As any entrepreneur is well aware, the early stages of a new business venture are an incredibly busy time. Entrepreneurs must focus on building the core team, structuring the company, attracting investors, developing the product/service, and developing key partnerships, sales channels and marketing plans. These tasks are typically all-consuming for the founders, taxing both their financial and time resources.
During this time, it may be challenging to allocate attention to intellectual property (IP) issues. However, this early stage is also a critical time to ensure that a business takes steps to protect its core IP and avoids the risk of third-party IP issues. It is increasingly crucial to gain a solid understanding of IP and developing a strategy that aligns with the business to build a new venture on a solid foundation.
This article includes an overview of the different types of intellectual property and provides advice to startup companies on how to secure their own intellectual property as well as protect against risks from others.
The four basic types of intellectual property that startups should understand are:
- Patents
- Trade Secrets
- Trademarks
- Copyrights
In this third post in the series, we cover Trademarks.
Trademarks
Trademarks serve to build brand awareness and business goodwill. They can impart consumer confidence in a product by its association with a brand the consumer recognizes and trusts. A trademark can be words, symbols, logos, slogans or product packaging and design that identify the source of goods or services. The Coca-Cola logo is one of the more famous trademarks.
Unlike patents, trademark rights are only acquired through use. Even without registration, the symbols TM or SM may be used to accompany trademarks or service marks to designate products or services. However, only registered marks may be accompanied by the ® symbol.
Although registration with the US Patent and Trademark Office is not required to gain trademark rights, registration provides certain important benefits to the trademark holder. For example, without a registration, trademark rights are limited to the geographic area in which the product or service is marketed and sold, and protection begins only after the product or service is available for sale on the market.
In contrast, federally registered marks provide nationwide rights. Registration also creates a prima facie case of validity of the ownership as well as an exclusive right to use the mark for specified goods or services. Once registered, the owner of a mark can stop importation of infringing products through U.S. Customs.
Clearing and registering key trademarks
Like with patents, businesses seeking trademarks should be aware of whether their desired name, logo or domain name is already in use by others. Searching for existing uses is known as trademark clearance, with the goal being to clear a desired mark for use. Clearing the name and brand early on will reduce the likelihood of problems down the road.
Startups should look to protect their brand early by clearing and registering key trademarks. Registration is relatively quick and inexpensive, generally a few thousand dollars for a clearance search and subsequent filing for registration. A trademark application must specify the type of mark — i.e., whether the mark consists of just words or includes a stylized design or even an identifying color or sound. The application must also specify the particular goods or services to which the mark will apply.
As the company grows, it will become increasingly important to police infringing uses of its marks. Such efforts will help ensure that the business is not losing customers due to confusion with knock-offs.