Can I Patent It? What Ecommerce Companies Should Know About Trademarks, Copyrights and Patents with Dan Kimbell

Andy Splichal:

Welcome to the Make Each Click Count podcast. This is your host, Andy Splichal, and we are happy to welcome this week's guest to discuss today's topic, which is, Can I patent it? What ecommerce companies should know about trademarks, copyrights and patents. Today's guest has over 30 years as an intellectual property attorney, and he's here to discuss patents, intellectual property and a whole lot more. A big welcome to Dan Kimball. Hi, Dan.

Dan Kimbell:

Hey, great to see you, Andy.

Andy Splichal:

Hey. So let's start with what is intellectual property and when does it become important to protect it?

Dan Kimbell:

Yeah, intellectual property is just basically a basket that contains types of properties that are distinguished from real property, like real estate or stocks. So it's products of the mind. So it's generally considered to include four main categories. The first is patents, and those are inventions like chemicals, business processes that are new and unobvious, things like that. And then the next is trademarks. Trademarks are source identifiers. So if we see the double arches, we know it's McDonald's. And what we hear, the ultimate driving machine.

Dan Kimbell:

That's a slogan. That's a trademark from BMW. So it carries with it goodwill. So if you have a product or service, American Airlines, Apple, whatever, people hear it and they go, oh, we can trust this provider of goods or services, so it's very valuable as a carrier of Goodwill. Third category of IP is copyrights, and those are artistic work. So if you write music, if you produce a podcast, record it, movies, tv, books, website contents, those are all copyrights and copyrights. We can get into more detail further on in this conversation. And then the last kind is considered trade secret.

Dan Kimbell:

So these are things that have value because they're kept secret. So if you have a secret formula for your fried chicken or for your carbonated beverage, those can be trade secrets, and they can be very valuable sometimes. Trade secrets the way to go. Instead of patents or other kinds of protection, copyrights and patents are actually specifically mentioned in the US Constitution. When this country was founded, the founders realized that those are very important to the development of a modern society protecting copyrighted works and also inventions. In fact, President Lincoln actually got a patent. So the only president ever got a patent.

Andy Splichal:

What was this patent for?

Dan Kimbell:

It was for a device for lifting sunk boats. So that was a big deal during the civil war. A lot of boats were getting sunk and he figured out a way how to lift them up.

Andy Splichal:

So that's great. I mean, it's good to start with. I don't know if I've ever really thought about the distinction between those. A trademark copyright patent. I didn't even know you could get. What was it, your secret sauce? Protected.

Dan Kimbell:

Yeah. Trade secrets are very big trade secrets.

Andy Splichal:

So what comes into play most for ecommerce companies, between those trademarks, copyright.

Dan Kimbell:

I would say that for ecommerce companies, unless they're the building or launching a product, they're usually like their copyrights on their content and their trademarks, like if they have a name for their commerce site, that's very important. And those tend to get copied a lot. People try to get close, but not too close. And then their content, whatever they provide, some people try to copy that again, get as close as possible. So those tend to be the two most important types of IP for ecommerce companies.

Andy Splichal:

And let's take a trademark. Do you need to file something for your trademark or is it enough to be first? I mean, let's make each click count. Make each click count podcast. If somebody else started the make each click count podcast, and we've been going here for four or five years, would I have any rights?

Dan Kimbell:

Yeah, you have rights. Trademarks are, their strength is by virtue of use. So there's two or three main types of trademarks. One is federally and state registered trademarks. So you can get a trademark in California and each other state in the country provides for a California trademark. And then there's also federal trademarks. The difference is, if you get a federal trademark, it covers you in the entire country. If you only have a California trademark, it only covers you in California.

Dan Kimbell:

And there's something else called common law trademarks. And those are you just get by virtue of using a trademark. In fact, one of my early cases when I was just starting out as an IP attorney was a company called Duro bag. And if you look at paper bags, a lot of times you'll see the brand on it. Back then, this was a long time ago. They didn't have a federally registered trademark. One of my clients was trying to register a mark that was similar, and they got a cease and desist letter. They didn't know that there was a registered trademark, and there wasn't, but there was this other company.

