Category Archives: Publications

SAM Attorney Tony Keats Ranked in World Trademark Review’s WTR1000 2017

World Trademark ReviewJanuary 2017 – Stubbs Alderton & Markiles is pleased to announce that partner Tony Keats has been ranked in World Trademark Review’s WTR1000 2017- The World’s Leading Trademark Professionals. The WTR 1000 is a guide exclusively dedicated to identifying the world’s leading trademark legal services providers. Through an extensive research process conducted by a team of highly qualified, full-time analysts, the publication identifies the leading trademark law firms and individuals in over 70 global jurisdictions.

Nicholas Richardson, research editor for the WTR 1000, explains: “A strong brand is vital to success in today’s intensely competitive and increasingly globalized market. Trademarks are key tools through which businesses can protect the goodwill and reputation inherent in their brands, and build and maintain demand for their products and services. As a result, external advisers play a crucial role in developing and implementing brand strategies for both local and international markets and in protecting these vital assets in the face of infringement. It is thus imperative to choose the best legal counsel and the WTR 1000 serves as an essential guide in today’s brand-focused economy – as well as highlighting the health of the trademark marketplace.”

To full the full press from World Trademark Review release visit here. 

Tony Keats is a partner of the Firm and co-chair of the Trademark and Copyright Practice Tony KeatsGroup. Tony’s almost three decade legal career has focused on both the legal and business protection of brands and creative content from consumer products to entertainment, from designer goods to the Internet. Tony’s litigation background also includes related commercial matters involving unfair competition, contract disputes, rights of publicity violations, business torts, domain name infringement, and idea submission claims.

For more information about our Trademark & Copyright Practice, contact Tony Keats at


SAM Client HouseCanary Raises $33M

HouseCanaryStubbs Alderton & Markiles’ client HouseCanary, a real estate analytics company leveraging data science to accurately value and forecast over 18,000 U.S. residential markets and 100 million properties, announced this week that it has raised $33 million in a Series A round of funding. HouseCanary’s investors include Hillspire (Alphabet Executive Chairman Eric Schmidt’s family office), Alpha Edison, ECA Ventures, Morpheus Ventures and Raven Ventures. Congratulations to HouseCanary on this success!

To read the full press release click here.

Stubbs Alderton attorneys representing HouseCanary in this transaction was Greg Akselrud and Adam Bagley.

About HouseCanary
Founded in 2014, HouseCanary’s mission is to help people make better real estate decisions. Built on a foundation of great data, powerful models and predictive analytics, the HouseCanary platform aggregates millions of data elements, including more than four decades of property data and a rapidly expanding arsenal of proprietary data calculations and analytics, to accurately define and forecast values and market influences. The company is headquartered in San Francisco.

For more information about our Internet, Digital Media & Entertainment practice, contact Greg Akselrud at


SAM Partner Scott Galer Featured in SFVBJ Article Regarding Sienna Acquisition

SAM Partner Scott Galer was featured in a San Fernando Valley Business Journal article regarding Sienna’s early acquisition. Scott provided his insight on biotech startup Sienna’s buyout strategy, which he described as a roll up.

The full article in the SFVBJ can be viewed here.

Scott’s practice focuses on counseling private and public middle-market and emerging growth companies in areas of mergers and acquisitions, securities offerings, joint ventures, complex brand and technology licensing and other strategic business arrangements. Scott has expertise in managing a wide variety of corporate and financial transactions, including mergers, stock and asset acquisitions and dispositions, roll-up and spin-off transactions, public offerings (representing both issuers and investment bankers), alternative public offerings, debt and equity financing (representing issuers, lenders and investors), secured lending transactions and financial restructurings.

To find out more about Stubbs Alderton & Markiles’ Mergers & Acquisitions practice contact Scott Galer at


The New Partnership Audit Rules

For over 30 years, partnerships have been subject to unified audit rules that permit the IRS to examine a partnership’s (including an LLC’s) tax return and make adjustments at the partnership level that affect all the partnership’s members. [1]  To comply with the existing rules, LLC operating agreements generally provide for the appointment of a tax matters partner and grant that tax matters partner the right to interface with the IRS, the obligation to comply with the requirement to notify the members of the LLC of the commencement of the IRS audit and the terms of any settlement or other disposition.

