In late 2015, Segway, maker of the famous two-wheeled, self-balancing scooter, sued a company called Swagway, then-producer of a motorized transporter called Hovertrax — aka, a hoverboard. Swagway’s hoverboards were reported to cause fires and injuries (which they were already being sued for). Compounding the negative coverage were the many problematic hoverboard knockoffs.

In this case, Segway argued that the brand names were close enough that consumers would confuse their brand with a competitor linked to consumer injuries and lawsuits.

(Things got even more confusing when the scooter company Razor acquired patent rights to Hovertrax, prompting Segway to sue both Razor and Swagway for patent infringement as well.)

This type of brand protection scenario is pretty common in the intellectual property space. Maybe if you’re selling, say, a cellphone case, you’re not really worried about someone hurting themselves with a knockoff product. But if you’re selling an electronic device or a pharmaceutical — something where a fraudulent brand could actually hurt someone — the stakes of protecting your intellectual property are much higher.

If you find your company in a Segway/Swagway-type scenario, how can you distance yourself from a brand with a rocky reputation?

Proactive Brand Protection

When other brands are copying what you’re doing, it’s a bit of a backhanded compliment. It usually means that your product has been really successful. However, as flattering as imitation might be, it’s still not preferable for the brand looking to set itself apart, especially when the imitator is linked to bad news.

In terms of enforcing your own intellectual property, there are generally two main approaches: patents and trademarks. Both aspects need protection in different ways, and both have gray areas where a knockoff might be able to exist without actually infringing on your rights. This is why I recommend always coming at intellectual property protection from multiple directions.

The Pitfalls of Patent Protection

On the patent side, someone could knock off your product so it looks and feels exactly the same, but it might not infringe the patent that you have in place because of subtleties in how the claims of the patent were drafted.

For example, you may produce a mechanical widget and also have a patent on some aspect of that widget. The inventive aspect might be something small, or a minor improvement buried in the mechanics or software.

So what happens when someone comes up with a competitive product that looks, feels and even operates the same, and is even marketed to the same consumer?
If they’ve done their work and designed their product around your patent, there’s little you can do. The competitor isn’t actually infringing on your patent because your patent covers something specific that the competitor deliberately avoided.

The Gray Area of Trademark Protection

On the trademark side, things are a little more fuzzy — which could actually work in your favor.

Say you don’t have a patent on your product or the patent only covers something very narrow, but your product has a good brand and a good name associated with it. You find a competitor selling a similar product and is doing something to pawn off of the goodwill you’ve established with your brand — maybe the competitor has a similar name, uses some of the look and feel of your branding, or is doing something surreptitious online to drive traffic to their site. That’s a different story in terms of enforcement.

Because there is more subjectivity in determining an instance of trademark infringement as opposed to patent infringement, your options for enforcement may be more numerous. In a broad sense, the specific product being sold by your competitor may not matter so much. What matters is that a consumer might be confused as to the source of those competing goods.

In these instances, if a consumer is likely to be confused into thinking that a knock-off brand is your brand or that they are associated with your brand’s reputation, that may be enough to move forward with a trademark suit.

And this is when you should have formal trademark protection in place.

Reactive Brand Protection

These preventative measures aren’t always enough, though. Crooks don’t often care about legal protections. If they want to copy a product, most of the time they’re not going to do any kind of diligence to avoid litigation unless they’re a large or otherwise sophisticated company. For them, it might just be easier to ask for forgiveness rather than permission, and that may be their only true legal strategy from the start.

Often, one might find themselves in a reactive, rather than proactive, situation as they try to enforce their intellectual property. What are your options without getting involved in a messy court battle?

Step 1: Make Your Intentions Known

In some cases, a one-page cease-and-desist letter can be enough to scare away the problem.

Our firm works with clients that sell consumer products to a wide range of customers. The products are generally low-dollar, high-volume items sold through large third-party distributor networks — the type of product that is at a high risk of encountering knockoffs or unauthorized sales.

For these clients, we employ a counterfeit avoidance program to constantly monitor where these products are being sold (online or elsewhere). We get reports showing us all the vendors out there selling the same product. Some of these services can send an automated short-form, cease-and-desist letter on the first round. With just that, you can successfully get rid of up to 80% of the bad apples without a ton of legal work.

Then, if needed, a second letter could come from a lawyer. It doesn’t necessarily say anything different, but when they see our legal letterhead with “intellectual property litigation” in the tagline, that gets people’s attention.

Most of the time, this is when we get that “please forgive us” response from the offender and they cease the bad behavior. Many of these genuinely didn’t know what they were doing was wrong. But not all . . .

Step 2: Determine If Litigation Is Right for the Situation

For the 10 or 20% that ignore the warnings and their actions are true instances of trademark infringement or counterfeiting, the next step is typically some form of litigation.
If it’s a U.S. company and you have a U.S. trademark registration in place, then you file a trademark infringement lawsuit. If it’s a counterfeit product pawning off on your goodwill, the claims will generally focus on some form of unfair competition.

Once you’re in litigation, things can become very expensive, time-consuming, drawn out, and uncertain. You have to pick your legal targets carefully. Some just aren’t worth litigating.

Step 3: Drum Up Some Good Press

In instances where a lawsuit is not preferable, it’s advised that your brand have a good public relations campaign in place to make sure consumers are informed (and maybe even give them tips for identifying problematic knock-off products). This campaign could include everything from basic press releases to emails to social media.

Having a strong patent or trademark doesn’t mean getting bogged down in endless IP litigation. However, having a routine and repeatable process in place to address any form of brand damage is important, especially when you’re trying to protect the positive associations that consumers have with your brand or product.

Questions about protecting your intellectual property? Schedule a consult.