Stop legal malpractice before it happens with these tips

The most important step you can take to avoid legal malpractice is to pick the right lawyer to represent you — one who is qualified to do whatever you are hiring a lawyer to do.

But that’s only the first step. Once you have retained a lawyer, it is important to make sure that he or she understands what you want him or her to do for you.

“Many malpractice cases involve situations where the client says, ‘I told my lawyer to do X,’ and the lawyer says, ‘No you didn’t.’ So, do not assume that the lawyer will automatically know everything you want done,” says Timothy J. Miller, general counsel at Novack and Macey LLP.

“If it is important to you that some particular thing be done in some particular way, make sure your lawyer knows it. Ideally, there should be a written record of exactly what you have asked the lawyer to do. That will help avoid misunderstandings about what is expected.”

Smart Business spoke with Miller about avoiding malpractice.

How does someone find a qualified lawyer?

There are many ways to identify qualified lawyers. If you have a lawyer who has done a good job representing you in the past, he or she may be able to recommend somebody to represent you in a case outside his or her area of expertise.

There also is a lot of information about lawyers available on the Internet. Your social media contacts may be able to help, and so might your friends and colleagues.

But, don’t just grab the first name that comes your way. Investigate and interview more than one lawyer before making a decision.

What else can help someone avoid malpractice?

Year after year, lawyer disciplinary agencies report that the No. 1 complaint clients have about lawyers is that lawyers fail to communicate as the client expected.

So, when you are picking a lawyer, you should be clear from the outset what are your communication expectations. Then, during the relationship, the lawyer should respond promptly to your emails and phone calls.

If your lawyer doesn’t respond to your calls, you need to do something about the problem, and ultimately, you may need to find a new lawyer.

Communication is not a one-way street. For example, you should pay attention to the copies of court filings and communications your lawyer sends to you and let the lawyer know if you see something you have questions about.

You also should respond promptly and honestly to your lawyer’s calls and emails. If you don’t return your lawyer’s calls or aren’t truthful with your lawyer, you are opening the door to problems.

In addition, you and your lawyer should communicate clearly about fees. That way you won’t be surprised about the size of your bill.

What if a client is unhappy with the lawyer?

If you are unhappy, you need to make sure the lawyer knows it. For example, if you are unhappy because draft documents do not address a specific issue, your lawyer needs to know that you are unhappy and why.

Lawyers are not mind readers, and if you don’t tell them that something is wrong, they probably will not figure it out on their own.

If nothing else, discussing your unhappiness will give the lawyer a chance to explain his or her reasoning and give you the opportunity to agree or disagree.

What if a client thinks the lawyer has committed malpractice?

Lawyers are humans. Thus, they are not perfect and occasionally do make mistakes. But, you need to keep in mind that just because something went wrong, your lawyer did not necessarily commit legal malpractice.

Cases are lost and deals go wrong even when the lawyer performed well. In addition, sometimes a lawyer makes a mistake, but the mistake is not really what caused the case to be lost or the deal to go bad.

If you believe that your lawyer made a mistake and that the mistake damaged you, consult with a lawyer who understands legal malpractice. Just as you should have done when picking the first lawyer, make sure you pick the right lawyer to advise you on this issue. ●

Insights Legal Affairs is brought to you by Novack and Macey LLP

How to protect your trademark online

Trademarks are the face of a company and its products and services. Customers rely on trademarks when making purchasing decisions — associating a mark with a certain quality. People often confuse trademarks with patents and copyrights. While copyrights protect the expression of ideas and patents protect inventions, trademarks are words, designs or symbols that identify and distinguish the goods of one source from another.

“A trademark represents a company’s goodwill, essentially a company’s reputation, and allows a company to distinguish itself from competitors,” says Alexis Dillett Isztwan, member at Semanoff Ormsby Greenberg & Torchia, LLC. “That’s why it’s so important for a business to invest in the protection of its trademarks.”

Smart Business spoke with Isztwan about trademarks and how to protect a brand online.

