fbpx

LayRoots

Asset Protection | Live More Carefree

Blog

By

But, do I really need an Operating Agreement/Articles of Incorporation?

Once upon a time, there was a girl who toiled away at her first job after graduating from law school.  It was a start up.  She felt lucky to be blazing her own trail.  They were going to change the world; well, at least the face of the intellectual property portfolio management world.  They strove to show businesses and clients that there was an alternative to Patent Trolls that actually HELPED people.  Among them were MBA’s graduates, seasoned industry professionals, attorneys – the four of them had to succeed!

They met as a team and deliberated for a day about the details of their employment contracts, their articles of incorporation, and their by-laws.  The girl wrote them though she had never done anything like that before (no, they don’t teach you that in law school).

Some months in:  The girl and two of her colleagues toiled away at their designated responsibilities.  And the CEO started to stroll in at 10am…or not come in at all.  He would message people on social media instead of picking up the phone and he would miss meetings.  They were not making the money that they thought they would by then.

There was an undercurrent of dissatisfaction with the way things were going.  The girl and two toiling colleagues were unhappy.  They told the CEO that they were no longer going to devote all of their time to the company (never a good sign).

THEN…a breath of relief…a good bit of money actually came in.  Real money.  That they had earned.

And then…the sh!t hit the fan.  Because…what happened?  Oh yeah, the CEO deducted a ton of expenses and when asked for the receipts/backup…well, there were delays and more delays and excuses.  He offered them a token amount as a gesture of kindness.  Um, what?  This is a business!  That’s not how dividends work, buddy!

There were arguments.  The girl and her two colleagues quit in a dramatic fashion.  They wanted what they had been sold – the CEO’s dream.  They had lived up to their end of the bargain, dammit!  The CEO invited a lawsuit (come at me, bro!) and also threatened one for breach of contract.

::apply brakes:: The girl had written those articles of incorporation AND their employment agreements.  He couldn’t sue them! She may be fresh out of law school, but she was a lawyer, and she wasn’t going to be bullied!

She channeled her rage into an action plan on how to extricate herself and her two, toiling colleagues from a messy situation without more of a mess.  It took one day.  And an understanding of what was actually written in the contracts they had all signed.  Did they lose the money that they were owed?

Yes.  They did.

So, why is it still a win?  Because her colleagues had families.  And houses.  And they all had lives that they wanted to live.  And other jobs that they wanted to pursue.  Any lawsuit would have cost tens of thousands of dollars (at least) and would have taken time away from all of the other important things in their lives.

Was there a better way to handle this?  Maybe.  But it was a great learning experience on why it’s important to have an Operating Agreement, contracts, and all of that legal stuff that just slows everything down and costs money (real life excuse heard by yours truly).

By

What is a Trademark Class?

This comes as a bit of a shock to many people and to many people’s pocketbooks (if you don’t know what you’re doing) but when you apply for your trademark, you are only applying for it in reference to a specific set of things or services. So, if you happen to be a business that sells t-shirts, provides advertising and graphic design services, and makes beer, then you would probably have to apply for three separate classes which means three filing fees (it can add up).

However, that is also why Delta Faucets and Delta Airlines can co-exist. The United States Patent and Trademark Office has decided that they are in different “classes.” Why do they do this? Because…

The applicant must identify the goods and services specifically to provide public notice and to enable the USPTO to classify the goods and services properly and to reach informed judgments concerning likelihood of confusion under 15 U.S.C. §1052(d).

Once you break that down, it means that the USPTO feels that I’m unlikely to go to the Home Depot to pick up my Delta Faucet and think to myself, “daaaaaaang, Delta Airlines makes faucets!?” Or unlikely, as I’m buying a ticket to go on a beachin’ weekend, to think, “I hate Delta Faucets! I bought one once and it totally made an annoying ‘drip-drip’ noise throughout the night. I’m never flying Delta again!”

It (in theory) allows for people to use similar names as long as they’re not related or competing in the same market and it (in theory) helps the overworked Trademark examiner to do their job more efficiently.

I say “in theory” for a couple of reasons:

1) if you start the artisan Delta Cheese Company and start selling t-shirts and putting on your website, “let your tastebuds soar with our cheese in your mouth” or “fly away with our cheese” – Delta Airlines may still not appreciate it and try to get you to stop.

2) We help breweries who have issues with the USPTO telling them that beer and wine are related, leading to a rejected mark EVEN THOUGH the two goods are in different classes! WTF is up with that?

In sum, are trademark classes important? Yes. They help trademark applicants, lawyer-humans, and trademark examiners figure out what you’re up against in the brand department. They also make sure you’re protected for the right thing(s).

Will applying in the correct class guarantee that you are in the clear, though? No. Sorry. In this world nothing can be said to be certain, except death and taxes (with love from Benjamin Franklin). With a lawyer-human on your side, though, you can navigate these uncertainties with a well-traveled guide.

