I will be doing a monthly round up of legal news that pertains to my practice areas. This month I focused on trademark news, because it’s a little bit more entertaining and relateable. These articles are all pretty easy reads and shouldn’t take longer than 5 minutes to digest. Enjoy!
1. Pooey Puitton (MGA Entertainment vs. Louis Vuitton), check out my blog post that discusses how this company may be able to win their lawsuit with LV over their parody toy.
2. McDonald’s loses its Big Mac trademark in EU. See how and why McDonalds lost it’s trademark for the Big Mac in the EU. This is kind of a big deal.
3. Netflix is being sued over the choose your own fate movie, Black Mirror: Bandersnatch. I was an avid reader as a child and I used to love the “choose your own adventure” books. Well, the publishers of those books are suing Netflix for trademark infringement. Read the article here.
4. Rihanna suing father over Fenty trademark. This article discusses why you can’t just go around using someone’s trademark all willy nilly, even if you have the same last name and are related.
Registering and maintaining a trademark is expensive, and you don’t want to lose your trademark over something that is preventable. Keeping your brand reputable is time consuming and, also expensive. You are putting time and money into your brand, and these three mistakes may cause you to lose your trademark.
1. You can lose your trademark if your non registered trademark is similar to a federally registered trademark.
If you have a non registered trademark and you are, say a little cupcake shop in Michigan, and you only plan to sell cupcakes in your city in Michigan, then you probably don’t have to register your trademark. But, if you want to sell your cupcakes nationally, and federally register your trademark, you’ll have to make sure that another company has not already used your trademark or something similar. Otherwise, you may lose your trademark.
If you want to learn the basics of a trademark and the benefits of registering your trademark, check out this post.
2.You can lose your trademark if you think that you have a trademark because you registered a domain name with a hosting service.
Just because you have a domain name does not mean that you have a trademark. Not only that, but if someone who holds the trademark that is similar or the same as your domain name may sue you for trademark infringement. If the trademark owner wins, then you’ll likely have to relinquish that domain name.
3.You can lose your trademark if you abandon the trademark, knowingly or unknowingly.
According to §15 USC 1127, you have “abandoned” your mark if:
(a) You have stopped using the mark and there is no intention to USE the trademark again. “Use” of a mark means you are using the mark to sell goods/services. You are not “using” a mark, if you are merely reserving the mark. If you don’t use the trademark for 3 consecutive years, there is a presumption of abandonment. The USPTO or federal judges will infer the intent not to resume under certain circumstances
(b) When any course of conduct of the owner, including acts of omission as well as commission, causes the mark to become the generic name for the goods or services on or in connection with which it is used or otherwise to lose its significance as a mark. For example, if the inventor of the vacuum trademarked “vacuum”, and the owner of the vacuum trademark did not do anything to keep this trademark from being generally associated with a machine that sucks up dirt. Since the owner did not stop his invention from becoming a generic term, the USPTO will likely no longer protect it under the Federal Lanham Act.
If you need help with registering your federal trademark, you can schedule a Clarity Call today.
A definitive guide on how to write a contract and what needs to be included in a valid contract
Can we all agree contracts are difficult to understand? I think we can also agree it’s even harder to understand how to write a contract that’s actually going to protect you and your business.
Well today we’re reviewing not only how to write a contract, but understanding what constitutes a valid contract.
But first and foremost, ALWAYS have awritten contract. Legal agreements are one of the most important aspects of your business. Creating and reading contracts is a very important duty when you are a business owner. The more your business grows, you will be expanding your team and working with other companies or businesses. This means more contracts (e.g. employee contracts and collaboration agreements) to review. One bad contract can cause your business to come crumbling down.
And with that, the first thing to ask is what is a contract?
What is a contract?
A contract is a legally binging agreement where two parties agree to perform something for something (quid pro quo). When two parties enter into a contract, they have duties and responsibilities to the other party to do what was agreed upon.
What makes a contract valid?
There are three elements that form a contract: offer, acceptance, and consideration (payment).
Offer: If you create my website, I’ll pay you $1200.
Acceptance: “I accept this offer” or a downpayment of $50 implies acceptance of the contract.
Payment: You’ve paid $50 as a deposit or the full contract price of $1200 for the website.
However, a valid agreement can be void if the person signing is under age, under duress, or not of sound mind.
Standard clauses to include in your contract
1. The first standard contract clause you need is the parties involved.
Your agreement should identify both parties that are agreeing to enter the contract. This clause is one of the top priorities when you are creating your contract. The parties involved clause states the person who is legally bound to the contract, and who is obligated to perform. Depending on the other clauses of the contract, if either party breaches, then the party can sue the person who did not perform their obligation.
