When Entrepreneurs Should Be Concerned About Copyrighting and Trademarking Dealing with legalities like copyright and trademarks can be a confusing (and costly) matter for entrepreneurs. Our expert attorney Doug Wolf provides some insight into this gray area.
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Q: What's the difference between copyrights and trademarks and when do I need to file?
A: Copyright law and trademark law are often confused with each other, largely because of some overlap in the subject matter being protected. Unlike patents -- which require filing and issuance for protection -- both copyrights and trademarks have some level of protection without filing an application.
Due to limited space, the following is just a high level overview of these two areas of law. Be sure to consult with an attorney for a more in-depth discussion since these areas of law can have surprising scopes of protection.
Trademark law is about protecting source identifiers -- the most common being a brand name like Tootsie Roll or a logo like the Nike swoosh. However, many other things can be trademarked, such as bottle shapes, color (pink for insulation), sound and smell (machinery lubricants), among other components.
In the U.S., protection generally occurs upon the first public sale or provision of a service. That protection is often called "common law rights," and is limited to the geographic regions in which the goods are sold or services are provided. For example, if you are selling widgets in Boston, your geographic region may be Boston, Eastern Massachusetts or even New England. There is no magic formula. If necessary, a court would decide the applicable region.
If you sell goods online, you may have common law rights in many different areas of the country. Determining where common rights may be afforded is a complex test which analyzes the types of goods, level of sales and communities, among other factors.
Common law rights do not require any filing and relying on your common law rights may be sufficient depending on the business. Some instances include a local store with no interest in expanding, personal services where revenue may not warrant the cost of state or federal registration or a product which is only offered for a short period of time. However, filing does grant some very important rights which should not be ignored in your overall business plan. A federal filing -- averaging $2,000 with legal support -- grants rights upon registration covering the whole U.S. upon issuance. A state registration -- averaging well under $1000 -- typically protects the whole state.
Copyright law protects expression of an idea. Typically, copyright law is used for books, graphics, music, artistic works, photographs, computer software and videos. Copyright law uses the "ordinary observer" test, whereas trademark law is concerned with "likelihood of confusion." Think of copyright law as protecting your assets from someone targeting your work and creates a pretty close copy.
Copyright protection occurs upon creation. As a default, the "author" of the creation is the owner, but there are laws which may dictate otherwise depending on the business relationship the author has with others.
Filing for copyright protection is not particularly expensive but also not commonly done compared to the vast number of works created. Why? Most companies will only seek copyright protection for their crown jewels, such as important code, graphics and recordings.
Some parties file to be eligible to enforce their rights, as required under U.S. law. Others may file in anticipation that the "work" may be infringed by another in the future. By registering the work prior to any infringement, a copyright owner secures some very powerful rights. Still, if you consider that every writing, advertisement, company graphic, etc., can be registered under copyright law, you can see why the percentage of filings-to-work is not particularly common.
Copyright vs. trademark. Do I need to choose?
No. There is some lingering case law which argues that an owner can only select one form of protection, but most attorneys agree that is not a valid interpretation. So, if your cool graphic acts as a source identifier, both trademark and copyright protections are available.
As a general matter, however, your budget should be focused on trademark protection since trademarks more often have a higher impact on the average company's asset value and provides some critical competitive positions against others. Still, making the choice between seeking trademark or copyright protection (or both) for your goods or services and determining whether to file for registrations are decisions best made carefully and with full knowledge of the future ramifications.