Defamation 101

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Going back to your years on the playground, who would have thought that the bully who was calling other people names or spreading rumors about someone may have been Biletsky Law - Defamation piccommitting defamation. Defamation is a broad area of law that encompasses libel and slander (keep these two in mind as I’ll discuss the difference between the two further below). The actual definition for libel is “a false and unprivileged publication by writing, printing, picture, effigy, or other fixed representation to the eye, which exposes any person to hatred, contempt, ridicule, or obloquy, or which causes him to be shunned or avoided, or which has a tendency to injure him in his occupation.”

Before going into the difference between libel and slander, here are the California elements for finding that someone has committed defamation: (Cal. Civ. Code §§ 44, 45a, and 46.)

1. publication of a statement of fact

2. that is false,

3. unprivileged,

4. has a natural tendency to injure or which causes “special damage,” and

5. the defendant’s fault in publishing the statement amounted to at least negligence.

Publication

1. Publication means that the statement was communicated to a third party who understands the meaning of the statement and who it is applied to. The requirement to constitute publication is VERY low. Any posting online easily fulfills the requirement and only 1 person needs to understand that the statement is defamatory and who it is directed to. For instance, posting that “someone has a sexually transmitted disease” on its face won’t appear to be defamatory, but so long as 1 person that reads that post knows who you are talking about, this element is met.

Falsity

2. Falsity is the entire basis of defamation. If what you are saying is true, there cannot be defamation and truth is an absolute defense to a defamation claim.

Unprivileged

3. “Privilege” comes in a few different ways such as the fair report privilege, the opinion and fair comment privileges, and substantial truth. Fair report comes from a public document or statement. Opinion and fair comment are based on opinions and subjects that can’t necessarily be proven true or false. For instance, “I think he’s an idiot” compared to “I think he’s a murderer”, the idiot statement would likely fall under the opinion and fair comment privilege while the murderer statement probably won’t. Courts look at the “totality of the circumstances” in determining whether the privilege applies. Substantial truth requires that the statement be mostly true, it doesn’t have to be 100% true, but mostly.

Damages

4. Generally, a defamation claim requires some kind of injury/damages to have been suffered. California does it a little differently than other states in that damages are not necessary if the statement is defamatory on its face. This means that no other evidence is needed to show that it is defamatory. For instance “he must of done something to have won that game” is arguably not defamatory on its face because you need more information in order to come to the conclusion that it is defamatory. “He only won the game because he cheated” would be defamatory on its face since there is no other evidence needed to see that the statement is defamatory.

Fault

5. Negligence can be a complicated topic but generally speaking, it is when a person is not acting with the reasonable level care that is due in a situation. This element goes towards the truth of the statement. For instance, if someone tells you that a guy killed someone and you post that online without looking it up, or figuring out if it was true, you likely acted negligent as to determining whether the statement was true or not. This last element is a huge part of the law and it varies when dealing with different people. A private person has the lowest standard whereas a public figure (those in the “public spotlight” for one reason or another would likely be considered a public figure, or a limited public figure) requires that there be actual malice for a finding of defamation. To put it simply, actual malice means that the person that wrote the defamation purposefully wrote it to injure the other person.

Libel v. Slander

Going back to libel versus slander, slander is a defamatory statement that is spoken and libel is a defamatory statement that is written. There are certain types of slander which are automatically defamatory. These are statements that convey that someone is a criminal, that someone has a disease, something that injures them professionally, and a statement about someone’s sexuality (they’re a cheater, impotent, etc.)

So, that is a VERY brief crash course in defamation. This area of law is substantially more complicated and there’s a lot more to it as well. For more information on or legal help dealing with slander, libel, and defamation, contact Biletsky Law.

Trademark Classes

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Biletsky Law - Trademark ClassificationA common misperception about trademark law is that once you have registered a trademark, that you own all of the rights to the name, logo, or brand (these are referred to as the “mark”). In reality, this is not necessarily the case. When registering a trademark, one of the essential steps is choosing which class best fits your product or service. Once the trademark application survives the examination process, you will then receive the trademark rights to your mark in the particular class that you selected.

