by Mat Sorensen | Jul 5, 2022 | News
Many clients wonder whether they need to trademark their business name. A trademark is a legal protection given to a business name or slogan and allows the owner to prevent others from using the same name or slogan. The purpose of a trademark is to give the owner of the mark exclusive use of the name or slogan so as to distinguish itself from its competitors. Trademarks provide protections against counterfeits or cheats trading on a good business name (and cashing in on someone else’s marketing) and also allow a business to avoid having someone else operate under the same name which helps to avoid confusion amongst consumers.
For example, the business name “Google” is a trademark of Google, Inc. This trademark grants Google, Inc. the exclusive use of this name in their industry and prevents a competitor from simply opening up a website or business and offering products or services with the good “Google” name. This also protects consumers from doing business with someone they weren’t intending to do business with and also prevents other businesses from benefiting off of someone else’s marketing and brand recognition.
When deciding whether to trademark your business name or service you must first determine whether you want your name protected in the marketplace from use by others. An attorney operating as Mathew Sorensen Attorney at Law may not worry about someone operating under his business name and may see little benefit from a trademark. But a business named something like Paramount Real Estate Brokerage which conducts marketing under that name, maintains a website under that name, provides services under that name, and which employs many agents using that name would see much more benefit from a trademark. Trademark protection is done on a national basis so when your trademark is approved it grants national protection of your name or slogan. Those who use the name in violation of the trademark are in violation of law and can be sued by the owner of the mark for damages.
Key Trademark Considerations
When applying for a trademark keep in mind the following items.
1. Trademark Availability- Make sure nobody else has filed a trademark with your word/name. This can be searched at the uspto.gov website. Keep in mind that there can be similar names or marks in different industries (see point 3 below).
2. Trademark Must be Unique- The mark may not be merely descriptive. For example, you cannot expect to trademark the business name Boats, Inc. to sell boats as that is merely descriptive of what you do and doesn’t distinguish your business from others. A name like Eagle Boats, Inc. on the other hand is distinguishable since your use of the word Eagle in the industry could be unique.
3. Trademarks Are Granted by Industry/Class- A trademark is granted based on the industry your business is in (called class by USPTO). What this means is that your mark is protected in your area of business but is not protected across all businesses and product lines. For example, the word Paramount may be registered by one group in the USPTO entertainment class as Paramount Pictures but may be registered and owned by a totally different group as Paramount Real Estate in the USPTO real estate class. Keep in mind that your business may cross over into two classes and you may want the mark approved in more than one class.
4. Trademarks Must be In Use- The trademark must be in use in the economy (on a website, in a brochure) before the mark will be approved and this use must be shown to the USPTO with your filing. You can also state an intent to put the mark in commerce without actually doing it yet but then you need to go back to the USPTO to show the use later and this is much more of a hassle. It also costs more in fees.
5. Trademark Cost- The USPTO fee to do a trademark is $350 per class. Our fees at the law firm are $1,000 per mark for all the work, filings and consulting related to the mark.
6. Trademark Time Frame and Maintenance- It typically takes about 9 months on average to get approval of a trademark with the USPTO. After the mark is approved you can start using TM next to your name or slogan (if you desire). You also have to show continued use of the mark to the USPTO every 5 years or so to maintain the mark. If you fail to show continued use the mark expires and may be picked up by someone else.
Trademarks are a great way to build long-term protection of your business name or product/service. They are a necessity for many businesses that invest significant marketing dollars into their business name or products/services. If you want to learn more, please contact the law firm at 435-586-9366 to speak with one of the attorneys.
by Mat Sorensen | Jun 5, 2020 | News
From my article on Entrepreneur.
Congress just passed the Paycheck Protection Flexibility Act of 2020 and improved the Paycheck Protection Program (PPPP) for small-business loans. The bill enhances the PPP by increasing the time small businesses can use funds and receive forgiveness from eight weeks to twenty-four weeks and by reducing the payroll cost rule from 75 percent to 60 percent. The President is expected to sign the bill immediately, and the SBA and Treasury will be tasked to update their regulations, guidance and forgiveness application.
by Mat Sorensen | Jan 7, 2020 | News
The SECURE Act was signed into law by President Trump at the end of 2019, and makes sweeping changes to the laws affecting retirement plans, including IRAs. The law, known as the SECURE Act, is a mixed bag of good, bad, and ugly. This article breaks down the details that IRA owners need to know moving forward.
The Good
RMD Age Raised to 72
- Required Minimum Distributions (RMDs) are no longer required until the IRA owner reaches 72. Prior to the new law, RMDs were required once the account owner reached age 70½. By extending the RMD requirement to 72, IRA owners can delay taking distributions from the IRA by an additional 1½ years. This is a good thing as you can let more money grow tax-deferred. The 70½ year rule was also confusing, as it takes a while to do the math and figure out what year you turn 70½. It used to be the only half-birthday you had to keep track of. There is still no RMD requirement on Roth IRAs. If you already reached 70½ in 2019 or earlier, and haven taken out previous distributions, then you continue taking distributions as usual (even if you aren’t yet 72).
