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But I won’t copyright it that way.

Recently, we’ve had a number of potential clients with copyright questions. So we thought it was time to post some copyright registration FAQs.

1. What can you copyright?  Copyright law protects original works of authorship including literary, dramatic, musical, and artistic works, such as poetry, novels, photographs, drawings, movies, songs, computer software, and architecture. Recipes and web sites sometimes can be protected, It protects the expression of ideas. It does not protect domain names, titles, slogans, most logos, band names, company names, facts, ideas, systems or methods of operation.
2. How do you get protection? Copyrights are created when you “fix” the work in a “tangible means of expression.”  So when it hits the paper, the memory card or the computer RAM, it is protected.
3. What rights are included in the “copyright”? Copyright is a bundle of rights:  the right to copy the work, distribute the work,  display the work, create derivative works, and publicly perform the work.
4. Why should I register my copyright? Technically speaking, copyright protection applies automatically upon creation, but this isn’t as good as it sounds.  Unless you get a federal registration, you cannot sue for infringement and your ability to get damages will be greatly reduced.  Registered works are entitled to certain presumptions under the law, and are eligible for statutory damages and attorneys fees, which makes the case much simpler and more efficient to bring.  Otherwise you have the costly and burdensome job to prove the actual damages you suffered from the infringement.
5. How long does a copyright last? For works originally created on or after January 1, 1978 the term is the life of the author plus 70 years.  If it is a joint work, the term lasts for 70 years after the last surviving author’s death. For works made for hire, and for anonymous and pseudonymous works (unless the author’s identity is revealed in Copyright Office records), the duration of copyright will be 95 years from publication or 120 years from creation, whichever is shorter. Other works have different times of duration, and it is best to discuss the specifics with a copyright attorney.
6. How do I register my copyright? To register a work, submit a completed application form to the US Copyright Office, along with a nonrefundable filing fee, which is $35 if you register online or $50 if you register by mail; and a nonreturnable copy or copies of the work to be registered.
7. What about mailing the work to myself? There is an enduring myth that mailing your work to yourself gives you protection.  This is often called a “poor man’s copyright.” There is no provision in the copyright law regarding any such type of protection, and it is not a substitute for registration. At best, it could prove when the work was created, but there are so many ways to game this system that the practice is virtually worthless. We think this practice provides a dangerous false sense of security. At $35, copyright registration is the most economic intellectual property protection.

Related articles

• But, Honestly, Copyright Protection is as American as Apple Pie, Even on the Internet (NCLawLife.com)
• Copyright Basics for Recording Artists: Protect Your Music (ixiivrecords.wordpress.com)
• US Copyright FAQ (selfpubauthors.wordpress.com)

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)

I appreciate the article because I would not want to appear completely self-serving when I advise that businesses of all sizes should meet with their attorneys (and accountants) at least once a year to head off potential problems. I know there is a lot of belt-tightening going on right now, but penny-wise can turn pound-foolish in an instant. For example:

• One of my first matters as a corporate attorney was “cleaning up” an IT company that had a founder’s friend do the formation. He was an attorney, but a divorce attorney, and it took about 30 hours to unravel the mistakes that were made in setting up the stock, the shareholders’ agreement and stock-option plan. It was pure luck that the S-corporation election was not invalidated by the way the stock was set up.
• Another client got into a dispute with a supplier of wire and wanted to cancel the contract. A low-level manager had written a contract that said the supplier would supply all wire needed by the company for the next three years (including a minimum purchase requirement). There was no way to terminate the contract early. It took many hours of negotiation to end the contract early when the telecom industry tanked and the client didn’t need the minimum order.
• Finally, one of the saddest matters I have handled was a client who got into some financial trouble and didn’t pay state income taxes. They owned a viable retail business, but the Department of Revenue padlocked them and put many people out of work.

All of these situations could have been largely avoided (or handled quickly and possibly less expensively) if the clients had spoken with a business attorney early on.

As with any service provider, word-of-mouth referrals are the most powerful. Ask other business owners, friends, church members and colleagues who they use and why. If you already have a trusted insurance agent or accountant, ask them for referrals for the other professionals. You can also meet many professionals at Chambers of Commerce and similar business networking groups. This is nice because you will be able to observe their personalities and learn a little about them in an informal setting.

Then do some research.

Each of these professionals is licensed by a state regulatory board, such as the State Bar for attorneys, a Board of CPA Examiners or the Insurance Commission. Financial planners can be merely brokers who sell various financial products and are licensed by the Financial Industry Regulatory Authority (FINRA) or they can obtain a voluntary additional credential known as a Certified Financial Planner, which means the certificant’s first duty is to the client as a fiduciary, ensuring that recommendations are in the client’s best interests. The broker’s first duty is simply to make sure that the client’s situation can reasonably handle the recommendation, and the further duty of the broker is to sell a product.

