Featured Comic: Friends, Family & Fools 11/25/13

Tee Up to Receive 2014 Minnesota Angel Tax Credits

The Minnesota Department of Employment and Economic Development (DEED) is now officially accepting applications for businesses and investors who hope to receive a portion of the $12 million in tax credits available in Minnesota beginning on January 1, 2014. 

The process is a multi-stage endeavor, but the ability to get started ahead of the new year definitely gives businesses and investors a leg up in ensuring they secure an allocation. At a high level, here are the requirements for qualification and submission that aspiring businesses can start working on now:  

• Ensure your company meets the eligibility requirements for the program by working through this Business Certification Checklist.

• If you believe your business qualifies, submit the 2014 Business Certification Application to DEED with the required fee. Your company will receive a certification approval email from DEED within 15 to 30 days confirming your qualification for the program, and your name will be posted on the DEED website’s list of qualified businesses. 

• Ensure your investors meet the qualifying requirements by having them work through the Investor Certification Checklist. 

• Have each investor submit the online Investor Certification Application and follow the instructions to sign the receipt and relay the required filing fee. Investors will receive their own certification approval email from DEED within 15 to 30 days confirming their qualification, and their names will be posted on the DEED website’s list of qualified investors. 

• After both your company and potential investors are certified, jointly submit a 2014 Credit Allocation Application. This will get you in the queue for an allotment of the $12 million in credits, which DEED will begin to process come January. Once you receive approval of your allocation (DEED will send both parties an email), you’re ready to move forward with the investment transaction!

There are additional steps involved once a transaction is complete, but the above points are gate-keeping items and can help get you ahead of the game this year. As of now, 2014 is the last year scheduled for the program, so its popularity and demand will likely be at an all-time high. In fact, it’s not far-fetched to project that the $12 million allocation may dry up within the first quarter of the coming year. If you’re planning to raise money utilizing the Angel Tax Credit, it makes sense to start the process now. And, of course, Gray Plant Mooty is always happy to assist at any stage of the process!  

A Post by Karen Wenzel, Guest Blogger

Maybe the Dog Ate His Homework

When I heard that Rand Paul had plagiarized Wikipedia, I was intrigued.   What would Wikipedia do?  I waited. I listened.  I heard nothing.  But as the story unfolded, and other instances of plagiarism were uncovered, I noted a great deal of confusion about whether Rand Paul was guilty of anything.

An article in the Daily Kos by Allan Masri (“Not plagiarism:  Rand Paul quotes Wikipedia”, 10/30/13) is a perfect example.  As suggested by the title, Masri argues that Paul is not guilty of plagiarism because he merely “quote[d] a Wikipedia article” and “cited a number of passages.”  In other words, Paul is not plagiarizing “because he is reviewing the plot from the movie, Gattaca” and he “says at the beginning of his remarks that all these ideas come from the movie.”  Masri has the right idea about what constitutes plagiarism, but applies the principals incorrectly to Mr. Paul’s speech.  

Paul lifted, without attribution and without changing the wording, a substantial amount from the Wikipedia content regarding the movie Gattaca.  Had Paul stated that he was quoting Wikipedia’s summary of the movie, he would not be guilty of plagiarism.  He didn’t.  Had Paul watched the movie and summarized it in his own words, he would not be guilty of plagiarism.  He didn’t.  Had Paul read the Wikipedia summary and paraphrased it, he would not be guilty of plagiarism.  He didn’t.

No one thought he was presenting the movie plot as his own idea – he was very clear with his reference to the movie Gattaca – but in listening to his speech, one would certainly believe that his description of the movie and its central plot points was in his own words and conveyed his own impression.  It wasn’t.  He presented someone else’s words as his own.  It may have been unintentional.  It probably has no commercial consequences to the original author (if that’s even relevant in a Wikipedia item).  But that doesn’t mean it wasn’t plagiarism.  It is.

As a lawyer, I was viewing Mr. Paul’s actions in terms of legal consequences, and frankly wasn’t seeing a whole lot to get worked up about.  So he lifted some words from Wikipedia.  Big deal.  It’s plagiarism, but without any real commercial consequence, so who is really going to care?

Happily, I am finding that plagiarism is considered a big deal by many, and highly relevant when evaluating politicians.  Plagiarism has always been an important issue in academia and journalism and, to their credit, these professions remain committed to discouraging plagiarism – not because it might be illegal or cause commercial harm, but because it is unethical.  It is bad behavior.  It suggests laziness, irresponsibility, lack of creativity, dishonesty, and any number of other unattractive characteristics.  And isn’t it right that those standards are being applied to politicians?

While one might still make excuses for a single instance of plagiarism, Paul compounded the problem by denying the infraction, blaming others, saying he didn’t do it on purpose and /or claiming no-harm-no-foul.   Oh, and then there are the other instances of plagiarism…

To Patent or Not to Patent

Mathematical proofs—remember those from as far back as high school geometry?  Wait: That sounds painful and boring.  This isn’t a blog post about math; it’s a post about patents…ummm, that also sounds boring and painful, doesn’t it?  Well, just trust me and keep reading.  I will make this as entertaining as possible.  

My point here is that preconceived notions about patents and technology could be causing businesses that are developing new technologies to place too much focus on patents.

As the mathematician might put it, the prevailing view seems to be that software is technology.  Patents protect technology.  Therefore, one needs to get patents to protect software or software-based technology.

