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Medical Marijuana: State of Michigan Outlines New Procedures and Requirements for Medical Marijuana Facility Licensing

In less than a week, the state of Michigan will start accepting medical marijuana license applications. The Department of Licensing and Regulatory Affairs (LARA) released emergency rules on Monday, December 4, 2017, outlining procedures and requirements for potential licensees. The emergency rules are effective for at least the next six months, and could be extended for another six months as LARA continues the promulgation process for permanent rules.

Many of the items addressed in the rules have already been discussed by the Bureau of Medical Marihuana Regulation (BMMR) during licensing board meetings occurring earlier this year. Nevertheless, and by way of background, last year the state enacted its Medical Marijuana Facilities Licensing Act (MMFLA) to regulate dispensaries and clarify the legality of edible products in Michigan. The law allows licensed dispensaries to operate in communities that choose to allow them. Growers, processers, testing facilities, and transporters are also subject licensure and regulation under the act.

While the MMFLA took effect last year – December 20, 2016 — it included a built-in delay in implementation of 360 days to enable the state to establish the licensing system required by the Act. A person cannot apply to the state for a license of any kind under the MMFLA until Friday, December 15, 2017. And, no one can apply to the state for a license of any kind under the MMFLA unless the municipality where the person is located adopts an ordinance authorizing that type of facility.

Applying for a Medical Marijuana Facilities License

First and foremost under the newly released emergency rules, those seeking a license under the MMFLA will be able to submit applications on December 15, 2017. Applicants will have to pay a $6,000 fee per license application and undergo extensive background checks for anyone who has ownership interest. The background checks will include submitting fingerprints and a handwriting exemplar to the state.

The rules require licensee to meet certain capitalization requirements. The requirements range from $150,000 to $500,000. A retail operation — called a provisioning center – carries a $300,000 capitalization requirement, which must be proven through attested financial statements.

Only 25 percent of the capital required needs to be in liquid assets, cash or cash equivalents – easily converted to cash. Up to 15 ounces of usable marijuana or 72 marijuana plants may be used toward the capitalization requirements.

LARA has broad authority to deny a license. A licensee can be denied if an applicant fails to comply with the rules or if the applicant is operating a facility after December 15 without a license. That said, facilities that are operating in a municipality that has licensed them can operate after December 15, may be permitted to continue operations, but must submit documentation showing the local municipality allowed them to operate. The rules provide no mechanism to appeal an adverse licensing decision, or to contest the imposition of fines and penalties.

Currently operating facilities with municipal licensure must apply for a state license no later than February 15, 2018. If those facilities do not have a state license by June 15, 2018, their operation will be considered unlicensed activity and could be referred to law enforcement. Although the rules do not address the situation were licensure is not met by June 15 due to government delay.

Details on Licensing

Licenses will be up for renewal annually. Applicants and licensees will be required to report a variety of information to LARA, including changes of location, contact information, members, managers and adverse reactions to a medical marijuana product. Theft or other criminal activity on the premises will have to be reported to the department within 24 hours of occurrence.

LARA has sweeping authority to inspect, examine and audit records of the licensee and enter the facility without notice to inspect. The department is allowed to charge civil fines of up to $5,000 for an individual and $10,000 or an amount equal to daily gross receipts against a licensee for violations. Given the number and various requirements regarding inventory control and the specifications for the physical facility itself, the risk of fines and penalties is no insubstantial.

During the first 30 days a state-operating license is issued to a licensee, marijuana products will need be entered into a statewide monitoring system and inventory will need to be tagged and packaged.

Class C grower licenses, which would allow 1,500 plants, for example, may be stacked under the rules. And licensed growers, processors and provisioning centers will be permitted to operate at the same location.

Security Requirements for Marijuana Facilities

Applicants will be required to submit security plans. Facilities will be required to maintain an alarm system and a 24-hour video surveillance system. Licensed-facilities will also have to maintain visitor logs.

Advertising Stipulations for Marijuana Facilities

Licensees will not be permitted to advertise any marijuana products in a way that is visible to the general public. However, that does not apply to advertisements that are not about a specific product.

Products also will be prohibited from being marketed toward minors, and edible products cannot be associated with cartoons or other things that would appeal to minors. Edible products also cannot be easily confused with commercially sold candy.

Federal Regulation of Marijuana Facilities

Of course, while specified medical use of marijuana is permitted under state law, its use is still illegal under federal law, and we don’t know for sure what the federal government will do in the future with regard to these specified uses. The status quo is that federal attention is diverted away from uses that are “authorized” by and operated in compliance with state laws. Attorney General Jeff Sessions, however, has made his view clear: “Good people don’t smoke marijuana.” On the other hand, the industry seems to be growing at a pace that exceeds the federal government’s ability (time and resources) to do much about it.

Fraser Trebilcock understands the regulatory aspects of the marijuana industry along with the legal risks. Our attorneys are available to advise you on issues related to state law and compliance.

Fraser Trebilcock attorney Michael P. Donnelly has years of experience handling matters ranging from major insurance fraud to intellectual property disputes. He formerly served three years as the President of Fraser Trebilcock and is currently the Managing Partner of the Detroit office. He can be contacted at 313.965.4968 or mdonnelly@fraserlawfirm.com.

Fraser Trebilcock attorney Paul V. McCord has more than 20 years of tax litigation experience, including serving as a clerk on the U.S. Tax Court and as a judge of the Michigan Tax Tribunal. Paul has represented clients before the IRS, Michigan Department of Treasury, other state revenue departments and local units of government. He can be contacted at 517.377.0861 or pmccord@fraserlawfirm.com.

