Shelf Space: Should You Rebrand? What Startup Founders Need to Know About Trademark Risk and Goodwill

You secured the perfect domain name. It cost a little more than you envisioned, but you have the coveted .com of your dreams. It’s available and all social handles are clean. The name feels right and conveys just the right amount of information to the consumer while still being unique. Just in case, you reach out to a trademark attorney — and it’s not quite the green light you wanted. The trademark attorney has advised that there is some risk to using the name. Now you’re in naming limbo, trying to decide if the risk is worth the story you’ve already started telling.

Here’s how to make the call with your brand, budget and investors in mind.

What Startup Founders Should Weigh Before Using a Risky Brand Name

Before moving forward with a name that carries trademark risk, consider the bigger business picture:

• Current expenditure: Have you already invested in domains, design, packaging or early marketing?
• Cost of rebranding at various stages of the company: The deeper you are into distribution, PR or retail, the more disruptive a rebrand becomes.
• Investor concerns: Trademark risk often surfaces in diligence. It can slow a deal or lower your perceived valuation.
• Loss of goodwill: The more you use a trademark, the more value it has to consumers. If you have to start over, you’ll need to rebuild that reputation from scratch.
• Infringement risk and legal cost: Defending a name can be expensive, especially if you’re scaling visibility or entering crowded markets.

Sometimes, the name is so desirable that it is worth dealing with these issues. But upfront spend and immediate rebranding costs are not the only business considerations.

Early-stage CPG founders also need to think ahead: What future harm could come from a forced rebrand? What would it cost to defend the brand down the line, and how would that risk land with investors? A good attorney will be able to help guide the true cost risk depending on your product category, stage of investment and the infringement risk. Schedule time to connect with us on Shelf Space using this short form.