When it comes to building your brand, there is some confusion around what it takes to establish trademark rights. Clients ask, is filing a federal trademark application enough to protect me? What about posting on social media?

These are great questions often without clear answers.

To understand how to best protect your trademark rights, it is important to understand the purpose of trademark laws in the first place. Trademark law, codified under the Lanham Act, is fundamentally a consumer protection statute. It was created to protect consumers from companies that try to steal the goodwill of popular brands to sell their products or services (think of those guys selling purses in NYC with interchangeable brand names). Trademarks are used as a source identifier. They allow consumers to differentiate between certain types of goods and their sources.

When it comes to establishing your brand, trademark rights are fundamentally based on the first to use the mark. That means, filing an application alone generally isn’t sufficient to protect your rights to a mark against someone who may have used the name earlier than you. Establishing legitimate use is critical.

But, what is legitimate use, you ask? Great question.

Legitimate use of a trademark that amounts to commercial use that would cause the public to associate your mark with your goods or services. It could be social media posts, a website, products, or apparel. Legitimate use also varies based on what you are selling. If you are selling goods, generally, you need to show the use on the good in a way that shows your goods are in interstate commerce and can be purchased. For services, proper use amounts to advertising the services, among other types of use.

When it comes to establishing priority over another company regarding a possibly infringing mark, the party that can show the earliest legitimate use of the name along with the strongest engagement with the consuming public will most likely win a dispute. A federal trademark application is important to protect your rights and establish your rights federally against later users in other locations. But to protect your rights locally and early, make legitimate use as early as possible.

Key Takeaway: when it comes to establishing priority, make sure you are gettings your goods or services in commerce early and effectively.

I have the privilege of attending this year’s Codex conference on the future of law at Stanford Law School. Codex brings together some of the leading minds using technology to move the law into the 21st century.

As a lawyer and law firm owner, I have a front-row view of the pain points plaguing not only consumers of legal services but also lawyers. While the answers to these challenges are to be debated (and perhaps more so in an industry where “debating” is our hallmark), the problems are real and need to be addressed. Where 80% of people in our country are unable to access legal services, entrepreneurs will figure out how to meet this demand. It is up to lawyers and legal innovators to decide whether they are going to step up to meet this need, or if they are going to continue to seek cover behind our walled garden. Carbon Law Group is committed to expanding our services to serve as many people in need of business and intellectual property support as possible.

As a member of the movement to improve the practice of law by leveraging current and future technologies, we look forward to a future where working with a lawyer will fulfill a deeper need for our clients and facilitate their growth.

Let’s get to work.

As any entrepreneur or business owner knows, building a website or online storefront to advertise, promote, or sell goods or services can be a detailed, time-consuming, and expensive process. The goal of attracting even the most discerning consumer on the internet makes those extra hours and expense worth it, especially when general marketing and branding goals include repeated visits, contact, and impressions to finally engage a customer or user. All successful businesses similarly understand that protecting the logos, content, design, functionality and, most importantly, the integrity of the website. An attorney-drafted “Terms of Use” or “User Terms and Conditions” page is extremely important because it provides, among other benefits, a mechanism 1) to prevent competitor copying or intellectual property infringement, 2) to legally bind users of the website, 3) to limit the business liability in certain contexts, and 4) to comply with federal law.

1. Prevent intellectual property infringement.

Valuable dollars and hours are spent building a website for goods or services, but the failure to secure or enforce proprietary intellectual property rules can nullify all of that value. A valid Terms of Use will enumerate the myriad of intellectual property present on the business website, and will make it clear to all users (guests or registrants) that the copying, stealing, scraping, or unauthorized use of proprietary information is grounds for termination of any user account, a claim for breach of contract, and claims of copyright, trademark, or trade secret infringement, and any other remedy available at law to the business. While the deterrent impact of a Terms of Use may be debatable, failing to have a Terms of Use removes any enforcement mechanism for a business owner against a rogue user.

2. Legally bind users of the website.

Having a Terms of Use section on the business website is not required by law in the United States, but consider that it has been (and may solely be) a binding agreement enforceable by a court between any user or abuser on the internet and the business (even if no transaction of money for goods or services occurs). Because the website is the property of the business, businesses may set user standards for use of the site as well as the penalties for failing to comply, including to terminate a user account or ban future use. Having this ability is extremely important for any online business to ensure smooth user engagement and process management.

