The company finally has the final product design and a prototype, and is ready to bring its newest, most innovative product to market. Is a meeting with the company’s lawyer on the pre-launch checklist? “Why?” you ask.
The answer is that by consulting with the Company’s legal team prior to introducing new toys into the market, the Company may save tens, even hundreds of thousands of dollars. The following is a short discussion of some of the items that should be on every toy company’s “To-Do” list prior to bringing any new toy to market.
1. Intellectual Property.
Most companies already know that they should apply for a trademark registration for the name of the company. However, the number one thing most companies forget or ignore until there is a legal battle ensuing is to search and apply for trademarks for the product names. Trademarks for product names are fairly inexpensive to search and protect, and yet, may cost a company dearly if those names were to become the subject of a cease and desist letter and resulting federal court infringement litigation. We previously defended a toy manufacturer in a trademark infringement lawsuit that allegedly infringed a competitor’s trademark. After two years and in excess of $50,000 in legal fees, the matter was resolved. Consulting with counsel and filing the appropriate trademark applications could have avoided the huge waste of time and resources.
Another form of legal protection often overlooked is copyright for the toy’s design. If the design meets the requirements of a sculptural work, such as a plush toy design, then copyright can be a powerful tool in locking out your competition from the use of designs that are “substantially similar”. Prior to bringing any toy to market, toy companies must identify and protect its intellectual property, or risk the very goodwill of the company. Intellectual property not only protects the company, but also provides a company with significant value.
2. Privacy and Security.
Toy companies must take steps to protect the data of the company, minimize the risk of a breach, and put in place technological and legal measures designed to decrease liability in the event a breach does occur. A comprehensive privacy program including but not limited to updated privacy notices, terms and conditions, internal policies, incident response plans and insurance coverage all geared toward reducing risk of legal liability is imperative if the company is to survive in 2018 and the years to come. If the toys being showcased are “smart” or “connected” toys, privacy and security issues involving the Internet of Things will be at the forefront of manufacturers’, retailers’ and consumers’ minds. Retailers seeking to avoid liability undoubtedly will have questions as to how the software works, what, if any, personally identifiable data is collected, how is it being stored, retained and destroyed. Additionally, if a third party vendor will be used to provide software for a smart or connected toy, the company must utilize counsel knowledgeable in privacy and security in order to reduce legal risk to the company that may result from the use of such software.
3. Labeling & Advertising.
Federal law requires product packaging and certain advertisements for toys and games intended for use by children 12 years of age and under to display cautionary statements regarding choking and other hazards. Safety related labeling and advertising for toys generally depends upon the category of toy and the age of the child for which the toy is intended. Additionally, all advertising, including packaging, social media blurbs, trade show banners and point-of-purchase displays or other sales sheets or brochures should be reviewed to ensure compliance with Federal law. It is imperative that toy companies be familiar with these laws and engage counsel who is familiar.
For more information, please contact:
Natalie A. Remien
180 N. LaSalle St., Suite 3200
Chicago, Illinois 60601