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Legal Myths That Can Cost You A Fortune

Myths about the law abound. They range from age-old lore, like “possession is nine-tenths of the law,” to mistakes about intellectual property rights. When you fall into the trap of letting these fables guide your decisions, you can get your business into trouble. So let’s dispel some of these legal myths.

Myth 1: Hey, I own that intellectual property. Misunderstandings about intellectual property ownership are rampant. Many businesspeople think if they register a new business with their home state, they automatically obtain trademark registration of their business’ name. No such luck. The trademark registration process is a completely independent process, and you don’t get any trademark registration rights just from setting up a new company.

Similarly, when businesses hire independent contractors to work on new ideas and inventions, companies often assume that they own the intellectual property created by the contractor. Wrong again. Unless you have a special agreement in place assigning the IP rights to your business, that contractor remains the owner of any copyright or patent associated with his or her work.

On the other hand, some businesspeople assume that anything on the internet is free for the taking which is a myth that the evil geniuses at Napster helped spread. We see companies snatch up and use (“scrape”) pictures from the websites of other businesses. The scrapers mistakenly believe that if a photo is on the internet, it’s free for the taking. Wrong still again. In fact, many website owners fighting off this type of stealing are employing “bots” to patrol the internet for these thefts. Next thing you know, the scraper is receiving a cease and desist letter and, if that doesn’t stop the theft, a lawsuit follows.

Myth 2: I’m not bound by this contract because I signed it under duress. I was recently trying to extricate a client from a terrible deal when he explained that he signed the contract under duress. He quite firmly believed that he should be allowed out of the contract. “What do you mean by duress?” I asked my rather insistent client. Was there a blowtorch pointed at your hand? Did the other side threaten you with waterboarding? Did they hold your family hostage? No, my client replied, “They wouldn’t sell me the goods unless I signed their contract.”

Duress this is not. Under the law, you will only be excused from a contract on account of duress where there was some significant wrongful act by your opponent, such as a threat of physical harm or kidnapping.


Jack Garson is the founder of Garson Claxton LLC and leads the firm’s business and real estate practice groups. Jack serves as a legal advisor for numerous local, regional and national companies, focusing on business transactions, commercial real estate, commercial leasing, and construction law. In addition to providing legal counsel, Jack serves as a strategic advisor and negotiator for many clients, providing guidance on issues such as the growth and sale of businesses, liability and risk reduction, the hiring and retention of key personnel, and protecting and enhancing profitability, as well as negotiating the resolution of complex commerce.

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