IP Risks of Reward Crowdfunding – PART III: Losing Your Brand
It is tempting to include a catchy name for your product in your crowdfunding proposal in the hopes of attracting attention from potential donors. However, it is important to be aware of the risks posed by crowdfunding to the ownership of your trademark.
In the U.S. and Canada, the first party to use a trademark in commerce can claim rights to the trademark, whether or not that trademark is registered. The classic example of “use” of a trademark is where the person sells the good with the trademark affixed to the good. However, it is not clear that publishing a crowdfunding proposal would be considered “use” of a trademark. It is possible that you could publish your crowdfunding proposal, including the name of your product and another party actually sells a product with that same name. That party could be considered the first party to “use” the trademark and would be the one that has trademark rights
Another risk is that once you use your new brand name and logo to submit a crowdfunded project, someone else could file for trademark protection before you do. The basic rule is that whoever applies to register a trademark first could get the registration and can block other similar trademarks. You could sue to get trademark back by trying to prove that you used it first, but that would use up time and money.
You must also consider the need to protect your trademark in foreign markets. In many other countries, including several Asian and European countries, it is the first party to file a trademark application which is presumed to have rights, regardless of use. Therefore, when you publish your crowdfunding proposal including the name of your product, another party could file a trademark application in a foreign country. After you have finally raised enough funds to file for trademark applications around the world, you may find that another party has already claimed the trademark rights.
There are several things that you can do to protect your brand in the context of crowdfunding. First, be cautious how you present your trademark in your crowdfunding proposal. If possible, it would be better to avoid publishing the name of your trademark in the crowdfunding proposal.
If you must reveal your trademark in your crowdfunding proposal, consider filing an Intent To Use (ITU) trademark application before publishing your crowdfunding proposal. You can file an ITU trademark application based on the fact that you propose to use the trademark in that country and this will hold your place in line.
When it comes to protecting your brand, there are other considerations aside from trademarks. For instance, you should also consider the need to register any relevant domain names that include your trademark, especially the all-important .com domain name. If you reveal your product or brand name before you have registered your domain name, you may find that someone else has grabbed that name and it could prove expensive to get it back. While anti-cyber-squatting laws might help you get the name back through legal action, you would need to prove that you owned the trademark prior to the alleged cyber-squatting and you would also need to prove that the domain name was registered in bad faith. You run the risk that you may not be able to meet that burden of proof. Therefore, it is best to simply register all relevant domain names before launching your campaign.
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