Businesses are borne out of an entrepreneur’s dream or vision. That is why when starting a business, you might as well start it right because there might be areas that can take an unexpected turn, especially when it comes to contracts, regulations, and sometimes, litigation. Get yourself protected at all costs by exploring the importance of having a law firm behind you in this episode. Elliot Begoun is joined by Rakesh Amin of Amin Talati Wasserman, LLP to share his knowledge with us on how he works with many start-ups and early-stage companies to overcome some challenges and mistakes in this particular area of the business. He also dives deep into writing contracts and intellectual property, laying down some scenarios around licensing, trademarks, and even trade secrets that many businesses may find themselves battling over.
—
Listen to the podcast here
Understanding Regulations, Contracts, And Intellectual Property For Start-Ups With Rakesh Amin
This is a show that is comprised of your questions. Before I turn it over to Rakesh, I want to say that prior to jumping on, somehow, someway he began to talk about the fact that what he does is fun and founders can have fun. I tried calling bullshit on it, but he convinced me, so we’ll see if he convinces all of you reading. Before we start with questions, let me introduce Rakesh and ask him to tell all of you a bit more about him. He’s one of the good guys in this business. He’s somebody I trust, admire, and feel like he has the backs of the founders, which is important in this role. Rakesh, thanks for doing this with me. Share a little bit more about you and your practice and we’ll dive in.
I appreciate that, Elliot. I feel the same way about you. The community and having great friends like you that are champions for these brands. I appreciate the invite, wave and charity. Thank you for setting it all up and I appreciate it. My name is Rakesh Amin. I’m with the law firm of Amin Talati Wasserman. We are based in Chicago and Washington, DC. We’re hoping to expand. We represent companies all over the country and world from everywhere. From ingredient companies to finished product companies, retailers and manufacturers. We’re focused on health and wellness, the medical beauty, cleaning product industries, so I was a pharmacist by background and went to law school. I worked as a pharmacist at Walgreens as a midnight pharmacist through law school. I went to school to be a patent and trademark lawyer and wanted to litigate.
The first law firm that I worked for, was the first law firm for Herbalife. My boss, Kurt Dilling had a firm called Dilling and Dilling. He hired me. He understood from another attorney there who was a pharmacist with me at Walgreens who was a few years older and she’s like, “I remember that you want to litigate. We represent Herbalife, Nutrition for Life, Kevin Trudeau, the mega memory guy, and we have all this litigation. That’s what you want to do, so do you want to join us?”
I didn’t know anything about the area. I knew drugs and I had an interest in devices, but I took the job because I wanted to litigate. I cut my teeth on doing that type of work, mainly for the companies like Herbalife that had foods and beverages. There were different formats. There were more shakes and bars, but there were still food supplements before they were called supplements. I graduated from law school in 1995. The supplement Act was passed on October 15th, 1994. It was signed by President Clinton, but it wasn’t put into final effect until September 1998.
When I graduated in ‘95, they called these supplements, it wasn’t in the correct category, but we call them foods for special dietary uses. I learned a whole set of foods, beverages, supplements, and we’ve learned cleaning products, cosmetics, personal care, and even OTC drugs, including homeopathics. We represent probably over 50 homeopathic companies. It’s mainly food, beverage, supplement cosmetic, drug, medical device, and cleaning product companies that we work with from startups to larger companies for the ingredients and brands.
We represent companies throughout private equity companies to retailers and labs. We have two arms or three different areas that are heard at our firm mainly focused on regulatory so FDA, advertising like Federal Trade Commission, State Advertising Laws, Prop 65, USDA, and customs. The other arm is intellectual property, so patents and trademarks. We search and file at the USPTO every day. We have three of our attorneys writing patents every day. We have another few attorneys doing Freedom to Operate and litigation.
We do the same thing on the trademark end. For our trademark team, we have five attorneys that are mainly doing trademark work, searches, and filings here at the USPTO and internationally. The third arm is dispute resolution and litigation dealing with the subjects that I talked about. Dealing with regulatory and dealing with mainly advertising Prop 65. That’s where you see most of the disputes in regulatory and we do tons of disputes in intellectual property, software technology, and eCommerce disputes that are often related to IP.
