Moving Startups Forward: Tips for Responding To A Patent Troll
Startups are increasingly vulnerable to demand letters and lawsuits from “patent trolls” looking for opportunities to extract quick settlements from small companies with limited resources to defend against claims of patent infringement. To protect your business, developing a thoughtful approach for responding to such non-practicing entities is essential. Here are 5 tips for moving forward:
1. Don’t Panic. When confronted with a patent demand letter or infringement lawsuit from a non-practicing entity, it is perfectly understandable to be upset. You have likely invested substantial sums of money into your business and/or product, and now feel that the investment is under attack. Maintaining your calm, however, will better enable you to think clearly and strategically about next steps.
Continue reading “Moving Startups Forward: Tips for Responding To A Patent Troll”
Appraising Produce
In July 2016, the Houston Regulatory Audit office sent a letter to a number of large importers cautioning them to be sure their value declarations were correct, underscoring CBP’s position by pointing recipients to a long list of CBP informed compliance publications, and touting the advantages of correcting any errors by way of a prior disclosure.
Now we see Round 2. In early October 2016, the Agriculture and Prepared Products Center for Excellence and Expertise (“Center”) sent a letter to many fruit and vegetable importers asking more value questions. Specifically, the Center wanted to know:
- Was the importer purchasing his goods or receiving them on consignment?
- Are the parties related?
- From which suppliers is the importer purchasing?
- From which suppliers are the goods received on consignment?
- If on consignment, how are the goods being valued at time of entry?
- Is reconciliation filed? If not, what actions does the company take to determine if the actual cost of goods is more or less than the value declared at time of entry?
It is this last question that ties right into the revenue collection role of Customs and Border Protection (CBP). Is CBP collecting the right amount at time of entry? If the value is too low at time of entry, it must be corrected. Similarly, if it is too high, it should also be corrected. Continue reading “Appraising Produce”
Steps to Take Now to Avoid the EB-5 Dragnet
By Les Gold, and Mark Hiraide
The Securities and Exchange Commission (SEC) is keeping an eagle eye on EB-5 projects these days, as evidenced by a dramatic increase in the number of fraud cases the agency has filed in federal courthouses across the country. EB-5 refers to the type of visa the government issues to immigrants who invest large sums in U.S. commercial projects that create or maintain a minimum of 10 jobs.
After filing only one EB-5 fraud case in 2014 and two the year before, the SEC filed five EB-5 fraud cases in 2015 and another two so far this year. MSK’s Corporate & Business Transactions attorneys, who practice in this area of law, are noticing that most of these cases accuse issuers of EB-5 offerings of defrauding foreign investors by making misrepresentations in securities offering documents.
Not only does MSK assist clients in preparing EB-5 offering documents, we also defend issuers in SEC enforcement actions. MSK attorneys are currently representing the defendant in two high-profile EB-5 fraud cases, filed in 2015 and 2016We also counsel our clients on how to best conduct their EB-5 offerings and operate their EB-5 projects to comply with the law and avoid the SEC’s heightened scrutiny. Continue reading “Steps to Take Now to Avoid the EB-5 Dragnet”
New Regulations Issued By The Copyright Office Affecting Thousands of Websites
By Eric Schwartz and Matthew Williams
The Copyright Office officially released an announcement Monday, October 31st, about new regulations affecting all online service providers who seek liability limitations under 17 U.S.C. § 512 (i.e., the DMCA). The regulations, which are effective as of December 1, 2016, require that all service providers (even those who have previously designated agents) file new forms prior to December 31, 2017 to (re)name their copyright designated agents, who are to receive takedown notices from copyright owners related to allegedly infringing content. This (re)designation process must be completed through the Copyright Office’s new online registration system. Paper forms will no longer be accepted. Moreover, companies must renew their agent designations every three years.
Continue reading “New Regulations Issued By The Copyright Office Affecting Thousands of Websites”
It’s All About Compliance
Part 2 – Import Classification
This Alert is one in an occasional series of articles providing tips about various topics which come up routinely with import and export transactions. These articles/tips are published with the intention to provide suggestions to aid international traders in their on-going efforts to get their declarations right the first time, and are based on situations we commonly see arising. Whether it is reasonable care on the import side or not self-blinding on the export side, compliance is a key for many different reasons, including protecting your bottom line.
Part 1 of this series addressed how to value goods correctly, and can be read here. This edition provides import classification tips.
Under U.S. law, imported goods are classified for duty assessment and statistical reporting using the Harmonized Commodity Description and Coding System. This compilation of 97 Chapters and approximately 5,000 product descriptions, known in the U.S. as the Harmonized Tariff Schedule of the United States (HTSUS), provides a single modern structure for product classification and is used by more than 200 countries as a basis for their customs tariff and collection of international trade statistics. The first six digits and their corresponding product descriptions are enacted by the countries World Trade Organization member countries. The remaining digits in any tariff number (which total 10 in the U.S.) and their corresponding duty rates are set individually by each country. The HTSUS in the U.S. has 99 chapters, with the two unique ones intended to cover product specific provisions, such as American goods returned, products assembled abroad, special rules imposed on given products (for example, temporary quotas), and so on.
