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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

CLG Founder Pankaj Raval shares some tips to consider when looking for a business attorney.

Transcript:

Hey guys, Pankaj Raval here, founder of Carbon Law Group back, talking about what to look for in a business lawyer.

Here are three things to consider when picking the right attorney. And don’t worry; this is not a shameless plug for Carbon Law Group.

First, do they understand your industry? Are they familiar with the nuance regulations of your industry? If not, are they willing to learn?

Second, are they interested in learning about your goals? You want to avoid a lawyer that has the answer to every question. Real issues are often complicated and require a thorough analysis. You want to make sure you have a lawyer willing to say they don’t know and look things up when necessary. Not all questions are easy to answer.

Third, are they responsive? You’re hiring a professional to act as an advisor. That means you want to make sure they’re communicating with you. Sure, lawyers are busy people, but so are you. Just make sure the expectations are clear at the outset of your relationship. Also, if you’re a text person over an email person, make that known.

Okay, I’ve got a confession. Of course this was a plug. Do you seriously think I was going to spend time and money recording a video not to plug Carbon Law Group? We sincerely believe we have the unique industry expertise, care about our clients’ objectives and are extremely responsive to our clients’ needs. So if you’re interested learning more about our services, call, text, DM, whatever it takes, let’s start that conversation.

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.

Forming your corporation is the first step to limit your personal liability and to ensure the protection of your personal property. However, we are often asked, “Is forming a corporation sufficient to achieve such protection?” or “Is it sufficient to resolve any issues that may arise between me and my partners down the line?”

The short answer is – NO.

After forming a corporation, there are several considerations that startup founders should take into account to mitigate their risk and to adopt a corporate structure that is in line with their expectations.

The below summary describes the initial documents necessary to ensure your corporation is legally compliant and to create effective asset protection mechanisms. Note: many of these principles can be applied to LLCs as well, but for the purposes of discussion here, we are focusing on corporations.

Director Resolutions

Director Resolutions are how you make important decisions for your corporation during the meetings of the Board of Directors. The basic initial resolutions include:

  • electing Directors and appointing Officers, such as the CEO, CFO, and Secretary;
  • approving Bylaws and Shareholders Agreement (discussed next);
  • obtaining authorization to open a separate bank account for your startup; and
  • issuing shares to shareholders of your corporation, etc.

Following such corporate formalities is essential to prevent your business creditors from reaching your personal assets. In the event of an audit or lawsuit, it provides evidence that you keep your personal and business assets separate, treat your corporation as a distinct entity, and cannot be personally liable for corporate actions.

Bylaws

Bylaws provide a governance structure and procedures for your startup. Adopting Bylaws is mandatory in California and many other states. The Bylaws address the following questions:

  • how to manage the corporation, and elect the Directors and the Executives;
  • how to make important decisions, such as approving major transactions; or
  • how to accept new investments or investors into your business, etc.

Adopting and following your Bylaws regularly is crucial in shielding shareholders’, directors’ and executives’ personal assets from corporate liabilities. This is why you should have well-structured Bylaws for your corporation that is is easy to understand and follow.

Shareholders Agreement

A Shareholders Agreement is helpful when your business has more than one founder or new investors join your startup. This Agreement memorializes the understandings and intentions of shareholders and can introduce significant protections for you and your partner(s), such as:

  • the right to buy existing shares before non-owners (Right of First Refusal);
  • the right to sell your shares back to the corporation (Put Option/Buy Back);
  • the right to buy newly issued shares before non-owners (Pre-emption Rights); and
  • the right to buy other owners’ shares in case they breach their duties (Buy-Sell Rights).

Having those provisions in place will allow you to tackle finance and governance disputes efficiently without impairing your regular business operations.

At Carbon Law Group we can help you to negotiate, draft, and incorporate these documents into your new business structure. This will shield your personal assets from your business creditors’ claims and will set clear paths for dispute resolution between you and your partners.

If you have any questions about how to draft governance documents for your startup or need assisting with setting up your corporation, do not hesitate to reach out to us. You can use this link to schedule an appointment to speak with an attorney today.

This blog article is published for educational purposes only. Its sole purpose is to give you general understanding of the law and not to provide specific legal advice. By using this website you understand that no attorney client relationship has been established between you and the publisher. Please contact an attorney licensed in your state for competent legal advice.

8.-Products-and-technology

My business holds a federally registered trademark, but someone else owns the “.com” domain containing my mark. Sound familiar to you or a “friend”? Domain names are arguably the most sought-after online property because of the ease and quickness by which any web user can acquire a domain name from popular hosts like GoDaddy. The common sense approach to this problem would be to search for the owner of the domain and reach out to them directly, but the likelihood of your receiving any response is small – with any action taken being even smaller. Fortunately, after having successfully filed hundreds of trademarks for our diverse group of clients, we have been able to identify and utilize effective means to obtain a domain name held by a “cybersquatter,” including the governing laws providing the grounds for our clients to obtain their rightful intellectual property.

 

What is “cybersquatting”?

Cybersquatting is the increasingly common practice employed by opportunistic individuals and entities of purchasing domain names in the hope of staking their claim to a popular company name idea or title. More often than not, attempting to access the domain through a web browser yields no result primarily because there was never any intent to utilize the domain for any commercial purpose. Fortunately, for federal trademark[1] owners and small businesses finding themselves having to pay lots of money for the domain name best associated with their mark, there are two routes that people or companies affected may take to combat this problem: (i) the Anticybersquatting Consumer Protection Act (ACPA)[2], and (ii) through the Uniform Domain Name Dispute Resolution Policy (UDRP) provided by ICANN[3].

