Spross & Associates, PLLC

Facebook Usernames and Trademarks

Most folks know that Facebook is allowing fanciful usernames starting at midnight on June 13, 2009.  If you have a registered trademark, you can submit that mark to Facebook to "reserve" your username for your company.  There is a very simple webform that requires the exact name of your trademark and the U.S. registration number.  I'm not certain what exactly Facebook does after the webform is submitted.  All I have received back so far is a canned email that says, "Thank you for your submission. If valid, we will process your request and contact you when reserved usernames are available for registration."  To be safe, you should register your user name too. 

Google Interest-Based Advertising and Privacy Policies

Google is in the process of launching interest-based advertising.  As part of that launch, you should update the piece of your Privacy Policy regarding third party advertisers.  Google does not suggest language exactly because everyone’s state laws are different.  However, below is some suggested language that you can tweak for your own purposes.  Make sure you check with your counsel before using this language or any legal language.

We use third-party advertising companies to serve ads when you visit our website.  These companies may use information (not including your name, address, email address, or telephone number) about your visits to this and other websites in order to provide advertisements about goods and services of interest to you.  If you would like more information about this practice and to know your choices about not having this information used by these companies please contact us.  In addition, Google, as a third party vendor, uses cookies to serve ads on the Site.  Google's use of the DART cookie enables it to serve ads based on the users visit to the Site and other sites on the Internet.  Users may opt out of the use of the DART cookie by visiting the Google ad and content network privacy policy on Google’s website.

Does Your Company Make Everyone Sign a Proprietary Information Agreement?

Do you have a proprietary information agreement (“PIA”) that you require all of your employees to sign?  If not, you are making a mistake.  A PIA covers things such as confidentiality, nonsolicitation, noncompetition, at will employment (in applicable states) and dispute resolution.  These agreements are important for a variety of reasons.  First, it is a contractual protection of confidential information which is your company’s family jewels.  It also covers your ex-employees poaching from the company or competing.  Finally, it will have an arbitration provision so that if there is an employment dispute, you will end up in arbitration in front of usually an ex-judge instead of with a jury.

Parachute Payments

Parachute Payments describe a situation where there is a lump sum payment on a change of control of a business.  Many change of control documents have a provision that says if there is a Parachute Payment, the structure of a payout can change to minimize the tax consequences of the company and/or the individual.  First you look to a base period which is 5 years and come up with an annualized base income for the person receiving the payment and if the parachute payment is greater than three times the base amount then it is an considered an excess parachute payment.  An excess Parachute Payment is not deductible by the company.  The person receiving the Parachute Payment it is hit with an excise tax in the amount of 20% over and above their normal withholding.  There are several provisions in the IRS Code that discuss small businesses and small business stock, and in some cases also kick in on a change of assets and not just change of control.  Make sure you talk to your legal and tax expert to learn how a Parachute Payment may affect you in a change of control situation.

What is the difference between ® and ™?

Everyone has seen them.  They are the ® and ™.  Just look on a can of Coke and you will see multiple ®.  Many times a newer product with have the ™.

 

The ® is known as a registered trademark.  It is used for a trademark that has been registered with the United States Patent and Trademark (“PTO”) office.  There is a process that involves filing a trademark application with the PTO.  When the application is approved, the use of the ® symbol may begin.

 

The ™ is used for an unregistered trademark.  This is used to denote common law protection of a trademark.  A trademark owner does not have to register their trademarks, but may rely on common law protection.  If someone has a trademark that they want protected they can use the ™ after the name.  For instance, we use the ™ for our trademark Diamond Docs™.

 

There are a couple of advantages to obtaining a registered trademark.  Among these are the following:

 

·         The ability to bring a lawsuit in federal court

·         A legal presumption of ownership in the trademark

 

One disadvantage of trademark registration is the cost of the application process.

S Elections

Typically, the income of a corporation is taxed to the corporation itself.  This can lead to double taxation.  For instance, if you own all of the shares of a corporation, the corporation would be taxed at the corporate tax rate and then any distributions to you would be taxed as individual income. 

 

This leads to the S Election.  All of the owners of a corporation may make what is called an S Election with the IRS on Form 2553.  In general, an S Election allows the income of an S corporation to be taxed to the company’s shareholders instead of the corporation.

 

There are multiple restrictions on S Elections, a couple of which are that you cannot have more than one class of shares, you can not have any foreign owners of the company and you must have less than 100 shareholders.

Do You Need a new EIN on Conversion from an LLC to an S-Corp

When you convert an LLC to an S-Corp, you do not need a new FEIN; however, the Internal Revenue Service does need to know about it.  You will need to file a new Form 2553 making the S election.  Note: this is not tax or legal advice.

Converting from a LLC to a Corporation in Texas

In order to convert from a LLC to a corporation in Texas, you must file a Certificate of Conversion.  As part of that Certificate of Conversion, you must attach a new Certificate of Formation.  Here is where it gets a little tricky.  Trick #1: the Certificate of Formation must contain a statement that says the new entity is being formed subject to a Plan of Conversion which is on file at the address of the entity.  This means there must be a Plan of Conversion in the corporate books.  Trick #2: the Certificate of Formation must have the name, state of incorporation, organizational form and date of incorporation of the converting entity.  As always, you should seek legal counsel when converting an entity.

Conflicts of Laws Provisions

Everyone has seen it in their contracts and wondered what it means.  It is always in the miscellaneous section at the end of agreements.  It usually says something like, “without regard to the conflicts of law provisions therein.”  The full text is “This Agreement shall be governed by the laws of the State of Texas, without regard to the conflicts of laws provisions therein.”  Why is it included?

 

This provision is used to take interpretation of an agreement outside of the state law where a cause of action occurs.  For instance, if you have an agreement with a company that is in California there could be a cause of action that arises in California.  However, you want the laws of Texas to apply.  You have added a “choice of law” provision for that very reason.  Unfortunately, most states have a rule that says the law of the state where the cause of action arose governs that cause of action.  This would mean that if the cause of action happened in California, even if you said you wanted Texas law to apply, Texas law would point back to California.  By adding the “without regard to the conflicts of law provision” we are able to negate the Texas law that points back to California.  That is why most choice of law provisions contain the described clause and you should think about verifying that yours does too.

Things to Keep in Mind for Blog Postings

Below is a short list of items that you should keep in mind when making corporate blog postings.

• Postings must NOT contain any confidential or proprietary information.
• Postings must be truthful and accurate.
• Postings must not contain any forward looking statements or other marketing/PR material that has not been approved for release.
• Ensure accuracy of your information before posting.  If necessary, have an additional person review the information.
• Write your posts in a way that is easy to read.  Use conversational style, but be sensitive to the ability of other cultures to understand idioms and pop culture references.
• Be professional and courteous at all times in both language and manner.