When you are starting a small business, your to-do list often seems endless. Since many small business owners have limited knowledge of the law, legal issues facing your business may seem daunting. Furthermore, if you are starting a business, you are likely focused on your two most valuable resources, which are money and time. Spending precious time or limited funds to make legal decisions may not be a top priority. However, there are numerous legal issues regarding even the smallest of startups, and consulting with an experienced small business attorney is crucial to the success of your business.

One legal issue that often gets ignored by small business owners is intellectual property, or IP. IP is extremely important for protecting brands, ideas, products, and much more. However, there are several myths regarding IP issues for startups.

1. My business is too small to need protection for my intellectual property rights.

Many small business owners have exceptional products, which sometimes may attract almost immediate attention from other companies in that particular field. Other companies may try to piggy back on your success by trying to resemble or even closely imitate your brand, packaging, or your product itself. If you discover another company is trying to infringe on your product territory, and you do not have the proper trademarks secured or other IP protections in place, you will have little leverage to protect your product and brand, and the entire basis for your business may be threatened or copied.

2. Once I have a patent, no one else will ever try to copy my product.

A patent gives you the right to prevent others from producing the idea or thing your patent covers. However, even if you have patented your brilliant idea, there is no guarantee that other companies will not still try to do so. Often, bigger corporations will try to take advantage of small startups because they believe the small business owners will not have the proper protections or resources to fight them. If you have taken all of the necessary legal precautions and have a competent small business attorney representing you, you do stand a chance of challenging even the biggest corporations. If you win, the corporation will have to pay you for the license to create your patented product.

3. A trademark completely protects my brand.

Trademarks may successfully protect your brand in many instances. However, it is not unheard of for people or businesses to carefully monitor the activity on the U.S. Patent and Trademark website. Sometimes, when people notice that a new logo or business name is registered, they will rush to secure the associated URL before you do. Then, these people can often try to sell the URL to you for a lot more money than you would have originally paid.

There are many additional IP issues and questions you may face when starting or running your small business. It is crucial to consult with a small business attorney who is familiar with IP issues involved in a startup in order to secure and protect your brand and product. Do not hesitate to contact an experienced attorney at Kalia Law, P.C. for a consultation on your small business needs.

Women in Technology Business: Struggles and Successes

A recent 2012 study conducted by Harvey Nash, a British tech recruitment group, polled the Chief Information Officers of 450 companies, ranging from the highest profiting technology companies to small California start-ups.  Surprisingly, of the companies surveyed, the number of women holding the CIO position was a mere 9%.  Even more surprising is that this number has been slowly decreasing over the past couple of years, down from 11% in 2011 and 12% in 2010.  While women have steadily become more commonplace on executive boards in general, they are highly outnumbered in top executive tech positions.  Furthermore, nearly one-third of the CIOs replied there were no women in any management position at their companies.

Women make up over half of today’s overall professional workforce in the United States.  55%-60% of social media users and social gaming players are also women.  However, women have had a difficult time rising in the business of technology, and it does not seem to be getting any easier for them.  Even worse, the large majority (82%) of the male CIOs who participated in the survey did not believe the lack of gender diversity was a problem, or even that women were underrepresented, regardless of the data.

Technology giants in Silicon Valley have historically had a difficult time recruiting and retaining women in executive positions.  The exceptions seem to be companies such as Facebook, Xerox, and Oracle, who all have women in top leadership positions.  On the other hand, Google has been notorious for failing to either promote women to the top or retain the women that do make it to senior levels.  In fact, last year Google lost executive Marissa Mayer, the longtime head of its most profitable search business, to Yahoo after she felt demoted and pushed out by the new CEO.  Mayer is not the only top woman to either be sidelined or let go at Google.  In fact, retention of successful women at Google has become such an issue that a task force was dedicated to solving the problem.  Some potential solutions included having women interview with at least one woman, more family-oriented perks, and regularly encouraging women at Google to nominate themselves for promotions.

Technology companies of all sizes should similarly recognize the importance of having women in leadership positions.  Statistics show that Fortune 500 companies that had at least three women directors had an overall greater return on investment.  According to the Harvey Nash survey, there are many ways in which women may positively impact tech companies more than their male counterparts.  These include team cohesion and morale, getting the job done, relationship with the business, creativity and innovation, efficient decision making, consensus decision making, strategy making, and technical know-how.

Source: Harvey Nash Study

Harvey Nash’s survey only focuses on a small sampling of the technology businesses out there, and therefore is not necessarily a completely accurate representation of women leadership in the tech business world.  In fact, in the Bay area, women are founding their own technology startups at 1.5 times the rate of men.  These women may not hold leadership positions in the country’s most powerful companies, but their presence and ambition may be just as important.

