Trademark Infringement Lawsuits Can Cripple a Small Business
Trademark infringement actions can bankrupt a small business, even if they win the lawsuit. So the best course of action is to avoid it from the start. There are many ways to limit your liability when it comes to trademarks and the first and most important is to consult with a qualified trademark attorney.
- Trademark infringement actions can apply not only to business names but also product names.
- For many small businesses, trademark is not even on their radar; but it should be.
- Sometimes another company finds your use on their own, sometimes they find it if you file an application to register your trademark.
- If you are on the receiving end of a trademark infringement claim, the liability can be substantial. Trademark law in the US provides for triple damages plus attorney fees.
- Consider the value of the trademark vs. the cost of litigation. We often refer to this as a cost-benefit analysis.
- This can be a very complicated process that includes substantial liability, hire a qualified attorney to help secure your rights and limit your liability.
Trademark infringement can be a very expensive problem for a small business, win or lose.
It’s a Problem That’s Easy to Imagine
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 a trademark dispute 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.
How Does This Problem Typically Appear?
If a company puts all of their capital into developing a certain brand name (whether for their company or product) 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 (USPTO). 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 trademark. Now, without a registered trademark, the new client and their product hang in limbo.
The Process Can be Extremely Complicated. Make it Simple. Hire a Lawyer.
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. A process that can be far more simple and better secure your rights or limit your liability by hiring a qualified trademark attorney.
The first thing you will want to figure out is: is your proposed use an infringement? Consequently, a complete trademark search is a good place to start. There are many times when 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 business owner 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 beginning (complaint) to end (verdict). Consequently, it is important for the business owners to determine the impact of removing the allegedly infringing trademark. If the financial revenue is slight, then ceasing to use the trademark 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 trademark in the past.
Of course, the smartest and often most cost effective thing to do is to consult with a qualified trademark attorney before this is an issue.
Whether you have a trademark registration you want filed, you have received a cease and desist or you need to send one or whether you are on either side of a trademark infringement case, you will want to consult with a trademark attorney who can protect your rights.
Contact an attorney with Veritas Business Law, LLC for a free consultation.