How has increased social media usage impacted how companies brand themselves?

Social media gives companies a platform to build brand recognition and loyalty. A trademark is a critical piece of establishing a brand identity. However, there are a number of risks and pitfalls. On social media, mistakes can be disseminated and amplified quickly. Blunders are posted, Tweeted about and mocked on YouTube. Damage to a company’s brand can happen in a heartbeat on social media. Prior to the advent of social media, businesses had the luxury of time to fix mistakes before hard-earned reputations were undermined by a post gone viral.

What advice would you give about obtaining a trademark for a company name?

Company names are often used as trademarks and should be protected as marks not simply registered with the state as a corporate name. Limited rights in trademarks arise from use in commerce. However, federal registration provides national protection and the strongest protection for your mark in the U.S. Distinctive trademarks are stronger and more protectable. Companies shy away from adopting unique marks opting for marks that merely explain to consumers what the business does. Not only are descriptive marks unprotectable, they fall short of what a business should strive for in its mark — setting itself apart from the competition. Finding a unique mark that has not already been adopted is difficult, so it is essential to perform a thorough search before launching a mark in commerce or applying for a registration.

How should a business protect its brand online?

Once a business settles on an available trademark and files a federal application, several additional steps are worth taking. Use the mark consistently in commerce. Obtain domain names and social media tags not only for the trademark but also derivatives of that mark. Use proper trademark notices: ™ for marks in use but not registered and ® for registered marks. Proper notice alerts third parties of your rights and provides additional protections.

Monitor use of your mark: supervise licensees to ensure proper use of the mark; keep an eye on use of the mark online — sign up for programs like Google alerts, and pay attention to social media sites that your customers might frequent like Facebook, Twitter and YouTube.

How is trademark infringement different on social media and the Internet?

Trademark infringement is infringement — on- or off-line. Certain types of misuse are unique to social media and the Internet including cybersquatting, phishing, brandjacking, and misuse of meta tags. Infringers have many options on the Internet and social media to benefit from the goodwill of established marks, and often are able to do so anonymously. Trademark owners struggle to mitigate damages resulting from the infringement while not knowing who the perpetrator is. Courts will sometimes assist in obtaining the identity of an infringer, but filing suit can be costly and distracting.

Another tricky facet of infringement on social media and the Internet is determining whether the unauthorized use satisfies the “use in commerce” requirement of an infringement claim. In a brandjacking case, imposters may not be using the mark in connection with the sale of goods — while the damage to the business’s reputation is the same, the unauthorized use may not constitute trademark infringement. Adopting a strong mark and vigilantly monitoring usage of and enforcing rights in a mark are critical elements to protecting a company’s mark, and reputation, online.

The Supreme Court’s Alice decision could invalidate your software patent

A Supreme Court decision from this past June could mean that companies with patents on software-related inventions will lose that protection.

The ruling in Alice Corp. Pty. Ltd v. CLS Bank International changes what is patent-eligible subject matter. That could leave some patents unenforceable, and will challenge companies to rethink how they draft patent applications.

“Up until this decision, it was understood by the U.S. Patent and Trademark Office and patent attorneys in general that software-related patents were patent-eligible subject matter if they were sufficiently tied to a machine, such as a computer” says Christian Drago, a senior associate at Fay Sharpe LLP. “In essence, you’re not claiming the software, you’re claiming the computer that’s performing the function that the software is instructing it to do. After Alice, the court said adding a computer is not enough. They’re looking for something that tangibly affects the real world.”

Smart Business spoke with Drago and Jay Moldovanyi, a partner at Fay Sharpe, about the court’s decision and the risks companies now face.

Who does this decision affect most?

Anyone who has patented business methods, such as those that function to process financial information, may be at risk. For instance, Alice Corp. owned several patents directed to a computer-implemented scheme for mitigating settlement risk via a third-party intermediary that CLS Bank International was utilizing, until Alice notified the conglomerate of a possible infringement.

