Hi. I'm Sari, Kimbell. And I've done just about everything in the food industry. I have helped hundreds of packaged food business entrepreneurs. And now I want to help you make your delicious dream a reality. Whether you want to be successful at farmer's markets, online, or wholesale on the store shelves, Food Business Success is your secret ingredient. I will show you how to avoid an expensive hobby, and instead run a profitable food business. Now let's jump. Welcome everyone back to the podcast today is going to be a good one. This is a must listen to if you're just starting out, or if you already got started, and you're wondering if you did it correctly. My guest today is Lauren handle, and she has her own practice, handle food law. And Lauren is an attorney for food, beverage and farming businesses. She counsels clients in the food space on a variety of legal issues, including regulatory compliance contracts, and intellectual property. And I love that Lauren specializes in CPG. So we're gonna have a great conversation. Thank you, Lauren, for being here. And welcome. Thank you for
Unknown Speaker 1:22
having me. Yeah.
So we got on a call a couple weeks ago, and I was like, Oh, my gosh, got to have you on the podcast. People need to talk about this, we need to start this conversation. I think I'm guessing you see this a lot. But people kind of get started because it's food and they're passionate about it. And then they'd kind of brush over this stuff. Would you say that's common?
Lauren Handel 1:50
It seems to be I. So I do have a lot of clients who are startups. And I also have a not so much in COVID times, but pre COVID went around a lot to different kinds of like food business boot camp type seminars where people are just getting started and learning the basics of how you start a food business. And I have found that it is pretty common that people, they realize that there are legal aspects of the business as there are with any business. But I think that because food is something everyone is so familiar with, and is part of all of our lives. Yeah, just because we have to eat that it seems like it should be easier than it is. And people are tend to be surprised at how many regulatory issues and legal considerations there are when it comes to having a successful food business. So yeah, so I do tend to surprise people who haven't looked into that before as to all the things that they should be thinking about and managing from a legal perspective.
Yeah, I think that's, that's pretty common. So wherever you are, it's okay. But we're not here to like scare you. But we also want to give you the reality check, right and make sure that you are doing these things. And and I always say like, you know, food is highly regulated, because it does have the potential to mean to potentially kill somebody or make somebody sick. And so we as brand, when you're a brand owner, you bear the responsibility for that and making sure you're you're dotting all of your i's and crossing your T's.
Lauren Handel 3:37
That's right. Yeah, it is. The the big existential threat of any food business is that it is a potentially deadly product.
Well, let's jump on in and why don't you tell me a little bit more about your practice.
Lauren Handel 3:53
Based in New Jersey, my practice is virtual, even pre COVID. I've, when I started this firm, I intentionally decided I didn't really want to work in an office anymore. So I do have a couple other attorneys who work with me part time and we're in different states. And my clients are all over the country and actually internationally too. Okay, great.
And I love it that you have this specialization. One of my clients started working with you to help them with their trademark and I loved that they It was like, you know, food, and you understand these pieces. So first of all, let's just talk about regulatory. You know, that's the big the big thing, the big elephant in the room like we are, who are we regulated by and what do we need? What kind of regulations do we need to follow as we get started as a food brand?
Lauren Handel 4:50
Yeah. So So it depends on what type of product we're talking about. And also where you are right which state you're in. So, food regulation is a little disjointed and complicated because we have multiple agencies responsible with somewhat overlapping jurisdiction apps. But at the federal level, the basic big dividing line is if you are if you have a meat or poultry product, which includes products that contain small amounts, but anything above two or 3% of meat or poultry, then you're regulated by the US Department of Agriculture. Also catfishes in their in USDA jurisdiction, which is kind of a weird word about regular fish, but cat, just catfish, and it's actually the whole family of fish, similar similar forms fish, which is basically catfish. Yeah, that's a weird quirk in food law. But that's USDA jurisdiction. And then everything else is FDA jurisdiction. Everything else except alcoholic beverages, which are?
I don't even know. Yeah, I don't even go there. I worked with bitters. But that's it.
