The High-touch Legal Services® Blog…for Startups!

© 2009-2019 Dana H. Shultz, Attorney at Law

Wikileaks and Apple – an Opinion

WikiLeaks logo

The following is taken almost verbatim from my answer to a Quora question and the comments that followed. Q. Was the WikiLeaks iPhone app really violating the Apple App Store “Terms of Service”? Apple spokesperson stated that ?Apps must comply with local laws and may not put an individual or group in harm?s way.? Is that actually the case?

A. Yes (in my opinion). Section 3.2(b) of the iPhone Developer Program License Agreement says:

You will not use the Apple Software or any services for any unlawful or illegal activity, nor to develop any Application which would commit or facilitate the commission of a crime, or other tortious, unlawful or illegal act[.]

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Which Protections Should be Included in Online Terms of Use?

Knight's armor with shield and mace

This post is based on my response to a LawPivot question from an entrepreneur who wanted to know which protective provisions should be included in his website’s terms of use.

The provisions that bear most closely on protecting website owners include those pertaining to:

  • Disclaimer of warranties made by the owner
  • Limitations on the extent of the owner’s liability
  • Users’ warranties, especially as concerns any information that they may post
  • Users’ acceptable behavior policies, which set the stage for . . .
  • The owner’s right, in its sole discretion, to terminate use privileges
  • Users’ obligation to indemnify the website owner against liabilities that result from user activities
  • A requirement that any lawsuit related to the website be brought at a venue that is convenient for the owner
  • An arbitration provision as a way to avoid litigation (though I am not a big fan of arbitration because it can be expensive and precludes small-claims court, which can be relatively quick and inexpensive)

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Which Financial Information Must a Corporation Provide to its Shareholders?

Financial balance sheet

The CEO of a client recently asked about the level of financial detail that must be disclosed to a (troublesome) shareholder. The client corporation was formed in Delaware but is located in California, so both states’ laws apply.

California Corporations Code Section 1601 says, in relevant part (emphasis added), that “[t]he accounting books and records of any domestic corporation, and of any foreign corporation keeping any such records in this state or having its principal executive office in this state, shall be open to inspection upon the written demand on the corporation of any shareholder . . . during usual business hours, for a purpose reasonably related to such holder’s interests as a shareholder . . . . Such inspection . . . may be made in person or by agent or attorney, and the right of inspection includes the right to copy and make extracts.”

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International Contracts: Choice of Law when the Parties Disagree

Logo for OnStartups.com, where Dana Shultz discussed choice of law for international contracts

This post concerning international contracts is based on an OnStartups.com question (edited here) that I answered a few minutes ago. Q. I am drafting a website-development agreement with a firm in India. I am in Australia. I prefer that the agreement be governed by Australian law, but the developer prefers Indian law. What is normally done in similar circumstances?

A. Several thoughts based on my experience international contracts: (more…)

Does My New Employer Now Own My Software?

Quora logo

This post is adapted (with editing) from a Quora question that I answered. Q. I developed a software application on my own, then adapted it for my new employer, where it is used enterprise-wide. What are my ownership rights in this situation?

A. It would help to know whether you signed any type of proprietary information and inventions agreement with your employer. If you did, its terms (obviously) will be of great importance. You did not mention any such agreement, so I will assume, for the purposes of the discussion below, that there is no such agreement.

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What Must We Do if We’re Going to Be Acquired?

photo of document binders standing next to one another

A successful exit by acquisition is one of the great thrills of entrepreneurship. That exit does not come easily, however. This post discusses, by category, the most important documents and information that you will need to provide during the acquirer’s due diligence process.

Corporate Documentation

  • Articles of incorporation and bylaws, as amended
  • Minutes of board and shareholder meetings and actions
  • Share transfer ledger, including name and address of each shareholder
  • Agreements pertaining to shares and shareholders’ rights (buy-sell, voting rights, etc.)
  • List of holders of option or warrants and all applicable agreements

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Changing Online Terms of Use: How Detailed Must Notice Be?

Blue change button

In “Changing Online Terms of Use? Be Sure to Give Notice First!“, I explained that if you are going to change a website’s terms of use, you first need to provide notice that the terms have been changed and explain how they have been changed. This post – based on a Quora question and my answer – discusses how detailed the notice must be.

Unfortunately, there are no definitive rules regarding the level of detail that the notice must contain. I have two guidelines that I like to follow.

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Who Can Sign a Contract for an LLC?

Photo of hand holding a pen, symbolizing who can sign a contract

Several months ago, I answered the question Who Can Sign Contracts for a Corporation? This post addresses who can sign a contract for a limited liability company (LLC).

Section references below have been updated to reflect California’s new LLC law that took effect on January 1, 2014 (see RULLCA Brings New LLC Laws to California in 2014).

The LLC’s Articles of Organization may address who can sign a contract, but this rarely occurs. The subject is more likely to be addressed in the Operating Agreement.

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Present Assignment is Important for Patents, Too

Stanford University logo

In “Copyright: Why You Need Presence of Mind about Present Assignments“, I wrote about why copyright assignments should be expressed as present assignments (e.g., “I hereby assign”) rather than obligations to assign in the future (e.g., “I hereby agree to assign”). This suggestion applies to assignment of patents, too.

A researcher at Stanford University, in collaboration with Roche predecessor Cetus, developed methods for quantifying Human Immunodeficiency Virus in human blood samples, and correlating those measurements to the therapeutic effectiveness of antiretroviral drugs.

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What Must We Do Regarding Corporate Board Meetings?

Logo of the Delaware Division of Corporations, symbolizing Delaware law about board meetings

The following question (edited for length) is from Founders Space. Q. What’s the minimum two founders must do regarding board meetings for a startup Delaware corporation doing business in California?

A. You should hold an annual stockholder meeting – or, alternatively, prepare a written consent – at which the stockholders elect the board of directors. See Delaware General Corporation Law Sections 211 and following. (more…)