For example, Coca-Cola may have originally registered their mark as a beverage (Perhaps under Class 032 – Beers and Beverages). At that point, someone who sold couches and other furniture (Class 020 – Furniture) under the name Coca-Cola would likely have been permitted to use the name Coca-Cola because there isn’t a high likelihood of confusion amongst consumers. A likelihood of confusion is the standard for trademark infringment, but that’s a whole other topic for another article!

Nowadays, because of the massive branding around Coca-Cola, and the possibility of the company having registered their mark under a multitude of different classes, the opportunities for other people to come up and use the name in a different product or service is diminishing.

Before getting back to what the different classes mean, here is a little history on the classification system. In 1957, the Nice Agreement, or the “Nice Agreement Concerning the International Classification of Goods and Services for the Purposes of the Registration of Marks” established a set of classifications to be used as the basis of registering trademarks.

One of the underlying purposes for establishing this class system was to set up a uniform method for making it easier for trademarks to be classified appropriately regardless of the country of origin of the mark. As of now, the Nice Classification had been adopted by 84 different countries and contains over 11,000 detailed descriptions of different products and services.

Now that you have a basic understanding of what classes are, and where they came from, we can dive into what this all means for you. The classes are divided into two major subsects, Products and Services. There are 34 product classes and 11 service class. Each of these classes are further divided into descriptions. For instance if you are selling camoflauge t-shirts the class would be 025 – Clothing and the description would be “Camoflauge T-shirt.”

Each class has a separate filing fee which ranges between $225 and $375. However, descriptions within each class can be added at no additional fee. So, going off the t-shirt example, if you are also selling dress shirts and sweat shirts, there is no additional fee to include those descriptions in your trademark application.

So, if you have enough money to be able to register your trademark under each class, you’ll be able to have the trademark rights to your mark for pretty much everything, right? Well, not exactly. Trademarks are based upon the use of the mark in commerce. However there are many situations where you may wish to obtain the trademark rights to a product or service but you may not be using the mark in those service quite yet.

That’s where the “Intent to Use” basis comes in. What this means is that you are not currently using the trademark for that product or service, but you intend to do so. However, you cannot just state that you intend to use the mark for every product or service, rather you need to have a bonafide intent to do so. The trademark application even requires you to state that you intend to use that particular class, under penalty of perjury. This means that lying about whether you had the intent to use the product or class can come with serious consequences.

So that is a crash course about the classification system for trademarks. There are many other nuansces to the the trademark process and for the classification selection process. Before submitting a trademark application, it is important that you speak with an intellectual property attorney to help you choose which class is best for your product or service.

For more information on trademarks or the classification system, contact Biletsky Law.

Terms and Conditions

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Biletsky Law - Terms of UseAlthough you may not be aware of it at the time, by visiting or using many websites and applications you may be agreeing to specific terms and conditions set by the website or application that you are using. These agreements may have different names such as Terms of Use, Terms and Conditions, Code of Conduct, User Agreement, and so on. Despite the different names, each of these agreements are meant to set the conditions for your use of the service and to also provide the owner with protection from liability.

So what’s in these agreements? Besides the names of these contracts, these agreements come in many different variations of length and complexity. Generally speaking, the more interactive the website or application is, the more terms that will be contained within the agreement. Also, what type of content the website or application hosts heavily influences the terms that will be in the agreement.

Keep in mind while reading these sections that the purpose or content of the provisions in these agreements are usually written to completely prevent any kind of liability on the owners part. In some cases, these agreements can be so over broad that they may end up being unenforceable. Regardless of the validity or enforceability of these provisions, some basically throw in the kitchen sink hoping that the agreement will be enforceable.

Introducing the Parties

Often, these agreements start out by defining who you are and who they are. Some of these agreements will use “We” and “You” while others will use more formal language such as “User” and “Company.” Regardless of the way that they state the party names, they are separating themselves from the rest of the world and considering anyone who uses or accesses the website or application to be considered the other party.

Also, there are certain services where access is based on a subscription. For these websites or applications, a further distinction between the mere user and a member may also be brought up.

What You Can’t Do

Another provision of these agreements limit what you are allowed to do on the website or application. These lists can go on for pages and include everything from refraining from posting malicious or illegal content to prohibiting hacking, spamming, soliciting, and other actions. These provisions help the owners to have the argument that regardless of the kind of content that you posted, they had previously prohibited such content and should therefore not be held liable.

Disclaimers

A section that could go on for pages are the “Disclaimers” sections. Depending on the use of the service, these disclaimers attempt to reduce or eliminate the owner’s liability for pretty much everything. Some provisions will disclaim any kind of “warranty” that the product or service may come with while other provisions limit what type of remedies you may be entitled to.

Further Protection from Liability

Depending on what type of product or service the website or application is offering, users may have the ability to post any type of content. This can pose a major problem for these websites as everything from stolen property, defamation, child pornography, and malicious content could be posted.

When the laws and regulations surrounding the internet were first evolving, certain laws  such as Section 230 of the Communications Decency Act of 1996 were passed which aimed to protect certain service providers from liability. In order for these kinds of services to be able to be protected, service providers must meet certain requirements. Some of these requirements allow the owners of certain content to be able to contact the owner in order to remove content that is being used without permission or that which is offensive.

And More Boilerplate

These types of agreements can sometimes be filled with endless legal jargon and repetitive clauses meant to ensure that the owners are protected. While at first glance these agreements may seem to limit any hope you have of getting out of the agreement, that may not be the case. Although within the mountains of boilerplate there may be “severability clauses” which allow the rest of the agreement to be enforceable if something is found to be invalid, the terms which are often found to be invalid are usually the most one-sided ones.

For more information on Terms and Conditions documents or to have one prepared for your website or application, contact Biletsky Law.

Life Rights

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Biletsky Law - Life RightsWhen books, movies, television shows or other productions are based on someone’s factual life story, it is important that the writer own or have permission to use those facts, especially if the writing will be used to make a profit.

“Life-story rights” are the rights that an individual or an entity owns in regards to the factual story regarding someone’s life. One of the purposes of obtaining these rights is to protect the writer from the future risk of the owner of those rights bringing a lawsuit against the writer.

Before someone’s life story makes its’ way to a movie or television production, they are often created as stories that are written either as books, scripts, screenplays, or other literary works. The process of how these literary works make it into a visual-arts production is another story, but even before that happens, the writer must either own or have permission to use the facts within the story.

While the facts themselves may not be owned by a particular person, acquiring these life-rights will protect a writer against a person’s claim of invasion of privacy, defamation, misappropriation, and the potential violation of a person’s right to publicity.

When someone else who is not the owner of particular life-story rights desires to create a writing including those facts or stories, the first step for those writers should be to attempt to acquire ownership or permission to use those life-story rights. Although it is not uncommon for these “licenses” or transfers of life-story rights to be done verbally, it is essential that any writer obtain written permission to use the life-story rights to reduce the chance of any problems which may arise in the future. Whether the oral agreement between the writer and owner is valid is another issue, but attempting to prove that you agreed to be able to use someone’s life-story rights is a completely separate issue that can cause many headaches for a writer.

So how does one acquire life-story rights?  The best way for both parties to enter into an agreement regarding the sale or license of the life-story rights is through a written contract which outlines the terms of the agreement such as; the rights that are being transferred or licensed, the term of the license, and the compensation to be paid (among many other terms). These agreements often come in the form of options or option-purchase agreements which basically reserve the rights for the writer to use. These contracts tend to range greatly in length and complexity depending on who the parties are. For example, a major motion picture production will likely have a lengthy and complex agreement which allows them to use the life-story rights in any way that can be conceived. On the other hand, a smaller or less-known writer may enter into a short one-page agreement with the life-story rights holder to be able to write a book or short story.

In addition to agreements between the writers and the owners of the life-story rights there are agreements which are entered into between writers and estates or third parties. Once an individual dies, there shouldn’t be a problem writing about them, right? Well, not exactly. In cases of well-known and famous individuals, those individuals may be entitled to a right of publicity to help protect their image. Since those life-story rights are valuable, certain states such as California allow a “successor-in-interest” to be assigned. If that is the case, you should attempt to obtain the rights to be able to write about the deceased from the owner of the posthumous rights.

As you can see, the acquisition of life-story rights is essential to help create a story based on true life stories. Although these rights open up a world of facts and stories that can be used in books, movies, and television productions, these rights can also be the demise of these productions if the rights are not properly acquiring.

