All businesses have some kind of intellectual property (IP) that helps them stand out from the crowd and be successful. Anything of value is worth protecting, including IP. There are many ways a restaurant’s IP rights can be protected.

Trade secrets are those things a restaurant owner can’t, or doesn’t want to, file for trademark or patent protection. This can include customer lists, marketing and sales plans, processes, recipes and many other items. These things must actually be kept secret. Having employees and vendors sign non-disclosure agreements should help.

Recipes are intellectual property. They can be a trade secret like the formula for Coke. Can they be patented? Patents can be granted for any “new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof” according to federal patent law. A list of ingredients can be a composition of matter and/or manufacture and how the product is produced can be a process.

Photo - restaurant IPBut the subject of the patent application must be “novel” and “nonobvious” so it can’t have existed before, be an obvious improvement or alteration of a previously known invention, which could be determined by someone with reasonable skill in the art encompassed by the invention. This would have to be quite a recipe to be patented given how many people have been cooking for thousands of years coming up with countless recipes.

The name of the restaurant (and possibly the name of the owners) and the names of food or drinks can be brand names that can be trademarked and not used without permission. If you’re buying a restaurant make sure those who owns it own the name and it’s listed as an item being purchased.

One example of a restaurant trademark fight is going on in Texas where for the third time since 2002, Houston’s Mambo Seafood is suing another restaurant, Samba Seafood in Humble, Texas, to stop it from stealing a trademarked logo, color scheme and name of an appetizer (“Vuelva a la vida”), according to the Houston Chronicle.

Mambo accuses Samba of being a bad imitator who is intentionally trying to deceive customers by its intellectual property theft and it has hurt Mambo’s business because of its “poor food and service.” The legal action filed in Houston federal court seeks,

  • An injunction to force Samba’s to stop its unauthorized use of Mambo’s trademarks.
  • Damages for unfair competition, copyright infringement, trademark infringement and lost profits.
  • A seizure of all “infringing” material, including signs, menus and advertising.

Mambo Seafood has been in operation for two decades and since 2001 under its current name. It has eight restaurants in Texas. The company has already sued a restaurant called Mambo Grill and Illinois restaurants named Mambo Seafood II.

  • Mambo Grill was accused of naming a cocktail and soup after “vuelve a la vida.” Mambo Seafood won the case in 2003. The judge issued a permanent injunction against Mambo Grill requiring it change its name, to stop using any Mambo Seafood names and remove any “vuelve a la vida” items from its menu.
  • Mambo Seafood sued multiple parties involved in two Illinois seafood restaurants bearing the company’s name in 2008. The legal action claimed “the name and logo are exact copies of the plaintiff’s marks” showing the intent to “mislead the public to believe that defendants’ restaurants are part of and an extension of the ‘authentic’ or ‘original’ Mambo restaurants, which is not the case.” The case was settled a year later.

Whether you’re a restaurant owner or owner of another business and you would like help in protecting your IP assets, contact our office so we can talk about what IP you own and what should be done to protect it.

photo - shark tankTo survive and grow you need to protect your company’s intellectual property (IP). Your product designs, marketing plans, customer lists and other proprietary information are what make your business unique. Recognizing and protecting that value may also make it easier to attract investors, as patent Vic Lin points out in a recent article for Entrepreneur.

He writes about the TV show Shark Tank and how often he sees the potential investors (the sharks) on the show ask contestants (entrepreneurs seeking funding) about their IP, what it is, whether it can be copied and if it’s protected just like real world investors do when they talk to business owners outside of TV studios.

Lin writes he’s repeatedly seen (on Shark Tank and in real life) entrepreneurs who understand there’s a high risk for copying (and who take steps to prevent it) normally have more success raising capital than those who ignore or don’t understand the risk. Those steps to protect IP help entrepreneurs attract investments because their success is more assured, more protected, than the future of a business selling a product just hoping there won’t be any knock offs.

  1. xCraft

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photo - PIMCOBill Gross, the billionaire “Bond King” and the person who co-founded the Pacific Investment Management Co. (PIMCO) in 1971 no longer is part of the company and is suing it. The Newport Beach company was sued in state court in Orange County in October. The lawsuit alleges Gross was forced out by a “cabal” of other executives seeking his bonus, resulting in a loss of $250 million, according to Reuters. Forbes estimates Gross’ net worth is nearly $2 billion.

