Latest / Skin Anarchy / Understanding MoCRA and Legal 101 for Beauty Brands with Antonella Colella

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Understanding MoCRA and Legal 101 for Beauty Brands with Antonella Colella · Skin Anarchy

• 0:01
  SPEAKER_01: Hey guys, welcome back to Future Anarchy.
• 0:04
  SPEAKER_01: This is your host, Ekta, and I'm really, really excited today because we're gonna go into an area which I feel like never gets talked about.
• 0:11
  SPEAKER_01: The law and the legal system around the beauty industry and everything that we see, whether it's small brands or understanding the legal aspects of the industry.
• 0:19
  SPEAKER_01: Like we never really hear about it, I feel like, in like social media, at least I don't, you know, from what I follow on LinkedIn.
• 0:26
  SPEAKER_01: So I'm very excited about our guest today.
• 0:28
  SPEAKER_01: She's a distinguished legal professional and lawyer, and she's the founder and managing attorney of Kalella Legal Studio.
• 0:35
  SPEAKER_01: So without further ado, I want to introduce you guys to Antonella.
• 0:38
  SPEAKER_01: Welcome to the show, Antonella.
• 0:39
  SPEAKER_01: I'm so excited to host you.
• 0:40
  SPEAKER_01: Thank you.
• 0:41
  SPEAKER_01: I'm excited to be here.
• 0:42
  SPEAKER_01: Yeah, no, I'm excited to really kind of pick your brain today and understand how law fits into beauty and what we should understand, especially from the perspective of small businesses, because there's so many people that tune in that are either entrepreneurs or they have their own skincare line.
• 0:58
  SPEAKER_01: And there's just nothing out there.
• 1:00
  SPEAKER_01: So before we dive in, I was wondering if you could tell us a little bit about your law background and your own background.
• 1:05
  SPEAKER_01: You know, what got you into beauty and especially from the legal angle?
• 1:08
  SPEAKER_01: What interested you?
• 1:09
  SPEAKER_00: Yeah, absolutely.
• 1:10
  SPEAKER_00: I get that question all the time.
• 1:11
  SPEAKER_00: So yeah, I've been an attorney for 15 years and was always really doing business law and doing transactional work.
• 1:19
  SPEAKER_00: And I worked at law firms, I worked for companies in their in-house legal department.
• 1:24
  SPEAKER_00: One of the last jobs I had, which was at a law firm, I had my first beauty client.
• 1:29
  SPEAKER_00: And that was probably now like seven or eight years ago.
• 1:32
  SPEAKER_00: And so they, it was a team of, it was like two best friends that were starting a skincare brand.
• 1:37
  SPEAKER_00: And I loved working with them.
• 1:39
  SPEAKER_00: And we did everything from the beginning stages of like forming the company, getting their contracts together, like reviewing the manufacturing agreement that they got, getting their trademark.
• 1:49
  SPEAKER_00: And like I just like, it was so interesting.
• 1:51
  SPEAKER_00: Like I just loved working with law can be very boring.
• 1:55
  SPEAKER_00: So when you are working with clients that you like and in an industry that you're interested in, it makes a big difference.
• 2:00
  SPEAKER_00: And so when I went out on my own, I started my own firm in 2021.
• 2:05
  SPEAKER_00: And I said, I want to work, you know, with more of these clients.
• 2:08
  SPEAKER_00: I want to work with clients that I enjoy.
• 2:10
  SPEAKER_00: And so I just was always putting myself in places where I could meet this type of clients.
• 2:14
  SPEAKER_00: And I got together with a beauty consultant and I worked a lot with a lot of her clients.
• 2:19
  SPEAKER_00: And then it just kind of snowballed from there.
• 2:21
  SPEAKER_00: And people were like, wow, like I never met an attorney that focused on beauty.
• 2:25
  SPEAKER_00: And this is so great that you understand this industry.
• 2:28
  SPEAKER_00: And I have an attorney and they don't understand what I do.
• 2:31
  SPEAKER_00: And so it's been awesome.
• 2:33
  SPEAKER_00: I think, like you said, it's very underserved when it comes to legal.
• 2:38
  SPEAKER_00: Like I feel like, especially small businesses, they just really don't know to make it a priority because they're just like a lot of them are creatives and they're just not thinking about it.
• 2:48
  SPEAKER_00: And the other thing is that with lawyers that do do beauty, they're at huge firms.
• 2:54
  SPEAKER_00: Like they're doing the regulatory work, which is so important, obviously, but there's a lot of these smaller brands that they're not getting served.
• 3:02
  SPEAKER_00: And so I'm happy to be that link, you know, to No, I love it.
• 3:06
  SPEAKER_01: I love that you are coming at it with this angle because I kid you not, when we first started chatting, I was just so excited that you're here doing this because I'm not gonna lie to you, even like from the podcast world, like I didn't really know where to start.
• 3:19
  SPEAKER_01: And then coming into the beauty industry, and yeah, I mean, all the brands that are huge, like they have their stuff together legally, but like a lot of the smaller brands, it's like, where do you begin?
• 3:28
  SPEAKER_01: You know, and what are things that you need to know?
• 3:30
  SPEAKER_01: Like, these were always questions that I feel like I had, but then also I'd hear it from founders too, that it's like a kind of a hard mate to navigate.