3. Limit the business liability.

A legally binding contract may include disclaimers against liability – and in certain cases, even where liability would normally be imputed by law. This includes common issue situations like outdated or incorrect marketing materials (especially those quoting prices or fees), governing the interactions between users (especially in the context of harassers or trolls), and updating the features or functionality of applications or other products. Note that by failing to disclaim against liability in these scenarios, a business may become an easy target for traditional lawsuits over small errors.

4. Compliance with privacy laws and the “privacy policy.”

If the site collects personal data that may identify an individual (e.g., a user’s email address, first or last name, physical address, or social security information), legislation like the Americans with Disability Act (ADA), Children’s Online Protection Act (CIPA), and more mandate privacy policies according to these Federal Trade Commission guidelines.

From our experience, while every business and proposition is unique, businesses should consider the following broad issues when either self-drafting or having an attorney draft the Terms of Use:

  • Privacy policy (if collecting personally identifying information)
  • How the user accepts the Terms of Use
  • Account security
  • Intellectual property rights (trademarks, copyrights, licenses)
  • User-posted content and content standards
  • Infringement
  • Social media integration

For more information or guidance on your online business practices, or if you are ready to prepare a terms of use and privacy policy, please call our office at (323) 543-4453 to schedule a consultation and speak with our savvy attorneys.

Most entrepreneurs look at legal issues as an expensive and burdensome cost of doing business, but with the right guidance you can use the law as a tool to further your goals and position your business for success. You can ensure your entrepreneurial dreams don’t hit any roadblocks by avoiding these five common legal mistakes.

  1. Picking the wrong (or no) corporate structure

By choosing the corporate structure that best serves your company’s individual needs, you can take advantage of different benefits like minimizing your tax liability and protecting your personal assets from any liabilities incurred by your business. Many entrepreneurs whose businesses are a one man shop skip out on forming a corporate entity all together because it looks like an unnecessary and confusing obstacle, but even solo entrepreneurs have a lot to gain from forming a corporate entity.

  1. Forgetting the importance of IP

So much goes into building a new company from scratch, and for many entrepreneurs, Intellectual Property (IP) isn’t their top priority. But what entrepreneurs need to remember is that IP isn’t just about protecting your own brand and product, it’s also important to check if someone else has IP protection for similar work. After all, what would happen to your business if one day you found out someone had already trademarked the product or brand you have put so much time into developing.

  1. Not defining key roles and responsibilities

If you have any business partners it may seem like you’re all on the same page, but if you don’t clearly define the roles each of you has in the company, it’s a recipe for conflict. You and your business partners should have a written partnership and shareholder agreement that makes everyone’s rights and obligations clear.

 

  1. Not having an exit strategy

How you and your partners would go about a business breakup probably isn’t the first thing on your mind as you start your company. But all too often business partners grow apart or have different goals as the years go by. Knowing how and when you and your partners can sell your stakes in the business is crucial, and having your attorney prepare a buy-sell agreement that addresses this up front will make for a much easier transition in the event anyone wants to leave the business.

  1. Tackling legal issues on your own

As an entrepreneur, it may feel natural to take things into your own hands when it comes to your business. Don’t let the seemingly easy DIY legal forms temp you into being your own lawyer. Filling in the blanks on some preprinted forms doesn’t take care of your specific needs and can leave you with a number of problems that could have been avoided had you had the help of an experienced small business attorney.

If you are looking to learn more about protecting your new business, feel free to email us at [email protected] or set up an appointment.

 

We see many bright eyed, intelligent entrepreneurs come through our office. Each of them is equipped with a new idea that will revolutionize an industry. However, many do not realize that the biggest factor that will dictate their success may not be how great the product is or how smart they are. It may come down to correctly timing the market.

Bill Gross speaks on this fascinating conclusion in this short, must-watch, Ted Talk.

 

On August 8, 2016, the vaping/e-cig world is going to change forever.

