Don’t Make These Mistakes in Your Crowdfunding Campaign

Tynan EdwardsBlog

May 17

Imagine this scenario: You have a great new product that you just launched through a crowdfunding campaign. Your campaign raised well above your target goal and customers placed hundreds of pre-orders for the product through the campaign. You are preparing to ship out your products to the first customers that pre-ordered, but you instantly run into a couple problems. First, someone has stolen your design and is now making a cheap knockoff of your product under the same name making consumers think your product isn’t as good as promised. Second, you’ve received a letter from an attorney that your product infringes on their client’s intellectual property.

While not everyone will have these problems with their crowdfunding campaign, they are something that every entrepreneur should think about before launching a campaign. Being proactive about securing your intellectual property (IP) rights in your products and campaign materials can save you from numerous headaches and expensive litigation later on. There are also numerous ways to protect your IP without breaking the bank. This article will cover how to evaluate the potential copyrights, trademarks, and patents that may be present in your crowdfunding campaign.

Copyrights

Copyrights can cover many different crowdfunding campaign elements. A copyright is secured on an original work of “authorship.” While the Copyright Act uses the word “authorship,” this is not limited to written works like some might think. A copyright can be secured on paintings, photographs, illustrations, music, sound recordings, video recordings, computer programs, books, poems, blog posts, movies, architecture, plays, and more.

Many crowdfunding campaigns include media products such as books, comics, poetry, artwork, and music. Campaigns for jewelry, pins, plushes, and any other product that could be considered creative works can all use copyrights to protect the designs of their products. Beyond the product being put forth in the campaign, the campaign materials such as the text used to describe the product and any videos are also copyrightable.

Why should I register a copyright? A copyright is secured as soon as the work is fixed in a tangible medium. As soon as the book is written, the jewelry made, or the photograph taken, there is a “common law” copyright on that work. However, you cannot sue someone for copying that work until you register the copyright for that work with the U.S. Copyright Office. Copyright registrations are fairly easy and cheap to secure. Copyright registrations are also the easiest IP for an entrepreneur to secure on their own. All that is required is an application, a copy of the work (referred to as a deposit), and a fee of usually less than $60 depending on the type of work. If you’re trying to determine what elements of your campaign are copyrightable, consulting an attorney can help.

Trademarks

Trademarks are used as indicators of source and quality. Trademarks can be names, slogans, logos, sounds, or anything else that can be used by consumers to tie a product to your company. If you’re planning to launch your campaign and thinking about what name you want to use for your product, you may want to consult a lawyer to make sure you pick a name that is available for use and registration. To make sure the name is available, you should run a trademark search before you start using the name because you could unknowingly infringe on the trademark rights of a third-party.

Running a search on the U.S. Patent and Trademark Office (USPTO) website on your own may not be enough. In the United States, you gain common law trademark rights in a mark the moment you offer a product or service for sale using that mark. Third parties may be using trademarks that are similar to the name you are considering for your product, and they may not have filed applications to protect their marks with the USPTO. If you consult a lawyer, the lawyer may be able to run a more thorough and detailed search to help you identify potential third-party threats. Further, the USPTO database can be tricky to search on your own because the searching tool may make it difficult for you to find similar variations or find relevant results. If the name you are considering is made up of common words, there may be hundreds of marks that are registered with similar words, but not all of them may be relevant to you.

Entrepreneurs should be very careful about disclosing the new name of the product in a crowdfunding campaign because doing so may not be enough to give the entrepreneur rights in the mark. Use of the mark in a crowdfunding campaign may not be considered using the mark “in commerce” if the product is not already being offered for sale. If you disclose the new name for your product in your crowdfunding campaign and a third-party takes the name and begins selling the same product before you’re able to bring your product to market, you may not have a cause of action for trademark infringement because you may not have owned any rights in the mark.

Why should I register a trademark? Going back to the scenario above, if a third-party begins selling a cheap knock-off of your product under the same name, you can sue the third party for trademark infringement or take other enforcement actions. If your trademark is registered, you obtain several important benefits including:

The legal presumption that you own the mark and you have the exclusive right to use the mark nationwide in connection with the goods / services listed;
A listing in the USPTO’s online databases, which will appear if the USPTO or third-parties conduct a search;
The ability to record the U.S. registration with U.S. Customs and Border Protection to prevent importation of infringing foreign goods;
The right to use the federal registration symbol “®”;
The ability to initiate a civil action for infringement of the mark in federal court and the ability to seek statutory damages for willful infringement or counterfeiting; and
The use of this registration as a basis to obtain registration in other countries.

If you want to register your trademark, you should get started as early as possible because the current processing times for trademark applications are very long, and it can potentially take over a year for your mark to register. If you want to file a trademark application for the name of the product in your crowdfunding campaign, but you have not yet begun selling products, you can file an “intent-to-use” application. This helps you signal to the public that you’re intending to claim the name as a trademark. Once the application is filed, the USPTO will reject subsequent applications for similar marks covering similar products or services, so it may also help fend off others who intend to adopt similar marks.

Filing a trademark application can also be relatively inexpensive. The USPTO charges $250 per mark, per class of goods and services for each application. However, seeking help from an attorney to file your application may be important to help make sure the mark is available before you file (so that your application doesn’t get rejected) and to make sure your application covers appropriate products and services. Obtaining a proper trademark search and filing an intent-to-use application can be a good first step to protecting your company and any marks you may want to use with your crowdfunded products.

Patents

Patents are one of the most well-known types of intellectual property and are well known for being expensive. The good news is that many crowdfunding projects cover products that may not be patentable at all. However, if you are an entrepreneur who has designed a new product that you do not believe exists on the market, a patent may be what you need. And a patent may be the most important thing to have in place before your crowdfunding campaign begins.

It is very important to discuss this with a patent attorney before beginning your campaign or you may end up spoiling your ability to secure a patent on your invention. A public disclosure of the invention made by, or that originated from, the inventor more than one year prior to filing a patent application for the invention will also preclude patenting. Patents also follow a first-to-file system, so the longer you wait the more you risk someone else filing an application with an idea that keeps you from getting a patent.

Many entrepreneurs may worry that they don’t have the funds to pay for an attorney to draft and file a full patent application for them. This is where a provisional patent application can come in handy. A provisional patent application is not examined by the Patent Office but secures a filing date for the inventor. The provisional application is valid for one year from the date of filing and is designed to allow the inventor additional time to further refine their idea or to raise capital to file the full application. It also gives you the right to use the term “patent-pending” in your crowdfunding campaign. Provisional applications often cost significantly less than a full application and then can be used as a starting point for a full application.

Starting your crowdfunding campaign can be an exciting time for an entrepreneur but, before hitting the “Go Live” button, consider the IP that can help protect you and your project.