I recently went to a conference, Equity Matters:  The Route to NASDAQ, sponsored by  organizations that help women entrepreneurs, including Activate, Springboard and Path Forward.

The conference was filled with amazing women who have started technology companies and thrived.  These women are now giving back to a new group of women entrepreneurs.

I was excited to find out more about ACTiVATE, a program that is nurturing women who want to start technology companies.  ACTiVATE is a year long training program for experienced businesswomen.

The ACTiVATE program has three elements:  ”:1) entrepreneurship and business instructon; 2) mentoring and skills development; 3) networking with regional resources.”

The ACTiVATE program provides an extensive support network for the enrolled women to increase the odds that they can be successful.  If needed, the program actually helps women find suitable technology to develop and license through major universities.  The program also helps women connect with other organizations like Springboard Enterprises, which helps women get VC funding.

This is an amazing resource! And it’s really cheap.  I was very surprised that the cost in enrolling in the year long program was only $2000 and scholarships are available.

The benefit from this program could be the difference between success and failure.  Just having a group of experienced entrepreneurs as a sounding board for ideas is invaluable. The classes are also designed to work with a working woman’s schedule.  The classes are at night and on Saturday mornings.

There are several programs in the country and I was thrilled that Texas State University has an ACTiVATE program.

If you a woman who wants to start a technology company, I highly recommend that you check out ACTiVATE.

Starting a startup is hard.  When you’re an entrepreneur you need all of the help you can get.  ACTiVATe can help.

For more information about Texas State’s program, contact:

ACTiVATE

TEXAS STATE UNIVERSITY-SAN MARCOS

512.245.6038

ACTIVATE@txstate.edu

www.txstate.edu/activate

When you start a new technology company while employed by another, you put your startup’s intellectual property (“IP”) at risk.

One of the biggest threats to your new startup is a claim of trade secret misappropriation by your former employer.  It may allege that you used or disclosed its trade secrets in the creation of your startup’s IP and therefore it owns the resulting work.

One of the best ways to minimize this risk is to quit your old job like a newborn baby—leave naked like the way you entered the world.

You want to strip yourself of anything belonging to your former employer.

Do not take any documents, computers, paper or electronic files, electronic storage devices, prototypes or work that belongs to your former employer, regardless of whether you think it actually qualifies as a trade secret.

Do not take source code or software tools, even if you wrote them.

To stay safe, do not take your phone or your business contacts list.  Customer lists can qualify as a trade secret and companies frequently sue over their use and disclosure.

Keep NOTHING in your possession that refers to your former employer except a copy of any contracts you signed and minimal documents related to any pension, profit sharing or insurance documents.

If you need to take something else, get permission from the company in writing.

And even if they offer to let you take your company computer — don’t.

Remember that in the event of litigation, a trade secret plaintiff will typically seek all documents that mention its name.  You will have to turn over everything in your possession, custody or control.  That includes documents in your house and garage or on remote servers.  Many entrepreneurs are stunned to learn this after litigation has commenced.

Once a lawsuit is imminent or filed, it is too late to clean house.  Destruction of documents can lead to a claim of spoliation of evidence and the plaintiff may win on a technicality.

You may be characterized as a trade secret thief regardless of whether your possession of your former company files was inadvertent.

Further, when you quit, it is a good idea to write a letter to your former employer stating that you understand your legal obligation not to use or disclose company trade secrets.

Think of the letter as the first exhibit in your litigation defense.

Make a show of returning all company property.  State in your letter that you returned all company documents and files in your possession with the exception of your employment contract and 401 K documents.  State the name of the person who took the documents and the date of their return.

By leaving your old job like a newborn baby, you can decrease the risk of trade secret litigation by your former employer.

This is the final post in the Startup Launch Series.  Click on the category to see other related posts.

When starting a company, many entrepreneurs seek funding and expert advice.  To get both, they will have to tell people what they’re doing or what they plan on doing.

But when disclosing the “big” idea or IP secrets, what are the risks that someone will copy the work or use the IP?

Is disclosure worth it?

To get off the ground and fly, many startups need information and money from others.  Without sufficient funding and knowledge, startups may wither and die.  If this is the situation, the risk of not disclosing information may be far greater than the risk of disclosing it.

The risk of disclosure varies dramatically depending upon many factors.  Some of the important considerations include:

1) the identity of the information receiver

2) the type of information disclosed and the level of detail

3) legal protections in place

1.  Identity of the Information Receiver

First, one of the most important considerations in weighing the risk of disclosure is the identity of the receiver.

Are they reputable?  Are they professional?  Are the family?

There is a world of difference between disclosing your business plan to a professional investment firm and another company who may invest in your startup but has the potential to compete with it.

