Buyer Beware: The Legal And Business Risks of $99 Logo Stores

You have alternatives when purchasing a logo for your business.

If you’re comfortable picking from several concept designs, you could work with a local designer or work remotely with a designer like Graham Smith (imjustcreative), an accomplished freelance logo and identity designer based in the United Kingdom.

You could crowdsource your logo design project on crowdSPRING and their community of 66,000+ designers and writers, work with several dozen designers at one time during your project, and choose your favorite logo design from an average of more than 110 concepts.

You could buy a logo template for a few dollars and add your company name. Or you could buy a “ready-made” logo for $99 (or cheaper) at an online “logo store” and have them add your company name.

For a good discussion about reasons you should avoid logo templates, you should read Steve Douglas’s post – Logo Templates: Why would anyone want a logo “just like theirs”?

Here’s why you should RUN from $99 logo stores: generic ready-made logos sold by logo stores are purchased by multiple other businesses (this is also one reason your should avoid buying logo designs with generic design elements).

Why should you care?

Here’s why: Generic $99 ready-made logos bought by multiple buyers expose you to legal and business risks and are ultimately, worthless.

Trademark law prevents businesses from operating under names – or using logos – that are likely to be mistaken for the name or logo of an existing competitor. For example, here’s how the U.S. Patent and Trademark Office defines a trademark:

any word, name, symbol, or device, or any combination, used, or intended to be used, in commerce to identify and distinguish the goods of one manufacturer or seller from goods manufactured or sold by others, and to indicate the source of the goods. In short, a trademark is a brand name.

A service mark is similar to a trademark – but it’s used to distinguish the services of one provider from services provided by others (and to indicate the source of the services).

Some people assume that if a logo is protected by copyright law, it is also protected under trademark law. This is untrue. A logo might be protected by copyright law, but is not protected by trademark law unless it is actually used in commerce. This is because trademark rights arise only through use of the logo in interstate or international commerce (such as when you offer items for sale and incorporate the logo in your marketing materials or on your products). For a brief primer on copyright law, I recommend you read Small Business Legal Issues: Copyright Basics.

You are not required (at least in the United States) to register your trademark or service mark with the trademark office. You can acquire “common law rights” simply by using the logo in commerce. However, to successfully assert common law rights, you must show that your logo has become a distinctive identifier associated with your business or your goods or services. It’s impossible to make this showing if you’re using a logo that is also used by dozens, hundreds, or thousands of other businesses who bought the same ready-made logo.

Similarly, if you attempt to register for trademark protection a generic logo used by many other businesses, your trademark registration will likely be refused.

Importantly, if another company – particularly one in your industry segment – is already using a very similar or identical logo based on the same generic ready-made template, you risk being sued for trademark infringement and exposing yourself – and your company – to significant legal costs.

Because of these legal and business risks, crowdSPRING has a zero-tolerance policy concerning the use of stock art in logo projects. crowdSPRING requires each participating designer, to disclose each time they submit a logo design, that everything in their design is their original work (excepting perhaps the font which may or may not need to be purchased separately).

You might wonder why you should care. After all, you’ve spent only $99 on your generic logo and could simply buy another one.

Yes, you can. However, the logo is an important element of your company’s brand. Having invested time, money and resources into building that brand, you’ll find it both difficult and risky to suddenly change your brand. Consistency is one reason why even relatively new companies like Foursquare are considered some of the world’s best brands.

What should you do to protect yourself and avoid these legal and business risks? Run from $99 logo stores selling generic ready-made logos to multiple buyers.

It’s worth repeating: generic $99 ready-made logos bought by multiple buyers expose you to legal and business risks and are ultimately, worthless.

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