Example: This agreement is made on [insert date] (“Effective date”) between [insert Party 1] (“Buyer”) and [ insert Party 2](“Seller”).
2. Include what services you are providing or goods you’re selling.
Include this standard clause in your contract to describe the reason that you are entering the agreement. Be sure that you are specific about what you are selling and when you are selling it. If you are a service-based company, you will describe what services you are performing. Also add when you will perform these services. If you sell goods, describe the goods you are selling.
Example: [Insert company name] will provide business coaching to Client for 1 hour daily for the next 30 days. [Insert company name] and Client will discuss mindset, building content, marketing strategies, business system workflows, sales tactics, and email list building. Services will not include tax and legal discussions.
Example: Seller agrees to sell, transfer, and deliver to Buyer fifteen green planners for forty dollars each. Seller agrees to deliver the green planners on or before October 31, 2019.
3. How long does the contract last?
Does your agreement last until performance has ended or does it last a year. These are terms that you’ll need to be specific about as to not cause confusion amongst parties. If one party believes that the contract was supposed to last for 3 months and the other party was under the belief that it was supposed to last a year, then that’s an issue. And that issue could cause a lawsuit. Being clear at the beginning of your working relationship will avoid any sort of confusion.
4. How much are you getting paid?
This is a clause that should ALWAYS be in your contract because you want to get the service/good you are paying for. And most importantly, you want the other party to pay you for the service/good you are giving! Consideration is what each party is receiving in exchange for the performance of the service or delivery of the goods. Make sure that the consideration clause includes price, quantity, quality and time of performance.
Example: In consideration of One thousand five hundred dollars, Photographer agrees to perform the wedding photography on April 24, 2018 at the New York City Library.”
Example: Consultant agrees to provide services for one year to Client in exchange for a $500 monthly payment beginning January 1, 2018, and on the 1st of every month ending on December 1, 2018.
5. You need a Governing Law/Choice of Law clause.
Governing law is the state where the rules and laws apply to interpret the agreement. This will usually be in your home state. But if you have businesses in multiple states, use the state that has the most favorable laws.
Example: This Agreement shall be governed by, construed, and enforced in accordance with the laws of the State of [State].
Example: All of the rights and obligations of [company/party] and [other party] arising under or related to this agreement shall be governed by the laws of the State of [state].
6. Last but not least, include an Entire Agreement clause.
This clause states that the contract is complete and any prior contract is invalid. Place this at the end of your agreement. If there are multiple contracts or attachments part of the same transaction, include these documents in this clause.
Example: This Agreement represents the entire understanding between the parties and any prior understanding or representation of any kind preceding the date of this Agreement shall not be binding upon either party except to the extent incorporated in this Agreement.
Example: I have read this agreement in its entirety and I agree to and understand the terms and conditions set forth herein. Any prior understanding, representation, terms, or oral agreement of any kind preceding the date of this Agreement shall not be binding upon either party except to the extent incorporated in this Agreement. This agreement may not be amended or modified in any way without the prior written consent of [Party 1] and [Party 2].
Final thoughts on how to write a contract for your business
Now you have the framework on how to write a contract. Incorporating these standard clauses in your contract will provide protection to you and your business. Although the above clauses are important, depending on your industry, there are other clauses that you need to include in your contracts. Wilson Murphy Law drafts various contracts for the countless needs of your small business. If you need a specific contract or any other legal services, Wilson Murphy Law is at your fingertips.
Does the little bag on the right resemble a certain luxury brand’s monogram? Well this is “Pooey Puitton”, which is a toy manufactured by MGA Entertainment. This little toy is a carrier that holds unicorn slime and it was a hot holiday toy this year. On December 4, 2018, MGA Entertainment filed a suit in federal court in Los Angeles. According to The Fashion Law Blog, MGA Entertainment alleged that, “On or around December 7, 2018, Louis Vuitton claimed to one of MGA’s customers that the Pooey name and Pooey product infringed upon or diluted one or more of Louis Vuitton trademarks”.
MGA Entertainment decided to beat Louis Vuitton to the punch on filing suit before Louis Vuitton could allege trademark infringement. Claiming a parody defense, MGA Entertainment states that the toy is “designed to mock, criticize, and make fun of that wealth and celebrity”. Also, according to the complaint,“The use of the Pooey name and Pooey product in association with a product line of ‘magical unicorn poop’ is intended to criticize or comment upon the rich and famous, the Louis Vuitton name, the LV marks, and on their conspicuous consumption.”
In 2005, MGA Entertainment sued Mattel over the popular Bratz dolls and Mattel countersued. Mattel ultimately lost. The court found that Mattel misappropriated trade secrets from MGA Entertainment and awarded MGA $88.5 million in damages.
