Carey Law, a Seattle Corporate, IP, and Internet Law Firm

Washington Leads The Pack In a New Venture Capital Study

Fri, 18 Sep 2009 00:00:00 -0500

A new report from the venture capital industry's chief lobbying group, the National Venture Capital Association, takes a look at the impact which venture has had on the U.S. economy. In particular, there is good news for Washington State: the report finds that Washington had the best employment growth and revenue growth at venture-backed companies of any state between 2006 and 2008.

John Cook of Seattle tech blog TechFlash provides commentary of the NVCA Report.

Seattle Startup Weekend is Coming

Mon, 07 Sep 2009 00:00:00 -0500

Startup Weekend recruits a highly motivated group of developers, business managers, startup enthusiasts, marketing gurus, graphic artists and more to a 54 hour event that builds communities, companies and projects.

As the website explains,

Startup Weekend provides an unprecedented level of networking, team building, learning, and life changes for its attendees and their communities. Don't forget that there will be 6-7 meals and drinks provided. There is a reason that most attendees come back for every event - it's just plain fun and provides amazing opportunities you can't get anywhere else. Sometimes a company emerges, sometimes one doesn't, but every time people leave with more experience, insight, knowledge, friends, and resources than they came with.

Startup Weekend happens nationally and in Seattle on November 20th-22nd.

Court: Yahoo's LAUNCHcast not `interactive'

Tue, 18 Aug 2009 00:00:00 -0500

LOS ANGELES (AP) - A federal appeals court in New York says Yahoo's LAUNCHcast music service is not "interactive" enough to require separate licensing deals with recording labels.

The 2nd U.S. Circuit Court of Appeals said Friday that LAUNCHcast did not offer its users enough control over selecting songs for personalized webcasts that they would choose that over purchasing music.

The ruling allows LAUNCHcast to pay a set fee through the U.S. government, one that tends to be cheaper and doesn't require negotiations with individual labels.

The ruling in favor of LAUNCHcast and against subsidiaries of Sony Music Entertainment covers operations from 1999 to 2001.

Since relaunching in February powered by CBS Radio, LAUNCHcast no longer offers webcasts based on individual preferences, although Yahoo Inc. says it has been working to relaunch that.

Lawyer defends song swapper in Mass. download case

Sun, 02 Aug 2009 00:00:00 -0500

BOSTON (AP) - A Boston University graduate student was "a kid who did what kids do" when he swapped songs through file-sharing networks like Kazaa, his lawyer said Tuesday as his copyright-infringement trial began.

In only the second music-downloading case against an individual to go to trial, the major recording labels accuse Joel Tenenbaum, 25, of Providence, R.I., of downloading and distributing songs from such bands as Green Day and Aerosmith. The case centers on 30 shared songs, though the recording companies say he distributed many more than that.

Last month, a federal jury ruled a Minnesota woman must pay $1.92 million for copyright infringement.

The industry has typically offering to settle cases for about $5,000, though it has said that it stopped filing such lawsuits last August and is instead working with Internet service providers to fight the worst offenders. Cases already filed, however, are proceeding to trial.

Charles Nesson, the Harvard Law School professor representing Tenenbaum, said his client - a graduate student in physics - started downloading music as a teenager, taking advantage of file-sharing networks that make it possible for computer users to share digital files with a network of strangers.

"He was a kid who did what kids do and loved technology and loved music," Nesson said in opening statements.

Nesson said the recording companies enjoyed decades of success but were to slow to adapt to the Internet.

"The Internet was not Joel's fault," Nesson said. "The Internet sweeps in like the way the automobile swept into the buggy industry."

But Tim Reynolds, one of the lawyers representing the recording industry, said song-swappers like Tenenbaum take a significant toll on the recording industry's revenues and on backup singers, sound engineers and other people who make a living in music.

Reynolds said Tenenbaum used a computer in his parent's house in Providence and then at Goucher College in Baltimore, where he was a student, to download and distribute digital files. He was flagged in August 2004 by MediaSentry, a private investigation company that was used by the recording industry to identify illegal song distribution.

Reynolds said that Tenenbaum continued distributing songs even after he had been confronted about it and that the defendant blamed his sister, friends and a foster child who had lived at the house.

"This defendant knew what he was doing was wrong at each step of the way," Reynolds said.

Under federal law, the recording companies are entitled to $750 to $30,000 per infringement but the law allows the jury to raise that to as much as $150,000 per track if it finds the infringements were willful.

In the Minnesota case, the jury ruled Jammie Thomas-Rasset, 32, willfully violated the copyrights on 24 songs and awarded damages of $80,000 per song.

Nesson urged the jury to "find the minimum number of infringements" by Tenenbaum, if any at all.

Do You Qualify for the State's Self-Employment Assistance Program?

Wed, 09 Sep 2009 00:00:00 -0500

If you quality for unemployment benefits in Washington, you may also qualify for the state's Self-Employment Assistance Program, which offers entrepreneurial training and counseling. To see if you're eligible for SEAP and to fill out an application, visit the Employment Security Department's website.