Dan Kimbell:

So my client was trying to sell plastic bags, and Duro said, no, no, we have common law rights. So we ultimately settled the case. But after that, immediately after that, durobag got a trademark, federal trademark for Duro. So, yeah, you can have common law rights even if you don't have a registration. So the thing about common law rights versus, let's say, a federal mark is if you only have common law rights and somebody in, let's say, east of the Rockies is doing a restaurant that's close, that's the same name as yours, you don't have any rights to stop them. But if you had a federal registration, let's say, applebee's, and you operated, like, maybe know, west of the Rockies, and somebody started doing business east of the Rockies, you could stop them because it gives you federal rights over the whole country. And then you might be asking, why would there be state trademark rights? Federal rights require that there's use, like, in commerce across the states, because it's governed by federal law. So if you are only locally located, or let's say it's something that's not permitted under federal law.

Dan Kimbell:

Like, right now, marijuana is not legal under federal law. So California allows trademark registrations on pot brands, different brands of pot, but the federal government doesn't. So for now, clients are getting California state and Colorado state and some other state, Oregon state trademarks for brands of marijuana and edibles and things like that. So they all have their place. But to go back to your question, you have rights just by virtue of using it. But if you went through the registration process, you could get federal trademark for your mark.

Andy Splichal:

What about internationally?

Dan Kimbell:

Yeah, international is its own system. So whatever rights you have for any kinds of ip, except for copyrights, are all based on the nation. So they're all granted by the sovereign, whatever country it is or region. So you could get a us patent or a us copyright or, excuse me, a us trademark that covers you in the US. But if you have somebody who's using a trademark or a patent in another country, there's no rights to stop them. So, for example, if a chinese company makes a knockoff product that would knock off your us patent, but sells it in Europe, unless you have a european patent or a patent in China, you can't stop them.

Andy Splichal:

Got it. So let me ask you a question happened to a client of mine and see what their options are. I think this might be interesting, especially for ecommerce companies, because this can happen. So they're an online company mostly. They sell, 95% of their sales are online. And they've recently had another website. They come and took their name instead of put it net, they're using their name, they're using their pictures, they're using their products. Whether or not they're shipping it out, nobody knows.

Andy Splichal:

But they're advertising what they're selling using the same descriptions, the same images, and they're advertising it at like 20% of the price.

Dan Kimbell:

Yeah.

Andy Splichal:

What options would you have in that situation?

Dan Kimbell:

Yeah, well, first of all, first question you have to ask is what rights are there and what rights are being infringed. So it sounds to me like you've described copyright infringement because there's images, text or content on a website.

Andy Splichal:

Well, and I would think trademark infringement too.

Dan Kimbell:

Trademark. Of course, they're using the same source identifier. So the purpose for trademark is to avoid consumer confusion. So that harms consumers. It's actually a huge problem with all these counterfeit goods, like counterfeit medicines, that people think they're buying authentic drugs that have all the quality control and they're not. And then also somebody buys products from a company thinking they're buying the authentic product and then they get this defective product or dangerous product. I've had many clients who've been found out about infringement when their customers say, hey, I bought one of your products and it just failed really quickly, and then they find out that isn't our product, where'd you find it? And then that's how we find out there's an infringement going on when something goes wrong. And obviously there's no quality person standing behind that counterfeit product.

Andy Splichal:

So what are the steps to eliminate that?

Dan Kimbell:

Yeah, basically at that point, once it's already occurred, first thing you have to do is basically either sue them directly or send them a cease and desist letter now.

Andy Splichal:

But this is a international person doing it inside the US.

