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Trademarking Your Business Name and Logo

Wednesday, July 15th, 2009

Need an Attorney to help your Maryland or DC business? Contact Raymond McKenzie at 301-330-6790 or ray@mckenzie-legal.com

Most business clients who come to me with trademark questions believe that filing a trademark is a complex and expensive process. Nothing could be further from the truth. While it is true that the entire trademark registration process usually takes 12-18 months, the actual filing of a trademark application can be done in a few hours. Once filed, the trademark application works its way through the U.S. Patent and Trademark Office (“USPTO”) with little work needing to be done. The filing fee paid to the USPTO is a mere $325.00. So for a couple hours of work by you or your business attorney along with a $325.00 fee, your business is entitled to have exclusive ownership of a mark, in your business’s line of products or services, across the United States.

What exactly is a trademark? A trademark is a word, phrase, symbol or design, or a combination of words, phrases, symbols or designs, that identifies and distinguishes the source of the goods of one party from those of others.  Words that you may trademark are the name which your business operates under and holds itself out to the public as (think “McDonald’s” or “Microsoft”).  A phrase you may trademark are words that identify or distinguish the source of your product or service (think Nike’s “Just Do It” or Gatorade’s “Is It In You?”).  A symbol or design may also identify or distinguish your business from another (think Apple’s “apple” found on every Iphone, MAC and Ipod, as well as the symbols found on nearly every luxury car like the Lexis, BMW or Mercedes.)

How would your business benefit by obtaining a federal trademark registration? While you are not required to register for trademark protection, doing so provides server advantages, including notice to the public of your claim of ownership of the mark, a legal presumption that you own the mark nationwide, and the exclusive right for you to use the mark on or in connection with the goods or services set forth in your registration.  In other words, you may advertise your name, logo, phrase, symbol or design that identifies your business’s product or services withour fear that someone else could come along and steal those identifiers from you.

You can search the trademark database to check on a trademark’s availability by going to www.uspto.gov.

A trademark registration remains valid for 10 years, provided you file an affidavit that you are continuing to use the mark between the fifth and sixth years following registration.

With all of the above in mind, isn’t it worth it to have the name you do business under, along with any slogan, design or logo your business uses, registered to your business nationwide in the category of goods or services you provide? To me, the answer is a no-brainer.

Visit the USPTO website, as it is a very useful and informative site. It contains a list of frequently asked questions at http://www.uspto.gov/web/offices/tac/tmfaq.htm#Basic001, as well as the basics of what you need to know about trademarks at http://www.uspto.gov/web/offices/tac/doc/basic.

Need an Attorney to help your Maryland or DC business? Contact Raymond McKenzie at 301-330-6790 or ray@mckenzie-legal.com

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Maryland Business Start-Up and Formation Issues

Monday, July 6th, 2009

Need an Attorney to help your Maryland or DC business? Contact Raymond McKenzie at 301-330-6790 or ray@mckenzie-legal.com

Why incorporate?

The first question a Maryland prospective business owner may ask is “why should I incorporate?” The reason to incorporate one’s business is to achieve limited liability, which means that a business owner is liable to third parties only up to the amount that the individual has invested in the business. A person that owns a business individually puts all of his or her personal assets at risk in the event the business fails. By incorporating, a business owner’s personal assets are shielded from creditors of the business in the event the business is unable to meet its debts as they become due.

What form should my business take?

After making the decision to incorporate, a prospective business owner must ask “what corporate form should my business organization take?”  Businesses can take the form of a corporation, partnership, or limited liability company (LLC). (As an aside, LLCs are creatures of statute that are organized, not incorporated, and therefore are not considered corporations as the term is legally defined. Nevertheless, LLCs do enjoy the same limited liability advantages as corporations and partnerships, and are therefore included as part of the discussion as what form a business should take.)

In order to determine what form your business should take, you should consult an experienced business accountant and corporate attorney, since each form of business has separate advantages and disadvantages, as well as differing tax treatment.  There is no exact answer for every business owner, as each determination can be made only on the unique facts of that business owner’s situation.

