Businesses in the woodworking trade often do not worry about their patents, trademarks and copyrights. They have more important things to concern themselves with such as sales, supply chains, clients, and employees. Having worked with manufacturing businesses for more than two decades, I found that there are several intellectual property issues that small businesses miss when they start. Those items are cheap to do in the beginning, but hard to fix later.
While established businesses often did not do these things at the beginning either, they never go back and fix the problem. As they say, “If it ain’t broke, don’t fix it.” But a few preventive measures can save a lot of headaches and help companies grow. Here are five:
Trademark your brand
Trademarks are all around us. Brand names like Coke; designs such as the Nike swoosh; even slogans such as “You’re in good hands”. These are all registered trademarks. Because most states require companies to register its business name, many businesses think this gives them a trademark right. Yet a company name is not the same as a trademarked brand. A business name gives you the right to charge sales tax and pay employees. A registered trademark provides national rights to control the use of a particular word or design on certain goods. Obtaining such a trademark registration requires a filing an application with the U.S. Trademark Office.
A federally registered trademark serves multiple purposes. It tells customers that your product comes from only a single source. It also creates a disincentive for competitors to copy your name, because the Federal Register of Trademarks is the most common database businesses look at to see whether a brand name is available. And most online retailers, such as Amazon, will only take action against knockoffs if you have a registered trademark.
Having a registered trademark can also deter your employees or business partners from going out on their own and confusing the public about which company is which. For a fascinating story about such confusion, just ask any antique wooden plane collector about the difference between Stanley, Bailey, and Stanley-Bailey planes.
You have better things to do with your time then try to regain clients that gave their business to the wrong company. Registering your trademark is an important step to stop that confusion.
In addition to your company name, specific products and product lines can be trademarked. This is especially important when selling commodity products where consumers have a hard time differentiating brands and quality. Sheetrock and Spackle were trademarked over a hundred years ago and while consumers often use these terms generically, they still legally refer to only branded products from a single company.
Product numbers can also be trademarked. The No. 4 plane has long lost protection; yet Levi’s 501 jeans is a very valuable trademark. And it is never too late to file. The 501 trademark application was filed a hundred years after it was first used.
Best of all, trademark filings are relatively inexpensive, given the value they represent.
Make sure you get what you buy
Readers of this magazine are familiar with stories of businesses that start or grow by buying another business. If you are purchasing a business, it is important to know that you are getting the intellectual property you are paying for.
Two problems commonly arise when buyer due diligence is done. First, it turns out that the intellectual property is held by a parent company or the individual owner. The purchaser is then forced to pay a license fee to the seller to make the products they were buying the company for, or the price needs to be renegotiated with the intellectual property now coming as a premium. Second, and often for service companies such as design/build shops, you need to make sure the person you buy the company from doesn’t take his customer list and compete directly with you after the purchase. Mr. Stanley and Mr. Bailey had to litigate these very issues. Having non compete clauses on the sale are common ways to prevent a much larger problem down the road.
Be careful about copying
It is rare that a business is making a totally unique product. Businesses are typically making improvements to existing products or selling competitive products at lower cost. Both situations can set you up for problems. It is much easier to have an attorney check that your product is “clear” than be faced with a cease-and-desist letter or lawsuit. Speak to your insurance carrier to see if you have intellectual property protection. It may require an additional rider, but if you are in a litigious area, it can be worthwhile.
While we are on this topic, be careful about downloading photographs from the Internet and putting them on your website. There are Internet bots that check websites to see if copyrighted photographs are used, and law firms that specialize in nuisance suits against websites that use such photos. It is much easier to take your own photographs or use stock photography. If you get a legal letter, talk to a lawyer. Some of the letters can be ignored; others can be remedied quickly. A short call can avoid worry and potential risk.
For makers, don’t slavishly copy other designs. Inspired designs are fine. While no one may catch you if you make a single copy of a chair you saw on Instagram, mass producing an iconic piece is a more likely going to generate pushback.
Clients often ask about the limit. Unfortunately, there is no red line. The legal test is whether a jury thinks one person copied the other. I often tell clients to compare it to speeding. Do they think they will be pulled over for going 61 in a 60 mph zone? Probably not. But going 100 in a school zone is a different story. The further you stay away from the line, the safer you are.
Patent your innovations
It is hard to imagine a successful manufacturing company that does not have some unique idea, whether a material, method of manufacture, product, or even a design. Engineers probably average a new invention every month. Patentable ideas range from unseen improvements in internal mechanisms, to game-changing technology, such as the SawStop.
Patents on woodworking inventions are not a new thing. Tool collectors often date an item from the patent numbers cast into the product. Patent numbers are issued in sequence, like tickets at a bakery. So, you can get a rough idea of when something is made by looking at how high the patent number is. And if you think we will run out of patentable ideas, think about this: Thomas Edison’s light bulb patent is No. 223,898; the Patent Office is now past 11 million.
Many small businesses believe that it is a waste of time to obtain a patent because they could never afford to file a lawsuit. But patents have many benefits other than starting a lawsuit. Touting patented technology tells buyers that your product is cutting edge and innovative. Having patents increases the perceived value of your company to investors and acquirors. Patents are also a source of pride to employees. This motivates them to continue to modify and improve your products. And similar to trademarks, patents can sway online retailers to stop knockoffs.
However, unlike a trademark, a patent cannot be filed years after you have publicized the product. While the dates for filing patent applications are beyond the scope of this article, the best practice is to file as soon as possible, before public sale or disclosure. Later filings may completely prevent you from getting a patent. Speaking to a patent attorney early on is a good idea.
Most small businesses rightly care more about getting good employees than whether their employee handbook is up to date. For companies with design and engineering employees, it is important that at least the employees involved with making new products understand that their inventions are owned by the business. In most states, unless an employee is “hired to invent,” anything that they come up with, even on company time, is owned by the employee. To change that default position to the employer setting, the employee manual typically includes an assignment. If you have one, make sure that section is in the handbook. If you don’t have one, at least make sure that your technical employees sign a document upon hiring that their innovations are owned by the company.
It is easy to overlook protecting your intellectual property when trying to run a profitable business. But you would not forget to put oil in your truck, nor sharpen the knives on your molding machine. These five simple actions will help your woodworking business avoid more expensive failures down the road.
Stephen F. Roth is a lawyer who represents businesses and start-ups on intellectual property issues. He builds studio furniture in his spare time. View his work on Instagram at Stephen.Roth.
This article was originally published in the July 2022 issue.