Author: Chris Swiecicki

by Chris Swiecicki

Is There a Statute of Limitations on Patent Infringement?

Does your business have a patent that another company has infringed upon? Or are you being blamed for stealing someone else’s idea or product? In either case, you may be wondering how long you have to take legal action. 

I myself have been co-counsel on a patent-infringement case having to do with a piece of technology (a parking app, to be precise). That said, it’s important to state: Handling a patent issue is something that should be done by someone admitted to the patent bar. So, if pursuing a patent case, make sure you have a patent attorney on board first.

While I am not a patent attorney myself, there is some readily available information that patent attorneys will commonly share with potential clients. This includes crucial information on the statute of limitations for patent infringement cases—and the timeframe you actually have for bringing forward a case.

The Ins and Outs of Patent Infringement

Patents are issued by the U.S. government to protect the invention or technology of an individual or business. When someone legally obtains a patent, they have the right to “exclude others from making, using, offering for sale, or selling the invention throughout the United States or importing the invention into the United States” (35 U.S.C. §154)—at least for a set period of time.

Two types of patents offer intellectual property protection. Design patents cover an object’s design or unique appearance, and last for 15 years. Utility patents cover unique machines, processes, or chemicals. These patents last for 20 years.

An invention does not need to be completed in order to be protected. During the process of making it, inventors can apply for a provisional patent for one year, which means it’s in the “patent pending” phase. This gives developers time to refine details and determine if there is a market for their product while letting others know that their idea is in the works and that it can’t be copied.

After the provisional patent has expired, the owner can either move on with their invention and file for a non-provisional (permanent) patent or allow it to lapse altogether. After that time, competitors can file for a patent using that same idea. 

What is Patent Infringement?

Patent infringement happens when someone copies a patented idea to create a product without the patent holder’s permission. “Stealing from” a patented product can happen in a number of ways:

Direct Infringement 

Producing, using, selling or attempting to sell, or importing a patented item without first obtaining a license from the patent holder.

Indirect Infringement

Infringing on a patent, but doing so only after another company or individual has done so. For instance, if another business copies a patented product, and you distribute their product, you could be sued for patent infringement. 

Contributory Infringement

When an individual or company purchases or imports a part that goes into creating a product that’s already patented by someone else. 

Willful Infringement

When someone shows blatant disregard for the patent. For example, if someone else’s patented product is found within your business where you are making a similar product, you are willfully violating their patent.

Induced Infringement 

Aiding another infringer by providing parts or assisting in the manufacturing of the patented item.

Not all cases of patent infringement call for legal help. Sometimes, a patent holder who is aware of someone using their product can inform the offending party and ask them to stop. If that doesn’t work, it may require business litigation where a patent attorney steps in. 

The Statute of Limitations on Patent Infringement

In the United States, the statute of limitations for patent infringement is six years. This means from the time a person who has a patent learns that someone is using their idea, they have six years to file a lawsuit. Each year, about 5,000 patent infringement cases are filed, and 97% of them are settled outside of court. 

After six years have passed, the patent holder cannot take legal action or collect financial damages. This is why it’s so important to contact a patent attorney as soon as one knows their idea is being stolen (unless they’ve successfully asked the accused to stop). 

Defenses to Patent Infringement

From what other patent attorneys have confided in me, there is a range of cases of patent infringement, with different sorts of difficulties involved. In some cases, proving someone is using a patented idea is easy. But in more difficult situations, a lawyer must carefully formulate a plan to defend the accused. These means that there is no simple “cookie cutter” defense to be had.

However, some common defenses a lawyer might use in patent infringement cases are: 

Non-Infringement

In simple terms, the product or process in question is not the same as the patented one.

Invalidity

The patent is invalid and should have never been approved, because another invention like it already existed prior to the patent, or it provides an obvious solution to a simple problem. 

Inequitable Conduct

The patent owner misled the examiner, withheld important information, or was dishonest. This defense also aims to prove the patent is not valid. 

First Sale Doctrine

The person accused of infringement is reselling an item that was legally sold to them. 

Licensing

The patent holder granted permission for the accused to use the patent, and that person used the invention in compliance with that permission.

Estoppel 

One of two forms of this defense may be used. File Wrapper Estoppel claims the inventor waived rights or admitted to limitations of rights in their patent application. Equitable Estoppel means the patent holder led the accused to believe the patent would not be enforced and allowed them to continue with the project.

Experimental Use

A patented invention can sometimes be used if related to the development of information. This exception is often granted to universities in their research.

Protecting Yourself From Patent Infringement 

The easiest way to avoid being charged with taking someone else’s invention is to research existing patents before beginning production. The Patent Public Search Tool on the U.S. Patent Office’s website (USPTO) lists products that are already patented. If a developer finds a similar invention listed but is unclear whether further development of the product would lead to patent infringement, an intellectual property attorney can identify the risks.   

Being found guilty of patent infringement can come with millions of dollars in fines, plus any accrued royalties. It is well worth the investment of hiring an attorney to avoid those costs.

On the flip side, if a business or product knows of someone who has violated their patent, they must take legal action immediately. Under the statute of limitations for patent infringement, there are six years to file a lawsuit. Waiting any longer could mean watching someone else profit from years of the originator’s hard work. A successful lawsuit will not only stop the infringement but could result in significant financial compensation.

To Patent Infringement Attorneys: It Pays to Have Someone Who Knows Business

Patent cases need to be handled primarily by an attorney admitted to the patent bar, of course. But these cases can get complicated, and it helps to have co-counsel with someone who understands the business contexts of these kinds of cases. This is especially true when technology is involved.

At our firm, we have extensive experience with business litigation, as well as with contract negotiation and corporate transactions. This means that we can put a patent infringement case within its broader context—for example, if a patent is in dispute after a merger, or as part of an employment contract.

So, if you are a patent attorney seeking co-counsel for a business case of patent infringement, we would be happy to help—just reach out.

by Chris Swiecicki

What Happens When Labor Union Contract Negotiations Break Down?

From time to time, contract negotiations stall between small businesses and their union employees. This scenario can seem daunting for businesses relying heavily on union labor, especially if they are trying to handle negotiations without an employment lawyer. 

Employment lawyers help business owners make informed, rational decisions. They explain their rights and responsibilities under federal labor laws and prepare them for the possibility of a strike.

Stay Calm During Contract Negotiations

If negotiations break down, it is essential to stay calm. This may be easier said than done, but remember, there are ways to manage the situation and the goal is to bring the other party back to the table. It is not uncommon for negotiations to hit a few bumps in the road and it is important not to let these setbacks derail the entire process.

Mediation and Arbitration in Labor Union Negotiations

One option to consider if negotiations stall is mediation. This involves bringing in an impartial third party to help facilitate discussions and work toward a resolution. If mediation does not work, a company might consider arbitration. In this process, a third party makes a decision that is usually binding on both sides. Both options can help break the deadlock and move the negotiations forward.

