Chances are, if you haven’t had one of your company’s photos copied from your website and placed on another’s, you know someone who has.
For manufacturers, a pressing issue is knock-off products being sold on the internet. Industry buying groups report having to address trademark infringement about a half dozen times per year.
Thanks largely to the internet, intellectual property is breached more than ever. “It’s an issue for everybody, so there’s no reason why our little corner of the world would be exempt,” says Steven Getzoff, senior litigation partner with Lester, Schwab, Katz & Dwyer in New York and outside general counsel for the Association of Pool and Spa Professionals.
“The world is becoming smaller.”
Here, attorneys and others familiar with intellectual property rights and law share some background on copyrights, trademarks and trade secrets, as well as tips for protecting them.
These protections apply to photos, training manuals, and other works of authorship.
Among builders, the most frequent infractions come when other companies lift their images off their websites.
While you can register these photos for copyrights, it’s not required. If you created it and give it the old circle-c, you own it. However, if you feel strongly about protecting your copyright, seriously consider registering the materials. Registration puts the owner in a position to take legal action, should somebody infringe your rights.
While registering individual images generally isn’t practical or financially sensible, some services can register images in bulk for a lower price.
But you also must understand that any images you register become available to the public through the U.S. Copyright Office.
Companies can take certain measures to make it more difficult for others to lift images from a website. For instance, you can disable right-click abilities to prevent web users from saving the photo. Additionally, you can place watermarks on the images to show who owns the photos.
Finally, if your website includes photos that have been taken from another company’s website without their permission, take them down. Some justify this by saying, “We’re not saying we designed or built this pool — we’re showing it as an example of what we can do.” Even so, using somebody else’s intellectual property without their permission is not legal and — many would say — not ethical.
There is a fact about copyright, and photographs in particular, that many in the industry don’t realize: Even if you pay a photographer or other freelance individual to take photos, those images don’t necessarily belong to you.
“If I don’t have the right agreement with them, I may own [some] physical shots, but I might not actually own the copyright — the photographer might,” says Andrew Nelson, a partner in the Costa Mesa-Calif. based law firm Fortis LLP, who specializes in intellectual property. “The photographer might be well in their rights to complain to me if I actually re-use those photos later without getting the right assignment of those copyrights.”
When you hire a photographer, check the contract to see how the copyright is addressed. Ideally, Nelson says, you would want the contract to assign you the copyright, so you own the images outright. Some photographers will not do that — and that’s probably okay.
At the very least, make sure the contract grants you unlimited license to the images so you can reproduce them and use them as you’d like. If the photographer retains ownership of the copyright, ask how he or she might use the images.
These apply to company names, brands, logos, and the aesthetic aspect of a product’s design (known as trade dress).
This aspect of intellectual property can be particularly tricky for the pool/spa industry, which seems to gravitate toward certain words when developing company names, observed Patrick Walls, CEO of the buyers group United Aqua Group and an attorney with a background in franchises. He believes this issue is more pronounced in the industry.
“You can go from town to town, and even sometimes in the same big city, and you’ll find a duplication of names,” he says. “Because most people name their swimming pool company or retail store something to do with water, aqua or something related. So it’s not uncommon to see how there could be conflicts.”
Where copyrights are meant to protect the holder, trademarks are devised to help consumers by making it easy for them to identify a company and distinguish it from others that offer the same goods or services.
Because of this, context plays a heavy role in trademark-infringement lawsuits. The central question by the judge becomes whether or not the defending company’s name or logo would confuse consumers. “If the answer is yes, then you have a claim; if it’s no, you won’t,” Getzoff says.
If a company shares your name but doesn’t work in the pool/spa industry, you likely will not have a case. Not only can a consumer distinguish between a pool/spa company and, say, a lumber yard, but the lumber yard would have obtained a different class of trademark, so they can coexist.
However, some cases are murky, Walls says. Logos, for instance, can become less cut-and-dry because they comprised so many elements — name, shapes, colors, etc. So, even if two companies are unrelated, similar logos can become a concern.
“If you’re Pat’s Pools, and someone else is operating Pat’s Lumberyard, the question is, will a consumer likely think that the two companies are connected? Probably not. But let’s say that Pat’s Pools’ logo has an aqua blue color scheme with a certain script type, and Pat’s Lumberyard is the same. The customer might think they must be the same company.”
Certain words within a name are more protected than others. Obvious or common words can be harder to protect in court. This can become problematic for companies using what are known as trademarks, which use positive descriptors such as “speedy” or “quick.”
“[Laudatory marks] can be protected as names,” Nelson says. “But since they communicate some description or quality of service, they tend to not be as protectable as other sorts of trademarks and service marks.”
National and state trademarks can be acquired — as long as you actually use them. Companies cannot hold onto a trademark in a market area if they do not do business there.
