CONTENT CENTER
California’s Privacy Act—Watch for an Expanding Private Right of Action
By Joshua Briones, Esteban Morales, Matthew Novian
The California Consumer Privacy Act takes effect on January 1, 2020, but amendments are expected. In an article recently published by Bloomberg Law, Mintz attorneys Joshua Briones, Esteban Morales and Matthew Novian discuss the April 9 hearing on SB-561, a bill that would expand the private right of action and remove compliance opportunities for businesses, and explain why the bill should be closely watched.
Musical.ly’s COPPA Failure Falls Flat at the FTC; Will Pay Note-Worthy Fine
By Cynthia Larose and Elana Safner
The Federal Trade Commission (“FTC”) has handed down its largest civil penalty ever for violations of the Children’s Online Privacy Protection Act (“COPPA”). Musical.ly, now known as TikTok after a 2018 merger, agreed to a fine of $5.7 million for its violations. The settlement was significant not only because of its record amount, but also because it includes a specific agreement on how the website will operate going forward.
Employers Beware: Judge Greenlights Employee’s Privacy Lawsuit Over Dropbox Access
By Cynthia Larose, Katharine Beattie, and Jennifer Budoff
Many employers maintain policies limiting their employees’ expectation of privacy in the workplace, including policies that eliminate any expectation of privacy when using company-issued electronic devices. While employers may think that having such a policy would protect them from invasion of privacy claims under the Fourth Amendment or state law, a recent federal court decision may cause employers to think otherwise. This post examines this decision and provides best practices for avoiding issues with employees’ privacy interests.
The Impact Terms Project: Defining the Standard for Impact
By Verna Krishnamurthy
The Impact Terms Project (“ITP”) was launched as a platform intended to provide guidance on best practices to entrepreneurs, investors and other stakeholders in the rapidly-evolving social enterprise space
The California Consumer Privacy Act (CCPA): What Startups Should Know
By Brian Lam
Privacy and data security is a serious concern for many startups. They understand that end users, consumers, partners, and investors are now concerned like never before about how data is collected, used, stored and transferred. A bad data event quickly turns into a bad news story, can turn off users, discourage investors, and bring regulatory scrutiny and enforcement.
The SEC Confirms the Limited Scope and Nature of Utility Tokens
By Marine Bouaziz and Dan DeWolf
On April 3, 2019, Finhub, the SEC’s Strategic Hub for Innovation and Financial Technology, released the “Framework for ‘Investment Contract’ analysis of digital assets” (the “Framework”) providing principles for analyzing whether a digital asset[1] constitutes an investment contract, and thus a security. The same day, the SEC’s Division of Corporation Finance (the “Division”) published its first No-Action Letter on digital tokens.
Can I Raise Venture Capital as a Public Benefit Corporation?
By Ben Stone
As societies and markets increasingly insist that corporations generate positive social impact alongside profit, investors have taken notice. The global impact investing market alone, for instance, doubled from $114 billion in 2017 to $228 billion in 2018, and will almost certainly continue to accelerate. [1]
10 Shortcuts Entrepreneurs Should Not Take When Starting a Company
By Robert Giachetti and Mark Higgins
Congratulations - you have done it! You had an idea, you built a product, you figured out how you want to go to market, and you created a company. With that tedious process complete, you are ready to find your first customer, iron the bugs out of your product, and start making money.
Is Your Commercial Co-Venture in Compliance in all 50 States?
Commercial co-venture arrangements are a great way to blend philanthropy and commercial activities, but the parties in such an arrangement need to be mindful of the rules in each of the 50 states that govern commercial co-venture arrangements. If a person or for-profit company joins forces with a charitable organization to benefit the charitable organization, usually via donations, the parties have entered into a commercial co-venture arrangement for a charitable sales promotion.
