Making It Legal:

I received an e-mail out of the blue recently about how to protect an idea. Not a plan, not a project, not something tangible . . . but a thought about a new approach to pet care. That’s about as much information as I have. Understandably, the entrepreneur was reluctant to disclose the idea because it hadn’t been patented yet (assuming patent protection was even appropriate). But she wanted to know how to get started.

It’s very hard to protect an idea, especially if you haven’t fleshed out any of the technology or marketing around it. You can create a nondisclosure agreement and try to get people to sign before you discuss your idea with them–but sometimes they will, and sometimes they won’t.

Your next steps depend on what you want to do with the idea. Do you just want to sell the idea to someone else or start a business around the idea? If the latter, the local office of the Service Corps of Retired Executives (SCORE) or a small business development center in a local university can sometimes provide counseling help. Both are programs established by the Small Business Administration to encourage entrepreneurship. And both are free. Also, if the idea is similar to something that’s already on the market, there may be reference books with business plans that can give you guidance about the steps to take.

But if you’re serious about making money from an idea, you need to be prepared to invest money in it–even if it’s just the investment in consultations with attorneys and accountants (both of whom have ethical obligations to keep what they learn confidential). The money you spend getting the advice for your particular situation will be well worth the time you would otherwise spend amassing possibly irrelevant information.

Copyright law developed over many years, from a time when the only way to distribute a book was to make physical copies through a printing press and sell them person to person. The core thinking behind the law was that the person who came up with the creativity should be the only one to benefit from it financially. But the internet has changed the way people receive their information–as well as the ease with which people can copy it and/or pass it off as their own. So the question now arises: If we can’t police the improper use of our creations as we once could, what’s the point of the old rules? Should we rethink copyright laws?

The question reaches a fever pitch (to the extent that a question actually can do so) when you consider the impact of the Google-YouTube acquisition. What kind of power does this give the “middleman,” as Michael Arrington puts it in his thought-provoking post. What would a new copyright/business model look like?

When is the right time to protect an idea? “About 10 minutes before someobody else tries to use it,” quipped an intellectual property attorney I know.

Budding entrepreneurs can become fixated on protecting their Next Great Idea. But, as Whitney Keyes points out in her post, “Avoiding Privacy Paralysis,” there’s a fine line to be drawn. Sometimes people are so worried about protecting their work from theft that they share it with very few and, as a result, it never gets seen/used/purchased. So you’re left with your pristine idea/product/work intact, but with nothing else to show for it.

An internet marketing mentor of mine takes the position that he would rather have his work shared by others than guard everything like a hawk and earn no money from it. [By the way, this guy “mints” money–I’ve seen his bank statements]. He finds other ways to have the money flow back to him–such as through affiliate links, etc.

Rolling around through the halls of Congress may be the latest bill to attempt to stop pirating, or knockoff, designs. It’s hard to say who’s helped (or hurt) more by this legislation. But, as Fortune Small Business reports, the Design Piracy Prohibition Act is sure to keep lawyers busy. For the time being, unless artists and designers can show that their designs were ripped off exactly, there’s great leeway given to “creative expression” . . .  even if it happens to look an awful lot like yours.

“I have the domain name. Doesn’t that count toward a trademark?”

“I did a search online and no one has the name. Why can’t I get a trademark?”

As Nina Yablok’s article, “Trademarks and Google,” touches on, Google isn’t the be-all and end-all when it comes to filing trademarks. That’s why, even in this high-tech, “AG” age, it’s still worth investing in the old-fashioned kind of searches done by real people who are trained to look for obstacles (Current retail price, approximately $600). As my namesake points out, the U.S. Patent and Trademark Office doesn’t look only at exact names or phrases in determining whether there’s a conflict. It also looks at whether a “mark” is sufficiently similar to another to be likely to cause confusion (Note, it doesn’t actually have to cause confusion–just be likely to).

Let’s take an example of two consulting companies–one in California and one in Virginia. Both consult with clients on marketing and PR skills to help hone their essential messages, elevator pitches, etc. The California company uses the phrase, The Spin Doctor. The Virginia company uses the phrase, The Pitch Doctor. The untrained researcher (that is, the entrepreneur looking to do this on the cheap) would probably not be able to come up with enough permutations to cover all the bases… but the people handling the searches can. And it’s likely that the trademark office would look at those two phrases and consider them too similar to allow them to co-exist. If you’re the second to file, it’s likely you’re the one who will have to cede your seat.

