Making It Legal:

Oh, it should be so easy.  Let’s face it, if securing and protecting trademarks were simple, any fifth-grader would be able to do it.

You’ve had sleepless nights coming up with that oh-so-fabulous brand that will rock the world (or at least your market niche). You sweated out the search process, making sure that no one else is using the same or similar mark in the same (or a similar) way. You drummed your fingers incessantly, waiting months for the Trademark Office to respond to your application. You tore your hair (or bit your fingernails) over the seemingly picayune alterations they wanted you to make to the application in order to get it through (not to mention the possibility of paying more in filing fees). You held your breath during the publication phase of the process, closing your eyes and praying to any deity that would listen that no one would object to your application. Finally, you got what you thought was the Holy Grail of trademark protection: the “R-circle” (®).

Can you breathe now? 

Yes and no.

In her post, “My Trademark Was Granted–I’m Done . . . Right?” my colleague, e-business lawyer Deena Burgess, Esq., tells you what’s up ahead, and what you need to anticipate.

I spoke at the Brooklyn Creative League earlier today, and the question, “Isn’t it true that there’s no regulation of the internet?” came up.  So once again, I had to debunk that myth.

In addition to the Communications Decency Act and the Digital Millenium Copyright Act, there are a host of federal and state laws concerning false advertising, trade, trademarks, copyrights and contract terms that DO apply to your online business activities.

So how can you create an e-commerce website that doesn’t become a breeding ground for lawsuits? For starters, have a look at “Careless With Your Business Website?  Don’t Get Sued.” written by my colleague, technology lawyer Mark Grossman, Esq.  Also check out my article on Website Terms and Conditions at GreatBusinessLawTips.com.

You may have plenty of opportunities to get it (legally) right . . . but not as many to hear me speak on the subject! 

For those of you near Brooklyn, N.Y., on July 15, stop by the Brooklyn Creative League, where I’ll be talking about everything you need to know about business law in 90 minutes.  (Well, not quite . . . but close!)  In this entertaining and lively session, I’ll provide entrepreneurs with an overview of the most common legal issues they will face as they start and build their businesses.  I’ll touch on:

• How to choose the right form of business
• Working with business partners
• What to look out for in your commercial leases
• How clear contracts make for happy clients/customers
• Intellectual property: what to protect and how to protect it
• Choosing the right attorney/advisory team

RSVP: Contact the Brooklyn Creative League at info@BrooklynCreativeLeague.com or (718) 576-2104.

Date:  Wednesday, July 15, 2009
Time:  9:30 to 11 a.m.
Location: Brooklyn Creative League, 540 President Street (between 3rd and 4th avenues)
(Take N/R Subway to Union Street)
Price:  Free for members; $10 non-members

Life is short. Time is limited. So when you see that someone has phrased something “just right,” can you take it?  Even just a wee snippet? Aw, c’mon!

I came across the example of a consultant who wanted to use song lyrics in publishing her book. The U.S. Copyright Office said “ask for permission.”  A smart, safe, standard answer. But the consultant came upon one of those gray, somewhat subjective areas in the law called “fair use.” Many people interpret that to mean that if you take only a tiny bit, it’s OK.

It’s not.  Whether a use is, legally, a “fair use” depends on a number of factors:

1. What’s the purpose of the work–does it try to supersede the original?
2. What’s the nature of the work you’re taking–fact or fiction?
3. How substantial is the portion you’re taking (note that “substantial” doesn’t just mean “amount”; it could mean a key phrase or concept that connects people to the work–like riffs in music sampling or recognizable song lyrics).
4. What’s the effect on the market for the original work–and can the connection of your product to the work diminish the value of the original work?

Safest strategy is to ask for permission.  If the tables were turned, wouldn’t you want the courtesy of someone asking you for permission to use your work? And bear in mind that it may not just be “little ol’ author” looking out for infringement (in which case, you may be tempted to think you’ll fly under the radar). That “little ol’ author” could be represented by a major publishing house or agency, in which case you’ve not crossed the line with a mouse–you’ve crossed the line with a mammoth.

Consider, too, what you might be getting yourself into:

• Sued for copyright infringement
• Have to destroy all copies of the infringing work without compensation
• Pay damages to the original author
• Pay attorney fees
• Redo the work so that it no longer contains the infringing items

If you’re determined to proceed, consult with an intellectual property specialist to more closely evaluate your risks of getting embroiled in litigation. Otherwise, you could find that that little ol’ shortcut is going to lead you down a long, expensive road.

