Top 5 questions asked by entrepreneurs

Over the last 20 years I have worked with many technology companies and entrepreneurs in the Chicagoland area. For a time, I also ran the start up and entrepreneurial ventures subcommittee of the Chicago Bar Association.

The entrepreneur panels are always the best attended and also seem to have the liveliest discussions.

Drawing on those experience is it, here are five of the most common questions asked by entrepreneurs.
  1. What is the best legal structure for my business?
  2. How do I protect my idea?
  3. What kind of contracts do I need?
  4. Should I use employees or independent contractors?
  5. Who else should be on my professional team?

Ordinarily one would tackle these in order. However, because the answer to #2 will inform the discussion around #1, it makes sense to address this first.

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Failure to Mind Corporate Details Leads to Loss of Copyright, Infringement Lawsuit

The case of Clarity Software, LLC v. Financial Independence Group, LLC is a great example the serious, negative consequences to intellectual property ownership when business owners and legal counsel fail to ensure that tasks are completed.

The short version is that the creator of computer software, Vincent Heck, sold the copyright in his software to settle a debt to a creditor, Eric Wallace, who intended to form Clarity Software, LLC to own and distribute the software. The lawsuit was for infringement of the copyright in the software.

As they say, “the devil is in the details.” In this case, the detail that became a devil, and ultimately prevented Wallace from enforcing a copyright in the software, was the fact that Clarity Software, LLC was never properly formed and therefore lacked standing to sue for infringement.

Forgive me for employing yet another trite phrase, but “truth is often stranger than fiction.” The Defendant proved that a veritable comedy of errors had occurred resulting in no record of the formation, including 1) the Department of State of Pennsylvania losing the certificate of organization, along with all records of the submission and filing of the certificate of organization, 2) the Plaintiff’s bank (PNC Bank) losing its copy certificate of organization provided when Wallace opened a bank account (even though PNC Bank still had the signature card completed when the account was opened), and 3) Wallace, himself a former President of the Pennsylvania Institute of Certified Public Accountants, losing his copy of the certificate of organization and all records of his communications with his attorney.

Defendant successfully moved for summary judgment based on its argument that Plaintiff did not own the copyright at issue in the litigation since it was not properly organized as a Pennsylvania limited liability company and never acquired valid ownership of the copyright.

Hat tip to Pamela Chestek and her blog, Property Intangible, where she first wrote about this case October 13, 2014. The opinion and order can be found here: Clarity Software, LLC v. Financial Independence Group, LLC, No. 2:12-cv-1609-MRH (W.D. Pa. Sept. 30, 2014).

To find out more about how the Adler Law Group can help your business identify risk and issues related to intellectual property ownership, corporation or LLC formation, or just assess risk associated with your business, contact us for a free, no-obligation consultation by emailing David @ adler-law.com, visiting out web site www.adler-law.com, or calling toll free to (866) 734-2568..

In U.S. Regulators, Legislators Fill Privacy Void

Over the last few years privacy, and the lack of comprehensive protection, have made numerous headlines. From overly inquisitive mobile applications that fail to disclose how cell photo data is accessed and shared (Path) to handset manufacturers failures to properly inculcate privacy in the design and manufacturing process (HTC) to security lapses at government databases resulting in exposure of sensitive personal information (South Carolina), consumers, regulators and legislators are waking up to privacy issues.

Recent developments highlight the trend in Privacy

In the U.S. we lack a single comprehensive privacy law, although many state and federal laws address various aspects of collecting, storing and sharing personal information. In the absence of a single, over-arching, mandate, legislators and regulators are stepping into fill at perceived need.

GPS, Location & Privacy

The Geolocation Privacy and Surveillance (GPS) Act addresses use of location data by law enforcement. The bill (not yet law) requires police to obtain a warrant based on probable cause whenever it seeks “location information.” Unfortunately, the term “location information” is very broadly defined, does not distinguish requests for access based on the level of precision, time period, or whether the information is for past or future conduct.

Proposed Federal Privacy Standards

Two bills introduced this year aim to create a baseline level of privacy protection at the federal level. John Kerry (D-MA) and Sen. John McCain (R-AZ) introduced S. 799, the Commercial Privacy Bill of Rights Act of 2011, to create a regulatory framework for the comprehensive protection of personal data for individuals, enforceable by the Federal Trade Commission (FTC). Similarly, Rep. Cliff Stearns (R-FL) is promoting a Consumer Privacy Protection Act (H.R.1528), directed at consumers and focused on restricting the sale or disclosure of personal information.

FTC Protects Privacy Under Mantle of Consumer Protection

As a result of alleged data security failures that led to three data breaches at Wyndham hotels in less than two years, the Federal Trade Commission filed suit against hospitality company Wyndham Worldwide Corporation. The case against Wyndham is part of the FTC’s ongoing efforts to make sure that companies live up to the promises they make about privacy and data security.

