After facing some initial problems in obtaining a new lemon supply, your brother’s lemonade business has really taken off. Some local grocery stores now want to sell his lemonade in bottles at their stores. While you previously were under the impression that the only ingredients in his lemonade were lemon juice and sugar, you recently find out that there is actually a secret blend of spices and natural sweeteners in his lemonade that give it a unique flavor. You are of course proud of your brother and happy you have been giving him some solid legal advice. But as you’ve problem come to realize at this point, the more a business grows the more legal challenges it may face. As protective older sibling, you have become worried that others may take advantage of your brother’s success. More specifically, you want your brother to take steps to protect his valuable lemonade know-how from competitors. Furthermore, you also want your brother’s business to have some minimal level of insurance to protect against new risks that a larger size business may face. For this assignment, review the background materials carefully and then write a two to three page paper addressing the following issues: What kind of protection should your brother try to obtain for his lemonade recipe – a patent or some form of trade secret protection? How should your brother go about obtaining this protection? Refer to Chapter 10 of DuBoff (2004) in your answer. Your brother’s lemonade stands only have a sign saying “Lemonade Stand”, and he wants the lemonade bottles sold in grocery stores to have a label saying “Fresh Squeezed Lemonade” on them. In your opinion, will your brother be able to get trademark protection for “Lemonade Stand” or “Fresh Squeezed Lemonade”? Why or why not? If not, give some examples of alternative trademarks that he might be able to get protection for. Refer to Chapter 11 of DuBoff (2004) in your answer. Your brother has enough income from his business to be able to afford one or two types of insurance. What kind of insurance do you think would offer him the best protection against lawsuits? Explain your reasoning, and support your answer with references to Chapter 18 of DuBoff (2004) or the article on small business insurance basics listed in the background materials.

 

Business protection

 

Name of student

Course title

Tutors name

Date

Business protection

Trade secret protection

The lemonade business suffers from the treat of imitation by competitors. Imitation is a contributing factor to decrease of customers as the business will loses its competitive advantage. To protect the lemonade recipe the owner should obtain trade secret protection. Trade protection entails that the recipe is not revealed and is used in the business operations to obtain a competitive advantage. Through the trade secret the owner preserves intellectual property rights and other advantages absent in patent protection (DuBoff, 2004)

In order for the lemonade business owner to obtain the trade secret protection physical security is essential. Physical security includes restricting access of unauthorized person to the area where the recipe is used. This minimizes the leakage of information to people who may pass them to competitors or use them for personal gain. Documents that have the recipe should be labeled appropriately to indicate documents that should not be viewed. The documents should have an authorized employee who is responsible for protecting them (O’Donnell, 2008)

To protect the recipe, fragmentation is important to ensure that the secret is not entirely known to one person only. By fragmenting no employee will have sufficient information about the recipe hence cannot sell it out to competitors. Signing a confidentiality agreement with the employees is a beneficial idea. The agreement entails that the employees are not allow to disclose the recipe to anyone. Vague labelling of the recipe components and ingredients is a strategy that helps in protecting the recipe. Giving the ingredients false names confuses parties that may engage in passing information and those imitating. 

 

Trademark protection

Trademark is commonly referred to as a distinctive design that is used to identify or represent a certain product or company. The lemonade business owner is likely to get a trademark protection for the “fresh squeezed lemonade”. This is because the phrase identifies the source of lemonade and distinguishes the lemonade from those that are processed. The “fresh squeezed lemonade” will get trademark protection for it usage in commercial activities.

The mark used in lemonade bottles that will be sold in grocery stores. The phrase will be protected if it facilitates easy identification of the manufacture. In the case the manufacturer is the lemonade business which is easy to identify when the lemonade is being sold. This puts more emphasis in that the trademark is associated with the product. Fixing the trademark on the bottles improves chances of getting the protection (DuBoff 2004)

“Lemonade stand” is not an applicable trademark because it is so generic hence cannot afford protection. The phrase is also descriptive about the location by indicating that the lemonade is found in a stand. But the “lemonade stand” trademark can get protection if the business owner can prove of the phrase secondary meaning.

Insurance against lawsuits

Insurance covers offers protection and compensation in case a business suffers from a financial loss. Insurance may also protect a business from being taken to court over disputes associated to the business. The best insurance for the lemonade business is the value policy or liability insurance. Product liability insurance protects the business from lawsuits such as lemonade effects on customer’s health. The insurance will protect the business because the accuser does not have evidence that product was designed with an intention to harm the consumer. Also, there is no prove that there was negligence in production of the lemonade. Product liability insurance has an inclusion of defense costs which entails that the company does not incur extra cost to pay the lawyers (DuBoff 2004)

 

References

 

DuBoff, L. D. (2004). The Law (in Plain English) for Small Business. Sphinx Legal.

O’Donnell, R. W., O’Malley, J. J., Huis, R. J., & Halt Jr, G. B. (2008). Trade Secret Protection. In Intellectual Property in the Food Technology Industry (pp. 23-28). Springer New York.

Schechter, F. I. (1927). The rational basis of trademark protection. Harvard law review, 40(6), 813-833.

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