photo-CA-bathroom-bill-199x300This year the culture wars burst into public bathrooms across the country with repercussions in California. If you have a single stall bathroom at your place of business a state law passed this year mandates that it doesn’t matter your sex, that bathroom has to be a place of equal opportunity. It can’t be a men’s or a women’s room. Gender can’t matter when using single-stall public bathrooms in California, reports the San Jose Mercury News. Your bathroom is just a bathroom.

Gov. Jerry Brown signed legislation in September that requires single user restrooms be designated all-gender, a small move to bolster transgender rights as other states passed restrictions as to who could use which bathroom.

State Assemblyman Phil Ting of San Francisco stated that restricting access to single-user restrooms by gender was a burden on LGBT community, parents and caretakers of dependents of the opposite sex. It’s also seen as a way to provide greater privacy and safety in public restrooms. of us running businesses have a supporting cast, whether they’re contractors, suppliers, funders, banks, attorneys or employees. If a trusted cast member disappears at a critical time what do you do? Susan Jeske found herself in that situation in September. Like most of us she made due with what she had and went forward.

Jeske owns the Ms. America® Pageant. She purchased it in 1999 after winning the competition in 1997. Ms. America contestants are often well into their careers, sometimes are married and often range from 26 to 40 years old. The 2017 event was scheduled for September 3 in Brea. At the last minute Jeske got some bad news.

She learned on August 30 that Costa Mesa based BTB Event Productions, the company hired to produce the pageant, was shutting down and their equipment was being sold off. As a result Jeske was left scrambling to find a stage, runway and proper lighting. “I have 43 contestants flying in from across the country that are coming in tomorrow and I don’t have anything,” Jeske told the Orange County Register on August 31.

photo-trademarks-search-terms-and-fruit-300x200A recent federal court decision from Connecticut has laid down some potentially new rules when it comes to trademarks and internet marketing. The lawsuit pits two competing companies and a dispute as to whether marketing practices of one company were meant to illegally steal away potential customers of the other.

The products being sold are fruit. Plaintiff Edible Arrangements, LLC, is a seller of artfully designed fresh fruits that are sculpted in the shapes of flowers and arranged to resemble floral arrangements. Defendant Provide Commerce, Inc., is a direct competitor which sells a variety of products including flowers, chocolates, fresh fruit, gift baskets and personalized gifts under brands such as “ProFlowers” and “Shari’s Berries” which offers a variety of items through its online store.

Judge Vanessa L. Bryant’s decision on defendant’s motion for summary judgement covered trademark infringement in the world of internet keyword advertising. She denied Provide’s request for partial summary judgment against trademark owner Edible Arrangements, which sued it for trademark infringement.

photo-PDC-EB5-scam-300x200It’s never a good thing to have a federal judge order a freeze on your business’ assets. That’s what happened to an Orange County firm that federal officials claim stole money from foreign investors, mostly Chinese citizens, who hoped their cash would lead to permanent U.S. residency, the Los Angeles Times reports.

Newport Beach lawyer Emilio Francisco and his investment firm, PDC Capital, face civil fraud charges filed by the Securities and Exchange Commission (SEC). It claims Francisco spent at least $9.5 million of investors’ cash on personal expenses (some going to help pay for a yacht, a yacht-club membership and his credit card) instead of investments that would qualify investors for the EB-5 visa program, which offers permanent residency to foreigners who make job-creating investments in the U.S.

Investors provided PDC with more than $72 million from 2013 to 2016, according to the SEC’s suit. More than a hundred investors put in $500,000 each. They believed the money would be spent building assisted-living facilities and opening new locations of Caffe Primo, a Los Angeles coffee shop and restaurant chain. The SEC states some of the money went to the promised projects, but millions of dollars were invested in other projects and more than $2 million went to pay Francisco’s personal expenses.

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photo - toy idea theftA stagnant company, one that’s not looking to improve on its products or come up with new ones, may not have a bright future. There may be pressure to come up with the next successful products as well as pressure to cut costs and improve profits. That may result in legal problems if a company illegally uses someone else’s concept without their approval or paying them. A recent Bloomberg article spelled out this problem of intellectual property theft in the toy industry.

