Quesada v. Herb Thyme Farms, Inc.; Does Federal or State Law Control Advertising a Product as “Organic”? Whether consumers may bring a state court action against the grower of herbs for fraudulently labeling its products as “organic” was answered by the California Supreme Court on December 3, 2015 in a [...]
What Material is Protected by a Trademark? Many people confuse what is protected as a trademark with copyrights and patents. Each of these terms describes a protection for very specific types of intellectual property. “A trademark is generally a word, phrase, symbol, or design, or a combination thereof, that [...]
An Overview of the Copyright Law The copyright law of the United States is governed by Title 17 of the United States Code and was enacted as the Copyright Act, Public Law October 19, 1976, as Pub. L. No. 94-553, 90 Stat. 2541 (the “Act”). The Act is the [...]
Protect Your Most Valuable Asset – The California Uniform Trade Secrets Act Does your business have trade secrets? Of course it does! Trade secrets in California means any “information, including a formula, pattern, compilation, program, device, method, technique or process” that has actual or potential value that is not known to [...]
What Factors Does the IRS Look at to Determine Independent Contractor Status? There are many definitions for the term “independent contractor.” Black’s Law Dictionary defines the term “[g]enerally, one, who, in exercise of an independent employment, contracts to do a piece of work according to his own methods and [...]
The Personal Services Contract in California Everyone knows and understands that slavery and involuntary servitude were abolished in the United States in 1865 by the passage of the Thirteenth Amendment to the Constitution. Something of a corollary to the Thirteenth Amendment was enacted in California in 1872, which provided [...]
Should I Form a Professional Corporation for my Medical Practice? California Business and Professions Code Section 2052 provides “[a]ny person who practices or attempts to practice, or who holds himself or herself out as practicing…[medicine] without having at the time of so doing a valid, unrevoked, or unsuspended certificate…is guilty [...]
The California Corporate Securities Law of 1968 – What is it Anyway? The California Corporate Securities Law of 1968 (“Securities Law”) became effective on January 2, 1969 Marc Levin, California Corporate Securities Law of 1968: The Issue of the Nonissuer, 2 Loy. L.A. L. Rev. 87 (1969) and regulates all offers and sales of [...]
Dissecting the Software Licensing Agreement For those involved in the creation and distribution of software, the software license agreement plays a vital role in protecting the intellectual property rights of the licensor of the software. Failing to have an adequate agreement can, and generally does, lead to infringements into [...]
What Should be in my Employee Handbook? Few small businesses in California have them, but all businesses, from large corporations to the small “mom and pop” pizza joint, would greatly benefit from having a well-considered and well-written employee handbook. The well-written employee handbook is one of the best tools [...]
Must I Register my Nevada Corporation in California? After deciding that they are going to incorporate their business, many California-based founders are persuaded, for a variety of reasons, to incorporate in some jurisdiction other than California. Many decide to incorporate in the states of Nevada or Delaware, usually because [...]
What Contracts Must be in Writing - The Statute of Frauds Not all contracts are equal. While it is true that many oral contracts (that is, contracts entered into between two parties without a written agreement) are enforceable in California, many are not. In California, the Statute of Frauds [...]
How and When to Wind-Up Your California Corporation Winding-up and dissolving a California corporation is governed by the provisions of California Corporations Code Sections 1900 through 1907. How that process takes place depends largely on whether the corporation has ever done business or issued shares or whether a “voluntary [...]
The Social Purpose Corporations Act and How to Use It California’s Social Purpose Corporations Act allows entrepreneurs wishing to combine for profit businesses activity with the achievement of a social purpose. The corporation is formed by the traditional filing of Articles of Incorporation which state that the corporation is [...]
Hot Rods, LLC v. Northrop Grumman Systems Corp. - Can Extrinsic Evidence be Used to Alter the Meaning of a Contract? On November 6, 2015, the California Courts of Appeal for the Fourth District, Division Three filed its decision in the case of Hot Rods, LLC v. Northrop Grumman Systems [...]
Some Suggestions for the San Diego Shopping Center Lease Shopping center leases are as varied as the locations in which malls are located and the type of tenant seeking to lease space within their boundaries. Is the mall an outdoor mall or an indoor mall? Does it currently have [...]
