- Trademark or LLC?
Do I need an LLC if I've got a trademark?
Do I need a trademark if I've got an LLC?
What's the difference? Are they the same thing?
Do they do the same thing?
Trademark or LLC? Trademark or LLC?
Trademark or LLC?
Stick around because I'm about to explain.
(bright music)
Welcome back to "All up in Yo' Business."
I'm business and branding attorney, Aiden Durham,
with 180 Law Co. in Colorado,
and I have helped hundreds of clients
set up successful small businesses.
Of course, typically the top two things that come
to mind when we're talking
about starting a business is forming an entity
like an LLC or a corporation and trademarks.
Do I have to think about trademarks?
And of course the question comes up of,
what do these two things mean?
Are they the same? Are they different?
Do I need to do both? Do I need to do either?
So in this episode, I'm gonna break down exactly
what an LLC is and what a trademark is,
how they sometimes play together,
how they are two completely different things,
but how they're both incredibly important
for the success and longevity of your business.
But first, make sure you hit that subscribe button
if you haven't already done so.
And be sure to hit the little bell
so you receive a notification anytime I post a new video.
And if you wanna learn more about trademarks,
check the description for a link to download
my free brandish trademark guide that
will teach you all of the ins and outs
about trademarks and the things that you need
to know to properly protect your business.
All right, so let's get into it. LLC versus trademark.
What do they mean, how are they similar,
and how are they different?
Let's start off with some basics.
What does LLC mean?
Not just, what does it stand for?
LLC stands for limited liability company.
Well, what does limited liability company actually mean?
What does that term mean?
I'm going to read you the dictionary definition
of limited liability company.
I'm gonna read it directly from my notes
so I don't get it wrong.
An LLC is an unincorporated company formed
under applicable state statute whose members cannot
be liable for the acts, debts,
or obligations of the company
and that may elect to be taxed as a partnership.
Let's reel that back.
An unincorporated company,
meaning not a corporation, formed under state statute.
So an LLC is a company formed
under state statute whose members can't be liable
for the deaths, obligation, liabilities of the company.
That's what an LLC is.
Let's look at the dictionary definition
for a trademark.
Trademark, a device, such as a word,
pointing distinctly to the origin
or ownership of merchandise to which it is applied
and legally reserved to the exclusive use of
the owner as a maker or seller.
A device, such as a word, pointing distinctly
to the origin or ownership of merchandise or services,
and legally reserved as the owner.
That's a trademark.
LLC is an entity formed under state statute.
Trademark is a device having to do
with origin and ownership of a good or a service.
So just looking strictly at the two dictionary definitions,
these things have nothing in common.
So there you go. That's the video, guys.
LLC, trademark. They're different, done. Bye.
I'm just kidding. I'm just kidding.
But really, let's start there.
They're completely different things.
An LLC is an entity formed under state law.
A trademark is a device, such as a word or a symbol
indicating the source of a good or service
and distinguishing it from its competitors.
I like to think of trademarks and LLCs
kind of like insurance.
If you either own your home or rent your home,
you have some kind of home insurance,
something ensuring your home
or your possessions in your home.
If you have a car, you also have auto insurance,
insurance that protects the automobile
and the people within the car,
and to an extent the personal possessions
or tangible items within the car as well.
If you've ever dealt with home or auto insurance,
you know they are two separate policies.
Home policy covers your home.
Auto insurance covers your automobile.
Sometimes we get these policies from the same company.
Sometimes they interact or overlap
with each other to an extent.
Let's say your car is parked in your garage
and someone breaks into your garage and steals your car
or steals some belongings out of your car.
Some of that loss might be covered
by your home coverage because someone broke
into your home and stole your possessions.
Some of them might be covered by your auto coverage
because someone stole things out of your car.
Of course I am not a insurance expert
so that's not always how it works,
but there are of course instances where your home insurance
covers something having to do with your car,
and your car insurance sometimes covers something
having to do with your home.
But at their core, they are two completely different things,
protecting completely different assets,
and you're paying for them separately,
and you need both of them.
LLCs and trademarks are kind of like that.
LLCs protect you as the individual member or owner,
and operating as an LLC can impact the strength
of your trademarks or your trademark ownership.
But the LLC itself has nothing to do with the trademark
or the trademarks themselves and vice versa.
The trademark or trademark registration protects
those trademarks which are assets of the business.
So of course there's overlap, but again,
they are two completely separate and distinct things.
An LLC is a form of business entity.
A trademark is a type of intellectual property.
While in LLC, the primary purpose for
its members in forming an LLC,
the primary purpose is protecting your personal liability.
Because as we know from the dictionary definition,
an LLC is meant to create a situation
so the members aren't liable for the deaths, obligations,
or liabilities of the company.
There's nothing in that definition about protecting the name
of the business or any other kinds
of trademarks having to do with the business.
There's nothing in that LLC definition that even describes
or talks about trademarks in any way.
So while the LLC will help to protect personal liability,
it does pretty much nothing when it comes
to protecting a business name or a business logo
or any of the businesses' other trademarks.
Wait, hold up.
So you're telling me that somebody else can use
the same name as I do for their LLC?
Well, yeah, kind of. I mean, it depends.
It helps to have a basic understanding
of trademark law and how trademarks work in the U.S.
to really understand how trademarks
and LLCs kind of play together.
So if you want a little extra primer
on some of those trademark basics,
don't forget to check the description
for a link to download my ultimate brandish trademark
guide that will give you all of that background
that will help you understand exactly how trademarks work
in your business.
When you register or form an LLC,
at best all you're doing is preventing somebody else
from forming an LLC with that exact same name
in that same state.
