Legal cheat sheet for business
[Author's note: This page is under construction. I'm developing it gradually, adding items in the course of my routine reading of recent developments, legal blogs, etc. As the page gets bigger, I expect eventually I'll break it up into separate topical sub-pages.]
Table of contents (so far)
• Business strategies
• Document destruction
• Government contracting
• HR Department
• Mergers & acquisitions
• People (managing them)
• Reporting and disclosure requirements
• Sexual harassment
• Web sites
Price fixing and other collusion can lead to jail time: See the entry under Sales.
“Hot news” likely won’t be legally protectable in the U.S.: Organizations that publish lucrative types of news for paying customers (e.g., financial news or real-time sports scores) just hate it when third parties grab their information off the TV or Internet and republish it without paying for it. This has led to some court battles, because: 1) under U.S. law, there’s no copyright in facts that aren’t selected and arranged in an original way; for example, the Supreme Court ruled in Feist that the white pages of the phone book aren’t copyrightable; but 2) the federal Copyright Act preempts all equivalent forms of protection that states might try to create — in other words, for publicly-known facts, it’s copyright protection, or no protection at all. (Secret facts might well be subject to trade-secret protection.) A very readable discussion can be found in the Barclays Capital opinion of the Second Circuit, an important federal appellate court. [ADDED 2011-10-28]
Software license restrictions should be drafted with care to avoid “copyright misuse”: Many software license agreements restrict what the licensee can do with the licensed software. The licensor’s motive typically is to inhibit existing- or prospective competitors from reverse-engineering the licensor’s trade secrets, or sometimes to require use of the software with specific licensor-approved hardware. Such license restrictions should be cautiously drafted, because a competitor might try to claim that the restrictions constitute “copyright misuse.” In 2011 a federal appeals court surveyed the existing law, and provided what amounts to a road map for drafting such restrictions, in Apple Inc. v. Psystar Corp., No. 10-15113 (9th Cir. Sept. 28, 2011) (affirming summary judgment in favor of Apple and rejecting Psystar’s copyright-misuse defense). [ADDED 2011-10-28]
Exercising too much control over subsidiaries could lead to joint and several liability: If a parent company maintains too-tight control over its corporate subsidiaries, in some circumstances the parent company could be held liable for a subsidiary’s troubles. True story: An investment firm was held jointly and severally liable for unfair labor practices by managers at a resort operated by the firm’s indirect subsidiary, because of the tight operational links between the two entities. See Oaktree Capital Management, L.P. v. National Labor Relations Board, No. 10-60749, (5th Cir. Sept. 26, 2011) (affirming ALJ decision in favor of NLRB), discussed in this posting by the Duane Morris law firm. [ADDED 2011-10-27]
Pushing the envelope — or even just inattention to legal details — might force a company to submit to on-going monitoring, for years: See this blog posting for a summary of how Google and and other companies found themselves agreeing to live under a microscope as a condition of getting rid of a lawsuit. [ADDED 2011-11-07]
Minimum wage: See the entry under the HR Department heading.
Overtime pay: See the entry under the HR Department heading.
Backdating stock options without properly accounting for them can lead to prison time: See the SEC list of indictments, convictions, and prison sentences for executives who were involved in backdating stock options. ¶ For an explanation of the various forms of stock-option backdating, see the Wikipedia article.
(See also Government contracts)
Contract interpretation is usually a pretty simple process: In interpreting a contract, a (U.S.) court will generally start by reading the contract language in question. Under the “four corners rule,” if the language is clear on its face — that is, as one respected judge put it, “a reader who is competent in English but unaware of the agreement’s context would think that the writing admitted of only one meaning” — then that is the meaning the court will use. See Richard A. Posner, The Law and Economics of Contract Interpretation, John M. Olin Law & Economics Working Paper No. 229 (2d series), at 21. ¶ If the language is ambiguous, then courts will typically look to extrinsic evidence, such as emails and witness testimony, to try to discern what the parties had in mind. See id. at 24-25. ¶ Other things being equal, courts will often resolve an ambiguity in language against the party that drafted that language, see id. at 35-36, on the theory that the drafter should be held accountable for not being more careful in its choice of words. ¶ Courts also will generally try to avoid interpreting contract language in ways that would be nonsensical or that cause problems with other language in the document.
