Protecting Your Company's Image: An Overview

You’ve developed a successful business with an expanding client base. Everything seems to be going in the right direction. This is a wonderful position to be in and I congratulate you for creating such a prosperous enterprise. Building and maintaining a business is tough.

But, up to this point, you’ve probably only focused on paying your bills and marketing your services. And while these day-to-day tasks are key to the company’s well-being, you must not overlook the importance of safeguarding your image, especially as your business starts to grow.

Now, when I refer to “safeguarding your image,” I am focusing on protecting your brand. And since you’ve established yourself in the marketplace, securing your company’s brand is not a luxury. It’s a necessity. Indeed, without the proper protections in place to protect your brand, it’s quite possible that everything you’ve generated could be taken away from you without any notice. That’s why I am dedicating this blog to the best way you can preserve the brand of your business.

In Practical Terms

To help my clients understand the importance of protecting  their brand, I often ask a question that may come across as shocking to some:  if an individual were to come along and steal your entire business from you, how much ransom would you pay to get it back? Now, that might sound like a hypothetical situation. However, it happens all the time.

So, for this reason, I always advise business owners to obtain trademarks and servicemarks to protect the intellectual property associated with their companies. Generally, you will recall from my earlier blogs that a trademark is used to protect a product and a servicemark is used to protect for a business’ name.

The protection you receive from either trademarks or servicemarks should be used in the following three situations:

·        If you have something that can be seen such as a logo or a design, it should be protected by a trademark or a servicemark.

·        If you have an item that can be heard or said such as a slogan or a tagline, it should be protected by a trademark or a servicemark.

·        If you own something that someone else might try to hijack like a domain name, it should be protected by a trademark or a servicemark.

Whether you wish to protect these elements on the state or the federal level, trademarks and servicemarks do the trick. And the little “TM” or “SM” next to your brand name or design will give notice to the world that you have the absolute and exclusive right to this valuable intellectual property. This will serve as a serious warning to anyone who might otherwise be considering  stealing the brand that represents your business. For a reasonable fee (approximately $10), you can ensure your image is sheltered in Illinois. If you wish to secure the same protection in another state in which you currently do business or expect to do business in the future, you can easily do so by registering for this trademark or servicemark with the Secretary of State of that other state. If you wish to have protection of your brand on a national level and be protected in all fifty states, you will need to apply for a federal trademark or servicemark with the U.S. Patent and Trademark Office. While the process is a bit more lengthy (6-8 months) and more expensive (approximately $2,500), it is worth the extra time and expense if your business brand is being exposed to the public on a national level.

Additionally, by going through the registration process, you may find out if your brand is already in use by another business. If so, you can consider your options for modifying your brand so as to avoid an infringement claim or for contacting the owner of the trademark/servicemark to discuss how you may license or purchase the trademark/servicemark and thereby preserve your brand without having to alter it. In this way, you’ll not only retain the investment in all of your company’s marketing materials, you’ll have the power to stop someone else from pirating your brand in the future.

Coming Soon

Next time, I will go into more depth about the differences between a trademark and a servicemark. I’ll also briefly discuss the protection of a copyright and I will provide you with essential information about the process of obtaining these protections. Plus, whether you’re looking for state or federal coverage of your brand, I’ll discuss the steps involved in making sure another business owner is unable to seize your image.

CASHIER’S CHECKS – DON’T BE A VICTIM!

In my last post, I presented an overview of the types of fraud that currently are being perpetrated using Cashier’s checks. In this post, I will provide my recommendations on how to best protect yourself from this type of fraud. Since a cashier’s check is designed to be issued by a banking institution, many people automatically trust the paper it’s printed on without a second thought. But advanced printers and clever scammers have proven that such blind trust can be a costly mistake.

Sadly, it can be difficult to figure out if a cashier’s check is counterfeit or not. In fact, your bank may not even know until the other bank returns it as unpaid and this could easily take weeks to be discovered. Today’s con artists do everything they can to make the check look as authentic as possible in order to delay the detection.

Protect Yourself

But there are ways you can protect yourself from becoming a victim of cashier’s check fraud. Some important things to keep in mind are:

·        Don’t do business with strangers. While it’s not always possible to know each person with whom you engage in business relations, it’s best to be cautious about accepting checks from individuals you don’t know. If you enter a business deal with someone you’ve never met before, make the effort to verify information about the buyer from an independent third party.

·        Consider escrow services or online payment systems when selling goods or services. When you use escrow systems or processing services such as PayPal, the money is then held until it clears. So you have an extra layer of protection from fraud. However, there are escrow services that scam people as well. Also, the online payment system can include expensive fees. That’s why it’s crucial to be careful and do your research.

·        When accepting a cashier’s check, be suspicious if it is for more than your selling price. The key to a majority of these scams is that you’re expected to wire an excess amount of money to a third party. So it’s logical to wonder why a complete stranger would provide you with funds that are the property of someone else. This should immediately serve as a warning.

In general, if you receive correspondence of any kind that claims you’re entitled to a large sum of money and you only owe a small fee, that’s a red flag. The rule of thumb should always be that if something seems too good to be true, it probably is a scam.

