Category: Business Development

Next book approved

I just received word that my publisher has approved my proposal for my next book. My first book, Fuel the Spark: 5 Guiding Values for Success in Law School and Beyond is in final pre-production and will be officially released in March 2009. The next book has a working title of “The Secrets of Creative Business.”

I’m very happy about this. Now I just need to finish the manuscript. My goal is to release the book in the Summer of 2009.  I’ll keep you posted.

Hey!  I just had an idea – feel free to submit your story about the best rewards and the toughest challenges in you creative business life.  Email me, or comment.

Play Nice: Legal Issues & Social Media

You already know, or are learning, that social media tools like Facebook, Twitter and LinkedIn are wonderful ways to keep in touch with your friends and business associates. However, unthinking posts in such forums could land you on the wrong side of a lawsuit.

My goal here is plant a few seeds in the back of your mind about social media content you create. I won’t be able to cover every possible way you can get yourself in trouble, but I’ll hit the highlights.

Of course, each situation is unique to you, your state, the people on the other side of any discussion, and a bunch of other factors, so don’t simply take my word for it. If you find yourself in trouble, consult your own attorney — everybody should own one.

The most probable ways you can find yourself in hot water are:

Defamation: damaging someone’s reputation.

Privacy: disclosing someone else’s secrets.

Interference with Business Relations.

Negligence: being a dork and harming someone.

Contract: ending up in an enforceable agreement.

Trademark: confusing consumers about a brand.

Copyright: sharing something that’s not yours.


Defamation

In today’s world, we lump harms to someone’s reputation arising from a written statement (libel) or from a spoken statement (slander) under the common term “defamation.” Here’s what we look for:

1.              Defamatory language on the part of the person being accused, which could be you or someone else online. Note that the language does not have to be direct, it can also be innuendo, satire, etc.

2.              That language must be “of or concerning” the person claiming to be harmed by the language.

3.              The language must be “published,” which is just assumed in the context of our discussion of a troubling tweet or other social media content.

4.              The language has to damage the reputation of the person making the complaint. Note that even a statement of opinion might be trouble, for instance: “I don’t think Sylvia can be trusted with the key to the store” would be actionable because you’re implying a personal knowledge and accusation of dishonesty that would harm Sylvia’s reputation.

If the language refers to a “public figure” or involves a “matter of public concern,” then we have to also prove:

1.              Falsity of the language; and

2.              Fault on the part of the accused person.

Remember that you can get in trouble with statements that target an individual, company, association, or anyone that has a reputation to be damaged. And, it could cost you big-time, especially if you are referring to a few special cases such as a statement that goes to a business or professional reputation, says someone has a “loathsome disease,” has committed a “crime involving moral turpitude,” or imputes “unchaste behavior to a woman.”

Even a truthful statement can get you into trouble if sharing that bit of truth damages someone’s reputation.


Privacy

This one is touchy. If you disclose something that a “reasonable person” would not want disclosed, then you could wind up in trouble, even if the disclosures are truthful. An example would be disclosing the real name and location of someone in witness protection. Another example would be attributing to someone views he doesn’t hold, or saying someone did something they did not do. Exposing someone’s extramarital activities inadvertently by posting a photo showing person X with date Y when the date is not X’s spouse could land you in hot water.

Note that this right is personal. Companies cannot claim a right of privacy, although they have other avenues to pursue similar situations, such as “Intentional Misrepresentation,” otherwise known as “fraud” or “deceit.”


Interference with a Business Relationship

This one is pretty well explained by the title. To get in trouble here you have to know about a valid contractual relationship, or a valid expectation that someone will be entering a valid relationship, then you have to intentionally mess it up. Enough said.

Negligence

Think about a car accident. Now think about a car accident online and you’ll be heading down the road to understanding this potential problem.

When you drive a car, you have a duty to conform to a specific standard of conduct, which was breached in the accident and caused actual damage to someone. The same can happen online. Do you have some duty of care?

A good example would be an attorney or doctor who has a duty to keep client information confidential. You also signed, but probably didn’t read, a “terms of use” agreement for each social media site when you signed up. Those agreements generally define your duty relative to the content you post on the site.

Did you breach that duty? And, did your breach cause damage? All four elements have to be in place to get you in trouble for negligence.


Contract

All it takes to fall into a contract is an offer, an acceptance, and a promise to pay, known as “consideration.” That’s it.

You might think you’re joking around during an online exchange, but just a single post and response could bind you into some contractual action. Watch out that you don’t agree to something you really don’t want just because you don’t think social media exchanges count as contractual language.

Heck, you could also get in trouble here by making an offer for business services that are seen as an open offer for everyone. The possibilities are endless.

Trademark

Trademark law is all about protecting someone’s investment in their brand — personal or business. It’s about consumer confusion.

The test for trademark infringement is if an appreciable number of consumers would be confused about the source of some goods or services, thinking those goods or services come from, are affiliated with, or endorsed or sponsored by the person making the complaint. The affiliation and endorsement factors will get you in trouble.

So, don’t use someone else’s brand name for your online name, and avoid inferring that you are associated with people or brands with which you really have no affiliation or sponsorship.


Copyright

I admit it will be hard to get yourself into a copyright infringement situation from a single 140-character tweet, but you might be tempted to post a few tweets in a row to share a short poem or song lyrics. Don’t do that.

It’s easier to get in trouble on Facebook, LinkedIn, or MySpace because there you might be tempted to post a photo or piece of music that will land you squarely in a copyright infringement situation. Just because it’s online and easily copied, doesn’t mean you have the right to make and post other people’s creative work. You don’t.