I have a few comments and a couple of observations. First of all, you’re a remarkable underachiever that you went through the rigors of pharmacology to put yourself through law school. It’s the typical track. Some people work as waiters. Some people do it. You became a pharmacist to become a lawyer. Those are two crazy professions. The second is, I’m still trying to discern the fun. We’re going deep on that one. We’re going to figure that one out. I want to jump in because I’m already getting some questions. One of the questions I’ll start with, in general, you work with a lot of startups, a lot of early-stage companies. Map out a few common mistakes, things that founders wind up regretting that if they addressed at the beginning, they would have been in a much better situation.
I appreciate it and it’s a common question. We represent a big chunk of startups and emerging brands, and you’ll learn along the way. Usually, it’s not a Herbalife company that’s a billion dollars getting sued by fifteen states and that stuff. Usually, for the startups, what I feel, at least where I have the most knowledge outside of accounting, principles, financial, and those types of things are with the law, regulations, litigation, and even lobbying. You have to know that you have to make the rules or someone else will.
It’s a title of a book and it deals with using the legal system to your advantage through contracts, regulation, and sometimes litigation. You don’t want to be a bully, but you want to be able to understand that area because somebody may attack you or you may need to stop somebody else from using your IP or theft of things. One of the areas and we don’t focus on it so much. It’s more M&A lawyers and corporate lawyers that do the bulk of the transactional work. They also do financing and M&A but they do a ton of transactional work.
We work on transactional mainly on technical areas and transactional supplier manufacturer agreements, IP licensing, and such, but I feel starting off you love your employees, but they’re the first relationship that you have. Every new employee and every new colleague that we bring on in the firm that’s outside of an attorney that has all these rules behind it, have to sign a confidentiality agreement, not a non-compete because that’s illegal in the law and but a confidentiality agreement. Starting that thought process of budgeting time, focus, and money on contracts even the most simplistic ones that are done in the very beginning to protect your IP to protect your interests.
It’s the same with your manufacturing agreements, distribution, and supply agreements. They’re important to get help. It’s difficult to issue spot everything, especially when you’ve only been doing it once, twice, or the third time around the block. You still want other people to help your issue spot because they’re such big things. Contracts are what are called intangible property. They’re not intellectual property but a contract with Costco or with your manual manufacturer is huge and so many implications flow from it.
I suggest even when you’re in an early stage to get an industry corporate firm with you to help you through that transactional process so you can write your own rules. At the end of the day, when somebody is looking to buy you, they’re going to be asking for all of your contracts and they’re going to be asking about all of your initial employees, team and did they all signed contracts where it’s work for hire and they give you all the IP assets that they may have been working on. That’s one part.
The other part is to try to do the ounce of prevention in regards to the regulations that govern you so with FDA and advertising regulations, getting your labels, your website and your social media reviewed is critical. When I started in 1995, and from what I understood 1980 to ‘95 and until 2005, it was fairly quiet, unless you sold a ton of products and you’re one of the highly targeted companies. Now, it’s never been easier to get labeled reviews done by our clients because there are so many lawyers. There are 1.5 million lawyers in the United States.
Intellectual Property: You have to make the rules, or someone else will.
What I say is an ounce of prevention doesn’t get you a pound of cure, which that’s what it was in ’95. It gets you 10 pounds. Starting the right way gets you 50% of the way there. It’s not all and it’s a constant process but if you start it right, you won’t be inundated with a whole bunch of issues later down the line, and you’re going to learn from the process where you’re going to be able to bring a lot of these things in-house eventually.
Getting labeling and advertising reviews and testing your products to make sure that your label claims and your ingredient amounts are in the right amount, testing your products for Prop 65 compliance for lead, mercury, arsenic, cadmium, the list. Whatever it is, you need to go through that to understand, “Am I within a safe harbor, or am I outside of a safe harbor? If I’m outside of the safe harbor, can I get a different supplier that maybe sells me material with less lead in it?”
