Photo by Bill Oxford

Earlier this year, Fiat Chrysler Automobiles (FCA) reached an $884 million settlement with consumers and various governmental agencies to resolve its longstanding diesel emissions scandal. In short, FCA was accused of programming its emissions control software in certain engines to detect when regulatory tests were being run, and manipulate the emissions down to required levels in only those situations—resulting in illegal emissions levels during normal driving conditions. FCA allegedly had violated the Clean Air Act and other federal laws and regulations, and paid significant penalties to resolve the government’s claims.

However, the DOJ and FBI have now taken their prosecution of this matter a step further. On September 24, 2019, they brought a criminal indictment against a mid-level manager at FCA. Emanuele Palma worked in the diesel drivability and emissions group at FCA, and is accused of intentionally calibrating emissions systems to produce fewer emissions when on federal test simulations than during normal driving. He is charged with lying to federal regulators by submitting applications containing false and misleading representations, as well as during in person meetings and in response to written requests for information.

The fifteen criminal counts levied include violations of the Clean Air Act, wire fraud, making false statements to multiple federal agencies, and conspiracy to defraud the United States. While similar scandals have sometimes resulted in criminal indictments of high-level executives, this case marks a more aggressive stance by the government in prosecuting an individual employee. In its press release, the DOJ emphasized that “[t]he indictment in this case should signal to corporations and individuals working for them that there are significant consequences for attempting to bypass US emissions tests and defraud the American people” and that “[c]heating government regulators, customers, and the public for increased sales and compensation will be prosecuted by the Department of Justice to the fullest extent of the law[.]”

Many times it may be natural for employees to believe that actions they take while at work or on behalf of their employer are “company” actions, and that required training sessions are simply instructions as to how the company wants its business to operate. Employers should make clear when training includes legal or regulatory requirements. As this example demonstrates, it is important for employees to understand that there can be significant consequences to violation of relevant laws and regulations—not only for the company, but for the employee personally.

For more information on this article and this topic, contact Mark Killingsworth.

Photo by Annie Spratt on Unsplash

You’ve worked hard. You’ve built your brand and your business. You’ve taken prudent steps to protect it—registering trademarks, obtaining insurance coverage, and implementing important training and procedures to ensure safe, legal, ongoing operations. You may still be growing, but you are profitable and successful. You are proud of your business, and increase its visibility in the marketplace by putting its name and logo out there for all to see. Then an accident happens.

Maybe a customer is injured using your product. Maybe a company vehicle is involved in an automobile accident. Maybe a vendor—or employee—is injured on a jobsite. After the initial response of concern for those injured, a fear begins to well up in the back of your mind. What if my success has made me a target?

Regardless of whether justified, it is common for those injured to seek recovery when a company logo appears on the product, uniform, building, or vehicle involved. When an incident occurs, it is important to take appropriate action from the outset to protect your business and brand.

First, ensure anyone involved receives appropriate emergency treatment. Everything else can wait.

Next, begin to document everything you can. Take photographs of the scene before, during, and after any changes are made to it. Write down what happened if you witnessed it, or what others are telling you—and who said it—if you didn’t. Take down the names and contact information of any other witnesses, as well as any first responders who are present. These will be important people to be able to reach should a claim or lawsuit ensue.

Immediately report the incident to your insurer, who will have a process to work through as the investigation proceeds. In the days that follow, ensure that everything related to the incident is retained—emails, reports, witness statements, or other documents. Instruct your staff in this regard, and establish a central repository for collection of any related materials. If a lawsuit arises, you could be responsible for any information you did not secure.

Consider whether to retain counsel in advance of litigation. Many times an injured party’s attorney will issue harsh demands quickly. While your insurer may defend you in a lawsuit, you may need to seek legal counsel before a lawsuit is filed or before your insurer has completed its investigation process. While some claims are resolved pre-litigation, involving litigation counsel early can be helpful in that someone is guiding the process with an eye toward how each development will affect a lawsuit down the road. 

Finally, keep calm. When it’s your business, that you’ve built, it’s difficult. It’s personal. But letting that show through will only escalate the situation. Instead, keep doing what you’ve always done: protect your brand and business.

For more information on this article and this topic, contact Mark Killingsworth.

Photo by Arisa Chattasa

After countless hours of work, you have finally settled on the trademark which will be your core brand. The words you’ve chosen perfectly fit your vision, and you’ve taken every step you need to secure your presence and begin to build “the next big thing.” Domain names? Check. Social media profiles? Check. Federal trademark application? Check. In fact, your trademark application went straight through with no issue, and now you know that a Trademark Examiner has looked it over and given it the go-ahead. The only thing left is for the mark to be “published” and you’ll finally be at the point of receiving your trademark registration certificate.

And then you get a Notice of Opposition.

What is a Trademark Opposition?

In the normal course of a trademark application, a Trademark Examiner reviews the file to decide if there are any obstacles to registration. These include procedural errors in the filing, potential confusion with other trademarks, or issues with the mark itself which won’t allow it to actually function as a trademark. If the Trademark Examiner doesn’t identify any obstacles, the mark is ready to be published in the Trademark Official Gazette, which the United States Patent and Trademark Office (USPTO) issues weekly.

In this public document, the USPTO provides a snapshot of the trademark application (see the STARBUCKS application for “Alarm clocks; Clocks; Watches; Wristwatches” below). For the next 30 days after this publication, any party believing it may be damaged by the trademark being registered can either oppose the mark or can request 30 days more to decide. If either of these two steps happen, the trademark application process is paused until the underlying issue gets resolved.

Why Do Trademarks Get Opposed?

Although Trademark Examiners take steps to determine if there are obstacles to a registration, they can’t be aware of every potential issue. Further, at times the Trademark Examiner may believe that another trademark isn’t an obstacle at all — but the party owning that trademark certainly does. When this happens, the owner of that other trademark may decide that filing an opposition and holding up an application is the best way to protect their rights.

In seeking to protect the valuable intellectual property of a trademark, an owner may decide that a mark about to be registered presents a risk. That mark may cover similar types of products, and the owner is concerned that an ordinary consumer would be confused as to who is providing what. On the other hand, the product offered may be very different, but the trademark owner doesn’t want the public to associate them with that offering. Lastly, and unfortunately, at times a trademark owner may oppose simply to obstruct a legitimate application in hopes of limiting or delaying competition in the marketplace.

Regardless of the reason, a trademark opposition will cause delay in an application’s march towards full registration.

First Steps When Your Mark is Opposed

If your trademark application faces an opposition, or even a letter threatening such, you should contact experienced trademark counsel immediately. An early analysis may help reduce delays and costs, as each opposition is different and the underlying law is constantly changing.

In Part 2, we will introduce the timeline of a trademark opposition and identify methods used to efficiently resolve these matters.

Photo by Claire Anderson

This morning, copyright attorneys, applicants, registrants, and common law owners were finally given definitive judicial guidance on a concept that has been in dispute for years—whether a copyright owner must have an official federal copyright registration in order to file a copyright infringement suit. Turns out the answer is “yes.” 

The issue has long depended on the definition and application of the word “registration” in Section 411(a) of the Copyright Act, which provides that “no civil action for infringement of the copyright in any United States work shall be instituted until preregistration or registration of the copyright claim has been made in accordance with this title.” There are two distinct camps of interpretation pertaining to this section of the Copyright Act—the “registration approach” and the “application approach.”

The Tenth and Eleventh Circuits have maintained the “registration approach” to Section 411(a), which relies on a plain language reading of the statute that “registration” is not “made” until a copyright application is accepted and a registration certificate is issued. Thus, merely filing a copyright application is not the “registration” required prior to filing suit. The Ninth and Fifth Circuits have maintained the “application approach,” which is much more sympathetic to copyright owners who may not have had a chance to procure a copyright registration prior to their works being infringed upon. Courts following the “application approach” argue that the Section 411(a) definition of “registration” is ambiguous because some sections of the Copyright Act indicate there are no prerequisites to registration other than a completed application. These courts have held that, as long as a common law copyright owner took the necessary steps to procure a copyright registration (submitting the copyright application, the work, and the necessary fees to the U.S. Copyright Office), the copyright owner should not be precluded from initiating a copyright infringement suit. In fact, the effective “registration” date listed on a copyright certificate is not the date that the U.S. Copyright Office accepts and registers the work, but the date the applicant filed the application. The other Circuits have either supported both approaches, stayed silent on the matter, or have expressly refused to decide one way or the other. This circuit split has long plagued the U.S. judicial system and frustrated artists hoping to grasp their works back from infringers.

Perhaps to the dismay of unregistered copyright owners and pending applicants, the split is no more.

This morning, the U.S. Supreme Court stepped in to settle the matter—officially adopting the “registration approach.” Justice Ruth Bader Ginsburg delivered the unanimous opinion in Fourth Estate v. Wallstreet.com, et. al., holding that copyright registration occurs—and thus, a plaintiff can only bring a copyright infringement action—once the U.S. Copyright Office issues an official registration. Additionally, after such registration has been granted, a copyright owner can sue for infringement that occurred both before and after registration. The Court held:

Registration occurs, and a copyright claimant may commence an infringement suit, when the Copyright Office registers a copyright. Upon registration of the copyright, however, a copyright owner can recover for infringement that occurred both before and after registration. Pp. 3–12. (a) Under the Copyright Act of 1976, as amended, a copyright author gains “exclusive rights” in her work immediately upon the work’s creation. 17 U. S. C. §106. A copyright owner may institute a civil action for infringement of those exclusive rights, §501(b), but generally only after complying with §411(a)’s requirement that “registration . . . has been made.” Registration is thus akin to an administrative exhaustion requirement that the owner must satisfy before suing to enforce ownership rights.

