Social Media and the Law

Does your company need a lawyer every time you post on Facebook? Obviously not if it is your personal page.

However, when you dive into social media to promote your business you would be well advised to speak with a social media law specialist to keep an eye on what you post. Look at it this way, when a company creates an ad that makes certain claims about their product, that ad has to go through a strict legal review to protect the interests of that company.

This is the same approach you should be taking when you begin engaging customers through social media. In other words, get protected before you post. Here are some areas to think about with regard to social media and the law.

Do you have an action plan?

On many levels, you can gauge a successful social media campaign by the amount of followers or "likes" you achieve. Yet when you drill down, an effective social media campaign is much more than a numbers game.

Before you meet with a lawyer, you'll want to put together your company's action plan. This can come in the form of a prepared background document. Included in this document should be the supporting data for the following:

• Current social media uses
• Lists of various social media platforms being utilized
• Type of material being shared (blogs, videos, Tweets, photos, etc.)
• Staff members responsible for generating social media content
• Any company policies regarding posting
• A review of competitors’ social media campaigns
• Guidelines for employees posting on behalf of the company such as language/photo use

All of these issues pertain to a certain level of risk management with regard to employee interaction. Without guidelines you could find yourself dealing with inappropriate posts that could cause great harm to your brand.

Do your employees know what they can or cannot post?

It's hard to imagine a company getting through the course of business without creating a "disgruntled" employee. Usually, these are the folks who are dismissed because of poor work performance and go on to vent their frustrations. These types of comments can be managed but what about posts from current employees that could be a problem? Make sure that your employees understand that company secrets or making fun of a customer are not something that should be done on social media.

All of these types of postings need to be explored with your legal representative in order to form a comprehensive set of rules for your staff. It is much better to work through all the possible scenarios as opposed to doing damage control. 

Things to Consider When Incorporating Your Business

Incorporating your business in Canada can provide you with a level of protection in terms of liability. It can also show potential investors that you're serious about handling your business in a professional manner. Before you enter into the incorporation process there are many factors you'll want to consider. 

Will I be able to conduct business throughout the country?

If you make your company a federally incorporated company then you'll be able to conduct business across all of Canada. On the other hand, a corporation who files under OBCA is restricted to doing business in Ontario exclusively, unless it obtains additional licenses. Understand that choosing between a provincial or federal incorporation would depend on the type of business that you run and your vision for the future.

What are all the filing requirements?

As a corporation you'll have to follow the laws of "general application, requiring registration, returns and/or fees" as they apply to each particular province. These requirements are all contained in the CBCA provisions. Additionally, any time there is a change in your corporation you'll need to make necessary filings. There are other restrictions under the Business Names Act which pertains to the name you can select for your company.  

Where can I hold my board of director's meetings?

If you are a federal corporation you can hold those meetings anywhere in Canada. With a provincial corporation those meetings must be held within your province. These requirements should be spelled out in the filing papers.

Filing for incorporation will require you to look ahead to the future of your business. It might seem less costly to do the minimum amount of legal work for a "simple" incorporation application. That approach could come back to haunt you when your business takes off and you look to expand throughout the country. There will be a lot of effort going into your incorporation filing. Make sure you explore all your options to ensure the greater potential for success. In other words, cover all the bases ahead of time and you'll come out on top! 

For more information on incorporation and to place an order to have our experienced paralegals draft  articles of incorporation on your behalf, please visit our website at www.CorporationCentre.ca.

What to Know About Running Contests

For many businesses, a contest is a perfect way to reward loyal customers and bring in new traffic. Best of all, you don't have to be a huge company with deep pockets to start a contest. However, there are some legal matters you need to be aware of before diving into the contest arena. Keep these guidelines handy before considering launching your contest.

Make it a sweepstakes or contest.

Sweepstakes and contests might sound like the same thing but in the legal realm they are quite different. A sweepstakes is when a person merely "enters" to win something. That can be as simple as submitting an email address or sending a text. On the other hand, a contest involves some sort of skill like writing an essay. You'll want to make that distinction because each one comes with a specific set of legal guidelines/restrictions.

