By Ruth Binger
Co-authored by Ruth Binger and Jeffrey L. Michelman
Suppose you plan to buy a large supply of Disney books from an overstocked Barnes & Noble retailer in Taiwan, and then offer your employees the opportunity to purchase the books at a deep discount as gifts for Christmas. You reason that if the employees don’t buy up all of the books, you can always sell the remainder to a discount book chain or on the Internet.
You are approached by the human resources department manager and advised that Disney is very litigious about protecting its copyrights. Because your company is not an authorized seller for Disney products, the manager fears losing an infringement lawsuit.
Fortunately, your legal counsel is familiar with this issue. Upon learning that you intend to make the initial purchase from an authorized Disney retailer in Taiwan, counsel advises that your company is protected by the “First Sale” Doctrine of the Copyright Act.
And the U.S. Supreme Court agrees. In Kirtsaeng v. John Wiley & Sons, the Court held that a legally obtained copyrighted work can be imported into the U.S. and resold without permission from the copyright owner even if it was manufactured and sold overseas. The ruling applies to sale of physical, tangible works and not digital works that are licensed and not easily resold because of license agreements. The Court explained that in a complex and interconnected world, buyers, sellers, and retailers should be able to import and sell products without having to search out the copyright owner to determine if the U.S. copyright owner approves of the sale.
The facts are simple. Kirtsaeng, a Thailand citizen, moved to the U.S. to study mathematics at Cornell University, and entered a Ph.D. program in mathematics at the University of Southern California. Continue reading »
04/1/13 2:48 PM
Business Law, Intellectual Property, Manufacturing and Distribution | Comment (0) |
U.S. Supreme Court Backs Resellers in Physical Goods Copyright Case
By Ruth Binger
Owners and managers frequently face the difficult process of terminating an employee for a reason other than lack of work. The reasons are many and varied, ranging from being placed in the “wrong seat on the bus” to poor cultural fit to “good cause” reasons, such as performance or behavior. Although employment at will is the rule of law, laws exist that undercut the employer’s absolute power to terminate for any reason whatsoever. Many of these laws are just plain common sense and can be compared to administering discipline with your own children.
Decisions made in haste or poorly executed have a very long damage tail including lawsuits, reduced morale, and loss of business momentum. By looking through the lens of both human nature and law, managers and owners can learn to make and execute decisions that are generally defensible both inside and outside the company culture. Knowing what could be coming and where it’s coming from will create a wiser decision process, a more legally defensible position, and buy-in from your watchful employees.
Practicing the following 10 rules will put you on a road map of common sense when dealing with issues related to employee discipline or termination:
- Investigate. Investigating the facts protects the integrity of the process and lessens the ability of an employee to establish an unlawful motive. Poking in the weeds also provides feedback to you on what is working, what is not working, and what should be changed. Look for facts – not hearsay and speculation. Determining credibility is your job. Companies are human collaborative efforts containing many actors with varying motives and agendas that can be constructive, bad, opportunistic or even crooked. Consider plausibility, demeanor, motive to lie, corroboration, and past record when making judgment calls.
- Interview witnesses and the employee in question. Ask the employee in question to explain what happened in front of two management witnesses. Write down exactly what the employee states and ask him/her to sign it. Ask the employee for objective facts or witnesses to support his/her position. Your aim is to pin down the employee to “one recollection.” Interview complainants and witnesses by asking who, what, where, when and how questions. Let them know that you will try to keep the investigation as confidential as possible under the circumstances and in compliance with the law. This arduous process prevents tears at the fabric of your culture. Continue reading »
03/20/13 11:41 AM
Business Law, Employment Law, Manufacturing and Distribution | Comment (0) |
Common Sense Road Map to Employee Discipline and Termination
By David A. Zobel
Parties to contracts, such as banks or contractors, have often been covered by what is known as the “commercial frustration doctrine.” The doctrine can excuse a party to a contract from his or her performance when a happening, unforeseen by the contracting parties, destroys or nearly destroys the contract’s purpose or the value of such performance – provided the parties did not cause the happening and were unable to avoid its consequences.
However, as seen in a recent Missouri case in which a party attempted to assert the doctrine and avoid payment on a promissory note by claiming the “Great Recession” was an “unforeseen happening,” the doctrine may not be applicable to merely encountering financial difficulties (even if significant).
In Carpenters’ District Council of Greater St. Louis and Vicinity v. Commercial Woodworking & Contracting, Inc., et al, the United States District Court for the Eastern District of Missouri held that the recession was not the type of unanticipated, unforeseen event which qualified for a commercial frustration defense. 2012 WL 1025203 (E.D. Mo. Mar. 26, 2012).
