If you have started your own business and are looking to hire your first employees, it can seem as though there are countless hoops to jump through to make sure you are doing everything correctly. Fear not! This blog post will take you through the ins and outs of things you might want to consider when hiring your first employee, and how Carbon Law Group can assist your business’s needs as you continue to grow.

1. Get an Employer Identification Number (“EIN”):

  • The IRS requires every business with employees to have an EIN. An EIN is a unique nine-digit number that acts as a business’s social security number, which can be used on tax returns and other documents a business submits to the IRS. The IRS requires businesses to have an EIN so that the business can be identified for tax purposes. 
  • Obtaining your company’s EIN is one of the many services that Carbon Law can provide when you are forming your entity.

2. Register with your State Employment Development Department

  • No matter the state, when you hire an employee you need to make sure you pay employment taxes.
  • If you use a payroll service provider, you should be able to find one that registers for you every time you onboard an employee.
  • We like Gusto (referral link), but there are many others out there you can explore

3. Define Your Employees’ Roles:

  • For growing businesses, it is common to have employees that operate in different roles throughout the day based on what’s needed. However, before you bring on an employee it is critical to understand your company’s needs and how this new employee can meet these needs.
  • It is important to contemplate this employee’s day-to-day responsibilities as well as how their position will continue to help your company grow. Additionally, you must determine what educational/professional background will best assist you in meeting your goals.
  • A well-written job description should:
    • include the essential functions that an individual must be able to perform, with or without reasonable accommodation, to be qualified for the job;
    • take into account the strategic goals of the employer and the applicable hiring department, including any upcoming changes that may impact the role; and
    • cover any gaps or core skills that are missing from the applicable hiring department.
    • help an employer clearly communicate the expectations to its prospective employees what their duties and responsibilities are and provide the basis for employee performance reviews, goal setting, development plans, bonuses, and salary increases.
    • is also essential to prevent increased litigation risks by undermining the employee’s position in wage and hour, discrimination claims, and incorrectly classifying for exemption status under the federal Fair Labor Standards Act (FLSA).
    • Some of the most serious class action lawsuits have been the result of an employer’s misclassification of non-exempt employees as though they were exempt from California overtime. Carbon Law has the professional knowledge to help you make the correct classification for your prospective employees and avoid potentially costly lawsuits.

4. Prepare for the Recruiting and Screening Process: 

  • It is important to minimize exposure to discrimination claims by appropriately handling candidate:
    • employment applications;
    • job interviews; and
    • background checks.
  • Now that you have made it to the vetting process, it is not only important to determine whether a candidate has the necessary skills to perform their job, but also whether they would be a good fit for your company’s values and culture. As your company continues to grow it is important to stay true to the values and missions that you have set out to accomplish. Making sure that you are hiring individuals that reflect these same values will be crucial to the long-term success of your company.
  • What to ask:
    • How their education/experience will apply to this role?
    • Areas where they have struggled in the past and how they have approached these areas
    • Why are they interested in working for your company?
      • What are they hoping to learn?
    • Do they work better in teams or by themselves?
  • What not to ask: 
    • Check out Pankaj’s video on this topic
    • Exercise caution when describing the job. Avoid promises of job security, future promotions, or other statements that arguably alter the at-will character of the position. It is permissible to be positive and describe the company’s expectations and anticipated future of the role but avoid over-selling the position or making guarantees.
    • Limit pre-employment inquiries, including interview questions, to job-relevant information. Avoid trying to make personal connections. Doing so may reveal information about the candidate that is inappropriate for consideration in employment decisions, such as their membership in a protected class, family status, or participation in lawful outside activities.
  • An employer must communicate expectations (such as a policy against salary history inquiries) to recruiters and other third parties involved in the pre-employment process, and ensure that any pre-employment testing, such as skills, physical strength, and drug tests, complies with applicable law, keeping in mind that some tests may only be allowed after making a conditional offer of employment and will require the prospective employee’s written authorization.

