MAINTAINING YOUR TRADEMARK

Preventing Expiration
After you have successfully gone through the procedure of attaining a federal trademark or servicemark, you will receive a Certificate of Registration from the U.S. Patent and Trademark office. To guarantee that the respective mark or marks are valid for your lifetime and the lifetimes of your beneficiaries, you must go through a number of very specific maintenance steps.

 It’s crucial to note that unlike a copyright or a patent, your mark will not expire unless you fail to complete the required maintenance filings with the U.S. Patent and Trademark Office. If you neglect to fulfill these filing requirements, your valuable registration will be canceled and your trademark or servicemark protection will then be lost.

So once you get your Certificate of Registration, remember the exact date of your registration. You will need to make sure you send in your first maintenance filing between the fifth and sixth anniversaries of this registration date.

Two declarations are needed to confirm the mark is currently in use:

1. “Declaration of Continuing Use”            Section 8 (Cost $100)

2. “Declaration of Incontestability”           Section 15 (Cost $200)

For the Section 8 declaration, you need to verify that the mark is being utilized with respect to the goods and/or services for which this protection is registered. If, however, the mark is not in use, you must provide a reason for why this inactivity should be excused.

In terms of the Section 15 declaration, you will be asked to attest to the fact that the mark has been in continuous use for at least five consecutive years from the registration date. Like the Section 8 declaration, you’ll need to confirm that your mark still reflects the goods and/or services for which it is registered.

If you miss this deadline, you will still have a six-month grace period to file the necessary information. But after that timeframe, your registration will be canceled and all benefits will be lost.

Similar to the first set of maintenance filings, you will be expected to send documentation on the tenth anniversary of your registration. Additionally, you are required to renew your registration every ten years thereafter.

Two declarations need to be filed at this time:

1. “Declaration of Continuing Use”  - Section 8 (Cost $100)

2. “Application for Renewal” declaration - Section 9 (Cost $400)

Again, these declarations require you to confirm that the mark is still being used. For the Section 8 declaration, you need to be prepared to corroborate that the mark is in use with respect to the goods/services for which the coverage is registered. If the mark is not currently in use, then you must demonstrate why this inaction is warranted.

Keep in mind that as a trademark owner, you aren’t permitted to maintain rights in a trademark that you’re no longer using. Furthermore, you must update your registrations at the time of any maintenance filings so that the U.S. Patent and Trademark Office has the latest information on your marks.

Using Your Certificate of Registration

Receiving the Certificate of Registration allows you to start using the ® designation in conjunction with your trademark. To clarify for some, the ™ designation is for trademarks that are in use, but not officially registered with the U.S. Patent and Trademark office.

Please be aware that in instances where your mark appears multiple times on the same object, you do not need to post the ® or ™ next to each trademark or servicemark. Although such repetitive posting is allowed, it’s generally expected that the correct designation is attached to only the most prominent display of the trademark on any item or page. As such, you are not required to make further postings, if you’ve already visually established your mark.

In Conclusion

There are certain ongoing procedures that need to be fulfilled in order to protect and maintain your trademarks and/or servicemarks, so you have the assurance that your company’s image will be continuously protected. In this way, if you ever discover that your brand has been stolen, you have the legal backing to make sure this infringer faces the appropriate consequences.

Enforcing Your Trademarks and Servicemarks

What do chapstick, a thermos and aspirin have in common? These iconic brands used to be protected by trademarks, but lost their legal rights over time. Unfortunately, the rightful owners of these brands were not aggressive enough in protecting their images. Now, the brand names that they created are used as generic terms in popular culture. So the original owners of these brands can no longer stop anyone from using their names. It’s too late.

Although I’ve provided some famous examples, the same type of trademark loss can occur with your brand if you’re not careful.  While it is extremely important to shield your image by obtaining trademarks and/or servicemarks, you can’t just stop there. The fact is, you always need to be on the lookout for any infringements. Quite honestly, the welfare of your business is at stake.

To give you a better understanding of what could happen if you don’t watch over your trademarks or servicemarks, there are three practical reasons for being vigilant:

·        Confusion in the marketplace – If another business, knowingly or unknowingly, starts using your image, consumers could become confused about your name. You may wind up missing out on potential revenue because clients accidentally turn to your competition, thinking they’re coming to you. So it’s critical that you always protect your name, your distinction in the marketplace, to eliminate the possibility of your brand getting blurred and the valuable distinction of your business product or service being lost. Furthermore, if you don’t take action in this scenario, you will eventually be seen from a legal standpoint as having abandoned your marks.

