Orange County Business and Corporate Practice Areas and Legal Definitions

The information on this web site is for informational purposes only and does not constitute legal advice. Transmission of the information is not intended to create, and receipt does not constitute, an attorney-client relationship. People accessing or otherwise viewing any of the information available on this web site should not act upon that information without first seeking professional counsel. The information contained in this web site is provided only as general information and it may not reflect the most current legal developments or the applicable law in your particular jurisdiction. This information is not provided in the course of an attorney-client relationship and is not intended to constitute legal advice or to substitute for obtaining legal advice from an attorney licensed in your jurisdiction. This web site may be considered advertising under applicable laws and ethical rules. Matthew A. Sumrow does not want to represent anyone seeking representation based upon viewing this web site in a jurisdiction where this web site fails to comply with all laws and ethical rules of that jurisdiction.

Formation and Operation of Companies:

In today's business environment, there are a number of options when thinking of starting and operating a business, and one must decide on the type of organization to form. Available types of business entities include corporations, limited liability companies, general partnerships and limited partnerships. Corporations, limited liability companies and limited partnerships have the advantage of providing limited liability protection for the owners of the business (for limited partnerships, only the limited partners have such protection). A business may also be operated as a sole proprietorship, but that does not provide any limited liability protection for the owner of the business. Limited liability protection can shield the owners from a company's debts and obligations. In other words, it can prevent people with claims against a company from forcing payment out of the personal assets of the company's owners. When forming and operating a business, one must also consider the desired tax treatment for the entity. S corporations, limited liability companies and partnerships can provide pass through tax treatment and avoid the double taxation of income associated with C corporations. Tax ramifications should also be considered in connection with purchasing or selling either an ownership interest in a company or the assets of a company.

The operation of a business typically involves a wide variety of legal issues and a business will often face matters related to general corporate laws (such as establishing or changing the ownership and management of the business), securities laws (such as requirements for offering and selling ownership interests in the business), real estate laws (such as leasing or buying real property) , tax laws (such as any taxes to be paid on the profits of the business or upon the sale of the business), intellectual property laws (including determining how best to develop and obtain protection for any intellectual property belonging to the business) and employment laws (including a company's ability to terminate an employee and the rights of an employee before and after termination). Matt Sumrow has over ten years of experience advising numerous business owners on a broad range of issues affecting their businesses. Contact Orange County business attorney Matt Sumrow for further information.

Mergers and Acquisitions:

Matt has represented a wide variety of businesses and their owners in connection with mergers and acquisitions, ranging in value from a few hundred thousand dollars to over one hundred million dollars. When considering a possible sale or purchase of a business, one should carefully evaluate how to best structure the transaction. The two basic ways to structure the sale of a business are either by selling the assets (an "asset sale") or by selling an ownership interest in the company (a "stock sale" or, if the sale of stock will result in the target company merging with another company, a "merger"). If the transaction is structured as an asset sale, the buyer has the advantage of acquiring the assets of the business (physical assets, intellectual property, goodwill, etc.) without the risk of taking on any foreseeable or unforeseeable liabilities of the target company that would be acquired if the transaction was structured as a stock sale. If the transaction is structured as stock sale, there will likely be favorable tax treatment for the seller and the transaction may be structured in a way for it to qualify as a tax free reorganization under the Internal Revenue Code. Tax free reorganizations are often structured as mergers in which all or part of the consideration paid for the target companies stock is in the form of stock issued by the acquiring company.

Other issues to consider in connection with a potential merger or acquisition include:

• the purchase price to be paid for an ownership interest in the business or the assets of the business
• whether any portion of the purchase price will be paid out over time
• whether the total amount of the purchase price will depend on any future events (such as requiring an additional amount to be paid to the seller if the business generates over a particular amount of revenue during a certain time period)
• the desired ownership and management structure of the business after the merger or acquisition is completed (perhaps the sellers will want to retain an ownership interest or management role in the business)
• the liabilities associated with the business that is to be acquired such as contractual liabilities, tax obligations and pending or potential law suits
• conducting due diligence on all relevant business, legal and tax issues associated with the transaction (such as analyzing financial reports, corporate records and tax returns)

Contact California corporate lawyer Matt Sumrow for further information.

