172: The Great Debate: To Trademark or Not?
Last week, I had the chance to sit down with Braden Drake from Not Your Average Law Firm to trademark three of my brands. Honestly, I waited way too long to do this, and I wanted to bring Braden on the podcast so you can avoid the same mistake.
In this episode, Braden will answer all your burning legal questions, like:
When should you consider trademarking your course, program, or brand name?
What do you need to protect your business and intellectual property?
How can you protect your personal assets?
And so much more!
Braden is an absolute treasure trove of knowledge when it comes to legal and tax issues for online business owners like us.
His straightforward, practical advice makes complicated legal stuff easy to grasp and put into action. We’ll cover the essential steps every online business owner should take to make sure their business is legally sound and protected from any potential pitfalls.
Whether you’re just starting out or looking to strengthen your existing business, this episode is full of actionable insights to help you navigate the legal landscape with confidence.
Legal Layers of Protection for Your Online Business
When running an online business, ensuring that your operations are legally sound is crucial. In a recent podcast episode, I had the pleasure of speaking with Braden Drake from Not Your Average Law Firm. Braden's expertise in both legal and tax matters for creative small business clients makes him an invaluable resource for online entrepreneurs. In this blog post, we'll dive into the key takeaways from our discussion, focusing on essential legal protections that every online business owner should implement.
Understanding the Essential Layers of Legal Protection
Braden comparies legal protection to layers of clothing, emphasizing that the number of layers required depends on various factors such as business maturity, revenue, and risk level. He introduces the concept of "legal layers of protection," which include contracts, insurance, business entities, compliance, and trademarks. Each layer serves a specific purpose in safeguarding your business from potential legal issues.
The Importance of Contracts
Contracts are the cornerstone of any legally sound business. They serve as the first line of defense in resolving disputes and ensuring that all parties understand their obligations. Braden highlights the necessity of having well-drafted contracts in place, especially for online business owners who often engage in various agreements with clients, collaborators, and service providers.
"Contracts are your first line of defense in any legal issue, ensuring your terms are clear and enforceable," says Braden. He also stresses the importance of regularly reviewing and updating contracts to reflect changes in business practices and legal requirements. By maintaining robust contracts, you can prevent misunderstandings and protect your business interests.
Choosing the Right Insurance
Insurance is another critical layer of protection that can shield your business from unforeseen risks. Braden advises finding an insurance agent familiar with your specific business model to ensure adequate coverage. He mentions that typical insurance needs for online businesses include coverage for copyright infringement, breach of contract, and other liabilities.
"The main thing is just to find an insurance agent that's familiar with your business model," Braden explains. He also suggests seeking recommendations from peers or online communities to find reliable insurance providers. Having the right insurance in place can provide peace of mind and financial protection in the event of legal disputes or other issues.
Forming the Right Business Entity
Choosing the appropriate business entity is crucial for protecting your personal assets from business liabilities. Braden explains the differences between an LLC and an S Corp, noting that an LLC provides liability protection while an S Corp is a tax status that can be elected for additional tax benefits.
"Forming an LLC can protect your personal assets by separating them from your business liabilities," Braden notes. He recommends that business owners consider their specific needs and consult with legal and tax professionals to determine the best entity structure for their situation. By forming the right business entity, you can minimize personal risk and optimize your tax strategy.
Navigating Compliance Requirements
Compliance with legal regulations is essential to avoid penalties and ensure your business operates within the law. Braden discusses the importance of understanding and adhering to data privacy laws, independent contractor classifications, and other regulatory requirements.
"Compliance is just a lawyer way of saying don't break the law," Braden says. He emphasizes the need for business owners to stay informed about relevant laws and regulations, including the GDPR for European customers and similar laws in California. Regularly reviewing compliance requirements and making necessary adjustments can help you avoid legal trouble and maintain a reputable business.
The Value of Trademarks
Trademarks are vital for protecting your brand identity and preventing others from using your business name or logos. Braden highlights the benefits of conducting a trademark search before naming your business or products to ensure you are not infringing on existing trademarks.
"A registered trademark not only protects your brand but also adds significant value if you decide to sell your business," I shared during our discussion. Braden advises business owners to consider trademarking their brand names and significant products early on to avoid potential legal battles and preserve brand equity. Registering trademarks can also make your business more attractive to potential buyers.
Conclusion
Ensuring that your online business is legally protected is essential for long-term success. By implementing the layers of protection discussed in this blog post, including contracts, insurance, appropriate business entities, compliance, and trademarks, you can safeguard your business from legal issues and build a strong foundation for growth. As Braden Drake's insights demonstrate, taking these steps can provide peace of mind and help you navigate the complex legal landscape with confidence.
