Free Enterprise - The FindLaw Small Business Law Blog

December 2009 Archives

Business Method Patent Law Case Before Supreme Court

There is a patent law case that may change the way small businesses protect their business methods. According to, a recent case argued before the Supreme Court of the United States, Bilski v. Doll, may alter the extent to which small and large businesses are able to patent business methods. 

The case directly involves questions regarding the patentability of business methods, but has ramifications on the patent issues relating to computer software. Can a patent be granted to something that is not tied to a machine or transformation? Can business methods be patented? According to the United States Court of Appeals for the Federal Circuit, the answer is no. However, the Supreme Court had agreed to hear the case and decide on the issue.

This issue is intregral because small businesses are shifting more and more of their business towards rapidly developing technologies related to e-commerce and the internet. The majority of business method related applications are filed in the area of U.S. Class 705 since the methods claimed in these applications are somehow related to financial data processing.

All of this talk brings about one question:

Small Business Federal Contract Diversion

While Congress is trying to ensure that Main Street gets some relief from the recession with some stimulus bills in the works, there are plenty of small business interest groups who complain that all of the bills fail to address one major issue: diversion of small business federal contracts to big business. They claim that government federal contracts that belong to small businesses have been awarded to big businesses that should not be receiving the contracts to begin with.  

The American Small Business League's press release calls the proposed legislation to help small businesses a "sham." The press release goes on to state that the $100 billion dollars a year in small business federal contracts have somehow been diverted to large corporations. It uses strong language to describe how the proposed legislation does little to stop the "widespread fraud, abuse and loopholes in small business contracting programs, which continue at the cost of countless jobs every year."

"Jobs for Main Street" Act: Light At the End of the Tunnel?

The "Jobs for Main Street Act" Of 2010 is legislation passed by the House that promises to deliver some hope to small business owners. It aims to create jobs for small business by slowly thawing the frozen lines of credit for small businesses.

This proposed piece of legislation is intended to help Americans directly affected by the recession. Congressman William Clay (Dem-MO) was quoted by the American Chronicle as saying, "I voted against the Wall Street bailout in 2008 because it lacked accountability and did very little to help my constituents. In contrast, this legislation directs Federal dollars to those who need it most... families on Main Street. The Jobs for Main Street Act also provides critical funding for highways, transit, school renovation, teachers, police, firefighters, small business, job training and affordable housing."

So what exactly are some of the key provisions of this jobs bill that create jobs for small business?

Bill for Small Business Job Creation Introduced

A proposed bill for small business job creation and opening lines of credit to small business was introduced by the United States Senate Committee on Small Business and Entrepreneurship. According to a press release by the U.S. Senate Committee on Small Business & Entrepreneurship, the "Small Business Job Creation and Access to Capital Act of 2009" contains provisions that will increase SBA loan limits, extend government guarantees, and get rid of fees that come with SBA lending.

The proposed bill aims to increase small business job creation and get credit to small business. The bill hopes to create jobs by allowing small businesses to grow. The Denver Business Journal quotes Sen. Mark Udall (Dem-CO) as saying, "If we're going to rebuild our economy, we have to unlock the credit market so businesses on Main Street can make payroll, buy inventory and expand. By increasing access to credit union loans, small businesses across the country will be able to expand, and create thousands of jobs."

The senators predict (with the help of Credit Union National Association) that the bill will help credit to small business increase by $10 million dollars. The senators who support this bill are: Sen. Charles Schumer, (Dem-NY); Sen. Joseph Lieberman, (Ind-CT).; Sen. Olympia Snowe, (Rep-ME); Sen. Barbara Boxer, (Dem-CA).; Sen. Susan Collins, (Rep-ME); and Sen. Kirsten Gillibrand, (Dem-NY). 

Healthcare for Small Business? The Senate's Plan

The Senate's intended Christmas present for all Americans promises to ensure that most Americans have insurance. The bill proposes healthcare coverage for 96% of Americans.

According to Reuters, the Senate healthcare bill also offers healthcare options for small businesses such as federal tax plans that would enable small business owners to provide healthcare coverage for their employees.

The Senate healthcare bill would also aim to create new insurance exchanges via states so that small business owners can shop around for the best health insurance policy for their small business. The Senate plans to offer state insurance exchange in all 50 states.

The Recession And The Office Party

While we have written about small businesses worrying whether or not to dole out holiday bonuses, it seems that CNN is reporting that most employers are not planning to cut out the office party from their roster of holiday festivities. The office party is seen as a way to retain employees when the economy starts looking better.

The office party is just what small business owners need to have in order to show that they appreciate workers and to boost up worker morale. According to CNN, a survey by Chartered Management Institute (CMI) shows that two thirds (65 percent) of managers across the UK believe that Christmas parties are important in helping to improve employee morale.

The same managers surveyed believed that the office party is an important way to recognize the hard work that employees put into the company.

Small Business Stimulus for SBA Loans Extended

The Senate voted to extend small business stimulus for SBA loans this week. Specifically, it extended two small business stimulus programs that cut fees and provided guarantees for SBA loans. The Wall Street Journal reports that the funding for these two programs was running the risk of having no stimulus to fund them back in November, as we previously discussed. The new extension grants a maximum guarantee of 90% for SBA loans. When there was no stimulus for SBA loans, the maximum guarantee was 75%.

Mary Landrieu (Dem-LA) was quoted by the Wall Street Journal as saying, "Small businesses have been left in limbo since the funding ran out. [The legislation] will provide a lifeline to small businesses in need of credit."

Small Business Bankruptcies Up 81% in California

California small business owners have it tougher than most small business owners in the country. According to the Los Angeles Times, California small business bankruptcies grew by 81% over the past fiscal year, compared to the previous fiscal year. These percentages were provided by the credit agency Equifax, Inc.

While these numbers may seem depressing, experts warn that numbers may be even higher because most small business owners start their businesses as sole proprietorships and file for personal bankruptcy versus commercial bankruptcy. Lawyers often advise small business owners to file for personal bankruptcy instead of business bankruptcy because the filing process is easier. Ms. Kathleen March, a bankruptcy lawyer in Los Angeles said that many small business owners go out of business only to discover that their company's debts continue to haunt them.

Ms. March told the Los Angeles Times: "The norm is if you're running a small business, you will have to either cosign or personally guarantee the significant debts. The business itself can shut down, but the people cosigned all the debts. So, the individuals are then saddled with these huge debts."

Teen DUI Settlement Highlights Dram Shop Liability

A recent settlement between the Sonoma County winery called Paradise Ridge Winery and a teenage boy over a teen DUI brought attention to dram shop liability. We wrote about the case settlement in more detail in our Injured Blog.  

Even though California does not have per se dram shop laws, this lawsuit dealt with a teen DU,I which is an exception to this rule. This brings up some important questions:

What is dram shop liability for vendors?

The first thing that you need to figure out is what a dram shop is. A dram shop is the legal term for any place where alcoholic beverages are sold.

So if your small business sells any alcoholic beverages, you can be open to dram shop liability for vendors. Dram shop liability is basically any liability that comes out of selling alcohol to obviously intoxicated individuals or minors that results in personal injury or wrongful death.

Some states impose liability in either scenario -- selling to minors, or to overly intoxicated adults -- while other punish one more than the other. You can look at a useful chart that lists out dram shop liability by state here. Some of the major states that have both types of liabilities are: Connecticut, Illinois, Massachusetts, and New York. California only has vendor liability for minors, not adults. 

Payback: Card Lawsuit Payout to Retailers

An antitrust lawsuit settlement will force Visa and MasterCard to make a $1.1 billion dollar payout to retailers. AP reports that the payout was the result of a class action antitrust lawsuit that claimed that both Visa and MasterCard attempted to fix prices and restrict trade.

The suit was over Visa and Mastercard having forced merchants to accept their signature debit cards if they wanted to accept their credit cards. The debit cards, by the way, featured some hefty transaction fees.

News of card companies paying out no doubt sounds nice to merchants who have been battling soaring interchange fees levied on retailers who want to accept plastic.

To retailers, this settlement disbursement is going to be a nice holiday surprise. Many small business retailers have noticed that holiday spending is lower because of the recession. Tracy Mullin, President and CEO of the National Retail Federation, told AP: "The timing of these checks couldn't be better. They come during a difficult holiday season and will help retailers position themselves to participate in the economic recovery that lies ahead."

According to a press release from the law firm Constantine Cannon LLP, since retail operating margins for most retailers are averaging less than 5 percent, the $1.1 billion payment is the equivalent to a $22 billion increase in merchants' overall holiday revenue.

How To Navigate GPL Open Source In Small Business

The recent lawsuit filed by the Software Freedom Law Center (SFLC) over General Public License (GPL) compliance dealt with big names in the electronics industry, but does your small business know how to navigate General Public License GPL Open Source?

At first glance, you may think that this can't possibly apply to your business. But with more products involving on-board software, and more businesses making themselves available to customers online, there's an increasing chance that your business, or perhaps a contractor it uses, might incorporate some GPL Open Source software into the products or services you offer.

First of all, most obligations of the GPL license kick in only when the GPL software is used, then redistributed to others (either in its original form or in a modified version). This can happen if a product's controls were built with GPL covered source code incorporated.

Here are some of the requirements of using GPL Open Source as outlined in Ars Technica and the GNU Official Website:

What You Need to Know about Jury Duty Law

The story of how an employer in Miami allegedly fired an employee over jury duty service highlights an important question: Do you know how to deal with employee jury duty and the jury duty law? One of the most basic rights of employment is allowing employees to do their civic duty.

Do You Need to Give Employees Time Off for Jury Duty?

The laws of almost every state require that employers give employees time off in order to vote and serve time in jury duty when the receive a jury duty summons.

These laws vary widely in the details, however -- some require employers to provide paid leave, while others do not; some allow employers to require employees to show some proof that they voted or were called for jury service; and some actually impose criminal penalties on employers who fire or otherwise penalize an employee for taking time off work for these civic obligations.

Make sure that you understand your state's jury duty law.

Franchise Owners Make Noise over NJ Calorie Law

CBS News reports that the New Jersey Senate passed a new calorie law. The calorie law would require chain restaurants in New Jersey to post the number of calories in a product right on the menu. The calorie food count measure requires all restaurants with at least 20 locations nationwide to comply with the new law. The bill would not apply to salad bars or buffets.

While the bill applies only to chains and not small businesses, franchise owners make up a part of the small business owner population. They are probably not going to be happy with this new calorie law. 

The penalties for non-compliance range from $50-$100 for a first time offense and then increase to $250-$500 for future offenses.

To Give or Not to Give: The Holiday Bonus

The small business holiday bonus may be just what your company needs in order to boost employee morale and add some cheer this small business holiday season.

Contrary to the rather dismal post we wrote previously in Free Enterprise about how small business owners have elected to use their limited resources to give customer gifts instead of employee bonuses, CNN is reporting that more employers are actually planning to give a holiday bonus.

CNN reports that Challenger, Gray & Christmas, Inc., an outplacement consultancy, said 64% of employers are planning to hand out holiday bonuses which is up from the 54% of employers who handed out holiday bonuses last year.

The Office Party: Tips on Avoiding A Workplace Lawsuit

With the holiday season approaching, you are probably planning an office holiday party in order to boost teamwork and morale amongst your own employees. But did you know that the office party opens you up to liability for a workplace lawsuit?

The United States Department of Labor states that holding a office holiday party with improper use of alcohol can make employers vulnerable to liability under tort, workers' compensation or other laws.

In fact, under California law, while there is no social host liability according to Dan Eaton (legal analyst on KPBS San Diego), there is business host liability in tort law.

Obama Calls For Small Business Stimulus Package

According to CNN, President Obama announced that he would like to drum up a small business stimulus package. He did so in a speech that he gave last Tuesday at the Brookings Institution.

