This move by ICANN could potentially raise the number of available gTLD domains from its current level to over 1,000 new options. Simply put, the Internet is changing and there are key dates all brand owners should keep in mind:

• April 12, 2012: New gTLD application window closes.
• Early May, 2012: Public Application Information will be posted to ICANN’s website.
• From April through November: Application Review, Initial Evaluation and an Objection Filing period will occur.

Brand owners should not ignore what is going on in the Domain Name game and lose a competitive advantage in the Internet marketplace. Businesses would be foolish to fail to review the posted applications to monitor for possible infringement or any other potential competitive harm. The should discuss the findings with counsel to identify the harm and develop a remedy.

Any dispute resolution proceedings must be based upon a complaint brought by one of the following four types of entities, and filed with the specific organization contracted to handle the dispute:

1. String Confusion Objections – objector must be a current TLD operator or gTLD applicant in the same round
2. Legal Rights Objections – objector must be a legal rights owner whose rights are being infringed
3. Limited Public Interest - objections may be filed by any member of the public
4. Community Objections – objector must be an established institution clearly defined with a community

• October, 2012: ICANN expects to release the details and procedures for trademark owners to file their registered marks within the Trademark Clearinghouse.
• Early 2013: Timeframe for first new registries to go live.

Now is the time to determine whether your business could be helped by having a new generic top level domain attached to your URL — and whether you could get it if you do want it.

If you and counsel believe the new gTLD is worth it, get that application on file quickly to meet the April cut-off date.

Lastly, be sure to schedule a prompt review of the new gTLDs so timely objections can be filed.

Posted by Attorney Jeffrey L. Michelman, who concentrates his practice on Trademarks and Copyright matters as well as e-Commerce and Social Media issues.

Ralph Waldo Emerson warns that “rest, conservatism, appropriation, inertia; not newness, not the way onward” are forms of old age which causes people (I submit companies also) to be dead while they are yet alive. Yet, your manufacturing company can grow young again, if you as the leader/owner pursue and embrace strategic planning, innovation, and sustainability.

The root cause hindering such onward movement is frequently caused by a lack of succession/exit strategies for business owners/leaders. The Small Business Administration estimates that at any given time, forty percent of businesses are facing transfer of ownership issues. Without arriving upon a succession plan/exit strategy for the owner/leader, onward is not possible.

Rather, the bitter truth of humanity is realized – we all die and many times we take our companies with us. The familiar aphorism “shirtsleeves to shirtsleeves in three generations” describes the propensity of family-owned businesses to fail by the third generation. In fact, it is estimated that less than one-third of family businesses survive the transition from first to second generation ownership, and only 10 percent remain active for the third generation to lead.

By creating an exit/succession plan, a business owner/leader is forced to consider not only what the business needs today but what is needed for the future. The owner will make hundreds of decisions differently such as: making an S Corporation election; entering into contracts with key employees, distributors, and suppliers; maintaining clean records; developing and incenting a good management team; and/or transferring stock to family members. Without a plan, the business will mostly die due to the lack of necessary investment in leadership and talent, business systems, and “state of the art” equipment.

The Next Generation Manufacturing Study conducted by the American Small Manufacturers Coalition/Missouri Enterprise in 2011, makes the point that although a majority of U.S. manufacturing firms anticipate a possible change in leadership within the next five years, only 30 percent anticipate a planned succession and only 29 percent report that a succession is possible. Unlike publicly traded companies where the average CEO tenure is six years, many family businesses have the same leaders for 20 to 25 years. Such long tenures increase the difficulty of coping with shifts of technology, business models, and customer behavior. Making things even tougher, family business owners must create a strategic plan for the business, in addition to a family strategic plan, a succession plan and an estate plan.

Owners only have a few options for an exit strategy:

• Retain family ownership but hire outside management;
• Retain family ownership and management control (offspring must have the desire, ability and youth, or use an Employee Stock Ownership Plan);
• Sell to outside third parties (company needs to have an outsider transferable value significantly above book value) or inside key employees (trusted employee who has youth and desire to own); and/or
• Planned liquidation (owner adopts a current-cash based approach to convert business wealth rather than future equity based approach).

Your business will only be successfully transferred if you choose an exit/succession plan, and start implementing the plan today. The plan will take five to ten years.

Posted by Attorney Ruth A. Binger. Binger serves both emerging and mature businesses concentrating in corporate law, intellectual property and technology law, and labor and employment law. Her commitment to the success of small to medium-sized businesses, and her understanding of multi-faceted issues inherent in operations, are what distinguish Binger’s practice.

