Tag: Litigation

Design Patent Case Digest W.Y. Industries, Inc. v. Kari-Out Club LLC

Sterne Kessler Goldstein Fox

 

Decision Dates: August 25, 2011 and November 12, 2013

Courts: D. NJ and United States Court of Appeals for the Federal Circuit

Patents: D469,689

Holding: The terms of the ‘689 Patent are construed; AFFIRMED by the Federal Circuit.

Opinion: Plaintiff W.Y. Industries, Inc. sued Kari-Out Club LLC for infringement of U.S. Design Patent D469,689, entitled Rectangular Stackable Container. W.Y. Industries sells rectangular plastic food containers. Kari-Out makes competing food containers. The Court adopted W.Y. Industries’ verbal claim construction and denied Kari-Out’s request to include additional language, which described the functional features of the patented design.

W.Y Industries’ design patent claims the “ornamental design of a rectangular stackable container as shown and described” in the drawings of the patent. According to the Court, construing a design claim as that which is shown in the patent drawings is typical of design patents since, in most cases, drawings better depict a design than a written description. However, when the drawings contain functional features, an enhanced verbal claim construction may help to clarify exactly which features are claimed and which are not. In this case, the parties agreed that certain elements of the patented design are functional. Therefore, the court concluded that a detailed verbal claim construction will be helpful to the jury.

Both parties agreed to a claim construction from W.Y. Industries’ response to an interrogatory. The claim construction specified that the ornamental features of the container include the rectangular shape and radiused corners on the base and lid, certain raised and recessed portions, and particular dimensions; it also identified a number of other specific features. Kari-Out requested to include additional narrative describing the functional features of the design in the claim construction. The Court denied the request for two reasons. First, design patents protect only the aesthetic aspects of a design. Second, Kari-Out’s additional description of the claims was based on information uncovered during a deposition. Claim construction, however, must be rooted in the written record, including “the claims themselves, the written description, and the prosecution history.”

Kari-Out appealed to the Federal Circuit. On November 12, 2013, the Federal Circuit affirmed the District Court decision in a Rule 36 judgment.

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Of:

Sterne, Kessler, Goldstein & Fox P.L.L.C.

American Conference Institute National Forum on Securities Litigation & Enforcement

The National Law Review is pleased to bring you information about the upcoming American Conference Institute National Forum on Securities Litigation & Enforcement.

ACI Securities

When

Thursday, February 27 – Friday, February 28 ,2014

Where

Washington, D.C.

ACI’s 3rd National Advanced Forum on Securities Litigation and Enforcement, this time in Washington, DC, is the only event in the industry where experienced in-house counsel, leading litigators, renowned jurists, and regulatory and enforcement officials from federal and state agencies will assemble in our nation’s capital to provide the highest level insights on the most current developments in the field.

Now, more than ever, lenders/issuers, officers and directors, underwriters, auditors, investment managers and broker-dealers need to know how to prepare for and respond to litigation, and how to deal with regulation and enforcement initiatives from various federal and state agencies.

In response, ACI has developed the 3rd installment of its lauded Securities Litigation and Enforcement conference, which will provide practitioners with the knowledge and expert strategies that they need in order to prepare for and defend against the newest claims and claimants.

Join us in Washington, DC, and hear from a highly regarded faculty featuring in-house counsel from the top financial services companies and leading outside counsel from law firms that excel in securities litigation, renowned judges, and key government bodies, including SEC, FINRA, PCAOB, U.S. Attorney’s Offices (EDNY & SDNY), and various state securities departments.

Holiday Warning Update: Cut Sexual Harassment From Your Holiday Party Invitation List (seriously)

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OK, we admit it is somewhat cliché for employment lawyers to circulate client alerts every December warning about the dangers lurking at company holiday parties. But when real-life examples show just how expensive claims arising from these events can be, we would be remiss not to issue yet another such alert.

Last December, we issued an alert concerning a federal district court’s refusal to dismiss a holiday party related sexual harassment lawsuit filed against an employer,Shiner v. State University of New York at Buffalo (Case No. 11-CV-01024).

The case finally settled in August 2013, with the employer paying the plaintiff a whopping $255,000.