Strike Management During Labor Union Negotiations

When negotiations break down, one of the most significant concerns for business owners is the possibility of a strike. Strikes can disrupt their business operations, impact their bottom line, and strain relationships within their workforce. However, understanding the nature of strikes and how to manage them effectively can significantly mitigate these challenges.

Types of Strikes

A strike occurs when workers collectively decide to stop working to protest against terms of employment, such as wages, working conditions, or other contractual stipulations. Strikes are a powerful tool in the labor union’s arsenal, directly impacting the company’s ability to operate normally.

However, not all strikes are the same. The nature, legality, and impact of a strike can vary depending on several factors:

Authorized Strikes: These are strikes that the union has officially approved following a vote by its members. They are typically organized and coordinated, with clear objectives and demands.

Wildcat Strikes: These are spontaneous strikes that occur without the official authorization of the union. They can be unpredictable and challenging to manage and are frequently the result of worker dissatisfaction. Wildcat strikes can be illegal, especially if they violate the terms of the existing labor contract.

Sympathy Strikes: These occur when workers strike in support of another group of workers who are striking against their employer. This type of strike can extend the impact of a labor dispute beyond the immediate parties involved.

Economic Strikes: These strikes occur due to disputes over wages, benefits, working conditions, or other economic factors. Economic strikes are generally legal, provided they adhere to specific rules and regulations.

Unfair Labor Practice Strikes: These occur in response to an employer’s alleged violation of labor laws or regulations. These strikes can happen anytime and are not limited by an existing contract.

Managing Strikes

Effective strike management is crucial to companies to minimize disruption to their business and work toward a resolution. Here are some strategies to consider:

Preparation: Anticipate a strike and have a contingency plan. This could involve training management and non-union employees to take over essential roles or hiring temporary workers to maintain operations.

Communication: Maintain open communication lines with the union representatives and their employees. Transparency about their position and willingness to negotiate can help to de-escalate tensions.

Legal Counsel: Ensure access to experienced legal counsel to advise executives on their rights and responsibilities during a strike and to help navigate labor laws and regulations.

Negotiation: Continue contract negotiations during a strike. The aim is to reach a resolution that satisfies both parties and ends the strike as soon as possible.

Maintaining Order: In the event of a strike, it is important to ensure the safety and security of all parties involved. This might include coordinating with local law enforcement or private security to manage picket lines and maintain order.

Remember, strikes are a symptom of underlying issues in the negotiation process. While managing a strike effectively is important, the ultimate goal should be to address these issues and reach a fair and sustainable agreement with the union.

Contract Negotiations: Getting Back to the Bargaining Table

Ultimately, the goal is to get back to the bargaining table. Employment lawyers help guide the contract negotiations toward a resolution that is in everyone’s best interests. It is essential to approach these discussions with an open mind and a willingness to compromise. Remember, the goal is not to “win” the negotiations but to reach a fair and sustainable agreement for both sides.

After all, while a breakdown in labor union contract negotiations can be challenging, businesses navigate this process successfully with the proper legal counsel, a calm demeanor, and a commitment to finding a resolution. Remember, the goal is not to defeat the union but to work with them to agree upon a contract that benefits everyone involved.

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by Chris Swiecicki

How Long Does the Average M&A Deal Take?

Mergers and Acquisitions (M&A) are complex business transactions that can significantly impact companies, industries, and even whole economies. They involve the combination of two or more companies, either through a merger (the coming together of equals) or an acquisition (one company purchasing another).

Business owners, even though they are aware of the complexity of such deals, are often still surprised at how long the M&A process takes. So how long does the average M&A deal take? While the average timeline is between six and twelve months, various factors influence the timeline of M&A transactions, so the average might not be as informative as knowing what the milestones are, and what to expect along the way.

What Can Affect M&A Timelines?

On average, Mergers and Acquisitions deals typically take several months to complete, ranging from six to twelve months or longer. Smaller transactions involving private companies may close more quickly, while larger deals with significant complexities and hurdles can take several years. Timelines depend on several factors:

Deal Complexity: Complex deals with numerous subsidiaries, international operations, or regulatory challenges tend to take longer to complete.

Due Diligence: The depth and breadth of due diligence (a process that allows the buyer to confirm pertinent information about the seller, such as contracts, finances, and customers) can significantly impact the timeline. Investigations into financials, legal matters, operations, and culture may turn into an extensive process.

Negotiations: The negotiation phase, including price, terms, and conditions, can vary in length. Contentious negotiations may extend the timeline.

Financing: Securing financing, whether through equity, debt, or a combination, can be a lengthy process that impacts deal closure.

Integration Planning: Planning the integration of two companies requires careful consideration of various factors, and this phase may begin before the deal closes. Extensive integration planning can add time to the process.

Cultural Alignment: Achieving alignment between the cultures of merging companies can be a time-consuming effort. Cultural differences may require additional attention and resources.

Unforeseen Challenges: Unexpected obstacles, such as legal disputes, unexpected financial issues, or changes in market conditions, can prolong the deal timeline.

Steps in the M&A Process 

The typical M&A deal flow consists of strategy, transaction, and implementation phases. Here is a more thorough breakdown of these phases:

Strategy Development/Planning

Define the strategic objectives and rationale for the deal. Essentially, the merger process commences when a company opts to acquire another. A company assesses the advantages of merging with another entity and identifies the potential benefits it stands to gain from the acquisition. This evaluation necessitates a thorough examination of its own operations as well.

Due Diligence

Upon acceptance of the offer, the due diligence phase begins. This comprehensive examination encompasses all financial facets, including balance sheets, ratios, personnel, clientele, supply chains, market presence, operational protocols, and beyond. This in-depth assessment of the target company is used to identify any prospective issues associated with the business.

Negotiation/Merger Agreement

Finalize the terms and conditions of the deal. After an acquiring company identifies its merger need, conducts searches for suitable target firms, selects a compatible candidate, and assesses its value, the formal merger process commences when one company extends an offer to another. Typically, this initiates confidential deliberations between both parties regarding the proposed merger. While initial agreements may arise from the first offer, negotiations typically entail multiple offers and prolonged discussions, often spanning several months.

Closing 

Sign the final agreements and complete the transaction. If the buyer remains interested in pursuing the acquisition, both parties typically outline the specifics of their transaction, including all terms and conditions. This may include discussions regarding the final purchase price, as well as the particulars of warranties, indemnities, and any restrictions. These negotiated terms are then incorporated into either a Share Purchase Agreement (SPA) or an Assets Purchase Agreement (APA), depending on whether the transaction involves the acquisition of shares or the entire business.

Integration 

Execute the integration plan to merge the two companies successfully. It is common for the Share Purchase Agreement (SPA) or Assets Purchase Agreement (APA) to incorporate clauses that become operative after the closing, including additional responsibilities to be fulfilled by both parties. These may include finalizing the transfer of extra assets, securing consents, or entering into supplementary contracts.

