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.

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]

The post Musk vs. Altman: What the OpenAI Trial Means for Your Small Business appeared first on Carbon Law Group.

As of July 2025, Congress made meaningful changes to Section 1202. Founders and early investors should pay close attention to these updates. The passage of new legislation brought a wave of taxpayer-friendly updates. These new rules transformed QSBS from a rigid set of guidelines into a highly flexible wealth-building tool. We are now navigating this new landscape together. It is clear that the rules of the game have fundamentally shifted.

The Challenge of Startup Structuring

Here is the thing. Running a small business presents incredible difficulties. Startups face relentless challenges every single day. You have to raise capital, hire top talent, build a product, and outpace the competition. On top of all that, you must worry about the structural foundation of your company. If your legal and tax architecture is flawed from day one, you might build a massive company but lose a huge portion of your exit value to taxes. That is exactly the challenge our law firm helps you solve. We step in to handle the complex legal structuring so you can focus on scaling your business.

We see too many entrepreneurs work tirelessly for years, only to realize at the finish line that they structured their equity incorrectly. These hard-working founders miss out on millions in tax savings because of a simple oversight early on. Small businesses often struggle with attracting high-level talent because they cannot match the cash salaries of massive tech giants. Therefore, equity becomes your best weapon. When you can look a potential executive in the eye and explain that their stock options could qualify for a massive tax exclusion, you suddenly have a compelling offer. However, using equity as a hiring tool requires precise legal drafting.

Why the New Updates Matter Today

The July 2025 updates make getting your legal house in order even more critical. You simply cannot ignore the potential rewards. If you plan on issuing stock, raising a new round of funding, or planning for a future acquisition, you must understand exactly how these new rules impact your bottom line. In this post, we will break down exactly what changed in plain English. We will look at real-world examples to show you how these updates play out in practice. Finally, we will explain why having the right legal counsel serves as the ultimate difference between a massive tax-free exit and a frustrating tax bill.

The Exclusion Cap Increased

Let us talk about the first major change. The gain exclusion jumped from $10 million to $15 million per issuer, or 10 times your basis if that number is greater. This increase represents a meaningful bump for anyone building toward a sizable exit.

Under the old rules, acquiring qualifying stock generally allowed you to shield up to $10 million of your profits from federal capital gains taxes. That was certainly nothing to complain about for most people. Ten million dollars tax-free is a fantastic outcome for any founder or investor. However, as startup valuations skyrocketed over the last decade, many founders found themselves blowing past that $10 million cap. A successful entrepreneur would sell their company for $50 million, exclude the first $10 million, and then pay heavy capital gains taxes on the remaining $40 million.

A Mini Case Study in Tax Savings

The July 2025 legislation recognized this reality. By increasing the baseline exclusion cap to $15 million, the government allows successful entrepreneurs to keep significantly more of their hard-earned money. For founders who structure their investments carefully, the strategic use of this expanded cap creates absolutely phenomenal results. Think about it for a second. You get an extra $5 million that stays in your pocket instead of going to the IRS.

Let us look at a mini case study to illustrate this point. Imagine a founder named Sarah. Sarah started a software company in August 2025. She invested $100,000 of her own money to get the business off the ground. Because she worked with a knowledgeable legal team, she incorporated as a Delaware C-Corporation and properly documented her initial stock issuance. Fast forward a few years, and Sarah sells her company. Her personal share of the sale equals $15 million. Under the pre 2025 rules, she would have paid federal capital gains tax on $5 million of that exit. Today, thanks to the new $15 million cap, Sarah walks away with the entire $15 million completely free of federal capital gains tax.

The Importance of Documenting Basis

This is where the math gets even more interesting for early investors. The law permits you to exclude the greater of $15 million or 10 times your adjusted basis in the stock. What does “basis” mean in simple terms? It simply means the amount of money you originally invested to buy the shares. If an angel investor puts $2 million into a qualifying startup after July 2025, their exclusion cap does not stop at $15 million. Because 10 times their $2 million basis equals $20 million, their personal exclusion cap actually becomes $20 million.