• 3:39
  SPEAKER_01: So it's a very, you're right, so underserved.
• 3:41
  SPEAKER_01: And I think that's one of my first questions is what are the basics?
• 3:44
  SPEAKER_01: If a small brand founder were to come to you and say, I don't even know where to start, what would you tell them would be the basics of starting a small business and from that legal standpoint?
• 3:53
  SPEAKER_00: Yeah, so a lot of my clients are like this, like they're pre-launch or they're just starting.
• 3:59
  SPEAKER_00: And so, you know, we talk about the type of entity that they should be.
• 4:02
  SPEAKER_00: So should they be an LLC, should they be a corporation?
• 4:05
  SPEAKER_00: And that's really gonna depend on circumstances and like do you have investors and kind of what's going on behind the scenes.
• 4:13
  SPEAKER_00: I mean, most of the time I'm forming LLCs for clients because LLCs, they're easier to start up, they're easier to administer, corporations are more, they have more formalities that you have to follow.
• 4:26
  SPEAKER_00: And so LLCs are, you know, have like the same protection and it's just an easier mechanism.
• 4:31
  SPEAKER_00: And so, you know, the reason why you do that is that forming that entity is going to separate you personally from the business.
• 4:39
  SPEAKER_00: And so if you are starting up and like you're entering into contracts with anybody, any vendor or a manufacturer, like you need that separation.
• 4:47
  SPEAKER_00: You need to enter that contract as a business, not as yourself personally.
• 4:51
  SPEAKER_00: So that's the first thing.
• 4:53
  SPEAKER_00: And then, of course, when you're thinking of your LLC name or your business name, you need to find out if that name is available with anybody else using that name.
• 5:03
  SPEAKER_00: So that's why I feel like trademark goes hand in hand like with the beginning startup stages, because you do not want to form a brand, spend money marketing, spend money on all of this startup stuff, and then realize, oh, my name is not available or somebody else has, or like worst of all, you're infringing on somebody else's name, and then you get a cease and desist letter, and it's it's just not you that's not ideal.
• 5:27
  SPEAKER_00: You do not pretty.
• 5:28
  SPEAKER_01: Yeah, yeah, it's just not pretty.
• 5:30
  SPEAKER_01: No, I think I heard about that.
• 5:31
  SPEAKER_01: Like it was a big celebrity brand.
• 5:33
  SPEAKER_01: I'm not gonna name it, but you know, like they had issues with the name or something.
• 5:36
  SPEAKER_01: Like, and I was like, I couldn't imagine.
• 5:38
  SPEAKER_01: Yeah, like I just couldn't imagine going through that.
• 5:40
  SPEAKER_01: Like, I feel like that would be the most annoying and like heart-wrenching thing.
• 5:44
  SPEAKER_01: Like you have a business and then you're going already, and then you're like, oh my god, somebody else has my name.
• 5:49
  SPEAKER_00: Yeah, like it's really like the saddest thing when I have to tell someone, you know, because sometimes brands that have been around for a while, they never got around to doing their trademark, and then they contact me and say, Okay, I want to do my trademark now.
• 5:59
  SPEAKER_00: And I have to say, like, look, like you can't, it's not gonna get registered, it's never gonna get through, or you know, somebody else already did it first.
• 6:06
  SPEAKER_00: And so that's really gut-wrenching for a founder because you just poured your heart and soul into a brand.
• 6:12
  SPEAKER_01: Exactly.
• 6:13
  SPEAKER_01: No, I completely agree.
• 6:14
  SPEAKER_01: And also, like, I just want to ask you because I think it's important to clarify, you know, for just anyone that's referencing this episode for guidelines, like, when should we bring in someone like yourself or you, if anyone listening needs legal advice, when do we bring in a legal expert?
• 6:28
  SPEAKER_01: And is it like before the company start?
• 6:30
  SPEAKER_01: When should we do that?
• 6:30
  SPEAKER_00: Yeah, you want that foundation to be done correctly.
• 6:34
  SPEAKER_00: So, yes, when you're starting to think about building this brand and like building a company, talk to somebody in the beginning because, like, if you do it correctly, then you don't need to fix as much later on.
• 6:44
  SPEAKER_00: Just like have a consultation with an attorney.
• 6:47
  SPEAKER_00: The trademark thing is something that people DIY trademarks, but the reason why you want to work with somebody or an expert is for the strategy portion of it.
• 6:57
  SPEAKER_00: And that's like, you know, we can get into that later, but there's a lot that goes into filing the application and like thinking about your branding and which trademark should you do first and which is not worth doing.
• 7:09
  SPEAKER_00: So people just tend to kind of like, I understand that you want to do it yourself in the beginning because you're trying to save money, but just think about it on the other side of, you know, why don't I just do it correctly now and then I'm set, you know, I don't have to think about it later.
• 7:23
  SPEAKER_00: I mean, that's really like the best place to be in.
• 7:25
  SPEAKER_01: Exactly.
• 7:25
  SPEAKER_01: No, that makes sense.
• 7:26
  SPEAKER_01: I've had this conversation before about like we always want to do things like in the most professional way.
• 7:32
  SPEAKER_01: If there's a professional that knows what they're doing, you know, especially with like law or like medicine or anything, go to them.
