Business Lawyers, Consulting, Cyberlaw, Intellectual Property

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How to work with your lawyer

Whether you retain a lawyer to draft contracts or to represent you in court, the outcome of your case will depend largely on how well you work with your lawyer. A lawyer is not a magician or a mind reader. Your lawyer needs to know all of the information available to you in order to best represent your interests. For instance, if you were in a car accident and you noticed that the other driver was on the phone, keeping this information from your lawyer could substantially harm your case. A good lawyer will listen to you and ask you questions. A good client will tell their lawyer everything about their case. So, a good place to start is to write down everything you can remember about what led up to the lawsuit. Or, in the case of a contract, all of the terms that you would like. Then sit down with your lawyer and go through the list. The more you provide ahead of time, the better. For each fact, try to answer the question “how do I know this”?...

Wednesday, 11 April 2012

Boilerplate, Part Three, Forum Selection Clause

Another clause you almost always find in a contract is a Forum Selection Clause. This clause specifies the place where disputes will be resolved. It will say that disputes under the agreement will be resolved in the courts of a certain jurisdiction, and that, by signing the contract, you grant jurisdiction over any resulting dispute. The clause may even require you and the other party to consent to service of process in a specific manner. THE RISK: By signing an agreement with such a clause, you are agreeing to the forum provided. If the jurisdiction selected in the contract is not your state of residence, you risk the time and expense required to fight a lawsuit in a distant state (or even country!). This can cause you great inconvenience. If a distant jurisdiction is listed in the forum selection clause, it is important to specify what law will apply to the contract. This is usually included in a Governing Law Clause (discussed in the previous installment). THE REWARD: You can structure this clause in a way that is convenient for you, ensuring that a dispute will be resolved in your state of residence. If you are entering into a contract with an individual or entity located outside the United States, this clause can place the contract firmly under United States jurisdiction, and allow you to resolve disputes in the US. You can also use this clause to state the method of service in case of a dispute, which is valuable...

Monday, 23 January 2012

Boilerplate, Part Two, Governing Law

Another clause you should find in your contract is a “Governing Law” clause. It will say something like “this contract shall be governed under the laws of _____.” The blank space in that sentence can be a state or even a country. If you are entering into a contract with another party who resides in your state, the contract will probably be governed under the laws of your mutual home state. In some cases, however, you will enter into a contract with a party from another state, or with a company that has offices across the country, or even with a foreign party that wishes to govern the contract under the laws of another country. Those parties may wish to have the law governed under the laws of a state you do not live in. Some considerations when deciding whether to agree to that arrangement: - Is there a forum selection clause which requires me to resolve disputes in another place? If so, am I willing to take on the inconvenience and expense? - Do the laws of the other place differ from the laws of my state in a way that negatively affects my rights? - Are the laws of the other place more favorable, or more appropriate, for the resolution of a dispute under this type of contract? In order to answer those questions, you should consult with a lawyer who practices in the other place, and you should consult with your regular lawyer regarding the enforceability of...

Thursday, 19 January 2012

Boilerplate, Part One: Entire Agreement Clause

If you’ve ever negotiated a contract, you’ve probably heard something like this: “Don’t worry about it – it’s all boilerplate.” Variations on this theme include, “These terms are standard in the industry,” and “This is just legalese, you don’t have to read it.” The implication is that the terms on the paper in front of you are formalities, and don’t have any affect on your agreement. Of course, this isn’t the case. Every word in a contract is important, because those words govern your relationship with the other party. But there are certain clauses that appear in almost all contracts, and are often referred to as boilerplate. Understanding these clauses is important. Boilerplate clauses can be included, left out, and varied to meet your individual needs, just like any other contract terms. This is the first in a series of blog posts, where we will explain, one at a time, several of these clauses so you have a better understanding of them the next time you find yourself staring at a long, boring contract. First up: The Entire Agreement Clause: The entire agreement clause is a good place to start, because you will almost always find this clause in a contract. It usually goes something like this: “This Agreement constitutes the entire and final agreement between the Parties and supersedes any and all prior oral or written agreements or discussions. This Agreement may not be modified in any respect except in a writing which states the modification and is signed...

Monday, 09 January 2012

Trademark Oppositions–Worth Fighting?

Many people file trademarks without the assistance of an attorney, either through the USPTO website, which is quite user friendly, or through an online service. Once you file your trademark, however, the process isn’t over. You may receive an office action, which asks you to submit additional information or explanation with regard to your mark. You will also have to file an additional form if you did not submit a specimen when you filed the mark. Another issue that may arise after you file your trademark application is a trademark Opposition. An Opposition may be filed against you by another party who believes it may be damaged by your registration of the mark. This often occurs if your mark is similar to another mark, but the similarity was not picked up by your examining attorney. The first rule of trademark Opposition is: Don’t Panic! Just because someone says your mark is confusingly similar to theirs, doesn’t mean it is. Many trademark owners hire aggressive law firms to protect their rights, and these firms oppose any mark that is even slightly related to their client’s mark, even if they are unlikely to win on the merits. Because so many trademark applicants default on Oppositions, these firms succeed in spite of the fact that they often have no case. Your best option is to hire an attorney who regularly fights trademark Oppositions. That attorney will be able to analyze your case and determine the most cost effective way to proceed. You may,...

