C3 Patent and Intellectual Property Law

Jun292009 | Steve O'Donnell

Research a brand before investing in it

A business' brand is its most valuable asset, and should be discussed with counsel early in the venture to avoid costly problems later.

I recently spoke with a small business client that got a nasty letter from a competitor in another state. Actually, the letter was fairly pleasant, but the news inside wasn't.

The client started a business a few years ago selling a certain type of goods, for discussion, lets say he was selling skateboard gear. He chose a business name and filed the requisite paperwork using a form he downloaded. He hired an accountant and hired a design firm to come up with a graphic representation of his chosen trademark that he could print on his goods, business cards, etc. He found a small store front, had signs made with his name and graphic and started manufacturing and selling his goods. He registered a domain and started selling online. After two years he was making a profit, a small profit, but enough to expand a little so he also started selling BMX gear. Around this time, his business drew the attention of an out of state competitor.

Unfortunately, this competitor had been using a very similar trademark for his business. The competitor's business exactly the same as the client's, but deals with similar goods in a similar market. The competitor started business sometime before the client and had registered the trademark. Understandably, the competitor wants client to stop using the mark.

The client is now between a rock and a hard place. He could call the competitor's bluff and hope that he doesn't get sued (which will almost certainly go very poorly), he can try to negotiate some deal with the competitor (doubtful because of the similarities between the marks and the markets), he can hope that a court will rule that the small difference between the trademarks is enough to defeat an allegation of infringement or he can rebrand everything and lose the good will and recognition that he's worked to build.

Assuming no deal can be worked out, the client will either have the expense and uncertainty of defending his position in court or the expense and problems associated with rebranding.

These problems could have been avoided for a fraction of the cost and annoyance if the client had spoken with a trademark attorney before investing in branding.

Your business if your livelihood, it's worth setting everything up properly from the beginning.