This is also going to affect app developers and e-commerce because they’re not tangibly affecting the real world.

How might this decision play out across those industry players?

Companies with software-related inventions and business methods may move away from filing patents. Many of these companies will use trade secret and copyright to protect their inventions, which are strategies that have some negative consequences.

Copyright can be used to protect software, but to get copyright protection a copy of the code must be sent to the Library of Congress, which means it could be copied. That creates unwanted exposure. So, more likely, companies will protect their inventions as a trade secret. That can be burdensome because it’s difficult for to maintain the secrecy of each step. It also puts a company at risk when those products are sent to the market because the function code may then be copied.

Why is the court taking this approach?

The Court is trying to prevent patents on what are considered abstract ideas, from preempting the use of those ideas by the public. For example, if the court allowed a patent on a human gene, that would preempt someone from studying that gene.

The problem, however, is that the court gives little guidance on what ‘abstract idea’ means.

How can companies with affected inventions protect their products in light of this decision?

Most of the software that’s being invented is going to affect something in the real world, it’s just a matter of making that relation clear in the patent application.

Based on the current rejections being issued by the Patent Office, claims of pending or new applications must be drafted in a way that shows an improvement to an existing technological process, uses an output to affect a tangible object, or links the idea to a particular technological environment with some form of meaningful limitation.

The court is showing that it equates ‘technology’ with ‘physical.’ So, any claims to an ‘abstract idea’ will be deemed patent-eligible only if they claim tangible, physical results or have an impact in the real-world.

Should companies with existing patents on these products be concerned that they could lose their legal protection?

Software remains patentable under the Alice decision. But the manner in which it is described, and the field in which it is implemented, will limit the scope of protection available.

Companies negotiating a license agreement should take precautions that licensees don’t sue for declaratory judgment of invalidity. But the bigger concern is asserting patent protection against infringers.

Contact a patent attorney if there’s a chance patent rights could be lost because of this recent judgment. He or she may be able to help rewrite the patent claims by way of a reissue patent.

When to sacrifice the benefits of arbitration in favor of litigation

Many business managers include arbitration provisions in their companies’ contracts. The prevailing philosophy being that arbitration is preferable to traditional litigation via the court system because it is private, speedier and less expensive. Under certain circumstances, however, a party may prefer to litigate a particular dispute in court even though it previously included an arbitration provision in the relevant contract.

“In such a situation, depending on the dispute and the arbitration provision, a party may be able to avoid arbitration and assert or defend its claim in a state or federal courtroom,” says Joshua E. Liebman, a partner at Novack and Macey LLP.

Smart Business spoke with Liebman about choosing traditional litigation despite the existence of an arbitration provision.

Why would a company choose not to arbitrate?

There are many reasons why a company may prefer to litigate in court as opposed to resolving its dispute via arbitration. For example, it may believe that it needs the broad discovery permitted by the courts, which is typically limited in an arbitration proceeding. Or, a party may believe that it has a strong technical legal defense that is more likely to be enforced by a court bound by the law than by an arbitrator who is not subject to review by the appellate court and may be inclined to seek a more equitable resolution. Also, a party may want to avoid arbitration if there is too much at stake. The substance of an arbitrator’s award is not subject to review on appeal. Rather, a court’s review of an arbitration award is limited to whether the arbitrator acted within the scope of his or her authority and whether the award is consistent with the terms of the underlying contract. A party may prefer to have the protection of appellate review in a substantial dispute.

Can a party that prefers litigation be forced to arbitrate?

Arbitration is contractual by nature. That means that if a party contracts to arbitrate a dispute, it is bound by its agreement to do so. On the other hand, a party cannot be forced to arbitrate any dispute that it has not agreed to submit to arbitration. Accordingly, even if a valid and enforceable contract containing an arbitration provision exists, a party may refuse to arbitrate when the dispute is beyond the scope of the arbitration provision.

