27425 Thu, 02/28/2013 - 12:37pm
By Kristi A. Davidson
Picture this: A company introduces a new product line featuring a bold and brilliant pattern. Fabrics have been purchased, molds have been made and advertisements have been created. The launch is a roaring success, and everyone is talking. Then comes … a cease and desist letter? Accusations that the line centers on a copyrighted design? Demands to pull product immediately? Disgorge all profits?
Hopefully, you have not been on either side of this scenario. Here are a few things to consider before launching that next big design:
Copyright 101. A “copyright” protects original works of authorship fixed in a tangible medium of expression. Basically, it gives the author of an original design control over who uses it and how. Ask yourself, “How original is my design? Was it inspired by something?” If so, how close is your design to its inspiration?
Copyright Registration. Although a copyright exists from the moment an original work is expressed in a tangible form (ideas in your head don’t count), rights increase when the work is registered with the U.S. Copyright Office. Before you launch a new line, make sure you have searched the office’s database for anything similar. If you are the party alleging infringement, make sure you have registered your design before you assert your claim.
Works for Hire. Hiring freelance designers can be cost-effective but carries risks. What other companies have your freelancers contracted with recently? What designs did they pitch to them? Do your contracts make clear that the designer’s work belongs, and all copyrights transfer entirely and indefinitely, to you? Or do you have only a license for the design? Is that license exclusive or limited? Are you relying on “work for hire” language that may not apply because of the nature of the design’s intended or actual use?
Know and Vet Your Suppliers and Manufacturers. Are they trustworthy? Do your supplier contracts contain strong indemnification and defense language in the event they sell you infringing product? Do you monitor manufacturers for things such as suspicious overusage of fabrics or other supplied materials? Are they selling product that does not meet your specifications to discount retailers?
Reasonable Royalties. Does either party benefit from being associated with the other? Is the purported copyright owner relatively unknown and the alleged infringer a well-known brand or vice versa? Does the owner really want the product off the shelves, or is he/she really looking for a percentage of the profits? Approaching a claim of infringement like any other business negotiation may yield a much better solution for all than adopting a scorched-earth litigation strategy.
Insurance. Finally, have you purchased intellectual property insurance? While this will not protect against reputational damages, it can help take the sting out of a damages award.
Kristi Davidson is a shareholder in the New York City office of Buchanan Ingersoll & Rooney. She has many clients in the home goods and consumer products industry. She can be reached at firstname.lastname@example.org.
Editor’s Note: The comments are those of the author and are not necessarily views shared by HFN or MacFadden Publishing.