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Transcript:
And my special guest today is Braden Drake. Braden is with Not Your Average Law Firm, and I am super excited about our discussion today. I've been working with Braden to do some trademarks, and I've been in his contract club for many, many years. So whenever I need a contract or anything for my business that's legal related, I will go to his contract club and I can tell you every single time I've gone there, I have found exactly what I've needed. So, Braden, thank you so much
Dr. Destini Copp [00:01:04]:
for joining me. I worked with you just this last week to do several different trademarks in my business. And quite frankly, I think I waited too long, so I'm glad that I, you know, took the step to
Dr. Destini Copp [00:01:11]:
frankly, I think I waited too long, so I'm glad that I, you know, took the step to work with you on that. But before we get into all the questions I have for you, can you tell the good audience just a little bit more about you and how you help people?
Braden Drake [00:01:25]:
Sure. So hello, everyone. Super excited to be here. My name is Braden Drake, and I am a California licensed attorney. I also have a master's degree in tax law, and what that means is that we do both legal and tax work for our creative small business clients, through my law firm, which you already mentioned. And, yeah, that's that's pretty much the the broad scope of it.
Dr. Destini Copp [00:01:48]:
So, Graydon, I you know, and I just wanted to give you a little plug there because I do think that you have a ton of resources for online entrepreneurs, online business owners. And the folks who are, you know, listening in or tuning in today, a lot of them have, you know, courses in their businesses or memberships, and, obviously, they have an online business that they're they're marketing. And I want to wanted to bring you on just to kind of give us the lay of the land. There's a lot of places that we need legal type help in our business, and I know that you have what we call this legal layer of protection. So I want you to kinda walk us through, and I'm gonna ask you I have tons of questions for you, but kinda walk us through kinda your framework and how you work with online business owners like us.
Braden Drake [00:02:37]:
Sure. Well, we have a few different frameworks. So what we're talking about today, though, on this podcast is just really the legal aspect. So when we zoom into the legal part of the business and protecting ourselves, which is important because we don't wanna get sued, we don't wanna get in trouble from the state or the IRS or the federal government or any of these things. And we use this framework called the legal layers of protection. And I say they're like layers of clothing. Like, the number of layers you need is gonna be based on, like, where you are geographically, the time of year. Like, there's variables.
Braden Drake [00:03:10]:
And the same is true for your business. The number of legal layers you need is variable based on how long you've been in business, how much revenue you make, what you do, how high risk your business is. You get the picture. So we start there.
Dr. Destini Copp [00:03:23]:
Okay. So let's say that somebody is just starting their online business. Where do you suggest they start? What do they need initially in their business?
Braden Drake [00:03:32]:
Yeah. So the most important thing in my opinion are I call them the essential layers of protection, and those are the first 2. In my brain, I always picture this like a pyramid if you're familiar with Maslow's hierarchy of needs. So we have, like, the bottom two things, which are contracts usually and then insurance. So contracts are typically your first layer of defense because if you run into any legal issues, it's typically gonna be governed by your contract with whomever you're having that legal issue with. And then in insurance, always a great idea because if your in contract isn't valid or someone sues you for something outside of your contract or you have an issue where you're using and have a contract to begin with, then ideally, your insurance is gonna step in and defend you in that case. So if you have those two things, you're typically fairly well covered as a newbie, assuming you're not in a super high risk business or doing, like, really high dollar transactions.
Dr. Destini Copp [00:04:29]:
So let's talk a little bit more about that insurance because I just want to make sure I understand it. So what kind of insurance would you generally recommend for somebody who has, like, a course business or a membership or they're selling digital product?
Braden Drake [00:04:41]:
Well, the main thing is just to find an insurance agent that's familiar with your business model. I used to talk a lot about the types of insurance that were available out there. But then in working with my insurance agent, I learned that I was often describing those incorrectly. And the re the reason why is because the language that insurance, the insurance industry uses, a lot of the times, it's contradictory to what lawyers are taught. And that's not to say that we disagree on things. It's just that one word has one meaning in context and a different meaning in a different context, but we both tend to agree, like, what you need to be covered for. So the main thing is you wanna be cover make sure that you're covered for things like copyright infringement is one that we actually see a lot. I had a client who bought a business off someone in, like, 2015.
