Tuesday, April 15, 2014

Copyrights, LLC, Inc. and Trademarks….What should I know?

Every artist, manager, business owner, etc., needs to know the ins and outs of protecting your name, company, slogan, etc. What better way to learn what to do and what is needed than speaking with an entertainment attorney! I had the pleasure of speaking with Lee Morin, who is an entertainment attorney that I had the pleasure of meeting a while back during a brunch with NARIP.

Ms. Morin took a moment to speak with me regarding the legalities of copyrighting, trademarking, and LLC or Inc. a company! I hope you enjoy.

If you could, please give a brief intro about who you are, how long you've been practicing and what your specialty is pertaining to law!

Greetings, my name is Lee Morin, and I am an entertainment attorney, licensed to practice in Georgia. I own my own firm, Morin Entertainment Law, L.L.C., which just celebrated its one-year anniversary.  I specialize in matters related to business, contracts, and intellectual property for a variety of small businesses in the entertainment industry, in such areas as music, film, television, fashion, fine art, book publishing, and computer and video games.

1. Would you recommend an up and coming artist or group that wants to brand their name to become an LLC or Inc? What are the reasons behind your choice?

Branding is an area related to trademarks.  The theory behind trademarks is as a source indicator, to indicate the source of goods or services supplied by the company.  Over time, the quality of a company's goods or services will or will not build good will, which is like a good or bad reputation with the public that purchases its goods or services.  The mark is important because it tells consumers that they can rely upon the quality or lack thereof of goods or services provided. 

In addition to acting as a source indicator, the trademark once registered provides a privilege to exclude others from using the same or similar mark, so long as the registrant uses the mark in commerce.  Commerce is any type of business regulated by Congress, typically interstate (as opposed to intrastate), or business with foreign entities.  In the music business, a trademark is useful to indicate the identity of the group or artist, which identity builds a reputation over time.  In addition, a mark once registered can provide the artist or group with a means to exclude other groups or artists from using the same or similar mark.

The decision to become a limited liability company (L.L.C.) or a corporation (Inc.) is a complex one.  Each situation must be considered individually.  Generally, an L.L.C. is more flexible and does not have as strict requirements as a corporation.  People typically base a decision whether to file an L.L.C. or corporation on issues of ownership and taxation.  For example, an L.L.C. is taxed like a sole proprietorship, whereas most corporations are double-taxed.

2. Should a group or artist Trademark their name? Why or why not?

It is critical to consider registering for a federal trademark when starting out as a group or artist.  Applying for a trademark on the principal register provides the applicant with a few things.  First, it provides the applicant with notice of what other marks are currently in use and/or are registered.  Depending on the results of a trademark clearance search, the artist or group may wish to reconsider their name.  Reconsidering a name is easier at the outset, before good will or a reputation is built, than half way through a career, when changing the name also means potentially losing name recognition that is so vital to artists now.  Second, applying for a federal trademark serves to impress upon the group or artist the seriousness of the business venture.  When the cost for application starts at $325 per international class, an applicant cannot afford to not take the application process seriously.  Finally, applying for a federal trademark demonstrates to the outside world that the artist or group is serious about taking control of their legal and business ventures as music professionals.

 3. Is it expensive to become an LLC or Inc. in the State of Georgia? How much should one budget?

That depends.  The cost to register an L.L.C. is generally lower because there is generally less paperwork because of less strict requirements than a corporation.  The administrative cost is $100 to file for an Articles of Organization for an L.L.C., and $190 to file for an Articles of Incorporation for a corporation, which includes the $40 fee for Notice of Publication and $50 fee for filing an Annual Registration within 3 months of receiving the Articles of Incorporation.

The professional fees can vary greatly for forming an L.L.C. to a corporation, depending on the paperwork.  Again, because of less strict requirements, generally an L.L.C. will mostly need an Operating Agreement, which is typically presented when opening a business checking account, for example.  In contrast, a corporation will generally require several corporate documents, including organizational minutes, bylaws, and stockholder agreements, for example.

