So what happens when your business name becomes someone else’s domain name? What happens when a layman registers www.mcdonalds.com before the billion burger server commonly known as “McDonald’s” does? What about when Hasbro and an adult entertainment website both desire the rights to www.candyland.com, but the adult site beats Hasbro to the proverbial punch or; when an MTV Video Jockey purchases www.mtv.com, but then leaves MTV? What happens?

For a time, these amounted to little more than good questions. It was clear that intellectual property rights were in question, being jeopardized and/or infringed upon, but the courts had not yet faced these new age digital era issues. Naturally, litigation ensued; actually, it boomed! Consequently, it also became increasingly obvious that with more than 3,000,000 registered trademarks and service marks; more than 33,000,000 internet domain names having been registered and; with the advent of phraseology like, “cybersquatting” and “typosquatting,” these issues were not going to quickly dissipate on their own. Subsequently, a coalition of internet business, technical, academic and user communities joined forces to find a means of resolution; resolution that would be short of a future bursting at the seams with litigation.

In October 1998, the Internet Corporation for Assigned Names and Numbers (ICANN) was developed and, amongst other things, this private-sector nonprofit organization became responsible for the management and coordination of the internet domain name system (DNS). As part of its policy, ICANN enacted the Uniform Domain Name Dispute Resolution Policy (UDRP) to provide a mechanism for trademark owners to recover domain names from cybersquatters. Moreover, all domain name registrars having the authority to grant top-level domains (i.e., .com, .net, etc.) would now be required to follow the UDRP which included a streamlined “cyber arbitration” procedure to more quickly and less expensively resolve domain name ownership disputes involving trademarks.

In order to win a UDRP arbitration, the trademark owner/complainant must prove each of the following elements:

1. The domain name is identical or confusingly similar to a trademark or service mark in which the complainant has rights;
2. The domain name owner does not have any rights or legitimate interests in respect of the domain name; and
3. The domain name owner registered the domain name and is using it in “bad faith”.

If the trademark owner is successful in proving these elements, an award is granted whereby the registrar of the domain name is instructed to cancel, transfer or otherwise make changes to the domain name registration.

In light of the examples questioned above:

1. Candyland.com is now safely in the hands of Hasbro;
2. McDonald’s made a charitable contribution at the domain holder’s request to transfer the domain name; and
3. MTV settled out of court with Video Jockey, Adam Curry.

“Damn Bratz!” is surely echoing through the hallways of mega toymaker, Mattel, Inc., as the Ninth Circuit Court of Appeals has overturned the Barbie doll maker’s multi-million dollar verdict and injunction against competitor, MGA Entertainment, maker of the Bratz doll line.

Presiding Chief Judge Alex Kozinski stated that not only did former U.S. District Court Judge Stephen Larson err in ordering MGA Entertainment, Inc. to transfer the Bratz IP portfolio to Mattel but, that the ruling was an “abuse of discretion.”

“Unlike the relatively demure Barbie, the urban, multi-ethnic and trendy Bratz dolls have attitude,” Kozinski commented.  “America thrives on competition; Barbie, the all-American girl, will too.”

In August 2008, a federal jury concluded that former Barbie designer, Carter Bryant, was under contract with Mattel when he sold some of his sketches to MGA Entertainment and that those sketches ultimately led to the production of the Bratz doll line.  Consequently, the jury ordered MGA to pay Mattel $10 million in damages (of the nearly $2 billion sought) and further granted it a constructive trust over MGA’s entire Bratz IP portfolio.

“Even assuming that MGA took some ideas wrongfully, it added tremendous value by turning the ideas into products and, eventually, a popular and highly profitable brand”, the three-judge appellate panel said in an opinion (click to view opinion) written by Chief Judge Alex Kozinski. “It is not equitable to transfer this billion dollar brand – the value of which is overwhelmingly the result of MGA’s legitimate efforts – because it may have started with two misappropriated names.”

It appears that the 9th Circuit Court has reaffirmed the long-standing principle that copyrights cover only the particular expression of an idea, but not the idea itself.

