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Coronavirus (COVID-19) Could Make Alternative Fee Arrangements the New Norm for Georgia Legal Community

By: Robin Gentry

Lilenfeld PC

Many individuals, small to medium sized companies and large corporations needing legal advice are now faced with a new dilemma due to this public health crisis known as Coronavirus (COVID-19): how do I ensure necessary legal services at an affordable price?

Fearing large legal costs, many people and companies that would benefit from an experienced lawyer’s advice, might choose not to bother during this time for fear that costs will be extravagant. This can lead to an even greater loss to the client based on infringement of their intellectual property rights, breaches of contract and the need to renegotiate existing contracts.

Fortunately, consumers are not locked into the traditional hourly fee billing model that so many people think of when viewing legal services. Instead, there are several alternative fee arrangements available.

Here are some alternative fee arrangements that are available:

1. Flat fee arrangements: When using a flat fee, lawyers offer various services at set, or “flat” rates. For example, do you need to register a trademark? A lawyer can charge a fixed rate for that application, no matter how long it takes the attorney to prepare it. Do you need to license your copyrighted artistic design? That can also be done for a flat rate. This type of alternative billing arrangement works best for services a firm is experienced providing. The firm’s expertise allows them to provide clients a low-cost option while still ensuring a quality work product.

2. Contingency fee arrangements: A contingency fee is an alternative to the traditional hourly billing model. When reviewing your case, an experienced attorney is likely to recognize the strength of the case and willing to gamble his time in order for a percentage of the case outcome. While this is often very attractive to clients, the downside is that the lawyer’s percentage is often significant and clients are often left with less than they expect. So how can the client and lawyer both win with a contingency?

3. Hybrid contingency arrangements: In hybrid, or partial, contingency fee arrangements, the client pays the lawyer on a monthly basis for the hours the firm works just like in the traditional model, but the lawyer’s normally hourly rate is reduced. Then, if the litigation is successful, the lawyer receives an additional sum (usually a percentage of the award, but at a lesser percentage than in a full contingency).

4. Fee caps: This is a variation of the flat fee arrangement that allows the lawyer to bill at her normal rate until they reach an agreed maximum amount or cap. Once the cap is reached, the attorney continues to work the case, but does not bill the client.

5. Retainers: Retainers are a fixed, monthly payment to the attorney who then performs the services you need that month. This is a great arrangement for a company that does not want to have an attorney as an employee but wants to make sure that a trusted attorney is available while knowing the cost up front.

If you have any questions about alternative fee arrangements, please contact David Lilenfeld at David@lilenfeld.com or (404) 201-2520.

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How Coronavirus (COVID-19) Impacts Force Majeure Clauses in Georgia Contracts

Globally, businesses are experiencing massive productivity issues due to Coronavirus (COVID-19) pandemic. Employees are working-from-home, self-quarantining and social distancing to prevent risk of exposure.

In addition to employee unavailability, manufacturing facilities are shut down or some have even converted their facilities to manufacturing different products in order to support the growing demand for certain products such as ventilators and face masks. Most of this is government mandated or strongly urged as steps to slow the spread of Coronavirus (COVID-19) pandemic.

Other issues arising in this context are does force majeure excuse a Company from paying employees severance if the Company was unable to maintain them on payroll due to the Coronavirus (COVID-19) pandemic?

In light of this, many companies are forced to seek relief from their contractual obligations, looking specifically at invoking a force majeure provision to excuse performance temporarily or even permanently. This article reviews force majeure law, focusing particularly on the State of Georgia. We also discuss the options available aside of force majeure.

Georgia Force Majeure Clauses

A force majeure clause is a contractual clause which excuses one or both parties to the contract from performing obligations if and when something occurs that is beyond their control and makes performance of those obligations impractical or impossible.

Events triggering a force majeure are often listed in the contract and frequently include the following:

1. acts of God, such as natural disasters including floods, fires, tornados, earthquakes, hurricanes, and other weather disturbances;

2. war, acts of warfare, terrorism, threats of terrorism and disease or medical epidemics and outbreaks;

3. strikes, civil disorder, labor disputes and disruptions; and

4. acts of government authorities such as the taking of one’s property, also known as eminent domain, censure, and changes in laws and governance; and

5. some accidents or mishaps. However, normally economic hardships on their own do not qualify as a force majeure circumstance.