Between April 26, 2004 and May 21, 2007, the Carpenters’ District Council of Greater St. Louis and Vicinity (“Carpenters Union”) made three loans to Commercial Woodworking & Contracting, Inc. and several individuals related to the corporation (“Commercial Woodworking”). The terms of the loan and its repayment were set forth in three promissory notes. Commercial Woodworking failed to repay upon the promissory notes. The Carpenters Union brought suit against Commercial Woodworking for repayment of the amounts remaining on the notes. Continue reading »
01/21/13 9:47 AM
Business Law, Litigation | Comments Off |
Missouri Court Holds Great Recession Not Sufficient Basis for Commercial Frustration Defense
By Laura Gerdes Long
On June 28, 2012, the Supreme Court, in a 5-4 decision, upheld the Patient Protection and Affordable Care Act (the “Act”), more commonly known as the health reform law, including the highly controversial individual mandate. While the Court limited the Act’s planned expansion of Medicaid, the decision was overwhelmingly a “win” for President Obama.
Now that President Obama has been elected to a second term, those who resisted implementing the first set of provisions (waiting for the Court to rule) will have to begin earnestly working to comply with both provisions already in effect and forthcoming provisions, including key provisions which require compliance in 2014: the individual mandate and the employer mandate.
Provisions currently in effect include:
- No lifetime limits on coverage.
- Restrictions on annual limits.
- No “rescissions,” meaning health plans cannot cancel coverage once you are sick unless you committed fraud when you applied for coverage.
- Dependent care coverage is provided up to age 26 for adult children without employer-sponsored coverage.
- Federal small business tax credits have also been available for employers who provide coverage, with credits differing depending on the size of the company and increasing to 50 percent in 2014.
- Many consumer employees have already experienced not having to pay out-of-pocket costs for certain preventative services, such as breast cancer screenings and cholesterol tests, and the disqualification of over-the-counter drugs as medical expenses for Flexible Spending Accounts (FSAs) and Health Savings Accounts (HSAs).
- Insurers will have to provide rebates to consumers if they spend less than 80 to 85 percent of premium dollars on medical care.
The impact of both the individual mandate and the employer mandate will not be fully known until closer to 2014; however, there has been great speculation about who will be most impacted. Continue reading »
12/17/12 9:27 AM
Business Law, Employment Law, Healthcare | Comments Off |
Employers and the Health Reform Law
By David A. Zobel
An Illinois appellate court recently upheld a two-year, non-solicitation activity covenant and one-year anti-raiding covenant between a tax preparation service and its employee, despite the employee’s seasonal employment of just three months. Zabaneh Franchises, LLC v. Walker, 972 N.E. 2d 344 (Ill. App. 2012).
In July of 2010, Zabaneh Franchises, LLC, an income tax preparation service based in Quincy, Ill., purchased an existing H&R Block, Inc. franchise. The sale included an assignment of employment agreements with H&R Block’s employees, including that with Terri Walker. Walker had signed an employment agreement in November 2009, as she did annually beginning in 2003. Pursuant to this agreement, Walker agreed to work during the 2010 “tax season,” from January 2 through April 15, 2010. Walker completed this tax season employment without incident.
In February 2011, Zabaneh filed suit against Walker alleging that within a few months of leaving Zabaneh in April 2010, Walker started her own tax preparation business, solicited clients, and hired employees of H&R Block in violation of her employment agreement. Zabaneh’s complaint sought a temporary restraining order against Walker to bar her from engaging further in such activities. The trial court found Walker’s employment agreement to constitute a “contract of adhesion” (a “take it or leave it” imbalanced agreement favoring one party) and denied Zabaneh’s request for a temporary restraining order. The case was subsequently dismissed with prejudice.
On appeal, the appellate court was asked to consider whether Walker’s employment agreement was reasonable and enforceable. In doing so, the court noted that the Illinois Supreme Court had recently addressed the proper standard for analyzing the enforceability of restricted covenants in an employment agreement in Reliable Fire Equipment Co. v. Arredondo, 965 N.E.2d 393 (Ill. 2012). Continue reading »
11/28/12 10:15 AM
Business Law, Emerging Business, Employment Law, Litigation | Comments Off |
Two-year, Non-solicitation Activity Covenant Upheld in Illinois for Seasonal Tax Employee
By Christopher D. Vanderbeek
On the whole, the American workforce is less healthy now than it has ever been. The sad truth is that many American workers live unhealthy lifestyles of poor exercise and eating habits, due in part to an increase in automation and technology. This unhealthy state, in combination with the natural aging process, leads to an American workforce struggling with chronic conditions such as obesity, diabetes, and arthritis.
