Author: National Law Forum

A group of in-house attorneys developed the National Law Review on-line edition to create an easy to use resource to capture legal trends and news as they first start to emerge. We were looking for a better way to organize, vet and easily retrieve all the updates that were being sent to us on a daily basis.In the process, we’ve become one of the highest volume business law websites in the U.S. Today, the National Law Review’s seasoned editors screen and classify breaking news and analysis authored by recognized legal professionals and our own journalists. There is no log in to access the database and new articles are added hourly. The National Law Review revolutionized legal publication in 1888 and this cutting-edge tradition continues today.

NY City Bar White Collar Crime Institute

The National Law Review is pleased to bring you information about the inaugural White Collar Crime Institute, on Monday, May 14, 2012 from 9 a.m. to 5 p.m. in New York City, NY.

This excellent review of developments in criminal and regulatory enforcement has been organized by our White Collar Criminal Law Committee, chaired John F. Savarese of Wachtell Lipton Rosen & Katz. Our program will feature keynote addresses by Preet Bharara, United States Attorney for the Southern District of New York, and Eric Schneiderman, Attorney General of the State of New York. The panels on key legal and strategic issues will include senior government officials, federal judges, academics, general counsel of leading New York based corporations and financial institutions, and top practitioners in the field. We have crafted the program to maximize their value for white collar practitioners and corporate counsel.

Plenary sessions will focus on:
  • Providing perspectives of top general counsel concerning the challenges they confront in this new era of expanded corporate prosecutions
  • Discussions of the increasing importance of media coverage in these cases and its impact on prosecutorial decision-making.

Break-out sessions will address:

  • Techniques for winning trials
  • Ethical issues presented by white-collar corporate investigations
  • Trends in white-collar sentencing, and
  • The special challenges of handling cross-border investigations.

Keep a Close Eye on Your Competition- Intellectual Property Law

Do you know of a competitor trying to imitate your product? Rip-It Sporting Goods developed an in-fielder’s mask for baseball and softball. The mask, which is marketed at trade shows, on the internet and nationally through distributors, was allegedly copied by competitor Champro Sports who attempted to sell two versions of a competing mask at a lower price. Champro displayed their masks at trade shows and on its website. Champro also sold and took orders for their masks.

Luckily, Rip-It held a design patent on its mask. On April 19, 2012, the United States District Court for the Middle District of Florida executed a Consented to Permanent Injunction Order prohibiting Champro Sports from making, using, selling or offering for sale the accused mask designs.

Lessons learned:

  • Protect your assets – whether your products, your name, your brand identity, even your customer lists.
  • Keep an eye on your competition.
  • Contact an attorney before the competition tries to copy you, to find out how to protect your assets.

© Lowndes, Drosdick, Doster, Kantor & Reed, PA

Retail Law Conference 2012

The National Law Review is pleased to bring you information about the upcoming Retail Law Conference:

at the Westin Galleria in Dallas, Texas

November 7-9, 2012

This event is the perfect opportunity to discuss the latest issues affecting the retail industry while obtaining important continuing legal education (CLE) credits.

Open to retail and consumer product general counsel, senior legal executives and in-house attorneys and their teams, the exceptional dialogue presented at this conference will help your organization navigate the current legal landscape of the industry.

New York Attorney General Files First Tax Enforcement Complaint Under New York’s Trailblazing False Claims Act Statute

The National Law Review recently published an article about New York’s Tax Enforcement written by Michael A. Berlin, David W. Bunning, Mark F. Glaser, and Barbara T. Kaplan of Greenberg Traurig, LLP:

GT Law

On April 19, 2012, New York’s attorney general filed the first tax enforcement complaint under New York’s novel False Claims Act (“Act”), alleging that Sprint-Nextel Corp. had deliberately understated sales tax payments to New York by over $100 million since July, 2005. Under the Act, the defendant could be held liable for three times the amount of these damages, plus penalties of $6,000 to $12,000 per violation, plus attorneys’ fees.

The Act, like its counterparts in federal law and the laws of 28 other states, permits a whistleblower to bring an action for false claims against the government. In New York, whistleblowers can be paid from 15-30 percent of the proceeds recovered. In 2010, New York amended its false claims act statute to become the first state to expressly permit recovery for tax fraud.1

In 2011, the Taxpayer Protection Bureau was created to work with whistleblowers and enforce the Act. Complaints by whistleblowers are filed under seal pending government investigation. According to a press release issued by the attorney general, the original whistleblower action was filed in March of 2011, just after the Taxpayer Protection Bureau was created. The Bureau conducted “an extensive investigation and determined the extent of Sprint’s illegal conduct.” By filing the superseding complaint on April 19, the attorney general took over that law suit.