Saturday, 07 January 2012

Don’t Fear Lawyers

We are often brought in to fix a problem that has gotten out of control. Often, the problem could have been prevented with very little work from an attorney. When asked about why the client waited so long to retain an attorney, the answer is almost always "I was worried about how much it would cost.” That fear causes problems to get out of control and makes everything more complicated and expensive in the long run. Without exaggeration, it can mean the difference between five hours of work and five hundred....

Tuesday, 13 December 2011

Conrad Murray Trial

The “jury is out” in the Conrad Murray case. They will likely return a verdict by the end of today or Monday. In a criminal case, the burden is on the prosecution to prove guilt “beyond a reasonable doubt.” We wrote on this subject previously. In June, we explained how the Casey Anthony case was a perfect example of the prosecution failing to meet its burden due to a lack of evidence. In the Casey Anthony case, she was charged with FIRST DEGREE murder. Conrad Murray on the other hand is charged with INVOLUNTARY manslaughter. These two charges are very different, and the evidence required is thus very different. It is easy to confuse the evidence required with the burden of proof. To prove its case against Conrad Murray, the prosecution must show that Dr. Murray caused Michael Jackson’s death by committing a crime that posed a high risk of death or great bodily injury because of the way in which it was committed, or that Dr. Murray committed a lawful act, but acted with criminal negligence. The prosecution must point to specific acts which meet those requirements, and must prove that beyond a reasonable doubt. In Casey Anthony’s case, the prosecution had to show intent to kill, not just criminal negligence. So, did the prosecution here prove its case? Did Dr. Murray act with criminal negligence? Most of the prosecution’s closing involved emotions, and not facts demonstrating criminal negligence. In fact, the prosecution even said that they do not...

Friday, 04 November 2011

Increase Your Bottom Line–Revenues Part 3

In “Increase Your Bottom Line—Revenues part 1” we explained that, generally speaking, the two ways to increase your revenues (ie. your top line; we are not talking about profit here) are: 1) Increase the number of sales (i.e. if you sell 100 widgets a month, sell 200 a month), or 2) Increase the price per sale (i.e. if you sell your widgets at $1 per widget, sell them instead at $2 per widget). In “Increase Your Bottom Line – Revenues part 2” we explained the two broad methods of increasing your revenues: 1) Sell to new customers, or 2) Sell more to existing customers. We then touched upon the idea of return on investment. One thing that we see a lot of businesses miss is an opportunity to easily sell more to existing customers. To do this, you have to know your customer well and identify their need, but if you keep your vision broad, it is often an easier method of increasing revenues than finding new customers. Amazon is a perfect example of this. When they first went online, in 1995, they sold only books. Now, they sell virtually everything. The idea is simple – people are already coming to us to buy books, we can give them the option of buying music as well. This has the additional benefit of bringing in new customers too. They did it again with the Kindle – people are already buying physical books from us, if we give them a method to...

Tuesday, 01 November 2011

Is Dictation a Lost Legal Skill?

In the “olden days” of law, which don’t go back so far, lawyers used dictation to write briefs, correspondence, etc. They would talk into a tape recorder and then their paralegal or secretary would listen to the tape and transcribe everything. The lawyer would then go through a printout with a (usually red) pen and give it back to the typist who would make the revisions. This would go on until the document was complete. Recently, I spoke with an attorney, who is not that old, who still uses this method. For a number of years, he has been using digital recorders instead of cassettes, and outsourcing the typing. Instead of his paralegal/secretary doing the typing, he would email the sound recording to a service, which would transcribe it and then email it back as a Word document. He could then make revisions himself (often on a printout with a pen which he would then give to his paralegal/secretary). For many lawyers, this method makes sense since they do not type as fast as a trained typist, and they have practice “thinking through speaking.” For those of us who grew up with computers, this is neither a natural method of thinking, nor efficient. My smartphone has a voice recorder, so I recently experimented with writing a letter this way. I found dictation extremely uncomfortable. Without the ability to quickly glance at what I “wrote” previously, and quickly make edits, I was lost. For me, doing my own typing and editing...

Friday, 21 October 2011

What Is Reasonable Doubt?

Beyond a Reasonable Doubt – if you don’t know the phrase from school, you know it from TV crime shows, along with another important one – Innocent Until Proven Guilty. You could easily repeat those phrases back to me, and you could probably tell me a little bit about what they mean. But how well do you understand them? This is an important question, because, while legal scholars have written countless articles and books about the burden of proof in a criminal case, it is ordinary Americans who apply these concepts in courtrooms across the country every day. In order to find a criminal defendant guilty, you must determine that his guilt was established at trial “beyond a reasonable doubt.” No matter what the defendant is accused of, he is innocent until his guilt is established to that degree, and it is each juror’s responsibility to view the defendant as innocent until he is proven guilty even if that takes a great effort. The burden of proof in a criminal case is very high, and it is designed so that it is more likely for a jury to find a guilty person innocent than an innocent person guilty. A criminal defendant has his or her freedom at stake, and a conviction should not be taken lightly. In civil cases, as opposed to criminal cases, jurors use lower standards of proof – proof by a “Preponderance of the Evidence” or proof by “Clear and Convincing Evidence.” There is a preponderance of...