• 7:38
  SPEAKER_01: Don't kind of take it in your own hands.
• 7:39
  SPEAKER_01: Like, I completely know what you mean though when you say like people do the DIY approach, you know, because it is cheaper.
• 7:44
  SPEAKER_01: But then I know like when we were getting our trademark, just you know, I don't know if anyone can relate to this, but we had to like this whole phase of like, well, yeah, okay, it went through the first part of it, but then you have to get another lawyer to like file for if it gets stuck at any phase, you know.
• 8:00
  SPEAKER_01: So it's like you're gonna pay either way, you're gonna end up paying for a lawyer no matter what.
• 8:04
  SPEAKER_00: I feel like yeah, I feel like I fix a lot of DIY uh registrations or answer office actions.
• 8:10
  SPEAKER_00: And so, yeah.
• 8:11
  SPEAKER_00: I mean, and then the other thing is like if you're a business owner, like now that you have a brand, you're a business owner, it's a business.
• 8:17
  SPEAKER_00: Like you wanna use professionals, you wanna think about the future.
• 8:20
  SPEAKER_00: And trademarks and IP are an asset of the business.
• 8:24
  SPEAKER_00: They have a value if you ever want to bring on investors, if you ever want to sell your company later on, they're gonna put a valuation on those marks.
• 8:31
  SPEAKER_00: And if you don't have those, then your company is gonna be valued lower.
• 8:35
  SPEAKER_01: Yeah, no, that's that's huge, actually.
• 8:37
  SPEAKER_01: I'm glad you mentioned that.
• 8:38
  SPEAKER_01: That it does matter, you know, later on down the line, especially because in the beauty industry, I feel like getting investors, doing that seed stage, like all that stuff gets talked about so much in this industry where it's like you have to raise funds.
• 8:50
  SPEAKER_01: You know, beauty is expensive, especially as a new entrepreneur.
• 8:54
  SPEAKER_01: Like it's a really expensive business, not only as a consumer, but as a business to start.
• 8:58
  SPEAKER_01: So I don't know, it makes sense to me.
• 9:00
  SPEAKER_01: But I want to ask you though, what is the 101 to filing a trademark?
• 9:03
  SPEAKER_01: Like, where do we start if that is something we want to do?
• 9:06
  SPEAKER_00: So, not every mark can be trademarked.
• 9:10
  SPEAKER_00: So you want something that's unique, that's arbitrary, that's not generic, that's not descriptive.
• 9:16
  SPEAKER_00: You know, those are kind of the rules when it comes to trademark.
• 9:19
  SPEAKER_00: And sometimes people don't know that.
• 9:20
  SPEAKER_00: And then the other thing is how many marks do you have?
• 9:23
  SPEAKER_00: Like maybe you really do have three or four marks, you don't know that they're marks, and maybe you need to prioritize, okay, like what should I do first?
• 9:32
  SPEAKER_00: And so you want to understand what you have.
• 9:34
  SPEAKER_00: And then, you know, the process is long, like it's taking even longer now.
• 9:39
  SPEAKER_00: So it takes about over a year.
• 9:40
  SPEAKER_00: It's like a 12 to 13 months, sometimes more.
• 9:43
  SPEAKER_00: And that's if everything goes smoothly.
• 9:45
  SPEAKER_00: Like that's if you don't get any kind of office actions or refusals.
• 9:49
  SPEAKER_00: And so the other thing to know, kind of basic, and I get this a lot.
• 9:54
  SPEAKER_00: Like people will come to me and they'll say, I already know that this name is available because I looked on Google or I looked on, you know, so there's no social media handles, or I have the domain name.
• 10:03
  SPEAKER_00: And that's not the standard at the US Patent and Trademark Office.
• 10:07
  SPEAKER_00: Like they don't care about that.
• 10:08
  SPEAKER_00: What they care about is is this mark confusingly similar to another mark that's in the registry already?
• 10:14
  SPEAKER_00: Like, is this going to cause confusion in the marketplace?
• 10:17
  SPEAKER_00: So it doesn't matter that there's not something exactly like yours.
• 10:21
  SPEAKER_00: If something could be construed to be similar or confusing, then that's gonna get a refusal from the trademark office.
• 10:29
  SPEAKER_00: So we do a search, we do a comprehensive clearance search, and you know, all attorneys do that, and that's really searching the database, it's searching social media handles, business names throughout the country to find out what else is out there that could be confusingly similar.
• 10:45
  SPEAKER_00: And then it's like a wide net that brings back all these marks, and then we go through them and we tell you, okay, this is what we found.
• 10:52
  SPEAKER_00: These marks could be a problem for you, and you know, this is your probability of registration.
• 10:57
  SPEAKER_00: And that alone is gonna help you because you know, if you don't do that, if you don't have that, you're just kind of like going blindly and applying and saying, okay, like let's see what happens.
• 11:05
  SPEAKER_00: You need that search because it might already be something so similar that you're gonna waste your money applying and you might as well think of something else.
• 11:13
  SPEAKER_01: Exactly.
• 11:14
  SPEAKER_01: No, that makes total sense.
• 11:15
  SPEAKER_01: And I think it's just not stuff that comes to mind for people when you have a business idea, you're really excited and you want to get it going, and you want to get it off the ground.
