At the risk of making us obsolete, this new online service was too cool not to link to.  The Silicon Valley law firm of Wilson Sonsini Goodrich & Rosati recently launched a free Term Sheet Generator for clients and prospective clients.  According to their website, the Generator:

“will generate a venture financing term sheet based on your responses to an online questionnaire. It also has an informational component, with basic tutorials and annotations on financing terms. This term sheet generator is a modified version of a tool that we use internally, which comprises one part of a suite of document automation tools that we use to generate start-up and venture financing-related documents.

Because it has been designed as a generic tool that takes into account a number of options, this version of the term sheet generator is fairly expansive and includes significantly more detail than would likely be found in a customized application.”

For the first-time entrepreneur, the Generator does a decent job of explaining the various terms and options.  Old pros will love the ease with which they can navigate different terms and produce a quick proposal to present to prospective investors.

All kidding aside, the Generator does not replace the need for a lawyer (it was invented by a law firm after all).  First time entrepreneurs may still need some guidance on valuation and customary terms for their fund raising round.  Old pros may still want something a little more custom, or want counsel in the negotiation phase.  In both cases, a lawyer is still needed to draft the final documents.

What the Generator does best, I think, is allow the entrepreneur to get started quickly, to do the initial ground work, before consulting with the lawyer.  For the lawyer, term sheets produced by the Generator are a great starting place, allowing lawyer and client to quickly get past the basics and on to more important aspects of the deal.

–Matt

A client recently asked me if he, as an employer, could designate his office as a “smoke-free” environment and, what’s more, if he could refuse to hire people who are smokers.

The short answer is, yes, under Michigan law, an employer can have both a smoke-free workplace and a workplace free of smokers.  (Even though smoking is a legal activity, and even if the smoking is done exclusively during off-duty hours.)

Federal law prohibits employers from discriminating against any individual in hiring because of that individual’s race, color, religion, sex, national origin, citizenship status, age, and disability.  State law also prohibits discrimination in hiring based on age, height, weight, or marital status, in addition to race, color, religion, sex (which includes pregnancy), national origin, and on the basis of disability.  A particular hiring practice may be unlawful if it is used for the purpose of excluding a “protected group”.  As of yet, smokers are not a “protected group” under Michigan or Federal law.

In Stevens v. Inland Waters, Inc., 220 Mich. App. 212, 559 N.W.2d 61 (Mich.App.,1996), an employee brought an action against his employer for allegedly violating the Michigan Handicappers’ Civil Rights Act (HCRA) by terminating his employment as a security guard because of his on- and off-duty smoking.  The HCRA provides that an employer shall not discriminate against an individual with respect to employment because of a “handicap” that is unrelated to the individual’s ability to perform the duties of a particular job or position.  To establish a case of discrimination under the HCRA, it must be shown that (1) the plaintiff is “handicapped” as defined in the HCRA, (2) the handicap is unrelated to the plaintiff’s ability to perform the duties of a particular job, and (3) the plaintiff has been discriminated against in one of the ways set forth in the statute.  The HCRA defines a “handicap” for purposes of the statute as a determinable physical or mental characteristic of an individual that substantially limits major life activities.  The Circuit Court granted summary judgment for the employer, and the employee appealed.  The Court of Appeals affirmed holding that the employee’s addiction to nicotine and his smoking did not substantially limit his life’s major activities, as required for it to be handicap under HCRA.

Most employers, however, don’t discriminate on the basis of smoking.  Rather, they prohibit smoking in the workplace, including company vehicles, in order to provide a safe and healthful work environment for everyone, but allow smoking in certain designated, outside areas and away from the company building.

Several efforts have been made in the State legislature to ban workplace smoking entirely but none have passed.

–Matt

Join us TONIGHT, April 23rd, for TechNow09 “a one-night business event, showcasing future and current Michigan business leaders who are innovating in their fields, creating jobs, and leading the transition of Michigan into a knowledge economy.”  The event includes five presentations from next-generation, Michigan-based technology companies; an interactive panel discussion with current Michigan business leaders; and cocktails, networking and raffle.  A live concert with Michigan’s own Manolete, a latin-inspired rock band, immediately follows.