It is not in the best interests of a professional investment firm to use your information.  If they did, their reputation and business would ultimately suffer.

In contrast, if you disclose your plans to a potential competitor without precautions, you may be putting your business in peril.

2.  The Type of Information Disclosed and the Level of Detail

Another important consideration is the type of information you are disclosing and the level of detail.

Are you disclosing a very general idea that can’t be protected by IP law anyway or confidential information and the detailed specifics of your business plan?

Are you disclosing a detailed prototype?

Are you disclosing source code that you want to protect as a trade secret or code you are allowing others to use?

Are you disclosing a potentially patentable invention?

The greater the level of disclosure the greater the risk.

3.  Legal Protections in Place

Another key consideration is whether you have any legal protection for the specific type of information you are disclosing.

Your Fabulous Name

A federal trademark registration for your business or product name gives you  rights against people who use your name and create consumer confusion.  Commercial use of the name also gives you some common law rights.

Trade Secrets

If you are disclosing information that can be protected as a trade secret, a non-disclosure agreement (“NDA”) with the receiving party can prevent unauthorized use or disclosure.

Most professional investors, however, will not sign an NDA.

If you don’t have an NDA, you may want to think carefully about the level of detail that you disclose.  If you disclose trade secrets without an NDA, you may lose legal protection under trade secret law for failing to take reasonable measures to protect your trade secrets.

Some companies who are potential investors or business partners may sign an NDA under some circumstances.

Potential Inventions

One patent lawyer I know said, ” Disclosing a potentially patentable invention without a provisional application on file with the PTO is like having unprotected sex.  You may really want to do it but it’s risky.”

If you disclose a potentially patentable invention, it is best to have a provisional patent application on file that protects your priority as an inventor.

If a patent eventually issues, you will have legal recourse against infringers even if you disclosed the invention to them at an early date.

On of the my favorite cases involved  the intermittent windshield wiper patent.  The inventor Robert Kearns filed a patent application for the invention prior to disclosing it to the big auto makers and trying to license it them.  When they used the invention without a license, he sued them for patent infringement and eventually won millions.

Copyrighted Works

You may also have automatic legal protection for some creative work fixed in a tangible medium under copyright law.  For example, software may be protected by copyright law.  A key issue is whether your startup actually owns the copyright.  But if it does, it may have legal recourse against those who copy the software or create derivative works without authorization.

When talking to investors, consider their reputation and think carefully about the type and details of the information that you disclose.

The money and expert advice may be well worth the risk.

The most common, classic mistake that technology startups make is not securing all rights to the intellectual property created for it by its founders, independent contractors, employees and vendors.

Friendship and verbal agreements are not enough to secure IP rights.

Relying on IP law default rules will create a complicated nightmare.

You need contracts —properly drafted contracts that assign IP rights to the company.

And everyone needs to sign one — even company founders.  Especially company founders.  You don’t want your startup’s IP rights walking out the door with a key founder.

Warning — not all contracts are created equal.  Some are horrific.  Some are poorly drafted and contain clauses that are an expensive hassle to litigate in court.

If your startup’s IP is valuable, you need contracts that will hold up in court.  You need the right type of contracts with very specific language that will properly assign the IP rights to your startup.

IP rights worth millions have rested on a few contract words.

Stanford University learned this the hard way.  In a recent case, a federal court found that Stanford didn’t own the rights to the HIV testing technology it thought it did because its contract with the inventor failed to use terms that actually conveyed the IP rights when the contract was signed.

To fully protect the value of your startup’s IP, you need well-drafted contracts.

If you use random contracts from the Internet that you don’t fully understand, you may be penny wise and pound foolish.

The following guest post is by contributing editor Heather N. Schafer, a patent attorney at Beem Patent Law Firm in Chicago, Illinois.  Heather specializes in representing university startups and entrepreneurs in the fields of biotechnology, alternative energy, and consumer products from kitchen gadgets to golf shoes and beyond.

The internet, your friends, your family, and maybe even your corporate lawyer are full of “helpful advice” about patents.  However, much of this advice may be misinformed, incomplete, inaccurate, or just plain wrong.  The following are five common patent myths.

Patent Myth No. 1

For example, your friends may say:

• “You should patent your idea” – FALSE

Ideas are not patentable.  To earn a patent, you must have an invention.  There are two steps to creating an invention, conception and reduction to practice.

When you have a terrific world changing idea, you are typically at the “conception” stage.  An example of a conception is: “wouldn’t it be great if my cat litter box was self cleaning?”  At this point, you do not have an invention.

Why Not?

To have a patentable (legally protectable) invention, you must reduce the invention to practice and file a detailed patent application with the Patent Office.

