Licensed To Sell
Patents, trademarks and licensing bring value to your business, but ignoring them could be trouble.
S’well. YETI. Fitbit. These brands have incredible recognition among clients, but they may also come with other types of intellectual property protection such as patents, service marks and copyrights. Of course, great ideas spawn great imitations—and sometimes those imitations are perfectly legitimate, as long as they don’t masquerade as the original.
Innovation is one of the hallmarks of promotional products, and suppliers deliver innovation through patented products and processes. Supplier Gill Studios, Inc., has a portfolio of products that have been awarded patents and trademarks. Carl Gerlach, MAS, vice president of marketing at Gill, explains the process as well as the impact that patents and trademarks can have on a business.
“We have developed products, then we have worked with lawyers to acquire patents. One product is our double-sided yard sign, for which we received multiple patents from the United States Patent and Trademark Office (USPTO),” says Gerlach. “Once we receive that patent, we are required to label every sign with the patent number and name of the patent owner [Gill]. We also have patents on the manufacturing process for making the product.”
To obtain the patent, Gerlach explains, the team at Gill begins with research to see if patents exist for identical or similar products or processes. “For registered marks [trademark, service mark] you can do a little bit of research on your own. After the initial due diligence, it’s best to get a patent attorney involved; the attorney will help prepare a patent application and obtain a patent through the USPTO that will differentiate your product or service from what has already been patented or registered,” he says.
The time it takes to apply and obtain a patent, along with the cost, might be prohibitive for some. However, says Gerlach, “We consider it a reasonable cost. It’s an up-front, one-time cost; we do have to take into account what the sales potential for the product is.”
In accordance with U.S. law, patent application must be filed within one year of the first sale, offer for sale or public use, or else the seller/manufacturer will be barred from thereafter seeking patent protection, says Harris Wolin of Myers Wolin, an intellectual property firm.
“Therefore, you are not able to test the market for too long before deciding to file a patent application. If you desire to seek patent protection outside of the U.S., then you must file the application before you launch, as countries outside of the U.S. do not have a one-year grace period. If the sales potential is perceivably high, then it is worthwhile to seek patent protection so that you don’t prejudice your rights down the road.”
If a product is patented in the U.S. and manufactured overseas, and/or it is also going to be sold overseas, says Gerlach, you should also apply for international patent protection. “Because 70 percent of industry product comes from the Pacific Rim, I would highly suggest getting an international patent and a U.S. patent,” he says.
Because Gill manufactures its patented items in the U.S. and doesn’t wish to protect its innovations outside the U.S., the company has not pursued international patents and relies on its U.S. patents to cover the U.S. market and halt infringing imports at the U.S. border.
Wolin adds that this strategy also applies for most small to mid-sized companies where a large majority of their market is in the U.S.
From a supplier standpoint, the purpose of a patent or trademark is to differentiate yourself and your business from your competitors. Gerlach adds, “Part of building a brand is letting distributors know they can depend on you, and that you have invested in your own company to protect your own innovations. In our case, it’s going to be [that Gill products are] produced in the U.S.
“By branding you can differentiate yourself among suppliers, and customers know they’re going to get something of quality,” he says.
Gill also owns the trademark for Zip-Strips, the super-removable adhesive backing on its bumper stickers. Gerlach notes that trademarks and service marks, such as those associated with product options, are ideal for promotional purposes.
If you’re ready to patent your innovative product or service, the first step is to do some legwork.
Wolin says while you can do some digging on your own, it’s beneficial to consult with your company’s inside or outside legal counsel when researching whether a patent already exists, or whether your product or service is capable of being protected.
“You also can’t forget that your product may also infringe on someone else’s patent, so performing a ‘right to use’ investigation before you launch may be important if the market potential is great,” he adds.
If no blocking patent is found during the initial due diligence, companies shoul consider filing a patent application on their product so they can apply the “Patent Pending” marking to their product. However, says Wolin, that phrase may only be used if a patent is applied. “Is the application filed with the U.S. Patent & Trademark Office?” he asks. “Even if a patent application is published before it officially grants, the scope of protection may not be fixed.”
Design patent applications are not published before they grant, so the Patent Pending marking may represent applications that are out of the public eye. For these reasons, says Wolin, filing a patent application in order to obtain the ability to mark your product “Patent Pending” can be beneficial from a marketing and advertising perspective, as it alerts the public of your potential rights and creates a deterrent to future, would-be copycats.
Branded merchandise is just as popular; what Chicago Cubs fan doesn’t want a championship t-shirt? But it takes more than loyalty to be allowed to emblazon brands on promotional products. Licensed merchandise requires a licensing agreement with the brand owner, something not everyone can obtain.
Distributors are most often the party that will hold a licensing agreement, which allows them to sell branded merchandise on behalf of an organization or company. Obtaining a licensing agreement, says Wolin, can take time. “These types of negotiations are typically very involved, and multi-year.”
