Thursday, August 15, 2019

Alastair Mactaggart Joins My Privacy Hall Of Fame

“I just think the data use by these companies is out of control”

--Alastair Mactaggart, California Real Estate Developer

Who is Alastair Mactaggart? He has done more than any other person to expand the privacy rights of individuals in the United States. In 2016, Mactaggart, who earned a fortune in Bay Area real estate, was talking with a Google employee about the amount of personal information collected by companies. This casual conversation led him to fund a citizens initiative that was set to appear on the November 2018 ballot in California. It would have given California residents extensive new rights to control how their data is collected and used by businesses. Following intensive lobbying by tech groups the ballot initiative was withdrawn by Mactaggart and in its place the California legislature (in less than a week) passed the California Consumer Privacy Act (CCPA). Effective January 1, 2020 the CCPA becomes the most extensive consumer privacy legislation ever passed in the United States. It gives Californians sweeping new data privacy rights, including a first-of-its-kind private right of action that will encourage lawsuits against businesses who fail to comply with the data breach portion of the CCPA. What a difference one person (with a lot of money) can make.

Thursday, August 8, 2019

Wage and Hour Risks for Small Businesses

While I am not an employment lawyer, it doesn’t stop my entrepreneurial clients from calling with questions in that domain. It also doesn’t stop friends and family members, who assume having the title “Juris Doctor” means you are an expert on all things legal, from calling asking for me to guide them on employment issues — but that’s a topic for another post.

When clients call, I often provide some high-level thoughts on the issues (stuff that I have learned from some awesome colleagues, who actually are experts in HR-related matters) and, if they need more than that, I hand them off to these same colleagues on the 4th floor for more guidance.

Given that I frequently see early-stage entrepreneurs with limited cash resources struggling with employment-related legal issues, I wasn’t surprised that this recent article, titled “This New Kind of Expensive Lawsuit Could Easily Bankrupt Your Small Business,” was about the risks relating to the failure to comply with applicable wage and hour laws.

Thursday, August 1, 2019

Matt McCarthy, The Real Doctor Will See You Shortly: A Physician’s First Year (Crown, 2015)

Summer associate season has come and gone at law firms across the country. Eager young people dressed to impress are returning to jeans and flip-flops as they contemplate a return to law school in a few weeks. Those of us closer to the end than the beginning of our careers cast their minds back to a time when we could recite the names and holdings of significant court cases but were stymied by the simplest forms.

Ah yes, the distinction between book learning and practical skill. Turns out, the fancy schooling is a necessary but not sufficient precondition to a successful career. This is not news to old-timers. Whatever the field, somehow we must all bridge the gulf between knowledge and implementation.

And, indeed, the process is remarkably similar no matter what your field may be. Take, for instance, Dr. Matt McCarthy. A former minor league baseball player and graduate of Harvard Medical School, he finds himself thrown in the deep end as he begins his internship at a Manhattan hospital. He’s told that Ivy graduates have a reputation for being heavy on theory but light in practical skill. He discovers, to his chagrin, that he fits the stereotype.

The medical internship process may be more immersive than in other professions and lines of business (and the stakes may be higher), but the story arc determined by a steep learning curve is something entrepreneurs will recognize, whatever their background. There is simply no substitute for learning by doing, with the help and guidance of experienced mentors. In time, raging self-doubt will yield to competence and growing confidence. This memoir is a fascinating, and for some no doubt reassuring, reminder of this. 

Thursday, July 18, 2019

Make Time for Lemonade

It was steamy hot this weekend in Minneapolis. The blow-up pool was out on the back lawn 24/7, Saturday required a morning and evening shower, and I thought maybe if I buzzed my head things would be better.

In the midst of this rainforest weather, my young daughters (3 and 5) ran a lemonade stand in the front yard. As I watched over their business operations, it occurred to me: a lemonade stand provides a perfect introduction to entrepreneurship.

Now our kids had it easy as my wife and I did not demand repayment for the costs of their inventory or require a lien on their toys, but they still sold product, served customers, and practiced counting their precious coins (and bills in some cases from generous customers). More importantly, they gained self-esteem and inspiration to plan more for next time.

Meanwhile, the older (9) girl next door stepped it up a notch with a friend. They bought their own supplies (lemons, cups, napkins, sparkling water, watermelon, and cookies) and established a posh stand down on a busy street and, as they say, made bank. Lemonade was 75 cents, but you could make it sparkling for 25 cents more. Want a cookie or slice of watermelon to go with it? That’s another 50 or 75 cents, respectively.

