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Guest: Gordon Firemark, entertainment attorney and host of Entertainment Law Update.
Host: Kevin Mako, founder of Product Startup and the leading expert in hardware startup consulting. A hardware entrepreneur since 1999, Kevin has advised more than 1,500 founders and built and scaled MAKO Invent through its acquisition by TriMech in 2024.
Understanding the Legal Questions Around a Product Business
Gordon Firemark discusses NDAs, contracts, insurance, advertising claims, endorsements, trade secrets, patents, trademarks, and copyrights. The episode gives product founders a practical map of the legal topics to recognize and the questions to take to qualified counsel.
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Filip Valica: Hey, everyone. Welcome to the Product Startup Podcast, podcast that helps bring your product idea to life by chatting with successful inventors, product designers, and other industry professionals. This podcast is run by Mako Design
Filip Valica: + Invent, and hosted by Filip Valica. Our goal here is to get to the bottom of what makes a product successful, from initial idea to putting your product on the shelf. We're taking you step by step to build a functional product and scale your product business. Now onto the show.
Filip Valica: Product Startup, Episode 9. Welcome to the Product Startup Podcast. helping you turn ideas into successful products step by step. With your host,
Filip Valica: Filip Valica. Hi, everyone, and welcome to the Product Startup Podcast. In this last episode, we heard from Doug Marshall, the founder of the Game Face Company. He creates temporary face tattoos and masks that peel off using FDA-approved materials made in the U.S.
Filip Valica: Doug talked to us about the behind-the-scenes details of Shark Tank and his partnership with Lori Greiner and Mark Cuban. Before I get into today's episode, I wanted to thank RJBarrie. J. Man 83, who left the review in iTunes. Very relevant for physical product startups.
Filip Valica: Great podcast for anyone starting a business around a physical product. Philip gets into helpful tactical details with guests that are hard to find anywhere else. Keep it up. Hey, thanks a lot, RJ Man 83. I don't get a lot of feedback on the show, so I really appreciate your thoughts.
Filip Valica: And now on to the show. In today's episode, I'm joined by Gordon Firemark, an attorney devoted to representing creative and business people in the media.
Filip Valica: He's the producer and host of Entertainment Law Update podcast, and we talk about the many legal issues faced by small business owners, including non-disclosure agreements and contracts, implied endorsements and
Filip Valica: fair use in advertising, trade secrets, patents, trademarks, and copyrights. So, on to the show.
Gordon Firemark: Hi, Gordon. Thanks for coming on the show today. Philip, hi. Thanks for having me. So can you tell everybody a little bit about yourself on your experience? Well, I am by practice, by profession, I should say, I am an attorney.
Gordon Firemark: I work in the entertainment industry on the transactional side, which means the only time I ever go to court is when I'm testifying as a witness or something like or a party in
Gordon Firemark: a lawsuit, I suppose. Fortunately, that hasn't happened. I help folks in the, in and around the entertainment industries with their businesses. And that is a very creative business, of
Gordon Firemark: course. And so that puts me, you know,
Gordon Firemark: at the nexus of things like intellectual property and contracts and also just a very crazy industry. And I love to help creative people
Gordon Firemark: with the business sides of their thing and help business folks with staying in touch with their creativity. That's right. And you've got a podcast yourself. I have several podcasts. The entertainment law update is the one where I and another lawyer do a monthly roundup of
Gordon Firemark: legal stories and news around the entertainment industry. I also have an asked and answered podcast, which is really just the audio track of a YouTube channel that I have that features me answering
Filip Valica: common questions that come from my listeners and viewers.
Filip Valica: And then there's one targeted at lawyers who want to use podcasting as a marketing tool for their businesses called the Law Podcasting Podcasting. Great. Well, we'll definitely link to those in the show notes and we can talk about near the end of the show. Awesome. Well, let's start with something really Basic.
Filip Valica: When I talk to people that are building products for the first time, usually they're worried about sharing their ideas and they say, should I sign an NDA or will you sign this NDA
Gordon Firemark: with me? My experience as an engineer is that the NDAs aren't really worth much because they're tough to enforce because it's hard to prove that someone actually violated the terms of an NDA and broke confidentiality. What is your perspective on that?
Gordon Firemark: Well, you know, NDAs are, they have some value, but I think you're right. Much of the time it comes down to a question of, does the evidence support a claim that there was a breach?
Gordon Firemark: And more, I think the real value of an NDA is that it formalizes the relationship and puts everybody on notice that, hey, we're serious about our stuff here. So don't steal it. Don't, don't be casual about it.
Gordon Firemark: Actually, in the entertainment industry, ideas are the, you know, that's the way business is transacted. And so,
Gordon Firemark: interestingly, it's very rare to see formal non-disclosure agreements in the entertainment industry. Part of the reason is the studios and the production companies and producers have the bargaining power to just say, no, give us your idea or not, but we're not going to sign anything.
Gordon Firemark: And in fact, many of them use the inverse, which is a submission agreement that basically says, you're submitting it to us, we're going to take a look. We may have something almost identical already in development, so we're not making you any promises whatsoever.
Gordon Firemark: And even in that circumstance, people generally intend to do right by each other.
Filip Valica: And the real key in protecting yourself is only do business with people, only contemplate doing business with people you feel you can trust and who have a decent reputation. If somebody's a slime ball to others, they're going to be a slime ball to you too. Right. Absolutely.
Filip Valica: And maybe even if you approach the relationship in a antagonistic way, then that's kind of setting the stage for what you expect to happen. That's true.
Gordon Firemark: No, that's interesting. I've also heard that many investors on the product development or on the startup side won't sign an NDA with you because they don't want to be shackled to or maybe
Gordon Firemark: opened up to a lawsuit in the future if a piece of your idea gets incorporated into something else unintentionally just because it's a part of their consciousness and now it's turned into something.
Gordon Firemark: That's so true. And it's the same thing in the movie business. The ideas are constantly in play and in motion. And it isn't at all unheard of to have the same idea, material.
