How do I surive with truly the next great idea?
QUESTION:
So let’s say I have an amazing idea for disruptive and game changing product. Let’s say it could be bigger than Facebook.
How do I bring the idea to market without being crushed by competitors, investors, and other capable people who are more opportunistic than honorable?
What steps can I take to ensure that I retain control of an idea that may be the next big thing?
ANSWER:
Antone Johnson
Do you know of any law firms who will assist an entrepreneur without charging an arm & a leg?
QUESTION:
I’ve read all the material on forming my startup, from going with an LLC to going with a Delaware C-Corp.
The reality is, I still need help from a professional lawyer to make sure all my paperwork is in order, my structure is the correct one, and so on. I’ve read about different incubators that assist startups in legal aspects so they can focus on product.
However, I haven’t come across any law firms who have special discounts or deferred payment for startups. Do you know of any law firms who will assist an entrepreneur like me with company formation without charging an arm and a leg? Thanks!
Does it make sense to set up an LLC or S-Corp for my startup?
QUESTION:
I would like to incorporate a value-added engineering software reseller business. It would be a Pennsylvania based company of about 15-25 employees working out of their home offices (no corporate office). The business involves sales representatives and technical employees delivering on-site training, demonstrations, and technical support. Would it make more sense to set up an LLC or an S-Corp?
ANSWER:
Antone Johnson
How do I find an investor to fund turning my idea into a patent?
QUESTION:
I have submitted a patent idea to a company, and they need $1,200 to do the patent search, design, and study group before looking for a buyer. I have no money available, as I have just started a new job. I would like to know if there any investors that would be willing to take a chance with me, or if you have any help for me to move forward. Thank you very much.
ANSWER:
Naomi Kokubo
by Naomi Kokubo, Cofounder of Founders Space
Who should I approach about investing in a green energy project?
QUESTION:
Can you help me connect with anyone interested in investing in a green energy invention? I went to a local colledge and spoke to a physics professor about the theory I have for my invention. To make a long story short,the physics professor said, “If it works, you’ll win a Nobel Prize!”
ANSWER:
Soody Tronson
by Soody Tronson, Founder of Soody Tronson Law Group
Does my startup need to be incorporated for the terms of service to hold up?
QUESTION:
If I am launching a social networking site, do I need to incorporate it in order for the terms of service, terms & conditions, privacy policy and all that stuff to hold up?
ANSWER:
Antone Johnson
What do I need to do to legally set up an online social networking business?
QUESTION:
I’m entering the beginning stages for creating a new social networking website. It’s similar to Facebook and MySpace. What legal aspects of a traditional business would I need to make sure to handle properly (e.g, fictitious business name statement, business license, form of ownership, etc.)?
ANSWER:
Antone Johnson
by Antone Johnson at Bottom Line Law Group
Start by forming a limited liability legal entity to operate the business: either a corporation or an LLC. A corporation makes sense if you’re planning to raise capital at any point from venture capital or angel investors; it also makes it much easier to issue stock options to employees, which is an expected part of the compensation package at most tech startups.
Can I post aricles I find on the web on my website without breaking copyright laws?
QUESTION:
I’m starting a website business on pet care. I need to be able to use articles on my site as customer/visitor information on pet health, etc. My only source for these articles would be the web, but I’m not sure how copyright or plagiarism applies if I use articles that I search for and put them on my site. Any information on this would be very helpful. Thanks!
ANSWER:
Naomi Kokubo
by Naomi Kokubo, Cofounder of Founders Space
Do I need to register as a foreign business operating in Florida?
QUESTION:
I am forming a business wherein I will do freelance software development. All I need is myself and a computer, so I can be location independent. My hometown (in Florida) is expensive when it comes to starting a business so I was going to form a LLC in Delaware instead. Do I need to register as a foreign business operating in Florida?
Florida statute 608.501 §1 states that a foreign LLC cannot conduct business within Florida until it files all the necessary paperwork, but 608.501 §2i states that conducting interstate business is not considered conducting business within Florida. Furthermore, 608.501 §2c states that foreign LLCs maintaining bank accounts in Florida does not constitute conducting business either.
Top 10 Typical Work Law Errors Done By Organizations
Stacia Abner
by Stacia Abner, author of Employment Law Training
The contemporary American workplace is susceptible to numerous federal, state, and local laws and regulations that impose strict obligations on businesses (e.g., wage and hour legal guidelines, nondiscrimination laws, etc.). Many organisations, especially smaller organizations, tend not to know the scope of such obligations and, therefore, frequently (albeit inadvertently) violate what the law states. These violations can result in costly lawsuits, and also civil and criminal penalties. In my experience of being a defense attorney in addition to being a plaintiff’s lawyer, the commonest employment law mistakes done by corporations are these (in no particular order):
Does timing of filing an assignment document have a substantive effect on patentability?
