Early Stage, Step 4: Cautionary trademark tales

26 Dec Early Stage, Step 4: Cautionary trademark tales

Editor’s note: This is the fourth in a series of articles on developing start-up companies in the technology or biotechnology sectors.

Madison, Wis. – In my last column for Stage 3, I indicated we would be moving on to forming the entity. In the meantime, I received a thoughtful response about the last column that bears addressing. As a reminder, the last column, dated November 17, 2006, discussed naming the entity.
These columns have been structured to address everyday issues. We all know that there are some cases that are much more complex. Intellectual property law, as well as business law in general, has many nuances that simply can not be addressed in detail in the limited space of this column. Entire books are written on these subjects.
The reader of the earlier column pointed out a two-year-old New York Times column that discussed the dispute between Entrepreneur Media, Inc., which owns Entrepreneur magazine, and other parties who use the word “Entrepreneur.”
The owner of the trademark “Entrepreneur” sought to limit others’ use of this name in many different contexts. The reader indicated that he thought the word is essentially generic and should not be allowed to be monopolized by one owner.
It may be true that some marks are generic and should not be protected. However, we need to recognize that if you own a trademark, it is up to you to protect it. If you do not, others can use it and, in the end, you lose the value of it. So how do you draw a line between the legitimate protection of a trademark and bullying? That is what courts are for. Unfortunately, as the reader pointed out, dispute resolution in this country is expensive. Even the threat of it can deter use of trademarks – sometimes improperly so.
Trademark turf
This reminds me of a personal story from 25 years ago. My wife and I were driving to Dallas, Texas to visit my sisters. (This was before we had children and could take our sweet time getting to places.) We stopped in Wichita, Kan., to visit Wichita State University, where my wife got her master’s degree in music piano performance. While there, we noted a business on the main street using the same federally registered trademarks of a client here in Madison. We stopped there took pictures, picked up business cards, and snooped.
Upon returning to Madison, I contacted my client pointing out the use of its trademarks in Wichita. Now, this Madison company, which is still in business with the same trademarks, had to decide what to do. If they did not contact the Wichita business to request their discontinuation of the use of their trademark, that Wichita-based company might get the right to use it in that region.
If my client ever wanted to expand there, it would not be able to use “its” trademarks. If they contacted the Wichita company asking them to cease use, they were protecting their trademarks in a yet unused territory. This change in trademarks would most likely be quite expensive for the Wichita company.
Well, my client chose to enforce its trademarks, asking the Wichita company to cease use. When I contacted this business, the proprietors were quite surprised we found out about them since they are so remote from Madison and had only changed to that name within the prior 90 days or so. Seems that earlier the Wichita business used another business’ name and so it had to switch once before! And yes, it did change its name for the second time.
Finders keepers
The obvious moral to this story is to check to see whether someone else is using any trademark that interests you.
A postscript: This client did not expand its business beyond Wisconsin, so the Wichita trademark use never would have been problematic. The client might have considered licensing the name and collecting royalties from the outset since it really did not know whether it was going to extend its business beyond Wisconsin, much less to Kansas.
The reader made a good point. However, there is no easy answer. Of course, it often depends on which side of the dispute you are on. Also, getting there first does matter.
Next time, I will discuss forming a new business entity.
Previous articles by Joe Boucher
• Joe Boucher: Early Stage, Step 3: Naming the entity
• Joe Boucher: Early Stage Step 2: Choosing a domain name
• Joe Boucher: Starting a tech business? Step 1 is minding the intellectual property
• Joe Boucher: Madison is flourishing while Marinette is dying