This mistake can cost your new startup a fortune and can be easily avoided. Taking proactive steps in the beginning of your startup can ensure that you have all the right to your name. Things like trademark and registration searches are key. With this in mind, the following is a guide to help you with trademark and brand protection for your startup.

What Should You Trademark?

Often startup shave no idea what should protected by trademark registration, since it extends much further than just the company name. Here are a few items which you should consider trademarking to protect your startup. 

Company Name

First, as a small business you should always protect your company name. Your company’s name is how consumers and clients find you and your goods and services. Without protection a competitor can open shop under a highly similar name and begin to take business from you by confusing your clients. A Trademark on your name is the easiest way to protect against this scenario from happening. 

Product Names

Just like with your company name, consumers also locate your goods and services through your product names. As such, if you provide a product or a service under a particular name you must also protect the same to avoid competitors from using like names on their goods or services. A good example of this are device names, most of us know ‘iPhone’, ‘Android’, etc. These are simple ways to protect your product from infringement. 

Logos

In addition to the above, logos can also be protected by trademarks. This will stop competitors from using like images for their goods or services. For example, no one is able to use the Nike Swoosh but Nike themselves. This is an example of a trademark on a logo. 

Marketing & Advertising Slogans

If you use a particular phrase or slogan in your marketing, you may be able to protect it through a trademark on the words. You can see examples of this with many fast food restaurants, such as McDonald’s, “I’m lovin’ it!”, or Papa John’s, “Better ingredients, better pizza, Papa John’s”. 

Benefits of a Trademark

Often startups wonder if trademarking is worth the cost and effort in the early stages of the company. The answer is: Yes! In addition to the potential savings of avoiding a costly rebranding after learning that the name you have been using is trademarked by another company below are a few other ways you can save money. Vice versa, if you do not have a trademark, these items may affect you. 

Deterrence

Having your trademark registered with the U.S. Patent and Trademark Office makes them easier to uncover by those doing trademark searches to see if their own trademark is available to be registered. This in turn helps to prevent the adoption of confusingly similar marks by third parties who may not choose a specific trademark similar to yours if they see your trademark is already registered with the U.S. Patent and Trademark Office, or the equivalent authority in your respective country. 

Registration Symbol ® 

Only trademarks that have been registered with the U.S. Patent and Trademark Office have the authorization to use the ® symbol in their advertising and marketing. The right to use the ® symbol in connection with your trademark may deter potential infringers from adopting or using a similar trademark to yours. It is also a great way to communicate that your brand is legitimate and valuable in a crowded field of imposters and cheap knock off brands.

Damages

Unfortunately, the reality is that companies often have to resort to filing lawsuits to enforce trademarks against infringers that don’t respond to cease and desist letter. When your trademark is registered it increases the type of monetary damages you can demand in a lawsuit if it is later infringed upon such as the ability to recover lost profits associated with the infringement including the possibility of receiving treble damages in certain circumstances as well as recovering attorneys fees. Essentially, having a trademark registration can pay for itself many times over.

Block Importation of Infringing Goods

If your trademark is used in connection with goods this is a key factor. Once registered, your trademark registration can be provided to the U.S. Customs and Border Protection Agency to help block the importation of goods that infringe on your trademark. More and more with products we are seeing this becoming a necessary step to stop product infringement. 

Takedown Notices

In the age of digital commerce where brands are distributed in online marketplaces around the world. One of the most powerful tools at your disposal is the ability to use takedown notices against counter-fitters and unauthorized distributors. This allows you to have the product / service removed based on registered trademark. It’s a fairly straightforward process that all major retailers and service providers adhere to. 

How to Protect Your Trademark (Process)

#1 Check if Your Name is Available

If you have yet to begin to use your product or service name, it is imperative that you research to see if it is available. A properly conducted research report will let you know if the name you seek is available to be registered before you incur the expense of the non-refundable government filing fees required for registration. Also, a research report will ensure you are not adopting and using a name that is infringing upon another’s trademark. If this occurs, you could be forced to give up use of your name and even pay damages to the entity you have infringed upon. A research report will avoid these issues and make sure your name is available. 