Braden Drake [00:05:27]:
And then just this past year, someone came after them for a demand letter for a stock photo that was taken off of Google, not through a stock photography company, and was on the website when she bought the company. So there's, like, weird stuff like that that pops up. And then, obviously, if you have clients that sue you for breach of contract saying that they didn't get what was delivered and they want refunds, like, you wanna make sure that all that kind of stuff is covered as well. So really think about anything that kinda could go wrong within your industry or business model, and that's what you wanna make sure you're covered for. And then your insurance agent should be able to match the policies to those concerns.
Dr. Destini Copp [00:06:06]:
And where do you recommend that we find an insurance agent that would understand the intricacies of online business, you know, this course business or this membership business? Because I'm not even sure that I'm aware of where to go for something like that.
Braden Drake [00:06:20]:
Yeah. I would say ask a friend. So I don't have a specific company recommendation. They're all a little bit different, but I always recommend, like, post in a Facebook group. I'm really active on threads now. Share on there and get some referrals from folks who have had good luck getting insurance. If people wanna send me a DM on Instagram at not not AVG, short for average, not AVG Law, I can always refer you to my insurance, agent. She's a broker, so she will be able to connect you with different companies based on what works best for you.
Dr. Destini Copp [00:06:54]:
Okay. So you talk about the contracts, and, you know, I guess the next question would be, from a business entity standpoint, what would you suggest that we need there?
Braden Drake [00:07:06]:
Okay. So you that's our 3rd that's our 3rd layer. So
Dr. Destini Copp [00:07:09]:
So I'm jumping ahead.
Braden Drake [00:07:10]:
A little a little bit. You gave the answer for us on our 3rd layer protection. And this is where it gets, like, a little bit dicey because 3, 4, and 5, they're all kinda they're all kinda equal in footing in terms of importance, especially number 5 because we we can't ignore that one, but we'll get there. The third one is your business entity. So if your contracts don't hold, your insurance doesn't cover you, then as the owner of your company, if you're a sole proprietorship, then your personal assets are on the line if you were to have a lawsuit. So if someone sued you for a $100,000 and you don't have a $100,000 in the bank and your insurance isn't gonna cover it, then you would might need to liquidate assets in order to satisfy that judgment or demand. Now the reality is this is very, very unlikely to happen. Lawsuits don't use I shouldn't say they're very, very unlikely, but lawsuits rarely get that far, especially in our industry destiny because most of our most of our programs are, like, a couple $1,000.
Braden Drake [00:08:10]:
So that tends to be, like, the highest limit of our legal risk. But still, it's something that we wanna protect ourselves from, and that's what an LLC can do. So when you form an LLC, it separates business. So then that way, if someone sues the business, they are only able to really get at the assets that the business owns and not the assets that you personally
Dr. Destini Copp [00:08:30]:
own. Okay. And I know that some people form an LLC, some people do an s corp. What are your recommendations there? Because I know you're into tax too, so I'm sure Oh,
Braden Drake [00:08:41]:
yeah. Yeah. So the main thing is people you you'll hear a lot about s corps online, especially if you follow me. I talk about them a lot. But an s corp is not actually a type of entity. It's just a tax status. So what you're doing is you are gonna form an LLC or a corporation, one of the 2, for liability protection, And then you can make a tax election to the IRS. So your tax election says, I want my entity to either be taxed as a sole prop, taxed as an s corp, or taxed as a c corp, and you can make that election on both LLCs and c corporations.
Braden Drake [00:09:18]:
So what we do is we form the LLC. By default, LLCs are taxed the same as sole prop, so nothing changes from a tax perspective when you form it unless you elect for it to get s corp tax status, and then that changes the taxation of the entity, which can make a lot of sense for some business owners.
Dr. Destini Copp [00:09:38]:
And you do this. Right? You help people like us Yeah. Go through and do all of that. So you you know exactly what you're talking about there. Alright. So take us to the next layer of legal protection.
Braden Drake [00:09:51]:
Okay. So I'm gonna swap 45 from what I normally do because I did say that they're kind of interchangeable because I think they're gonna have more questions about number 5. So we'll get 4 out of the way. And 4 is just I just call it compliance, which is just, you know, a lawyer way of saying don't break the law because obviously, you're not very legally protected if, like, not complying with the law. So we have to hit our compliance needs. So these are things like data privacy, having a privacy policy on your website if you sell in Europe, which pretty much everyone does because websites are accessible worldwide. You need to know about the GDPR rules. We have similar laws here in California.