The specific language in a contract will determine if a force majeure provision can be invoked. However, this requires a fact intensive analysis and force majeure clauses are narrowly interpreted.

Specifically, the provision is interpreted in light of its original purpose meaning that they are viewed with items of the same nature, such as the items mentioned throughout the contract. It limits damages where the obligations to perform have been frustrated and made impossible or impractical.

Georgia Law: Coronavirus (Covid-19)

Under Georgia law, two provisions stand out for those seeking to excuse performance due to the coronavirus under a commercial contract in the absence of words such as “epidemic,” “pandemic” or other similar variations: (1) the “act of God” clause in contracts and (2) the “act of God” defense to contractual breach (O.C.G.A. § 13-4-21). While the words “pandemic” and “epidemic” are not normally specified in contracts, “acts of God” and force majeure provisions usually make their way in as a means of contractual relief.

“Act of God” in Contract:

Frequently in contracts, the “act of God” provision is included in the force majeure clause and lays out when a party may cease its obligations to perform. Without the addition of words like “pandemic” and “epidemic,” the “act of God” provision might be your saving grace. However, don’t get too excited as Georgia case law is silent on whether something like the coronavirus counts as an “act of God.” Further, some “act of God” clauses limit even what qualifies as an actual “act of God.”

Even though Georgia case law is currently silent on this topic, as these cases start making their way through the courts, we are likely to see varying judicial outcomes and verdicts. Specifically, Georgia case law outlines an “act of God” as one that is not human caused and not reasonably predictable or avoidable. As the facts of this pandemic come to light, this test will be argued in many different ways. Moreover, the California Department of Public Health has stated that the source of the virus is not yet known.

Ultimately, the contract itself will first guide parties and courts regarding obligations to perform, but it is still unknown how these exact terms might be interpreted due to COVID-19.

“Act of God” Defense:

A contract does not have to include a force majeure clause in order to invoke the “act of God” defense.

O.C.G.A. § 13-4-21 of the Georgia Code states that “[i]f performance of the terms of a contract becomes impossible as a result of an act of God, such impossibility shall excuse nonperformance, except where, by proper prudence, such impossibility might have been avoided by the promisor” Additionally, O.C.G.A. § 1-3-3 defines “act of God” as “an accident produced by physical causes which are irresistible or inevitable, such as lightning, storms, perils of the sea, earthquakes, inundations, sudden death, or illness. This expression excludes all idea of human agency.” The real question due to this public health crisis will be how the words “irresistible or inevitable” and “excludes all idea of human agency” will be interpreted.

One item to note though is that the “act of God” defense requires the obligation to perform to be “impossible.”

Georgia Law: Recession

In 2008, the economic downturn that occurred and the consequential events that followed did not invoke the force majeure clause allowing Defendants’ to modify or cease their obligations under the Alliance Agreement. In the case of Elavon, Inc. v. Wachovia Bank, Nat. Ass’n, the court found no external force majeure thwarting Wachovia from performing its obligations under the Alliance Agreement. (841 F. Supp. 2d 1298, 1307–08 (N.D. Ga. 2011)). Even though the economic pitfalls facing the banking industry back in 2008 might have been beyond the reasonable control of Wachovia, Wachovia did have control over the decision to extend the Wells Fargo-First Data contract.

Other Options if No Force Majeure Clause or Unable to Utilize:

If you are unable to employ a force majeure provision to modify or cease your performance during this coronavirus pandemic or your contract does not contain one, there are other options that may be available to limit or excuse your performance.

If you don’t have a force majeure provision in your contracts, even if you do, you should not wait until this pandemic is behind us to state that the public health crisis prevented you from fulfilling your obligations of the contract. Even in the event of this crisis, if you do not make a timely claim, you might be waiving any relief you could have under the contract.

