In this episode, hosts Brad and Michael discuss the trademarking factors you should be aware of during the operating season. Tune in as they share the story of med spa owner faced with a cease-and-desist letter after a competitor spots similarities in their logos. Learn how proactively trademarking your brand can help minimize the risk of litigation and financial losses.
Listen to the full episode using the player below, or by visiting one of the links below. If you have any questions or would like to learn more, email us at info@byrdadatto.com.
Transcript
*The below transcript has been edited for readability.
Intro: [00:00:00] Welcome to Legal 123s with ByrdAdatto. Legal issues simplified through real client stories and real-world experiences, creating simplicity in 3, 2, 1.
Brad: Welcome back to Legal 123s with ByrdAdatto. I’m your host, Brad Adatto, my co-host, Michael Byrd.
Michael: As a business and health care law firm, we meet a lot of interesting people and we learn their amazing stories. This season, we are riding the emotional rollercoaster of the crises that arise in the operating season of a business. Our theme this season is, Running a Business.
Brad: All right, Michael, for those that don’t know, that is just one season. What are all the seasons of a business?
Michael: We have the building season, so you’re starting a business. We have the operating season, that’s the running a business that we’re talking about. This season we have the scaling season – growing a business, and the buying and selling season.
Brad: Well done, sir. Now, do you have a mini story for today?
Michael: [00:01:00] Of course I do. Brad, I’m going to continue our theme of talking “drug talk” this podcast season.
Brad: Okay. I didn’t see that coming.
Michael: Well, Jay talked about cocaine on a recent episode.
Brad: He did.
Michael: And so our normal lives are not that exciting, but I do have my own cocaine story to share.
Brad: Oh gosh, do we need to take the fifth first before you talk about it?
Michael: Well, it’s not really me. You aren’t learning something new about me.
Brad: Right, so this is not some story about some exotic cocoa tea as well?
Michael: No, that was Jay. This one involves the real thing, Brad. Our client in today’s story is named Dr. Pillow.
Brad: Go ahead, but why Dr. Pillow?
Michael: Well, you’ve heard the expression that someone is as “cool as the other side of the pillow”?
Brad: Of course. For those who watched ESPN regularly when you were young, Stuart Scott, rest in peace, was very famous for saying that along with this other signature line of “booya”.
Michael: Okay, well, we didn’t need that, but, [00:02:00] okay. So, continuing with our mini story, Brad, Dr. Pillow could teach a masterclass on responding to a crisis situation. She’s a dermatologist in Miami with a traditional derma-practice and a med spa, and she called me one evening after just speaking with Nurse Narc.
Brad: Nurse Narc?
Michael: Yeah, her name will reveal itself momentarily.
Brad: Okay, this is starting to sound like a crisis with a name like Nurse Narc on the opening story, and you’ve already mentioned cocaine.
Michael: Yeah. Well, Nurse Narc, she was calling Dr. Pillow to report an incident involving an aesthetician in the medical spa side. We’ll call her Ms. Griselda.
Brad: I mean, how many characters are you going to have in here? I’m starting to lose count. Maybe Kennedy’s writing it down on the whiteboard for me. Who is Ms. Griselda?
Michael: Okay, Brad. So, I saw a documentary [00:03:00] under that name. There’s a famous drug lord, who’s actually named Griselda, who is responsible for bringing the drug scene into Miami. Her name was Griselda Blanco.
Brad: Did not know.
Michael: And so, she was infamous and ruthless. Ms. Griselda seemed in the story to enjoy some of the same things as the drug lord.
Brad: Okay, please tell me she, this someone, wasn’t being killed in your story.
Michael: No, no. I thankfully have not ever experienced that type of crisis. Ms. Griselda in our story was in between patients walking in the hall and a bag of cocaine dropped out of her pocket onto the floor.
Brad: That does feel a little unusual, and I’m assuming there was not a medical reason for the cocaine to be in the middle of a dermatology practice?
Michael: [00:04:00] No, Brad. No. I’m glad you have that positivity to you, but no. She was quick to respond because there was that awkward moment of the cocaine on floor, and Griselda looking down and seeing it, and looking up and making eye contact with Nurse Narc. She quickly told Nurse Narc that it wasn’t her, and that she was carrying it for a boyfriend.
Brad: Oh, so it wasn’t for a friend? It was actually for the boyfriend, Michael? I feel like you’re making this up. This sounds like something out of like an episode from our favorite eighties show, Miami Vice.
Michael: I’m not going to let you bring in another TV show.
Brad: Well, sorry. It’s okay. We have Miami, we have cocaine, and we have drug lord.