Additionally, women in technology have been forming networking groups, both in person and online, to encourage and assist their fellow female techies.  Women 2.0 is a forum where female technological innovators write articles and share their stories.  Women Inspire Technology is a networking group with monthly meet up events in San Francisco.  Such organizations realize that though women have struggled to climb the ladder in many tech companies, there are so many talented technological geniuses among them and they need to continue to inspire women to succeed in this field.  Due to the increasing number of startups led by women, and the realization by many large technological giants of the value of hiring and retaining women in top positions, many tech executives believe that, though the numbers are currently bleak, this is actually the beginning of a boom period for women in the technological industry.

Earlier this year, Sheryl Sandberg, Chief Operating Officer of Facebook, published her first book entitled Lean In: Women, Work, and the Will to Lead, commonly referred to as simply Lean In.  Lean In focuses on the reasons behind the current and historical lack of women in leadership positions in business and government.  Sandberg wrote the book due to the apparent stall in the women’s revolution as far as careers are concerned.  She realized that only 14% of Fortune 500 executive officer positions were held by women, and that number had hardly changed at all over the past ten years.  Because the ultimate goal is to have men and women split leadership roles in the United States 50/50, women seemingly need to step up their professional games.

Instead of simply blaming men or gender bias in general, Sandberg asks women to take a hefty amount of responsibility for their own actions that may be holding them back in the professional realm.  Sandberg’s overall premise is that women tend to subconsciously hold themselves back in business by “lacking self-confidence, by not raising our hands, and by pulling back when we should be leaning in.”  By identifying common mistakes even the most ambitious women repeatedly make, the book aims to empower women in the workplace and take control of their professional futures while still maintaining a satisfying home life.

Main Theories 

Sandberg claims that women often “leave before they leave” a job.  Ambitious women are taught from a young age that they will someday struggle to balance work and family, and so women in business often begin worrying about this balance long before necessary.  Women will not strive for the top because they anticipate having children, and so they do not make as big of an impression as possible prior to having kids.  If women achieve greater things prior to having kids, they will return to the workplace with more respect and more authority.  Sandberg also asserts that men should step up more at home in order for everyone to achieve balance in their lives.

Sandberg also addresses “imposter syndrome,” or women feeling as if their success is fraudulent and they are not worthy of a certain level of success or authority.  This causes women to speak up and give their opinions less, since they are not as confident in what they have to say.  Silence does not make an impression and therefore quiet women in the workplace are not viewed as contenders for top positions.  On the flip side, women who do speak up and aggressively assert themselves tend to be less liked, and women are usually expected to be likeable.

Sandberg admits women walk a fine line on their way to the top, but encourages women to have a confident voices and a strong presence in the workplace.  Most of all, women should support each other, and at the end of her book, Sandberg recommends that women should form Lean In circles to continue this conversation and encourage the movement.

There is no question that the Internet has changed the business landscape and has significantly lowered traditionally high barriers to entry in some industries. No longer do startups and entrepreneurs need to have large amounts of capital to get started. Depending on the industry, getting started may be as simple as having a reliable Internet connection and a basic website selling your product or service. Currently, Internet-based retailers enjoy the benefit of not being required to charge sales tax in states where they do not have an actual physical presence.

That all may change soon, however. The Marketplace Fairness Act is currently pending in both houses of Congress, and would give states the power to collect sales tax from all online business that sell products to their residents. Part of the reason that states were unable to collect from online businesses up until now was judicial concern that allowing states to collect from businesses that did not have a presence in the state would unreasonably burden commerce. According to proponents of the bill, technological advancements have made it more feasible for retailers to collect state sales tax at the time of a transaction. According to a report in the Wall Street Journal, the bill has broad bipartisan support as well as the support of most large retailers, including Amazon and Wal-Mart. Notably, online retailing giant eBay has voiced vocal opposition to the bill, saying that it will hurt small online sellers, a group that makes up the majority of eBay’s customer base.

The act requires states to simplify their tax laws in order to simplify the process of tax collection for businesses. States that want to collect taxes from online retailers have two options to simplify their tax codes:

• Option 1 – States that have not already may adopt the Streamlined Sales and Use Tax Agreement (SSUTA) that 24 states already use.
• Option 2 – States that do not adopt the SSUTA may alternatively meet 5 simplification criteria set forth in the act: notify retailers ahead of time of any rate changes, designate a single state agency to handle tax registrations, filings, and audits, create a uniform sales tax base for use throughout the state, employ destination based tax rates, and provide retailers free software to comply with state tax laws, and not hold retailers liable for any errors resulting from using state provided systems or data.

Fortunately for small businesses, the Marketplace Fairness Act provides an exemption for businesses that have less than $1 million in annual revenue. This measure gives smaller retailers a slight advantage over their larger competitors, and also ensures that small business is not overburdened by complicated tax collection requirements.

