IOC Takes (chemical element) Au Medal in Trademark Bullying

Its Olympics time again. That means another opportunity to bash the International Olympic Committee (IOC) and its National Olympic Committees (such as the United States Olympic Committee or USOC) for trademark bullying. Every two years we hear about the little shops and businesses, particularly those in the country of the scheduled games, that are advised, warned, or even threatened to take down signage that displays the 5-ring symbol, the words “Olympic” or “Olympiad,” or any other mark exclusively reserved for use only by the Olympics organization. That currently includes any reference to “London 2012” and “30th Olympiad” as well as various combinations of words associated with the Olympics, such as “games,” “gold,” “silver,” “bronze,” “London,” “2012,” etc. You get the picture.

No question, there are some choices made by the Olympics organizations that do appear a little harsh. The Minnesota band The Olympic Hopefuls, for example, became The Hopefuls, the Ferret Olympics, a fundraising event by a Eugene, Oregon ferret shelter, became the Ferret Agility Trials, and Nebraska Wesleyan University’s annual psychology department Rat Olympics became the Xtreme Rat Challenge.

Anyone familiar with trademark law would reasonably ask how these uses of “Olympics” could possibly create a likelihood of confusion—the standard for trademark infringement. While the such marks are subject to standard trademark protection by virtue of their use and registrations under applicable trademark laws, certain specified marks are subject to special statutory protection under the Amateur Sports Act of 1978 which is frequently cited as establishing an absolute bar to any use that does not meet certain very limited exceptions outlined in that Act.  Can you blame the USOC for taking advantage of its broad statutory rights?

Before answering, it should be noted that the Olympics were financially strapped throughout most of their history. It has only been in the last 25 – 30 years that Olympic marketing has generated significant revenues to support athletes, develop training facilities, and assist those hosting Olympic events. Much of that revenue comes from big companies paying big dollars for marketing rights. And those marketing rights hinge on brand exclusivity. Is there any doubt that the IOC and its National Olympic Committees feel pressured to protect such valuable assets for the benefit of (and perhaps even on demand of) sponsors? And, given the number and breadth of unauthorized uses, can you blame these Olympic organizations if their demands are a little brusque and their sweep a little impersonal?

Probably not…if you’re talking strictly about commercial infringers. But many are not, and maybe they deserve special handling, although not the kind used by the USOC in its cease and desist letter to Ravelry, a social network for knitters.

Ravelry was preparing to host its third “Ravelympics,” a knitting competition for persons watching the Olympic Games. Instead of sending a simple letter explaining the law and requesting a name change, the USOC sent a letter that, among other things, claimed that Ravelry’s use of “Ravelympics” in connection with events such as an afghan marathon and scarf hockey “tends to denigrate the true nature of the Olympic Games” and “is disrespectful to our country’s finest athletes.” Here is an organization with a solid legal basis for its position, and it chooses instead to be insulting. Not a smart move, particularly in today’s social media environment—especially when dealing with a social media based organization!

In the spirit of goodwill, couldn’t the USOC have said something less mean or insulting? How about:  “We have this law regarding use of these marks. We understand that it wasn’t your intention to violate the law, and that your infringement is most likely a desire to share in the excitement and goodwill symbolized by the Olympics. Unfortunately, we have a responsibility to the numerous Olympic organizations around the world, and to our sponsors, to control use of our marks, and cannot allow any use that is not expressly authorized and strictly used for the benefit of the Olympics. Please acknowledge that you will cease use of _________ within ___________ or we will be obligated to pursue legal redress. We appreciate your cooperation and apologize for any inconvenience.”

I realize this approach wouldn’t work in all cases, but it might make a few feel more like part of the team. Save the bullying until it’s needed.

I need a vacation from my vacation

My inbox has at least two dozen links to the story of Bart Lorang, CEO of Denver-based internet start-up FullContact, sending his employees on vacation while picking up the tab (not to exceed $7500).

There are strings attached, but not the ones you may think. The fully-paid vacation requires that you actually go on vacation—and connectivity back to the office is verboten (“no calls, emails, tweets, or work of any kind”). Full disclosure, I’m posting this while on vacation with my family. Better yet, we’re at a camp with the motto “A Vacation with a Purpose,” which, among other things, also implies that I shouldn’t be in contact with the office.