If you truly want your company name (or tagline) to become the next household name, realize that it will take time and money to invest in protecting it properly. There’s no point spending money to register the mark, build up the marketing, print the business cards and develop the website, only to have a larger company with a prior claim stomp all over those plans with a cease and desist letter. Invest in the planning and searching before you launch. A good IP attorney can guide you through the process.

More and more, a company’s most important asset is its intellectual property. But what, exactly, is intellectual property, and what are the different ways to protect it? Check out this intellectual property law primer through The Professional Network/Small Business Resource Center . . . and talk to an attorney about your options.

Blogging can be joy, bliss, burden, or boon for your business … and it can also be a trap for the unwary. There’s so much free stuff, it’s tempting to assume we can just take what we find. Not true.

Here’s a helpful post from Tamara Dourney on a blog called “Registered Trademark 2” (no, it’s not affiliated with the U.S. Patent and Trademark Office), which outlines the intellectual property issues you should know and the ways that entrepreneurs can protect themselves from takers.

From the Department of Nightmares comes this story of a David-and Goliath lawsuit.  Apparently, online perfume retailer Perfume Bay has been embroiled in litigation with online auction site eBay (also spelled ebaY in its logo) for about the past three years.  According to the Orange County Register, which profiled the case last month, Perfume Bay grossed $17 million last year; eBay grossed $6 billion. 

Perfume Bay has spent hundreds of thousands of dollars defending this lawsuit, which is on appeal from the Central District of California in the U.S. Court of Appeals for the Ninth Circuit.  While Perfume

Imagine spending several years building your brand, investing thousands of dollars, and having cultivated thousands of satisfied customers, to find that an online behemoth with enormously deep pockets will stand in your way of protecting your trademarks.  That’s what’s been happening to Jacquelyn Tran, Perfume Bay’s owner.  You can read about her saga on her blog, www.makesnoscents.com.  The briefs on appeal are there, too, which make for fascinating reading.  It’s like the studies done in Psych 101 classes where a clown quickly runs through a room and the students are asked to describe the clown:  there’s rarely agreement on height, weight, clothing, or which door the clown entered.    

I’m not about to place odds on where the appeals court will come out; a decision is expected/hoped at the end of this month.  I did have a chance to speak to Jacquelyn herself to see what she has learned from the experience, and what she might have done differently.  Jacquelyn is the sole owner of Perfume Bay and an Inc. Magazine “30 Under 30� award winner.  She’s been fortunate in that the company has generated sufficient revenues to pay the legal fees, which has given her the ability to “stay in the game,� as it were (other entrepreneurs in her situation might have to use their personal savings, or give up the lawsuit altogether).  She is passionate about her company and its branding.  Upon reflection, though, she acknowledged that she didn’t seek legal counsel when she began her branding and trademark process.  “I think if I had to do it again, I would definitely get legal advice . . . someone who could give me information at the outset,� she remarked.  “It’s hard to say what I would have done differently – maybe trademarked sooner,� she added.   Even with the appeal looming – which has put Perfume Bay’s marketing into a bit of a holding pattern – morale at Perfume Bay is positive.  “We’re optimistic,� Tran said, “and going full force with our objectives.�

In some ways, the Internet is the Wild West . . . and Web 2.0 is like the Wild West meets the Sci-Fi Channel — unpredictable, potentially dangerous, and often bizarre.  If you’re involved in, or thinking about, doing business online at all, the Electronic Frontier Foundation is a great resource.  They’re even hosting a one-day Compliance Bootcamp on October 10, 2007 for people who handle issues arising from users and user-generated content. 

There are “basicâ€? legal issues that online content raises (such as defamation, copyright and trademark infringement, privacy, to name a few — see my article on “Common Legal Perils of Bloggingâ€?).  In addition, here’s a great post from Rafe Needleman — endearingly called 9 Fun Ways Web 2.0 Startups Can Commit Legal Suicide.  He points out two handfuls of other legal pifalls, including ignoring safe harbor rules (by not registering as a copyright agent), collecting data from children, failing to create a reserve fund for settling trumped-up lawsuits. 

His suggestion:  “The best bet is to keep a lawyer around.�

This is becoming a burgeoning issue – and I’ve just found myself on the victim’s side of it!!

Thanks to the way WomenEntrepreneur.com set up my blog, I’m able to see some of the comments and trackbacks to follow where my blog content is ending up in cyberspace. I followed one trackback link to another site . . . only to find that an entire blogpost of mine had been taken and posted onto this other person’s blog.