1. “I do not want to upset my parents, siblings, etc., but I want to appoint my best friend.”
• I recommend that parents choose someone to serve as guardian for their children that shares their values and is going to raise the children similarly to how they would raise them. Now is not the time to worry about whether feelings may be hurt. This is a very personal decision and family members may not always be appropriate to serve as guardian.
2. “I want my sister/brother/aunt to be appointed guardian.”
• Each parent usually has a preference for his/her own family member. While an attorney can point out pros and cons to the parents, he or she will not take a side. While each parent can appoint different guardians for their children, this is not recommended as it will just lead to court battles. Parents should discuss and come to a consensus on who they want to appoint prior to meeting with the attorney.
3. “We want to appoint my sister and brother-in-law as guardians.”
• Appointing co-guardians may be difficult. If your sister and brother-in-law get divorced, do you want your brother-in-law to have custody rights?
• Do you want to have to amend your documents if your sister and brother-in-law divorce?
• Typically, appointing your sister as the guardian is the better option to prevent unnecessary amendments to estate planning documents.
4. “I don’t want my ex-spouse to have custody of our kids in the event I die.”
• Unfortunately, a surviving noncustodial parent has the right to take custody of the children unless he or she is unfit or unwilling to act. Typically your Last Will and Testament will acknowledge the rights of the other parent and appoint backup guardians for this case.
5. “How many people should we appoint as backup guardians?”
• Two or three backups should be appointed. Typically you do not want only one person appointed as guardian with no backup appointed.

Keep in mind that your Last Will and Testament only expresses your wishes to the court regarding who should serve as your child’s guardian. The appointed person must otherwise qualify. A history of involvement in the child welfare system, felony convictions, or a drug or alcohol abuse history may prevent your appointed guardian from serving.

While the decision of who to appoint can be difficult, it is important that you name someone to serve as guardian in order to prevent prolonged litigation in the event of a tragedy.

Posted by Attorney Misty A. Watson. Watson’s practice focus is estate-related: planning, administration, and probate. She creates trusts, wills, financial, and health care powers of attorney, guardianships, and conservatorships.

The decision to purchase a home may be one of the biggest financial decisions you will ever make. Chances are, you will be looking at two or three times your annual income in debt, a small forest’s worth of paperwork, and a host of terms and phrases you may not be familiar with. Unfortunately, a misstep or two in your purchase can have serious ramifications on both your home and your investment. This discussion sets forth several legal considerations to keep in mind before you sign the contract.

How Should I Take Title to the Property?

This choice can be pretty easy when you are single – you purchase it and title yourself as the sole owner. The property is yours (subject to the mortgage) and you are free to sell it as you please or have it pass pursuant to estate plan.

However, if you are married or purchase the property with a friend or investor, you will need to title the property differently and different titles may be more appropriate for different marital and financial relationships. For example, a joint tenancy with right of survivorship may be ideal for family situations in which an older family member wants the property to automatically pass to a younger sibling upon death. A tenancy by the entirety, reserved for married couples, can prevent one of the spouse’s individual creditors from reaching the property. Where business partners are purchasing a property, it may be wise to hold title as tenants in common which would allow either partner to freely sell his/her interest in the property without the permission of the partner.

The Basement Is Dry, The Roof Does Not Leak: Seller Representations

Most states require the seller to disclose to you “material” facts which may affect your decision to buy the property. What is “material” may vary from state to state, but typical items for disclosure and warranty address termite or water damage as well as issues relating to appliances, the roof, and sewage systems. Should the seller misrepresent the extent of a known problem or fail to disclose something known to them, you may have a cause of action against the seller for any damages caused thereby. It is important to note, however, that the seller’s disclosure typically only covers known issues. For this reason, it is still strongly suggested that you obtain your own independent property inspection.

What About Title Insurance?

Another issue to consider is title insurance. When you purchase a house you may be purchasing more (and maybe less) than the house and land you actually see. Your property is likely encumbered. In other words, third parties may have rights to your land, which in some cases are actually superior to yours and restricts your ability to use your land in certain ways. In some cases, the encumbrance or restriction can be minor, such as a minimum set-back ordinance preventing you from building up to your property line. Others may be more severe. Utility easements can prevent you from installing that dream pool. An errant legal description can disclose your brand new fence is actually on your neighbor’s property. You can protect yourself against these surprises by obtaining a policy for title insurance along with the appropriate endorsements to the policy.

