In this episode of the B2U Podcast, we sat down with legal advisor, Kelly Jesson of Jesson & Rains, LLP, and discussed ways to help new business owners navigate the different types of Intellectual Properties such as Trademark, Copyright, Patent and Trade Secret.
Alec: Hey there listeners. Thank you for joining us for the B2U Podcast brought to you by cbrbiz.com. I’m your host, Alec Mangum. And today, we’re talking about something that often intimidates new business owners and entrepreneurs, the law. Here to help settle our worries and dispel our fears is attorney Kelly Jesson. Kelly, how are you? Thank you for joining us.
Kelly: Thanks for having me. I’m doing good.
Alec: So, before we get started, why don’t you tell us and our listeners a little bit about yourself, tell us a bit about you, why you became an attorney and what you do on a daily basis at Jesson Rains.
Kelly: Okay. Again, my name is Kelly Jesson. I am a business and a state planning attorney. I co-founded Jesson and Rains law firm with my husband Ed. We’ve been in business about three and a half years. We do, again, estate planning business and construction. So he does more of the construction side, I do estate planning and business work which means that I help people plan for death and incapacity unfortunately with wills and trusts and powers of attorneys. And then I help business owners plan for their future by protecting their personal assets and their business assets which is one of the things that we’re going to talk about today, intellectual property.
I became an attorney because it is challenging work, I like kind of figuring out a puzzle every day. Every client is different, every family is different, every business is different. And so just listening to what my clients want and figuring out the best way to make it work for them it’s like putting a puzzle together. And it’s challenging and exciting and makes me feel good when they’re happy.
Alec: To say the least, that’s awesome. Well, let’s go ahead and jump right into it. The first thing that I’d love to get into is kind of defining for entrepreneurs out there the difference between patents, copyrights, and trademarks. You know, all of that is crazy complicated and scary to jump into for business owners on the get-go. So if you don’t mind just defining some of that stuff for us?
Kelly: Yeah, absolutely. And I’m gonna add a fourth category in there too of intellectual property which is often times overlooked which is going to be confidential information and trade secrets.
Alec: IP, intellectual property.
Alec: Okay. Awesome. Take it away.
Kelly: So, the most common form of intellectual property that most people know about is a trademark. So you can trademark a word, a phrase, a symbol or design. It’s very common for people to trademark their business names or logo, you see that a lot, that’s pretty common. So also design elements too, so an example of that is a Tiffany Blue Box. Everyone can see that and immediately identify what it is and what company that.
Alec: It’s associated with.
Kelly: Right. Exactly. So that is what you think of with a trademark. So it is something that distinguishes the goods and services from another party and identifies as the owner of the mark.
Alec: Okay, so that’s trademark.
Kelly: That’s trademark, right.
Kelly: A copyright protects an original work of authorship. So that is writing a video and audio recording. So like this, the podcast, photographs, and artwork. So it has to be unique, so that’s a copyright.
Alec: Okay. How does that differ from the design aspect of a trademark? You mentioned the Tiffany Blue Box, how does that differ?
Kelly: Right. So that’s a great question. So something could have both copyright protection and trademark protection. So, you design a logo if you’ve got some artwork in there. The person who created that has a copyright. As soon as it’s created there’s a copyright which I’ll talk about in a second, common law rights. But then when you attach it to something commercial and put it out there and using commerce you can then also get that trademarked, so it can be both or two different things.
Alec: Okay. Awesome. All right.
Kelly: So for both the trademark and the copyright, what I just mentioned, is you can have common law protection which means that as soon as you draw that original piece of artwork or take that picture, you automatically have a copyright. Someone cannot then take that without your permission and use it. So you can have a copyright without taking the extra step of applying for federal copyright protection.
Alec: So is that specifically for like monetization reasons? So if I take a photo and I sell copies of it and someone thinks, oh that’s a cool photo, I could probably recreate that whole situation, they do so and they sell it. That is copyright infringement, right?
Kelly: No, if they created a new photo, no. So, it’s actually using that.
Alec: That photo, like if they ripped it from my website and posted it on their own.
Kelly: Right. Because if you think about it, if I take a picture of Mount Kilimanjaro, someone else can come and stand in the exact same spot and take the exact same.
Alec: Only you can take a picture of them.
Kelly: So, you’re not really protecting the content in the picture, it’s your original picture. But that’s gonna be different depending on what medium we’re talking about because if you think of a piece of music, the same cannot be said for that. If I take a piece of paper and I do the music for a Beethoven classic. That is me riffing Beethoven off.
