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A Legal Guide for Colorado Startups: Protecting Your Intellectual Property, Trademarks and More

Last year in Colorado, a whopping 175,000 people filed paperwork with the state to start a new business, up 11.5% from 2021. Clearly, entrepreneurship in our state is alive and well. As an attorney deeply engaged in mentoring and supporting Colorado’s startup and venture communities, I work with many entrepreneurs building their businesses from the ground up. Typically, those in the startup stage don’t have a lot of money and resources at their disposal. And when you’re laser-focused on growing your business, legal matters can seem like one of the least important parts of their journey. But you shouldn’t forget about protecting intellectual property for startups.

Many entrepreneurs don’t understand that poor legal decisions made at the start can end up making or breaking their business’s success in the long run. By not protecting intellectual property for startups — the things that really make their business stand out in the consumer’s mind — they risk losing the rights to their brand ideas, investor dollars or even the future sale of their business. 

So what do new business owners need to know? Well, often, they get intellectual property, trademarks, copyrights, trade secrets and patents confused. So here’s a breakdown of what you need to know about each and how to protect your intellectual property rights for startups.

READ: What Are the Safest Industries to Start Your First Business in 2023?

What is intellectual property (IP)?

Intellectual property is an asset of a business created using the expertise, ingenuity and creativity of the people within it. It comes in different forms — mainly in works that can be trademarked, copyrighted, patented or protected as trade secrets — and can be essential to a business’s success and longevity. While this article focuses on trademarks, it’s worth differentiating the major categories of IP as background.  

What is a trademark?

A trademark identifies your brand and the goods or services you sell and may include your company names, slogans, brand names, designs and any number of different pieces of your business. For example, people may recognize the trademarked names and designs of Coca-Cola and Starbucks (they’re everywhere), but they may not realize that even the Coca-Cola red and Starbucks green colors are trademarked by those companies!

READ: What to Do If Someone Uses Your Trademark 

What is a copyright?

Copyright protects creative works, such as writings, art, audio and video recordings and other non-branded creative elements. For example, Coke or Starbucks might copyright their web content, pictures, videos or jingle song lyrics. 

What is a patent?

Patents protect physical objects and products that have design functionality. For example, Coke has patented the iconic curves of its bottles. 

READ: Demystifying the Patent Process: Resources to Support Innovation

What are trade secrets? 

Trade secrets are commercially valuable information known to only a limited group of individuals within the company. The information is proprietary and helps differentiate a company’s goods and services from those of others, just like a good trademark or copyrighted work does. For example, one of the most famous trade secrets of all time is the secret recipe for KFC’s spice blend — it’s unique to the company, not widely known, and has significant value to the business. 

READ: How to Protect Trade Secrets When Noncompete Agreements Are Not an Option

How do I know if I need to register a trademark?

Your unique designs, slogans and names can help differentiate your business from the business across the globe or down the street, and they can be a fundamental pillar of your success (think what would happen if Coke changed its name or Apple changed the name of its iPhones). So, begin by assessing whether it would be very problematic if someone else started using the same company name, slogan, brand name, design name or any other element of your business. If so, you need to protect those essential elements with a trademark.

The four main risks associated with not registering a trademark are:

  1. Other parties could use identical or similar marks and create confusion in the public’s mind, potentially diminishing your sales and the value of your business. In the worst-case scenario, it could even result in losing rights and priorities in your marks.
  2. You could have to rebrand, resulting in a huge loss of brand equity and significant cost in developing an alternative.
  3. You could be forced to litigate a trademark infringement case for unknowingly infringing on someone else’s identical or similar brand name, image, design or logo. You would also have a less persuasive case in enforcing your own mark.
  4. Without registering the key identifiers of your business, your company can be much less attractive to investors or potential buyers.

How can I register a trademark?

Short of undertaking the federal registration process — which is by far the most protective — there are some easy ways to begin protecting your marks on your own, such as registering a trademark directly with the state of Colorado or simply using the ™ symbol next to your marks. However, these options generally do not provide broad protection. Therefore, as your company establishes value, you’ll want to speak with an experienced trademark lawyer to identify more ironclad ways to protect your business across the U.S. 

Do I need a state and federal trademark?

Registering with the state of Colorado is very inexpensive and straightforward, and if you operate one car wash in Denver, that may be all you need. However, if your business has any kind of online sales component, multiple locations or the potential to expand out of state, there is a lot of protective value in filing for a federal trademark registration. Because federal trademark applications are quite lengthy and complex and involve many legal requirements, utilizing an attorney is highly advisable and usually means you’ll have a significantly better chance of securing your trademark rights. 

How long does it take to obtain my trademark?

Federal trademarks are issued by the United States Patent and Trademark Office, which receives over a million trademark applications annually. In fact, the USPTO received a record-high number of trademark application submissions in 2022. Unfortunately, the USPTO is also experiencing a staff shortage, and their review process is extensive. Applications will not receive approval without a complete examination of the application for various issues and without allowing third parties to dispute the registration. As such, the entire process, from application development to completed review, currently takes more than a year. 

How much does it cost to obtain a federal trademark? 

Contrary to popular belief, hiring a trademark attorney to help formulate your application is relatively cost-effective. Of course, the total cost will depend upon the attorney. My clients often spend around $2,500 all in (i.e., including filing fees with the trademark office), which is a significant bang for their buck and allows them to avoid unexpected legal costs.

Everyone wants to protect their brand, and protecting intellectual property for startups is one of the most important ways to protect your brand and company, especially given the scale of the risks. 

 

Andrew Comer HeadshotAndrew Comer is a partner at Fortis Law Partners where he leads the firm’s trademark practice, advising companies on registrations and brand protection. Comer also advises companies on mergers and acquisitions, commercial transactions, and other corporate matters affecting their formation, financing, and operation.