Corrections or additions?
These stories by Peter J. Mladineo and Barbara Fox
were published in U.S. 1 Newspaper on April 22, 1998. All rights reserved.
Survival Guide
B>Albert Stark, one of the Princeton’s legal visionaries,
has his sights set on what could become the newest barrister’s bonanza:
the Internet. One immediate example of the strategy: A Stark & Stark
conference “Don’t Get Caught in the Web: protect your company
and yourself from the dangers and risks of cyberspace,” on Wednesday,
April 29, at 9 a.m. at the Hyatt.
Speakers include Robert J. Levering, a Washington D.C.-area
attorney who is a direct marketing expert and will discuss online
taxes; Matthew Mandell, of Melmar Multimedia, who will discuss
cyber-contracts; and panelists from Stark & Stark, Craig S. Hilliard,
Thomas B. Lewis, John E. MacDonald, Thomas J. Pryor,
and Rachel M. Stark. Call 609-895-7307 for more information.
Levering warns of the possibility that the states will insist on making
online sellers liable for collecting out-of-state taxes on retail
purchases. “What the governors are really afraid of is that much
of the retail purchasing environment, which is a taxed environment,
will migrate to the ‘Net, and in that realm they will still be subject
to a sales and use tax,” he says. “But if you buy from a company
out of state, your state doesn’t get any tax because that company
doesn’t have the obligation to remit it. Usually it’s the seller that
remits the tax.”
This prospect could severely discourage many merchants from selling
online, he says.
As it now stands, taxation in cyberspace will probably adhere to the
rules of catalog selling, which adheres mostly to the rules governing
direct mail. Levering, 51, has a law degree from Georgetown University,
and spent most of his career working on legal issues within the direct
marketing industry. For 13 years he was senior vice president for
catalog issues with the Direct Marketing Association.
Currently, slightly more than a dozen states (including New Jersey)
try to collect use taxes from out-of-state purchases. While New Jersey
has a line on its state income tax form asking taxpayers to report
all out-of-state purchases, most efforts like these are fairly halfhearted,
says Levering. Maine has a new wrinkle in its state income tax forms.
If you don’t specify that you made zero out-of-state purchases, then
the state figures in its own tax.
Currently the Internet is safe from taxation and Levering hopes it
will stay that way. But a new bill in Congress, named the Internet
Tax Freedom Act, could be the instrument that brings about changes
unfavorable to the small business. While the bill’s initial intention
was to protect small businesses on the Internet, Levering explains,
an amendment made by one of its sponsors could create a “universal
collection responsibility” within a couple of years. “If you’re
a retailer you have to market to other states and you have to collect
their taxes and their local taxes too,” he says. “In Texas
there are 1,400 different taxes. They grow ’em down there.” If
a small retailer had to collect taxes for that many jurisdictions
it might not be worth it to get on the ‘Net.
An extrapolation of Stark & Stark’s message may be to get on the World
Wide Web now while it is still truly wide open. Because if companies
heed John MacDonald’s message, it’s only a matter of time before PC
monitoring software will be installed everywhere. “You might feel
like Big Brother, but we don’t exactly live in a non-litigious society,”
says MacDonald, 31, to employers considering how closely they need
to monitor employees’ cyber-habits.
“Let’s say an employee makes a sexually charged comment against
another employee and it goes out over an intranet. There’s a record
of this thing. That can be found and used in a sexual discrimination
suit or as proof of a hostile work environment. Companies have to
monitor these things.”
MacDonald further cautions employers on the need to protect its information,
confidentiality, and intellectual property in an environment as trademark-blind
and anarchic as the Web. The intrusion could come from all directions,
he adds. “That could be from outsiders hacking into your intranet,
or your employees stealing information from other companies or negligently
sending out attachments to E-mail messages info that should not leave
the company.”
The plain fact is, the balance of power is still tilted towards the
cyber-criminal. So far, MacDonald explains, the only criminal codes
that could be applied to cyber-theft are the Electronic Communications
Privacy Act of 1986 and the wiretap statutes. “If company A rips
off information from company B, it’s difficult to realize that it’s
gone,” he says. “It’s difficult to prosecute, and the penalties
are not very steep.”
For the employee, MacDonald’s advice is terse: Your E-mail, no matter
how private, is still company property. The courts have “also
put in some language along the lines that you do not have a reasonable
expectation of privacy,” he adds.