Dan Kimbell:

Okay, well, if they're international doing it in the US, they must have some kind of us presence. And usually you go after that. Absent that, you basically have to go after them in their own country. If they don't have a presence in the US, if they're like a vendor on one of the major platforms like Amazon and Etsy and eBay, have tools to use to stop infringement, that's very good. So you could use those kind of tools to do that. There's some other tools depending on exactly what the goods or services are. So there's a variety of tools.

Andy Splichal:

If somebody came to you, is that something you could help them with?

Dan Kimbell:

Yeah, we do that all the time.

Andy Splichal:

Absolutely. And is that based just on an hourly charge?

Dan Kimbell:

It's usually hourly because we can't really tell what the other side is going to do. If the other side just stops immediately, maybe a letter is all that takes. But oftentimes infringers are just persistent and they will just keep infringing until they have the gun against their head, the trigger is pulled and the shells coming out of the nozle. So it just depends on what the other side does. If they're reasonable, they stop. If they don't, then it can go on. And sometimes lawsuits have to be filed before people really get the message.

Andy Splichal:

And do you ever contact where their domain is hosted at?

Dan Kimbell:

Yeah, there's domain name dispute procedures that can be used if somebody has secured a domain that's too close to yours. Definitely. That's another tool to use the domain dispute procedures.

Andy Splichal:

And I mean, that's somebody copying the whole site. But I mean, we talked about it a little bit in the early two thousand s. I worked for an ecommerce company and the biggest problem and might still be going on, but Ugg boots, those sheepskin boots that mostly women wear.

Dan Kimbell:

Yeah, Uggs.

Andy Splichal:

Right. And those, the amount of counterfeiting coming out of China sold in the mean. It was probably almost one to one that was advertised on Amazon. How would a company like Ugg, or if somebody's doing that to your product, if you're getting big mean, what are the steps? And can you do it yourself or do you need an, I mean, a.

Dan Kimbell:

Lot of it can be handled internally in the company. They have to set up the proper procedures. I've had different clients. Like I had a client one time, they're no longer a client, but they had a problem. They made this advanced flooring and it would snap together. So it was like really easy to install, durable. And so they were getting a lot of knockoffs coming from China. And so what they did is they instituted a process where they had stickers, like 3d hologram stickers.

Dan Kimbell:

And so they would monitor the vendors and the vendors would know, like if it doesn't have the hologram and a serial number, it was not the authentic good. So that helped a lot. There's a whole lot of things that can be done. Like, first of all, register your trademark. One thing that custom and border protection does if it's actually physical goods, is you can identify known infringers. And if somebody is shipping goods on a container, they have to identify the contents. So if custom and border protection sees that a shipment is coming in and it's having counterfeit or mislabeled goods, they will stop it at the border. And I've represented clients on both sides, and if you're the guy who has a trademark they're not supposed to be using, your goods are going to be seized, and you're not going to get it out, and you're going to have to pay to have it destroyed.

Dan Kimbell:

So it's very difficult to get seized goods unseased. So that's one great thing. Register your trademark or your copyrights with customer and border protection. A lot of my clients do that, and it's very effective, and they can do it themselves.

Andy Splichal:

I guess it surprised me. If you're relying on a government agency to enforce your rights, how do they even know.

Dan Kimbell:

Let'S say, you know, that there's some certain factory in China or a company, and you can usually figure this know, with time, you can tell custom and border protection, and then they will send notices out to all the ports, and then if a shipment comes in, they're going to be able to seize the shipment. So that happens all the time. And it works very well.

Andy Splichal:

Yeah. I mean, what's the same? The biggest form of flattery is imitation. So I guess it's good. I mean, it's successful, but, boy, it sure sounds like it's going to.

Dan Kimbell:

I don't think it's that good, actually. I mean, it's like imitations that are. People think they're buying the real thing, obviously. A lot of times it's not the same quality, and then how the quality control and then the brand gets damaged. If somebody's shipping boots, uggs, that fall apart right away after three wearings or something.

Andy Splichal:

So let's go back to somebody who's just starting out in a business. How do you know if your idea is patentable?

