In the first quarter of 2022 alone, over 1.2 million business applications were filed. Surprisingly, 99% of businesses are small businesses. The exact definition of a small business can vary from state to state, but it generally has three criteria. First, how much revenue is being generated. The qualifying amount ranges between $1-$40 million per year. The next qualification is the number of employees that work for the business. Less than 500 employees is considered the standard. The final indicator is the business organization which the company files for. Sole proprietorships or partnerships are generally what small businesses are categorized under with very many fitting into the LLC and S-Corp category. They range from traditional family owned brick-and-mortar stores to ETSY style businesses that run completely online. Professional practices, such as law firms and chiropractic offices, are also considered small businesses.
Unfortunately, while businesses have been increasing, their threats have been as well.
Two of the biggest threats to small businesses are pirating and counterfeit goods.
PIRACY vs. COUNTERFEIT
Piracy is known as the act of illegally reproducing and distributing copyrighted materials. Watching bootlegged movies or illegally downloading music is a very common practice, which incurs great profit loss within multiple industries. There is an estimated combined $170 billion loss of revenue and 360 billion loss of streams in the media due to pirated content.
A counterfeit item is defined as physical fake goods that infringe on trademarks or patents. These are often imitations of expensive brand name items that are sold for a much lower price or black market versions of pricey prescription medications or supplements. When these goods are in circulation, they can “dilute” the original brand. Brand dilution related to counterfeit items occurs when consumers have an altered, normally negative, perception of the original brand or goods due to confusion between the original and the dupe.
The counterfeit market has grown to become a $500 billion industry that contributes to a yearly loss of revenue between $1.7-$4.5 trillion. Counterfeit goods are often much lower quality than their authentic counterparts with sometimes deadly effects from defective products or dangerous chemical interactions with unknown ingredients.
To prevent piracy and/or counterfeiting as discussed above, it is important to make use of legal tools such as filing copyrights and trademarks. If a business produces creative media such as photographers, videographers, film makers, course creators, or online coaching a stolen version of the work that is subsequently pirated will likely fall under a violation of copyright law. Whereas, if a business produces a physical good such as clothing, cosmetics, jewlery, or purses are experiencing fake versions of the product being sold on the internet as an authentic item this likely would fall under a violation of trademark law.
When every single dollar counts, trademarks and copyrights can operate as key legal tools for small business owners to ensure they are protecting themselves from thieves and copycats in the market looking to prey on unprepared brands and businesses
Copyright is a form of protection provided by the laws of the United States to the authors of “original works of authorship” that are fixed in a tangible form of expression. An original work of authorship is a work that is independently created by a human author and possesses at least some minimal degree of creativity. Examples of original works include musical works, choreography, art, movies, books, and more. Although copyright exists automatically at the time of creation, registration with the US Copyright Office is necessary to enforce the exclusive rights of the creator.
A trademark can be any word, phrase, symbol, design, or a combination of these that identify a goods or services. Examples include but are not limited to product names, logos, slogans, and trade dress, which is the physical look of the product. Common Law rights to a trademark are established by consistently utilizing a mark in connection with a business or product but do not provide owners the nationwide right to exclusively utilize a trademark in connection with a good or service. The right to be the only user of a particular trademark can only be obtained through federal registration of a trademark with the United States Patent and Trademark Office.
What does this mean for small business owners?
When it comes to enforcing IP rights and protecting the cornerstones of what makes a small business profitable, owners must stay vigilant. It is important to constantly search for infringement, as if it is not reported then the losses will continue to occur and in some cases may be considered a waiver of rights. Additional ways to protect a business or brand against piracy and counterfeiting include: platform take down requests, cease & desist letters, or legal action via courts or small claims boards.
Take Down + Cease & Desist
If an infringement is found, business owners can often report the infringing content to be removed and taken down from the platform. Additionally, a cease and desist letter to the infringing party notifying them of their infringement and misconduct and to stop the infringement immediately are often utilized by brands to show the seriousness of the matter and to enforce applicable rights.
Courts + Copyright Small Claims Board
Once a copyright is registered, owners have the ability to engage courts to enforce their applicable rights to stop counterfeiting and infringement. An additional resource is the newly operational Copyright Small Claims Board. This board provides a simple, virtual, and cost-efficient way to settle copyright disputes up to $30,000 additionally utilization of the board is available to all copyright owners even without prior registration.
If small businesses make up 99% of all businesses the billion dollar counterfeit and pirating industry undoubtedly impacts small businesses the most. When every single dollar counts, trademarks and copyrights can operate as key legal tools for small business owners to ensure they are protecting themselves from thieves and copycats in the market looking to prey on unprepared brands and businesses.
About the Authors:
Liberty Bing is a Spring 2022 intellectual property intern for the Law Firm of Lawson McKinley. Liberty is a Pre-Law Business Management major at the University of Georgia. Liberty sits on the Terry Student Diversity Advocacy Counsel and has previous internship experience in marketing and strategic management.
Whitnie Riden Esq is an Associate at the Law Firm of Lawson McKinley in its Sports and Intellectual Property practice areas. She is a graduate of Georgia State University and Atlanta’s John Marshall College of Law.
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