5 Small Business Branding Mistakes Entrepreneurs Should Avoid

Establishing your small business brand can be challenging, but there are legal mistakes that you can avoid along the way. On today’s show, we’re discussing business branding mistakes to avoid, from a legal perspective. We’re pleased to welcome Dayna Thomas Cook, entrepreneurship and entertainment attorney at The Law Office of Dayna Thomas. She is also the best-selling author of “Entrepreneur’s Guide To Building A Solid Legal Foundation.

Transcription:

Jim Fitzpatrick: Thank you so much for joining us once again, Dayan.

Dayna Thomas Cook:
Awesome. Thank you for having me. It’s always a pleasure to be here, especially my favorite topics, business and branding.

Jim Fitzpatrick:
That’s right. As I mentioned in the opening there, a lot of mistakes can happen, and certainly they can be avoided if people know what to do. There’s so many entrepreneurs out there. I was one a number of times, where you take this ready- shoot-aim approach. Where you come up with a great idea and a great name for a company, and maybe you even put together a great logo or have one designed and figure, okay, I’m all set. No one else is out there doing this, and I’m going to take it to the public. What are a few of the common legal branding mistakes small businesses owners often make that they come into you and say, “Ah, you’re an attorney, now I need help?”

Dayna Thomas Cook:
Absolutely. I am going to cover five of those branding mistakes for businesses. I have seen all of these happen before and even some more, but I wanted to focus on some of the ones that are more common. So yes, what you said is absolutely true. For any entrepreneur that is just starting a business, it’s exciting. The first thing that an entrepreneur wants to do is pick the brand name because it’s fun, it’s meaningful and sometimes it can be easier than the rest of the entrepreneurship process. But, there is a lot of responsibility that comes with that. And so for number one, I would say, of course you should not solidify your brand name or your logo before you know if it’s available to trademark. This is the most common mistake that entrepreneurs have made. They will pick a brand name, start putting it on inventory, have launch parties, and publish it on social media and everything.

Dayna Thomas Cook:
And then they realize several months later, it could be a year later, that someone else already has a trademark for this, or they get a cease and desist letter. It’s devastating. It’s scary, it’s devastating because their brand is at jeopardy, all of the money that they have invested. If someone has a trademark before you, there’s not much that you can do. Really, it is the first to file who gets the trademark protection.

Dayna Thomas Cook:
There are some other scenarios where that won’t apply, but for the most part, if you don’t want to have any issues with your brand, be the first to file and just make sure that your name and your logo is available for trademark protection first. You can actually do something that’s called an intent to use trademark application, which means that you don’t even have to be using the name before you file your application. How awesome is that? I can think of a name or even a logo, file my application and the trademark office will reserve it for me so long as it’s not too similar to something else. And then I- a good amount of time to submit the evidence that I’m using that name. So, that’s number one.

Jim Fitzpatrick:
Well, let me stop you there. Because I know there’s some people out there that are saying, “But Dayan, I went on Google and I went all over looking for the name that I’ve chosen. I didn’t find any company at all on Google that uses the same name that I came up with. Aren’t I in the clear?”

Dayna Thomas Cook:
Absolutely not. You are not in the clear. I will say this, a Google search is necessary in the process, right? Because, even if your brand name is available to trademark on the federal level, if there is a brand out there that as soon as you put it in Google, it’s everywhere, even though they don’t have a trademark, that matters as well. But there are also some companies who are not very active online, that may have a trademark. Maybe it’s a older company that when they weren’t using online or social media as much. So no, your Google search will not put you in the clear. The federal trademark protection, not even State trademark protection, federal trademark protection is what you’d need to really not have to look over your shoulder.

Jim Fitzpatrick:
Right. Okay. Move on to the next one.

Dayna Thomas Cook:
Sure. Number two. Thinking that filing your business documents with the Secretary of State is going to protect your brand name.

Jim Fitzpatrick:
Very common mistake.

Dayna Thomas Cook:
It is. People think that, okay, well I got my LLC or my corporation in this name, so that means that I own it, right? No, it doesn’t mean that you own it. Someone else can use that same exact name, trademark that same exact name and get a federal registration for it. The only thing that filing that name with the Secretary of State will do is that another company can’t file or have a business entity in Georgia or whatever state you’re in, under that same name. However, they can still trademark it, meaning that they can use that name for their brand, even though their LLC name is something different. So your LLC name and your brand name do not have to be the same. Just because you file your LLC or your corporation, that does not give you any trademark rights or any rights to own that name.

Jim Fitzpatrick:
Right. Absolutely.

