Advertising was another beast. We couldn’t just run Facebook ads like other e-commerce shops. We had to tiptoe around regulations, focusing on organic growth. ~ Dennis Sanders, Founder, Burning Daily
Startups often grapple with complex legal challenges right from the outset, and overcoming these obstacles is crucial for long-term success. We’ve gathered insights from Founders and CEOs who have faced and surmounted these hurdles. From securing intellectual property rights to navigating the intricacies of data privacy regulations, discover the most challenging legal hurdles faced by fifteen startups in their early stages.
- Securing Intellectual Property Rights
- Navigating International Trade Laws
- Protecting Animated Video Copyrights
- Ensuring Health Product Legality
- Complying with GDPR Across Borders
- Trademark Protection Realities and Costs
- Overcoming Trademark Registration Challenges
- Maintaining Consumer Protection Compliance
- Adhering to FMCSA Regulations
- Adapting to Cannabis Regulations
- Staying Informed on State Laws
- Equity Structuring Among Founders
- Defending Independent Contractor Status
- Surviving a Copyright Infringement Claim
- Navigating Data Privacy Regulations
Securing Intellectual Property Rights
The biggest legal hurdle I faced was securing intellectual property rights for my proprietary marketing tools.
I overcame this by hiring an experienced IP attorney who guided me through the patent application process and ensured my innovations were legally protected.
I can safely say that deciding to do so protected my competitive edge and allowed me to confidently move forward with my business growth.
Leslie Gilmour, Founder, BeFound SEO
Navigating International Trade Laws
In the early stages of building Or & Zon, we faced a major legal hurdle around importing artisanal goods from multiple countries. Each country had different legal requirements and restrictions, which made it complex and potentially risky. The complexity multiplied as we had to deal with both the export laws of the artisan’s country and the import laws of the destination country.
We overcame this challenge by partnering with experienced legal advisors who had a thorough knowledge of international trade laws. Furthermore, I found it essential to personally visit the artisans we sourced from, to understand their working conditions, and to ensure they complied with fair trade regulations. This hands-on approach not only helped us tackle the legal complexities but also reinforced our commitment to ethical business practices and strengthened our relationships with the artisans we work with.
Guillaume Drew, Founder & CEO, Or & Zon
Protecting Animated Video Copyrights
Our main legal challenge was protecting our animated video creations from being used without permission. As an explainer-video company, it was crucial to safeguard our work. We tackled this by promptly registering our videos with copyright authorities to establish legal ownership. We also ensured our contracts clearly defined who owned the videos and how they could be used. Monitoring online platforms helped us catch any misuse early, and we were ready to take legal action with the help of experienced lawyers. By addressing these challenges early on, we protected our creative work and set a strong foundation for our business to grow.
Andre Oentoro, CEO Founder, Breadnbeyond
Ensuring Health Product Legality
When developing products for your business, there are some that require more legal legwork than others. Products that you consume are one of them. Going into this expansion of our other business, where we sold CBD products, we had a pretty good grasp of what the different laws were and the countries and states where we’d be allowed to sell our products. Moving into the wider realm of health products in general has had its own set of challenges.
We did not take this responsibility lightly when we decided to expand our existing business to include a wide range of health supplements. Having legal parameters to work with took a lot of the guesswork out of product creation.
One of the ways we were legally proactive was by ensuring that each of our products was extensively researched and that the formulation was effective and safe for consumers to take. Using verified university research studies on each of our products enabled us to maintain a high level of control over the quality of our products. Having actual scientists partner with us has given us, and our customers, a sense of trust in our products and our company.
Jan Brandrup, CEO, Neurogan Health
Complying with GDPR Across Borders
The most challenging legal hurdle we faced was navigating the complex web of data protection regulations, particularly the General Data Protection Regulation (GDPR) in the EU. As a company handling sensitive personal information for identity verification, ensuring compliance with GDPR while still delivering an efficient service was a significant challenge.
This hurdle was especially difficult because we were operating in multiple countries, each with its own nuances in interpreting and implementing GDPR. We needed to create a system that was not only technologically sound but also legally compliant across various jurisdictions.
To overcome this challenge, we took a multi-faceted approach:
1. We invested heavily in legal expertise, bringing on board specialists in data protection law. This was a significant expense for a startup, but it was crucial for our survival and growth.
2. We redesigned our data processing systems from the ground up with a ‘privacy by design’ approach. This meant incorporating data protection principles into every aspect of our technology, not just as an afterthought.
3. We developed a rigorous consent management system to ensure we had proper legal bases for all data processing activities.
4. We implemented strict data minimization practices, only collecting and retaining the data absolutely necessary for our services.
“In the world of compliance tech, legal hurdles aren’t obstacles—they’re opportunities to build trust and create better solutions.”
This experience, while challenging, ultimately became a competitive advantage. By solving these complex legal issues, we were able to offer our clients a truly compliant solution, which was crucial in building trust and growing our business to serve clients in 35 countries.
