New laws for 2013 affecting business

Big changes include patent law rules, marijuana use and wind energy tax credits

Windmill farm

When it looks like you’re about to drive over a cliff, it’s easy to overlook potholes, construction and detours that lay further down the road. But now that Congress has patched together a compromise to avoid the fiscal cliff, many business owners are taking stock of road bumps and other legal changes that will shape their journeys in 2013.

Patent law revisions approved more than a year ago will go into effect this March, posing challenges for small business innovators. Voter-approved legalization of marijuana in Washington could leave workers and bosses confused about what’s allowed at work. The fiscal cliff budget deal extended tax credits for several industries, including at least one – wind power – that could benefit in Southwest Washington. And beyond changes to the letter of the law, many companies are finally tackling challenging decisions that they had put off for years.

Innovators beware

Small and medium-sized companies involved in innovation – like Peak Recreational Products in Brush Prairie, Pro Safety Inc. in Yacolt and Inventist Inc. in Brush Prairie – face new laws that govern intellectual property rights in 2013. They may find themselves at a disadvantage compared to very large competitors, said Kurt Rylander, patent attorney at Rylander & Associates in Vancouver.

The America Invents Act, which brings U.S. patent law into harmony with much of the rest of the world, has key provisions that go into effect in March.

“Previous to the act, the rule had always been that regardless of who files the application first, the person who invents the intellectual property is the one who gets the patent,” Rylander said. “Starting in March, the person who files the patent application first gets the patent.”

Inventors also used to have a one-year grace period during which they could sell their creations before filing a patent application. “That grace period has been changed and made a lot squishier,” Rylander said.

These changes are “really going to hurt small businesses quite a bit, because they don’t have regular intellectual property counsel. They will come in after they have had market success, and by then bigger companies may have blown their patent opportunities,” he said. “If your business includes innovation then this is the year to talk to an intellectual property attorney. You can’t put it off at all.”

Weeding through drug laws

When voters legalized possession of up to an ounce of marijuana, they opened the door to a lot of confusion about what’s allowed at work, said Joe Vance, a partner at Miller Nash in Vancouver.

“Employees may think, ‘It’s okay to smoke marijuana and there’s nothing my employer can do about it,’” Vance said. But in fact, “The change in the law has no effect on employers’ rights to drug test in Washington state, or for employers’ rights to enforce zero-tolerance drug policies.”

Vance recommends that businesses review their drug policies – or draft one if they haven’t already – then remind their employees that marijuana use is still against workplace rules.

“If you are inclined to fire somebody because of their drug or alcohol use, it’s a good idea to have a policy in place,” Vance said. “Make sure the policy prohibits any detectible amount of… drugs, instead of using an under-the-influence standard,” since marijuana can be detected in blood or urine samples even when a user is sober, because of how it’s metabolized in the body.

Which way the wind blows

“The clients I know who were most happy with fiscal cliff legislation: anybody who has anything to do with wind production,” said Dustin Klinger, a partner with Miller Nash in Vancouver.

For many years, temporary tax credits to support wind-powered generation have been enacted by Congress, allowed to expire, enacted, expired, and so on, creating an unpredictable business environment. The result: wind development has proceeded in fits and starts, with a frenzy of activity while credits are available, and projects put on hold if they can’t be completed before a credit expires.

Tucked in to the fiscal cliff deal was a two-year extension of wind credits, as well as a small change to the credits that could make a big difference.

“Under the old system, a facility had to be in service to qualify for the tax credit, so six months to a year before expiration everyone would say, ‘We’re not sure we can finish it, so we can’t even start it,’” Klinger said. “Not only was the tax credit extended for two years, it’s now applicable for any project that begins before it expires.”

Who’s the boss?

Klinger said he’s also seeing a growing number of businesses tackling thorny issues surrounding ownership.

For a number of years now, family-owned businesses or closely held companies that involve several partners have been so focused on survival that they’ve pushed off difficult decisions about internal ownership, Klinger said. Increasingly, however, companies are coming to him to talk about how to negotiate one owner’s departure from a company.

Getting rid of a partner may not sound like a sign of a healthy company, but Klinger sees this trend as a positive one.
“It’s a sign that they see enough future value that they are willing to dig in and deal with long-term problems they were ignoring,” he said. “They are focusing on the long-term needs of the business.”

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