These elevated numbers create incredible opportunities, but they also introduce potential traps. Small businesses frequently mess up the documentation of their tax basis. If you mix personal funds with business funds, or if you fail to formally document a cash contribution in exchange for shares, the IRS might challenge your calculation. This vulnerability is a primary reason why our law firm insists on rigorous corporate governance. We draft clean and unambiguous stock purchase agreements. Our team ensures that every dollar you invest legally ties directly back to your equity basis. When the time comes to claim your $15 million exclusion, you will possess a bulletproof paper trail.

The $50M Asset Ceiling Increased

The second game-changing update involves the expansion of the “small business” threshold. The limit increased from $50 million to $75 million in gross assets at the time of issuance. In practical terms, this means more growth-stage companies can now qualify for the benefit.

To understand why this matters, you have to understand how the government defines a qualified small business. The IRS looks at a company’s aggregate gross assets. This metric essentially measures the total amount of cash and property the company holds. Before July 2025, a company could only issue QSBS if its gross assets stayed under $50 million at all times before and immediately after the stock issuance. Once a company crossed that $50 million line, it permanently lost the ability to issue new QSBS to future employees or investors.

The Problem for Capital-Intensive Startups

For lean software startups, $50 million acts as a fairly high ceiling. They might never hold that much cash or property before finding an acquirer. But what about capital intensive small businesses? What about hardware manufacturers, biotechnology firms, or renewable energy startups? These types of companies often need to raise massive amounts of venture capital just to build a working prototype. They buy expensive machinery. They lease massive warehouse spaces. These physical assets and large funding rounds previously pushed them over the old $50 million limit very quickly.

This old limit created a massive headache for growing businesses. A startup might be doing incredibly well and preparing for a Series C funding round. The investors want to put in $30 million. But the company already holds $25 million in assets in the bank. Taking the new investment pushes their total assets to $55 million. Suddenly, the new shares fail to qualify for the QSBS tax break. This dynamic often forced founders into awkward negotiations or complex restructuring gymnastics.

Breathing Room for Growth

By raising the ceiling to $75 million, Congress provided a much needed pressure release valve. Fast growing companies now possess a significantly longer runway to issue tax advantaged stock. This longer runway makes it much easier to attract later stage investors and retain top executives as the company scales.

Consider a real world scenario. A clean energy startup needs to build a $20 million testing facility. They recently raised $40 million in previous rounds. Under the old rules, their next fundraise easily pushes them past $50 million. Consequently, any new employee they hire gets standard and fully taxable equity. Under the new July 2025 rules, they have an extra $25 million in breathing room. They can raise more capital, build their facility, and continue issuing QSBS to their newest hires.

Our law firm actively monitors this metric for our clients. One of the biggest mistakes a small business can make involves accidentally crossing the asset threshold without realizing it. A sudden influx of cash from a loan or a poorly timed funding round permanently disqualifies your company from issuing future QSBS. We work closely with founders and their accounting teams to map out funding schedules. We ensure perfect timing for every stock issuance. Our goal remains simple. We want to maximize the amount of equity that qualifies before you inevitably cross that $75 million mark.

It Is No Longer All-Or-Nothing At Five Years

Perhaps the most universally celebrated change involves the new holding period structure. Previously, the law required you to hold QSBS for more than five years to get the exclusion. It served as an incredibly strict all or nothing cliff. Now, Congress implemented a tiered system for stock acquired after July 2025.

Here is how the new system breaks down:

• 50% exclusion after 3 years

• 75% exclusion after 4 years

• 100% exclusion after 5 years

That flexibility matters greatly, especially in today’s fast paced exit environment. The old five year rule caused an immense amount of anxiety in the startup ecosystem. Think about how fast the business world moves. Five years feels like an eternity for a technology startup. Founders launch a company, scale it to a massive valuation, and receive a lucrative buyout offer in just three or four years.

