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Monthly Archives: April 2017

Understand the Dangers of Commercial Leases

A commercial lease for office or retail space is a serious commitment for your business. They are typically long-term contracts lasting at least five years, the rent is often your second-biggest monthly expense after payroll, and the rights and limitations in your lease agreement have major effects on your ability to expand, contract and relocate your business.

Companies large and small can make major mistakes when planning for new space and negotiating the lease – these are the most common.

1. Not Allocating Enough Time

Conventional wisdom in the commercial real estate industry is to allow six to 12 months to complete a deal for less than 10,000 square feet and nine to 18 months for larger deals. The lead time is required for the various complicated steps in any business relocation – finding the right business attorney, due diligence of possible locations, negotiation of the lease, planning and design of your new space with an architect and engineer, bidding out and awarding the construction work required to customize the space (known as a “fit-out”), obtaining construction and business permits, and completion of the fit-out itself.

Just as important, the lease commencement date needs to take these steps into account. Otherwise, you’ll be paying rent for the new space before you’ve moved in. You’ll also need to coordinate your plans with your current landlord by giving sufficient notice of your move and negotiating a rent deal for any period that you remain in your current space beyond the term of your current lease (known as a holdover).

2. Insufficient Planning

Closely related to the lead time issue is the failure to adequately plan your new space. The way you want to do business should drive the location and design of your space; your real estate shouldn’t determine how you do business.

You need to think about how much space you need and whether you need any specialized space (reinforced floors for heavy equipment? a data center? backup power?). An experienced architect and a good tenant broker/representative can help your senior management consider all the right issues, including:

  • How will you coordinate moving all your business functions, particularly technology and your employees?
  • Who will make decisions about the ongoing project (a committee or one person)?
  • What corporate image do you want to project, and what kind of office space will convey this image?
  • What ratio of collaborative office space vs. private office space makes sense for how your business is run?
  • What is your budget?
  • What space plan makes sense for possible growth? (e.g. How much additional space might be needed in the next three to five years? Or is there a possibility of downsizing?)

3. Lack of Representation

There is no such thing as a “standard commercial lease.” Landlords – the building owners and their property managers – do not have your best interests in mind when they draft a lease, and business real estate deals have none of the legal consumer protections of apartment leases. The financial terms and legal provisions of most commercial leases are specialized and hard to understand, and most business people lack the background to effectively review and negotiate a lease agreement.

You’ll need an experienced commercial real estate lawyer admitted in the state where the property is located – preferably one who has dealt with your landlord (or your landlord’s lawyer) in prior deals. You should also seriously consider engaging a tenant broker/representative – a consultant that represents only commercial tenants (and NOT building owners or property managers) in leasing deals. A good tenant rep will know the condition of your market (like the current “market rent” per square foot in your city), the present and future vacancies in the buildings you are considering, and the best way to deal with the landlords of those buildings.

4. Lack of Due Diligence

The physical and legal condition of your company’s space can significantly affect your business operations, and you need to protect yourself with an investigation of the facts. In addition to reviewing the proposed lease, your real estate lawyer should also:

  • Confirm that the building’s zoning will permit your company to conduct its operations as intended.
  • Engage a title company to produce a report of the building’s liens, mortgage lenders and any pending legal claims.

In addition to planning and designing your new space, your architect and engineer should inspect the building’s electrical, plumbing and HVAC systems and review the space’s compliance with building codes, fire and safety regulations, and disabled person access laws. Your architect should also confirm that the leased space actually contains the square footage stated by the landlord.

5. Not Understanding Crucial Lease Provisions

Term

This is the length of the lease – the commencement and termination dates. Like everything else in a commercial lease this not as straightforward as you think.

  • Does the term start when you sign it or only after you commence operations in the space (i.e. when the fit-out construction has been completed)?
  • Even if rent isn’t payable until you move in, is your business on the hook for building insurance and maintenance charges starting at the signing?
  • Near the beginning of the lease, you’ll see a clause entitled “Term.” This clause describes the length of your lease and specifies the starting and ending dates.
  • How can the Term be extended – does it happen automatically or only after a party gives notice?
  • Are there circumstances when you or the landlord can end the Term early?

Calculation of Rent

The calculation of rent and other tenant charges in most commercial leases is complicated and can result in some unpleasant surprises during the lease term if the terms aren’t fully understood at the beginning.

Some of the common rent structures are:

  • Single net lease or net lease: The tenant pays only its portion of the utilities and property tax (calculated by the percentage of space leased in the building), while the landlord pays for all maintenance, repairs and insurance.
  • Net-net, or double net lease: The tenant is responsible only for its portion of the utilities, property taxes and insurance premiums for the building (again, based on the percentage of space leased in the building), with the landlord paying all maintenance and repairs.
  • Triple net leases: Tenant pays its portion of all costs of the building, except the landlord is generally responsible for structural repairs.
  • Full service gross, or modified gross lease (also called modified net lease): The tenant and landlord agree to split structural repairs and operating expenses (property taxes, property insurance, common area maintenance and utilities), with the tenant’s portion called “base rent.”
  • Percentage lease: Used almost exclusively for leases of retail space, this type of lease means some portion of the rent is calculated as a percentage of the tenant’s customer sales at the property.

In addition, you need complete clarity on how and when rent can be increased – both on an annual basis and cumulatively over the entire Term.

Security Deposit

Unlike a standard apartment lease, a commercial landlord can demand more than 2 months’ rent in cash. It can be whatever amount the landlord thinks it needs based on the creditworthiness of your business. If you are a brand new business without an operating history this will be a big issue for the landlord.

The landlord can also demand a security deposit in the form of a Letter of Credit issued by a bank. With an LC your bank sets aside a portion of your cash so that the landlord has an easy remedy if you breach the payment obligations under the lease (the landlord doesn’t need to sue you in court).

Improvements and Alterations

If the new space needs to be renovated or customized for your operations (a “fit-out”), the lease needs to specifically address these issues. You’ll need to negotiate who does the space design work, who does or manages the construction, whether there are hard deadlines for completion and who pays for it. It is also important to reach agreement on any rent payment obligations during the fit-out.

Parking and Signs

Day-to-day details can also be important in the lease. Does renting space in the building entitle you to a certain number of parking spaces? Do you need to pay for additional spaces if you need them. Where can you install signs identifying your business? Do they need to be designed in a certain way?

Disputes

If your business and the landlord get into a dispute, how will it be resolved? Is there a required period of negotiation? Do the parties need to submit the dispute to mediation (usually cheaper than court) or can the parties sue each other immediately? Are rent obligations suspended during a major dispute? Can you withhold a portion of the rent that reflects the cost of the disputed issue?

6. Not Focusing the Lease Negotiations on Key Business Issues

Prospective tenants should not focus only on the rent and other payment terms – other key lease provisions can be much more significant to the future of your business. It’s also important to be aware of State or City specific factors. For example, a qualified contract attorney in NYC will be much better suited to answer your questions than an attorney in Oregon. It’s important to ask and resolve the following questions:

  • How much notice does the landlord entity need to give if it wants to relocate your space to another part of the building?
  • Can you sublet or assign part of the lease if your business contracts?
  • Can you acquire additional space in the building if your business expands?
  • Can you cancel the lease and move to another building if there’s insufficient available expansion space?
  • Can you extend the term if you want to stay in the building?
  • Can you assign the lease to a buyer of your business?
  • Is the lease still valid if your business has a change of control?

7. Underestimating Negotiation Leverage

A tenant representative will understand the current condition of the real estate market in your city and the current situation of your particular landlord. For example, does the landlord need tenants? Is it about to lose a major tenant which will cause a significant vacancy in the building? Or does the landlord have a fully leased building for the indefinite future? Without this information, your company won’t understand how much negotiating leverage you may have and the range of incentives your landlord may be willing to offer to sign a new tenant.

Landlords will commonly agree to:

  • Periods when no rent is payable (so called “free rent”).
  • Periods of discounted rent.
  • Contributions to the costs of the tenant’s fit-out of the space.
  • Make certain improvements to the building that the tenant wants or needs.
  • A cap on annual rent increases (including the portions tied to building expenses).

In addition, landlords can often be persuaded that no personal guarantee will be required from the tenant’s owners or major shareholders to back up the payment obligations in the lease. Or if a guarantee is required at the beginning of the lease, landlords will sometimes agree that it expires a few years into the initial term once a you establish a reliable payment history.

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Simple Guide to Understanding a Design Patent

What is a Design Patent?

A design patent is a type of patent that protects the way a manufactured product looks. However, this patent doesn’t protect the way a product works or the mechanical structure. Design patents can help protect businesses and their intellectual property rights by creating design protection and allowing the use of adding “patent pending”, “patent issued”, or “patented design.”

New designers and makers who want to protect their future designs should consider applying for design patents before bringing their products to market so a competitor does not knock off your design and sell your design to the public.

A design patent is a right of exclusion, meaning patent holders have the right to exclude others from using their designs in commercial or personal works. Finding the right attorney with the right knowledge is crucial, and it may be best to find one in your city. Whether you find an IP attorney in Los Angeles who understands fashion industry designs compared to one in San Francisco who might understand software. You can find design patents everywhere that protect the way products like jewelry and soft drink containers look.

You Can’t Get a Design Patent for Something That People Can’t Use

Although design patents don’t cover the way a product works or functions, you can’t get a design patent for an item that people can’t use. For example, you can’t apply for a design patent for a product that you get from a method, such as a photograph you take or a piece of art you paint. Additionally, the design itself needs to be repeatable.

Instead, the U.S. Patent and Trademark Office (USPTO) issues design patents based on a working object’s ornamentation. If you make shoes, you might get a design patent for the type of design you give to the strap on a pair of clogs.

You Can Get a Utility Patent, Too

Getting a design patent doesn’t prevent you from getting a utility patent. A utility patent protects the way people use something or how a product works and must be novel, useful, and nonobvious. It also prevents others from making, using, selling, or importing into the United States any product with functions covered by the claims in the patent regardless of the appearance and design. Historically, utility patents have been stronger and more popular than design patents.

If you’re making something that’s unique in design and function, you might want both patents as a complete patent strategy. Design patents can be somewhat easier to get than utility patents, take a shorter amount of time, and they’re also less expensive to receive.

Based on very old studies on design patents, using rules potentially too old to be relevant, it has been suggested that 7 out of 10 design patents litigated were invalid. However, if there is a large amount of design patents, there can still be a lot of protection for inventors.

You may also want to consider getting a copyright if you believe the object may be a work of art such as a painting, song, book, or sculpture or if the object is a physical article that may be trademarked.