Since this just happened, I’m sure there won’t be a resolution of this case for years from now. But do you think MGA has a valid defense over Pooey Puitton?
If you want to learn a little bit more about trademarks and how to avoid a denial from the US Patent and Trademark Office, I have afree checklist you can use when you are deciding on your trademark.
Growing a business is not easy and business owners make the same costly legal mistakes.
You’re working hard and churning your wheels, but there’s this nagging in the back of your brain about all of the legal aspects that still need to be taken care of. Although, I can’t help with the overwhelm (therapy and meditation helps, I promise!), today I am going to give you 5 tips on how to grow a businessonline. When you are growing your business online, there are steps you will need to take to protect yourself and your business from liability. The legal business growth tips below are some steps are just the tip of the iceberg on steps that you should be taking.
1. Form an LLC or corporation.
There are 4 types of business entities: sole proprietorship, partnership, limited liability company (LLC), and a corporation. When you are forming your business, you may start as a sole proprietorship or partnership. As you grow, you’ll want to create an LLC or corporation depending on the type of business you have and how you want to be taxed.
An LLC is a business entity that shields the owners from being personally responsible for the LLC’s debts and lawsuits. If the company gets sued, you’re less at risk of losing your home or personal bank accounts to pay a judgment.
If you form an LLC or corporation, this entity shields your personal assets if someone sues you. Depending on your election with the IRS, you may be able to save money on self-employment taxes. In addition, if your business is a start up or you plan on having investors, forming a corporation makes you look professional and it is easier to raise capital because of the sale of stocks. Also, investors are more likely to work with a corporation as they are most familiar with this type of entity. It’s much easier to scale and grow a business once you have investors in place.
2. Choose your tax designation.
LLCs and S- Corporations are pass through entities which means that the entities are not subject to federal income tax. The IRS will tax the owner individually on their income. The IRS taxes LLCs as one of a sole proprietorship or partnership, depending on the number of owners. Basically, the owner will report all of the income from the LLC on their personal income tax return and pay personal income tax on the company’s profits. A C-Corporation is subject to double taxation. The IRS taxes a C-Corporation’s profits, as well as the shareholders dividends if the corporation distributes the profits as dividends.
If you elect an S-Corporation, you can bypass double taxation and possibly paying personal income tax on all of the company’s profits. The LLC or corporation must meet certain requirements, but instead of reporting all of the income of the company on a personal income tax, the owner(s) must pay themselves a reasonable salary, which will be subject to Social Security, Medicare, federal, and state income tax (if applicable). If there are remaining profits after you pay yourself a reasonable salary, that profit will not be subject to self employment tax, and you can take it as a dividend (bonus).
As you are growing your business, your business will start getting brand recognition. A consumer can recognize your brand by words, a design (logo), or a sound (like the NBC chimes). By trademarking your name or logo, no one else can use your name or logo to profit off of the brand you created.
If you want to register a trademark, you will have to register the word, logo, or sound with the United States Patent and Trademark Office (USPTO). You’ll want to make sure that your name is not similar to an already registered trademark before applying using the USPTO trademark search engine.
Once you apply, the USPTO checks your trademark against their database. The USPTO has to confirm that the mark was not previously registered or a likelihood of confusion. If everything checks out with the USPTO, they will register your trademark and no one else can use it without your permission.
4. Copyright your content.
As an influencer, blogger, or business, you have worked too hard for someone to just swoop in and copy your ideas. While growing your business, you want to make sure that copyright your creations. A copyright can be a book, website, photography, music, plays, and the list goes on. Copyrighting gives you the legal rights to use your content in anyway that you want.
To register for a copyright you have to go through the Copyright Office. There are different categories to copyright your content, such as literary works, visual arts, performing arts, sound recordings, and single serial issues. Once the Copyright Office approves your registration, you will receive a certificate of registration.
These terms and conditions guide users how to behave on your site and how visitors should use your information. Your terms and conditions should include:
Intellectual property rights
Limitation of liability
Final thoughts on how to grow a business
Growing a business online is a lot of work and it will not happen overnight. You need to make sure you have the correct legal foundation so that as your business continues to grow, your business isn’t costing you more than it’s making. You’ll want to be sure to protect yourself from liabilities and prevent lawsuits before they happen.
Have you implemented these tips in your business yet? If you haven’t, use these tips on how to grow your business online to get your business off the ground.
If you’re still spinning your wheels about what you need to do for legal protection in your business, pick up The CEO Legal Kit. This guide helps you understand how to implement the legal aspects into your business so that your business can grow and scale.
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