Articles

Nah, No Employer Would Be That Dumb

Thursday, March 15th, 2012

One criticism of attorneys that non-attorneys ( better known as “real people”) have is that we spend too much time in the netherworld of hypothetical situations. Surely, no employer would ever:

1. Refuse to believe his assistant when she announced that she was pregnant, because she told him for the first time on April 1st;
2. Call his assistant’s fetus a “thing” and refuse to look at the ultrasound picture;
3. Refuse to hire a temporary replacement for his assistant after the birth because she only had to be gone a few days – not the several weeks allowed by law;
4. Complain that “just because somebody’s pregnant, doesn’t mean I should have to pay for it,” even though it was actually covered by insurance;
5. Complain that his assistant was going to doctor’s appointments too often for her high-risk pregnancy;
6. Give his assistant a patent application entitled “Apparatus for Facilitating the Birth of a Child by Centrifugal Force,”* saying that it would allow her to come back to work sooner;
7. Terminate both his assistant and her medical insurance coverage while she was still in the hospital, recuperating from her Caesarian – but not telling her until several days after that.

Well, these are some of the facts from EEOC v. HCS Medical Staffing, which entered judgment against the employer last month. The Wisconsin District Court awarded $48,340.40 in backpay, $50,000 in compensatory damages, and $50,000 in punitive damages. Yeah, even attorneys sometimes have their brains in the real world.

*One of Bay Oak Law’s favorite Oakland authors, Mary Roach, author of “Packing for Mars,” wrote about this invention. She especially liked the apparatus’ “elasticized ‘pocket-shaped newborn net.’”

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Pi Day: Who Doodled For Google?

Wednesday, March 14th, 2012

Who doodled for Google on Pi Day, 3/14? Why, our friend and client Robert Lang, the noted origami artist. You can see a time lapse video of the folding of his origami Google.  Today is the 101st anniversary of the birth of the modern father of origami, Akira Yoshiwara. You can also see one of several articles about Robert Lang’s Google Doodle here.

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The Breyer Copyright Manifesto

Monday, March 12th, 2012

The length of US copyrights has been growing ever longer. Supreme Court Justice Stephen Breyer‘s recent dissent in Golan v. Holder, 565 U.S. ___ (2012) (“Golan”), relies on the Constitution to reveal the folly of that lengthening. While some wonder why judges write dissenting opinions, those dissents sometimes grow into majority opinions later. Justice Breyer’s Golan dissent aids the fight against those who seek again to extend copyright terms into a second century – long past the time of any possible benefit to the human authors of works.

A copyright is a constitutionally authorized monopoly. It gives authors (which now includes everyone in the expressive arts: dancers, sculptors, artists, composers, musicians, photographers, etc.) an incentive to create works that the public can learn from and enjoy. While the Constitution requires that the monopoly be “for limited times,” those times have grown from fourteen years in 1790 to ninety-five years for works for hire today, and for works by individuals, the life of the individual author plus seventy years. Author J.D. Salinger published The Catcher in the Rye in 1951. He died in 2010. Under current copyright law, his estate will enjoy the copyright to this rock of American literature until 2080.

Golan upheld Congress’ 1994 vote to retroactively award copyright protection for foreign works that were never registered in the United States. The authors had registered their copyrights in their home countries, which did not have agreements with the US to respect those copyrights here. Justice Ruth Bader Ginsberg‘s majority opinion concluded that Congress’ grant of retroactive copyright protection “does not transgress constitutional limitations on Congress’ authority. Neither the Copyright and Patent Clause nor the First Amendment, we hold, makes the public domain, in any and all cases, a territory that works may never exit.”

Justice Breyer’s dissent, joined by Justice Samuel Alito, focused on the source of Congress’ power over copyrights:

“In order ‘[t]o promote the Progress of Science’ (by which term the Founders meant ‘learning’ or ‘knowledge’), the Constitution’s Copyright Clause grants Congress the power to “secur[e] for limited Times to Authors . . . the exclusive Right to their . . . Writings.’ Art. I, §8, cl. 8. This ‘exclusive Right’ allows its holder to charge a fee to those who wish to use a copyrighted work, and the ability to charge that fee encourages the production of new material.”