Based on the previously mentioned prevailing philosophy that arbitration is preferable, contractual parties often attempt to nullify a ‘beyond the scope’ argument by inserting broad, all-encompassing language into their arbitration provisions that subject to arbitration ‘any and all disputes arising out of or relating to the agreement.’ However, if instead of using this broad stock language the parties take the time to draft a narrowly tailored arbitration provision that identifies certain disputes for arbitration or excludes certain disputes from arbitration, then courts will not force a party to arbitrate a dispute that is beyond the provision’s scope.

Who decides whether a claim is subject to the parties’ arbitration agreement?

Under federal law, a court determines whether the parties are bound by a given arbitration agreement and whether that agreement to arbitrate applies to a particular type of controversy. Under Illinois law, if the arbitration agreement is clear, the court makes the initial determination. If the language is broad or uncertain, the arbitrator decides. In all events, parties can contract to submit the question of ‘arbitrability’ to the arbitrator.

What can business managers do to avoid arbitrating disputes that they prefer to adjudicate in the courts?

It begins and ends with the arbitration provision. If there are specific categories of disputes that a company prefers to resolve in the courtroom, it must identify those disputes and draft an arbitration provision that excludes them. It is crucial that business managers think about the effect of including arbitration provisions in their contracts and craft those provisions to meet their companies’ needs. Arbitration provisions are not one size fits all.

Four common mistakes in business that won’t cost you much to avoid

Realizing it’d be a setback if a key employee who drives a lot of revenue to your business walked out the door, you offer a minority share in the company to show how much you value what this person does.

Six months later, a great opportunity arises with a competitor and the employee decides to take it. You must come up with an amicable solution to the ownership issue, but that’s not your only concern. It turns out you didn’t have the employee sign a non-compete agreement, so he is free to immediately take his talents and client connections to one of your biggest competitors.

The decision to sell shares in your business or to not get a non-compete agreement on file are two mistakes that Todd C. Baumgartner, a partner at Brouse McDowell, sees business owners make over and over again.

“For a few thousand dollars or less of legal work, these mistakes, which can cost a company hundreds of thousands of dollars, can usually be avoided,” says Baumgartner.

Smart Business spoke with Baumgartner about four of the most common mistakes businesses make and what you can do to avoid them.

Mistake No. 1: Not having non-compete agreements for key employees.

Star performers bring revenue to your business. Depending on the depth of your sales team, they can be responsible for a sizable percentage of the overall money that your company brings in each year. A non-compete agreement protects you by formalizing what happens if the employee decides to leave.

The process is not expensive and requires just a few hours with your legal team to make sure you’ve covered all the bases. You may get some grumbling from an employee who has a strong position from which to negotiate. But even if it’s only for six months or a year, it’s worth it to get the agreement.

Mistake No. 2: Not separating key assets in a corporate structure.

Let’s say you have a manufacturing company sitting on a piece of land worth $500,000. You find out the Environmental Protection Agency has issued a $2 million finding on the land. If you have the real estate and the operating company separated, the environmental liability won’t impact the business. You may lose the real estate, but you can keep all your equipment and keep the business operating.

Conversely, if you have a separate operating company and there is an accident in your manufacturing facility, a creditor won’t be able to go after the real estate because it’s a separate company. The limited liability company (LLC) is a useful tool to split out your real estate and it’s something that can be done fairly seamlessly.

Mistake No. 3: Bringing in key employees as minority shareholders.

Once you take this step, you can no longer terminate the employee without a legitimate business reason, even if their contract says they are employed on an at-will basis. Complications also arise if you want to reorganize the company.
If this employee works in one part of the company that you want to split off, there is potential liability if you move money between the divisions because you’re moving it away from a minority shareholder.

If the employee decides to leave and you’re not publicly traded, there could also be a dispute about how much the individual share is worth.

A profit sharing program, a stock appreciation rights plan or phantom stock are few options that help you avoid these problems.

Mistake No. 4: Not protecting intellectual property.

Companies will develop software and not get any type of patents on it. There are patent trolls out there just looking for ideas that don’t have intellectual property (IP) protection. Talk to an IP attorney to go through your inventory.