The plaintiff, Leslie Shiner, was a clerk at the University at Buffalo Dental School. She alleged that she had not wanted to attend the school’s annual holiday party because the conduct at previous events made her uncomfortable. However, a supervisor encouraged her to attend the party, which was held at a local bar. During the party, an associate dean, with supervisory authority over the plaintiff, allegedly made sexual advances toward her that included fondling her, putting his tongue in her ear and pulling her onto his lap. Another department official with supervisory authority allegedly cheered him on.

In early 2012, the plaintiff filed claims of sexual harassment under state and federal anti-discrimination laws, as well common law claims of assault and battery. In November 2012, as we wrote last year, the judge denied the defendant-employer’s motion to dismiss and allowed the case to proceed. After months of discovery and over a year and a half after the plaintiff filed her lawsuit, her employer ultimately agreed to pay her $255,000 to settle her claims. That amount obviously does not include the attorneys’ fees expended by the employer during a protracted time period of motion practice and discovery. Not including the inconveniences to the employer, the total out-of-pocket cost of the case to the employer likely exceeded $350,000 or $400,000.

The lesson for all employers is that the lighthearted, and sometimes drunken, atmosphere at office holiday parties does not equate to a free pass for unwanted touching, lewd comments and other types of inappropriate behavior that otherwise would not be tolerated. As the University of Buffalo Dental School eventually had to recognize when it agreed to settlement, employers who fail to protect themselves can be held liable for workers’ conduct that might easily get out of hand at festive events particularly when there is drinking.

The following are examples of ways employers can reduce the threat of dangerous misbehavior:

  • Remind employees prior to the event that the company’s code of conduct remains in effect during the event
  • Establish procedures in advance to handle any inappropriate behavior that might occur
  • Limit the amount of drinking and provide taxis or other safe transportation home to employees who may be intoxicated

If an employee does come to you with a sexual harassment complaint, please consider it seriously and take prompt action as necessary to investigate and stop the harassment.

 

Article by:

Michael B. Kass

Of:

Armstrong Teasdale

It's Official—The Supreme Court Announces That It Will Review The Contraceptive Mandate

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On Nov. 26, 2013, U.S. Supreme Court announced that it will review two cases in which for-profit employers challenged the application of the contraceptive mandate under the Patient Protection and Affordable Care Act. The cases are Sebelius v. Hobby Lobby Stores and Conestoga Wood Specialites Corp. v. Sebelius.

Both employers say that their religious beliefs bar them from providing employees with drugs or other items that they consider abortifacients. These employers argue that the Free Exercise Clause of the First Amendment and the Religious Freedom Restoration Act protects their religious beliefs and therefore bars the application of the contraceptive mandate. In contrast, the government argues that for-profit corporations cannot exercise religion and therefore have no protection from the mandate.

Supreme Court

At present, the federal courts of appeal are deeply divided on this issue. Three circuits—the Seventh, Tenth, and D.C. Circuits—have upheld challenges to the mandate, while two circuits—the Third and the Sixth—have rejected these challenges. The most recent decision came from the Seventh Circuit in Korte v. Sebelius, Case No. 12-3841, and Grote v. Sebelius, Case No. 13-1077.  The court’s ruling, issued Nov. 8, 2013, held that the Religious Freedom Restoration Act barred the application of the mandate to closely held, for-profit corporations when the mandate substantially burdened the religious-exercise rights of the business owners and their companies.

The Supreme Court will likely hear oral argument in the consolidated Hobby Lobby andConestoga case in March 2014. The decision is expected to decide whether—and to what extent—for-profit corporations have a right to exercise religion. Many commentators see parallels between this case and the Citizens United case in which the Court held that corporations had a First Amendment right to make certain political expenditures. If the Court finds that corporations also have religious rights, it could have significant impact on the application of other laws—including the Title VII, the ADA, the FMLA, etc. For example, could a religious employer object to providing FMLA leave for an employee to care for a same-sex spouse, even in a state that recognizes same-sex unions? Keep an eye on this case—it could have far-reaching consequences.