What is a “Biological Material Transfer Agreement” and When to Use It A biological transfer agreement is a written contract between a provider of biological material to another, generally an entity engaged in biomedical research. The agreement is designed to govern the rights and obligations of the parties in [...]
Include an Arbitration Clause in Your Contracts to Save You Money Arbitration has increasingly been used to resolve disputes over the past twenty years. In fact, some commentators and lawyers believe that alternative dispute resolution (“ADR”) (meaning, among other used methods, mediation, arbitration, and the use of “private judges”) [...]
The Non-Solicitation Agreement; Why Use It? California has a strong public policy against restraining the ability of its citizens from engaging in their chosen professions. California Business and Professions Code Section 16600 essentially prohibits almost all forms of agreements between an employer and employee wherein the employee agrees not [...]
Should I Require Key Employees to Sign an Arbitration Agreement? Most employers, as well as other business people, have increasingly turned to arbitration agreements for a variety of reasons. Among the reasons most commonly cited is the avoidance of the cost of employment litigation and the amount of time [...]
Why Sarbanes-Oxley is Important to Private Companies For many private companies, Sarbanes-Oxley represents a cumbersome burden that is the province of publicly-traded companies and not relevant to the needs or goals of private enterprise. There are, however, a few provisions of Sarbanes-Oxley that pertain to private companies, including certain [...]
The Value of Registering Trademarks You may have heard that federal registration of trademarks is not necessary in the United States because certain rights to use a mark and exclude others from using it in connection with similar products arise automatically. While this is generally true under common law, [...]
Preparing For a Private Sale: Bid Letters and Letters of Intent Letters of intent are an important tool in the process of buying or selling a business. They can benefit both sides of a potential transaction in many ways. They can also serve as a proving ground for the [...]
How an IP Portfolio Attracts Funding and M&A Suitors Maintaining a complete and current patent portfolio is a great way for a company to improve its chances of a potential acquisition deal. In intellectual property (IP) centric industries like technology and biotechnology, a patent portfolio is also vital to [...]
Prepare For a Private Sale by Reviewing Key Supplier and Customer Contracts Even though buy-side due diligence in the sale of a private company forms the bulk of the research during the deal process, sellers should not overlook important diligence steps that will help prepare their company for sale. [...]
Understanding Preferred Instrument Term Sheets in Early Stage Funding Structuring early stage investments as preferred instruments, such as preferred stock, is significantly more complex than working with convertible notes; understanding preferred instrument term sheets in early stage funding is essential knowledge. This post will introduce some of the commonly [...]
Part Two: Positioning Your Startup to Appeal to Angel Investors A previous article introduced the concept of reviewing and structuring a startup to appeal to angel investors. That article briefly discussed some of the common points of inspection for the due diligence conducted by an interested angel. This article [...]
Understanding Convertible Note Term Sheets in Early Stage Funding Once an angel has decided to invest in a startup, they will either seek a convertible note or equity in the form of preferred stock. In either case, a term sheet is often used to communicate the basic details of [...]
Positioning Your Startup to Appeal to Angel Investors After initial seed money and the money from friends and family has been exhausted, early stage startups enter a challenging phase in the financial life of the company. For biotech startups in particular, this can be the beginning of a relentless [...]
Representations and Warranties Form the Bedrock of Private Acquisition Agreements There are many provisions that are negotiated in almost all private acquisition agreements. Definitions, closing conditions, indemnifications, and representations and warranties are among the essential topics addressed by such agreements. While these topics all bear directly on the nature [...]
Examining Ownership and Assignment of Intellectual Property Rights Produced by Independent Contractors In the United States, ownership of intellectual property (IP) rights defaults to the inventor. In order for any transfer of rights to be effective, a clear written assignment must be made between the parties. Even the work [...]
How Freedom to Operate Informs Deal Values in IP-Heavy Industries In transactions involving research-centric businesses like biotechnology firms or pharmaceutical companies, the intellectual property (IP) assets of the target are the focus of the deal. The terms of a proposed acquisition are directly affected by the relative strength and [...]
One-Step Mergers One-step mergers are a traditional method for acquiring public companies. The target, acquiring company, and a subsidiary of the acquiring company execute a merger agreement that contains various listed conditions. Once those conditions are satisfied, the subsidiary will merge with the target company, and the target becomes [...]