Soody Tronson
by Soody Tronson at Soody Tronson Law Group
Conclusion First: The case discussed below sets the UK standard in clarifying that an applicant claiming a right of priority must be entitled to do so at the date that the priority claim is made. Any claim to priority made by a party not entitled to do so may contribute to the invalidity of the patent.
It is therefore critical that any assignment document which is necessary to transfer the rights in a priority application or to assign the right to claim priority is dated before the Applicant company makes a priority claim.
Do I have to form a partnership, LLC or corp to bring onboard a technical partner?
QUESTION:
My background is in small business management, as well as sales and marketing. However, I have a few business models I’d like to pursue taking advantage of. My challenge is that they each require the skills of a programmer (which I don’t have) to build either a very detailed website or an iPhone app, both of which would also require someone to update and maintain them. My question is can I form working relationships with individuals with these skills in order to start my business, perhaps with a working contract and not by forming a partnership, LLC or a Sub S Corp?
Do you know where can I find founders’ stock purchase documents that my startup can use?
QUESTION:
I’m looking for founders’ stock purchase agreements to use for my startup. Do you know where I can find any documents like these?
ANSWER:
Naomi Kokubo
by Naomi Kokubo, Cofounder of Founders Space
Below is a link to the Founders’ Stock Purchase Documents provided by Orrick. You need to check with your counsel to make sure these work with your company.
Go see Founder’s Stock Purchase Docs
Common Stock Purchase Agreement (with Vesting)
This agreement allows the founders to document their initial ownership in the Company, including standard transfer restrictions and any vesting provisions with respect to their shares.
What are the different options for convertible debt financing that startups usually encounter?
QUESTION:
I’m talking to angels now about convertible debt financing. What are the different options for convertible debt financing that startups usually encounter?
ANSWER:
Russell Greenman
by Russell Greenman at Raines Feldman LLP
Any advice on getting a start-up attorney that will work without a retainer?
QUESTION:
I’m looking to work with a start-up attorney w/o a retainer. Thanks.
ANSWER:
Russell Greenman
by Russell Greenman at Raines Feldman LLP
An attorney’s willingness to work without a retainer depends on a number of different factors including, but not limited to, the attorney’s relationship with the potential client, the level of sophistication of the potential client, what stage in the star-up evolution the potential client is and, increasingly, the attorney’s confidence in the success of the venture. You have to remember that attorneys are “selling” hours and need some level of confidence that they would not be working for free (or spending additional hours tracking down payments). As you can imagine, it is impossible to evaluate the willingness of any attorney to take any client (established or otherwise).
Will a corporation protect me from all liability?
QUESTION:
I’m the Chairman and CEO of a small startup. Will a corporation really protect me from all liability?
ANSWER:
Russell Greenman
by Russell Greenman at Raines Feldman LLP
One of the main advantages of incorporating a business (or forming an LLC) is to limit your personal liability for the debts/obligations of the business resulting from judgments or general debts to creditors. This protection, however, can be lost and without careful management you could be held liable for certain obligations of the corporation. Some things to look out for:
Can you recommend a good place to go to find online legal documents for setting up my company?
QUESTION:
I’m a first-time Silicon Valley entrepreneur. Can you recommend a good place to go to find online legal documents for setting up my company?
ANSWER:
Naomi Kokubo
by Naomi Kokubo, Cofounder of Founders Space
Orrick’s startup toolkit helps with company formation and is a good place to start. It doesn’t replace having a good attorney, but it should give you an idea of what’s involved in setting up typical Silicon Valley startup.
Take a close look at the toolkit and see what works for you.
Where can I download an NDA and assignment of inventions agreement?
QUESTION:
One of our founders asked, “Do you know where I can download an NDA and an agreement for the assignment of inventions. I just need the basic boilerplate documents.
ANSWER:
Below is a link to the Technology Related Legal Documents provided by Orrick. Keep in mind, these do not replace having a good attorney, but they do provide a good starting point.
Go see Technology Related Legal Docs
Confidential Information and Invention Assignment Agreement for Employees
Can I simply abandon a California corp?
QUESTION:
Can I simply abandon a California corp and leave it blowing in the wind? I started a company a while back, and it didn’t work out. Since then, I’ve moved on to another profitable venture. Instead of bothering to close down the old company, can I simply abandon it. What will happen? Am I liable for anything like taxes?
ANSWER:
Ethan Stone
by Ethan Stone, Stone Business Law
First, a quick caveat: I’m not your lawyer and this answer doesn’t establish an lawyer-client relationship. I’m giving a generic answer to a generic question to educate the users of this site.
What if a laid-off employee refuses to return his laptop to the company?
QUESTION:
What should I do if a laid-off employee won’t return his laptop to the company? It has confidential information on it, and it’s a company laptop.
ANSWER:
Ethan Stone
by Ethan Stone, Stone Business Law
First, a quick but important clarification: I’m not your lawyer and this answer doesn’t establish a lawyer-client relationship. I’m giving a generic answer to a generic question to educate the users of this site. The information below is general in nature and should not be understood as a substitute for personal legal advice.
