Business Transactions

Battle of the Forms: EULAs Versus Purchase Orders

I have negotiated dozens of licensing deals for clients who offer software, databases, and other intellectual property assets to their licensees.   After you spend substantial time and resources on protecting your rights and interests through a negotiated end user license agreement (often called a EULA), make sure you do not negate all those benefits by accepting an inconsistent purchase order.

Many purchase orders include up to a few pages of terms and conditions. While the other side may encourage you to view those few pages of language as irrelevant boilerplate, the language can become important.

 

How Your Business Plan Differs From Your Private Placement Memorandum

A business plan is your blueprint for building your business venture.  It explains the operational and marketing strategy for your business and lays out financial projections.  In addition to being your road map, the business plan hopefully motivates potential investors and lenders to finance you.

 

While the business plan is a planning and marketing document, a private placement memorandum (“PPM”) is a legal document used in a private placement offering.  The PPM’s primary legal purpose is ensuring compliance with federal and state securities disclosure and anti-fraud laws.  Compliance with those laws requires providing investors with accurate and complete information about the company.  The PPM is sometimes referred to as an offering memorandum or simply a disclosure statement.  A prospectus is the disclosure statement used in a public offering. 

 

 

Viacom/YouTube Lawsuit Illustrates Risk to VC Firms of Start-Ups with Questionable Business Models

In a recent step in its $1 billion lawsuit against YouTube, Viacom subpoenaed documentation from venture capitalists Sequoia Capital, Artis Capital Management and TriplePoint Capital. The three vc firms invested in YouTube in its start-up days and subsequently sold the company to Google.

 

In its lawsuit, Viacom claims that YouTube’s business model entails generating traffic and advertising revenue through copyrighted programming posted by YouTube visitors.  That copyrighted programming posted on YouTube includes many Viacom television shows such as The Colbert Report and South Park Viacom wants to review the venture capital documents to learn what motivated the vc firms to invest in YouTube and to review exactly how the fledgling YouTube described its business model to potential investors.

California Supreme Court Confirms That Non-Compete Agreements Are Invalid

It’s nothing new to learn that California does not hold non-compete agreements in high regard. Previously, some advocated the view that non-compete agreements were valid in California as long as any prohibitions on practicing one’s profession, business or trade are reasonable.

For example, while it might be reasonable to prohibit a former employee from soliciting work within a radius of fifty miles of the office for a one-year period, it’s probably not reasonable to prohibit a former employee from soliciting work anywhere in the United States for a five-year period. This “reasonableness threshold” is the law in many other states.

The California Supreme Court slammed the door on that view by confirming that non-competition agreements are invalid in California even if their prohibitions are narrow. The only exceptions are non-competition agreements in the sale or dissolution of a corporation, partnership, or limited liability companies

Background to Court’s Decision
The opinion comes from the case of Edwards vs. Arthur Andersen. Raymond Edwards worked as a certified public accountant in the Los Angeles office of the accounting firm Arthur Andersen LLP. Andersen required Edwards to sign a non-competition agreement which restricted Edwards from doing any of the following after leaving the firm:

Indie Video Game Developers Earn Through Licensing Deals

Traditionally, the video game industry has been comprised of large companies like Electronic Arts, Microsoft, and  Nintendo selling their multi-million dollar budgeted, blockbuster titles directly to consumers. The industry now includes more web-based, lower-budget, independent games which find sponsors and audiences through websites like Flashgamelicense.com, Kongregate, and Addicting Games.

The Wall Street Journal recently carried an article on the trend, "Notes From the Underground: Indie Videogames Come of Age", written by Christopher Lawton. Lawton's article includes an estimate of the independent video game market or casual game market being at $1 billion when you factor in revenue from advertising, downloads, and subscription fees.

The trend spawns a growth in transactions in which independent developers earn income by licensing their games to intermediaries and/or by sharing in advertising and premium sale revenue with those intermediaries. As a business and intellectual property attorney who has worked on many licensing deals, I offer some issues about revenue-sharing, representations, and exclusivity for the consideration of those negotiating such video game licensing transactions