Source: http://wineindustrynetwork.com/suppliers/carle-mackie-power-ross-llp.html
Timestamp: 2019-04-20 10:42:16+00:00

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The creation of fine wine is no mere accident of nature. Excellence demands vision and passionate adherence to standards of the highest quality. So it is with building a successful business within the wine industry. The stakes are high. To ensure success, you must avoid pitfalls with prudent decision-making, every step of the way.
Providing solutions to your most critical wine industry challenges is the power of CMPR:WINE. With a unique depth and breadth of wine industry experience and expertise, our seasoned team of legal advisors guides you through the full range of strategic and day-to-day business and regulatory issues.
CMPR:WINE is a practice group within Carle Mackie Power & Ross LLP, one of Northern California's most respected full service business law firms.
The combination of the expertise and experience of the CMPR:WINE team represents a unique resource able to quickly and efficiently respond to any situation.
JOHN MACKIE, a founding CMPR partner and leader of the CMPR:WINE team, has focused his practice on the wine industry since 1993 advising on a wide range of strategic corporate and real estate transactions as well as land use, and environmental compliance issues. He is also actively involved with WineVision, Sonoma County Food & Wine Center, Sonoma State University Wine Business Program, Sonoma Valley Vintners & Growers Alliance and Alexander Valley Wine Growers Association.
PHILLIP KALSCHED regularly advises businesses in the wine industry particularly in the area of real estate matters, including acquisitions and sales of vineyards and winery facilities, vineyard leases, and land use and planning matters. His expertise also extends to business formations, grape contracts, secured lending, and partnership transactions.
SIMON INMAN has handled a wide range of business transactions including merger and acquisition transactions, start-up and venture capital financings, stock options and other equity incentive plans, public and private securities matters, real estate, tax-exempt bond transactions and other bank financings.
JOHN DAWSON is head of the firm's Intellectual Property practice and a member of the firm's Wine Group. His practice is focused in the areas of intellectual property, business transactions, alcoholic beverage law and litigation.
JEREMY LITTLEpractices in the firm’s Food and Alcoholic Beverage Group with an emphasis on business formation, raising capital, alcoholic beverage compliance, contracts, trademarks, and the purchase and sale of related companies.
Respected for a pragmatic, quality-driven approach, CMPR:WINE focues on key issues of each transaction to promote a speedy and satisfactory conclusion.
By tailoring real estate law to a wine industry specific context, CMPR:WINE helps you achieve your commercial objectives.
CMPR:WINE is dedicated to providing practical solutions for all the legal needs of our wine industry clients. Our knowledge and insights, honed over years of experience with day-to-day legal issues, offer you a competitive edge.
For our winery, distributor, and retailer clients, please note that the TTB has increased its auditing of sales records and has also changed its approach to such audits. The TTB is auditing for compliance with federal limitations on the sale of wine, focusing on conduct such as consignment sales, heavy pallets, and “distributor banks.” The TTB has received special funding for these enforcement efforts and has hired additional investigators to focus on these issues.
In addition, we have heard that the TTB’s decision to take an aggressive stance on these audits is coming from TTB headquarters. Therefore, these actions do not appear to be the result of one or two TTB agents acting outside the TTB mandate. CMPR has been in contact with Congressman Mike Thompson’s office to let him know of the aggressive enforcement efforts we have seen to date, and we understand that he will be meeting with TTB officials to discuss the enforcement process.
While you have a legal duty to cooperate with TTB investigators, we encourage you to keep control over your business records. If the TTB comes to your premises and seeks to remove documents, ask for or prepare a receipt so you know what documents they took, or offer to make them copies yourself. It is also our experience that the TTB investigators will contact your employees and independent salespeople, so you may want to alert them to the possibility of a “cold call” interview from a TTB official.
There is much going on, and it is all happening so quickly that it cannot be completely covered in this short email blast. If you have any questions at all, or if you’ve been contacted by a TTB investigator and would like representation, please contact Jeremy Little or Kim Corcoran.
Harassment Training Is Mandatory - Are You Ready?
This year, all employers with five or more employees must provide at least 1 hour of harassment training to all employees, and 2 hours to supervisors.
CMPR is happy to announce that it offers this required training and is here to help you comply with the new law.
Our experienced employment law attorney, Samantha Pungprakearti, can provide your company with affordable harassment training.
Opportunities for additional training and HR assistance as requested.
Call for more information or to set up an appointment for on-site training today!
Call our office at (707) 526-4200, or email samanthap@cmprlaw.com.
Happy New Year! Now that we are back from the holidays, it's time to dust off the employee handbook, review your policies and procedures, and make sure they are compliant with the new employment laws taking effect in 2019. Click the link below to see the top ten changes.
Get into the Trade Show for FREE!
The California Supreme Court decision in Troester v. Starbucks is a new case that may change the way you keep track of employee time.
Most employers know they need to keep track (and pay!) non-exempt employees for every hour they work. Non-exempt employees are those who are paid by the hour because they are not a Professional, Executive or Administrative employee. Employers have recordkeeping, minimum wage, overtime pay and other obligations that are based on how many hours each employee works. So it is essential that employees’ time be accurately recorded.
In the Starbucks case, the California Supreme Court ruled that work done off the clock, even a few minutes a day, must be recorded and paid – rejecting the “de minimus” defense for most routine off the clock work situations. The de minimus defense is codified under federal law and permits employers to ignore very small amounts of time worked off the clock, so long as it is: a) uncertain or indefinite periods of time of a few seconds or minutes, and b) cannot, as a practical administrative matter, be recorded.
Troester, a Starbucks manager, was required to clock out before he was able to run the daily sales reports, lock the front door, walk his employees to their cars (a job requirement) and take in any outside furniture that may have been accidently left out. This amounted to between 4 and 10 minutes a shift. Although the time varied, the Court found that because Starbucks knew its managers were required to clock out before completing these tasks it was required to pay for this time.
The Court did not kill the de minimusdefense in California entirely. It concluded that de minimus may be applicable when the amount of off the clock work was very small, very difficult to track, and not routine unlike what occurred at Starbucks. The Court will also consider the size of the aggregate amount of off the clock work, what technologies are available to track the work and what the employer has done to try and minimize the off the clock time worked.
· pay wages based on reasonable estimates for the off the clock work.
2. Evaluate Time Keeping Practices. Relying on hand-written timesheets are the least accurate and efficient option. An employer could be held responsible for not utilizing the best procedure, in light of the cost or availability to the company.
3. Make It Right. If non-exempt employees have been working off the clock, consider offering to pay a reasonable estimate for that work, in exchange for a full release to avoid legal liability down the road.
If you have a question or want to discuss any employment law issues, please feel free to give us a call.
Samantha Pungprakearti is an Attorney at Carle, Mackie, Power & Ross LLP and part of its Employment Law Group. Phone: (707) 526-4200. Email: samanthap@cmprlaw.com.