Whether pertaining to your personal or professional life, chances are you have entered into, or sought to enter into a partnership at some point.  For some, it provides a sense of security; for others, a dinner drink led to a friendly discussion about an idea you had and WHAM, you’re going to move on that idea together – as partners, or; for those timid-hearted types, perhaps you gravitated toward a partnership because you simply wanted half the responsibility, half the risk, and half the potential blame.

Whatever your cause, and whatever your (personal) purpose, you could stand to save yourself a lot of time, frustration and money by knowing up front what sort of partnership you’re actually getting into.

Whereas some people use ‘partnership’ more as a term of art (i.e., corporation owners may call themselves ‘partners’, but that does not necessarily make it so), there are, in fact, a variety of legally recognized partnerships.  They are: (1) General Partnerships; (2) Limited Partnerships; (3) Limited Liability Partnerships; (4) Limited Liability Companies and; (5) Joint Ventures. And of these different types of partnerships – some governed by corporate law and still others governed more by contract law – the one that is of particular interest in this article is that of the “General Partnership”.

Attorneys are often surprised to find the staggering number of parties involved in general partnerships who believe they are being afforded certain corporate law advantages.  Let’s take a moment to touch upon a bit of the confusion.

A General Partnership is like a sole proprietorship except that there are two (2) or more persons conducting business under one name.  Unlike Limited Liability Companies, for example, no articles need to be filed with the Secretary of State, nor does the partnership even need to enter into a written partnership agreement (although it has been considered a terrible idea not to). A significant difference between formally established partnerships (i.e., LLC’s, LLP’s, etc.) and that of a general partnership is that each partner in a general partnership is jointly and severally liable for the actions and debts of the partnership.  Since any partner may bind the partnership, the other partners may be held liable for actions, contracts and/or debts in which they didn’t even know existed.  Take that one step further — partners can even be held personally liable for the acts of agents or employees that had apparent authority to bind the partnership.

So, for those of you not wishing to formally establish a partnership at the state level, and, whether you are willing to entertain and execute a partnership agreement or not, you may wish to have a better understanding of the risky business you could be entering into, or, may already be involved in, as a partner in a general partnership.

If an individual is looking to business-incorporation/”>form a new business, they may want to consider forming a Limited Liability Company. This type of business structure is similar to a corporation but is less formal, more flexible and offers several benefits, including personal liability protection, for its owners.

What is an LLC?

A “Limited Liability Company” (LLC) is a hybrid between a partnership and a corporation. It has the operating flexibility and “pass through” tax treatment of a partnership with the limited liability for its “members” accorded to corporate shareholders. “While an LLC is a business entity, it is best to think of it as an unincorporated association,” said Anthony Spotora, an extremely experienced business attorney. “Although sometimes incorrectly referred to as Limited Liability Corporations, they are in fact not corporations.” See California Corporations Code, Title 2.6.

Further Benefits

LLCs are highly attractive to some because of the flexibility in tax choices. LLC business ventures qualify for a single layer of taxation, which prevents ownership from being double-taxed under the corporate tax structure.

“However, LLCs may also elect to be taxed under a corporate tax structure if they wish,” Spotora advised. “In fact, the full list of taxation choices for LLCs are as a sole proprietor, a partnership and either an S- or C- Corporation.”

LLCs also often require much less administrative paperwork and record-keeping than do corporations. The laws also allow LLCs to customize the rules for how the LLC is best operated.

Drawbacks

Some people feel that LLCs do have disadvantages, however.

In California and a handful of other states, LLCs must pay a franchise or capital values tax on the business.

LLC’s in California must pay an annual tax to the state’s Franchise Tax Board. The fee is $800 per year, though if the LLC’s net annual income exceeds $250,000, then there will be an additional fee that must be paid, too.

Also, some people believe LLCs have a more difficult time raising financial capital because investors may be more comfortable investing funds into corporate firms.

If a person is considering forming a Limited Liability Company or other business entity, it is important for them to speak with a knowledgeable attorney. Anthony Spotora is a Los Angeles business attorney who specializes in incorporation and can guide you on the best strategy for your business.

You can visit our blog to learn more about corporate formation and other topics in business law, including the impact of RULLCA, California’s 2014 revision of the laws governing LLCs.