Legal Risks And Dangers Of $99 Logo Stores Ross | July 14th, 2010

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 to our 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 business name. Or you could buy a “ready-made” logo for $99 (or cheaper) at an online “logo store” and have them add your business name.

For a good discussion about reasons you should avoid logo templates, I recommend 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. We require 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.

You have alternatives when buying a logo design. Pick an alternative that creates a unique identity and a cornerstone of your brand. Generic ready-made logos purchased by numerous other businesses cannot do this for you and will merely expose you to unnecessary legal and business risks.

Do you agree?

image credit: thebeercanmuseum

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  • @DanDimmock

    Definite food-for-thought. Thanks. Towards the end of your post, you mentioned the ‘b’ word, too. So, let’s not forget the all important “a logo does not a brand make!” rule.

    To borrow a phrase: “You pay peanuts, you ultimately get monkey…”

  • @DanDimmock

    Definite food-for-thought. Thanks. Towards the end of your post, you mentioned the ‘b’ word, too. So, let’s not forget the all important “a logo does not a brand make!” rule.

    To borrow a phrase: “You pay peanuts, you ultimately get monkey…”

  • glamaz0n

    So do you think a $300 logo on cS is 3x better than a $99 logo?

  • glamaz0n

    So do you think a $300 logo on cS is 3x better than a $99 logo?

  • Ross

    @DanDimmock – ultimately, cost is one of many factors – and there are plenty of examples that prove it. Nike paid “peanuts” for its logo and nobody would call the “swoosh” a monkey. But, you’re absolutely right that a brand encompasses more than a logo.

    @glamaz0n – This article isn’t about qualitative differences. It’s always a challenge to compare on price because we’ve all seen plenty of outstanding low cost logos and plenty of poorly designed expensive logos. Low cost logos can be just as original – if not more – than expensive logos. However, generic ready-made logos, when purchased by multiple businesses, are worthless.

  • Ross

    @DanDimmock – ultimately, cost is one of many factors – and there are plenty of examples that prove it. Nike paid “peanuts” for its logo and nobody would call the “swoosh” a monkey. But, you’re absolutely right that a brand encompasses more than a logo.

    @glamaz0n – This article isn’t about qualitative differences. It’s always a challenge to compare on price because we’ve all seen plenty of outstanding low cost logos and plenty of poorly designed expensive logos. Low cost logos can be just as original – if not more – than expensive logos. However, generic ready-made logos, when purchased by multiple businesses, are worthless.

  • @DanDimmock

    Ross: If Carolyn Davidson did in fact receive peanuts for her ‘swoosh’, her career since benefited from the subsequent credit and praise. But I’m thinking: Nike’s ability to grow and invest millions of dollars in promotional advertising may have helped her cause and their stature.

    My ‘adapted’ Ogilvy quote was in reference to the process of ‘brand’, not just a logo. It’s a sad state of mind: If, from the outset, you’re only prepared to pay peanuts, you will [ultimately] get monkey… [excrement].

    To quote another Master:

    Pablo Picasso was sketching in the park when a bold woman approached him.

    “It’s you — Picasso, the great artist! Oh, you must sketch my portrait! I insist.”

    So Picasso agreed to sketch her. After studying her for a moment, he used a single pencil stroke to create her portrait. He handed the women his work of art.

    “It’s perfect!” she gushed. “You managed to capture my essence with one stroke, in one moment. Thank you! How much do I owe you?”

    “Five thousand dollars,” the artist replied.

    “B-b-but, what?” the woman sputtered. “How could you want so much money for this picture? It only took you a second to draw it!”

    To which Picasso responded, “Madame, it took me my entire life.”

  • @DanDimmock

    Ross: If Carolyn Davidson did in fact receive peanuts for her ‘swoosh’, her career since benefited from the subsequent credit and praise. But I’m thinking: Nike’s ability to grow and invest millions of dollars in promotional advertising may have helped her cause and their stature.

    My ‘adapted’ Ogilvy quote was in reference to the process of ‘brand’, not just a logo. It’s a sad state of mind: If, from the outset, you’re only prepared to pay peanuts, you will [ultimately] get monkey… [excrement].

    To quote another Master:

    Pablo Picasso was sketching in the park when a bold woman approached him.

    “It’s you — Picasso, the great artist! Oh, you must sketch my portrait! I insist.”

    So Picasso agreed to sketch her. After studying her for a moment, he used a single pencil stroke to create her portrait. He handed the women his work of art.

    “It’s perfect!” she gushed. “You managed to capture my essence with one stroke, in one moment. Thank you! How much do I owe you?”

    “Five thousand dollars,” the artist replied.

    “B-b-but, what?” the woman sputtered. “How could you want so much money for this picture? It only took you a second to draw it!”

