The following post is excerpted from a talk given at the St. Mary's University 2012 Law Homecoming CLE on March 23, 2012. 

In the fast-moving world of software development and startup companies, Agile methodologies are used to keep companies competitive. This discussion introduces Agile concepts to the legal field and discusses how you can apply some of these concepts to your practice. 

First: a bit of background:

One of the most common questions I get from new business owners (and many established ones) is "How can I keep someone else from using my name?".  One answer is "through trademark rights."

The good news is that you may already have trademark rights to your business name, but probably not in the way you would think they arise.

Many people assume that once they register a business (either as a DBA with a county clerk) or more formally with the Secretary of State, that they have reserved that name.  You might also think that by registering your business as a corporation or LLC that you are guaranteed that nobody else is using that name.  Unfortunately, that's not usually the case.

Instead, trademark rights can arise simply through use of the name in the course of business.

Both Federal (nationwide) and Texas (statewide) trademark rights can be acquired through what is called common-law use.  These use-based rights occur without any registration or formal filing, but are more limited than formal "registered marks."  A trademark applies to goods (physical products) and a servicemark applies to services (together just called "Marks").

What's a trademark (vs a patent vs a copyright)?

According to the U.S. Patent & Trademark Office (U.S.P.T.O.), a trademark is "a word, phrase, symbol, or design, or a combination thereof, that identifies and distinguishes the source of the goods of one party from those of others. A service mark is the same as a trademark, except that it identifies and distinguishes the source of a service rather than goods."

The USPTO has a good summary of basic federal registration questions available in PDF.  I think their explanation is pretty accurate and concise: "A trademark typically protects brand names and logos used on goods and services. A copyright protects an original artistic or literary work. A patent protects an invention. For example, if you invent a new kind of vacuum cleaner, you would apply for a patent to protect the invention itself. You would apply to register a trademark to protect the brand name of the vacuum cleaner. And you might register a copyright for the TV commercial that you use to market the product." BasicFacts_with_correct_links.pdf

Common Law Trademarks

™ + ℠

Common law rights are usually indicated by the [ TM ] symbol. These rights pre-date the registration laws on both state and federal levels.  In fact, the term "trademark" first arose in pre-colonial Britain when bakers would stamp their loaves of bread with marks to identify which baker created the otherwise indistinguishable loaf.  Just as then, businesses today can use their mark "in commerce" and obtain common-law rights to the mark. 

For instance, if a clothing manufactuer sews its name and/or logo into the clothing it sells, (and assuming that mark isn't already taken by someone else) then that clothing maker may have a common law trademark in those geographic areas in which it distributes its product.  A business claiming common law rights can apply the ™ symbol after its mark or ℠ after a servicemark to indicate that rights are claimed for that mark.

State Statutory "Registered Trademarks"

Trademark law is somewhat unusual because it exists at both the state level and national level. In Texas, the business and commerce code provides that trademarks can be registered with the Secretary of State, even if they are not federally registered marks.

A mark registered with the Texas Secretary of State offers greater protection than a common-law mark, but less than a federally registered mark.

State registration (under Tex. Bus. & Com. Code  §16.15) can automatically broaden geographic protection to the entire state, whereas common-law marks are geographically limited to the locations in which business is conducted using the mark.  These days, state-level registration isn't as big of a sellling point as it once was, but can help in some situations.  For instance, a local business selling sustainable meat and produce at a farmer's market in San Antonio might want to use registration to expand its protection to avoid a future competitor in Abilene from using the mark, even if the San Antonio business only sells and markets its product out of one location at present.  But, if you're an internet-based startup selling online tools for facebook users, that might not be a big deal.

State registration can also give enforcement of trademarks "more teeth" (see Tex. Bus. & Com. Code  §16.15 and §§16.26-.27).  These are mostly benefits you (and your lawyer) would want to have if trademark infringement problems result in litigation (or threats of litigation).  Defensively, state registration is presumed (prima facie) legal proof that your business was using the mark for your products.  Offensively, it allows for a statutory cause of action against others who might later infringe on your mark.  And, it makes counterfeitting of your mark a crime under Tex. Penal Code § 32.23. 

But, Texas registration does not extend beyond the state, does not guarantee against other federal registrants, and doesn't permit use of the federal ® symbol.

