You've Been Slapped With a Trademark Lawsuit, Now What?

For the last week, three large boxes filled with 165 pounds of new product have been sitting in a home office in Wisconsin and they may never leave.

It took 18 months and a $20,000 investment to create the business to sell this product and now it might not ever make it to consumers. The owner of the company is fighting a prominent international consumer products company over its trademark, and business has come to a screeching halt.

"I have a product, but I can't do anything with it. There was clear message that if I use it [the trademark], I could be in real trouble,” said Kate, whose last name and business name are being withheld due to the possibility of litigation.

After meeting the minimum filing requirements and receiving approval from a trademark-examining attorney, Kate was sent a notice of publication by the US Patent and Trademark Office.

Her published trademark was opposed during the 30-days allotted for opposition from parties who claim they may be damaged by registration of the mark. Now, without a registered trademark, Kate and her product hang in limbo.

Entrepreneurs on the receiving end of either an opposition, cease and desist letter or trademark infringement action need to be prepared for an arduous process, the experts warn.

“The first thing you want to figure out right away is: is it an infringement? A lot of the time people will send a cease and desist letter when there is really no infringement,” said attorney Cindy Salvo of The Salvo Law Firm in New York and New Jersey.

Business owners should look at both trademarks and examine the similarities between the products, where they are sold and at what price point.

Salvo recommended business owners prepare the following if they are called to defend their trademark:

  • paperwork for all of the ways the business uses the trademark
  • itemized expenses for advertising, signage, cards, printouts and an online presence
  • details of how a business owner decided on the name
  • steps the business owner took to verify that the trademark was available

Entrepreneurs also need to consider the costs associated with litigation.

Since August Kate has spent $4,000 on legal fees and anticipates that number tripling. Attorney Jason Shinn of E-Business Counsel in West Bloomfield, Mich., suggested that business owners determine the impact of removing the allegedly-infringing mark. “If the financial revenue is slight, then ceasing to use the mark to avoid a lawsuit may make the most cost-effective sense,” said Shinn. He suggested that business owners review their insurance policies since some policies may cover defense or damages stemming from the claims.

For business owners who end up settling a claim, Shinn warned, “Make sure the party claiming infringement agrees in writing to release all claims for damages. Without the proper settlement and proper release you may face a situation where the party comes back and tries to recoup profits that you supposedly wrongfully accrued from use of the mark in the past.”

Kate attempted to come to a resolution with the party opposing her trademark without much success. For now, spending $10,000 to rebrand is not an option. So she just waits.

“They have not been up against someone who has fought them as much as me,” she added, “but I don’t have the resources they do and this has really taken my enthusiasm away.