You’ve spent months, maybe even years, developing your skincare line and you’re finally ready to launch. Congratulations! Or maybe you’re just getting started on your dream skincare brand. Wherever you are in your skincare business journey, it’s important that you know what intellectual property (IP) is and how it pertains to your business. While learning about intellectual property for skincare brands might not seem as fun as choosing herbs, or mixing up the magic, if you don’t protect your IP, your business could suffer for it.
I am not a lawyer, so I decided to interview one of the best IP lawyers in the business, Jim Flynn, about what skincare businesses (especially new and small ones) need to know about IP.
What laws protect intellectual property (IP)?
Intellectual Property (IP) law protects the original creations from any company or individual who owns them against infringement by others. Intellectual property laws are in place so that people can use their ideas without fear of someone taking those ideas and profiting off of them with no compensation back to the originator.
Here’s my complete interview with Jim Flynn about intellectual property for skincare businesses
Rachael Pontillo: What types of intellectual property protection are actually available to skincare formulators? Is there a way to protect their actual recipes/formulas? Techniques? Or is it more the brand itself?
Jim Flynn: There are four basic types of intellectual property available to all business: patent, copyright, trademark (including trade dress), and trade secret.
Though it is a bit of an over-simplication, patents can protect your product or the process for making it or using it. Copyright can protect what you say about your product, and trademark protects what you call your product or how you package it. Trade secrets can apply many of those aspects as well as your customer information, financial data and other knowledge that you have.
As far as protecting the actual formulations and techniques, patent and trade secrets can protect those directly. But trademark and trade dress are the ways of protecting the brand itself.
RP: What are the biggest mistakes that new small skincare owners make in terms of intellectual property?
JF: The biggest mistake that small or start up skincare owners make is assuming that they can do what they are doing and that others can’t copy it.
That applies to both the names that one uses and the formulas/techniques one employs.
On the name side, people assume that they can use any name that they come up and have never heard of before, or because a particular URL is available. However, there may already be others out there already using that name–or something confusingly similar–and the same business or some similar line of business may have superior trademark rights through earlier registration or use.
The newcomer who doesn’t check trademark records or other resources beyond domain names then winds up investing time and money investing in packaging, signs, websites and other things that later causing them a problem when the brand with superior trademark rights challenges them.
On flip side, as to techniques and formulas, newcomers assume that new products or processes that they come up with are automatically theirs, and can’t be copied. But skincare is a pretty public thing in how you apply it to customers, explain it to them, and advertise its advantages. If those things are not patented, or if you don’t take steps to protect them as trade secrets, then others are free in most cases to copy them, or reverse engineer them.
RP: I’ve had Create Your Skincare Pro students ask me if they should trademark the names of each individual product in their skincare line, in addition to the brand name itself?
JF: They certainly can, but they don’t have to. It really takes an understanding of your business goals, and what resources you have to achieve them.
The name of a business is often called a house mark, and an example would be Ford or Honda for automobiles. A company like that also protects the names of individual car models, like Explorer or Pilot.
While it can vary, most new skincare businesses want to establish a house identity, and devote resources into that to build trust in a broad variety of their products, which they continue to reference by more generic, descriptive names like “cleanser,” “scrub,” and the like.
If one comes up with a great name for an individual product, you could always seek protection, but trademark is ultimately about identifying products with a particular source in consumers’ minds (even if they don’t know the name of the exact source). For new businesses, doing that expressly through house marks makes the most sense.
RP: What type if IP protection do you feel is non-negotiable/absolute top priority for small skincare business owners—even if they are on a tight budget?
JF: I think if you are starting any business people need to know what it is called, so I always start with trademark.
Your formulas and techniques are important, but you can protect those through customer agreements, and other steps that are less expensive and less public. But trademark is by definition something very public, and you should check it out before you get too far down the road.
RP: How effective are trademarks, really?
There have been instances of small brands who have trademarked their brand names, but then a bigger fish (like a celebrity skincare line) came along with the same name, fought the existing trademark, and won the rights to use the name simply because they had greater resources? How much of a risk is there of this happening?
JF: That certainly can happen, and it is called reverse confusion.
But you are better off to have the relatively small investment in protecting your mark than not doing it because you then at least have some bargaining leverage, and can potentially get a bigger latecomer to pick a different name, or to pay a license fee for the right to use the name that you protected.
The key, of course, is being vigilant in monitoring the market before the latecomer’s use saturates market, and reaching out yourself or through counsel early as well. Additionally, sometimes the registration alone will deter a bigger company, which is reviewing a number of possible names, from picking one close to yours when others on their possibility list don’t get any registration hits as they are doing their development review.
Many, if not, all of the situations implied in your question arise because new business owners made the mistake of thinking that registering the name of the business as part of forming an entity like a corporation or LLC is the same as registering a trademark. But it isn’t. Again, it is important to register your trademark with United States Patent and Trademark Office, and not simply on a business formation filing in any single state.
