by STEPHANIE POTTICK, ESQ., Pottick Law PC & Protect for Success
Big-, medium-, and, yes, even small-size companies need to pay attention to legal. While lawsuits are expensive and a nuisance for any business, for a smaller company, a lawsuit could be devastating.
Taking proactive measures upfront may seem expensive and unnecessary, especially when you consider the smaller quantities you’re probably producing as a manufacturer selling to the specialty retail market, but one lawsuit could end your entire business, and when you’re in the toy, game, juvenile, or gift industries, the stakes are high.
Here are some game-changing things to consider:
Do you have product liability insurance — and do you even need it?
Product liability insurance helps protect your business against claims that one of the products you sold or manufactured caused harm to a third party. Since you are responsible for any damages your products cause, having this type of insurance is a good idea, but it can be expensive in relation to the number of pieces you’re selling. Ultimately, it’s a business decision whether to invest in an insurance policy. Consider who the product is targeted to, the likelihood of harm, or if you can afford the legal costs if someone decides to sue you.
One lawsuit could end your entire business, and when you’re in the toy, game, juvenile, or gift industries, the stakes are high.
Are your manufacturing facilities compliant withthe latest applicable rules and regulations?
This is a big one: You must ensure you work with reputable factories that comply with applicable laws. You may also need to safety test your products. There is so much to get into here, so I recommend finding experienced professionals to help you figure out what you need to know about this topic.
Have you protected your IP?
Identifying and protecting your IP is one of the best ways to create a strong and enforceable brand, build recognition and goodwill in the marketplace, and add significant value to your company. Having unique and protected IPs can give you the competitive advantage to succeed, whether you’re selling to retailers or directly to consumers. You’re working hard to build it, so protect it!
Have you thought about expanding your business through licensing?
Which do you think sells more: a Mickey Mouse shirt or a shirt with a generic, non-branded design on it? Of course, it’s Mickey! So, if you’re manufacturing a product, imagine how sales would increase if you “license in” a known brand. Think of all the different versions of Monopoly — Star Wars, Friends, Fortnite, Pokémon, and more. Licensing can help take your business to the next level!
These are just a few thoughts to get those creative “legal” juices flowing. Being in the toy and gift industry can be fun, but remember it’s still a business, and part of doing business is understanding potential legal issues and learning how to use the law to your advantage to help your company thrive. You can do it!
*Disclaimer: This article is for informational purposes only and not intended as legal advice.
A version of this feature was originally published in The Toy Book’s 2024 Specialty Toys & Gifts Issue. Click here to read the full issue! Want to receive The Toy Book in print? Click here for subscription options!