In addition to addressing these post-closing affairs, the parties may also consider a post-closing integration process. This exercise aims to merge the two companies or businesses successfully.

Ensure a Successful M&A Deal

The duration of an M&A deal can vary widely, depending on numerous factors. While the average timeline falls within the range of six to twelve months, it’s crucial to recognize that each transaction is unique. Successful M&A deals require careful planning, diligence, and a willingness to adapt to unforeseen challenges. Understanding the potential variables that can affect the timeline can be complicated. Contact Swiecicki & Muskett to help you navigate the complexities of M&A transactions with greater clarity and confidence.

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by Chris Swiecicki

Three Kinds of Conflicts Where a Corporate Lawyer is Essential

“Corporate law” is a broad category involving all legal issues of establishing, managing, and operating a corporate entity. But at the same time, it is a highly specialized area of practice. Out of the 1.3 million attorneys in the American Bar Association, less than 15,000 are classified as corporate lawyers. Within this group, there are specialties within the specialty. For example, an attorney might focus their practice on a niche such as mergers and acquisitions or intellectual property.

So what is corporate law, exactly? At its core, the discipline is about business relationships and the contracts that define them. What does a corporate lawyer do? While the job description can cover a lot of ground, in essence, they advise companies on their legal rights and responsibilities in regard to those contractual relationships.

What Is Corporate Law?

The basis of all corporate law lies in mandatory and default provisions that create a framework for how every corporation operates. Mandatory rules are non-negotiable and all corporations must conform. Default rules are exactly that: the practice that is followed unless the parties forming the company provide an alternative way of doing things. Default provisions can not, of course, violate federal, state, or local laws. 

For example, a commonly accepted practice is that a merger can be approved by a majority vote of all outstanding shares. A corporation can opt instead to require 60%, 75%, or some other amount. 

An example of a mandatory provision is the rule that all publicly traded companies must provide regular detailed financials in a prescribed format. It is not something a corporation can avoid.

These new rules are spelled out in a corporate charter, also known as articles of incorporation. Articles of incorporation are fundamentally a contract between the company, its shareholders, and the incorporating state.

What does a corporate lawyer do to help with these issues? They can assist with corporate governance, which is the system of rules, processes, and practices that guide a company. They iron out the details and spell out exactly how the business will be structured and operated. 

In creating this framework, corporate lawyers anticipate the conflicts that may arise among the various stakeholders. They can then ensure that the corporate charter is clear and fair to all parties involved.

The Three Relationships That Result in Corporate Conflict

While a corporate entity can be seen as having a single goal, the corporate structure includes stakeholders with conflicting interests in the business. For example, a company might have managers whose main focus is productivity and efficiency. Meanwhile, the company’s employees value good working conditions, fair pay, and generous benefits. Creditors want to be paid in full and on time. And shareholders hope for ever-increasing profits. 

All of these objectives can define a successful company. But few corporations can accomplish all of these things without a push and pull between stakeholders. It is the job of a corporate attorney to interpret corporate law and help the business resolve these conflicts when they arise. 

It’s worth noting that corporate lawyers are not on the side of the shareholders or the employees. Instead, they represent the corporate entity itself. They handle these three common conflicts with the best interests of the company in mind.

1. Managers vs. Shareholders

Shareholders of any company are by nature concerned with the return on their investment, and associated tax implications. This is sometimes at odds with corporate management who may be willing to sacrifice some short-term profits in favor of growing the business or maintaining its competitive edge. 

For example, the management team at a manufacturing company may be in favor of a large capital investment in new automated technology. The price tag is high and it could take two to three years before its full benefit is felt in the bottom line. The shareholders are not willing to see their dividends suffer and are against the purchase.

A corporate lawyer can help negotiate the dispute between the two groups and help them come to an agreement that will be in the best interests of the company.  

2. Controlling vs. Minority shareholders

Companies with majority shareholders and minority shareholders can be prone to conflict. Not only do minority shareholders have less control than those with controlling interest, nor do they have the protection of a contract like employees, vendors, or creditors do. 

In one notable case (Halpin v Riverstone National, Inc.) minority shareholders won a class action lawsuit against majority shareholders who voted to proceed with a merger without including the minorities in the vote.

The remedy for this would have been to include explicit provisions in a company’s articles of incorporation. Corporate law is generally written to add protections by either empowering minority parties or limiting the advantages given to majority shareholders. For example, minority shareholders might be given special voting powers, reserving a certain number of seats on the board for them, or assigning veto powers or key committee roles. 

When the rules are broken, or if there is no specific language addressing a situation, litigation may be necessary.

3. Shareholders vs. Non-Shareholders

There are several groups of stakeholders who are not shareholders. These parties include employees, vendors, creditors, and even the community where the corporation does business. The nature of these parties’ roles with the company can be a source of conflict with shareholders.

A good example of this is a case brought against IBM by its employees in the early 2000s. Lou Gerstner was credited with rescuing IBM with massive layoffs and overhauling its pension plan to help cut costs. Not only were shareholders thrilled, but Gerstner walked away from the job in 2002 with an annual salary of over $1.5 million and a pension of more than $1.1 million. 

When an executive’s compensation comes at the expense of its employees, it is a clear conflict of interest. The employees won the case and the company agreed to pay $320 million in a settlement to current and former employees. 

While this is an extreme case, corporate law deals with any conflict between a company’s stakeholders. The law lays out the rules for all to follow and corporate lawyers interpret the law so the parties can come to a consensus that benefits the wellbeing of the business as a whole.

A Corporate Lawyer is an Asset

Whether a company is big enough to employ in-house counsel or an entire legal department or is small and just needs occasional legal advice, finding an experienced attorney is a must.  

These legal professionals are indispensable when drawing up a corporate charter and deciding on issues of corporate governance. Once a company is established, they can advise on all contractual and legal matters involving the various stakeholders, and resolve conflicts as they arise.

The firm of Swiecicki & Muskett Attorneys at Law has extensive experience in corporate law, particularly in the areas of compliance and taxation. Contact Christopher Swiecicki to discuss your company’s needs.

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by Chris Swiecicki

Potential Tax Implications of Employment Settlements

Employee settlements are a fact of life for many businesses. The tax implications of those settlements, however, are too often an afterthought. Both parties involved should know the potential tax implications of employment settlements—understanding the tax treatment of settlement payments, their deductibility, and any reporting requirements can help both sides maximize benefits and avoid unnecessary taxes and penalties.

Understanding the Tax Treatment of Employment Settlement Payments

The tax treatment of an employment settlement largely depends on the origin and nature of the claims involved. For instance, if the claimant is suing for wages, the settlement recovery will be treated as wages. This means the amount received will be subject to the same tax considerations as regular income.