Gordon Firemark: and be expressed in a couple of different ways almost simultaneously you may remember maybe you know you're younger than I but you know about 20 25 years ago there were three volcano movies the same summer
Filip Valica: where the volcano is blowing up under the city basically and people are running for their lives three separate movies with different storylines but the premise was the same and you know there was nobody's fault it just was the way it came out the answer is you know do business with reputable people
Filip Valica: and be good to one another yeah no and I totally agree with that I personally try to not walk into any relationship and signing an agreement from the get-go.
Gordon Firemark: Maybe the next step, whenever you're working with a supplier or someone that's a partner that you're trying to do business with is maybe need to write something down if you're agreeing to terms or there's an exchange in money.
Gordon Firemark: What do you think is the point that people should look to put something down on paper? Well, you know, Phil, the contracts are really very easy to make. And we make them all the time every day and we don't even think about it.
Gordon Firemark: And so sometimes we make it a bigger deal than it needs to be in our minds when we start getting into a business relationship. Nowadays, we do a lot of things back and forth by email where I'll say, hey, you know, what's your price for X, Y, Z? And you say, it's this much. I go, oh, that's too much. How about this?
Gordon Firemark: And, you know, you're having a negotiation. And when everybody says, okay, done, we have a contract. We have an agreement. Now, it's not a formal memorialization of the terms of the deal in a single document, you know, stapled together and signed in Blue Link.
Gordon Firemark: but we still have a contract. There are only a certain handful of kinds of contracts that must be in writing in a signed document like I described. The rest of the time, we rely on these informal relationships, these informal things,
Gordon Firemark: and those emails become the evidence if there is ever a breach of contract. Now, with all that said, I do believe that good contracts make for good business partners, just like good fences make good neighbors. It sets out the boundaries and the expectations of the partners.
Gordon Firemark: And so it is worthwhile to sit down and really think about all of the parameters of a deal. And that's where, frankly, using a lawyer sometimes is beneficial because, let's face it, the lawyers are doing this every day. And you may be doing this kind of a contract once every six years.
Gordon Firemark: So reaching out to somebody who has the frame of reference to think about the terms that might otherwise be overlooked and get it down in a document.
Filip Valica: But really, most of the time, we can write our own simple contracts, you know. what's the price what's the what's the service being rendered or the goods being transferred and
Filip Valica: when and uh you know answer the who what where when how and why and you've got a contract yet no and that totally makes sense i actually remember so in a prior life i did web design web development
Filip Valica: while i was in college and i took on a client as a freelancer and we had back and forth through email and everything was documented one thing led to another we had a falling out i went to small
Gordon Firemark: claims court to sue for the wages passed due. And the judge says, well, I'm not sure that this contract is enforceable. There wasn't a little statement on there that said, this person has the
Gordon Firemark: authority to make these types of decisions. Oh, it's interesting. I did get a partial award, but I didn't get the full funds. At the end of the day, there were some technicalities that definitely bit me. Well, you raise a really interesting point. And that is also that the
Gordon Firemark: The law will sometimes imply a contract where there is no written agreement.
Filip Valica: You know, there are certain things that we do that just by our course of action, our course of business, establishes that, you know, it's reasonable to expect, or for the other side to have expected that there would be compensation or that there would be a quid pro quo of some
Filip Valica: sort. And so, you know, implied contracts do exist and oral contracts exist as well. Very interesting. So let's move on from that. Then, you know, we've signed the contract.
Gordon Firemark: contract. We're continuing to do business together. Let's go on one path that I think that you've got a lot of experience on. We're looking to advertise a product or service and maybe either
Gordon Firemark: directly or indirectly imply that we have sponsorship of a celebrity or someone that is well known. What is the current case law for that?
Gordon Firemark: Well, I'm not going to cite you particular cases. Sure. I think our audience would be bored and fall asleep very quickly. But, you know, the basic rule is, and this is true of, whether it's a celebrity or a brand relationship or something like that, if you, if you
Gordon Firemark: if you create the, the perception in the audience's mind that there's an affiliation, there better really be an affiliation. A false designation of origin, like, you know, if I say,
Gordon Firemark: you know, if I call my podcast, the Coca-Cola podcast and Coca-Cola has nothing to do it, they're going to sue me for trademark infringement or unfair competition or something because I'm misusing
Gordon Firemark: their brand. And the same is true of a celebrity endorsement. If you imply an endorsement and that doesn't exist, you're essentially trading on that person's, the value of that person's name
Gordon Firemark: to enhance the value of your brand. And so that is not okay.
Filip Valica: And this varies from state to state,
Gordon Firemark: but celebrities do have a right. And in fact, anybody in California, for example, has a right to control commercial use of their name or likeness. Now, that's not to say you can't talk about somebody by name but if you if you create the implication that there's that endorsement or if you
Gordon Firemark: say sponsored by or brought to you by you know those kinds of things that's where you run into real trouble understood so if let's say we're doing a product photo shoot and there's a can of coke in the background do you need to blur that out you know the best practice would be yes blur it out
Gordon Firemark: or or better yet excluded from the shot and you know again but you know if you were shooting a video
Gordon Firemark: and, you know, in your garage and you happen to have a bunch of old Coca-Cola signs and products and, you know, those kinds of things and use sort of a collector, that,
Filip Valica: you know, you're not using it as your brand. It's just a, it's just a referential kind of use of the thing, what we call a nominative fair use of the brand of the
Gordon Firemark: trademark. And really, you know, when we talk about brands, we're talking about trademarks and service marks. And yeah, you just, you know, you don't want to create any confusion in the minds of the public, of the consumers, as to whether there's.
Filip Valica: an association or affiliation.
Gordon Firemark: Makes sense. So there's, I guess, some understood amount of fair use that you can get away with before it starts, you start to imply that you're associated with that brand. Yeah, well, so fair use is actually a copyright concept that comes out of the First Amendment
Gordon Firemark: and free speech and stuff like that. But the same principle of free speech does apply when we're using trademarks. Again, as long as we're not using it in a confusing way to
Gordon Firemark: suggest some association. Is there any leeway given to you if you're not making money? You know, this is one of the most common sort of fallacies that people, again, in the copyright context as well as trademark, come up with is they somehow think that because they're not
Gordon Firemark: earning any money from it, there's no harm being done to the brand or to the person or to the material that's being taken and used.
