Business
Shipment Success: The Importance of Pre-Contract Qualification in Fulfillment Centers
Shipping fulfillment centers play a pivotal role in the third-party logistics ecosystem. These businesses are uniquely positioned as both a warehouse to store products sold on e-commerce sites and a service provider responsible for packing and shipping such products once ordered. This dual role creates unique liabilities and responsibilities for each of these two functions. Appropriate customer and vendor screening is important to complete these functions. Warehouse Liability and Issues When a shipping fulfillment center receives customer products for storage and subsequent shipment, it is critical to understand what the products are, together with the creditworthiness of the fulfillment center’s customer. Product considerations may include: What products require a temperature-controlled environment? Do the products contain regulated materials that require special handling and storage? What is the packaging of these products when delivered to the fulfillment center warehouse? Additionally, assessing the customer’s creditworthiness upfront helps address accounts receivable issues and prevents scenarios where aging customer inventory occupies valuable rack space due to non-payment or bankruptcy. Each of these considerations is tied to some aspect of liability and whether the fulfillment center must take special steps to mitigate any such liability. This may include incorporating special charges for mitigation efforts into the service agreement with the customer. Packing and Shipping Concerns Similarly, the fulfillment center’s packing and shipping side must understand the customer’s desired packaging requests and shipping procedures. For example: Does the shipped product contain unique characteristics requiring special packaging materials? Are special freight charges likely to apply? Is the fulfillment center provided with the shipping materials, or is this item being sourced from a third party? Each of these factors will affect the workflow of the fulfillment center team. Pre-Contract Qualification of Customers With the above issues in mind, the fulfillment center must assess whether the customer is a good fit for their business or otherwise contract around any concerns or issues. This decision-making process (and subsequent contract negotiation) will help mitigate issues such as damage to other customer products, unforeseen expenses incurred to the fulfillment center’s detriment, delayed shipping issues, or rack space occupied by defunct customers. Implementing a comprehensive customer screening process will help drive better customer interactions and warehouse efficiency while ensuring that you engage with reliable and legitimate parties. Here is a structured approach that your warehouse can implement to evaluate potential customers: 1. Authorization to Do Business; Background Checks Documentation Check: Require potential customers to provide official business registration documents from the appropriate governmental body in their state (or, when dealing with international companies, their country of origin). This verifies their legal existence and is an easy way to confirm whether this customer sells legitimate products accepted by the market. Be cautious of any company unable to provide such documentation, as they may be either undercapitalized or operating as “fly-by-night” entities selling defective or non-compliant products until the market rejects them. Such companies are prone to leaving fulfillment centers with unpaid invoices and obsolete inventory occupying valuable fulfillment center rack space. Verification with Authorities: Cross-check the provided documents with relevant authorities or utilize online government databases specifically designed for business verification. Background Check: If the account is a significant size, consider a background check to ensure the company has a history of legitimate business operations and payment history. This can include checking for any legal issues or past bankruptcies. References: In addition to conducting background checks, consider requesting financial references from banks and other companies that have done business with the potential customer. This provides valuable insights into their financial integrity and payment track record. This is also an important step when negotiating contract terms because the fulfillment center can assert a security interest in the products being stored. Therefore, it is crucial to identify existing lienholders and assess whether they are considering legal action against the customer. 2. Proper Licensing Licensing Verification: Ask for copies of relevant licenses if the products use special materials that require specialized care. This same consideration should be given when hiring vendors to handle specialized products. This step is crucial for ensuring compliance with industry regulations and standards, as well as your applicable insurance policies. Compliance Checks: Conduct or request audits on compliance with industry-specific regulations and standards. This might include environmental, safety, and other operational standards relevant to the logistics sector. Implementing the Process Once you develop a screening and qualification process for customers, implementing that process into your daily workflows is essential. The best way to implement such screening is by creating a digital or paper-based checklist to be reviewed when accepting new customer inquiries. The process should also be continuous. Customers can change over time, so annual or bi-annual compliance and background checks can help proactively identify payment issues before they begin. Establish a structured procedure for periodic customer re-evaluation to ensure ongoing compliance with your standards. Lastly, be sure to maintain detailed records of all checks and verifications carried out. These records serve as vital documentation for audits, compliance checks, and resolving any potential disputes with the customer or third parties. Conclusion Implementing these measures will significantly reduce the risk associated with onboarding new customers. Warehouse space is critical for fulfillment center operations, and one of the quickest ways to endanger profits is to have this space occupied by delinquent customer accounts. Remember, the depth of the screening should be proportional to the potential risk and impact the customer might have on the fulfillment center’s business operations. For assistance implementing a customer screening process or addressing specific concerns in contracts, feel free to reach out to Mark Wendaur or Faith Miros.
April 2, 2024
Commercial Litigation
Five Things to Know About Hiring a Litigator
Did you get sued for the first time? Then you’ve got litigation on your hands. Litigation is just another word for a court case. Choosing an attorney to represent you in that litigation is tricky — and very important. Here are five things to know about hiring a litigator: 1. Hire Within Your Budget Most attorneys in the New York City area have higher billable rates. This is common across the country — legal services cost more in larger cities. But just because most attorneys have higher billable rates doesn’t mean you can’t afford high-quality representation. Make sure you know your attorney’s billable rate and ask about budgeting for your case. For example: What is your estimated budget for each stage of the case? What can we do to keep costs low in the case? Who will work on my case, and what is each person’s billable rate? 2. Experience vs. Titles Titles vary from firm to firm. What ultimately matters is the experience. An associate at a midsize firm might have more experience than someone who opened their own practice straight out of law school. On top of that, a midsize firm gives you the best of both worlds with experienced associates and significant resources at their disposal — but not at big law firm rates. 3. Seek a Clear Communicator Make sure your attorney tells you what the options are for your case — in detail and in language that you understand. Litigation is stressful, emotional, and expensive. If communication isn’t clear from the outset, it is likely to only add more stress, confusion, and frustration to your case — which may last for months or even years. Many attorneys have poor bedside manners. The term “legalese” exists for a reason. The law can be complex and dense — it’s your lawyer’s role to communicate to you clearly what’s happening. You shouldn’t feel talked down to. If your attorney is an effective communicator, you will receive updates about your case in clear and understandable language, confidently discuss each component of your case, and strategize together about how best to move forward. 4. Hire a Litigator, Not an Attorney Even though all attorneys are admitted to practice law, they’re not all the same. Litigation is a specialty. It requires being familiar with the court rules. More than that, it means having expertise in using the tools available to give you an edge in the case. Find a litigator who knows how to practice in the court your case is in. Even then, litigation is a wide-ranging area with many specialties. Make sure you ask about that attorney’s experience in your case’s area. For example: Have they worked on a case in this area before? What are some of the strategies that work well for this type of case? Do other attorneys in their firm have experience in this area? 5. Act Quickly As soon as a case starts, so do the deadlines. If you delay taking action for too long, the deadlines will pass, and your attorney will have to try to undo the damage by asking the court to give you another chance to make things right. All of this work is likely to result in additional costs and time. It is imperative to move quickly. Reach out to schedule a consultation right away so that you can best protect yourself.
April 2, 2024
One Minute of Overtime
Legal Test
Welcome to One Minute of Overtime, where I will share insights on Labor and Employment Law topics, mostly related to minimum wage and overtime compliance issues. Compliance in this area of law is nuanced and technical, so it is critical for employers to audit and adjust their practices to remain compliant, so stop by to stay up-to-date and in-the-know. Whether a worker is an employee, or an independent contractor is not a choice the employer gets to make. Instead, it is a legal conclusion reached based on the application of a legal test. In Maryland, the test focuses on the economic realities of the engagement.
March 20, 2024
Commercial Litigation
Protecting Your Business: Understanding ADA Website Accessibility Lawsuits in New York
Did you receive a complaint alleging that your company’s website violates New York’s equivalent of the Americans with Disabilities Act? Does the complaint allege the website violates New York State Human Rights Law and New York City Human Rights Law? By an individual claiming they tried to purchase goods on your website but could not do so due to accessibility issues? You are far from alone. Court dockets are ballooning in New York with these cases. With the right strategy, you can maximize your chances of greatly reducing the exposure you face and potentially securing the dismissal of the case without paying the other side a dime. Here are five things to know about your case: 1. Your Website Actually May Have Accessibility Issues There are many technical requirements for making your website accessible. It is important to work with a trusted vendor to bring your website into compliance, but that alone won’t cause the lawsuit to be dismissed. 2. Still, the Plaintiff Must Be Able to Prove the Impairment or Disability Even though your website may have been inaccessible to those with an impairment or disability, the plaintiff who sued you still must be able to prove that they are impaired or disabled. The phase of the lawsuit where you can dig into that proof is the discovery phase, and with the right strategy, you may be able to resolve the case during that phase and not have to proceed to trial. 3. A Fast-Paced, Active Approach Tends to Work Best The law firms that file these cases file a lot of them. Managing such a high volume of cases takes time and effort. With so many cases, their attorneys prefer to attack those cases where the other side is asleep at the wheel. Don’t show complacency. Instead, bring the fight to them and put them on their heels. 4. Don’t Expect Immediate Results Depending on which court your case is in, you may be facing a court with a lengthy process to bring your case to its close. The court may take its time to move your case along, and there are ways to nudge it to the next step. Maintaining that proactive approach is best, but be ready for the case to likely last a minimum of several months. 5. Be Ready to Negotiate Settlement talks can happen at any stage of the case. Don’t assume that the first offer you receive will be one you’re ready to take. Often, the attorneys for the other side are anxious to settle the case and will be open to significant negotiation. If you just received a complaint about your website, it is imperative that you act quickly. As soon as a lawsuit starts, so do the deadlines. You don’t want to miss a deadline—especially in this type of case where the other side is waiting for you to slip up.
March 15, 2024
Family Law
Shareholder Agreements in Divorce: A Legal Perspective
Divorce proceedings can often involve complex financial negotiations, particularly when business interests are involved. When spouses who are shareholders in a company decide to part ways, it can raise a host of challenging issues regarding the disposition of shares, control of the business, and the future direction of the company. In such cases, understanding shareholder agreements becomes crucial, as they often dictate how shares can be transferred, sold, or retained in the event of a divorce. Shareholder agreements are legal documents that outline the rights and obligations of shareholders in a company. These agreements typically address a wide range of matters, including the transfer of shares, the appointment of directors, voting rights, and dispute resolution mechanisms. While shareholder agreements vary widely depending on the specific needs and circumstances of the shareholders and the company, they often contain provisions that address what happens in the event of a shareholder’s divorce. One common provision found in shareholder agreements is a buy-sell agreement, also known as a buyout agreement. A buy-sell agreement is a contractual arrangement between shareholders that governs the sale and purchase of shares under certain circumstances, such as death, disability, retirement, or divorce. In the context of divorce, a buy-sell agreement may specify that the shares owned by a divorcing shareholder must be sold to the remaining shareholders or to the company itself at a predetermined price or according to a specified valuation method. Another important consideration in the context of divorce is the issue of control and management of the business. In closely-held companies, where a small number of shareholders typically control the company, the transfer of shares as a result of divorce can have significant implications for corporate governance. Shareholder agreements often include provisions that address voting rights and the composition of the board of directors, which can become relevant in the event of a divorce. In some cases, spouses may be parties to a shareholder agreement together or may have entered into a separate agreement that governs their ownership interests in the company. In either scenario, the terms of the shareholder agreement will play a central role in determining how shares are treated in the divorce process. For example, if the shareholder agreement contains provisions restricting the transfer of shares or giving other shareholders a right of first refusal, those provisions will generally need to be respected in the divorce proceedings. However, it’s important to note that while shareholder agreements can provide valuable guidance and structure in the event of a divorce, they are not necessarily binding on the court. In some jurisdictions, the court does not have the authority to transfer title of shares from one spouse to another. However, if the parties enter into an agreement to transfer shares from one spouse to the other, the shareholder agreement becomes the governing instrument on effectuating the transfer. Ultimately, navigating shareholder agreements in the context of divorce requires careful attention to both the terms of the agreement itself and the applicable family law. Consulting with experienced legal counsel who can provide guidance on both corporate and family law issues can be essential in ensuring that the interests of all parties are protected and that the divorce process proceeds as smoothly as possible. By understanding the implications of shareholder agreements and how they intersect with divorce law, shareholders can better position themselves to protect their interests and preserve the value of their investments in the company.
