Being Deal Ready—Preparing Your Tech Startup for Merger, Acquisition or Investment

Posted in Events, Start-up

Shareholder Michelle Hallsten will be participating in an upcoming workshop on Oct. 18 at the University of the Pacific Sacramento Campus to help companies get ready to merge, acquire, or invest in another company. It’s never too early to get your house in order to optimize future deal value and outcomes for your tech startup. Attendees will gain insight from experienced professionals in corporate M&A and finance in this interactive discussion.

Topics covered include:

  • Current state of M&A and private equity markets
  • Deal process and timing
  • Understanding valuation drivers
  • Avoiding deal breakers and value killers
  • Preparing for the transaction process

Date and Time

Wed., Oct. 18, 2017
5:30 PM – 8:30 PM PDT

University of the Pacific Sacramento Campus
3200 5th Avenue
Classroom C
Sacramento, CA

To register, click here.

New German Federal Data Protection Act Officially Published

Posted in Cybersecurity, Data Protection

On 5 July 2017, the new German Data Protection Act (BDSG-new) was officially published in the Federal Gazette. BDSG-new will fully replace the current German Federal Data Protection Act (BDSG) and is intended to adjust the German legal framework to the new European General Data Protection Regulation (GDPR). Both BDSG-new and the GDPR will become effective 25 May 2018.

Some of the most important provisions of BDSG-new relate to sensitive data, employee data protection, the obligation to appoint a data processing officer and the use of scoring data.

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Effective Date of Final Rule on Parole for Startup Entrepreneurs Delayed to March 14, 2018

Posted in Start-up

On July 11, 2017 the Department of Homeland Security (DHS) announced that it is temporarily delaying the effective date of the International Entrepreneur Final Rule (the IE Final Rule). The effective date is delayed from July 17, 2017, to March 14, 2018, except for a minor provision which adds the Form FS-240, Consular Report of Birth Abroad, to the list of acceptable documents for Form I-9 verification, which went into effect on July 17, 2017. Written comments must be received on or before August 10, 2017.

This delay will provide DHS an opportunity to obtain comments from the public regarding a proposal to rescind the rule pursuant to Executive Order (E.O.) 13767, “Border Security and Immigration Enforcement Improvements.” The public may submit comments through Federal eRulemaking Portal: or mail to USCIS directly.

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James DeCarlo to Present on Patent Eligibility Determination in a Post-Alice World

Posted in Events

On Thursday, June 29, Greenberg Traurig’s James DeCarlo will present “Patent Eligibility Determination in a Post-Alice World: Significant Updates & Developments” on a webinar hosted by The Knowledge Group.  The panel will discuss the important issues with respect to Patent Eligibility Determination in a Post-Alice landscape. Speakers will also present and analyze the recent trends and developments surrounding this significant topic, and provide practitioners practical advice in traversing Alice challenges, in both prosecution and litigation. Click here for more information and to register for this webinar.

Jim is a shareholder in the firm’s Intellectual Property & Technology Practice and Emerging Technology Group and has over 25 years of experience litigating, licensing, and procuring patents in the software, hardware, internet, and networking space, among many others. His clients in the United States and abroad range from start-ups with one or two key patents to giants with thousands of patents worldwide.

How Startups Can Avoid Costly IP Mistakes

Posted in Intellectual Property, Patent, Trade Secrets

Most startup entrepreneurs spend a significant amount of time creating business plans, product development plans, marketing plans, etc. However, startups often neglect one of the most important aspects of planning — developing a plan for the company’s intellectual property (IP) to minimize risks to the company’s intangible assets. This oversight can be a critical mistake that can doom the startup. To help avoid IP headaches down the road, here are some IP tips that every startup company should consider.

Don’t Confuse Which IP Is Necessary for Your Intangible Assets
Not all IP is the same. Different IP options offer different protections, so it is important to understand the distinctions. Generally, these are some key areas of IP to consider:

  • Patent protects the idea.
  • Copyright protects the expression of the idea and requires the memorialization of the idea on a tangible medium.
  • Trademark protects the logo or the name and acts as an identifier of the source of the product or services associated with the logo or name.
  • Trade Secret protects anything that is confidential or proprietary.