#2 Register Your Trademark

Once you have determined your desired name is available to trademark you should immediately apply to register it with the U.S. Patent and Trademark Office. Since trademark rights can be acquired either when you first use your trademark or first to file for an intent to use the same, it is imperative you get a trademark application on file with the USPTO as soon as possible to secure your rights in the trademark before someone else does. 

#3 Monitor For Infringement

Once you have a trademark you need to make sure that no one else adopts and begins use of a confusingly similar trademark. Trademark infringement costs businesses hundreds of millions of dollars each year in lost revenue. Even if a competitor begins use of a similar, albeit not identical trademark to yours, if can still funnel clients away from you business. In essence, competitors create confusion between your and their goods and services by adopting a similar trademark to yours. They then use the good will you have created in your trademark through your marketing to otherwise steal your clients and / or products. 

#4 Police Your Trademark

When infringement of your trademark is discovered, you must act quickly to stop the same. There are numerous ways to enforce your trademark depending upon how it is being infringed upon. For instance, if a competitor has registered and is using a domain name that is similar to your trademark, a domain name dispute may be the right tool to use. If a competitor is simply using a similar trademark on their website, then sending a cease and desist letter or possibly suing them in court may be the best option. Or if they have applied to register a confusingly similar trademark with the U.S. Patent and Trademark Office. 

Final Notes

For many businesses, their brand is their most valuable asset. Through a few judicious steps in seeking trademark protection, monitoring use by others, and policing infringement, you can ensure that your company brand is secured and flourishes with the growth of your business. You can learn more about trademarks and intellectual property protection by visiting the U.S. Patent and Trademark Office (USPTO) here. 

To see what Five23 can do for your startup. Please feel free to contact us here, or by email: contact@five23.io. 

The post Why Trademarks are Important to Startups first appeared on Five23.

“(a) Rules Relating to Constructive Receipt.— 

“(1) Plan Failures.— 

“(A) Gross Income Inclusion.— 

“(i) In general.—If at any time during a taxable year a nonqualified deferred compensation plan—

“(I) fails to meet the requirements of paragraphs (2), (3), and (4), or

“(II) is not operated in accordance with such requirements, all compensation deferred under the plan for the taxable year and all preceding taxable years shall be includible in gross income for the taxable year to the extent not subject to a substantial risk of forfeiture and not previously included in gross income. 

“(ii) Application only affected participants.— Clause (i) shall only apply with respect to all compensation deferred under the plan for participants with respect to whom the failure relates.

“(B) Interest and Additional Tax Payable with Respect to Previously Deferred Compensation.—

“(i) In general.— If compensation is required to be included in gross income under subparagraph (A) for a taxable year shall be increased by the sum of— 

“(I) the amount of interest determined under clause (ii), and

“(II) an amount equal to 20 percent of the compensation which is required to be included in gross income.

“(ii) Interest.— For purposes of clause (i), the interest determined under this clause for any taxable year is the amount of interest at the underpayment rate plus 1 percentage point on the underpayments that would have occurred had the deferred compensation been includible in gross income for the taxable year in which first deferred or, if later, the first taxable year in which such deferred compensation is not subject to a substantial risk of forfeiture. 

“(2) Distributions.— 

“(A) In general.— The requirements of this paragraph are met if the plan provides that compensation deferred under the plan may not be distributed earlier than— 

“(i) separation from service as determined by the Secretary (except as provided in subparagraph (B)(i)),

“(ii) the date the participant becomes disabled (within the meaning of subparagraph (C)), 

“(iii) death, 

“(iv) a specified time (or pursuant to a fixed schedule) specified under the plan at the date of the deferral of such compensation, 

“(v) to the extent provided by the Secretary, a change in the ownership or effective control of the corporation, or in the ownership of a substantial portion of the assets of the corporation, or

“(vi) the occurrence of an unforeseeable emergency.