March 14, 2024
Construction
A Primer on Preliminary Notice of Mechanics' Liens
Most contractors, subcontractors, and suppliers know that lien claims have strict deadlines, typically measured from the last date of work. But did you know that some states also require preliminary notice of lien rights upfront, at the first time of furnishing labor or materials? In 2017, Pennsylvania created an online registry known as the Construction Notices Directory that allows owners to register private projects that exceed $1.5 million. If a project is registered, all subcontractors and suppliers must file a Notice of Furnishing within 45 days of first providing labor or materials to the project; otherwise, the lien right will be lost. Recently, more owners have been registering projects. Thus, prompting the questions: Do other states have similar early notice requirements for preserving lien claims? And what steps should be taken in Pennsylvania when dealing with the Directory? Other States' Lien Claim Process and Notice Requirements Pennsylvania’s requirement for a preliminary notice at the start of work (only when a project is registered on the Directory) is atypical in the Mid-Atlantic. Neither Maryland, Delaware, the District of Columbia, nor New Jersey require any similar preliminary notice at the start of work. The only other Mid-Atlantic state with a similar requirement is Virginia, which requires a preliminary notice to be issued within 30 days of commencing work on a one- or two-family residential dwelling if the owner has identified a Mechanics’ Lien Agent in the building permit. Preliminary notices at the commencement of work are more prevalent in other regions of the country; for example, California requires a preliminary notice to be issued within 20 days of first furnishing labor or material to the project. The point is that while preliminary notice requirements are atypical in the Mid-Atlantic, they are required in other parts of the country. It has become more popular for owners to utilize the Pennsylvania Construction Notices Directory. Thus, it is best to stay current on preliminary notice requirements if working in multiple jurisdictions. Practical Tips for Handling Pennsylvania's Construction Notices Directory If a prime contractor works directly with the owner, recognize that it is ultimately the owner’s choice on whether to register the project. If the owner elects to register the project, a Notice of Commencement is filed on the Directory, and that document should become part of the Contract Documents. The best practice is to also identify in the special conditions of the contract the Directory listing. The Notice of Commencement must be posted at the project site. Additionally, statutorily mandated language must be included in all contracts that provide notice that a failure to file a Notice of Furnishing will result in a waiver of the lien claim. The notice of furnishing is only required to be filed by subcontractors and suppliers. For subcontractors, closely review the Contract Documents to identify any indication of the project being registered. It is also recommended to include in internal standard processes that the Directory be searched at the time of signing the subcontract and also at the time of commencing work. The Notice of Furnishing can be filed prior to starting work; thus, there is no need to wait or delay in properly filing the document. Properly noticing mechanics’ lien claims and preserving rights can be a complicated area of construction law. The best practice is to have sound internal protocols and trusted counsel for troubleshooting. Offit Kurman construction attorneys are available to advise and counsel contractors, construction managers, design-builders, design professionals, subcontractors, developers, and design professionals on construction contracts, risk, and project disputes.
March 14, 2024
Immigration Law
Unlocking Opportunities: Navigating National Interest Waivers (NIW) for STEM Professionals
As we explore the maze of U.S. immigration law, we come across a provision that makes it easier to bring exceptional professionals with special skills to the U.S. Through this provision, the National Interest Waiver (or NIW), individuals may be able to secure permanent more easily and faster than the traditional labor certification process for those in STEM fields (Science, Technology, Engineering, Mathematics), this provision may be the perfect fit. What is a National Interest Waiver? The National Interest Waiver is a unique provision within the U.S. employment-based immigration system, offering a streamlined route to permanent residency for individuals who can demonstrate their work's national importance. This waiver enables eligible applicants, including STEM degree holders, to bypass the labor certification process and job offer requirements. STEM Professionals and National Interest Waivers: Why should STEM degree-holders pursue the NIW? STEM degree holders are particularly well-positioned to benefit from the National Interest Waiver due to the inherent value of their contributions to the U.S. economy and society. Here's how STEM professionals can leverage the NIW: In-Demand Skills: STEM fields are consistently identified as high-priority areas by the U.S. government due to the demand for skills that drive technological innovation, research, and development. National Economic Growth: STEM professionals often contribute directly to economic growth by advancing cutting-edge research, developing new technologies, and fostering innovation, all of which align with the national interest. Job Flexibility: The NIW offers STEM professionals greater flexibility in their career choices, as it eliminates the need for a specific job offer from a U.S. employer. This flexibility allows individuals to pursue opportunities that align with their expertise and passion. Expedited Permanent Residency: With the NIW, STEM professionals can benefit from an expedited path to permanent residency, bypassing the lengthy labor certification process that is typically required for employment-based green cards. How to Qualify While the benefits are clear, it's essential for STEM professionals seeking a National Interest Waiver to meet specific criteria, including showcasing exceptional abilities or skills, demonstrating the potential to benefit the nation, and establishing the national interest in waiving the job offer and labor certification requirements. Applicants must hold a U.S. advanced degree (or foreign equivalent) followed by five years of professional experience. Those demonstrating exceptional ability must demonstrate that they have ten years of professional experience. Exploring the Specific Criteria for National Interest Waivers The National Interest Waiver (NIW) serves as a valuable pathway for individuals with exceptional abilities or skills, including STEM professionals, to obtain permanent residency in the United States. To qualify for an NIW, applicants must satisfy specific criteria established by the U.S. Citizenship and Immigration Services (USCIS). Let's dive into the details of these criteria: Exceptional Abilities or Skills: NIW applicants must demonstrate extraordinary abilities or skills in their respective fields. This can be evidenced through a combination of factors, including: Recognition and Awards: Receipt of major awards or prizes in the field. Publications: Authorship of scholarly articles, publications, or books in esteemed journals or platforms. Patents: Ownership or co-ownership of patents in the field. Significant Contributions: Evidence of significant contributions to the field, such as groundbreaking research or innovations. Critical Impact on the Field: Applicants must showcase the significance of their work and its impact on advancing the field. This can be demonstrated through:Citations and References: High citation counts and references to the applicant's work by peers and experts in the field. Research Collaborations: Participation in collaborative research projects with prominent institutions or researchers. Technical Contributions: Development of technologies, methodologies, or solutions that have had a substantial impact on the field. National Interest: The heart of the NIW application lies in demonstrating the national interest served by waiving the job offer and labor certification requirements. This involves:Economic Impact: Showing how the applicant's work directly contributes to economic growth, job creation, or competitiveness in critical sectors of the U.S. economy. Healthcare Advancements: Demonstrating contributions to healthcare innovations, treatments, or technologies that benefit the nation's public health. Environmental Sustainability: Highlighting efforts to address environmental challenges or promote sustainability practices that align with national priorities. National Security: Illustrating contributions to national security through research, technological advancements, or expertise in strategic areas. Comparative Assessment: Applicants must provide evidence that their contributions are unique and cannot be easily replicated by U.S. workers. This may include:Expert Testimonials: Letters of support from experts in the field affirming the applicant's exceptional abilities and the importance of their work, as well as documentation of at least ten years of full-time experience in the occupation. Market Demand: Demonstrating demand for the applicant's specialized skills or expertise in the U.S. job market. Navigating Education Requirements for National Interest Waivers In addition to showcasing exceptional abilities or skills and making significant contributions to their field, applicants for the National Interest Waiver (NIW) must meet specific education requirements as mandated by the U.S. Citizenship and Immigration Services (USCIS). Here's a detailed breakdown of the specific educational criteria for NIW eligibility: Advanced Degree or Equivalent: To qualify for an NIW, applicants are typically required to hold an advanced degree or its equivalent in a relevant field. This includes: Bachelor’s Degree or Master's Degree: Many NIW applicants possess a master's degree or higher in a field such as science, technology, engineering, mathematics (STEM), or a related discipline. A master's degree demonstrates a high level of expertise and specialization in the applicant's area of focus. Doctoral Degree (Ph.D.): Applicants with a doctoral degree, such as a Ph.D., are particularly well-suited for NIW eligibility due to the depth of knowledge and expertise gained through advanced research and academic study. Professional Degree: In some cases, applicants with professional degrees, such as a Doctor of Medicine (M.D.) or Doctor of Jurisprudence (J.D.), may also be eligible for an NIW if their work significantly benefits the nation and aligns with the national interest criteria. Field of Specialization: The applicant's advanced degree must be directly relevant to their area of expertise and the work they intend to pursue in the United States. USCIS evaluates whether the applicant's educational background aligns with the national interest served by waiving the job offer and labor certification requirements. Equivalency Evaluation (if applicable): For applicants educated outside the United States or with degrees from non-U.S. institutions, USCIS may require an equivalency evaluation to determine the degree's comparability to a U.S. degree. This evaluation ensures that the applicant's education meets the necessary standards for NIW eligibility and demonstrates the required level of academic achievement. Demonstrated Impact of Education: NIW applicants must provide evidence of how their advanced education and academic achievements have contributed to their exceptional abilities or skills and their potential to benefit the nation. This may include:Research and Publications: Highlighting academic research, publications, or thesis work that showcases the applicant's expertise and contributions to the field. Advanced Training or Specialization: Demonstrating advanced training, specialized coursework, or academic achievements that have enhanced the applicant's skills and knowledge in their area of specialization. Academic Awards or Honors: Providing evidence of academic awards, honors, or scholarships received in recognition of the applicant's educational achievements and contributions to the field. The National Interest Waiver (NIW) does not just expedite the immigration process of persons of extraordinary ability but also acknowledges that professionals in science, technology, engineering, and mathematics (STEM) are significant contributors to America’s future. In this era of innovation and technological advancement, the NIW becomes a means through which holders of STEM degrees can add value to the country while still being able to seek permanent residency. In an effort to influence their careers in the U.S. permanently, the National Interest Waiver (NIW) offers STEM professionals a chance to navigate through immigration intricacies with dexterity and intentionality.
March 13, 2024
Business
Is a Trust Better Protection Than a Prenup?
Business owners and families of wealth should know that a properly structured trust can be a very effective alternative to a pre-nuptial agreement. The Legal Intelligencer By Joe Armstrong Preparing for your child’s wedding should be a joyful experience, so it should come as no surprise when a family business owner avoids bringing up a prenuptial agreement. Business owners and families of wealth should know that a properly structured trust can be a very effective alternative to a prenuptial agreement. When one or more generations of a family have worked hard in business to accumulate substantial wealth, they will frequently ask their children to enter into prenuptial agreements to protect the family business and other assets in the event of a future divorce. For a first marriage of relatively young persons, the concept of a prenuptial agreement is frequently considered offensive and a topic to be avoided. Even the discussion between parent and child can be stressful and considered by the child to be undue pressure ahead of what they believe will be the happiest day of their lives. When met with these circumstances, counsel can help alleviate the family strife by suggesting the use of trusts to protect assets in the event of a divorce at least as effectively as an actual prenuptial agreement signed by those about to be married. This article discusses some of the many ways that a trust can be a very effective alternative to a prenuptial agreement. Each state has its own laws and customs regarding the division of property between divorcing spouses. These state laws can vary significantly (e.g., equitable distribution v. community property states), but they all will look at the extent to which a spouse owns or controls an asset and the right to receive income from that asset. It is the ownership or control of an asset by a spouse that will bring the asset within reach of a divorce court. This core concept of ownership or control is what allows a trust to be such an effective alternative to a prenuptial agreement. As a general proposition, if a divorcing spouse does not own or control a particular asset or the right to income from that asset, a divorce court will not attempt to award that asset to the other spouse. Just because a trust is established for someone’s benefit does not mean that the beneficiary automatically has ownership or control of the assets in the trust, or even the right to income generated by those assets. The key is structuring the trust in a way that does not give the spouse ownership or control over the assets in the trust while still giving the trustee broad discretion in how to utilize the assets for the benefit of the spouse. Revocable Living Trusts One of the most commonly used trusts is a revocable living trust or “RLT.” As suggested by its name, an RLT is fully revocable by the settlor and is typically used in conjunction with a simple will that leaves the assets of the testator to the RLT. Since an RLT does not provide savings on death taxes that can be achieved with a more complicated irrevocable trust, those without exposure to the federal estate tax often prefer an RLT as a cost-effective method to minimize the burden of the probate process and provide asset protection to the heirs. An RLT does not complete a transfer of assets during the lifetime of the settlor since by nature an RLT may be revoked at any time. An RLT can work well for the generation owning the family business or otherwise having substantial wealth with the intent to hold on to their assets until death. Irrevocable Trusts An RLT immediately becomes an irrevocable trust upon the death of the settlor since the trust can no longer be revoked. An irrevocable trust upon formation transfers assets of the settlor to the trust during the lifetime of the settlor (an inter vivos transfer). The use of an irrevocable trust allows for more complex tax planning to minimize the burden of estate, gift and generation skipping taxes on the beneficiaries and future generations. For those fortunate enough to have wealth beyond the amount of the lifetime federal estate and gift tax exemption ($13.61 million for an individual and $27.22 million for a married couple in 2024), an irrevocable trust with tax planning provisions will be the preferred form of trust to use in lieu of a prenuptial agreement. So How Does It Work? Whether using an RLT or one of the many varieties of irrevocable trusts, it all comes down to making sure the language of the trust document cannot be fairly construed to give the spouse, as beneficiary, ownership or control of the assets in the trust. The following are some of the key points to address when drafting a trust to have the same impact as a prenuptial agreement but without the angst that goes along with putting one in place. A Trustee You Can Trust Selecting a trustee that you can readily trust (for lack of a better word) to act in the best interest of the spouse as the beneficiary is critical. The more independent the trustee is from influence by the beneficiary, the better for protecting the assets from a divorcing spouse. A corporate trust company will be viewed as highly independent while a sibling of the beneficiary spouse may be considered more susceptible to influence by the beneficiary. Identifying the trustee is often the most challenging task for the family. When in doubt, select a corporate fiduciary with a long history of serving as a trustee for multiple generations of families of substantial wealth. No Absolute Right to Income or Principal Distributions Clients are often tempted to provide terms in their trust that will give their child as a beneficiary the right to withdraw some or all of the principal in the trust at certain ages or other milestones. Providing beneficiaries with the absolute right to income from the trust or the ability to withdraw principle from the trust can significantly weaken the asset protection characteristics of the trust and its effectiveness as a substitute for a prenuptial agreement. Giving withdrawal rights or the absolute right to income to beneficiaries of a trust indirectly gives them a degree of ownership or control over the assets of the trust that springs into existence when the stated age or milestone is reached. In a divorce court setting, one can expect a special master or judge to consider a spouse to own or control some or all of the assets in the trust. Once ownership or control is established, one must assume that the divorce court will look to find a way to include the value of the assets in the trust as being subject to some form of distribution to the other spouse in the divorce. In the end, a carefully crafted trust can be even better than a prenuptial agreement when seeking to protect assets in the event of a divorce. Reprinted with permission from the February 15, 2024, edition of The Legal Intelligencer © 2024 ALM Global Properties, LLC. All rights reserved. Further duplication without permission is prohibited, contact 877-256-2472 or asset-and-logo-licensing@alm.com.