Some of it is getting labeling advertising reviews, but a lot of it is done in-house like from a testing point of view. It’s a good place to put your time and money into it because this isn’t just for your company. It’s for the consumer, your partners, the retailers, and your eventual investors. Everybody has a stake in it and they want it as correct as possible. I feel that’s part of the fun process. It’s learning becoming compliant, but being able to figure out how to message and simplify that message where right now with all the different products out there is an art.
Your first label review and your first label are probably going to be different than a few versions after but from a legal point of view, it’ll be similar and you may end up making a few changes in claims but you get a lot out of doing label reviews in the beginning. The only other thing is with intellectual property, doing trademark searches, and applying for him in the US and wherever you’re based. If you gain traction and you’re starting to think whether you should file internationally, especially in certain countries that are first to file wins like China and Ireland.
In the US, we’re the first to use a trademark wins the race. It’s not the first to file or first to register but no matter what you want to search, you want to file. You want to file based on intent to use if you’re not going to be using it in the near future so you can reserve your name. The key is doing a great prelim search and potentially a full search. It’s impossible to search Google and the USPTO database, which is rudimentary, so you almost have to put exact search terms in unless how to do a structured search at the USPTO gets difficult.
I recommend getting some professional help there. It’s not too costly. It’s your brand. If you do it right the first time around, once you do it and get it registered, there’s nothing going on for another five years until the renewal and keeping your head up in the marketplace. Also, making sure that nobody is infringing your stuff and making sure that you’re in a good position in regards to legal, contractually with intellectual property and with compliance.
Aside a few comments and a couple of follow on questions, one of the things you said was around contracts and the importance of writing your own rules. The one thing I want to add to that, certainly, and comment on it too, as an early stage brand, there’s going to be some larger entities that you deal with like Costco, a big distributor, or whatever where you may not have a lot of latitude in terms of being able to change the terms. It’s also equally important to understand when you’re signing up for somebody else’s rules, what those rules are, what their consequences, and what their impact can be. Having somebody who can tell you what you’re signing is vital so that you know.
A question for you when a brand is starting for example, in our eTardigrade Program, where a lot of the brands are in their earlier days, pre-revenue to seed stage, friends and family money is exceedingly tight. Two questions. First, how do they begin to get their arms around what they should budget or what they should be prepared to spend in the early days to start some of the things you’re recommending?
Secondly, how do they know what they don’t know? You listed a bunch of things that probably most founders haven’t thought through even from simple agreements from new team members, suppliers, and NDAs all the way up through, so it’s those two questions. What should you be prepared to spend in the early days and how do you know what you don’t know, so you’re asking for the things that you should arm yourself with or protect yourself with?
With the first question, intellectual property and intangible assets are hard to value. From a revenue point of view, you have to dedicate a certain percentage to intellectual property and contracts. It could be a small percentage like 2% in the beginning. At the end of the day, big companies dedicate a lot more because they think that they’re more sophisticated and they know that it serves their interests. When you’re bootstrapping it and it’s not only money, I feel it’s time and focus. I do think it is probably about 2% to 5% where you’re thinking. The corporate attorneys may say something totally different and say that it’s 10% because I’m thinking more from an intellectual property compliance and contracts point of view when you start thinking. That’s where I’m saying 2% to 5%. I’m not saying attorney’s fees for other legal issues. Moving to the second question, a big part of it is prevention.
How do you know that? The average founder coming into this business isn’t a trained pharmacist and lawyer. They’re an innovator, a disruptor, following their passion and they didn’t enter this thinking, “I’m looking over my shoulder. These are all the things that could potentially bite me in the ass, so I’m going to protect myself.”