For more information on acquiring, selling, or licensing life-story rights, contact Biletsky Law.

Fitness Sponsorship

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“Making a living from doing what you love must be one of the most fulfilling things [that] a person can do.” –David Kimmerle.

The health and fitness industries are some of the greatest examples of people going out and doing what they love. In addition to being able to do what you love for work, being able to monetize on your accomplishments can be even more awarding. But the industry is not just about the prizes and competitions, the world of supplements and other health and nutrition products is an integral part to the fitness industry and provides a unique incentive to competitors and trainers.

Sponsorship is an essential way that athletes are able to monetize on their product. An athlete’s “product” is often considered their bodies and talents. When talking about sponsorship in the realm of sports and fitness, these companies are looking for the ideal person who can represent their brand and take their products or services to the next level. Whether it is because of the unique look that an athlete has, or because of the massive social media following that the individual has, sponsorship helps a product or service identify with their consumer base.

Having the look and having the talent that catch the eye of a sponsor is something that needs to be mastered in your field of specialty. However, once the lawyers come in and bring out the contracts, that’s where your hard work and skills have less of an impact and your leverage and negotiation skills come into play.

A sponsorship agreement can be divided into many different sections and it is important that you understand what each section means when you are presented with a sponsorship agreement.

The Compensation

Let’s face it, while you may love the product or service of the sponsor, just being a part of their organization may not be enough to sway you into signing a contract. Sponsorship agreements are somewhat unique when it comes to contracts in that the compensation is not always just the usual straight money deal. Certainly it can be, but often times it is a blend of money, products, and recognition. It is important before entering into a sponsorship agreement that you be able to identify what is important to you and what you expect to get out of the sponsorship relationship. This all depends on you as a person and where you are in your career. An athlete just starting out may have a hard time deciding whether the fame or fortune is more important in the beginning of their career. Whatever kind of compensation you choose, be sure that you make it clear to the sponsor what it is that you are looking for.

Conflicts

Conflicts in sponsorship agreements occur more often than one may imagine. One of the reasons for this is because many of these companies are “vertically integrated” and because they may not just provide one kind of product. Instead, they provide a multitude of products and may also be the manufacturers, distributors, wholesalers, and resaler of the product. When a sponsor has their hand in so many industries, the chances of you running into a conflict increases. It is essential that you keep track of who your sponsors are and what your limitations are as far as conflicts. In most cases, the contracts will very clearly outline for you what kind of products or services you are prohibited from being affiliated with, but for the contracts that don’t spell it out so clearly, it is important to be aware of what your sponsor does before entering into another sponsorship agreement.

Morals Clause

Morals clauses work to help prevent tarnishment or damage to a company’s brand or image. The validity and enforceability of morals clause is an entire issue in and of itself. Courts have battled with this time and time again, and whether this provision will be enforceable should be further down the road in your thoughts than what are in the these clauses.

Put the enforceability aside, it’s reasonable to understand why a pre-workout manufacturer doesn’t want a convicted murderer or a thief to be the face of their company. But there are some morals clauses that go too far in attempting to limit your speech and private actions. The basis to most of these clauses is that you cannot get in trouble by the law for certain things and it cannot come out in public that you partake in certain activities (for certain sponsors, drug and alcohol tests are mandatory and may come unannounced).

Your Duties

OK, so you’ve been sponsored! That’s great, but what do you have to do? Each sponsor requires something unique from the individuals that they sponsor. Some require that you post a certain amount of content on your social media pages, others require that you appear at certain events and ceremonies, while others require that you wear branded clothing of theirs when you are at certain events or even when you are out in public for a certain amount of time. It is important to understand what your duties are and what you need to do to make sure that you are not in breach of your contract.

There are many other provisions which go into these contracts and it is important that you are aware of the impact that each of these provisions have on your sponsorship relationship.

To learn more about sponsorship agreements or to obtain assistance in reviewing or negotiating an a sponsorship agreement, contact Biletsky Law.