The complaint alleges that Sprint-Nextel deliberately understated sales tax to be collected from its customers and paid to New York by arbitrarily treating part of monthly access charges to cell phone subscribers as non-taxable interstate calls rather than as taxable access charges. It further alleges that to carry out this plan false records and statements were submitted to New York tax authorities, and the practice was concealed from the taxing authorities, competitors and customers. According to the complaint, approximately 25 percent of the monthly access charges were arbitrarily designated as non-taxable, resulting in a loss to New York of more than $100 million in tax revenue.

The press release states that this produced a competitive advantage by making Sprint-Nextel’s plans “cheaper than competitors’ plans by $4.6 million per month, collectively, because of sales tax not collected and paid.” In addition to triple damages, penalties, and attorney’s fees, the complaint seeks to ensure that Sprint-Nextel’s customers are insulated from any liability for the unpaid sales tax2 and seeks to prevent early termination fees from being enforced against any customers who terminate their contract before the end of the contract term.

The attorney general’s press release notes that the Act “is one of the state’s most powerful civil enforcement tools.” Indeed it is, for at least three reasons. First, the State can recover from acts reported by whistleblowers, which may otherwise be unknown to the State and undiscoverable through audit or other means. Second, New York can recover significantly more money in an action under the False Claims Act than it otherwise could using the tax statutes. Triple damages plus penalties and attorneys’ fees minus the amount paid to a whistleblower is far more than the sales tax plus 14 percent interest and the 30 percent penalty that could otherwise be recovered. Third, the filing of the complaint is public, in contrast to a tax audit, which must remain undisclosed because of taxpayer secrecy laws.

1 The 2010 legislation was spearheaded by Eric Schneiderman, then a state senator, who became attorney general in January, 2011. 

2 If a seller does not collect sales tax from a buyer, either the seller or the buyer can be held liable for the tax.

©2012 Greenberg Traurig, LLP

8th Annual FCPA & Anti-Corruption Compliance Conference

The National Law Review is pleased to bring you information about the upcoming 8th FCPA & Anti-Corruption Compliance Conference:

8th FCPA and Anti-Corruption Compliance Conference
Identifying Changes to the Global Anti-Corruption Compliance Landscape to Maintain and Upgrade Your Existing Compliance Program

Event Date: 12-14 Jun 2012
Location: Washington, DC, USA

Beyond dealing with the FCPA and UK Bribery Act, there are upcoming changes to global Anti-Compliance initiatives being enacted by other major countries. It is imperative that organizations are made aware of these new rules and regulations to be able to meld them all into their organization’s anti-corruption compliance program. Maintaining a robust global compliance program along with performing proper and detailed 3rd party due diligence is of the upmost importance.

Marcus Evans invites you to attend our 8th Annual Anti-Corruption & FCPA Conference. Hear from leading executives within various industries on how to identify new areas of concern when dealing with bribery or working within a company to update an anti-corruption compliance program.

Attending this event will allow you to learn how to mitigate the effects of any possible instances of corruption and bribery both at home and abroad. Discuss solutions and best practices that companies have found when dealing with their anti-corruption compliance programs. This conference will not only review the newest enforcement cases, but also highlight practical solutions to problems dealing with FCPA and global anti-corruption measures.

Attending this conference will allow you to:

-Overcome the issues in dealing and conducting an internal investigation with Dell
-Identify anti-corruption liability concerns for US companies when engaging in Joint Ventures and Mergers and Acquisitions with Crane Co.
-Perform anti-corruption audits to better identify gaps in the compliance program with SojitzCorporation of America
-Promote a culture of ethics within an organization to combat non-compliance with Morgan Stanley
-Assess the continued challenges in conducting a 3rd party due diligence program with Parker Drilling

The marcus evans 8th Annual Anti-Corruption & FCPA Conference is a highly intensive, content-driven event that includes, workshops, presentations and panel discussions, over three days. This conference aims to bring together heads, VP’s, directors, chief compliance officers, and in-house counsel in order to provide an intimate atmosphere for both delegates and speakers.