Lauren Handel 6:10
We could do a whole podcast just on alcohol. So all all food generally other than meat, poultry, catfish is FDA. And so that's at the federal level, then each state also has responsibility for food products, and has regulators that has their own rules. But basically, state law follows federal law. It's not allowed under the Constitution to conflict with federal law. So for the most part, state regulators are enforcing the same standards that FDA enforces. But there can be some additional requirements, especially with regard to labeling that states can impose. Okay, so. So those are kind of the big breakdowns at the state level, the agencies responsible, it varies from state to state, but it's usually either the Department of Health, or the Department of Agriculture, or sometimes both. But But if you're just getting started, then the state's departments of health and in agriculture are good places to start. Because usually you can find somebody to talk to somebody, like answering the phone and give you some idea of where to start to try to figure out what rules apply. Because then the type of product matters. So if you're going to do a canned product, meaning any kind of shelf stable, low acid or acidified food type products, well, there's a set of rules that apply to those products in particular registration that's required for those types of products. If you do juice, while there are juice hasip rules that apply if you do seafood there seafood hasip rules apply for basically everybody else. It's just general, the food safety rules. And then there are other labeling rules on top of that, too, which again, are mostly federal, but some states have additional requirements, like California has prop 65 is a big one. But that's kind of the very rough overview.
Yeah. Well, thank you for that I, I always tell people the same thing. Like it depends on your product. And then it depends on the state you're in. And it also depends on where you're going with that product to some extent, like, if you just want to do a farmers market, sometimes you can start out as cottage food or something like that. So it is helpful to kind of have those three pieces. But I always encourage people to get on the phone with somebody at the beginning.
Unknown Speaker 8:50
Yeah, one other thing I mentioned. So there's an additional layer two, where it depends if if your business is primarily wholesale selling to other businesses, then that's basically what I just described.
Unknown Speaker 9:04
If your business is strictly retail, if it's food service, or you only plan to sell direct to consumer, then you're more likely to be regulated by your local health department. So the county or the health department, then the state.
Perfect. Yeah, great, great caveat. There's a lot of caveats whenever we start describing license. However, the FDA still that's not a caveat that's still there. And so can we talk a little bit about labeling on top of that, so there's licenses but then I think you specialize in FDA compliant labeling as well. And I know I always get a lot of pushback on this and I like to say you know, you're the FDA does not does not consider your marketing advice. reason not to have all of the things that they require on there? Because most people design a beautiful label to their marketing and their brand. Yes.
Yeah, a lot of what I do is reviewing people's labels and other marketing materials, so their websites and social media and cell sheets, things like that, all of which are regulated, which, which may surprise some people for compliance. But also, because these days a lot of people get sued or threatened with lawsuits for things that they say, in their labeling and marketing. And you might think that, Oh, well, that's just the really big companies with deep pockets. And the reality is that it's not and that they're actually plaintiffs lawyers who deliberately target small companies to threaten lawsuits, because they know that those companies can't afford to defend the lawsuits, and therefore, they can get settlements quickly. So when I look at someone's labels, or their marketing materials, I'm doing it with an eye toward not only compliance, but also to try to prevent them from getting hit with a lawsuit or threatened lawsuit. So yes, it is true that your your marketing needs are pretty much irrelevant to compliance. And it's also the case that you cannot look at your competitors to figure out what the law is, right? Because there is a lot of non compliance in the marketplace. And especially with FDA regulated products, because FDA doesn't pre approve your label, right. So USDA products, if you make a claim, you have to submit the label to USDA for review and approval before the you start using that label in the marketplace. That doesn't happen with FDA, and FDA doesn't have the resources to be out there, policing everyone's labels. So there's a lot of non compliance in the marketplace. That's why there's so much room for class action plaintiffs lawyers to come in and basically enforce the law. And different companies have different tolerance for risk and different resources for addressing problems if they arise. So a very small company, maybe can't afford to take the risk, that they're going to get hit with a warning letter from FDA or get hit with a threatened class action lawsuit, the larger company might see that as a cost of doing business, and, you know, take a bigger risk with their marketing with the recognition that if they need to, they'll change the labels, the they'll pay off a settlement. You know, everybody has todo that calculus for themselves.
Right? Yeah, and some people are just more risk tolerant, some people are more risk averse. So you kind of want to decide, you know, and, and I know I get people are like, well, I'm just going to the farmers market, or I'm just very local. And so you know, there are certain levels, obviously, the more exposure you have the the greater your risk. And, and so I'm sure you have kind of a cow, you know, your your basic statement that you tell people as as an attorney, and I respect that, like, this is the law, and this is what you need to be doing. And if you want to minimize your risk, then you need to be following it. But
Lauren Handel 13:30
Yes, my my advice on on labels and marketing is always that i can i can tell you what the law is. And you have to decide what you want to do. And well, I, you know, I sometimes get asked to propose suggested changes. And I am not a marketing person, so I'm not a good person for that. So I can't tell you what will best sell your products and what will be catchy as to consumers. All I can tell you is technically what what you're required to do or not allowed to do. And, you know, kind of help to guide my clients towards what would be different ways to maybe if they want to make a claim that's just not allowed? Well, there's usually some way you can reframe what you want to say and get an overall message across in a way that is compliant. So I try to help them find that.
