March 17, 2008

New York Times Reports on The U.S. Supreme Court's Friendly Stance Toward Business Interests

The New York Times Magazine has published a piece detailing the apparent strengthening of businesses interests before the U.S. Supreme Court. In the article, the Times profiles the efforts of the U.S. Chamber of Commerce in its advocacy of business interests before the United State Supreme Court. The article notes that in the Supreme Court's most recent term the chamber’s litigation center filed briefs in 15 cases, with its side winning in 13 of them — the highest percentage of victories in the center’s 30-year history.

An interesting aspect of this story is that some of the justices on the Supreme Court who are generally considered "liberal" joined in decisions that favored the positions advocated by the U.S. Chamber of Commerce, positions that are typically considered to be very conservative. This shift represents what the article terms "an ideological sea change on the Supreme Court," especially when one considers that only a number of years ago businesses interests were viewed with skepticism by the Supreme Court.

Although many business owners and entrepreneurs might feel inclined to applaud this apparent shift in the Supreme Court's judicial philosophy, this change is not without its critics. Many observers and legal practitioners are concerned at what they believe is a growing and one-sided sympathy by courts across the country with business interests. These critics complain that the interests and legal rights of consumers and individuals are being subordinated to corporate America's pursuit of profits. Some of these critics also point out that the U.S. Chamber of Commerce tends to serve the interests of very large businesses, which can be and often are divergent from the interests of small businesses.

Whatever side of the debate you are on, the article is an interesting and informative read about an issue that affects all of us.

March 3, 2008

Chrysler Appeals Plastech Bankruptcy Ruling

Crains Detroit Business is reporting that Chrysler L.L.C. will appeal a Detroit federal bankruptcy court's order that it cannot retrieve equipment from the premises of Plastech Engineered Products Inc. Plastech filed for bankruptcy protection last month. Chrysler has filed the notice of appeal with the bankruptcy court that is required under the Federal Rules of Bankruptcy Procedure.

This case arises out of a lawsuit that Chrysler filed against Plastech seeking to recover in excess of $167 million worth of tooling machinery Chrysler owns that Plastech used to manufacture parts for Chrysler. Chrysler had requested the bankruptcy court to grant a stay that would allow it to recover the equipment in spite of bankruptcy litigation rules that prevent non-bankruptcy legal proceedings against parties that have filed for bankruptcy.

However, the bankruptcy court denied Chrysler's motion and ruled that Plastech's reorganization efforts could be harmed if Chrysler removed its equipment at this point in time.

February 15, 2008

Michigan Governor Signs Bill Letting Legal Immigrants Get Driver Licenses

Governor Granholm signed a new law today that allows legal immigrants who temporarily reside in Michigan to resume getting driver licenses.

At this point, it's unknown how soon the necessary rules can be written and adopted so the Secretary of State's office can resume issuing licenses to legal immigrants who aren't permanent residents in Michigan.

Secretary of State Terri Lynn Land had changed the State's former policy in late January and began to deny the licenses, based on her analysis of a legal opinion by Michigan Attorney General Mike Cox.

Businesses and some educational institutions, particularly universities, had been unhappy about the Secretary of State's new policy because it had denied driver licenses to some of their workers and students even though they were in Michigan legally.

February 11, 2008

Michigan Sues Tyco for Pension Fund Losses

A report in Crain's Detroit Business notes that the State of Michigan is suing Tyco International, four of its executives, and its auditors for $50 million in losses in Michigan state pension funds. Tyco manufactures a wide variety of products such as electric components and health care products.

Tyco was one of the famous corporate implosions that led to the Sarbanes-Oxley corporate governance law. The "implosion" was was caused by a multibillion dollar accounting fraud, and resulted in some of Tyco's top executives going to prision. As a result of public disclosure of the fraud, Tyco stock plummeted, resulting in massive losses to its stockholders, including the State of Michigan. Overall, Michigan pension funds hold approximately $62 billion in investment assets.

The lawsuit was filed in the United States Federal District Court in Detroit, and will be prosecuted on behalf of the state by Michigan Attorney General Mike Cox.

