With AMZ Advisers: Why Take Intellectual Property Seriously

AMZ Advisers


Mike: Hey everybody. Its Mike from AMZ Advisers, and today I have a special guest with me. It’s Preston from Brand Registry Trademark. Preston and this company help eCommerce sellers deal with intellectual property challenges in efficient and cost-effective ways. He’s here today to tell you more about how intellectual property can help you as an eCommerce seller to build your brand and protect it online. Hi Preston. Thank you for being here with us.

Preston: Hi Mike. I’m happy to be here. Thanks for the opportunity.

Mike: I’m glad to have you here as well. Could you please tell us a little bit more about your company?

Preston: Absolutely. My name is Preston Frischknecht, and my company is Brand Registry Trademark. I’m an intellectual property attorney and registered patent attorney. I help businesses become more competitive using intellectual property legal tools like patents, trademarks, copyrights and play games in that space to help businesses be able to increase their bottom line.

Types of Intellectual Property

Mike: Okay, awesome. Thanks for that. So, as a seller you mentioned a few of the different types of intellectual property that are available. Maybe you can just expand a little bit more on what those are?

Preston: You bet. So, starting with patents—there are different kinds of patents, but roughly patents are going to protect the utility of products or product design. So, if you have a product that has some sort of a function or some sort of a unique application, oftentimes you can protect it with the utility patent. If your product has shapes that are important to it, if it’s unique in the market because it looks a certain way, then you can protect it with a design patent. So, there are different facets of products that you can protect with patents. Trademarks are what are used to protect brands, logos, sometimes technologies, or the names of technologies—anything that a consumer is going to use to identify a brand, or something that indicates the source of a product. That’s something you’d protect with trademark. Copyright is more for artistic things. So sometimes products or businesses will have unique value in the way that they’ve created their content, or perhaps some of their designs have a visual quality to them. Or lots of times, online sellers will use product photos. And that’s something that we use quite a bit to manage competition online if they’re using product photos on their listings or if they have unique content like in their user manuals.

Mike: And then how do you determine what someone needs or what type of intellectual property they’ll need?

Preston: That’s a great question.  I find as I have talked to people—that they don’t often understand all the potential and all the opportunities that they might have, sometimes even with a pretty mundane or pedestrian product. But really, it’s a conversation. It’s somebody coming to me and saying, “this is what I have is there any way I can protect it?” And oftentimes we can figure out lots of different ways to try to protect something, and it’s definitely worth having those conversations early on. You can usually do those with a free consultation or a short conversation. Because one of the issues that you find is that if you don’t do it upfront you may miss opportunities, and later on down the road after you’ve grown to a certain stage or something like that, you can no longer go back in time and protect the things that have brought you success to that point.

Mike: Okay so that sounds like one reason that a seller might be motivated to get intellectual property. Are there are other reasons why a seller might pursue getting intellectual property for their brand?

Preston: Yeah absolutely! I mean you can look at it from a very narrow perspective which is something I’m sure you and your company are very familiar with—like the Amazon Brand Registry. That’s a large part of our focus—when a seller wants to access the enhanced brand content that’s available through Amazon.com. They’re going to need to show intellectual property rights to do that—a trademark registration, for example. So, there are platforms that actually require that you have some basis of protected intellectual property in order for you to be able to reach higher levels of SEO and content. But beyond that, I also try with the businesses that I talk to, to take a long-term approach. The reason that you want to get a registered trademark or a patent or any of these types of intellectual property is because they increase the bottom line for your company. They can become appraisable assets for that company.  I spoke with someone not too long ago that has successfully grown a company and we’ve had some challenges because they didn’t do anything early on and it’s only after they had success that they looked to try to protect things. And at that point it’s often too late.  They told me, “I can’t sell the company if I wanted to,” and I asked why, and they said, “because I don’t own any of the products. Like people can jump up and sell these products and I don’t really have anything other than my cash flow in the company to offer as an asset.” And so, the more you can think long-term and build intellectual property assets, the more you’ll be able to manage competition and increase the value your business.

About Trademarks

Mike: What types of things can be trademarked?

Preston: Trademarks are in lots of different places. They can be what I refer to as a house mark:  if your company has a brand that is the umbrella under which everything your company does fits; then that is something that can be a trademark. And underneath that brand, you might have different product lines. You may offer a product line A and a product line B and each one of those product lines can have different unique names that are also protectable. And underneath product lines you can have names for specific products that are unique. Or within products you might have names for technologies; a lot of times you see companies say in their marketing that they have some sort of unique technology and it’ll have some funky name. An example of one I grew up with was NIKE AIR:  you knew that NIKE AIR had that little air bladder in the shoe and you thought, “man that’s really cool.” Well I guarantee you that, anything that was AIR-related to shoes those guys protected. So, I really look at brand protection as a hierarchy, I suppose. And you can protect things within that hierarchy to build an overall brand structure for your company.

Mike: When you’re helping a seller or a company determine what type of intellectual property they need, what are the guidelines that, you know, a seller needs to consider when creating the brand of trademark or whatever other type of intellectual property it is.