Reduction to practice may happen in two ways: (1) by constructing a working prototype of a self cleaning litter box, (2) by creating detailed drawings and a detailed description of a self cleaning litter box.

“Detailed” means that you could hand your drawings and description to your colleague and she could follow your instructions and make your invention.

Patent Myth No. 2

• You can secure a “poor man’s patent” by mailing your idea or invention to yourself – FALSE

You receive NO legal protection from mailing your “idea” or invention.  The reasoning behind this myth is that the post office date stamp will prove your date of invention.  However, the postal system is not the Patent Office.

The only way to be confident that you have secured your date of invention is to file a patent application meeting all of the statutory requirements with the Patent Office.

Patent Myth No. 3

• Patent application = patent – FALSE

A patent application merely proves that, on the date that you filed, you were in possession of the invention that you disclosed.  The application doesn’t turn into a patent until years later – after being thoroughly scrutinized by the Patent Office.

There are many reasons that you might not receive a patent for your application.  Chief among those reasons are that someone else invented it first.  For example, someone else is already selling your invention, or filed a patent application for your invention, or wrote an article about your invention in a magazine.

Patent Myth No. 4

• A provisional application is a “cheap patent” that gives you time to shop your idea around before making the “big” investment – FALSE

This myth is such garbage that it deserves (and will receive) its own post.  Suffice it to say for now, if you hire an online patent filing service, an unskilled patent attorney, or a patent mill to file a provisional application for you, you will likely waste your money.

Worse, a badly drafted provisional may compromise your future patent rights.  A provisional application is a foundation document.  What you put into the application, and what you leave out, may come back to haunt you later both during prosecution of your patent application and during litigation.

A good provisional application takes time and attention and often costs as much to prepare as a non-provisional application.  In many circumstances, particularly in the high-tech industry, a provisional patent application might be a bad idea.

Patent Myth No. 5

• You don’t need a patent application – you can disclose your invention to potential investors if you have a non-disclosure agreement (NDA) – FALSE

Most “investors” will laugh if you show up with an NDA.  In fact, they will likely hand back to you what I call an “anti-NDA.”  The “anti-NDA” will state that you cannot tell them anything that they don’t know and if you think you have something new, you are wrong – they have been working on your invention for years before you were born.

The attitude is “you need us, we don’t need you.”  If you want to play, you have to trust that they won’t steal your invention.  If your invention is something that only you can do, it might be a good risk.  If your invention is something that your potential investor can hire someone else to figure out – file a patent application!

If you think you have a patentable invention, you should . . .

Treat your invention with the same respect as your plumbing.  Unless your mom, bartender, or best friend is a plumber – don’t take her plumbing advice.

A patent is an investment.  Along with your other IP; it is the “plumbing” of your business.  Talk to a patent attorney, maybe even two or three patent attorneys.  Most patent attorneys do not charge for initial consultations.

Don’t blow potential patent protection by believing patent myths.  Learning accurate information about patent law can be critical to preserving your invention’s value.

Heather can be reached at HSchafer@BeemLaw.com.

After doing IP litigation for over a decade and spending thousands of hours conducting evidence discovery, people never cease to amaze me.

Many people hoard an enormous number of worthless documents — just in case they might be needed in the distant future.  This bad habit can increase litigation costs by millions, even for unfortunate startups, when lawyers have to sort and review the stockpile for potentially relevant evidence.  The ease of electronic storage and duplication has made hoarding a litigation nightmare.  (I’ll do a post on proper document retention policies in a few months.)

Ironically, the hoarders usually neglect to adequately document their most important ideas and inventions.

Many people keep the crap and not the important stuff.

(Of course some hoarders keep evidence that proves infringement, which is important to the other side.)

When IP ownership is disputed or the company tries to stop a competitor’s infringement, some companies have been highly dismayed when they don’t have the proper documentation about the creation for the company’s crown IP jewels.

For example, in the Bratz doll case discussed previously, the fate of the billion dollar doll line in large part hinged on the documentation of the Bratz dolls’ creation.  Carter Bryant failed to prove that he conceived of the dolls when he was not employed by Mattel.  Mattel hired forensic document experts and Bryant admitted at trial that he had altered dates on his records.   His poor, clumsy documentation in a spiral notebook didn’t cut it in court.

Because the jury found that Mattel owns the Bratz doll line, the doll designer will likely lose millions in royalties.   MGA, the Bratz doll maker, will lose billions in sales.

If you think that you and your employees may be creating valuable IP, it is well worth the effort to require good idea and invention record keeping — from the start.

As you are creating your company and your key IP assets, you have the perfect opportunity to implement proper recording practices and procedures.