Title insurance aims to protect against these issues by searching the property’s title history to disclose what rights others may have with respect to the property. Additionally, title insurance insures against any additional “defects” which were not found in the title search and not otherwise excepted/excluded under the policy. In some cases, depending on the policy, title insurance can pay off your mortgage in the event a defect causes you to lose the property.

A Note on Foreclosure

Foreclosure may be the last thing on your mind as you prepare to purchase a house, but in these unfortunate times, it may be wise to consider it and what it may mean should your property be foreclosed upon.

First, it is important to realize that in some states the seizure and sale of your house may not end the bank or lender’s ability to seek further money from you. Known as deficiency judgments, in some states a bank or lender may be entitled to recoup from you the remaining balance of your mortgage (minus the foreclosure sale proceeds) even after the bank/lender takes the property.

Second, keep in mind that a foreclosure will stay on your credit history for years. Your credit score will be severely affected. This will influence your ability to purchase larger items, such as a vehicle, where financing is necessary or may even affect your ability to become approved to rent an apartment.

Next Month’s Topic: The Law and Your Job

To submit future blog topics/questions that affect young professionals for consideration, submit through “Leave a Reply” following the post.

Posted by Attorney David A. Zobel. Zobel primarily represents individuals and corporations in the defense of civil litigation, including contract, negligence, and real estate matters. In addition to his court room work, Zobel assists in advising clients on contract and employment issues and regarding issues arising under the Sunshine Law.

The data used in determining states’ grades comes primarily from OSHA recordable injuries and illnesses. Once the data was collected, it was interpreted in terms of the two most significant factors driving the cost of workers’ compensation throughout the US. The first factor is injury/illness outcomes, specifically the success within a state in preventing injuries, and, when they occur, the success in returning the injured worker to health and productive endeavor, thus avoiding prolonged absence and medical treatment costs. The second factor is administrative burden stemming from the accumulation of rules, procedures, disputes, delays, discretionary charges and patterns of practice, including lawsuits, affecting the resolution of claims.

The 2012 WLDI report cards primarily consider the “primary outcome measure” of how quickly workers recover from their injuries/illnesses and return to work. Five different outcome measures are compared among the states for each year:

1. Rates of the occurrence of workplace incidents;
2. Number of cases in which employees missed work;
3. Median duration of disability;
4. Instances of “delayed recovery”; and
5. Instances of the “key condition,” which for this reporting period was low back strain.

For 2012, Missouri was one of only five states to receive an “A” grade overall. The other four states were Alabama, Arkansas, Georgia, Minnesota, and Utah. In addition, the WLDI reports indicated “impressive advancement” for Missouri from 2000 through the present.

Posted by Attorney Christopher D. Vanderbeek. Vanderbeek is involved in the evaluation and defense of workers’ compensation and other insurance claims, protecting the interests of employers and insurers.

Madigan stated S&P “… used every trick possible to give deals high ratings in order to retain clients and generate revenue. The mortgage-backed securities that helped our market soar – and ultimately crash – could not have been purchased by most investors without S&P’s seal of approval.” The lawsuit cites numerous internal emails and conversations among S&P employees as evidence of its misrepresentations. For example, in one email, an employee stated an investment “could be structured by cows and we would rate it.” The lawsuit also cites to congressional testimony by a former managing director at S&P who testified that “profits were running the show” and ratings were assigned to risky investments to help drive profit margins for their clients.

Mortgage-backed securities are financial products made up of a pool of mortgages that are bundled and sold as a security. They are backed by residential mortgages. Pension fund and 401(k) managers relied upon S&P ratings to make decisions as to whether these were appropriate investments for their clients.

Madigan has been successful in the past in her efforts to go after lenders following the housing market crash. In December of 2011, Madigan and the U.S. Department of Justice agreed to a $335 million settlement with Countrywide for discriminating against minorities during the sub-prime mortgage lending binge. In 2008, she headed up a lawsuit against Countrywide leading to a nationwide $8.7 billion settlement over predatory lending practices. She also reached a $39.5 million settlement with Wells Fargo over deceptive marketing of risky loans called Pay Option ARMS.

Posted by Attorney David P. Renovitch. Renovitch has extensive litigation experience in matters related to insurance companies and their insureds, real estate, construction, banking and lending, especially in the areas of title litigation, recoupment and mechanic’s lien litigation.

The overseas theft of trade secrets is a major concern of companies with business operations outside of the United States. A recent decision by the Court of Appeals for the Federal Circuit provides U.S. companies with a new weapon to protect against trade secret misappropriation that occurs completely outside the United States. While welcome news for U.S. businesses, it is important that they remain vigilant in developing and implementing preventive measures for the international protection of their trade secrets.