5. The Offer Letter/Employment Agreement:

  • Once you have found your ideal candidate, it is now time to offer them a formal employment offer. This offer should outline their responsibilities, pay rate, and expectations of the employee going forward. It is important to note that there should be provisions set in place for possible promotions or raises based on an employee’s performance. The employment offer should also emphasize that the relationship between the employee and the employer is “at-will.”
  • The employee agreement could also be a valuable tool for laying out agreements over a trial or orientation or probationary period with the employee, agreements over any tests or background checks the offer is contingent upon, and any requirements related to sign-on bonuses. 
  • The offer letter/employment agreement can also help preserve an employer’s competitive advantage by creating enforceable agreements that:

6. Consider an Employee Handbook:

  • Creating an employee handbook can seem like a daunting task for an employer. Some employers have few, if any, written policies in place when they begin the process. Although there is no federal law requiring private employers to provide handbooks to their employees, there are numerous reasons for employers to do so, including:
  • A handbook provides an opportunity to formally welcome new employees, introduce the organization and explain expectations.
  • Grouping various employment policies together in a handbook makes it easier for an employer to ensure that each employee receives copies of all relevant policies.
  • A handbook is a centralized place for employees to look for answers to common questions such as how often employees are paid.
  • Handbooks and signed acknowledgments can effectively assist in an employer’s legal defense.
  • The employee handbook should contain the standard procedures and company policies that employees need to know about for their work. These handbooks are especially valuable because they bring uniformity to the expectations and requirements of working at your company. It helps set the tone for employees going forward and will serve as a foundation for your company’s practices as you continue to grow.

How we can help

It is difficult to navigate through the numerous legal requirements to draft an employee handbook that truly reflects your business’s needs and comply with all the applicable laws. Carbon Law can assist your business to create an employee handbook that complies with applicable current laws, uses a positive and professional tone that matches your Company’s culture and uses plain language to explain your company’s policies and procedures to your employees.

 

There comes a time in the life of many entrepreneurs when they have to make the difficult decision of either forging on or throwing in the towel. More than half of new businesses don’t make it past the first two years. It is nothing to be ashamed of to say a venture just cannot go on. No matter what, you’ll always be a winner to us :) 

If you do, in fact, come to the decision to close your corporation, please don’t just pull a Michael Scott…

The decision to close your corporation necessitates a few important legal steps to ensure you don’t have liabilities follow you. 

Considerations When Shutting Down Your Corporation

Each state has different rules on what is needed to close down a corporation. Below are a few important considerations to pay attention to when closing down your corporation. 

Dissolution refers to the termination of a corporation’s existence under California state law. In California, a corporation may dissolve voluntarily or involuntarily, through administrative or judicial means. Dissolving a California corporation is a multi-step, multi-state-agency process that has requirements with both the Franchise Tax Board (FTB) and the California Secretary of State (SOS).

There are many benefits of formally dissolving a corporation. Including:

  • Ensuring that taxes, fees, and penalties do not continue to accrue against the corporation. A corporation is subject to:
    • a $250 penalty if it fails to file its annual statement of information; 
    • a minimum $800 annual franchise tax
  • Ensuring that shareholders are protected against personal liability for known and unknown liabilities.
  • The corporation is not considered a sham corporation for piercing the corporate veil.

To avoid legal challenges to the dissolution, the corporation should carefully follow all requirements and procedures set out in California law, the articles of incorporation, and the bylaws and keep detailed records of the dissolution decision and process, particularly any notice provisions and votes on a resolution.

Here’s a step by step guide to voluntarily dissolve a corporation that has commenced business and issued shares: 

  • Obtain Shareholder’s approval of the dissolution. The corporation must give written notice of the shareholders’ meeting to vote on dissolution to all shareholders entitled to vote. The shareholders must then approve the dissolution by the required voting percentage. You will also need to prepare a separate board resolution approving the dissolution and a plan of dissolution to define and document the dissolution and winding-up process.
  • Winding up your corporation. This means to settle the corporation’s affairs by liquidating assets, collecting accounts receivables, and using these proceeds to pay off your corporation’s tax liabilities and corporate debt, such as outstanding rent, bank charges, payments owed to contractors, utility bills…etc. You must give notice to shareholders and creditors on the commencement of winding up. Carefully review all active agreements to resolve assignment of rights and delegation of duty issues.
  • Fulfill Franchise Tax Board (FTB) requirements.
    • File all delinquent tax returns and pay all tax balances, including any penalties, fees, and interest.
    • File the final/current year tax return. Check the applicable Final Return box on the first page of the return, and write “final” at the top of the first page. All tax returns remain subject to audit until the statute of limitations expires.
    • Cease doing or transacting business in California after the final taxable year.
  • Make sure an annual statement of information was filed with the California SOS. Before the dissolution of your California corporation will be approved, any outstanding Statement of Information must be filed.
  • Filing a certificate of election to wind up and dissolve. This document must be filed with the California SOS after the corporation has elected to dissolve. There are no filing fees for this document. Note that you won’t need to file the certificate of election to wind up and dissolve if all outstanding shareholders voted to approve the dissolution.
  • Filing a certificate of dissolution. This document must be filed with the SOS after the corporation has completed the winding-up process. There are no filing fees for this document. This must be filed within 12 months of the filing date of the corporation’s final tax return.