November 16, 2007

Michigan Department of Treasury Unveils New Michigan Business Tax Web Calculator

The Michigan Department of Treasury has launched a new Web tool that provides a calculation of a business's future tax liability under the new Michigan Business Tax. The calculator is aimed at businesses and tax professionals, and provides unofficial estimates that are not legally binding on a business's actual liability under the new Michigan Business Tax. The new Web tool is located on the Michigan Department of Treasury’s Web site that is dedicated to providing information about the Michigan business tax.

November 12, 2007

Michigan's Volatile Business Tax Situation Leads to Business Class Warfare

A number of Michigan's biggest companies are asking the legislature to raise one business tax and kill another. While everyone seems to agree that Michigan's new 6% service tax is a bad idea, the alternate plan being pushed by Michigan big business would shift the major portion of the business tax burden to thousands of smaller businesses. The big businesses supporting the new plan include the Big Three automakers, and big insurance and banking companies.

The Michigan House of Representatives has obliged these big companies, by passing legislation that would replace the unpopular service tax with a 32.9% surcharge on the new Michigan Business Tax. It is unclear at the present how the Michigan Senate will deal with this legislation. The Michigan Business Tax is scheduled to replace the Single Business Tax on January 1, 2008. The Michigan Business Tax gives gives increased tax breaks to manufacturers and other enterprises that invest in facilities located in Michigan and hire Michigan employees.

The 32.9% surcharge would be imposed on sales and income and would be applied before tax credits. The reason why big business is behind the surcharge plan is that there is a cap on the surcharge so that no single business would pay more than $2 million per year. $2 million per year is a fraction of what the Big Three would pay under the service tax. This is because these companies use so many different kind of services that will be included in the new service tax such as landscaping, consulting, warehousing, and janitorial.

The 6% service tax was a hastily put together solution reached on October 1, 2007 in order to keep the Michigan government from shutting down due to a budget shortfall. The service tax has received very bad reviews from businesses big and small. The surcharge proposed under the Michigan Business Tax would replace all revenue that the service tax is estimated to raise, which is $614 million this fiscal year and $750 million the next.

Michigan's business tax situation is far from settled, with a variety of plans being proposed from a number of different corners. Depending on the exact proposal, it can be difficult to map out which companies will lose and which will win in the final analysis. However, one thing is sure, all of this uncertainty cannot be good for attracting new companies and businesses to Michigan.

November 9, 2007

Starbucks Claims that Macomb County, Michigan Business Is Infringing Trademarked Logo

A story in today's Detroit Free Press tells of a Macomb County, Michigan coffee shop that has been accused by Starbucks of trademark infringement. Like most large companies, Starbucks is very aggressive about policing its intellectual property rights, and that includes making sure that no one else infringes on its trademarks.

The Macomb County business, Conga Coffee & Tea shops, has a logo that consists of a green circle surrounding a silhouette of an elephant. The logo for Starbucks is internationally famous and consists of a split-finned siren in the middle of a green circle. Starbucks claims that the two logos are so similar that Conga's logo is "likely to cause consumers to think that Conga is an authorized licensee of Starbucks." Conga's owners disagree noting that the words in the logo are different, the pictures in the logo are different, and the shades of green in the logos are different.

A trademark is a word, phrase, symbol or design, or a combination of words, phrases, symbols or designs, that identifies and distinguishes the source of the goods of one party from those of others. A service mark is the same as a trademark, except that it identifies and distinguishes the source of a service rather than a product. Often the "trademark" and "service mark" are used interchangeably.

Whether the owner of a registered trademark can prevent someone from using a confusingly similar trademark depends on a number of factors. These factors include whether:

1. The trademark is used on competing goods or services. Generally, goods or services are considered competing if the sale of one is likely to influence the sales level of the other.

2. Consumers are likely to be confused by the dual use of the trademark.

3. The trademark is used in the same part of the country or is used relative to related goods or services. Related goods and services are those that are likely to be noticed by the same customers, even if those goods or services don't necessarily compete with each other.

Federal trademark law provides stiff monetary and injunctive penalties for trademark infringement.


October 29, 2007

Michigan's Unemployment Rate Rises to 7.5% in September

Michigan’s jobless rate rose again in September. This increase marks Michigan's highest monthly unemployment rate in 14 years for the second straight month.

The September unemployment rate is seasonally adjusted and rose from 7.4 percent in August. As bad as this news is, however, the current rate is still lower than in the early 1990's when Michigan had an annual jobless rate of 9.3 percent in 1991.

