LEGL test 3
Easiest and least expensive business organization to create
Sole proprietorships, more than 75% of US business organizations are this) single person farmers market stand, selling on etsy or amazon by yourself
in order to violate the trade secret
Somebody must misappropriate a trade secret
Basic buisness organization forms (3) blocks that everything else is built upon
Sole proprietorship Partnerships Corporations
what is a trade secret
Something that you have, and have kept it secret, and it is valuable because you kept it secret, and you have taken the steps to keep it a secret
regional offices of administrative agencies
investigate alleged violations of law, have their own judges and legal council. Can have their own organization, boards, and commissions
what does Respondeat Superior/ Vicarious Liability mean
"let the master respond" If the agent is acting within the scope of their employment or as the principal, the employer is vicariously liable unless you can prove frolic and detour (not acting in scope of employment like taking a break at mcdonalds)*
what is double taxation
(two different taxes on the same income) Corporation makes income, and the IRS taxes this That same money is distributed to shareholders in a dividend, and the IRS taxes the shareholders on the same money
Factors to consider when selecting a business's organizational form (5 MAIN)
*Cost of creation: the legal steps necessary to create or form a legal business and get it recognized in that state How long will it take to happen? most important How much paperwork am I going to have to fill out? What is it going to cost me? *Continuity of the organization: the continuity (stability) of an organization when changes occur internally and externally Dissolution - a change in the legal organization of the business by changing owners Termination - the closing/terminating of a business meaning it is not coming back *Managerial control of decision: who has control and makes the decisions for the company. Can make or break the company and is most overlooked* Many different types of managerial styles but most time family ownerships typically do not work well Any business is going to have problems so being aware and prepared for those to occur is very important - knowing how to solve it *Owner liability: when is the owner liable for harm caused within business- how liability passes from the organization to the individual 1)Most owners want limited personal liability because it shields the owner and their assets from being liable "shield" can come down if business is mishandled, if company cannot pay for the amnt they are sued for they then investigate and can come after owner ex: using a corporate amex for personal use is bad 2) With unlimited personal liability they come after the owner when something goes wrong. They pay for it to satisfy the judgment *Taxation: tax laws that determine how a business or organization is taxed they can be single or double taxed Most people want to limit taxes and find loopholes because lots of organizations are double taxed
why is intellectual property important
-75% of value is derived from intellectual property of fortune 500 companies -Society benefits because it encourages research and innovation -The pace of creative development will slow dramatically without the protections of intellectual property
Holly Farms poultry industry case
-NLRA made by congress NCRP are the haul workers employees subject to unionization. The board ruled they are employees rather than ag workers protected by the NLRA. The boards decision reflects a reasonable interpretation of the law* and the courts cant touch it
what are two civil protections for trade secrets?
1)Injunction: order by a judge either to do something or refrain from doing something. orders those who have missappropriated the trade secret to refrain from telling others and in some cases delay in taking a new job. 2)Money damages
what are the two questions asked/ issues in litigation challenging the validity of an administrative agencies rule making?
1)Is delegation valid? An agency must only make rules and regulations within the confines of its delegation Congress cannot give powers outside of the constitution to the agency This is the only thing the courts can look at so once they look at it thats all they can do Delegation must be definite and limited 2) did the agency exceed the authority given to them? The court will determine authority is exceeded If analyzing the legislative intent goes beyond what the intent was even if the intent was noble this is exceeding the authority
what Is limited personal liability and unlimited personal liability?
1)Most owners want limited personal liability because it shields the owner and their assets from being liable "shield" can come down if business is mishandled, if company cannot pay for the amnt they are sued for they then investigate and can come after owner ex: using a corporate amex for personal use is bad 2) With unlimited personal liability they come after the owner when something goes wrong. They pay for it to satisfy the judgment
How do you register a trademark?
1)PTO places the mark in the Official Gazette* for others to see new marks. "pawliday inn" example. 2)Registered on the Principal Register* is the mark is acceptable provides notice of official trademark with registration status **If listed on the Supplemental Register* for five years and acquires a secondary meaning, a name or descriptive term can acquire full trademark status and then be transferred to the supplemental register Ex. Honey-baked ham: it is a company to most people but it's actually a trademark ; Ford; Disney: u dont think of walt disney the person u think of the place trademarks can have unlimited protections as long as u upkeep and defend it. It could go on forever.
How to obtain a patent
1. File application with PTO 2. Filing fee 3. Explain invention 4. Show difference from prior art 5. Describe patentable aspects 6. Evaluation by the patent examiner can take several years New invention 🡪 Legal monopoly whoever files first gets it
Kraft Foods Group Brands LLC v. Cracker Barrel Old Country Store
A cheese by craft was called cracker barrell Old country store wanted to move into grocery stores Holding: likelihood of confusion would be detrimental to Kraft and consumers would think the products were now bad, so Old Country Store could not sell in grocery store. Cracker Barrell changed their logo to "CB" The use of each separates trademarks in the same location creates a likelihood of confusion
Exhaustion of remedies
A court created rule that limits when courts can review administrative decisions meant to avoid the premature interruption of the administrative process A court will only look at a case where there is a final decision by an agency, if it dosen't the court will not touch it Reasons: The court hopes the agency will be able to resolve the issues on its own if it can be resolved Exceptions: Constitutional right is violated Agency is acting beyond it's jurisdiction
Sarbanes-Oxley Act (SOX) of 2002
Applies to all public companies in the U.S. and international companies registered with SEC signed by president bush. Collapse of enron triggered this law* Primary purpose of SOX is to ensure the accuracy and integrity in the financial reporting of public companies***** Also impacts accounting firms Created PCAOB****
advantages and disadvantages of partnerships (3)each
Advantages of partnerships -Easy and relatively inexpensive to form -Many incentives for new employee's -More partners means more knowledge, skills, money and experience on the table Disadvantages to partnerships -Joint and several liability -Disagreements among partners -Shared revenues can cause problems because everyone gets the same cut (unless written into an agreement) even if not all partners put in the same work and effort
when is your chance to have influence over an administrative agencies laws?