4. Is it expensive to register a Trademark in the State of Georgia? How much should one budget?

The administrative cost to register a trademark in Georgia is $15.  This does not include professional fees for clearing, preparing, filing, and monitoring the application's progress, which can vary depending on practitioner.  Keep in mind that state registration only offers protection for intrastate commerce, that is, business conducted within state lines.  It does not offer protection for business done over state lines or internationally, and the Internet.

5. What can an artist or artist manager copyright? Ex: Can a name, song, or agreement be copyrighted?

Generally, an original work of authorship fixed in a tangible medium is copyrighted under common law.  Essentially, expressions of ideas or organizations of facts (except chronological organization, which is a fact) are copyrightable.  Ideas or facts are not copyrightable.  To file for federal copyright registration provides certain benefits one does not have under the common law.  Subject matter that qualifies for federal copyright is listed in Section 102 of Title 17 United States Code, which includes literary works; musical works, including any accompanying words; dramatic works, including any accompanying music; pantomimes and choreographic works; pictorial, graphic, and sculptural works; motion pictures and other audiovisual works; sound recordings; and architectural works.
6. Would you advise someone to use companies such as Legal Zoom to obtain an LLC, Inc, or Trademark? What steps should they take instead?

Certainly not. Here an old adage is appropriate to illustrate why not: an ounce of prevention is worth a pound of cure.  Most small business owners that I know have invested their livelihoods into their enterprises.  They would not entrust just anyone with the security and stability of their fortune.  Trusting boilerplate contracts with no trained legal professional assistance is akin to trusting anyone with your future.  It is unreliable and inadvisable.  It may seem okay at the start, but if the work is ever challenged, then chances are it will also cost more to resolve an error that could have been prevented with solid legal advice at the outset.

7. Should everyone seek legal advice or have an attorney compose documents for the LLC, Inc., or Trademark? Can it be done on your own?

For the reasons stated above in question 6, I heartily recommend engaging a trained legal professional, and preferably, a licensed attorney in good standing at the relevant State Bar association, to attend to your legal queries concerning establishing a business and applying for federal or state trademark. 
8. What is an operational agreement and is it needed for any of these entities?

The Operating Agreement is an agreement among Members of an L.L.C. that sets out company information, financial and managerial rights and duties of its Members.  For example, some Members also serve as Managers, while not all Managers are Members.  In a single-member L.L.C. the Member will also serve as the Manager.  In addition, the Operating Agreement discusses procedures for example, should the company dissolve.  For L.L.C.s with more than one Member, the Operating Agreement is essential because in addition to the above, it also spells out ownership or distribution percentages, allocations of profits and loss, meeting and voting, and restrictions governing transfer of membership interests, for example.

9. What advice would you give an up and coming artist that wants to brand their name and protect it? Where should they start?

They can start by just Googling the name they want to use.  Visit industry-related web services, such as Bandcamp, Reverbnation, MySpace Music, SoundCloud, Spotify, or Pandora, and search in the search bar for the name you wish to use.  See if there is already an artist or group with that name.  If you feel lucky and have not found the name you wish to use, seek counsel from a licensed legal professional and pay for a trademark clearance search of that name.  Chances are you will feel more confident in applying for federal trademark protection once you have appreciated the risks and costs associated with the process.

10. Are your services available to up and coming artists? If so, where can they reach you at and is there a starting amount that should be budgeted for your services?

Yes.  They may reach me by sending me an email at lee@morinentlaw.com.  I typically suggest they budget around $1,000 to begin the application process.  Of course, that amount may vary greatly depending on the number of international classes they wish to register, and the complexity of the search.  I know that seeking legal advice is a big step for artists or groups, so I welcome anyone to the table first for a free consultation.

*** Warning: the above post reflects the opinion of the author using general legal principles. The contents shall not be considered legal advice or the formation of attorney and client relationship. The reader is highly encouraged to seek the advice of a legal professional in his/her own area for advice on specific facts.

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