GarageBrand

I’m not a marketing expert, but I deal in brands every day. My focus, of course, is on the legal side. I evaluate whether a business name or product name can be used without infringing the rights of third-parties, whether the mark can be protected by the client, and the relative strength of the proposed “mark.” There are generally two opposing forces that an entrepreneur faces when choosing a name: 1.) how “obvious” the name should be in relation to the services; and 2.) how “creative” the name should be.

Trademark law gives very broad rights to a trademark that is “made up” such as Kodak or Xerox. So, choosing a name that is entirely a made up word, or a word that has no relation to the services is generally the method of creating very strong trademark rights. It is also usually easy to see if anyone else has used such a trademark in the past because it is easy to search for something that is not a “real word” to see if anyone else has adopted it first. Here’s the problem for the small start-up: if you use a trademark that is a fanciful word that you have made up, no one will know what you are selling!

The other end of the spectrum is that many entrepreneurs select a totally generic or descriptive term for their business or product name. This presents two problems. First a name that “describes” the services or goods is not protectable, generally. Second, the use of a descriptive word as a trademark makes it difficult to distinguish from other sources of similar products. If I hope a cigar store called “The Smoke Shop” it is going to be easy for consumers to figure out what I sell, but I can’t stop others from using the name for other smoke shops, and I can’t distinguish myself from the other smoke shops.

In between descriptive trademarks and fanciful trademarks are a class of trademarks that are “suggestive.” Most great brands are somewhere in the range of “suggestive.” What I mean by this is that some marks are “highly” suggestive in that they almost describe the product or service, while others are mildly suggestive or “uniquely” suggestive, such as Google for a site that has “everything” or “infinity-ish” content. The word Google is not “made up” or fanciful, but it is not descriptive either. Trademarks that have the right amount of “suggestiveness” without being overly descriptive are often the best “brands” that enable the entrepreneur to tickle the consumer’s imagination, but also provide enough information about the product or service so that the consumer “gets it” immediately.

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This form is typically used by owners of stock in a corporation where all of the founders are all working for the company and want to ensure that in the event of death or disability (or the desire to sell out), then remaining “partner” shareholders have the right to buy the stock from the exiting shareholder.

buy-sell-agreement

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After months of dreary news, including NPR, a bit of good news today. Maybe “happy news.” There’s a report out that happiness spreads quickly through social networks. Even better is the news that negativity spreads far less effectively than happiness. More good news: the happiness factor spreads through social networks, which means that a few good social networks that intentionally spread happiness can out-do the news networks and their penchant for negativity. Even the positive news is spun bad these days. How about the fact that unemployment dropped? Well, the news quickly qualified that as “a little” or “moderately” and then said, “BUT, jobless claims are at an 18 year high.” Geeze, can’t we even have a bit of good news without making it sound bad?

I’ve been hammering my social network with good news, and frankly the more good news and happiness that I look for and talk about, the more good stuff seems to happen. In the past week, I’ve been with a dozen different people who are prospering; looking for new business opportunities; successfully raising capital for business ventures; doing deals; and more. Folks, there’s a lot to be happy about, and lest you forget, this is America. We live in the land of opportunity, and there’s never been more opportunity than there is now.

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Every small business should carry a “commercial general liability” (”CGL”) policy. The cost of this type of policy is not normally too high, and the premium is often based on the income of the business. A small law office might only pay $600 per year for a “CGL” policy. If there are higher risk factors (e.g. a landscape company) then the cost is higher. But, in a higher risk business, there is an even stronger case that the business should have insurance.

In addition to covering the actual risks of the business, a CGL policy can protect the “corporate shield” of the small business’s entity structure. For example, a one-person business that operates as an LLC has a bit of “protection” or a “shield” against the liability of the business so that the personal assets of the individual are, to some extent, protected. However, a lawyer can often “pierce the corporate veil” by showing that the company never had the funds or insurance to protect its customers or the public from the risks of the business. If the business has a lot of money in its bank accounts, then you put that money at risk, but protect the corporate shield. If you don’t have much cash, then you really do need insurance to “keep” the corporate shield alive and effective. Even if you have cash, insurance is sure a lot cheaper than losing the precious reserves that you have built up in your business accounts.

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I’m sure that most people have been moved by the movie Pay it Forward. Its the story of a little boy who believes that good can be spread by doing something “good” and subsequently having each person who has a good done to them “paying it forward” to the next person. Its brilliant, and unfortunately, the human tendency is to “pay it back” by taking out our meanness tomorrow on someone else in retribution for whatever meanness was done to us today.

I’ve been bothered by the acceleration of negativity in the world. I was equally bothered by the acceleration of stupidity in the world during the last few years of tulipomania (real estate could keep going up forever?). I’ve decided that I’m going to try to “spread” something different than pure optimism or pure pessimism, maybe something like “positivity.” A few weeks ago I thought I could spread a bit of this to 5 people a day. The reality is that I only get about 2 opportunities a day to really hit someone in the head with positivity. It feels like I’m not making a very big dent…like I’m taking on media outlets with millions of people who get the negativity and who each then turn around and spread that negativity to others, creating a sort of exponential decay. Its pretty easy to think that a million “bummed out” people are going to be a fairly static group, or that their negativity will only spread a little here and there. How do we end up with the whole country frozen in a stupor? How did we end up so paralyzed?

