Coming to Arizona in 2015: B Corporations

October 17, 2013 by 2 Comments
voting or shopping by photologue_np from Flickr (Creative Commons License)

voting or shopping by photologue_np from Flickr (Creative Commons License)

An exciting bill was approved by the Arizona legislature this year that will allow people to create B corporations in Arizona starting in 2015. (Apparently it will take them until then to update the Arizona Corporation Commission website with the forms and information.)

Benefit corporations, or B corporations, are like other businesses except that they have “higher standards of corporate purpose, accountability, and transparency.” In other corporations, the people in charge have an obligation to make the most money for their shareholders, and if the shareholders believe that management isn’t doing that, they can sue the company. In a B corporation, the company has other motives for being in business besides maximizing profits and the shareholders are on board with that plan. These are companies like Patagonia and Ben & Jerry’s.

B Corp CertifiedEarlier this year, I attended a seminar organized by the Arizona Tech Council on B corporations where we learned about some of the benefits of having B corporations in your community. B corporations are 60% more likely to donate at least 10% of their profits to charity compared to other sustainable businesses and they are 18% more likely to use suppliers from low income communities compared to other sustainable businesses. These companies are four times more likely to give employees paid professional development opportunities compared to other sustainable businesses. In 2011, 95% of B Corps paid a living wage to all employees and were three times as likely to offer health insurance to all employees and have retirement plans.

Until we have B corporations in Arizona, companies can become B-corp certified if they meet the B Lab’s “rigorous standards of social and environmental performance, accountability, and transparency.” There are at least four B-corp certified businesses in Arizona, including Goodmans Interior Structures and DIRTT Environmental Services. A business doesn’t have to have a higher social cause as its obvious purpose for being in business. Many small businesses who provide traditional goods and services can be B-corp certified.

Over 600 companies have become or B-corp certified. If you want to learn more about B corporations including how to become B-corp certified, please visit their website. If you need help deciding whether you should become a B corporation or B-corp certified, contact your accountant or business attorney for assistance.

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What Happens to your LLC when you Die

October 10, 2013 by 1 Comment
Headstone View by Augapfel from Flickr (Creative Commons License)

Headstone View by Augapfel from Flickr (Creative Commons License)

When you own an LLC or part of an LLC, you own property. This is property that will be part of your estate when you die. If someone came to me and said their business partner just died and they’re not sure what that means for the business, I would initially have two questions.

  • What does your operating agreement say in regards to this situation?
  • What does the deceased’s estate plan say happens to their portion of the business?

Hopefully both of these documents exist and give clear instructions. If you don’t have an operating agreement and the person didn’t have an estate plan, their portion of the business will pass to their relatives like the rest of their estate per that state’s law. Most likely, if the person was married, their portion of the business would go to their spouse. If they didn’t have a spouse, it would go to their kids. If they didn’t have a spouse or kids, it would go to their parents.

When I draft an operating agreement for LLC owners, I make them answer the hard questions like what happens if an owner dies or gets disabled and document their plans for addressing those situations at the beginning of their business relationship so they won’t be scrambling when they find themselves facing these issues.

If you are a sole LLC owner, you don’t need an operating agreement that tells you how you’re going to run the business, but you may want one to thoroughly document what you want to happen to the business when you become disabled or die. Make sure you document the pertinent information like where keys, passwords, and bank accounts are so your employees or loved ones can take over or wind up the business.

Once you have your estate plan and operating agreement in place, make sure you tell your family and whoever else may need to know where you put it so they can carry out your wishes. My Wills and Estates professor (who is a brilliant estate planning attorney) suggests you put them in a fire-proof and waterproof safe with the door unlocked (or the key in the lock). That way the documents are safe but if a thief gets into your business or house, they will quickly see that it doesn’t contain anything of value to them and leave it.

It’s hard to think about what should happen to your business if you die. If you work in an industry (like law) where a person needs a specific credential to be an owner, you may not be able to keep the business in the family but they could be charged with closing down your operation. Otherwise you will have to decide if you want the business to go to a family member, an employee, or a combination of people. You ultimately won’t have control over whether the business continues to exist, but you can put the documents in place to try to make it happen.

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Ask the Hard Questions Before Starting a Business

September 19, 2013 by 2 Comments
dock at dusk by Scott Ellis from Flickr

dock at dusk by Scott Ellis from Flickr

When business owners are launching their new venture, they can get so excited about launching the business that they don’t put the energy into making sure they have the structure of their business relationship laid out. Why would they want to do that? That sounds really boring and kind of a downer when you think about it.

