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11Dec/120

Limitations Of The Texas Judgment Lien

The Texas judgment lien is a powerful tool in the judgment collection process. Its power lies in its ability to attach your judgment debt to the debtor's real property. But, there are limitations to that power.

It Only Attaches to Some Real Estate

A Texas judgment lien only attaches to real estate your debtor owns. It has no effect on the debtor's personal property.

Now suppose your debtor does own a home in Texas. Your would, of course, assume that your lien attaches to that home. But, it doesn't. Texas exempts your debtor's personal residence from the power of a judgment lien. It's called a "homestead exemption."

Even though your lien doesn't attach to the debtor's homestead, it does create a cloud on the debtor's title to his home. In other words, you can make it difficult for the debtor to sell his home because your lien creates a question of ownership.

Because of this "cloud" you must release the lien as to the homestead. You don't have to do it until the debtor asks you to do so. But, if the debtor asks, you have to release it. If you don't, the debtor can sue you for damages.

It Attaches to Later Acquired Real Estate

Your judgment lien isn't limited to real estate the debtor owns on the date you create the it. It also applies to any non-homestead real property he acquires at any time after you obtain a judgment. So, if your judgment debtor buys a rent house after you create obtain a judgment, your lien does attach to that rent house.

It Attaches to Inherited Property

When a person dies in Texas, his property immediately becomes the property of his heirs. But, the property is first subject to payment of the debts of the deceased. This is true whether the person dies with or without a will.

If you have a judgment against one of the heirs, it immediately attaches to the inherited property. An executor of the deceased person's estate can, however, sell the property free of your lien. But, he can only do so to pay debts of the deceased.

The Texas Judgment Lien is a powerful collection tool. But, it does have limitation. Being aware of both its power and its limitations will help you make the best use of this tool in your collection efforts.
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4Sep/120

Quitclaim – Warranty and Survivorship Deeds: How to Create and File a Deed (in Plain English!)

The issue of correctly transferring property can be vitally important, as real property is often a person's largest and most valuable asset. If you need to transfer the ownership of real property from one person to another, you will need to use a Deed to do so - but which one. That answer depends on what is the reason for the transfer, what goals are intended by the transfer and who is going to hold title to the property after the transfer.

Basically, a Deed acts as the document showing the transfer of a piece of property from one person or party to another. Upon the closing of a real estate transaction, the purchaser of the property will tender the purchase price to the seller who then tender a Deed to the purchaser - who will then file the Deed with the recorder's office or real estate office in the county where the property is located. In other cases where there is no true "sale" but title to real estate is transferred from one person to another without significant payment (e.g. a mother or father transfers property to a child or other relative), a Deed is also utilized to transfer title and the Deed is filed with the appropriate recorder's office. In either case, a fee for filing the Deed and transferring the property will usually be required.

On the Deed, the sellers must provide the legal description of the property - this description (which is NOT the address) legally identifies the property. It is CRUCIAL that this information be accurately set forth on the Deed. The seller/grantor (i.e. the person transferring title) must sign the Deed in the presence of two witnesses. The witnesses must both sign and print their names. The purchaser or transferee does not have to sign the Deed. The seller must also have the Deed notarized - meaning that it must be signed in the presence of a notary or the seller must testify to the notary that his/her true and accurate signature appears on the Deed.

TYPES OF DEEDS:

Warranty Deed

A Warranty Deed by definition is a Deed which conveys the title to property whereby the seller makes some guarantee that the title will be good and unencumbered, except as stated on the Deed, and agrees to defend and protect the purchaser against any loss that may arise in the future from any defect in the title at the time of conveyance.

The warranty Deed is the most common type of Deed used to transfer property from one individual or business to another. Warranty Deeds usually require that a title search be conducted to ensure that the property is free and clear of liens or encumbrances. Any lien or encumbrance discovered would effectively "cloud" the title of the property and make warranting the property risky or impossible.

This Deed can be used to conveying property from a seller to a purchaser in a variety of situations - most commonly when a person or couple purchases a house from a homeowner and needs to transfer title; or when a relative desires to name another person as the co-owner of a house or parcel of property that he or she currently owns by him or herself.

Quitclaim Deed

This type of Deed contains no "warranties" that the property is being transferred with good title or without encumbrances except those that are filed on record, nor is any joint tenancy or right of survivorship created. This Deed tells the person accepting the title to the real property that they will be taking whatever rights or interests that the seller or grantor has in the property, nothing more and nothing less. Often, in true arms-length sales of real estate, a buyer should insist on a warranty Deed rather than a quitclaim Deed - since the buyer would want the protections of the warranties that are offered through that kind of Deed.

This Quitclaim Deed can be used to conveying property from a seller to a purchaser in a variety of situations. For example, when one spouse or relative desires to transfer property to another spouse relative, or name another person as the co-owner of a house or parcel of property that he or she currently owns by him or herself, a quitclaim Deed can be uses. Also, when property is transferred from a person to his or her trust, a quitclaim Deed is often used. Further, this type of Deed is often used to transfer property from spouses that become divorced.

Survivorship Deeds

This Deed is a warranty Deed with "survivorship" rights created. This Deed creates a joint tenancy (sometimes called a survivorship tenancy) between two or more grantees (again, the persons taking title to the property), with the grantees each typically owning an undivided interest in the whole of the property. Upon the death of one of the grantees, his/her interest passes in equal shares to the surviving joint tenant(s) - to accomplish this, an affidavit is usually filed in the county Deed records office to evidence the transfer. Since the property transfers to the other grantee, the deceased grantee's prior interest in the property is not a probate asset, but is included in the estate for state estate tax purposes. Where husband and wife are in title in survivorship, divorce terminates the survivorship tenancy and creates a tenancy in common between ex-spouses - unless the divorce decree specifically provides otherwise.

This Deed is be used most commonly when a person or couple purchases a house from a homeowner and each desires the joint ownership and survivorship features, when a relative desires to name another person as the co-owner of a house or parcel of property that he or she currently owns by him or herself or from one spouse to both spouses. Again, the grantees or purchasers who take title to this property also do so "with survivorship," meaning that if one of the purchasers dies the other retains title to the property.

CLICK HERE to learn more about creating a Deed without the expense of an attorney.

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13Mar/120

Guide to Current Patent Reform Legislation

Legislation that would dramatically overhaul U.S. patent law appears to be on a fast track in Congress, with Senators Patrick Leahy (D-Vermont) and Orrin Hatch (R-Utah) leading the charge.

But legal and business groups are finding themselves at odds over the legislation, with some saying it would reduce patent litigation costs and improve patent quality while others say it would do just the opposite. Everyone, it seems, can find parts of the measure to love and others to hate.

In April, identical bills were filed in the Senate and House, each titled the Patent Reform Act of 2007. In the Senate, Leahy and Hatch introduced S. 1145, while in the House Representatives Howard Berman (D-California) and Lamar Smith (R-Texas) introduced H.R. 1908.

On May 16th, a House subcommittee approved the bill for further review by the full Judiciary Committee, which held hearings on it in June. The committee released a revised version of the bill June 21st.

In an effort to help make sense of this legislation, we offer this guide to its key provisions, together with summaries of the arguments being raised for and against.

CONVERT U.S. TO FIRST-TO-FILE

What it would do: In what would be a fundamental shift in U.S. patent law, the bill would bring the United States into conformity with the rest of the world by converting it from a first-to-invent to a first-inventor-to-file system.

Arguments for: Proponents maintain this would simplify the patent process, reduce legal costs, improve fairness, and enhance the opportunity to make progress toward a more harmonized international patent system. A first-to-file system, they say, provides a fixed and easy-to-determine date of priority of invention. This, in turn, would result in greater legal certainty within innovative industries.

Proponents also believe that this change would decrease the complexity, length, and expense associated with current USPTO interference proceedings. Rather than tie up inventors in lengthy proceedings seeking to prove dates of inventive activity that may have occurred many years earlier, inventors could continue to focus on inventing.

Finally, because this change would bring the U.S. into harmony with the patent laws of other countries, it would enable U.S. companies to organize and manage their portfolios in a consistent manner.

Proponents include: Biotechnology industry.

Arguments against: Opponents argue that adoption of a first-to-file system could promote a rush to the USPTO with premature and hastily prepared disclosure information, resulting in a decline in quality. Also, because many independent inventors and small entities lack sufficient resources and expertise, they would be unlikely to prevail in a "race to the patent office" against large, well-endowed entities.

Opponents include: The USPTO opposes immediate conversion to a first-to-file system, in part because this remains a bargaining point in its ongoing harmonization discussions with foreign patent offices. Inventors also oppose this.

APPORTIONMENT OF DAMAGES

What it would do: The bill would significantly change the apportionment of damages in patent cases. Under current law, a patentee is entitled to damages adequate to compensate for infringement but in no event less than a reasonable royalty. Section 5(a) of the bill would require a court to ensure that a reasonable royalty is applied only to the economic value attributed to the patented invention, as distinguished from the economic value attributable to other features added by the infringer.

The bill also provides that in order for the entire-market rule to apply, the patentee must establish that the patent's specific improvement is the predominant basis for market demand.

Arguments for: Proponents say this measure is necessary to limit excessive royalty awards and bring them back in line with historical patent law and economic reality. By requiring the court to determine as a preliminary matter the "economic value properly attributable to the patent's specific contribution over the prior art," the bill would ensure that only the infringer's gain attributable to the claimed invention's contribution over the prior art will be subject to a reasonable royalty. The portion of that gain due to the patent holder in the form of a reasonable royalty can then be determined by reference to other relevant factors.

Complex products, the proponents contend, often rely on a number of features or processes, many of which may be unpatented. Even where the patented component is insignificant as compared to unpatented features, patentees base their damage calculations on the value of an entire end product. This standard defies common sense, distorts incentives, and encourages frivolous litigation.

Further, courts in recent years have applied the entire-market-value rule in entirely dissimilar situations, leaving the likely measure of damages applicable in any given case open to anyone's guess.

Proponents include: Large technology companies and the financial services industry.

Arguments against: Opponents argue that Congress should not attempt to codify or prioritize the factors that a court may apply when determining reasonable royalty rates. The so-called Georgia-Pacific factors provide courts with adequate guidance to determine reasonable royalty rates. The amount of a reasonable royalty should turn on the facts of each particular case.

Although intended to guard against allegedly inflated damage awards, this mandatory apportionment test would represent a dramatic departure from the market-based principles that currently govern damages calculations, opponents say. Even worse, it would result in unpredictable and artificially low damages awards for the majority of patents, no matter how inherently valuable they might be.

