Business Law

July 16, 2013

In Negotiations, Can Silence Be Golden?

by The Law Firm of Grasing & Associates

When it comes to negotiating the best deal possible most people consider words to be king. If you make an offer there has to be a justification. If you refuse the offer, you immediately have to make a counter-proposal, and justify it. You tout the benefits of your product, justify your asking price, and critique the other side’s position; a few well-placed matter-of-fact observations, should do the trick. What most people do not realize, though, is that sometimes certain things, at certain times, are best left unsaid. Sometimes, silence is golden.

Standard negotiating advice to someone making an opening offer is to justify it. If there is something special about the item you are trying to sell, then say it. If there is something below-par about the product or service that you are trying to buy, then mention it. After all, you will be taken more seriously, and your position given more credence, because you have a reason for your offer. This advice is based, in large part, on the 1978 “Copier Machine Study,” by Ellen Langer, Arthur Blank, and Benzion Chanowith. In that study, a person waiting to make copies was more likely to let someone cut in front of him to make a small number of copies if the person offered some justification.

Katherine Shonk, Editor of Negotiation, the monthly newsletter of Harvard Law Schools’ Program on Negotiation, in an article that first appeared in October, 2011, points out that sometimes it may be wise to not justify an offer, at least not at first. She points out that the “Copy Machine Study” may have more to do with the trivial nature of the request, “Can I make 5 copies?” than with the justification offered for it.

July 9, 2013

Trademarks and Businesses: Branding Made Better

by The Law Firm of Grasing & Associates

A well thought out business plan should ensure steady, profitable growth by providing goods or services that customers want and can rely upon. One way to achieve this is through brand loyalty, which some would argue is the key to success. If you want to be around in ten years, chances are you will have to convince buyers that your product or service, whatever it might be, is worth having, recommending, and coming back to. Any business owner can tell you the benefits of purchasing what she’s selling; dependable, reliable, high quality, less expensive, value-driven; there are many ways to describe how good her product is. Getting this point across to your potential customers, however, can be difficult. One often overlooked way to convince them of the quality of your product is through a trademark or service mark, which, if done right, will easily identify your product or service. To show you just how important a trademark is, one of this country’s favorite companies, Apple, is back in the news because it is trying to trademark the name of what might become the next must-buy piece of personal electronics.

Apple is seeking to trademark the term “iWatch” in Japan, as well as approximately 6 other countries. Everyone can guess what an “iWatch” will be. Like most good phrases used in advertising it’s a catchy name with more than one meaning. It could describe a watch made by Apple because, it seems, almost everything Apple makes now begins with the lowercase “i” in its name. That, in and of itself, is quite a branding tool; most businesses can only dream of having their customers identify their products by one little letter. At the same time, it implies that the product is something the user will watch/view/look at; with most computers, that’s just what you do. What is important to keep in mind, however, is exactly what Apple, by filing the trademark applications, is trying to do.

Apple reportedly wants to have the sole rights to use the name, the iWatch, for a mobile computing device. The trademark application, by itself, however, does not mean that Apple already has come up with, invented, or even produced a proto-type of, a mobile computing device worn on the wrist; patents are separate from trademarks. In the U.S., you can apply for a trademark even if you haven’t used the mark in commerce. If you get permission to use the trademark from the U.S. Patent and Trademark Office, you are given a certain amount of time, normally six months, to start using it. It should be noted, though, that Apple has filed a series of patents in the U.S. for watch-like mechanisms.

June 25, 2013

Business Negotiations 101: Know Your Fallback Position

by The Law Firm of Grasing & Associates

As we have talked about, negotiations are important, to businesses, their employees, and customers. Everyone wants to get the best deal possible. Being able to achieve it, however, is no easy task. How you conduct negotiations, the negotiation strategies that you should follow in order to get what you need out of the negotiations, might sound like academic gobbledygook, but they really are common sense ideas that have real life consequences for real life people. Businesses fail, employees lose their jobs, and products we all know and love go away, when emotion gets in the way of reason; these negotiation strategies are a way to avoid that.

We previously wrote about the need to know what you want before you begin to negotiate and the dangers of playing hardball once you start. This time we’ll talk about determining what your best alternative to a negotiated agreement, or BATNA, is. Put another way, your BATNA is your best fallback position if negotiations fail. It’s a common sense concept that gives you an idea of when you should accept an offer, when you should fight, and when you should walk away. Knowing your realistic bottom line, and that of your opponent, is essential to getting what you want, and preventing you from giving away more than you have to, in negotiations.