Even though it might seem boring or superfluous, people who are going into business need to have a meeting of the minds and address some of the hard questions that come with owning a business. It might be the first stressful conversation you have to have and it’s a good way to gauge how well your partner(s) communicate under stress. You might learn that they’re an irrational nutball when things aren’t smooth sailing and you don’t want to go into business with them.

When I’m working with new business owners, here are some of the questions I throw at them to see how well they’ve thought through their plans.

  • When and how much will each owner get paid?
  • What happens if an owner gets divorced? Becomes disabled? Dies?
  • What are each person’s responsibilities? How much can each owner spend without getting the other owner(s) approval?
  • If the owners are deadlocked on a decision, how will you resolve it?
  • What should happen if an owner isn’t performing up to par?
  • What will happen if an owner wants out?
  • Under what circumstances can an owner kick another owner out of the company? What will the process be?
  • What’s the goal of the business, including the exit strategy?

Ideally, these answers should be a part of the owners’ operating agreement if they have an LLC or otherwise documented in a master plan so everyone’s on the same page. Business divorces can be as messy as family divorces, especially when the owners didn’t figure some of these things out in advance.

It’s much easier to deal with these questions when everyone’s happy and thinking about what’s fair and what’s best for the business than to wait until everyone’s pissed off at each other and looking for ways to get ahead or screw over the other owner(s).

Before you start a new business, talk about the hard questions with your potential partners before you launch your venture and consider meeting with a business mentor and/or a business attorney to make sure that you’re setting yourselves up to be a success from all angles from the beginning.

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News Reporter Shea Allen Fired because of her Personal Blog

August 1, 2013 by 2 Comments
TV Camera on the grass by Simon Yeo (smjbk) from Flickr

TV Camera on the grass by Simon Yeo (smjbk) from Flickr

Shea Allen was a TV reporter in Alabama who has a personal blog. She was fired after she released a post of “No Apologies: Confessions of a Red Headed Reporter” where she, among other things, admitted she is “frightened of old people,” has “taken naps in the news car,” and that she’ll stop recording if you ramble and she deems you unnecessary for her story but let you think otherwise. You can check of her post for the full list. I’m not sure what to think of her statement that her best sources have secret crushes on her.

Shea’s boss was not impressed and fired her because the post did “irreparable harm to the station’s image.” She did an interview about the situation with Keith Yaskin from The Flip Side Communications and shared her thoughts about what happened here.

Shea doesn’t think that she should have been fired since the alleged inappropriate post appeared on her site where she’s sharing her personal views, and not representing the TV station and because she offered to take the post down once she became aware of her employer’s objections to it.

The First Amendment protects Shea’s right to free expression; however the fact that her statements were not illegal is not enough to keep her boss from firing her, at least if she was an at-will employee. At-will employees can be fired for any legal reason, including the fact that your boss doesn’t like what you posted on your personal blog as long as what you wrote about isn’t protected (i.e., your gender, race, religion, disability, etc.)

Keith hit me up for an off-the-cuff response interview and here’s what I had to say about bloggers like Shea being fired because of their blogs here.

What about the statement that she was just being funny? I believe that was her intent; however blogging gives you a voice but not necessarily a voice tone. You can’t guarantee that what’s funny to you will be seen as such by others, especially when it’s your boss reading about things that you do at work that he/she may frown upon.

I agree with Shea that her situation highlights a “gray area in social media.” It’s because of situations like this that every company needs a social media policy that provides clear dos and don’ts when possible but more importantly provides guidelines for employees when it comes to their online posts, whether they’re using the company’s social media accounts or their own. Companies should remind employees that their posts are permanent and that they should treat each post like a digital billboard that millions of people might see.

I also think that Shea’s confused about the limits of the freedom of speech. It applies to everyone in the U.S., but it doesn’t protect you from all the consequences that may occur because of what you said.

If you want more information on this topic, please check out my newly revised book, The Legal Side of Blogging: How Not to get Sued, Fired, Arrested, or Killed.

You can connect with me on Twitter, Google+, Facebook, YouTube, LinkedIn, or you can email me.
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Filed Under: Business Law, Employment Law, Internet law, Legalities of Blogging Tagged With: , , , , , , , , , , , ,

How to Avoid Screaming Matches in Coffee Shops

July 25, 2013 by 2 Comments
Office Cleaning Prank Played On Janitor In Frederick Md from Flickr

Office Cleaning Prank Played On Janitor In Frederick Md from Flickr

When you and a friend have a great idea for a new business, you create an LLC.

