Zynga shows us what the bulldog means in their logo …

Zynga, the makers of Farmville and other popular games, was written up in the Wall Street Journal because they chose a rather poor way to consolidate their equity (from early employees). Law 4 Small Business wrote a particularly good blog article, entitled Zynga shows us how NOT to form a company, which focuses on how poor planning in the formation stage of the company sowed the seeds of a costly and embarrassing situation down the road for Zynga.

Of course, given the Zynga logo features a bulldog, it’s all to easy to comment on the negative connotations of that bulldog to Zynga’s unfortunate employees.

Getting punked: Will your old website images be the source of an expensive lawsuit?

A good blog article just came out, talking about how the big stock photo companies are using sophisticated software to find their images across the Internet. Even if the images have been manipulated, this software can sniff them out. When it does, it checks the owner of the website, where it find the images, and compares it to any license that may have been sold. The problem is, this software doesn’t care how old a website is. They are going after websites that are over 10 years old, as well as new websites. How many people have their receipts from 10 years ago, let alone the individual copies of licenses to use certain pictures they (or their www designer) purchased so long ago?

The blog article is located here: http://www.l4sb.com/2011/ip/images-or-photos-on-your-website-copyright-infringement/

It’s a good and scary read for anyone that has a website. It pays to start thinking about acquiring images more carefully.

Top 10 Suggestions for Businesses Entering the 2012 New Year

There is a great blog article that was just written for business leaders, owners and entrepreneurs, that provides a “top-10″ list for business owners to consider, as we get close to January 1, 2012, which represents a new fiscal year for most businesses. By thinking about this now — before the New Year is upon us — businesses have a chance to prepare their businesses to save on taxes, change the legal status of their company, change accounting methods, save on expenses, and much more.

This is an easy read, and should be valuable for most small businesses. The article is located at: http://www.l4sb.com/2011/ip/starting-the-2012-new-year/.

The meanings of the R-symbol and the TM symbol.

It’s surprising how little people know about the R-symbol and TM symbol in trademark law. Hiring a trademark attorney or a small business lawyer can help you understand what and/or when you need to use the R-symbol or the TM symbol. You can also learn more about them by reading Law 4 Small Business’ new article What does the R-symbol and the TM symbol mean?. It’s a short read that helps you grasp the concepts and suggests when you might ever have to use them.

Free seminar for business leaders in Albuquerque, NM: Beyond the brick-and-mortar …

Two legal experts in Internet law are putting together a seminar on April 18th, in Albuquerque, from 10am to 12pm.

The topic is “doing business on the Internet,” told from the perspective of your typical brick-and-mortar business. The latest, cutting-edge topics will be discussed, including cloud computing and on-demand computing. Practical advice on how to reduce legal, financial and reputation risks will be discussed.

Learn more at: http://www.l4sb.com/2011/business-law/free-seminar-announcement-moving-beyond-brick-and-mortar/.

Consistency is a concept often overlooked by business professionals and attorneys alike

The word “consistency” is an important concept in software development. Much expense is devoted to make consistent user experiences and processes in the software world. The reason for this is simple: inconsistent user interfaces confuse people.

This concept hasn’t caught on quite as well in the general business world (nor in the legal world), yet it is extremely important nonetheless. When someone is inconsistent, at best this can be an embarrassment. At worst, it can bring about lawsuits.

Read more, with the article: Consistency, the key ingredient in any magic sauce.

This is a great read, and provides some suggestions on how to improve consistency within communications and within the business.

Evergreen clauses in contracts can be a problem …

Evergreen clauses work to help lock people into contracts, because people become lax or forget the particulars of a contract. This is great, if you’re providing a business or service to your customers, and you want to lock them into your contracts. It’s not so great, if you’re a customer of someone else. Read more about evergreen clauses, what they are, and what to do about them.

It pays to know about evergreen clauses.

Law 4 Small Business

I’m proud to announce that I just kicked off a new law firm, called Law 4 Small Business (L4SB), which is focused exclusively on the needs of small and medium sized businesses in the State of New Mexico.

I created this law firm for several reasons. First and foremost, the law firm represents the last 15 years of my background, training and experience. It was a natural direction for me to go. Second and perhaps most importantly, I wanted to try something very different in the legal world. I wanted to create a law firm that actually had a brand. That provided outstanding customer service to its clients. That did business the way small business needs it to get done.