Filip Valica: And the fact of it is that is not,
Filip Valica: it isn't, it isn't a major factor. Let's put it that way. In the context of copyright fair use, the nature of the use is a factor. But there's a, a bunch of other factors that have to be considered as well. No, that's very interesting.
Filip Valica: So, no, I appreciate you dispelling some of these myths. So as we get across them, feel free to jump in. It makes my job a lot easier when I have clients come in and they know what I'm, they know the rules already. Absolutely. No, I'm a huge fan of educating your client base.
Filip Valica: The last couple of companies that I worked at, we developed products and it was probably half the effort that we spent was to educate our current clients. You touched on trade secrets a little bit. But can you get into a little bit more detail?
Filip Valica: Because usually the next question that I get asked is, when should I patent and should I patent or should it be a trade secret? The advice that I usually give personally, and I'll admit that I'm a bit jaded on the patent
Filip Valica: system being an engineer, there's very few ideas that I would patent. I feel that there's so many products out there on the market that aren't patented.
Gordon Firemark: There's better ways of competing, whether it's through customer service or through marketing or something like that.
Gordon Firemark: If anything, I would maybe look at trade secrets or, you know, keeping your formula for whatever it is or your manufacturing method,
Gordon Firemark: a guarded secret over a patent. But,
Gordon Firemark: of course, everything is case by case. And if you've got an idea that's market changing, if it's something that's going to make all the other competitors a scramble, obviously that's something that you need a patent, but we have so many patents out now that I feel are kind of frivolous.
Gordon Firemark: Well, you know, I think it's probably worthwhile for us to take a step back and and take a look at the, at the spectrum of all these components of intellectual property of how everything fits together so that, so that we're really clear what we're talking about.
Gordon Firemark: trade secret is really the whole reason that we talk about non-disclosure agreements, because the basic rule is if you've got an idea, which is generally not something that can be protected by any other form of intellectual property,
Gordon Firemark: the only way to really keep it from being used by others is to keep it to yourself, keep it secret, or have an agreement with the people you share it with that they will keep it secret and they won't use it for their own purposes
Gordon Firemark: without making some kind of a financial arrangement with you or a partnership or, you know, or whatever. And so that's the basis for, if you're going to submit something to somebody, you get them to promise that they're not going to steal it, right? So that's trade secrecy.
Gordon Firemark: Keep it secret. And this is, you know, the formula for classic Coca-Cola, the 11 herbs and spices recipe for Kentucky Fried Chicken. These are trade secrets.
Gordon Firemark: There's other examples of these that come up. with some frequency, but, you know,
Gordon Firemark: so anybody who's going to have access to that has to acknowledge, basically, if they're keeping it secret. Now, patent law protects inventions. So it's not just the idea, but it's the actual implemented iteration of the idea.
Gordon Firemark: And inventions can be processes and systems and formula and things. So a formula for Coke or something like that might be if there's a particular way it has to be put together in sequence to make it.
Gordon Firemark: to Coca-Cola and not explode in your face or something like that.
Gordon Firemark: And I sort of agree with you. I think the whole system is susceptible of abuse. And we saw a case in actually a podcast patent that was a problem a year or two ago
Gordon Firemark: where the owner of this patent for a serialized delivery of episodic content by RSS feed, you know, claimed a patent on all of this. And everybody was worried that we were going to start having to pay royalty.
Gordon Firemark: to this company and whatever didn't materialize and we're all good but um so you know susceptible of abuse there are patent trolls who sort of grab stuff up and claim patents you know the goodness is it's
Gordon Firemark: pretty expensive to file a patent and and uh so there is a bit of a barrier to entry there's got to be something there essentially um copyright is the other sort of end of the spectrum where you know
Gordon Firemark: again doesn't cover ideas it covers the expression of ideas so the way you express the idea of boy meets girl and they go off and have a life together and the way I do are two very different
Gordon Firemark: stories and so we each could have a copyright but that neither of us can stop someone else from coming along and telling a boy meets girl story so there you have an example that and facts are also not
Gordon Firemark: protected so telling a story about real events there have been how many how many different movies telling the story of the gunfight at the okay corral for example right no that's interesting and then just to fill out the the gap trademark covers the
Gordon Firemark: the unique identifier of brand, so the word or mark or symbol that is distinctive and becomes
Filip Valica: associated in the minds of the public with a particular brand. So if I say box of crackers with a red triangle in the upper corner, you know what brand I'm talking about without me ever saying the name, do you? Right. Don't you? Nabisco, just for those who are wondering.
Filip Valica: Or I say, you know, the most famous kind of chocolate cookie with a white cream filling. And we know it's Oreo, which happens to be a Nabisco brand. So there's two brands, two trademarks right
Gordon Firemark: there. So it has to be a distinctive identifier of goods or services, not generic or descriptive, but distinctive. So that's the sort of spectrum of the way things get protected for intellectual
Gordon Firemark: property. That's very interesting. So I've gone through some of these myself. What I advise people to do is if they don't know if they want to seek patent protection to go ahead and apply for provisional patent. And that way, at least they have a year to test out the market.
Gordon Firemark: bare fruit, then you're able to at least use some of the money that you should be getting within that year to cover your cost of patenting. But at the onset, whenever you create your brand or your company, there are probably some legal protections that you should have in place.
Gordon Firemark: Well, yeah, so for anybody who's starting up, I think the fundamentals are figure out your financial structure and your business structure, make sure you have a sound entity type
Gordon Firemark: in place or an alternative, which could be insurance, to protect yourself from liability. If something blows up with the product, you don't want them coming along and taking your house away from you, right? Product liability insurance.
Gordon Firemark: Well, yeah, but also maybe a corporation or an LLC to insulate and hold that product and all of the property related to that product. So, God forbid, you know, someone gets hurt or needs to sue, they sue the company and not
Gordon Firemark: you individually and your family and your house and things are safe. So there's the entity level, form an LLC, form a corporation, whatever.
