Legal IM Questions -Round 4

Spliffic said:
Awesome thread(s) mont7071, I have a quick question if you don't mind:

For asset protection with an existing corporation, are you able to setup a secondary corp (i.e. subsidiary) and transfer the monies from your original corp to this newly setup corp?

For example, let's say you have a relatively successful IM corp which contains a large sum of business income which is currently held by the corporation. As IM is a risky business, you could potentially get sued by anyone for anything. I guess the biggest issue would be getting sued and potentially losing everything you've earning so far that's remaining in the original corp.

Would setting up a secondary corp and transferring the existing business assets to the new corp (of course covering all the tax obligations to the government as needed) protect you from any liabilities that your original corp may encounter? If your original corp gets sued, and there are essentially no business assets left in this corp (as they've been transferred to the secondary corp), is the person suing able to go after those monies?

Would love to hear your thoughts on this. Thanks man.
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Sure, it's done quite often actually, for exactly the reason you suggested. The main legal gotcha is whether you do a "stock" sale, or an "asset" sale from the first company to the new one. There are different pros and cons to consider for each one (beyond the scope of this post and very situation-specific) but generally speaking an "asset sale" is akin to a firesale of all the actual hard assets owned by the first company ( can include intellectual property like patents and brand names), whereas a "stock sale" transaction is more like swallowing the original company whole, which can include things like goodwill and other intangibles, but typically also comes with some higher risk of "inheriting" some of the original company's liabilities and potential liabilities (but can have some great tax and creative financing advantages). For this type of sale, its usually best to consult with an attorney who is familiar with the particular facts of your company

The best example I can think of off-hand is yellow cab companies. With most of these, every individual cab (even if they have thousands) is its OWN subsidiary company owned by the parent company. That way, when a drunk cabby runs down 5 nuns in a cross-walk, the only real asset of the "guilty" company is that one (now damaged) cab, not all the other cars in the fleet, even though they all technically have the same owner. This way the entire company can compartmentalize its risk down to individual cabs and not put all the other assets (other cabs) at risk in case of a lawsuit against one.

Great Q.
 
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Thanks for all the answers mont, whats your take on my question?

Hey,

So whats the deal if you just provide a link to copywrited material ( movie / cd / or w/e has been leaked)

Im not hosting it, creating it, just simply tell people where it is with a link ( Im not currently doing this, just curious)

Thanks,
 
canucksfan19 said:
Thanks for all the answers mont, whats your take on my question?

Hey,

So whats the deal if you just provide a link to copywrited material ( movie / cd / or w/e has been leaked)

Im not hosting it, creating it, just simply tell people where it is with a link ( Im not currently doing this, just curious)

Thanks,
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It kind of falls in the middle of the scale, you are still asking for trouble, but you probably aren't asking for as much trouble as the guy who is actually hosting the copyrighted material. If the owner of the material sent a nastygram to your host, you are likely going to get shut down. If the owner of the copyrighted material actually sues whoever IS hosting the copyrighted material, they may include you in the suit for fun, but usually don't.

There are a lot of other factors that come into play, e.g. are you getting paid somehow (even indirectly) for being the "source" of the referral links?, then that is a big red flag. If they haven't contacted you about it, you probably aren't running a huge (legal) risk, but you have to ask yourself what your reasons and motivation are for linking to someone that is stealing copyrighted material.
 
mont7071 said:
I don't get stumped too often, but that one is hard, I've never had an issue like that and don't have any experience to pull from. I'll get some other lawyer's thoughts and post later if I hear any interesting other opinions. Great question +rep.
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I'm in a similiar situation. My business/residence in EU, doing business with a US-based law firm (they do some immigration, but do not specialize), and even those lawyers don't have a clear answer to this question.

