ASSETS AND LIABILITIES FOR BUSINESS OWNERS

Lisa KrizmanLaw Office of Lisa K. Krizman, LLCCherry Hill, NJ and New York, NY

© 2007, 2009 Law Office of Lisa K. Krizman LLCA WBE certified company

This presentation is intended as general information and may not be relied upon as legal advice.

Trademarks and Copyrights

What you will Learn

Why you need to know about intellectual property

How to make money with itHow to avoid losing money because of itHow to get it

A change in the marketplace

• The business marketplace today depends heavily on “intellectual property.”

• Because of the internet, intellectual property has global reach and impact on you.

• Leveraging and protecting your company’s intellectual property will affect it’s value.

What is Intellectual Property?

• Name of company• Non-descriptive product names, “brands”

and “logos,” known as “trademarks”• Written text, artwork, graphics, music,

training manuals, advertising copy, quotes, • Methods, processes, formulas• Words, artwork, “look and feel” of your web

site and advertisements • “Trade dress” of products and services• Domain names

How To Make Money From Intellectual Property

• It can be created at no cost or acquired; can be bought, sold and licensed:• Creates perception of value• Growth in actual value over time• Licensing generates revenue

• Requested by Investors• Attractive to potential acquirers• Attractive to potential “co-branders”

How to Avoid Losses as Result of IP

• Legal claims from other parties, resulting in• Attorney expenses• Damages (by statute, profits, actual, nominal, treble)• Injunction against continued use• Forced to withdraw products• Destroy letterhead, redo advertising• Loss of your investment in promotion

• Legal claims from co-owners or licensees• Loss of rights to the property

• Inadvertently give away or be deemed to have abandoned

• Trademark: Loss of ability to expand product lines• Trademark: Loss of ability to expand markets

What is a trademark?

• A trademark is a symbol of the origin of the product or service. It is a “mark.”

• Its purpose is to avoid consumer confusion about the source of that product or service.

• A trademark may be a word or words, a slogan, a person’s name, a signature, design, sound, a color, or a smell.

• A trademark can include the overall image or appearance of your product. For example, the décor of a restaurant or the distinctive packaging used for a good.

Good IP Plan

• Conduct an audit of the intellectual property• Who owns it? • Is there an “exit” strategy?• Do you have policies in place?

What is a trademark?

• Certification marks are a type of trademark that are typically used to indicate that a product or service meets a certain standard. E.g. “Good Housekeeping Seal of Approval;” “Certified Financial Planner; “WBE” (Women’s Business Enterprise).

• Collective Membership marks are a type of trademark to indicate membership in an organization.

• Business names are protected under the trademark laws.

General Law of Trademarks

• A mark must serve to distinguish to consumers your goods or services from those of other sources.

• “Descriptive” phrases or slogans may or may not be considered “marks.”

• You may not use a mark that resembles another mark for related goods and services so as to cause a likelihood of confusion as the origin of the goods or services

• You may not use a mark that misleads or deceive the consumer about an affiliation, endorsement or some form of connection between two sources of goods or services.

• “Dilution” of a mark refers to blurring the distinctiveness of a famous mark or tarnishing of it, even if the two marks are in non-competitive businesses.

Making Money with Trademarks

• Appreciation• The value of your mark increases as sales and

advertising grows. • In 2005, Coca-Cola’s trademark was valued at over

$67 million; Microsoft's at $59 million, and IBM at over $53 million

• Tax• Trademark is intangible capital asset with indefinite life. • Certain expenses may be amortized. • Check with tax attorney

Making Money with Trademarks

• Assignment of trademarks• Assignment of trademarks can be a large source of income.

Citigroup recently assigned back to Travelers the famous “red umbrella” mark for an undisclosed sum of money.

• There are “anti-trafficking” laws, but assignments generally permitted if the mark is assigned “together with the goodwill” of the business.

• Licensing of trademarks• Licensing of trademarks can generate revenue for your

business. • Certification marks create the perception of value and also

generate substantial licensing revenues.

How to get trademark rights

• Create and use one!

• Adopting a trademark: arbitrary, suggestive, descriptive and generic. • Arbitrary: Starbucks; Exxon; CVS• Suggestive: It’s the Network• Descriptive: The Childrens Place• Generic: “Consultants”

• Trademark rights begin to accrue as soon as you begin to use a mark in connection with the sale or rendering of services in interstate or U.S. and foreign commerce.

How to get trademark rights

• Registration at state trademark registries and/or the U.S. Patent and Trademark Office are not needed, but advisable. Foreign registrations should be considered.

• You can register with the Patent and Trademark Office at any time when the mark is already being used in commerce.

• Once you apply for registration, the mark is published in a national database to allow others a chance to object.

• If no objections are made after a period of time, the registration is complete and the applicant gains the presumptive exclusive right to use the mark in commerce on a national basis, and other benefits

How to Get Trademark Rights

• By filing an “intent to use” trademark application:

• Allows you to “lock in” the exclusive right to use the mark on a national basis in the future.

• The mark is published in a national database to allow others to object.

• If no objections are made, the applicant has three to four years to establish actual use in order to complete the registration process.

• Highly recommended for all marketing plans.

How can you get trademark rights?

• First to File versus First to Use – The “race” to the Trademark Office

• The first to file the application, on an intent to use basis, locks in the priority to the mark, on a national basis, as of the date of filing.

• Filing is available on a 24/7 basis, electronically.

• Nevertheless, a prior user of a similar mark can object to your mark.

Why Federally Register My Trademark?

