Are you becoming a Member of a Business? Here’s what to look out for.
Depending on the nature of the business you are becoming a Member of, confidential information could be defined narrowly, as intellectual property such as patents or designs, or it could be as broad as company strategy, client lists, business practices, and other operational information. It is critical that these clauses are clarified, preferably in writing, to ensure that you understand what is confidential when you are operating in your new role as a Member. To ensure you know what is confidential, you can request a further breakdown of what the Company would consider confidential, or a request that information that is considered confidential is labeled as such throughout communications of the specified information. This will help you protect yourself moving forward, both as a Member, and if the relationship terminates and you seek to stay in a similar industry.
2. Time dedication.
In becoming a Member of a Company, you may already be a full-time employee, or you may just be a part-time entrepreneur working with or running a number of businesses. It is critical that you review the time management or time requirement clause to ensure that your expectations align with the Company’s. Further, many times a requirement of full-time dedication is boilerplate language that is also considered a material part of the agreement. This means that if the relationship goes south, the Company could theoretically rely on this clause to show a violation of the agreement and take action to remove you as a Member.
3. Remedies for Breach.
Remedies for breach could range from extremely strict to very lenient. We recommend ensuring there is a clear opportunity to cure, meaning a period of time to right the wrong. Note this opportunity to cure cannot be applied to all breaches, such as legal violations applicable to the business of the Company or dishonesty in financial dealings. Generally, you as a Member join into the LLC with a capital contribution or other exchange that affords you a number of units, or a certain amount of interest in the Company. It is critical to understand what impact your termination or breach has on your interest. For example, if you barely provided any contribution upon joining the Company, and the clause states that simply returning your contribution means that your interest is transferred back to the other Members of the Company, you can be bought out for that minute amount. Alternatively, it is preferable that your interest is purchased from you for the value at the time of your departure.
4. Valuation.
How any interest or assets of the Company is valued directly impacts every Member of the Company. This calculation can change how much an annual distribution is, how much interest is purchased for at the time of a Member’s departure, or how much a Member is paid if the Company is dissolved. Generally, valuation is performed by a certified public accountant (CPA) or accounting firm that is familiar with the business the Company operates in. Something to watch out for is valuation by the Manager alone. There is nothing to ensure that things are valued in realistic terms, especially where the valuation clause is defined by “in the Manager’s discretion.” Such language provides no checks and balances on the Manager to ensure the determination is defined by fair market value.
5. Restrictive Covenants.
One of the final clauses to pay close attention to is any restrictive covenant. These are generally non-compete and non-solicitation clauses in these types of agreements. They can sometimes be intertwined with or hidden in the Confidentiality clause. These may be upheld by a court if contested, but they must have some restrictions on them. These are generally in the form of geographic and time restrictions. For example, a non-compete that covers the entire United States is generally going to be struck because the geographic region is too expansive. Each state also generally has a reasonably approved time constraint, usually falling between 1 and 3 years. These agreements can hinder your ability to start your own company or even apply for new jobs when you leave the current Company. Pay attention to the manner of departure, attorney fees, and compensation for signing the non-compete. It is important to understand your own plans and goals as to how this can impact you in the future.
Remember, you are in a position to negotiate each term in the agreement before signing. It is recommended that you hire counsel to review and work with you on negotiating the terms to make sure you are protected, and your interests are supported in becoming a Company Member.
Next Steps
If you would like to learn more about any of the topics mentioned here, please call or text 484-801-0021 or reach out to Cassandra Ortner at cassandra.ortner@peytonlaw.com. We proudly support the nation’s business owners.
*Janelle Peyton is the Managing Partner of Peyton Law, a national boutique law firm providing general counsel and intellectual property legal services to small and mid-sized business owners and entrepreneurs. The firm offers business and brand building legal strategies; including business entity formation, contract drafting and review, human resources and employee matters, joint venture agreements, trademark and copyright protection, licensing & franchising, business succession planning, and mergers & acquisitions. Peyton Law serves as outsourced general counsel to companies in a wide range of industries. Visit us at peytonlaw.com.
Today’s consumers are inundated with options. Thousands of businesses offer similar products and services or promise similar results. How does a consumer choose one business or product over the other? The answer: consumers will always gravitate toward distinctive, uniquely relevant brands.
With such high saturation in most markets, it can be easy for a business to get lost in the crowd. Brand differentiation is key to your business’s products or services standing out.
What is Market Positioning?
Market positioning is the process of creating a specific image or identity for a product or brand. Successful market positioning allows a business to occupy a distinctive place in the minds of their target consumers. This strategic exercise in consumer perception helps businesses establish unique places in their market and stand out from their competition.
