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The Daytona Law Blog

Understanding non-compete agreement enforcement

Businesses in Daytona Beach understand the importance of their proprietary information. It is for this reason that concerns are often raised when an employee leaves a company. Many may view these fears to be justified, and thus warrant requiring staff members to sign non-compete agreements. Such an agreement typically seeks to limit what a person can do when pursuing opportunities similar to the work they provide while in a company's employ. The question is whether or not such agreements are enforceable. 

Section 542.335 of Florida's state statutes says any covenants that restrict or prohibit an employee from competing with a former employer are enforceable provided that they are reasonable in terms of their time, area and line of business. Often, courts have interpreted "reasonable" to extend only to the sharing of vital business information and not restricting an employee from working in the same industry or for a particular company within that industry (agreements deemed to be lawful that restrict employment usually only apply to a company's immediate geographic area). Indeed, Florida's law goes on to specify that restrictive covenants to employment only apply when there is a legitimate fear of a negative impact on a company's business interests. Those interests are defined as: 

  • Trade secrets 
  • Valuable confidential business and/or professional information
  • Relationships with current and potential clients and customers
  • Client goodwill
  • Trademarked practices
  • Extraordinary or specialized training

Defining intellectual property

As business markets expand and information sharing proliferates, the question of what exactly is it that your company owns becomes more important than ever. Many clients in Daytona Beach have come to us here at Smith Bigman Brock with this very question, and oftentimes coming up with an answer proves difficult. There are undoubtedly unique aspects of your company that contribute to its competitive advantage; you of course want to ensure that those aspects are protected as your business' intellectual property (thus guaranteeing that they cannot be shared with or duplicated by others). Yet what exactly counts as IP? 

The World Intellectual Property Organization defines IP as "creations of the mind." Such a definition seems to leave much room for interpretation, yet fortunately the WIPO goes on to define it further. It identifies two distinct types of IP. The first is copyrighted material. This covers music, films, books and artistic works. Your business may or may not produce its own copyrighted material, but it may manage that of others, thus making the need to identify instances where it is being infringed important. 

What if a client doesn't pay me?

Small business owners need payment to continue providing quality service to customers. Ignoring an invoice is all too common in the business world, and if the invoice remains unpaid a business owner can choose to pursue legal action to recoup his or her losses. Before that happens it helps to recognize the signs that an invoice will likely be unpaid, as explained by Inc. 

Most business transactions are done digitally these days. Having your clients remit payment digitally is more convenient and cost-effective since no postage is necessary. That's why it's odd when a client insists on paying with check only. While it may be true that some people prefer this method, a check can easily bounce, which leaves you scrambling for another form of payment. If your business accepts checks, institute penalties for bounced checks so you remain financially protected. 

Trademark basis for filing options

Finding ways to achieve competitive advantages or differences in the marketplace is a common goal for businesses in Florida and across the country. At the same time, companies often seek ways to prevent others from leveraging their strengths or assets. Intellectual property protections like trademarks or service marks can assist with this.

As explained by the United States Patent and Trademark Office, a trademark or service mark is designed to identify the origin of a particular service or product. It also identifies a product or service as unique, aligns it to a brand and differentiates it from competitive offerings. When applying for a trademark, a company may or may not have already used the name or mark publicly yet.

Client sues marketing agency over failed website project

Business owners and executives in Florida know that entering into contracts is an important and delicate part of operating a company. The manner in which a contract is developed and the specific verbiage it uses can help or hurt one or both parties if a dispute ever arises. The terms and verbiage of one contract between a major car rental company and a marketing agency will likely be under close examination in a new lawsuit.

As reported by Consulting magazine, the rental car company hired the agency to develop an all-new website and associated mobile application. Unfortunately, the work was not delivered in the manner that the client believed was appropriate. Now the company is suing the agency for breach of contract.

Should you arbitrate a business dispute?

