How To Stay Software Compliant And Avoid Big Trouble

How To Stay Software Compliant And Avoid Big Trouble

Your small business may not operate on a national or global level, but as a software user on any level, you are subject to licensing agreement laws. The unauthorized use or distribution of copyrighted software is more common than you think. Not thinking about it will also lead to legal trouble, like the $3 million penalty the City of Denver recently paid to Oracle. Examples of misuse include sharing, downloading, selling, or installing multiple copies of licensed software. Other examples are installing a piece of software more times than the license permits and sharing software license codes, activation keys, or user IDs and passwords for web-based software applications. It is equally as important to protect your business’s intellectual property as it is to protect it from threatening audits or penalties. A small business attorney will help keep you compliant and protected. This post will discuss:

  1. Different types of software licenses,
  2. Impact and consequences of unlicensed software, and
  3. Precautions concerning software and license choices every small business should take.

1. Staying Legal With Software Licenses

According to Wikipedia, a software license is a legal contract that governs the use or redistribution of software. All software is copyright protected, and a license grants the licensee/end-user specific permission to use one or more copies of the software. One exception is public domain software, where the software has been put into the public domain for anyone to use. Another exception to typical proprietary software is open source. Open source software is under copyright, but this type of license grants users the right to modify, reuse, and share the product while protecting the copyright holders from legal liability. One of the most popular of these licenses is a GNU General Public License, which takes measures to ensure that your software stays open source even if modified or redistributed. Other open source licenses include GNU Lesser General Public License, Apache License, MIT License, and BSD License. There are varying levels of complexity and restrictions among the different open source licenses each with their own benefits. A small business lawyer will help you determine what type of software and licenses are right for your business.

2. Impact And Consequences Of Failure To Comply With Software Licensing Laws

Software licensing or compliance audits are conducted to improve software distribution and to avoid or determine copyright infringement. Not only can an infringement result in your software being disabled, but it can lead to civil as well as criminal penalties. Unlicensed software also exposes businesses and consumers to security threats, like malware, ransomware, spyware, and viruses. A CBS Denver news story reveals that, as a result of the city’s violation of licensing agreements with Oracle, Denver taxpayers will pay millions of dollars more in 2017. The article states that Oracle threatened a $10 million penalty but settled for $3 million. Chief Information Officer for Denver Technology Services Scott Cardenas did not say how the city became out of compliance, only that the city has entered a new five-year contract with Oracle that is a “true-up” or balancing of its licensing with Oracle. A Forbes article indicates that companies, like Oracle, are giving more audit and breach notices, leaving businesses prone to losing their software programs and much more. It is easier than ever to fall out of compliance with the changing nature of software products and evolution of IT infrastructure. Your small business attorney will ensure your business stays compliant in order to avoid costly fines or loss of your current database.

3. Precautions When Considering Your Software And License Choices

Small businesses can learn valuable lessons from big entities and their mistakes or misfortunes with software licensing compliance. There are numerous precautions you should take to keep your small business out of big trouble. It is essential to find the right software and license fit for your company. Once you have done this, follow a checklist as it applies to your business.

  1. Keep an organized record of purchase orders, contracts, paid invoices, retail and other receipts for purchase, and original license certificates;
  2. Audit software installed on any desktop, portable, virtual computer, server, or personal computer/device used for company purposes;
  3. Compare and match software product names, version numbers, and types of licenses;
  4. Establish a company policy regarding software usage; and
  5. Monitor ongoing usage.

A small business attorney will ensure you have taken the necessary precautions and represent you in the event of a software licensing violation.

If you need help with software compliance or your small business contact me, Elizabeth Lewis, at the Law Office of E.C. Lewis, P.C., home of your Denver Business Attorney. Phone: 720-258-6647. Email: elizabeth.lewis@eclewis.com

Contact Us Today

Law Office of E.C. Lewis, P.C.
Your Denver Business Attorney
3773 Cherry Creek North Drive, Suite 575
Denver, CO 80209
720-258-6647
Elizabeth.Lewis@eclewis.com

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Why Your Small Business Website May Benefit from a Creative Commons License

Why Your Small Business Website May Benefit from a Creative Commons License

What small business owner wouldn’t love to see a bit of content he or she put up on the web, or a marketing campaign he or she launched on YouTube become known around the world? Especially if that content could generate just the right amount of new business! Everyone likes the idea of their content being shared, but no one wants to see their content stolen. This post will discuss the ways your small business website may benefit from a Creative Commons license.

Creative Commons explains what they do:

[Creative Commons is a] digital commons, a pool of content that can be copied, distributed, edited, remixed, and built upon, all within the boundaries of copyright law.

