EBay's Win, Small Business' Loss

Perfume Bay is doing well - and it has been doing well for several years now. The online retailer, which sells perfumes, opened its virtual doors in 1999 and has since made millions of dollars in revenues - and maybe that's what eBay had the biggest problem with.

In a recent 9th Circuit Court of Appeals case, judges ruled in favor of eBay on grounds of trademark dilution law. Essentially, eBay went and sued Perfume Bay to remove the "Bay" from its name saying that it could potentially confuse customers into thinking Perfume Bay is affilated with eBay - all because of that darn "Bay." The online auctioneer sells perfume itself, which is one of the reasons it went after Perfume Bay.

The obvious lesson that has come out of this case for small business owners is to study, study and study the law so that this doesn't happen to you. Obviously the success of Perfume Bay is not something every small business owner will achieve. However, you should always prepare for that potential surge in growth, so that if it happens, you are legally protected.

For the most part, the big businesses could probably care less about the small guys - until the small guys become their competition. This was the case with Perfume Bay. As a concession, the company was told that it could add a hyphen to its name, Perfume-Bay. However, the busines owner has argued that that would not matter since online URLs cannot include hyphens.

In fact, if big business did see small business owners as a threat, then there would be a lot more done to Christmas tree operators with the name "Trees R Us" or stores that are called "Jons" (instead of Vons). The fact is though, that unless you are taking a significant chunk of the marketplace, it wouldn't matter.

However, to keep your business protected, you should always trademark your business name and trademark your web site name, because when the dust settles in every litigation fight, the owner of the trademark comes out the winner.

Before settling on a business and web site name, run searches (you can use the help of the county) to make sure that no one else has that name. Oftentimes, you can run these searches online at no additional cost. You can also go into person to have the search done, although you may be charged.

This is moving on to a slightly different branch of business ownership, but you should also consider incorporating your business or at least making it a limited liability company, so that if litigation does come knocking at your door, you will not stand to lose any of your personal belongings. As a sole proprietor, your entire life's savings could be up on the auction block if you end up being sued.

So, take a cue from Perfume Bay's troubles and make sure to read up on the law and keep all of your bases covered. What separates the big businesses from the small businesses is the ability to use the law to one's advantage.