Yeah, yeah. Anytime you start making claims, health claims, that kind of thing that really can open you up, you're kind of opening up the risk circle, for sure. So I highly recommend getting those getting those reviewed, and not just assuming because you saw it on somebody else's package. Like you said, I think people often come to me and say well, but so as I was not doing that, and they're a big brand, I'm like the start. Let's not use them as the model because there's a lot of things wrong on People's labels for sure. That's true. And now we've layered in all of the FDA new nutritional compliance that is in effect. So it's an effect for everyone now, right? That's right. Yeah. Okay. So it doesn't matter for a little while it was only companies over a certain amount. But there is a an exemption that people can can get if they want to. They're small enough, right?
Lauren Handel 15:29
Yeah. So if you're very, very small, you can be entirely exempt from nutrition labeling. And so if you're just kind of selling at a farmers market, then that's probably okay. The reality is, though, if you want to sell to any other business, even if you have an exemption, there's a few different exemptions that could apply. But even if you have an exemption, your buyers are going to want to see that you have a nutrition label.
Yeah, that's what I say to like, if I'm at a grocery store, I want to see that it's on there. It speaks to credibility, and transparency. So I agree, even though you could get an exemption. And I would say buyers want to see it on there as well. So
Unknown Speaker 16:12
Yeah, and it doesn't need to be all that expensive, either. I mean, except for really unusual products where a database wouldn't put out an accurate nutrition label. Yeah, you can go online and use recipe towel and plug in your formula and spit out a compliant nutrition label from cost, right. The only part where people get tripped up sometimes is not choosing the right serving size. I see this a lot actually, I see it even with fairly sophisticated companies sometimes that they will, and people don't always realize this that you're serving size, you can't just decide for yourself, what your serving size is that there's a there's a regulation for exactly how you determine what the correct serving size is. So that you like the idea that like products should have very similar serving sizes, so people can make real comparisons. So I see that a lot that companies choose the wrong serving size, tend to choose too small of a serving size, and then your nutritional label will be wrong because it was based on the wrong serving.
Yeah. The other one I'm starting to see issues with is the dual column for for products that have multiple servings in them, and kind of what that threshold is and not having the dual column. So there's just so much I was like to say like, do you want to be an expert at labeling your product and figuring out how to do this? Or do you just want to get the product done and in your hands and have it be legal, and so you can get to the business of selling it? Like, all this information is available on the FDA website. But it's that is a beast.
Lauren Handel 18:03
Yeah, it's definitely not presented in a really user friendly way. And especially with regard to labeling the FDA, I think it's FDA last updated its nutrition letter, its food labeling guide, in 2013. And a lot of the rules have changed since then. So it's, there are still parts of it that are valid, but there's a lot of it, that's not and an ordinary person who doesn't spend all their times poring over FDA rules wouldn't necessarily know which parts they can rely on or not. It's it's really, I don't I don't know what's taking them so long to update it. The new nutrition labeling rules were passed in 2016. And they haven't updated that yet.
Yeah, I know. It's unfortunate, I really the things move so slowly, but it is what it is. So get help with this. So I think what are some other misconceptions then that food entrepreneurs or mistakes where they make and we talked about a couple already with nutrition, but in regard to regulations?
