Heading to the office today, I heard a young man behind me say, “Well, I’d been there six- and-a-half years, so it was time to move on.”  A few steps later, I heard him add, “Well, it was time for me to get health insurance.”

This random comment fell right in line with the just reported findings by Mercer’s October 2011, What’s Working survey.   The survey finds that employees leave for a host of nonfinancial reasons as well, with a key factor being “how you are treated….”

When I’m leading training sessions for human resources professionals, I remind participants that in spite of the many laws they must know, if they will remember but one rule, they will usually get the law right, quoting Maya Angelou: “People will forget what you said, People will forget what you did, but people will never forget how you made them feel.”  When workers believe that they have not been treated fairly they seek to strike back.  Sometimes they vote quietly with their feet because of how they feel about their “work, co-workers, bosses and the general work environment,” according to Colleen O’Neill at Mercer.

Perhaps fueled by the Occupy Wall Street movement, it is clear that more terminated employees are not voting so quietly. The EEOC’s charge statistics certainly show a steady increase.    And, although the year-to-date numbers are not posted, it is clear from speaking with fellow defense oriented employment lawyers, charges are up across the board. To paraphrase the famous line from the movieNetwork, workers are “Mad as H_ _ _ and Not Going to Take it Anymore.”

The tide has clearly turned since the end of the official recession.  Making sure that employees understand their workplace situation is key to your company’s economic health. North Carolina may be an “at-will” employment state, but if employees don’t feel that they have been treated fairly, your company may become part of the EEOC’s new statistics.

If you need assistance with workplace decisions, The Workplace Lawyers at Sands Anderson would be pleased to assist you.

This was originally published on Virginia Workplace Law on November 8, 2011.

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Small business owners in the Triangle are invited to attend a free corporate legal clinic on Friday, October 28, 2011, sponsored by the Durham County Bar Association, North Carolina Lawyers for Entrepreneurs Assistance Project (NC LEAP) and the Small Business Center at Durham Technical Community College.

 This is the place for you if:

•  You are thinking about starting a business and have questions for an attorney;
• You tried to form your own corporation or LLC and need reassurance and review;
• You have a contract to be reviewed;
• You have questions about an employee or independent contractor;
• You want to find out more about protecting your company’s name, logo, web site or materials;
• You have a question about trademarks or copyrights;
• You need help collecting money from your customers;
• You’ve received a legal notice you don’t understand; or
• You want to get your company’s legal affairs in order so you can get financing. 

 The clinic will be held at the Durham Tech Small Business Center, SOUTHBank Building, 400 W Main St, Third Floor, Durham, NC 27701, from 10 a.m. to 2 p.m. Clients are encouraged to pre-register by calling (919) 536-7241, and will be given an hour-long window in which they will have a 20-minute consultation with an attorney. We will try to fit in walk-ins as best we can, but the wait will be long.

The volunteer attorneys will help you assess your legal needs, give you some basic information and point you toward appropriate resources. 

 NC LEAP assists low-wealth entrepreneurs with their legal needs in starting or expanding their businesses by providing access to pro bono North Carolina business and transactional lawyers.

 The Durham Technical Community College Small Business Center is a state-funded organization which is part of the Small Business Center Network of North Carolina. The Small Business Center (SBC) provides small business owners with information they need for success, including advice on marketing, sales, bookkeeping, and management. 

While many business owners are savvy enough to select the proper entity on their own, many do not understand the difference between trade names and trademarks. Others accidentally give the rights to their logos and other commissioned artwork to their graphic artist and the content of their website to their web host.  Some will think they can choose whether a worker is a contractor or an employee.  A good business attorney can address these issues on the front end, and save much expense and aggravation later.

Likewise, a good certified public accountant isn’t just a number cruncher — he or she is a trusted advisor who understands your business and today’s economic climate.  CPAs evaluate business ideas, plan for growth, minimize taxes, monitor cash flow and help keep proper financial records.  Poorly set up books can make it impossible for companies to track costs, make profits and attract financing.