• 11:24
  SPEAKER_01: But it's like with trademarks and especially with things like logos, if you're especially in the skincare industry, the beauty industry, like we are so tied up with like the aesthetics of a brand, too, that it's like if you're gonna have a logo and you're gonna have a look to you, like you need to register all of that, right?
• 11:39
  SPEAKER_01: Like the coloring and everything, like that needs to be part of what you file, from my understanding.
• 11:44
  SPEAKER_01: I don't know if yeah, yeah.
• 11:46
  SPEAKER_00: So I mean, it can depend.
• 11:48
  SPEAKER_00: Like, I usually tell clients to do your name first, like apply for the name, like the brand, and then the logo I would say is secondary, depending on whether you can get the name or not, because I find that logos tend to change over time, like they'll change slightly.
• 12:04
  SPEAKER_00: So that's why I always say just do the business name.
• 12:06
  SPEAKER_00: But yeah, of course.
• 12:07
  SPEAKER_00: I mean, if you have a logo that is, you know, your logo and it's professionally designed and that's part of your branding, then absolutely, you know, you want to do that.
• 12:15
  SPEAKER_00: The good thing is if you do a word mark, like your name, it's protected in any color, style, or font.
• 12:23
  SPEAKER_00: So at least you get that protection, it doesn't matter the color.
• 12:26
  SPEAKER_01: That's pretty cool.
• 12:27
  SPEAKER_01: That's good to know.
• 12:28
  SPEAKER_01: And I think the name thing definitely it's news, I think, to a lot of people because I always hear, but that's why I brought up logos, because I always hear, like, get your logo trademarked.
• 12:36
  SPEAKER_01: You know what I mean?
• 12:37
  SPEAKER_01: So, like, but we never think about the name part where it's like, no, you have to secure your the actual name of your business, and that's actually huge, especially with like skincare brands.
• 12:45
  SPEAKER_01: There's so many that I feel like they sound very similar.
• 12:48
  SPEAKER_01: So it's like you don't want to be stepping on toes.
• 12:51
  SPEAKER_01: So my next question really, I think it's more about like monitoring.
• 12:55
  SPEAKER_01: It's like, you know, if once you have registered the trademark, is that it?
• 12:59
  SPEAKER_01: Is there anything else you have to do at that point beyond just like filing for it?
• 13:03
  SPEAKER_01: Or how does that work?
• 13:04
  SPEAKER_00: Yeah, I mean, like, so hopefully it will get through without issue.
• 13:07
  SPEAKER_00: There's things called office actions, which are refusals.
• 13:10
  SPEAKER_00: Sometimes they're easy to correct, sometimes you need like a written brief with arguments to try to convince the examiner otherwise.
• 13:16
  SPEAKER_00: But if everything goes through, then trademarks last forever as long as you do the renewals.
• 13:23
  SPEAKER_00: So there is a first renewal after you're five and six, and then every 10 years you have to file a renewal just to show that you're still using the brand.
• 13:32
  SPEAKER_00: And then after you're registered, I really recommend having some kind of a monitoring process in place, even if it's just yourself, like just putting out like Google alerts or you know, or having somebody do a like more formal monitoring.
• 13:46
  SPEAKER_00: And the reason is like you have this registration now, like you want to enforce it.
• 13:49
  SPEAKER_00: That's the reason why you got this registration.
• 13:51
  SPEAKER_00: You have the certificate, you can stop other people from using your mark.
• 13:54
  SPEAKER_00: So you want to be aware of what's going on in the marketplace.
• 13:58
  SPEAKER_00: Like, are there other brands that are using names similar to mine?
• 14:02
  SPEAKER_00: And then you want to be able to stop it.
• 14:03
  SPEAKER_00: Like you can send them a cease and desist letter, show them your registration certificate.
• 14:07
  SPEAKER_00: Because if you don't do that, what can happen is the mark can get diluted because a potential infringer or somebody that is using is similar, they can say, Well, you're not really policing this mark, and there's so many other marks out there that are similar, and you haven't done anything about it.
• 14:27
  SPEAKER_00: So there's no reason why I shouldn't get registered because like this mark is getting diluted.
• 14:31
  SPEAKER_00: There's just so many out there.
• 14:33
  SPEAKER_00: So that's the point of monitoring.
• 14:34
  SPEAKER_00: Like, that's why you want to do that.
• 14:35
  SPEAKER_00: You want to be able to enforce.
• 14:37
  SPEAKER_01: This is totally a like a side question, but because I've heard stories, right?
• 14:40
  SPEAKER_01: Of like people sue people for like, no, like I deserve to have this mark or like whatever, and you haven't used this, you know what I mean?
• 14:47
  SPEAKER_01: There's like people who sit on literal like trademarks, like they'll sit on it.
• 14:50
  SPEAKER_01: So, like, does that play a role in the legal system?
• 14:53
  SPEAKER_01: Like, if you do go to court over something like that, like yeah, like that's yeah, yeah, absolutely.
• 14:57
  SPEAKER_00: Like, that's an argument, like for the other side that they'll say you it's been it's illegal to like sit on the trademark and like not do anything and then you know try to claim it.
• 15:06
  SPEAKER_00: You're not supposed to do that, but even you could be like innocently just not paying attention and like you know, not enforcing and not really doing anything with it, and that's ammunition for another brand to come in and say, Well, I should be able to get this mark because like you're not even doing anything with it, you're not even using it.