On May 10, 2016, the Food and Drug Administration (FDA) passed a final rule expanding the statutory definition of “tobacco products.” As amended, now products that meet the statutory definition of “tobacco products” will include:

  • currently marketed products such as dissolvable not already regulated by FDA;
    gels;
  • water pipe tobacco;
  • ENDS (including e-cigarettes, e-hookah, e-cigars, vape pens, advanced refillable personal vaporizers, and electronic pipes),
  • cigars; and,
  • pipe tobacco.

Accordingly, on August 8, 2016, the FDA will enact the following new rules and regulations governing the sale of “tobacco products:

  1. Enforcement action against products determined to be adulterated or misbranded (other than enforcement actions based on lack of a marketing authorization during an applicable compliance period);
  2. Required submission of ingredient listing and reporting of HPHCs;
  3. Required registration of tobacco product manufacturing establishments and product listing;
  4. Prohibition against sale and distribution of products with modified risk descriptors (e.g., ‘‘light,’’ ‘‘low,’’ and ‘‘mild’’ descriptors) and claims unless FDA issues an order authorizing their marketing;
  5. Prohibition on the distribution of free samples (same as cigarettes); and
  6. Premarket review requirements.

The FDA has enacted these new rules in the interests of public safety. However, for many e-cig and e-juice manufacturers, the new rules mean (a) new compliance requirements, and (b) a potential change to their business models.

If you are looking to find out more about the new FDA regulations and how to comply, call our office to today: 323.543.4453 or [email protected]

Until now, the general prohibition against the sale of unregistered securities to the public limited the options for startups and emerging companies to raise capital.

Now, after years of discussion and analysis, the Title III of the JOBS Act (“Act”) is about to take effect. Title III of the Act addresses equity crowdfunding. Under Title III, registered broker-dealers or registered funding portals can solicit investments of up to $1 million from the general public.  A funding portal is any person acting as an intermediary   in a transaction involving the offer or sale of securities for the account of others, solely pursuant to the “crowdfunding exemption” that does not:

(a) offer investment advice or recommendations; (b) solicit purchases, sales, or offers to buy the securities offered or displayed on its website or portal; (c) compensate employees, agents, or other persons for such solicitation or based on the sale of securities displayed or referenced on its website or portal; (d) hold, manage, possess, or otherwise handle investor funds or securities; or (e) engage in such other activities as the SEC, by rule, determines appropriate. [1]

If you are interested in learning more about Title III and opportunities under the JOBS Act, feel free to contact our firm to speak to an attorney.

*Nothing herein shall constitute legal advice and the information provided should not be construed as such.

 

by Pankaj S. Raval

So you have decided to quit your job and pursue your dream of starting a new business with a friend. First of all, congratulations. You are among the few who are willing to take the risk to follow their dreams of being their own business owner. However, before you get carried away with finding office space and forming your company, as an attorney and counselor for numerous small businesses, I can tell you with a good amount of confidence, that it would be wise to hit pause and really look at the person (or people) you are going into business with before you take the plunge.

The saying that a “partnership is like a marriage” is about 95% accurate. Remember, the person who you choose as your business partner (or who chooses you) should be by your side through thick and thin over the next several years (if you manage to beat the odds of entrepreneurship and create a viable business). And, undoubtedly, those first few years are going to be bumpy.  You and your partner are going to be dealing with fire after fire as you build and scale your business. Whether it is a shortage of capital, a hiring decision, or deciding on product-market fit, these are all questions you are both going to have your own ideas about. Invariably, both founders will have to compromise on certain facets of the business. That means you are both going to have to learn to keep your egos in check and figure out how to put your personal issues aside to take on the competition.

One of the most prevalent issues that all new ventures face is dealing with the expectations of your fellow co-founders.

At some point, no matter how close you are with your co-founder, there will be a moment where one founder is up working at 3 am and the other is on vacation with family, and the question will enter that midnight-oil-burning partner’s mind: “why am I busting my butt on this while Andre is posting to Instagram from a beach in Thailand?”

Now, we don’t know the Andre’s backstory–maybe he just closed a round of funding and needed a break. Maybe he had to go to a family wedding. Nonetheless, the time will come where one partner feels like they are putting in more of the work, and preparing for those moments can be the difference between the success of failure of a business.