Notwithstanding, the Court recognized there were limited circumstances where a copyright claimant could bring an infringement suit prior to registration, such as a copyright owner who is preparing to distribute a type of work particularly vulnerable to predistribution infringement—e.g., a movie or musical composition—or a copyright owner of a live broadcast. 17 U.S.C. §§ 408(f)(2), 411(c).

This ruling means that copyright claimants must wait a longer period of time prior to bringing a valid copyright infringement suit, for the administrative process of copyright examination can take months to complete. Nonetheless, the U.S. Copyright Office gives copyright applicants the option of paying a substantially higher copyright application fee to expedite an application’s examination procedure through the Special Handling process. Copyright claimants still have the ability to recover compensatory damages incurred before and after the registration issues, so this process is, at worst, merely a procedural annoyance.

The lesson here is not a new one—anything of actual worth should be protected. Copyright owners seeking to protect their work from infringement should consider registering their work with the U.S. Copyright Office. Registration can establish a public record of a copyright claim and a registration certificate may be offered as prima facie (accepted as correct until proven otherwise) evidence of the validity of a copyright registration. Further, copyright registrations can be recorded with the U.S. Customs Service to prevent the importation of counterfeit copies. Lastly, if a work is registered prior to commencement of an infringement (or within three months of the first publication of the infringement), a litigant may be entitled to attorneys’ fees and statutory damages.

Read the Court’s full opinion here.

For more information on this article and this topic, contact Charles Wallace.

Photo by Enrico Mantegazza on Unsplash

I am often asked to update a company’s handbooks, contracts, and policies, or to prepare these important documents when none existed. Unfortunately, the first test of the enforceability and utility of these writings comes at the worst possible time for the employer – when needed to justify and support a termination or, even worse, in litigation. When a company is just starting out, there are so many moving pieces to get the business off the ground that, by necessity or inattention, the documents dictating important relationships go by the wayside. Sometimes new business owners will resort to short cuts like searching the internet for something that seems to fit. However, it is often unclear where the language in these documents came from, which state and federal laws apply, and whether the document takes account of changes in authorities such as statutes or administrative regulations. Regrettably, the business owner will generally only discover these issues when the documents become critically important – too late in the game.

Careful preparation of your contracts and policies allows you to think through these questions proactively. For example, one way of drafting may dictate where any litigation occurs – preferably in your preferred courts – whereas another leaves room for the other side to choose where and how to bring a case. With that in mind, here are some points to keep in mind:

1. CONSIDER INCLUDING VENUE AND FORUM PROVISIONS IN YOUR CONTRACTS AND USING ARBITRATION AGREEMENTS FOR YOUR EMPLOYEES. Including a dispute resolution process in your employee agreements affords you notice before things get out of hand, and can solidify your position by allowing you to determine when, how, and where matters get brought before a court. Additionally, language requiring notice of claims, or requiring that you have the opportunity to cure any alleged issues, can potentially save a relationship before things become irreconcilable. 

2. INCLUDE NOTICE AND OPPORTUNITY TO CURE PROVISIONS IN YOUR CONTRACTS WITH VENDORS AND BUSINESS AFFILIATES. Similarly, with regard to your vendors and other contracted parties, a robust dispute resolution process can require not only advance notice, but resolution opportunity steps before launching into costly litigation. Advance notice can allow you to get in front of potentially problematic terminations. A jury waiver or arbitration clause can be imposed to lessen the damages potential of a jury verdict, and place decisions in the hands of a former judge or attorney who may be better able to understand the legal issues involved. 

3. CAREFULLY REVIEW THE CLAUSES IN YOUR EMPLOYEE HANDBOOK. Your company handbooks is your employee’s first experience with understanding how you want to run your business. How lenient do you want to be with absenteeism, or is it critical to your business that your employees show up on time and provide advance notice of absences? Do you want to pay out unused vacation when an employee quits? Do you want the option to withhold pay if an employee leaves owing money? What kind of disciplinary policies do you want to implement? These very important questions can be addressed in a well written and considered handbook. From a practical perspective, these policies will come into play when you terminate an employee and they seek unemployment. The availability of unemployment benefits for a terminated employee can depend on whether there was a policy in place to address the conduct at issue, and whether you provided warnings prior to the termination. Therefore, to manage your unemployment claims, it is important to address in writing conduct that will constitute grounds for termination. It is also important that the employee understand those grounds in order to adjust conduct accordingly.

In the bustle of starting or scaling a business, remember the phrase “don’t rush to failure.” Careful planning at the early stages may pay dividends for years to come, providing a solid foundation on which to build your vision.