Dan Kimbell:

Yeah, well, in order to be patentable, an idea has to be new, and it has to be unobvious. So new means it can't have been invented before, so it doesn't have to be patented. It just has to be out there. So a lot of times, people come without an idea, and they go, wow, I just thought of this, and I want to patent it. And, well, my first question is, well, are you aware of anything else that's close to it? And sometimes they say, yeah, I got the idea for this. So the second hurdle for getting a patent is not just being new, but it has to be unobvious. So if you take a pencil and you say, well, the pencil has an eraser on the end at one point, pencils didn't have erasers on the end. So somebody had the brilliant idea of putting a grommet, a metal grommet, and sticking an eraser on the end.

Dan Kimbell:

That was probably patented 150 years ago or something. But now that idea is really old. And let's say, I say, oh, I'm going to put a little light at the end so I can see where I'm writing. And we have pens like that. It would be obvious because, well, maybe nobody ever made it or sold it, but it would be like, well, we have pens that have a light on the end, so it'd be obvious to put a light on the end. So the first inquiry is like, is it even patentable? A more important question, though, is, well, a lot of things could be patented, but can you make any money from it? If you're not going to make money from your patents, then I always tell clients, why don't you just take that money and take a nice vacation? Because it's going to cost you a lot of money to go through the patenting process.

Andy Splichal:

How much money does it cost to go through the patent process?

Dan Kimbell:

To get an average patent, it's probably anywhere from $10,000 to $50,000, and it depends on the complexity. Some things are simple and they're easy and they're completely new, and there's not a lot of action at the patent and trademark office. So those might be the lower end. If you're in a technology that's very crowded, where there's a lot of other stuff that the patent office has to consider, and you're trying to get an aggressive claim, let's say that protects you really broadly. Those cost more because you're fighting a lot with the trademark or the patent office. So you're going to have to do a lot more work.

Andy Splichal:

And so you had mentioned that you want to make sure that you're able to sell it. How do you recommend people do that? Research?

Dan Kimbell:

Yeah, I think that a lot of it can be done in house or by yourself. It's just basically do surveys of the marketplace. What other alternatives are there? I mean, we don't really live in a vacuum. If you're thinking of something, somebody else is probably thinking of something, like, you invent something and it's going to provide a solution to a problem, right? Like I have a new kind of router or something, and it's going to be smaller, it's going to use less electricity, it's going to be cheaper, it's going to have higher throughput, it's going to look beautiful, it has certain features and benefits. And if it doesn't have enough, you're fighting against inertia. Right. So people have something that works and it's cheap enough and they're familiar with it. So there's all the hurdles to getting people to say, why would I buy this new product from this company I don't know about? It has to have sufficient improvements, and even then it may not work because there's a lot of great inventions that never are commercially successful, because there's not enough money for marketing, there's not good branding, they can't manufacture it at scale.

Dan Kimbell:

The leadership sucks. There's just so many ways to fail and a lot fewer ways to succeed. So I guess going back to, how do you know? You first have to know what the competition is like, what your advantages are, what you can offer, can you scale it, can you build a company? And if you can't do all those things, it's unlikely that you're going to succeed. And then at that point you have to say, am I really the right person to do it? Or maybe I need to partner with someone else to help me with it. But it's a big endeavor. To do any, even a little simple thing is a lot of work.

Andy Splichal:

What about those late at night commercials for patent companies saying, if you have an idea, give us a call and we'll get the patent for you?

Dan Kimbell:

Yeah, I hate them with a passion. In fact, one reason I started my canipate.com was in opposition to that, because I've had many clients over the years, and I've been doing this for over 30 years, that have been started out at those late night tv shows, invent tech or some. There's the guy, the caveman, carving a wheel out of stone. It's the same people behind those things. They get shut down by the Federal Trade Administration, Federal Trade Commission, and then they start up another company with a slightly different name. And they have high pressure salesmen who tell everybody, oh, yeah, it's a great invention, it's patentable, and we'll promote your invention for you. But they get a very poor quality patent that's probably not worth getting. And then they have an inventor fair where there's a bunch of other of their clients at a big trade show, and then nobody comes.

