photo - Jones and Jackson lawsuitIt’s been nearly seven years since Michael Jackson’s death but that passed time hasn’t put an end to the lawsuits involving his music. The latest lawsuit in the news involves his former producer and the production and sales of Jackson’s music after his death.

Los Angeles Superior Court Judge Michal Stern ruled in February that a lawsuit over breach of contract claims filed by Jackson’s former producer Quincy Jones against MJJ Productions (controlled by Jackson’s estate) and record company, Sony Music Entertainment, involving royalties on some of the biggest hits Jones produced for Jackson can go to trial, reports the Orange County Register. He said it would be up to a jury to decide the numerous factual disputes about whether Jones is owed any money.

He sued MJJ Productions and Sony Music Entertainment in 2013 for at least $10 million. Jones claims the defendants edited songs for the “This Is It” film featuring footage of Jackson rehearsing for a concert tour, a pair of Cirque du Soleil shows featuring Jackson’s music and the 25th anniversary edition of Jackson’s album “Bad” to deprive him of royalties and production fees. He also seeks a credit on the film. Jackson’s estate and Sony Music have tried to have the case dismissed.

photo - texting a contractTexting has become a common form of communication. Smart phones are used less and less as phones and more and more as devices to text and email from. You may see texting as an informal, short hand way to communicate but a Massachusetts case shows you need to be careful with texting because the messages you send may be interpreted by a court as creating a binding contract.

The Massachusetts Land Court ruled in April that a series of text messages between two real estate brokers concerning the purchase and sale of a commercial building may be enough to constitute a “writing” meeting the requirements of the Massachusetts Statute of Frauds. In the St. John’s Holdings, LLC v. Two Electronics, LLC, case the court denied defendant’s motion to dismiss arguing the communications at issue were insufficient to be a contract for sale of real estate. The judge found the communications between the parties,

  • Identified the subject of the alleged agreement,
  • Showed they made a contract,
  • Stated the essential terms of the alleged contract with reasonable certainty,
  • Included a form of a signature, and
  • May be the legal equivalent of a written document signed by the parties.

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photo - vizioThe $2 billion sale of Vizio to Leshi Internet Information & Technology Corporation (known as LeEco) is expected to result in the Chinese firm’s much broader reach into the American market. LeEco sells a variety products and the company tries to marry content (some of it of its own making) with the sale of its electronics, according to the Los Angeles Times.

  • LeEco’s Le 2 pro handset sells for $166 in China but for another $15 you get a one-year subscription to the company’s entertainment offerings (Disney’s “Zootopia,” DreamWorks Animation’s “Kung Fu Panda 3,” and live sports broadcasts including Major League Baseball, NBA games and European soccer matches).
  • If you own a LeEco Internet enabled television any shows you stream or bookmark on your phone will be queued up automatically on your TV (and vice versa). The phone is also a remote control for the television set.

That kind of “synergy” may be coming to future Vizio (or LeEco) smartphones sold in the U.S. where, until now, the company is practically unknown. In China and India LeEco has sold millions of phones and televisions. By buying Vizio LeEco enters the U.S. market without having to build its own brand from scratch.

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photo - business divorceIf it’s more than you running the business chances are pretty good the relationship between you and other owners will hit a rocky patch at some point, maybe even become adversarial. Breaking up that business relationship can be seen as a divorce. With some thought, planning and proper execution the split need not necessarily a traumatic break up.

A business divorce is a court-ordered dissolution of a business entity that the parties are involved in. They normally involve corporations, limited liability companies or limited partnerships, though they can also involve general partnerships. Depending on the circumstances this type of dissolution may be not possible or is just not the best option for you. There are other methods that can create leverage for you resulting in a better outcome.

How things can or should end depend on a number of things, including the form of the entity and any agreements between the parties. You would also need to consider state statutes, bylaws and any agreements.

If a partner is not controlling the company or part of management, he or she has a right to inspect the books and records of the company as long as there is a proper purpose for seeking these documents.

  • In a business divorce you might say you’re “investigating possible mismanagement” or “valuing my interest in the company.”
  • Company documents could be the basis for a lawsuit against the managers or directors.
  • Your request to look at books and records may spark a discussion between you and management about how your concerns could be resolved.

The stockholder, member or partner can sue the persons or entities controlling the company for damages due to breach of fiduciary duty or the relevant agreements. If successful, on paper this type of action will not break up the relationship, but as a practical matter that may be the best way to settle the case. Continue reading

photo - pick the right boardIf you’ve chosen a corporation as the structure for your business you need to have a board of directors. If chosen well these people can be a huge asset to your company and help your business become more successful. Choosing the wrong people can be a big setback, sucking time, energy and resources away from managing a business and towards a malfunctioning board.

A board of directors is elected by stockholders and it oversees the corporation’s management. Daily functioning of the business should be left to executive officers recruited and retained by the board. Major decisions affecting a business should be decided at the board level.

If you have a new business you need to find directors. If you have an existing company after a board member leaves you may need to find a replacement. In either case, here are some things to think about.

