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.

photo - elder abuseFinancial abuse of the elderly not only harms the older person but also harms those who aren’t getting the financial support they’re entitled to. A lawsuit filed in December alleges an elderly woman with good intentions was manipulated by a financial advisor. A charity that at one point was the beneficiary of a trust created by a wealthy, elderly woman found itself out in the cold. The financial advisor allegedly found a $2.4 million windfall, according to mynewsLA.

Seal Beach based charity Los Angeles Thoracic and Cardiovascular Foundation claims Juanita Earley’s investment adviser, James Schaedler, took money meant for the organization. The defendants are Schaedler, Merrill Lynch (the wealth management arm of Bank of America) and Banc of America Investment Services Inc. (BAIS, Merrill’s predecessor). Financial elder abuse and negligent supervision are the causes of action.

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photo - DTSAA bill allowing a private cause of action for trade secret theft was approved by the Senate Judiciary Committee in January. The Defend Trade Secrets Act (DTSA) would create a private cause of action based on federal law. Its remedies would be consistent with those provided by federal law to owners of other forms of intellectual property such as patents, trademarks and copyrights.

The goal of the bill is to discourage the theft of corporate trade secrets. If it can be shown such a theft occurred it would allow companies to go after the (alleged) thieves of confidential business information in federal court. The DTSA would amend the Economic Espionage Act of 1996 (EEA) to create a federal private right of action for trade secret theft. As it stands now the EEA only allows criminal law violations for trade secret theft and a civil lawsuit on the matter would have to be based on state law.

The bill as approved by the committee,

  • Provides for injunctions, civil seizure orders and damages, and
  • Changes the EEA’s definition of “trade secret” to align it with the definition contained in the Uniform Trade Secret Act which has been enacted by 47 states (including California).

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photo - get in writingIt’s something lawyers often say to people claiming to have a “contract” or “agreement” that’s supposedly broken. Often what supposedly was agreed to was never formalized in writing. Oral contracts are binding and enforceable. All the plaintiff has to do is prove it existed and both parties agreed to it. The fact the “contract” or “agreement” were only spoken words, often in the presence of no witnesses, can make that difficult if not impossible.

It’s not just Mom & Pop businesses who have this problem, as a lawsuit described in CNN/Money shows. At issue is the now halted $475 million dollar sale of Forbes magazine to a group of Chinese investors, doing business as in Hong Kong as Integrated Whale Media Investments.

The Forbes family has filed suit against Integrated Whale for failing to pay up. Its complaint, filed in Delaware in October, alleges Integrated Whale,

  • Purchased the publishing business last year. It borrowed money from the Forbes family to finance the purchase and is accused of failing to honor its contract and defaulting on the loan.
  • Failed to make its first interest payment due on October 1, 2014. The terms of the agreement require Integrated Whale to repay the entire amount of the loan, which it failed to do.
  • Has “actively resisted … efforts to collect on the unpaid debt by any means necessary, no matter how improper…They have also wasted corporate assets and abused their position as controlling shareholder of Forbes Media.”
  • Investors perjured themselves in court testimony in the British Virgin Islands in the course of another legal action Forbes filed to force the company to repay the loan and it “potentially faces being placed into liquidation due to its failure to pay its debt.”

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