Michael: I know you can’t resist. I understand. It’s low hanging fruit. Well, Dr. Pillow was calling me wanting help on what to do here.
Brad: Wait, we have already established that you were a terrible criminal defense attorney with your speeding ticket story, so what did you do this time?
Michael: I stayed clear of the criminal side of the equation. So, I was more talking about the business side, employee management, and what in the world Dr. Pillow should do about this. And so, the strategy we developed was first for Dr. Pillow to investigate, because all we had was the word of another employee saying that this happened.
Brad: Nurse Narc?
Michael: Yes. So, thankfully Dr. Pillow actually had cameras in her office, and so she paused, went in the next couple of days, and was able to figure out on the camera that this actually did happen.
Brad: So, what did you learn from the story?
Michael: Well, because Dr. Pillow was so cool, I didn’t have to calm her down. We talked it through and after she verified that this actually happened, she fired Ms. Griselda. And that was pretty much it. No blow back, so to speak. This is why it was [00:06:00] a mini story because Dr. Pillow was so calm and she took something so horrific and diffused it quickly.
Brad: I just like the fact that he said, no blow.
Michael: Yes, I said so to speak.
Brad: So to speak. Well, no, the blow did leave with her. Well, I think – Kennedy, I think we’re learning something here about Michael. He seems to thrive as an attorney when he doesn’t have to do anything.
Michael: Yes, yes, fair observation, Brad. But let’s move on.
Brad: Let’s get into the real story for today.
Michael: Okay, onto the good stuff or the real stuff. So our client in today’s story is Dr. Vince Vaughn.
Brad: Oh, man. You know how to butter me up. I blindly accept this name, and I’m assuming we have a movie theme about to come out in your story.
Michael: Brad, consider this an early birthday present to you. Dr. Vaughn owned Blue Medical Spa.
Brad: Old School. Loving it. You’re my boy Blue! For those that don’t know, Old School is an Academy Award-winning movie.
Michael: [00:07:00] Hey, as much as I personally agree with you, you’re not even close. You just made that up.
Brad: But it should have won for best everything.
Michael: That’s not even a category.
Brad: Fine, fine, fine. But for those that know, Old School stars, Luke Wilson and Vince Vaughn, who are just enchanted with life, try to recapture their college days as grown adult men. In addition, Will Ferrell, who plays another iconic character, Frank the Tank, was amazing in it and has awesome lines.
Michael: Dr. Vaughn, in our story, Brad, had recently leased a massive medical office building with space for a multi-physician clinic, a surgery suite, and a medical spa.
Brad: Okay, so that sounds like a physician clinic surgery center med spa. They must be in the aesthetics business.
Michael: Way to use your context clues, Brad.
Brad: Thank you.
Michael: Dr. Vaughn is a facial plastic surgeon on the west coast in Washington. He had hired us to help with his strategy to scale the business to prepare him for sale.
Brad: [00:08:00] Stop, stop. Michael, this is the operating season. This doesn’t seem to be right to really talk about, unless Dr. Vaughn is planning to form his own college fraternity, and you’re going to tell us a story about the different crises that popped up at the local university.
Michael: I don’t think we would serve the audience well if I retold the movie Old School through the lens of a facial plastic surgeon.
Brad: Okay, you’re making a mistake if this episode is not a health care remake of the movie. We’ll keep going. But we have so many great scenes that we could make in our podcast through this. We really wanted to.
Michael: Yeah, I do as well. But we need to keep our focus, Brad.
Brad: So I’m assuming there is an actual crisis that you would like to discuss.
Michael: Yes, but we need to paint the picture first.
Brad: Okay.
Michael: Dr. Vaughn was investing a ton of money in this scaling initiative, besides this Taj Mahal like office that he had just leased. Then he hired us, and he hired other business consultants. [00:09:00] Dr. Vaughn was recruiting new staff, and most relevant to the story, he had hired a marketing company to help with a rebrand.
Brad: Ooh, that sounds like a cool vocabulary word. For those who are not in the cutting edge, like Michael Byrd, tell us what goes into rebrand.
Michael: Okay, well, I’m definitely not cutting edge unless I’m comparing myself to you.
Brad: Fair. Okay, fair assessment.
Michael: I’m no marketing expert. However, to be fair, both you and I have been through multiple rebrands in the past. Going back to even our old firm. The general idea is that Dr. Vaughn hired a marketing company to evaluate how the staff, how the practice thought of itself, and does this align with how the patients thought of the practice. So, they were doing research both externally and internally, and they were doing this for the surgical practice, the surgery center, and Blue Medical Spa.
