May It Please The Internet is a podcast brought to you by Revision Legal

• Lots of questions about start ups, to us, these are not all that interesting. Reality is a true start up is going to do the bare minimum to get going. Ownership agreements between the founders are probably the most important, after that, it is completely dependent on what the business can afford.

• More interesting is to open the hood on businesses that have been around. What should you have in place if you have been around for 3, 5, 10 years. What could be considered a luxury for a start up can become an absolute need for a more mature business

• No business is perfect, you won’t have all of these

• But end of the year is approaching, it is time to pull out that dusty list of legal needs and start making plans to get things done

  1. Organizational Structure

  a. Internal corporate documents (bylaws/shareholder agreement/operating agreement)

i. Clear outline on ownership/managers

ii. Buy/sell agreements

b. Relations with investors

You should be able to clearly, and without question, answer:

• all questions about your cap table, capital accounts, rights of first refusals, and your complete org structure

• know your (and other owners) rights about selling

• what happens if people die, divorce

• key man insurance (and how to distribute the money)

If you exit, this must be 100% clear or it will cause problems.

2. Contracts

a. Employment agreement

i. Non-compete

ii. Confidentiality

iii. Work for hire

b. Independent contractor agreements

i. Work for hire

c. Phantom stock / incentive agreements

d. Employee handbooks

i. Workplace policies (time off, sick leave, benefits, etc)

e. Service agreements (how you get paid)

f. Real terms of use

g. Real privacy policy

h. Real copyright policy (copyright registered agent)

i. Manufacturing agreements

j. Insurance

ii. Property/personal property

iii. Key man

iv. health

You should have organized documents that all have signatures. You will need to produce all of these documents in an exit.

3. IP

a. Trademark

i. Federal/state registrations

ii. Process to clear names before investment

iii. Trusted counsel

iv. Make sure registrations are owned by the correct entity

v. International trademarks

1.US only good for US

2.Take advantage of Madrid

3. File in “first to file” countries - china

b. Copyright

i. Understanding what can/should be registered

1. Industry specific but advantages for all

   c. Patent

i. Knowing basics of when/how to act if you want to seek patent protection (or at least who to ask)

ii. Contracts with employees help to make sure you have all rights

d. Trade secrets

i. What they are

ii. How you maintain trade secrets

You should be able to:

• Explain and document all cases all alleged infringement on your IP and threats against you

• Know where the business could invest in more IP protections

• Have a domain portfolio of domains registered for your brand, including defensive registrations to cover typos or even gripe site type domains

  1. Taxes

     a. Understand tax structure, tax planning

i. What states for sales tax – nexus

b. Trusted CPA

c. Paying quarterly

d. Taking advantage of tax laws

i. Cars

ii. Spouses / kids

e. Not trying to nickel and dime, just do it right

1. Accounting

   a. Clean books

• Intro

• World of scammy lawsuits is nothing new, but there is a popular trend impacting ecomm store owners: lawsuits claiming websites are not ADA compliant for the visually impaired

• Before we dive into this topic, let’s visit the history of shitty lawsuits attorneys/companies file in the online space

  • copyright trolls

    • stock photo companies looking for unauthorized uses

    • Freeplay music

      • Confusing on what license you actually have / synch license

    • bit torrent lawsuits on porn

      • Prenda Law

        • the CD CA called it a :porno-trolling collective” whose business model relied “on deception” and resembled a racketeering enterprise

        • they basically uploaded porn to bit torrent networks then threatened to sue anyone that downloaded it, or that had their IP address implicated

        • there was no real plaintiff

        • threatened public exposure of the Ds downloading porn and would settle for $4,000, or a bit less than the price of defense

        • always one named defendant that was basically in on it

        • Steele got 5 years

        • Hansmeier got 14 years

    • Always looking for a quick settlement

• ADA Lawsuits

  • ADA/state law, in general, says that all persons are entitled to full and equal accommodations in all business establishments”

  • These all follow a relatively similar pattern

  • A plaintiff files suit on behalf of a class arguing that the defendants website cannot be operated by the plaintiff, who is visually impaired

  • They ask for an extreme amount of money, $30-50,000

  • But they are willing to settle for far less, often times under 10,000

• What do these plaintiff have to prove?

