The Essential Legal Steps Every Beauty Entrepreneur Should Know ft. Antonella Colella

0:00Hey guys, welcome back to Skincare Anarchy. This is your host Ekta and I'm really excited to welcome back our guest today because I feel like legal stuff and law in the beauty industry is an area that a lot of skin care and I'm really excited to skin care and I'm really excited to get a lot of the skin care and I'm really good for the way to get a lot of the way to be Thank you. It's good to be back. No, it's really great to have you. And, you know, it's really great to be able to chat with you because you know so much in this landscape. And there's so much we don't know. You know, not only from my side as a consumer, I don't have a beauty brand of my own.

0:39But there's so many that tune in that do, you know. And it's really, I think, confusing in terms of figuring out what's, you know, what is stuff that we need to prepare for. And I'd love to kind of remind our listeners and all of your background, if you don't mind. And, you know, just kind of do a little, you know, walk down memory lane of your legal background and your expertise. Sure. So I've been an attorney for 15 years now and always working with businesses, always doing transactional work. And I've worked at law firms. I've worked in-house as a deputy general counsel for a company. So I have a lot of experience kind of guiding companies through compliance, regulatory matters, contract, and then also IP.

1:25So I went out on my own in 2021 to start my own practice, my own firm, and I work with all businesses. But I do have a niche with beauty based businesses. So I work with businesses that are starting products, manufacturers, and also on the service side. So estheticians and spas and salons, et cetera. So, you know, the work is a lot of contracts. It's a lot of trademark and IP protection. And then on the beauty product side, there's also, of course, the regulatory work, Mocra and FDA regulations and kind of getting everybody compliant. compliant and that's I think that's where a lot of people are scratching their head because especially with MOCRA it's so new nobody knows what's going on even you know ourselves like the professional service people that are trying to work through it they have not released regulation so they you know they have not told everything that we need to know about it yet so we're just kind of like going through it with like a I don't know yeah no I bet and I'll also like I want to actually talk about Mokra like in depth because I don't think a lot of people really understand what it is I know if you're a beauty brand founder out there and you're going through it you know in terms of getting everything in order I mean that's one thing but for those who don't know and so can you tell us like what is Mokra and like why is it significant so Mokra is a cosmetics law that was passed it was actually passed at the end of 2022 and it has kind of like staggered dates of when requirements are due.

3:03And so some requirements are already in place, and they're already due to be complied with. But it's significant because it is really the first cosmetics law in about 80 years. So like there has just been no regulation, really. I mean, not really, in the US with cosmetics. I mean, it's very kind of, the FDA does have some power, but they don't really have a lot of power. And, you know, not like the EU does, the EU has, you know, more compliance and kind of stricter regulations. And MoCRA was an answer to that. So, you know, the US said, well, let's try to get our stuff together. And, and let's kind of model ourselves off of the EU model of cosmetic regulations.

3:47And so that's what it is. And it you're large or small but any really it applies to any cosmetic brand any brand that's selling cosmetics in the U.S. whether you're you know an international brand that's selling in the U.S. you still have to apply whether you're small you know if you're a one person you still there's still things that you have to do with from okra so it is it is significant that's what gets me is that you know it kind of like landed out of nowhere I feel like you know for a lot of people because I think for those who are behind the scenes and were paying attention it might have been you know a slower journey but I know it kind of when people started talking about it it was like a flood you know so I think it'd be overwhelming for a lot of small business founders especially because you know when you are told that oh my gosh here's all this regulatory stuff that you have to now be in compliance with I mean it could be really overwhelming so I'd love to get you know some insight from you about you know how does this really differ from obviously other regulations but also other business stuff that you would have to go through legally, you know, to secure your business.

4:58I mean, what are some things they can really, I guess, like, you know, prepare for and be ready for? Yeah. So Mocha distinguishes between large business and small business, and they define that as having a million dollars in revenue in the past three years, kind of averaged. So if you have a million or over, you're large. If you don't, you're small. And so it imposes, I mean, really the biggest change I would say is the product registration. Whereas before cosmetics, you did not have to register them anywhere. There was actually a voluntary database where you could register your products, but that was not, it was voluntary, it wasn't enforced.

5:39So now you have to register your products. If you're a large business, you automatically have that requirement. If you're small, you may have to register them if there are certain types of products. They give us kind of four caveats to that. And so, you know, if you're kind of preparing for MOCRA, I mean, you have to know that, like whether you need to register your product. There's also record keeping requirements for safety substantiation. so they are requiring to have safety substantiation for your product and and keep those records have them on hand the thing that we don't know which is like this is typical with mocra we don't know they didn't tell us which tests they want us to do so they just had safety substantiation you know we kind of have an idea just like from industry standard of what we think you know you should get But again, that's another thing that's kind of we're in the dark on that until they tell us.

