Techdirt:

I know a fair number of patent lawyers and copyright lawyers who are quite skeptical of what’s become of patent and copyright law — and who readily admit that the law has gone way beyond what is reasonable or what the law was designed to do (i.e., “promote the progress…”). And yet there are some in the patent or copyright legal business who somehow seem to think that it’s traitorous for a patent or copyright lawyer to ever dare question the idea that patents and copyrights work. I had a patent lawyer argue with me the other day that of course patents encourage innovation, because the Constitution says they do. This sort of logical blunder blows my mind. How can otherwise intelligent people assign such backwards logic to things? Do these same people also believe that when Congress passes any law, it automatically achieves its goals?

I have a good friend, who has recently made it through law school. Since he spent over a decade as a computer scientist, the law firm he went to work for made sure he did a rotation in the patent group (but of course).

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Financial Post:

If you’re in the midst of divorce, meditation, a healthy diet, plenty of exercise and laughter could help your business – and you – survive. That’s because the better shape you’re in, the greater the likelihood you’ll be able to tend to the business.

Not only does the divorce of a business’s owners often unleash uncertainty in the minds of everyone from employees to customers and suppliers – putting the business at risk- but it’s also a very difficult time for the owners themselves, which can result in them neglecting the business’s needs. The fact is, the best time to ensure a husband/wife-owned company will survive a divorce is during business’s honeymoon period, or at least during its good times.

The problem is most happily married couples cannot even begin to imagine what going through a divorce is like. So to ensure their business’s survival and minimize the upheaval divorce can cause, the first step is for the spouses to take a good, hard look at all that could go wrong- when all is going right and they’re thinking rationally.

“I often suggest to couples that they lay down on the table worst-case scenarios,” says Ruby Wong, a partner at Toronto-based law firm Cassels Brock & Blackwell LLP, who specializes in corporate and commercial matters.

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New Hampshire Business Review:

Many high-tech companies, particularly smaller ones, borrowed money to fuel their growth during the recent boom. They borrowed money from banks, venture capitalists, friends and family members and used their intellectual property — patents, copyrights and trademarks — as collateral for the loans.

Now that the economy is, colloquially, in the “dumper,” these high-tech companies are defaulting on their loans. The question arises as to who has the earliest perfected security interest in this intellectual property and is, therefore, first in line for the collateral and who has an “imperfected” security interest and is left empty-handed.

Article 9 of the Uniform Commercial Code governs the method of perfecting security interests in personal property, which includes intellectual property. In general, a lender must file a UCC-1 Financing Statement describing the collateral with the secretary of state of the state in which the borrower resides in order to perfect a security interest. However, Section 9-310 (a) specifies that UCC-1 filings are insufficient when a system for perfecting security interests under federal law is established. Thus, the proper perfection of a security interest in IP depends on whether federal law preempts the UCC requirements.

There do not appear to be any statutes or cases expressly addressing the perfection of security interests in domain names. Thus, security interests should be perfected by recording UCC-1 Financing Statements.

There also is no federal statute specifically addressing the issue of perfecting security interests in trademarks, regardless of whether the mark is a common law trademark or a federally registered one. Therefore, the proper method of perfecting a security interest in a trademark is through the filing of a UCC-1.

The U.S. Patent and Trademark Office does provide a system for recording security interest in trademarks. Read full article.

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Inc.com:

Captive insurance companies have been growing by leaps and bounds. A captive is an insurance company that insures the risks of its parent company. It is owned by a parent or, at times, by the shareholders of the parent company. The operating entity insures all or part of its risks with its captive company. The captive may reinsure some or all of such risks, or may retain such risks. The benefits of a captive may be many, but the primary goal is to retain the profit that would have been made by an outside third-party insurance company or to provide coverage where coverage would not be available.

There are many different types of captives depending on the needs of the parent company or its owners are, including Single Parent Captives, Association Captives, Group Captives, Agency Captives, and even Rent-a-Captive, among others.

Captives, like all insurance companies, have specific tax rules that allow them special benefits not available to other companies. An insurance company receives premiums, pays it expenses, and then invests the money it has retained, known as reserves, to pay for future claims. An insurance company receives an income tax deduction for almost all of its funds deemed reserves, and can invest and accumulate these funds. A regular corporation pays income tax on the funds it retains as profits. Yet, as the business of insurance requires the payment of future claims, the accumulation of funds is a necessity for being able to pay such claims.

The amount of reserves that a company can accumulate is determined by an actuarial calculation of the nature and amount of risks it covers, combined with the insurance rules as to the types of allowable investments for company reserves. There are restrictions upon what types of investments and what percentage of assets per investment may be made. The jurisdiction or state of the insurance company’s license will also have an effect on its operations and retentions.