Strong market positioning is essential for brands to become visible to their target audience and make a lasting impression. Once a business pinpoints what makes them unique, they can discover a positioning strategy that works for them. A strong positioning strategy highlights the unique features that make a brand different from its competitors.
For example, one company may find that their pricing is lower than their competitor’s and then position for affordability. Conversely, an organization may find their pricing is higher than their competitor’s and then position for quality or luxury status. Businesses may also focus on their product’s special benefits, ease of use, convenience, and more.
Why is Positioning in Marketing Important?
Positioning in marketing can essentially be boiled down to how a business wants to be perceived in relation to their competitors. The goal of market positioning is to find a defining characteristic that will help a business eclipse their competition.
Successful positioning results in a brand gaining the competitive edge they need to improve sales and promote company growth. Strong market positioning also helps businesses more clearly define their target market and better connect with their target consumer’s needs. As a result, brands can make more effective business decisions.
How to Create Strong Brand Positioning in your Market
Positioning in marketing is not easy. It requires extensive research and dedication to a specific niche, idea, or target audience. Effective positioning strategies consider three areas: the needs of the target consumer, a business’s own strengths and weaknesses, and the strengths and weaknesses of their competitor. Outsourcing this work to a marketing company is a great option for small businesses that do not have the in-house resources to complete extensive market research and cannot rebuild their brand’s architecture on their own.
First, businesses need to examine their existing position in the marketplace and determine their point of difference. Businesses may find they are marketing their product or service just like many other businesses on the market. Understanding their current market position gives businesses important insight into what needs to be changed and where to go next.
After understanding their current market position, businesses must analyze their competitors. How is the competition positioning their brand and products? Competitive analysis may reveal that one competitor’s weakness is another business’s strength. Once they have located an untapped corner in their market, businesses can begin to build a unique marketing strategy.
Once marketing materials such as slogans, logos, designs, or websites have been created, they need to be cleared for use. After your attorney conducts a search of registered marks and confirms your business can use them, you will then want to file for the necessary intellectual property protections to secure the unique materials for exclusive use.
Legal Considerations: Intellectual Property Protections
Market positioning is much more than selecting a category. The business has to commit to embodying the identity in all of its branding materials, products, and content. A strong market positioning strategy drives the words, phrases, logos, product names, and entire image of a business’s branding. Consequently, protecting your business’s intellectual property is an important part of your market positioning strategy.
Once a business has developed a strategy to cement their brand in a desirable position, they then have to actively protect that position from competition. Protecting your intellectual property means turning the unique, intangible aspects of your business into exclusive rights. As a result, competitors are unable to commercialize and benefit from the branding materials and content strengthening your market position.
Intellectual property protections naturally enhance market positioning strategies because they help secure exclusive brand identities, distinguish products or services from competition, and prevent competitors from encroaching on the unique concepts that identify your brand.
Next Steps
If you would like to learn more about any of the topics mentioned here, please call or text 484-801-0021 or reach out to Cassandra Ortner at cassandra.ortner@peytonlaw.com. We proudly support the nation’s business owners.
*Janelle Peyton is the Managing Partner of Peyton Law, a national boutique law firm providing general counsel and intellectual property legal services to small and mid-sized business owners and entrepreneurs. The firm offers business and brand building legal strategies; including business entity formation, contract drafting and review, human resources and employee matters, joint venture agreements, trademark and copyright protection, licensing & franchising, business succession planning, and mergers & acquisitions. Peyton Law serves as outsourced general counsel to companies in a wide range of industries. Visit us at peytonlaw.com.
Benjamin Franklin. Author, printer, political theorist, politician, freemason, postmaster, scientist, mathematician, inventor, civic activist, statesman, diplomat, and the happy face smiling back at us on the $100 bill, Ben Franklin is known throughout the world as a political leader. Locally, we know him as our first innovator; and the culture of our region continues to be filled with his spirit of creativity and originality.
Mr. Franklin takes credit for inventing the lightning rod and understanding electricity, the Franklin stove, bifocal glasses, odometer, swim fins, and a flexible urinary catheter. Today, our region boasts inventions ranging from #2 pencil to Monopoly, and from software and mobile applications to pharmaceutical drugs and the latest in healthcare apparatus. It’s no surprise then, to consider the astounding amount of intellectual property created here. The United States Patent Office is the busiest in the world, with over 300,000 patents granted and 300,000 trademarks registered each year.
Being that we are a region of innovation, collaboration and design, the management of our intellectual property (patents, trademarks, copyrights, and licenses) is important. When choosing a firm to manage your company’s intellectual property, or “IP,” make sure they employ the following strategies to protect the IP portfolio.
