Lesley: Hello Amazon sellers! So what about this whole intellectual property thing? Before all the price gouging stuff started going down, IP was probably the top issue that we were getting phone calls and concerns about, especially trademark issues, because as you all know they can be used for good or for evil at Amazon. So today I am super excited to have a guest with me. It is Preston Frischknecht. Hi Preston.
Preston: Hi Lesley.
Lesley: Thank you so much for joining me today. I really appreciate it.
Preston: Oh thanks for the chance. I love talking with you.
Why is it important to get a trademark registration for your brand
Lesley: So, Preston is with Brand Registry Trademark which is a law firm, and they specialize, obviously, in trademark issues. And so he has a lot of great insights he’s going to offer us. First, we’re going to talk some about people who are private label sellers and brand owners and how they need to deal with trademark issues on the platform, then we’re going to flip over to the other side and talk a little about third-party sellers who get hit with these complaints. And there’s some interesting crossover between what Preston does, and what we do at Riverbend. So to start out, Preston, talk a little to our audience about brand owners and why it is so important that they get a trademark for their brand.
Preston: So I think it’s important to have a trademark registration and protect your brand for lots of different reasons. Some of them make a lot of sense and they’re very narrow in perspectives—such as getting on the Amazon Brand Registry. You know, a lot of sellers on Amazon want the enhanced brand content, and you can only get that with the registered trademark. So from a short term view, that has a huge benefit. Looking longer-term, you know, most of the value in companies, of any size, comes from their intangible assets. So your brands, and your intellectual property, and those types of things can be worth even more than the inventory that’s sitting in your warehouses if you treat things properly. And you can use those tools not only to manage competition but also to increase the bottom-line value of your business. So if you ever get in a position where you want to sell it, or something like that, an appraiser can actually come in and independently appraise these assets that you’ve protected, such as your brand. And they can be a real value to businesses in the long term.
The trademark registration process
Lesley: Well and you mentioned brand registry. I think a lot of people still don’t understand that as the first step to getting on Brand Registry, you have to have the trademark. And not to just have filed for it, but it has to have gone all the way to completion. So talk a little about the time frame. How long does that take?
Preston: Right, there are a couple of different vehicles to go about trying to get a trademark registration, but normally the process takes between six and eight months, and it can vary. But, you know, what I emphasize to a lot of the people that are selling on Amazon is to do it right out of the gate because I’ve had a lot of people who– whether they’ve tried to do it themselves or they haven’t understood the process completely– they’ll reach that six- or eight-month mark where, you know, they should have had a trademark registration, and instead they find out, “oh my gosh! I’ve got to redo this,” because of, you know, some reason that something’s gone wrong.
Why hire a trademark attorney
Lesley: Right and it seems like it should be a simple process, but you’re also relying on government agencies and timelines and using an outside attorney. So as another thing, I’ve had clients who did not realize that you do have to actually have an attorney involved in the process. And that it helps if they actually understand how Amazon works because there is information passed between the attorney and Amazon directly that cannot go through the seller. Can you talk about that process a little bit?
Preston: Yeah, as far as the process of using an attorney goes, there are a lot of good resources on the USPTO website that explain “Why hire an attorney?” I mean, the USPTO strongly recommends that you hire a licensed trademark attorney to help out with this process because it is a legal process that’s like, you know, a mini lawsuit kind of thing where you’re trying to protect your brand and you’ve got somebody at the government agency who’s examining it against lots of different legal criteria. And some of it can be complicated, and that’s why you would use an attorney. And statistics show, you know, there have actually been a lot of studies—Stanford did a study that showed that people who try to get a trademark registration on their own have something like less than a 50% likelihood of getting it. So people get them. It’s just that it’s hard when it’s a roll of the dice, you know, and you’re sort of trying to establish your business and get on the Brand Registry. And that likelihood goes significantly up with an expert that knows what they’re doing. But you’re right, on the back end getting on Amazon brand registry, you know, they reach out when you’re doing your application for the Brand Registry and contact the attorney for the registration and that’s part of the process of enrolling.
Lesley: Right and, you know, I’m really hearing what you’re saying about the timeline because if you do it yourself, and you do it incorrectly and then the trademark office informs you of that. And you’re already four or five months in, right, so then you start over again. You could be easily talking about a year before you’re finished with the process. And in the meantime, you’ve had a product. A lot of our sellers would have a product, it’s actually already up on Amazon selling, and has had a lot of opportunities for hijackers to jump onto their listing. And you can always do the whole testify thing and report a violation and there are ways to get hijackers off of your listings that don’t involve brand registry, but when you have Brand Registry, oh my goodness, it’s so much easier.
