Common IP Issues Facing Startups and How to Avoid Them

By: JOANNA JANA LAZNICKA

Over the years of consulting startups I have ran into times where I needed to call Mark Leonard of Davis & Leonard LLP.  Mark is a top notch attorney focusing on trademark and copyright registration, general intellectual property (IP) counseling, e-commerce, licensing, and litigation in the areas of trademark and copyright infringement, computer intrusion, Trademark Trial and Appeal Board proceedings, and ICANN Internet domain name disputes.

Often when calling Mark it is in situations that could have been avoided by the startup founders and management if they had considered IP issues in their initial business planning.  Such hiccups can be very serious and are a clear black mark in the history of the startup which becomes a liability when looking for angel or venture capital funding.

Not only does it become a problem when looking for funding it also pulls founders’ and staffs’ time and resources from growing the company to fighting a lawsuit.

To help startups educate themselves before they get into hot water Mark has taken his time to let us interview him on common IP issues facing startups.

Joanna: When choosing a name for a new company what are some common mistakes startups make?

Mark: One of the top mistakes I see startups make is failing to conduct a comprehensive trademark search prior to launching the company.  This is likely because there are a number of myths that cause businesses to believe a search is unnecessary.  For business names, a very prevalent myth is that there is no need to search if the Secretary of State’s office approves the name of a corporation or limited liability company.  The Secretary of State’s name approval process uses criteria different from trademark law and only checks against corporate and limited liability names registered with that state.  It does not does not consider federally registered marks, partnerships, sole proprietorships, business entities in other states, or even state trademark registrations.  It is not uncommon for  trademark conflicts to arise between businesses in the same state that have both had their names approved by the Secretary of State.

A second myth is that it is sufficient if no identical matches are found after searching a mark on the Internet or United States Patent and Trademark Office (“USPTO”) records.  Trademarks need not be identical for a conflict to arise, phonetic similarity or similar meanings are sufficient.  These searches are also incomplete because trademark rights are acquired through use not registration and many businesses do not advertise on the Internet.  Thus, these searches may miss potential conflicts.

Startups should also be wary of mass market legal service companies that offer trademark registration services.  These companies often generate voluminous search reports, but because they cannot give legal advice there is no explanation as to whether the reports show any potential conflicts or not.  Startups should work with an experienced trademark attorney to conduct a comprehensive trademark search early in their business planning process to ensure the chosen name for their business, product, or service does not conflict with another trademark.

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