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Business Succession Planning In The Internet Age

This articles was originally published in Forbes. By: Doug Bend Many business owners build their businesses hoping that they will continue to generate income for their heirs after they pass away. However, businesses often die or lose significant value when the owner dies.  When strategizing how to make sure your business continues to thrive, it… Read More

This articles was originally published in Forbes.

By: Doug Bend

Many business owners build their businesses hoping that they will continue to generate income for their heirs after they pass away. However, businesses often die or lose significant value when the owner dies. 

When strategizing how to make sure your business continues to thrive, it is important to know that if you do nothing, your business already has a default game plan in place. If no additional planning is done, your business is an asset of your estate and will be subject to probate. 

There are four problems with this default game plan. First, it can take years for a court to probate your estate. In the meantime, your business can wither on the vine until the probate has been finalized. Second, if you do not have an estate plan, your heirs can fight over who will inherit the business. Third, whoever inherits the business under defaults in the law (intestate succession) might not be the best person to make sure your business will continue to grow and be successful. Lastly, if you have co-owners, they might not like the heir to your estate and could quickly get into disputes with the new owner that harm the business.

Estate Planning Attorney Megan Yip contributed insights regarding business succession, as our law offices are collaborating to provide the best insights into this emerging issue. There are two legal tools to consider when evaluating your options:

1. Buy-Sell Agreement

A buy-sell agreement is a legal contract between the co-owners of a company that addresses a variety of business-changing events, including when an owner dies. Instead of the deceased owner’s equity being a part of the assets that are distributed during probate, the buy-sell agreement can include an agreed-upon amount that will be paid to the estate in exchange for the business repurchasing the equity. Often, the purchase amount is financed with a life insurance policy on each owner of the business.

2. Proper Estate Planning

Instead of allowing your business to be subject to probate, the business owner can work with an estate planning attorney to have the business be an asset of the owner’s trust. This replaces a probate process that can take years with a more seamless transition from the deceased beneficiary to their heirs.

Whether you choose a buy-sell agreement or to include your business interests strategically in your estate plan, make sure you pay attention to the digital assets that are important to the continued operation of your business. Your business’s digital assets may include client lists and data stored in software systems, primary communication channels like email addresses, intellectual property or creative products, and even revenue streams like online stores or websites.

Here are my top three tips on considering your digital assets.

1. Know the policies that affect your tools. 

Most of our businesses today depend on software for managing client data, communicating with clients and keeping track of productivity. As part of your plan and regular course of business, review your software provider’s policies on what happens if your company needs to name a new point of contact, pay bills in a different way or be transferred to a different company in case the unexpected happens.

2. Balance security with redundancy. 

Many business owners focus on the security and safety of information and digital assets used in their business, and rightly so. A business’s success demands that owners and employees alike keep proprietary information and client information secure. However, that concern for safety needs to be balanced with a sort of redundancy that considers which trusted individual or team of people will have access to digital assets and an understanding of what to do with them if the owner or main management team is unable to tend to business as usual for any reason, including death.

3. Include digital assets in your legal documents.

Don’t just discuss digital assets; include an inventory of digital assets in your buy-sell agreement or estate plan. Get specific about who should get access to digital assets, how and at what juncture in case of emergency. Make a plan to review digital assets on a regular basis with your other assets, and keep in mind that they might change more often than traditional assets.

Making a detailed plan about who should have access and who should not have access to your business’s digital assets in the case of you becoming incapacitated or passing away is an important part of succession planning today. No matter what legal structure you employ to ensure your wishes for the continued success of your business come to fruition, developing a strategy for what should happen to the digital assets your company relies on needs to be a part of the process.

No one likes to think about dying. But taking the time to work on your business succession plan now can help ensure your heirs get the most value possible from the business you spent years of your life building long after you are gone.

Disclaimer: This article discusses general legal issues and developments. Such materials are for informational purposes only and may not reflect the most current law in your jurisdiction. These informational materials are not intended, and should not be taken, as legal advice on any particular set of facts or circumstances. No reader should act or refrain from acting on the basis of any information presented herein without seeking the advice of counsel in the relevant jurisdiction.  Bend Law Group, PC expressly disclaims all liability in respect of any actions taken or not taken based on any contents of this article

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Architectural Design and Copyright Law

By: Matthew Cox The construction industry is governed by many different bodies of law.  Arguably, contract law lays the unifying foundation for the industry. But other bodies of law still play vital roles in shaping the ever-changing legal landscape.  Intellectual property, and specifically copyright law, is vital to the industry. Just who owns architectural or… Read More

By: Matthew Cox

The construction industry is governed by many different bodies of law.  Arguably, contract law lays the unifying foundation for the industry. But other bodies of law still play vital roles in shaping the ever-changing legal landscape.  Intellectual property, and specifically copyright law, is vital to the industry.