Filip Valica: The nice thing about entities is you can also use them as a financial vehicle by selling membership interests of an LLC or stock in the corporation to investors who would essentially fund some
Gordon Firemark: of the development of startup cost, whatever. Then you have partners and people to answer to, of course. So that's the flip side.
Gordon Firemark: And these entities also give you some sort of street cred in a sense. not a lot these days but you know that counts and you go open bank accounts and all that and you buy
Gordon Firemark: insurance in the name of the company okay so now you're building a business the next step is to evaluate the assets that you're creating and decide patent trademark copyright trade secret
Gordon Firemark: what else can we do and how do we make a business all of the above yeah well probably so out of those legal protections that you mentioned, what do you think is something that is feasible to do on
Gordon Firemark: your own? And when do you need a call and ask for help? You know, as a lawyer, I have a vested interest in helping people do these things. And so I will say, you know, I think you're always better off having a professional help you. But if money is an object and it, who, for who, you know,
Gordon Firemark: for most of us it is, let's face it, I think that, you know, you can form a corporation using an online service that does the filings for you and things like that. Now, it's going to be a very plain vanilla,
Gordon Firemark: normal corporation and if there's anything unusual either about your your your product category the kind of you know if you're making a movie you don't use a plain vanilla corporation because there's
Gordon Firemark: a lot about making movies that's sort of unique and so that's my business you know if you're making you know if you've invented a better mouse trap you're probably okay starting a basic corporation using one of these online services and then you know as you grow that can be
Gordon Firemark: adjusted and fixed if there's any problems um as far as is copyrights or do-it-yourself kind of a thing.
Filip Valica: If you create, you know, write a book, create a video, film, music, you know, those kinds of things. Or if you, let's say you have a particular instruction manual that you want to protect
Gordon Firemark: so people can't use whatever it is in a different way, all of that can be done yourself. You go to copyright.gov and you, it's a terribly ugly and disorganized web form, but
Gordon Firemark: it can be done by yourself if you're willing to spend the time. The good news is,
Gordon Firemark: you know, it's not that expensive to hire a professional to that stuff because it's relatively quick and easy.
Gordon Firemark: Trademarks a little further on the spectrum of you sort of have to know what you're doing.
Gordon Firemark: And so those of us that do it every day or every week kind of, you know, there's an economy of scale there. But a smart person who's got the time and not the cash, you know, go ahead and give it a try. Can you talk a little bit about that?
Gordon Firemark: because when I went through to file a trademark, it asked if it was in use. And that was a bit awkward because I'm filing it when I'm launching my brand. Should I say that it's in use?
Gordon Firemark: Because technically it is online somewhere. So in order to be entitled to the protection of trademark law, you have to have your wordmark or your brand, your logo, those things, have to be in
Gordon Firemark: use in commerce, actually in interstate commerce. So fortunately nowadays, putting something up on the as an advertisement for a product or service pretty much counts as in use. Now, if the product hasn't officially launched yet, but you've got a website saying coming in
Gordon Firemark: November, you know, whatever, then the trademark office might take issue with whether it's really in use or not. But there is actually an opportunity to get an intent to use trademark
Filip Valica: as well, which basically just sort of gets you into the system and then you have six months after they approve it to prove you're now using it. And then there's actually renewals and things. So that's sort of what we recommend when it's not officially in the marketplace
Filip Valica: available for sale yet. So it's called an intent to use application.
Filip Valica: So don't let that stop you. But knowing which box to check is the challenge. And the trademark office, to their credit, has done a really good job of making instructional videos and help documents
Filip Valica: and things like that that you can, you know, you can navigate through the whole thing.
Gordon Firemark: But one of the problems is that their form times out before you finish watching the video. So you then have to go back and so there is a way to save your work periodically. And if you hit a stumbling block, I would recommend save it, download it and get your information and then proceed.
Gordon Firemark: So great. No, that makes sense.
Filip Valica: And for patents, I think you need a patent lawyer. No, I completely agree with that. So as an engineer, I've been hired by companies to work and design around existing patents, basically. And that destroyed my trust in the patent system.
Gordon Firemark: Between that and some of the frivolous patents that I've had to work around that are arguably facts that have been patented, you know, this law of physics underwater, that stuff has just super frustrated me.
Gordon Firemark: And at least as an engineer, as someone that develops products, and I feel like the people that are really winning out in these types of patent wars, so to speak, are the ones that hold the most patents. Yeah, yeah. Well, that the patent becomes the asset that they're leveraging to earn money.
Gordon Firemark: They don't have to have a lot of licensees paying them a little bit of money, and they've got, you know, a revenue stream that can be leveraged. Would you still advise a small-time inventor to go ahead and grab a patent?
Gordon Firemark: Sometimes people don't have the ability to enforce it or protect it. Some people will pour their last $10,000 into getting that patent. Yeah. What is that right point viable for me to get a patent versus maybe I really need
Gordon Firemark: to focus on proving that I have a business or a product? You know, I think that's a really great question, and I don't know exactly the answer. I think it's going to be different for every situation.
Gordon Firemark: But I do think that, you know, spending your last few bucks on something like getting a patent,
Filip Valica: if you don't have a business plan for what you're going to do with this asset once you have the patent, you've got,
Gordon Firemark: you know, you don't have a plan. There's no sense in spending that money. You might do better to spend some money figuring out whether it's viable as a product or whether it fits into someone else's product. And again, that's where some trade secret kind of,
Gordon Firemark: that's where maybe an NDA makes sense. You've got a patentable thing. You haven't yet registered the patent. And if you make it public, you won't be able to patent it. So that's an important component of this is that once the material is out there in the public, if you haven't registered
Gordon Firemark: for patent, you lose the opportunity to. So, and I'm not a patent lawyer per se, but, you know, that's sort of the extent of my knowledge on the subject. So you want to be really careful
Gordon Firemark: not to publish the technology until you've got a patent, whatever. So by sharing with a third party, you're publishing it unless you have that NDA. So that may be a valid reason why you
Filip Valica: must insist on an NDA is you've got a valid, a patentable thing, but you haven't, yet patented.
