Patent Infringement Damages May Now Be Calculated Differently

Insight Michael Moradzadeh Michael Moradzadeh · January 12, 2011

In Uniloc v. Microsoft, an appeals court issued a decision that may change how infringement damages are calculated by precluding the use of the "25 percent rule of thumb" which has been used to calculate damages in most patent cases for the past fifteen years.  This decision marks an important step towards requiring patent plaintiffs to rigorously prove damages with facts connected to the value of the patented invention, and it is likely that future courts will more strictly scrutinize patent damages evidence. 

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TAX ALERT - New IRS Amnesty for Offshore Accounts

Insight December 22, 2010

In his speech before the 23RD Annual Institute on Current Issues in International Taxation in Washington, DC on December 9, 2010, IRS Commissioner Douglas Shulman said that the IRS is “seriously considering” a new partial amnesty program for taxpayers who report secret offshore bank accounts.

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BBB Offers Mechanism to Prevent Deceptive Ads

Insight Yaacov P. Silberman Yaacov P. Silberman · December 17, 2010

As we await the release of the FTC Green Guides, advertisers also should be aware of the BBB’S National Advertising Division (“NAD”) as a potential means for dispute resolution for false advertising claims.

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Watch out greenwashers; here comes the FTC

Insight August 23, 2010

The Federal Trade Commission ("FTC") was created in 1914 to regulate unfair trade practices. It issued its first set of Guides for the Use of Environmental Marketing Claims (commonly known as the Green Guides) under in 1992, which it then updated in 1996 and 1998. The Green Guides are meant to provide guidance to marketers so they can avoid making unfair and/or deceptive environmental advertising claims. Imagine that! Technically, the Green Guides informally interpret Section 5 of the FTC Act (15 U.S.C. §§ 41-58) ("The Act"), which governs unfair and/or deceptive advertising claims, including claims about environmental benefits and practices. Essentially, the Guides are a play book for how to stay out of trouble with the FTC.

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Has the PTO Gone to Pot?

Insight August 10, 2010

Pipe dreams of trademark protection for marijuana go up in smoke . . .

On April 20, 2010 the USPTO issued a federal service mark registration to Sunny Chan d/ba Good Leaf Collective for the mark GOOD LEAF COLLECTIVE for "Retail store and on-line retail store services featuring medical marijuana". Ironically (and probably much to the delight of Mr. Chan), April 20 is a counter-culture holiday amongst marijuana users. Unfortunately for Mr. Chan and the nearly 100 other applicants who are waiting for the USPTO to issue registrations for their marijuana related products and services, on July 20, 2010 the PTO had a change of heart and the applicant's pipe dreams may have gone up in smoke.

On July 20, 2010, the USPTO sent Mr. Chan a letter informing him that his federal service mark registration was issued mistakenly and has since been canceled. The letter continues to state that Mr. Chan's application has been restored to pendency and the file returned to the Examining Attorney to issue a refusal.

In a related twist, the USPTO publishes a Manual of Acceptable Identifications of Goods and Services on its website for use by federal trademark registration applicants . According to a July 19, 2010 WSJ article, on April 1, 2010 the PTO approved an ID for "Processed plant matter for medicinal purposes, namely medical marijuana". The USPTO offers a public service whereby applicants (or their counsel) can suggest IDs to be added to the manual. I have used this service many times to assist clients in the sustainabiltiy space get their innovative product and service descriptions pre-approved by the PTO. Apparently, someone suggested the medicinal marijuana ID, which the PTO approved given that there are fifteen states in which medical marijuana is legal (AK, CA, CO, DC, HI, ME, MI, MO, NV, NJ, NM, OR, RI, VT, WA). The addition of marijuana to the manual apparently created a rush on the PTO with several new applications filed for marijuana and marijuana related products and services. Apparently, the marijuana ID was removed in mid-July admist questions from the Wall Street Journal about its prudence.

Thus, for now, legal medical marijuana growers and purveyors will have to rely on common law rights, or use broader categories in their trademark applications -- such as dried plants or agricultural seeds -- to protect their trademarks nationwide.

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Obama Administration Approves $1.5 Billion in Foreclosure-Prevention Funding

Insight June 25, 2010

On June 23, the Obama Administration approved $1.5 billion in "Hardest Hit Fund" foreclosure-prevention funding for state Housing Financing Agencies. The funding is meant to support struggling homeowners in Arizona, California, Florida, Michigan, and Nevada.

President Obama established the "Hardest Hit Fund" in February 2010 in order to provide aid to those most affected by the housing downturn. This recent approval will assist struggling homeowners with negative equity through principal reduction, assist some individuals with mortgage payments, facilitate the settlement of second liens, facilitate short sales and/or deeds-in-lieu of foreclosure, and assist in the payment of arrearages.

The full press release from the Department of the Treasury is available here.

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Supreme Court Upholds Employer’s Right to Read Employee Text Messages

Insight June 21, 2010

The Supreme Court recently held in City of Ontario v. Quon that in certain circumstances an employer has the right to read text messages sent from and delivered to a pager issued by the employer to one of its employees. While reading employee text messages may generally violate the Fourth Amendment's guarantee against "unreasonable searches and seizures," the Court held in this case that since the employer conducted its review for a noninvestigatory, work-related purpose, it was withing its rights.