·        Dilution of your brand – If you become lax and don’t object to other businesses using your name or some aspect of your brand, you also run the risk of your image being diluted. The result is that your unique and distinct name won’t mean anything anymore because so many other businesses share it. This can and should be stopped before the potency of your name becomes meaningless in the marketplace.

·        Financial losses – If you don’t stand up for your marks, it’s very possible that other businesses could be financially benefiting from your advertising by poaching your potential customers. That’s because they’re openly using your name to make money.

The logical conclusion is that you need to be ready to enforce your trademarks and servicemarks at a moment’s notice. When you discover another business is ignoring your rights as the holder of these marks, then it’s time to take action.

Steps to Take

Once you discover that someone has used your name, the response is very simple: Immediately contact an intellectual property attorney in order to issue a cease and desist letter to the infringing party. The purpose of this letter is to give this individual or company notice that what they’re doing violates your intellectual property rights and constitutes an illegal use of your brand.

Included with this letter, your attorney will provide a copy of your pending or existing marks to supply undeniable proof of your brand ownership. Furthermore, the letter will make clear that the offender needs to stop using your mark without delay.

If this violation persists after a five-day period, then it’s time to go to the next level. Your attorney will promptly seek legal action to enforce your rights in either state or federal court under a trademark or servicemark infringement claim. This process involves getting a restraining order, which stops the entity from stealing your mark.

Secondly, your attorney will seek a court order that will compel the infringing business to divulge all of the financial gains that it received from illegally using your brand. Once this information is disclosed, you will then seek a court order that awards to your business, all of the profits made by the infringing party, because these profits rightfully belong to your business. And as a final kicker, you are entitled to seek reimbursement from the infringing party for all of the attorney fees that were caused by this unlawful infringement.

In Conclusion

By taking the time and investing the money to obtain trademarks and/or servicemarks, the image of your business is protected. But, the reality is that a clever company can find ways to benefit from your brand, even if you’re the legal owner. For this reason, I recommend that you periodically perform a search online to determine if anyone is illegally using your intellectual property. If you discover an infringement, contact your intellectual property attorney.

 

 

 

Understanding Trademarks and Servicemarks

In my last blog, I explained the importance of protecting your business’ image once you begin to expand. The goal is to make sure nobody can come along and steal your brand out from under you. And this can be accomplished by obtaining trademarks and servicemarks for your company’s unique presence in the marketplace. Generally speaking, trademarks are meant to guard a unique product created by your business and servicemarks are designed to protect a unique name, logo or tagline that identifies your business.  If you’ll recall from my previous blog, logos, designs, slogans, taglines and even domain names all fall under trademark or servicemark protection.

But there is much more to getting this legal coverage than you might think. For this reason, I want to go into greater detail about the process of attaining trademarks and servicemarks for your business.

State Protection

Let’s say your business is based in Chicago and it’s really starting to grow and gain much needed visibility in the marketplace. At this point, you should consider investing in the necessary protections so that nobody can steal your brand.

The good news is that you can safeguard your brand very easily by going online. The State of Illinois streamlines the procedure by providing all of the required applications that you need to fill out. For a $10 fee, you may submit your application and if approved by the Secretary of State, you will be awarded the exclusive right to use your.

However, even though your brand can’t be touched within Illinois, someone just ten miles southwest in Indiana could appropriate your brand. That’s because the applications you sent to the Illinois Secretary of State do not protect your company’s image beyond Illinois. So you might think about registering your brand in nearby states such as Indiana and Wisconsin as well.

National Protection

But what if your company continues to grow and quickly becomes recognized in other regions of the country? You could take the time to send in trademark and servicemark applications to each state that potentially touches your business. Keep in mind, though, that the costs and the time investment may add up faster than you might think.

So, a more economical option may be to seek federally registered servicemark and/or trademark protection through the United States Patent and Trademark Office (USPTO) in Washington DC. By taking this route, you’re applying for the exclusive right to use your brand in all 50 states and to have the right to stop someone from stealing your brand even if you are not currently doing business in that state. The federal application process is understandably longer, because the USPTO must conduct an initial search of its federal records to determine if any other businesses are already using a brand similar to your own. An examiner in Washington then has to do his/her own due diligence to provide a thorough investigation and ensure that nobody else owns or has applied to own, a brand similar to your brand.