Effective January 1, 2018, all new and existing partnerships will be subject to new partnership audit rules.  The representative of the partnership will be known as the partner representative, dropping the familiar term “tax matters partner”.  The applicable statute of limitations on auditing the partnership and making adjustments that will affect all the partners will be determined at the partnership level and will be determined, or extended, at the entity level.[2]  The partnership representative may unilaterally extend the statute of limitations with the IRS on behalf of the partnership.[3]  A partnership with 100 or fewer partners that in general are US individuals or C corporations may elect out of the unified partnership audit rules.[4]  That is a significant increase in the size of a partnership eligible to elect out from the 10 or fewer individual partner limit on electing out of the unified partnership audit rules under pre-2018 law[5].  A partnership with pass-through entities as constituent partners may still qualify to elect out of the new rules if the pass-through entity partner discloses the identities of its members so that the master partnership can determine and certify that it has 100 or fewer direct and indirect partners who are US individuals (or their estates) or C corporations or foreign entities that would be treated as C corporations if they were US entities.[6]

All of the partners will be bound by the terms of any settlement, final audit report or court decision affecting the partnership.[7]  In a departure from the prior approach, the income tax deficiency will be computed at the partnership level and assessed against the partnership computed applying the highest individual and corporate tax rate for each partner[8].  This is in contrast to the current rule under which the determination of an adjustment is made at the partnership level but the partners are liable for computing the effect of the adjustment on their own returns.[9]  The partnership may opt out of liability for the partners’ taxes with the result that the tax burden will be passed through to the partners and computed at the partner level.[10]  The election to opt out of the unified partnership audit rules must be made when the partnership return is filed in most cases.[11]

The partner representative of the partnership will have the standard 90 days in which to file a petition for the US Tax Court to review the IRS’s proposed action.[12]  The partner representative, unlike a tax matters partner, does not have to be a partner or LLC member.[13]  That new rule may add some flexibility for the sponsor of a syndicated program.  Unlike the current rules, there will not be an opportunity for partners to file a petition for a redetermination of a final partnership administrative adjustment.[14]  Inconsistent treatment by a partner or member requires notification by the partner reporting inconsistent treatment, similar to current law.[15]  The new law has special rules on the timing of the assessment that permit the assessment and collection of a partnership adjustment in the year in which the adjustment becomes and non-contestable.[16]  It will be up to the partnership, if at all, to cause the economic cost of the collection of the adjustment to fall on the partners in the partnership for the year audited rather than for the year assessed and collected. By contrast, under existing law, a final partnership administrative adjustment, whenever assessed, affects the returns of the partners for the year or years audited, not the year collected—the collection occurs at the partner level based on the pass-through of the adjustment on the partnership’s tax return for the year audited.

For example, if the IRS audits a partnership’s return for 2015 and the examination is completed in 2018, any adjustment would be reflected in the tax liability of the partners for 2015.  Under the new law, when the partnership adjustment is final, the IRS will collect the deficiency from the partnership.  An audit of the partnership’s 2018 return might be completed in 2021 and collected at that time, but in the interim between 2018 and 2021 several placements might have added partners who were not investors in 2018 but who would have their share of available cash reduced in 2021.

As a practical matter, LLC operating agreements should reflect these new rules, appoint a partnership representative, describe the partnership representative’s authority to hire professionals, interact with the IRS, inform the partners of any developments and determine whether to elect out of the unified audit rules if there are fewer than 100 direct or indirect partners, and determine what events the partnership representative should be required to inform the partners pursuant to the terms of the operating agreement.  Existing LLC operating agreements for LLCs with more than 100 members, with pass-through entity members that cannot or will not reveal their constituent members’ identities or with foreign members should be analyzed to determine if the operating agreement authorizes the manager to conform the authority of the tax matters partner to these new rules when they become effective.

Michael Shaff joined Stubbs Alderton & Markiles, LLP in 2011 as Of Counsel. He is chairperson of the Tax Practice Group. Michael specializes in all aspects of federal income taxation. Mr. Shaff has served as a trial attorney with the office of the Chief Counsel of the Internal Revenue Service for three years. Mr. Shaff is certified by the Board of Legal Specialization of the State Bar of California as a specialist in tax law. Mr. Shaff is a past chair of the Tax Section of the Orange County Bar Association.  He is co-author of the “Real Estate Investment Trusts Handbook” published annually by West Group.

