Question
I would like to know, based on the experience of IP professionals, what are some typical IP-related mistakes that many startups make but which could easily be avoided? What are some issues that have made startups fail?
And, I guess this would differ from industry to industry, but would a startup focusing on software development ultimately go down because maybe someone drew up the wrong license agreement from the start, or some piece of code was GPL licensed or something like that? Or can these things usually be rectified later, maybe at some unnecessary cost but not essentially threatening the business?
Thank you for your input! -- John
Answers: 6 public & 0 private
I have what I call at least 5 myths about what people commonly claim to know about intellectual property law, which are as follows:
• A mark needs to be registered to be protectible;
Maybe in many countries in this world but NOT in the United States. A business accrues rights in a mark through its exclusive, continuous, open and notorious “use,” meaning by placing the mark on the company’s goods when sold in U.S. Commerce or by showing the mark when advertising the offered services and rendering those services. Those trademark rights accrue whether or not the mark is registered. A trademark registration merely reinforces those rights by announcing as a public record that the business owns the rights to the particular mark on the particular goods/services and since that announcement is deemed to be visible to all of the United States when registered with the U.S. Patent and Trademark Office, the trademark rights are extended to be nationwide (as opposed to the actual commercial area where the mark is used). Likewise, merely using a mark that is too similar to an existing mark for similar or related goods/services can create infringement liability whether or not the earlier mark is registered if the marks overlap in the same relevant market and cause customers to be confused about which marks identify which business.
• A mark is available because the company name that is the mark was registered with the SOS;
The Secretary of State generally registers the name of a business in that state as long as that exact same name in the exact same spelling is not already registered. The SOS does not check the USPTO database of registered or pending marks, or any other database, to determine if another business is using that name as a mark. Moreover, the registration of a business with the SOS office is the creation and naming of a business entity, analogous to a person and their given name, and is not necessarily the name of a particular product or service, which is what a trademark or service mark is. Consequently, businesses (and their general lawyers without knowledge of trademark law) often make a serious mistake relying on the availability of a company name or mark merely because the SOS was willing to register the business in that name.
• I want to register GENERIC, INC. so my customers know immediately what my product or service is.
That strategy might spare some additional advertising expenditure because the company will not need to advertise and teach consumers how to recognize its goods/services in the marketplace. However, competing businesses will need to use that same terminology to describe their goods/services, which the law will permit, and that generic term for the goods/services will thereby lose its uniqueness for that company and will become ineffective as an identifier of the company’s particular goods/services. Consequently, the strongest, most valuable marks are marks that least describe or refer to the goods/services or any quality thereof and which instead are unique, arbitrary and make no sense in relation to the particular goods/services with which they are associated.
• There’s no likelihood of confusion between my mark and the other mark because my mark is in all capital letters and the other mark is in lower case letters.
Marks can be considered confusingly similar even if they are not exactly identical and/or their associated goods/services are not the same or closely related. First, marks are compared for similarity in sight, sound or meaning and therefore similarity on any of those qualities could be sufficient to consider marks too similar to coexist. Second, consumer confusion is measured on a sliding scale so the more similar the marks, the less similar the goods/services need to be and vice versa – the more similar the goods/services are, the less similar that the goods/services need to be to find a likelihood of confusion and infringement.
• Patents, copyrights and trademarks are distinctly different types of intellectual property;
One does not obtain a “patent” for a slogan, a trademark for an invention or a copyright for an idea. A patent is a right that is created and granted expressly by the U.S. Patent and Trademark Office (“USPTO”) to an inventor “to exclude others from making, using, offering for sale, or selling the particular invention” for a limited time in exchange for public disclosure of the invention to enable others to make and use the invention later. A trademark is “a word, phrase, symbol, or design, or a combination thereof,” that identifies and distinguishes the source of the goods/services of one party from those of another. A trademark therefore grants exclusive rights to a word or design only when that word/design is used to refer to a specifically defined set of good/services or a particular market and not to the use of the word/design in any possible context. A copyright is a form of protection for the creator of an “original work of authorship” when that work is “fixed in a tangible medium of expression” such as literary, dramatic, musical, artistic and other intellectual works. A copyright therefore cannot protect anything that is not in a tangible medium, i.e. one’s thought or idea that is not reduced to a writing, or a similar genre or pattern of a story without the story also borrowing substantially the same specific content as the original story, i.e. its characters, literary setting or precise plotline.
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