All posts tagged startups

Guidelines for Picking a Company Name

An emerging company’s name can be as important as its product. Names, logos, and branding can have an extraordinary effect on individuals and businesses, as consumers, and can shape the marketplace so directly that a nonsensical word like “uber” can come to identify a multi-billion dollar company. Since company and product names can be so powerful, it is important to be deliberate and intelligent in naming your startup.

The best protection for a company or product name is a trademark, but not all trademarks are alike. Names that are arbitrary or fanciful have the greatest trademark protection. Fanciful marks have no meaning and exist only for the purpose of branding.  Whereas, arbitrary marks have a common meaning, but do not describe the product or service itself. Examples of fanciful marks include Exxon and Kodak – words created for the purpose of branding. An example of an arbitrary mark is Apple – the common meaning of the word related to fruit has nothing to do with computers and electronics. Arbitrary and fanciful names have the highest levels of protection, and are therefore great assets for companies.

The next level of trademarks are suggestive marks. These marks may be desirable for companies because they can speak to the nature of the products, thereby notifying consumers of the nature of the goods or services being provided. For the same reason, the trademark protections are not as strong. Examples of suggestive marks are Greyhound for the bus line and Jaguar for the automotive company. These marks suggest the nature of the good or service, but require “imagination, thought and perception” from consumers. Suggestive marks can be difficult to trademark, however, because the line between suggestive and descriptive marks is sometimes hard to define.

The US Patent and Trademark Office is disinclined to issue trademarks for descriptive marks – unless they obtain secondary meaning. Just as the name suggest, descriptive marks speak directly to the good or service provided. These marks cannot be trademarked until a company can prove that the name has acquired a secondary meaning where consumers associate the name with a particular product, which usually requires five years and significant advertising budgets to prove. Startups without the luxuries of time and money are encouraged to avoid descriptive marks.

The last category of marks are generic marks. The US Patent and Trademark Office does not issue trademarks for generic marks and there are, therefore, no protections for these marks because they directly and generically describe the company’s product or services. The name “Emergency Dental Center” would never pass for an office that provides emergency dental services because it is completely descriptive of the services.

Startups should think very carefully before naming their company and products. A fanciful or arbitrary name can usually be easily trademarked and provides the company with the greatest extent of protection. A strong name with high levels of protection is likely to become one of the greatest assets for an emerging and developing enterprise.

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George A. GellisGuidelines for Picking a Company Name

Advice for Startup Founders and Employees – Never Sign Agreements You Do Not Understand

Start-up teams are usually composed of young entrepreneurs untrained in legal dealings, particularly in the countless intricacies hidden within stock purchase, stock option and technology transfer agreements. In fact, that’s precisely why they need competent legal counsel.

We encounter an increasing number of start-up teams that run into legal problems because attorneys they chose at the inception of their operations behave merely as vendors of legal services, instead of as trusted advisors. It is well known that large law firms are in a great position to offer tech start-ups a good “bang” for their buck — knowing that start-ups are typically cash starved, large law firms often charge very little money upfront for their standardized multiple-page contracts with the balance of costs due at a later time. This is easy because such services for start-ups are virtually zero-cost – some firms simply reuse templates and recycled documents.

However, when the ink hits the page, the founders and early employees of start-ups are left in the dark as to the true nature of the agreements. Large law firms do not waste time educating clients who are receiving discounted services about the details within the provided agreements. While it is the right of every person to take the risk of signing a document without being fluent in its language, clients should at least be made aware of those risks.

At Gellis Law Group, whether we represent and deal with founders, key employees or consultants, we thoroughly educate our clients on the ins and outs of every document they are about to sign. Even a one-pager is broken down meticulously. This ensures that our start up team clients do not come to the realization years down the line that the founders or investors got everything while they were left with a fraction of the value of their contributions.

Say for example that a key employee was awarded stocks at an agreed-upon price at the founding of a start-up. What he may not know is that, if he is ever terminated or demoted, the company may have the legal right to buy back these shares for a fraction of the original cost – leaving that employee with almost nothing upon his exit. Was he aware that he may not be getting what he signed up for? Not if his attorneys didn’t thoroughly take him through the contract.

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George A. GellisAdvice for Startup Founders and Employees – Never Sign Agreements You Do Not Understand

The America Invents Act Changed the Landscape and Rules of the Game for Technology Startups

The America Invents Act, formally known as H.R. 1249 (“AIA”) has clearly been the most significant evolution to the United States’ patent regulatory landscape in decades. The most important change under the AIA is that America has joined the rest of the world in rewarding the first inventor to file a patent, known more commonly as the “first-to-file” rule.

Under the previously existing system, an inventor could provide that he or she was the first inventor, even if he or she was not the first to file, through laboratory notes and journals. Now, with a few exceptions, one needs to be the first at the doors of the Patent Office. If and when several people come up with the same invention, which happens more often than most people think, it does not matter who was actually the first inventor in time. What matters is who was first to sprint to the Patent Office to file.

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George A. GellisThe America Invents Act Changed the Landscape and Rules of the Game for Technology Startups