Dayna Thomas Cook:
I can see that you’ve heard and seen that one before.

Jim Fitzpatrick:
I did all of these things. As a young entrepreneur, I ran out and made all of these mistakes and I know exactly what you’re talking about. It cost me a lot of money to reverse all of that because I’ve got to hire a very talented attorney like you, to get me out of the hot water and then also steer me into the correct waters that I should be in without any legal problems. So I’ve made these mistakes.

Dayna Thomas Cook:
Yeah. Hence why we’re here now, to help others. Number three is imitating famous brands. I know that it can be very tempting to imitate a famous brand because it sounds cool, it’s almost like this, but it’s not this, right? There’s some, immediately some type of feeling associate or some type of recognition. But let me tell you how much those famous brands protect their trademarks. They get more trademark protection if it’s a famous brand. It extends beyond what may just be in their trademark application. They have lawyers and people round the clock that are looking through trademark applications to see if there’s anything that is even somewhat similar.

Dayna Thomas Cook:
Jim, they do not play about their brands. I’ve had a situation with a client. She did an imitation of the WB for Warner Brothers in the shield, and she put her own initials there, and it was different services. It was completely different services. Although we did get past the trademark examiner, because the products and the services were very different, she wasn’t offering entertainment or clothing. It was something very different. There’s a stage in the trademark process where Warner Brothers can oppose the application. Usually oppositions come from these famous brands because they protect it strongly. I know it’s tempting. Yeah. I know it’s tempting to do it. It’s cool, looks fun, But, come up with something unique.

Jim Fitzpatrick:
I knew of a situation where somebody used the green logo for Starbucks and the circle that said Starbucks. Obviously, it’s a world renowned brand there. So they changed the name of the company to The Great Coffee Company. They put it in the same font with the same color green in the circle. Of course the name wasn’t even close to Starbucks, it was The Great Coffee Company. Starbucks came in and said, no, it looks too similar to what our brand looks like, and you’re also going after the same market of people. So they said, you got to change your entire branding, which by now they already had even a couple of stores. They had their wall decorated, the logo out there. I think they even had some apparel with the logo on there and Starbucks said, no, you got to change it all. And they won that case, Starbucks itself.

Dayna Thomas Cook:
I could bet that even if that person that you’re talking about, that new coffee company, even if they were selling sneakers, Starbucks would still not allowed it.

Jim Fitzpatrick:
That’s right. That’s a very good point. There was also a famous case with, somebody came up with a furniture company that said, Furniture or Chairs R Us. Right. With a reverse R. And of course, Toys “R” Us had a trademark on that and said, “No, no, you’re leading the public to believe that this is a Toys “R” Us company by saying Chair R Us”, with the reversed R, and what have you. Anything “R” Us, they had a trademark on.

Dayna Thomas Cook:
Yeah. If it’s not specifically filed, they will oppose your application and drag you through court. So avoid that. Number four…

Jim Fitzpatrick:
We might add too that for the entrepreneurs and the business owners that are listening to this, it’s much better to sit down with Dayan or somebody, if you don’t have a Dayan available, somebody like Dayan, that’s got the knowledge in this area and spend the necessary money. It’s not a whole lot of money, but spend the necessary money up front. Don’t wait for the letter, because by then it’s too late and it could cost you literally thousands of dollars to get out of this. I just want to interject that for people that are listening to say, “Hey, you better be taking notes right now.” But go ahead, go to the next one. Yeah.

Dayna Thomas Cook:
Sure, trademarks last forever, so it is worth the investment. Number four, not owning the copyright in your logo. I know we’ve talked about trademark and a lot of people get trademark and copyright confused, right? Let’s settle that now. Copyright protects works of arts or authorship that are fixed in a tangible medium. Fixed in a tangible medium, that just means if you can touch it, it’s tangible. If I sing a song, it’s not copyright protectable. Once I record a song and I’m holding it in the recorder, it’s copyright protectable. Same thing as it applies to logos. Once you give your, even if you give your logo designer the idea for your logo, and the logo designer creates that logo for you, unless you have a contract that says that the copyright is being transferred from the designer to you or your company, or it’s a work for hire, then that logo designer owns your logo.

Dayna Thomas Cook:
Even if you told him exactly what to do, what you’re contributing is not copyright protectable because it’s just ideas. It’s words, it’s not fixing a tangible medium. Your designer, who’s actually creating it, where they’re drawing it, doing it on the computer, they own the copyright to that logo. Only a contract that is signed by the logo designer can transfer the copyright in that logo to you or your company. So that’s important because as we are all very optimistic about our brands and our businesses, we want to take it as far as possible, and be million and billion dollar brands. Guess what, when your logo is all over magazines and billboards, and making all this money, I bet you will get a letter from that logo designer, saying that the- copyright.