  • These plaintiffs must have “bona fide intent” to use the D’s services

    • This leads to some ridiculous examples of blind people wanting to buy guns, cars, etc

  • There was also a defense as to whether the ADA applied to online businesses, or whether a “brick and mortar” store only fell within the ADA’s “public accommodation” language

    • This used to be somewhat up in the air

    • But in August 2022, a CA COA ruled that the CA ADA law, the Unruh Civil Rights Act, did not apply to websites.

    • This practically killed ADA cases in CA, but not in other states (NY, PA, etc).

• What should store owners do

  • WCAG 2.1 standards

    • People can use screen readers and obtain a phone number to call

    • Contrast in text

  • Not ignore lawsuits

•

•

•

May It Please The Internet is a podcast brought to you by Revision Legal.

First – intro into copyright law – few quick definitions then pull it together

• What is a copyright – type of IP that protects original works of authorship the moment an author fixes the work in a tangible medium of expression.

• What is a work – picture, movie, musical recording, book, architecture, code, etc

• What are copyright rights –

  • Reproduce the work

  • Distribute copies of the work

  • Perform the work publicly

  • Make derivative work

  • Perform copyrighted sound recordings by means of a digital audio transmission

  • Display the work

    • Explain copyright as bundle of sticks

• Bring it all together.

Second, copyrights in music/albums

• There are always two copyrights at issue: the music itself/lyrics and the musical recording.

  • Artist usually owns the music/lyrics

  • Record label owns the recording

    • Gives both rights in the music, need both approval for licensing, etc

Now to Taylor

• Big Machine Records owned Taylor’s musical recordings

• That entity was sold to Scooter Braun, manager of many famous groups

• He sold it to a private equity firm, estimates are $300 million

  • This would give this PE firm rights to control that music

• Taylor didn’t like this and said fuck you

Contract Law

• Taylor’s contracts with Big Machine Records gave her re-recording rights after 2 years.

• So this allows her to re-record the songs

But isn’t that infringing on the PE firm’s rights?

• NO

• Copyright law, specifically 17 USC 114

  • The exclusive rights of the owner of copyright in a sound recording under clauses (1) and (2) of section 106 do not extend to the making or duplication of another sound recording that consists entirely of an independent fixation of other sounds, even though such sounds imitate or simulate those in the copyrighted sound recording.

• So this means Taylor can make the same song (she owns the music and lyrics) and record it and it is NOT infringement

• And that is exactly she did. She re-recorded 4 albums and you will see they are all called “Taylor’s Version” on Spotify/Apple music

• Boss move

May It Please The Internet is a podcast brought to you by REVISIONLEGAL.com

Short Story: Through a copyright infringement lawsuit, we were able to have a haven for leaked paid adult content taken down.

• What was Thotsbay?

  • Explanation of forums

  • How people gained “points” upvotes etc

  • Number of people impacted by this website – hundreds of thousands of users

• What we did

  • Filed a lawsuit in the ND IL for copyright infringement

  • The case for copyright infringement is very clear

  • We conduct discovery

    • Subpoenas to ad networks, paypal, registrars

    • We are able to find the people behind the websites, but they reside overseas

    • Not able to freeze a substantial amount of money, they switched into only accepting bitcoin shortly after the lawsuit began

  • We obtain a default judgment

    • That judgment requires third parties to act

    • This required us to enforce the judgment with Tucows / Verisign

    • Shortly thereafter, the site moved to a specific country code registrar outside the US, but able to convince them to shut down the site as well

• What happened next

  • Subscription bomb, other bad actions

  • Sites give up, but we keep getting notices that the site is back, not entirely clear at this point

  • Ton of support from those impacted, positive end

• Next steps

  • Fight isn’t over

  • Continuing our investigation

  • Other sites are in the cross hairs

May It Please The Internet is a podcast brought by RevisionLegal.com, lawyers who represent businesses who make money online.