1. Minimum Wage: While not a new law, this year brings the next step from the 2013 law that increased minimum wage over a period of years. Beginning January 1, 2018, all hourly employees need to be paid at least $11.00/hr. ($10.50 for employers with 25 employees or less), and all salaried exempt employees need to be paid at least 2x minimum wage ($45,760/year for full time employees). In addition, a number of California cities have their own, higher, minimum wage. TO DO: Review and update your hourly rate, and check to make sure all your salaried employees are making at least 2x the new minimum hourly rate.
to consider, distribute, or disseminate information related to specified prior arrests not followed by conviction, referral to or participation in a diversion program, and convictions that are sealed, dismissed, expunged or statutorily eradicated .
Employers who intend to deny a position of employment solely or in part because of an applicant’s conviction history must make an individualized assessment of whether the applicant’s conviction history has a direct and adverse relationship with the specific duties of the job that justify denying the applicant the position, including: i) the nature and gravity of the offense or conduct; ii) the time that has passed since the offense or conduct and completion of the sentence; and iii) the nature of the job held or sought. The employer must then provide the applicant with written notification of the decision under a specified procedure, including a right to respond. TO DO: Delete questions about “have you ever been convicted of a felony” from your job applications and interview outlines.
3. Salary History Inquiries are Prohibited (Labor Code §432.3): Newly enacted Section 432.3 prohibits employers, including state and local governments, from seeking an applicant's salary history information and/or relying on salary history in deciding whether to offer employment, or what salary to offer an applicant. The bill does not prohibit an applicant from voluntarily, and without prompting, disclosing salary history information, or prohibit an employer from considering or relying on voluntarily disclosed salary information (which seems contradictory). But remember that Labor Code §1197.5 already prohibits an employer from using an applicant’s salary history, by itself, to justify a pay disparity. The new statute is intended to narrow the gender (and race) wage gap by preventing employers from relying on an applicant's prior salary, compensation, and benefits as factors in determining whether to offer employment or what salary to offer. This new law also requires employers to provide the position's pay scale to applicants upon reasonable request. TO DO: Delete questions regarding salary history from your job applications and interview outlines.
4. Recreational Marijuana is Here: Proposition 64 legalized adult-use of recreational marijuana in California effective January 1, 2018. That does not mean employers have to condone use in the workplace. Proposition 64 expressly provides that employers may prohibit marijuana in the workplace, and will not be required to accommodate an employee’s use of marijuana. This is consistent with the Supreme Court’s holding in Ross v. RagingwireTelecommunications, Inc., in 2008, which addressed the use of medical marijuana under California’s Compassionate Use Act, which conflicts with federal law. Stay tuned, as this is likely not the last of this discussion. TO DO: Review and update your drug and alcohol policy.
Access, review, or obtain employee records, without a subpoena or court order.
The law also requires employers to notify current employees in a posted notice in the language they speak, within 72 hours of receiving a Notice of Inspection of I-9 Employment Eligibility Verification forms or other employment records (using a Labor Commissioner template). Employers must also provide the results of such an inspection to current affected employees and any affected employee's authorized representative. The law further prohibits employers from re-verifying the employment eligibility of a current employee at a time, or in a manner, not required by federal law. Penalties for violation of this law range from $2,000 to $5,000 for a first violation and from $5,000 to $10,000 for subsequent violations. (See, Government Code sections 7285.1, 7285.2, 7285.3; Labor Code sections 90.2, 1019.2.) TO DO: Call your legal counsel if you are contacted by immigration enforcement agencies.
6. Parental Leave for Small(er) Employers (Gov’t Code §12945.6): SB 63 amends the FEHA to expand the California Family Rights Act (CFRA) protections for baby bonding leave to smaller employers. The law requires employers with 20-49 employees to provide 12 weeks of baby bonding leave to eligible employees. The law applies to employees with more than 12 months of service with the employer, who have at least 1,250 hours of service with the employer during the previous 12-month period, and who work at a worksite in which the employer employs at least 20 employees within a 75 mile radius. Employers must maintain and pay for coverage under a group health plan for employees who take this leave, but can recoup it if the employee does not return to work.
TO DO: Update your employee handbook if you have 20-49 employees.
7. Harassment Training Expanded to Cover Gender Identity, Gender Expression, and Sexual Orientation (SB 396): The California Fair Employment and Housing Act (FEHA) requires employers with 50 or more employees to provide training and education regarding sexual harassment to all supervisory employees every two years. Under SB 396, this prescribed training must now include content addressing harassment based on gender identity, gender expression, and sexual orientation. Employers must also display a poster developed by the Department of Fair Employment and Housing regarding transgender rights in a prominent and accessible location in the workplace. (See Government Code sections 12950, 12950.1; Unemployment Insurance Code sections 14005, 14012.) TO DO: Update your training outline.
8. Additional "Whistleblower" Retaliation Protections (SB 306): SB 306 amends Labor Code §98.7, and adds three Labor Code sections authorizing the Labor Commissioner's office to investigate an employer, with or without receiving a complaint, when during a wage claim or other investigation, it suspects retaliation or discrimination.
assist providers of medical services in seeking authorization of medical treatment.
These advocacy services may be provided by the employer, the employer’s insurer, or the employer’s claims administrator. This Legislation arose out of the struggle for treatment experienced by victims of the San Bernardino terrorist attack of 2015. TO DO: Contact your insurance provider should these circumstances arise.
10. Human Trafficking Notice (Civil Code §52.6): Section 52.6 requires certain types of businesses to post a notice regarding human trafficking and assistance hotlines. It has been amended to extend the posting requirement to hotels, motels, and bed and breakfast inns. Separate legislation requires new language in the notice to state that a person can text a specified number for services and support. TO DO: Post this notice if you operate a hotel, motel or inn.
Augustus v. ABM Security Services, Inc. & Vaquero v. Stoneledge Furniture – If you have employees who work alone, or work on commission, make sure they are compensated separately for rest periods and relieved of all responsibilities, or pay a one hour penalty for each violation at the time it occurs.
Lopez v. Friant & Associates, LLC – Make sure your paystubs have all nine pieces of information required by Labor Code 226(a), as even inadvertent mistakes, with no damage to the employees, will subject an employer to costly PAGA penalties.
Mendoza v. Nordstrom, Inc. – While employees can volunteer to work on the seventh day of rest, employers must “maintain neutrality,” and not do anything to encourage it.
Have a great 2018, and please contact Dawn Ross or Samantha Pungprakearti for help with your labor and employment law needs - (707) 526-4200 or dross@cmprlaw.com or spungprakearti@cmprlaw.com.
The Trump administration released its initial tax reform proposal on April 26 in the form of a one-page outline accompanied by a briefing from Treasury Secretary Steven Mnuchin and National Economic Council Director Gary Cohn.
The one page summary is excerpted below. While light on detail, the proposal nonetheless reflects considerable changes to the existing federal income tax system.