Agencies give public notice of proposed rules and hold public hearings in the federal register which comes out daily The public hearing is your chance to provide feedback Interested parties present evidence in support or opposition to the regulation Agencies react to the force of public opinion Each branch of government has control over the administrative agencies
Alice Corporation Pty. Ltd. V. CLS Bank Int'l
Alice had several patents over computer programs for risk transaction; solved the problem where transaction were proceeded with insufficient funds CLS bank sued Alice for Alice's patents were not patentable subject matter it is just an abstract idea Holding: The use of a third party intermediary is a building black, and the software is a mere abstract idea. If a patent's recitation of a computer results in instruction to perform a mere abstract idea, it is not enough. Abstract ideas of intermediated settlement on a generic computer does not transform it to patent eligibility. They just asked a computer to do what a human can do. This did not kill all software patents. An abstract idea on a computer does not adapt patent eligibility
why is hey having a full range of governmental powers a problem in agencies
All three of these powers are given to one federal agency (threatens checks and balances)
What is a security?
Any interest or instrument that offers the right to subscribe to or purchase stock, bond, or any certificate of interest. Given a broad expansive definition Security includes more than corporate stocks and bonds involves an investment in a enterprise is the investment based on a reasonable expectation of profits? Will these profits be earned from someone other than the investor?
Primary jurisdiction
Applies when a claim is originally and appropriately filed with the court Ensures consistency when dealing with matters entrusted with an administrative body You file a case in a federal court, and on of the issues depends on an administrative agency, so they pluck out the issue that is specific, gets the answer, then moves forward. They are not specialized in the other areas of the case so they give it to someone that does and it gives the court a ruling then they use that plucked ruling onto the case and move forward The administrative agency has the primary jurisdiction over the court, courts are forced to practice restraint and rule in favor of the agency
Congress grants the power to promote the progress of science and useful arts by securing for limited times to authors and inventors of the exclusive right to their writings and discoveries (intellectual property) in.....
Article 1 section 8 of the constitution
Service mark
Associated with a service not a produce put on uniform, trucks, or website used by ppl in company other than owner. The service mark establishes worker meets requirements, if they don't enforce it then they will loose the mark
what is a Benefit Corporation
Benefit corporation is a legal form that is not recognized by every state A legal business structure permitted to make a profit while pursing explicit socially oriented goals Not a nonprofit, but will also do something socially good Ex. For every pair of shoes we sell, we will give another pair away Shareholders intend to make money, but not as much. not a nonprofit
the two types of trademark dilution
Blurring - when usage of a mark blurs distinctiveness of a famous mark Ex. McDowell's v. McDonalds Tarnishment - when usage of a mark creates a negative impression about the famous company ex: ben and jerry's and ben and cherries (a porn company)
Certification mark
Certifies a quality, origin Often owned by trade association Used by somebody other than another Meets compliance for a certain standard If the certification company does not uphold the standards, they will lose their mark
Establishing the existence of a trade secret
Conduct a trade secret audit to identify confidential knowledge-based resources (plans, reports, knowledge) Trade secrets do not have to be unique to be protected IP audits are important, and they need to be done regularly Preserve secrecy: Lock written material Secure computer-stored knowledge with firewalls and encryption Impose confidentiality restrictions Regulate visitors Ask employees, customers, and business partners to sign nondisclosure agreements
Employee mobility and trade secrets
Confidentiality contracts forbid employees from disclosing the knowledge obtained in workplace Employers can enforce agreements not to compete only when there is a valid business purpose for the contract
how many people consist in the board of an administrative agency?
Consist of 5 - 7 members** One member is appointed as chairperson, usually same as the president (republican) Not all commissioners can be in the same political party Appointments require senate confirmation Appointees are not permitted to engage in other employment during the terms Agencies have distinctive organizational structure to meet its responsibilities removal of these agencies is only done by the president
General partnership: creation, continuity, control, liability, taxation
Creation: automatic based on buisness conduct; modified by agreement easily formed continuity: dissolved whenever one partner withdraws control: each partner has a equal voice; modified by agreement they share the profits and losses Liability: personal obligation for all debts and liabilities (each owner has unlimited personal liability); joint and several liability taxation: pro rata share of buisness income subject to personal taxation Agreement between two or more persons to share a common interest in a commercial endeavor Name of partnership cannot dupe the public can't use "company or corporation"
limited partnership: creation, continuity, control, liability, taxation
Creation: partnership agreement and certificate filed in public office where buisness is conducted continuity: dissolved when general partner withdraws control: general partners have total control liability: personal obligation for general partners, limited partners liable for investment taxation: pro rata share of buisness income subject to personal taxation Includes all the attributes of a partnership Limited partners: not responsible for the debts of the business organization/limited liability (like shareholders) Give up management powers* if they dont they will lose their limited liability can consult, advise tho Created by agreement, but a certificate has to be recorded in the county where the partnership is headquartered If not, limited partners will lose their limited partner status, and will become general partners and they become personally liability General partners: personally liable for the organization's debts/management control ** both limited and general partners need to be listed and updated
Copyright fair use exception: Includes copying for:
Criticism Comment News reporting Teaching Scholarship Research **NOT fair use for personal profit if u copy a book and sell it yourself Factors for "fair use" considered on case-by-case basis Profiting is never fair use
what is a popular state to create a corporation in?