Opponents further argue that this change would undermine existing licenses and encourage an increase in litigation. Existing and potential licensees would see little downside to "rolling the dice" in court before taking a license. Once in court, this measure would lengthen the damages phase of trials, further adding to the staggering cost of patent litigation and delays in the judicial system.

Opponents include: The USPTO, Federal Circuit Court of Appeals Chief Judge Paul Michel, the biotechnology industry, smaller technology companies, patent-holding companies, medical device manufacturers, university technology managers, the NanoBusiness Alliance and the Professional Inventors Alliance.

WILLFUL INFRINGEMENT

What it would do: Section 5(a) of the bill would limit a court's authority to award enhanced damages for willful infringement. It would statutorily limit increased damages to instances of willful infringement, require a showing that the infringer intentionally copied the patented invention, require notice of infringement to be sufficiently specific so as to reduce the use of form letters, establish a good faith belief defense, require that determinations of willfulness be made after a finding of infringement, and require that determinations of willfulness be made by the judge, not the jury.

Arguments for: Proponents say that willfulness claims are raised too frequently in patent litigation - almost as a matter of course, given their relative ease of proof and potential for windfall damages. For defendants, this raises the cost of litigation and their potential exposure.

A codified standard with fair and meaningful notice provisions would restore balance to the system, proponents say, reserving the treble penalty to those who were truly intentional in their willfulness and ending unfair windfalls for mere knowledge of a patent.

Further, tightening the requirements for finding willful infringement would encourage innovative review of existing patents, something the current standard discourages for fear of helping to establish willfulness.

Proponents include: Large technology companies, the financial services industry, and the biotechnology industry.

Arguments against: Opponents argue that willfulness is already difficult to establish under existing law. The additional requirements, limitations, and conditions set forth in the bill would significantly reduce the ability of a patentee to obtain treble damages when willful conduct actually occurs. The possibility of treble damages under current law is an important deterrent to patent infringement that should be retained as is.

Opponents include: The USPTO, the Professional Inventors Alliance.

INTERLOCUTORY APPEALS

What it would do: Section 10(b) of the bill would permit an interlocutory appeal to the Federal Circuit Court of Appeals after a Markman hearing on claim construction, rather than waiting for a final judgment from the district court.

Arguments for: Proponents say these appeals would reduce the length and cost of litigation. Claim construction, they argue, is a fundamental predicate that goes to the heart of any patent infringement case. Until a claim is construed, it is impossible to establish whether infringement occurred and whether the patent is invalid. This process also serves to narrow discovery and motion practice and related expenses.
Proponents assert that an interlocutory appeal would help to mitigate the judicial inefficiency that occurs when a full trial is conducted based on an incorrect interpretation of the patent, only to be reversed on appeal and sent back for a second trial. More than a third of all Markman rulings are overturned on appeal, meaning that many litigants end up paying the attorney fees and expenses for two trials.

Proponents include: Large technology companies and the financial services industry.

Arguments against: Opponents say interlocutory appeals from Markman hearings would increase litigation and court congestion and offer "another bite at the apple" because the reversal rate for claim construction is fairly high. The net result, they say, will be to significantly delay final judgments from the lower court, significantly delay potential settlements, and significantly increase litigations costs.

Opponents argue that the Federal Circuit would not be able to handle expeditiously the large numbers of Markman appeals, meaning that resolution of the underlying district court cases would be delayed for years.

If this provision is enacted, opponents say, it would result in an interlocutory appeal in virtually every patent infringement case as soon as a Markman order is issued. One study estimates this would double the number of appeals each year.

Opponents include: The USPTO, Federal Circuit Chief Judge Michel, the biotechnology industry, smaller technology companies, and smaller patent-holding companies.

POST-GRANT REVIEW

What it would do: The bill would expand the ability of third parties to challenge a patent after its issuance. In particular, it would allow any person to oppose a patent within 12 months after it is granted. More controversially, it would allow a challenge at any time if the petitioner "establishes a substantial reason to believe that the continued existence of the challenged claim in the petition causes or is likely to cause the petitioner significant economic harm."

A newly designated Patent Trial and Appeal Board would be responsible for conducting the post-grant reviews. The presumption of validity that applies to patents during litigation would not apply to these post-grant review proceedings. Instead, a "preponderance of the evidence" standard would apply.

Arguments for: Proponents say these post-grant review procedures would be an improvement over existing reexamination procedures because they would allow consideration of evidence gleaned through depositions and interrogatories as well as from patents and other documents. Also, proceedings would be overseen by an administrative law judge rather than a patent examiner. These changes would allow for more meaningful review and that, in turn, would lead to better patent quality overall.

The so-called second window - the ability to challenge at any time - is necessary, proponents say, to allow for a meaningful and broadly available reevaluation of suspect patent claims before a firm is forced into prolonged and expensive litigation.

Proponents include: Large technology companies and the financial services industry.

Arguments against: While reexamination is an important component of the patent system, it must be structured in a manner that preserves the value and enforceability of the majority of patents, opponents say. This change would create an essentially limitless opportunity to challenge a patent at any time during its life. This would be a dramatic departure from the norm and cast a cloud of uncertainty over issued patents. If a patent can easily be challenged at any time under a low standard of proof, patents will have much less value and investment predicated upon them will inevitably be diminished. This, in turn, will likely result in less innovation.

Additionally, the resulting surge in complex, post-grant review proceedings would further strain an already overburdened and under-funded USPTO, thereby jeopardizing the agency's ability to improve pre-grant patent quality.

