Business Startup

News Roundup: Ride Sharing, Startups Cash In, Google Invests in SpaceX, etc.

Here’s a collection of the most interesting legal and business news we found this week:

Ride Sharing

One of the big issues facing Uber has to do with the fact that auto insurance policies for individual drivers generally don’t cover damages from commercial activity, including ride-sharing through applications like Uber and Lyft. In Colorado, USAA and Farmers are now offering ridesharing insurance. Colorado is a natural testing ground for these new types of policies, as Colorado became one of the first states to explicitly authorize ridesharing services in 2014.

Startups & Funding

The big news of the day is Box’s IPO. After a shaky ride through the IPO process, Box’s IPO appears to be an initial success. It is a home run for its...

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Intellectual Property

USPTO Reduces Trademark Application Fees

Today, we bring good news to any of our readers who are planning on filing for a federal trademark. The United States Patent and Trademark Office (“USPTO”) recently announced that it will be reducing trademark application fees and also will be adding a new type of trademark application.

Why were trademark application fees reduced and when will the new fees take effect?

As authorized by the Leahy-Smith America Invents Act, the USPTO amended its regulations to reduce certain trademark application fees in order to: (1) continue with an appropriate and sustainable funding model; (2) support strategic objectives relating to online filing, electronic file management, and workflow; and (3) improve efficiency for USPTO operations and customers. The new fees will take effect on...

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Litigation & Dispute Resolution

Alternative Dispute Resolution Series: Early Neutral Evaluation

We continue our Alternative Dispute Resolution Series with a discussion of Early Neutral Evaluation. Early Neutral Evaluation (ENE), also known as “Neutral Case Evaluation” and “Case Evaluation,” is when one or both parties use a third-party neutral to evaluate the strength of their case, generally early in the life of the dispute. Just as with arbitration and mediation, there are different forms and styles of ENE, but the core structure is the same. In ENE, the third-party neutral reviews the evidence, listens to parties’ summaries of their cases, and gives the parties a written evaluation of the case.

The Benefits of Early Neutral Evaluation

Parties, including clients and their attorneys, often inaccurately assess the strength of a case. This can lead to...

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Business Startup

Shareholder Inspection Rights for Washington Corporations

Becoming a shareholder in a Washington corporation comes with certain statutory rights, including the right to inspect the company’s records. These shareholder inspection rights may not be included in the company’s articles or bylaws, and many shareholders are not aware the shareholder inspection rights exist. But it can be very important to understand what documents you have a right to see as a shareholder. Below, we’ve highlighted the ins and outs of shareholder inspection rights in Washington and the procedural requirements for requesting records.

Who can request corporate records?

Under RCW 23B.16.020, shareholders of a corporation are entitled to inspect and copy a corporation’s records at the company’s office and during normal business hours if the shareholder gives that corporation at least...

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Corporate Finance & Securities

What You Should Know About Reselling Private Stock

If you purchased stock from a startup in a “friends and family” round, can you sell it to someone else without violating securities laws? The answer to that question probably depends on whether you’re in compliance with Rule 144, which provides requirements that if satisfied, allow people to re-sell privately issued stock.

Background

There’s a general rule in the Securities Act of 1933 that if you sell a non-exempt security to another person, the sale must be registered unless an exemption from registration applies.

There’s a few things to unpack here. First, what is a non-exempt security? Second, what does it mean for the sale to be registered? Third what are the exemptions from registering the sale?

Exempt Securities Section 3 of the Securities Act...

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Litigation & Dispute Resolution

Alternative Dispute Resolution Series: 3 Secrets to Mediation Success

In our Alternative Dispute Resolution Series , we highlighted why mediation and arbitration are increasingly popular alternatives to litigation in business disputes. In this post, we’ll dive into three strategies you should employ when mediating a dispute.

Mediation is a commonly used alternative dispute resolution (ADR) method where parties can enlist the help of a third-party neutral (the mediator) to hopefully come to a resolution. As we discussed in our earlier post in the ADR Series, in mediation, the parties in dispute have much more control over the process than they would have in litigation. In this post, we’ll discuss how parties can take advantage of this process in order to increase their likelihood of success:

1. Separate the people from the problem

It is...

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Litigation & Dispute Resolution

Website Leverages the “Crowd” to Finance Lawsuits with Crowdfunding

A few weeks back a new website was unveiled that uses crowdfunding to finance high-value commercial lawsuits. According to the Wall Street Journal and the company’s press release, LexShares connects accredited investors with plaintiffs in commercial lawsuits.

“Invest in Justice”

The company’s slogan suggests a novel idea in the crowdfunding world, and breaks away from the “traditional” reasons for raising capital through crowdfunding, which is raising operating capital to fund startups and small businesses.

LexShares’ staff of securities professionals review the lawsuits and only post suits that have “strong merit.” The target lawsuit for the company is one with $10 to $40 million in claim value. According to the press release, if the plaintiff wins the case, then the investors will recover an...

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Business Startup

Brewery Law 101: A Primer on the Basics of Owning and Operating a Brewery or Distillery in Washington

Over the course of the next few months, Collin Roberts and I will be putting together a brewery law blog series with what we hope will be helpful information for people interested in starting their own brewery or distillery in Washington. Starting a brewery or distillery isn’t all that different than starting any other business, but there are a few important issues to highlight that are important to be aware of as you open your brewery’s doors. Below are the topics we will be exploring over the next few months:

Choosing the right entity and other startup considerations for breweries Why are trademarks so important for breweries and distilleries? How labelling requirements may affect your trademark decisions Brewery Operating Agreements Navigating TTB Requirements and Licensing When...

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Business Startup

Understanding the Cumulative Voting System

When you form a company, there are several key decisions that you need to make upfront to make sure you protect your interests and position your company for long-term success. Sorting out the voting system for electing directors is one of those key decisions. Today’s post highlights cumulative voting in director elections and why it might make sense for your company.

What is Cumulative Voting?

Cumulative voting is a type of voting system that allows shareholders to vote their shares cumulatively, which is to say that the shareholders can vote all of their shares for a single director candidate. For context, in a “normal” voting system assuming one vote per share, each shareholder can vote only as many shares as they have...

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Corporate Finance & Securities

GoPro—An Illustration of the Importance of Investor Lockup Provisions

Here’s an example of a commonly overlooked provision in a term sheet coming into play. Recently, news broke that there was a “loophole” in GoPro’s lockup provision, and the company’s shares subsequently tumbled almost 13%.

What is a lockup provision? A lockup provision is an agreement that the shareholders will not sell their shares for a specified period of time—often 180 days—following a company’s initial public offering. The point of the lockup provision is to keep existing shareholders from flooding the market and depressing prices in the company’s offering. There are two primary types of lockup agreements. The first is an agreement between the investors and the company during a private offering.

A standard industry term sheet has the following lockup provision:

Investors shall...

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