Trademark & Licensing w/ Annie Tunheim
The next slide is some tips for developing trademarks. I should have started this talk by kind of asking you all where you're at I don't know if you all are on the very beginning side of learning how to create these patterns or if you already have established businesses but I'll just go over some tips for developing trademarks in the event that you are still in this sort of brainstorming phase about what you would like to call your brand in the event that you're creating one. First you should just, you should consider your goal. Is it to tell people what you do within the name of your business? Do you want that more descriptive mark? Or do you want to have a totally original name that stands out from the crowd, have it be a more fanciful mark? Or have it be some sort of combination of the two? You should think about your target audience and develop a mark that will be well suited to it. Think about the kind of designs you're going to create and if that evokes some sort of feeling and y...
ou could tie it to that. So regardless of the mark that you should choose it should be sufficiently unique to be protectable and then you also want to make sure you're not inadvertently infringing on someone else. Let's see here, so you also you want to kind of also look at the scope of your business and so you want to call it something fabrics, but what happens if you end up, you know, expanding those designs and it's not just being printed on fabrics, it's going to be on you know, cell phone cases or you know dog food bowls, so you know maybe think about where you see your business going before you come up with your mark as well. Also, trademarks are divided into different classes of goods and services. So you also want to make sure before you become set on your mark that you, you know, you might think at first, well there's nobody using my mark that is in the fabric category. But there's a number of different classes of goods and services that could potentially infringe. So you do want to make sure your mark isn't already in use in some sort of vaguely similar category as well. So these are all just sorts of things to think about in the event you want to move forward you want to make sure there's no issues that come into play there. The next slide talks about freelancing. There's a ton of benefits to freelancing. And then also benefits to being employed as well, as we all know. So under freelancing there's many more freedoms that you have to your work. With traditional employment, any work that you create under that employment, oh and I have a little, I'm missing a word here. Any work, sorry about that, any work that's created under that employment belongs to the employer. So you can be coming up with some amazing, unique, fabulous designs, but that, those designs will be owned by your employer. But when you're freelancing the work that's created for, you know, you'll be doing these insular jobs for different clients and the work that's created just simply for the scope of that assignment, may belong to your client but you own the copyright to the work. And so that right means that you can make and distribute copies of that work, you can publicly display that work, you can create derivative works, which means you know, other similar designs. So it also depends on the agreement that you have with each individual client and the scope of work that is agreed upon. So I don't know if those of you that are working as a freelancer, if you have a certain agreement that you enter into when you work with clients that outlines this scope of your work and what will or will not be owned by the client as a result of that work. But that might be worth thinking about. I know this is jumping back a little bit, but Bonnie, before we go further do you want to clarify or ask me anything about the trademark or copyright end of things? Or should we wait until the end?
Sure I can touch on just a few things. I want to clarify to that we are talking about the fabric industry but this is also applicable to general surface pattern design as well, correct?
Yeah, so whether you're designing for wallpaper or stationary, notebooks, all of this is applicable to all of the things that you're doing whether fabric is involved or not.
Absolutely, yes. A design is a design and regardless of the product it ends up on we still have the same issues of the trademark if there's a brand associated with it. And then the work of art that you've produced and the rights that you have to it, exactly. So wallpaper, fabric, anything.
Perfect, yeah Annie and I'm good I think you're covering everything really well.
