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A Legal Guide for Colorado Startups: Protecting Your Intellectual Property, Trademarks and More

Last year in Colorado, a whopping 175,000 people filed paperwork with the state to start a new business, up 11.5% from 2021. Clearly, entrepreneurship in our state is alive and well. As an attorney deeply engaged in mentoring and supporting Colorado’s startup and venture communities, I work with many entrepreneurs building their businesses from the ground up. Typically, those in the startup stage don’t have a lot of money and resources at their disposal. And when you’re laser-focused on growing your business, legal matters can seem like one of the least important parts of their journey. But you shouldn’t forget about protecting intellectual property for startups.

Many entrepreneurs don’t understand that poor legal decisions made at the start can end up making or breaking their business’s success in the long run. By not protecting intellectual property for startups — the things that really make their business stand out in the consumer’s mind — they risk losing the rights to their brand ideas, investor dollars or even the future sale of their business. 

So what do new business owners need to know? Well, often, they get intellectual property, trademarks, copyrights, trade secrets and patents confused. So here’s a breakdown of what you need to know about each and how to protect your intellectual property rights for startups.

READ: What Are the Safest Industries to Start Your First Business in 2023?

What is intellectual property (IP)?

Intellectual property is an asset of a business created using the expertise, ingenuity and creativity of the people within it. It comes in different forms — mainly in works that can be trademarked, copyrighted, patented or protected as trade secrets — and can be essential to a business’s success and longevity. While this article focuses on trademarks, it’s worth differentiating the major categories of IP as background.  

What is a trademark?

A trademark identifies your brand and the goods or services you sell and may include your company names, slogans, brand names, designs and any number of different pieces of your business. For example, people may recognize the trademarked names and designs of Coca-Cola and Starbucks (they’re everywhere), but they may not realize that even the Coca-Cola red and Starbucks green colors are trademarked by those companies!

READ: What to Do If Someone Uses Your Trademark 

What is a copyright?

Copyright protects creative works, such as writings, art, audio and video recordings and other non-branded creative elements. For example, Coke or Starbucks might copyright their web content, pictures, videos or jingle song lyrics. 

What is a patent?

Patents protect physical objects and products that have design functionality. For example, Coke has patented the iconic curves of its bottles. 

READ: Demystifying the Patent Process: Resources to Support Innovation

What are trade secrets? 

Trade secrets are commercially valuable information known to only a limited group of individuals within the company. The information is proprietary and helps differentiate a company’s goods and services from those of others, just like a good trademark or copyrighted work does. For example, one of the most famous trade secrets of all time is the secret recipe for KFC’s spice blend — it’s unique to the company, not widely known, and has significant value to the business. 

READ: How to Protect Trade Secrets When Noncompete Agreements Are Not an Option

How do I know if I need to register a trademark?

Your unique designs, slogans and names can help differentiate your business from the business across the globe or down the street, and they can be a fundamental pillar of your success (think what would happen if Coke changed its name or Apple changed the name of its iPhones). So, begin by assessing whether it would be very problematic if someone else started using the same company name, slogan, brand name, design name or any other element of your business. If so, you need to protect those essential elements with a trademark.

The four main risks associated with not registering a trademark are:

  1. Other parties could use identical or similar marks and create confusion in the public’s mind, potentially diminishing your sales and the value of your business. In the worst-case scenario, it could even result in losing rights and priorities in your marks.
  2. You could have to rebrand, resulting in a huge loss of brand equity and significant cost in developing an alternative.
  3. You could be forced to litigate a trademark infringement case for unknowingly infringing on someone else’s identical or similar brand name, image, design or logo. You would also have a less persuasive case in enforcing your own mark.
  4. Without registering the key identifiers of your business, your company can be much less attractive to investors or potential buyers.

How can I register a trademark?

Short of undertaking the federal registration process — which is by far the most protective — there are some easy ways to begin protecting your marks on your own, such as registering a trademark directly with the state of Colorado or simply using the ™ symbol next to your marks. However, these options generally do not provide broad protection. Therefore, as your company establishes value, you’ll want to speak with an experienced trademark lawyer to identify more ironclad ways to protect your business across the U.S. 

Do I need a state and federal trademark?

Registering with the state of Colorado is very inexpensive and straightforward, and if you operate one car wash in Denver, that may be all you need. However, if your business has any kind of online sales component, multiple locations or the potential to expand out of state, there is a lot of protective value in filing for a federal trademark registration. Because federal trademark applications are quite lengthy and complex and involve many legal requirements, utilizing an attorney is highly advisable and usually means you’ll have a significantly better chance of securing your trademark rights. 