Make a list of rules.

You'll need to make a list of rules for your contest and then adhere to those rules. These rules should cover the typical items such as deadlines, eligibility requirements and rewards. They should also cover every possible scenario in terms of winning and losing. In other words, don't leave anything to second-guessing.

Make it region specific.

It's easy if you have a small neighborhood business and want to run a contest for your customers. You would only have to look up the guidelines as it pertains to your city and state. However, if you want to go national or international you're going to need to do a lot more research. This is why many contests have built in restrictions as to who can play.

Make sure you understand the online rules.

Obviously, the best way to reach the most potential customers would be with an online contest but that will open the door to a whole new range of possible restrictions. You might think it's a good idea to run a contest in order to get an expanded email list, but in reality you could be prevented from using those newly acquired addresses. Make sure you follow the rules especially when there is the potential for minors to be exposed to your contest.

Make sure you get a good attorney.

Suppose your contest involves printing "golden tickets" that a customer needs to find. What if the printer messes up and everyone gets a golden ticket? That scenario actually happened to Kraft Foods back in 1989 when suddenly all of the contestants in a contest were claiming brand new cars when there was only supposed to be one winner. Since then the "Kraft clause" was instituted to cover those kinds of human errors. An experienced attorney who has crafted rules and regulations for a contest will know all about those clauses and that's who you should be retaining to help with your contest.

When it comes to contests, you want to make sure your company comes out as the real winner!

How to Do Business in China

Looking to expand your business? You might want to look to the Far East - as in China. There is a groundswell of eager Chinese consumers with money to spend. As the middle class expands they'll be looking for the same types of products and services as every other group of middle class workers around the globe.

How can you break into the Chinese market? It's going to take a little groundwork and investment.

Here's what you need to think about to do business in China:

Get the Lay of the Land

You really can't just drop your products into China and expect them to sell. You'll first want to explore the country.

Don't worry about seeing it all. Stay focused on the urban centers where people are spending their money. The language barrier could be a huge hurdle but it is easy to overcome. There are many locals who are happy to act as an interpreter. Try going through a reputable service to find someone to take you around. For a few bucks you can also download the iTranslate app on your Smartphone which will get you through the basics in a pinch. If you're really serious about doing business in China you might take a language course. That will show your Chinese counterparts that you're respectful of their culture.

Keep in mind that you're not guaranteed to make a quick buck in China. Build a long-term strategy, with a network of employees, business professionals and consultants.

Find a Trade Show

Just like there are trade shows and expos happening all the time on this side of the Pacific, there will be the same kind of opportunities in China. Depending on your business these could be a perfect way to start building up your new Chinese network of business associates.

Retain a Qualified Lawyer

The Chinese have a different way of doing business. Once you embrace that you should be able to navigate the intricacies of the Chinese marketplace. For instance, the Chinese don't embrace contracts as a legally binding agreement but more of a show of good faith. Does this mean you could get ripped off? Perhaps which is why you want to do your homework before setting up shop in Shanghai. A good lawyer will provide you with the legal backing and advice to help you navigate the business culture.

Work With a Consultant

You might find that a solid business consultant on this side of things can be the best introduction into Chinese business and culture. Once again, because of the many business opportunities happening in China you should be able to find a qualified consultant to help you set up your business. Look for a consulting company with many resources as opposed to an individual. You'll get more bang for your buck that way.

5 Myths About Small Business Law

There is a familiar courtroom saying that goes, "A person who decides to represent themselves has a fool for a client."

What that means is that you shouldn't cut corners when it comes to legal matters especially in your business. There is just too much at stake. That same idea can apply to what you think you know about the law.

There are many myths about small business law that can fall under the category of "They say" or "I heard." Neither one of those ideas should be trust. Case in point: These five myths about small business law:

Myth One: Patents keep your intellectual property protected.

There are many variables that go into filing a patent. One tiny slip-up could open the door for someone to swoop in and make a clone of your idea incorporating a variable that allows them to score their own patent. Although it might not be fair, a bigger corporation could also "borrow" your design and make its own modifications. You can take them to court but they can also crush you with their legions of lawyers. And if there is patent infringement overseas, good luck! This doesn't mean you shouldn't file that patent. Just know it's not a complete shield.

Myth Two: A contract has to be thick to be any good.

Wrong. The best contracts are the ones that are easy to assimilate and understand. One of the reasons that contracts become complicated, is because lawyers like to bill for any ongoing changes.  If you can get a contract boiled down to a few pages then you'll be ahead of the game. Just because lawyers like to throw around a bunch of legalese doesn't mean they have to. That isn't the law!

Myth Three: You can't be sued if you did nothing wrong.

Actually, you can. Anyone can sue you for anything. That doesn't mean the case won't be tossed out be a judge, but before that happens you'll still have to hire a lawyer and defend your company's interest. It could be that the litigant is just trolling for a settlement. Tort reform is a big issue in many countries. There are some places where the loser has to pay all court costs. That could curtail frivolous lawsuits but until that becomes a universal law brace yourself.

Myth Four: All you need is a trademark to protect your brand.

Not so much. First of all, getting a proper trademark can be a very complicated affair. Even when you do get a trademark issued it can only apply to certain territories. That means you have to go multiple places to be truly protected. On many levels, getting the right URL is way more important than a global trademark. Remember, that URL could also be many variations of the same word or phrase related to your company or product. Try to snag them all.

Myth Five: You only need a lawyer if you're sued.

We could spend hours telling lawyer jokes. Yes, they can be a hindrance especially if they are coming after you and your business. However, the best time to retain a lawyer is long before you ever set foot inside a courtroom. If you're not sure about an issue whether it has to do with taxes, R&D or even real estate spend the money to consult with the right attorney. This can pay off in the long run. 

Finding the Right Small Business Lawyer

You need a lawyer. By now you've already embraced that fact as a way of moving your company forward. However, you don’t know how to find the right small business lawyer for your needs. Obviously, asking a friend or business associate for a referral is the best first step you can take. Just because someone you trust recommends an attorney, doesn't automatically mean that attorney will be a perfect fit. Here's what you need to think about when interviewing potential business lawyers:

Fees: Clearly, you need to know how much your new lawyer is going to cost you. Will there be a fixed retainer or will they bill you by the hour? Is every quick phone call going to cost you big bucks? Yes, you should look for fair rates but keep in mind that a lawyer with a hefty hourly billing rate might be a better investment. That's because with experience comes higher fees. That experienced lawyer can finish an assignment in a couple of hours while the new lawyer might take several days. What would you be saving then?

Attention: As a small company you might have small issues to deal with at first. Will your new lawyer devote the same level of attention to your concerns as they would to a bigger company? They'll probably tell you that won't be a problem. Yet, if you discover you're not getting the attention you need then it might be time to change it up.

Return Call Rate: Coinciding with the amount of attention you'll receive will be the return call rate. How fast will your lawyer get back to you? If you're waiting a day or more then there are some problems you need to work out.

Patience: You're not a lawyer otherwise you could handle your own matters. Will your new lawyer have the patience to explain the legalese to you? You should never feel like you're asking silly questions and your lawyer should have the ability to walk you through complicated contract issues.

Focus: You'll be able to tell a lot about your new lawyer by the way they handle that first interview meeting. Are they constantly being interrupted by calls? Are they checking their Blackberry for emails? If they can't focus on a simple meeting how do you think they can handle the big stuff? Are you being too demanding asking for their undivided attention? Absolutely not. That's what you're paying for.

Excitement: You're not going into business with your lawyer but that doesn't mean they can't be passionate about what you're trying to accomplish. Are they excited to work with you? They should be! 

Avoiding Legal Issues When Selecting a Company Name

What's in a name?

For a company it could be everything. The name is the first introduction you have to your future customers. It's a way of building a brand and can matter a lot when it comes to establishing a foothold in the marketplace.

Think of it as planting your flag in the corporate world. The hitch is, if somebody got there before you, you'll be sent back to the drawing board.

The Legalities

The first legal issue is to make sure your proposed company name isn't already being used by another company. When you file articles of incorporation you are looking to qualify to do business and that begins with your company name. In other words, you can't open up a retail store and call it Target.

For instance, your Widget Inc. could survive as Widget Enterprises Inc. You should be cautioned not to pick a name that is too closely associated with a thriving business. That will get you into trademark trouble.

This is why many corporations often use a family name as the "umbrella" under which many other businesses can be created. You are able to perform a search for your business name beforehand to ensure that it is available. You might find that adding descriptive qualifiers can help if the name you want is similar to another.

The Trademark Issue

Right now, somewhere in the world, there is a trademark infringement lawyer preparing a lawsuit. Businesses who have spent millions on developing a brand and setting up a loyal customer base don't want that all their efforts ruined by some cheeky competitor.

Consider this the rule of the "Mc."

McDonald's has done a great marketing job of associating its products with the "Mc" surname. McNuggets, McWraps, McBites, McChicken, McFlurry... you name it and they put a "Mc" in front of it.

You could come along and have a carpet cleaning business that you want to call McCleaner and McDonalds would be well within their rights to haul you into court with a "cease and desist" order mentioning that your "Mc" is diluting their "Mc" brand. And because their "Mc" is first, you will lose.

Don't think that you can get away with a name that might be close to a company with a low profile. All they would need to do is serve you with a lawsuit and your entire business can come to a screeching halt.

How to Protect your Company from a Lawsuit

Nobody likes getting sued. If you’re a start-up, a lawsuit can bring your business to a screeching halt.

On some level, you can’t ever provide 100% protection against a lawsuit. Anyone can sue anyone at any time. The issue becomes whether that lawsuit has merit or not. Hopefully you can institute the following steps to make sure you would be protected against lawyers bringing frivolous lawsuits against your company.

Step 1: Be patent and copyright compliant

If you are selling a product that you invented, you should have patent and copyright protection in place before you make any sale. There are plenty of internet resources you can tap into that will let you determine whether or not you might be infringing on someone else’s copyrighted material. If you’re making a new product is “like” another product then having your own copyright or patent should insulate you from a lawsuit going forward. This type of research should also apply to any type of logo or other marketing device you intend on using. For instance, if you’re selling a new patented blend of cotton T-shirt but have Mickey Mouse imprinted as the design you could be sued by the Disney Company unless you have licensed that image.

Step 2: Incorporate

As the sole owner of a start-up business, you might think it’s not necessary for you to incorporate yourself. After all, you’re making all the decisions, right? In truth, incorporation provides a layer of protection against liability. If your business is sued it would only be the assets of that incorporated business that would be at risk. All of your personal assets would be safe. In the worst case scenario, an incorporated business can declare bankruptcy and you can turn around a start a new business the next day with a new corporation.

Step 3: Always get it in writing

There isn’t an aspect of your business that couldn’t benefit from a well written contract. Whether that document is between you and an employee, vendor or client having all the terms clearly spelled out will help reduce the instance when someone could find fault with your practices. That’s why contracts should always include clauses to consider all the possibilities of a particular outcome. 

Step 4: Don’t steal staff

Too often the best potential workers are already working somewhere else. There is nothing wrong with hiring a worker away from another company. It happens all the time. However, when you get into situations where intellectual property is involved it might cause some problems down the road. For instance, if you’re starting a mobile game development company and you poach a great designer from another company, that company might take exception with the kind of knowledge their former employee is bringing to your company. This is why there are non-compete clauses in a person’s severance contract. If you are hiring someone in a situation like that make sure they are coming to your business free and clear.

How to Reduce your Legal Fees

As professions go, lawyers are probably among the most maligned out there. You definitely want a "barracuda" on your side but the moment an attorney starts serving you papers they become the bane of your existence.

If you're in business, you need a lawyer. Hopefully it will only be for the start-up and lease negotiation process and not defending you in a lawsuit.

Even with the simple contract work, legal fees can take a huge chunk out of your bottom line.

