This guest post is brought to you by WePay - the easiest way to accept credit cards online.
Your business can only run smoothly when cash is flowing in and out. Unfortunately sometimes clients aren’t keen to shell out the money they owe you even though it’s way past time.
Wouldn’t it be nice to avoid all this? To get the money you’re owed without all the fuss and hair-pulling? There are actually a few things you can do to streamline the process of getting paid so your business can grow and you can pay your bills.
Let’s face it: if you don’t have a contract in place, you don’t really have any leg to stand on when a client ditches you. You can yell at them until you’re blue in the face but if there’s nothing legal there you can’t really go after them when they’re late or even if they disappear.
So contract up! Docracy has many popular commercial contracts to choose from. This document actually protects both parties, so unless the client is planning on being a deadbeat they should have no reason to fight the inevitable. To aid quick payment, be as specific as possible with every detail, especially when it comes to money. Detail payment terms, what form of payments you’ll accept, and consequences for late or non-payment.
How many times have you heard “Do you take so and so as payment? No? Hmmm, I’ll have to figure it out later.” If your client pays all of their bills a certain way – say via a business credit card – you don’t want to be the squeaky wheel who demands that they go out of their way to pay you in another form. So while you may already take PayPal, some clients won’t have that option and would like to pay you with a credit card directly. Plus, once you open this option, you can take on other clients who would like to pay with cards, too. Sign up for a free WePay account and start accepting credit cards in your small business. It’ll broaden your horizons and get you paid faster, too.
You want to get paid and the client wants their work done right. How do you ensure everybody walks away happy?
Making the client put down a deposit before you start the work ensures they’re actively invested in the business relationship. It also gives you more of an obligation to finish the work the best you can so you can get the rest of the payment. Deposits solve the conundrum above so both parties leave happy.
There’s something to be said about the power of numbers. If you’re in business by yourself sometimes it can feel like you’re on your own with no help at all. The truth is, however, that you have other people around you willing to help.
For example, the Freelancers Union exists primarily to let freelancers know they have friends out there. They’ll represent you when times are tough and help you with other matters, both legal and otherwise. Check out their “World’s Longest Invoice a tool they’re using to advocate for independent workers’ rights to get paid.
Do you have a deadbeat client story? What safeguards do you have in place to ensure you always get paid?
At its core, a license is permission from one party to another to perform an activity which would not otherwise be permitted. An intellectual property (IP) license is an agreement between two parties (a licensor and a licensee) for the use, which would otherwise infringe on legal protections, of intellectual property. Put another way, an IP license lets a licensee use protected IP without being sued for infringement of copyright, patent, or trademark protections.
Since most protection for software in the United States is under copyright law, a software license is permission, by contract, for the use of copyrighted IP (the software); use without a license would be an infringement, actionable under US law, of copyright protections.
There are two main schools of thought that form the vast majority of software licenses: proprietary software licenses and free-and-open-source software (FOSS) licenses.
Proprietary licenses usually involve an End User License Agreement (EULA) that grants the licensee no right to the software beyond the use of it for a specific the term and territory. Generally, the EULA will limit where and how many times you can install the program, if you can copy or redistribute the software, and if you can modify it in any way. When software is distributed with a proprietary license, users generally are not given access to the source code (the actual programming of the software).
FOSS licenses, by definition, maintain access to the source code as an integral part of the rights being licensed. Keep in mind that the FOSS licenses protect the users’ rights to use and redistribute software, not the authors’. Also, open source does not equal free. The Free Software Foundation (FSF), in a comment made about the differing philosophies between ‘free’ and ‘open source’ software, highlights the similarity of the two paradigms: “nearly all free software is open source, and nearly all open source software is free”.
While the particulars of the many varied FOSS licenses can be overwhelming, there are some fundamental differences.
There are two primary categories of FOSS licenses: recursive - or copyleft licenses - and everything else. Copyleft licenses are recursive in that they require any successive distributions that have used the initial software in any way also to be released under the same permissive license as the original; in other words, that any successive modifications are also released as FOSS.
Some copyleft licenses, such as the GNU General Public License (GNU GPL; http://www.gnu.org/licenses/gpl.html), are strong copyleft licenses; they require that any derivative work also be released under the same license. The FSF maintains a list (http://www.gnu.org/licenses/license-list.html) of licenses that are compatible with the GNU GPL. Software released under licenses it deems compatible can be combined with software released under the GNU GPL and maintain the GNU GPL license. Keep in mind that you can use or modify any GNU GPL software and use them privately without ever releasing them to the public. The copyleft nature comes into play when you decide to release the modification.