Preston: Yeah it’s a pretty powerful tool, and honestly, you know, what I find is that the reason why people try to do it themselves is that if you use a regular attorney, it’s just too expensive for a lot of people. You know, I think on average it costs $2,000 to get that process going with an attorney in this country. And, you know, Amazon has this IP accelerator program that they’ve launched, and it’s actually more expensive. It’s $2,400 to do a comprehensive search and have one of their IP accelerators file for you. So, you know, what we’ve tried to do is bridge the gap between those barriers that cause people to try to file the trademark applications on their own by lowering the price. And so what we do is a comprehensive trademark clearance search and application for about $800. And while that might still be a little bit of money for somebody, it’s really worth doing it right the first time. Because as you mentioned, you know, if you’re doing this and you’re a year behind, it’s not just the problems on Amazon, but it’s also the fact that we live in a first-to-file system. And so if somebody files a correct application over yours, you know, it may be that somebody ends up with your brand over that course of the year. And you can’t get it back easily, at least not without significant effort and expense.
Lesley: Really so $800 if you’re looking at the time? I always think of everything in terms of time, because, for example, we help clients by monitoring their accounts when they have a problem with Amazon. We will do the reinstatement for them instead of them doing it, and a lot of the reasoning, or when we answer their customer service messages I will tell them, you know if you go out and you sign one good deal, you know, you find one more supplier, one good product, you’ve paid for us. And then that money’s gonna keep flowing over time also. And so really that’s a value price, and I understand, you know, what you’re talking about. Thousands and when someone has also put in all the R&D and they’ve produced a product that hasn’t had a return– that’s problematic. But if you can keep it at that price, my goodness, just for the time saved, I would be all-in.
Preston: Yeah and, you know, I understand because I’m a do-it-yourself kind of guy. I like to learn and do things on my own, but I think all of us understand those projects that we didn’t know what we didn’t know when we get into them. And that’s the biggest thing that I find when I talk to people– DIYers sort of — on the backend when things have gone wrong. You know, they sort of come to me with something completely on fire, and they’re like “I had no idea that it could go wrong these eight different ways. I just thought it was an application that you filled out and filed.” And that’s sort of the deceptive ease of trademark application. It’s that the forms are fairly easy. You know, you fill out the forms and do that kind of stuff, but that’s probably the least important part of all the process of getting a trademark registration. And really the most value that I think that we add is the analysis that we do of the brand landscape to make sure that what you’re launching, as far as a brand, is in safe waters, and that it’s not being launched into some totally hostile environment that nobody looked into before they went into.
Lesley: “Hostile environment” is a really good phrase because that is something I think everyone on Amazon understands. It’s just like there are certain brands that it’s not worth it to try and sell if you’re someone who does wholesale or arbitrage because there are brands that are incredibly hostile. And I’m sure it’s the same way in intellectual property that there are certain brands that if you’re just too close, even if you’re trying to trademark something that really technically should be okay, but you’re kind of close and they’re very hostile, you need someone to tell you, “This really isn’t worth it man because these I know who these people are and they’re sharks.”
Preston: Right yeah, you know, I think that one of the biggest things that learning to do this on your own– one of the biggest barriers, I think, to doing it is to understand the risks that you’re facing. Because one of the examples I use is, you know, a lot of people are very familiar with getting a URL a domain name for their website & that’s pretty straightforward. You know, you go on GoDaddy and you type it in, and if it’s available you buy it for ten bucks. And so I think a lot of people have that type of mentality when they approach trademark registration. They think, “well I’m just going to go and if I see that it’s available I’m gonna apply for it.” Or maybe they don’t even look and just apply for it. And the problem with Trademarks is you’re not only looking for something that’s identical or even identical products, you’re looking for things that are similar. And so it’s a really fuzzy sort of—it’s a mix of art and science. You need to try to figure out, you know, what is similar enough that it could constitute a threat, and as part of what you do– at least I also look at sort of the psyche behind what the potential obstacles are. If there are competitors out there in the market and they’re highly litigious, then you need to know if you’re moving forward with a brand that’s going to raise their hackles, that you know you need to be prepared for that and ready for it. And if you’re not, then you might be best served by pivoting towards a somewhat different brand so that you’re not, you know, caught in some sort of a fight with somebody that’s much bigger than you.
Lesley: Right because sometimes it’s worth dying on that hill if there’s a reason for really caring about a particular name or mark, but other times it’s really not. I mean why not just do something different? But if no one warns you then, oops, I’ve broken right into that fire ant mound.