This is not a trade show; our 8th Annual Anti-Corruption & FCPA Conference is targeted at a focused group of senior level executives to maintain an intimate atmosphere for the delegates and speakers. Since we are not a vendor driven conference, the higher level focus allows delegates to network with their industry peers.

Nothing Revealed on “Reveal Day”: New gTLD Application System Remains Suspended

Recently an article by Geri L. Haight of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. regarding The NEw gTLDs was published in The National Law Review:

The much anticipated “Reveal Day” — so dubbed by ICANN itself — has now come and gone without fanfare.  May 1st was to be the day when ICANN was scheduled to publish the list of all applied-for new generic top level domains (gTLDs) as part of the roll-out of the new Internet era.  Instead, all that was revealed today was that ICANN remains mired in technical glitches.

ICANN announced last Friday that, though it had hoped to re-open the online application system on April 27th, the system would remain shut down.  ICANN now plans to notify all applicants within the next seven business days (by May 8th) as to whether their applications were affected by the “technical glitch” in the TLD application system.  The “technical glitch” at issue is that ICANN’s application system allowed a limited number of users to view some other users’ file names and user names.  For the past two and a half weeks, ICANN has been (and continues to be) reviewing its internal system logs and full packet-level capture of all traffic to and from the application system from when it opened the application system on January 12th until it was shut down on April 12th.  After it notifies all applicants, ICANN will announce a new schedule for reopening the system and allowing applicants to confirm the completeness of their applications.  At the time the application system was shut down, the number of registrants in the system was 1,268. According to ICANN, this number could change (for example, for applicants that might withdraw or were in the process of submitting their $5000 deposit when the system was taken offline). Many business (and their trademark counsel) are anxious to review the list of which .BRANDS and .GENERICS have been applied-for.

But, alas, it seems that nothing will be revealed anytime soon.

©1994-2012 Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.

Upcoming Spring 2012 CLE National Institutes

The National Law Review is pleased to bring you information about the ABA’s Upcoming Spring 2012 CLE National Institutes:

Learn and network at these in-person,full-day or multi-day seminars held live in various locations across the country that draw lawyers from across the nation.

Riding the Escalator (Principle) Safely: Recent Appellate Court Decision Underscores Challenges Facing Employers Reinstating Returning Servicemembers

The National Law Review recently published an article by Aaron R. Gelb and Mark S. Goldstein of Vedder Price regarding Reinstating Servicemembers:

With large numbers of soldiers returning home and, presumably, to the jobs they held before being called to active duty, employers would do well to brush up on the re-employment obligations imposed by the Uniformed Services Employment and Re-employment Rights Act (USERRA). Not only must an employer reinstate a returning servicemember (assuming reinstatement was requested in a timely manner), but that employer must place the servicemember in a position equivalent to the position the employee would have held but for the fact of the employee’s military leave.

Complying with this obligation—which is commonly referred to as the Escalator Principle—can present some challenges for employers struggling to determine how far an employee would have advanced (up the escalator) in terms of position, pay and benefits, had the employee worked the entire period of time spent in the military. This analysis is even more difficult when the returning employee held a position that does not entail lockstep increases or seniority-based promotions or benefits.

In late 2011, the US Court of Appeals for the Second Circuit (Connecticut, New York and Vermont) issued an opinion in Serricchio v. Wachovia Securities LLC that underscores the sort of complex analysis in which employers must engage when reinstating employees and determining their post-service compensation rate.

Background of the Case

Michael Serricchio worked as a financial advisor for Prudential Securities (whose retail brokerage business was subsequently subsumed by Wachovia Securities) from late 2000 through September 2001, when he was called to active duty in the United States Air Force Reserve. Serricchio earned approximately $75,000 in commissions during his predeployment employment. While serving his country abroad, however, most of Serricchio’s accounts were reassigned and several were taken by the partner to his new firm.

When Serricchio returned from active duty in October 2003, he requested reinstatement, but had to wait five months before Wachovia re-employed him. When he was finally reinstated in late March 2004, Wachovia offered Serricchio an advisor position with his preservice commission rate. Serricchio, however, objected to this, citing the fact that the account list provided to him by Wachovia was not nearly as lucrative as the one he managed before deployment. Indeed, the court noted in its opinion that the book of business provided by Wachovia would “generate virtually no commissions.” Wachovia made matters worse, since it provided no assistance to Serricchio in re-establishing either his book of business or his higher, preservice commissions. Serricchio thus filed a lawsuit in US district court, accusing the company of violating USERRA by failing to re-employ him in a position that would provide him with the same earnings opportunities that he had prior to his deployment.