Justice Breyer stresses that “[t]he possibility of eliciting new production is, and always has been, an essential precondition for American copyright protection. . . . That philosophy understands copyright’s grants of limited monopoly privileges to authors as private benefits that are conferred for a public reason—to elicit new creation.” In contrast, Congress’ retroactive award of copyright protection “does not encourage anyone to produce a single new work. By definition, it bestows monetary rewards only on owners of old works— works that have already been created and already are in the American public domain.”

Justice Breyer concluded that the Constitution’s Copyright Clause does not authorize the statute, arguing that

“This statute does not serve copyright’s traditional public ends, namely the creation of monetary awards that ‘motivate the creative activity of authors,’ . . .’encourag[e] individual effort,’ . . . and thereby ‘serve the cause of promoting broad public availability of literature, music, and the other arts’ . . . . [Citations omitted.] The statute grants its ‘restored copyright[s]’ only to works already produced. It provides no monetary incentive to produce anything new. Unlike other American copyright statutes from the time of the Founders onwards, . . . it lacks any significant copyright-related quid pro quo.”

Breyer’s dissent finds that the majority opinion ignores the express purpose of the Constitution’s copyright monopoly: to give authors an incentive to create new works. Breyer equates the majority to the dreaded Stationers’ Company that squashed expression critical of the crown. The Stationers’ Company enjoyed a monopoly on printed works in England until 1710′s Statute of Anne, when Parliament awarded the copyright monopoly to the authors, instead of publishers.

Justice Breyer finds that“[t]he possibility of eliciting new production is, and always has been, an essential precondition for American copyright protection.” Instead of the singular Continental focus on artists’ “moral rights,” British and American copyright law balances the interests of the artistic creators and consumers of those creations. A copyright monopoly should last only while it benefits society by providing incentives for creating new works. Its purpose is not to maximize the authors’ returns. Justice Breyer condemns the majority’s ignorance of “[t]his utilitarian understanding of the Copyright Clause [that] has long been reflected in the [Supreme] Court’s case law.” Justice Breyer notes that

“In Twentieth Century Music Corp. v. Aiken, 422 U. S. 151 (1975), the Court says that underlying copyright is the understanding that ‘[c]reative work is to be encouraged and rewarded, but private motivation must ultimately serve the cause of promoting broad public availability of literature, music, and the other arts.’ Id., at 156 (emphasis added). And in Sony Corp. of America v. Universal City Studios, Inc., 464 U. S. 417 (1984), the Court, speaking of both copyrights and patents, points out that the ‘monopoly privileges that Congress may authorize are . . . [not] primarily designed to provide a special private benefit. Rather, the limited grant is a means by which an important public purpose may be achieved. It is intended to motivate the creative activity of authors . . . by the provision of a special reward.’ Id., at 429 (emphasis added); see also, e.g., Graham v. John Deere Co. of Kansas City, 383 U. S. 1, 6 (1966) (The ‘constitutional command. . . `[to] promote the Progress [of Science]‘ . . . is the standard expressed in the Constitution and it may not be ignored’); Fox Film Corp. v. Doyal , 286 U. S. 123, 127 (1932) (‘The sole interest of the United States . . . lie[s] in the general benefits derived by the public from the labors of authors’).”

Justice Breyer focuses on the constitutional justification for copyright, to “the power of copyright to elicit new production. Congress in particular cases may determine that copyright’s ability to do so outweighs any concomitant high prices, administrative costs, and restrictions on dissemination.” When that incentive is removed from the equation, as Justice Breyer concludes it does for these (already created) foreign works, then Congress lacks the power to give copyright protection to them.