Contact a small business attorney for a consultation

The Marketplace Fairness Act has the potential to significantly alter the e-commerce landscape, and may have substantial tax implications for growing businesses. Small business owners and entrepreneurs should take time to understand the implications of the proposed law, and also consult with an attorney to determine whether their business will be affected, and also how to comply with the regulations should they become law.

If you hire someone to perform services for your business, that person may be classified as an independent contractor or as an employee.  The differences between these two classifications are often misunderstood by an employer, and these misunderstandings can have significant legal consequences.

There are several benefits for a small business owner who hires independent contractors instead of employees.  First, the business owner does not have to provide health benefits or retirement plans for an independent contractor.  The business owner also does not have to pay employment taxes on an independent contractor, as the IC is considered self-employed and pays his or her own taxes on Schedule C of a 1040 IRS form.  Recordkeeping is therefore simpler. Also, under the doctrine of respondeat superior, an employer can be held liable for the tortious acts of his or her employees performed within the scope of employment. In the case of an independent contractor, however, the employer is not liable.

Often times, however, a small business owner believes they have hired an independent contractor, when the court may consider the person to actually be an employee.  Just because a business owner labels a worker one way or the other, does not necessarily mean that classification is accurate.  Courts are not bound by an employer’s classifications, and may reclassify workers if deemed appropriate.  In the case of reclassification, an owner may find him or herself liable for taxes or tortious actions on behalf of the employee.  So, it is important for small business owners to carefully ask themselves whether their believed independent contractors are actually employees.

To make this determination, a small business owner must understand the test that courts generally use.  The test has several factors, however most of the factors involve one thing: control.  Courts ask, in short, who controls the worker?  Independent contractors control themselves.  They set their own hours, their own fees for payment, and typically provide their own materials and tools.  A contractor may have several jobs for different businesses at once.  On the other hand, employees are controlled by the business owner.  The business owner usually sets hours, wages, and provides the materials and tools for the job.  Furthermore, an employee is usually under the control of only one employer at a time.

Therefore, even if a small business owner does not pay taxes on a worker, and considers them an independent contractor, if the business largely controls the worker, the court or IRS may reclassify the worker as an employee.  The small business owner may find him or herself facing liability for actions of the employee or for unforeseen back taxes.  A small business owner should take steps to avoid reclassification – first, start with an employment contract that clearly defines the worker as an independent contractor.  Next, the business owner must follow the control rules regarding the worker, and allow an independent contractor to control himself in order to retain contractor status.

If you have question regarding classification of a worker as an independent contractor or employee, or are facing a possible court case, do not hesitate to call an experienced small business attorney at Kalia Law, P.C.to discuss your case today.

A professional and robust Internet presence is essential for any business that wants to remain competitive in today’s marketplace. The web allows for business opportunities that did not exist just a few years ago, and also allows anyone with an internet connection to share their thoughts with the world instantly. The Internet is increasingly becoming the first place people turn in order to shop for goods or services, and consumers are also becoming more educated about their options. As a result, it is increasingly important for businesses to actively manage their online reputations, and monitor what internet denizens are saying about their business practices and quality of product or service. Online review sites such as Yelp get millions of visitors every month, and Google has started including reviews and ratings with some of its search results. According to a Harvard study conducted in 2011, a one-star improvement for restaurants on Yelp resulted in a 5-9% increase in revenue.  What all of this means is that it is more important now than ever for businesses to be vigilant in protecting their online reputations, and also to take steps to remedy any unwarranted negative commentary.

Legitimate criticism or actionable defamation?

Even for the most careful and customer conscious business, there are going to be disgruntled or dissatisfied customers and negative reviews are going to happen. The First Amendment of the U.S. Constitution guarantees free speech, but when speech ruins a reputation or interferes with a business expectancy a person or business may be able to sue for defamation. Under California law, a claim for defamation arises if a person makes a false statement about another party, and that statement causes harm to that party’s property, business, profession, or occupation. Because falsity is an element of defamation, true statements by definition cannot be defamatory. Defamatory statements that are spoken are called slander, and written statements are known as libel. Depending on the circumstances of a particular situation, a business may also be able to bring a tortious interference action against a person or other business that made negative statements online. Generally speaking, in order to claim tortious interference you must have an existing business relationship with a third party, and the defendant must have somehow interfered with that relationship. In fact, in some cases a business relationship may not even need to exist; under some circumstances, it may be sufficient to have the reasonable expectation of an economic advantage or benefit.

Consult with a Small Business Attorney to explore your options

Any business owner knows that his or her business’s reputation can make or break a business. In these days of constant connectivity, Twitter, Facebook, or Yelp, one unhappy customer or client can broadcast their displeasure to the world. Luckily, there are steps that a business can take to remedy unwanted or undeserved criticism. If a person is publishing statements that are hurting your business, you may be able to sue him or her and potentially recover damages due to the loss of business. A court could also prevent an individual from posting about your business at all. To determine whether you have a claim, you should consult with an experienced attorney.