The Old Dilemma Versus The New Flexibility

Under the pre 2025 rules, founders faced a brutal dilemma if an acquirer came knocking at year four. Do they take the deal now and pay a massive capital gains tax on the entire purchase price? Or do they reject the offer, cross their fingers, and wait one more year to hit the five year mark? We have seen founders turn down incredible acquisition offers just to wait out the QSBS clock. Sometimes, the market shifted during that waiting period. The acquirer walked away, the economy cooled down, and the founder lost the deal entirely. This situation amounted to a high stakes gamble driven entirely by rigid tax policy.

The new tiered system completely changes this dynamic. It operates almost like a vesting schedule for your tax benefits. Let us use an analogy. Imagine you are baking a cake. Under the old rules, taking the cake out of the oven at 45 minutes instead of 60 minutes ruined the entire cake. You threw it away. Under the new rules, taking it out early just means you get a slightly smaller cake, but it still tastes delicious. Make sense?

Real World Application and Exit Strategy

Let us look at a case study involving a mobile app startup. The founders launched the company in August 2025 and issued themselves QSBS. Exactly three and a half years later, a major tech conglomerate offers to buy the app for $30 million. The founders feel exhausted and ready to sell. Under the old rules, selling before year five meant zero QSBS benefits. They paid millions in taxes. Thanks to the July 2025 update, holding the stock for more than three years instantly qualifies them for a 50% exclusion. Half of their massive gain remains completely shielded from federal taxes. If they manage to hold out for four years, that protection jumps to 75%.

This tiered approach aligns tax policy with the reality of modern mergers and acquisitions. However, executing an early exit while preserving these new partial exclusions requires precise legal maneuvering. Mergers involve incredibly complex transactions. If the parties structure an acquisition as an asset sale rather than a stock sale, you might inadvertently destroy your QSBS eligibility entirely. Our law firm specializes in exit planning. When an offer comes to the table, we analyze the exact timing of your stock issuance. We negotiate the deal structure with the buyer to ensure you actually receive the partial exclusion you earned. We protect your tax interests at the negotiation table so you do not leave money behind.

The Key Takeaway: Proper Structuring Is Mandatory

The key takeaway here is simple. QSBS no longer serves as just a niche tax planning topic discussed quietly by accountants. It acts as a strategic structuring decision that materially impacts after tax outcomes for founders, early employees, and investors. But, and this remains vitally important, eligibility still depends on proper entity structure, timing, documentation, and business activity requirements. It does not happen automatically.

Many new entrepreneurs assume their stock automatically qualifies for these tax breaks simply because they run a small business. This assumption represents a dangerous misconception. The Internal Revenue Code provides a very specific checklist that you must satisfy. First and foremost, you must get the entity structure right. To issue QSBS, your company must operate as a domestic C-Corporation. It cannot function as an S-Corporation. It cannot operate as a Limited Liability Company (LLC) taxed as a partnership.

Strict Rules for Entity Types

This requirement creates a massive hurdle for many small businesses. Often, founders form an LLC because it feels cheap, easy, and offers pass through taxation. They operate the LLC for four years, grow the business, and then decide to convert to a C-Corporation right before selling. Unfortunately, the time spent as an LLC does not count toward your QSBS holding period. The clock only starts ticking the day you formally issue equity as C-Corporation stock. If you plan to utilize Section 1202, you must commit to the C-Corporation structure early in the company lifecycle.

Furthermore, you must meet an active business requirement. The company must actively use at least 80% of its assets in a qualified trade or business. The IRS specifically excludes certain industries from participating in this program. If your business operates in hospitality, farming, banking, or professional services like a medical practice or a consulting firm, you generally do not qualify. You must build a product, develop software, manufacture goods, or operate in an approved sector.

The Importance of Pristine Documentation

Finally, documentation acts as the silent killer of QSBS claims. You must acquire the stock at its original issuance. You cannot buy it from another shareholder on the secondary market. When you acquire the stock, you must pay for it with cash, property, or services. You must meticulously document every single one of these steps in your corporate records. You need unanimous written consents from your board of directors. You need fully executed stock purchase agreements. You need a legally sound cap table that tracks the exact date you issued every share.

