How to Avoid Being Sued for $250,000
Businesses often invest countless hours and thousands of dollars into branding initiatives. Before investing in a brand, though, it is important to turn your mind to a few key matters. If any of these issues are overlooked, the brand may not only lose all value, but it may also become a significant liability, costing you time, money and goodwill.
Is Your Brand Original and Distinctive?
A notorious example of how branding can go wrong was set by the founder of ‘Ms. Lube’, an automobile repair shop which sought to target women as its core clientele. The entrepreneur behind the concept appeared on the television series Dragons’ Den to pitch the concept. Unfortunately, one of the Dragons also happened to be one of the owners of the well-established ‘Mr. Lube’ franchise. In his view, the public would be confused by the use of ‘Ms. Lube’ and think that the business was related to ‘Mr. Lube’, which, of course, it wasn’t. The result was not the investment that the entrepreneur had sought. Instead, she became mired in a law suit in which Mr. Lube apparently sought nearly a quarter of a million dollars in damages from her start-up business.
The first steps to take after coming up with a branding concept is to ensure that:
- Your brand is sufficiently original to ensure that potential customers won’t confuse your products and services with those offered by a competitor;
- You will legally be allowed to use your trademarks wherever you plan to do business; and
- You will be able to prevent others from using your trademarks or any that are confusingly similar to them.
A trademark agent can advise you as to what searches should be done to ensure that your brand is viable, and can also file an application to register your trade-marks so that you will be able to prevent others from using similar branding.
Why Registering Business and Domain Names is not Enough
The agencies that register business and domain names cannot confer any trademark rights. In fact, they may register names that actually infringe on someone else’s rights. It’s up to you to ensure that you have the right to use a name, logo or other mark, and the only way to obtain full trademark protection in Canada is to register your marks with the Trade-marks Office (“TMO”) of the Canadian Intellectual Property Office. Given the intricacies of the trademarks registration process, which includes an examination by government officials as well as public advertisement of your claims, it will usually be difficult for anyone to challenge your rights once your mark has been registered.
The registration process can be complex and professional advice is usually essential in order to ensure that:
- The required searches and due diligence inquiries have been conducted;
- There are no registered or unregistered competing marks which may prevent registration or attract a claim for damages such as the one in the ‘Ms. Lube’ case;
- The application is comprehensive and will be acceptable to the TMO; and
- All filings are completed in the prescribed form and within the time required time.
Protecting Your Business While Creating Value for the Future
A brand that is selected carefully, following the appropriate due diligence searches and analysis can be extremely valuable in a number of ways, including:
- Increasing the distinctiveness and popularity of your business;
- Preventing others from effectively stealing your concepts and using your investment and goodwill for their own profit, at your expense;
- Creating valuable intellectual property, for the purposes of financing, attracting new investors, a future sale of business or other succession strategy, as well as for licensing or franchising.
More importantly, by following this process, you can avoid inadvertently infringing the rights of others. This means that, unlike Ms. Lube, you are unlikely to have a worthy business endeavour, such as an appeal for financial backing, turn into a major law suit in which you play the unhappy role of the defendant.