3 Reasons Why Your Startup Shouldn’t Be An LLC

One of the earliest legal decisions you’ll need to make as the owner of a startup is deciding what type of entity your new company is going to be. Will you choose a C-Corp? An LLC? Something a bit more eccentric, like a B-Corp? There are a number of options out there, and picking the wrong one can spell disaster for someone hoping for a high growth rate fueled by venture funding.

For most startups, there are three different corporate structures to consider: the C-Corp, the S-Corp, and the LLC. The three are primarily differentiated by their tax treatment, but that’s a story for another article, and I have posted an introduction to LLCs and a primer on Corporations before, so check them out if you want to learn more about those entities, how the differ, and what they’re best suited for. Spoiler: the C-Corp is the best entity for a startup.

Now onto the matter at hand. Why are LLCs are terrible for tech startups? There are tons of reasons, but I’ve distilled them down into three.

  1. Investors Don’t Like LLCs. Venture capitalists can be a funny bunch. On the one hand, they’re always trying to discover the next great thing that’s going to turn into a huge success. On the other hand, they’re ultra-conservative (as much as possible, anyway) with their investments. And they have good reason to be—especially those who are investing other peoples’ money. As a result, investors don’t like LLCs because they’re different than the standard C-Corps they’re used to investing in, which means more money must be spent on due diligence, including evaluating each LLC’s unique operating agreement and drafting the often complex LLC documents; the partnership style taxation of most LLCs means some tax-exempt investors can’t invest in LLCs and all investors can still be taxed on the LLC’s income even if they’re not getting a cut of it in any given year (due to reinvestment, etc.); and investors living in other states may have to declare income, and subsequently be taxed on it, in not only the state where they live, but they state where they’ve invested in the LLC. The upshot of this is that because most investors have issues with LLCs, it makes it much more difficult to find investors for your new startup.
  2. Unlike Corporations, LLCs Are Difficult to Manage the Larger They Get. With a C-Corp, where stocks are issued instead of membership interest when someone acquires an equity stake in the business, a corporation can easily manage how its stocks are being distributed. Stocks are simple and easy to manage no matter how many shares are being issued. Instead, with an LLC, the company is left trying to cut the pie into smaller and smaller parts with each new investor, leading to all kinds of tax complications. Also, LLCs are predominantly governed by their individual contracts, and as more investors get on board, the contracts will become longer and more complex, leading to higher legal fees with each new transaction (except for those lawyers who help startups for flat fees).
  3. Taxes, Taxes, Taxes. I’ve already touched on some of the major tax issues, including taxation in states where passive investors reside and where the LLC is located, but tax problems can also arise each and every time a new investor comes in, depending on how they want their preferential treatment structured (liquidation preference, etc.). The tax code also doesn’t recognize LLC membership interest for reduction in capital gains taxes under Section 1202. And to top it all off, when it comes time to sell your company, you’re going to be stuck with taxes and, unlike with a corporation where you can swap the stock of your company for that of the acquirer in certain circumstances in order to help defray those taxes, with an LLC, you’re left hanging out to dry by the tax code with no option but to pony up the cash to pay the tax bill.

So, as the founder of a new startup, what are you to do? The common solution to the problem with LLCs is to just not use them for startups. While ease of operation and need to not follow any of the traditional corporate formalities may seem like a boon for founders in the early stages, the problems with LLCs escalate as they grow. As a result, if you’re bootstrapping your company, you can freely choose any entity you like (though I recommend doing so at the suggestion of your startup attorney and your accountant). But, if you have any desire to raise funding on a large scale down the road, you’re going to want to consider an alternative structure.