Even inadvertent document destruction could lead to severe civil sanctions — possibly including a large fine — if litigation is in the offing: If litigation is imminent or perhaps even just “reasonably foreseeable” (depending on the applicable law), a company that destroys potentially-relevant emails and other documents — even inadvertently — could find itself severely sanctioned by an angry judge. True story: A 25-year-old woman was killed by a truck that overturned onto her car. Her widower successfully sued for wrongful death and won a $10 million verdict. The judge, however, cut the award almost in half, and ordered the widower and his lawyer to pay $722,000 in attorneys’ fees to defense counsel, on grounds that at the attorney’s direction the widower deleted some “party” pictures from his Facebook account and deactivated the account so as to conceal the pictures and other information from defense counsel. See this ABA Journal article. For more information, see this Kirkland & Ellis memo.
Document destruction to hide evidence from the government could be prosecuted for obstruction of justice: Government prosecutors seem to like to go for the low-hanging fruit, in the form of easy-to-prove charges. For example, they went after Al Capone for tax evasion, and Martha Stewart for lying to the SEC. ¶ When federal prosecutors wanted to go after the giant accounting firm Arthur Andersen for its involvement in the Enron financial debacle, the low-hanging fruit was obstruction of justice, in the form of the firm’s shredding of Enron-related documents. The Supreme Court of the United States eventually overturned the firm’s conviction, but by then the firm had already been brought down, its reputation destroyed and its partners and employees scattered.
(See also “Document destruction“)
Why the first thing you should type in an email might be “[ATTN: LEGAL]“: Google is being sued for patent infringement by Oracle. Unfortunately for Google, one of the company’s engineers didn’t include “[ATTN: LEGAL]” (or something like that) in the early drafts of a potentially-incriminating email he sent to a company executive and one of its in-house lawyers. ¶ As a result, the jury will see the email — and that could conceivably lead to Google being held liable for treble damages for willful infringement of the patents. See this posting for more details. [ADDED 2011-11-01]
Emails are eliminating he-said she-said: Sexual-harassment cases are increasingly being pursued on the basis of incriminating emails, not just on the harassee’s testimony about what the harrasser allegedly did, according to this NY Times article. [ADDED 2011-11-07]
Government rights in technical data: The Federal Acquisition Regulations (FARs) and Defense Federal Acquisition Regulations (DFARs) set out a complicated regime of regulations that determine what rights the U.S. Government has in computer software and technical data relating to items it purchases from vendors. A useful overview can be found in a U.S. Air Force handbook published in January 2011. [ADDED 2011-10-28]
Requirement to post notice of employee rights: Ten days after taking office in 2009, President Barack Obama signed Executive Order 13496, requiring federal contractors and subcontractors to post conspicuous notices informing employees of their rights under the National Labor Relations Act (NLRA). The stated rationale of the executive order is that “[w]hen the Federal Government contracts for goods or services, it has a proprietary interest in ensuring that those contracts will be performed by contractors whose work will not be interrupted by labor unrest. The attainment of industrial peace is most easily achieved and workers’ productivity is enhanced when workers are well informed of their rights under Federal labor laws …. Relying on contractors whose employees are informed of such rights under Federal labor laws facilitates the efficient and economical completion of the Federal Government’s contracts.” ¶ The form of the notice is prescribed in Department of Labor regulations. The notices must be posted, conspicuously, in plants and offices where employees covered by the NLRA perform contract-related activity, including all places where notices to employees are customarily posted both physically and electronically. Federal Government contracting departments and agencies are required to include provisions to that effect in pretty much every government contract; contractors must also include similar provisions in their subcontracts. See this Department of Labor page for more information and the text of the required notice.