6:40And then there's also actually labeling changes. So on the label now, you need to list fragrance allergens in the ingredients. And then you also need to add a contact, either a phone number or an email for the brand. And the reason for that is they want to have an easy way for consumers to report adverse events. And so they're requiring that label change. Some people have that information already, but that's not a requirement. So people just have the website, which is not enough. You need like an info email or an admin email, some kind of like general mailbox. that would be sufficient where people could you know put in their adverse events if there's if there are any so in terms of like you know like actually like being like like in compliance with mocra like like legally speaking i mean what are some things that people need to look for because i know that you know we kind of go to lawyers and a lot of lawyers might not know about these regulations right i mean i think that's where you really stand out to be because you're so like integrated in and you understand the beauty community and something I would love for people to understand that you know you what you should look for you know like if you're going to somebody to represent you or to help you through this what are some like key things a lawyer should be able to understand and you know just so they can protect themselves yeah I mean if you're a beauty brand you know of course you would want somebody that understands the regulations that understands MOCRA that understands, you know, the OTC regulations, you know, if you like, you know, sunscreen is regulated as a drug in the US.

8:25So, you know, that has different requirements altogether. So, you know, for the regulatory piece, you know, yes, absolutely. You know, search for somebody that has the experience in the industry that you are in. And then, you know, the other stuff, which, you know, we talked about a lot in our first meeting was like, you know, the other legal foundation of, you know, getting your business up and running, getting your IP, you know, registered and really identifying your IP. You know, people have, and companies have, you know, logos, slogans, product names that they could protect. And sometimes they don't know, or they don't realize.

9:05So, you know, obviously, yes, you want to search out professionals that, you know, great if they have experience in your industry, and are able to you know really help you get started legally and and kind of protect yourself as you go that makes sense that makes sense and you know I think that in this area is just so it's so new that you know I really suggest whenever you're looking for representation or someone to really help you along from the legal standpoint like you know I mean obviously I will tell you people to go to you and you're the only lawyer I know you know that's really specializing right now in this the beauty space i mean but also just in general i mean just do your homework before you you know go to somebody because they might not know it's so new you know i can't imagine everyone being very well versed on it already you know in terms of all the law regulations yeah i mean especially with this i mean like there's just when a law comes out they issue regulations that interpret the law and they just they have not done that yet with mokra so it's there's a lot that is kind of just being assumed like we just don't know so we are going off of what we do know and i mean the law is in effect so like we have to comply you know whether we understand it or not we have to do kind of you know what it's telling us in the statute so so that's kind of how we're guiding branding brands right now.

10:34That's interesting. And I want to actually, I want to shift gears a little bit because I know last time we spoke a lot about, you mentioned it just now about things like, for example, getting ready for your business, right? Like making sure you're protecting it through trademarks and, you know, really kind of protecting the name, the logo or whatever, whatever you're using to distinguish yourself in the industry. And now that I watch this industry you grow every day and I swear there are five brands that pop up every day I'm literally overwhelmed myself you know just when I search for brands and so I can't imagine how difficult that must be you know like I know you had posted a while ago on your social media about road and that case yes you know there was this whole like actual like legal process that they had to go through with their name can you like tell us a little bit about that like how does that work in terms of finding, for example, let's start with the name, finding a unique name, right?

11:30And then being able to protect it and make sure that nobody else has it so that later on you're not paying so much money trying to protect it even more, you know? Yeah, I mean, this is just so important and specifically with beauty because like you just said, it's very crowded. Like it's a very, very crowded market. So, you know, what is it that's making you stand out? It has to be your branding, your name, your voice, your story. And, you know, trademark is the legal mechanism, you know, to protect the brand. And that's what, you know, branding is in a legal sense. So, you know, and I have this conversation multiple times a week with potential clients or on consultations, I just had one this morning, they have a name in mind, they may have already started like printing labels, and they come to me and I have to tell them that name is not available.

12:26Like you cannot trademark that name. Either it's already taken or it's too similar to something that's already out. And, you know, they end up being the infringer. Like you are infringing right now because, you know, you're using a name that's already registered. And so it's so important in the beginning when you're naming something, when, you know, if you're coming, developing a new product, if you are doing something new, you know, just run the name by a professional to have them search it. And, you know, the search is really the most important part in the beginning. I mean, obviously, then you have to follow through with it and actually do the registration.

13:09But, you know, you need to know what else is out there that is, you know, potentially similar to that name that you want, because you could be an infringer, you could spend all this money marketing and building a brand, and then get a cease and desist letter. So you, and then you, and then the other thing is you don't want to kind of like build a brand. And then five years later realize, oh wait, you know what? I never trademarked this name. Let me go to Antonella and see, you know, how I can register this. And then I have to tell you it's not available. So it's just, it's so sad. Like, you know, the founders, you get crushed.

