Your business has unique products or services. What type of intellectual
property protection do you need to make sure that your competitive advantage is
not exploited by others?

It is important to understand whether you should file for a patent, a
trademark, a copyright — or all three. While patents, trademarks and
copyrights are all types of intellectual property, each protects something very
specific.

For example, let’s say your company manufactures small colorful kitchen
appliances including breadmakers and mixers. The distinctive name and logo
on your appliances could be protected by a trademark. But you might also obtain
patent protection for a unique new process that improves the way your
appliances operate when compared with other appliances on the market. Assume
further that each of your appliances comes with a written story about the
company founder’s love of cooking. The story can be protected by copyright law.

As you can see, one company could need all three types of intellectual property
protection. Consult with your attorney to decide which one to handle first.

Here are some basic similarities and differences between patents, trademarks
and copyrights.

Definition

• A patent is a limited duration property right relating to an invention,
  which is granted in exchange for public disclosure of the invention. A
  patent provides exclusive rights to make, use, import, sell and offer for
  sale an invention for up to 20 years.
• A trademark is a word, phrase, symbol, and/or design that identifies and
  distinguishes the source of the goods of one party from those of others. A
  service mark is a word, phrase, symbol, and/or design that identifies and
  distinguishes the source of a service rather than a product. The term
  “trademark” is often used to refer to both trademarks and
  service marks.
• A  copyright protects works of authorship, such as writings, music, poetry,
  novels, movies, computer software, architecture and works of art that have
  been tangibly expressed.

Do I have to file or register with the federal government to
obtain protection?

• A patent right is granted to inventors by the U.S. Patent and Trademark
  Office (USPTO). So you must obtain protection through the federal
  government.
• For a trademark, you don’t necessarily have to work with the federal
  government, because there is potentially common law protection. Registration
  of a trademark with the U.S. government is not required but registering
  provides advantages including: a notice to the public claiming ownership
  of the mark; a legal presumption of ownership nationwide; and the
  exclusive right to use the mark on or in connection with the goods or
  services set forth in the registration.
• When it comes to copyrights, you don’t necessarily have to register with the
  federal government because there is potentially common law protection.
  Registration with the U.S. government Copyright Office is not required but
  provides advantages. For example, registration establishes a public record
  of the copyright claim; it is necessary before an infringement suit is
  filed in court; and it establishes prima facie evidence in court if made
  within five years of publication.

Are ideas protected?

• A patent cannot be obtained based on a mere idea or suggestion. For example,
  a patent is granted upon the creation of a new machine and not upon the
  idea or suggestion of a new machine. A complete description of the actual
  machine for which a patent is sought is required.
• You can’t trademark an idea or even a generic name. For example, you can’t
  trademark “wine” as the name of a product. A trademark must
  involve a word, phrase, symbol, design, or combination that identifies and
  distinguishes the goods or services of one party from another.
• Copyright does not protect ideas, facts, discoveries, systems, or methods of
  operation, although it may protect the way these things are expressed.

How long does filing or registration take?

• For patents, the USPTO reports the current average application time is
  24.6 months.
• According to the USPTO, it is difficult to predict exactly how long it will take a
  trademark application to mature into a registration, because there
  are many factors involved. “The total time for an application to be
  processed may be anywhere from almost a year to several years, depending
  on the basis for filing, and the legal issues which may arise in the
  examination of the application,” the USPTO states.
• When it comes to copyrights, the timing depends on the number of applications
  the Copyright Office has received at the time and the details of the
  application. Currently, average processing time for e-filing is three
  months for e-filing and ten months for paper filing. The Copyright Office
  notes that if a work is copyrightable and meets all requirements, the
  effective date of registration is the date the Office received the
  completed application with correct payment.

Trade Secrets

Trade Secrets are a fourth type of intellectual property. Trade secrets consist of
information companies have not revealed that give them an advantage over their
competitors. They can include a formula, pattern, compilation, program, device,
method, technique or process. A trade secret should be used in your business
and you must take reasonable steps to protect it.

For questions about how to safeguard your intellectual property, consult with
us.  DBosco@boscolegal.com; (212) 201-1908

No matter what type of business you’re in, you probably have a Web site. And you probably want to regularly put interesting content on your Web site in order to keep it fresh and appealing.

Perhaps you develop your own copyrightable articles or images — or hire someone else to do it. No matter how your Web site is created and maintained, be aware of copyright law.