So what does Albert Stark see on the cyber-horizon for business law?
The importance of good contracts will loom larger for businesses on
the Web. “People are getting fleeced by website developers,”
says Stark. Often, businesses getting on the Web don’t know what language
to insert into a contract to ensure that a good-quality website is
delivered. Second, many website developers are just out to make a
quick buck and don’t deliver performance guarantees. He likens this
current caveat emptor to the warnings given to people hiring
siding contractors years ago. “It’s a new industry so a lot of
people are going to be fly-by-nights,” he says.
With his night goggles on, Stark sees cyber-torts hovering large in
the distance. While the laws and precedents are still largely amorphous,
Stark feels that this area will experience as much attention as did
matrimonial torts, when Robert Durst, a Stark & Stark attorney,
took the famous Brennan case to the Supreme Court.
“When Beth Baldinger (another Stark & Stark attorney) started
victim’s rights, everyone thought she was crazy, now she’s a leader,”
says Stark. “We hope the same thing will occur with our firm in
the area of cyber-law.”
— Peter J. Mladineo
There’s a few ways you can tell that the New Jersey
State Police has moved its anti-aggressive driving campaign to Route
1. One, you can listen to the stentorian growl emitted by New Jersey’s
perpetually outraged Attorney General, Peter Verniero, when
he decries the need to get tough with aggressive drivers. (“Aggressive
driving is a growing menace on our highways and requires strong deterrence,”
he says. “We knew we had to take steps — strong steps —
and send the message that driving is a cooperative venture, not a
competitive sport.”)
Two, tailgate one of the state troopers out patrolling Route 1. If
he doesn’t stop you, pass him on a shoulder. If he still doesn’t,
run the red light he just went through.
Police officers of the 10 municipalities dotting the Route 1 corridor
between Trenton and Woodbridge are now teaming with state troopers
to put the kabosh on road rage. “We are going to be out there
on selected mornings and afternoons at commuter time,” says Frank
Cox, chief of police in West Windsor. “We’re zeroing in on
specific intersections and areas of Route 1 for selective enforcement.”
Cox says he recently got a call from a commuter from Woodbridge, who
was complaining about the proliferation of police cars waiting at
traffic lights all the way down Route 1. Cox informed the driver of
the police intentions: Drivers are significantly less likely to blow
through yellows and reds or to engage in “aggressive driving”
when they know they are being watched by police.
The ultimate goal, says Cox, is to decrease the number of motor vehicle
accidents and fewer road-related injuries. “A lot of our accidents
are people who are trying to blow the amber light or the red light,”
says Cox.
“The aggressive driver, he’s just out there going from the fast
lane to the middle lane to the third lane to the shoulder, running
the amber light, or following too closely,” says Cox. Or, as happened
to a woman driving on Windsor Road recently, the aggressive driver
was the one shattering her windshield because he felt she was following
him too close before they got to the stop light.
Other moves the police might construe as aggressive driving:
Riding the shoulders. A traffic-beater’s favorite in astate famous for sometimes having more shoulder space than lanes onits highways, Cox says cops are especially happy to ticket these impatientdrivers.Parking in a fire lane. The police are even less likelyto be sympathetic when the parking lot is empty, Cox reports. Thisone is more characteristic of the aggressive driver’s imperious drivinghabits. “It’s the same thing — people just do whatever theywant to do when they get behind the wheel,” he says.One reason road rage has become such a big issue in New Jerseyis that the state has such a high density of cars on the road. Butwill issuing yet more tickets do anything to curb New Jersey of itsroad raging woes? Cox maintains that these new traffic measures arenot attached to interests in revenues (unlike the state’s new planto defray the cost of E-Z Pass by hitting up the toll violators).”We’re hoping that the people driving on Route 1 know that we’reout there for their safety,” says Cox. “This is not harassment.This is not trying to make income for the state or any such thing.”