A company owning a captive normally receives an income tax deduction for the payments it makes to such captive as an ordinary and necessary business expense within IRC §162. The captive receives such funds, pays its operating expenses and then deducts the allowable amounts of reserves it invests. If a claim is made the reserves are used to pay such claims.

A captive insurance company may provide an opportunity for a company that either self insures certain risks to have a current income tax deduction for payments to another entity it owns, or its shareholders own, that will provide the future funds for what would otherwise have been a non-deductible current assumption of risk. Read full article.

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PowerHomeBiz.com:

Daycare regulations like it or not, are necessary. Many view them as an inconvenience, designed to make our lives more difficult and a constant reminder of the increasing red tape in our day care businesses. Although our world in general appears to becoming more bureaucracy happy much of this legislation exists for a reason. More importantly, much of it is there to help protect those who are most vulnerable in our society.

Daycare regulations, however, really only ensure that the minimum standards of care are being met. There is much above and beyond the stated rules that can be done to improve the quality of care and early education children are receiving. I like to think of the regulations and my inspection reports as guidelines, tools for updating the service I provide.

I don’t view them as a criticism of what I do but as a priceless workbook that inspires and aids me to further improve upon what I am doing. Consider what many companies pay consultants to update their systems, procedures, quality control and effectiveness. We get it all through our daycare regulations and inspections. Full article.

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AllBusiness:

When you can legally fire employees isn’t an easy question to answer. Laws and cases have become increasingly protective of employees. Although the “at will” doctrine is still prevalent in many states (meaning that you can freely fire an employee at any time), there are many exceptions. Plus, employees are increasingly suing managers and companies for “wrongful termination,” harassment, discrimination, and other reasons.

Employment lawsuits can be nasty and expensive, and they can generate negative publicity for your company. Juries tend to be particularly partial to terminated employees.

So when can you legally fire an employee? Here is a list of some reasons that should generally stand up:

1. Consistent incompetence. If an employee just isn’t able to do a competent job, and you have given the employee a reasonable opportunity to succeed, then termination will often be seen as appropriate.

2. Violation of company policy. If you have established clear, legal, and consistent policies, and the employee obviously has violated them in a meaningful way, then termination is appropriate. Violation of antiharassment, discrimination, or confidentiality policies are particularly actionable.

3. Repeated unexcused absenteeism or tardiness. Your company depends on its employees to show up for work and perform their jobs. Continual absence or tardiness jeopardizes the ability of an employee to complete important tasks. If absenteeism or tardiness is continual and unexcused, then termination may be justified. Be careful to investigate the reason for the absences. If they’re the result of a medical condition, you may need to accommodate that condition, or at least attempt to do so.

4. Physical violence. If an employee commits or threatens physical violence, you will want to fire him or her immediately. All employees are entitled to a safe work environment, and employers have a duty to take reasonable steps to provide for that.

5. Drugs and alcohol. Depending on the circumstances, being under the influence at the office may be grounds for immediate suspension or termination. Some companies now offer treatment and rehabilitation counseling as an alternative to immediate firing. Conditions caused by the use of prescribed drugs may also require a more tempered response.

More reasons here.

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… let’s grab a fistful of paper dollars. Think about stuffing them down a storm drain. Small businesses unwittingly throw money away — well, no. They actually send it to the government.

Droves of small-business owners overpay taxes because they don’t know the rules, they don’t take time to learn, they are too busy running the business, they have paperwork chaos.

Business offices need to identify transactions so the tax preparer has a fighting chance to get it right. I’ve seen the brown paper bag of receipts come to a CPA office. Hundreds of dollars worth of restaurant receipts for, well, who knows, crumpled in the bag.

To be deductible, slips need some identifiers. I’ve been taught to write the names of the people who ate, plus the business topics that were discussed on the receipts for those meals. And those receipts also need to show the date and the place where the meal took place.

Properly notated, all or most of those receipts in that crumped bag might have been deductible at tax time. But I was instructed to ignore them. They wouldn’t have passed an audit. Generally, only 50 percent of meal expense is deductible. You need to “stay tuned” to the tax laws and the information the preparer will need. Standard meal allowance may be used when traveling. Higher percentages are allowed for “hours of service,” defined by the federal Department of Transportation.

Where else is Ms. or Mr. Small Business throwing money away? The Internal Revenue Service allows 100 percent deduction for holiday parties, summer picnics for employees and employee/stockholder/director meetings. Also, entertainment and meals made available to the general public are 100 percent deductible. Read full article.