Okay, great thanks. So as a freelancer, you know, some people just enter into it, they agree to do work for somebody and maybe you haven't really thought about well, who owns that work, or do I have the rights to do, what if I really love this design and I give it to a client and they want to, you know, have it as a header on their website but what if I want to create wallpaper from it? Do you have the rights to that design still or is it now completely owned by that client and you can't do anything with it. So those issues can go either way. So I think the most important thing to do in this situation is to have it really clear in both parties and who does own that so everybody's on the same page. Problems arise when there, and when it's more ambiguous. So in a perfect world, things will be really clear from the outset who owns that design and what rights do they have to it. Let's see here, the next slide Bonnie should read buy-out versus licensing. So as a freelancer you do have the right to that design. So now you've created work that the client is interested in using, maybe he initially hired you to create a design for his website header but he might come back to you and say you know what, I really love this and now I want to be using this on my business cards and I want to print some T-shirts that have this design on it. So now what? You've got a couple options. You can do a buy-out where they purchase the rights to that design and then they can do anything that they would like with it. And so one advantage of the buy-out is that you can sell your design for a higher price because you're basically ending your relationship with it. But then along those lines, once it's sold you lose all your rights to it. So you lose your future use of that design as well as having a say in what products the design is put upon. So depending on you and how you feel as an artist if you are morally opposed to having your design show up on some things, like you know, a gun holster or something like that, if you are morally opposed to certain things and you don't want your designs attached to them at all that might not be something that you feel comfortable doing, just completely releasing all your rights to that design. So that's something for you to think about. Another option is to enter into a licensing agreement for that design, so that gives another party certain rights to use your design for certain products for a certain length of time. But it allows you to retain some rights to that design. There's exclusive and non-exclusive licensing agreements if you enter into an exclusive licensing agreement that party will be the only party that can use that design but a non-exclusive license you can license your design to different parties for different purposes. You retain control, you can decide how long you want that person to have the ability to use your design, you can choose what products they're allowed to create. So it's a way of getting your work out there into the public without you having to do something with it. You do get some of the monetary benefit but you also do retain some of that control. So that might be more comfortable for some of you out there. So the next slide, so now we're leaving freelancing versus, you know, employment, and buy-out versus licensing. So now we're gonna talk a little bit about business entities. Again, I don't know all of you out there, where you are in your goals. If you already own some sort of business or if you're a sole proprietor or if you are still kind of in the you know hobby mode and you're just thinking about the future but I'm just gonna provide some background information about what the different options are. A lot of times people start out just sort of, you know, creating patterns and doing things because they enjoy it and then maybe friends and family members say wow that's so fantastic I want you to create, you know, I need my dining room chairs recovered and I would love to have your designs on it. And your mom is like, that's amazing I want my wallpaper to have that, and so you start to think about it in a larger scale because of the positive response your seeing. So it might be time to start thinking about something larger than just having a hobby. So Bonnie if you move to the next slide, the sole proprietorship. Under the sole proprietorship you're not an official business entity. It's the least expensive option in terms of the taxes and the fees associated with it. It's just you and you are putting something out there. There's no, you know, the paperwork and the tax forms, it's all the simplest. It's the least investment in terms of if you're like you know I don't really know if I'm going to be doing this long term I'm just kind of feeling my way here. The sole proprietorship is a good place to start because you're not, you know, creating something that needs to be dissolved. So it seems like that might be the best way to go but on the other hand, you are also assuming full liability for your own personal assets. You're, you know, if you own a home. Because you are putting yourself out there in terms of some sort of product, if something does go awry, you're personal assets could be on the hook for that. So that's, that might be uncomfortable for someone in terms of their liability. Thinking of something off hand, you know it's hard to think of well what could I be liable for in terms of a design that I've put on wallpaper that's out there, it doesn't seem like a very physically dangerous product but you'd be surprised of situations that people can get into that is, it's hard to imagine but unfortunately in the society that we live in today it can be uncomfortable to know that you could be personally liable if something goes awry. So your house, your car, your whole family's livelihood, could be at risk if you decide to stay as a sole proprietor. So let's move to the next slide, the limited liability company, the LLC. What that does is it separates your own personal self from any liability that could be associated