Brad: Well, for those who aren’t familiar, and I’m [00:10:00] going to take a kind of double click here for a second, but when we have done this rebrand process, and it’s fascinating when you talk to yourself, someone will interview you and they’ll talk to your partners and they’ll talk to your clients. And one of the questions that they asked everyone was to try to figure out what we were like as a brand, they said, if we were a…
Michael: This is at our old firm.
Brad: Yes, this is at our old firm. If we were a vehicle, what type of vehicle would we be? And most of the partners at our firm said like pickup truck or SUV or whatever it was. And most of our clients saw us as a high end luxury car. Not too expensive, but really nice, almost like a Lexus. And so what we learned is that we as partners, all needed to see help, because we actually didn’t think as highly as our clients thought of. So it’s fascinating. But if you ever do have that opportunity, you can learn a lot from that feedback.
Michael: It was really interesting too, because that then affected kind of our branding and our positioning [00:11:00] after we got some therapy and gained some confidence that we are more loved than we thought we were.
Brad: All right, back to the story.
Michael: Okay. At the end of this extensive process for Dr. Vaughn, one of the changes that was implemented was the development of a new logo for Blue Medical Spa.
Brad: You my boy Blue!
Michael: Okay. You already said that Brad; you don’t have to say that every time I say Blue Medical Spa.
Brad: Fine, but did the Blue Medical Spa logo have an image of old man and a coffin that says “With dust in the wind” as a new jingle for the website?
Michael: Well, that would be amazing. But you’re being way too literal with our Old School references.
Brad: I’m going to pause to note that we’re pretty far in the story and I’ve seen you talk about scaling activities and rebranding. This still might feel like the wrong season. I have seen no evidence of a crisis
Michael: Be patient, Brad, I should probably next introduce the marketing company. I’m [00:12:00] cautiously about to say this because I don’t know how you’re going to react. The marketing company’s name is Frank the Tank Marketing Agency.
Brad: I love everything about that name. I have so many lines going through my mind again right now.
Michael: Same. Okay, and let’s keep going. So the problem with Frank the Tank Marketing is that they were the only agency in this area in Washington – so a small community, okay. They consequently ended up doing most of the branding and marketing for the entire community. And as much as they tried, they sometimes reused some of their ideas from past projects.
Brad: Ooh, this sounds like a hint to a crisis.
Michael: One of the elements to the new logo for Blue Medical Spa was a butterfly.
Brad: Okay. Well, that doesn’t seem too controversial here, Michael.
Michael: Yeah. I mean, my recollection was that the marketing spin they had on this was on this was that [00:13:00] Blue Medical Spa would help take you from a caterpillar to a beautiful butterfly.
Brad: Oh, sure. Yeah, because after you leave Blue Medical Spa, you’re now a beautiful butterfly, but they could also go with duck lips as a logo maybe.
Michael: Well, that would be more on brand with the Old School movie, but they did not take this creative direction, Brad.
Brad: So now is there crisis?
Michael: Soon, be patient Brad. After spending a significant amount of time and money on developing the Blue Medical Spa logo, and mind you, it’s not just the logo itself you’re talking about, but they’re building out the entire website. Not just having the logo on the website, but the content that kind of aligns with this look and feel. They had signage, they had brochures, and it came out that a medical spot down the street also had [00:14:00] a butterfly as their logo, and they had used Frank the Tank Marketing.
Brad: Oh, this is not good. But also, I’m sure a butterfly, was just one element of the overall logo design. It could not be that big of a deal. Am I missing something here, Michael?
Michael: Dr. Vaughn received a cease-and-desist letter from this competitor that would say otherwise, Brad. Let’s go into a commercial and learn more about this story and the legal impact when we come back.
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Brad: Welcome back to Legal 123s with ByrdAdatto. I’m your host Brad Adatto, with my co-host, Michael Byrd. Now Michael, this season, our theme is, Operating a Business, and we’re really taking a step back and really taking real client stories as they pop up in an operating season. And we kind of deal with those crises as they happen. Michael, right before we went to commercial, you dropped a nice bomb, or you blasted us with a true crisis that appeared. And we have a cease-and-desist letter, and we’ll talk about that in a second. Now let’s kind of take a step back and give more context to our audience who aren’t familiar with certain logos and things that we were throwing out. So, a trademark is something that we were referencing, it’s intellectual property, also known as IP on the street, it’s an asset or something of value that is an intangible creation by a human intellectual. Now, great words there, but it’s best known examples are [00:16:00] patents, copyrights, and trademarks. And if you want to receive this protection of your intellectual property, or in this case trademark, you really have to go through a process. And that process starts with going to a federal agency that actually oversees these registrations, which is known as the US Patent and Trademark Office, also known as the USPTO.
