In my experience, a document’s level of detail should be driven by the nature of the business transaction and the parties’ relationship. I will give some examples both from in-house work and from my private practice that pertain to agreements with independent contractors.
Long and Detailed
When I was VP and Legal Counsel at Visa, I negotiated hundreds of contracts. Given that most were for IT products or services, a lot of money often was at stake, especially if a relationship was to continue for a period of years.
Accordingly, I prepared a series of detailed standard-form agreements – typically 15-20 pages – that served as a starting point. To minimize the amount of negotiation that would be required, the agreements were reasonably balanced, yet they, nevertheless, protected my client’s essential business and legal interests.
The agreements were long, but the length was justified by (a) the size of the deals and (b) the fact that each standard-form agreement would be used many times in the future, with minor revisions as required.
Client was one of two founders of a website. She provided content; Co-founder developed, maintained and promoted the site.
Client and Co-founder had been working together for three months when Co-founder presented a business agreement that had been prepared by his paralegal friend. Client asked that I review the agreement on her behalf.
I saw right away a problem that frequently arises in this situation: The parties were characterized as participating in a joint venture under which they would split earnings from the site. The problem arises because under California Corporations Code Section 16202(c)(3), subject to certain exceptions (see discussion below), “[a] person who receives a share of the profits of a business is presumed to be a partner in the business”. This is true even if the parties did not intend to form a partnership (Section 16202[a]).
I prepared a Proprietary Information and Invention Agreement (“PIIA”) to be signed by the employees of a small but established technology company in the Bay Area. The PIIA ensures that the company owns whatever employees create on the job, and it obligates employees not to disclose the company’s proprietary information to third parties.
The client pointed out, however, a conflict between the PIIA and the existing Employee Handbook: The PIIA states that any dispute will be resolved in state or federal court in San Francisco, but the Handbook states that all employment disputes will be subject to arbitration. The client asked me how this conflict should be resolved. Read more…
Some companies force employees to sign proprietary rights agreements under which the employee automatically assigns to the company any patent applications that the employee files within one year of separation from the company. I have always considered these provisions unjustifiable. California law apparently has reached the same conclusion.
In Applied Materials, Inc. v. Advanced Micro-Fabrication Equipment (Shanghai) Co., et al., case number 07-cv-05248, the U.S. District Court for the Northern District of California held that such a provision is unlawful under California Business and Professions Code Sections 16600 (which pertains to restraints on engaging in a lawful profession, trade, or business) and 17200 (which pertains to unfair competition).
Prudent California employers now should make sure that any post-employment provisions in proprietary rights agreements:
Do not include automatic assignment of any post-employment inventions
Limit provisions concerning post-employment inventions to those inventions that were conceived during the employment period based on the employer’s confidential information
This blog does not provide legal advice and does not create an attorney-client relationship. If you need legal advice, please contact an attorney directly.
Today I made a lunchtime presentation to the East Bay MashEx in Pleasanton.
I am pleased to make the Top Ten IP Mistakes of Small to Mid-size Tech Companieshandout available as a Free Download using the Sign Up button in the sidebar.
This blog does not provide legal advice and does not create an attorney-client relationship. If you need legal advice, please contact an attorney directly.
Today a client received an e-mail bounce-back from Spam Arrest, which provides a challenge-response system to stop automated junk mail. The first time a sender sends e-mail to a protected recipient, the sender must follow a link in the bounce-back message to a web page where, following user entry of a one-time verification code, the sender is identified as a legitimate e-mail sender.
During the past several years I have gone through the Spam Arrest verification process a few times and never thought much of it. But when I followed the link in the client’s e-mail, I saw something that, to the best of my knowledge, I had never seen before: the Sender Agreement reproduced toward the end of this post.
Facebook recently began allowing users to name the URLs for their pages. For example, my Facebook page is at www.facebook.com/danashultz. The option to choose a URL appears as soon as the user logs in.
(Not surprisingly, Facebook’s servers appear to be overworked at this time. The first two times I tried to reserve my URL, I was hung up on a “Loading….” message. The third time worked.)
It is easy to anticipate, however, that trademark infringement and cybersquatting will run rampant. If you believe that another Facebook user has chosen a URL that infringes upon your trademark, you can submit a Notice of Intellectual Property Infringement (Non-Copyright Claim).
Dana H. Shultz, Attorney at Law +1 510 547-0545 dana [at] danashultz [dot] com
This blog does not provide legal advice and does not create an attorney-client relationship. If you need legal advice, please contact a lawyer directly.
Corporations have existed for centuries. One way they promote economic activity is by allowing stockholders to limit their personal liability for corporate debts to the amount of their individual investments in the corporation (“limited personal liability”).
Consequently, entrepreneurs often form new corporations to run their new businesses. But they should be careful – sometimes courts ignore the corporate entity and hold an entrepreneur liable for all of the corporation’s debts!
This result often is called “piercing the corporate veil“. It also is referred to as the “alter ego” doctrine, on the theory that the corporation merely was the alter ego of the entrepreneur.
A couple of years ago, at the State Bar of California’s Section Education Institute, I delivered a one-hour program titled “What Every Business Lawyer Needs to Know about Licensing”. The target audience was attorneys who work with businesses but are not particularly familiar with intellectual property or licensing issues.
Have you ever wanted a list of what you need to do, once a corporation is formed, to comply with the various legal requirements that confront businesses nowadays? This post may help you.
I am pleased to offer, as a Free Download using the Sign Up button in the sidebar, the 10-page document on Postincorporation Matters that I provide to clients once I form their corporations. It addresses such issues as maintaining the separate existence of the corporate entity; conducting annual meetings of shareholders and the board of directors; payment of taxes; personnel hiring and terminations;and intellectual property issues; and much more.
This blog does not provide legal advice and does not create an attorney-client relationship. If you need legal advice, please contact an attorney directly.
Dana Shultz is a business-savvy lawyer located in Northern California's San Francisco Bay Area (in the East Bay, near Oakland) who has in-depth knowledge of law, business, technology, and the needs of startup and early-stage companies.
For more information about Dana and his services, please go to the About Dana Shultz page and the Services page.
+1 510 547-0545
dana [at] danashultz [dot] com
Skype: dana.h.shultz
This blog does not constitute legal advice and does not establish an attorney-client relationship. If you need legal advice, please contact a lawyer directly.
Dana Shultz is a business-savvy lawyer located in Northern California's San Francisco Bay Area (in the East Bay, near Oakland) who has in-depth knowledge of law, business, technology, and the needs of startup and early-stage companies.