03/18/2010 05:12 am ET | Updated Nov 17, 2011

Lessons from Bikram Yoga: A Lot of Hot Air for Free

Hot yoga is hot. Bikram Yoga, the original "hot yoga," was developed by Indian yogi Bikram Choudhury. Today, there are over 4,000 of these yoga centers worldwide. But, guess what--according to Bikram, he hasn't gotten a cent from them!

Why? He never knew that he needed to trademark his name or set up a franchise system. So, for over 50 years, he's been charging fees for his training programs, but after that, anyone who has gone through training has been able to open a yoga studio using the Bikram name without paying licensing or franchise fees.

Bikram thought he was living the American Dream. He arrived in this country in the late 1970's thanks to former President Nixon, who heard about Bikram from the Prime Minister of Japan and sent for him on an Air Force jet without visa or passport to help with his Phlebitis. Bikram never left.

Bikram, has been practicing yoga since he was a young boy in India and teaching all over the world, but he says that he did not start doing this for the money: "I never knew that it was going to be a business. Teaching yoga in India is free, still today." He claims that he "has never taken one penny from anybody in over 50 years. I'm a yogi -- I don't care for money. Money comes to pay the bills. I never charged anyone one penny until today, this moment." He may be the only yogi in the U.S. who is not thinking about money! Yoga is big business--estimated to be over $5.7 billion a year including classes and merchandise.

Bikram got wise thanks to former Attorney General Janet Reno. Reno's former assistant was a student at a Bikram Yoga Center and supposedly introduced her old boss to Bikram to help with her Parkinson's.

According to Bikram, "I asked her how to protect Bikram yoga name. She said, 'Welcome to America. We protect your money by putting it in the bank, we in America protect intellectual property through patent, trademark, copyright, franchising, etc." No one had told him that before. "Some of the center owners are using the brand without my permission." So, the yogi who never thought about business hired a law firm. So far, it's taken almost 7 years to complete putting together the licensing and franchising. Today, after spending an estimated $3-$5m on lawyers' bills, Bikram has permission to franchise in 49 states, but is still waiting for approval from New York State.

Maybe being a yogi has helped Bikram stay calm about the whole process, but for the rest of us, having unauthorized use of our name or product is enough to cause some major heartburn. The key is to protect what's yours but putting things into place early. It's very difficult and costly to go backwards and try to fix things later.

For many small businesses without a patentable product or service, the trademark can by the most important and valuable asset. According to New York attorney Lori Smith, a partner in the corporate and technology practice groups at Sedgwick, Detert, Moran & Arnold, LLP, "there are many entrepreneurs who spend a lot of time and money developing and marketing their brand only to find out they didn't do their diligence, someone else actually owns the name and they are infringing on third party rights or they can't protect their business against copycats or even innocent third parties who establish similar businesses under the same name."

According to Smith, "you can obtain certain common law rights in trademarks just by usage but registration adds significant additional rights and protections. Common law rights are difficult to prove and are territorial - only valid in the location of use - so if your business starts in California, and that is the only place where you are using the mark then that is the only state where you have common law rights (subject of course to satisfying the requirement of first use) - it will not protect you against someone who without knowledge of your business, starts up a business under the same name in another state. This may not be important initially, but it will be if either or both of you try to expand your respective businesses nationally. A federal registration is national in scope."

Make sure that you are protecting your mark with your own partners. If you are planning to license to others, put proper protection in place--this can be as simple as a license agreement. According to Smith, "don't forget to include a provision for quality control."

Creating a new brand name is one of the most critical steps in developing a new product or service. But sometimes, people get so excited about the perfect name that they forget to check if it's being used somewhere else. Make sure you search for companies with similar names in similar businesses not just locally but around the country and ideally, around the world.

Don't forget about online presence. Registering your trademark offline is not enough--make sure that you grab the domain name if it's still available. If it's not available, think hard about using a different name so there's no confusion.

Believe it or not, even big companies can mess up. Supposedly, American Express "forgot" to protect their "Black Card" mark (they were marketing it as the centurion card, but everyone called it the "Black Card") so Visa registered the mark and domain name!

Treat your name and your business name and logo as the valuable assets that they are. You don't want to be fighting to protect your own "hot air" years from now.