How can you reduce your legal fees? Consider these ideas: 

1)  Be clear on what you’re paying for

Before entering into any arrangement with a lawyer you should understand their billing practices. Instead of billing for every piece of work on an hourly basis, your potential attorney could work on a flat fee. This is a good arrangement especially if you are looking for contract review and not a lot of back and forth "fixes."

Understanding what you're paying for also means going over your bill every month. If something doesn't look right, ask your attorney for clarification.

Make sure to keep track of your own contacts with the lawyer to compare with the bill.

2) Think before you call or email

Having a lawyer at your disposal is a bit like living with a doctor; you just can't resist the urge to ask about every question that pops in your head. Just know that with a lawyer you're going to be billed for every phone call and email that you send.

Even if it takes them 30 seconds to respond, they're going to charge you at least a quarter of an hour.

All of this means to plan before you communicate. You might be able to answer your own question and save yourself some bucks.

3) Do some of the work yourself

Always keep in mind that lawyers will bill for everything. Reduce costs and time by making copies and delivering documents on your own. Also, try to respond in a timely manner whenever your attorney requests information. If they have to keep reminding you to submit something, that will be another charge.

4) Don't hesitate to shop around

Nurture a great working relationship with your lawyer. It could make all the difference. However, if you find them doing the kind of basic work that any decent attorney could do, you might be well advised to shop around. Find out what other attorney's are charging. Ask your friends who they use. Remember that the lawyer is working for you!

How a Shareholders' Agreement Can Protect You and Your Business

Corporate law doesn’t offer a solution for every potential conflict that can occur between partners or shareholders during the course of running your business. Which is why creating a shareholders’ agreement can be a very smart thing to do to protect yourself.  There are many situations in which a shareholders’ agreement can get you of trouble. Here are a few examples:

·         An unfortunate event that occurs such as a conflict with one of the shareholders, an accident, bankruptcy or even death of a shareholder

·         When the shareholders want to maintain equal equity within themselves

·         When shareholders want to participate in company decision-making, such as the introduction of new partners in the company

·         Or changing the shareholder voting rights

Even if you have less than three shareholders, you should write and sign a shareholders agreement. The departure of a partner or even a disagreement between shareholders can often lead to bad blood within your company.  And in situations like these, you want to make sure you’re protected.

If you want to have the best shareholders’ agreement that meets your needs, it is advisable to consult a lawyer. He will determine what clauses should be included in the agreement and suggest solutions tailored to your situation and that of the shareholders. Expect to pay a few hundred dollars for a lawyers’ service.

If there is a dispute or uncertainty on how to proceed in a particular situation, you can refer to the shareholders' agreement for guidance. In the event that the agreement does not cover a particular circumstance or the situation cannot be resolved by the shareholders, an arbitration clause can be inserted in the agreement that requires the dispute to be referred to an independent third party.

Here are some of the clauses that you should be aware of and may wish to put in your agreement:

1.       First refusal: This allows shareholders to have a say over the sale of their shares to someone else who is not a part of the company.

2.       Mandatory offer due to death: Provide what will happen upon the death of a shareholder

3.       Mandatory offer due to withdrawal from business: Provide for situation which could lead to the withdrawal of a shareholder from the company for various reasons

4.       Pre-emptive right: Protects the rights of the shareholders against issuing new shares by the Board of Directors

5.       Shotgun clause: Protection from any disagreements between shareholders

6.       Working conditions: This outlines the working conditions governing the shareholders who work for the company

7.       Voting: Allows shareholders to be elected as board of directors

In starting your business, you should hope for the best, but plan for the worst to occur. By using a shareholders' agreement, you save money, time and frustration in the long run. What you get is greater trust and peace of mind between you and your partners which is fundamental to every successful small business.

Are Canadian Courts Adapting with New Technologies?

The cornerstone of any free society is a thriving court system which takes the approach to justice very seriously. For a court system to truly serve its constituents it has to keep up with the technology and the Canadian legal system is no exception.

Fortunately, the modern technological advances that have been woven into the Canadian courts have proven to not only be cost effective but also to serve the greater good.

I see you!