When you create an LLC, you get super-excited about your new venture.

When you get super-excited about your new venture, you forget to put in the business infrastructure behind the scenes.

When you forget to put in the business infrastructure behind the scenes, you and your partner may have different ideas about how you’re going to run the business.

When you and your partner have different ideas about how you’re going to run the business, you get frustrated with each other.

When you get frustrated with each other, you get into screaming matches at coffee shops.

Don’t get into screaming matches at coffee shops.

Get an operating agreement at the beginning of your business relationship.
This will make sure that everyone is on the same page and you can predetermine how you’re going to address certain problems before they arise.

You can connect with me on Twitter, Google+, Facebook, YouTube, LinkedIn, or you can email me.
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When’s the Last Time You Reviewed Your Contract Templates?

July 18, 2013 by 1 Comment
Inspiration as Commodity by exquisitur from Flickr

Inspiration as Commodity by exquisitur from Flickr

I had the pleasure of speaking to the Photographer’s Adventure Club last week. In addition to discussion the basics of copyright and how to protect their rights in their work, we talked a lot about the importance of contracts.

I know the subject of contracts makes a lot of people’s eyes glaze over – it’s that fine-print-legalese-crap-that-no-one-reads-anyway stuff. A lot of people think contracts are boring and a lot of contracts are . . . but they don’t have to be.

I love contracts. They create the basis of so many relationships – whether they are written, oral, or pieced together through a series of emails. Too often people come to me with a question about a problem in one of their professional relationships and when I ask, “What does your contract say about this?” the answer is “I don’t know” or “We don’t have a contract.” We can still resolve the problem but we could have avoided a lot of headaches and frustration by putting everything on paper in advance so everyone’s on the same page from the beginning.

Having contract templates is often the best way to create the relationship with others that you want. In regards to photographers they should have a file of contract templates for clients who hire them, for other photographers when they have to hire an additional person to work a shoot, a copyright license for publications, a model release, and a location release. And contracts don’t have to be long, complicated, or riddled with crazy legalese to be effective. I prefer to write contracts in straight-forward English and I wish more of my legal counterparts would get on board with this idea.

And contracts can be fun. Recently I saw an episode of Man v. Food where Adam Richman took on the Hellfire Challenge at Smoke Eaters – 12 wings covered in crazy hot sauce. Before he could begin the challenge he had to sign a waiver that required the person signing to acknowledge that “I am an idiot.”

You can put almost anything you want in your contract as long as it isn’t illegal. And if you downloaded your contract templates off the internet, that’s not a bad place to look for ideas, but you should at least consult an attorney to make sure it suits your needs before you start using it. If the contract is valid and you sign it, you’re stuck with the terms so you want to make sure you’re not opening yourself up to get screwed over.

If you need additional information about the minimum you need for a valid contract, please check out my video below or here.


If you want to chat about your contract needs, please send me an email or contact a business attorney in your community.

You can also connect with me on Twitter, Google+, Facebook, YouTube, and LinkedIn.
Please subscribe to the Carter Law Firm newsletter for additional information about running your business more effectively. Please visit my homepage for more information about Carter Law Firm.

Filed Under: Business Law, Photography & the Law Tagged With: , , , , , , , , , , , , , ,

How Work Made for Hire Contracts Work

June 13, 2013 by Leave a Comment
Photographer Devon Christopher Adams at Ignite Phoenix #10, photo by Joseph Abburscato used with permission

Photographer Devon Christopher Adams at Ignite Phoenix #10, photo by Joseph Abburscato used with permission

If you have ever hired a third party to do photography, video work, web design, graphic design, or to create website or marketing materials for your company, you should check your contracts. If you didn’t draft it correctly, there’s a good chance you don’t own the copyright in what they created.

When you hire a freelancer or a company to create this type of content for you, you need a work made for hire contract. This contract should state that the person being hired is a contractor (not an employee) that they are being hired to create a works made for hire, and that you will own the copyright in everything they create under the terms of the contract. This contract needs to be in writing and signed before the contractor begins work on your project.

If you don’t do this, you will not own the copyright in the work. You will only have an implied license to use the work in ways specified in your verbal or written agreement. The contractor will still own the copyright in the work. If you repurpose the work in another way without the contractor’s permission, there’s a chance that you will be infringing on the contractor’s copyright. The contractor could sue you for copyright infringement or force you to buy another license to use the work. They could offer to sell you the copyright in the content too, which basically means, from your perspective, you’ll have to pay for the same work twice.