He said such small business stimulus package would include new tax breaks to small businesses for new hires and for buying new equipment. CNN quotes President Obama as saying, "Even though we have reduced the deluge of job losses to a relative trickle, we are not yet creating jobs at a pace to help all those families who have been swept up in the flood. And it speaks to an urgent need to accelerate job growth in the short term while laying a new foundation for lasting economic growth."

President Obama also proposes to eliminate capital gains on small businesses for one year and recommended that any money left over from Trouble Asset Relief Program (TARP) should be funneled into building small businesses back up.

Rights in the Workplace: Transgender Employment

As discussed in FindLaw's Law and Daily Life, a transgender teen is filing an employment discrimination complaint against McDonald's because she claims that they refused to hire her because she is transgender. The story brings up the important issue of workplace rights for transgender employment.

As of April 3, 2008, 98 cities and counties reportedly prohibit employment discrimination on the basis of gender identity in employment ordinances that govern public and private employers in those jurisdictions.

While current state laws differ widely and are in a state of flux, what is clear is that transgender employees have suffered from many forms of discrimination in the workplace.

According to the Transgender Legal Defense & Education Fund, around 47 % of transgender people report being fired, or denied a job or promotion, because of their trans status.

Jay-Z, a Tea Shop, an ASCAP License and Small Business

As discussed in FildLaw's Celebrity Justice, a lawsuit from Jay-Z (and five other artists who are part of Universal Music Group) has been filed against Spot of Tea in Mobile, Alabama.

This lawsuit serves as a warning for small business owners of establishments such as bookstores, tea shops, restaurants and coffee shops: You could be breaking the law without even knowing it. The lawsuit serves to warn owners about an important legal issue: performance rights.

One solution: get permission to play the music you want at your business through a performance rights license such as a BMI or ASCAP license.

Universal Healthcare Plan: Worries for Small Business Owners

A recent study indicates that small business owners do not have a lot of confidence in the universal healthcare plan that is currently in the works. The universal healthcare plan simply does not seem to hold an appeal for small business owners.

Inc. reports that only 16 percent of small businesses would cancel their employer-provided coverage if there was a public offering, according to a monthly survey of small businesses conducted by VerticalResponse.

It seems that the smaller the business, the less likely small business owners would cancel their own employer-provided coverage if there was a public option. The survey of 831 companies found that nearly 41 percent of businesses with 11 to 100 employees wouldn't cancel their employer-provided coverage.

Not For Hire: Small Business Unemployment on the Rise

With unemployment at a 26 year high at 10.2%, its no wonder that DC movers and shakers are starting to focus more attention on small business owners.

Statistics supplied by ADP (and reported by CNN) show that small businesses (businesses with less than 50 employees) cut 68,000 jobs this past November. A huge portion of the total 5.3 million jobs lost this year alone was due to the 2 million jobs lost in small business.

With challenges such as small business loans drying up, SBA subsidies running out, and other small business financial institutions going bankrupt, it will be harder to recover those lost jobs. In fact, large banks have axed close to $10 billion dollars in small business lending.

Lending to Microbusinesses Up

In a bright spot of news, Reuters reports that borrowing by the smallest of all small businesses has grown, possibly indicating the beginnings of a small business recovery.

This is good news considering that many people believe that small businesses are the best way to economic recovery. They employ many Americans and they are the best way to create jobs in this economy.

According to Reuters, PayNet Inc for Reuters tracked the loan, lease and line of credit activity of microbusinesses. It discovered that U.S. businesses with less than $100,000 in outstanding debts began borrowing again warily this spring to invest in their businesses. This trend was constant until the very end of the study back in September 2009.

More Credit Cards for Businesses as Loans Dry Up

As small business lending is drying up, a lot of banks are offering more credit cards for businesses.

CNN reports that banks are offering more credit cards for businesses in lieu of traditional small business loans. In fact, JPMorgan and Chase has introduced four new credit cards for businesses. All of them have interest rate that are up to 30%.

More credit cards are being offered because they are more profitable for banks -- allowing them to charge (and hike) variable interest rates and charge penalties such as late fees.