Wyndham’s web site privacy policy claimed that, “We recognize the importance of protecting the privacy of individual-specific (personally identifiable) information collected about guests, callers to our central reservation centers, visitors to our Web sites, and members participating in our Loyalty Program …”

The FTC complaint alleges that Wyndham failed to maintain adequate and industry standard security measures by storing credit-card information in unencrypted format, allowing servers to remain unpatched, and failing to use firewalls.

The FTC alleges that these failures led to fraudulent charges on consumers’ accounts, millions of dollars in fraud loss, and the export of hundreds of thousands of consumers’ payment card account information to an Internet domain address registered in Russia.

Most notably, the lawsuit will test whether the Federal Trade Commission has the jurisdiction to compel companies to provide a certain level of cybersecurity in order to safeguard consumer personal information.

Privacy Remains Top Concern

Many companies across many industries, financial services, higher education and healthcare, just to name a few, are facing a wide range of security and privacy concerns, scrambling to implement A defensible security framework and demonstrate compliance. It’s alarming, considering the significant consequences associated with not complying.

Organizations can lose contracts, customers and their reputation. That could put some out of business.

Compliance Preparation & Best Practices

Large organizations can spend many months and millions of dollars on compliance. Your business need not go to such extremes. To prevent getting caught by surprise and to prepare for the compliance journey, I’ve listed below some suggested best practices.

Periodic risk assessments. Evaluate potential damage and disruption caused by unauthorized access, use, disclosure, modification, or destruction of data or systems.

Policies and procedures. Incorporate procedures for detecting, reporting, and responding to security incidents, as well as business continuity plans.

Standardize. Set standards of acceptable information security for networks, facilities, and information systems.

Train Employees. Awareness training for employees, contractors, and other users of information systems is critical. Articulate the security risks associated with activities and define users’ responsibility for complying with policies and procedures.

Test & Evaluate. Periodic assessment of the effectiveness of information security policies, procedures, practices, and controls helps determine weak spots. At a minimum they should be conducted annually, according to Ford.

Respond & Repair. Have a pre-defined process for planning, implementing, evaluating, and documenting remedial actions designed to address legal, PR, HR and related risks in the event of a breach.

THIS IS NOT LEGAL ADVICE. The procedures outlined above are merely suggestions and there is no guarantee that implementation will reduce risk or mitigate liability.

Please contact Leavens, Strand, Glover & Adler at 866-734-2568 for a free consultation to learn how LSGA can help meet your specific needs.

Three Things I Learned About Personal Cybersecurity At RSAConference That You Should Be Doing Right Now

Image representing CloudFlare as depicted in C...
Image via CrunchBase

I just returned from RSAConference 2013 where I had the privilege and honor of giving a presentation of the legal risks caused by social media in the workplace. As a speaker-attendee, I had the priceless benefit of access to all the other speakers and programs held during the conference.

One such program I attended was “We Were Hacked: Here’s What You Should Know”. The speakers, Matthew Prince (@eastdakota) CEO of CloudFlare, and Mat Honan (@mat) writer for Wired Magazine, shared their common experience as targets of high profile hacks. Hearing the details from them first hand, including information from interviews with the hackers themselves, I learned how easy it is to be the victim of hacking and how it’s the little things that create exploitable seams in our information security barriers.

Rather than rewrite their stories, I thought I would share three simple lessons I learned that I’ve already implemented and you should too. Besides, Matt does a better job telling his own story which can be found here.

Here are the three things I learned about how you can protect yourself and others in your organization.

First, security attacks go after the “low hanging fruit” and that often means figuring out a way to exploit your personal email address. With so many web-based services and so much login information to remember, many of us use our personal email as our username for everything from the web sites on which we comment, to our online photo gallery, to our online banking service. Unfortunately, this is probably the address we use for password recovery if we forget. Given that our digital lives are easily mapped, hackers already have one piece of the two-piece login puzzle: they know your user name.

TIP NO. 1: Use a private, obscure email address for your more sensitive information.

Second, once a hacker has accessed your accounts, your computer and your files, the fun has just begun for them. As Matt Honan described, these often adolescent script kiddies simply don’t understand the value of your stored memories and other information. In his case, all the photos of his children were permanently deleted. Regardless of a hacker attack, stuff happens and you don’t want to lose everything because you we’re too lazy to back up.

TIP NO. 2: Back Up your digital life, early and often.

