Blogging Issues and the Entrepreneur

WRITTEN BY DONALD R. SIMON, CEO of Simon Business Consulting

For entrepreneurs, social media (which includes blogging) is an innovative way to promote one’s business.  Unfortunately, more and more stories are popping up about bloggers getting in trouble for what they post.  Just recently, a $2.5 million dollar judgment was handed down against one so-called “citizen journalist” for defamatory remarks posted on her blog.  Across the nation, courts have seen a spike in lawsuits associated with social media activities.

Like all journalists and publishers, bloggers sometimes post information that others may not want published.  These may include observations about a competitor’s products, services, management style, quality of work, etc.  Some such remarks are being increasingly looked at as potential violations of defamation laws, infringements of intellectual property, or invasions of privacy.

Defamation is a false allegation of fact that is disseminated about a person and tends to injure that person’s reputation.  The good news is is that truth is an absolute defense to defamation, but it may be difficult and expensive to prove.  And typically, fair comment and criticism is protected, but merely labeling a statement as one’s “opinion” does not necessarily make it so.

Unlike a reporter at a local newspaper, social media enthusiasts may not have the benefit of training or resources to determine the legality of their online activities.  Further complicating matters, most of our nation’s media laws were written for traditional journalists and courts haven’t yet decided how those laws apply to the blogosphere.

In a legal action, courts will look at whether a reasonable reader could understand the accused statement as asserting a statement of verifiable fact.  This means that context is critical!  When examining the blog, a court would likely start with its general tenor, setting, and format.  Next, a court would look at the specific context and content of the blog entry, analyzing the extent of figurative or hyperbolic language used.

But this is what happens after the lawsuit is filed.  The best strategy for an entrepreneur is to avoid costly and embarrassing litigation all together.  Steer clear of potentially defamatory utterances in the first place.  Do not rely on information from anonymous sources.  Finally, provide the targets of defamatory allegations an opportunity to respond.

Don’t let concerns about defamation stop you from blogging.  Freedom of speech is the foundation of a functioning democracy.  But before posting information, observations, or accusations about someone’s products, services, or business, make sure that your comments are grounded in fair and balanced observations based on personal experiences.  Don’t let blogging legal problems sidetrack you from Thinking Big!

 

Written by Donald R. Simon, J.D./LL.M., is president and CEO of Simon Business Consulting, Inc., a firm providing consulting services such as business and marketing plan development, incorporations, intellectual property advising, media relations, franchising regulatory assistance, and presentations on the basics of starting a small business.  Send questions or comments to don@simonbizconsulting.com.  This blog is provided as a source of information and is not to be construed as legal advice or opinion, or to form an attorney-client relationship.  For legal advice, please consult an attorney.

Partnership Issues and the Entrepreneur

Going into business with someone else is a lot like a marriage: you will be spending an inordinate amount of time together, making decisions jointly, making individual decisions that affect the whole, and being together in both good times and bad.  Just as one should not make a hasty long-term relationship decision, so too should careful consideration go into finding the right business partner.

A partnership occurs when two or more persons join together for the purpose of doing business.  Absent a written partnership agreement (discussed below), each partner is liable for any debts or judgments taken on by the business.  Because a partnership is unincorporated, there is no limited liability.  This means that all the partners’ personal assets can be taken to satisfy lawsuit judgments or to settle partnership debts.  Further, any partner can be sued for the full amount of business debt.

Take heart, it’s not all bad.  A partner gives you someone with which to work, to share ideas, and to divide the workload.  Additionally, a partner is someone with whom you can share the financial responsibilities of the business. 

The key is to find someone with whom you can work well.  Look for someone with complementary skills.  In other words, their strengths are your weaknesses and vice-versa.  You are the yin and they are the yang.  They should share your vision and be willing to work as hard as you do.

Although not legally required, a written partnership is STRONGLY recommended.  A good partnership agreement should include the following provisions:

·        the time or money each partner will contribute;

·        the methods for making business decisions and resolving disputes;

·        the division of profits and losses;

·        the procedure for adding/changing partners; and

·        the process for winding up the business.

It’s a lot like a pre-nuptial agreement in that you and your business partner(s) are preparing for the divorce on the eve of the wedding.  However, in the absence of a written agreement, the division of assets (including the business name), profits, and liabilities will be assumed to be equal, regardless of who actually made the contribution or incurred the debt.

Before asking for someone’s hand in a business marriage, carefully consider the pros and cons.  If you find that the good outweighs the bad, go for it!  Don’t let partnership problems sidetrack you from Thinking Big!

 

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Written by: Donald R. Simon, J.D./LL.M., is president and CEO of Simon Business Consulting, Inc., a firm providing consulting services such as business and marketing plan development, incorporations, intellectual property advising, franchising regulatory assistance, and presentations on the basics of starting a small business.  Send questions or comments to don@simonbizconsulting.com.  This blog is provided as a source of information and is not to be construed as legal advice or opinion, or to form an attorney-client relationship.  For legal advice, please consult an attorney.



The Trials and Tribulations of Trademarks

Guest blogger Donald Simon gives his best advice when it comes to trademarking your business. 

Upon reading a recent article about Target’s trademark troubles in Canada, I was reminded of the importance of selecting a strong business name.  A strong trademark or service mark (the “mark”) allows a business to build goodwill and brand reputation in the goods or services it sells.  A weak mark may sideline your marketing efforts and might even entangle you in expensive legal battles.  Selecting a legally strong mark in the early stages of your business can save you from a lot of future headaches.

