Forming a Business Entity… Which Entity is Right for Your Small Business or Start-up?

April 9th, 2014

By Daniel Richardson

One of the most common questions I am asked by owners of small businesses and start-ups is whether they should form a business entity, such as a corporation or limited liability company (LLC), and, if so, which is best for them. This is a vital question for any business.

Limited liability is one of the main reasons businesses establish themselves as entities. Essentially limited liability protects the owners of the company from having any personal liability for the debts and obligations of the business other than contributions already made to the business. In other words, the owners of the business cannot be held liable if the business is sued.

Understandably, most business owners want limited liability. There are, however, many other factors to consider. These factors include tax considerations, how ownerships interests can be divided and transferred, and whether the business anticipates venture capital investments.

By Carsten Tolkmit from Kiel, Germany (crossroads) [CC-BY-SA-2.0 (], via Wikimedia Commons

Frequently, business owners want to form their business as a specific entity, say, a corporation, when another type of entity would be a better fit for the business. This article will give an overview of the three most common entity types, Corporations, S-Corporations, and limited liability companies that provide limited liability and address some of the questions that should be asked when deciding which business entity would be the best fit for your business. Read the rest of this entry »

Copyright Trolls? Or an Innovative Business Model by Getty Images?

April 8th, 2014

Getty Images 1By Sharon Adams

Certain large companies, including Getty Images, routinely send out demand letters claiming copyright infringement.  However, the actual validity of alleged infringement is rarely, if ever, tested in court.  Getty Images seems to have perfected the “price point” for extracting money based on weak claims of copyright infringement.

Getty Images is a private company, founded by Mark Getty, son of the American-British billionaire philanthropist Sir John Paul Getty, Jr.

Getty Images purports to be providing images as a sort of public service, stating on its website that:  “Easy, legal access to historic and contemporary content empowers our customers, contributors and nonprofits.”

Read the rest of this entry »

Professor Gets Schooled

April 7th, 2014

Watch this video.

Priceless. Better than getting a Jamba Juice if a student’s phone goes off in class.

Shallow Pockets

April 1st, 2014

By Andrew Jacobson

The first question plaintiff lawyers ask when a new lawsuit comes their way is “where are the deep pockets?” Suing the villain is fine, but winning only gets a piece of paper called a judgment. You need to sue and beat someone with money to pay for a judgment – deep pockets. Sometimes, when the villain is bad (and poor) enough, there are no deep pockets. Sara Montague found out the hard way earlier this year when the California 4th Appellate District denied her appeal against her poisoner’s employer. Read the rest of this entry »

Scam Alert — Court “Notice of Appearance”

March 28th, 2014

From Wikimedia Commons, the free media repository

If you receive a “court notice” via email, don’t open it — it is a scam designed to add to your computer malware designed to get you to give over control of your computer to somebody else.  We started receiving these a few weeks ago, but it may only just have started getting past your spam filters.

Most courts are still pleasantly 19th century — they require that you either be personally served with the starting documents of a case (a summons), or if a case has already begun, they provide you with mailed notice, or in the case of federal cases, you or your lawyer have to sign up for electronic case filing . Courts cannot give first notice via email.

If you were unlucky enough to have been duped, run an up-to-date malware removal tool on your computer. Malware is different from a computer virus, so your anti-virus software may not catch malware. A lot of good malware removal tools s are free, such as Malwarebytes or Microsoft’s free malware removal tool.

Star-Struck, or Struck Dumb?

February 12th, 2014

Comedian Nathan Fielder has been revealed as the brains behind the “Dumb Starbucks” shop that popped up without fanfare (or a health permit) on a Friday afternoon. It disappeared the next Monday. While the joke seemed to be on the people who waited in line for three hours for bad coffee and Vons-bought pastries, comedian Fielder claimed it was a performance-art parody of Starbucks, and thus was protected by the fair use exception under the US copyright laws.

Mr. Fiedler is, technically, incorrect – fair use is a defense for fairly using someone else’s copyrighted expression, but he is “using” Starbucks’ trademarks to make his point. There is no explicit fair use exception in trademark law, as there is under copyright law. However, there are plenty of trademark cases that show that a parody use of someone else’s trademark does not violate the law. Read the rest of this entry »

Obama’s One Sentence on Patent Reform –

February 7th, 2014

By Sharon Adams


After Passing the Most Sweeping Patent Law Reform in DecadesPresident Obama’s State Of the Union speech briefly mentioned patent law.

