Business Law

Tuesday, September 5, 2017

Legal Concerns for Businesses Engaged in Social Networking

Social media is a phenomenon and in this day and age, it is rare that an individual, organization or business does not utilize it.  The use of websites like Facebook, Twitter and Linkedin can be of great benefit to your business and can assist in advertising, marketing and branding.  But, it is important to remember that their use is not without legal pitfalls.

Read more . . .

Thursday, August 17, 2017

What is a mechanic's lien?

A mechanic's lien is not just for mechanics.  It is a legal tool used to protect workers and suppliers who contribute the labor and materials used to improve a property, real or personal.  Workers and suppliers can file a mechanic's lien if they do not get paid and may be able to force the sale of the property to receive payment. 

Read more . . .

Wednesday, July 26, 2017

How’s your Lawyer’s Math?

Perhaps math isn’t every lawyer’s strong suit; although some lawyers prefer to stay away from fractions and decimals, it doesn’t mean they aren’t able to do math when needed to help their clients.

Read more . . .

Monday, June 26, 2017

Entrepreneurial Immigrants: Building the American Dream

The American Dream of starting your own business and pulling yourself up by your bootstraps is alive and well. In fact, it is the creation and growth of small businesses that is instrumental in helping America recover from the Great Recession. What many do not realize is that a significant percentage of new business ventures in this country are started by immigrants.  Despite their business startup prowess, Immigrants face a multitude of legal issues as they start new ventures in the United States.

If you are an immigrant and are considering starting a business in your new homeland, there may be a number obstacles ahead of you. At the top of that list is obviously obtaining legal status for yourself, your family, and your employees. America welcomes innovators and business creators, but obtaining legal status is never easy. Thankfully, there are several paths to legal status available to entrepreneurs. Working with an experienced immigration attorney is the best way to figure out which options will work for you.

Providing employment for family members and friends is one of the rewarding aspects of being a small business owner, but immigrants must strictly adhere to all laws governing the employment of non-citizens. If you are caught violating this law you could lose your business and put your legal status in jeopardy.

Immigrant entrepreneurs may also face discrimination. If you think that a lender, supplier, or other business-related contact has treated you unfairly because of your nationality, and your business suffered, you should contact an attorney. An attorney can help you seek compensation if appropriate, and can help you negotiate and enforce future contracts.

There are also unique opportunities in the business creation world for immigrants.  As newcomers to an area, immigrants have the ability to see gaps in the market that others may not notice. A business attorney can help you take your vision and make it a reality by helping you through the formation and permitting processes.  The government also has several special programs that are designed to help minority and woman-owned businesses flourish. Many immigrant business owners are able to take advantage of these programs.

Starting a business is challenging regardless of whether you’re an immigrant.  The pride of owning your own business, seeing it succeed and living the American Dream more than makes up for the trials and tribulations that founders encounter.

Monday, June 12, 2017

Federal Trademark Registration

There are many advantages to registering a mark with the United States Patent and Trademark Office (USPTO).  A licensed trademark can provide “constructive notice” to customers on a national basis.  Moreover, if there is a lawsuit, a valid registration can be used to substantiate or prove ownership of the mark. 

A trademark is used to inform customers of the source of the items that are being sold. The “source” of the goods or services denotes the company or business that is associated— generally the seller or manufacturer.  Trademarks are implemented and enforced to prevent confusion among customers in intrastate and interstate commerce.  For example, if two businesses sell the same type of product, one brand may sell better quality; the other may sell knockoff goods.  The trademark associated with either brand will indicate and alert the customers to the type of quality and goodwill of the particular company. Both factors play a substantial role in a company’s sales and revenue production.   

To prevent conflict, it is essential to conduct a trademark search prior to filing an application. Without  a search, there is a risk of great expense in the future.  For example, if another business in the same industry files a lawsuit claiming a similar trademark, and that business wins the case, the defendant may be obligated to alter any merchandise that lists the prohibited trademark.  When all is said and done,  sued company may not survive. 