• 15:24
  SPEAKER_00: So, yes.
• 15:25
  SPEAKER_01: Like, I'm just curious, like, what if like it's in another industry?
• 15:28
  SPEAKER_01: Like, does it matter?
• 15:29
  SPEAKER_01: Like, once it's a trademark thing, like it's across all industries, or like does it matter if you're in like the you know food industry, but you have like a name, it's in the food industry, but you're using it for beauty.
• 15:40
  SPEAKER_01: Does that matter at all?
• 15:41
  SPEAKER_00: Or yes, yes, it does.
• 15:43
  SPEAKER_00: So when you file for a trademark, you don't get protection like in every single industry.
• 15:48
  SPEAKER_00: You have to choose a class or classes, and so there's 45 classes and they're made up of different descriptions of goods and services.
• 15:57
  SPEAKER_00: So, like, like beauty is cosmetics or class three, but beauty services are class 44.
• 16:03
  SPEAKER_00: So, like if you're in class three and say there's another mark that is in something unrelated, like let's say they sell tires or they sell like car parts, like you have a better chance of like that's fine because they're completely unrelated.
• 16:18
  SPEAKER_00: There's, you know, there's dove chocolate, there's dove soap, they can coexist.
• 16:22
  SPEAKER_00: They're never dove chocolate is never gonna sell soap, and vice versa.
• 16:26
  SPEAKER_00: So, yes, I mean, you can potentially have two marks that are similar if they're in completely different classes.
• 16:32
  SPEAKER_00: But if you have something in class three and in class 44, even though they're different classes, they're both beauty related.
• 16:39
  SPEAKER_00: So if you have something similar in that's a hair salon and you're selling cosmetics, the trademark office doesn't like that.
• 16:46
  SPEAKER_00: So they most likely will find a conflict with that.
• 16:49
  SPEAKER_01: Interesting.
• 16:50
  SPEAKER_01: Okay, so it's like a little overlap and like because I know the industry is very different.
• 16:54
  SPEAKER_01: Like beauty is different, you know, it's either like you're selling products or you're like in a clinic, you know what I mean?
• 16:59
  SPEAKER_01: Like you have like a aesthetic clinic or something, or there's just different ways, you know.
• 17:03
  SPEAKER_01: I feel like the beauty industry is so diverse in that way.
• 17:06
  SPEAKER_01: So I'm curious how much your figures and talk a little bit more about because you had mentioned like the LLC, like what the benefits are, you know, of getting an LLC, but like say a business is that is at a point where or would they be at a point, rather I should ask you like if you want to go from an LLC to something like incorporated or like I don't know, whatever another class might be of a business.
• 17:26
  SPEAKER_01: Like, can you give us some examples of that or if that's even something that we should do?
• 17:30
  SPEAKER_01: Would brands ever do that?
• 17:32
  SPEAKER_01: Or like changing the kind of business that they are?
• 17:34
  SPEAKER_00: Yeah, I mean, it can happen.
• 17:36
  SPEAKER_00: I mean, I I really recommend like figuring out in the beginning which one you should choose.
• 17:40
  SPEAKER_00: I have seen that, and the reasons why that would happen going from an LLC to a corporation, for example, is like in the past, it was like widely known or accepted that investors didn't want to invest in LLCs, they liked corporations.
• 17:57
  SPEAKER_00: And so if you had an investor, they may require you to change into a corporation.
• 18:02
  SPEAKER_00: I mean, I don't really hear that as much anymore.
• 18:04
  SPEAKER_00: I don't think that that's as much of an issue.
• 18:06
  SPEAKER_00: I don't really see it that much.
• 18:08
  SPEAKER_00: I have seen it, but I don't think it's nothing to worry about.
• 18:10
  SPEAKER_00: Like if you're an LLC, you're you're fine.
• 18:13
  SPEAKER_00: Again, the protection is the same.
• 18:15
  SPEAKER_00: It's just really like the formalities and the law surrounding corporations.
• 18:20
  SPEAKER_00: They require like strict meetings and meeting notices and things like that.
• 18:24
  SPEAKER_00: So again, it's not you're fine, you know, being an LLC, most likely.
• 18:28
  SPEAKER_01: Cool.
• 18:29
  SPEAKER_01: Okay, cool.
• 18:29
  SPEAKER_01: Yeah, because I was always confused about that.
• 18:31
  SPEAKER_01: It's like, why do people change their actual business?
• 18:34
  SPEAKER_01: You know what I mean?
• 18:34
  SPEAKER_01: Like it's like you just go from not being incorporated to like all of a sudden you are.
• 18:39
  SPEAKER_01: But that makes sense what you said about, you know, old times, like with the investors.
• 18:42
  SPEAKER_01: I don't know why they would want that, you know, at this point.
• 18:44
  SPEAKER_00: I just like I feel like LLCs are kind of new, like when it comes to law.
• 18:49
  SPEAKER_00: Most of the states enacted them in the 80s, so that's like kind of young for like so that's where that comes from.
• 18:55
  SPEAKER_01: Interesting.
• 18:56
  SPEAKER_01: Okay, yeah.
• 18:57
  SPEAKER_01: Let me ask you this.
