Limited liability companies (LLCs) and trademarks are different by nature. An LLC is a business structure that grants asset protection from business liabilities, while a trademark protects a specific category of non-tangible assets.
Should LLC registration come before trademark registration? Read on to find out.
Limited Liability Company vs. Trademark Rights – Understanding the Concept
As its name suggests, an LLC is a business structure that offers personal liability protection to its owners (also referred to as “members”).
The owners of an LLC are not personally liable for business liabilities and vice-versa. For example, if someone wins a judgment against an LLC, it is not possible to collect the owed amount from the member’s personal assets.
In such a case, the lien holder can only collect from the LLC’s assets to satisfy the judgment. While an LLC is a type of business structure, a trademark is a type of intellectual property.
According to the United States Patent and Trademark Office (USPTO), a trademark can be “any word, phrase, symbol, design, or a combination of these things that identifies your goods or services.” The three key purposes of trademarks:
- To identify the source of goods or services in the marketplace
- To distinguish a company from its competitors in the same segment, and
- To provide legal protection for a company’s brand
When used strategically, the combination of LLCs and solid trademarks may result in a profitable case study. Trademark rights prevent copycats from stealing one’s business marks, while the legal structure of LLCs shields entrepreneurs against potential liabilities.
Which Comes First LLC or Trademark? – The Verdict
A key difference between LLC ownership and trademark rights is the foundation of each category. It is impossible to operate an LLC legally without proper registration. Each state has its own legislation to govern LLC formation.
Forming an LLC necessarily requires registration with the appropriate agency at the state level. For example, registering an LLC in Florida requires applicants to file with the Department of State.
On the other hand, trademark rights do not stem from registration but from their active use in business. While it is possible to enforce an unregistered (common law) trademark in court, proper registration offers superior legal protection.
The best strategy is to register an LLC first and only then seek trademark registration. A trademark can be owned by either individuals or legal entities.
Once registered in its state of formation, an LLC can legally own one or multiple trademarks. Please note that the ownership of a trademark depends on which party uses the mark.
Hence, the trademark must be already in use before its owner files for registration. While LLC registration must necessarily happen at the state level, it is possible to own a federally registered trademark.
A good method to guarantee trademark protection for start-up LLCs with a limited budget and urgency to start their operations is to file for a state trademark. Once the company starts to expand and generate sufficient capital influx, it is easier to register with the USPTO for a federal trademark.
Tangible & Non-Tangible Asset Protection – Immediately Seek Expert Legal Guidance
A well-versed legal advisor in business & intellectual property law, Attorney Romy B. Jurado willingly wants to help you succeed. Contact us by calling (305) 921-0976 or emailing [email protected] to schedule a consultation.