 

(i) Understanding the Anticybersquatting Consumer Protection Act (ACPA)

Under the ACPA, cybersquatting is the “practice of registering, using, or selling a domain name containing language that is identical or similar to a current trademark owner’s mark with a bad faith intent to profit from the domain name.” Critical to this definition are the factors a court may use to determine if a domain name transaction is conducted “in bad faith”, counting for and against.

A domain name transaction is unlikely to be considered in bad faith if:

  1. the registrant herself has any trademark or IP rights in the name;
  2. the domain name contains the legal or nick- name of the registrant;
  3. the registrant used the domain name in connection with the good faith offering of goods and/or services; or
  4. there is lawful non-commercial or fair use of the mark in a website under the domain name.

On the other hand, a domain name transaction is likely to be considered in bad faith if:

  1. there is intent to divert a site that could harm the trademark owner’s goodwill-either for commercial gain or with intent to tarnish by creating likelihood of confusion as to source, sponsorship or affiliation, or endorsement of the site;
  2. there is an offer to sell the domain name without having used, nor having an intent to use, the domain in the bona fide offering of goods or services, or there exists a prior pattern of such conduct;
  3. the registrant intentionally provides misleading contact information in the domain name registration application, or has a history of such conduct;
  4. there exists a warehousing of multiple domain names that appear to be identical or confusingly similar to distinctive marks or dilutive of famous marks, without regard to the goods or services being provided; or
  5. the mark (not the domain owner’s mark) is particularly distinctive or famous.

Some of these factors are actionable under the Lanham Act, but that a softer qualification for purchasing or registering a domain is that there be a bona fide intent to launch goods, services, or a business – even if those plans never come to fruition. However, per subpoint D above, if a domain registrant sits on a mark that he or she knows to be famous and tied to another’s validly registered trademark, a claim for “bad faith” becomes stronger.

 

(ii) Understanding the Uniform Dispute Resolution Process (UDRP)

The UDRP administered by ICANN currently applies to the top level domains (TLDs) of .biz, .com, .info, .org, .net, and a few country code domains like .ac, and .mx. The definition of cybersquatting provided by ICANN is a “bad faith registration of another’s trademark in a domain name,” so traditional trademark rules related to unregistered “common law” and federally registered trademarks apply.

One of the big differences between the UDRP and ACPA is that the entire dispute resolution proceeding is conducted online, is generally resolved within 60 calendar days of the first filing, and is mandatory for TLDs contracted with ICANN (including “.com”). Once you or your counsel determine that a UDRP action is appropriate or necessary depending on the responsiveness of the current domain owner, the process begins by filing a complaint and sending a copy to the respondent (the current domain holder). The UDRP is generally lauded for its effective and timely dispute resolution process, and we have found that our trademark clients value its efficacy.

 

For more information and personalized guidance based on your circumstances, or if you are ready to commence an action through the UDRP, please speak with our technology attorneys by emailing us at [email protected] or call our office at (323) 543-4453 to schedule a consultation.


[1] Note that unregistered or “common law trademark” holders may be able to assert similar claims, but that their rights are limited to the outcome of dispute resolution (with little basis in codified federal law).

[2] 15 U.S.C. §1125(d) under the Lanham Act

[3] For more information, see this link.

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]

It is a question that comes up frequently—and rightfully so.

If you’re reading this, you have most likely read about trademarks somewhere or perhaps received some (likely unsolicited) advice about their importance (when you are an entrepreneur, it is amazing how many people are ready to throw in their proverbial “two cents” (less frequently the real money)).

Fundamentally, trademarks are “source identifiers.” A trademark can be a word, shape, symbol, color, sound, scent, or combination thereof, used by a business to distinguish their goods or services.  A trademark owner has a limited property right to the exclusive use of that mark with relation to their goods or services.

Trademark rights are created through use.  Use establishes common law rights in a trademark.  Common law rights grant owners limited rights to the mark based on geographic locations, trade channels, or demographics.  Owners of common law trademarks may use the ™ symbol next to the mark.

Federal registration of a trademark provides several additional benefits depending on how your trademark is registered.  Trademarks can be registered on one of two Federal Registers: (1) the Principal Register, and (2) the Supplemental Register.  Registration on either register provides the following benefits:

  • right to use the ® symbol;
  • right to file a trademark infringement lawsuit in federal court;
  • bar the registration of another confusingly similar trademark; and
  • allow for international registration in certain instances.

Registration on the Principal Register, however, provides distinct advantages to the Supplemental Register, such as:

  1. a presumption that
    1. the mark is valid,
    2. the registrant is the owner of the mark, and
    3. the registrant has the exclusive right to use the registered mark;
  2. proof that the mark has acquired secondary meaning;
  3. constructive notice of a claim of ownership, eliminating any justification or defense of good faith adoption and use made by a third party after the registration date;
  4. the registrant is entitled to nationwide priority based on the filing date; and
  5. the registration becomes incontestable after five years on the Principal Register, creating conclusive evidence of the registrant’s exclusive right to use the mark, subject to certain statutory defenses.

In order to obtain a federal trademark registration, your mark must meet two fundamental criteria: (1) the mark must be distinctive, and (2) it must be used in commerce.

To learn more about the trademarking process and how to increase your chances of obtaining a successful registration, contact us today.

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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