Article by:

Mark D. Scudder

Of:

Barnes & Thornburg LLP

District of Columbia Court Allows Extra Virgin Olive Oil Fraud Claims To Proceed To Trial

tz logo 2Judge Brian F. Holeman of the D.C. Superior Court issued an omnibus order this week denying summary judgment in lawsuits against a number of D.C. grocery stores, including Safeway and Giant, paving the way for a consumer to proceed to trial on claims that the stores sold inferior quality olive oil falsely labeled as “extra virgin.” The consumer, Mr. Dean Mostofi, brought the suits as a “private attorney general” under the District’s consumer protection law.

Extra virgin olive oil is the purest and highest quality of olive oil. In order to qualify as extra virgin, olive oil must have certain chemical and sensory properties and must be free of all defects and chemical processing. The lawsuits allege that Defendants sold inferior grades of olive oil as “extra virgin.” The olives oil brands in question include Carapelli, Filippo Berio, Pompeian, Bertolli, and Safeway Select.

Testing performed by the UC Davis Olive Center in 2010 and 2011 found that a large percentage of “extra virgin” olive oil sold by those brands was actually not “extra virgin.” In addition, Mr. Mostofi employed taste-testing “panels” of olive oil experts in both California and Australia to test bottles of olive oil he purchased in D.C. Those panels—as well as an Australian chemical laboratory—indicated that some olive oil sold in D.C. under those brand names is also not truly extra virgin.

In denying summary judgment to the Defendants, the Court found that (1) expert testimony could support a finding that the oils are not, in fact, extra virgin; (2) testing on bottles other than those purchased by the Plaintiff could be considered at trial; (3) selling olive oil falsely labeled as “extra virgin” could violate a reasonable consumer’s expectation; and (4) testing performed by UC Davis and Mr. Mostofi’s expert was sufficient evidence to allow the claims on behalf of the general public to proceed to trial.

Counsel for Plaintiff, Hassan Zavareei, said, “This is a huge victory in a hard-fought battle against entrenched interests determined to prevent our case from going to trial. We are gratified that we will have an opportunity to put an end to this fraudulent food mislabeling in the District of Columbia. D.C. consumers have a right to get what they pay for.”

To read the omnibus order denying summary judgement, click here.

To read the omnibus order denying the exclusion of expert testimony, click here.

Article by:

Hassan A. Zavareei

Of: 

Tycko & Zavareei LLP

Today’s Tip for Commercial Litigators: Making a Legal Argument Versus Being Argumentative

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Trials are the culmination of extensive discovery and oftentimes unsuccessful attempts to resolve matters out of court. Parties can spend significant resources preparing for trial; they have a lot to gain or lose; and they expect a great deal from their attorneys. As a result, the tension can get thick between opposing attorneys during trial.

Keep in mind that no matter what your feelings may be about opposing counsel by the time of trial, demeaning a lawyer in court never helps your client’s case. Similarly, stay cool if opposing counsel acts disrespectfully towards you for the following reason—juries may not understand the nuances of a legal argument, but they know a cheap shot when they see it.

The same holds true for cross-examination, which can be sufficiently aggressive to fit the purpose. Yet an overly aggressive cross-examination can backfire when an attorney’s apparent hostility towards a witness becomes more prominent than the substance of the questions and answers.

For example, suppose you represent a plaintiff in a breach of contract action. The civil defendant’s mother is testifying about a conversation she alleges took place between the parties. Your goal during cross-examination is to undermine her testimony by showing that she is inherently biased. Instead of attacking the mother, perhaps cross-examination could consist of the following, “Ma’am, it is true that you love your son, correct? You are aware that your son is being sued for breaching a contract with my client, correct? Are you are aware that if your son is found to be in breach of the contract, he would owe my client a significant amount of money? Is it fair to say that you don’t want to testify in a way that would hurt your son?”

At this stage, most reasonable juries are going to discount whatever the mother says. However, if you simply go on the attack, the cross-examination will be more about disrespecting someone’s mother than showing the witness’ bias. The point is that zealous advocacy for a client does not translate into exhibiting hostility towards opposing counsel or an adverse witness.

Article by:

Stephen C. Shannon

Of:

Odin, Feldman & Pittleman, P.C.

