San Jose Startup Lawyers
Legal Tips and Information
Protecting Your Intellectual Property
For many startups, the most valuable asset(s) they own are in the form of intellectual property – whether the IP in question is a unique technology, process, creative work, or brand. It is therefore critical to the success of the business that these property rights are protected against present and future infringement. If you fail to adequately protect your IP rights, your startup may quickly get pushed out of the market by businesses with financial and other infrastructural advantages.
Register Your IP
Registering your IP with the United States Patent & Trademark Office (UPSTO) is good practice for enforcement of trademarks and copyright, and legally necessary for enforcement of patent rights. Registration can be extremely complicated for the layperson, as there are a number of regulations affecting the submission of a valid application. Further, you’ll have to consider certain strategic aspects related to your IP, such as how protectable it would be even if registration were granted. A skilled startup attorney can advise you and how to restructure your IP to ensure that it is protectable.
Hire a Dedicated Patent Attorney
If you believe that you may have a technology or process that is patentable, then you’ll have to register it with the USPTO. Without a patent grant, you will not be legally entitled to protect such IP from infringement.
Though a patent application can be submitted by an attorney who has not passed the patent BAR, and can even be submitted by a non-attorney, it is a good idea to work with a dedicated patent attorney if you’re going to be submitting a patent application to the USPTO – a successful patent application is complex, expensive, and benefits greatly from specialized experience with the process.
Confidentiality Agreements and Provisions
Trade secrets should be protected through the use of strict confidentiality agreements (and/or provisions inserted into employment and service contracts). IP damage can occur even without full infringement. If a former employee or business partner leaks partial information to a competitor, it could hurt your positioning in your industry.
Your startup attorney should either have the litigation experience necessary to pursue infringers on his or her own, or should be able to connect you with a skilled IP litigator who is equipped to do so. Potential infringement must be dealt with before it negatively affects your market position and the power of your brand.
Qualities of a Great Startup Attorney
Every attorney has a unique set of strengths and shortcomings. There are, however, certain qualities that are often shared by the best startup attorneys. As you search for a startup attorney in San Jose, try to filter for attorneys who demonstrate the following qualities.
Engaged and Dynamic
Your attorney should be highly-engaged with clients and provide dynamic services in response to client needs. What does this mean, exactly?
Suppose that you hire an attorney to register your startup business as a corporation and draft some employment contracts. The attorney does the bare minimum work necessary to accomplish their task. They listen to what you want done, register the business, and draft the contract as requested. This is not how a great startup attorney works with clients, however.
The best startup attorneys offer their own perspective as input. They work with a client to ensure that the client is aware of alternative options. A dynamic startup attorney in the above example would explain alternative corporate forms that might be worthwhile to consider, and they would discuss the employment agreement provisions with you to make sure that the terms of the agreement are favorable to your goals.
Finger on the Pulse of Change
Regulation is always subject to change, in nearly every industry. Your attorney should not only be familiar with regulations as they are now, but should also be “plugged in” to potential changes coming down the regulatory pipeline. If significant regulation will be implemented in a year, your San Jose startup lawyer should be informed about it and should work with you to help your business prepare for it.
Experience in Your Industry
Though it’s not a pre-requisite to receiving quality legal services, you can benefit a lot from working with a startup attorney who has experience in your industry. Industry standards do affect legal strategy, sometimes indirectly. For example, in the consumer-facing software industry, aggressive litigation is received poorly and may damage your brand. On the business-side, litigation is much more acceptable and is less likely to hurt the perception of your brand.
Civil litigation can be extremely costly for an early stage startup, from both a financial and time/effort perspective. Generally speaking, each party benefits when costly civil litigation is avoided, assuming that some other compromise is made.
Of course, litigation is inevitable to some degree. At some point in the life of your startup, you are likely to engage in a dispute with a third-party. Thus, minimizing the risk of litigation is key to managing the long-term cost to your business.
Deal Fairly with Partners
To avoid litigation, make sure to deal fairly with your business partners. The more fairly you deal with your partners, the less likely there will be a future legal dispute.
What can you do to ensure fairness and transparency?
When drafting a contract, do not move forward with executing the contract until you are certain that the other party or parties fully understand the terms of the agreement. Try to minimize the amount of last-minute changes, as they may come across as dishonest. Finally, if you later are forced by circumstance to breach a contract, give as much advance notice as possible to limit the damages caused to the other contracting parties.