In order to determine what your BATNA is, you first need to actually know what all of your alternatives are. The most important, and overlooked, step is to make sure that you compare them as apples to apples because none will be exactly the same. As Harvard Business School and Law School Professor Guhan Subramanian pointed out in an article entitled, “Taking BATNA To The Next Level,” which first appeared in the January 2007 edition of the monthly newsletter Negotiation, your alternatives are not going to be directly comparable to what you can achieve in a negotiated agreement. His example, of a customer deciding whether to renew his current homeowner’s policy, proves the point. You can’t just compare premiums; you have to go through the coverages, to see what losses are covered and what you’ll receive if a loss actually occurs, before you know which policy gives you the best value. Saving a few hundred dollars a year in premiums may not mean much if you lose a few thousand dollars because the cheaper policy does not cover your loss.

June 14, 2013

How To Get What You Want In Business Negotiations: Is Hardball Always Necessary?

by The Law Firm of Grasing & Associates

How to succeed in negotiations is open to debate. It depends in large part on what you mean by success. Business owners, in New York and elsewhere, often think it means they have to win, and their negotiating partner, who they often view as their opponent, has to lose. Hardball, to them, is the key; power is what counts. Most business owners want to gain the upper-hand, and, once they have it, use it for all it’s worth. Lawyers often act in this same way, especially once litigation begins. The take-no-prisoners approach may be tempting, and it certainly does look good in the movies, but it often doesn’t get you what you bargained for.

The word “tense” always seems to come first whenever negotiations make the news. Normally up against a deadline, each party strongly believes that its cause is just and that the other side is pig-headed, if not downright evil, in opposing it. If the negotiations fail, each side is ready and willing to heap scorn upon the other.

Think of what happened to Hostess Brands. It closed down in November of 2012 because one of its unions went on strike. Hostess made Twinkies, Ho-Ho’s, and even Wonder Bread. Just about everyone has tried some of their foods at one point or another; my favorite was the Coffee Cakes. Well, the familiar story goes, Hostess ran out of money, declared bankruptcy to try to survive, and attempted to negotiate new contracts with its various unions. Some went along; the Teamsters did. Some refused. The Bakery, Confectionery, Tobacco Workers and Grain Millers, which represented 5000 Hostess employees, went on strike because they opposed the give-backs the bankruptcy judge imposed. When they wouldn’t go back to work, at least not enough of them anyway, Hostess decided to close its doors and sell off its assets. All of its major brands eventually were sold and, hopefully all will re-appear on store shelves. Many of its former employees, however, probably won’t be hired by the new owners.

June 7, 2013

How Should You Negotiate? Know What You Want

by The Law Firm of Grasing & Associates

Negotiations are an important part of everyday existence for all businesses, whether big, medium, or small, whether they are located in New York, around the country, or anywhere in the world. Every time businesses buy and sell goods and services, they negotiate. Business owners want to buy low and sell high. They want to break into a market either by undercutting their competition or by charging a premium for their product to convince buyers of its superior quality. Business negotiations impact the lives of everyday people, too. Everyone knows what a Kindle is, what an iPad is, and what e-books are. Many either have, or know someone who has, at least one of them. In the last few years it’s become common for people to walk around with their nose in their tablet, either reading an e-book or surfing the web. Business negotiations played a big part in making this happen.

A good negotiator is a hard person to find. She’s someone no one else wants to go up against, but everyone wants, and needs, on their side. Whether you can become one is open to debate, but there are a few things every business owner, corporate officer, or attorney, i.e., anyone involved in negotiations on a regular basis, can do to increase their chances of success. Perhaps the most important thing is knowing what you want. Recent news stories point this out.

The United States Department of Justice has sued Apple over its alleged role in price-fixing the retail cost of e-books; the trial started this past Monday, June 3, 2013, in the United States District Court for the Southern District of New York. According to news reports, Apple is charged with conspiring with publishers to raise the price of e-books in 2009 when it sought to enter the e-book market with its iPad. At that time Amazon.com was selling 90% of all e-books, some at a loss, in order to support its e-reader, the Kindle, which it introduced two years earlier. Apple was looking for a way into the market, and the publishers reportedly were looking for a way to increase prices, and presumably profits. Allegedly Apple, at the suggestion of two of the publishers, agreed to a different pricing model than Amazon.com. The agency-model, as it was called, let the publishers set the price for the e-books and set Apple’s compensation as a fixed percentage of the sales price. According to published reports, the Department of Justice alleges that Apple’s entry into the market gave the publishers what they had been looking for: a way to increase the price of e-books. Apple is the sole remaining defendant in the case; the publishers have settled.