:

“So, IP ecosystem – this is how you are thought of by people who have a very large impact on public opinion – what do you think and what are you going to do about it?”

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How Much Does a Copyright Cost?

by Clifford D. Hyra on December 3, 2009

Technically, Copyrights Themselves Are Free

Copyrights protect your creative works, such as books and other texts, recorded music, pictures and photographs, and movies and other audiovisual recordings. The owner of the copyright to a creative work has the right to prevent others from making or distributing copies of the work without permission.

Copyrights now arise automatically when such a work is created, without any action on the part of the author and without any cost. The copyright is initially owned by the person or people who made the creative work, unless the work was made as a “work for hire” for another entity, for example by an employee for his or her employer as a part of the employee’s job, in which case the employer owns the copyright.

Registering Your Copyright With the Government Costs Money

Unfortunately, copyrights are not worth much if they are not registered with the government. For example, you cannot bring a copyright infringement lawsuit based on an unregistered copyright. Therefore, there is no practical way to enforce your copyrights unless they are registered. I explain many of the benefits of copyright registration here.

It costs $35 to register a copyright online with the Copyright Office, or $50 to register a copyright using a paper Form CO with printed barcode, or $65 for registering a copyright using a simple paper form. Almost all copyright registrations can be applied for either online or using Form CO, depending on your preference. Beyond the cost savings, it is a good idea to file electronically because the wait time for a copyright registration is about one year longer for paper filings than for electronic filings.

Because there is a wait of up to 9 months for an electronic application to be processed and up to 22 months for a paper filing, it is best to apply for registration early. If you find it necessary to obtain a rush copyright registration in order to file suit against a copyright infringer, the cost of expedited processing of your application at the Copyright Office is $760.

A full list of copyright costs is available at the Copyright Office website here.

For Many Copyrights, the Cost of a Copyright Attorney’s Help is Justified

Of course, if you use a copyright attorney to help you with the application for copyright registration, you must add the attorney’s fees to the government costs given above. You can expect an attorney’s help with preparing and filing a copyright application to cost a minimum of a couple hundred dollars.

If you have some experience with filing copyright applications, and/or your copyright claim is very simple, you may be able to get away with not using an attorney. But, I would recommend using a copyright attorney at least for the first time you register a certain type of work, especially if there are any issues such as a work for hire, transfer of ownership, multiple authors, multiple works, a portion of the work you are not claiming copyrights to, etc.

A copyright attorney will save you a lot of time trying to figure out the Copyright Office system and will avoid costly mistakes that could result in delay of your copyright registration or necessitate a whole new application.

Thus, the total cost of a copyright registration including a copyright attorney’s help is about $200-300, or potentially much more if you choose to use an expensive attorney.

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Trademark Basics for Businesses

by Clifford D. Hyra on November 13, 2009

I recently recorded the following video for Legal River concerning the basics of trademarks for business owners (and others!)


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How Long Does a Trademark Last?

by Clifford D. Hyra on November 12, 2009

A trademark is anything used in commerce to distinguish the products or services of one company from those of others. Logos, brand names, and slogans are common examples of trademarks. Under U.S. law, trademark rights arise when the trademark is first used in commerce, and continue as long as the trademark continues to be used in commerce. Thus, trademark rights can last indefinitely.

Many famous trademarks, such as Coca-Cola, Budweiser, the Bass logo, and Nestle have lasted for over 100 years. Trademark rights generally cease only when the trademark is abandoned and no longer used.

Federally Registered Trademarks

Federal trademark registrations are governed by additional rules. Placing a trademark on the federal trademark register at the United States Trademark Office bestows many additional benefits on the trademark owner, for example the right to exclude others from using a similar trademark anywhere in the country.

However, to keep the benefits of a registered trademark, the trademark owner  must abide by the requirements of the Trademark Office. These requirements include the obligation to file a renewal application every ten years and to verify that the mark continues to be used in connection with the products and services listed on the trademark register.

Thus, a trademark registration lasts for ten years, at which time it must be renewed. If regularly renewed in a timely fashion, the trademark registration can last forever. Please note that there are some additional requirements during the first ten-year term of a trademark registration which also must be satisfied for a trademark owner to continue enjoying the benefits of registration. Please review the requirements carefully and contact a trademark attorney to aid you in ensuring that you meet all of the relevant dates.

Other Ways Trademark Rights Can Be Lost: Genericity, Failure to Enforce, Authorizing Uncontrolled Use

Trademark rights can be lost under some circumstances other than abandonment or failure to meet official filing requirements. For example, trademark rights are lost when a trademark becomes generic, and is used to identify a certain category of products or services, rather than those of a certain company.

Examples of trademarks that became generic include Aspirin, Cellophane, Crock Pot, Dry Ice, Escalator, Trampoline, and Zipper. Each was originally a trademark used only on the product of a certain company, but was so popular that it became known as the generic name for any similar product.

As a result, the original trademark owners are no longer able to prevent their competitors from using the same words in connection with their own products. “Genericide” is the colorful term used to describe the process of losign trademark rights due to genericity.