Be aware:

• Courts don’t trust electronic documents.  Dates are often critical to claims of ownership and patent statutory issues.  Everyone knows that dates can be electronically altered and faked.   Trustworthy records are crucial.
• Courts distrust sloppy record keeping.
• An inventor’s own testimony is suspect because it is usually self-serving.

To overcome the Court’s suspicions, you need to create idea and invention records that look reliable and believable.

Even in the electronic age, recording ideas and inventions by hand in old fashioned, permanently-bound notebooks is still the best evidence in court.

Bound notebooks that show when a page has been deleted are more trustworthy.

Affixing data printouts and key code sections to notebooks in a way that shows later alterations, like stapling, is also better evidence than an electronic file.

Remember:  You are creating potential court evidence.

(I will discuss the major issues that software developers face in creating trustworthy evidence in a later post.)

The following are important for an Idea/Invention Notebook:

• Permanent binding (a composition notebook or lab notebook works well)
• Permanent ink for writing

On the inside cover of the Notebook:

• Prominent, legible, printed name of creator
• Name of employer or IP owner
• Date that notebook is started and finished
• Location where work is being conducted

In litigation, failure to identify the notebook’s author and the dates of notebook entries is a big problem.

In the Notebook use the following:

• Legible handwriting
• Project and topic headings
• List of all people involved in each project
• References used or sources of ideas if any
• Ideas described in a way that is understandable to others in the field
• Contemporaneous entry of ideas and research
• Full date on every entry!
• Time of work, if done during off hours and IP ownership is an issue
• Initials on the bottom of every page
• Printouts of key software code sections stapled to notebook pages
• Printouts of key data stapled to notebook pages
• For pages explaining the most important ideas and data, there should be the full signature of the inventor(s) and a signature by a witness

You should have a witnessed record of when you conceived of the idea and when you actually made a working version of the idea.  This is critical for patentable inventions.

You need to remember that you are creating potential legal evidence.

I know it’s a pain, but if what you are creating is potentially patentable or valuable, it is well worth the effort to do a good job in documenting your ideas.

With proper record keeping you can improve the odds that you can protect your million dollar idea or defend yourself against claims of infringement.

I understand that you may be trying to start a company and build a website on a shoe string budget.

You may think that you are saving money by hiring an individual or a small Web design shop to create your website.

You may think that you are getting a real deal because the individual or tiny shop happens to be highly creative and truly talented.

You may think that you are saving money by not having an IP attorney review the contract, if any.

You may think that you own the website design and logo that you paid to have designed.  Your Web designer may even tell you that you do.

You may think that the contract that the Web designer gives you really assigns the copyright to you because it vaguely talks about ownership and copyrights in the same paragraph.

You may think that your Web designer will understand copyright law and not rip off other sites and put infringing material on your site.

YOU MAY BE VERY, VERY WRONG!

Legally ignorant Web designers (“Amateur Web Designers”) can create a legal cesspool.

Warning!  Some Web designers don’t understand the basics of copyright law!

Amateur Web Designers may be exceptionally talented and legally clueless.

Amateur Web Designers may be launching their own startup on a shoe string budget.  They may decide to save time by not researching the law.  They may decide to cut costs by not getting competent legal help.  They may rely on a best friend’s girlfriend’s brother or a friend of a friend for business and legal advice.

Amateur Web Designers may stick their heads in the sand and ignore the legal issues related to their work.

An Amateur Web Designer’s lack of legal knowledge can have serious consequences for your business.

Amateur Web Designers will not use proper contracts with their clients that correctly assign (transfer) the design copyrights to the person or company who pays for the design.

Cavalier Amateur Web Designers won’t use a written contract of any kind.

Earnest Amateur Web Designers may try.  They may have good intentions.  They may even draft a contract trying to transfer the copyrights and give you a copyright assignment.

But if they don’t understand copyright and contract law basics, they won’t use the proper assignment language.

Amateur Web Designers may think that it is utterly unnecessary to learn about copyright law.  They may think they can just use what seems like logical language rather than legal language.  They may think that legal language is unnecessary and utter hogwash.

But Amateur Web Designers who draft their own contracts may create a legal quagmire.

Some crappy amateur contracts are internally inconsistent, talk about some of the individual copyright rights in strange ways, and create a tangled mess that is actually worse than no contract at all.

I know it’s hard to read contracts and that legal language sounds like mumbo jumbo.

But Web designers need to understand that the copyright statute and judicial decisions that interpret the statute and language in litigated contracts actually dictate the proper wording for copyright assignments.

Law makers and judges determine what language is appropriate.  And if the contract isn’t written properly, it won’t legally do what the designers thinks it does and it may create a putrid, legal cesspool.

You may be wondering, does it really matter that I don’t own the copyright to my website design?