Now ordinarily, I’d enjoy the free publicity, but what didn’t feel quite right was that there was no obvious attribution to me or the blog (such as, “Here, in an amazing flourish of brilliance, is Nina Kaufman’s post on BlahBlahBlah . . . “). Yes, the header was hyperlinked back to Making it Legal, but if you didn’t know to look for it, the first impression was that the content-taker was the author. Not cool. Not “fair use” under the Copyright Act (from my interpretation of it). Not the spirit of “sharing” that is supposed to underlie our social media interactions. For what’s the good of having my content plastered all over the Internet if no one knows it’s mine?

Therefore, I have emailed the content-taker, thanking “CT” for the link, but requesting attribution. I’ll give CT about a week to comply and then make a phone call. I will keep you posted on what happens next . . . but if I don’t get either the attribution (which I would prefer) or the removal of the post, I’m prepared to alert the blog’s hosting company and alert them to copyright infringement o their servers.

The most galling part of this? CT is a lawyer!

I recently gave a teleclass on intellectual property issues for small business owners.  One of the questions that came up is whether it’s okay to use someone else’s content (in this case, transcribing a podcast and posting it in its entirety) on your own blog as long as you give the proper attribution. 

The short answer is no (“What?!â€? horrified bloggers exclaim).  The general rule is that any time you want to take someone else’s content and use it you need to ask for permission.  Why?  Because the right to control the distribution of the content is part of the monopoly of copyright rights that one gets for being the creator of the work.  In this case, the creator of the podcast has the sole right to make whatever other uses of the work she chooses.  She can turn the podcast contents into a CD, a book, a PDF transcript, a workshop.  Only the original author can do that. 

However, there is a small exception known as “fair use�.  It’s the exception that bloggers hang their blogging hats on (and sometimes, their necks, if they’re not careful).  Fair Use looks at the reason, context and amount of the content you take.  It’s like the big Celebrity Fit Club scales, weighing and balancing different factors.  If you take someone else’s content for reasons or news or commentary, the scales tend to tip in your favor; if you take content to sell off in your own products, the scales tip away from you.  If you use just a tiny portion of the overall whole content to make your point, that’s more acceptable; if you transcribe the entire podcast and post it for free on your website – probably not kosher. 

So play it safe, because a cease and desist letter is a nasty thing to receive in the mail.  If you have any doubts about the amount of content you want to use, ask for permission from the authors before you take their content.  The best that can happen is that they say yes!

I had a query about using confidentiality agreements.  “Cee� asked: 

<<i have every person i deal with sign confidentiality. but i have found that it does not really protect you because unless you are willing to pour tons of money into a lawsuit, and most small people dont have tons of money, then what can you do?>> 

The first question I have for Cee is what’s IN your agreement?  Most confidentiality agreements that I see downloaded from the Internet (where many entrepreneurs get their legal advice) have more holes than Swiss cheese.  They may be 1-pagers that simply say “we acknowledge that we’re sharing information and agree not to disclose it.� 

That’s not enough!  A good confidentiality agreement contains a lot more, such as: 

• Identifying the specific information that will be considered confidential 
• Detailing the actions OTHER THAN mere disclosure that will be considered a violation – such as doing an end run around you and “doing the dealâ€? with someone else (called “non-circumventionâ€?) 
• Limiting the number or identity of people within the company who have a right to know the information 
• Imposing confidentiality requirements on third parties (such as subcontractors) 
• Providing TEETH in the agreement!!!  (Can you hear my frustration?).   

One of the fatal flaws of most canned confidentiality agreements is that they don’t spell out what happens if the other side divulges the information.  (Acchhh – if I had a nickel for every lousy confidentiality agreement I’ve seen . . . .).  That’s where entrepreneurs and small business owners lead the fox right into the proverbial hen house.  There need to be penalties for bad behavior (improperly disclosing information).  Such as the right to bring an expedited lawsuit (called “injunctive reliefâ€?), the right to have your attorneys’ fees paid if found in your favor, the right to bring the lawsuit in your local courthouse (“jurisdiction and venueâ€?).  All of these things can make it v-e-r-y unpleasant for a party – especially one overseas — who has the inclination to pirate your valuable intellectual property. 

Confidentiality agreements can’t necessarily prevent the need to bring a lawsuit to enforce them.  But, if properly worded, they can make the process swifter (and less expensive); plus, a clearer case of infringement with a well-written agreement might make your case a more tempting one for an attorney to take on a contingency fee basis (in which case, you don’t have to front the legal fees).   

Final words:  especially if you are negotiating with an overseas company, do your due diligence!!  Find out if the company is reputable.  Learn about the customs of doing business (just how informal is it?).  Is there a culture of pirating? 

To those who say, “I can’t afford the due diligence,� I ask, “can you afford not to do it?