For some reason, those who have navigated away from an LLC tend to be drawn towards the S-Corp. Maybe it’s because someone told them they were a great way to protect themselves from taxes and “all the rich people use them” as tax shields, or something like that. And while an S-Corp is certainly better than an LLC in terms of running a startup driven by investor financing, there are still some problems you can run into. Namely, foreign investors and corporations cannot invest in the S-Corp, and as far as growth goes, you’re stuck at a maximum of 75 investors—so much for rapid growth with lots of investors. As a result, if you’re starting out and planning to bootstrap your operation entirely, an S-Corp is a solid choice for your business structure. But if you’re hoping to build the next great startup with a shower of VC money coming your way, think again.

Which leaves us with the C-Corp. The ideal structure upon which your startup should be based. Investors (and their lawyers) are used to them, they’re easy to deal with, there’s a ton of law about how they work, and it just makes sense.

Now, which state should you incorporate in? Delaware? California? Nevada? Your home state?

How to Defend Against a Trademark Opposition

Step one: Hire a trademark attorney. Step two: Relax and let them do the work for you. Most people don’t even know the TTAB exists. That’s the abbreviation for the Trademark Trial and Appeal Board, by the way.

All kidding aside, a trademark opposition is a big deal if you’re trying to register a trademark for a brand you’ve spent a lot of time building up into something great. Unfortunately, all it takes is one company, one person even, to oppose your trademark—leaving you feeling like you have no chance at getting that registration you’ve spent so much time (and money) on. And, to make matters worse, there are a lot of companies out there (I’m not going to name names, but they know who they are), who believe it is in their best interests (it’s not) to oppose every single mark that uses even the tiniest smidgen of their branding, regardless of the products or services that mark is being registered for. Regardless, the important thing to keep in mind with a trademark opposition, is that it all comes down to one simple question: Should the USPTO allow your trademark to register? The answer to that hinges on a variety of other questions, such as whether there is priority of use or likelihood of confusion, but that is the big question that needs to be answered.

But enough about how terrible you feel now that someone has decided to oppose your mark’s registration. It’s time to move on to what you actually need to do.  And if we’re being perfectly honest here, you really do need to hire a trademark attorney to defend against the opposition if you want to continue with the registration process. After all, they’ve done this before and they’re going to know how to best go about beating even the biggest multinational company who is threatening the registration of your trademark. However, before you go out and hire trademark counsel, you need to consider whether it is worth your while given your budget and how much you’ve invested in your mark.

Consider the Costs

For starters, you’re going to want to consider the following costs:

  • How much money have you spent on advertising where you’ve used the mark, and how long have you been using the mark? If you’ve spent a lot—certainly enough to establish your brand as a leader in your chosen market—or you have been using the mark for many years to the same effect, an opposition will probably be the right course of action, regardless of the price. If you’ve spent very little and you’ve been using the mark for a couple of years, have a talk with your trademark attorney (many offer free consultations) to discuss what the costs are going to be and what the likelihood of success is. If you haven’t begun using the mark yet, you should still talk to a trademark attorney, but most will probably tell you the same thing: just change the mark to something else and abandon your filing.
  • How much you have to spend to rebrand? Again, if you have a huge following for your brand, this may be expensive, and the cost of hiring trademark counsel to defend against an opposition may be less than having to inform your customers of the rebranding. Even more significantly, consider the non-customers who know your brand as it currently is, and how much confusion it may cause to change branding in their minds.
  • How broad will your rebranding have to be? If you just have to change one product and its associated website, the cost may be fairly insignificant. However, if you have to change your entire corporate identity, including your company’s websites, business cards, and letterhead, as well as your products’ packaging, labels, signs, and displays, you’re looking at a substantial cost.
  • How much will you have to spend on new trademark applications? Shameless self-promotion time: if you’re applying for trademark registration with Norton Law Corporation, our fees are only $395 per mark plus government fees. And we offer deals if you’re registering more than three marks at once.
  • And last but not least, how much will your attorney cost? There’s still a lot of attorneys out there who bill by the hour for trademark opposition work. However, I (and many other trademark attorneys) offer flat fees depending on the scope of our representation. You should also ask your attorney about whether they think accelerating the case is a possibility, as the TTAB provides what’s known as Accelerated Case Resolution (ACR) which greatly truncates the timetable for relatively straightforward cases while providing excellent cost savings. All parties have to agree to ACR, however, so keep in mind that what you and your attorney may hope happens may not necessarily be what the opposing party will agree to.

