New and Notable Archives - Carbon Law Group Los Angeles transactional and intellectual property law firm that provides innovative legal and business solutions Mon, 27 Apr 2026 23:43:26 +0000 en-US hourly 1 https://wordpress.org/?v=6.9.4 https://carbonlg.com/wp-content/uploads/2024/02/cropped-identity_02-32x32.png New and Notable Archives - Carbon Law Group 32 32 Musk vs. Altman: What the OpenAI Trial Means for Your Small Business https://carbonlg.com/musk-vs-altman-openai-trial-small-business-lessons-los-angeles/ Mon, 27 Apr 2026 22:32:16 +0000 https://carbonlg.com/?p=12753 Jury selection kicked off in an Oakland federal courtroom, and the tech world is watching closely. Elon Musk is suing Sam Altman and OpenAI in what could become the most consequential business lawsuit of the decade. The core accusation: a $44 million nonprofit was secretly converted into an $852 billion for-profit empire, and Musk wants […]

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Jury selection kicked off in an Oakland federal courtroom, and the tech world is watching closely. Elon Musk is suing Sam Altman and OpenAI in what could become the most consequential business lawsuit of the decade. The core accusation: a $44 million nonprofit was secretly converted into an $852 billion for-profit empire, and Musk wants $130 billion in damages.

You might wonder why a small business owner should care about a billionaire fight. The answer is straightforward. This case touches issues that affect every company in America: corporate structure disputes, fiduciary duty, co-founder conflicts, and the line between nonprofit and for-profit operations.

What the Case Is Actually About

At its heart, this is a story about broken promises.

Back in 2015, Musk co-founded OpenAI as a nonprofit research lab with one mission: to build AI that benefits humanity, not shareholders. He donated roughly $44 million to get it off the ground. Fast forward to today, and OpenAI carries an estimated valuation of $852 billion, operates through a for-profit subsidiary, and counts Microsoft as a multi-billion-dollar investor.

Musk argues that Altman and other leaders pulled a bait-and-switch. His legal claims include fraud, breach of fiduciary duty, and breach of contract. Whether or not you agree with him, the underlying issues should sound familiar to any business owner.

A human hand reaching out to shake the mechanical hand of a robot, symbolizing the intersection of human business decisions and AI technology at the center of the Musk vs. Altman OpenAI trial.
A man gives his hand to shake with a robot. The interaction of humans and artificial intelligence.

The Small Business Parallel

Have you ever gone into business with a partner who promised one thing and delivered another? Have you invested money based on a handshake agreement, only to discover the terms shifted without your knowledge?

These situations happen constantly. They happen because businesses skip the legal groundwork early on. A well-drafted operating agreement, clear bylaws, and documented founder agreements can prevent exactly this kind of dispute. At Carbon Law Group, we help Los Angeles small businesses put these protections in place from day one, before a disagreement becomes a lawsuit.

The Stakes: $130 Billion and an IPO on the Line

Musk is not simply seeking money. He also wants Altman removed from OpenAI and the nonprofit-to-for-profit conversion unwound entirely.

If a federal jury agrees that the conversion was fraudulent, the consequences would ripple across the AI industry. The highly anticipated OpenAI IPO, potentially worth hundreds of billions, could be delayed or derailed for years.

What This Means for Corporate Restructuring

The same legal principles that govern OpenAI apply to your business, just on a different scale. If you decide to convert your LLC to a corporation, or shift from nonprofit to for-profit, strict legal requirements apply. You need proper board approvals, stakeholder notifications, and full documentation. Investors and donors who contributed money under one set of terms cannot simply have those terms changed without their consent.

That is precisely what Musk alleges happened at OpenAI. Whether or not the jury agrees, the lesson is clear: if you are restructuring your business, raising investment, or changing your entity type, a business attorney must guide every step. At Carbon Law Group, we handle corporate restructuring for small businesses across Southern California and make sure every change follows the rules.

Key Witnesses Who Could Decide the Outcome

The witness list in this case reads like a Silicon Valley power roster.

Sam Altman will likely argue that restructuring was necessary to compete, attract talent, and fund safe AI development. Elon Musk will center his testimony on original commitments and what he calls a deliberate betrayal. Satya Nadella, CEO of Microsoft, may reveal financial details about the Microsoft-OpenAI relationship that have never reached the public.