Delaware: More than 1 million and 60% of fortune 500 companies because of its stable court system Delaware Court of Chancery : widely recognized as the best court that deals with complex corporations and exposure to business law is unmatched. Government of delaware is non jury and appointed judges Do not have to pay taxes in the state if you are a corporation
Three types of patents are
Design, utility, plant
what did Economic growth, regulatory relief, and consumer protection act not repeal?
Did not repeal Dodd-frank; instead provided certain limited amendments and modifications Considered most significant change to US banking regs since Dodd-Frank* Eased regulations on "small banks"
FDA v. Brown & Williamson Tobacco Corporation
Did the FDA exceed its authority FDA tried to reduce tobacco consumption is adolescence and children Tobacco industry is mad because they have never been regulated before and they challenge the rules because they think they have exceeded the authority they have been given Congress specifically legislated to protect tobacco while making sure the consumers know the dangers of Congress says sale of tobacco is adamant to the economy and general welfare congress gave power to the FDCA to regulate tobacco products Court says: congress is protecting tobacco so there is no way congress would give the FDA the authority to regulate nicotine/tobacco bc it is one of the biggest industries. The FDA exceeded their authority. Since 2009 an act was written and , the FDA can regulate tobacco, but they cannot remove it. in order to make a decision the courts go off what was ruled in the past and the parties intent.
Matal v. Tam
Disparaging- not anymore Is the disparagement clause in the Lanham Act invalid under the First Amendment? Holding: the name "the slants" is hurtful to the community. Speech that demeans on the basis of age, race is hateful. But the disparagement clause of the Lanham act was unconstitutional under the first amendment because of viewpoint discrimination from the PTO bc they weren't consistent with their rulings. We should be able to express what we hate or else it violates the first amendment. the washington redskins determined it was disparaging at first but they got rid of it for all and didn't change back bc their sponsors said they wouldn't give them money if they kept their name
dissolution v termination
Dissolution - a change in the legal organization of the business by changing owners Termination - the closing/terminating of a business meaning it is not coming back
Federal communication commission v. AT&T, Inc.
Do corporations possess "personal privacy" rights as defined by the federal freedom of information act (FOIA) exemption 7 (c)? Holding: At&t overcharged the government for services. so gov asks for documents. they reached settlement of 500k but competitors got nosy and according to FOYA (freedom of information request) the competitors could access the documents. *corporations do not have personal privacy rights for the purpose of this exemption in 7c FOYA Person and personal privacy are not the same** Personal privacy only applies to a true individual *
Free enterprise Fund v. Public Company Accounting Oversight Board
Does SOX law (regulate the public accounting industry, created another administrative agency (PCAOB) and gave SEC commissioners more power which let them appoint the PCAOB members who would only be allowed to be removed by the members for cause ) violate separation of powers by giving PCAOB power? SOX is not unconstitutional because they severed the dual for cause limitation (cut off the bad part) for removal and it changed it to at will for good cause termination which saved SOX and PCAOB chief justice roberts said the dual for cause removal Is unconstitutional bc it contradicts the separation of powers clause and presidents power bc they were exercising power under him but he had no power on who was in it
Iancu v. Brunetti
Does section 2(a) of the Lanham act, which prohibits the federal registration of "immoral" or "scandalous" marks, violate the free speech clause of the first amendment? F.U.C.T. was named a clothing line Holding: restriction on trademark of immoral or scandalous trademarks is a violation of the first amendment because it is viewpoint discrimination on the part of the PTO. So they could keep their name. immoral, scandalous names or symbols- not anymore
How do you have to qualify to become an S Corp*
Domestic corporation Allowable shareholders (must be individuals) No more than 100 shareholders
3 types of corporations
Domestic: known as domestic corporation in the state where it was created and began Foreign: a domestic corporation that expands to other states Alien: a corporation created under the authority of another country
Jumpstart our business startups (JOBS) act of 2012
Ease burdensome federal regulations Allow individuals to invest in startups through relaxed rules Title II Allows companies to advertise that they are seeking investments Title III Allows a company to raise up to 1 million by selling securities Congress and the SEC were encouraging the use of crowdfunding so great for entrepreneurs u have to qualify
Every state has the equivalent of a federal register (t/f)
F
what are the agencies or "alphabet soup" of the federal government
FCC- federal communications commission regulates foreign communication , SEC- enforces federal securities laws, FDA- unsafe food and drugs, but there are more
A collective mark is meant to be used by someone other than the owner of the mark to certify the quality, point or origin, or other characteristics of goods and services for instance, like the certified fair trade mark or a certified gluten free mark (t/f)
False
A computer engaging in artifical intelligence inventions can be a party seeking a patent within the parameters of the patent act (T/F)
False
primary jurisdiction is a court created rule that avoids the premature interruption of the administrative process by requiring a claim to complete the administrative agency process before seeking the review of a court (t/f)
False
Only the owner of a famous mark can sue under this law (trademark)
Federal Trademark Dilution Act, 1995 Prohibits the usage of a mark same or as similar to another's trademark to dilute its significance, reputation, and goodwill. They don't have to prove likelihood of confusion
what 3 things are not missappropriation
If you innocently acquire information, that is not misappropriation Independent creation and reverse engineering is not misappropriation
Marchand v. Barnhill
Investors blamed officers for listeria outbreak that caused Blue Bell Icecream stock to tank Derivative lawsuit claim for fiduciary duty. Claim survived a motion to dismiss Settled out of court Did blue bell creameries board breach their fiduciary duties by disregarding the contamination risks? There was no system in place for managers to report contamination to the board and this was a breach in their fiduciary duties and the directors would be held liable based on previous case.
