What Is Intellectual Property?
.jpg)
No matter what product your business makes or service it provides, it is likely that your business is frequently using and creating a great deal of intellectual property. So, what is intellectual property? Intellectual property, sometimes referred to by its initials, IP, refers to creations of the human mind that are protected by one or both of state or federal law in a fashion similar to real property (land) or personal property (an automobile). Inventions, literary and artistic works, business secrets, and symbols, names, images, and designs used in commerce are all considered intellectual property. The four forms of intellectual property are patents, copyrights, trademarks and trade secrets.
- Patents provide the right to exclude others from making, using and selling or offering for sale an invention that has been patented.
- Copyrights protect an expression of an idea reduced to a tangible form. For example, a work of art, this blog on intellectual property, a statue or a photograph is protected by copyright.
- A trademark protects a product or service by its name in such a way as to avoid confusion in the marketplace of the source of the product or services.
- A trade secret refers to a secret that one might use in their trade or business but which would provide an unfair advantage to another if taken. An example is the process and formula for making a special soda beverage or a recipe for cookie dough.
These four components all make up what is known as intellectual property. The Constitution defines what may be protected by federal law, namely, patents, copyrights and trademarks. Trademarks may also be registered in a state and both trademarks and trade secrets are regulated by state law. One can only register a copyright or apply for a patent through the federal government and can only enforce their registered copyright or issued patent in federal court. Though it may seem abstract at times, it is important to note that intellectual property is just as valuable as tangible property and is regulated by the federal and governments in this manner.
Annual National Security Small Business Conference on December 2-3, 2009 in McLean, VA
The National Defense Ind
ustrial Association (NDIA) is holding its annual small business conference on December 2-3, 2009 at the Hilton McLean Tyson's Corner, McLean, VA. This conference is a good opportunity for small businesses to participate in an open exchange of information and ideas with senior government officials from the Department of Defense and the Small Business Administration as well as pick up tips to enhance their bottom line.
NDIA provides a legal and ethical forum for the exchange of information between industry and Government on National Security issues, and this year’s conference theme is “Partners for Success: Small Business and the Military.” In addition to learning firsthand about available business opportunities with the U.S. Government and large businesses, some of the other highlights of the conference include sessions on preparing proposals to win more contracts, tips for small businesses on government procurement, and enhancing your business opportunities through organizational branding and strategic communications.
This conference will be valuable to small government contractors in the security industry, and shouldn’t be missed. For registration information, please visit NDIA’s Meetings and Events Webpage.
DC Human Rights Act May Apply to Virginia Employers
You manage the Virginia office of a company headquartered in the District of Columbia, and place an ad for a job opening in a Virginia newspaper. Thereafter, you conduct interviews for that position at your Virginia office, and hire a new employee who proceeds to work full-time in Virginia.
And a couple of years later, you terminate the employee for poor performance and the employee files a lawsuit against your company for discrimination. Clearly, the employee’s lawsuit must be brought in Virginia under Virginia law, right? If your answer is “yes,” you are not alone, as I would have answered “yes” as well. However, in light of a new D.C. Court of Appeals case, we would both be wrong!
In Monteilh v. AFSCME, AFL-CIO (PDF), the D.C. Court of Appeals held that an employee could maintain a lawsuit in the D.C. Courts under the D.C. Human Rights Act (D.C.’s anti-discrimination statute) even though the employee never worked one day for the company in D.C. According to the Court, the determinative factor was where the alleged discriminatory decisions took place, not where the employee may have worked during the course of his employment.
The Court reasoned that although the effects may have been felt outside of D.C., “recognizing jurisdiction under the DCHRA where actual discriminatory (and/or retaliatory) decisions by an employer are alleged to have taken place in the District is most faithful to the statutory language and purpose.”
The ramifications of this decision are quite significant for those businesses that are headquartered in the District of Columbia but maintain an office in Virginia. For one, the D.C. Human Rights Act (DCHRA) is much broader than the applicable anti-discrimination statutes in Virginia (namely Title VII) as the DCHRA prohibits discrimination based on race, color, religion, national origin, sex, age, marital status, personal appearance, sexual orientation, familial status, family responsibilities, matriculation, political affiliation, disability, source of income, and place of residence or business.
By contrast, Title VII only prohibits discrimination based on race, color, religion, sex, and national origin.