Wednesday, 05 October 2011

Work For Hire: Good or Evil?

When negotiating an entertainment related contract, anything can happen (I’d love to spend this blog post telling you all the crazy stories that came to mind when I wrote that line, but that wouldn’t be very informative and might get me sued for defamation). One thing that almost always happens, however, is an argument regarding copyright ownership, and that argument usually centers around the inclusion of a Work for Hire clause. The words Work for Hire seem to be almost universally hated. Artists see it as a disadvantage no matter what the situation, and they can hardly be blamed. A Work for Hire clause or agreement requires one party to give up rights to intellectual property, and no one likes to give things up. And the numerous articles and blog posts imploring artists not the sign Work for Hire agreements would give anyone the impression that there is never a good reason to do so. Clients on the business end of the entertainment industry also express discomfort with the Work for Hire. Knowing it is likely to cause a problem, they often ask me to “say it some other way” or “make it friendlier.” Unfortunately, a Work for Hire clause can’t be stated another way, or made much friendlier, because it only works if it jumps off the page, yelling “I’m a Work for Hire and you’re giving up your rights.” That’s a good thing, because it prevents people from being tricked into signing away their rights. The main problem...

Tuesday, 20 September 2011

The Great Contract Fairy in the Sky

We write a lot of contracts. We review a lot of contracts. There is a common misperception about contracts that should be cleared up. Often, the misperception appears when a client asks us for “X” type of contract. Maybe it’s a “Service Agreement,” or a “Writer’s Agreement,” or something else. We then ask for details. Invariably, we are asked to produce “just a simple, standard form.” The impression most people seem to have is that lawyers have a connection to the Great Contract Fairy in the Sky and just pick up the phone and say “can you send down a Writer’s Agreement? Thanks.” Sometimes a person will just do a search for the type of contract, and send us what they found to review. But there is almost never a standard agreement. While there is a lot of “boilerplate” that can be copied from past agreements, even that is not standard! For instance, do you want faxed signatures to be treated as originals? Do you want the contract to be binding as of the last signature date or some specified date? What do you want your remedies to be in case of breach? It is not a matter of knowing which form to use or having access to the right one. It’s a matter of putting on paper the expectations and obligations of each side. You can certainly use something that you find online, or draft yourself. But you will then be bound to that....

Tuesday, 13 September 2011

Securities Law–a primer

Every entrepreneur needs to know a little securities law. Why? Because when you form your business and want to sell shares to investors, these laws apply to you. Also, when you form your business and want to invest money in your own company for your own shares, these laws apply to you. What do you need to know? 1) Don’t do anything without knowing what you are doing. To learn what to do, either read a lot about the subject or speak to a lawyer. 2) The general rule, stated simply, is that the issuance of any securities (most commonly stock) requires registration unless there is an exemption. Registration is a big and expensive process. Luckily, there are quite a few exemptions. 3) If you want to avoid registration (which you want to do if you’re a new company), you need to fit one or more exemptions, both on a Federal level and on a State level. Some of these require filing forms (such as Form D if you fit one of the Regulation D exemptions on a Federal level), others don’t. It is very likely that you will need to file a form either on a Federal or a State level, possibly both. 4) There are deadlines on when you need to file the forms, and they are not long (e.g. 15 days after becoming required to issue the shares). It is best not to miss these deadlines. 5) Your company should follow the correct company procedures (e.g. meetings,...

Wednesday, 07 September 2011

Increase Your Bottom Line–Revenues part 2

In “Increase Your Bottom Line—Revenues part 1” we explained that, generally speaking, the two ways to increase your revenues are: 1) Increase the number of sales (i.e. if you sell 100 widgets a month, sell 200 a month), or 2) Increase the price per sale (i.e. if you sell your widgets at $1 per widget, sell them instead at $2 per widget). There are important caveats attached to those two, and a good example. So please read the first post if you haven’t already. Let’s look at how to increase the number of sales. Instead of outlining all options, we can simplify this into two broad concepts: 1) Sell to new customers, or 2) Sell more to existing customers. Keeping these two ideas in mind is very important, especially when you are trying to expand. Let’s look at the same basic scenario as last time to see why: In any given month, you sell 100 widgets at $2, for revenues of $200/month. Now, you want to sell more widgets. We will assume these are the same exact widgets, and you are not introducing a new product. How do you sell more? Sell to New Customers There are people out there that don’t know that your widgets exist and they don’t know that they need the widgets. So some sort of marketing campaign could work great. Sell more to existing customers These are people that know about your product, but aren’t convinced that they need to buy more than they already...

Wednesday, 31 August 2011

How to Solve a Problem

Too many people try to force their idea of a solution as the only solution to a problem they are facing. In other words, when faced with a problem, they come up with one solution and try to make that work. This inevitably fails. The first step when facing a problem, whether it is in litigation, business, or otherwise, is to explore all possible solutions. Choose the solution that is most likely to work and bring the best result, not just the solution that you hope will be the best. Do not blind yourself to other avenues that may work, and may work better. In other words, when presented with a square hole, do not try to force a round peg into it....

Saturday, 27 August 2011

There’s no such thing as a “Missed Opportunity.”