If you choose to do business with someone who offers you a cashier’s check, remember to save every document associated with this transaction. The paperwork may be very valuable if a problem with this deal surfaces down the line.

Caution and good sense are important whenever you enter into any business deal. So don’t jump into a transaction that involves a cashier’s check until you have thoroughly investigated every detail. Otherwise, you could be left owing a large sum of money and possibly losing an expensive product to scammers in the online marketplace.

As a final matter, remember that the best way to avoid becoming a victim of Cashier’s check fraud, is to only conduct business transactions in which all funds are delivered to your bank by a wire transfer. Wire transfers are cash and essentially fraud-proof.

Understanding Restrictive Covenants

Trust, But Restrict

               Creation of a business requires a certain amount of trust. That’s because even if you’re the driving force behind your company, you still must rely on other­­s to assist you. The reality is you just can’t perform every role yourself.

               So, trust has to be part of the equation. But problems arise, however, when you trust the wrong people. Unfortunately, some individuals won’t hesitate to steal the confidential information behind your business and profit from it at your expense.

               For this reason, it is crucial to protect your company from being raided by those within your circle of trust, by using non-disclosure agreements (NDAs) and restrictive covenants. In a recent post, I provided an overview of NDAs and restrictive covenants and I explained that they are designed to ensure that the secrets of your business do not get shared without your knowledge and consent. Now, I want to discuss these agreements in greater detail, so that you understand how they can be applied to give you the power to guarantee that the confidential information of your small business is never compromised.

NDAs

               Typically, an NDA is a one-page document that you require be signed by anyone outside your company with whom you must reveal confidential information in order to explore how this individual can enhance your business. Once the document is signed, the person is bound by this contract and is prohibited from ever revealing the sensitive information that you’ve shared, even if you ultimately determine not to enter into a formal business relationship with this individual.

               If, for whatever reason, this individual violates or even attempts to violate the NDA, you have the right to take the individual to court to secure a restraining order to keep the individual from disclosing the secrets of your business. The NDA also will allow you to have this individual pay you for all of the attorney fees that you incur to enforce the NDA. As a good business practice, always make sure that you clearly explain this aspect of the NDA, so people are well aware from the start that there are dire consequences for ignoring the terms of the NDA.  

Restrictive Covenants (Clauses)

               In contrast to an NDA, a restrictive covenant is used with individuals that are already inside your company (i.e. employees) or non-employee individuals with whom you have decided to do business (i.e. independent contractors). But the idea behind a restrictive covenant is the same as the NDA, in that restrictive covenants are designed to protect the unauthorized disclosure of your business secrets without your knowledge. Restrictive covenants /clauses typically provide three separate protections:

·        The Confidentiality Clause is similar to the NDA. Its purpose is to make sure that confidential information, such as sensitive financial information, customer lists and other trade secrets of your business (sometimes referred to as “intellectual property”), stays private. This keeps your competitors from using this sacred information to unlawfully gain a competitive advantage over your business.

 

·        The Non-Conversion Clause is a natural follow-up to the non-disclosure. It states that once new employees or independent contractors have been given access to your intellectual property, they won’t attempt to steal your workers, suppliers or vendors. Basically, your staff is barred from trying to build a separate business for themselves of for one of your competitors, based on your ingenious ideas.

 

·        The Non-Compete Clause is the final of these three essential protective documents. It tells your staff members that they cannot go out and compete with you in any form whatsoever. You want to make sure, after you have revealed the secrets of your business to trusted individuals that they won’t apply this key information, to their own company on your territory.

               All three of the restrictive covenants can be easily embedded into an existing employment agreement. That way, every member of your staff, whether full-time or part-time, will fully understand that they have clear restrictions on what they can reveal to the outside world. Equally important, these employees or independent contractors will know that if they ignore these restrictions and instead, try to profit on the back of your business, the consequences of their violating the restrictive covenants will be severe. Just like with the NDA, their violations will expose them to serious court action and personal judgments, separate from being fired.

               When you give the restrictive covenants to an independent contractor or someone whose services you’ve hired from outside your company, the restrictions should be part of your Independent Contractor Service Agreement with this individual or theses restrictions may be contained in a free-standing separate two-page document.

Duration

               Non-compete clauses remain in effect for three to five years after the employee relationship ends. Consequently, the covenant serves as a meaningful deterrent, as it blocks this person from interfering with your business and stealing your clients for a significant period of time.

               Even harsher, is the duration of the confidentiality clause. This one is typically for life. That means that the people to whom you have revealed all of your trade secrets, can never share this information with anyone without your authorization, except under extreme circumstances (i.e. court order).

Chicago Small Business Expo

As part of his ongoing effort to support and encourage small businesses, Attorney Rob Dreger will present the workshop "Legal Smarts for Small Business" on Friday, October 7, 2011 at the Chicago Small Business Expo from 2:00 p.m - 2:45 p.m. Hosted by City of Chicago Treasurer Stephanie D. Neely, the daylong event is free to the public and is being held at the UIC Forum. 

For more information go to:

http://www.chicagocitytreasurer.com/smallBusinessExpo/smallBusinessExpo.htm