Q:  I have invented something that could almost be considered reinventing the wheel.  Here is my question.  If I built and used my own invention (not just a prototype), would I still have protection if I only have a provisional patent on it? I don’t want to manufacture it myself; I want to sell the idea to a manufacturer in the industry that it was targeted for. I also want to retain licensing rights to the invention.

A:  The short answer is this:  If you file a provisional patent but don’t follow up with a full application within one year, someone else could come along and grab the patent rights, and you could lose any opportunity to later file for the patent rights–regardless of whether you’re already using or selling the invention.

Selling or licensing the idea to a manufacturer could be a lucrative approach, but chances are that a manufacturer paying for those rights would want to know that they could be protected.  If your time clock is running to file the full patent, I’d strongly suggested that you consult with a patent attorney to get clear guidance on your next steps and ways to structure a sale or license of your invention.

Once again, I’m asked whether you can take what someone else has made and simply sell it to a new market . . . even (and especially) if the original manufacturer hasn’t had the wisdom to move into the new area.  Just think of the money they’re leaving on the table!

Unfortunately, in many cases, it’s their money to leave on the table.

Q.:  “I have developed several ideas of new markets for an existing product that the manufacturer is not currently selling into. They hold the patent on their product; the markets I see do not require any changes to the current product, so I cannot develop a new patent. Is there a simple way, perhaps a common contract that we both could agree to where I would be compensated for my ideas if they like them, and do end up selling into these new markets ?”

A.:  You may be able to work out a license agreement with the patent holder, but it would require your doing the legwork to sell the product in the new market. However, it’s not likely that they would pay for the idea to sell to the new market (”hey–why not sell your baby carriages to dog owners?”) unless you could back it up with a sound marketing plan, contacts and meaningful projected revenue. You’d also need to carefully screen whether the manufacturer has thought of the idea previously–it’s entirely possible that the manufacturer has already considered it and chosen not to move into the market you identified for lack of staffing/infrastructure or other reasons.

License agreements are not something you want to treat as an off-the-shelf item. Their terms can vary widely concerning how you get paid. Make sure you speak to an attorney in your state who understands product licensing so that you’re getting the counsel you need.

I was asked recently in my Forbes.com Ask An Expert column whether you could copyright something you didn’t write.  The short answer is “no,” unless you’ve carved out a “work for hire” exception.  This is particularly relevant for entrepreneurs who outsource to freelancers for their projects.

When you hire a freelancer to do work for your company, the freelancer–not you–is the owner of the copyright.  In order for your company to become the owner of the rights, you need one of two things (preferably, both):

• A written agreement that states that the work being performed is done on your company’s behalf as a work for hire; and

• A written agreement transferring any rights that the freelancer may have to your company.

The second is important because your contract may come under scrutiny and not have the right language for a “work for hire” (it can happen, especially if you download contracts from the internet).  The first is important because, without the “work for hire” provisions, your freelancer can sell the work to someone else, make changes to it or use it in other ways . . . all of which you don’t want.  For more examples of how the lack of “work for hire” language in your written contracts can cause problems, read my article, Why Guns for Hire Should Scrutinize Work for Hire Provisions, available on my GreatBusinessLawTips.com site.

Q: What would be the first step for an invention? How can the idea be protected when others will need to be involved in the process of getting the idea to market?

A: It’s very difficult to protect an idea, unless you have found some way to “capture” it in a kind of tangible form–such as a writing, drawing/schematics, etc. The way people have tried to work around this when building prototypes is to use confidentiality and non-disclosure agreements, which aim to prevent your manufacturers, designers, etc. from disclosing to others the information they learn from you, or from using it themselves. How you structure the agreements can depend on the nature of your invention and the work you’re having people do for you.

Your best next step is to consult with a local patent attorney (with an invention, you’d want to have one on board anyway). If you don’t know of one, most counties have a bar association that will have an intellectual property committee . . . make sure you find someone who is admitted to the U.S. Patent Bar (not all IP attorneys work with patents). The attorney should be able to discuss with you: 1. the full process involved in protecting an invention, 2. the costs and fees associated with the various forms of protection and 3. strategies for handling that “in between” stage of developing the prototype.

Today’s query has to do with celebrities. Dabnabbit!–why don’t they return my calls?

Q.: I sent two celebrities a business idea for a website. I never heard a response from them or their companies. Should I continue to write them or find other interested parties?

A.: Without knowing the business idea or which celebrities you contacted, I can think of several reasons they didn’t respond:

• They didn’t like your idea.
• They didn’t like how you proposed they be involved in the project.
• They began implementing the idea you suggested well before you contacted them.
• They’re too busy to be bothered

Under various state laws, celebrities have the right to control how their image and likeness are used. It’s called the “right of publicity.” One can assume you didn’t pick these particular celebrities because they were your closest friends since childhood. No–you wanted to trade off their publicity machine, their influence and their “power of attraction.” So they may not be interested. After all, you’re probably not the first person to approach them with a business opportunity.

