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Started an internet business, and am working to spend capital frugally, should I allocate money to patent and or trademark?

Los Angeles, CA |

In starting an internet business, I have a creative and different concept of transaction and am curious the options for and liklihood/ necessity of working to patent (if it can be) as well as a federal trademark....should I?

Attorney Answers 8

  1. Best answer

    The FIRST step before doing business is to make sure that you're not traipsing on someone else's rights. Your "creative and different concept of transaction" may already be patented by someone else.

    Assuming that you've already scoured the publicly-accessible websites and found no such "transaction" mechanism there are still many, many non-public websites that may use what you, at the moment, think of as your invention. Moreover, there is no requirement for a patent owner to put in practice his invention -- so without doing a "freedom to operate" patent search you cannot be sure that your "transaction" process is not already patented.

    So, for the moment, I think your money is well spent making sure you do not infringe someone else's patent. If you don't, then think about seeking patent protection for your "transaction" mechanism. You need to speak with a patent attorney.

    Nearly the same analysis applies to your branding. BEFORE you adopt a company name, product name, logo, or tag line, you need to make sure no one is already using it to brand their company or product or service. Your money is well spent doing a "trademark clearance search" and having a trademark attorney review the results.

    The above are MANDATORY. If you do not have the money take these steps you have no business being in business.

    The above is general information ONLY and is not legal advice, does not form an attorney-client relationship, and should NOT be relied upon to take or refrain from taking any action. I am not your attorney. You should seek the advice of competent counsel before taking any action related to your inquiry.

  2. My general advice about trademarks at startup is that you have a trademark as soon as you use it in commerce -- you don't need to register it to use it. Still, you want to make very sure that you are the very first to use it, and since you are on the internet, that would have to be (at least) nationwide. You can wait to apply for a registration once you have a positive cash flow -- just make sure you have documentary evidence of your first use of the trademark, since the date of first use is one of the issues for a trademark registration.
    As for patents, that is definitely something that you would want to discuss with a patent attorney.

  3. Congratulations on the start up business. If your concept is different and unique, I'd suggest at the very least consulting with a patent attorney regarding your method. While frugality is to be applauded at times, if this is something that you could patent, you should consider doing so before launching it out into the public and possibly losing out on a patent later.

    As to trademarks, you may be best to hold off on that; HOWEVER, it all depends upon some additional facts of your case. Also, if you are solely Internet based, your "brand" is extremely important in protecting, so a trademark might be able to be put off for a bit, but keep it as a priority. Applying for patents and trademarks are very much comparing apples and oranges. Trademarks are relatively inexpensive to apply for and pretty straightforward. Also, if you are starting an Internet-based business that has some unique and creative layouts etc., you may also want to speak to someone regarding copyright as well. I'd suggest speaking to someone regardless, but first about patentability of your method(s), then apply for the trademarks. Best of luck.

  4. Frugality is a good thing; "false economy" is not. As my colleagues point out, trademark registration is based on "first use" so you could delay in registering it. Patent protection, which I do not do, seems a higher priority. What you may consider is a general business attorney familiar with IP to make sure your business entity is in proper form, a good CPA which is essential for any successful business, and consider what insurance you may need. it is great, however, that you are making a budget and are considering the value of various professional services and seeking to prioritize them.

    The above is general legal and business analysis. It is not "legal advise" but analysis, and different lawyers may analyse this matter differently, especially if there are additional facts not reflected in the question. I am not your attorney until retained by a written retainer agreement signed by both of us. I am only licensed in California. See also terms and conditions item 9, incorporated as if it was reprinted here.

  5. Should you allocate money to a patent or trademark? Maybe.

    Because a patent is more time sensitive, you should first focus on determining whether a patent would be worthwhile for your endeavor and weigh its cost (which will be in the five-figure range). Conduct a patent search and consult with a patent attorney. You may decide that the potential scope of protection (especially if you are considering a business method patent) is too narrow to justify the capital investment. If you decide to proceed with a patent application, you may be able to defer some costs by filing a provisional application (which has fewer formal requirements) instead of a non-provisional application.

    Trademarks are often very valuable for an internet business, and there are advantages to filing an intent-to-use (ITU) application with the USPTO before actually using the mark. Again, conduct a trademark search and consult with a trademark attorney. The cost (in the low four figure range) is significantly less than for a patent. That being said, you can still file a trademark application after you begin using the mark in commerce, if you need to conserve cash.

    This answer is for informational purposes only. It is not intended as specific legal advice regarding your question. The answer could be different if all of the facts were known. This answer does not establish an attorney-client relationship.

  6. You should be looking at deductibility issues for startup so that Uncle Sam provides help. If you pick a bad mark you could become dragged under immediately. I lecture startups through PACE in LA and we have some sessions in February & March for IP & Tax on startups. As a patent and tax attorney, its the stuff I live for. I'd love to have you drop by at one of my presentations. Secondarily, please look at some of my articles on picking a trademark.

    Curt Harrington Patent & Tax Law Attorney Certified Tax Specialist by the California Board of Legal Specialization PATENTAX.COM This communication is general information and not legal advice, and does not create an attorney-client relationship. This communication should not be relied upon as any type of legal advice. Please note that no attorney-client relationship exists between the sender and the recipient of this message in the absence of either (1) a signed fee contract and (2) remission of an agreed-upon retainer. Absent such an agreement and retainer, I am not engaged by you as an attorney, nor is any other member of my law firm.

  7. If you have a truly unique product, patenting it may make a lot of sense. Be aware you only have one year from the date of making it public to file though.

    If you have a brand that you want to grow and have the public recognize, I recommend registering the trademark. The filing fee is $275 or $325. You can do it yourself, but might be better off having counsel do it as there are a few places where you can get tripped up.

    Good luck.

  8. Trademarks are established through their use and not necessarily through their registration and so using the mark begins your protection. But you should keep clear records about when you first started using your mars so that you can clearly establish you date of "First Use" in the event the USPTO allows a registration to slip through so that you can file an opposition or a petition to cancel in that event. However, this can be costly and given that a trademark registration is inexpensive, I would suggest that you apply sooner rather than later. As for business methods patents, you I suggest that you get a reputable patent attorney because the factual nature of what you want to patent becomes very important. Most patent attorneys will give you at least a 30 minute free consultation and give you better direction to assist you..