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News-Leader.com:

The National Federation of Independent Businesses will present a seminar, “Keeping Small Business Out of Court: 10 Ways Small Business Owners Can Avoid Lawsuits,” on June 25 in Springfield.

Beth Milito, senior executive counsel of the NFIB Small Business Legal Center, will present the seminar from 11:30 a.m. to 1:30 p.m. at Mille’s Cafe, 313 S. Jefferson Ave.

The $15 registration fee includes lunch and copies of the NFIB Guide to Wage and Hour Laws, the NFIB Guide to Managing Unionization Efforts and the Federal Employment Law Handbook.

Register online at www.NFIB.com/MO or contact Kathy Peerson at (866) 782-6390.

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By Cali Zimmerman – NuWire Investor:

Buying a business that is already up and running can potentially be a wiser choice for an entrepreneur than starting up a company from scratch. In exchange for the higher upfront costs, buyers of an existing business receive a business that’s already on its feet and has immediate cash flow. If investors play their cards right during a recession, they can pay low prices for small businesses that will drastically increase in value once the economy begins to recover. But there are special considerations to bear in mind when purchasing businesses during a recession and buyers need to be extra careful not to sink their money into a business that’s destined to go belly up.

“It may be the best time ever [to buy a business]. It’s a buyer friendly market, which we don’t see often…. People need to avoid this paralysis or fear just because of the ‘r’ word; it’s a very opportune time for people,” Richard Parker, founder of Diomo Corporation and author of eight programs on buying businesses and leading small market intermediaries, said.

Even if buyers shouldn’t let themselves be terrified, it’s important to remember that “the ‘r’ word” has had some real effects on the market that need to be taken into account. It may be difficult to find businesses that are still financially viable. Certain sectors have been hit harder than others; buyers would be wise to steer clear of businesses focused on real estate—such as construction or mortgages—for the time being. If investors are uncertain about a potential business purchase, they should take a look at its history in conjunction with its present state.

“A good business to buy in this economy is one that was making a lot of money and is still making a little money; [buyers will] be poised to make a lot of money again,” Andrew Cagnetta, CEO of Transworld Business Brokers, said. “You can always point to healthcare [as a good sector in which to buy]. That’s going to be good because we have an aging baby boomer population.”

It’s important to realize that a business’s own cash flow is not the only factor that needs to be considered. If the business in question sells to other business, the buyer needs to investigate the financial health of those other businesses as well, according to Parker. Even an apparently thriving business could go be forced to close its doors if half its customers suddenly declare bankruptcy.

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ecademy:

Running a small business can be a legal mine field, and without appropriate knowledge and understanding of the relevant risks involved, you can quickly find yourself in some difficulties. Running a business without consideration for the law can be dangerous, particularly when considering the potential financial and even criminal risks you may be running. That’s why it’s a good idea to have an idea of the relevant legal provisions that may apply to particular circumstances in order to understand where you might be personally liable, and how you can avoid incurring such liability when managing a small business.

The first thing to bear in mind is that a business has its own legal formalities relating to the particular business form you choose. For example, running your business as a sole trader will require very little in the way of natural legal formalities, other than that you file appropriate tax returns annually and keep appropriate records of your financial transactions on a daily basis. This burden is far stricter if you choose to operate as a limited company. If you do decide to go down this route, it may be worth investing in a book on basic company law for reference. Don’t take the risk and try to muddle through; it’s better to know what is expected of you and what the penalties are by getting some form of expert opinion.

Secondly, you may face liability if you cause injury, either financially or physically to another party in the course of running your business. It is advisable therefore to opt for decent insurance coverage to protect against eventualities of this nature. Another good idea is to include an exemption clause or disclaimer whenever you can, although it’s important to understand these aren’t watertight. What they can do is limit your liability in damage to physical property where it is reasonable to do so, and in no way can they limit any liability you may have for anything deemed unreasonable or anything relating to a physical injury or death. Read full article.

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Solutions Are Power:

You have a great product or service and you want to create a business online to market and sell your offering. You likely will have (at least at the beginning) production, operation, and/or delivery issues that will require your focus and attention.

However, during your initial start-up, there are a few important legal concerns about which you should also be thinking. Although there are many legal matters (employment issues, consumer protection, advertising and data privacy issues) that may require more of your attention as your business grows and becomes more established, here is a list of six basic concerns that you should consider when starting your business.