Federal Statutory "Registered Trademarks"

®

A federally registered trademark is probably the best choice for businesses that plan to expand regionally, nationally, or who do business with out-of-state customers over the Internet.  It's also the only proper entitlement to use of the federal ® symbol.

A federal registration provides each of the benefits of the state registration described above, and broadens the application of those provisions nationwide. In addition, a federal registration allows you to bring suit in Federal Court instead of state courts, allows a mark to become "incontestable" after a period of time, can act as a basis for foreign registrations, can allow U.S. Customs and Border Protection to stop infringing goods at importation, and offers additional procedural safeguards.

Requirements For Registered Marks

The Lanham Act (15 U.S.C. §1051 et. seq.) is the controlling statute that defines federal trademark law in the US.  In defining what can be registered, the law includes most marks and then excludes categories that are ineligible.  This is one area in which a lawyer who specializes in trademarks can often be helpful, as the statute is lengthy and its' exclusions (and cases interpreting its exclusions) are a prime reason that the USPTO rejects new registrations.  

But, some examples of marks that are NOT acceptable under §1052 include:

• "merely descriptive" marks
• "geographically descriptive" marks
• surnames
• functional names
• a mark that would cause dilution, blurring, or tarnishment of an existing mark
• disparaging, immoral, deceptive, or scandalous marks
• certain flags or coats of arms
• depictions of living or dead inviduals without consent

 

How Do I Apply for Registration?

 The application for federal marks is done through the USPTO.  Most applications are submitted through the TEAS (Trademark Electronic Application System) and TEAS Plus systems online, following the guidelines of the TMEP (Trademark Manual of Examining Procedure).

Texas state-level registrations can be done through Form 901, filed with the Texas Secretary of State. You can also register through the online SOS Direct e-filing system.

 

Can I Do It Myself or Do I Need A Lawyer?

It depends.  

It's kind of like fixing a car.  If you go to an average mechanic, he's might tell you it needs professional repair.  If you go to an average car dealer, he's might tell you to get a new car.  If you go to an average auto parts shop, they'll might tell you that just buying the part and doing it yourself is fine. If you go to a really good mechanic, hopefully he'll look it over and tell you when it's a simple matter, when it's not, and lay out some options.  

Since this post is informational, not advice, it's impossible to say what would suit any particular client or particular mark.  But, here's what the Texas Secretary of State FAQ says:

Do I have to use an attorney to apply to register a mark?

No; however, it is important to understand that although we can assist with the nuts and bolts of completing an application, our office cannot give you any legal or business advice. We initially reject an estimated 90% of applications that are submitted to us by non-attorneys. You might benefit from consulting with an attorney about the best way to protect your intellectual property.

Finally, How do I make those registration symbols on my web site?

The HTML symbols for copyright and registered trademarks are part of the HTML specification and are as follows:

™ ™
© ©
® ®

The common-law symbols are accessed via character code as follows: 

℠ ℠
™ ™
© ©
® ® 

Additional Reading:

Texas Trademark Registration FAQ
Texas Trademark Forms
Lanham Act
TMEP 

 

 

Today the President signed into law the Small Business Jobs Act of 2010 (H.R. 5297).  The House Bill came before the Senate for a vote and was passed by the Senate last week by a vote of 61 to 38. As with many legislative works, the $30 billion bill contains some valuable changes in the law, but they don't necessarily jump off the page. Proponents of the bill claim it will enable $300 billion in new small business credit and create 500,000 new jobs. 

"Large small businesses" (an oxymoron, for sure) already gained from the 2009 Recovery Act stimulus, and that continues, with expansions to the SBA 7(a) and 504 loan programs.  Federal contracting rules have been overhauled, with benefits to well-connected contractors and new entrants. 

But many of these federal programs leave the average small business or startup wondering "what's in it for me?  The good news is, plenty.

How about a ten grand ($10,000.00) deduction to offset costs of starting a new business?

New businesses started in 2010 can deduct up to $10,000.00 in startup expenses.  This is up 2x, doubling the 2009 deduction of $5,000.00.  As most founders can attest, the process of starting a business can result in all sorts of unexpected costs and expenses.  This grab-bag deduction can seriously help defray startup expenses in the first year.  Of course, you need to be on a path to revenue and income, or a tax deduction becomes less useful.

Purchasing equipment for your trade or business? Get a first-year write-off for up to $500,000.00 and a phased incentive up to $2 million.

This applies to IRS Code Section 179 expenses, which were already benefitted by ARRA, the 2009 American Recovery and Reinvestment Act. This includes purchases of machinery and equipment, livestock, presses, office equipment, store counters, cases, and other non-structural build-out items.  This also includes non-custom computer software and manufacturing equipment.  However, you'll need to act quickly, as some of the limits revert back at the end of 2011.

Hey, your cell phone is now easier to deduct.

While cell phone deductions probably don't top your list of big-ticket expenses, a minor procedural change removes them from a category of expense that was previously somewhat difficult to deduct.

Your health insurance can be deductible. 

A self-employed business can deduct a family health plan premium for the 2010 tax year.  Whether this will be extended or made permanent isn't entirely clear, but I hope that this provision will continue in future years.

Have a bad year? If you have current losses and prior profitable years, you might be able to get a refund on prior tax payments. Apply your tax credits over five years and against the AMT.

If you have current losses, but paid tax on profitable years anytime in the last five years, you can potentially get an immediate refund of some of those payments.  Businesses with gross receipts under $50 million (and that's most small businesses and startups) can carry back their general business credits to offset up to five years of tax liabilities and can apply those credits to the AMT (alternative minimum tax). Prior to the Small Business Jobs Act of 2010, you could only carry back credits for one year. 

Issuing stock? Get a 100% capital gains exclusion for up to $10 million.

This one is a bit trickier, as not all small businesses will qualify.  Likewise, the issuance of stock must occur in the pretty narrow window between the bill's passage in late September and the end of 2010.  That said for those who qualify, the bill increases the capital gains exclusion to 100% on stock issues that meet requirements and fall within the window.

Lending Stimulus

I'm not going to dive too deep into this one, but as with prior stimulus, this bill includes a wide variety of lending changes designed to make capital flow more readily to small businesses.  You can read all about it at the White House press release page.

Resources to Learn More

• Senate Summary of the Act (PDF)
• Full Legislative Text and Amendments (PDF)
• Additional Legislative History

And, the obligatory legalese:

The typical disclaimers apply: This post is provided as general information, and is not intended as legal advice.  The applicability of this information will vary based upon countless variables unique to your business, and the legality and applicability of this information will vary depending upon your jurisdiction.  You should always consult a professional, such as your attorney, accountant, or tax advisor before making decisions. IRS CIRCULAR 230 DISCLOSURE: While this information is not considered legal advice, any tax-related information contained in this communication (including any attachments or links) is not intended or written to be used, and cannot be used, by any taxpayer for the purpose of (1) avoiding tax-related penalties under the U.S. Internal Revenue Code or (2) promoting, marketing or recommending to another party any tax-related matters addressed herein. 

According to the SBA, half of the small businesses between three and 10 people don’t provide health care, but would like to offer it.  According to the US Treasury, the Affordable Care Act contains provisions that would allow up to a 35% tax credit for qualifying businesses, who may receive both state and federal tax credits. Fortunately, determining whether your business qualifies for those credits just became much easier.  

As always, you should consult your attorney or tax advisor for advice tailored to your situation.  However, the government has made it easier to determine where your business falls thanks to new guidance issued by the IRS and the US Treasury Department.  On May 17, 2010, the Treasury issued release TG-698, which outlines some common scenarios.  The IRS has issued a more in-depth publication via IRS Notice 2010-44 (pdf). Here are some of the highlights:

Getting Money For Health Care: Combined Credits up to 75%
If you're a business in Texas, the 35% credit is a welcome step, allowing for federal credits where no direct credits were previously available.  In other states that do provide direct assistance, the combined federal-state credits can cover up to 75% of an employer's premium costs.

Federal Tax Credits
A common adage is that "the devil is in the details," and that's often true with the transition between legislative action and implementation.  However, based upon the recent guidance, the new Act's provisions look like they'll be implemented generously. Beginning immediately in 2010, businesses may be able to claim up to a 35% tax credit for health care premiums.  Starting in 2014, that number increases to a 50% federal credit.

"Health Insurance Coverage" is defined broadly.  In addition to the traditional medical insurance, the Section 45(R) credit includes dental, vision, and other limited-scope coverage.  There is an explicit allowance in the IRS Notice for long-term care, home nursing care, disease-specific riders like cancer coverage, "or any combination thereof".  There are some restrictions, such as requiring a minimum 50% employer contribution, and each must be a stand-alone qualifying arrangement, but your tax advisor, insurance agent, or legal counsel should be able to help you determine whether your current offering qualifies and what changes or tweaks may be needed to ensure compliance.

State Tax Incentives

The new Act does not reduce federal credits based on state benefits, unless the combination would exceed the employer's contribution. State tax incentives are monetary incentives usually provided by tax credits or deductions that reduce your businesses' tax bill. The National Conference of State Legislatures (NCSL) provides a summary of Employer Health Coverage Tax Incentives for businesses in Alabama, Arizona, Colorado, Georgia, Idaho, Indiana, Kansas, Kentucky, Maine, Montana, Michigan, Missouri, North Carolina, Oklahoma, South Carolina, Utah, and Wisconsin.

State Premium Assistance
Premium assistance is money available for direct or indirect payment or reduction of premiums. Unlike tax-driven incentives, premium assistance can be un-bundled from the tax system and potentially provides another avenue to defray costs for tax-disadvantaged businesses. The NCSL maintains a list of premium assistance programs for businesses in Arkansas, Idaho, Kentucky, Maine, Maryland, Massachusetts, Montana, New Mexico, Oklahoma, Washington, and Tennessee.

Health Savings Accounts (HSAs) allow for tax-free accounts that are usually coupled with high-deductible insurance that provide an alternative to traditional premium-only insurance. The NCSL also provides a list of health savings account (HSA) programs that interested businesses should review.

Employer and Plan Eligibility Requirements

The tax credits are often referred to as "Small Business Health Care Credits".  But who is a small business?  Fortunately, the IRS guidance allows for some flexibility in this definition. In order to be an eligible small employer, "(1) the employer must have fewer than 25 full-time equivalent employees (FTEs) for the taxable year; (2) the average annual wages of its employees for the year must be less than $50,000 per FTE; and (3) the employer must maintain a “qualifying arrangement.” --IRS Notice, SII(A)

A "qualifying arrangement" is one where the employer pays at least 50% of the per-employee premium on a uniform percentage.  There are some caveats for 2010 due to the implementation phase-in, so if you plan to claim a 2010 credit, be sure to ask your advisor about the 2010 rules.

Under the IRS guidance, employers can elect for the most favorable method of determining FTE hours (full time equivalent).  This is important for eligibility because the tax credit is highest for employers with 10 or fewer FTE employees. Benefits extend up to 25 FTE employees, and the employer is able to choose whether to look to actual hours of service, or can use estimated hours based on total days or weeks of service.  

The calculation is basically a five-step approach:

1. Determine the employees who are taken into account
2. Determine the number of hours of service performed by those employees
3. Calculate the number of the employer’s FTEs.
4. Determine the average annual wages paid per FTE.
5. Determine the premiums paid by the employer for a qualifying arrangement under section 45(R)

The full IRS Notice 2010-44 contains all of the details, as well as example scenarios for common business situations.

Some Cautionary Notes

As with any law, the actual legislation isn't without caveats.  For example, while the tax credit is scheduled to increase to 50% in 2014, the credit is only available for six years total, unless amended. Businesses can claim the credit in tax years 2010 to 2013, and for two additional years thereafter. Based on these numbers, the plan is expected to save small businesses up to $40 billion through 2019.  The flip side of that is that the government will lose the same amount in tax revenue, if not made up by other sources. Also, lawmakers were also worried about so-called "Cadillac Plans" and therefore, the eligible contribution iscapped based on the average cost of health insurance in your state. 

As I've mentioned, the typical disclaimers apply: This post is provided as general information, and is not intended as legal advice.  The applicability of this information will vary based upon countless variables unique to your business, and the legality and applicability of this information will vary depending upon your jurisdiction.  You should always consult a professional, such as your attorney, accountant, or tax advisor before making decisions. IRS CIRCULAR 230 DISCLOSURE: While this information is not considered legal advice, any tax-related information contained in this communication (including any attachments or links) is not intended or written to be used, and cannot be used, by any taxpayer for the purpose of (1) avoiding tax-related penalties under the U.S. Internal Revenue Code or (2) promoting, marketing or recommending to another party any tax-related matters addressed herein. 

 

 

 

How to run multiple Acrobat OCR batches at once:

 I was about to dive into a document review project today and ran into some "technical challenges". Here's how it worked out.  Hopefully this will save others some time in the future.

The Situation
Today's another one of those days ... my morning started out in a room stacked full of boxes of documents that were produced to us.  Now, I need to make sense out of these and find those proverbial needles in the haystack.  Fortunately, the tedious scanning process was already done for me, and I had PDF copies of the production on discs.

The Goal
The immediate goal is to go through the documents and look for key words and phrases, with a more in-depth review guided by a roadmap that is developed today. The quickest way to do this is to make the documents searchable. Often, you can get a scanning service provider (or your own scanner/copier) to perform OCR text recognition during the scanning process.  In this case, we received the documents as un-processed PDFs, so the recognition had to be done in-house.

The Problem -- Speed
Today's desktop computers often have plenty of horsepower.  This particular job was run on a dual-core Mac Mini desktop with 4GB of RAM.  However, Adobe Acrobat is single-threaded for OCR.  What that means is, you can tell it to batch process multiple documents, but it goes through them sequentially, one at a time.  When you have thousands, or hundreds of thousands of documents, this poses a real problem.

I started the batch as normal, by going to Adobe Acrobat Pro's "Document" menu and selecting "Recognize text in multiple files using OCR ...".  I added the files from our Windows (SMB) file share and set it to work.  After a few hundred pages, it was clear that this approach wasn't going to be finished in any reasonable amount of time.  What I needed was concurrency.  From my processor usage graph, I could tell that my computer had plenty of spare cycles, but that Acrobat just wasn't using them effectively.  

The Solution
One approach that I've used in the past is simply to split up the job across several different computers. This is fine if you have enough computers, but it's still inefficient and ties up several machines in the office with each one running at less than peak speed. 

Step 1: More Acrobat!
This time, I took a different approach.  I made a copy of the Acrobat application in the Finder.  

Each copy will consume about 900mb of disk space, but on a modern system this isn't a problem.  Acrobat's license allows for multiple backup copies on a single computer, so up to this point you're OK on licensing.  I gave each one a slightly different icon so that I could tell them apart when active.

Step 2: Queue up Jobs.
Now, you can launch each copy of Acrobat separately and add documents to each one's queue independently.  However, to do this right, you'll need a license for each concurrent copy of Acrobat.  I reviewed their retail license and it looks like they define "the Software" in such a way that it's licensed per copy, not per computer.  The backup copy provision probably doesn't cover concurrent usage. In my case, I had two retail copies of Acrobat as well as another copy that was bundled in my Adobe Creative Suite package. If you have a site license or other agreement with Adobe, your licensing may be different. 

Step 3: Doubled Productivity (or more).
Most desktop computers these days are dual-core systems or better.  On the Mac Mini, running two copies of Acrobat is the most efficient, with each one loading up a different processor core.  If you had a high-end machine with 8 cores, (and 8 copies of Acrobat) you could linearly scale up the workload. Another advantage to running multiple copies is that you can get work done in one copy while another copy runs the batch processing.  If you're on a Mac, you can also use the bult-in Preview.app program to read and review PDF files while your Acrobat is running OCR jobs.  Sadly, Preview.app doesn't do OCR on its own.

The Take-Away
Running multiple Acrobat jobs on one computer beats tying up several different systems at once. However, licensing issues can be a pain if you want to run a large number of concurrent jobs.  For full-time production, I'd stick with a copy provider or hardware scanner that provides OCR.  You can also get standalone software like ABBYY FineReader that specializes in OCR.  For small jobs, even Google Docs can now OCR documents.  When it comes down to it, these kind of work-arounds shouldn't be necessary.  Acrobat is a "professional" product (it says so on the box !) It's inexcusable that Acrobat Pro doesn't run batch jobs like this in parallel.  At a minimum, it could parallelize page recognition, even if it attacked documents sequentially.  But, until Adobe does a bit more to modernize its Acrobat product line, a bit of creativity and an additional tithe to Adobe can still get the job done quickly.