By

When to Slap-On a ©, ™, or ® To Your Work? – Pt 3

You see them everywhere, but why do people use them and what do they mean?

Last time, we discussed the ™ and the time before that we discussed the © .  Now, it’s time to move on to the ®, which as many of you may or may not know, also signifies a trademark.  Again, a trademark is a word, name, phrase, symbol, sound, or even color that identifies and distinguishes the source of goods.

Let’s recap what that means in plain English!

From last time…
Okay, so there are a couple of parts to this.   It looks like anything can be a trademark from that long list of things that they have in their definition.  That is sort of true as long as it “identifies and distinguishes the source of goods” – which we will get to what the heck that means in a bit.  Some examples of trademarks: that apple with a bite out of it on your Mac, the roar of the MGM lion before the next movie you watch, the name “Kleenex,” or the phrase “I’m lovin’ it” for McDonald’s.  All of these different things are trademarks.

Now for the second part – it has to identify or distinguish the source of goods.  So, you come up with a sick drawing of a little alien dude.  You could register a copyright for that drawing, but you can not register a trademark for it at this point.  Then you decide that you are going to put this little alien drawing on your craft ginger beer…which you give away to friends at parties.  Still not a trademark.  Then your friends LOVE IT and tell you “dude!  you gotta sell this at the farmer’s market!” So, you do.  You start selling your Alien Ginger Beer at the local farmer’s market.

NOW you can trademark the little alien guy in connection with your ginger beer.  Why?  Because people will associate the alien with your COMPANY and with your PRODUCT.  When they go to Whole Foods (once you scale your product because of high demand), they will scan the shelves looking for your alien guy and will recognize your ginger beer because it has the alien on it.

This time…. 

You are ready to break out of your local market.  You want that distribution deal from Whole Foods.  Now, you might be ready to graduate from a  ™ to an ® .

So, what the hell is the difference between the two and why should you care?

Like with our copyright examples, MONEY.

The ® means that you have registered your mark with the United States Patent and Trademark Office (USPTO).  Once you register your trademark with the USPTO,  you will be entitled to statutory damages if you prove that someone has violated your trademark.  You will also be entitled to attorneys fees, which can really add up, so it helps you to enforce your rights if you know you can get reimbursed for those costs.  Also, by registering your trademark you show any potential buyer, licensees, joint-venture partners, distributors, etc. that you take your product seriously enough to: 1) protect it and 2) invest in its future.

So, you can slap your ™ on there as soon as you start selling it.  If someone rips off your brand (intentionally or not), you can try to stop them but you probably cannot try and collect money from them.

You can’t slap that ® on there until you register it with the USPTO.  Once you register it, if someone rips off your brand (intentionally or not – sometimes it is completely innocent), you can try to stop them, you can try and collect money from them, and there are other options available to you as well.

There are a whole lot of reasons to start thinking about your trademark early.  So, if you think that you’re ready to graduate from your farmer’s market, or if you have questions and want to talk to a Lawyer-Human about it – feel free to schedule some time with us or shoot me an email at [email protected]

X

By

How Do I Make Money Off My Idea? – Pt 3

What Is An Advisory Board?  Do you need one?

Last month we discussed why I think that business cases are a necessary part of making money off of your idea (even though some sources don’t agree).  Now, how do you bring that business case to life?

Well, there are three main options with many variations within those three categories:

  1. Sell the idea to the highest bidder

  2. License the idea to many companies/manufacturers

  3. Turn the idea into a business yourself

Although the first two are important, and often good or great options, I will focus on the third option today – turning the idea into a business.

First of all, this option may have the greatest potential for making money BUT it also has the greatest risk of failure.  So, you need to be honest with yourself about whether or not you can handle it.

Question you should ask:

Are you cut out to be a business owner?  Not in the Shark Tank, The Social Network, glamorized kind-of-way.  I mean, do you enjoy the hard work and the emotional rollercoaster that is owning a business and are you able to delegate things that you might enjoy doing so that you can focus on money-making activities that you may not enjoy?  If the answer is “no, I am not okay with those things.” That is perfectly okay!  Not everyone is!  You should probably consider going with options 1 or 2.

If, however, you ARE okay with those things and want to move forward as a business, then let’s keep going.

fortune cookie

*Actual Fortune Cookie fortune from Shreya’s lunch last week.  Who says they’re BS??

For one of the patents that I am working on, we are finding that the best option is to build the idea into a business for now and eventually sell the idea and/or business to someone – to flip it like a house (or a pancake).

We had to do some self-reflection at this point.  Yes, we’re willing to do the work, BUT we don’t necessarily have the connections or the experience it takes to build this particular business.  So, what do we do?  Give up?

NO.  We had two options as we saw it: 1) we hire a “CEO” or business partner who already has connections to introduce us to people and ease our entry into the market OR 2) we get help from an “Advisory Board.”