Safford & Baker is an official sponsor.  Please come by our table and say hello.

The event is at the Royal Oak Music Theatre.  Doors open at 6pm, and the event starts at 7pm.  Manolete performs at 10pm.  A minimum donation is required for entry.  All proceeds are benefiting the Multiple Sclerosis Society.

For more information visit TechNow09.

–Matt

“A 12-person jury deliberated six hours over two days in January before awarding [the plaintiff] $50,000 in compensatory damages.  The verdict made him the first plaintiff awarded damages in a libel suit against a blogger….The case is one of at least 50 similar suits filed in the past several years.” — Kansas City Daily News, October 26, 2006

“Social media – always fun until someone gets sued.” — FP Legal Post, March 16, 2009

What are blogs, wikis, and online forums?

Blogs, wikis, and online forums are part of the Web 2.0 social media explosion that are changing the way we do business and work with each other. Web 2.0 represents one of the greatest opportunities of our lifetime to share ideas and work collaboratively.

However, Web 2.0 also represents one of the newest legal threats to people and companies utilizing these tools.  Whether you are new to Web 2.0 or a relative old-timer, you have probably witnessed more and more stories every day about people and companies getting in trouble for what they or their users have posted online.

What legal liability issues can arise from my blog, wiki, or online forum?

Generally, you face the same liability issues as anyone making a publication available to the public. The main legal liability issues include:

• Defamation
• Intellectual Property (Copyright/Trademark)
• Trade Secret
• Right of Publicity
• Invasion of Privacy

Whenever you open the Web 2.0 door, inevitably someone will publish information or post content that others don’t want published.  Someone might, for example, publish something that someone considers defamatory or private, republish someone’s copyrighted content without permission, or misuse or tarnish someone’s trademark in a way that confuses consumers.

What can I do to protect yourself and my company?

• Understand your rights to link to information, quote from articles and blogs, or otherwise use someone else’s creative works.
• Understand how and when you can use the brand name of a good or service in your blog, wiki, or online forum.
• Develop and implement company policies and procedures for employees using Web 2.0 tools.
• Post clear and conspicuous terms and conditions for users.
• Implement a comprehensive and expeditious “notice-and-take-down” procedure for the removal of copyrighted material.
• Understand your rights and responsibilities under Section 230 of the Communication Decency Act of 1996.

–Matt

The Magnuson-Moss Warranty Act is the federal law that governs consumer product warranties.  The Act requires manufacturers and sellers of consumer products to provide consumers with detailed information about warranty coverage.  In addition, it affects both the rights of consumers and the obligations of warrantors under written warranties.

What the Magnuson-Moss Act Does NOT Require

• The Act does not require any business to provide a written warranty.  The Act allows businesses to determine whether to warrant their products in writing. However, once a business decides to offer a written warranty on a consumer product, it must comply with the Act.
• The Act does not apply to oral warranties.  Only written warranties are covered.
• The Act does not apply to warranties on services.  Only warranties on goods are covered.
• The Act does not apply to warranties on products sold for resale or for commercial purposes.  The Act covers only warranties on consumer products.  This means that only warranties on tangible property normally used for personal, family, or household purposes are covered.

What the Magnuson-Moss Act Requires

In passing the Magnuson-Moss Warranty Act, Congress specified a number of requirements that warrantors must meet.  Congress also directed the FTC to adopt rules to cover other requirements.  The Act and the Rules establish three basic requirements that may apply to you, either as a warrantor or a seller.

• As a warrantor, you must designate, or title, your written warranty as either “full” or “limited.”
• As a warrantor, you must state certain specified information about the coverage of your warranty in a single, clear, and easy-to-read document.
• As a warrantor or a seller, you must ensure that warranties are available where your warranted consumer products are sold so that consumers can read them before buying.

