Wednesday, May 12, 2010

Victor’s Secret: How Early Branding Due Diligence Can Save You Millions

Victor’s Secret:
How Early Branding Due Diligence Can Save You Millions

By Leon D. Bass, Esq.
Of Counsel, Chester Willcox & Saxbe, LLP

Trademarks may not exactly be “sexy”, but as David D’Alessandro, former CEO of John Hancock Financial Services, once stated, “[a] business based on a brand is, very simply, a business primed for success.” Often times a business’s brand or trademark is its single most valuable asset. However, as Victoria’s Secret has taught us, just as easily can a brand be a business’s biggest liability. Businesses sometimes get burned by jumping the gun on their use of business names, logos or taglines.

Victor and Cathy Moseley learned this first hand when Columbus, Ohio headquartered Victoria’s Secret sued them over their use of “Victor’s Secret” for their Kentucky-based lingerie and adult novelty store and website. The Moseley’s were forced to expend significant attorney’s fees defending the 10-year case that reached the US Supreme Court and ultimately still found themselves facing a costly rebranding effort with respect to their store and website. In the end, the Moseley’s, who first changed the store’s name to Victor’s Little Secret in response to a cease and desist letter from Victoria’s Secret attorneys, were sued and ultimately were forced to stop using Victor’s Little Secret as well because the court found that Victor’s Little Secret would “dilute” the Victoria’s Secret famous trademark. Regrettably, the Moseley’s could have prevented not only ten year’s worth of attorney’s fees and court costs, but the costs of two rebranding efforts and web domain changes as well as the loss of goodwill connected with the loss of a trademark.

Many new businesses fail to conduct simple due diligence before launching a new branding concept (including a logo, name, tagline, domain name, etc.) with the potential consequences of a complete rebrand, losing website, incurring significant attorneys’ fees and potential large liability awards. Also, a court might determine that the entrepreneur knew about the trademark registration and this could cast the user as a “willful infringer.” Willful infringers can be held liable for large damages and payment of the registered owner’s attorney fees. For large companies the costs of a rebrand could exceed millions or even hundreds of millions of dollars. Businesses that are served with the infamous “cease and desist” letter regarding their company name or logo are faced with a “Catch 22” decision: either (1) change their name or product mark after investing substantial funds over time building goodwill in a logo; or (2) litigate the issues of trademark rights at substantial cost and with no guarantee of successful results. The costs of changing a business name can be enormous and difficult to quantify. For example, imagine that a fast food chain with 500 restaurants was forced to change its name. If the average cost to change the fancy electric signs on each restaurant was $10,000, this amount to total cost of $5 million for just signs alone. In addition to signage, significant costs would be incurred for new uniforms, packaging, menus, and marketing the new name and website domain. In addition, the damage in terms of lost goodwill that had been generated over time could be worth more than the hard costs. In some cases, a change of a name may even effectively mean the end of a business.

Best practices prior to launching a new branding or marketing concept such as a new name, logo, or tagline, include the initial step in retaining an attorney to perform a trademark search, legal analysis and opinion. The search and analysis will determine whether another business is already using a trademark that is identical or similar to the one the business owner wants to use and whether or not a proposed trademark can even be afforded legal protection. Marks that are not identical but similar can still infringe on existing trademarks, especially if the two marks are used to market goods or services that are in related industries.

If the search and opinion are favorable or the owner is comfortable with the risks involved, the informed business owner should apply for state and federal trademark registration. Federal trademark registration is a crucial element in a business’ intellectual property protection strategy because a registered owner is presumed to have exclusive nationwide rights to use any mark that is confusingly similar to their mark. This allows the owner to enforce its right against other businesses that are trying to pass off similar goods and services as that of the registered user. In addition, after a period of five years from the date of registration, a registrant has the right to declare the mark “incontestable,” further protecting the user against attacks from unknown users. Once incontestable, it is almost impossible to cause a registered mark to become canceled. Without incontestable status, a trademark user that used a similar mark prior to a registered user’s mark could seek to have the registered user’s registration cancelled.

In general, a search and registration can be relatively inexpensive especially when compared to the cost of potential infringement litigation and/or future name change. Given the complexity of issues surrounding trademarks and their relative importance to a business, the advice and guidance of an experienced trademark attorney can be invaluable.

Leon Bass, Esq. is Of Counsel to the Columbus, Ohio based law firm of Chester Willcox & Saxbe, LLP and practices in the areas of Trademark, Copyright, Entertainment and Business law.

Contact Leon at

Friday, October 30, 2009

October News

Firm News and Updates

October 30th, 2009: Bass to Exhibit Underwater Photography

Leon Bass will host an opening reception for his new photo exhibit featureing his underwater works on Nov. 19th, 2009 at Cafe Brioso on Gay and High in downtown Columbus from 5:30-7:30. A portion of the proceeds from print sales will benefit coral reef conservation efforts.

