Worldwide: Why Most Small And Midsize Businesses Should Deeply Care About Trademarks And All But Ignore All Other Types Of Intellectual Property

Last Updated: June 22 2018
Article by Andrei Mincov

Intellectual property lawyers typically value intellectual property for what it is—because that's what we do.

Entrepreneurs and business owners value intellectual property for what it does and how it helps them build, grow, and monetize their business. At least, they should.

In this article, I'll explain why the only type of intellectual property that small and midsize businesses should really care about—to the exclusion of all others—is trademarks.

But before we get there, allow me to assume that you are not a seasoned IP attorney, so let me give you a 9-year-old version[1] of what each type of intellectual property protects:

Copyright protects content (books, videos, software, photos, music, etc.).

Patents protect innovations (new products, new technologies, new ways of doing something, etc.).

Trade secrets protect information that has commercial value because your competitors don't have access to it.

Trademarks protect that which people use to identify your products and services from identical or similar products and services of everyone else.

So why would I say that copyright, patents, and trade secrets are largely irrelevant for small and midsize businesses?

Let's evaluate their usefulness using the following 4 factors:

DOES IT PROTECT THE ACTUAL PRODUCT OR SERVICE?

Being able to effectively police a monopoly over a product or a service that everyone wants to buy is the ultimate competitive advantage. Let's see how different types of IP can help you with that.

Copyright will not protect your products and services unless you are in the business of creating and selling content. Of course, if you run a film company, a radio station, a software startup, or if you sell infoproducts or organize televised sports events, etc. then intellectual property is not some fancy addition to your product or service. It IS your product or service. What you sell IS copyright—packaged up for consumption by the masses.

On the other hand, copyright pervades pretty much ANY business. Your website, the videos you post on YouTube, the manuals you write for your gadgets, your Facebook ads—all these assets (and many more) are works of copyright.

The difference here is, this latter type of assets SERVE your business, but if someone else copied these assets without your permission, it wouldn't destroy your business. And if it would, then you probably ARE in the content business.

Having said that, regardless of whether content is your business, make sure you have the right to USE (or better yet, OWN) all such assets to defend your business from attacks.

Patents. The whole idea behind patents is to give you a monopoly over your products and services. So yes, patents do just that. If only patents were easy to get and enforce, they'd be the way to go. Unfortunately, that's not the case, but more on that later.

Trade Secrets can protect the product or the service—as long as your consumers and competitors can't figure out the secret behind your products and services on their own. Once your confidential information stops being confidential, it can no longer be protected as a trade secret. In other words, if the information you manage to keep confidential from others creates a competitive advantage for you, you can protect it through trade secret laws.

Trademarks, in theory, are designed to allow the market to tell products and services of one business from identical or similar products of everyone else. In other words, again in theory, you can't directly protect a product through trademarks.

Why do I keep saying, "in theory?"

Let me google that for you...

See what I just did?

Google is a registered trademark, a name. But this is such a strong brand that it indirectly results in Google owning the online search niche itself.

But at some point, the camel's back breaks.

This is when strong brands like Linoleum, Escalator, Laundromat, and Aspirin become generic and lose their trademark status.

Speaking of which, Google has just barely survived a challenge in the U.S. Supreme court alleging that Google had become generic. But it may not be the end of the story.

Another example of trying to protect a product through a trademark is the shape of Lego blocks. While Lego was originally successful in obtaining such trademarks, in many countries their trademarks were subsequently cancelled. Precisely because Lego was trying to use the trademark to get a monopoly on the product itself, rather than that which could allow the market to tell Lego blocks from other similar blocks.

DOES IT HELP THE BUSINESS'S SALES AND MARKETING EFFORTS?

Even if you offer the best product or service, you won't have a successful business without paying customers. You need people to know that you exist and you need them to be willing to pay for your products and services.

Yes, you have your marketing people and a sales team, but intellectual property can also help them do their work.

Here's what different types of IP can do for you on the sales and marketing front.

Copyright won't do much beyond allowing you to prevent your competitors from copying your website, Facebook ads, and your other marketing materials.

Patents. There are three types of businesses.

When you are a "Me Too" business, you're a commodity.

When you are "Me Better" business, you've figured out how to do something a little cheaper, a little faster, a little better. Usually, this type of advantage doesn't last long.

The real fun starts when you can legitimately say, "We are the only company that does X." That gets you in the "Me Only" territory.

The human mind is wired in such a way that whenever someone who is trying to sell us something tells us that they are "the only ones who...," we automatically assume that whatever makes them unique has got to be good. Otherwise they wouldn't be telling us about it, right?

Patents give you the ultimate opportunity to claim the cherished "Me Only" status, because you are, by law, the only one who can make and sell your patented products or services. That's why you hear about "proprietary patented technologies" in the ads.