Opponents include: The USPTO, the biotechnology industry, smaller technology companies, patent-holding companies, medical device manufacturers, university technology managers, the NanoBusiness Alliance and the Professional Inventors Alliance.

PRIOR USER DEFENSE

What it would do: Section 5(b) of the bill expands the prior-use defense, which presently applies only to business-methods patents, to cover all patents.

Arguments for: Proponents argue that this expansion is reasonable in a competitive economy and strikes a balance between trade secret and patent protection. They also say it goes hand-in-hand with U.S. adoption of a first-to-file rule. Prior-user rights benefit smaller businesses, which often lack the resources or know-how to pursue patent protection, proponents say. This measure would allow them to commercialize their inventions when they used the subject matter of the invention prior to the patent's filing date, even when they did not pursue patent rights.

Some foreign countries presently allow prior-user rights, including Germany and Japan. This measure would help level the playing field for U.S. companies by putting them in the same competitive position as their overseas counterparts.

Proponents include: The financial services industry and the biotechnology industry.

Arguments against: Opponents contend that prior-user rights undermine the purpose of a patent system by creating a strong incentive to protect innovations as trade secrets. Under a prior-use defense regime, if inventors are able to protect their innovations as trade secrets, they are able to use them indefinitely, even if someone else obtains a patent on the invention.

Opponents also argue that this change would benefit larger corporations at the expense of smaller ones. They also contend that prior-user rights would reduce the value of patents and therefore make innovation less desirable.

Opponents include: The USPTO, the Professional Inventors Alliance.

VENUE

What it would do: Section 10(a) of the bill limits the places where corporations may be sued in patent cases by amending 28 U.S.C. § 1400(b) to provide that a corporation "resides" only where it has its principal place of business or in the state in which the corporation is incorporated. Current law presumes a corporation to reside wherever it is subject to personal jurisdiction. This change would not apply to declaratory judgment actions brought by alleged infringers.

Arguments for: Proponents argue that this change would discourage forum shopping. As the law now stands, any company whose products are sold nationwide is subject to patent litigation in any jurisdiction in the country. As a result, certain jurisdictions have become magnets for patent cases because of the disproportionately high number of cases they decide in favor of patentees.

This forum shopping imposes a costly burden on businesses which must collect evidence and witnesses and travel to remote jurisdictions to try complex patent cases over a period of weeks or months.

Proponents include: Large technology companies, the financial services industry, and the biotechnology industry.

Arguments against: Opponents argue that this change would be a substantial departure from established practice and may not result in the most appropriate and convenient venue for litigation. Certain district courts attract patent cases not because of favoritism, they say, but because of their expertise and timeliness. They also argue that the impact of forum shopping is minimized by the existence of a single appellate court for patent cases, the Federal Circuit.

Opponents include: Smaller patent-holding companies, smaller technology companies.

USPTO REGULATORY AUTHORITY

What it would do: The bill would authorize the USPTO to promulgate substantive - as opposed to procedural - rules and regulations for the first time in its history.

Arguments for: Proponents argue that giving the USPTO substantive rulemaking authority would be beneficial to the patent system and would help ensure an efficient and quality-based patent examination process.

Proponents include: The USPTO.

Arguments against: Opponents note that the U.S. Constitution expressly gives Congress the power to protect intellectual property and that delegating that authority to an administrative agency would be an ill-considered abdication of that Constitutional authority. Further, this grant of authority would create instability in the patent system, because the USPTO could make multiple changes to the law during the life of a patent. The job of defining substantive patent law is better left to Congress and the courts.

Opponents include: The biotechnology industry, smaller technology companies, patent-holding companies, university technology managers, medical device manufacturers, and the NanoBusiness Alliance.

INVENTOR'S OATH

What it would do: The bill would change the current practice of requiring the inventor to sign an application. It would allow the assignee of an invention to file a patent application in its own name. It would also allow substitutes for the inventor's oath where the inventor is unable or unwilling to sign.

Arguments for: Proponents say this change would reduce unnecessary formalities in the patent application and simplify and streamline the process. They also say this change would go hand-in-hand with a U.S. shift to a first-to-file system.

Proponents include: The USPTO.

Arguments against: Opponents say that patent applications filed by assignees may lack the actual inventor's personal guarantee that the application was properly prepared. In addition, assignee filing might derogate the right of natural persons to their inventions.

Opponents include: The Professional Inventors Alliance.
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27Oct/110

Case Theory

When you are going to court, you need to come up with a theory describing your case. Advocate your beliefs, stick to the point and use the law to prove your theory. Your theory should basically explain what happened or how you or your client was wronged. Explain why you should receive the verdict that you're after. You will need to state the facts, explain what happened, state the law that supports your advocacy, and ask for the verdict that you deserve.

Your case theory should contain and clearly state the outcome that you believe to be fair and just. You should explain your cause, whether or not you are defending or acting, and offer up ways to prove your theory. Stick to the point as much as possible. Your case will be strongest if you can point out one major issue as opposed to a borage of facts that could be argued. Try not to cloud the major issue at hand with useless arguments, emotions or improvable theories. Make sure that every argument and fact that you present supports that first theory that you are trying to get across.