with your company. So it both protects you as a personal person but then it also protects your company. When you think about how two thirds of bankruptcies nowadays come about from someone in your family getting sick and then not being able to handle the medical bills. That could, you know, that could potentially affect your business that you've created so it's double asset protection. It protects on both ends, so that suddenly makes the LLC look a little bit more attractive. Unfortunately so many marriages end in divorce, so all sorts of personal liabilities surrounding illness, if you have a bad real estate investment and then you need to declare a personal bankruptcy, credit card debt, the LLC is separate from you as a person. So there's protection on both ends. The next slide, talking more about the LLC, so to create an LLC that might seem overwhelming, but actually in many states it's a pretty simple process. My law practice is an LLC and I know in Colorado it's $50 to create and $50 a year to maintain through the state. Arizona has no annual fees, unfortunately I don't know how many of you are in California but it is a little bit more substantial. It's $800 a year in California so that could be off-putting for somebody that has a more, a fledgling business that they don't know exactly how much revenue that they're going to be bringing in. There are some ways around this that I know people try to avoid that California high rate, you know by creating an LLC in a different state. There are some ways around this, I am not a tax attorney and I don't pretend to know whatsoever implications around that. If you live in California, you would like to create an LLC, but that $800 fee is just daunting, that might be worth checking into someone about but you also have to know that you could be on the hook from the IRS if they find out that you've done something shady. A tax attorney would know how to go about this in a more legitimate fashion. But again, I've heard of things like that, but I wouldn't be the person to advise you on it. The next slide, so should you choose a sole proprietorship or an LLC? Well that's something that you need to look at. You need to ask yourself is this more than a hobby? If it is something more than a hobby then the LLC depending on what state your in might be starting to look more attractive. I didn't discuss this but one of the benefits, I feel like, of having an LLC as opposed to you know, a corporation is the LLC provides you that liability protection but from a text standpoint it is still very simple in terms of filing your tax return. Your income, it's still lumped in with your personal income so it's not a far more involved process if you are doing your taxes on your own. So it's still a simple business to maintain. Like we discussed, the pattern design industry, it's a pretty low risk of liability, it's not like you are creating some sort of food product. So if there are really high expenses in your state maybe a sole proprietorship might be best for you at this point. But the bottom line, I feel like, is if you're putting a ton of time and energy into, money into growing your business, then your business is worth protecting and you should go ahead and create the LLC. So, and if you don't have the funds at this time, start stocking it away and have that as one of your short term or long term goals. Let's see here, the next slide, what can I do right now? So again, it's a little bit hard for me to gauge because I'm not sure where all of you are right now, but here's some things I tell my clients right now what can I do to take action to move forward in any of these categories. Right now if you've got a brand name even if you don't have that registered mark, use that small TM next to your mark to show that you are claiming common law rights to it. If you have a website you can also write at the bottom of your website that your mark is a trademark of your, you know, business entity if you have one. It's also great to set a Google alert if you've got a trademark set a Google alert for it and then you'll get a notification anytime that mark is being used. And that can help you kind of keep an eye out there for other people that are using your mark. Especially if it's a fanciful term that you've come up with, you'd like to know if there's anyone else out there using that mark. I can't impress upon this enough, take action on any copyright infringement you might see on sites like Etsy or other people's blogs. If you see someone that is copying your work whether it's intentional or inadvertent, you don't want it to go on too long. If you see that somebody else just created a brand that's similar to yours and using a very similar or the same mark, you don't want to wait two years and then get annoyed enough that you go after them it's better from your standpoint and theirs to approach them on the early end before they are too far invested into the mark as well. Because the earlier on you get them the more likely they are to go ahead and agree to altering it without putting up too much of a fight. So it's really best to take action as soon as possible to try to avoid these types of issues just growing larger and larger. The other side of it is if you say, you know what I feel really bad going after these people I'll just allow them to do it, the more people out there that start to use a mark similar to yours, it's weakening your rights to the mark. So being nice is a detriment to your business. Because you allow that business to keep doing it, and then a third one pops up, and it's deluding the strength of your mark. So it's really, it behooves you to take action as soon as possible. Also in this age, acquiring domain names and social media accounts even if you don't think you're going to be tweeting about your wallpaper brand, it might be a good idea to just go ahead and secure that name right from the beginning. Because you never know, you know, two years once you're a little bit more established and you have kind of created a cult following