People have no obligation to respond to an unsolicited offer, proposal or manuscript. But they may not want to take the risk of acknowledging your idea, in case it’s close to something they already have in the works . . . and the last thing they need is a lawsuit claiming they infringed your intellectual property rights, no matter how specious the lawsuit is.

Unless you have a way to get past the “gatekeeper” (such as through a personal connection to the celebrity’s business manager, accountant, attorney or sister), continually sending letters probably won’t get you far. Either find a way to be a closer “”degree of separation,” or try someone else.

If I had a nickel for every time someone asked me, “I want to take someone else’s product and put it to a different use. Do I have to get their permission?” . . . well, I might still be writing this blog, but I’d be doing it from a beach in Bora Bora. It’s asked with the same (seemingly) innocent, wide-eyed pleading my little brother used when he was in his “I want a puppy” phase and a stray happened to wander into our backyard. “Can we keep him, Mom?  Please?  PLEEZ??”

Well, by gum, I’ve actually turned into my mother (”We mock the thing we are to become,” she used to say, quoting Mel Brooks) and the answer is a definitive “NO.”  Said with hands on hips and a stern expression to boot.

Unless . . . you want to build your business on a risky proposition that you just might fly under the radar and get away with it. But if you’re going to go into business with the intent that all you’ll do is fly under the radar, that’s not a very grand plan for a business, nor are the prospects for the future particularly bright. Because you might not fly under the radar and get caught for copyright or trademark infringement. And unless you have a spare $100,000 (or more) just sitting around with no meaningful purpose except to pay an attorney to litigate the issue, you could find yourself up to your eyeballs in lawsuits.

A better approach: Do some original thinking. Create your own product. Or legitimately license the product from the manufacturer. And speak to an attorney who knows your industry to make sure you minimize the risks involved.

The last time (and only time) I ever made my own clothing was in seventh grade “home ec” class.  I started with wild and totally unrealistic ambitions for making a three-piece suit of jacket, vest and skirt for myself (this was the late ’70s, after all).  I bought the Simplicity pattern and fabric, cut everything out, tried to follow the pattern . . . and I don’t even remember whether I finished the vest.  Nightmares of stuck sewing machines, off-kilter bobbins and seam rippers visited me regularly that semester.  I was relieved to have to move on to the cooking portion of the class, where at least we could make chocolate chip cookies.

Chocolate cookies have been a staple of my life ever since, but not making my own clothing (gotta delegate what you don’t do well!).  So I was intrigued by this question, which crossed my inbox:

Is it copyright infringement if I use commercially sold patterns to make clothing to sell?

And the short answer is: Yes. Commercially sold patterns generally permit you to make clothing only for personal use, not for commercial sale. Check the language on the packaging to see whether it limits your use.  If you’re planning to build a whole clothing line around a particular pattern, you might want to reach out to the smaller pattern companies to see if they will grant you a license to use the pattern in a commercial context.  Or make your own.

Last week, I froze in a moment of horror when I saw my very words show up (vitually unattributed, except for the teeny-tiny type at the bottom of the article) on someone else’s blog. After some schnuckling around, I learned that I was not the only person the “perpetrator” had done this to. Ultimately, there’s a happy ending.  I didn’t have to stomp and snort and raise Cain because (as I found out after more schnuckling) the “perpetrator” is a legimitate content partner, with prior permission to use the work.

But let’s say the “perp” didn’t have prior permission. Why isn’t is fair to just use the article and give me attribution?

Under the copyright laws, fair use allows for some degree of use of a portion of a work if it’s in connection with news, reporting, education, commentary and the like. But in my case, the website used virtually the entire “work” (article).  It was just scooped up–without prior permission–and plunked it onto the site. So the amount used isn’t strictly “fair use.”

In addition, many internet sites are not functioning out of the goodness of their hearts–they’re commercial enterprises, which means they’re trying to attract visitors (and ad revenue) to their site using the strength of someone else’s content.  If they are purely educational institutions, there’s leeway given for that. But they’re not (see note about ad revenue), so wholesale copying and pasting of OPIP (other people’s intellectual property) isn’t kosher.

One appropriate way to handle OPIP is to write an original introduction to the subject and then link to the article.  Or pick up a small snippet of the article and delve more deeply into a (original) discussion of the issue.  Or have a conversation with the author of the work (gee, isn’t that what all this social media stuff is about–building community?) and ask for permission.  Prior permission trumps all else.