LegalZoom vs. a Lawyer for Protecting Intellectual Property

You have already taken a step in the right direction by knowing that you need to protect your invention, brand or other original works with a patent, trademark, or copyright, respectively. But, what are the most cost effective, efficient and proactive steps to take when the time comes to protect your intellectual property? Over the last decade or so, a variety of online legal services have popped up, promoting themselves as easy-to-use and inexpensive when compared to a typical intellectual property attorney.

One of the most common and highly promoted online entities is LegalZoom. It purports that the party seeking protection, typically the owner of the intellectual property, may easily download the necessary paperwork based upon the menu items or checklist items selected within its website. LegalZoom advertises a base starting price of $99 that increases with nearly each selection you make on the website. Your documents are not reviewed by an attorney and you are responsible for completing and filing the items on your own.

With that low of an entry price point, it can be very tempting to “do it yourself” (DIY) instead of hiring a professional intellectual property attorney. As you may suspect – BUYER BEWARE! Costs can and often do increase wildly during the filing process – and there’s no one to help you guarantee that you’re filing the right forms, filling them out correctly, or even meeting the basic requirements of the U.S. Patent and Trademark Office or U.S. Copyright Office. Accordingly, we’ve put together three key things to consider before moving forward with a DIY approach to intellectual property protection.

Researching Trademark and Patent Needs

It can take hours to fully research which materials you need based upon the property you are trying to protect. This type of process is not typical for people outside of the legal profession, and although some websites will provide you with the documents they feel you need, the system is not foolproof. One key consideration when comparing LegalZoom vs. a lawyer is that an intellectual property attorney will know exactly what steps need to be completed for your specific situation, no matter how simple or complex.

It is important to note that the “complexities” do not lie solely in filling out the paperwork or checking the correct boxes on the LegalZoom website. Trademarks, for example, should broadly and accurately cover the goods and services that a company currently makes or plans to make within the next five years. Too often, trademark applications are prepared with a narrow or inaccurate scope regarding the goods and services of the company. This may result in less than intended coverage, which in turn may require that additional trademark applications be filed. Or worse, it may leave the door open for a competitor to usurp your mark for goods and services that should have been covered in your trademark application.

As for patent applications, it may seem like straightforward process to write up a description of your invention, add a few images to support your description, and file it using LegalZoom. However, the chance of a DIY patent application making it through the examination phase at the U.S. Patent and Trademark Office is virtually zero. On the off chance that the examination process is navigated successfully, the odds of that DIY patent actually becoming a valuable, enforceable asset are even closer to zero. Patents are documents that live for 20 years, they must be addressed to a variety of audiences, they must be written for a person of ordinary skill in the art, which is legalese that a DIY software program cannot explain, they must flow from general to specific, they should not contain absolute terms or non-working examples that could invalidate the patent, and they must include well drafted patent claims.

Patent claims are the heart and soul of a patent application. They provide the legal boundaries that define your invention, which means, if properly drafted, they provide a protected space that keeps competitors from designing around your invention.

Filing the Correct Paperwork

After you have found the documents you think you need to file, you now need to complete the proper paperwork. Each document needs to be completed correctly, and will be closely scrutinized upon receipt by the U.S. Patent and Trademark Office or US. Copyright Office. If there is ANY discrepancy, your request will be denied – often without any opportunity to remedy the alleged defects. If you are still so inclined, you will then need to repeat the process, including obtaining and completing the proper paperwork and paying more fees. An experienced intellectual property lawyer will guide you through the entire process, handle all the necessary paperwork and communication with the respective Office, and help you obtain strong and broad coverage for your intellectual property.

Potential Intellectual Property Liability in the Future

Assuming that you overcome the odds to have your patent or trademark application filed, examined and approved, the work is still not finished. A competitor may move to cancel your trademark or invalidate your patent, among many other tactics. At that time, having the correct items and a legal professional who knows your business is more critical than ever. In these stressful circumstances, it is much more beneficial to have an IP attorney who understands your business and product fully and one who can assist you from the beginning to avoid many potential pitfalls down the road. When considering a DIY entity such as LegalZoom, you should be extremely careful not to be taken in by the attractive entry costs because, in the end, you always get what you pay for. Your IP attorney will be able to counsel you about and through the process all while ensuring you are set up to succeed.

Although it may seem like a substantial cost savings in the beginning, your business and its intellectual property assets are too important to rely on the lowest bidder. If you’re considering LegalZoom vs. a lawyer, contact our attorneys now and we will provide you with an initial consultation to help you understand the importance of strong IP assets and how we can help your business be successful from its early beginnings to many years of successful growth.

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A Look at The Senate Tax Reform Bill

Fraser Trebilcock continues to monitor the tax reform plans moving through the House and Senate. As we mentioned in our last post, the various proposals are a bit of a moving target and are in at state of flux. On November 9, the Senate Finance Committee released its “policy highlights” outlining their goals for tax reform. The Senate framework has many proposals which are similar to the House bill released on November 2, but it also has a number of significant differences. On November 13, the Senate Finance Committee began its markup of its version of the Tax Cuts and Jobs Act, a summary of which was released last Friday and summarized below. Members of the senate Finance Committee have thus far filed 355 amendments.

Meanwhile the House Ways and Means Committee voted out its markup which makes a number of changes to the House Bill originally introduced. The House Rules Committee is scheduled to meet on Wednesday, November 15, on that version of the House Bill approved by the Ways and Means Committee. A floor vote is expected on Thursday, November 16.