I work with companies and freelancers on both sides of this issue. I encourage companies to make sure they have a proper works made for hire in place with their contractors and to not let their contractors lift a finger until that contract is signed. I often suggest that they have provision in their contracts that states the contractor will indemnify the company against any infringement claims made against the company because of the contractor’s work. The company should make the contractor cover the attorneys’ fees and any damages if it turns out the contractor ripped off someone else’s work instead of creating the work themselves.

On the flip side, I frequently write contract templates for freelancers to ensure that they understand what rights they are retaining and which ones they are giving up. Many freelancers want contracts that give the hiring party the copyright in their work and that also give the freelancer a license to put a copy of their work in their portfolio so they can use it to obtain other jobs.  Without this license, the contractor can’t use their work in any way without risking violating the copyright that the company now owns, even though they created it.

If you are a freelancer or a company who hires third parties to create content, please contact a copyright attorney to make sure your rights and interests are protected by the terms of your contracts. You can connect with me on Twitter, Google+, Facebook, YouTube, LinkedIn, or you can email me.

You can also subscribe to the Carter Law Firm newsletter.
Please visit my homepage for more information about Carter Law Firm.

Filed Under: Business Law, Intellectual Property, Photography & the Law Tagged With: , , , , , , , , , , , , , ,

How To Trademark a Business Name

May 23, 2013 by 3 Comments
Can programming language names be trademarks? by opensourceway from Flickr

Can programming language names be trademarks? by opensourceway from Flickr

Last week a friend asked me if a business could trademark their name. Anyone who’s spent much time with me knows that the answer to every legal question is “It depends.” In this case it depends on whether your business name is trademarkable and if anyone else had claimed the same or a similar name for your category of goods or services.

When you start a business, check the U.S. Patent and Trademark Office (USPTO) database to see if anyone has registered the name you want to use (or a similar one) for selling the same goods and services as you. If someone’s already using the name you want, you will likely be infringing on their trademark rights if you use the name on your products. They could force you to change your name and rebrand if you use the name that someone’s already registered. If you were using the business name on your products and someone registers the name before you, you’ll be in the Burger King situation where you can keep using your name, but only in your established market.

Once you establish that your desired name hasn’t been registered by someone else, you have to look at whether the name you want is trademarkable. Not every business or product name can be a registered trademark. Here are the five types of trademarks.

1. Fanciful Marks: Fanciful marks are words that didn’t exist before you stuck it on your products. Examples include Exxon and Kodak. These marks can be registered with the USPTO main registry.

2. Arbitrary Marks: Arbitrary marks are words in real life, but they are stuck on a product that has no connection to the word. For example, the mark “Apple” for computers, cell phones, and digital music players is an arbitrary mark. The fruit has nothing to do with digital machines and gadgets. These marks can be registered with the USPTO main registry.

3. Suggestive Marks: Suggestive marks are marks where if you think about it, you can make a connection between the mark and the product. “Playboy” as a mark for a men’s magazine is a suggestive mark. These marks can be registered with the USPTO main registry. It’s sometimes hard to discern the difference between suggestive and descriptive marks.

4. Descriptive Marks: Descriptive marks merely describe the product. This includes businesses where the owner names the business after themselves. These marks can be registered on the USPTO main registry after they’ve established “acquired distinctiveness,” which usually means you’ve been using the mark for five years.

5. Generic Marks: Generic marks are the name of the products themselves. It would be if you had an apple orchard and wanted to sell your apples using the mark “Apples.” If the USPTO let you register that mark, no other apple farmers could call their apples “apples” without infringing on your trademark rights. Generic marks can never be registered with the USPTO.

This video may help. You can watch it below or see it here.

If you want to know if your business name can be your trademark and the risks and rewards surrounding registering your mark, contact a trademark attorney in your community.

You can connect with me on Twitter, Google+, Facebook, YouTube, LinkedIn, or you can email me.
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Reddit’s New Privacy Policy – How Terms of Service Should Be Written

May 9, 2013 by Leave a Comment
Startup Schwag Bag #2 by homard.net

Startup Schwag Bag #2 by homard.net from Flickr

Are you on Reddit? I love Reddit. It’s a great way to connect with the various online communities that matter to you.

Reddit recently announced that its new privacy policy is going into effect on May 15th. You can read the text of the policy here. Seriously, go read it.