It is wise to make sure your advisor is currently licensed.

Many professionals will have a web site listing their area of expertise, practice philosophy, education, etc., although insurance agents tend to have fairly generic sites featuring one of the companies they represent. Look through the site and see if their philosophy and geography mesh with yours. I also conduct an online search to see if the professional has been in the news, has been published, is active in the community, etc. They may have a blog with interesting information that helps you know them better.

Call and set up an introductory meeting with your potential professional. Ask ahead of time if there is a fee for this. At that meeting, you will want to ask about what services are offered, how they are priced, what payment terms are offered, and who will actually be doing your work.

It is important for companies to deal with emergencies quickly and intelligently. Here is one site that is fairly comprehensive in damage control planning — except for major oversight: There is no attorney on the crisis management team.

When you call in human resources and upper management, it is imperative that you call your attorneys. A proper investigation of the facts needs to be conducted, preserving evidence, employee confidences, and the privacy and reputations of those involved. It is important to find out the truth of allegations, whether the underlying situation be sexual harassment, product tampering or poor product performance.

You will compound your problems a thousand-fold if you publicly blame a fiasco on an employee who later turned out to be completely innocent or to spend a lot of money denying product liability claims, only to have a private testing service release videos showing your product spontaneously combusting.

The PR team (often along with the attorneys to make sure no greater harm is done) will craft public statements, press releases, appearances by key company personnel, but the attorneys will help determine the proper legal response, including terminating an employee, filing criminal charges, bringing a civil suit for defamation, or sending a cease and desist letter. Often, as is the situation with the Domino’s case, these actions are taken simultaneously.

In addition to addressing the public relations aspects of a crisis, the company may well need to address internal culture, or lack of policies/training. For example, it is being debated whether a social media policy would have prevented the Domino’s fiasco. Others are calling for a new food safety czar at Domino’s. Personally, I think both of these responses are inappropriate in this case, but these are the right questions to ask.

Other things that I think may help prevent the crisis:

• Treat your employees well and create a positive corporate culture. This may inspire loyalty to your business and mission, and will hopefully translate into better customer service, less whistle-blowing and less chance of getting hit by a runaway PR freight train. Remember, your brand is going to be represented to most customers by the lowliest employees. How they feel about their jobs and the company will be broadcast to the customer. Happy employees are more productive and offer better customer service.
• Don’t just have corporate policies, but train employees and enforce them. Having one and not following it is worse than not having one.

]]> http://nclawlife.com/2009/04/17/dominos-lesson-ii-corporate-damage-control/feed/ 4 http://nclawlife.com/2009/03/30/contracts-for-dummies-what-you-should-know-about-drafting-your-own-contracts/ http://nclawlife.com/2009/03/30/contracts-for-dummies-what-you-should-know-about-drafting-your-own-contracts/#comments Mon, 30 Mar 2009 15:56:05 +0000 Donna Ray Berkelhammer http://nclawlife.com/?p=195 I ran across a publication the other day called Business Contracts Kits for Dummies. It is a “fun and easy guide to business agreements that cover your assets!”

But should a business owner really draft important contracts without counsel? I have to say, that with my writing background, drafting and negotiating contracts is one of my favorite things to do, but I think few lay people would be energized by warranties, disclaimers, severability or indemnifications. Indeed, I work with many small business owners who often do not realize the significance of the standard terms and conditions in their contracts.

I am all for educated and empowered clients, and often work collaboratively with my clients to save on legal fees.

But contracts have far-reaching and high-dollar ramifications. The safest course of action is to bring in an attorney every time. Many experienced, sophisticated business people don’t truly understand limitations of liability, warranties and indemnifications. They don’t know to include venue or choice of law, or a host of other things that seem to be mere boilerplate.

This week, I am negotiating with a business owner who hired my client to develop a software component to be incorporated into a larger project. Standard procedure is to include a mutual indemnification agreement that balances the risks faced by each party. The business owner steadfastly refuses to include any indemnification provisions. He says– and I believe him and respect his stand-upness — that he will stand behind the final product 100%. But it is not up to him. An end-user who gets notice that the product infringes a third-party’s copyrighted software will sue everyone involved. It doesn’t make a lot of sense, and I truly wish the other party were represented by counsel.