Incorrectly pursuing the wrong IP protection can be costly and can place your company at risk. More often than not, entrepreneurs are faced with having to decide whether a patent strategy should be implemented or if trade secret is sufficient.  The answer is – it depends.  Each offers different types of protection with distinct benefits and risks, so you will need to decide which path is right to meet your business goals. It is always best to seek the advice of an IP attorney in this respect.

Avoid Public Disclosure of IP
Inventors may inadvertently jeopardize their ability to successfully apply for or be granted a patent by disclosing information about the invention to the public. Three typical situations to make efforts to avoid are:

Research and Development (R&D) in the Open
With the proliferation of co-working spaces, many companies are conducting R&D in the open and making their prototype available for all to see.  This practice can be considered a public disclosure and will likely foreclose patent protection in most of the world.  The United States affords a grace period of one year to file for patent protection, but consider avoiding doing research in the open.

Publishing or Presenting your Innovation Too Early
Companies sometimes publish or present their research early to showcase their innovation, which is often the core technology around which the company is being built.  In other instances, to fundraise, companies may meet with investors who often refuse to sign a non-disclosure agreement (NDA).  In either instance, the one-year clock for protecting IP will have started ticking, while protection in most of the world will likely have been foreclosed. With this in mind, it is important for companies to file the innovation with the United States Patent and Trademark Office (USPTO) before doing any presentations.

Discussing Innovations You Plan to Pursue
Even after a patent application is filed, any presentation or discussion should be limited to the subject matter that is in the filed patent application.  Also, during an interactive presentation or discussion, be aware of unintended brainstorming sessions between yourself and the other party.  This type of discussion may result in an invented concept not previously in the patent application being discussed with or suggested by the other party.  In such a situation, the inventive concept is now publicly disclosed, and the other party is now a co-inventor in the new inventive concept.

Remember to Secure IP Ownership Up Front
To help ensure the company has complete ownership of all IP assets, as soon as the company is incorporated or formed, all relevant IP should be assigned to the company.

Assignment Agreement
Many companies don’t consider IP early on and do not have proper assignment agreements in place.  If a founder leaves the company, and there is no assignment agreement, that founder owns the IP outright and can take it to a competitor or start a competing company.  What can help avoid this situation is making sure that all innovations are assigned to the company as soon as the company is formed.

Employment Agreement
Similarly, companies should consider putting an assignment clause in the employment agreement stating that the company owns the IP generated during the course of employment. The assignment clause should include the magic phrase, “I hereby assign.” By having an employment agreement with such an assignment clause, should the employee leave before an assignment agreement is executed for an invention, the company can rely on the employment agreement to show proof of IP ownership.

Confidentiality Protocol
If trade secret is an IP strategy or if there is a robust culture of exchanging ideas in a company, having a confidentiality protocol in place can protect the company from inadvertent public disclosure. At a minimum, every startup company should consider including the following provisions:

  1. Making sure appropriate content is marked as confidential and educating employees on the risks of publicly disclosing the information;
  2. Having written agreements with employees and outside contractors that require them to maintain business confidences.
  3. Implementing policies that place limits on the extent to which employees may transfer sensitive material to personal devices (e.g., rules against sending material to a personal email address).

Steer Clear of Using Content and Resources from Previous Employer
As an entrepreneur, “borrowing” trade secrets, know-how, customer lists, etc., from a previous employer is strictly prohibited.  In most cases, you likely signed an employment agreement with your previous employer that prohibits you from using such information to compete. If there was a non-solicitation provision in the employee agreement, you also cannot hire any talent from the previous employer to your new company. Violating either of these provisions can place your company in jeopardy even before it starts.

Make Sure Domain Name and Trademark are Available
In an effort to avoid wasting time, effort, and marketing dollars in branding your product and/or venture, you can make sure that the domain name you want is available first before deciding on a trademark for your product or venture.  Without that domain name, having a trademark that your customers cannot easily associate with your product or venture can be a detriment to your business.