March 7, 2024
Intellectual Property
Lights, Camera, Trademark: The Unsung Heroes of the Oscars
Oscar night is the most glamorous night in Hollywood. The red carpet. The gold statuettes. The gowns. The tuxedos. The stars. The trademarks. That’s right, the trademarks. They are essential to the movie industry, and when we celebrate the best in the movies, we should also celebrate the unforgettable trademarks that go along with the motion picture industry. The equipment used to make and show movies are all emblazoned with trademarks. We’ve all seen PANAFLEX or PANAVISION cameras in behind-the-scenes documentaries. Most of us have seen movies in IMAX, and we have heard movies in DOLBY SURROUND SOUND, DOLBY ATMOS, or DTS. Or maybe we’ve even seen a movie in CINEMASCOPE (Disney’s 20,000 Leagues Under the Seas, for example). We’ve probably watched movies with special effects from ILM, DIGITAL DOMAIN, and WETA. Almost all of us have seen a movie in an AMC or REGAL CINEMAS theater, or maybe we have seen where the stars have signed their names and left their handprints outside of GRAUMAN’S CHINESE THEATER in Los Angeles. That theater is so well-known that the look of the building is registered as a trademark. The studio and production company names that appear at the beginning of films are great examples of trademarks, indicating the source of the movie that viewers are watching. PARAMOUNT, PIXAR, WARNER BROTHERS, RKO, UNIVERSAL, SONY, COLUMBIA PICTURES, A24, ORION PICTURES, FOCUS FEATURES, BAD ROBOT, and AMBLIN are all trademarks. So are the roaring lion that introduces MGM films, the Twentieth Century Fox Fanfare, and Netflix’s “Tudum” sound. The water tower on the Warner Brothers lot is also a trademark. That brings us to the movies themselves. The U.S. Trademark Office will not register the title of a single work (this is true for books, too); rather, it will only register the title of a series (meaning two or more movies). While none of this year’s Best Picture nominees are part of a series, plenty of movie series titles are registered trademarks: BACK TO THE FUTURE, JURASSIC PARK, STAR WARS, MISSION: IMPOSSIBLE, DUNE, THE GODFATHER, BARBERSHOP, MADEA, and GODZILLA to name a few. Even some characters and props are the subjects of trademark registrations. Mickey Mouse, for one, is a registered trademark (trademark protection for characters is not always available). There are trademark registrations for multiple lightsaber hilts, as well as the X-Wing Fighter. In Europe, the owner of James Bond has a number of trademark registrations, including one for the well-known gun barrel sequence, and one for one the famous spy’s iconic poses. At least some movie brands have received legal advice and sought trademark protection. Thus, there are registrations for STAY PUFT (for marshmallows), STARK INDUSTRIES (for clothing), THE DAILY PLANET (also for clothing), WILLY WONKA (for candy), BUBBA GUMP (for restaurants), THE MIGHTY DUCKS (for hockey). Of course, we should not forget that Mattel has a trademark registration for the shade of pink associated with BARBIE. And yes, the golden statuette itself is a trademark, so all those who took one home took home a trademark. It’s the most glamorous night in Hollywood, and the trademarks have the best seats.
March 7, 2024
Estates and Trusts
Four Reasons Your Power of Attorney May be Out of Date
A financial Power of Attorney is an essential document in any estate plan. It enables you to appoint someone you trust to manage your finances and other legal matters in case you become unable to do so yourself. The person you name, called your “attorney in fact,” generally has broad powers to handle things like paying your bills, filing your taxes, accessing your safe deposit box, managing your investments, and even selling or mortgaging your house. A “Durable” Power of Attorney remains in effect even if you become incompetent, which is when the document is most likely to be needed. Because it may be years before your Power of Attorney is used, you should review it periodically to make sure it remains current. Here are four reasons to consider having your Power of Attorney revised: It is more than five years old. Unless the document states otherwise, a Power of Attorney technically remains valid indefinitely. Still, banks and other financial institutions may be skeptical if the document is more than five years old. Their skepticism may stem from a legitimate concern that the Power of Attorney has been revoked or perhaps superseded by a newer version of the document. It names the wrong people. Longtime partners and married couples often name each other as their attorneys, in fact, and another individual to act as a backup in case the partner or spouse isn’t able to do the job. If your marital status has changed since you had your Power of Attorney prepared, or if your backup attorney, in fact, has fallen out of favor, it’s time to rethink who should be in charge of your finances if you can’t be. It’s Not the Maryland Statutory Form. In October 2023, the Maryland Legislature adopted a new Statutory Power of Attorney. Under state law, Maryland’s banks, insurance companies, and brokerage firms are legally obligated to accept this statutory form. Anyone who refuses to honor the Statutory Power of Attorney can be forced to pay the attorney’s fees spent getting a court to require that they accept the document. Although other Power of Attorney forms are still valid in Maryland, having the statutory form will help to ensure that the document is honored without delay. It doesn’t include provisions for your digital assets. Digital assets include things like the electronic data stored on your computer or smartphone, your Internet accounts like LinkedIn and Gmail, and your online pictures and documents. Without explicit authorization, called “lawful consent,” no one can legally manage these assets for you if you become incapacitated. Some of these assets, like your PayPal or Amazon accounts, may have monetary value. Others, like your email account or personal blog page, could be of great sentimental importance. Even your voicemail account may be valuable if it includes messages from potential clients or expressions of support from loved ones during an illness. Only a newer Power of Attorney will include provisions for your digital assets, and it may be wise to have yours updated for this reason alone. It is also important to make a list of your passwords and login information. This should be kept in a safe place so your attorney, in fact, can find it when the need arises. Do you really need a Power of Attorney? Without one, it could be necessary for the court to appoint someone to become your legal guardian. A guardianship proceeding is an arduous and expensive process. In addition, the guardian would need to file annual accountings with the court to verify how your assets had been spent. Taking the time to have a Power of Attorney prepared—and to keep it current—is well worth the small effort required. Lee Carpenter is a Principal at the law firm of Offit Kurman, P.A., and can be reached at (410) 209-6426 or lee.carpenter@offitkurman.com. This article is intended to provide general information and should not be construed as legal advice.
March 4, 2024
Intellectual Property
Trademark Use in the U.S.
Demystifying What Constitutes an Acceptable Specimen of Use Evidence of use is, in most circumstances, essential to securing and maintaining a U.S. trademark registration. Subject to certain limited exceptions involving foreign trademarks, the U.S. Trademark Office will not issue a U.S. trademark registration without appropriate proof of use. Similarly, to maintain a U.S. trademark registration, a registrant must submit adequate proof of use to the Trademark Office. While this sounds straightforward, in practice, it can sometimes be very difficult to find evidence of use that the Trademark Office will accept. According to the Trademark Manual of Examining Procedure, § 904, specimens “are required because they show the manner in which the mark is seen by the public.” Acceptable specimens can be labels and tags affixed to goods or the containers for goods (but not mockups), stampings on products, commercial packaging, screenshots from a computer program or a frame of a movie or video, a website from which software can be downloaded, point of sale displays, catalogs with ordering information, websites from which products can be ordered, and manuals. TMEP §§ 904.03 (a) through 904.03 (k). On the other hand, printer’s proofs, mockups, renderings, and advertising materials are generally not acceptable as evidence of use. TMEP §§ 904.03 (a) through 904.03 (k). Once evidence of use is submitted, the Trademark Office will examine it carefully. If it is not accepted, an Office Action will be issued, after which one will have the ability to submit a substitute specimen that was in use as of the pertinent date (usually the date on which the original specimen was submitted). TMEP § 904.05. Obtaining an acceptable specimen is often one of the most difficult parts of preparing a trademark application or a maintenance filing. This is in part because the Trademark Office examines them so carefully but also partly because there is a desire to avoid the expense of repeated filings with the Trademark Office. Indeed, failure to submit an acceptable specimen can lead to the refusal of an application, as demonstrated by a recent case. Hi-Tech Pharmaceuticals, Inc. sought to register EXPERIMENTAL AND APPLIED SCIENCES as a trademark for use in connection with dietary and nutritional supplements. As evidence of use, it submitted an original specimen and a substitute specimen. The original specimen was five pages long, consisting of a screen capture of a web page showing five different products. The proposed mark did not appear on the first page, but it did appear on close-ups of two supplement bottles that were part of the specimen. The close-ups showed the proposed mark on the lower back portion of the label, on one line of a four-line group. All four lines were the same color, appeared in the same font size and style, and had the same justification. The proposed mark appeared at the end of the following sentence: “Developed and exclusively manufactured by Experimental And Applied Sciences”; because of its positioning, the proposed mark was on the second line. The next line had the applicant’s address, and the following line had the applicant’s phone number and website address. The Examining Attorney refused registration of the mark, taking the position that the evidence of use showed the proposed mark being used as a trade name, not as a trademark (the submitted evidence did not show the proposed mark anywhere else on the bottle). The Trademark Trial and Appeal Board affirmed on appeal, agreeing with the Examining Attorney that the “applicant would be hard-put to present the term in a less prominent manner.” (emphasis in original). The TTAB explained that the proposed mark appeared as part of a visual unit and that, as a result, the impression was that the proposed mark should be read in the context of the lines around it. Therefore, registration was refused. An acceptable specimen would have led to a different result. While the Hi-Tech Pharmaceuticals case was in the context of seeking registration of a mark, it applies with equal force to maintenance filings—an improper specimen can lead to the cancellation of a registration mark. Thus, in either context, it is important to work with experienced counsel to make sure that a mark is being used in a manner that demonstrates trademark use and that will be accepted by the Trademark Office. If there is any doubt about whether the Trademark Office will accept use, please contact me (preferably well in advance of any deadlines).
February 29, 2024
One Minute of Overtime
Primary Duty
Welcome to One Minute of Overtime, where I will share insights on Labor and Employment Law topics, mostly related to minimum wage and overtime compliance issues. Compliance in this area of law is nuanced and technical, so it is critical for employers to audit and adjust their practices to remain compliant, so stop by to stay up-to-date and in-the-know. Most exemptions under the FLSA focus on the employee’s primary duty. This means that even where an employee may do a variety of work, the exemption analysis will focus on the principal, main, major or most important duty that the employee performs.
