Companies, especially start-up businesses, routinely agonize over the development of new products and services, costs and pricing, as well as their physical plant, operations, sales, distribution, human resources, etc. However, these companies rarely pay enough attention to the intellectual property (IP) aspects of their business, mostly because they are unfamiliar with core IP concepts. There are four IP mistakes that can create disasters for business owners.
1. Insufficient trademark investigation: Let’s start with the brand name. While a company might select a “cool” name for their business, they often fail to investigate whether the name is already in use by another business. It is extremely difficult to develop a desirable brand name that is not already in use. If the investigation is not thorough enough, you may receive the dreaded “cease and desist” letter from someone claiming a superior right to the name. If this happens, you may risk losing not only your profits, but also the time and money that you expended in developing a brand name.
2. Failure to Register Trademarks: Brand names should not be descriptive of the product or service, nor should they utilize generic or commonly used phrases for the product or service. A brand name should be unique to the goods or services that the company provides, meaning it should not be confusingly similar to another brand that offers a similar product or service. Once a brand name is established, it should be registered with the United States Patent and Trademark Office (USPTO). The benefits of registration are numerous, including acquisition of a national trademark. Otherwise, you may only be entitled to the exclusive use of your brand name in the geographic location in which you do business. This leaves open the possibility that any other company may use the same name in other locations.
3. Failure to properly transfer IP rights: The goal in all branches of intellectual property is to establish exclusive rights. Regarding trademarks, exclusive rights are accomplished by choosing a distinctive mark and registering it with the USPTO. Copyright covers items such as artwork, graphics, photos, literary property, music, film, television production, and software. Many of the foregoing items are used by companies in one fashion or another. Copyrights are obtained when an original work is fixed in a tangible medium. This means that you cannot secure rights in an original idea unless it is expressed in something tangible like paper, canvas, or a computer drive. The exclusive rights in copyright include the right to copy (thus the name) sell, distribute, display and perform, and create derivative works.
The most glaring mistake that I encounter regarding copyright property is that clients think that they have acquired rights because they paid for certain items. This is not true. For example, if a company hires people to create a logo, ad campaign, illustration, television production, or customized software (each, a “Product”), the owner is the person who created the Product, not the company. Just because you buy a painting does not mean that you can make copies of the painting and sell it. These misconceptions lead companies to mistakenly believe that they possess a proprietary interest in aspects of its products, services or operations.
4. Failure to Register Copyrights: Registration of copyrights with the U.S. Copyright Office is generally mandatory if you wish to enforce your rights, but it is also necessary in order to recover “Statutory Damages.” Copyright damages are generally comprised of actual damages and the infringer’s profits. Statutory damages are a kind of punitive damages, which may range from $200 to $150,000 per infringement depending on the infringer’s culpability. Statutory damages may be awarded even if actual damages or an infringer’s profits are not provable. Thus, it is important to register a copyright prior to infringement. Failure to do so might leave a copyright owner without any monetary remedy in the case of infringement.
In conclusion, early registration of trademarks and copyrights and proper acquisition of intellectual property is vital to the preservation of a company’s intellectual property rights. Consult an experienced intellectual property attorney for help in navigating the trademark and copyright process, and protecting your intellectual property.
Eric Vaughn-Flam, Esquire is Of-Counsel at Cooper Levenson, P.A.’s Boca Raton office, and Chair of the Firm’s Intellectual Property Practice Group. He can be reached at firstname.lastname@example.org or 561.569.8062
All materials are for informational purposes only and do not contain legal advice, legal opinions or any other form of advice regarding any specific facts or circumstances.