You might be thinking, “but I have a copyright symbol in the footer of my website!” In fact, creative work is protected in the United States the moment it is created – it belongs in that instant to the author. But there is a lot more to copyrights and licensing than you might think. When you mark your website with the copyright symbol, as most small business owners do, you are reiterating in effect, that visitors to your site cannot use your content without your express permission. Adding a license to your content, or portions of your content, is a way to define what parts you are willing to share and under what circumstances. If that sharing leads to more business for you, you want to make sharing easy! A copyright, in effect, may have the opposite effect.

Social Sharing of Small Business Website Content

Just a side note – when I say sharing in this context, I am not referring to the share buttons used for social sharing of small business website content that link to social media and allow people to share your content on their social feeds. These types of shares actually belong to the social media site you connected your web site to; in this sense you “released” your ownership of that content in the specific form it takes when shared on the social media site. In terms of licensing, I’m talking about specific creative works of your own, from your site, that people may want to share in their entirety. Examples might include detailed, informative blog posts, infographics, tools or calculators you created, and apps that you authored.

When to Use a Creative Commons License

It’s not hard to determine when to use a Creative Commons license; if you are creating content online and want to see it shared outside of social media, you should probably license it. A Creative Commons license can be in helpful in a couple of ways: First, it provides you with a simple way to license the content so that the intended use is well documented, which protects your legal position. Second, a clearly stated license will offer reassurances to someone who may want to share your content, but would be unwilling to do so if your intentions about sharing are not clearly stated. If you have creations you want circulated on the web, where a thumbs up from someone else has more value than anything you could ever say about your own work, then you may want to use a Creative Commons license. And finally, and perhaps most importantly, once you select and apply a license, your newly licensed content will be included in the Creative Commons repository and can be searched, discovered, used, and shared by people who need content to share and are looking for exactly the type of content you have created! How much will it cost to have your content included? Creative Commons is free, but you have the opportunity to donate.

Which Creative Commons License You Should Choose

As with so many things where there are repercussions, the best answer is… it depends. Which Creative Commons license you should choose is determined by your intentions and situation. But don’t worry, CC has come up with a simple license picker to help you decide on the best license for your particular situation. If you get stuck, use the handy Creative Commons FAQ.

A Creative Commons license isn’t for everyone – but there are benefits in the right situation. If you need help understanding when and if your small business website may benefit from a Creative Commons license, or have other questions about your intellectual property, contact me, Elizabeth Lewis, at the Law Office of E.C. Lewis, P.C., home of your Denver Business Attorney. Phone: 720-258-6647. Email: elizabeth.lewis@eclewis.com

Contact Us Today

Law Office of E.C. Lewis, P.C.
Your Denver Business Attorney
3773 Cherry Creek North Drive, Suite 575
Denver, CO 80209
720-258-6647
Elizabeth.Lewis@eclewis.com

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3 Things to Know Before Starting an Online Business

It seems simple – no lease to sign, no building to maintain or insure, fewer employees to manage. Online is easy, and starting up a new business is as simple as building a website! Only, it’s not. More often than not, I end up helping small business owners with issues they could have avoided if they had sought advice before starting an online business.

Based on the issues I am most often asked to address after the fact, there are three things I would advise a new online startup to understand before jumping in:

  1. What type of business form is correct for my situation?
  2. What type of control am I giving to my web developer?
  3. How will I terminate an advertising and promotions contract?

The Correct Form for an Online Business

The rules governing your information technology company, information services company, or online business are different than a traditional brick-and-mortar business. There are the typical business formation questions; should you form your business as a corporation or LLC, for example. But it is also important to understand the legal implications of having a brick-and-mortar store with an online presence, or even transitioning your brick-and-mortar store to being solely online. And while it may look more affordable to ditch the brick-and-mortar storefront for a website, your agreement with the company that creates and maintains a website for you is in many ways similar to a lease. Signing a contract with a questionable company can cause you just as much grief as bad landlord.

Controlling Your Online Assets

With the growth of the internet and information technologies, more and more businesses are based completely online. An online business can include online advertising, a social media presence, and online sales of physical products, all of which come with their own set of legal ramifications. Whether your business is an information technology business, IT services business, supplements its income with an online store, or is completely online, you will probably be signing contracts with web development firms who will help you build and maintain your website. It is crucial that you understand what you are agreeing to when you allow someone to build a website for you. I hear stories all the time from developers such as:

I was being asked to build a third website for her, after two previous contractors failed to deliver a finished product, or failed to deliver a quality product. When I attempted to set up her new site, I found the previous developer had moved her domain, which she had owned and had control of for many years. She had given them permission to do so, but she didn’t understand that she was giving up control of her URL when she did. In addition, the company she contracted with to build her previous site had been controlling and filtering her email. She spent days on the phone trying to end the contract and get her domain and email back, and she lost much of her email history, and all of her website content in the process.

