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Will penalties from user data lawsuits destroy your online business?

If you own a website that collects user data or simply operates online, take caution!

By Peter Lemire

In June of this year, California enacted the California Consumer Privacy Act (CCPA), becoming the first state in the U.S. to pass its own data privacy law. The CCPA act was enacted just one month after the European’s General Data Protection Regulation (GDPR) officially became enforceable. Any relief felt by U.S. companies for completing the arduous task of bringing their business practices into compliance with the GDPR was short-lived—California has plunged headfirst into the privacy arena, and they’re playing by their own rules.

On the surface, it may seem that companies not doing business with California residents or EU citizens remain unaffected and are free to carry on business as usual. However, the enactment of the CCPA could have broad implications for businesses across the country. The public is demanding corporate accountability for cybersecurity and privacy—just ask Mark Zuckerberg, the creator of Facebook. Companies should start contemplating and formulating compliance strategies sooner rather than later. In the realm of privacy and data security, a proactive approach to the management of cybersecurity and privacy risks is best, and may avoid a costly game of “catch-up.”

In order to understand what privacy and personal data management policies should be in place, it is first important to look at what the CCPA requires for compliance. The CCPA has been largely referred to as California’s version of the GDPR, however, the comparison is slightly misleading as there are quite a few differences between the CCPA and the GDPR.  This means that existing privacy policies tailored for the GDPR will not automatically be fit for purposes of complying the with CCPA, and will likely need to be updated to reflect the disclosures and transparency obligations required by the CCPA.

Of course, the first step is determining whether your business is even affected by the CCPA. The CCPA applies to for-profit businesses that collect and control California residents’ personal information, do business in the State of California, and either (a) have annual gross revenues in excess of $25 million, (b) receive or disclose the personal information of 50,000 or more California residents, households, or devices on an annual basis, or (c) derive 50 percent or more of their annual revenues from selling California residents’ personal information.

Although the CCPA’s directives become operative January 1, 2020, in order to comply with the 12-month look-back period for consumer requests, businesses subject to the CCPA will need to begin mapping data and keeping records of personal information beginning January 1, 2019.

Even if the CCPA does not apply to your business, it is still worth having a basic understanding of the CCPA, as other states are following the EU and California’s lead, which could lead to federal involvement. Essentially, the CCPA gives California residents four basic rights in relation to personal information. First, “the right to know” grants the right to know what personal information is being collected, and the right to know whether personal information is being sold or disclosed and if so, to whom. “The right to opt-out” provides for the right to opt-out of the sale of the collected personal information to third parties. Further, minors under the age of 16 must actually opt-in (meaning the sale of personal information is not permitted until consent is expressly provided), and for minors under the age of 13, the consent must come from a parent or guardian. “The right of access” gives consumers the right to have businesses disclose the information collected, the categories of information collected, the categories of third parties with whom the information is shared, the categories of sources of the information, and the business purpose for collecting or selling personal information. Finally, the CCPA provides for “the right of equal service,” which forbids businesses from discriminating against consumers for exercising their right to privacy afforded under the Act.

California’s law is just the tip of the iceberg of what is happening throughout the United States. The GDPR and CCPA have brought concerns of inconsistent and sometimes conflicting privacy laws to life, and present businesses with unnecessarily burdensome compliance challenges. As a result, attempts to lobby Congress to pass federal omnibus privacy and data protection law that would pre-empt the CCPA and other existing and future state data protection laws are currently underway. The U.S. Chamber of Commerce, the Internet Association, a trade group representing leading Internet companies, and the Interactive Advertising Bureau have already all spoken on the matter.

Businesses that are compliant with the GDPR do have a fairly significant head start on complying with the CCPA. However, because there are material differences between the two regulations, even businesses that are “GDPR-compliant” (if there is such a thing) will have additional work to do to prepare for the CCPA. Absent an act of Congress pre-empting the CCPA, businesses who may have dodged the GDPR bullet must now develop robust data management. However, even businesses who have not been affected by the GDPR or CCPA may want to consider taking a second glance at their privacy practices and policies—one way or another, privacy regulation seems inevitable.