May the Odds be Ever in Your Favor

Once you’ve determined the cost of defending outweighs the cost of rebranding, your attorney will evaluate your case on the merits. Essentially, this means the attorney will review whether your mark should register and how to best structure the arguments necessary to win against your opposer. Of particular importance here, as I mentioned earlier in this post, is the likelihood of confusion aspect. After all, that’s generally the most common reason for oppositions—the opposer believes that your mark, were it to register, is too similar to their mark so as to confuse the public as to where the goods or services actually originated from.

Who is Your Opposer?

If you have a strong legal standing on the merits, it really doesn’t matter who your opposer is. Big company or small business, if the merits are in your favor, you stand a very good chance at winning. However, a good trademark attorney evaluates exactly who the opposer is, what seems to motivate them, and how best to solve the problem without forcing their client to spend huge amounts of money on the opposition. Major corporations dedicate a portion of their budgets to trademark monitoring and policing, and they’re primarily a results-driven group, hoping that your company will just kind of roll over and die on them so they can get an easy win. Of course, this also means that even though they have very large budgets to spend on trademark opposition and trademark policing in general, they’re really only going to want to tap into their resources if someone is directly in competition and obviously using a mark that will fairly obviously confuse the public or rides on the coattails of the brand they’ve worked hard to establish. So regardless of the opposing company’s size, settlement may be a possibility that could work in your benefit, allowing you to continue using your mark as you and been (and being able to register it for your chosen classes).

Cost-Benefit Analysis

Ultimately, the biggest question is whether the costs of defending against the trademark opposition are outweighed by the benefits of seeing that mark registered. It’s a case-by-case evaluation, and worth a chat with a friendly trademark attorney.

3 Reasons You Shouldn’t Copy and Paste Your Contracts

Three Reasons Why You Shouldn’t Copy and Paste Your Contracts (And Terms Of Service!)

A contract is a legally binding agreement between you (or your business) and another party. While it may seem like a written contract template you found online is perfect for your business, chances are it’s not. While most of the information in the contract may apply to your business, if even a small factor is off it can spell disaster for your business relationship. Here are three reasons why you shouldn’t copy and paste a contract from the internet.

The Contract Doesn’t Apply to Your Business

So you’ve found a contract online that you think applies to exactly what you need for your business. Just change the names and call it good, right? Wrong. Even if you do find a template online that you think matches, chances are there are more significant underlying issues you’ll need to address if you’re hoping for a solid written contract. If the title matches, that’s great, you’re off to a wonderful start, but does the governing law provision match where you do business? Does the term of the contract work with the type of business you’re conducting? Did you mean for that binding arbitration provision to be in there when you find yourself litigating against a customer who won’t pay you? Finally, contracts are often construed against the drafter in court—and if you’ve merely lifted a contract from another, you run the risk of being caught not knowing what a contract you supposedly drafted outlines. These are just a few of the ways a contract you find on the internet may not be applicable to your business.

The Contract Template May Not Be Properly Drafted

If you read the first point, you know that a contract you find online probably doesn’t apply to your business how you want, but did you know not all contracts you find online are properly drafted? Often, especially if the template you found wasn’t actually drafted by an attorney, the provisions of the contract could be improperly drafted and quickly severed by a court in the event of a dispute. Worse, the contract may not include what’s known as a severability provision, or a section of the contract that ensures if a court finds one section of a contract invalid, the whole contract is not invalidated along with it. Without a provision like that, you could find yourself in deep trouble should one provision be stricken—taking the rest of the contract along with it.

