Law Blog

Investor Wants “Due Diligence” Fees Paid…Up Front?

Investor Wants “Due Diligence” Fees Paid…Up Front?

Start-Up, Venture Capital
Several months ago, a new-ish startup founder (we'll just call him "Chuck") came to my law firm seeking help in reviewing and possibly negotiating the terms of a seed round with their first, outside investor. Chuck was genuinely excited because this investor had proposed (let's just say a number between) $1-2 million for (let's further say) 20% of Chuck's company. A critical infusion of capital that could get the company through a few of the next developmental milestones. However, during our first call, Chuck said something that made my lawyer antennae stand on end. While we were talking about timeframes, he said something along the lines of "yeah, [Mr. Investor] is just waiting for us to sign off on the agreement and to send in our check for due diligence."…
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TCPA Penalties Enhanced under New “DO NOT CALL” Act

TCPA Penalties Enhanced under New “DO NOT CALL” Act

Telephone Consumer Protection Act
Earlier this Summer, Sen. Catherine Cortez Masto (D-NV) introduced a bill to enhance penalties for illegal robocalls under Telephone Consumer Protection Act (TCPA). Dubbed the “Deter Obnoxious, Nefarious and Outrageous Telephone (DO NOT) Call Act”, Senate Bill 1913 was cosponsored by Sen. Charles Schumer (D-NY), Sen. Margaret Wood Hassan (D-NH), Sen. Amy Klobuchar (D-MN), and Sen. Kirsten Gillibrand (D-NY). The legislation would impose strict new penalties for violations of the TCPA, namely it would amend the Act to impose prison terms of up to one year for those who “willfully and knowingly” violate the robocalling provisions of the TCPA and an enhanced penalty of up to three years in prison for “aggravated” violations, specifically where: the individual has previously been convicted under the Act;the violation involves initiating more than: 100,000…
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Beware of Trademark “Registration” and “Directory” Schemes

Beware of Trademark “Registration” and “Directory” Schemes

Uncategorized
Yesterday, I received a frantic e-mail from a client for whom my law firm had just filed a new trademark registration with the United States Patent & Trademark Office (USPTO). It seems the client had received a letter from an organization identifying itself as "WTP", which came in the form of a very serious looking invoice for her to pay $1,420 dollars for "Reproduction of Trademark". A "Trademark Publication" Letter from WTP In the middle of this missive, was the drawing of the mark which we had submitted in the original Trademark Electronic Application System application. Oh look, it even has the application's USPTO Serial Number! The client was understandably concerned, as her startup had already paid the TEAS filing fees for two International Classes, not to mention my legal…
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9th Cir. Gives No Credit to Claim that Experian’s Updated Site Terms Apply

9th Cir. Gives No Credit to Claim that Experian’s Updated Site Terms Apply

Contracts, Online Agreements, Terms of Service
A recent Ninth Circuit Court of Appeals decision involving mega credit reporting company Experian reminds us that online businesses should be careful of relying on unilateral "change-of-terms" clauses in their online terms of use/service/and conditions. Stover Background In Stover v. Experian Holdings, Inc. (No. 19-55204, 9th Cir. 2020), Stover purchased an "Experian Credit Score" service from the credit reporting firm back in 2014. In doing so, she was required to accept Experian’s terms and conditions, which contained a number of provisions in which she agreed to waive her right to be part of a class action and to arbitrate all disputes “to the fullest extent permitted by law”. Under these 2014 terms, Stover further agreed that each time she accessed the "Product Website", she would be manifesting assent to the…
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Is Minimum Wage Required for My Startup’s “Gig” Workers?

Is Minimum Wage Required for My Startup’s “Gig” Workers?

Employment Agreements, Independent Contractor, Start-Up
Startup companies (particularly those in technology or e-commerce) typically rely on independent contractors to fill key roles in the early stages of development, design, and implementation. But not a few startups we advise also rely on short term, part-time, “gig” workers to make their business model go. These workers are typically paid by the end-customer through the startup's platform, which facilitates the transaction (usually for a cut). So, are such companies required to pay or guarantee a certain minimum wage to such workers? Minimum Wage and Arizona Law NOTE: I am only licensed to practice here in Arizona and, as such, this post deals strictly with the law of Arizona. You should research the law of your own state or consult a qualified lawyer in the state where you are…
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