This is a case of a messy split up of a co-founder of a business and its current management. While Gross portrays his forced resignation the product of greed and conspiracies by others, PIMCO defends itself by stating,

  • It’s simply a parting of the ways. Gross and PIMCO’s management couldn’t agree on how the company should move forward into the future.
  • The returns on the investments Gross has been making have been declining and clients have moved their money out of the company.
  • The assets Gross managed peaked at $293 billion in April 2013 but have since dropped by about two-thirds to less than $100 billion.

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photo - unsocial media by Automotive SocialNonprofits in some ways are much like businesses. They need to raise revenues, control costs, have client bases they need to satisfy and they must create and defend their brands. Just like for profit businesses a nonprofit organization can use legal action against another entity if their trademarks have been violated. But just like businesses with litigation comes possible public relations issues.

Two nonprofits are in the news for their aggressive trademark and copyright protection approaches, Susan G. Komen for the Cure and the Wounded Warrior Project.

Komen’s major fundraising events nationwide are their “races” for a cure for breast cancer, which are long distance walks where participants obtain donations and businesses sponsor the events. Komen’s logo is a pink ribbon which has also become popular. It has over 200 registered trademarks. Given their success others have gotten on the “for the cure” bandwagon and Komen is fighting back, according to the Stanford Social Innovation Review.

Komen is trying to find possible trademark violators and has threatened hundreds of non-profits with legal action if the alleged violations don’t stop. The Huffington Post reports that organizations involved with Kites for a Cure, Par for The Cure, Surfing for a Cure and Cupcakes for a Cure have been targeted. Kites for a Cure was warned not only not to use “for a cure” but also the color pink. Those organizing the “Mush for a Cure” sought to trademark their name only to have it opposed by Komen.

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photo - new franchise lawA new state franchise law goes into effect on January 1 which is much more favorable to franchisees. It makes it more costly for franchisors to pull out of agreements and gives franchisees more time to correct any alleged breach of a franchise agreement.

The new California Franchise Relations Act will cover any franchise agreement signed or renewed after January 1 as well as any franchise agreements that have an indefinite duration which may be terminated by the franchisee or franchisor without cause.

The part of the new law that should have the biggest effect on franchisor/franchisee relations are the new repurchase requirements.

  • Under prior law a franchisor could terminate a franchise agreement or not renew it with no requirement to repurchase the franchise’s assets so long as such a termination or nonrenewal was done following the terms of the franchise agreement and the Act.
  • Under the new law with a franchise termination or nonrenewal franchisors must buy from the franchisee at the value of price paid (minus depreciation) all inventory, equipment, fixtures and furnishings purchased or paid for by the franchisee under the terms of the franchise agreement or any connected agreements.
  • The prior law required franchisors to repurchase the franchisee’s resalable current inventory if a termination or failure to renew an agreement was done in violation of the Act.
  • Franchisors that terminate or fail to renew a franchise in violation of the new version of the Act must pay the franchisee the fair market value of the franchised business, its assets and any other damages incurred by the franchisee. The franchisor can deduct from such payments amounts owed to it by the franchisee.

Other changes are fairly simple and are consistent with franchise laws in other states.

  • Except as otherwise provided by the Act the new language limits a franchisor’s ability to end a franchise for good cause, which would be the failure of the franchisee to substantially comply with the franchise agreement after getting sixty days’ notice (the period was thirty days in the prior version of the law) before such termination.
  • Franchisors won’t be allowed to restrict the sale or transfer of a franchise to another person if the transferee is qualified under the franchisor’s standards for new or renewing franchisees.

The bill was co-authored by Assembly member Chris Holden. He had testified on behalf of the new law, according to his website, “As a former small business franchise owner, I can tell you that the one-sided nature of a franchise relationship quickly becomes apparent after signing these documents.” The changes were modeled after franchise laws in Minnesota, Nebraska, New Jersey, Rhode Island and Wisconsin.

Holden’s website states a statewide survey of franchisees found that 40% of respondents reported their agreement could be terminated due to acts they took that they thought were appropriate to operate their business. When asked if they would recommend franchising to others 65% said no.

The relationship between a franchisee and franchisor can be a difficult one and is bound by state statutes as well as contract law principles developed in state courts over the years. Before signing a franchise agreement I’ts critical you understand all the possible effects of the contract. Contact our office if you have questions about such an agreement, want it reviewed or you’ve already signed such a contract and are having serious problems with the other party. We can talk about your contract, applicable laws and your best options.

