Category Archives: Publications

Business Law Breakdown – Amendments to the Delaware General Corporation Law Prohibit Fee-Shifting and Endorse Forum Selection Clauses

Nick-Feldman-smNick Feldman’s practice focuses on corporate transactions, including mergers and acquisitions, dispositions, private equity transactions and general corporate matters for both public and private clients, focusing on middle-market and emerging growth companies. In addition, Nick counsels companies in connection with entity formation, corporate governance, federal and state securities laws and compliance, joint ventures, employee incentive plans, executive employment agreements and other executive compensation matters.  Nick also serves as an Adjunct Professor at Loyola Marymount University, where he lectures on media law topics.


DelawareOn June 24, 2015, Delaware Governor Jack Markell signed several important amendments to the General Corporation Law of the State of Delaware (the “DGCL”) into law. The amendments, which will become effective on August 1, 2015, prohibit “fee-shifting” provisions and endorse forum selection provisions, among other changes.

Prohibition on Fee-Shifting

In response to the Delaware Supreme Court’s decision in ATP Tour, Inc. v. Deutscher Tennis Bund, 91 A.3d 554 (Del. 2014), the DGCL amendments invalidate “fee-shifting” provisions in certificates of incorporation or bylaws of stock corporations. In ATP, the Court upheld a bylaw imposing liability for legal fees of a nonstock corporation on certain members of the corporation participating in the litigation.

The new legislation narrows the ruling in ATP by way of new DGCL Section 102(f). That statute provides that a certificate of incorporation may not impose liability on a stockholder for the attorneys’ fees or expenses of the corporation in connection with an “internal corporate claim” as defined in new Section 115 (discussed below). The legislation also adds a similar restriction on fee-shifting provisions in corporate bylaws to Section 109(b). An amendment to Section 114 provides that the restrictions on fee-shifting provisions do not apply to nonstock corporations.

While the legislation invalidates fee-shifting provisions in certificates of incorporation and bylaws of stock corporations, it does not bar such provisions in stock purchase agreements or stockholders’ agreements.

Authorization of Delaware Forum Selection Clauses

The 2015 legislation confirms the holding of Boilermakers Local 154 Retirement Fund v. Chevron Corporation, 73 A.3d 934 (Del. Ch. 2013), adding a new Section 115 to the DGCL which confirms that a corporation’s certificate of incorporation or bylaws may require internal corporate claims to be brought exclusively in the courts of the State of Delaware. “Internal corporate claims” are defined to include claims of breach of fiduciary duty by current or former directors, officers, or controlling stockholders, or persons who aid and abet such a breach.

 Section 115 does not expressly authorize or prohibit provisions that select a forum other than Delaware courts as an additional, non-exclusive forum for internal corporate claims. However, it does invalidate any provision selecting courts outside of Delaware, or any arbitral forum, to the extent such a provision attempts to prohibit litigation of internal corporate claims in the Delaware courts. And, as with the fee-shifting amendments, it does not invalidate non-Delaware forum selection provisions in a stockholders’ agreement or other separate written agreements with stockholders.

Stock and Option Issuances

With respect to stock issuances, the new legislation amends Section 152 of the DGCL to clarify that the board of directors may authorize stock to be issued by the determination of a person or body other than the board, in one or more transactions and in such amounts and at such times as determined by the authorized party. In order to do so, the board must set certain parameters at the time it authorizes the issuance(s), including fixing the maximum number of shares that may be issued, the time frame during which such shares may be issued, and a minimum amount of consideration for which they may be issued.

Additionally, the legislation permits the board to delegate the ability to issue restricted stock to officers of the corporation on the same basis that the board may delegate the ability to issue options under Section 157 of the DGCL. Both Sections 152 and 157 are further amended to clarify that the board may determine the minimum consideration for such stock or options by way of a formula which references or is dependent upon extrinsic facts, including market prices.