Consult with an Experienced California Business Lawyer Today!

It is a common tendency to take shortcuts when closing down a business. However, this can be extremely risky due to all the personal liability and tax issues that can result from not handling the related requirements appropriately. To avoid legal challenges and liabilities arising from the dissolution, the corporation should carefully follow all requirements and procedures set out in the Cal. Corp. Code, the articles of incorporation, and the bylaws and keep detailed records of the dissolution decision and process, particularly any notice provisions and votes on a resolution. Carbon Law Group has business lawyers who specialize in business and corporate law in California. Schedule an appointment to find out what we can do for you and your business!

As the novel coronavirus spreads around the world, a chaotic market for N95/KN95 masks, Personal Protective Equipment (“PPE”) such as gloves, thermometers, ventilators, hospital beds, testing kits, hazmat suits, hand sanitizer, goggles and other desperately sought-after medical supplies vital to the fight against COVID-19 has sprung up.

 

Numerous brokers or businesses around the world have joined the gold rush for this year’s most sought-after commodities. Urgent late-night inspections at mask factories, hurried million-dollar wire transfers to secure PPEs, and more. In this frenzied, pandemic-driven market, many different types of commercial agreements are involved. Entrepreneurs in international commodity trading, especially bulk commodities, often come across documents like Non-circumvention, Non-disclosure Agreements (“NCNDA”), International Master Fee Protection Agreement (“IMFPA”), Commission Agreements, and other documents. However, the legitimacy and protection these documents afford are yet to be determined.

 

What are NCNDAs and Why You Should Consult an Attorney Before Signing One

 

An NCNDA is an agreement that is commonly used in the preliminary stages of a business transaction where the seller and buyer do not know each other but are brought into contact with each other by one or more intermediaries or brokers to fulfill the transaction. The purpose of such agreement is to ensure that (1) the intermediaries or brokers who brought the buyer and seller together are not by-passed and (2) the information disclosed during the negotiations is not revealed to any external or unauthorized party. These agreements are usually valid for a specified term.

 

In this frenzied market, as the manufacturers making these desperately sought-after medical supplies are making huge profits by supplying bulk commodities to whoever can pay the most and pay fastest, a strong and well-drafted NCNDA is vital to anyone involved in these deals to protect their interests and ensure that they are not circumvented.

 

Some key terms of an NCNDA include:

  1. Non-Circumvention Clause, which is used to prevent the contracting parties from cutting each other on any businesses covered in the agreement. A clear definition of the covered business is critical.
  2. Non-Disclosure Clause, which aims to protect any information the contracting parties intend to be held confidential. A good NCNDA will need clear language to ensure important information that the party wants to prevent from disclosure are covered.
  3. Term, which defines how long the NCNDA will run.

 

Navigating this chaotic, “Wild West” PPE market can seem daunting. It is always helpful to enlist the assistance of a professional business attorney. At Carbon Law Group, with our extensive experience in providing legal guidance to businesses in contracting and negotiation, we are confident that we can serve as strong legal support for your business. Find out how Carbon Law Group can help you protect your intellectual property rights by scheduling a meeting with us using this link.

 

We can help with:

  • Reviewing Contracts
  • Drafting strong NDAs and Non-circumvent Agreements
  • Answering compliance questions
  • Due Diligence
  • Paymaster Services

Your business is doing well and your profit is growing – Great! But this also means that there are some new legal concerns that your growing business must face now. 

 

When Hiring New Team Members…

As your business grows, you will likely need to hire more people. Hiring can raise many potential legal concerns. 