Third, today’s’ Internet is an interdependent ecosystem. Just because you or your organization takes security seriously, doesn’t mean that other do as well. Your internal systems are not enough. Like it or not, the seams of your security perimeter are intertwined and permeated by the services and systems of customers and vendors. For most consumers, the there is a Hobbesian choice of Security v. Convenience. Multiple login usernames and super long passwords are difficult to remember and tedious to use. As a result, most people choose the least secure means of authentication on the assumption that using astringent password is enough. Unfortunately, some people don’t even bothers with that. A recent ZoneAlarm study found that “password” was the fourth most commonly used password by consumers.

Google, Facebook and others have started using two-factor authentication. Two-factor authentication requires that one enter a code after entering the username/password combo. The code is sent via, text message, voice call or email. This greatly reduces the chances of unauthorized access because hackers would need to have your phone, in addition to your username/password combo.

TIP NO. 3: Whenever possible enable two-factor authentication.

Please understand that there is no “magic bullet” when it comes to Cybersecurity. Taking these precautions does not guarantee that you won’t be attached or that your account information won’t be accessed. However, these are important and easy steps that you can take to improve your personal data security.

Please comment and follow!

 

Social Media Legal News Roundup

1. Content & Marketing

MutualMind Signs Agreement With LexisNexis to Offer Advanced Social Media
MarketWatch (press release)

PRNewswire via COMTEX/ — MutualMind, an award-winning social media technology developer based in Dallas, Texas, announced an agreement today with LexisNexis, a leading provider of legal content and technology solutions.

Facebook: Should Law Firms Bother?
Business 2 Community

While consumer brands have embraced Facebook as a key tool in building deeper customer engagement, the biggest social network largely remains terra incognita in the legal world. The sector has certainly harnessed professional networking sites.

2. International

Bahrain may act against social media abuse
Trade Arabia

Legal action could be taken against people in Bahrain, who incite violence and spread sectarianism on social media, said a top official. The initiative comes as a new code of honour for social media users is set to be launched by the Bahrain Bloc.

3. Law Enforcement

Infographic: How police investigators are using social media
Police News

An overwhelming majority of investigators using social media for investigative purposes are “self taught,” according to a new survey of 1200 Federal, state, and local law enforcement professionals.

Social media for investigators: Why Police departments should invest in training
Police News

That’s but one of the many conclusions found in a comprehensive new survey — conducted in a partnership between PoliceOne and LexisNexis Risk Solutions — focused on the impact of social media on law enforcement in criminal investigations. Among the …

4. Employees & Workplace

What your social media profile is telling future employers? (Take our poll)
Plain Dealer

The State of Maryland already has passed a law forbidding employers from asking job candidates for their passwords to Facebook and other social media sites, and California is considering a similar law. 01fgSCREEN2.jpg View full size · The Society for …

Social Media in the Workplace – July 2012
JD Supra (press release)

With an understanding of some of the relevant issues, employers can implement meaningful and reasonable policies and guidelines for employees and respond appropriately and legally to social media issues that arise. Below are a few of the discrete issues …

5. Financial Services

Quest IRA, Inc. Develops New Interactive Website & Social Media Campaign
Equities.com

The trick for us is trying to provide legally correct information, in such a way that is easy to understand, to the American public so that investors truly understand their options with retirement savings.” “Internet, the online experience and social media are the 21st Century.”

The New Social Metrics
Bank Technology News

Below are methodologies and metrics for determining the ROI of these specific social media use cases. The metrics roll up to three major categories of benefits: revenue impact, operational efficiencies, and legal and compliance risk avoidance.

David M. Adler, Esq. is an attorney, author, educator, entrepreneur and partner with Leavens, Strand, Glover & Adler, LLC, a boutique law firm in Chicago, Illinois created with a specific mission: provide businesses with a competitive advantage by enabling them to leverage their intangible assets and creative content in order to drive innovation and increase overall business value.

We meet this challenge by providing legal counsel on issues related to creation, protection and commercialization of intangible assets, our comprehensive understating of the relevant law, our team of seasoned professionals and our client service philosophy.

World Social Media Legal News Roundup

Newsmakers Q&A | Law slow to address workers’ social-media privacy
Columbus Dispatch

Colorado shooting: Public calls on Christian Bale to swoop in
Los Angeles Times

July 21, 2012, 12:04 p.m.. People are calling upon the caped crusader in the wake of the Colorado theater shooting with the 21st century bat signal: social media.

Afghan social media war steps up with new campaign
Reuters UK

And with the government mulling a media law to tighten its grip over the fledgling but lively Afghan press corps, Nai hoped social media could help safeguard political and social freedoms, as occurred during the wave of uprisings across the Middle East.

A social media win on merger
Philadelphia Inquirer

It’s a bracing lesson, on a local stage, in the power of social media to create community around an issue and ratchet up pressure on key players – in this case, the members of the Abington board and its president and CEO, Laurence Merlis. “It’s amazing to me just how fast word spread,” …. A community-conscious and activist community, with a high concentration of concerned, committed people who work in industries such as law, medicine, public relations, and journalism.