I've travelled to USA frequently on both visa waiver and B1/B2. Apparently, I
CAN: solicit business, attend meetings, negotiate, consult
CANNOT: perform productive work, be employed, get paid (but my EU company, which I'm the sole owner of, can)

In our biz, what's the difference between consulting and performing productive work? I guess that's open to interpretation.
 
mont7071 said:
Sure, it's done quite often actually, for exactly the reason you suggested. The main legal gotcha is whether you do a "stock" sale, or an "asset" sale from the first company to the new one. There are different pros and cons to consider for each one (beyond the scope of this post and very situation-specific) but generally speaking an "asset sale" is akin to a firesale of all the actual hard assets owned by the first company ( can include intellectual property like patents and brand names), whereas a "stock sale" transaction is more like swallowing the original company whole, which can include things like goodwill and other intangibles, but typically also comes with some higher risk of "inheriting" some of the original company's liabilities and potential liabilities (but can have some great tax and creative financing advantages). For this type of sale, its usually best to consult with an attorney who is familiar with the particular facts of your company

The best example I can think of off-hand is yellow cab companies. With most of these, every individual cab (even if they have thousands) is its OWN subsidiary company owned by the parent company. That way, when a drunk cabby runs down 5 nuns in a cross-walk, the only real asset of the "guilty" company is that one (now damaged) cab, not all the other cars in the fleet, even though they all technically have the same owner. This way the entire company can compartmentalize its risk down to individual cabs and not put all the other assets (other cabs) at risk in case of a lawsuit against one.

Great Q.
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Thanks Mont.

I think it all boils down to intent when it comes to whether corporate veils will actually protect you personally from liabilities. This is especially true if you are a single person corp. For instance, if you were a plumber and you accidentally caused some damage to a customer's place (and didn't have insurance), you may get sued but the corp itself would basically only be at fault. Conversely, this would be a little different for an internet spam operation that blatantly violates CAN-SPAM laws etc and then is named in a class action lawsuit for their actions. I would assume as a single owner corp wouldn't stand a chance in terms of personal asset protection in this case.

Is this assumption correct when it comes to how well these single person corps hold up?
 
Hey Mont, thanks for all the great advice you're giving here. I've got a few questions, I'll break them up into separate posts though to make things easier.

First up, is there a way to start and 'run' a c-corp without being a controlling shareholder? The context for this question is that my visa allows me to work for companies on my visa, and it allows me to own offshore companies, however, for what I want to do, and to avoid pissing off the IRS, I want to have some of my operations run under a US corp. If I appoint a 'puppet' to run the corp, I want to eliminate any risk of them causing me issues, and I don't want to have to go ask someone else when I need access to the corps money to sign anything.
 
Second question :) There was a contract made between myself and another company. The contract was made to outline that the company would provide a service for me to get traffic and I would monetize it for a 50/50 split. Unfortunately it turns out that the method being used 'broke' for the company before I met them, and with false optimism they agreed to run for me with the hidden agenda of fixing their method.

There was a startup cost of $20K involved, which was meant to cover their expenses of getting things up and running. Truth be told, I went with them on the basis that they had a working product and it'd save me the time of developing it myself. As you can guess by now, they basically have zero performance and their method no longer works the way they are trying to do it. I could 'fix' it for them, but they refuse to cooperate.

Sadly, this is the only performance clause I put in the contract:

"XXX agrees to make all fair attempts to deliver no less than XXX targeted unique clicks within any 30 day period of the contract. If XXX unique clicks are not delivered during any 30 day period, YYY reserves the right to terminate this contract with 48 hours written or verbal notice."

I know I should have been more specific, but I really didn't think the company had zero working product at the time. So I have the right to terminate the contract based on non-performance, but doing that does me no good. Would I have any legal grounds at all to get the $20K back based on non-performance or any other way?
 
This question (it's been a busy month) ;)

So a well known company (top 1,000 alexa US) with a palo alto office and about 40mm in VC has decided to target me for legal notices. First up they sent a DMCA notice to my registrar with the normal 6 dot points filled out. The first two points are as follows:

1. The copyrighted work at issue is the use of the XXX name and logo to redirect traffic to the MyDomain | Domain Names, Web Hosting, and Free Domain Services website.

2. The infringing material is on the web page located at: MyDomain | Domain Names, Web Hosting, and Free Domain Services

To address that, I have never once used their logo in any situation. The domain does not contain their name anywhere, nor their logo. Some of my users do mention them occasionally, but there is definitely no use of the logo and mentioning a companies name in general discussion is not a copyright violation in my understanding.

Now, the domains registration details are all valid, there is no private whois, and so a couple of weeks later I got a second notice from them, this time via snail mail to my Australian address on the whois. The letter made the following claims (paraphrased)

1. XXX owns trademarks XXX and XXXX XXXXXX

2. "It has come to my attention that you are illegally using my client's name and logo to redirect traffic to a URL registered under your name and located at www.mydomain.com"

3. "You must immediately stop using XXX's name, logos and likeness.