Tariff classification of goods under the HTSUS is governed by the General Rules of Interpretation (GRIs) which are analyzed in order until one applies. In so doing, don’t forget to also check the additional U.S. rules of interpretation. Continue reading “It’s All About Compliance”
Make Your Hanjin Bankruptcy Claims Now!
There is a lot of press coverage about the Hanjin bankruptcy, but very little of it provides tangible facts for traders to rely on. One thing we know for sure is Hanjin filed a Chapter 15 bankruptcy in the U.S. What that means is the U.S. bankruptcy court will defer to the Korean bankruptcy court regarding how the case will proceed. The U.S. court will limit its orders to cargo in the U.S. or touching the U.S. Most importantly right now, if you think you have a claim against Hanjin, you need to file that claim in the Korean bankruptcy proceeding, and you must do that between October 11 and 25, 2016. If you miss that claim deadline, you will be out of luck. There are a handful of Korean lawyers representing the interests of cargo owners and other potential claimants in Korea and they should be contacted immediately. Referrals are available.
Beside this one fact, there are a lot of pending questions. The Federal Maritime Commission is accepting consumer claims, but can only facilitate a discussion, as it has little jurisdiction in this context. It does have the bully pulpit, but seems reluctant to use it. Continue reading “Make Your Hanjin Bankruptcy Claims Now!”
The Regs They Are a-Changin’: Are You Ready?
October 10, 2016
FLSA: Employees Must Earn More To Qualify For Overtime Exemption
The U.S. Department of Labor’s long-expected amended regulations to the Fair Labor Standard Act (“FLSA”) will become effective on December 1, 2016. Under these new regulations, employees across the nation must earn at least $913 per week (or $47,476 annually) in order to qualify for any of the “white collar” (executive, administrative or professional) overtime exemptions. This minimum salary will be adjusted annually to an amount equal to the 40th percentile of weekly earnings for full-time salaried workers. Although lawsuits have been filed seeking to block the regulations, at this time, employers should be prepared for implementation on December 1.
Under existing law, in order to be properly classified as exempt from overtime under any of the white collar exemptions, an employee must meet both a duties test (i.e., his or her primary job duties must meet certain minimum requirements) and a salary basis test (i.e., he or she must be paid a fixed salary each week that is not subject to deduction based on the quantity or quality of work). For many years, the minimum weekly salary to meet the FLSA salary basis requirement was only $455 per week. Continue reading “The Regs They Are a-Changin’: Are You Ready?”
Proposed IRS Regulations Could End Most Valuation Discounts for Family Entities
By Allan Cutrow and Jeffrey Eisen
On August 2, 2016, the Treasury Department issued proposed regulations under Section 2704 of the Internal Revenue Code. The proposed regulations, if adopted in their current form, essentially will eliminate all minority discounts or lack of control discounts and lack of marketability discounts for transfers between family members of interests in family-controlled businesses.
The proposed regulations accomplish this result in complex ways. But here are some points to consider as you decide whether to act quickly.
- The regulations are “proposed.” This means that they are not currently in effect. The Internal Revenue Service has scheduled a public hearing on the regulations in Washington, DC on December 1, 2016. They take effect when the IRS announces that they are “final.” Thus, these regulations could take effect shortly after the hearing, sometime in 2017, years from now, or never (in theory). The IRS may change the regulations in meaningful ways before adopting them as final. Continue reading “Proposed IRS Regulations Could End Most Valuation Discounts for Family Entities”
It’s All About Compliance
Part 1 – Value
This Alert is one in an occasional series of articles providing tips about various topics which arise routinely with import and export transactions. These tips are published with the intention to aid international traders in their ongoing efforts to get their declarations right the first time, and are based on situations we commonly see occurring. Whether it is reasonable care on the import side or not self-blinding on the export side, compliance is a key for many different reasons, including protecting your bottom line.
Given the ever increasing attention being paid by the U.S. government to compliance by companies of all sizes, and especially in light of the recent informed compliance letter sent out by CBP’s Regulatory Audit in Houston, TX, now is the time to review how to value goods correctly.
The same basic value code is used throughout the world, at least among all the World Customs Organization member countries, although most assess duty on the C.I.F. value of the imported goods, whereas the U.S. assesses duty on the F.O.B. cost of goods. While admittedly each country has its own interpretation and they vary a tad, the basics are: Continue reading “It’s All About Compliance”
Important New Guidance on Charitable Remainder Annuity Trusts
The Internal Revenue Service has issued important new guidance that can allow a charitable remainder annuity trust (CRAT) to qualify under Internal Revenue Code section 664 in a low-interest environment.
Background
Section 664 confers substantial tax benefits on charitable remainder trusts that meet its requirements. These are irrevocable trusts that during their term distribute a formula amount to one or more non-charitable beneficiaries, with the remainder distributed to charity upon termination of the trusts. There are two allowable formulas. A charitable remainder unitrust (CRUT) distributes a fixed percentage of the value of trust assets determined every year. There are some allowable variations for CRUT distributions, but in general this means that distributions from a CRUT can go up or down from year to year, depending on increases or decreases in the value of trust assets. While CRUTs are by far the more popular of the two main varieties, some clients and donors prefer the CRAT, which distributes the same amount every year during its term, which is fixed at the time the trust is created and which must be at least 5% of the value of assets contributed to the trust. Continue reading “Important New Guidance on Charitable Remainder Annuity Trusts”
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