Weak - or partial - copyleft licenses, such as the GNU Lesser General Public License (GNU LGPL; http://www.gnu.org/licenses/lgpl.html) allow the software to be linked, or used in conjunction with the GNU LGPL licensed software, without any requirement for the new software to be licensed in a particular way. In other words, if you use some software licensed under the GNU LGPL as part of software you author, you can still license your software in any way you wish to. The only caveat is that the part that was licensed under the GNU LGPL is still under that license.
All other FOSS licenses are permissive to the extent that they allow the user to do what they will with the software, including incorporating it into proprietary software. The Modified BSD license (http://opensource.org/licenses/BSD-3-Clause), a permissive FOSS license, allows redistribution, with or without modification, if the redistributed software includes the same notice of copyright permission and does not coopt the original author’s name without permission. The Apache License Version 2.0 (http://www.apache.org/licenses/LICENSE-2.0) is also a permissive FOSS license, with additional patent termination and indemnification provisions to further protect users.
Choosing a license under which to release your software can be difficult. While the details between the various FOSS licenses are important and need to be considered, the general differences discussed above should help get you pointed in the right direction.
The FSF maintains a short page on its license recommendations, http://www.gnu.org/licenses/license-recommendations.html; the OSI likewise maintains an FAQ to help navigate the FOSS waters, http://opensource.org/faq.
The Clause: Agreeing to Binding Arbitration & Class Action Waiver [Paragraph 20.3 (a-i)]
Any dispute you may have relating to your use of Pay By Mobile services may be resolved either through informal negotiation or in small claims court (in NY, small claims may not exceed $5,000). However, if those fail or are otherwise insufficient forums for handling your claim, you are now expressly required to resolve your dispute through binding arbitration. The clause states this succinctly: “You are giving up the right to litigate (or participate in as a party or class member) all disputes in court before a judge or jury.” It also provides that all claims must be filed, in small claims court or arbitration, within one year from the date on which it could first be filed.
Arbitration clauses are common enough and, for general purposes, they’re not necessarily a bad thing: most people will not need to litigate an expensive claim arising out of Pay By Mobile. The costs of a lawsuit in time and resources often outweigh the value of the harm to the individual. You’ll probably get more out of a negotiation or small claims proceeding than you would if you put your claim to the test before a court of law.
The class action waiver is more controversial. The class action is one of the most effective legal options for consumers to settle disputes against large service providers. Essentially, a class action enables consumers who have been wronged in the same way to join together in a lawsuit. By bringing together a mass of small individual claims, consumers who have been harmed can seek redress while keeping their own, and the court’s, costs down.
The new section does contain an “opt out” by which, after agreeing to the present Terms, you can reject future changes to the Terms by sending notice to Skype through US Mail. However, you will remain subject to the Terms to which you’ve already agreed - it’s not a true “opt out” since you have no choice but to opt into the current Terms.
Since these provisions are written by companies on a take-it-or-leave-it basis and significantly affect your rights, there is a risk that they could be found by courts to be unconscionable. Other companies that have recently added binding arbitration to their Terms - like EBay, Instagram and StubHub - have provided their customers with a limited window to opt out completely. Because Skype hasn’t offered such an opt out, they appear to be somewhat uncertain of the legality of this tactic. They seem to have hedged their bets by adding a severance clause, which would effectively strike from the contract any clause in 20.3 that was found to be illegal or unenforceable. It’ll certainly be interesting to see if any legal challenges arise from the the lack of an opt out clause, and whether Skype will be forced to retroactively give their customers the option.
So, all you Skypers out there using Pay By Mobile - what say you? How does it feel to know that if one day you discover you’ve been subjected to unreasonable or fraudulent practices, that your only remedy will be before an arbitrator who’s been exclusively retained by Skype? There’s not much hope that lawmakers in the courts or capitals will force companies like Skype to sit its customers at the bargaining table. For now, keep your eyes open to the effects of these provisions and let your voices carry your opinions loudly. They can’t contract away your right to be heard - and, after all, you can always opt out completely.
Many people, when they think of patents, think of an invention. The truth of the matter is slightly different.
While a patent is granted based on a particular invention, a patent is actually a set of legal rights being granted to the patent’s inventor. A patent allows the invention’s creator (the inventor) to prevent anyone else from benefiting from the invention without the inventor’s consent. This right can then be sold, licensed, or assigned to another party.