• Presumption of ownership of valid trademark

• Presumption of exclusive rights to the mark, which can become incontestable over time

• Helpful to prosecute infringers

• Locks in rights to use the mark on a national basis even if you have not actually used the mark nationally. This allows you to expand over time.

• If in doubt, the registrant wins in an opposition proceeding.

Costs of Registration

• State trademarks: $50• Federal trademarks: $275-$325 per class of

goods and services. Subsequent filings, if needed, are approx. $100 each. Renewal: Approx. $300 per class of goods and services.

• International trademarks: $500-$2,000.• Attorney fees:To file and prosecute federal

application: approx. $500-1,000 if no objections or complications.

“Do it Yourself” Trademarks

• Go to www.uspto.gov (federal) and www.state.nj.us/njbusiness/start (state)

• At uspto.gov: Click “trademarks’ “search” “file online for “Principal Register”

• Issues: who is owner, date of first use, is mark in use or not, description of goods and services, penalty of perjury

• Also do Internet search for unregistered uses• Comprehensive trademark searches available by

vendors on line, e.g. Corsearch, Thomson & Thomson.• International and state searches.

How can a trademark lawyer help you?

• Clear. A lawyer can advise you on whether your proposed mark is already in use by a third party before you invest in it.

• Help pick a mark. A lawyer can review other marks and counsel you as to the choice and value of the proposed mark.

• Advise. A lawyer has access to information you may not, and can advise you according to the law.

• File and prosecute trademark applications.

• Acquire marks by licensing agreements.

• Handle infringement actions.

• Clear advertising.

Other intellectual property areas

• Domain names• Not in itself a “trademark” if just an address. • Trademark registration can give you superior

rights to a domain name.

• Right of Publicity • A right of publicity is an individual’s right to

control and profit from the commercial use of her name, likeness and persona.

• Person’s name and likeness may also establish trademark rights.

Other intellectual property areas

• Trade Secrets• A trade secret is a “formula, pattern, device or compilation of

information which is used in one’s business, and which gives him an opportunity to obtain an advantage over competitors who do not know or use it.”

• Examples of a trade secret:• Product pricing• Customer list • Market strategies • Company finances • Benefits of trade secrets

• Protecting your trade secrets can give your business an advantage by preventing your employers from obtaining your future plans and your customer information.

• Must be kept confidential

Copyright

• Copyright• Copyright protects published and unpublished works which

are fixed in a tangible form. • Examples of copyrightable works:

• HTML coding or computer graphics.• Computer programs• Books, articles, texts, manuals, proposals, and other literary works• Illustrations or designs• Films, transparencies, audio broadcasts

• Benefits of Copyright Protection• The owner of a copyright gains several distinct rights:

• The right to reproduce• The copyright owner has the exclusive right to make

reproductions of the work.• For example, another would not be allowed to distribute

unauthorized photocopies of your book or script.

Copyright

• Benefits of copyright protection, continued:• The right to derivative works

• The copyright owner has the exclusive right to adapt or transform the work.

• For example, only the copyright owner could adapt a book into a screen play, or create an improved version of copyrighted software.

• The right to distribute copies• The copyright owner has the first to the first sale of the

copyrighted work, and the right to lease or rent the work.• For example, an author has a right to sell her book to

bookstores. However, the author would have no additional right to control the distribution of the book after this initial sale.

Copyright

• Benefits of copyright protection, continued:• The right to perform

• The copyright owner has the exclusive right to perform a work publicly.

• A renter of the work could not display the work in public without permission.

• The right to display • The copyright owner has the exclusive right to display a

work publicly.• For example, an artist would have the right to display

a sculpture in public.

Copyright

• How can copyright work for you?• Each of these rights can be transferred, licensed, or sold. Each

of these rights, therefore, has a monetary value. • For example

• The right to perform allows a work to be licensed to parties, extremely important in the film industry and other industries.

• The right to first sale is an extremely valuable right in the book publishing industry.

• What kind of work can copyright protect? • Copyright protects broad categories of works. These include:

• Literary and dramatic works, musical works & sound recordings, artistic works, choreography, pictorial and sculptural works and architectural works.

• Who can register for copyright protection?• The author of the work, or anyone who derives their rights

from the author of the work, can register for copyright protection.

Copyright

• How can you get copyright?• Copyright exists in the author of the work automatically

when a work is created, meaning when the work is fixed in tangible form for the first time.

• Who is the author of the work? The company or the employee or the contractor?

• Therefore, registration with the United States Copyright Office is not required, but has many benefits.• Proof of validity of copyright in litigation if made within five

years of publication• Availability of different forms of damages if a copyright is

infringed• Protection against importation of infringing copies

“Do It Yourself” Copyright

• The Copyright Office maintains several different forms for different categories of works. Filing of this form along with a fee achieves effective registration. www.copyright.gov.

• Fees: $35 per work, filed electronically.

Copyright: Works Made For Hire

• The employer is the “author” of the work performed by employee within scope of employment.

• If not an employee or the work is made outside scope of employment, the work belongs to the individual, not the employer, unless it is a certain type of “work made for hire” and it’s under written agreement, signed by the parties.

Copyright: Watch out!

• Determining whether you need a license or not to use third party works.

• Is it “fair use?”• Do you own the all rights to work product

from others?• Downloading from the Internet.• Making photocopies and compulsory

licensing.

QUESTIONS?

THANK YOU FOR ATTENDING THE CONFERENCE!

Lisa KrizmanLaw Office of Lisa K. Krizman, LLC

1930 East Marlton PikeCherry Hill, NJ 08003

lisakrizman@krizmanlaw.com856 751-4131