After reading the article and getting over the “that would be really cool” aspect (it took about 5 seconds), I could sense my blood pressure rising as I thought about how impossible it would be to do that. As I was thinking about clients, co-workers, and friends, I could not think of one person who could completely “unplug” from their business (owners in particular) or job. Could it be because “work” (as it’s broadly defined) is more than just work?

I found it particularly interesting because Bart Lorang, by his own admission, stated “I suck at it” regarding following his own rules. I was reminded of an often-cited New York Times article that collected scientific and informal data indicating that taking time away from work actually has positive health aspects. The data “… looked at 12,000 men over nine years who were at high risk for coronary heart disease. Those who failed to take annual vacations had a 21 percent higher risk of death from all causes and were 32 percent more likely to die of a heart attack.” Yuck. But I suppose a heart attack is a good reason to take time off.

So, if a vacation is supposed to be a good time to unplug, take time off, enjoy time with family and friends, and it’s also good for your health, why are we not taking time off, and  forfeiting unused vacation time, all the while tethered to our phones and laptops? I think I can sum it up in one word: Duty.

When I was growing up, I remember my father taking about 1 week off (usually the middle of summer between different corn and wheat harvests). His generation never took much time off because they were “married to their jobs” and in the case of farmers “married to their crops.” It was our livelihood. Being in an increasingly post-agrarian economy, that same mentality and sense of duty is still woven into our DNA. We are determined to do our part (whether business owner or entry level employee) to ensure the success of the companies we work for.

In some ways, I hope we never shake that sense of duty. In others, we need to get better at it because (as my brother often reminds me) when we’re old, we’ll likely never reflect and say ‘I wish I spent more time at the office’… As for me, I’m getting a C- on my vacation and my wife thinks I’m back in the family automobile looking for something (I think I found it)…

Pre-Transaction Estate Planning Part 2: Grantor Retained Annuity Trusts (GRATs)

Building on the first installment of this series (the simple gift of business units), this second post will discuss the first leveraged gifting option—grantor retained annuity trusts, more commonly known as GRATs. Estate planners love acronyms, so almost every specialized technique will have some kind of acronym associated with it.

A GRAT is an irrevocable trust that is established by the grantor, and the grantor pays all the income taxes associated with the assets held in the trust. The trust is established to last a certain period of years, usually 2-5 years. Right now there are no limitations on the term length, but that is something Congress is considering changing.

The grantor transfers assets to the trust, and then retains the right to get ALL the assets back in annual installments in the form of an annuity. In addition to getting all the assets back, the grantor receives a prescribed interest rate. Any growth the assets have over the initial value plus that interest rate, the trust retains tax free. Generally the lower the rate, the more successful the trust is. After the prescribed term of years, the trust usually continues for the lives of children. Just as in the example in Part 1, if you anticipate your business will grow in value, have a sale event, go public, or experience some other appreciation event, you can capture all of that appreciation tax free.

Example. Business owner transfers $10,000,000 of appraised business assets to a GRAT for a three-year term. The business owner will receive three annual payments of $3,400,200 based on August’s rate of 1.0% (an all-time low), and if the assets grow at 10%, the trust will contain over $2,000,000 after the three years. All tax free. If the assets grow 30%, say in a sale, the remainder left in the trust will grow to $8,400,000 tax free.

If the assets go down in value there is no risk to you as grantor; the assets are treated the same as if you held the assets in your own name. There are no income tax implications to transferring the stock to the trust and there are little to no gift tax implications. This is a great technique if you are expecting an appreciation event, or even have steadily appreciating business assets. The lower the interest rate, the better the technique works, so now is the time to take advantage.

From Groucho to Aristotle: Understanding Technology Transactions

Groucho Marx: Now pay particular attention to this first clause, because it is most important. The party of the first part shall be known in this contract as the party of the first part. How do you like that, that’s pretty neat eh?

Chico Marx: No, that’s no good.

Groucho: Why? What’s the matter with it?

Chico: I don’t know. Let’s hear it again.

Groucho: So the party of the first part shall be known in the contract as the party of the first part.

Chico: Well it sounds a little better this time.

Groucho: Well it grows on you. Would you like to hear it once more?

Chico:  Just the first part.

Groucho: What do you mean, the party of the first part?

Chico: No, the first part of the party of the first part.

