A trademark or service mark is a brand identifier. Every company offering products or services has at least one. While the name of a product or service tells consumers what it is, the associated mark tells consumers who offers it to the public. The ...

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"E-Commerce Law" - 5 new articles

  1. 7 Trademark Rules Every Startup Should Know
  2. Copyright Basics for Startups and Entrepreneurs
  3. Virginia Statute Protects Employee Social Media Passwords
  4. Trademark Selection Basics for Startups and Entrepreneurs
  5. Copyright Basics for Startups and Entrepreneurs

7 Trademark Rules Every Startup Should Know

A trademark or service mark is a brand identifier.  Every company offering products or services has at least one.  While the name of a product or service tells consumers what it is, the associated mark tells consumers who offers it to the public.

The selection and use of a brand name involves a number of important decisions that have both marketing and legal implications.  Failing to understand and accommodate those implications can expose a startup to increased marketing costs and legal exposure.  Accordingly, a startup would be well-advised to follow these seven simple rules:

  1. Keep in mind the purpose of the mark.  A mark is meant to identify the source of a product or service to consumers, so it must be unique in the industry in which it is being used.  Though it is advisable to engage a professional to conduct a full clearance search for each prospective mark before it is used, searching the Trademark Electronic Search System (TESS) can often provide preliminary information about existing marks that are similar to a prospective mark.
  2. Select a mark that does more than simply name or describe the product or service. A generic term is incapable of functioning as a mark.  A descriptive term can only function as a mark upon proof that consumers actually recognize the mark as a source identifier.  The best marks are devices invented for the sole purpose of acting as a source identifier (e.g., EXXON®, XEROX®) or that have a common meaning having no relation to the products or services being offered (e.g., APPLE® for computers). 
  3. Create a mark and a separate generic name for new products and services. The product many people refer to as a “Band-Aid” is actually correctly described as an “adhesive bandage.”  BAND-AID® is a trademark that identifies adhesive bandages sold by Johnson & Johnson Corporation.  Many companies may produce and sell adhesive bandages, but only Johnson & Johnson Corporation may produce and sell “Band-aids.” 
  4. Always use a mark as an adjective qualifying a generic noun that defines the product or service being offered. This rule directly follows Rule Nos. 1 and 2.  A mark should always be used to identify the source of, but not describe, a product or service. For example, a child with a skinned knee needs a BAND-AID® adhesive bandage, not a “band-aid”; a person uses the GOOGLE® Internet search engine to find information about “trademarks,” she does not “Google” “trademarks.” 
  5. Display the mark consistently each time it is used. Using a mark in a consistent fashion supports consumer recognition of the mark, which strengthens the mark legally and increases its marketing power.  Consistency demands that logos always be used in the same colors and location and that text marks always be used in the same font, color, and style of text. 
  6. When using a text mark, display the mark in a manner that distinguishes it from surrounding text, such as in all capital letters or italics. Such use (e.g., BAND-AID® adhesive bandages) will make clear to consumers that the text is intended to be a brand name or source identifier, not a common descriptor. 
  7. Use the mark with a symbol indicating its status as a mark. Marks that are issued registrations by the United States Patent and Trademark Office are designated by a ®.  Unregistered marks are designated by a ™.

These seven rules of trademark selection and use provide startups with the foundation necessary to properly establish a brand identity that is both valuable and legally-protectable.

    

Copyright Basics for Startups and Entrepreneurs

In most cases, the value of an early-stage business is based primarily on its intellectual property, such as its rights in inventions, literary and artistic works, and the symbols, images, and names used to identify the business to its prospective customers.  Though many entrepreneurs and startups immediately think of seeking patent protection for their ideas, the other two forms of intellectual property protection, copyright and trademark, provide valuable protections that should not be ignored.

The form of intellectual property protection easiest for many entrepreneurs and startups to understand is copyright protection, which applies to many writings, images, and videos.  In an age in which many startups commercially exploit digital content, whether as a core product or ancillary to the development of an online community, startups and their principals should be well-versed in at least the basics of copyright protection.

What is protected by U.S. copyright law?

In the United States, Section 102(a) of the Copyright Act extends copyright protection to “original works of authorship fixed in any tangible medium of expression.” 

To be protectable, a work must be: 

  • Original, that is, it must be independently created and not copied from another work, though it may closely resemble a preexisting work;
  • A “work of authorship” such as a literary work; musical work (including any accompanying words or lyrics); dramatic work (including any accompanying music); picture, graphic, or sculpture; motion picture; or sound recording; and
  • Fixed in a “tangible medium,” that is, it must be embodied in a copy that is sufficiently permanent to permit it to be perceived, reproduced, or otherwise communicated in more than a transitory way.

So, copyright law protects this article and all original literary works, music, songs, photos, drawings, movies, and websites.

What is not protected?

