According to the 'Lectric Law Library, a respected online legal research organization, "One of the worst shocks a small business can receive is a lawsuit, or the threat of a suit, alleging that the company should stop using its name." And it’s easy to see why. Intellectual property disputes are very expensive.

Patent litigation, in particular, is quite expensive, costing between $1 million and $10 million according to a survey conducted by the American Intellectual Property Law Association. The average cost to litigate a trademark dispute is less, but still difficult to swallow at approximately $250,000.

This gives large companies advantages over small businesses when it comes to intellectual property disputes. "When faced with fighting a protracted legal battle with a much larger company, most small businesses simply give up," notes Stephen Sturgeon, a Washington, DC attorney whose firm, Stephen Sturgeon & Associates, specializes in intellectual property law involving domain names. He adds that even when the odds of winning appear to be heavily in their favor, most small businesses cannot afford to fight for their intellectual property rights.

Scott Smith, president of EntrepreneurPR, a small public relations firm in Sacramento, California, has been battling his own IP lawsuit with Entrepreneur Magazine over the use of the word "entrepreneur." He has spent almost 5 years and more than $100,000 in his battle.

If you do find yourself in an in intellectual property dispute, it’s important to seek help. Every defendant has a limited time to respond to a lawsuit, so it’s best to contact an attorney experienced in trademark litigation to explore your options "Don’t try to be an island," recommends Jeff Kravitz, an intellectual property attorney. "Small businesses are often intimidated by the threats of larger companies in the trademark arena. However, just because one company has more money does not necessarily mean that they are going to prevail," says Kravitz.

Neither major corporations or small businesses want to allocate the funds needed for protracted IP legal battles, but the bigger companies are much more likely to find the funds needed to fight. "Intellectual property litigation is expensive litigation," says Kravitz. For small business, litigation can pull cash out of a budget where there is precious little to spare.

To make matters worse, even giving up can be a financial nightmare for a small business. Cintara, a full service branding agency in Silicon Valley, California, estimates that "$100,000 is the typical minimum cost of changing a name…even if the name is free and is for a small business." Cintara fees alone are $18,000 to $25,000 to develop names for companies.

Many IP disputes can be avoided if small businesses take the critical step of making a thorough trademark search to ensure their name or idea will not infringe on an existing trademark or patent. A mark that is confusingly similar to other marks should raise a flag for potential problems. Every business should take the necessary steps to protect themselves, but always keep in mind there are no guarantees.

Even when all the proverbial "t’s" are crossed and "i’s" dotted, a small business can find themselves in hot water. Smith hired a professional naming company who researched trademarks. They helped him develop his company’s name, and then he had a lawyer register the name with the U.S. Patent and Trademark Office (USPTO).

According to Smith, The USPTO didn't feel there were any conflicts between EntrepreneurPR’s and Entrepreneur Magazine’s trademarks, but this didn’t protect him. In June 2000, a federal judge ruled that Smith had to stop using the word "entrepreneur." In February 2002, the 9th U.S. Circuit Court of Appeals ruled unanimously in Smith’s favor, stating that Entrepreneur Magazine's trademark is "weak" and that the company does not have exclusive rights to the word "entrepreneur." Despite this, the civil case against Smith continues with a trial set for early 2003.

With an eye towards bringing these issues to the forefront and providing a forum for discussion and solutions, Smith has organized the "Acute IP Issues for Small Business Conference" to be held in Washington, D.C. on November 15.

The objective of the conference is to bring attention to the struggle smaller companies have with intellectual property disputes, and to brainstorm ideas on the kind of legislative relief small business owners need. The event is hosted by EntrepreneurPR in cooperation with Rep. Donald Manzullo (R-IL), Chairman of the House Committee on Small Business.

"This conference is the first of its kind and is an important step in drawing attention to the issues. It will generate further dialogue, and ultimately new policy initiatives to protect small businesses, the backbone of the U.S. economy," says Smith. "But it will be beneficial to all if we succeed in simplifying and clarifying the processes. It’s a win-win."

1. Get a thorough trademark clearance search and legal opinion.
2. File for both state and federal registration.
3. If you believe there is a likelihood of infringement, purchase infringement insurance.
4. If sued for infringement, or if you find another company infringing your trademark, contact an attorney experienced in trademark litigation.

   Those interested in learning more about the "Acute IP Issues for Small Business Conference," click here