By Joseph R. Soraghan
The JOBS (Jumpstart Our Business Startups) Act (the “Act”), was signed into law by the President on April 5, 2012.
The Benefits to Entrepreneurs
Probably, to entrepreneurs, the most important change in the “Act” is the elimination of the ban on “general solicitation”. This elimination in effect allows advertising of small (heretofore “private”) offerings of investments in their businesses. For companies seeking pre-seed, seed and angel investment, this step creates or implements essentially two new types of offerings:
- Accredited investor offerings, in which the investments may be sold only to accredited investors (those who meet significant net worth or income requirements), which offerings are not new, but in which now the issuing company may advertise the offering in mass settings, such as newspapers, broadcast, and most importantly, on the Internet and in social media; and
- “Crowdfunding” offerings, also generally solicited, in which non-accredited investors may purchase the investments, but only (a) up to the lesser of $10,000 and 10% of their annual income; (b) with the assistance to the company of “intermediaries” who must meet certain requirements; and (c) with maximum sales in each offering limited to $1 million in any 12 month period (hereinafter called “crowdfunding”).
It is my belief that perhaps the most beneficial of the above two “new” offerings will be the first, that which simply removes the prohibition on advertising on offerings to accredited purchasers only. The removal of that prohibition will allow an issuer to reach many more possibly interested persons, and therefore many more accredited investors. And although those offerings will not require the use of registered brokers dealers or unregistered intermediaries, the entrepreneur offering companies will now be able to use “intermediaries” (or “portals”) who no longer must be fully registered as broker-dealers, to assist in finding and working with accredited investors. This will be a huge advantage to entrepreneurs seeking capital. And this type offering will place no restrictions on the dollar amount which the purchasers may acquire or the amount which the entrepreneurial business may raise.
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05/17/12 3:14 PM
Business Law, Emerging Business, Intellectual Property, Manufacturing and Distribution | Comment (0) |
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Crowdfunding is Not the Best Thing in the Jobs Act for Entrepreneurs
By Ruth Binger
Thanks to an exponential growth rate in technology, the Internet has changed the world and how we communicate with each other. In 1995, 16 million people used the Internet. Last year, 2 billion people used the Internet and in 2020 it is predicted that the number will be over 5 billion.
Google, a 12-year-old company, has certainly fueled this growth. Social media platforms have also supercharged Internet usage. Facebook claims to have over 800 million active subscribers, LinkedIn claims 85 million subscribers and YouTube has over 100 million videos online.
However, the way we relate to and judge each other, whether it is for employment, relationships, or credit history, has not changed. We are all trying to predict each other’s future behavior for the relationship(s) and transactions we seek.
Facebook purports to be worth $104 billion with its purchase of Instagram. Why is it worth so much? Because companies are spending over $2 billion per year to collect information from social media outlets about what we as consumers want. Our behavior and our opinions can be measured in fine detail as we post and that behavior can be monetized. For example, it is estimated that your personal/buying information is worth $50 to $500 to Google, depending upon how much you spend. On Twitter, each of your followers, assuming you have a large following, could be worth as much as $2.50 each per month. In short, personal data greases the Internet. The data we share (names, addresses, pictures, precise locations, and links) helps companies target advertising based not only on demographic but also on personal opinion and desires.
What does all of this information mean to you as an individual? Technology rules will continue to change, so you need to be vigilant. It is important for you to keep up with the positives and negatives of the rapidly changing technology. Right now, social media is at its height but it is designed for websites. That is predicted to change as the world moves to smartphones. Nearly $1 million worth of features come with any smartphone and there are a billion smartphones in the world. Within the next decade, 6 billion people will have a constant connection to the Internet. This explains why Facebook recently bought Instagram, a mobile app company, for $1 billion. Facebook wants to conquer the smartphone market and not be left behind. Continue reading »
05/2/12 9:04 AM
Business Law, Digital Media, Employment Law, Manufacturing and Distribution | Comment (0) |
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Social Media: Six Ways to Protect Today’s You and Tomorrow’s You
By David A. Zobel
Within the past few months more and more news outlets have reported stories of employers asking job applicants for their Facebook login information. While many applicants understandably feel uncomfortable with the idea of their potential employer delving through their private lives, applicants are typically not in the position to decline.
This new trend has sparked an inevitable inquiry: is it legal? At this time, the answer is uncertain. Like many issues arising from the fast-paced and ever-changing world of the Internet and social media, the law has not caught up with the question. There does not appear to be a statute, regulation or court decision directly on point – either at the federal or state level. Consequently, experts on both sides of the issue have begun considering and arguing whether any statutes, regulations, or court decisions indirectly apply to the issue.
