Starting a new business is a challenge and the investment in proverbial blood, sweat and tears is often substantial. The first few years especially can be an uphill battle - and one that isn’t always won. Statistics from the Small Business Association show that around 30% of new businesses fail during the first two years, 50% during the first five and 66% during the first ten.
The saddest thing is when a business fails even though it had a good and viable business model. The perils of cash flow for a growing business account for many such failures. But less well documented is the risk of trade mark infringement. This is why, when it happens to the rich and famous, those of us who work in this field like to jump up and down and make a lot of noise.
Cue David Beckham and his Major League Soccer club, which he has called Inter Miami CF. Italian giants, Internazionale – otherwise known as “Inter” - have taken legal action for trade mark infringement. This means that Inter Miami CF may be forced to change their name just weeks ahead of their (long-awaited) debut.
Battles for names by big brands are nothing new. In 1978, Apple Inc. was sued by Apple Corps. Ostensibly, the case was settled by Apple Inc. agreeing not to enter the music industry. “What?” we hear you say. Well – that’s right; they did agree this, but , in 2007, they bought the Apple trade marks of Apple Corps. (and licensed some of them back) and this is why they are now known for “Apple Music”.
While the likes of Inter Miami CF and Apple may be able to afford such legal wrangling, the cost to a new or small business can be devasting – and potentially fatal. With estimates ranging between £10,000 - £245,000 to develop a brand, you want to be sure your money is being well spent.
But the costs of losing a legal dispute can be far, far worse. It may be several years after you have started trading (and investing in a new brand) before you get a complaint from another trade mark owner and, if that complaint is successfully pursued, the trade mark owner may be entitled not only to a court injunction to stop you using the brand, but also to back-dated damages, or a sum equating to your profits for all the sales you have made under your brand since day one…….. And then, if the case goes to court, there would be legal costs too which, all told, could be between £50,000 and £250,000 or more.
For a start up business, you have to ask yourself whether you can afford to fight a complaint by another trade mark owner. Even if you win, the cost in terms of legal fees and lost management time (at a time when your business needs you) can be highly detrimental. And can you afford to take the risk - could your business survive losing?
There are things that you can do to minimise the risk from choosing a good name and conducting trade mark searches to check its availability, through to securing trade mark registration and designing your website and packaging with care.
Investing in expert legal advice early on may seem like a luxury at a time when funds are short.
But not doing so may be a disaster of Major League proportions.
For more information please contact Victor Caddy, Trade Mark Attorney and Director on +44 (0)20 3146 7888 or email firstname.lastname@example.org.