You’re Probably Plagiarizing Someone Else’s Hard Work

This is a point that applies particularly to terms and conditions of use or privacy policies on a website. Because so few people actually bother to read the terms of service, most website owners think they can get away with a simple copy/paste job from a similar site’s terms of service. This may have worked years ago, but people are starting to wise up. Essentially, copying and pasting the terms of use seems like a fine idea because, really, how different is one site from another. Unfortunately for many website owners, the differences are just enough that they can find themselves in hot water for copyright infringement. All websites are copyright of their respective owners, and any savvy site owner knows at least a few of the visitors to her site are there for the sole purpose of scraping that site’s content. Numerous tools are available for webmasters to help them track down people who rip content from their sites, and if they catch you stealing their (or their attorney’s) hard work it could spell legal trouble in the long run.

Photo courtesy: Thomas Leuthard

How to Protect Your Business’s Trade Secrets

Regardless of your chosen business type, chances are your business has secrets you want to protect. These secrets can be anything from a distributor or an account, to a secret formula used in your manufacturing process, to new product designs that are still in the development phase but not yet ready for sale. These types of secrets are often called trade secrets, generally defined as confidential or specialized information that unique to a particular business—and often one of the keys to its profitability. Given the importance of trade secrets to a business, it’s no wonder state laws provide numerous protections for businesses’ trade secrets.

But just because something is important to your business, or is considered secret by you and your staff, doesn’t mean the law defines it as a trade secret. While it varies somewhat state to state, trade secrets are generally defined as a business secret the business uses reasonable efforts to protect, that confers an economic benefit from remaining unknown to the public. Some of the most commonly cited examples of trade secrets are the secret recipes for Coca-Cola soda and KFC’s secret recipe.

On a very general level, trade secrets are fairly similar to patents, in that both work to protect a design, formula, or other “invention” of a business from being used by the public at large. However, the difference lies in the way these protections work. For a patent to provide protection, the business must register the patent with the USPTO, whereby it gains protection from use by anyone else at the expense of limiting that protection to a set term of years. And you give up the secrecy of the patented item, since you have to publish the patent for all the world to see. A trade secret, on the other hand, stays protected indefinitely as long as it stays secret—so don’t go around sharing your business’s secrets, lest your legal protection for those secrets be terminated.

Now that you know the importance of protecting a trade secret, you need to come up with a way to keep your secret a secret. One of the most common ways for a business to protect its trade secrets is to ensure employees don’t take divulge the secret to anyone, or take it with them when they move on to a new position at a new company. Typically, employers require their employees, and even their contractors, sign a non-disclosure agreement, preserving the confidentiality of the trade secret. It varies from state to state what the penalties for violation of such an agreement would be, but generally an employee who is found to violate a valid non-disclouse agreement will be faced with financial penalties.

Non-diclosure agreements can help a business protect its trade secrets, but what if that secret gets out into the wild—or worse, solely into the hands of a competitor. Well, if a trade secret is stolen or violated in another way, the business may be able to bring a state law claim against the offender. The remedies available to a company who had its trade secret misappropriated are state specific, and would be beyond the scope of this general overview of trade secrets. However, common to most jurisdictions are financial damages and injunctive relief, including compensation for the economic harm and possible punitive damages.

We hope you found our primer on trade secrets to be useful. Remember to keep your business’s secrets safe under all circumstances, and they will be protected for years to come.

Photo courtesy: mugley

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10 Things to Consider Before Buying a Business

Starting your own business entity from scratch is definitely not for everyone. While running any business involves a ton of hard work and dedication, starting from square one involves even more. That’s why so many business owners choose to purchase another person’s business that’s already running strong. But before you sign that check to purchase an existing business, have you done your due diligence and made sure that everything the seller or the business broker told you is correct? We’ve complied ten of the top considerations to check in your due diligence process to ensure the business you’re buying is all its represented to be.