If you have questions about how to update your privacy agreements to avoid costly trouble, we are here to help. Please feel free to contact us at (303) 768-0123 or send us an inquiry here.

By | December 19th, 2018|BLOGGING, BUSINESS LAW, CYBER LAW, INTELLECTUAL PROPERTY, OTHER|Comments Off on Will penalties from user data lawsuits destroy your online business?

Hazy times for Colorado’s marijuana businesses

Many businesses are dealing with the impacts of Colorado’s foray into recreational marijuana. Often, this uncertainty is focused on how the new laws and regulations will be implemented. While compliance with the Colorado regulatory framework is often the first priority of companies associated with the marijuana industry, another important legal issue is lurking below the surface, and unfortunately how it is resolved remains to be seen. The issue concerns an area of intellectual property law that all businesses have – trademarks.

Trademarks protect identifiers of the source of goods in commerce – essentially they protect brands. Trademarks can be any non-functional aspect of a product or service that identify its source. They can be business or product names, logos, or even things such as product packaging or design (e.g., the shape of an I-Phone or a Coke bottle).
The law protecting trademarks has two main purposes. The first is to protect the goodwill built up by business owners with the consuming public.

Basically, we don’t want a company to spend 20-plus years building a good reputation only to have another company come in and adopt a mark that is intended to ride on the coattails of the first company. The second purpose is to protect the consuming public. Essentially, when you go and buy a Coke, you do so because you have certain expectations about the product including quality, price etc. Therefore, the law recognizes that it is in the public’s best interest to not allow dish water to be bottled and sold to the unsuspecting consumer as a Coke or for a fly-by-night company to sell shoddy knock off shoes as a pair of Nikes.

There are basically two types of trademarks – registered and unregistered. Unregistered trademarks (also called common law trademarks) arise from the business’ use of the terms to identify its goods. The scope of protection for common law trademarks is generally narrow. Fights about the geographic scope of common law trademark rights often get down to the zip code level. Because of these limitations it is not preferable to just rely on common law rights.

Registered marks are those in which the trademark owner has sought registration of the trademark with a state or with the federal government. Each state’s laws are different and can range from highly complex systems to Colorado’s system, which basically just defaults back to common law protection. Most trademarks are protected under the federal Lanham Act. Trademarks registered under the Lanham Act are enforceable in all 50 states even if the business hasn’t had sales nationwide.

The problem facing Colorado companies that are involved in or sell goods or services related to the marijuana industry is that, generally speaking, the law doesn’t allow for trademarks rights in goods or services that are illegal. On a broad level this makes sense; if you are conducting an illicit activity, you shouldn’t be able to sue someone else for doing the same illicit activity under a similar name. Doing so would tend to legitimize the illegal activity. But what happens when something is legal under state law but illegal under federal law?

Usually the answer would be that the state law is invalid due to the Supremacy Clause of the United States Constitution. However, this inconvenient fact is essentially the third rail in the marijuana debate. Even though the last two administrations have looked the other way, marijuana is still illegal federally. The federal controlled substances act prohibits among other things the manufacturing, distributing, dispensing or possession of certain controlled substances including marijuana and marijuana-based substances.

Additionally the CSA makes it illegal to sell, or offer for sale any drug paraphernalia (“any product, equipment or material which is primarily intended or designed for use in manufacturing, compounding, producing, preparing, injecting, ingesting, inhaling or otherwise introducing into the human body a controlled substance”) 21 U.S.C. §863. Because of this a company will not be granted federal trademark registration for marijuana or marijuana paraphernalia. Therefore a business owner cannot get a federal trademark for the name of their dispensary or their own brand they might assign to a particular strain of marijuana. Additionally a business owner would also be denied federal common law protection for any such mark under the Lanham Act.