October 30th, 2009: Rebecca Morrisey Passes the Ohio Bar Exam!

Congratulations to Rebecca, our long-time law clerk who will be sworn in as an Ohio Attorney on November 9th. Rebecca took the Ohio Bar Exam for the first time in July, 2009, and passed on her first try while working full time. This is an extraordinary accomplishment and we extend our deepest congrats. Great Job Rebecca!

October 21st, 2009: Leon Bass receives Virgin Islands Attorney License

At a beautiful ceremony conducted by the chief justice of the Supreme Court of the Virgin Islands, Leon Bass was presented his license to practice law as an attorney in the US Virgin Islands. The US Virgin Islands is a united states territory in the Caribbean Sea near Puerto Rico and consists of the main islands of St Thomas, St. Croix, St. John in addition to numerous smaller islands. Leon plans to practice part time in the USVI while continuing his full time practice in Columbus, Ohio.

October 13th, 2009: WaterBand named top-3 finalist in YouTube Contest

Congrats to client Waterband ( for reaching top-three vote getting status in YouTube's Peace One Day video contest. The voting continues at Waterband has generously donated thousands of dollars to water causes, including Capitol Square Rotary's Honduras project. You can catch them live in Columbus at Vic's on October 23rd.

October 9th, 2009: Leon Bass to Join Saving Jane front person Marti Dodson to Speak at Ohio State at the "Musician Inc", The Working Artist's Music Conference

Leon Bass will speak at a new music conference to be held on October 9th at the RPAC Center on the OSU campus. Also speaking will be Marti Dodson from the national act Saving Jane. The conference will include panelist speaking on the areas of recording, publicity, booking and music law and business. The conference is free and takes place from 1pm-5pm.

October 2, 2009: Leon Bass to Join US Virgin Islands Bar

Leon Bass will soon be entered on the roll of attorneys and will become licensed to practice law in the very near future as he has passed the Virgin Islands Bar exam.

October 1st, 2009: $12k raised at Wine into Water

The firm has received word that about $12,000 was raised at the Capitol Square Rotary's annual "Turning Wine into Water" charity wine tasting and auction. The event benefited Thirst Relief International, the Rafiki AIDS Orphanage and The Village of El Macote, Honduras. More info is available at:

Monday, October 5, 2009

US Virgin Islands Office

I have just heard that I passed the US Virgin Islands Bar Exam. I scored in the top 5% in the country on the ethics portion, but still waiting on stats from the rest of the test. I expect to be licensed there shortly; I still have to be sworn so my license will have to wait until my next trip to St. Thomas.

We are looking into options for opening and office there or affiliating with a local firm. The Columbus office will remain open.

Thursday, April 23, 2009

The Ohio Jobs and Growth (i.e. Quadruple Casino) Plan:
Is it fair to Ohio?

By Leon Bass, Entertainment Attorney

The "Ohio Jobs and Growth Plan" ( (translation, the "Ohio Constitutional Amendment Ballot Initiative to allow two business the right to build and operate four casinos in Columbus, Cleveland, Cincinnati and Toledo") overcame its first hurdle on April 13th when the state allowed the group to begin collecting the necessary 402,275 signatures from registered Ohio voters. If my ability to see into the future is correct, we will all be voting yes or no to these four casinos in November.

I have recently been asked to review the proposed constitutional amendment law and answer the question of "Is it fair to Ohio?". Admitting that there is a certain amount of subjectivity present, I believe that although it could be better, overall, it is relatively fair.

First, let's look at the simple factors supporting casinos in general: Ohio would get about 7,000 permanent jobs at the Casinos plus about 13,000 temporary construction jobs to build them. Moreover, we are continuously losing money (perhaps millions per year) in revenue from the neighboring states’ casinos. Those against casinos cite moral grounds, the draw of crime, and problems with addiction. I won’t touch the moral argument. I have yet to see any strong study on a clear relationship to a meaningful increase in crime. And we all know that not having casinos here does nothing to stop those with addictions from gambling illegally or driving to a neighboring state. Moreover, this initiative will contribute substantial funds to Ohio programs, thus improving our state’s ability to deal with addiction by creating help that we currently do not have.