The Serricchio Decision

Following trial, a jury determined that Wachovia had not satisfied its obligation to provide Serricchio with the position that he would have held had his employment not been interrupted by military service or, in the alternative, to a position of “like seniority, state and pay” upon return from active duty. As such, the jury found that Wachovia had a) failed to offer Serricchio re-employment within two weeks of his request; b) failed to reinstate him to a position with pay comparable to his pre-service earnings; and c) constructively discharged him by failing to offer a suitable and appropriate position.

After a bench trial on the issue of damages, the district court awarded Serricchio $778,906 in back pay and liquidated damages, $830,107 in attorneys’ fees and costs, plus $36,567 in prejudgment interest, and reinstated him as a Wachovia financial advisor with a three-month fixed salary and a nine-month draw. Wachovia appealed both the jury’s decision and the district court’s apportionment of damages, arguing that it had complied with its USERRA obligations by offering Serricchio his preservice commission rate. The Second Circuit disagreed.

Noting that Serricchio presented a USERRA issue that was a matter of first impression, the Second Circuit held that Wachovia’s provision of a position with the “same preservice commission rate” did not comply with USERRA because it disregarded the “amount of actual commissions” that Serricchio had earned from his preservice book of business. The court held that offering a commission-based employee the same commission rate “without regard to volume or size of the accounts in the servicemember’s pre-activation book of business” does not satisfy USERRA. Where an employee has received commission-based pay, the appropriate USERRA analysis must therefore include the amount of prior earnings. Thus, Wachovia violated USERRA because the position that it offered to Serricchio upon his return from active duty would have resulted in much lower actual earnings—despite the same commission rate—and “did not provide the same opportunities for advancement, working conditions and responsibility that [Serricchio] would have had but for his period of military service.”

Lessons Learned

With thousands upon thousands of soldiers returning to the workforce, employers should ensure that the individuals responsible for making decisions relating to the employee’s position, pay and benefits understand what USERRA generally requires with respect to re-employment, how to properly apply the Escalator Principle and what the Serricchio decision means for employees who are compensated in ways other than straight salary. If at all possible, employers should provide USERRA training to these decision makers so that they understand the broad requirements of the law with respect to re-employment, as well as to other employment rights accorded to the men and women in our military. Finally, all re-employment-related decisions affecting a returning service- member should be reviewed by human resources, and employment counsel should be consulted if any questions arise.

© 2012 Vedder Price

ICC Institute Masterclass for Arbitrators

The National Law Review is pleased to bring you information about the upcoming ICC Conference  Masterclass Arbitrators:

Join us for an intensive 2 1/2 day training for professionals interested in working as international arbitrators!

June 4-6, 2012 at ICC Headquarters in Paris.

Rosetta Stone v. Google: No Easy Exit for Google from AdWords Trademark Suits

An article about Rosetta Stone v. Google written by J. Roger Williams, Jr. of Andrews Kurth LLP recently appeared in The National Law Review:

Rosetta Stone, Inc., which provides technology-based language learning products and services, sued Google in the U.S. District Court for the Eastern District of Virginia for direct and indirect trademark infringement and trademark dilution arising out of Google’s sale of Rosetta Stone’s trademarks as keywords in Google’s AdWords program. Google triumphed in the trial court, with the District Court granting summary judgment in favor of Google on all claims. Earlier this month, however, in Rosetta Stone, Inc. v. Google, Inc.,[1] the U.S. Court of Appeals for the Fourth Circuit reversed the ruling and remanded the case for further proceedings on all trademark claims. For Google, the ruling means that it has no easy way to exit any trademark case arising out of its AdWords program. For brand owners, the ruling provides a road map for how to hold e-commerce web sites (Google, eBay) responsible for counterfeiters who advertise on the web site.

The primary issue in Rosetta Stone’s claim of direct trademark infringement was whether the Sponsored Links generated by Google’s AdWords Program create a likelihood of confusion. The District Court held that the only meaningful “digits of confusion” were Google’s intent in auctioning the keywords, the evidence of actual confusion, and the sophistication of the consuming public; and on each of these elements Rosetta Stone had failed to provide sufficient evidence to defeat summary judgment. The Fourth Circuit, after intense scrutiny of the evidence, disagreed with the trial court and held that there was sufficient evidence on each of these factors to force a trial.