Copyright law protects the expression of an idea, not the idea itself.  Section 102(b) of the Copyright Act clearly provides that “[i]n no case does copyright protection for an original work of authorship extend to any idea, procedure, process, system, method of operation, concept, principle, or discovery, regardless of the form in which it is described, explained, illustrated, or embodied in such work.”  There may be other forms of intellectual property protection available to underlying ideas, but the coverage of copyright protection is limited to the manifestation of the idea in a tangible medium.

What can the owner do with a copyright?

The Copyright Act reserves six rights exclusively to the owner of the copyright in a work: 

  • The right to reproduce the copyrighted work;
  • The right to prepare derivative works based upon the copyrighted work;
  • The right to distribute copies of the copyrighted work to the public;
  • Where applicable, the right to perform the copyrighted work publicly;
  • Where applicable, the right to display the copyrighted work publicly; and
  • Where application, the right to perform the copyrighted work publicly by means of a digital audio transmission.

With few exceptions, only the owner of a copyrighted work may legally exercise any of these rights with respect to a copyrighted work.  The unauthorized exercise of any of these rights by anyone other than the copyright owner usually constitutes copyright infringement.

What is “fair use”?

Generally, the unauthorized reproduction of a copyrighted work is unlawful.  However, Section 107 of the Copyright Act carves out an exception for unauthorized reproduction of copyright works where such copies are created for purposed of “criticism, comment, news reporting, teaching, scholarship, or research.”  To determine whether the reproduction of a copyrighted work constitutes permissible “fair use” (as opposed to an impermissible infringement of the rights of the copyright owners), the Copyright Act provides a nonexclusive list of factors for a court to consider, including:

  • The purpose and character of the use, including whether the use is for commercial vs. non-profit educational purposes;
  • The nature of the copyrighted work;
  • The amount and substantiality of the portion used in relation to the copyrighted work as a whole; and
  • The effect of the use upon the potential market for or value of the copyrighted work.

The “fair use” exception is designed to permit fairly inconsequential and non-commercial reproductions of copyrighted works where the market for the original work is not affected while protecting the exclusive right of the copyright owner to commercially exploit his or her creation. 

By enforcing its rights in copyrights, and respecting the copyrights of others, a startup may avoid enterprise-killing losses and litigation.  Accordingly, it is important for the principals of a startup to have at least a basic familiarity with copyright concepts.

    

Virginia Statute Protects Employee Social Media Passwords


Trademark Selection Basics for Startups and Entrepreneurs

After carefully developing an idea for a marketable product or service, many startups and entrepreneurs immediately name it with little thought as to the legal effect of the name chosen.  Selecting the brand name of a product or service is an important decision having both marketing and legal implications.  A failure to understand and accommodate those implications can expose a new venture to increased marketing costs and legal exposure that few emerging businesses are prepared to bear.

What is a Trademark or Service Mark?

In the United States, Section 45 of the Lanham Act defines a “trademark” as “any word, name, symbol, or device, or any combination thereof . . . used by a person, or [intended to be used in commerce] . . . to identify and distinguish his or her goods, including a unique product, from those manufactured or sold by others and to indicate the source of the goods, even if that source is unknown.”  A “service mark” is such a word, name, symbol, or device, or any combination thereof used, or intended to be used, to identify and distinguish services, as opposed to a product.    

Essentially, a mark (trademark or service mark) is a brand identifier.  While the name of a product or service tells consumers what it is, the associated mark tells consumers who offers it for sale.

What Should You Consider in Selecting a Mark?

In selecting a mark to be used in connection with a new business, entrepreneurs should take care to:

  1. Keep in mind the purpose of the trademark or service mark.  A mark is meant to identify the source of a product or service to consumers, so it must be unique in the industry in which it is being used.  Though it is advisable to engage a competent professional to conduct a full clearance search for each prospective mark before it is used, searching the Trademark Electronic Search System (TESS) (http://tess2.uspto.gov/bin/gate.exe?f=tess&state=4807:wu1rd4.1.1) can often provide preliminary information about existing marks that are similar to a prospective mark.
  2. Select a mark that does more than simply name or describe the product or service.  A generic term is incapable of functioning as a mark.  A descriptive term can only function as a mark upon proof that consumers actually recognize the mark as a source identifier.  The best marks are devices invented for the sole purpose of acting as a source identifier (e.g., EXXON, XEROX) or that have a common meaning having no relation to the products or services being sold (e.g., APPLE for computers).
  3. Create a mark and a separate generic name for new and unfamiliar products and services.  The product many people refer to as a “Band-Aid” is actually correctly described as an “adhesive bandage.”  BAND-AID is a trademark that identifies adhesive bandages sold by Johnson & Johnson Corporation.  Many companies may produce and sell adhesive bandages, but only Johnson & Johnson Corporation may produce and sell “Band-aids.”

While these simple guidelines are not intended as a substitute for good legal advice, they can help startups and entrepreneurs avoid a few common mistakes made in the selection of a trademark or service mark.

    

Copyright Basics for Startups and Entrepreneurs

My June article on The Rouse, "Copyright Basics for Startups and Entrepreneurs," has proven to be my most popular yet.  It has been shared on social media platforms more than 5,000 times since Friday.

    

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