For more information about the Tax Practice Group, contact Chair, Michael E. Shaff at

[1]   Internal Revenue Code (IRC) §6221 et seq. all as in effect after December 31, 2017.
[2]  IRC §6232(d)(2).
[3]   IRC §6232(d)(2).
[4]   IRC §6221(b)(1).
[5]   Old Section 6231.
[6]   IRC §6221(b)(2).
[7]   IRC §6223.
[8]   IRC §6221(a).  The statute authorizes regulations for adjusting the tax rate to be used when the highest rate is not appropriate.
[9]   IRC §6225(b).
[10]   IRC §6225(a).
[11]   IRC §6227(c).
[12]   IRC §6235.
[13]   IRC §6223(a) (“Each partnership shall designate*** a partner (or other person) …”)
[14]   IRC §6223(b).
[15]   IRC §6222(c).
[16]   IRC §6232.



Scott Alderton Featured in 2016 Reflections Article by

scottAll this holiday season, SoCal Tech has been sharing the reflections on 2016 from the Southern California’s technology ecosystem. Here, they have the thoughts of Scott Alderton of Stubbs Alderton and Markiles, LLP.  SAM is a longtime sponsor of, and represents a wide range of clients, including a significant number of Southern California’s most visible startups.

To read the full article visit here.

Scott Alderton is a founding partner of the Firm, Managing Partner, and a member of the Firm’s Executive Committee.  Scott is co-chair of the Firm’s Venture Capital and Emerging Growth Practice Group and chair’s the Firm’s Interactive Entertainment and Video Games Group. Scott advises both public and private clients across a number of industries, including technology, manufacturing and distribution of goods in commerce, finance, the Internet, interactive video games, and new media industries.

To learn more about Stubbs Alderton & Markiles, LLP contact Scott Alderton at



Stubbs Alderton & Markiles, LLP ranked in 2017 “Best Law Firms” for Commercial Litigation

SAM-High-Res-Logo-1December 2016 — U.S. News & World Report and Best Lawyers, for the sixth consecutive year, announce the “Best Law Firms” rankings.

Stubbs Alderton & Markiles, LLP has been ranked in the 2017 U.S. News – Best Lawyers® “Best Law Firms” list and regionally in 1 practice areas.

Firms included in the 2017 “Best Law Firms” list are recognized for professional excellence with persistently impressive ratings from clients and peers. Achieving a tiered ranking signals a unique combination of quality law practice and breadth of legal expertise.

The 2017 Edition of “Best Law Firms” includes rankings in 74 national practice areas and 122 metropolitan-based practice areas. One “Law Firm of the Year” is named in each of the 74 nationally ranked practice areas.

Ranked firms, presented in tiers, are listed on a national and/or metropolitan scale. Receiving a tier designation reflects the high level of respect a firm has earned among other leading lawyers and clients in the same communities and the same practice areas for their abilities, their professionalism and their integrity.

Stubbs Alderton & Markiles, LLP received the following rankings in the 2016 U.S. News – Best Lawyers “Best Law Firms”:

  • Regional Tier 2
    • Los Angeles
      • Commercial Litigation

The official Best Lawyers 2017 publication can be read in its entirety here.

For more information about Stubbs Alderton & Markiles, LLP contact the firm at


Napkin Finance Founder Tina Hay Featured on®


Congratulations to SAM Preccelerator® Program’s company Napkin Finance and its founder Tina Hay for having an article featured on this week. The article written by Tina Hay, entitled “A 7-Point Financial Checklist to Starting Your Own Business”  creates a list  to help guide those new to entrepreneurship. Napkin Finance is a multimedia company that simplifies financial matters and uses napkins to teach users everything they need to know about money in 30 seconds or less.

To view the full article on click here.