The 15 percent “business tax rate” would apply to corporations as well as small and medium-sized businesses taxed as pass-through entities (e.g., limited liability companies, partnerships, and S corporations). To the extent such pass-through income would have otherwise been taxed at personal income tax rates, this change would lead to significant tax savings (as well as tax-planning opportunities) unless other provisions are put in place to avoid abuse. Mnuchin did indicate that the plan will ultimately “make sure that there are rules in place so that wealthy people can’t create pass-throughs and use that as a mechanism to avoid paying the tax rate they should be paying on the personal side.” While the Trump administration appears cognizant of the issue, the drafting and subsequent enforcement of such anti-abuse rules represents a significant and difficult undertaking.
Significant reforms have also been proposed on the individual side, including changes to the brackets and a doubling of the standard deduction. While many deductions would be taken away (including the deduction for state and local taxes paid), the mortgage interest deduction and charitable giving deduction are expected to remain. The estate tax and alternative minimum tax are slated for repeal.
The Trump administration’s plan is in its early stages and has been met with mixed reactions. CMPR will continue to monitor developments and provide updates as appropriate. Please contact Daren Shaver at Carle, Mackie, Power & Ross LLP (tel: 707-526-4200; e-mail: dshaver@cmprlaw.com) with any questions or for more information.
In a long-watched case, the California Supreme Court issued an opinion this week addressing how the use of private electronic devices intersects with the Public Records Act. In this case, San Jose v. Superior Court, a resident objected to a redevelopment project and submitted a request for public records under the Public Records Act to the City of San Jose. The request included all emails and text messages sent or received by city employees or officials on private devices. The trial court ruled that communications about public business, sent on private devices, were subject to disclosure. The Court of Appeal disagreed and said they are not. The California Supreme Court reversed, holding that substantive communications about public business are subject to disclosure under the California Public Records Act, even if the communication is sent or stored on a private device.
The California Constitution gives citizens a right to access information concerning the conduct of the public’s business by mandating that public officials’ writings “shall be open to public scrutiny.” The Public Records Act, a state statute, declares that access to information concerning the public’s business is a fundamental and necessary right belonging to every person in California. This statute must be broadly construed to provide access to the public and narrowly construed when limiting the public’s access to records. Essentially, all public records are subject to disclosure unless there is a stated, or express, exemption from disclosure.
As the Supreme Court observed, in these modern times with multiple devices, email accounts, text messages, and other electronic platforms, the lines between an official communication and an electronic aside can be blurry. The sometimes difficult job of distinguishing between an official communication and an aside requires looking at the content, context, purpose, intended audience, and author of the communication; as opposed to where the communication was stored or on whose device it was sent. Communications that substantively relate to the conduct of the public’s business must be disclosed under the Public Records Act, unless an exemption to disclosure applies. Conversely, primarily personal communications that only incidentally mention agency business do not need to be disclosed. Thus, a writing – which includes text messages and emails sent or stored on personal devices or email accounts – substantively related to the conduct of the public’s business, is subject to disclosure under the Public Records Act.
The Court stated this result is necessary in order to ensure open access to government communications so that the public can verify that public officials are acting responsibly and are accountable to the public. This result also prevents public officials from evading the Public Records Act by simply switching devices or email accounts.
The Supreme Court considered employee privacy issues and provided guidance on how public agencies can comply with the Public Records Act when records are on a public employee’s or official’s private device or email account. When this occurs, the focus should be on the content of the communication, not its location. Agencies can adopt policies addressing how to handle these situations and they can require employees or officials to copy their government accounts for all communications involving the public’s business. When responding to a request for public records, the agency may rely on the employee or official to search their personal files for responsive materials. This respects an individual’s privacy rights while responding to the request for public records. For materials and communications stored on private devices or accounts that are not disclosed, the official or employee may provide an affidavit, containing sufficient facts to show that the materials being withheld are not public records. The Court was careful to explain that it was not endorsing any particular search method, but was merely providing guidance to agencies struggling with this issue.
We now have clarity - anyone substantively interacting with a state or local agency in California about the conduct of the public’s business should assume that the communication is a disclosable public record, irrespective of how the communication occurs or where it is stored.
Please do not hesitate to contact Tina Wallis at twallis@cmprlaw.com or (707) 526-4200 if you have questions or concerns regarding this article.
Now that we are back from the holidays, it's time to dust off the employee handbook, review your policies and procedures, and make sure they are compliant with the new employment laws taking effect in 2017. This year, we have a combination of new laws, and existing laws that have been updated with additional protections.
1. California Minimum Wage Raised – On January 1, 2017, employers of 26 or more employees must pay $10.50 per hour as the minimum wage. Employers of less than 26 employees will not be required to raise the minimum wage to $10.50 until beginning January 1, 2018. Action: Review your pay policies to ensure they meet the minimum wage requirements. Please note that many cities and counties in California have passed higher minimum wage requirements (Berkeley, Cupertino, El Cerrito, Emeryville, Los Altos, Los Angeles City and County, Malibu, Mountain View, Oakland, Palo Alto, Pasadena, Richmond, San Diego, San Francisco, San Jose, San Leandro, San Mateo, Santa Clara, Santa Monica and Sunnyvale).
2. Federal Salary Basis Adjustment – Under state and federal law, employees may be deemed exempt from overtime if their positions meet certain criteria, including salary paid above a set rate. In May of 2016, the DOL amended the federal rule to increase the minimum salary requirement from $455 per week to $913 per week ($47,476/year) exceeding the minimum salary set by California. This new salary minimum was scheduled to go into effect on December 1, 2016. However, the rule change was put on hold while the question of whether the DOL exceeded its authority in making this new rule is litigated. The DOL may end up withdrawing the rule when the new administration takes over. Thus, the California minimum salary requirement of two times the minimum wage (now $41,600 for employers under 26 people and $43,680 for larger employers) remains in effect. Action: Ensure your pay policy meets the minimum salary requirement for all exempt employees as the minimum wage increases. Also, keep an ear out for any policy shifts from the DOL as the administration changes.
4. California’s Legalization of Recreational Marijuana Use – With the passage of Proposition 64, California now allows people over the age of 21 to smoke or ingest marijuana, grow up to 6 plants and transfer up to 28.5 grams of marijuana without compensation. Employers may implement policies limiting the use of marijuana by their employees, up to and including total prohibition. Action: (i) Confirm your company’s stance on employee marijuana use (both on and off the clock); (ii) review your employee handbook to make sure it is consistent with your position; (iii) make necessary changes to the handbook; and (iv) communicate those changes to employees.
