Patent Applications to be Published 18
Months After Filing, Even If Decision on Patent Has Not Yet Been
Issued. Bringing the US patent system into line with patent systems in
Europe and Japan, the American
Inventors Protection Act of 1999, now requires that the US
Patent and Trademark Office (USPTO) publish most applications
18 months after their date of filing, whether or not the patent
is granted. This means that a new invention may be made public
before the inventor knows whether or not the patent will be granted.
However, an inventor whose application is granted after publication
would have the right to seek royalties from others who use it
before the patent is granted. Inventors who don't plan to seek
a patent overseas may qualify for non-publication under an exception
to the new law. The publication provision of the Act is effective
as of January 1, 2001.
Tax I: Installment Tax Correction Act
Reverses Onerous Tax Treatment of Installment Sales of Small
Businesses. As previously reported in our March, 2000 issue, small
businesses using the accrual method of accounting were taking
it on the chin because a new law which taxed the entire proceeds
of the sale of a business upon the sale, even if the payments
were to be received in installments. That law is now history,
as President Clinton, on December 17, 2000, signed into law the
Installment Tax Correction Act of 2000, which essentially returns
the law to what it was before last year's new law took effect.
To see the bill when posted, go to
http://thomas.loc.gov/, click on "Public Laws by Law
Number", and input # 106-573.
Tax II: New IRS Reporting Requirements
for Attorneys Postponed. A new IRS Regulation scheduled to take effect January
1, 2001, 26 CFR Sec. 1.6045-5(a), was again postponed, to the
relief of the bar nationwide. New 1099-MISC reporting requirements
would have eliminated the $600 threshold for reporting, eliminated
the exception for professional corporations, and required payors
to report not only "income" but "information"
regarding all monies passing directly or indirectly through the
hands of attorneys. Such information reporting would include
checks payable to a client, but delivered to an attorney. Fortunatley,
IRS
Notice 2001-7 postpones indefinitely the adoption of the
regulation as to 26
USC 6045 (f), which remains in effect. But the so-called
"middlemen" regulations are expected to make their
appearance again next year.
On Discovery of Malpractice, Statute of
Limitations Begins to Run as to All Defendants. Debtor
filed for bankruptcy after a business it purchased was found
to have significant financial difficulties. But Debtor's subsequent
adversary proceeding against defendant-accounting firm for its
failure to advise buyer of the financial state of the business
being purchased was found to be barred by a 2-year statute of
limitations, since more than two years earlier, Debtor wrote
to defendant, advising that its lawyers were investigating whether
defendant and others were liable for accounting errors. In addition,
once a party has a "strong suspicion" that one potential
defendant has been engaged in wrongdoing, the statute of limitations
begins to run as to all other potential defendants.
The Whitlock Corporation vs. Deloitte & Touche, LLP,
00-1718 (12-7-00).
Software Vendor's Limitation of Damages
to "Repair and Replace" is Void if it Fails of its
Essential Purpose. Although Defendant software vendor's contract for sale of computer
software contained a limitation of liability clause which disclaimed
all warranties of merchantability and fitness for a particular
purpose, and purported to limit its liability to "repair
and replacement," such clause was ineffective to dismiss
Plaintiff's claim for money damages, since plaintiff's complaint
alleged that the remedy wholly failed of its purpose. Relying
on Pennsylvania's version of the Uniform Commercial Code's (UCC)
limitation of damages provisions, the US District Court for the
Eastern District of Pennsylvania ruled that Plaintiff's complaint
was sufficient to allege that defendant's exclusive remedy had
wholly failed of its purpose, and denied defendant's motions
to dismiss. Caudill
Seed and Warehouse Co. vs. Prophet 21, Inc., USDC ED Pa.,
No. 00-3712, (11-22-00).
States Vote to Approve Recommendations
on New Sales Tax System. Of the 45 states with some form of sales tax, representatives
from 38 of those states which are members of the Streamlined
Sales Tax Project have voted to support a Uniform Act and
Uniform Agreement to implement a more modern and uniform sales
tax collection system. Currently, vendors operating in the 45
states with sales taxes must comply with multiple tax rates,
varying laws on product definitions, extensive tax return requirements,
and costly and time-consuming annual audits, according to the
Project's Press Release. The Uniform Act is expected to be submitted
to the various state legislatures this year. To track its progress,
return to the Project website above.
Resources for the DotCom Economy. At www.Dotcom.com, search
for a business by name, website, business type or stock ticker,
and get back not only the information you seek, but also maps
and directions to the business offices. Order credit reports
or industry-specific reports for a fee. You'll find everything
from news, trends, facts, and forecasts, to a basic primer on
website content and copyright law.
USSC: Arbitration Agreements Enforceable
As to Statutory Rights. Respondent alleged Petitioner's violation of the Truth in Lending
Act (TILA) in a financing arrangement which was subject to binding
arbitration. The agreement was silent regarding the costs of
arbitration, and Respondent, who was of modest means, contended
that she might be unable to vindicate her rights under TILA because
of the cost of arbitration. The US Supreme Court held that an
arbitration agreement is not unenforceable simply because it
fails to say who is responsible for arbitration costs, that Respondent
had not proved that cost was an issue, and that the party resisting
arbitration has burden of proving that Congress intended to preclude
arbitration of the statutory claims at issue. Greentree
Financial Corp vs. Randolph, USSC, No. 99-1235, (12-11-2000).
Technology Advancing to Protect Copyrights. A story in the latest issue of Wired
magazine reports on the development of software capable identifying
pirated material on the internet, and tracing it back to the
originating server. Once the server is located, an automatic
"take-down" notice is sent, in compliance with the
Digital
Millenium Copyright Act of 1998, which requires copyright
holders to contact infringers, and requires infringers to remove
the copyrighted material from their websites.
First Major Y2K Ruling Favors Insurer. Saying that Xerox waited too long and spent too much before consulting
its insurer for reimbursement, Justice Charles Ramos of the State
Supreme Court in Manhattan has turned down Xerox's request for
reimbursement. The Court noted that Xerox had spent $138 million
over three years before contacting its insurer, and that Xerox's
delay had deprived its insurer, American Guarantee and Liability
Insurance Co. of the chance to examine Xerox's hardware and software
to determine how much work was needed, if any, before it was
carried out. No decision online, but see the New
York Times report.