The Rise of Tender Acquisitions Two years ago, the Delaware General Corporation Law (DGCL) was amended in a way that has dramatically changed the use of tender offers. Historically, tender offers were the province of hostile takeover bids. Acquirers of public companies could greatly accelerate the takeover timetable and [...]
Choice of Entity for Biotech Startups A key decision for any startup is which entity type to choose—and choice of entity for biotech startups is no exception. The primary advantage of forming a legal business entity is to shield the personal assets of the owners from the liabilities of [...]
ERISA Fiduciaries Must Monitor Retirement Plan Investments The United States Supreme Court has issued a reminder to plan fiduciaries responsible for selecting investment options available to participants in employee benefits plans subject to ERISA. Any such fiduciary has an ongoing duty to monitor the total performance of plan investments, [...]
Private Placements: The Advantages of 506(c) Companies seeking to raise capital through a private placement have long preferred to proceed under Rule 506 of Regulation D of the Securities Act of 1933. Regulation D provides a safe harbor for private offerings, with three separate registration-exemption schemes governed by Rules [...]
A Quick Guide to DOL’s Proposed Changes to FLSA Overtime Regulations The Department of Labor (DOL) has proposed several changes to the overtime regulations of the Fair Labor Standards Act (FLSA) that are expected to take effect in the middle part of 2016. The changes will raise the minimum [...]
CGL Insurance: The Basics A previous post discussed why Commercial General Liability (CGL) Insurance policies typically do not cover the costs of intellectual property (IP) rights infringement claims. However, CGL Insurance is still an essential component of any ongoing business operation because it protects the assets of the business [...]
Avoiding Rescission Exposure in a Private Placement Private placements can be a great vehicle for raising money to infuse a business with much needed capital while avoiding the formalities of a public offering. Many businesses that lack the contacts to secure sufficient attention and investment from a venture capital [...]
Indemnification Obligation Limits in Stock Purchase Agreements In an earlier post, stock purchase agreements were addressed, with brief mention of principal clauses including indemnification provisions. This post will focus directly on the utility of indemnification obligation limits in stock purchase agreements. The indemnification obligations imposed on stockholders of the [...]
Acquisition Due Diligence: IP Infringement In another post, the process of identifying and investigating intellectual property (“IP”) assets of a target company was addressed. That process often serves as the first step of an IP due diligence effort and builds a foundation for subsequent stages of IP due diligence. [...]
M&A Due Diligence: Employee Entitlements in Stock Purchase Deals A crucial activity of any due diligence effort in an acquisition is to review the employee benefits offered and maintained by the target company. This sort of review is vital whether the intended deal structure is an asset purchase or [...]
Acquisition: Structuring a Stock Purchase Deal In a deal structured as a stock purchase, the buyer purchases either all or a controlling interest in the outstanding shares of the target company’s stock, which results in the target becoming a subsidiary of the buyer. Stock purchases differ from asset purchases [...]
Directors and Officers Insurance: Do Startups Need It? Among the many types of insurance startup companies might consider, Directors and Officers (D&O) Insurance may have the biggest impact in terms of making the company more attractive to interested investors and potential talent. D&O insurance covers specific risks not addressed [...]
Have You Considered IP Insurance? Many small companies erroneously assume that their Commercial General Liability (CGL) Insurance policy will cover defense costs in case of a suit over intellectual property (“IP”) infringement, such as a patent infringement claim. Insurers typically have two principal duties under a third party CGL [...]
IP Due Diligence in Mergers and Acquisitions The first step in conducting intellectual property (“IP”) due diligence of a target company is to identify and list all IP assets indicated in documentation produced by the target company and any relevant information obtained during the preliminary examination of the target. [...]
Have You Considered Alternative Dispute Resolution? A key topic addressed in any commercial contract is how the parties will resolve any future disputes. For judicial remedies, the parties to a contract may specify the litigation venue, the choice of law to be applied, and limits to the time period [...]
Three Often Overlooked Items in Commercial Leases Parking is an important part of any commercial space, but when signing a commercial lease, this provision is often neglected. This seemingly obvious and vital component of a business’s space needs is commonly overlooked, and can be costly to remedy after the [...]