So how does one prepare for such scenarios? Luckily, the problem is not new, therefore, we have the benefit of looking at how other’s have dealt with it. Here are a two options:

1. The Pre-Formation Agreement

Before you start a partnership, you should sit down and answer the following questions:

  1. What is our mission?
  2. Who is our market?
  3. Why are we doing this?
  4. What do we hope to get out of it?
  5. What is each founder bringing to the business?
  6. How much time are we each expected to devote to the venture?
  7. What is the vacation policy?
  8. What if one partner needs to leave? Is there a buyout? Can they compete if they leave?
  9. What if one partner is not performing?
  10. Who is a neutral third party we can trust to help resolve split decisions?
  11. How much money are we each putting in?
  12. Will the intellectual property be shared equally?

These are all questions that will form the basis of a formal partnership agreement but not weigh you down with details can be discussed later once you decide you have a viable business.

2. The Slicing Pie Model

An alternative model that has gained a good amount of popularity over the last few years is the Slicing Pie model, developed by entrepreneur Mike Moyer. The model proposes a dynamic equity transfer where partners get equity in a company based on what they put in, whether it be time, money, connections, etc.

Mike is a seasoned entrepreneur who speaks from experience, so the model is tested and it works. I actually purchased several of his books and give them out to my clients.  The model does require a bit of work and monitoring, so some entrepreneurs have been hesitant to adopt it. However, based on the tools he provides, it can be a great way to track the value founders are contributing to a venture to avoid the conversation where you question someone’s commitment because it isn’t clear that they are dedicated to seeing the company succeed. The Slicing Pie model prevents this by tracking the time and effort each person is contributing so you have concrete data from which you can make informed decisions on how to move forward.

Conclusion

While there is no right way to plan a partnership, not doing any planning is a good way to increase your chances of failure. With a little work before you dive in and understanding of the risks ahead, you can put yourself in a position to deal with the trials and tribulations of starting a new business with a roadmap that will prevent you from getting sidetracked by the inherent difficulties of a partnership.

The Law Offices of Pankaj S. Raval focus on serving startups, new ventures, and scaling businesses. We help companies draft their founding documents but also put them with financing agreements to help them grow. Based on years of experience, we pride ourselves on looking at both the legal and practical aspects of starting and growing a business. You can reach us a 323.413.7958 or [email protected]

 

 

By Vikas Srinath, Associate

The internet has opened up a world of opportunity for the average consumer to find the exact product or service they’re looking for.  As a result, retailers are placing a prime emphasis on building a brand and establishing a reputation so as to separate themselves from the rest of the vendor ecosystem.  Accordingly, businesses are relying on trademark law to grow their brands and protect their reputation.

Trademark law generally serves two functions: (1) to protect consumers from being confused or deceived about goods or services in the marketplace, and (2) to encourage merchants to stand behind their goods or services by protecting the goodwill they have developed in their marks. To put these functions in context, consider the following scenario:

An electronics manufacturer designs and sells a smartphone that features, prominently, a pear engraved on its backside.  When the manufacturer sees sales begin to increase, it spends money on an advertising campaign that shows customers of all ages using the product while featuring the pear logo.  However, within three weeks of reaching new heights in sales and market presence, the manufacturer sees smartphones made with its exact same pear imprint on its backside listed at a fraction of the cost of the original pear-branded smartphones, but listed by another seller.  Unsurprisingly, the quality control of these newly sold, but similar-looking products is poor, and the original pear-brand manufacturer finds its sales dropping significantly as consumers who purchase the knockoff phone begin to confuse the lower-quality products with those of the original.

Unfortunately, the scenario above (and many more like it) is common, especially in the online marketplace. Combined with the need to keep operations lean, many original product manufacturers and service providers find themselves undercut significantly because they didn’t have the tools to protect their trademark, or they risk having to litigate in order to enforce their rights.