How to Distribute Equity in Your Start-Up
By Patrick Elahmadie
The purpose of granting equity to management, employees and certain consultants is to align the interests of the parties pivotal to the growth of your company with the interests of investors. There are a number of different ways to grant equity in a start-up, the most common of which is stock options
CAUTION: Director Veto Rights in Financing Documents May Constitute “Disproportionate Voting”
By Lewis Geffen
Section 141(d) of the Delaware General Corporations Law (DGCL) allows the certificate of incorporation (COI) of a Delaware corporation to confer upon one or more directors voting powers greater than or less than those of other directors, thus resulting in “disproportionate voting” rights amongst the Directors.
How To Get Started: Dividing Equity, Getting Incorporated and Other Details When Beginning Your Business!
By Dinesh Melwani and Will Perkins
Just about every emerging business/start-up lawyer could write a book (and many have!) on the topics of equity division, incorporation and the innumerable ‘other details’ founders need to keep in mind when starting a business!
LLCs and Convertible Debt – Too Good to be True?
By Scott Pinarchick and Will Bussiere
Founders choosing a structure for their business are often drawn to the limited liability company, or LLC, for its overall flexibility in both taxation and governance matters. And founders seeking access to early capital, not to mention seed investors themselves, are often drawn to the convertible note as a simple, less expensive means to raise funds.
Digital Tokens: Rethinking the Term “Cryptocurrency”
By Dan DeWolf, Rachel Gholston, and Marine Bouaziz
What are the similarities between a one dollar bill, a share of a company, and a pre-paid gift card? The answer is……..not so much! The same is true of the similarities between virtual currencies, security tokens, and utility tokens; in truth, not so much.
Issues in Chinese Foreign Direct Investment in U.S. Early Stage Biotechnology Companies
By Flora Brookfield
There has been a marked increase in the amount of money being invested by Chinese investors into U.S. early stage biotechnology companies since 2017, spurred on by direct encouragement from Beijing through its Made in China 2025 industrial policy, which specifically targets biotech as a strategic industry eligible for greater government backing. In the first half of 2018, Chinese venture capital funds and high net worth family offices invested $5.1 billion in US biotech companies, exceeding the $4 billion invested by Chinese investors in all of 2017.
Founder’s Stock – a Legal Fiction
By Michael Bill
In common usage, a founder is an individual who creates or helps create a company, but in legal terms, there is no such thing as a “founder” or “founder’s stock,” only early participants in a company’s organization and ownership of its initial equity capital. Why is this so? Because, for all practical purposes (from a startup’s point of view), there are two types of stock – common stock and preferred stock – and “founders” are just the initial holders of the company’s common stock, usually before any financing, in-licensing, or contribution of assets.
Liability Considerations for Delaware Public Benefit Corporations
By Will Perkins and Christina Bailey
A public benefit corporation (PBC) is a statutorily designated type of corporation in Delaware that melds two concepts that are often seen as opposites: maximizing profit and providing public benefit. This choice of entity presents a compromise for those companies who are committed to operating in a responsible and sustainable manner, while acting as a for-profit entity.
The Form is Always Wrong
By Dan DeWolf and Samuel Effron
Mintz attorneys are often asked as to why we don’t simply provide “forms” on our website that can be downloaded and used. After all, a number of law firms let you download term sheets and other forms such as SAFEs. Our simple answer is: THE FORM IS ALWAYS WRONG! Legal forms are merely starting points and most forms are typically only half an inch deep. A successful enterprise truly needs so much more depth than what is provided in a basic form.
What to Do Now if You Want to Sell Your Company
The global M&A market has remained strong from the end of 2017 into 2018. With stockholders pressuring larger companies to grow their revenues and the strong liquidity position of many companies, it is a sellers’ market. For companies looking to sell and participate in the global M&A market of $3.7 trillion in 2017[1] and $890.7 billion in Q1 2018[2], the toughest question is often how to start.
New Beneficial Owner Threshold Eases VC Fundraising
By Talia Primor, Rachel Gholston, and Dan DeWolf
Small venture capital funds and special purpose vehicles, which otherwise qualify as “venture capital funds,” can now raise money from up to 250 beneficial owners and remain within the 3(c)(1) exemption of the Investment Company Act of 1940 (the “Investment Company Act”).
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