Many entrepreneurs and investors are approached with business deals which are pitched as a great opportunity. This is no different than high-pressure sales tactics when shopping for a car, or when sitting through a timeshare presentation. In all of these, the person doing the pitching (the salesman) is playing off of the other person’s FOMO… Fear Of Missing Out. FOMO is a mixture of many basic human emotions. But a sales technique utilizing this can always be spotted with the basic message of “act now or you will regret missing this opportunity.” As a result, you will be given a tight deadline with consequences if you don’t act. For instance, if you are running a business distributing widgets and a vendor says “the price is $X if you sign up for a year contract today, otherwise it rises to $Y,” you will not have the time necessary to shop for other widgets and compare price and quality. If they really have a good product at a good price, they don’t mind you shopping around! Making matters worse is that once the deal is closed and the money is invested, it is human nature to be blinded to a bad decision, and thus, make similar bad decisions in the future....

Wednesday, 24 August 2011

Getting the Most Out of Customer Relations

Receiving a customer complaint about your product is not something you want or expect. But it happens sometimes. It is important to accomplish three goals during that contact: 1) Assess liability – did your product harm the customer? Is there a potential that your product will harm people? Do you need to issue a recall? Is it time to call your lawyer? 2) Improve your product if possible. 3) Turn the upset customer into an advertiser for you – if the customer is misinformed about the product (perhaps the customer misused it or the inquiry was based on a rumor), then walking the customer through its proper use, or explaining the truth about your product, will save you that customer. More importantly, if you provide the customer with excellent service, and maybe a free sample or two, then the customer will tell everyone what a good company you are. Today, before you get that phone call, is the perfect time for you to write the questions that you plan to ask and outline the information you need to get....

Thursday, 18 August 2011

Increase Your Bottom Line–Revenues part 1

A couple of weeks ago, we wrote a primer into increasing your bottom line. As a reminder, there are two basic items of focus: (1) Increase your revenue, (2) Decrease your costs. As the title above implies (not so subtly), this post is part 1 in answering the question: How do you increase revenue? First, it is important to understand the question. The question focuses on revenue and revenue only. That is, the total amount (the “gross”) of money flowing into the business. This is not your “profit margin,” or your profit, or your bottom line. In fact, many businesses suffer the problem of increasing revenue, but decreasing their bottom line. This can even lead to a loss! You might be skeptical about this last point. If a business is bringing in more money, how can it be losing money? You will just have to trust us. It happens more often than you think. This is because there are hidden costs to increasing sales – you might spend more on advertising, shipping, employees, etc. Each of these expenses might decrease your per item profit margin until some, or all, of your items are actually selling at a negative profit margin and you don’t even realize it! But that will have to wait for a different post. So, how do you increase revenues? Like our last post, it may seem obvious, but it’s more complicated than it sounds. Here are your two options, stated a little inaccurately (you will understand why...

Tuesday, 16 August 2011

The Arbitration Clause

Arbitration, as we explained in our last post, is a more adversarial process than mediation. In a typical arbitration, a sole arbitrator or a panel of three arbitrators listen to each party present his or her side of the case, and then make a decision, which may or may not be binding on the parties. You have probably, at some time in your life, agreed to settle a dispute through arbitration. Many, if not most, contracts with big companies (credit card companies, etc.) include an arbitration clause. Because an arbitration clause requires your dispute to be settled outside of court, you may think it is in your best interest. After all, litigation is expensive, time consuming, and stressful, so an alternative procedure must be better for you, as a consumer or small business. However, when you sign a contract with an arbitration clause, you are giving up (or at least delaying), your right to take the other party to court, and this may put you at a disadvantage. An arbitration clause often specifies that the arbitrators will be associated with a specific organization or industry that is likely to favor, or at least understand, the other party’s position. If you and the other party to your contract work in the same industry and would be more comfortable settling a dispute in front of experts, this may be an advantage for you. If you are not working within a specialized industry, but contracting with one who is, you may not want...

Thursday, 11 August 2011

Alternative Dispute Resolution

Most people have heard of two types of Alternative Dispute Resolution: mediation and arbitration. Both are used to resolve disputes before or during litigation. Some mediations and arbitrations are required, either by the court, as part of the settlement process, or by the terms of a contract. Alternative dispute resolution processes are also chosen by parties to a dispute as an alternative to litigation, because they believe it will save money, result in a quicker resolution, preserve business or personal relationships, or be less stressful than a lawsuit. WHAT IS MEDIATION? A simple definition of mediation is a form of dispute resolution where a neutral third party (a mediator), helps the parties to the dispute reach a resolution. A mediator may take a very active role in the mediation, making suggestions and offering his or her own ideas as the mediation progresses, or a mediator might take a less active role, asking questions in order to help the parties come to their own decision. The parties might be together for the entire mediation, or the mediator might speak to each party individually. Sometimes, attorneys participate in the mediation, and sometimes mediation occurs without the involvement of attorneys. Generally, a mediation will begin with an introduction by the mediator, followed by opening statements by each party. After the opening statements, the mediator asks questions in order to gather all the information, identifies the issues that need to be resolved, and assists the parties in negotiating an acceptable settlement. A mediation may...