The Investor Lesson

The Nadella angle highlights a critical lesson for any small business bringing in outside money. Investors do not just write checks. They shape strategy, governance, and sometimes even your corporate structure. At Carbon Law Group, we help business owners negotiate investment agreements that clearly define investor rights, board composition, and decision-making authority, so you stay in control of your own company.

Why This Case Matters to Your Business Right Now

You are not building the next ChatGPT. But the legal lessons from this trial apply directly to your situation.

Co-founder disputes, corporate structure decisions, investor agreements, and fiduciary duties are not exclusive to billion-dollar companies. These are everyday challenges for small businesses across Los Angeles and beyond.

Ask yourself a few honest questions. Do you have a clear operating agreement? Have you documented your corporate structure properly? Are you bringing on partners or investors without ironclad legal protections?

If any of those answers concern you, now is the time to act. Prevention is always less expensive than litigation. Every dollar spent on proper legal agreements and clear governance can save tens of thousands in legal fees later.

The Musk vs. Altman trial is a high-profile reminder that the structure you choose for your business, and the agreements you put in place, are the foundation of everything.

Get the Legal Foundation Your Business Deserves

At Carbon Law Group, we work with small business owners to build legal structures that minimize the risk of disputes and protect what you have built. Whether you are forming a new company, restructuring an existing one, negotiating with investors, or resolving a conflict, our team of experienced business attorneys in Los Angeles is ready to help.

Do not wait until a disagreement becomes a lawsuit. Contact Carbon Law Group today to schedule a consultation.

👉Take the next step, book your consultation today, and safeguard your brand’s future.

Connect with us: Carbon Law Group

Visit our Website: carbonlg.com

👤 [Pankaj on LinkedIn]

👤 [Sahil on LinkedIn]

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Ensure Your Wedding Day Is Protected: Carbon Law Group’s Wedding Protection Services Save You Heartache and Worry https://carbonlg.com/simplify-your-wedding-planning-protect-yourself-with-carbon-law-groups-contract-review-services/ Wed, 16 Oct 2024 19:05:04 +0000 https://carbonlg.com/?p=6494 Planning your wedding should be exciting and joyful. However, dealing with venue and vendor contracts can feel overwhelming. At Carbon Law Group, we make sure these agreements work for you, so you can focus on celebrating. Let’s explore how our legal expertise can save you stress, time, and money. Why You Need a Contract Review […]

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Planning your wedding should be exciting and joyful. However, dealing with venue and vendor contracts can feel overwhelming. At Carbon Law Group, we make sure these agreements work for you, so you can focus on celebrating. Let’s explore how our legal expertise can save you stress, time, and money.

Why You Need a Contract Review for Your Wedding

Weddings are meant to be joyful, but unexpected issues can arise. Contracts often contain hidden liabilities or unclear terms that could affect your day. We help you avoid these pitfalls by providing:

  • Avoid Hidden Liabilities: Contracts often have fine print that leads to surprise costs or responsibilities. We make sure you understand every clause to prevent unexpected liabilities.
  • Protection Against Non-Performance: Vendors can fail to deliver, and venues can fall short. We make sure your contract includes clear expectations and penalties to protect you if things go wrong.
  • Negotiate Better Terms: We negotiate for terms that prioritize your interests, giving you peace of mind.
  • Clarity and Avoid Ambiguities: We ensure all critical details—like staffing, accommodations, and support—are clearly defined to avoid confusion.

Our Wedding Contract Review Packages

Every wedding is unique, and so are your legal needs. We offer four service packages to match your requirements:

Package Name Price Inclusions
Essential Protection $895 Comprehensive contract review of one venue or vendor agreement, 45-minute consultation, Basic risk assessment
Premium Negotiation $2,495 Comprehensive contract review, Up to 3 hours of consultation and negotiation support, Risk mitigation strategies and contract revisions
Complete Legal Shield $4,995 Comprehensive contract review, Up to 10 hours of consultations and legal services, Ongoing legal support until the wedding day, Custom contract amendments and high-level risk management
Full Service Legal Partner $7,995 Comprehensive contract review, Unlimited hours of consultation and negotiation, Ongoing legal support for up to three months post-wedding, Custom contract amendments and high-level risk management

Why Choose Carbon Law Group

  • Experienced Legal Professionals: With years of expertise in business and contract law, we understand the intricacies of contracts.
  • Personalized Service: Every couple is unique, and so are their concerns. We provide tailored solutions to meet your specific needs.
  • Comprehensive Protection: From deposits to performance clauses, we ensure every part of your agreement is clear, fair, and protects your interests.

