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Legality of Design w/ Annie Tunheim

We have our special guest who is calling in right now. And we have the audio to speak with Annie. But we don't currently have the video. But we can start chatting with her whenever you're ready. Okay, great. Is Annie here? Annie, can you hear us? Yes I can. Hey, Annie. All right. Now Annie, go ahead, and why don't you just introduce yourself. And now we can all hear you all right. I think we're good to go whenever you're ready. Great, thanks so much. My name is Annie Tunheim, and I'm an intellectual property attorney. I advise clients on various trademark and copyright issues, I draft and review contracts for them, and sometimes create business entities. My clients tend to be small, creative type businesses, just like people that should be on this call. Some of my clients started very small and have become large. So I work with all types of clients and I love the businesses that they have. So, what were... We'll talk about various topics today. I think, Bonnie, can you ad...

vance my slide to the next slide, which should be the overview of topics? Yes. So, today we'll talk about the difference between different forms of intellectual property. A lot of times people use the term trademark and copyright you know sort of interchangeably. So I'm just gonna go over the different kinds of intellectual property so we're clear on what is what. We'll also talk about you know freelance work versus working for somebody, and types of issues that might arise in those scenarios. We'll also talk about business entities, whether you should stay a sole proprietorship or form an LLC, and different considerations that go along from there. That should fill up our time. But depending on how much time we have, I'm more than willing to take questions from anyone that has questions as well. So, Bonnie, if you could go to the next slide. So there's different forms of intellectual property. A patent is... A patent protects a process of design or manufacture. So it doesn't involve a name or the look of something. It's really, it's a process. The patent process is the most expensive of the forms of intellectual property, the most involved and it's actually the only area of law that you need to pass a separate bar exam. So I am not a patent attorney. But if there is something special about the way that you are creating patterns that you think is unique, that might be something that should be discussed with a patent attorney. But we're not gonna go into any more detail about patents today, because I'm not the right person to talk to about that. A copyright protects original works of authorship or art. So, you know, anytime you write something unique, or if there's a unique pattern that you've created, that would fall under a copyright. We'll discuss that in more detail. Trademarks indicate the source of goods and services. So, we'll talk about that in more detail today. And then trade secrets are more something about your product, the way you make it. You know, if you have some sort of edible item, maybe it's the recipe that goes into it. And then trade dress is that visual appearance of your packaging, that sort of thing. So the trade secrets and trade dress, we won't be going into more detail either, unless somebody has a specific question about it. We're gonna focus more today on copyrights and trademarks, as they relate to patterns that you guys might be creating. So, Bonnie, the next slide should be headed copyrights. So, patterns and designs on fabric, that falls under copyright. Filing a registered copyright on a design can be a worthwhile process. But it can also be a frustrating area of law because as you may have seen before, somebody can have a design on fabric, and then you might see that someone has done something that is almost exactly the same, and they've only changed a small part of it, and it seems very similar to your work. And it isn't deemed copyright infringement. And it's a hard balance because the government wants to protect that work but they also need to leave room for creativity and for other people to create. So, there isn't a broad protection with regard to patterns on fabric. That's not to say that you shouldn't go through the process of protecting that creation. But I do want to make clear that simply by creating that work, you do have copyright rights to that work. And it's only by going through that federal registration process. What it does is it gives you extra benefits under the statute in terms of monetary benefits. But first of all, you've designed this pattern. So simply by designing this pattern and putting it onto fabric, you've got copyright rights to that. So what does that mean? Say you've created this design and you've licensed or sold it to a manufacturer, and it's on a bolt of fabric that is sitting at JOANN Fabrics. So what next? Many of you that are dealing with fabric may have seen copyright symbols on the fabric. And a lot of times people want to have control over everything that happens to that fabric. But there's something called the first sale doctrine. And what that means is you have control as the copyright owner over what happens for that first sale. And for a copyright owner, you can enforce your rights over that fabric the first time you sell it. And that would be when you sell that design or license that design to the fabric manufacturer. But once it's on the shelf, at say JOANN Fabrics or at a boutique, you don't then have a