In addition, the federal agency publishes your proposed brand name, logo and/or tagline in a national magazine. This publication is then sent to every intellectual property attorney around the nation. If your image is already in use by another business across the country, you can be sure the lawyer who represents that individual company will inform USPTO immediately.

While applying for a federal trademark/servicemark does cost a significant amount of money due to application costs and other fees, your business’ brand will be protected nationwide. Furthermore, by going through this procedure, you’ll also find out if other companies may already be using your brand, thereby avoiding possible future infringement claims against your business and your loss of the right to use marketing materials (Web site, letterhead, business cards) relating to this already owned brand. The result could be that you decide to tweak or slightly revise your brand. Then you may have the potential to stand out even more in the marketplace.

Copyrights

While your brand can be adequately protected by state or federal trademark/servicemark registrations, your business may also seek copyright protection of your brand images and taglines. By obtaining this type of protection from the U.S. Copyright office, you will be shielding original works that are published or unpublished. Typically, copyrights are designed for literary, musical, visual or other kinds of artistic creations. If this applies to your business, it may be wise to obtain a copyright.

But copyrights are a form of protection for the authors of “original works of authorship.” As such, a copyright may not cover titles, names, short phrases and slogans, lettering or coloring unless such image or information is sufficiently original and complex. For example, the Nike “swoosh” logo is extremely simple and would not qualify for copyright protection even though the image is protected as an invaluable trademark.

On a Final Note

The notion of obtaining trademarks and servicemarks can seem overwhelming at first. But it is not a complicated process. If you want to get this type of protection on a state-by-state level, you can get the applications online and fill them out by yourself.

On the other hand, if you’d prefer not to cherry-pick and you need protection that covers the entire country, I advise you to seek the expertise of an experienced intellectual property attorney. The interactions with USPTO and the federal examiner are much more involved than the simple state application process. So this is not something you should undertake without legal counsel.

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.

Cashier's Checks - Not Always Good as Gold

In today’s digital age, many transactions are now being done on the Internet. For this reason, my colleagues and I in the legal community have noticed that online fraud cases are on the rise. One of the principle forms of this type of financial deception involves the cashier’s check. Once considered a consistently trustworthy payment, cashier’s checks have become more questionable due to sophisticated scammers. This means a supposedly bank-issued check may not be as good as gold anymore.

 

It’s an unfortunate reality that cashier’s check fraud is a booming business for criminals both near and far. So I’d like to focus this blog on how you can protect yourself from cashier’s check schemes.

 

Types of Cashier’s Check Scams

 

According to the Office of the Comptroller of the Currency (OCC), there are a number of different cons that have been developed using cashier’s checks. These include:

• Online goods – If you have a product for sale online, a buyer sends you a cashier’s check for the ticketed price. Then you send the item to the buyer. You and your bank discover later that the check was fraudulent. Therefore, you lose both the product and the money you charged for this item.
• Purchase price and more – This scam is similar to an online goods sale except that the buyer sends you a cashier’s check in an amount that is more than your advertised purchase price. As a result, the buyer requests that you send the excess money to a third party, which could be located in a foreign country. After you follow these directions and wire the money as instructed, you learn that the check has no monetary value.
• Lottery win or legal settlement – You receive a letter stating that you’ve won a foreign lottery or you have the legal right to some kind of substantial settlement. The letter explains that in order to get this money, you need to pay a processing fee or transfer tax. However, the enclosed cashier’s check will cover that amount. All you need to do is deposit the check and wire the designated funds to a third party. In the end, that cashier’s check is worthless.
• Mystery shopping payment – A letter is sent to you that explains you’ve been selected to be a mystery shopper. With the enclosed cashier’s check, you’re asked to use a certain sum to buy merchandise and transfer another portion to a third party. The rest of the monies are yours to pay for your services. After depositing the cashier’s check and wiring the designated amount, you learn that you’ve been scammed.

In each one of the above scenarios, the fake cashier’s check will be returned to your bank as unpaid. Therefore, the amount of this check will be deducted from your account. If you don’t have the funds, the bank will go after you for the cashier’s check amount. The inevitable conclusion is that you will lose the goods that you sold, if that was the set-up, the funds that you sent to a third party or both your property and the wired money.

