Trademark expert Julie MacDonell has heard all the horror stories. There was an aesthetician, for instance, who poured her life savings into opening a beauty shop and developing a line of cosmetic eyelashes. With signage up, a website launched, and product ordered from a manufacturer, the venture had promise — that is, until she received a cease-and-desist demand from a global company that claimed her branding and wares were infringing on its trademark.
The request meant the shop couldn’t continue under its banner, and its products with logoed packaging weren’t sellable. Tens of thousands of dollars were gone.
“And that was it, the dream was over,” says MacDonell, a lawyer, trademark agent and co-founder of Haloo, a Toronto-based service that helps entrepreneurs navigate the trademark process. “It’s heartbreaking.”
This wasn’t so much a case of a market leader stomping on the little guy as it was an entrepreneur making a surprisingly common misstep, says MacDonell. Many launch into business without first trademarking their startup’s name, branding and other identities. Without such protection, not only can it be devastatingly costly, but it can also prevent them from forming business partnerships, getting funding from investors and selling through giants such as Walmart or Amazon.
MacDonell and other experts have plenty of advice to help startups and small businesses grow, but they all emphasize taking this crucial step early — stake your claim to your idea and brand from the get-go. Here’s everything you need to know to get you started on safeguarding your assets.
What’s a trademark?
A trademark is defined as a word, symbol or design that distinguishes one product or service from the next. Everything from a company name and logo to a slogan can fall under the trademark umbrella. “As such,” the Business Development Bank of Canada notes, “trademarks constitute valuable intellectual property.”
Patents, which protect inventions or advancements on inventions, and copyrights, which protect artistic works, are similar safeguards.
It’s not mandatory to register a trademark to operate a business in Canada. Common law offers companies some protection against competitors ripping off their intellectual property. But trademarking gives better protection from misuse and imitation, proves ownership and provides more licensing opportunities down the road.
When should you trademark?
If all ventures begin with an idea, they take shape during the second phase: branding. This is where entrepreneurs define their product or service, and its value in the marketplace by crafting the brand. “The first thing that the entrepreneur needs to figure out is what they are, what they’ve created or what they’re going to create,” says Anthony de Fazekas, a lawyer, patent agent and intellectual property strategist. “Sometimes they don’t fully appreciate the importance of a brand and brand strategy.”
With those established, it’s time to search the Canadian Intellectual Property Office trademarks database to see if the brand name is already taken. If not, apply for a trademark. De Fazekas recommends entrepreneurs register for one before taking any further business steps — that means before seeking partners, approaching investors, getting feedback or publicizing the venture by setting up a website or crowdfunding page, lest their branding ideas get scooped in the fledgling stage.
Many larger companies have employees that search and register trademarks, and they won’t even start developing a new product or service without trademark clearance.
Does registering your company provide enough protection?
Entrepreneurs who register their company federally with Corporations Canada, incorporate or buy a website domain name often think of these steps as synonymous with trademarking. They’re not. Trademarks, patents and copyrights are separate registrations and protections.
Do you need a lawyer?
Intrepid entrepreneurs can embark on acquiring trademarks, patents and copyrights on their own. The Canadian Intellectual Property Office, through its home on the federal government’s website, offers directions on searching its database for existing trademarks and applying for one.
But experts agree the process is not simple. In fact, it can often be opaque and strewn with barriers, making it difficult for novices and small businesses to navigate alone, says Haloo’s MacDonell. Indeed, she co-founded her company, which uses artificial intelligence to accelerate the process, because of the time and cost barriers involved.
“I think of it like changing your own brakes,” says lawyer Charles Boulakia, who specializes in patents in his day job and also volunteers with entrepreneurship programs at Ryerson University and the University of Toronto. “You can watch a YouTube video and you can learn how to change your own brakes — it’ll probably take you a lot longer than it would take an expert, but you could probably get it done. Hopefully, you’ve done it right, but if you haven’t it’s a pretty big deal.”
How can you protect your idea beyond Canada’s borders?
Registering through the Canadian Intellectual Property Office provides a trademark that spans Canada for at least 10 years (and it can be renewed). But businesses with wider geographical ambitions, especially those in e-commerce where the whole world is their market, will have to go through a similar process in other jurisdictions. The United States has its own Patent and Trademark Office. Fortunately, many other countries don’t have to be approached separately. In 2019, Canada signed on to the Madrid Protocol, a centralized international system which allows brand owners in 120 member countries to make a single application, with a single fee, to get a trademark across all these countries.
How should a company protect its trademark?
Obtaining a trademark isn’t the end of it. Trademark lawyers encourage business owners to monitor whether other companies are infringing on their trademarks, using the same databases where they registered, and it’s up to them to pursue violators.
The odds of infringement are good. A 2020 study by CompuMark found that 85 percent businesses reported an infringement in the previous year. “That number seems shocking,” MacDonell says. “But it’s completely not surprising to a lawyer who practises in this area. There’s a number of things that can happen. They’ve chosen a name that somebody else already owns, or has registered. That’s extremely common.” Which again underscores the importance of staying vigilant.
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