The Importance of Brand Protection for Small Businesses
This article was written by Nupur Shah of Nupur Shah Law, P.C.
Business owners are constantly faced with challenges. One of the first challenges is to find a name for a business or brand –one that is not already in use by another business owner. Now, you may argue that this is the easiest part of a business. But more often than not, business owners run into legal trouble because they were not diligent enough in their search or because they failed to protect their brand. Simply doing a Google search and securing the domain name is not enough to ensure that you are not infringing on someone else’s rights. Before investing in marketing, advertising and promotional material and further developing your brand, you want to ensure that you do a diligent search and secure your rights to the brand.
Your Brand: What’s At Risk?
The potential risk of not registering your brand can be disastrous, causing you to lose thousands of dollars and maybe even the rights to your brand. My client, Susan (name changed for confidentiality purposes), found herself in such a legal situation. Susan is a fashion designer in New York who started her company, Clarity, Inc. (name also changed for confidentiality), a few years ago. She registered her business as an S corp. with the New York Department of State, and also adopted Clarity as her brand. Susan invested a substantial sum of money in creating and developing her brand. Two years later, Cynthia, who is also a fashion designer, started using and applied to register Clarity as a trademark with the United States Patent and Trademark Office. Cynthia was able to do this because trademark registration is a first-to-file system.
Cynthia’s use of Clarity created a problem for Susan because customers were getting confused between Susan’s and Cynthia’s products. Susan wanted to stop Cynthia from using Clarity. But now that Cynthia had already applied to register Clarity as her brand and trademark, Susan would have to fight her in court to get Clarity back, or Susan would have to lose her Clarity brand and rebrand. All of this could have been avoided if Susan had registered Clarity as her brand name with the United States Patent and Trademark Office when she initially started using it.
Now that you are aware of the potential risks of not protecting your brand, the next step is to know what is involved in securing your rights.
1. Scope of Trademark Protection
A trademark can be a brand name (“Apple”), product name (“iPad”), logo (Apple’s Apple logo), symbol, tagline (Nike’s “Just Do It”), drawing, sound (Chime of Apple’s Mac computers powering on), color (Christian Louboutin’s red outsoles), or scent (Verizon’s “flowery musk” scent that perfumes select stores).
2. Searching for Conflicts
I have seen many business owners get emotionally attached to the first name they came up with, and purchased the domain name because it was available. More often than not (and to their surprise), they run into trouble because someone else has either registered it as a trademark or has a pending trademark application. I always have to break the news to them and then watch them go through an emotional breakup with the said name. A good strategy is to run a comprehensive trademark search. Attorneys specializing in trademark law routinely do such searches and have the expertise to overcome the challenges that a business may face in adopting and using a desired mark. This can definitely avoid unnecessary risk and also save you thousands of dollars in litigation costs in the future.
3. Knowing the Difference Between Registering a Business and Registering a Trademark
A common misconception among small business owners is that if their business and brand names are the same, then by registering their business as an LLC or corporation within their State, they are acquiring trademark rights to their brand. Like my client, Susan, they do not register their brand as a trademark and end up losing money in the long run. The purpose of registering your business as an LLC or a corporation, is to separate your personal assets and liabilities from that of your business. Such registration takes place in the state in which you conduct your business. Trademark registration is governed by a federal organization and confers countrywide protection to your brand so you can stop a third party from using the same name.
The United States Patent and Trademark Office (USPTO) filing fees range from $225 to $400 per class of goods or services, depending on the method of filing chosen. Attorneys’ fees are in addition to the USPTO filing fees, to run a search to determine availability of the proposed mark, to determine the appropriate class and method of filing, and to prepare and file the trademark application.
Failing to register your brand name as a trademark is just one of the mistakes business owners make. As the owner and founder of Nupur Shah Law, a boutique law practice in New York, I have seen literally hundreds of mistakes that business owners make that are costing them thousands of dollars and countless hours. This can be avoided and I wanted to make it easier for business owners to understand some of these mistakes. So I compiled a report which addresses some of the most common legal mistakes that business owners make and how they can be avoided. This is essential for all small businesses. You can find the report here.
About Excelsior Growth Fund
Excelsior Growth Fund (EGF) helps businesses in New Jersey, New York and Pennsylvania grow by providing streamlined access to business loans and advisory services. EGF’s signature product, the EGF SmartLoan™, provides up to $100,000 in fast, transparent, and affordable financing through a secure online platform. Larger loans up to $500,000 are also available. EGF is a nonprofit organization and is certified by U.S. Department of Treasury as a Community Development Financial Institution (CDFI). Learn more at www.excelsiorgrowthfund.org.