The Senate anticipating to vote on their version as early as the week following Thanksgiving. After that, it is expected that the bills will head to a marathon conference in the first two weeks of December with at vote in both houses by the third week of December with final legislation being presented to the President’s signature by Christmas. Below is a summary of the Senate Bill, with the differences noted between the completing bills noted appropriately.

Individual Provision

New individual income tax rates. The Senate plan provides a reformed tax rate structure of 6 rates verse the 4 in the House Bill. The Senate plan maintains the 10% bracket and provides a 38.5% bracket for high-income earners.
Standard deduction increased. The Senate plan would increase the standard deduction to $24,000 for joint returns and surviving spouses, $18,000 for single parents, and $12,000 for individuals. This is up from $12,700, $9,300, and $6,350 under current law.
Child tax credit. The Senate plan would expand the child tax credit from $1,000 to $1,650 and substantially lift existing caps.
State and local tax deduction. The Senate plan would repeal in full the deduction for State and local taxes. The House plan, in contrast, retains the state and local property tax deduction up to $10,000.
Retained credits & deductions. The Senate plan retains many current law provisions that have been potentially targeted for repeal in the House bill, including:

- the child and dependent care credit;
- the adoption credit (although this has been restored);
- the deduction for charitable contributions;
- the deduction for medical expenses;
- the enhanced standard deduction for the blind and elderly;
- provisions that provide “education relief for graduate students”;
- the home mortgage interest deduction, preserved for existing mortgages and maintained for newly purchased homes up to $1 million;
- the earned income tax credit; and
- retirement savings programs including 401(k)s and IRAs.
Alternative minimum tax. Like the House plan, the Senate plan proposes to repeal the Alternative Minimum Tax.
Estate tax. Unlike the House bill, the estate tax itself would not be repealed but instead, the current exemption would be doubled.

Business Provisions

New corporate tax rate. The Senate plan would permanently lower the corporate tax rate to 20%. However, unlike the House bill, this reduction reportedly wouldn’t go into effect until 2019.
Deduction for pass-through businesses. The Senate plan would establish a “simple and easy-to-administer deduction for pass-through businesses of all sizes.”
Expensing. The Senate plan would allow for full and immediate expensing of new equipment. Unlike the House bill, which generally allowed for full expensing for five years, this provision would be permanent.
Enhanced cash accounting. Under the Senate plan, more businesses would be allowed to use the cash-basis accounting method.
Retained credits and deductions. The Senate plan would retain many current law provisions that have been potentially targeted for repeal, including:

- the low-income housing credit;
- the research and development credit; and
- the interest deduction for “Main Street employers.”

International Provisions

Shift to territorial system. The Senate plan would eliminate the current “worldwide” system of U.S. taxation and change to a territorial system.
Repatriation. The Senate plan would eliminate the “lock-out effect” by making it “simpler and less onerous for American multinationals to bring foreign earnings back to America.”

Also yesterday the House Ways and Means Committee reported out it’s Bill after amendments. The changes bring the cost of the legislation down to the $1.5 trillion revenue loss that was agreed to in the budget. Among the key changes are:

Individual Provisions

New rate for certain small business income. The original Bill contained a new 25% maximum rate on business income of individuals who are active partners or S corporation shareholders. This provision has now been eliminated. The amended Bill now provides a new a 9% tax rate, in lieu of the ordinary 12% tax rate, for the first $75,000 ($37,500 for single filers and $56,250 for heads of household filers) in net business taxable income of an active owner or shareholder earning less than $150,000 in taxable income ($75,00 for single filers and $112,500 for heads of household filers) through a pass-through business, such as an LLC or S corporation. This new 9% rate is to be phased in over five years.
Restores and preserves the adoption credit.
Moving expenses deduction for service members. The amended Bill preserves the above-the-line deduction for moving expenses of a member of the Armed Forces on active duty.
Certain rollover from 529 plans. Rollovers between qualified tuition programs and ABLE programs (ABLE Accounts, which are tax-advantaged savings accounts for individuals with disabilities and their families). This new provision would allow rollovers from section 529 plans to ABLE programs.

Business Provisions

Limitation on lowered corporate tax rate. The original House bill provided for lower corporate tax rates. This amendment lowers the 80% dividends received deduction to 65% and the 70% dividends received deduction to 50%, and thus preserves the higher current law effective tax rates on income from such dividends.
Easing of limit on reduction of business interest. Under the original House Bill, every business was to be subject to a disallowance of a deduction for net interest expense in excess of 30% of the business’s adjusted taxable income. That provision has been eased for taxpayers that paid or accrued interest on “floor plan financing indebtedness”.
Modification of treatment of S corporation conversions into C corporations. This new provision provides that distributions from an “eligible terminated S corporation” would be treated as paid from its accumulated adjustments account and from its earnings and profits on a pro-rata basis.
Amortization of certain research and experimentation expenditures. The amended Bill provides that certain research or experimental expenditures are required to be capitalized and amortized over a 5-year period (15 years in the case of expenditures attributable to research conducted outside the U.S.).
Preserves the current rules regarding nonqualified deferred compensation. The original House Bill tightened up rules regarding nonqualified deferred compensation. The Bill reported out yesterday strikes this provision, so that the current-law tax treatment of nonqualified deferred compensation is preserved.
Change in the treatment of restricted stock units. The House bill, would have given certain employees of nonpublic companies who receive stock options or restricted stock, an election to defer income recognition for up to five years. As amended, restricted stock units are not eligible section 83 treatment except as provided in new section 83(i).

