This post is all about the somewhat confusing debate of "Trademark vs LLC".
Trademark vs LLC - Which one should I get first?
Before you consider a trademark vs LLC, you should know what these terms mean. Both can be great protections for your business and they serve different purposes.
A trademark is a brand identifier. A trademark lets a consumer know the source of a good or service.
You can register your name, logo, slogan, or design as a trademark or service mark (these two terms are often used interchangeably).
The main benefit of a federal trademark is that you have exclusive rights to use the mark nationwide. You can stop someone in a different state from using your federal trademark even if you are not operating in that state.
An LLC is short for a limited liability company. It is a business entity that can shield you from personal liability. You always want to limit your personal liability.
For example, if your company is sued, you want the creditor to only have access to the business' bank accounts and assets. You do not want a creditor to come after your personal home and bank accounts. An LLC, or corporation, or partnership can serve as a barrier and limit recovery to only the business' assets.
Reminder: Legally protecting your business can make you more money. Watch this video to find out!
How can I register my trademark?
The trademark registration process is two steps.
Step 1 is the trademark clearance search. This is the due diligence phase. You want to check to make sure that the mark you want to use is not too similar to another trademark owned by someone else.
If your company name, logo, or design is too similar to another trademark, you could be sued for trademark infringement. You could be sued even if your mark is not the exact same as another company's.
Your trademark applicationThe United States Patent and Trademark Office could also deny your trademark application could also be denied by the United States Patent and Trademark Office if it is too similar to another mark. The USPTO rejects applications where they find that there is a likelihood of confusion between certain marks.
The trademark clearance search could help you modify your trademark or pick a new trademark to avoid these risks. If you are sued for infringement or receive an office action rejection, you could have to start all over.
That could mean a new brand name, design elements, LLC registration and LLC name, brand identity, business cards, and business registration.
The better option would be to have an experienced attorney conduct a trademark search so that your company's brand can properly expand without wasting precious time and money.
Step 2 is the trademark application process phase. This is where you, or an attorney, complete the application form on the U.S. Patent and Trademark Office's website. The application is short but intricate. A mistake on the application could result in you jeopardizing your trademark protection at the federal level.
Here is a quick overview of the application process:
Conduct a trademark clearance search.
File a trademark application and submit the filing fee.
Wait approximately 9 months for your application to be assigned to a USPTO trademark examining attorney.
Your application proceeds to the publication phase or receives an Office Action refusal. (You now only have 3 months to respond to office actions.)
Your application is either approved and you get a trademark registration or your application is rejected and you may have to start all over again.
If you are considering a state trademark (filed with your local Secretary of State) versus a federal trademark (filed with the USPTO), you can read my prior blog post here. In sum, there are very limited reasons to have a trademark at the state level. You usually see this in cases where a particular industry is legal at the state level but not available for trademark rights at the federal level. The main example is the cannabis industry.
The best way to register your trademark is to have a trademark attorney conduct a trademark clearance search and file your application. It is more cost effective to hire an attorney in the beginning. If you have to hire an attorney to fix a mistake, it could cost much more than if you had hired an attorney in the first place.
Should I get an LLC?
The main business entity formations are corporations, partnerships, LLCs, and sole proprietorships. You should seek legal advice or advice from an accountant to determine which structure is right for you.
I've seen many businesses operate under an LLC in their early years. Once a company grows, it might elect to change its entity to a corporation. Remember these are not cookie-cutter situations and it is a good idea to speak with a professional before your business starts collecting money.
Remember you want to limit your personal liability (personal assets). If you do not form a separate legal entity your personal bank accounts and assets could be at risk if you get sued. Small business owners are highly encouraged to form corporations or limited liability companies for this heightened degree of legal protection.
Business entities can usually be formed by going to your Secretary of State's website.
What are the different kinds of business entities?
A sole proprietorship is a business entity where one person owns and operates the business. You do not necessarily have to file paperwork to be considered a sole proprietor. You can wake up one day and just start doing business and be a sole proprietor. You are entitled to all profits. However, you are also responsible for all of the company's debts. There might be less paperwork, but there is a higher risk for your personal assets.
A general partnership is the next level of protection. It is where two or more people own and operate a business. However, one partner could be liable for the actions and debts of another partner.
As mentioned above, a limited liability company is often preferred for new business owners. The state filing requirements and tax requirements are not overly burdensome and the limited liability protection could be great.
Corporations are probably the strongest limited liability protection for a company. The filing requirements often make it more appealing once a company is earning a certain level of money.
Conclusion
You should protect both your intellectual property rights with trademark registration and your limited liability with a business entity registration.
If you have any questions, I'd be happy to help. I help businesses protect their intellectual property from trademark searches and trademark applications, to trademark enforcement. You can reach out via my website or (754) 800-4481.
This article was all about trademark vs LLC.
References
Melissa Ramnauth is a highly respected and accomplished trademark and business attorney, with over a decade of experience in the field of law. She is the founder of MDGR LAW.
MDGR is a leading trademark law firm based in Florida. The firm serves clients across the world and in a wide range of industries, including technology, consumer goods, fashion, and entertainment. Melissa works closely with clients to understand their unique needs and goals. This allows her to provide effective legal solutions.
She writes articles on trademark law. She also writes articles on West Indian history and politics to promote the Caribbean in the global marketplace.
She graduated magna cum laude from the University of Miami with a Bachelor of Arts degree in Political Science, a minor degree in History, a minor degree in Criminology, and a Juris Doctor degree.
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