A final caveat: As part of this process, I discovered that Acrobat also has a propensity to crash when it tries to save batch-processed documents to a network SMB server.  So, be sure to save to the local disk then copy back to your file server when done.  Reading directly from the server doesn't seem to be an issue. Finally, I'm trying out Amazon's program, so some of the links in this post are affiliate links - http://cmp.ly/5

 

While some lawyers ply their trade primarily in the courtroom, the reality is that most of us spend the majority of our time on written work product, not eloquent jury arguments.  This week, I came across two links that are quick reads and have the potential to markedly improve work product with little time invested.

The first is Typography For Lawyers. The site is run by Matthew Butterick, an attorney in Los Angeles. His pre-law background is graphic design and typography, with experience running a website development studio.  I also came from a non-law (and web programming/design) background and thus the attention to presentation that he's advocating really resonated with me.  I spent several years helping attorneys gain maximum impact in the courtroom by applying good presentation skills to their in-trial advocacy.  Mr. Butterick makes the point that those same principles can apply to your written work as well:

When you speak to a judge, do you stand at the lectern, eyes cast downward, and read from a script in a monotone? No, of course not. To maintain the judge’s attention during your argument, you change the speed and volume of your delivery; you gesture; you extemporize. You do this because you don’t merely want to be heard—you want to persuade. The text matters, but so does the presentation.

So it is on the printed page. The text matters, but if that’s all that mattered, then everything could be set in 12-point Times New Roman. And that would be the equivalent of staring at the lectern.

Typography is always important because presentation is always important. 

 

The second resource I'd like to point out today is an article entitled 4 Danger Signs To Search For, Before Sending Off Your Novel by Charlie Jane Anders.  The tips from that article may be geared to fiction writers, but they apply also to legal writing. A few quick word searches through your pleadings for these warning signs can improve the final product with a minimal time investment. I highly recommend hitting the link to read the full article, but the TLDR version of what to watch out for is:

 

1) Adverbs. In a nutshell, you do a search for "ly" in your manuscript. 

2) Sentences beginning with "It." The main problem with "it" is that it's a pronoun, so you must be absolutely clear about what "it" refers to. And when a sentence begins with "it," that can be another red flag pointing to bad writing.

3) There was, or there were. Most people will tell you to keep your use of the verb "to be" to an absolute minimum. But you can't avoid using "is" or "was" altogether, and like everything else, "to be" has its place in your prose ... But you absolutely should do a quick search for "there was" and "there were" — which are pretty clearcut instances of the verb "to be" flopping around when a stronger verb could be flexing its muscles. 

4) Was being, or were being. Just as most experts will tell you to avoid the verb "to be" as much as possible, they'll also warn you away from passive verbs.

 

I'm frequently a passive voice offender in my early drafts and in casual writing. Therefore, I religiously scrub my writing for passive voice whenever I have the time.  With the four suggestions above, I can add a few checkboxes to my quick-search routine.  Maybe one day I'll even have the discipline to apply those to my blog posts =D.

I came across this article published at the American Mathematical Society as part of my morning reading:

Moving Remy in Harmony: Pixar's Use of Harmonic Functions

It's a really interesting discussion of how various geometric formulae are used to enable the characters to move in a natural way.  I think exposing this kind of real-world application of relatively easy-to-understand concepts is a great way for educators to show their students how seemingly austere concepts can be made to do "fun" things that apply to their own lives. 

The animation shops that lead their field today draw upon the talents of artists, mathematicians, programmers, and many other disciplines to tell a compelling story.  The viewer gets to look through the mind's eye of the storyteller, but only because countless professionals have plied their trade to make it all work seamlessly.

So, next time you wonder that "tan" or "cos" key on your calculator is for, just think of talking mice ...

 

[Fair Use Statement:  The image of Remy from Pixar Studios' Ratatouille may be a copyright of Disney/Pixar and used, if at all, herein  for nonprofit educational purposes, and is an insubstantial portion of the work as a whole that does not significantly impact the value or market of the original work.  Any images displayed in this post are links to a third party source and are not hosted or supplied by the author. ]