Dan Kimbell:

And very few of them actually license one major invention promotion company, who I will not name as part of a lawsuit in the past, had to publish their statistics. And something like only 1% of their inventors who paid a lot of money got their money back. They made as much money by their. And it was something like 15,000, $20,000 on average. So only about 1% of the people who were clients got that much money back from their inventions. So it's extremely rare that people make their money back. So they're a scam. They're high pressure.

Dan Kimbell:

When I was a young guy, a long time ago, I checked out to say, how could I write patents for one of these companies? And I inquired, and it turned out they pay very little. They're hiring guys who don't very junior, who will do it for the cheap. And the quality of the work is pretty terrible. So you get what you pay for, but actually you get a lot less than you pay for with invention promotion companies. So run away if you are thinking about it. Just don't go there.

Andy Splichal:

How careful do you need to be with sharing ideas before you get a patent? I mean, how much do you need to use NDAs when you go into your attorney's office, where do NDAs come in handy with a new idea?

Dan Kimbell:

Yeah, NDAs are. That's not nondisclosure agreements or NDAs or confidential disclosure agreements. Pretty much the same thing, just two names. They are agreements that basically create a contractual right when you disclose something confidential to a third party, that they will not use it inappropriately. So having NDAs is quite important because it just puts the other side on notice that you regard what you're disclosing to them as being confidential and having value, and they are not to use it for any inappropriate purpose. A few years ago, I had a client who got a patent. We'll file a patent for a cake pan that was unique, and it was being pretty commercially successful. She went to a manufacturer, and the manufacturer made these cake pans for her.

Dan Kimbell:

She didn't have a patent at that time, and she didn't have an NDA. The manufacturer, what they did is basically copied her and started selling it on the side, and they could know undercut her, and she never was able to obtain a patent. The prior patent was poorly drafted, and it could never be fixed. I tried to fix it. It was finally rejected. So she had no patent rights, she didn't have an NDA, she didn't have any proof. So basically, in a lawsuit, she lost and that manufacturer made all the money from her invention. So, yeah, it does happen.

Dan Kimbell:

There's some bad people who will steal your invention. So before disclosing any of your good ideas, get the other side to sign an ADA that'll protect you. It'll tell the other side that you think this is confidential. If they don't want to sign it, you have two choices. You could either say, well, I'm willing to take a risk, or you can say, no, it's not worth it. I don't trust these people. And if somebody won't sign it, your hackles should go up, your radar should go up, because why won't they sign it? A lot of big companies won't, because they say, oh, we have an invention department. We have a lot of inventions.

Dan Kimbell:

We don't want to be sued by some local yokel who thinks they invented what we already invented. That may be legitimate, but maybe not. I've seen a lot of big companies steal inventions from smaller people, so I don't particularly trust large entities any more than I trust small entities or individuals. So trust, but verify. And NDAs are a great way to do it, and they should be signed before the disclosure happens.

Andy Splichal:

How solid cloud does your NDA need to be? I mean, is it something you need to have an attorney create for you? Is it something you can download for free off of the know?

Dan Kimbell:

You can do a download off the Internet, and it's going to be probably generic, and it's probably, okay. I've seen a lot of NDAs that aren't good. Like, they have time limits, which aren't necessary. They don't describe the property properly. Recently, a client asked me to look at an NDA, which was called a mutual NDA, but it was actually a one way NDA that was very one sided to this other side. So had that client just said, yeah, we'll sign it, they would have been really in trouble, because now their rights would be compromised by this other side that was, frankly, a little unscrupulous. And just from the tone of it, I think they were paranoid, and they'd probably sue them if anything came up. So I'd say it's probably better to have somebody just at least look it over to make sure it's okay.

Dan Kimbell:

Yeah.

Andy Splichal:

Well, this has been fascinating. I'm curious, how did you get into this line of work?