How long does it take to obtain my trademark?

Federal trademarks are issued by the United States Patent and Trademark Office, which receives over a million trademark applications annually. In fact, the USPTO received a record-high number of trademark application submissions in 2022. Unfortunately, the USPTO is also experiencing a staff shortage, and their review process is extensive. Applications will not receive approval without a complete examination of the application for various issues and without allowing third parties to dispute the registration. As such, the entire process, from application development to completed review, currently takes more than a year. 

How much does it cost to obtain a federal trademark? 

Contrary to popular belief, hiring a trademark attorney to help formulate your application is relatively cost-effective. Of course, the total cost will depend upon the attorney. My clients often spend around $2,500 all in (i.e., including filing fees with the trademark office), which is a significant bang for their buck and allows them to avoid unexpected legal costs.

Everyone wants to protect their brand, and protecting intellectual property for startups is one of the most important ways to protect your brand and company, especially given the scale of the risks. 

 

Andrew Comer HeadshotAndrew Comer is a partner at Fortis Law Partners where he leads the firm’s trademark practice, advising companies on registrations and brand protection. Comer also advises companies on mergers and acquisitions, commercial transactions, and other corporate matters affecting their formation, financing, and operation. 

What to Do If Someone Uses Your Trademark 

From McDonald’s golden arches to Nike’s “Just do it,” trademarks can be incredibly valuable. So it’s no wonder that protecting trademarks is a big deal. An adequately protected trademark allows a business to build its brand, increase customer loyalty and protect its brand identity. 

Trademark infringement is when a trademark is unlawfully used by another business and can have a severe negative effect. For example, it can cause confusion, weaken the brand and even result in a loss of profits. 

What Is a Trademark? 

A trademark is a brand name or mark that allows businesses to distinguish themselves from competitors. It protects the intangible value of their name, symbol, slogan, or product design and can include colors, sounds, look and feel, and scents. 

How to Obtain a Trademark 

To obtain federal trademark protection, businesses must file a trademark application online with the United States Patent and Trademark Office (USPTO). The application requires careful attention to detail, as well as submission of a fee.  

The USPTO then reviews the application. This can take several months. If the USPTO determines that the proposed trademark can be registered, it will publish the mark in its “Official Gazette.” Other parties that believe the trademark registration may damage them have 30 days from the publication date to oppose it. If nobody objects, the USPTO registers the mark and sends a “certificate of registration.” 

Not all applications are approved. To help increase the chances of a successful application, businesses commonly work with an intellectual property attorney to ensure the application is completed correctly. 

How to Protect and Build Value in Your Trademark 

To protect a trademark, the owner must file specific maintenance documents to keep the registration alive. In addition, trademark owners must check the status of their registration regularly. 

When to Seek Legal Counsel  

The USPTO does not police trademarks. Therefore, it is up to the trademark owner to take action by consulting with an intellectual property lawyer if they see the trademark being infringed upon. 

Did Trademark Infringement Take Place? 

Attorneys generally begin by reviewing the facts and assessing whether trademark infringement occurred. Trademark infringement only happens when the trademark is used on competing goods and services and when customers are likely to be confused. 

Just because two companies in two different industries use the same name does not mean that trademark infringement has occurred. If the companies sell entirely different products or are in different markets, there may be no infringement. 

Sending a Cease and Desist Letter 

If an attorney believes trademark infringement likely occurred, they will often take action by sending a “cease and desist letter” to the other company. The letter outlines the alleged violation and demands the other company cease use of the confusingly similar mark. The letter often threatens a lawsuit if the company doesn’t comply within a set period. 

Filing a Trademark Lawsuit 

If the infringing company doesn’t respond to the letter, refuses to comply, or continues to use the trademark, the next step is for the attorney to file a lawsuit or seek administrative action by the USPTO. The attorney may request that the court force the infringer to stop using the trademark and request that the court order money damages accordingly. 

 

John T SnowDouglas R GriessDoug Griess of Hackstaff Snow Atkinson & Griess, LLC, is a top Denver business attorney with expertise spanning various industries. Specializing in business law, litigation, intellectual property, tax law, and dispute resolution, John Snow and Doug Griess offer an in-depth understanding and knowledge of general corporate rules and regulations and are a trusted resource for business owners throughout Colorado.  

Understanding how to protect and grant licenses to use creative content

If your company produces information or original works or has intellectual property (IP), you likely know that it is protected under copyright laws. 

There might be circumstances in which you want to provide licensing to another party to use your copyrighted material. As the copyright owner, you have the authority to do so.