The source of the litigation arose in 2001 when the City of Ontario, CA, issued pagers to its employees, among them Jeff Quon who was working for the Ontario Police Department. Under the wireless service plan, monthly text allowances were limited and excess usage was charged. Quon was told by his supervisor that his text messages would not be monitored as long as Quon paid the overage fees. However, before acquiring his pager, Quon and others accepted the City's "Computer Usage, Internet and E-Mail Policy" under which the City "reserve[d] the right to monitor and log all network activity including e-mail and Internet use, with or without notice. Users should have no expectation of privacy or confidentiality when using these resources." Although texts were not explicitly included in this policy, the City made clear that texts would be treated the same as e-mails. When Quon and other officers incurred overage charges numerous times, it was proposed that perhaps the text allowance was too low and that the department should determine whether the excessive texting was work-related, and if so, to expand the monthly text allowances. In fact, the vast majority of Quon's texts sent and received while at work were not work related, and he was disciplined. However, Quon and others felt the review had violated their Fourth Amendment rights and filed this action. The Court upheld the City's right to review the texts.

This opinion is an important reminder to employers to ensure that their personnel policies convey a clear message to employees regarding privacy issues related to use of company communication systems. Also, employers should make sure that their managers are aware of company policy and are not making misrepresentations to employees.

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House Passes Changes to Carried Interest Taxation

Insight June 10, 2010

On May 28th, the House passed H.R. 4213, the "American Jobs and Closing Tax Loopholes Act." The Act addresses an array of issues, but has particular signficance for certain partnership and LLC "carried interests" for investment fund managers. If it goes through, the Act would prevent investment fund managers of venture capital, private equity, hedge and real estate funds from paying taxes at capital gain rates on investment management services income received as carried interest in an investment fund.

Under the proposed changes, return on invested capital in the form of carried interest would continue to be taxed at capital gain tax rates. But to the extent that carried interest does not reflect a return on invested capital, investment fund managers would eventually be required to treat seventy-five percent of the remaining carried interest as ordinary income.

The proposed changes would not take effect until 2011. However, for the bill to become effective it must also be passed by the Senate, an outcome which is not certain to occur.

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Class Action For 1.5 Million Wal-Mart Employees Affirmed By Ninth Circuit

Insight June 08, 2010

In the recently decided case of Dukes v. Wal-Mart Stores, the Ninth Circuit upheld a 2004 district court's decision to certify a class that could potentially consist of 1.5 million women employed by Wal-Mart since 1997. Through this gender discrimination class action, the employees seek back pay, declaratory relief, and injunctive relief.

The plaintiffs allege that Wal-Mart engaged in discriminatory pay and promotion practices in violation of Title VII by paying female employees less than their male counterparts and giving fewer promotions to women than to men.

In 2005, after the district court held that class certification was appropriate under Federal Rule of Civil Procedure 23, Wal-Mart appealed that decision claiming that the class did not satisfy Rule 23(a)'s class requirements and that the potential size and cost of the claim violated Rule 23(b)(2). While the Ninth Circuit did not comment on the merits of the case, it held that there was no violation of Rule 23 that would prevent the class action. Wal-Mart plans to appeal the case to the Supreme Court.

The Ninth Circuit also held that when a district court is determining class status under Rule 23, it must apply a "rigorous analysis." It will be interesting to see whether this standard benefits parties opposing or advocating class certification in the future.

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FINRA Regulatory Notice Regarding Regulation D Offerings

Insight June 07, 2010

The Financial Industry Regulatory Authority (FINRA) issued Regulatory Notice 10-22 on April 20, 2010. The notice, which came in light of recent abuses in Regulation D offerings, was intended to be a reminder to broker-dealers of their obligation to conduct a reasonable investigation of the issuer and the securities they recommend in offerings made under the Security and Exchange Commission's Regulation D under the Securities Act of 1933 (also known as private placements).

This obligation arises from the broker-dealer's "special relationship" to the customer and the representation, in recommending the security, that the broker-dealer has conducted a reasonable investigation and is basing the recommendation on conclusions drawn from the investigation.

If such a reasonable investigation is lacking, the broker-dealer must make that fact and the risks that arise from the lack of information known when making a recommendation.

Additionally, broker-dealers recommending securities offered under Regulation D must meet its suitability requirement under NASD Rule 2310, and must comply with the advertising and supervisory rules of FINRA and the SEC. That is, a broker-dealer must conduct a suitability analysis when recommending securities to both accredited and non-accredited investors that will take into account the investor's knowledge and experience.

While the notice admits that no list of reasonable investigation practices would suffice since each investigation must be tailored to the specific facts of the Regulation D offering in question, it does provide a list of sample investigative practices. A few of those include:

  • Examining the issuer's governing documents, noting particularly the amount of its authorized stock and any restriction on its activities.
  • Looking for any trends indicated by the financial statements.
  • Inquiring about internal audit controls of the issuer.
  • Contacting customers and suppliers regarding their dealing with the issuer.

The full notice is available at FINRA.org.

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