– Peter J. MladineoTop Of PageTechno TransferThe catalog verges on the surreal. In describing federalprograms, there are color snapshots of mailmen in spacesuits, mountaineersin day-glo red thermal suits, a child spinning on a life-sized gyroscope,and a group of men in orange shades surrounding a high-tech vacuumcleaner fan. There are plugs for Lactaid and soybeans.But this is not a retro-minded spoof on the ’50s. That mailman ina spacesuit is sporting new “soft” body armor developed bythe Army that would be ideal for, let’s say, opening packages fromthe Unabomber. The material is also now being used to make boat sails.The day-glo suits are made out of Primaloft, a synthetic alternativeto down that was developed for the U.S. Army by Albany InternationalResearch Co., and is now used by major clothing manufacturers likeL.L. Bean, Liz Claiborne, and Land’s End. The vacuum fan was initiallydeveloped by NASA but is now used for Kirby vacuum cleaners.What these products all have in common — even the hundreds ofsoybean products and lactose — is that they are commercializedversions of technologies developed by the government. The brochureis from the Federal Laboratory Consortium for Technology Transfer,promoting innovations developed for the government that have goodcommercial potential in the private sector.Technology transfer is the subject of a New Jersey Technology Councilmeeting with John Preston, president and CEO of Quantum EnergyTechnologies Corp, formerly MIT’s director of technology development,who speaks on “The State of the State of Technology Transfer,”on Thursday, April 23, at 7:30 a.m. at Princeton University’s POEMCenter. Call 609-452-1010.Sponsors include Ernst & Young, NJEN, Princeton Venture Research,Smith Stratton Wise Heher & Brennan, and the Technology Help Deskand Incubator/NJSBDC. Seminars cover working with large companies,opportunities with colleges and universities and federal laboratories,and new funding and successful business strategies for technologytransfer. Participants include six state universities plus the FAA,Picatinny Arsenal, and the Princeton Plasma Physics Lab.Preston’s message includes anecdotes showing a rather Cassandran historyof technology transfer. Napoleon kicked Robert Fulton out of his officewhen Fulton tried to sell him his designs for a steamboat. WesternUnion rejected Alexander Bell’s plans to commercialize the telephone,claiming that the phone would never be more than a curiosity withno business potential.Preston suggests that just about every important technology arrivedvia technology transfer. “Even PCs and software for voice mailrepresent discoveries that have been transferred to society for commercialuse,” he says. “The most important thing that it leads tois new products that improve our quality of life. The only way tobenefit from funding research is to see that research commercialized.”The most effective form of technology transfer, he reports, is notproducts, the transfer of people from academe to industry. The secondmost effective transfer is publications — ideas committed to theoryon paper before somebody bright snaps them up and cashes in.Preston, a senior lecturer at MIT is a co-director of the school’sentrepreneurship section. He downplays the important of his QuantumTechnologies, a venture capital fund that invests in technologiesthat lower energy consumption and the pollution caused by energy consumption,to this conference. “I’m not coming there to tout a company,”he says.Top Of PageBorrow NowIf you need to borrow, borrow now, says MitchellHeld. Held is the co-chief economist at Salomon Smith Barney andhe predicts a rise in interest rates by early next year.Held will discuss national trends and how they might affect smalland mid-sized New Jersey businesses at the first annual business networkingconference staged by the New Jersey Economic Development Authority.Set for Monday, April 27, at 8:30 a.m., at the Hyatt, the conferencecosts $25 including a lunch with Michael Bloomberg as keynote speaker.Call 609-292-0359 to register.Bloomberg will discuss how the growth and success of Bloomberg FinancialMarkets can offer useful insights to New Jersey businesses makingexpansion plans. A graduate of Johns Hopkins University and the HarvardBusiness School, Bloomberg’s first worked on Wall Street and was apartner with Salomon Brothers. He founded Bloomberg Financial Markets,which since 1981 has grown to be a major business and financial newsservice with 80 global news bureaus, a radio station, a magazine,a book publishing house, and its data collection headquarters on Route518.Anthony Coscia, chairman of the EDA, will moderate a panel titled”Business Outlook for New Jersey” with opinions from RonaldCorwin, executive vice president of the American Stock Exchange,Rae Rosen, senior economist of the Federal Reserve Bank of NewYork, and Samuel Schreiber of the South Jersey Division of FirstUnion National Bank.Caren Franzini will preside on a panel entitled “NJEDA’sCapital Opportunities,” on how the EDA helps business obtain financing.Franzini is executive director of the EDA, which has the mission tobuild business and create jobs in the state and has provided morethan $12 billion in financing assistance since it was founded in 