In common law, there are two doctrines known as the doctrine of impossibility and frustration of purpose. These are used in exceptional circumstances, which we are likely experiencing. The purpose of these doctrines is to provide relief when an event triggers a contract impossible to perform for reasons beyond the parties control. Typically when this occurs, the obligations under the contract are excused and not just extended. While not a perfect remedy, these doctrines can provide some sort of relief in the event your contract does not contain a Force Majeure provision.

Since many governments of numerous countries, with the United States being no exception as a national state of emergency has been declared, have enforced strict lockdowns, businesses should be arguing that their failure to perform their obligations in the contract have been made impossible/ impractical. To name a few states, California, Illinois and Washington governors have all ordered the closing of bars and restaurants, and some mayors of specific cities like Los Angeles and New York City have ordered the same thing in order to try and halt the spread of COVID-19. Some states have even issued “shelter in place” orders. These are all factors that reinforce the impossibility/impracticability defense.

Further, the frustration of purpose defense can be used when it doesn’t make sense anymore for the obligations of the contract to be followed. Stated differently, this occurs when the circumstances have changed making the obligations under the contract not even worth it for the other party. Even with the coronavirus though, businesses should be mindful that items like an increase in performance costs and other economic hardships typically are not enough to argue a defense of frustration of purpose.

Conclusion:

At this time, the coronavirus is having a significant impact on businesses and their abilities to fulfill their contractual obligations. However, businesses requirements to perform under their contracts will have to be evaluated on a case-by-case basis due to the fact intensive analysis to determine if the force majeure provision applies or if an impossibility/impracticability or a frustration of purpose defense can be invoked. Contracting parties will have to review their specific language first and then applicable law in order to determine if their obligations can be modified or ceased.

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Protecting Intellectual Property with Employees Working from Home

How to Ensure Your IP Remains Safe

Offices, cubicles and community spaces are shifting to dining rooms, kitchen tables, bedrooms and home offices. Due to the severity of the Coronavirus (COVID-19) pandemic many of our clients have employees working, for the first time, from home, which has our Clients asking how to ensure their intellectual property remains safe.

Typically, employees must possess at least some of their employer’s intellectual property in order to perform their job duties, for example, pricing lists, vendor information and access to your CRM. This intellectual property might also include other trade secrets (formulas, R&D materials, financial information) and material protected by copyright, such as software, source code, manuals and publications.

Limit Intellectual Property Theft or Loss

Here is what you should do to limit the risk of the theft or unintentional loss of your intellectual property.

1. Partition your digital information – for example, if a particular employee does not need access to your CRM, set permissions so he/she cannot access it.

2. If you don’t already have one, employees should sign non-disclosure agreements.

3. Upon return to normalcy, employees should sign a “Return to Work Policy” that they do not have any non-disclosed copies of any of the company’s information.

4. Consider adopting a “work from home policy” which would include measures for protecting the company information.

5. Instruct employees to use a secure connection/ VPN, use strong passwords and have phone calls discussing sensitive information in private.

6. Remind employees in writing that your company’s intellectual property belongs exclusively to your company, no different than the company’s furniture, computers and other equipment.

7. Remind employees in writing that they may not share any company information with anyone outside the company without your permission.

8. Make sure to provide your employees with instructions and guidance in order to preserve and safeguard sensitive information such as maintaining a secure connection/ VPN, reinforcing strong passwords and having phone calls discussing sensitive information and topics in private if possible.

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Trademark Registration in 2020: What’s New?

By: Connor Edwards
Lilenfeld PC

The United States Patent and Trademark Office (USPTO) has made several changes to the trademark application requirements in the United States. This article discusses three need to know changes that are currently in effect.

Even though these changes have been in effect for some time now, many people are still unfamiliar with the changes, or are unaware that they even exist. Because the changes are critical to the success of a trademark application, it is important to understand each of the changes. The first two changes are relatively minor, but the third change requires a few additional items to consider and steps to take when completing your application.