RP: What are the first steps a small skincare business should take if they feel/have evidence that someone else is using their brand name/copy/graphics or has duplicated their formula?
JF: Really several different questions, because of the different types of IP involved.
If somebody is using their name, it is a trademark question, while using copy and graphics is a copyright issue. Luckily you can probably deal with those together by addressing to some extent, an unfair competition claim that alleges trademark and copyright infringement as well.
The first step is contacting a lawyer, explaining the situation, and likely having the lawyer write a cease and desist letter. If you already have counsel, you might have them create a form letter that you can tailor to send as a first contact in many situations. However, it’s always good to talk it through first, even if letter is signed by the business owner rather than the lawyer.
Formula duplication is going to depend who is doing it and how you know. Often it may be too late to do much if you haven’t already taken earlier steps to prevent it. Make sure your employees sign confidentiality agreements, and maybe even non-competes, before you share the formulas and techniques you want to protect. You may also want customer agreements with confidentiality provisions for certain techniques.
Obviously a patent on your product or technique makes it easier to protect, but that is an expensive, time consuming process, so some of these other steps are more likely, and more easily accomplished. If you have done some of these beforehand, then the process after you discover an infringer is pretty similar to what I described for unfair completion claims.
RP: Obviously we want everyone to seek legal counsel for these matters, but that’s not always easy for brand new or small businesses with cash flow issues (especially due to COVID). What should people know if they try to DIY copyright/trademark/patents, or use a third party/middleman service like LegalZoom?
JF: Something is better than nothing, so you can use those resources to register copyrights or trademarks, or come up with form agreements to get some protection for your business and your IP.
But just to draw a comparison that may resonate—will over-the-counter, mass-produced skincare products work in the same way, and meet your clients’ needs to the same degree as a personalized skincare regimen that you create for your clients?
The answer is “no,” of course, but many skincare business owners would probably tell a client that doing some skincare on their own is better than doing nothing.
RP: Are there any instances where certain types of IP protection are NOT necessary—meaning it would be a waste of time and resources to pursue it?
JF: Lots of times, once you register a US trademark, you get lots of advertisements for registering your mark overseas or to pay for further “protection” in US.
Many of them come in ads that actually look, unless you read closely, like it is coming from a governmental agency. Forget those, as they are basically scams.
RP: If you could give one piece of advice about intellectual property to a new/small skincare business owner, what would that be?
JF: Invest time, and maybe money, in a discussion with IP counsel right when you are starting out.
I say “maybe money” because many attorneys will do initial consultations without charge. Having these things explained early lets you make choices about resource allocation.
It doesn’t mean that you will immediately do everything that your lawyer suggests, but it is better to at least understand what you are skipping or deferring rather than missing something that you might have easily and relatively cheaply done, but you just didn’t know.
RP: Anything you would like to add?
JF: Yes, in addition to these IP issues, you do need to make sure that your business complies with:
- (i) Any state required licensing for practicing any particular form of treatment or making /selling/using products and
- (ii) Any federal/FDA rules concerning back up that may be needed as to product or process’s safety or claims you advertise or make concerning a process’s or a product’s efficacy.
- And make sure that you insurance taken care of as well. Better safe than sorry.
Intellectual property is a broad term that encompasses many different types of proprietary rights for your business. The most common type when it comes to skincare products are patents, copyrights and trademarks. You should also look into trade secrets if you have any unique processes or formulas that make up the backbone of your product line.
There’s so much more to having a successful and sustainable skincare brand than just the products, ingredients, and packaging.
You may have heard that the majority of new businesses fail after the first year. One of the biggest reasons for that is that while these new skincare business owners might have great products, many enter into the industry with little to no actual business or marketing education.
The fact is that when you build a strong business foundation by seeing to important issues like intellectual property for skincare from the start, you set yourself up for success.
This is why Create Your Skincare Pro provides you with a thorough, holistic curriculum that includes lessons on skincare formulation topics AND skincare business topics. You’ll learn business planning, development, financial planning, organization, branding, copywriting, content marketing, and even some legal knowledge–all must-have information on how to build a successful skincare brand from scratch.
Click HERE to learn more about our curriculum, enrollment packages, and how to start your professional skincare formulation and business education today!
About James (Jim) P Flynn:
Companies facing complicated disputes, especially over intellectual property or proprietary information, turn to Jim Flynn, Managing Director of Epstein, Becker, and Green, for creative solutions. Jim is known among clients and colleagues for his willingness to tackle unusual challenges and act quickly in time-sensitive matters. To help clients prevail in high-stakes trade secret and data theft cases, he applies novel arguments that stand up to scrutiny, even as the law continues to evolve.
Learn more about Jim HERE.
*This article is for general informational and educational purposes only. It is not a substitute for legal advice from an attorney. For legal advice assistance with your skincare brand, business, or practice, please consult with a licensed attorney.