You have to understand that I’m a lawyer, so we’re cynical people. In law school, they don’t have you reading about Kumbaya, they have you reading about problem after problem. This is where I would learn. It’s from people in the industry that have done it before and I often think that it’s the seven habits. It’s often quoted, but they say, “Be proactive,” which means plan and they also say, “Think the end in mind.” I often think that people like you have seen that end 100 times, so you’ve seen what strategies and other companies ask for in due diligence requests.
Think about what a strategic or an investor in your first major round, they’re going to ask you 100 questions about IP and requests on contracts. Think about what they’re asking for, and know that you’re going to have to answer to it. At one point, presuming that you’re successful, you’re going to have to show them. They’re going to say, “Send me your employment contracts.” That should give you a heads up. One thing that I forgot also is understanding that a lot of times you’re sitting on where you don’t even know that you have IP assets so trying to think about what your company has but protecting your trade secrets is a critical thing. You’re not going to be patenting most things, especially in the food industry, so how do you protect your trade secrets? These are things that you’re going to do not with your employees, but with all of your partners. I often think and that’s what these due diligence lists from the major companies like Coke, Pepsi, and Kraft so on. They go through HR and they give me all of the agreements.
In the supply chain, and in technology, give me all of the agreements. Give me and tell me all of your IP. Tell me all of your IP problems. Send me every cease and desist letter. Send me every coexistence agreement that you have. It’s the same thing on regulatory. Send me all proof of regulatory and send me any regulatory problems. Send me any shakedown letters and tell me how it was resolved. That’s what I would do. I would be thinking, “What am I going to need to do in two years? Who am I going to have to show?” It’s not only Whole Foods. It’s going to be the investors usually, they’re the ones that ask all these questions. They’re better than lawyers in asking questions because they’re looking to pay a lot of money and they’re trying to figure out all these risks.
Intellectual Property: Contracts are intangible property.
To add to that a few things, an investor is a great resource for this, believe it or not, especially a bigger investor before you’re ready for them. Say, “I’m starting to think through getting everything established, so as I grow into being a brand that reaches your radar, I’ve got everything buttoned up.” What are the things that I need to be looking for from a regulatory compliance and IP standpoint? The other is and this is not a pre-ordained endorsement here.
One of the first things that anyone reading this should be doing is making sure they have a good attorney around them in this business for a lot of reasons like understanding of the law but Rakesh said something somewhat tongue-in-cheek but it’s true. They are, oftentimes, your best cynic. They’re often the person around you who isn’t as idealistic or, as Gary Herzberg always says, “Pathologically optimistic,” as you might be.
They’re the person in the room that’s been around the things that aren’t as rosy as you would hope they’d be doing that but having an honest discussion with them about, “When you’re in the early days, you can’t take every risk out of your business. You can’t get everything that you need done because you rarely have the time or the dollars.” An attorney who’s on your side will start helping you do it as a ticked-down list saying, “Let’s take the highest risk things. Let’s get those addressed and we’ll work this way. We’ll work our way down this list over time to make sure everything’s buttoned up.”
I want to jump into a couple of other questions. Ryan has a question and I’m going to read it, “We’ve been in business since 2013 and it never filed for a trademark. We discovered another company based in Britain that filed a mark similar to our brand name back in 2018. Now, we’re having a hard time getting our trademark approved. We’re working with good lawyers on the process but it sounds like things from here could get expensive. Considerably, we’re still somewhat smaller and relatively cash-strapped around $3 million in sales, should we be planning to go after the other brands to remove their mark entirely from the US market or should we be happy settling with them on some form of coexistence?” That’s a big question.
It comes up a lot. It’s all facts specific. Here, if you’re having a problem getting your mark registered, and if you can’t overcome the USPTO stage to get a federally registered trademark, and if I’m understanding, you filed but you didn’t get it registered yet. If that’s right, I would fight it at the USPTO level but I would also consider approaching after making sure that you have first use because it’s a cardinal sin to approach anybody unless you have first use.