Lauren Handel 19:12
Um, so Well, I mean, I see a lot of misunderstanding of the rules around claims, nutrient content claims are very specifically regulated. And so by that I mean a claim that a product has a certain amount of a nutrient right, so high in fiber or low in fat, excellent source of protein. Any claim like that is a nutrient content claim and there are actually several different regulations that apply to those that restrict the the conditions in which you can make that claim there's specific criteria that the product has to need to make a claim. And then what language you can use. So people think they can say, you know, packed with protein. And that's actually not a permissible nutrient content claim. And then there are additional disclosures that you have to make if the product meets a certain profile. So, I see a lot of misunderstanding or just lack of knowledge that there are rules around these things at all. I think people tend to assume that there are rules about health related claims, which there are very much so strict rules about what kinds of claims you can make about health related benefits. But things like that nutrient content claims, and that's an area where people don't really have great understanding. The serving size thing is a big one. Yeah, there are a lot. Even listings of ingredients where I can't do a full label review unless somebody gives me their whole formula and all of their ingredient specifications. But I do see when I get that information that people unintentionally leave things out of the list, or I get a question a lot is there if I if there's less than 1% of something in my product? Do I have to list it in the ingredient list? Yes, you do. You do. If you intentionally put it in there, then almost always there are a few exceptions, but almost always it has to be declared in the ingredient list. So those are some
Yeah, I see the sub ingredients, trick people up. And that's where I don't think people realize, like, if you're using a certain brand of say, versus your sauce is a good example, that when you put versus your sauce on there, you also need to list all of the sub ingredients. And those change from brand to brand. So you want to be sure that when you find a brand that you stick with it, otherwise your whole label changes, right? All of a sudden, we could introduce soy as an allergen going from different words to share sauces. So it's a big deal. Yes, yeah. All right. So the moral of the story is that you are getting into an industry that is highly regulated, and certainly, you know, certain products are going to bear additional responsibilities, like you said, the acidified foods or juices or seafood. So we get into that whole thing that we're going to label layer on the labels. And then of course, with nutrition and health claims that get piled on there, too. So there's just a lot for people to tease out. So I highly recommend you get some help from somebody like Lauren, to help you make sure that you are compliant. I mean, when I worked for Whole Foods Market, you know, we that is one of the things that we say you have to have a compliant label and and while we're not, you know, we weren't a legal entity reviewing it, there were certainly we knew what we were looking for. And there were certainly things that would have prevented people from getting on shelves, and it's just such a bummer if you have to go if you just got a whole bunch of labels printed or a whole bunch of pre printed packaging, and spent 1000s of dollars and then it's you got to get either new stickers to stick over them or or they go in the trash.
Lauren Handel 23:32
Yes, and and I do I see that a lot, too. And also, I'll I'll say that, get your get advice on this early in the design process, too. Yeah. So lots of times people will come to me when they think they're done. And it's kind of an afterthought, that, oh, let's run this by a lawyer. And I will notice things that I'll notice things that should have been thought about in the product development stage. Yeah, you know, any ingredient that you can't use. Or, you know, they've chosen a flavor. This is can be a big one, anyone who's using flavors and flavors that you call out as the characterizing flavor of the product, there is a very detailed, very difficult to understand regulation about what kind of labeling you need to have to describe the characterizing flavor if you are creating or supplementing that flavor with a flavoring. And people will choose flavorings when they're doing their formulation, because it tastes good because it's cheap, for whatever reasons it's available, their manufacturer has it without knowing what that implications of that choice will be for the labeling. And you know, for example, I've had many clients who when I've looked into the details on the flavor that they're using, which by the way, it's almost impossible to get real information from a flavor warehouse about what they make a flavor out of. But if it's not made from the food that's named, and if there is none of that name true. So for example, I'm making a strawberry flavored bar. And there's no actual strawberry in it. And I'm using a strawberry flavoring that's not made from strawberries. Well, even if that flavoring comes from entirely natural sources, FDA regulations, so you're required to label that product is artificially flavored. And nobody wants to hear that. And I'll notice that in label review, when somebody thinks that we've got all the design done, the product is ready to be made. We're just you know, need to send this to the printer, please look at it. And now they have to go back and reformulate and find a new flavor, and that tastes good. And that works for the manufacturer.
100% Yes, get it right. I love to get involved early on to with layout and like trying to try to blend the marketing and the legal and then work with somebody like yourself, who really has that fine eye, as well to do that. I had such great advice get get people involved? Who know because you're a graphic designer is not, can I just say that as sternly as possible, your graphic designer does not know these rules and regulations, they are designing a label for aesthetics for beauty, for marketing purposes. So
Unknown Speaker 26:33
Hopefully, they know the basic rules about sizing and formatting of the required label content. Because that it's great to find a designer who already knows that you don't really want to be paying a lawyer to educate your designer about you know, they need to use eight point font for this particular text. And this needs to be on this panel and that kind of thing. Hopefully they know that. But yes, I would not expect a designer to know the law about different kinds of claims, or Yeah, what you need to call your product.
Yeah, working with a CPG graphic designers Oh is beneficial for many of those reasons. But Alright, so speaking of our labels, and we're going to be putting our logo on there. So let's transition talk about trademarks, which I know is something you specialize in, and especially for for the food industry. So can you just kind of talk about kind of high level, what is a trademark? And what do we need to think about as we're building out a brand? And and I mean, I just have so many people wonder, like, do I need a trademark and when do I need one? Why?