Those of us that work with startups are familiar with the intersection of  providing value and penny-pinching, and can often work with the bootstrapped entrepreneur on how the services are provided and paid for.

Related articles

• Moving beyond the kitchen table (csmonitor.com)
• Bootstrapping Mistakes You Can Easily Avoid (startupbiz.wordpress.com)
• How to Get Good At Making Money (inc.com)
• About Starting a Small Business (thinkup.waldenu.edu)

Oh when will they ever learn?
(Pete Seeger – Where Have All the Flowers Gone, Copyright 1961 (renewed) Fall River Music Inc.

It seems that internet and social media titans Google and Facebook have once again, to no one’s surprise, gotten themselves in some hot water with the FTC and some privacy watchdogs again. They just can’t seem to get the hang of this “privacy” thing. Hence the start of this post.

Google has settled with the FTC over a little faux pas concerning its fabulously fizzled BUZZ service. Trying to combine the best of Facebook and Twitter, they announced BUZZ with typical Google style and fanfare, and just to be hip, they phrased their sign up options thusly:

“Sweet! Check out Buzz”

Or

“Nah, go to my inbox”

Minor problem: The “Sweet!” option gave less than a full and transparent statement of the degree to which users’ information would become public. In essence, Buzz capitalizes on all those emails you never deleted, scanning them for connections that you have or might want to make, or something like that. In other words, they use your private information to build a public social network. I’m sure they studied the 2009 Facebook Privacy policy fiasco in detail, but apparently concluded that Google and BUZZ were somehow “different” as in not subject to the same rules and regulations as their competitors. When folks started to realize that their private information was being shared far more than the casual “Sweet – Check out Buzz” message indicated, they were less than amused, but then, as they dug further they discovered that checking the “Nah” box did not have the effect one might have expected either. Notwithstanding a clearly checked “Nah” box, Google dutifully went right ahead and collected all sorts of information about the non-subscribers, perhaps with the thought that they would be pleased to see all that information stored and ready to go once they finally decided to join the flood of ecstatic BUZZ users, now measuring in the hundreds, or even thousands.

For its thoughtful and condescending violation of its users’ privacy expectations, Google was invited to discuss their philosophy of privacy with the FTC in court, leading to a proposed consent order that requires Google to submit to rigorous FTC audits for the next 20 years.

Facebook’s latest gaffe was to introduce its facial recognition capability as an “Opt Out” feature in June. Described by PC Magazine as “Creepy” and “terrifying,” Facebook’s tool works in the background scanning and analyzing the 200 million or more pictures uploaded every day by its 600 million users. By comparing faces in the pictures in its database with pictures in which your friends have “tagged” you, or you have tagged yourself, Facebook develops an incredibly powerful capability to analyze your movements, your activities, and your associations. Of course, by participating in Facebook in the first place, you already give them a lot of raw material, but this new tool goes one step farther. And it’s a big step.

Even if you opt out, how can you know whether Mr. Zuckerman’s elves won’t continue to analyze your photos with this capability. Or, having opted out, what if being tagged in one photo with one “suspect” and in another with a different “suspect” might provide a link that law enforcement officials would just about do anything to know. Did I say ‘suspect”? Sorry – I meant “subject.” Facebook is not a government agency of course. But then, what, if any, new surveillance capability has not eventually been commandeered by law enforcement, with or without a warrant? I’m not sure I would want to count on Facebook not to give up the goods if the FBI or Homeland Security brought enough pressure to bear. In fact, their privacy policy pretty much makes it a foregone conclusion:

6. How We Share Information

 

 Facebook is about sharing information with others — friends and people in your communities — while providing you with privacy settings that you can use to restrict other users from accessing some of your information. We share your information with third parties when we believe the sharing is permitted by you, reasonably necessary to offer our services, or when legally required to do so. For example:

……..

To respond to legal requests and prevent harm. We may disclose information pursuant to subpoenas, court orders, or other requests (including criminal and civil matters) if we have a good faith belief that the response is required by law. This may include respecting requests from jurisdictions outside of the United States where we have a good faith belief that the response is required by law under the local laws in that jurisdiction, apply to users from that jurisdiction, and are consistent with generally accepted international standards. We may also share information when we have a good faith belief it is necessary to prevent fraud or other illegal activity, to prevent imminent bodily harm, or to protect ourselves and you from people violating our Statement of Rights and Responsibilities. This may include sharing information with other companies, lawyers, courts or other government entities.