Things most likely don’t fare much better under a state common law analysis. While there isn’t any case law out on this yet, but strictly going by the law, a court would have to deny state common law protection as well, due to the Supremacy Clause. This causes a huge conundrum – how are marijuana business owners supposed to protect their goodwill?  How do we protect consumers that rely on brand names to make purchasing decisions regarding, quality, strength and safety?

Most ironically, a grower could produce a new strain, protect it with a plant patent, and give it a new name. If someone infringed the patent the grower could sue and obtain an award for damages. However, if the same individual sold an existing (non-patented) stain under the same brand name as the patented strain, the grower might not have any recourse.

So does this mean that marijuana-related businesses should just ignore trademarks? I would say that is not a wise choice. There are still many strategies that a business can use to get the most protection possible under both state and federal law, which while might not be ideal, it is definitely better than nothing. Additionally, sophisticated legal counsel can also employ other areas of intellectual property may also prove helpful in protecting brand identity.

Lastly, we really are in a situation of wait and see. Until either the federal law is changed, or some cases concerning these companies move their way through the courts, it’s all a bit hazy.

The perils of public-generated content

There is a well-known phrase known to businesses relying on the internet to help drive marketing and sales: “Content is king.”

That phrase has expanded, in the wake of businesses turning to Facebook and YouTube and in the development and use of better consumer digital cameras and video. That new and improved phrase is this: “User-generated content is king.” Soliciting user-generated content (UGC) is often an attractive marketing strategy: It engages customers and cultivates much-desired online content for a business all at the same time.

Some companies have come to regret that marketing move, however, as users who generate content are bringing suit when their material appears in future advertising, marketing or other company collateral, as McDonalds recently found out.

In the McDonald’s case, the wheels were set in motion in 2008 when McDonald’s hosted a “Big Mac Chant” contest on MySpace. Contestants created videos of their chants and uploaded them to the website. One participant, Daniel Calden uploaded a video of him in sunglasses with a sock puppet singing “Big Mac. Big Mac. Big Mac.  Everybody wants to eat a Big Mac.” Nothing came from the entry, although a few days after it was submitted it was removed, and Mr. Calden’s inquiries with McDonald’s and their marketing firm went unanswered.

A year later, McDonald’s launched a commercial involving a fish mounted on a wall singing to a man about wanting a Filet-o Fish sandwich. Three years later, Calden filed suit against McDonald’s and their marketing company for theft of intellectual property, breach of the contest contract, copyright infringement and a host of other theories. (Interestingly, the statute of limitations on a copyright infringement case is three years.) McDonald’s fired back with a motion to dismiss the claims, citing among other reasons, that the works are not similar in the least except that both works contained men, non-human characters, and music about McDonald’s sandwiches.

Probably the McDonald’s case is one where the plaintiff is fishing for a settlement.  However, it serves as a good example of the perils of soliciting UGC. No doubt McDonalds crafted their contest contract in a careful manner, which will definitely help them in the case, however even careful drafting might not prevent a business from being sued. While wanting to be involved with customers on a more interactive basis is an admirable objective, business owners must remember that generally people are passionate about their creations and creative works. They can and often do get very possessive and angry if they feel they have been taken advantage of – even if they assigned their rights to the company in the contest rules. Something that might make good business sense to a marketing professional may leave a customer feeling cheated, taken advantage of, or betrayed.

The worlds of contests and UGC also have a lot of legal issues associated with them.  Contests are subject to state gaming laws and can potentially lead to serious liability for illegal gambling if not structured correctly. Additionally, a business will want to make sure that it owns any UCG submitted and that the contestant is not entitled to any additional compensation other than what is provided for in the contest rules – even if they are not the contest winner.

These contracts need to be tightly drafted. Otherwise a company could wake up with a much-enlarged audience resulting from an online initiative, but simultaneously be subject to not just intellectual property violations, but illegal gaming issues as well.

