By Mika Mooney
Entrepreneurs work hard. We have to. If it weren’t for us spending late nights perfecting those pitch decks or crafting on-point copy for our websites, those things just wouldn’t happen — at least not in the beginning, when we’re strapped for start-up cash and doing it all with a team of One.
And, as we pour time and energy into our businesses, it becomes clearer that they’re more than just ventures — they’re adventures — living, breathing journeys in constant motion, materializing and expanding through our passions, commitment, and dedication (and also lots of coffee and not as much sleep 😉).
They become much more than conduits for delivering products or services. They weave themselves into the fabric of our lives, become extensions — limbs — of ourselves where there once was nothing. We often overuse the analogy that they’re our “babies” because…well, despite being stale and unoriginal, they ARE our babies..
But…we need to be careful.
Although we’re excited to show the world this new thing we’ve created, although we’re ready to let it spread its roots and curate what grows, we need to protect it. The same way we hold a child’s hand when they cross the street or double check that a match is fully blown out before tossing it into the trash can, we need to take precautions to protect what we’ve worked so hard for and what we believe in so fervently.
In the vast landscape of the business world, our businesses’ success requires proactive shields that go beyond the aesthetics of well-designed logos or eloquent taglines. This shield comes in the form of trademarks and contracts. Although seemingly less-than-sexy, they’re actually the heroes, instrumental in securing the fruits of our labor — in protecting our interests, our time, and our brands.
The trademark tightrope
Picture this: You've worked tirelessly to establish your brand, invested in marketing, and finally launched your product or service. But the celebration comes to a halt when you discover that another entity has filed a trademark for your exact name or a distractingly similar one. This scenario is not uncommon and can lead to confusion among consumers.
On the other hand, you may have invested all of that start-up funding into branding and marketing only to be hit with a cease-and-desist letter because you’ve inadvertently infringed on another’s registered trademark.
Faced with the prospect of rebranding or engaging in a legal battle, you have to make a tough decision — one that will likely cost a lot more in the end than it would have cost to trademark your brand at the get-go.
Only so much money
In the early stages of entrepreneurship, deciding where to invest can be challenging, especially if you're working with a limited budget. And often, trademark registration gets overlooked amidst other pressing business needs, such as branding or operational support.
However, as illustrated in the example above, delaying trademark registration can be a costly oversight. Without officially trademarking your brand name, product names, logo, or slogan, you don't fully own the rights to these elements. This opens you up to risks such as finding others using your unprotected brand elements for profit, thereby causing consumer confusion, or unknowingly infringing on another brand's rights. With the cost of investing in a trademark lawyer starting at just a few thousand dollars, it's a solid trade-off for avoiding the potential risks and financial pitfalls of not trademarking down the line.
To drive the point home, let’s explore how much NOT trademarking could cost you:
Rebrand = $10K+
If you’ve failed to protect your brand elements, such as your brand name, logo, or slogan, and find yourself on the receiving end of a cease-and-desist letter from another brand that registered one or more of those elements themselves, it’s possible that you’ll have to rebrand and update all branded channels, including your website.
Hiring a lawyer = $5K+
To resolve the cease-and-desist matter mentioned above, you’ll likely need to go through a negotiation and/or mediation process at minimum, which requires the support of a lawyer.
Legal fees = $25K+
If you are, in fact, found to be infringing upon another brand’s intellectual property and no agreement can be reached through negotiation or mediation, and the brand you infringed upon chooses to sue for damages, your case may end up in court — a costly and lengthy process for both sides.
Despite the temptation to allocate resources elsewhere in the early stages of business, the potential costs of forgoing trademark protection far outweigh the initial investment. Consider the toll that forced rebranding, lawyer fees, and the prospect of court battles will have on your brand's reputation, the trust of your customers, and your own sanity.
Contracts = clarity
Let’s talk contracts now.
Imagine you land a freelance project to develop a custom software solution for a client. Eager to start the work, you dive in without formalizing the terms in a contract. As weeks pass, you deliver the completed software on time and on budget. However, when the client expresses dissatisfaction with a minor feature, things take an unexpected turn.
Without a contract outlining the project scope, acceptance criteria, and any potential revision process, you find yourself in a dispute with the client. The lack of clarity from the onset leads to disagreements on whether the feature was part of the initial agreement or an additional request. With no written record to refer to, you’re forced to invest additional time and resources to addressing the client's concerns, impacting your profitability and straining the once-positive relationship.
Preparedness and risk prevention are the names of the game
Many times entrepreneurs land in hot water because they didn't use a contract when they should have, or their contracts were incomplete, ambiguous, or contradictory. These instances can lead to anything from an awkward and uncomfortable disagreement to costly litigation.
But if you're not a lawyer, it can be confusing to decipher complicated legal jargon or understand what key elements should be included in your agreements.
So consider the following FAQs your crash course on all things contracts:
What should be included in a standard service contract?
The exact terms of each contract will vary based on the nature of the agreement, but your contract should generally include:
Detailed project scope + deliverables
Precise project timeline
Comprehensive payment terms
Communication guidelines
Dispute resolution guidelines
Cancellation terms
When is it necessary to use a contract?
Contracts are necessary whenever goods, services, commitments, or payments are being exchanged between two or more parties. By putting a contract in place in every business relationship, you create a clear legal framework for the responsibilities and expectations in your business engagements or transactions.
What are some common “what if’s” I should address within my contracts?
Include clauses to protect timelines, address revisions to deliverables, outline a clear dispute resolution process, address late/missed payments, and set out terms on termination or cancellation of the contract.
How can I address potential disputes?
You can prepare for potential contract disputes by including a clause in your contract outlining mediation — a facilitated negotiation — or arbitration, a process where a third-party makes a binding decision. By including mediation or binding arbitration terms, you create an alternative to the costly process of litigation which may make sense in some instances.
What are the benefits of using a lawyer-drafted template?
Using lawyer-drafted contract templates ensures that you include necessary terms + clauses to protect both parties, address industry-specific nuances, and mitigate the risk of having missing, incomplete, or contradictory contract terms that can occur when DIYing your contracts or copying from various free templates (check out my Contract Templates Shop for a variety of lawyer-drafted templates!).
Your business is a meticulously cultivated reflection of dedication and hard work. It deserves protection not just as a “nice-to-do” or legal requirement, but as a strategic investment in long-term success.
Trademarks and contracts are proactive measures that empower us as entrepreneurs to protect our interests, maintain clarity in business relationships, and secure the hard-earned fruits of our labor.
As we continue our demanding-but-rewarding journeys, let’s make sure we have these protections in place. I know I do!
Mika Mooney
Mika Mooney is a New York based business, trademark and employment attorney and fellow entrepreneur. Mika Mooney Law was born out of a desire to support female founders in all things legal in a straight-forward, caring and sound way; all with a goal of also making legal counsel approachable and accessible. As a litigator, Mika argued countless cases in court and vigorously defended big businesses day in and day out, gaining a deep and extensive understanding of the legal needs of businesses and how best to protect them. Now, she uses that knowledge to keep entrepreneurs and small business owners like you, from experiencing any legal headache, hopefully creating a stress-free, easy and seamless legal experience.
She’s got your back whether it's with trademarks or contracts! Get her Service Contract Clause Checklist or chat about trademarks with her recently launched Trademark Hour. Don't forget to follow her on IG for more tips on protecting your business.