Trademark searches can be very complex because they involve a thorough analysis of registrations under both federal and state law. It is possible for an entity to have legal rights to a mark, even if it is not registered.  These are typically called “common law” unregistered marks.  Therefore, a search will often surpass the information listed on the USPTO’S “Trademark Electronic Search System” (TESS) database. 

On the other hand, if goods or services are being offered by a third party under a similar mark, but the goods or services are very different and the industries are separate, then two similar marks may be allowed to exist simultaneously.  Furthermore, if a trademark application has been denied, an attorney can initiate an appeals process with the administrative board.  The “Trademark Trial and Appeal Board” (TTAB) is charged with the task of reviewing the case.  

Even if a trademark is granted, it is often necessary for an attorney to enforce the mark against others who attempt to usurp the mark.  For example, an attorney can draft and send a “cease and desist” letter to any entity using the contested trademark for its business.  If the entity does not stop using the mark, a lawsuit can be filed. In dealing with trademark issues, it is important to consult with a competent business attorney to prevent future litigation and unnecessary expenses, and help ensure future prosperity. 

Monday, May 29, 2017

Obtaining Venture Capital

It is no secret that it takes money to make money.  Not all business owners have the money they need to get their ventures off the ground and therefore many require financing. 

Venture capital is a type of financing that is different from the financial support a business would customarily obtain from other lenders.  Venture capital is usually reserved for businesses that have high growth potential but also involve high risk.  Most of the time, these investments are unsecured and are in exchange for a stake in the business or a management role.  Venture capitalists often want to be involved in the operational matters relating to the business and this type of relationship might not be right for all organizations.  In many instances, small start-ups and those involved in the technology field obtain venture capital to get their businesses up and running.

While venture capital is not as common as traditional forms of financing, it can certainly give a business the boost it needs to become successful.  This type of financing is not as easily obtained as other forms and a business interested in it must have the right approach.  The business must be based on a unique idea that is not available in the current market.  Investors want to know that there is a need for the product and that there will be demand.

Business owners seeking venture capital must also have a comprehensive business plan that provides as much detail as possible.  The business plan should include industry considerations, factors that can propel the business or that may become an obstacle, and of course, financial information.  The financial overview should include information from the past (if applicable), present and future projections.  Venture capitalists want to have confidence that the business will be successful and nothing says that like past performance.  If people have already paid for the product, investors want to know that.  Therefore, this information should be included and highlighted in the financial portion of the business plan.

Those seeking venture capital should also use all of the avenues available to them to build a network including face to face interactions and online communities.  For many investors, the team that is proposing the investment is of the utmost importance.  Business owners should seek to surround themselves with dedicated individuals that work well together and have the ability to evolve or adapt as the company grows if they want to attract venture capital.

If you are seeking venture capital or are in need of an attorney to negotiate or handle the formalities involved in an investment, contact us today.

Monday, May 8, 2017

Who Owns A Business's Customer List?

Many businesses have customer lists that they consider their own private property.  It is common, however, for sales representatives and other employees to regard customer lists as theirs too, something they can take to a new employer. Employment agreements, confidentiality agreements, non-competes, and non-solicitation agreements can all be used to eliminate confusion over whether a customer list is transferable or not. 

In the absence of clear contractual protections, however, case law and state trade secret laws may decide whether a list is the exclusive property of a business.  If the list is a "trade secret," a business owner may have an easier time protecting it and obtaining damages for its use by ex-employees and competitors. The Uniform Trade Secrets Act, that has been adopted by most states and the federal Defend Trade Secrets Act provide for penalties and remedies for the misappropriation of trade secrets.

When is a list a trade secret?

Generally, a list receives "trade secret" protection if, first, it contains information not readily ascertainable from public sources.  Merely listing customers and general contact information is usually not enough to elevate the information to trade secret status. Second, owners must usually take some measures to keep the information confidential.

What steps can a company take to ensure that a list is viewed as a trade secret?

The following are elements which, when present, can lead to a customer list being deemed a trade secret.

• The list contains unique, non-public information about each customer, such as ordering history, needs and preferences, and private phone numbers and e-mail addresses.  The more a customer list contains valuable details compiled about each customer, the less likely a court is to say that the list could have been readily assembled from public sources. 