Just who owns architectural or engineering design documents associated with a construction project?  Does the owner who contracted with the design professional for design services own the documents? Or, does the designer, by way of work product created by intellectual means, retain ownership of the plans and specifications?

Design documents are subject to copyright laws in the United States; they fall under the category of “technical drawings,” which includes architectural plans.  Whether or not unique aspects of the design were protected after construction was completed remained a looming question until 1990. Finally, litigation resulting from this issue persuaded legislators to clarify the code.

The straw that broke the camel’s back was a case brought in 1988 by an architect against a homebuilder who allegedly copied the architect’s design after it had already been used to build the home for which the design was initially drawn up.  The homebuilder used the design and constructed an identical home elsewhere. The court found for the builder…. and found no violation of the copyright.

In response, Congress amended the copyright laws to more clearly define architectural work as the design of a building as embodied in any tangible medium of expression, including a building, architectural plans, or drawings.  This tightening of the rule brings in arrangement and composition of elements, but still excludes individual features. Under this rule, the design professional, by law, owns both the design documents, as well as the unique design elements of the structure—but not the individual elements.

Parties are still free to contract how they see fit, so most agreements contain provisions for the owner to retain a limited license for the plans and specifications while the design professional retains ownership of the  documents. The copyright can also be transferred. Issues arise when the design professional has concerns about use of the design in unanticipated ways by the project owner. In this situation, an indemnity agreement holding the design professional harmless and charging the project owner with providing a defense upon suit is an adequate risk management option.  The general rule of thumb has become: the professional designer retains ownership of design documents unless the parties agree otherwise by contract.

Disclaimer: This article discusses general legal issues and developments. Such materials are for informational purposes only and may not reflect the most current law in your jurisdiction. These informational materials are not intended, and should not be taken, as legal advice on any particular set of facts or circumstances. No reader should act or refrain from acting on the basis of any information presented herein without seeking the advice of counsel in the relevant jurisdiction.  Bend Law Group, PC expressly disclaims all liability in respect of any actions taken or not taken based on any contents of this article.

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Amazon Brand Registry: Add Trademarks To The Cart

By: Vivek Vaidya The retail industry has been revolutionized by online marketplaces. Amazon leads the charge, with programs like Amazon Prime making it easier to purchase products online than going to a brick-and-mortar stores. The rise of Amazon has also caused an increase in counterfeiting, trademark infringement and the unauthorized resale of products on the… Read More

By: Vivek Vaidya

The retail industry has been revolutionized by online marketplaces. Amazon leads the charge, with programs like Amazon Prime making it easier to purchase products online than going to a brick-and-mortar stores.
The rise of Amazon has also caused an increase in counterfeiting, trademark infringement and the unauthorized resale of products on the platform. Third parties are selling products using the good will of others, resulting in lost sales and licensing revenue to the true owner of the brand. Previously, the only option for parties who believed their products may be victim to counterfeiting was to prove the infringement to Amazon, instead of the seller bearing the burden of proving that they are not violating the law. There has also been a growing concern with fraudulent complaints by parties who are not the true owner of a brand.

In an effort to streamline the thousands of complaints filed each day, Amazon has launched the Amazon Brand Registry. The Amazon Brand Registry allows brand owners, manufacturers, distributors, and resellers to control its content and marketing materials, including its titles, product descriptions, and product photographs. Most importantly, successful registration with the Registry establishes a brand owner’s valid ownership of a trademark with Amazon and provides an expediated process for causing Amazon to remove unauthorized sale of products bearing its trademarks. It also serves as a deterrent and a defense against fraudulent complaints.

The threshold requirement for joining the Amazon Brand Registry is trademark registration with the United States Patent and Trademark Office (USPTO). Not only can the store name be registered as trademark with the USPTO, but so can the individual products that are being sold, along with any logos and tag lines that are used. Copyrights registered with the U.S. Copyright Office can also be included, allowing copyright owners to efficiently cause the removal of infringing photographs, videos and other content.

If you sell your goods on Amazon, registering your trademarks with the USPTO and then with the Amazon Brand Registry is extremely important in the new retail landscape, and will provide great return on your investment. The process can be complicated, but we’re here to help with the logistics of protecting your intellectual property on Amazon and beyond.