Preston: Yep, exactly.
When to file the trademark application
Lesley: Yeah. Okay, so Lauren is asking a super awesome question. She is asking: Would you recommend filing brand level trademarks at a company’s inception or wait for some modest proof-of-concept?
Preston: So I think it’s always good to talk to somebody early on. Really I don’t think you could be too early as far as talking to a trademark attorney. I always appreciate it when people come to me early because if they’re so early in the process that they’re actually picking the name (the brand), then I can often give them guidelines which will give them a greater chance that they’ll pick something that is protectable. That said, a lot of times people don’t come to me until they’ve actually settled on something or they’re actually selling. You know they’re on the market and they’re selling a product. And, you know, I help people at all stages. It’s just easier when you’re talking to people on the front end because then they can get an understanding of the types of marks that are protectable and the types of marks that there’s not much you can do. I think the worst-case scenarios are businesses that I talked to who didn’t look or evaluate any of the intellectual property stuff early on, but they’ve been successful. You know, what they wanted to have happened has happened, they now have good cash flow coming in, but it’s too late. You can’t go back in time and protect things when other people have gotten in line ahead of you. Or in some cases for patents, I’m also a registered patent attorney, so I help companies with that, there are timelines that people aren’t aware of. If your products have been on the market for longer than a year, you lose your right to patent it. And so I always think it’s better to talk to someone earlier, especially if it’s like a free consultation kind of thing. You know what’s the harm of talking to somebody and understanding your options. You don’t lose money on that.
Lesley: Right. Someone who could point out the problems in advance. Because it’s a way of thinking, and you know that’s why I laws is a specialized field, just like what we do is kind of a specialized field, you have to learn the thought process. It’s not that our clients aren’t extremely intelligent people who can’t do things themselves. It’s the thought processes behind it that are so hard to learn it takes a really long time.
Preston: Right, yeah, and more than that I think, you know, anybody that’s succeeded in business, you know, you go fast alone but you go far with others. I think it’s really important for businesses to build the right team around them just because as one person you can only focus on one thing at a time. And so having a team of specialists in different areas I think is really useful.
Lesley: Well and let’s face it, entrepreneurs out there, all you entrepreneurs, you know who I’m talking about, risk management is not your thing. It’s seriously not your thing. It is not what you like. It is not what you enjoy. You like thinking about the opportunity, but unfortunately, that’s why you have attorneys, accountants, and people like me. Because we are all about risk management to keep you out of trouble in the long term. And since you don’t like risk management, because you like doing the risky things, just outsource that.
Preston: Yeah, that’s a good way to think about it. And if you don’t like to think about it that way… you know I’ve worked with enough entrepreneurs to know, I mean, I look at a lot of intellectual property, you know, and I say over and over again that it’s competition management. So, I mean, if you like sort of risk-taking and being on the offensive and being assertive, these tools are not just for defense, I mean, these are the types of things that you wield against other people. You know intellectual property can be a shield to protect you. But it’s also a sword that you can wield to gain market share and manage your competitors.
How to use intellectual property assets to manage competition.
Lesley: Okay so let’s talk a lot a little bit about that on Amazon. Because on Amazon you’ve got your trademark, & you’re on Brand Registry, so how are we controlling the bad actors once we’ve gotten that into place?
Preston: Lots of times the best relationships that I have with businesses are the businesses that just bring problems to me. And it may not even be, you know, something that they’ve identified as an intellectual property problem. An example of that from recently, you know, somebody came to me and said, “man we’ve just got this one competitor that’s really you know eating our lunch on Amazon is there anything we can do?” And, you know, I sort of combed through everything to see are there were any intellectual property hooks that we could use to manage this competitor, and, you know in this particular example, we were able to order product and see that the owner’s manual was using some of the photographs that were taken by the seller that I was representing. And so all of a sudden you’ve got a copyright infringement complaint and it’s something that really wasn’t even identified. I mean it’s great if sellers can identify legal violations on their own. That’s kind of straight or we can talk through those things but again going back to that, it’s worth talking to somebody, you know. If you have a problem it’s worth talking to somebody and you might be talking to different people. You know, you might have a list of people to go through, and one of those people might be your intellectual property attorney, to see if there’s anything that, you know– because really if you want to look at what this company is doing, they’re using some dishonest means to compete. And you don’t know exactly why it is they’re succeeding, but I am of the opinion that these laws exist for a reason, and, you know, there are two sides to them. And if somebody’s on the wrong side then you use it against them because they’re being unfair. It’s an unfair competition.