13:46Like when you hear that news, because you've like come up with this name, you've just like put so much blood sweat and tears into into the name into the brand and then just to find out it's not it's you know you can't own it so yeah yeah no that's got to be like something that is absolutely crushing for not only like you know personally because you get attached but the vision also that you might have for your brand I mean that's that's got to be rough and you know so when should we start planning for things like that you think like way before you're even like anything like Like that's the first thing, right, that you should do is make sure you're securing your name.

14:21I think so, yes. I mean, when you are forming a business and, you know, you're going to form an LLC and you're kind of trying to figure out your structure, you know, it's okay to form an LLC. Your LLC name could be anything. Like that's not name ownership. You could have, you know, your name as the LLC. Whatever it is, that's not your trademark. Your trademark is, you know, the brand, the name of the brand, if it's different than the LLC, a product name. So when you're naming that thing, whatever it is, the name of your business, really just, you know, double check, have somebody search it. And the thing is, the search, there is a free search on the USPTO website, but that is not a comprehensive search.

15:09That's only going to tell you and kind of if there's any direct hits, but it doesn't do the search as the trademark office does the search. So, you know, all trademark attorneys have a software that they use. There's several in the market, but those softwares are specialized and that algorithm searches, you know, in the same way that the trademark examiners will do their search. So that's why you want to have it professionally done. I mean, just kind of looking online, Googling or even looking on the USPTO trademark, the free site, it's not enough. So you need that extra that extra protection in that search.

15:51That makes sense. I didn't know that. I didn't know that you couldn't just completely like just go on to Google. You know what I mean? And look this up on the right now. Yeah, that's that's interesting. so like in terms of like I mean other pitfalls I mean what are some common pitfalls you've seen small businesses run across and fall into when it comes to just securing themselves and their business and whatever that might be yeah I mean I would say the biggest has to be just not doing the legal stuff in the beginning people don't like to spend money on legal in the beginning because it's not like sexy.

16:28It's not, it's not like moving you further as, you know, a marketing firm would like, you know, like you, you, you hire a marketing company and you know that they're going to, you know, they're going to work on your brand and they're going to make you stand out. And that's something that you can see. Whereas the legals, you can't really see it. It's just something that you need to do. So people don't like to start with that. But the problem is like if you don't do that and then you start building and you spend all this money, then you have to come back. You know, you have to come back and do the legal and then it's more expensive or you just can't do it.

17:04And like in the case of the trademark, you may not even be able to register that name or, you know, you don't have contracts with your vendors or your partners and then something goes wrong and then you have to spend money, you know, trying to fix that. So there's just things that I would say that's a really big issue, you know, with maybe not only smaller brands. I mean, I just think it's not something that when you're starting a company, you really want to think about. Yeah, it's not like the sexy thing to think about when you're getting started. I mean, I think there's so much, right? I mean, I'm personally like, like very intrigued by some things.

17:40And I don't know if you are, you know, specializing in this area or not. But I think for me, things like copyright come up because there's so many brands that use like imagery and stuff that they might not know if it's the right thing to use or if they're allowed to use it. I mean, I feel like there's a lot of people who get inspiration off flights like Pinterest and they don't realize that, you know, Pinterest is not a place you can really take anything from. And, you know, stuff like that, you know, it could be difficult. Right. Yeah, no. So actually, this that you're bringing up now, this is a huge issue that I am seeing more and more, which is I'm getting clients, potential clients that are coming to me and say, I got this nasty email or letter from a lawyer that said that I, you know, in 2015, I used this photo on my website.

18:32and I don't even remember this or you know when a social media intern put this up I have no idea and that is copyright infringement and that is like there's damages and statutory damages like in you know the five figures and up and if you're a small brand you just like it's like what it's like you're you're asking me to pay thirty thousand dollars for a picture that I don't even have on the website anymore I mean it's really really scary the way that that's I'm seeing that happen a lot and so that I mean I just tell brands like you have to really train you know train your social media people or or you know interns or people that are doing you know the marketing for you but then also you know obviously you have to understand that you can't just take any picture that you've you know you find yeah that you can't you can't just like randomly take And I feel like this almost like, especially in the beauty industry and smell, I feel like this needs to be like, there needs to be a handbook.

19:33Like I'm not joking, like a legal handbook. You know what I mean? Because there's so much like when you're trying to market your brand or when you're trying to like go out there and sell it to people and make people relate to it. I mean, there are so many things that you want to do. You know what you just like, we were just talking about like Pinterest or some random sites you get pictures off of. But even like, you know, getting like content, for example, I've seen people repost like in like micro influencer content and I don't know if they get their permission or not, but they'll post it up and it's just stuff like that.

