Author: Maria Silvia Martinson, lawyer at RestMark METIDA
Starting a new company from scratch is never easy. Even if you have a fantastic idea, it is difficult to build a well-functioning product or service and break into the already highly competitive market filled with recognized or even loved brands. A motivated team is essentially the key to getting far along the road, but those countless hours of restless work could turn out to be a wasted resource if anyone could just start using your work without your consent or worse, force your company to pay high costs due to an IP infringement and thus make it unviable or untrustworthy in the long run. Fortunately, there is a way to escape this cruel fate by thinking ahead and avoiding the following highly common mistakes:
- Not doing the necessary prior research
When you establish a company, you are basically building your brand. A brand needs to have a distinctive name which can be incorporated into the business name, trademark and domain name. However, you cannot just choose any name you would like as it needs to check several boxes. Firstly, is it even possible to use the name as a trademark? The name cannot be general, descriptive etc and needs to stand out. Secondly, does anyone else have any similar earlier rights to the name or mark you are about to use? If yes, an infringement case might be brought against you. Additionally, if you are developing a product or using a product which is highly similar to someone else’s, you also need to check whether they can bring a legal claim based on your actions.
Therefore it is highly important to do an extensive research before choosing your business name, trademark or domain name. The same goes for selling or manufacturing goods which are very similar to patented inventions. You can start by doing the preliminary search and turn to legal professionals if anything suspicious catches your eye. However, it is always good to rope in a professional before making any binding decisions.
- Not getting familiar with regulations in different jurisdictions
If you are planning on selling your goods or offering your services in other jurisdictions than your own, you need to plan ahead and get acquainted with the nuances of each individual country’s regulations before starting business. Just because something works well in Australia, does not guarantee a success in Brazil. There are even noticeable differences in member states’ regulations throughout the European Union which need to be kept in mind.
Businesses need to know the regulations and practice for several purposes – some business practices might be unacceptable or even illegal in one jurisdiction, whereas you could be using the same tactics in another country. For example, in a few countries using the registered trademark sign ® is compulsory, in others its good to use it in practice as it gives some additional benefits in infringement cases and in some countries it is not necessary for any purpose.
- Not protecting your IP timely and extensively
This is a highly common mistake for most startups as generally IP rights are not considered a priority when the team is only just building the product and actual legal issues seem far away. Most startups just choose a quirky name to get it over with and decide to deal with the IP matters later. However, it is important to realise that by the time you actually have time and resources to think about IP protection (whether it is a trademark or something else), it might just be too late. Many of the quirky names cannot be registered as they do not function as a distinctive trademark or might already be taken by a third party. Also, by the time a business is usually thinking of registering its trademark, the mark is usually already somewhat known and therefore the business is reluctant to change it (and with good reason). Thus, you ought to choose a distinctive name right away, check its availability in different regions you want to take your business and register it.
When registering your trademark, think ahead for about 10 years as that is usually how long the registrations stay in force (before they need to be extended). What are the goods or services you are offering now or wish to offer in the upcoming years? In which locations? Make sure you protect your IP rights in all the jurisdictions where you wish to operate.
Another angle to think about is regulating IP rights with reinforceable contracts. Startups should also make sure none of their team members will go to another company with the product or IP they have already developed – therefore well-functioning contracts are the key. Additionally, it is time to think who actually owns your webpage, logo etc – have the IP rights been assigned over to you?
- Being cheap when you should not be
It is obvious that startups do not have a surplus of money in general. However, some costs do pay off and a good law professional is one of them. It has been previously stated that it is important to do prior research to choosing your business name etc, getting familiar with regulations in different jurisdictions, forming solid contracts with 3rd parties and your employees and also protecting your IP rights sufficiently in all the places you do business. For some of these things, a DIY (do it yourself) approach is acceptable if you are thorough, but a good legal professional will see problems coming from a mile away and help you keep them at bay before any actual issues arise.
Many people choose to go to a legal professional only after actual infringements have been taken place and consider a lawyer or a patent attorney their last resort. That is definitely a big mistake as it is much more difficult (if not impossible) to solve IP related problems after things have already gone South. Investing into an experienced professional will surely pay off if you do it timely. More precisely, the expert will provide you with thorough information before any binding decisions and help you protect your interests in the best way possible. In addition, they will surely deal with different registration processes and have colleagues abroad who can help with more international issues. It is also a good idea to have one legal professional keep an eye on your entire IP portfolio as in that case they can make better informed decisions and think of the whole IP portfolio’s strategy.