Archives for December 2014

Beyond your Legal Rights: Trademark Bullying

Trademark BullyTrademark bullying is when a trademark owner zealously enforces their trademark rights outside the scope of the trademark law. Trademark bullying does not necessarily result in negative legal reactions, but the public backlash from trademark bullying can be costly. Consult your trademark counsel when determining the right course of action to infringement. Sometimes your marketing staff and your lawyer need to work together in order to produce the best outcome for the company.


Continual monitoring and enforcement is essential to protecting your trademark rights from infringement and dilution. However, if you believe that another party inadvertently infringed upon your trademark right, you might consider calling or sending a polite close and desist letter instead of threatening lawsuits. A polite initial response can reduce potential negative publicity and public backlash and perhaps even drum up some positive publicity. Consider the following options when you identify an infringer that may cause you bad publicity.

Have you Tried Calling?: A written cease and desist letter may be used against you in negative ad campaigns. Instead, you may wish to call the infringer and explain the situation. You can assert your trademark rights while minimizing misunderstandings by simply calling the other party.

The Polite Cease and Desist: A cease and desist letter can effectively assert your right while giving the other party an opportunity to fix the infringement issue. This method is more likely to elicit positive response from the accidental infringer and resolve the issue faster.

The Permission Letter: Unique situations require tailored responses. Here is a creative method of drumming up positive PR while responding to a legal outside trademark use.


The first step is to determine if the other party’s action (usually a cease and desist letter) extends beyond their legal trademark rights. Such analysis can be quite costly but necessary in order to determine your next course of action. If the financial value attached to your brand is still minimal you might consider changing your brand within a reasonable period of time and demanding compensation for the cost of rebranding. If the cost associated with your brand (in terms of branded products, loss of market shares, cost of rebranding, and loss of customer good will) is too great, ask your lawyer about the following options:

Coexistence Agreement: A trademark agreement will allow both parties to use similar marks and coordinate efforts so that neither mark is weakened.

Consent Agreement: The registered party agrees to allow the other to use the mark under certain terms for some incentive.

If it is difficult or impossible to negotiate with the other party, you may consider more costly actions such as…

Litigation: You can attain a judgment from the court that you are not violating your opponent’s trademark rights.


Ten Issues to Consider in Your Company’s Social Media Presence

Businessman with social media concepts

  1. Trademark, Cybersquatting or Impersonation-

Social Media sites do very little to prevent anyone from adopting usernames and using trademarks that belong to someone else. They can misdirect traffic from your customers and create confusion. Trademark owner bears the responsibility of monitoring these sites.

  1. Trademark Infringement is Rampant in Social Media-


Bloggers, video posters and chat room participants frequently use trademarks without licenses. These individuals believe they are just chatting and do not realize they are infringing. Enforcement of this is almost impossible because of the sheer volume of infringement and the speed at which the infringement can spread.


  1. Unsolicited Ideas and Brand Damage-


With social media posts in the hands of the consumers, they are impossible to control. The company needs to actively monitor the posts for intellectual property infringement.


  1. No Back Up of Intellectual Property-

Often social media sites have terms and Conditions of Service that allow them to shut down at any time, without notice to the account holder. Failure to back up the company’s posts and blogs may result in a loss of intellectual property.

  1. User Generated Content-


This is material generate by the public and uploaded to a company’s site. This is a very important piece to social media because it creates the interaction between the company and their customers. The company should have posted policies to prevent the submission of material that are copyrighted.


  1. Are Tweets protected by Copyright?-


The answer to this is generally, No. The company needs to decide if it is valuable to them to make their thoughts available to the general public in a format that may not be protected by copyright.


  1. Unauthorized Disclosure of Trade Secrets by Employees-


This is a risk a company takes when they do not have appropriate internal policies in place regarding sharing confidential information or trade secrets through their social media sites.

  1. International Laws govern Social Media-

Users and reach of social media are international. Companies who are looking to protect their trademarks have to try and keep up with monitoring them globally. This is a huge undertaking.


  1. Ownership of the Social Media Account-

Frequently a company will ask an employee to set up and manage their social media site. Who owns the account? Companies should consider clearly addressing the ownership of company social media accounts in agreements with their employees, such as employee proprietary information and invention assignment agreements. Agreements like this should state, in part, that all social media accounts that employees register or manage as part of their job duties or using company resources – including all associated account names and handles, pages, profiles, followers and content – are the property of the company, and that all login information and passwords for such accounts are both the property and the confidential information of the company and must be returned to the company upon termination or at any other time upon the company’s request.

  1. Ownership of the Followers-

If an employee is asked to manage a site they essentially become the “voice” of the company and his or her style and personality may be essential to the success of that site. As a result, the lines between “brand” of the company and the “brand” of the individual may become blurred. And when the company and the individual part ways it can create issues regarding the ownership of the related social media accounts and followers.









Risky Business: The Perils of Independent Contractor Misclassification

freelanceHiring independent contractors instead of employees often has a financial benefit for businesses due to savings in payroll taxes and employment benefits, and avoidance of wage and hour regulations. However, if a state or federal agency discovers that an independent contractor is misclassified, the business faces back pay, fines, interest, civil and criminal litigation costs, and business restructuring costs. All benefits gained from the misclassification are lost and more! If the business does not pay all associated fines and interest, the overflow debt may then be held against the owner’s personal accounts.