Free Lucia v. SEC
Is an ALJ an "employee" or "officers of the US?" Appointments clause Holding: 1991 decision also said ALJ's are officers of the US subject to the appointment clause appointed by the head of the SEC at the very least, not employees. Compared ALJs to STJs. ALJs are even more officers than STJs. They have significant discretion, makes decisions, and almost all the power of a trial federal judge.
ANYONE who is involved with or promotes the initial sale of securities; especially the following four:
Issuer - persons offering a security for sale to the public Underwriter - investment bank Controlling persons - controls issuer like the major stockholder and the seller Seller - causes purchase transaction
Corporations are considered:
Legal persons under the law An individual is a human but so are all these other entities citizens united case- protected their 1st amendment rights and said they cant be limited
what do most employees of administrative agencies have and why?
Legislative Lesion* administrative agencies have this bc they spend a great deal of time lobbying with congress, this is reporting to the executive director for administration
what are the three powers given to administrative agencies
Legislative: power to create rules and regulations Executive: power to investigate, prosecute, advise, supervise Judicial: power to decide controversies
what is the difference between a limited liability partnership and a limited liability company
Limited liability partnership (LLP) Variation of the LLC Have characteristics of both a partnership and a corporation Enjoyed by doctors, lawyers, accountants The partners are all limited partners They are not responsible joint or severally for the other people in the partnership
Hybrid (4) buisness organizations
Limited partnerships S corporations Limited liability companies Limited liability partnerships
what is the most overlooked factor to consider when selecting a buisness organization form
Managerial control of decision: who has control and makes the decisions for the company. Can make or break the company and is most overlooked*
what did the SOX act not adress?
Mark to market accounting to book hypothetical future profits
How do you protect your trademark?
Marks protected by the Lanham Act of 1946 (federal protection): have to register w the PTO Unregistered marks can still be sued against for infringement
Al Minor & Associates, Inc. V. Martin
Martin is an employee of AMA He didn't sign a noncompete When he leaves AMA he does not take the customer list, but he does memorize the clients he did work with, and successfully takes 15 clients Holding: even information that was memorized can be subject to trade secret violation and it was misappropriated
Association for Molecular Pathology v. Myriad Genetics, Inc.,
Myriad filed for patents of gene sequence for sequence for breast and ovarian cancer Myriad would be able to exclude others from testing for these genes Molecular pathology argues that you cannot patent naturally occurring DNA Holding: Everything stems from a building block so there has to be a fine line of where to cut off patentable inventions. Myriad did not invent these sequences, they just found them. Extensive effort alone is insufficient to gain a patent. Existing patents covering natural DNA were killed after this case patent law rewards invention not genetics
are Benefit corporation vs. B corps the same?
NO. Benefit corporation formed that way through their articles*, B corp is a certification mark not a business structure** you can be both abut u can be a B corp anywhere and stop being a B corp at anytime
Utility patent
New, non-obvious, useful processes, machines, compositions of matter or improvements thereof 20 years form filing
Design Patent
New, original, and ornamental design for an article of manufacture 15 years from issuance
Plant Patent
New, variety of plant that can be reproduced asexually 20 years from filing
The copyright act specifies that a fair use of copyrighted materials is not an infringement of the owners property. Examples of fair use include (3)
News reporting, scholarship, research
is the advisory council employees of administrative agencies?
