By Patrick Connelly, originally published in Buffalo Law Journal, Buffalo Business First on Jan 21, 2019, 5:00am EST.
Small Businesses Eyeing a Web Presence Must Exercise Caution, Experts Say
SPECIAL REPORT: Cyber Law
A new business establishing an online presence must navigate the waters carefully, attorneys say.
There’s a lot to consider and mistakes could be costly or even crippling, according to area attorneys Brendan Lillis, senior associate at Phillips Lytle LLP; Rebecca Stadler, partner at Del Vecchio & Stadler LLP; and Vincent LoTempio, partner at Kloss Stenger & LoTempio.
“We try to touch base with all of our startups right away,” said Lillis. “A lot of this stuff comes up in due diligence. … It becomes a pain to go back and try to correct.”
First, a new business will want to check to see if the name in mind is unique enough from established companies.
“The worst thing is starting a business and having a similar name,” LoTempio said. “That’s just a nightmare. Whatever small business it is, it’s definitely an issue. … Your intellectual property here is the name itself.”
LoTempio said it’s important to check state and federal databases to see if anything similar exists.
“It’s pretty easy to run a search yourself but even hiring an attorney to do a brief trademark search is inexpensive,” Lillis said, adding that research at the outset is cheaper than being sued later on.
“We recommend at least doing the minimum vetting of the name,” he said. “It’s very cheap to change a name early on. … We encourage new businesses to do that vetting as early a stage as possible.”
Intellectual property can be protected by copyright, patents, trademarks and trade secrets, the attorneys said.
Registering a copyright preserves the rights of a business to sue infringers.
A common fallacy among small businesses regarding IP rights is that owners often don’t believe it’s worth the time or effort to secure their intellectual property.
“The biggest question a lot of people have is (what) the differences (are) between the different categories of intellectual property,” said Stadler.
“A lot of the questions we get in the trademark world are whether (a small business) can trademark something and how close it can be to somebody else’s trademark. In the patent world, I think they just want to know the process and whether they need to do a search. For copyrights, our questions are all over the place.”
A mistake often made by new businesses is haphazardly using images online that they do not own. Companies must use images they created themselves, purchased or have permission to use, attorneys said.
“You can be in a tough position because the cost of defending yourself can escalate quickly,” Lillis said.
“Copyright trolls” scour the web looking for violators, he added.
“(They go) around looking for images used without the proper licensing demanding money,” Lillis said.
“That’s a big thing that a lot of people don’t realize,” he said. “They think if they find it on the internet, it’s fair game. … A couple grand (in penalties) doesn’t sound like a lot, but if you’re a small business that could really cripple you.”
He added: “They say most small businesses fail; they say the ones that have a business plan fail less. It will increase your chances of success to check all the boxes (off the to-do list when launching).”