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The National Law Forum - Page 685 of 753 - Legal Updates. Legislative Analysis. Litigation News.

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

2012 National Law Review Law Student Writing Competition

The National Law Review is pleased to announce their 2012 Law Student Writing Competition

The National Law Review (NLR) consolidates practice-oriented legal analysis from a variety of sources for easy access by lawyers, paralegals, law students, business executives, insurance professionals, accountants, compliance officers, human resource managers, and other professionals who wish to better understand specific legal issues relevant to their work.

The NLR Law Student Writing Competition offers law students the opportunity to submit articles for publication consideration on the NLR Web site.  No entry fee is required. Applicants can submit an unlimited number of entries each month.

  • Winning submissions will be published according to specified dates.
  • Entries will be judged and the top two to four articles chosen will be featured on the NLR homepage for a month.  Up to 5 runner-up entries will also be posted in the NLR searchable database each month.
  • Each winning article will be displayed accompanied by the student’s photo, biography, contact information, law school logo, and any copyright disclosure.
  • All winning articles will remain in the NLR database for two years (subject to earlier removal upon request of the law school).

In addition, the NLR sends links to targeted articles to specific professional groups via e-mail. The NLR also posts links to selected articles on the “Legal Issues” or “Research” sections of various professional organizations’ Web sites. (NLR, at its sole discretion, maydistribute any winning entry in such a manner, but does not make any such guarantees nor does NLR represent that this is part of the prize package.)

Congratulations to our 2012 and 2011 Law Student Writing Contest Winners

Winter 2012:

Fall 2011:

Why Students Should Submit Articles:

  • Students have the opportunity to publicly display their legal knowledge and skills.
  • The student’s photo, biography, and contact information will be posted with each article, allowing for professional recognition and exposure.
  • Winning articles are published alongside those written by respected attorneys from Am Law 200 and other prominent firms as well as from other respected professional associations.
  • Now more than ever, business development skills are expected from law firm associates earlier in their careers. NLR wants to give law students valuable experience generating consumer-friendly legal content of the sort which is included for publication in law firm client newsletters, law firm blogs, bar association journals and trade association publications.
  • Student postings will remain in the NLR online database for up to two years, easily accessed by potential employers.
  • For an example of  a contest winning student written article from Northwestern University, please click here or please review the winning submissions from Spring 2011.

Content Guidelines and Deadlines

Content Guidelines must be followed by all entrants to qualify. It is recommended that articles address the following monthly topic areas:

  • March Topic Feature:  Environmental and Energy, Insurance and Intellectual Property Law
  • March Submission Deadline:  Tuesday, February 21, 2012
  • May Topic Feature:     Tax, Bankruptcy and Restructuring and Healthcare Law
  • May Submission Deadline:  Monday, April 16, 2012

Articles covering current issues related to other areas of the law may also be submitted. Entries must be submitted via email to lawschools@natlawreview.com by 5:00 pm Central Standard Time on the dates indicated above.

Articles will be judged by NLR staff members on the basis of readability, clarity, organization, and timeliness. Tone should be authoritative, but not overly formal. Ideally, articles should be straightforward and practical, containinguseful information of interest to legal and business professionals. Judges reserve the right not to award any prizes if it is determined that no entries merit selection for publication by NLR. All judges’ decisions are final. All submissions are subject to the NLR’s Terms of Use.

Students are not required to transfer copyright ownership of their winning articles to the NLR. However, all articles submitted must be clearly identified with any applicable copyright or other proprietary notices. The NLR will accept articles previously published by another publication, provided the author has the authority to grant the right to publish it on the NLR site. Do not submit any material that infringes upon the intellectual property or privacy rights of any third party, including a third party’s unlicensed copyrighted work.

Manuscript Requirements

  • Format – HTML (preferred) or Microsoft® Word
  • Length – Articles should be no more than 5,500 words, including endnotes.
  • Endnotes and citations – Any citations should be in endnote form and listed at the end of the article. Unreported cases should include docket number and court. Authors are responsible for the accuracy and proper format of related cites. In general, follow the Bluebook. Limit the number of endnotes to only those most essential. Authors are responsible for accuracy of all quoted material.
  • Author Biography/Law School Information – Please submit the following:
    1. Full name of author (First Middle Last)
    2. Contact information for author, including e-mail address and phone number
    3. Author photo (recommended but optional) in JPEG format with a maximum file size of 1 MB and in RGB color format. Image size must be at least 150 x 200 pixels.
    4. A brief professional biography of the author, running approximately 100 words or 1,200 characters including spaces.
    5. The law school’s logo in JPEG format with a maximum file size of 1 MB and in RGB color format. Image size must be at least 300 pixels high or 300 pixels wide.
    6. The law school mailing address, main phone number, contact e-mail address, school Web site address, and a brief description of the law school, running no more than 125 words or 2,100 characters including spaces.