Once the choice is made as to corporate form, business owners can search the Maryland SDAT website for name availability at  www.sdatcert3.resiusa.org/ucc-charter/.

After determining whether a corporate name is available, forms for Articles of Incorporation (for corporations), Articles of Organization (for an LLC) and Certificate of Organization (for partnerships) can be found at www.dat.state.md.us/sdatweb/sdatforms.html#entity. The Articles must be filed with the Maryland Department of Assessments and Taxation along with the appropriate fee.

Once filed and approved, a federal tax identification number will usually be required for the business. You can obtain one electronically within 30 minutes in most cases at www.irs.gov.

Finally, with whatever business structure you choose, applicable corporate documents must be drafted to memorialize the agreement between the parties, ie a shareholder agreement for shareholders of a corporation, a partnership agreement for partners in a partnership, or an operating agreement for members of an LLC. These agreements are a pivotal step in the start-up process, as it will in many cases be the only document that defines the exact business relationship between the parties.  Crafting such a document requires the expertise of a business lawyer.  Other tasks that a business attorney may perform at the outset on behalf of business clients are the registration of trademarks and service marks, as well as obtaining fictional (d/b/a) names.

Need an Attorney to help your Maryland or DC business? Contact Raymond McKenzie at 301-330-6790 or ray@mckenzie-legal.com

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What are the differences between a “non-compete agreement,” “non-disclosure agreement,” and “non-solicitation agreement”?

Thursday, June 18th, 2009

Need an Attorney to help your Maryland or DC business? Contact Raymond McKenzie at 301-330-6790 or ray@mckenzie-legal.com

Business clients often confuse the above terms, each of which protect business owners from a different type of harm. I will summarize the three types of agreements below.

Non-compete agreement

A covenant not-to-compete is an agreement whereby a party agrees not to compete against another party: 1) in a specific line of business; 2) for a definite period of time; 3) in a limited geographic area.

A non-compete agreement is usually found as part of a broader contract, such as an employment agreement or franchise agreement, and will take effect upon termination of the contract.

Maryland courts allow a covenant not-to-compete to be enforced provided it is “reasonable” in the activity it restricts, as well as in its geographic scope and duration. A typical non-compete looks something like the following:

Employee hereby agrees that for a period of one year following the date of termination of this Agreement for any reason, Employee shall be prohibited from acting, directly or indirectly, as an owner, manager, operator, consultant or employee of any business or business activity that is in the business of providing services similar to or competitive with Company.

Non-disclosure agreement

A non-disclosure, or confidentiality, agreement (“NDA”), is an agreement whereby a party pledges not to disclose the confidential and proprietary information of another party. NDA’s are commonly used to protect confidential information not generally made available to the public such as trade secrets, customer lists, business and marketing plans and strategy, and financial information, so that such information does not fall into the hands of competitors or even the public at large. NDA’s can be found in many employment and independent contractor agreements, as well as agreements where businesses are performing due diligence on one another prior to some type of relationship commencing.

Unlike the situation where covenants not-to-compete must be reasonable in all areas, non-disclosure agreements will be enforced by Maryland courts unless the person or company that is alleged to have violated the NDA is able to show that it learned of the confidential information from an independent, outside source. Whatsmore, an NDA need not contain any geographic or time restrictions in order to be valid and enforceable.

A typical NDA will look like this:

Employee acknowledges that Company may, in the course of Employee’s employment, provide Employee access to Company’s trade secrets, customer lists, business and marketing plans, financial information, and other confidential information related to the business of Company, including access to Company’s Employment Manual (the “Manual”). Employee agrees to retain all such information as confidential and may not use such confidential information on his or her own behalf or disclose such confidential information to any third party during or at any time after the term of Employee’s employment.

Non-solicitation agreement

A non-solicitation agreement is an agreement whereby a party pledges not to solicit the clients and customers of another party. Non-solicitation agreements are generally found in employment and independent contractor agreements, as well as vendor arrangements where one party is granted access to the clients list of another party.