In 1998′s Sonny Bono Copyright Extension Act, Congress prolonged copyright terms yet again. The same lobby that pushed that Act will return to Congress soon to extend those terms even further. Justice Breyer’s analysis of the constitutional rationale for copyright will demand the answer to this question: what will the public get when (not if) Congress tries to extend copyright terms into a second century? Does the additional revenue from extending copyrights a century or more from the date of creation cause more works to be created? It is hard to imagine an author saying that she won’t create a work unless the copyright lasts ninety, instead of seventy, years after her death. If the Constitution’s drafters wanted to give all the rights to authors, they would not have prefaced the right with an incentive clause, and they would have given the rights for all time – not for “limited times.”

Justice Breyer’s manifesto did not carry the day in Golan. However, he reinvigorates the constitutional link between incentive and copyrighted work – a rationale long ignored by those who seek to stretch copyright terms into a second century. Justice Breyer provides valuable ammunition for those who restore the balance between private and public interests.

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Felony Stupidity Is Not a Crime — But He’s Got That Covered, Anyway

Friday, March 9th, 2012

Steal from a judge that you were just in front of, then post the proof on Facebook. Smart!

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Allergan’s IS a Botox Smile; or, No Mirth for Merz

Thursday, March 8th, 2012

Allergan, the maker of the first botulinium toxin cosmetic product (better known as Botox) is smiling today because it won a trade secret misappropriation trial against competitor Merz Pharmaceutical. Merz markets Xeomin,  another botulinium toxin product that until recently was authorized only for muscle cramps.
Allergan sued for trade secret misappropriation after Merz poached Allergan’s botox sales teams. Federal Judge Andrew Guilford of the Central District of California found the sales teams helped themselves to large doses of confidential sales information before blowing off Allergan. For all the advanced chemistry and biology involved, apparently the trade secrets misappropriated were garden variety (albeit vital) sales and customer information.
Judge Guilford’s full ruling and terms of the injunction are due on Friday, March 9th; we will provide a link here when it becomes available.
A hearty huzzah, though, for Merz’ counsel, Rick McKnight, who tried to make the best of a bad result: he is quoted as saying that he thinks the judge’s ruling after trial is a way of “encouraging settlement.”

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What Wouldn’t You Buy from Steve Jobs — Even If He is in the Apple Farm in the Sky?

Sunday, February 26th, 2012

Here’s an article about a seizure of stoves labeled as iPhones.

Your Top Five List:

5. There’s an app for THAT?

4. Get ‘em while they’re hot.

3. Boy, will those birds be angry.

2. How soon until the iPhone Stove 2, and when will they put a camera in that thing?

1. The worst part — lousy battery life.

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Silicon Handshake or Hangman’s Noose: The NDA’s Opportunities and Risks

Monday, February 20th, 2012

Nondisclosure Agreements (“NDA”) are everywhere: a Silicon Valley Don Juan had an NDA ready for every date. However, NDAs are not created equal — what is good for the discloser is not good for the recipient. The “Silicon Handshake” can become a hangman’s noose for the unwary.

Questions to Ask.

Any potential signer to an NDA needs to answer several questions before signing. Those questions are:

  1. Whose secrets are being protected? Is the NDA mutual — does it cover the secrets of both parties? If you are presenting an NDA to protect your trade secrets, you may not want to bind yourself to protecting the other side’s secrets. Alternatively, if someone presents you with an NDA, you may want to make sure your own secrets are protected.
  2. What secrets are being protected? Is everything discussed to be considered confidential? This can be a trap for the unwary. If someone mentions something in passing, you could be foreclosing future opportunities for your company. Do documents have to be marked as confidential to receive protection under the NDA, or does it cover everything that the recipient remembers? How will the recipient know what is protected and what is not? Obviously, no NDA can specifically spell out in advance all the details of what is being disclosed. But an NDA that is too broad could restrict the recipient’s future operations. What is good for the discloser is not always good for the recipient.
  3. Who is covered by the NDA? Does the NDA allow for independent derivation? If your R&D office is, without your knowledge, working on a similar project, has your signature cut off future development of that project? Is there an option for independent development? Have you bound one of your independent partners? Is the protection limited only to those actually signing the NDA?
  4. How long does the NDA last? Is the NDA to last into perpetuity? Does it carry over into new companies or ventures that a party may enter into? Is there any way of removing oneself from its provisions, such as returning all documents?
  5. What are the exceptions? Are documents otherwise publicly available covered? Is the recipient released from the duty to protect the documents if they later become publicly available? If the recipient receives the information independently, does the duty to protect end?
  6. Whose law governs? Jurisdiction and choice of law questions are not excess verbiage designed to keep lawyers employed. They have important consequences, particularly because states often have very different protections. California tends to protect employees’ rights to pursue a livelihood more than other states. If a choice is available, an attorney should review the NDA to see what is best for you.

Advantages v. Disadvantages.

Never is the old saw “where you stand depends on where you sit” more true than when considering an NDA. The discloser’s motives are radically different from the recipient’s: thus, the discloser’s NDA should be different than the one you would be willing to sign as a recipient. An NDA covering mutual disclosures should not resemble that of a one-way disclosure. Good preparation should include having three different NDAs — one for when you disclose documents, one for when you receive documents, and one for mutual disclosure. The mantra to remember is: how does this NDA help me maximize my gains, and minimize my risks?

Strategic Considerations.

NDAs are more than just the latest fashion in attorney make-work, but an integral part of business operations. If someone could use your information to triumph over you, you need an NDA. Alternatively, if you, as the discloser, would not sue someone for using the information being disclosed, an NDA is not necessary. Indeed, by revealing distrust of the other party, it could inhibit the relationship.

A Shield Can Be a Sword. Commonly a shield, NDAs can also be a weapon. An unwary recipient can prevent itself from developing a new line of business that the discloser reveals — and it can even handcuff those in alliances with the recipient. Sometimes two-layered NDAs are appropriate. The first layer is to someone who acts as a gatekeeper, to decide if the information threatens the recipient or its alliances; the second is for a broader, operational distribution.

Keeping Track of NDAs.

Who keeps track of the NDAs your business signs? Does anyone? If your VP of marketing left tomorrow, who at your company would know what NDAs exist that she may have signed, binding the company? Is there anyone at your company who knows enough to gauge whether the NDA your R&D guy is about to sign conflicts with any other project you have? “Gee, I didn’t know . . . “ is usually the prelude to a disaster. With the prevalence of NDAs today, your company needs a firm-wide policy. One person or group should be the gatekeeper of every NDA your company signs. Do not allow your partner — or potential adversary — to dictate the progress of the relationship. Impatience in allowing your general counsel to review the NDA before signing can be a warning signal that you may have more to lose than to gain.

No one wants to repeat the well-known mistake one software company made when it refused to sign an NDA with IBM: IBM instead did business with a young company called Microsoft. However, the more common problem is finding the “silicon handshake” transformed into a noose around your neck.

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Expensive Waffles

Thursday, February 16th, 2012

Roscoe’s Chicken and Waffles used to have a restaurant near the Bay Oak Law offices in Oakland; an assistant used to visit nearly every weekend with her fiancé. Unfortunately, the Oakland branch closed a few years ago, and Roscoe’s is currently only in Southern California.

Unfortunately, Roscoe’s was in the legal news today because it lost a copyright infringement suit. The case itself is fairly standard: after years of ignoring requests to license music to be played, Roscoe’s Long Beach restaurant was caught playing eight songs for which it did not have a license – the house band played several John Coltrane selections and the CD player played several songs by the jazz fusion group Hiroshima. The “good” news is that the court awarded “only” $4,500 per song ($36,000 total) – it could have been far more. Some copyright infringement suits have up to $30,000 in damages per work. The “bad” news is that the plaintiffs were awarded $162,000 in attorneys’ fees, because the works infringed had their copyrights registered within 90 days of being published. This is one of the most important advantages to registering copyrights when they are published – the attorneys’ fee issue can (and often does) dominate the size of the case.