Current and Accurate Financial Information

You’re buying a business to make money. That much is given. But is the business you’re purchasing actually as successful as the seller’s made it out to be? For starters, you’ll want to have the financial statements for the last three to five years audited. Also, check any credit or analyst reports that may be available on the business. Read through schedules of inventory, accounts receivable and payable, and check for any additional indebtedness.

Make Sure the Business is in Good Standing

All too often, a business owner forgets to submit annual or biennial documents to the state’s Secretary of State, causing the business to be suspended. Do yourself a favor and make sure the business is still in good standing. And while you’re at it, read through the Articles of Incorporation (or Organization), the Bylaws (or Operating Agreement), and all other documents contained in the corporate binder, including minutes and additional records.

Check for Employment Law Violations

Employment law is an absolute quagmire for a lot of employers. Minute differences between exempt and non-exempt employees as well as the failure to update an employment handbook can spell disaster for an unaware employer. So be sure to check through all of the employment records for current and former employees of the business to determine their categorization, benefits paid, and any workers’ compensation or unemployment insurance claims they’ve made, among other things.

Taxes Paid

Taxes, like employment laws, can be a tricky situation for a business owner to navigate. While many businesses employ attorneys or CPAs to fulfill their accounting needs, far too many believe they can do their taxes themselves and fail to meet requirements set forth by the IRS or state or local taxing authorities. When you’re going through the company’s financials, be sure to look through all tax filings s well, and focus your attention to any tax liens or discrepancies that could spell trouble later.

Look for all Necessary Licenses or Permits

Many businesses must maintain active licenses or permits with various state and federal agencies for them to conduct business legally. Unfortunately, quite a few of those businesses—particularly the smaller ones—often neglect their licensing requirements. If you’re contemplating the purchase of a business where a license or permit is required, make sure the business has it, and it is up to date.

Examine the State of Physical Assets

There are few businesses that can get away with having little to no physical assets as a part of their business model. While a schedule of assets can take you a long way to understanding the types and status of the assets the business owns, that is only the first part of the puzzle. You’ll also need to look to any equipment leasing contracts the business has with manufacturers or dealers, any UCC filings for the equipment, and lists of all purchases and sales of capital equipment.

Intangible Assets such as Intellectual Property

While physical assets are often thought of as one of the most important factors in the purchase of a business, intangible assets, such as intellectual property, can often be more valuable than the physical assets of a business. What are intangible assets? We’re primarily talking about trademarks, patents, and copyrights the business owns. Be sure to check if the business’s name and product names are trademarked (and still actively maintained). Go over methods for protecting trade secrets with the managers. Comb over patents and licensing agreements to make sure they’re valid.

Vendor, Supplier, and Other Contracts

A business is often only as good as its supply chain. And as an integral part of that supply chain, you need to be sure that your contracts with vendors, independent contractors, or any other suppliers of materials or labor are all valid and intact. Start by getting a list of all of the third parties the business deals with on a regular basis. Check to make sure their contracts are all valid and there are no breaches between the parties. Also, while you’re checking these contracts, take a look at any real property leases or mortgages.

Environmental Issues or Other Litigation

One of the most hot-button issues currently for purchasers of new businesses is whether the previous owners have any environmental problems that may pop up later. From pollution to exposure violations, even the smallest environmental issue can spell big trouble for the business. Be sure you check out any types of hazardous materials the business uses as well as how those materials are handled and disposed of. Also, check for hazards in the form of litigation that could harm the company later on, including any current or threatened litigation by or relating to the company.

Get as Much Customer Information as Possible

A business will not have any success without a strong customer base. And any business that is worth its price will have a detailed list of customer information on hand for your perusal. If possible, read through a list of customers to find out who they are, where they live, and what products they purchase. The more you know about your customer base, the better position you will be in when it comes time for you to take the reins of the company from the seller—meaning you’ll be able to enjoy profits as quickly as possible.