The case theory should be supported by some sort of evidence. Only present evidence that supports your theory argument. Start with the most relevant, strongest piece of evidence and go from there. Present facts that support your theory in order of most pertinent to the weakest argument. As you go, you will need to be prepared to explain the weaker points. Have an explanation ready and offer it up before it is asked for. Encourage listeners to see your points about why certain weaker facts or pieces of evidence should still be considered in making a final decision. Offering a weak defense or cause for action without immediately acknowledging its weakness and explaining yourself can cause distrust and a lack of respect. These can be case killers.

You don't want to get emotional during a trial or advocacy. Your case theory should be presented in a way that doesn't demonstrate a depression, anger or lax attitude. Be confident and sure of yourself, but remain professional and formal. You can, however, use emotional arguments or defenses to play on the personal emotions of the judge or jury. Presenting an emotional theory can be very effective when supported by appropriate and relevant facts and evidence.

Lastly, you can help advocate your case by recognizing that there are two sides to every story. Point out your opponent's strengths and weaknesses. Try to communicate that you understand where they are coming from, but based on the facts and evidence that you are presenting, their theories should be disproved. Seeming one-sided can put off a jury and confuse them about who to trust. Not pointing out the other side's arguments can make it look like you are trying to hide from the facts that they are presenting. Use endearing or character building terms to describe your client or cause. Be sure not to put down the opposition, this tactic can seem petty and childish. Use generic terms when speaking about the opposite side.

In conclusion, you should be as precise as possible. Present only the strongest arguments and evidence. Keep your case theory in mind and bring up how each point proves the theory throughout your advocacy. Concentrate on why your theory is strong and not how your opponent is wrong. How you present yourself and your case can be as important as the facts and evidence themselves.
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24Apr/110

Options For L-1 Employees Facing Prospect of Losing Job-Status

In view of a few leading IT companies coming under a cloud of uncertainty recently, we have been getting calls from anxious employees, who are on L1 status, exploring options for change of status to H-1B.

Option One:

If the person has ever been on H-1B classification within the past six years and has not stayed outside the US for a period of one year or more since getting the H-1B status, he/she is eligible to change status to H-1B right away, i.e., an employer can file an H-1B petition with change of status from L-1 to H-1B.

Option Two:

Find an Employer who is exempt from H-1B quota cap and have them file an H-1B petition with change of status right away. Of course, such petition has to be approved before the individual can work for the new Employer.

Since most persons may not find the either of the above options available and/or feasible, the next option is to have a cap-subject H-1B petition file on April 1 to start employment on October 1. If such an employer is found and the Petition could be filed on April 1, these are the possible scenarios, depending on the individual's visa validity and status of employment:

Scenario 1:

The individual has to leave the US before April 1st: Have the employer file the H-1B petition on April 1, for Consular Processing. The H-1B gets approved and sent to the Consulate overseas; the individual gets the H-1B stamp and returns to the US to start working for the H-1B employer on October 1st.

Scenario 2:

The individual has L-1 validity up to or beyond September 30th and he/she will be in the US on L-1 status until September 30: Have the new employer file the H-1B petition on April 1 with a change of status to H-1B. If this petition is approved, the individual gets a new I-94 with the H-1B validity dates. If he/she has maintained valid L-1 status until September 30, he/she can start working the for the H-1B employer on October 1 without having to leave the US.

Scenario 3:

The individual assumes the Scenario 2 above, but loses the job and/or L-1 status before September 30 (i.e., after filing the H-1B change of status petition) and has to leave the US: Two things can happen:

a) The USCIS finds out that the individual has left the US and asks the employer (through a Request for Evidence, or RFE) to name a Consulate where to send the approved H-1B. The employer responds appropriately, and the H1B gets approved, sent to the Consulate, and the individual gets the visa stamp and returns to the US to start employment on October 1st.

b) The USCIS approves the H-1B petition with change of status, giving new I-94 with new validity dates: Still, since the beneficiary is overseas, the H-1B has to be stamped in his/her passport before he/she can come back to the US to begin working for the H-1B employer.

In all the above situations, please be mindful of the fact that an individual can remain in the US for a total of six years on L-1 and H-1B status combined. H-1B status for a seventh year and beyond can be obtained depending on whether and when a Labor Certification application or an Immigrant Visa petition has been filed on behalf of the individual.

If the individual on L-1 has L-2 dependents in the US, such dependents will lose their status when the L-1 person loses his/her status. If such L-2 dependents are working using EADs, they should stop working immediately on losing L-2 status. They should either leave the US or change status to H4 if and when H-1B status is available to the L-1 person. No EAD is available to persons on H4.

Copyright: The Law Offices of Morley J. Nair, Inc.
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16Nov/100

Cloud Computing – The Legal Issues Are Somewhat Cloudy in the Cloud

"Cloud computing" has become a very hot topic. For the uninitiated, "cloud computing" generally refers to providing access to computer software through an Internet browser, with the software and data stored at a remote location at a "data center" or "server farm," instead of on the computer's hard drive or on a server located on the user's premises. This is also referred to "software as a service."

Proponents of this approach claim many benefits, including lower costs, less need for on-site support and "scalability." "Scalability" means that the number of licenses and available resources can easily be adjusted as the need increases. Access can typically be provided to any computer with a browser and an Internet connection, but can be controlled through password protection and other measures. Proponents also argue that the cloud makes it easier to manage and push down software upgrades. Software as a service is usually provided on a fee for service approach that may result in cost savings compared to the traditional local area network. Think of it as somewhat like renting as opposed to owning.

