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Legal Update - March 2017 Newsletter

Yogi Patel - Wednesday, March 01, 2017

Dear valued clients and supporters: This month's newsletter will focus on: (1) changes to New York State wage and overtime laws; (2) an update in Trademark Law; and (3) intellectual property insurance.

New York State Wage and Overtime Update

While the implementation of the changes to the FLSA were stayed by a federal court late last year, Employer's in New York should be advised that the minimum wage and overtime exemption thresholds have increased under New York State law. Across New York, all employees are entitled to be paid at least $9.70 per hour and must be paid overtime if they earn less than $727.50 per week. However, in certain cities and counties, these figures are higher. In New York City, employers with 11 or more employees must pay their workers at least $11.00 per hour and grant overtime to anyone making less than $825 per week. For smaller NYC employers, these figures amount to $10.50 hourly and $787.50 weekly; in Long Island and Westchester they are $10.00 and $750.00, respectively. Employers and employees alike should be further aware that all of these thresholds are scheduled to increase again at the end of 2017.

Trademark Law Update

The United States Patent & Trademark Office (USPTO) will begin randomly auditing approximately ten percent of all "declarations of use" filed in connection with trademarks that are registered in one or more class as of March 21, 2017. A declaration of use is a document filed by the owner of a trademark stating that the that the mark is still being used in commerce as registered. The declaration of use is required to be filed between the 5th and 6th year after a mark is registered. While owners are generally only required to submit one specimen for each class under which their marks are registered, owners whose declarations are subjected to an audit by the USPTO will be required to provide additional evidence. Owners who supply insufficient evidence will find their marks subject to cancellation. As such, all trademark owners are encouraged to maintain records, including photographs, demonstrating a consistent use of their marks for all their registered purposes in order to best secure their rights in the event of an audit.

IP Insurance

Although intellectual property (trademarks, patents, and copyrights) may represent a significant source of value for a company, business owners often fail to property protect themselves in the event they are faced with an infringement lawsuit. Defensive measures, such as obtaining insurance to cover the cost of any such lawsuit, should be seen as a necessary precaution for any business that places significant value on its intellectual property. Generally, policies that are typically carried by businesses (Comprehensive General Liability or Commercial General Liability Insurance) may offer coverage for claims related to infringement, however, businesses are advised to understand whether their existing policies do in fact offer coverage related to IP infringement and are advised to seek explicit endorsements in the absence of clear language.

Readers are encouraged to follow us on Twitter (@lloydpatelllp) and Facebook to receive updates on these and other issues throughout the month.


 

Legal Update - October 2016 Newsletter

Yogi Patel - Tuesday, October 18, 2016

Dear valued clients and supporters: This month's newsletter will focus on: (1) trademarking website domain names; (2) impact on a business in the event of a divorce; and (3) rethinking employment contracts in light of the recent award of the Nobel Prize in Economic Science.

Trademarks and Website Domain Names
Contrary to the assumption of many, simply registering the name of a business as a domain name does not give the same protections as trademarking the name itself. Domain name registrants lease, rather than own their website domain names, whereas a trademark grants exclusive use of a particular domain name in commerce nationwide. Thus, businesses who fail to trademark their domain names are much more susceptible to infringement and customer confusion due to another entity using the same or similar name. And many businesses that spend countless resources on their brand (often tied to their websites) could find themselves in a position where they lose their ability to use that domain name resulting from their failure to seek federal trademark protection. For further details on the differences between registering a domain name and a trademark and why businesses should strongly consider the latter, an in-depth article can be found here on our website.

Protecting a Business from Divorce (Updated)
In our newsletter last month, we briefly discussed the need for business owners to prepare themselves in the event of a divorce. A more in-depth article on what steps owners should take to protect their businesses from a divorce is now posted here on our website.

Rethinking Employment Contracts

The most recent Nobel Prize in Economic Science was awarded to two professors for their work on improving the design of employment contracts. At the core of Dr. Oliver Hart and Dr. Bengt Homstrom's study were findings that suggested new ways in which businesses should value their employees' contributions and provide incentives to maximize performance. By restructuring its contracts based upon the professors' research, business can more accurately measure and incentivize their employees' performance and provide compensation accordingly. A more in-depth article on this topic will be posted next month here on our website.

Readers are encouraged to follow us on Twitter (@lloydpatelllp) and Facebook to receive updates on these and other issues throughout the month.

Trademark and Website Domain Names

Yogi Patel - Monday, October 10, 2016

Coming to America (1988)

Cleo McDowell:

“Look... me and the McDonald's people got this little misunderstanding. See, they're McDonald's... I'm McDowell's. They got the Golden Arches, mine is the Golden Arcs. They got the Big Mac, I got the Big Mick. We both got two all-beef patties, special sauce, lettuce, cheese, pickles and onions, but their buns have sesame seeds. My buns have no seeds.”

Most businesses, at some point or the other, hope to establish a unique brand with the aim of distinguishing themselves from others within their respective industries. Businesses spend countless resources to establish a brand and once they do, they should protect it at all costs. While only a parody, the scene from Coming to America quoted above illustrates the issue well: What if you managed to come up with something that catches on in the market place and becomes entrenched in your ability to generate business. What would you do to protect it? McDonald’s would likely go after McDowell’s to prevent him from creating confusion and diluting its brand.

The point of this article is to discuss how domain names, which should be thought of as your “brand” can be protected using trademark laws. There is little doubt that most businesses view online presence as essential. A website, is generally the portal through which the business makes its presence known. Whether it is marketing with the intention of providing business owners opportunities to expand their services or whether it is actually providing the service using the website itself – website are here to stay and are poised to become increasingly more essential to businesses.

To make the website more readily identifiable to their customer-base, business owners frequently use their business name as the domain name. A common assumption is that registering a domain name is enough to safeguard the name from being used by others. Simply put, signing up with a registrar and paying a small annual fee only gives the business a license to use the domain name for a certain period of time. Additionally, this right could be revoked at any time. So most domain names are not owned by the business, they are simply on lease. Imagine spending a significant amount of time and resources into building your website and driving traffic to it, only to have to start all over again because someone owns the trademark that is your domain name.

Registering or licensing a domain name will not protect business owners from others who actually trademark the same name or a similar domain name. This could lead to customer confusion, particularly where others with a similar domain name are also selling similar products. Online businesses are especially vulnerable to infringement, because the website is its sole identity. In most cases, trademarking the domain name is an important step towards protecting a business’ online identity and will provide business owners with legal recourse in the case of infringement. Trademarking a domain name essentially declares that the business owner has legal rights to that name.

A business owner who registers a trademark has an exclusive legal right to use the mark in commerce. For example, a business owner who trademarks a domain name will have the exclusive right to use that domain name in relation to its goods and services. Trademarking a domain name is subject to the same rules and standards as trademarking a business name or logo.

While choosing a domain name may be simple, not every word is protected by trademark law. A business owner who wants to trademark a domain name will have to consider a few factors. The name must identify products or services in that business, and it must be distinctive. For example, using common words such as coffee.com or juiceshop.com are most likely ineligible for trademark protection. The more unique the name is, the more likely it will qualify as a trademark. A diligent search should be performed to avoid the potential of any future legal liability as well as to ensure that an application for trademarking the domain name is not rejected.

This article was prepared with the help of Julie Lee, J.D. candidate (2017), CUNY School of Law.

 


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