People don’t value IP the way that they should. For some companies, IP is their whole business.

It’s advisable to protect everything, especially for companies looking to make a liquidity event or exit strategy. A potential buyer is going to come in and look to see what is and what is not protected.

What retired pro athletes can teach seasoned leaders about business

The transition from being a professional athlete to an entrepreneur is fraught with risk. Your physical gifts may carry you a long way on the field or the court, but in the business world there are many other factors that play into your ability to succeed.

“It’s a difficult psychological transition,” says Luke Fedlam, emerging business attorney and chair of the sports and entertainment practice at Kegler, Brown, Hill + Ritter. “The first step to managing that transition is to figure out what it is they are going to do with the rest of their lives.”

The challenges faced by retiring pro football players are not all that different from those faced by entrepreneurs feeling the itch to try something new. While the former often has very little business experience, those in the latter group often think they know more than they actually do about what they’re getting into.

Smart Business spoke with Fedlam about the challenge of expanding your business portfolio and how to make the transition easier.

What is one of the biggest mistakes an entrepreneur can make?

Whether you are a former athlete turned entrepreneur or an established business leader who wants to branch out into a new industry, you still need to assemble the right team around you to be a success. When you don’t have that support, it can lead to a lot of problems.

Many professional athletes have mentors that they look to for support. That also holds true for entrepreneurs who have been in the corporate world and built successful businesses. The same philosophy of being open to help must be an integral part of your transition. It’s not expected for you to know everything, so having someone on your team who you can rely on to ask the difficult questions and feel comfortable doing so is a critical component of success.

What lessons can an established entrepreneur take from a retired athlete turned entrepreneur?

The first is to have a game plan for success. What are you looking to get out of this experience? Retired professional athletes know very well the work that went into each step of achieving their dream of playing professional sports. The next step was always on their mind and it’s the same with business.

There is so much that goes into the development of a business that focusing on the success solely because you believe in the industry, service or product will not benefit you or your business in the long-term.

Protecting yourself is vitally important. It could be something simple, such as making sure the appropriate agreements among your business partners are established and you have the necessary corporate formalities in place.

Go beyond the expected return, beyond the opportunity itself and ensure that from a business perspective, you’re protected. Develop the tools in the beginning so when it’s time to take the field, you’re ready to perform.

How do you find the right people to build a strong team?

It’s a matter of establishing your expectations and then having a team at the top that can hold everyone accountable. Articulating both standards of performance and business goals are crucial in forming your plan. It is also important to have a ‘no’ person as part of your team. Oftentimes successful athletes and business leaders are surrounded by people who do not want to ‘upset the apple cart’ and always agree with the leader.

A successful leader ensures that their team understands the business strategy but is empowered to challenge ideas and drive innovation. An added benefit to this approach is when a business leader looks to start a new business, the ‘no’ person can help protect the leader from making decisions that don’t correspond with the direction of the business.

A ‘no’ person will insulate you from the emotional decisions that come with being an entrepreneur, especially those related to personnel decisions. This person has the ability to objectively say, ‘This person is or is not doing the things necessary to make this a successful company.’ The right team can make all the difference.

Insights Legal Affairs is brought to you by Kegler Brown Hill + Ritter

The state’s new minimum wage law may cause employers to fret a bit

On July 1, California’s minimum wage increased to $9 per hour — but there are some related issues that could have a larger impact on businesses than the increase in wages.

The minimum wage increase not only raises regular and overtime wages, it also affects the classification standards of “overtime exempt” employees. In most cases, exempt employees must be paid a monthly salary that exceeds at least twice the minimum wage.

“The concern is that employers will not take that into account. Because exempt employees are not hourly, employers may not go back and see whether that salary translates to at least the minimum wage per hour,” says Wendy E. Lane, a partner at Greenberg Glusker.

Smart Business spoke with Lane about how the new wage law is affecting California employers.

What possible hazards should employers be aware of with the new wage law?

