Friday, December 17, 2010
12-Month Extension on the 100% Capital Gain Exclusion for Investments into Small Businesses
Today, President Obama signed the “Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010” (the “Act”). Among other features, the Act extends for an additional year the 100% exclusion from federal capital gains tax for sales of qualified small business stock (QSBS) purchased during 2011. As I wrote in my earlier post from November 15, 2010, this benefit previously applied only with respect of stock purchased through the end of 2010. This extension provides a continued incentive for investment in small businesses. Note that the QSBS must be held for 5 years in order to qualify for the tax exclusion.
Trade Name vs Trade Mark
Is a trade name the same as a trade mark? What is the difference between the two terms? Should I trademark my business name? These are the commonly asked questions that today’s post aims to answer.
Trade name is the official legal name of your business entity. This name appears on the incorporation papers and you can find it if you search the Department of State business registry. You use this name to open bank accounts, obtain business credit cards, and this name is the one you use to pursue or defend a claim in courts. Trademark, on the other hand, is any word, design, slogan, sound or symbol that serves to identify the source of goods or services (service mark).
Not every trade name (or business name) may be trademarked. You should trademark your trade name only if you use it in commerce to advertise, promote or identify the source of goods or services your company produces. For example, Google is both a trade name (there is a Delaware corporation called “Google”) and a trademark (because Google puts its name on its products and services to identify the source). On the other hand, TJ Maxx is a trademark for retail department store services, but is not a trade name. The actual name of the company is TJX Operating Companies, Inc., which is a trade name that consumers would not typically identify with what TJ Maxx does.
Just having the name registered with the New York Department of State as a name of your business does not afford you protection against someone using the same name as a trademark. For example, person A started marketing his handbags under the name “Handy Bandy” in New York in 2000 without forming a legal entity. Person B could form a legal entity “Handy Bandy” and register it with the New York State in 2004. This is possible because in the NY Department of State registry the name is still available. However, person B would not be able to use this name as a trademark to identify the source of handbags because person A already uses this name for this purpose and has a common law trademark. The reverse may also be true. If person A registered his business in New York State under the name “Handy Bandy” in 2000, there may be an argument made that if person A does not use this name as a trademark, then the name may be available to person B wishing to use it as a trademark to advertise and sell handbags. This would be a difficult but not an impossible argument to make.
In conclusion, business owners may want to consider whether they use their trade names as trademarks, and if they do, to register them with the U.S. Patent and Trademark Office.
This article is not a legal advice, and was written for general informational purposes only. If you have questions or comments about the article or are interested in learning more about this topic, feel free to contact its author, Arina Shulga. Ms. Shulga is the founder of Shulga Law Firm, P.C., a New York-based boutique law firm specializing in advising individual and corporate clients on aspects of business, corporate, securities, and intellectual property law.
Trade name is the official legal name of your business entity. This name appears on the incorporation papers and you can find it if you search the Department of State business registry. You use this name to open bank accounts, obtain business credit cards, and this name is the one you use to pursue or defend a claim in courts. Trademark, on the other hand, is any word, design, slogan, sound or symbol that serves to identify the source of goods or services (service mark).
Not every trade name (or business name) may be trademarked. You should trademark your trade name only if you use it in commerce to advertise, promote or identify the source of goods or services your company produces. For example, Google is both a trade name (there is a Delaware corporation called “Google”) and a trademark (because Google puts its name on its products and services to identify the source). On the other hand, TJ Maxx is a trademark for retail department store services, but is not a trade name. The actual name of the company is TJX Operating Companies, Inc., which is a trade name that consumers would not typically identify with what TJ Maxx does.
Just having the name registered with the New York Department of State as a name of your business does not afford you protection against someone using the same name as a trademark. For example, person A started marketing his handbags under the name “Handy Bandy” in New York in 2000 without forming a legal entity. Person B could form a legal entity “Handy Bandy” and register it with the New York State in 2004. This is possible because in the NY Department of State registry the name is still available. However, person B would not be able to use this name as a trademark to identify the source of handbags because person A already uses this name for this purpose and has a common law trademark. The reverse may also be true. If person A registered his business in New York State under the name “Handy Bandy” in 2000, there may be an argument made that if person A does not use this name as a trademark, then the name may be available to person B wishing to use it as a trademark to advertise and sell handbags. This would be a difficult but not an impossible argument to make.
In conclusion, business owners may want to consider whether they use their trade names as trademarks, and if they do, to register them with the U.S. Patent and Trademark Office.
This article is not a legal advice, and was written for general informational purposes only. If you have questions or comments about the article or are interested in learning more about this topic, feel free to contact its author, Arina Shulga. Ms. Shulga is the founder of Shulga Law Firm, P.C., a New York-based boutique law firm specializing in advising individual and corporate clients on aspects of business, corporate, securities, and intellectual property law.
Sunday, December 12, 2010
Virtual World: Get Ready to Meet COICA (Combating Online Infringements and Counterfeits Act)
On November 18, 2010, the Senate Judiciary Committee unanimously approved COICA, a legislation that, if passed by the full Congress and signed by the President, would allow the Attorney General to commence a legal action to obtain injunction against the domain name of any website suspected of infringing copyrights or trademarks. It would also allow Attorney General to ban credit card companies from processing US payments to the website and forbid online ad networks from working with the website.
In particular, the Act would allow the Attorney General to seek a temporary restraining order, preliminary or permanent injunction against a domain name used by a website if the domain name is used by the website “dedicated to infringing activities”, i.e., if the website is “primarily designed, has no demonstrable commercially significant purpose or use other than, or is marketed by its operator, or by a person acting in concert with the operator, to" infringe copyrights or trademarks and such infringing activities, if taken together, are "central to the activity” of the website. The definition is extremely broad and is met if the website includes "a link or aggregated links to other sites or Internet resources for obtaining access to” infringing products or services.