Unfortunately, this is a typical and frustrating scenario I hear from newcomers to online businesses. Another stumbling block I see small business owners encounter as they enter the online world involves contracts with companies that offer to help with advertising and promotion.

Promoting Your Online Business

Promoting your online business comes with it’s own set of concerns, whether you do it yourself or hire someone to help you. Some contracts tie you to a service regardless of whether or not it performs well for you – in this case, what you don’t know about social media, advertising, and promoting a business online can really hurt you. Again, a trusted advisor who understands internet technologies, and online business promotion can really help here. Until you have some experience and know what works for you, ask someone who does to recommend a company that can do it for you, or train you to do it yourself.

Even if you are an experienced entrepreneur, you will face challenges as you enter the online world and perhaps encounter unscrupulous actors offering to help you launch an online business. An attorney can help you make sure that important assets, such as your domain name, remain in your control. It is also very important that a clear means for you to retain the contents and coding for your website exists, even if you choose to end the relationship with the contractor or company that builds it for you. These, and other concerns can be avoided just by getting a good referral to a reputable firm. An attorney with a strong background in IT and online business practice can guide you to reputable firms, and make sure the contracts you sign are fair.

If you need guidance concerning the formation of your online business, or help reviewing a contract with a web developer or firm offering to promote your business online, contact me, Elizabeth Lewis, at the Law Office of E.C. Lewis, P.C., home of your Denver Small Business Attorney. Phone: 720-258-6647. Email: elizabeth.lewis@eclewis.com

Contact Us Today

Law Office of E.C. Lewis, P.C.
Your Denver Business Attorney
3773 Cherry Creek North Drive, Suite 575
Denver, CO 80209
720-258-6647
Elizabeth.Lewis@eclewis.com

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CO Anti-Patent Troll Law

Colorado recently passed a law aimed at reducing the amount of so-called “patent trolling.” Generally, “patent troll” is used as a derogatory term to describe non-practicing entities, which are entities that own a patent on something but do not use it themselves (they may license it to others or do nothing at all with it other than enforce their patent rights against others). Such entities may “troll” other companies that are allegedly using that patent without permission by sending them threatening letters that if they do not pay up a licensing fee for the patent, that they will take them to court over it.

There have been various cases where businesses have shut down or struggled after receiving these letters or paying the licensing fees. This has become an issue of particular concern in the tech industry where very broad patents have been issued, that arguably never should have been or at least been more narrow. You can check out these two This American Life podcasts on the subject if you want to learn more: When Patents Attack! Part 1; Part 2. However, more specifically, this law was motivated by cases where businesses have received threatening letters without much information as to who they were coming from or what the basis was for the alleged infringement.

HB-1063 aims to combat this by allowing Colorado’s Attorney General to go after people who send threatening letters in bad faith to companies asking for money over alleged uses of their patents by the company. The act would apply to instances such as where the sender of the letter falsely claims that litigation has been filed against the recipient or related persons, where there is no reasonable basis in fact or law for the allegations (such as if the sender does not own the patent in question or have any authority to license or sell it). The act can also come into play when the sender does not provide enough information to the recipient. Required information would generally include:

  • Identity of the person sending the letter
  • The number issued by the USPTO of the patent in question
  • Factual allegations regarding the specific areas that the recipient’s activities (products/services/technology) infringed the patent in question

Note that this law should not prevent anyone who legitimately has the rights to the patent and/or its licensing, unless you fail to send adequate information to alleged violators or send such letters without a reasonable basis. This means that so-called patent trolling will not cease to exist, but it should make allegations of patent infringement more substantive, clear, and transparent. This should also reduce abusive and more questionable instances of patent trolling.

It will be interesting to see if this law has the desired effect of both reducing the instances of “patent trolling” in Colorado and encouraging technology and knowledge-based companies to begin and grow in Colorado. From a legal perspective, it will also be interesting to see if this law will have any problems with preemption by federal law, basically meaning that this state law could be held invalid by the federal courts because it is incongruent with federal law (this legal concept is based on the Constitution’s Supremacy Clause).

If you have questions about intellectual property issues, please contact the Law Office of E.C. Lewis, P.C., home of your Denver Business Attorney, Elizabeth Lewis, at 720-258-6647 or email her at elizabeth.lewis@eclewis.com.