Ultimately, if you think that you have strong rights, then there’s got to be a motivation. I always say that you need to have a business case for doing anything. If there’s a business case for approaching them, do it with a thoughtful process and look at all the facts to make sure that you have a pretty strong argument. If the issue is big enough, it’s worth pursuing it and this is top level. You have to look at it. I’m presuming that there is an issue in getting this registered and there is potentially also a likelihood of confusion.
That’s where I want to focus on this question. The business case for me is, are they causing a problem? Are they preventing me from getting registered or are they confusing some consumers and not de minimis or token confusion or total speculation but where you think potentially a large number of people possibly 10% of the people if you did some survey on the likelihood of confusion that 10 out of 100 would be confused? In Federal Courts around the country, they required the lowest circuit. It requires 13% in a survey, so 13 out of 100 had a likelihood of confusion that’s a source or origin or affiliation. If they don’t, that’s not enough confusion.
A lot of times, you may think something is a problem, but it’s not. Here, if you have an issue with getting it registered, then you do have an issue and the USPTO might be citing this other mark. If they’re citing the other mark, I would potentially, if you have first use go to them and say, “Will you agree to a coexistence agreement so I can file that with the USPTO saying that there’s no likelihood of confusion and even the other side is saying that.” Potentially it gives an option of both companies having the registration as long as you don’t think that there’s any confusion.
I am going to add. First of all, Ryan, thanks for asking the question. I appreciate your willingness to do it. The follow-on that I’ll say is, that reinforces why and you mentioned that it’s now getting expensive, it’s taking time, and it’s something that’s probably keeping you up some at night. I’ll use your example as another admonishment to encourage anyone in the earlier days to jump on this the sooner the better. Don’t wait, if you can. A few more questions. One that comes up often is when to go file for a patent and when to stay as a trade secret and how do you know when you’ve crossed that point where filing for a patent makes more sense? Any high-level suggestions there? I know that one’s relatively speculative because there’s no specificity to it.
One, it depends. To be patentable, you have to be new, non-obvious, and functional. Usually, things that you mainly have to get around the functional element are not difficult to achieve but to get patentability, which is a limited monopoly for twenty years from the date of filing. You have to be new and you have to be non-obvious over prior art, and you can connect certain things together. What we do for our clients, and where you see more patents filed are in the dietary supplement industry, drug industry, and medical device than in food and beverage, but you do see it in food, beverage, personal care and so on. We have what’s called an invention disclosure form and we give it free to anybody that asks.
It’s a twenty-page document that lists out a series of questions that basically will answer the question at the end. It will tell you whether it’s even worthwhile to have an attorney review it to seek patentability and if at the end, you’re like, “This may have legs that it may be patentable, you can typically engage an attorney to review that invention disclosure form for a modest amount.” For $1,000, you could get a person to say, “Yes, this has legs. No, I don’t think so. You’re going to have a lot of problems with this, that or the other, or with scope.” You may want to take the approach of keeping it a trade secret. Yes, reverse engineering is legal and leaks happen with trade secrets but that’s where you see probably more value in food and beverage companies or with their trade secrets. It’s part of what differentiates them from a technical point of view. It’s a huge asset.
It’s sometimes hard to understand what the Cokes and the Gillettes say that, “Our brand is the most valuable asset along with our intellectual property.” It’s not only the brand but the know-how, the technology, and trade secrets. They’re not only saying the brand name. These trade secrets are huge. If anybody wants an invention disclosure forum, I provided along with an analysis on natural loss because not everything is patentable. A recipe made of natural ingredients and if it didn’t have unexpected results, or synergistic activity, and if there wasn’t some other element that’s patentable, you definitely want to keep it as a trade secret.
Trade secrets are only as good as you keep them secret so make sure with employees and partners to only disclose it on a need-to-know basis. Those are the key elements. There are some gaps and there are some nightmare stories or possibilities that can happen with trade secrets now with patent reform. Let’s say a University got a patent on a technology that a company has been using for years. That university can send you a cease and desist letter. You have some options where under this Prior User Doctrine. You have some defenses but it’s limited and it doesn’t apply to the prior user defense and universities.
