Business Law-Intellectual Property

The last blog talked about Patents and Trademarks.  Before we move on, another comment about Trademarks.  The Patent and Trademark Office (PTO) has an extensive web site that allows the filing of a Trademark Application on line.  Before going through the process (which is somewhat self-explanatory), I urge folks to find out if the proposed name to be trademarked is actually available.  There are two companies: Thompson and Thompson, and Corsearch, which will conduct a national search to find out whether there are other uses of the proposed name. Please understand that actual use is the strongest trademark and you may trademark a name, only to find that it is already being used somewhere, thereby minimizing if not defeating your trademark.
Also, the ability to trademark and the strength of the trademark depends heavily on the "strength" of the name: is it unique, generic, merely descriptive, fanciful?  Has it acquired secondary meaning?  What does the name identify-product, category? The word "Apple" cannot be trademark to name a fruit, but it can be used to identify a computer.  It is a common name used in an uncommon way.  There are many "tricks" to trademarking, so before you go online to file an application, and spend the non-refundable fees, it is a good idea to better understand the world of trademarks.  We will move on the Copyrights, the Right of Publicity and Tradenames, next time.

Business Law-Intellectual Property

Intellectual Property takes many forms, but all have in common one idea: A legal monopoly to protect one's ideas. It may be a product, a brand, a picture, software or other forms, but each form allows the creator to protect that idea from copying and use by others.  So, what are the forms of Intellectual Property?  There are many. 
Patents generally are to protect a product, although they have been extended in recent years to ideas, such as computer software and business ideas.  Patent Law has just changed so the handling of patent applications will be modified.  The basic procedure is that an idea is submitted to the US Patent and Trademark Office (PTO) and goes through a process to determine the originality of the proposed item/idea.  Specialized lawyers, admitted to a specialized court, handles these matters.
Trademarks generally describe the name of something, and the goal is to associate the name with the product.  Over time there can be various products.  Others aren't prohibited from producing the product, say tennis shoes, but can be prohibited from calling their tennis shoes, Nike.
Next time we will discuss other examples of Intellectual Property.

Construction Law-Insurance

I represented an owner who hired a contractor to build a large equestrian center.  The roofing was put on upside down! The result was that water leaked into the building, soaking the insulation, which in turn fell on the floor in great sheets, damp, smelly and a general mess. The resulting litigation involved the owner, the contractor, the architect, the roofing sub-contractor, and the roofing material supplier.  That's another story.  The point here is that when a claim was made to the insurance carrier of the general contractor, who in turn made a claim to the insurance carrier of the roofing subcontractor for the roof which had to be redone, the carrier denied coverage, based on the "your work" exclusion.  The carrier would cover the damage caused by the water leak but not the cost of redoing the roof.  Why?  Because the "your work" exclusion means that insurance coverage does not cover poor/improper/negligent work.  Damages from the work-yes.  The redo of the work, no.  Contractors commonly think that if they have insurance, they are covered for everything.  No.  They are only covered for damage caused by their poor work. The solution to the owner is to require a performance bond.  It is not a cure all, but it is better than trying to recover from a contractor who has nothing, or in this case, filed bankruptcy.  The reason why the roof was put on upside down is another story.

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GENERAL COUNSEL

What is a General Counsel, and what does he do?  That's a common question, so let me explain by starting with an analogy.  An Internal Medicine or Family Practice Doctor performs a similar role in medicine.  Those doctors handle the "whole patient", and are the general treating doctors.  If a specialist is needed, they know where to find them and they monitor what the specialist does.

In business law, the general counsel performs the same role. Every day the small businessman has a variety of legal issues to deal with, some small that he/she handles and others that require the assistance of an attorney.  Perhaps it is a lease problem, or a building purchase/sale, or a contract or, unfortunately, litigation.  Maybe the owner wants to start a business but doesn't know the steps.  Perhaps the owners don't get along and need a "business divorce", or have a name that they want to trademark, or they are negotiating with a bank or investor and need assistance.  The issues are endless and as broad or narrow as the business.  The owner knows how to run the business, they generally don't have the knowledge or experience to handle these legal matters.

The point of all this is that the client explains the situation and the attorney's job is to identify the issues to be resolved, recommend solutions, and on the agreement of the client, to implement them.  Sometimes that means bringing in a specialist, but generally not.  If a specialist is needed, the attorney will find them, perhaps negotiate the fees, and monitor the efforts for the best benefit and the least cost, for the owner.

Business Law-joint owners

It is a common practice when two folks start a business to decide on joint ownership.  It might be as 50-50 partners in a partnership, or 50% ownership in stock, or as equal members and joint managers of an LLC. Let me suggest it is a recipe for major trouble, or a disaster.  The problem comes when there is a disagreement.  How do you settle it?  Somebody has to concede, or there is no resolution--which is what commonly happens.  Since neither party has a majority, either party can block a decision.  The decision then gets made by a third party--either an arbitrator or a judge.  That means you have turned your business and the resolution of the dispute over to someone you don't know, who knows nothing about the nuances of your business, or the effect of resolving the impasse.  His/her job is to resolve the dispute--that's it. 
Usually the dispute is over a big issue. Sometimes it is financial, sometimes it is emotional.  Whatever the basis, it is obviously important enough to the parties to create this impasse and commonly means the relationship cannot continue. 
As radical and unacceptable as this may sound, I suggest that someone has to have the final decision making authority, otherwise you are back to the judge or arbitrator.  Remember that the decision maker has a fiduciary duty to the best interests of the business, not their personal interests.

CAM CHARGES

bendelow law officeWhen tenants are negotiating a lease for a commercial property they commonly look at the rent as the main financial term.  While that is critical,  there is another critical element, and that is the Common Area Maintenance or CAM charges.  Those are the charges for the common area of the building.  The definition of the common area is critical and should be closely examined.  Some landlords include the roof, or the Heating, Ventilation and Air Conditioning (HVAC) system as part of the CAM charges.  Tenants think of sidewalks, parking lots and landscaping as common area.  While those are all generally included, the above examples are not unusual.

Another element is a management fee. I have seen the fee as a percentage of the rent or other times totally undefined and annually a very big number. I recently saw a 15% depreciation fee included. 

The point of all this is that CAM charges are in addition to the rent.  Landlords are wise enough to know that tenants focus on rent.  CAM charges can add major amounts to the monthly bill, so examine them closely.