Branding Right from the Start

Posted by Handshake 2.0 at 5:21 AM on July 9, 2012:

From Rebecca Conner, LeClairRyan:

Choosing a company or product name can be difficult and time-consuming for a start-up.  That said, if the branding process is done correctly, it can save the company substantial time and money in the long-run.

To avoid costly errors, start-ups should conduct trademark searchesMost importantly, new branding campaigns should be researched extensively to determine whether similar marks are being used in commerce by third parties.  It is important to search filings made with the United States Patent and Trademark Office (USPTO) for trademark registrations. Searches of unregistered uses (also known as common law uses) of similar marks in commerce must also be conducted through online searches and other means.

Many companies use trademarks without having registered the marks, so it is important to look for such unregistered uses prior to committing to a new branding campaign.  It is a good idea to order and review commercial search reports, which will provide critical information related to potentially conflicting brands based on a number of proprietary databases, including the USPTO filings and unregistered, common law uses. 

As the market place becomes more and more crowded, branding campaigns are subject to significant risk if an inadequate search is performed.  Responding to cease and desist letters is expensive and time-consuming, and being forced to rebrand is embarrassing, and even more costly. Imagine the time and expense associated with taking down a website and rebranding your entire product line. 

The other key element in selecting a new branding campaign is to choose a brand name that is not descriptive of the products or services offered under the brand.  Brands that are descriptive are difficult to register with the USPTO and even more difficult to enforce in the market place, even with a trademark registration.  For example, it would be difficult to enforce the trademark “American Journal of Bicycles” because this is descriptive of the journal.  Arbitrary and fanciful names (e.g. Twitter) are more enforceable than descriptive ones (e.g. Facebook).  It is difficult to convince infringing third parties to rebrand if the brand is descriptive.  This is especially important in the mobile application space, as stores like iTunes are filled with applications that are branded with descriptive marks. 

A branding process conducted before the launch of a company or product that includes extensive research, and results in unique rather than descriptive names, can result in distinctive brands with enforceable trademarks.

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For more information on LeClairRyan's Intellectual Property practice, including patents, trade secrets, trademarks, copyrights, and rights in software, please contact Rebecca Conner.

Read more from LeClairRyan on Handshake 2.0.

LeClairRyan specialized in high-tech corporate law.LeClairRyan is a law firm with deep entrepreneurial roots, having originally been founded as a venture capital boutique. With more than 350 attorneys and offices from Virginia to New York to California, the firm provides business counsel and client representation in matters of corporate law and high-stakes litigation. Its mission is to achieve excellence for its clients by providing integrated, responsive and timely services.

LeClairRyan is a client of Handshake Media, Incorporated, the parent company of Handshake 2.0.

Advice to My Fellow Entrepreneurs About Names, URLs and Trademarks

Posted by Handshake 2.0 at 8:00 AM on May 30, 2012:

As our technology start-up, Handshake Media, Incorporated, approaches the anniversary of its fourth year in business, I am reflecting upon what I might do differently if I were starting the company today.  About corporate intellectual property (IP), here are the three pieces of start-up advice I would give myself:

1) Pick names for your company and products that aren't common words.

In 1996, "Internet Technologies" seemed like a cutting-edge name for a line of World Wide Web products and services.  I worked that year for a company with a similar name now out of business.  I can't imagine the difficulties in trying to trademark the name today.

I look up URLs, trademarks and do Google searches on every company or product name before I even think of launching or releasing it, but not everyone does.  A whole lot of people have the same great ideas for business products, services, and company names, too. If a company doesn't declare and protect its naming and trademark rights, it risks losing them. The fellowship of entrepreneurship makes start-up-to-start-up cease and desist actions demoralizing and miserable for all parties involved, and the requisite legal fees are miserably hard on both start-ups' budgets.

2) If the .com URL isn't available for the name you have in mind for your company or product, change the name of your company or product. 