Groucho: All right. It says the first part of the party of the first part shall be known in this contract as the first part of the party of the first part—look, why should we quarrel about a thing like this, we’ll take it out, ok?

Chico: Yes. It’s too long anyhow. Now what have we got left?

So starts the contract negotiation scene from A Night at the Opera, and so started our workshop entitled A Legal Guide to Technology Transactions (see my earlier post) held on June 22 at Gray Plant Mooty. My fellow entreVIEW blogger, Karen Wenzel and I used the Marx Brothers to have some fun with key issues like limitations of liability, risk avoidance, source code, acceptance testing, warranties, and intellectual property rights, as well as to illustrate the many issues involved in the acquisition of complex technology and related agreements. The point was to make sure that when these agreements are negotiated they are easily understood, accurately reflect the business deal, and are reasonable in how they allocate risks and opportunities.

So after Groucho and Chico reduce their lengthy contract to just a few clauses that appear to capture the essence of the agreement they continue to parse through the agreement:

Chico: Hey wait, wait. What does this say here?

Groucho: Oh that? Oh that’s the usual clause. That is in every contract. That just says “If any of the parties participating in this contract are shown not to be in their right mind, the entire agreement is automatically nullified.”

Chico: Well, I don’t know.

Groucho: It’s all right, that’s in every contract. That’s what they call the sanity clause.

Chico: You can’t fool me, there ain’t no sanity clause.

Our workshop started with Groucho and ended with a quote from Aristotle—

“How many a dispute could have been deflated into a single paragraph if the disputants had dared to define their terms?”

Keep it simple. While it can be a challenge, given the lethal combo of technical and legal jargon in these types of agreements, the parties must focus on how to put together a written agreement that everyone (not just the lawyers and computer programmers) can understand.

If you missed our captivating performance, you can still get a free copy of A Legal Guide to Technology Transactions in hard copy or CD-ROM from Gray Plant Mooty or the Minnesota Department of Employment and Economic Development (DEED). You can also view and download a copy from either the Gray Plant Mooty web site or the DEED web site.

We were overwhelmed by the turnout at this event and may do a repeat performance. Let us know if you are interested in hearing the content (and getting a chance to see us don our Marx Brothers garb). We are also looking for topics for future workshops so let us know what issues are keeping you up at night or what you would simply like to learn more about. We might even put on a show…

Pitch Advice Worth Its Weight In Gold

In our Twitterated universe (where people no longer write anything in chunks larger than 140 characters), the business plan has evolved to match. Five years ago, an entrepreneur looking for an angel investor would send an executive summary hoping to pique the angel’s interest enough to garner a request for a full business plan. In the current climate, it seems nobody writes full business plans anymore and investors are more apt to request a “pitch deck” from a hopeful entrepreneur.

With this squarely in mind, we invited renowned Silicon Valley “Demo Coach” Nathan Gold to town last week to work with our clients. Nathan has worked on thousands of pitches and his “students” have won many awards and competitions—and secured capital—on the strength of their pitches. Nathan was introduced to us by Frank Vargas, our colleague with the “view from Mountain View.” Frank met Nathan as he’s been networking his way through Silicon Valley.

The event, which featured presentations and one-on-one coaching sessions, culminated with a pitch competition among participants (think "Dancing With The Stars," without all the glittery dresses). There were card tricks, mental exercises, and plenty of humor—as you might imagine, a guy whose business and reputation is about creating great presentations needs to be a pretty great presenter himself.

Participants learned about the importance of stories, analogies, metaphors, examples, and similes. They also learned how critical it is to grab the attention of the audience in the first 30 seconds, as well as how to use emotion to keep them engaged. They also learned about presentation resources—if you haven’t checked out Prezi (the panning and zooming cloud-based software) you’re probably at least a couple of months out of date. Of course, a couple of months in our tech-centric world can be an eternity.

Interestingly, it sounds like the trend on the West Coast is for even less written content. Nathan explained that many entrepreneurs now send a 60-90 second video instead of an executive summary (still usually followed by the “pitch deck”). I wonder how long it will be before angels impose a 140 character limit of their own on communications…

Walt Disney: The Triumph of the American Imagination

The Book: Walt Disney: The Triumph of the American Imagination, by Neal Gabler (Alfred A. Knopf, 2006).

Why You Should Care: A testament to what one man with a singular vision can create over the course of a lifetime.