Likewise, performing a clearance study to ensure that your trademark is available before spending resources on a branding campaign can be helpful.  It would be unfortunate if you were to find out late in the process that a competitor has a same trademark for a similar product.  The costs associated with undoing and redoing a branding campaign can be significant.

Greenberg Traurig’s Emerging Technology Group to Present at the 2017 Angel Capital Association Summit

Posted in Events, Intellectual Property, Nanotechnology, Technology

Greenberg Traurig’s Emerging Technology Practice will present on four separate sessions at this year’s Angel Capital Association (ACA) Summit in San Francisco (April 26-28 at the San Francisco Marriott Marquis Hotel). The sessions include:

  • After the Check: Tactics to Boost Your Returns (April 27, 9:45-10:30 a.m.)
    James J. DeCarlo, a shareholder in the Intellectual Property Practice in New York and New Jersey, will present on a session covering specific tactics that angels, who are not sitting around board tables, can employ during the holding periods after investing.
  • Workshop for Showcase Companies – The Ins and Outs of Term Sheets (April 27, 9:45-10:30 a.m.)
    Emily Ladd-Kravitz, an associate in the Corporate & Securities Practice and Emerging Technology Industry Group in Boston specializing in mergers & acquisitions, and Beth Cohen, director of Global Emerging Growth Services in the Emerging Technology Industry Group in Philadelphia, will be presenting on term sheets, which is one of the most important documents to an entrepreneur. They will provide answers to the following questions: Which terms are most important? How do they affect you? What are the best ways to negotiate for good results
  • Workshop for Showcase Companies: Intellectual Property and Patents (April 27, 11-11:45 a.m.)
    DeCarlo and Chinh H. Pham, co-leader of the firm’s Emerging Technology Practice and Chair of the firm’s Nanotechnology Practice in Boston, will hold a workshop regarding what startup enterprises need to know about developing, protecting and monetizing their IP assets.
  • The Next Big Thing in Tech – VR, IoT, Deep Learning… (April 27, 2:15-3 p.m.)
    Pham will also present on a session addressing the hottest technology trends in the last two years, including virtual reality/augmented reality (VR/AR), IoT and Artificial Intelligence. The panel will explore future trends and investment opportunities in each category.
  • Structuring Deals (April 28, 11:15 a.m.-12 p.m.)
    Kravitz will participate in a session that analyzes the structuring of deals.

For more details, please click here.

Greenberg Traurig to Host the Second Atlanta-Israel FinTech Innovation Conference

Posted in FinTech, Technology

May 22-23, 2017, Greenberg Traurig’s Atlanta office will host the second Atlanta-Israel FinTech Innovation Conference.

With over 100 guests expected, the conference brings together both U.S. and Israeli companies seeking synergy and collaboration opportunities. U.S. companies attend fin search of “cutting edge” Israeli technologies and Israelis leverage the event to showcase their technologies and make important contacts. The conference allows for many networking opportunities including one-on-one meetings.

The conference will be led for the second consecutive year by Greenberg Traurig’s David Schulman, Intellectual Property & Technology shareholder at the Atlanta office and an active member of the firm’s Israel Practice.

For more information please visit:

2017 Atlanta-Israel FinTech Innovation Conference in the news:

How Well Do You Know Your Co-founder?

Posted in Entrepreneurship, Start-up

Two co-founders, one CEO and one EVP. One owned more than the other, got paid better, had bigger bonuses. How did this happen?

“We were always very clear with each other about who would have what role,” the EVP once told me. I observed that almost everything between them was consultative, even to a fault. But for a tough call, if push came to shove, the EVP deferred and the buck stopped with his partner. “We defined the roles and it has always worked for us.”

Yet, when representing start-ups, I often find that conversations over business fundamentals such as choice of structure, team recruiting, or tweaking a cap table will be greeted by an entrepreneur nervously wondering, “How am I going to break the news to my co-founder?”

