Sumpin’ New on All Appropriate Inquiries

Since the last blogs on what one needs to do when acquiring an interest in real estate, there have been a change or two which are kind of important. See examples 12 and/or 3. The most significant is that there is a new ASTM 1527 standard; ASTM 1527-13 to be exact. In the event one does not know why we get to do an environmental site assessment with each acquisition of any interest in real estate, just re-read the above posts, or read the following brief review. (more…)

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Inherently Confusing: Bikes and Trademarks (Part 3)

What we Learned From the Specialized Trademark Incident

Part 3 – The Internet Determines Whether Marks are Confusingly Similar.

In my last post, I followed upon the discussion of the Specialized trademark saga. That saga provides another important pointer for trademark practitioners.

A trademark can only have one owner — the owner is the exclusive source or quality control agent of the goods sold under the mark. (That owner may in turn license others if the owner is monitoring the quality of goods sold under the mark. So in the case here, ASI was assumedly monitoring the quality of Specialized bikes sold under the Roubaix mark.) This is an important point, because it puts a trademark owner in a difficult position. (more…)

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Inherently Confusing: Bikes and Trademarks (Part 2)

What we Learned From the Specialized Trademark Incident

Part 2 – Never Miss an Opportunity to Publicly Scold Your Competitor.

In my last post, I opened a discussion on the Specialized trademark saga, with the goal of highlighting what hard rules, according to the Internet, apply when dealing with a mark infringement issue.  Our first take-away point was this little gem:  Mark owners who fear infringement must investigate the veteran status of the alleged infringer before sending out a cease and desist letter.  The saga teaches us a second rule, which I explain below. (more…)

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Inherently Confusing: Bikes and Trademarks (Part 1)

What We Learned From the Specialized Trademark Incident…
Part 1 – Always Investigate the Infringer’s Military Service History

People always complain: Why must everything in the law be so uncertain? What happened to black and white rules of law? How come everything involves a multi-factor balancing test that depends upon facts that require a 36-month lawsuit to uncover and a jury three days to decide? Well, sometimes, current events provide us a lesson that does provide us with black and white principles of law.

For example, three months ago the Specialized Bicycle company sparked a wildfire of Internet discussion when it sent a letter to a Cochrane, Alberta bicycle shop requesting it cease from using the word ROUBAIX as part of its name. It seems the bicycle shop decided to call itself “Café Roubaix.” The backlash supposedly went “viral” and even included reports appearing on cycling media outlets. An example of the “jumping on the pile” response from the Internet are the several articles appearing last December on the Velonews website. I especially liked the story objectively entitled: “Specialized’s disastrous trademark case is unnecessary to defend the brand.” So what are the hard and fast rules of law we learned from this incident? Well, here is the first rule: Investigate whether the alleged infringer is a war veteran.

Every story I came across about this matter pointed out that the bicycle shop owner was a veteran of the Afghanistan war. And though I am greatly in favor of veteran rights and accommodations (and was so years before it became Hollywood fashionable to do so), I was not sure what veteran status had to do with trademark rights. Of course, the Internet is never wrong. In discussing the pertinent merits of the Specialized trademark matter, the Internet nabobs would certainly not key onto an immaterial point just to create press? Would they? That would be so highly unusual.

I instruct all clients forming a new business or rolling out a new brand that the best money one can spend is on a comprehensive search to determine what other marks and names may be out in the business world that could pose infringement issues. In this case, the bike shop’s owner apparently opened his shop without even checking the Canadian intellectual property office’s registry of marks. Had he, he would have seen that Specialized owned a registration for the mark “ROUBAIX” for use in connection with bicycles and bicycle components. (Be honest reader, if you saw that registration, would you open up a bicycle shop named “Café Roubaix” without evaluating the trademark risks?) Nevertheless, comment posters vilified Specialized as a trademark bully. So putting aside the question of whether there is any type of infringement between Specialized’s registered mark and “Café Roubaix,” the Internet tells us that mark owners who fear infringement must investigate the veteran status of the alleged infringer before sending out a cease and desist letter. According to the Specialized case, this is a relevant inquiry under trademark law. By extension of this first rule, one must not assert mark rights against a veteran of the Afghanistan conflict. I have no idea what should happen if the alleged infringer has a blemished military record.

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Sole Owner LLC – Is Your Liability Really Limited?

paper(275)You are proud of yourself. You went on-line at the Secretary of State’s website and filed your Articles of Organization. This means that you have limited your personal liability right? Well … maybe.

People rarely understand that what they do AFTER filling Articles of Organization is as important as the filing itself.

You are living under a rock if you think that one of your creditor’s attorneys will say this:

“Oh, my, she has an LLC. I guess there’s no way to hold her personally liable.”

NOT …….

There will be a search to see if you have maintained the appropriate separation between you and your company. You formed an entity, and now the question is whether you acted like an entity. If not, you’ll be a target … personally.

