Jay Sachetti joined Jeff O’Brien, partner at Husch Blackwell and Dyanne Ross-Hanson, president of Exit Planning Strategies talked about the market for mergers and acquisitions, exit planning opportunities for companies that don’t end up for sale and how companies can maximize their eventual sale price during an early October panel at the first Upsize on Tap event at Summit Brewing Co. in St. Paul.
When the state Legislature passed a law requiring employers to provide paid leave and safe time for employees, Justin Bieganek started hearing differing details from friends, colleagues and peers.
Starting early next year, businesses and entrepreneurs will be able to apply for customized “generic top-level domain names” (gTLDs), which are the suffixes after the dot in a website address, writes William Schultz, a trademark litigation attorney with Merchant & Gould in Minneapolis.
Currently there are only 22 gTLDs, such as .com, .edu, and .org. The Internet Corporation of Assigned Names and Numbers (ICANN) recently voted to open top level domain name strings to the public. Approved applicants will control their own, customized domain suffix. Business leaders and entrepreneurs should familiarize themselves with the timeline, opportunities, and requirements of the gTLD expansion.
ICANN will begin accepting applications on January 12, 2012. The initial application period will be open for sixty days. ICANN will confirm the accuracy of the applications and will post non-confidential portions of the gTLD applications for public review in the spring of 2012. The approval time will depend on the number of applicants, the number of applicants for a particular gTLD, and the number of objections to the gTLDs, according to Schultz.
Companies seeking to obtain and run a new gTLD can the public.
The registration of the new domain name string is open to everyone, though ownership of a gTLD has significant barriers to entry, writes Schultz. The first barrier is the $185,000 application fee that is made payable to ICANN. Based on this fee, applicants will likely consist of large companies who want to use the gTLD system in connection with a brand (e.g. IBM) or well-funded companies or entrepreneurs who want to capitalize on a generic space like .web or .fun.
ICANN will ultimately choose the gTLDs that will make it on the Internet. That decision process, however, is designed to be objective. On May 30, 2011, ICANN published a revised 355-page applicant guidebook (http://icann.org/en/topics/new-gtlds/rfp-clean-30may11-en.pdf) that will be used to assist companies through the application process. Applicants will be required to submit information regarding their technical plans, financial resources, and business model. ICANN’s latest gTLD news is also posted on the Twitter accounts @ICANN and @NewgTLDsICANN.
The gTLD introduction to the public will provide significant opportunities for companies looking to capitalize on an entire web space. Companies with brands will have the chance to enjoy controlling content running through their top level domain strings. Non-brand gTLDs, such as .city or .sports, are also expected to be in high demand, according to Schultz.
Companies desiring to apply for a gTLD should take action quickly. With the application process set for a sixty-day period early next year, companies will need to start putting together their plans accordingly. ICANN has not announced when it will again open its doors for a second round of applications. If companies are looking for their own gTLD, the time is now.
The introduction of the gTLDs will also present challenges. Opening the new gTLD space to any number of registrants will introduce potentially thousands of brand enforcement issues.
Brand owners should maintain a careful watch over the application and introduction of the new gTLDs. The gTLD application process will have processes for brand owners to file objections to proposed names (those to the right of the dot). Further, communities, special interest groups and certain classes of citizens will have the right to object to applications that are morally objectionable. The objection filing period will open after ICANN posts the list of complete applications and will last for approximately seven months. Objections must be filed with dispute resolution providers, not with ICANN.
Once the gTLD string is accepted, brand owners will have a variety of mechanisms available to them to protect their brands to the left of the dot. Under the Trademark Post-Delegation Dispute Resolution Policy, brand owners will have the right to file a dispute against the registry operation in connection with the top level (to the right of the dot) and second level (to the left of the dot) names. The complainant must prove by clear and convincing evidence that the registry operator’s conduct takes unfair advantage of the complainant’s mark, impairs the character or reputation of the mark or creates a likelihood of confusion with the complainant’s mark.
Each of the gTLDs will also have a mandatory sunrise program that will allow trademark holders to register their brand prior to general availability. Brand owners desiring to use the sunrise services should consider trademark registration of their brands as opposed to relying on common law rights. Certain countries have rapid registration services. Business leaders should contact their trademark attorneys for more information regarding registration, Schultz writes.
Brand owners should also be aware of the trademark claim process that will be employed as part of the new gTLD launch. Brand owners who do not want to register blocking domain names may put a claim in on a particular term. If someone tries to register that name, the potential registrant will be notified of the trademark claim and the trademark holder’s alleged rights. The claim, however, does not block the registration. The potential registrant may proceed with the registration provided it represents it will not infringe on the brand owner’s rights. The brand holder will then be notified regarding the registration and will be provided the registrant’s contact information, writes Schultz.