To enter, an applicant and any co-authors must be enrolled in an accredited law school within the fifty United States. Employees of The National Law Review are not eligible. Entries must include ALL information listed above to be considered and must be submitted to the National Law Review at lawschools@natlawreview.com. 

Any entry which does not meet the requirements and deadlines outlined herein will be disqualified from the competition. Winners will be notified via e-mail and/or telephone call at least one day prior to publication. Winners will be publicly announced on the NLR home page and via other media.  All prizes are contingent on recipient signing an Affidavit of Eligibility, Publicity Release and Liability Waiver. The National Law Review 2011 Law Student Writing Competition is sponsored by The National Law Forum, LLC, d/b/a The National Law Review, 4700 Gilbert, Suite 47 (#230), Western Springs, IL 60558, 708-357-3317. This contest is void where prohibited by law. All entries must be submitted in accordance with The National Law Review Contributor Guidelines per the terms of the contest rules. A list of winners may be obtained by writing to the address listed above. There is no fee to enter this contest.

“Brogrammers” Giving Silicon Valley a Bad Name?

An article by Emily Holbrook of Risk and Insurance Management Society, Inc. (RIMS) regarding “Brogrammers” recently appeared in The National Law Review:

According to a recent article, Silicon Valley tech firms are using marketing tactics geared more towards fraternity brothers than programming savants. The problem? Not only is it sexist at times, but it is alienating a large chunk of qualified tech professionals. Here are a few examples:

Of course, this is only a snipet of what’s going on as many of the antics are never publicized. Barbaic events like these may not only cost companies money (several businesses pulled their sponsorship from the Sqoot event), but it alienates those who may be talented programmers, but don’t adhere to the frat boy mentality.

There’s also an audience that feels left out of the joke. Women made up 21% of all programmers in 2010, down from 24% in 2000, according to the U.S. Bureau of Labor Statistics. Anything that encourages the perception of tech as being male-dominated is likely to contribute to this decline, says Sara Chipps, founder of Girl Develop It, a series of software development workshops. “This brogramming thing would definitely turn off a lot of women from working” at startups, says Chipps.

But is this really a serious problem in Silicon Valley or just young men being young men? I’ve heard both sides of the argument. Some companies that have taken this seriously, such as Etsy, have decided to do something about it. The e-commerce website is donating $5,000 to at least 10 women in an attempt to lure female coders to New York’s Hacker School this summer.

Whether this is an epidemic that should cause concern or merely programmers acting their age, one thing is for sure — having a working envrionment void of diversity is aiken to siloed idea generation. Silicon Valley should know this.

Risk Management Magazine and Risk Management Monitor

5th Product and Pipeline Enhancement for Generics Conference, July 17-19, 2012

The National Law Review is pleased to bring you information about an upcoming conference:

5th Product and Pipeline Enhancement for Generics Conference, July 17-19, 2012 in Washington, DC

The marcus evans 5th Product and Pipeline Enhancement for Generics Conference will host industry leaders within the Generic Pharmaceutical, Branded Pharmaceutical and API industries operating globally as they share best practices, strategies and tools on portfolio management and business strategy, as well as legal, intellectual property and patent issues.

Featuring case studies from leading generics experts, including:

  • Richard Dicicco, Chairman at Harvest Moon Pharmaceutical
  • Dr. Vijay Soni, Executive Vice President, IP, BD and Product Portfolio at Glenmark Pharmceuticals
  • Candis Edwards, Senior Vice President, Regulatory Affairs & Compliance at Amneal Pharmaceuticals
  • Gregory Fernengel, Senior Intellectual Property Counsel at Ben Venue Laboratories, Inc.
  • Markus H. Meier, Assistant Director, Health Care Division, Bureau of Compensation at Federal Trade Commission
  • Vishal K. Gupta, Chief Scientific Officer, Vice President, Research & Development at CorePharmaLLC
  • Sherri Leonard, VP, Business Development and Portfolio Management at OrchidPharma, Inc.

Attendees will leave this conference with a better understanding of:
1. Current and upcoming FDA proposals and regulations to ensure compliance
2. Innovation in the drug pipeline
3. Portfolio management and business development
4. How to protect the company’s patents’ and intellectual property
5. Expanding the commercial reach through biosimilars
6. Market changes and future industry developments

Testimonials:

“Great in-depth coverage of hot topics in an intimate setting that lent itself to excellent discussions.” – Novartis

”Terrific chance to connect with other industry traders to exchange ideas and explore solutions to the challenges we all face.” – OrchidPharma

Social Media for Employers: Recent Cases Before Courts, NLRB

The National Law Review recently published an article by John Patrick White, Jeffrey T. Gray, Jr. and Luis E. Avila of Varnum LLP regarding Social Media and Employers:

Varnum LLP

Social media continues to be in the news.  The National Labor Relations Board (NLRB) issued an “updated” summary of social media cases earlier this year and social media continues to find its way into court decisions.