Classifying Workers: Are They Employees? California businesses face a task with potentially costly legal implications when deciding whether to classify workers as employees or independent contractors. Certain businesses may have an economic incentive to classify workers as independent contractors to take advantage of decreased labor costs that result from [...]
California Sick Pay Law 2015 Are you abiding by the new Healthy Workplace Healthy Families Act of 2014? Are you keeping your employees informed about the amount of paid sick leave they have per pay period via their pay stub or other written notice? Have you been displaying a Healthy [...]
Digital Marketing for Small Business Digital marketing continues to skyrocket for many successful businesses. With advanced technology, numerous social media outlets, and an app for just about anything, there are many opportunities to promote “you”. Having a digital marketing plan is essential; however, it can take a great deal [...]
Business Start-Up Strategies As you start a new business, it will take hours of planning to turn a dream into reality. Entrepreneurship requires determination, motivation, and knowledge. There will be many challenges before and after you launch, but we have provided you with eight strategies to help begin [...]
Use Social Media to Improve Business With multiple social media outlets, using the web can get overwhelming and confusing. Choosing the best media outlets for your business is essential in marketing your business. Make sure to have a clear-cut strategy on to whom and how to promote your [...]
Overtime Law for Small Business President Obama has proposed a new standard for employee overtime. Currently, the Federal Fair Labor Standards Act (FLSA) exempts employees who are performing managerial duties or any professional worker receiving $455 a week from overtime. This means an employee earning slightly less than [...]
When to Register a Foreign Business in California If you have a corporation, S-Corp, or LLC formed in a state other than California, or you are planning to start a corporation, S-Corp, or LLC in a state other than California, and you will do business with one or more [...]
Proposed Equity Crowdfunding Rules Released On Thursday, October 24th, the SEC released a proposed set of equity crowdfunding rules that would allow companies to sell securities via equity crowdfunding. While made legal when President Obama signed the JOBS Act on April 5, 2012, crowdfunding will remain limited to [...]
CyberSecurity Threats to Small Businesses October is National Cybersecurity Awareness Month, making this the perfect time to inform businesses, especially small businesses, about cybersecurity issues. A study released by Symantec revealed a 72% increase in cyberattacks against small businesses. Cyber attacks that target small businesses comprise one-third of [...]
Small Business Under Obamacare Effective today, there is a change in the healthcare system of the United States of America, forcing government into the once private health care industry through the creation of government exchanges in which people, whether or not employed, must obtain government-mandated health insurance to [...]
General Solicitation Rule 506(c) As mandated by the Jumpstart Our Business Startups Act (JOBS Act) signed April 5, 2012, the Securities and Exchange Commission has released a final rule ending (under specific circumstances) the eighty-year ban on general solicitation of private placements. Rule 506(c) of Regulation D became effective September [...]
2013 Changes for California Business As of January 1, 2013, the California Secretary of State’s office has some new legal requirements applicable to business entity documents. The changes were legislated under California Senate Bill 1532 and apply to documents filed on or after January 1, 2013. [Read the [...]
Rule 506 General Solicitation The Securities and Exchange Commission has released proposed amendments to Regulation D of the Securities Act of 1933 that would allow for general solicitation (read: advertising) of private placements. The proposed rules, mandated under the Jumpstart Our Business Startups Act (JOBS Act), were published [...]
LLC vs. Corporation for Equity Crowdfunding The traditional debate for promoters of start-ups when choosing which entity to utilize has been confined to three (really four) choices: sole proprietorship/partnership, S-Corp, or LLC. In most instances, each of these forms has allowed for initial losses to be passed through to [...]
Equity Crowdfunding is "No Fund" I recently received a question about the use of equity crowdfunding to create an investment pool that would create a small investment fund to purchase equity and debt securities in other small businesses. In short, the answer is that it is not allowed. While [...]
Avoid the Crowd Even before equity crowdfunding was signed into law earlier this month, an article in The Wall Street Journal voiced a critical opinion of equity crowdfunding. The idea behind equity crowdfunding is to ease the process of capitalizing small and start-up businesses; in turn, it is [...]
Preparing for Equity Crowdfunding Equity crowdfunding will not become available for mass use until early 2013. However, it is expected that a great deal of investor money will be ready for equity crowdfunding when it comes online. Wefunder.com reported on April 6, 2012, just one day after the [...]