Jim Fitzpatrick:
There’s been a number of cases where people, all of a sudden get a bill at the end of the second year that says, hey, did you want to lease? Do you want to go ahead and lease the logo rights again for the upcoming year? And people are like, what do you mean lease the logo rights? Oh yeah, you did. I only gave you that for one year. That was in the fine print when you hired me to do the logo. I said I’d do the logo, and in the fine print I gave you rights to it. Again, this is an area that you want to run it by your attorney to say, I’ve had this work done by a logo designer. Do I have full rights to this logo? Even though somebody goes, oh no, no, you’ve got full rights to it, but maybe it’s only for a year or three years, and then they want to renew that with you. That can be very, very costly.

Dayna Thomas Cook:
Absolutely. If there’s no contract, you have no rights. The most that you may have is an implied license, because if the logo designer is giving the logo to you to use for your business, it’s implying that you can use it for your business, but that can be revoked at any time. All right? So make sure you own the copyright to your logo. Number five, not having a written agreement with your business partner, especially if you don’t have a trademark. The reason why that is important for your brand, I have come across this situation multiple times, where there’s business partners. At first, everything is going great, right. They’re using the same brand. They’re using the same logo. There is no contract. And then there’s a dispute.

Dayna Thomas Cook:
They split and both of them are using the same logo, or the same brand, selling the same services. And it’s like, when there’s no contract, you can’t say one person, and there’s no trademark, one person owns the rights more than the other. It gets very messy. Make sure that you have a contract with your business partner and that it speaks to, if this person wants to leave, what’s happening with this brand. Do they take the brand with them? Does the brand stay? Does it have to be, you’re bought out? Are we sharing it? What the situation is? And so, if you have an LLC, you can put that in your operating agreement. If you have a corporation, you can do it with your by-laws or your shareholders’ agreement and then there’s different types like joint ventures and things like that. Make sure you account for your brand with your partner.

Jim Fitzpatrick:
Absolutely. In fact, Dayan, I would love to have you come back when we’ve got a little bit more time, and the show would really just focus on the importance of having an agreement with your partner and, what are the elements that need to go into that. Because I think a lot of people just think, no… And even if it’s your brother, your sister, whoever it might be, it doesn’t really matter. You’ve got to have that agreement and you have to address everything that you can think about, and put it in that agreement, because these things are going to come up for sure. And if it’s not in an agreement, you could have one heck of a messy business relationship with your partner who you really liked going into this new venture. Right?

Jim Fitzpatrick:
Friendships and partnerships break up because of the business. And it was the one, “I thought we were going to do this, well no, I thought we were going to do this, and how come we always do it your way and not my way and how come…?” All of these things come up, or somebody that says we have to take out a loan for the company.

Jim Fitzpatrick:
When one partner says, all right, let’s sign, the bank says, we need your personal guarantees. One partner says yes, and the other one is, I’m not putting my personal guarantee on that. Well, now what do you do with the company? Do you not get the loan? Do you get the loan? All of these things have to be addressed in these. Even though you’re not facing those issues right now, I can assure you, you will be one day, if the business lasts any longer than a day. Right?

Dayna Thomas Cook:
Absolutely. That is absolutely true. And what you said about, it doesn’t matter how close you are in the beginning, because one of the situations that I was thinking about what this brand are between cousins. Cousins who are business partners, and then they split and both are literally pushing the same brand and they both have a big following. And so, there’s an issue there. So thanks so much, Jim. I love the co-sign on all five of my common mistakes. Appreciate that. It’s always a pleasure to chat with you and your audiences.

Jim Fitzpatrick:
Yeah likewise. For those of you that are listening to us, there’s a great case between Adidas and Puma, the sneaker companies. Adidas and Puma, they were partners. They were relatives actually. I think they might’ve been brothers. Adidas got started, lo and behold the partnership falls apart, the other brother goes out and starts Puma, and they’re competing brands and they always have been, but it’s an amazing story. A lot can be learned from stories like that, because I don’t care how close you are, if you don’t address these issues that we’ll talk about by the way on the next show, you’re going to be in trouble. Again, Dayan Thomas Cook, thank you so much for joining us here on the Atlanta Small Business show. I know that our entrepreneurs and small business owners get so much out of your visit here because every time you’re on, we get a ton of views. So, thank you for all your contribution.

Dayna Thomas Cook:
I love that. Thank you so much. I will be here next time.

Jim Fitzpatrick:
Okay. Take care.


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