Trade Secrets will allow you to prevent your former employees and others with inside information from using your sales and marketing secrets to promote their own stuff. Again, this only works as long as your consumers and competitors can't figure out what your sales and marketing secrets are by observing your process.

Trademarks will also get you in the "Me Only" territory. You may not have anything unique about your product or your service, but if you play it smart, you will have a unique brand that will allow you to claim that you are "the only one who..."

Think of Apple's ad campaign, "If it's not an iPhone, it's not an iPhone." Essentially they are telling the world that anybody can sell phones, but they are the only ones who sell iPhones. While there is a ton of patented technologies and works of copyright inside an iPhone, the word "iPhone" is merely a trademark. It's just a word.

Here's another example I love. Ford used to run ads that ended with "Only Ford has Ecoboost Fuel Economy." Interestingly, they never bothered to tell you how Ecoboost was better or even different from other fuel systems. They never even told you if "Eco" stood for economy or ecology. They simply said that they were the only ones that have it. Guess what, "Ecoboost" is nothing but a trademark owned by Ford. Again, a word.

Starbucks bought a company that owned the name Frappucino. Now, anyone can serve cold coffee, but only Starbucks can call it Frappucino.

Pretty powerful.

HOW EASY IS IT TO OBTAIN PROTECTION?

By now, you may be thinking that all types of IP are useful. And they are—if you could take advantage of them. Thing is, often you can't. More on that below.

Copyright is the easiest type of IP to acquire. All you need to do is come up with some content and express it in a way that others could perceive. In other words, once your content departs your brain and enters the real world, it's probably protected by copyright. It doesn't have to be unique—it just needs to not be stolen from someone else.

But it must be more than just an idea. It must be the actual thing. For example, an idea of an online platform that allows millions of people to post and read messages of up to 140 characters is NOT protected by copyright. The code that makes Twitter run IS.

An idea for a book is NOT protected by copyright. The first draft of the book IS.

You don't need to register copyright to own copyright.

Protection lasts 50—70 years after the death of the last surviving co-author who contributed to the creation of the work.

Patents are the hardest to get. The threshold of what the Patent Office would consider a patentable invention is extremely high. So is the price of getting a patent even if the invention is patentable. The cost of owning a patent can easily run in the hundreds of thousands of dollars.

It takes about 5 years to get a patent—and they only last 20 years after the filing date. Essentially, you only have 15 years of monopoly. After that, it's fair game for anyone to use your patent, without asking you and without paying you anything.

The general rule is, if you can protect it other than through a patent, don't get a patent.

Trade secret protection is relatively easy to acquire. All you need is to take reasonable steps to safeguard your confidential information. These steps could range from having those who come into contact with your confidential information sign non-use and non-disclosure agreements to building a massive vault where you're going to store your secret recipe (like Coca-Cola did).

Trade secrets only last for as long as your information remains confidential.

Trademarks take work and knowledge to get but are not nearly as difficult or expensive as patents. The typical trademark registration process is around 14—18 months, depending on the country. Some files go through faster, some longer. Basically, if you have your trademarks handled by someone who knows what they're doing, it's usually a pretty straightforward process.

Best thing is, trademarks are the only type of IP that can last forever. As long as you continue to use the trademark to offer your products and services, you can keep renewing your trademark. Coca-Cola has been renewing their trademark since 1892. Incidentally, their brand alone (without any of their facilities and other assets) is worth over $70 billion.

Budget around $3,000 per trademark per country.

Don't fall for "low-cost" providers of trademarking services!

First of all, if your brand is not worth trademarking for $3,000, it's probably not worth trademarking, period.

But more importantly, low-costers' business model relies on luring unsophisticated brand owners with low filing fees and milking them dry as their trademark applications evolve from filed to registered. The trademarking process is a lot more involved than simply filing your trademark application. That part is easy. Where it usually gets complicated and expensive is when the Trademarks Office issues what's called an office action (which happens to about 70% of all filed trademark applications). An office action is basically a letter with their reasons why your trademark should not be registered. Most law firms and trademarking companies make their money charging you by the hour to respond to these office actions.

If I may toot my horn here, the company I founded, Trademark Factory® (website: https://trademarkfactory.com), offers trademarking services that cover all trademarking steps from start to finish for a single all-inclusive flat fee, with a 100% money-back guarantee. For $2,495 (government fees are extra) you get everything from a comprehensive trademark search to make sure your brand is even trademarkable to receiving your trademark registration certificate in a custom frame in the mail. And if your trademark doesn't get registered, you get your $2,495 back. Plain and simple. And risk-free.

HOW EASY IS IT TO ENFORCE?

To lawyers, enforceability is about two things:

  • Can I come up with an argument that would support the right of my client to do X?
  • How many billable hours can I generate in the process?

To clients whom lawyers purportedly serve, enforceability is about something completely different:

  • Will the potential benefits of enforcing my right, multiplied by the probability of success, noticeably exceed the costs of enforcement (time and money)?