This is where our law firm provides the most value. We do not just give you advice and walk away. We build the foundation. We guide you through the choice of entity analysis to ensure a C-Corporation makes sense for your specific business model. We draft the customized restricted stock purchase agreements that clearly establish your original issuance and tax basis. We maintain your corporate minute book. Therefore, if the IRS ever audits your massive tax free exit, you possess a flawless binder of legal evidence to hand them. Small businesses face enough risks in the marketplace. Your corporate legal structure should never be one of them.

Now Is A Good Time To Ask: Is Your Equity Positioned To Qualify?

If you are forming, financing, or restructuring a startup, July 2025 changed the landscape completely. The increase to a $15 million exclusion cap provides unprecedented wealth preservation. The higher $75 million asset ceiling gives your company the runway it needs to scale aggressively. Most importantly, the new tiered holding periods remove the agonizing five year waiting game, which allows you to exit on your own timeline.

However, as we explored throughout this post, strict legal and regulatory requirements lock these incredible benefits away from the unprepared. A single misstep during incorporation, a poorly documented funding round, or a misclassified asset costs you millions of dollars when it is time to sell. You cannot afford to treat your corporate legal structure as an afterthought. You must make it a priority from day one.

Evaluating Your Current Setup

Now is a good time to ask yourself a critical question. Is your equity positioned to qualify?

Take a hard look at your current setup. Do you currently operate as an LLC when you should be a C-Corporation? Did you formally issue stock to your co-founders and early employees, or do you rely on vague handshake agreements? Do you know exactly where your aggregate gross assets stand today? If you hesitate to answer any of these questions, you need professional guidance. You simply cannot leave this to chance.

Small business owners already carry a tremendous burden. Adding complex tax code interpretation to your plate distracts you from your primary mission. Your primary mission is growing your revenue and building an exceptional product. Let legal professionals handle the regulatory maze so you can maintain your focus.

Partnering for Success

Our law firm dedicates itself to helping small businesses and visionary founders navigate this exact terrain. We combine deep legal expertise with a practical understanding of how startups actually operate. Our team will review your current entity structure, audit your cap table, and implement the necessary legal frameworks. We ensure your equity remains fully compliant with the new July 2025 rules. Never leave millions of dollars on the table simply because of a paperwork error. We possess the tools and the experience needed to protect your hard work.

If you feel ready to secure your financial future and optimize your corporate structure, we stand ready to help. Contact our office today to schedule a comprehensive equity and structuring review. Together, we will ensure that when your big exit day finally arrives, you get to keep the rewards you worked so hard to build.

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]

The post QSBS Just Got a Glow-Up appeared first on Carbon Law Group.

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.

The post <strong>Notable New Laws Affecting California Businesses in 2023</strong> appeared first on Carbon Law Group.

The complaint details an elaborate alleged conspiracy, engineered by Hollywood’s elite talent manager Guy Oseary, to boost the value of Bored Apes with celebrity promotions—all while secretly enriching all involved via a covert payments scheme laundered through a prominent crypto-trading company MoonPay. “Defendants’ promotional campaign was wildly successful, generating billions of dollars in sales and re-sales . . . The manufactured celebrity endorsements and misleading promotions . . . were able to artificially increase the interest in and price of the BAYC NFTs . . . causing investors to purchase these losing investments at drastically inflated prices,” the complaint reads.

This situation serves as a cautionary tale for celebrities/influencers. It is essential for celebrities/influencers to be cautious about the companies they endorse and make sure they are complying with the Federal Trade Commission (FTC)’s endorsement guidelines. The FTC is a federal agency that is responsible for protecting consumers from fraudulent, deceptive, and unfair business practices. In the case of celebrity endorsements of NFTs, the FTC has specific rules that celebrities must follow in order to avoid misleading consumers. According to the FTC’s Endorsement Guides, celebrities must disclose any material connections they have with a company or product that they are promoting. This means that if a celebrity is being paid to promote an NFT, they must disclose that fact to consumers. And, if a celebrity accepted a free NFT in exchange for promoting it, the celebrity is also required to clearly and conspicuously disclose such a material connection. The same rule applies to celebrities/influencers that get paid to promote products and services. Additionally, the endorsement must reflect the celebrity’s honest opinion and must not be misleading. This means that celebrities cannot make false or exaggerated claims about the NFTs they are promoting. If a celebrity violates the FTC’s Endorsement Guides, they could face legal action from the FTC and/or consumers who were misled by their endorsement.