Protect Your Big Day Today

Your wedding day should be about love and celebration—not stress over contract details. Let us help you enjoy your big day without any legal worries.

Contact Us Today to Get Started

Ensure Your Peace of Mind

Don’t take risks with your dream wedding. Make sure you’re legally protected with Carbon Law Group’s expert contract review. Click the link below to secure your protection and start your journey toward peace of mind today.

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Notable New Laws Affecting California Businesses in 2023 https://carbonlg.com/notable-new-laws-affecting-california-businesses-in-2023/ Fri, 06 Jan 2023 06:07:10 +0000 https://carbonlg.com/notable-new-laws-affecting-california-businesses-in-2023/   The new year is upon us, and if you’re running a business, make sure you are prepared for new laws that will impact your business. In California, the new calendar year also means a fleet of new laws and regulations that go into effect. 2023 is no exception. Here are some new laws that […]

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The new year is upon us, and if you’re running a business, make sure you are prepared for new laws that will impact your business. In California, the new calendar year also means a fleet of new laws and regulations that go into effect. 2023 is no exception. Here are some new laws that may affect your California business:

 

  1. Assembly Bill 1041 adds a “designated person” to the list of existing permitted family members that an employee can take off time to care for under the California Family Rights Act.
  2. Senate Bill 1162 requires companies that employ at least 15 people to include salary ranges in all job postings and provide them to existing employees upon request.  The California Labor Commissioner can issue fines of as much as $10,000 for failure to comply.
  3. California raised its minimum wage to $15.50 on January 1st, applying it to all employers, regardless of size. The half-dollar boost resulted from a 2016 law that mandated inflation-related adjustments.
  4. Under Assembly Bill 1949, California employers with 5 or more workers must allow them up to 5 days of unpaid, job-protected leave upon the death of a close family member, including a spouse, child, parent, sibling, grandparent, grandchild, domestic partner, or parent-in-law.

 

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Key Provisions of the Trademark Modernization Act of 2020 and Why it is Important for Brand Owners https://carbonlg.com/key-provisions-of-the-trademark-modernization-act-of-2020-and-why-it-is-important-for-brand-owners/ Wed, 31 Mar 2021 07:03:16 +0000 https://carbonlg.com/key-provisions-of-the-trademark-modernization-act-of-2020-and-why-it-is-important-for-brand-owners/ The Trademark Modernization of 2020 (“TMA”) was signed into law on December 27, 2020, as part of the COVID-19 relief and government funding bill. It will be fully implemented and take effect on December 27, 2021. TMA brought some remarkable changes to the United States Trademark Act of 1946, a.k.a. the Lanham Act, that will […]

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The Trademark Modernization of 2020 (“TMA”) was signed into law on December 27, 2020, as part of the COVID-19 relief and government funding bill. It will be fully implemented and take effect on December 27, 2021. TMA brought some remarkable changes to the United States Trademark Act of 1946, a.k.a. the Lanham Act, that will significantly affect brand owners in the U.S.

TMA Codifies Rules for the “Letters of Protest” Practice

There has been a long-standing yet not well-known practice of the USPTO, called the “letter of protest,” which allows third parties to submit evidence to the USPTO prior to registration, regarding a trademark’s registrability. Before the TMA, the USPTO did not have a formal process in place for submitting or reviewing these letters of protest, and it has resulted in the underutilization of this process. The TMA formalizes this letter of protest process for submitting evidence against pending third-party trademark applications by giving it statutory authority. The letter of protest submissions must identify each legal ground for an examining attorney to refuse registration or issue a requirement, include evidence that supports those grounds, and a concise description for each piece of supporting evidence. Following the passage of the TMA, the USPTO issued rules setting out the letter of protest procedures and a $50.00 fee for these submissions that went into effect on January 2, 2021. TMA requires the USPTO to act on submissions of letters of protest within two months of receipt. 