Time will tell whether Facebook and Google use these powerful capabilities for good or evil, but they are here to stay, and growing everyday. Even if there is little you can do to block their intrusive reach, you owe it to yourself to actually read the privacy policies of Facebook and any other site to which you submit personal information.

How carefully are you reading the Terms of Service and Privacy Policies of the online sites you frequent?

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As of June 23, 2011, all cities, all counties, and private employers with at lest 25 employees in North Carolina are required to use the federal government’s E-Verify program to verify the work authorization of newly hired employees.
Public universities, community colleges and other North Carolina state agencies are already required to use E-Verify. The new statute applies to municipalities, counties and employers that employ 25 or more employees in North Carolina.

Timeline for employers to register and participate in E-Verify:

• October 1, 2011:  municipalities and counties in North Carolina.
• October 1 2012: Employers who employ 500 or more employees in North Carolina.
• January 1, 2013: Employers that employ 100 or more employees in North Carolina
• July 1, 2013: Employers that employ 25 or more employees in North Carolina

Employers with seasonal temporary employees who work fewer than 90 days in a consecutive 12-month period are excepted from compliance, and the law also does not apply to employers that employ fewer than 25 employees in North Carolina.

An employer covered by the Act will be required to enter a new hire’s information reported on the Form I-9, Employment Eligibility Verification, into the E-Verify program to determine the eligibility of that employee to work in the United States. An employer must retain the records of the verification of the employee’s work authorization during the length of that employee’s employment and for one year after the end of the employment period.

Any person who has a good faith belief that an employer is violating the requirement to use E-Verify may file a complaint with the North Carolina Commissioner of Labor. The complaint may be anonymous. The commissioner will investigate valid complaints and may issue subpoenas for employment records from the employer as part of this investigation.

For a first violation of the Act, the North Carolina Commissioner of Labor will order the employer to file a sworn affidavit within three business days after the determination that the employer has violated the Act. The employer must swear in the affidavit that it has consulted with the employee and requested a verification through E-Verify. Failure to timely file this affidavit subjects the employer to a $10,000 civil penalty. A second violation of the Act subjects the employer to an additional $1,000 civil penalty, and a third violation subjects the employer to a $2,000 civil penalty for each required employee verification that the employer failed to make. The Act contains a provision allowing an employer to appeal the commissioner’s determination that the employer has violated the Act.

 For more information about instituting an E-verify program, please call Donna Ray Chmura at 919-706-4200 or dchmura@sandsanderson.com

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The trademark geeks lawyers at Sands Anderson have been debating how far a company should go to “police” its trademarks.  Entrepreneur Media  (publisher of Entrepreneur magazine and owner of Entrepreneur.com) got us thinking about it:  in attempts to protect its Entrepreneur brand, it sent cease and desist letters to EntrepreneurOlogy.com for workshops, EntrepreneurPR, a firm that had a newsletter called Entrepreneur Illustrated, and 3Entrepreneurs, which  sold T-shirts, sweaters and hats with the phrase “Entrepreneur Generation”.

While it is never too soon to protect your company’s valuable trademark, registration alone is not enough. The owner of a trademark has to stop people from infringing its marks, known as policing the mark. 

It is a difficult line to walk. If you don’t police, you could be deemed to have abandoned your mark or have allowed infringing uses to go unchecked.  Too much (or inappropriate) policing can make your company look like a bully and generate bad PR. 

It is important to remember that a trademark registration protects the use of the brand name in connection with the goods and services provided in the registration only.  So if your registration is for ENTREPRENEUR.COM for “downloadable podcasts in the field of business, current events, lifestyle issues, and developments in science and technology”, is a Tshirt with “ENTREPRENEUR GENERATION” on it likely to cause confusion with your service?  Entrepreneur Media thought this was justified, because it had produced clothing with its “entrepreneur” logo.