Regardless, we don’t live in a perfect world and like Elliot said, which I agree, you’re not going to get everything done. It’s the parietal principle. Protect the 80% of your IP. Do 80% of it. That’s what we typically recommend. The founders look at the invention disclosure form, share it with their R&D team, they should probably read it every year to see if there’s something worthwhile, but sometimes there is and you keep it as a trade secret.
Intellectual Property: An ounce of prevention doesn’t get you a pound of cure.
That’s a great resource too. Thank you. Wes has a question here, “What do you think is the best strategy for protecting against counterfeit or knockoffs?”
Getting your trademark registered, we live in a first to use country wins. Typically, if you use first and you don’t apply, you’re a common law user. The problem with the common law user is it has limited rights where you have to establish significant market penetration in each state. It’s costly to prove that you have weak remedies and you can’t make the other side and basically destroy all their evidence. It’s not as easy. What you want to do is get your brand registered and also consider doing it internationally in areas where you’re selling, or that you think that you’re going to sell in the next 2 to 3 years.
There are things that you can do at the border with the US Customs where you can submit evidence of your brand and where they can help you with some of the enforcement. There are ways to do that. Ultimately, with counterfeiters, if you can show your rights and a lot of times with counterfeiters, we engage investigators and the help of foreign counsel if it’s happening internationally, but there are vehicles and there are laws that can protect you against counterfeiting.
Another similar question. What do you recommend for classifications for marks as pertains to growing brands? Is it important to register all the classes initially based on their dissipated use or wait to register based on forms or use change?
I am a strong believer if you anticipate the category within the next 2 to 3 years, it can make sense to file in for those specific categories. It’s more expensive, but not that much. It’s more in the filing fees typically. You can’t see what’s happening now. You have to look into the future where you’re going, where you think and act accordingly. The USPTO with brands they give you can file a trademark here in the US based on foreign rights. You can file based on intent to use and you can file based on use.
Whenever you file based on use, you are probably late in doing it. Never only search, use, and don’t file. Unless you do the search and you’re about to start use in a week, don’t wait. File the intent to use. Get your stake in the ground as early as possible because you can lose priority by 2 or 3 days. I’ve seen it happen before. Get your stake in the ground and file an application. It’s not going to be that costly. Even if you don’t go into a specific category, you don’t pursue it.
Another question. Many of the folks reading this have their products produced as a co-man. This is a great question. What do you see this missing out of a lot of co-man agreements that should be considered?
Quality components, inserting specifications into the agreements, recall, and making sure you negotiate on the limitations of warranties. They’re going to disclaim warranties eight ways to Sunday typically. You have to anticipate that this is not a perfect world, that you’re going to get defective products at one point. What do I need to do and what provisions do I want in the agreement? You’re going to want to have the maneuverability to have potentially other suppliers.
What I see typically is you just make sure that your intellectual property rights are protected and you retain ownership because ultimately, when you end up selling, the buyer wants you to have this whole of an asset as possible. A lot of times, you don’t want to give away the farm, these co-manufacturing agreements, and so on. It’s a negotiated thing and a lot of times, if you’re not able to retain ownership, then you look elsewhere. That’s one area. Sometimes, if a defective product is produced, what are you going to do in terms of recall? Are they going to help you with expenses because it’s expensive and you would want them to?
They often disclaim warranties, including consequential damages, which are, “We sent you this, but we’re not going to get hit for lost profits.” You can either strike that, and they may say, “No, we’re not going to agree to consequential damages,” but you can agree to something where it’s not a full write-off of all warranties and so on where they have your back. It could be their liability is limited to three times the purchase price of whatever. I see people not negotiating that point and I’m not sure why because it comes up all the time.
I tell clients this all the time. You know when you need contracts or when you’re the one most at risk. Who’s most at risk the manufacturer or you? You have to get money upfront or at least a big chunk of it. We don’t live in a perfect world, so we do have to anticipate these types of things. I know they’re your partners and they are some of your closest friends and allies and they’re a part of it but it needs to be arm’s length. I can tell you that these strategics look at the manufacturer agreements a ton. It’s one of the biggest things.