Minimum wage: Not only does federal law prescribe a minimum wage, so do the laws of some states and even cities. See the Department of Labor Web pages listing the federal minimum wage as well as state-law minimum wages. (The DOL Wage and Hour Division has numerous helpful Web pages explaining various labor laws; they’re well worth perusing.) [ADDED 2011-11-02]
Interns might well have to be paid minimum wage: As explained in this U.S. Department of Labor fact sheet, an intern at a for-profit company must be paid minimum wage unless six criteria are met; for businesses, one of the most significant criteria will likely be the following: “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[.]” [ADDED 2011-11-07]
Payment for off-duty checking of email: Employees who are not exempt from the requirements of the (U.S.) Fair Labor Standards Act must be paid for any off-duty time they spend checking or responding to work emails, texts, etc., unless the time is de minimis — but the burden might be on you to prove they didn’t spend an hour a day on work emails at home. In a blog posting, Chicago attorney Bill Pokorny offers suggestions to reduce the pain-in-the-neck factor associated with this legal requirement.
Overtime pay: This is one area where a business doesn’t want to screw up, because plaintiffs’ lawyers just love to bring overtime pay lawsuits. In a nutshell, the federal Fair Labor Standards Act (FLSA) law requires employers to pay overtime to all employees, other than “exempt” employees — which can be a tricky determination — for hours worked over 40 in a work week; the overtime rate cannot be less than time and a half. Contrary to a popular misconception, though, the FLSA itself does not require overtime pay for work on Saturdays, Sundays, holidays, or regular days of rest, unless overtime is worked on those days. For more details, definitely browse through the Department of Labor explanation, which has numerous links to other reference materials. [ADDED 2011-11-02]
Workplace notices: Employers must post a variety of legal notices in the workplace. Some notices are required nationwide by federal law; other notices are required only by specific states’ laws. Government contractors and subcontractors must post a separate notice of employees’ rights under federal labor laws.
Domestic partner health benefits: California law requires all group health care service plan contracts and insurance policies that are marketed, issued, or delivered to a California resident to provide equal coverage to domestic partners as is provided to spouses (Senate Bill No. 757, enacted in 2011). According to the legislative counsel’s digest, willful violation of this requirement is a criminal offense under the Knox-Keene Health Care Service Plan Act of 1975. [ADDED 2011-10-27]
Termination for gross misconduct – send a COBRA denial-of-coverage notice: If you terminate an employee for gross misconduct (for example, fighting), and the employee won’t be eligible for COBRA benefits, it might be a very good idea to give the employee a written notice of that fact. See this 2011 article by New York attorney Keith McMurdy. [ADDED 2011-10-28]
The basics: Several years ago I wrote a series of posts explaining, from a 10,000-foot level, the basics of how business insurance works, along with things businesses should know about insurance certificates that another party might provide, as well as important points about additional-insured endorsements. [ADDED 2011-11-03]
Keep your contractors’ insurance certificates where you can find them: This posting recounts how one company, which had hired a painting contractor, was sued by an injured employee of the contractor. The painting contractor had provided the company with an insurance certificate, but the company couldn’t find it. The company ended up paying to settle the claim; if it had been able to find the contractor’s insurance certificate, it might not have had to pay anything. [ADDED 2011-11-03]
Employer liability insurance might not provide coverage to defend against a claim brought by the EEOC: See this article by Quarles & Brady lawyers Fred Gants and Craig O’Loughlin, discussing Cracker Barrel Old Country Store, Inc. v. Cincinnati Ins. Co., No. 3:07-cv-00303 (M.D. Tenn. Sept. 16, 2011) (granting insurance company’s motion for summary judgment). [ADDED 2011-10-29]
Mergers & acquisitions
Acquiring a copyright infringer led to a $1.3 billion damage award against SAP — and criminal charges to boot: In 2005, the German software giant SAP AG acquired a much-smaller company called TomorrowNow. The smaller company was a third-party provider of maintenance services for the database software of SAP’s arch-rival, California-based giant Oracle Corporation. TomorrowNow’s founder stayed on after the acquisition to continue running the company as an SAP subsidiary. ¶ It turned out, though, that TomorrowNow had done some illegal things, including unauthorized copying of Oracle software and documentation. In 2007, Oracle filed a copyright-infringement lawsuit against SAP. As the case progressed, SAP shut down TomorrowNow, and its founder left the company. Before trial, SAP admitted that TomorrowNow had done wrong, asserted that Oracle’s damages were a fraction of what Oracle claimed, and tried to settle the case, ¶ Oracle, though, relentlessly pursued the matter, and was rewarded with a staggering $1.3 billion jury verdict (later reduced to “only” $272 million; at this writing the case likely will be appealed). ¶ Then the feds piled on: In September 2011, the U.S. Attorney’s office brought criminal charges against TomorrowNow for copyright infringement and unauthorized computer access. SAP agreed to pay $20 million on behalf of TomorrowNow to settle the charges. [ADDED 2011-11-03]
