Ten Issues to Consider in Your Company’s Social Media Presence

Businessman with social media concepts

  1. Trademark, Cybersquatting or Impersonation-

Social Media sites do very little to prevent anyone from adopting usernames and using trademarks that belong to someone else. They can misdirect traffic from your customers and create confusion. Trademark owner bears the responsibility of monitoring these sites.

  1. Trademark Infringement is Rampant in Social Media-

 

Bloggers, video posters and chat room participants frequently use trademarks without licenses. These individuals believe they are just chatting and do not realize they are infringing. Enforcement of this is almost impossible because of the sheer volume of infringement and the speed at which the infringement can spread.

 

  1. Unsolicited Ideas and Brand Damage-

 

With social media posts in the hands of the consumers, they are impossible to control. The company needs to actively monitor the posts for intellectual property infringement.

 

  1. No Back Up of Intellectual Property-

Often social media sites have terms and Conditions of Service that allow them to shut down at any time, without notice to the account holder. Failure to back up the company’s posts and blogs may result in a loss of intellectual property.

  1. User Generated Content-

 

This is material generate by the public and uploaded to a company’s site. This is a very important piece to social media because it creates the interaction between the company and their customers. The company should have posted policies to prevent the submission of material that are copyrighted.

 

  1. Are Tweets protected by Copyright?-

 

The answer to this is generally, No. The company needs to decide if it is valuable to them to make their thoughts available to the general public in a format that may not be protected by copyright.

 

  1. Unauthorized Disclosure of Trade Secrets by Employees-

 

This is a risk a company takes when they do not have appropriate internal policies in place regarding sharing confidential information or trade secrets through their social media sites.

  1. International Laws govern Social Media-

Users and reach of social media are international. Companies who are looking to protect their trademarks have to try and keep up with monitoring them globally. This is a huge undertaking.

 

  1. Ownership of the Social Media Account-

Frequently a company will ask an employee to set up and manage their social media site. Who owns the account? Companies should consider clearly addressing the ownership of company social media accounts in agreements with their employees, such as employee proprietary information and invention assignment agreements. Agreements like this should state, in part, that all social media accounts that employees register or manage as part of their job duties or using company resources – including all associated account names and handles, pages, profiles, followers and content – are the property of the company, and that all login information and passwords for such accounts are both the property and the confidential information of the company and must be returned to the company upon termination or at any other time upon the company’s request.

  1. Ownership of the Followers-

If an employee is asked to manage a site they essentially become the “voice” of the company and his or her style and personality may be essential to the success of that site. As a result, the lines between “brand” of the company and the “brand” of the individual may become blurred. And when the company and the individual part ways it can create issues regarding the ownership of the related social media accounts and followers.

 

 

 

 

 

 

 

 

CHARGING ORDER PROTECTION

iStock_000028924588Small (1)

The protection of assets is generally one of the biggest reasons to form a legal entity. Specifically, the protection of business assets from an owner’s personal liabilities is critical to a business’ continuing success. In many states, a personal creditor may charge a stockholder’s stock with payment of a judgment. Such a remedy could result in the forced liquidation of a viable business to satisfy an owner’s personal debt to the detriment of other owners.

 

In Nevada, charging order protection is extended to partnerships, limited liability companies and corporations. What this means is that a personal creditor’s only remedy against an owner’s stock is a charging order and, as a result, that creditor must wait for distributions from that entity to satisfy any judgment. The creditor cannot force distributions from the entity, nor can the creditor exercise any control over the entity; thereby allowing the business to continue operations despite the creditor’s claim.

 

LLCs and Partnerships

 

Nevada has long recognized charging order protection for limited liability companies and partnerships, but there has always been a question as to whether that protection extended to single-member LLCs. The case law leaves some doubt and more recent decisions appeared to be chipping away at a member’s ability to protect its membership interest if the LLC was a single-member LLC.

 

To remedy this, in 2011 the Nevada legislature addressed this issue and provided that “the exclusive remedy by which the judgment creditor of a member or an assignee of a member may satisfy a judgment out of a member’s interest of the judgment debtor, whether the limited liability company has one member or more than one member.”