Why Are Design Patents Important?

Protecting your intellectual property rights should be a top priority. Design protection allows you to continue to make a product while preventing other companies from copying the design. You can keep more market share for your product because you can protect your product’s unique appearance.

Additionally, many companies are known based on their designs. Design is part of your brand, and you don’t want other companies to water down your brand reach. High-end fashion designers could lose millions of dollars in revenue without design protection because anyone else could create the same design aesthetic.

When Do You Need to Get a Design Patent?

You need to have a design you can protect to successfully file for a design patent. Here are some points you need to think about:

  • Ornamentation: The surface of the product features distinct ornamentation.
  • Structure: The design bears an exact structural design.
  • Both Ornamentation and Structure: The product is unique in both ornamentation and structure.

In order to quality for a design patent the object must be:

  • New with no identical design that exists in prior art
  • Satisfy the ornamental standard
  • Nonobvious from existing design(s)
  • Must be visible to the user when the product is in use
  • Original to the inventor(s).

There are also various situations when you may want to consider digital design patents. App developers often patent their icons to keep other developers from using them. Companies can also patent screen layouts and fonts.

Interestingly, the first digital design patent given in the United States gave intellectual property protection for a font. However, keep in mind that digital design patents only protect the design when they’re shown on a computer screen.

Design patents can also be useful at preventing knock-offs and counterfeits for high fashion items that can grow popular very quickly.

Points for Applying

If you feel that your product satisfies the points above, you can apply for a design patent. Here are a few important points to keep in mind:

  • While you won’t find a set due date when applying for design patents, you’ll want to apply for one as soon as you can. The USPTO gives patents on a first-come, first-serve basis. If another business applies for a design patent that you want, the USPTO will reject your application.
  • Don’t waste time and money. Do a patent search and look for other patents like your own.
  • Make sure that your product is truly unique so that you can avoid people or businesses claiming you infringed on their design patents.

Examples of Design Patents

Companies often get several design patents as they continue to create new products.

 

Patentable Designs

 

The 1998 iMac’s shape acts as an example of a unique design. The iMac’s trapezoid appearance sets it apart from its competition, which became a key part of its success. Automakers also get design patents for many aspects of the vehicles they design. Unique hood ornaments have become part of the auto culture. Car enthusiasts love them, and they help automakers brand their products.

 

Patent Infringement

Apple has won patent infringement lawsuits against companies that copy its many unique designs, including the iMac CPUs and the iPhone. If you have a design patent and another company infringes upon your patent, you can sue for damages.

In 1872, the U.S. Supreme Court came up with the “ordinary observer” standard in a case about a silverware handle design. In 1984, this decision was reversed when the Federal Circuit determined that the design patent had to meet the “ordinary observer” standard and show the accused product adopted the novel point of the patent design. However, since September 22, 2008 the 1984 ruling was reversed and the Federal Circuit maintained that the “ordinary observer” test should be the only test for design patent infringement in Egyptian Goddess v. Swisa.

The “ordinary observer” test asks the jury to look at the infringing product, look at the design patent, and determine if there is infringement. Previously the jury focused only on the point of novelty and not the entire drawings. Overall, the design patent became stronger since it asks an “ordinary observer” to just determine if the infringing product is a copy of the design patent.

Think about it this way: Would consumers look at a product and think that they’re buying the original? The legal system uses “ordinary observers” as a benchmark instead of experts who are more likely to spot very fine details.

With the low cost of the design patent and increased strength from the 2008 ruling, some patent attorneys have been recommending that design patents be strongly considered when filing for a utility patent.

When Does a Design Patent Expire?

Design patents last for 15 years if filed on or after May 13, 2015 or 14 years if filed before May 13, 2015 with the date starting from when you receive the design patent.

If your design patent expires, you can no longer protect your product’s design. You can always ask to get an expired patent reinstated as long as no one else has claimed your design. However, a utility patent has a 20-year period if filed on or after June 8, 1995 attached to it with increasing maintenance fees at 3.5, 7.5, and 11.5 years after the issue date to keep the patent out of public domain.

Common Mistakes

Companies sometimes make mistakes when they apply for a design patent.

  • Not doing patent research: You’ll waste money trying to apply for a design patent when someone already owns the intellectual property rights to the design.
  • Not protecting how the product works: If your product is unique in the way it works and its design, you need a utility patent. You can file a provisional utility patent, which also lets you use the words “patent pending” when describing your product, until you file for a full utility patent.
  • Not including specifics: Unlike utility patents, design patents depend on drawings. If your drawings don’t have enough detail in them, the USPTO might turn down your application.
  • Not speaking with a lawyer: A lawyer can help you file a design patent. Look for a lawyer who has experience with intellectual property.

Frequently Asked Questions

  • What does a design patent cover?

The design patent covers a product’s appearance or its unique structure. The protection is more or less limited to exactly what is in the design patent drawings. This means that the inventor should file a new design patent if there is even a slight unique variation since it may not be covered in the original design patent.

  • How long does the design patent application process take?

In most cases, the USPTO gives out design patents within 12 months. It is possible that it can be awarded in 6 to 9 months. In contrast, it may take 3+ years to get a utility patent.

  • Can there be similar design patents?

Remember, a design patent covers an exact appearance and unique structure. Similar patents can be present, but a company can’t infringe on a design patent that already exists by making something that closely looks like a competitor’s product. Similar design patents can also exist for non competing products.

  • Should you sue over design patent infringement?

You can sue another company for damages if that company steals your design. You can also send a demand letter that asks the company to pay you a license fee.

  • What is a patent reissue?

A patent reissue takes place when you make changes to your original design patent application. A reissue is usually done with updated patent drawings.

  • How much does a design patent application cost?

As of January 2017, the design patent cost just for the application is $180. However, the USPTO charges small businesses only $90, and smaller businesses pay only $45.

  • What are some additional differences between a utility and design patent?
    • Design patent applications have only a single claim whereas utility patents applications can have multiple claims.
    • Filing for multiple design patents is common since even the smallest amount of variation in designs should have a new design patent whereas different utility patents need to be more distinct. However, you do want to avoid double patenting which is when a single person patents multiple patents for the same exact invention.
    • Foreign priority may be in effect for utility patent applications 1 year after the first filing for any country in the Paris Convention whereas design patent applications receive 6 months.
    • Design patents cannot claim priority to a provisional patent application
    • A Request for Continued Examination (RCE) may only be filed for utility or plant patent applications. A Continued Prosecution Application (CPA), which has a similar function as RCE, may be filed for a design patent application, but not for a utility application.
    • If a utility patent application is filed on or after November 29, 2000, it must be published whereas design applications are not published.
  • Can there be design patent and trademarks protection on the same product?
    • Yes, however, it is important to note that in order to infringe on a trademark, the product must cause confusion, mistake, or deception with the public. The courts may also look into the buying habits of the public and sales methods of the business. In contrast, a design patent just needs to pass the “ordinary observer” test above.
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What Are the Types of Patent Infringement?

The various types of patent infringement occur when a person or business uses parts of a patented idea, method, or device without permission. Patent infringement is also known as patent violation or even stolen ideas. It could involve either using or selling the patented invention or idea. Before you can sue someone for patent infringement, you must figure out who is at fault. Depending on where you live you will want to hire a qualified professional with specialized knowledge, whether you’re looking for a patent attorney in San Francisco with experience in software patents or one in Texas with perhaps manufacturing experience. It’s not always as obvious as you might think. Understanding the different types of patent infringement helps to determine who is accountable.

Direct Infringement

Making, using, selling, trying to sell, or importing something without obtaining a license from the patent holder is considered direct patent infringement. The offender must complete this act willfully and within the United States.

Indirect Infringement

Indirect infringement includes contributory infringement and inducement to infringe a patent. Under these terms, even if a company isn’t the one that originally infringed on the patent, that company can still be held accountable for patent infringement.

Contributory Infringement

This type of infringement involves the purchase or importation of a part that aids in creating a patented item. To prove contributory infringement, one must show that the component’s main use would be to create a patented item. A generic item that has other uses usually doesn’t qualify in proving contributory infringement.

Induced Infringement

This occurs when a person or company aids in patent infringement by providing components or helping to make a patented product. It occurs through offering instructions, preparing instructions, or licensing plans or processes.

Willful Infringement

Willful infringement exists when a person demonstrates complete disregard for someone else’s patent. Willful infringement is especially damaging to defendants in a civil suit. The penalties are much higher, and typically defendants must pay all attorney and court costs if they are found guilty.

Literal Infringement

To prove literal infringement, there must be a direct correspondence between the infringing device or process and the patented device or process.

Doctrine of Equivalents

Even if the device or method doesn’t exactly infringe a patent, a judge might find in favor of the patent holder. If the device does basically the same thing and produces the same results, it could be an infringement.

There are five ways to justify a case of patent infringement:

  1. Doctrine of Equivalents
  2. Doctrine of Complete Coverage
  3. Doctrine of Compromise
  4. Doctrine of Estoppel
  5. Doctrine of Superfluity

Sometimes the end user is not even aware that he or she is using a patented item unlawfully. Other times, there are too many people using the item to sue all of them. Rather than suing end users, it might be best to sue those who are knowingly trying to infringe on a patent.

Types of Patents

A person files a patent application after he or she has created an idea or invention. This prevents others from profiting from it. After one files for a patent in the United States, you receive a notice and that is how to get a patent pending. During this process, the United States Patent and Trademark Office (USPTO) decides whether to approve it. This can be a long process, taking up to five years. Following are the types of patents available:

Utility Patent

  • Most common type of patent
  • Related to technology such as mechanics, chemistry, and software
  • May include drawings, charts, and software
  • A very detailed description of the patent is always necessary

Design Patent

  • Only exists in the United States. In other countries, designs aren’t patented.
  • Function doesn’t matter for design patents
  • Typically, only a drawing of the design is necessary when filing a design patent application

Plant Patent

  • Only relevant for patents that involve plants such as flowers
  • A florist may patent a type of hybrid flower

In the United States, patents protect companies from losing billions of dollars to competitors. For example, a patent protected the creators of the drug Lipitor, which resulted in 12.7 billion dollars in sales.

Patents exist all over the world, but the laws vary by country. For example, in India, a patent gives the owner power over everything about that idea or object.

Enforcing a Patent

The patent office issues patents, but it does not enforce them. That job is left up to you. The first step is typically to ask the infringing person or company to stop. If that doesn’t work, the next steps depend on the country. In Canada, for example, most patent cases take place in the Superior Court of the Provinces or in the Federal Court.