The codified letter of protest process under the TMA provides third-parties with a simpler and cheaper procedure compared to the traditional opposition procedure, which limits third parties believing that they may be damaged by the federal registration of a mark to file an opposition during a 30-day opposition period occurring just before registration of the mark in question and pay the expensive opposition filing fees (increased to $600.00 per class from $400.00 this year).

  • Takeaway: Any brand owner now may use this simpler and inexpensive formal process to attempt to intervene in a third-party application for a trademark that may conflict with your mark, or that you believe should otherwise be refused registration, by asking the USPTO to consider evidence that it may not otherwise have in the examination record. On the other hand, the letter of protest process may also be disadvantageous to some brand owners by making it more difficult to secure a trademark registration. To help make the most of this new process, brand owners should consider setting up trademark watch services that alert the brand owner to pending applications for marks that may conflict with the brand owner’s mark.

TMA Enables the USPTO to Shorten Office Action Response Deadlines to Anywhere Between 2 Months and 6 Months

In order to free the USPTO trademark register from numerous illegitimate trademark applications that are not actually used in the U.S. commerce, TMA gives the USPTO the authority to set office action response periods that are shorter than the current six-month response time, but not less than 60 days from the Office Action issuance date. If needed, the applicant may request to extend the shortened response deadline to up to six months.

  • Takeaway: Brand owners now must pay special attention to the actual response deadline upon receipt of an Office Action, as we may start seeing much shorter response periods than the six-month response deadline that we are used to.

TMA Creates New Ex Parte Expungement and Reexamination Proceedings as New Methods for Seeking Cancellation of a Third-party Trademark Registration

Before the passage of the TMA, the USPTO permits inter-parte Cancellation proceedings that are similar to court litigation against trademark registrations, which occur before the Trademark Trial and Appeal Board (TTAB). There are a number of grounds on which someone may petition to cancel a third-party registration, including the registration owner’s abandonment or lack of use of the registered mark in interstate commerce.  

TMA provides a new post-registration procedure for ex parte expungement of certain improperly granted registrations. Specifically, it allows anyone to petition the USPTO to expunge a registration, either in whole or in part, where there are specific goods or services listed in the registration for which the trademark has never been used in U.S. commerce. This new procedure must be brought between three to ten years after the registration date.

On the other hand, a reexamination proceeding may be initiated against a registration any time before the fifth year following the registration date for any registration based on use in commerce. The new trademark reexamination procedure provides a process for challenging registrations based upon a false, but not necessarily fraudulent, declaration of the mark’s use in association with the goods and services identified in the registration. When preparing a trademark application, applicants often include many (or all) of the goods and services that fall within the “class” of goods or services initially selected by the applicant. Trademark applicants often try to include as many goods and services as possible under the same class because their filing fee covers the registration of a mark under the entire class. However, this practice violates the spirit of the law, which requires actual use of the mark in association with each good or service identified in the registration. To rectify the proliferation of overzealous registrations resulting from this practice, TMA’s reexamination procedure allows for the cancellation from the registration, each good or service with which the mark was not being used as of the filing date of the mark’s declaration of use.

For both the Ex Parte Expungement and Reexamination proceedings, the USPTO’s decision to cancel a registration is appealable, and these proceedings may be initiated against registrations that registered before or after enactment of the TMA.

  • Takeaway: It is critical for brand owners to make sure that they actually provide all the goods and services listed in their trademark registrations, or be exposed to the risk of losing part or all of their registrations for lack of use in commerce.

TMA Restores the Rebuttable Presumption of Irreparable Harm for Plaintiffs Seeking Injunctive Relief in Trademark Infringement Cases.

Before TMA, in order for a trademark infringement plaintiff to obtain a court-ordered injunction against a defendant to stop the defendant from continuing to use the disputed mark, the plaintiff must prove several elements, including that the plaintiff will be irreparably harmed without the injunction. In recent years, the federal circuit courts in the United States have been split on whether the irreparable harm element should be presumed in trademark infringement cases where the court has found either infringement (for a permanent injunction) or that the plaintiff is likely to be successful on the merits of its infringement claim (for a preliminary injunction).