Ratification of Defective Corporate Acts

The 2015 legislation makes several amendments to Section 204 of the DGCL, which sets forth the procedures for ratifying stock or corporate acts that would be void or voidable due to a “failure of authorization.” The amendments clarify and confirm certain provisions of the ratification process and provide additional guidance as to the specific requirements for the filing of certificates of validation, including: (1) confirming the requirements for a board of directors and stockholders to adopt and ratify one or more defective acts; (2) providing for ratification of the initial board of directors where it was not named in the original certificate of incorporation nor elected by the incorporator; (3) addressing the voting standards applicable to the ratification of the election of a director where the original vote obtained was defective; (4) clarifying the requirements for certificates of validation; (5) confirming the scope of acts by the board of directors or officers that may constitute a defective corporate act susceptible to cure by ratification; and (6) confirming that certain “voidable” acts may be cured by ratification under common law.

Implications: Action Items for Delaware Corporations

A Delaware stock corporation that has adopted a fee-shifting provision should consider amending its charter and/or bylaws, as applicable, to remove the provision because it will no longer be enforceable once the new legislation takes effect.

Further, Delaware corporations that have not previously adopted a Delaware forum selection clause should consider adopting one. And, as with fee-shifting provisions, a Delaware corporation that has adopted a forum selection clause prohibiting litigation of internal corporate claims in the Delaware courts should amend the clause to make clear that such claims may be brought in Delaware in addition to, or instead of, the forum currently specified.


For more information about services for your legal needs, contact Nick Feldman at or (818) 444-4541.

SAM Alert – “.sucks” gTLD – End of Sunrise Period Quickly Approaching

.sucksAs the Internet Corporation for Assigned Names and Numbers (ICANN) has released new generic top-level domains (gTLDS), clients concerned about protecting their trademarks and famous names need to review their positions with respect to “defensive” domain name registrations.  The new gTLD receiving a surprising amount of attention is “.sucks”. Owners of registered trademarks who register prior to June 19, 2015 ( end of ‘Sunrise Period) with the Trademark Clearing House of ICANN will have the first opportunity to purchase the “.sucks” gTLD domain names. Those trademark owners who do not register or are not registered may still have an opportunity to acquire this gTLD . Unfortunately they may also face having to buy the “.sucks” gTLD from cybersquatters or those who seek to criticize the business or activities of the trademark owner.

The Trademark Clearing House fee to acquire the “.sucks” domain name during the Sunrise Period is higher than after the window closes as no priority is guaranteed. So the rights holder must consider how far it needs to go in defensively protecting its reputation or famous marks. Is it important to stop all gTLD’s using your trademark or name? Do you want to have to manage a portfolio of non-productive domain names? While critics of a company or individual might use the new “.sucks” gTLD to launch a website that contains criticism, how much of a difference would such a website make to the business or career of the target?  Couldn’t the same critics more easily use social media such as TWITTER or FACEBOOK to communicate the same criticism and possibly with greater impact and less effort?  A rights holder must also consider how difficult it will be under the current law to be able to stop such websites based on trademark infringement as such websites have been found not to violate owners’ trademark rights. Although the content of the site may be the basis for other legal claims.

Nevertheless, there are certain businesses and personalities for whom the existence of a critical or seemingly defamatory web presence cannot be tolerated. In such instances, obtaining the “.sucks” gTLD as well as “.XXX, .porn, and .adult” gTLD’s makes sense and provides a comfort level knowing that someone cannot post on these websites or hold up the rightful name owner for large sums of  money to acquire these gTLD’s.

Please contact your principal attorney at SAM or SAM’s Intellectual Property Group to assist you in obtaining any of the new gTLD’s during the sunrise period or thereafter.


Please contact:

Tony or (310) 746-9802

Konrad or (310) 746-9810

Kevin or (818) -444-4521

Business Law Breakdown – Five Reasons to Hire a Lawyer for Your Startup, and Five Things to Look For When You Do

Nick-Feldman-smNick Feldman’s practice focuses on corporate transactions, including mergers and acquisitions, dispositions, private equity transactions and general corporate matters for both public and private clients, focusing on middle-market and emerging growth companies. In addition, Nick counsels companies in connection with entity formation, corporate governance, federal and state securities laws and compliance, joint ventures, employee incentive plans, executive employment agreements and other executive compensation matters.  Nick also serves as an Adjunct Professor at Loyola Marymount University, where he lectures on media law topics.