Ellie Shapiro came up with a toy in 2012. They were little animal figurines with snow globes in their bellies which she called Wishables. She worked as a freelance toy inventor but prior to that she spent ten years as an executive at Mattel Inc. and Walt Disney Co. Shapiro pitched her toy ideas to toymakers including Hasbro, Inc.

She signed a confidentiality agreement, met with Hasbro executives in Santa Monica in 2013 and showed off her prototypes, sample packaging and feed back from focus group testing. Executives liked the presentation, asked for samples but later told her they were passing on the idea.

In the fall of 2014 she walked into a Target store and saw a new Hasbro toy, an animal figurine that was also a snow globe. “At first, I was in shock and in disbelief,” Shapiro told Bloomberg. “Then I felt completely sick.” She later sued Hasbro for stealing her idea in federal court in the Central District of California. The company responded by saying snow globes have been used in toys for years and a similar design was developed in-house in 2012, prior to her submission.

Shapiro sued an Australian toy maker previously and settled the case in 2014. In the past she felt Hasbro stole a previous idea, threatened to sue them but ultimately did not. Freelancers like Shapiro face the double threats of having their ideas stolen and not making any money or suing (which can be expensive) and getting a litigious reputation risking being avoided by toy companies and not making any money. Some inventors see theft as the cost of doing business, hoping eventually a company may agree to pay for an idea.

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Starting a business can be very exciting. You make plans for a bright future. You’re optimistic not only about how well the business will run, but how profitable it will be too. Plans and dreams are great, but it’s preparation and work that may help you avoid conflict with co-owners. If it happens there are things you can do to protect yourself.

Whether you formed a partnership, limited liability corporation, partnership or limited liability partnership, a big step to manage expectations and make sure everyone knows their responsibilities is an effective partnership agreement, LLC operating agreement or shareholders agreement.

If despite those documents owners are at a stalemate or relationships have simply broken down it may be time for disputes to be resolved or for people to go their own ways. How this takes place should be spelled out in the agreement which should be tailored to the needs of the business and the owners. If there is no such agreement state statutes cover these topics in a “one size fits all” approach that may or may not work very well.

If things are going poorly you may want the other owners out, they may want you out, or both. It’s possible that the company’s not doing well and everyone’s miserable. Maybe it’s going very well and some are trying to get more of their fair share of the profits.

If there is an agreement,

  • Who has the ability to make what decisions for the business?
  • Has one or more parties over-stepped their bounds?
  • Have obligations been met?
  • If the agreement has been breached, are remedies spelled out in it?
  • How are disagreement supposed to be resolved?
  • If the parties can’t do it themselves, must a mediator or arbitrator be used?
  • If the disagreement goes to court, must it be filed in a particular place using the laws of a specified state?
  • Does the agreement state attorney’s fees and costs of litigation can be awarded to the prevailing party?
  • Can a judge or arbitrator award attorney’s fees?

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photo - hold the mayoNew companies seeking investment and funding are under a lot of pressure to show success. One such company is facing an investigation by the Securities and Exchange Commission (SEC) to see if it tried to boost its sales numbers by hiring contractors to buy their product then reimburse them for the purchases.

The SEC is looking into San Francisco based Hampton Creek, Inc., according to Bloomberg, which broke the story about the potentially bogus sales numbers in order to impress potential investors. The agency is trying to determine if the startup broke federal law by failing to disclose it was buying its own vegan mayonnaise from stores, making it appear to be more successful than it actually was, according Bloomberg’s sources.

At issue is whether company founder and CEO Joshua Tetrick improperly recognized revenue from purchases made with company money. Bloomberg reported Hampton Creek started an operation to purchase its own mayonnaise starting as early as 2014. The SEC has jurisdiction over the closely held company because it has raised money from outside investors.

Investors have come up with more than $220 million for Hampton Creek and Tetrick told employees in August he expects to raise another round of financing by September that will increase the value of the company to $1.1 billion, according to Bloomberg.

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photo - IP negotiationsTrade secrets are the life blood of a business. They can be marketing plans, customer lists or product designs. Because they have value sometimes they are stolen often by an ex-employee or business associate. This theft can be seen as treachery, the business equivalent of a stab in the back. No matter how high emotions are running if a lawsuit has been filed or is being considered, the reality is the vast majority of cases settle.

Since that’s the case whether you’re a plaintiff or defendant in a trade secret theft case you should think about your interests, your goals and how they may be reached through a settlement. These cases can be very expensive in time, energy and money. If a settlement can be achieved fairly quickly with reasonable terms it may be your best option over a long litigation slog and rolling the dice at a trial.