Disputes between business partners can tear a Florida company apart, which is why many businesses build ways to resolve conflicts into their contracts. Some companies employ mediation or civil litigation, but arbitration is commonly used to handle many disputes. Arbitration mimics a civil trial in that the disputing parties make their case before a person who looks at the evidence and renders a judgment. Arbitration, like any form of resolution, has its benefits and drawbacks which should be carefully considered before going forward with it.

Per Chron.com, companies typically like to use arbitration because it costs less than civil litigation, takes less time, and is more private. Going to arbitration means that details about the case that could be embarrassing if made public will be kept confidential in the arbitration process. Also, sometimes corporate or technical matters may be so detailed and sophisticated that the company prefers a specialist to arbitrate as opposed to a judge who might not be familiar with the concepts involved.

Buyout agreements: What are they and why do you need one?

If you plan to start a business in Florida, or if you already own and operate one, you may benefit from a sound buyout agreement. A buyout agreement, also known as a buy-sell agreement, is an agreement between the owners of a business that details what will become of an owner's share of the business should he or she choose to back out for any reason. The agreement also goes into effect when certain triggering events such as death, disability or conflict occur. FitSmallBusiness.com explains why you need a buy-sell agreement and what elements to include in yours. 

The sole purpose of a buyout agreement is to offer you guidance in the event that an unforeseeable happening occurs. Though you should maintain a positive attitude about your business partnership, plan for the worst. Unfortunately, life is full of curve balls, many of which have the potential to derail even your best of intentions. Some events that may occur during your time as a business owner include the following:

  •       A partner may divorce and part of his or her share may end up in the hands of an angry ex-spouse.
  •       You or a partner may pass away and, as survivors contest their rights to a share of the business, the business could die in probate.
  •       If you decide to exit without a buy-sell agreement, you or your heirs may not receive fair compensation for your portion of the company.
  •       If you or a partner have to find a buyer for a share of the business on short notice, you may not receive market value.

What is a trademark infringement

If you are like many business owners or executives in Florida, you know that your intellectual property should be carefully protected. Similarly, you know that avoiding an issue with another company's intellectual property can be important. In monitoring these things, it is good for you to understand the world of trademark infringements as trademarks may be among the types of intellectual property commonly involved in disputes.

As explained by the United States Patent and Trademark Office, the responsibility for enforcing any trademark rests squarely on the shoulders of the entity that holds the trademark. If that company does not enforce their marks, nobody else will. An allegation of infringement generally includes the assertion that another party is using the mark without approval and in a manner that is likely to cause confusion in the marketplace. This confusion, it should be noted, does not have to be intentional.

US companies face threat to intellectual property from China

In Florida, new businesses are started every day. While business owners are often focused on the basics of running the business, there are much more complicated matters that will eventually come up. One of these is the reality of protecting intellectual property. According to the The Heartland Institute, the United States is ranked number one in intellectual property protection among the 50 largest economies in the world, but China still remains a large problem.

The ranking is based on things such as copyright, trademark, patent, trade secrets protection and around 40 indicators that are vital to innovation. In the United States alone, industries heavy in intellectual property supply up to 45 million jobs and contribute up to $6 trillion to the United States GDP.

Understanding contract consideration

Your business partnerships in Daytona Beach are much more clearly defined when you have a contract in place. Yet as many of the companies that we here at Smith Bigman Brock have worked with in the past can attest to, simply having a written contract does not mean that such an agreement is valid (and, by extension, enforceable). It is the language and terms within a contract that confirms its validity. 

One of the basic elements that must be present in order for an agreement to be considered a contract is consideration. The Florida Bar defines "consideration" as "the exchange of promises to act and/or provide goods, services or money." Essentially, your contract consideration is the mutual benefits both you and your partner will receive from the agreement. For example, if you are a service provider, then the benefit your partner receives is your services. Your benefit is the payment for those services (or other services received in return). A contract cannot be "one-sided," or have benefits so heavily offered to one party of the agreement in order to be considered valid. 

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