With respect to this particular amendment, it would mandate that the state take 33% of "Gross Casino Revenue", which is defined as "the total amount of money exchanged for the purchase of chips, tokens, tickets, electronic cards, or similar objects by casino patrons, less winnings paid to wagerers." When compared to rates of other states, this is actually on the higher end. Some go significantly higher; for example, Illinois has been as high as 70% (currently has a sliding scale of 15-50%), Maryland is at 67% and Pennsylvania is at 55%. Therefore, Ohio could certainly do much better than 33%. On the other hand, Nevada, New Jersey and Mississippi have tax rates of less than 10 percent and Colorado, Missouri, Iowa, Indiana, and Louisiana range from 20-35%. The states in the lower tax brackets house the most casinos by far. Therefore, although Ohioians could likely get away with demanding a higher cut of the profits, we are certainly by no means getting ripped off at 33%. Of course, this being a ballot initiative, there can be no negotiation and we have to take it or leave it as is.

Also, Ohioans should consider the "fine print" of the law. For example, the term "Gross Casino Revenue" as defined does not include income generated from the casino that is not directly earned from chips (or tokens, tickets, etc.). Therefore, non-gaming related income, such as bar sales, food, hotel rooms, merchandise and retail operations, non-gaming entertainment, and parking would not be taxed at 33% and only subject to normal state taxes. While I do not think this is really out of line, if we had the ability to negotiate this law, Ohioans could likely get a large share of that revenue—and probably should as it is driven almost entirely by the draw of the gaming on the premises.

In addition, the amendment basically only allows the casinos to be built on four specified parcels of land, and thus in effect, would likely mean that only two companies would have the ability to own and operate these casinos. Therefore, the law does not allow the legislator or the to-be-organized gaming commission to allocate casino licenses pursuant to any type of merit based system that could potentially work more in the favor of Ohioans.

Another potential issue is the possible effect on the existing legal gambling enterprises in the state: Charitable Bingo and Lotteries. I have not seen any research or data purporting to predict to what extent, if any, consumer dollars currently being spent on charitable bingo or the lotteries would be diverted to the casinos. If significant funds were diverted, certain Ohio charities could take a hit along with the $672.2 Million generated by the lottery for education.

Finally, another "fine print" issue that was recently cited against the proposal by Ohio Secretary of State Jennifer Brunner was the fact that the proposed amendment actually can change if a neighboring state decided to change their law. Specifically, if another contiguous state adds another type of gaming not currently permitted, then it automatically becomes legal in Ohio. However, if they decide to make something illegal, it still stays legal in Ohio. This is because the proposal ties its definition of gaming to what the other neighboring states say it is as of January 1st, 2009. The actual text reads:

""Casino gaming" means any type of slot machine or table game wagering, using money, casino credit, or any representative of value, authorized in any of the states of Indiana, Michigan, Pennsylvania and West Virginia as of January 1, 2009, and shall include slot machine and table game wagering subsequently authorized by, but shall not be limited by subsequent restrictions placed on such wagering in, such states…"

What is clear is that no matter how “fair” the proposal is, passing a gaming initiative in Ohio is problematic. While many tout this proposal as the best yet, Ohio has turned down gambling at least three times since 1990 and we currently have a Governor that opposes it. Moreover, the 2006 initiative, Learn & Earn, which had 43% of voting Ohioans in favor (the highest percentage among four Ohio gambling issues) included a 45 percent tax of slot machines as opposed to the current proposals' 33%. In addition, Penn National, a backer of this ballot and probable owner of two Casinos, was against the most recent losing Casino initiative (Issue 6) that would have allowed for a 97-acre complex off Interstate 71 near Wilmington. Finally, it also remains to be seen if the candy coating of the name "Ohio Jobs and Growth Plan" will be a turn off to Ohioans. I would like to think that Ohioans are smarter than that and will vote on the merits of the amendment.


Leon Bass is an Attorney practicing entertainment, intellectual property, business and real estate law in Columbus, Ohio. 614-431-BASS

Monday, November 3, 2008

Small Business gets burned by Trademark

Small Business gets burned by Trademark

It never ceases to amaze me how often small businesses overlook trademark issues. I keep seeing cases where they get burned on this. Case in point: small local construction business grows their niche to become one of the largest companies in the region over a 10-15 year period, only to find a letter in the mail telling them to stop using their business name and logo. They had spent years and significant funds branding this business -advertising on TV, Radio, in phone books, on the web, and in direct marketing campaigns.

In cases like this, the costs to a small business can be over six figures, either in attorneys fees and/or in loss of goodwill and changes to the business brand--even in losing a website domain name!

Many new businesses wait until they have been using a name or logo for months or even years before seeking counsel on trademark issues. This can be extremely detrimental and many business find out the hard way that they can no longer use a name or logo. This results in substantial costs and loss of business goodwill by forcing a business to change their logo, name, web page domain name, signs, business cards, etc.

Business that are even thinking of using a new business name or brand name should start the process by consulting a trademark attorney and not wait until it is too late.

To read more on trademarks, see the trademark article on my resources page here: