If you're just starting out in a small business, it may be tempting to think that the liability sheild of a corporation or company is akin to free money.  It's definitely not!  And if you want to grow a successful business, you need to start from the very beginning keeping careful records and making responsible purchases.

The FDIC offers some good guidelines here.  Remember, many of the "consumer protections" of recent legislation do not apply to business plastic. 

A "patent troll" is a derogatory term for a party who owns a patent, does not use it, but sues the heck out of anyone who tries to use anything like what the patent protects.  It can be lucrative:  no innovation, manufacturing, or marketing!  Just pay your attorneys, and they come back with huge settlement checks.

Recently, federal courts have reined in the counterpart "copyright trolls" like Righthaven LLC, who purchased copyrights to (usually) news articles and sued the nonprofits and organizers of internet message boards for settlements that often drained the coffers of these organizations.  It was recently found that several of Righthaven's cases were wrongly decided, and they should return the monies extorted, but of course they are already bankrupt.

With patents, it's slightly trickier.  A non-practicing entity (the polite term for patent troll) may be non-practicing as to a particular patent, but it could still be in the R&D phase (think clinical trials for pharmaceuticals) or a patent on a product that is not sold because it's proprietary in-house software (Skype's encryption software).  This article gives a solid outline of the legislation that has been taking shape to combat patent trolling and makes some very interesting suggestions.

Remember, if a patent troll (or anyone) sends you an angry letter, don't just send a check!  Always have legal counsel reveiw both the entity and the underlying validity of the claims before making settlement offers.  Some of these may be legitimate patent owners with a grievance or good-faith beleif you infringe, and some of them could be as  

This is a fairly complex article for legal practitioners, detailing why it's so important for licensees to have an "exclusive" or "controlling" right to use a patent.  If you are simply granted a right to use someone else's patent, you are given no rights to defend yourself or your use of it if that patent ends up infringing on someone else's property.

Yes, we all hope that after several long years with the patent examiners of the USPTO, every patent has been thoroughly vetted and compared with everything else under the sun.  But it's not always the case -- sometimes patent examiners miss something, or other technology not yet in the market jumps ahead in line of your patent.  Sometimes patent owners wait on purpose until you use infringing technology so they can sue for damages.  It's a tough world out there.

The point of sharing this more complex article springs from an article I'm working on for a magazine about common pratfalls that licensing professionals make when negotiating big deals.  Don't think that the "boring" part of a contract is not important because it's basically the same for every deal.  We sign so many contracts in our daily lives -- from cell phone services to Netflix user agreements to privacy policies at the doctor's office -- that we run the risk of getting numb to the value of the words therein.

Think of it this way:  every contract has "boring stuff" like indemnities and warranty clauses, choice of laws, termination, and scope of rights BECAUSE IT'S SO IMPORTANT.  It's not a rug or floor covering, it is the floor.  Without understanding these parameters of the agreement, you don't have a complete agreement.  If you are considering granting a license or getting one for your business, call us.  The first 30 minute consultation is free and we can help you demystify some of the "boring" parts of any agreement you are being asked to sign.  

HLR specializes in empowering small business owners to help themselves:  we will explain anything we draft for you to you so that you can negotiate it yourself.  You will understand what you are asking for and why, what you are giving away and what it's worth to you,  and what the counterpart is asking for and why.  Some larger law firms pat you on the head and take care of these "details" for you.  That's great if you have deep pockets or little time to build your own alliances.  But for those of you who are hands-on, it's crucial that you understand the mechanisms by which your products and services are shared and controlled. 

Imagine pitching a great idea to a person you are sharing an elevator with.  Now imagine them offering to fund your prototype in exchange for a share of the profits.

You might be thinking this would solve all your funding problems!  You might be right. 

It's not crazy -- some high-net-worth individuals really do want to help your ideas succeed.  Maybe they aren't "idea people" but they care about improving technology in a certain field.  Maybe they are experienced developers who want to share expertise and funds without a cumbersome employment agreement and its obligations.  Maybe they simply think the best way to make the most money on a new idea is to get in on the ground floor. 

These are "angel investors," and it could happen to you.  INC. Magazine has a handy guide to start your search to see if bringing in angel seed money is right for you, and where to find it.  Contrast that with this recent Wall Street Journal article outlining changes in some states' tax incentives for angel investments. 

While you are pitching, consider legal advice to ensure that you are protecting your confidential information in an intelligent and serious way.  Once you have found someone willing to invest, structuring the arrangement definitely requires the assistance of legal counsel.

You didn't think it was going to be easy, did you?

At HLR, we care about how your business is going to succeed.  We are scouring news reports and informational articles to find tidbits, examples, and advice that might be useful to your business.  Specific legal questions, of course, should be discussed live, but we try to use this space as a launch pad for those discussions. 

As such, we're trying hard to find good news!  This Wall Street Journal article details the bickering and infighting among the economic experts who inform us of national trends.  One side says entrepreneurship is up!  Another side says more businesses are closing than opening, even in 2011. 

As we drive around our cities and towns, it's heartening to see new ventures open in storefronts.  It's also gloomy to see those same new ventures shuttered, often after only a few months.  How do you see the climate for new businesses in your area?