No
Private securities litigation reform act (PSLRA) of 1995
Only the SEC can pursue claims against third parties not directly responsible for the securities law violation any allegation of intentional wrongdoing has to be very specifically plead when filing a claim designed to limit frivolous securities lawsuits. before..A plaintiff would see a price shift then use the lawsuit to conduct discovery, they were 'fishing' for private information hoping they might find a problem they can actually cash in on Requires private plaintiff to allege with specificity when filing a claim under section 10(b) and rule 10b-5 Securities litigation uniform standards act of 1998 (SLUSA) Prevents abusive securities fraud litigation in state courts Makes it a little harder to file a class action suit*
Fair use exceptions:
Not distinctive enough Educational purposes Comparative advertising Parody Public confusion is not likely
Corporate liability/piercing the corporate veil:
Notwithstanding the limited liability enjoyed by the corporate shareholders, creditors of a closely held corporation may be able to reach shareholders' personal assets in the following situations: The shareholders used the corporation to defraud customers and/or counterparties The shareholders commingled corporate and personal assets once the veil has been pierced the shareholders then have unlimited liability and makes them more personally responsible for their actions. if u want to keep the veil or limited liability then don't use the corporation irresponsibly
Characteristics of patents (3)
Novelty: Something new and difference from the prior art, has to be something new that what is already out there. Novelty test (1 year) Nonobviousness: Ability of an invention to produce surprising or unexpected results Something that was not anticipated by professionals within the field of the prior art Utility: Must do something useful As long as it is useful in some way; does not have to be useful in the way you intended Mere abstract ideas are not patentable- congress decides what is not patentable A patent cannot lock down an entire field of discovery Until a chemical compound has USE they will be unable to get a patent on it (getting rid of fleas)
How long can patents run for
Patents can only run for a limited duration During the duration of your patent, you have a monopoly. Just because you have a patent, doesn't mean you have the right to build an item. Utility and Plant patents- 20 years Design patents- 15 years big research foundations own the patents and other IP that is developed at UGA. Huge money maker. once the patent has expired others can use it
Three time periods involved in the registration process:
Prefiling period Legal for the issuer to only engage with the underwriter Cannot offer to sell Cannot entertain offers to buy Waiting period After registration statement is filed, SEC begins to look into the quality of the statement usually lasts 20 days but can be shortened or delayed Still cannot sell a security You can entertain offers to buy u just cant accept mentions the prospectus Post effective period Registration becomes effective Now securities may be sold Prospectus: sets forth the key information contained in a company's registration statement with the SEC
Operating the organization through agents (4)
Principal, agent, third-party, independent contractor
Trade dress
Protection that extends to the look, design, color scheme, etc. of a product Same thing with a restaurant - menu items, layout, color scheme Rebranding causes a loss in trade dress sometimes u sit at dinner and cant see the label but u know its a patron bottle bc of the shape of the label and bottle Color can be a trade dress, but they are hard to get and is narrow rights Ex. Tiffany's own robin egg blue for bags and boxes Ex. John Deere does not have a trademark on green because it is functional color for the industry but they have trade dress protection on yellow wheels and seats Ex. Louboutin has a color trade red on just the sole of the red shoe but if someone makes an entirely red shoe its fine You can get sound marks too if u can show if this sound identifies the product or the service in a consumers mind Ex: espn
ALJ's - administrative law judges**
Quasi-judicial staff Immunity and protection have a lot of power What are they really able to do? Apply the rules of the agency they work for Proceedings begin when an allegation is filed Allegation is investigated, then filed a complaint, the case is assigned to an ALJ ALJ decides on cases from their own agency decision is final within 30 days, if you appeal the decision it goes back to the ALJ and limited to evidence admitted by the ALJ
what are 2 Types of regulatory authority an administrative agency has
Quasi-legislative These have the force and effect of law Quasi-judicial They act as a court Administrative law hearings, agencies can make decisions like a court
what do you have to file before the sale of a security
Registration statement: detailed disclosure of financial information about the issuer and controlling individuals
Securities exchange act of 1934
Regulates transfers of securities after the initial sale Created the securities and exchange commission (SEC) gave power to them Illegal to sell unregistered securities on national exchange Registration requires filing prescribed forms with stock exchange and SEC ***Section 10(b) and rule 10b-5: antifraud provisions (most)* created by SEC under the '34 act.
Criticisms of administrative agencies (3)
Relating to personnel- Difficulty in hiring and retaining the best-qualified people Difficult to discharge unsatisfactory employees Personnel in top positions are selected for political reasons Relating to procedures- Delay in the decision-making process Administrative process is overwhelmed with paperwork and meetings Rules and regulations are written in complex legal language Dictatorial in nature Relating to substance- Rules and regulations overlap and conflict Actions or illegal conduct end only with consent orders Enforcement of laws varies over time
what does the general council do?
Represent the agency in court Big impact on policy Seen just as powerful as commissioners Some have to have senate approval to serve
Copyright infringement The owner has to establish that defendant violated his or her exclusive rights of:
Reproduction Creation of derivative works Distribution Performance Display *your own expression cannot infringe if u did it by urself and its similar to another
Securities and exchange commission (SEC)
Responsible for administering the federal securities laws, it is an administrative agency Created in 1934 Consists of five commissioners (generally lawyers) Possess quasi-legislative and quasi-judicial powers (allows SEC to be allowed to be in investment cases) Commission Chairmen appointed by president and approved by the senate 4 other commissioners
Standing to sue, party that suing has to have these 2 things to establish a standing to sue on an administrative agency
Reviewability Reviewable except if congress says in its statute that it is not reviewable Aggrieved party Showing you have suffered some economic loss or noneconomic (ex. First amendment rights have been violated)
what is rule 10b5 under the securities exchange act
Rule 10b-5 is the principal antifraud rule relating to the secondary distribution of securities Rule 10b-5 provides that a civil action for damages may be brought by any private investors who purchased or sold a security and was injured because of false, misleading, or undisclosed information Rule 10b-5 applies to all securities whether registered or not, as long as use is made of the mail, interstate commerce, or a national stock exchange Have to establish materiality Proof of intent to deceive, if you're in this industry you have the duty to speak up or else you are aiding and abetting Manipulative and not mismanagement
what are the 4 functions of agencies?
Rule making: Quasi-legislative power They have the force and effect of laws made by congress They can make very specific or very general rules New rules and regulations are made every single day Agencies try to publish guidelines to help follow their rules, but the guidelines do not have the force and effect of their rules Adjudicating: Quasi-judicial Fact finding They can sanction, fine, or provide other penalties Cease and desist Stop and don't do it again Advising: Provide reports to president and congress Report information to general public Publish advisory opinions Non-binding Helpful in indicating the view an agency might take A unique device that is generally not available in actual courts Shift with the political environment Investing: May independently investigate a legal actions Goes hand and hand with the power to adjudicate
Salman v. United States *
Salman was convicted of insider trading Tipping chain was short He argues tipping chain was not supposed to apply to him because Maher never got a pecuniary relationship Maher and Michael had a very tight relationship and was seeking his approval. They were all in violation of the securities law The court said the government said the tipper and tippee must have a meaningful relationship Court held that evidence of a close family relationship sufficient is to sustain a conviction for insider trading. U need to be careful how u phrase your questions, check sources and see if u can find info anywhere else and if u cant then its a red flag
In what instances can the PTO deny registration of a trademark?
Same or similar to another mark Prohibited or reserved names or designs like the us flag or gov symbol Names or pic of ppl without permission Descriptive term***like "salty crackers" Generic like cellphone Disparaging- not anymore Matal v Tam Immoral, scandalous names or symbols- not anymore Iancu v. Brunetti
Liability for securities laws
Section 11: false or misleading registration statement Section 12: no registration statement regardless of intent; false or misleading prospectus (ORANGE TREE EXAMPLE) Section 17: device, scheme, fraud, omission, deceit ^^very easy to violate
what do the shareholders, board of directors and officers do in a corporation?
Shareholders Elect the board of directors* Board of directors (Elected) Set the objectives and goals for the corporation Then hire/ appoint the officers Officers (Hired) (president/ VP) Managing the day to day operation and asked to achieve the set goals and objectives of the board of directors
what is the only difference of an S corporation
Shareholders of certain corporations unanimously elect to have to organization treated like a partnership for income tax purposes (only difference). Formed under subchapter S of the internal code* Shareholders have to account on their individual income tax returns for shares of profits or losses Shareholders avoid having a tax assessed on the corporate income
Alii v. U.S.
Should the court pierce the corporate veil and strip away the liability protection of the Allis? HUD pays Allis corporation (BSA Corp) to use their residence buildings, but Allis are not using the money HUD is giving them appropriately because they are not maintaining residence buildings HUD takes on the responsibility to fix up the apartments, and BSA sues for breach of contract BSA corporation is sued for breach of contract, but BSA corporation does not have enough assets, so HUD files for discovery to show BSA was not managed properly Holding: they should have used the money to maintain housing and they had to move all residents out and used money for their own use the court determined that the veil should be peirced bc the failure to do this would result in the taxpayers paying for it, you can take the Allis personal assets. Allis got greedy and HUD hammered them
State blue sky laws
State statutes designed to protect the public/ investors from sale of fraudulent stocks and bonds*** Vary from state to state*** Uniform securities act, 1956- federal law does not preempt state laws this means that state laws are superior ** "we are going to regulate securities and we encourage u to do the same"
why is a prospectus helpful in the waiting period of a registration statement?
Supposed to help investor make a good decision but not a guarantee that your investment will make money Does not prohibit the sale of worthless securities as long as there is full disclosure and statutory requirements are met The SEC is only there to protect you from deceit, not from making a bad investment decision
what are some key points of the Sarbanes Oxley act (SOX)?
Take steps to separate auditing and consulting in accounting firms * A ton of rules for interna checks and balances Mandates that whenever there is a restatement of a financial information, the company must return bonuses paid to executives *** Prohibits personal loans from the company to executives Provides protection for whistle blowers to encourage people to report corruption as they see it* Audit committees are required to adopt procedures to make sure whistle blowers are heard
Google v. Oracle America
The "copyright lawsuit of the decade" pitted google against oracle in a titanic legal battle over smartphone software Did SCOTUS allow copyrights on Application Programming Interfaces (API)? SCOTUS sidestepped this issue and just assumed fair use Ruled that Google has not violated Oracles copyright by using components of their Java computer program
How can a patent be challenged in court
The infringer can challenge the patent's validity in court. The infringer can be any individual or buisness in the PTO
PTO can deny trademark registration if (3)
The mark is the same or similar to another mark, the mark is generic, the mark contains prohibited or reserved names or designs like the US flag
what are the two ways buisness organizations can be held
closely held- a few people that is family owned usually publicly held- owned by hundreds or thousands, generally exchanged on new york stock exchange
who is a tipper and tippee
Tipper: a person who discloses material non-public information to another person Tippee: the person who receives material non-public information from a tipper (can be a temporary insider) the insider cant trade but this tippee can Tipping chain can be short or very lengthy (3 or 40 people)
if a sound is used to identify the commercial origin of a product or service then it can be granted a sound mark protection by the PTO (T/f)
True
trademarks can potentially enjoy unlimited protection periods (t/f)
True
what is joint several liability:
Two parties (or more) are held responsible together and as individuals for liability. there is a 300k suit but one partner doesn't have assets, if the person suing only sues one person its the partner's responsibility to get that money back from its other partners- you're responsible for each other's mistakes. Not its own taxable entity; the partners share the tax at their personal income level and must report it as taxable income in regard to the business
Collective mark
Used by a group of people that are members of the organization
Criteria for copyright protection:
Work must be original- facts are not original, although collections of facts may be Must be fixed in a tangible medium of expression- canvas, flash drive Must show creative expression
is there criminal enforcement of trade secrets?