• 18:58
  SPEAKER_01: What is like LLC, like C corporation and S corporation?
• 19:01
  SPEAKER_01: What is that?
• 19:02
  SPEAKER_00: So I get this all the time.
• 19:03
  SPEAKER_00: So people will say, like, I'll ask the question, are you an LLC or are you a corporation?
• 19:08
  SPEAKER_00: And they'll say, Oh, I'm I'm an S-corp.
• 19:10
  SPEAKER_00: You can be an LLC and an S-corp.
• 19:13
  SPEAKER_00: The S-corp is a tax election.
• 19:16
  SPEAKER_00: That is how you get taxed.
• 19:18
  SPEAKER_00: So you could be an LLC and and this is something that you could talk about with your accountant.
• 19:23
  SPEAKER_00: I really don't give advice on this part, but you can be taxed as a corporation.
• 19:28
  SPEAKER_00: And so, like, you know, with an LLC, the funds would just go right to your personal return.
• 19:34
  SPEAKER_00: Whereas if you're taxed as a corporation, then the corporation files taxes, and then you would get like your salary or any profits on your personal return.
• 19:44
  SPEAKER_00: So that's what that means.
• 19:46
  SPEAKER_00: It's not an entity type, it's a tax status.
• 19:49
  SPEAKER_01: Interesting.
• 19:50
  SPEAKER_01: Okay, so I guess maybe also, I mean, it's good to have an accountant on board as well, I guess, right?
• 19:54
  SPEAKER_01: Like with the Oh, yeah, absolutely.
• 19:57
  SPEAKER_00: Yeah.
• 19:57
  SPEAKER_00: I mean, I I usually refer, you know, to accountants and and vice versa, because and that's like one of those things also in the beginning, you want to get right.
• 20:05
  SPEAKER_00: You don't want to make them a st that mistake because you could end up paying a ton of taxes when maybe you don't really need to.
• 20:12
  SPEAKER_01: Exactly.
• 20:12
  SPEAKER_01: No, that's absolutely I mean, it's really just like cover your bases kind of thing, especially like right now.
• 20:17
  SPEAKER_01: I think the beauty industry has evolved so much as well.
• 20:20
  SPEAKER_01: You know, I don't know if you agree with that, Antonella, but like I just feel like we've gone like so much in a further direction because now we have creators.
• 20:27
  SPEAKER_01: I remember seeing something on social media about how if you're a UGC content creator, you have to make sure you're legally protected as well, you know, in terms of how you present yourself, how you do your contract, all of that stuff.
• 20:39
  SPEAKER_01: And it's like a new topic that's come up in the industry, I think in the last like what five years or so?
• 20:44
  SPEAKER_01: Like it's crazy.
• 20:46
  SPEAKER_00: I was talking about influencer agreements like five years ago, and people thought it was crazy.
• 20:51
  SPEAKER_00: Like other lawyers were like, What are you saying?
• 20:53
  SPEAKER_00: Like, what are you talking about?
• 20:54
  SPEAKER_00: Influencers.
• 20:55
  SPEAKER_00: Yeah, I mean, that's a whole industry that there's so much money in it, and they have a lot of legal requirements, like with the FTC and like how they present themselves as advertisers and the disclosures that they need to make.
• 21:08
  SPEAKER_00: And so, and also as a brand, you need to be aware of that because you could get you know hit with some penalties if you're using a UGC that is like not doing the right thing.
• 21:20
  SPEAKER_00: So there's a lot that's involved.
• 21:22
  SPEAKER_01: I might like kind of pick your brain about that on another episode about that, because I feel like a lot of small brands like use UGC create, you know, they use that for for advertising and marketing and stuff.
• 21:33
  SPEAKER_01: And I think it's definitely a new and emerging area because I know that they were like the huge influencers a while back, you know, and I always used to think like, oh, they must have like a legal team, you know what I mean, on their own.
• 21:43
  SPEAKER_01: But then from the brand perspective, it's like I hear this a lot where it's like a brand will tell a creator, like, we'll send you products, we just want you to make some content for us, you know what I mean?
• 21:53
  SPEAKER_01: But then I'm always like, Well, where's the legal side of that?
• 21:56
  SPEAKER_01: You know, like is there some sort of like a understanding you need to have?
• 22:00
  SPEAKER_01: With them about what you're putting out, all that stuff.
• 22:02
  SPEAKER_01: So it's a big gray area.
• 22:04
  SPEAKER_01: Absolutely.
• 22:05
  SPEAKER_01: Yeah.
• 22:06
  SPEAKER_01: But I want to actually ask, you know, what is in terms of like just what you've seen, you know, and the services that brand founders require for like the beauty industry, a beauty founder versus somebody who owns like a t-shirt brand.
• 22:17
  SPEAKER_01: Like, has there been a difference that's seen in terms of kind of the legal advice that they would require versus any other kind of brand?
• 22:24
  SPEAKER_00: Yeah, I mean, so the biggest thing is the regulatory piece.
• 22:27
  SPEAKER_00: So MOCRA, right?
• 22:28
  SPEAKER_00: Like that's, I mean, for beauty brands, and that's really the hot topic right now, in addition to all of the other things, like getting your trademark, getting your contracts.