NAMING FOR THE LONG RUN
When naming your company, seriously think about how you would like the company to evolve. Will it always have one location and work within a few-mile radius? If so, look around that market are to make sure there’s no duplication, and register in that area.
But if there’s any chance you might want to grow throughout the state or even the country, do a more extensive search and develop a truly unique name. An attorney and help you scour through the state or country to look for companies with duplicate names, or you can visit the website of the U.S. Patent and Trademark Office (USPTO).
“I would always think big,” Walls says. “If I were starting a company, I would try to think about where this could go, and as such, I would make sure that I had a name that I could expand with if I wanted to.”
Even if you don’t register your name, you may enjoy prior rights in your market area. However, if you think your name is truly novel, you might want to give it that protection, Walls suggests. This can be done through an attorney or by going to the USPTO’s website and filing for a few hundred dollars. It could take 12 to 18 months to process.
“Then you know you have a registration, and if you choose to expand later on, you know you’re going to be in a pretty good position,” Walls says.
But, once again, you must conduct interstate commerce within a certain period of time to hold onto your federal trademark.
Once you get your company name and/or logo trademarked, it is incumbent on your company to police it, these experts say. If another firm operates with your name long enough and you fail to intervene, you may lose your protections.
You can also better shield your own trademark by working to achieve a high internet search profile, Getzoff says.
“If you do, the chances of somebody wanting to use your name become less and less,” he says. “If you have such a good web profile, then why would someone else want to use that name? Every time somebody does a search, the first 10 listings are going to send them to you.”
There are times when you may decide against registering certain elements of your intellectual property.
That’s because the cost of gaining copyright protection is greater than the loss in enterprise value of the intellectual property if it were to become public knowledge. This decision becomes especially important if you have a chain, franchise, or if you just own a novel system that sets you apart from your competitors.
“Our manuals, systems and processes are held very tight to our chest,” says Troy Hazard, non-executive director of Poolwerx, whose U.S. headquarters are located in Dallas. “They’re all behind a firewall. They’re under the [protection] of the franchise agreement, where our franchise partners are bound to not disclose that information for any use other than running their business.”
For smaller companies, the best way to accomplish this is with a non-disclosure agreement, which states that an employee cannot share trade secrets with others. “I think, for a lot of small companies, the biggest problem they have is theft from current or former employees,” Getzoff says. “[A non-disclosure agreement] is the best way to protect yourself.”
To serve this purpose, many companies try a less-effective channel — the non-compete agreement, which states that an employee cannot work for a competing company after they leave. These have fallen out of favor with many courts and even government entities. In fact, several states have passed or are seeking to enact laws that limit or bar the use of these contracts.
“Non-competes are not favored because they can deprive somebody the ability to earn a living in their chosen field,” Getzoff says. “If you work for me installing pools, and I want you to sign an agreement saying you can’t work for any other pool builder within 60 miles for three years, how are you going to make a living?”
Judges and government officials also have become impatient with companies that require lower-level employees to sign such agreements, rather than limiting the documents to management or executive-level staffers. Some see this practice as an abusive.
“Hairdressers have been forced to sign non-competes,” Getzoff says.
For the most part, non-competes are best limited to exiting company owners when they sell their firm, he says.
Non-disclosure forms are easier to enforce, but even they are usually most appropriate for higher-level employees, these experts agree. Consult an attorney when choosing a form, Walls says. Each state has different requirements, so it’s best to have an expert help you choose the right form.
Also keep in mind that the enforceability of a non-disclosure agreement depends somewhat on how a company’s trade secrets are treated. If you view something as a trade secret, protect it as such. It should not be shared on websites or otherwise released for public consumption. Even when passed around within the company, trade secrets should have an identifier stating that it is confidential. If not, a judge may not agree that an employee could not share it.
You could say that intellectual property defines franchisers. At the very least, this sector is more aware of its importance.
“We have a heightened consciousness because we work in the franchise sector, and we know that we have substantial intellectual property that we’ve created that others do not have,” Hazard says. “So it’s important for us to identify that property, and then develop a strategy to mitigate risk in relation to some of that information making it out into the public domain.”
Hazard recommends auditing your own company to pinpoint what information, systems, documents, etc., constitute intellectual property that should be protected. Of course that includes your name and branding, but are there proprietary technologies or tools that you have created? Do you have a system in place that sets your company apart? A secret sauce?
“Every bit of intellectual property that you can generate forms part of the enterprise value of your business,” he says. “It can be simple things. Even digital assets don’t come into the consciousness of some operators as assets that should be protected.”
The easiest way to do this is to ask: What am I doing that my competitors are not that adds value to the business?
“If you do an audit on what you believe those assets to be, you might actually reveal some things that you had not considered before to be something that adds value to your business,” Hazard says. “If you look at it solely that intellectual property is made up of things that can be registered, you’re probably leaving money on the table. There are so many things you could be creating that add value to your business, that you just need to find an alternative way to protect.”