Securities Law:

A "security" includes any investment of money in a common enterprise with an expectation of profits to be derived from the efforts of others. Common types of "securities" include shares of stock in a corporation, ownership interests in partnerships and limited liability companies, bonds, options, warrants, profit-sharing agreements, investment contracts and interests in oil and gas wells. There are only three types of securities offerings under the securities laws: (i) registered; (ii) exempt from registration; and (iii) illegal. Registered securities offerings include initial public offerings (IPO's) in which in which the offering is registered with the Securities and Exchange Commission (the "SEC") and subject to extensive regulation). An exempt offering is a private offering of securities that does not have to be registered with the SEC and that is also exempt from qualification requirements under State law. An illegal securities offering is any offering that is not registered and does not qualify for an exemption under applicable Federal and State securities laws. Any illegal offer or sale of securities subjects the issuer of those securities and any persons involved making the offer and completing the sale to potential significant civil and criminal liability. At a minimum, a person who purchases securities in an illegal offering is entitled to rescind the sale and recover the full purchase price from the seller.

Before offering or selling any securities through a private offering, one should consult an experienced securities law attorney to determine what available exemptions from registrations may be available. If the securities will be offered or sold in more than one State, the laws of multiple States will have to be considered. Available State and Federal securities laws exemptions have numerous precise requirements and exemptions will be lost if all the requirements are not met.

Securities laws issues also include such matters granting stock options to employees, private investments in public equity (PIPE transactions) registration requirements for public offerings (such a registering an initial public offering or a secondary offering) and reporting requirements for public companies (such as 10-K, 10-Q, 8-K and proxy statement filings).

Matt Sumrow has extensive experience representing public companies, private companies and investors in numerous public and private securities offerings, ranging from small private placements by start-up companies to public offerings of over three hundred million dollars. He has also represented companies on numerous matters related to issuing stock options and warrants, Rule 144 sales, securities related disclosure requirements and reporting requirements for public companies. Contact California corporate lawyer Matt Sumrow for further information.

Contracts Law:

A contract is an agreement between two or more persons or entities to do, or to refrain from doing, a particular thing in exchange for something of value. Contracts may be in verbal or written form. Depending on the subject matter of the contract, a variety of state and federal laws may apply. For example, antitrust laws should be analyzed if the contract involves restraints on trade. If the contract involves licensing intellectual property, laws governing the intellectual property being licensed (copyright, trademark, patent, etc.) should be considered and the contract should be clear as to who owns the intellectual property exactly what rights and obligations the licensee has in connection with using the intellectual property.

Matt Sumrow has advised numerous clients on a wide variety of contracts, including asset purchase agreements, stock purchase agreements, merger agreements, buy-sell agreements, joint venture agreements, operating agreements, partnership agreements, employment agreements, consulting agreements, confidentiality and non-disclosure agreements, stock option agreements, stock purchase agreements, distributor agreements, marketing agreements, brokerage agreements, security agreements, loan agreements, leases for real property, purchase agreements for real property, software development agreements, intellectual property license agreements and settlement agreements. Contact Orange County business attorney Matt Sumrow for further information.

Intellectual Property:

Intellectual property law includes patent law, copyright law, trademark law and trade secret law. Some aspects of other areas of the law, such as freedom of speech and unfair competition often are intertwined with intellectual property matters. Internet activities also frequently involve intellectual property law matters such as domain name and trademark rights, copyrights for web site content and related software, patents for unique business methods and trade secret protections for proprietary information.

Copyrights protect "original works of authorship," including literary, dramatic, musical, artistic and certain other intellectual works. Books, paintings, films, sound recordings and software are some of the "works of authorship" that may be protected by copyrights. Design elements in a functional item, such as an artistic design for the legs of a chair, may also be protected by copyrights. There are common law copyrights that, in the United States, automatically arise with the creation of the works. Registering a copyrightable work with the United States Copyright Office provides additional advantages and protections to the copyright owner.