Photo - fake hedge fundsA New York resident has been sentenced to five to fifteen years in prison for defrauding investors of about $800,000. Moazzam Ifzal Malik, a.k.a. Mark Malik, 33, of Lahore, Pakistan was a very busy and ambitious guy. Instead of honestly making money he took short cuts and is now in prison.

Malik was convicted in December by a jury after a two week trial in New York County Supreme Court of 28 counts charged in the state Attorney General’s indictment, including grand larceny and securities fraud, according to a press release issued by the Attorney General’s office.

Malik invented a number of fictitious hedge funds which he claimed routinely outperformed the market by over 200%. From 2011 to early 2015 he convinced investors that he managed multi-million dollar hedge funds that earned high returns. Malik,

  • Advertised his hedge funds on his own website and on the internet.
  • Also scammed money the old fashioned way by making cold calls to possible investors/victims.
  • Admitted during the trial he solicited dozens of investors in the United States and abroad.
  • Convinced at least seventeen people to invest more than $800,000 in his hedge funds which was actually spent to support his lifestyle with $215,000 in cash withdrawals from accounts and an additional $210,000 spent on hotels, airline tickets, rental cars, restaurants, electronics, utilities and a karaoke bar.

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photo - jammin java pump and dumpBob Marley is the world’s most recognized reggae superstar even 34 years after his death. His socially conscious music touched people across the globe and we can only imagine what he might think of his family name being associated with possible shareholder fraud.

The former chief executive of Jammin’ Java Corporation, which sells Marley Coffee, Shane Whittle been charged by the Securities and Exchange Commission (SEC) with fraud in November, according to the Los Angeles Times. Whittle is accused of running a “pump-and-dump” stock scheme that resulted in $78 million in illegal trading profits.

A “pump-and-dump” scheme, according to the SEC, normally involves positive and false publicity about the stock and the company which can drive up the number of people buying the stock, increasing its price.

  • False claims are often made on social media, internet bulletin boards and chat rooms. People are urged to buy the stock early then sell it before the price drops. The party making the statements often claims to have inside information about some future development or skills in picking stocks.
  • Those “pumping” the stock price often are actually company insiders or people paid to promote the stock and/or they will profit by selling their shares due to increased interest in the stock created by bogus claims.
  • Once those involved in the scheme “dump” their shares and the hype stops, the price drops and investors find they’ve invested in a company worth much less than they believed.

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organization ISIS holds much territory in Syria and Iraq and has inspired attacks in Europe and California. It engages in genocide, recruits child soldiers, has given its blessing to the rape of enslaved women and broadcasts mass murder regularly on the internet. In addition to a long list of war crimes it also violates copyright laws.

Many artists are not surprised if their works are used without permission, whether it’s photos, artwork or music. In one instance a piece of art created in the hopes of stopping violence is being used by ISIS to promote it, according to Fstoppers.

Brian McCarty created a number of photographs based on drawings of refugee children. He works with them by using art therapy to help them cope with their situation. The image, entitled “Cinderella” is from his series WAR-TOYS.

UntitledMcCarty used a drawing of a crying child surrounded by soldiers as inspiration. He took toys he found amongst the refugees and nearby wreckage to create the photo above. He found his image on a photo theft alert website and he sent it to a few Arabic speaking friends. They confirmed it had been stolen and used as war propaganda by ISIS.

They took the photo and altered it so that their flag and an open Quran are being protected by a bubble (below). The text reads, “Even if war destroys everything, the Islamic sign and state is protected and will never fall down.”

Untitled2Though McCarty could have a case for copyright infringement he’s not going to court. He said even if he could collect damages he would never accept money from a terrorist organization. McCarty plans on continuing his work helping children who are the victims of war.

There is no such thing as an “international copyright” that protects a work.

  • Prohibitions against unauthorized use in a particular country are based on the laws of that country.
  • Most countries offer protection to foreign works under certain conditions and they have been greatly simplified thanks to international copyright treaties and conventions.
  • There are two main international copyright conventions, the Berne Convention for the Protection of Literary and Artistic Works (Berne Convention) and the Universal Copyright Convention (UCC). The United States has been a member of the UCC since 1955 and became a member of the Berne Convention in 1989.