Some important aspects of enforcing a patent include the following:

  • Patent cases are civil, not criminal, and are heard at the federal level
  • Damages are typically monetary and include an injunction to prevent further use of the patented idea or item
  • The scope of the patent clearly outlines the rights of the person who owns the patent

It’s important for you and your company to watch your competitors to make sure no one is infringing on any of your patents. Some people choose to hire a third party to do this.

It’s also important to watch upcoming technology. You can save time and money by stopping any patent infringement attempts before they are completed.

If you believe someone is infringing your patent, proving it is a two-step process.

  • Evidence must show that the infringer copied all or part of the patent
  • Evidence must show any valid parts of the patent where infringement exists

The defense typically will challenge the patent’s validity. The capabilities, rules, and regulations vary by country.

The defense may try to prove that the original patent was not valid based on a previous idea or patent. It could be considered invalid because of a failure to include every inventor in the patent.

Several strategies are necessary and important to win a patent infringement lawsuit.

Defining Patent Infringement: Method versus Apparatus

Patent infringement means unauthorized use of a patent. “Use” may sound like a simple term. Unless you are specifically trained in patent infringement, it’s not easy to define.

According to 35 U.S.C. 271(a) (2000), “[Whoever] without authority makes, uses, offers to sell, or sells any patented invention, within the United States or imports into the United States any patented invention during the term of the patent therefore, infringes on the patent.”

In the past, courts have defined the term “use” liberally. This has made patent infringement difficult to prove.

The nature of the claim determines how the courts handle a case. It’s much different for a process or method versus an apparatus.

  • To consider a process as patent infringement, it must actually be performed
  • An apparatus claim involves the physical item and not necessarily what it can do. Owning or possessing the object is not always patent infringement.
  • The sale of an object or apparatus that can do a patented method does not qualify as infringement
  • There are fewer limitations when claiming patent infringement on methods than on apparatus claims.

Federal Court Opinions: Method versus Apparatus

Infringement on a method has a smaller scope than infringement on an apparatus.

Joy Technologies, Inc. versus Flakt, Inc.

The federal government disagreed that the sale of an industrial plant that the defendant created to use a patented system was patent infringement. If the process was later performed, it could be patent infringement. The sale of the equipment was not considered infringement until the equipment was actually used.

NTP, Inc. versus Research in Motion, Ltd.

The Federal Circuit made it clear that the infringer must sequence the steps exactly for patent infringement to exist. In this case, if the infringer did even one step of the process outside of the United States, the court did not consider the method patent infringement. When the system isn’t used in its entirety, it’s not infringing on the patent. However, the court did find infringement when the infringers used the system completely within the United States.

Centillion Data Systems, LLC versus Qwest Communications International

The courts decided that infringement only occurs when the system is used and the invention put into service. The infringing party must apply the system or method to cause the end product to benefit the user.

Differences for Apparatus Claims

  • Even if the device can do things besides its intended use, it is still patent infringement
  • Direct infringement occurs when someone tricks the owner into selling a machine or apparatus
  • The courts vary in their decisions when an apparatus claim falls into the method category or vice versa

Patent Infringement Litigation

  • Litigation may aim to stop the use or activities of a patented idea or item
  • Patents are typically considered intellectual property and tried at the federal level
  • An infringement case has to be brought to court within six years of the alleged infringement
  • Typically, the case is overseen by a judge, as opposed to determined by a jury
  • The patent holder bears the burden of proof, which means the evidence must favor the patent holder

Judging Patent Infringement

Judging patent infringement is a two-step process.

  1. All relevant patent documents are analyzed in terms of the infringement claims
  2. These claims must be tested to see whether they actually describe the alleged infringement

Penalties for Patent Infringement

When someone is found guilty of patent infringement, the penalties typically include monetary relief to the patent holder. The most important of these is compensatory damages. These cover the patent owner’s lost profits because of the patent infringement. The amount of these damages is set after the value of the patent has been determined. Damages may also include the actual money received by the infringer.

The patent holder is also eligible to receive court costs and attorney fees that were paid to take the infringer to court.

If a defendant is found guilty of deliberate infringement, the patent holder is eligible for increased damages. These damages can be up to three times the normal compensatory damages. These damages can only be claimed from the date the patent is issued, and the claim can only go back six years prior to the filing of the infringement claim.

Injunctions are another type of penalty for patent infringement.

Preliminary Injunction versus Permanent Injunction

  • A judge may grant a preliminary injunction at the beginning of the case if the judge believes the patent infringement will cause hardship to the patent holder
  • If patent infringement exists, then the judge may grant a permanent injunction for the patent infringer to stop activities

Patent Infringement in India

For infringement disputes in India, the court levels start with the District Court, then move up to the High Court, and finally the Supreme Court of India. These disputes are handled similarly to those in the United States. After the filing of a suit, a hearing is held where the district court reviews the evidence.

If the case deals with both invalidity and infringement, it is heard by the high courts. Furthermore, a specialized board, the Intellectual Property Appellate Board, hears all the appeals related to patent infringement.

In India, the process goes as follows:

  • Everyone involved is properly notified
  • Before the trial begins all the evidence is presented by both parties
  • After the decision, both parties can appeal to the IPAB

How to Avoid Patent Infringement

Spending money to avoid patent infringement could save you or your company a lot of money in the future. There are many reasons to avoid a patent infringement lawsuit.

Cost

Lawsuits are expensive, but patent lawsuits tend to cost even more than traditional ones. Many cost over a million dollars in legal fees alone. If you are the defendant and lose, you may be required to pay court costs and the legal fees of the person who accused you of patent infringement.

Time Consuming

If you are sued for patent infringement, you pay with both your time and your money. Even though the lawyers do most of the work, you will still spend a lot of time appearing in court and working with the lawyers to attempt to prove your innocence.

Injunctions

The accuser may ask for a preliminary injunction that could hurt your business even before the judge gives the verdict. Specifically in India, to get an injunction, the accuser must prove that the claim has validity, there is irreparable damage involved, and that the accuser will be greatly inconvenienced if it is not granted.

Customer Concerns

The owner of the patent may also go after your customers. Even if you have not knowingly committed patent infringement, you could lose customers and damage your reputation during the process.

Recreating Your Product

If you are found guilty of patent infringement, you typically will have to start completely over in your process for your product or idea. You will lose valuable time and money. Finding alternatives from the beginning could be much cheaper.

Avoiding Patent Infringement: Start Early

Don’t wait until you’ve already created a product to try to find relevant patents. You may want to consider outsourcing this step to experts who know how to find relevant patents for specific designs or ideas.

  • Perform an online patent search by going to the United States Patent and Trademark Office or using PatentHunter
  • Make sure to remain diligent about reviewing the competition to decide if any parts are similar or patented
  • Check the packaging of competitors’ products or the product itself for patent numbers to see what parts are covered by the patent
  • Review all patent numbers by doing a patent number search
  • As a last resort, contact the competitor or have a third party do so

Avoiding Patent Infringement: You Can’t Play Dumb

Intentionally ignoring others’ patent information won’t save you in court. In fact, it will probably cause you more problems.

Avoid Patent Infringement: Perform an Initial Screening

Once you have found all the relevant patents related to your product, it’s time to send them to a lawyer for review. Since this process can be costly, make sure you do an initial review to pull out any patents that have expired. Also, find out if the patent owner has paid all maintenance fees, or if any of the patents aren’t actually applicable to your product.

A utility patent normally expires after 20 years. A design patent usually expires after 14 years. There are typically maintenance fees associated with patents, and if they aren’t paid, the patent is no longer valid. Don’t waste your money by having your lawyer review patents that have expired.

Before you send any patents to your lawyer, you should realize that internal communications about patents are not always covered under attorney-client privilege. Be cautious about what you say during these communications.

The Next Steps With Your Attorney

If there is any question that you could be infringing on a patent, it’s best to work with your patent attorney immediately. Request a preliminary patent infringement review. This is not a formal opinion, and it costs less than a full review.

If it is necessary, the next step is a formal patent infringement check by your patent attorney. Your attorney will check the USPTO and look for any validity concerns with the patent. Although a formal review is more expensive, it’s much cheaper than being sued for patent infringement.

If patent infringement is possible, then it might be worth the time to prove any further validity issues. These might include earlier technology or other patents which would discredit the patent.

  • Patent invalidity occurs when you can prove that the patent should not have been issued, therefore deeming it invalid
  • Inequitable conduct might prove a patent invalid if there was deception involved in the original patent
  • Patent misuse can invalidate a patent if the patent owner uses it to violate antitrust laws

Common Myths Business Owners Believe About Patent Infringement

Myth: We won’t get sued.

  • Some company owners believe that they can get away with using a patent because their company is small and it will go unnoticed
  • If the patent is owned by a small company, businesses wrongly believe that person or company won’t have the means to sue an infringer

Reality: It’s not worth the risk.

  • Patent lawyers are marketing and doing the homework for businesses, making lawsuits more accessible. Even small companies are at risk of being sued.
  • There’s always a chance a small company could be bought by a larger company, and that company will have the resources to find applicable patent infringement
  • Patent lawyers often take cases on contingency, which means there are little or no upfront costs for small businesses

Myth: We know every patent in the industry.

  • When people feel that they are experts in their field, they assume that if there is a related patent, they already know about it.

Reality: It’s impossible to know every patent.

  • With new technology created every day, a new patent could be filed without knowledge of others in the industry
  • A patent may exist for a product that isn’t commercialized and therefore unknown to competitors

Permissible Infringement

There are some times when infringement is permissible or at least excusable. If the patent holder intentionally delays bringing a suit against the infringer, the infringer could win the case. There are four other times when infringement is permissible.

  • The owner authorizes the sale of a patented article, allowing a person to sell it to someone else
  • An implied license is given when there is also an authorized sale
  • A person can repair or replace any part of an item that breaks as long as that specific part is not patented
  • A person can infringe a patent if the purpose is to experiment with the product

Patent Infringement Insurance

If you get sued for patent infringement, it could cost you a great deal of money. you could see big costs. If someone copies or steals parts of your patents, those court costs can also be high.

If you could be at risk for being on the offense or defense of patent infringement, then you may need to consider patent infringement insurance.

You have the choice of two types of policies:

  1. Defensive policies if you are being sued for patent infringement
  2. Offensive policies that cover part or all of your court and attorney costs if you need to sue someone for patent infringement

Most of the time, patent infringement insurance is not worth the investment. There are high costs associated with the insurance, including insurance premiums and copays. The money you spend on insurance is usually better spent on developing technology or investing in your company.