This second reason became an important goal of mine. In talking to a number of business leaders in New Mexico and elsewhere, I found the same reoccurring theme when discussing attorneys: Many attorneys don’t accept credit cards. They are difficult to get a hold of. They aren’t available when needed. It’s difficult to budget how much money you need to spend. And most hated of all, the dreaded “retainer fee,” which tells everyone “I don’t trust you.”

Another goal of mine, in forming L4SB, is to convince business leaders hire attorneys sooner. All too often, I’ve encountered the situation where business leaders or entrepreneurs will wait to hire an attorney until absolutely necessary. In other words, when they are being sued or they have found themselves painted into a corner they absolutely cannot get out of, without the help of a skilled attorney.

I seek to change this. I’m trying to convince people to hire attorneys early. The argument is not dissimilar to that you hear in medicine: “An ounce of prevention is worth a pound of cure,” and “An apple a day keeps the doctor away.” In the context of law, my argument is that most business people don’t have legal training, and therefore cannot predict the long-term consequences of their actions, especially as it pertains to contracts, agreements, intellectual property, legal strategy and general business and employment law. My hope is that I can convince business leaders, if made easy, affordable and predictable, to involve attorneys earlier in their decision-making process.

We’ll see if this holds true, but in the mean time, please check out L4SB, and tell me what you think. I can really use referrals, advice and suggestions.

Please follow me …

Debunking the Wayback Machine

The Internet Archive (www.archive.org) was founded in 1996 by Brewster Kahle, a search-engine whiz and dot-com multimillionaire at the time, with a dream: “He wanted to back up the Internet.” It quickly became the largest publicly accessible, privately funded digital archive in the world. At the same time of its founding, Mr. Kahle co-founded Alexa Internet in April 1996, which was sold to Amazon.com in 1999.

At the time of the founding of the Internet Archive, there were approximately 50 million or so unique URL’s. In July of 2007, Google claimed that it found approximately 1 trillion unique URL’s on the web, with every indication that growth will continue to explode. Over the years, the Internet has become a significant driver of commerce, increasingly the subject matter of litigation. The Wayback Machine has provided evidence, for plaintiffs and defendants alike, in litigation ever since; and has become a very important tool for attorneys and litigants.

The problem is, most attorneys (and even highly paid expert witnesses) don’t have enough technical experience to truly appreciate the limitations of the Wayback Machine, and often misuse or misinterpret the results of the Wayback Machine.

I was recently hired as an expert witness by a small Internet company, to help defend against a lawsuit from a major music publisher. The case looked absolutely hopeless, as this major music publisher spent an exorbitant sum on an expert witness, who appeared to have created a water-tight case against my client using information provided by the Wayback Machine.

As I read the report of the plaintiff’s expert witness, it became clear to me that the expert witness had absolutely no understanding of the limitations of the Wayback Machine, and as a result, completely misinterpreted the results. Within a few short weeks, I was able to completely discredit the expert witness, thereby undermining the plaintiff’s case (This case is still ongoing, and has not yet reached final disposition).

I am currently working on a paper, which I am calling “Debunking the Wayback Machine,” which will detail the advantages and disadvantages of using the Wayback Machine in litigation. This paper will discuss the technical issues, as well as provide easy-to-follow steps and guidelines on how to carefully examine and apply the results of the Wayback Machine for testimonial purposes. And, most importantly, how to discredit anyone that blindly relies on the results of the Wayback Machine to prove or disprove their case.

Consider the issues.

These limitations can have profound impacts on what is delivered from the Wayback Machine, and my paper discusses these impacts in depth. For your consideration, consider these two examples I have personally witnessed in the past year:

• In one example, the Wayback Machine has archived a particular website for years. When referencing that website from several years ago, the Wayback Machine contains all the web pages including a form. The form, however, references an actual script that sits on today’s website (i.e. the script, itself, is not backed up on the Wayback Machine). Therefore, when one accesses the form from the Wayback Machine, it gives the false impression that when you hit “submit,” you’re getting the results from several years ago. This is incorrect, because when you hit “submit,” the Wayback Machine sends the query to the existing website, therefor you’re getting today’s information. This is a difficult concept to grasp, and made all the more difficult in litigation, because most expert reports contain mere screen shots, when a careful examination of the underlying links, data and information provided by the Wayback Machine is needed to properly assess the accuracy and relevance of that information to the case at hand.
• In another example, the Wayback Machine had archived some, but not all, images of a particular website. When viewing a backed up website through the Wayback Machine, you see a complete web page but when you carefully examine the links, you find that not all the images represented have been backed up. A few of the images — and in this case, a very important image — continue to be referenced from the existing website. When you have anything coming from outside the Wayback Machine, it is not archived information. Thus, subject to changes and manipulation over time. In this case, the image in question was key to a case: It provided specific information about the company that a plaintiff attempted to use in litigation.