• 22:37
  SPEAKER_00: I mean, because like I just feel like Mokra is there's two types of brand founders I'm seeing right now.
• 22:43
  SPEAKER_00: So there's one that is like burying their head in the sand, they're not paying attention, they don't want to hear anything about it, they don't care.
• 22:50
  SPEAKER_00: And then I have people coming to me like panicked, like, oh my God, what do I need to do?
• 22:54
  SPEAKER_00: Can you help me?
• 22:55
  SPEAKER_00: I'm not compliant and I don't know what to do.
• 22:58
  SPEAKER_00: So I just wish that I could explain better that Mockra's here.
• 23:04
  SPEAKER_00: And even if you're small, you have requirements.
• 23:07
  SPEAKER_00: Like you may not need to comply with every piece of the law, but you have requirements under the law that you need to comply with.
• 23:15
  SPEAKER_00: Yeah.
• 23:16
  SPEAKER_01: And what are some of those?
• 23:17
  SPEAKER_01: Like, what are some big ones like off the top of your head?
• 23:20
  SPEAKER_00: There's label changes, like packaging changes, there's changes about with your ingredient list, like you're gonna have to list certain fragrance allergens.
• 23:29
  SPEAKER_00: You need, like, this is just touching the surface.
• 23:31
  SPEAKER_00: You need your safety substantiation, all your records in order, and certain testing.
• 23:37
  SPEAKER_00: Well, I have a list of testing that should be done, and you need all of that records.
• 23:42
  SPEAKER_00: And then the other thing is the adverse event reporting.
• 23:45
  SPEAKER_00: You need to have a policy in place, a protocol, and a responsible person identified who is going to take adverse event reports from consumers that get that.
• 23:56
  SPEAKER_00: And those are applicable to small business.
• 23:58
  SPEAKER_00: And then also you need to know your manufacturers, they need to comply as well.
• 24:03
  SPEAKER_00: And you should know if the manufacturer that you're using is compliant with MoCra.
• 24:08
  SPEAKER_00: Like, if they're not, that could be a problem for you.
• 24:10
  SPEAKER_00: So there's things that you need to know, and people are just not Well, I mean, going forward, this is gonna become relevant whether we want it to or not.
• 24:18
  SPEAKER_01: You know what I mean?
• 24:19
  SPEAKER_01: Even now it's relevant.
• 24:20
  SPEAKER_01: But I think that like the things you listed off are huge, like they're off the top of your head, but they're big things, you know?
• 24:26
  SPEAKER_01: Like you have to know like, is your product actually meeting these criteria?
• 24:29
  SPEAKER_01: And to have like legal guidance, I just couldn't imagine doing it without some sort of legal guidance there that you are doing it right and that you know you're literally checking off the boxes.
• 24:38
  SPEAKER_01: Because with something like Mochra, like I don't know, for me, I look at it, I mean, I'm not a beauty founder, but like I always wonder, you know, for the brands that don't meet the criteria or something, what would you, you know, I'm sure there's next steps they've established, you know, in their protocol.
• 24:53
  SPEAKER_01: But like even going forward with that, like I would want a lawyer by my side, you know what I mean?
• 24:58
  SPEAKER_01: To be like, hey, you're doing it right, don't worry.
• 25:00
  SPEAKER_01: You know, even for that, the guidance aspect, I feel like brands need to kind of prepare themselves because I can guarantee right now, like in the industry, I know that there has to be, like, especially with safety and in terms of ingredients and stuff, like the whole benzyl peroxide thing, for example, just went down.
• 25:15
  SPEAKER_01: That's a huge thing.
• 25:16
  SPEAKER_01: And that could impact, I know at least 10 brands off the top of my head that have benzyl peroxide products.
• 25:21
  SPEAKER_00: And there's rules under MOCRA, it's in the statute, but we didn't get the regulations yet, like about talc.
• 25:26
  SPEAKER_00: So that's gonna be like when a statute is enacted, there most likely is going to be regulations, and we didn't get the regulations yet for MOCRA, like they did not come out yet.
• 25:36
  SPEAKER_00: So there's a lot that's in the law that we don't have a lot of guidance on yet, but we can kind of tell you like this is what we think, or just kind of this is the best practice that you should do for now until the regulations come out.
• 25:48
  SPEAKER_00: And like talc and like the PFAS, like there's language in the statute about that.
• 25:52
  SPEAKER_00: So there's gonna be rules coming out about that as well.
• 25:55
  SPEAKER_01: Yeah, exactly.
• 25:56
  SPEAKER_01: Exactly.
• 25:56
  SPEAKER_01: And I think it's just, I don't know, I think it's very smart, especially if anyone's tuning in and you're like a new brand, you just came into the beauty industry, you're taking off, or you're at that phase, right?
• 26:07
  SPEAKER_01: Where you've got everything started, it's a good time to start getting ahead of this.
• 26:11
  SPEAKER_01: Because one thing I know, like even from my angle, with like the FDA or any government regulation agency in general that I know about, is like they take their time, like rolling things out.
• 26:21
  SPEAKER_01: And so when they do, it'll hit you like a ton of bricks.
• 26:24
  SPEAKER_01: Because I know with the CDC, for example, like I can tell you from the medicine side, like hospitals find out protocols like way later, you know what I mean?