1) Naming Your Business: If you are going to conduct business on the Web and want customers to find your site, you are going to need a company name and a domain name for your business that is distinctive, does not already infringe the trademark rights of another business, but that is readily accessible by customers. Select two or three names for your business and then do the following:

a) “Google” your business name to see if any other company is doing business with your name and is offering similar products or services;

b) Go to the US Patent & Trademark Office (USPTO) web site found at: http://uspto.gov/ and on the left side menu click “Trademarks”. In the menu that opens up choose ” Search TM Database (TESS), type in your name to see if anyone has, or has filed, a trademark registration for your business name;

c) Finally, search a WHOIS domain name database http://www.networksolutions.com/whois/index.jsp to see if your business name is available as a domain name.

If no other business appears in your Google search and you find that other businesses have not filed a similar registered trademark or domain name, then you can feel somewhat confident (but still not 100%) that your business name does not infringe the trademark of another business. After completing your research, you should register your business domain name (.com and .net extensions are the most popular).

There is much more here.

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* Rule No. 1: Incorporate. Milito said going alone often provides poor asset protection and poor tax benefits, and she recommends having an attorney or accountant review corporate records once a year.

* Rule No. 2: Know the law. “Ignorance is no defense, and in fact it’s a good way to get sued,” Milito said. Small-business owners should particularly focus on employment and tax laws. Good record-keeping and proactive tax planning are key.

* Rule No. 3: Maintain adequate insurance. Milito recommends an “insurance physical” every few years and said business owners should be aware that it’s possible to be over-insured. Employment-practices liability insurance can help businesses respond to claims of employment discrimination.

* Rule No. 4: Manage fairly and wisely. Business owners should beware of falsified résumés, have detailed job descriptions, tackle poor performance early and consistently enforce policies, according to Milito.

* Rule No. 5: Prohibit harassment. A 2007 Texas case indicates “some male supervisors are still truly clueless, no offense to any males in the room,” Milito said. She went on to summarize the case:

A male director of nursing was accused of quizzing female employees about their sex lives two to three times a week in front of other employees, including asking them if they took men home the previous night. When the women asked him to stop, he threatened to fire them.

“At trial, he admitted he was questioning the women this way because he thought that if they had a lot of sexual activity the night before, it would affect their work performance because they would be tired – that’s what he said. I can’t believe this case even went to trial,” Milito said. The jury awarded each woman $7,500.

* Rule No. 6: Catch and correct wage and hour violations. Milito called failure to pay overtime “the new food for plaintiffs’ attorneys.” Since 2003, federal court filings involving wage actions have surpassed employment discrimination cases, and settlements have reached into the tens of millions of dollars, she said.

* Rule No. 7: Be careful with independent contractors. Milito urges regular reviews of independent contractor classifications and careful consideration of how much control business owners have over contractors.

* Rule No. 8: Watch out for workers’ compensation claims. Adequate training and maintaining a drug-free workplace can prevent accidents. If they do occur, Milito said immediately reporting claims and having a return to work commitment helps. Signs of possible fraud include claims by a disgruntled or new employee, an employee on leave who is difficult to contact, or accidents to which there are no witnesses.

* Rule No. 9: Hire an attorney. Milito recommends interviewing several before making a selection, holding regular meetings to compare case progress with budget constraints and requiring authorization for expenses exceeding $200.

* Rule No. 10: Document, document, document. Keep tax-related records for at least eight years, employee records for the term of employment, plus five years, and shred papers before disposal, Milito said.

Via Beaufort Gazette.

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Emailwire:

Business owners should be paying attention to employment law requirements. Not only are they required to follow specific regulations concerning employment law, but they are also required to notify their employees of their employment law rights by placing an employment law poster in a conspicuous place in their business where their employees will be likely to see it, such as an employee break room.

There are eight basic Federal employment laws that one should be aware of and understand. The first of these is Title VII of the Civil Rights Act of 1964. This employment law prohibits discrimination on the basis of race, color, religion, national origin and sex. In addition, sex discrimination on the basis of pregnancy and sexual harassment is also prohibited under this employment law.

Next, there is the Civil Rights Act of 1966. This employment law prohibits discrimination based on race or ethnic origin. The Equal Pay Act of 1963 prohibits employers from paying different wages to men and women that perform essentially the same work under similar working conditions. Most employers have heard of the Americans with Disabilities Act, but do not understand how this employment law can impact them. This law prohibits discrimination against persons with disabilities.

The Immigration Reform and Control Act of 1986 prohibits discrimination on the basis of national origin or citizenship of persons who are authorized to work in the United States. The Age Discrimination in Employment Act, also known as ADEA, prohibits discrimination against individuals who are age 40 or above. The Equal Employment Opportunity Act prohibits discrimination against minorities based on poor credit ratings. The Bankruptcy Act prohibits discrimination against anyone who has declared bankruptcy. Read more.

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