Chief Underwriting Officer
With hundreds of new businesses starting every day, the chances of infringing on someone else's intellectual property (IP) - such as copyright or trade mark - are increasing. A claim can be raised for infringement of a logo, business or product name, even colours, symbols and fonts. You can also face problems for using stock images, music and sounds, if you haven't bought the necessary licenses.
Most companies are vociferous about protecting their brand identity, and it's their legal right to do so - even if it seems unfair when you're a start-up scrapping to get a foothold in the market. There is also the threat of patent trolls, who buy up patents and trade marks simply to make money out of litigating against businesses with similar designs. It can be a cutthroat business!
How to avoid a challenge in the first place
The best way to avoid a challenge and potentially expensive rebrand is to ensure you do the necessary checks when you first decide on your name, branding and logo. You might want to do this through a chartered patent attorney or lawyer – particularly if you have specific concerns. But at the very least you should research similar company names, web domains and check the online register of patents, trade marks, copyright and designs. Remember to look at possible infringements both in the UK and globally, even if you're not trading abroad yet. Otherwise, you could get caught out further down the line when looking to expand overseas.
What should you do if you face a challenge?
The first you're likely to hear about a claim is through a 'cease and desist' letter from the claimant's solicitors, threatening legal action if you don't stop using your name or logo. This isn't the kind of thing you want to open when you arrive for work in the morning, particularly after all the time and effort you've put into building your product or brand. But, it's better to deal with it sooner rather than later, as unfortunately it's unlikely to go away on its own.
You'll probably spend a few minutes in a state of shock, but try not to panic and read the contents of the letter carefully before doing anything. The claimant may be demanding an immediate name change, that you cease trading, pay damages or threatening legal action. They may also give you a deadline for response, which you should make a note of.
Then the next step is to seek professional advice from an IP lawyer, who can advise you on your options, the risks and potential costs of pursuing the case. However frustrating and seemingly unjustified the claim may be, the cost of challenging it can be prohibitive on a start-up budget, which could mean settling out of court - probably resulting in an agreement to stop using the branding, logo or offending materials (although there's the possibility that you'll be allowed to use it under license, with a cost and specified terms).
How can insurance help?
Superscript professional indemnity (PI) policies protect against trade mark and copyright disputes, covering your legal costs and any damages involved in defending or settling a claim of infringement. Our tech PI policy will also pay up to £25,000 in legal costs if you want to take action against another party for infringing on your IP, as long as your lawyer believes you have a strong case.
It's worth noting that PI policies typically won't cover claims relating to patents - however we can arrange bespoke cover for this - just speak to one of our Account Managers for more information.
How to turn a trade mark infringement around to your advantage
Having to change your business name, logo or branding can be devastating, but it doesn't have to be the end of the world. In fact, more and more start-ups are using legal challenges like this to their advantage, gaining free publicity and engaging with their communities. Here's a few recent examples to inspire you:
Monzo (formerly Mondo)
Innovative challenger bank Mondo was forced to change its name last year by an unnamed business. But rather than spending money on an expensive design and branding agency, the founders decided to crowdsource a new name from their community of fans. As an extra PR flourish, they also registered the domain bankymcbankface.co.uk, to raise awareness of the campaign, receiving loads of media coverage for their efforts. Their idea was a hit, resulting in 4,500 crowdsourced suggestions, and the simple but effective switch to Monzo.
Insurtech innovator and personal insurance app Brolly was recently challenged by industry behemoth Travelers to change its umbrella shaped logo. But again, founder Phoebe Hugh saw an opportunity, releasing the story to the media, and launching a crowdsourcing campaign to find a new design. The result was high profile media coverage for the brand, mountains of support on social media, and over 300 logo entries. As a final twist, Brolly also chose one of the most simple suggestions – same logo, but upside down.
BrewDog– Elvis Juice
It may not be a start-up anymore, but this controversial beer company knows how to scrap with the best of them, as it proved with the launch of its grapefruit and blood orange IPA. The pair faced a legal challenge from The Elvis Presley Estate over the name, Elvis Juice, but quickly saw a way around it. The founders, James Watt and Martin Dickie, both changed their names to Elvis, claiming the beer was in fact named after them. Sneaky!
To find out more about how professional indemnity insurance can help protect your IP and any infringement claims you might face, our guide on what is professional indemnity?.
This content has been created for general information purposes and should not be taken as formal advice. Read our full disclaimer.
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- 28 July 20228 minute read
Insurance fraud – when the holder of a policy knowingly and deliberately makes a false claim – can be an extremely serious act, with significant consequences.