What IP Issues To Consider When You Name Your Business

By Debby Winters

It’s not easy to name a business. The name has to convey the right message and generate interest. In addition to making sure your business is going to attract customers or clients, you need to consider some trademark issues. Getting a cease-and-desist letter from a trademark owner alleging that you are infringing their trademark may make you scream. Changing your name after you’ve spent time and money developing your brand is frustrating. With a little knowledge and planning, however, you can decrease your risk of trademark infringement.

Trademark Issues: How to Stay Safe

Trademark infringement may lead to legal battles where you lose precious time and money. Therefore, it’s important that you research the names you think will be suitable for your business. You may also find it helpful to hire a trademark attorney to help you avoid legal issues.

Don’t take trademark issues lightly: These conflicts can completely annihilate your financial resources. An ounce of legal prevention is worth a pound of cure in terms of time and money.

Here are 7 tips to keep in mind.

  1. Incorporation Issue. When you incorporate your company, it’s important to note that your corporate attorney will probably not look for potentially conflicting federal trademarks or conflicting names in other states before filing your incorporation paperwork. Watch out! You may be able to incorporate in one state and use a business name that may describe your products or services and still infringe another company’s federally registered trademark or service mark. This is a problem if you want to advertise on the Internet or sell your products or services nationally.
  2. Professional Trademark Search. When picking a business or product name, the safest approach is to hire a professional trademark attorney to conduct a search for federal and common law trademarks that are identical or similar to the name that you want to use. Watch out for commercial use of identical names or names that are confusingly similar to potential customers, as to the actual source of goods or services.
  3. Domain Search. Go to a domain registration site like Go Daddy and search for the name that you want to use. It can save you time and hassle to start with a domain search regardless of whether you want to build a website around the name. Check out whether any of the domains are taken. If the dot com domain for the name that you want to use is taken, this is a BIG RED FLAG!
  4. Common Law Rights. Even if a mark is not federally registered, common law rights arise upon commercial use of a name and prior use may cause future legal problems. It is bad business to infringe another’s trademark and it can get you sued.
  5. USPTO Search. Go to USPTO.gov and search for federal trademark registrations on your proposed name. The PTO has a free, easy, on-line way to search for previously registered and pending trademarks with TESS (the Trademark Electronic Search System). If the mark is LIVE, the registration is current. But watch out! A DEAD mark may still be in use and the owner may be relying on common law rights. Be sure to check whether the mark is actually being used in commerce.
  6. Google Search. Check for merchants who are using the name for goods or services. If a lot of businesses are using similar names, your mark will be weak and your protection minimal. Moreover, you may be at risk of allegations of trademark infringement from prior users.
  7. Record your results. Finally, make a record of your pre-name selection process by writing down the date and what you did before selecting your final name. You want to create evidence that you had a good faith basis for selecting your name and that you didn’t intentionally use a mark that is likely to cause confusion with a mark being used by another merchant.
  • Ways to create your record:
    • Print out your search results.
    • Make notes about your reasoning and conclusions.
    • Makes notes about your domain name and Google searches.
    • Put your preliminary search records in a file and keep them.

With a little preliminary groundwork, you can increase the odds that you can use the name that you want to use and minimize your risk of trademark infringement. It is always best to seek the help of an experienced trademark attorney. Good luck in selecting the name of your new business.

Employment Agreements Should Contain IP Clauses

By Debby Winters

Although most states are employment at will states, many state courts will enforce employment agreements if they have reasonable boundaries within the agreement. For a company that is developing intellectual property, it is advisable to have employment agreements for all employees that include clauses for dealing with intellectual property rights as well as confidentiality. This is especially true for small business start-ups. The agreements should contain clauses for IP disclosure and assignment.  These clauses should require employees to promptly disclose new inventions or other intellectual property to the employer upon conception, and to assign such inventions to the employer at that time.  The agreement should make it clear that the employee has an obligation to assign new inventions to the employer as a part of the employment.

New employees should sign such agreements prior to employment or on the first day of work.  Some states require additional requirements for having an employee sign such an agreement once employment has already commenced or such clauses will not be valid. These additional requirements may include new consideration, such as a raise, for signing the agreement.

Certain words have specific definitions or understandings in patent law.  For example, ambiguity could arise as to whether the employee would “conceive” and “make” an invention.  It is always best to stick with the definitions that are common to patent law.  For example, “conception” refers to “formation in the mind of the inventor, of a definite and permanent idea of the complete and operative invention, as it is thereafter to be applied to practice.”  This is more than just a vague idea; it requires definite plans for how to implement the invention.  “Make” or “reduction to practice” refers to the act of actually making the invention work for its intended purpose.

To avoid a dispute as to whether the employee developed the invention prior to employment, when executing the agreement, give the new employee the opportunity to indicate that he or she developed the invention prior to beginning their employment.  Require that the new employee prove this development by providing sufficient detail that he or she can’t later argue that vague statements constitute conception.  Unless the parties agree otherwise, the employee should retain all rights in inventions that he or she conceived or invented prior to coming to work.

The language used should requires the employee to promptly disclose inventions to the company and to “hereby assign” all future inventions.  The assignment is not required once the employment has ended and you need to chase the employee down and potentially sue him.  Instead, make it effectual as soon as inventions are conceived. Former employees are not always cooperative in the patent process for their former employers.  Therefore, you should include language that grants the employer at least a partial power of attorney to execute documents on behalf of the former employee inventor in cases where that becomes necessary.

It is always advisable to have an attorney familiar with patent law draft these clauses of your employment agreement.  If you need help with employment agreements, let me know.