In the US, the name a limited liability company (LLC) must contain an identifier of the business entity type. This can be written in several ways,in ...
LLC vs. Trademark: Which One Comes First?
Written by: Carolyn Young
Carolyn Young is a business writer who focuses on entrepreneurial concepts and the business formation. She has over 25 years of experience in business roles, and has authored several entrepreneurship textbooks.
Edited by: David Lepeska
David has been writing and learning about business, finance and globalization for a quarter-century, starting with a small New York consulting firm in the 1990s.
Published on February 9, 2022
Updated on May 24, 2023
Starting a business is exciting, but there are many steps to complete before you can start making money. If you’ve decided to form a limited liability company (LLC) and you’ve chosen a business name, it’s important to protect the name so no one else can use it.
Forming your LLC will protect the name in your state, but the only way to protect it across the United States is to trademark your business name. The next logical question is, which comes first – forming the LLC or applying for a trademark?
|LLC (Limited Liability Company)||Trademark|
|Definition||A business structure that provides the limited liability features of a corporation and the tax efficiencies and operational flexibility of a partnership.||A recognizable design, expression, logo, or sign which identifies products or services of a particular source from those of others.|
|Which Comes First||Typically, forming an LLC is the first step for a new business. This establishes the business as a legal entity. After forming the LLC, it's easier to determine what trademarks are necessary for the company.||Usually, after the business is established (for example, as an LLC), the business can then apply for trademarks. Trademark registration is typically for specific products or services, so it's usually beneficial to understand your business structure and offerings first.|
|Purpose||Provides legal protection to the owners by limiting personal liability. Used for running a business.||Protects a business's brand by preventing others from using a similar logo, name, or slogan. Used for brand identification.|
|Formation||Formed by filing articles of organization with the state's secretary of state office and paying the required fees. An operating agreement is also often prepared outlining the company's operating procedures.||Obtained by registering with the United States Patent and Trademark Office (USPTO). Involves conducting a search for similar trademarks, filing an application, and paying the required fees.|
|Liability||Owners (members) have limited liability for the company's debts and obligations. Personal assets are generally protected.||Owning a trademark doesn't limit liability. A trademark offers protection to the brand, not to the owners or operators.|
|Duration||Depends on the laws of the state where the LLC is formed. Some states require LLCs to list a dissolution date, others allow perpetuity.||Initially valid for 10 years in the U.S. Can be renewed indefinitely every 10 years by filing a renewal application and paying a fee.|
|Transferability||Members can transfer their interests in the LLC according to the rules set out in the operating agreement.||Trademarks can be transferred or sold with the business. They can also be licensed to others.|
|Cost||Filing fee depends on the state, typically between $50 and $500. Additional costs for creating an operating agreement, if needed.||Filing fees for a trademark application range from $225 to $400 per class of goods or services. Additional costs for search and legal assistance, if used.|
Which Comes First?
A trademark must be owned by the person or entity using it. In the case of an LLC name, the LLC will be using the name, not you, the owner of the LLC. This means that the trademark application must be done so that your LLC is the owner of the trademark. For that to occur, the LLC must already be registered when you apply for the trademark, which means that you need to form your LLC before you start the trademark application process.
It’s a good idea to form your LLC and get the trademark as quickly as possible to reduce the risk of someone else trademarking the name first.
If you apply for the trademark in your name, you can assign the trademark to the LLC later, but that route adds a number of time-consuming steps. Also, if the trademark is in your name, but the LLC uses the name, you risk the trademark being canceled.
Make Sure the Name Isn’t Taken
Before you form your LLC or apply for a trademark, you need to do some due diligence to make sure the name isn’t already taken.
- First, check your state’s website and do a business name search. This is usually on the secretary of state’s website, or another agency that registers businesses in your state. Type in the name, and try variations of the name as well, to see if there are any that might be too similar to yours.
- Check your state’s name regulations to make sure your business name is in compliance with the rules regarding business naming in your state.
- Visit the website of the US Patent and Trademark Office to make sure the name is not already trademarked.
- Check the availability of related domain names using our Domain Name Search tool. Using “.com” or “.org” sharply increases credibility, so it’s best to focus on these.
- Do a simple Google search for the name to see if there are businesses anywhere that have the name or names that are similar. If another business does have the name, you can use it if it’s not trademarked or registered in your state. But you might want to reconsider your name to avoid any confusion between your company and the other company. Also, if the name is registered in another state and you start doing business in that state, you won’t be able to use your business name in that state.
- Reserve your business name on your state’s website. Nearly all states have a Name Reservation Request form you can fill out online and legally reserve the name for anywhere from 30 to 120 days. Keep in mind, this is not the same as registering your business. You’re simply reserving the name so no one else can take it before you register your business. If you’re ready, go ahead and register your LLC instead of reserving the name.
How to Trademark Your Business Name
There are a few steps to follow to apply for your trademark.
1. Visit the USPTO
The first component of the trademarking process is to visit the US Patent and Trademark Office website. You’ll find an application form, part of the Trademark Electronic Application System (TEAS). You should be able to complete this application relatively quickly and easily. However, the trademarking process is likely to take at least a month or two.
It’s imperative that you’re 100% certain the name you have in mind has not already been taken or is too similar to another trademarked name.
2. Fill Out the Application
Your trademark application will require your focus, energy and time. Dedicate a morning or afternoon to the application and you should be able to thoroughly complete each section to submit it in full confidence.
The application requires the name and contact information of the entity filing to secure the trademark as well as personal details. Those living or working outside the US will need a trademark attorney’s services to complete the application.
The trademark application also requires that you list the products and services the name will be used to cover. Use descriptive words to detail each product or service the name applies to. Even the class the product or service falls into should be described and can be found on the patent office’s website. The trademark can be registered in more than one class, for which there will be added costs.
Of course, the trademark application requires the name you desire to be trademarked. The simplest form of trademark is the standard character mark, also known as a word mark. This trademark includes only the words, letters and numbers of the business name, with no design element and no claim to any font, style, size, or color.
The other main option is a design mark, also known as a logo trademark, which includes specifics about the layout of the business name, as well as the font style, font size, color, other design elements and even a business image and logo. This allows for much greater specificity and ensures your company trademarks not only the name but also a wide variety of style and appearance concerns.
However, if you choose to register a design mark, the trademark will strictly protect that specific depiction of the name. It will not protect your business from any company that uses a similar name but a different mark.
3. File The Application
The trademark application can be filed with the TEAS system mentioned above.
A trademark application filed with the USPTO triggers an application to a federal government patent lawyer, who reviews the application and issues a response to the applicant. If the lawyer determines there are problems with the application, he or she will likely issue a letter referred to as an “office action.”
Most trademark applicants have upwards of six months to provide a response to the issues highlighted in the office action letter. If you fail to respond within the designated window, the application will expire, meaning it will be rejected.
Alternatively, if the USPTO approves the application, it will publish your trademark. This publication occurs in a web-based journal that provides the general public with easy access to all trademarked names to prevent duplicate or similar trademarks.
So, the answer to the original question is that typically you should register your LLC first, and then start the trademark application process. In rare cases, this may not be true, so it’s best to consult an attorney for advice, and who can also help you through the process.
LLC vs. Trademark: Which One Comes First?
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