The Act prohibits anyone who offers a written warranty from disclaiming or modifying implied warranties.  This means that no matter how broad or narrow your written warranty is, your customers always will receive the basic protection of the implied warranty of merchantability.  This is explained in Understanding Warranties.

There is one permissible modification of implied warranties, however.  If you offer a “limited” written warranty, the law allows you to include a provision that restricts the duration of implied warranties to the duration of your limited warranty.  For example, if you offer a two-year limited warranty, you can limit implied warranties to two years.  However, if you offer a “full” written warranty, you cannot limit the duration of implied warranties.

What the Terms “Full” and “Limited” Mean

If each of the following five statements is true about a warranty’s terms and conditions, it is a “FULL” warranty:

• The warranty does not limit the duration of implied warranties.
• The warranty provides warranty service to anyone who owns the product during the warranty period; that is, coverage is not limited to first purchasers.
• The warranty provides warranty service free of charge, including such costs as returning the product or removing and reinstalling the product when necessary.
• The warranty provides, at the consumer’s choice, either a replacement or a full refund if, after a reasonable number of tries, you are unable to repair the product.
• The warranty does not require consumers to perform any duty as a precondition for receiving service, except notifying the warrantor that service is needed, unless the duty is reasonable.

If any of these statements is not true, then the warranty is “limited”.

You are not required to make your entire warranty “full” or “limited”.  If the statements above are true about the coverage on only some parts of your product, or if the statements are true about the coverage during only one part of the warranty period, then your warranty is a multiple warranty that is part full and part limited.

Basic Information Required for All Warranties

Under the FTC Rules, there are five basic aspects of coverage that your warranty must describe.  It is useful to think of these as five questions which your warranty must answer:

• What does the warranty cover/not cover? Answering this question is quite simple when the warranty covers every type of malfunction or defect that may appear in all parts of the product. However, if not all parts or not all types of defects are covered, you should clearly describe the scope of coverage.
• What is the period of coverage? If coverage begins at some point in time other than the purchase date, your warranty must state the time or event that begins the coverage.  For example, warranty coverage could begin when the product is installed, which may be different from when the product is purchased.  Also, you must make it clear when coverage ends if some particular event would terminate it.  For example, coverage could be voided upon improper installation.
• What will you do to correct problems? This requires an explanation of the remedy you offer under the warranty.  This could be repair or replacement of the product, a refund of the purchase price, or a credit toward subsequent purchases.  If necessary for clarity, you must also explain what you will not do or what expenses you will not pay.
• How can the customer get warranty service? Your warranty must tell customers who they can go to for warranty service and how to reach those persons or companies.  Typically, this means that the warranty needs to include the name and address of your company, and any person or office customers should contact.
• How will state law affect your customer’s rights under the warranty? Your warranty must answer this question because implied warranty rights and certain other warranty rights vary from state to state.  Rather than require a detailed explanation about this on a state-by-state basis, the FTC adopted the following “boilerplate” disclosure to address this issue.  It must be included in every consumer product warranty: “This warranty gives you specific legal rights, and you may also have other rights which vary from state to state.”

Making Warranties Available Prior to Sale

The FTC’s Rule on Pre-Sale Availability of Written Warranty Terms requires that written warranties on consumer products costing more than $15 be available to consumers before they buy.  The Rule has provisions that specify what retailers, including mail order, catalog, and door-to-door sellers, must do to accomplish this. The Rule also specifies what manufacturers must do so that sellers can meet their obligations under the Rule.

Retailers must make written warranties available at the point of sale.  As a manufacturer, you must provide retailers of your product with the warranty materials they will need to meet their availability requirements.  There are any number of ways to do this, including: providing copies of the warranty to be placed in a binder; providing warranty stickers, tags, signs, or posters; or printing the warranty on your product’s packaging.  As long as you have provided retailers with the warranty materials they need to comply with the rule, you are not legally responsible if they fail to make your warranties available.

–Matt

The above is a general overview of some aspects of Federal Warranty Law and was in part taken substantially from the Federal Trade Commission’s Business Person’s Guide to Federal Warranty Law