What is an Advisory Board?  It is a group of more experienced and better-connected individuals who can provide guidance and/or connections but that will take a laissez-faire attitude towards the business.  They are not too invested.

The CEO is a great option and we thought that we NEEDED this option at first.  What we learned, though, is that it is an expensive option.  No one with the experience needed would put their time and energy into helping a wee start-up like ourselves without a significant chunk of equity (think: 50%).  We did not want to give up that equity.  Plus, we are willing to do the legwork.  We are willing to knock on doors, put ourselves out there, and otherwise put the sweat in and put the ego on the line.  Therefore, the advisory board is looking like a much better option for us.  Small equity options for the advisors, minimal time investment on their part.   They help to ensure that we are knocking on the right doors and that the doors will at least open for us.

So, for us, the Advisory Board was just what we needed.  You may need more than that or you may not know people who would be a good fit.

Hope this helps…and until next time.

By

When to Slap-On a ©, ™, or ® To Your Work? – Pt 2

You see them everywhere, but why do people use them and what do they mean?

Last time, we talked about the © , which is for copyrights.  This time, we’re talking about the ™, which as many of you know, signifies a trademark.  A trademark is a word, name, phrase, symbol, sound, or even color that identifies and distinguishes the source of the goods of one party from those of others..

Plain English, Please!

Okay, so there are a couple of parts to this.   It looks like anything can be a trademark from that long list of things that they have in their definition.  That is sort of true as long as it “identifies and distinguishes the source of goods” – which we will get to what the heck that means in a bit.  Some examples of trademarks: that apple with a bite out of it on your Mac, the roar of the MGM lion before the next movie you watch, the name “Kleenex,” or the phrase “I’m lovin’ it” for McDonald’s.  All of these different things are trademarks.

Now for the second part – it has to identify or distinguish the source of goods.  So, you come up with a sick drawing of a little alien dude.  You could register a copyright for that drawing, but you can not register a trademark for it at this point.  Then you decide that you are going to put this little alien drawing on your craft ginger beer…which you give away to friends at parties.  Still not a trademark.  Then your friends LOVE IT and tell you “dude!  you gotta sell this at the farmer’s market!” So, you do.  You start selling your Alien Ginger Beer at the local farmer’s market.

NOW you can trademark the little alien guy in connection with your ginger beer.  Why?  Because people will associate the alien with your COMPANY and with your PRODUCT.  When they go to Whole Foods (once you scale your product because of high demand), they will scan the shelves looking for your alien guy and will recognize your ginger beer because it has the alien on it.

So, why a TM?  Well, that means that you haven’t registered your trademark with the United States Patent and Trademark Office.  You can slap that ™ on there as soon as you start selling that ginger beer at the farmer’s market.  It puts the world on notice that you are reserving it.

BUT even though you’re reserving it, you could still be limited by where people would likely buy your ginger beer – so people in your local area.  No desire to get that Whole Foods national distribution deal?  That’s cool.  Maybe this is good enough, but if you’re ready for that next level, well, stay tuned for what happens with the ® .

Email me at [email protected] to find out if you are ready to slap this trademark symbol on your work or schedule a telephone meeting.

X

By

“Always Bet on Yourself” – SXSW

At SXSW during the “crossover” day (crossed over from interactive to music), I went to a panel about Alternative Funding.  I *thought* the panelists were going to talk all about crowdsourcing; however, it ended up talking about how it is always more lucrative to “bet on yourself.”  Meaning, as an artist, they suggested to work your butt off, don’t take money up front, and ask for more royalties.

Their reasoning is that you and your fans will promote your album far more effectively than the label will.  Also, you will get more money in the end by assuming that you will successfully sell and promote your album.  That is the key, though.  You will need to work your butt off to sell and promote your album.  It’s really an incentive.

This mindset also applies with patents and trademarks, though.  If an inventor or business person wants to license or sell their patent or trademark, then it can pay to “bet on yourself.”  It also, however, pays to truly evaluate your ability and willingness to do the work necessary to reap that reward.  Is it more worthwhile to you to receive a smaller monetary value for your software, your invention, or your logo/branding package so that you can move on to the next thing, not deal with any administrative tasks, and not be responsible for any possible failures with the device or promotions?  OR does your confidence and passion for what you created instill a willingness to wait, do the administrative tasks necessary, and make any sacrifices?

The panel had a lot of examples of artists who have made it big by betting on themselves.  However, they also recognize that many artists, and I recognize that many business owners or innovators, have a very real need for cash to pay bills.

It’s a tough decision to make and your investors (family, friends) or attorney can definitely weigh in.  However, in the end, it is YOUR decision because they will not necessarily be doing the work for you.

As proof that we put our money where our mouth is, we are going all in.  We will be spending a LOT of time (read: most of our time) in Texas for the upcoming months because we are betting on ourselves in a new, monetizing-patent adventure.