First, while often overlooked by many small businesses, it is extremely important to clearly distinguish “independent contractors” from “employees.”  In California, we have a stringent “ABC” test for determining whether a worker is an employee or an independent contractor and it applies retroactively. The ABC test, an employment-classification test in California that presumes workers are employees rather than independent contractors, was first adopted in April by the California Supreme Court in Dynamex Operations West, Inc. v. Superior Court. Under this test, anyone hired by a business is presumed to be an employee and the burden is on the employer to demonstrate that every worker is not an employee. The punishment of misclassification is steep, which includes a fine for each person misclassified and penalties for failure to withhold income taxes (1.5% of the wages, plus 40% of the FICA taxes (Social Security and Medicare) that were not withheld from the employee and 100% of the matching FICA taxes the employer should have paid). Criminal penalties of up to $1,000 per misclassified worker and one year in prison can be imposed as well. In addition, the person responsible for withholding taxes could also be held personally liable for any uncollected tax. All it takes is one disgruntled person to cause a huge thorn in your business.

Second, it is important to have an employment handbook to set the policies, procedures, working conditions, and behavioral expectations your business has on its employees. A handbook tailored to the way you do business helps ensure that managers across the organization handle issues consistently and provide a framework for your employees to follow. In case the need arises, a well-written handbook is the first step of a successful defense of unemployment or other legal claims because these cases often require the employer to prove that the terminated employee was on notice of a certain rule and had been warned that violating the rule would lead to disciplinary action up to and including immediate termination.

 

Stop Relying On Informal Agreements…

As your business grows, you should start to always put your business agreements in writing and stop relying on informal, verbal agreements. Having written agreements are helpful in ensuring that everyone keeps their promises and gets what they want. You should start using customized written agreements that accurately when working with business partners, lenders, and other businesses.

 

Intellectual Property Protection Issues…

When your business first started, it was probably hard to imagine that you’ll potentially later face issues with people infringing on your intellectual property assets (or vice versa). As your business grows, it becomes more and more worthwhile of the investment of time and money to get your copyrights, trademarks, patents and trade secrets legally and properly registered so you don’t have to worry about it if, and when, an issue arises.

 

Non-Disclosure Agreements…

It is crucial for your business to maintain its competitive advantage by keeping working projects, innovative ideas, or exciting new products secret and away from potential competitors. A non-disclosure agreement is a legal document that keeps the lid on such sensitive information. When working with investors, creditors, clients, or suppliers, you should use Non-Disclosure agreements to protect your intellectual property because these outside entities will have access to business information that you may want to keep private.

If you need legal help to guide your business’s growth, feel free to schedule a consultation with an attorney using this link or calling our office at 323.543.4453.

The almighty dollar is a tool for creation and destruction. From concept to execution, how money comes in and how money goes out is at the forefront of every entrepreneur’s conscious. For both Fortune 500 companies and startups, understanding the key features of different sources of capital is critical to successfully funding a company.

Companies can raise capital in either of two ways: debt, or equity. Debt is when a company borrows money and has an obligation to pay money back over time with interest, e.g., a loan. Equity is when money is invested into the company in exchange for ownership rights, e.g., founders investing their own money in a startup. Early-stage companies rarely raise money by incurring debt because it is unclear whether or not the company will be able to pay back any borrowed money (the exception being convertible notes which will be discussed in a separate blog post). With this in mind, it is critical for owners of early-stage startups to know where they can find sources of equity funding, in addition to their own investment. Here are some of the most common sources of equity funding to get your company up and running.

Sources of Equity Capital

     1. Friends and Family 

Friends, family, and professional networks of founders are common grounds for early-stage sources of pre-seed and seed financing. When founders seek capital from these sources most or all of the investors in the business have some close personal connection to the founders for better or for worse. On one hand, close personal connections can allow for greater flexibility in negotiations, lower equity stakes and the potential for investors to become trusted advisors in the startup. On the other hand, close personal connections can bring about unnecessary conflicts due to personal matters, unwarranted requests for higher equity stakes from inexperienced investors and the untimely loss of personal connections as a result of unsuccessful ventures. Friends and family rounds can range from $1,000 to $150,000 – sometimes reaching $300,000 and more. However, don’t be tricked by the label of “Friends and Family” – you still need to treat these people as legitimate passive investors. These people are still entitled to certain rights depending on the type of the instrument used to raise funds (SAFE, Convertible Note, or Series Seed Preferred Stock) and they must still comply with federal and state securities laws. Hence, seeking the guidance of an experienced startup attorney is always a great idea when navigating these complex regulatory waters.