May It Please The Internet is a podcast brought by RevisionLegal.com

Is Your E-commerce Business Ready for In-House Counsel?

Episode Outline:

Intro

• Welcome to May it Please the Internet

• Intro to Chris

◦ Chris joined in 2021, previous experience working in-house

◦ Chris, explain who you are, past experience in general terms, etc.

• Topic

◦ Here today to talk about whether your eCommerce business is ready for in-house counsel

◦ What is in-house counsel and what do they do?

▪ Oversight over legal issues for entire business

• Handle certain issues for the business

◦ Internal corporate matters

◦ Contracting

◦ Some employment

◦ Regulatory / licensing issues

• Outsource and work with outside counsel for other matters

◦ Litigation

◦ IP

◦ Employment

◦ Tax

◦ Property

▪ Quasi-business advisor

• Identify risk

• Ask tough questions

• Generally kill dreams (but just playing devil’s advocate)

▪ The main point is that you have someone with legal training in the room, part of the planning process, and hearing the input/issues raised by various departments within the company

◦ Different types of “in-house” counsel

▪ Standard is hiring an attorney and putting them on the payroll

• This is right for certain types of businesses

◦ VC firm, highly regulated industries, or big enough where legal is a constant issue

▪ But “in house” can be a good fit even for businesses that don’t fall into those categories, but it would be at a smaller scale

• Fractional in-house or “outsourced in-house”

◦ What it really means is having a regular and constant legal voice in the business, on whatever scale makes sense

◦ We do this in a number of ways

▪ Attend certain meetings

▪ Regular weekly, bi-weekly, or monthly meetings

▪ Being a part of a company’s Teams/ Slack channel

▪ Attend company retreats

• What are the benefits?

◦ We touched on this already, but its about having that voice in the room

◦ Yes, we may identify more problems than a true risk-taker, but we can also save time

▪ If you come up with a plan for doing a massive online sweepstakes as a central marketing effort, spend a bunch of time and money, then at the last minute say, we need to run this by legal, you may have wasted a bunch of time

▪ Of course cost is a concern, but in my experience, the problem with legal fees is usually the unpredictable nature, not the cost itself.

▪ If you can find a predictable budget, even flat fees, then this can work

▪ Wrap it up

• In house essential for some businesses

• Can benefit all businesses and the cost can be made predictable

• Having that different voice in the room can save time

May It Please The Internet is a podcast brought to you by REVISIONLEGAL.COM

1. Actions by Amazon competitors

   1. Describe the problem

   2. Specific types of problems

      1. False infringement notices

      2. False re-categorization

      3. Hijacking listings

   3. How to handle them

      1. Demand letters

      2. Litigation

         1. Types of claims

            1. Abuse of the DMCA

            2. Tortious interference

            3. Unfair competition/deceptive trade practices

2. Actions involving Amazon

   1. Describe the problem

   2. Specific types of problems

      1. Suspensions

      2. Terminations

      3. IP infringement

   3. How to handle them

      1. Arbitration under BSA

      2. Litigation for IP claims

"May It Please The Internet" is a podcast brought to you by: Revision Legal

1. What are Trademarks?

The term “trademark” includes any word, name, symbol, or device, or any combination thereof—

(1) used by a person, or

(2) which a person has a bona fide intention to use in commerce and applies to register on the principal register established by this chapter,

to identify and distinguish his or her goods, including a unique product, from those manufactured or sold by others and to indicate the source of the goods, even if that source is unknown.