Michael: And I think before we get to the letter, I want to kind of expand on what you were just saying. I think we have to take a step back and talk more about trademarks and what you actually get with trademark protection. And we did discuss this in the building season. We had an episode where we went into kind of the application of the trademark process. A lot of Bee Gee’s references, if you remember, right? So, there’s kind of some misinformation out there that people think if you [00:17:00] apply for a trademark, you own it. And that’s that. Like, it’s black or white, it’s binary. And really what the trademark office offers is a heightened level of protection. What the law is set up to protect is the person that uses a trademark first. And when they say first they have some fancy thing in commerce. It is basically saying if you scribble it in your notes and have it and can say, I did this years ago, that doesn’t count. Like, you have to do something with it that whether it’s a website or a mailer or something like that, that actually puts that logo or that trademark out there. And so more important than the actual trademark itself is to be the first one to use it. And so, I use this analogy when I’m talking to clients sometimes, it’s [00:18:00] kind of a land grab. I think we talked about this a little bit before as well. And so the idea is back in the old days when you were young, Brad, a little younger.
Brad: Man, I’ve been sitting on that one for a while.
Michael: Yeah, I know. I could see your eyes lighting up – that people were trying to take land in the West and they would put a stake in the ground. Well, that’s the same thing with the trademark. So if you are the one that gets the domain name and starts to use it first, that’s the most important thing. And so, when we start talking about things like a crisis that we have here, it’s both relevant. Do you have a trademark? Because the trademark laws do give some presumptions and some added protections. And the longer you have a trademark, the more the protections that are in place. But again, it’s also relevant how long you’ve been using it. Unfortunately, [00:19:00] in our case, it was new. And so we know that we weren’t first in commerce, or Dr. Vaughn wasn’t. But talk a little bit about kind of what is trademarkable and the process. I know we touched on this in the prior episode.
Brad: Yeah. And actually, I want to take even more of a step back. You kept using – it’s who’s the first to use it – it’s important in common law as to who was the first one out there; that does not automatically give you any protection on the federal side. You might have state protections because of, of other rules that might be in that particular state, but that might only be local rules, meaning that someone else was utilizing it elsewhere. To get the full protection of it, and that’s, I think where we’re going with this is, someone else may have used it first in Georgia, but you were the first to use it in New York. But if the Georgia person then does it on a national side, it’s a harder fight. This is a little bit easier to understand because we have two local organizations that [00:20:00] are kind of looking at it. But that’s why if you have a mark that’s so unique, or a brand name or a, a statement that you think is going to be protectable, and I don’t want to go too much in depth because I know we spoke about that in in our building season. But point being is, then you want to go through that process of registering it with the USPTO office. But I want to keep moving a little bit forward, Michael, and I know we can talk about other things, but did Dr. Vaughn even attempt to trademark this logo?
Michael: In this situation, Dr. Vaughn had not yet applied for a trademark with the USPTO. He only had it in place for six months. But again, I mean, he invested, I mean, tens of thousands of dollars coming up on six figures just on this whole marketing process. I mean, there was a lot of hours behind this “caterpillar will turn you into a butterfly” emotion that you’re supposed to get when you see this image. And so, [00:21:00] this entire rebrand process with Frank the Tank Marketing Agency, there was so much money and time invested well before even the six months that had been out there.
Brad: Perfect. Well, you said something earlier, right before we went to commercial about him receiving a cease and desist letter. And for our audience members that don’t know what that means, can you kind of give them some context as to what that is.
Michael: You want it more than cease-and-desist?
Brad: Yes. I got that part.
Michael: Yeah, you did. So a lot of times, what would happen is this other competing med spa sees this out there, decides they want to fight it and they don’t like it. And so, the first step usually is to tell them to stop. And there’s many ways to do this, by the way. So, there are some brands out there that are famous for having a very friendly way [00:22:00] to send a cease and desist letter. And so, they’ll say I’m so flattered as you know, this brand is so important to us, and it’s so flattering that you like our brand enough that you’re using a version of it. Unfortunately, our lawyers say that this impacts and dilutes our brand if we allow it to happen. So they get to the same point, whether it’s that version or the version that Dr. Vaughn received, which was very mean and said, ultimately you need to stop or you’re going to get sued. Sometimes they’ll say we will license you the name.