Following two consecutive posts from my recent journey in the wilds of fiction, I return today to my comfort zone—non-fiction—and particularly to the wonderful world of biography. In doing so, I risk stepping on the toes of my fellow entreVIEW editor, Dan Tenenbaum. In addition to being a first-class counselor and advisor to entrepreneurs, Dan happens to have a thing about Walt Disney. Want proof? Check out his profile or his wardrobe, for that matter. It is a rare day that Dan is not sporting an item of clothing featuring one Disney character or another. This is a sartorial mannerism I personally much prefer to the overdone bow-tied lawyer affectation.

But, as Dan knows, he is not alone in his enthusiasm for all things Disney. I myself almost named Disney in my profile as the one person, living or dead, with whom I would like to dine, but at the last minute went with Winston Churchill or Franklin Roosevelt. (I must have been feeling especially embattled on that day.) At any given moment, it would be easy to change my mind to Disney instead. There’s just something about the world he created that is supremely reassuring and comfortable, and not just for children. My wife and I had one of our best vacations ever when we went to Disneyworld before the kids had arrived on the scene.

It turns out—no big revelation here—that Dan and I aren’t the only people who feel this way. Enter Neal Gabler, whose 2006 biography, Walt Disney: The Triumph of the American Imagination, is a definitive tour de force of all things Disney and why we love them so much. And not just us: Gabler quotes the New York Times, in eulogizing Disney following his death in 1966, as describing him as “probably the only man to have been praised by both the American Legion and the Soviet Union.”

But it was America and the American consciousness that Disney reshaped. His list of accomplishments is long: he essentially invented animation, he “reconceptualized the amusement park as a full imaginative experience,” and he created the first modern multimedia corporation. He was an entrepreneur, but Gabler tells us he was “a reluctant one.” He had a vision for creating a “perfect world that conforms to our wishes,” where “the fabricated [is] preferred over the authentic and the real world purged of its threats.” This, from the man who was, “along with Norman Rockwell, the leading avatar of small-town, flag-waving America.” These visions drove his achievements, not economic reward—although economic reward surely followed in spades.

This is a wonderful story—though, at some 630 pages, not so short—about a man whose life epitomizes the axiom, Do what you love and the money will follow.

A July 4th Perspective on JOBS Act Timing

I recently learned that July 4th wasn’t the actual date that the Declaration of Independence was signed (that was August 2). I guess the issues government officials are having with the calendar enacting rules under the JOBS Act just continues a trend that was established well over 200 years ago!

If you have been following our coverage of the JOBS Act, (Dan Tenenbaum  has been tracking the legislation’s progress particularly closely), we’ve been trying to provide insights into how this might impact our typical entrepreneurial clients. Dan’s most recent post on the topic can be viewed here.

Like our very own version of Nostradamus, Dan predicted in this much earlier post that the SEC would miss deadlines established in the law. Last week the SEC Chairman, in remarks before a House committee, acknowledged that the SEC will not meet the initial deadline for required rulemaking related to general solicitation. As you’ll recall, one of the more significant aspects of the legislation (perhaps the most significant for our typical clients) is that general solicitation will now be permitted in Rule 506 offerings, so long as all purchasers are accredited investors.

The SEC was to revise Rule 506 for this change regarding general solicitation within 90 days of the legislation’s enactment, which was on April 5, 2012. For those of you (like me) who aren’t so good at math, that deadline would expire just about the 4th of July. As Chairman Shapiro noted in her remarks, however, “the 90 day deadline does not provide a realistic timeframe for the drafting of the new rule, the preparation of an accompanying economic analysis, the proper review by the Commission, and an opportunity for public input. Although we will not meet this deadline, the staff has made significant progress on a recommendation and economic analysis, and it is my belief that the Commission will be in a position to act on a staff proposal in the very near future.”

I have no idea what it means when the SEC says that they will be in a position to act on the proposal “in the very near future,” but I wouldn’t put your weekend after the holiday plans on hold pending a release (not sure about your Labor Day plans).

Notwithstanding the not-so-shocking news that this initial deadline will be missed, and perhaps other deadlines to follow, the remarks provide a good summary of the JOBS Act and the changes that are likely to result once the SEC is able to implement the rules.

We’ll continue to track this legislation and provides updates when warranted.