For example, patent insurance usually costs between 2 and 5 percent of the amount of coverage. If you want a million dollars in coverage, it could cost up to 50,000 dollars. You might also have to pay a copayment of 15 to 25 percent of any lawsuit award covered by the insurance. That means if the suit costs one million dollars, you will still owe up to 250,000 dollars.

Defensive patent insurance requires a strict process for approval. The insurer will look closely at your patent portfolio for conflicting patents. If there is any chance you could be sued for patent infringement, they won’t cover you. These disadvantages are also true for offensive patent insurance.

Some Comprehensive General Liability Insurance may offer types of insurance that cover aspects of patent infringement, such as intellectual property infringement.

Patent infringement is a complicated part of the legal system. It’s important to work with an attorney, whether you are on the defensive or the offensive end of patent infringement. You can post your legal need here, whether it is a patent infringement or another business legal need, and you will instantly receive free custom quotes from the top 5% of lawyers on UpCounsel. Our lawyers come from some of the most prestigious law schools such as Berkeley, Yale and Harvard.

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Guide to Utility Patent Requirements

What Are Utility Patent Requirements

To meet utility patent requirements, inventions must be novel, not obvious, statutory, and useful. They must also meet the United States Patent and Trademark Office’s written description, enablement, and best mode requirements. Utility patent requirements are more stiff than other types of patents, but they also offer the strongest protection. You can also find a utility patent example to help better understand the requirements. Inventors who hold a utility patent can stop other people and companies from making, using, importing, and selling their inventions.

Meeting the Novelty Requirement

An invention is novel if it’s different from other products in the marketplace, which are known as prior art. Prior art includes:

  • Publications and patents published before anyone developed the invention
  • Some patent applications filed before the inventor filed a patent
  • An invention that has an overseas patent

If the invention has all the same features as another product, it is not novel.

Meeting the Statutory Requirement (Promotion Before Approval)

An application may get rejected if the inventor shared information about the invention before filing a patent application. Before filing, it can’t be:

  • Known to the public
  • Described in any print publication
  • Described in another published patent application or issued patent.

Under the revised patent requirements of the 2013 America Invents Act, it’s acceptable for an inventor, person, or business to file for a patent within 12 months of sharing information about the invention. Anyone who waits longer than that cannot ever get a patent for that invention.

Many other countries do not have this rule. Applying before disclosure is the best way to get patents in the United States and abroad. If this isn’t possible, you should speak with a patent attorney who knows about experimental invention use.

Meeting the Statutory Requirement (Types of Invention)

To meet the statutory requirement, inventions must fall under one of the categories outlined in Section 101 of the Patent Act. It states that people may get a patent for:

  • Processes: a means of getting a result through steps concerning physical or chemical interactions
  • Machines: devices that carry out a set task
  • Articles of manufacture: single objects without movable parts
  • Compositions of matter: mixtures of chemicals or other materials

Some patentable inventions include:

  • Business procedures and methods
  • Machines and electronics
  • Fabrics and fabric designs
  • Sporting goods
  • Medicines
  • Computer hardware
  • Computer software that has “useful, concrete, and tangible” results
  • Man-made bacteria
  • Identified and isolated human genes

Here are some things that would fail the statutory requirement:

  • Data structures claimed without a computer or computer-readable media
  • Musical or literary works
  • Electromagnetic waves or signals
  • Software not connected to a process or physical machine

Courts can also declare “exceptions” to patentable subjects, such as:

  • Abstract ideas (this is important for software)
  • Laws of nature
  • Natural phenomenon

Meeting the Non-Obviousness Requirement

The Patent Act of 1952 made non-obviousness a requirement for getting a utility patent. An invention must be better than past inventions in a way that isn’t clear to other experts in the field. The technology and ideas behind it must come from real skill and innovation.

USPTO examiners don’t always agree about what is or isn’t non-obvious. To make a decision, they often look at other published patent documents and other prior art. But this doesn’t always work. One patent examiner may look at an invention and decide that anyone could have thought of it. Another examiner may look at the same thing and decide that it’s clever.

If the examiners find that the product is basically just two different things mixed into something new, they likely won’t accept it. A good patent attorney will help the inventor by saying that nobody else had ever thought to do that.

The examiner may also think about other factors. If the invention is more popular than similar products, it may count as being non-obvious because other inventors aren’t doing as well. It’s also likely that an invention is non-obvious if it has been a long time since the other products first came out.

Meeting the Utility Requirement

An invention must be useful to satisfy the utility requirement. Only utility patents need to follow this rule. A useful invention works the way its inventor claims it does, and it’s clear or certain that it’s useful for an exact purpose. Inventions must meet two types of utility:

  • Specific Utility: this relates specifically to the invention and how well it works compared to others in its category.
  • Substantial Utility: this utility must be real and instantly help the public.

In the past, inventions also needed moral utility, but this is less important now.

Although you don’t need to do this, adding a utility statement to your patent application can help you prove to the examiner that your invention meets the utility requirements.

Reasons an Invention Could Fail the Utility Requirements

  • The invention’s utility isn’t obvious. The applicant might not give enough information to help the examiner see how useful the invention is.
  • The claims of usefulness aren’t credible. If an invention claims to do impossible tasks, it won’t get patent approval. Patent applications are rarely rejected on these grounds because claims must be believed until they’re proven to be false.
  • It’s an inoperative invention. Inoperative inventions don’t work at all. An invention could still meet the utility requirement if it works poorly or only half as well as it should. It’s not easy to prove whether biological and chemical inventions work. For example, a type of medicine may intend to treat a disease, but nobody can test it on a large group of people before it’s patented.

Meeting the Written Description, Enablement, and Best Mode Requirements

A patent application needs a specification to prove three requirements:

  • Written description: the inventor can write about the invention in detail to show he or she made it.
  • Enablement: the inventor’s description needs to be detailed enough so an equally skilled person can make or use it without too much experimentation.
  • Best mode: the inventor can show what he or she believes is the best way to use the invention.

The specification must explain in detailed, clear language:

  • What the invention is and its attributions using an exact legal definition
  • How it was made
  • How to use it. Test data or hypothetical examples could show this.

Chemical and metallurgical invention applications often show the experimental data because it helps to describe the invention, including its process parameters (time, temperature, pressure etc.) and narrower preferred ranges. It may also have data that shows how well the invention works compared to prior art.

This written material should support any claims the inventor makes in the patent.

Frequently Asked Questions

  • Who can help me decide whether my invention is patentable?

A patent expert can help you decide if it’s worth it to spend your time and money on a utility patent. The first thing you should do is get a professional patent search. Next, ask a patent attorney to study the results, but keep in mind that it may increase your overall utility patent cost. Following these two steps is less costly than getting a utility patent.

  • Should my patent application include crude versions of my invention?

Your application should have any plan you had that would have worked, even if it is crude.

Including all versions of your work helps to protect your intellectual property. Otherwise, someone else could patent an invention that’s similar to your early works. Even if the product is cheaper and not as great as yours, it could become your competition. People might even wonder if your product is worth buying.

You don’t need to personally use each part of the patent. You may even decide to license your earlier versions to make extra money while you focus on the latest version.

  • Are there any other types of patents?

There are three types of U.S. patents. Utility patents are the most common.

There are also design patents which protect the way something looks. These are non-functional.

Plant patents protect new plant discoveries, including asexually reproduced plants and sexually reproduced seeds.

  • How long does a patent protect my invention for?

A utility patent protects your invention for 20 years from the date of filing, so long as you pay the maintenance fees. If your invention is a drug, medical device, or additive, you can get a 5-year extension. Related patent filings and the processing time can change how long the patent lasts. Before the Agreement on Trade-Related Aspects of Intellectual Property, utility patents had a shorter 17-year term.

Design patents have a shorter term of 14 years from the date of filing. Plant patents offer protection for 17 years.

  • Why would I apply for a provisional patent?

A provisional patent is a 12-month patent that gives an invention “patent pending” status. The inventor must apply for a non-provisional patent within that 12-month period or the patent is dropped. An inventor may also apply for a provisional patent before getting a non-provisional patent because:

  • It provides protection while buying time. During the 12 months, inventors may continue to work on their product, test its commercial potential, or try to raise money.
  • It’s cheaper. Under U.S. intellectual property law dating back to 8, June 1995, provisional patents are easier to pay for than non-provisional patents. Many inventors don’t have the money to pay for a patent right away. The USPTO filing fee generally costs between $65 and $260, and there is a $50 processing fee.

A person or company may file a provisional patent application up to 12 months after an invention is first sold, used publicly, or written about. It should have:

  • A cover sheet with:
    • The names and addresses of all inventors
    • The invention’s name
    • The attorney’s name (if there is one)
    • The U.S. government agency interested in the application
    • A statement that this is a provisional patent application
  • A detailed written description
  • Drawings of the invention and its function
  • The filing fee

Provisional patent application forms are available through the USPTO website.

  • How do I apply for a utility patent?
    • Complete a patent application. This will contain:
      • An abstract that summarizes your invention
      • A descriptive specification, including a summary of the invention summary and sketches of the concept, embodiments, variations on these, and earlier technology
      • One or more numbered claims at the end of the specification
      • A declaration that the inventor was the invention’s original creator
      • Filing fees
    • Submit the application to The United States Patent and Trademark Office (USPTO). This body grants, issues, and monitors all U.S. patents. Once you’ve filed your application, prosecution begins.
    • Wait for a USPTO examiner to study your application and compare it to prior art.
    • Receive a response from the USPTO. This could be:
      • Approval and a patent
      • A rejection or some or all of the claims
      • An objection which indicates a problem with the application
    • Decide what to do next. If you weren’t successful, you should consider the reasons given by the examiner when planning your next move. You could give up your patent or choose to try again by appealing, either on your own or with the help of a patent attorney. On a second rejection, you can appeal to the Board of Patent Appeals and Interferences. If you’re still rejected, you could take your case to the United States Court of Appeals for the Federal Circuit or pursue a civil action under 35 U.S.C. § 145 against the Director in the U.S. District Court for the District of Columbia.

It usually takes an inventor two to five years to get a utility patent.

  • What are the different types of utility patent applications?
    • Direct filed application: the first application filed for an invention.
    • From a provisional application: an application filed within a year of filing a provisional application.
    • From a foreign application: an application filed after filing an international patent application.
    • As a continuation application: a second application related to a first application not yet granted or abandoned.
    • As a divisional application: a second application made because the USPTO claimed your first application concerned two inventions.
    • As a continuation-in-part (CIP) application: a second application with a specification that incorporates the first application’s specification and new material.
    • As a national-stage application (or 371 application): a national phase utility patent application filed after filing a Patent Cooperation Treaty application.
  • Can I sell my invention once I secure a utility patent?

