The Vethan Law Firm, P.C. successfully negotiated a settlement in trademark and franchise dispute.

New York Pizzeria Blog 5/21/2013

The Vethan Law Firm, P.C. successfully negotiated a settlement in the middle of a Federal jury trial in a recent trademark and franchise dispute involving local eatery New York Pizzeria, the Plaintiff, and a former franchisee.  The Vethan Law Firm, P.C. was retained following the first trial continuance as trial counsel for New York Pizzeria with only three months to trial.  Pretrial efforts to settle the case were unsuccessful.  Therefore, The Vethan Law Firm, P.C. narrowed the issues and prepared for trial.  After successful opening statements and the beginning of evidence, settlement negotiations reopened and the parties were able to settle all pending claims.

Often a successful settlement posture requires successful trial technique.

 

Selecting the Business Formation that is Right for You, Your Company, & Your Business Goals

Starting your own business can be scary, overwhelming, exciting, and confusing all at the same time.  It takes a certain type of person to become an entrepreneur: smart, driven, goal oriented, a risk lover, detail oriented, hardworking, creative, ambitious . . . and well, you get the gist.  Starting a business and being successful requires a lot of different skill sets. Unfortunately, most of us don’t have all of the needed skills, some of us are planners, some procrastinators, some are creative geniuses and other financial whizzes.  That is why about 75% of small business are a partnership or some form thereof and that is why it’s important to not only have a great idea for your business but to put some thought into what type of business entity is right for you.  Whether you are starting a business in Texas, California, Oregon, or Michigan the types of business entities will be very similar although each state offers their own twists on the general types of business formations.


The most common business entities are:

·         Partnership, including limited partnerships and limited liability partnerships

·         Limited liability corporations (LLC), including professional limited liability corporations

·         Corporations, including professional corporations

 

Each of these business entities offer distinct advantages and disadvantages. Before you make a decision you should evaluate each business entity in light of the following questions:

·         How many individuals will be involved in the business?

·         How will each individual be contributing to the business?  Equity (money)? Expertise? Labor?

·         How involved does each individual want to be in the business on a day to day basis?

·         How much capital (money) is there to start the business?

·         Will the business need additional capital to continue operations once it is started?

·         What is the long term goal for the business?  Stay small?  Become a major player in the given industry?

 

With the answers to these questions you will have a basis from which you can start your inquiry into the perfect business entity for you.  Often times when you are starting a business it makes good financial sense to seek the guidance of a professional.  There are many nonprofit organizations that assists new business owners, as well as lawyers, accountants, and consultants.  Check back soon for more information on each business entity, with a discussion of risks, benefits, and how to’s.

Building a business is exciting and rewarding,  best of luck as you start your journey!
 

 

Vethan Law Firm, P.C.

http://www.texasbizlaw.com/

 

 

 

 

 

So I started my business, and my former employer sued me…

At the Vethan Law Firm, PC we deal with a few of what we call “template situations.”  One of those, which is not the subject of our discussion is the “business divorce.”  That is the implosion of a family owned business through internal strife and litigation.  The subject of today’s entry however, is just as common.  You work in an industry for years developing your experience and knowledge and finally you decide to strike out on your own.  Sometimes the decision is made for you because you have been fired, laid off, or more commonly constructively discharged, but in any situation you have decided to strike out on your own.

As is often the case, if you have the knowledge and experience to open your own shop, no matter the industry, then you are a valuable asset to an employer.  And often, former employers do not take kindly to valued assets becoming the competition.  And so you get sued.  You are going to get sued for a couple of things, which are quite often bundled together in one neat package: breach of fiduciary duty (depending on your former position), breach of non-competition agreement (if you had a non-compete contract), misappropriation of trade secrets (if you knew anything of value), tortious interference (if any clients decide to use your new business), and civil conspiracy to do all of the above (if you left with others as well).

The first thing you need to realize which you may very well already know is that some egos bruise easily.  The second thing you need to realize is that a company is most vulnerable in their infancy.

You have been served with what is known as a “Strike Suit.”  Most commonly a Strike Suit, is a zero merit law suit that attempts to squeeze a settlement out of a Defendant simply because the cost to settle is lower than the cost to defend.  In your situation the Strike Suit is a zero merit lawsuit filed, not with the intent to squeeze out a settlement, but with the intent of bleeding your business of its startup capital and scaring off your potential clients and investors.

There may be animosity between you and your former employer and that will fuel the litigation.  But the real goal is to keep you from competing with them.  You need to remember that they are suing you because you are a threat.

If you are planning on leaving an employer to set up shop you ought to have counsel to help craft any severance agreement.  But choosing effective counsel the moment you are sued is vital.  It may just be what saves your startup from failing.  It is commonly said that the ultimate revenge in the business world is success.  It is time for revenge.

Vethan Law Firm, P.C wins a Copyright Case In Texas

Vethan Law Firm, P.C wins a Copyright Case in Texas.

We would like to share a blog someone wrote about a case that we won, visit our website to learn more about our practice areas and our aggressive board certified attorneys.

 Billy-Bob Teeth Bites Again

I recently wrote about the difference between standing in patent cases and copyright cases, and the always erudite Ron Coleman over at Likelihood of Confusion contributed on the topic. There is, in my mind, a flaw in copyright jurisprudence that essentially bars a defendant from challenging the chain of title for ownership of a copyright. And it strikes again.

Engenium Solutions, Inc. v. Symphonic Technologies, Inc. is a software copyright case, so you know it's complicated on many levels. The software in question is called "Scheduling Workbench" and is a customized scheduling and maintenance tool compatible with SAP software (SAP is not a party). Scheduling Workbench was developed by the plaintiff Engenium Solutions, but under a Developer's License Agreement ("DLA") with SAP. The DLA allotted copyright ownership for new software for the SAP platform in different ways, depending on whether the software was an "Add-on" (for which the developer would own the copyright), an "Enhancement" or a "Modification" (with the copyright in the latter two owned by SAP). In this case, SAP certified the Scheduling Workbench as an Add-on.

Engenium then licensed the Scheduling Workbench to ConocoPhillips in a Master Software License, Maintenance and Service Agreement ("MLA"). The MLA had what might be conflicting provisions about the ownership of the copyright, saying both that ConocoPhillips had only a license to Scheduling Workbench but also, in boilerplate, that "All copyrights ... developed or created by Licensor [i.e., Engenium] during the course of performing the work for Licensee [i.e., ConocoPhillips] shall belong exclusively to Licensee and shall, to the extent possible, be considered a work made for hire for Licensee ...."

The defendants challenged Engenium's copyright ownership in several ways: first, that the Scheduling Workbench software was not an Add-on but either a "Modification" or "Enhancement" and so the copyright was owned by SAP; second, that at least some parts of the Scheduling Workbench software were developed for ConocoPhillips and therefore ConocoPhillips owned the copyright by the terms of the MLA.

So a very convoluted ownership problem, which the court handled this way:

Plaintiff correctly points out that numerous courts, including this one, have held that alleged infringers may not avoid liability by arguing that a plaintiff does not own the copyright at issue due to defects in a copyright transfer agreement between the plaintiff and a non-party transferor. Billy-Bob Teeth, Inc. v. Novelty, Inc., 329 F.3d 586, 592-93 (7th Cir. 2005).... In this case, unlike the above precedents, Defendants argue that the DLA and the MLA are valid transfer agreements, and Engenium has successfully transferred ownership to SAP and ConocoPhillips under 17 U.S.C. § 204. However, the precedents cited by Plaintiff are equally applicable; where there is no dispute between contracting parties as to the ownership of the copyright, a defendant accused of infringement may not avoid liability by arguing that the contract actually worked a transfer of ownership. SAP itself agrees that Scheduling Workbench is owned by Engenium, as evidenced by the fact that SAP certified Scheduling Workbench as an add-on. Because SAP agrees that Engenium is the owner of the copyright at issue, Defendants ought not be permitted to avoid liability by arguing that SAP actually owns the copyright. Thus, even if Defendants could produce evidence that would support their contention that the capacity availability feature of Scheduling Workbench falls under the definition of an enhancement under the DLA, such an argument is not an appropriate defense to a copyright infringement suit.

Okay, well I can see some economy in the use of judicial resources here by characterizing it as an improper defense, although I'd rather see it as simply that no reasonable factfinder could find that SAP owns the copyright. But then we get to the ConocoPhillips MLA:

Defendants' argument that Engenium transferred ownership of certain aspects of Scheduling Workbench to ConocoPhillips under the MLA fails for the same reasons. While it is not entirely clear from the MLA whether the changes made to Scheduling Workbench at ConocoPhillips' request constitute "work product" owned by ConocoPhillips, or are merely "updates," "versions," or "releases" owned by Engenium, the Court need not resolve the matter. Defendants may not rely on an agreement transferring copyright ownership to avoid liability in an infringement suit.

That's it, baldly, "I don't know who the heck owns what, but I'm saying you don't even get to ask." What?

How did we get here? It started with Imperial Residential Design, Inc. v. Palms Development Group Inc., then was extended by Billy-Bob Teeth, Inc. v. Novelty, Inc., which, for no good reason, made the broad policy statement that

[The defendant] simply does not having standing [to challenge ownership of the copyright] under § 204. The statute is in the nature of a statute of frauds and is designed to resolve disputes among copyright owners and transferees. As the court said in Imperial Residential Design, "the chief purpose of section 204(a), (like the Statute of Frauds), is to resolve disputes between copyright owners and transferees and to protect copyright holders from persons mistakenly or fraudulently claiming oral licenses or copyright ownership."

That may have been why there is a writing requirement in the statute, but that's a significant amount of judicial activism to turn it into a basis for denying a defendant the right to challenge the threshold element of a plaintiff's claim, ownership of the copyright.

