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Trademarks 101: Avoiding Common Mistakes PART 2

Posted by on Oct 9, 2013 in Intellectual Property

In addition to consulting an attorney who specializes in trademark law, startup companies and entrepreneuers can avoid other common mistakes when it comes to safeguarding their brand or image by conducting a proper trademark search. While this also may seem like common sense, you’d be surprised at the number of entrepreneurs who build an entire business model and brand without so much as conducting a preliminary search, much less a full-fledged trademark search. Many trademark infringement claims could have been completely avoided if the company or entrepreneur had taken the time and made the small expenditure up front to conduct a trademark search not just before launching their business, but before finalizing their business model. If a proper search is conducted, it may help to surface any mark held by a third-party which could potentially be an infringement risk. If a proper search is conducted up front, the company or entrepreneur will have the time to choose a different name, brand or image or obtain permission to use that particular name, brand or image from the third party who owns it. A proper trademark search can also help the company or entrepreneur defend against claims that the alleged infringement was willful (which raises the severity of the infringement claim). In the converse–not conducting a proper trademark search can possibly be used as evidence that the company or entrepreneur acted willfully. Trademark searches can be preliminary or they can be full trademark searches, both of which we will discuss over the next couple of weeks. In the meantime, if you have any questions concerning how to protect your name, brand or image, please contact a trademark...

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Trademarks 101: Avoiding Common Mistakes

Posted by on Oct 4, 2013 in Intellectual Property, Practice Pointers

Many entrepreneurs and small businesses try to handle their intellectual property (in this case, trademarks) independently. While this works in some circumstances, entrepreneurs and small businesses often make the same mistakes when dealing with trademark searching and clearance which could be avoided relatively easily. Trademark searching and clearance involves the collection and analysis of information in order to assess a potential trademark’s viability from an availability and protectability standpoint. The process of trademark searching and clearance is crucial for businesses from a risk management standpoint, particulary those who rely heavily on a specific logo or brand. Consequences of an inadequate search or, God forbid, the failure to search can be drastic and can include being sued for trademark infringement (which can result in significant monetary damages) and/or an injunction that completely stalls a product launch or advertising campaign. While the process of trademark searching and clearance can be complicated, there are common mistakes that an entreprenuer or small business can take steps to avoid. Common Mistakes To Avoid: #1) Failing to Consult a Trademark Attorney: While this may come across as redundant, manipulative or simply not heplful from a common sense standpoint, it is no lie that many entrepreneurs and small businesses get into trouble with their brand, logo or other trademark assets because they made decisions or took actions without consulting a trademark attorney. (NOTE: a “trademark attorney”) Searching a trademark can be complicated and there are many potential pitfalls which can be avoided if an entrepreneur or company consults an experienced trademark attorney first. Most trademark search mistakes occur when the process of searching and clearance is conducted by a business manager or other personnel or, surprise surprise, by an attorney who does not specialize in trademarks. Therefore, make sure the attorney you consult actually has experience in trademarks.   Stay tuned for additional common mistakes that you can avoid in the trademark search and clearance...

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Update! I-9 Forms and Immigration

Posted by on Oct 2, 2013 in Uncategorized

Earlier this year, the U.S. Citizenship and Immigration Services (“USCIS”) issued a newly revised Form I-9 for use by employers. The Form I-9 is used to verify the identity and employment authorization of individuals who are hired for employment in the United States. Thus, all companies who have employees must ensure that a Form I-9 is properly completed for each employee. As of this date, employers should be using the revised form, which is available at: http://www.uscis.gov/files/form/i-9.pdf. The USCIS’s revisions to the I-9 form are subtle, in that USCIS simply: Added data fields for the employee’s: foreign passport information (if applicable) telephone number e-mail address Improved the form’s instructions Revised the layout of the form, expanding it from one to two pages (not including the form instructions and the List of Acceptable Documents) The revised form can be identified by the revision date “3/08/13 N” printed in the lower left-hand corner. Please contact an attorney if you have any questions about using the Form I-9 or your duties in verifying an employee’s identity and work...

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What Types of Insurance Should I Have For My Business?