A utility patent is a good first step, but it doesn’t mean that you can sell the invention. It only makes sure your competitors can’t make, use, or sell your invention. After securing a patent, ask an attorney to conduct a freedom-to-operate analysis to check if you can sell your product.

  • What can I do if someone infringes on my patent?

You can bring a lawsuit against any person or business that doesn’t obey your copyright. The accused may try to argue that your trademark hasn’t been infringed or that your patent isn’t valid or true. According to the Patent Act, all patents are assumed to hold true, so the burden of proof is on the accused. It doesn’t matter if the person or business didn’t know about your patent or feels like he or she made the invention separate from yours.

  • What is the exhaustion doctrine?

The exhaustion doctrine states a patentee can get just one royalty for each patented device. It’s meant to stop patentees from collecting too many royalty payments for a single invention. The 2008 case of Quanta Computers v. LG Electronics challenged this doctrine, but it could not change the rule.

  • I’m not ready to file a patent yet. How can I make sure my collaborators don’t steal it?

You could get all third-parties to sign a non-disclosure agreement (NDA) before showing your invention’s details. This is a legal promise that the other person won’t share information about your invention with others or make money from it.

  • I’m not sure if I want an international patent. How long do I have to decide?

Under 1975 amendments to the Patent Act, you have up to 30 months after filing your U.S. patent application before beginning prosecution in another country. This is part of the Patent Cooperation Treaty, which gives you the time you need to judge your invention’s technical value and how likely it is to succeed in international markets.

If you aren’t sure if your invention meets the utility patent requirements, speak to a patent attorney. Legal matters are always best left to trained professionals. You can post your utility patent needs or other legal needs and get free custom quotes from the top 5% of lawyers with an average of 14 years of experience.

– See more at: https://www.upcounsel.com/utility-patent-requirements#sthash.NvRZmy63.dpuf

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Guide to Understanding Trademark a Name Cost

Guide to Understanding Trademark a Name Cost

What Does Trademarking a Name Cost?

Filing a trademark for your business name with the U.S. Patent and Trademark Office (USPTO) will cost between $225 and $600, plus legal fees. You can register with most states for $50-$150 if you don’t want protection outside your state.

Trademark protection covers the designs, symbols, words or phrases that identify your business as a source of products or services and sets them apart from competitors’ offerings. Business names, logos, and product labels can all be trademarked. If your company sells services instead of goods you would technically use the term “service mark” instead of trademark, but most people use the word “trademark” when talking about services as well as goods. There are a lot of things to consider when figuring out how much does it cost to trademark a name, but we have covered many of them in the sections below.

Federal Trademark Information

Note: Each application covers one class of business, so if your business sells different types of goods and services (like movies and posters) you might need to pay the following fees more than once.

E-file fees: If you file your federal trademark online at the USPTO website, you can use the Trademark Electronic Application System (TEAS). A regular TEAS has a $400 fee, but if you can use the TEAS Reduced Fee (TEAS RF) form the fee is only $275. If your application is very simple you might be able to use the TEAS Plus form for just $225.

Paper filing fees: Filing a paper form with the USPTO is more expensive at $600.

Legal fees: Lawyers will typically charge $500-$2000 to conduct a business name search and file your trademark for you.

State Trademark Information

Most businesses choose federal protection, but if your business is very localized you might be content with only a state-level trademark. If filing for a state-level trademark you will want to consult an attorney in that state. For example, a trademark attorney in Houston may have more different knowledge than one in a different region such as San Francisco, California.

Corporations and LLCs: When you form your business entity with the state, business name registration is included. Fees to form a corporation or LLC vary by state but are usually less than $150.

Sole proprietors and partnerships: If you register a “fictitious name” form with the state, county, or city, your business name is registered at the same time. Costs vary by region, but $50–$150 is typical. If you use your legal name as your business name, you won’t be required to register your name and will need to apply to your Secretary of State if you want a trademark at the state level.

Why Is Trademarking a Name Important?

Federal registration protects you in all 50 states, plus offers additional benefits:

  • “Prima facie” proof of ownership (courts accept your ownership without further proof)
  • A listing in the USPTO’s online records
  • The right to use the ® symbol with your business name
  • Public notice of the trademark, so an infringer can’t claim they didn’t know about your trademark even if you don’t use the ® symbol
  • The right to file a lawsuit in Federal Court if someone else uses your business name
  • The right to recover cash damages and attorney’s fees in Federal Court if you’ve used the symbol “®” on your business name and someone still uses it
  • The right to record the trademark with the U.S. Customs and Border Protection Service to block counterfeit products at the border
  • The right to register your business name in foreign countries

Important Data on Name Trademarking Costs

  • 50–80 percent: The number of trademark filings rejected each year on their first try, usually because the forms aren’t completed properly or the filer didn’t do a full search to see if anyone else was using their name.
  • $400–$500: What some discount legal sites charge for trademark services. This fee covers helping you with your application only. It doesn’t include any support if your application is rejected and may not include a search.
  • $1000–$2000: Typical legal fees charged by an experienced trademark attorney.
  • Six months to three years: The average amount of time it actually takes to fully complete a trademark filing.

Other Costs of Trademarking a Name

If you haven’t started doing business under the name you want to trademark, the filing will involve some extra steps and cost. About 12 weeks after you apply, the USPTO will send you a notice. You then have six months to either file a Statement of Use (with a $100 fee) accompanied by proof that you’ve started using the business name, or if you haven’t started transacting business yet you can request a six-month extension. If you use an attorney, you’ll also need to pay legal fees to prepare the statement and proof that you are using the name. The legal fees range between $250 and $700.

Common Mistakes

  • Choosing an attorney who doesn’t have specific trademark experience
  • Not doing enough research to make sure your business name isn’t similar to someone else’s
  • Not choosing the correct class of business to file under
  • Not applying for more than one class if you have different business activities
  • Trademarking your logo but not your business name
  • Trying to register a business name the USPTO considers too generic, like “fine dining” or “Used Cars”
  • Trademarking your URL with the suffix; if your website is sparklewidgets.com, you should usually register Sparkle Widgets or Sparklewidgets as your business name so you can protect yourself more broadly

Global Business

  • Foreign businesses that want to trademark their names in the United States have three choices: a foreign application, a foreign registration, or a Madrid Protocol application.
  • U.S. businesses that do business overseas can register their names with the government in each country where they plan to have a presence.
  • You can record your trademarked name with the U.S. Customs and Border Protection Service to stop counterfeit goods bearing your name at the border.

Reasons You Might Not Trademark Your Business Name

Your business name is protected the moment you start using it, even without being registered, as long as it doesn’t already belong to someone else. Common law trademark protects you locally from another business using your name. If you’ve registered your business entity or fictitious (DBA) name with the state, you already have some federal protection, too.

Reasons to Trademark Your Business name

A federal trademark lets you register your business name in all 50 states and in other countries. If your name is trademarked federally, you can sue in federal court to protect your branding. Lawsuits might let you collect cash awards or even press criminal charges against anyone who tries to use your business name. You’ll also be making sure that you’re not violating someone else’s trademark by using a similar name.

Frequently Asked Questions

  • What is the difference between trademark, patent, and copyright?

All three offer legal protection for businesses against theft, but they cover different types of property. Trademarks (or service marks) protect business names, phrases, and logos that identify the company or its products. Copyright protects creative works like books, songs, dances, or works of art. Patents cover inventions, systems of production, and chemical structures.

  • What does it cost to trademark a business name?

Filing fees range from $225–$600 per business class, depending on the method of filing. Attorney fees can range from $500–$2000.

  • Are business names protected by trademark law if they aren’t registered?

Using a business name on your products, packaging, signs, or print ads makes a business name legally yours if no one else in the area is already using it. That ownership only applies locally, though, and you will have to be able to prove that you were the first to use it if you want to protect it in court.

  • Is it better to trademark your logo or your business name?

If you want full protection of your business identity, you’ll need to trademark your business name and logo separately. But if you can only afford one, it’s better to register your business name. It’s much easier to change your logo than your business name, and trademarking just your name gives you broader protection than securing only your logo.

Steps to Trademark a Business Name

Name Choice: Common or generic words cannot be trademarked as a business name. You also won’t be able to trademark a name that is very similar to someone else’s , especially if the similar name belongs to a competitor.

Trademark Search: The PTSO’s Trademark Electronic Search System offers a place to search for businesses with similar names to yours. Expect to pay your attorney $300 and up to search the database for you, or you can hire a search company like CompuMark. If you do this work yourself, search carefully for every possible variation of your name. If you miss something that the PTSO considers a close match, your application will be denied and you will forfeit the fees you pay.

Trademark Application: The USPTO offers 45 different classes of business, like “apparel” or “undertaking.” You’ll need to file an application for each class of business you engage in. The USPTO prefers electronic applications through the TEAS system at www.uspto.gov. Paper applications should be mailed to Commissioner for Trademarks, P.O. Box 1451, Alexandria, VA 22313-1451. Fax applications are not accepted.

Review: Your application will be reviewed by an examining attorney to decide whether your request meets all the requirement. The examining attorney uses the Trademark Act of 1946, 15 U.S.C. §1051 et seq., and the Trademark Rules of Practice, 37 C.F.R. Part 2 to evaluate your application. This stage takes several months.

Office Action: If the examining attorney runs into any problems with your application, they will send an “office action” asking you or your attorney to address the issues.

Opposition: If your application passes the review, your business name will be put up for “opposition.” This lets anyone using a similar name protest your trademark. If no one opposes, your newly trademarked name will be listed on either the Primary or Supplemental Register.

Maintain: After five years, you’ll submit a “Declaration of Continued Use” along with proof that you are still using the business name. This filing will cost $100. Renewing your trademark happens after nine years and costs $400-$500 per class of goods/services.

Trademark Watch: Your lawyer or a company like Thomson Compumark can set up a “trademark watch” that will let you know you when someone else tries to trademark a business name that matches yours too closely. You can then decide whether to send a cease and desist letter or bring a lawsuit.

Where to Get Help

If you have questions about trademarking your business name, you can post your question or concern on UpCounsel’s marketplace. UpCounsel accepts only the top five percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience. They work with or on behalf of companies like Google, Stripe, and Twilio.

Your business name is at the heart of your brand identity. Registering your trademark will help you protect your brand and establish your business as a strong presence in the marketplace.