“Content is King,” still applies, but care and caution could help a company’s online efforts from also becoming costly.

Moving on up – and out

Some of you may have noticed that our firm has not published a new column in a few weeks now. The reason for this is that we were engaged in a Major Office Move.  You know the kind: anguished over for months, thought about repeatedly at 3 a.m. and again at 6 a.m. and over dinner with your spouse. But our move was inevitable. The firm has grown and along with that, we had outgrown our old office suite in more ways than one. In addition to simply needing much more space, we also wanted to be in offices that better reflected the firm’s character and personality.

This is, technically, our third space in the company’s history and we have been able to learn from our past experiences and plan for the future. For example, we learned that as you add attorneys to your staff, those attorneys tend to schedule meetings with clients and prospective clients. Also, if you have multiple meetings back-to-back and your main lobby is the size of a British phone booth, things will get crowded and look like I-25 prior to T-REX.

Generally speaking, this is not good for business.

While I can’t say that moving a law firm, or any business for that matter, is something I would want to do on a regular basis (particularly when it comes to getting employees packed up and ready to go prior to the movers arriving), businesses can seize the move as a great opportunity to reflect upon where they have been and where they are going.

A few columns ago I talked about the opportunities that spring provides to do some spring cleaning for your business. It was essentially a mini-audit for the business owner to determine if they were covering all the legal details necessary to ensure the vision they have for their company. As we were going through the process of finding new offices, I became aware that the moving process itself forces you to take stock of your company and start thinking about what that company will look like years down the road.

Through the myriad of necessary decisions inherent in moving a business — like office location, size, configuration and the type of building finish and personality — you are organically lead to essentially constructing a strategic plan for the length of the term of your lease.

Where do I want to be located? How many employees do I have now and will have in the future? What does the space say about my company (or does it even matter)? How long do I want the lease to be? What are the main functions of my business and will we be adding any lines of business in the future that might need special accommodations or a special environment?

It’s easy to consider staying put: but if one thing is certain it is the inevitable, change.

It’s easy to think of the headaches of moving, but what if, instead, you and your staff spent the time leading up to the move as a fun exercise of strategic planning, goal setting and visionary pursuits that can revitalize your business and possibly open up opportunities that were not perceived before? What inadvertently happens is that you become more in touch with your company’s mission and can therefore take measure of how successful you are in keeping true to that mission.

Sure: No one necessarily wants to stop and carefully think through the details of a strategic company vision. And the actual act of moving is often painful, much like herding cats.

But a business move can be cathartic. Furthermore, the momentary pain of moving is temporary, yet the fruits of your labor are everlasting – especially if the new space has a great view, like Leyendecker & Lemire, LLC’s new offices. Come see the digs: 5460 S. Quebec St., Suite 330, Centennial, Colo., 80111. We make good coffee.

Clash of the tax and retail titans

Since I counsel a lot of online businesses, including online retailers, I am often asked about the sales tax implications of online sales. Generally speaking, the answer is pretty easy: If you are a Colorado business and sell goods to individuals residing in Colorado, then you have to collect Colorado sales tax and the appropriate county and city taxes from the consumers and remit the sales tax to the appropriate taxing authority.

Technically speaking, Colorado consumers are supposed to report and calculate the value of goods purchased from out-of-state business and pay the state government the appropriate tax. Of course, no one does this, and the state has no way of knowing how much each taxpayer purchases and how much tax is owed.

In an attempt to capture all of these unpaid taxes, the state passed what became known as the Amazon Tax in 2010. The Amazon tax required internet retailers to collect the sales tax from Colorado consumers, or in the alternative, notify each Colorado customer and the State in writing that they owed sales tax on their purchases and provide the customer with a list of all goods purchased by the customer and the amounts spent.

The Amazon Tax poses many issues for large and small online businesses alike. In the case of a large retailer such as Amazon, the task of complying with Colorado’s law is mammoth, due to the enormous volume of transactions the company processes. It would force Amazon to specifically set up unique systems just for Colorado customers.