The TMA resolves the circuit split by codifying into law that trademark infringement plaintiffs shall be entitled to a rebuttable presumption of irreparable harm without the injunction upon a finding of trademark infringement or likelihood of success on the merits, depending on whether the plaintiff is seeking a permanent or preliminary injunction.

  • Takeaway: Brand owners now have a reduced evidentiary burden for obtaining injunctive relief to protect their trademark rights. A brand owner who proves infringement will enjoy a favorable legal presumption that the harm caused by continued infringement will be irreparable.

If you need help with registering a new trademark with the USPTO, contact us today to discuss your trademark protection strategies with an experienced trademark attorney. Schedule an appointment with us to schedule a free initial consultation! 

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6 things to know about the New California Privacy Law – California Consumer Privacy Act (“CCPA”) https://carbonlg.com/6-things-to-know-about-the-new-california-privacy-law-california-consumer-privacy-act-ccpa/ Tue, 14 Jan 2020 06:58:49 +0000 https://carbonlg.com/6-things-to-know-about-the-new-california-privacy-law-california-consumer-privacy-act-ccpa/ The post 6 things to know about the New California Privacy Law – California Consumer Privacy Act (“CCPA”) appeared first on Carbon Law Group.

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In late June, 2018, following the European Union’s groundbreaking General Data Protection Regulation (“GDPR”), California passed its own consumer privacy law, AB 375, that imposes its own set of requirements on U.S. companies with regard to consumer’s “personal information.” You can read more about GDPR here. The new California law, referred to as the California Consumer Privacy Act (“CCPA”), took effect on January 1, 2020 and established new, groundbreaking consumer privacy rights for California consumers. Fines for non-compliance of CCPA can add up quickly; these fines are in addition to any loss of goodwill or consumer trust – or expenses associated with responding to any compliance investigations.

 

What consumer “personal information” is protected by CCPA? 

CCPA takes a broader view than the GDPR of what constitutes “personal information.” CCPA defines “personal information” to include “information that identifies, relates to, describes, is reasonably capable of being associated with, or could reasonably be linked, directly or indirectly, with a particular consumer or household.” The words “relates” or “reasonably capable of being associated with/linked” open up a very large class of non-traditional personal identifiers, that goes beyond name, address, social security number, to include information such as email address, online social media handles, IP addresses, biometric information, geolocation data, browsing, and search history.

 

Who needs to comply to CCPA?

Companies that meet the following criteria  must adapt their privacy policies and reporting to CCPA’s requirements: 

  1. companies that serve or hire California residents;
  2. have $25 million or more in annual revenue; 
  3. possess the personal data of more than 50,000 “consumers, households, or devices;” or
  4. earn more than half of its annual revenue selling consumers’ personal data.

 

What protection does CCPA give to consumers? 

The CCPA gives California residents the following rights:

  1. to know what personal information is being collected about them;
  2. to know whether their personal information is sold or disclosed and to whom;
  3. to say no to the sale of personal information;
  4. to access their personal information;
  5. to equal service and price, even if they exercise their privacy rights;

The CCPA provides California residents with a right to be informed of the categories of personal information that a business collects or otherwise receives, like smartphone locations or voice recordings, that a company has on them sells or discloses about them; the sources of that data; the purposes for these activities; and the categories of parties to which their personal information is disclosed. CCPA also grants California consumers the right to request detailed information about the personal information a business holds specifically about them, which may include detailed logs of a person’s online activities, physical locations, ride-hailing routes, biometric facial data, ad-targeting data, and the right to obtain portable copies of their personal information from the business. CCPA also gives California consumers the right to prohibit a business from selling their personal information, and to request that a business delete their personal information.

 

When will enforcement start? 

The CCPA took effect in California on January 1, 2020, with a six months grace period before enforcement of the law begins. Starting in July 2020, offenses of the CCPA will be assessed with fines. 

 

Does compliance with GDPR ensure compliance of CCPA? 

No. The CCPA and the EU’s GDPR do not share some same key requirements. Compliance with one does not imply or guarantee compliance with the other. The scopes, definitions, and requirements of the CCPA and the GDPR are different. 