As this is a new ruling, it remains to be seen as to whether there will be a flood of similar cases filed. My guess is that we will see quite a few of these cases over the next couple of years. Certainly, given the potential impact to Virginia businesses, this head-scratcher of a case is something we will have to keep our eye on down the road.
Efficiently Managing Due Diligence in Acquisition Transactions
.jpg)
Are you or your company considering the acquisition of another business? If so, you will want to discover and analyze all material information necessary to fully understand the target company before signing on the dotted line.
Due diligence is one of the most risk-fraught elements of the transaction; however, it rarely receives the attention it deserves in acquisitions involving small privately held companies most often because of budgetary constraints. You don’t need to skimp on this phase, though – the proper implementation and execution of a well conceived due diligence review can control costs and expenses, reduce risk, and maximize the value of your investment.
A due diligence review reveals more than just potential “deal killers” in the target, it provides information that will be useful for valuing the stock or assets of the target and defining representations and warranties in the final sales agreement. Otherwise, how will you confirm that the business is what it appears to be and is worth the asking price?
The key to effectively and efficiently managing the due diligence phase of an acquisition is to include the following organizational elements into the review process:
- Prepare a Player’s List: Prepare a spreadsheet of contact information for each responsible person involved at the target company as well as your own team (i.e., address, telephone numbers, facsimile numbers and email addresses).
- Organize a Due Diligence Checklist: Prepare and organize a comprehensive Due Diligence Checklist with items grouped together in categories and columns for the names of the responsible team members, notes and status of each items.
- Assemble a Due Diligence Team: Assign a key staff member(s) to gather certain categories of documents. For example, make your accountant responsible for gathering and reviewing relevant financial documents and tax returns of the target company; chief operations manager responsible for gathering customer contracts; human resource manager responsible for gathering employee contracts and benefit information; etc.
- Structure the Due Diligence Process: Develop key phases for specific tasks, such as, the gathering documents, including on-site and off-site review; conducting research on target’s organization, liens, and litigation; researching the target’s industry, competition, long-term prospects; meeting with key management of the target company; document review; etc.
- Develop Milestones: Set reasonable deadlines for the review process with check points along the way to ensure complete and proper implementation of the due diligence process.
Due diligence should be approached as a business process in order to maximize the monetary benefits of the deal. Achieving success and efficiency in this phase of the transaction can be as simple as organization plus disciplined implementation.
Wrongful Termination: Business Owner Hit for $1.5 Million in Damages
An Ale
xandria federal court judge has awarded a plaintiff employee more than $1.5 Million in damages against her former employer stemming from allegations, which included sexual harassment, breach of contract, and constructive discharge. In the case of Wynne v. Birach, the employee, Elizabeth Wynne, sued her former boss and his company, Twin Star Holdings, alleging the owner of the company, Sima Birach, Jr., sexually harassed her, cheated her out of money owed under her employment agreement, and forced her to submit fraudulent financial documents.
You might ask, what was Mr. Birach’s response to these serious allegations? The answer: Nothing!
Mr. Birach and his company never put in a response to the allegations and basically ignored the proceedings. This resulted in Ms. Wynne obtaining a victory by default. In and of itself, it is somewhat remarkable that a company would fail to defend itself against such allegations. However, more significant than that, the court’s opinion sets forth at least two very important findings for employment law cases.
First, the court took judicial notice of the fact that Mr. Birach was the sole director of Twin Star Holdings, and based upon the uncontested allegations in the Complaint, Mr. Birach regularly used corporate funds to pay for his personal expenses. This finding allowed the court to pierce the corporate veil and hold Mr. Birach personally liable for the damages in the case. It is rare that a company’s owner is personally tagged for damages in a wrongful termination case. The Wynne case emphasizes, once again, the need for companies to observe corporate formalities to avoid the possibility of personal liability against corporate owners.
Second, Ms. Wynne was not terminated, but actually resigned from her position. Nevertheless, the court found that she was “constructively discharged” from her job because her boss subjected her to “repeated and blatant” sexual harassment, and she was repeatedly asked to violate Virginia law by submitting fraudulent financial documents. This is significant because courts in Virginia rarely find that an employee has been subjected to working conditions so intolerable that they have no other choice but to resign.