Patents protect inventions. A patent for an invention is the grant of a property right to the inventor. In the United States, patents are issued by the United States Patent and Trademark Office. The term of a new patent is usually 20 years from the date on which the application for the patent was filed in the United States. U.S. patent grants are effective only within the United States, U.S. territories, and U.S. possessions. There are three types of patents: (i) utility patents may be granted to anyone who invents or discovers any new and useful process, machine, article of manufacture, or composition of matter, or any new and useful improvement thereof; (ii) design patents may be granted to anyone who invents a new, original, and ornamental design for an article of manufacture; and (iii) Plant patents may be granted to anyone who invents or discovers and asexually reproduces any distinct and new variety of plant. Potential patent protection will be lost if an invention is disclosed or the related product is sold in commerce and a patent application is not timely filed. A patent attorney should be consulted prior to disclosing or using any invention for which you may want to file a patent application.

Trademarks and service marks protect marks used on or in connection with goods (trademarks) or services (service marks) sold in commerce. The mark protected can contain words, numbers or other images or any combination of words, numbers and images. "Nike" is an example of a trademark. "United Airlines" is an example of a service mark. Exclusive rights to a trademark or service mark can be obtained based on actual use of the mark in commerce. Rights based on such use are known as common law rights. Superior protection for a trademark or service mark may be obtained under the Lanham Act by registering the mark with the United States Patent and Trademark Office. Trademark and service mark applications may be filed on the basis of actual use (for a mark that is already being used in commerce) or on an intent to use basis (for a mark that one intends to use in the future). Filing a trademark or service mark application on an intent to use basis is a good way to protect a mark before you begin using it in commerce. The mark will have to be used in commerce before a registration will be issued, but in the meantime a pending intent to use application generally provides priority over any later filed application or any subsequent use in commerce by a different party. Prior to using or applying to register a trademark or service mark, it is advisable to have an attorney conduct a trademark availability search to determine if the same or any confusingly similar mark is already in use or on file as a pending application. Contact California business attorney Matt Sumrow for further information on how to protect your company's business ideas and intellectual property.

Domain Names and Cybersquatting:

Domain names for web sites may be registered with various private companies. Obtaining a domain name registration, however, does not mean that the domain name does not infringe on another party's trademark or service mark rights. If a domain name is identical or confusingly similar to another party's trademark or service mark, the owner of the domain name may be forced to cease using it. "Cybersquatting" (registering a domain name that infringes on another party's trademark or service mark) is also prohibited by a Federal law specifically targeting that practice. The Anticybersquatting Consumer Protection Act (the "ACPA"), amended the Lanham Act to prohibit someone from registering, trafficking in or using a domain name that is identical of confusingly similar to another party's trademark or service mark. To succeed in a cybersquatting claim under the ACPA, a plaintiff must establish that the defendant had a "bad faith intent to profit" from the use of the infringing domain name. A normal claim for trademark infringement under the Lanham Act, however, does not require a plaintiff to prove "bad faith" by the infringing party. In addition to a possible court action for trademark infringement, the Internet Corporation for Assigned Names and Numbers ("ICANN") provides a Uniform Domain-Name Dispute Resolution Policy to resolve alleged trademark infringement by a domain name. An attorney should be consulted to determine whether a particular case would be better suited for a court trial or for arbitration through the ICANN dispute resolution policy. Contact Orange County business attorney Matt Sumrow for further information.

Orange County business lawyer Matt Sumrow can also assist with:

• Emerging companies and venture capital
• Joint ventures and strategic alliances
• Buy-Sell agreements
• Stock options
• Finance and capital markets
• Employment agreements and consulting agreements
• Commercial law
• Software development and licensing
• Internet law
• International law
• Real estate transactions

If you or someone you know in Orange County, throughout California, the United States or overseas needs the assistance and trusted legal advice of an experienced business lawyer, please call Attorney Matthew A. Sumrow toll free at 866-741-4274, or complete the contact form provided on this site to consult with a skilled California corporate attorney.

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