Legal Tips for Investors in Artificial Intelligence (AI) Startups

By Business, Intellectual Property, Software & Startups

Investors have poured staggering amounts of cash into Artificial Intelligence (AI) startups since late 2022. In 2023, a year that was otherwise lukewarm for tech investment, AI funding seemed to buck the trend.

Interest in AI companies is not limited to large Venture Capital firms. Private AI companies have raised cash from angel investors, friends and family members, and other small-check investors. While smaller investors often lack the legal budget to conduct rigorous due diligence before investing, they have useful tools at their disposal to de-risk AI deals. This article describes legal methods investors can use to do so.

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10 Tips for Creating Enforceable Online Software Agreements

By Business, Intellectual Property, Software & Startups

For providers of Software-as-a-Service applications, an online agreement with the product’s users is critical. Whether called a Terms of Use, End User License Agreement (EULA) or some other name, the agreement gives providers a host of benefits. It can reduce liability in the event of a lawsuit, secure intellectual property rights that providers need from users, help providers comply with privacy laws and more. Read More

Frequently Asked Questions (FAQs) About the Corporate Transparency Act

By Banking and Financial Services, Business, Corporate Transparency Act Resource Center, Software & Startups

This article answers common questions that companies and individuals have about the Corporate Transparency Act (“CTA”). Please note: these answers are general and may not apply to you. Please consult an attorney for advice regarding the CTA and how it may apply to you or your company.

The law and best practices relating to the CTA change frequently, and portions of this page may be outdated at the time that you read it. Read More

F.D.I.C. Requests that Banks Report Their Cryptocurrency-Related Activities

By Banking and Financial Services, Blockchain & Digital Assets, Intellectual Property, Software & Startups

The Federal Deposit Insurance Corporation (F.D.I.C.) has requested that all banks engaging in cryptocurrency-related activities notify the agency of those activities. The request came in the form of an April 7, 2022 letter, FIL-16-2022, to F.D.I.C.-supervised banks. In that letter, the F.D.I.C. summarizes its concerns regarding banks’ participation in cryptocurrency-related activities. Those concerns include the potentials for consumer confusion, risks to banks’ information technology and cybersecurity systems and money laundering. The F.D.I.C. also wrote that certain inherent characteristics of cryptocurrencies, including practical challenges with identifying digital assets’ ownership, raise unique questions about banks’ ability to ensure safety and soundness. Read More

Non-Fungible Tokens Make First Appearances in U.S. Courts

By Blockchain & Digital Assets, Business, Intellectual Property, Software & Startups

Nearly one year after they became a household term, non-fungible tokens (NFTs) have begun to make their first appearances in American court decisions. These early cases involve two of America’s best-known names in media: recording artist Jay-Z and Playboy. While many legal questions about NFTs remain, these first decisions suggest that courts will apply traditional legal principles to at least some of the issues these tokens raise. Read More

When Should a Tech Startup Form a Company?

By Business, Intellectual Property, Software & Startups

Before a technology startup becomes a company, it spends a period of time as simply a project. The founding team is usually one or two individuals building and testing products as they try to validate a demand for them in the market. At some point, founders ask themselves: when is it time to turn this project into a company?

This article tackles that question with respect to a particular type of business venture, which is a growth-oriented tech startup. By this, we mean an organization whose products incorporate intellectual property (I.P.) and which seeks to scale quickly after confirming product-market fit. Read More

Talking Tech: Carlo DiCelico and Loida Otero of Neon Labs

By Intellectual Property, Software & Startups

This article is the first in a new series called Talking Tech from the Perkins Thompson Intellectual Property Practice Group. Talking Tech features interviews with tech company founders and employees about their highs, lows, and problems they’ve solved.

Today we interview Loida Otero and Carlo DiCelico, the founders of Neon Labs, a startup in Portland, Maine. Perkins Thompson attorney Adam Nyhan is a non-legal advisor to Neon Labs. Read More

A Legal Checklist for Early-Stage Tech Companies

By Business, Intellectual Property, Privacy, Software & Startups, Start-Up and Entrepreneurship Law

Download the Legal Checklist for Early-Stage Tech Companies

In a tech company’s early days, it’s easy for the founders to make legal missteps.  Most mistakes are unintentional and result from a lack of knowledge or legal budget rather than bad intent. Nonetheless, it’s critical to remedy them as the company moves forward.  Failure to do so can place the company in breach of its business-to-business contracts; it can create uncertainty about the company’s ownership of its intellectual property; and it can create a host of operational risks.  It can also kill or devalue outside investment deals when investors discover these problems in their due diligence. Read More

User Experience (UX) Design Agreements: 4 Essential Clauses to Include

By Intellectual Property, Software & Startups

User Experience (UX) design is a bedrock part of software and website development.  It includes the study and optimization of the user’s experience – the totality of the ways in which humans interact with and experience products.  (Definitions of UX vary; in the classic definition by designer Don Norman, it includes a person’s interaction with not just a product but the company that provides it as well).  Software companies employ UX designers in a range of ways including market research, the development of product business requirements, wireframing, prototype design, and watching behind two-way mirrors as testers struggle to navigate interfaces. Read More

A Hiring Checklist for U.S. Tech Companies

By Labor and Employment, Software & Startups

Hiring employees presents unique challenges for tech companies that do not confront other American businesses. In our experience as outside counsel to tech companies, legal mis-steps typically result from oversight rather than a deliberate intention to flout the law. The checklist below is a structured guide to avoiding these common pitfalls in the hiring process. It applies to Software-as-a-Service providers, custom software developers, mobile app developers, I.T. consulting firms and other tech employers. Read More

Maine Places Limits on Noncompete Agreements and Prohibits No-Hire/No-Poach Agreements Between Employers

By Labor and Employment, Software & Startups

Governor Mills signed into law “An Act to Promote Keeping Workers in Maine” (26 M.R.S. §§599-A and 599-B), set to become effective September 19, 2019, placing significant limitations on the use of employee noncompete agreements and prohibiting agreements among employers not to solicit or hire each other’s employees. In passing this legislation, Maine joins its New England neighbors, New Hampshire and Massachusetts, in restricting the use and enforceability of noncompete agreements and joins the national trend in striking down so-called “no poaching” agreements. Read More