At risk are your business’ name, slogan, fleet design, and marketing materials.
Consider this hypothetical: Brothers Bob and Joe Smith took over the HVACR business that their father started, Smith Heating & Cooling. The business has been quite successful, as the Smith family is well known in the community. Bob is the majority owner, with 51% of the stock. Their father had set things up this way to be sure that the older brother could make decisions if there were disagreements.
Bob and Joe have a falling out. Joe starts a new business that he calls Smith Family Heating & Cooling. He has painted his trucks to look very similar to the trucks used in the family business, using the same style of lettering and the same color scheme. Joe makes copies of the marketing brochure that he and his brother had used and simply puts his new company's name on the brochure. He feels justified in doing this because he has spent hours writing the brochure.
Bob is livid and wants to know how to stop his brother. Welcome to the murky world of intellectual property.
Before sorting through this mess, you need to know a little bit about copyright and trademark law and the differences between copyrights and trademarks. A copyright is a form of protection for "original works of authorship." A copyright does not protect a simple phrase, slogan, or trade name. An individual who holds a copyright has the exclusive right to reproduce the copyrighted work, to prepare derivative works, and distribute the work. A copyright is automatic. As soon as you create a work, you have copyright protection. However, the holder of a copyright has better protection if the copyright is registered through the Copyright Office of the Library of Congress. Copyright is often “assigned” in work-for-hire contracts; for example, a commercial artist working at an advertising agency usually signs an agreement that the agency retains copyright of the work the artist produces and specifies how the artwork will be used.
A trademark is a word, name, symbol, phrase, or other device that is used in trade with goods to indicate the source of goods. Closely similar is a "service mark," which is used with services to indicate the source of services. The trademark or service mark can protect not only the words but also the "look" of the mark. Trademarks and service marks can be established by use in a trade or business. The holder of a trademark or service mark can prevent others from using a confusingly similar name or mark by challenging them in a civil lawsuit. However, better protection is afforded by registering the trademark or service mark. Marks that are used in federally regulated commerce can be registered with the U.S. Patent and Trademark Office. Not all trademarks and service marks are matters of federal law, but many states have their own laws regarding trademarks and service marks.
With this background, let's try to sort out the situation between Bob and Joe Smith. We know that the brochure is copyrighted, because the copyright protection arises when the work is created. The fight is going to be about who owns the copyright. Joe will lay claim to the copyright, based upon his authorship. However, presumably he wrote the brochure as an employee of the company, so the company has a copyright claim as well. Ownership of the brochure could easily have been established by simply adding to the front of the brochure the “©” notation followed by the company name — Smith Heating & Cooling. That would have easily resolved the issue between the company and Joe.
Ownership would be even clearer if the company had had all employees sign agreements that creative works they produce for the company while employed by the company immediately become property of the company. If you are not using such agreements with employees and vendors that provide creative material and/or unique product or service designs to your company, you should consider doing so. Having these on file could greatly reduce the likelihood of copyright disputes. (For an example of such as agreement, go to the HVACR Business download center.)
Can Bob do anything about the confusing name of his brother's competing business? Without a registered service mark, it will likely be very difficult. Many states permit businesses to incorporate or to register business names that are extraordinarily similar. In Ohio, for example, Joe would have had no problem in registering the name of his business, notwithstanding the existence of a business with a very similar name in the same community.
Had the name of the original business been trademarked or service marked, Bob would have a much better chance of stopping his brother from using a similar name. He may still have a claim in state court, but whether and to what extent he will be successful will depend on both state law and his ability to prove that the similar name is hurting his business.
Obtaining a federal trademark or service mark is a somewhat involved process. It generally takes three to six months or longer and will likely cost a minimum of $800 to $1,200. If someone challenges the application, costs can skyrocket. Nevertheless, it is clearly the best way of protecting a trade name, trademark, or service mark.
Michael P. Coyne is a founding partner of the law firm Waldheger Coyne, located in Cleveland, OH. For more information of the firm, visit: www.healthlaw.com or call 440.835.0600.