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A Guide to Understanding Trademark Cost

What does a Trademark Cost?

A trademark costs $400 for electronic trademark applications and $600 for paper filings, both per-class of goods or services selected registering for a federal trademark through the United States Patent and Trademark Office (USPTO).

Should You Register for a Trademark?

A trademark user can build rights for a mark by frequently using the mark in commerce. If the user relies on just common-law rights for their trademark, they won’t have to pay fees to formalize rights for it. However, there are some risks. Someone else may may obtain the trademark. If a trademark user has obtained the right to use the mark in a certain geographic location, you will lose the right to use your trademark in that area. Or the trademark holder may accidentally infringe upon a mark that is already registered. Due to these risks, it could cost less to enforce a registered mark than to enforce a common-law mark.

In some cases, it makes sense to register a trademark as soon as possible so that you can maximize the value of your brand and minimize the possibility of infringement. Also, in the long run, a trademark may be more valuable because it is registered.

What Are the Benefits of Federal Registration?

It is possible to register a trademark in most states, and in most cases it will be less expensive and easier. However, a state trademark is often less useful than a federal trademark. If you’re wondering whether you should register a trademark with the federal government or your state, here are some of the benefits of federal registration:

  • Concrete evidence of ownership of the trademark.
  • The right to use the trademark nationwide for the products and services you listed during registration. This can become a conclusive after you use the trademark for five years continuously.
  • The trademark will be listed in the online databases of the United States Patent and Trademark Office.
  • There will be public notice of the mark whether the “®” is used or not. Therefore, an infringer will not be able to claim that he did not know about the mark.
  • The right to file an infringement of a trademark lawsuit with the Federal Court.
  • The right to recover attorney’s fees and enhanced damages in Federal Court if the “®” federal registration symbol is used.
  • The right to prevent infringing products and counterfeits from entering the country by registering the trademark with the U.S. Customs and Border Protection Service.
  • The right to use the federal registration to obtain trademark registration in other countries.

Why You Shouldn’t File for a Trademark

You haven’t researched the availability of the trademark.

If you attempt to register a trademark without doing research, you will likely encounter trouble. You may not know about any infringement issues until the patent office examiner rejects your application, citing prior registration. Even if your application is successful, third parties can petition for the cancellation of the registration for about five years. Therefore, it’s better to do research at the start to ensure that infringement won’t be an issue, rather than waste money and time filing a trademark application. You can use the USPTO website to start your research or consult a trademark attorney for help.

The mark is incredibly descriptive.

If a trademark is very descriptive, the patent office may refuse to register it. For example, if a mark describes a characteristic, ingredient, feature, quality, purpose, use, or function of goods or services, the mark may be far too descriptive for registration. An experienced trademark lawyer will be able to know whether a trademark can be registered, giving you the chance to alter a descriptive trademark so that it is eligible for registration.

The trademark will be short-lived.

If you attempt to register a trademark, the earliest you can expect it to be accepted is within six months. However, if the trademark is not currently in use or there are objections to registration, it can take far longer. If you don’t intend to use the trademark for a long duration, you may not want to waste your time and resources in filing. You can just depend on common-law rights if you know the trademark will be short-lived.

You already own a registration that is very similar.

You don’t need to register a trademark for every little thing. In the United States, there is the “related goods” doctrine that will protect the trademark for services and goods that are similar to those already covered by another registration. For example, you may need to register a trademark for pants if you have already filed an application for a mark for T-shirts. If a third party attempts to use the mark to sell pants, it will likely be seen as trademark infringement because consumers will assume the pants came from the same trademark holder as the T-shirts.

What Does It Cost to Obtain a Trademark?

To file an application for a new trademark, the government fees are usually $225 per class if you select the specific goods and services from the trademark office’s pre-set list. You also need to file electronically and follow a few other rules. However, if you want to enter your own text, it will cost you $275 per class.

For example, if you file an application for a trademark for clothing (class 25) and jewelry (class 14), you can expect to pay about $550 in government fees. You will pay this fee to the United States Patent and Trademark Office when you apply.

An additional cost for filing a trademark is the fee for an attorney or a trademark service. Attorney fees vary by individual and state, for example trademark attorneys in Austin may have different experience and knowledge compared to trademark attorneys in San Francisco or other regions of the U.S. A general attorney will help you prepare and file an application for a trademark for a flat fee. Usually, the flat fee is between $300 and $1000. An experienced trademark attorney will typically charge $1000 to $2000. However, if you are filing a trademark for multiple classes, the attorney fees may be higher. Online trademark services usually cost $400 to $500.

Once you have filed the application, the Trademark Examiner or the Examining Attorney will check the application. If the examiner refuses the application, you will receive the Office Action official letter of refusal. In some cases, the refusal will be easy to overcome. However, in other cases, you will need to do plenty of legal research and complete legal documents to get your application accepted. You don’t have to pay any fees to the government to respond to the Office Action If you need legal help to respond, you can expect to pay anywhere from $200 to $2,000 in attorney fees for a response to the Office Action.

You can file a trademark application whether you have already used the mark to sell the goods and services or you intend to sell goods and services using the mark in the future. If you have not sold goods and services using the trademark, you will need to fill out a Statement of Use at the end of the application process. For every class of goods and services in the application, you will need to pay $100 in government fees for the Statement of Use. The attorney fees for preparing and filing the Statement of Use are generally between $250 and $700.

Of course, the trademark lawyer cost will depend on the number of classes and how hard it will be to get images of the use of your trademark. Some attorneys will charge you for any time spent answering your questions, talking about strategy, reviewing the registration certificate, and reporting your application’s status. So the total cost of attorney fees for a trademark application could be $2,500 or more.

You can cut classes from your application whenever you like. However, keep in mind that the trademark office will not refund the filing fees for those classes.

What Are the Ways to File a Trademark?

To file a trademark , you can do it on your own, use an online filing service, or hire a trademark attorney.

Do-It-Yourself

Undoubtedly, the least-expensive option for filing a trademark is doing it yourself. You can visit the website of the United States Patent and Trademark Office and complete the online form. Afterward, you pay the $275 government fee. While this may sound like an easy process, it could prove to be very difficult. The online forms on the trademark office’s site can be quite complicated and the legal jargon can be difficult to navigate. While the trademark office provides a guidebook for filling out the online forms, its 19 sections can be difficult to understand, particularly if you don’t have a legal background.

To file a successful application for a trademark, the prep work is often far more important than the filing. Of course, you need to file the application correctly. However, format and wording matters even more. If you don’t word or format the application correctly, you may not receive the breadth or depth of protection you want, and your application may even be rejected.

Use an Online Filing Service

There are many online filing services that you can use to file a trademark application. It can cost as little as $200 to file a trademark application, not including the government fees. The services will do a basic search of the trademark system to make sure there are no conflicts with another trademark. Online filing services will also check the spelling and grammar of the application as well as the design of the logo, the color adjustment, and basic digitization.

Most online filing services will make sure that you complete the form correctly. However, you cannot count on them to give you legal counsel and advice.

Hire a Trademark Attorney

If you hire a trademark attorney, you can expect to pay up to $2,000, including the filing fee. If there is more work required in the process, you can pay another $300 to $400 per hour for the help. Even though attorney fees are expensive, a trademark attorney can be a very valuable resource. A good attorney will be able to do an extensive trademark search for you. He or she will also do a trademark assessment to make sure infringement is not an issue.

An attorney will be able to advise you when it comes to the uniqueness and strength of your trademark and whether you’re using the name or logo in a way that doesn’t meet the requirements for filing. The trademark attorney will also format and word your application to make sure you have a good chance of having your trademark approved.

Are There Costs After Filing the Application?

Once you file the application, any additional costs will depend on how you actually use the trademark. If you intend to use the trademark at some point in the future, you will need to fill out a Statement of Use once you begin using the mark. If you fail to file a Statement of Use within six months of using the trademark, you will be charged an extra fee of $100. The $100 fee is also applicable to the Declaration of Continued Use that you will need to pay five to six years after registration of the trademark. Trademark registration lasts for a decade. Therefore, you will need to file the Declaration of Continued Use and a renewal application after 10 years. The government fee is $400 for each class. If your trademark is filed in more classes, you can expect to pay more in fees.

What Are Your Responsibilities After Registering the Trademark?

Once you have successfully registered the trademark, you will have some further responsibilities. The trademark office requests that the holder help enforce the protection of the trademark. Therefore, you will need to be on the lookout for generalization or unauthorized use of the mark. The patent office will stop all unauthorized use of the trademark, but the trademark holder needs to be aware of the unauthorized use. Some law firms provide Trademark Monitoring Services that will notify you of all new USPTO filings that may infringe your trademark. Some law firms will also remind you about renewal deadlines for your trademark. Finally, a law firm may help you make sure that you use the trademark properly while following the patent office’s requirements.

Should You File a Trademark On Your Own?

It may be tempting to file a trademark application on your own or use an online service in order to save money, but it can be risky. While some experts estimate that 50 percent of trademark applications are initially rejected, other experts estimate that as many as 80 percent of first applications are rejected. Improper research, wording, and formatting are the most common reasons for a trademark rejection. These issues can usually be bypassed by hiring a good attorney. If your trademark application is rejected, you will need to pay the government fees again, and you will likely have to hire an attorney to help you out.

Trademark Costs: Why You Should Hire an Attorney

While hiring an attorney will probably be the most expensive option for trademark application, it also can be far less risky. It is very likely that your application for a trademark will be successful if you hire a trademark attorney.

If you hire an attorney to provide legal help, you will have to do little to no research. A lawyer who specializes in trademark registration will be very familiar with the process and can answer any questions you may have. You also can also work with him or her to come up with a good strategy for obtaining your trademark. Post your legal needs here and UpCounsel can provide a list of experienced trademark attorneys in your area.

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Trademark Infringement Defenses

What is a Trademark Infringement Defense?

A trademark infringement defense is the legal case brought by a defendant to prove they did not infringe on someone else’s (the plaintiff’s) trademark. Basically, trademark infringement is the unauthorized use of a trademark or service mark on goods or services that compete or are related. Whether or not a claim is successful is transferred to the defendant and depends on whether his or her use was likely to cause confusion to the average consumer, thereby weakening the plaintiff’s image. It’s important to note that infringement doesn’t need to be an exact replica or copy, just similar enough to confuse the average consumer. This is especially an issue when both marks share the same market and thereby can be seen as related.