You can also lose your trademark rights by failing to enforce your trademark against known infringers or by allowing others to use your trademark without controlling the quality of the products or services they provide under your mark.

Summary

Continue to use your trademark in commerce and your trademark can last forever. But to maintain your federal trademark registration, you must renew every ten years and take other steps required by the Trademark Office. Genericity, failure to enforce your trademark rights, and failing to control the quality of authorized users of your mark can also lead to premature loss of trademark rights.

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What is a Cybersquatter or Typosquatter and How do They Make Money?

by Clifford D. Hyra on October 30, 2009

Cybersquatters

In this post, I discuss how to deal with cybersquatters. Cybersquatters register domain names similar to a domain name or trademark of an established business for profit. They may profit by selling the domain name to the established business or, more commonly, by monetizing the traffic generated on the domain by the popularity of the established business.

Typosquatters

A typosquatter is a type of cybersquatter who registers domain names that are common typos of a popular existing website, capturing Internet users who mistype the website domain name when entering it into the address bar. When the domain name is mistyped by Internet users seeking that website, they are instead directed to the typosquatters website. This website is typically automatically generated and will be full of pay-per-click advertisements from Google Adwords or other online advertisement programs for websites similar to the one the user was originally looking for.

In the Google Adwords program, an advertiser pays Google to get Internet users to click on the advertiser’s ads and visit its website. Google then automatically places the ads in search results and on websites wherever its system decides that such clicks are most likely to come from. A Google advertiser may therefore find its ads placed on the websites of typosquatters.

The typosquatter is paid some amount of money, generally a few cents to a few dollars, for every user who clicks through one of its links. Users looking for the popular website who end up at the typosquatter’s site instead will many times see a link back to the site they were originally looking for and just click it. The typosquatter is paid a couple dollars for the click, and the owner of the popular website pays a few dollars to Google Adwords for the click on their advertisement.

Thus, the typosquatter diverts existing customers of the popular website, who are attempting to navigate directly to that website, and channels them back to the website through sponsored links to generate income for themselves at the expense of the website owner.

In another common scenario, a user who inadvertently is diverted to the typosquatter’s site is likely to see a sponsored link to a competing website and navigate there instead. The popular website in that case has lost an existing customer to the competition, due to the actions of the typosquatter.

The Cybersquatter Business Model

In the early days of the Internet, cybersquatting was an activity participated in by a large number of individuals and small entities. Today, cybersquatting activity is concentrated in a small number of large, efficient cybersquatting companies.

These companies use automated software to determine which domain names are receiving or are likely to receive traffic, register those domain names, and throw up an automatically generated website with sponsored links as described above. If the domains are not returning enough income to cover the cost of registering and parking them, they are canceled. Otherwise, they will be added to the company’s portfolio, even if they are only generating a few dollars each year.

These companies may have hundreds of thousands of domains in their portfolio, generating large amounts of passive income for the owners. These domains are treated as assets with income streams, and are bought and sold freely between companies.

Cybersquatting is a big business that has grown with the Internet, and a big problem for companies with a significant online presence. Have you encountered a cybersquatter? Tell me about it in the comments.

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Moral Panics and the Copyright Wars

by Clifford D. Hyra on October 17, 2009

This book by William Patry is the latest offering in the recent spate of anti-copyright books aimed at the general public. I agree with the author’s overall conclusion that copyrights have been strengthened excessively, to the point that they achieve the opposite of the intended result- less creative works rather than more. However, I did not care for this book, a review copy of which was sent to me pre-publication by the publisher, Oxford University Press.

Patry is at his best when dealing with facts. Patry is undeniably a copyright expert and has an array of interesting and important historical information and data at his command. I enjoyed learning more about the history of copyrights and about the statistical shortcomings of the copyright industries. However, such content is unfortunately uncommon. Although the book is over 20% citations, Patry seems mostly to cite to the opinions of others, not to supporting facts or research.

This lack of intellectual rigor unfortunately causes the book to go off the rails on multiple occasions, never moreso than when he attacks the free market, and particularly Alan Greenspan, for our nation’s copyright ills. Frankly, the free market could not have less to do with copyright law, which is wholly a creation of government, as Patry acknowledges. It puzzles me that Patry attacks the copyright industries throughout the book for their anti-competitive lobbying, but fails to come to the conclusion that the problems with copyright law are simply a result of successful rent-seeking by large corporations, similar to the agricultural subsidy debacle and other government failures.

Instead, Patry spends most of the book eviscerating the movie industry for its use of metaphor. Metaphor is a common rhetorical tool and I remain unconvinced that it is a significant cause of the problems we face in copyright law. As a lawyer, surely Patry is familiar with the idea of putting forward the best and most convincing argument possible in support of one’s position. This obsession with the use of metaphor also seems unproductive as his book is not going to end the use of metaphors- I suppose he is attempting to reduce the effectiveness of such metaphors on the public?

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