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Setting your Startup on the Path to Success: Four Tips for Choosing Your Company Brand Name and Logo

Setting your Startup on the Path to Success: Four Tips for Choosing Your Company Brand Name and Logo

Jonathan Milgrom

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How can set yourself and your business up for success? It all starts with the name, and I will provide you with four key takeaways that can help.

  • Pick a name that is unique from others in the space
  • Pick a name that is not descriptive of your goods and services
  • Secure rights in the art/logo via assignment
  • Work with an attorney to file trademark applications in countries where you intend to use the mark.

I remember when the graphic designer I hired came up with the initial logo for our law firm. Seeing it on mockups for a website and for business cards was a surreal experience. It reduced the months of planning and research into something tangible and real. It hit me so quickly—this is really happening—and I was filled with pride in what was to come.

I know many entrepreneurs feel this same sense of excitement when engaging with initial branding and logos. One entrepreneur told me he would rather change the name of his first-born child than his company. While some are very pragmatic in choosing business name and logos, most of us are so excited to get moving that we can miss the forest through the trees and create unforeseen problems down the road. Because choosing a name and logo is an integral part of your company’s identity, it is important to set yourself up for success. It is the embodiment of the classic saying, “a stitch in time saves nine.” Here are four tips to consider when choosing your name and logo to make sure you are starting on the road to success.

1. Prior Use?

This is the most basic—and, if not completed, often tragic—of the tips. Prior to deciding on a name and investing time and money into branding, you should absolutely determine if others operating in the space are using your name or something confusingly similar to it.  Google search your list of potential names to ensure no one else is using them. While a Google search is certainly not exhaustive, it is a great start to mitigating the potential for problems down the road.

You can also use the Patent and Trademark Office’s Trademark Electronic Search System (TESS) to see what trademark applications and registrations may be at the Patent and Trademark Office (PTO). Note, TESS is highly nuanced, so while you can likely perform a basic search competently, we recommend a more robust search conducted by a trademark attorney prior to filing a trademark application. This will help to eliminate issues with your application and name down the road.

When you are contemplating your initial searches, it is important to understand that trademark rights are made to prevent consumer confusion. This means that:

  1. Rights are limited in scope of goods and services; and
  2. Small derivations will not prevent a finding of infringement.

In relation to item (i) above, a consumer is not likely to confuse McDonald’s Burgers with McDonald’s Hardware; however, if someone started selling McDonald’s Tacos, this likely would constitute infringement as the goods are closely related. Do not view this too liberally when conducting your search or choosing a name—the similarity need not be as close as tacos and hamburgers to constitute a likelihood of consumer confusion. The analysis is highly subjective so if the names are similar and the goods are similar, do not talk yourself into differentiation—consider a different name.

In relation to item (ii) above, a small derivation from a prior name will not prevent consumer confusion. Nike shoes will be confusingly similar with Nyke shoes. Pickle juice will be confusingly similar with pickle juze. You would be astonished at how often I get asked these sorts of questions.

Do your best to find something truly unique. It will prevent potentially expensive conflict further down the road and will also provide your company with its own unique identity.

2. Descriptive?

Not all trademarks are created equal. There is a spectrum of distinctiveness. The most distinctive marks, which are fanciful or arbitrary, are afforded greater protection while less distinctive marks, which are descriptive or generic, may be afforded little or no protection.

When choosing your name, ask yourself: does this describe exactly what I am providing? If so, consider another more distinctive name that may be more protectable. Generally, software companies and drug companies employ strong trademark strategy. Amazon does not mean online marketplace for buying anything. Lipitor does not mean cholesterol pill (although the root Lipo may be related to fat, potentially pulling this mark into the suggestive but still protectable realm).

There was once a restaurant in Boulder, since closed, called Café Food. That is a trademark attorney’s nightmare as this type of name rides the descriptive/generic line. Of late, The Kitchen, a restaurant group owned by the Musk empire, has been in a trademark battle with Wolfgang Puck’s Kitchen. Both names are at least descriptive, and the founders set themselves up for a fight by not choosing something unique and distinctive. Try to avoid this situation by choosing something unique and distinctive for your business.