Lesley: Okay y’all, this happens more than you think; it does. This owner’s manual thing, it sounds like it. So, Preston, you told that story and I was thinking, “Wow!” someone was really done to do that. I have had three clients, same story, that they had patent issues with a competing product. All of them were knock-offs out of China. In two cases we believe that the factory that my clients were using sold the mold to someone else, which happens a lot over there, sold them all to another factory and they advertised it and sold this to someone on Alibaba, right? So what happens sometimes over there is they know that their manual is not going to sound like it’s American English so they will buy the product they’re knocking off and they will copy the manual so it sounds like American English. And they will copy the photos and everything. So if you have a product that you’re having knockoffs, and especially if you see that they’re coming from China, I totally recommend checking the product literature, what’s on the box, the photos, everything to see if there are copyright violations because this is not an unusual thing.
Preston: Yeah that’s a great tip. I think to be honest with you, most of the Amazon sellers are sourcing outside of the country and I don’t think most people realize that the intellectual property laws apply differently in different countries. So particularly if you’re sourcing something in another country, you need to make sure that your ducks are in a row with the intellectual property. You don’t want to be caught on the wrong side of something. An example of that again, just this week I had somebody who, you know, spent $200,000 on inventory and they never checked to see essentially if someone owned the patents for the product that they were selling. And so, you know, now the situation that we’re in is, “Okay what are our options now that we have?” All of this inventory and they’ve been delisted on Amazon, and those types of things. So again the rule of thumb starts early, just having somebody just talk to you about the things you should be considering. Because those things are not always intuitive. And particularly like you were saying about factories in China, their expertise is in selling you things. Their expertise is not in letting you know if it’s safe to sell them or keeping them safe or that type of thing.
Lesley: Yeah I’ve had the same thing. I’ve had clients shut down because they bought inventory on Alibaba or from an Alibaba supplier and the molds were for a large brand in the United States. And I mean and when you look at the products, it’s not a coincidence. I mean you can even see the shadow of the name on the mold so it’s obviously stolen or handed off or from the same factory or whatever. Right and the clients were told it was unbranded, & it is just a generic product and it’s not. So it’s smart to do some extra research and not just assume that what you’re buying is okay if it’s not at your direction. Their laws are different and their thinking is different because they don’t have the IP law structure that we have over there. So they’re not even doing anything wrong in their eyes. It’s how a lot of businesses operate.
Preston: Right, yeah, and you know speaking to trademarks on that particular issue—if you’re sourcing in another country you have to think about getting trademark registration in that country. Because the worst-case scenario, which you know any intellectual property attorney has dealt with and has at least a handful of these stories, is that somebody else registers the brand in the country that you’re sourcing it in and then they basically hold you hostage. I mean a brand rights owner in China can call their customs and say “don’t let any of this product out of the country because I own the brand for it. I own the trademark rights.” Also, they’re there’s a Costco in Korea and so there are a lot of American goods sold in these countries. And people will actually pick [products] up and do a trademark search in that country to see if it’s owned. And if it’s not owned, they’ll go file for it and there are untold stories of people holding American companies hostage by owning their brands in other countries. So that’s another reason to be vigilant.
Lesley: Wow, we learn something new every day. You know, I always say our job never gets boring because of some of these blackhat tactic bad guys in the Amazon world. They come up with new strategies every month. [And] we’re like, “Oh my goodness I never would have thought of that.” I’m sure that your line of work is the same way where you’re like, “I never even thought of that way to be evil.”
Preston: Right. Yeah, you know, it’s a really competitive world and if you’re selling stuff on Amazon you already know that and know that you have to be good at your game. You can’t go out there and play with Michael Jordan if you’re a 5’ 8”, white guy like me. Right, you’ve got to work a lot harder, you know, if you want to play at the highest levels and so I think that’s a lot of what we spend our time doing is helping companies understand what their options are, what they need to look out for and sort of what they need to map as far as a strategy to gain more market share on platforms like Amazon.
Defending against intellectual property violation claims
Lesley: So let’s talk a little bit about the flipside—the sellers out there who receive IP claims through the Amazon system because someone who’s allegedly the rights owner complains. So for this conversation let’s assume that the complaints are actually from the rights owner and not fake complaints because that’s a whole different ball of wax. that’s really not fun to deal with. How they even game that system to pretend to be the brand registered owner is beyond me, but the ones who actually own the intellectual property they filed a claim against you you know Amazon isn’t gonna play ball in this situation they want the two parties to work it out and so you contact the rights owner and they don’t respond to you at all. Is there anything that you can do? That’s what Lauren is asking me; if you receive one of these hostile IP warnings or a fake one, you know, like where you’re selling legitimate product and they’re saying it’s counterfeit. For example, you got it from a wholesaler and they won’t respond to you. Is there anything that the seller can do?