The first change requires that all registrants must make an account on MyUSPTO.gov, which Lilenfeld PC has and maintains. In addition to this account, the user is required to login and provide proof of identity to file any trademark documents at the USPTO. In doing so the USPTO is able to keep registrants more accountable for their filings.

The second change only affects applicants, registrants, or parties to trademark proceedings who are not located within the United States. A person or an entity that fits this demographic is required to be represented by a US licensed attorney. The reason for this change is to ensure that the procedures and rules of the USPTO are more closely followed.

The third change and certainly the biggest change surrounds the specimen portion of a trademark registration. For those who might be unaware, in order to file a trademark, you must submit a specimen. A specimen is essentially a sample of your trademark being used in commerce. People used to be able to provide specimens very easily, and this allowed for many people to file using fake specimens. This new rule is intended to prevent these fraudulent specimens by having two big requirements. The first requirement is that a specimen that is a screenshot of a website, where the mark is being used in commerce, must contain the URL of the webpage as well as the date the screenshot was taken. The second new requirement states that product packaging specimens must also include an image or description of the product, either on the package or in addition to the packaging itself.

The reasons for the changes can be boiled down into two categories: (1) abuse of the system and (2) a lack of education around the rules and procedures of the USPTO. The USPTO perceived that many registrants, both foreign and domestic, seemed to be cutting corners and filing fraudulent trademarks.  The additional requirements are here to help crack down on fraudulent filings and maintain the integrity of the trademark registrar.

Contact us if you have any questions about applying to register your trademark.

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The 7 Contracts Needed For Your Short and Low Budget Films

By: Kennington Groff
Lilenfeld PC

So you’ve spent weeks, months, or even years writing the perfect script or combing through dozens of scripts to find the one that aligns with a story you have to tell. Now you are ready to turn that work into your new project. What do you do first?

Hire an entertainment attorney! Every project needs to be protected no matter how small or large the budget.

Creating a film is no small task. An entertainment attorney can assist you to ensure your project runs smoothly by helping you avoid the threat of a lawsuit or removal of certain footage later on down the road when potential conflicts may arise with contracts that were not in place (or poorly drafted), rights that were not obtained, and releases that were not signed.

Below are 7 contracts that at a minimum all short and low budget films should have in place:

  1. Location agreement: Gives you permission to enter a property and film there.
  2. Talent Agreement: Gives you permission to use someone’s image/ voice in your film.
  3. Crew Agreement: An employment contract outlining the work to be performed and rights (if any) to the film.
  4. Confidentiality & Non-disclosure Agreement: For use when discussing your film or script with third parties.
  5. Materials Release: For the intellectual property that might be used in the work, i.e. photos, artwork, audio/visual clips.
  6. Appearance Release: When a person is appearing in your film, specifically for privacy issues.
  7. Area Release: Notifies people and businesses that you are filming in their area.

To learn more about our Entertainment Law services, including our short/low budget film contract package, please contact Kennington Groff at (404) 201-2520 or kg@lilenfeld.com.

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Trademark Registrations Can Be Amended to Adapt to New Technologies

By: Kennington Groff
Lilenfeld PC

Our Client’s federal registrations, which it originally secured in the 1990s, listed “printed charts” as the products used with its trademark. So when our Client switched from paper to digital products, its federal trademark registrations no longer provided the same protections for the updated product. What could be done to help the Client?

On September 1, 2015, the USPTO began a pilot program to allow, under limited circumstances upon petition to the Director, amendments to identifications of goods/services in trademark registrations that would otherwise be beyond the scope of the current identification, but are deemed necessary because evolving technology has changed the manner or medium by which the underlying content or subject matter of the identified products and services are offered for sale or provided to consumers.

As an evolving pilot program, we were able to work with the Director to have Trademark Rule 2.173(e) waived. Trademark Rule 2.173(e) may only be waived “in an extraordinary situation, when justice requires, and no other party is injured.” In our situation, we were able to successfully convert our Client’s trademark registrations, that has been around for over 30 years, in connection with “printed charts,” into a trademark registration for “downloadable charts.” With ever changing technology, the printed materials had become dated. Our Client needed to evolve to stay competitive in a rapidly evolving industry.