3. Rights in the Art?

Many founders ask a friend to draw their initial logo. Friends are great because they are likely to be honest with you as to appearance and often do the work as a favor or on the cheap end, which is always important for a startup. However, it is important to get an executed assignment of rights to ownership in the work. Creative works fixed in a tangible medium are governed by copyright law. Absent a signed writing conveying ownership to your entity, you most likely have only an implied license to use the logo and do not own the logo to your own business. This license can be revoked at any time for any reason.

We have run into multiple founders who, once their company gets off the ground, are hamstrung by the original artist by either revocation of the license or a demand for some significant payment to continue using the logo. This is all easily avoided by getting an assignment of rights in the art at the onset of creation. Don’t be afraid to ask for this—it can mean the difference between the success or failure of your company.

4. Get a Trademark Registration and Consider Filing Internationally.

Lastly, while trademark rights begin to accrue at the time of use of the mark, these rights are limited in scope and geography, may be subject to rights of senior users, and are very hard to enforce. Getting a federal trademark registration in the United States affords protection in the entire United States for the goods and services specified in the application and for the “natural zone of expansion” (think burgers and tacos) and provides a presumption of seniority. This is incredibly valuable.

Note, trademark registrations are limited by country and will not afford you rights in other jurisdictions. Look no further than Budweiser, which is unable to brand its product as such in the Czech Republic as they were not the first to secure trademark rights. https://www.usatoday.com/story/money/business/2012/12/18/budweiser-budvar-dispute/1777097/

Filing trademark applications both in the US and internationally is a nuanced process that is best accommodated by a trademark professional. However, the value in securing the registration almost always significantly exceeds the costs down the line of foregoing the submission.

Choosing a name and logo is one of the first steps in creating your company. By following the guidance above, you will be much better positioned for success in the future.

ABOUT THE AUTHOR

MANAGING PARTNER

The founder of Milgrom & Daskam, Jonathan (Jon) Milgrom advises businesses of all sizes and works across a variety of sectors. His diverse client-base includes companies in tech, software, fintech, health insurance, brewing and distilling, retail, graphic design, and other creative industries. He also advises a number of family-owned businesses.

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Understanding the LLC Structure: Key Considerations for Operating Agreements

Understanding the LLC Structure: Key Considerations for Operating Agreements

John Daskam

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Limited liability companies (“LLCs”) offer individuals a lot of flexibility when starting a new business while also providing the benefit of limited liability related to personal assets or assets that exist outside of the company structure. The LLC has become a favorite for forming new ventures due to its unique structure and single-level tax implications. However, when forming a new LLC, there are some key considerations to keep in mind related to its main governing document, the Operating Agreement (“OA”).

The OA for an LLC contains all of the rights and obligations of the individuals who are part of the LLC (“Members”). This blog post will focus on three main considerations for Members of an LLC when drafting the OA: 1) Management Rights, 2) Member Transfers, and 3) Deadlock.

1. Management Rights

As an initial matter, the Members will need to decide whether the LLC will be “member managed” or “manager managed.” In Colorado, this election will be included in the Articles of Organization which are filed with the Secretary of State. Typically, a “manager managed” LLC is advisable, as it provides for maximum flexibility for decision-making rights related to company matters. LLCs have two main associated rights: management rights and economic rights. Bifurcating the management rights from the membership base allows certain individuals to maintain control of the company’s major decision-making while allowing others to participate in ongoing company distributions (or required capital calls). Members who are Managers (though a Manager does not necessarily need to be a Member of the LLC) will want to think through what decisions can be made by an individual Manager and those that would require a majority or unanimous vote of all Managers (e.g., committing the LLC to a new loan or long-term contract).

2. Member Transfers

It is of the utmost importance that the Members understand how their interests in the LLC (“Membership Interests”) may or may not be transferred, assigned, hypothecated, or otherwise. Typically, there will be strong prohibitions on any transfer other than with some level of consent from the Members or Managers or for estate planning purposes. In almost all instances, the Membership Interests will not be registered securities, so it is important to avoid a triggering event that would require registration. Furthermore, the Members have entered into the LLC with a common goal, and finding themselves in the position of a unilateral transfer to an outside individual who may not have the same goal in mind can be highly problematic. Understanding that Membership Interests may never have a market value and are not readily saleable is a key foundational aspect of the LLC that Members must understand.