In TianRui Group Co., et al. v. ITC et al., 661 F.3d 1322 (Fed Cir. Oct 11, 2011), the U.S. Court of Appeals for the Federal Circuit held that the U.S. International Trade Commission (ITC) has the authority to exclude imports of products into the United States that are manufactured outside the United States using a misappropriated trade secret process, even when the misappropriation occurs outside the United States and there are no goods being manufactured in the U.S. using the protected process.

The Court held that in determining whether a trade secret has been misappropriated, the ITC should apply U.S. federal common law of trade secret misappropriation rather than the law of any particular U.S. state or of the country where the misappropriation occurred. The application of federal common law in actions brought before the ITC involving the overseas theft of trade secrets will make it easier in many cases for U.S. companies to prove the theft of their trade secrets, because proving trade secret misappropriation is generally more difficult under the laws of many other countries.

The holding in TianRui has no bearing on the sale or importation of goods outside the United States that were manufactured using misappropriated trade secrets of a U.S. manufacturer. Consequently, U.S. companies will still need to think globally when adopting trade secret protection measures.

The definition of what constitutes a trade secret and the elements for proving trade secret misappropriation vary from country to country. Additionally, there are regional competition laws that affect trade secret protection. Taking into account these laws when drafting confidentiality and non-compete provision is necessary to ensure trade secret protection and the enforceability of the provisions or agreements. Post-employment restrictive covenants need to be drafted to take into account the relevant statutory and judicial law, because if they are drafted too broadly they will be unenforceable.

In many countries a post-employment non-compete clause is not valid unless there is separate compensation for the restrictive covenant (e.g., China and Germany). In other countries, non-compete agreements are prima facie void on public policy grounds, and therefore, particular care is required when drafting a non-competition agreement in order to ensure that it will be considered reasonable under the applicable country’s laws.  

To prove access to confidential information, it is advisable for a company to require written acknowledgement of the receipt of company information from employees, consultants, subcontractors and any other third parties at the time of disclosure, as well as having these individuals sign confidentiality agreements. In some countries, having a signed confidentiality agreement is not sufficient to prove access to a trade secret.

As a result of the decision of the U.S. Court of Appeals for the Federal Circuit in TianRui, U.S. companies have a powerful enforcement mechanism to protect against the imports of competitor products into the United States if the foreign manufacturer engaged in conduct that constitutes an unfair trade practice under U.S. law.

However, when drafting confidentiality agreements, trade secret preventive measures and post-employment restrictive covenants, U.S. companies still need to consider carefully the statutory and judicial laws of the relevant foreign country and region.

Posted by Attorney Marcia S. Orgill. Orgill concentrates her practice in the area of business and personal taxation—especially complex domestic and international tax strategies.

One major issue, the depletion of Missouri’s Second Injury Fund (SIF), arose gradually.

Other issues arose much more suddenly. Specifically, two recent Missouri cases flipped Missouri’s workers’ compensation system on its side by respectively providing:

(a) that an employee can sue a co-employee in civil court for the co-employee’s negligence in causing a workplace injury, and

(b) that an employee can sue his or her employer in civil court for a work-related occupational disease (e.g. carpal tunnel syndrome).

Prior to these court cases, it was believed – and, Missouri businesses argue, the Missouri legislature intended – that the sole venue for a claim based on a work-related injury was the workers’ compensation system.

Missouri businesses have responded by throwing their weight behind SB 572. The bill proposes a plethora of amendments to Chapter 287 of the Missouri’s statutory code, which is informally known as the Missouri Workers’ Compensation Act. Included are several amendments to Section 287.120, otherwise known as the “Exclusivity Clause.” This section was recently cited in the case of State ex rel. KCP & L Greater Missouri Operations Co. v. Cook in support of the argument that employees have the right to sue their employers in civil court for work-related occupational diseases.

Some highlights of the proposed bill:

• Prohibition of occupational disease claims outside the workers’ compensation forum
• Prohibition of negligence-based injury claims against co-employees
• Elimination of a $40-per-week benefit paid to injured workers out of the SIF
• Elimination of benefits paid by the SIF to uninsured employers
• Prohibition of all claims for permanent partial disability (PPD) against the SIF
• Prohibition of all claims by employees not legally entitled to work in the US
• Elimination of benefits for employees who become incarcerated

SB 572 was introduced by Senator Tom Dempsey of the 23rd District of Missouri (St. Charles County). The bill is currently being considered by the Small Business, Insurance, and Industry Committee and was initially presented to the committee on January 10, 2012.