These two important findings from the Wynne case should not be diminished just because the employer did not show up to fight. The court ruled against Ms. Wynne on several of her other claims made under the Virginia Human Rights Act and against her on her assault claim; so she did not automatically win her constructive discharge and piercing the corporate veil claims because the employer defaulted. Rather, the court looked at the facts asserted and found they were sufficient to establish these claims.
Based upon prior rulings from the federal and state courts in Virginia, some employment law practitioners thought that obtaining a constructive discharge finding was virtually impossible in Virginia. The Wynne case assures us that is not the case.
New TRO Standard for Business Non-Competes
Most attorneys r.jpg)
epresenting a corporate client have gotten the late afternoon call that a former employee is now working for a competitor in violation of the employee’s non-compete, and likely using confidential corporate information. A double-whammy which your client wants stopped immediately!
Well, for years us lawyers practicing in the Eastern District of Virginia would get out our tried and true Complaint asking for a PI, along with the papers requesting a Temporary Restraining Order (TRO) to immediately stop the wayward former employee from wrecking our client’s business one second longer (assuming diversity of citizenship for access to federal court).
We used what had become well-known as the Blackwelder standard, named after the case of Blackwelder Furniture Co. of Statesville v. Selig Manufacturing Co., 550 F.2d 189 (4th Cir. 1977), which was later reaffirmed in Rum Creek Coal Sales, Inc. v. Caperton. The injunction standard adopted by these cases used “the balance-of-hardship test”.
However, a few months ago, the Fourth Circuit changed the tried and true tune of the Blackwelder standard. Citing a Supreme Court case from 2008, the Fourth Circuit ruled in The Real Truth About Obama, Inc. v. FEC (PDF), that it had been misapplying the preliminary injunction standard. Last year, in Winter v. Natural Resources Defense Council, Inc. (PDF), the Supreme Court held that in order to obtain a preliminary injunction, a plaintiff has to establish that:
- he is likely to succeed on the merits
- he is likely to suffer irreparable harm in the absence of preliminary relief
- the balance of equities tips in his favor
- an injunction is in the public interest
For some reason, the prior cases form the Fourth Circuit heavily emphasized prongs two and three. The practical effect of the Real Truth decision (apart from a new catchy sounding injunction standard) is yet to be determined, because despite its proclamations in Real Truth, the Fourth Circuit and the district courts in this Circuit will likely find it difficult to move from a legal standard that had been adopted by jurists and practitioners alike for more than thirty years. However, it may be the case that employers and their counsel will have to really go the extra mile to get a TRO, and actually meet all four prongs of the injunction standard. We will have to wait and see.
H1N1 Vaccine for Business Continuity
.jpg)
As concerns about the H1N1 influenza virus (the “swine flu”) escalate across the U.S., business owners face the daunting task of creating and maintaining a healthy workplace for employees. With estimates of 22 million H1N1 cases in the United States between April and October 2009, the H1N1 flu is of pandemic proportions. As the holiday season fast approaches, businesses should immediately implement an H1N1 preparedness plan to maintain business continuity.
The adoption of an H1N1 preparedness plan is especially important for small businesses. As noted by Karen Mills, the Administrator for the U.S. Small Business Administration, “For countless small businesses, having even one or two employees out for a few days has the potential to negatively impact operations and their bottom line. A thoughtful plan will help keep employees and their families healthy, as well as protect small businesses and local economies."
Although developing an H1N1 preparedness plan may seem a touch overwhelming, the process is not as involved as it may seem:
- Identify work-related exposures and protect employees from health risks
- Include business continuity measures for essential business functions, jobs, and roles
- Update human resource policies to reflect public health recommendations and workplace law
- Implement a telecommuting policy
- Allow employees to stay home if they are sick or if they have to care for a sick family member
- Establish procedures and triggers for activating and terminating the company’s response plan altering business operations, and transferring business knowledge to key employees
- Include a process to communicate information to employees
Given the uncertainties of the H1N1 influenza, you must take the time to put a preparedness plan in place. At a bare minimum, you should organize a meeting of your company's key decision-makers and discuss the basic components of an H1N1 plan. The Centers for Disease Control and Prevention has an excellent H1N1 guide for businesses and employers. So, give your business a vaccine against H1N1 with a preparedness plan, and protect your business from the H1N1 pandemic.
Stay Connected with H. Scott Johnson Jr.
Stay Connected with Angela H. France
Stay Connected with Malik Cutlar