Several states and federal agencies monitor independent contractor misclassification; the misclassification identification in one agency often has a domino effect, brings all agencies and formerly misclassified employees pounding on your door, demanding money. The cost associated with this risky mistake can realistically drive you out of business. In case you are still unconvinced of the severity of the misclassification, the following article describes penalties associated with violations in Nevada.


The burden of proof rests upon the employer to determining whether an independent contractor relationship exists. The employer needs to demonstrate the existence of three factors.

  • The person has been and will continue to be free from control or direction from the employer regarding the performance of services;
  • The service is either outside the usual course of the business for which the service is performed or that the service is performed outside of all the places of business of the enterprise for which the service is performed; and
  • The service is performed in the course of an independently established trade, occupation, profession or business in which the person is customarily engaged, of the same nature as that involved in the contract of service.


They’re Watching You

The following Nevada agencies monitor independent contractor misclassifications:

  • Division of Industrial Relations, Nevada Department of Business and Industry
  • Employment Security Division (“ESD”)
  • Office of the Labor Commissioner
  • Nevada Department of Taxation
  • Department of Labor Standards Enforcement (“DLSE”)


The following federal agencies monitor independent contractor misclassifications:

  • Wage and Hour Division of the Department of Labor (“WHD”)
  • Equal Employment Opportunity Commission (“EEOC”)
  • Internal Revenue Service (“IRS”)


Agencies choose to investigate when…

  • Your “independent contractor” files an unemployment claim
  • Independent contractor complaints (e.g. By a competitor)
  • You independent contractor’s lawsuit against you
  • Random audits
  • Internet registration process


Heavy Consequences

  • Employment benefits including health insurance, retirement contribution, stock options, paid vacations, sick days, life insurance, disability insurance, etc.
  • Payroll taxes for each misclassification during each tax period including Social Security and Medicare taxes, federal unemployment insurance taxes, workers’ compensation insurance, etc.
  • Back wages, overtime pay, FMLA leave, and other employment law compliances fines
  • Interests and penalty on everything.
  • Gross misdemeanor criminal charges.
  • Civil action suits by the Nevada Attorney General and class action suits by misclassified workers.
  • Restructuring costs to ensure current and future workers will be properly classified.


Remember, these liabilities may pierce the corporate veil, becoming the liability of the owners and corporate officers, if not paid.


Learn from Microsoft’s Mistake

The IRS found Microsoft’s employment misclassification in the early 1990s and charged Microsoft millions in fees and penalties and caused Microsoft to restructure its human resources. After the federal government was finished with Microsoft, the company faced a civil suit for employment benefits from eight of the previously misclassified workers. Microsoft lost the suit in the circuit court and settled the case for $97 million.


Riskier than Ever!

Since 2011, the federal government has cracked down on employment classification, adding over a hundred monitoring agents and $25 million in funding to catch misclassifications. Specific task forces communicate between agencies to ensure that misclassifications are fully penalized by various agencies. This trend is not changing; in 2013, the federal government budgeted $14 million of grant money to assist states in identifying misclassifications. Now more than ever, business owners should be vigilant in employment classification.


Words Don’t Matter

Nevada has a counterintuitive definition for independent contractors. Designating the business relationship in an independent contractor agreement and actually perceiving your worker as an independent contractor is not enough. To proactively ensure that your workers are properly classified, call the lawyers at the Drinkwater Law Office.

Copyright Ownership in the Workplace: Work Made for Hire

Copyright 2 Copyright StampsAs a small business owner, you have probably hired a contractor or employee to design your website, write articles, copy, and incorporate pictures. You may also have had additional help in promoting and branding your company. If you received assistance in these tasks, you might not be the owner of the copyrightable work product created by the contractor or employee. In the United States, copyright ownership generally vests in the creator of the work. If you contracted with a web designing firm to design and populate your website, you are not the creator of the site content. In order to claim ownership of the copyright work, you must include a work made for hire clause in your independent contractor and employment agreements. Retaining original copyright ownership is more advantageous than licenses and assignments. You can avoid contractual complications and restrictions that accompany licenses. Work made for hire copyright expires 95 year after first publication or 120 years after creation; this expiration is considerably longer than the 35 years statutory termination for certain licenses and assignments.
Independent Contractors
An independent contractor owns the copyrights to his or her work, unless a written agreement states otherwise. You may commission an independent contractor to do the following work while retaining ownership:
• Contribution to a collective work
• Part of a motion picture or other audiovisual work
• Translation
• Supplementary work
• Compilation
• Instructional text
• Test and the answer material
• Atlas
Notice that the commissions do not encompass all copyrightable works. You cannot claim original ownership of some copyrightable works (such as computer software) created entirely by an independent contractor. Instead, you should consider hiring an employee to prepare such work.
A copyrightable work prepared by an employee is usually considered the employer’s copyright. However, the employer only owns the copyright if the work was prepared within the scope of employment. An employee may be able to contest the employer’s ownership of the copyright by claiming that the work does not fall within his or her scope of work. In these cases, the court usually asks three questions to interpret the employee’s scope of work:
• Was the employee hired for the purpose of preparing copyrightable works?
• Was the work created during the employer authorized time and space limits?
• Was the work created (at least in part) to serve the employer?
As an extra precaution, you may add a work made for hire clause and an assignment clause to employment agreements to secure the company’s rights in works produced by its employees.
Prioritizing proper copyright ownership in the beginning can save numerous headaches in the future. If you wish to pursue an enforcement action against infringement or sell your company, you will likely need to make representations regarding copyright ownership. Managing copyright issues years down the road can be expensive and time-consuming in time-sensitive situations.