Optima Law Group Blog

The Basics of Trademark Protection

A trademark is a word, phrase, symbol, and/or design that identifies and distinguishes the source of the goods of one party from those of others. A service mark is the same, but for services (not goods). All points made in reference to trademarks in this article are also applicable to service marks.

Trademark laws are primarily concerned with preventing marketplace confusion. Companies invest capital into marketing their products and services, and trademarking those marketing devices protects them from infringement. By obtaining trademark registrations, these companies add to their intellectual property portfolio and increase the company’s valuation. Two main concerns with marketplace confusion are that a consumer will mistakenly purchase a good or service, and that a company will use another’s mark and wrongfully benefit from the good will that the mark enjoys. 

Aside from the increase in company value, the main benefit of registering a trademark is the ability to prevent others from using the mark in a manner likely to create marketplace confusion. This provides protection against another company spoiling the good will that has been created in the mark, and prevents another company from taking part of the market share by wrongfully using the mark. A registered trademark creates a presumption of ownership in the registered owner of the mark, it places all other companies within the United States on constructive notice of the mark, after a period of time it makes the mark incontestable, and it may increase payment in a willful infringement case.

Ideally, registering a trademark would be enough to prevent infringement. In many cases it is, however, trademark owners must remain vigilant in enforcing their rights.  It is important for the owner of the mark to routinely check USPTO records and the marketplace for anyone who may be infringing their mark and take appropriate measures. Where some question exists about who has rights to a mark, the mark will be registered to the applicant who is able to show the earliest use in commerce. Additionally, in enforcing a mark, the owner must be aware of the class or classes in which their mark is registered. Remember, the ability to stop another from using a mark is dependent on the use of the mark being potentially confusing to consumers. Therefore, a mark registered and used in the apparel class will not likely prevent the same mark being used in the food and beverage class. Some marks, however, are so strong that they occupy the field in many classes. Consider Coca-Cola, for example. While typically associated with a beverage, the mark is so strong that the same mark would not likely be registered to a clothing company. 

Generally, in order to register a trademark the USPTO requires that the mark be used in commerce, the mark is not generic/descriptive, and not so close to another existing mark as to cause a likelihood of customer confusion in the marketplace. When an applicant intends to use the mark in commerce, but has not yet, the applicant can apply to reserve the mark. The more unusual a mark is, the more likely it is to be eligible for trademark. A mark that is merely descriptive or generic will be considered weak and might not be eligible for registration. A computer company would not likely succeed in trying to register “computer” as a trademark for one of their products since that merely describes the actual product, however “MacBook” is sufficiently unique and non-descriptive to allow the mark to be registered.

Should you have any questions about trademark law or how and whether to protect your marks, please do not hesitate to contact paul@optimalawgroup.com. We will be diving deeper in specific aspects of trademark protection in the near future. Stay tuned! 

Ten Things to Consider When Selecting an Entity

When starting a business, you must decide what form of business entity to establish. Depending on a number of factors, some of which hold greater weight than others, your choices might include: C-corporation, S-corporation, B-corporation, LLC, partnership, sole proprietorship, etc.

Entities are not one size fits all, so it is essential that you conduct a thorough analysis to identify which entity matches best with the ongoing needs and goals of your business.

Here are several key things to consider when selecting an entity for your business:

  1. What is the long-term exit strategy for the founders?
    • Will the business be acquired in five or 10 years?  
    • Will you pass the business on to children?
    • Will the business continue a noble cause indefinitely? (not-for-profit entity) 
  2. How will this venture be funded?
    • Will you self fund the venture? 
    • Will you target VCs, angel investors, or friends and family to invest funding?
    • Will you apply for grants/donations/public funding?  
  3. Does the entity need limited liability protection?
    • This depends on the type of business. Limited liability protection is essential for most businesses even if you aren’t selling sharp, dangerous objects. It does not hurt to have an extra layer of protection and other stakeholders (including investors) will insist upon it. 
    • It is useful so your personal assets will not be taken to pay debts of the company. Any kind of business can fall on hard financial times and into debt.  
  4. What is the expected financial performance the first 1-2 years?
    • Will the business be immediately profitable? 
    • Will it run at a loss for a period of time? 
  5. Do the founders need a unique arrangement between one another?
    • If profits will be divided according to ownership, then your entity choices are open. If not, then an LLC that allows for customization might be best.  
  6. Will all founders be active or will they be passive?
    • LLCs allow for some passive structures.
    • Corporations can have SOPs to reward and incentivize active founders. 
  7. How many owners will the business have and will any be non-US citizens?
    • S corps have restrictions on who can be a shareholder. 
  8. How much record keeping do the founders want to do/want to pay for?
    • Smaller consideration obviously, but sometimes people really care about this. They know they are going to have a tough time remembering to maintain the formalities of a corporation so they opt for an LLC. 
    • Record keeping can increase each year.  
  9. If the founders’ goals/plans for the venture change after a few years, can the chosen entity be converted or adjusted to align with these changes?
    • Perhaps you originally wanted to self-fund and now you want to raise capital from outside investors. Or vice versa. 
  10. Which state should be chosen for formation?
    • We usually look at either the state where the principal place of business will be, or a state like Delaware or Nevada with other advantages. 
    • Don’t just follow the crowd.

As you can see, you must take the time to analyze your business’ needs to determine the correct entity for it. If you need help with choosing an entity for your business, please contact Optima Law Group at 858-964-4697 or info@optimalawgroup.com and we can assist you through the entire process.

Facing a Merger or Acquisition?

Optima Law Group specializes in assisting our clients with all legal aspects of their mergers and acquisitions. A merger occurs when two companies combine into one entity while an acquisition takes place when a company purchases another company. We’ve seen many different outcomes, successes and obstacles throughout theses processes and would like to offer the following advice to a company considering a merger or an acquisition.

  • Make sure your corporate records, contracts, and other documents are in order prior to due diligence: If your company is being acquired or merged, all this will be disclosed during due diligence. Best to make sure all is in order ahead of time so you do not have to scramble to fix problem areas during the transaction and risk looking unprepared, unprofessional, or overvalued to the other party.
  • Identify the optimal structure for the deal: There are many ways to structure a transaction. Work with your legal and tax advisors to identify the optimal structure possible for maximum financial benefit and minimal risk. The earlier the better.
  • Perform thorough due diligence on the other party: Due diligence is your chance to gather all necessary information about the other party not only for practical purposes in carrying out the transaction, but also to make sure you are comfortable with the other party and there are no skeletons hiding in their closet.
  • Make sure your management team maintains its focus through the entire process: During a merger or an acquisition, it is essential that management does not lose focus on the company’s day-to day operations. A manager’s time is often stretched thin during the process but it is essential to not let the current company’s operations slide.
  • Recognize geographic challenges: If the two companies’ headquarters are located in two different countries, this could result in language barriers, along with varying performance motivators and legal differences. It is important to recognize these obstacles so strategies can be put into place to deal with them.
  • Identify cultural differences: If two companies have varying cultures, such as flexible work schedules, communication policies, dress code polices, etc., this can create problems during a merger or acquisition. Again, it is important to distinguish these differences so they can be dealt with early in the process.
  • Involve key personnel from the early stages: It is important to involve key personnel early in the process, including human professionals who are tuned into the companies’ cultures and talent pools. However, timing is critical and will depend on the circumstances. It is also a mistake for a company being acquired to let the cat out of the bag too early in the process.
  • Take an intellectual property inventory: The seller needs to provide the acquirer with complete list of its IP property, including patents, trademarks, licenses, software, third party contacts, domain names, social media accounts, etc. since these are some of the most valuable assets and can drive much of the valuation of the deal.
  • Hire proper consultants and an experienced legal team: it is essential to hire the proper consultants and legal team during a merger or acquisition since a company’s business leaders may not possess the specialized knowledge or skills necessary to successfully guide the company through the process. A merger or acquisition can also feel like a second job due to the time required. Allow your team to shoulder some of the load. Involve them early before a Letter of Intent (LOI), Term Sheet or other preliminary document is in place so all the necessary issues are addressed for as smooth a transaction as possible.
  • Make sure the final deal documents are on point: Excellent deal documents will carry out the parties’ intent and agreement on all key issues, but also serve as a roadmap for the future.A year after the transaction is complete and a dispute arises as to a liability, milestone payment, or the like, the deal documents should clearly spell out to the parties what is supposed to happen. Clear deal documents will help prevent litigation and hard feelings down the road.