Filip Valica: I've even heard that, whether you have an NDA or not, that it might be considered public disclosure because you've offered it for sale technically. Well, but if you're offering it to sale to a company that's going to incorporate it into a product, you know, you're not saying,
Filip Valica: hey, buy my thing. You're saying, hey, let's talk about whether this is a viable joint venture or whether you want to license this technology.
Gordon Firemark: So, you know, it is, yeah, again, and you know what I would really say here is the answer is, spend a few hundred bucks and have a consultation with an experienced patent lawyer, really, who can advise you on that, you know, and yeah, there's that sense of, well, you know, if I go to a carpenter who's got a hammer, I'm sure
Gordon Firemark: going to look like a nail. Right.
Gordon Firemark: But, you know, lawyers don't get ahead by doing things that their clients don't really need or can't really justify financially. So, you know, find somebody
Gordon Firemark: you can trust and get some good advice and make sure there's a business behind it. You may, You know, it may be great to have this invention, but if nobody's going to ever use this invention,
Gordon Firemark: don't bother.
Filip Valica: No, I totally agree with that. I think, and it wasn't a leading question, but what I usually advise people to do is to test the market first.
Filip Valica: And even if that means being really vague about what your idea is, and that way there is no public disclosure,
Filip Valica: you can approach people to say it's in this space or in this industry or it's this type of product that solve this need without really disclosed.
Filip Valica: the specifics. Yeah, I think it's really important to validate product ideas as early in the game as possible, and that may just be by conducting surveys
Gordon Firemark: or by bringing in a focus group or something like that and letting them try the product. That doesn't count as publishing the technology. If you create a prototype, of course, which is another expensive adventure to go down,
Gordon Firemark: but if you've got something like that and you can bring someone who would normally use this and say, here look what I've created is this something you would buy that can be a great way to validate again check with a patent lawyer to make sure that's not going to get you
Gordon Firemark: into problems with registrability great no so all great tips actually while we're on the topic so you said check with a patent lawyer what are the things to look for when you are
Gordon Firemark: choosing a lawyer for some of these topics you type into Google you type lawyer my city the first two pages are the people that have paid for the top Google ads or have the best SEO and you type you
Gordon Firemark: you reach out to them. Some of them will reply. Some won't.
Gordon Firemark: The rates that you get back range from, and I'm speaking from personal experience talking to some lawyers, they'll go anywhere from 150 an hour to, let's say, 500 an hour. That may or may not be representative of their experience and skill set.
Gordon Firemark: Well, true. Yeah.
Gordon Firemark: Oftentimes the higher rate is tied to someone who's been in practice a longer time. And so at least in theory, they have more experience, whether that more experience translates into greater efficiency in getting the work done or just greater success
Gordon Firemark: in getting the work done is sort of hard to say. But, you know, I'll tell you in my own experience. I have, I'm at the higher end of that range. And the folks that come to me can pretty much count
Gordon Firemark: on me getting the job done either in less time or with less overall expenditure, even though a younger lawyer who's charging a third of my rate might seem cheaper. It's not.
Gordon Firemark: You know, one shouldn't skimp on legal fees on the hourly rate, focus on what it's really going to cost you. And you should ask a lawyer, hey, what should I expect to be spending on this patent or this transaction or whatever it is we're doing?
Gordon Firemark: And if they can't give you a number, it means either they're afraid to tell you a number
Filip Valica: because it's going to be too high or too low or they don't have the experience to know what it's really going to cost. And, you know, we can even do flat rates. You know, there's nobody forcing us to charge an hourly.
Filip Valica: So, you know, for things like trademark registrations, we do flat rates and, you know, there's an efficiency in some of these things.
Filip Valica: What do you look for in a lawyer?
Gordon Firemark: I think experience is in the specific thing you're talking about. If you have a biotech patent, use a lawyer who's done some biotech patent work. If you have a mechanical engineering kind of a thing, then use someone who's got that experience.
Gordon Firemark: Now, the interesting thing is in patent space, especially, in order to become a patent lawyer, you have to, to demonstrate, well,
Filip Valica: generally you have to demonstrate some experience and education in a
Gordon Firemark: technical field, engineering, biotechnology, science, hard sciences, those kinds of things, which is why I'm not a patent lawyer. I'm a Bachelor of Arts guy.
Gordon Firemark: So, you know, you want experience, you want understanding. And I would say some wisdom. You know, someone straight out of law school probably can file the patent for you, but I don't know whether they're going to give you
Gordon Firemark: the kind of advice you need early on in the game and really get you where you need to be. So, again, spending a little more money, probably a wise investment in that regard. So you call up, you know, 10 people and you sit down and have these consultations.
Gordon Firemark: Is it normal to expect these to be, let's say, a 30-minute consultation to be kind of free of charge because it's an opening consultation, or is it something that you would normally charge for? And now you're kind of out of pocket for the five or 10 people that you speak to.
Gordon Firemark: You know, I think that you should be able to narrow it down before you end up paying. So, you know, you're going to talk to people on the phone first, and five or ten minutes ought to be enough to tell you a lot.
Filip Valica: You know, you should be able to describe in general terms what it is you're looking for.
Filip Valica: And really, my guess is if you call 10 lawyers, six of them are going to say they're not that interested in it or we're going to seem not that interested. That's been my experience anyway. I just thought it was my face. No, you know, I mean, the truth of it is it's too small of a job. It's too big of a job.
Filip Valica: It's not the right kind of a job for our firm or we're just too busy. You know, you're going to find a lot of that. And then you move on to the few who are actually willing to take a meeting. You can, hey, look, you know, is this a free consultation?
Filip Valica: And it's reasonable to ask for a free consultation so that they can pitch you the business or pitch the business to, you know, sell you on hiring them. If someone's not willing to do, I mean,
Gordon Firemark: this is from someone who actually does charge for consultate. I do short consultations for free. That's the get-to-know-you stuff. But then if you want me to give you real advice about your business, that's what I get paid for. Absolutely.
Filip Valica: And that's expected. Yeah.
Gordon Firemark: So, you know, if it's a matter of someone has to actually take a look at your thing in order to decide, is it patentable?