Unknown Speaker 27:47
Right. So again, something that you should do as early in the process as possible, because you will be investing a lot of money in your brand. And and I've unfortunately had clients where they put off the trademark search process for a long time they bought URL they had packaging printed, they were either already in the market or about to be with a product and then I do a trademark search and find out that not only will they not be able to get this trademark registered, but they're infringing it high high risk of getting sued for trademark infringement if they continue to use that trademark. So it's best to find out early on in the process, if you can get your your trademark protected and, and use it. So what's the trademark? Well, it's the brand. So it's anything that signifies the source of goods. And by source, it means who's the company that's responsible for this product. And it can be anything that signifies that so the most common and obvious one is the brand name is a trademark. But it can also be a logo or multiple logos, they can be a tagline. It can be a unique, distinctive shape of packaging, which is called trade dress. And so if consumers will look at this name or symbol, or design and associate it over time with your brand, then that is your trademark. And people have trademarks once they create those things and start using them in commerce, right. So you get trademark rights in this country by using a trademark in connection with the sale of goods or services. The rights that you get just from doing that are limited to whatever states you do business in. And so those are common law rights that come from from state law to fully protect yourself It is a very good idea to get federal trademark registration. So so people often talk about trademark says, getting a trademark from the USPTO. Well, you have a trademark, you get it right, you all you're doing is registering it with the USPTO. And that gives you additional rights that you wouldn't otherwise have. So a big one is National protection. So if you're small, you're just starting out selling at some farmers markets in Arizona, well, the only rights you would have under common law would be in Arizona. Okay, if you register with the PTO, you now have nationwide rights to that trademark. So that prevents other people from from using, or, or registering a confusingly similar trademark to yours. So that's the basic test is confusingly similar. When when I say I do a trademark search, I'm looking in the USPTO. That's the US Patent and Trademark offices, trademark database, I also look in other sources to see Is there someone else out there who's using the same trademark for similar or related kinds of goods, or a similar trademark? And it has, it's a very subjective test, there's a number of factors that go into it. But the basic idea is that if a consumer saw both brands, you know, side by side in the marketplace, would they be confused and think that the goods come from the same company? And so, you know, there can be a variety of factors in that. But basically, it comes down to how similar are the trademarks themselves? And how similar or related are the goods or services with which they're used?
Okay. And, and I know, sometimes, you know, there's a lot of brands that get started in their own state, they're super local, they don't get the trademark. But then when another brand that maybe has the same name goes to get that trademark, the people who started first have the first kind of claim to it, at least in that state. Is that correct?
Lauren Handel 32:17
Yeah. So legally, again, you have trademark rights just from using a trademark in commerce. So legally, you could stop the other party, but you'd have to go to court to do it. Or you'd have to file a proceeding in the patent trademark office to oppose that application if you became aware of it, or if you find out that somebody has registered a trademark already, but you were the first user of it, well, you could petition to cancel that trademark. But that can be expensive. Right. You know, that's it's a litigation type proceeding. The trademark office and it's a really big advantage of having trademark registration, is you basically recruit the trademark office to police your brand for you. So with someone else applies later, you you already have an application or you already have registration, and someone later applies for something that's the same or very similar? Well, that later application is going to be refused. Otherwise, you have to be monitoring, trademark applications, which you can do and you can pay people to do to see if someone comes up with something that's that's infringing to you. But you can avoid a lot of that if you just by applying and getting your trademark registered.
Yeah. And there are categories, right, so is it as specific as like granola? Or like, how drill down are the categories? Or is it just like food? high level?
Lauren Handel 33:51
Yeah, no. So there's a few. So this is kind of hard for people understand there's a classification system. And it comes from international treaties that we have that there. There's numbered classes of trademarks of goods or services in trademark applications and registrations. Those are very broad categories. And the only real function of that classification system is it tells you how much you're going to have to pay for the application because you pay a filing fee per trademark per class. Okay, your application and the registration that issues if you're successful, has to have a description of the goods or services with which you use your trademark and it needs to be fairly specific. It's supposed to use the common names in the industry for various kinds of goods. And so my general advice is you want to pick a description that is as broad as possible, but specific enough to satisfy the trademark office unless you have a different considerations. Just Sometimes I'm helping people to figure out how best to describe their goods to avoid a potential or perceived conflict with another trademark.