House Tax Reform Bill: A Look at How It Breaks Down

UPDATE: (November 14, 2017) A Look at The Senate Tax Reform Bill

On November 2, 2017, House Ways and Means Committee introduced the much anticipated House Tax Reform Bill – The Tax Cuts and Jobs Act. The bill is 429 pages, so it will take some time to completely digest and analyze all of the provisions. The scope of the proposed changes is very broad and the task is more difficult as various provisions are a moving target, since the House Ways and Means Committee’s markup began Monday, November 6th. The Senate Finance Committee, the Senate counterpart to the House Ways and Means Committee, is expected to release its version of the tax bill the week of Nov. 13th. The Administration has expressed its desire to sign tax legislation by Christmas.

If the Bill becomes law, it will mark the most significant change to the Tax Code in over 30 years. The bill generally would apply to taxable years beginning after December 31, 2017. Here is an overview of key provisions:

Business Provisions

Corporate tax rate. Lowers the corporate tax rate to 20% – down from 35%
Pass-through rate. Sets a top 25% rate for owners who are active participants in pass-through businesses such as sole-proprietorships, S corporations and partnerships. The plan includes complicated guardrails that limit people from turning what would otherwise be wage income taxed at up to 39.6% into business income taxed at a lower rate (presumptively set at 30% — 0% for service-related businesses) of their business income.
Immediate expensing of business investment. Allows businesses to immediately write off the full cost of new equipment instead of depreciating it over a number of years.
Net Operating Losses. Establishes an indefinite carryforward (and no carryback) for net operating losses (“NOL”) but also caps the NOL deduction at an amount equal to 90% of taxable income (as computed without the NOL deduction).
LITC. Retains the low-income housing tax credit.
R&D. Preserves the Research & Development Tax Credit.
Interest deduction. Limits the business interest expense deduction, capping it at 30% of earnings before interest, taxes, depreciation and amortization, which is a measure of cash flow. Real estate firms and small businesses would be exempt from that limit.
Limits executive compensation deduction. Publicly traded businesses would lose the ability to deduct certain executive compensation above $1 million, which they can now do for performance-based pay.
Nonqualified Deferred Compensation. Nonqualified deferred compensation, stock options, and stock appreciation rights would be subject to immediate taxation upon “vesting,” which (in many cases) might also be triggered more quickly.
Limits like-kind exchanges. Limits §1031 like-kind property exchanges to real propert
Repeals the following:
- Corporate Alternative Minimum Tax
- Entertainment expense and certain fringe benefits deductions
- Technical terminations of partnerships
- New market tax credit
- Exclusion from income of §118 contributions to capital

International Provisions

Repatriation tax rate. Creates a one-time 12% tax on offshore earnings held as cash or cash equivalents and a 5% tax on noncash assets, payable over up to eight years, whether or not the earnings are repatriated.
Controlled Foreign Corporations. Creates a new 10% tax on US companies’ high-profit foreign subsidiaries, calculated on a global basis.
Territorial Tax System. Establishes territorial taxation with a 100% exemption for domestic corporations on dividends from certain foreign subsidiaries.

Tax-Exempt Entities

Sports stadium financing. Eliminates tax-exempt bond treatment for professional stadiums.
Executive Compensation. Establishes 20% excise tax on compensation paid in excess of $1 million to an executive of a tax-exempt organization.
Excise tax on private college endowments. Imposes a 1.4% excise tax on net investment income of private colleges and universities if the aggregate fair market value of assets is at least $100,000 per student.
Permissible political activity. Establishes rule that churches and religious organizations will not lose exempt status or be deemed to have intervened in any political campaign on behalf of a candidate as a result of the content of any sermon, teaching or presentation.

Individual Provisions

Reduces the number of individual tax rates as follows:
- 12%: Applies to incomes from $0 up to $45,000 for individuals and $90,000 for couples.
- 25%: Applies to incomes up to $200,000 for individuals and $260,000 for couples.
- 35%: Applies to incomes up to $500,000 for individuals and $1 million for couples.
- For single parents that are heads of households, the thresholds would be the midpoint between individuals and joint filers, except for the highest bracket which would still kick in at $500,000.
- 39.6%: Applies to incomes over $500,000 for individuals and couples making more than $1 million a year.

A larger standard deduction. The standard deduction for all taxes would increase to $12,000 for individuals (up from $6,350) and $24,000 for couples (up from $12,700). The benefit is offset, however, since the Bill eliminates the personal exemption and various secondary deductions.
Expands child tax credit. The Bill proposes to increase the child tax credit to $1,600, up from $1,000, for any child under 17. But the Bill also limits the refundability of this credit. The $600 increase in the credit is, however, not refundable. Further, the Bill will let more people claim the child tax credit. The income level where the credit starts to be phased out is increased to $115,000 for single parents, up from $75,000 today, and to $230,000 for married parents, up from $110,000.
Creates two new family credits. The Bill would create two different $300 tax credits.
Credit for non-child dependents. Credit for nonchild dependents — for instance, any son or daughter over 17 whom you are supporting, an ailing elderly mother or an adult child with a disability. The credit is equal to $300 per individual.
Spousal Credit. A $300 credit for each spouse if they file jointly (or, in the case of single parents, the head of household).

These credits are in effect only for 5 years and would not be refundable.