For more about the Preccelerator® Program, contact Heidi Hubbeling, Director at
(310) 746-9803 or


Indemnification and Advancement of Directors and Officers for a Utah Corporation Doing Business in California

Corporate counsel is asked to make many decisions on behalf of a corporate client. A corporate client may seek advice on choice of law selection or where it should incorporate. At the initial founding stages, many clients do not consider that the place of incorporation and choice of law will affect the corporation’s obligations to indemnify and advance expenses to directors and officers.sealofutahstateseal

For this analysis, even if the client chooses to incorporate in Utah, if most of its business is being performed in California, it will be deemed a “quasi-California” corporation pursuant to California Corporations Code section 2115 and will be made subject to several California laws regulating corporations.[1] If the corporation wants to initiate a lawsuit against a director or officer that has failed to act in the best interest of the corporation, counsel must consider where the corporation should file the lawsuit. Crucial to this consideration is that California and Utah have different standards for granting indemnification and advancement of expenses. The choice of forum will dictate the requirements and obligations of the corporation to advance and indemnify its officers and directors.


A Utah corporation that meets the requirements set forth in California Corporations Code section 2115 will be deemed a “quasi-California” corporation and will be subject to a host of expressly delineated laws regulating out-of-state corporations. Included in the list of applicable provisions is California Corporations Code section 317, California’s law on indemnification and advancement. Section 317(e) provides the law on indemnification:

“any indemnification under this section shall be made by the corporation only if authorized in the specific case, upon a determination that indemnification of the agent is proper in the circumstances because the agent has met the applicable standard of conduct …”

The indemnification provision of section 317 is limited by a standard of conduct determination, meaning that the corporation will have some ability to control who receives indemnification and who does not. The standard of conduct set forth in section 317(b) requires a determination that the person to be indemnified “acted in good faith and in a manner the person reasonably believed to be in the best interest of the corporation…” By comparison, the indemnification statute in Utah operates the same way, requiring the corporation to make a determination that the person to be indemnified has met the applicable standard of conduct and has taken action in good faith and in a manner he or she reasonably believed was in the best interest of the corporation.[2] With little variance between the indemnification provisions in California and Utah, it could be expected that the law on advancement would also be similar. But that would be an incorrect assumption.


The Utah statute on advancement is similar to the indemnification statute, requiring that, “a determination is made that the facts then known to those making the determination would not preclude indemnification…”[3] However, unlike the Utah statute, the advancement provision in California is not limited by a standard of conduct determination, or any determination at all. Instead, the California advancement statute states:

“Expenses incurred in defending any proceeding may be advanced by the corporation prior to the final disposition of the proceeding upon receipt of an undertaking by or on behalf of the agent to repay that amount if it shall be determined ultimately that the agent is not entitled to be indemnified as authorized in this section.”

See Cal. Corp. Code § 317(f).

The only requirement for advancement under California law is that the person seeking advancement deliver an undertaking to repay the amount advanced if it is ultimately determined that he or she is not entitled to be indemnified. It is unclear whether the delivery of an undertaking requires anything more than a written promise to pay back any amounts advanced.

This is an important and interesting distinction between California and Utah law, and one that counsel must consider in evaluating disputes between a Utah corporation and its officers and directors. The result of choosing to apply California law is that the corporation might be obligated to provide advancement to its directors and officers without any determination of whether that person meets the applicable standard of conduct, limiting its ability to deny advancement those who have acted outside the best interests of the corporation.

[1] For the full list of provisions quasi-California corporations are made subject to, see California Corporations Code § 2115(b).

[2] Utah Revised Business Corporation Act 16-10a-902(1).

[3] Utah Revised Business Corporation Act 16-10a-904(1).


For more information about this topic, contact Gina Correia at (818) 444-4500 or  Gina Correia is a litigation associate of the Firm. Gina’s practice focuses on all stages of business litigation. Prior to joining the firm, Gina worked in-house as a business affairs law clerk for HBO. Gina’s prior experience in the entertainment industry focused on talent engagement negotiations including drafting contract request, calculating actor, producer, and writer fees for top-tier talent, and evaluating comprehensive deal points. Gina also previously worked for The Los Angeles Office of the District Attorney in the Consumer Protection Division where she researched and analyzed wire-tapping violations under Penal Code and Federal Trade Commission guidelines.


Counterfeit Pharmaceutical Kills Music Legend Price – by Anthony Keats

counterfeit-pharmaceuticalsCOUNTERFEITING IS NOT A VICTIMELESS CRIME. In the last 24 hours it has been reported by CNN and others that the iconic music legend, PRINCE, became another victim of counterfeit pharmaceuticals. In bottles marked as Vitamin C and Aspirin pills were found containing the powerful anesthetizing drug, fentanyl. It is reported that fentanyl is fifty times stronger than heroin and one hundred times stronger than morphine in its debilitating effects on the human body. It is legitimately used with terminal cancer patients or as an anesthetic during surgery.

