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Silicon Bayou 101: Pivoting Your Business

Silicon Bayou 101: Pivoting Your Business

Small Business and Technology on the Rise in Silicon Bayou

As our Sunday nights are now void of Silicon Valley, we have time to reflect on some of the legal issues addressed in the second half of the season.  Has your business experienced any of these issues in Silicon Bayou?

The Importance of Branding

In Episode 5, Erlich hires Chuy to provide a classy and sophisticated logo design for Pied Piper. Although Erlich’s choice of logo was filled with blunders, developing a brand that can be protected by trademark and copyright laws is important at the outset of a business. A business should perform searches to see if domain names are available, if there are registered trademarks, and if their business name is available before beginning operations. This will mitigate the litigation risk from infringing on another business’s trademark or copyright. Prior planning can prevent an unintentional breach of another company’s Intellectual Property rights.

Employee Policies

While Erlich blundered in designing the logo, Jared used psychology 101 to address problems with the employees (Dinesh and Gilfoyle.) This highlights the importance of establishing employee policies at the outset to improve efficiency of work flow and to avoid conflicts between coworkers and management. A key tool for avoiding these problems is to utilize a “policies and procedures” handbook. This document should identify the policies that employees are to abide by and sets forth expectations for employment. Additionally, it is a protective tool if an employee later brings suit for discrimination or termination issues.

Well Negotiated Contracts Can Prevent Critical Issues

Episode 6 raises the issue of working with third parties. Richard hires “the Carver” to address issues with cloud computing. Richard clearly failed to properly evaluate his contract with the Carver as the Carver was paid a substantial sum of money for destructing the code in Pied Piper, causing a major problem. Although the problem was ultimately resolved, Richard could have avoided these issues by performing due diligence when engaging with a potential contractor.  He would also have likely obtained a better price when hiring this third party contractor. Additionally, he could have included warranty and indemnification provisions in the contract that would have held the Carver liable for any failure to perform according to the contract.

Do Not Forget About Trade Secrets and Confidentiality

Moreover, any contract with the Carver would need to address issues of trade secrets and confidentiality. By allowing the Carver access to the code of Pied Piper, there was significant exposure for the Carver to reverse engineer Pied Piper or use the information disclosed to develop a newer and better version of a similar product. Thus, taking the necessary precaution before disclosing information is essential.

In Episode 7, the presentation at TechCrunch Disrupt poses the same confidentiality and trade secret risks as contracting with third parties. How does a company market to third parties and investors while maintaining the value of their company? These are all issues that your legal counsel can help you address prior to the presentation.

Pivot Your Business!

Finally, in Episode 8, Pied Piper is forced to pivot its business model. At this point, any contracts addressing the scope of the business would need to be reviewed to ensure that the proper terms are still effective. Further, Richard is on the verge of needing to negotiate with additional investors and third party contractors, which as previously discussed, is a critical time to address issues with your legal counsel.

Although during the first season Pied Piper faced many legal blunders, the presentation at TechCrunch Disrupt was a success, and additional funding and growth will pose new challenges during Season 2.

Allen & Gooch is providing this legal update for informational purposes only. This article should not be construed as legal advice or a legal opinion as to any specific facts or circumstances. You should consult your own attorney concerning your particular situation and any specific legal questions you may have.