Filip Valica: It's a judgment call whether to expect to be charged.
Filip Valica: And I think it's reasonable to expect to pay something. But it ought to be a fairly nominal amount that they'll know within a few minutes, whether it's something that they can help with or not. And then it comes down to personality connection.
Gordon Firemark: Does it seem like somebody you can trust? All very good tips for sure. One of the first questions that people have when we start talking about patents into any detail is I haven't seen any patents around this space. So I must be okay.
Gordon Firemark: And so I always tell people to go speak to a lawyer. So lawyers and CPAs are the two people that I will not skimp on. I'm a huge fan of DIY as you see behind.
Gordon Firemark: me in my workshop. I do everything myself, even when it comes to business, I've tried to learn marketing and sales and graphic design, but the accounting and the law side, I definitely
Gordon Firemark: outsource to people with that knowledge because that one tiny mistake can bite you. And I'll tell you, you know, I, it's interesting. I do my own taxes, but when I have a legal situation, I hire a lawyer. And my other area where I don't DIY is plumbing.
Gordon Firemark: Fair enough. You know, Plumbing is one of those things where it either takes you 30 minutes or three days. Exactly.
Gordon Firemark: Yeah, while the water is pouring out of the sink, right? Right. Well, all very great tips on how we can find a lawyer ourselves and what we should look for when forming our businesses.
Gordon Firemark: Is there anything that we haven't covered so far that you think is a typical stumbling block for somebody that's a small business owner or they're just starting out? You know, there's a couple things that we didn't really touch on that I think are worth considering. And that is if you're doing business online, there are some.
Gordon Firemark: other components to all of this that you have to think about, one of which is, you know, make sure you have your terms of service, your privacy policy, and, you know, all of those
Gordon Firemark: kinds of things done properly. And it isn't smart to just copy someone else's. Even if they're in the exact same business as you, you're going to do things differently
Gordon Firemark: than they do. Or if you're smart, you're going to do things differently than they do. At least that's how you differentiate yourself in a marketplace. So you need to make sure that these are contracts, after all, that they cover you properly.
Gordon Firemark: Insurance we've touched on earlier, you should definitely have insurance in place. And especially if you're online, there are components to liability that come up only in the online space. Really? Well, I think we need to get into that.
Gordon Firemark: Well, I mean, I guess copyright infringement and those kinds of things do come up offline, but there's so much more common online.
Gordon Firemark: If you are doing a business of any kind where people can submit, content onto your website or onto a service that you operate,
Gordon Firemark: register your DMCA agent for service of process. You go to the copyright website and type in DMCA agent, and there's a form
Filip Valica: that you have to download and file. It costs about 130 bucks to file it. This gets you on your,
Filip Valica: and you have to identify the person that somebody writes to to complain about a copyright infringement. And this basically gets you into the system, the DMCA system,
Gordon Firemark: So that if somebody wants to come after you, you basically what the DMCA says, this is the Digital Millennium Copyright Act. Basically what this says is if somebody has a complaint about copyright infringement, they have to send you a notice.
Gordon Firemark: And if you respond to that notice by taking down the material, then you are eligible for a safe harbor against copyright lawsuit. So as long as you have a clearly stated policy that you enforce to do these things, you're okay.
Gordon Firemark: and if you've registered that person with the DMCA, with the Copyright Office, excuse me.
Filip Valica: So, you know, don't do that and someone uploads something to your website, even in the comments on a blog. Imagine this.
Filip Valica: You know, you have a blog and you're promoting your product in the blog, and some bozo jumps into the comments section and paste a big, long quote from a movie into your thing.
Gordon Firemark: Technically, copyright infringement. You've copied the dialogue of the movie, right? And you're the host of the thing, so who's going to, who are they going to come after, right? Right. So they notify you, you take it down. You're good.
Gordon Firemark: And if you don't have that registration and that policy in place, you can be sued for copper and infringement. So it's cheap and easy insurance.
Gordon Firemark: Fortunately, I don't have many comments on my blog. Well, that's fortunate or unfortunate depending on your perspective. Wow, that's really interesting. I didn't think that it applied to blog comments.
Filip Valica: I thought it was just for crowdsourced sites or, you know, places where you've got a lot of user-generated content.
Gordon Firemark: Well, it's generally, that's how we generally think of it. But my thinking is for $130 to have that piece of mind and know that if some bozo posts a photo, for example, in your blog comments.
Gordon Firemark: You know, and yes, you can take it down on your own volition, but you also don't want to be in that position of appearing to be an editor of content on your site because that puts you back into the liability. You know, you have that, quote, red flag knowledge.
Gordon Firemark: about it. So if you're going to allow comments on your blog and you're going to allow uploads and that kind of stuff, my feeling is have that DMC and that is taken care of. Very good advice.
Gordon Firemark: So some of the other things that we talked about, we talked about trade secrets, patents, copyrights, trademarks, all things that are important whenever you're starting a business.
Gordon Firemark: What about something if you're already in business that you might be overlooking, whether it's agreements with suppliers or employment law? Well, I think as you expand your business and you start taking on employees, you open up a whole other can of worms.
Gordon Firemark: Dealing with wage and hour issues, of course,
Gordon Firemark: unemployment issues. You know, if you fire somebody, obviously there's concerns about why you fire somebody and how you go about it, the normal human resources kinds of issues. I'm not qualified to really talk about all that other than to say you want to talk to
Gordon Firemark: people and get some good advice about that. Fortunately, there's lots of resources out there, the Small Business Administration and outfits like SCORE and, you know, the Senior Corps of Retired executives. Have you heard of them? Yes, I use them extensively in Houston and they're amazing.
Gordon Firemark: Those kinds of folks. And but also, you know, make sure your insurance is in place to cover them for workplace injuries and those kinds of things. And by the way, if you use volunteers or interns,
Gordon Firemark: make sure you have insurance coverage that will cover them because they may very well be treated as employees,
Gordon Firemark: even though you're not paying them.
Filip Valica: And the non-payment of interns has been an issue in the news and media a lot in the last couple of years as well. So get some good advice about these things. Employment situation?