Ownership of employee inventions is not a given: An employer might or might not own an invention created by an employee. This flow diagram and its accompanying notes will help you quickly analyze how U.S. law works on that score. [ADDED 2011-10-31]
Patent filings needn’t be painful: It’s usually possible to draft and file a solid provisional patent application in one day — or, preferably, two half-day sessions — by adapting a systems-analysis diagramming technique, as described in this post. (This slide deck summarizes why the traditional patent-drafting process is so often described as “painful.”)
Patent infringement depends on the patent claims: A patent isn’t infringed just because the accused infringer does what the patent describes. What matters is whether the accused infringer does what’s stated in at least one of the patent’s claims. This 2010 post, adapted from something I wrote for a programmers’ forum, explains how patent claims work in terms of logical AND and OR operations. [ADDED 2011-10-31]
People (managing them)
Overtime pay: See the entry under the HR Department heading.
Retaliation — real or imagined — against an employee for complaining about harassment or discrimination can lead to trouble: If an employee complains about alleged harassment or discrimination (racial, sexual, etc.), it’s important for supervisors to try to avoid doing things that might create an impression of retaliation against the complaining employee. To grossly oversimplify the legal test: If a reasonable person could conclude that there was retaliation, then the jury might have to decide whether or not it actually happened — and that means (expensive) depositions and pre-trial preparation, not to mention the risk of “rolling the dice” with the jury. There are tons of cases to illustrate the point; a decent tutorial is found in Moore v. Third Judicial District of Michigan, No. 80-12353 (E.D. Mich. Sept. 29, 2011) (granting partial summary judgment in favor of employer on discrimination and harassment claims, but denying summary judgment on retaliation claim).
Employee data privacy: Several countries, notably those of the European Union, impose fairly-strict rules for maintaining the confidentiality of employee data. See this overview by Scott E. Landau and Bradley A. Benedict of the Pillsbury Winthrop firm. [ADDED 2011-10-27]
Pregnancy harassment & discrimination: As summarized by the U.S. Equal Employment Opportunity Commission (EEOC), the Pregnancy Discrimination Act (which applies to companies with 15 employees or more) makes it unlawful to discriminate against or harass a woman because of pregnancy, childbirth, or a medical condition related to pregnancy or childbirth. For more details, see the EEOC’s summary page at http://goo.gl/eIMm7, which contains links to additional reference material. [ADDED 2011-11-06]
Family medical leave under federal and state laws: As summarized by the U.S. Department of Labor (at http://goo.gl/8y604), the federal Family and Medical Leave Act (FMLA) provides an entitlement of up to 12 weeks of job-protected, unpaid leave during any 12-month period to eligible, covered employees for the following reasons: 1) birth and care of the eligible employee’s child, or placement for adoption or foster care of a child with the employee; 2) care of an immediate family member (spouse, child, parent) who has a serious health condition; or 3) care of the employee’s own serious health condition. The Act also requires that employee’s group health benefits be maintained during the leave. ¶ Some states, and even a few cities such as San Francisco, have their own laws or ordinances requiring paid family medical leave; check with your lawyer, or at least do an on-line search, to see whether your state or city is one of them. [ADDED 2011-11-06]
English-language employment documents can be trouble in foreign countries: Translating key employment-related documents into the local language can make good business sense, not least because it may be required by local law. French law, for example, is notoriously aggressive in requiring workplace communications to be in French and even penalizing the use of other languages. For example, a French court held that a terminated employee was entitled to his full at-target bonus because his bonus term sheet was in English — this, even though the employee understood English perfectly well. The French are far from the only ones who do this sort of thing. See this article by White & Case attorney Donald C. Dowling. [ADDED 2011-11-07]
Transgender / transvestite discrimination: California’s Assembly Bill 887 (2011) amends the definition of “sex” in various statutes to prohibit discrimination on the basis of gender identity and “gender expression”; the latter is defined as “a person’s gender-related appearance and behavior whether or not stereotypically associated with the person’s assigned sex at birth.” [ADDED 2011-10-27]
Termination for social-media postings: Terminating an employee for posting on Facebook (or Twitter, Tumblr, etc.) about your company might or might not get you in trouble with the National Labor Relations Board (NLRB).