The guy wringing his hands across the table didn’t fret while burning the candle at both ends to improve on the start-up business model. He didn’t squirm when he quit his day job to bootstrap a risky venture. He didn’t sweat when he and his co-founder shook hands. But now, he’s afraid of allocating himself more shares of stock.

One such entrepreneur was running the entire operation. One had made a substantial loan to the company. One was dealing with unqualified co-founders whose presence would have violated any nepotism policy. One had declined freelance work and was living with her folks. One had paid the other a handsome salary in one business while they jointly plotted the spin-off. But they all sometimes found themselves walking on egg shells when it came to having what they perceived as difficult conversations with their co-founders.

Watching a rerun of the Food Network show Restaurant Impossible reminded me of this phenomenonOn the show, host Robert Irvine is brought in to a failing restaurant to identify the problems, help correct them, and hopefully turn it all around. On each episode it is often the family member or long-time buddy back in the kitchen or at the host stand that is harming the business in some way. Curiously, nobody can quite bring themselves to pinpoint the problems honestly when Irvine does his initial due diligence. Finally, after the employees quietly signal the real dynamics, the main players have to go on national television so that they can be prodded to have an adult conversation with each other.

Are you nervous about your co-founder? Will he be tempted by surer paths? Are your complementary skills being strained? Are you making allowances? Are you hiding annoyances?

Perhaps you’re nervous about yourself? Do you feel as though you are enjoying an undeserved wide berth? Afraid your co-founder will bear a grudge? Have your expectations changed? Is there some romantic or other non-business alignment?

As seen through personal experience (and on Restaurant Impossible!), for the good of the venture, it is important to be able to talk about these things and your other feelings in an open and trusting way. For starters, discuss each person’s strengths and weaknesses. Identify what actions and reactions he or she views as positive. Figure out what really gets under her or his skin. Compare management styles. Come up with the areas where one person needs a counterweight or could simply benefit from support.

Naturally, it’s ideal to have such talks before deciding to partner with someone. But it’s never too late to employ candid interactions to take your relationship to the next level.

Hatching New Ideas, from Tech Transfer to Incubation

Posted in Education, Entrepreneurship, Start-up, Technology

Colleges and universities are under increasing pressure to be more entrepreneurial and improve their impact on economic growth, job creation, and competitiveness. Additionally, higher education institutions face greater recruiting challenges, with many colleges and universities vying for the same quality professors, faculty and students from around the world. The way schools have addressed these issues has evolved over the last 30 years, inspiring new, creative curriculums and giving students new options to explore entrepreneurship.

 A Tradition of Tech Transfer

Historically, as a way to remain relevant and competitive, academic institutions have focused on improving technology transfer, the complex work that takes place at the intersection of research and commercialization. Over the last three decades, schools have revamped their technology transfer capabilities in order to seize the opportunities presented by patent system reforms such as:

  • The Bayh-Dole Act of 1980 which gives universities the right to take title to inventions made from federal research grants;
  • Supreme Court decisions that expand patentable matter; and
  • The new first-to-file system and other reforms brought by the America Invents Act.

For many years, the emphasis was largely on licensing patents, which was the mission of the university technology transfer office (TTO). However, it can be challenging for some universities to generate significant revenue from this model, and difficult for TTO companies to build sustainable businesses. One of the major hurdles has been the gap between research and conversion to commercial products.

Incubating Student Innovation

In recent years, colleges and universities have reconsidered their role in the innovation system. Rather than a linear system that supports invention in the hopes of landing a blockbuster patent, schools have seen the benefits of supporting an “innovation ecosystem” on campus. As a result, the startup incubator has emerged, which aims to give the student entrepreneur access to a broad array of resources, including education, laboratories and other facilities, investment capital, mentorship, and legal counsel.

With this alternative model, the school can help drive innovation, but may not own the resulting invention. Rather, the school “incubates” the development of new ideas and innovations by helping early-stage ventures to survive and grow during the startup period – a time when they are most apt to fail. On-campus incubators provide student entrepreneurs with a range of support services and resources tailored to meet their unique needs. By devoting resources to support campus entrepreneurs and partnering with business advisors and capital investors, colleges and universities are creating a nurturing environment for these nascent enterprises.