Braden Drake [00:10:30]:
They're starting to crack down when it comes to, like, income claims and other things. We also have independent contractor classifications, so misclassifying employees as contractors is a really big issue. So it's staying on top of those things and making sure that you're not breaking any of the rules and the laws. I could also add here complying with company policies. Like, if you use Stripe complying with their policies, but that's not really law. That's really just well, it kind of is, but that's contract law between you and the company. So you're not gonna get into, like, legal trouble with the federal government if you break those, but you might lose your ability to use that platform.
Dr. Destini Copp [00:11:07]:
So I'm I just just wanna delve into one thing that you just said, and it was related to the income claims. And I've been teaching this summary as a university professor, and that's one of the things that we've been kinda delving into what what's changing there with the FTC. And I wanna bring this up because I know all of us as, you know, online courses, membership owners, we have these testimonials on our website.
Braden Drake [00:11:38]:
Yeah. So Yeah. So full disclosure for you and your audience, this is not something that I have very much knowledge on. As you can see in our firm, we cover a lot of air a lot of areas. So I've let our associate attorney kinda wear their primary hat when it comes to keeping But just to give you kind of, like, a general, like, a general principle is your income claims shouldn't be deceiving. Like, they need to be true. Like, they have to be true. They can't be deceiving.
Braden Drake [00:12:14]:
And then when it comes to testimonials, one thing that I've heard about, and I'm not sure exactly to what degree this is enforced, but they're starting to look negatively upon you. I call them using testimonials only from your a plus students. Mhmm. So if you sell it let's say, like I don't know. Let's say you're a realtor and you create a course that's how to make $300,000 a year as a realtor. And you have had a 100 students and 3 of them, like, hit that, if you're only using their 3 testimonials and then you're making all these income claims, like, ours if you say something like our students have made, like, make $3,000 that makes it sound sound like all of them do. So be careful with that. One thing I have seen something I've seen that someone's done really well is, as you know, I follow Amy Porterfield.
Braden Drake [00:13:09]:
I've taken all of her programs. I've been in, like, inside of her Facebook groups. And she does a lot of testimonials from people who have made multi six figure courses down to people who've had success in terms of, like, a 1 to $2,000 first launch, which I think is a really good variety, and it shows people, like, how to set reasonable expectations. So that's kind of the gist. I've also, seen and read that it's good to have disclaimers for your testimonials that say that this may not be, like, the average use case. So that's a good starting point, I think.
Dr. Destini Copp [00:13:42]:
Yeah. And I think all of those are good good points. And some of the research that we've been doing in the summer and the classes that we've been kinda reviewing, what's changing is, you know, really at some point in the future, we might, as business owners, might be required to verify those results. So if some one of our students says, well, I made, you know, $50,000 by following your framework or whatever. We couldn't use that until we actually were able to verify by, you know, going and seeing the income statements and all the details there that that we
Braden Drake [00:14:16]:
Oh, that sounds like
Dr. Destini Copp [00:14:16]:
a use that.
Braden Drake [00:14:17]:
Sounds like a huge pain in the ass, doesn't it? Right.
Dr. Destini Copp [00:14:20]:
It does. I'm like, well, would I even go through the, you know, go through the process to do that? Would it would it even be worth it using that testimonials? But I don't think the FTC is there yet, but it seems like based on some of the research, we might be getting there in the future in
Braden Drake [00:14:37]:
the I would hope, like, we have a testimonial release agreement template in our contract club, and I would I would think if we just added a paragraph that says that, like, they agree that any income claims they've made are true and accurate, and we have them sign that that that would be sufficient. But, you know Yeah. You you never know.
Dr. Destini Copp [00:14:55]:
The world is changing, so we don't know. But, anyway so what's the next layer of protection there? Primarily,
Braden Drake [00:15:01]:
trademark. And, really, it just comes down to, a, but primarily trademark. And really, it just comes down to, a, making sure that you're not infringing on anyone else's trademarks or IP, and then, b, making sure that you are protecting your own and enforcing it so that other people aren't watering down your own brand and using your trademark.
Dr. Destini Copp [00:15:29]:
So when would you suggest that we, as business owners, either work on trademarking a brand name or maybe the names of one of our programs or courses or memberships?
