LaBarge Weinstein Quarterly: Winter 2013

Year in Review

2013 already…Can you believe that another year has come and gone so fast! We hope this year is off to a good start and that everyone had a nice holiday season.

A lot of exciting things happened at LaBarge Weinstein over the past 12 months. For starters, 2012 marked our 15^th year providing legal services to technology and knowledge-based companies all across the country. We also opened an office in Vancouver, added three new firm partners, and reintroduced our monthly networking events.

But enough about us, it’s our clients who really deserve the shout-outs. Here is a summary of a few client highlights from 2012.

• Paul DeJoe, the CEO of Ecquire, answered the question “What does it feel like to be the CEO of a startup?” on Quora. His response became a viral sensation and was even picked up by Forbes.com.

• WattPad, an online community for readers and writers, received $17.3M in funding!

• Vidyard moved from a shared office space on the University of Waterloo campus to their own location; a fabulous house on Oak Street!

• Tindr and Veritaaq IT Consulting won gold at the Ottawa Business Achievements Awards in the New Business and Mid-Market categories.

• Shopify merchants sold over 420,000 products (or 124 sales per second) on Cyber Monday! That’s up from 216K last year.

Are Your Terms of Use Strong Enough to Protect You?

A recent ruling by the U.S. Federal court in Nevada could mean bad news for many e-commerce and online companies. Last January, hackers got ahold of over 20 million customers’ email addresses, passwords, phone number, and home addresses from online footwear and clothing retailer, Zappos. Some of those customers decided to sue Zappos, who apparently believed that their terms of use would protect them. However, the court recently ruled that these agreements were completely invalid.

In order to ensure this doesn’t happen to you, we recommend the following proactive steps when it comes to your website terms:

1. Enforceability

If like most companies with a web presence your business relies on web terms to limit liability and to inform end users of the scope and limits of your products and services, it’s important to note now that recent US case law has cast further doubt on the enforceability of web terms, which are not highlighted to end users through a click-accept process.  This means that if your privacy policy and terms of use are currently set out as links on your website, even if you consider these links to be prominently displayed, the courts are leaning towards the conclusion that those terms are not binding or enforceable against your users.

To increase the likelihood of enforceability, we recommend you do the following:

• Implement a click accept procedure at the first opportunity past casual browsing of the site (e.g. when a user opens an account, provides personal information, buying products or ordering services, requesting feedback, or signs up for further information or to participate in contests).

• A Scroll-through format rather than links is preferable.

• Extend this measure to both your privacy policy and terms of use so both documents must be click-accepted rather than relying on cross-references between the documents.

2. Unilateral Clauses

The ability to make changes to standard form agreements is a common clause in web agreements. However, this type of clause may not hold up in court based on recent rulings that challenged its validity. This means that if your current privacy policy or terms of use allows you to make changes to your documentation without notice to end users and puts the onus on the end user to check for changes, you should remove this clause and consider implementing a procedure where substantive changes to your web terms are highlighted by email to your users or notified to them when they next log in to their accounts with a requirement that they click accept the new terms before proceeding further.

If you need further assistance with Intellectual Property Commercialization and Licensing, please contact Michael Morgan mmorgan@lwlaw.com or Gisèle Salazar gsalazar@lwlaw.com.

Note: the above is a general guideline only and not intended to be interpreted as specific legal advice.

 What’s Your Social Media Campaign Worth?

So, you actively promote your products and services using social media but don’t actually know if your campaigns are generating revenue. Trust me…you’re not alone!

Luckily, Source Metrics is here to help you answer this question.  Founded in 2008 (originally under the name Swix) and backed by $1.6 million from Growthworks and Canada’s FedDev program, this Ottawa-based company started out building analytics and campaign management tools for social media marketers.

It didn’t take long for the team to identify a major gap in the social media marketing space. Upon making this observation, a decision was made to fold their previous products and concentrate solely on a fully integrated social media analysis application. And voila…Source Metrics!

Source Metrics provides social publishing, campaign management, and social media monitoring, as well as tools to measure the ROI of campaigns. While there are many tools for social media monitoring of online discussions about brands, there wasn’t a tool that provided good analysis of the results of a campaign, Scott Lake, cofounder and CEO of Source Metrics told Forbes.com.

With Source Metrics, companies can analyze the traffic to different landing pages, pinpoint which campaigns the clicks came from, and identify what social media sites the user was originally visiting.

Although this new product was only officially launched in mid-October, the ambitious Source Metrics team is already planning to release new features, including a landing page creator.