 

What to do if you think a business is misusing your personal information under the CCPA?

Starting July 2020, California consumers may bring a legal action for statutory damages ranging from $100 to $750 per violation or actual damages, whichever is greater. The California Attorney General may bring actions for civil penalties of $2,500 per violation, or up to $7,500 per violation if intentional. No actual damage or specific evidence of identity theft is required. A CCPA plaintiff must inform the California Attorney General of the situation within 30 days of filing a CCPA lawsuit. The California Attorney General is the sole individual who has the power to delay or block such individual litigation under the CCPA. 

Find out how Carbon Law Group can help you prepare for CCPA compliance by scheduling a meeting with us using this link.

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Changes to Independent Contractor Classifications You Need to Know https://carbonlg.com/changes-to-independent-contractor-classifications-you-need-to-know/ Fri, 11 Oct 2019 01:03:04 +0000 https://carbonlg.com/changes-to-independent-contractor-classifications-you-need-to-know/ The post Changes to Independent Contractor Classifications You Need to Know appeared first on Carbon Law Group.

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Today’s workplace has become increasingly regulated and complex. Employers have started to recognize the importance of complying with misclassification statutes, and are trying to educate their executives on the process.

In determining whether a worker is an employee or an independent contractor, courts in California generally apply the common law test under which the employer’s right to control the manner and means by which the employee’s work is accomplished, rather than the amount of control actually exercised, is the principal factor in assessing whether a plaintiff is an employee or an independent contractor.

On September 18, 2019, California Governor Gavin Newsom signed Assembly Bill 5 (“AB5”) into law. Thus, California businesses will soon face new challenges in their use of independent contractors. AB5 raised the bar for companies that otherwise might rely on freelance or contract workers. The new law establishes stricter criteria, known as the “ABC test”, to maintain a worker as an independent contractor. Specifically, a business must prove that:

  1. The worker is free from the company’s control.
  2. The duties performed by the worker are not central to the company’s core business.
  3. The worker is customarily engaged in an independently established business, trade, or industry.

Workers that do not satisfy all three criteria will be reclassified as employees, which could allow them to start earning a minimum wage and qualify for overtime pay, paid sick leave, and health insurance benefits.

AB5 is landmark legislation for gig economy workers and employers in California. Yet, the passing of AB5 does not mean that gig economy workers in California who were categorized as independent contractors are now automatically employees. They will still need to challenge their employers in court to apply the ABC test and reclassify them. 

If you need help with your questions about employee and independent contractor categorization, feel free to schedule a consultation with an attorney using this link or calling our office at 323.543.4453.

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Looking Back At 2018 and Moving Forward Into 2019 https://carbonlg.com/looking-back-at-2018-and-moving-forward-into-2019/ Fri, 04 Jan 2019 08:12:51 +0000 https://carbonlg.com/looking-back-at-2018-and-moving-forward-into-2019/ As the Earth completes another rotation around the Sun, we take pause to both reflect on all that has happened over this last year and to make sure we are on the right path to where we want to go. Guided by our mission statement to empower our community by providing invaluable business and legal […]

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As the Earth completes another rotation around the Sun, we take pause to both reflect on all that has happened over this last year and to make sure we are on the right path to where we want to go.

Guided by our mission statement to empower our community by providing invaluable business and legal solutions to help our clients and community thrive, we are lucky to say 2018 was a great success. Some of our highlights from 2018 were:

  • Filed our first IPO for a client
  • Set up a $25 million venture fund
  • Advised companies and investors on 23 private placement transactions
  • Handled 12 M&A transactions
  • Guided over 20 startups with early-stage financing
  • Filed over 75 domestic and international trademark applications
  • Formed or wound-up over 100 businesses
  • Counseled over 300 individuals and businesses
  • Received 41 5-star reviews from both Google and Yelp combined
  • Held a volunteer event to feed the homeless with assistance from the Azusa Lighthouse Mission in DTLA

To say we have had a busy year would be an understatement. And it couldn’t have been accomplished without the trust and support of our amazing clients who we have the honor of serving as they strive to make a small dent in the universe (in the words of Steve Jobs.).