Posted by on Sep 18, 2013 in Uncategorized

Branching off from our discussion of whether you need an entity for your business, one related issue that’s important to keep in mind is what types and amounts of insurance you should obtain and maintain with respect to your business. Whether the insurance policy is personal in nature (such as a policy to cover your personal automobile or home) or commercial in nature (worker’s compensation, professional liability, etc), insurance plays a vital role in the minimization and management of risks associated with the operation of your business. We will go over insurance that is more commercial in nature next time, but for now, we will talk about insurance that is more personal. What Types Of Insurance Should You Have? While the overall answer will ultimately depend on the nature of your business, there are some types of insurance, particularly personal in nature, that are always a good idea to obtain and maintain because they protect you on a personal level– no matter what happens to the business. To the greatest extent possible, business owners should strive to minimize and manage their personal risk so that their capacity to focus on the business operations will not suffer as a result of a personal loss. While this may seem like common sense, if you’re a business owner who also owns a home, you’re going to want to make sure you have homeowner’s insurance of an adequate type and amount, which can help protect you from accidents that happen at home or may have occurred due to your own actions. In order to run your business, you need to make sure your home, and items inside the home, is adequately protected–so all of your resources can be focused on the business. This concept also applies to business owners who do not own a home, but who rent. Renter’s insurance is equally as important if you are a renter to protect your home and items inside your home (which may or may not be useful in your business). While there are other coverages which probably seem like common sense (e.g. personal automobile insurance or health insurance), you probably get the point concerning insurance which is personal in nature and are more curious about insurance which is commercial in nature. We will visit commercial insurance coverages next time, but before we leave this topic, it is important to drive home one more point: Because many small business owners operate their businesses as sole proprietors (i.e. entities for which there is little to no separation of assets, profits, liabilities and obligations), it is especially important to consider how best to protect your personal assets which may directly or indirectly impact the operation of your business. If you have questions concerning insurance or how best to manage and minimize risk for your business, please talk to an attorney–or an insurance...

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Do I Need An Entity for My Business? Cont…

Posted by on Sep 13, 2013 in Uncategorized

As we discussed before, most people end up operating their business through an entity of some sort. However, there are some individuals who do not necessarily need an entity and can operate their business as a sole proprietorship. Without going into details concerning the various types of business entities, it is important to remember that a sole proprietor is personally responsible for the debts and obligations of the business (i.e. there is no “shield” or “veil” of limited liability as in a corporation or LLC). While this may sound scary, it is actually not that big of a deal for some people–and the good news is that sole proprietors do not have to pay Tennessee Franchise & Excise taxes (which are typically between 6%-7%). We will discuss a bit more concerning the various factors that you should consider when trying to decide whether to create an entity through which to operate your business: #1: The kind of service or product you are providing. If you’re providing a risky service or product, that is an argument in favor of having an entity for your business. There is a huge difference between someone who is manufacturing tires and someone who is taking photographs of people. While photography may entail certain risks (risks particularly related to personal identity, images and/or other intellectual property rights), those risks are inherently less risky than the tire manufacturer scenario. Keep in mind that there are many other factors to consider in addition to the type of service or product you are providing, and we will discuss those in more detail later. However, for now, explore whether the level of risk your business entails may be curtailed by purchasing an insurance policy to adequately cover those risks. There are many types of businesses that can cover their risks adequately (and in a way that agrees with the business-owner’s risk tolerance) by purchasing general liability and other insurance policies to cover things like services which cause or are alleged to have caused bodily injury or property damage. If your risks may be covered by insurance policies which are less costly than the TN F&E taxes, it may be a better idea to stay a sole proprietorship and avoid the TN F&E taxes. This is a very brief and general discussion of a rather important topic, so we strongly recommend that you discuss your business with an insurance broker and an attorney so that you can fully understand how best to curtail the risks associated with your...

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Do I Need An Entity For My Business?