Brand owners who do not take part in the sunrise or claims programs may take action after their brand has been registered. The Uniform Dispute Resolution Policy (UDRP) is an alternative dispute resolution process that already exists with existing domain names transfer or cancel domain names that were improperly registered or maintained, according to Schultz. Additionally, brand owners may use the Uniform Rapid Suspension program (URS) that is planned to handle straightforward cybersquatting cases.
Tim Matson is an intellectual property attorney with Lommen Abdo law firm in Minneapolis. He had this to say when Upsize recently asked him for his best IP advice:
Q. When you work with companies, where are you focusing your attention?
A. A good chunk of my practice is getting companies to recognize that some of their most valuable assets are intellectual property. So many companies say, I’m not an entertainment company, I’m not a technology company, so what do I have to protect?
Q. And your answer to them would be?
A. The value of a company, bottom line-more and more the valuable assets of the company are intellectual property. If you look at the various sorts of mainstream, mainline content industries-newspapers, book publishing, record companies-they’ve been turned on their heads because of how they distribute and monetize the distribution of content. But it’s not only those companies that need to realize the value of their IP.
The Internet has changed everything. It’s already over. The world has already completely changed so if you don’t jump on this as a business owner you’ll be left behind.
Business partners who start out enthused and agreeable can later end up in court with irreconcilable differences. So write Mark Larson and Molly Hamilton, attorneys with Messerli & Kramer. They offer these tips to improve partner relationships.
1. Trust begins to erode in a business relationship when one partner has sole control of the finances and limits the other partners’ access to information.
2. Even if nothing dishonest is taking place, suspicion and conflict frequently ensue when an owner has reason to believe that information is withheld or manipulated.
3. Each partner should have ready access to all business and financial information, including bank accounts and payroll records, vendor contracts, accounts receivable and payable, customer lists and employee data.
4. The business partners should work with an accounting firm to assure that proper financial controls are set up to prevent mismanagement, waste or fraud.
If any partner raises legitimate issues about financial management or information, the accounting firm retained by the business, or another neutral third party, should be promptly engaged to undertake an investigation and, if possible, resolve any issues before the life of the business is threatened.
Litigation of business disputes today is expensive and always comes at the most inopportune times, writes Tom Dougherty of Lommen Abdo in Minneapolis. You may not be able to avoid it completely but there are some common areas of risk of which you should beware-Dougherty calls them “dragons.”
1. Piercing-the-Corporate-Veil Dragon. The general rule is that a corporation is a separate and distinct entity from its shareholders; the shareholders are not responsible for the debts and obligations of the corporation. However, under certain circumstances a court may hold the shareholders of a corporation responsible for the obligations of the corporation. When this happens, the court is said to pierce the corporation’s veil of limited liability.
Tip: All corporations must hold annual meetings of its shareholders and directors. Accurate minutes must be kept to document action taken. At the meeting, the shareholders must formally elect directors and approve other matters appropriate for or requiring shareholder action, according to Dougherty.
2. Failure-to-Disclose-Individual-Capacity Dragon. Often an officer of a corporation will enter into a contract or agreement intending to bind the corporation but fails to disclose that he or she is acting on behalf of the entity. When this happens it can be successfully argued that the individual signing the agreement is personally liable to perform the contract.
Tip: Always disclose the name of the entity you are acting on behalf of and your representative capacity. This is as easy as setting forth the name of the entity (for example, Acme Amalgamated Enterprises Inc., a Minnesota corporation) and your authority and capacity with the entity (for example, By Samson Agonistes, its president).
3. Failure-to-Plan-for-Death/Disaster Dragon. It is critical to address up front – and before a triggering situation arises – the importance of keeping the business in the family, who your co-shareholders are, how liquidity events such as divorce, disability or death will be met and how the business will be continued or transitioned when the current active shareholders are no longer around.
Tip: Every corporation with more than one shareholder must have a buy-sell agreement that addresses these issues and more, writes Dougherty. It is common for well drafted buy-sell agreements to ban unpermitted transfers, and create rights of first refusal in the name of the corporation and other shareholders.
Funding methods such as life insurance policies, seller financing – or both – can be used to fund the share purchase. Valuation methods should be addressed in advance with shareholders (likely to be either the buyer or the seller and therefore likely to be reasonable in their approach).
Tom Dougherty,
Lommen Abdo:
612.336.9330
td********@****en.com
www.lommen.com
Molly Hamilton,
Messerli & Kramer:
612.672.3634
mh*******@************er.com
www.messerlikramer.com
Mark Larson,
Messerli & Kramer:
612.672.3634
ml*****@************er.com
www.messerlikramer.com
William Schultz,
Merchant & Gould:
612.336.4677
ws******@***********ld.com
www.merchantgould.com