Alec: Yeah, because music is music, it’s kind of like math. It’s like it’s numbers, it matches up exactly. But I bet copyright and all of that whole concept and the laws around that have evolved over the years with digital platforms moving forward.
Kelly: Absolutely. Definitely. And that has also helped to blur the lines a little bit on what intellectual property protection actually applies. Because sometimes when we get to digitizing things you might get in the realm of patents too. Before we talk about patents, I’ll also say too that trademarks also have common law protections. I use this example all the time, it’s so boring, but I love cupcakes, so that’s why I say it and my name is Kelly.
So if I open Kelly’s Cupcakes and I have this unique logo design and I start selling cupcakes on mainstream, a year later someone opens Christie’s Cupcakes and two stores down and she has got a really similar logo, all right? Just because I didn’t go and get my trademark federally protected it does not mean that I don’t have a claim against her. I had a common law trademark. I was the first to use that unique mark and commerce. And if her using that mark is damaging me in some way, meaning…
Alec: Like being right down the street and taking your business.
Kelly: Right. If someone looks at her mark and says, “Oh, I want to buy those cupcakes, I’ve heard they’re really good” thinking that they’re my cupcakes and then they go to Christie’s store and buy from her, if I can show that I’ve been damaged by her use of a similar mark then I might have a claim against her, so that’s common law trademark protection.
Now if you get a federal trademark it makes that whole process easier because you are presumed to be the first one to use it and you don’t have to prove damages, there are some statutory damages that you can get. But the point in me telling you this is that just because you don’t go and get federal protection doesn’t mean that you’re out of luck if someone comes along and starts infringing on your intellectual property.
Alec: Right, right, very interesting.
Kelly: But it is good to take that extra step and get the federal protection for the reasons that I said. You have a presumption that you’re the owner of the mark, so that means that you kind of walk-in court a winner. Instead of me proving all of these things, I’ve already proved it and the other side is the one who has to come along and say, no, she wasn’t the first to use it. So there are some benefits to doing that.
Patents, on the other hand, there is no common law patent. So if you are going to get a patent you have to apply for the federal patent protection and those are for inventions. So they have to be again, unique, it’s gotta be something new. You have to apply for the patent I think within a year of you actually developing the product, but it actually has to work.
Alec: Right. How do you prove that?
Kelly: So you have to prove that it works with the design and everything like that, so it has to be a workable design.
Alec: So, you take it to a federal office?
Kelly: Yes. It’s probably the most complicated intellectual property. People can apply for them themselves but it’s recommended to use a patent agent or a patent attorney to help you with that. And not all intellectual property attorneys are patent attorneys, like me, I am not a patent attorney. So whenever I have clients who need patents I refer them out to somebody else. But in addition to passing the patent bar exam, you have to have a degree in a technical field. That’s pretty interesting.
Alec: Because you have to be there to advocate for…
Kelly: I mean, you’ve got to understand it is science, mathematics-based because you are creating a product or a process that works and does something.
Alec: Right. Wow. Well, that’s super interesting. So that covers all the different categories of intellectual properties. I’ve got a question for you.
Kelly: Except the confidential and trade secrets information. Do you want to talk about that?
Alec: Okay. Tell me about that. Yeah, tell me about that.
Kelly: So, you could have trade secrets and confidential information that is not federally protected or out there in the public realm and protect it using contracts and this happens all the time. So if you think of secret formulas, so to use like the most famous one is Coca Cola. So, nobody knows the secret formula to Coca Cola and it probably could….well, I don’t know if it could be patented, maybe the process for creating it can be patented, I don’t know but nobody knows it, it’s not out there and it has been protected for years and years and years by utilizing contracts.
So common types of contracts that people use nondisclosure agreements. If you have an idea for a product or business or anything before you start talking to people about your idea and negotiating with third parties for funding or whatever, you should get them to sign a nondisclosure agreement so they don’t steal your idea and go and do something with it.
There’s also employment agreement, so you hire employees and they’re working for you and they’re making Coca Cola during the day. You don’t want them to go out and sell your…the contracts have to be good. There’s gotta be some penalties in there for people running their mouths.
Alec: Yeah, exactly. So, Coca Cola is not…the formula is not patented at this point in time. So they protect it using various contracts with their employees and in partners. Wow.
Kelly: Yes. And another contract that people can use too is a non-compete agreement. So, if Kelly’s Cupcakes has this really good lemon meringue pie cupcake and like Mecklenburg County is just going crazy over it and I teach my employee how to make it because obviously, I’m not going to be making the cupcakes every day. If she then takes that recipe and leaves and goes and works for Christie, I’m in trouble because now Christie has this great lemon meringue pie cupcake.