If the Web designer doesn’t use a proper contract, then you won’t have clean IP rights to the website.

Without a signed, written copyright assignment, the default law is that the Web designer owns the copyrights.

No skin off the designer’s back.  It is your problem going forward, not his.

If you don’t own the copyright to your website design:

• Depending on your contribution to the content, you may not be a joint author and you may only have an implied license to use your company’s site.
• You may be infringing the designer’s copyright when you change or redesign your company’s site at a later date.
• You won’t be able to sell your website to a competent company who does IP due diligence.
• You can’t register the website copyright with the Copyright Office.  If you don’t register the copyright and someone copies your site, you can’t bring a legal action for infringement, get statutory damages or attorney fees.
• Depending on the specific facts, if pissed off, your Web designer may have the power to stop you from using your company’s site.

Too bad for you.

If you don’t have a written, signed copyright assignment for the design of your website, you may want to make the Web designer your BFF.

If your Web designer doesn’t understand copyright law, you may be in for more unpleasant surprises.

Amateur Web Designers may infringe the copyrights of others and use unlicensed or improperly licensed material on your site.  When you operate the site, you will be the infringer.

Amateur Web Designers may use video that they don’t have the clear legal right to use.

Amateur Web Designers may be so clueless that they don’t have a proper copyright assignment to video that they have independent contractors shoot for them.  If they don’t have an Independent Contractor Agreement that assigns the copyrights to their business for the contractor’s work, then the contractor — yea the guy who shot the video — owns the copyrights.

When you use the video on your site, you will be relying on a tangled IP mess and a domino line of implied licenses.

Amateur Web Designers may use software that they don’t have the clear legal right to use.

They may copy and use unlicensed code.  They may use code that they think they own that is really owned by their former employer.

Amateur Web designers may also unwittingly use open source code that has horrible commercial implications for your site.

You may pay a small price for Web design now and pay a big price later.

What does a professional Web designer do?

A professional Web design company will have a proper contract drafted by an attorney who understands copyright law issues.  A proper contract will assign the copyrights for the overall design, new images and any logos to you.  This will allow you to register copyrights to your logo and website if you so desire.  (There is usually a carve out for designer’s software that gives you a license to use old code that the designer reuses.)

A professional Web design company will have a proper license to use any photographs and other third party material on your site.

A professional Web design company will disclose any source code that they use for the website’s foundation, have proper licenses to use the software, and give you a copy of the related licenses when asked.

A professional Web design company won’t copy other sites and infringe the IP of third parties.

A professional Web designer may be well worth the money.

In my personal opinion, you may want to hire a professional Web designer if:

• If you are not married to, closely related to, or best friends with the Amateur Web Designer who is creating your site
• You are paying a lot of money for the creation of your website
• The designer is creating a lot of original images for the site
• The designer is creating your company logo
• You plan on using your site for at least a year
• You plan on modifying your website at a later time
• Your website is the core of your business
• You might want to sell your website in the future

I’ve used small shops for the design of my websites to save costs but I’ve taken precautions.

I required the designers to sign a contract that assigned the copyrights to me.  I also reviewed the contracts for underlying open source code that was used for the foundation for my sites.

I ABSOLUTELY WOULD NEVER HIRE A DESIGNER WHO WON’T SIGN A DESIGN COPYRIGHT ASSIGNMENT!

I also believe the best practice for licensing photographs on your site is to license the photos yourself after the designer has selected them from a stock shop. This way you make sure that there is a license and that the license is appropriate.  I’ve also gotten a signed written copyright assignment from a photographer friend who has taken photos for my sites.

To make sure that you have the proper rights to your website’s IP, you can hire an Amateur Web Designer and an IP attorney to draft a proper website design contract for you.  Let the attorney explain the contract to the Amateur Web Designer.

Ultimately, protection of your website’s IP and reducing your risk of copyright infringement is up to you.

You need to make sure that you have the legal right to use every element of your website.  In business, it pays to be informed.

If you want to understand more about copyright law, download the free ebook IP Law FAQ or go to the Copyright Office’s website.

The following post discusses Brand Name Tips 2-4.  My last post discussed Tip 1:  Consider Whether You Can or Want to File a Federal Trademark Registration.

When picking a name that describes your products or services, it’s important to do some preliminary work to increase the odds that you can use the name and decrease the odds that you will be accused of trademark infringement.

Getting a cease-and-desist letter from a trademark owner alleging that you are infringing their trademark may make you scream.

Changing your name after you’ve spent time and money developing your brand is frustrating.  With a little knowledge and planning, however, you can decrease your risk of trademark infringement.