Charitable contributions. The Bill continues the deduction for charitable contributions.
Retains the earned income tax credit. Provides tax relief for low-income Americans.
No changes to 401(k) plans. Retains retirement savings options such as 401(k)s and IRAs.
No repeal of Affordable Care Act’s individual mandate.
Limits the home-mortgage interest deduction. Retains the home mortgage interest deduction for existing mortgages but limits the home mortgage interest deduction for newly purchased homes for mortgages up $500,000.
SALT Deduction. Limits the state and local tax deduction to local property taxes up to $10,000 but eliminates the deduction for state income and sales taxes.
Patents and inventions. Adds patents and inventions to the list of assets that are not treated as capital assets.
Eliminates personal exemptions. The Bill eliminates the personal exemption of $4,050 for you, your spouse and each of your dependents.
Removes most personal itemized deductions. The only deduction preserved explicitly is for charitable gifts and edited home-mortgage interest and SALT deductions. Eliminated itemized deductions include:
- Student-loan-interest deduction.

- Medical expense deduction.
- Moving expense deduction.
- Alimony payments.
Repeals the adoption tax credit. Repeals the tax credit for adoption.
Eliminates the exclusion for dependent care assistance accounts. Some employers provide parents the opportunity to save up to $5,000 of their income in a dependent care flexible spending account. That money is excluded from the parent’s taxable income. The Bill would repeal that exclusion.
Removes the deductions for MSA’s. Deductions for contributions to Medical Savings Accounts (“MSAs”) and exclusion from income for contributions of employers to MSAs are eliminated under the Bill.
Repeals the estate tax. Under current law, the threshold for the tax, which applies only to estates with greater than $5.6 million in assets during 2018, would double to over $10 million. Then, the tax would be phased out after six years.

How Trademarks, Copyrights, and Patents Protect your Business

Your intellectual assets are some of the most powerful resources your business has. These assets separate your business from your competition and make you unique – as long as they are protected. Trademarks, copyrights, and patents are methods of protecting your intangibles while publicly providing notice to other businesses or individuals to avoid copying or infringing on your intellectual property rights. But when do you need these protections? How do you get them? And what are they for?

Trademarks

What is a trademark?

Trademarks are exclusive legal protections for names, logos, sounds, and even colors as applied to a category of goods or services. Federally registered trademarks may not be used by others without your permission. Trademark owners do have a legal obligation to police their marks and provide notice to anyone that may be inadvertently or willfully using the mark without permission. Trademarks can be renewed indefinitely as long as the owner can show proof that the mark has been continually used in commerce.

What is a trademark for?

Trademarks operate to distinguish your business, build consumer goodwill and solidify your reputation as a source for the goods or services. In most cases, a trademark is a distinctive word, phrase, logo or design that is associated with or applied to a category of goods or services. Trademarks should not be merely descriptive of the goods or services and generic terms are expressly banned from trademark protection (e.g., such as the term “Supermarket” as applied to a grocery store).

Trademarks must not be confusingly similar to another company’s mark otherwise the U.S. Trademark Office will reject the mark or the opposing owner may proactively move to cancel your mark. For example, the Nike name and Swoosh logo are federally registered trademarks. Trademarks may often be referred to as service marks when applied solely to services such as the NBC tri-tone sound or United Airline’s “Fly the Friendly Skies” slogan. If you are in the business of providing goods or services, then it is strongly recommended that you consult with an intellectual property lawyer to get the best protection in a timely manner.

How do I get a trademark?

For the most part, trademark rights vest upon usage of the mark in interstate commerce (e.g., across state lines). When you select a distinctive mark for your business, you are legally considered the owner of an unregistered trademark under common law trademark law (i.e., limited protections vis-à-vis a federally registered trademark). During this initial use and while your trademark application is being examined by the U.S. Trademark Office, you may use the ™ symbol to provide public notice that you are claiming ownership rights in the mark. The ™ symbol does not have any legal significance and is simply used as a public notification tool. Your ability to halt an infringing action, obtain an injunction or obtain money damages is limited when the mark is an unregistered trademark. Therefore, it is strongly recommended that you take the necessary steps to federally register your trademark with the U.S. Patent and Trademark Office. Once registered, you may use the ® symbol and be entitled to a full range of legal protections for your mark.

When should I get a trademark?

If you are consistently using a non-generic name, logo, or other symbol, you already have an unregistered trademark. This shows your customers that it is yours. To prevent another company from using the goodwill associated with your business – or, worse, tainting your business reputation with low-quality products – you should register your mark with the U.S. Patent and Trademark Office as soon as you have finalized the word, phrase, logo and/or design.

Copyright

What is copyright?

Copyright is the exclusive legal protection that covers an original work of authorship. Copyrights vest upon creation of the work, which means placing the work onto a tangible medium (e.g., applying paint to a canvas or words to a screenplay). Stated otherwise, a copyrighted work must be more than an idea – the idea of painting a scenic mountain is not protectable until one applies the paint to the canvas. A copyright owner holds to right to prevent others from copying, reproducing, displaying or making derivative works unless they expressly provide their permission for such use. A derivative work, for example, would be making a movie based on a book. Copyright protections are not indefinite; most protections last the length of the author’s life plus 70 years. For example, the author of the book Dracula died in 1912, so the copyright protection ended in 1982 and the work entered the public domain, which means it can be freely reproduced and distributed by anyone.

What is copyright for?

Original works are copyrightable materials. “Original” simply means that there must be some modicum of creativity that distinguishes the work from others. Books and e-books, magazine or newspaper articles, software, paintings, music, plays, some websites, and movies, among other things fall under purview of copyright protection. Historical and scientific facts, recipes, ideas, domain names, surnames, inventions, methods, and events are examples where copyright protection would not be appropriate; although some of these things may be protected under trademark or patent law.