Posted by Attorney Christopher D. Vanderbeek. Vanderbeek is involved in the evaluation and defense of workers’ compensation and other insurance claims, protecting the interests of employers and insurers.

The Court ruled against an elementary school teacher in her employment discrimination claim against Hosanna-Tabor Evangelical Lutheran Church and School, of Redford, Michigan, holding that the First Amendment protects the school from the reach of anti-discrimination laws, when the claims involve certain employees. The ruling was in line with many lower federal court rulings, but the issue had not previously been presented to the United States Supreme Court.

In the decision, written by Chief Justice John Roberts, the Court confirmed the “ministerial exception” to certain anti-discrimination laws, concluding that the courts could not force the school to reinstate the teacher, Cheryl Perich. Perich claimed she was fired because she pursued a claim under the Americans with Disabilities Act, alleging she suffered from narcolepsy.

While the Supreme Court confirmed the ministerial exception for religious organizations, such as churches and schools, it did not provide a strict test for determining exactly who was considered a “minister” for purposes of the exception. However, the Court’s ruling is clear that the exception applies to a class of employees broader than merely clergy. Perich was an educator, and was responsible for teaching secular courses, in addition to religion class, and she attended chapel with students. However, she had formal religious training and had recently been designated as a “called” teacher of the school, as opposed to a lay or contract employee. Chief Justice Roberts’ opinion is clear that her duties with respect to religious instruction at the school were sufficient for her to fall under the umbrella of the ministerial exception. The Court was further not persuaded that the small amount of time spent by the teacher teaching religion class during her work day was a significant factor, stating “the issue before us, however, is not one that can be resolved with a stopwatch.”

The ruling was a unanimous decision of the Court, and while the primary opinion did not propose a test for determining which employees qualify for the exception, the two concurring opinions, one written by Justice Clarence Thomas, and the other by Justices Samuel Alito, Jr. and Elena Kagan, did, although the concurrences differed on the methods of determining the status of employees, largely leaving the test for this determination up to the lower courts to determine on a case-by-case basis.

The Supreme Court’s ruling is generally in line with other church-state doctrines through which courts are reluctant to interfere with the internal operations of religions organizations. Many states, including Missouri, allow churches and parochial schools to discriminate on the basis of religion when hiring employees, so that the organizations are free to prefer job candidates whose religious beliefs are in line with that of the organization. Courts also often refuse to interfere with decisions regarding the ecclesiastical matters of religious organizations, meaning judges generally will not decide cases involving disputes over theology or religious practices within a particular organization.

Posted by Attorney Jeffrey R. Schmitt. Schmitt practices in commercial litigation including banking, real estate, construction, and other matters for individuals and businesses.

The impetus of the story is new legislation passed by the Illinois legislature which outlaws “double dipping” by union officials. According to the article, union officials allegedly misused the pension system to secure large public pensions based upon short teaching stints and even substitute teaching for as little as a single day. Certainly this kind of abuse, if true, is, or should have been, discouraged by all the players involved, including both the state and the public pension plan trustees.

As highlighted by the rest of the article, Illinois continues to face a significant fiscal and budgetary problem, due to many factors, including public pension liabilities. The author notes that the crisis currently amounts to an $83 billion funding shortfall, resulting in the worst unfunded pension liability in the nation, with only 43% of the long-term pension obligations currently funded. Part of the fault certainly lies with the State of Illinois for its failure to fund in earlier, more prosperous times. If uncorrected, this funding shortfall will continue to cause headaches for Illinois lawmakers and public pension plans alike. Ultimately, if not corrected, the continuing trend could possibly cause personal financial losses to deserving retirees across the state.

While unions and public pension plan officials urge the state to fully fund the pension liabilities, lawmakers continue to evaluate plans for both the temporary and permanent fix to the state’s pension woes. Employees and retirees will be keeping a close eye on these legislative developments, and some options may threaten continued benefits for future and/or existing employees.

As the author of the article correctly points out, any attempt by the Illinois legislature to modify the retirement benefits of existing employees entitled to those pensions will almost certainly raise serious legal and constitutional questions that the Illinois, or perhaps even Federal courts, will ultimately decide.

Posted by Attorney Jeffrey R. Schmitt. Schmitt practices in commercial litigation including banking, real estate, construction, and other matters for individuals and businesses.