Tim Marman's Loosely Coupled

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• What's the best state to incorporate in? (Hint: Delaware)

  AskTheVC recently addressed the question of what was the best state of incorporation . The short answer is one of 3 preferred states: "Delaware, whatever state the company is in and whatever state(s) the VCs are located in." Obviously, the last is hard to determine if you're going to incorporate before you close financing. California is notoriously employee-friendly so it should be avoided. Some of those laws may still apply if you are based in California, but if you are elsewhere you should definitely assume those burdens. New York is also undesirable. It's fairly balanced when it comes to dealing with owners vs. employees, but the one big red flag is Section 630 of the NYS BCL. This section states that the top 10 shareholders are liable for employee wages if the company goes out of business and employees aren't paid. This statute does not apply to foreign companies (i.e., those incorporated in other states) even if they're doing business in New York. Considering... Posted Jul 23 2007, 05:53 AM by Tim with | with 5 comment(s) Filed under: Web 2.0, Business, Law, Entrepreneurship, Startup, Venture Capital, NextNY

• How is IP split between separating founders?

  AskTheVC addresses the question of what happens to IP rights when the founders go their separate ways . "Bottom line, you have a strong incentive (as does your former partner) to settle this amicably, otherwise, you both are going to be worse off." I thought it was worthwhile to dig into this a little further, though, and discuss what happens with the various IP rights a startup might acquire. Often you'll hear 3 founders say "we want everything split 3 ways", but joint ownership of IP can be tricky. Rights and duties with joint ownership are poorly misunderstood, even by many lawyers. More importantly, the rights and obligations of each owner vary by the type of intellectual property and from country to country. A joint owner of copyright in the US has different rights from a joint owner in England, and a joint owner of copyright has different rights from a joint owner of a patent. Both copyright and patent rights vest in the original author(s) or inventor(s) respectively, and both can... Posted Feb 12 2007, 06:47 PM by Tim with | with no comments Filed under: Intellectual Property, Copyright, Web 2.0, Patent, Business, Law, Entrepreneurship, Startup, NextNY