In a perfect world, a business lawyer isn’t the person you run to when things go sideways—it’s the trusted advisor you consult regularly to anticipate challenges and put you in the best position to succeed. While it may seem like a luxury for some startups, there are several important factors to consider that make hiring a lawyer earlier than later a smart decision.


 Five Reasons to Hire a Lawyer for Your Startup


At the incorporation stage, the value of a lawyer has as much to do with helping you figure out what you need as it does with preparing documents. When it comes to what kind of entity to form, how to structure and distribute equity, or the best strategy to protect your intellectual property, a good lawyer will help guide you toward where you need to be—and then get you there.


 When people embark on a business venture together, it’s best to establish everyone’s rights and expectations at the outset in case there are disagreements down the road. It’s a lot easier to resolve a conflict before it arises, and you’d never imagine anything could break the bond between you and your co-founders… until it does.

 Intellectual Property

Intellectual property can be one of the biggest assets—and, if not protected, liabilities—of a startup company. Whether it means preparing nondisclosure agreements to protect trade secrets, drafting license agreements, defending trademarks, copyrights, or patents, or avoiding infringement of all of the above, a good lawyer will keep you protected.


It probably goes without saying that you don’t want to violate tax laws or incur unnecessary tax liability, and that you want pay the taxes you owe so as to avoid penalties. Tax laws can be complex, and a good lawyer will keep you ahead of the curve on tax issues and structure your business accordingly.


Finally, there’s the day-to-day legal that every startup encounters. Airtight vendor agreements, employment and contractor documents, and website terms of service and privacy policies are all invaluable for startups to get right—the first time.


Five Things to Look For When You Do


First and foremost, you want someone that is skilled and experienced with the types of legal issues you will face. This includes both the underlying business issues and the challenges specific to your industry—an attorney with knowledge relevant to your business is best positioned to become the advisor you need.

For many startups across the board, it’s extremely advantageous to hire an attorney (and law firm) with experience in both formation and financing. An attorney who regularly helps companies get “up and running” but is also frequently involved in seed-stage and venture capital financing will be able to give you better advice, and better facilitate accomplishing your goals.


It’s also important that your lawyer (and his or her firm) is a good fit for your company. This means someone that you get along with and enjoy working with, but also someone who “gets” your business and industry and has the resources at their firm to serve all your potential needs. If a lawyer doesn’t speak the language of your business or understand the world in which you’re operating, it’s harder for him or her to adequately represent you.


It should go without saying that you want a lawyer who responds to your calls and emails in a timely manner. What’s equally important is how they respond. A good lawyer shouldn’t just tell you “no.” They respond to a problem with the right questions and a new suggestion of how to get what you want: “This is what you can do.”


 You might be thinking about your lawyer in terms of connections or cache, and you wouldn’t be alone in that thought. While the expertise, fit, and responsiveness of an attorney should take precedence, the ability of your lawyer to introduce you to investors or potential partners—as well as their guidance in how to do so and the credibility they lend—is simply part of the value proposition.


 Let’s be honest: one of the biggest considerations in hiring a lawyer is the bottom line. The lawyers most start-ups deal with typically bill by the hour, and the hourly billing rate may vary widely between junior and senior lawyers. Depending on the complexity of your issue, the lawyer may be able to offer a flat fee arrangement to offer you some predictability, or at least offer an estimate of the amount of time it will take to complete the task at hand.

 If you make the time and effort to find the right attorney and firm, you can get quality representation at a fair price. In the long run, hiring a lawyer for your startup is worth it—in time and money saved, and stress avoided, by starting down the best path in the beginning.


For more information about services for your legal needs, contact Nick Feldman at or (818) 444-4541.

Preccelerator Program Event: Accelerators, Incubators & Co-Working Spaces: Which One is Right For You?

This panel, hosted by the SAM Preccelerator Program, discusses  the differences and benefits of accelerator, incubator and co-working spaces from the accelerator, legal and entrepreneur viewpoints.