2. What is the Purpose of Trademarks?

• Protect consumers

  - Coffee example

• Value to rights holder

3. Are some Trademarks Better than Others?

• Yes, not all created equal

i. Fanciful

ii. Arbitrary

iii. Suggestive

iv. Descriptive

• Things to avoid

i. descriptive

ii. geography

iii. surnames

iv. foreign languages

4. How Close is too Close to Another Trademark

• Need to understand likelihood of confusion test

• Very flexible

• Not strict

• How close are the two marks - Slight change in spelling not enough

• How close are the Goods/services, sophistication of consumer, trade channels, etc

5. Do I Need to Register a Trademark to have one?

• NO

• Use in commerce

• Benefits of registration

Bonus – why hire an attorney for a TM?

• Single filings, with some study, not the end of the world to do yourself

• But these rights last forever (in theory), if there is any complexity at all, get advice

• Attorneys can help with future plans, contingent plans, scope of your registrations, and practical advise

• Worthy investment

"May It Please The Internet" is a podcast brought to you by: RevisionLegal.com

• Reps and Warranties

  • What are they – Promises

    • General overview

    • Walk through some examples

    • How people should be reviewing these

    • What happens if they are not true

      • Disclosure schedules!

        • What are these

        • How do they work

        • What do they look like

    • What happens if you breach these promises

      • Explain connection to indemnification

    • Fundamental v general reps

    • Baskets and caps

Parting Shot

• Get your operating agreement done. Do it. Make it a priority. You may not use it, but its nice to have something in place.

May It Please The Internet is a podcast brought to you by RevisionLegal.com

• Had a client ask me, will I win? And it just made me think about the incredible disconnect between what people think a lawsuit is about and what a lawsuit it really about.

• Basics of litigation – big picture

  • Long, slow, expensive

  • Not great way to solve a problem

  • Either a last resort or a problem so big that it cannot wait or injunctive relief

• Outside pressures play a big role

  • Loss of profits, waiting on money, financing, online listings, etc.

  • Personal or business decisions, selling the business, new projects, new hires, etc.

• Procedure

  • Complaint, summons

  • Answer/MTD

    • Creating factual issues good for P bad for D

  • Discovery

  • Summary J

  • Trial

• Collections

• So the question is not “will I win”

  • Its balancing all of these factors, determining whether it is worth the investment, the odds of success, the consequences of losing, peace of mind, loss of production, etc

May It Please The Internet is a podcast brought to you by: RevisionLegal.com

Last week, we covered the basics what exactly is an APA; how is it different than equity, the parties to the agreement, what you are selling, what you are not selling.

This week we want to talk about the fun stuff: Purchase Price and Closing

Purchase Price

• Different ways to describe it, one number, one number plus other payments later, a multiple of SDE, etc.

• Get into SDE in a bit

• First want to make sure you confirm the number is correct and when does it get paid

  • Escrow/release of escrow

• Deferred payments

  • Hold back

  • Deferred Payment

  • Stabilization payments

  • Earn Out Payments

• Other deferred payment issues

  • When are deferred payments made?

  • Performance based Earn out payments

    • What is the calculation

    • Are there caps on things like operational overhead?

    • Do you have access to books and records to confirm performance targets

  • Can these be used for set off?

Inventory Payment

• When is this paid

  • All types of options

    • Paid in full

    • % of estimate then true up

    • Consignment

• Inventory estimate/reconciliation process

  • Seller estimates pre closing

  • Buyer determines final post closing

  • Must have ability to object to post closing

  • When is reconciled amount paid

  • Net working capital adjustments

Parting Shot – If you are about to be in a lawsuit, or maybe in a lawsuit, don’t email everyone in the world about it. Those are all discoverable. If a lawsuit is possible, phone calls only. Limit emails to attorneys. Don’t forward your attorney’s emails to other people!

***May It Please The Internet is a podcast brought to you by RevisionLegal.com, lawyers who represent businesses who make money online.

• Opening: general chat about digital assets, how they can move, how they can be stolen, people forgetting bitcoin wallet passwords, etc.