5. Trade Secrets [Handbook Edits Suggested] – In May of 2016, a federal law was created governing trade secrets, which supplements existing California law. The federal law is substantially similar to the laws in California, but provides a better mechanism for immediate relief from trade secret misappropriation, along with the ability to seek punitive damages and reasonable attorney’s fees and costs. Action: To take advantage of the new federal law, employers must notify their employees that whistleblowers of trade secret violations will receive criminal and civil immunity against claims of trade secret misappropriation so long as the report was made confidentially to a federal, state or local government official, an attorney or under seal in a lawsuit. The inclusion of this notice into new agreements governing confidential information or trade secrets and in handbooks is voluntary, but makes these significant additional remedies available to the employer.
6. Notice Required of Leave Available for Victims of Domestic Violence, Sexual Assault or Stalking [Handbook Edits Required] – Several years ago, Labor Code 230.1 was enacted, requiring employers of 25 or more employees to provide time off to victims of domestic violence, sexual assault or stalking to obtain medical attention, obtain services from a shelter or program, counseling or to plan for their safety. Beginning in 2017, employers are required to notify new employees of certain rights under this law. Current employees need only be notified of their rights upon request. Action: Employers must notify new employees of several rights under the law: (1) that the employer prohibits retaliation against employees who use this leave, (2) that employees can use vacation, sick or any other time off they are already entitled to, and (3) that the right does not extend the amount of time off they are entitled to under the FMLA. The Labor Commissioner will be creating a form for employers to use for this purpose. In lieu of the form, handbooks can include the required language.
7. Single-Occupant Restrooms Must Be Identified as “All-Gender” – By March 1, 2017, all business establishments that have single-user toilet facilities are required to change the sign to identify the restroom as “all-gender” and conform generally with normal signage requirements.
8. Venue and Choice of Law – Labor Code section 925 now prohibits employers from obligating California-based employees to sign agreements that require lawsuits to be brought outside of California or under other states’ laws, if the employee “primarily” works in California. This new law expands California’s right to adjudicate disputes between employers and employees. Previously, out of state employers could insert terms into their employment contracts applying their home state’s law and forums, making it difficult for California employees to sue their employer. Action: Review your employment contracts for any offending language and amend them to identify California as the choice of venue and law for California employees.
Citizenship: Employers may not make hiring decisions based on an applicant’s status as a citizen or permanent resident (other than the fact that the applicant must be legally able to work in the U.S.).
Employers must have a legitimate business reason for making employment decisions based on accents, such as: (1) the ability to communicate in spoken English is required to perform job duties effectively; and (2) the individual's accent materially interferes with job performance. There must be a legitimate business reason to make decisions based on fluency, if it is necessary for the effective performance of the position. Finally, “English-only policies” are only legal if they are required to promote safe and efficient job performance or business operations, and are only enforced for those purposes. Action: Review handbook language and other management training documents to ensure they are compliant with the law.
10. Workers’ Compensation Coverage Exclusions Narrow for Business Owners – Previously, officers, directors and working partners were not required to be covered by a company’s Workers’ Compensation (WC) policy unless they opted in for coverage. Beginning January 1, 2017 (and including in-force policies), officers, directors and partners are required to be covered unless they meet the narrow exception to allow them to opt out. For corporations, only corporate officers and members of the Boards of Directors who own 15% or more of the issued and outstanding stock of a corporation may opt out of WC. General partners of partnerships and managing members of limited liability companies can also opt out of coverage. This law is intended to prevent employers (usually in high risk industries) from giving employees a small (e.g., 1%) ownership interest to avoid paying Workers’ Compensation insurance premiums. Action: contact your WC insurance carrier to ask for details on the new rules and for an opt in/opt out form.
Change on the Horizon: Agricultural Workers Right to Overtime Phase In Beginning 2019-AB 1066. The overtime rules for agricultural employees working for employers with 25 or more employees are changing beginning January 1, 2019. Agricultural workers who work more than 9.5 hours per day and/or 55 hours per week will be entitled to 1.5 times their regular hourly rate. The law will continue to roll-out between 2020 and 2025 until the overtime rules are in alignment with those for non-agricultural employees. Action: No action is required this year. However, we encourage agricultural employers to review their policies and increase their staffing if necessary to ensure they will be ready when the law goes into effect on January 1, 2019.
Britain’s decision to leave the European Union (“EU”) raises a number of issues for current and prospective owners of trademarks in the EU and the UK.
Prior to June 23, 2016, an applicant for an EU Trademark (“EUTM,” previously known as a “Community Trademark” or “CTM”) could rely upon a single application to obtain ownership of a registered EUTM, which provides trademark protection in the UK and 27 other European countries. By virtue of the Brexit vote, however, the UK has triggered a process by which recognition of trademark rights under the EU system may no longer extend to the UK.
For registered EUTMs, the protections currently afforded to such marks in the UK are expected to remain intact for at least two more years, while the EU and UK negotiate the terms of the UK’s exit from the EU. Thus, for existing EUTM owners, no immediate change in the status of your UK trademark rights is expected.
Ultimately, and subject to the outcome of the Brexit negotiations, each registered EUTM may be divided into two trademarks: (1) a new, stand-alone trademark in the UK, and (2) the pre-existing “mother” EUTM covering the remaining EU member states. This approach would preserve the prior rights and priority dates previously established under the pre-Brexit EUTM registrations.
For parties filing new EUTM applications after June 23, 2016, and who also seek to obtain trademark protection in the UK, such applicants should file separate EUTM and UK trademark applications to ensure that they have adequate trademark protection. Because the UK and EU will remain signatories to the Madrid Protocol, new applicants seeking trademark protection in the US, the UK, and the EU can continue to rely upon the Madrid Protocol’s “one application” approach to apply for and obtain trademark registrations in each of those jurisdictions.
Please do not hesitate to contact John B. Dawson atjdawson@cmprlaw.com or (707) 526-4200 if you have questions or concerns regarding this historic event and the impact it may have on your international trademark rights.
On April 20, 2016, CMPR obtained an across-the-board victory on behalf of International Fruit Genetics, LLC (“IFG”) in a case involving termination of licensing agreements for proprietary table grape varieties. The United States District Court, Central District of California, granted summary judgment in favor of IFG, holding that IFG validly terminated the parties’ licensing agreements based upon defendants’ contractual violations. The court also denied defendants’ separate motion for summary judgment on defendants’ counterclaims. International Fruit Genetics, LLC v. P.E.R. Asset Management Trust, et al., (Case No. 14-5273).
IFG develops and owns proprietary hybrid table grape varieties in the United States and around the world. After developing a new grape variety, IFG applies for patents and other intellectual property registrations for the new variety in the U.S. and other countries. IFG licenses its proprietary grape varieties to authorized growers around the world under a licensing program designed to strictly control the propagation of its proprietary plant material and protect IFG’s intellectual property.