Missouri statute does not appear to directly prohibit such a practice; however, this does not mean it is wise for employers to engage in it. The reason has little to do with the actual practice of asking for the login information, but rather concerns what may be potentially discovered by such practice. No, I am not referring to finding rants about past employers or photos of bad decisions and misdemeanors. Employers should be concerned about finding family or pregnancy photos, photos of the applicant in the hospital, and/or religious views.
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04/23/12 11:56 AM
Business Law, Digital Media, Emerging Business, Employment Law, Litigation, Manufacturing and Distribution | Comment (0) |
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The Facebook Folly: Why Browsing an Applicant’s Facebook Profile Could Present Problems for Missouri Employers
By David R. Bohm
Part of a series on issues related to Manufacturers, Distributors and International Trade
Co-authored by David R. Bohm and David A. Zobel
A major change involving subpoenas to non-parties has hit the business world in the state of Missouri.
A new amendment to the Missouri Supreme Court Rules now requires non-party record custodians to physically appear at deposition to produce subpoenaed items, unless all parties to the litigation have agreed that the subpoenaed party may produce the items without appearing.
The amendment changes the prevailing practice where parties send out subpoenas to third parties with a letter explaining that they will be excused from appearing at deposition if they produce the requested items along with what is known as a business records affidavit.
Rule 57.09, as amended, now requires parties to first obtain consent from all other parties to the litigation before a subpoenaed witness may produce documents without attending the deposition. This agreement must be communicated to the witness in writing. Absent this agreement, a witness must appear to produce subpoenaed items at deposition.
What does this mean to you? If you receive a subpoena, you may only produce the documents to the party serving the subpoena without appearing at deposition if that party represents to you in writing (e.g., in a letter) that all other parties have consented to production of the documents without need for you to appear at the deposition. Such a letter should protect you from allegations that you improperly produced records by mail, instead of bringing the documents to the deposition. You do not need to see the actual agreement. If you have any questions as to whether you can simply mail the documents, instead of appearing at deposition, you should either call your attorney for advice or simply wait and bring the documents at the time and place designated in the subpoena.
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03/28/12 12:30 PM
Banking and Finance, Bankruptcy, Business Law, Employment Law, Healthcare, Intellectual Property, Litigation, Manufacturing and Distribution, Real Estate, Tax, Workers' Compensation | Comment (0) |
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Is This by Consent? Changes to Missouri Supreme Court Rule Affect Use of Non-party Subpoenas
By David R. Bohm
Part of a series on issues related to Manufacturers, Distributors and International Trade
In order to prevail on a claim of trademark infringement under the Lanham Act (the federal trademark law), a common law claim of trademark infringement, or a claim of unfair competition, a plaintiff is required to show that the infringing use be “likely to cause confusion or to cause mistake.” 15 U.S.C. § 1114(a).
In Sensient Technologies Corp. v. Sensory Effects Flavor Co., 636 F.Supp.2d 891, 899 (E.D.Mo. 2009), the Court set out determine whether such a likelihood of confusion existed. To make the determination, the Court
“… [considered] six nonexclusive factors.” Everest Capital Ltd. V. Everest Funds Management, LLC, 39 F.3d 755, 759 (8th Cir. 2005). These factors are:
“(1) the strength of the owner’s mark; (2) the similarity of the owner’s mark and the alleged infringer’s mark; (3) the degree of competition between the products; (4) the alleged infringer’s intent to ‘pass off’ its goods as the trademark owner’s; (5) incidents of actual confusion; and (6) the type of product, its cost, and conditions of purchase.”
Luigino’s Inc. v. Stouffer Corp., 170 F.3d 827, 830 (8th Cir. 1999).
Step One in the determination of a claim of trademark infringement involves the strength of the owner’s mark. If a mark is generic, it is entitled to no protection. If the mark is descriptive (which is the weakest category of protectable marks), it is only entitled to protection where the mark has developed secondary meaning; i.e., where the mark is widely recognized as identifying the source of the goods.