Don't add "inc" to the end, i.e. companynameinc.com, or add a hyphen because someone already has the unhyphenated version.  That generates confusion in the marketplace and has both legal and business model ramifications.  You could be the receiver, not instigator, of a cease and desist action.  And you will build a valuable company or innovative product and make its name brand URL very valuable to the person who owns it, which isn't you.  Competitors out-compete you.  Trolls happen.

3) Trademark everything from day one.

Handshake 2.0 (R) is a registered trademark of Handshake Media, IncorporatedConsult an IP attorney about trademarking your company name, tagline, products' names, everything that could be considered intellectual property and a corporate asset.  Although I showed more initiative than most, I still was "pennywise and pound [dollar] foolish" by not spending small amounts on trademarks early and ending up paying larger sums to fix problems or rebrand later.  Entrepreneurs want to pivot because of momentum, not mistakes.  If someone has already used what you want to use, see #1 and #2.

These lessons were hard to learn, but not as hard as they could have been.  I followed advice I was given from day one:  Do not DIY IP.  Hire an IP attorney. 

In 4 years, I have worked with 3 IP attorneys, the most recent for the past 2 years.  Having done 2 years of work with me, my IP attorney knows my business, my business model, and our industry.  Doing business with her costs fractions of hours, not hours, because I don't have to provide a context.  Most importantly, she has the education, knowledge and experience of an IP expert.  I don't. 

Paying for hours of expertise frees up my hours for what I really want to do - grow my start-up exponentially for next year's anniversary celebration.

. . . . . . . . .

Sponsored by LeClairRyan specializes in high-tech corporate law.LeClairRyan, a law firm with deep entrepreneurial roots, having originally been founded as a venture capital boutique. With more than 350 attorneys and offices from Virginia to New York to California, the firm provides business counsel and client representation in matters of corporate law and high-stakes litigation. Its mission is to achieve excellence for its clients by providing integrated, responsive and timely services.

For information about LeClairRyan's Intellectual Property Practice, please contact Rebecca Conner.

LeClairRyan is a client of Handshake Media, Incorporated, the parent company of Handshake 2.0.

The Problem with Patents

Posted by Handshake 2.0 at 8:00 AM on April 25, 2012:

From Jim Cowan and Rebecca Conner, LeClairRyan:

Entrepreneurs who are inventors may have intellectual property (IP), such as patentable ideas, as the foundation of their business ideas.

Patentable ideas may be the foundation of entrepreneurs' business ideas.Patents are a creation of federal law, having their  origin in Article 1, Section 8 of the U.S. Constitution.

A patent is defined as a new, non-obvious invention  including processes, machines, methods of  manufacture, compositions of matter, and  improvements thereon. 

A patent gives the owner the right to exclude others from making, using, selling, offering to sell, or importing the patented product, for a term, in most cases, of twenty years from the date of filing the patent application.

Pursuant to federal law, patent rights vest with the individual inventor. Thus, it is necessary to properly secure patent rights from employees and contractors pursuant to an assignment document.

Standing alone, confidentiality or no-compete agreements will not afford protection of your company's rights to its patents. Assignment provisions are required to properly vest patent rights in the name of the company.

For companies that are founded by, or employ or contract with inventors, it is imperative to require, as a condition of employment, that employees/contractors execute an invention disclosure agreement whereby employees and contractors agree, among other things, to:

  1. Immediately and completely disclose any inventions created by the employee, so the employer will be in a position to decide whether to seek patent protection for the invention;
  2. Affirmatively assign any inventions to the employer;
  3. Execute any documents that may be required to assign the invention to the employer, and agree to cooperate with the prosecution of any patent applications; and
  4. Disclose any rights the employee claims in inventions created before commencement of employment, so that the employee is stopped from later asserting that a new invention was created before the obligations under the employment agreement arose.

To request a copy of his recent presentation, "Protecting Your Trade Secrets," please contact Jim Cowan. For more information on LeClairRyan's Intellectual Property practice, including patents, trade secrets, trademarks and copyrights (including rights in software), please contact Rebecca Conner.