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


Earlier this month, Brand Development & Content Protection co-chairs Tony Keats and Konrad Gatien attended the annual meetings of the International AntiCounterfeiting Coalition and the International Trademark Association in Hong Kong.  In addition, Tony Keats traveled to Shanghai, Xi’an and Beijing.  During their trip to China, they witnessed several issues that blatantly affect brand protection efforts of high-fashion design and consumer product companies.


Tony Keats  reports on visiting Beijing’s notorious Silk Market Building  with some 1,700 vendors, over 3,000 salespeople, 10 sales floors, and located on seven floors  at Yonganli, in the Chaoyang District. Here, the sales personnel openly flaunt the availability of enormous volumes of counterfeit apparel and luxury goods.  In the prior decade, famous brand owners from Burberry, Louis Vuitton, Chanel  and Gucci, to The North Face and LaCoste had achieved ground-breaking legal successes  obtaining relief against the owner/landlord of Beijing’s Silk Market complex, including obtaining injunctive relief, signage requirements, and even small amounts of damages. However, less than a decade later, this litigation has had little impact as Tony Keats was shown back-rooms of various stores with floor to ceiling inventories of counterfeit luxury products. On the first floor, vendors selling unlicensed apparel were not even hiding the merchandise in backrooms but were openly displaying enormous quantities without any effort to cover up their sales. Tony also reports that dozens of tour buses unloaded anxious buyers at the Silk Market while he was at the market. It is reported that there are approximately 20,000 visitors on the weekdays and between 50,000 to 60,000 shoppers on weekends.







It has been suggested that as China develops more of its own famous brands which are counterfeited, that the IP community will see greater enforcement efforts by the authorities in that country.  For example, on May 14, the state paper The China Daily reported that customs officials in  Jiangmen City in  Guangdong Province recently seized nearly 3 million fake batteries with a value of US $90,000. The counterfeits, which were to be shipped to Dubai, have a graphic logo very similar to that of SUNWATT, a famous brand owned by Chinese manufacturer, Guangxi company.

SAM’s Brand Development and Content Protection group was able to assist client Stanley Black & Decker in shutting down a counterfeit battery manufacturer in Fushon City, which was producing counterfeit DeWalt brand batteries used with the companies power tools.


On May 1, 2014, revisions of the trademark law went into effect. One provision prohibits the use of “well-known trademarks” in advertising and on packaging. The state paper The China Daily reported that the new law was causing a number of companies to change their labels and even destroy products. One Chinese company, Jing Wu Agribusiness Group, a company specializing in food and feed processing, which won the title of most well-known trademark in China in January 2013, has now recalled and destroyed nearly 2 million packages at a cost of approximately US $500,000.


The state China Intellectual Property News proclaimed that agencies nationwide investigated more than 4,700 intellectual property infringements in the first quarter of 2014 that had a combined potential retail value of US $43.25 million. Enforcement officials claimed to have checked a wide range of sectors including garments, electric appliances, toys, shoes and furniture. They claim in March alone, 183 shipments of food and six shipments of cosmetics were proven counterfeit, then destroyed or returned to exporters. These efforts are at best a step in the right direction but a paltry amount in light of the size of the Chinese counterfeiting problem.

It was reported by The China Daily on May 21st, that a district court in Beijing handed jail and monetary penalties against seven men convicted of illegally offering movies and TV downloads in what was described as China’s largest copyright piracy case.  The president of the company that operated the website was sentenced to five years in jail and fined US $160,200. The other six defendants were given jail sentences ranging from one to three years., founded in 2008, had seven managers and 140 website administrators, becoming the largest portal of pirated movies, TV shows, and music in China. The parent company also had two brick and mortar stores in Beijing. The website had more than 20 million downloads.

For more information about Stubbs Alderton & Markiles’ Brand Development & Content Protection Practice, contact Tony Keats at or (310) 746-9802, or Konrad Gatien at or (310) 746-9810.

SAM Partner Scott Alderton Featured in Article “Find an Attorney Who Will Be in Your Corner With These 3 Tips”


SAM Co-Founder and Managing Partner, Scott Alderton was featured in today’s article “Find an Attorney Who Will Be in Your Corner With These 3 Tips.”  Author Adam Callinan of Beachwood VC outlines some of the early questions you should be asking and warning signs you should be recognizing when searching for new legal counsel.