So, what is a trademark?  According to the U.S. Patent and Trademark Office (“USPTO”), a trademark is “a word, phrase, symbol, or design, or a combination of words, phrases, symbols, or designs, that identifies and distinguishes the source of the goods of one party from those of others.”  A service mark identifies a service instead of a product.  Simply stated, a mark is a brand name and probably the most important asset your business will ever own.

In general, the more distinctive a mark is, the wider its scope of protection will be.  Marks can be categorized as having varying levels of strength or distinctiveness from coined terms like KODAK or EXXON, which receive the highest legal protection, to generic terms like “clock” for timepieces, which receive no protection.  In short, your customers must be able recognize the mark as distinguishing your goods or services from those of others. 

Before adopting a new mark, it is advisable to make sure that no other business in your industry is using it or something confusingly similar.  If you adopt a mark that is the same or similar to an existing mark, you may be liable for infringement.  To avoid this, you should conduct a search of existing marks in your industry.  This can be accomplished in two phases.  The first phase consists of looking for exact matches of your proposed mark in the USPTO database and on the Internet.

If your proposed mark survives USPTO and Internet searches, then you can begin phase two: a full search of existing and pending registrations and of unregistered prior users.  USPTO and Internet searches alone are not enough to determine whether a mark is available for use.  You should hire a professional search firm (such as Thomson) to conduct a full search and hire a trademark attorney to interpret the results.

Once you have a high degree of comfort that the proposed mark is free, start using it!  Your right to prevent others from using it starts the moment you first adopt it and use it publicly and you do not have to register a mark in order to exert your rights.  However, registering your mark with the USPTO has several advantages, including:

• public notice of your ownership claim;
• ability to initiate an infringement action in federal court; and
• legal presumption of your exclusive right of use.

With regard to trademarks, the old adage applies: an ounce of prevention is worth a pound of cure.  Don’t let trademark troubles sidetrack you from Thinking Big!

 

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Written by: Donald R. Simon, J.D./LL.M., is president and CEO of Simon Business Consulting, Inc., a firm providing consulting services such as business and marketing plan development, incorporations, intellectual property advising, franchising regulatory assistance, and presentations on the basics of starting a small business.  Send questions or comments to don@simonbizconsulting.com.  This blog is provided as a source of information and is not to be construed as legal advice or opinion, or to form an attorney-client relationship.  For legal advice, please consult an attorney.

WARNING: Non-Competition Agreements & the Entrepreneur

There are many challenges that an entrepreneur may face—raising capital, sustaining the business, hiring effective employees—the list goes on and on.  And although you may be focused solely on your business, your sales, your employees, your success, as a result, you may lose sight of another important aspect: the competition.

As an entrepreneur, it’s important for you to understand the notion of non-competition agreements.  Believe it or not, this may be the one thing that is standing in between you and your small business.  If you have signed a non-competition agreement (often referred to as a “non-compete”) with a former employer, you may find a few roadblocks on the way to self-employment.

Non-competes are often signed at the beginning of a term of employment and kick in at the end of the employer/employee relationship.  They are for the protection of the employer’s trade secrets, business plans, marketing strategies, customer lists, etc.  Most non-competes specify a specific time and geographic area that the former employee is to refrain from engaging in activities that will place him or her in direct competition with the former employer.

Generally speaking, in states where non-competes are legal, they will be enforceable if, at a minimum, they are:

1)     Designed to protect the former employer’s legitimate business interests;

2)    Limited both in duration and in geographical area; and

3)    Not contrary to the public interest.

Courts generally disapprove of non-competes that are so broad that they unfairly impede a former employee’s right to earn a living.  If a court finds a non-compete overbroad, it may narrow the duration and/or scope of the agreement or refuse to enforce it all together.

So if think you may be covered by a non-compete, here are a few things to think about:

1)    Non-competes must be reasonable in duration.  Generally, the time frame ranges from one to two years, but may be as high as five.  If the former employer’s restriction prevents you from doing business for an excessive amount of time, it is probably too broad. 

2)   The geographical area covered by the non-compete must also be reasonable.  Generally, courts will not allow a non-compete to prevent you from working in a geographic area where the former employer does not do business.

3)   Even if you think your non-compete is overbroad or unreasonable, seek out some legal guidance first to discuss your rights and risks.

Enforceable non-competes are about the balancing of interests.  Employers have a legitimate right to protect their customer relationships and confidential information, but former employees also have a right to earn a living in their chosen endeavor.  If you have questions about your non-compete, consult a business attorney.

With all of the challenges of launching a startup, it is easy to miss something like non-competes.  Don’t let this important factor sidetrack you from Thinking Big!

 

Written by: Donald R. Simon, J.D./LL.M., is president and CEO of Simon Business Consulting, Inc., a firm providing consulting services such as business and marketing plan development, incorporations, intellectual property advising, franchising regulatory assistance, and presentations on the basics of starting a small business.  Send questions or comments to don@simonbizconsulting.com.  This blog is provided as a source of information and is not to be construed as legal advice or opinion, or to form an attorney-client relationship.  For legal advice, please consult an attorney.

Edited by: Allison Way.