Business Litigation

Sunday, February 26, 2017

Should I include a mandatory arbitration clause in my business contract?


Arbitration is a way to resolve any disputes outside of the court system. Over the years, as court dockets have become impacted, arbitration clauses have become more popular in commercial contracts. By agreeing to binding arbitration parties agree to abide by the decision of one or more chosen neutral parties. The solution imposed is thus legally binding and does have the ability to be enforced in a court.

Arbitration In South Carolina

Arbitration has a long history in South Carolina, dating all the way back to the late 1700s.


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Saturday, May 14, 2016

Lawmakers Pass the Defend Trade Secrets Act


How can my business protect its trade secrets?

Certain forms of intellectual property such as patents, trademarks and copyrights have long enjoyed protection under Federal law. Until recently, this has not been the case for trade secrets. Now that Congressional lawmakers have passed the Defend Trade Secrets Act of 2016 (DTSA), however, owners of trade secrets will have a Federal private cause of action for the misappropriation of this highly sensitive information.

What are Trade Secrets?

Information such as formulas, designs, practices, processes or patterns that are not widely known outside of a business are considered to be trade secrets. These can include things like the formula for Coca-Cola or any of Google's search algorithms.


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Tuesday, March 22, 2016

The Perils of Litigation for a Small Business

How Can I protect my small business from litigation?

Small business owners typically focus their attention on achieving success in the marketplace without giving much thought to the possibility of being hit with a lawsuit. However, by failing to prepare for the potential of litigation, entrepreneurs jeopardize their businesses, and possibly their personal assets.

The best defense is to avoid litigation by not being negligent and exposing your business to a personal injury or other civil lawsuit. In order to minimize the risk of litigation, small business owners should start by choosing the right business organization, obtain liability insurance, and retain an attorney.

Creating a Limited Liability Corporation

By creating a Limited Liability Corporation, a small business owner can separate his or her personal assets from the business. In this arrangement, the business exists on its own and is responsible for any legal liabilities or debts it acquires. In some cases, however, an aggrieved client or customer can pierce the corporate veil and sue the business and the owner individually. In particular, a business owner who personally guarantees a loan will be liable for the debt.

Liability Insurance

Business owners typically need to obtain an array of insurance policies, such as workers' compensation insurance and errors and omissions coverage. However, in order to protect a small business from the financial damage of a lawsuit, it is essential to have liability insurance that provides a source of funds in the event that a successful lawsuit is brought against the business.

Hire an Attorney

In spite of all the preventive steps a business owner can take, lawsuits and business disputes are sometimes unavoidable. These may include: a breach of contract, infringement of intellectual property, trade secret theft, or various employment claims such as discrimination, harassment and wrongful termination. It is also possible that a class action will be brought by customers, or that conflicts among the owners and minority investors may arise. In order to ensure business continuity, a business owner must be prepared to handle any of these disputes.

Often it is possible to settle disputes through negotiation and avoid going to court. If negotiation is not successful, there are other methods to resolve conflicts including mediation and arbitration. In any event, the best way to minimize the potential damage that can result from litigation is to hire an attorney who specializes in commercial litigation and has knowledge of local customs and laws.


Thursday, July 30, 2015

South Carolina Judge Rules Subscription Charges ‘Count’ as Taxable Income Against Cable Conglomerate

If an out-of-state business collects subscription proceeds from a South Carolina resident, must it pay South Carolina tax on that income? 

With subscription-based services all the rage nowadays, the concept begs the question: What about taxes? Based on a recent case holding, it is clear that cable provider DirectTV had hoped to circumvent this minor detail – but was instead slapped with an $8.5 million income tax bill for failing to pay taxes on revenues from consumer subscriptions in the state of South Carolina. The case, which was decided by a state administrative judge within the Department of Revenue – hinged on the concept of “income-producing activity,” and whether the cable company actually engaged in taxable activity within the state of South Carolina. The case also serves as a glaring reminder of a foundational principle that, in life, only two things are inevitable: death and (federal and state) taxes. 

Basis of DirectTV’s claims: It never actually made money in South Carolina

DirectTV asserted throughout the course of the litigation that the monthly subscriptions maintained by South Carolina residents did not “count” as the source of its income. Rather, its income is derived from “national marketing, content development, broadcast operations and customer service — business activities that are conducted outside of South Carolina.” By that reasoning, the company shouldn’t have to pay income tax in any state outside its state of incorporation, right? 

Not really. Invoking a much more thorough level of reasoning, the administrative law judge concluded that the actual revenue-producing activity conducted by DirectTV involved its “delivery of the signal into the homes and onto the television sets of customers….[and] all of those income-producing activities related to South Carolina customers occurred entirely within South Carolina. 

Thankfully, the judge also took a moment to rebuke the respondent for its argument, stating that it was of “no practical value.” Between 2006 and 2011, DirectTV has generated over $2 billion in subscriber fees from South Carolina homes and businesses, including $136 million in revenue from cable equipment and boxes. 

If you are struggling with a state taxation issue or would like to discuss a general business matter, please do not hesitate to contact the Florence and Myrtle Beach business law attorneys at Willcox, Buyck & Williams today: 843-536-8050. 

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