Copyright is a form of intellectual property that has its foundations in the U.S. Constitution and is protected by statutory laws of the United States. It protects original works of authorship including literary, dramatic, musical, and artistic works, such as poetry, novels, movies, songs, computer software, and architecture. Copyright does not protect facts, ideas, systems, or methods of operation, although it may protect the way these things are expressed.

Work becomes protected by copyright law the moment it is created and fixed in a tangible form. Registration with the U.S. Copyright Office is not required in order to receive protection but there are advantages.
For example, it is necessary if you want to bring a copyright infringement
lawsuit on a statutory basis.

Copyright Notice

Placing a copyright notice is not currently required under U.S. law. However, it is still a good idea to add one. For example, © 2012 John Smith. Using a copyright notice informs the public that your work is protected by copyright as well as identifying the copyright owner and the year of first publication.

Fair Use Exception

Not all use of protected material is an infringement. The fair use exception allows you to use a limited portion of a work without seeking the creator’s permission.

Under the fair use doctrine of the U.S. copyright statute, it is permissible to use limited portions of a work including quotes, for purposes such as commentary, criticism, parody, news reporting, and scholarly reports. There are no legal rules permitting the use of a specific number of words, a certain number of musical notes, or percentage of a work.

One example of fair use is a book review in a magazine or newspaper that quotes short passages of the book. While there’s no “word limit” on fair use, you can generally only copy a small portion of the work.

Copyright Infringement of Images

Many businesses have gotten in legal hot water by not fully understanding the law. For example, one supplier of photo and graphic images has sent thousands of letters to Web site owners demanding payment for unauthorized use. The company found its images by using “spider” or “fingerprinting” software, which continually searches the Internet.
Once the software finds a match, the copyright owner verifies that the image
belongs to it and generates a letter demanding a “settlement fee” of
up to $1,000 or more for each image.

In some cases, the Web site owners simply copied images they found on the Internet and uploaded them onto their pages without paying for the rights to use them. This is clear-cut infringement. But other cases are not so straightforward. Many businesses hired third-party Web designers who didn’t obtain the proper licenses to use images. Web design firms often subcontracted work overseas where unscrupulous workers stole licensed images and incorporated them into banner ads, web templates and other products. The
businesses with the infringing images on their Web sites had no idea until they
received demand letters.

Would a company have any legal protection if it unintentionally used images in this way? While intent may play a role in a lawsuit or legal claim, the bottom line is Web site owners (the end users) are generally liable for any copyright infringement that occurs on their pages –
even if they didn’t know about it. Ignorance of the law is generally not a
defense.

As you can see, copyright infringement on Internet Web sites is a serious problem. You want to ensure your company protects its copyrighted works and does not violate the rights of other copyright owners.
Consult with us for steps to take to accomplish both goals.  DBosco@boscolegal.com (212) 201-1908

When bringing new employees on board, your business may provide applicants you want
to hire with offer letters. In interviews, managers may make certain positive
statements about the financial condition of the company in order to entice
candidates to take the jobs. And after being hired, employees may sign
employment contracts and be given employee handbooks.

Through all of these hiring steps — and other actions — your business may be making
job security promises. In the future, employees may be able to argue that you
promised them jobs for as long as they wanted.

The reason is that certain statements can be treated as binding contracts, and even
verbal statements can be considered implied contracts.

Managers and supervisors acting on behalf of your company can create contracts as
binding as those made by the chief executive officer.

Below are the types of statements that can get your business in trouble, but
first, here are the key differences between offer letters and employment
agreements:

An offer letter is a brief document offering a position to a candidate to whom you have already verbally made an offer. It should not contain statements about issues such as salary, benefits, possible disciplinary actions or the duration of the job. No statement should be able to be misconstrued as a promise. These letters generally contain an “at
will” statement. This makes it clear that either the employer or the employee can terminate the relationship at any time for any legal reason. This means employees can be terminated without “just cause.”

There is no legal requirement to put offers in writing, although many companies use
offer letters and many job candidates ask for them. Consult with your attorney
about whether your organization should put offers in writing and what language
should be used. Letters that are not carefully drafted could inadvertently
create an employment contract or other claims.

An employment agreement is a more formal, lengthy legal contract. It generally contains basic information such as the name of the employee, job location, title, duties and the employee’s supervisor.  As with an offer letter, there is generally an “at will” statement. The exact provisions in an employment contract vary but the agreements should be
drafted by your attorney to ensure there are no unforeseen issues.

An Employment Agreement May Contain the Following Provisions:

1. Salary or wages - It may also address bonuses, stock, profit sharing, employee benefits, business expense reimbursement and severance pay.