Agreement Ends Sole U.S. Control of Web-Naming Group ICANN

Wed, 30 Sep 2009 00:00:00 -0500

Washington - The Internet Corporation for Assigned Names and Numbers (ICANN), a non-profit group that controls the Internet's domain name system (DNS), will have significantly less oversight from the U.S. government under a new agreement signed Wednesday with the Department of Commerce.

The deal puts the management of 11-year-old ICANN into the hands of a worldwide panel of government and private-sector representatives, with the goal of protecting the interests of international Internet users.

The U.S. will remain on ICANN's Governmental Advisory Committee.

"This framework puts the public interest front and center, and it establishes processes for stakeholders around the world to review ICANN's performance," said NTIA Administrator Lawrence Strickling.

ICANN was formed in 1998 to oversee the DNS, which allows users to send email and reach websites using simple domain names (such as http://commerce.gov) rather than the numeric network server addresses (such as http://170.110.225.163).

by Mark Hefflinger of Digital Media Wire.

Where Are The Software Deals?

Mon, 23 Nov 2009 00:00:00 -0600

ChubbyBrain offers market and investment information for private companies, VC firms, private equity firms, and angel investors. It's a useful tool if you'd like to see where the investments are occurring within your industry these days.

According a to a recent Xconomy Seattle article, ChubbyBrain shows relatively good numbers for Seattle in October: $70M raised primarily in Healthcare and Gaming industries.

Video: An Inspiring VC Negotiation

Fri, 11 Dec 2009 00:00:00 -0600

LearnVC has a very inspiring (and educational) link to an episode of Shark Tank in which a very skilled founder successfully negotiates a deal with venture capitalists. Check it out here.

Entrepreneur Forum: Can I use Pictures that I find on the Internet?

Tue, 10 Nov 2009 00:00:00 -0600

At a recent forum, I was asked the following question:

I intend to author a book which will be a study utensil specifically targeting certain select academia. I hope to use images to convey certain ideas and there will be a lot of visuals.

Are there pictures that are considered free domain?

Can I use a image that appears to have many multiple sources?

If I find an image I like on the internet, what cues are there to whether or not I can copy/paste this image into my format and sell the final product?

Generally, any photograph that is downloaded from the internet is subject to copyright law (which since 1989, protects works automatically upon creation--though federal registration confers certain benefits such as enhanced damages and is required for certain things, including litigation of copyright matters--another topic altogether). This is true unless the copyright owner specifically grants you a license to use it or elects to release the image into the public domain. Simply posting a photo on the internet does NOT automatically make it public domain.

There are good sites for buying stock image licenses, such as iStockPhoto, but one must carefully read the terms of the license you are buying, as this will govern exactly how you can use the image(s). Also, images released under the Creative Commons license may suit your application, but be sure to check the designations accompanying the license, as various versions are available (look here for a detailed explanation).

An image's having multiple sources is not indicative of any increased ability for one to use it in any way, without obtaining a license.

Aside from an express grant of permission, there is no real indicia for whether you can copy/paste directly from the internet for your own personal/commercial use, unless you find a website that claims its images to be public domain and free for any and all use. Even then, however, one is not in the clear; there may exist an argument that the images were acquired properly, but there is nothing to say that the website conveying such a message regarding its images knows the true copyright status of any of those images.

Thus, the rule of thumb is unequivocally: do not lift images from the web for use in commercial works of any kind.

Disclaimer: Articles on this site do not constitute legal advice, and you should consult an attorney and/or tax advisor regarding any business transactions which you are unsure about. No engagement for legal services exists until expressly agreed upon in writing.

Entrepreneur Forum: C-Corporation for Closely Held Small Web Business?

Tue, 08 Dec 2009 00:00:00 -0600

At a recent forum, an entrepreneur interested in starting a small, web-based e-business asked the following question:

If I were to start a C-Corporation would I be paying any taxes if I weren't making any profits?

He went on to explain that the type of business he was starting would not involve any investors and the planned exit strategy was to operate the business with a long-term revenue model.

The entrepreneur had decided that a C-Corporation was the way to go, but didn't really know why. After addressing the initial question regarding tax in a no-profit situation, I explained to him the following about why a C-Corporation might be a poor choice for his particular business model:

In addition to the more complex tax and accounting issues, operating a C-Corp means that loss carryback/carryforward occurs only at the corporate level. In other words, if you as an individual shareholder experience loss (which is possible for many businesses within the first year), you cannot write it off of your personal taxes. This can produce a less-than-ideal outcome.

If you insist upon going this route, you should at a minimum become familiar with what is called Section 1244 (Small Business) Stock, and find an attorney to structure your C-Corp in order to take advantage of this exception to the general rule (allowing $50,000 of loss deduction personally to shareholders ($100k if filing jointly)).

Should I burn my 401K to start a business?

Tue, 19 Jan 2010 00:00:00 -0600

Seattle 2.0 recently published a great article regarding the pros and cons of utilizing one's existing 401(k) for bootstrapping a startup. Check it out here.