Tuesday, 09 August 2011

Forming a New Business: California vs. Delaware/Nevada

Business clients often come to us after forming their Corporations or Limited Liability Companies in other states. Often, the client made this decision because someone told them that another state (usually Delaware or Nevada), is more business friendly than California. Although we agree with this statement, incorporating in a business friendly state rarely gives our clients, who hire us because they do business in California, any advantage. If your corporation enters into repeated and successive transactions of business in California, it must qualify to do business in California no matter where it is incorporated. If the owners/managers of your business are located in California and do business form California, you must qualify to do business in California. You will be subject to California’s franchise tax on net income for business done in California which requires a yearly minimum payment of $800, whether or not your business makes any money. You may also be subject to jurisdiction in California courts, if your business satisfies the “minimum contacts test” in its dealings within California. This negates many of the benefits you get from out-of-state organization (low taxes, or, in the case of Delaware, specialized business courts). There are some situations in which out of state incorporation could be beneficial for a California business. If you intend to go public at some point, you may have to reincorporate in Delaware at that time, and initial incorporation in Delaware will save you some time and expense. If your CA business will be one of...

Thursday, 04 August 2011

Increase Your Bottom Line–a primer

Everyone wants to increase their bottom line; that is, their profits or the “net.” But too many people do not have a strategy to do so. It is important to have at least a basic understanding of how to increase your profit. For instance, you can spend money on advertising, but before doing so, you should at least have a basic understanding of what you hope to get out of that – brand expansion, direct sales, etc. The first thing to know is that to increase your bottom line, you have two basic options: (1) Increase your revenue, (2) Decrease your costs. These seem obvious, but we often break it down that simply for people and it turns on a light bulb. Another realization that seems obvious is that these two things are not mutually exclusive and can happen at the same time. More importantly, the best business decisions will meet those two goals at the same time....

Monday, 01 August 2011

The Debt Ceiling–what happens if the debt ceiling is not raised?

I previously wrote about the debt ceiling. In my first post about the debt ceiling I explained what the debt ceiling is and briefly touched upon the direct effects of not raising it. I concluded with the only two clear conclusions that can be drawn: “(1) we are not facing a total shutdown/Armageddon and (2) some people will be affected.” In my second post, I gave the analogy of a credit card to explain that the Federal government “WILL still spend money, but only equal to the amount they bring in.” In this post, I will step out on a limb and read the tea leaves to try to predict more direct effects from hitting the debt ceiling. It is easy to say “we won’t have a total government shutdown” or “some people will be affected,” but it is much harder to say what the actual effects will be or who will be affected. As with everything we post – this is not legal or financial advice, it is just a very brief, very rudimentary analysis. The first thing to do is to start with what we “know” (I put “know” in quotes because I am getting this from the Wikipedia page on the U.S. Deficit, which is probably accurate, but I have not cross-checked this information with the official public reports): (1) the Total debt is roughly $14.46 TRILLION, which is almost equal to the entire U.S. GDP in 2010. GDP is not revenue (taxes are revenue). Basically, GDP...

Saturday, 30 July 2011

Contract Pitfalls–the “merger” or “integration” clause

Contracts often have “boilerplate.” People assume that boilerplate clauses are standard, necessary, and risk-free (this seems especially true in the entertainment industry where everything is claimed to be “standard”). But there are huge pitfalls to signing a contract without carefully thinking through the effects of each clause. One of the most common “boilerplate” clauses is the merger clause (a.k.a. an integration clause). Like all “boilerplate,” this clause can be worded several different ways (which already says something about how “standard” any language is). To spot this clause, look for a heading titled “entire agreement,” or “merger,” or “integration,” or something to that effect. The language itself will state, in substance, that “this Agreement is the entire and final Agreement between the parties on this matter…” The effect of this clause is to make the current contract the final, binding agreement between the parties. This is very important in case there were oral communications, emails, etc. that might otherwise be considered part of the contract (but keep in mind that just because a merger clause is in a contract, that doesn’t mean evidence of discussions or emails can’t come in to help interpret the contract). In short, it keeps things simpler and cleaner in case of a dispute. But, sometimes the unintended consequence of this clause is to supersede another contract, which should not be superseded, and can lead to confusion. For instance, if you contract to buy 100 widgets a month, and then want to buy another 200 a month...

Thursday, 28 July 2011

How to Choose a Strong Trademark, Part II

If you choose a weak trademark, or one that is ineligible for trademark protection, your competitors may be able to use similar marks, making it more difficult for your customers to identify your business, product, or service. Having a strong trademark makes it less likely that you will be forced into costly litigation over trademark rights later on, and more likely that any dispute that arises will be resolved in your favor. In my last post I explained that, in order to achieve maximum trademark protection, your trademark should a highly distinctive, strong trademark without any descriptive, surname or geographic connotations. The following types of trademarks are eligible for protection: 1.) The Suggestive Mark: A suggestive mark suggests, but does not describe the product or service. The customer must go through a mental process in order to associate the mark with the type of product or service it represents. An example of a suggestive mark would be “Greyhound” for fast busses, “Razr” for a thin cell phone, or Frootloops for fruit flavored cereal. 2.) The Arbitrary Mark: An arbitrary mark is one that has an ordinary meaning that is unrelated to your goods or service. This type of mark is protected even more broadly than the suggestive mark. Some examples of arbitrary trademarks are “Apple” for computers and “Amazon” for an online store. 3.) The Fanciful Mark: Fanciful marks, like arbitrary marks, enjoy the broadest protection under trademark law. This type of mark isn’t a dictionary word. Instead, a fanciful...