say over the people that then purchase that fabric and what they make out of that fabric. You don't have a say over that. So anyone who's purchasing that fabric at the fabric store, no one will have a say over what you do with that fabric. And if somebody really wants to become an expert on this, there's tons of information available on the copyright.gov website that I have up on the screen. But it is, it's more information than you'll ever want to know about copyrights. So again, by creating that work, you have rights to that work. But unfortunately, someone can make a small change to that design and then your right to some sort of copyright infringement claim may be diminished as a result. But if you have a question about it, it is worth contacting an attorney to see if there is a claim here. And they should be able to let you know whether you have rights to go after that person or not. So let's go to the next slide. Do I need to obtain a federal copyright? So like I said, you don't need to file. But the US copyright office does offer additional benefits. What it does is it establishes a public record of the copyright. And then if you do find yourself in a scenario where you do want to go after somebody or file an action against them, you do need to have that copyright filed federally. So even if you don't have one, and you find yourself in a scenario where you want to go after somebody, you would need to file that copyright in order to then file an action in court. And then in doing so, if you do file that action in court and it proceeds to some sort of litigation, you do have some additional monetary benefits should you prevail such as attorney fees, your attorney's fees, and additional damages. But hopefully, I tell my clients that by acting... There's some things that you can do on the front end to hopefully avoid getting yourself into scenarios like this. Because no attorney wants to see their client in a position that you do need to file something in court. So hopefully you can avoid issues like these by taking action you know, on the front end. Having that copyright symbol on your work does put people on notice that you are claiming rights to it. And that copyright symbol should be used. It shows a federal copyright. And when you do have copyright rights, those benefits last 70 years after your death. So if it is, you know a monetary benefit to your family that you're gaining income from this, it might be worthwhile to go ahead and file that federal copyright. So let's move on to trademarks. Bonnie, if you could move to the next slide. So what a trademark is, it indicates the source of the goods or services. It's a source identifier. So it's a word or a symbol that let's consumers know where this good comes from. So what it does is it distinguishes your brand from other brands. And hopefully, consumers start to know that your brand is a good brand, they trust that brand, they have goodwill surrounding that brand, and it's an... Sorry, it's an intangible business asset. The Quaker Oats executive one time in an interview said, "You know, if this company ever dissolved, "I would let the other people have all of the "kind of brick and mortar "physical business assets. "And I would take the brand's goodwill, "and I would be in a much better place than them." Because so much goodwill has surrounded that brand. It has so much longevity. And you know, when you think of oats, I honestly can't think of another brand of oat other than Quaker Oats. So that's what we're talking about when we talk about trademarks. So those of you that are maybe thinking about or have already come up with a name, if you are creating a line of fabric, say, this is the sort of thing to think about if you're still coming up with your brand name. We'll talk about this a little bit more on the next slide. We're walking the tight rope. There's a fine line between coming up with a name that satisfies your marketing needs and our intellectual property needs. And if you move to the next slide, we're looking at the strength of trademarks. So we'll delve into that a little bit deeper. So from a marketing perspective, you want to have a name that really describes that product. So when the consumer hears that name, it really evokes something about that product. From my perspective as an intellectual property attorney, I want my client to come up with a name that has absolutely nothing to do with the product itself. Because from a legal standpoint, the less that trademark has to do with the product, the more highly protect-able it is. So what I do is work with clients to come up with a name that fits the product but is also strong from a legal perspective. So, let's look at what that means. In my little, very simple chart here, we've got at the top of the chart fanciful names are the highest level of protectability for trademarks. And a fanciful name is a completely made up word. It has absolutely no other meaning other than what that word is. So an example of that would be Verizon, has no meaning in our society other than for the cell phone company name. So that would be a very highly protectable mark. An arbitrary mark is... It is a word that we recognize, but it still has absolutely nothing to do with the product or service itself. The best example of that would be Apple computers. Everybody knows the word Apple, but has absolutely nothing to do with technology or computers. So that is still a very highly protectable trademark. The next level down is a suggestive mark. And