Generally,

  • The works of an author who is a citizen or resident of a nation that signed on to these treaties can claim their protection. There can also be protection if the work us first published in a member country or published within 30 days of first publication in a Berne Convention country.
  • The Berne Convention has no formal requirements for protection. Under the UCC a notice should consist of the symbol © with the year of first publication and the name of the copyright owner (example: © 2006 John Doe). It must be located in a way and location to give reasonable notice of the copyright claim.
  • The use of a copyright notice is optional under U.S. law but using one makes sense because it can defeat a defense of “innocent infringement” of the copyright.

If you own a copyright that you believe has been infringed, either here in the U.S. or overseas, contact our office. If the law’s been broken by a criminal gang or terrorist organization your options may be limited, but we can discuss the situation anyway. Creativity isn’t limited to the art world and copyright infringers, it can be very handy when engaged in litigation too.

 

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Thanks to the internet there are people making a lot of money in ways that didn’t exist ten or twenty years ago. Some of those people, or more accurately their pets, are internet celebrities. If they’re smart they will use intellectual property protections such as trademarks and copyrights in order to protect and cash in on their internet celebrity status. One such celebrity is the Grumpy Cat.

Intellectual property rights are particularly important to the Grumpy Cat because he (she?) doesn’t make money by producing things or providing a service. It’s just the Grumpy Cat image and name that’s used and licensed to make money. If everyone could use that image and name to make money the Grumpy Cat would need a day job instead of a regular stream of royalty checks to keep the kibble coming.

The Grumpy Cat became an internet hit in 2012. Grumpy Cat Limited was created to take advantage of that notoriety. That company is engaged in an intellectual property dispute with a beverage company marketing the iced coffee “Grumpy Cat Grumppuccino.”

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photo - ex-employeesThis can happen in many ways but a recent Inc. magazine article brings up the fact that statements and opinions of former employees can damage your company’s reputation and make it more difficult to attract good job candidates. Just as online reviews of products and services (even lawyers) have multiplied across the internet, so have reviews of employers.

In the article J.T. O’Donnell describes a business owner having a hard time finding candidates for job openings, with three people backing out of interviews. With openings unfilled he was having a hard time meeting his clients’ needs. O’Donnell learned his company had restructured two years earlier resulting lay offs. Some of those let go used social media to blast the company and its management.

Just as you may do online research on people you’re considering hiring, those looking for work also may do online research of possible employers. These job seekers, especially ones whose skills are in high demand, may be very picky if they read things they don’t like. The job candidate may discount one or two truly negative reviews as being written by malcontents, but if multiple, consistent negative statements about your company or management are found they may be given some weight.

O’Donnell warns of three ways your well of job candidates could be poisoned by former employees,

  • Glassdoor: This website solicits ex-employees to anonymously share their experiences. The website advertises job openings and gives applicants the ability to research potential employers which are rated from one to five stars. As an example the A. Times has a 3.5 average from reviewers. Is your company listed? What rating do you get?
  • LinkedIn: It’s the top networking tool in the world. With a few clicks, a job candidate can search for and find your former employees, making it easier for candidates to get their off-the-record thoughts on their former employer.
  • Social Media: Just as angry clients and customers can lash out on Facebook or Twitter, so can ex-employees. Search your company name and find out who is saying what about your business.

O’Donnell suggests the best way to deal with this is to take your brand as an employer just as seriously as your brand for your product or service. She suggests you not shy away, that you take charge of it, publicize it and be transparent. Top talent doesn’t expect perfection but they would appreciate openness and honesty.

How do you prevent bad reviews from happening or at least reduce the chances they’ll be made? You could give your employees a contract stating a condition of employment is not disparaging your company. There are limits to this restriction, such as not including complaints to government agencies. Non-disparagement language could also be used as part of a severance agreement, along the lines of the person will get a certain number of weeks’ pay in exchange for not disparaging your company. If the contract is broken the ex-employee would owe your company the actual damages or a certain amount of money (whichever is more).

This is not a cure all, considering online reviews of employers can be anonymous, but it may give a disgruntled ex-employee second thoughts before writing a scathing Glassdoor review or responding to a LinkedIn message from a job applicant.

If you are having problems because of former employees or want to try to prevent them, contact our office so we can talk about your situation, applicable laws and how you can protect your business from unhappy ex-employees.