If every state enacted differing laws concerning the collection of sales tax with differing requirements, it could be a nightmare for large nationwide retailers. Likewise, for smaller online retailers, the Amazon Tax potentially poses a large cost burden in acquiring the systems that would allow the collection of the tax, or complying with the notice requirements.

Enter the U.S. Constitution and the commerce clause. The commerce clause is getting a lot of press these days because of “Obamacare,” but it is also intimately connected to online commerce. In this instance, we are concerned with what is called the reverse commerce clause – basically the theory that state laws cannot place an undue burden on interstate commerce (commerce between states).

In March, Federal District Court Judge Robert Blackburn tossed out the law, stating, “I conclude that the veil provided by the words of the act and the regulation is too thin to support the conclusion that the act and the regulations regulate in-state and out-of-state retailers even-handedly,” and that the law and regulations “impose an undue burden on interstate commerce.”

This ruling confirms what scholars and commentators have said for a long time – any sort of taxation on internet sales has to come from a national level. Given the plethora of issues already being debated at the national level, I think online retailers are safe from any additional government involvement – at least for a little while.

Colorado Intellectual Property Attorney writes about protecting your business online: recent changes to top-level domains part 1

Policing how your trademark or business name appears on the Internet is important to insure it is being displayed in the manner you want. Even if your business’s online presence is minimal, recent changes in how generic top-level domain (“gTLD”) names are assigned could have significant impact on your company. These changes will affect how your mark may appear on the Internet and what tools are available to protect yourself.

To understand the changes, it may help first to understand the terminology: A top-level domain (TLD) is a domain at the highest level in the hierarchical designation of website names. For example, “.com “is TLD, as are .gov and .edu. There are different types of top-level domains. Generic top-level domains, or gTLDs, are a distinct group of top-level domains that do not have a country affiliation and are not sponsored by a particular organization. GTLDs include .com, .info, .net and .org, while sponsored TLDs (“sTLD”) include .mil, .gov and .edu. Management of most top-level domains is handled by the Internet Corporation for Assigned Names and Numbers (ICANN).

In March ICANN approved a new sTLD: .xxx. Further, in June ICANN announced its approval to expand the number of gTLDs available. Following this announcement, the limited number of TLDs will become as quaint as the idea of having only three TV channels. As the owner of a business and/or a trademark, it is important to be aware of how your mark may be used or infringed upon by these new developments.

With the creation of the .xxx sTLD, businesses in the adult entertainment industry will begin acquiring new domain names which have not been previously available. The .xxx domain, registration will begin this fall for new addresses, such as www.acme.xxx. While this particular domain has been designed solely for the use of the adult entertainment industry, its creation presents an expansion of the possible websites that have similar names to your own. You may be aware of domain names that are similar to yours within the TLDs of .com or .net, but you will now have to be aware of those with xxx. Simply searching for your business might take an Internet user to a website you would rather not have your business affiliated with. ( Just as this happened with sites early on in website creation, such as XYZcompanysucks.com, there are companies that will quickly take advantage of this expansion, and purchase domain names such as XYZCompany.xxx. ) To prevent your mark or business from being associated with this industry, or infringed by a new registration on this domain, there are several steps to take and tools too use:

Register your Trademark with ICM

ICM, the registry that has contracted with ICANN, has set up a tiered registration period that allows for different “classes” of registration. Concurrently running, Sunrise A and Sunrise B registration opened on September 7, 2011 and remain open for fifty-two days. Sunrise A is for “Members of the Sponsored Community” (online adult entertainment industry participants and those supplying products or services to that industry) and Sunrise B is for non-members wishing to block the use of their intellectual property. These non-members may submit an application to block their trademarks from xxx. At the close of the Sunrise Period, if no conflicting application by a Sunrise A has been filed, these names will be reserved from registration (blocked).