 

In my next post, I'll discuss how you can avoid becoming a victim.

Worker Classification: Part Two

In my last post, I explained the critical importance of properly classifying your workers as either employees or independent contractors. Indeed, I warned you that if you do not classify your workers in accordance with state and federal guidelines, your staff incorrectly, your business could be subject to hefty penalties and retroactive interest.
Since it is so important to understand how the State of Illinois and the federal government evaluate the status of a worker, I’d like to discuss this subject in greater detail. That way, you’ll become more familiar with the evaluation factors, so you can better protect your business.

Illinois’ Factors

As I’ve previously mentioned, the Illinois courts rely on a ten factor “right to control” test. This tool enables the state to conclude whether or not your workers are employees or independent contractors. The difference between the two types of workers matters from a governmental perspective for purposes of employment benefits and taxation.
These ten factors cover a wide range of circumstances. Most importantly, Illinois wants to know how closely you manage your worker. For instance, does this individual receive training, materials and direction from you? If so, it is likely that the state will conclude that you “control” the worker and therefore, this worker is properly classified as a “controlled” employee rather than an “uncontrolled” independent contractor.

Other aspects include:

·        Worker engagement – Illinois will look at whether or not the worker performs duties for other employers. If he is exclusively employed by your business and is not available for hire, then the state will see him as an employee.

·        Worker skill – The state evaluates the amount of skill needed to do the work in a particular company. In general, if more expertise is necessary, the state tends to classify the worker as an independent contractor.

·        Employment length – The period of time a worker has offered you services can make all the difference to the Illinois courts. If this individual has worked in your company for a short time, she’ll usually be viewed as an independent contractor. Conversely, a worker who has a longer history with your business will probably be recognized as an employee.

·        Payment method - If you pay your workers on a project-by-project basis, chances are that the state will see these individuals as independent contractors. On the other hand, salaried or hourly workers are more likely to be categorized as employees by Illinois.

·        Integral or ancillary – An integral worker is considered part of the company’s regular business. The fact that he performs a key function in the business, it’s probable the courts will look at him as an employee. At the other end of the spectrum is the ancillary worker, who is an occasional contributor to the company and not involved in its operations on a consistent basis. The ancillary worker will likely be viewed as an independent contractor.

In general, the underlying theme to remember is how much control the business exerts over its staff members.

Similar to the state’s court system, the Illinois Unemployment Insurance Act examines the amount of power you have over your workers in order to determine the correct categorization. But instead of ten factors, there are only three. Furthermore, all three of these circumstances must be met for a worker to be recognized as an independent contractor. Otherwise, the worker is deemed to be an employee.

Below are the factors this statute systematically applies:

·        The business does not control the worker’s performance.

·        The service cannot take place during the normal course of business or at the physical location of the company.

·        The worker has to offer an occupation or profession that’s separate from your business.

Again, control is the key. This means that the less supervision you have over a worker, the better the argument for classifying this individual as an independent contractor.

The Internal Revenue Service’s Factors

Like the state of Illinois, the Internal Revenue Service (IRS) also evaluates employment status based on the right to control. Therefore, if you direct, train and integrate workers’ services into your business operation, for example, it’s reasonable to expect the IRS to define your staff as employees rather than independent contractors. This means that you’ll be required to pay certain taxes and possible penalties, if you have misclassified your workers.

While the amount of regulation over your workers is a critical element of the federal government’s final judgment, other components are also involved to generate this decision. In total, the IRS relies on twenty different factors. These essential circumstances include:

·        Reports – If a business requires written or oral reports as part of the job, then the IRS could assume the worker is an employee. This consistent expectation suggests the worker is regularly supervised, which supports the government’s theory of permanent employment.

·        Payment of expenses – If a company covers workers’ travel or business expenses, the government may conclude they are employees. That’s because the payment is interpreted as control over the workers.

·        Realization of profit or loss – If workers can experience a profit or loss as a result of providing services to a business, they will be probably be viewed as independent contractors.

·        Working for numerous companies – If a worker provides products or services to several unrelated businesses, it’s likely the IRS will see him as an independent contractor.

·        Right to discharge – If a business has the right to discharge its workers, then the IRS might regard these individuals as employees. An independent contractor is protected from being fired unless he does not live up to contract specifications.