Wednesday, 27 July 2011

How To Choose A Strong Trademark, Part I

If you choose a weak trademark, or one that is ineligible for trademark protection, your competitors may be able to use similar marks, making it more difficult for your customers to identify your business, product, or service. Having a strong trademark makes it less likely that you will be forced into costly litigation over trademark rights later on, and more likely that any dispute that arises will be resolved in your favor. Therefore, it is important for you to understand a few very basic things about trademark law. Maximum protection for your trademark will be achieved if you select a highly distinctive, strong trademark without any descriptive, surname or geographic connotations. Such a trademark will be registered in the Patent and Trademark Office and in foreign countries with little difficulty, and will have maximum protection under trademark law. Some words cannot be protected by trademark law because they are not distinctive: Some types of words are excluded from trademark protection because they are not distinctive. Some examples include generic names. A generic name may be a common dictionary term (if you make computers and you plan to call your product “Computer,” you would be using a generic name to describe your product), or it may be a former trademark that has become a common name for a product. These terms are viewed by the public as descriptors of the product itself, not of the source of the product, so you cannot reserve exclusive use of these words. Sometimes, a non-distinctive...

Tuesday, 26 July 2011

The Importance of Foundation

Whether you are dealing with a lawsuit or business negotiations or political debate, it is essential to understand the concept of foundation. Far too often, people jump to a conclusion without the proper support or evidence (in other words, the “foundation” for that conclusion). For instance, maybe one person rear ends another. The person who got rear ended might assume that the other person was sending a text message and not paying attention. But why would they assume that? This is absolutely a vital question. Perhaps they saw the person with a cell phone in hand, perhaps not. Even with a cell phone in hand, you can’t conclude that the person was sending a text message. Maybe the person was distracted for other reasons. Another example would be if you suddenly found your competition using the name of your product on theirs. You might assume that they are doing so on purpose. But without some support, that is just an assumption. Perhaps they are doing it accidentally. Perhaps not. But you should always start with what you know for sure and build from there, making note of where you are making assumptions....

Friday, 22 July 2011

What does “foreclosure” mean in California?

“Foreclosure” is not new in California. But there is one important detail that people miss when discussing the topic – there are TWO types of “foreclosures” in California. In both cases, a debt is owed to someone. We’ll call this person the “Lender” even though it might not be the person who made the loan. In both cases, the loan is secured by real property (“real property” simply means real estate as opposed to “personal property” which is other property). The first is the most common: “non-judicial.” In non-judicial, the lender auctions off the property through a “trustee sale.” This auction, and the procedure surrounding it, has to comply with certain laws. But nothing has to be filed in court. The second is less common, but has its own benefits and risks for both parties: “Judicial.” In a judicial foreclosure, the lender files a lawsuit in court so that the auction actually goes through the court system. It is important to know which you are discussing because there are vastly different legal ramifications between the two....

Thursday, 21 July 2011

The U.S. Debt Ceiling–a simple analogy

In a past post, I gave an overview of the debt ceiling issues. I recently explained this to a very confused colleague using a simple analogy: Let’s say you have a monthly income of $1,000. Your basic living expenses are $700 a month, leaving you with a “surplus” of $300 a month. Due to elements out of your control, you cannot change your monthly income (despite repeatedly asking your boss) and you cannot decrease your living expenses. That is, the bare-minimum necessary for you to survive every month is $700 and the most money you can possibly earn every month is $1,000. You have options on what to do with that $300 though. You can save it or spend it. In this example lets pretend that the only way to save it is by putting the surplus in a jar in your closet. If you save it, you can spend it in a later month. For instance, if you save $300 one month, you now can spend $1,300 the next month (your $1,000 income check plus the $300 that you saved). Or you can spend $1,150 next month and $1,150 the month after. Or you can continue to save $300 a month, or whatever you want to do. But you can never spend more than your monthly income PLUS whatever you have saved up in the past; that is you can never spend more than what your boss pays you that month PLUS the amount in your jar. Given the...

Thursday, 21 July 2011

The Importance of having a FANTASTIC Logo

Recently I was speaking with an entrepreneur who was bragging about hiring a very expensive graphic designer to design a logo. The entrepreneur was spending a huge portion of his startup budget on just the logo. This is a very common and costly mistake! A logo is your trademark. As a general guideline, it should be recognizable and unique. Anything else depends on your industry and target demographic. For instance, sometimes you will want your logo to obviously indicate the product or service you offer. Other times, you want it to be more subtle or just be something memorable. But your logo will never be the key driver of your business. Having a great logo or a catchy slogan will mean nothing if you provide a bad product or service. Similarly, having a decent logo will be good enough if you provide a great product or service. In the case of a startup with very little seed capital, wasting money on an expensive logo is a bad investment. If you have a large amount of seed capital, then it does not affect you as much....