A generic term can never function as a trademark because it refers to the common name or nature of the article. Id. A generic term does not identify the source of a product, but rather indicates the basic nature of the product. See id…. “Because a generic term denotes the thing itself, it cannot be appropriated by one party from the public domain….” Likewise, descriptive terms are generally not protectable because they are needed to describe all goods of a similar nature. Such a term describes the ingredients, characteristics, qualities, or other features of the product…to be afforded protection, then, a descriptive term must be so associated with the product that it becomes a designation of the source rather than a characteristic of the product. Schwan’s IP, LLC v. Kraft Pizza Co., 460 F.3d 971, 974 (8th Cir. 2006).
“A strong and distinctive trademark is entitled to greater protection than a weak or commonplace one.” SquirtCo v. Seven-Up Co., 628 F.2d 1086, 1091. (8th Cir. 1980).
Strong marks are those that are suggestive, fanciful or arbitrary, with the last classification (essentially made up words) being the strongest.
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03/27/12 2:35 PM
Business Law, Intellectual Property, Manufacturing and Distribution | Comment (0) |
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To Prevail on a Trademark or Unfair Competition Claim There Must Be a Likelihood of Confusion
By Ruth Binger
Part of a series on issues related to Manufacturers, Distributors and International Trade
Historically, St. Louis has been known as a manufacturing region. But over the past few decades, manufacturing jobs have dropped significantly. St. Louis has lost nearly half of its factory jobs since 1990 and now only 1 in 10 working St. Louisans work in manufacturing.
2011 saw a slightly positive sign of recovery in manufacturing. 3,400 jobs were added to the manufacturing sector in this region. Boeing’s deal to build 85 F-15s for Saudi Arabia should continue fighter jet production in the region through 2020. General Motors recently decided to make a huge investment in its Wentzville plant, adding over 1,200 new jobs.
The U.S. Bureau of Labor Statistics recently announced that total nonfarm payroll employment rose by 243,000 in January and the unemployment rate decreased to 8.3 percent. The BLS also recently announced that nonfarm business sector productivity increased at a 0.7 percent annual rate during the fourth quarter in 2011. This reflects of 3.6 percent in output and 2.9 percent in hours worked.
There are positive signs that St. Louis manufacturing jobs are increasing.
Posted by Attorney Ruth Binger. Binger serves both emerging and mature businesses concentrating in corporate law, intellectual property and technology law, and labor and employment law. Her commitment to the success of small to medium-sized businesses, and her understanding of multi-faceted issues inherent in operations, are what distinguish Binger’s practice.
02/21/12 2:30 PM
Employment Law, Manufacturing and Distribution | Comment (0) |
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Manufacturing Showing Signs of Improvement in St. Louis
By Ruth Binger
Part of a series on issues related to Manufacturers, Distributors and International Trade
Ralph Waldo Emerson warns that “rest, conservatism, appropriation, inertia; not newness, not the way onward” are forms of old age which causes people (I submit companies also) to be dead while they are yet alive. Yet, your manufacturing company can grow young again, if you as the leader/owner pursue and embrace strategic planning, innovation, and sustainability.
The root cause hindering such onward movement is frequently caused by a lack of succession/exit strategies for business owners/leaders. The Small Business Administration estimates that at any given time, forty percent of businesses are facing transfer of ownership issues. Without arriving upon a succession plan/exit strategy for the owner/leader, onward is not possible.
Rather, the bitter truth of humanity is realized – we all die and many times we take our companies with us. The familiar aphorism “shirtsleeves to shirtsleeves in three generations” describes the propensity of family-owned businesses to fail by the third generation. In fact, it is estimated that less than one-third of family businesses survive the transition from first to second generation ownership, and only 10 percent remain active for the third generation to lead.
By creating an exit/succession plan, a business owner/leader is forced to consider not only what the business needs today but what is needed for the future. The owner will make hundreds of decisions differently such as: making an S Corporation election; entering into contracts with key employees, distributors, and suppliers; maintaining clean records; developing and incenting a good management team; and/or transferring stock to family members. Without a plan, the business will mostly die due to the lack of necessary investment in leadership and talent, business systems, and “state of the art” equipment.
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02/7/12 1:07 PM
Business Law, Manufacturing and Distribution | Comments Off |
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Lack of an Exit Plan Equals Dead Company Walking
By Marcia Swihart Orgill
Part of a series on issues related to Manufacturers, Distributors and International Trade
The overseas theft of trade secrets is a major concern of companies with business operations outside of the United States. A recent decision by the Court of Appeals for the Federal Circuit provides U.S. companies with a new weapon to protect against trade secret misappropriation that occurs completely outside the United States. While welcome news for U.S. businesses, it is important that they remain vigilant in developing and implementing preventive measures for the international protection of their trade secrets.