Photo Courtesy: Sebastiaan ter Burg

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A Quick Primer on Corporations (C-Corps & S-Corps)

A corporation is the business entity that most people think of when they think of a business. Seeing the Inc. or Corp. at the end of a business name conjures up images of well-known, successful businesses. Beyond that, though, corporations are seen as people in the eyes of the law. Just like an individual, a corporation can bring lawsuits, own property, and enter into contracts, among other things. Corporations have a perpetual lifespan, meaning that short of dissolution, corporations will persist indefinitely, allowing their shareholders to buy, sell, and trade shares for years to come. Speaking of shareholders, corporations, while sometimes thought to be owned by the board of directors, are actually owned by their shareholders and managed by the board of directors. Officers, such as the president, CEO, and CFO, run the corporation through its day to day activities, in turn delegating work to managers and other employees. In smaller corporations, a single person may hold several roles, as shareholder, board member, and officer.

S-Corporations, formally known as Subchapter-S Corporations after the tax code section which authorizes them, are very similar to C-Corps above. As far as similarities go, both are corporations and are inherently structured the same in the eyes of the law. However, S-Corps are designed with certain tax savings in mind—at the expense of the large amount of growth a C-Corp can experience. While all of the differences between the two are outside of the scope of this quick guide, the most important thing to keep in mind when comparing an S-Corp to a C-Corp is that with an S-Corp, you sacrifice the ability to grow to a very large size and issue a wide variety of stock for tax savings benefits.

Photo courtesy: ernestopletsch

A Quick Primer on Limited Liability Companies and Partnerships (LLCs & LLPs)

A Limited Liability Company, or LLC, is a far newer type of business entity than a corporation, though they have quickly become the most popular type of business entity around. This rapid growth in popularity is because LLCs combine liability protection afforded by a corporation with a partnership’s lack of strict administrative rules and formalities. And let’s not forget that an LLC can also provide for tax savings as well. While it would be overkill to say you can form an LLC and immediately forget about its required formalities, it is the simplicity of the LLC that has made it hugely popular among small business owners who would much rather be running their business than scheduling shareholder and board meetings.

A Limited Liability Partnership, or LLP, is very similar to the LLC discussed above. In most situations, if you’re considering an LLC versus an LLP, choosing the LLC is the way to go simply because it affords you more options for growth and provides a better business structure overall. However, some states, like California, require certain professionals to form LLPs instead of LLCs for liability purposes. Some professionals, such as attorneys, architects, and accountants, are prevented by state law from organizing as an LLC, and therefore must form an LLP instead.

Photo Courtesy: Manish Prabhune

Choosing Corporation or LLC: The Legal Side of iOS App Development Part III

At this point, you’ve read through Apple’s developer contracts and you’ve decided on an amazing name for your iOS app. But what’s the next step, aside from actually designing and coding your app, of course?

While it is definitely possible to have a single individual, also known in the business world as a sole proprietor, post an app to Apple’s App Store, you’re going to be much better off if you form some kind of business entity before you submit your app. Why? Several reasons—most of which revolve around liability and growth.

But before we get too far ahead of ourselves, we need to ask what is a business entity? It’s kind of a strange phrase, but it’s simply a general term for corporations (both C-Corps and S-Corps), limited liability companies, and partnerships. Which one is right for you is going to be a judgment call you should make after you discuss your situation with other iOS entrepreneurs and a knowledgable business lawyer.

With the general nomenclature out of the way, let’s talk about some specifics. Most small developers like to form LLCs. People talk a lot about the benefits of an LLC (liability protection, electable S-Corp taxation status, lack of corporate formalities). However, there are a number of very significant drawbacks. For example, I’ve discussed this on our site before, but if you’re forming a single-member LLC, you’d better be sure you know what you’re doing—or you could find yourself liable for the debts of your company. And that’s not a position anyone wants to be in. Further, LLCs often have a problem scaling, which is something even the smallest app developer should be concerned with since app development can sometimes be an expensive undertaking and you may want to take on extra investors in exchange for a percentage interest in the company. That said, LLCs are great for a small number of shareholders (called “Members” in the LLC context), but trying to add more members and investors down the road can lead to some major problems. After all, corporations are much better suited to taking on investors than LLCs are.