Trademark registration with the USPTO confers a number of benefits to the registering party in addition to avoiding unpredictable litigation outcomes, including: (1) giving a party the right to use the mark nationwide, subject to certain limitations[1], and (2) providing nationwide constructive notice to others that the trademark is owned by the party, thereby enabling that party to bring an infringement suit in federal court[2].  Practically, registration allows the party to potentially recover treble damages, attorneys fees, and other non-monetary remedies; after five years of active use of a mark, registered trademarks can provide an exclusive right that is considered conclusively established[3].

The old adage rings true: an ounce of prevention can lead to a pound of cure.

For more information on the next steps you and your business can take, or any other information related to trademarks, intellectual property, and related disputes, please feel free to contact our firm.

The Law Offices of Pankaj S. Raval has been one of the top registrants of trademarks for retailers and entrepreneurs. For information on starting the process, please call 323.543.4453, or email [email protected] to learn more about protecting your brand today.

 

[1] 15 U.S.C. §1072

[2] 15 U.S.C. §1121

[3] 15 U.S.C. §1065

Coaching is a hot career choice today.  In LA, it seems like people have “coaches” for everything. There are financial coaches, health coaches, business coaches, life coaches, and more.

In discussing the value of coaching, I like to pose the question: how many championships do you think Michael Jordan would have won without Phil Jackson? Hiring a coach illustrates the importance one puts on self-improvement. Successful people know that learning does not stop with school and hiring a coach is a great way to push yourself to be better than you were yesterday–no matter the playing field.

As you can tell, I am a big proponent of coaching. I will confess, I have hired a few coaches for myself since I moved to Los Angeles and my experience has been nothing short of exceptional. I also have several clients that are excellent coaches. Many have left lucrative careers in finance or real estate to become coaches. These clients came to me with a desire to pursue a career where they could give back and help individuals on a one-on-one basis.  In doing so, they realized there are a few important legal issues to consider. I have done my best to synthesize the key elements of a coaching agreement into five main points. I hope you find them helpful.

  1. Define the relationship (“DTR”). Similar to the conversation we have all had a some point with a significant other, the DTR talk with a prospective client should happen at the outset.  Before any coach agrees to work with a client, they should have a clear understanding of the wants and needs of the client.  Is the client committed? Are they going to be talking to other coaches at the same time? Do they have a checkered past with other coaches? Wait…I think I have lost track of what we are talking about.  Right, coaching, yes, similar to starting a relationship you want to know your client and you want them to know you.  Once, you figure out why you are working together, make sure to put it in an agreement you both sign.
  2. The exchange. All valid contracts require an exchange of some sort. In law, we call it “consideration”. It is important the agreement contains, in detail, the services you are providing (and some of those you are not providing) and what the client is expected to provide in return, e.g., payment.
  3. Rendering services. How are you going to provide your services? In-person? Phone calls? Texts? Snapchat? (I hope you use discretion with that last one).  Each type of communication medium has its pros and cons. Figure out what works best for you and do that.  Don’t feel pressured to migrate to a medium that doesn’t fit your personality or skill set. Plus, remember, newer technologies can pose complex privacy risks. Walk before you run.  Take time to hone your skills before trying the latest technology just to seem like you are “cutting edge”. Technology is a tool, don’t try to do too much with it.
  4. Termination. Every contract needs an out. Decide when the agreement terminates. It can be recurring monthly, but that needs to be clear.  If it is a year from now, say that as well. Further, what are grounds for termination? If the client misses three meetings? How about if they do not listen to your advice? The clearer you can be here the better so you protect yourself if the relationship is not working out.
  5. Guarantee. In a services profession, you need to be very careful making guarantees about anything. We hear shady sales people make them all the time and the truth is it can sound desperate and you may catch yourself in a bad spot. Clients may want guarantees if they are going to be paying a high dollar amount for your services, but let your reputation speak for itself and don’t make any promises you cannot keep.  More importantly, make sure you state explicitly in your agreement that you do not guarantee any particular outcome from the coaching services. The clients need to clearly understand this fact.

Depending on the types of coaching services you offer, there are likely specific issues to address in your contract. Nonetheless, the above five points give you a great foundation to any coaching agreement you are thinking about drafting.  If you have specific questions about starting your own coaching service, please don’t hesitate to reach out to our office for more information or help with drafting your own personalized coaching agreement.

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