• 26:32
  SPEAKER_01: And so a lot of times, like even hospitals, like they'll prepare themselves to make sure they go above and beyond so that if the CDC ever recommends something new, like they're ready to go.
• 26:41
  SPEAKER_01: It's like prepping for the government, you know.
• 26:45
  SPEAKER_01: So I think that also applies here.
• 26:47
  SPEAKER_01: I'm glad that Mochra is like, you know, trying to cover every aspect, but for a brand, it can be extremely overwhelming, especially if you're a new founder.
• 26:55
  SPEAKER_00: So yeah, and it's one of those things that like you should get do in the beginning.
• 26:58
  SPEAKER_00: Like if you're starting out, like just know what you need to do in the beginning so that you're compliant, you're done already.
• 27:04
  SPEAKER_01: Exactly, exactly, yeah, exactly.
• 27:06
  SPEAKER_01: I think it's just really goes back to what you said, you know, in the beginning of the episode is just get ready for this stuff, and you know, you should do this early on, just like trademarks, making sure your name isn't taken, like all of these things should be like a checklist that we start with and go down that and make sure you're protected before everything else.
• 27:23
  SPEAKER_01: Like one of the most I feel like it would just be terrible to see somebody create something amazing, right?
• 27:28
  SPEAKER_01: Like a beauty product that's just phenomenal, and then you get hit with something legal that's unnecessary.
• 27:32
  SPEAKER_01: Yeah, but I want to actually ask about in terms of if you were to give any founder a piece of advice, all founders, I guess, what would be the one thing you wish all founders knew about legally in terms of protecting themselves?
• 27:44
  SPEAKER_01: I know you spoke a lot about trademarks and we went into that, but what would be that one key advice that everyone should know?
• 27:51
  SPEAKER_00: Yeah, I mean, I would say similar to what I said earlier, it's start early.
• 27:54
  SPEAKER_00: Like, don't put it off until later.
• 27:57
  SPEAKER_00: Consult with somebody in the beginning and know, okay, these are the things that I need to do, like I absolutely have to do in the beginning because whether it's the trademark thing, whether it's becoming an LLC, any of that stuff, if you wait and you get hit with something and then you have to fix it later on, it's just it's always worse and it's always so much more expensive.
• 28:17
  SPEAKER_00: And so if you're in the beginning stages and or if you're not and you're kind of you know been around for a couple of years and you don't have some of these things that we've been talking about, just do it.
• 28:27
  SPEAKER_00: Just do it.
• 28:27
  SPEAKER_00: It's legal, it's usually tax deductible.
• 28:30
  SPEAKER_00: I'm not an attorney, so make sure, but it's usually tax deductible your legal work.
• 28:34
  SPEAKER_00: So just do it.
• 28:35
  SPEAKER_01: Yeah, yeah.
• 28:36
  SPEAKER_01: No, I love that.
• 28:37
  SPEAKER_01: Just do it.
• 28:37
  SPEAKER_01: Like literally, I mean, I think it's something we just overlook till something goes bad.
• 28:42
  SPEAKER_01: One of those things.
• 28:43
  SPEAKER_00: But it's like it's the wrong approach because, like, as a founder, as a business owner, you have to be forward thinking.
• 28:47
  SPEAKER_00: Like, okay, my brand is launching, it's gonna thrive.
• 28:51
  SPEAKER_00: Maybe your goal is to exit in five years and you want to sell this brand, and like you need to prep it, you need to have everything so that you're gonna look good to investors or you're gonna look good to somebody that's gonna want to acquire you.
• 29:02
  SPEAKER_01: Yeah, exactly.
• 29:03
  SPEAKER_01: Exactly.
• 29:04
  SPEAKER_01: And I think that a lot of times, like you don't know what road you're gonna end up down, you know.
• 29:08
  SPEAKER_01: Sometimes like brands don't realize, like, you might hit the market and absolutely go viral, you know what I mean?
• 29:13
  SPEAKER_01: And in that short amount of time, like you gotta adjust and get ready for this stuff, which is what you said, investors and growing and getting to that next place, right?
• 29:22
  SPEAKER_01: So, and you wouldn't want a delay there.
• 29:24
  SPEAKER_01: That's another thing.
• 29:25
  SPEAKER_01: I feel like the worst feeling in the world is when you're ready to go, but something is delayed, you know, unnecessarily.
• 29:30
  SPEAKER_01: So, yeah, I agree.
• 29:31
  SPEAKER_01: So, but no, this has been so, so informative, Antonella.
• 29:34
  SPEAKER_01: I can't wait.
• 29:35
  SPEAKER_01: For everyone listening, we're gonna be doing like a mini-series with Antonella about just legal stuff.
• 29:40
  SPEAKER_01: I think the next episode is gonna be more focused on Mokra and really diving more deeper into that.
• 29:45
  SPEAKER_01: But if you guys have any questions or if there's something that you're curious about, I'd love to hear from you and see if we can pick Antonella's brain a little bit more and get some more answers and understanding.
• 29:54
  SPEAKER_01: But I hope you love the episode and I'll be back next time.
• 29:57
  SPEAKER_01: Thank you so much.
• 29:57
  SPEAKER_01: Thanks.
• 29:58
  SPEAKER_01: Hey guys, so I hope you love that episode.
• 30:01
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