it's a word that might evoke some sort of quality of the goods or services, but it's not necessarily directly related. One that comes off the top of my head is something like Papyrus, which is that stationary company. They sell greeting cards and things like that at the mall. So Papyrus, you know the word for paper. It is suggestive, but it's still not directly related. And then, you go to descriptive marks. So if we're looking at you know a soap company, and we've got... You know, Bubbly Lather Soaps or something. We're getting pretty descriptive there. And that might be a mark that from a Patent and Trademark Office perspective, they might not allow that to be a registered trademark because it's on the more descriptive end of things. There are some ways to get around that. And that's something that you can talk to an attorney about. But if your mark is getting into that realm, it's great from a marketing perspective, but it's not so great on the protectability perspective. Then we've got generic marks. And that's just a strictly descriptive term. So if we're looking at fabric, if you've got a soap company, you want to call your soap company Fabric Soaps, that's totally fine. That falls in the arbitrary category. But if you want to have a fabric company called Fabric Fabrics, that's not going to work. It's just a completely generic term. So let's go to the next slide. And that's what I've just gone over, the generic term, just it doesn't work. Soap, yarn, wine, fabric. Those are all just generic terms. So let's go to the next slide which is okay, so what are the benefits of actually having a registered mark? Because a lot of times as a newer business owner, your time and energy and money is pulled in a million different directions. And it may seem a little frivolous to go ahead with the process of actually registering the mark. You might have heard it's expensive and it just seems a little silly. I'm such a small company, who's going to be copying me? But I would, of course, I'm slightly biased as an intellectual property attorney. But I would advise the vast majority of people that it is always beneficial to go ahead and have a registered mark. So first of all, let's go and look at the benefits of moving forward with that. A, even if you're not even actually making patterns on fabric right now, but you've got a name for this future company in mind, it can reserve your rights ahead of time, even if you are not selling any fabric at all right now. It reserves that name, that awesome name that you've had in the back of your mind for your company. It reserves that ahead of time. So even though your fabric isn't actually sold. So that's a huge benefit because if and when you are ready to launch, you know that that name, you've got the claim to it. Also, in some instances, if you're looking for financing for your company or an investor, a lot of times investors want to know that you already have those kinds of things in order that you've got the trademark already registered or at least in process. So investors will be more confident if you can say yes, this is already in process. Also sometimes if you are working with a distributor to get those goods out into the market, you can try to avoid some problems by having those, those rights already in place by having that registered mark. I think a huge benefit to having a registered trademark is giving people constructive notice. By having that mark included in the Patent and Trademark Office's searchable database, A, a diligent party, before they go ahead with using a mark, they might do a trademark search and find that you are already using it. But B, even if someone is inadvertently using it, and then they go ahead and try to file that mark, well the Patent and Trademark Office is doing some of that policing for you and they won't let that mark, that application go through because you have priority over it. Another benefit is that you have that right to use that circle R symbol that means it is a registered trademark. In most countries, by having that registered mark, that's your only source of trademark rights. Here in the United States, similar to that copyright, simply by creating that work of art, you have some copyright rights to it. In the United States, simply by using that mark, you are entitled to common law rights to that mark. So those that come after you, you do have some rights to it. But there's still additional rights that come available by having the registration. It also protects internet domain names. So if you've got a brand name and you haven't secured all of the countless domain names, iterations to it, it can still protect other people from registering domain names that are kind of copycat domain names to you. And like we talked about with the copyright, it does provide greater rights in litigation in terms of monetary benefits, awarding you attorney's fees and damages if you have that registered mark. It awards you greater monetary benefits but like I always counsel my clients, by having that registered mark, I feel like it prevents a whole host of issues that could arise. What you don't want to happens is you just say oh, nobody's gonna copy me. I don't need to have that registered mark. And then you find yourself in a scenario where there is somebody out there who has inadvertently been using the same mark as you. And then there's an issue as to who's using it first. For me, the absolute largest benefit of having a registered mark is that it automatically gives you priority in