There are four primary defenses to claims of trademark infringement. These are:

Doctrine of Laches

Laches is an unreasonable delay by the plaintiff in bringing a claim. When you assert a defense of the doctrine of laches, you’re asserting that the other party did not bring the claim quickly enough and is out of time. It’s typically used in equity cases as an affirmative defense, whereas statute of limitations is what you’re likely more familiar with in a statutory damages case. Laches is derived from an Old French term, lasche, and is quite close in meaning to negligence.

Estoppel

The doctrine of estoppel has three main elements:

  • Position of authority assumed by the defendant
  • Submission to and reliance upon that assumption by the plaintiff
  • Injury suffered by the plaintiff as a direct result of submission and reliance

Unclean Hands

Unclean hands is only invoked by the court when a plaintiff is otherwise entitled to relief, but acted so badly with respect to the claim of infringement that the public interest in punishing the plaintiff outweighs the need to stop the defendant’s illegal conduct.

Fair Use/Collateral Use

Fair use is probably the most common defense raised to trademark infringement claims. You often hear it quoted in parody cases, although fair use doesn’t apply when the claimed parody is used to promote a competitor’s goods or services. Fair use is also seen in advertising cases, provided there are no untrue claims. The First Amendment protects for artistic and editorial parodies. If the parody is used for commercial purposes and to sell products, it won’t get the same protection from the law.

Collateral use is when someone uses a trademarked item as part of a bigger project/product. The doctrine of collateral allows the defendant to use the trademark without fear of infringement, provided he or she does not deceive consumers into thinking the product is marketed by the original trademark owner.

Fair use and parody are affirmative defenses to trademark infringement, which means it’s technically an “excuse” for the defendant to keep using the trademark.

When are Trademark Infringement Defenses Needed?

Trademark infringement defenses are needed when someone who owns the rights to a trademark sues another person for attempting to use their mark, or one that is substantially similar to the trademark in question.

The Importance of a Trademark

Why is a trademark important? A trademark serves multiple purposes. It’s a way to identify that all goods bearing the mark come from the same source. It’s a guarantee of uniform quality, and it’s also a form of advertising. That’s why you should search for available trademarks and similar ideas before settling on your own branding. You want to protect yourself against future claims of infringement. To know how to protect your own trademark, you need to understand what its elements are:

  • (i) identify and do not describe
  • (ii) use proper adjectives not nouns
  • (iii) must remain distinctive
  • (iv) must be properly designed as marks

Common Mistakes

In order to protect yourself from claims of trademark infringement, create a trademark that is easier to protect and defend. Every trademark has some ranking of strength, whether it’s weak or very strong. The range provides insight into the product — if it’s suggestive of the goods, it’s the weakest, whereas made up terms or unrelated marks make the strongest trademarks. One example often used in discussions by trademark attorneys in San Francisco is APPLE Computers. The apple logo has nothing to do with the products being sold.

When courts are ascertaining whether trademarks are similar, they consider elements like common letters, meaning, pronunciation, and the consumer impression. They also compare whether the goods are closely related. Don’t assume goods are related by the International Class number used at the U.S. Patent and Trademark Office. Class numbers are only utilized in the U.S. and determine the fees owed by the applicant, and they are completely unrelated to the owner’s rights. In other countries, you may find the class numbers are important and do have a relationship.

There is also discussion whether a mark appears in a crowded field, which can occur when trademarks for certain goods have some similar attributes. In the crowded field situation, parties may adopt the similar mark, provided they are different from each other and not closer to any one other mark in the group.

Famous trademarks are treated differently when you’re talking about overall analysis. They are provided rights under the theory of “dilution,” which allows the trademark owner to pursue a claim even if the goods are entirely unrelated. An example would be a very well-known brand like Coca-Cola. If someone tried to use the name for Coca-Cola for an unrelated product, the theory of dilution would apply.

The confusion aspect of trademark law applies, which can be helpful for proving infringement in some cases, but when the trademarks are both new, confusion may not even be an issue yet.

When considering the parody defense, the courts are often siding on behalf of the parody, while the Trademark Trial and Appeal Board (TTAB) of the U.S. Patent and Trademark Office (USPTO) is finding against them nearly all the time. Here are three recent decisions that all side against the defendant:

  • LESSBUCKS COFFEE – “joking uses of trademarks are deserving of less protection when the object of the joke is the mark of a directly competing product” citing Deere & Co. v. MTD Products. Inc., 41 F.3d 39, 32 USPQ2d 1936, 1940 (2nd Cir. 1994).
  • SEX ROD – “there is nothing in the parody itself which changes or detracts from the vulgar meaning inherent in the term” … “Parody is not a defense if the marks would otherwise be considered confusingly similar.”
  • JUST JESU IT – “applicants are not intending to use their mark to parody or to make any type of social commentary regarding opposer, opposer’s famous mark or opposer’s goods. Instead, they are seeking to use their mark for religious social commentary, and attempt to take a “free ride” on the mark’s association with the famous mark for economic gain. This is not protectable parody.”

Frequently Asked Questions

  • What sources govern trademarks?

Both state and federal law govern trademarks. State law was the original main protection, but the U.S. Congress enacted the first federal law in the late 1800’s. Since then, federal law has continued to expand, taking over state common law. The main federal statute is the Lanham Act, which was enacted in 1946 and amended in 1996, 15 USC 1051, et seq.

  • What constitutes trademark infringement?

Trademark infringement occurs when there is a chance of confusion between two trademarks and the defendant is using a mark that is the same or similar to the plaintiff’s trademark. The plaintiff must own the rights to the trademark. The standard of “likelihood of confusion” will apply, which again, looks at a number of factors,

  • The strength of the mark
  • The proximity of the goods
  • The similarity of the marks
  • Evidence of actual confusion
  • The similarity of marketing channels used
  • The degree of caution exercised by the typical purchaser
  • The defendant’s intent

Steps to File

When trademark infringement is suspected, a trademark owner (plaintiff) brings a lawsuit against the suspected infringing user, or defendant. Lawsuits may require the defendant stop using the trademark in question and it may also award damages for the wrongful use of the trademark.

The plaintiff may bring the action in either state court or federal court if the trademark is protected under the Lanham Act, which applies to both registered and unregistered trademarks that are used in commerce streams where Congress may oversee regulation.

Deadlines and regulations for bringing a trademark infringement case are very strict and detailed. If you need help with trademark infringement defenses, you can post your question or concern on UpCounsel’s marketplace to a qualified trademark attorney. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Stripe, and Twilio.

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Business Structure for Startups: C Corp vs S Corp

What Are Legal Business Entities?

When you were a child, you probably got by with just setting up a lemonade stand and getting right down to business. As an adult, starting a company isn’t quite as simple and one of your first decisions will be how to structure your business.  While a C corporation will probably be your best bet if you are forming a high growth, finance intensive start up, there are seven primary business structures you generally should consider – each has its own advantages and disadvantages. In this article, we will cover the advantages and disadvantages of C corporations compared to S corporations. Before starting a business it is extremely advantageous to consult with a qualified business attorney in your city or state.

C Corporation

A C corporation (C-corp) is probably the most common business structure in the United States and has been around much longer than the others on this list. Larger companies usually favor this structure and, if you are a looking to build a Silicon Valley tech startup which raises venture capital, you should really consider a Delaware C corporation. Click here to read more about why you should incorporate in Delaware.

Advantages of C Corporations

Most venture capital firms prefer to invest in C corporations because:

  • IRS Code Section 1202.  One of the primary reasons that venture capital companies prefer C-Corps is the potential tax advantages of Section 1202 of the IRS code that allows up to $50 million of gain on the sale of a C-Corp to be federally income free. The analysis is more involved than can be explained here, but it is only available to C-Corps.Large amounts of stock can be issued along with stock options to employees.
  • Legal precedence. C corporations have been around so long that the legal issues surrounding them are well defined.  LLCs and other partnership entities are very flexible, but the legal outcomes of disputes between the owners, directors and officers are less predictable.  
  • Income taxes can be lower. C-Corps can be more income tax efficient than pass through entities like LLCs and S-Corps.  Corporate tax rates are lower than personal tax rates. If the intention is to keep all the earnings in the business until you sell it versus distributing the earnings to the owners, then a C-Corp is the best income tax choice.
  • Public companies are C-Corps.  Having potentially millions of owners makes having a pass through tax entity impractical.  A C-Corp is only taxed at the entity level, pass through entities are taxed at the owner level, and the tax responsibilities are borne by the owners.  
  • Less administratively cumbersome. All pass through entities have to go through the process of allocating the earnings to the owners and sending them a K1 which obligates the owner to pay the income tax. That process can create some administrative headaches.
  • Limited liability.  Owners are not liable for the Company’s debts.

Disadvantages of C Corporations

Conversely, some of the disadvantages of a C corporation include:

  • Subject to double taxation. C corporations are taxed on the corporate level and then shareholders are personally taxed if the Company issue dividends.
  • More administrative requirements. C-Corps have a more administrative requirements such as holding a yearly shareholder meetings, election of board of directors, formal written resolutions of the Board that document corporate actions on certain types of activities among other things that are not required with a LLC. Failure to comply with these requirements can result in the owners losing the corporate liability protection from the debt’s of the corporation.
  • No deduction of business losses.  You cannot deduct business losses on your personal taxes like you can with pass through entities.

S Corporation

An S corporation is simply a tax election that corporations and LLCs can make to be taxed under Subchapter S of the IRS tax code that eliminates the double taxation problem inherent with C-Corps. In order to take advantage of this tax election, the code requires the entities to meet certain requirements. To make sure your understanding all the tax and legal implications of an S Corp you may want to hire a lawyer online through sites like UpCounsel.

Advantages of S Corporations

Some of the advantages of S corporations include:

  • Save on self-employment taxes. Owners can often times reduce their self-employment taxes which is a benefit only given to owners of entities taxed under Subchapter S.  Self-employment taxes are over 16% of your taxable income that is paid in addition to income tax.  This tax benefit is often times the reason that S-Corp status is chosen.
  • No double taxation. Profits and losses are passed to the shareholders without it first being taxed at the corporate level. With C-Corps, the corporation pays tax on the income and then if the earnings are distributed to the owners as dividends, the owners pay tax on the same earnings, hence the phrase “double taxation of income.”
  • Limited liability.  Owners are not liable for the company’s debts.
  • Conversion simplicity. S-Corp status can be easily converted to C-Corp status if necessary.