There are probably a lot of smart people in economics and the social sciences, but I thought I’d at least I could try to apply some logic here. If you use a nifty little exponential calculator like this one you find that the way exponential calculations work is really scary if the news is negative. If 5 people spread negativity for 5 days to 5 people each day, at the end of 30 days there are 2,430,000 really bummed out people. I’m not sure how to calculate this, but if you have news media making up new “negative” words each day and spreading those to millions of people, and each one of those folks bitches around the water cooler each day for a month, it takes a month for the entire country to feel negative. What do I mean by negative words? All of the negative “numbers” seem to “surge” like unemployment; we use “crisis” with all sorts of modifiers like cash, credit, financial, real estate. We use “melt down” and talk about how nothing good can happen for “a long time.” There’s “no bottom” in sight. Thing are “spiraling” downward. Its as if there is a room full of creative writers at every media outlet thinking of new ways to embellish and accentuate the negativity with greater and greater sensationalism. They did it with the “booms” of technology and real estate, and largely contributed to the bubble phenomena of both. Think of how many people you heard talk about millions of dollars in IPO’s and technology stock in 1999 and 2000? Think of how many people you heard talking about buying a new construction house in Surprise Arizona for $200,000 and selling it for $275,000 before it was even finished. The news of these two bubbles was unrelenting. Article after article, day after day, the news harps the same story. Again, take your 5 people who tell 5 people each going on for 30 days, and 2.5 million that results.

I can’t compete with the news for spreading my positivity, but to encourage myself that I can make a difference, what if I really do get 2 people every day to stop their negativity and think normal again? If those 2 each take the task and tell 2 more, then in 90 days, I’ve got over 8,000 people thinking good. If we can take that number up to 3 per day, then in the same 90 days there would be 729,000 positive people. How about 4 people per day for just 3 months? Just tell 4 people “things are only bad because you keep saying they are bad, stop it and start acting like they are bad because that’s what is creating the “crisis.” Its a self perpetuating crisis, a self-fulfilling prophecy on a mass scale.” Get 4 people to cut it out. Do that for 90 days and hope that all of them get 4 others doing the same thing for 90 days. The result is 65 million people, almost the entire U.S. population of people ages 20-64.

Change can happen really fast for the better or worse, and exponentials shows it in a sort of dramatic way. Of course, the math is just math. The real world is fuzzy and funny and doesn’t really work this way. What could make a big difference is just to have enough people get tired of the negativity and pessimism, while others of us breed some positivity.

The world isn’t going to end. We are not going to be hunkered down in war torn cities, fighting over loaves of bread. We don’t need to have gold packed away in safes or cash stuffed under the bed. Picture the scene in a movie when someone is freaked out and ranting and screaming and someone with their head on straight walk over and smacks them across the face (okay picture the scene from Airplane where there’s one such person and a like of people waiting to smack her). You and I have to be ready to take the freaked out friends and family and smack them across the head (figuratively please) and say “stop it, stop it, everything is going to be okay.” These people freaking out are going to ruin it for everyone, and those of us that aren’t freaking out have to stop the cycle of fear.

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I thought that I’d deviate from the IP forms for a week or two. This week its a good form for the next time your buddy borrows a couple hundred bucks: make him sign a two page installment note. I don’t have a form that allows payment in weekly beer installments, but you are welcome to revise this one to meet your particular needs.
Installment Note

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The negativism of last week was “surge” in “unemployment.” I ranted about that in last weeks’ anti-negativity post. The word of the week from our friends in the mainstream media is “sink hole.” I advocated the position that negativity and fear breed a self-fulfilling, downward cycle that can’t possibly be reversed until the fear subsides. One writer said that the Great Depression turned when fear turned to faith.

No one can deny that there is an economic problem, but for entrepreneurs, decisions don’t turn on the economy, but on the business sense and experience of the individual. If you are self employed, then your entire business rises or falls from your ability to pull up your bootstraps. The economy “matters” in that a good economy makes it a little easier to make mistakes, and a bad economy leaves less room for error. However, the entrepreneur creates opportunity in any economy, and can flourish as well in a “down economy” or in an “economic sink hole” as if the economy was flat or rising.

If you have a job working for someone else, and unemployment rises, there is no reason to engage in the fear either. Unemployment at 8% versus 6% makes it 2% more likely that you’ll end up in the “surging” unemployment lines. Even if unemployment surges more, there is no reason for the 92% employed to be paralyzed with fear.

The “sink hole” is a fear driven spiral downward, and filling it with money (the government’s plan) is only going to fill it part of the way, it needs to stop sinking…sinking that is created by the mentality of Americans who negativity into the hole. Until then, the actions of fear cause more sinking: it is a self fulfilling prophecy.

