Business Law FAQ

A trademark (or servicemark) is a word, name, symbol, or device (or any combination) used to distinguish the goods or services of that person from the goods or services of others. A person includes corporations and other business entities, as well as individuals. To claim trademark rights, the mark must be in use for one of these purposes and cannot be registered for future use or reserved.

A registered trademark and related legal protection prevents consumer confusion about the company or person offering products or services. It identifies the products or services that you offer exclusively with your business. Infringement occurs when a competitor uses your trademark (or an unacceptable derivation).

Trademark infringement occurs when someone begins to use a trademark that may be confused with a mark already in use by another. The courts consider many factors in determining whether infringement has occurred. Some of these factors are the uniqueness of the mark, its strength in the market, similarity between marks, intent, market overlap, and the actual confusion created. To establish infringement, the courts seek to determine the likelihood of confusion. While this is clearly a judgment call, the threshold of confusion is generally fairly low.

Unregistered (or Common Law) trademarks are recognized in the area where the mark is being used or is known. Trade and service marks can be registered with the Iowa Secretary or State and apply to the entire state. A trademark registered with the Federal Patent and Trademark Office exist nationally. Since trademark rights can be claimed for "first use" in a geographic area, a given trademark may exist in more than one geographic area if the business to first use the mark failed to register it with the FPTO.

"Trade secrets" is the legal term for confidential business information. A trade secret gives your company a competitive advantage. A non-inclusive list of trade secrets would include: the names and preferences of your customers, your list of vendors and negotiated terms, product pricing, marketing strategies, company finances, manufacturing processes.

The Uniform Trade Secret Act defines the criteria for trade secrets. information must meet three criteria to qualify as a trade secret. The information must not be "generally known or readily ascertainable" through proper means. The information must have "independent economic value due to its secrecy." The trade secret holder must use "reasonable measures under the circumstances to protect" the secrecy of the information.

The law protects you from the "wrongful taking" of confidential or secret information. This means that someone cannot directly take and use your secret information. Your claim of trade secret theft may be countered by the claim of independent development or reverse engineering.

Legal action can restore your control of the information. You can also pursue the payment of damages and attorney fees. Punitive damages may be recovered in exceptional cases. If theft is involved, criminal penalties apply.

Before you share a trade secret, you should obtain a signed non-disclosure agreement. The agreement should define the scope and nature of the protected information with as much detail as is possible. Signing the agreement should confirm both agreement with the terms outlined and that the agreement has been read.

In general, the disclosure agreement establishes notice of your claim. A detailed agreement conveys greater contract rights than a general agreement. Confirmation that an agreement has been read provides greater "notice value" than a contract that simply promises compliance.

As you might expect, a thorough, well-prepared contract provides greater protection than a more generic, standard form.