20:05They need to be able to understand, like, is this something I can do? And if not, you're going to be in a hole, you know, and you're not going to know what to do at that point. Yeah, it gets really expensive. So I feel like we need something. Or when you're, you know, when you're starting up a business, you know, just kind of check in with a professional, like you should check in with an accountant, you know, a lawyer and just say, okay, I'm starting a business, what do I need to know? What do I need to do? And that's, I mean, that's helpful. yeah I completely agree I I think it's it's something that maybe goes over people's heads you know when they're first starting out but you're so excited about what you want to create and your vision and your you know the ideas but yeah this is absolutely a must I I guess to to really round things out I would love for you to just tell us like any like one critical legal tip that every beauty brand should know I mean there's never just one yeah I mean I think it would have to be just check in like check in yeah do it correctly check in with a lawyer when you're starting something because there's just I mean we've talked how many pitfalls did we talk about you know in these yeah yeah minutes that we've been talking I mean it's landmines yeah landmines there's so much that you don't even realize and you know again you know the the trademark the IP thing is very important and it could really cost you a lot of money if you are using somebody else's brand their name I mean because they will come after you like they will send you cease and desist letters they can even get you know profits from you and like if you've been using the mark and have made money you know so it's it's really important that you check on that and and make sure that you do that.

21:54The other thing I didn't mention about that is like, if as you grow, any time you bring on an investor, or if you want to end up, you know, selling the business at some point, they are 100 % going to want intellectual property protection of that brand. Like, yeah, they want that. Otherwise, they won't even look at you. And that brings it's an asset of your business, it brings value. So if you don't have that stuff, you know, they your business is going to be valued at much less so that's you know also something to think about I totally lied also I have one more question for you and and this is something that's very intriguing to me now because I see so like you said so many brands popping up every day you know and I am very curious like what happens when because you always see like xyz skincare you know what I mean like that's the that's kind of the go-to that I'm seeing is like a brand name and then they put skincare at the end of it what is the legality around that stuff like when you come up with a name and say it's taken could you add things to the end of it that help like make it unique I mean is that a practice that you see common brand with brands it can help in some instances it really really depends on what the you know the main word of the mark is and kind of how crowded the registry is with that mark yeah word but things like you know skincare that is not that's part you know that could be part of your trademark but that's usually disclaimed because it's descriptive of your product so and that just means like the examiner will say it's something like drunk elephant skincare i don't even know if it's called that so they will say that the word skincare is disclaimed meaning like you're not you cannot have ownership of the word skincare because it's just descriptive so and that's totally common and normal and that's just what happens so the trademark office does not like descriptive marks so if you have a mark like lovely nails for you know some press on nails that entire thing would be disclaimed because or not even be able to be registered because it's too descriptive interesting yeah I didn't know that I mean I think that that's where I get confused because every brand either has beauty at the end of it or skincare at the end of it and I'm like I wonder why they do that if it's like to differentiate their sell themselves and like you know trademark applications or something but that's interesting because I know they do that with podcasts like they'll do like you know something like a really common name for a podcast and they'll be like podcast or with so-and-so you know and it's It's just like, it's not a new name.

24:38They've just added something at the end of it. Well, this was amazing, Etienne. I love talking to you. You're so, there's so much wisdom here and you're always like guiding us from this like legal standpoint. And I think that that's something I want to see more in this industry because it's just not there. You know, I follow a lot of like blogs and people and I'm always, even for me, you know, being, you know, the host of this podcast, it's always confusing. You know, where are our limits? What should we be looking out for? I can't imagine how that is for actual beauty brands or creating products, getting them out there, especially with what we discussed with MoCRA.

25:12So, you know, thank you for your guidance here and all the knowledge. Absolutely. Thank you for having me again. Yeah, I'd love to have you again. But everyone listening, if you guys have any questions at all, if there's anything you're curious about, maybe a legal issue that came across your desk and you're kind of confused about it, you know, in the beauty realm, please chime in. let us know and you know I hope that this was helpful to you thank you so much hey guys so I hope you loved that episode please make sure to hit subscribe if you're tuning in to us on any podcast platform we are available on so many different platforms so wherever it is that you're tuning in just go hit subscribe you will be immediately notified when we publish new episodes this way you're able to tune in to amazing insights from experts brand founders industry leaders authors all the wonderful people that we host and that's very important for me because I love to hear from you guys and really understand what you love and what you want to hear more of also make sure to give us a follow on all of our social media outlets we're available on instagram tiktok x you name it we're there we also have a blog on medium so if you're a reader and you love medium blogs check us out on medium we publish some really great articles on there that do deeper dives than just what's available on the podcast and it's really a great place for all of you science geeks out there that want to learn a little bit more we go above and beyond with our research and making sure we're bringing you information that you usually probably won't hear about in other outlets so check us out leave us a comment leave us a review and we'll be back next time with another episode thank you