We are beyond grateful for the support we saw in 2018, but more so, we are excited for what is in store for 2019. We are poised to take on even larger deals, expand to new cities, and help more clients see greater success than they ever imagined.

Here is to a wonderful 2018 and an even better 2019!

Upward and onward!

 

Sincerely,

Carbon Law Group

Pankaj, Hayk, Lyris, Sarine, George, Cristal, and Sunny

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Copyright law and fair use: setting the record straight https://carbonlg.com/copyright-law-and-fair-use-setting-the-record-straight/ Wed, 21 Jun 2017 21:33:06 +0000 https://carbonlg.com/copyright-law-and-fair-use-setting-the-record-straight/ Every so often the question arises, “how much of a copyrighted work can I use? I heard if it was less than 30%, I am okay.” I am sure I am not the only attorney who has heard this and I am sure it makes us all cringe–if only the law was so simple. The […]

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Every so often the question arises, “how much of a copyrighted work can I use? I heard if it was less than 30%, I am okay.”

I am sure I am not the only attorney who has heard this and I am sure it makes us all cringe–if only the law was so simple.

The initial problem with this assumption is that how do you determine what “30%” of a work is? Do you measure it in size? Maybe depth? Geometric volume? Length?

Copyright law is much more nuanced than providing such a bright line rule as “so long as you use less than 30% of a work, you are good.” Instead, courts look to their trusted methodology of balancing various factors when determining if a work constitutes “fair use.”

The Four Factors of Fair Use

Under the fair use doctrine, courts look at the following four factors when asked to decide whether a work considered violates someone’s copyright:

  • (1) the purpose and character of the use, including whether the use was commercial in nature and whether the use was transformative;
  • (2) the nature of the copyrighted work;
  • (3) the amount and substantiality of the portion of the work used; and
  • (4) the effect of the use on the potential market for the work.

So, when creating your next masterpiece, please let go of this idea of your safe as long as you use less than 30% of another person’s (or company’s) artwork and refer to the above factors instead. And when in doubt, you should think about licensing the right to use the work in your piece or at least reaching out to an attorney for a second opinion.

To read more about how the fair use doctrine has recently been applied, please read this great article published by Loeb & Loeb attorneys Neis Strauss and Ava Badiee, titled “Dr. Seuss Enterprises, L.P. v. ComicMix LLC”.

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Crowdfunding begins on May 16, 2016 https://carbonlg.com/crowdfunding-begins-on-may-16-2016/ Sat, 14 May 2016 03:03:58 +0000 https://carbonlg.com/crowdfunding-begins-on-may-16-2016/ Until now, the general prohibition against the sale of unregistered securities to the public limited the options for startups and emerging companies to raise capital. Now, after years of discussion and analysis, the Title III of the JOBS Act (“Act”) is about to take effect. Title III of the Act addresses equity crowdfunding. Under Title […]

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Until now, the general prohibition against the sale of unregistered securities to the public limited the options for startups and emerging companies to raise capital.

Now, after years of discussion and analysis, the Title III of the JOBS Act (“Act”) is about to take effect. Title III of the Act addresses equity crowdfunding. Under Title III, registered broker-dealers or registered funding portals can solicit investments of up to $1 million from the general public.  A funding portal is any person acting as an intermediary   in a transaction involving the offer or sale of securities for the account of others, solely pursuant to the “crowdfunding exemption” that does not:

(a) offer investment advice or recommendations; (b) solicit purchases, sales, or offers to buy the securities offered or displayed on its website or portal; (c) compensate employees, agents, or other persons for such solicitation or based on the sale of securities displayed or referenced on its website or portal; (d) hold, manage, possess, or otherwise handle investor funds or securities; or (e) engage in such other activities as the SEC, by rule, determines appropriate. [1]

If you are interested in learning more about Title III and opportunities under the JOBS Act, feel free to contact our firm to speak to an attorney.

*Nothing herein shall constitute legal advice and the information provided should not be construed as such.