Alec: But if you have that contract she’s in trouble.
Kelly: Right. So you can use a non-compete agreement. You have to be careful with them because they do have to be narrowly tailored because you don’t want people to not be able to work. But that contract would say employee you cannot work for another cupcake store within a 15-mile radius of here for a year after you leave. And so that’ll at least protect me in that area from a competitor. But those are just some types of contracts that you can use. So you can keep things secret. Once they’re out in the public knowledge they don’t have any more trade secret protection, so they’re not protected anymore.
Alec: Wow. Well, that’s all extremely important for new business owners, or listeners, because they’re out there innovating on new products, they’re opening new businesses and this is the kind of thing they want to think about, especially as they’re hiring new employees and in bringing them into maybe those trade secrets.
So here’s a question for you. I’ve got an idea for a product, I believe that it’s totally new, it’s a new thing, I’m really excited about it. First of all, I want to get this idea out there and make sure that it’s legally viable. How do I make sure that my idea is truly original, that I’m clear to kind of push it out as my original thing?
Theoretically if I came up with a new oven for cupcakes and I think it’s brand new design, completely new way to bake cupcakes, but I’m not sure that this idea is non-existent in the market, what are the legal systems and mechanisms in place and what’s the process that I go through to make sure that that’s the case and maybe even patent it or trademark and all that stuff?
Kelly: First of all, like we talked about an idea you can’t patent, so you would have to create it and make sure that it works. And to see if there was anything out there like it in the market you could search all of these databases, patent databases, trademark databases, copyright database, you can search all of that. But nowadays it’s great because we have the internet and the officers who work for the U.S. patent and trademark office they actually will search the internet and look for things too.
Now if you created a cupcake oven, if there was something out there already but you made it better you could still patent that because there is something unique about yours. So just because something else is out there, it doesn’t mean that you can’t do it. I mean, and if you think about all the business..you don’t have to come up with something novel you just have to come up with something better.
Alec: Exactly. Exactly. And I bet that’s a very fine line in some industries where it’s like specifically maybe even with something like an oven where it’s like, it’s just slightly better but if it is just a little better it’s unique.
Kelly: Right, so for that you can do some searches. It’s really easy to search the trademark database harder for patent database because you’re actually looking at plans and things like drawings.
Alec: Is that stuff public, patents?
Alec: Because I’ve seen stuff like come out in the news like Apple just patented this new device, you don’t know if they’re actually gonna like put it out or when they’re gonna put it out but it seems to be public information, especially for bigger corporations.
Kelly: And that actually is another interesting point. So there’s a strategic decision to be made whether you want to patent something or whether you want to try to go the trade secret route. So if you patent something, it is public. So once it’s done the whole world can see it. Now, for a long period of time between 14 and 20 years, I think, it is protected.
So, I’ll give you an example. Famous current example is a YETI Cooler, so they have a patent. Now as soon as that came out, a whole bunch of other people have come out with similar products and are questionably ripping it off that design. And Yeti has sued a lot of those companies and I think they’ve won a lot of lawsuits. But anyway, that’s a risk that you run when you do a patent is that it is going to be out there and if it’s a really good design you’re gonna have some people who are gonna try to rip you off for lack of a better word.
So if you look at a YETI Cooler, I mean, you could sit down, someone with a science background, not really me, but you could sit down and look at the design, probably break apart materials, figure out how it’s made, figure out how it’s designed and easily put it together.
Alec: Right. Like reverse engineer it.
Kelly: Right. So let’s say they decided not to patent it and they decided to go the contract route. So once they put it on the market, everybody is gonna figure out how to make it.
Alec: Something like Coke, like you take a sip and it’s not like you can reverse engineer from there but something like a tangible product that’s built and engineered and you can take that thing apart and figure out how it works.
Kelly: Right. So if you can do that then there is a benefit to you getting the patent because then you know for 14 to 20 years it’s protected and you can go after people who do this. Whereas if they had just relied on contracts that might not have been the best thing for them because someone can figure it out once it gets in the market. So that is a strategic decision to make. Am I gonna go forward with patent protection or am I gonna utilize contracts like Coke?
So to go back to your question, you’ve got this business idea if it’s a product then you can get a patent. If it’s an overall larger business idea, let’s say you’ve got this idea for opening up a business and it’s going to be service-related, so it’s not a tangible product there, it is a good idea to do a trademark search. Even if there’s nobody in your immediate area, what if there’s a business in California that’s doing the same thing and you establish your business and you get a cease and desist letter in the mail from California place saying, “Hey, you’re using the same logo.”