 

Corporations

 

Nevada was the first state to provide charging order protection to certain corporations under NRS 78.746. This provision provides the exclusive remedy available to a judgment creditor from a stockholder’s stock. The judgment creditor is only provided the rights of an assignee of the stock and has no rights to management or control of the corporation, provided that the corporation meets the following requirements:

 

  • Has less than 100 stockholders of record, at any time;
  • Is not a subsidiary of a publicly traded corporation or subsidiary of the same; and
  • Is not a professional corporation

 

These restrictions closely mirror the IRS limitations for s-corporations and include most small businesses.

 

Conclusion

 

The expansion of these rights to these types of entities helps to continue Nevada’s business friendly reputation. However, it is unclear when and if other states will follow suit with similar legislation, which leaves the answer unclear as to whether this law will be respected outside of Nevada.

Ten Issues to Consider in Your Company’s Social Media Presence

  1. Businessman with social media concepts

 

 

 

  1. Trademark, Cybersquatting or Impersonation-

Social Media sites do very little to prevent anyone from adopting usernames and using trademarks that belong to someone else. They can misdirect traffic from your customers and create confusion. Trademark owner bears the responsibility of monitoring these sites.

  1. Trademark Infringement is Rampant in Social Media-

Bloggers, video posters and chat room participants frequently use trademarks without licenses. These individuals believe they are just chatting and do not realize they are infringing. Enforcement of this is almost impossible because of the sheer volume of infringement and the speed at which the infringement can spread.

  1. Unsolicited Ideas and Brand Damage-

With social media posts in the hands of the consumers, they are impossible to control. The company needs to actively monitor the posts for intellectual property infringement.

  1. No Back Up of Intellectual Property-

Often social media sites have terms and Conditions of Service that allow them to shut down at any time, without notice to the account holder. Failure to back up the company’s posts and blogs may result in a loss of intellectual property.

  1. User Generated Content-

This is material generate by the public and uploaded to a company’s site. This is a very important piece to social media because it creates the interaction between the company and their customers. The company should have posted policies to prevent the submission of material that are copyrighted.

  1. Are Tweets protected by Copyright?-

The answer to this is generally, No. The company needs to decide if it is valuable to them to make their thoughts available to the general public in a format that may not be protected by copyright.

  1. Unauthorized Disclosure of Trade Secrets by Employees-

This is a risk a company takes when they do not have appropriate internal policies in place regarding sharing confidential information or trade secrets through their social media sites.

  1. International Laws govern Social Media-

Users and reach of social media are international. Companies who are looking to protect their trademarks have to try and keep up with monitoring them globally. This is a huge undertaking.

  1. Ownership of the Social Media Account-

Frequently a company will ask an employee to set up and manage their social media site. Who owns the account? Companies should consider clearly addressing the ownership of company social media accounts in agreements with their employees, such as employee proprietary information and invention assignment agreements. Agreements like this should state, in part, that all social media accounts that employees register or manage as part of their job duties or using company resources – including all associated account names and handles, pages, profiles, followers and content – are the property of the company, and that all login information and passwords for such accounts are both the property and the confidential information of the company and must be returned to the company upon termination or at any other time upon the company’s request.

10.  Ownership of the Followers-

If an employee is asked to manage a site they essentially become the “voice” of the company and his or her style and personality may be essential to the success of that site. As a result, the lines between “brand” of the company and the “brand” of the individual may become blurred. And when the company and the individual part ways it can create issues regarding the ownership of the related social media accounts and followers.

