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Earlier this month, in Altavion, Inc. v. Konica Minolta Systems Laboratory, Inc., The California Court of Appeals held that patentable ideas that are kept secret can be protected by trade secret law. This decision clarifies an area of law that was muddied in 2010 by the court’s decision in Silvaco Data Systems v. Intel Corp., which seemed to indicate that trade secret law did not protect such ideas. This seeming change in the law is a good reason for California businesses, both small and large, to contact a licensed attorney who practices business and commercial law.

The Court’s opinion in Altavion starts by explaining the purpose of trade protection, that it “promotes the sharing of knowledge, and the efficient operation of industry by permitting the individual inventor to reap the rewards of his labor by contracting with a company large enough to develop and exploit it.” The basic idea is that those who come up with ideas should be able to pitch their ideas to companies without fear of the company using the idea without compensating the person who came up with it

Altavion invented a process for creating self-authenticating documents through the use of barcodes that contain encrypted data about the original documents. Konica Minolta is a research subsidiary of a company that manufactures multifunction printers. The two companies entered into negotiations for Konica Minolta to use Altavion’s newly developed technology. Of course, in those negotiations, Altavion had to disclose details about the technology, so both sides agreed to a nondisclosure agreement. After negotiations proved unsuccessful, Altavion learned that Konica Minolta had filed for patents encompassing Altavion’s technology.

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May 12 through May 16, 2014 is National Small Business Week. This very special week celebrating the entrepreneurs who drive our economy has been recognized by the President of the United States each year since 1963. The week provides an opportunity to recognize the sacrifices of those who take the brave steps to start their own business. This year’s National Small Business Week is particularly exciting, though, because new survey results have been released that show that women are performing exceptionally well as small business owners.

Women are Starting their own Businesses

The San Jose Mercury News reports that women are starting small businesses at what it calls a “torrid pace.” An American Express analysis shows that women are starting 1,288 companies each day in the United States. This is a massive jump from the 602 companies that they started each day in 2011-2012. The total number of women-owned businesses in the United States has risen by 68 percent since 1997. The same survey shows that female small business owners are starting businesses that deal predominantly with educational services, administrative services, are involved in arts and recreation, or that handle waste management.

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Documentary transfer taxes are something any small business owner needs to consider when making real estate decisions for the business. Each municipality may have different taxes, and tax codes change over time, so before making any final decisions about your business, you should speak with a licensed Oakland real estate attorney. However, the following basic principles can help you understand what documentary transfer taxes are and why you should consider them in any real estate deal.

What is a Documentary Transfer Tax?

On a very basic level, documentary transfer taxes are taxes levied on the documents related to real estate transfers. California law allows the board of supervisors of any county or combination of a county and city to impose these taxes on deeds or other writings that transfer real estate so long as the value of the interest in the property being transferred is at least $100. The tax authorized by the state is 55 cents for each $500 of value. Compared to some other states, this tax is relatively low.

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Right now may seem like a tough time to start or own a small business. With concerns about the Affordable Care Act (Obamacare) and talk of raising the minimum wage, some people may wonder if this is the right time to venture out and live a life-long dream of owning their own company. However, so long as you seek out the advice of a knowledgeable and licensed attorney, now can be a great time to take that leap. And new surveys show that those who have done it are more optimistic than they have been in years.

Nationwide Small Business Owners Feel Circumstances Have Improved

The Central Valley Business Times reports that small business owners nationwide have an improved outlook according to the U.S. Bank Annual Small Business Survey. The survey measures the opinions of thousands of small business owners, and has done so for the past five years. Those surveyed are truly small business owners by any standard, as they all report less than $10 million in annual revenue. Half of the businesses have under $200,000 in annual revenue. This is the first time it has shown that the majority of small business owners are optimistic about the economy, saying it is in a state of recovery or expansion. This compares to the 2010 survey where nine out of ten small business owners classified the economy as being in a recession.

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In creating a start-up, it is important to form the business as the type of legal entity that best suits its needs and goals. Because there are numerous forms of entities to choose from, each with their advantages and disadvantages, choice of entity can be, absent expertise, a daunting task.

The three most common types of entities to choose from are Corporations, Limited Liability Companies, and General Partnerships. Often, the manner in which the start-up is to be funded is a primary factor in entity selection. For example, if you are seeking funding from family, friends, or angel investors, it makes sense to form as an LLC. This is because an LLC is a “pass-through” entity: it does not have entity-level taxation. In other words, it is the responsibility of the LLC’s shareholders and members to pay taxes on the entity profits relative to their respective ownerships portions. In addition to this single layer of taxation, LLCs are also an attractive choice because an LLC’s owners, or “members,” are not personally liable for the debts of the company.

Some of the most famous companies in the world began as start-up LLCs:

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A recent federal court ruling offers a good reminder of the many unique claims that may be made against employers by their unhappy employees. All Sacramento business owners–from established enterprises to start ups–should be familiar with their risks before trouble arises.

The Situation

Shaw Rahman was employed by Crystal Equation, a staffing company that assigned him to a job with AT&T. Rahman signed more than one document that specifically described his employment as “at-will,” and stated his employment could be terminated at any time.