It’s Working

Campus incubators are growing exponentially. According to the National Business Incubation Association (NBIA), as of October 2012, approximately one-third of the 1,250 incubators in the United States were at universities, up from one-fifth in 2006. Today, there are an estimated 7,000 business incubators worldwide. Incubators are no longer found only at technology-centric schools such as MIT, and not just in Boston and Silicon Valley. Even non-tech campuses such as Northern Kentucky University, Duke and Syracuse now have incubator programs.

The on-campus incubation model continues to adapt to meet a variety of needs, from fostering commercialization of university technologies to increasing employment in economically distressed communities to serving as an investment vehicle.

Research conducted by the NBIA states that on-campus incubators can reduce the risk of small business failures. For example, in 2011, North American incubators assisted about 49,000 startup companies that provided full-time employment for nearly 200,000 workers and generated annual revenue of almost $15 billion. Perhaps most telling, is that, according to the NBIA, 87 percent of all companies that have graduated from their incubators are still in business. These newly hatched companies create jobs, revitalize neighborhoods and commercialize new technologies, thus strengthening local, regional, and even national economies.

Whether through tech transfer or incubation, higher education institutions are well-positioned to support entrepreneurship on campus, attract top talent, and help hatch new innovations.

How Big Pharma Taps Outside Ingenuity

Posted in Start-up

Economics in getting a compound approved and commercialized are evolving. Drug companies have reduced budgets that historically funded vast R&D teams. Innovators are chasing tight investment dollars. The two camps are increasingly collaborating.

pillsThere is a self-selection factor rewarding start-ups. Specifically, they can’t attract funding or licensing deals unless they’ve protected their intellectual property, showed clinically relevant data, recruited a credible advisory board, and/or received validation within the industry. Even then there’s plenty of risk. Product prospects fail more often than not and early-stage companies usually have all of their eggs in one basket. Indeed, investors worry that companies trying to pursue multiple compounds would lose focus.

For their part, Big Pharma can test promising compounds developed on the outside and try to reproduce results. As such, they can thoughtfully employ a “build” vs. “buy” analysis, deciding whether to go it alone or in-license (or otherwise acquire) given material. Even with the resources and expertise to get new ideas out of the lab and launched, established drug companies must figure out at what point licensing makes sense. There’s obviously greater risk at early stages of discovery. On the other hand, they’ll pay more for drugs that have already shown promise.

Happily, technology has enabled companies small and large to stretch their dollars. Huge new and open data sets together with relatively inexpensive high throughput computing identify genetic or other characteristics to achieve earlier targeting, better prospects, and even repurposing of previous failures.

So what does an exclusive licensing deal look like? Here are the basic elements:

  • Field of Use – Parties determine whether the license is limited to developing therapeutics for a particular disease and what activities a licensor can pursue outside of certain indications.
  • Up-Front Payments – These are usually paid on signing of the license and represent concrete value in the licensed compound; other payments are not guaranteed.
  • Milestones – Each step of advancement — whether filing a regulatory application, dosing the first patient in a clinical trial, or achieving the first sale in a given market — typically give rise to additional remuneration. Conversely, if a licensee discontinues development, there may be a mechanism for rights to revert and interim development to be licensed back.
  • Royalties – Payments are based on a percentage of net sales (sometimes per unit sold). Each deal varies as to the types of expenses, taxes and combinations that are included, and how and for what markets and periods thresholds are calculated.
  • Intellectual Property – The parties agree which has the right to register, enforce or defend IP rights and how costs and awards are split.
  • Reporting and Consultation – A committee often confers on the direction of, and each side’s continuing contribution toward, R&D.
  • Protections – Licensing can be a big-ticket deal. The parties must carefully craft legal and other provisions to anticipate issues that may arise in the future and apportion responsibility.

One of the terrific aspects of working with life sciences companies is the ability to witness ingenuity. Start-ups bring great creativity to a problem. Successful drug companies achieve a balance between internal R&D capabilities and external deal making. Getting a drug to market is rewarding for all.