Pursuant to three licensing agreements with IFG, defendants were permitted to test and make limited plantings of certain IFG grape plants in South Africa. However, the agreements prohibited defendants from propagating IFG grape plants. After learning that defendants had wrongfully propagated those plants, and had illegally imported other IFG plant material into South Africa, IFG gave notice terminating the parties’ agreements. In July 2014, IFG filed this lawsuit to confirm the validity of its termination based upon defendants’ contractual violations and other wrongful conduct. The CMPR team of John Dawson, Rick O’Hare, and Kim Corcoran co-authored the winning briefs.
Separately, the Bipartisan Budget Act of 2015, signed by President Obama on November 2, 2015 (the “Budget Act”) introduced sweeping changes to partnership audit proceedings.
When a C corporation converts to an S corporation or an S corporation acquires assets from a C corporation in a tax-free transaction (e.g., a tax-free reorganization), the S corporation may eventually find itself subject to a corporate-level “built-in gains” tax in addition to the tax imposed on its shareholders upon disposition of its assets. This rule supersedes the traditional pass-through tax treatment afforded to S corporations, otherwise, a C corporation could make an election to be taxed as an S corporation and then proceed to sell all or part of its assets with only a single level of tax applied.
The time period during which an S corporation is required to track dispositions of assets subject to the built-in gains tax was originally ten years from conversion to an S corporation (or asset acquisition), but was then reduced to seven years for taxable years beginning in 2009-2011, and then to five years for taxable years beginning in 2012 to 2014. Absent legislation, this time period was slated to return to the original ten-year time period in 2015.
In a very favorable provision for small businesses, the built-in gain recognition period has been permanently reduced to a five-year period, with retroactive effect to the 2015 tax year.
The PATH Act extends and phases out the Section 168(k) bonus depreciation for qualified property placed in service over the next five years as follows: from 2015 to 2017, bonus depreciation will remain at 50 percent, in 2018 it will be 40 percent and in 2019, 30 percent.
Additionally, the PATH Act provides for a very beneficial election for certain plants which bear nuts and fruits (including grapes). Under the prior law, bonus depreciation was only available in the year in which the property is placed in service, which typically means when the plant becomes income producing (in most cases, several years after planting). If the election is made, the plants are considered to be placed in service when planted, and thus eligible for bonus depreciation in the first year (at the then current percentage).
These provisions apply to property placed in service after December 31, 2015.
A taxpayer may elect under Section 179 to deduct (or “expense”) the cost of qualifying property rather than depreciate the property. From 2015 forward, such expensing will be allowed up to $500,000, assuming that less than $2 million worth of equipment is placed in service during the year. Absent legislation, the $500,000 and $2 million thresholds would return to prior levels, $25,000 and $200,000, respectively.
The Tax Acts also removed the limitation on Section 179 deductions for qualified real property (e.g., retail, restaurant, and other leasehold improvements) and made permanent the permission granted to a taxpayer to revoke without the consent of the Commissioner any election made under Section 179.
In the case of newly constructed or substantially rehabilitated housing that are not federally subsidized, the calculation of the “applicable percentage” was originally designed to produce a ten-year credit equal to 70 percent of the present value of the building’s qualified basis. However, prior legislation extending as far back as the Housing and Economic Recovery Act of 2008, had mandated, on a temporary basis only, that the applicable percentage for newly constructed or substantially rehabilitated housing which is not federally subsidized could be not less than nine percent.
The PATH Act makes permanent the minimum applicable percentage of 9 percent and is effective January 1, 2015.
The Section 1202 exclusion from gross income of gain from the sale of Qualified Small Business stock held for more than five years has been permanently extended to 100%.
The provision is effective for stock acquired after December 31, 2014.
The Budget Act effectively repeals and replaces the current TEFRA partnership audit procedures with a significantly different procedural regime, effective for tax years beginning after December 31, 2017. All partnerships (and LLC’s taxable as partnerships), whether or not formed prior to the effective date are impacted. Prior to these changes, an Internal Revenue Service (“IRS”) audit would occur at the partnership level and the IRS would cause adjustments to be made to the partners directly. Under the new audit regime, and unless otherwise elected, the IRS will assess and collect tax, penalties, and interest attributable to audit adjustments at the partnership level, leaving it up to the partnership as an entity to pay (and then pass any liability on to its partners). Depending upon which procedure the partnership elects, and the audit year in question, it is possible that current partners could find themselves on the hook for a deficiency attributable to years in which such partner did not hold a partnership interest.
Some partnerships (and LLC’s taxable as partnerships) may elect out of these new procedures altogether. The ability to elect out is limited to partnerships with 100 partners or less and various ownership and look-through rules apply; most notably, tiered partnerships (i.e., partnerships with other partnerships as partners) are not eligible to elect out of the new regime.
The new rules also substitute the concept of a “Partnership Representative” for the TEFRA-era Tax Matters Partner. The Partnership Representative is to serve as the sole liaison between the partnership and the IRS and shall have the authority to bind the partnership in such dealings.
In its current form, the new audit rules leave many issues and questions unanswered. Given the delayed effective date, the IRS is entertaining comments and the expectation is that additional guidance will be provided. In the interim, partnerships (and LLC’s taxable as partnerships) should consider the impact of these new rules on their existing and future agreements.
If you have questions regarding any of these changes, please contact Daren Shaver(dshaver@cmprlaw.com) or the CMPR attorney with whom you regularly work.
Wineries and Growers were both Well-Dressed and Organized at Monday Night’s Sonoma County Public Forum.
Much has already been written about the “nuts and bolts” of the November 16th meeting, but the energy and determination that permeated the room was remarkable.. The meeting was the one and only chance for the public to finally have its say in response to the hours and hours of meetings held by the County’s Winery Working Group, prior to hearings before the Planning Commission, then the Board of Supervisors. . The members of that Group have been working for the last six months to provide direction to the County about new winery applications. Each of the previous meetings had been held before an audience that was required to stay silent at all times. Monday night was the time for the County to hear from all of the interested stakeholders, large and small.
Until Monday night, the wineries and growers appeared to be in two camps: those who were following every breath and sigh of the Winery Working Group and those who didn’t even know that the Group had been formed, or that a new County ordinance was working its way down to them. Although the discussion of the new ordinance is cast as applying only to new wineries, there is the distinct possibility that the County would apply any new ordinance to existing wineries (whether through applications for increased production or changes to use permits). As such, whether they knew it or not, every winery and grower will likely be affected by the new ordinance.
From the more than 500 people who met in Santa Rosa Monday night, the news had finally been disseminated. More than half of the audience members were there to support the wine business. It was a refreshing sight to see growers, winery owners, winemakers, and tasting room staff energized, motivated, and wearing brilliant green t-shirts or stickers (brilliant in both their color and their use as a statement). The anti-winery contingent was there with their plain white nametags and a few placards but Monday night’s energy belonged to the wineries and growers.
