Bay Oak Law can represent you in just about every business dispute, regardless of whether it has anything to do with intellectual property. From common contract disputes to employment cases, Bay Oak Law will stand by you, effectively, and at a lower cost than large firms.
The New York Times has an excellent article on a lawsuit in which a law firm is accused of running up the fees. Smaller firms can’t afford to do this.
Out comes money
When is a fictional character copyrightable? Certainly main characters are. But what about lesser characters – even ones that do not have even a single line?
Protected intellectual property
Judge Ronald S.W. Lew faced this question in DC Comics v. Towle in February 2013 regarding the Batmobile. Defendant Mark Towle runs Gotham Garage a custom car business. He has been selling kits that allow people to customize their vehicles into the Batmobile. DC Comics sued for copyright and trademark infringement.
Like most of Batman’s fights, the outcome was not in much doubt. Batman wiped the floor with Towle. Judge Lew found that Towle violated DC Comics’ copyright and trademark rights in the Batmobile. Judge Lew found that the public is likely to be deceived by Towle’s product, and also that the Batmobile had enough “artistic features” to be protected under copyright law.
Batmobile certainly a unique image that justifies protection, if only because there is a demand for kits to fit out a car as a Batmobile. However, the line delineating what is protectable intellectual property starts getting very fuzzy as characters get less distinctive. Supporting characters and henchmen are almost always anonymous, or nearly so, and have little intellectual property protection. In Nichols v. Universal Pictures, 45 F.2d 119 (2d Cir. 1930), the legendary judge Learned Hand found that “the less developed the characters, the less they can be copyrighted; that is the penalty an author must bear for marking them too indistinctly” in ruling that two plays featuring a Jewish person marrying a Catholic person in New York were not so similar as to constitute copyright infringement. Copyright protects expression, not ideas. Luckily, “Holy _____” is not long enough to constitute protected expression.
Photo By Joy Acharjee (Flickr) CC-BY-2.0, via Wikimedia Commons
When you think of Hallmark, you often think of the word “giving.” In a recent case, though, Hallmark will be doing the getting: a repayment of a substantial severance package by a former executive who later used Hallmark’s trade secrets to compete against it.
As the Eighth Circuit Court of Appeal explained in Hallmark Cards, Inc. v. Murley, Janet Murley was a former Hallmark Vice-President until Hallmark eliminated her position in 2002. Murley received a severance package consisting of a $735,000 payment, 18 months of paid COBRA health insurance, and executive placement and tax preparation services. In return, Murley promised not to sue Hallmark, and not to use its trade secrets.
Murley went to work at one of Hallmark’s competitors, Recycled Paper Greetings (“RPG”). Murley admitted disclosing confidential Hallmark information, including information about Hallmark’s business model, its consumers’ buying process, and industry analysis that Hallmark paid for. Hallmark learned of the violation of the confidentiality agreement when American Greetings was buying RPG and wanted a third-party to inspect RPG’s information to ensure that RPG did not have any of Hallmark’s information. Hallmark then sued Murley.
The judge made it extra easy for the jury after finding that Murley had deleted 67 documents from her computer just before the computer inspection. The court instructed the jury that
If you should find that a party willfully destroyed evidence in order to prevent its being presented in this trial, you may consider such destruction in determining what inferences to draw from the evidence or facts in this case. You may, but are not required to, assume that the contents of the files destroyed would have been adverse, or detrimental to the Defendant.
The jury found in favor of Hallmark, and the Eighth Circuit Court of Appeals affirmed, overruling Murley’s objection to the jury instruction.
When employees and executives leave, companies have a difficult balancing act of respecting the law and acting fairly to its departing people, and protecting its own interests. The Hallmark case shows that courts will protects the company’s interests when a departure violates its agreement. Now that’s a Hallmark moment.
Entrepreneurs in California sometimes want to organize their companies in other states, like Delaware or Nevada. They learn that companies can pay less in franchise fees in Nevada, or that Delaware is seen as the state for great corporations. There are good reasons to organize in those states, but for many companies operating in California, it would be a waste of time and money.
Dela-where?
