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Imitation can be the most lucrative form of flattery

2 minute read

“Look at this! This is a blatant copy of our design and product!”

Most business owners’ heart sink when they stumble upon a competitor shamelessly copying their hard work. Understandably so, in a culture where attention is scarce the likelihood of confusion in the market when scrolling on social media can add up to a noticeable loss in profits depending on the size of the competitor.

Proactive Intellectual Property

The situation described above is a very different conversation for business owners that have proactively sought to register the intellectual property that creates the foundation of their business. The often-overlooked reality about intellectual property is that registering your work does not stop others from trying to imitate you – it increases your ability to be made whole when they do.

Like all business decisions, a well-formulated intellectual property strategy requires a cost-benefit analysis. There is no “one size fits all” strategy to building out the IP registrations in an early-stage companies and each should be carefully weighed based on several factors including but certainly not limited to:

  • Protectable content that is mission-critical to business operations
  • Target markets
  • Number and type of direct competitors
  • Timeline for business growth and development
  • Available capital to deploy towards intellectual property.

Costs and Potential Award

Type of RegistrationInitial InvestmentPotential Recovery
Copyrights$600.00actual damages suffered as a result of the infringement, any profits of the infringer that are attributable to the infringement and are not taken into account in computing the actual damages.
or Statutory damages between $750 - $30,000
or In the event of willful infringement, statutory damages of up to $150,000
Patents$10,000-$15,000*
(on average)
Damages adequate to compensate for the infringement but in no event less than a reasonable royalty for the use made of the invention by the infringer, together with interest and costs as fixed by the court. The court may award up to three times the actual damages.
In exceptional cases, the court may award attorney fees to the prevailing party.
Trademarks$1500-$2500* (on average)Infringer’s profits, any damages sustained by the registered owner, and the costs of the action, in the event of willful infringement on a registered trademark, mark’s owners are entitled to treble (3x) damages or profits, whichever is greater AND reasonable attorney fees.
OR
statutory damages not less than $1,000 or more than $200,000 per counterfeit mark per type of goods or services sold, offered for sale, or distributed, as the court considers just; or if the court finds that the use of the counterfeit mark was willful, not more than $2,000,000 per counterfeit mark per type of goods or services sold, offered for sale, or distributed, as the court considers just.

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[1] The potential recovery and remedies summarized here are for educational purposes only and in no way guarantee or represent to guarantee actual recovery in any infringement action. The summary provided is indeed a summary and is in no way exhaustive of potential remedies available.

*Prosecuting trademarks and patents often requires hourly work on office action responses that cannot be given a guaranteed price estimate in advance.

The best kind of infringement is willful

As you can see above, the potential recovery in most infringement actions increases significantly in the event that the infringing party is found to have been doing so willfully, or on purpose. This is why policing your intellectual property registrations is so important. Sending cease and desist letters and notice of claims letters to intellectual property infringers is a crucial step in this process. The best method of notice is to have an experienced law firm send formal correspondence through certified mail so that there is clear evidence that the other party was made aware and continued with their infringing behavior.

Contracts are key

Former consultants, advisors, contractors, employees or anyone otherwise associated with your business should have express contractual terms regarding how and when to use your company’s intellectual property. In the event of a separation, if they go on to work for competitors – it will be incredibly beneficial to have clear contractual obligations for them to proceed under. If not, the road to recovery in those situations is made more difficult.

You cannot enforce rights you do not have

The full rights and protections that are associated with intellectual property registrations are only as available to those with the prudence to seek out registration before infringement takes place. With the relatively low cost up front compared to the potential recovery, strategic registrations need to be implemented early on in the business plan.

Is it too late?

There are avenues of relief for unregistered intellectual property, but it is a more difficult burden of proof and the potential recovery is less. Nevertheless, if you believe your intellectual property is being wrongfully used by another party, consulting with experienced attorneys is a must so that you can make informed decisions regarding any and all potential avenues for recovery and not leave any money on the table.

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