Missouri workers are no exception, and this causes an increasing concern for Missouri employers. Increasing unhealthiness contributes to a higher incidence of degenerative and inflammatory musculoskeletal conditions. Put simply, this means that less healthy workers tend to become “injured” due to work activities more often than other workers.
How can Missouri employers insulate themselves from increased workers’ compensation liability for unhealthy workers?
There are two analytical measures employers can implement to limit their workers’ compensation liability in the face of increased liability risk due to unhealthy workers. Continue reading »
10/29/12 6:00 AM
Business Law, Employment Law, Workers' Compensation | Comments Off |
How to Limit Work Comp Liability when Faced with Unhealthy Workers
By Jeffrey L. Michelman
The St. Louis Business Journal recently ran an article on how to select an Intellectual Property attorney, yet solely focused on patents. There are other areas of IP that are equally important. I’d like to focus on trademarks, which are a unique proprietary right for several reasons.
A brand or trademark never wears out; with reasonable care, it can be a perpetual asset. Unlike most forms of property, a trademark becomes more valuable with use. The trademark is a reasonably liquid asset that can be sold or licensed. It is also a powerful merchandising shortcut, inducing consumers to purchase the company’s goods or services.
Yet some myths abound. A business sometimes attempts to protect its name by incorporating, qualifying to do business, or reserving the name in various Secretary of State offices. However, the scope of brand name protection afforded by such measures is rather limited. Such methods do not mean that the company’s name is available for use as the brand on products or services because the company name may still infringe another’s pre-existing trademark. Further, incorporating or reserving a business name does not necessarily create the right to exclude others from using the same or similar name on goods and services. A better method offering more comprehensive coverage at a substantially lower cost is federal trademark registration.
You need not register a trademark to have a protectable, exclusive right to it. Under common law, you can acquire trademark rights in the narrow geographic area of your use. State registration of trademarks provides no more protection than is afforded by common law rights. Continue reading »
07/25/12 12:40 PM
Business Law, Intellectual Property, International, Manufacturing and Distribution | Comments Off |
The Benefits of Trademark Registration
By Jeffrey L. Michelman
As a manufacturer, you will have “trade secrets.” But do you have a clear understanding of what is considered a trade secret?
Under Missouri law a trade secret can be any:
“… technical or non-technical data, a formula, pattern, compilation, program, device, method, technique or process that (a) derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by other persons who can obtain economic value from its disclosure or use; and (b) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.”
Trade Secrets in Manufacturing
Typical trade secrets in manufacturing include tolerances, specifications, formulas, recipes, unusual applications for use of non-evident material, unusual combinations of materials or processing steps, use of non-evident devices, processes of manufacturing, drawings.
The remedies for misappropriation of trade secrets by others can include: getting an injunction against use and further disclosure; your actual losses attributed to the disclosure; reasonable royalty; attorneys’ fees; and punitive damages.
Where Are Your Trade Secrets Most at Risk?
The risk of losing your trade secrets in the manufacturing industry often comes from: Continue reading »
06/20/12 12:02 PM
Business Law, Intellectual Property, Manufacturing and Distribution | Comments Off |
Protecting Your Manufacturing Trade Secrets
By Christopher D. Vanderbeek
The Workers’ Compensation Research Institute recently released the results of a study documenting the costs of medical professional services in workers’ compensation cases.
The study, entitled Medical Price Index for Workers’ Compensation (MPI-WC), defined medical professional services as “nonhospital, nonfacility” services provided by physicians, physical therapists, and chiropractors. It measured the difference between medical professional service costs in states that do not have medical fee schedules versus states that do have medical fee schedules. More specifically, the study compared the increase in medical professional services between 2002 and 2011 in states without fees schedules versus states with fee schedules.
A medical fee schedule is essentially a listing, rendered by a state government, of the amounts medical providers are allowed to charge for given services. The allowable amounts are based on the codes for given services. For example, in New York, the code for a level one ambulatory surgery is “PAS 1” – each provider licensed to administer ambulatory surgeries has an allowable fee for a level one surgery.
Continue reading »
05/24/12 8:21 AM
Business Law, Manufacturing and Distribution, Workers' Compensation | Comments Off |
Worker’s Comp Medical Costs Rising Faster in States without Medical Fee Schedules