    To which Picasso responded, “Madame, it took me my entire life.”

  • ThatRobert

    Hmm. The CrowdSpring designer volunteers whether or not they are using stock images. There is nothing to stop them from using stock images (and reporting such) and if the customer is not savvy enough to notice and care whether or not stock images are used, the customer is in the same position as they are with the $99 logo store.

    That’s not even considering the fact that it would be very easy for the CrowdSpring designer to “accidentally” forget to mention they are using stock images.

  • ThatRobert

    Hmm. The CrowdSpring designer volunteers whether or not they are using stock images. There is nothing to stop them from using stock images (and reporting such) and if the customer is not savvy enough to notice and care whether or not stock images are used, the customer is in the same position as they are with the $99 logo store.

    That’s not even considering the fact that it would be very easy for the CrowdSpring designer to “accidentally” forget to mention they are using stock images.

  • Sandra

    I would have loved it if the article would have contained more real information, e.g. real court cases, real businesses that had the same logo by mistake.
    So it seems just like you want to bash your competition.

  • Sandra

    I would have loved it if the article would have contained more real information, e.g. real court cases, real businesses that had the same logo by mistake.
    So it seems just like you want to bash your competition.

  • Rodger Dodger

    It really seems the point has been missed here by some…
    It’s not bargain based logos we are talking about but the fact you can buy a logo that 100 other people can buy that can now represent 100 businesses.

    If the mom and pop bakery buys one, and the strip club down the street buys the same logo and maybe the car dealer across town gets himself the same logo… you now have an identity problem. Maybe the strip clubs wants to sue the others for logo infringement or maybe someone buys a car and wants to know if they get free donuts.

    I think a crappy original logo is better than one that confuses your identity… or gets you sued.

    You can fix a logo, but it is hard to recover from a lawsuit.

  • Rodger Dodger

    It really seems the point has been missed here by some…
    It’s not bargain based logos we are talking about but the fact you can buy a logo that 100 other people can buy that can now represent 100 businesses.

    If the mom and pop bakery buys one, and the strip club down the street buys the same logo and maybe the car dealer across town gets himself the same logo… you now have an identity problem. Maybe the strip clubs wants to sue the others for logo infringement or maybe someone buys a car and wants to know if they get free donuts.

    I think a crappy original logo is better than one that confuses your identity… or gets you sued.

    You can fix a logo, but it is hard to recover from a lawsuit.

  • Ross

    @ThatRobert – crowdSPRING requires EVERY designer to disclose EVERY time they upload a design whether their design contains stock. In logo projects, stock is not allowed and we have a zero tolerance policy – one violation and you lose your right permanently, to work on crowdSPRING. We rigorously enforce this policy. More about that here: http://blog.crowdspring.com/2010/03/new-stock-art-policy/

    It’s one important difference that’s made it possible for us to work with many of the world’s top agencies and brands.

    @Sandra – I could easily write hundreds of pages on this topic with lots of court cases. I spent 13 years prior to crowdSPRING practicing law focusing on intellectual property. But I suspect THAT article would have bored everyone to death.

    @Rodger Dodger Nicely said!

  • Ross

    @ThatRobert – crowdSPRING requires EVERY designer to disclose EVERY time they upload a design whether their design contains stock. In logo projects, stock is not allowed and we have a zero tolerance policy – one violation and you lose your right permanently, to work on crowdSPRING. We rigorously enforce this policy. More about that here: http://blog.crowdspring.com/2010/03/new-stock-art-policy/

    It’s one important difference that’s made it possible for us to work with many of the world’s top agencies and brands.

    @Sandra – I could easily write hundreds of pages on this topic with lots of court cases. I spent 13 years prior to crowdSPRING practicing law focusing on intellectual property. But I suspect THAT article would have bored everyone to death.

    @Rodger Dodger Nicely said!

  • Sean O.

    ehhh… or you could just flip the switch on the client who wants the cheap way out.

    My standard response to potential clients:
    You want a cheap bulk logo? Sure thing, you make a valid point. I’ll keep that in mind when the next time I am looking for [insert their business here], Ill take the cheap mass market solution too.

    *Wins every and I mean every time.

  • Sean O.

    ehhh… or you could just flip the switch on the client who wants the cheap way out.

    My standard response to potential clients:
    You want a cheap bulk logo? Sure thing, you make a valid point. I’ll keep that in mind when the next time I am looking for [insert their business here], Ill take the cheap mass market solution too.

    *Wins every and I mean every time.

  • ThatRobert

    @Ross, last time I participated in a logo project the options were just “all this work is original” or “all this work is NOT original”. It looks like you’ve changed at some point?

  • ThatRobert

    @Ross, last time I participated in a logo project the options were just “all this work is original” or “all this work is NOT original”. It looks like you’ve changed at some point?

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