It will not prevent people from registering
a very similar name for their LLC
or registering the exact same name
in a different state or potentially depending on the state,
it may not even prevent someone from registering
that same name as a DBA,
but without the LLC designation on it.
For the most part, in most states,
literally all it's doing is preventing someone
from registering that exact same name in that state.
And that's not even a trademark issue behind it.
It's not like the Secretary of State's office has someone
in the background comparing LLC documents and saying,
"Oh, this name is too similar to this one.
This is gonna be trademark infringement."
No, the Secretary of State,
aside from state trademark registrations,
they could care less about your federal trademarks
or the trademark of your business name.
The reason they're concerned about similar names is
because most state statutes require
that your LLC have a distinct name
which means it can't be identical to some other one.
And because a lot of their systems don't know how to handle
two identical LLC registrations.
It's improper, it shouldn't exist.
An LLC needs to have its own distinct name.
But distinctness can be one letter difference
or even a comma difference sometimes will
make this LLC name different from the other one.
So it's solely a procedural issue
for the most part of why you can't have an LLC
that has the identical name in the same state.
It has very little to do with trademarks.
Trademark rights, however, in the United States arise
out of use of the trademark.
You don't have any rights in a trademark
until you've actually started using it in commerce
because then it is a trademark because
if you've seen any of my other videos,
I don't know if you guys are getting sick
of hearing me say this,
I'm not, I love it, but a trademark isn't a trademark
until it's a trademark.
Your business name or your LLC name
isn't a trademark until you start using it as a trademark,
which means you are using it to distinguish
and identify the source of your goods or services.
And simply forming an LLC, simply filing paperwork to
form an LLC does not in 99% of instances,
that by itself does not constitute use
of a trademark because you're just registering an LLC.
You're not selling your goods or services.
You're not using the LLC name as a trademark yet.
Now, you can kind of secure some rights
in a trademark before you started using it.
And you can do this by applying
with the USPTO on a 1b intent-to-use basis.
If you want to register your trade mark,
you can apply before you started using it in commerce.
But it won't be registered until you've started using it
because it's not a trademark until you've started using it.
So it is true that you really don't have any protection
over a trademark until it becomes a trademark.
But with a little caveat that you can get
some preliminary protection, I guess,
by filing on a 1b intent-to-use basis.
But aside from that, ownership and rights in a trademark
don't come up until it's being used as a trademark
which means it's being affixed to your products
or product packaging or product displays,
or if it's used on marketing
or advertising materials for services, something like that.
Until the consuming public experiences
your trademark out in the wild, in a situation
where they can then purchase your goods and services,
that's when it becomes a trademark.
So when it comes to, do I need one or the other,
should I do both, which one should I do first?
Really, both, for most of us are optional.
Of course, I'm a lawyer.
I encourage people to operate businesses as an LLC
or a corporation to protect their personal liability.
And of course, I encourage people to take care
of their precious trademarks
by registering them with the USPTO.
But neither of these things are required to start a business
or operate a business.
There are some instances where it might be required
if you are doing an Amazon, if you're selling on Amazon,
Amazon requires for brand registry that you
have a trademark registration
or at least a pending application.
So in instances like that, a trademark might be required.
But legally speaking, there's no requirement for either.
But of course, they are good things to do,
operate a business as an LLC and registering any
of your business' trademarks with the USPTO.
If you've decided you want to do both,
which one do you do first?
Well, again, we've got to think
of what are these things that we're dealing with?
This trademark, what is it a trademark of?
It's a trademark of the business in theory, right?
If we are going to form this LLC to operate our business
and that business is going to be using this trademark
whether it's the business name, a product name,
a service name, a logo, or some other design,
it's gonna be the business that's using that, right?
So shouldn't the business exist
before we file an application for this trademark?
Yes, yes, it should.
It would be improper for one to file a trademark application
under their own name, my individual name
as the owner or user of the trademark.
If it's really my business, my LLC that's using it,
that wouldn't be correct as far as the trademark application
and registration process goes.
So if it's one or the other, then of course, you know,
we need to decide what's more important here,
protecting my personal liability, which, you know,
the LLC will help to do,
or is it more important that I really secure this brand,
this business name, this logo?
But if it's both, then, yeah,
99% of the time we want to form the company first
because it's the company that should be the owner,
applicant, user of the trademark.
Bottom line here, folks, is that LLCs
and trademarks are very, very different things.
They're both important for a business
and for operating a successful business.
Neither are completely necessary though.
And they both help to protect you
and your business in one way or the other.
And they play together to an extent in that sense.
But at their core, at the heart, at the heart of themselves,
an LLC is a state formed entity.
Whereas a trademark is a device that identifies
and distinguishes the source of a good or a service.
If you are ready to do either of those things,
form an LLC, register a trademark, check the description
'cause I am going to load you guys up
with some great resources.
Of course, when it comes to trademarks,
I've got you covered with my
all inclusive trademark registration package
where I will handle every step of
the trademark registration process from beginning to end.
Or if you're a little bit more of a DIY-er,
I've got brandish which is my online course
that teaches you step by step how to prepare for,
complete and submit a trademark application to the USPTO
all by yourself without an attorney.
I'm also going to link to a couple of great resources
for forming an LLC, learning more about how you go
about doing that,
getting all the documents set up for your LLC,
and a few other things that you might wanna know.
If you learned something from this video,
go ahead and give me a little thumbs up.
And of course, don't forget to hit that subscribe button
and the little bell so you don't miss any future episodes
of "All up in Yo' Business."
Thanks so much for watching.
I'm Aiden Durham and I'll see you next time.
(bright music)