Termination for violating employer policies might be illegal: A long-term care facility reprimanded one of its supply clerks for violating the facility’s dress code by wearing a hat. The clerk took cell-phone pictures of other employees wearing hats — some, apparently, without the permission of the other employees — and used the pictures in enlisting support from her colleagues to protest inconsistent enforcement of the dress code. ¶ The facility then fired the clerk for taking pictures of employees without permission, although the facility apparently had no policy prohibiting such photography. ¶ The National Labor Relations Board found that the fired employee had been engaged in “concerted activity” protected by the National Labor Relations Act; the facility was ordered to reinstate her and pay her back pay with interest. See NLRB v. White Oak Manor, No. 10-2122 (4th Cir. Oct. 28, 2011) (unpublished; affirming Board decision).
Reimbursing employees’ attorneys’ fees: California Labor Code section 2802 requires an employer to “indemnify [that is, reimburse] his or her employee for all necessary expenditures or losses incurred by the employee in direct consequence of the discharge of his or her duties, or of his or her obedience to the directions of the employer, even though unlawful, unless the employee, at the time of obeying the directions, believed them to be unlawful.” This has been held to include the employee’s attorney’s fees incurred in defending against third-party claims, but not in successfully defending against a suit by the employer itself. See this article by Seyfarth Shaw lawyers Robert Milligan and Joshua Salinas, discussing the California Court of Appeal holding in Nicholas Laboratories, LLC v. Christopher Chen, No. G044105, (Cal. Ct. App. Oct. 12, 2011) (affirming trial-court judgment in favor of employer). [ADDED 2011-10-28]
Credit checks as employment screen: Although credit checks can sometimes be useful in screening employment candidates, a number of states have laws restricting that sort of thing — see this article by Littler Mendelson attorneys Rod Fliegel and Jennifer Mora.