     2. Incubators and Accelerators

Incubators and Accelerators are a great way to transform ideas into businesses. Both programs provide capital, operating resources, help with management and valuable networks to help businesses grow. Some incubators look more like accelerators and some accelerators look more like incubators understand more of the difference between the two here. The goal of an accelerator program is to help a business do roughly two years of business building in just a few months. Accelerators are intense 3-6-month commitments which require startups to give up 4-6% equity in exchange for typically $10,000 to over $120,000 in seed money, in-depth training and access to a valuable network of investors, financial advisors, successful startup executives and industry experts. One of the most well-known accelerators in the industry, Techstars, accepts around 1-3% of startups for its program each year and contributes $20,000 in exchange for 6% equity of the company until the company raises a priced equity financing of $250,000 or more. Incubators rarely require equity but will grant you space and supportive services to help your startup grow. 

     3. Crowdfunding

Crowdfunding involves a type of social platform on the internet to attract a large number of people to each invest relatively small amounts to reach fundraising goals. Crowdfunding platforms are registered with the SEC and allow entrepreneurs to pitch their business ideas, generate public interest, and reach a specific community of investors or people willing to support their ideas with relatively little cost. With crowdfunding, entrepreneurs are not forced to use traditional methods of capital markets and venture capital fundraising. Entrepreneurs can focus on a specific community of people in the crowdfunding sphere and access the traditional methods of fundraising at a later time when their idea has gained more traction. But raising funds through crowdfunding is not easy. The crowdfunding market is competitive, and the funds raised through crowdfunding cannot exceed $1.07 million in any rolling 12-month period. And even if you succeed in raising the maximum $1.07 million, which is not an easy thing to do, it can result in a messy cap table with numerous minority stockholders and future VC’s might not like that. 

     4. Angel Investors or Angel Investor Groups

Angel investors are a rapidly growing part of startup private equity markets. Angel investors are a collective class of roughly 300,000 high-net-worth individuals in the United States who are willing to invest their own money into risky startup ventures. Their motives for investing may range from a passion for a specific industry, professional interest, or a more traditional return on investment. In any event, angel investors collectively inject over $1 billion dollars quarterly in US startups. The average size of contributions per investors may vary, but a successful seed round can reach up to  $1 million, especially if it is led by an angel investor group. Angel investor groups are collaborative angel networks that share information about potential investment opportunities for other angels. In addition to individual investors and groups, super angels are well known, full-time investors that often have their own investment funds. Here is a list of some of the top angels around Los Angeles: Talmadge O’Neill, Mihir Bhanot, Anthony Saleh, Clark Landry, Jim Brandt, Ashton Kutcher – Tech Coast Angels, 12 Angels, Angel Vision Investors. These investors are more sophisticated than friends and family investors and often have their own lawyers and accountants. So, it is critical to be prepared for their due diligence requests, conduct your own due diligence, and have your startup’s legal structure and financial statements in order. Not hiring an attorney to assist you with fundraising, risks the loss of potential capital and reputation, advice and other ancillary benefits to be gained from an angel investment.

     5. Micro-Venture Capital Firms

Micro-venture capital firms (“Micro-VCs”) are institutional investors that specialize in early stage financing. Institutional investors like Micro-VCs invest using funds pooled together by LPs like pension funds, corporations, wealthy individuals, or governments looking to stimulate the startup ecosystem. Micro-VCs often have access to large funds but are very careful with where they choose to invest and so fewer deals are made each year. Here is a list of some of the top Micro-VC’s around Los Angeles: Arena Ventures, Canyon Creek Capital, Mucker Capital, Noname Ventures, Wavemaker Partners. The size of early seed rounds led by Micro-VCs may well be in the hundreds of thousands or even millions of dollars and are a sign of a rare success in early startups.  This said, founders should be careful not to give up more control and economic rights than necessary in exchange for a Micro-VC investment. Of course, dilution of the founders is inevitable in priced rounds, and you should be prepared to lose full control over your board of directors. But founders must fully understand the ramifications of dilution and that there are no hidden provisions in VC term sheets that can cost you your job as the CEO or a board member of your own startup. This is why it is critical for startups to work with an attorney that can bring both parties together and verify that both parties are on the same page regarding the terms of the investment and how to protect against future problems.   