Preston: So, if I can be fortunate enough to talk with someone that’s in the process of selecting a brand, there are some things that I can help them with as far as guidelines. And they’re good to know because if you understand the guidelines, those will often dictate whether you have something that’s easily protectable or something that’s that you really have to work hard to protect or that may not be protectable at all. But trademark law divides trademarks into different categories, and those categories are along a spectrum of distinctiveness. So, the most distinctive brands have the highest level of protection under trademark law, and the least distinctive brands are often unprotectable. Some examples of that might be helpful – I often use the Apple logo; the apple with a bite out of it is an example of a very strong mark. That brand is distinctive because an apple has nothing to do with computers or cell phones or anything like that. It’s a symbol that the company has basically forged in the marketplace to indicate those types of products. And those are the strongest types of marks. They’re known as marks that are “fanciful or arbitrary.” Those are the trademark terms for them. They can be made-up words or really unique combinations of words that don’t necessarily tell you what the products under those marks are–those are the strongest. The weakest marks are going to be what are called “generic or descriptive marks,” and those are unprotectable actually. A generic mark is a mark that basically is the name of the product. So, if I were selling pencils and I named my brand PENCIL I would never get protection for that. The trademark law says we don’t want people to lock up the English language for use of ordinary words, so we’re not going to let somebody protect that. Descriptive marks are marks that say some something about the product that’s a little bit too descriptive for lack of a better term. So, if I were selling that pencil and my name was something like WOOD STICK, you know, that’s basically describing what a pencil is; I couldn’t protect that. But once you get into the next level of trademark category which is called “suggestive,” you can start protecting the mark. Suggestive marks or brands are brands that hint at what the product is, but they don’t let the cat out of the bag totally. So, you know, if you think of something like, you know, I often come up with animal names or like the NINJA PENCIL or something like that. If you add something distinctive to your brand it doesn’t say “hey this is just a pencil” that’s where you start getting into a brand that you can protect. So, people should generally aim to come up with brands that are more distinctive and not just “we’re just telling you what the product is.”

Mike: What else can happen if you don’t protect your brand under trademark?

Preston: The biggest issues I see with trademarks relate to people not touching base with an expert, or not understanding the space that they’re entering. So, lots of times when you’re a startup company you’re thinking “I just want to see if I can sell this.” And you’re sort of bootstrapped and trying to save everything you can. And so, most of the problems I see come about because people don’t do the proper due diligence to see if their brand is something that they can use or if it’s something that somebody else might own the rights to so they would infringe on it. Essentially the problem comes when no one checks to see if the brand is available or if it should be protected. And then they reach a certain stage after they’ve invested a bunch of money in the company and they discover that someone else owns the rights and then they have to pivot—they have to change their brand. And I deal with that all the time—when companies have to change their brand because they haven’t done the due diligence or protected it.

Mike: You mentioned that a lot of people get started just selling products online just see how it goes. Maybe it doesn’t make sense for them to make a filing then or they don’t have the money or they’re not sure how things are gonna go. When would you recommend a seller to consider filing a trademark?

Preston: The worst-case scenarios with companies and intellectual property happen in this space. And I think the biggest ones and, you know anybody that practices in this area has these stories, but it happens when a company is sourcing another product in another country, and they don’t have the intellectual property rights in that country where they’re sourcing. A lot of the times people think, “well I’m buying something from China but I’m selling it in the U.S., so as long as I have the U.S. rights, I’m OK.” But that’s not true. You actually need to own the rights not only in your major markets, but where you source the products. Otherwise if someone else owns the rights to your brand where you’re sourcing your product, then you don’t own your product. And the worst-case scenarios are basically when whoever owns the brand in the sourcing country shuts down your supply chain. And I’ve seen that happen several times where they basically blackmail you for a huge amount of money—which I’ve seen people pay enormous amounts of money. I think one of the bigger earlier examples was that Apple paid somebody in China something like thirty million dollars for the name IPHONE because they didn’t own it in China. Somebody had registered it, and unfortunately, we live in this world that’s a first-to-file kind of world, so whoever gets to the office first with the application is the one that ends up usually getting the rights to it. So that’s something that you never want to walk into. You never want to walk into a situation where, you you’ve got a bunch of inventory somewhere and you can’t move it because you failed to protect the rights at the source where it’s coming from.

When to File a Trademark

Mike: Yeah that’s definitely a problem to shut down your business pretty early. When would you recommend a seller to consider filing a trademark?

Preston: This is probably cliché, but the earlier the better. Lots of times you don’t need to spend a lot of money to figure out where you stand. And so that’s the most important thing I think is to talk to someone early—talk to an expert who knows what they’re doing and then you can kind of start assessing what the costs that are going to be involved moving forward. The biggest problem is when you don’t do anything.  One example that I can think of is somebody that was trying to get something off the ground and they crowdfunded it. Chinese companies, people in other countries basically just scour those types of sources and see people raising money and then they go and apply for the brands. Lots of times companies just don’t think—they’re out there marketing and trying to sell their products not knowing that if they haven’t gotten in line to protect the brand that it’s going to be taken from them. So, as a general rule, the earlier the better.