February 28, 2024
Labor and Employment
Employment Law Update: Delaware Supreme Court Takes a Stand on Restrictive Covenants
In Cantor Fitzgerald, L.P. v. Ainslie, C.A. No. 9436 (Del. Jan. 29, 2024), the Delaware Supreme Court signaled to its lower courts that many well-drafted restrictive covenants remain valid and enforceable. The Cantor Court unanimously reversed the Delaware Chancery Court’s ruling, which had rejected as unenforceable a financial services company’s limited partnership agreement clause under which a limited partner’s equity is forfeited if the partner violates non-competition provisions. The decision is noteworthy because the Court of Chancery has increasingly demonstrated a willingness to strike down overly broad non-compete agreements, accompanied by a growing reluctance to revise (or “blue pencil”) agreements by narrowing their terms. The Court of Chancery held that the non-compete and non-solicitation provisions contained in the limited partnership agreement, which had a worldwide geographic scope, were geographically overbroad and unenforceable. Additionally, the Court of Chancery found the definition of “Competitive Activity” overbroad due to its inclusion of “any Affiliated Entity,” reasoning that “it is highly possible that a partner could unknowingly engage in a Competitive Activity.” 2023 WL 106924, at *18. Notably, the court declined to “blue pencil” the provisions to make them more reasonable. The Court of Chancery then focused on the forfeiture-for-competition provision triggered by “Competitive Activity.” The Court of Chancery considered whether it should evaluate the forfeiture-for-competition provision (which it called a “Conditioned Payment Device”) for reasonableness or apply contractual deference under the “employee choice” doctrine. The court determined that “forfeitures do not enjoy this Court’s contractarian deference” and conducted a reasonableness analysis. Id. at *24. Although the court applied a “lenient” reasonableness test, it nonetheless determined that the Conditioned Payment Device was unreasonable and invalid, given the broad definition of “Competitive Activity,” the lack of an established legitimate business interest for the broad restrictions, and the four-year temporal scope, which extended beyond the temporal scope of the contractual non-competition and non-solicitation provisions. Id. at *26. The Supreme Court disagreed, highlighting the distinction between non-competition clauses for former employees and those for former partners. It ruled that partnership agreements could include consequences not typical in standard contracts, like penalties and forfeitures. While the Delaware Supreme Court’s decision was specific to limited partnership agreements, employers should still take note. Put another way: while employment-based non-compete clauses are still subject to a reasonableness standard, the tides in Delaware may be shifting back towards the employer-friendly interpretation of restrictive covenants, at least for now (and until there is more clarity surrounding the FTC’s final rule). Moreover, such provisions may not be enforceable in specific industries, such as law firm partnership agreements where ethics rules may be implicated due to a chilling effect on a client’s right to select counsel. Furthermore, following the Cantor ruling, the Delaware Supreme Court accepted an interlocutory appeal regarding a Chancery Court ruling in Sunder Energy, LLC, v. Jackson, C.A. No. 455, 2023 (Del. Jan. 25, 2024). This case concerns the denial of a preliminary injunction to enforce a non-compete provision in a limited liability company agreement and a refusal to engage in blue-penciling. The Delaware Supreme Court’s stance on the matter remains to be determined. Given the current state of Delaware jurisprudence on restrictive covenants, employers must carefully consider any restraints on employee mobility. They should also give similar consideration to the choice of law and forum selection provisions contained in employment agreements. Thank you for reading our legal update- please get in touch with us if you have any questions or require any assistance. Sarah Goodman can be reached at sarah.goodman@offitkurman.com or 267-338-1319, and Charles McCauley can be reached at cmccauley@offitkurman.com or 484-531-1712.
February 27, 2024
Family Law
Navigating High-Asset Divorce Cases
High-asset divorces typically involve couples with substantial wealth, including real estate, investments, business interests, and other valuable assets. These cases require a meticulous approach to ensure a fair and equitable distribution of assets, spousal support, and child custody arrangements. Determining the value of complex assets such as businesses, stock options, and intellectual property can be challenging. Valuation experts may be required to assess the worth of these assets accurately. In some cases, spouses may attempt to conceal assets to reduce the amount subject to division. Uncovering hidden assets demands thorough financial investigations, and forensic accounting may be possible. The tax consequences of asset distribution need careful consideration. Dividing assets without a comprehensive understanding of tax implications can lead to unexpected financial burdens. When one or both spouses own a business, the division or buy-out of business assets becomes a critical issue. This involves assessing the business's value and determining the most equitable way to distribute ownership interests. High-asset divorces often involve substantial spousal support considerations. Calculating the appropriate amount requires a detailed analysis of each spouse's financial situation and needs. Your divorce attorney will help you engage the necessary financial experts, such as forensic accountants and valuation professionals. Comprehensive documentation of all assets, liabilities, and financial transactions is essential in determining the marital estate. Given the complexity of high-asset divorces, negotiation and mediation can be effective methods for reaching agreements outside the courtroom. This allows the parties more control over the outcome. Having a well-drafted prenuptial or postnuptial agreement can simplify the divorce process by establishing clear guidelines for asset division and financial arrangements. If you have such an agreement, you should provide a copy to your attorney. Each spouse should seek experienced legal representation with experience in high-asset divorces. Attorneys with expertise in this area can navigate the legal complexities and advocate for their client's best interests.
February 15, 2024
Intellectual Property
Upcycling, Customization, and Trademark Infringement
With its potential environmental and sustainability benefits, upcycling is a popular trend. Likewise, product customization, allowing consumers to express their own style, is also popular. As illustrated by two cases involving watches, both can give rise to claims of trademark infringement and counterfeiting. Rolex Watch USA, Inc. v. BecekerTime, L.L.C. BeckerTime is a seller of decades-old preowned watches containing Rolex parts. BeckerTime identifies such watches as “Genuine Rolex,” but they include both Rolex and non-Rolex parts. Before taking action, Rolex purchased two watches from BeckerTime. BeckerTime added diamonds as hour markers to the refinished watch dials by drilling holes in the dials and inserting aftermarket diamonds or other stones and settings in the holes. As part of the refurbishment process, BeckerTime strips the dial down to bare metal, and once the refurbishment is complete, it reapplies Rolex’s trademarks. When selling the modified watches, BeckerTime lists a retail price with a comparison price labeled as “New MSRP (if all factory)”— even though Rolex does not and has never sold a similar watch. Additionally, BeckerTime adds various non-Rolex parts (such as bezels with added diamonds, bands, or straps). BeckerTime issues an “Authenticity Guarantee” for each watch it sells and has held itself out as a “Certified PreOwned Watch Dealer” with a “Rolex Certified Master Watchmaker” even though Rolex has not certified BeckerTime or its watchmaker. Moreover, the parts added by BeckerTime are integral to the function of the watches and do not bear any markings indicating that BeckerTime is the source of the watches. To be sure, BeckerTime did indicate on its website that the replacement parts were not genuine Rolex parts, that the alterations it makes would void any Rolex warranty, and that BeckerTime is not affiliated with Rolex. That was not enough to stave off legal action. Rolex sued BeckerTime for trademark counterfeiting and trademark infringement in September 2020. After a bench trial, the court found that BeckerTime infringed Rolex’s trademark by counterfeiting Rolex watches and issued an injunction precluding BeckerTime from using Rolex’s trademark in specific ways. Both parties appealed, and the court of appeals largely upheld the injunction. The court of appeals explained that “BeckerTime does more than recondition or repair vintage Rolex watches.” According to the court of appeals, BeckerTime sold watches that were materially different from those sold by Rolex; the watches could not be called genuine Rolex watches. The court of appeals also pointed out that customers were confused as to whether the watches were entirely genuine Rolex and that BeckerTime had received complaints about the quality of the watches. As a result, the court of appeals affirmed the injunction, although it did instruct the lower court to clarify one point. Hamilton Intern. Ltd. v. Vortic LLC Like the BeckerTime case, this case also involved watches. The outcome was very different. Robert Thomas Custer founded Vortic and endeavored to make a watch that would be entirely made in America. After learning that no active company in the U.S. made watch movements, Vortic began salvaging and restoring parts from antique American-made pocket watches manufactured in the late 1800s and early 1900s. The parts, which included antique parts from watches bearing Hamilton’s trademark, were then encased in new wristwatches. One of the watches Vortic made was named “The Lancaster,” after the city where the Hamilton Watch Company was originally based. The Lancaster features restored antique pocket watch movements and front dials made by Hamilton. The front dial bears the HAMILTON trademark. The watch strap, case, and various internal parts were either manufactured by Vortic or came from modern U.S. sources. The back of the watch has a glass cover through which the watch parts, some of which bear the HAMILTON trademark, can be seen. The cover is surrounded by a metal ring with Vortic’s name and serial number for the watch, as well as the watch’s name. Buyers received the watch in a wooden box with Vortic’s name and a booklet that displayed the Vortic logo and explained its manufacture and restoration process. The box also included an authentication card with Vortic’s name and serial number, which was signed by the watchmaker. Vortic’s advertisements emphasized the antique and authentic nature of the watch’s parts. In July 2017, Hamilton sued for trademark infringement and counterfeiting. After a bench trial, the court ruled in favor of Vortic, finding that there was no likelihood of customer confusion. Hamilton appealed, and the court of appeals affirmed the lower court’s ruling. The court of appeals pointed out that Vortic took genuine parts from Hamilton watches, refurbished and repaired them, and modified them into a wristwatch and that consumers would view the watch as an antique pocket watch modified into a wristwatch rather than as an entirely new product. Further, the court of appeals explained that Vortic took many steps to disclose that it was not affiliated with Hamilton and that its watch used refurbished original parts. This could be seen in advertisements, the marks on the watch itself, and the fact that the watches themselves are presented to consumers as restored antique pocket watch parts modified into a wristwatch. The court of appeals contrasted this with other cases (including cases brought by Rolex) where there was no disclosure of the changes made to the watch and pointed out that there was no evidence of consumer confusion in the record. So, What Is Permitted? Anyone seeking to reuse a previously manufactured product or parts from a previously manufactured product should make sure to disclose to consumers exactly what has been done. Further, it is important to make clear that there is no affiliation between the upcycler/customizer and the original manufacturer. These seem to be the key differences between the Rolex decision and the Vortic decision. However, strict compliance with those requirements does not mean that reusing a previously manufactured product cannot give rise to a claim for trademark infringement. One thing that does seem settled is that customization of a product purchased by a consumer is permitted so long as the customized product is intended for the consumer’s own use and not for resale (in the BeckerTime case, it appears that BeckerTime was customizing watches for sale, rather than in response to consumer requests). If you are contemplating reusing someone else’s products or are concerned that a third party reusing your products will result in consumer confusion, please feel free to contact me.
February 14, 2024
Intellectual Property
Laughing in the Face of Copyright: The Unsettling Case of AI-Generated Comedy and Digital Immortality
George Carlin had quite the career. His seven dirty words routine was the centerpiece of litigation about the government’s power to censor indecent material on the airwaves that went up to the Supreme Court. He won awards for his comedy specials and albums (full disclosure: Jammin’ in New York is a personal favorite). He appeared in movies like The Prince of Tides, Bill & Ted’s Excellent Adventure, Cars (where he voiced Fillmore), and was the conductor on Shining Time Station. Carlin passed away in 2008, and he is now at the center of a new lawsuit raising questions about whether AI should be used to “resurrect” deceased artists, who controls the legacy of deceased artists, and who can profit from their “resurrection.” On January 9, 2024, Dudesy LLC (“Dudesy”) released an hour-long video entitled “George Carlin: I’m Glad I’m Dead (2024). The introductory voiceover explained that Dudesy, using some type of AI, fed George Carlin’s standup routines into the training database for the AI; the AI was then used to create the video. The introductory voice further stated, “I listened to all of George Carlin’s material and did my best to imitate his voice, cadence, and attitude, as well as the subject matter I think would have interested him today.” The video quickly made the rounds on social media. By January 25, Carlin’s estate, which had nothing to do with the video, filed suit against Dudesy and the individuals associated with the making of the video. The lawsuit, filed in federal district court in Los Angeles, asserts three claims: violation of the common law right of publicity, violation of the statutory right of publicity, and copyright infringement. The first two claims are based on the unauthorized use of Carlin’s name, voice, and likeness in the video. The third claim is based on the copying allegedly occurring when Carlin’s standup routines were fed into the AI to create the video. The lawsuit claims that Dudesy saw the video as a profit center, not just a way to make people laugh. Dudesy promoted the video with social media posts providing links to its online store and Patreon page from which subscribers can purchase monthly subscriptions. And a YouTube channel associated with Dudesy that posted videos relating to the hour-long special with the same hyperlinks and advertisements. Further, in anticipation of a likely claim that the video was a “fair use,” the lawsuit alleges that the video “has no comedic or creative value absent its self-proclaimed connection with George Carlin. It does not, for example, satirize Carlin as a performer or offer an independent critique of society.” In the wake of the filing of the lawsuit, Dudesy now claims that the video was not written by AI but instead by Chad Kultgen. Mr. Kultgen, together with Will Sasso, hosts the Dudesy podcast—a podcast that was used to promote the video. If it is true that a human wrote the script for the video, that might negate the copyright infringement claim insofar as it relates to the use of AI, but it still leaves Dudesy facing the California right of publicity claims for their efforts to “resurrect” George Carlin. The question of who, if anyone, has the right to “resurrect” a performer or personality depends on state law; slightly less than half of the states recognize a post-mortem right of publicity. The case neatly crystallizes the issues surrounding AI as it impacts the legacies of performers and other celebrities and touches on similar issues that were at the core of last year’s Hollywood strikes. Thirty years after it came out, the movie Jurassic Park remains prescient. And Dr. Malcom’s indictment of John Hammond and InGen applies with equal force to the burgeoning use of AI: “your scientists were so preoccupied with whether or not they could that they didn’t stop to think if they should.” If you need to talk with someone about whether or not you should, contact me or one of my intellectual property colleagues at Offit Kurman.