The first step in policing is to find other people who are using your mark or something substantially similar that is likely to cause confusion in the marketplace. This can be done through search engine alert services or by hiring “watch” companies. Then you need to send a cease and desist letter, demading that the infringing use stop.  After that, there are a number of ways to maintain control of the mark from liecensing  the use to seizing and destroying infringing material. 

In addition to policing, maintaining a trademark after registration also includes making occasional post-registration filings. 

Related articles

• Entrepreneur Magazine a Trademark Bully… to Entrepreneurs (tacticalip.com)
• Creating, Protecting and Defending Brand Equity – Part 3 (circleid.com)
• Stay Out of Legal Hot Water: Website Trademark Issues (iplawforstartups.com)
• Get your name trademarked or get blog-squashed! (supernovaqueen.wordpress.com)
• The Highest Form of Flattery: Do knockoff Prada bags hurt Prada—or help the company sell more of the real thing? (slate.com)

Disney filed on an “intent-to-use” basis, meaning the applications will be reviewed, and if approved, Disney will have six months to begin actually using the trademark in commerce. 

Leaving aside questions of whether this name is owned by the Federal government, or whether this application is in bad taste, we wish more of our clients were as proactive as Disney in protecting their brands on the front end. 

Trademark usage and rights are a very complex area of law. Rights can be obtained in three different ways:

• Companies or individuals can obtain limited rights in trademarks just by using them in commerce. This is called “common law” protection and gives the company the exclusive right to use the mark in the area of actual use, plus a reasonable zone of expansion. Common law protection allows you to prevent other businesses from using a trademark in the same geographical area that is substantially similar to yours, and that would be likely to cause confusion to the consumer between your good or service and the other good or service. 
• Companies or individuals can obtain exclusive rights to use the trademark in a particular state by obtaining a state registration. A state registration gives you the right to stop others from using a substantially similar trademark anywhere in the state, regardless of where in the state you are actually using your trademark.  Obtaining a state registration takes a few months.  
• Companies or individuals using (or intending to use) their marks in interstate commerce can obtain exclusive rights to use the trademark in the United States by obtaining a federal registration.  A federal registration gives you the right to stop others from using a substantially similar trademark anywhere in the United states, regardless of where in the country you are actually using your trademark.  Obtaining a federal registration usually takes a more than a year, but it can be much longer. 

We are involved with a number of trademark infringement cases, and if we can make one point that would save our clients untold cost and aggravation, it would be to have them secure their rights in their brand name and logo early in the process.

What does this mean?  It means:

1. Before using a name or logo, make sure you have the rights to use it.  There is nothing worse than spending a lot of money on a logo, domain name, web site, business cards, marketing materials and signage and then getting letter demanding that you stop infringing someone else’s trademark.

2.  Register your name and logo on the state or federal level as soon as possible.  As Disney did above, you can file an application on the federal level before you have an actual product in the marketplace.  While you will have some limited rights based on non-registered use, there are significantly more arrows in the quiver when you have either a state or federal registration. 

Benefits of registration include: 

• Demonstrates Marketing and Business Savvy.  Having the official “stamp of approval” on your trademark (i.e., an official registration) can provide influence and credibility for your business. You may be working on a shoe-string out of your spare room, but you will present yourself as a savvy business owner who understands how to identify and protect your assets.  Customers, competitors and juries may involuntarily respond favorably to you because your mark is not just being used, but has been registered.  
• Deterrent effect.  Registration lets the world know that you are serious about protecting your brand name and reputation. If your mark is registered, the U.S. Patent and Trademark Office (or the state trademark office) will refuse to register any confusingly similar marks. Additionally, your mark will appear on trademark searches.  When other businesses consider a mark that is similar to yours, your mark will show up on the search report.  Most businesses would rather adopt a mark that is unique to their business and that does not run the risk of infringement or a lawsuit.  Simply letting them know you’re out there could prevent someone from stepping on your trademark toes.
• Priority of use.  The rights you get from just using your trademark are essentially limited to the geographic area of actual use.  A state registration gives you rights throughout the state, and a federal registration gives you rights throughout the country.  
• Access to Federal Courts.  A federal trademark registration gives easier access to federal courts.  Some lawyers prefer Federal courts because the procedures are standardized across the country.  Other lawyers prefer to file in state courts, where the process may be cheaper and quicker.  If you need to sue an infringer in another state, however, federal courts may be the preferred venue for access to justice.  
• Validity.  If you need to sue someone for trademark infringement, a state or federal registration easily proves that you are the owner with the right to stop someone else.  Otherwise, you have to spend the time and money to demonstrate the mark is valid, that you are the owner, you have not abandoned the mark and that you have continuously used the mark in interstate commerce. 
• Help Fighting Counterfeiters.  Owners of federal trademarks can get help from the US Customs service to help fight importation of counterfeit goods.