•  The list is marked "private" or "confidential," and employees are informed that it the property of the company. 

• Electronic versions of the list are password-protected, and access is limited to certain users.

• Printed copies are kept under lock and key.

• When the list is shared with third parties, there is a confidentiality agreement.

• The owner can show that time and effort were invested in building and maintaining the list.

A recent case involving former employees of an insurance company shows how these factors can influence a court.  In that case, the customer list contained more than just customer names, birth dates and drivers' license numbers.  It also contained laboriously compiled information about the amounts and types of insurance each customer had bought, the location of insured property, the personal history of policyholders, policy termination and renewal dates, and other potentially valuable details.  The list conferred a powerful, competitive advantage and the court deemed it a "trade secret."

Meeting the criteria spelled out in that case and in the suggestions above does not guarantee that a customer list will be deemed a protected trade secret.  It could, nonetheless, increase the odds.

Monday, April 24, 2017

The Parol Evidence Rule & How it Affects Your Contract

One of the purposes behind memorializing an agreement in a written document is to ensure that the parties to the contract do not recant what they originally agreed upon.  Often, parties may dispute contractual terms if contracts are not working out in their favor or are resulting in negative or unanticipated consequences.

When a document is drafted by an attorney, parties usually feel more confident and secure about the transaction. A legal document will help prevent any future deviations from its original intent because all aspects of the matter have been stipulated in the final written document.   

If there is any disagreement regarding the written contract, the court’s consideration of evidence is limited.  For example, the courts may look into the prior deals between the parties and check out industry practices as a means of comparison.  However, it is typically prohibited to admit evidence of prior agreements or negotiations of the parties on the same contractual matter at issue.

The court may also inquire as to whether the agreement is partially or completely integrated. A fully integrated document is one intended by the parties to represent all of the terms to the exclusion of any prior writings or oral agreements.  If the agreement is fully integrated, then all other information will likely be excluded. On the other hand, if the document is only partially integrated, the court may take note of circumstantial evidence if such evidence does not contradict the agreement. 

“Parol evidence” is generally oral evidence.  It is beneficial and may be admitted under certain circumstances after the parties agree to a final written agreement.  For example, if the parties to the contract made a mistake, such as omitting or mistakenly listing a term, parol evidence may be considered.  In that case, the option of bringing in subsequent agreements in limited circumstances may be available.  

Parol evidence also comes into play when the writing of the document is unclear or if there is a dispute as to the meaning of certain terms within the contract.  Finally, new evidence is admissible if there is illegality or fraud relating to the contract.  Conferring with a contract attorney will help to clarify how parol evidence rule may affect current and future dealings.

Monday, April 17, 2017

An Overview of Foundational Corporate Documents

There are a number of steps involved in forming a corporation from selecting a name, obtaining the necessary licenses and permits, paying certain fees, and filing foundational documents with the appropriate state agency. While an attorney can help prepare and file the required papers, the owners, officer and directors should have a basic understanding of these documents.

Articles of Incorporation

The first underlying document is the Articles of Incorporation which states the corporate name, and the  purpose of the business. This is typically a generic statement to the effect that the corporation will conduct any lawful business in the state in accordance with its objectives.  In addition, the type and amount of stock that will be issued (common or preferred) must be established. This document should contain any other pertinent information, including the name and address of a registered agent.

Corporate By-laws

By-laws are the formal rules regarding the day-today operations of a corporation. This document outlines the corporate structure and establishes the rights and powers of the shareholders, officers and directors. By-laws specify how officers and directors are nominated and elected as well as their responsibilities. In addition this document should clarify how disputes among the parties will be resolved. By-laws establish where and when meetings will be held, whether quarterly, annually or at other times, what constitutes a quorum, as well as voting and proxy rules. Lastly, this document should also contain information on the issuance of shares of stock and other operational details.

Meeting Minutes

After the corporate existence has begun, an initial organizational meeting of the principals must be held in order to adopt by-laws, elect directors, issue stock, and to conduct any other business. All of these activities must be memorialized in meeting minutes, which must also be prepared during any subsequent meetings.