In conclusion, I believe it’s attorney malpractice to let the opposing side use the results from the Wayback Machine in litigation (or to influence settlement or the outcome of a case) without consulting with an expert who can carefully examine and scrub the results provide by the Wayback Machine.

Stay tuned for my paper. If you have any questions or are dealing with a matter that involves evidence provided from the Wayback Machine, please feel free to contact us at your earliest convenience.

Non-Compete Agreements: They Can Work

One of the biggest concerns I hear from many business owners, is the fear of key employees walking away with customers. I’ve talked with employees at many companies, and it’s clear: These people believe any client they work on is “their customer,” they are free to take “their customers” away from their employer, and they don’t believe non-compete agreements are enforceable.

I just cringe for these business owners, who have such individuals in their employ. Sure, they are busy, but make no mistake about it — they are working for themselves and there is zero loyalty — these employees will leave you in an instant if they think the grass is greener elsewhere.

Aside from being completely wrong on all accounts, these employees have little knowledge or respect for the difficulty and sheer effort it takes to open, run and successfully manage a profitable business. It’s the business owner that invests in marketing and signs the advertising contracts. It’s that same owner who doesn’t sleep at night, trying to figure out how to keep the lights on, the clients coming through the door and the paychecks issued. Client loyalty is key to the success — and long-term viability — of any business.

How can you prevent former employees from stealing your clients? The answer is, a well-crafted non-compete and non-solicitation agreement.

The laws vary from state-to-state, jurisdiction-to-jurisdiction. There are ways to write bad (i.e. unenforceable) agreements, and there are ways to write great (i.e. enforceable) agreements. The best way to obtain a great agreement, is to hire a local attorney familiar with such matters — the money you spend writing such an agreement will pay for itself in dividends.

Do you even have agreements in place with your employees? If not, you have no excuse! Start now!

Don’t give courts reasons to invalidate your agreement. Make it fair and reasonable. This means take ownership of what is yours — the client — and don’t unduly restrict your employees from being gainfully employed elsewhere. Avoid:

• Geographic restrictions - even limited ones can pose problems
• Blanket restrictions - everyone has a right to work, so don’t prohibit someone from earning a livelihood
• Unlimited restrictions - always reasonably time-bound the restriction (i.e. 1 year)
• Non-solicitation only - everyone tries to get around this, by creating the circumstances where “I didn’t solicit them, they called me!”
• Punitive damages - courts seldom award punitive damages, especially for employee contracts; so they just help to instill the belief that your non-solicitation agreement is egregious, unfair and unbalanced

Every good non-compete agreement should, at a minimum:

• Define Confidentiality and require employees to honor the confidential information of your business
• Define “Client” and “Client List,” and make it clear they are owned by company and are to remain Confidential and Trade Secret
• Indicate that employees (including “whether as an individual for its own account, or for or with any other person, firm, corporation, partnership, joint venture, association, or other entity whatsoever, which is or intends to be engaged in the same line of business as YOUR COMPANY, or in such other business competitive with YOUR COMPANY,”) may not solicit, interfere with, or entice away any clients (or employees) of your company, for a reasonable period of time (i.e. 1 year)
• Indicate that employees (with language above) after their employment ends at your company, may not service, or perform services for, any Client, for a reasonable period of time (i.e. 1 year)
• Require employees to acknowledge that the restrictions will not create an undue hardship, not prevent them from competing in an independent business, and agree they are subject to a restraining order and/or injunction if they violate the agreement
• Require “reasonable enforcement costs and expenses” to be paid by employee, if they violate the agreement
• Contain the standard clauses of severability, survival, waiver of breach and assignment

Note that if you are presented with employees who are bringing their own clients, and you want to acknowledge the clients they bring, my advice is to create an “attachment” that has the actual names of the clients you want to exclude from the agreement. The employee should specifically indicate who such individuals are.

If you have an employee who doesn’t want to sign such an agreement, then you have some interesting information: They intend to steal clients from you the minute the relationship doesn’t work for them. Do you really want such employees in your organization?