According to the Michigan Department of Labor & Economic Growth, last year's September unemployment rate was 7.1 percent. Michigan's unemployment rate remains above the national jobless rate, which also increased by one-tenth of a percentage point to 4.7 percent in September.

October 15, 2007

Michigan's Auto Industry Takes Center Stage at Republican Debate in Dearborn

The Republican candidates' debate took place in Dearborn, Michigan on October 9, 2007. As you might imagine, Michigan's most important industry was one of the main topics of discussion. The candidates were pretty much agreed that America needs to ween itself off of foreign sources of energy (i.e., oil). Pretty much all nine of the candidates said that the solution to America's energy needs must include alternative sources such as nuclear power, increased refinery capacity, ethanol production, and production of higher tech hybrids automobiles.

The debate was an especially important event for the Big 3. As we all know, Michigan's auto industry has been closing factories and hemoraging tens of thousands of jobs. The domestic new car marketshare of Ford, GM, and Chrysler is currently at an all time low -- just 50% according the current estimates.

The candidates each had their own unique takes on the economic situation. Senator McCain mirrored President Bush's position that the Big 3 need to take responsibility for creating compelling product that the American public will want to buy. Mitt Romney said he supports more investment in technology and research. California congressman Duncan Hunter called into question America's ability to protect its national security in the face of its massive loss of manufacturing capacity. Perhaps the most amusing debater of the evening was Fred Thompson, if only for the way he seemed to be totally out of touch with Michigan's economic situation. First, he painted a very rosey picture of the economy, calling it "dynamic" with the relevant economic indicators looking good. He finished off his upbeat assessment by stating that he would not agree to bail out the auto industry, because its problems do not arise to the level of "affecting the economy and national security."

Given the Democrats punishment of Michigan for breaking party primary rules, you would have thought the GOP debaters would have been able to take advantage of a golden opportunity to speak directly to Michigan voters on the issues that matter most. Mostly, they just looked out of touch.

September 19, 2007

Businesses Announce New Investments in Oakland County and Washtenaw County, Michigan

Grupo Aernnova SA of Spain has announced that it will invest $10 million to open a new engineering facility in Pittsfield Township, a suburb of Ann Arbor in Washtenaw County. The Spanish company's center will focus on supporting the commercial aerospace structural requirements of large U.S. and European aircraft manufacturers. Grupo Aernnova designs and produces aeronautical structures and compenents and has said that its long-term plan is to provide support to U.S. aerospace defense programs. Grupo Aernnova's CEO has stated that one of the draws of Washtenaw County was its deep engineering talent pool and proximity to world-class universities.

In addition to the arrival of Grupo Aernova in Washtenaw County, three other companies have announced significant expansions in Oakland County. Azure Dynamics, Credit Acceptance Corp. and MARS Advertising Price Logic have announced their intention to expand their operations in Oakland Country that could possibly lead to the addition of 1,552 new jobs in that county.

All in all, the total capital investment of these four companies in the Michigan economy is expected to total around $7.8 million. Although this may seem meager in light of Michigan's steep economic woes, it is definitely a step in the right direction and news that we all can cheer here in Michigan.

September 17, 2007

Microsoft Appeal Rejected by EU Commission

The second-highest European court today strongly rebuked Microsoft when it rejected Microsoft's request to overturn a landmark European Commission antitrust ruling that the company had wrongfully taken advantage of its dominance in computer operating systems.

Legal and industry experts have said the decision will favor smaller software makers and place software market leaders on notice that they cannot take advantage of one technology niche to quash innovation on a broader scale.

The ruling by the European Court of First Instance ordered Microsoft to comply with a March 2004 commission order to share confidential computer code with Microsoft's competitors. The court also upheld the record financial sanction against the compan of almost $690 million.

Legal and software experts have noted that the EU court’s decision might portend problems for other high tech companies such as Qualcomm, Intel, and Apple. The market dominance of these companies in related niches such as online music, computer chips and cell phone technology is also being closely reviewed by the commission.

The decision also could make it much more difficult for Microsoft to continue the oft-critized pracatice of “bundling” new features into its Windows software.

September 12, 2007

Southwest Detroit Businesses to Pay for Shoppers

History is about to be made in Michigan. Businesses are actually going to pay for shoppers. Well, not actually, but kind of. Southwest Detroit business owners have approved Michigan's first Business Improvement Zone. These zones are more commonly known as Business Improvement Districts, or a "BID".