Posted by on Sep 9, 2013 in Practice Pointers, Your Entity

(*Note: this discussion presupposes a basic understanding of limited liability entities and alternatives, which have been discussed before and which we will discuss more in the future.) Many people starting a business often wonder if they need to set their business up as a corporation, LLC or some other entity. It is also common to encounter entrepreneurs who just automatically assume that they’ll structure their business as an LLC without really questioning whether they need to do so. By default, if you do not have an entity for your business, you will be considered to operate your business as a sole proprietorship, essentially meaning that the debts and obligations of the business will be considered to be your personal debts and obligations. Again, while this may be scary-sounding, it isn’t always that big of a deal for some people. While having the limited liability offered by a corporation, LLC or some other entity may be a good baseline, there are some individuals who will have businesses that could actually be operated as a sole proprietorship without any entity structure at all. How Do You Know If A Sole Proprietorship Is Okay For You? First and foremost, if you have partners or other individuals with whom you work closely on your business, you will more than likely need to be another type of entity (maybe even a general partnership, but probably another type of entity). Therefore, you really should only be considering a sole proprietorship if you operate your business alone. Whether you need an entity at all will depend on a number of other things, including (but by no means limited to): The kind of service or product you are providing. The degree to which you expect to make or lose money in the beginning. Whether your business is or will be open to the public (i.e. a place or portal where the public can access physically or digitally). Whether you plan to have employees or independent contractors. The degree to which you will borrow money or seek investors. How many assets you own in your name (home, stocks, etc.). Your personal risk tolerance. While we will discuss these issues in more detail over the next couple of weeks, it is important that you seek advice from legal counsel if you are starting a business or operating a business and have questions concerning your...

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Planning for the End in the Beginning

Posted by on Sep 3, 2013 in Uncategorized

Succession Planning When most people start a business, their main focus is, understandably, on building a successful brand, service, or product. There is excitement for the road ahead—networking with mentors and possible investors, signing new leases, testing new technology. Often, people go into business with their good friends or a family member, and rarely do new business owners contemplate in those early stages all that could possibly go wrong if personal relationships fall apart or if one person decides to leave the business. A thoughtful and thorough business succession plan can protect the business and its owners in the event of a voluntary or involuntary departure of a business owner. Whether you draft a separate buy-sell or shareholder agreement or include detailed provisions in your operating agreement outlining what happens when one owner, member or partner of the business leaves, setting ground rules upfront before a problem or departure arises can help alleviate the stress and emotions that any business breakup might bring. Departure of one owner can take any number of forms and a good agreement will contemplate involuntary or unexpected events such as death or illness and voluntary departures such as a move or decision to pursue other interests. Finally, it is important to draft an agreement that accurately reflects the owners’ future goals for an exit strategy. Many new businesses rely on standard language in form agreements and fail to openly discuss specific needs or possible departure scenarios. Developing an exit strategy in the initial stages helps owners understand their options and plan for the successful growth and development of the business. Some things to consider: Trigger events for sale of ownership interest Transfer of a business interest to an heir or family member Restricting ownership transfer or control How the business will be valued How will the business pay a departing owner (does the company have the necessary capital to buy out the partner, insurance for certain owners, will the business need to find a...

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Update! New JOBS Act Regulations

Posted by on Aug 28, 2013 in Update!

Several of our discussions have mentioned the SEC’s delay in adopting final implementing regulations under the JOBS Act of 2012, however, on September 23, 2013 a few new JOBS Act regulations will become effective to implement a lift on the ban on general solicitations or general advertising for certain private offerings. 1) The final rules adopt amendment to Rule 506 of Regulation D and Rule 144A under the Securities Act of 1933 and implement Section 201(a) of the JOBS Act, which permits an issuer to engage in general solicitation or general advertising in offering and selling securities under Rules 506–as long all purchasers of the securities are accredited investors and the issuer takes reasonable steps to verify that the purchasers are accredited investors. 2) The amendment to Rule 506 also includes a non-exclusive list of the measures which issuers may take to verify the accredited investor status of purchasers who are natural persons. 3) The amendment to Rule 144A provides that securities may be offered under Rule 144A to persons other than qualified institutional buyers as long as the securities are sold only to persons that the seller (and any person acting on behalf of the seller) reasonably believes are qualified institutional buyers. 4) In addition to these amendments, the SEC revised Form D to require issuers to indicate whether they are relying on the provisions permitting general solicitations or general advertising in a Rule 506 offering. 5) The SEC also adopted rules under the Dodd-Frank Act to disqualify felons and other “bad actors” from participating in certain securities offerings. If you have any questions concerning the JOBS Act or are considering a private offering, please contact an...