Unknown Speaker 35:10
It's often the case that I do a search. And again, it's a very subjective test as to whether or not to trademarks are likely to be confused. So I might find another trademark, that's somewhat similar. It's used for somewhat similar, maybe arguably related kinds of goods. But it's not, it's not definite that your your application is going to get refused. So you might, my clients might want to proceed with the application. And we'll try to figure out how best to describe their goods so that when the examining attorney at the PTO reviews the application, they understand that my clients goods are not related to the other company's goods. Yeah, that would be difficult to do.
Right. That's why having I think, I mean, yes, you can file your own trademark, but I don't know that I would recommend it. And those nuances are really important to set you up for future success as well. And then, there are definitely certain words that you wouldn't be able to and that's another thing you help with is like, certain words, you can't you can't just trademark like granola. Like, so there's certain general words that can't be trademarked. And, and so having somebody like yourself, and I love that you how you structure your, your trademark piece in your business that you I feel like you are really trying to make yourself accessible to small brands and with your fee structure and all of that. So thank you for doing that for small brands.
Lauren Handel 36:47
Yeah, thank you. Yeah, it's, um, they do I started this practice recognizing that there's, there is a gap of in the legal services marketplace for for small businesses. And it's it's hard to find affordable legal counsel, so I'm trying as best as I can. Yeah. Yeah.
But and I will also just say, for people who don't know, like having a trademark, you know, some people might be like, Well, why do I, you know, I don't know that I really need that. I mean, anytime you start crossing state lines, you're going beyond your local area, like having those national rights super important as you grow your brand. And Amazon, you definitely get some great benefits being trademarked on Amazon, if you if you decide to move your product and into that space, but and for people who don't know, maybe, I guess just describing, can you describe the the TM and the AR and kind of when to use though?
Lauren Handel 37:47
Yeah. So tm just means trademark. And so it's permissible to use that for anything that you consider to be your trademark, whether it's registered or not. So before you have a trademark registered, that's all you can use, and it's not required. But it is a good idea, especially for things like logos, and taglines because they may not be obvious to the rest of the world that you consider those things to be your trademark. So little tm symbol puts everybody on notice that the company is claiming that as a trademark. R stands for registered. And it's actually illegal to use that unless you have trademark registration. And it will be a basis for getting an application refused. If the image you send into the trademark office that shows how you're using your trademark in commerce has that little r, because it's not registered yet, you're still applying. So that's a problem. So So don't use the registered symbol until you have registration. And then it is a good idea to use it on on your packaging, especially for the brand name for anything else. That's a registered trademark, because it actually does give you additional legal rights if you had to sue somebody for trademark infringement.
Yeah. So as soon as you start, yeah, because it's really like from the time you start doing commerce, and you want to be able to prove that so, you know, take screenshots, take, you know, save those emails, and then you really can actually apply correct me if I'm wrong until you have interstate commerce, right. So until you make that first sale across state lines are not that wrong.
Unknown Speaker 39:39
No, it doesn't have to be Interstate and actually you can apply before you even have any sales, right? So I highly recommend that people start the whole process early. Because while you you don't have priority rights over another trademark user, and You've actually begun using a trademark. If you get your application and First, it becomes much more difficult for somebody to apply for the same or very similar Mark later, okay. And there is you are allowed to file based on what's called intent to use a trademark. There are some additional filing fees associated with that. But it's basically holding your place in line for this trademark. And as long as you plan and it's realistic that you will actually have a product in the market within the next three years, it's a good idea to apply based on 110. To use.
Yeah, that's great. I mean, don't go through the process of all the labeling and all the things and then and decide, oh, maybe I should do those. Get it done from the beginning. Hold your place in line.
Unknown Speaker 40:52
Yeah. So you can't you won't get registered until you've begun using the trademark in commerce. And commerce doesn't mean interstate commerce. But it's used in a different way that it doesn't mean the product has to cross state lines, it means it has to be commerce that can be regulated by the federal government, which of course all food is. So even if you're entirely local business, there's plenty of trademarks for you know, a restaurant that have has one location, it's clearly a local business, you still can get federal registration. Okay, good.
I just learned something new. Awesome. All right. So trademarks, very important, especially if you're on that path to start a bigger brand, and you want to really grow that brand in the future. And then the last thing I'd love to touch on is just around contracts. And I think, again, this is an underserved area where I think people underestimate potential for issues to come up or, or, you know, their their co Packer just gives them a contract, and they don't necessarily get it reviewed. And so what kind of contracts? Who are the people we need to get contracts with? And what are some of the things we should be on the lookout for?