Incorporation Issue. When you incorporate your company, it’s important to note that your corporate attorney will probably not look for potentially conflicting federal trademarks or conflicting names in other states before filing your incorporation paperwork.

Watch out!  You may be able to incorporate in one state and use a business name that may describe your products or services and infringe another company’s federally registered trademark or service mark.  This is a problem if you want to advertise on the Internet and sell your products or services nationally.

Professional Trademark Search. When picking a business or product name, the safest approach is to hire a professional trademark search firm to conduct a search for federal and common law trademarks that are identical or similar to the name that you want to use.

Realistically, a professional trademark search may be too expensive for your startup’s budget.

The following tips explain shortcuts and strategies that can help you identify major conflicts when choosing a business or product name.

Trademark Infringement.

IMPORTANT—The following is the test for determining federal trademark infringement:

Whether your use of the mark is LIKELY TO CAUSE CONFUSION among ordinary purchasers as to the source of the goods or services.

(Note federal trademark infringement is just one possible cause of action among many.  You may be liable for multiple other legal violations based on similar facts.)

Don’t use a name that is confusingly similar or identical to a name associated with comparable goods or services!

You need to watch out for commercial use of identical names or names that are confusingly similar.

I know the standard about confusion is somewhat confusing.

Just make sure that you are not confusing potential customers as to the actual source of goods or services.

You don’t want people to confuse your products with another merchant’s products.

Also, you don’t want to use a name that is similar to a famous mark even if your goods are not similar.  You may be liable for trademark dilution.

Damages.  In the event of a claim of trademark infringement, the damages may be far higher than you expect.  A plaintiff may get injunctive relief, damages, profits, attorneys’ fees, corrective advertising and possibly even a product recall.

It is best to stay clear of potentially conflicting marks, especially marks used by direct competitors.

Tip 2.  When picking a business and product name, go to a domain registration site like Go Daddy and search for the name that you want to use.

It can save you time and hassle to start with a domain search on GoDaddy.com regardless of whether you want to build a website around the name.

Check out whether any of the domains are taken.

If the dot com domain for the name that you want to use is taken, this is a BIG RED FLAG!

Check out what sites if any are using the name in a domain.

Check out whether the domains for close variations of the name are taken and whether there are associated websites.

Are the sites selling goods or advertising services?

Determine whether they are selling similar goods or services.

Determine whether there is a likelihood of confusion as to the source of goods or services between the merchant using the name and your products or services.

If ordinary purchasers may be confused as to the source of goods and mix you up with the other merchant, beware.  The prior user may accuse you of trademark infringement.

Even if a mark is not federally registered, common law rights arise upon commercial use of a name and prior use may cause future legal problems.

It’s bad business to infringe another’s trademark and it can get you sued.

Further, to protect your brand, you will want to register the domain names that surround the name you choose.  (I’ll discuss the problem cybersquatting in a later post.)  But finish your preliminary searching before you pay for domain registrations.

Tip 3:  When picking a business or product name, go to USPTO.gov and use TESS to do a search for federal trademark registrations on your proposed name.

The PTO has a free, easy, on-line way to search for previously registered and pending trademarks with TESS (the Trademark Electronic Search System).

Go to USPTO.gov.

Under the center section, “Trademarks,” click on number 2, “Search Marks.”

In the “Select The Search Form” box, click on “New User Form Search (Basic).”

In the search term box, put in your proposed business or product name.

(You can also search on mark owners and put in your potential competitors to see their registered marks.)

Click Submit Query.

TESS will then retrieve any relevant hits, if any.

If you see “No TESS records were found to match the criteria for your query,” it means it didn’t find pending or registered marks matching your name.

If a table with names appears, click on the links to see the associated goods or services.

If the mark is LIVE, the registration is current. But watch out! A DEAD mark may still be in use and the owner may be relying on common law rights.  Be sure to check whether the mark is actually being used in commerce.

Tip 4:  Do a Google search on your proposed names.

Check for merchants who are using the name for goods or services.

If a lot of businesses are using similar names, your mark will be weak and your protection minimal.  Moreover, you may be at risk of allegations of trademark infringement from prior users.

Look for merchants selling similar goods or services using an identical or similar name that is likely to cause confusion.

It is worth you time to review any hits.  A little work now can save you a lot of hassle later.

Tip 5.  Make a record of your pre-name selection process.

Write down and date what you did before selecting your final name.

You want to create evidence that you had a good faith basis for selecting your name and that you didn’t intentionally use a mark that is likely to cause confusion with a mark being used by another merchant.

• Print out your TESS search results.  Make notes about your reasoning and conclusions.
• Makes notes about your domain name and Google searches.
• Put your preliminary search records in a file and keep them.

Finally, review your search results and think carefully about the final name.

Sleep on it.