There is a practical aspect of adapting technology to court use and that has to do with geography. Beyond our vibrant urban cities, Canada is a vast land of abundant resources and environments. The current population stands at 30 million + but we are scattered all across the Canadian landscape. As such, it’s not uncommon for a judge to be issuing rulings 1,500 miles from the main courthouse. This is where video conferencing has made a huge difference in terms of expediting court cases.

With video conferencing, a judge can review, cross examine and make a ruling on an applicant who might be several miles away. By adapting video conferencing there is also a great reduction in the need for prisoner escort costs. In some cases, a video conference is a benefit when a hardened criminal can remain incarcerated without the chance of getting contraband passed to them outside the confines of the jail. This is definitely a case where swift justice can prevail.

Shuffling papers…

Another positive use of technology is with case management, especially the large amounts of paperwork to manage. New software and systems have been created that allow documents to be created, edited and stored virtually on secure servers. It allows court clerks instant access to case files and removes redundant data entry.

As with the video conferencing, upgrading to a case-management system for certain court documents is a cost saver not only on paper but also physical storage space. The caution is to insure that these documents are secure. Safeguards need to be put into place to make sure only designated court personnel would have access to these types of records. By the same token, these files have to be properly updated to insure that an innocent party has their record expunged.

Efficiency is the key

During the actual trial, technology can play a role when it comes to evidence presentation. A power point presentation is easy to compile and understand. It’s also helpful when it comes to reviewing that evidence if it is kept on a single file as opposed to scattered over dozens of charts and placards. Many courts have upgraded old transcript recording to new digital recording methods. Once again technology proves to streamline a process while reducing costs.

Clearly, the Canadian courts are putting technology to work. The question then becomes how dominant will that technology become and will there be safeguards to protect privacy?  Ironically, the answer to that will be decided by the courts.

Intellectual Property: Tips on How to Protect Your Business Online

Intellectual property is anything that you or your business creates that is the property of your business. Each of the super heroes in the smash hit movie, Avengers, are the intellectual property of Marvel Comics. This means you can’t use The Hulk to advertise your spring sale. When you or your company creates a piece of intellectual property whether it’s a slogan, a character, a recipe or logo you are well within your rights to make sure that property is protected. In this age of social media networking, keeping up with that protection can become a challenging and full-time job. The following are some insightful tips on how you can protect your intellectual property and what to do when someone steals it.

·         Patent, Trademark, and/or Copyright First

You really can’t make a claim against someone who is using your intellectual property unless you first register that property. This will require filing an official trademark or copyright application for your property. A trademark protects your company information from being used by another company. Going back to the Avengers example, the next Batman movie can’t have Spiderman in it because those are two separately trademarked characters and can only be used with permission from the trademark owner. Copyriting typically applies to a work that you intend to publish like a story, article or photo. These can also be created by your business as a way of promotion but can’t be used by other companies unless you give them permission. A lawyer who is familiar with these types of laws can advise you as to which is the best application to file for protection.

·         IP Monitoring

If you are serious about protecting your intellectual property then you’re going to have to invest into some time into monitoring your brand to see if your property is being inappropriately used. This isn’t just about checking into Facebook once a day, but instead dedicating time to conduct comprehensive searches across all kinds of social networking sites and other web portals.

·         Decide If Your Have Been Infringed Upon

Suppose your company creates a brand icon like the Pillsbury Doughboy. After trademarking this icon, it becomes very popular and begins popping up as people’s profile picture or on their blogs. Is that real infringement? Is your business being damaged? Your reputation being tarnished? Only you can make that call but just because someone might be using your icon or other intellectual property in the vast outreaches of cyberspace doesn’t mean your business will suffer. On some level, you can’t realistically chase down every infringement. You have to pick your battles wisely.

·         Taking Action

When it has been determined that your intellectual property is indeed being misused then you can take appropriate legal action. The first would be a cease and desist order. This would be a legal letter sent from your company’s attorney informing the user that they need to stop using your intellectual property immediately. Once you’ve put them on notice and they still keep using the property, you can sue them for trademark or copyright infringement. Proving damages in court can be tricky and costly for you. Often, the cease and desist order will do the trick.