IRA Age Limit for Contributions Removed
- There is no longer an age restriction on when you can contribute to an IRA. Prior to the law, Traditional IRA contributions were restricted once you reached RMD age of 70½. Under the new law, there is no longer a restriction (even when you each 72). This means older IRA owners who are still working or have earned income can continue to contribute to a Traditional IRA.
Exception to 10% Early Withdrawal Penalty for Birth or Adoption
- A new exception to the 10% early withdrawal penalty was added in the case of the birth or adoption of a child. This is limited to $5,000, but will allow new parents to withdraw up to $5,000 from any IRA or other retirement account without having a 10% early withdrawal penalty apply. Taxes would still be due on Traditional (pre-tax) funds withdrawn, but the 10% penalty is waived.
The Bad
The Stretch IRA Has Been Gutted
- The Stretch IRA, whereby a non-spouse could inherit an IRA or Roth IRA and take distributions over their lifetime, has been gutted. While a non-spouse can still inherit an IRA or Roth IRA, the account (in most instances) must be distributed in 10 years. There are no annual distributions required under this new rule over the 10-year period. Instead, the total account balance just needs to be distributed in 10 years. So, if you inherit an IRA in 2020 or later, then you will have 10 years to continue investing the account and you can take distributions whenever you want (or just at the end) with the full amount being distributed within 10 years. There are some persons who can still use the old Stretch IRA rules, but these groups are limited and include: Disabled or chronically ill persons, minor children inheriting, and beneficiaries not more than 10 years younger than the IRA owner.
The Ugly
The elimination of the Stretch IRA was bad and ugly. What else can I say? The only good news is that those who have already inherited one in 2019 or earlier can still operate as usual. Everyone else who looked forward to one will have to take solace in the fact that they at least have 10 years of “stretching” to continue investing the funds in a tax-free (Roth) or tax-deferred (Traditional) manner. And, under the new rule, there is no RMD rule in effect each year. Instead, the total amount must be distributed at the end of 10 years. This makes things a little easier with self-directed assets and also helps any IRA owner – 10 years is still a good amount of time – get a little bit of additional tax-deferred (Traditional) or tax-free (Roth) growth.
At Directed IRA we are a custodian of inherited Traditional IRAs and inherited Roth IRAs, we are keenly aware of the changes and are helping our clients understand the new rules. Please reach out and gives us a call ((602) 899-9396) if you have questions on these new rules.
Mat has been at the forefront of the self-directed IRA industry since 2006. He is the CEO of Directed IRA & Directed Trust Company where they handle all types of self-directed accounts (IRAs, Roth IRAs, HSAs, Coverdell ESA, Solo Ks, and Custodial Accounts) which are typically invested into real estate, private company/private equity, IRA/LLCs, notes, precious metals, and cryptocurrency. Mat is also a partner at KKOS Lawyers and serves clients nationwide from its Phoenix, AZ office.
He is published regularly on retirement, tax, and business topics, as well as a VIP Contributor at Entrepreneur.com. Mat is the best-selling author of the most widely used book in the self-directed IRA industry, The Self-Directed IRA Handbook: An Authoritative Guide for Self-Directed Retirement Plan Investors and Their Advisors.
by Mat Sorensen | Jul 30, 2018 | News
If you are receiving a fee for assisting someone else’s company in raising money, then you must operate within the confines of securities laws. These laws provide three different ways in which one may legally raise money for another company for a fee. You can’t get a “commission” or “bonus” or anything of value for bringing an investor to another company or person unless you fit into one of these three categories:
Broker Dealer License
First, if you are licensed and are registered with an SEC registered broker dealer, you may receive commissions and other forms of compensation for raising money in public or private offerings (e.g. private placements). The newest form of registration from FINRA is designed to license and regulate those who operate as “investment bankers,” called a “Series 79 license.” This license allows a holder to collect commissions and other fees for raising funds for an offering of equity (e.g. stock) or debt (e.g. notes or bonds). In addition to passing the licensing test, you’ll need to associate with a broker dealer.
Finder’s Fee
Second, if you take a limited role in the raising of funds and are paid a flat or hourly fee, as opposed to commissions based on funds raised, you may be able to be paid a finder’s fee for introducing investors to others. A finder’s fee can only be paid to a finder so long as:
- The finder isn’t involved in negotiations of the securities being sold.
- The finder doesn’t discuss the details of the securities.
- The finder isn’t paid based on money raised (e.g. no commission).
- The finder doesn’t perform “finding” services on a regular basis.
In sum, a finder’s fee may be paid but only to someone who makes introductions of potential investors, and the fee amount must be based on some factor other than compensation relating the persons or amount of securities sold to those introduced by the finder.