The law carries a huge potential for class action liability. The minimum base salary for employees to be exempt of overtime, meal and rest period obligations under three of the major exemptions — administrative, executive and professional — has now been raised because the minimum salary for those exemptions is based on a factor of two times the minimum wage.

As of July 1, in order to qualify for these exemptions, an employee must earn $3,120 per month, which is $37,440 annually. Employees must also meet certain ‘duties’ criteria in addition to being paid a salary of at least double the minimum wage.

The liability is that bigger companies with a large number of exempt employees all in the same boat likely could have a potentially sizeable class action suit.

How should employers examine their exempt employee situation?

While there are many factors that go into determining if an employee is exempt, including their level of expertise, training, and discretion, if they don’t meet the minimum salary requirement everything else is irrelevant.

A high-ranking employee could be in charge of other employees and make key company decisions. But if  he or she is not meeting the minimum salary test, the employee cannot be classified as exempt.

Then, if the employee you had treated as exempt worked more than eight hours in a day or more than 40 hours in the week, they were working overtime, but you hadn’t been paying them overtime. They probably worked through at least some of their meal breaks.

There are considerable penalties for having not properly paid overtime or provided the meal breaks because, in effect, you have been treating a nonexempt employee as exempt.

These cases are even harder to defend because most employers may say, ‘If they are exempt, we don’t need to track their time.’ Well, how do you prove there was or was not overtime if you don’t have timesheets? It suddenly becomes much more difficult, and the presumption is against the employer under California law.

What impact could the new law have on a company’s bottom line?

Obviously, the additional cost is a concern to employers, but it needs to be weighed against the cost of retraining a person. Let’s say that some employees were let go in order to pay for this raise at the lower level. Retraining somebody also carries costs.

There are also arguments that as people make more, they may no longer have to choose between food, rent or medicine — and may have more cash to contribute toward prevention and health care — which may improve the employee’s status with respect to attendance issues and sick time.

Employers must find ways to use the minimum wage increase to their benefit as this may be just the first of several minimum wage increases that will be going into effect.

Employers should consult with counsel as they make difficult decisions, such as lowering salaries of employees or terminating employees to be able to afford this change in the minimum wage.

Companies need to ensure they don’t make personnel decisions that will inadvertently expose them to greater liability (such as for claims of discrimination or retaliation) because they are not looking at the big picture as to whom they are selecting.

Insights Legal Affairs is brought to you by Greenberg Glusker

Consider if you want to reorganize or liquidate when bankruptcy looms

Bankruptcy is a unique tool that companies can use to restructure their debt, says Doris Kaelin, Of Counsel at Berliner Cohen.

“If creditors are getting aggressive, a company may decide to file Chapter 7, which offers an automatic stay of any actions, and let a trustee liquidate the assets,” she says. “But with Chapter 11, the officers, directors and investors believe there is a business worth saving and they can reorganize the company.”

Smart Business spoke with Kaelin about the types of bankruptcy for a business.

What different types of bankruptcy are there?

Chapter 7 is a straight liquidation; the business has typically ceased operating and control is given to a trustee appointed by the court. The trustee liquidates the assets and pays creditors in accordance with bankruptcy code priorities.

In contrast, Chapter 11 affords the company the ability to remain in control. The existing management, officers and directors continue to operate. A reorganization plan is put forth for how the company will emerge from bankruptcy. A company may also decide to liquidate some or all assets in Chapter 11, where greater value can be achieved than under a Chapter 7 straight liquidation. For example, with technology companies, the intellectual property often requires the know-how of the employees. A sale of assets in Chapter 11 may fetch a much higher price than in Chapter 7, because the buyer can hire the seller’s employees. In Chapter 7, employees no longer may be available for hire.

Why would a business choose bankruptcy?

Normally, when a company files Chapter 7, it has explored all alternatives, including a restructure, sale of its assets or new investment if there is still a business worth operating.

Sometimes businesses get sued and need the benefit of the automatic stay, which starts as soon as the business files bankruptcy.