Netflix Takeover

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Biletsky Law - Netflix TakeoverApproximately 95 million U.S households subscribe to some form of cable television. Since cable’s introduction to the consumer public, cable providers have generally enjoyed an increase in the number of subscribers. However, for the first time in decades, this trend may come to a standstill. Subscription video on-demand streaming services such as Netflix, Hulu, and Amazon are quickly gaining ground and recent surveys have even shown that up to 40% of U.S households subscribe to one service or another. What may be even more surprising is the ever increasing numbers of households who are customers of a streaming service provider but who do not pay for cable television.

Although modern cable services are often bundled with internet services, the massive numbers of customers who are flocking to the streaming services should be nothing short of alarming for the cable companies. What was once seen as the cable companies’ dominate marketplace (aside from satellite companies such as DirectTV and Dish Network), is now a shared marketplace with providers who are able to cater to their user’s exact needs.

But what does this mean to the average consumer? The low cost of these video on-demand streaming services has resulted in the major cable companies offering more incentives in an attempt to retain or recruit customers. Despite what “incentives” some of these companies are offering, there are little indications that consumers are buying into the cable companies’ attempts to mitigate the impact that the streaming services are having on their customer base.

To further divest the cable companies of their customers, several of the major streaming services have started producing original exclusive content that can only be viewed through their services. Hit television series such as “House of Cards” and “Orange is the New Black” are commanding such extraordinary viewership that it is hard for the networks to keep up in their offerings of unique and captivating television series.

In addition to the original content offerings that the streaming services have, the streaming services have opened up new opportunities for smaller or lesser known productions to be picked up as a television series. These productions, which may have otherwise gone unnoticed, are now being given the chance for their concepts to see the light of day and to be produced.

While the landscape of television continues to change, so does the way in which consumers are able to view and access the content they want.

For more news and stories related to the changing media industries, be sure to follow Biletsky Law on social media.

Streaming Issues

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The way that people consume media has been evolving throughout the 20th century. The advent of commercial radio in 1920 followed by the first television station in 1941 were seen as milestones in the evolution of entertainment. Fast forward to the second half of the century and the evolution of our media consumption has evolved at an unprecedented rate. Radio and phonographs evolved to audio cassettes which evolved into 8-tracks and eventually compact discs. Terrestrial television morphed into cable and satellite, which was eventually recorded onto VHSs, DVDs, and BluRay discs.

Even the 21st century has made a leap into a new format which was not even conceivable until recently. In 2000, the way that music was being consumed drastically changed as a result of downloading services such as Napster, Kazaa, and Limewire. From that point on, the digital download started taking a larger foothold in the marketplace of the music industry. Within just a few short years, as personal computers and internet capabilities advanced, streaming services began to flood the marketplace where downloads had just recently taken over.

Nowadays, high speed internet delivers unlimited steaming capabilities right into our hands, anywhere in the world. Streaming media still continues to evolve with resolution and quality constantly reaching new levels. But with anything new, comes new problems. The earlier years of internet media and in particular, downloadable content, brought a new wave of piracy into the world. Copyright infringement soon became as easy as the click of a button. While the music and motion picture industry are constantly battling to thwart online piracy, streaming media has not only caused those industries new headaches, but has also created these headaches for others.

Take for example some of the recent sporting events that have taken place. On May 2nd, the world watched the “boxing match of the century” featuring Floyd Mayweather against Manny Pacquiao. Pay-per-view orders of the fight in the U.S were around $100 per order. The revenue earned from just the video on demand sales sky rocketed to reach record breaking figures. But it wasn’t just the paying or legally watching customers who were able to view the fight.

In the beginning months of 2015, well known and easy to use live-streaming applications have started to transform people’s ability to transmit content around the world, live. While the purpose of these applications are to facilitate the distribution of user made content or to broadcast certain events, these applications are more commonly being used to distribute the content of others illegally. HBO and Showtime, the co-producers of the Mayweather/Pacquiao fight, had done all they could to attempt to eliminate the possibility of people in the crowd streaming the fight for free. Other live-streaming concerns include movie premiers, sporting events, music festivals, concerts and other pay-to-view events.

With the spread of the popularity of these types of applications, it is difficult to see how content producers will be able to keep their content from being distributed for free. But, going back to the beginning of this article, this isn’t exactly the first time that these content makers have had to deal with this issue. Starting with programs such as Napster in 2000 and torrent downloading software thereafter, content producers have been in this struggle for a while.

