Home Archived Articles New Year, New Rules, and Some New Horizons for Businesses

New Year, New Rules, and Some New Horizons for Businesses

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Most diehard sports fans have an uncanny ability to instantly cite rules and recent rule changes, no matter how esoteric or obscure. Many business professionals, by comparison, find themselves paying particular attention to very specific parts of their rulebooks and playbooks, happy to overlook things that don’t appear to concern them.

It’s difficult and rarely productive to commit everything to memory, or even to attempt to produce a succinct summary of the most recent changes in business law. Nevertheless, there are some recent developments and trends that businesses should be aware of.
One of the most obvious topics relevant to the business environment in Maryland focuses on changes made to the state’s General Corporation Law (MGCL) during the General Assembly’s last session.
“Many of the changes were based on corporate governance,” said Randy Fisher, founder of the Annapolis-based Fisher Law Office that focuses on business law and estate planning. “Some of the changes include making ownership easier for shareholders for their own personal planning purposes.”

A new provision in the law establishes jurisdiction rules for adjudicating internal corporate claims, permitting a corporation’s bylaws to require such claims to be filed only in courts sitting in one or more specified jurisdictions, provided the bylaws not prohibit filing in a Maryland state or federal court, he explained.

Other MGCL changes prohibit Maryland corporations with capital stock or a Real Estate Investment Trust (REIT) from imposing liability on a stockholder who is party to an internal corporate claim for attorney fees or other expenses; establish new rules for corporations and REITS regarding appointment of a resident agent for service of process in civil actions; expand the list of documents available for expedited processing by the State Department of Assessments and Taxation; and clarify the role of directors during the period when a charter is forfeited.

The new provision also simplifies the process of merging a Maryland corporation with or into a direct or indirect subsidiary to form a holding company.

Sick Leave

By far, 2018’s most anticipated proposed legislation in the corporate arena involves paid sick leave.

According to Fisher, Gov. Larry Hogan’s forthcoming bill would phase in paid sick leave benefits for businesses with 25 or more employees over a three-year period, and would allow businesses finding the provisions too burdensome to seek a hardship waiver.

“The proposed 2018 legislation would be accompanied by a separate $100 million plan to extend tax credits to businesses that offer paid sick leave, commuter benefits and other employee incentives,” he said. “What form any sick-leave bill takes will need to be watched by all small businesses.”

Likewise, Fisher said he continues to watch the drama in Washington regarding the Republican-backed overhaul of the federal tax code, which was passed by the Senate on Dec. 20 and approved by the House of Representatives later that same day, and is likely to be enacted by President Trump before this issue of The Business Monthly is published.

Social Media

Sole proprietors and owners of very small businesses may know the value of an online presence and the attendant social media accounts that are useful for branding and marketing, but many of these business owners overlook the question of what happens to those accounts in the event of their death.

According to Cynthia Lifson, a Columbia-based family law attorney, both private individuals and owners of very small businesses should be aware of their ability to designate who has access to their social media accounts after death.

Facebook, for example, allows account owners to designate a legacy contact, and Google makes provisions through its Inactive Account Manager service, while Twitter and other social media providers each have their own processes for dealing with this contingency.

“The Maryland Fiduciary Access to Digital Assets Act of 2016 also addresses some issues business owners should consider in either planning business succession or making sure someone has access to these accounts after they die,” Lifson said.

There are, however, limits to what these designees may do with any given account.

“You have to [plan] control of those accounts so that they can be transferred to new ownership,” acknowledged Fisher. “Those are often key elements to any small business marketing plan.”

Artificial Intelligence

As information technology advances, there are more than a few major questions that still need to be addressed concerning artificial intelligence (AI), specifically when it comes to legal theories of liability and aspects of intellectual property.

It ultimately will rest with the courts to decide who is at fault when, say, two autonomous vehicles collide, or when a smart contract system incorrectly records a transaction, or when a machine decision results in property damage or loss of life.

So far, any repercussions in the intellectual property arena stemming from the use of artificial intelligence appear to be a question for the future, provided existing patent law and intellectual property laws are up to the task of dealing with any accompanying legal implications.

At the moment, legal professionals are hardly in agreement on how to view the question.

“I don’t see an area of concern here,” Fisher said, noting that conventional thought places low odds on a patent resulting from computer-generated or computer-assisted claims.

His own research, he said, suggests that improvements to existing inventions are the more likely outcome.

Jun Lee, a registered patent attorney and principal at the Rosenberg, Klein & Lee law firm in Ellicott City, suggested that any resulting product of AI might not be considered intellectual property because it wouldn’t result from an intellectual process.

“United States patent law and patent law in most other jurisdictions deem that patents can only be issued for inventions generated by natural persons,” Lee said.

Another possibility, according to Managing Director Paul Skalny of the Columbia-based Davis, Agnor, Rappaport & Skalny law firm, could lie in the traditional view of patents, which acknowledges both the inventor and the patent owner.

“If that piece of technology invents something else, it’s like a piece of software that does computations,” Skalny said. “It’s going to revert back to the owner of the underlying artificial intelligence technology. It’s possible that a third party would have some claim or right to the new invention … but that will be strictly dictated by the terms of the license agreement itself, as a contractual issue.”