Filip Valica: Same thing about contract versus employee-type relationships. Yeah, so that's an interesting, a good point.
Gordon Firemark: Many of us think that, well, if we call somebody an independent contractor, we don't have to withhold taxes, we don't have to cover them with insurance, et cetera, et cetera, et cetera. The truth is calling something so does not make it so. You know, I can say the sky is orange, but it's not going to be orange.
Gordon Firemark: It's not most of the time it's not orange.
Gordon Firemark: So calling somebody an independent contractor when they are really an employee and when they look like an employee to the outside world,
Gordon Firemark: chances are the government is going to think they're an employee. And chances are somebody who gets hurt is going to think of himself as an employee. And the worst case scenario is you've got this person treated as an independent contractor.
Filip Valica: You're paying them, you know, a lump sum without withholding taxes. You're not insuring for workers' compensation. You're not insuring for unemployment. And then they get hurt.
Gordon Firemark: And they miss three weeks of work and you fire them. Right. Now you're getting sued for wrongful termination and the workers' comp claim,
Filip Valica: but the workers' comp insurance coverage is not going to cover it because you weren't. treating this person as an employee.
Filip Valica: But the general liability insurance policy isn't going to cover it because they should have been treated as an employee.
Filip Valica: Sneaky.
Filip Valica: And if your company doesn't have a lot of cash and capital,
Filip Valica: now, even though you've got a corporation or an LLC or something like that, there are ways that they can sometimes access your personal assets.
Gordon Firemark: So, you know, you've got to be careful. Wow. That's very interesting. So I have a LLC myself, and I try to definitely keep the separation.
Gordon Firemark: of assets and bank accounts and, you know, sign all the contracts properly, you know, as member of LLC or manager of LLC. Sure. So let's talk about that a little bit, you know, piercing that veil, so to speak. That's the term.
Gordon Firemark: The legal term is piercing the corporate veil or the LLC veil. And,
Gordon Firemark: yeah, the courts take a look at, I mean, when it comes up, and it fortunately doesn't come up that often, is this company really just an alter ego for the person? and if so and the way we look at that is do they commingle their finances you know
Gordon Firemark: does he borrow from his personal account to cover a company bill does he you know whatever does he pay for gas with the company credit card on a non-business trip or you know those kinds
Gordon Firemark: of things and the more of that kind of stuff that exists the more likely they are to pierce the veil and say it's an alter ego we're not going to we're not going to distinguish the two and we're going to let them at your assets.
Gordon Firemark: Absolutely.
Filip Valica: So again, make sure that you're working with professionals to make sure things are set up properly and you're not. And not having insurance in place is going to be another one of those factors that they look at.
Gordon Firemark: Well, you know, if you'd had insurance in place, you were acting like a business by having it. So all of those kinds of things. So you've brought up insurance probably four or five times now. The only insurance that I'm aware of personally is product liability insurance specific to products
Gordon Firemark: in certain industries. And it's basically,
Gordon Firemark: from what I understand, the rates are based on how much revenue you're making per year and the type of product it is. In other words, the likelihood of it injuring somebody.
Gordon Firemark: What are some of the other types of insurance and what do you recommend is like the bare minimum that people should have whenever they just start? Well, I mean, I think there's a whole raft of different kinds of insurance that can apply.
Gordon Firemark: And we've already talked about several of them, workers' compensation to cover your employees against any injuries that happen while they're working.
Filip Valica: General liability insurance is the stuff that covers a slip and fall on the premises or damage to some, you know, somebody's property while they're on, you know, while it's on the premises,
Gordon Firemark: damage to the premises itself could be covered by a general liability policy. You might want to have, you know, fire and earthquake and those kind of coverages to cover you against losses suffered as a result of a disaster. Right.
Gordon Firemark: And I'm not here to sell insurance, but, you know, I'm just sort of thinking off the top of my head. head here.
Gordon Firemark: Business interruption insurance is another one where if there's a flood or a fire or an earthquake or something that stops business from happening. Maybe it's a strike or a riot or who knows what. You might be able to have some insurance to keep things going, keep people on the payroll
Gordon Firemark: so you don't lose your whole your whole staff if you have a protracted delay in getting things done.
Gordon Firemark: Products liability coverage, as you said, will depend on the product and the size of the general liability insurance for a business. Oh, yeah.
Gordon Firemark: In terms of you do something to harm somebody in some capacity professionally. That might not be under the general liability coverage. I'm going to get to that. So what you're talking about is sort of an errors in omissions insurance.
Gordon Firemark: This is where you should have gotten a license to use a piece of copyrighted or patented or trademarked material and you didn't.
Filip Valica: You can have coverage against that lawsuit.
Gordon Firemark: So you get a defense of that case. on. And that will also depend on the nature of your business and how much of this kind of stuff you're doing. And it can also cover, you know, well, just any kind of, if you need a license
Gordon Firemark: or a permit and you need to, you get fined or, you know, they may be able to get a defense there too. And then there are the, there are sort of umbrella policies that will cover any gaps that come up. Now, you can, you can overinsure. It's definitely possible to have too much
Gordon Firemark: insurance where all your money is going out to insurance. That's where my mind is right now, because my head is kind of spinning because I'm thinking, gosh, I need five or six policies now.
Filip Valica: And is that something that I can afford with minimal revenue? Well, you know, I think that, as I've said before, a lot of the time, what's important is that you have a talk with an insurance agent, someone who knows this stuff and can really
Filip Valica: take a look at your business and give you a strong recommendation of the things.
Gordon Firemark: And you can ask that person, hey, prioritize these for me. What do you think is, obviously, if I've got employees, I've got to have workers' comp,
Gordon Firemark: right? And if I've got a facility, if I've got a factory or a warehouse, I've got to have liability coverage because the landlord's not going to let me do it without it.
Gordon Firemark: Do you need E&O insurance if you're in the business of making a product and you're, you know, inventing it from the ground up and you're very confident that you're not stepping on somebody else's patent?
Gordon Firemark: Probably not. I mean, you can probably get away with it for a while without it. And, you know, it sort of depends where you are in the phase of your business and all those kinds of things, too.