What would be reasonable terms? They should be based on what could be attained without a settlement. Be realistic. Trying to hammer away at the other party to get terms that would be unlikely through litigation will probably be a waste of time and just antagonize the parties even more. On the other hand, setting your sights too low makes the process not worth it.

What do you need to settle? What would you like to settle? You must decide before starting negotiations.

Out of fear or anger you may seek litigation to try to get injunctive relief or a seizure of your trade secrets. But without enough facts an attempt at injunctive relief will probably fail. Another way to seek what you want is through negotiations.

You will have to contact the suspected bad actor, or their attorney, to see if there is interest in negotiation or mediation. This should be in writing, in a business-like fashion, without hostility which may end discussions before they start. You should include some details as to when and where and what information should be exchanged in advance.

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If you hear the term “insider trading” you may think about corporate big wigs sneaking off and secretly buying or selling stocks to cash in on inside information. That scenario happens but there’s a wide range of people who may seek to profit on information unavailable to the public. One recent case involves an optical physicist.

Guolin Ma was a former consultant for two China-based private equity firms. He agreed to pay more than $756,000 to settle insider trading charges filed by the federal Securities and Exchange Commission (SEC), according to an SEC press release. It charged Ma with breaking the Securities Exchange Act of 1934.

The agency claims Ma traded on confidential information he received while working for two firms as they sought to buy Silicon Valley-based OmniVision Technologies, which makes optical semiconductor devices used in mobile phones and webcams.

Ma is an optical physicist who lives primarily in China but who resided in Mountain View during the period in question. He attended various meetings and performed technical due diligence related to the potential acquisition of OmniVision. He also obtained a timeline and strategy documents from the firms about the OmniVision purchase. The SEC’s complaint filed in federal court in San Jose in June states,

  • One of the firms Ma advised joined a group of Chinese investment firms to make a bid for OmniVision.
  • Ma worked regularly for the investment firm. He monitored their current investments and evaluated possible investments in the area of optical technology.
  • Ma was aware his consulting exposed him to non-public information about the firm’s investments and other entities and that such information needed to be kept confidential.
  • Ma signed a confidentiality agreement with the firm in March 2014 prohibiting him from trading on the non-public information he learned through his work with the firm.
  • Ma owed a duty of trust or confidence to the firm he worked with and he and those at the firm shared confidential information regarding potential investments.
  • Ma “knew or recklessly disregarded” the fact he owed a duty of trust or confidence to keep the information confidential and used the inside information to place trades in his personal brokerage accounts.
  • Ma bought 39,373 shares of OmniVision in a number of purchases in April and May 2014. OmniVision’s stock price climbed 15% when the proposed purchase was announced in August 2014.
  • That gain created $367,387 in illegal profits for Ma.

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photo - Panera v. Papa John'sAllegations a growing national pizza chain improperly hired an IT executive away from one of the nation’s leading “fast casual” restaurants is the basis of a recent lawsuit filed in federal court in St. Louis. At issue to the potential loss of intellectual property, specifically technology such as digital ordering kiosks, according to the St. Louis Business Journal.

Panera Bread Co., based in the St. Louis area, states it filed a lawsuit in July against a former IT executive and his new employer, Papa John’s International Inc., in order to protect its technology trade secrets. Panera claims Papa John’s knowingly interfered with an employee contract to gain trade secrets involving its technology. The plaintiff seeks injunctive relief, damages, attorneys’ fees and a jury trial.

Michael Nettles is the former Panera employee at the center of the legal storm. He’s a named defendant in the suit who was Panera’s vice president of architecture for the company’s information technology department from 2012 to July 1, 2016. Panera states he had “privileged access” to its tech based initiatives and was involved in every aspect of their development.

The lawsuit claims Nettles knows of Panera’s high-level discussions about using technology, developing an intimate knowledge of Panera’s strategic technology plan. Panera stated it has invested more than $42 million in its digital and tech strategies including enabling customers to order via their smartphones or in-store kiosks.

Nettles allegedly signed a non-compete agreement with a list of competitors (including Papa John’s) where he couldn’t work for a period of time. Papa John’s is accused of knowing about the agreement but still pursuing Nettles.

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