Federal Court Narrows Claims Surrounding “HAPPY BIRTHDAY TO YOU” Copyright Suit

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Following up on a previous post regarding the lawsuit winding its way through federal court seeking clarity on whether the music publisher Warner Chappell owns or has the exclusive right to license the copyright in the ubiquitous “Happy Birthday to You” song, U.S. District Judge George H. King (Central District of California) has ordered that certain tangential claims be stayed until further notice, while the case will move forward on the central claim, essentially whether Warner’s copyright in the song is valid and enforceable or not.

Judge King’s order confirms the parties’ agreement at an October 7th hearing to bifurcate (separate) the central claim from the remaining claims (seeking an injunction against Warner, and a variety of related claims such as unfair competition, false advertising, and breach of contract) at least through the summary judgment phase of the central claim.  The central claim alone will proceed for the time being allowing the parties and the Court to focus on what is truly the dominating question in this case.

In his order Judge King also declined to apply a four-year statute of limitations to the central claim instead of the traditional copyright infringement three-year period.  Plaintiffs claimed that unlike a traditional copyright infringement action where a plaintiff alleges a defendant infringed its copyright, this is a “declaratory judgment” action involving a copyright, that is to say one where plaintiffs are preemptively bringing suit so the Court can decide whether Warner even has rights it can assert.  Basically instead of asserting its purported rights, Warner is being forced into a suit to defend its rights.  Despite the procedural change however, the analysis and issues are very similar to a traditional copyright infringement action.  The question Judge King has to resolve was, since the Declaratory Judgment Act (which permits this type of suit) does not contain its own statute of limitations, plaintiffs argued that the Court should instead use the four-year period applicable to California’s unfair competition claims (one of those ancillary claims Judge King stayed in this same order).  Judge King declined, holding that because the Declaratory Judgment Act is merely a procedural vehicle and the substantive rights being challenged are copyright-based under the Copyright Act, the best statute of limitations period is not California’s four-year period, but rather the Copyright Act’s three-year period.  He therefore dismissed two plaintiffs whose claims were time-barred by the new shorter period and gave them three weeks to re-file if they can/chose to.

Judge King’s order is clearly going to focus the parties and the court on the central issue, whether Warner has a valid enforceable copyright in the “Happy Birthday to You” song.  We will continue to closely watch this one as it proceeds.

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Swiss National and Former Energy Executive Criminally Charged Under Foreign Corrupt Practices Act (FCPA)

Katten Muchin

In an illustration of the extraterritorial reach of the Foreign Corrupt Practices Act (FCPA), Alain Riedo, a Swiss citizen and the general manager of Maxwell Technologies S.A. (Maxwell), a Swiss subsidiary of a US public company, was criminally charged with violating anti-bribery, book and records, and internal control provisions of the FCPA. According to the indictment filed in the Southern District of California, Riedo, along with unidentified co-conspirators and agents, allegedly conspired to, and made, corrupt payments to Chinese government officials and falsely recorded those payments on Maxwell books and records in an effort to retain business, prestige and increased compensation. Riedo worked for Maxwell, which manufactured and sold high-voltage/high-tension capacitors (HV/HT) in several countries, including China. From October 2002 through May 2009, Riedo allegedly conspired with a senior officer of the US parent company, a manager of the Swiss subsidiary and a Chinese national acting as Maxwell’s agent, and caused up to $2 million in bribes to be paid to Chinese government officials in order to obtain HV/HT sales contracts. According to the indictment, the bribery scheme entailed giving prospective customers quotes for HV/HT sales at prices that included a “secret mark-up” of approximately 20 percent. Invoices were prepared reflecting the marked-up prices and the agent in China kicked back the marked-up portion to employees at Chinese state-owned electric utility manufacturers. The indictment alleges that Riedo falsely recorded the inflated payments in Maxwell books, records and accounts as “commissions, sales expenses, or consulting fees.” Thereafter, Riedo allegedly electronically transmitted this erroneous financial information to Maxwell’s parent company in California, which resulted in errors in the parent’s publicly filed consolidated financial statements and other Securities and Exchange Commission filings, including false sub-certifications of the financials.