Scott Alderton states that you need “a lawyer with a deep contextual understanding of both the substantive nature of your evolutionary path (i.e. they understand and do the exact type of transactions you are going to be engaging in) and a broad understanding of your industry.” 

To read the full article, click here.

For more information on our Emerging Growth practice, and for information about our Start-up Fixed Fee Legal Package, contact Scott Alderton at (818) 444-4501 or


Stubbs Alderton & Markiles Featured in LA Business Journal Article Regarding Tech Growth in the Legal Industry


The Los Angeles Business Journal featured the recent expansion of Stubbs Alderton & Markiles’ Business Litigation practice in its March 31 edition regarding tech growth in the Los Angeles legal market. To view the full article, click here.

For more information about our Business Ligitation practice, contact SAM Partner Michael Sherman, at or 818-444-4528.

Unfair Competition – Lexmark Int’l, Inc. v. Static Control Components, Inc.

Unfair CompetitionWashington, D.C. – This dispute between printer ink cartridge suppliers has encountered a blotchy area of the law. Lexmark, a laser printer manufacturer, encrypts the ink cartridges it manufactures for use in its printers with a microchip. Static Control Components engineered a microchip that allowed competing ink cartridge manufacturers to have access to Lexmark printers. Lexmark sued Static Control for copyright infringement, among other things, and Static Control countered with a false advertising claim against Lexmark. Lexmark sought summary judgment on the false advertising claim, alleging that Static Control did not have standing to sue under the Lanham Act. On Tuesday, March 25, 2014, a unanimous Supreme Court resolved a split of authority amongst the Circuit Courts over the issue of standing in false advertising claims brought under the Lanham Act, 15 U.S.C. § 1125(a). Who has standing to bring a false advertising claim under the Lanham Act? Justice Scalia’s opinion answers this question by establishing a two-prong test for interpreting the Act to determine whether a particular plaintiff “falls within the class of plaintiffs whom Congress has authorized to sue under §1125(a).” Lexmark at 9. First, a plaintiff’s interests must “fall within the zone of interests protected by the law invoked.” Id at 10. The Court explains that this “Zone of Interest” requirement “applies to all statutorily created causes of action… unless it is expressly negated” by Congress. Id at 10. However, “the breadth of the zone of interests varies according to the provisions of law at issue” for any particular statute. Id at 11. Second, “a statutory cause of action is limited to plaintiffs whose injuries are proximately caused by violations of the statute.” Id at 13. This “Proximate Cause” requirement asks “whether the harm alleged has a sufficiently close connection to the conduct the statute prohibits.” Id at 14. The Court explains that this second requirement “generally bars suits for alleged harm that is ‘too remote’ from the defendant’s unlawful conduct.” Id.

Applying the first prong to a false advertising claim under the Lanham Act, the Court identified the “interests protected by the Lanham Act” by referring to the “’unusual, and extraordinarily helpful,’ detailed statement of the statute’s purposes.”

Section 45 of the Act, codified at 15 U. S. C. §1127, provides:

“The intent of this chapter is to regulate commerce within the control of Congress by making actionable the deceptive and misleading use of marks in such commerce; to protect registered marks used in such commerce from interference by State, or territorial legislation; to protect persons engaged in such commerce against unfair competition; to prevent fraud and deception in such commerce by the use of reproductions, copies, counterfeits, or colorable imitations of registered marks; and to provide rights and remedies stipulated by treaties and conventions respecting trademarks, trade names, and unfair competition entered into between the United States and foreign nations.” Id at 12.

Although “[m]ost of the enumerated purposes are relevant to false association cases,” the Court explains that “a typical false-advertising case will implicate only the Act’s goal of ‘protect[ing] persons engaged in [commerce within the control of Congress] against unfair competition.’” Id. Justice Scalia looks to the common law for the definition of “unfair competition,” stating that it was “understood to be concerned with injuries to business reputation and present and future sales.” Id. Thus, a plaintiff comes within the zone of interests in a suit for false advertising under §1125(a) when that plaintiff “allege[s] an injury to a commercial interest in reputation or sales.” Id at 13.