If you don’t understand what’s wrong in the previous paragraph, I submit that you should concentrate on your core business competency and let me concentrate on mine — protecting your business.

How can you decide whether it makes sense to draft your own contract? As with whether a business owner should incorporate without an attorney, it depends on a variety of factors:

• How simple is the transaction?
• How experienced is the business owner?
• What is the value of the transaction?
• Can the business afford an attorney?

Obviously, the simpler and lower value the contract is, the more sense it makes for the business owner to draft the contract himself or herself.

From my point of view, the earlier you bring someone like me on, the cheaper and easier it will be for usto protect you. It can be very time-consuming to find and fix all the “gotchas” in an existing contract. It is even worse to have to tell the client he has no recourse for poorly manufactured goods he bought, there are no penalties in the contract for non-payment, or they lost their intellectual property protection.

What is your experience in drafting legal documents?

Not everyone realizes that business owners are able to file Articles with the North Carolina Secretary of State on their own without an attorney. In addition, there are many services around that can help entrepreneurs form corporations or limited liability companies (LLC). These include online services, forms from books/guides sold in office supply stores, and online forms available from the Secretary of State.

So, do you really need a lawyer to form your corporation?

Yes. Well … maybe…

Let me ask you some questions: Should you form a C-corporation, an S-corporation or an LLC? What do you do after you file your articles? What assets should be transferred into the company and how do you do it? What do you need to do to maintain your limited liability? If you don’t know, or you don’t understand the differences between the available entities, you probably shouldn’t form your own corporation.

If you don’t know, none of these cost-saving services are going to be able to tell you; that’s unauthorized practice of law. They can tell you what’s on the menu, but they can’t recommend what to order. And the problem with a bad choice is not mere indigestion. Setting up your business entity incorrectly or incompletely can lead to tax penalties, unprotected personal assets, no limited liability and lost peace of mind.

Forming an entity without legal counsel works best for single-member entities that don’t expect to bring in additional owners or outside capital, hire employees or set up multiple locations (particularly multi-state locations). It may also make sense to set up your own entity if you had an attorney set up a prior entity, and you are following a similar business model, with the same people as before, and nothing has changed in any of their lives. In reality, of course, every deal is different, people change, laws change, and the structure that you used last year may not be the best structure this year for this situation.

What an attorney adds.

While many people have used these services and are happy with the results, almost every business lawyer I know has a story (or two or three) about incomplete, incorrect or ill-conceived formations done by clients “going commando.”

If you plan to raise money from outside investors, hire employees, open multiple business locations, pay only those taxes that you really owe, or if your business is in a highly regulated field, you absolutely need the services of a competent business attorney. By the time you fill your online shopping cart with your best guesses, you are getting close to what you’d pay for an attorney…and you are getting a lot less for your money the online route.

In addition to being able to help you select the proper entity and place of filing (Nevada, Wyoming, Florida, Delaware or the Old North State), good business attorneys will connect you to other reputable professional service providers — bankers, accountants, insurance agents, financial planners and web designers. We know where to send you for free or low-cost business services to make sure your business plan is sound, or to get training on Quick Books, marketing, sales or hiring employees. We will make sure your ongoing filings with the Secretary of State are current and that the corporation is holding requisite annual meetings. In short, we take an ongoing professional interest in your success.

Bottom-line: if the initial organization is not done correctly and completely, or if you choose the wrong form of entity or state of incorporation, the costs to unravel the errors greatly exceed the savings of “doing-it-yourself.” As they said in Ghostbusters, “Who ya gonna call?!”

If you have decided to form your own entity, particularly using an online service such as Legal Zoom, The Company Corporation, BizFilings, etc., a couple caveats:

1. As with any significant online purchase, research the vendor. Find people you know who have used these services personally (ask around on Facebook, LinkedIn, or Twitter) and ask about their experience. Check with the Better Business Bureau and the NC Department of Justice for complaints on file. What are your options if things go bad? Can you get your money back?

2. This may not be the time to go with the cheapest alternative. The low rates advertised are often “teaser” rates and the companies will try to upsell you at every turn. Make sure you know what you are getting, and most importantly what you are not getting. Understand what you need to have a complete formation, and what comes in each price-point package. How long does it take and how much does it cost to get it faster? By the time you add express services and ala cart documents (shareholders agreement, DBA, tax filing documents), the price may not be that different from an attorney’s fee.

I realize that every profession has its “princes” and its “toads” and the legal profession is no different. There is no shortage of bad experiences with attorneys, and a quick internet search shows no shortage of bad experiences with do-it-yourself strategies. I’d love to hear what has worked and hasn’t worked for you.