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I often get the question: “how do I protect my blog?” A blog is a dynamic website that has a constant stream of new content that is uploaded and published in the form of pages, posts and comments. If you simply wrote a single article, or a book, you would just file a copyright on the work and be done. However, if the content changes constantly, then there’s a constant need to protect the “new” content. As such, a single one-time copyright isn’t enough.

There are two approaches to copyright protection for blogs: 1.) treat it like a periodical, 2.) treat each article as an individual work. If you want the most protection, then each article that the blogger writes (page or post) is an “original work of authorship, fixed in tangible form” and entitled to its own copyright registration. While this can get expensive, as each filing costs $45 if done pro per, or $300 if an attorney files it, the “protection” of individual registrations is likely the best. If the blogger turns syndicated columnist, then each copyrighted work is ready for licensing and adequately protected. I write an article or two per week, and by filing my own registrations, each work is subject to its own copyright. This works well for my blog because each post is really an independent article on a particular subject, much like a “how to” column in a newspaper. If there are comments to my posts, then I really don’t own that content anyhow, because it was written by the commentator who submits it. I don’t spend much time replying to comments either, as I can just use the comments as groundwork to write another unique post that will help more people.

If a blogger writes lots and lots of short posts, and engages in ongoing dialog through comment responses, then filing individual copyright applications is simply impractical. For such cases, I believe that the best approach is to file a monthly updated copyright for the whole site with all new content, and simply “disclaim” claim of rights in the comments submitted by third-parties (as well as any other content that the blogger doesn’t own). I can file form SE or form GD (if its daily content like a newsletter, daily newspaper, etc), and treat my work like a periodical. I’m attaching a series of copyright forms, including SE and GD for the free legal form of the week in a separate entry.

Whether you file a copyright on every article or on your site as it updates content, there is another type of copyright to consider: your user interface (the “UI” or “GUI”). Because most people don’t create their own UI, this subject deserves its own post…so watch for it: How Can I Protect My Website? (focusing on the UI).

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articles-of-inc-ca

Remember that California’s articles of incorporation are not “fill in” style like Nevada (coming next week). You need to choose the amount of stock to issue, par value, use your corporate name, and other relevant information. NO PO BOXES folks.

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There are a lot of us out there in the small business world that have our own websites. So, I get a lot of questions about how to protect a website. Before I tell you how to protect your website, I have to ask a question that most people miss: CAN you copyright your website? To answer this question, we have to look at how your website was created, and talk about the various aspects of your site.

Most websites are made up of several distinct pieces that are merged by Internet protocols into what we see and experience in a website. These “pieces” are generally: 1.) text written uniquely for the site; 2.) graphics; 3.) photographs; 4.) code (HTML, Java, ASP, various scripting codes, etc.); and 5.) data and database functions.

The starting point for an inquiry about copyright law flows from the definition: “an original work of authorship” that is “fixed in tangible form.” To “own” the copyright, the claimant needs to be the creator (author/designer), or acquire right by contract in the form of “work for hire” or “assignment” of rights. Let me use my own site for an example of the analysis:

My Text My text is an original work of authorship, fixed in tangible form (typed on my blog!) I wrote my own text, I am the creator
My Graphics My graphics are original works of authorship, and as one can see my website, the graphics are fixed in tangible form I did not design the graphics, but paid someone: did I get a “work for hire” [no]; did I get an assignment [no]
My Photos My photos are original works of authorship, fixed in tangible form I took the only photos that are on my site (or my wife did and we own them jointly as part of owning our site)
My Code My code is an original work of authorship, fixed in tangible form: choose “view source” to see it in tangible form I did not write my code, it is a mix of WordPress code, and a template designed by a benevolent designer, both of whom granted me (an anyone) royalty free licenses to use the code
My Data My data is not an original work of authorship! Data is an assembly of non-original information and is not copyrightable; to the extent that the data uses a database application (programming code), it is copyrightable as an original work of authorship I can’t copyright the data, but I might be able to protect it by not allowing users to get to it, and by having an agreement on my site that says that “users of this site may not download my data” [or something more lawyer-ish]; to the extent that there is database programming being utilized its not mine, but granted by license

The upshot is this: most of us own our content in terms of text, and not much else. As such, the content can be copyrighted. However, determining what to copyright and how to copyright it is the subject of my Post on copyrighting a blog: the approach to copyright filing depends on how dynamic your content is, how often you update it and how broad you want to protect it.

If you did design your own photos or graphics, then you have two levels of copyright to consider:

1. copyrighting the whole site along the same lines as a children’s book: text, graphics and photos; AND
2. copyrighting the individual images to the extent that each one might be a separate “original work of authorship” that is “fixed in tangible form” prior to and separate from your website.

As I discuss in the Post on copyrighting your blog, one might even copyright individual articles separately from a “whole site” copyright registration if the individual articles have a life independent of the blog or website.

Mine do! Don’t copy mine please…but please feel free to link to me and pimp out the blog. I offer this stuff for free to my users after almost 10 years of billing people $280/hour for it.

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