Virtual World: Your Trademark and Social Media

global connectivityBenefits of Using Social Media
When you use a social media site, you are no longer the only brand builder. By engaging with consumers on social media sites, you will change the brand either positively and negatively. In general, brand recognition tends to be amplified on social media. Here are some benefits of building your brand through social media:
• Maximizes brand exposure: Trademarks that have secondary meaning associated with them have the strongest protection because consumers clearly perceive the brand as a source indicator. Social media can expedite secondary meaning acquisition.
• Lower marketing costs: The effectiveness of social media campaigns can render other forms of media moot, reducing your marketing costs.
• Search engine optimization: The more popular you are on social media sites, the more prominent your search results online. Notoriety in one online site may serve as a catalyst to increase your popularity in others.
• Humanizes the company: While your brand may present your professional image, your social media site can have an entire persona that humanizes you in the eyes of your consumers. Consistent interaction with your audience can build a loyal following.
• Consumer feedback: You can conduct market research on social media sites to modify your products to better fit consumer needs.
• Business networking: You also have the choice of interacting with other businesses to build your professional image.
Relationship with Social Media Platform
Social media platform agreements are non-negotiable, unilateral contracts that give the social media sites broad rights over your trademark. While social media sites do not necessarily benefit from repelling businesses from exercising its full contractual rights, understanding and adapting to agreement is important. Consider the following aspects of your relationship with the social media site:
• Use of your trademark: Social media sites often allow other users to interact with your posts. For example, Youtube allows users to use, reproduce, distribute, display and perform your uploads and Twitter allows users to use, reproduce, and create derivative works from your uploads. You no longer have exclusive rights to your work on that site, which limits quality control of your brand online.
• Licensing issues: Social media sites are international but you may have a territorial restriction on your use of the trademark through a license. Social media postings may conflict with third party trademark licensing agreements.
• Indemnification: You often have to promise social media sites an arm and a leg to compensate them for any injury you might cause. Know what you are promising before using these sites.
• Unlimited amendments with little or no notice: You promise to allow social media sites to change their policies and procedures at any point for any reason. This change may come with little or no notice to you, but you still have an obligation to abide by these new changes. While social media sites will probably not abuse this right or risk losing business interests, you still need to monitor these changes and respond accordingly.
Relationship with Users
• Inadvertent infringers: In some ways the inadvertent infringers are harder to manage than intentional infringers. There are many fans of your trademark who may not understand the legal ramifications of the improper use of your trademark. You want to maintain a positive relationship and continue to build rapport with your consumers while protecting your trademark rights. For example, two fans of Coca-Cola started a Facebook fan site without the company’s knowledge and accumulated millions of fans; it became one of the most popular sites on Facebook. As the company did not start the page, they had no control over the content or trademark use. Instead of sending a cease and desist, Coca-Cola contacted the fans that started the site and partnered with them to manage the page. It is important to educate your consumers and communicate with them to ensure the proper use of your trademark on social media sites.
• Cyber squatters: Even if you choose not to form a business page for your social media site, you must still monitor these sites for infringers. Imposters may use your business name for their own purposes online and social media sites do not necessarily filter out all imposters. Cyber squatters can do significant damage to your reputation and consumer good will in a relatively short amount of time. You should report such abuse to the social media site or send cease and desist letters to enforce your rights.
Social media can be a great tool for growing your business, but it can also harm it. Connect your trademark lawyer with your social media and marketing staff to ensure that your business is protected.

WHEN WILL YOU NEED TO USE A POWER OF ATTORNEY?

Golden scales of justice on a white background

 

The power of attorney allows you to grant your authority (as the principle) to perform certain tasks to another (the agent). You may grant a general power of attorney that In Nevada, a general power of attorney allows your agent to manage…

 

  • real estate
  • personal property
  • investments
  • financial matters
  • businesses
  • insurance
  • trusts
  • legal claims and litigation
  • personal and family maintenance
  • government benefits
  • retirement plans
  • taxes
  • gifts

In Nevada a power of attorney that does not specify a termination date continues after the principle becomes incapacitated.

An individual may desire to be more limited in the powers that are granted and can do so with a specific power of attorney. Some examples include:

 

  • The power of attorney for the performance of mundane tasks in your stead such as representing you at the DMV, paying utilities, managing your insurance, etc.
  • The power of attorney for limited performance of financial (or other) decisions, which can also be for a limited time frame (such as an extended vacation). This power of attorney may be revoked at any time or for any reason, making it useful for temporary use.
  • The power of attorney which grants powers after a specific event or circumstance has occurred, such as incapacitation. This power of attorney along with an advanced health directive or living will gives you the ability to determine how medical decisions are made on your behalf. When choosing an agent for health care decisions, be sure the person is trustworthy and decisive and will carry out your directions even while in emotional turmoil.
  • The grant of a power of attorney in connection with a will or trust to ensure that your family and business are protected the way you intended.

 

If you think you may need a Power of Attorney, please contact Drinkwater Law Offices.

Series LLC

Housing InvestmentWhat is a series LLC?

A Limited Liability Company is a legal entity formed with the purpose of shielding the owner(s) from liabilities relating to the business. A series LLC groups numerous LLCs into different internal series under one parent LLC. Each series may have its own distinct business ventures and members and is shielded from liability from the other series.

Who may benefit from a series LLC?