This journey taught us the importance of embracing regulatory challenges as opportunities for innovation, a philosophy that continues to drive Ondato’s growth and success in the compliance space.
Liudas Kanapienis, CEO, Ondato
Trademark Protection Realities and Costs
This story doesn’t have a happy ending, unfortunately.
I owned a very successful e-commerce and brick-and-mortar chain business for over a decade.
We spent a lot of money to trademark our business name. Over the next few years, with my attorney’s permission, I sent out many cease-and-desist letters that included “Represented By: [name of my attorney]” in my signature.
Each time, this was enough to make startups, eBay stores, websites, and others change their names.
One day, we found out that another business was using the plural version of our name. We had the singular version. I bought the .com domain for both the singular and plural forms of our name.
This other company had the .net for the plural name, was a similar business, and we were getting Google reviews for their company.
This was all clearly confusing to customers, and an obvious violation. So, as I’d done many times before, I sent them a cease-and-desist letter.
However, they did not agree and told us to take legal action. I consulted with six attorneys, including my original IP attorney.
They all agreed it was a straightforward case. But there was a big problem. Each attorney required a non-refundable retainer fee of $10,000 just to get started.
This was a stark realization that the $750 I paid to file my trademark would not protect me in the future without further costs.
Since then, as a consultant, I have hesitated to advise any new business to spend time, money, and stress on trademark legal filings where resources could be used more productively elsewhere.
In my opinion, it is more beneficial to have the .com domain for your business, operate under that domain, and have a DBA (Doing Business As) or another legal entity in that name. These steps can be more advantageous than trying to trademark something you may not be able to defend later on.
In many cases, such as Xerox, Kleenex, and Scotch Tape (just off the top of my head), not being trademarked or letting your trademark expire can actually help your branding and business. Your name can become a household name for an entire industry (with you as the expert).
That’s my story. It taught me a lot about the complexities and costs of trademark protection and when and why to skip it altogether.
Casey Whitcher, Business Owner / Consultant, CWdynamic
Overcoming Trademark Registration Challenges
In the early stages of our children’s clothing and accessories brand, we encountered a significant legal hurdle when it came to trademarking our brand name. Protecting our brand identity was crucial for our growth, but navigating the complex world of trademarks was a daunting task.
We faced challenges in understanding the legal jargon, filing the necessary paperwork, and ensuring that our brand name was unique and not infringing on any existing trademarks. The process seemed overwhelming, especially for a startup like ours with limited resources and legal expertise.
To overcome this hurdle, we sought the guidance of a knowledgeable intellectual property attorney who specialized in trademarks. Their expertise and guidance were invaluable in helping us navigate the legal requirements and secure our brand name. They not only simplified the process for us but also provided us with the confidence to move forward with our branding efforts.
Through this experience, we learned the importance of seeking professional help in areas where we lacked expertise. By investing in legal guidance, we were able to overcome this challenge and set a strong foundation for our brand’s future success. As we continue to grow, we carry this lesson with us, knowing that seeking expert advice is key to overcoming any legal hurdles that may come our way.
Nikhil Soni, Founder, The Tribe Kids
Maintaining Consumer Protection Compliance
One of the early legal hurdles we faced was related to consumer protection: the end-users of our business, or any product, must be legally protected by the producers.
Neglecting the welfare of the consumers can expose the startup to liabilities, potentially leading to the demise of the many dreams carried by the founders. We’ve observed numerous cases where producers’ negligence towards consumer rights led to the bankruptcy of many companies.
To overcome this, we made sure as founders to familiarize ourselves with the sets of laws, regulations, and principles governing our products in our country to avoid unnecessary costs. This proactive approach helped us to ensure compliance and protect our business from legal challenges related to consumer protection.
Amir Elaguizy, CEO and Co-Founder, Cratejoy, Inc
Adhering to FMCSA Regulations
One of the most challenging legal hurdles faced by Nationwide United Auto Transport in its infancy was ensuring compliance with stringent Federal Motor Carrier Safety Administration (FMCSA) regulations. These rules govern the vehicle transport industry to guarantee safety, transparency, financial responsibility, and more. The complexity of these rules posed a significant challenge, especially for a startup with limited resources. Instead of bypassing the issue, we invested time and resources to thoroughly understand the mandates.
Hiring a knowledgeable legal expert specialized in vehicle transport laws helped tremendously. We also developed robust internal protocols for regularly reviewing and updating our compliance strategies. This situation underlines the importance of upfront investment in legal expertise, even for startups working on tight budgets, to avoid non-compliance repercussions down the line.
Chris Estrada, CEO & Founder, Nationwide United Auto Transport
Adapting to Cannabis Regulations
For us, it was navigating the complex web of federal and state regulations. Cannabis’s federal illegality creates a minefield of potential issues, from banking to shipping.