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August 30, 2007

Washtenaw County's Wexford Builders In Receivership

The future is unclear for Washtenaw County based Wexford Builders.

At one time, the company was the perfect example of a well-run, profitable residential construction company in Washtenaw County. However, Wexford has been buried by debt, hit by disputes between the company's founders and challenged by the near collapse of the housing market in Southeast Michigan. It went into court-appointed receivership in April.

Despite all of this, Chief Executive Officer Craig Welch insists that the company will continue building homes. He has also stated that Wexford intends to repay its creditors. However, at this point in time, the details of just how this will be accomplished are unknown.

July 27, 2007

Business Spending Helps Grow Economy in 2nd Quarter

The US economy has showed the strongest quarterly growth in more than a year, growing at a 3.4% annual pace in the second quarter of 2007. That figure is based on the new gross domestic product figure that was released today by the Commerce Department. The new quarterly growth number marked a significant improvement from the first quarter of this year when economic growth fell to almost nill at just a 0.6 percent pace. That was the slowest growth the US economy had experienced in almost four years.

Increased spending by businesses and government fueled the rebound in the second quarter, which runs from April to June. The news wasn't all good however. Individuals were more frugal in their spending, grappling with high gasoline prices and the slumping housing market. The bad housing market continued to have ill effects on the national economic activity in the spring but not at the same level as it had in previous quarters.

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The economy's second quarter surge was better than the 3.2 percent growth rate expected by economists. It was the highest level of growth since the first quarter of 2006, when the economy expanded at an annual rate of 4.8%.

July 26, 2007

Washtenaw Wireless on Hold for Now

The effort to provide Washtenaw County with wireless Internet has hit a funding snag, but officials claim the project will continue to move forward. The program is known as Wireless Washtenaw. It is been implemented in the downtown areas of three Washtenaw County cities: Ann Arbor, Saline, and Manchester.

The company working with the county to install the wireless network is 20/20 Communications. It has applied for a $14 million loan from the US Department of Agriculture, and is also trying to secure funding from other sources. The company's original goal was to start installing wireless service in the county's rural areas in the spring of 2007, with installation to have been completed by the end of the year.

20/20 also obtained a $2 million loan from United Bank & Trust Ann Arbor for the project. A number of venture capital investors have declined to contribute funds to the project, citing concerns about the technology being used growing obsolete and the management of the project by a small local company instead of a large national firm.

However, those involved remain optimistic. Project cost estimates have decreased significantly during the last 12 months. In August 2006, 20/20 estimated the cost for the project would run $42 million. That number was decreased to $26 million in December 2006. The is now estimated at $20 million. The company has stated that the lower costs are because of equipment improvements that mean fewer radios have to be purchased and installed. Equipment costs have also decreased.

According to Washtenaw County, no taxpayer money is being used to build, operate or maintain the wireless network. 20/20 officials have indicated that if the company gets the funding it seeks, it could wrap up the whole project by mid-spring of 2008.

July 18, 2007

Ann Arbor is Great Place for Entrepreneurs

Despite our state's well-known economic woes, Michigan's government has shown just how progressive it can be when it comes to using business and tax incentives to attract new business that will capitalize on Michigan's high tech infrastructure and highly educated and skilled workforce. For example, Google located its new AdWords headquarters due in large part to the government's offer of a $38 million tax credit. That investment will create 2,500 jobs and $2 billion in personal income for Michigan workers.

So, while coastal states like Massachussetts, New York, and California tax and regulate businesses at every turn, states like Michigan, and cities like Ann Arbor, are rolling out the red carpet and making significant efforts to attract highly desirable businesses to the area. Combine that with Michigan's highly educated workforce, and a compelling case can be made that Southeast Michigan should be on any entrepreneurial company's investment short list.

July 13, 2007

Michigan Governor Signs New Michigan Business Tax Bill into Law

On Thursday, July 12, 2007 Michigan Gov. Jennifer Granholm signed into law a replacement for the controversial Single Business Tax that its supporters said would jump start the languishing Michigan economy. The Single Business Tax had long been hated by businesses in Michigan, and was seen by many as one of the factors that discouraged more businesses from investing in Michigan. Gov. Granholm has stated that she believes the new tax will give everyone in Michigan the opportunity to promote the state as "open for business."

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