Disadvantages of S-Corp Status

However, venture capital firms generally don’t like S corporations because:

  • Limited to 100 shareholders.  S corporations are limited to 100 shareholders – which can make it difficult to raise capital.
  • Only single class of stock. Venture capital firms generally want preferred stock which is not available with an S corporation.
  • Certain types of owners excluded.  S-Corps can only be owned by US Citizens and Resident Aliens. This excludes business entities and foreigners from being owners.
  • Income and loss allocation difficulty. Income and loss cannot be allocated as easily because there is only one stock class and S-Corps do not permit special allocations of income and loss like an LLC does.
  • Must Comply with corporate formalities.  The owners must comply with the corporate formalities like annual meetings, board resolutions, etc or risk losing the protection against the liabilities of the corporations
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Four Types of IP Protection for Businesses

Entrepreneurs and business owners need to understand the basics of intellectual property law to best protect their hard-earned creations and ideas from unfair competition. Here are four main types of intellectual property that you can use to protect your business.

1. Copyrights

Copyrights protect original works of authorship, such as literature, music, artistic works, and computer software. As the holder of a copyright, you have the exclusive right to reproduce, adapt, and distribute the work. A copyright exists from the moment the work is created, so registration is voluntary.

However, registered works may be eligible for statutory damages and attorney’s fees in a copyright infringement suit, so it is recommended that you register at the U.S. Copyright Office. You can register your copyright online by completing an application, submitting a non-refundable fee of $35, and sending in a non-returnable copy of your work.

The average processing time for e-filed and paper applications is 2.5 months and 5.6 months, respectively. The duration of the copyright depends on several factors, but generally for works created after Jan. 1, 1978, the copyright lasts for the life of the author plus an additional 70 years and is non-renewable. You can visit the U.S. Copyright Office for more information or visit sites online to find more info on how to get a copyright.

2. Patents

A patent grants property rights on inventions, allowing the patent holder to exclude others from making, selling or using the invention. You obtain a patent by filing an application with the U.S. Patent and Trademark Office (USPTO).

There are 3 types of patents: utility, design and plant. A utility patent is the most common type, and it covers any process, machine, article of manufacture, or composition of matter, or any new and useful improvements thereof.

To qualify for a utility patent, the invention must be novel, non-obvious, and have some usefulness.

A design patent covers any new, original, and ornamental design for an article of manufacture, while a plant patent covers any new variety of asexually-produced plant. A design patent lasts 14 years, and a utility or plant patent lasts 20 years.

The patent application process is complicated and could cost thousands of dollars, so the USPTO recommends that you hire a qualified patent attorney or agent to file your patent. To maintain the force of the patent, you must pay fees due at 3.5, 7.5 and 11.5 years after the patent grant. The total amount of maintenance fees for a small entity (such as an independent inventor) is $4,430, while for others the total is $8,860. The USPTO website has more information about patent applications.

3. Trademarks

A trademark is a word, phrase, symbol, or design that distinguishes the source of the goods of one business from its competitors.  For example, the Nike “swoosh” design identifies shoes that are made by Nike.

Although rights in trademarks are acquired by use, registration with the USPTO makes it easier to enforce those rights. Before registering your trademark, you should conduct a search of federal and state databases to ensure a similar trademark doesn’t already exist. For example, depending on the state you can find all the information for getting a trademark in New York by an experienced trademark attorney in NYC at sites like UpCounsel.

To apply, you must have a clear representation of the mark, as well as an identification of the class of goods or services to which the mark will apply. You can submit an online application, and filing fees vary according to several factors, including the form type and the number of classes of goods or services. Filing an application is complicated, so most applicants hire an attorney who specializes in trademarks. For more information, visit the USPTO website.

4. Trade Secrets

A trade secret is a formula, process, device, or other business information that companies keep secret to give them an advantage over their competitors.

Examples of trade secrets are: soda formulas, customer lists, survey results, and computer algorithms. Unlike the other types of intellectual property, you can’t obtain protection by registering your trade secret. Instead, protection lasts only as long as you take the necessary steps to control disclosure and use of the information.

Businesses use non-disclosure agreements, restricted access to confidential information, post-employment restrictive covenants, and other security practices to maintain trade secrets.

Need help protecting Intellectual Property?

Post a Job on UpCounsel and Connect with Quality IP Attorneys today who can help you with your intellectual property protection today.

– See more at: https://www.upcounsel.com/intellectual-property-protection#sthash.r7mAxnX0.dpuf

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Easy 10-Step Guide for Hiring Your First Employees

If you’ve come to the point where your startup needs employees to get things done, there are a few steps you have to take. You’ll obviously want to do things like create an employee handbook, make your own employee personnel files, and create safety measures to protect your workers. These basic tasks, however, do not correctly represent the long process of hiring an employee. In fact, there are many legal issues you’ll have to deal with to make sure you’re compliant with state and federal regulations.

  1. Get an Employer Identification Number

The first thing you should do is set up an Employer Identification Number (EIN). You’ll need to apply for this through the Internal Revenue Service (IRS). This number will be used when you and your employees are filing taxes. Several other important documents for the IRS and state agencies require it as well. You can apply for an EIN here or call the IRS at 1-800-829-4933 for help with EIN setup.

2. Satisfy Federal and State Tax Reporting Requirements

Employers must classify workers as employees or independent contractors. This categorization determines the amount of unemployment taxes you pay, as well as filing requirements for each worker. Independent contractor, freelancer or consultants are responsible responsible for reporting and paying their own Social Security and income taxes. You will still need to pay taxes for independent contractors (see IRS Form 1099) to the federal government.

If you are hiring full time or part time employees, your employees will need to fill out a withholding exemption certificate (Form W-4) on or before the date of employment to determine the proper amount of federal income tax withholding from their pay. You will need to file this form with the IRS. You should set up a payroll system that can accurately manage and keep track of tax withholdings and payments (including Social Security and Medicare tax payments).

The IRS requires you to maintain employment withholding tax records for employees for at least four years. You may need to withhold state taxes, but the requirement and filing steps vary by state. For example, if hiring in New York you may want to check with a startup lawyer in NYC to understand the implications of hiring in that specific State. You should be prepared to file a wage and tax statement (Form W-2) for each employee that you pay any type of compensation to. This is for reporting wages paid and taxes withheld for each employee. Copy A of Form W-2 needs to be filed with the Social Security Administration. More information on Social Security Administration filing requirements is available here.

If you pay wages of $1,500 or more in any calendar quarter or have an employee on the payroll for any 20 weeks of the year, you’ll also need report and pay federal unemployment taxes and file an Employer’s Annual Federal Unemployment (FUTA) return (Form 940) each year.

These forms may also need to be submitted to your state’s Department of Labor or Taxation.

3. Be Prepared to Meet Filing Requirements

Take time to also learn state rules related to filing requirements. Your state and local obligations vary depending on where your employees are located. You can find out more about your state and local tax obligations here. These taxes are handled by each individual state rather than at the federal level. This means what you need to file in California could be completely different than in Florida. You can learn these rules from your state’s labor department. You’ll need to register with that department before hiring employees, so you won’t have to go out of your way to get the information.

4. Verify Employees’ Eligibility to Work

Employers are required by federal law to verify the employee’s eligibility to work in the United States. You will need to fill out an employment eligibility verification form (Form I-9) for each employee you hire within three days of hiring. You will need to examine each employee’s acceptable forms of documentation (specified in the Form I-9) to confirm their citizenship or eligibility to work in the US. The form doesn’t need to be filed with the IRS, but you do need to keep it on file for either three years after the date of hiring the employee or one year after that employee’s termination, whichever is later.

Employers can also electronically verify the eligibility of newly hired employees by registering with E-Verify here.

5. Avoid Potentially Bad Employees

Now that most legal issues are out of the way, you’ll want to make sure you’re hiring the right employees. While it’s not mandatory, you may want to perform a background check and drug tests, but make sure your testing complies with state laws. Make sure to call former employers and check references as well.

6. Know What Questions Are Allowed

Asking questions of your possible employees is a great way to see if they are a right fit for the company. You need to make sure that you’re complying with federal and state laws governing the questions that are allowed to be asked.

You cannot base hiring decisions on an applicant’s age, sex (including gender identity, sexual orientation, and pregnancy), marital status, religious affiliation, disability, race, national origin, or genetic information. If there is any indication of bias or discrimination in the hiring process, you can face serious liability. By reading up on and understanding The Age Discrimination in Employment Act, the Civil Rights Act’s Title VII, The Americans With Disabilities Act, and The Family Medical Leave Act, you can avoid plenty of problems. The websites for the U.S. Department of Labor, the Equal Employment Opportunity Commission and MyEmploymentLawyer.com are helpful for understanding how to comply.

7. Get Required Information for U.S. DOL

The U.S. Department of Labor (DOL) also requires you to keep certain information on file about your employees. This information must be kept the entire time they are employed. No special form is needed, but you’ll need to maintain this information:

  • Employee’s full name and Social Security Number;
  • Complete mailing address;
  • Pay rate;
  • How often an employee is paid;
  • If an employee is under 19 years old, you’ll need their birth date;
  • Gender and occupation;
  • Time and day of week when the employee’s workweek begins;
  • Hours worked by an employee each day and workweek;
  • Amounts paid in overtime;
  • Date paychecks are paid and the pay period covered;
  • Total amounts paid each pay period;
  • Deductions and additions to paycheck; and
  • “Straight time” hours worked (standard number of hours worked in pay period).

8. New Hire Reporting Program State Registration

Your state has a registry that you must report your newly hired and re-hired employees to. For example, If hiring in Illinois you have to report here and any experienced startup attorney in Chicago can help answer additional questions throughout the registration process. You must file new hire information with the state’s directory within 20 days of bringing them on. You can find your state’s information here.

9. Obtain Workers’ Compensation Insurance

All businesses with employees are required by federal law to carry workers’ compensation insurance coverage. This will protect you and your company from costs of accidental or fatal injuries in the workplace. Without this protection, you may go broke paying for an employee’s injury or disability suffered while on the clock. Each state has different workers’ compensation requirements as these benefits are administered at the state level. Check here for the requirements for each state.

10. Post Required Notices in the Workplace

Before bringing in your employees, there are certain notices you’re required to display in the office. These must be posted in a place where all employees will see them. The Department of Labor’s Workplace Poster page lists the specific federal and state posters that are required to be posted. They’re available for free from the federal and state labor agencies. You should also check rules from the Occupational Safety and Health Administration (OSHA) to see what safety notices are required.

If you’re ready to hire your first employees and need help getting the ball rolling, post your legal need in UpCounsel’s marketplace. The attorneys on UpCounsel have an average of 14 years experience and you can find a great startup lawyer for a very reasonable price. And since 95 percent of lawyers are screened out, you’ll only receive advice from the brightest attorneys from law schools such as Yale and Harvard.

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