Alec: So, what is a trademark search? How do business owners go about that?
Kelly: So if it’s just a name, it’s not terribly difficult. The United States trademark patent office website and search for names. Now, one thing that I’ll say is that just because the business doesn’t have your identical name doesn’t mean that you’re in the clear because the trademark office looks at like phonetics too. So, if I could spell, you know, K and C-
Alec: Popa Pola.
Kelly: Yeah, exactly. So they look at that and so you’re not totally in the clear with that, so you’ll need to look up different variations of words. And so it’s a good idea to utilize professionals for this and not completely try to do it yourself.
Alec: So to get an attorney to help you really comb through that stuff.
Kelly: And to also kind of help you with is this a trademarkable business name from the beginning. So Kelly’s Cupcakes is not going to be trademarkable because it’s generic. If a trademark is important for you, you want to pick a unique name. So, let me think about this for a second. So, Apple computers, there’s a classification called fanciful and arbitrary and it’s the most protected form of a trademark. And it means that the word associated with the product they have nothing to do with each other. So, Apple computers, I mean, they’re not selling apples, they’re selling computers. But that’s not always great for marketing when you’re starting a business.
Alec: I think that’s easier for like tech companies because they can create a generic name that just sounds cool and that’s kind of the basis, that’s kind of the baseline for tech companies but something like cupcakes you can’t call it something that’s too far away from what it is because then people don’t know to stop in for cupcake.
Kelly: That’s exactly right. So, you just got to know that going into it that maybe trademark protection isn’t the most important thing for your business name. Now if you get really popular and you’ve got a cool little logo or something like that and maybe you’ll want to do something with that. But Kelly’s Cupcakes is just gonna be merely descriptive is what it’s called. So my name describes what I’m selling.
Alec: Because there’s probably several Kelly’s Cupcakes out there because there are several Kellys who are selling cupcakes. But once you get a logo and stuff, I mean, have you put yourself in a tough position because now you can’t trademark that or?
Kelly: Yes, that’s a great point, that’s why you should at least do the searches in advance because sometimes people will move forward with something and then they’ll realize later, I either can’t trademark it or somebody else has something similar to this.
Alec: Right. I’ve had several friends in that position where they get several years into their business and they just can’t stick with the name that they’ve been using all this time and that can be a major marketing problem because now they’ve got to change their name. So nailing down this stuff early on in your process of starting your business I think is probably vital.
Kelly: And it also depends too on what your vision for your company is. If I’m gonna just be on main street selling cupcakes in my small town forever than maybe some of this isn’t as important but if I got this tech startup that I want to be global and I’m gonna be soliciting a bunch of investors and there’s a lot of money at stake…
Alec: Don’t name it The Best Software.
Alec: It may seem like an obvious one but we just want to throw that out there. Well, my next question was about picking a name for your business and what the best way to make sure that the name you’re picking is protectable? And I feel like we’ve kind of covered that a little bit but is there anything else you’d like to add in that?
Kelly: Not really. The other protectable kind of category that I didn’t talk about was so very first is fanciful and arbitrary. So that’s at the top, so Apple computers. The next is suggestive and that means that the name suggests what the good or service is without saying it. And so what I think about for this one, is Facebook. So Facebook suggests what it is, it’s a online yearbook or at least it used to be, now it’s not.
Alec: It’s something else now.
Kelly: Now it’s like a phone book but with faces on it, so that is a suggestive name. So that’s the other highly protected class of names. So, come up with a creative name if trademarking is important for you, if not..
Alec: Make sure it’s fanciful, arbitrary or suggestive.
Kelly: Right, exactly.
Alec: On my way to becoming an attorney, I guess. That’s very cool. So if we were to rename Kelly’s Cupcakes to something more protectable to put you on the spot, something having to do with icing or something like that maybe would be, would be a better name than Kelly’s Cupcakes? We’ll stew on this.
Kelly: Yeah, yeah. Let me think about it.
Alec: We’ll brainstorm later. Cool. Awesome. Well, my next question for you is something that I think a lot of new business owners, new business owners would be interested to hear, what’s the difference between the various..the TM, the R with a circle around it, rights reserved to copyright, what’s the difference between those different symbols? How do you get that, you know, on your logo or on your brand? Is that something that business owners should seek out and should they pursue?
Kelly: Right, yes. So whenever you want to assert a common law trademark protection which you can do without getting the federal trademark, that’s what the TM is.