Like an NDA, a non-solicitation agreement need not contain any geographic or time restrictions in order to be valid and enforceable in Maryland. A common form of non-solicitation agreement follows:

Employee hereby agrees that for a period of one year following the date of termination of this Agreement for any reason, Employee shall be prohibited from soliciting business from, or performing services for, or inducing or attempting to induce, any customer or client of Company, its subsidiaries or affiliates, to cease doing business with Company, or in any way interfering with the relationship between Company and any customer or client of Company.

Many business contracts will contain one or more of the above agreements. It is therefore important to be able to distinguish among them, and draft contracts that are specific to your business needs.

Need an Attorney to help your Maryland or DC business? Contact Raymond McKenzie at 301-330-6790 or ray@mckenzie-legal.com

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5 Legal Tips for Maryland Business Owners

Monday, May 25th, 2009

Need an Attorney to help your Maryland or DC business? Contact Raymond McKenzie at 301-330-6790 or ray@mckenzie-legal.com

As the saying goes, “an ounce of prevention is worth a pound of cure.” With that in mind, here are five tips for every Maryland business owner.

  1. Apply for federal trademark protection for your business trade name and logo. In its plainest terms, federal trademark registration protects your registered marks throughout the United States. With certain exceptions, no one may use your registered marks in any manner that confuses the public. Federal trademark registration is usually simple and inexpensive. The cost involved in registering your business name, logo, symbol or slogan is minimal compared with the benefits you receive.
  2. Consider purchasing key person life insurance and/or disability insurance for your business’ owners and key personnel. These insurance policies can be vital in protecting your business when one of its partners, owners, members or key employees dies or becomes disabled. The proceeds of the policy can be used where necessary to purchase the owner’s ownership interest, as well as provide your business with necessary cash flow in the event of a loss of a key employee. All small business owners should investigate whether these policies are right for their business.
  3. Keep the trade secrets of your business confidential. Employment and operating manuals, compensation plans, advertising strategies, financial statements, formulas, recipes, designs, and customer lists are all examples of trade secrets. Always: 1) mark such information as confidential; 2) keep the information away from the public domain; and, 3) have employees execute confidentiality and non-disclosure agreements, including a non-compete clause. Such agreements prove valuable when an employee threatens to utilize your confidential information.
  4. Ensure that the agreements that govern your business’ structure are accurate. Review your business’ operating, shareholder, or partnership agreements to make sure they are accurate and current. The ownership structure of your business changes, as does your business’ expansion plans and growth. Ensure that all agreements governing your business are signed by every owner, and address subjects like an owner’s death, disability and retirement, as well as how ownership interests may be transferred. Ensure that the agreements accurately specify the powers held by each owner, as well as what acts require the unanimous consent of all of your business’ owners.
  5. Make sure that your agreements protect you and your business sufficiently. Most owners pay attention primarily to the business terms of an agreement, ie. the length of the deal, the amount of product or service involved, and the compensation due. Just as important in any agreement are the acts that lead to default or termination of the agreement, as well as the renewal and termination provisions, dispute resolution procedures, and the recovery of attorneys fee if litigation arises. These are just some of the issues that you must address when entering into agreements with third parties.

Need an Attorney to help your Maryland or DC business? Contact Raymond McKenzie at 301-330-6790 or ray@mckenzie-legal.com

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An Introduction

Sunday, May 24th, 2009

My name is Raymond McKenzie, and I have been practicing corporate and franchise law in the Washington, D.C. metropolitan area for the past 10 years.

I’ve created this blog as a resource for those who are researching business legal matters. This blog will focus on:

1) Corporate and business law matters that are relevant to small and mid-size businesses located in the Washington, DC metropolitan area;

2) Franchise law issues that are of interest to franchisors and franchisees from across the United States.

Thanks you for taking the time to read Maryland Law Blogger. I look forward to sharing my thoughts, experiences, and advice with those who are seeking answers.

If you have any questions or comments, feel free to contact me at ray@mckenzie-legal.com.

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