You made many but an important point where I know from working with a lot of founders, it’s a struggle. It’s a struggle when they’re when they have a relationship with somebody that’s been informal or relatively informal to codify it suddenly. The truth of the matter is a well-constructed contract protects both sides and any relationship of material and this is my opinion I call it bullshit on it if you choose, but any relationship of material to the business should be treated as if the individuals themselves weren’t involved in it. You’re looking at the entity. You want to establish it like if you were to leave the entity and they were to leave the entity that it wouldn’t go on in perpetuity as a set and it wasn’t reliant upon the relationship that you’ve established personally.
It’s hard sometimes to say to somebody that you’ve been doing business with, “We need to put a contract together. We need to negotiate an agreement,” but it’s in both party’s best interest to do that. It’s going to be needed for you to grow and for you to grow t your business with your co-man. It’s required to get to that next level of scalability. Here’s a cool question. They’re saying that they’re roughly in the seed stage so let’s say they’re a $1 million brand or support. “If I had five things that I needed to check off that I can say that I have done from a regulatory compliance and IP standpoint, what would those five things be?”
Ingredient reviews. If it’s a food and beverage, every ingredient needs to be grass or an approved food additive. Labeling and advertising review, getting your trademark registered, protecting your trade secrets, and that manufacturing agreement. Those are usually the big things. I can say there are probably ten others that could compete because you can give away your rights on your first day with your first employee. I read this book, and it was written and Warren Buffett wrote to it by Howard Marks has a book that’s named The Most Important Thing. I don’t want to give away the book.
There are many important things and one thing that I want to emphasize is, I already mentioned private equity. They know what the strategic is going to end up asking for and they are asking the same questions. Get a lot of information from them but I don’t know if you can retain them. Getting experts, getting consultants and getting people to help, it helped our law firm so much to get outside help. I can’t believe it took us this many years to do but it’s been so helpful. I often say that I play a lot of sports and I’m not saying this but I would pick people better that are going to win all the time and they’re your point guards or quarterbacks.
Intellectual Property: To be patentable, you have to be new, non-obvious, and functional.
In the legal world, that’s usually the corporate lawyer. She or he is the best piece. The hour of counseling that they give you, especially if they’re an industry one, they are the ones that went through all four rounds of financing and sold it to the big strategic. They are the ones that are quarterbacking the deals. They’re the ones that are setting up these data rooms. We don’t do it. We help with due diligence on a daily basis.
We’re always working on at least 5 or 6 deals at any given time but we do the regular and the technical parts so the regulatory and the IP reviews. We help on reps and warranties that relate to IP and relate to regulatory. We help that process but the real quarterback other than, “I feel like you’re the one,” is that corporate attorney. I feel that people wait a little too long to get an industry one. I feel they can always write better contracts. They always see the same problem and issues.
It’s a tough situation because for most, relationships with your attorney are billable hours and what people do is wait until you need it and that’s the worst time to do it when they should be a trusted advisor. To your earlier point about the seven habits, you’re proactive with your attorney instead of reactive but so many people are fee avoidant. I look at it as a good insurance policy. We’re all paying insurance and we feel the best about it when we don’t use it. That’s the beauty of it.
You don’t want to triage. I can tell you that triage is part of business now but to be able to reduce it is a huge thing because it’s the distractions and the lack of everything. It compounds itself so I feel that you’re never going to be perfect. Even when these brands sell to the strategics, they’re not perfect. We work with a lot of the strategics and they’re like, “We bought the brand that you’re working on and we’re still working on it.” They’re working on whatever they’re working on so not everything is going to even be done after you sell it and it’s going to take them a few years to get it the way that they want it.
It’s part of the process of being an entrepreneur, but I can tell you when you are compliant and the other person, the other company next deal or the second and third are not, it puts you at a huge advantage. It puts you at a huge advantage when you have all your IP and all that stuff. One thing on the fun part is this is, maybe it’s the wrong word, but relaxing. You don’t have all these lawyers stress on eight day stress on bad facts, not good facts.