Applying the second prong, the Court explained that the “[p]roximate cause analysis is controlled by the nature of the statutory cause of action,” and asks “whether the harm alleged has a sufficiently close connection to the conduct [that] the statute prohibits.” Id at 14. The Court held that, when suing for false advertising, a plaintiff “ordinarily must show economic or reputational injury flowing directly from the deception wrought by the defendant’s advertising.” Id at 15. This occurs when a defendant’s deception causes “consumers… to withhold trade from the plaintiff.” Id. Several examples include “afford[ing] relief under §1125(a) not only where a defendant denigrates a plaintiff ’s product by name… but also where the defendant damages the product’s reputation by, for example, equating it with an inferior product.” Id at 19. Further, a defendant who “‘seeks to promote his own interests by telling a known falsehood to or about the plaintiff or his product’” may be said to have proximately caused the plaintiff ’s harm. Id at 20.

The Lexmark decision is important in two aspects. Narrowly, in order to have standing under the Lanham Act for a false advertising claim, “a plaintiff must plead (and ultimately prove) an injury to a commercial interest in sales or business reputation proximately caused by the defendant’s misrepresentations.” Id at 25. Broadly, the decision adopts a two-prong test for evaluating standing under any statutorily created cause of action, and provides a rubric for analyzing each prong. It will be interesting to watch the development of the jurisprudence of standing as lower courts apply Zone of Interest and Proximate Causation to false association claims under the Lanham Act and extend this analysis to other federal statutes.


For more information about our Brand Development & Content Protection Practice, contact Konrad Gatien ( or Tony Keats (

SAM Partner Tony Keats Co-Authors “Protecting the Brand: Counterfeiting and Grey Markets”

SAM Partner, and Co-Chair of the Firm’s Brand Development & Content Protection Practice, Tony Keats has Co-Authored the book, “Protecting the Brand: Counterfeiting and Grey Markets.” For more information regarding our Brand Development and Counterfeiting expertise, contact Tony at (310) 746-9802 or  For order information and discount codes, please see the below flyer.

Protecting the Brand Flyer for Author_Page_1

Important Business News from Stubbs Alderton & Markiles, LLP – New California “Do Not Track” Law Goes into Effect January 1, 2014


Important Business News


Stubbs Alderton & Markiles, LLP

New California “Do Not Track” Law Goes into Effect January 1, 2014


Beginning January 1, 2014, AB 370, an amendment to the California Online Privacy Protection Act (CalOPPA), will require owners of commercial websites to disclose how they respond to “do not track” signals and to inform users of these websites if their online activities are being tracked. “Do Not Track” technology enables a web browser to express the user’s preference not to be tracked by websites. When this feature is activated, a user’s browser signals to advertising networks and other websites the user’s choice to opt out of being tracked.

This new law does not make it illegal to ignore “do not track” settings on web browsers. Instead, it requires each business to disclose whether or not they ignore these settings. The law also requires each business to disclose whether its website tracks over time and across other websites the online activity of consumers residing in California who visit the website or if the business allows third parties to track the website’s visitors. Failure to comply with the new law could lead to significant fines enforced by the California Attorney General.

Here are some suggested business practices for adapting to the new law:

  • Conduct an audit of your website. Determine how your website responds to “do not track” browser settings and signals and whether your business permits third parties to conduct tracking activities on your website.
  • Update your website’s privacy statement. California business owners should update their website’s privacy statement by January 1, 2014 to include disclosures about how the website responds to “do not track” signals.

How Stubbs Alderton & Markiles, LLP can help. We are a business law firm with particular expertise in privacy and Internet law. Our attorneys have extensive experience in developing effective and legally compliant privacy statements for websites. Please contact us directly if you would like assistance in updating your website’s privacy statement to comply with the new “Do Not Track” law.

For any questions, please contact Kevin DeBré, Scott Alderton or Stephen McArthur.

Kevin DeBré

Scott Alderton

Stephen McArthur