Cloud computing is not a technology of the future, but is here today. Google, for example, uses this approach to provide its suite of business applications intended to compete with Microsoft Office. Google applications are provided free or at very little cost. Salesforce.com is one of the best known providers, providing customer relationship management ("CRM") software to a growing list of companies. IBM and Microsoft are also entering the playing field.

There appears to be little doubt that cloud computing is here to stay, and that it may indeed represent the future of information technology. There are many advantages and potential advantages to the cloud computing model.

That said, from a legal perspective, cloud computing raises a host of issues. Having spoken recently to several cloud computing vendors, there are some rather obvious questions. Perhaps the most obvious question is, "What happens if you lose my data?" The answers I was provided focused on technical and not legal issues, such as the back-up procedures provided.

Technical issues are important, and there are certainly technical issues that a potential customer may want to consider, such as maintaining a back-up on site, or a back-up through a separate vendor. These approaches might provide some real practical protection in the event of a catastrophic failure or bankruptcy at the primary provider. Other technical issues might focus on what happens when the relationship ends, whether happily or not. Is there another vendor that can provide the software and host the data? Will data have to be converted to a different format? If the customer decides to switch back to a local area network, will the terminals that have been used for cloud computing (which, I am told, can be very basic "low powered" machines) be of any use, or will a completely new network need to be installed?

Although technical solutions are a good thing, over twenty-five years of litigation experience have taught me that disasters do happen, even with fail-safe plans in place, and even with parties acting in complete good faith. And, I suppose, it is natural for a lawyer to focus on legal rights and remedies rather than technical solutions.

From a legal standpoint, cloud computing appears to raise a host of essentially contractual issues to be addressed by the parties' contract or licensing arrangements. There are also potential regulatory issues (ranging from privacy to export control issues), potential e-discovery issues, and certainly other issues that have not yet crossed my mind.

As businesses and their lawyers become more experienced with cloud computing issues, it is likely that a consensus will emerge as to how cloud computing issues will be addressed. Hopefully, purveyors of cloud computing services will be flexible and reasonable in addressing legitimate business concerns. However, given the prevalence of "standard" licensing in the software field (often on a shrinkwrap or clickwrap basis) and efforts to limit liability under any circumstances, there is some cause for pessimism.

All that said, here is a list of issues that one might wish to consider asking a vendor or otherwise considering in entering into a possible cloud computing arrangement:
What contractual obligation will you assume to protect my data? This could include reference to particular steps and procedures, including back-up obligations. The contract or license may specify a standard of care that the provider must meet. What contractual obligation will you assume regarding uptime, if any? Will you provide any type of uptime warranty? Even if such a warranty is subject to a limited remedy, it probably would provide considerable incentive for the provider to limit downtime. Most providers seem savvy enough to disclaim any interest in your data and will freely say -- in a sales setting anyway -- that "your data is your data." Well, that's good, but how do I physically get my data back at the end of the contract or if you go bankrupt? What remedy limitations, if any, are in your terms? Are consequential damages excluded? Are total damages capped (such as to a return of fees paid)? Even if contractual obligations are assumed, if remedies are severely limited, the provider may be shielded from liability. Where is my data going to be stored? Are you willing to agree that all my data will be kept in this location under specified conditions and at agreed security levels? This could be important for regulatory reasons, but also for reasons associated with meeting general customer confidentiality obligations or complying with privacy policies. Have you inserted a forum selection clause into the terms? Many providers want to insist on litigating on their home turf (which often, it seems, is California), but that is rarely a happy instance for a customer. How do I get out of this arrangement if you do not perform and what is my exit strategy? What rights do I have upon termination? What obligations do you have to assist in transitioning to a new vendor or back to a self-managed platform?

If you are considering going to the cloud, you should consider involving your business and technology lawyer early in the process. As stated, there are probably many other legal issues that have not even occurred to me. It is clear, however, that lawyers need to begin considering these issues, because cloud computing is clearly not going away.
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14Sep/100

Startup Law 101 Series – Mistakes Founders Make – Neglecting Securities Laws

Securities laws are not to be trifled with. Among other things, if you violate them, your investors can ask for their money back from your company and from those who control the company.

Yet founders are sometimes careless in complying with securities laws.

Here are some very high-level guidelines for complying:

1. The broad rule is this: either you register the shares to be offered or you find an exemption from registration for the type of offering your company will make. It has to be one or the other.

Registration at the federal level is a public offering. No early-stage startup does that.

At the state level, registration is still a formal and expensive process. Few early-stage startups do that either.

Therefore, the key securities law concern for any stock issuance by an early-stage startup is to make sure that the offering fits within an exemption to the registration requirements.

2. You must not only find an exemption under which you can make the offering, but you must find an exemption that applies to each purchase and sale of the stock that is made under the offering.

You will need a federal (SEC) exemption. The easy one is the intra-state offering exemption, which applies where all purchasers in the offering reside in your company's home state. Beyond that, the question is fundamentally whether your offering is a private placement under either Section 4(2) or under Regulation D, the former of which is subject to murky legal standards and the latter of which defines "safe harbors" that essentially take away the murkiness. Finally, Rule 701 exempts qualified issuances under employee incentive plans.

You will also need a state exemption for each state in which any of your purchasers resides. The securities laws of each of the respective 50 states are known as "blue sky" laws. Whenever your company sells stock, you need to do "blue sky compliance" for each state involved in the offering.

3. Federal and state securities law exemptions are tricky and complex. Use a good business lawyer to guide you through the process. With skilled guidance, the process is neither too involved nor too expensive for most early-stage offerings.

So where do founders go wrong in this area?

Founders will sometimes use counsel for an initial offering and will complete that offering with proper securities law compliance owing to counsel's guidance. So far so good.

Where founders get into trouble is where they thereafter assume they have learned the blueprint for an offering and do the next one themselves, without attorney help and without bothering with securities law compliance. Focusing solely on the buy-sell aspect of the stock sales, they forget the accompanying details that make those sales legal in the first place. This will normally not happen when they inform counsel of their plans. It happens when they don't bother with that step.

Another way that founders get into trouble is by getting ensnared by the doctrine of "integration."

Most states have some variation on what California calls a limited-offering exemption, which is basically an offering and sale of stock to a limited number of people who have a pre-existing relationship with the company or its founders. As long as the offering is limited to the number of purchasers authorized by the exemption, there normally is no problem.

Problems arise when founders complete their offering and then later have second and third offerings of a similar type within comparatively short time periods. This is what I call the rolling-offering problem.

Under securities laws, such offerings can be "integrated" with one another, i.e., treated as if they were not separate offerings but rather one continuous offering. If they are so integrated, then a sale of stock to 25 persons in one offering can be combined with another sale to 15 other persons, with the result being that the company is deemed to have sold stock to 40 persons in a single offering. If the applicable exemption says that, in order to be exempt, the offering must be limited to 35 persons, then integration will blow the exemption.

The common problem in both these examples is that founders assume they don't need to consult with their business attorney once they think they know the "blueprint" for a stock offering. They then run wild and unsupervised in making their stock sales. And they get themselves into trouble.

What are the penalties?

The main one is rescission. If stock is sold that is neither properly registered nor exempt, then each purchaser can rescind the sale and get his money back either from the issuer or from those who control the issuer. A very dangerous and potentially expensive remedy for founders who play too loosely with securities laws. This is not just corporate liability. It is personal liability.

The rescission remedy can also be problematic if stock issued initially to founders or other key people is issued in violation of securities laws. Of course, no one cares if such early-stage purchasers rescind and ask that their trivial cash purchase price be returned. But what if the purchase price included assignments of IP into the company? Rescission enables such purchasers to rescind and to demand that all items of value transferred into the company be returned to them. Again, a very dangerous and potentially expensive problem for your startup if it results in a cloud hanging over the company's key IP.

How to prevent these problems?

Three key things to keep in mind: (1) remember that no equity can be issued without securities law compliance, ever -- don't ever treat stock, stock options, warrants, etc. as if they were items of candy that you can simply hand out to any willing recipient; (2) do use competent securities law counsel to assist with your stock offerings, whether to founders, bridge or seed investors, angel investors, or VC investors; and (3) whenever possible, limit your stock sales to "accredited" investors. Accredited investors can be individuals or entities and there are detailed rules defining who they are. In general, for individuals, it is either high-income individuals or those having a net worth of at least $1 million. See your business attorney for details.

Why is it important to deal with accredited investors only, if at all possible? Because they normally don't count toward the number of purchasers to whom you may sell stock in qualifying for most exemptions. Thus, in our example above of the rolling offering, you would not have a problem with the offerings being integrated if your investors were all accredited. In such a case, you would not exceed the numerical limit because the accredited investors wouldn't count toward that number.

In addition, with accredited investors, you will normally have a much easier time generally complying with disclosure and other requirements that are part of the exemption process than you will have in dealing with less sophisticated investors.

Don't trifle with securities laws. Work closely with a good business lawyer to ensure compliance. If you don't, it will likely cost you far more to untangle problems than any money you might have saved in trying to skimp on the lawyer costs. Don't be penny-wise and pound-foolish in this important area.
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10Sep/100

Insurance Fraud Lawyer

Insurance fraud, also called false insurance claims refers to false claims that have been filed with the intention of defrauding an insurance provider or user. Insurance fraud may be committed against insurance companies or insurance policy holders. According to government estimates, fraudulent insurance claims account for 10% or about $30 billion every year of the expenses incurred by the insurance industry.

Common insurance frauds include inflating actual claims, known as padding, submitting claims for false injuries or fraudulent claims of damage, submitting tweaked facts and submitting claims over staged accidents. Some types of frauds are more rampant in some states. For instance, the sale of unauthorized health insurance is a common fraudulent practice in Texas. In this case, unlicensed companies sell false insurance policies even though these do not meet the state's minimum financial requirements. The company continues to collect premiums and doles out insignificant amounts of money from time to time. However, when there is an emergency and a really heavy claim is made, the company simply vanishes from the scene.

Some of the common kinds of insurance frauds in existence include:

Medical claim Automobile collision Worker's compensation Frauds against seniors Fire
 
The rampant nature of insurance frauds in the US has led to the formation of fraud bureaus in 41 states. Some states even have two bureaus. Many of these bureaus have law enforcement powers.  

Any person or company accused of insurance fraud charges must retain the services of an efficient insurance fraud lawyer. There are two essential components of fraud; the intention to deceive and fraudulent measures that induce a company to pay more. In such cases, timely action is important as companies or false claimants usually cover up their actions if given enough time. In many cases, by the time the case comes to the insurance fraud defense lawyer, the company or claimant has had enough time and opportunity to cook up information that can cloud the issue.

