Tuesday, May 14, 2013

Pitfalls To Avoid When Securing A Business Name


PITFALLS TO AVOID WHEN  
SECURING A BUSINESS NAME 

One helpful service a lawyer can provide for start-up clients is assistance in securing a name for the new business. Although the California Secretary of State's website offers some guidance and permits "availability inquiries" by letter prior to the reservation of a specific name, getting a business name approved by the Secretary of State alone does not assure its safe use. And finding out after the fact that a business name is not protected can be disruptive to correct and very expensive.

There are many common misconceptions about the legal right to use a name that has been selected. For example, many attorneys wrongly believe that a client can use a name with impunity if:

- the California Secretary of State's office has approved it;
- the name is spelled differently from another name in use;
- the client has already been using the name without a problem for a few years;
- the client owns an Internet domain name(s) that contains the name that has been selected; or
- the name includes the client's last name.

Each of these assumptions is wrong. Although many people (including lawyers) believe state corporate law governs business names, the truth is that the actual governing law is federal trademark law. If a chosen name for a client's business doesn't qualify under, or is not protected by, federal trademark law, the client could be subject to legal attack and exposure to injunctions, damages, and litigation costs.

Case History

Here's a real-life example: A Colorado hair salon began using "Haircrafters" as its new name. A few years later, the salon received a cease and desist letter from a New York-based haircutting franchisor who owned a federal trademark registration of the same name. The dispute ended up in litigation. The Colorado salon lost and had to change its name, even though it had been using "Haircrafters" for years and had registered the name with the state of Colorado . (Mesa Springs Enters., Inc. v. Cutco Industries, Inc., 736 P.2d 1251 (Colo. App. 1987).)

The dilemma arose because federal trademark law trumps state corporate law; it also overrides state trademark law.

Given these realities, the best way to protect a client's business name is to do a full trademark clearance. This work includes a formal search and investigation before selecting the name, and then, if it's available, registering it as a federal trademark.

Registering the Mark

Federal trademark law is embodied in the United States Code. (See 15 U.S.C. §§ 1051-1141n.) The code protects both registered and unregistered trademarks and service marks. Federal trademark law protects distinctive words, designs and logos, product and packaging design (called trade dress), sounds, smells, and virtually anything else used by a person or entity to identify and distinguish its products or services. (Qualitex Co. v. Jacobsen Products Co., Inc., 514 U.S. 159, 163 (1995); see also 15 U.S.C. § 1127.) Federal registration lasts for ten years and can be renewed as long as the mark remains in use. (15 U.S.C. § 1059.)

Beyond Registration

In addition to registration, trademark rights can be created through use of the name. However, such common law rights are limited to the geographic area where the company's reputation extends, which could be as small as a few square miles. (See All Video, Inc. v. Hollywood Entm't Corp., 929 F. Supp. 262 (E.D. Mich. 1996).)

Because many marks in use are unregistered, a search on the U.S. Patent and Trademark Office website is not enough. One option is to hire a commercial trademark search company to find and identify federal and state registrations, common law uses, and domain names. But assessing factors that may block the use or registration of a client's potential trademark is a challenge, and a wise advisor will enlist a trademark lawyer to analyze the findings.

It's always safest to get a formal federal trademark registration. Better to obtain these rights at the outset of a new business than be forced to scramble to recover later on - after untold sums have been spent on signage, stationery, marketing, and other start-up expenses.

New business owners have enough on their plates without facing an injunction to stop using their favorite name just when the operation is taking off.

Reprinted with permission of Steven M. Weinberg, Esq. (Partner, Holmes Weinberg PC)

Contact us at Mark@KleinLawCorp.com 



Mark D. Klein, Esq. is a senior attorney at Klein Law Corporation, a Southern California-based law firm providing legal assistance to businesses and individuals alike. Klein Law Corporation provides an extensive range of legal services aimed at helping clients with issues involving corporate law, business law, intellectual property matters and estate planning while actively working with entrepreneurs starting business ventures and those purchasing or selling businesses.

 The foregoing information is presented by Klein Law Corporation as a news reporting service to clients and friends of the firm and is distributed with the understanding that Klein Law Corporation is not rendering legal advice and assumes no liability whatsoever in connection with its use. If you have questions about the subject matter presented or desire to obtain more information on legal issues related to your business, please contact us at mark@KleinLawCorp.com 



© Copyright 2012 Klein Law Corporation. All rights reserved.
(949) 453-7979 * FAX (949) 453-3311 * E-Mail: mark@KleinLawCorp.com * Website: www.kleinlawcorp.com 

Friday, May 3, 2013

Protecting Your Corporation (Part 3)


HOW CAN KLEIN LAW CORPORATION HELP MAINTAIN MY CORPORATE PROTECTION BY KEEPING ME COMPLIANT WITH CALIFORNIA LAW? ---- PART THREE

In our last segment we drew your attention to the myriad of corporate decisions that need to be documented by corporate resolutions. We realize that when running a company, corporate paperwork is often the last thing on your list.  However, if a lawsuit hits, the result could be devastating if you have let your paperwork slide. 

Faced with these requirements, you have essentially two options:  try to muddle through it and do it by yourself or have KLEIN LAW CORPORATION assist you in fixing your current and future compliance problems.  

LET OUR LEGAL PROFESSIONALS HANDLE THE PAPERWORK FOR YOU!

Our Corporate Compliance Service™ will put your mind at ease, eliminate the headache of preparing the paperwork yourself and lessen the risks of neglecting your corporate paperwork. If you are either a newly formed corporation or a seasoned corporation that hasn’t been as diligent with your corporate records as you should have been, our Corporate Compliance Service™ is for you! 

HERE’S HOW OUR  CORPORATE COMPLIANCE SERVICE™ WILL BENEFIT YOU:

! We conduct an initial review of your corporate records to make an assessment of your corporation’s level of risk and thereafter make recommendations concerning corrective actions.

! We provide 12 months of record keeping where our document specialists will send you the necessary resolutions for your business, including, annual minutes, special minutes, shareholder loan documentation, bank resolutions and other necessary board resolutions.

! You will receive automatic monthly email reminders to help ascertain whether any corporate decisions were made that require a resolution.  This will help trigger the need for you to have us do any needed resolutions based upon the past month’s activities.

! We will send you our Annual Corporate Minutes Questionnaire to help you in providing us with the necessary information for us tom complete your annual minutes

! We offer ongoing free educational services, including 12-months of our firm’s e-newsletter, “Report From Counsel” along with other legal articles that help advise you on new court decisions and legislation that could affect your business.

! We give you PRIORITY STATUS on all your projects.

You get all the foregoing benefits with our three affordable options:

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(includes Basic Plan plus one an hour monthly telephone consultation)



REG. $1,299

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ONE YEAR
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LIFETIME PLAN 
(includes all resolutions for the life of your business)




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REMEMBER - WHAT YOU DO AFTER INCORPORATING IS AS IMPORTANT AS FORMING YOUR CORPORATION ! 

To take advantage of this offer simply contact us at (949) 453-7979 or email us at info@kleinlawcorp.com.  Our staff is standing by to help you.