“(B) Special Rules.— 

“(i) Specified employees. —In the case of any specified employee, the requirement of subparagraph (A)(i) is met only if distributions may not be made before the date which is 6 months after the date of separation from service (or, if earlier, the date of death of employee). For purposes of the preceding sentence, a specified employee is a key employee (as defined in section 416(i) without regard to paragraph (5) thereof) of a corporation any stock in which is publicly traded on an established securities market or otherwise. 

“(ii) Unforeseeable emergency.— For purposes of subparagraph (A)(vi)— 

“(I) In general.— The term ‘unforeseeable emergency’ means a severe financial hardship to the participant resulting from an illness or accident of the participant, the participant’s spouse, or a dependent (as defined in section 152(a)) of the participant, loss of the participant’s property due to casualty, or other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the participant.

“(II) Limitation on distributions.— The requirement of subparagraph (A)(vi) is met only if, as determined under regulations of the Secretary, the amounts distributed with respect to an emergency do not exceed the amounts necessary to satisfy such emergency plus amounts necessary to pay taxes reasonably anticipated as a result of the distribution, after taking into account the extent to which such hardship is or may be relieved through reimbursement or compensation by insurance or otherwise or by liquidation of the participant’s assets (to the extent the liquidation of such assets would not itself cause severe financial hardship).

“(C) Disabled.— For purposes of subparagraph (A)(ii), a participant shall be considered disabled if the participant—

“(i) is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, or

“(ii) is, by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, receiving income replacement benefits for a period of not less than 3 months under an accident and health plan covering employees of the participant’s employer. 

“(3) Acceleration of Benefits.— The requirements of this paragraph are met if the plan does not permit the acceleration of the time or schedule of any payment under the plan, except as provided in regulations by the Secretary.

“(4) Elections.— 

“(A) In General.— The requirements of this paragraph are met if the requirements of subparagraphs (B) and (C) are met.

“(B) Initial Deferral Decision.—

“(i) In general.— The requirements of this subparagraph are met if the plan provides that compensation for services performed during a taxable year may be deferred at the participant’s election only if the election to defer such compensation is made not later than the close of the preceding taxable year or at such other time as provided in regulations.

“(ii) First Year of Eligibility.—In the case of the first year in which a participant becomes eligible to participate in the plan, such election may be made with respect to services to be performed subsequent to the election within 30 days after the date the participant becomes eligible to participate in such plan. 

“(iii) Performance-Based Compensation.— In the case of any performance-based compensation based on services performed over a period of at least 12 months, such election may be made no later than 6 months before the end of the period. 

“(C) Changes in Time and Form of Distribution.— The requirements of this subparagraph are met if, in the case of a plan which permits under a subsequent election a delay in a payment or a change in the form of payment—

“(i) the plan requires that such election may not take effect until at least 12 months after the date on which the election is made,

“(ii) in the case of an election related to a payment not described in clause (ii), (iii), or (vi) of paragraph (2)(A), the plan requires that the first payment with respect to which such election is made be deferred for a period of not less than 5 years from the date such payment would otherwise have been made, and

“(iii) the plan requires that any election related to a payment described in paragraph (2)(A)(iv) may not be made less than 12 months prior to the date of the first scheduled payment under such paragraph. 

“(b) Rules Related to Funding.—

“(1) Offshore Property in a Trust.— In the case of assets set aside (directly or indirectly) in a trust (or other arrangement determined by the Secretary) for purposes of paying deferred compensation under a nonqualified deferred compensation plan, for purposes of section 83 such assets shall be treated as property transferred in connection with the performance of services whether or not such assets are available to satisfy claims of general creditors— 

“(A) at the time set aside if such assets (or such trust or other arrangement) are located outside of the United States, or 

“(B) at the time transferred if such assets (or such trust or other arrangement) are subsequently transferred outside of the United States.

This paragraph shall not apply to assets located in a foreign jurisdiction if substantially all of the services to which the nonqualified deferred compensation relates are performed in such jurisdiction.