If you need help with a merger or acquisition, please contact Optima Law Group at 858-964-4697 or info@optimalawgroup.com and we can assist you through the entire process.

​Protecting Your Intellectual Property – One of Your Most Valuable Assets

What is Intellectual Property, or “IP?” In simple terms, Intellectual Property is an intangible asset, including patents, copyrights, trademarks, secrets, etc. Your company’s intellectual property may be some of your largest and most valuable assets, especially during a sale. According to the U.S. Chamber of Commerce, America’s IP is worth $5.8 trillion, more than the nominal GDP of any other country in the world.

Since these precious assets give your company a unique competitive advantage, you must take all necessary steps to protect them. How should you protect these assets? With the help of an experienced and knowledgeable IP Attorney, you can create legal barriers to prevent your competition from stealing your company’s valuable knowledge, ideas, formulas, and everything else that your company has worked so hard to create.

It is critical that you hire the right IP Attorney to handle your Intellectual Property. Here are a few of the questions that you must ask a potential IP Attorney:

1. Does the IP attorney have experience in all IP legal practice areas: patents, trademarks, copyrights and trade secrets? 
2. Does the attorney have experience in both IP protection and enforcement? 
3. Does the attorney have the experience in freedom to operate analyses and IP legal opinions? 
4. Does the attorney have detailed experience in IP portfolio management? 
To learn why these questions are important to ask, along with other questions that you must ask, please request our free download - Ten Things to Look For When Hiring An IP Attorney.

Request Our Free Offer - Ten Things to Look For When Hiring An IP Attorney

If you need help on clarifying these questions, or finding an IP attorney who meets this criterion, please contact us at 858-964-4697 or info@optimalawgroup.com and we can assist you. We are also offering a complimentary Business Ambition session, along with a complimentary review of your intellectual property and referrals to attorneys that provide these services. Good luck finding the best IP Attorney to fit your needs.

Legal Trends – Rising Hourly Fees

Optima Law Group is pleased to introduce a new series on legal trends. We will examine current trends in the industry and how our firm is dealing with them and innovating for the benefit of our clients. We recently ran across an interesting article that addresses legal hourly legal fees, which just keep increasing.

Despite efforts by corporate clients to curtail legal expenses over the past decade, rates continue to steadily rise at many of the nation’s BigLaw firms. According to a recent article by the ABA Journal, a number of attorneys now have billing rates of as much as a whopping $1,500 per hour. Only five years ago, a billing rate of $1,000 rate was unheard of, yet firms just keep raising rates each and every year.

Optima Law Group strives to keep our rates competitive and to innovate billing practices in a number of ways:

  • Our firm operates in a semi-virtual environment, which greatly reduces our overhead costs. We pass this savings along to our clients.
  • We offer all-inclusive flat-fee arrangements, which ultimately reduce surprises and provides ultimate predictability to our clients.
  • We offer flexible payment plans to our clients.
  • We are always upfront with cost estimates for our clients, which provides them with cost predictability.
  • We often cap project fees for our clients.
  • We offer strategic pricing plans to save our clients significant money. For example, we offer patent portfolio maintenance (for companies with 100s of patents) for a reasonable, customized monthly fee.
  • Our team is always flexible and moves quickly to complete assignments, which saves our clients time and money.
  • Our firm is geared towards working with entrepreneurial clients, so we work within a not a one-size-fits-all nature.

Our team at Optima Law is always available for consultation on your business legal matters. Contact us at 858-964-4697 or info@optimalawgroup.com for a free consultation.