2. A confidentiality or non-disclosure agreement, which prevents employees from divulging information about an employer’s operations, processes, trade secrets, products and other aspects of the business.

3. A non-compete clause prevents an employee from competing with a company after the end of employment. These provisions should be reasonable in scope or they may not be enforceable. For example, courts would not likely uphold a clause that prohibits an employee from working for any competitor in any geographic area for 10 years. It would likely be seen as unreasonably preventing the individual from earning a living. Note: Laws regarding non-compete covenants vary from state to state.

4. A non-solicitation agreement states that if employees are terminated, they cannot solicit business from the company’s confidential customer list. It can also mean that the individuals cannot hire former colleagues to work for a new employer. These agreements
generally last for a specified time and may be limited to a certain geographic
area.

5. Moonlighting provisions prohibit full-time employees from having jobs on the side without the company’s approval. These clauses may be limited to employment at similar types of businesses and competitors.

6. Intellectual property clauses state that the employer owns inventions or work created on the job.

7. A morals clause states that employee may be terminated for engaging in behavior that could embarrass the company or be detrimental to its interests, such as illegal activity.

8. Arbitration and choice of law provisions state that disputes will be resolved through arbitration rather than in court. They also may name the state laws that will govern the arbitration process.

Here are some examples of the types of job security assurances supervisors and
managers should avoid in all written documents and conversations:

• While interviewing a job applicant, a company vice president says, “Our
  company is financially solid. We’ve never had a layoff.” If the
  company eliminates the employee’s position six months later because of
  budget cuts, the employee may argue the vice president’s comment implied
  job security.
• Managers make statements to employees such as “You’ve got a job here for as
  long as you want,” or “We’re like a family, so you’ll never have
  to worry about being let go.” These types of statements can imply job
  security.
• An offer letter states: “This position will last until the project is
  completed.” This is a promise of job length. Employees may argue the
  company breached a contract if they are terminated half way through the
  project.
• In order to improve morale after some layoffs, a company states in a letter
  to remaining employees: “We want you to know we will make every
  effort to avoid further layoffs. This does not mean that we won’t fire
  anyone for good reasons, such as poor performance or criminal activity, but
  we are committed to job stability.” An employee who is laid off in
  the future could charge that the letter created an employment contract
  that allowed termination only for just cause.
• An offer letter or an employment agreement states: “You will be eligible
  for two weeks of vacation next year and three weeks the following
  year.” That could be implied as a guaranteed multi-year contract.
• An employee handbook states that after a three-month probationary period
  employees become “permanent” members of staff. A court could
  interpret the language as a promise of job security.

Best practices. Have written documents such as offer letters, employment agreements and employee handbooks drafted or reviewed by your attorney. Train managers and supervisors about what to tell applicants and employees about job security. This includes avoiding any oral or written statements — either clearly or implied — that may be construed as elements of enforceable contracts.

Contact us to find our more:  (212)201-1908 or dbosco@boscolegal.com

Date: 02/15/2012

Subject: SEC Tightens Rules on Advisory Performance Fee
Charges

SEC Tightens Rules on
Advisory Performance Fee Charges

02/15/2012

Under the SEC’s rule, registered investment advisers may charge clients
performance fees if the client’s net worth or assets under management by the
adviser meet certain dollar thresholds. Investors who meet the net worth or
asset threshold are deemed to be “qualified clients,” able to bear the risks
associated with performance fee arrangements.

The revised rule will require “qualified clients” to have at least $1
million of assets under management with the adviser, up from $750,000, or a net
worth of at least $2 million, up from $1 million. These rule changes conform
the rule’s dollar thresholds to the levels set by a Commission order in July
2011. The Commission-ordered increase in the thresholds was required by the 2010
Dodd-Frank Wall Street Reform and Consumer Protection Act. In addition, the
revised rule will exclude the value of a client’s primary residence and certain
property-related debts from the net worth calculation; the change was not
required by the Dodd-Frank Act, but is consistent with changes the Commission
approved in December to net worth calculations for determining who is an
“accredited investor” eligible to invest in certain unregistered securities
offerings.

A new grandfather provision to the performance fee rule will permit
registered investment advisers to continue to charge clients performance fees
if the clients were considered “qualified clients” before the rule changes. In
addition, the grandfather provision will permit newly registering investment
advisers to continue charging performance fees to those clients they were
already charging performance fees.