In the words of Lee Corso, Not so fast, my friend.

It may very well be the case that businesses and individuals should seek patent protection for their software based inventions.  But a software patent, or a large portfolio of software patents, may not protect the patent holder’s rights as solidly as the patent holder may think.  In fact, software patents are under some serious fire in the courts these days. 

The Federal Circuit Court of Appeals is the court that will review any patent case that is appealed.  It was created to harmonize patent law.  In the space of software patents, however, the Federal Circuit is anything but harmonious.

As it stands today, there are several unsettled questions related to software patents.

First, there is an ongoing debate as to whether software is even patentable.  Neither the Federal Circuit nor the Supreme Court has provided effective guidance here. The United States Patent and Trademark Office, the agency that issues patents, seems confused as to what to do.  The long and the short of this debate is that even if one gets a software patent, the courts may very well not enforce it.

Second, courts occasionally find that some software ideas are really just old ideas that are now simply being done on the Internet. Merely using known electronic systems or methods to implement known concepts cannot result in a valid patent. If the USPTO happened to issue a patent like this to you, it also may end up as nothing more than a paper tiger when you go to enforce it.

Third, even if software is patentable and the idea isn’t simply using known systems to implement known concepts, a software patent still can face legal challenges.  For example, if the patent isn’t specific enough—and I mean down to disclosing certain code—it could be invalidated by the courts. 

Now, given this parade of horribles, does that mean businesses and individuals can’t protect their software-based ideas?  No!  What this means is that effective idea protection needs to take multiple forms.  Through contracts, attention to data security, trade secrets, copyrights, and trademarks, the law provides many avenues for protecting software-based ideas. The focus shouldn’t only be on patents. And, depending on your circumstances, perhaps you and your business shouldn’t focus on patents at all.  

Oh, and if this discussion of patent law didn’t entertain you, perhaps Lee Corso getting body slammed by Bill Murray will.

Aren’t you glad you read this whole post now?

A Post by Loren Hansen, Guest Blogger

Some Quick Observations from a Trip to Silicon Valley (Part II)

A little more than a year ago, Dan Tenenbaum posted about impressions garnered during a whirlwind trip to Silicon Valley. It just so happens that a week ago I returned from my own quick trip to the Valley, during which I met with a number of people working in the venture lending space.

This niche involves lending to companies that are beyond the start-up phase and gaining traction in the marketplace. These companies may not yet have attracted the attention of commercial banks or other institutional lenders, or they may need a substantial mezzanine investment to seal the deal with a senior lender, but either way they generally prefer not to give up a substantial equity position (as would be required in a typical venture capital deal). Like venture capital equity deals, the focus in these debt deals is on a successful exit for the capital provider at the end of a predetermined investment period.

So, how’s business in the Valley?

Last year, business was booming when Dan visited. It still is. Two people with whom I met described the capital markets there as positively “frothy.” This I take to mean that deal flow is surging, with more capital providers seeking good deals than there are good companies seeking financing.

All in all, it was a great trip. A bit of a trip down Memory Lane as well. It’s been more than 30 years now since I left Stanford and Silicon Valley behind, eventually to hang up a shingle here in the Midwest. On more than one occasion I’ve paused to reflect that the guy on whom I accidentally spilled beer at the Oasis on El Camino in Menlo Park back in 1982 may have been Steve Jobs. Where would I be now if I’d invested my law school tuition money with him? Sigh. 

Food for Thought

It’s no surprise that for my first entreVIEW blog post, I am writing about the local restaurant scene (see the top three things I am most likely to blog about). I love food. In fact, in law school, some friends and I created an informal food club where each month one person was assigned with choosing a new restaurant. It was a great distraction from the stress of law school! 

A recent trend for Minneapolis restaurants owners is to raise capital through Kickstarter.  Somewhat like Angel List, Kickstarter is a website that provides a platform for business owners to raise capital, but in Kickstarter’s case without giving up equity in their company. On its Kickstarter web page, the company describes the creative project they would like to pursue and the public can support the company’s endeavor by donating funds to the project. In exchange for their capital, the donor will receive a service or good from the business. For instance, Travail sought to raise $75,000 on Kickstarter by offering investors tickets to the soft opening of the proposed new restaurant, cooking classes with the chef, and reservations at their existing restaurant (there’s normally a 45 minute wait).  Travail’s fundraising efforts were hugely successful; they raised $255,669 in one month. 

After Travail’s success, Birchwood, another one of my favorite restaurants, is hoping to raise $100,000 on Kickstarter to fund an expansion of their restaurant. Birchwood is off to a great start, having raised over $30,000 in eight days. 

The question for other restaurant owners (or entrepreneurs for that matter) is whether they can achieve similar success using websites like Kickstarter. The biggest challenge for a business owner is to create awareness of the business’s fundraising campaign and to develop such a strong connection with customers that they want to contribute to the growth of the company. If you have been to Travail, you know that their food is consistently excellent and unique. They have created quite a loyal following with the success of Travail, Pig Ate My Pizza, and Umami.  They have carved out a niche in the Minneapolis restaurant market; customers are willing to wait over an hour to eat at their restaurants. If a business doesn’t have a dedicated following similar to Travail, it may be more challenging to attain its fundraising goals. Vast support from the community is vital to a successful fundraising campaign through online websites like Kickstarter. 

Congratulations to Travail for their fundraising efforts. I look forward to visiting the new Travail with my food club!