And so I want to add a little bit of a side comment because there are some trademark owners out there that are trying to make a buck. And so they’ll go out [00:23:00] and get some name that is kind of a catchy name and be the first to trademark it. And in their cease-and-desist letters, what they’re really looking for is you to license it from them and pay them a fee. And so there’s the famous example of the “three-peat” back when the Bulls – well, then the Lakers had it as well, but yeah. And I think we even talked about that at some point as well, but there is a different intent. In this case, we had a competitor that was like, you got the same butterfly, let’s stop.
Brad: Well, let’s check reality check here. There was only a butterfly, right? A beautiful butterfly, but a butterfly; that can’t be that big of a deal, Michael.
Michael: I had the same initial reaction. Actually, the logo itself was different. There were some similarities with color and [00:24:00] font. The competitor did not have blue in its name. The butterflies, which were identical because Frank the Tank Marketing Agency I think just copied and pasted. That was the only true overlap.
Brad: All right. Well, we had some overlap, but how does trademark law view this type of overlap in butterflies? And your answer cannot be, it depends.
Michael: Okay. So we’ll use the context. We said earlier, we talked about this first to use, then you added all this kind of confusion about, is it federal, if you’re in Georgia and they’re in New York, well, ultimately the test, the thing that they’re trying to get to is, is the mark that one is using confusingly similar to the other? And by confusingly similar, it’s confusing to the consumers out there. So, that you are impacting [00:25:00] the marketplace by creating confusion to the consumer base.
Brad: Okay. I think it helps, but it doesn’t help at the same time, how do we know if it’s confusingly similar? Maybe that would be more helpful.
Michael: Yeah, it depends, Brad. You told me not to say that. No, this is kind of what they fight about. And this is the litigation in court. And so, it becomes tricky in a crisis situation because you’re like, I mean, come on, and this is just a butterfly. It’s the same butterfly, but the logos don’t look anything the same. And so, trying to figure out how to counsel on that is tricky. There was one fact that ultimately created a ton of risk for Dr. Vaughn. Apparently, more than one patient of Blue Medical Spa showed up to the competitor’s location and tried to use [00:26:00] a Blue Medical Spa gift card.
Brad: Ooh, yeah, that does sound really bad for Dr. Vaughn. So Michael, what ended up happening with the issue?
Michael: So Dr. Vaughn resisted. There was a time period where I was involved and we sent a response to the cease-and-desist letter saying “pound sand”. We basically said, it’s not the same, it’s just a butterfly and I had a bunch of back and forth.
Brad: A butterfly or a beautiful butterfly?
Michael: Yes, Brad and so apparently the competitor was cousins with a big-time trademark attorney in Seattle. Oh, no. And was getting a deal on the fighting side of things. And so, they decided that enough was enough, and they filed suit. Once the suit happened, Dr. Vaughn quickly decided that he didn’t love the butterfly that much. It wasn’t that beautiful, Brad. [00:27:00] So though he had invested a ton of money on his new logo, it had not been part of his brand long enough for him to be willing to go into expensive litigation over it. And it wasn’t going to be a major impact with his customers to drop it.
Brad: At that point, not with an awesome name already. He already had it. You know, let’s take a step back and think about what Dr. Vaughn could have done differently before he accepted the logo, which was extremely, obviously similar to his competitor down the street. And honestly, folks, the simplest tool out there before you brand or rebrand your business, is use Google. Look at the name recommended by the marketing company, look at the logo and see how many other companies in that market are using or utilizing something similar. Additionally, when the marketing company presents you with some final ideas, you can always ask them to show you what are your competitors using so that you can distinguish yourself from them so you don’t look just like them, which as you can imagine, Michael [00:28:00] will help minimize your risk of receiving that evil or even kind cease and desist letter. Michael, we’re almost done for the day. Michael, what are your final thoughts?
Michael: Well, we’ve said many times that being a business owner is not for the faint of heart. No matter how committed you are to compliance and to running your business properly, I’ll say it this way, stuff happens.
Brad: It does, yes.
Michael: There will be crazy things like cocaine on the floor or unexpected things like your butterfly infringing on a trademark. You can minimize your risk by doing things the right way. And of course, that’s part of how we guide our clients. But you still need to be prepared to deal with the fact that a crisis is going to pop up and how are you going to respond? How are you going to make some hard decisions in the face of a sticky situation?
Brad: Well, Michael, that’s all the time we have today. Next Wednesday, we will be back again. We talked about Frank the Tank Marketing Agency this time, [00:29:00] but next week we’re going to talk about a crisis in which your marketing company holds your website and company hostage. Thanks again for joining us today. And remember, if you like this episode, please subscribe, make sure to give us a five-star rating, and share with your friends.
Michael: You can also sign up for the ByrdAdatto newsletter by going to our website at byrdadatto.com.
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