Criminal background checks of potential employees: Using criminal background checks in deciding whom to hire or not hire can sometimes lead to trouble. See this posting by Littler Mendelson attorneys Rod M. Fliegel and Jennifer L. Mora and the reference materials cited there. [ADDED 2011-11-02]
Written statement of pay rate, etc.: California and New York (possibly among other states) require employers to provide certain employees, when they are hired and when the information changes (and possibly each year as well), with a written statement of, among other things: • the employee’s rate or rates of pay and overtime pay; • the employer’s regular payday; • the employer’s name, including any “doing business as” names, and its physical address. (Suggestion: Check with the state labor authority in your state to see if it has published a template.) [ADDED 2011-11-02]
Hiring away a competitor’s employee: If you hire away one of your competitor’s executives or star employees, you shouldn’t assume the competitor will sit still and not take you to court for misappropriation of confidential information or for tortious interference with a non-competition covenant. This article by Drinker Biddle attorneys Daniel Aiken and Aaron Moyer explains some of the legal due diligence you can do to help protect yourself. [ADDED 2011-11-02]
Reporting and disclosure
“Conflict minerals” disclosures: California requires any public company doing business with the state to comply with (not-yet issued) SEC regulations requiring disclosure and certification of whether or not the company uses “conflict minerals” — gold, tantalum, tin, and tungsten — in its products and/or its manufacturing processes. See this client update by Morrison & Foerster. (The SEC has proposed, but not yet finalized, similar rules, which are proving controversial.) [UPDATED 2011-10-29]
Human trafficking disclosures: Beginning January 1, 2012, retail sellers and manufacturers that do more than $100 million in gross receipts worldwide and “do business” in California must provide specific disclosures about human trafficking and slavery in their supply chains, under the California Transparency in Supply Chains Act of 2010, analyzed in this May 2011 article by Thomas W. White and Ayo Badejo of the WilmerHale law firm. [ADDED 2011-10-27]
On-line sellers should keep the FTC rules in mind: The [U.S.] Federal Trade Commission has proposed rules to govern on-line sales, similar to those that already govern telemarketing sales. See this memo by Locke Lord attorney Paul Van Slyke for an overview and links to source materials. (Personal note: Paul was one of the first partners I worked for, at his and my former law firm, back when I was a baby lawyer.) [ADDED 2011-11-02]
California requires written commission agreements: Starting on January 1, 2013, if you pay your employees commissions for services rendered in California — even if you don’t have a fixed and permanent place of business in that state:
- you need a written employment contract;
- the contract must state the method by which the commissions will be (i) computed and (ii) paid;
- the contract arguably must be signed in advance by both you and the employee;
- you have to give the employee a signed copy of the contract;
- you have to get a signed receipt for the contract from the employee; and
- if the contract expires but the parties continue to work under its terms, those terms are presumed to remain in full force and effect until the contract is superseded or employment is terminated by either party.
This is the result of AB 1396, which amended California Labor Code section 2752. (The amended section also contains a definition of “commission” along with some exclusions.) [ADDED 2011-10-28]
Price fixing and other collusion can lead to jail time: Agreeing with a competitor to divvy up customers, or to keep prices at an agreed level, or to take turns submitting the winning bid in response to RFPs, can result in indictment and prosecution by federal- or state authorities for violation of the antitrust laws — or simply for obstruction of justice. See this post for some real-life examples. [ADDED 2011-10-28]
A customer’s harassment of employees can get the employer into trouble: In 2011 the U.S. Equal Employment Opportunity Commission (EEOC) filed a lawsuit against Fred Meyer Stores for failing to stop a customer from sexually harassing several female employees. (Reportedly, the customer in question was 84 years old and died before the EEOC filed its complaint.) Said the EEOC in a press release:
… female employees at Fred Meyer’s Oak Grove store in Milwaukie, Ore., were sexually harassed by a customer who visited the store almost daily, and often several times a day, since at least 2007. He would sit by the employee time clock in order to pull women onto his lap as they walked past to punch in. He would also rub up against female workers, giving unwanted hugs and groping their bodies, the EEOC said. … Despite numerous complaints by the staff, the EEOC said, Fred Meyer managers excused the customer’s offensive behavior and dismissed it as nothing more than ‘hearsay,’ even though the women were giving firsthand accounts of their experiences. The managers told employees that their reports were not actionable unless witnessed by management or the loss prevention department.
Immunity from defamation liability for third-party postings, comments, etc.: When someone feels they’ve been libeled by a comment on a Web site, they’re usually tempted to sue the Web site provider and not just the commenter. The Web site provider is probably easier to find (the commenter might be anonymous), and could have more money to satisfy a judgment. But in the U.S., a federal statute offers some pretty strong protection to Web site providers; see generally a 2011 article, Protection Under CDA § 230 and Responsibility for “Development” of Third-Party Content, by Edward Fenno and Christina Humphries, published in the ABA’s Communications Lawyer. [ADDED 2011-10-27]
Linking to a defamatory article won’t lead to liability in Canada: See the Supreme Court of Canada decision in Crookes v. Newton, 2011 SCC 47, discussed by University of Ottawa law professor Michael Geist.
