Insight How Important Is A Trademark?

Times have changed.  It is an old cliché and yet it is as true for new businesses as it is in all other aspects of life.  For decades (at least) most attorneys’ recommended first step for an entrepreneur, or anyone starting a new business, was forming a limited liability entity.  In many ways, this is still good advice.  However, in many cases, this is now arguably step two.

In today’s marketplace, often step one is (or should be) researching trade-names and online/social media identities.  There are numerous URLs to consider (.com, .biz, .info, .us, .org, .net, .edu, .uk, .ac, .au and many others) plus Twitter handles, Facebook pages, Instagram accounts and YouTube Channels, along with Google+, Tumblr, Pinterest, Reddit, Fliker and others.  For many businesses, having some or all of these locked up is the top priority, which is quickly followed by forming the business entity and transferring the rights to these assets into that entity.

Importantly, research related to an on-line presence and social media outlets must be done in conjunction with selecting a trade-name.  Many clients set their minds on a trade-name and spend money investing in that selection.  However, on further investigation they find that it is impossible, or very expensive, to obtain a formal trademark and establish their online presence using that trade-name because others already control the relevant URLs, accounts and handles.  Businesses that rely heavily on their brand and on social media must consider this “new” first step.  They also must be flexible and creative in establishing a brand and a trade-name and should meet with an intellectual property attorney very early no to avoid some of the pitfalls addressed below.

An important related issue involves ownership and transfer of rights to URLs.  Often, new businesses use professional help (IT companies or website developers) to acquire URLs and set up websites.  Others have an IT savvy employee help with the process; more often than not, an employee that is neither a principal nor an owner of the business.  This raises several problems.
The most immediate one is that without professional advice on intellectual property issues the business can run into problems with the design, information and content on their website.  As a related issue, the business can end up with a URL, or URLs, that don’t correlate well with the trademark or brand that they ultimately end up using.

The longer term problem that is any future transfer of that URL can only be done by the individual listed as owner (typically identified as the “registrant”). So, after years of effort, the business owner has accomplished their ultimate goal; they have found an acquirer.  However, the individual or entity that obtained all of their URLs has disappeared, gone out of business, died, or gone to work for a competitor.  The target company’s web presence may be a significant asset of the business and now they have a serious problem.  As an aside, a prospect’s control over its IP is also likely to be a concern for equity investors, lenders, and in the event of a public offering.

Spending an hour or two with knowledgeable IP counsel early in the business formation process can eliminate this serious problem.  However, regardless, take the time now to check the ownership of your domain name.  It is easy to do using the internet.  Search on-line for the “whois” database.  “Whois” databases are maintained by all registrars (the entities that issue domain names) and they list key information about all domain names issued by the registrar.   Registrars’ Whois databases can be searched online.  Once you are on the Whois database, enter your domain name (such as “awesomebusinessentity.com”) and view the results.

Your domain name is “owned” by person or entity listed as the “registrant.”  The results may also identify all of the individuals or entities listed with the registrar as “contacts.”  If only the registrant is listed, make note of the name of the registrar and go their website to obtain the rest of the pertinent information.  In additional to the registrant, people listed as “contacts” may have the ability to negatively impact the domain name.  Once you have accessed this information, be sure the appropriate people are listed and all of their contact information is correct.  If any information is not correct or if it needs to be updated, contact your registrar to get it changed.

If there is a problem or dispute related to your URL, the identity of the registrant or other issues, there are dispute resolution mechanisms but they can be time consuming and complicated and will likely necessitate hiring legal counsel.  This is why you must take care of these issues before they become an immediate problem.  Your associate legal costs will be significantly lower if you handle these issues properly in the beginning.

ICANN.org is the organization that authorizes registrars to issue domain names to the public.  If the applicable individuals can’t resolve a domain name ownership dispute among themselves, most disputes are resolved through ICANN.  Following is a link to the ICANN web page addressing the Uniform Domain-Name Dispute Resolution Policy (the “UDRP”) that all registrars are required to follow. [https://www.icann.org/resources/pages/dndr-2012-02-25-en#udrp]  If your registrant is not the appropriate person and is uncooperative, you are likely to have to follow the UDRP.

Brand and web-presence are important for virtually all businesses; even those (like law firms) that traditionally focused on other types of branding and marketing.  In the early stages, businesses need to create a strategic plan related to domains and social media, and may even need to build their “brand” around the trademarks, domains, handles and accounts that are available as opposed to the one that they initially thought was perfect.  During the life of the business, the owners must assure that they maintain control of the accounts and domain names.  As employees and service providers come and go from the business team, owners must assure continued control over URL’s, domain names and websites.  In this way, these valuable assets remain controlled by the business and its principals and there are no ugly surprises when the big deal is on the line.

For more information or questions, please contact a member of our Business Group, or call 208.344.6000.