 

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A Primer on Forming Partnerships https://carbonlg.com/a-primer-on-forming-partnerships/ Tue, 26 Apr 2016 01:35:18 +0000 https://carbonlg.com/a-primer-on-forming-partnerships/ by Pankaj S. Raval So you have decided to quit your job and pursue your dream of starting a new business with a friend. First of all, congratulations. You are among the few who are willing to take the risk to follow their dreams of being their own business owner. However, before you get carried […]

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by Pankaj S. Raval

So you have decided to quit your job and pursue your dream of starting a new business with a friend. First of all, congratulations. You are among the few who are willing to take the risk to follow their dreams of being their own business owner. However, before you get carried away with finding office space and forming your company, as an attorney and counselor for numerous small businesses, I can tell you with a good amount of confidence, that it would be wise to hit pause and really look at the person (or people) you are going into business with before you take the plunge.

The saying that a “partnership is like a marriage” is about 95% accurate. Remember, the person who you choose as your business partner (or who chooses you) should be by your side through thick and thin over the next several years (if you manage to beat the odds of entrepreneurship and create a viable business). And, undoubtedly, those first few years are going to be bumpy.  You and your partner are going to be dealing with fire after fire as you build and scale your business. Whether it is a shortage of capital, a hiring decision, or deciding on product-market fit, these are all questions you are both going to have your own ideas about. Invariably, both founders will have to compromise on certain facets of the business. That means you are both going to have to learn to keep your egos in check and figure out how to put your personal issues aside to take on the competition.

One of the most prevalent issues that all new ventures face is dealing with the expectations of your fellow co-founders.

At some point, no matter how close you are with your co-founder, there will be a moment where one founder is up working at 3 am and the other is on vacation with family, and the question will enter that midnight-oil-burning partner’s mind: “why am I busting my butt on this while Andre is posting to Instagram from a beach in Thailand?”

Now, we don’t know the Andre’s backstory–maybe he just closed a round of funding and needed a break. Maybe he had to go to a family wedding. Nonetheless, the time will come where one partner feels like they are putting in more of the work, and preparing for those moments can be the difference between the success of failure of a business.

So how does one prepare for such scenarios? Luckily, the problem is not new, therefore, we have the benefit of looking at how other’s have dealt with it. Here are a two options:

1. The Pre-Formation Agreement

Before you start a partnership, you should sit down and answer the following questions:

  1. What is our mission?
  2. Who is our market?
  3. Why are we doing this?
  4. What do we hope to get out of it?
  5. What is each founder bringing to the business?
  6. How much time are we each expected to devote to the venture?
  7. What is the vacation policy?
  8. What if one partner needs to leave? Is there a buyout? Can they compete if they leave?
  9. What if one partner is not performing?
  10. Who is a neutral third party we can trust to help resolve split decisions?
  11. How much money are we each putting in?
  12. Will the intellectual property be shared equally?

These are all questions that will form the basis of a formal partnership agreement but not weigh you down with details can be discussed later once you decide you have a viable business.

2. The Slicing Pie Model

An alternative model that has gained a good amount of popularity over the last few years is the Slicing Pie model, developed by entrepreneur Mike Moyer. The model proposes a dynamic equity transfer where partners get equity in a company based on what they put in, whether it be time, money, connections, etc.

Mike is a seasoned entrepreneur who speaks from experience, so the model is tested and it works. I actually purchased several of his books and give them out to my clients.  The model does require a bit of work and monitoring, so some entrepreneurs have been hesitant to adopt it. However, based on the tools he provides, it can be a great way to track the value founders are contributing to a venture to avoid the conversation where you question someone’s commitment because it isn’t clear that they are dedicated to seeing the company succeed. The Slicing Pie model prevents this by tracking the time and effort each person is contributing so you have concrete data from which you can make informed decisions on how to move forward.

Conclusion

While there is no right way to plan a partnership, not doing any planning is a good way to increase your chances of failure. With a little work before you dive in and understanding of the risks ahead, you can put yourself in a position to deal with the trials and tribulations of starting a new business with a roadmap that will prevent you from getting sidetracked by the inherent difficulties of a partnership.

The Law Offices of Pankaj S. Raval focus on serving startups, new ventures, and scaling businesses. We help companies draft their founding documents but also put them with financing agreements to help them grow. Based on years of experience, we pride ourselves on looking at both the legal and practical aspects of starting and growing a business. You can reach us a 323.413.7958 or pankaj@psratlaw.com.

 

 

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