In TianRui Group Co., et al. v. ITC et al., 661 F.3d 1322 (Fed Cir. Oct 11, 2011), the U.S. Court of Appeals for the Federal Circuit held that the U.S. International Trade Commission (ITC) has the authority to exclude imports of products into the United States that are manufactured outside the United States using a misappropriated trade secret process, even when the misappropriation occurs outside the United States and there are no goods being manufactured in the U.S. using the protected process.
The Court held that in determining whether a trade secret has been misappropriated, the ITC should apply U.S. federal common law of trade secret misappropriation rather than the law of any particular U.S. state or of the country where the misappropriation occurred. The application of federal common law in actions brought before the ITC involving the overseas theft of trade secrets will make it easier in many cases for U.S. companies to prove the theft of their trade secrets, because proving trade secret misappropriation is generally more difficult under the laws of many other countries.
The holding in TianRui has no bearing on the sale or importation of goods outside the United States that were manufactured using misappropriated trade secrets of a U.S. manufacturer. Consequently, U.S. companies will still need to think globally when adopting trade secret protection measures.
The definition of what constitutes a trade secret and the elements for proving trade secret misappropriation vary from country to country. Additionally, there are regional competition laws that affect trade secret protection. Taking into account these laws when drafting confidentiality and non-compete provision is necessary to ensure trade secret protection and the enforceability of the provisions or agreements. Post-employment restrictive covenants need to be drafted to take into account the relevant statutory and judicial law, because if they are drafted too broadly they will be unenforceable.
In many countries a post-employment non-compete clause is not valid unless there is separate compensation for the restrictive covenant (e.g., China and Germany). In other countries, non-compete agreements are prima facie void on public policy grounds, and therefore, particular care is required when drafting a non-competition agreement in order to ensure that it will be considered reasonable under the applicable country’s laws.
To prove access to confidential information, it is advisable for a company to require written acknowledgement of the receipt of company information from employees, consultants, subcontractors and any other third parties at the time of disclosure, as well as having these individuals sign confidentiality agreements. In some countries, having a signed confidentiality agreement is not sufficient to prove access to a trade secret.
As a result of the decision of the U.S. Court of Appeals for the Federal Circuit in TianRui, U.S. companies have a powerful enforcement mechanism to protect against the imports of competitor products into the United States if the foreign manufacturer engaged in conduct that constitutes an unfair trade practice under U.S. law.
However, when drafting confidentiality agreements, trade secret preventive measures and post-employment restrictive covenants, U.S. companies still need to consider carefully the statutory and judicial laws of the relevant foreign country and region.
Posted by Attorney Marcia S. Orgill. Orgill concentrates her practice in the area of business and personal taxation—especially complex domestic and international tax strategies.
01/31/12 9:41 AM
Intellectual Property, International, Manufacturing and Distribution | Comments Off |
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Protecting Against the Overseas Theft of Trade Secrets
By Marcia Swihart Orgill
Substantial Risks Exist for Misclassifying an Overseas Consultant as an Independent Contractor
Part of a series on issues related to Manufacturers, Distributors and International Trade
With both the IRS and the Department of Labor targeting the misclassification of U.S. employees as independent contractors, many companies are re-examining their worker classifications. While most U.S. companies are aware of the costly consequences of such misclassification, they may not be cognizant of the considerable dangers of misclassifying foreign workers as independent contractors.
Frequently, U.S. companies choose to engage local representatives in their overseas markets as independent contractors rather than employees in order to avoid compliance with foreign employment laws, withholding tax requirements and social welfare/insurance contributions. In many countries, these obligations may be considerably more onerous than they are in the United States.
However, the consequences of misclassifying a foreign worker as an independent contractor are frequently more costly as well.
For example, in Germany an employer is obligated to remit social security type payments for its employees that are equal to about twenty percent of the employee’s compensation to German social welfare and insurance agencies. The employer is also required to withhold from the employee’s compensation the employee’s social security obligations which are also equal to about twenty percent of his/her compensation.
If an employer fails to withhold the requisite amount from the employee’s wages, the employer becomes liable for the employee’s social security obligations. The employer many not seek reimbursement for this amount from the employee, regardless of any contractual agreement that provides for such reimbursement. The look back period for collection of these social security payments is thirty years in some cases.
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11/14/11 4:41 PM
Business Law, Employment Law, International, Manufacturing and Distribution | Comments Off |
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Beware: It’s Risky to Misclassify an Overseas Consultant