Disclaimer: This article discusses general legal issues and developments. Such materials are for informational purposes only and may not reflect the most current law in your jurisdiction. These informational materials are not intended, and should not be taken, as legal advice on any particular set of facts or circumstances. No reader should act or refrain from acting on the basis of any information presented herein without seeking the advice of counsel in the relevant jurisdiction. Bend Law Group, PC expressly disclaims all liability in respect of any actions taken or not taken based on any contents of this article.

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US Supreme Court Decision Opens the Floodgate for Racially Offensive Trademarks

By: Paul Hirsch Since the Lanham act was passed in 1946, the United States Patent and Trademark Office had rejected trademark applications that include racially offensive language and symbols, because they “disparage … persons, living or dead, institutions, beliefs, or national symbols, or bring them into contempt, or disrepute”. In June, the US Supreme Court… Read More

By: Paul Hirsch

Since the Lanham act was passed in 1946, the United States Patent and Trademark Office had rejected trademark applications that include racially offensive language and symbols, because they “disparage … persons, living or dead, institutions, beliefs, or national symbols, or bring them into contempt, or disrepute”. In June, the US Supreme Court ruled that racially offensive trademarks are now protected under the First Amendment.

The Supreme Court decision emerged from the case Matal v. Tam, where an Asian-American rock band attempted to trademark their band’s name as “The Slants”, language considered to be a racial slur. The band had their trademark dismissed by the USPTO  for being “disparaging” under Section 2(a) of the Lanham Act. In June, the Supreme Court unanimously agreed that Section 2(a) of the Lanham Act “offends a bedrock First Amendment principle: Speech may not be banned on the ground that it expresses ideas that offend.” This decision cleared the way for offensive language, such as “The Slants”, to be trademarked.

Since the Supreme Court’s ruling in Matal v. Tam, the USPTO has seen a large influx of applications to trademark racially offensive language and symbols.

For example, an African-American man named Curtis Bordenave filed a trademark application for the “N-word” the same day the Matal v. Tam decision was made. Bordenave filed to use the language in association with retail store services, namely the sale of general merchandise.His goal is keeping the “N-word” out of visible circulation because he can enforce his trademark rights against its use.

Another example is Steven Maynard, an attorney, who has filed a trademark for the swastika symbol. Maynard plans on commercializing the offensive symbol on clothing and then charging an abnormally high price for the clothing, which effectively minimizes the symbol’s visible circulation in commerce.

Federal trademark registration protects parties against the unapproved use of their trademarked brands. In these cases, that includes the use of, or profit from, privately owned racially offensive language and symbols such as the n-word and swastika. However, there are conditions to attaining and keeping a registered trademark.

Prior to registering the trademark, applicants must show that there is a relationship between the brand, the product that is branded, and the consumer connection to both. If a design or word is universal or generally used by others the US Patent and Trademark Office may dismiss the trademark registration. Thus, it will difficult for applicants like Maynard to trademark the swastika, a universally known symbol.

After a trademark is registered, the trademark must be continuously used or it will be considered to have been abandoned. A party may not register trademarks for racially offensive language and simply hide it away forever. Thus, trademark owners who intend to control the censorship of the racially offensive language in commerce must simultaneously enter the trademark into commerce at a continuous rate. This could prove difficult.

Parties who intend to trademark racially offensive language to control the message will undoubtedly face difficulties along the way. Although the US Supreme Court’s decision in Matal v. Tam has opened the floodgate for racially offensive language to be trademarked, it is still unclear how these trademarks will be handled by the US Patent and Trademark Office. We may not have an answer anytime soon, as trademarks are normally not decided upon immediately, and may take years to approve or deny.

Disclaimer: This article discusses general legal issues and developments. Such materials are for informational purposes only and may not reflect the most current law in your jurisdiction. These informational materials are not intended, and should not be taken, as legal advice on any particular set of facts or circumstances. No reader should act or refrain from acting on the basis of any information presented herein without seeking the advice of counsel in the relevant jurisdiction.  Bend Law Group, PC expressly disclaims all liability in respect of any actions taken or not taken based on any contents of this article

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To License or Not to License: Guidance for Documentary Filmmakers

By: Brandon Shelton If you remember the early aughts and the Napster era of file sharing, then you are well aware of the widespread legal battles filmmakers and music producers have waged to protect their right to profit off of their works. However, if you’re a filmmaker just starting out in the documentary genre, it… Read More

By: Brandon Shelton

If you remember the early aughts and the Napster era of file sharing, then you are well aware of the widespread legal battles filmmakers and music producers have waged to protect their right to profit off of their works. However, if you’re a filmmaker just starting out in the documentary genre, it might occur to you to use footage, sound, or music produced by someone else. In such a case, you could be staring down a long list of needed licenses to copy and use such footage. By now you are probably wondering: “What about my First Amendment!?” To a degree, you’d be right—the First Amendment is the basis behind allowing some copying for critical works, a category to which documentary films clearly apply. However, the macro approach of assuming that the work overall absolves you of any licensing requirements is somewhat misguided.