Stock Certificates

Stock certificates are the record of any stock that was initially issued.

Once these foundational documents are in place, a corporation is also required to keep complete and accurate books and records of account and must maintain a record containing the names and addresses of all shareholders. All of these documents may fall under different names and the applicable laws vary from state to state. Because this is a complicated process and one that requires careful analysis, you are well advised to engage the services of an experienced business law attorney to help prepare and file the necessary foundational documents.

Monday, April 3, 2017

Capacity to Contract - Minors, The Mentally Disabled & The Intoxicated

The value and success of a business often rests on the ability of the principals involved to make and enforce contracts with third-parties.  However, if the person who entered into a particular agreement did not have the “capacity to contract” in the first place, then those contracts may be “voidable.”  A contract is “voidable” if it permits the person without legal capacity to either terminate or enforce the agreement.  This is meant to ensure that the weaker party does not get taken advantage of due to unequal bargaining power. 

Again, contracts become “voidable” at the discretion of the party who does not have the ability to execute an agreement.  The “capacity to contract” is an individual’s lawful competence “to enter into a binding contract.”  In other words, there is a presumption that certain individuals cannot understand what they are agreeing to.  This category typically includes mentally incompetent individuals or minors. 

Minors (typically those under the age of 18), do not have the legal power to form a contract.  However, if a minor does enter into a contract, he or she usually has the option to cancel while still under the age of 18. If the individual is no longer a minor and has not yet exercised the right to void the contract, the contract may be enforceable after the person has turned 18. 

Similarly, a person who is mentally incompetent can either have his or her guardian void the agreement or personally cancel it. Tests for mental fitness at the time a contract is signed vary from state to state. Nevertheless, minors and the mentally disabled may not be permitted to void contracts intended to provide them with necessities, such as clothing, shelter and food.   

Persons under the influence of alcohol or drugs do not usually have the same power to void contracts as do minors and the mentally disabled. Typically, intoxication is deemed a “voluntary” act and courts encourage intoxicated individuals to assume accountability for their actions.  If an individual was so inebriated as to be unable to appreciate “the nature and consequences of the agreement,” however, the intoxicated party may be able to void the contract. If another person used the intoxicated party’s condition as a means to take advantage of the situation, this can also be used as a loophole for the intoxicated party to void the contract. Anyone attempting to void a contract should consult with a savvy business attorney in order to explore the possibilities of viable options in his or her particular case.

Monday, March 27, 2017

Use of Non-Disclosure Agreements

As a small business owner, it is essential to protect sensitive information that is often referred to as trade secrets. While some well known examples of trade secrets include the formula for Coca-Cola and Google's algorithms, any business information such as practices and techniques, processes and procedures, needs to remain confidential. In some cases, business data such as client and vendor lists may qualify as a trade secret.

Although trade secrets and other confidential business information are protected by state and federal laws, it is crucial to secure this information through the use of a confidentiality or non-disclosure agreement. In sum, this is a legal contract between two or more parties in which the party receiving the sensitive information agrees not to reveal it to any other party without prior permission or authorization.

In situations in which a business engages with vendors or enters into a strategic alliance with a similar business, a separate, stand-alone agreement can be used. Similarly, confidentiality provisions can be incorporated into an employment agreement for employees who are given access to sensitive business information. In either case, common provisions included in these agreements include:

  • A definition of the confidential information (but usually not the protected information itself)

  • An explanation as to why the information is being provided to the receiving party

  • Terms under which the information may be disclosed to appropriate parties (such as on a need-to-know basis)

  • The circumstances in which the information may or not be used

  • The duration of time  the information must be kept confidential

In order for a non-disclosure agreement to be enforceable, it must be deemed fair. A court typically looks to whether an agreement is overly restrictive in making a determination of fairness. If the contract is unduly burdensome to the party receiving the information, a court may find all or part of the agreement invalid. If the information has already been revealed to a third party and the agreement is deemed to be invalid, a business may be barred from recovering damages for its losses. For this reason, it is crucial to consult with an experienced business law attorney who can help to prepare a well designed non-disclosure or confidentiality agreement.


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