Consider filing a federal trademark registration.

With a little preliminary groundwork, you can increase the odds that you can use the name that you want to use and minimize your risk of trademark infringement.

You may want to check out the prior posts in this Startup Launch sub-series about picking business and product names.

Why It’s Important to Consider Trademark Law When Picking Business and Product Names for Your Startup

Tip 1:  Consider Whether You Can or Want to File A Federal Trademark Registration

My next two blog posts will discuss 5 tips for picking brand names and avoiding trademark infringement.  Today’s post discusses Tip 1.

When you are picking business and product names, there are important issues to consider in the context of trademark law.

Tip 1.  When picking a name that describes your goods or services for your business, consider whether you can or want to trademark it.

Why would I want to consider getting a federal trademark on the names that I use?

If you want to increase the odds that you can use the name you want to use where you want to use it, get a federal trademark.

The best way to increase the likelihood that you can use your business or product name on the Internet or sell goods or services nationally is to register the name with the federal Patent and Trademark Office (USPTO.gov).  It costs around $350 for one registration depending on the type of registration.

Although you get some limited common law rights when you use a mark in commerce, there are lots of benefits from a federal registration.

Benefits. First, federal registration gives notice to the public of your right and you can use the federal trademark symbol ®.   Other companies are less likely to use your mark if it is registered.

Second, registration gives rise to a legal presumption that you have the right to use the mark.  This is very, very important if you have a dispute with another company using an identical or similar mark for similar goods or services.

Third, registration is required for legal action in federal court.

Fourth, a federal registration gives you clear ownership status to bring complaints against others who are using your identical mark or confusingly similar mark in a domain name under the UDRP.  With a federal registration, you can stop squatters and companies who seek to capitalize on your popularity and good name with parking pages using similar domain names.

Finally, if you don’t have a federal registration, your use of your business name may be limited.  If there is a likelihood of confusion between your name and a federally registered mark as to the source of goods or services, the federal mark owner may try to stop your use of the name.

Can I get a trademark on the type of name that I want to use for my business or products?

Types of Names that Cannot be Trademarks

When considering a business or product name, it is important to understand that several types of names CANNOT be federally registered upon use.

Generic and descriptive names can’t be trademarks upon use.  Inherently, they are not distinctive and not good brand names.

Generic.  A generic name is the common name for a good or services.  For example, “life coaching” is generic and can’t be registered.  It is a common term used in the industry.  Similarly, “software” can’t be a trademark.  The government won’t stop people from using a common term that describes their services or products.

More examples of generic names:  Courts have determined that the following names are generic:  Super Glue (rapid glue); LIte (low-cal beer); Safari (hunting hats and jackets).

Descriptive. A descriptive name that describes something about your goods or services can’t be a trademark when you first start using it.  A descriptive name doesn’t immediately convey the source of the goods.

Rather descriptive names describe ingredients, characteristics or qualities of goods or services.  A descriptive name can only be a trademark after the name acquires “secondary meaning” — when consumers associate the name with a single source.

For example, “Life Coaching for Losers” is descriptive.  “Secure Software” is descriptive.

“Life Coaching for Losers” could be a trademark if after a period of exclusive use and marketing potential consumers associated the name with a single life coach.

More examples of descriptive names:  Jet (spray nozzle); Ice (beer); Vision Center (optical clinics).

Proper names.  Moreover, proper names that are primarily surnames are descriptive and can’t be trademarked until they are so famous that they have acquired secondary meaning.  Oprah has a federal registration on her name.  In contrast, I’m not famous enough to get one for Jill Hubbard Bowman.

Courts hate to stop someone from using their proper name in commerce.  They will bend over backwards to allow a merchant to use their proper name.

Book Titles. Generally, a single book title can’t be a trademark.  But a name that is a trademark (service mark) like “Career Renegade” for providing career services can also be a book title.

Types of Names that Can Be Trademarked Upon Use

Suggestive, arbitrary and fanciful names can be registered immediately upon use and are the strongest type of mark.

Suggestive. A suggestive name that subtly suggests a quality of a good or service can be registered.  For example, “Career Renegade” subtly suggests that the career information is for those who are not following a traditional career path.

More examples of suggestive names:  Contact (self-adhesive paper); Playboy (magazine); Citibank (bank); Q-Tips (cotton-tipped swabs).

Arbitrary and Fanciful. Random names that have little or no relationship to the type of business or product are the strongest marks and the easiest to register.

A name is arbitrary if without your advertising and marketing, people would have no idea what your goods or services are from your name.

For example, the name “Google” for Internet searching seemed arbitrary and bizarre when it was first used.  Yahoo! and DEL.ICIO.US are also arbitrary and fanciful.