The U.S. Copyright Act explicitly provides a “fair use” exception, which allows you to use prior works for the purpose of “criticism, comment, news reporting, teaching…, scholarship, or research.” 17 U.S.C. § 107. This exception is what allows you to do some license-free copying necessary to produce a documentary. However, not every aspect of your documentary will necessarily fit within this exception. Compare, for example, footage of Elvis Presley dancing while singing his music with added commentary explaining how his dance moves created controversy, versus a scene showing B-roll in a jailhouse during a documentary about Al Capone’s stay in Alcatraz while playing Jailhouse Rock in the background. In the first example, you are providing some instruction or critique of the music and the video. In the second, the relationship between your informative position and the work itself becomes much more tenuous. One clearly has a better fair use argument than the other. That being said, the line isn’t always clear, and the fair use protection provided by courts can differ from state to state.

As you create any film, you should always be aware of the works you are using and the licensing requirements that come along with them. In fact, if you ever plan to show a film anywhere, you will likely need Errors and Omissions (E&O) insurance, and the E&O providers are going to require either proof of a license, or a solid fair use analysis. In other words, the need for licensing and fair use analyses is a bridge you will have to cross to show your filmmaking genius to the world. That being said, don’t be afraid to try to seek out a license. If you believe in your work, stand by it, push through, and eventually, you will have created something to be proud of.

Disclaimer: This article discusses general legal issues and developments. Such materials are for informational purposes only and may not reflect the most current law in your jurisdiction. These informational materials are not intended, and should not be taken, as legal advice on any particular set of facts or circumstances. No reader should act or refrain from acting on the basis of any information presented herein without seeking the advice of counsel in the relevant jurisdiction.  Bend Law Group, PC expressly disclaims all liability in respect of any actions taken or not taken based on any contents of this article.

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Thinking Like an Examining Attorney

By: Vivek Vaidya When you apply to register a trademark with the United States Patent and Trademark Office (USPTO), an examining attorney is assigned to your application and decides whether or not to allow the registration.  They will consider if the registration should be barred because of a host of trademark law issues, the most… Read More

By: Vivek Vaidya

When you apply to register a trademark with the United States Patent and Trademark Office (USPTO), an examining attorney is assigned to your application and decides whether or not to allow the registration.  They will consider if the registration should be barred because of a host of trademark law issues, the most basic being if another mark is registered that looks or sounds similar and/or is involved with a similar stream of commerce.

That is why it is important to think like an examining officer.  Instead of using and applying for a mark that cannot be registered, it is best to be proactive when deciding what mark to use when starting a business and when going through the registration process.  Before filing a trademark application, you should perform as rigorous a search for conflicting marks as the USPTO examining attorney. Consulting with a trained attorney during this search process, and working with an attorney to analyze the viability of the mark based on trademark law, can often end trademark disputes before they arise and ensure a seamless registration rather than applying to register a mark that will only cause headaches later.

Once a mark is chosen, you must file an application with the USPTO.  The application contains many questions about the business, including making a determination of what class(es) to register in and an appropriate description of the goods or services that the mark is associated with.

After an application is filed, an examining attorney will analyze the application. The examining attorney relies on the Trademark Manual of Examining Procedure (TMEP) for guidance and decides whether or not to allow the registration.  If the examiner rejects an application for any reason, the examining attorney will issue an office action letter laying out their objections.

Responding to office actions requires a deep understanding of trademark law and USPTO process. Typically applicants hire experienced attorneys to handle office action responses.

If the examining officer decides that either the trademark should be registered straight out of the gate or the objections in an office action are remedied, the mark is published under a federal publication called the Official Gazette for a period of time.  This publication provides notice to others that the mark is to be registered, and it gives them an opportunity to oppose the registration. If there are no oppositions, the USPTO will register the mark, and mail you a certificate of registration. At this point, you will officially own a federally registered trademark, and all the benefits that come along with it.

Need some help thinking like an examining attorney?  Contact Bend Law Group, PC for all your trademark needs at (415) 633-6841 or info@bendlawoffice.com.