What must you do to protect yourself? Keep these reminders handy: (more…)

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Leases – Reasonable Wear and Tear Excepted

bell(275)Every commercial lease has a sentence that reads like this: “… at the end of the lease term, the Tenant must return the leased premises to the Landlord in the same condition as when the lease term began, normal wear and tear excepted.” Sounds pretty simple. But what about all of the improvements you made, like cabinets, lighting and partitions?”  Those improvements weren’t there when you signed the lease.  So, returning to the “same condition” may not include those improvements. Who pays to remove them and return your space to its original condition?” Most likely, it’s you. (more…)

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Conditions and Covenants in a Business Acquisition Agreement

Graph(275)Business acquisition agreements have special features that you wouldn’t normally expect to see in run-of-the-mill contracts. This articles discusses two such features: pre-closing covenants and closing conditions.

Pre-closing covenants
Business acquisition agreements generally include a few covenants which obligate the purchaser and seller to do, or refrain from doing, certain things. In deals where there is a period of time between signing the purchase agreement and the closing (similar to buying a house where you sign a contract and then close the deal a few weeks later), there are normally a number of pre-closing covenants.

The purchaser usually performs extensive due diligence of the target company’s operations and records during the period between signing the purchase agreement and the closing. (Again, this is similar to the period after signing a purchase agreement for a house during which inspections are made and bank financing is lined up.) The parties also begin obtaining consents and making governmental filings and their legal counsel draft documents necessary for the closing. The parties generally agree to do — or refrain from doing — certain things during this period. Here are some examples of the seller’s pre-closing covenants:

  • provide access to its records, assets, and facilities for the purchaser’s due diligence;
  • continue to operate the business in the normal course;
  • not amend its corporate documents;
  • not sell additional equity;
  • not do anything that would have an adverse effect on the business or its assets or operations;
  • obtain required consents;
  • refrain from negotiating with any other potential purchasers; and
  • use its best efforts to fulfill the conditions to closing.

The purchaser’s covenants are not nearly as extensive. The purchaser might covenant for the following:

  • obtain required consents; and
  • use its best efforts to fulfill the conditions to closing.

Closing conditions
Business acquisition agreements generally provide that certain things must happen before the purchaser has an obligation to proceed with closing, and certain things must happen before the seller is obligated to sell. These are known as closing conditions. In transactions where there is a simultaneous signing and closing (i.e., the acquisition agreement is signed at the same time that the transaction closes), closing conditions aren’t necessary.

Here are some examples of typical closing conditions that must be met before the purchaser is required to close the deal:

  • the representations and warranties are true and accurate;
  • required consents have been obtained;
  • the seller has performed its pre-closing covenants;
  • there has been no material adverse change in the business, or its assets or operations; and
  • there has been no legal proceeding that would stop the transaction from proceeding.

If the respective closing conditions aren’t met, the parties aren’t obligated to close the transaction.

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The Lease Always Comes Last … Unless You Ask

Bullseye(275)You love to shop … or maybe you don’t. But in either event we have to buy things to survive. In your business you routinely make purchase decisions, large and small. Here’s a business purchase quiz for you: Have you ever negotiated a critical purchase without knowing how much the item costs? Nope. Have you ever bargained with a supplier without seeing the price list? Of course not. Have you ever spent hours and hours ($$) finding a much wanted item and then spent more hours ($$) arranging special delivery and more hours ($$) getting it assembled AND THEN asked how much it costs? No, you say?

But that’s probably how you negotiated your lease, if you negotiated at all. People spend countless hours looking for the location, negotiating with a broker, picking out carpet and paint colors BEFORE they ever see the lease. How can that be? Because business owners (that’s you) think that commercial leases are really all the same. Leases are a commodity right? Wrong … oh, so wrong. Of course you know the base rent and the options to renew. But everything else just seems a blur. No matter. None of that other stuff really matters. Wrong … oh, so wrong. (more…)

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Return to Liability

Briefcase(275)Seems we just can’t get away from those pesky, real estate/environmental liability issues. We now have a couple of Appellate Court cases on the Bona Fide Prospective Purchaser defense (the “BFPP” for those of you following my blog posts).

You will remember that in order to claim the defense, you have to do things before you buy the property, and then, do things after you buy it. Well, one of these cases addresses the before and after part. The other case only addresses the after part.

How many times do I have to tell you, you have to do both parts. . .

First, in Voggenthaler v. Maryland Square LLC., 2013 WL 3839330 (CTA 9, 2013), a purchaser of a shopping center knew one of its tenants had some problems with dry cleaning fluid. It bought the property anyway. We only know it found out because the seller disclosed a report that said the property was contaminated. And, if that was not enough, there was an issue about whether it exercised due care on the post purchase obligations. (more…)

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Missouri Workers’ Compensation: I’m a Small Business, Why Should I Care?

Computer (275)Workers’ Compensation.  Just the phrase causes many to conjure up images of employees faking injury to secure monetary reward.  Employers cringe when they hear “workers’ compensation” or an “on the job injury”.

However, it may come to a shock that many small businesses are unaware of the laws that are meant to protect not only employees in the state of Missouri but employers as well.  In many, many instances, an employer is much better served operating under the workers’ compensation system.  One could write a novel on the do’s and don’ts of workers’ compensation cases, both from the perspective of the injured employee as well as from the perspective of the covered employer.  In an effort to streamline a tedious subject, following is a summary of what small businesses should know about Missouri workers’ compensation and why they should care it exists. (more…)

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