“(2) Employer’s Financial Health.— In the case of compensation deferred under a nonqualified deferred compensation plan, there is a transfer of property within the meaning of section 83 with respect to such compensation as of the earlier of— 

“(A) the date on which the plan first provides that assets will become restricted to the provision of benefits under the plan in connection with a change in the employer’s financial health, or

“(B) the date on which assets are so restricted, whether or not such assets are available to satisfy claims of general creditors.

“(3) Income Inclusion for Offshore Trusts and Employer’s Financial Health.— For each taxable year that assets treated as transferred under this subsection remain set aside in a trust or other arrangement subject to paragraph (1) or (2), any increase in value in, or earnings with respect to, such assets shall be treated as an additional transfer of property under this subsection (to the extent not previously included in income).

“(4)Interest on Tax Liability Payable with Respect to Transferred Property.—

“(A) In General.— If amounts are required to be included in gross income by reason of paragraph (1) or (2) for a taxable year, the tax imposed by this chapter for such taxable year shall be increased by the sum of— 

“(i) the amount of interest determined under subparagraph (B), and 

“(ii) an amount equal to 20 percent of the amounts required to be included in gross income. 

“(B) Interest.— For purposes of subparagraph (A), the interest determined under this subparagraph for any taxable year is the amount of interest at the underpayment rate plus 1 percentage point on the underpayments that would have occurred had the amounts so required to be included in gross income by paragraph (1) or (2) been includible in gross income for the taxable year in which first deferred or, if later, the first taxable year in which such amounts are not subject to a substantial risk of forfeiture.

“(c) No Interference on Earlier Income Inclusion or Requirement of Later Inclusion.— Nothing in this section shall be construed to prevent the inclusion of amounts in gross income under any other provision of this chapter or any other rule of law earlier than the time provided in this section shall not be required to be included in gross income under any other provision of this chapter or any other rule of law later than the time provided in this section. 

“(d) Other Definitions and Special Rules.— For purposes of this section:

“(1) Nonqualified Deferred Compensation Plan.— The term ‘nonqualified deferred compensation plan’ means any plan that provides for the deferral of compensation, other than—

“(A) a qualified employer plan, and

“(B) any bona fide vacation leave, sick leave, compensatory time, disability pay, or death benefit plan. 

“(2) Qualified Employer Plan.— The term ‘qualified employer plan’ means— 

“(A) any plan, contract, pension, account, or trust described in subparagraph (A) or (B) of section 219(g)(5)(without regard to subparagraph (A)(iii)),

“(B) any eligible deferred compensation plan (within the meaning of section 457(b)), and 

“(C) any plans described in section 415(m).

“(3) Plan Includes Arrangements, Etc.— The term ‘plan’ includes any agreement or arrangement, including an agreement or arrangement that includes one person. 

“(4) Substantial Risk of Forfeiture.— The rights of a person to compensation are subject to a substantial risk of forfeiture if such person’s rights to such compensation are conditioned upon the future performance of substantial services by any individual. 

“(5) Treatment of Earnings.— References to deferred compensation shall be treated as including references to income (whether actual or notional) attributable to such compensation or such income. 

“(6) Aggregation Rules.— Except as provided by the Secretary, rules similar to the rules of subsection (b) and (c) of section 414 shall apply.

“(e) Regulations.— The Secretary shall prescribe such regulations as may be necessary  or appropriate to carry out the purposes of this section, including regulations— 

“(1) providing for the determination of amounts of deferral in the case of a nonqualified deferred compensation plan which is a defined benefit plan, 

“(2) relating to changes in the ownership and control of a corporation or assets of a corporation for purposes of subsection (a)(2)(A)(v),

“(3) exempting arrangements from the application of subsection (b) if such arrangements will not result in an improper deferral of United States tax and will not result in assets being effectively beyond the reach of creditors,

“(4) defining financial health for purposes of subsection (b)(2), and
“(5) disregarding a substantial risk of forfeiture in cases where necessary to carry out the purposes of this section.”.

