Start-ups overlook the need to trademark their brand name and copyright their content in the mad rush to build a business, but this can be counter-productive
Corporates tend to be very prompt when it comes to legal matters. Even before the launch, the trademarks will be filed and copyrights registered. There shall be no sales before this is done; their well-paid legal teams simply wouldn’t allow it. Start-ups have much less to lose monetarily and, therefore, completely fail to factor in legal aspects, not just at the time of launch, which is obvious, but even years after.
Pinterest, for example, delayed filing for a trademark for so long in the US that it ended up losing the right to trademark the name in Europe and Australia. None of your mentors – and certainly not your VC – would agree with such an attitude. So why is this so if it is not mandatory to register your brand name or copyright your content? Let’s find out.
Limited Legal Rights
Yes, trademark and copyright registration are not mandatory. This is because you have legal rights to what is yours whether or not you’ve registered it. However, you would need to be involved in a potentially lengthy dispute to establish your ownership. If the name is already registered, however, not only is the chance of a dispute small, it is likely to be settled very quickly. Moreover, to actually fight a legal battle over intellectual property, you must first register it.
Therefore, let’s say you’re running a company that sells headphones under the unregistered brand name ‘You Rock’ for the past four years. In the past two years, let’s say another brand called ‘You Rock’ has begun selling t-shirts and even trademarks the brand name. Now, given that you have been doing business earlier, you would have a legitimate case against this other business. However, to even go to court, you would first need to apply for a trademark registration. Moreover, even if the court rules on your favour, you may find your rights compromised.
For example, the courts may rule that you can continue to sell under the brand name ‘You Rock’ for all brands related to headphones, but award the t-shirt brand the right to trademark the name under all other categories. Or the ruling may be based on where sales have been made – so if you’ve only been conducting business in a few states, you would only be able to sell under this trade name in those states.
Registration, therefore, greatly strengthens your control over your intellectual property. In case of a dispute, you’re guaranteed to come away unscathed.
Another mistake start-ups regarding their intellectual property is failing to ensure that they own it. Confused? Let’s clear it up. Most start-ups don’t hire a designer or a design agency to work on their logo or their website design. Often, it is just handed over to a friend or a classmate to work on. There is no contract or discussion about ownership. Do you know who would own the logo or design in the absence of a formal contract? The friend, of course. It’s intellectual property, after all. It was the friend’s intellect and so it’s his/her property.
Now, what if this friend at a later date decides to create a similar design for another client’s brand or website? There’s nothing that you would be able to do about it. So what should you have done? You should not only have a formal employment contract with your friend, you should also have it registered to avoid adverse events.
It may be too corporate for your start-up to take care of these legal matters early, but young businesses often bring difficulties upon themselves by failing to do so. Corporates protect their property because they have a lot of money to lose. If you are looking to build a unicorn, you will have a lot to lose, too. So why not avoid all the potential problems and register your trademark and copyright for the paltry sum it costs, rather than pay the high legal fees that come with a dispute?