Gordon Firemark: If you're using vehicles to drive your stuff around to deliver your product, you need vehicle insurance.
Gordon Firemark: And if you have, as you said, if you're putting a product into the marketplace that has any potential to harm somebody, you need that product's liability coverage.
Filip Valica: And, you know, you may not think that your product can harm somebody, but someone will find a way. Well, let's face it, if you're in the business of cupcakes, you can food poison somebody, of course.
Filip Valica: Sure.
Filip Valica: Someone can choke on
Gordon Firemark: a sprinkle.
Gordon Firemark: So back to the advice.
Gordon Firemark: Talk to an insurance professional, ask them to prioritize. If you only had a limited budget for this, which of these things would you be buying first? And which one can you think I can live about? And follow those priorities.
Gordon Firemark: Very great advice. And actually, while you were talking, I thought about something else that maybe we didn't cover from a legal perspective. So I know that online, especially if you make any type of statements regarding income,
Gordon Firemark: they have to be phrased a certain way for the, FTC. Oh, right. Yeah, the FTC guidelines for advertising and endorsements are really important. This applies both to endorsements where you have a, you know, celebrity or someone
Gordon Firemark: suggesting that they're endorsing your product.
Filip Valica: They better have actually used the product and it better be a legitimate, bona fide, non-fraudulent endorsement. Never make me misleading statements in your marketing and sales, you know.
Gordon Firemark: And yeah, if you if you're if you're citing, specific performance revenue markers or performance and those kinds of things it's important
Gordon Firemark: to have the right disclaimers in place and we've all seen these disclaimers you know um results not typical or or uh your you know your experience may vary or those kinds of things i mean you want
Gordon Firemark: a good example that type in a google search for us iberry extract and look at all how all the ads are structured and all those disclaimers there's your template right um um
Gordon Firemark: And although some of those folks have gotten in some big trouble, actually. All very good help. I feel like in the last 50 minutes, we've probably rushed through some very important topics that we could spend even more time on.
Gordon Firemark: But it's basically been the most enjoyable conversations I've had in a lawyer ever with. So thank you for sitting down with us and talking to us about a lot of these topics that are all very important when running a small business.
Filip Valica: Well, it's really been my pleasure. Do you have any parting thoughts of wisdom or tips that you can give to small business owners? Well, you know, I think the biggest tip I want to give is use common sense.
Filip Valica: If it feels like there's something not quite right, that's probably the case.
Gordon Firemark: Don't convince yourself otherwise. Listen to your intuition about these things. And seek and obtain advice about everything. Off of the online forums. Well, you know what?
Filip Valica: The online forums are a decent. starting place because let's face it it's going to be 1130 at night when you think of this thing that you have to know the answer to or you're not going to sleep right so go and do the online
Filip Valica: research and then take it the next step further if you think it's something you should talk to a lawyer about send an email to a couple of lawyers ask for you know free consultation or ask them see if they have any information online a lot of us put a lot of invaluable information up
Filip Valica: online as a way of educating the public and you know that that's a And if you need an accountant, seek an accountant. If you need a dentist and see a dentist, don't try to fix your own, you know, broken tooth. Right.
Filip Valica: So where can people find you if they want to get more information and where are you licensed to practice if they'd like to work with you personally?
Gordon Firemark: So I am a licensed California attorney.
Filip Valica: I'm in Los Angeles, California area, but the whole state is fair game.
Gordon Firemark: And you can find me at firemark.com.
Filip Valica: My name is Gordon Firemark.
Gordon Firemark: It's F-I-R-E-M-A-R-K. com you want to hear my podcast the main one is entertainment law update.com and one is well one is actually
Gordon Firemark: not yet in existence but I'm looking at my checklist of things to do for the next week or two first one is I have an e-book for podcasters and bloggers called the podcast blog and new media
Gordon Firemark: producers legal survival guide and podcast lawbook.com
Gordon Firemark: is the location for that. So anybody who's interested in the online and really covers all that online stuff that we talked about.
Gordon Firemark: The other one is a negotiate anything course and that is at firemark.com slash negotiate.
Gordon Firemark: What else?
Gordon Firemark: On most social media, G, Firemark.
Gordon Firemark: Great. And we're going to have all those links in the show notes. So I'll thank you again very much. All your tips are hugely appreciated. And I know that at least this gives people a good introduction of what they should be looking out for and some of the pitfalls they should expect
Gordon Firemark: from starting their own business. So thanks again for coming on the show. Oh, well, thank you. And one other thing.
Gordon Firemark: Anybody has questions they'd like to submit? I have a YouTube channel at firemark.tv. And if you go to firemark.com slash questions, you can submit your questions. And if it's in my wheelhouse, I'll try to give an answer online. That's perfect.
Gordon Firemark: Well, thanks again, Gordon. I really appreciate your time. Thank you.
Gordon Firemark: And that's all I've got for. for today. Thanks for listening. I put all the links that we've covered under the show notes posted on the product startup.com slash episode nine. Join me in two weeks for another new episode. If you
Gordon Firemark: like this episode and you want to see more like it, or even if you want to see something completely different, please leave me a review on iTunes by going to the product startup.com slash review. I really appreciate your support. I read all the comments and questions and I try
Gordon Firemark: to incorporate them into future episodes. Reviews also help me get great guests on the show. So I'll see you in two weeks.
Gordon Firemark: Thank you for listening to this episode of the Product Startup Podcast with your host, Philip Belizea. For more great content and to stay up today, visit theproduct startup.com. Your guide to getting there.
Filip Valica: Thanks for tuning into this episode of the Product Startup Podcast, the show that teaches you what it really takes to bring your product to market and turn it into a big success. This podcast series is brought to you by Mako Design + Invent, the first firm in North America
Filip Valica: to provide global caliber end-to-end physical consumer product development to startups, inventors, and small product businesses. If you're looking for product development help on your invention, head over to macawdesign.com.
Filip Valica: That's M-A-K-O-Dign.com for a free consultation from one of Mako-Design for design studios from coast to coast. Thanks for listening and see you next time.
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