Trust your instincts — if you had worked hard to create something, would you want it posted by someone else? Probably not.

I’m sure there is some form of legal trouble that you could get yourself into that goes beyond this list. But I’m going to assume that you’re not a criminal mastermind and that you’re not going to use your online accounts to harass people or solicit young boys or girls to meet you at the mall for a date.

Use your account only for good, to make friends and help people. It’s a jungle out there, so be careful and play nice.


Troubling Tweets

I just got another call about a potentially “troubling tweet.”  A Troubling Tweet is a potentially damaging post using Twitter (www.twitter.com) that could get the person posting the “Tweet” in legal trouble. Most of the time, these things happen relative to damaging personal or business reputation, trademark issues, contract issues, and some other causes of action.

This is the second separate matter regarding Twitter Tweets that I’ve dealt with in the last two weeks and when that happens, I know it’s going to escalate.

Watch for an article on this topic coming out in the 12/19 issue of the Northern Colorado Business Report.  I’ll post the article to this site on that day as well.

When in doubt, don’t post and play nice.  🙂

Northern Colorado Business Report Column #1

NCBR ARTICLE

Anatomy of a tech-transfer startup
By Kevin E. Houchin, Esq.

July 4, 2008 —
You can’t live and work in a college town without hearing the term “tech transfer” quite a bit. Yes, we understand it has something to do with making money from the technology that comes out of the labs of research universities, but what does that really mean? And how do universities and inventors share the profits?

The modern era of technology transfer started back in 1980 when Congress passed the Bayh-Dole Act, which gave ownership of technologies created as a result of government-funded research to the universities and other institutions conducting the research. The magazine The Economist evaluated the act as “the most inspired piece of legislation to be enacted in America over the past half-century. … More than anything, this single policy measure helped to reverse America’s precipitous slide into industrial irrelevance.”

According to the Association of University Technology Managers, there were about 250 patents issued to American universities each year before 1980. In contrast, fiscal year 2004 saw more than 11,000 new patent applications from universities.



Success stories include Gatorade (University of Florida), the nicotine patch (UCLA) and, yes, even Google (Stanford). We’re talking about over a billion dollars in royalties and literally thousands of startup companies, with all the new jobs and downstream economic benefits new companies – especially technology companies – create.

Think Figure 4

While “tech-transfer” sounds complex, it is easy to understand the basic structure of these deals. Just think of the number 4.

Tech Transfer Figure 4 Diagram
Tech Transfer Figure 4 Diagram

A diagram of a typical technology transfer deal looks like a “figure 4”. It starts with a university employee, a professor or other researcher, coming up with a new, probably patentable technology. As with most employee-created intellectual property, the invention’s researchers create while working within the scope of their employment is owned by the employer – in this case the university.

You might think this is unfair or that this would make it hard to recruit smart people, and you would be partially correct, given that almost everyone who pursues a serious academic career chose his or her path for something other than money. They want to help solve problems by, for example, creating a new vaccine to fight TB in Africa.

Of course, it might become difficult to recruit and retain even the most altruistic research professionals if they didn’t get a chance to benefit from profits resulting from their work. Accordingly, most universities automatically give back a standard percentage of any profits generated by patentable technology to the inventor. If there is more than one inventor listed on the patent, the group splits the pot, evenly or based on the level of contribution made by each member.

For its part of the deal, the university pays the cost of “prosecuting” (jargon for the application process) the patent. This expense can range between $5,000 and $15,000, but can be much more depending on the complexity of the technology and whether or not international coverage/protection is desired.




In some cases the university can directly license the technology to an existing company, which then develops the technology into marketable products. If this kind of direct license happens, the revenue stream flows from the consumer to the industry partner or licensee. The licensee typically pays a predetermined set of fees, percentage of sales ( “royalty”), or some combination of the two back to the university. In some cases, ownership equity is also provided in exchange for the rights to the technology. Simple.

However, many new technologies that develop from university research do not fit into existing markets or products. They may require some form of validation or proof of principle, and often require more extensive business development and technology maturation.

Some of these technologies may be suitable for a “university startup” and we get to form the “figure 4” of the transaction. In this case the university might ask the inventors, or the inventors might approach the university, to discuss formation of a new company specifically to commercialize the technology.

Commercialization happens

Let’s say this happens and let’s call the new company “NewCo.”

After NewCo is formed, the university licenses the technology to NewCo and works closely with NewCo to help make the business a success. NewCo further refines the technology, develops a market assessment and potential customer database for products and services derived from the technology, and sells these products and services in the marketplace.




Sometimes the founders of NewCo will quit their university jobs and devote their full-time energy to the new venture, especially if the inventor was a graduate student or untenured faculty. Other times, the inventors will keep their day jobs and bring in outside management professionals to run the company.

The inventors take an equity interest in NewCo, and many times the university receives an equity stake in the new company as part of the exclusive license of the patent. Many times other outside investors may add some cash or expertise to the project in return for stock in NewCo.

When NewCo has commercialized the product and taken it to market, the university shares royalties with the inventors, which is a required part of the Bayh-Dole legislation, and practiced by U.S. and most international universities as well. Not bad.

Of course there are as many different details and nuances to these agreements as there are people and patents, but most technology transfer will follow the basic anatomy of my “figure 4” diagram.

Kevin Houchin is an attorney specializing in intellectual property law and marketing for entrepreneurs based in Fort Collins. He will be covering the legal world for the Business Report each quarter, and can be reached at kevin.houchin@houchinlaw.com.