I’ve had clients say, “Rakesh, don’t forget about these good facts.” I’m like, “Trust me, I won’t. I love the good facts.” If we don’t have the bad facts, if we don’t address them, we’re going to get crushed. I often say, “Get on higher ground and put good facts in your work chest.” The lawyers will always take your money and even clients sometimes call me and say, “Can we pay X amount of money and get this over with?” Sometimes, if you saw $100 million worth of product, it’s not always that easy because sometimes these shakedowns require judge approvals and all these types of things.
If you get 50% of it done in the beginning and if you set the tone that you’re going to continuously do this for the next 5 or 10 years until you’re done, you’re going to be so much ahead of the game. It’s going to help differentiate you and they’re going to end up preferring. You still have to have the revenue and the profitability and the story and all that stuff but the last thing they want you to do is to be distracted on litigation. They don’t mind you spending money on analytical testing, IP protection, or regulatory compliance.
You made an important point too and that is all of this foundational work all this workaround regulatory compliance and IP could wind up being the differentiator between you and another brand that a strategic or VC is looking at. Like all the other things that you’re working so hard to do to make sure that you are the most appealing from product, packaging, marketing, execution, team, capital efficiency, and all of those things.
Having your regulatory, compliance, and your IP well tied up, documented, and structured could be the difference. At the end of the day, it could be the difference and as an aside, Rakesh mentioned he likes playing sports and he mentioned Bill, so I can’t go without saying, “If you’re in an industry pickup basketball game and you need a shot on your team, grab Rakesh.” He’s definitely the ringer you want. Thanks for doing this with me. How do people get in touch with you and learn more?
I’ll provide all my contact information. They can call me anytime. Call me or email me anytime. If we don’t do it, I’ll lead you in the right direction. We know people in all different areas. We’re looking for long-term relationships and strong bonds. I’m not too concerned about the labor review or a trademark. I want to take good care of you, so feel free to contact me anytime.
Like I said and I meant it sincerely, Rakesh and the team are the good guys and they do it for the right reason. Thanks so much for coming on and doing this with me. It’s good to see you. This is the only way we get to but hopefully, that won’t last much longer. Thanks, everybody for joining. I appreciate it. Thanks for the great questions. I look forward to seeing everybody in the next episode. Take care.
Thank you so much.
Important Links
About Rakesh Amin
Rakesh represents companies in the food, beverage, dietary supplement, cosmetic, drug, medical device and cleaning product industries. Rakesh is known for his passion, sound legal judgment, results and relationships. Rakesh’s clients include health & beauty brands, suppliers, manufacturers, corporate law firms, pharmaceutical, technology, retail and media giants, private equity and venture firms, accelerator groups, trade associations and government-sponsored commerce groups.
Rakesh works on compliance issues involving the Food, Drug & Cosmetic Act, The Federal Trade Commission Act, The U.S. Department of Agriculture, Proposition 65 and advertising laws, patent and trademark protection and infringement litigation, consumer false advertising class actions, and commercial litigation.
Companies seeking to develop and launch products turn to Rakesh and his team for creative strategies to help label, advertise and sell products, and protect, license and enforce brand names (trademarks) and inventions (patents & trade secrets).
Whole Foods and Informa Market (Expo West and Supply Side West shows) recommend Amin Talati Wasserman as a leading FDA and Ad Law firm.
Rakesh is a board member of Naturally Chicago. The firm serves as FDA regulatory counsel for The Hemp Roundtable championing The Farm Bill and path for CBD products. Amin Talati works with the Council for Responsible Nutrition on FDA and advertising regulatory issues. The firm is also general counsel for The International Probiotics Association, The Global Organization for EPA and DHA Omega-3s (GOED-fish oil), The American Botanical Council and NAXA for FDA, Ad Law, trademarks and IP.
Love the show? Subscribe, rate, review, and share! tigbrands.com/tig-talks/