Three central themes came from this energized group. First, agriculture does not mean grapes growing peacefully by themselves, beyond the touch of human hands. Instead, agriculture means feeding your family and making the mortgage. That requires one to sell the grapes/wine, and selling necessarily requires marketing efforts. Speakers from small wineries presented a compelling case of why they needed what the County calls “events” and what theycall distributor meetings or wine club dinners. Without direct-to-consumer sales, only “the big guys” with their existing distributor outlets would be able to own wineries in Sonoma County. The “big guys” had their say as well – without being able to hold distributor lunches or dinners, their business model fails as well.
Another common theme was that the County should not regulate the type of activity going on at the winery. Instead, the County should be regulating impacts – it shouldn’t matter whether there is a tasting menu, whether a customer sits or stands, or whether there is a fee for a wine club party. No other business is in danger of having the County decide when, or whether, it can have business or staff meetings. How can the County do that to wineries?
Finally, the wineries and growers challenged the opposition’s continued mantra of “rural character”. Without high-end agriculture, the land would be sold for housing. Housing would not recharge the aquifer, would not maintain the job base, and would be anything but “rural”. The wineries and growers stepped up to the microphones Monday night by the dozens noting, among other things, that the first word on the Sonoma County seal is “Agriculture” and that pioneers like Sara Lee Kunde had worked tirelessly in the past to make agriculture economically viable. Making a good living from agriculture is what allows for rural character in the first place.
This is not isolated to Sonoma County. Napa is dealing with their own ordinance battles, as is Santa Barbara, Paso Robles and the other wine-growing areas of the state. Indeed, this “not in my backyard” approach to land use is also reflected in municipal ordinances restricting restaurants, nightclubs and wine stores in major cities throughout the state.
As the meeting approached 8:30 and then 9:00, many of the opposition group trickled out. The winery and grower contingent just filled-in their seats behind them (about 100 people had not been allowed into the meeting room due to occupancy requirements and had been relegated to the lobby to watch the proceedings on a screen.) When the meeting finally ended shortly after 9:00, the room was abuzz with energy from the green-clad growers and winery representatives finally being able to say their piece. Indeed, one of the anti-winery speakers said to another as he was walking out of the meeting early, “The wineries – they’re organized.” Ah – the power of working together toward a common goal.
The California Competes Tax Credit is a business income tax credit intended to incentivize economic development in the State of California. If your business (whether organized as a corporation, limited liability company or partnership) is planning to hire and/or expand in California, please consider applying for the California Competes Tax Credit.
The credit is awarded through a competitive application process and is individually negotiated with the Governor’s Office of Business and Economic Development (“GO-Biz”) for approval by a statutorily created California Competes Tax Credit Committee. The credit is taken against income tax due to the California Franchise Tax Board.
Although not yet officially announced, we anticipate that GO-Biz will open the next application period in late September (prior application periods have typically lasted around one month). GO-Biz previously indicated that approximately $200 Million is available to be awarded in fiscal year 2015-16.
The evaluation process consists of two phases (though it is possible to bypass Phase 1 under certain circumstances). Phase 1 is an automated process in which the requested tax credit, aggregate employee compensation and aggregate investment are evaluated to arrive at a cost-benefit ratio. Those applications with the “most advantageous” cost-benefit ratio proceed to Phase II.
Phase II of the evaluation process focuses on several factors, including the number of jobs created, compensation paid to employees, amount of investment, geography and overall impact to the State of California.
Successful applicants enter into a tax credit agreement to provide for allocations of the credit to be made upon the successful completion of established milestones (e.g., hiring, investment targets). Awardees who fail to achieve the established milestones are at risk of having the credit recaptured.
Online applications will likely be submitted athttps://www.calcompetes.ca.gov. If unsuccessful, applicants may reapply in subsequent application periods.
It's that time of year again! While there are some important changes to be aware of, this year's employment related legislation was not as overwhelming as in the past few years. Below is a summary of the most significant changes.
1. Minimum Wage Increase & Liquidated Damages: For those of you with minimum wage employees, the hourly rate is increasing from $8/hr. to $9/hr. effective July 1, 2014; and then to $10/hr. effective January 1, 2016. In addition, Labor Code sections 1194.2 and 1197.1 have been amended to allow the Labor Commissioner to award liquidated damages in an amount equal to the unpaid wages (doubling the amount due), if an employer violates California's minimum wage law. Action: (i) order and post the new Minimum Wage poster before July 2014; (ii) update payroll for minimum wage earners; and (iii) review and update other areas where minimum wage may come into play, for example, travel time policies and/or commission agreements for sales employees.
2. Driver's License for Undocumented Immigrants: A new law requires the DMV to issue a driver's license to an undocumented person who can prove identity, residence, and who passes the necessary exams. This card will not be acceptable for federal purposes, which will be noted on the driver's license. This license may not be used to verify eligibility for employment or for purposes of identification on the I-9 form.
3. Wage Withholdings: SB 390 creates a criminal penalty for employers who fail to remit withholdings from an employee's wages which were made pursuant to state, local or federal law. Action: Keep employee withholdings in a separate account and always make timely payments to federal, state and local agencies.
4. Protection Against Using Immigration Status Against an Employee: Several new laws were passed to protect employees from having their immigration status used to retaliate against them for exercising any employment related right. First, under new Labor Code §1019, if an employee complains about his/her wages or other conditions of employment, it would be unlawful for an employer, or any other person, to either directly or indirectly retaliate against the employee by engaging in an "unfair immigration related" practice. This includes: (i) requesting more or different documents than federal law requires for proof of employment; (ii) using the e-Verify system to check employment eligibility at a time not required by federal law; (iii) threatening to file, or filing, a false police report; (iv) threatening to contact, or contacting, immigration authorities; or (v) taking any adverse employment action against the employee. This new law creates a rebuttable presumption that an adverse action taken within 90 days of the employee exercising a protected right is retaliatory.
The second new statute, Labor Code 1024.6, prohibits an employer from discharging, discriminating, retaliating, or taking any other adverse action against an employee because the employee updates or tries to update his or her "personal information," unless the update is directly related to the skills, qualifications or knowledge required for the job. For example, if an employee presents a new name or social security number, this law would protect the employee from adverse action based on the change.
In addition, Labor Code §98.6 was amended to make it illegal for an employer to retaliate against an employee who has complained that he/she is owed unpaid wages, and creates a civil penalty of up to $10,000 per violation.
The last new law in this area, Labor Code §244, authorizes suspension or revocation of a business license if the licensee has reported or threatened to report the suspected citizenship or immigration status of an employee, former employee, or prospective employee, or a member of their family, because the person has exercised a right under the Labor Code or other laws. The law also makes it a cause for suspension, disbarment, or other discipline for any California licensed attorney to report, or threaten to report, the suspected immigration status of a witness or party to a civil or administrative action, if the person exercises or has exercised a right related to employment. Action: (i) be sure to only check on immigration status upon hire, or other times required by federal law; (ii) never use immigration status as a threat or reason to take action against an employee for lodging a complaint or exercising a legal right; (iii) carefully document all reasons for taking disciplinary action.