In general, business ventures that generate passive income (income that does not come from an active role in the business) can benefit from being a LLC.   LLCs, for example, are great for real estate investment. Those who have or plan to have multiple LLCs to limit liability between different investments may benefit from a series LLC. A series LLC would allow an investor or business owner to combine all LLC filings under one parent LLC, which can greatly reduce administrative costs. Owners have the flexibility to place multiple types of business ventures under this one legal entity, while limiting liability between each venture. If one series in such an LLC is ever in a lawsuit, Nevada courts will recognize that each series has limited liability with respect to the other series. It is, however, unclear whether courts in states that do not recognize series LLCs would respect the series.

Potential disadvantages?

Start-Up and Tax Issues: While a series LLC has greater long term administrative cost reductions, it may cost more in the short term because of higher start-up fees. In addition, some CPAs are not familiar with the relatively new series LLC and may not understand its tax implications.

Bankruptcy: It is unclear under federal law if a series LLC would be treated as an individual with the right to file for bankruptcy independently. The principle of substantive consolidation may also be a later issue in litigation. Under Section 105 of the bankruptcy code, Judges have the ability to combine assets from distinct legal entities of the same owner to pay debtors.

Complexity: As a series LLC may have distinct interested parties in each LLC with different business ventures, careful structuring of the series is essential.

For a properly formed series LLC please visit Drinkwater Law Offices.

Commercial Lease Information

Commercial Lease Entering into a commercial lease is one of the first steps entrepreneurs take when opening a new business or a new location. The lease process involves many important decisions, not only assessing the viability of the physical location, but also the provisions contained in the lease document. It is important to remember that not all leases are created equal. In fact, many provisions in a lease may appear harmless, but can have significant ramifications to your business and its operations.

Term and Renewal Periods

For a new business, a shorter initial term with several optional periods for renewal provides the most flexibility. Not only does a shorter initial term limit the exposure if the new business does not do as well as planned, but it can also provide flexibility to the new business if it is so successful that the premises is no longer functional for its operations. Further, renewal terms should always establish a future lease rate. Failure to establish a method to calculate future increases can result in disagreements when the initial term expires.

Use and Exclusivity

The use provision should clearly identify all of the expected business activities, while at the same time, not limit future expansion. This provision does not ensure that zoning and other laws allow for the businesses use. It is the tenant’s responsibility to check into these items before the lease is executed. In addition, the Landlord should provide an exclusivity clause which protects against the leasing of space to another tenant who would directly compete against the business. This provides protection of the customer base and also protects your Landlord against vacancies from business failures that such direct competition may cause.

Personal Guarantees

Personal guarantees are generally standard for new business leases. These guarantees make the guarantor personally liable for the lease in the event that the business is not able to meet the obligations of the lease.

Maintenance and Repair

The lease should always clearly identify the parties responsible for maintenance and repairs. Generally in multi-tenant locations, the tenant is responsible for the maintenance and repair of the interior of the premises and the landlord is responsible for the outside and common areas, including all structural components. Additionally, the tenant generally has to return the premises to the condition it was in at the beginning of the lease term, excluding normal wear and tear.

These are only a few of the items to be aware of in any lease. The most important thing to remember is that nothing is a substitute to having an experienced attorney review your lease.

New Procedures For Nevada Business Registration

NV Secratary of StateIf you are in business or thinking about starting a business in Nevada, there has been a change in the way that your business should obtain its Nevada Business Registration (the “License”). With a few minor exceptions, this License is required of every person or entity doing business in Nevada. This means anyone who performs services or engages in a trade for profit or if you have a legal entity with the State.

Effective October 1, 2009, State Licenses began to be issued out of the Nevada Secretary of State Office rather than the Department of Taxation where you previously filed for the License. As part of this change, the Secretary of State’s office will require that all businesses file for their annual State License in conjunction with the filing of the Annual List.

What if you should have a License, but never got one?

If your initial list is due soon (before the end of the year), you can simply apply for the License when you file your initial list with the Secretary of State. However, if your list is not due soon (say before the end of the year), you should submit a Gap Business License Application as soon as possible to avoid late penalties for failure to obtain a License. Thereafter, your License will be due when your annual list is due.

What if you have a License but it expires before your annual list is due?

You should submit a Gap Business License Application as soon as possible (preferably before the expiration date) to avoid late penalties for failure to obtain a License. Thereafter, your License will be renewed when you file your annual list.