The IRS considers all payments for employment claims, including those allocated explicitly to attorneys’ fees, as part of the claimant’s income. This is a crucial point to note as it means that, even if the payment is made directly to the attorney, it will still be considered income for the claimant.

However, certain exceptions exist. For example, the IRS has ruled that payments for attorneys’ fees in specific class action lawsuits aren’t included in class members’ income where there’s no contractual agreement between the members and counsel. Similarly, the IRS has ruled that amounts representing attorneys’ fees paid to settle a lawsuit brought by a union against an employer to enforce a collective bargaining agreement aren’t included in the union members’ income.

Exclusions From Income

There are certain circumstances under which portions of these settlements could be excluded from a claimant’s taxable income. For example, a business owner paying the settlement might wonder whether paying out the settlement is something they can write off at tax time.

Under Internal Revenue Code Section 104, amounts paid to compensate for these damages are generally excluded from income. This type of damages isn’t subject to income tax, which can significantly reduce the claimant’s tax liability.

Like the cost of other business expenses, like equipment and travel, the costs from defending a lawsuit are usually considered costs incurred as part of doing business and are, therefore, tax deductible.

Similarly, if a claim involves a physical injury sustained at the workplace, compensation for that injury could be excluded from income. Regardless of the exact circumstances, the goal is to structure the settlement in the most tax-advantageous way possible. 

It’s important to note that these claims aren’t common in employment cases, typically involving wages, discrimination, or wrongful termination disputes. However, the potential tax savings can be significant when they do occur.

Moreover, applying these tax considerations can be complex and depends on each case’s specific facts and circumstances. Therefore, it’s crucial to consult with a tax professional or an attorney knowledgeable about these issues when negotiating and drafting employment settlement agreements.

Deductibility of Attorneys’ Fees

The tax considerations of an employment settlement don’t only concern the income received from the settlement; they also involve the expenses incurred during the process, such as attorneys’ fees. 

The claimant will generally be taxed on the entire settlement amount, including any portion paid directly to the attorney as fees. However, the Internal Revenue Code provides relief under Section 62(a)(20). Claimants are typically entitled to deduct attorney’s fees incurred in claims for unlawful discrimination and many other employment-related claims. These are “above-the-line” deductions taken directly from your gross income.

An “above-the-line” deduction is particularly beneficial because it reduces your adjusted gross income (AGI), which can potentially qualify you for other tax benefits. This differs from “below-the-line” deductions, which are taken from your AGI and subject to various limitations.

Suppose the attorneys’ fees aren’t deductible above the line. In that case, they may still be deductible as a miscellaneous itemized deduction on Schedule A. However, these deductions come with their own set of restrictions. For instance, they are only allowable to the extent they exceed 2 percent of adjusted gross income. Additionally, such deductions aren’t allowable for Alternative Minimum Tax purposes.

It’s important to note that the ability to deduct attorneys’ fees can significantly offset the tax burden of the settlement amount. This is a critical factor to consider when negotiating the settlement and determining the net benefit of any potential settlement amount.

Taxable Wages and Employment Taxes

All settlement payments regarding claims for severance pay, back pay, and front pay are considered wages for employment tax purposes. This means these amounts are subject to the same taxes as regular wages, including Social Security and Medicare.

The IRS asserts that attorneys’ fees for wage claims are wages subject to employment taxes unless the settlement agreement expressly provides an allocation for attorney’s fees. This can have significant implications for the overall tax liability of the settlement and should be carefully considered when drafting the settlement agreement.

Reporting Requirements for Settlement Payments

The tax implications of an employment settlement don’t end with the payment of the settlement amount. There are also important reporting requirements that both parties must adhere to to remain compliant with IRS regulations.

Employers, in particular, bear a significant portion of this responsibility. They’re generally required to file information returns for payments made on behalf of another person. This includes the entire settlement amount, even the portion paid directly to the attorney as fees. 

The total amount must be reported as paid to the claimant, regardless of how the payment is divided. This can be done using Forms W-2, 1099-MISC, or both, depending on the nature of the payments. For instance, if the settlement includes back wages, those amounts would be reported on a Form W-2. In contrast, other compensatory damages might be reported on Form 1099-MISC.

Failure to properly report these payments can result in significant penalties. Therefore, employers must understand these requirements and accurately report all settlement payments. As always, when dealing with complex tax matters, it’s advisable to consult with a tax attorney.

Proper evaluation of both the income and employment tax aspects of settlements and the correct reporting of settlement payments is critical to obtaining the best possible result. Failure to properly file a required information return or timely furnish the payee(s) with a correct Form W-2 and/or 1099-MISC may result in a penalty equal to 10 percent of the settlement amount. Therefore, it’s crucial to look before you leap and consider all tax implications before settling employment matters.

As a business law firm, we’re here to guide you through these complex processes and help ensure your business transition is as smooth and advantageous as possible. Contact us to discuss your options with confidence.

 

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by Chris Swiecicki

What is Patent Infringement? And Can it Apply to Apps?

In today’s smart-phone driven world, mobile applications are part of everyday life. Apps are everywhere, enhancing our productivity, communication, and entertainment. For app developers coming up with the next big idea that will disrupt a particular industry, it’s understandable to be protective of their creation and its underlying technology. 

Everyone working in the tech world needs to understand the legal landscape around this type of intellectual property. Just like any invention, software and mobile apps can be patented. Patents safeguard intellectual property and give patent holders a definition of what is patent infringement for an app. On the other hand, anyone building apps needs to be careful not to infringe on someone else’s patent—and should be aware of the potential consequences of doing so.

But before getting into those details, I should note here: Handling a patent issue is something that should be done by someone admitted to the patent bar. If you are pursuing a patent case, make sure you have a patent attorney on board first.

While I am not a patent attorney myself, I have been co-counsel for a patent case for an app, and so I’ve seen firsthand the kinds of information that patent attorneys will commonly share with potential clients. What follows is a brief overview for those pursuing this route. (And if you are a patent attorney looking for co-counsel with business experience, I would be delighted to help with your case!)

The Basics of Patent Protection

Patents are issued by the U.S. government and are covered by intellectual property law. A patent grants an inventor—or in this case a software developer—the exclusive right to make or sell their invention for a set period of time. 

Copyrights and trademarks are also intellectual property, but are different from patents. Copyrights cover individual written works of authorship. Trademarks protect branding for goods and services. 

What is patent infringement? It is using someone else’s idea, either by accident or intentionally, to create your own product or app. A patent by itself does not prevent this from happening. It does, however, give the patent holder the right to make you stop. For a patent holder, this could be as easy as informing the offending party that what they are doing is patent infringement. Other cases may call for business litigation involving patent attorneys. 

Getting a Patent For an App

Obtaining a patent for an app follows the same guidelines as any other invention. Applicants must prove that their product is new and unique. Software and mobile apps must provide a novel technical solution to a technical problem. You can not patent abstract ideas or obvious solutions that anyone else in the industry might come up with.