4. "This is an infringement of 17 USC 101 et seq"

So once again, I've never used said logo, and it'd take a complete moron to confuse my site with theirs. The two have entirely different names and colour schemes, and I make zero attempt to copy them, although technically I am their competition.

Also, I checked up on one of their trademarks they said they own, and it's not registered.

Now I don't particularly want to open communication with them, so I don't want to ask them what they specifically think I've done. I have my theories on this though. The most likely issue they have is that I own some of their typos. Under the anti typo squatting laws I have made sure I am covered, based on providing 100% valid contact details, not offering the domains for sale, and making all reasonable steps that the site they redirect to could not be confused with XXX's site by anyone over the age of 5.

So, the confusing bit to me is how exactly I am breaking "17 USC 101 et esq". I don't see how that could relate to typos, and from my understanding you're even allowed to go as far as mentioning a competitors name in an ad as long as you don't make any claims about them or use their logo or anything like that. I've been tempted to turn up to their office unannounced to speak with their in-house council about it. I say unannounced because I'd prefer to not be served with some rubbish if they have time to prepare themselves.

So what are your thoughts given this information? Would you ignore the notices until they at least send something with more details to research?
 
Insomniac said:
Hey Mont, thanks for all the great advice you're giving here. I've got a few questions, I'll break them up into separate posts though to make things easier.

First up, is there a way to start and 'run' a c-corp without being a controlling shareholder? The context for this question is that my visa allows me to work for companies on my visa, and it allows me to own offshore companies, however, for what I want to do, and to avoid pissing off the IRS, I want to have some of my operations run under a US corp. If I appoint a 'puppet' to run the corp, I want to eliminate any risk of them causing me issues, and I don't want to have to go ask someone else when I need access to the corps money to sign anything.
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That's the tradeoff, if you want to use a "puppet". than that puppet is going to come with some risk, and if they screw you in terms of taking over the corp or running it a certain way, not a lot you can do about it. You could/should, of course, have a separate contract with the puppet (or "strawman" in legal parlance) stating what duties they owe to you, but that isn't going to help much if they decide they are going to "take over" the corp you just made them chief principle of.
Other than some tax forms, there isn't too much that requires the actual controlling shareholder to sign, you can usually reserve signatory powers to yourself or anyone else, especially if the bank accounts of the company only have you as the signatory.
 
OK. I hope you are open for 1 more question.

I have read through all the links in the original post and all references to trademark names, in the previous 3 threads, in order to ensure I am not wasting your time.

How protected is a Politician? Let's say I owned stopgraydavis.com or recallgraydavis.com back when Gray Davis the former California Governor was being recalled.

Am I infringing in any way? Am I CyberSquatting? Could I have monetized the sites and/or list the domain names for sale. Are there any restrictions of what I could do (within reason of course)? I know that I could not in any way represent the site as being affiliated with Gray Davis in any way (colors, content, implied, etc). But am I free otherwise? Or would I get in trouble for putting the undeveloped domains up for sale or trying to sell the domains to Gray Davis - or simply monetizing the domains and enjoying the organic traffic?

Thank you in advance for your response.
 
REIMktg said:
OK. I hope you are open for 1 more question.

I have read through all the links in the original post and all references to trademark names, in the previous 3 threads, in order to ensure I am not wasting your time.

How protected is a Politician? Let's say I owned stopgraydavis.com or recallgraydavis.com back when Gray Davis the former California Governor was being recalled.

Am I infringing in any way? Am I CyberSquatting? Could I have monetized the sites and/or list the domain names for sale. Are there any restrictions of what I could do (within reason of course)? I know that I could not in any way represent the site as being affiliated with Gray Davis in any way (colors, content, implied, etc). But am I free otherwise? Or would I get in trouble for putting the undeveloped domains up for sale or trying to sell the domains to Gray Davis - or simply monetizing the domains and enjoying the organic traffic?

Thank you in advance for your response.
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Good Question. Politicians are actually less protected than almost anyone else, because legally they are considered public figures. The basic idea of this is that anyone who has availed themselves of being in the public eye, such as a public servant or one running for public office, is presumed to have opened themselves up to more inquiry than say, the shy elderly neighbor who won't answer the door or speak to a neighbor.