all 50 states. By just relying on that common law rights to your mark, you are building rights to that mark only in the areas that you're using it. So say you've created a line of fabric and you are selling it locally at you know small boutiques in your area or even all over your state, or in the neighboring states. So you're building common law rights to your mark in those states. But if you're in California, there could be somebody in Maine, in Boston, using the same mark, and you would have no recourse against them. But by filing that registered trademark, you automatically have rights in all 50 states, even if you have never sold in 37 of those states. So for me that is huge because in two years, you could have grown beyond your wildest imagination and you are selling in all 50 states, and you don't want to find that you don't have rights to the mark in some of those states because you hadn't jumped on it from the start. So let's go ahead to the next slide which should show the Band-Aid category picture. So, there's a proper way of using a trademark. For those of you who are relying on your common law rights to the mark, you might have seen a small TM symbol. And that means that you are claiming common law rights to that mark. And right now, if you have a brand, and you do not have a registered mark right now, you should just go ahead and put that TM symbol. You don't have to use that. But it's nice because it's showing people that you are claiming common law rights to that mark, that you're aware of your rights, and that you are showing people that. The circle R should only be used if and when you have the registered mark. It is also really important to not use your mark as a noun. So an employee of the Band-Aid company would never say hey, can you hand me a Band-Aid. They would always say can you hand me a Band-Aid bandage. You always want to use your mark as a descriptive term, as like an adjective describing the generic term of bandage. Because there's the danger of your mark becoming generic, like Band-Aid is so ubiquitous in our society as hey, hand me a Band-Aid. But it really is a Band-Aid brand bandage. So I just wanted to point that out. The next slide is, you can go ahead and advance, and it should say trademark infringement. So... Say you've got your amazing brand name and you're printing your fabric and you're building this brand. What you don't want is somebody creating a line of fabric kind of similar to yours with a similar mark. A, you don't want them riding on your coattails. You know, you're starting to build this goodwill around your brand. And you don't want them, you know, riding that wave of all your hard work. But then you also don't want them putting out an inferior product and having consumers be confused, thinking that that's your work. Especially if it's much lower quality than yours. So it's really important to keep a brand distinct. It's a win-win situation for everyone to keep their brands distinct. No one will be doing that work for you to keep your brand distinct from someone else. The onus is on the brand owner to police your own mark, and your own brand. Like I said before, having a registered mark takes some of that work off of your plate because, if somebody goes ahead and files that application that has a similar name to yours, and it's similar goods, the Patent and Trademark Office will deny the application based on a likelihood of confusion with your mark. You all may know, if you follow design kind of blogs, there's a design blog called Decor8. It's decor and then the number eight. Holly Becker writes it. I take care of her intellectual property and just recently... So her mark is filed under the class of services for a website that provides interior design ideas and tips. And so recently somebody filed an application for the same mark. And it wasn't the same category. It was for retail and wholesale stores offering home decorating and entertainment merchandise like lamps and kitchen containers, etc. And I didn't even know about it. But the Patent and Trademark Office issued an objection because there was a likelihood of confusion. So, in that instance, Miss Becker didn't have to do anything. She didn't have to hire me to do anything to go after these people. The Patent and Trademark Office just took care of that application on its own. So none of that work fell on the brand owner's plate. The next bullet point says marks need not be identical to be in conflict. So it could be something that's fairly similar. And the Patent and Trademark Office might come back and say it's not identical, but there's still a... There's a likelihood of confusion here. And the more arbitrary or fanciful your mark is, the more of a made up word it is, the broader that protection will be surrounding your mark. And again, if you want to talk with somebody about well I see this other company out here and it feels kind of similar to me, am I crazy or is this something I should be concerned about? That's something to talk with someone with some expertise about. It also depends on the nature of the products and the consumer's that'll be buying it. If you have some sort of very expensive fabric, the consumer's that are looking at it are using kind of a higher degree of awareness about it. And if your product's are sold in the same channels of trade, it's a multi factorial process, and there's no hard and fast rules about it unfortunately, or my job would be a lot easier. But it really is kind of a case by case basis to look at.