If you are looking either to continue operating the business pending confirmation of a plan of reorganization providing for the restructure of the business, or to obtain approval of the sale of the company’s assets affording the benefits of a bankruptcy sale order, you may consider Chapter 11. Regarding the latter, a buyer may want to get the benefit of a free and clear order — an order approving the sale of assets to the buyer free and clear of liens, claims and encumbrances, a step a bankruptcy court may approve. That route may be taken because the buyer requires it. Bankruptcy could be the means by which to sell the assets.

How often can a business seek bankruptcy?

There are companies that have filed Chapter 11 more than once and successfully restructured the business. Sometimes the focus of the business changes and the company cannot continue with its current debt structure, so the bankruptcy process allows the company to restructure its debts and emerge stronger.

How expensive is bankruptcy?

Chapter 11 can be an expensive process. In Chapter 11, a company has to prepare monthly operating reports, file motions for court approval of transactions outside the ordinary course of business, and obtain the requisite votes and court approval of its plan to emerge from bankruptcy. There are a lot of things to be considered before a company goes that route, like is it really going to achieve what they need?

What are alternatives to bankruptcy?

If a company has financial difficulties, there may be non-bankruptcy options available. For example, a company can informally wind down outside of bankruptcy. Or it can utilize the assignment for the benefit of creditors’ process, a state law process that functions similar to a bankruptcy, where the company hand picks the assignee to liquidate the assets and pay creditors. Whether a company considers bankruptcy or other alternatives as options, it is important to talk to an insolvency professional sooner rather than later. You may have some options earlier that you may not have later.

If the company is a creditor in a bankruptcy filing, it is important to talk to an adviser to determine what may need to be done and to ensure that a deadline isn’t missed. There may also be an opportunity to purchase assets out of a bankruptcy case at a more favorable price.

Insights Legal Affairs is brought to you by Berliner Cohen

How to leverage your IP attorney for the analysis of intellectual property

As businesses invest in new products or services, the importance of identifying and protecting their intellectual property (IP) may not be at the forefront of their thinking.

“However, if you want to recoup your investment you have to be able to protect it, and IP is one way to do that,” says George Huang, an associate at Fay Sharpe LLP. “Most people are familiar with Chinese companies that knock off a product and can sell it much cheaper than the original manufacturer, because the Chinese company didn’t have to invest in developing the product and its market. Protecting your IP can keep others from harvesting the rewards of your work.”

Smart Business spoke with Huang about how your IP attorney can help analyze your IP, so you can protect your investments.

What kind of IP needs to be protected and how can an IP attorney help?

What product or service makes your business stand out from its competitors? What knowledge have you monetized? This is the IP that needs to be protected.

Your attorney can help by asking questions and providing a framework to help identify what IP in your business is valuable. It’s important to value your own assets highly enough, which is where an IP attorney can provide expert counsel.

Your attorney can also help identify what IP is protectable, and the best way to protect it. For example, two common forms of IP protection are patents and trade secrets. A patent excludes others from selling the patented product or service, and can be especially useful for manufactured products with new features. Obtaining a patent, however, requires disclosing the IP to the public in return for this monopoly, which lasts for 20 years, and certain requirements must be met.

In contrast, trade secrets are used to protect IP that is valuable because it is unknown, for example the recipe for Coca-Cola, and can last indefinitely. Your attorney can help determine whether your IP will meet the requirements for obtaining a patent, or perhaps might be better protected as a trade secret.

In addition, your attorney can identify your competitors’ IP. This can help you direct your investments towards new territories that can further distinguish you from your competitors. You can avoid investing in areas where your competitors already have an advantage.

If needed, your attorney can identify the best ways to assert your IP and protect your investment. For example, government agencies like the U.S. Customs and Border Protection must stop shipments of counterfeit goods from entering the U.S., and can do so when provided with the right information.

What’s an example of how the right protection can create value?