Disputes over intellectual property rights issues will be handled by the rapid evaluation service (“RES”). ICM has also instituted the Charter Eligibility Dispute Resolution Policy (CEDRP). Additionally a trademark holder can proceed under the ICANN Uniform Domain Name Dispute Resolution Policy (UDRP).

Conclusion

With the creation of the .xxx sTLD, many businesses in the adult entertainment industry will be seeking to expand their online presence. Such expansion could potentially put your trademark in danger of being infringed upon. It is essential for a small business owner and/or a trademark owner to stay informed as to the risks inherent in this change, and the mitigation measures available to them. Stay tuned to this blog for further discussion on the, I will ramifications for businesses from ICANN’s expansion of gTLDs.

By | September 27th, 2011|BUSINESS LAW, GENERAL INTEREST, OTHER|0 Comments

Colorado Trade Secrets Attorney Explains Recent Developments Making the Protection of Trade Secrets a Bit Easier in Colorado

The Colorado Supreme Court recently made implementation of certain intellectual property policies and protections a bit easier for companies with staff, who, in the past might have taken their employers’ intellectual property and used it to compete with them.

Over the years Leyendecker & Lemire has worked with a number of established businesses to implement policies and procedures to protect these companies’ intellectual property and protect against potential employee competition.  Generally, these policies are covered in a set of contracts, known as Proprietary Information and Inventions Agreements.  Most times these agreements with employees include provisions concerning confidentiality of information, non-competition, non-solicitation and obligations to assign any work product or inventions created during or in the course of the employee’s employment.  These agreements are especially important when dealing with trade secret information.  If an employer sets up these policies from the get go, it is usually a simple process.  Things can get more complicated when dealing with an established business that already have employees on staff.

Under the old law, continued employment could not be used as consideration for the contract.  The term “consideration” is a legal term for the reason or material cause of a contract.  In short, the employee is giving up the right to conduct certain activities or obligate themselves to certain conduct.  Consideration is what the employee receives in return, or what the employer gives up.  Therefore, prior to the change in the law, an employer had to provide additional monetary compensation to the employee in exchange for the employee signing the contract.  This was always a tough analysis – the employer wanted to minimize its out of pocket costs, but didn’t want to offer an amount that would insult its current employees, lessening the chances the employee would sign the contracts. Depending on how many individuals the company employed, the dollar figure could add up quickly.  For example if a company has 40 employees and decided that it would need to pay each employee $100 in order to get the employee to sign the agreement, the company is looking at spending an additional $4,000 just in additional payments to employees.

With the new decisions from the Colorado Supreme Court, the employee’s continued employment is sufficient consideration to support the contract, so there’s no need for additional payment to existing employees.  Basically, the court states that since the employer is forbearing their right to terminate the employee, the employee’s continued employment is determined to be adequate consideration to uphold a non-compete agreement.  Therefore, an employer wishing to implement proprietary information and inventions agreements doesn’t need to give the employee additional compensation(which in our example is a savings of $4,000); they just need to make the employee’s continued employment conditional upon signing the agreement.  With this change, even companies on a shoe string budget can effectively implement intellectual property protection strategies without worrying about breaking the bank with extra payments to employees.  In this day and age, the ability to be able to secure your hard earned intellectual property through employee agreements is essential, even for the smallest of enterprises.  Luckily, it just got a whole lot easier.

By | September 9th, 2011|BUSINESS LAW, OTHER, PATENTS, TRADEMARKS|0 Comments

THE LEMONADE STAND and of solving our country’s economic doldrums.

In the beginning we were a nation of adventurers willing to strike out into the unknown and take chances on an uncertain future with dreams of prosperity if not for ourselves for our children. This came naturally to us: our parents and grandparents risked death on the high seas crammed into the wooden bowels of barely ocean worthy craft all for the dream of a better life away from the rigid class structures of Europe. They were of a different sort or breed compared with those who stayed behind. They were adventurers who were willing to take big risks, even facing death, on the hope of future rewards even of those rewards were uncertain, improbable or even unknown.

