When a corporation is being sold, merged, or acquired, the duties of the board of directors shift.
The board members must not think of the business’ survival and instead focus on getting the best price and upholding the shareholders’ interests. Of utmost importance is the duty of care for the directors to utilize and gather all the materially accurate information to be able to determine the most appropriate buyer and make the most informed decision.

The business judgment rule will be used by the courts to see if the duty of care was upheld. This rule analyzes if actions were done in good faith and in line with how a reasonable person would have acted.

Board members should not be acting with self interest, bias, or only looking to preserve their roles. This duty of loyalty also includes the board of directors disclosing any conflicts of interest and a duty of confidentiality to prevent potentially harmful publicity or crises.

In real terms, all efforts must be made to receive the highest value for the corporation. Any preference for one bidder over another should be in line with getting the maximum price. If bias is discovered or a dispute ensues because favoritism is occurring for the wrong reasons, a breach of fiduciary duty can be claimed.

The courts recognize that even when the sale of a corporation is completed, some amount of business risk is taken. If the board of directors has made a decision that is in the shareholders’ best interests to further its’ goals, board members will be greatly protected from liability. But if the duties of care, loyalty, and disclosure are not upheld, a lawsuit can ensue. When wrongdoing is proven and shown to have caused damage to the shareholders, compensation for actual damages and sometimes even punitive damages can be sought. Courts do not rule favorably in circumstances where a board of directors or select individuals on the board have a conscious disregard for their duties in a sale, merger, or acquisition.

It is therefore advised to have a team in place to help the board of directors make the soundest judgments when an opportunity arises for the business to change ownership. An experienced business attorney is essential for the board of directors to have to review their duties and actions as the research and transactions unfold. Enlisting a competent attorney ahead of time can help to minimize risk and comply with all pertinent regulations.

Anthony Spotora is a Los Angeles business lawyer and Los Angeles business litigation lawyer. To learn more, visit Spotoralaw.com.

In-N-Out Burger has a following of restaurant-goers that crave its “fresh to order” hamburgers. Since 1948, the company has excelled in burgers, fries, shakes and a devout commitment to clean, efficient fast food. It has also relied on its boomerang logo and signage to stand out from the competition since its inception. No wonder that In-N-Out Burger was recently shocked to find that another restaurant was using a very similar boomerang to promote its company.

The lawsuit, In-N-Out Burgers vs. Pappas Restaurants alleges that Pappas’ used boomerang arrow signage outside its Houston, Texas airport location. In-N-Out Burgers has more than 260 locations throughout California, Texas, Arizona, Nevada and Utah. They allege that the boomerang logo is closely identified in the marketplace for In-N-Out Burgers and could cause confusion amongst the public. Thus, Pappas’ is allegedly engaging in trademark infringement under federal laws and unfair competition under Texas law, In-N-Out Burgers claims.

Pappas Burger has three burger restaurants in Houston and uses a yellow boomerang that bends with lights similar to In-N-Out’s signage. Case watchers say that the case will come down to how similar the signs are and how much confusion the two signs could have caused. What is interesting is that its logo is more of a baseball-oriented font and feel but the Houston signage does largely use a boomerang.

When companies go after each other for trademark infringement for a sign or logo, it shows that they are concerned about consumers being deceived, confused, or mistaking one company for another. Businesses spend a lot of time and money on signage and logos to have the public associate a set of words and images to their brand. Packaging, advertising, and promotions can also mirror the large-scale logo. Unless there is a partnership or marketing agreement that allows one business to utilize key parts of another’s logo for mutual benefit, trademark infringement can be charged.

An experienced trademark attorney is essential to protecting a logo and associated intellectual property assets. When a problem arises, a company can request a temporary injunction to prevent further harm, amongst other pursuits of resolution. Lost profits and losing part of a customer base can be devastating to a business when a trademark dispute arises. Moreover, in instances where a rival is acting in bad faith or confusion can be proven, monetary awards can be given. Punitive damages and attorney’s fees can also be sought after. Unjust enrichment and deterrence to continue the act of infringement is something that the courts will also look at when deciding a trademark case.

Anthony Spotora is a Los Angeles trademark attorney, Los Angeles intellectual property attorney, and Los Angeles business attorney. To learn more, visit Spotoralaw.com.