There are three different types of inventions that the United States Patent and Trademark Office (USPTO) will grant a patent for:
(1), Utility patents for processes, machines, composition of matter, or articles of manufacture (or improvements to any of these);
(2), Design patents for ornamental designs for an article of manufacture; and,
(3), Plant patents for asexually reproduced plants.
process: a process, act, or method; a way to do something (primarily includes industrial or technical processes)
composition of matter: a composition of two or more substances (produced by either mechanical or chemical means); e.g. a synthesized chemical compound or transgenic mouse
articles of manufacture: an article produced from raw or prepared material giving the material new form/property/quality/combination; e.g. ceramics, cast metal objects, gloves, envelopes
Provisional patent applications do not result in a patent, rather they grant a 12 month pendency period during which a non-provisional application can be filed which takes advantage of the provisional application’s filing date. Essentially, the provisional application indicates to the USPTO an intent to file a non-provisional application and establishes an earlier effective filing date (the date at which patent protection begins once a patent has been granted).
In order for the patent to be granted, the USPTO has to be shown that the invention is new, useful, novel, and nonobvious. For these reasons, each application for a non-provisional (read: 20 year) patent must include a written document with a specification (read: description and claims), any necessary drawings, and an oath (stating that the inventor is the original and first inventor).
The specification is the meat of the application; it provides the primary means of understanding the invention. It begins with a full, clear, concise, and exact description of the best way to carry out the invention so that someone knowledgeable in the appropriate field could understand it and make use of the invention. Following the description is a claims section where the inventor points out the particular parts of the description that are the actual invention.
Oftentimes drawings are necessary to clarify and help in the understands of the invention.
Lastly, an inventor must make a declaration that the application was made or authorized by the person on the application and that the inventor believes himself or herself to be the original inventor of the invention in the application.
When the USPTO examines a patent application, one of the things it looks at in determining whether a patent should be granted is “prior art”. Prior art - the body of existing knowledge - is basically any patents already granted, any publications where the invention was described, or anywhere the invention was used in public view; basically any disclosure to the public - the worldwide public - of the invention before the application was filed qualifies as prior art.
If the USPTO determines that there is prior art, the patent won’t be granted unless the prior art falls under a small set of exceptions. The USPTO has a series of four videos - with accompanying powerpoint presentations - describing prior art and these exceptions, found here.
It’s incredibly important to be as accurate as possible (while still trying to keep the description and claims broad) in order to give the application a high chance of success.
So remember, being granted a patent gives you, the inventor, the legal right to prevent anyone else from benefiting from your invention. Understanding what constitutes a patent and for what the USPTO will grant a patent is essential to an effective and successful patent application.
A Benefit Corporation is a new type of corporate entity available to businesses choosing to incorporate in California. Inder Comar, a Docracy contributor who represents small businesses and startups there, recently published his sample Articles of Incorporation and the following useful information, to help you figure out if this business entity is right for you.
There are important differences between Benefit Corporations and more traditional C-Corporations:
Public benefit: A Benefit Corporation is required to create a general public benefit, something which must be specifically stated in the articles of incorporation. A Benefit Corporation may also promote a specific public benefit as well, which can similarly be included in the articles of incorporation.
Measurable goals: Benefit Corporations are required to asses their overall social and environmental performance in accordance with a third-party standard. The assessment does not need to be audited or certified by a third party.
Annual benefit report: Along with such assessment, the Benefit Corporation is required to provide an “annual benefit report” to shareholders, explaining the ways in which the Benefit Corporation pursued a general public benefit and specific public benefit (if any).
Changes to board fiduciary duties: The California Benefit Corporation statute changes board fiduciary duties in significant ways. In a traditional C-Corporation, corporate managers are required to make decisions that maximize profit. In a Benefit Corporation, directors must take into account the impact of any action or proposed action on shareholders, employees, customer interests, community and societal considerations, the local and global environment, the short- and long-term interests of the Benefit Corporation and the ability of the Benefit Corporation to accomplish its general and specific benefit purposes. Corporate directors are thus statutorily required to take factors other than short-term profit maximization into account when making decisions. A director is shielded from monetary damages in performing such duties.
Benefit enforcement proceeding: Finally, any shareholder or director may bring a “benefit enforcement proceeding” against the company to force the Benefit Corporation to comply in creating a general public benefit. Monetary damages are not available, but a court in its discretion can award attorneys’ fees.
Check Inder’s blog for further information!
It is Friday, and specifically it is Feature Friday, a storied tradition here at Docracy. We have only one major feature to discuss today, but it’s a good one, so let’s get started.
Suppose you are shooting some video and need waivers signed by everybody who will appear in the shoot. Or, you may be running a conference and need to get agreements signed with all the speakers. Customizing, sending for signing, and then following up on each of these docs can be very tedious. It is for this reason that we created “Link Signing”. The idea is to prepare your document on Docracy, including specifying any fields you would like the recipients to fill in. Then, just copy the link that is generated on the right side beside the document text:
Simply send that link to anybody you need to sign the document. They will be guided through the process and you will receive an email once they have signed.
Note that you can only use this feature from a private document. If you prefer to start from one of Docracy’s public templates, hit the “Branch” button to make your own customized version prior to using this feature.
We’ve had a lot of requests for this from users, so we are happy to deliver this feature!
International Character Set
For many of our non-English-speaking Docracy users, you will be overjoyed to hear that we now properly support the UTF character set in our documents. That means that any language, characters and glyphs are supported, and accents or special characters will always be faithfully represented everywhere on the site. ◕‿◕
That’s all for now, but stay tuned for more features… particularly on Fridays.
Thank you for creating this [contract] for designers. It’s such a difficult thing to have to deal with when you [are] on your own. This document is clear, fair and covers what needs covering. — User comment on Designer Sample Contract
Developer Contracts in the Real World -
A handy list of popular contracts for developers, as featured on SitePoint
So you want to form an LLC? Great! Here is some information about how to get going.
A Limited Liability Company (LLC) is a business entity created under the laws of a particular state to incentivize commerce and investment. Essentially, a LLC is an organization of made up of its owners, referred to as members. The number of members can be as few as one or as many as you’d like, and may consist of natural persons, corporations and other LLCs. The LLC structure provides a limit to the personal liability of members for debts incurred or lawsuits filed against the company. Another benefit of creating an LLC is that it is considered a “flow-through entity” - business income is taxed federally only after it is distributed to each of the members, as personal income.
Each state has its own legal rules governing the formation and operation of LLCs, so be sure to check the specifics for the state in which you intend to organize. For instance, New York requires an LLC to publish notice of its formation for six consecutive weeks in two different newspapers. You should check the requirements for your state.
Image credits to Julian Hankrov
Initially, the members must file Articles of Organization (or alternatively, Certificate of Formation) with the state government. The example provided here is for New York State - along with a fee, all you need to do is submit:
Some states have additional requirements, such as the names and addresses of the members. If changes need to be made after organization (i.e., you change the name of the LLC), you will need to file an Article of Amendment, a similarly simple document that will vary by state.
At the outset, one of the most important considerations is management structure. How many members will be in your LLC? Will it be managed by the members or by managers selected by the members?
In addition to the state and federal rules governing LLCs, the framework by which the members of the LLC abide is called an Operating Agreement - the primary source of rules for the business. This document will differ depending on the management structure of the LLC - single-member, multi-member, and manager-managed. Single-member and multi-member LLCs differ in that the former is owned by a single member whereas the latter is owned in proportion between each of the constituent members. However, they will all commonly describe:
The main difference between member-managed and manager-managed LLCs is that the members do not take part in the day to day operations of the latter. The managers are elected by the members and exercise control over business arrangements like managing company assets and employment. The difference is usually compared to other business entities: member-managed LLCs operate like a partnership whereas manager-managed LLCs are more akin to corporations. As in corporate entities, managers are generally shielded from personal liability for business decisions, but have a duty to the company to perform according to the best interests of the business.
There are some good reasons to start an LLC: it’s easy, flexible, limits personal liability and provides certain tax benefits. The members of the LLC are beholden only to themselves and the terms they agree upon and are only taxed on income once. However, some of the characteristics that make LLCs attractive may also turn off investors. Investing in an LLC may complicate tax filings or subject an investor to an unwanted and unforeseen tax. While LLCs are convenient and come with some attractive benefits, it’s important that you see the whole picture before you choose an entity for your business.
First thing, you have to figure out if it makes sense for you to register a trademark, and what is trademarkable.
According to the US Patent and Trademark Office’s Trademarks (USPTO), a trademark is “a word, phrase, symbol or design, or combination thereof, that identifies and distinguishes the source of the goods of one party from those of others.” A service mark, distinguishing a service, is often referred to as a trademark as well.