In 2011, the NLRB’s General Counsel issued a summary of 14 social media cases handled by that office.  On January 24, 2012, the General Counsel issued an updated summary covering another 14 cases.  The General Counsel’s position in these cases is that social media policies (or any other policies) that may “reasonably chill” employees in the exercise of their rights under the National Labor Relations Act (“Act”) are unlawful.  Here are the high points from the updated summary:

  • The General Counsel continues to find employer policies and work rules to be unlawfully broad when employees may reasonably view them as prohibiting conduct protected under the Act.  For example, work rules or policies prohibiting “insubordination or other disrespectful conduct” and “inappropriate conversation” were held to be unlawfully broad because employees might think that they cannot join together to complain about their terms and conditions of employment, which is protected activity under the Act.
  • Importantly, the General Counsel’s Office rejected a “savings clause” in a social media policy designed to prevent the policy from being overly broad.  The employer’s social media policy stated that “it would not be interpreted or applied so as to interfere with” employee rights under the Act.  The General Counsel found this language did not “save” the policy from being overbroad because an employee could not reasonably be expected to know that the clause would apply to discussions the employer deems inappropriate under the policy.  In light of the General Counsel’s approach, employers should narrowly tailor their social media policies rather than attempt to use “savings” language to fix overly broad policies.
  • On the other hand, the General Counsel found an employer’s “amended” social media policy to be lawful because it prohibited conduct that was “vulgar, obscene, threatening, intimidating, harassing, or a violation of the Employer’s workplace policies against discrimination, harassment, or hostility on account of age, race, religion, sex, ethnicity, nationality, disability, or other protected class, status, or characteristic.”  The General Counsel found the policy lawful because employees would not reasonably construe the policy’s language to prohibit conduct protected by the Act.
  • Individual gripes by employees are not protected activity.  Thus, the General Counsel found in several cases that employers did not violate the Act by discharging employees who complained about their employment on social media pages because they were acting solely on their own behalf rather than on behalf of themselves and other employees.
  • Employees can go overboard in their criticisms, however, and lose the protection of the Act.  Language that is “opprobrious,” or sufficiently “disloyal, reckless, or maliciously untrue” may remove the activity from protection, depending upon the circumstances.

In addition to the NLRB’s attention to employee activity, courts and arbitrators are increasingly addressing social media.  Here are just a few recent examples:

  • A federal district court in Illinois ruled that an employee, a marketing director for an interior design firm, could proceed with federal Stored Communications Act and Lanham Act claims against her employer based on her co-workers’ unauthorized use of her Facebook and Twitter accounts to promote the employer.  Maremont v. Susan Fredman Design Grp., No. 10C 7811 (N.D. Ill. Dec. 7, 2011).
  • A federal court in Washington ruled that a trial was necessary to determine whether an employee, who had been on leave for treatment of depression, was unlawfully discharged due to her suicidal comments made via social media.  Peer v. F5 Networks, Inc., No. C11-0879-JCC (March 19, 2012).
  • An arbitrator denied a grievance challenging the discharge of a Head Start teacher who started a closed Facebook page to “gripe” about employees, parents, and students at the Head Start program.  Although the members of the invite-only group complained about work, they were also exceedingly profane, many of the posts were not connected to working conditions, and, most importantly, there was “nothing about the conversations that would lead to the conclusion that [the employees] were seeking to band together to take action to address their workplace concerns.”  Vista Neuvas Head Start, 129 LA 1519 (VanDagens, 2011).
  • A federal court in California held that a mobile news website company sufficiently stated claims for negligent and intentional interference with prospective economic advantage by alleging that a former employee appropriated a company Twitter account that drove traffic to its website.  PhoneDog v. Kravitz, No. C 11-03474 MEJ (N.D. Cal. Jan. 30, 2012).
  • An NLRB administrative law judge recently ruled that a “Jimmy John’s” franchisee violated the Act when an assistant manager posted the telephone number of a known union supporter on an anti-union Facebook page and encouraged others to “text” him to let him know “how they feel.”  The ALJ believed this post amounted to an invitation for other anti-union co-workers to harass the employee in retaliation for this union activity.  Jimmy John’s, 18-CA-19707 (April 20, 2012).

Employers must act carefully when issuing disciplinary action in connection with social media activity.  Seeking legal advice is important because, as shown above, employee social media activity implicates numerous areas of employment law.

© 2012 Varnum LLP

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.