However, it is essential to ensure that you continue to protect your business when granting a license to use your creative content. 

Licensing Provisions 

Licensing agreements are contracts that give the purchaser rights to use the IP in some way if certain conditions are met. They do not involve selling the IP, only providing for its use by the other party. Parties granting the license or licensors have the right to dictate how the party purchasing or licensee the license can use it. Licensing provisions can include things like: 

  • The scope of the material being licensed.
  • Quality control standards for its use.
  • What purposes the purchasers can use the license for ?
  • How long the license will be in effect?
  • What would trigger termination of the contract?
  • How disputes will be handled.

These provisions or any others the licensor decides to include function like contracts within contracts. Should the licensee not abide by one of these provisions, they can cause the entire contract to be void.  

What Rights Can a Licensing Agreement Include? 

Individuals or businesses have intellectual property rights over their creations. When something new is created, the law generally gives the creator an exclusive right to its use for a specific time period. Companies can pick and choose what IP they want to license and exactly how they want to license it and grant certain rights. Their rights can be granted to the licensee and might include any of the four IP types: 

Trade Secret Licenses 

Trade secrets are the proprietary methods, structures, formulas, strategies, or other information that is confidential and is not purposed for unauthorized commercial use by others. Trade secret protection is critical for helping businesses gain a competitive advantage. Companies have the right to control how, where, and when the licensee can use their trade secrets through a contract. 

Trademark Licenses 

A trademark is a unique sign that allows consumers to identify a particular company’s goods or services easily. Some examples include Amazon’s signature A trademark, Dominoes’ signature domino, or Ford Motor Company’s memorable blue oval and F. A trademark can consist of words, letters, phrases, symbols, smells, sounds, or color schemes. Trademarks can protect a set or class of products or services instead of patents that just cover a single process or product. If a licensor grants a trademark license, it gives another company the right to use its trademark. 

Patent Licenses 

A patent prevents IP from being created, sold, or used by another party without the creator’s express permission. The patent owner has the right to commercialize their patent. This can include buying and selling the patent or authorizing a license to the invention to any third party under through a licensing agreement with mutually agreed terms. 

Copyright Licenses 

A copyright does not protect ideas. However, it does cover “tangible” forms of creation and original work such as music, art, architectural drawings, or software codes. The owner of the copyright has exclusive rights to sell, publish, and/or reproduce any musical, literary, artistic, dramatic, or architectural work created by the author. With a copyright license, the licensee gains the right to reproduce and sell a copyrighted asset. 

Using Personal and Commercial License Agreements 

The best way to ensure IP is protected and to avoid accidental infringement is to use personal and commercial licensing agreements in a legally binding contract. Within this contract, the rights and expectations of both the licensor and the licensee should be clear and comprehensive. If something is missed in this agreement, companies could be putting their IP at serious risk. Since many companies are not highly familiar with licensing agreements or contract laws, enlisting the services of a business attorney can be extremely helpful.  

Hire a Business Attorney to Help Protect Your Company’s IP 

Licensing agreements can be beneficial to both the companies that grant them and to their licensees. However, they must be drafted correctly and thoroughly. You need an advocate who understands the importance of IP to your business but also all applicable IP rights and laws. 

Hiring a knowledgeable business attorney who can understand your goals and draft your licensing agreements is invaluable to the livelihood of your business. If you are considering granting rights to some of your company’s IP, be sure to discuss your situation with an experienced business attorney. 

Doug Griess and John Snow of Hackstaff & Snow, LLC, are top Denver business attorneys with expertise spanning various industries. Specializing in business law, litigation, intellectual property, tax law, and dispute resolution, John Snow and Doug Griess offer an in-depth understanding and knowledge of general corporate rules and regulations and are a trusted resource for business owners throughout Colorado. 

IP on IG: marketing your business without infringing on another’s rights

Effective business marketing is a cornerstone of most successful companies. When you’re trying to run a profitable business, intellectual property (IP) rights aren’t always at the forefront of your mind. However, not honoring these rights can have serious legal and financial consequences for your business.

It doesn’t matter if the violation was unintentional or what platform it occurred on. Using another party’s IP on social media or anywhere on the internet for advertising can still have negative implications, just as if it were used in another arena.

Intellectual Property Protections

You can’t avoid IP infringement if you aren’t aware of what protections apply. To use material properly, you need to know the different types of IP and their protections. No matter their size, companies should focus some time and energy on building a robust understanding of the intellectual property process. The major types of IP protections you might encounter include:

Copyrights

Copyrights protect the rights to “original creative works,” such as literature, music drama, video, computer software, and architecture.