1974.She has lined up these panelists: Thomas A. Bracken, president,New Jersey Market, CoreStates Bank; William H. Turner, president& CEO of PNC Bank NJ; Irving Friedman, president of Delta PlasticsCorp.; and Thomas J. Drury Jr., president and CEO of SensarInc.Business owners are not the usual audience for Held, who is speakingat the behest of Peggy Krieger, a vice president at SalomonSmith Barney and a board member at EDA. He went to George Washington,Class of 1976, and has his master’s degree in economics from New YorkUniversity. He has been with the firm (starting with the Smith Barneyentity) for nearly 17 years. And no, he is not familiar with the viewsof his opposite number at Merrill Lynch, “I don’t pay a lot ofattention to competitors, out of fear that subconsciously I will adopttheir views as my own.”His view: that problems in Asia will continue to influence the UnitedStates and thus the New Jersey economy. “My focus is a story wehave been telling for a while,” says Held. What will be left afterthe Asian crisis “is a fairly strong economy with tight labormarkets that probably will require a higher interest rate to slowdown. In the next year we will probably see a modest rise in short-terminterest rates, a rise in long term interest rates, and probably weakerequity markets as well.”He believes these rises will occur later in the year or early nextyear. “Prepare for some slowing down of economic activity nextyear,” says Held. “Don’t be fooled into thinking that thestrong growth will continue. If you need to borrow, borrow now ortry to refinance existing loans.”Held admonishes everyone not to focus only on what has gone on recently.”Frankly we think good markets will continue in the near term,but it is always a mistake to focus on the short run, a mistake tothink that markets will only go up. They will also go down.”Will the slowdown turn into a recession? “We don’t think it willbe as bad as ’89,” says Held. In ’89 the Fed’s job was much moredaunting. They had a much bigger job to slow things down.”Top Of PageEDA LoansConsider banks and venture capitalists your worst enemies,”admonishes Michael Bloomberg in his autobiography “Bloomberg onBloomberg” published by John Wiley & Sons. “They create doubtin entrepreneurs’ minds with their insistence on detailed game plansbefore they lend. Worst of all, they think an originator will be helpedby their oh-so-insightful views on how he or she should run the newbusiness.”Bloomberg may carry a different tune when he speaks at the EDA networkingmeeting (see story above). It is being convened for the sole purposeof acquainting entrepreneurs with financing alternatives. But no matterwhat Bloomberg’s message, after he is finished, lending officers ofthe EDA will meet with business owners to discuss specific financingneeds. Among the two dozen programs they can offer:Statewide loan pool for business. EDA will provide upto 25 percent of loans and may guarantee up to 25 percent of bankmonies for loans of from $50,000 to $1 million for fixed assets andup to $500,000 for working capital. The interest rate ranges fromfive percent to one percent below prime rate.Loan guarantees for creditworthy businesses that are jobintensive, will create or maintain tax ratables, are located in aneconomically distressed area, or represent an important economic sectorof the state. Guarantees can be for conventional loans of up to $1million for working capital or for conventional loans or bond issuesfor fixed assets of up to $1.5 million. Generally they are limitedto 30 to 50 percent of the loan amount.For both of these programs, non-refundable EDA fees total $1,250 plusa closing fee of .5 percent of the EDA guarantee times the numberof years the guarantee is in effect.Direct loans are for up to $500,000 for fixed assets andup to $250,000 for working capital for up to 10 years. The interestrate would be no less than five percent or the Federal Discount Rate,and no more than one percent below the highest prime rate. Fees wouldamount to $1,500 or $500 plus one percent of the loan, whichever isgreater.Call Adam Mukerji, director of the commercial lending division,at 609-292-0187, cld@njeda.com”>>cld@njeda.com, or Lawrence G. Cier,director of investment banking division/municipal funding, at 609-292-0192,ibd@njeda.com”>>ibd@njeda.com.Consulting assistance for manufacturers impacted by imports is providedby John F. Walsh, director, trade adjustment assistance center,609-292-0360. A real estate development program is available throughMichael B. Francois, managing director of the real estate developmentdivision (609-292-0369).Copies of “The Power to Help New Jersey Business Grow: a guideto financing and other services” will be available.Next StoryCorrections or additions?This page is published by PrincetonInfo.com— the web site for U.S. 1 Newspaper in Princeton, New Jersey.