Yes! Federal espionage act EEA(makes it a crime to steal trade secrets) Can only be brought by the federal government Fined Imprisoned
what two doctrines guide the court in judicial review for an administrative agency
exhaustion of remedies and primary jurisdiction
Trade secrets, to be protected, must be registered with the PTO (t/f)
false
any corporation can elect to be treated as an S corporation for tax purposes (t/f)
false
officers of a corporation elect the shareholders (t/f)
false
the terms "dissolution" and "termination" mean the same thing (t/f)
false
what is a temporary insider
a person who is not an insider but has been entrusted in confidence then breaks fiduciary relationship Ex. An outside accountant for a company or a lawyer, not an insider but bc of their situation they have access to the information an insider has
patent trolls
a person who obtains the rights over certain patents) very disliked Buy other people's patents and profit off of them
what is an insider
a person who owns more than 10% of any security; a director or officer of the issuer of the security. A director or officer of the issuer of that security (the function) insiders have information on the company A duty to the shareholders, a violation of the trust and this is ILLEGAL. Implented for insiders to not take advantage of this information and make a profit require that insiders file that they are the owners (registration) you have 10 days to do this with the SEC and any change is 2 days put in place by SOX (section 16) below Any profit made within a 6 month time period is short swing profit (illegal) and you have to return the money to the issuer
What is a trademark?
a symbol, word, or words legally registered or established by use as representing a company or product. Recognizability or distinctiveness Protection against confusion Federal trademark is very protected if you go to mcdonalds in a different state you expect the food to taste the same nike check mark or mcdonalds "M" ® - registered ™ - trademark but not registered
If a minority shareholder feels that the majority shareholders/board of directors are not acting in the best interest of the corporation they can::
file a derivative suit Derivative suit: a minority shareholder who believes that a majority shareholder has acted in his or her personal interest
apparent authority-
agent gets fired and gets made and orders 10k of frames bc they dont know she got fired. the employer still has to pay for them bc she had apparent authority. To avoid this- notify all third parties that the agent can no longer have the authority to buy things
what is a proxy in a corporation
an agent appointed by shareholder for the purpose of voting shares Gives insider shareholders more power than they really should have which can lead to big scandals
Fiduciary duties
an obligation to act in the best interest of another party; it exists when one has a special trust, confidence, or reliance on a fiduciary to exercise discretion or expertise. (attorney has fiduciary duty to a client; corporate officer has fiduciary duty to shareholders)
what is a cease and desist order
an order or request to to stop an activity and to not take it up again in the future.
orange tree example- were these the sale of securities?
as long as they make money they don't care and they lost money and look to get it back, buyers sued under the securities act of 1933 (were these the sale of securities) YES they were the orange trees had an expectation of profits resulting from the action of other people. Since there was no registration of these securities it violated the law. Howie was held responsible
implied authority-
based on past actual authority, the agent can act
what is one big advantage of a corporation
continuity is not impacted by shareholders debt- ability to separate management from ownership (if a shareholder dies or sells his stock it does not effect the organizational structure of the corporation)
what is the one taxable organization
corporation
what should you take time to do in a partnership
create a legal partnership agreement( not required but u should) about things such as how profits and losses are shared to save time and money in the future if any legal disputes occur between partners Seen as extremely risky to operate without a legal partnership agreement
the word BLANK means the legal steps necessary to form a particular buisness organization
creation
S corporation: creation, continuity, control, liability, taxation
creation: incorporators apply for state charter with articles of incorporation continuity: perpetual, as long as number of shareholders limited control: managed by officers appointed by directors who are elected by shareholders liability: shareholder obligations limited to investment absent other commitments taxation: all buisness income subject to personal taxation Shareholders are treated as partners, so they eliminate double taxation
non profit corporation: creation, continuity, control, liability, taxation
creation: incorporators apply for state charter with articles of incorporation continuity: perpetual, so long as it can conduct business control: managed by officers appointed by directors who are elected by shareholders liability: shareholder obligations limited to investment absent other commitments Taxation: tax exempt if approved by state and IRS under IRC501c3 Nobody is planning on making big money The incentive is some sort of public service - not to make money * Normally apply with the IRS as a 501(c)(3) Makes them not taxable Allows donors to get a tax deduction which incentivizes donors to donate ** 2011, they reduced the 501(c)(3) status by 17% You have to be very mindful of the rules to maintain status
corporation: creation, continuity, control, liability, taxation
creation: incorporators apply for state charter with articles of incorporation. a lot of money and time consuming. Articles have to contain corporation name, period of duration, members of share, registered agent (usually lawyer or just individual who gets legal documents) this is looked over before the state issues a charter continuity: perpetual, so long as it can conduct buisness control: managed by officers, appointed by directors, who are elected by shareholders Liability: shareholder obligations limited to investment absent other commitments (limited personal liability) taxation: corporate income taxed** shareholders taxed only on income distributed which is an advantage in some way bc if the corporation maintains funds then shareholders don't have to pay taxes only the corporation does Shareholders to not have to pay personal taxable income when the corporation holds back money because the corporation is its own taxable entity
Sole Proprietorship: creation, continuity, control, liability, taxation
creation: no formal documentation, buisness licenses only Continuity: so long as proprietor desires but NO transfer to others Control: total control by proprietor Liability: personal obligation for all debts and liabilities (owner) unlimited personal liability Taxation: all buisness income subject to personal taxation
limited liability company or partnership: creation, continuity, control, liability, taxation
creation: organizers file articles of organization with state official Well suited for companies with a single owner continuity: dissolved when member withdraws, but may be continued by those remaining control: equal management by members unless manager designated. wu have organizers filing articles of organization with the secretary of state** Owners are called members* Membership in an LLC is not limited to individuals * Transferability of the membership is restricted In most states, you can put a clause in your articles of organization to dissolve this issue dissenting members can bring upon a derivative suit to possibly peirce the corporate veil if funds are used badly liability: members are agents but only liable for investment Limited liability for members like corporation* taxation: may elect (in advance) either corporate or personal taxation for buisness incomereated as nontaxable entities Not double taxes Owners have more flexibility compared with S corporation Not a corporation - it is a company**
Copyright is a form of intellectual property that protects:
creative expressions
a corporation know as a BLANK corporation in the state it was originally incorporated in
domestic
what is patent law
gives inventors the right to exclude others from making, using, or selling products that infringe the patented invention. An exclusive right created by statute and conveyed by PTO for a limited period of time. Patents are property
what is counterfeiting
imitation products
How long does copyright last?