Valley reacts via social media regarding Colorado shooting
KGBT-TV

Once new information began streaming in about the shooting, over 100 viewers began responding to the Action 4 News Facebook page and Twitter feed. As the day progressed, over 500 comments came into valleycentral.com andAction 4 social media

Media Wise Parents to the rescue
Windsor This Week
Media Wise Parents helps parents, educators and churches become more aware with social media and the internet. Tweet · Bookmark and … It’s certainly in my background with law and marketing, it’s always something that interests me.

We Want To Hear From You: Take This Two-Minute Social Media Survey
Business Insider

This Is The Gun Used In The Colorado Shooting That Everyone Can’t Believe Is Actually Legal

In Focus: Social Media & Law Enforcement

Busted! Police Turn to Social Media to Fight Crime
CNBC.com (blog)

Law enforcement is taking to social media because criminals are changing their behavior and using social media to facilitate crime. In response, law enforcement officials are using it to track down criminals and as a predictive policing tool, said Haywood.

Role of Social Media in Law Enforcement Significant and Growing
Business Wire (press release)

WASHINGTON–(BUSINESS WIRE)–LexisNexis® Risk Solutions today announced the results of a comprehensive survey focused on the impact of social media on law enforcement in criminal investigations.

Police Make Wide Use Of Social Tools
InformationWeek (blog)

The survey, of more than 1200 law enforcement professionals with federal, state, and local agencies, found that 83% of the respondents are using social media, particularly Facebook and YouTube, to further their investigations.

Crime Busters Embrace Social Media
BusinessNewsDaily

It’s not just prospective customers, partners or employers who may be scanning the social media landscape to glean information about you and your organization. The long arm of the law has joined the party as well, a new survey shows.

How Law Enforcement Is Using Social Media (Infographic)
Law enforcement officials are using social media to solve crimes and will continue to do so in greater numbers. In an online survey conducted by LexisNexis Risk Solutions, four out of five law enforcement officials used social media.

Social Media Legal News Roundup

Into the data jungle – in association with Huron Legal
The Lawyer
Technological developments such as cloud computing, social networking and mobile apps mean EU law is no longer fit for purpose. The EU claims current laws often conflict and cost businesses a total of nearly £2bn a year.

Saudi Arabia considers law against insulting Islam
Bangladesh News 24 hours
JEDDAH, Saudi Arabia, July 16 (bdnews24.com/Reuters) – Saudi Arabia is studying new regulations to criminalise insulting Islam, including in social media, and the law could carry heavy penalties, a Saudi paper said on Sunday.

Mind the missteps in online job dance
Lawyers Weekly
With some background check firms specializing in social media searches (U.S.-based Social Intelligence Corp. for one), how do third-party recruiters use social media when screening or finding clients for law firms in Canada?

Saudi Arabia looking to criminalize Islam insults on social media
Bikya Masr
DUBAI: The Saudi Arabia government is looking to ensure users on social media networking sites do not insult Islam or the Prophet Mohamed, al-Watan newspaper reported on Sunday, citing officials who said a new law could bring “heavy” penalties.

Watching the detectives: the case for restricting access to your social media data
Delimiter
That debate tells us something about how Australians and the media conceptualise privacy and business-government relationships in a world where mobile phones and social network services such as Facebook are ubiquitous.

10 Tactics for Integrating Photographs into Content Marketing
Business 2 Community
Acquire digital rights for images. Remember when using images, especially photographs, your legal team is your best friend. Ensure that you’ve got the right to use the photos by incorporating outtakes and additional shots for social media.

Syracuse Neighborhood Watch plans to increase social media outreach
CNYcentral.com
New program coordinator plans more email, social media contact. … CNY Biz Central – Legal. Helpful advice about finding the right attorney for your legal needs. CNY Biz Central. Get information from our team.

Reasonable Expectations of Privacy in the Digital Age
Mondaq News Alerts (registration)
In this digital age of smart phones, global positioning systems, cloud computing, and social networking, determining what constitutes private information and what lengths our legal system will go to protect it is increasingly challenging.

Sale Of Digg Reminder Of Potential Risks To Facebook And Other Social Media …
Seeking Alpha
In 2011, social media watchers may recall reading in Bloomberg that Myspace, which had been purchased by News Corporation (NWS) for $580 million in 2005 had reportedly been sold for just $35 million to private investors, including Justin Timberlake. In …

Your Social Media Tweeting & Posting Legal Rights. TV … – YouTube
Find out how legally liable you are for your Twitter Tweets and Facebook postings.

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