Marketing and use have made these arbitrary names strong brand names.

I picked the name lookilulu for my career website for teenage girls specifically because I wanted a name that I could easily trademark.  The word lookilulu is made up.  It is a combination of the term “lookilu” which is a rubbernecker who stops and stares and “lu” a version of my mother’s name.  I wanted something feminine, hence the lulu aspect, and I wanted something that captured the idea of looking.  It captures the essence of my website that profiles career women for teenage girls to see positive role models.  Lookilulu is arbitrary—it isn’t generic, descriptive or even suggestive.

Do I want to get a trademark on the business or product name that I am using?

You should carefully consider the options when brainstorming names.

My personal opinion based on my bias against IP clean up:

If you really want to use a specific name and you pick the type of name that can be trademarked and there isn’t already a conflicting mark in use (my next post’s topic), it is insane not to file a federal registration.

But I realize that you may not want to pick a name that can be trademarked.

You may only want to get a registration on a particular product or a specific business name that is part of what you do.  You may not want to file a registration on a name that you are not going to promote or brand.  You may not want to file a registration on a name that you don’t really love.  You may not want to file a registration if  you are trying to pick a new name.

To file or not to file a federal registration also depends on the type of goods or services that you are selling.  It also depends on what you are trying to brand.

For example, some life coaches who sell individualized professional service may want to build their brand on their personal name even if they can’t get a service mark.  (Service marks are for services.  Trademarks are for goods.  Same difference.)  I think using a personal name and building your personal brand for coaching services is a fine idea.

Some coaches do both.  They build a personal brand and trademark their cleverly named services.  For example, Jonathan Field’s blog/website is jonathanfields.com and he is heavily marketing his personal brand.  He has also registered “Career Renegade” for his career services and is building that brand too.

Further remember that you can only get a trademark for commercial goods or services.  Regardless of the type of name you ultimately choose for your business or product, learning about trademark law and doing some basic groundwork is important.

If this was helpful, you may want to read the other post in this sub-series, Why It’s Important to Learn About Trademark Law When Picking Business and Product Names for Your Startup.

Picking great business and product names is hard.

You want a name that is distinctive, memorable, and makes a good impression.  The best name is also easy to say and spell.  You want a name that captures the essence of your business or product.  You want a name that makes you stand out from the crowd.  And you want a name that has an available domain.

Sometimes it seems like all of the good business and product names are already taken.

When thinking about your business and product names, it’s important to think about them in the context of trademark law.

But why oh why should you think about trademark law in the startup planning stage?

Because so many of the good business and product names are already taken.  Many names have a federal trademark registration or common law rights that protect them.

You want to understand the basics of trademark law so that you can take steps to increase the odds of being able to use the names you want to use.

If you don’t consider trademark law when you pick your business or product name, you might get accused of trademark infringement or lose the right to use the brand that you have worked so hard to develop.

After you have incorporated your business with a name, designed a logo, built a website and marketed your brand, it’s a terrible setback to have an aggressive trademark owner allege that you are infringing her registered trademark.

Even worse, if you don’t understand the value of federal trademark protection and fail to file a registration, someone else may get a federal registration on the name that you’ve been using and then try to stop you from using it.  If the PTO doesn’t find your prior use (it might not if you don’t have a registration) or you don’t monitor pending registrations during the time when you can object, you may be very upset that you didn’t register your mark earlier than the interloper.

Trying to prove priority and cancel a registered mark is an expensive hassle.

What does trademark law do?

Trademark law protects brand names that are used in commerce.  Its goal is to prevent consumer confusion as to the source of goods or services.

Go to USPTO.gov website and learn about trademark law.  The government is trying to help small business owners and it has a ton of free information on its site.

The US Patent and Trademark Office (PTO) has a registry system that keeps track of federally registered marks and gives people notice of the source of the goods or services associated with the mark.

When you go to USPTO.gov, you can also do some basic searching yourself and find out whether the name you want to use is already being used for similar goods and services by another company.

You can search this registry for free with TESS on the USPTO.gov website.  It’s easy.  You can search for specific names and you can search on owners.  (Use the New User Search Form (Basic).)  You can find out what names already have a federal registration and the associated goods or services.  (The third post in the sub-series will discuss federal trademark and common law trademark searching in more detail.)

Trademark law will prevent you from using a name that is likely to confuse consumers as to the origin of goods or services.

No one wants to start over from scratch.  And you don’t want to waste time or money or hire an IP attorney to clean up the mess.

Clean up always cost far more than prevention.

If you learn about trademark law and do some preliminary groundwork, you can save yourself money, time, energy and hassles.

My next two posts will discuss trademark registration and specific tips for avoiding infringement when picking business and product names.