As Benjamin Franklin once said, “By failing to prepare, you are preparing to fail.” The growth and protection of a company’s IP portfolio is essential to their success. Mr. Franklin also noted in his autobiography that “…we enjoy great advantages from the inventions of others, we should be glad of an opportunity to serve others by any invention of ours…” Keep the spirit of our region alive inventing, collaborating and innovating, and keep the spirit the spirit of innovation strong.
For more information on IP portfolio management, or to help you reap the benefits of trademark registration, please call or text 484-801-0021 or reach out to Cassandra Ortner at cassandra.ortner@peytonlaw.com. We proudly support the nation’s business owners.
*Janelle Peyton is the CEO and Managing Partner of Peyton Law, a leading boutique law firm designed to provide the highest quality branding, business, and legal services to companies via quarterly subscription called Strategic Legal Solution. Peyton Law offers brand building strategies through corporate and intellectual property law, including business entity formation, buy+sell, contracts, joint ventures, trademarks, patents, licensing, and other growth-related transactions.
Is President Trump the most business savvy of all United States presidents? The outcome of this debate may be uncertain, but if the number of trademarks were an indication of business savvy, he probably takes the lead. Trademarks are an essential component of running a business.
The United States Patent and Trademark Office (USPTO) is responsible for the registration of trademarks (among other things). The USPTO’s records are open to the public, and according to some quick searches, it appears that President Trump and his associated for-profit businesses retain the rights to over 100 active registered trademarks. He has submitted over 300 trademark applications throughout his years in business. In addition, there are another six (6) trademarks submitted by the non-profit organization, Donald J. Trump for President, Inc., four (4) of which are currently pending registration. Melania appears to have an application pending for MELANIA for jewelry, and Ivanka Trump has submitted 80 applications, of which 29 are active registrations, with another 20 pending registration.
It appears that the Trump family has some “rules of thumb” when it comes to protecting their trademarks. Here are the top three (3) lessons learned from trademarking TRUMP.
Lesson #1. “1b” is Key.
There are two (2) types of trademark applications with regards to timing; a Section 1b Intent-To-Use application, or a Section 1a Actual-Use application.
In the beginning, the two types are processed in the same way; however, the Section 1b application will not become a registered trademark (and be awarded the full protections afforded to registered marks) until the mark is actually used in commerce. The Trumps originally submitted many of their marks as Section 1b applications. By filing their applications before actually using the mark in commerce, the Trumps have protected their marks from use by others.
Lesson #2. Words and Logos.
The USPTO accepts trademark registrations for the word mark alone, the logo itself, or both the logo and the word. Receiving a registration for the trademarked word is important, as logo designs often change slightly over time. However, it is possible to trademark the name and logo in a single application. The Trump family files separate applications; one for the word alone, and a second that includes the logo design along with any words depicted in the logo. This strategy allows them to protect the trademarked word if their designs change; and are also protects their designs, in case they wish to keep the design, but change the word.
Lesson #3. Consent Required.
The Trademark Manual of Examining Procedure (TMEP) is the rule book for the USPTO when it comes to issuing registrations. One section clearly states that a living person must give his or her consent to use their name as a trademark or part of a trademark (15 U.S.C. §1052). Many (but not all) of the Trump trademarks include their names; “Trump,” “Ivanka Trump,” “Melania,” etc. In these cases, to keep the trademark application moving toward registration, the Trumps will submit a formal consent to use their name(s) with each application.
With well over 400 trademark applications submitted by the Trump family, it takes a team of professionals to manage their intellectual property portfolio. They must ensure that each application is submitted properly, applications are tracked, requests for information are fulfilled, registrations are received, future deadlines are noted, and possible new opportunities are brought to the attention of the family. A team of intellectual property professionals or key person is essential to the success of any business or organization. Decision makers are well served when they find a great team member to help them manage their intellectual property portfolio (trademarks, patents, licensing, copyrights, etc.).
For more information on registering a trademark, please call or text 484-801-0021 or reach out to Cassandra Ortner at cassandra.ortner@peytonlaw.com as we offer a complimentary consultation. We proudly support the nation’s business owners.
*Janelle Peyton is the CEO and Managing Partner of Peyton Law, a leading boutique law firm designed to provide the highest quality branding, business, and legal services to companies via quarterly subscription called Strategic Legal Solution. Peyton Law offers brand building strategies through corporate and intellectual property law, including business entity formation, buy+sell, contracts, joint ventures, trademarks, patents, licensing, and other growth-related transactions.
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