Red Line Law Group’s Legal Entities and Intellectual Property In A Nutshell Red Line Law Group’s Legal Entities and Intellectual Property In A Nutshell University of Illinois—Champaign/Urbana Victor Pascucci III, Esq. Mark A. Powers, Esq. 218 North Jefferson, Suite 400 Chicago, Illinois (312)

Topics Outline Legal Entities Intellectual Property Hiring Lawyers

Legal Entities Corporations – Familiar entity – Publicly traded entities Limited Liability Companies – Relatively new entity type – Modeled on European entity type Partnerships – Archaic – Being replaced by LLC Sole Proprietorships – Most common “entity” – Not recommended

Corporations Formation – File articles w/ Sec. of State – Bylaws, shareholder agreements, resolutions, etc. Characteristics – “Immortal” – Independent legal entity – Limited liability for owners  “Piercing the Veil” – Easy to sell interests/add new investors Management – Officers – Directors – Fiduciary duties – Shareholders Tax Aspects – “Double taxation” problem – Methods of avoiding ill effects of double taxation

Partnerships Formation – Two basic types, general vs. limited – Creation can be different for each type Characteristics – Independent legal entity – Full liability for debts – Hard to add new investors or transfer interests; all get veto power over new party – Relatively fragile structure Management – Equal say in operation – Acts of one bind all (including liabilities) Tax Aspects – Entity is not taxed – Income (losses) “pass through” to owners pro rata

Limited Liability Companies Formation – State filing – Operating Agreement (or default rules apply) Characteristics – Independent legal entity – No liability for debts – Hard to add new investors or transfer interests; all get veto power over new party – Relatively fragile structure Management – Flexible – Managers – Members Tax Aspects – Entity is not taxed – Income (losses) “pass through” to owners pro rata – Can elect “c-corp” status

S-Corporations Formation – File articles w/ Sec. of State – Bylaws, shareholder agreements, resolutions, etc. – Timely filing of Form 2553! Characteristics – Generally, same as standard corporation, except restrictions on capital structure. Management – Officers – Directors – Fiduciary duties – Shareholders Tax Aspects – Pro rata allocation of income (losses) to shareholders – Very similar to partnership taxation

Sole Proprietorships Formation – Open a business – At most, a disclosure filing Characteristics – No independent entity – Full liability for debts – Business winds up when owner dies Management – Just owner Tax Aspects – Income (losses) are considered the owner’s income (losses)

Intellectual Property Trade Secrets Trademarks Patents Copyright

Trade Secret Information Generates economic value from Neither being know, readily ascertainable Reasonable efforts to maintain secrecy

Trademark Definition: – Graphic, word, slogan, combination – Adapted to identify goods or services – Distinguish Exclusive right to use, 10 years Strength: – Generic-Descriptive-Suggestive-Arbitrary-Coined

Copyright Intangible right in the expression of and idea Fixed in tangible form Right to: reproduce, derivative, distribute, perform/disseminate, display Life plus 70 Fair Use

Patent Idea Utility Patent Design Patent Scope Requirements: novel, utility, non-obvious, disclosure

Business Concerns Work for hire NDA Solicitation License Assign Transfer Royalties

How To Hire A Lawyer Wants to Be Your Lawyer Understands You & Your Business Who Are You Hiring? Experience Appropriateness Limitations of Lawyers

Law Myths Hire Lawyer not a law firm Sell senior, service junior We’ll get you funded Learning

Thank You ! ! Victor Pascucci III, Esq. (312) N Jefferson, Suite 400 Chicago, Illinois (312) Mark A. Powers, Esq. (312)