What if you have a License, but it expires after your list is due?

Simply file your list when it is due and submit for your License renewal at the same time (even though it has not expired). You will pay a prorated fee for the balance of the year and, next year, your License will expire at the same time that your annual list is due.

To find more information and the appropriate forms, visit the Nevada Secretary of State’s website at http://nvsos.gov.

Data Collectors Safe Harbor

Data CollectorsA SAFE HARBOR FOR “DATA COLLECTORS” IF A DATA BREACH OCCURS

On the heels of ineffective data breach notification laws, Senate bill 227, a more proactive approach, offers a safe harbor to businesses that collect personal information if a data breach occurs. Some important definitions apply:

Are you a “data collector?”

A “data collector” is defined in Nevada Revised Statute 603A as “any governmental agency, institution of higher education, corporation, financial institution or retail operator or any other type of business entity or association that, for any purpose, whether by automated collection or otherwise, handles, collects, disseminates or otherwise deals with nonpublic personal information.”

If you collect data, what constitutes “personal information?”

Personal Information is defined as a natural person’s first name or first initial and last name in combination with a (i) social security number (ii) driver’s license number or identification card number, or (iii) account number, credit card number or debit card number, in combination with any required security code, access code or password that would permit access to the person’s financial account.

So, if I am a data collector, what do I need to do to get the safe harbor?

Effective January 1, 2010, you will need to encrypt personal information that is either transmitted electronically or contained in a data storage device that has moved beyond the data collector’s control (e.g. on a laptop computer). There are specific requirements contained in the statute! If you do encrypt the data, you, as a business owner, will avoid liability if that encrypted data is lost or improperly accessed! In addition, it is possible that courts will take the encryption requirement into account in determining what constitutes negligent conduct associated with data breaches. Companies that follow the statutes may even be eligible for reductions on their insurance. All of these are good reasons to check out SB 227 in the 2009 session information on the Nevada Legislature website at www.leg.state.nv.us or at http://www.leg.state.nv.us/75th2009/Bills/SB/SB227_EN.pdf

Levels Of Trademark Protection

Trademark Protection Blog PostA trademark is a word, symbol or phrase used to identify a company or individual’s products or services and to distinguish them from the products or services of another. There are different levels of trademark protection, and rights can be acquired in one of three ways: (1) common law trademark rights, which require that the user be the first to use the mark in commerce; (2) state trademark rights, which require registration with a specific state; and (3) federal trademark rights, which require registration with the U.S. Patent & Trademark Office.

Common Law Trademark Rights

This is the lowest level of protection and simply requires the use of your trademark in commerce. Once a business uses a trademark in connection with its goods or services, the business acquires priority to use that mark in connection with those specific goods and services assuming no other trademark owner has superior rights. However, the priority to use that mark is limited to the geographic area the mark is actually used in and a limited zone of expansion. This right would provide the business the right to stop any infringing use of the mark within the business’ geographic area, but would not give the business the right to stop someone from using the trademark anywhere else and also would not prevent someone else from filing a federal registration for that same mark, effectively limiting the first users’ expansion into any new areas.

State Trademark Rights

The second way to obtain protection is to file for a trademark registration within the state in which the business is using the mark. This registration would provide protection only within the state of registration assuming no other trademark owner has superior rights. This registration would not limit another business’ ability to obtain a federal registration, again, effectively limiting the ability to expand into new markets outside of the state of registration.

Federal Trademark Rights

This is the highest level of protection for trademarks in the United States. These rights require registration with the U.S. Patent & Trademark Office. Once registered, the business would have the right to use the mark nationwide, except to the extent that the mark is utilized by a third party with previously established rights. In addition to the right to use the mark nationwide, federal registration provides several other benefits, including: (i) the right to bring an infringement lawsuit in federal court; (ii) the mark becoming “incontestable” after five years of use after registration; and (iii) potential recovery of treble damages, attorneys’ fees and other remedies for infringement.

There is no way to fully protect a business’ trademark and its future expansion without obtaining a federal trademark registration. Businesses that rely on common law rights often find that the expansion into other geographic areas is limited by later in time trademark use and/or registrations. Registering your trademark federally ensures that all the costs and expense of building a business’ trademark is not wasted and helps you to build a valuable asset for your business.