While the methods and processes of app technology are patentable, the underlying code is not. Computer code can, however, be copyrighted. Depending on the nature and technology used to create an app, it might benefit a creator to get both a copyright and a patent.

But is a patent really necessary? That depends. The process of getting a patent is time-consuming and expensive. Developers must decide if the app has the potential to become popular enough to justify not only the cost of the patent but of marketing the product to the public. And it is important to note: The patent application process requires the developer to publish the details of the app. If the application is denied, or if the patent lapses (more on that later), the technology is fair game for a competitor.  

The return on investment, and the risk, might not be enough for an individual entrepreneur unless the app is truly unique and marketable. It is best to consult with a patent attorney who can advise on whether it makes sense to pursue a patent. 

What is Patent Infringement For an App?

Patent infringement for an app involves copying and profiting from its methods and processes without the patent holder’s permission.

Once they have a patent, the developer can sell the app (and its patent). Or they may grant permission to use it for a fee by licensing it. Meanwhile, it is the patent holder’s responsibility to determine if patent infringement has occurred. They can seek damages in such cases with the help of a patent attorney.

As mentioned above, the law firm of Swiecicki and Muskett is involved in one such case. The firm, along with another attorney, is representing Gil Bashani, owner of a company called Parking World Wide, in a lawsuit against the City of St. Louis. Bashani owns the patent on a system that determines if a parking space is occupied by someone who hasn’t paid. The app then sends an alert to a parking attendant or law enforcement. The suit alleges that the City’s mobile parking system called ParkLouie uses Bashani’s technology.

This case has yet to go to trial, but is a good example of what is patent infringement for an app. If it can be proven that ParkLouie is using and monetizing Parking World Wide’s processes, the City could be liable for damages.

Obtaining a Patent For an App

Again, any patent attorney will tell you that an app is only patentable if it solves a technical problem with a new and unique technical solution. But how does someone know what is new and what is a patent infringement of an existing idea?

Developers can start by using the Patent Public Search Tool on the U.S. Patent Office’s website (USPTO). This will find apps that are already patented with the same or substantially similar technology. A patent attorney can help with this, and the application process.

There are two types of patents protecting different aspects of an invention:

• Utility patents are granted for unique machines, chemicals, or processes and last for 20 years.
• Design patents protect an object’s unique appearance or design for 15 years.

Apps typically have utility patents, as they are concerned with the technological processes and methods of the software.

Assuming the app is unique, inventors can apply for either a provisional or non-provisional patent. We’ve all heard the phrase “patent pending,” which means there is a provisional patent. Provisional patents last for one year. During that time, developers can refine the details of their product and determine if there is a market for it. 

At the end of 12 months, they can either apply for a provisional patent or let the non-provisional patent lapse. Other companies and competitors could then file for their own patents using the same ideas. Remember, part of the patent application process is making the information available for public viewing. 

Protection From Patent Infringement—Is it Worth It?

The process of patenting an app takes anywhere from two to five years. Provisional patents cost between $2,000 and $5,000. Non-provisional patents range from $10,000 to $15,000. In addition, there are annual fees to maintain and keep the patent. Plus, it is up to the owner of the patent to discover instances of infringement. And if they uncover illegal use of their ideas, the business litigation fees to seek damages are their responsibility. 

That said, successfully suing for patent infringement for an app means collecting damages and forcing the infringement to stop. For an app that is truly innovative and likely to disrupt the industry, getting a patent is well worth the effort. 

If you are an app developer who is wondering whether your idea is unique, or if you have an app that you’re considering patenting, the best thing to do is consult with an attorney who has been admitted to the patent bar. They can advise from there.

In the meantime, if you yourself are a patent attorney trying to get your head around a case involving an app, we would love to help out, and perhaps even be co-counsel on the case. Swiecicki & Muskett has extensive experience with business litigation and business law which can be invaluable in such cases. Contact us today to see whether we would be a good fit.

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by Chris Swiecicki

7 Tips for Preparing for Contract Negotiations

Running a business involves managing risk in many forms, from economic downturns to severe weather. One risk has more influence over a company’s success than any other: how well its leaders manage contract negotiations.  

Without skilled, experienced leaders at the table, businesses may suffer financially in employee contract negotiations. They also may settle for less in deals with business partners, or pay too much when buying or renting property.   

Many companies minimize risk by engaging an attorney for contract negotiations. Attorneys help businesses with large and small deals, from vendor agreements to merger contracts. When companies follow their attorney’s advice on how to prepare for contract negotiations, they are in a much better position to achieve their goals. 

Advice from a St. Louis Attorney for Contract Negotiations 

Tennis great Arthur Ashe said, “One important key to success is self-confidence. An important key to self-confidence is preparation.” Business leaders who spend time preparing for contract negotiations are more confident at the negotiating table. 

Our firm helps clients gain confidence before negotiations. Here are the steps we recommend for maximizing returns and minimizing risk in contract negotiations:

1. Research the other party. Read the company’s website and news articles about it. Search for news of earlier deals and try to glean the terms of the deal. You want to understand the company’s financial position or time constraints on reaching an agreement. This information will help you negotiate from a place of power—one in which you are confident and able to predict how the other party will react to your actions.   
2. Create and share a draft contract. If your business is making the proposal, develop a baseline draft of the contract, then share it with the other party.  The baseline draft includes the most important terms of the agreement, what your company is willing to accept, and room for writing in changes. Present the draft to everyone who will be at the negotiating table in plenty of time for them to review it.  
3. Break up complicated negotiations. Large companies often face contract negotiations that go on for days. If you expect a long, tedious, process, think about breaking up the negotiations into several components, then agree upon the terms of each part separately. This will reduce stress and fatigue for both parties, resulting in better decision-making and ultimately, better results. 
4. Prioritize objectives. Decide on which objectives to focus on before contract negotiations begin, using the SMART goal format to put parameters on the goals. Objectives may include your bargaining range with an optimum number, as well as minimum and target goals. The optimum number is where you want to start negotiations. The minimum is the least you will accept, and if the other party does not offer it, your company will walk away. Hitting the target goal is the objective of the contract negotiations.   
5. Decide which terms are non-negotiable. Meet with your team and agree upon what must be in the contract. Then, when you arrive at the negotiating table, firmly tell the other party about your non-negotiables.  
6. Determine concessions. Contract negotiations usually include one party offering the other a concession, or trade-off. Negotiators need to know beforehand how to proceed when the other party offers a concession and what trade-offs their own party will offer. Concessions must be managed carefully during the negotiation. By deciding the concessions to offer and accept beforehand, you are decreasing the likelihood of a hasty decision that hurts your position.  
7. Set your intention for a win-win outcome. There are several styles of negotiating. We recommend the style focused on win-win results because they get better results and lay the foundation for more productive conversations in the future. Set the stage for win-win negotiations by arriving at the negotiating table with your mind set on treating the other party as a valued business partner. When you are respective, cooperative and collaborative, not combative, the other party most likely will respond in kind. 