How do I copyright my work?

As noted above, copyrights vest upon creation of the work, even if it isn’t published. Similar to trademark law, it can be difficult to enforce your copyright if the work is not registered with the U.S. Copyright Office. In most cases, a copyright application entails a downloadable form, a fee, and a copy of the work submitted to the U.S. Copyright Office. The review process takes about four months to possibly one year. Registering your work with the U.S. Copyright Office is definitely a good idea and it is recommended that you have an intellectual property attorney at least do a cursory review of your copyright application prior to submission. If your work is plagiarized, improperly displayed or illicitly distributed then having a registered copyright will strengthen your position in the event you decide to take legal action and file an infringement lawsuit.

Patent

What is a patent?

A patent is a legal monopoly for protecting a utilitarian device, system, machine, composition or process. A patent owner has the right to prevent others from making, using, selling or importing a protected invention for a limited time. Utility patents have a term of 20 years and design patents have a term of 14 years from the date of filing.

What is a patent for?

Design patents protect the aesthetic or ornamental, non-functional aspects of a utilitarian object. Utility patents protect useful devices, systems, machines, processes, and compositions of matter that, upon examination by the U.S. Patent and Trademark Office, are verifiably shown to be new and non-obvious. Almost any product, from Tupperware to iPhones to Vicodin, can be (and often are) patented.

How do I get a patent?

The initial process for obtaining a patent is to prepare and file a patent application with the U.S. Patent and Trademark Office. It is important to realize that a patent is powerful asset that must be written with a variety of audiences in mind (e.g., inventor, investor, licensor, patent examiner, judge, jury, etc.) while meeting a plethora of complex and sometimes arcane rules of the U.S. Patent and Trademark Office. Once a patent application has been filed, a patent examiner will perform a patentability search and determine whether the patent application meets the various standards such as novelty and non-obviousness. The patent owner may publicly assert that the invention is “patent pending” as soon as the U.S. Patent and Trademark Office provides a filing receipt, which typically takes a few minutes if the patent application is filed electronically. The U.S. Patent and Trademark Office has a stated goal of examining a patent application and providing a final disposition within about 36 months, but it is not uncommon for the examination process to take longer. If the patent application successfully makes it through the examination process, the U.S. Patent and Trademark Office will grant an official patent number and the owner will then have a legally enforceable asset.

When should I file a patent?

The U.S. is a “first-to-file” system, so it is imperative that an inventor keep the details of their invention confidential until a patent application has been filed. Also, timing is of the essence to prevent a competitor from winning the race to the Patent Office. The basic requirement to prepare and file a patent application is that the inventor must be able to describe, in sufficient detail, how to make and use the invention to one of “ordinary skill in the art,” which typically means a person versed in the industry to which the invention pertains. For example, technical and industry terms may not need to be defined if such terms are commonly known among those skilled in the art. Further, a prototype of the invention is not necessary nor does the U.S. Patent and Trademark Office required an inventor to perform a patentability search before filing. As soon as you have the aforementioned information, you should contact a registered patent attorney or agent to begin the process. Remember, confidentiality and timely filing are two primary keys to obtaining patent protection for your invention. In view of the complexities of the patent process, retaining an intellectual property lawyer is a vital step to obtaining strong patent protection in an efficient and timely manner.

Whether you are seeking trademark, patent or copyright protection, make sure to document the process carefully, and seek legal advice. The wrong protection or a badly conducted filing can make you vulnerable to legal loopholes or unnecessary rejections from the U.S. Patent and Trademark Office. With the right intellectual property protections in place, your business will be able to thrive and grow while keeping your competition at arms length.

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Are your U.S. Savings Bonds Still Earning Interest?

Many U.S. Saving Bonds no longer earn interest. It may be time to cash them in and start making money again. It’s important to find out how much your bonds are worth, and when they will stop earning interest. In addition to checking a bond’s maturity date, it is also very important to carefully review the designated owner of your bonds. Has the owner died? Is the owner a trustee of a trust that was terminated? Should you name a beneficiary on your bonds to avoid probate? Information and many of these questions are answered at www.savingsbonds.gov; or, call us for help with the trickier aspects of managing your U.S. Savings Bonds.

For further information on this and related matters, contact attorney Marlaine C. Teahan, chair of Fraser Trebilcock’s Trusts and Estates Department. Marlaine can be reached at 517.377.0869 or mteahan@fraserlawfirm.com.

Intellectual Property Due Diligence in Anticipation of a Sale or Purchase of an Organization

Is your business anticipating an upcoming merger or acquisition? If so, you will be facing a number of upcoming due diligence responsibilities such as, but not limited to, financial stability, asset valuation, contractual obligations, employee benefits arrangements, ownership rights, licenses, and numerous other matters. However, one incredibly important due diligence item that cannot be forgotten is that involving intellectual property (IP).

IP due diligence generally takes the form of an inventory or audit to assess the quantity and the quality of IP assets owned by, or licensed to, a company, business, or individual. The due diligence process should also include an assessment of how IP is captured, protected, and owned by the business and an analysis of relevant competitors.

Typically, the due diligence process is carried out by a prospective purchaser in relation to the IP assets of a target business. However, IP due diligence can also be carried out by a company on its own IP assets in preparation for a transaction, such as a business sale or a major licensing deal.