Which is worse – being hit by a “Trane” or having someone go all “Hiroshima” on you? It looks like Roscoe’s got a little bit of both.

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It’s H-1B Visa Season

Thursday, February 16th, 2012

2013 H-1B Visa Application Start Date

If your firm is seeking to provide a new H-1B visa on or after October 1, 2012, the application season opens on April 2nd. In past years, the maximum number of visas was reached within the first few days of the period, so it will be important to get your application in early. This period is only for new H-1B visas, not renewals, extensions, or for those involved with higher education, nonprofits, or governmental research organizations.

Bay Oak Law does not do any immigration law, but we are happy to recommend Randall Caudle in San Francisco [ randall@caudleimmigration.com ], at 1-415-596-2845.

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Are Interns A Good Idea?

Thursday, February 16th, 2012

By Kim Kennedy

Does your business use interns? Are you thinking of hiring an intern or two in the near future? The economy is still struggling, and hiring more employees is a significant expense in payroll costs, as well as in other costs such as health insurance, and training. There are hordes of unemployed recent college graduates who have found the job market unfriendly, and are willing to spend time interning in order to bulk up their resumes. Although internships are typically unpaid, interns gain valuable skills and experience, which will make them more competitive candidates when they enter the job market again.

Sounds good, right?  Well, maybe. Firstly, remember that unless you are a non-profit, your intern is not a volunteer. If you run a for-profit business (even if you are not profitable), you may not utilize the services of volunteers under the Fair Labor Standards Act (“FLSA”).  So what is the difference between a volunteer and an intern, or an employee?

The FLSA states that to “employ” means to “suffer or permit to work.”  However, the Supreme Court in Walling v. Portland Terminal  Co., 330 U.S. 148, 152 (1947), observed that this definition “was obviously not intended to stamp all persons as employees who, without any express or implied compensation agreement, might work for their own advantage on the premises of another.” Based on Portland Terminal, the Wage and Hour Division (“WHD”) has developed six factors to evaluate whether a trainee, intern, extern, apprentice, graduate assistant, or similar individual is to be considered an employee.

1. The internship, even though it includes actual operation of the facilities of the employer, is similar to training which would be given in an educational environment;
2. The internship experience is for the benefit of the intern;
3. The intern does not displace regular employees, but works under close supervision of existing staff;
4. The employer that provides the training derives no immediate advantage from the activities of the intern; and on occasion its operations may actually be impeded;
5. The intern is not necessarily entitled to a job at the conclusion of the internship; and
6. The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.

If any of these criteria do not apply, the individual is considered an employee, not an intern. The fourth factor states plainly, “The employer that provides the training derives no immediate advantage from the activities of the intern; and on occasion its operations may actually be impeded.” Maybe that intern does not sound like such a good deal anymore!

The worst result for your business would be if an “intern” who did not meet these criteria sued you for violations of wage and hour laws. Last fall, two unpaid interns who worked on the movie Black Swan filed a complaint against Fox Searchlight Pictures. The suit is awaiting a hearing at a federal court in New York. Two weeks ago, a former intern filed suit against Hearst Corp., Harper Bazaar’s parent company, for failing to pay minimum and overtime wages during her internship with that magazine. Her counsel has indicated that they intend to turn the case into a class-action lawsuit, representing other unpaid interns form Hearst Corp.’s many magazines.

In California, penalties for not paying someone can be ruinous – up to thirty days’ pay for each paycheck that should have been paid. If you usually pay twice a month, that effectively triples the amount the intern would have earned. There are also penalties for back payment of state and federal taxes, as well.

Make sure your relationships with employees, interns, independent contractors, and whoever else is involved with your business are well-defined to avoid this type of liability in the future.

Kim Kennedy is a paralegal with Bay Oak Law.

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