Saturday, 16 July 2011

The Basic Legal Issues Involved in Marketing Your Product or Service

When you create a website, video, document, or other material for the purpose of advertising your business, your main goal is to convince potential customers to buy from you. However, you also need to make sure that your advertising materials comply with the law. Some of the things you need to think about are: What Claims Do You Make In Your Advertisement? There are two types of claims you need to analyze in order to ensure compliance: Express claims, which are claims you make directly, such as “Our product promotes weight loss,” and implied claims, which are implied by the ad without being stated expressly. Both types of claims are treated the same – you can’t imply a claim that you could not make directly, and all claims must be truthful, not misleading, and have adequate substantiation. You must assess the net impression of your advertisement, which includes the text, product names, and depictions of the product or other images in the advertisement. Do You Omit Important Information? If your advertisement fails to reveal information which is material in light of your advertisement, it might be misleading. Any qualifying information must be disclosed prominently, and not hidden in fine print, and it must be simply and clearly stated. Can You Provide Evidence? You must have a reasonable basis for the claims you make. The amount of evidence you need depends a lot on what you are selling. If your product or service is something that consumers will have a hard...

Thursday, 14 July 2011

The Debt Ceiling–an unbiased primer

The U.S. Federal government will soon hit its debt ceiling. This information has been in the news for some time, often with predictions of “doomsday” if the ceiling is not lifted. Most of the news on the ceiling does not explain, in any sort of detail, explain what the debt ceiling is, why it is a perceived problem if we “hit” it, and why raising it is a solution to anything (other than to “hitting” the ceiling). Here is a brief, unbiased explanation of what the debt ceiling is and its effect so that you can decide if it is a problem. It is easy to explain “what” the debt ceiling is: the Federal government has a cap on the amount of money it can borrow. If the Federal government reaches this limit, the Federal government can no longer borrow any more money. What the debt ceiling is not: in the above, notice the emphasis on the word “borrow.” The debt ceiling is NOT a limit on how much money the Federal government can bring in or spend. For instance, in 2008, the Federal government brought in $2.66 TRILLION from taxes. That money is unaffected by the debt ceiling, the Federal government will still collect a similar amount each year no matter what happens with the debt ceiling. If the Federal government were a business, this would be its “Revenues.” That same year, the Federal government spent $2.9 TRILLION. If the Federal government were a business, this would be its...

Tuesday, 12 July 2011

Casey Anthony–A demonstration on the necessity for evidence

In our last post, we wrote about the importance of evidence. In that post, we were specifically addressing expert opinions, in a prior post we explained that “The first thing to ask yourself before embarking on a lawsuit is ‘what evidence do I have in my possession to prove my case?’” The reason that question is so important is because a lawsuit is about proving a case; presenting the evidence in a way that the judge and jury will come to the conclusion you want. This question is especially true in a criminal case where the burden on the prosecution is higher than in a civil case. In a murder case, the prosecutor has to prove that the defendant committed the murder, and the prosecution has to prove this “beyond a reasonable doubt.” But to get to the conclusion of murder, logic dictates that the prosecution also has to prove that the defendant could commit the murder. In other words, the prosecution in the Casey Anthony case had to logically establish two points: That Casey Anthony could kill her child, Caylee – physically and emotionally, and That Casey Anthony did kill her child. It is very important to note that sometimes evidence of the killing is so strong that it necessarily establishes capability. In other words, if there is video of someone committing the murder, then obviously that person is capable of the murder. In legalese, this is the “probative value” (the strength) of the evidence – how strongly does...

Wednesday, 06 July 2011

Winning Your Lawsuit–the importance of expert witnesses

By: Aaron Shechet As we mentioned in our article “Winning Your Lawsuit—understanding litigation” (here or here), evidence is the primary focus of a lawsuit. In “Winning Your Lawsuit,” we focused on the discovery process, where you exchange evidence, or avoid exchanging evidence, with the other party. Here, I want to talk about the next step: explaining your evidence to a judge or jury. While the value of some evidence is obvious – for instance, a signed contract regarding the subject matter of the dispute – other evidence requires explanation. For example, your opponent may claim that the signature on your contract is a forgery. In that case, someone needs to analyze the signature and provide an opinion as to its authenticity. Some cases turn on scientific or medical evidence which requires explanation. Other disputes require an expert witness simply because the central issues are confusing or unsettled. For example, I served as an expert witness to testify about true retainers in a lawsuit by music producer Phil Spector against his lawyer Robert Shapiro. This issue isn’t scientific or technical, but it is the subject of much disagreement in the legal community. In California, the evidence code prohibits laypersons from giving opinions about anything requiring special qualification, so you can’t have just any witness explain issues like these to the jury. In situations like these, you need an expert witness. An expert witness is exactly that – an expert in a specific field who will give an opinion about something that...

Thursday, 30 June 2011

Writing An Operating Agreement That Works For You

When you form a Limited Liability Company, your attorney should prepare an Operating Agreement. Your Operating Agreement is the contract that governs your company, and it is very important, especially if your LLC has more than one member. You should discuss the following issues with the other members of your LLC and your attorney before your Operating Agreement is prepared. If you already have an Operating Agreement that does not adequately deal with these issues, you should amend it. 1. Management/Control of LLC: Who will be responsible for managing the LLC? If more than one person will have management responsibilities, will you have to agree in order to make decisions? If you can’t agree, what happens? Will there be any compensation to members who take on a management role? Is there a non-managing member who will get a percentage of the profits? Think about how you will hire employees, take care of expenses, and who will be responsible for accounting issues. 2. Distributions: How will the income of the LLC be distributed? 3. Bringing in others: Can other investors be brought into the LLC, and if so, is agreement required? Will there be criteria for new members, or a process for approval? 4. Separation/if someone wants to leave/if someone dies or is incapacitated: What happens if a member of the LLC wants or has to leave? Is that partner entitled to transfer his interest? 5. Exit Strategy: Are you planning to go public or be acquired? 6. Capital: How much...