Your insurance fraud lawyer must have vast experience practicing in the field of insurance frauds. Frauds may take on various forms and it is vital that you select a defense lawyer who specializes in the area of concern to you. Some fraud schemes are so elaborate and complex that they easily implicate people who had no active part in the fraud. To take on a well-funded and well-prepared prosecution, you need an aggressive and knowledgeable defense attorney.
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2Jul/090

Pennsylvania Divorce Law

Going through a divorce can be stressful at the best of times, and it is important to ensure that each party receives fair treatment as part of the divorce proceedings. Pennsylvania divorce law is designed to ensure that you have a certain degree of protection when it comes to divorce proceedings, and that you receive fair treatment when it comes to the allocation of joint assets. However, understanding Pennsylvania divorce law isn't always easy, and particularly at an already stressful and confusing time.

You can, however, hire the services of a specialist divorce lawyer in Pennsylvania, and these lawyers are experts in the area of Pennsylvania divorce law. By hiring a lawyer you will benefit from expertise and experience in this area, and your lawyer will ensure that you come out of the divorce as unscathed as possible in terms of finances and assets. These lawyers use their expert knowledge of Pennsylvania divorce law to work on behalf of their clients and get the most favourable outcome possible at the end of the divorce proceedings.

A divorce can be very messy, and often the animosity between the couple can cloud their judgment and decisions. The lawyers working on behalf of each party, however, will be able to clearly and professionally assess the situation, and each lawyer will fight for his or her client to ensure that the client is not 'taken for a ride' or treated unfairly through the proceedings. By using specialist divorce lawyers you will come out of the divorce safe in the knowledge that everything has been dealt with in the proper legal manner, and that all matters are now settled once and for all.

The cost of hiring a specialist divorce lawyer can be quite high, and at an already financially difficult time this can simply add to the stress. One way to avoid the additional worry is to have a prepaid legal services plan in place. These plans are available for a small monthly premium, and with a prepaid services plan you can rest assured that you will have ease access to an expert divorce lawyer should the need arise.
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5Jun/090

How to Reduce the Burden of Compliance

Today CIO's and CISO's are faced with the challenge of attaining or maintaining security controls in order to comply with industry standards, regulations or legislation such as PCI DSS, SOX404, Basel II, and/or Data Protection Act. Alternatively they may 'just' be attempting to find evidence in compliance with a set of internal risk policies aligned to ISO27001. In a normal business environment complying with regulation is demanding enough, but in a post-credit crunch world of budget cuts the hill is likely to get steeper - more will be needed from less.  Downward cost pressure accelerates the need to leverage value-added technical innovations like virtualisation and cloud computing, whilst at the same time maintaining or improving compliance levels.   

This article is the first of three in a series to provide advice aimed at helping organizations to structure their compliance program in such a way as to address their immediate needs, and provide the flexibility that organizational and technological change demands without losing control of future compliance levels.  

COMPLIANCE AND THE FINISHING LINE  

With the plethora of regulation that face businesses these days it's often difficult to grasp the exact meaning of the actual state of 'compliance'. This is largely due to the manner in which many standards and laws are worded, combined with technological evolution, making it difficult to know when you have reached a state of being compliant. Faced with this conundrum you turn to your auditors and discover that being compliant often means 'giving the auditors comfort' (and auditors rarely feel comfortable!). Worse still, the Board always wants to know the answer to the question "How compliant are we?" and expects some kind of quantitative answer. Without clear baseline standards to measure yourself against it is impossible to answer this question. Therefore, managing the detail is key but difficult.  

MAKING THE PAIN STOP  

Reaching and staying compliant with any regulation can be a painfully slow process, littered with missed milestones, endless repetitive meetings and frustrated or disappointed senior executives. What started out as cozy Friday morning chats around the CIO's table rapidly turns into a nightmare of spiraling project costs, complex spreadsheets, questionnaires, status reports and worse still, remediation activity that seems burn capital, yet does not seem to improve the compliance 'score'.   All of which lead to perpetual conversations with the internal auditors about what, exactly, constitutes 'evidence' and what the external auditors do or don't care about.  So is there a better way?  
 
STRUCTURING THE PROBLEM  

Unlike many traditional technology projects whose scope and ambition diminish over time, compliance initiatives move in the opposite direction. What starts as a small and simple problem becomes bigger and more complex once the true workload required to bridge the gap becomes clear, and in most cases it is something that a single department cannot execute in isolation. It demands a multidisciplinary approach to manage a portfolio of projects and initiatives. Therefore, the first thing that the CIO/CISO should do is appoint a senior program/project manager to oversee the changes necessary, providing the mandate and budget necessary to deliver the desired results.  

However, this is just the first step in regard to building structure, as with this In many cases the Compliance Program Manager may have an audit or accounting background, sometimes a project management background, sometimes a general business background, and often an entirely different background altogether. Therefore, it is advisable to consider supplementing the skills of this key individual with some additional knowledge both in terms of content and process did by implementing a purpose-built compliance solution.  

SELECTING A COMPLIANCE SOLUTION  

In order to reduce the likelihood of 'death by spreadsheet' any mid-sized or large business that is about to embark on any serious compliance activity should consider automating the effort of management and governance as much as possible. Such solutions do not make individual issue remediation efforts any easier, but it will make management and governance of the compliance process far more structured and transparent. Several commercial software solutions exist to help in this regard and organizations should select and implement the one that best fits the requirements.   
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