In order to show that an extraordinary situation exists, for which for which justice requires a rule waiver, we declared, to the best of our knowledge, that (1) based on changes due to evolving technology in the manner or medium by which products and services are offered for sale and provided to consumers, our Client cannot show use on the original goods or services; (2) our Client still uses the mark on other goods or services reflecting the evolved technology, and the underlying content or subject matter remains unchanged; and (3) absent an amendment of the identification, our Client would be forced to delete the original goods or services from the registration, and thus lose protection in the registration in relation to the underlying content or subject matter of the original goods or services.

In considering third-party harm in allowing the amendment, the USPTO performed a new search of the Trademark database of registered and pending marks and identified no marks that might be harmed by the acceptance of the amendment.  As an additional means of reducing the possibility of third-party harm and to provide a mechanism for interested parties to comment about proposed amendments prior to acceptance, the USPTO published the proposed amendment for public comment on the USPTO website and no comments were received.

Currently the pilot program does not have a termination date, but the results of the pilot will help the USPTO determine if it will continue to allow such amendments in the future. Rest assured though that all registration amendments granted under the pilot program are permanent, regardless of the outcome of the program.

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Is a Favicon a Trademark

By: Kennington Groff
Lilenfeld PC

What’s a “favicon”? Surprisingly, while not a popular term, you probably see a favicon every day.

A favicon is a small pixel icon that appears at the top of a web browser on the tab:

A favicon serves as a branding identifier for your website so that internet users can easily locate your page when they have multiple tabs open in their browser.  All of these icons act as source identifiers for the brand they are associated with.

The United States Patent and Trademark Office states that a trademark is a word, phrase, symbol, and/or design that identifies and distinguishes the source of the goods of one party from those of others. A service mark is a word, phrase, symbol, and/or design that identifies and distinguishes the source of a service rather than goods. Some examples include: brand names, slogans, and logos.

As technology evolves, people are beginning to brand their products in different ways. Before it will allow a trademark to be registered, the Trademark Office requires proof that the trademark is actually being used in a public-facing way. So is a favicon sufficient to prove that you are using the trademark in a public-facing way? While not a guaranteed answer, in certain circumstances the answer is “yes.” For example if your Client is trying to register a trademark in connection with a website that sells certain products online, the favicon may very well be an acceptable specimen. Technically, in this situation the favicon is being used in commerce.

As more applicants begin to submit favicons as the proof of use of a trademark, the Trademark Office will likely issue more guidelines on the use of favicons.

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Dr. Dre v. Dr. Drai: Doctors Battle Over Trademark Rights

One “doctor” is known by his stage name, Dr. Dre, and is heavily involved in the music industry, a Grammy award winning-rapper, and known worldwide. The other, Dr. Drai, is a board certified osteopathic doctor and OB/GYN in Pennsylvania. Both “doctors” have been involved in a trademark dispute over the rights to use their name.

 

The Pennsylvania OB/GYN wanted to trademark his name Dr. Drai for medical educational and entertainment services, health care consulting, and related books. However, Dr. Dre, the music icon, was not happy with this and tried to prevent Dr. Drai from getting a trademark for his name because Dr. Dre believed consumers would be confused between to two doctors.

 

However, the Trademark Trial and Appeal Board (TTAB) dealt a blow to Dr. Dre. The TTAB evaluated various factors in determining the likelihood of confusion between the marks. Frist, TTAB found that the marks Dr. Dre and Dr. Drai were similar and weighed in favor of a finding of consumer confusion. Next, TTAB evaluated the strength or fame of the prior mark. However, Dr. Dre’s mark was found to only be famous in connection with music—not the medical field.

 

Crucial to the determination of different services was that Dr. Drai would use his mark in connection with osteopathic medicine, obstetrics and gynecology—areas that are completely different than Dr. Dre’s area—music. Therefore, the Board found that the goods were not related. So, this factor favored the Pennsylvania Dr. Drai.