In other words, not every enforceable right is worth enforcing.

So let's see how various types of IP do in this regard.

Copyright will only allow you stop literal and very close copying of your works or their substantial parts. You can't stop others from independently developing underlying ideas behind your works.

If you are in the content business, most platforms will allow you to file a takedown notice if someone reposts your content without your permission.

Beyond that you would need to resolve your disputes in court. Not only is it very expensive, even if you win, the awards are usually not very high.

Patent litigation tends to be one of the most expensive types of litigation.

With the exception of very strong patents (a very small minority), it is usually possible to lawfully circumvent a patent by tweaking a few things here and there.

Online platforms typically will not get involved and will not provide takedown mechanisms in case of alleged patent infringements.

Daymond John, the founder of a clothing brand Fubu and a celebrity investor on Shark Tank, said, "Fubu had 50 patents that cost me by the time I was done $700,000. I never made a dime off of them because people can alter them. But you can never use the word FUBU anywhere in the world. And a universal trademark cost me $50,000 but I started off with just $2,500."

We'll cover trademarks a few paragraphs below. Stay tuned.

Trade secrets are very difficult to enforce.

You need to:

  • define the confidential information in question;
  • prove that this information had commercial value to you because you were keeping it secret;
  • prove that you took reasonable steps to keep it secret;
  • prove that the defendant had obtained unauthorized access to it by knowingly breaching the measures you set up to keep the information secret;
  • you suffered a loss as a result of the defendant's actions.

In the best-case scenario you can get a monetary award against the defendant.

The problem is that by the time you get the award, your trade secret is often no longer secret anymore.

Unless we're dealing with clearly stolen documents, online platforms will not get involved in trade secret violation disputes.

Trademarks tend to be the easiest to enforce—both inside and outside of courtrooms.

Most trademark disputes are relatively straightforward. Lawyers on both sides can usually estimate the chances of both sides early on.

Which is why demand letters about infringement of registered trademarks are usually so effective—there is no point in arguing a case you can't win.

In court, the trademark registration certificate creates the presumption of ownership and validity. This means that the brand is deemed to be a valid trademark lawfully owned by the person identified in the registration certificate. Not having to prove these things to a judge in a trademark dispute can save the trademark owner tens of thousands of dollars.

But the real beauty lies in out-of-court enforcement tools available to trademark owners.

No, I am not referring to out-of-court enforcement delivered by the Russian mob.

I am referring to three perfectly legal ways you can successfully deal with those who infringe upon your trademark—without ever getting your litigation lawyers involved.

Most online platforms have mechanisms that allow owners of registered trademarks to fill out some sort of an infringement form. All you need to have is a registered trademark—and you can easily take down or reclaim infringing Twitter and Instagram profiles, Youtube channels, Facebook pages, etc.

Also, if you sell physical products on Amazon, you should consider recording your brand with Amazon Brand Registry. It's free of charge. However, you do need to have a registered trademark for this to work. Once you're on their Registry, Amazon will automatically block everyone else from selling identical or similar products under a brand that's identical or similar to yours.

Finally, there is the Uniform Domain-Name Resolution Policy (UDRP) that allows brand owners to reclaim domain names that are confusingly similar to your trademark—in a matter of months and without complex legal proceedings!

EXECUTIVE SUMMARY

All in all, here are four take-aways from all this for small or midsize businesses:

  1. If you are in the business of selling content, you should use copyright to protect your business.

If you are not in the business of selling content, you should still make sure you have the right to use works of copyright created by others (your website, videos, marketing materials, etc.)

  1. Unless you invented something groundbreaking that is likely to attract investors with deep pockets, don't bother with patents. They only last a short while, are extremely expensive to get, and even more expensive to enforce.
  2. Trade secrets can be very valuable. But their value largely depends on your ability to keep your confidential information confidential. Once it leaks, it's expensive and pretty difficult (if not impossible) to put the toothpaste back into the tube.
  3. Trademarks provide the best bang for your buck.

They can last forever.

They are relatively easy to obtain—if you know what you're doing.

They only cost you a fraction of what you're spending on promoting your brand.

They allow you to create the perception of uniqueness and get you in that cherished "Me Only" territory—even if there's nothing unique about your product or service.

There are many out-of-court mechanisms to enforce your trademarks against imposters and competitors.

BOTTOM LINE

All types of intellectual property can be useful to a business of any size.

Copyright, patents, trade secrets, industrial designs, plant varieties, trade dress, contractual IP—all of that can (and often is) be used to benefit or destroy a business.

However, trademarks are the type of intellectual property that ALL small and midsize businesses should deeply care about.

After all, why have a brand if you don't promote it?

Why build a brand if you don't protect it?

Footnote

1 This article does not purport to contain a thorough legal analysis addressing all subtleties of intellectual property law of any particular jurisdiction. It contains generalizations and simplifications. This is by design, and not an oversight.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

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