Below is a non-exhaustive list of the primary activities that should carried out during the IP due diligence process. As the process unfolds, it may be necessary to drill down into one or more of the assets, especially if the asset is related to a core technology of the business.

Document retention and proactive steps as viewed from the IP owner’s perspective:

Identify the key personnel and consultants who are in any way involved with the IP.
Create and maintain a list of all of the patents and patent applications in the U.S. and any foreign country or region.
Create and maintain a list of all of the trademarks and trademark applications in the U.S. and any foreign country or region.
Create and maintain a list of all domain names and registrations of the business.
Create and maintain a list of all copyright registrations and applications and includes a list of copyrightable material that has not yet been registered by the U.S. Copyright Office.
Create and maintain a list of all contracts and agreements relating to patents, trademarks, trade names, brand names, copyrights, inventions, processes, know-how, trade secrets, or other IP, including licenses, royalty agreements, confidentiality agreements, and other agreements or arrangements to which the business is a party relating to any IP of the business or of any other entity.
Using proprietary protections, create and maintain a list of all legal opinions and search reports.
Create and maintain a list of all software products and licenses produced by or acquired by the business, other than software used for word processing and other general office functions and administration. Obtain all public domain, open source, copyright or community source code materials used, or planned to be used.
Summarize all products and services sold or planned to be sold by the business. Such a summary should include the dates of first commercial sale for all products and services currently being sold as well as any future commercial launch dates.
Identify and list any security interests taken against any of the IP.
Identify any pending, threatened, or past challenges to the IP or right to use its IP and/or products and/or services.
Identify and list the main competitors in the US and elsewhere.

Typical review and analysis steps as viewed from the IP lawyer’s perspective:

Review any employment or other contracts for the key personnel and consultants to determine ownership, assignment obligations and fiduciary duties. Such a review may include employment and/or consulting agreements, including any agreements with prior employer(s), as applicable. Importantly, this review should also include agreements and communications between founders to ascertain any fiduciary obligations that may impact ownership of the IP.
For patents and patent applications, review and analyze the scope and strength thereof to include, but not limited to, ownership, licenses, and the prosecution history of each such patent and patent application.
Review the material trade secrets of the business vis-à-vis the patent portfolio.
For trademarks and trademark applications, review and analyze the commercial usage, mark strength, coverage and status, licenses, renewal documents, and the prosecution history of each such trademark or trademark application.
Compare domain names to trademark list to ensure continuity and proper association.
Perform at least a cursory review of all copyrights and copyright registrations of the business.
Review all contracts and agreements relating to patents, trademarks, trade names, brand names, copyrights, inventions, processes, know-how, trade secrets, or other IP, including licenses, royalty agreements, and other agreements or arrangements to which the business is a party relating to any IP of the business or of any other entity.
Review all legal opinions rendered on the IP of the business, such as, but not limited to, all patentability, freedom-to-operate, infringement, validity and registrability matters conducted or commissioned by the business or by another on behalf of the business.
Look at any software products produced by or acquired by the business, other than software used for word processing and other general office functions and administration. Obtain all public domain, open source, copyright or community source code materials used, or planned to be used, by the business.
Perform at least a cursory review of all software products and licenses.
Perform a comparative review of products and services sold or planning to be sold with the IP portfolio and ensure that IP protection adequately precedes commercial launch dates, trade shows, and advertisement campaigns.
Review any security interests taken against any of the IP.
Analyze the scope and relevance of any pending, threatened, or past challenges to the IP of or right to use its IP and/or products and/or services.
Perform a cursory review of the IP owned by the main competitors in the US and elsewhere for potential monetization opportunities and to better asses the valuation of the IP assets.

These issues provide a starting point for any business that is considering a merger or acquisition in the near future and beyond. If you have specific legal questions for your business with regard to the quantity and quality of your IP, we can help. Our attorneys are experienced in all aspects of intellectual property law and business law.

This blog serves solely as a general summary of complex intellectual property issues surrounding mergers and acquisitions. It does not constitute legal guidance. Please contact us with any questions related to your company’s intellectual property or that involving a potential upcoming business sale or purchase.

CLIENT ALERT: New Corporations Online Filing System Launches Monday, October 30, 2017 in Michigan

On Monday, October 30^th, the Department of Licensing and Regulatory Affairs (LARA) will launch a new Corporations Online Filing System (COFS) for Michigan businesses. This system will allow businesses to submit documents and annual filings, pay filing fees, and order certificate, and will replace the MICH-ELF system. The service also features an expanded search function.

Michigan Businesses Will Be Assigned New ID Numbers for COFS

Businesses will be assigned new entity identification numbers to use when submitting documents. These numbers have been mailed to all resident agents of Michigan business entities. It is important that resident agents save this information. It includes log-in instructions, the new entity identification number, as well as a customer identification number and PIN, which will be used as a username and password to log into new system.

It is important to note that business taxpayer identification number(s) used by the Michigan Department of Treasury and federal Internal Revenue Service (IRS) will remain unchanged.

If you have any questions, LARA has provided a detailed guide online at the Corporations Division website. Anyone needing further assistance can reach out to the Corporations Division during extended help hours, from Monday, October 30^th to Thursday, November 9^th from 8:00 a.m. to 6:00 p.m. EST.

Learn more about the new system from LARA: New Corporations Online Filing System (COFS) Cuts Red Tape for 800,000+ Businesses in Michigan.

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NEW VIDEO: Understanding Eminent Domain Law

Our country has a rich history surrounding eminent domain – from the brick and mortar that built its foundation – to modern-day infrastructure projects like roads, airports, and bridges. Even our Founding Fathers understood the great impact this would have on private landowners as well as the condemning agencies.