individuals: author's life plus 70 years Company: 95 years from publication OR 120 years from creation of the work, whichever expires first u need to copyright books, music etc before you publish them. anything before 1926 or before public domain new law** is fair game
If a trademark becomes generic
it loses its distinctiveness and cannot be protected Coca Cola example- specify what kind of cola Velcro generic marks cannot be protected bc they come synonymous in the mind of consumers. ex: kleenex : its bad that consumers assume kleenex is the name of any problem. ex: coca-cola : ppl think any dark soda is coke but now sellers have to specify if its pepsi or something else. Velcro video
Courts do not reweigh the evidence:
make independent determines of fact and substitute their view of evidence from that of the administrative agency** Courts are only going to determine if there is substantial evidence for the decision of the agency
Congress authorized the creation of BLANK to achieve the goals of Dodd-Frank Act *
new administrative agencies Dodd-frank strengthened and expanded the existing whistleblower program promulgated by SOX. Specifically, the act: Established a mandatory bounty program under whist whistleblowers can receive from 10 to 30% of the proceeds from a litigation settlement Broadened the scope of a covered employee by including employees of the company as well as it subsidiaries extended the statue of limitation under which a whistleblower can bring forward a claim against his employer from 90-180 days after a violation is discovered
landrith case lumber company
owned lumber company and sold company, when they sell they transfer all the shares. Did these 2 purchasers their purchase of the timber business was failed to be registered with the SEC and ended up not being successful but they kept landrith on to run daily operations- could the sale be rescinded because he failed to register it with the SEC?- YES
Employees are agents, but:
not all agents are employees because they could be an independent contractor (like an attorney)***
Misappropriation occurs when:
one improperly acquires or discloses secret information Espionage You disclose something you know you have a duty to keep secret
What is copyright?
protects creative expression Original expression vs. original invention (patents) Limited time (set by congress) Ex. Movies, music, plays, books, art Copyright law grants property in certain creative expressions & prohibits others from reproducing it without permission
5 reasons for agencies
provide specificity-Legislative branch cannot legislate to the specific level needed Congress uses general and broad language When a big law is passed, it expands the level of federal agencies, or adds new administrative agencies to specify the law. This costs more money, and citizens have to pay more taxes, expertise-Development of robust policies and decisions requires a certain level of expertise beyond what congress has These people are considered experts in their field Also always for consistency and continuity over areas, protection-Many governmental agencies exist to protect public Protecting public from business community because businesses often do not self-regulate Citizens believe it is the government's responsibility to reduce harm Ex. EPA did not exist until the 1970s Businesses were doing whatever they had to do to maximize their profits, regulation-Sometimes agencies replace competition with regulation When a company is given a monopoly, the government creates contracts to regulate it, services-Ex. National Park Service, Social Security Administration, USPS
the station nightclub fire in Rhode Island was caused by:
pyrotechnics
judicial review of an administrative agency is:
quite limited
the administrative agency BLANK is responsible for publication of all agency actions in the federal register which is published daily
secretary
burwell v hobby lobby stores-
tried to require corporations to provide birth control but they rejected to provide CERTAIN types like plan B. Supreme court ruled that a closely held corporation**has the right to freedom of religion and couldn't be forced to
why was the securities act of 1933 created?
the Great Depression Prohibits deceit Enable investors to make an informed judgement about what they should purchase Requires the disclosure of information to the potential investors: "disclosure law" Applies to the initial sale of the security Truth in securities law^^^ upper 4 bullet points** info good to investors Information must not be untrue or misleading; "truth in securities" law Regulates ANYONE who is involved with or promotes the initial sale of securities; especially the following four: issuer; underwriter, controlling person; and seller what happens if a person purchases an investment and they loose money? they have recovery rights
Directors/officers have fiduciary duties to:
the corporation and minority shareholders in closely held corporations
a benefit organization is not available in every state, but where it is, it is a legal buisness structure permitted to make a profit while pursuing explicit socially oriented goals (t/f)
true
an administrative agency can make rules and regulations that have the force and effect of law (t/f)
true
in limited partnerships, limited partners enjoy limited personal liability even when taking a very active everyday role in the management of the buisness (t/f)
true
the term administrative agency describes the boards, bureaus, commissions, and organizations that make up the governmental bureaucracy (t/f)
true
actual authority-
the employer(principal) tells the third party that their agent (employee) has the ability to purchase 10k in frames this month. implied authority- based on past actual authority, the agent can act
If the name is anything other than the surnames of the partners then:
they must register their actual name with the state under the **states assumed name statue so that the public can look them up
Tiffany v. Costco
tiffany sued costco Costco described a setting as a tiffany setting in a very expensive ring Holding: a sophisticated consumer would not be confused and tiffany is a generic description of a type of setting. There also wasn't a tiffany logo or robin blue anywhere on the product
why do we have financial and securities regulations?
to make investors feel safe so our economies can survive
Once information is in the public domain....
you cannot apply a IP claim to recapture it