Read more from LeClairRyan on Handshake 2.0.

LeClairRyan specialized in high-tech corporate law.LeClairRyan is a law firm that has deep entrepreneurial roots, having originally been founded as a venture capital boutique. With more than 350 attorneys and offices from Virginia to New York to California, the firm provides business counsel and client representation in matters of corporate law and high-stakes litigation. Its mission is to achieve excellence for its clients by providing integrated, responsive and timely services.

LeClairRyan is a client of Handshake Media, Incorporated, the parent company of Handshake 2.0.

6 Steps for Protecting Your Trade Secrets

Posted by Handshake 2.0 at 8:00 AM on March 20, 2012:

From Jim CowanLeClairRyan:

Under the Uniform Trade Secrets Act, to be considered a trade secret, information must:

  • derive independent economic value from not being generally known to competitors, or readily ascertainable by them; and
  • be subject to reasonable efforts to maintain its secrecy.

6 Steps for Protecting Your Trade SecretsElements of a corporate trade secret protection program include the following six steps:

  1. Have written procedures to protect the information;
  2. Sign non-disclosure agreements with employees and others who have access to the information;
  3. Clearly mark as confidential any information that the company maintains is proprietary, and notify those who utilize such information of its proprietary nature;
  4. Restrict dissemination of the information only to those who have a need to know the information;
  5. Physically restrict access to the information, or to the computers on which the information is stored. This may also be achieved by an effective password protection system; and
  6. Conduct exit interviews to remind terminated employees of their obligations of confidentiality and to limit the amount of confidential information that is removed by such employees.  Many companies use a written form.

To request a copy of his recent presentation, "Protecting Your Trade Secrets," please contact Jim Cowan.  For more information on LeClairRyan's Intellectual Property practice, including patents, trade secrets, trademarks and copyrights, please contact Rebecca Conner.

Read more from LeClairRyan on Handshake 2.0.

LeClairRyan specialized in high-tech corporate law.As a trusted advisor, LeClairRyan provides business counsel and client representation in corporate law and litigation. In this role, the firm applies its knowledge, insight and skill to help clients achieve their business objectives while managing and minimizing their legal risks, difficulties and expenses. With offices in California, Connecticut, Massachusetts, Michigan, New Jersey, New York, Pennsylvania, Virginia and Washington, D.C., the firm has approximately 350 attorneys representing a wide variety of clients throughout the nation.

LeClairRyan is a client of Handshake Media, Incorporated, the parent company of Handshake 2.0.

Raising Capital - IP First

Posted by Handshake 2.0 at 6:00 AM on June 14, 2011:

From Mike Drzal:

For entrepreneurs, raising capital is almost never easy. That said, a systematic approach will greatly enhance the entrepreneur’s prospects for success. The first step isn’t to form a legal entity but to vet the intellectual property on which the company will be built.

When raising capital, consider IP first It’s important to determine that the company being considered will have all necessary IP assigned or licensed to it. All necessary IP must be accounted for. If consultants have been involved, IP assignments are a must. If a patent application is pending, the strength of the claims and the likelihood of issuance need to be assessed.

Assuming a patent is likely to issue and the claims appear solid, freedom to operate should be assessed in order to ensure that the entrepreneur is working with a complete IP package that will allow him/her to deploy the subject matter into the marketplace. This step should not be skipped even if a patent has issued, especially if the patent is being licensed. The entrepreneur should not assume that just because a patent has issued it is either sufficient or defensible.

Patents licensed from universities/tech transfer offices have special considerations associated with them, including representations, warranties and indemnities. A recent Supreme Court case underscores the importance of investigating whether patents being licensed from universities have been properly assigned.

If there is no patent involved, the IP “fence” may be a trade secret or know-how. Either can be fine depending on the circumstances, but again no assumptions should be made – choosing the right IP strategy from the beginning will pay off.

When thinking about it, putting IP first makes complete sense – why spend the time and money to form a legal entity and begin assembling a team to commercialize IP if the IP is somehow lacking or defective? It will all come out in investor due diligence anyway, so finding out early is much wiser. You can always get more money, but you can’t get more time.

