In previous blog posts I suggested that incorporating in Canada is not a substantial hindrance to receiving U.S. investment.  In some situations, the U.S. investor could require the Canadian company to become a U.S. (likely Delaware) company.  While this sounds simple in practice, how does this Canadian-U.S. company swap work?

While each investment is different, one approach is as follows:

1.  The investor and Canadian company reach an agreement on investment terms.  This agreement also lays out the steps that must be completed as part of the deal (both before the deal is closed, and after) to facilitate the swap.

2.  A U.S. company is incorporated (likely Delaware).  This company will receive investment from the U.S. investor.

3.  The U.S. company acquires the Canadian company through a share exchange whereby shares of the U.S. company are exchanged for shares of the Canadian company.  Through this exchange, the Canadian founders/other shareholders receive equivalent equity in the U.S. company as they had in the Canadian company and the Canadian company becomes owned, 100%, by the U.S. company.

4.  Investment is made in the U.S. company.

There are also additional considerations, such as how the Canadian subsidiary will be used going forward and ownership of intellectual property.  Ultimately, the steps above aim to show you that a Canadian incorporated startup can be later swapped for a U.S. company to satisfy an investor.

Online agreements require an electronic form of your signature, whether you click “I agree” or use a digital version of your offline signature.  Electronic signature laws in the U.S. and Canada do not address the correct signature format.  Instead, these laws focus on the correct process for creating an enforceable signature.

Three key considerations guide the electronic signature process:

1.  Identification

How do you identify the signatory?  In the case of a prospective user agreeing to a Terms of Service, identification may come in the form of an email address, first and last name and IP address.  Given the impersonal nature of online agreements, the identification challenge is establishing that signatory is, in fact, the signatory.

2.  Intention

How do you establish intention to sign?  Intention could be established through a digital version of your offline signature applied to a document or a user clicking “I agree.”  Ultimately, the user must understand what they are agreeing to and that they are, in fact, agreeing.  For example, placing the “I agree” button after the agreement provides the user an opportunity to understand the agreement before being asked to agree to it.

3. Integrity

How are electronic signature records retained to ensure originality and ease of production? Integrity may be established through a fixed user acceptance process whereby any user, in order to access a website, was required to accept certain terms.  Alternatively, in the case of a more traditional signed agreement, the agreement copy was retained in a locked file format, with date and time of signature logged.  In both cases, establish an electronic audit trail.

While there is no correct type of online signature, there is a correct process for online signatures that should be considered whenever an online agreement is required.

Whenever a developer discovers a copied version of their app/game, their immediate concern is how to remove it.  This post aims to outline the process for removing content that infringes your copyright from major app/game stores.

All major stores operated by U.S. companies (and often foreign companies) comply with the United States Digital Millennium Copyright Act (“DMCA”).  Simply summarized, the DMCA provides a notice-and-takedown procedure whereby a notice of copyright infringement sent to a DMCA Agent leads to the take down of infringing content.

STEP 1.  DMCA Notification

The DMCA Agent should be your primary contact as the DMCA specifies a procedure for copyright infringement claims and major stores will follow the procedure.  Here are links to the DMCA Agent for each major store:

Steam:  https://steamcommunity.com/dmca/create/

Apple:  http://www.apple.com/legal/internet-services/itunes/appstorenotices/

Google Android:  https://support.google.com/legal/troubleshooter/1114905?product=androidmarket

Facebook:  https://www.facebook.com/help/contact/208282075858952

Microsoft:  https://www.microsoft.com/info/cpyrtInfrg.aspx 

You must complete and send the notice of copyright infringement contained in these forms to the DMCA Agent in order to initiate the DMCA process.  After you send notice, the DMCA Agent should remove, or disable access to, the allegedly infringing app/game and send notification of such removal to the infringer.

DMCA Agent response time varies.  Indeed, U.S. courts are currently determining what period of time constitutes a reasonable response!

STEP 2.  Utilizing Connections and Social Media

After sending the notification, feel free to contact anyone you know at the app/game store or use Twitter and other social media to push your cause.  Often a campaign will cause a quick response from the DMCA Agent.

STEP 3.  Cease and Desist

Consider sending a cease and desist letter to the infringer as well, requesting that they remove the infringing content from the store (perhaps also request sales proceeds).  Where the store or website does not comply with the DMCA, this may be the first or second step.

STEP 4.  DMCA Counter Notification and Lawsuits

The infringer may respond with a counter notification claiming that the allegedly infringing content was removed as a result of mistake or misidentification.  The DMCA Agent, upon receiving counter notification, will let you know about the counter notification and will put the  content back on the store in 10-14 business days, unless  (before the content returns) you seek a restraining order against the alleged infringer and inform the DMCA Agent of the order.

In reality, the DMCA Agent likely will not receive a counter notification in the case of a blatant ripoff of your app/game.  Nonetheless, it’s important to know the steps that follow DMCA notification.

This post aims to clear confusion surrounding two technology law terms:  Terms of Service (ToS) and End User License Agreement (EULA).  Often, clients use these terms interchangeably even though the terms refer to different business models.  Determining which term applies to your business will assist you when searching for legal counsel and  to understand your own business model.

End User License Agreement

An End User License Agreement addresses the license of copyrighted software to your users.  This agreement is used when users are installing or accessing computer code, such as on their phone/mobile device or computer.  Since users are installing/accessing code, the End User License Agreement provides users a copyright license to the code and, therein, aims to protect your rights to that code.

Example:  a mobile application, downloaded from an app store and installed on a user’s device.

Terms of Service 

A Terms of Service agreement addresses the provision of services to your users.  This agreement  is used when users are provided a service, typically accessed through a website, but users do not install or access code – Software as a Service.  While some label the provision of services as a “license” this is not always ideal as “license” is a term evoking copyright and installing/accessing computer code.  Rather, the user is provided with “access” or a “subscription” to the services (or similar language).

Example:  a SAAS service accessed from a website through a user account.

But… 

There may be instances where you combine these two documents, licensing code and providing a service.  For example, an application (installed code) that connects to your cloud service to retrieve data (the service).  Additionally, you may have a mobile application and web service that accomplish the same thing but exist separately and, in this case, both agreement types are required.

In Sum:

Understanding the differences between End User License Agreements and Terms of Service should assist you with understanding your business model (am I selling software, a service, or both?) and your legal needs.