• This used to be about domain name

  • Revision Legal past experience in litigating stolen domain name issues

    • ACPA/CFAA/UDRP

    • Damages

    • Procedure/Jurisdiction

• Continuing the NFT train – stolen NFT is the newest rage

  • Recent lawsuit – Armijo v OpenSea and Yuga Labs (BAYC) – District of NV

    • FACTS

      • Nov 2021, Jan 2022, P bought 3 BAYC/MAYC for total of about 80 ETH (about 300k)

      • Feb 2022, he wants to trade the MAYC for some “Cool Cats” NFTs

      • He goes on a discord channel and finds a willing trade partner

      • P alleges a third party trading service was needed to complete the trade, P wanted to use NFT Trader.io, other side agrees.

      • “A few minutes” after agreeing to the trade, the other side says he uploaded the Cool Cats to the website, and he just needs P to upload the MAYCs and complete the transaction. Other side sends P a link to the NFT Trader website.

      • P thought it was the real website, it wasn’t

      • He uploads, and clicks to approve the transfer, nothing happens, he clicks multiple times more, then he notices his ETH in his wallet is lower than expected, he checks the wallet, and BAYC and MAYC are gone.

      • Turns out the website was fake, every time he clicked to complete the transaction, he was allowing access to his wallet

      • He tries to tell Open Sea in order to prevent the re-sale, does the same on discord, reaches out to BAYC on discord, they tell him sorry and will try to help with Open Sea

      • 4 hours after they are stolen, they are all re-sold on open sea

      • It appears they were then later sold on LooksRare

      • New owners will not give them back unless they are paid what they lost

      • Complaint goes on to detail many other similar situations, complains of lack of gov regulations

    • CAUSES OF ACTION

      • Alleges OpenSeas grew too fast, not sufficient security protocols, same w LooksRare, says BAYC doesn’t do anything to prevent this

      • Negligence as to OS and LR – not maintaining the database for stolen items, not sufficient customer service

        • Points to media interviews about OS admitting they have an “obligation” as to security

      • Negligence as to BAYC – not monitoring the community for stolen items

      • Negligent supervision and training and negligent hiring as to OS and LR

• Discuss SIM SWAP cases

  • What is a sim swap

  • How do they happen

  • Causes of action

  • Arbitration

"May It Please The Internet" is a podcast brought to you by: RevisionLegal.com, lawyers who represent businesses who make money online.

Show Outline:

Part 1- Legal Stuff in the News/More lighthearted discussion – of course lots of NFT stuff

• Nike sues StockX for its Vault collection of NFTs relating to Nike shoes

  • Now there is another NFT project about the lawsuit

• Miramax sues Tarantino for NFT project re Pulp Fiction script.

• Jay Z sues Dam Dash

• Hitpiece NFT website

• Our own experience with NFTs

May It Please The Internet is a Podcast brought to you by Revision Legal. For more information visit RevisionLegal.com

• What is an APA, how is different than equity

  • Why APA over equity

  • Exceptions

  • Structure/format of an APA/length

  • How to review, where to start?

• The Parties

  • Individual liability – how does this work

  • Who is the buyer – subsidiary? Who is paying you on deferred payments

• The Assets

  • What are you selling,

    • Online accounts

    • Inventory

    • IP

    • Data/records

    • Domains

    • Social media

    • Causes of action

    • Contracts

    • Goodwill

  • What are you not selling

    • Cash

    • Money in amazon account

    • Certain contracts

    • Corporate records

    • anything specific

Parting Shot of Truth

• Getting settlements done – don’t change the terms mid-stream, it kills momentum and credibility

May It Please The Internet is a PODcast brought to you by Revision Legal. For more information and legal advice, visit RevisionLegal.com

Show Outline:

a. Take a hard look at your business, what is sloppy?

b. Getting books in order

i. Knowing your landed costs of inventory without question

1. Including any customs fees

ii. Document and organize loan documents, get a personal contact with the

lender if possible

iii. Clean up internal house – operating agreement, who owns your

business, who needs to approve the sale, etc

c. Independent contractor agreements

d. Supplier contracts

e. Registering and chronicling IP

i. Make sure right entity owns it

For more information visit: RevisionLegal.com