“Interestingly, condemnation law was so critical that the Founding Fathers put it right in the Constitution,” said Mark Bush, eminent domain attorney at Fraser Trebilcock. “Without it, roads, bridges, highways, airports, and virtually all other aspects of the critical infrastructure we use daily would not have been possible.”

For more than 30 years, Fraser Trebilcock attorneys have successfully worked with clients to improve, protect, and defend properties of all shapes and sizes, in a broad range of projects that include: petroleum pipelines, highway construction, airport expansion, county roads, drains, water and sewer projects, and more.

“As a result of that work, I’ve actually represented both condemning agencies and landowners in a multitude of public improvement projects,” said attorney Kirby Albright. “The eminent domain area has very unique procedural requirements and any client that’s affected by the eminent domain process it’s imperative that they have knowledgeable and experienced counsel to help them navigate that procedural process.”

This video gives an interesting look back at the history of eminent domain law in the U.S. and some of the cases we have handled.

Mark A. Bush is a veteran litigator and trial specialist with over three decades of hard-earned experience handling cases ranging from condemnation to wrongful death and catastrophic injury. Contact him for more information on this matter at 517.377.0815 or mbush@fraserlawfirm.com.

H. Kirby Albright has amassed a wide range of litigation experience over the last 30 years, including successful representation of clients on both sides of eminent domain law. He has been elected by his fellow shareholders to serve on the Fraser Trebilcock Board of Directors. Contact Kirby for more information on this matter at 517.267.0538 or kalbright@fraserlawfirm.com.

7 Tips About Data Breach Prevention and Cybersecurity for Small Businesses

We see it in the news on a regular basis. Major corporations like Anthem, eBay, Sony Pictures, and Target have all suffered major data security breaches. But these breaches don’t only happen to major businesses. Companies of all sizes are targets. Sometimes, smaller companies are even bigger targets because protections may be lax.

So how do businesses of all sizes go about data breach prevention and cyber security? Here are seven tips to strengthen your business against a data breach.

1. Train employees and users on data breach prevention

Human error is often to blame for most breaches. The easiest way for a hacker to invade your network is by preying on an employee who doesn’t recognize the risk. Whether through a malware email attachment, or by downloading a document from an unreliable resource, there is a wide variety of easy phishing attempts that can lead to a data breach. The key to prevention is teaching your employees how to avoid making these common mistakes. Also, include a technology protocol section in your employee handbook where your team can easily access it. This section should cover proper steps to take to protect your technology, especially anything that could be considered a trade secret, or private customer/client information and data.

2. Store customer data in an encrypted database

Another tip for data breach prevention is to use a secure database and encrypt any items containing customer/client information or trade secrets. The encryption process converts that information or data into a code, which then works to prevent unauthorized access. A common example of this process is the one used when you make an online purchase. Once you enter your payment information onto an ecommerce website and it has been approved, your information is encrypted before it is stored on the website. When you later go back to the website to make another purchase from your account, your information is ready to use.

3. Improve cybersecurity with two-factor authentication

Two-factor authentication adds an extra layer of protection to logging into a website. After a user inputs the required login and password, an extra step is initiated to ask the user for another piece of information that only he or she would have. For example, a text message with a one-time code may be sent to the user’s phone, which is tied to the account. Two-factor authentication is very important for data breach prevention if your business has devices that go in and out of the office, such as tablets or laptops, making sure they are secure in the event they become lost or stolen.

4. Malware detection software on both servers and workstations

Each workstation inside your business, as well any servers, need to have malware detection software installed to help with data breach prevention. The detection software prevents malware from being installed. Malware can be hidden in a variety of formats, the detection software helps scan each item to ensure its safety. There are a variety of different software packages available for businesses, depending on the level of security needed.

5. Perform regular vulnerability checks

It’s critical that you perform regular vulnerability checks to minimize the risk and prevent data breaches. For example, it’s important that firewall configurations be reviewed regularly with penetration testing, to make sure only trusted networks are given access. Software updates may also vary with your malware protection software. There are programs that can run regular checks, or you can look to a third-party IT company for assistance. It’s also important that you continue to test and train employees through phishing emails to ensure they stay vigilant.

6. Require frequent remote data backups

Whether routinely completed on the cloud or on an external hard drive, remote data backups ensure that your data is stored securely. A routine backup allows you to have a reference point if your data is breached in the future. Most backup providers allow you to pick the frequency of the backup, time of day it occurs, and what level of information detail you would like to store.

7. Have a disaster plan ready in case of a data breach

Protecting your business against a data breach is an ongoing process. Under the Michigan Identity Theft Protection Act, in the event of a data breach that is likely to cause harm or result in identify theft, a business must provide a notice of the security breach to each affected Michigan resident, customers and vendors affected by the breach, as well as consumer reporting agencies. Keep in mind, the notifications must be precise and meet certain statutory requirements.

Unfortunately, even with planning, a cyberattack can still happen. Be prepared by having a disaster plan ready, and be sure to include the proper steps for employees to take both during and after an attack. Review the plan as an internal team frequently to ensure that everyone has a clear understanding of timelines and responsibilities. Time is of the essence during a data breach, and having a disaster plan prepared will make that stressful time more efficient.

To learn more, contact an attorney at Fraser Trebilcock at 517.482.5800 or by clicking here to fill out this form on our website.

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A critical overview of laws and regulations governing businesses of all sizes.

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