The US Food and Drug Administration (“USDA”) refers to counterfeit prescription drugs as: “fake, contaminated, ineffective, or otherwise unsafe ingredients; drugs that have not been tested by the FDA for safety and efficacy; drugs that don’t carry the correct amount of active ingredients or; drugs that carry harmful ingredients. How far are counterfeiters willing to go to victimize the pill-popping citizens of the United States? These organized efforts are part of a criminal secondary market that has produced incredible profits because legitimate prescription drugs are often too expensive for the average American. Part of the problem rests with big pharma itself which over the past several decades has inundated media with consumer advertising for prescription drugs from Viagra to Avastin.

The problems arising from counterfeit prescription drugs has been documented since at least as early as the 1980’s.Two well-publicized incidents attracted headlines. First, counterfeit Ovulen-21 birth control pills were being sold to American women. These pills had originated from Panama and were found to be ineffective. Second was the distribution of counterfeit Ceclor, an antibiotic, and Naprosyn, a pain reliever, by a sophisticated pharmaceutical educated resident of Iran. In line with these developments Congress passed the 1987 Prescription Drug Marketing Act or PDMA. The PDMA required states to license prescription drug wholesalers; put in place a requirement for non-authorized distributors to show the “pedigree” of the drug; and third, imposed requirements for the distribution and accountability of drug samples. Under pressure from various interest groups Congress and the FDA delayed imposing the “pedigree” requirements for decades until technology was developed in the form of Radio Frequency Devices (“RFD”) which allows manufacturers to track and trace each of the prescription drug products. Unfortunately, track and trace technology does not necessarily get used during the supply chain process of base chemical ingredients which are often sourced from third-world or lesser developed nations with lax quality control oversight.

In 2015, Congress enacted the Drug Supply Chain Security Act, which required all health care providers to provide prescription drugs to patients which are purchased from authorized licensed trading partners. However, as evidenced by a July 22nd release from the FDA; see “Counterfeit Prescription Pills Containing Fentanyls: A Global Threat” at When it comes to fentanyl, the danger appears to be increasing. Chinese suppliers of legitimate ingredients are at the same time manufacturing large amounts of uninspected synthetic ingredients like fentanyl. The report indicates that counterfeiters can transform as little as one kilogram of fentanyl powder costing a few thousand dollars into hundreds of thousands of counterfeit pills reaping millions of dollars in profits.

Trafficking in counterfeit pharmaceuticals is subject to both criminal and civil penalties. So when consumers think that it’s fun to buy knock-offs they ought to think about the fact that they themselves could be a victim of this dangerous game. The death of the icon of the “Minneapolis Sound” in his Paisley Park home will effect America’s culture for decades to come.

To learn more about anti-counterfeiting, contact Anthony Keats,  the co-chair of the Copyright & Trademark Practice at Stubbs Alderton & Markiles, LLP. You can reach him at or (310) 746-9802.


Ready for the Market – How to Successfully Position Your Company to be Sold

MERGER SIGN BELOW OFFICE BUILDINGNow is a great time for entrepreneurs to sell their companies. However, even in good times investment bankers will tell a seller that the company must be positioned for sale to be successful.

What needs to be prepared to position a company for sale?
The seller must have his or her company financials in good order. This usually means reviewed financials at a minimum. Most sophisticated buyers, like a private equity fund for example, will require audited financials as part of their internal investment criteria. They may also perform a quality of earnings report to detect any flaws in your accounting system or non compliance with GAAP.

You must have your corporate records and minute book in order. This includes your organizational documents, director and shareholder actions, stock register and other customary items. These items should be complete, signed and in the minutes book.

Make sure your contracts are signed, in writing (where applicable), and in one place with all amendments. This will help to expedite the buyer’s due diligence review and reflect favorably on your management skills.

You should also have offer letters or employment agreements, assignments of inventions and nondisclosure agreements in place for key employees, particularly if your business is dependent on key technology and personnel. If you have an HR function, you should have employment policies in place.