Take your time while working through these seven steps and do not put off preparation. You do not want to feel rushed at any point in the contract negotiations to avoid hasty decision-making. 

Preparing for Mergers and Employee Contract Negotiations

Preparation for contract negotiations varies based on the type of contract. Two of the most consequential types of business contracts are merger contracts and contracts with unionized workers.

Details to Include in a Merger Contract

I draw on decades of merger contract experience to guide business owners through preparation of a merger contract. The contract spells out the terms and conditions of the two or more businesses that are merging. The owners will agree to sell all stock and assets to the new company at the price stated in the merger contract. The newly created business will be a single new legal entity. 

Follow these steps to prepare for signing a merger contract:

• Determine the value of the other business(es) and your own. You can do this yourself with extensive research or hire a business appraiser.
• Compare the values and decide whether you will need additional resources to invest in the business. 
• Make a list of assets and liabilities of both businesses.
• Prepare a contract for the purchase of assets or stock or a corporation.
• Plan how to transfer ownership.
• Create an operating plan.  

Ask a contract lawyer to review the merger contract before you transfer ownership. 

Minimizing Risk During Employee Contract Negotiations

Attorneys for contract negotiations advise organizations on two types of employment contracts: individual employee contracts and contracts with employees represented by labor unions. 

Companies with unionized employees have many layers of rules to work through that are explained in the National Labor Relations Board’s guidelines on collective bargaining rights. Organizations have a legal duty to negotiate in good faith, but the law does not require reaching an agreement with the union. The consequence of a breakdown in negotiations may be a strike which may disrupt the economy and delay delivery of essential services for weeks.

Organizations minimize conflict with their employees’ unions when they begin preparing for employee contract negotiations months or weeks in advance. Steps to take include: 

• Form a negotiating team. Most negotiating teams include one or more labor professionals, a human resources professional, an operations executive, a senior finance executive, and a frontline supervisor.  
• Assess organizational and employee needs, then develop objectives for the contract negotiations.
• Draft a new contract. If questions surfaced about certain aspects of the current contract, clarify the matter in the new contract. The same goes for adding solutions to problems that arose with the current contract. Adjust the current contract for anything new such as facilities, more gig workers, or employee training. 
• Prepare for information requests. Negotiators may ask for data and other information about the organization to support their requests. Be prepared by anticipating their needs. 

Preparation for union contract negotiations also must include creating a robust strategic communications plan. Organizations must take steps to control the narrative and minimize conflict. 

If your organization uses contracts for individual employment, preparation can be handled internally with on caveat. Ask an attorney to review all contracts to ensure nothing has been overlooked or misconstrued. 

When it Comes to Contract Negotiations, Experience Matters

Every contract includes unwritten rules attorneys understand.

Christopher Swiecicki ensures his clients know what they are agreeing to and that they must abide by them. If they do not understand the contract they sign, they risk a battle in court. Chris’s experience ranks him in the top contract and mergers and acquisitions attorneys in St. Louis. Contact him online or by phone at 636-778-0209 for a consultation on contract negotiations.

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by Chris Swiecicki

How Taxation Laws Affect Stock Market Prices

When you hear news of possible corporate tax rate increases, your first thought may be how this will hurt your company’s bottom line. In addition to concerns about reduced profits, you might wonder how changes in taxation laws affect stock market prices. In many cases, stock prices go up after a federal tax increase. Still, many worry about what will happen if the economy stalls. 

Business owners do not have much influence over tax laws. They do have choices about reducing their tax burden. For example, selling stocks is taxable. Smart stockholders know the ins and outs of capital gains, tax credits, and taxes on dividends. Knowledge of tax laws related to the sale of stocks is especially important for those looking to sell their businesses. 

The History of Taxation Laws Affecting Stock Market Prices 

President Joe Biden’s 2024 budget proposal includes an increase in the corporate income tax from 21% to 28%. Although the proposed tax hike is sizable, if passed the corporate tax rate will still be lower than the top rate of 35% corporations paid before 2018. Congress is unlikely to approve new corporate tax laws, but the president’s proposal has reignited dialogue on corporate tax rates.  

The last corporate tax hike was in 1993, when the government raised the rate from 34% to 35%. The tax rate stayed the same until Congress passed the 2017 Tax Cuts and Jobs Act and lowered the corporate tax rate to the current 21%. Most corporations and their taxation law experts find ways to pay the government less than the statutory tax rate. The effective federal tax rate for large corporations decreased from 16% in 2014 to just 9% a year after the 2017 tax cuts. 

Despite what one would think, markets have had strong returns following tax increases over the past 50 years. Fidelity compared tax increases with stock market trends from 1950-2021. The study included corporate, personal, and capital gains tax increases. Key findings include: 

• The S&P 500 index had higher than average returns after tax increases 13 times.  
• Stocks rose every time the corporate tax rate increased. 

The study’s findings are interesting, but Fidelity does not have enough information to draw a conclusion about how taxation laws affect stock market prices. When corporate taxes have increased and stock prices also went up, the economy might have been stimulated by factors such as job growth, defense spending, or low interest rates. The added sales revenue from a booming economy often give companies what they need to counter higher taxes and come out ahead. 

Selling Stocks Is Taxable Under Capital Gains Laws

While you cannot affect stock market prices or tax increases, you can reduce your tax liability related to selling stocks or your business. The Internal Revenue Service levies capital gains taxes when you sell stocks: 

• Long-term capital gains taxes apply to the sale of assets when you have owned a business for one or more years. Long-term capital gains have lower tax rates than other sources of income. The three tax rates are income-based: 0%, 15%, or 20%.  
• Capital gains for businesses less than one year old are taxed at ordinary income tax levels.  

To figure the taxable gain of the sale of your pass-through entity, subtract the seller’s basis from the purchase price. The proceeds will be taxed as capital gains. 

Tax Laws Related to Selling a Business 

Before getting serious about the potential sale of your business, find out how the structure of a sale will affect both your federal and state taxes. Failure to structure the sale properly may have a significant impact on your tax bill, and hence on your retirement fund.  

The sale of a business usually is classified as a long-term capital gain for which the seller is responsible. The long-term nature of the gain adds up. If you started your business 15 years ago with $75,000 and are selling it for $5 million, your capital gain is $4.25 million. In this example, a federal capital gains tax at a 20% rate is $850,000. 

Businesses may be sold in one of two ways: As a stock offering or a sale of assets. Most sellers prefer stock sales while buyers want to buy the assets. The seller will pay capital gains taxes.  