What I love about this policy is how simply it is written. It’s straightforward, well organized, and written in English – not legalese. It’s a policy that Joe Average people can read and understand how the site will use their information. I appreciate that Reddit even said that they want their users to read and understand their policies.

Reddit’s approach should be the standard way that lawyers write a company’s terms of service for their clients’ websites. They should be simple, direct, and be organized in a way that it’s easy for users to understand the site’s rules. They don’t need to be excessively long or use words that no one uses in real life.

A website’s terms of service is a contract between the site’s owners and its users. If you disagree with a site’s terms, don’t use the site. It’s important when you join a website where you will be interacting with others or posting content that you understand your dos and don’ts as well as what the site can do with your information and anything you post.

Some people think it’s ok to simply take another website’s terms of service, change the name of the company to their own, and slap it on their website. This is asking for trouble, especially if you don’t understand the terms that you’re copying. You may be creating rules for your users that you don’t want in place. Reading other website’s terms of service is a good place to get ideas if you want to try to draft your own, but it shouldn’t be a substitute for making sure your terms of service reflect your individual or company’s needs. You never know who draft the terms you’re copying.

I love drafting custom website terms of service. I get to combine my client’s needs with what the law allows and come up with a document (in English) that will work for them. I know it sounds boring to some people, but to me it’s like a big puzzle that I get to figure out.

If you operate a website where users get to post content or interact with each other, please make sure you have a solid set of terms of service that fits your needs. If you can’t afford to hire an attorney to draft your terms of service from scratch, at least have one to review your terms of service or pay for a consultation to discuss what your provisions should be in your terms of service.

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Filed Under: Business Law, Geek Law, Internet law Tagged With: , , , , , , , , , , ,

FAQs about the Legalities of Social Media

April 25, 2013 by 1 Comment
Carter Law Firm's Official Postcard - let me know if you want me to send you one.

Carter Law Firm’s Official Postcard – Let me know if you want me to send you one.

I had the pleasure of speaking at the Public Relations Society of America’s Western District Conference last weekend. I led two sessions: “So you want to do a flash mob” and “The Legal Side of Blogging: 10 Questions to Ask Before you Hit ‘Publish.’” Both sessions were great and I wanted to share some of the frequent questions I get when I talk about the legalities of social media.

What should you do if you’re outsourcing your blog content?
You need a kick ass contract that clearly states who owns the copyright in the content that is created. If the hiring company obtains copyright, does the blogger get permission to put a copy of the work in their portfolio to obtain other work? The contract should also state who is responsible if there are any problems related to the work (i.e., copyright infringement claim) or if there are any disputes related to the contract.

What should you do if you want to use a photo from a company’s site, such as if want to write a positive review of their company?
There’s a chance that using the photo could qualify as fair use; however it’s probably best to avoid the possibility of being hit with a copyright infringement claim by asking the company if you can use their photo. You never know who owns the rights to an image and if there are any restrictions related to using it.

What’s the worst case scenario if you use an image from Google Images without verifying that it was available for use with a Creative Commons license or had been released to public domain?
You could be sued for tens of thousands of dollars for copyright infringement. I always say that just because someone sues you that it doesn’t mean they’re going to win, but in this case, they might. You can still be sued and lose even if you didn’t mean any harm.

I get permission to use every photo on my blogs or use photos that are available under Creative Commons licenses that allow me to modify and commercialize each image.

What if you’ve been using Google Images or you haven’t kept track of what images you’re allowed to use?
Probably no one wants to hear this, but I’d rip every image out of your site and start over, making sure that you own or have permission to use every image on your site.

These are my rules of thumb when it comes to social media:

  • Assume everything you post online will be seen by your best friend, your worst enemy, your boss, and your mother. If you’re not ok with one of those people seeing what you want to say, don’t post it.
  • Don’t post anything online that you wouldn’t put on the front page of the newspaper.

For more information about the legalities of social media, please check out my book The Legal Side of Blogging: How Not to get Sued, Fired, Arrested, or Killed.

You can also subscribe to the Carter Law Firm newsletter.
You can connect with me on Twitter, Google+, Facebook, YouTube, LinkedIn, or you can email me.
Please visit my homepage for more information about Carter Law Firm.

Filed Under: Business Law, Intellectual Property, Internet law, Legalities of Blogging, Photography & the Law Tagged With: , , , , , , , , , , , , , , , , , , , , , , , ,
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