Obama State of the Union

“And let’s pass a patent reform bill that allows our businesses to stay focused on innovation, not costly and needless litigation.”

 This single sentence appeared to be dropped into the middle of his speech, and was somewhat confusing given that in 2011 a new “patent reform” bill was passed by Congress, and signed into law by Obama.   This relatively new legislation is also known as the “America Invents Act” or AIA.  According to Obama, this legislation was designed to “encourage the entrepreneurial spirit wherever we find it” and that this legislation “cuts away the red tape that slows down our inventors and entrepreneurs.” Read the rest of this entry »

Crowdfunding Your Business – An Intro to Title III of the JOBS Act

January 24th, 2014

By Daniel Richardson

On April 5, 2012, the Jumpstart Our Business Startups Act (JOBS Act) became law. The JOBS Act seeks to “increase job creation and economic growth by improving access to the public capital markets for emerging growth companies.”[1] Title III of the JOBS Act or the “Capital Raising Online While Deterring Fraud and Unethical Non-Disclosure Act of 2012” addresses modifications to the Securities Act of 1933 (“Securities Act”) and the Securities Exchange Act of 1934 (“Exchange Act”) to permit securities-based crowdfunding.

Flying moneyCrowdfunding is a method of raising funds through the Internet for a variety of projects ranging from innovative new products to artistic endeavors such as books or movies. Popular crowdfunding sites include Kickstarter, Indiegogo, and RocketHub. Crowdfunding, however, currently can not be used in the U.S. to raise money by selling ownership interests in a business, since securities that are not publicly traded or registered with the SEC must fall under one of the exemptions listed under Section 4 of the Securities Act.[2] Title III of the JOBS Act added Section 4(a)(6) to the Securities Act, providing an exemption for businesses to raise money by offering an ownership interest in their business via crowdfunding.

Read the rest of this entry »

Earned Income Tax Credit Notice

January 8th, 2014

California employers, take note: you are required to give notice to all your employees about the earned income tax credit at about the time you give them their W-2 or 1099 forms. If you have individuals who are independent contractors, give them notice as well.
Here is the recommended language, which you can print on a sheet that goes with the W-2s or 1099s, or a company-wide email:


“Based on your annual earnings, you may be eligible to receive the earned income tax credit from the federal government. The earned income tax credit is a refundable federal income tax credit for low-income working individuals and families. The earned income tax credit has no effect on certain welfare benefits. In most cases, earned income tax credit payments will not be used to determine eligibility for Medicaid, supplemental security income, food stamps, low-income housing or most temporary assistance for needy families payments. Even if you do not owe federal taxes, you must file a tax return to receive the earned income tax credit. Be sure to fill out the earned income tax credit form in the federal income tax return booklet. For information regarding your eligibility to receive the earned income tax credit, including information on how to obtain the IRS Notice 797 or any other necessary forms and instructions, contact the Internal Revenue Service at 1-800-829-3676 or through its Web site at”

If you want more information, go to the California Employment Development Department webpage.

Towersquatting (and Contributory Cybersquatting)

January 7th, 2014

Photo Author: Andy Mitchell, ©2009, Creative Commons Attribution-ShareAlike 2.0 Generic License, courtesy of Wikipedia Commons,

Petronas Towers


The cybersquatter is a parasite that benefits from an internet user’s confusion who thinks that they are accessing a popular website, when they really get something else. The US banned cybersquatting in 1999′s Anticybersquatting Consumer Protection Act (“ACPA”) and is codified at 15 U.S.C. § 1125(d).

Malaysia’s oil company, Petronas, discovered a cybersquatter who used the name of Petronas’ iconic twin towers in a domain name that forwarded to more adult-oriented fare. Petronas quickly demanded that the registrar for the cybersquatting domain name, Go Daddy, take down the “petronastower” website because Go Daddy was allegedly infringing upon Petronas’ mark. However, the website that Go Daddy hosted (but did not create) did not have any infringing content; only the domain name was infringing, and domain name disputes are subject to the Uniform Domain Name Dispute Resolution Policy (“UDRP”), an internet-wide policy required by the body that runs the internet, ICANN. While Petronas wanted Go Daddy to immediately shut down the cybersquatter, under UDRP rules, Go Daddy could not do so until it receives orders to do so from UDRP arbitration or a local court. Read the rest of this entry »