Perhaps most hardly hit has been the music industry. Albums featuring 10-15 songs were at one point able to get a premium sale price of $20 per unit. With the explosion of downloading software, the business models have had to shift and now iTunes sells songs for just 99 cents and streaming sites offering music for free.

But the music industry hasn’t collapsed because of this, and in fact, new artists that would never have been known are now starting to thrive due to the free distribution of their music which has allowed consumers who would not have usually purchased their music to become fans. Where the future of streaming content goes is anybody’s guess, but what impact it has on the entertainment industry is up to the consumers.

For more information about the legal issues involved in streaming media, contact Biletsky Law.

Electric Daisy Carnival Trademark Battle

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Biletsky Law - EDCIn 2009, a trademark application for the mark “Electric Daisy Carnival” was filed on behalf of Pasquale Rotella of what is now Insomniac Holdings LLC. The trademark application alleged use as early as 1997. On April 20, 2015 Gary Richards of HARD Events filed a lawsuit seeking to cancel Insomniac’s trademark. Before diving into who owns what, it is important to understand where this lawsuit is coming from.

Starting as early as 1991, Gary Richards and Stephen Enos (also known as Dr. Kool-Aid) began hosting events under the name “Electric Daisy Carnival” in Southern California. It wasn’t until 1997 when Rotella began using the name for Insomniac’s flagship festival.

For nearly six years, Insomniac’s use of the “Electric Daisy Carnival” trademark went uncontested. Then, on June 5, 2013 Enos filed an Australian trademark application for “Electric Daisy Carnival.” After that trademark was filed, on June 21st, Insomniac filed an Australian trademark application for “Electric Daisy Carnival” as well. In addition to the filing, Insomniac also opposed Enos’ application. Taking the legal battle closer to home, some five years after the initial U.S trademark application for “Electric Daisy Carnival” was submitted, Enos filed suit in California against Insomniac claiming prior use of the mark.

While the outcome of the Australian trademark opposition and the U.S lawsuit is uncertain, Richard’s claim for ownership of the mark has thrown Insomniac back into the courts. Even though this lawsuit is likely to last for several months before any major developments occur, there is plenty of time to speculate what will happen.

Although Richards may not have federally registered the trademark, a person or a company receives “common law” trademark rights to the mark just by using the mark in commerce. However, unlike other intellectual property rights such as copyrights and patents, the user of a trademark only owns the rights to that mark so long as they are using the mark in commerce. What this means is that although Richards may have been the initial user of the mark, if Insomniac is able to show that Richards “abandoned” or failed to continuously use “Electric Daisy Carnival,” then Richards argument that he is the rightful owner to the mark will likely be met with rejection.

While the battle over the rights to the “Electric Daisy Carnival” wages on, Insomniac will continue to use the brand and has its’ flagship festival in Las Vegas lined up for next month with revenues expected to surpass the record-breaking receipts of previous years.

For more information about trademarks or to have a trademark of your own registered, contact Biletsky Law.

Fashion Distribution Agreements

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Biletsky Law - FashionThe time has come, the drawings are done and the sketches are ready to become a reality. The only thing missing now is…who is going to buy the product? Of course in many situations, this question comes up well before the design stages, but regardless of the stage of development that you are in, it is a question that needs to be answered.

For many designers and producers, a distribution agreement is the key to being able to commercially exploit a product. But before signing away the products that you’ve worked so hard on, it is important to have a grasp of what these agreements will mean for you and your product. Are you giving away too much? Are you being robbed of any credit? And of course, are you getting the maximum compensation and exposure possible?

How you obtain the distribution deal depends greatly on your goals, your product, the market and most of all, your connections. Once you have engaged the distributors and the deal is in motion, there are several important considerations to keep in mind.

Exclusivity

Similar to obtaining the deal itself, whether or not this distribution will be exclusive (either on your part or on theirs) depends on many factors. A larger distributor will likely have a multitude of designers and will not be exclusive to you. However, depending on the product line, you may be exclusive to them. This favors the distributor in that they know that because this product is being made exclusive to them, that they may be able to charge their clients more for the exclusive product and that they will have some leverage against you since you are not able to sell the product to anyone else.