     6. Strategic or Corporate VCs

Strategic or corporate VCs are typically subsidiaries of large corporations like Intel, Google, and SBI. Corporate VCs use corporate funds to invest in external private companies. The sole purpose of these strategic or corporate VCs is to invest within their core businesses to achieve financial or strategic returns, e.g., capture technologies that may be important to their business, or acquire critical in-house expertise. Here is a list of some of the most active strategic or corporate VC’s this past year: Google ventures, Salesforce Ventures, Intel Capital, Baidu Ventures, Legend Capital, SBI Investment, Alexandria Venture Investments.

     7. Investment Bankers and Mergers & Acquisitions

Investment bankers, brokers, or financial advisers can assist founders connect with financing sources. But, investment bankers are primarily concerned with providing growth capital to relatively mature companies looking to expand, restructure operations or enter new markets. Investment bankers also tend to be intermediaries for private placement of securities. In other words, investment bankers can help you sell securities to funds and other investors. But be warned, regulatory issues and banking fees are usually associated with intermediaries like investment bankers. Read more here. A merger or acquisition with a company rich in cash can be a viable source of capital. But any merger or acquisition triggers a myriad of legal, structural and tax issues that must be evaluated carefully before making any decisions. For early-stage startups, we recommend waiting a couple of years before selling the company to achieve a higher valuation rather than selling your potentially great idea at a much lower valuation.

Legal Considerations

Raising capital from any of the sources mentioned above is a great way to potentially grow your business. But with that growth comes a multitude of legal issues from proper due diligence and compliance with securities laws to tax considerations and corporate governance structures. The almighty dollar is a tool for creation but without proper legal counseling it can be a tool for destruction. 

If you need help with your questions about funding your business, feel free to schedule a consultation with an attorney using this link or calling our office at 323.543.4453.

 

By Ryan Urban, Loyola Law School

The startup world is fast paced and always changing. Newcomers to the arena are often lost in the day to day jargon surrounding startups. But a common question among entrepreneurs trying to turn ideas into money is what is the difference between incubators and accelerators?

The good news is that both incubators and accelerators support startups in their early stages to get past the startup phase. Both frameworks provide capital, operating resources, help with management and valuable networks to help businesses grow. Startups who participate in incubators and accelerators are generally shown to have a higher rate of success raising follow on capital.

But which program is best to help you strategically grow your business to be the million-dollar idea you know it to be?

Incubators

Generally, incubators provide a space for startups to translate ideas into businesses. Incubators provide startups with a broad range of mentorship and guidance in areas like business, finance, presentation skills, fund raising and managing intellectual property. The typical incubator aims to provide low or no cost office space for multiple startups looking to grow their ideas with the supervision of technical advisors. One of the benefits of incubators is they typically do not require an equity stake in your business in return for their services. Incubators are usually sponsored by universities, non-profits and government entities looking to grow your idea for an unspecified amount of time. Some incubators are even sponsored by venture capital (VC) firms, angel investors or other major corporations.

With that being said, incubators are not the panacea for every growing business. Some incubators are understaffed and lack the entrepreneurial drive or pressure to deliver successful startups because of their lack of an equity interest. Some research even suggests that the majority of startups don’t become successful or are slow to realize the benefits of an incubator until the 5 years into the program.

But not all incubators are bad, many have the adequate resources to achieve your startup goals. Here is a list of some of the great incubators we found around Los Angeles: Viteribi Startup Garage, LA CleanTech Incubator, Hub101

Accelerators

Unlike incubators, accelerators are geared more toward taking an existing business and scaling it to accelerate growth.

Mike Bowry, general manager of Brandery said, the goal of an accelerator program is “to help a startup do roughly two years of business building in just a few months.”

Accelerators are intense 3-6-month commitments which require startups to give up equity in exchange for in-depth training and access to a valuable network of investors, financial advisors, successful startup executives and industry experts. The accelerator framework can help your business secure funding to grow, provide living expenses for entrepreneurs and even find long term business partners who can help you down the road. Accelerator programs generally have a high rate of success with their startups because they have a stake in your success if you succeed they succeed.