Advertising was another beast. We couldn’t just run Facebook ads like other e-commerce shops. We had to tiptoe around regulations, focusing on organic growth.
But we persevered and learned a lot. We built up a good team of advisors in the industry who have helped us stay ahead of regulatory changes, and we focused on educating our customers about cannabis.
The key was adapting quickly. When one door closed, we found a window. It wasn’t easy at the beginning, but we’re still committed to operating ethically and legally in this ever-changing landscape.
Dennis Sanders, Founder, Burning Daily
Staying Informed on State Laws
Staying informed about laws in all 50 of the United States has been a hurdle I didn’t give too much thought to when launching my business initially. However, it’s come in handy in our B2B sales and also in interactions with any potential customers visiting our site.
You’d be surprised at how much laws and licenses pertaining to real estate and moving differ from state to state. Even knowing the specific kinds of driver’s licenses needed for long-haul truckers driving across state lines is necessary information for us to have. We maintain a database of this information that we can refer back to and add to and subtract from as needed.
Knowing which companies we want to promote on our site depends on us knowing who is licensed to do what in each part of the country. Not being able to reference this information quickly could lead us to refer a company that can’t actually meet a consumer’s needs.
Ryan Carrigan, CEO & Founder, moveBuddha
Equity Structuring Among Founders
In the early days, we faced a major legal hurdle: structuring equity and ownership among the founders. Equity disagreements—and even just misunderstandings—can lead to drama, mistrust, and even splits in the founding team, which, at worst, could be game over for the enterprise altogether. We worked with a seasoned startup attorney to draft tight, fair, and legally binding documents.
It involved much discussion and negotiation to ensure that we all agreed on the roles and responsibilities of all founders, including the company’s ownership in personal and equity terms. The attorney’s involvement enabled us to detect potential areas of disagreement, providing a fair and transparent framework and laying the groundwork for our agreements to be robust, legally correct, and tailor-made. As a result, our startup had a solid, unified founding team that could focus on growing the business without the risk of further disputes or dilution of trust, with confidence in our legal foundations.
Mark McShane, Founder, Cupid Digital PR
Defending Independent Contractor Status
I recall the countless sleepless nights I endured when our company encountered a legal challenge that posed a threat to our entire business model. We were experiencing rapid growth, and our network of independent locksmith contractors was instrumental to our success. However, we were blindsided by a notice from the California Labor Commissioner’s Office, alleging that our contractors had been misclassified and should be regarded as employees.
I was shocked and concerned. If we lost the case, it would mean a significant increase in costs, potential legal liabilities, and a major disruption to our operations. I knew we had to act fast and get to the bottom of this. So, I personally reviewed every contract, every payment record, and every communication with our contractors. I then worked closely with our legal team to build a strong case, and we presented our arguments to the Labor Commissioner’s Office.
After weeks of uncertainty, we finally received the ruling: our contractors were indeed independent business owners, and we had done nothing wrong. It was a huge relief, and a testament to the hard work and dedication of our team. We emerged from this challenge with a renewed focus on compliance and a deeper understanding of the importance of getting the legal details right. It was a tough lesson to learn, but it made us a stronger and more resilient company in the end.
Eli Itzhaki, CEO, Keyzoo
Surviving a Copyright Infringement Claim
A copyright infringement cease-and-desist almost put us out of business before we even started! As an exam preparation company, we produce an enormous amount of study material, which is obviously core to our business. Whether it was a pressure tactic or a legitimate concern, one of our competitors served us a C&D, claiming that we had copied their materials.
As a fledgling startup, we had virtually no money to spend on a legal defense—but this was an existential crisis. We scraped together every cent we had, called in all our favors, and hired the most experienced and well-known lawyer we possibly could. Although we could only afford a few hours of time from our heavyweight legal champion, our founding team worked dozens of hours around the clock, day and night, doing our own research and compiling an immense amount of proof and documentation supporting the originality of our work.
Our efforts paid off, and our competitor backed down! Turns out that thorough preparation is the not-so-secret sauce to legal success. It was a harrowing, white-knuckle experience, but it was a heck of a ride and a story to tell, and we’re all the stronger for having survived.
Justin Pincar, Founder & CTO, Achievable, Inc.
Navigating Data Privacy Regulations
When Messente was starting, ensuring compliance with diverse data protection regulations across different countries was a significant hurdle. We had to understand and adhere to laws like the GDPR in Europe, which imposes strict rules on data handling and user consent. This complexity was compounded by the fact that our services involve handling sensitive communication data across borders, making regulatory compliance even more critical.
We hired legal experts specializing in data privacy and international laws, which was invaluable in guiding us through the regulatory maze and ensuring we were compliant from the outset.
This approach not only ensured our compliance but also strengthened our reputation as a trustworthy and reliable business messaging provider. It was a challenging journey, but it taught us the importance of diligence, expertise, and proactive management in navigating the complex world of legal compliance.
Uku Tomikas, CEO, Messente
Join the conversation!