Five Things New Entrepreneurs Must Know

If you’re a new entrepreneur, you are probably getting a lot of advice from a lot of different people. Whether it’s welcomed or not, you’re going to get many opinions on how you should run your business.

Want some advice that’s actually helpful? Canadian Business recently featured an article about the five things new entrepreneurs must know. Here’s a summary of what they had to say.

If you watch Shark Tank or Dragon’s Den, you will have heard this one over and over again. The number one thing you must consider before moving forward is ensuring you have a viable product. In other words, your product or service needs to be something that people will buy. If your idea won’t generate revenue, you don’t have a viable business.

Before you turn to other people, make sure you invest your own money, time, and sweat before asking for capital. Investors need to see that you believe in your idea or they aren’t going to pony up the dough.

Do yourself a favour and make it easy for investors to help finance your business. As James Smith, firm partner and a leading lawyer for technology startups says, “Keep your legal boring. If you’re creating unique, or highly stylized capital structures…the narrower the audience of people that would be interested. A standard ownership structure is best for attracting potential investors.”

Great inventions aren’t created overnight. They are perfected overtime and often require many refinements. That being said, don’t be afraid to change it up if things aren’t working. According to Shawn Abbott of iNovia Capital, “Dedication is a must, but only when combined with agility. In order to steadfastly work toward a goal, you can’t just do that blindly. You have to know when to cut bait, when to switch your strategy.”

The last and probably the most important thing new entrepreneurs must know (or ‘feel’ in this case) is passion. Be passionate, or don’t do it at all. The divide between self and work is non-existent when you’re an entrepreneur.  If you’re only in it for the money, the likelihood of long term success is low. Make sure you’re 100% invested in your idea before deciding to make it your livelihood.

Click here to read the Canadian Business article.

LW Connect

Back in September, we reintroduced our monthly networking sessions, LW Connect. The events run once a month on Thursdays from 5pm until 7pm, with a focus on seed level investing options for technology and knowledge-based startups.

If you’re an Ottawa-based business that could benefit from this information, come network with other entrepreneurs, have a beer on us, and hear from iNovia Capital – January 24^th at 5pm in our boardroom.

For more information, please contact Casey O’Brien at mailto:cobrien@lwlaw.com.

Deal Flow Report

Here is a sample of recent publicly-announced transactions that we’ve worked on over the past few months:

• Blinq Networks Financing
• Frank & Oak Financing
• Lufa Farms Financing
• MoneyBar Rewards Reverse Takeover of Ackroo
• Thinkwrap’s Sale of Veriday
• TUC Brands Acquisition of TechSupport.ca
• Videyard Networks Acquisition by Procera Networks

Firm and Staff News

Co-founding partner, Paul LaBarge, was presented with the Queen Elizabeth II Diamond Jubilee Medal in a ceremony on October 31^st. Paul’s decoration was received for his dedication to the creation and development of the Trans Canada Trail. As one of the original members, Paul has held various positions with the organization since 1995 and currently sits on the Board of Directors as the Chair.

Various members of the firm participated in Movember for the second year in a row. Our team, the LW Dusters, raised donations totaling $4,845 for prostate cancer research.

LaBarge Weinstein has been nominated for the Kanata Chamber of Commerce People’s Choice Business Awards in the Professional Services category. Voting closes on Friday, February 1^st at midnight, so if you want to vote for us, here is the link.

Information Worth Sharing

In November, the Harper Government announced that Canadians will be able to save an additional $500 in their Tax-Free Saving Accounts (TFSA) starting this year.  This increases the annual contribution limit to $5,500. Read more here.

The Royal LePage House Price Survey and Market Survey Forecast that was released on January 8^th showed the average price of a home in Canada increased year-over-year between 2.0 and 4.0 per cent in the fourth quarter of 2012. Standard two-storey homes rose 4.0 per cent year-over-year to $390,444, while detached bungalows increased 3.6 per cent to $356,790. National average prices for standard condominiums increased 2.0 per cent to $239,374.

Compared to 2012, fewer homes are expected to trade hands in the first half of 2013, which should slow the pace at which home prices are rising. However, by the end of 2013, Royal LePage expects the average national home price to be 1.0 per cent higher compared to 2012.[i]

On January 14^th, Prime Minister Harper announced a plan to strengthen the venture capital investment in Canada. The Venture Capital Action Plan will seek to deploy $400M over the next seven to 10 years to strengthen Canada’s competiveness in the knowledge-based economy. Read more here.