February 7, 2024
Construction
Avoiding Preconstruction Pitfalls (from the Contractor's Point of View)
It has become increasingly popular for private commercial construction projects to engage the contractor during preconstruction design early in the project. By doing so, the owner’s team and design professionals are able to work collaboratively and receive valuable feedback on key project details, such as constructability, schedule, early cost estimates, projected budgets, long lead items, and value engineering. This is true for any project delivery system that uses design assistance, delegated design, is a true design-build, is a CM at risk or CM as an advisor, or is a version of an integrated project delivery. But what happens if the owner tries to call an audible at the line of scrimmage and seeks to replace the contractor right before the construction phase begins? And what other pitfalls should a contractor be wary of if involved in preconstruction services? Precon, Not Freecon Some owners ask that preconstruction services be offered for free as a value-added customer service. Each project should be considered on a case-by-case basis. There might be projects and business reasons why that makes sense. Typically, however, it is best to avoid giving “freecon.” The preconstruction work is a valuable service, and there can be risk associated with it. Proper business relations should clearly define the scope, rights, and obligations regarding the preconstruction services and have an associated fee, typically done on an hourly or stipulated sum basis. Land Development, Design Assist, Delegated Design, or Design Build? The role, responsibilities, and scope of preconstruction services should be clearly identified in a contract so that there is no confusion about the exact services and risks being undertaken. Sometimes (but rarely), the contractor will assist the owner with land development, acquisition, usage, and zoning. Usually, however, the contractor is not involved in land development activities but instead will only provide services in relation to the preconstruction itself. If the contractor is only assisting and commenting on the design (design assist), that limited scope should be clearly stated. If any scope is delegated design, where the contractor will be responsible for furnishing the actual sealed/stamped design, or perhaps the contractor is responsible for a performance specification, it should be clearly stated. Furnishing of design should always be done by properly licensed professionals per any statutory laws. Intellectual Property Ownership of the Design One of the best approaches to protect the contractor from unpleasant surprises when furnishing any design is for the contractor to expressly remain the owner of the design intellectual property. If the intellectual property rights to the design will be assigned, it should be later in the project or at the end of the project. This ensures that the owner cannot receive a discounted design, remove the contractor, and then continue with the project, still using the original contractor’s design work. Similarly, whether furnishing the design or merely assisting, termination for convenience and “buyout” clauses help to protect the contractor from being unceremoniously removed from the project. Lastly, if furnishing the design, the final seal/stamp on the design should be the last thing and done very close in time with the submission of the design to the AHJ and the buyout/procurement phase. Unintentionally having a sealed/stamped design floating around without any future involvement in the project tends to lead to issues down the road. Clarifying the Guaranteed Maximum Price If using a GMP, it should be clearly defined in regards to evolving, unfinished design development. Also, it should be clear whether certain work or potential work is included in the GMP. Issues can arise when owners believe that the GMP includes the reasonably inferable, developing design (e.g., incomplete lighting package, which is often developed at the end of design), but the contractor believes that the incomplete design was not included in the GMP. For developing design, any placeholders, assumptions, budgets, qualifications, and exclusions should be clearly noted, and it should be clear how they relate to the GMP. Similarly, if using a GMP, there should always be a contingency. The contingency should be clearly defined both in terms of use and process, so that everyone is in agreement as to the type of work, issues, scope, and snafus that allow for application of the contingency. It is further recommended that the savings on the contingency be split in an agreed upon percentage ratio. By allowing the contractor to participate in the savings, it incentivizes the project to come in on budget and schedule. Assessing the risks and properly contracting for preconstruction services can be a complicated area of construction law. Best practice is to engage trusted counsel, insurance consultants, and other professionals. Offit Kurman construction attorneys are available to advise and counsel contractors, design-builders, CMs, design professionals, developers, and specialty trades on contract matters and project disputes.
February 7, 2024
Intellectual Property
Recipes, Trademarks and Décor
Feasting on the Lessons of Il Mulino’s Intellectual Property Battle When thinking about restaurants, most people think of a savory meal in a pleasant setting. I think about that, too, but more often than not, my thoughts turn to a restaurant’s intellectual property and what can be protected (a danger of the trade, I suppose). Restaurant names can be protected as trademarks, recipes as trade secrets, and the plating of an entrée may be protected by a design patent. A recent case involving the well-known Italian restaurant Il Mulino touches on many of these aspects of protection. Still, perhaps most interestingly, that case found that the look of the restaurant’s interior, its trade dress, is protectable. According to the court, this case is the latest in a long-running dispute over intellectual property relating to the Il Mulino restaurants. Defendants had been involved in opening and operating Il Mulino restaurants, an enterprise that involved various entities; one entity owned the intellectual property and licensed it to various locations. In 2020, some of the Il Mulino entities filed for bankruptcy. As a result of the bankruptcy, plaintiffs acquired those entities, including the entity that owned the intellectual property. The defendants opened Il Mulino Tribeca in 2018, and the location closed in September 2023. On September 15, 2023, the defendants opened a new Italian restaurant in the same space as Il Mulino Tribeca. The lawsuit was filed in November, with plaintiffs seeking to preliminarily enjoin the defendants from using proprietary recipes, certain restaurant names, the trade dress of Il Mulino Tribeca, a former Il Mulino location, and certain property from Il Mulino Tribeca in their new restaurant. Each claim warrants review, particularly the trade dress claim. The Trade Dress of Il Mulino Tribeca The court explained that the Plaintiffs defined the trade dress of Il Mulino Tribeca as consisting of the following elements: an art collection of black and white photographs arranged in a perfectly symmetrical design, covering almost one entire interior wall of the restaurant; custom artwork commissioned for Il Mulino Tribeca’s back wall that evokes the restaurant’s Tribeca home by referring to its location “Below Canal St[reet]”; (3) white-washed brick and high ceilings painted matte black; and unique, hand-blown glass pendants hanging near the entrance of the restaurant. All of the above appear in the Defendants’ new restaurant. The court found that the above definition was sufficiently precise and that the claimed trade dress was not functional. According to the court, “Il Mulino Tribeca’s décor plainly does not affect a customer’s “use or purpose” of the restaurant nor the cost or quality thereof. A customer could just as easily enjoy veal parmigiana in the absence of glass pendants or white-washed brick.” The court also pointed out that the trade dress analysis focuses on the trade dress as a whole, not particular elements that may be used by competitors. Finding that the trade dress was also inherently distinctive since it did not convey any information about the restaurant’s services or cuisine, the court concluded that the claimed trade dress was entitled to protection. Since the trade dress was entitled to protection, the court next determined whether there was a likelihood of consumer confusion. The court found that there was a likelihood of confusion even though the claimed trade dress was weak because there was little evidence that consumers associated the trade dress with Il Mulino. In reaching its finding, the court pointed out that the trade dress in the two restaurants was very similar (not surprising since the new restaurant opened in the exact location as the old restaurant and since social media posts for the new restaurant used images that seemed to draw on social media posts for Il Mulino Tribeca); that both restaurants were Italian; and that defendants seemed to be trying to capitalize on the reputation of Il Mulino. On that basis, the court found a likelihood of consumer confusion and preliminarily enjoined the defendants’ use of the claimed trade dress. Infringement of the IL MULINO Trademark The plaintiffs did not fare so well on their other claims. They claimed that the new restaurant’s name, Il Giglio, infringed on the IL MULINO trademark. Apparently, a prior restaurant affiliated with Il Mulino had operated under the name Il Giglio, but the court did not think consumers would associate the new Il Giglio with the old one. Likewise, the court pointed out that Il Mulino and the new Il Giglio used different fonts for their names and that “Mulino” and “Giglio” sound different and have different meanings. Proprietary Recipes The court seemed prepared to protect any of the plaintiffs’ proprietary recipes that the defendants might be using. However, in the court’s eyes, plaintiffs did not present sufficient evidence that the defendants were doing so—the claims were based mostly on the review of a menu and photos of similar-looking preparations of entrees. The court pointed out that neither party presented witnesses at the preliminary injunction hearing, and the plaintiffs did not seek expedited discovery before moving for a preliminary injunction. As a result, the evidence relating to the improper use of the plaintiffs’ proprietary recipes was insufficient. Interestingly, the court raised the possibility of a confusion-based theory as to the plating of dishes (particularly Il Mulino’s branzino) but did not pursue it since plaintiffs failed to develop it. Personal Property Finally, the court declined to enjoin the defendants’ use of certain personal property allegedly belonging to plaintiffs, such as tableware and tens of thousands of dollars of alcohol. According to the court, this personal property was not part of the trade dress, and plaintiffs could be compensated for the use of this property if its use was not enjoined. The court’s decision is a good example of the many different types of intellectual property a restaurant may have and how willing a court will be to protect that intellectual property. If you have questions about protecting your restaurant’s intellectual property or about someone who might be using your restaurant’s intellectual property without authorization, contact me or one of my intellectual property colleagues at Offit Kurman.
February 2, 2024
Elder Law and Advocacy
Aging in Place: NYFSC’s Home Sharing Program Offers a Unique Housing Solution for NYC’s Aging Population
The housing crunch in New York City is real. Exorbitant rents and climbing interest rates have led many further into debt, all but ruled out homeownership for most, and forced countless seniors to reconsider their plan to “age in place” in the space they have called home for decades. New York City’s Foundation for Senior Citizens (“NYFSC”) may have a solution in its established “Home Sharing Program.” What Is It?: NYFSC’s free Home Sharing Program has been in existence for the last 30 years. Its mission is to help link senior or adult “hosts” with unused private spaces in their homes or apartments with appropriate adult “guests.” The hosts and guests share their abode and the related expenses and perhaps forge a friendship along the way. The only age requirement is that both must be over the age of 18, and either the guest or host must be 60 or older. How Does It Work?: The NYC program (and similar programs in other cities) has a comprehensive screening process to match hosts with the right guests. Social workers provide a formal intake to screen applicants to consider lifestyle, work schedule, and collective needs for socialization. The host and the guest must have three solid professional recommendations and endorsements to ensure they are suitable candidates. The housing coordinators also assist with negotiating home-sharing and financial specifics to ensure the arrangement works for both parties. What are the Benefits?: Home or apartment sharing can provide homeowners and tenants additional income by renting out spare rooms and space. This is particularly helpful in expensive cities like NYC with high housing costs. The cost of long-term care is multiplying each year. Likewise, the guest’s contribution can ensure that a senior who no longer can afford to reside in their home can remain now that the guest is sharing the carrying charges of the home or apartment. Similarly, guests who find themselves out of options due to unaffordable rents might be able to find the perfect housing arrangement in a neighborhood that they thought was out of their reach. In addition to the obvious financial benefits, coordinated housing can foster a sense of community by connecting people who may not have otherwise interacted. When they work well, such arrangements can lead to the formation of relationships and mutual support between hosts and guests. This is particularly useful for seniors who tend to become more isolated as they age. Beyond companionship, there is a real opportunity, particularly in NYC, for cultural exchange and a richer understanding of different lifestyles and backgrounds, which can, in turn, contribute to a more diverse and interconnected community. In addition to building community and an exchange of cultures, an intergenerational arrangement may provide both parties the opportunity to give and receive advice from someone who is further on in life. Learn More: Certainly, this option is not for everyone, but perhaps it is an option that might work for those who wish to age in place as they age. For more information about this program or similar programs in your town or city, contact your local county office on Aging.
January 31, 2024
Estates and Trusts
Five Biggest Mistakes of Estate Planning
#5 - Inequity The fifth biggest mistake of estate planning is presuming to treat everyone equally, equaled only by the error of presuming to treat your loved ones differently because you don’t think they need anything or, in the other extreme, that they don’t deserve anything. Perhaps you’ve given more to one in life and intend to balance things in death. Unless you intend to include a detailed accounting (and even then?), I urge you to reconsider in this regard. Similarly, choosing who is to serve in what role (attorney-in-fact under a power of attorney, executor, or trustee, for instance) based on perceived fairness or not wanting to seem inequitable is a mistake. Have a reason, trust your judgment, and choose someone based on your sound judgment (for instance, she’s the oldest; he’s a lawyer; she’s the only one who hasn’t done time… these are all good reasons). Worse, appointing two co-fiduciaries (i.e., co-attorneys-in-fact, co-executors, or co-trustees, might be the biggest mistake of all - especially if you refuse to provide the two co-equals with a means of breaking a deadlock. If there are two empowered to make decisions and they don’t agree on something, if you’ve not authorized a coin flip or other means to break the tie (rock, paper, scissors, perhaps?!), their only recourse is to the courts. Don’t do it…don’t name two co-equal decision-makers to manage your affairs when you die. If you simply can’t help yourself, at least give them a fighting chance and tell them what to do when they disagree (if considering a coin flip, I suggest making it at least two out of three!). #4 – Sentimentality The fourth biggest mistake of estate planning is presuming one or more of your loved ones “wouldn’t want” something of yours, or alternatively, planning based on presumed values ascribed to the “objects of your bounty.” It is difficult to nearly impossible to know accurately what one of your kids might value over another, and you should take no offense by loved ones’ avoiding the subject altogether or making statements to the effect that they don’t want anything of yours. Everyone deals with death and the loss or thoughts of loss of a loved one in one’s own way. That said, it may, of course, be true that they don’t want your stuff; your style and tastes may be embarrassingly outdated. It may also be true that they don’t need anything, have the space for things they might want, or might not want to be perceived as thoughtless or greedy by asking for something of yours, for instance, before you are even in the ground! Rather than take offense or think, “How dare they!” consider over-sharing and discussing more with them, not less. Force them to face truths none of us generally care to acknowledge — first and foremost of which, you are going to die! Hate to be the one to burst that bubble for you, but it happens to all of us eventually. Too often, I see families left squabbling over misperceived intentions and failing/refusing to face these avoidable issues head-on, which brings us to the third biggest estate planning mistake. #3 – Communication The third biggest mistake of estate planning is failing to involve your beneficiaries in the planning. You need not give them a say in your plans necessarily or even seek their input per se, at least not everyone’s!, but that doesn’t mean you shouldn’t involve them at all, even if only to communicate that you’ve made a plan and where/how it can be found. Those who intend to play a role later should be consulted. The executor (or “personal representative”), who will oversee the administration of your probate estate; the trustee, who you will count on to manage assets you’ve opted to have held/protected from creditors and managed for the benefit of those you may not completely trust to manage them effectively for themselves (either because of their immaturity, addictions, or other special needs); and especially guardians of any minor children you might leave behind…these should all be consulted and confirmed before being named and saddled with such responsibilities. After all, they may not want or be able to handle the responsibility and/or their own life circumstances may not be fully known to you and may not make them the best choice. To minimize the risk of mistaken choices in this regard, don’t compound the mistake by failing to name a backup and a backup to the backup and also setting forth a means of picking the person you would want to be next in line should all else fail. #2 – Indecision The second biggest mistake of estate planning is changing your plans. This one comprises a whole series of mistakes. Changing one’s mind is ok, of course. The timing of a revised estate plan is one of the primary factors when litigation is later considered. Doing so after declining mental health, shortly before or after major life events, just prior to death (on one’s deathbed!), and/or with the involvement or input of less than all of one’s beneficiaries virtually assures legal wrangling after you’re gone, or, at the very least, likely breeds ill will among your loved ones in ways you can’t possibly fully anticipate. Compounding this mistake with less than full and open communication about your planning efforts (refer back to #3!) frequently sparks resentment and even hostility when you yourself have set different and differing expectations among those to whom you intend to benefit. If you opt to share your planning documents, do so with all of your beneficiaries. If you opt to make a change, be sure to communicate any changes to everyone, preferably with very specifically communicated reasons why. Oftentimes, in addition to breeding resentment for each other, change, especially uncommunicated changes to one’s estate plan, leaves your loved ones resenting you, even when they are the ones benefiting from the change! #1 – Inertia The number one biggest mistake of estate planning is not to plan. A favorite lyric from a group I’ve enjoyed since the 80s goes as follows: “If you choose not to decide, you still have made a choice.” Not planning, i.e., not creating a will or other document directing the disposition of assets upon your death, is the equivalent of deciding you want your loved ones to experience the costly, time-consuming, living hell that can often be the result of doing nothing. Don’t let inertia be your guide. Have a plan… execute the plan. Do it now; tomorrow may never come. Carpe diem!
January 29, 2024
Immigration Law
EB1 Multinational Manager/Executive Green Card via an L1A Intracompany Transfer Visa
Originally posted 08.11.18, content updated 01.24.24 What is the L-1A visa? The L-1A intracompany transfer nonimmigrant visa allows foreign national executive/managerial employees located outside the U.S. to work in the U.S. for an affiliated entity. An L-1A visa is a non-immigrant status and does not automatically give the foreign employee permanent residency or a “green card”. But it may in certain circumstances be a very useful gateway for a green card. What is the EB-1C Multinational Manager/Executive? The Employment-Based Immigration Petition, or EB-1C green card, is an employment-based petition for permanent residence. The EB-1C was designed for the most proficient and skilled foreign managers and executives. Some of the EB-1C criteria are similar to those of an L-1A visa. Persons who come to the U.S. as L1A workers can usually apply for an EB-1C green card after being in the U.S. for one year on the L1A status, provided they are not also an owner of the business. In some cases, qualified L1A executives/managers can apply for EB-1C green cards prior to the one-year anniversary of their L1A status, if the U.S. entity has been operational for over a year. L-1A Visas - The Intracompany Transfer BASIC REQUIREMENTS FOR L-1A For the Employee (Alien) to be eligible for an L-1A nonimmigrant visa, the following conditions must be met: The employee must have worked abroad for the overseas company for a continuous period of one year in the preceding three years. The company for which the employee has worked for a year abroad must be related to the U.S. company in a specific manner. The sponsoring company must be doing business both in the United States and another country throughout the period of the transfer. Or the employee must be opening a startup in the U.S. The employee to be transferred must have been employed abroad in an “executive” or “managerial” position. The employer must be coming to the U.S. company to fill one of these capacities (executive or managerial). The employee must be qualified for the position by virtue of his or her prior education and experience. The L-1A alien must intend to depart the United States upon completion of his or her authorized stay (including extensions) but may also pursue permanent residence at the same time. ONE-YEAR CONTINUOUS EMPLOYMENT REQUIREMENT The one-year continuous employment requirement gives rise to several questions. Does the petitioner have to meet the one-year requirement within three years immediately preceding to filing the L-1A petition or entry into the United States or initial application for entry into the United States? The statutes and regulations are unclear and contradicting on this issue. Reading the Immigration and Nationality Act ("INA") on its face, the statute refers to the 3 years preceding the time of application for admission into the United States. Following this interpretation, the Code of Federal Regulations ("CFR") defines intracompany transferee as “an alien who, within three years preceding the time of his or her application for admission into the United States, has been employed abroad continuously for one year” by a qualifying company.[1] However, later in the same section, the CFR provides contradicting interpretation, stating that L-1A petition need to be supported by evidence that “the alien has at least one continuous year of full-time employment abroad with a qualifying organization within the three years preceding the filing of the petition”.[2] In Matter of Kloeti, the court looked at the beneficiary employee’s initial application for entry into the United States.[3] The beneficiary first applied for admission to the United States as a nonimmigrant visitor for business (B-1); he then applied to change status to L-1. The court said that his application for change of status is not an application for admission to the United States under INA section 101(a)(15)(L). As the beneficiary had not employed for one year by the qualifying overseas company before his B-1 visitor application, he did not meet the one-year employment requirement for L-1 petition. The INS (USCIS) discussed that if a beneficiary works in the U.S. on H-1B visa before filing for L-1 and the H-1B is related to the qualifying foreign employer, they count the qualifying employment time prior to the H-1B application when considering the one-year employment requirement.[4] The INS provides a scenario where a beneficiary has worked in the U.S. for 3 years on H-1B nonimmigrant visa before filing for L-1. The INS officer says that for the L-1 petition, they consider whether the beneficiary has acquired one-year of qualifying employment within three years immediately preceding his H-1B application. The INS requires, however, that “the time spent in the U.S. as an H-1B be for a firm related in a qualifying capacity to the alien’s previous foreign employer.”[5] If the employee gets work-related training in the U.S. for a few months, does the training break his/her continuous employment at the overseas company? In Matter of Continental Grain, the foreign national stayed in the U.S. for 28 months as a nonimmigrant trainee in pursuit of further training related to his qualifying employment.[6] Within the twelve months immediately preceding his petition, the beneficiary had spent over four months in the United States. He had worked at his overseas company for over 5 months immediately preceding the training and immediately after the training, he worked there for more than 7 months. Under such circumstances, the foreign national met the one-year continuous employment requirement. (This case was decided before the current L-1 regulations came in force. “Periods spent in the United States in lawful status for a branch of the same employer or a parent, affiliate, or subsidiary thereof and brief trips to the United States for business or pleasure shall not be interruptive of the one year of continuous employment abroad but such periods shall not be counted towards fulfillment of that requirement.”[7]) EB-1C GREEN CARD - Multinational Executives and Managers EB-1C stands for the first preference employment-based immigrant classification for multinational executives or manages. This classification allows a U.S. employer to permanently transfer a qualified foreign employee to the United States to work in an executive or managerial capacity. In order to establish eligibility for EB-1C, the employee must have worked for a qualifying entity abroad for one year in the three years preceding the filing of the petition or preceding his or her admission to work for the petitioner as a nonimmigrant. If the beneficiary is outside the United States at the time of filing, the petitioner must demonstrate that the beneficiary’s one year of qualifying foreign employment occurred within the three years immediately preceding the filing of the petition.[8] If the beneficiary is already working in the United States for the petitioner, or its affiliate or subsidiary, at the time of filing, the petitioner must demonstrate that the beneficiary’s year of foreign employment occurred in the three years preceding his or her entry as a nonimmigrant.[9] In its recent Policy Memorandum issued on March 19, 2018, USCIS states that for the one-in-three employment requirement, it only looks at the three years immediately preceding the EB-1C petition. A period of employment with a different U.S. employer would not automatically disqualify a beneficiary. However, a break in qualifying employment longer than two years will interrupt a beneficiary’s continuity of employment with the petitioner’s multinational organization. Such breaks may include, but are not limited to, intervening employment with a non-qualifying U.S. employer or periods of stay in a nonimmigrant status without work authorization. Please consult Mo Syed on issues related to L-1A or EB-1C petitions. [1] 8 C.F.R. § 214.2(l)(1)(ii)(A). [2] 8 C.F.R. § 214.2(l)(3)(iii). [3] See Matter of Kloeti, 18 I&N Dec. 295 (Reg’l Comm’r 1982). [4] Letter, Bednarz, Chief, NIV Branch Adjudications, CO 214 L-C (Mar. 25, 1994), reprinted in 71 No. 27 Interpreter Releases 936, 938 (July 18, 1994). [5] Id. [6] See Matter of Continental Grain, 14 I&N Dec. 140 (D.D. 1972) [7] 8 C.F.R. § 214.2(l)(1)(ii)(A). [8] 8 C.F.R. § 204.5(j)(3)(i)(A). [9] See 8 C.F.R. § 204.5(j)(3)(i)(B).