 What do you think about Disney’s trademark applications for SEAL TEAM 6?

Related articles

• http://www.usatoday.com/money/media/2011-05-17-disney-seal-team-6_n.htm
• The Mouse Takes Bin Laden: Disney Moves To Claim Trademark to “Seal Team Six” (jonathanturley.org)

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These days most businesses have web sites of some sort.  Have you ever wondered if a dissatisfied or injured customer in Peoria, Illinois or Honolulu, Hawaii could make you defend a lawsuit in their state just because they can view your website there?  This is a question I’ve been spending a lot of time on lately. 

A court only has jurisdiction to decide a case if it has jurisdiction over the subject matter and the parties.  Before a court has jurisdiction over a nonresident (or foreign) defendant, the defendant has to be afforded certain due process.  The defendant must have “minimum contacts” with the forum, so that making the defendant defend a suit in that state “does not offend the traditional notions of fair play and substantial justice.”  If there are no minimum contacts, the court does not have jurisdiction and the case must be dismissed. 

In some cases, the defendant’s contacts with the state (sales, product delivery, bricks and mortar location) also provide the basis for the suit, and allow the defendent to be “haled” into a foreign jurisdictions.  In other cases, a court will review the nature and totality of defendant’s interactions with the forum state.  What types of Internet activity would subject a company to a foreign lawsuit? 

The leading case is Zippo Mfg. Co. v. Zippo DOT Com, 952 F. Supp. 1119 (W.D.Pa 1997), which provides a three-prong, “sliding scale” framework:

The Internet makes it possible to conduct business throughout the world entirely from a desktop. With this global revolution looming on the horizon, the development of the law concerning the permissible scope of personal jurisdiction based on Internet use is in its infant stages. The cases are scant. Nevertheless, our review of the available cases and materials reveals that the likelihood that personal jurisdiction can be constitutionally exercised is directly proportionate to the nature and quality of commercial activity that an entity conducts over the Internet. This sliding scale is consistent with well developed personal jurisdiction principles. At one end of the spectrum are situations where a defendant clearly does business over the Internet. If the defendant enters into contracts with residents of a foreign jurisdiction that involve the knowing and repeated transmission of computer files over the Internet, personal jurisdiction is proper [citation omitted]. At the opposite end are situations where a defendant has simply posted information on an Internet Web site which is accessible to users in foreign jurisdictions. A passive Web site that does little more than make information available to those who are interested in it is not grounds for the exercise personal jurisdiction [citation omitted]. The middle ground is occupied by interactive Web sites where a user can exchange information with the host computer. In these cases, the exercise of jurisdiction is determined by examining the level of interactivity and commercial nature of the exchange of information that occurs on the Web site [citation omitted].

The outcomes of these cases are highly fact-specific, depending on the claims alleged, the specific actions of the defendant,  and the nature of the website, among many other factors. 

The thought of having to defend a lawsuit in a far-flung corner of the country could keep a business owner up at night.  But there are several concrete steps a company and its business attorneys can take to reduce the exposure. 

What steps are you taking to protect yourself from risks coming from your web site?