You still can't falsely say they support some idea of yours, or tell outright lies, as you already alluded to (e.g. Stop Gray Davis, he killed and ate my cat and murdered my gardener, etc) but otherwise, politicians have very few protections in this regard. Celebrities are a different group, they have the right to profit from their own name, so you couldn't falsely say they endorsed some idea or product of yours. Most protected in these cases is actually the ordinary citizen, there are far more lawsuits involving invasion of privacy committed against regular Joes than ever for politicians or celebrities.

Don't register and than try to sell the domains directly to Gray Davis though; that is one way in which you could run into concern on a Cybersquatting issue that could cost you the domains, but free political discourse is encouraged in the U.S. so "anti-" sites like StopXYZPolitician are typically safe.
 
Is it legal to sell ebooks/guides that basically claim to cure you of something.

ex: pregnancymiracle.com

Claims to cure womens infertility. They do have a disclaimer linked at the bottom of the page, which says among other things:

"The Website cannot serve as a substitute for face-to-face professional advice and are not intended to diagnose or treat any illness, metabolic disorder, disease or health problem."

Another example might be something like a "7 Day Acne Cure" or "Instant Back Pain Cure"

Thanks Mont!
 
Hey Mont7071 I was wondering what back ground checking services you would recommend using for getting the most complete information on a person. Like there ave income, bankruptcy/credit history, Marriage/divorce history , financial records , work and living address history as well as current work and home address, ect.

thanks for any help and thanks a lot for giving all of us your time
 
Pagerage and facetheme. Thoughts on them? Would FB have grounds to sue them? Or their pubs? They have already started not using "facebook" in ads and say "FB" instead, but on their site they both use the word facebook. So, general thoughts on these? www.pagerage.com/www.facetheme.com.
 
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ret said:
Is it legal to sell ebooks/guides that basically claim to cure you of something.

ex: pregnancymiracle.com

Claims to cure womens infertility. They do have a disclaimer linked at the bottom of the page, which says among other things:

"The Website cannot serve as a substitute for face-to-face professional advice and are not intended to diagnose or treat any illness, metabolic disorder, disease or health problem."

Another example might be something like a "7 Day Acne Cure" or "Instant Back Pain Cure"

Thanks Mont!
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"Cure" is a really bad word to use, for FDA reasons. Its also a hot-button issue and one they are zealously pursuing. If it is anything that is classified as a "disease" , then you are taking a great risk with the word "cure". Take a look at the standard FDA disclaimer you will see on EVERY bottle of pills/supplements at your local store "These statements have not been evaluated by the FDA, This product is not intended to diagnose, treat, cure or prevent any disease" There is a reason every single one has the same language.
 
rockstar45177 said:
Hey Mont7071 I was wondering what back ground checking services you would recommend using for getting the most complete information on a person. Like there ave income, bankruptcy/credit history, Marriage/divorce history , financial records , work and living address history as well as current work and home address, ect.

thanks for any help and thanks a lot for giving all of us your time
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Not sure i can offer much guidance on this one, but a basic credit check from any of the big credit reporting agencies is a good start (Equifax, Experian, etc) is a good start. You can check at the local courthouse for any judgments against a person in that state, but that is usually limited to local stuff. If I'm trying to dig up dirt on a person I"m suing, or find hidden assets, I usually contact a bail bondsman offices, those guys use a lot of tools that can get some pretty complete information on just about any one.
 
Hi Mont
Awesome thread, I went through the other ones but didnt' find my answer. I also noticed this
mont7071 said:
I am an attorney. I make a lot more money in the IM world then I ever have pushing paperwork around a courtroom,so I don't practice much anymore
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does it mean you don't provide paid consultation at all?

Here is the question:

The case:

Hubpages.com (B) lets users publish articles on it's web-site.

Web-site (A) copies articles from (B). (B) says "the content belongs to the writer of the content and not the hubpages (site HubPages FAQ)".

Site (A) lets article owners to either remove the or claim ownership. To claim ownership of the article they must post a little code on the site (B) to prove they are owners. Once they become
owners site (A) gives them complete access to the page and they can put their ads and get paid if someone clicks on them.

Question:

- Can site (B) sue site (A) if content "belongs to individual writers"
- Will site (B) win if they sue site (A)
- Is site (A) allowed to copy the articles from site (B)


Sorry I had to dumb it down, but this was sent to another attorney, who's still scratching his head over the case.
 
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