Alec: Okay, that’s the federal.
Kelly: No, that’s the common law, is the TM.
Alec: Okay. So if I create a logo for my business tomorrow I can put that TM next to it and I don’t have to contact any federal office before I do that.
Kelly: Yes. And that kind of puts the world on notice that you’re treating that as a trademarked logo or trademark catchphrase or whatever and if somebody takes it, you’re going to go after them.
Alec: Right. Kind of like I’m paying attention, I care about this, you can’t steal it.
Kelly: Right. So, you know, I tell people don’t use it willy-nilly. Again, for Kelly’s Cupcakes, I’m not gonna put TM on there because I am probably not gonna have any common law trademark protection for that either. But if you’ve got something that you are kind of toying with protecting, not protecting, go ahead put the TM on there and establish that you’re intending to be the first person using that and that you’ll protect your rights.
The R with a circle around is a registered trademark. So, you cannot use that unless you have a federal trademark. I see people using it all the time and that’s wrong. So that’s what the R with a circle around. C with a circle around is copyright. Patent pending just literally means patent pending. There’s not a patent symbol so that’s kind of funny but you can put..patent it or that’s why you see people say, “We use this patented formula for blah, blah, blah.”
Alec: That’s our way of…it’s kind of like…it’s also a marketing thing now to say that it’s like, ooh, innovation.
Alec: Cool. Well, that’s good to know. I think new business owners, people who are sitting down by themselves to create something, to make a brand are often looking at the internet for images, quotes, anything that they can use. If they find a good image do they have to credit the artist? Could you talk a little bit about copyrighted material that you might want to use for your business? What are some good practices with finding good material?
Kelly: Okay. I love this question because this is a huge problem. So, if you find something on the internet do not copy and paste it and use it because you didn’t create it and you don’t have permission to use it. So you can do a couple of things. You can ask the person’s permission to use it or you can find free artwork or you can do more than a couple of things, you can create something yourself.
Alec: Right, that’d be optimal.
Kelly: But there are plenty of websites where you can get free images, where you actually log on and there’ll be a licensing agreement and you check it and then you have permission to use all of those photographs and images. So, without a doubt, do not take something off the computer and use it. Even if you credit to..so that was just the second part of your question. If I use something and I credit the author I’m still using it without their permission. So, there’s a fair use exception to that rule. So if I am doing scholarly research, academic, something like that to use books and artwork and things like that as part of my research or teaching a class or something like that.
Alec: Because it’s published material so you’re just using what’s out there.
Kelly: Exactly. I don’t have to call whoever wrote that book and say, “Hey, do I have permission to cite your book in my research paper?” But if I was doing something commercial which we’re kind of talking about when we’re talking about business here you definitely do not want to take something and use it in your marketing materials.
Alec: And we see that all the time, companies who just find a great photo of like the Charlotte skyline and they just want to pop it in there as the header to their website and we ask them, hey, you know, where did you get this? You know, and oh, just Google images. Google images is not the place to go for that stuff.
There are a lot of good resources that we found, there’s a website called unsplash.com, I’m just putting that out there for our listeners. They have free, you know, it’s got an agreement, free stock photos and they’re beautiful. So, there’s a lot of resources like that. And you can also purchase the rights to a lot of photos for $3 to $10 if you find something that you really love. So definitely make sure that you get the rights to the assets you’re using on your website and your branding, all of that. Well, Kelly, this has been super, super helpful. Is there anything else that you’d like to add for our listeners before we close out?
Kelly: I don’t think so. Just if you need any assistance with anything like this I wanted to pass on my information. So again, my name is Kelly Jesson. The name of my law firm is Jesson and Rains. My email address is Kelly, K-E-L-L-Y@jessonrainslaw.com and that’s J-E-S-S-O-N-R-A-I-N-S-L-A-W.COM. And I look forward to speaking with all of you and answering any of your questions. And I hope that you have learned a little bit about intellectual property.
Alec: Absolutely. I’ve learned a lot today.
Kelly: Okay, great.
Alec: Thank you so much. All right, listeners, there you have it. I certainly hope you found this episode of B2U Podcast as informative as I have. Kelly, thank you for joining us today and sharing this great information. It’s been super insightful and I hope we can have you back in the near future. Listeners, if you have any questions about today’s podcast or have topic suggestions, feel free to tweet us @CBRbiz on Twitter.
This concludes today’s episode of the B2U Podcast. Once again, I’m your host, Alec Mangum. And thanks for tuning in to the B2U Podcast brought to you by cbrbiz.com. Until next time, we mean business.