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Your Liability Can Have Limits #3

Posted by on Aug 22, 2013 in Draft Your Contract, Limiting Liability, Practice Pointers

We’ve talked about 2 ways people limit liability in a contract (waiver of consequential damages and limitation of liability provisions). Another way you or someone you’re negotiating against can limit contractual liability is by including a provision that limits the time in which a party can bring a claim under the contract—i.e. shortening the statute of limitations that otherwise would apply. I know that sounds great, but: “what’s a statute of limitations”? A statute of limitations is essentially a law which establishes the maximum time after an event has occurred within which a party may commence legal proceedings. That is to say, a statute of limitations is a law that basically tells people how long they have to file suit. Statutes of limitations can vary depending on the type of claim or issue at hand. For example, in the State of Tennessee, the default statute of limitations for breach of contract claims is 6 years, meaning if 6 years has passed since the other party breached your contract, you probably can’t sue him or her for breach of contract (unless your contract says otherwise). The Tennessee Code sets forth statutes of limitations for many types of actions, including defamation, injury to personal property, products liability, medical malpractice, and the list goes on. Not only is it important to know the statute of limitation which may apply to your potential legal claims in any given situation, you should remember that you can often limit these statutory limitations contractually. It is common for contracts to include a provision that shortens the default statute of limitations to 3 years, 2 years or even 1 year. I’ve even seen a contract that attempted to limit the period to 3 months (!). Statute of limitation provisions are often placed at the back of the contract in a “governing law,” “dispute resolution” or “miscellaneous” section. A shorter statute of limitations can really take you for surprise if you dilly-dally or delay your decision concerning whether to file a claim. Obviously, if you are providing the good or service, you’d probably want the period to be shorter, and if you’re the one buying the good or service, you’d probably want the period to be longer. If your contract doesn’t say anything about it, don’t worry: the statutory default of 6 years would kick in. Don’t be afraid of these limitations, though, because, if used correctly, they can really help both parties understand and manage their respective risks under the contract. While there may be a way to argue around the statute of limitations provision in your contract, this is one reason why you should always read the fine print carefully (*or have an attorney review your contract and advise you concerning liability matters). If possible, you want to avoid having to hire an attorney to argue why your contract provisions should be...

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Your Liability Can Have Limits #2

Posted by on Aug 20, 2013 in Draft Your Contract, Limiting Liability, Practice Pointers

Last time we discussed limitation of liability provisions and how they can be used by you or your vendors, suppliers and other independent contractors to limit, reduce or otherwise control liability under a contract. Another way contracting parties can limit liability is by including a Waiver Of Consequential Damages provision. While this provision can be part of an overall limitation of liability provision, it is often set apart as its own provision. Without getting into a detailed discussion on what types of damages constitute consequential damages (this is an entirely separate blog discussion that will come later), we can use the most classic example of consequential damages: lost profits as the focus of our discussion. When you are providing goods or services to a client, you may want to consider including a waiver of consequential damages provision in order to better protect yourself in the event your client later claims that you breached the contract (or a warranty) and that caused them to lose profits or incur other consequential damages. Conversely, if you are buying goods or services, you will want to look very closely at any waiver language to see if your suppliers, vendors or independent contractors are attempting to waive responsibility for any consequential damages, including lost profits, that you may suffer as a result of their breach. Depending on the distribution of bargaining power between you and the other contracting party, you may not be able to negotiate this issue, but here are 2 things to consider about waivers of consequential damages: (1) If you are faced with a supplier, vendor or independent contractor who wants you to agree to a waiver of consequential damages, you will at least want to try to make sure the waiver is MUTUAL (i.e. applies equally to both parties). (2) Although we will have to discuss the scope of consequential and other damages at a later date, it is important for you to understand your level of exposure to damages in general, including consequential damages like lost profits, should your suppliers, vendors or independent contractors breach. It could be that whatever you’re buying from them wouldn’t really impact your business in a way that concerns you enough to put up a big fight about including this waiver language. So, know and understand the types of damages you may suffer from a supplier’s breach. (e.g. There is a huge difference between suffering from some losses resulting from additional rental fees should your supplier be late in a delivery of purchased goods vs. losses resulting from a complete shutdown of operations). Please contact an attorney if you’re ever faced with the decision of whether and how to waive or limit consequential damages in your contracts–there are many more considerations and this discussion only skims the...

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