BUILDING A BUSINESS IS LIKE BUILDING A HOME.

Building a business is like building a home.  You would not use drywall to support a home, because it would not survive the elements (rain, storm, etc.) and would result in a loss of substantial investment.  Similarly, contracts are support beams for businesses.  If you don't utilize solid comprehensive business contracts, the business investment is at substantial risk.

Protecting Your Assets from Business Activities

1.  GENERALLY

When starting a business you should consider taking steps to protect your personal assets, including your home, from business creditors and other business claims.  First, consider creating a separate legal entity under which you will conduct your business, e.g. INCORPORATE, set up a LIMITED LIABILITY COMPANY, etc.  Second, consider non-business protection options such as, filing a DECLARATION OF HOMESTEAD (if applicable in your jurisdiction) for your home.

WHEN IS IT BETTER TO HAVE TWO LLC'S?

OFFERING FLAT FEES FOR LLC'S AND CORPORATIONS AND TRADEMARKS.

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Checklists for Businesses and Executives

Checklists are great "easy to use" tools that will help get you started in spotting the general issues, concerning your endeavor.

ADDITIONAL ISSUES FOR BUSINESS STARTUPS

Business Startup Checklist II

TO LICENSE OR FRANCHISE . . . THAT IS THE QUESTION.

Understanding the Differences between Licensing and Franchising . . . that is the challenge.

If it looks like a duck, walks like a duck, quacks like a duck, it’s a duck.  Similarly, if a deal is structured like a franchise and/or operates like a franchise, it’s likely a “franchise,” and if so, franchise laws must be complied with, regardless of what you call the deal (i.e., even if you choose to call it a “license,” not a “franchise”).  Misrepresenting the deal, misunderstanding the deal and failure to comply with necessary laws, could result in civil and criminal penalties for persons and businesses involved.

Business Acquisition Checklist for Buying or Selling a Business

The following is a general checklist of issues that typically should be addressed in a Business Acquisition Agreement, when buying or selling a business.

New Business Checklist

1. Gather Your Team of Professionals (Legal, Tax/CPA, Bank Rep., Insurance agent)
2. Confirm in writing the promises made by each Participant (roles, duties, responsibilities and any limitations, expectations and assumptions made).
3. Register Trademark, Copyright and Patents .
4. Learn the differences between LLC’s and Corporation and S-Corp.
5. Obtain By-Laws, Shareholder Agreements & Operating Agreement.
6. Obtain Fed ID for Business.
7. Open separate Bank Accounts for Business.
8. Create a realistic budget and learn about Financing Options.
9. Learn about and Obtain Applicable Business Certificates, Licenses & Permits.
10. Understand the Letter of Intent, Lease and Guaranty, before you sign.
11. Understand Licensing Intellectual Property (trademarks, designs, patents, content, etc.).
12. Learn about Employer Posters Required by law.
13. Learn about and obtain appropriate insurance coverage.
14. Register with the State for Sales and Use tax if applicable.
15. Establish Payroll System.
16. Obtain Protection with Terms of Use, Terms of Sales, Privacy Policy, IP Notices.
17. Comply with merchant credit card transaction requirements.
18. Obtain Protection with Agreements, such as:
a. Website & Logo Designer Agreements (like real Estate, e.g., you don’t own your logo or website design, unless a proper signed writing assigns ownership of it to you).
b. Employment Agreements: Non-competes, Assignment of Rights, etc.
c. Executive Compensation Agreements: Profit Sharing, etc.
d. Independent Contractors (learn the difference between contractors and employees)
e. Confidentiality Agreements
f. Strategic Marketing Alliance Agreements
g. Supplier- Buyer Agreements
h. Manufacturer – Distributor and Broker Agreements (Non-circumvention, etc.)

Trademark Lawyer Blog, Part 3

Why should I register my trademark or the mark I want to use as a trademark?

Click here to contact Attorney Michelle DelMar, Small Business Lawyer, Trademark Attorney and Executive Contract Lawyer.