David and I have known each other for several years through our pro-bono work in Durham County.  Like many attorneys, he is smart as a whip and has a knack for civil procedure and the rules of evidence.  What sets David apart is his practice philosophy.  David and I have a similar approach:  we take the time to understand our client’s needs and goals (and often cost parameters) and craft a legal solution that addresses all these factors. 

I have enjoyed collaborating with David in the past, and look forward to working with him in the future.  If you are involved in a contract dispute, have questions about ownership of your brand name, trademark, software or other intellectual property, or otherwise are involved in a business-related lawsuit, in my opinion, David is the right person to call.

Imagine you are the owner of a business with about 50 employees.  Your product is well-known and there are limited suppliers in the United States.  Your best salesman generates about 50% of your company’s gross sales – or about $100 million a year.  He is on salary plus commission under his employment contract and is earning at least three times as much as any other employee. 

Now imagine that this super-star has a very messy personal life, and he’s well-known around town for partying and womanizing.  He’s been divorced three times (once after being discovered in bed with another woman by his first wife),  experienced a brutal custody battle, was accused of beating his second wife and now he’s missed a key sales meeting in New York.  Turns out he was found by hotel staff drunk and naked in a hotel room that’s been trashed.  He is hospitalized in New York (his mother rushed to be with him and says it is very serious).  Upon his release, he enters a three-week rehab program. 

He comes back to work.  At the local Arts Council fundraising dinner, where your VP of Marketing is getting an award and your company has a table, the employee  complains loudly about what a “stupid, stupid man” you are, how your company is exploiting his sales experience and contacts, he doesn’t get paid enough for all the crap he has to put up with — and your company would be nothing without him. 

Can you even fire someone for their outside conduct that reflects unfavorably on your company?  What are your potential legal liabilities?  Does it matter if the employee had an illegal drug problem? A booze problem? Would it matter if he were bi-polar or otherwise mentally ill? 

Would the answer be any different if the employee were Charlie Sheen? 
 
If we were the employment attorneys advising the company and its owner in this scenario, first we would look to the employment contract.  Is this employment-at-will where the employee can be fired at any time for any reason that is not discriminatory?  Are there notice provisions?  Or are there specific guidelines for termination that must be met before the employee can be fired?

We would make sure the personnel record is up to date and all performance-related conversations and observations are entered. We would look at how the company treated other employees in similar situations. 

In light of the very liberal definitions of disability under the Americans with Disabilities Act (ADA), we would have to consider whether the employee is in a protected class and whether the termination would be in violation of the ADA.  And if his “stupid, stupid boss” comment is made in front of co-workers, we would also consider whether this public comment is protected activity under the National Labor Relations Act. 

The stakes are high if you handle it wrong.  Charlie Sheen was in fact fired after his off-the-clock antics, and in fact sued the studio, the producer and the production company for $100 million.  The complaint alleges breach of contract, conspiracy, and breach of state and federal laws that protect ill employees. 

What do you do when your super-star employees lose their Sheen?

L3Cs are limited liability companies that have both a profit-purpose and a charitable or education purpose.  They were approved by the legislature on August 1, 2010.  About a dozen have been formed to date here.  They are intended to attract investment and funding sources that may not be available to traditional for-profit entities.

Proponents would like the L3C to become the entity of choice for “program-related investments” (known also as PRI) from  private foundations.  Private foundations are required by the IRS to distribute a percentage of their funds each year, either through grants, loans or other investments for mission-related activities (i.e., program-related investments).  Few private foundations make loans or investments because it is cumbersome and regulation-heavy.  It is easier to give outright grants. Because the L3C authorizing statutes contain certain PRI  language from the Internal Revenue Code , proponents hope private foundations will begin considering funding mixed use for-profit/charitable projects by investing in L3Cs. They are lobbying to get federal tax recognition for the PRI investments in L3Cs.

Another cutting edge social enterprise concept is the B-Corporation (“B” standing for Benefit).  Currently, B-corporations are not recognized via a specific statute in North Carolina, but a bill has been introduced in the North Carolina senate to recognize benefit corporations. Companies, however, can voluntarily be certified as B-corporations by B Labs, a non-profit organization.  The impact of being a “B Corp” now is like having a “Good Housekeeping Seal of Approval” — it is a certification from an independent third-party acknowledging your company’s commitment to serving society and the environment.  B Corps do not receive any specific tax breaks at the state or national level. 