Delaware is well-known as the state of incorporation for most public corporations in the United States. Why? Because the laws of Delaware are quite favorable to the management of public corporations. Also, in part because of this favorable law, Delaware’s Court of Chancery is extremely experienced in business litigation, and juries are not used. For companies with a nationwide presence, incorporating in Delaware is quite advantageous. For smaller companies, there is not much advantage, and the annual franchise taxes, if matters are not structured correctly, can be devastating. A company that once incorporated in Delaware with a great number of authorized shares of stock was shocked to receive an annual bill for more than $1 million – many times their annual revenue for the year.
But We’re Superstars! Yet, you ask, what happens when (never if) we hit it really, really big? We are the new Google/Yahoo/Apple of the 21st century – won’t it be too late to choose Delaware? No. Once you become the superstar you are destined to be, you can reincorporate your business in Delaware. Until then, you can save your cash and your hassle by dealing with just California.
Nevada’s laws are more focused on the smaller entities. Advertisements pushing incorporating in Nevada say that it is cheap and private. While true, the ads do not reveal something else: all corporations and LLCs doing business in the state of California have to register with the California Secretary of State.
Gambling with Nevada
This applies for “foreign”corporations and LLCs – “foreign” here meaning “non-California.” According to California Corporations Code § 191(a) doing business in California “means entering into repeated and successive transactions of its business in this state.” Leasing office space or phone systems, hiring employees, and selling goods or services are considered doing business in the State of California. That means that you have to register as a foreign or domestic corporation or LLC. That means you pay at least the annual California $800 franchise fee, plus you have to file (and possibly pay) taxes here in California, as well as do all the paperwork normally associated with a limited liability entity in California.
The temptation, of course, is to skip on the registration in California – after all, who is going to catch you? The State of California, for one. If you have employees, you will have to make withholdings on their paycheck. You also have to have worker’s compensation. Even if you do not have any employees, you are counting on getting money from the business, and California’s many agencies can crosscheck to see if the business is in good standing.
Moreover, if the business wants to enforce – or defend – its rights in court, it will have to be in good standing to do so. A corporation or LLC that is not in good standing cannot appear in court.
Golden in California
Moreover, any contract signed by the “foreign” corporation or LLC may be voided by the other party to the contract. Someone who wants to void the contract with your business, or who is in a lawsuit with you, can get your business declared to be not of good standing – and you are frozen out of court until your business is back in good standing. Moreover, you are liable for penalties and back payments of the franchise fees. Foreign corporations are liable for $20 per day in which they do unauthorized business in the State of California, plus a $250 penalty.
The lesson – do not assume that what is good for a big company, or what is said in an ad on the radio – is the right solution for your business. Talk things over with an experienced business lawyer to find the right solution for you.
Dunkin’ Donuts has found the hard way that being the self-styled best isn’t good enough. The United States Patent & Trademark Office has refused to register its slogan “Best Coffee in America,” as being merely descriptive and not having a secondary meaning to consumers.
Not good enough for registration.
Dunkin’s prime claim to trademark registration is that the slogan became distinctive over the five years that Dunkin’ used it. However, the USPTO noted that similar self-praising slogans like “The Best Beer in America” (Boston Beer or America’s Freshest Ice Cream for Carvel Ice Cream is considered “puffery” and is not registrable.
The “Best” coffee in the United States is inherently subjective. While it is possible that there is some general agreement about what might be best in a certain industry, coffee is probably not one of them. Your favorite barista’s coffee might surpass, in your mind, anything found at the most expensive coffee shops in the world. Every shop thinks it makes its product the best – the consumers, not the USPTO, decide.
Dunkin’ Donuts will have to fall back on another product, like donuts. Mmmm, donuts.