Braden Drake [00:15:40]:
Yeah. So I okay. First of all, it's always good to do a search as soon as you name something because the sir even if you're not going to file the trademark, the search tells you that you're not infringing on someone else's trademark. So that's important. Right? Then then the second part is when do we actually file to register our trademark to actually get it registered with the US? And for that answer, I usually say whenever whenever you would tell yourself it's worth me not having to potentially have to change this name in the future. So if you're gonna name something and put the time and energy into doing the design for it, marketing it, creating it, and then someone came to you a year later and told you, oh, you have to change that, then I would ask myself, would it have been worth the 1 to $2,000 it would have cost me to get my trademark on that to prevent me from having to, like, redo all of this and lose all of the like, the brand equity is. That's really, really hard to value, but we changed the name of the contract club over a I think it was over a year ago. It used to be the contract vault, and I still have people googling contract vault all the time.
Braden Drake [00:16:50]:
So think about, like, how many potential loss sales you can have once you do a brand change.
Dr. Destini Copp [00:16:55]:
Yeah. I think that's a good point. And quite frankly, I feel like I waited longer than what I should have. And just so everybody knows who's listening here, last week, Braden helped me file 3 different trademarks. We did one for HobbyScool We went did one for HelloContent, And we also did one for the podcast, which also have some courses under, which is Creator's MBA. And I probably should have done all 3 of those quite frankly a lot sooner than what I did. And I feel like I did this.
Dr. Destini Copp [00:17:24]:
Yeah.
Braden Drake [00:17:24]:
I'm a say how painless was that? We did it, what, like, on 1, 2 hour? It was, like, 2 hour call?
Dr. Destini Copp [00:17:29]:
We did. We filed them all in one of your VIP days, and we knocked them out, did all 3. And quite frankly, I feel like I need to go back and do some more for some of my flagship courses that I've been selling since since 2018. So I feel like I still have some more work to do there. I feel like I've waited too long on all of them. But I agree with you. Extremely painless, but I think it's gonna, you know, save me a lot of heartache, you know, years down the road. Because I do feel like those brand names are gonna be out there for, you know, ever.
Dr. Destini Copp [00:17:59]:
I'm not gonna be changing them to your point of when we should consider kind of do going through that process.
Braden Drake [00:18:05]:
Yeah. It also it also makes your brand a lot more valuable. If you ever go to sell your company or even just, like, a program, then having those trademarks makes your your brand a lot more valuable as well. So there's, like, lots of lots of positive reasons to make sure you're marked for sure.
Dr. Destini Copp [00:18:20]:
Yeah. And that's one of the reasons why I kinda started going down that process is, eventually, I wanna sell hobby school. We're not there yet, and I have a lot more work to do on it. So I was like, you know what? If I'm gonna sell it, I've gotta trademark it. Because to your point, it does make it a lot more valuable in the industry.
Braden Drake [00:18:38]:
So Could you I was like, could you imagine? I always think put yourselves in the shoes of the potential buyer. Could you imagine going to buy a company and the company being like, well, we've been using the name and we haven't really had any issues, but it's not it's not trademarked. And then you're like, okay.
Dr. Destini Copp [00:18:53]:
Well, I don't think they would buy it. I mean, I wouldn't. Know, because the the risk is you might have to stop using it, and you build up that brand equity and over those years. So I agree with you. Any last minute tips for the audience? And I think we went through every layer. Right?
Braden Drake [00:19:09]:
Yeah. Yeah. We went through all of them. My no. No. I think we covered all the main things. So if anyone has any questions, though, they feel free to ask, and we have lots and lots of lots of resources.
Dr. Destini Copp [00:19:22]:
So, Braden, before we wrap it up here, can you tell them where they can find you?
Braden Drake [00:19:27]:
Sure. I forgot to can we swear on your podcast?
Dr. Destini Copp [00:19:30]:
We might have little kids listening. So
Braden Drake [00:19:32]:
Okay. Okay. Well, my podcast has a potty word in it. It's un and then, like, f. You can kinda fill in the blank from there. There's an asterisk for that val in there. Your biz with Braden. I'm sure Destiny will put that in the show notes, but you all can search it and find it.
Braden Drake [00:19:50]:
And then my website is not AVG Law. So you can go check out all of our resources there. And then not AVG Law is most of our social handles, the ones that are, ran by the company. And then my own social handle is bradenadamdrake on Instagram.
Dr. Destini Copp [00:20:06]:
And I'm gonna make sure that all of those links are in the show notes, and I definitely want you guys to check out his contract club. I use it, honestly, Braden. I probably use it almost monthly because I'm constantly looking for contracts because we're entering contracts with a lot of different things that we're doing in all three of our brands. So thank you for putting that together. I think it's a great resource for online entrepreneurs like us.
Braden Drake [00:20:29]:
Love it. Thank you. Thanks for having me.