Imagine, large boxes filled with new product sitting in a home office, now imagine them never leaving.
This is an all to real and frequent example of how trademark disputes can effectively shut a small business down. Small businesses traditionally, put the lion share of their capital into the product and administrative aspects of their new business. However, ignoring the implications of a potential trademark infringement lawsuit could be disastrous.
If a company puts all of their capital into developing a certain brand name and that brand name just so happens to belong to the owner of a different company, this is the textbook example of trademark infringement, and can cause a business to come to a screeching halt.
Occasionally, I hear from a client (who initially filed their trademark application themselves) "I have a product, but I can't do anything with it. We received a cease and desist letter which said that if we use it [the trademark], we could be in real trouble."
After meeting the minimum filing requirements and receiving approval from a trademark-examining attorney, the new client is sent a notice of publication by the US Patent and Trademark Office. Thereafter, the published trademark is opposed during the 30-days allotted for opposition from parties who claim they may be damaged by registration of the mark. Now, without a registered trademark, the new client and their product hang in limbo.
Entrepreneurs on the receiving end of either an opposition, cease and desist letter or trademark infringement action need to be prepared for an arduous process.
The first thing you want to figure out right away is: is it an infringement? There are many times that people or trademark owners will send a cease and desist letter when there is really no infringement.
Business owners should look at both trademarks and examine the similarities between the products, where they are sold and at what price point.
If called to defend their trademark application it will be important that a client have the following information:
1) paperwork for all of the ways the business uses the trademark;
2) itemized expenses for advertising, signage, cards, printouts and an online presence (including social media);
3) details of how a business owner decided on the name; and
4) steps the business owner took to verify that the trademark was available.
Entrepreneurs also need to consider the costs associated with litigation. A full blown trademark infringement lawsuit can cost in the neighborhood of $250,000 in attorney fees from complaint to verdict. Consequently, it is important for the business owners to determine the impact of removing the allegedly infringing mark. If the financial revenue is slight, then ceasing to use the mark to avoid a lawsuit may make the most cost effective sense. It is also important that business owners review their insurance policies since some policies may cover defense or damages stemming from the claims.
For business owners who end up settling a claim, make sure the party claiming infringement agrees in writing to release all claims for damages. Without the proper settlement and proper release you may face a situation where the party comes back and tries to recoup profits that you supposedly wrongfully accrued from use of the mark in the past.
Of course, the smartest and often most cost effective thing to do is to consult with a qualified trademark attorney.