Trademark Use and E-commerce

As e-commerce businesses have taken off, so have more issues arose relating to use of others’ intellectual property. We’ve already talked about how intellectual property like trademarks can be a delicate situation between businesses trying to protect their rights but trying to avoid upsetting their customers.

So-called patent trolling (generally speaking, this is where a company holds patents but doesn’t use them other than to try to get licensing fees from other companies) has been around for a while, but more recently, we have been seeing what could be called a form of trademark trolling. Basically, these are instances of trademark owners bullying other businesses, not really to prevent consumer confusion, but more so to end some kind of competitive business practice they don’t like (usually against direct competitors or companies selling their competitors’ products).

Take a look at this case between Multi Time Machine, Inc. and Amazon. Here, we have a watchmaker, who does not sell its watches on Amazon.com, suing Amazon for presenting consumers who search for their watches on Amazon.com (usually by entering searches like “mtm special ops”) with results of watches that are similar to MTM. (MTM has registered trademarks for MTM Special Ops and MTM Spec Ops.) Additionally, MTM was unhappy that Amazon failed to indicate to these customers that no results were found when searching for MTM products.

Naturally, Amazon wants to have the appearance of a store that has everything someone could want available for sale, and when it doesn’t have exactly what you were looking for, it wants to offer you the closest product to it. The court in this case referenced the situation where someone at a restaurant asks for a Coke and is instead offered a Pepsi. After all, is the situation in this case that different from walking into a department store and asking for a particular brand watch and the salesperson directing you to similar watches? Whether they tell you they don’t have that specific brand or not, you would probably figure it out pretty quickly by the absence of the brand name you were looking for on the products you were shown and the existence of different brand names in their place. Or perhaps the internet is different from this example, and companies like Amazon are trying to confuse customers into purchasing their alternatives under the guise of being made by MTM. Either way, the primary concern in trademark law is whether or not there is a likelihood of consumers being confused.

Ultimately, the court did not find MTM’s arguments persuasive and determined that there was no likelihood of confusion between MTM’s products and Amazon’s alternative offerings as search results. However, MTM appealed the case to the 9th Circuit, who recently heard oral argument on the matter.

Trademark rights are designed to prevent consumer confusion in the marketplace. We don’t want consumers to be confused about who makes the product they are buying, so we don’t let companies use the same or confusingly similar names on their products, especially if they are selling similar products.

If your business is thinking about using another company’s trademark, even for comparative or other purposes, it is a good idea to talk it over with a knowledgeable attorney. If you need help regarding trademarks, do not hesitate to reach out to the Law Office of E.C. Lewis, P.C., home of your Denver Business Attorney, Elizabeth Lewis, at 720-258-6647 or email her at elizabeth.lewis@eclewis.com.

Non-Compete Agreements in CO

Simply put, non-compete agreements are contractual agreements that generally provide for individuals not to compete with their employer while they are employed and for a period of time after leaving the company. Even the sandwich company, Jimmy John’s, has been under fire for its broad non-competes for its low-level employees including sandwich makers and delivery drivers not to compete with any restaurant that sells sandwiches for two years.

Generally speaking, all states require non-competes to be “reasonable” to be valid, but some states go even further. California considers almost all non-competes to be invalid by default, which some claim sparked the economic boom in Silicon Valley by fostering competition.

Here in Colorado under C.R.S. § 8-2-113, non-competes must fit within four particular exceptions to be upheld in court as valid and enforceable.

These specific exceptions include:

  1. Contracts for the purchase and sale of a business or its assets
  2. Contracts for the protection of trade secrets
  3. Contracts providing for the recovery of education and training expenses of an employee who has served an employer for less than two years
  4. Executive and management personnel and officers and employees who constitute professional staff to executive and management personnel

If the non-compete does not fit within one of these statutory exceptions, then it is not considered to be valid in the State of Colorado. However, even if it may appear to fit within an exception, there are still fact-specific considerations and other reasonableness concerns as to the specific applicability and terms of the agreement that need be considered. So before you have your employees sign a non-compete or think about starting your own business when you have already signed a non-compete, be sure to speak with a knowledgeable attorney first to find out more about its enforceability.

Even if it looks like it would be considered unenforceable by the courts, there is always some level of risk in taking it to court. Additionally, there is a lot of time, money, and stress involved in that process, so it may still be a good idea to wait out the agreement or even try negotiating a settlement between you and the company. With these other considerations in mind, the importance of discussing the options with an experienced attorney is even more vital.

If you would like help in drafting or reviewing a non-compete for you, reach out to the Law Office of E.C. Lewis, P.C., home of your Denver business attorney, Elizabeth Lewis at 720-258-6647 or by email at elizabeth.lewis@eclewis.com.