Tuesday, 28 June 2011

Winning Your Lawsuit–understanding litigation

We have found a lot of people misunderstand the process of a lawsuit. They seem to believe that lawyer A files “something,” then lawyer B files “something,” then everyone goes in front of a jury at which point lawyer A screams, then lawyer B screams and the lawyer who is “better” wins their client a lot of money. This misunderstanding probably arises from television portrayals of lawsuits as quick events. In order to “win” a lawsuit, the first step is to understand what the process and goal of a lawsuit is. In short, a lawsuit is an attempt to get a judgment in order to force another party to do, or not do, something. The most common goal is to force another party to pay money for damage that their actions have caused. But it is very expensive to win a lawsuit, so the cost of winning should, ideally, be far less than the amount at stake. If you are defending a lawsuit, the goal should be to get it dismissed with the least possible cost. But why is it so expensive? A lawsuit is not a one-day screaming match. Although a trial might, depending on the case, only last for one-day, in order to “win” you need evidence. The first thing to ask yourself before embarking on a lawsuit is “what evidence do I have in my possession to prove my case?” The second thing to ask yourself is “what evidence will I need to get from the other...

Tuesday, 28 June 2011

What Kind of Lawyer Does a Start-Up Need?

If you’re starting – or thinking about starting – a business, you know that every penny counts. Unless you are lucky enough to have a lot of funding from the start, you will need to make some hard decisions about what to spend on in the beginning. One of those decisions will, undoubtedly, involve legal fees. As a business owner, you need to make your legal budget work for you. There are some things you can probably do without – or do on your own – in the beginning. There are other things that you need a lawyer to help with. Your lawyer should, ultimately, prevent legal problems and save you money. But hiring a lawyer is a daunting task. Here are the things you should be thinking about as you make this big decision: - Your lawyer should be able to advise you regarding entity formation, intellectual property, funding and investment, and contracts. He or she should be focused on litigation prevention. If you are in a regulated industry, your lawyer should be familiar with it. - Your lawyer should be comfortable discussing fees with you. Try to find a lawyer who is flexible about fees. - Your lawyer should have experience working with start-up companies, and should be enthusiastic about your company. You want a lawyer who will be part of your team. He or she should point out problems and find solutions. - Your lawyer should be available. Don’t hire someone who never returns phone calls or...

Monday, 27 June 2011

Patents, Trademarks, & Copyrights–a Primer

What Is a Patent? A patent for an invention is the grant of a property right to the inventor, issued by the Patent and Trademark Office. The term of a new patent is 20 years from the date on which the application for the patent was filed in the United States or, in special cases, from the date an earlier related application was filed, subject to the payment of maintenance fees. US patent grants are effective only within the US, US territories, and US possessions. The right conferred by the patent grant is, in the language of the statute and of the grant itself, “the right to exclude others from making, using, offering for sale, or selling” the invention in the United States or “importing” the invention into the United States. What is granted is not the right to make, use, offer for sale, sell or import, but the right to exclude others from making, using, offering for sale, selling or importing the invention. What Is a Trademark or Servicemark? A trademark is a word, name, symbol or device which is used in trade with goods to indicate the source of the goods and to distinguish them from the goods of others. A servicemark is the same as a trademark except that it identifies and distinguishes the source of a service rather than a product. The terms "trademark" and "mark" are commonly used to refer to both trademarks and servicemarks. Trademark rights may be used to prevent others from using...

Tuesday, 21 June 2011

“Non-refundable” Retainer Fees: Fact or Fiction?

If an attorney required you to pay a “non-refundable” retainer fee, would you hire that attorney? Many people do, although there are few situations in which a “non-refundable” fee is appropriate. An attorney must refund unearned fees, unless those fees fit into the definition of a “true” or “classic” retainer. The True Retainer: A true retainer is “earned upon receipt” (that is, becomes the property of the attorney immediately), and is not contingent upon the provision of legal services. It is generally not refundable, although it may be refundable where the attorney does not fulfill his end of the bargain, or where the fee is found to be unconscionable. A true retainer must not be placed in a trust account, and must not be billed against. Advanced Payment Retainer: An advanced payment retainer is intended to compensate an attorney for legal services. If money is not a true retainer, it is most likely an advanced payment retainer. It is paid in advance and billed against as the attorney performs services and/or incurs costs on behalf of the client. This retainer should be placed in a trust account, although there is some indication that it may be permissible to place it in a general account. An advanced payment retainer is always billed against, and any unearned portion is refunded to the client. Security Retainer: A security retainer may be billed against, although a client who pays a security retainer generally pays bills as they come due. The security retainer is meant...

Tuesday, 21 June 2011

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