Once the negotiation is complete, he says, licensees are not necessarily guaranteed expansive rights. “The rights may be a carve-out; you’re negotiating for a little slice of the pie,” he says, meaning that licensees may be able to sell only certain items with a brand’s logo or name on them. “If you’re new, you can get a small piece of the pie, and then grow.”
This, says Wolin, is why a variety of manufacturers produce branded product that is attributable to a single brand.
“Once the brand owner sees that you have the capacity and manufacturing wherewithal to deliver quality product that is representative and reflective of their brand value, then they may increase the scope of your license,” he says. “The process can be pretty arduous, but the benefits are huge. The licensing agreement that comes with intellectual property is immensely valuable. People buy brands.”
So your client has seen a cool product and is adamant that you can reproduce it. What’s your response? Follow these guidelines, from Harris Wolin of Myers Wolin, an intellectual property firm, to help your company navigate patent laws and observe the letter of the law. “Mitigation of risk is the name of the game,” says Wolin.
What to do when you want to add a product to your line that ...
You see at a trade show
- Look for markings such as patent numbers or trademarks
- Ask the supplier if the item is protected by a patent, or if he is aware of others that were stopped or threatened by a patent owner
- Ask peers if they know about enforcement issues related to the product
You see being sold by another distributor/supplier:
- Look for patent information on the product or the distributor/supplier website (If there are none, and the product has been widely adopted, perhaps no one has a patent; consider your willingness to take the risk of introducing the product into the market.)
Someone asks you to manufacture, that they’ve provided an example of, or to add it to your line and pay them a royalty:
- Look for patent markings such as “Patent Pending” or an actual patent number; or trademarks
- Request indemnity from the individual or company so that they take over the defense in the case of an infringement suit
- Consult with legal counsel to conduct due diligence
Someone asks you to make a similar version of, that they’ve provided an example of:
- Look for petent markings and trademarks
- Request indemnity
- Request IP coverage
- Consult with legal counsel
Someone asks you to make a similar version of, that they believe may be patented:
- Engage legal counsel to perform a patent search and provide an opinion
How to tell if a product or process is patented
- Look for patent markings on every surface of the item.
- Conduct a patent search, using the company name as a starting point.
- Look for marketing/advertising signal words, such as: “exclusive product line”; “featuring a unique...”; “uses an inventive ...”; “features a patented ...”; and “innovative solution.”
- Review a company’s website. The ‘About Us’ page often shows indicators of innovation, invention and creativity: “patents”, “product development”, and “designers” are just a few key words to look for.
Source: Myers Wolin
What’s The Difference?
A word, phrase, symbol or logo used to brand, identify and distinguish a product. Registered trademarks are identified with the ® symbol. Unregistered trademarks are identified with the ™ symbol. Examples: Nike, Tiffany & Co.
A word, phrase, symbol or logo used to brand, identify or distinguish a service. Registered service marks are identified with the ® symbol. Unregistered service marks are identified with the SM symbol. Examples: Walmart, McDonald’s
Companies that provide both an actual product and a service (think FedEx, with its shipping and packaging products) may apply both service marks and trademarks to their products, logos and slogans.
Want to learn more? View Harris Wolin’s webinar “It's Not Just About Products, You Need To Be Prepared To Protect Your Intellectual Property As Well” from his live session at the 2016 PPAI Product Responsibility Summit. Find it under Education/Online Learning at www.ppai.org.
License To Print
Are you interested in adding licensed products to your offerings? The process isn’t for the faint of heart. The Collegiate Licensing Company is the official trademark licensing affiliate company representing nearly 200 U.S. colleges, universities, bowl games and athletic conferences, as well as the Heisman Trophy and the NCAA.
CLC provides resources and guidance to help its partners manage their licensing programs, which account for nearly 80 percent of the $4.6 billion retail market for collegiate licensed merchandise. Read on for a snapshot of the process required to obtain CLC licensing.
To be considered for a standard and/or local licensing agreement, interested parties must first complete a license application and pay an application fee, and submit a generic quality sample of each product for which they want licensure. Parties must also submit a completed Corporate Responsibility and Supply Chain Compliance Questionnaire as well as a Factory/Supplier Information Form if it is required by the institution of interest.
The second phase of the application process requires applicants to obtain insurance and submit authorized manufacturers agreements from every manufacturer and finisher that will be used throughout the manufacturing process, as well as institution-specific artwork. Finished product samples must be provided to any institution that maintains such a requirement. Applicants must also register with the Fair Labor Association if they wish to obtain a license for one or more FLA-affiliated institutions.
The third and final phase requires applicants to sign a Labor Codes of Conduct agreement, pay royalty advances to applicable institutions, and sign a Standard Retail Product License Agreement.
Source: Collegiate Licensing Company