Use Preventative Measures
There are a number of preventative measure you can take to limit the risk of extensive litigation down the road.
First, you may want to consider including a liquidated damages clause in your contracts. A liquidated damages clause sets a fixed damages amount to be paid out in the event of breach. This brings a degree of certainty to contract breach. Because each party is “prepared” to accept certain terms for breach, there is less likelihood of litigation.
Second, you may also want to consider having your attorney approach disputes with a compromising negotiation strategy before filing a lawsuit. If a compromise can be reached between the disputing parties, then costly litigation will be unnecessary to resolve said dispute.
Consider Alternative Dispute Resolution
Alternative dispute resolution – and specifically, arbitration – is a great way to minimize the cost of litigation.
Arbitration, unlike standard court litigation, is a private matter, and as such the content of arbitration will not be revealed to the public (thus preventing damage to your brand). Arbitration is also over much more quickly. A neutral arbitrator is chosen by the parties to oversee the dispute. The arbitrator assesses the evidence and argument of each party, then renders judgment. Judgment is then confirmed by a court, and becomes final.
To make use of arbitration, ask your startup attorney to draft contracts that include an arbitration clause.
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From primarily dealing with things like business formation, contracts, leases, equity financing, securities, and intellectual property protection, the San Jose startup lawyers on UpCounsel can help you with a variety of specialized and general startup law related legal matters. No matter what type of startup law needs you have, you can easily hire an experienced San Jose startup lawyer on UpCounsel to help you today.
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- 7 min read
LLCs and Corporations: What Are They?
Corporations and limited liability companies (LLCs) are two legal entity structures available in the US. If you're involved in a startup, these are two of the entity structures you can choose from. They operate differently, and are taxed differently, but both provide protection for your personal assets if the company faces financial difficulty and both can add increased credibility with customers.
Other company entity options include forming as a partnership or a sole proprietorship, but these entities lack many of the benefits provided by LLC’s and corporations, including personal liability protection. To understand which of these entity structures are right for your startup, you need a basic understanding of each, and you need to consider what the future may hold for the business.
What is Incorporation?
Incorporation was the orig
- 5 min read
Seed Money: What Is It?
Seed money is used to fund the earliest stages of a new business, potentially up to the point of launching your product. Seed money may come from a variety of sources, including debt and equity offerings. Usually, an investor will exchange money in exchange for some equity or share in the company. The seed money is intended to support the early operations of the business until it begins to create a profit, or is ready for additional investors.
Common uses of seed money include the following:
Market and demographic research.
- 4 min read
What Are Outstanding Shares?
The term “outstanding shares” (aka “shares outstanding”) refers to the total of all shares of your company’s stock held by all of your investors, including restricted shares owned by company officers and institutional investors.
You will find the total number of outstanding shares listed on your company’s balance sheet under the “Capital Stock Issued and Outstanding” heading. You can also calculate the number of outstanding shares by adding the total number of preferred stock shares to the total number of common stock shares, and then subtracting the total number of treasury shares. Other methods for determining outstanding share totals include looking at the company's market capitalization, earnings per share (EPS)
- 3 min read
To start a transportation business, you will need to decide which type of business you intend to create. Options include: a taxi service, bike rental, limousine service, owner/operator trucking, moving company, specialized transportation service, livestock transportation, transporting boats, air transport, marine shipping, medical transport or services for seniors. The type of company you use to establish should be determined based, among other things, on the need and competition in the area you decide to work in. Once you figure out what you want to transport,you'll need to build a plan to establish how you are going to provide these services.
Determine What Kind of Business You Want
Do you want to run a sole proprietorship, limited liability company, or corporation? Each of these has specific advantages and disadvantages. Do your research and figure out which one you want, as they each have different requirements for yo
- 10 min read
What are Class B Shares?
Class B shares are:
- Common stocks
- Preferred stocks offering fewer advantages than Class A
Mutual funds can be divided into more than one type, and each type reveals the interest, portfolio, fees, and costs, in addition to the commission the sales representative of those stocks will receive in turn. Generally, class B shares are a kind of stock that offers a variable amount of voting shares when compared to class A.
What is the Difference Between Common and Preferred Stock?
Preferred stock is a type of security that gives people priority dividend amounts. This helps the owner's priority dividend payments and boosts the company in cases of liquidation or bankruptcy.
On the other hand, common stock is mostly lower-priority but found much more often in equity transfers. Companies sometimes create various classes of common stocks for investors, members of