Current corporation law is arguably geared toward maximizing profits for shareholders.  The L3C statute and proposed Benefit Corporation statutes are geared at making it acceptable legally for a company to focus on a social goal, perhaps to the detriment of the profit motive.  The L3C statute, for example, clearly states that the company should operate so that “no significant purpose of the company is the production of income or the appreciation of property.” It allows the owner to focus on meeting the social purpose without having to focus exclusively on return on investment.  The company is in no way prohibited from being profitable; it should not be the main focus.

 It is thrilling as a lawyer to be involved at the inception of a new entity — particularly one that will help people “do well by doing good.”

The Annual Report is a document required by statute that updates basic information of the company, including the names and addresses of the officers, directors, and/or managers, as well as the company’s principal business address and registered agent information and address.  This is so there is accurate information on file on how to contact the company and who is authorized to speak for the company. Companies that don’t file their report will be suspended by the Secretary of State, and you could lose your limitation of liability. 

For corporations the fee is $18 (plus a $2 fee) if submitted electronically online and $25 if sent by mail.  They are due when you file your corporate tax return (usually March 15).  For limited liability companies, the fee is $200 (plus a $2 fee if filing electronically). They are due by April 15.  In addition, corporations are required to hold annual meetings of shareholders and directors. Failure to do this could also result in losing your limited liability. 

Professional corporations (PCs or PAs) and professional limited liability companies (PLLCs) are not required to file annual reports, but professional corporations should hold annual meetings of shareholders and directors.

For more information, click on the Annual Report document here.

My business lawyer’s heart sank when I first read about the fees associated with the “Kardashian Kard.”  While recent federal legislation has attempted to corral fees and abuses related to bank-issued credit cards, prepaid debit cards remain free in the wild wild west. 

My first thought was that the Kardahians saddled their brand name onto a disreputable product.  Was anyone really surprised when that bronco bucked them?

My second thought was utter disbelief that they didn’t have lawyers or business managers managing the details and their brand.  I counsel my clients constantly on the legal aspects of trademarks, marketing and branding issues. This is the kind of problem that is 100% preventable with a good attorney in your stable. 

If your name were attached to a product or service of any sort, wouldn’t you investigate the nature and quality of the product first?  Especially if you were a celebrity brand that was essentially famous for no discernible reason? What else do you have but your reputation?

So, the moral of the day is a two-fer:

1.  The devil is in the details; and

2.  Read the contract before you sign it. 

What’s the biggest mistake you would have made if you hadn’t actually read the fine print?

 Small Business Trends has listed 50 sites that offer free or low-cost images that you can use on your website to add visual impact without violating someone’s copyright. 

Click here for more information about copyright law.

Cooks Source magazine was designed to support local food-oriented businesses in Western Massachusetts. The magazine had a Facebook page where it electronically reposted its printed articles.

After writer Monica Gaudio posted a rather off-hand blog entry on her interaction with the Cooks Source editor, the story went viral on the Internet, largely because of the editor’s pompous and condescending attitude. Thousands of people researched Cooks Source online and found its Facebook page. Numerous people “liked” the Cooks Source Facebook page for the sole purpose of criticizing editor Judith Griggs and posting insults (some of which were quite clever, others of which were crude and mean).

In later electronic communications, Griggs complained that her Facebook page had been “hacked.” Hacking is breaking into a computer to gain unauthorized access. Often hackers are trying to steal information. In this case, the Facebook page performed as it was designed. Consumers felt a desire to connect with a certain business (i.e., Cooks Source), “liked” the page and then posted comments. Unfortunately, most of these comments were critical of Griggs, but this is not hacking. Social media (Twitter, Facebook, blogs) is designed to be an interactive forum with customers, not an electronic bulletin board where a company posts press releases and stifles all criticism. Companies who misunderstand the interactiveness are often ill-prepared for the fall-out.