And look how far it's gone. Both Billy-Bob Teeth and Imperial Residential Design were cases where there was an oral transfer later memorialized in writing, with the challenge being whether the oral agreement actually ever existed. It makes some sense to avoid that challenge; it is going down a bit of a rabbit hole to question whether there was an oral agreement when the parties to the agreement don't challenge it and there ultimately was a writing confirming the assignment. But how we go from "you can't challenge an undisputed oral agreement later memorialized in writing" to "you may not rely on an agreement transferring copyright ownership to avoid liability in an infringement suit" is, I repeat myself, crazy talk. In Engenium, we have no idea what ConocoPhillips thought about the situation and no reason to think that ConocoPhillips was in agreement with Engenium about the copyright ownership. The reasoning in Imperial Residential Design and Billy-Bob Teeth has no place here.

So I'm going to go register me some copyrights, claim I won them in a poker game, and get busy ....

Engenium Solutions, Inc. v. Symphonic Tech., Inc., No. H-10-4412 (S.D. Tex. Feb. 15, 2013).


The text of this work is licensed under a Creative Commons Attribution-No Derivative Works 3.0 United States License.

Successfully captures $1,000,000.00 in Summary Judgment.

In an intensely litigated case before the Honorable Bankruptcy Judge Jeff Bohm, VLF successfully obtained partial summary judgment regarding the ownership of $1,000,000.00 for our client, AFI Services, LLC on a real estate deal gone bad. The Plaintiff, an attorney and sophisticated real estate investor, argued the $1,000,000.00 he had invested in AFI Services, LLC was never property of the Defendant and accused our client of improperly claiming rights to the property, and filed a motion arguing that the money was his. VLF disagreed and countered with its own partial summary judgment.  After presenting the evidence both in the motion and at the hearing on several days, the Judge agreed with VLF over the protestations of the Plaintiff and commemorated his ruling with a twenty-four page opinion.

VLF again proved that with the proper sling, David beats Goliath, every time. 

THE DEVELOPMENT OF THE TEXAS NON-COMPETE: A TORTURED HISTORY

     A recent article in the New York Times reported that the state of Texas had gives out more incentives than any other state, around $19 billion a year, to lure the most dynamic businesses in the United States to the Lone Star State. [i] The governor of Texas stated that "Facebook, eBay, Apple - all of those within the last two years have announced major expansions in Texas... [t]hey're coming because it is given, it is covenant, in the boardrooms across America, that our tax structure, regulatory climate and legal environment are very positive to those businesses."[ii] Although Texas offers tax incentives and a favorable business climate, high tech businesses may have, in the past, understandably been reluctant to relocate to Texas because of the prior anemic protection granted to businesses in the arena of non-competes. These businesses, one assumes, have no interest in training their best and brightest today, only to have them become competitors tomorrow. READ MORE...

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[i]Louise Story,  Lines Blur as Texas Gives Industries a Bonanza, New York Times (December 3, 2012)

[ii] Id.  at p. A18.

Call Today:  (713) 526-2222

Written Employment Contract

You have probably heard many people talk about the “good old days” when you shook your boss’ hand and agreed to an employment deal. In Texas those days are long gone.

Texas is an at-will employment state, which means that employees without a written employment contract may be fired for good reasons or no reason at all. Unless you have a written employment contract, nothing limits your employers from firing you.

Earlier this year, a case was filed in the Fifth Circuit (on appeal from Southern District of Texas – Houston Division) regarding how fraud claims intertwine with the at-will nature of employment in Texas.

The original case involves former employees at a DuPont facility who were covered by a collective-bargaining agreement. These employees claimed they were fraudulently induced to terminate their employment with DuPont, and were required to enter employment with a newly formed subsidiary. The fraud issue involves whether, at the time of negotiations with these employees, DuPont knew it intended to sell the subsidiary.

The Texas Courts of Appeal in Waco, San Antonio, and Houston have previously concluded that Texas law does not permit at-will employees to bring fraud claims against their employer for a resulting loss of their employment. The Beaumont Court of Appeals, however, has held otherwise. Because the Texas Supreme Court has not previously addressed this issue, the Fifth Circuit originally had to guess how Texas’ highest court would treat these claims. (2)

In Sawyer v. du Pont, the Fifth Circuit originally rejected the employees claims of fraudulent inducement, concluding the employees were in an “at-will” employment status.

However the Fifth Circuit subsequently changed its mind and issued an order certifying two important employment questions[1] to the Texas Supreme Court:

1.     Under Texas law, may at-will employees bring fraud claims against their employers for loss of their employment?

2.     If the above question is answered in the negative, may employees covered under a 60-day cancellation-upon-notice collective bargaining agreement that limits the employer’s ability to discharge its employees only for just cause, bring Texas fraud claims against their employer based on allegations that the employer fraudulently induced them to terminate their employment?

These questions have been accepted by the Texas Supreme Court and are scheduled for oral argument by the attorneys on both sides of the case. Clearly, the outcome of The Texas Supreme Courts’ ruling will be an important issue to Texas labor law because the ruling by the Texas Supreme Court, if it upholds that the fraudulent inducement claim against DuPont may process, may bring back the good old days where you could rely on your boss’ handshake. The Vethan Law Firm prosecutes and defends employment and non-compete cases involving management and senior level employees. Call us if we can be of service to you.

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VETHAN LAW FIRM Houston

VETHAN LAW FIRM San Antonio

Call now: (713) 526-2222