Strategies for reducing taxes when selling stock differ by corporate structure. The owners of pass-through entities—Limited Liability Companies (LLC), partnerships, or S Corporations—usually sell their personal stock shares to transfer the company to a new owner. They pay capital gains taxes on their personal income taxes and the company does not owe additional taxes. 

A buyer may be adamant about buying the assets of a pass-through entity, not stock, because of the tax advantages for them.  The seller can go ahead and sell the assets and not worry about paying any taxes beyond capital gains.  

In contrast, selling assets instead of stock has negative consequences for owners of C Corporations. When a company sells its assets, it must pay taxes at both the corporate and shareholder level. If the shareholders sell their stock, they receive a direct payment and pay capital gains tax. Sellers often need help from a taxation attorney to negotiate with buyers for the deal that is in their best interest.  

Taxation Attorneys Help Business Owners Cut Their Tax Burden 

If you are planning to sell your business, ask for advice from taxation attorney Christopher Swiecicki. He helps business owners design an exit strategy with the lowest tax burden possible. Some tactics Christopher recommends include:

• Spread out your tax liability. You can ask the buyer to pay in installments to eliminate your need to pay all the capital gains taxes in one year.  
• Watch the calendar. Do not sell a business before it is at least a year old to benefit from the lower rates of capital gains taxes. 

• Do not rush into a sale. Negotiate with confidence when the buyer wants to make a deal that works for them but not you. Take your time and stand your ground. 
• Reinvest in the Opportunity Zone Fund. You can defer capital gains tax through December 31, 2026, by investing capital gains from the sale of a business into an Opportunity Zone, a federal economic development program. The investment must be made within six months of the capital gains. 

Selling your business may be the largest financial transaction you will ever make. Feel confident you are structuring the sale to minimize capital gains taxes with help from taxation attorney Christopher Swiecicki. Call our office at (636) 778-0209 to arrange a free consultation.  

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by Chris Swiecicki

What is the Difference Between a Merger, an Amalgamation, an Acquisition, and a Takeover?

As a small business owner, one of your long term goals could be to sell your business, or acquire another one to expand your reach. Either way, it’s a big decision, and understanding the different ways companies can combine with each other will give you more options and a greater understanding of the potential outcomes.

There are four main types of business combinations: Mergers, amalgamations, acquisitions, and takeovers. Each one serves a different strategic outcome, and only you can decide which one is ultimately the best match for your goals.

Mergers

A merger is a strategic move where two or more companies combine resources and operations to create a new entity. A merger is usually a mutually agreed-upon decision to expand market reach, diversify product lines, or enhance operational efficiency.

Mergers represent strategic decisions businesses make for a variety of reasons. At their core, mergers are about growth and consolidation. They provide an opportunity for companies to expand their market reach, gain competitive advantages, and increase their market share. Unifying resources, talent, and operations between the merging entities achieves this.

One of the key reasons why a company might opt for a merger is to expand into new geographical areas. Suppose a company is seeking to grow its business in a specific region. In that case, it may merge with another company already operating in that area. This allows the merging company to leverage the local market knowledge, presence, and customer base of the existing company, thus facilitating a smoother and more effective expansion. Another significant motivation for pursuing a merger could be preventing an unprofitable business’s closure. If a company struggles financially, merging with a healthier company could infuse it with the necessary resources and stability to turn its fortunes around. This saves the company from potential bankruptcy and helps preserve jobs that might otherwise be lost.  Additionally, mergers can lead to cost efficiencies through economies of scale. By consolidating operations, companies can eliminate duplicate departments or functions, saving costs. This could result in lower customer prices and increased profitability for the newly merged company.

A merger or acquisition is a complex legal process. It starts with evaluating the economic value of the deal, followed by meeting statutory requirements, drafting legal documentation, and conducting due diligence. After the merger, the focus shifts to effective integration management. A merger and acquisition attorney is critical to the process, offering high-quality advice, risk mitigation, and negotiation skills.

Amalgamations

An amalgamation is similar to a merger but usually involves more than two companies. In an amalgamation, multiple companies combine to form an entirely new company. The existing companies cease to exist, and the new entity takes over their assets and liabilities. This strategy is often adopted to achieve more significant economies of scale or to consolidate resources. None of the combining companies survive as independent legal entities in an amalgamation. Instead, they dissolve and form an entirely new company.

Amalgamations can streamline operations, reduce overhead costs, and improve financial performance. For instance, the combined entity can eliminate duplicate departments or functions, resulting in operational efficiencies and cost savings. From a legal perspective, an amalgamation involves due diligence to inspect all aspects of the target companies, from operations to intellectual property.

The process also requires compliance with statutory requirements, which vary depending on the size and sector of the firms. The amalgamation is formalized through a legal contract, and a critical phase post-amalgamation is managing the integration of the companies.

Acquisitions

In an acquisition, one company (the acquirer) purchases another company (the acquiree). The acquirer takes control of the acquired company, which becomes part of the acquirer’s business, and the acquiree’s identity ceases to exist. This strategy stimulates growth, gains competitive advantages, or increases market share, giving the acquirer a greater presence and influence in its industry. There are several compelling reasons why a business might want to pursue an acquisition. One key motivation is to improve the performance of the target company. The acquirer may identify opportunities to significantly reduce costs, improve margins, and enhance cash flows within the target company.

​​As mentioned, an acquisition is when one company buys most, if not all, of another company’s ownership stakes to take control. From a legal perspective, this involves a series of steps.  A thorough analysis of the economic value of the deal is undertaken. If the value is positive, the buyer proceeds to meet any statutory requirements that may apply, depending on the size and sector of the company being acquired.  The acquisition also necessitates conducting financial and legal due diligence to reveal relevant information for the buyer. This process involves the seller providing all supporting documents and answering a due diligence questionnaire. The transaction is formalized through legal documents, often a sale and purchase agreement.

Takeovers

A takeover is a type of acquisition that can be friendly or hostile. In a friendly takeover, the target company’s management supports the transaction. However, in a hostile takeover, the acquiring company pursues the purchase despite opposition from the target company’s management or board of directors.

A takeover occurs when an acquiring company aims to assume control of a target company, typically by purchasing a majority stake. The process often involves making a bid for the target company’s shares. If the takeover is successful, the acquiring company gains control over the target company and its resources, which can significantly impact its market position. There are several strategic reasons why a business might want to pursue a takeover. For instance, if a company’s existing products are in the later stages of their life cycles, it may be challenging to achieve organic growth. In such cases, a takeover allows for the acquisition of new products or services and the expansion of the business portfolio.  A takeover is a legal process in which one company acquires control of another by purchasing most of its stock. From a legal standpoint, this involves careful due diligence, which is a thorough investigation of all aspects of the target company.

It’s also crucial to comply with any statutory requirements related to the specific industry or size of the firms involved. The takeover is formalized via legal documents, often a sale and purchase agreement, if a single entity owns the target.

