Corporate Law Monitor : Corporate Lawyer & Attorney : Cole, Schotz, Meisel, Forman & Leonard Law Firm : NJ, Mid-Atlantic Business Transactions & Finance Law

The Frank-Dodd Wall Street Reform and Consumer Protection Act (the “Act”) amended the definition of “accredited investor” under the Securities Act of 1933, as amended, by requiring that any natural person who is intending, with or without that person’s spouse, to be deemed an “accredited investor” based on the $1 million dollar net worth test, exclude the value of the primary residence of the natural person in the calculation. The Act authorizes the Securities and Exchange Commission to review the definition of “accredited investor” as such term applies to natural persons, to determine whether other requirements of the definition should be modified for the protection of investors, in the public interest and in light of the economy and, thereafter, make such adjustments as the SEC deems appropriate. While the SEC has not issued amendments to its rules to reflect this change, this amendment to the calculation of net worth in the definition of accredited investor was effective upon adoption of the Act on July 21, 2010.

Offering documents and purchase/subscription agreements (and, in some cases, operating or governing agreements) currently being used or in the process of being prepared should be revised to reflect these amendments to the definition of “accredited investor”.

The Act contains numerous other changes in or proposed changes to current laws which are not summarized herein. A copy of the Act is available at http://www.sec.gov/about/laws/wallstreetreform-cpa.pdf.

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On August 13, 2010, New York State laws were amended to clarify that powers of attorney executed by individuals in New York primarily for a business or commercial purpose need not comply with the onerous requirements that went into effect on September 1, 2009. Following the 2009 amendments, the New York General Obligations Laws technically required all powers of attorney executed by individuals within the State of New York (including those used in corporate transactions and securities filings) to comply with mandatory notice, acknowledgement and notarization provisions and certain other technical matters.

The 2010 amendments expressly provide that the requirements for powers of attorney set forth in the 2009 amendments will not apply to:

1. a power of attorney given primarily for a business or commercial purpose, including without limitation:
   1. a power to the extent it is coupled with an interest in the subject of the power;
   2. a power given to or for the benefit of a creditor in connection with a loan or other credit transaction;
   3. a power given to facilitate the transfer or disposition of one or more specific stocks, bonds or other assets, whether real, personal, tangible or intangible;
2. a proxy or other delegation to exercise voting rights or management rights with respect to an entity;
3. a power created on a form prescribed by a government or governmental subdivision, agency or instrumentality for a governmental purpose;
4. a power authorizing a third party to prepare, execute, deliver, submit and/or file a document or instrument with a government or governmental subdivision, agency or instrumentality or other third party;
5. a power authorizing a financial institution or employee of a financial institution to take action relating to an account in which the financial institution holds cash, securities, commodities or other financial assets on behalf of the person giving the power;
6. a power given by an individual who is or is seeking to become a director, officer, shareholder, employee, partner, limited partner, member, unit owner or manager of a corporation, partnership, limited liability company, condominium or other legal or commercial entity in his or her capacity as such;
7. a power contained in a partnership agreement, limited liability company operating agreement, declaration of trust, declaration of condominium, condominium bylaws, condominium offering plan or other agreement or instrument governing the internal affairs of an entity authorizing a director, officer, shareholder, employee, partner, limited partner, member, unit owner, manager or other person to take lawful action relating to such entity;
8. a power given to a condominium managing agent to take action in connection with the use, management and operation of a condominium unit;
9. a power given to a licensed real estate broker to take action in connection with a listing of real property, mortgage loan, lease or management agreement;
10. a power authorizing acceptance of service of process on behalf of the principal; and
11. a power created pursuant to authorization provided by a federal or state statute, other than this title, that specifically contemplates creation of the power, including without limitation a power to make health care decisions or decisions involving the disposition of remains.
    The 2010 amendments are effective on September 12, 2010, and will apply retroactively to September 1, 2009.

The 2010 amendments contain other modifications to the New York power of attorney laws which are not all summarized herein.  A copy of the 2010 amendments is available at http://assembly.state.ny.us/leg/?default_fld=&bn=A08392%09%09&Summary=Y&Text=Y.
 

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Many business owners believe their company’s name is “cleared” for trademark purposes once it is registered as a business name. That is a dangerous misconception. The system for registering business names is separate from the system for clearing and registering trademarks. To minimize the risk of expensive infringement litigation and maximize protection for a company’s trademark, a business owner should have a complete trademark search conducted and should generally register their trademarks, not just their business names, with the federal or state governments.

Business names – technically, “trade names” – are registered by the county clerk (for sole proprietorships and general partnerships) and the State (for corporations, limited liability companies and limited partnerships). Trade names are legally distinct from trademarks and service marks. While a “trade name” identifies the company itself, a “trademark” distinguishes the company’s goods from another’s goods and identifies those goods as originating from a particular source. A “service mark” serves the same function for services.

The difference may seem technical, but failing to recognize it can lead to trouble. County or State registrations for trade names and alternate names neither reserve a trademark nor ensure a trade name will not infringe another business’s trademark, service mark or trade name. The state/county trade name registration system does not prohibit the registration of alternate names that infringe other trade names, much less trademarks and service marks, and the system does not cross-check between state and county records. The trade name registration/reservation process also does not check for registrations outside New Jersey or for unregistered uses of trademarks and service marks, which can have common law protection.

A comprehensive search of federal, state and public records is needed, therefore, to clear trademarks, service marks and trade names. That search should be done before a company invests time and money developing goodwill in the mark.

Once a mark is cleared, it should usually be registered with the federal Patent and Trademark Office or the State. Although registration is not mandatory, it enhances the scope of protection, deters infringements and affords registrants important advantages when trademark disputes end up in court.
 

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