Copyrights are registered with the Copyright Office of the Library of Congress. Registration isn’t required to own a copyright. Creating the original work often signals ownership. However, you secure greater, more effective protection by registering your work.

Trademarks

Trademarks protect branding features like symbols, words, and phrases that identify companies, services, and goods. Registering a trademark with the state or federal government is one of several effective ways to protect it.

Before your company uses a new trademark in the marketplace, it’s critical that you conduct a search to ensure there isn’t another trademark already registered or being used in commerce, which is called a “common law” trademark that conflicts with or is surprisingly comparable to your new trademark. If you don’t, your use of the trademark can come to a standstill under the law. Using something similar to an already protected trademark can cost you valuable time and even substantial expense.

Trade Secrets

Trade secrets protect proprietary information such as formulas, methods, techniques, data, and programs. Trade secrets give one party a financial advantage over competing interests. If a business owner has taken reasonable steps to protect certain information, it could be classified as a trade secret. Nondisclosure agreements (NDAs) are the most common and most effective way to protect trade secrets. Courts have repeatedly echoed that the use of NDAs is the most significant way to maintain the secrecy of confidential business information. C.R.S. § 7-74-101 is Colorado’s version of the Uniform Trade Secrets Act (UTSA).

How to Avoid IP Violations

Many experts recommend beginning by checking the U.S. Patent and Trademark Office database to ensure a brand or product name, design, or logo isn’t already registered. Business owners can also take the following steps to prevent inadvertently violating another person or business’s IP rights:

  • Generate Original Images or Music for Advertisements

Even small businesses can turn to in-house staff or freelancers to create original content, graphics, music, and more to use in their marketing efforts.

However, if you do use freelancers, it’s imperative to include a clause in the contract stating all rights to created materials belong to your business. Otherwise, freelancers could plausibly register the material themselves and file a lawsuit against your business for IP infringement.

  • Acquire the Necessary Licenses from Copyright Holders

The easiest way to protect your business is to request permission to use the work from its original creator. This can be as simple as messaging another user or business and asking for permission. Keep in mind that the best way to protect your business is to have a formal agreement signed by both parties.

If you plan on using registered material, it’s vital to get the necessary licenses and explicit, written consent from the content’s owners. Without a license and consent, you should never even think about using protected content.

  • Use Royalty-Free Media

Royalty-free media can be found online, and it isn’t subject to the same limitations as other types of IP. Royalty-free media can be used freely without consequence. Keep in mind that it’s best practice to give credit to the creator wherever their content is used.

  • Ask for Audience Media

Some companies have found success in asking their audience for media. This step not only avoids IP infringement but can help grow followers. Most followers enjoy user-generated content even more than they enjoy yours because it’s authentic and unpredictable.

  • Be Careful with Livestreams

Livestreams can sometimes get businesses into trouble. Suppose music is playing that you don’t own a copyright to, or you use another company’s slogan by accident. In that case, it could end with IP infringement.

Determining if Information is Okay to Post

To determine if something is okay to post or use on social media or anywhere on the web, or if it could be an IP violation, ask yourself the following questions:

  • Are you familiar with the site’s or app’s Terms of Service (TOS), and if so, will your post adhere to them?
  • Are you using trademarks in a manner that won’t cause consumer confusion or dilute the famed mark of another company?
  • Are you being truthful and using the minimum information necessary to reference the particular trademarked good or service?
  • Did you create the content you are sharing?
  • Do you have the owner’s permission (ideally written) to use the content?

Unless you can answer these questions affirmatively, you could be in danger of IP infringement. You should speak with a qualified IP lawyer before proceeding.

How IP Attorneys Can Assist Business Owners with IP Marketing Plans

Businesses can spend a lot of time developing a product or service. They should spend an equal amount developing an IP strategy to ensure the maximum return on their IP investment.

To help protect your IP and ensure that you don’t violate IP laws by using someone else’s material, it’s best to have a seasoned IP attorney on your side. Your legal counsel can perform the necessary legal searches to identify potential conflicts and problems that might arise while providing you peace of mind and ultimately saving you time and expense.

Aaron Atkinson and Doug Griess of Hackstaff & Snow, LLC, are top Denver business attorneys with expertise spanning various industries. Specializing in business law, litigation, intellectual property, tax law, and dispute resolution, Aaron Atkinson and Doug Griess offer an in-depth understanding and knowledge of general corporate rules and regulations and are a trusted resource for business owners throughout Colorado.