Some new leave entitlements have been added.
1. Stalking Victims: Labor Code sections 230 and 230.1 currently allow time off, and prohibit an employer from discharging, discriminating or retaliating against an employee who is a victim of domestic violence or sexual assault, for taking time off from work to attend court proceedings or to obtain medical or other services as a result of the crimes against them. These protections have been expanded to include employees who are victims of "stalking." An employer must also provide reasonable accommodations, including implementation of safety measures such as job transfer, modified schedule, installation of locks and safety procedures. Action: (i) if an employee confides that he/she is being stalked or is the victim of domestic violence or sexual assault, become familiar with these statutes to be sure you obtain the necessary documentation and are providing the required time off and accommodations; (ii) engage in the good faith interactive process; (iii) add this new leave to the next employee handbook update.
2. Crime Victims: Labor Code §230.5 has been added to provide protection for employees who are the victim of certain serious or violent crimes, or whose spouse, parent, child, sibling, or guardian is the victim of such a crime. These employees may take time off work (unpaid or using accrued time) to attend court proceedings, and cannot be punished for taking the time off. Action: the same as Section 1, above.
3. Peace Officers & Emergency Rescue Personnel: Currently, employers with 50 or more employees must allow volunteer firefighters to take up to 14 days off (either unpaid or using accrued time) per year to participate in firefighting training. Labor Code §230.4 was amended to extend this same right to peace officers and emergency rescue personnel to participate in law enforcement and emergency rescue training. All of these first responders have an unlimited right to unpaid time off as necessary to respond to emergencies. Action: add this extended leave to the next employee handbook update.
4. Paid Family Leave Benefits Extended: Currently, the Paid Family Leave Act provides employees with up to six weeks of partial pay replacement benefits when they take leave to care for a seriously ill family member or to spend time with a new baby, adopted child, or foster child. The Act has extended these benefits to employees who take time off to care for a seriously ill grandparent, grandchild, sibling, or parent-in-law. This does not create a leave entitlement; it just provides partial pay replacement if a leave is otherwise authorized. Action: (i) if an employee is taking a leave to care for a family member in this extended category, provide them with the information of filing for Paid Family Leave; and (ii) if your handbook leave policy addresses Paid Family Leave Act benefits, update this definition.
In addition to the new entitlements in the Leave of Absence section above, there are a couple of other handbook updates. None of these changes require an immediate update to your handbook, but put them in your "update" folder so they are accessible when it's time for your next update.
1. Protection for Military & Veterans: The Fair Employment and Housing Act was amended to add "military and veteran status" to the list of categories protected from employment discrimination. "Military or veteran status" is defined as an individual's membership in, or status as, a veteran of the U.S. Armed Forces, the Reserves, the National Guard or the Coast Guard. Action: Military and veteran status was already protected by federal law, so is probably covered by your handbook. However, check your policy and, if necessary, add this to the anti-harassment and anti-discrimination portions of your handbook during your next update.
2. Sexual Harassment Definition Clarified: The Fair Employment and Housing Act was amended to clarify that sexually harassing conduct does not need to be motivated by sexual desire, and that hostile treatment can amount to unlawful sexual harassment regardless of whether it is motivated by sexual desire. Case law was in conflict on this issue. Action: (i) treat complaints of harassment seriously, even when it's clear that sexual desire is not involved; (ii) review your anti-harassment policy to determine whether the definition of harassment needs updating.
Should you face a wage claim filed with the Labor Commissioner, you should be aware of the following changes.
1. No Exhaustion Required: Under newly added Labor Code §244, it is not necessary to exhaust administrative remedies through the Labor Commissioner in order to file a lawsuit against an employer for violation of any law over which the Labor Commissioner has jurisdiction. This may result in a lot more civil claims, which take longer and are more expensive. Action: (i) be sure your exempt employees are properly classified; and (ii) be sure you are in compliance with overtime, meal, rest period, and other wage and hour laws.
2. Attorneys' Fees: Labor Code §218.5 has been amended to provide that an employer may only recover attorneys' fees and defense costs when it prevails in an action brought by an employee for unpaid wages if the employer can prove the employee brought the action "in bad faith." This will make it more difficult for an employer to recover its attorneys' fees and costs. Action: Make sure you are complying with overtime, rest and meal period, and other wage and hours laws to avoid facing a wage claim.
3. Labor Commissioner Lien: An employer has 10 days to appeal an adverse decision on a wage claim issued by the Labor Commissioner. Under a new law, once the time to appeal expires, a lien is automatically created and the Labor Commissioner can record it in any county in which the employer holds real property.
1. Heat Illness Recovery Periods: For those of you with employees who work outdoors, Cal/OSHA's heat illness standards allow for cool-down periods in the shade of no less than five minutes at a time on an "as-needed" basis for employees to protect themselves from overheating. Labor Code 227.6, which requires employers to pay an additional hour of pay to employees who are required to work through a legally mandated meal or rest period, has been expanded to require the same extra hour of pay if an employer fails to provide required heat illness recovery periods. Action: (i) be sure you are familiar with, and complying with, Cal/OSHA laws; (ii) add a policy to your Handbook asking employees to report to Human Resources if they are not being allowed the necessary recovery time.
2. Successor Liability for Farm Labor Contractors: Newly added Labor Code §1698.9 holds a successor farm labor contractor liable for wages or penalties owed by a predecessor farm labor contractor under certain specified circumstances, including use of same facilities or workforce, or a relationship with the predecessor through shared ownership, employment or family relationship. Action: complete due diligence on this issue before taking over for a Farm Labor Contractor.
3. Good Samaritans: Health & Safety Code §1799.103 was added to prevent an employer from prohibiting an employee from providing voluntary emergency medical services, including CPR, in response to a medical emergency, unless the person in need has expressed the desire to forgo resuscitation or other medical intervention. This is most likely to come up in residential settings. Action: review your handbook to make sure you do not have such a policy.
This is the last in a series of bulletins about the crowdfunding exemption from the requirement for SEC registration, as included in the JOBS Act of 2012. Links to the previous three bulletins may be found here. The purpose of this bulletin is to explore some of the practical implications for companies looking to take advantage of crowdfunding.
In the first place, crowdfunding intermediaries and funding portals will essentially act as “gatekeepers”. Although they will not be responsible for promoting the investment opportunity or if investments go bad (absent their own failure to comply with obligations imposed by the legislation or the SEC), in order to build their own brands, they will want to be associated with successful projects. Those who develop a track record of picking opportunities that turn into “winners” will attract more investor interest. This may leave a company with a more “risky” or marginal project either not finding a portal or ending up with a less well respected operation whose involvement may not enhance the prospects (or reputation) of the company.
Second, there is a definite sense that more traditional sources of early stage capital (including angel investors) may be reluctant to invest in companies that have used crowdfunding. The fear is that, if there are a large number of early stage investors, they may be difficult to manage in the later stages, particularly when the company moves on to more sophisticated financing structures or a liquidity event. For companies that are likely to need more traditional follow-on financing, crowdfunding may not be the best option.