If an influencer or a celebrity promotes an NFT that turns out to be a fraudulent investment, they could potentially be held liable for any losses suffered by consumers who relied on their endorsement. In such a case, the celebrity or influencer could be sued by the affected consumers.

Therefore, it is important for celebrities and influencers to be transparent and honest about their endorsements and to make sure they are not promoting products that are fraudulent or deceptive to avoid unwanted legal consequences.

The post Celebrities Are Being Sued for Promoting Bored Ape Yacht Club NFTs appeared first on Carbon Law Group.

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! 

The post Key Provisions of the Trademark Modernization Act of 2020 and Why it is Important for Brand Owners appeared first on Carbon Law Group.

Numerous brokers or businesses around the world have joined the gold rush for this year’s most sought-after commodities. Urgent late-night inspections at mask factories, hurried million-dollar wire transfers to secure PPEs, and more. In this frenzied, pandemic-driven market, many different types of commercial agreements are involved. Entrepreneurs in international commodity trading, especially bulk commodities, often come across documents like Non-circumvention, Non-disclosure Agreements (“NCNDA”), International Master Fee Protection Agreement (“IMFPA”), Commission Agreements, and other documents. However, the legitimacy and protection these documents afford are yet to be determined.

What are NCNDAs and Why You Should Consult an Attorney Before Signing One

An NCNDA is an agreement that is commonly used in the preliminary stages of a business transaction where the seller and buyer do not know each other but are brought into contact with each other by one or more intermediaries or brokers to fulfill the transaction. The purpose of such agreement is to ensure that (1) the intermediaries or brokers who brought the buyer and seller together are not by-passed and (2) the information disclosed during the negotiations is not revealed to any external or unauthorized party. These agreements are usually valid for a specified term.

In this frenzied market, as the manufacturers making these desperately sought-after medical supplies are making huge profits by supplying bulk commodities to whoever can pay the most and pay fastest, a strong and well-drafted NCNDA is vital to anyone involved in these deals to protect their interests and ensure that they are not circumvented.

Some key terms of an NCNDA include:

1. Non-Circumvention Clause, which is used to prevent the contracting parties from cutting each other on any businesses covered in the agreement. A clear definition of the covered business is critical.
2. Non-Disclosure Clause, which aims to protect any information the contracting parties intend to be held confidential. A good NCNDA will need clear language to ensure important information that the party wants to prevent from disclosure are covered.
3. Term, which defines how long the NCNDA will run.

Navigating this chaotic, “Wild West” PPE market can seem daunting. It is always helpful to enlist the assistance of a professional business attorney. At Carbon Law Group, with our extensive experience in providing legal guidance to businesses in contracting and negotiation, we are confident that we can serve as strong legal support for your business. Find out how Carbon Law Group can help you protect your intellectual property rights by scheduling a meeting with us using this link.

We can help with:

• Reviewing Contracts
• Drafting strong NDAs and Non-circumvent Agreements
• Answering compliance questions
• Due Diligence
• Paymaster Services

The post The “Wild West” Mask Market And The Runaway NCNDAs appeared first on Carbon Law Group.

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.

The post Changes to Independent Contractor Classifications You Need to Know appeared first on Carbon Law Group.

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

The post Looking Back At 2018 and Moving Forward Into 2019 appeared first on Carbon Law Group.

Compliance with upcoming regulations is especially important because the measure establishes serious civil penalties for violations. Penalties include fines, nuisance abatement, and even authorizing the Department of Water and Power to turn off the utilities of noncompliant businesses. Finding the right attorney to help you navigate through this period of evolving state and county regulations will ensure you are your business are taken care of.

The post Measure M: Making sure your Marijuana Business Complies With New Local Laws appeared first on Carbon Law Group.