3. Deadlock

In closely-held LLCs (those with only a couple or few individual Members), it is vital that the Members are thoughtful about the scenario where there is disagreement over a major decision that will cause the business to struggle or fail (“Deadlock”). Typically, in a Deadlock scenario (which may further be defined in the OA), the Members will want to have a mechanism in the OA that allows for a path forward. One way that this scenario may be handled is a shotgun provision where the Members may elect to compel the buyout of the Membership Interests of the Member(s) who are withholding consent to a major decision. In this scenario, the withholding Member would have the option to sell or purchase the Membership Interests from the Members initiating the shotgun on the same economic terms. The buyout mechanism and triggering events would be built out specifically within the OA.

The considerations discussed in this blog are only a few of the many important aspects that must be addressed in the OA, and it is highly advisable to discuss with legal counsel when thinking about starting your new business.

ABOUT THE AUTHOR

PARTNER

John Daskam joined Milgrom & Daskam as a Partner in January 2019. He focuses his law practice on real estate and corporate law. His real estate practice includes acquisitions and dispositions, landlord-tenant matters, leasing, financing, development, and contract preparation and negotiation.

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Seek the World Beyond the “All Right”

Seek the World Beyond the “All Right”

Jonathan Milgrom

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After teaching in low income schools for four years, I became disenfranchised. I had teacher friends trying to raise their own kids on welfare while they worked full time, and my schools’ administrators repeatedly disregarded my ideas for change. I felt I had no voice, and at the same time I could barely pay my rent. There had to be a way to do well and do good at the same time. I decided to go to law school.

After graduating from the University of Colorado Law School, I joined a prestigious firm that is well known for impact-minded work. I was successful and was on the fast track to partnership, receiving bonuses and a raise each year. But I was frustrated by my inability to dedicate meaningful time to causes I was passionate about and by the grinding hours requiring me to forego daylight and weekends. In spite of my perceived success, I was not happy. It was comfortable, but crippling.

I felt trapped in the Goldilocks scenario: I had tasted a porridge that was too cold when living paycheck-to-paycheck as a teacher with limited ability to affect institutional change. Then I had tasted a porridge that was too hot when I succeeded at the big law firm, making lots of money, living a comfortable life, but recognizing that my life and my decisions were not my own.

I began to think about what the just right porridge might be. Where could I go and be comfortable but also have the autonomy to support and participate in work that I found meaningful and necessary in our flawed community? This was the balance I was in search of.

I reached out to my mentors in big law to get their thoughts on starting my own practice. The answer was the same: “That is crazy! You have a great position at a great firm. Why would you want anything else?” In spite of my discontent, the people most important to my development consistently told me I was crazy for wanting something else.

And herein lies the problem. We allow institutions to tell us what should make us happy instead of listening to ourselves. This is why, when I ask most lawyers whom I graduated with how they are liking their jobs, they respond with “it’s all right.” 

Striving for all right is no way to live one’s life.

One evening, I sat at my desk at the big firm watching the sun fall over the Rocky Mountains. I decided to take the leap, the risk, and start my own practice.

Today, Milgrom & Daskam is a certified B-Corporation and proud member of 1% for the Planet. We do high level corporate legal work and we support non-profits working on human rights, immigration, homelessness, food justice, access to local media, education, and a slew of other causes. We are a team of 15 that grows by the day. A team that has said all right is not good enough.

Starting your own company may not be for you. Different things make different people happy. But don’t let the institutions tell you what will make you happy—listen to yourself. The risk of taking a leap towards happiness pales in comparison to the risk of living a life of just all right.

ABOUT THE AUTHOR

MANAGING PARTNER

The founder of Milgrom & Daskam, Jonathan (Jon) Milgrom advises businesses of all sizes and works across a variety of sectors. His diverse client-base includes companies in tech, software, fintech, health insurance, brewing and distilling, retail, graphic design, and other creative industries. He also advises a number of family-owned businesses.

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