Both employers and employees need to review their wage statements for the new year, because California has amended Labor Code 226 to identify nine types of information that has to be on each wage statement:
(1) gross wages earned,
(2) total hours worked by the employee, except for any employee whose compensation is solely based on a salary and who is exempt from payment of overtime under subdivision (a) of Section 515 or any applicable order of the Industrial Welfare Commission,
(3) the number of piece-rate units earned and any applicable piece rate if the employee is paid on a piece-rate basis,
(4) all deductions, provided that all deductions made on written orders of the employee may be aggregated and shown as one item,
(5) net wages earned,
(6) the inclusive dates of the period for which the employee is paid,
(7) the name of the employee and the last four digits of his or her social security number or an employee identification number other than a social security number,
(8) the name and address of the legal entity that is the employer and, if the employer is a farm labor contractor, as defined in subdivision (b) of Section 1682, the name and address of the legal entity that secured the services of the employer, and
(9) all applicable hourly rates in effect during the pay period and the corresponding number of hours worked at each hourly rate by the employee.
The most common mistake seems to be not including the name of the legal entity: “Bob’s Hardware” is not the name of the legal entity, if that is merely the tradename, and the business is actually “Robert Smith Hardware, Inc.”
I forgot to fix the wage statement
There is a real price to pay if the wage statements are incorrect: the greater of actual damages or $50 for the initial pay period, per employee, and $100 per employee for each later pay period, up to a total of $4000 per employee. The Legislature has put some real bite into this, because lawyers who sue on behalf of the employees are entitled to an award of costs and reasonable attorneys’ fees – which could be $300-$500 per hour. These attorneys are always very thorough, and bill lots of hours.
Every employer should review the wage statement being issued to employees this month, to make sure it complies with current law. The payroll provider should be aware of these changes but if not, changes need to be made quickly.
Online content providers – including websites and apps – need to add something to their 2013 To-Do list.
It covers you, too
Beginning July 1st, the Federal Trade Commission’s new rules under the Child Online Privacy Protection Act (“COPPA”) will apply covering more online services. While the new rules have been criticized as “a mess,” they still apply. Most business-related online providers have assumed that COPPA and its related rules have not covered them, because they do not direct activities at children. However, if your stationery store has Barbie Notepads or fuzzy gnome erasers, their online presence could bring them under the COPPA requirements, such as having parental consent and disclosure requirements.
Here is a quick summary of the new changes:
• More Online Providers. Probably the most important change is that more online providers are covered. Rather than just the child-focused websites, all online providers (which includes apps) that have even a small amount of content directed at children are subject to the COPPA rules.
• Third Parties Covered, Too. If your website or app relies on advertising from third parties who might be able to collect information about children, those third parties are covered as well.
• Personal Information is EVERYTHING. Personal information about a child is more than their name, address, email address, or birthdate – it is anything about them. Thus, anything that can be used to discover something about the child has to be protected: screen or user names, geolocation info, browser and flash cookies, device identifiers, internet messaging IDs, javascript “tags” – basically, anything, other than those used for the internal operations of the provider.
Not all the changes are negatives for the online providers. The FTC has tried to streamline the online notices required to parents, although it remains to be seen whether this will be sufficient. Online providers, at least for now, will not be required to explain how children’s data is protected.
Strict Liability. An online provider is strictly liable for any breach of COPPA’s provisions. This includes, beginning in July, those who are working on behalf of the provider, but not controlled by the provider. While the online industry largely opposed this extension, privacy groups won the battle. The takeaway for smaller online providers is to make sure – very sure – that the organization that is monetizing your content through advertisements or the like is following the new COPPA provisions.
We never regulated websites back in the 70's. (c) 2008, photo courtesy of Matt Becker, Weatherman90 at en.wikipedia, Wikipedia Commons
The FTC has provided a lengthy 167-page analysis of its reasoning for the new rules. If you are an online provider, you need to review these new rules to see how they apply to you and your technology. Bay Oak Law will be here to assist, if necessary.
Walking on red-hot irons? Easy. Try a 3-day depo.
It is easy to feel smug when we look back on our ancestors 1000 years ago. They had donkeys — we have 400 horsepower, 4 wheel drive vehicles. They had the Black Death — we have vaccines for all types of illness, even cancer. For a justice system, they had trial by ordeal — we have civil court depositions. Well, some things never change.
Actually, one thing has. In September, California’s Governor Jerry Brown signed Assembly Bill 1875, which generally limits civil depositions to just seven hours of testimony.
