LJN Newsletters

Large law firms usually have in-house administrators ensuring their systems operate as they should. Small firms and solo practitioners, on the other hand, often lack this luxury and consequently are not as efficiently organized as their larger counterparts. The need for administrative support within small firms becomes apparent when one realizes that most attorneys dread administrative tasks. They rightly determine that the best use of their time is through the performance of billable client services.

Most leases provide for a rent abatement in the event of a casualty to either the building or leased premises that renders the leased premises unfit for the tenant's use until the casualty damage has been repaired. At first glance, the only items to be negotiated in such provisions are those that clarify what portion of the building or premises — as the case may be — must be affected in order to provide for an abatement, how quickly the landlord is obligated to restore the damage, and under what circumstances the parties may terminate the lease.

Due to the potential for extraordinary liability associated with contamination problems, landlords and tenants in commercial leasing transactions should address environmental concerns in the leasing documents. Subsurface contamination involving soil and groundwater concerns could result in substantial costs and liabilities for both parties. In addition, asbestos can present unique issues for both the landlord and the tenant. The landlord should be concerned that the tenant's operations will result in the contamination of the premises. The tenant should be concerned that existing contamination, whether soil, groundwater, the presence of asbestos, or other problems, could present liability issues for itself.

Commercial real estate professionals often draft ground leases for those situations in which a tenant (the "Ground Lessee/Sublessor") leases land from a fee owner (the "Ground Lessor") to be developed into a shopping center or some other development with a mix of retail or other commercial tenants. Numerous occasions arise, however, in which a ground lease is needed because the Ground Lessee/Sublessor intends to sublease the parcel to a single-use tenant entity (the "Tenant"). When drafting the sublease for this Tenant, the real estate practitioner must tailor the ground lease to take into account the specific requirements of the Tenant's sublease.

Highlights of the latest commercial leasing cases from around the country.

The evaluation of the assets and liabilities of a business is referred to as a due diligence review. Most commonly, these evaluations determine the value of a business for purposes of investment or the establishment of a relationship with the business. Because the value of intellectual property has increased substantially recently and patent protection in many countries has expanded to cover software and business methods, businesses without IP assets and existing or potential IP-related liabilities are rare. With the consistent increase in damages for IP infringement and the possibility of business-crippling injunctions, it is likely that any business will be subject to, or will itself conduct, an IP due diligence.

Enterprise value is the difference between a company's book value and a company's market capitalization. It is a consequence of the difference between value as defined by generally accepted accounting principles and value as defined by investors. Over the past few years, enterprise value has been used as a proxy for intellectual property value. During the market bubble years when market capitalizations were well in excess of book values, IP emerged as the new "must have" high-value asset. Skeptics now suggest that the collapse of the bubble took the air out of patent value. This author and his firm suggest that a requiem commemorating the demise of patent value would be premature. We also suggest that there is good empirical evidence why market-based valuation systems for IP are reasonable.

In general, when confronted with the threat of a patent infringement suit, companies undertake a simple calculation to determine whether to seek an exculpatory opinion of counsel. Specifically, the potential infringer determines the amount of damages likely to be assessed in the event infringement is found, and whether the enhancement of those damages exceeds the (often considerable) cost of a non-infringement opinion. Of course, the necessity of obtaining an opinion is likely to be affected by the pending en banc opinion from the Federal Circuit in Knorr-Bremse v. Dana Corp. However, assuming that exculpatory opinions will continue to have a role in the willfulness calculus, this simple cost-benefit analysis will remain in use.