Differences Among These Business Combinations

While all these terms represent ways of combining businesses, their processes, strategies, and outcomes differ. In mergers and amalgamations, the companies involved typically have a mutual agreement and shared objectives. The resultant company is a blend of merging entities, which often cease to exist in their original form.

By contrast, in acquisitions and takeovers, the identity of the acquiring company usually remains while the acquired company gets absorbed. The key difference between an acquisition and a takeover is the level of agreement from the target company, with takeovers potentially being done against the wishes of the target’s leadership. Each business combination has its own legal, financial, and operational implications. Ultimately, the best route to take would depend on the specific circumstances of the business and the owner’s strategic objectives. It would be advisable for a business owner to consult with a financial advisor or business consultant to understand the best options for their specific situation.

As a business law firm, we’re here to guide you through these complex processes and help ensure your business transition is as smooth and advantageous as possible. Contact us to discuss your options and embark on this pivotal business journey with confidence.

 

by Chris Swiecicki

What Does a Business Litigation Attorney Do?

When starting a business, few owners expect to end up facing a lawsuit. But at some point during the life of the company, they may end up on either side of a legal dispute This could be with another business, customers, suppliers, lenders, employees, or a government entity. It can also be between the company’s business partners. These circumstances all call for legal help.

What does a business litigation attorney do for companies? They represent those facing legal challenges, negotiating and settling conflicts or litigating the cases in court. In addition, consulting with a business litigation lawyer before problems arise can often help a company avoid disputes altogether or at least reduce their impact.

Some businesses have in-house legal counsel to handle  litigation issues. Others hire a law firm when there is a clear need for legal guidance. A third option is adding a business litigation attorney to your team on retainer. Gaining a deeper understanding of the services litigation attorneys provide will help business owners know if and when to find one.

Situations That Call for a Business Litigation Attorney

Owners of small and medium-sized businesses may never need a business litigation attorney. Instead, they accomplish simple legal tasks like  obtaining licenses, permits,  and an employer identification number (EIN) with a bit of research. Even navigating an Internal Revenue Service audit is possible with the company’s accountant rather than legal counsel.

If circumstances threaten business interests in some way, or if there is a good chance that a situation may turn litigious, a business litigation attorney is a must. A lawyer in this role can defend the company’s rights if they are under attack. If the business litigation attorney’s client is the entity that has been wronged, counsel can see that it is made whole.

These are the most common issues that call for a business litigation attorney:

Contract Disputes

Companies may face breach of contract issues or disagreements about how to interpret a contract’s language that necessitate the help of a business litigation attorney. Contracts may involve explicit instructions, like a stock purchase agreement in a merger or acquisition, or something less concrete such as the implied covenant of good faith and fair dealing. The attorney may negotiate with the other party on behalf of the company or represent it if the matter ends up in court.

Employee Allegations

Human resource issues sometimes escalate to the point of litigation. A company may need a business attorney to defend against a former or current employee for wrongful termination, complaints regarding pay or working conditions, or claims of discrimination, sexual harassment, or a hostile work environment.

Internal Disagreements

Disagreements between business partners sometimes turn contentious. A business litigation attorney can help resolve the situation and keep the partnership intact, or advise the parties on dissolving the partnership. Issues may also arise in public entities between shareholders and management about corporate control or the direction of the company. An attorney may be called upon to intervene.

Someone is Suing Your Business

A company can become the subject of a lawsuit for any number of reasons including:

• Product liability/class action suits
• Real estate disputes
• Intellectual property or patent infringement
• Breach of contract

Working toward a settlement or if necessary, going to court in one of these instances, is one of the most common reasons a company would hire a business litigation attorney. 

You Need to Initiate a Lawsuit

Just as an entity may be sued for the reasons above, it may also find itself as the plaintiff in one of these same cases. Perhaps a competitor is ripping off a product design.

When it becomes necessary to file a claim or initiate a lawsuit against an individual or another company, owners will need an experienced business litigation attorney.

Facing an Investigation By a Government Entity

Business litigation attorneys also represent companies in complaints or investigations brought by the federal, state, or local government. These cases can include compliance issues, a corporate mishap or disaster, or tax liability issues with the IRS.

The Role of Business Litigation Lawyers

For many companies, dealings with business litigation attorneys are largely preemptive. Owners or managers consult with lawyers to draft contracts, write policies, and make decisions with the specific goal of not ending up in litigation. For example, a company will hire a merger and acquisition attorney to structure a deal so the transaction goes smoothly.

When things turn litigious, a business litigation attorney helps negotiate a settlement that is acceptable to both parties. A lawyer may also advise their client through Alternative Dispute Resolution (ADR) procedures. The process of ADR can take the form of arbitration, where a judge decides a dispute for the parties, or mediation, where the parties come to their own agreement.

If the dispute ends up in court, what a business litigation attorney does is the same as what any other courtroom lawyer does. They prepare briefs, present motions, find and interview witnesses and experts, and present evidence. They will argue the case and defend their client in front of a judge and jury during trial.

Do You Need a Litigation Attorney on Retainer?

Companies and industries that are vulnerable to litigation often  employ full-time litigation attorneys. For example, utility companies with thousands of employees and customers, and strict government regulation, have in-house legal departments.

Other companies may only hire a litigation attorney if and when they need one. Or, they may have a consulting relationship with a law firm or independent attorney for issues as they arise. In some cases, companies with in-house counsel work with an outside litigation attorney with  specific litigation experience, leaving their corporate team to deal with day-to-day legal issues.

Whether a company has a legal department or hires an attorney on an ad hoc basis is often a matter of cost. Owners must ask themselves about the likelihood of ever needing legal representation. Some may never need a business litigation attorney. But if they do anticipate the need, and are weighing whether to have an attorney on retainer, they must weigh what a business litiation attorney does with being under-represented in what could become a very costly lawsuit.

What to Look For In a Business Litigation Attorney

Perhaps you will never need a business litigation attorney, but it is best to consider the possibility. At Swiecicki and Muskett , we have met many business owners who never imagined they would be sued or need to file a lawsuit to protect their business interests. This is why we suggest being proactive.

Find and form a consulting relationship with an attorney that you trust. Even if only called upon occasionally, they will be able to provide expert legal guidance. Their assistance with business basics like drawing up legally binding contracts and writing clear and compliant business policies will help you avoid unsettling legal disputes.

Even if your lawyer is not a business litigation attorney, or does not have experience relevant to your situation, they can refer you to someone they trust in the event that litigation expertise is needed. When interviewing litigation lawyers, look for superb writing and negotiating skills. Assess whether they can display the confidence in court necessary to argue your case effectively. And of course, they must be well-versed in state and federal statutes, case law, and legal precedents.

If you have questions about business litigation, schedule a consultation with Swiecicki and Muskett. We’ll discuss how best to protect your business interests and preserve what you’ve worked so hard to build.