Dan Kimbell:

Yeah, well, actually, I was a chemistry major at UCLA, and I always wanted to be a scientist. But as I was going through the process, I got my bachelor's, and then my advisor was saying I should stay on and get a master's degree. And I just evaluated that and said, a master's degree in chemistry is not very valuable. I would have to get a phd. At that point. I was tired of school. I didn't want to go through a four to six year program to get a phd and be stuck in a lab. So one of our neighbors in my neighborhood growing up was a patent attorney.

Dan Kimbell:

So he invited me to his office and I thought he said, it's great because you can get to wear a suit and you work in a nice office, you make pretty good money, and you can be around science, but you don't have to do it. So I thought, that's fantastic. So I went to his office, I loved it, and went to law school and became a patent attorney.

Andy Splichal:

And how do you make the process of protecting intellectual property easier for your clients?

Dan Kimbell:

Well, I try to be very transparent. A lot of times people will ask me, should I do something? And I'll tell them, quite frankly, no. Like for example, patents. Unless they know that there's a business scenario, a viable business scenario. I'll usually say, you should do the business plan, the financial plan, before you really worry about patents. Because it's not just to get a patent. There's a lot of patents that never make money. In fact, most of them.

Dan Kimbell:

So you should figure out how likely you are to make money. Some things like copyright applications, I usually tell clients, you can do that yourself. If you want your handheld, I'll help you with the first one, but after that you can usually do them yourself. Trademarks people think they can do good searches and they usually don't. So I usually recommend you should probably have a professional help you with trademark searching. So yeah, I help people decide whether the cost benefit of what they're doing and then help them in the areas that they need help in other areas. I can just say, you should do this. You could do it yourself.

Dan Kimbell:

Or maybe there's different ways to do it to save money. Money is not unlimited and so you have to weigh carefully how you spend it, especially if you're a new company with not unlimited budgets. So I help them decide what should be done and the best rollout of your dollars to get know most bang for your buck.

Andy Splichal:

And how can an interested listener has a great idea? Perhaps. But how can they get in contact with you?

Dan Kimbell:

There's a couple ways. You can contact me through my Facebook page, which is. And then also through my law firm and the website there is www dot KB as in boyip.com so those are two ways to reach me. And if you google my name, I come up and you can find me that way as well.

Andy Splichal:

Well, this has been really fascinating and I think very useful for our listeners. Is there anything else you'd like to add today before we go ahead and wrap it up?

Dan Kimbell:

Well, I guess if you don't succeed at first, try again. Just do it with open eyes and knowing that maybe the first attempt may not succeed. But if you can play the game, stay in the game, not lose all your money, and then you can try again. And you probably learned a lot from your earlier attempts, and maybe it might take two or three times, but I've seen a lot of clients who, people we know mutually who've been at it for a while, and they tend to get better at it. Like everything else, the more you do it, the better you get at it and they start having more success. So I would say don't get discouraged. Be realistic, but don't be discouraged and then try to get help where you can. Because all of us are in our little silos, right? We know what we know.

Dan Kimbell:

We don't know what we don't know. So talk to people who know more, try to learn from others so you can avoid mistakes, and then hopefully do what you do well and then get help with all the other areas.

Andy Splichal:

That's some great advice.

Dan Kimbell:

Thank you.

Andy Splichal:

Well, thanks for joining us today, Dan.

Dan Kimbell:

Thanks, Andy. You have a great rest of the week for listeners.

Andy Splichal:

Remember, if you like this episode, please go to Apple Podcasts and leave us an honest review. And if you're looking for more information regarding connecting with Dan, you will find the links in the show notes below. In addition, if you're looking for more information on growing your business, check out our all new podcast resource center, available at podcast makeeachclickcount.com. We have compiled all of our different guests by show topic and included each of their contact information. In case you would like more information, any of the services I have discussed during previous episodes, well, that's it for today. Remember to stay safe, keep healthy and happy marketing and I'll talk to you in the next episode.