Should I avoid examining our competitors’ patents?
QUESTION:
I know that my competitors have been granted patents in our space. Should I avoid examining these patents? I’ve heard that if I do, I may be committing willful infringement and have to pay 3 times damages.
ANSWER:
Joshua Masur
by Joshua Masur at Turner Boyd LLP
The answer is that, unfortunately, there’s no easy answer other than the old saw: Consult your lawyer. But it’s really going to come down to a risk-reward analysis.
Is it ever worth suing a startup that has no money left and is clearly about to go under?
QUESTION:
I’m an amateur angel. I put money into a tech startup, and the CEO spent the money on “personal” travel and other questionable things. I don’t think what he did was ethical or good for the business. But is it ever worth suing a startup that has no money left and is clearly about to go under?
ANSWER:
Naomi Kokubo
by Naomi Kokubo, Cofounder of Founders Space
Are There Ways to get Your Patent Application Examined Earlier?
Soody Tronson
by Soody Tronson at Soody Tronson Law Group
In considering the information below (available from USPTO website and its perspective of course), please keep in mind that it is a general collection of programs, and that there are many pros and cons and nuances in determining whether any of these are either applicable or beneficial to your situation.
Patent Law is a complex area of law and requires in depth evaluation of your strategy. It is advisable to consult an expert in making any critical decisions that are critical to the success of your business.
What happens if one partner wants to leave an LLC?
QUESTION:
We’re a California LLC. Both of us own half the company. We have no other agreement in place. What happens if one partner wants to leave the LLC? What rights does that partner have after leaving?
ANSWER:
by Geraldine Zaroukian at Zarig
Regarding Legal matters: Usually an LLC is governed by an Operating Agreement. An Operating Agreement is not required by the government or by law; however, in some states such as California, LLCs are required under state law to have an Operating Agreement. Whether required or not by state law, Operating Agreements are not filed with the government nor the state. That said, an Operating Agreement is a very helpful and important document for members of an LLC. (Owners of an LLC are called members.)
If there’s a merger, what will happen to my unvested options?
QUESTION:
I’m an exec at a startup, and there’s a lot of talk about a possible merger. If there’s a merger, what will happen to my unvested options?
ANSWER:
Naomi Kokubo
by Naomi Kokubo, Cofounder of Founders Space
Anything can happen. They can be canceled, accelerated, or stay on the same vesting schedule. You need to check your stock option agreement. If it’s not specified in your stock option agreement, then it’s up to negotiation.
Patent Process Visualized
submitted by Sood Tronson at The Soody Tronson Law Group
We found this flow chart depicting the patent process to be very enlightening. Feast your eyes on this…
Patent Flow Chart
When selling a company, what are the advantages of going with a third-party shareholder representation firm?
QUESTION:
I’m about to sell my company, and I’m wondering what are the advantages of going with a third-party shareholder representation firm rather than just doing it myself? No one on our board seems to want to do this job, and I’m not sure if I should do it, or if we should hire someone.
ANSWER:
Ethan Stone
by Ethan Stone, Stone Business Law
First, a quick but important clarification: I’m not your lawyer and this answer doesn’t establish a lawyer-client relationship. I’m giving a generic answer to a generic question to educate the users of this site. The information below is general in nature and should not be understood as a substitute for personal legal advice.
What should I watch out for when hiring an overseas software developer?
QUESTION:
I want to hire an overseas software developer. What should I watch out for? I’m worried that they may steal my IP. I’m also worried that they may not deliver and I’ll have no recourse. But I can’t afford a US developer. Any advice would be appreciated.
ANSWER:
Ethan Stone
by Ethan Stone, Stone Business Law
First, a quick but important clarification: I’m not your lawyer and this answer doesn’t establish a lawyer-client relationship. I’m giving a generic answer to a generic question to educate the users of this site. The information below is general in nature and should not be understood as a substitute for personal legal advice.
What are the rules around having unpaid interns?
QUESTION:
What are the rules around having unpaid interns? We’re a San Francisco startup. Are we allowed to legally bring on interns without paying them?
ANSWER:
Captain Hoff
by Steve Hoffman, Cofounder of Founders Space
In California, you must pay your interns at least minimum wage, unless the internship you are offering qualifies as part of an educational course. In most cases, the jobs interns are given do not qualify and I wouldn’t risk it.
Should I give a time window in which a third party can exclusively license my patent?
QUESTION:
I would like to commercialize an invention of mine in the field of photovoltaics through a corporate partner. The challenge with my idea and field are that A) the invention does not have any obvious applicability to other industries; and B) the solar industry is so competitive nowadays that I suspect a corporate partner will demand a high level of exclusivity in order to make a deal. Under these circumstances, do you have any advice about the best way to set up a partnership that maximizes the potential upside to my startup, yet keeps intact a sufficient degree of downside protection (i.e. ensures that all is not lost if the partnership does not go well)?