  • Find someone you trust. A board member will be privy to the company’s innermost secrets. A board member who uses his or her position for personal gain, perhaps by starting a competing company or working for one, would be a huge problem. Though this could be grounds for legal action against this individual, the threat of a lawsuit might not necessarily prevent the person from trying to cash in on his or her access to the company.
  • Those to avoid: VentureBeat lists The Do-Nothing, The White Flag (avoids confrontation), The Cabalist (his or her personal agenda is foremost), The Meddler (focuses too much on details) and The Pontificator (just wants to hear himself talk).
  • Are there too many board members? Do meetings get bogged down because too many people are involved? Is it difficult to reach a decision because of so many opinions? A larger board will also probably be less engaged with the business.
  • What skillsets you should be looking for in board members depends on the maturity of the business. Individuals whose skills are especially helpful for a startup may not be so helpful with a mature, established business. Board members should also have a mix of skills that complement each other and members of management.
  • A board member should be a good fit with the culture of the business. Is the culture dominated by those with strong opinions or run by consensus?
  • How much compensation should a board member receive? If you want skilled, experienced people their time is very valuable. It will take a commitment by a board member to become engaged, do the homework necessary to make informed decisions and attend and participate in board meetings.

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If your company has employees driving either company owned or employee owned vehicles in the course of their duties depending on the circumstances your firm may be held liable for their negligence. Given the potential damages of a catastrophic accident it’s important that your company has sufficient insurance to cover this situation. Without proper insurance your company could be responsible for paying for your legal defense, settlement amount or damages awarded at a trial.

If you have employees driving their own vehicles for company purposes you need to review your coverage. If such a company related errand or delivery is done in a vehicle not owned by your company and an accident occurs your insurance may not cover it. Most business owners have a general liability policy. It’s a common myth this policy will cover anything and everything that could result from business related negligence but most of these policies do not cover car accidents.

There are several potential causes of action that could be filed against you.

  • The legal doctrine of ‘respondeat superior’ means that an employer can be held responsible for the negligent acts of an employee if he or she is acting within the scope of his or her employment. The reasoning is the employer is exercising some control over the employee while the employee is doing his or her job. This can include actions taken by an employee driving his or her own vehicle or one owned by the company.
  • Another legal doctrine impacting such a situation is that an employer has an obligation to defend legal claims against an employee who is acting within the scope of his or her job. If the employer fails to do so the employer can be sued by the employee to get a court order mandating the defense or to pay the employee’s legal bills.

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photo - warrantiesHow many times have your purchased some consumer good and in the box is a copy of the warranty in print so small it made you squint? Now thanks to a recent change in the law if a consumer good has a warranty a copy need not be provided in the packaging. It can now be posted online and the print can be enlarged as much as you want on the screen. If you make or market consumer goods this should cut your costs and eliminate another piece of paper to put in the box.

The E-Warranty Act of 2015 amends the Magnuson-Moss Warranty-Federal Trade Commission Improvement Act. The changes allow manufacturers and sellers the option posting written warranties online instead of on or with the consumer product as was required under the law. The Congressional intent of the law is to provide,

  • An environmentally-friendly means to give consumers access to product information, and
  • Flexibility in terms of complying with labeling and warranty requirements.

Supporters of the law see it as a way to bring warranty publishing laws into the digital age, increasing access to warranty information while reducing waste. Consumers need not keep track of papers they can see warranty terms on computers, tablets or smartphones.

Under the law written warranties aren’t required but if they are offered the Magnuson-Moss Warranty Act and its Federal Trade Commission (FTC) regulations require sellers and makers of products costing more than $15 at retail to,

  • Show the text of the warranty to consumers, and
  • Make the warranty available to potential buyers prior to the sale.

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photo - Swift Lucky 13“Lucky 13” wasn’t so lucky for pop star Taylor Swift who found herself being sued by Blue Sphere, a seller of clothing of the same name based in Orange County. The lawsuit was filed in May 2014, according to the Hollywood Reporter, and settled in November. The terms of the settlement agreement are confidential. Blue Sphere accused Taylor of infringing on its “Lucky 13” trademarks which it has held since 1991, reports Rolling Stone. The trial was expected to start in January.

Her website describes the 25 year old Swift (whose birthdate is December 13) as,

  • A seven time Grammy award winner and the only musician to have three albums sell over a million copies in their first week of sales,
  • The first musician since the Beatles (and the only female) to have albums six or more weeks ranked as the number one seller with three consecutive studio albums,
  • One of Time magazine’s 100 Most Influential People in the World, and
  • One of eight people narrowed down to be the magazine’s 2014 Person of the Year (she lost out to those battling the then Ebola outbreak).

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All businesses have some kind of intellectual property (IP) that helps them stand out from the crowd and be successful. Anything of value is worth protecting, including IP. There are many ways a restaurant’s IP rights can be protected.

Trade secrets are those things a restaurant owner can’t, or doesn’t want to, file for trademark or patent protection. This can include customer lists, marketing and sales plans, processes, recipes and many other items. These things must actually be kept secret. Having employees and vendors sign non-disclosure agreements should help.

Recipes are intellectual property. They can be a trade secret like the formula for Coke. Can they be patented? Patents can be granted for any “new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof” according to federal patent law. A list of ingredients can be a composition of matter and/or manufacture and how the product is produced can be a process.

photo - shark tankTo survive and grow you need to protect your company’s intellectual property (IP). Your product designs, marketing plans, customer lists and other proprietary information are what make your business unique. Recognizing and protecting that value may also make it easier to attract investors, as patent Vic Lin points out in a recent article for Entrepreneur.

He writes about the TV show Shark Tank and how often he sees the potential investors (the sharks) on the show ask contestants (entrepreneurs seeking funding) about their IP, what it is, whether it can be copied and if it’s protected just like real world investors do when they talk to business owners outside of TV studios.

Lin writes he’s repeatedly seen (on Shark Tank and in real life) entrepreneurs who understand there’s a high risk for copying (and who take steps to prevent it) normally have more success raising capital than those who ignore or don’t understand the risk. Those steps to protect IP help entrepreneurs attract investments because their success is more assured, more protected, than the future of a business selling a product just hoping there won’t be any knock offs.

  1. xCraft

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