Supreme Court to Decide if First Sale Doctrine Permits Importation of Foreign-Made Copyrighted Works Without Authorization

Recently an article by Paul Devinsky and Rita Weeks of McDermott Will & Emery regarding First Sale Doctrine was published in The National Law Review:

The “first sale doctrine” in copyright law permits the owner of a lawfully made copy of a copyrighted work to sell or dispose of that copy as it sees fit.  The Supreme Court of the United States has agreed to hear a case that will decide whether the first sale doctrine permits the importation of foreign-made goods containing copyrighted materials into the United States without the copyright owner’s permission.

The Supreme Court of the United States has agreed to hear Kirtsaeng v. John Wiley & Sons, Inc., a case involving “gray market” resale of copyrighted works and the defense of the “first sale doctrine.”  In copyright law, the “first sale doctrine” permits the owner of a lawfully made copy of a copyrighted work to resell or otherwise dispose of that copy without limitations imposed by the copyright holder.  The Supreme Court’s decision will resolve whether the first sale doctrine applies to works manufactured outside of the United States that are imported and resold in the United States, and therefore is of particular importance to importers, distributors and retailers of copyrighted goods produced abroad.

U.S. textbook publisher John Wiley & Sons brought a copyright infringement suit in the Southern District of New York against Kirtsaeng, a University of Southern California graduate student from Thailand.  Kirtsaeng’s friends and family shipped him foreign editions of Wiley textbooks printed abroad by Wiley’s affiliate Wiley Asia, which Kirtsaeng then sold on commercial websites such as eBay for allegedly substantial profits.  Wiley alleged Kirtsaeng violated Wiley’s copyrights by unauthorized importation of textbooks only intended for a foreign market.  Kirtsaeng attempted to proffer the defense of the “first sale doctrine,” but the district court prohibited him from raising the defense and rejected the applicability of the defense to foreign editions of textbooks.  A jury found Kirtsaeng liable for willful copyright infringement and awarded Wiley $600,000 in statutory damages.

Kirtsaeng appealed, arguing the district court erred in holding that the first sale doctrine was not an available defense.  Last year the U.S. Court of Appeals for the Second Circuit affirmed the district court.  (IP Update, Vol. 14, No. 9).  Reviewing §109(a) of the Copyright Act, which codifies the first sale doctrine, the Second Circuit noted that the language instructing that the defense applies to works “lawfully made under this title” was ambiguous such that §109 itself did not compel or foreclose the application of the first sale doctrine to works manufactured abroad.  Therefore, the Second Circuit looked to §602(a)(1) of the Copyright Act, which prohibits the importation of a work acquired abroad without the copyright owner’s authorization, and the Supreme Court’s guidance in Quality King Distributors, Inc. v. L’anza Research International, Inc.  Quality King involved copyrighted works manufactured in the United States that were exported to foreign distributors, who then re-imported the works back into the United States for resale without the copyright owner’s permission.  In that context, the Supreme Court unanimously held that the first sale doctrine limited the scope of §602(a) and thus the foreign distributor who re-imported the works could assert the first sale doctrine as a defense.  The Supreme Court did not rule on whether the first sale doctrine would apply to works manufactured outside of the United States, however.  Relying on Quality King, the Second Circuit in Kirtsaeng held that the first sale doctrine only applies to products physically manufactured in the United States.  To find otherwise, the Second Circuit reasoned, would nullify the protections of §602(a)(1) in the vast majority of cases.

Among other reasons, the grant of certiorari is significant because the Supreme Court issued a rare 4-4 decision in a similar case in 2010, Costco Wholesale Corp. v. Omega, S.A. (see Supreme Court Deadlocks on Applying First Sale Doctrine to Foreign-Made Copyrighted Items for more information).  In that case Costco legitimately acquired Omega-brand watches through a New York company that bought and imported the watches from overseas at much lower prices than Costco would have paid.  While copyright owner Omega had authorized the initial foreign sale of the watches, it did not authorize their importation into the United States or their resale by Costco.  The U.S. Court of Appeals for Ninth Circuit held that the first sale doctrine did not apply to purchases made outside of the United States, and the Supreme Court agreed in a split decision.  Due to the split, caused by the recusal of Justice Elena Kagan who filed an amicus brief in the case in her previous position as Solicitor General, the ruling is only binding on the Ninth Circuit.  Therefore, the Supreme Court’s decision in Kirtsaeng should resolve the outstanding question of how the first sale doctrine and §602 apply to copies of copyrighted works made and legally acquired abroad, then imported into the United States.

In granting cert, the Supreme Court order indicated it will consider whether such a foreign-made product (1) can never be resold within the United States without the copyright owner’s permission; (2) can sometimes be resold within the United States without permission, but only after the owner approves an earlier sale in this country; or (3) can always be resold without permission within the United States, so long as the copyright owner authorized the first sale abroad.  Oral arguments will be heard in the fall (2012).

© 2012 McDermott Will & Emery

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.