You're invited to read more from Mike Drzal on Handshake 2.0.

Mike Drzal is a shareholder at LeClairRyan and serves as chair of the Firm’s Venture Capital practice. Mike currently serves as general counsel to a number of start-up and emerging companies, including medical device, bioinformatics, pharmaceutical, diagnostics, manufacturing and distribution, alternative energy, medical information technology, internet, and high-tech research and development companies. He also serves as counsel to a growing angel investor network and serves as co-chair of the Roanoke/Blacksburg Regional Innovation Blueprint and Action Plan initiative of the Roanoke-Blacksburg Technology Council of Virginia.

Mike Drzal is a client columnist for Handshake Media, Incorporated, the parent company of Handshake 2.0.

Three Questions to Ask an IP Attorney

Posted by Handshake 2.0 at 9:15 AM on June 8, 2011:

How does a start-up founder choose an intellectual property attorney?

I asked Rebecca Conner, an attorney with LeClairRyan who specializes in IP for emerging companies, "What are three questions a technology company founder should ask a prospective IP attorney to find out whether or not the company and the IP attorney are a good fit?"

Three questions to ask an IP attorney Rebecca Conner kindly replied:

1.  Does the firm have subject matter experts in the company's relevant industry (e.g. chemistry, life sciences, IT, opto-electronics, biotech, etc.)? 

In order to adequately protect IP, a company founder needs access to an IP attorney who is an expert in the company's technology vertical market.  If the IP attorney cannot understand the invention, he/she cannot properly protect the invention.  
 
2.  Does the firm have experts in all areas of IP protection? 

If the firm does not have an expert in each area of IP protection, the firm will not be able to help the company protect all aspects of its invention.  For example, if the invention consists of proprietary hardware bundled with proprietary software, all 4 areas of IP protection - patents, copyrights, trademarks, trade secrets - should be considered.  Attorneys in each IP area need to be able to work together to protect the invention holistically.  
 
3.  Does the firm have experts that can assist in other areas of business (e.g. raising capital and financing, general corporate work, tax issues)? 

In order to adequately protect IP, a company's IP attorney needs to have a firm understanding of all aspects of the company's business.  If the firm provides all of the legal work necessary for the operation and growth of the business, the company's IP will be consistently evaluated to ensure that it is adequately protected. 

For example, if a company founder is in the process of raising capital, the company's corporate attorney may need to work with company's IP attorney to better understand the business in order to identify suitable investors or sources of financing.  Or, if the corporate attorney is helping a founder set up a distributorship in another nation, your corporate attorney needs to work with your IP attorney to ensure that your IP protection extends to operations in that nation.  These collaborative processes occur most effectively and cost-efficiently when all of legal work is being provided by one firm.

Thank you very much, Rebecca!

Rebecca B. Conner, attorney at law with LeClairRyan, focuses her practice on emerging growth companies in a variety of practice areas including entity selection and formation, mergers and acquisitions, intellectual property matters, and a variety of financing transactions, including, but not limited to, venture capital transactions. Ms. Conner also regularly advises clients concerning issues relating to technology contracts.

You're invited to read more on the subject of intellectual property on Handshake 2.0.

IP in The Social Network

Posted by Handshake 2.0 at 6:45 AM on November 3, 2010:

From Anne H. Chasser, co-author of Brand Rewired: Connecting Branding, Creativity, and Intellectual Property Strategy:

Anne-chasser Social Networking is here to stay. The movie, The Social Network, is sure to be an Oscar favorite as it chronicles Mark Zuckerberg’s journey, relationships, connections, opportunities and the highs and lows of starting Facebook with fellow Harvard classmates. Throughout the movie, the discussion of intellectual property (IP) - who owns an idea - takes center stage.