A browse-wrap Web site agreement without an “I agree” button might not be enforceable: For a survey of how different kinds of Web-based contracts have or have not been enforced, see this September 2011 article from the ABA’s Business Law Today magazine, by Raymond P. Kolak and Ryan D. Strohmeier.
The customer, not the seller, should click on the “I agree” button: UPS might be liable for the $12,000 cost of an engagement ring that it shipped to a buyer on behalf of an on-line seller (who may have sold the ring on something like eBay or Craigslist). According to the seller, the UPS employee who took the ring package assured him that UPS would accept only cash. But the buyer gave UPS, and UPS accepted, a cashier’s check for the ring — a check that turned out to be fraudulent. The terms of service displayed by the UPS self-service computer included a disclaimer of liability, but the seller denied that he had ever clicked on the “I agree” button; in an affidavit, he said that it was a UPS employee who entered all his information. A trial court granted summary judgment in favor of UPS, but an appeals court reversed, holding that a trial was necessary to determine whose version of events was correct. Marso v. United Parcel Service, Inc., No. No. COA11-201 (N.C. App. Sept. 20, 2011), discussed in this blog posting by contracts law professor Meredith H. Miller.
A trademark owner can’t necessarily preempt the corresponding domain name: Law professor Eric Goldman’s Technology & Marketing Law Blog summarizes a case in which the owner of a trademark for motorcycle parts, AirFX, muscled aside an indoor skydiving company that registered the domain name, whereupon the skydiving company sued the motorcycle parts company for reverse hijacking. ¶ The motorcycle parts company convinced a UDRP panel to take the AirFX.com domain name away from the skydiving company and transfer it to the motorcycle parts company. The skydiving company struck back by filing a lawsuit against the motorcycle company for “overreaching” its trademark rights by reverse-hijacking the domain name. ¶ The court refused to dismiss the skydiving company’s lawsuit, ruling that the company would be allowed to put on evidence to try to prove its claim. [ADDED 2011-11-03]
A Web hosting service that knowingly hosts a trademark counterfeiter can be forced to pay the trademark owner’s resulting damages: In 2011, the Louis Vuitton company ended up with a judgment of more than $10 against a service that had hosted a Chinese-based Web site that sold Louis Vuitton knock-offs, then ignored numerous infringement notices from the company. See Louis Vuitton Malletier, S.A. v. Akanoc Solutions, Inc., No. 10-15909 (9th Sept. 9, 2011) (affirming in part and reversing in part the trial court’s judgment after jury verdict). [ADDED 2011-11-09]
Listing a (U.S.) state in a drop-down menu might be enough to get you sued there: See this blog posting about a Nevada company that was sued for trademark infringement in Utah — it tried to get the case dismissed on grounds that it had no purposeful contacts with Utah, but the court refused, saying that the inclusion of Utah in a drop-down list for the user to choose was enough. [ADDED 2011-11-09]
Terminating a user’s account: If you terminate a user from your company’s online service, can the unhappy ex-user file suit? Law professor Eric Goldman explains 47 U.S.C. § 230(c)(2)’s role in making the answer “no,” and argues why this immunity for online providers is sound policy.
“Outing” a whistleblower may violate the Sarbanes-Oxley Act: A Halliburton employee filed a confidential complaint with the SEC about certain of the company’s accounting practices. After the SEC opened an investigation, the company’s general counsel sent out a “document retention” email to a number of people — and the email specifically identified the employee. In due course the SEC notified Halliburton that it would not take any enforcement action in response to the employee’s complaint. ¶ The employee later felt shunned by his co-workers; eventually he resigned, and filed a complaint for retaliation with the U.S. Department of Labor. The department’s Administrative Review Board concluded that the sequence of events amounted to illegal retaliation against the employee, which might entitle him to damages — and could lead to criminal prosecution. See Menendez v. Halliburton, Inc., No. 92-002 and 003 (Dept. of Labor Admin. Rev. Bd. Sept. 13, 2011) (reversing ALJ determination in part), explained in this update by the Duane Morris law firm. [ADDED 2011-11-07]