“(b) Treatment of Deferred Amounts.— 

(1) W-2 Forms.— 

(2) In general.— Subsection (a) of section 6051 (relating to receipts for employees) is amended by striking “and” at the end of paragraph (11), by striking the period at the end of paragraph (12) and inserting “, and”, and by inserting after paragraph (12) the following new paragraph:

“(13) the total amount of deferrals for the year under a nonqualified deferred compensation plan (within the meaning of section 409A(d))”

(B) Threshold.— Subsection (a) of section 6051 is amended by adding at the end the following: “In the case of the amounts required to be shown by paragraph (13), the Secretary may (by regulation) establish a minimum amount of deferrals below which paragraph (13) does not apply.”.

(2) Wage Withholding.— Section 3401(a) (defining wages) is amended by adding at the end the following flush sentence:

“The term ‘wages’ includes any amount includible in gross income of an employee under section 409A and payment of such amount shall be treated as having been made in the taxable year in which the amount is so includible.”.

(3) Other Reporting.— Section 6041 (relating to information at source) is amended by adding at the end the following new subsection:

“(g) Nonqualified Deferred Compensation.— Subsection (a) shall apply to—

“(1) any deferrals for the year under a nonqualified deferred compensation plan (within the meaning of section 409A(d)), whether or not paid, except that this paragraph shall not apply to deferrals which are required to be reported under section 6051(a)(13) (without regard to any de minimis exception), and 

“(2) any amount includible under section 409A and which is not treated as wages under section 3401(a).”.

(c) Clerical Amendment.— The table of sections for such subpart A of part I of subchapter D of chapter 1 is amended by adding at the end the following new item:

“Sec. 409A. Inclusion in gross income of deferred compensation under non qualified deferred compensation plans.”.

(d) Effective Date.—

(1) In general.— The amendments made by this section shall apply to amounts deferred after December 31, 2004. 

(2) Special Rules.—

(A) Earning.— The amendments made by this section shall apply to earnings on deferred compensation only to the extent that such amendments apply to such compensation. 

(B) Material Modifications.— For purposes of this subsection, amounts deferred in taxable years beginning before January 1, 2005, shall be treated as amounts deferred in a taxable year beginning on or after such date if the plan under which the deferral is made is materially modified after October 3, 2004, unless such modification is pursuant to the guidance issued under subsection (f).

(3) Exception for Nonelective Deferred Compensation.— the amendments made by this section shall not apply to any nonelective deferred compensation to which section 457 of the Internal Revenue Code of 1986 does not apply by reason of section 457(3)(12) of such Code, but only if such compensation is provided under a nonqualified deferred compensation plan—

(A) which was in existence on May 1, 2004,

(B) which was providing nonelective deferred compensation described in such section 457(e)(12) on such date, and

(C) which is established or maintained by an organization incorporated on July 2, 1974. If, after May 1, 2004, a plan described in the preceding sentence adopts a plan amendment which provides a material change in the classes of individuals eligible to participate in the plan, this paragraph shall not apply to any nonelective deferred compensation provided under the plan on or after the date of the adoption of the amendment. 

(e) Guidance Relating to Change of Ownership or Control.— Not later than 90 days after the date of the enactment of this Act, the Secretary of the Treasury shall issue guidance on what constitutes a change in ownership or effective control for purposes of section 409A of the Internal Revenue Code of 1986, as added by this section.

(f) Guidance Relating to Termination of Certain Existing Arrangements.— Not later than 60 days after the date of the enactment of this Act, the Secretary of the Treasury shall issue guidance providing a limited period during which a nonqualified deferred compensation plan adopted before December 31, 2004, may, without violating the requirements of paragraphs (2), (3), and (4) of section 409A(A) of the Internal Revenue Code of 1986 (as added by this section), be amended—

(1) To provide that a participant may terminate participation in the plan, or cancel an outstanding deferral election with regard to amounts deferred after December 31, 2004, but only if amounts subject to the termination or cancellation are includible in income of the participant as earned (or, if later, when no longer subject to substantial risk of forfeiture), and

(2) to conform to the requirements of such section 409A with regard to amounts deferred after December 31, 2004.

Link to U.S. Congress.Gov Tax Code: (https://www.congress.gov/108/plaws/publ357/PLAW-108publ357.pdf).

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