Disclaimer: This article discusses general legal issues and developments. Such materials are for informational purposes only and may not reflect the most current law in your jurisdiction. These informational materials are not intended, and should not be taken, as legal advice on any particular set of facts or circumstances. No reader should act or refrain from acting on the basis of any information presented herein without seeking the advice of counsel in the relevant jurisdiction.  Bend Law Group, PC expressly disclaims all liability in respect of any actions taken or not taken based on any contents of this article.

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The Silver Lining of the GDPR for Ad-Tech Companies

By: Vivek Vaidya The General Data Protection Regulation (GDPR) went into effect in May of 2018 and has caused internet businesses with European Union users to shift their data collection, storage, and usage practices.  The spirit of the GDPR is to give individuals greater control of their data in a world in which practically all… Read More

By: Vivek Vaidya

The General Data Protection Regulation (GDPR) went into effect in May of 2018 and has caused internet businesses with European Union users to shift their data collection, storage, and usage practices.  The spirit of the GDPR is to give individuals greater control of their data in a world in which practically all computer devices are connected and some estimate the internet of things to be a $9 billion industry by 2020.  The EU has recognized that it is important that users be able to control the valuable information they provide on the internet, especially in light of how often regular internet users input personal information.

Amongst the requirements of the GDRP is that data is collected in accordance with one of the following justifications: (1) with the consent of the user; (2) in performance of a contract with the user; (3) in order to comply with law; (4) for the purpose of health and safety; (5) to perform an official governmental function; or (6) based on the legitimate interests of an organization or third party.  For ad-tech companies who do not have a prior business relationship with the user, consent is the primary justification for processing personal information. Another requirement of note is that websites, apps, and online platforms be able to provide users with their data upon their request, and also delete data upon request.

The GDPR particularly affects ad-tech businesses that base their marketing practices on third-party data used to target consumers.  The inability of websites to share data is causing them to rethink their customer service, communication, and business strategies. Online marketers are no longer able to chase users around the internet with a bombardment of the same advertisements.

There have been different approaches by ad-tech companies for shifting their behavior while remaining relevant and complaint.  One is a hands-off approach, where companies have stopped collecting and handling personally identifiable information for users located in the European Union, which obviously hurts a company’s bottom line. A second approach has been to rely on the GDPR’s exemption of collecting data for a “legitimate business purpose,” which includes requested marketing, fraud prevention, and sometimes market research.  A third approach is the passive approach of hoping that the EU only goes after big players in the tech industry, and will have to make concessions and changes to the GDPR before going after the smaller fish.

Companies can still collect cookie-less data like keywords and search data and be GDPR compliant, which highlights the importance of creating a trustworthy relationship with users.  This type of first-party data, or data that the consumers have directly provided through a company’s website, should be prioritized in marketing efforts.

The GDPR is persuading many businesses to provide the same rights to all users, including those outside the EU, because of the momentum towards similar data privacy regulations in other jurisdictions.  However, it is important to realize that the GDPR does not consist of static regulations. Over the next months and years, there will be challenges and changes to the regulations, so it will be interesting to see how the EU changes the regulations and  publishes clarifications to vague and ambiguous portions of the law.

Overall, the GDPR requires businesses to move away from third party data collection and marketing campaigns based on this data, a practice that regularly annoys customers.  While this may seem like a hindrance on marketing efforts, the silver lining is that the regulations present an opportunity to create a unique value exchange with consumers that leads to more consumer trust and better bottom line results.  Companies that send too many irrelevant marketing materials and create bad customer service interactions are more likely to be contacted by consumers with burdensome GDPR information requests, so it is important to create relationships with users that make them feel comfortable providing first-party data and consent to receiving marketing materials.

The post-GDPR world means that ad-tech companies need to be more open and stop sales tactics that irritate consumers.  One positive effect of the GDPR is that companies are being forced to be more open, deliver more value, and enhance their relationship with consumers.  It should cause a constructive impetus for improvements across the tech industry, and companies that bear this in mind will do well to grow their bottom line.

Disclaimer: This article discusses general legal issues and developments. Such materials are for informational purposes only and may not reflect the most current law in your jurisdiction. These informational materials are not intended, and should not be taken, as legal advice on any particular set of facts or circumstances. No reader should act or refrain from acting on the basis of any information presented herein without seeking the advice of counsel in the relevant jurisdiction. Bend Law Group, PC expressly disclaims all liability in respect of any actions taken or not taken based on any contents of this article.

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