This is a weekly guest post written by Ryan Bernardo of Braun Legal. Follow Braun Legal here. Visit Braun Legal at BraunLegal.com.
Let’s just be frank. The launch of your crowdfunding campaign will include a number of important legal issues. Don’t ignore them! Protect your legal rights, especially your intellectual property (“IP”) rights, and avoid unnecessary conflicts from the outset.
Consider These Legal Issues Before you go Live.
Below are several legal issues you should consider and evaluate before your campaign goes live. While this is not a comprehensive list, these are some of the most common issues I see crowdfunding campaigns face:
Do I need protection for my campaign’s IP?
All campaigns, no matter how simple or small, have some level of intellectual property. Your IP is very valuable so don’t ignore it. Your campaign will have one, or more, of the three IP categories: trademark, copyright, or patent.
- A trademark is any word, name, symbol, or device that you use to differentiate yourself from others in the market. This will usually include things such as your product or campaign name, logo, and even packaging. Federal trademark protection will give you the exclusive right to exploit your branding, keeping others from benefiting from your hard work. Trademark registration is one of the simplest and most cost effective strategies to protect your rights.
- A copyright provides protection for literary, musical, or artistic works. If your campaign includes original art, you need to consider federal copyright registration for your works. Federal copyright protection gives you a number of important tools for protecting your works, including the ability to take down copycats or unauthorized uses using the Digital Millennium Copyright Act.
- A patent provides you a monopoly on the manufacture of your product for a certain number of years. Patents are the most complex of the three and include a number of sophisticated requirements, including that the subject of the patent be new and non-obvious. The monopoly benefits of having a patent can be significant, however, these benefits often come at a very high cost as well as time commitment for obtaining the patent.
What sort of business structure do I need?
This is another area that is often over looked when starting a new campaign. You need to decide early how you will structure your new business. Is it just you? Then perhaps a sole proprietorship makes the most sense.Are you worried about being personally liable should something go wrong? A limited liability company may be the best fit for you.The structure you put in place now will help determine your direction in the future.
For example, let’s say you start a campaign with your best friend, it far exceeds your funding expectations, and now you both have long-term aspirations for the business. Who owns what? Whose idea was it to begin with? Who runs the day-to-day operations? How do you divide profits, or even liabilities? You now have a deluge of issues that are only further complicated by the campaign’s success. If you had a simple partnership agreement in place before your campaign was live you would have all these answers in hand, potentially saving your friendship down the road.
Do I need to worry about my campaign design?
YES! As you plan out the perfect images, music, videos, or even fonts for your campaign, remember that you must have the right (or license) to use them. If you ever find yourself unsure as to whether or not you have the right to use a certain item, just avoid it, it is not worth the risk.
One of the most common disruptions I see for campaigns are DMCA Takedown Requests. Getting a DMCA takedown request will completely shutdown your campaign, and you MUST respond to it. What it means is that someone has accused you of not having the right to use a certain item in your campaign (this could be a song, a video or even an image). So, just remember, even the design of your campaign is important to ensuring your success.
Do I need an attorney?
All these considerations might be making you wonder if you need an attorney. In many cases you can work through the basic issues and logistics of your crowdfunding campaign on your own. You don’t need the cost of an attorney just to tell you the above issues may exist (I’ve already told you that).
However, sophisticated legal counsel can help you work through the sometimes-complicated specifics of these issues quickly and in the context of your campaign. The trademark, copyright, and patent processes can be very complex, and an experienced legal professional can help you navigate this process expeditiously. One of the benefits of considering the above issues early is you can plan and budget for legal costs in your campaign, as opposed to trying to find the money after a problem happens.
Ryan Bernardo is Chair of the Intellectual Property Practice Group at Braun Blaising McLaughlin & Smith, P.C. (BraunLegal), where he draws on his experience as an entrepreneur, IT consultant, and now intellectual property attorney to provide valuable legal insights on crowdfunding related matters. Ryan uses his experience to consult with campaign owners on a variety of legal matters related to launch, funding, and completion. The materials provided in this post are for informational purposes only and not for the purpose of providing legal advice. Please contact Ryan directly if you have specific legal questions regarding your situation.