Term

The term of the agreement will let you know how long this relationship is to last for. The term can be anything from just a season to several years. In addition to the initial term, there may be an automatic renewal of the term or it may need to be negotiated once the first term ends.

Purchase Order

As with most other things in this agreement, the purchase order depends on several things such as who the distributor is and what kind of product you are designing. In certain cases, especially when you are held to be exclusive to the distributor, the contracts may be either a “requirement contract“ or an “output contract.“ A requirement contract is a contract where the designer or owner delivers to the distributor as much of the product as they “require.“ An output agreement is one where the distributor will purchase everything that the owner is able to produce.

Purchase Price

The purchase price is usually what gets the designer or owner’s attention. These deals are often straight purchase orders for a bulk amount of the product either based on a unit price ($2 per shirt for instance) or based on the bulk amount ($2,000 for 1,000 shirts). These figures may vary depending on what kind of purchase order the distributor is putting in.

Conclusion

There are of course many other provisions that you should be aware of including quality control, storage, marketing, advertising, and credit. Each of these topics, like the rest of them, depends on who the parties are and what the product is. One of those provisions that a designer often regards as being important is credit. Depending on the product itself, there may not even be any credit provisions or they may be one that just requires that credit be provided on the product itself. Others may have requirements that the designer be provided credit in the area in which the product is being sold (think of the clothing department at a major retail store that says “designs by ______” or “by ______”).

What it all comes down to is that there are many deal points in distribution or licensing agreements and unless you are competent to negotiate each of these provisions, it is best to have an attorney who has experience with fashion distribution agreements to take care of this agreement for you. For assistance with your fashion legal needs, contact Biletsky Law.

 

Where to Incorporate

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IMG_0464When the topic of what state to form your business in comes up, most people immediately say Delaware. In certain situations, this may be the right answer, but the state of Delaware is often thrown around as the answer more than it should. There are many issues to take into consideration when determining which state is the most ideal for your business to be formed in. We will go through a few of these important considerations below.

Where are you located?

Chances are it’s not in Delaware. Delaware certainly has its’ advantages when it comes to the cost of running a business as well as taxes, but it is often forgotten that you will also likely be subject to the fees and taxes of the state that you operate in. For example, a business that is incorporated in Delaware but that is doing business in California will likely need to register as a foreign company in California and will then likely be liable for California fees and taxes. However, Delaware does makes it easy for most small businesses in that if you are registered in Delaware, but are not doing business in Delaware, you will likely not need to pay any Delaware taxes (although certain fees may still apply).

What about the other states?

Delaware has long been held as the state that most people think of when it comes to where companies are from (especially corporations). There are many reasons for this, but one that sets it apart from the other states is called the “Court of Chancery”. Although it’s certainly a fancier name than your normal “Superior Courthouse”, this court’s main focus is business. Cases and controversies that go through this court enjoy expedited case times and are presided over by judges with particular experience in business issues. But at this point, this court is probably not what is convincing you to incorporate in Delaware.

Low and behold, other states saw Delaware’s success in attracting businesses with their low costs, no taxes, and discrete reporting and those states decided to jump on the bandwagon. The two other states who have made a name for themselves as the favorites amongst businesses are Nevada and Wyoming. These states offer similar low or no cost fees and don’t require certain reporting such as shares issued or who the directors are (this can be a big advantage when someone doesn’t want the world to know that they are the owners of the corporation for whichever reasons).

Nevada and Wyoming have even upped the ante with Delaware in that neither state instills any personal tax on a corporation owner and has no annual franchise tax. This is a substantial advantage in particular for other states which do have annual franchise taxes, such as California. California requires that an entity pay a minimum of $800 regardless of whether the company is even running or is operating at a loss. Having no such franchise tax in states such as Nevada and Wyoming is a great advantage unless you run into the issue that I mentioned above…where you still may be subject to the fees and taxes from the state you operate in.

So what does this all mean?

States such as Delaware, Nevada, and Wyoming have been designed as being very business friendly in the hopes of attracting your business to incorporate there. Often, many people will recommend one of these states as the state of incorporation. But the biggest issue that tends to be forgotten is that forming your company in another state does not necessarily leave you free and clear from having to pay the state that you operate in.

For more information on what state to incorporate in, contact Biletsky Law.