Lauren Handel 42:08
Yeah, so a common contracts that I work on for food clients, and our co packing contracts are definitely a big one. contracts with distributors and brokers and other kinds of service providers like people who help you with product development. But so my basic rule of thumb is, you have to think about dollar value. And how long of a relationship is this going to be? Right? So if you're going to make a one off purchase of, you know, printer paper, you don't need a contract to do that, right. And, you know, that's like a very obvious example. But you know, there can be other even, you know, significant purchases, but if it's a one time purchase, you probably don't need a written contract for it. If it's going to be an ongoing relationship, for any length of time, then you really should have a written document that makes clear to everyone involved. What are the expectations for everyone's behavior? What are the rights and responsibilities of the parties? And importantly, what happens if something goes wrong? Yes. So when someone starts working with a co Packer, I'll often advise them that usually the way things work with a co Packer is you'll probably we'll start with some a trial run of some kind, and maybe not even a full size production run. You can have a very simple document for that run that just basically says, you know, what are the specifications of the products? How many are you ordering? What's the price you're going to pay? Because it's a one time thing you don't know if it's gonna work out or not? Sometimes it doesn't, you have to go find a different a different manufacturer. But once you reach the point where you want to do business with this co Packer, you know, for multiple, multiple production runs over the next year or beyond, well, you should have an agreement that covers that in writing, and never sign an agreement that a co Packer hands without really reviewing it, because I've never seen one proposed by a co Packer that wasn't just totally one sided in their favor, and only addressed the things that matter to that. So definitely be careful about that. The other kind of contract that's really important for food businesses, even if you're just even if it's just a short term relationship is an NDA. So you need to have a good form nondisclosure agreement that's tailored for food businesses, that you can use with a variety of people because the important intellectual property Other than your trademarks is your recipe, your ingredient specifications, right? There's there's all of this intellectual property in the product itself, which very rarely can be protected by patents in the food space and for which your only protection is as a trade secret. And that means that to protect it, you have to keep it secret. But that's impossible. You people need to know that information to for you to do business. And so you have to be able to share it with other people. And but to maintain the legal protection, it has to be under an obligation of confidentiality. So that should be a simple, inexpensive thing that everybody can get. And if you're talking to anybody, a co Packer or product development person, an intern, you know, anybody who's going to have access to that kind of information, you need to have an NDA in place with that.
Yeah. Yeah. I find them all the time. People should have an NDA when they work with me for sure. And that's, that's just par for the course. So yeah. Great. Yeah, I think the the piece around what happens if this isn't a good relationship? You know, the out clause is one thing that I think gets missed frequently. And it's really important that yeah, if you go into a relationship with a co Packer, for example, that you have a way to get out of that as well.
Unknown Speaker 46:30
Yeah, and that you have recourse of things, even if you don't want to get out. But if What if they deliver a whole lot of product that's, that's mislabeled, or you know, the taste is off, or you know, that right, to know what your rights are, to reject those products. And something that people don't realize, or may not realize when you're talking about co packing type agreements is any, any contract for the sale of goods and, and people don't realize that they're making contracts all the time. Even if they don't put them in writing, right, so you can read the things by email, I think you don't have a contract, but you do. And for contracts for the sale of goods, every state has a version of the Uniform Commercial Code that sets default rules for those types of agreements. And so if you haven't put in writing what you want the terms of the agreement to be, well, the law will fill that in. And it might do so in a way that you don't like, you won't realize it until you're in court, or you go to go to talk to a lawyer because you need to sue your co Packer. And you find out that you actually had an agreement, because the law said what it would be that you didn't like. So it's much better for the parties to decide what they want, put it in writing, filed away. And you know, remind yourself occasionally what that agreement was. Don't forget to have it. That's another problem I see with people after they get going. And they get into a relationship for multiple years. And they don't go back and look at their contract. And they start behaving differently than they agreed to, without really amending the contract, that creates all kinds of problems as to whether the contract was actually modified by the practice of the parties. Or maybe it was entirely nullified. So get an agreement, and then actually do what you agreed to.
Good advice, yeah, actually do what was in there. But it's so smart to just then it's like, you take the drama, like, if there's a QA issue, or the packagings off or whatever, like you just now we have a way to deal with it. And we have it all worked out ahead of time. So it doesn't have to be this big dramatic thing. So contracts are there to support you. And help you.
Lauren Handel 48:56
No that'svtrue. And I find that lots of times people think of a contract as kind of inherently adversarial. And that's really not true.