January 24, 2024
Intellectual Property
Decorating Danger: Pitfalls in Using Images of Rooms Decorated with Your Furnishings
Everyone does it. A light fixture is featured in a prestigious publication, or a rug is shown in a home featured by an interior design publication. The image (and perhaps an image of the publication’s cover) is quickly reposted on Instagram, added to the company’s website, placed in promotional materials, and otherwise used to promote sales. There’s just one problem. Use of the image could result in costly charges of copyright infringement. Copyright Ownership: Under U.S. law, the general rule is that the author of a work owns the copyright in the work unless the work was created within the scope of their employment, in which case their employer owns the work. In most cases, the photographers working for publications like Interior Design, Architectural Digest, House Beautiful, or Coastal Living are not employees but independent contractors, which means that the photographers, and not the publications, own the copyright in the photos they take and the photos shown by the publications. As a result, the photographer (not the publication) must give permission for any reproduction of their photo, including reproductions on social media or websites. Photographers, not publications, generally own the copyright in photos featured in prestigious publications. Reproduction requires explicit permission from the photographer, extending to social media and websites. Strict Liability in Copyright Infringement: Reproduction without permission is copyright infringement. Copyright infringement is a strict liability offense, meaning there is no defense to whether infringement occurred — either something was copied without permission, or it was not. There are defenses that can be asserted , but these are directed to the amount of damages, not whether there has been infringement. Giving credit to the photographer or the publication is not a defense. Similarly, the fact the one didn’t make any money directly from the use of the photo is not a defense. The fact that an image was available online is generally not a defense. Nor is a court likely to find that such a use is a fair use — to find out if a use is fair use (essentially arguing that no permission was needed), it will probably be necessary to take the case to trial, involving expense in terms of time and money. Costs of Copyright Infringement: If a photographer has timely secured a copyright registration for their photos, they are entitled to statutory damages of up to $30,000 per infringement (and up to $150,000 per infringement if the infringement is shown to be willful). The idea of such an award is to deter future infringement. In addition, the photographer is entitled to their reasonable attorney’s fees if a timely copyright registration was made. Reproducing images without permission can lead to costly consequences. Photographers with timely copyright registration can seek damages up to $30,000 per infringement or $150,000 if willful, plus attorney’s fees. Importance of Written Permission: Having permission from the photographer would defeat a claim of copyright infringement, but that permission should be directly from the photographer and should be in writing. Permission from the publication in which the photo appears is probably not enough unless the magazine owns the copyright in the photos. Reality Check — Cease and Desist Letters: Think it can’t happen? It has already happened and will happen again. Entities you know have received cease and desist letters from photographers. Others have been sued (roughly half of the copyright infringement lawsuits filed in the U.S. involve the unauthorized use of a photograph). In either case, payment has likely been made, and either a license permitting the images to stay up has been obtained or the images have been removed. Entities have received cease and desist letters and faced lawsuits for unauthorized photo use. Roughly half of U.S. copyright infringement cases involve unauthorized photo use, resulting in payments and image removal. Protection Against Claims: The best way to protect against a copyright infringement claim is to make sure you have permission to use the photo showing your product or the room you designed or styled (if possible, take the picture yourself!). If a photographer refuses to give you permission, don’t use the image. If you are not sure if you need permission or have permission, contact me or one of my intellectual property colleagues at Offit Kurman — an ounce of prevention is worth a pound of cure.
January 24, 2024
Immigration Law
EB-5 Investor Visas - USCIS Redeployment Policy Change Announcement
Originally posted 07.28.20, content updated 01.22.24 This blog post may contain information that was accurate at the time of publication but could become outdated over time. We strive to provide relevant and timely content, but circumstances, facts, and data can change. Users are encouraged to verify the current status of any information presented and seek updated guidance where necessary. On July 24th, 2020, USCIS (the United States Citizenship and Immigration Services) issued a Policy Alert to clarify guidance regarding the redeployment of capital under the EB-5 program. This new guidance will substantially impact how EB-5 project sponsors and regional centers approach the future re-deployment of EB-5 capital. EB-5 investor program allows U.S. permanent residence for qualified foreign investors who place investments of $900,000 into regional centers. Below is a summary of the policy changes effective immediately: The purchase of financial instruments on the secondary market will generally not satisfy requirements for the redeployment of EB-5 capital. EB-5 capital may be redeployed into any commercial activity consistent with the purpose of the new commercial enterprise (NCE) to engage in the conduct of lawful business. Redeployment of EB-5 capital must be through the same NCE. Redeployment must be within the approved geographic area of the same regional center, including any amendments to expand the geographic area that is approved prior to redeployment. USCIS generally considers 12 months as a reasonable amount of time to redeploy EB-5 capital but will consider evidence showing that a longer period was reasonable. What You Need to Know Going Forward: Advance Planning and Regional Center Expansion Now that USCIS has clarified that the purchase of financial instruments will generally not satisfy requirements for redeployment and that the redeployment must occur within the geographic area of the same regional center, project sponsors and regional centers will need to plan further in advance for the redeployment of EB-5 capital. Project sponsors and regional centers should strongly consider expanding the approved geographic area of their current regional center through an I-924 amendment. This is a serious issue, especially for EB-5 projects sponsored by regional centers with limited geographic coverage since the options for redeployment could be very limited or impossible as a result of the new policy changes. Under this new USCIS policy, if a regional center was only approved for 2 counties, then the redeployment of EB-5 capital could only occur within those 2 counties. However, if the regional center successfully amended its designation to cover an additional 23 counties, then the redeployment could occur anywhere within the entire 25-county area. For new EB-5 projects considering regional center sponsorship, it is critical to select a regional center with a large geographic coverage area to provide increased flexibility for future redeployment. View the Official USCIS Policy Alert »
January 22, 2024
Immigration Law
H-1B Request for Evidence: Common Questions and How to Prepare
Originally posted 04.17.20, content updated 01.18.24 There are six common requests for evidence from USCIS. This article will quickly outline what these requests are. The most common requests for evidence from USCIS are the following: Needs of the Petitioner for the Services of the Beneficiary Specialty Occupation Maintenance of Status Validation Instrument for Business Enterprises (VIBE) Employer-Employee Relationship Beneficiary Qualifications Needs of the Petitioner for the Services of the Beneficiary This occurs most often with small businesses seeking to employ aliens in a professional role that is not common to the business. The evidence sought will show that the employee will serve in the specialty role acceptable for an H-1B visa, and not a position which would not qualify for H-1B visas. Additionally, the employer has to present evidence that the need for the employee is genuine. Specialty Occupation H-1B nonimmigrant visas are available for those who are performing ‘specialty occupations’ which require one of the following: A bachelor’s degree (or equivalent) is generally a minimum requirement for the position. The degree requirement is usual in the industry for the type of position. The position requires complexity such that it can only be done by someone with a specific degree. The employer usually requires a degree for the specific role. A request for evidence often includes the job posting (i.e., was a degree a requirement?), evidence of how the position is filled in the industry generally, or more information about the duties of the job (is it so complex that a degree is necessary for it?). Maintenance of Status This request for evidence occurs when an H-1B visa holder is trying to either change status or maintain status; the holder must show that the status never expired. If you are seeking to maintain your H-1B status, showing recent pay stubs will often suffice. If you are a student with an F-1 visa, evidence regarding class (such as assignments, grades) will usually be enough evidence to show that status was maintained. Validation Instrument for Business Enterprises (VIBE) A VIBE request occurs when the USCIS’ database does not match the information provided by the employer in the H-1B petition. USCIS is seeking to authenticate information about the business. They are looking for evidence that the business exists, which can include tax identification numbers or tax returns, articles of incorporation, or payroll documents. Any evidence that proves that the business is in operation will likely be sufficient. Employer-Employee Relationship This request for information is likely to occur if the employee works off-site or when the employee is working in a consultant role. USCIS is looking for evidence that there is an actual employer-employee relationship. Evidence should be submitted showing that the employer has effective control over the employee’s work and how the work is completed. Beneficiary Qualifications Positions eligible for H-1B visas require at least a bachelor’s degree, and the person working in that role must have the degree required for the position. A request for evidence will likely be asking one for the following: evidence of how the worker’s degree relates to the position if the field is different or for evidence that a foreign degree is equal to a Bachelor’s degree earned in the U.S. In lieu of a degree, three years of professional experience may be used to fulfill the beneficiary qualifications and a request for evidence may be necessary to evaluate whether the experience meets the standard for “professional.” One of the most common ways to submit evidence of experience is by using referral letters from past supervisors and employers.
January 19, 2024
Immigration Law
H-1B Workers with Part Time Work and Multiple Employers
Originally posted 07.24.19, content updated 01.18.24 Although the H-1B non-immigrant visa status has many restrictions, it does allow H-1B employees to work for more than one employer under H-1B status as well as work part-time. H-1B visa holders are eligible to work full-time, part-time, and for one or more employers, so long as they qualify as an H-1B occupation.[1] H-1B Pay Requirements for Part-Time Positions Under the U.S. Department of Labor requirements, H-1B employers must pay their H-1B workers the prevailing wage based on the specific type of work that they perform[2]. Additionally, they must pay more than the prevailing wage if they also pay their other employees who are in the same position a higher wage. This requirement applies to both full or part-time positions. It is important to clearly demonstrate to the United States Citizen and Immigration Services (USCIS) that the hourly rate satisfies the wage requirements. If you change from full to part-time, or vice versa, within H-1B status, you must first file an amended visa petition. H-1B Cap and Ability to Work Multiple H-1B Jobs There is a yearly limit to cap-subject H-1B petition approvals, with petitions to be submitted by April 1 and jobs to begin October 1. However, if you are already in H-1B status and find a new job that also meets the H-1B occupation requirements, then your new employer can petition for you right away, even if this position is cap subject or if the cap limit has already been filled. Employers for non-profits, government research institutions, or universities are another exception to this yearly cap-subject limitation and are allowed to petition for their H-1B worker at any time. If you have a H-1B visa that is cap exempt and find a new job with a cap-subject employer, this new employer can also petition for you right away. However, this is only allowed as long as you stay at with both employers. Six Year Limit for Part-Time Positions H-1B status is typically limited to six-years. This limit is also enforced for part-time positions and is based on the amount of time the H-1B visa holder is in the U.S. not on the amount of time one works in H-1B status. However, for those who have spent some time outside of the U.S. while in H-1B status, you can add the time you were outside to the end of your authorized stay. If your H-1B job is seasonal or you spend less than six months a year in the U.S., then you may be eligible to maintain your status indefinitely. H-1B Workers are Ineligible to Work on a Contract Basis Since the rules for H-1B eligibility require an employer-employee relationship and therefore H-1B employees cannot work on a contract basis. You must be on an employer’s payroll and be receiving a W-2 rather than a 1099 tax form. H-1B Visa Holders Going to School There are no restrictions for an H-1B employer to attend school. You can work part-time or full-time with H-1B status and enroll in school, so long as you satisfy the terms of your H-1B employment to maintain your status. [1] https://www.nolo.com/legal-encyclopedia/part-time-work-multiple-employers-h-1b-workers.html [2] https://www.dol.gov/whd/immigration/h1b.htm
January 18, 2024
Intellectual Property
Trademarks in Your Cereal Bowl
A Closer Look at Post’s Fruity Pebbles Trademark Application It’s likely that you, your kids, or your grandchildren have eaten them. Have you ever thought, though, that you could identify what you are eating just by the fact that multicolor rice crisps are in your bowl? It’s probably not the first thing you think of while you are eating, paying more attention to their crunch and the sound they make when they are in milk. We’re talking about Post’s Fruity Pebbles cereal, of course. While you may not have been thinking that you could identify the contents of your bowl just by looking at the colors in it, Post Foods LLC (“Post”) was thinking that. Thus, Post filed a U.S. trademark application to register the colors of Fruity Pebbles as a trademark for use in connection with breakfast cereals. Interestingly, that application was initially refused, and that refusal was affirmed in a decision issued by the Trademark Trial and Appeal Board on January 4, 2024. There were two main reasons for the refusal. First, in its application, Post defined the mark as “consist[ing] of the colors of yellow, green, light blue, purple, orange, red and pink applied to the entire surface of crisp cereal pieces,” as shown in the image below (the application did not claim the shape of the cereal crisps, which makes sense since each crisp has a different shape). However, the application sought registration of the claimed mark (the colors) for use in connection with breakfast cereals, not crisp cereal pieces or breakfast cereals consisting of crisp cereal pieces. Post argued that it sought registration of the colors shown in the drawing as applied to crisp rice cereal pieces. Ultimately, the Trademark Office held that the mark that Post sought to register was the combination of colors as applied to breakfast cereals. This was because the shape of the rice crisps was not claimed as part of the mark and because the application identified the goods as breakfast cereals (which could cover cereals in ring-like shapes as well as cereals shaped like rice crisps). Having determined what mark Post sought to register, the Trademark Office next considered whether the mark was registrable. The Trademark Office concluded that the claimed mark did not function as a source identifier and, thus, that it was not registrable. Why did the Trademark Office reach that conclusion? It was not because the claimed mark consisted of colors—the Trademark Office has long recognized that colors can be trademarks. Rather, it was because, in the Trademark Office’s view, Post had not come forward with sufficient evidence to show that consumers associated the colors used for Fruity Pebbles with breakfast cereals. The evidence showed that a wide variety of breakfast cereals had similar multicolor cereal combinations. Some were for other crisp rice cereals, and some featured diverse shapes. The Trademark Office referenced Fruit Loops; Cap’n Crunch’s OOPS! All Berries corn and oat cereal; Trix Fruity Shapes cereal; Trader Joe’s Fruity O’s cereal; Best Choice Fruity Crisp Rice cereal; Wegmans Fruity Rice Crisps cereal; Clover Valley Fruity Bites rice cereal and others to support this conclusion, as well as articles from various publications. With so many cereals using multicolor combinations, in the Trademark Office’s view, the use of a similar combination on Fruity Pebbles would not cause consumers to identify the cereal as being Fruity Pebbles. Additionally, the Trademark Office pointed out that much of the evidence submitted by Post to support its application pertained to its use of the multicolor combination on crisp rice breakfast cereals, not to the broader breakfast cereals identified in the application. In view of this decision, anyone interested in registering a trademark in the U.S. should keep the following in mind: In the U.S., it is possible to register colors and product configurations as trademarks (it is much more difficult to do this elsewhere in the world); While colors and product configurations can be registered as trademarks in the U.S., it is not an easy thing to do and often requires the submission of extensive evidence showing that consumers recognize the mark; and The advice of experienced trademark counsel is crucial in prosecuting applications like this, from identifying the goods to be covered by an application to assessing whether there is sufficient evidence to establish that a mark functions as a source identifier. At Offit Kurman, we can assist with all aspects of trademark prosecution; please reach out for a consultation or if you have any questions.