 

The Board concluded that there is no likelihood of confusion between Dr. Dre and Dr. Drai. Even though the marks might be similar, the goods and services offered by Dr. Dre (music related) and Dr. Drai (medical related) are too different and outweigh any similarity in appearance.

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The Basics of Amazon’s Brand Registry for Trademarks

Amazon has a service called “Amazon Brand Registry” that helps your company protect its registered trademarks for products you sell on Amazon. To enroll in Amazon’s program, your company will need to have its trademark registered with the United States Patent and Trademark Office.

 

Once your trademark is enrolled in the Amazon Brand Registry, you will have access to Amazon’s search and report tools to help you find listings that make unauthorized use of your registered trademark. Content can be searched across various Amazon stores. Image searches where you can find listings on Amazon that use your company’s logo or image of your product on a listing that is not yours and bulk ASIN searches to search in bulk for potentially infringing content are available to you.

 

In addition, a feature called “Transparency” offers item-level tracing for products. You may assign unique codes to each product you manufacture that Amazon will then scan for at its fulfillment centers to ensure no counterfeit products are being sold to consumers. If you find infringement, Amazon will investigate and will most likely take action within eight hours.

 

Eligibility / Enrollment Requirements

 

In addition to your trademark being federally registered, your company will need a Vendor or Seller account on Amazon.

 

Once the necessary information is submitted to Amazon, Amazon will contact your trademark lawyer to complete the enrollment process.

 

Additional Features

 

Not only does being registered in the Amazon Brand Registry help prevent infringement, but you will gain greater access to your product detail pages to ensure accurate information is listed.

 

Contact us if you would like to discuss your company using Amazon’s Brand Registry.

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The Basics of Trademarks in Comparative Advertising

Do you have an advertisement for your goods or services (including trademarked goods/services) in which they are compared to those of a competitor? Is one of your competitors comparing your goods/services to theirs? That is comparative advertising, and it is generally permissible. However, all comparative advertisements must be truthful and must not be deceptive. Truthful comparative advertisements are beneficial to consumers and can help them make good purchasing decisions. In short, if you want to create a comparative advertisement and avoid any pitfalls, be honest, accurate, and truthful.

 

Comparative advertisements usually highlight measurable characteristics between goods/services, such as price. However, other metrics can be used, including comparing speed of service, better taste, quality of product, etc. in comparative advertisements.

 

Comparative advertisements are governed by a variety of regulations and laws. However, the main ones are The Federal Trade Commission Act (FTC Act) and Section 43(a) of the Lanham Act (15 U.S.C. 1125(a) (aka the “Trademark Act”)). Your advertisement may attack or criticize a competitor’s goods/services as long as your statements are truthful and not deceptive. So, your comparison could be literally true, but it cannot be deceptive. To avoid deceptive comparisons, do not omit facts that may mislead a consumer who then makes a decision based on your misleading statement. Truthful comparative advertisements can help maintain a strong brand in your trademark.

 

There are multiple avenues to take when another company is improperly comparing its goods/services in a comparative advertisement. Demand letters (including takedown requests) may be sent to both the company with the comparative advertisement and its web hosting provider or outlet where the advertisement is displayed. You may file a complaint with the FTC, but this is usually only beneficial if there is a large amount of consumer harm instead of just a dispute between two competitors. If you have national advertisements and meet certain criteria, you may file a complaint with the National Advertising Division of the Council of Better Business Bureaus, Inc. Finally, you may file a complaint in Federal Court under the Lanham Act (aka the “Trademark Act”). You may be entitled to injunctive relief (to stop the false advertiser from continuing to display the comparative advertisement during the case—and possibly even the display of your trademark) and/or for monetary damages to be awarded. In general, the party seeking monetary relief must prove that actual consumer deception or confusion occurred due to “material” statements or omissions in the comparative advertisement that caused actual harm.

 

At Lilenfeld PC, we can work with you to protect your company’s brand and trademark by getting an opposing company to stop using a deceptive comparative advertisement. We also can defend your comparative advertisement and trademark against another company if you received a demand letter or if a lawsuit was filed against you. If you have any questions or would like a consultation, please contact us.

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