The general benefit of registering your trademark is the enhanced protection it affords against infringement. A federally registered trademark will protect you nationwide and, with an additional filing, internationally. Before we get into the particulars of actually registering a trademark, the USPTO has information on what a trademark is and why you should register one.
Once you have a trademark you want to register, the actual process is relatively simple. Though the USPTO requires a high degree of accuracy in any registration application, and that’s why going to a lawyer or to a professional register service is a popular choice, anyone can do it.
There are three principal steps to complete a registration application:
The USPTO maintains a search tool on their website to help identify any possible TMs that are currently registered which could cause your application to be refused: The Trademark Electronic Search System (TESS).
Your search should start from here (there are other places). If a possibly conflicting trademark is found, the entry in TESS will show some basic information concerning the registration: the trademark itself, the description of the trademark (including the class, a categorical classification based on international trademark standards), the filing date, the owner, the type of trademark, and whether the trademark is live or dead (and if dead, the date of abandonment).
While a dead trademark is a good indication that a prior registrant won’t challenge your application, submitting a correctly completed application is necessary to ensure the best chance of registration.
Sample results from a trademark search on Markify
If you can’t find any conflicting trademarks, you’ve got a solid chance at a successful registration. However, remember that trademark law allows for two methods to establish trademark protection:
Being the first-to-use in a geographic area only protects you from infringement in that area and in areas into which you would be expected to expand. This means that even if you successfully register a trademark with the USPTO, you can’t prevent a business that has been using the same (unregistered) mark in a specific location from continuing to use it there.
For example, say you wanted to start a chain of pizza parlours named Bob’s Pizza. A search on TESS doesn’t turn up a direct match. However, if Bob from Coeur d’Alene has already been operating a pizza shop under that name, you would not be able to stop him from continuing to do so around the Coeur d’Alene area and within a reasonable geographic radius.
The second part to registering a trademark is choosing under what basis to file. Unless you are looking to register domestically a trademark already registered internationally, you will likely only need to consider whether to file under section 1(a), use-in-commerce, or 1(b), intent-to-use.
To file under 1(a), the trademark must currently be used in commerce. Filing an intent-to-use application under 1(b) requires a “bona fide intent” to use the trademark in commerce within the next three to four years. This means that you have a good faith intention to use the trademark.
A specimen, such as a screenshot, showing how your trademark is, or will be, used must be included in your application. A mere drawing of your trademark does not qualify; the specimen must show how the trademark is, or will be, used in the manner associated with the good or service for which the trademark is being registered.
Along with the specimen, an indication of when the trademark was initially put into use, or when you intend to begin using the trademark, must also be included.
While paper filing is still an option, e-filing is both quicker and costs less. For these reasons we will be addressing e-filing as the standard filing option.
The USPTO’s e-filing system, Trademark Electronic Application System, has two methods for filing: TEAS, and TEAS Plus. The primary differences are a 50$ discount as compared to a TEAS filing as well as a heightened list of requirements for a TEAS Plus filing. The requirements, while not overly confusing, are nevertheless not trivial either; failure to comply will result in an additional $50 fee for every class in the application.
TEAS Plus requirements:
The most unforgiving requirement, or at least the hardest to comply with, is (2), to select an accurate description of your trademark from those already found in the USPTO’s Acceptable Identification of Goods and Services Manual (ID Manual). In this manual, you’ll find a list of all the descriptions the USPTO has currently published for classifying a registered trademark. If one does not exist, an email petition to include a new description in the ID Manual can be made to the USPTO (firstname.lastname@example.org).
If you are able to find a description in the ID Manual, and opt to go with a TEAS Plus filing, congratulations! Otherwise, guidance about how to phrase your description can be found by looking through the ID Manual to help glean possible appropriate language. Trademark lawyers use to say that drafting a description is more an art than a science. A good start is looking at entries in the same class as your trademark to see how similar trademark descriptions are written:
Say you’re interested in starting a company consulting with commercial climbing gyms for the setup, design, and maintenance of their actual climbing facility.
If you’re feeling lost, check Eric Adler’s step-by-step filing guide. Also, many law firms offer a fixed fee arrangement for filing a trademark application ($500 to $1,000) and sites like Trademarkia or LegalZoom lower the price in the $100-$200 range, not including the USPTO filing fee of $325 per class.