One good example is the SpinBrush toothbrush. The inventor had previously developed a rotating lollipop, and used that mechanism to spin the bristles on the toothbrush. Electric toothbrushes were previously high-end products that cost a lot of money, but this invention brought the price down below $10.

Because the inventor had the patents on the mechanism in the toothbrush, he prevented others from selling the same product, and had time to build his market share. Proctor & Gamble eventually paid $475 million for the company.

How important is timing for safeguarding new IP?

Timing can be critical. For example, many foreign countries require you to file a patent application before you even start offering your product. If you begin advertising before you file your patent application, then you won’t be able to get that patent protection at all.

How do you suggest companies weigh investing in their IP protection versus advertising/marketing?

That’s difficult to answer, and is unique to each company. It’s generally better to invest in IP protection as early as possible. However, it’s up to each company to decide how best to invest and grow their business. IP protection protects your assets and helps you keep the customers you find, but you still need to find those customers. Successful companies can balance these priorities.

Insights Legal Affairs is brought to you by Fay Sharpe LLP

How to manage the benefits and risks of social media in the workplace

As the number of people and businesses using social media continues to proliferate, workplace social media policies are getting more attention.

“It’s important to craft a written social media policy that protects a business without infringing on employee’s rights,” says Stephen Goldblum, a member at Semanoff Ormsby Greenberg & Torchia, LLC. He advises having a legal expert help establish a clearly defined social media policy.

“An employment lawyer who drafts personnel polices can help create a social media policy suitable to your business’s needs,” he says.

Smart Business spoke with Goldblum about the benefits and risks of social media, as well as the importance of a written social media policy.

What are some of the most popular uses and types of social media in the workplace?

There has been an explosion in the growth of social media and it has changed the way people communicate, both at home and in the workplace. Some of the most popular examples of social media include Facebook, LinkedIn, Twitter, YouTube and Pinterest.

Companies can benefit greatly from the use of social media, but there are also significant risks, which is why it’s so important to have a well-articulated social media policy. Even if a business doesn’t have a social media presence it can still be affected by what people, including its own employees, post about the business.

What benefit does social media offer?

All businesses can capitalize on the use of social media. One example is the recruitment of employees. Over the past several years, outlets such as LinkedIn and Facebook have become an important part of the recruiting process for many companies. Also, social media allows a business to communicate with current employees as well as the public to drive existing or prospective customers to its website or physical location.

What are the risks associated with social media?

One of the biggest risks is that people misuse social media while at work. For example, employees may inadvertently or intentionally disclose confidential or proprietary information about their employer through social media, or publish negative or false information. Employees may also waste time on Facebook or YouTube rather than concentrating on their assigned responsibilities.

The social media phenomenon can be a liability for businesses. For example, social media can be a source of discovery in employment discrimination cases. In fact, the Equal Employment Opportunity Commission recently ruled that a claim of racial harassment made through a co-worker’s Facebook postings could go forward.

It’s also important to note that personal information that companies glean from social media cannot be used to make employment decisions. Although most businesses know that questions about a person’s background are generally not permissible in a job interview, significant information about a person’s race, gender, religion, national origin and age can be gleaned from a person’s use of social media, which creates a risk for discrimination lawsuits if this information is used in the hiring process.

Why are written social media policies important?

It is incumbent upon businesses that they have a well-drafted social media policy that is distributed to employees so they know in advance what is expected of them. The policy must clearly state whether social media usage is allowed at work, and if so, under what circumstances. The organization should articulate its social media goals, including what it uses social media for and what it expects to get out of its use of social media.

Employees must understand that they are responsible for the things that they post on social media and must clearly understand the legal impact that their actions can have on the company. Employees must understand the need to exercise good judgment and to protect the company from the disclosure of its confidential and proprietary information.

Finally, it’s important to outline the consequences for failing to abide by the policy, which might range from a warning for a minor infraction to termination for a more significant violation of the policy.

Insights Legal Affairs is brought to you by Semanoff Ormsby Greenberg & Torchia, LLC