Director or Officer of Offering Company
Third, you may be able to assist in raising funds for another if you are an Officer or Director of the company whom you are raising money for. The SEC promulgated Rule 3a4-1 which is a Safe Harbor from enforcement and allows someone who serves as a paid Director or Officer to assist in selling the company’s securities. There are many ways to qualify under this Rule but the most common is to meet the following criteria:
- Be paid as a Director or Officer by salary or other criteria that is not linked to sales of securities made (e.g. be the CFO or Treasurer and offer financial consulting advice in addition to working with potential investors).
- Can’t be associated with a Broker Dealer and cannot have a prior SEC disciplinary history.
- Should stay on with the company following closing of the offering so as to show your purpose as a Director or Officer was not just for raising funds.
- Takes a passive and restrictive role in selling the securities and refers to the CEO or President for details and negotiations.
Failure to comply with the securities laws can result in civil and criminal action. In addition, investors who can claim a failure to comply with the laws outlined above are able to rescind their investment and can subject the company’s founders and the person soliciting the investment with personal liability for any losses.
by Mat Sorensen | Jun 26, 2018 | News
President Trump’s private lawyer, Michael Cohen, recently had his home and office raided by federal agents. But wait, isn’t all of his information attorney-client privileged? If you’re confused at how a lawyer’s records could be raided, your instincts are right. We’ve all learned about the fourth amendment, which protects us against unreasonable search and seizure, and requires the government to obtain a warrant. But, lawyer records and client information is especially protected, and any old warrant won’t allow the government to search or seize a lawyer’s records. In the case of Trump’s private lawyer, Michael Cohen, the government was able to blow past attorney-client privilege by alleging and providing credible information that they suspected Mr. Cohen was part of criminal activity himself. So, what can upstanding business owners learn from the Michael Cohen saga? Well, quite a bit.
When planning your business and tax structure with your lawyer, it is important to understand what is privileged and what is not. Often times, clients divulge information to their lawyer and wonder whether that information is “attorney-client privileged” or not. Attorney-client privilege is an important legal protection offered to persons, companies, and organizations who provide confidential information and who seek counsel from their lawyer or law firm. Under law, an attorney cannot be required to provide attorney-client privileged information to a plaintiff in a law suit (e.g. creditor) or to a government agency (e.g. the IRS) except under limited situations. Here are a couple of common situations where you may lose attorney-client privilege and some tips to make sure your confidential information provided to your lawyers doesn’t run into the exceptions.
Exceptions to the Attorney-Client Privilege Rule
1. Third-party non-lawyer present
Was a third-party present with your lawyer when the information you want to be privileged was discussed. For example, was your accountant or financial adviser present when discussing information you want to remain confidential and to privileged? Keep in mind that if a third-party is present in a meeting or on a conference call then that third-party may be required to provide information or documents from the meeting and that your accountant, consultant or adviser can’t raise the attorney-client privileged defense for you unless they’re actually your attorney. If a third-party professional does need to be hired (e.g. an accountant or CPA), that third-party can be hired or brought into the matter by the attorney and the privilege may remain intact. This is known as a “Kovel” hiring of the accountant, and stems from a case where a lawyer engaged an accountant for the client, and the accountant’s work was therefore covered under the lawyer’s attorney-client privilege.
Tip: For sensitive matters where you want information to remain confidential and privileged, do not involve outside parties as those outside parties or non-attorney advisers cannot raise the attorney-client privileged defense.
2. Only legal advice is attorney-client privileged
Only information exchanged when seeking legal advice is attorney-client privileged. This is especially tricky for companies who have their own “in-house” legal counsel who also offers business advice. Only the information exchanged that pertains to legal advice would be privileged. For example, was an organization chart of the company’s holdings “privileged” when provided to the company lawyer who also manages those assets for the business? Also, what if that lawyer disseminated that organization chart to accountants, property managers, or other non-lawyers? If they did, then that information is no longer attorney-client privileged.
Tip: If you have sensitive documents or information you want to keep in communication only with your lawyer, ask your attorney to identify the document as “Attorney-Client Privileged” and do not provide it to non-lawyers.
3. If the lawyer is on the crime, it is no longer attorney-client privileged
This tip comes compliments of the Michael Cohen case outlined at the beginning of this article. You may also think of “Breaking Bad’s” famed lawyer, Saul Goodman. Or maybe you’re “The Godfather” kind of person, and you think of the mafia lawyer, Tom Hagen. In the case of Goodman and Hagen, they were lawyers who were part of the criminal enterprise of their bosses. As a result, their records are not protected by attorney-client privilege.
Tip: While this third scenario is less likely applicable to our readers, I hope, it’s more fun to talk about than when your accountant can receive incriminating information.
Remember that not all information provided to your lawyer needs to be attorney-client privileged. Keep these tips in mind when communicating highly-sensitive information to your attorney, and let your attorney know before you provide the confidential information that you intend it to be privileged, so that they can ensure that your information is properly handled and so that non-lawyer third-parties are only involved when the privilege can be maintained.