In Brand Rewired, Jennifer Wolfe and I interviewed some of the world’s leading thought leaders in innovation, branding and intellectual property from companies such as Proctor & Gamble, Kodak and Yahoo!  We found that companies and especially start-ups that take a strategic pause during the creative process to design in intellectual property protection can create long term value and a greater return on investment.  Thinking about it early can save the company a lot of money and produce better results. 

Intellectual property protection of an idea - Facebook, a social networking site for Friends - can be protected and can keep others from stealing your idea, your computer algorithm, the name of your company, your logo.  This is achieved by filing and registering patents, trademarks and copyrights.

Did you know that the Nike swoosh, the blue box from Tiffany, the Coca-Cola bottle design, and the sound of the unique tones for Intel are all registered trademarks?  No one else can use these without permission from the owners.  These iconic brands have endured because companies took the time to protect unique features of their products and services.  The consumer knows that these brands stand for quality and dependability.

A company’s intellectual property is its most valuable asset.  The question looming in the movie The Social Network is “who” owned the idea.  Protecting it earlier in the process might have saved Mark Zuckerberg a lot of money and a lot of friends!

***

Thank you very much, Anne Chasser, for your guest post for Handshake 2.0.  For more information on brand and intellectual property, readers are invited to visit the Brand Rewired site.

Anne H. Chasser's bio from the Brand Rewired site:

Anne H. Chasser was named “One of the 50 most influential people in the intellectual property world,” by Managing Intellectual Property magazine,  served as Commissioner of Trademarks for the United States Patent & Trademark Office and President of the International Trademark Association. As Associate Vice President for Intellectual Property at the University of Cincinnati and Director of Trademarks and Licensing at The Ohio State University, she has achieved top-level executive experience in both government and higher education administration. Chasser is widely recognized as a visionary thought leader in intellectual property.

For Early Stage Start-Ups, Who Owns the IP?

Posted by Handshake 2.0 at 6:00 AM on June 19, 2009:

From Ken Maready:

Assignment of intellectual property to a startup needs to be an early step. As an attorney working with technology startups, I find it is best if I can meet with founders during the early conceptual stages, long before they organize their companies, as there are some early legal and business issues that can potentially cause missteps, even failures.  Although typically simple to address early, they can be very costly, if not impossible, to fix later on.  One of the earliest concerns is corralling and protecting a new venture’s core intellectual property.

When a group of founders first incorporate a company, it is common for them to assume that the ideas, concepts and technology (the "intellectual property") they’ve discussed among themselves will automatically belong to the company.  But it is helpful to remember that the company is its own separate entity apart from the founders and the company doesn’t own anything until someone assigns or licenses to it, usually by written contract.
 
It is important to get each founder to sign an assignment of intellectual property to the company as early as possible, typically in connection with the initial issuance of their stock.  This assignment will state that the company owns the ideas the founders have previously conceived or developed which are related to the technology or business practices on which the company is based.  This is in addition to any in-licenses from a university or other institution in which technology has been developed. 

And remember that the founders might not own everything they believe they own – IP developed, even in part, during the course of employment for someone else (or using their previous employer’s equipment or facilities) might give the previous employer a claim to a company's IP, something that needs to be planned around.

Not only will these steps help ensure that the company owns the technology the founders think that it owns, it will also help prevent a co-founder from "taking his or her ideas elsewhere" – at least as far as this technology is concerned.  

***

Ken Maready heads Venture Counsel, a law firm for entrepreneurs.  Venture Counsel is located at the Virginia Tech Corporate Research Center in Blacksburg, Virginia.  He writes the Venture Counsel blog and can be followed on Twitter, @venturecounsel

Ken Maready's chapter, "Legal Concerns for the Web 2.0 Business," was accepted for inclusion in volume one of the new series, Enterprise 2.0: How Technology, E-Commerce, and Web 2.0 Are Transforming Business Virtually, by Tracy Tuten, Ph.D.  The Enterprise 2.0 series is scheduled for publication by Praeger Publishers, an imprint of Houghton Mifflin Company.

Added 3/22/10:  Ken Maready has joined Hutchison Law Group.