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Many business owners, particularly start-ups, remain unaware of the complex legal issues involved in employer-employee relationships. It is critical to have guidance on these matters, to understand your risks, rights, and obligation as an employer. Consider employer duties to accommodate employees with disabilities.

For example, a case recently passed through the federal district court system regarding an employer’s failure to accommodate an employee with a disability. The Americans with Disabilities Act (ADA) states that an employer must make reasonable accommodations for an employee with a disability, if such accommodations are possible and do not cause undue hardship. Common accommodations include providing wheelchair accessible offices or meeting spaces, modifying work equipment or schedules, and adapting training procedures or specific job duties. Reasonable accommodation must be made to allow employees to complete the interview process, training programs, and regular job duties.

Gooden v. Consumers Energy Co.

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Landlords and business tenants entering into commercial leases in California should be aware of the legal issues surrounding lease renewal options. One of the best ways to do this it to examine two cases that have dealt with California commercial leases with options to extend.

In Ginsberg v. Gamson, 205 CA4th 873 (2012), the tenant and landlord executed a commercial retail lease in April 1996, for a five-year term, with an option to renew for additional five-year periods. After the first five-year term, the tenant renewed for a second term. During that term, a dispute arose over repairs and the tenant sued, alleging breach of the lease and intentional interference with use of the premises.

The landlord filed a cross claim, seeking a declaration that the lease allowed only one renewal. The trial court ruled that the lease gave the tenant the right to unlimited five-year extensions for 99 years. The jury subsequently found in favor of the tenant and awarded the tenant compensatory and punitive damages. The trial court struck the punitive damages award and the landlord appealed the remaining judgment. The court of appeals reversed the trial court’s interpretation of the lease renewal option, concluding that the trial court erred in construing the lease to give the tenant unlimited extensions; however, the court affirmed the order striking down the punitive damages award.

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A typical commercial lease in California requires a commercial tenant to maintain and repair the leased property and not commit “waste.” For legal purposes, waste is defined as permanent harm done to real property by a person or persons in legal possession of that property, such that the property’s value is diminished. If the tenant breaches the maintenance requirement, the landlord may provide a notice of default. If the tenant does not cure the breach, the landlord may terminate the lease and sue to recover the cost of repairs for damage to the property. But, what happens if the tenant does not cure the breach, and the landlord does not terminate the lease or the lease has not expired? Can the landlord sue to collect the cost of repairs for damage to the property? A recent decision by the California Court of Appeals for the Fourth District answers this question.

In Avalon Pacific-Santa Ana v. HD Supply Repair & Remodel, 192 Cal. App. 4th 1183 (2011), the Appeals Court held that a commercial landlord could not recover from a tenant the cost of repairs for damages where the parties continued to perform under their lease agreement, which had neither expired nor been terminated. The facts of the case are instructive.

HD Supply Repair & Remodel leased vacant warehouse and office space from Avalon Pacific-Santa Ana, intending to convert the space into a retail facility. The 10-year lease was set to expire in 2017, but included an option to extend. After demolishing the office space, HD Supply stopped renovations because of the economic downturn. HD Supply unsuccessfully attempted to sublease the property. The property eventually fell into disrepair, was vandalized, burglarized, and became home to vagrants. Avalon sued HD Supply for breach of the maintenance and repair obligations of the lease and for waste; however, Avalon never terminated the lease and HD Supply continued to pay rent of $50,000 per month. The case proceeded to trial, where a jury found in favor of Avalon, awarding $677,000 in damages for breach of the lease and $561,000 in damages for waste.

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Section 1954, subdivision (b) of the California Civil Code allows a landlord or property owner to enter a leased or rented dwelling to “exhibit the dwelling unit to prospective or actual purchasers.” Such entry may not be made “during other than normal business hours” unless the tenant gives consent, and the tenant must be given proper notice. While 24 hours is presumed to be reasonable notice, what are “normal business hours?” A decision by the California Court of Appeals in August of last year has answered this question.

Dromy v. Lukovsky

In Dromy v. Lukovsky, 219 Cal. App. 4th 278 (2013), landlord/property owner Dromy leased a condominium to tenant Lukovsky in 1994. In 2010, Dromy wished to sell the property and entered into a listing agreement with real estate agent Milstein. Lukovsky permitted Milstein to show the property to prospective purchasers by appointment, but she refused to allow weekend open houses. Dromy filed a declaratory action against Lukovsky in the Superior Court, alleging that Lukovsky’s refusal to allow weekend open houses was frustrating his efforts to sell the property. While the Superior Court ultimately agreed with Dromy, concluding that section 1954 “permits landlords to hold open houses on weekends with reasonable notice,” it sought to establish a schedule reasonable for both parties. The judgment provided as follows: (1) Milstein shall be permitted to hold two open houses per month; (2) open houses may be held on weekend days between 1:00 p.m. and 4:30 p.m.; (3) Dromy’s designated agent shall be present and tenant may be present during any open houses; and (4) Dromy’s designated agent shall provide ten days advance email notice to tenant of proposed open house dates, and tenant shall have 48 hours to acknowledge those dates or provide alternative dates. Lukovsky appealed this judgment and the California Court of Appeals for the Second District affirmed.