The injunctive relief can be obtained against the domain name registrar where the website is registered, the domain name registry which maintains the database of names for the target website’s domain, and any of the service provides or operators of network linked to the Internet. If the injunctive relief is obtained, the domain registrar, registry or service operator must suspend operation of the domain name, but can petition the court for relief from such order.
When initiating a legal action, the Attorney General must notify the domain registrant of the alleged violation and its intent to obtain injunction, as well as publish a notice of the action once the injunction is obtained.
The Act also gives the Attorney General the right to keep a list of websites that meet the definition of “dedicated to infringing activities” but which have not been the subject of suspension. A website owner would have to bring an action against the Attorney General in federal court to be considered for removal from such list.
The Act has been subject to a lot of criticism. One such criticism is that the Act violates the freedom of speech protected by the First Amendment. (See Law Professors’ Letter in Opposition to S.3804, signed by 51 law professors, available at http://www.eff.org/files). Another important criticism raised by the Letter is that domain registrars, registries or service providers will have “no information whatsoever concerning the allegations regarding the presence of infringing content at the target websites because they have no relationship to the operators of those websites; they are therefore in no position, and they have no conceivable incentive, to contest those allegations. The Act contains no provisions designed to ensure that the persons actually responsible for the allegedly infringing content – the operators of the target websites – are even aware of the proceedings against them, let alone have been afforded any meaningful opportunity to contest the allegations in a true, adversarial proceeding.” Additional objections have been raised in a Letter from NetCoalition.com (which represents Amazon, Bloomberg, eBay, Google, IAC, Yahoo!, Wikipedia and others), dated November 15, 2010, available also at http://www.eff.org/files.
According to Wired.com, “COICA is the latest effort by Hollywood, the recording industry and the big media companies to stem the tidal wave of internet file sharing that has upended those industries and, they claim, cost them tens of billions of dollars over the last decade. The content companies have tried suing college students. They’ve tried suing internet startups. Now they want the federal government to act as their private security agents, policing the internet for suspected pirates before making them walk the digital plank.” (http://www.wired.com/epicenter/2010/11/coica-web-censorship-bill).
In conclusion, the Act, if passed, may not pass judicial scrutiny given constitutional concerns. Also, financial burden resulting from business interruption and legal fees for some (especially smaller or lesser known) websites could be astronomical. Finally, there are already civil and criminal remedies set in place by current trademark or copyright laws, - is there really a need for such radical measures?
In particular, the Act would allow the Attorney General to seek a temporary restraining order, preliminary or permanent injunction against a domain name used by a website if the domain name is used by the website “dedicated to infringing activities”, i.e., if the website is “primarily designed, has no demonstrable commercially significant purpose or use other than, or is marketed by its operator, or by a person acting in concert with the operator, to" infringe copyrights or trademarks and such infringing activities, if taken together, are "central to the activity” of the website. The definition is extremely broad and is met if the website includes "a link or aggregated links to other sites or Internet resources for obtaining access to” infringing products or services.
The injunctive relief can be obtained against the domain name registrar where the website is registered, the domain name registry which maintains the database of names for the target website’s domain, and any of the service provides or operators of network linked to the Internet. If the injunctive relief is obtained, the domain registrar, registry or service operator must suspend operation of the domain name, but can petition the court for relief from such order.
When initiating a legal action, the Attorney General must notify the domain registrant of the alleged violation and its intent to obtain injunction, as well as publish a notice of the action once the injunction is obtained.
The Act also gives the Attorney General the right to keep a list of websites that meet the definition of “dedicated to infringing activities” but which have not been the subject of suspension. A website owner would have to bring an action against the Attorney General in federal court to be considered for removal from such list.
The Act has been subject to a lot of criticism. One such criticism is that the Act violates the freedom of speech protected by the First Amendment. (See Law Professors’ Letter in Opposition to S.3804, signed by 51 law professors, available at http://www.eff.org/files). Another important criticism raised by the Letter is that domain registrars, registries or service providers will have “no information whatsoever concerning the allegations regarding the presence of infringing content at the target websites because they have no relationship to the operators of those websites; they are therefore in no position, and they have no conceivable incentive, to contest those allegations. The Act contains no provisions designed to ensure that the persons actually responsible for the allegedly infringing content – the operators of the target websites – are even aware of the proceedings against them, let alone have been afforded any meaningful opportunity to contest the allegations in a true, adversarial proceeding.” Additional objections have been raised in a Letter from NetCoalition.com (which represents Amazon, Bloomberg, eBay, Google, IAC, Yahoo!, Wikipedia and others), dated November 15, 2010, available also at http://www.eff.org/files.
According to Wired.com, “COICA is the latest effort by Hollywood, the recording industry and the big media companies to stem the tidal wave of internet file sharing that has upended those industries and, they claim, cost them tens of billions of dollars over the last decade. The content companies have tried suing college students. They’ve tried suing internet startups. Now they want the federal government to act as their private security agents, policing the internet for suspected pirates before making them walk the digital plank.” (http://www.wired.com/epicenter/2010/11/coica-web-censorship-bill).
In conclusion, the Act, if passed, may not pass judicial scrutiny given constitutional concerns. Also, financial burden resulting from business interruption and legal fees for some (especially smaller or lesser known) websites could be astronomical. Finally, there are already civil and criminal remedies set in place by current trademark or copyright laws, - is there really a need for such radical measures?
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