And that brings us to the corporation. Compared to LLCs, corporations are slightly more costly to set up and require more effort to keep running (in terms of required meetings, corporate minutes, resolutions, etc.). However, if you’re looking for a way to scale your business at some point, setting up your entity as a corporation is the way to go. With the ability to issue a range of stock types to investors, you’ll be in a position to grow in ways you never thought possible.

But what if you’re looking for something in between? You’ve started out and you’re developing your first app, after all. What do you do? Well, we sometimes recommend setting up the LLC first and then converting it to a corporation later. That way you don’t have to worry about all of the corporate formalities at the beginning and you can focus on what you do best—developing your app. Then, after your app is finished and selling like hotcakes on the App Store, you can convert the LLC to a corporation. And to top it all off, you’ll have saved some money to boot.

Next time we’ll discuss the legal ramifications of using third party resources and code in your app—what it means for your development now and in the future.

Photo Courtesy: Thomas Leuthard

2 Steps to a Trademarkable App Name: The Legal Side of iOS App Development Part II

Choosing the right name for your iOS app is always a difficult task. After all, you’re looking for something that sounds great, is memorable, is not already in use, and has some relation to what your app actually does. Finding the right mix between all of those factors is a tough job, but we have a few tips to help point you in the right direction.

Before we get into them, though, be sure to check out our post on How To Pick The Perfect Name For Your Business. You may find a number of helpful hints that can easily be applied to naming your app.

There are really three goals you should have in mind when choosing your app’s name: (1) Choose something that somewhat describes what your app is or does, (2) Choose something you can trademark, and (3) Choose something that is catchy or marketable.

Since our posts try to stick with the legal side of things, we’ll be talking about trademarkability. I’ve discussed trademarks a bit on our site before, but as a refresher, there are a couple of things you need to know. The biggest, when it comes to choosing a name, is to make that name as distinctive as possible. Whether you’re able to register a trademark for the app’s name at some point in the future largely depends on how distinctive your mark is. If you’re naming your new messaging app Message App, that’s not particularly distinctive—it’s merely descriptive and therefore somewhat unlikely to be registered by the United States Patent and Trademark Office (USPTO). However, if you name your messaging app something like Fast Messages, you’re getting somewhere. You have a name that is a little more distinctive than before. However, if you really want to take it to the next level, then take a page from messaging app names like WhatsApp or KakaoTalk, both of which have very distinct names.

The next issue you need to be on the lookout for when coming up with a name for your iOS app is to make sure you’re not (inadvertently) taking a page from an existing trademark. In other words, if your mark is too similar to a currently registered mark, you’re going to have a tough time registering your app’s name with the USPTO. Before any trademark can be registered, it has to be cleared through the USPTO’s strict set of searches, and if any problems pop up, it will delay the process. Furthermore, even after your application has cleared the USPTO examining attorney’s first search, the mark goes on to be published in the Trademark Official Gazette, a weekly publication from the USPTO that documents the marks that are approved for registration each week. Once published, you have to wait to make sure nobody opposes your mark before the USPTO will finally register your trademark. Long process, right? It takes at least 6-7 months.

Ultimately, I always recommend approaching naming an app (or a business) as a two step process. Start by coming up with 3-5 names you think sound great. Then start searching around to make sure those names aren’t already in use. Of course, if you hire a trademark attorney to help you through the process, we’ll do all of the searching for you.

Keep an eye out for our next post on the legal side of iOS app development, where we talk about forming your business in a way that’s great for you—and will make your future investors happy too.

Photo Courtesy: Thomas Leuthard