The federal courts have been following a seven hour rule for several years now. Federal Rule of Civil Procedure 30(d)(1) limits depositions to “1 day of 7 hours.” If someone tries to impede, delay, or frustrate a deposition, that person can be sanctioned.
New California Civil Procedure Code section 2025.290 provides:
(a) Except as provided in subdivision (b), or by any court order, including a case management order, a deposition examination of the witness by all counsel, other than the witness’ counsel of record, shall be limited to seven hours of total testimony. The court shall allow additional time, beyond any limits imposed by this section, if needed to fairly examine the deponent or if the deponent, another person, or any other circumstance impedes or delays the examination.
(b) This section shall not apply under any of the following circumstances:(1) If the parties have stipulated that this section will not apply to a specific deposition or to the entire proceeding.(2) To any deposition of a witness designated as an expert pursuant to Sections 2034.210 to 2034.310, inclusive.(3) To any case designated as complex by the court pursuant to Rule 3.400 of the California Rules of Court, unless a licensed physician attests in a declaration served on the parties that the deponent suffers from an illness or condition that raises substantial medical doubt of survival of the deponent beyond six months, in which case the deposition examination of the witness by all counsel, other than the witness’ counsel of record, shall be limited to two days of no more than seven hours of total testimony each day, or 14 hours of total testimony.(4) To any case brought by an employee or applicant for employment against an employer for acts or omissions arising out of or relating to the employment relationship.(5) To any deposition of a person who is designated as the most qualified person to be deposed under Section 2025.230.(6) To any party who appeared in the action after the deposition has concluded, in which case the new party may notice another deposition subject to the requirements of this section.(c) It is the intent of the Legislature that any exclusions made by this section shall not be construed to create any presumption or any substantive change to existing law relating to the appropriate time limit for depositions falling within the exclusion. Nothing in this section shall be construed to affect the existing right of any party to move for a protective order or the court’s discretion to make any order that justice requires to limit a deposition in order to protect any party, deponent, or other natural person or organization from unwarranted annoyance, embarrassment, oppression, undue burden, or expense.
Your phone rings, and it is your friend from the PTA: your name is listed in the local paper for having skipped jury duty last month. Your friend informs you that you may be subject to jail time and/or a fine. You were called for jury duty awhile ago, but you checked the website, and you didn’t have to go in — but when was that? Last year? The year before? Your friend sounds worried, but tells you that there is a number to call, and you get the number. Now your fingers are shaking a little bit as you dial.
Your fingers start shaking a little more as you listen to the recorded message tell you the bad news that you may face a thirty day jail term and a $500 fine — but then you hear that this is all just a joke, but you can use the number to mess around with the head of one of your friends. What the —?
No joke. Photo courtesy of Photos-public-domain.com
This is really happening in Pennsylvania, as the Administrator for the Courts, Zygmont Pines (yes, that is his real name) is warning about the hoax. The only question is how soon it will spread to the jokers here in California. As much of a drag that jury duty is, it is vitally necessary for our justice system. If one of your friends tries to play this one on you, just tell him its really not funny.
Lawyers love Latin — it makes the sordid sound sophisticated. After reading the below, ask yourself cui bono? Who benefits?
Judge William Pauley recently knocked down an attorneys’ fee request:
“”Astonishingly, Kramer Levin attorneys, paralegals, and staff amassed 5536.4 billable hours on this matter, employing four partners, three special counsel, ten associates, eight paralegals and a summer associate,” he said, with partners billing in a range of $680 per hour to $1025 per hour, associates from $440 per hour to $745 per hour, paralegals from $250 per hour to $295 per hour, and “last but not least,” a summer associate for $335 per hour.”
Cui bono, Robin? By Louis Rhead, 1912, from Wikipedia Commons
Now, partners billing between $700 and $1000 an hour is pretty steep — but maybe, just maybe, they are very, very good. Then to have 10 associates — attorneys either too new or not good enough to be partners — billing between $440 and $745 an hour?
But here comes the kicker: a summer associate billing at $335 an hour? A summer associate is a law student who is only there for the summer. A summer associate is not an attorney — just a wanna-be attorney (I know — I was one, back in the Reagan administration). Can you call yourself Robin Hood if you steal from the rich — and become rich doing so?