Ways to Apply for Trademark Registration

Mike: So, what options do Amazon sellers have, or e-commerce sellers in general, when it comes to getting the trademark?

Preston: There’s lots of different thing that people can do, and I guess I’ll just kind of go over the major ones in my mind and kind of quickly talk about the costs and benefits of each. First, you can do it yourself. There are a lot of people that try to do it themselves. There are good statistics on your odds of success if you don’t have experience in this area. There was a study out of Stanford that looked at a bunch of data and showed that people who try to do it themselves have an under 50% chance of succeeding. So there are people that do it but it can be very painful especially if you do something wrong.  You’ll lose a lot of time and money and sometimes even the opportunity to protect the brand. So, if you do it yourself you should really try to educate yourself and know that, I guess manage your expectations as far as likelihood of success. Second, there are a bunch of online filing companies–like Legal Zoom or Rocket Lawyer or whatever—that will charge you a couple hundred bucks or something like that to file your trademark application. The problem with these is they basically just collect your data and plug it into fields and charge you money and send it off without doing a lot of the necessary upfront work. A third option, which is what most people have used for a long time, is a law firm. The downside with that, you know, you get all the expertise and all the competence, but you really pay a lot for it. I think on average people pay about $2,000 to do the initial work on trademark application so that’s too much for a lot of people. Amazon, as you may be aware, has the IP Accelerator program. What they do is say “we’ll give you the enhanced brand content and we’ll get you on the Brand Registry if you use our directory.” But you end up paying for that. I think what I saw last time I looked is that they charge $2,400 to do a comprehensive search and application. So, really what our company is trying to do is be the solution to that framework of not-great options that we see. Again, looking at the statistics, small law firms or solo attorneys will charge about 1/3 less than a regular law firm. So what we’re trying to do is be a space between a regular law firm and DIY and online filing systems, and help people get the best bang for their buck.

Trademark Application Pitfalls

Mike: Okay thank you for explaining all the options. You know, if someone is going to be, I guess I’ll say ambitious, and try to the trademarking themselves. What do you think are the most common areas they could go wrong?

Preston: The biggest thing that can go wrong initially is in conducting a proper clearance search. A trademark clearance search is what happens when somebody comes to me and says, “I’m looking at this brand I’d like to protect it. Can I protect it?” What we do is go and look at all the trademark applications and filings. We look at social media. We look at business filings. We’re looking at all kinds of data to see what the brand landscape looks like. It’s very different from something like buying a domain name.  When you want a domain name and you’re excited to get your website going, you just go on GoDaddy and see if it’s there, and if it’s there you pay $10. Trademarks are very different in the sense that you don’t just look for something that’s identical, you’re looking for things that are similar. And that makes the logic kind of fuzzy, and that’s really where an attorney can add value. They can help you understand what that landscape looks like because most people don’t understand if something is an obstacle or isn’t. They have a hard time understanding where the rights end and where they begin in that kind of complicated landscape. And so one of the things you can do is look to see if something similar exists out there.  But it’s hard for a DIYer to know if they can get around that, or if they can overcome it. And so that’s one of the biggest places I think people get things wrong. The other place they get things wrong is in understanding how exactly to describe the goods and services that they’re selling. That’s an important part of an application, and if you do that incorrectly when you get to the end point of the application, you’ll realize that you get rejected. And so, actually crafting the description of goods and services is another, I’d say probably the number two, place I see people make mistakes.

Mike: What other ways are you and your company helping Amazon sellers understand what they can do in the intellectual property space?

Preston: So, what we try to do is understand people’s business. Most of the time people don’t know what the options are. So, I like to understand what they’re selling. What are you selling? Who’s your market? What do your competitors look like? Who are your competitors? And what kind of tools can we deploy to make you more competitive? So essentially, it’s really holistic.  What we try to do beyond just register trademarks is evaluate the business holistically. There’s are lots of different tools that a business owner can use. But we try to at least educate them as to some of the intellectual property tools and competition management tools that they can use because if you’ve ever seen the people that play at the top of the game, you realize that they are using this stuff left and right. And that’s the challenge if you’re a smaller seller or if you’re a challenger brand.  Those are a lot of the people that we represent. So, at Brand Registry Trademark, beyond being an expert at registering trademarks, we look to introduce smaller companies and challenger brands to this world of competition management using these tools.  We do it in a way that is geared towards them because they have small budgets and because they’re cost conscious, we try to apply leverage. We’re trying to do the most we can for the least amount to get them in the competitive space that they need to be.

Mike: Yeah it sounds great taking the holistic approach and helping them understand what their challenges are. It sounds like a great approach. Well Preston, I really appreciate you taking the time to speak with me today. If any of our audience wanted to get in touch with you, what’s the best way for them to reach out to you?

Preston: Go to our website BrandRegistryTrademark.com and you can find all of our contact information. Our toll-free number is there.

Mike: Awesome. All right, thank you again Preston. Hopefully we can do this again sometime.

Preston: Thank you Mike I appreciate it.

Mike: Thank you. Have a great day.