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Memphis Business & Commercial Law Blog

Important intellectual property considerations

A Tennessee business's intellectual property is invaluable, especially for a company that is just starting out. It is important for entrepreneurs to understand the basics of intellectual property and how to protect their ideas and products.

One important step is to have carefully worded contracts that make it clear that when independent contractors make goods or perform services for a company that the contractors are not owners. Without the explicit understanding that what is produced belongs to the business misunderstandings and lawsuits can occur.

WordLogic sues Swiftkey over theft of intellectual property

Tennessee smartphone users may be interested to know that SwiftKey has been sued by WordLogic over allegations that it violated one of its patents and used that technology to create many of its own applications. The suit was filed in the U.S. District Court for the Western District of Washington. While SwiftKey is one of the most recognizable producers of predictive keyboard apps, WordLogic says it has been selling or licensing its predictive text technology since 2001.

While the company claimed that it had been in negotiations to license its technology to SwiftKey, those talks broke down and SwiftKey used the technology anyway. In 2012 and 2013, the SwiftKey keyboard app was one of the most downloaded apps on Google Play, which is a marketplace where users can download apps for their Android devices.

Choosing the proper structure for a Tennessee business

One of the most important decisions that a new business owner has to make is what form of entity to use. While it may be more expensive and require more time to comply with state laws, a corporation offers superior asset protection for the owner of the business.

This is because a corporation is legally considered to be a separate entity from the owner of the company. Like a person, the corporate entity can be taxed and legal action may be taken against it. The corporation must file its own tax return and keep detailed records about its operations. It must also open a bank account that is separate from its owner, and details about the company's finances may need to be made public.

Considerations for the timing of trademark filing

Tennessee business owners and individuals considering starting businesses sometimes wonder about the timing of trademark and other intellectual property filings. It is often a good idea to begin the trademark application process as early as possible. Many companies file the application at the same time that they file the company's organizing documents. There is at least one reason, though, that it may make sense to begin even sooner than that.

Typically, a comprehensive trademark and name search will be performed when the trademark application is begun. Using databases maintained by state and local agencies and the U.S. Patent and Trademark Office, the proposed mark is compared with existing marks from all over the country. If there is a conflict with an existing trademark, company owners can consider a name change. If the company's organizing documents have already been filed, a trademark conflict may cause undue stress and expense.

Redskins trademarks canceled by Trademark Trial and Appeal Board

Tennessee business owners interesting in protecting their intellectual property may be interested in a story about the cancellation of federal trademark registrations owned by one NFL football team. Though some fear that this could have a negative effect on the team's intellectual property rights, others believe that they still have protection against competitors.

In June, six trademark registrations, including those for the Washington Redskins football team, were canceled by the Trademark Trial and Appeal Board. All of the trademarks contained the term "Redskins," which parties opposed to the trademarks argued is a racial slur against Native Americans. This move by the TTAB removes the official registration of the marks, but one attorney argues that the effect of the cancellations is being overstated by the media.

Intellectual property valuable from the start

Tennessee entrepreneurs who are considering selling a startup company may want to review the intellectual property that is associated with the business to make sure they are not selling more than they have built into the selling price. Even if the idea of selling the company is not a consideration, pretending that a sale is the ultimate goal may help to keep startups out of trouble during organization and early contracting stages. Often, intellectual property is equated with patents, but trade secrets, copyrights and trademarks are also considered intellectual property and have value to the person who owns or is acquiring a business.

A brand name is also intellectual property and should be chosen and researched carefully. An unintended brand name infringement may be a costly lesson for a young company in terms of both legal expense and time. Another often-overlooked type of intellectual property is the plans an entrepreneur has for developing and growing the company product or service.

Marijuana edibles company being sued by Hershey

Residents of Tennessee may have heard about a Colorado-based marijuana snack company that is reportedly being sued for copyright infringement by Hershey Co. The owner claims that it comes as a surprise since his company supposedly changed their labels six months before the lawsuit surfaced. A spokesperson from Hershey claims it is a clear infringement on their trademark and considers it to be dilution of the brand.

The chocolate company also claims that the pot-based company unlawfully used the likeness of popular brands like York peppermint patties, Heath and Almond Joy. Representatives also said that the mimicry poses a safety risk to children as well. The owner of the edible maker claims he has not received any official notice of the lawsuit but hopes to resolve the issue as soon as possible. He says that many of these types of edible products come with special labels, warnings or child-proof seals. The company's products reportedly require a doctor-prescribed card that is strictly offered through licensed medical marijuana dispensaries.

Understanding the Hispanic market

Business owners in Tennessee know that staying ahead in a competitive market involves adapting to new opportunities and strategies. A corporation is often formed to take advantage of a particular need or to fill a specific gap, but markets quickly evolve. One example of change is the growing Hispanic market in the United States, and many small and medium sized companies are not doing enough to earn this business.

Fortune 500 companies study the numbers and have been cultivating the Hispanic market for many years. There are currently 50.5 million Hispanics in the United States, and the census data shows that the percentage of the population with Hispanic or Latino roots grew from 12 percent to 16.9 percent between 2000 and 2012.

Virtual reality company sued for infringement of ownership rights

Tennessee technology fans might be interested to learn that a lawsuit has been filed against Oculus VR, the manufacturer of the Oculus Rift, a virtual-reality video game headset. Facebook recently purchased the company for $2 billion. Now, a video game company known as ZeniMax has filed the suit, alleging that Oculus used ZeniMax-owned Intellectual property while developing the Oculus Rift.

The lawsuit claims that Oculus benefited from the use of trade secrets and copyrighted computer code and demands compensation. It says that two Oculus employees, including the company's founder, signed contracts prohibiting their use of the ZeniMax technology without a license and that Oculus then used the technology without authorization to help with the development of the headset.

Business partnerships and LLCs

For Memphis residents looking to expand their businesses, there are often questions about how to bring in new partners. A new partner can provide new types of expertise, more capital and increased manpower, but choosing the best legal entity under which to do it can be confusing.

For a sole proprietor, adding another person into the business will generally convert it into a partnership. There are two main types of partnerships. The general partnership usually features the equal sharing of control and profit between the partners, but there is no limitation on personal liability if the partnership gets sued. A limited partnership is made up of at least one general partner and at least one limited partner. The limited partner has limited management control over the business and is only liable for as much money as he or she has invested into the partnership. The general partners bear the liability for any judgments against the business, meaning that personal assets may be seized.

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