Riedo—who, according to the indictment, was separated from the company shortly after the alleged conspiracy ended—faces nine counts. No charges were filed against the companies. In fact, the indictment alleges that Riedo and the Chinese agent subverted the corporate compliance program by falsely representing in an internal FCPA questionnaire that they were not aware of any FCPA violations.

United States v. Alain Riedo, No. 13-cr-3789 JM (S.D. Cal. October 15, 2013).

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SEC Scores in Accounting Fraud Suit Against BankAtlantic Corp. and Former CEO

Katten Muchin

On October 10, a Florida federal judge granted the Securities and Exchange Commission’s motions for partial summary judgment against BankAtlantic (now BBX Capital Corp.) and its former CEO and chairman Alan Levan, finding that the defendants’ public disclosures about their commercial real estate portfolio and their accounting treatment of certain portfolio loans violated Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The accounting fraud claim stems from BankAtlantic’s October 2007 attempt to sell many of the troubled loans. The company improperly recorded the loans on its books as “held-for-investment” instead of held-for-sale,” and failed to write them down. Management’s concern about the credit quality of the company’s commercial real estate land acquisition and development portfolio had been memorialized in a March 2007 email sent by the CEO in response to a cascade of borrowers requesting extensions, in which he stated, “[i]t’s pretty obvious that the music has stopped…I believe we are in for a long sustained problem in this sector.” The court found that the CEO made false statements in July 2007 during a second quarter earnings call, in which he acknowledged concerns about a subset of the portfolio but stated that, “there are no asset classes that we are concerned about in the portfolio as an asset class” and “the portfolio has always performed extremely well, continues to perform extremely well.” The company’s Forms 10-Q for the first and second quarters of 2007 did not acknowledge the trend of extensions granted and loans downgraded to non-passing status. The court also struck defendant’s affirmative defense that it relied on the professional advice of accountants, agreeing with the SEC’s assertion that the company did not completely disclose the problem to its accountants.

Securities and Exchange Commission v. BankAtlantic Bancorp Inc. et al., No. 0:12-cv-60082 (S.D.Fla. October 10, 2013).

 

IRS Guidance on Employment and Income Tax Refunds on Same-Sex Spouse Benefits

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Employers extending benefit coverage to employees’ same-sex spouses and partners should review their payroll procedures to ensure that such coverages are properly taxed for federal income and FICA tax purposes.  Employers also should review the options in Notice 2013-61 and consider filing claims for refunds or adjustments of FICA overpayments.

Employers that provided health and other welfare plan benefits to employees’ same-sex spouses prior to the Supreme Court of the United States’ June 2013 ruling in U.S. v. Windsor may be interested in filing claims for refunds or adjustments of overpayments in federal employment taxes on such benefits.  To reduce some of the administrative complexity of filing such claims, the U.S. Department of the Treasury and the Internal Revenue Service (IRS) recently issued Notice 2013-61, which outlines several optional procedures that employers can use for overpayments in 2013 and prior years.

String of pearls and champagne glass with wedding rings

In Windsor, the Supreme Court ruled Section 3 of the Defense of Marriage Act (DOMA) unconstitutional.  Section 3 of DOMA had provided that, for purposes of all federal laws, the word “marriage” means “only a legal union between one man and one woman as husband and wife,” and the word “spouse” refers “only to a person of the opposite-sex who is a husband or wife.”

Federal Taxation of Same-Sex Spouse Benefits

The Windsor ruling thus extends favorable federal tax treatment of spousal benefit coverage to same-sex spouses.  The IRS issued guidance in July clarifying that this tax treatment would extend to all same-sex couples legally married in any jurisdiction with laws authorizing same-sex marriage, regardless of whether the couple resides in a state where same-sex marriage is recognized.  This IRS approach recognizing same-sex marriages based on the “state of celebration” took effect September 16, 2013.