·        Right to terminate – If a worker can terminate her employment without any liability, then the federal government will generally look at this individual as an employee.

Need More Help?

Worker classification encompasses many detailed factors. So it’s understandable to feel overwhelmed by the numerous elements. But as a small business owner, you need to be aware that if you group your workers incorrectly, you could face harsh tax consequences.

However, my team and I at DregerLaw are well-versed in all of the factors the state and federal governments use to determine worker status. Let us make sure you’ve designated your staff correctly.

Worker Classification - An Overview

Every business needs workers. So as a small business owner, you must determine how you want to classify the people who work in your company. Basically, this means you have to choose between designating your workers as employees or as independent contractors.

However, I must stress that this decision must be made with great care and deliberation. Indeed, it is imperative that you categorize your workers correctly or you could face severe federal and/or state tax consequences.  So in this post, I’ll provide an overview to help you understand the best approach to take in making these worker classification decisions.

Circumstances for Worker Classification

There are a number of circumstances that can make worker classification an issue to business owners. These situations include:

• When a new business is looking to set up efficient management and accounting practices;
• When an existing business is downsizing to reduce operating expenses and payroll taxes; and
• When a flourishing business is expanding its staff to increase productivity.

In each one of these circumstances, proper labor classification is immensely important. Both state and federal taxing authorities monitor and regularly conduct audits of businesses, with the hope of being able to impose significant retroactive penalties and interest on a business that is determined to have improperly classified employees as independent contractors.

The “Right to Control”

To discover whether or not a business has accurately classified its workers, both the state and the federal government have devised lists of factors that can be applied to the company’s structure. The purpose of each point is to determine how much control you as the owner have over your workers. The more control you exercise, the more likely it is that your business is staffed by employees, not independent contractors.

This “right to control” essentially means that you actively supervise, provide tools and convey clear expectations of how your workers should use their time fulfilling certain roles within your company. In other words, if you inspect an individual’s output, give him set hours on work days and, overall, direct his performance for you, then you are subject to paying state and federal employment taxes, Workers’ Compensation and other fees that correspond with hiring permanent employees.

State and Federal Factors

Illinois common law examines ten different factors in its “right to control” test designed to distinguish between employees and independent contractors. Although the emphasis on these factors may fluctuate, control is still the key.

The Illinois Department of Employment Security (IDES) has devised its own strict test for evaluating the status of a worker. While the IDES only considers three (3) factors, its strict pro-employee consideration of these factors almost always results in a finding that the worker is an employee, not an independent contractor. Therefore, a business owner, who has mistakenly classified his workers as independent contractors, may be forced to pay harsh penalties and interest to IDES.

On a federal level, the IRS conducts its own evaluation of worker classification based on twenty factors. Like the IDES test described above, the federal test also tends to favor a finding of a worker as an employee rather than an independent contractor. As a result, an employer could be compelled to pay an exorbitant amount of taxes, penalties and interest to the IRS, retroactive to the date of hire of the improperly classified worker.

Defending Your Business

Now that you understand what’s at stake when it comes to classifying your workers, let’s discuss how you can prevent state and federal authorities from re-classifying the categorization of your staff in a way that makes you susceptible to enormous penalties.

First of all, you need to familiarize yourself with the different factors that the state of Illinois and the federal government apply to determine worker status. Secondly, you must structure your business so that you cannot be deemed to have a “right to control” your workers. You can achieve this outcome by making your workers truly independent from your company. For example, each independent contractor must be their own separate, incorporated business with company names and business cards.

Next, you should have each corporate worker sign an Independent Contractors’ Agreement with you which includes explicit language that declares each person as independent with no obligation to you. The agreement should specify that your independent contractors can and do work for other people. So they are not tied exclusively to your business. This move minimizes the “right to control” aspect that is such a core factor to both Illinois and the federal government.

It may seem uncomfortable at first to take such extraordinary steps. But you have to keep in mind that if you don’t protect your worker classification, you could be subject to a grueling audit that will be both costly and a serious threat to the future of your business.

In my next post, I will look more closely at some of the factors that the state and federal governments use. That way, you will better understand how these factors work as a whole.

The "Cost of Collection" Clause

In this post, I’ll explain the meaning of the “Cost of Collection ” clause and I will tell you why it’s so crucial that you integrate this provision into the agreements you create with customers.

