Blackletter

Social Media: Personal but also Public The use of social media in every day life is now becoming the norm. The President is well known for using Twitter. Celebrities have adopted it to make announcements, pick fights, or even take political stands on current events. Social media provides the ability to reach a large number of people with short and sometimes loaded comments.

The law and business practices tend to be slow to adapt to new technology. An example of this is music streaming. The method of music distribution and how royalties are paid is no longer the same as with albums, CDs, and cassettes. It wasn’t until this year that the 2018 Music Modernization Act closed loopholes in digital royalty laws. Keep in mind that Pandora was founded in 2000 and Spotify, 2006. Social media is also experiencing lags of legal clarity.

Legal ramifications of social media posts can be costly. Elon Musk, CEO, of SpaceX and Tesla, posted a tweet that resulted in a $20 million fine and his removal from the Tesla board. On August 7th, while stock markets were still open, Mr. Musk tweeted that he was considering taking Tesla private at $420 a share and that he had secured funding.

Does a tweet constitute misleading investors? Previously, Musk was already the target of a complaint filed by the National Labor Relations Board (NLRB). He was accused of violating labor laws when he tweeted on May 20 that he “threatened to strip employees of their stock options should they vote for the union.” Action from this complaint is still pending.

Now, with this latest tweet, the Tesla board was unaware of his statement and had not given their approval for its release. The result of this ‘simple remark’, Tesla stock rose 6%. The timing of the tweet and the stock price increase brought about an investigation by the Stock Exchange Commission (SEC). They were interested in whether the tweet amounted to misleading investors and violating federal securities laws.

According to the SEC press release, his tweet falsely announced the price and it was a substantial increase from its current price. He had stated that the funding for the transaction had been secured, and only a shareholder vote remained. The SEC alleged that Musk knew that the potential transaction was uncertain and subject to numerous contingencies. He had not spoken to any potential financing partners, and the transaction lacked an adequate basis in fact and that his misleading tweet caused a jump in price and led to significant market disruption.

In late September, Musk accepted an agreement to step down as chairman of Tesla and pay a $20 million fine. The settlement, which still requires court approval, will allow Musk to stay as CEO but must leave his role as chairman of the board within 45 days. He also cannot seek re-election for three years. All of this was caused by the simple message of a 61 character tweet.

Protecting your business and mitigating errors in judgment To protect themselves, most companies have social media guidelines in place reminding their employees that there is no clear line between your work life and your personal life.

Organizations often obtain legal representation to preserve, protect and defend its clients’ business interests and individual rights, reputations, and livelihoods. Providing counsel concerning investigative interviews, subpoenas, search warrants, civil investigative demands, and related allegations of impropriety. A law firm like DBL can provide representation that includes managing matters from the investigation stage through the grand jury process, trial, and if necessary, appeal and collateral proceedings.

https://www.dbllawyers.com/social-media-personal-also-public/

Patent monetization is the generation of revenue by selling or licensing patents.  Patent applications can be expensive. Independent inventors and small businesses, such as startups, need to spend their money wisely. If small businesses decide to pursue patent applications, the ability to monetize those patents is extremely important.

If a small business has a new and unique technology, the upside of investing in a patent can be enormous. There are ways to get a sense of how valuable a patent of the invention would be prior to paying for and submitting a patent application.

Prior to submitting a utility application, it is important to acquire a professional patentability search and analysis. The results of the search allow the inventor to assess how crowded the art field is and how unique the invention is.  If the art field of invention is crowded and the ability to acquire a patent is dependent on narrow claims, the patent will likely not be very valuable and it may not be in the best interest for the inventor to allocate limited funds on a patent application. If the results of the search confirm that the invention is unique, the patent will more likely have broader coverage, making the patent potentially more valuable. 

Another important assessment for patent monetization is determining how marketable the invention is. If the invention sells well, the patent is more valuable.  However, it is also important to file a patent application as quickly as possible since the patent office awards priority to the invention that is filed first. For inventors with limited funds, a provisional application is viable option.

The provisional application is a holding spot in which a filing date is established, and the invention is considered patent pending. The inventor is given twelve months to determine if they would like to file the non-provisional utility application (actual patent application) and claim the filing date of the provisional application.  The provisional application is considerably less expensive than a non-provisional utility application. Therefore, an inventor may first file a provisional application and then try to determine how marketable the invention is by either making and selling the invention or presenting the invention to potentially interested parties in an attempt to either outright sell or license the invention.

It is likely in the best interest of the inventor to file a utility patent application after determining the invention is unique and marketable. During the drafting and the examination of the application, it is the duty of the patent attorney to acquire allowability for the broadest possible claims of the invention to maximize the value of the inventor’s patent.

There are multiple strategies in which small businesses may monetize a patent during its pendency and once the patent has been granted. Patents or patent portfolios may be used as collateral to secure a business loan.  The loans provide immediate cash flow, which is important for startups or struggling companies.  Typically, banks are the lenders for patent backed loans.  To determine the amount of the loan, the lenders will have the patents valuated. Patent valuations are based on the demand of the invention, timing of the demand of the invention, the lifetime of the patent, evidence of use and competition in the market, whether the patent validity has been tested by litigation, and other factors.

If the bank provides a business loan using patent(s) as collateral, the amount of the loan will typically range between 10% and 40% of the valuation, due to the uncertainties of a patent valuation. Once a loan has been granted, a security agreement is registered with the U.S. Patent Office and is made available to...

The Best of Blackletter: Season 2 in Review

Tom Dunlap brings famously experienced business people, lawyers, accountants, and anyone else in the realm of business to the table to share personal experiences that have shaped their business and to talk about how to handle black letter issues in creative ways.  Topics include: National & Cyber Security, the Legal Market, Music & Technology, Real Estate, Immigrating to the United States, Protecting Athlete's Investments, Patent Prosecution, Law Firm Management and Commercial Lending.

The number of new trademark filings from international, or non-US companies has increased dramatically in the last decade.  Until recently, these international trademark applications were filed with the United States Patent and Trademark Office (USPTO) by non-US based companies through their foreign lawyers or through a corporate representative.  However, beginning August 3, 2019, according to the USPTO, all “trademark applicants, registrants, and parties who have a permanent legal residence or a principal place of business outside the United States” must file any United States trademark application through a lawyer based in the United States.

While this may seem heavy-handed, the USPTO outlined the reasons for the new regulation.  The three goals of the rule are:

1. To ensure the accuracy of submissions to the USPTO
2. To increase customer compliance with federal trademark law
3. To ensure the integrity of the US trademark register

Much of the rule is aimed at combating fraudulent trademark applications from foreign applicants. Another reason comes as a result of a Chinese government’s subsidy that provides a bonus or financial incentive to any Chinese citizen that successfully registers a trademark in the United States.  In some cases the Chinese applicants were filing trademarks and either not following through with the application or, even when the marks became successfully registered, they were not then using the trademarks in commerce to sell any goods or services, thus essentially creating a kind of trademark spam on the principal register.

US attorneys who are familiar with the trademarks system have a much higher likelihood of avoiding USPTO rejections, and of successfully responding to office actions and rejections from the USPTO.  Any foreign company that has filed an application has six months to find US-based counsel to respond to an office action that will issue requiring a US attorney sign and enter a valid US bar number as part of the application.  Likewise, any maintenance filings for applications registered before August 3 will also need a US licensed attorney of record.

https://www.dbllawyers.com/a-new-uspto-rule-requires-foreign-trademark-applicants-to-hire-u-s-based-attorneys/

Daily Law News by Thomas Dunlap covering the headline: What Men Want Suit - October 8, 2019