Our forefathers and mothers moved West in search of a better life. And as it is with all who strike out from the comfortable and familiar, many failed. But some succeeded. Collectively, they built new towns, cities and states and created wealth and prosperity where there was none before.

In the East, a merchant class arose following in the footsteps of renegade entrepreneurs like John Hancock who helped free the nation from rigid and stifling constraints of stuffy old England. Our eastern cities began to rival those of Europe and a new class was created: a large and prosperous middle class.

Entrepreneurship exploded in this country around the turn of the last century when the industrial revolution spurred the creation of giant corporations. And we invited in the people of the world who were fleeing economic desperation and political strife in their homelands. The immigrants didn’t just work for the corporations, they started new businesses: restaurants, ethnic delis, service stations and so many others that served the growing populace. My grandfather was among them: he left Germany in the nineteen twenties. He started and nursery lost it and started another business. I vaguely remember him and several of his employees plying into a landscaping truck filled with rakes, lawn mowers and shovels off to preen the manicured lawns of long island.

Our forefathers, these immigrants, pioneers, refugees, ultimately succeeded in creating a better life, not only for themselves for us as well.

And along the way in the last sixty or seventy years as we have revelled in our prosperity, we have largely lost it: the drive, determination, grit and tolerance for uncertainty that propelled us here. We go to college, get a degree and hope to find employment at a large corporation that will pay us well and give us a nice benefits package. If we get laid off, we look to the government for an unemployment check. Most of us don’t even know how to be self sufficient. To be fair, our technologically complex society has at least something to do with it: many of us have specialized professions that do not easy translate into a skill or vocation outside of bureaucratic company or the government.

Which brings us to my point: solving our countries economic problems and well, the lemonade stand. Over the past couple of weekends my kids (9 year old twins) set up a lemonade stand and sold the yellow elixir to thirsty Parade of Homes passersby. They learned the thrill of running their own business and having people buy and enjoy their wares. They learned about the cost of raw materials and pricing their product to make a profit. They learned about sitting around and persevering during the slow times waiting and hoping for busy times. And they learned how to make money apart from a wage handed down from an employer. For a brief few hours they were self-employed.

So how does all this help the economy? The way we grow our economy and as a society depend on our ability to innovate and move forward. And for this we need people who think outside of the box and our willing to risk failure for the reward of self determination. In the fifteenth century, they were called explorers; in the sixteenth and seventeenth century they were called colonists; in the eighteenth century, they were pioneers; and for the last hundred years we have known them as entrepreneurs. Perhaps the lemonade stand will help my kids realize that they do not need the safety of a regular paycheck to survive and prosper but that all they need is a belief in themselves and their abilities. And it is never too late for all of us to realize these lessons.

Perhaps among those that will read this blog post are future innovators who will create products the rest of us are not aware yet aware that we need or want. Perhaps among those who will read this blog post are the future employers of thousands. Perhaps among those who will read this post are those that will help ensure future of this nation’s continued prosperity. And perhaps for some the journey began when they were young and got their first taste of entrepreneurship running a simple neighbourhood lemonade stand.

By | August 30th, 2011|GENERAL INTEREST, OTHER|0 Comments

A Tip From a Colorado Internet Attorney: Website Owners Beware – What You Promise To Do May Cost You

In general, the federal communications decency act has two provisions that provide very strong liability protections for service providers, to the extent that that protection was once thought to be invincible.  However, recent cases have shown that service may be liable if they promise to take corrective action, but fail to follow through.