When you own a business of any sort, the business must generate revenue. Without these funds, your company cannot stay afloat. That’s just the reality of running a company.
So after your business provides services or supplies products, you naturally expect to get paid. But if you send out all of your bills and find that nobody is paying you or a client decides he’s just going to pay you whenever he wants, your business can quickly slip into a financial crisis.
Therefore, to avoid this cash flow nightmare, you have to give your customers an incentive to pay your bills to them. This incentive comes in the form of a provision within your contract called the “Cost of Collection.” By including this specific provision, you’re spelling out very clearly that there are consequences if your clients or customers ignore their responsibility to pay you.

The Last Ten Percent
Sadly, I’ve seen many of my clients lose out on the last ten percent of money owed to them by their own customers on multiple occasions. It’s a helpless feeling when you’re unable to collect the full amount of a bill after you’ve done all of the work.

What these wily customers have figured out is that this last ten percent is just small enough that a business owner won’t take them to court. It’s not worth the legal fees. Therefore, the owner is forced to abandon the recovery of that ten percent (10%) balance of his Contract, even though the money was legitimately earned.

However, this entire scenario changes if the “Cost of Collection” clause is written into a signed contract with clients or customers. The tables are turned now because you as the business owner have the enforcement rights to defeat that nonpayment strategy.

How the Cost of Collection Clause Works

If you build the “Cost of Collection” clause into your agreement with a customer and this individual fails to timely pay for services rendered, you now have a legal recourse at your disposal. You can take this customer to court to secure a judgment for the full amount of the unpaid contract balance, plus all of your attorney’s fees incurred in enforcing your contract rights.

Illinois law says you can get reimbursed for legal costs under the following circumstances:

• If the recovery is written into a contract; or
• If the recovery is written into a statute such as Consumer Fraud, which is designed to be a disincentive for deceptive business practices.

In other words, this “Cost of Collection” clause gives you the power to force a non-paying customer to promptly pay your contract balance, since it will be the customer, not you, who pays for the attorneys fees incurred in enforcing your contract rights.

By making sure that every client or vendor agreement contains a “Cost of Collection” clause, you’ll find that the people you do business with will become far more cooperative when it comes time to pay you.

THE WAVEHOOKS STORY

To illustrate the extreme importance of NDAs and restrictive covenants, a client of mine has consented for me to share in this blog, his company’s amazing growth experience, due in great part to his ability to confidently bring his product to market without risk that his success would be stolen from him.

 

Michael Aylesworth is the owner of ImagiGadget, Inc. and the inventor of a very marketable product called WaveHooks. The concept is simple. WaveHooks are small, portable shelves with suction cups that you can stick to the side of your tub or shower. So if you want to take a bath and relax with some wine, you have a sturdy area on which to put your glass.

 

Now originally, Mr. Aylesworth was able to make each WaveHook in his own home. But everything changed once he used social media to market his gadget. Then the popularity of Wavehooks exploded and his website video went viral. Almost overnight, he was hired to make hundreds of WaveHooks and fill massive orders within a very short period of time.

 

Major vendors, including Nordstrom and Amazon.com, were contacting him for bulk purchases and promotion, while national media programs like “The Today Show” and “Shark Tank” started inviting him to talk about his invention. Needless to say, he called me in a panic because he wasn’t equipped to keep up with the volume of business he’d generated.

 

At this point, he knew he had to find a manufacturing company to produce the WaveHooks for him. But how could he be sure the company he hired wouldn’t steal his idea? And how could he know the people he chose to market WaveHooks wouldn’t take advantage of his trade secrets?

 

This is where NDAs and restrictive covenants came into the picture and made a huge difference. I quickly helped him put these agreements in place so he wouldn’t have to worry about his concept getting stolen by those he trusted. As a result, ImagiGadget was able to successfully secure an international company to mass-produce Wavehooks and he was able to engage a Seattle-based marketing firm to successfully launch a national promotional campaign. Today, his company is continuing to enjoy its growth but with the confidence that its intellectual property is well-protected.

 

If you’re interested in learning more about WaveHooks, I highly recommend that you visitwww.wavehooks.com . His idea is ingenious and he’s getting a lot of well-deserved attention for creating such a great product.

 

Next time, I will delve more deeply into the various kinds of NDAs and restrictive covenants. You’ll understand in even greater detail how they’re applied and why they’re so valuable to your small business.