around your brand, maybe, and you've got some more time and energy to invest in other areas of your business, maybe you do want to start tweeting or having an Instagram account with your designs, et cetera. So it's a good idea to go ahead and acquire those accounts from the front end so you can grow into them. And then you should make a long term plan, because again a lot of my clients have started out as very very small, just you know, in your house kind of businesses. And then at least one of mine has grown to a huge worldwide brand, so you never know at the start what you're going to grow into. So it's great to make that long term plan and take steps incrementally to get there. Again, a lot of times people think, well it's, there's so many things that are cost prohibitive and I know especially in the legal field a lot of traditional law firms do have high retainer fees and they charge a lot of money with hidden extras to have work done, so it does seem just too daunting and but there, more and more nowadays there are a lot of attorneys just like me who have smaller practices, flat fees are becoming more and more common, I know I use flat fees the vast majority of the time with my clients to have the costs very up front so there's no surprises. I divide my fees over a few months to make the process feasible for anyone who wants to undertake it. So there's more and more flexibility nowadays so really just, if you are interested in having this sort of work done, the possibility is out there to have it done. And people are becoming more and more willing to work with you. So it's worth seeking out the cost and then putting that in your long term goals. So now we have reached the end, the last slide, so thanks for listening, I'd be happy to answer any questions that you might have. My ethical rules prevent me from giving specific legal advice without officially being someone's attorney but at the same time I can provide plenty of answers, you know, just making sure I couch it in more general terms. So I'm happy to answer any questions about what I've spoken about, or if something is unclear I'd be happy to explain it further or if you'd like to contact me separately about something that's really specifically relating to you go ahead and email me at the address that's up on the screen or you can reach me through my website as well.
Alright, well if you can hear me Annie, this is Chris, I'm one of the hosts here at Creative Live, I want to try to quickly get through one or two questions with you while we have you on the line if that's alright.
Okay, great, we have a couple of questions that have been coming in from online. This one's from Graycanamera, and they say that they want to know what are the rules with historical monuments being used in your materials, for instance the pyramids or the Eiffel Tower. What kind of laws are affiliated with that?
That's a great question, because obviously you don't have the right to something as ubiquitous as the pyramids, but if you are creating an original work surrounding the pyramids, then that's an original work. If you are incorporating the pyramid into some sort of design then you've just created something new. Like I said before, how you only have to change something small about a pattern to suddenly diminish your copyright rights, is that nobody should have to copyright to making any sort of design involving some sort of shape or something like that, so. So you do have the right to do that but my caveat is that some sort of logo or symbol or you know, if like I live in Denver so the Denver Broncos symbol, you would not have the right to take that symbol and then create a wallpaper of Denver Broncos symbol and then market that because that is a registered trademark of the Denver Broncos. So there are some situations where you would not be able to create something around. And if you do have a question about something in particular that might be worth just running by somebody to make sure you aren't finding yourself with some sort of infringement actions slapped on you.
Okay great, now I know we had some questions coming from the studio audience here, I think we have time for one. Anybody have a quick one that we can ask? Yeah go ahead.
It might be off topic, but Annie I'm opening a shop and I'd like to sell other people's work whether it be supplies, art supplies, or even maybe eventually other people's artwork. Can you give me a little general guidance?
Sure, so it really depends on what sort of agreement that you're going to enter into with these people, are you going to be purchasing these items on a wholesale basis and then making them available to the public, I'm not quite sure what you, what sort--
If I want to sell a Faber Castel pen in my store, do I need to contact them and set up an agreement with them? Or if it's like a second sale, can I resell it?
No, that would be fine to sell those products through your store as long as you're not passing them off as your creation. It's just you need to be, I think what you would need to be careful of is some companies have, you know, about using their registered trademark, their registered trademarked name. Potential uses, but something like a pen that is already an established brand, selling it in your store, that shouldn't be an issue. Unless the company only has licensed retailers, that's a separate issue.
Thank you very much.
And I honestly don't know if the pen company does.
Alright, well thank you so much Annie, I think that's all the time that we have. Any final thoughts from you, Bonnie? As we say goodbye to Annie.
No Annie, that was so wonderful and I think I speak for all of us when you probably just clarified a lot of questions that we have coming from a creative background we just struggle with this part probably more so than any other part. So to make sure that we are doing things right and taking care of all of our issues, crossing our Ts and dotting our Is, you just put our minds to ease so thank you so much.
Oh you're welcome, I was glad to participate.