Griggs lost control of her Facebook page. She didn’t respond to negative comments, which further infuriated her critics. I have heard this called “slacking” meaning that the Facebook owner “slacked off” (shirked) monitoring social media. When food conglomerate and chocolatier, Nestle, dipped a toe into social media with a Facebook page, it was flooded with critical comments about its sustainability practices and marketing practices for infant formula in the Third World. Corporate responded with a warning to stop posting altered versions of the Company’s logo. While this alteration might rise to copyright or trademark infringement, the legal response needed to be tempered by extremely savvy marketing/public relations advice.

Both of these companies entered social media without a plan, or, quite frankly, a clue, and were powerless to repel the social attack. The plan needs to encompass both legal and marketing experts, and a company needs to learn from Cooks Source, Nestle, and Domino’s that social media can be used against you. Companies need to understand the particular media, the users, and the unwritten rules of any community, as well as the underlying legal and marketing concepts. On the legal end, companies using social media also need a firm understanding of copyrights, trademarks, defamation, and right to privacy. Social attacks require coordinated responses from the lawyer and the PR agency.

More on Internet caching later.

This is the place for you if:

• You are thinking about starting a business and have questions for an attorney;
• You tried to form your own corporation or LLC and don’t know if you did it right;
• You have a contract to be reviewed;
• You have questions about how to protect your company’s name or other intangible assets;
• You need help collecting money from your customers;
• You’ve received a legal notice you don’t understand;
  ]]> http://nclawlife.com/2010/10/04/corporate-legal-clinic-on-october-22-2010/feed/ 1 http://nclawlife.com/2010/09/16/changes-to-fsas-and-hsas-nothing-to-sneeze-at/ http://nclawlife.com/2010/09/16/changes-to-fsas-and-hsas-nothing-to-sneeze-at/#comments Thu, 16 Sep 2010 14:43:18 +0000 Donna Ray Berkelhammer http://nclawlife.com/?p=808 Many employees take advantage of Flexible Spending Accounts
  ]]> http://nclawlife.com/2010/09/16/changes-to-fsas-and-hsas-nothing-to-sneeze-at/feed/ 5 http://nclawlife.com/2010/08/24/health-reform-codifying-economic-substance-doctrine/ http://nclawlife.com/2010/08/24/health-reform-codifying-economic-substance-doctrine/#comments Tue, 24 Aug 2010 14:24:37 +0000 Donna Ray Berkelhammer http://nclawlife.com/?p=770 John Vandenhoff continues his exploration of
  ]]> http://nclawlife.com/2010/08/24/health-reform-codifying-economic-substance-doctrine/feed/ 2 http://nclawlife.com/2010/07/19/before-you-lose-your-friend-and-your-money/ http://nclawlife.com/2010/07/19/before-you-lose-your-friend-and-your-money/#comments Mon, 19 Jul 2010 19:52:39 +0000 Donna Ray Berkelhammer http://nclawlife.com/?p=733 If you lend money to a friend, expect to lose the friend and the money. And in North Carolina, if you help a friend buy a house, you could also be committing a class 3 misdemeanor.

  Until recently, the North Carolina Mortgage Licensing Act made it a criminal act for a non-licensed individual to loan money to someone else for the purchase of a property to be used for “personal, family or household use.” In English, much to the dismay of the real property bar, this means, it was illegal for parents to lend money to their children for the purpose of buying a home.

  This law was modified about this time last year, and now specifically allows an individual to provide a residential mortgage loan to an immediate family member. “Immediate family member” means a spouse, child, sibling, parent, grandparent, or grandchild, or the spouse of an immediate family member. This term includes stepparents, stepchildren, stepsiblings, and adoptive relationships.

  It is still illegal for an aunt and uncle to loan money to a niece or nephew, or a good family friend to loan you money to buy a house. A lot of real estate attorneys think an individual should be permitted to make a few loans to friends or family over the course of his lifetime, without having to register as a mortage lender, broker or originator.

  ]]> http://nclawlife.com/2010/07/19/before-you-lose-your-friend-and-your-money/feed/ 3