But the benefits of an accelerator come at a cost. Putting equity aside, accelerator programs are extremely competitive to participate in. Accelerators receive thousands of applicants every year and must carefully hand-pick the most scalable startups. The framework necessarily drives accelerators to select startups that will take the least amount of time and produce the highest return on investment.

Overall, accelerators are a great resource for achieving rapid growth and building networks despite intense commitment to the program. Here is a list of some of the great incubators we found around Los Angeles: Launchpad LA, McKernan, Disney Accelerator, Amplify LA.

Ultimately, incubators and accelerators are different programs each with their own unique benefits. Some incubators look more like accelerators and some accelerators can look more like incubators. To determine which pathway might be best for your business it is important to look into specific programs, who sponsors them and how might their benefits affect your business.

Answer: Only if you care about protecting your creative work.

We realize we set you up with a leading question, but the reality is, based on a recent Supreme Court ruling, it is more important than ever before to file for a copyright registration if you want to protect your creative work.

On March 4, 2019, the Supreme Court settled a split among U.S. Courts of Appeals regarding whether a copyright owner can sue for infringement before the Copyright Office grants registration in Fourth Estate Pub. Benefit Corp. v. Wall-Street.com, LLC.

This decision underscores the importance for copyright owners who expect to enforce their rights through litigation take early action to register their works with the Copyright Office before any claim arises.

The Copyright Act of 1976 gives copyright protection to “original works of authorship fixed in any tangible medium of expression,” and copyrights vest as soon as the original work was created and reduces to a tangible medium (such as put in writing, saved on a hard drive, recorded on tape, etc.).

Copyright owners have the exclusive right to (a) reproduce their original work; (b) distribute such work; (c) publicly display or perform the original work, and (d) create derivative works of the original work. And they can prevent other people from exercising those rights during the duration of the copyright.

However, 17 U.S.C. §411(a) conditions that “no civil action for infringement of the copyright in any United States work shall be instituted until…registration of the copyright claim has been made in accordance with this title.” In plain English, this means that if the original work has not yet been copyrighted, the owner cannot sue for copyright infringement.

Fourth Estate Public Benefit Corporation (“Fourth Estate”), a news organization, sued Wall-Street.com and its owner (“Wall-Street”) for copyright infringement after Wall-Street failed to remove Fourth Estate’s news articles from its website despite having canceled the parties’ license agreement. Fourth Estate had filed applications to register the articles with the U.S. Copyright Office. Yet, the Register of Copyrights had not acted on those applications before Fourth Estate filed the suit.

The parties disputed the meaning of “registration” in §411(a). Fourth Estate argued but failed to convince both the U.S. District Court and the Eleventh Circuit court, that “registration” for the purposes of §411(a) occurs when a copyright owner submits the application, materials, and payment to the Copyright Office. Both lower courts held that registration of copyright hasn’t been made until the Copyright Office acts. Justice Ruth Bader Ginsburg delivered the opinion for a unanimous Supreme Court that affirmed the lower courts’ decisions, holding that “registration” in §411(a) “refers to the Copyright Office’s act of granting registration, not to the copyright claimant’s request for registration.”

However, the statute provides several exceptions to the general rule that registration occurs, and a copyright claimant may commence an infringement suit when the Copyright Office registers the copyright. For example, owners of material susceptible to pre-distribution infringement, such as movies or musical compositions, can apply for preregistration, a limited review of the application after which the copyright owner may commence an infringement suit.

Thus, this case clarifies that generally a copyright owner only may bring an infringement suit after the Copyright Office grants registration. If authors and content creators do not register their works early, they may not be able to enforce their rights in courts right away when infringement takes place.

By Judy Yen, Loyola Law Student and Law Clerk with Carbon Law Group

We like to think of ourselves as rational beings who operate from a rational mindset. However, after reading a short but fascinating excerpt of a conversation between Malcolm Gladwell and Steven Johnson, titled “Malcolm Gladwell on Why the Best Decision-Makers Are a Little Bit Irrational” I was inspired to think about the continual balance I try to find as a lawyer, entrepreneur, and counselor.

