How Entrepreneurs Can Avoid Microsoft's SkyDrive Trademark Misstep Follow these expert tips for naming your startup and protecting your brand from trademark infringement.
By Ashley Lee
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What's in a name? Entrepreneurs tend to put most of their energy behind the business idea, but a company or product name can be just as important -- and has the potential to spark a costly lawsuit.
According to TNW, Microsoft will soon rename its SkyDrive cloud-storage service after the English High Court ruled that the product's name infringed on the trademark of British broadcasting conglomerate BSkyB. Though Microsoft initially said it would appeal the ruling, the company has since dropped the plan in exchange for temporary continued use of the name -- perhaps to come up with something truly unique and protected.
This isn't the first time a well-known brand has gotten tangled in a naming dispute. Last year, Ford Motors filed a complaint against Ferrari when the Italian automaker named its new Formula 1 racecar F-150, the same name as Ford's top-selling truck. Ferrari agreed to come up with a new name. Likewise, Words With Friends maker Zynga recently filed a suit against the makers of casual sex app Bang With Friends to protect their signature trademark.
Contrary to popular belief, renaming a company or product is a relatively small loss compared to fighting for it in a lengthy lawsuit. "It always seems like it's so detrimental because you feel you've invested a lot of time and effort into building a brand," says Benish Shah, partner at Sardar Law Firm and CEO and co-founder of clothing startup Vicaire. "But legally speaking, it's not worth the fight. It's actually cheaper for you to change your name and do all the rebranding than engage in a lawsuit and jeopardize your entire company."
Three experts weigh in on how to come up with and protect your startup's name to avoid a legal battle that even Microsoft can't win:
Don't think too literally. When naming a business or product, entrepreneurs often want to use common words that immediately describe their product. But such literal thinking leaves little room for strong trademark protection and, equally important, SEO strength. "It's important for the startup to be easy to find and recognizable online," says John Harthorne, founder of startup accelerator MassChallenge. For example, one startup that he's been working with originally chose the name MedAlert for its prescription-monitoring service, but it was too similar to other product names already on the market, including the Medical Alert bracelets. The founders have since renamed the startup MedAware. "They were able to adjust before it became a legal issue, and well before it affected their brand adversely," says Harthorne. He also suggests avoiding words associated with well-known companies. For instance, don't bother adding another word to "Amazon" for your next startup.
Related: When Business Names Confuse Consumers: The Basics of Trademark Law
Conduct a thorough web search on the name. Sweep through search engines and social-media feeds for your potential name, as well as varied versions of it. "Don't just look at the first three pages; look at the first 25, so you're not missing anything," says Shah, who discovered after five days of Googling, that the initial name for her clothing startup Vicaire was taken by an existing small business that hadn't bothered with trademarks -- but could later on. If you discover that your name is already in use, don't try to rationalize using it anyway. Just accept it, move on and think of another, advises Shah.
Search trademark databases. It's important to run a trademark search on the website of the U.S. Patent and Trademark Office. It's free, and you can also call the office directly for help on how to use the search fields. Search your intended name and possible variations, as well as slogans and terms you want to reserve. You may also want to check in with your local chamber of commerce to see what names have been reserved, if not yet trademarked, or work with a lawyer. Corporate law firms offer trademark search services for a fee and will ensure that your chosen name isn't taken by businesses in similar industries or in an application that's currently pending approval.
Register trademarks. Once you've picked an unclaimed name, register your trademarks immediately. Since they're class-specific, register trademarks for all categories your business operates in to protect your brand from competitors. Most businesses work in two or three classes, and you can see a full list of classes here. "A lot of my clients are in Class 35 for marketing agencies and business consultants, but some also consider themselves business coaches, where Class 41 comes in," says Rachel Rodgers, a lawyer and the founder of startup law resource Small Business Bodyguard. "It doesn't seem like a huge difference, but it is legally." File 1A applications for products you're already selling, and 1B applications to reserve trademarks for products you plan to launch in the next six months. Experts agree that hiring a lawyer is key to successfully managing the registration process.
Protect your brand. Guard your trademarks by setting up a Google Alert on your trademarked names to track if others are using them on the web. If another company starts to suddenly "borrow" your brand name, send a cease-and-desist letter immediately. On the other hand, if you realize you're accidentally infringing on another company's trademark, start transitioning out. "When you are a startup, people rebrand often," says Shah, who recommends pairing the new name announcement with a product launch. "The worst thing you can do to yourself as an entrepreneur is engage in litigation. It's a very costly endeavor, and it's not worth it."
Related: Using Someone Else's Intellectual Property Comes At a Price
