Four Quick Legal Tips to Protect Your Business from Litigation
by Radiance W. Harris, ESQ.
There is a common misconception that businesses only need to worry about “legal stuff” or hire an attorney after they get in trouble. While that may be the case for non-business related matters (such as divorce), this is certainly not the case when you are a business owner. A smart business owner understands that legal is an important and necessary business expense, and proactively takes steps to establish a solid foundation to protect themself from liability. Here are four quick legal tips to get your business on track:
CHOOSE A DISTINCTIVE AND NON-INFRINGING NAME
It is best to choose a business/product/service name that is highly unique and distinctive from your competitors. The less your chosen name conveys about the nature of your products and services, the better. Names consisting of invented words (such as KLEENEX for tissues) or real words applied to unrelated services (such as APPLE for computers) are the most distinctive and enjoy the highest brand protection in the United States marketplace on a nationwide level. You can always use a catchy descriptive tagline to identify the nature of your products or services.
To ensure that your business/product/service name does not infringe on prior third party’s rights, conduct in-depth searches of the U.S. Patent and Trademark Office’s (USPTO) database, the Internet, business records, and domain name databases for your proposed name, including similar variations, for identical, similar, and closely related products and services to confirm whether it is available for use and registration in the United States. The point of a thorough search is to minimize the risk of receiving a cease and desist letter or, even worse, getting sued. A lawsuit will cost you hundreds of thousands dollars more than hiring an attorney to conduct a comprehensive trademark search and provide an opinion on availability.
PROTECT YOUR INTELLECTUAL PROPERTY AND RESPECT OTHER’S INTELLECTUAL PROPERTY
Intellectual property encompasses four categories: trademarks, copyrights, patents, and trade secrets. Just like houses can be valuable real estate to your personal wealth, intellectual property has significant value to your business wealth. Trademarks protect words, phrases, symbols, or designs (including a combination of these elements) that distinguish or identify your products or services (e.g., business name, slogan, logo, product/service name, and other business assets). Copyright protects the substance and form of original tangible expressions (e.g., writing, music, artwork, etc.). Patents protect inventions (e.g., products or processes). Trade secrets protect business information that has value in its secrecy (e.g., the Coca-Cola formula). You should take an assessment of your business’ intellectual property and then take steps to protect it before another business or competitor beats you to it.
While there are limited exceptions, as a general rule, you should always seek permission from the owner of any third party content (including photographs, videos, music, etc.) before using it in connection with your business.
Check out the U.S. Patent and Trademark Office website (www.uspto.gov) for more information about trademarks and patents, and the U.S. Copyright Office (www.copyright.gov) for more information about copyrights.
DOCUMENT EVERYTHING WITH WRITTEN BUSINESS CONTRACTS
Every business should have contracts when dealing with customers, clients, business partners, employees, and independent contractors. These contracts may include, for example, professional services agreements, employee agreements, website agreements (e.g., terms of use and privacy policy), partnership agreements, and license agreements. It can be quite risky to engage in business without attorney-drafted or reviewed contracts.
If there is nothing in writing, there is no proof. It is important to memorialize in writing the exact terms of your agreement to eliminate any uncertainty or misunderstanding, protect your rights and interests, and minimize liability and legal disputes in the future. If a dispute later arises, you can always refer back to written contracts as evidence of what the parties agreed to. It essentially functions like “liability insurance” for your business. As an example, in the case of dealing with independent contractors or employees who are creating content for your business, they automatically own the copyright in any content they create (not you or your business) unless you have something in writing stating the contrary and transferring the rights to your business.
GET PROFESSIONAL HELP
To save on expenses, new business owners often take a DIY approach or hire inexperienced professionals to handle important business and legal matters. At a minimum, you should have your ABCs in order: a trusted go-to attorney, banker, and CPA working closely with your business. When you outsource and delegate these very important matters, you minimize your legal risks and liabilities, and allow more time to focus on your business.
In conclusion, whether it is a dispute involving a former client, business partner, or contractor with whom you did not have a written contract, or a competitor claiming that you are infringing on their intellectual property rights, litigation is a very costly, time consuming, and emotionally draining experience. If you are proactive instead of reactive when it comes to your legal affairs, your business will be much better off in the long run.
Radiance Harris is the founder and managing attorney of Radiance IP Law, a DC-based exclusively flat fee law practice. She serves as outside general counsel to start ups and emerging companies with a focus on trademark law, copyright law, advertising law, and business contracts. She can be reached at rharris@radianceiplaw.com.
Legal Disclaimer: This content is a resource for educational and informational purposes, does not constitute legal advice, and should not take the place of hiring an experienced attorney. This content also does not create an attorney-client relationship between you and Radiance Harris or Radiance IP Law.