1. Trademarks; Generally. Federal and State law govern trademarks. The laws derive from the principle that a merchant has an inherent right to the exclusive use of those marks which distinguish its goods.

(a) Who "wins" in the battle for trademark rights? First in time wins, when it comes to exclusive right to use trademarks. Whomever applies for registration for the mark first or uses a mark in commerce first, has the exclusive right to use that mark for the purpose(s) (or in the industry).

(b) Why Register? No registration is "required" for trademarks used in commerce, however, trademark registration provides the owner of the mark with:

(i) the presumption that the owner of the registration has exclusive rights (over everyone else) to use the mark in commerce for a particular purpose (and that presumption is not easily overcome);

(ii) the right to stop others from using the mark for the same or similar purpose, based upon the presumption of exclusive right to use the mark;

(iii) reduction in likelihood that someone else has exclusive rights to use the mark for the same or similar purposes. Why do we care if someone else has registered the same trademark? Because that means that you cannot use it for the same or similar purposes or your use will likely amount to infringement;

(iv) sophisticated business persons (who have legal counsel) will not likely pay for a license to use a trademark, unless it is registered and you are record owner of exclusive rights to use the trademark;

(v) the ability to bring an action concerning the mark in federal court;

(vi) the right to use the federal registration symbol ®;

(vii) Public notice of your claim of ownership of the mark;

(viii) the use of the U.S. registration as a basis to obtain registration in foreign countries;

(ix) the ability to record the U.S. registration with the U.S. Customs and Border Protection (CBP) Service to prevent importation of infringing foreign goods; and

(x) listing in the United States Patent and Trademark Office’s online database.

2. Risks to Consider. Some of the risks of not registering the trademark are as follows:

(a) Someone else may have already registered the trademarks for the same or similar purposes, in which case, you will not likely be able to legally use the mark(s).

(b) Someone else may file an application to register the trademark registration before you, in which case you will likely not be able to use the mark(s).

(c) If someone else has exclusive right to use the trademarks that you plan to use, or files for registration before you, and you use those trademarks:

(i) you will be exposed to the possibility of a law suit for infringement, an injunction will likely be issues against your business prohibiting your use of the mark, damages will likely be sought and your investment (time, effort and money) in the business will be at great risk;

(ii) even if you use the mark before someone else, if they obtain trademark registration before you, it will be extremely costly to get that registration canceled ($50,000 - $100,000+ in legal fees)* and in the interim, a court will "presume" that they have exclusive rights to use the mark and the court will likely issue an injunction against you (prohibiting use of the mark) unless it is proven that you were first in time and registration is cancelled, if possible.

There are good reasons why most well-known trademarks are registered with the USPTO and good reasons why they went through the registration process, including, but not limited to, the above reasons.

3. Where the mark IS the product. Where the trademark is the product (or at the very least, an indispensible aspect of the product), and possibly the most valuable asset of the business, knowing the availability of use of the trademarks and trademark protection is absolutely essential. Some questions to consider in determining whether to obtain advice concerning availability of the marks and whether to register the marks:

(a) Would it be o.k. for someone else to sell the same goods using the trademarks that I will use?

(b) Would it be o.k. if some day I have to stop using the trademarks? Can I simply replace the trademarks with other trademarks?

(c) Would it be o.k. if someone sued my business because I am using a mark to which they have exclusive rights?

Everyone's "risk tolerance level" is different.  Consider what your "risk tolerance level" is with regard to the trademarks of your business.

*Analogy: It's like investing in a piece of real estate without checking to see who owns it first, and then obtaining a deed in your name, but not registering/filing the deed with the Registry. If someone else claims rights to that property later, and their deed is filed before your deed, you can imagine that it will be very difficult and costly to resolve the situation.

Consult a competent experienced Trademark Lawyer to discuss your specific situation.  Click here to schedule a consultation with Michelle DelMar, Esq., Trademark Lawyer.

Click here to contact Attorney Michelle DelMar, Small Business Lawyer, Trademark Attorney and Executive Contract Lawyer.

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