Tuesday, July 16, 2019

Protecting Artificially Intelligent Technologies

By Shantal Pai and Amanda McAllister

Artificial intelligence (AI) is becoming increasingly integrated into modern life. From self-driving cars to smart toothbrushes, AI can and will change the way we interact with the world around us.

The proliferation of AI has some inventors and designers considering how they can protect AI-related technologies through intellectual property rights. There also has been much discussion around how to build, design, and protect AI-related technologies without reinforcing biases and while still ensuring due process rights. 

As AI technology evolves, it has been less and less clear how intellectual property protections will apply to these technologies. For instance, most AI-related technologies are ineligible for patents. Courts refuse patents for “abstract ideas,” including software, and consequently, critical components of AI technologies, including data compilations and source code, may be ineligible for patent protection. 

Consequently, many have been looking to trade secrets as a potentially viable way of protecting rights in AI-related technologies. Trade secrets law protects economically valuable secrets when reasonable measures have been taken to protect their secrecy. In order to protect an AI-related technology as a trade secret, an AI developer must be able to do two things: (1) articulate what the trade secret is, and (2) take steps to protect the secrecy of the technology. 

Wednesday, July 10, 2019

Advertising Law and Social Media Law – A Case Study for Entrepreneurs

By Jonathan Husted and Kirsten Donaldson

All startups and budding entrepreneurs want to get the word out about their business, and social media makes advertising extremely accessible even for entrepreneurs with low marketing budgets.

Like everything else though, advertising — including advertising done on social media — must be truthful and nondeceptive and abide by a certain set of rules. What potential pitfalls might be waiting for a new business advertising on social media? Let’s take a look…

Meet Sally. Sally is excited to launch into her second career — operating a mobile ice-cream food truck called “Scoops in the City!” Sally used some of her savings to purchase and refurbish a used food truck, and is employing her daughter Madison specifically to launch her new venture’s social media presence. Sally loves her city, and she wants her ice-cream truck to be associated with the same charming aspects of the city that makes her call it home, including the well-known local baseball team. And you really can’t miss the truck — Sally commissioned a friend of hers to paint the truck to look like an ice-cream sundae, with bright and sparkly sprinkles all around. Now Scoops is ready for business!

Scoops plans to park outside the local baseball stadium before games to catch families on their way to and from the ballpark. One morning, Madison suggests that they have an informal photo shoot that evening when Sally takes the truck to the stadium so she can post pictures on various social media pages. Madison’s friend, Sawyer, has a camera and considers himself a semiprofessional photographer, and he’d be happy to stop by the stadium to take some pictures for Sally as a favor — no photography contract needed among friends, he thought.

Tuesday, July 2, 2019

MN DEED Now Accepting Applicants for Minnesota Angel Tax Credit Program

Summer is in full swing and as you prepare to head to the cabin for the fourth of July, now is a good time to review exciting news for Minnesota entrepreneurs! After a several year hiatus, as of July 1, 2019, the Minnesota Department of Employment and Economic Development (DEED) once again accepts applications from businesses, investors, and funds to participate in the Minnesota Angel Tax Credit program. If you are an avid follower of this blog (and you should be), you probably are already aware of the historical popularity of the Minnesota Angel Tax Credit and some of its limitations. If you are not a frequent reader or are new to the entrepreneurial scene in Minnesota, below are some highlights of the 2019 Angel Tax Credit program.

  • Minnesota’s Angel Tax Credit provides a 25% credit to investors, or investment funds, that make equity investments in early stage companies (with a particular focus on high technology, new technology, or new proprietary products, processes, or services in select fields). 
  • The maximum credit is $125,000 per person, per year ($250,000 if filing jointly) and the credit is both refundable and available to residents of other states and foreign countries. 
  • For 2019, the Minnesota legislature allocated $10 million of tax credits for eligible investments. Until September 30, 2019, $5 million of that $10 million is reserved for businesses owned by women or minorities, or for businesses located outside of the seven county metro area. Beginning on September 30, 2019, any portion of that $5 million that has not been allocated will be made available for all other eligible investments.
  • If you are planning to use the Minnesota Angel Tax Credit for an investment in 2019, you should plan on becoming qualified as soon as possible. Many companies are submitting applications now, and some have even delayed financings that would have been otherwise completed at this point in the year.

As a reminder, the process requires that the company be certified as a qualified business and that the investor also be certified as a qualified angel. Both of these steps require filings with DEED. Once the company and investor are both certified, they must jointly submit a credit allocation application.