Prior to the ruling, an employer that provided coverage such as medical, dental or vision to an employee’s same-sex spouse was required to impute the fair market value of the coverage as income to the employee that was subject to federal income tax (unless the same-sex spouse qualified as the employee’s “dependent” as defined by the Internal Revenue Code).  The employer was required to withhold federal payroll taxes from the imputed amount, including federal income and the employee’s Social Security and Medicare (collectively FICA) taxes.  In addition, employers paid their own share of FICA taxes on the imputed amount, as well as unemployment (FUTA).

As a result of the ruling, an employee enrolling a same-sex spouse for benefit coverage under an employer-sponsored health plan no longer has imputed income for federal income tax purposes; may pay for the spouse’s coverage using pre-tax contributions under cafeteria plans; and may take tax-free reimbursements from flexible spending accounts (FSAs), health reimbursement accounts (HRAs) and health savings accounts (HSAs) to pay for the same-sex spouse’s qualifying medical expenses.  This same favorable federal tax treatment does not extend to employer-provided benefits for an unmarried same-sex partner, unless the same-sex partner qualifies as the employee’s dependent.

Overpayments of Employment Taxes in 2013

Employers that overpaid both federal income and FICA tax in 2013 as a result of income imputed to employees for benefit coverage for a same-sex spouse may use the following optional administrative procedures for the year:

  • Employers may use the fourth quarter 2013 Form 941 (Employer’s Quarterly Federal Tax Return) to correct overpayments of employment taxes for the first three quarters of 2013.  This option is available only if employees have been repaid or reimbursed for over-collection of FICA and federal income taxes by December 31, 2013.

Alternatively, employers may follow regular IRS procedures to correct an overpayment in FICA taxes by filing a separate Form 941-X for each quarter in 2013.  Notice 2013-61 provides detailed instructions for each of the alternative options, including how to complete the Form 941, as well as Form 941-X, which requires “WINDSOR” in dark, bold letters across the top margin of page one.

Overpayments of FICA Taxes in Prior Years

Employers that overpaid FICA taxes in prior years as a result of imputed income for same-sex spousal benefit coverage may make a claim or adjustment for all four calendar quarters of a calendar year on one Form 941-X filed for the fourth quarter of such year if the period of limitations on such refunds has not expired and, in the case of adjustments, the period of limitations will not expire within 90 days of filing the adjusted return.  Alternatively, employers may use regular procedures to make such claims or adjustments.  The regular procedures require filing a Form 941-X for each calendar quarter for which a refund claim or adjustment is made.  Note that under the alternative procedure provided by Notice 2013-61 or under the regular procedure, filing of a Form 941-X requires either employee consents, or repayment or reimbursements, as well as amended Form W-2s to reflect the correct amount of taxable wages.

Employee Overpayments of Federal Income Taxes

Employers who provided benefits to employees’ same-sex spouses in 2013 may adjust the amount of reported federally taxable income on each employee’s Form W-2 (Wage and Tax Statement) to exclude any income imputed on the fair market value of the coverage and to permit the employee to pay for the coverage on a pre-tax basis.

Employees who overpaid federal income taxes in prior years as a result of same-sex spouse benefit coverage may claim a refund by filing an amended federal tax return for any open tax year.  Refunds are available for overpayments resulting from income imputed on the fair market value of the coverage and from premiums paid on an after-tax basis for the coverage.  An amended tax return generally may be filed from the later of three years from the date the return was filed or two years from the date the tax was paid.

Employers that file Form 941-X are required to file Form W-2c (Corrected Wage and Tax Statement) to show the correct—in this case reduced—wages.  Employers that do not file Form 941-X may want to begin preparing for employee requests for a Form W-2c for each open tax year in which benefit coverage was offered to employees’ same-sex spouses.

Next Steps

Employers extending benefit coverage to employees’ same-sex spouses and partners should carefully review their payroll processes and procedures to ensure that such coverages are now properly taxed for federal income and FICA tax purposes.  In addition, employers should review the options in Notice 2013-61, and consider filing claims for refunds or adjustments of overpayments of FICA taxes for any prior open tax years and issuing Form W-2c to allow employees to claim refunds of federal income tax.  Most importantly, by acting promptly, employers can correct the 2013 over-withholdings for both FICA and federal income tax and overpayment of the employer portion of FICA tax, without the necessity and burden of filing a Form 941-X.

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