Finally, the revised rule provides that every five years, the Commission
will issue an order making inflation adjustments to the dollar thresholds used
to determine whether an individual or company is a qualified client, as
required by the Dodd-Frank Act.

The rule amendments will take effect 90 days after publication in the
Federal Register, but investment advisers may rely on the grandfather
provisions before then.

 
05:33 PM EST

Link to New York Times article about a Apple trademark dispute in China regarding the use of the name IPAD.

International Financial Law Review

JP Morgan Investment Management, New York’s highest court affirmed the Martin
Act, the state’s blue sky law, does not vest the attorney general with
exclusive ability to file claims against investment advisers, when
damages are sought on grounds of …

Financial-Planning.com

By John F. Wasik

Registered investment advisors are already familiar with the paperwork hassles that accompany SEC oversight. Yet as states take over regulation of RIAs with up to $100 million in assets under management, many firm owners are wondering …

How To Start, And Run, A Hedge Fund

From Forbes”

“A lot of employees who worked at prop desks are now at hedge funds or
starting their own,” said Mark Coriaty, director of strategic partnerships at
Eze Castle Integration, a Boston-based provider of technology services and even
full service office …

A shareholders agreement drafted for a privately held company details the rights
and obligations of the shareholders. It not only provides guiding principles
for running the business today, it lays out the ground rules of what to do if
one of the shareholders dies, becomes disabled — or one party wants
to dissolve the business.

In other words, it can resolve issues in the future that you may not even
anticipate now.

Caution: There are online shareholders agreement templates that can be filled in. But
there is no one-size-fits-all shareholders agreement that is applicable to all
businesses. Your company is unique and the terms of your shareholders agreement
must reflect that. In addition, it must comply with the laws of the state where
it is being drafted and be in compliance with SEC regulations.

A shareholders agreement can be a complex document. Here are just some questions
your attorney may ask when drafting one.

1. What is the basic information about the business and the
shareholders?

• The name, address and state of incorporation of the business.
• The names and addresses of all shareholders who are parties to the agreement.
• The number of shares each shareholder will own.

2. How will transfers of shares be handled?

• Can shareholders transfer shares to family members?
• Must the company or other shareholders be given the right of first refusal to
  purchase them?
• Must shareholders approve any transfer?

3. What about the sale of shares?

• Must the company or other shareholders be given the right of first refusal to
  purchase them?
• Can shareholders sell some shares or must all shares be sold?
• Can shares be sold to a third party?

4. How is each share valued?

• What is the present value of each share?
• Is the price based on book value, fair market value based on the company’s
  assets and liabilities or another method?

5. What will happen if a shareholder dies?

• Will a shareholder’s shares be sold only after the business or other
  shareholders have the first election to purchase them?
• Will there be life insurance to pay for the shares?

6. What happens if a shareholder becomes disabled?

• Will a disabled shareholder’s shares be sold only after the business or other
  shareholders having the first election?
• Will there be disability insurance to pay for the shares?
• How will you define “disability?”

7. What about new shares?

• Is the issuance of new shares prohibited?
• If not, must shareholders be offered new shares in proportion to their
  interests so they won’t be diluted?

8. How will disputes be handled?

• Must they be resolved by arbitration?

9. What about spouses?

• What restrictions will be placed on the ability of shareholders to transfer
  shares to a spouse?
• Do spouses have the right to vote?
• What about in the case of divorce?

10. What limitations will be placed on shareholders’ ability to
compete — especially if they sell shares or leave the business?

• How will the scope of a non-compete clause be defined? For example, how long
  will it last and what geographic area will be covered?
• Can shareholders be involved in other businesses that may potentially compete
  with the company?
• Is there a non-solicitation clause that prohibits shareholders or former
  shareholders from hiring employees (or independent contractors) to work
  for another competing business?

11. Will there be a board of directors?

• Who can serve?
• What are their duties and roles?

12. How will contributions be handled?

• What is the amount of initial contribution?
• How will future capital contributions be made?
• How will capital contributions be paid back?

13. When will the shareholder agreement terminate?

• Will it end when all shareholders agree to it?
• Will it stay in effect until a specific date?
• What if some of the shareholders want to sell the
  business but the others don’t?

This article only covers some of the issues that could be covered in a shareholders
agreement. The exact provisions will depend on the shareholders and they type
of business. By having an agreement, you can help avoid contentious, expensive
disputes in the future and help protect the rights of all shareholders.

Note: The attorney drafting the agreement is representing the company.
Each of the shareholders should be advised to consult with an attorney to
protect their individual interests.