Third, having a large number of shareholders presents a number of challenges for what will most likely be relatively small businesses with inexperienced management teams. The enhanced corporate governance responsibilities associated with a large pool of shareholders will definitely create additional significant burdens and costs, especially since many of the shareholders may themselves be inexperienced in terms of understanding what to expect from their investments, the type of information that the company will provide, and their rights as shareholders. The potential for unpredictable behavior on the part of such investors is another reason why later-stage investors may be reluctant to invest later.
Companies will want to make sure they have effective Directors and Officers insurance. While this may not provide coverage for damages for actual breaches of fiduciary duties that give rise to losses, the coverage will typically cover the costs of defending any shareholder lawsuits.
Many companies may also opt to incorporate in Delaware which has a reputation for being more management-friendly. However, companies based in California and with a significant proportion of California shareholders will find themselves still subject to many of the provisions of California law that are considered to be more shareholder-friendly.
It is also to be hoped that crowdfunding intermediaries will help provide a package of services designed to help companies comply with their corporate governance responsibilities, from maintaining the stock register to handling the required annual shareholder meetings and other shareholder communications.
For the time being, we must now wait patiently for the SEC rule making process to be completed before we can fully assess the likely impact crowdfunding may have.
For more information contact Simon Inman at srinman@cmprlaw.com or at (707) 526-4200.
This is the third in a series of bulletins about the crowdfunding exemption from the requirements for SEC registration included in the JOBS Act of 2012. Previous bulletins were published in March 2013 and June 2013. The purpose of this bulletin is to explore in more detail the role of funding portals that will form an integral part of the crowdfunding process.
The legislation allows a crowdfunding intermediary to establish a funding portal through which investors will be able to make crowdfunding investments. The crowdfunding intermediary must be registered with the SEC and regulated by FINRA or another regulatory body.
Monitoring the limits on the amounts investors are allowed to invest. The maximum amount any investor can invest in any 12-month period is limited to (i) the greater of $2,000 or 5% of annual income or net worth (if either is less than $100,000), or (ii) 10% of annual income or net worth (if either is greater than $100,000), but not more than $100,000 in total. It is not clear how funding portals will be able to monitor compliance with these limits otherwise than through self-certification. However, funding portals through which investors regularly invest will at least be able to monitor the amount being invested through that funding portal by such investors.
Allow its principals to invest in any securities offered through the portal.
Given these responsibilities and restrictions, it will be interesting to see how crowdfunding intermediaries operating funding portals will be compensated for the services they offer. All will be revealed when the SEC gets around to publishing its rules.
The final bulletin in this series will explain some of the practical implications for companies looking to take advantage of crowdfunding.
This is the second in a series of bulletins about the crowdfunding exemption from the requirements for SEC registration included in the JOBS Act of 2012. The first bulletin, published in March 2013, described the background and overall objectives of the legislation. The purpose of this bulletin is to explore in a little more detail the obligations of businesses seeking to use crowdfunding as a source of capital.
If the offering is more than $500,000, audited financial statements.
Even though the maximum amount that can be raised through crowdfunding is limited to $1,000,000 in any 12 month period, the cost of having reviewed or audited financial statements is likely to mean that most crowdfunding offerings will be $100,000 or less. Although the legislation gives the SEC the power to increase the offering limit for audited financial statements, it does not have power to increase the offering limit for reviewed financial statements unless the legislation is amended.
A prohibition on foreign entities using the crowdfunding exemption.
The next bulletin will explain in more detail the funding portals and the final bulletin will review some of the practical implications for companies wanting to take advantage of crowdfunding.
There has been a lot of buzz about crowdfunding recently. Sadly, despite the passage of the legislation in Congress nearly 12 months ago, we are not much closer to seeing the rules that the SEC must produce before crowdfunding can begin. Most commentators believe that we will not see crowdfunded transactions until sometime in 2014.
This bulletin is the first of a short series that is designed to explain the background to the crowdfunding legislative and regulatory framework, as well as the possible pros and cons of what many believe will be a Brave New World of funding for small businesses.
The basic regime for the protection of investors in the United States that was established by the Securities Act of 1933 was to provide that securities could not be sold to the public unless they had been registered with the SEC. The SEC’s job was to vet the securities to ensure that they were appropriate to be offered to the public. However, the legislation and SEC regulations created a number of exceptions to the general rule requiring registration. The most well known exception is probably that which relates to offerings to “accredited investors”, being persons who, according to the SEC definition, should be capable of making an informed investment decision and bearing the risk of a total loss of their investment. These exemptions pre-empt state laws.
The crowdfunding legislation created a new exception to the prohibition against general solicitation of investors if the soliciting of investors is conducted through an authorized “funding portal”. This is a website managed by an appropriately licensed party through which investors will be able to make investments. The legislation limits the amount that any one business can raise in a 12 month period to $1,000,000 and limits the amount that any individual investor can invest depending on their own income or net worth. This excemption also pre-empts state laws.
Based in part on the success of organizations like Kickstarter and Indigogo, there has been a tremendous amount of excitement and anticipation regarding the opportunities that crowdfunding will provide once the SEC rules become law. It is probably fair to say that the public comments posted on the SEC website fall into two categories: those who cannot wait for the SEC to complete its rulemaking and exhort the SEC not to ruin things by being too conservative; and those who think that this is bad legislation and encourage the SEC to concentrate on ensuring that the public is protected from a potential avalanche of fraudulent investment scams.
The title of the crowdfunding legislation is “Capital Raising Online While Deterring Fraud and Unethical Non-Disclosure Act of 2012”.
We shall see if the SEC can strike a right balance between these concepts.
SANTA ROSA, CA – April 2011 Carle, Mackie, Power & Ross, LLP (CMPR), a premier business law firm based in Santa Rosa, CA, announces the launch of their new online trademark service, CMPRmarks.com. CMPRmarks allows world-wide access to a full range of trademark services, from researching potential marks for use in the United States, to filing and prosecution of trademark applications at the U.S. Trademark Office, as well as maintenance of trademark registrations once they have issued. The website also offers information on trademarks generally, from choosing a mark to the timing of U.S. Trademark Office procedures.
All work done through CMPRmarks is overseen by the firm’s team of experienced trademark attorneys, and is offered through a secure website. The service is available not only to individuals and companies, but to law firms seeking a reliable outsourcing opportunity for trademark work.
Founded in 1998, CMPR offers a wide range of legal services to individuals, businesses, non-profits and public agencies, including corporate, commercial, and financial transations as well as employment, litigation, and tax advice. In addition, CMPR is widely recognized for its particular expertise with respect to the Wine Industry and to Affordable Housing transactions. The firm is experiencing substantial growth and expects that CMPRmarks will help fuel future expansion.

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