The article reminded me that while my job as a lawyer is to understand risk and help clients mitigate it, my job as an entrepreneur and founder of a law firm is to look for openings in the market and push my firm to greater heights when I know the odds are against me to succeed.

This duality has always fascinated me. Attempting to use my rational mind when advising clients, but also recognizing that to be a startup founder or entrepreneur is to live in an irrational world where the odds are against you, but you are willing to bet on yourself anyway.

The conversation between Gladwell and Johnson provides some useful insights on how to think about the risk of launching a new product or business. Johnson discusses utilizing a storytelling exercise before launch to think about three ways it may turn out: one version where things get better, one where things get worse, and one where things get weird. The last scenario opens you up to the possibility of seeing things that you may not have foreseen (or turned a blind eye to) if you didn’t go through that exercise.

The dance between the rational and irrational is one that every entrepreneur must learn. By practicing some of the exercises featured in this article, you can learn to master the balance.

 

We recently returned from our first firm trip to the Consumer Electronics Show (CES) in Las Vegas, Nevada–and what a trip it was.

For those of you who are not familiar with CES, it is the world’s largest consumer electronics show in the world. The estimated attendance over the five days is around 300,000 people.

CLG decided to make the trip this year to meet prospective clients and get an understanding of what the future holds for our current clients in the consumer electronics space. The trip ended up a great success and certainly eye-opening.

While we provided a play-by-play on our Instagram feed (@carbonlg), we thought it would be helpful to provide a few important take-aways here for our those thinking about attending. Here are some insights we gained that may be of interest:

  1. Get ready to be overwhelmed. There is just too much to see in the time you are there. Plan your trip ahead of time and get an idea of what are the types of technology you find most interesting.
  2. Wear comfortable shoes. CES is spread out over several convention centers. Great ready to walk–a lot. 
  3. Book your accommodations early. Hotel rooms fill up early and the prices are super-inflated. Try to lock something down as early as possible.
  4. Get to the official CES parties super early. We attempted to attend the opening party at Omnia nightclub, but we quickly changed our minds when we realized the line to get in was about 300 yards long. It was insane. We ended up at a private Google party, which was very cool and surprisingly empty. Many of these larger companies host private parties at locations they don’t come close to filling. We were able to get into some great events by simply asking nicely.
  5. Think about how these new technologies will impact your industry. Every industry is going to be affected by the coming technologies featured at CES. From blockchain to AI to autonomous vehicles, there is a lot to be both excited and slightly concerned about.

Key takeaway: technology will be disrupting industries like never before in the next 10 years. CES provides a valuable glimpse into all the new and interesting ways technology will play a role in our lives in the future. Whether this is a good thing or a bad thing is something worth considering as we must also weigh the effects technology will have our well-being and mental state.

Something to ponder: In an increasingly digital world, how important are analog experiences?

As the Earth completes another rotation around the Sun, we take pause to both reflect on all that has happened over this last year and to make sure we are on the right path to where we want to go.

Guided by our mission statement to empower our community by providing invaluable business and legal solutions to help our clients and community thrive, we are lucky to say 2018 was a great success. Some of our highlights from 2018 were:

  • Filed our first IPO for a client
  • Set up a $25 million venture fund
  • Advised companies and investors on 23 private placement transactions
  • Handled 12 M&A transactions
  • Guided over 20 startups with early-stage financing
  • Filed over 75 domestic and international trademark applications
  • Formed or wound-up over 100 businesses
  • Counseled over 300 individuals and businesses
  • Received 41 5-star reviews from both Google and Yelp combined
  • Held a volunteer event to feed the homeless with assistance from the Azusa Lighthouse Mission in DTLA

To say we have had a busy year would be an understatement. And it couldn’t have been accomplished without the trust and support of our amazing clients who we have the honor of serving as they strive to make a small dent in the universe (in the words of Steve Jobs.).

We are beyond grateful for the support we saw in 2018, but more so, we are excited for what is in store for 2019. We are poised to take on even larger deals, expand to new cities, and help more clients see greater success than they ever imagined.

Here is to a wonderful 2018 and an even better 2019!

Upward and onward!

 

Sincerely,

Carbon Law Group

Pankaj, Hayk, Lyris, Sarine, George, Cristal, and Sunny

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