Equity Crowdfunding Fundamentals Although equity crowdfunding is now legal, the Securities and Exchange Commission (SEC) has 270 days to implement the equity crowdfunding provisions found in Title III of the Jumpstart Our Startups Act (JOBS Act) adopted last week. Until the SEC releases the regulations it proposes to [...]
Equity Crowdfunding Legal Today the Jumpstart Our Startups Act (JOBS Act) was signed into law. Within the law are two key provisions allowing small and startup businesses to capitalize by raising funds from investors. The first provision under Title II of the JOBS Act modifies the prohibition against [...]
Avoid LLC Pitfalls BEFORE FORMING AN LLC WITH AN ONLINE SERVICE, MEET A LOCAL ATTORNEY. THE CHEAP LLC YOU ARE THINKING OF BUYING FROM AN ONLINE SERVICE MAY NOT BE THE MOST INEXPENSIVE OPTION AVAILABLE. • Avoid spending HUNDREDS OF DOLLARS PER YEAR for registered agent services. • [...]
Pursue Investors For many small business owners, the thought of bringing investors into their business evokes emotions of both hope and fear. Yes, the dreams of capital to expand into new markets or finally develop the product that for years now has been stuck in R&D limbo would [...]
How to Choose a Business Name One of the most important decisions to make when organizing a startup is selecting a name for the business. Entrepreneurs spend dozens, if not hundreds, of hours developing the name of each new business to ensure the name will represent the business well [...]
Business Disaster Planning According to the Insurance Information Institute, 25% of American businesses forced to “temporarily” close due to a natural or man-made disaster are never able to reopen again. The primary causes of these post-disaster businesses failures are preventable if planned for in advance, but practically unavoidable if [...]
Determining Worker Classification Last month we discussed several ways to increase the profitability of your business by reducing operational costs. One of the cost-cutting methods I suggested was to trim from your payroll any employee who did not either make or save money for your business. Based upon this [...]
Increase Net Income by Reducing Costs With this being the first week of a new year, it is a good time for business owners to think about how to increase net income in 2011. The knee-jerk answer is to increase gross income by increasing sales. This thinking is not [...]
Start an Internet Business Over the last decade, the internet has changed the face of business. Before the internet, commerce was, in large part, dominated by those who had the means to open and support “brick-and-mortar” stores or offices. As the internet has gained more and more users, first [...]
Expand a Business Online Over the last decade, the internet has changed the face of business. Before the internet, commerce was, in large part, dominated by those who had the means to open and support “brick-and-mortar” stores or offices. As the internet has gained more and more users, first [...]
Starting a Biotechnology Business Starting a biotechnology business entails many of the same legal and business principles required to start any business and reviewing the page “Starting a Business” is a good starting point. The following is an overview of the biotechnology industry beyond generally applicable principles: Biotechnology Business [...]
Selling Franchises Selling franchises allows a business owner to rapidly expand a business with a proven business model at a fraction of the price of a similar expansion of company owned locations. Franchises are sold in a wide range of industries, so there is more than likely a market [...]
Sell an Existing Business Selling a business you already own is simple compared to the process of buying an existing business, but there are still several complex factors to consider, such as the fair market value of the business assets, federal bulk sale rules, federal and state securities laws, [...]
Buy a Franchise Buying a franchise allows the buyer to start a new business, operated under a proven business model, using a recognized business name already known and trusted by consumers. Franchises are for sale in a wide range of industries, so there is likely to be a franchise [...]
Grow an Existing Business Growing a business in order to increase profits is the ultimate business goal. In the early stages of developing a new business, growth may come quickly. However, as a business matures, continuing growth becomes more difficult. The most common methods of growth for maturing businesses [...]
Buy an Existing Business There several reasons to buy a business, including: • Entering into an industry by buying an existing, proven business with existing customers and known cashflow rather than starting a business from scratch; • Expanding the client base of your existing business through the acquisition of [...]
Starting a New Business Starting a business begins with planning. However, once the plan is in place, the plan must be executed. Below are the ten steps you will need to execute to transform your business idea into an operating business. #1. Write a Business Plan A well written [...]