January 17, 2024
One Minute of Overtime
Exempt Employees
Welcome to One Minute of Overtime, where I will share insights on Labor and Employment Law topics, mostly related to minimum wage and overtime compliance issues. Compliance in this area of law is nuanced and technical, so it is critical for employers to audit and adjust their practices to remain compliant, so stop by to stay up-to-date and in-the-know. A frequent mistake occurs when employers misclassify employees as exempt because it is easier to pay a salary than deal with overtime and recordkeeping. By failing to track hours following misclassification an employer only increases its exposure.
January 17, 2024
Immigration Law
Israeli Citizens Eligible for E-2 Treaty Investor Visas as of May 1, 2019
Originally posted 08.23.19, content updated 01.15.24 The U.S. Embassy in Israel recently announced a long-awaited development that would open the doors to Israeli citizens looking to make an investment in the United States. The U.S. and Israel signed a treaty investor agreement, allowing for Israeli citizens to be eligible for E-2 Treaty Investor visas in the U.S. as of May 1, 2019. Back in June 2011, President Obama had signed legislation to add Israel onto the list of eligible countries for E-2 status. However, this was stalled as both countries needed to come to agreeable terms and authorize reciprocal rules for the issuance of visas.[1] Now that Israel has authorized a comparable status for U.S. citizens, the E-2 visa has become available for qualifying Israeli citizens. The E-2 Treaty Investor visa is a non-immigrant visa eligible for foreign nationals of a treaty country willing to invest a substantial amount of capital.[2] There are many specific requirements necessary to qualify for an E-2 visa, such as that one must show legitimate control of funds and the investment must be at risk. With Israel having one of the largest per capita number of start-ups of any country, the E-2 visa is an exciting opportunity for those interested in investing in a new or existing business in the U.S.[3] The E-2 visa is a viable option for entrepreneurs. The application process at the Embassy in Israel may allow for a 5-year visa. Before submitting your application, it is crucial to understand the requirements of the E-2 visa and provide substantial supporting evidence to prove your eligibility. With increased scrutiny arising from the executive order “Buy American and Hire American,” it is particularly important to show that your investment has the potential to create jobs for American workers. Investments Must be Substantial When considering what a substantial investment is, consular officials will evaluate the scope of the business plan and the funds necessary for developing a successful operation. Investment includes lease payments, the purchase of equipment, inventory, and so on. The business should be able to make a sufficient economic contribution within five years of becoming operational. The Business Must be Real and Operational Passive investments, such as in real estate, do not qualify for an E-2 visa. The business must be real and operational; it must be producing a commodity or service to qualify. The U.S. Department of State guidelines on an E-2 visa state that speculative investments held for potential appreciation of value (e.g. stocks) are prohibited. Individual Investors Individual investors pouring funds into a business need to carefully consider their five-year business plan - including staffing projections, objectives for the business, and overall costs and revenue. There is greater scrutiny for individual investors by consular officials to determine if their investment is at-risk. Intent to invest is not sufficient to qualify for E-2; the applicant must be close to starting operations. Corporate Investors and Emerging Companies Companies traded on only the Tel Aviv Stock Exchange may qualify for E-2 visa benefits in the transference of an essential, supervisory, or executive employee to operate in the U.S. This is true even if the investment by the Israeli company in the U.S. operations took place before the May 1, 2019 E-2 visa agreement. Israeli nationals must own 50 percent or more of the business applying for the E-2 registration. This may be challenging for entrepreneurs and emerging companies that are seeking seed or venture funding. It is critical to be aware of how equity investments could impact E-2 visa eligibility. [1] https://www.lexology.com/library/detail.aspx?g=beee1e3b-242b-41ee-ab18-3663eede9c3d [2] http://syedfirm.com/e-2-treaty-investor-visa/ [3] https://www.natlawreview.com/article/e-2-treaty-investor-visa-open-to-israeli-citizens
January 15, 2024
Immigration Law
L1 Visa Document Checklist
Originally posted 08.23.19, content updated 01.12.24 L1 Visa Document Checklist L-1 petitioners and their sponsors must meet the stringent requirements under US immigration rules to submit extensive supporting documentation that supports the application for an intracompany transfer visa. The following L1 visa document checklist summarizes the paperwork that will be needed to evidence applicant eligibility. The following checklist contains some of the main documents that will need to be submitted in support of the petition: Foreign Company Documents: Articles of incorporation Stock certificates Audited accounts Financial statements of business Promotional materials of business Organizational chart, including total number of employees and position held by you as the transferee Detailed statement from authorized representative explaining ownership and control of company U.S. Company Documents: Articles of incorporation Stock certificates Audited accounts Financial statements of business Promotional materials of business Business license Corporate by-laws Detailed business plan Organizational chart, including total number of employees and position held by you as the transferee Detailed statement from authorized representative explaining ownership and control of company If you are coming to the U.S. to setup a new office, evidence will also be required to show the establishment of new premises, for example, a lease for office space, sales contracts and copies of applicable business permits etc. Please note that the above checklists are by no means exhaustive and legal advice should always be sought based on your specific business operations. L1 visa document checklist – the eligibility criteria The L1 visa permits key professional employees to transfer from an overseas office to a parent, branch, affiliate, or subsidiary of the same company in the United States or, alternatively, to set up a new affiliated office. There are two types of L1 visa: the L1A and the L1B. The L1A visa is for employees working in an executive or managerial role, whilst the L1B visa is for those who have specialized knowledge of the company’s products, services and procedures that are key to its success. In either case you must have worked for at least one year out of the preceding three years prior to your application and be seeking to enter the U.S. to undertake work in the same or similar capacity. L1 visa document checklist – the petition paperwork Prior to submitting your application for an L1 visa, your U.S. employer will be required to file a petition on your behalf with the U.S. Citizenship and Immigration Services (USCIS) using Form I-129, together with supplemental Form I-129L. For larger employers, prior approval may already have been obtained under what’s known as a Blanket L petition. This permits multiple key personnel to apply for L1 status without waiting for individual USCIS petition-approval. However, to obtain a blanket petition certain regulatory requirements must be met, in particular that the company: Has transferred ten L1 managers, executives, or specialized knowledge employees to the United States in the previous twelve months, or Has U.S. subsidiaries and affiliates with a combined annual sales of at least $25 million, or Has a U.S. workforce of at least 1,000 employees. If your employer does not meet the above criteria and/or has not obtained blanket approval, an individual petition will need to be filed on your behalf, together with extensive documentation to prove the following: That there is a qualifying relationship between the foreign company and the U.S. company, meaning that there needs to be common ownership and control. That you have worked for the foreign company continuously, on a full-time basis, for at least one year within the last three years prior to filing the petition. That the identified relationship between the overseas and U.S. companies existed for the duration of your one-year period of employment abroad. That you have worked as a manager, executive or specialized knowledge employee for the foreign company, and are seeking work in the same or similar capacity in the U.S. L1 visa document checklist – the visa paperwork Once the petition has been approved by USCIS, your employer will be given a notice of approval on form I-797. You will then need to submit your online visa application with the Department of State using Form DS-160. You will also be required to schedule an interview at your local U.S. Embassy where you will need to attend with various documents, including the following: The visa interview appointment letter The DS-160 visa application confirmation page The DS-160 visa application fee receipt A valid passport with at least six months left prior to its expiry Any old passports held by you Your most recent resume or CV Two recent color photographs of your face A copy of the I-129 petition submitted to USCIS The I-797 approval notice from USCIS A letter from your employer to the consulate requesting an L1 visa You will also be required to provide detailed documentation in support of your eligibility for an L1 visa, including but not limited to evidence of your previous and proposed role within the overseas and U.S company respectively. In the event that you fail to attend with the necessary documentation you risk your application for an L1 visa being delayed, or even denied. L1 visa document checklist – the potential pitfalls An approved petition does not, in itself, guarantee that you will be granted an L1 visa. Your eligibility will still need to be determined based on the information contained within your application and the documentation in support. Needless to say, if that information is deemed incomplete then your application may be significantly delayed, if not completely denied. At the very least, where information is lacking, there will be a request for further information before a final decision is made on your visa application. Furthermore, even where your application and supporting documentation are satisfactory and complete, you will still need to be interviewed by a consular officer based on that information. You will be asked detailed questions relating to the company that you work for and the capacity in which you have been, and will be, employed by the overseas and U.S. company respectively. For L1B applicants, in particular, the questioning by a consular officer during interview can be challenging, requiring a persuasive explanation to prove how your specialized knowledge is vital to the overall functioning and competitiveness of the business. You can significantly improve your chances of being successfully granted an L1 visa by ensuring not only that your paperwork is correct, but by answering any questions as openly and as fully as possible.
January 12, 2024
Litigation
How to Avoid Estate Litigation
Trust and estate litigation is an all-too-common outcome for individuals and families in the wake of a loved one’s passing. But why? Is it just about money? Inter-personal and family disagreements? Or something else entirely? The answer inevitably varies. Many, if not most, estate disputes have some underlying familial distrust and disagreement. These family issues can often boil over in the wake of a loved one’s passing. Yet, not all estate disputes arise out of preexisting family issues. It is not uncommon for family dynamics to change and for problems to arise in the face of a loved one’s passing. But how can this be prevented? Communicating with family and planning ahead are just two things to consider when trying to avoid unnecessary estate litigation. Though seemingly insignificant, simply communicating with family, friends, and loved ones that you have an estate plan is vital. Now, this does not mean that you must divulge what your estate plan is, but letting those in your life know that you have one and where and how to access it when the moment comes is important. It aids to remove the element of surprise and ideally with it, the potential for distrust as well. Additionally, letting beneficiaries know who you have chosen to act as your executor is equally important. Informing those affected who will be in charge after your passing again removes the element of surprise, which all too often can breed distrust and discomfort. Planning ahead goes hand in hand with communication. Many Americans put off creating a will or estate plan, seeing it as something to take care of in the future. Something that is not relevant to them today. Yet, this way of thinking is generally an avoidant one. Though it can be difficult to plan for our own passing, doing so can alleviate the myriad of questions and concerns that can occur absent an estate plan. Through developing an estate plan, the execution of your wishes can be better assured and allows for your loved ones to be more informed. This allows for more clarity regarding the wishes and intentions of the deceased and oftentimes makes a meaningful impact in dissuading a loved one’s potential lawsuit. Trust and estate litigation may be common, but through planning ahead and having open communication, it allows for a deeper understanding of our loved one’ wishes and can help prevent minor interpersonal disagreements and familial distrust from devolving into litigation. Seek legal counsel to ensure that your interests are protected. If you have any questions about this or Estate Planning/Estate Litigation topics, please contact me at austin.hinel@offitkurman.com or (703) 745-1899.
January 10, 2024
Page 19 of 35
About the Blog
Receive timely content, newsletters and event information delivered to your inbox.
