Infringement: How to Protect Yourself and Your Business
October 21, 2020 | Barna, Guzy & Steffen, Ltd.
At some point, many business owners face the threat of infringement and are challenged on their use of a business or product name. For some it is simply an accident, and the “fix” may be as easy as changing a name. But what should you do when confronted with a cease-and-desist letter or lawsuit? Read our blog as we discuss infringement and how to protect yourself and your business. Types of infringement The Legal Information Institute at Cornell Law School defines infringement as “a violation, a breach, or an unauthorized act.” There are different types of infringement depending on the situation. In a commercial contract, an infringement occurs when one of the contracting parties breaches the contract terms. In intellectual property, an infringement relates to an unauthorized use of any copyrighted material or patented invention. This can be trademark, patent, or copyright infringement. How to protect yourself and your business In many cases, infringement on another is done unwittingly. However, regardless if the infringement is an accident, the law is very clear. Your first course of action should be to contact a knowledgeable attorney who can help you understand the law and your rights. Your attorney will be able to advise you on whether a response is required. Because the use of someone else’s intellectual property (like…
Read MoreThe Corporate Veil: What is It and Why You Should Care?
October 12, 2020 | Barna, Guzy & Steffen, Ltd.
You may have heard mention of the corporate veil – the common term for the liability protections afforded to an individual (or entity) who creates a separate company to do business. However, this protection is not ironclad. Read our blog as we discuss the corporate veil, what it is, and why you should care. The benefits of setting up a corporation or L.L.C. For purposes of our discussion, let’s assume Ellen runs a canoe making business out of her garage called Handcrafted Canoes. If she doesn’t create a corporation or limited liability company (or other liability limiting entity), she is personally liable for all of the debts of the business. In other words – her personal assets are subject to claims relating to the business. Ellen’s smart attorney advises her to set up a corporation, and Ellen takes the advice. Handcrafted Canoes, Inc. (HCI) is formed as a Minnesota corporation. But is that the end of the story? If Ellen’s only act is to set up the corporation, and she doesn’t actually operate her business as a separate entity, creditors of her business may be able to get past that corporate “veil” and proceed against her personal assets. Piercing the corporate veil Parties that do business together have a reasonable expectation that if something goes wrong,…
Read MoreThe Company Sale: Stock or Asset
September 30, 2020 | Carole Clark Isakson
I have been handling sales and purchases of businesses for over three decades, and the first question I always have is whether the owners are selling their interests in the company (i.e. stock) or whether the company is selling its assets. The distinction here is CRITICAL and will impact how the deal is structured, how it is financed, how employees and third parties are impacted, and the tax consequences to the seller (and later, the buyer). Understanding the difference between a stock sale and an asset sale is an important first step for anyone wishing to buy or sell a business. Read on as we take an in-depth look at the company sale. Structuring the transaction While it’s best to leave the ultimate structure of the transaction you have in mind to your professionals, it is common practice for a buyer and a seller to agree on price and remain flexible on how the deal is organized until initial due diligence is conducted. Ideally a structure will be found that benefits both parties. For purposes of this discussion, let’s focus on a business operated by a corporation and the shareholders who own the stock in the corporation (the analysis would be roughly the same for a limited liability company). EXAMPLE: Tent Corporation is…
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