Preston: Yeah my experience is that and it’s the reason why I have a job or I wouldn’t have a job but laypeople have a hard time understanding where rights begin and where they end. They’re not certain of how all these claims work and what the possible defenses to these claims might be or what the holes in the claims might be. And so in my opinion you know if you get something that’s thorny and you’re not able to fix it, that might be the time to reach out to an intellectual property attorney. You know lots of things can be negotiated and my experience is a lot of new buyers will sort of approach things in a very friendly way with the people that filed complaints against them. They’ll say, “you know you delisted me, I’m so sorry what can I do to make you happy?” And the person who filed the complaint is on the other end going “well I got what I wanted which is you’re not on the platform anymore end of the story you know we’re not we’re not doing any more favors for you.” And so in that particular situation a lot of the time you’re not going to be able to reach resolution with the person that filed the complaint but your best bet is against Amazon and if Amazon gets the sense that you’re in the weeds you don’t really understand where the rights begin and the rights end then they’re more likely to defer to the person that filed the complaint. But if you have some strong arguments or strong defenses that you can state really succinctly and this is I guess you know maybe where your space and my space overlap a little bit I’ve been able to get traction oftentimes by telling people “I’m an attorney and I represent the seller,” you know, “here are the legal issues and this is going to be a problem if we don’t get our listing back up.” And you know we can get significant traction with Amazon if we can’t get traction with Amazon then lots of times there are things you can do to sort of increase your leverage against the person that has filed the complaint. [With] a lot of the companies that file complaints, one of the things they’re considering is how small is the person that I am filing a complaint against? And if they’re very small, one of the big bets is that “well our argument might have a five percent chance of winning in court, but we’re betting that this person’s too small to get help or know what they’re doing to fight back.” And so those are situations where I think you know that’s my sweet spot where I try to insert myself and you know really generate some leverage against people to show, you know, “we might be small we might be a challenger brand or whatever, but we’re scrappy and you can’t bully us around.”
Lesley: Yeah you know I really see both sides and just like you play both sides on this with some people you’re working with the sellers and sometimes you’re working with the brands. It is the same thing for us. And we care about both sides and we’re interested in what’s right and helping the people who are on the side of the Angels right? So don’t get me wrong. I understand there’s a lot of merit on both sides, but I got to tell you there are a lot of rights out owners out there who are just bullies. And it’s exactly what you said, if you are small, they think “I’m just gonna scare you with this letter, and even if you’re selling something that you got from a wholesaler or distributor we work with, we don’t care. We don’t want you Amazon. I don’t care if you’re selling it in a brand-new condition I could care less. I want you off the listing so I’m just gonna scare you with this giant law firm or with a really frightening letter where I’m demanding things like I want to know where you got your inventory and how much you pay for it.” Am I wrong on that or I don’t know?
Preston: Yeah I think you’re gonna get my attorney perspective on this which is obviously you know if somebody asks me a bunch of questions I’m gonna ask them a bunch of questions. You know like, “prove to me that your rights are where you say they are.” Show me the chain of title for your trademark registration you know, or patent, or whatever. So I would never hand over commercially sensitive information especially out of the gate. That’s not gonna help you; it’s going to help your competitor, and so I think sometimes these things are better looked at through the perspective of this is competition and you know everybody competes at some level or another, and everybody negotiates at some level or another. And so, you know, when you get something that’s really scary like this rather than thinking about it in terms of wrong and right I think it’s you know finding out where the lawsuits and then what your options are and a lot of times you know you’re defending yourself and not letting yourself be bullied and standing up for yourself, but even if you have done something wrong– and a lot of time people do things inadvertently wrong– I think it’s totally okay to negotiate. You know, “okay I’m sorry I didn’t know this was what’s going on, but I need some things to work with you and in terms of intellectual property right violations.” Even if you have no defense arguments, you know, I typically help people get things that are favorable to their business or to the situation at least like phase-out periods, sell-off periods, you know “I have six more months to sell off my remaining inventory.” Sometimes I work with the other side to come up with an alternative product design or an alternative brand that would be acceptable to them so it doesn’t turn into a lawsuit. So there’s lots of things that can be done even if you know you’re fully in violation of intellectual property law.