The first protection offered by the CDA is that a service provider is not held liable for content published on its website by 3rd parties, even if that content is false or slanderous.  The second protection is that a website operator cannot be held liable for removing 3rd party content it determines is objectionable.  Notwithstanding these protections, two different courts have recently allowed suits to go forward when a website provider promised to remove certain content, but then failed to follow through on the promise.  The first suit involves the posting of false ads on craigslist which falsely identified an individual as openly gay and invited sexual liaisons.   When the aggrieved party contacted Craigslist, Craigslist representatives agreed to take down the posts, which they did, but they also agreed not to allow any future posts with the user’s information without express consent.  1 month later more slanderous posts appeared without the users consent.  The court said that notwithstanding the immunities provided by the CDA, a service provider can be held liable for failing to follow through on its promises (promissory estoppel).  Likewise, in a case against Yahoo, a woman filed suit after an ex-boyfriend posted fraudulent profiles of the woman on Yahoo.  Yahoo had promised to take the profiles down, but failed to do so until after the woman filed suit.  The court once again denied Yahoo’s motion to dismiss based on the theory of promissory estoppel.

The take away from website owners is that if you promise to take material down, you need to follow through – or else the aggrieved party can sue you. Once you agree to remove material you have essentially waived the protections granted to you by the Communications Decency Act.  Website owners will also want to make sure that all of their employees are aware of the ramifications of agreeing to take down material and then not following through.  In fact the course of action with the least amount of risk for a website owner might very well be to never agree to remove any content period.

By | November 3rd, 2010|BUSINESS LAW, CYBER LAW, GENERAL INTEREST, OTHER|0 Comments

When Is the Best Time to Start A Business?

In the last year or so millions of people have been laid off from their jobs. Additional millions are worried or concerned that they may be next.  It has crossed the minds of many if not most of these people that perhaps they should start their own business to gain control of their destinies and obtain a measure of financial freedom.  Most of these people shrug the idea off rationalizing that it would not be wise to start something in a bad economy.

 

The truth of the matter is that the foregoing rationalization is just plain wrong: provided you have the financial wherewithal, one of the best times to start a business is when things look the bleakest.  The reasons are numerous:

 

  1. New businesses tend to take a significant amount of time and planning to get off the ground, but economic recessions according to historic data tend to last two years or less. To put it simply: if you start your business now, by the time you open for business, the recession could very well be over or nearly over giving you the ability to capitalize on the rush to consume as people emerge from their financial cocoons.

 

  1. Very few other people are starting businesses.  In contrast in good times, many people start businesses. Would you rather compete against dozens or hundreds of new entrants in a particular market segment or just a few?  If the need your new business looks to solve is a real one, the need is probably still there even in the height of a recession.  So even if demand is reduced 20-30% of what it would be in non-recessionary times, your business might actually do very well if there are no other or very few other businesses competing with you for the remaining 70-80%.

 

  1. In recessions: office space is cheaper; people will work for lower levels of compensation; and suppliers desperate for sales will often make deals.  To sum it up, you can offer your service or product for less, making you more competitive. Consider that your competition is saddled with higher rents on leases signed before the recession began; more highly compensated employees; and higher priced supplier and service contracts.  A new company will almost always be at disadvantage concerning brand recognition compared to established companies but the foregoing cost advantages may help mitigate this difference and even give the new guy a leg up.

 

  1. Opening a business in a recession teaches you control and restraint.  People who start businesses in good times are often less frugal with their money largely because they didn’t need to be frugal.  Now that challenging times are upon them, they are often unable to react and as such fail.  In contrast, money is hard to come by in a recession, and as such, new businesses must exercise greater because additional funding is often not available. 

 

Of course, the big problem or issue facing those starting a business in bad times is obtaining startup funding.  Simply put, don’t expect to borrow money from your neighborhood bank unless you can back it up with the equity in your home.  And angel investors and venture capital firms are going to be pickier then ever.  Truth be told, you will probably have to fund your venture yourself or through the support of friends and family.  Nevertheless, if you have an urge to start a business that solves a marketplace need, the time to act is NOW. 

By | February 11th, 2009|BUSINESS LAW, GENERAL INTEREST, OTHER|0 Comments