The court’s analysis on the “intent” issue is remarkable. The record contained evidence of internal business studies done by Google that suggested that there would be “significant source confusion among Internet searchers when trademarks were included in the title or body of the advertisements.”  Although the Rosetta Stone marks were not involved in these studies, the Fourth Circuit nevertheless held that these studies provided sufficient evidence “that Google intended to cause confusion in that it acted with the knowledge that confusion was very likely to result from its use of the marks.” Because Google’s studies were not specific to the Rosetta Stone marks, the reasoning of this holding appears applicable to every brand owner that asserts a trademark infringement claim against Google over its use of AdWords. In other words, the opinion indicates that any trademark plaintiff may be able to defeat summary judgment for Google on the “likelihood of confusion” issue by showing that Google was provided with evidence that confusion was “very likely.”

Google also gave up its win on the “functionality” doctrine, which holds that a functional product feature cannot be trademarked or the subject of a trademark infringement suit. Finding that the trademarks used as keyword triggers are functional because they are essential to the functioning of Google’s search service, the District Court had granted summary judgment for Google on this defense. The Fourth Circuit reversed, reasoning that the functionality doctrine affords no protection to Google because Rosetta Stone, the mark owner, did not use the marks as a functional product feature.

Also reversed was Google’s summary judgment on Rosetta Stone’s claim of contributory infringement, i.e., Rosetta Stone’s claim that Google is liable for trademark infringement by the advertisers who directly infringe Rosetta Stone’s marks in the Sponsored Links. The central issue was the evidence that Rosetta Stone had notified Google of approximately 200 instances of specific Sponsored Links advertising counterfeit Rosetta Stone products and that Google nevertheless continued to allow the very same advertisers to purchase Rosetta Stone marks to trigger Sponsored Links for other web sites owned by the advertisers. The trial court was “unpersuaded” that this evidence met the legal standard for contributory infringement set by the Second Circuit in its Tiffany v. eBay decision.[2]  In theTiffany case, the Second Circuit held that eBay was not contributorily liable for trademark infringement despite its general knowledge that sellers were selling counterfeit Tiffany products on eBay. The major difference between the facts in the two cases is that Tiffany’s demand letters, in Tiffany v. eBay, did not identify particular sellers who Tiffany thought were then offering or would offer counterfeit goods, whereas Rosetta Stone’s notification to Google, in Rosetta Stone v. Google, apparently did identify particular sellers who were offering or were likely to offer counterfeit products. This evidence, according to the court of appeals, sufficed to force a trial on the issue of whether Google contributed to trademark infringement by continuing to supply its services to known infringers.

In any event, the Fourth Circuit’s reasoning has clear practical implications for brand owners who are fighting counterfeiters: Diligently provide notice to the e-commerce site of the identity and web site of each counterfeiter who is or might be selling counterfeit products.

Not all the news was bad for Google. The holding that Google was not vicariously liable for infringement by counterfeiters was affirmed; and although Rosetta Stone is going to get its day in court, nothing in the Court of Appeals’ holding suggests that Rosetta Stone will be able to prevail at trial. Even so, this ruling was a significant setback for Google. Google, understandably, has been searching for a “safe harbor” to avoid entanglement in trademark disputes between online advertisers and brand owners over the advertiser’s use of the brand owner’s mark in Sponsored Links.  One potential safe harbor for Google has already been eliminated by the Second Circuit in its 2010 holding in Rescuecom v. Google that Google’s sale of keywords constituted a trademark “use in commerce.”[3]  It appeared that the District Court’s ruling in Rosetta Stone had given Google several additional “safe harbors” under the theories that Google’s mere sale of keywords did not create a likelihood of confusion, that Google did not contribute to infringement by supplying its services to known infringers, that Google’s keywords were merely functional, and that Google’s sale of keywords fell within the “fair use” exception to dilution; but now the Fourth Circuit has rejected the notion that any of these defenses shields Google as a matter of law from trademark liability for its AdWords program. For the foreseeable future, Google has no easy exit from any trademark suit based on its AdWords program.

1. Rosetta Stone, Inc. v. Google, Inc., __ F.3d. __, 2012 WL 1155143 (4th Cir. April 9 2012).

2. Tiffany Inc. v. eBay Inc., 600 F.3d 93 (2d Cir. 2010).

3. Rescuecom Corp. v. Google Inc., 562 F.3d 123 (2d Cir. 2009).

© 2012 Andrews Kurth LLP