Determine the impact on employees if information about a possible sale leaks out to the work force. If that is an issue, handle all due diligence off site or online through a secure website (a data room) and limit the buyer’s access to personnel until the latest possible time.

What legal issues might come up in the sale process?
There are obviously many legal issues that will come up, but here are just a few.

If you have been sued or are about to be, you should have your litigation counsel prepared to explain the status of the cases, the likely cost you may incur if you lose (or even if you don’t lose but have big attorneys fees), the effect on the company’s business, etc. This will surely come up in the buyer’s due diligence. There will likely be an escrowed amount from the sale proceeds to handle the cost of the litigation so as to shift some or all of the risk to the seller.

If you are in a regulated business, make sure you are in compliance with applicable rules and that your counsel can confirm this. The buyer likely will require a legal opinion from counsel to address this and other customary legal issues.

If you are in a technology business, be thinking about how you have protected your intellectual property, including trade secrets, and whether there are any infringement issues. This will be heavily negotiated in the purchase agreement.

How can companies stay on top of contractual matters?
Securing landlord or third-party contract approvals to a sale often takes weeks or longer to secure. If this is going to be an issue in your company, plan ahead and start the process as early as possible — recognizing that the deal may fall apart, so don’t jump the gun too soon.

Check all contracts for change of control provisions to ensure compliance with those provisions.

Start the process early with your lawyer to go over representations and warranties that are likely to be included in a purchase agreement. You will need to be thinking about scheduling exceptions to representations, insurance coverage, environmental matters, undisclosed liabilities, and numerous other matters that will be the subject of representations and covenants in the purchase agreement.

Start thinking about the letter of intent. Will it be binding or nonbinding? Will it go into extensive detail so you know upfront whether you will be able to resolve all material business points at the letter of intent stage? Will there be an earn-out? Will there be a financing contingency? Will you have to provide seller financing? How will the deal be structured? Will there be a standstill period?

Who should be involved in the process and what should be communicated to them?
Locate and engage suitable M&A counsel, accountants (if you do not already have one) and an investment banker to assist in the sale. If your golf buddy is your lawyer, chances are he may not be up to the task of doing an M&A deal. You will need a lawyer that specializes in M&A because it is complicated and part of the negotiations revolve around what are ‘market’ terms in the current environment.
There is often tax structuring necessary to secure a tax efficient sale, so engage tax experts early in the process. The M&A law firm you use will likely have this expertise.

Discuss with your investment banker (if you plan to use one) what they believe is the current market valuation for a company such as yours in today’s market so your expectations are met when the company is marketed. There are investment bankers who handle middle market as well as larger, or smaller, deals. M&A counsel can help you select a banker for your deal.

Even though you think you know all the buyers in your market niche, investment bankers have big rolodexes and have contacts with strategic as well as financial and foreign buyers. Although the investment banker will charge a fee, you can often get a significantly higher price using an investment banker. This is not essential but certainly something to consider carefully.



Jonathan R. Hodes is a partner of the Firm, and co-chair of the Mergers and Acquisitions Practice Group.  Jonathan concentrates in the area of domestic and international business structures and operations with an emphasis on corporate law, securities, and general business law, including international cross-border transactions.  He devotes substantial time to buy side and sell side mergers and acquisitions, management buy-outs, leveraged buy-outs, leveraged recaps, mezzanine and senior debt financing transactions, work-outs and secured lending and leasing transactions.

Jonathan’s experience includes a broad range of corporate work including complex public and private, domestic and international mergers and acquisitions with emphasis on middle market companies, purchases and sales of middle market companies, representation of emerging growth companies from inception through various tiers of venture capital financing and IPO’s and corporate finance transactions. He also works on private equity deals with emphasis on add on portfolio acquisitions to existing platforms, and dispositions of portfolio companies.

Jonathan’s practice also includes corporate, partnership and limited liability company formation and ongoing representation; as well as securities offerings including public, private, Rule 144A, and international Regulation S offerings as well as securities compliance matters. He has a broad range of industry experience in many industries, including biologics, money service business, television production and distribution, real estate developers, construction management, technology companies, hotel owners and operators, video game publishers, and the manufacturing sector.

For more information regarding our Mergers & Acquisitions Practice Group, please contact Jonathan Hodes at or (818) 444-4508.