Unknown Speaker 49:09
Often working on contracts with for for a client who's worthy the counterparty things are great, right? It's at the beginning of the relationship, things are great. They want to work together, it's mutually beneficial. And it's really in both parties interests to have documented what their what their understanding is. And you know, it can be really useful tool for everybody.
So, yeah, yeah, it's there to help you as the business owner and just set expectations and, and help protect you. So I wouldn't look at contracts as a bad thing. They're just part of doing business. And yeah, I mean, it's good to have somebody who's advocating for you and understands what this contract is saying and making sure like I said, a co Packer or a blender, you know, anybody of course is gonna have a contract that favors them. So You want to be sure. It's not a bad thing. But make sure that you're, you're also in there and you're getting your needs taken care of. So it's a win win. All right, well, let's just kind of go back out to a high level. So what would you tell a new company a new brand just starting out, they're ready to take their product into the marketplace? of things that they need to be paying attention from earlier. What's your advice? coming? From your point of view?
Unknown Speaker 50:33
Yeah, um, okay, well, so kind of covering all going back over the things that the categories we've talked about, or those are really like the three big areas. So apart from business formation, which, again, food is potentially very risky business, and you don't want your personal assets to be on the line, right? So form a business entity, get that liat limited liability protection, get insurance, okay, take care of those things. And then, as early as possible, get an understanding, you don't have to know all the details, but get an understanding of how your product is going to be regulated, what kinds of license or registration, you need yourself, what rules are going to apply to the manufacturer of the product, and the labeling of the product. Do that trademark search process early, you know, good. And you could actually do the initial search yourself. So if you go on the uspto.gov website, and you can find a little button to search for trademarks, it's called test T S, S is the name of the database. And there is a basic search, I do a more sophisticated search than that. But there's a basic search you can do yourself. And if if you do that search and you find another trademark, that look in the columns is alive or dead, you can ignore the dead ones, for your purposes, this initial screening, but if you see another trademark, that's the same or very similar to yours as listed as live. And it's used for anything remotely similar or related to your kinds of products, we'll just move on. Right. So go to your next choice in your brainstormed list of possible brand names, right. And then you don't pay a lawyer to do that part of it, you can narrow it down to the one or two that you think are really good contenders and, and get a professional to do a more complete search on those on those possible choices. Do all that stuff early, I'd say you know, understand that the regulatory piece early in the development process. And, you know, especially if you're working on product development, you know, I would be asking those questions, if you hire somebody to help you with product development, like have they considered how the product will need to be labeled, when they design this delicious cookie for you, right and check all the boxes, in terms of taste, consumers are going to love it, it's the right size, it's got the right shelf life, all those things, but if the labeling has to be something really unattractive, that's going to be a problem. So make sure you're paying attention to those things. And then on on on contracts, you know, early on, definitely need an NDA, cuz you're gonna need that with a lot of people and it's not an expensive thing to do. But don't just pull it all off of LegalZoom the one you'll find will not be suitable or protective enough for a food company. Because the confidential information of a food company stays valuable as a secret, potentially forever. And most MBAs are written as though the confidential information will expire after a few years and that's not the case with food at least not with regard to recipes and formulation kind of information.
That's great to know I mean you're essentially as a as an entrepreneur, you're building your team and you need this legal aspect of your team. Especially in food because it is so regulated. And yeah, you just you need this part of your team so build out your legal part of your team. You need your marketing you need your all the things your manufacturing your all the things we do inside Food Business Success, but you also need a legals a legal team so I love it. Where can people find you Lauren?
Unknown Speaker 54:27
Well, you can on my website which is handle food law comm I'm also on Facebook is handle food law. You can email me Lauren at handle food law calm and you can find all the contact information on my website.
Awesome, but we'll put your links in the show notes also put the test link in there so people want to do that initial search. I think yeah, that's where I always start when we start dealing with trademarks and names and it can be hard to come up with a name so many Things are already taken between URLs and trademarks. Those are things but, but it's important to do that search before you, you know, put your stake in the ground. And I will just say I can speak from experience as somebody who got a cease and desist on my former business, and has now registered my own business name. I can speak from experience, it's not fun to get that cease and desist letter in the mail. Or, I should say hand delivered by FedEx. Anyway, well, thank you for spending this time with us. This has been really educational, and I highly recommend I've been sending folks your way and I highly recommend working with Laura and I think you really are there to have the food entrepreneurs back and are trying to work with these smaller brands. So thank you. Thank you. I appreciate that. That wraps up this legal conversation. Thanks for hanging in there for this is so important. And until next time, have an amazing week.
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