Does the buying of keyword advertising trigger trademark infringement lawsuits?

The short answer is “yes, it can.” But while there have been many instances of such matters being aired in court, judges across the country have struggled to keep current with the matter and have issued less than uniform guidance. To understand the keyword advertising dilemma, it is important to first understand what keyword advertising is.

Keyword advertising, a multibillion-dollar business, refers to paid advertising on the Internet that links specific keywords or groups of keywords. If you have ever used the Internet search engine Google, you know that typing a phrase such as “sporting goods” into the search area would produce advertising links for sporting goods providers on the side of the screen.

Companies pay for the right to certain words so that customers click on the advertisements that lead to their Web sites. Often, companies pay for each “click-through” that is generated. But the controversy with this type of advertising occurs when companies buy a keyword that is part of a competitor’s trademark, bringing into play the Lanham Act.

In part, the Lanham Act is meant to protect the holder against those who “without the consent of the registrant, use in commerce any reproduction, counterfeit, copy, or colorable imitation of a registered mark in connection with the sale, offering for sale, distribution, or advertising of any goods or services on or in connection with which such use is likely to cause confusion, or to cause mistake, or to deceive.”

To establish that keyword advertising violates the Lanham Act, it has to be proven that the trademark was actually used and that the general public would be confused about who is offering the goods or services in question.

Second Circuit courts have often found that the use of a keyword on its own is not a violation of the Lanham Act. Yet outside the Second Circuit, courts have often found the opposite to be true.

For example, in April 2008, the Eleventh Circuit ruled against a company who used a competitor’s trademarks within its invisible meta tags of its website. The court ruled that such practices were in fact trademark infringement.

Microsoft, Google and Yahoo! all sell keyword advertising and have been dragged into some Lanham Act court cases.

When it comes to companies protecting themselves against competitors misusing keyword advertising, it is important to track how your trademarks are being used on the Web. When a violation is suspected to have taken place, one should complain to a search engine, many of who often have their own complaint procedures in place. Experts also recommend that companies make sure they are the highest bidder for their advertising keywords that represent their trademarks to prevent others from using them.

To learn more, visit https://spotoralaw.com/.

If you’re an employer and have invested in an employee for a long time, the last thing you want to happen is have that worker jump to a competitor.

After all, that employee has good insider knowledge and could help the competition swipe away some of your customers, employees, market share – and even trade secrets.

Usually, a non-competition agreement or non-compete clause in an employment agreement would take care of such problems by barring the former employee from working for competitors for a certain period of time. Yet there’s a big problem with that when it comes to California. The Golden State considers non-competition agreements/non-compete clauses unenforceable in just about every instance, according to a 2008 ruling by the state supreme court. Other states have some restrictions, but California is one of the first to take such a hardline stance on the matter.

So what is an employer to do in order to safeguard his or her business? Experts say the next best thing is to address this issue from the get-go by requiring a well-worded non-solicitation agreement be signed at the time of hiring. A non-solicitation agreement, in conjunction with a confidentiality agreement, will go a long way in protecting your bottom line and market share.

This step will restrict an employee from soliciting customers while they are with your company and, once they leave, from using trade secrets to solicit customers.

“It can be difficult to prove solicitation,” said Anthony Spotora, a Los Angeles-based business lawyer, “but a non-solicitation agreement can be your best offense in California when seeking to defend your business and your bottom line.”

It is important to note that the trade secrets component is the only enforceable component of a non-solicitation agreement. The same 2008 Supreme Court decision that found non-compete agreements to be unenforceable also found that non-solicitation agreements are only enforceable when they are limited to trade secrets, or intellectual property. This distinction must be clear in the employee agreement.

Trade secrets can encompass a wide range of information such as customer lists, technical information and computer programs, software, techniques and licensing.

As per California’s 2008 Edwards vs. Arthur Andersen decision affecting non-solicitation and non-compete contracts, this extends to employers both in and out of state.

To learn more, visit https://www.spotoralaw.com/

There are a lot of challenges and unknowns when getting a new business venture off the ground. Am I ready for this launch? How long will it take me to recoup my capital? When will the customers begin rolling in?

If you are operating the business with a partner, one of the things that can save you a lot of headaches later on is putting together a partnership agreement. A partnership agreement clearly outlines each partner’s responsibilities and rights, therefore preventing disagreements in the future. It is not uncommon for disagreements between partners to sink new business ventures, destroy friendships and cause long, drawn-out legal battles.

A partnership agreement can be tailored to each venture’s specification, yet they all should include a section detailing each partner’s individual job duties. Consider life without a partnership agreement: If each party is under the impression that the other person is handling a particular task and it is not completed, the new business venture can crash before it has a chance to get off the ground.

“This legal document can minimize the number of risks that new business ventures face, creating a better chance for success,” said Anthony Spotora, a Los Angeles-based business and entertainment lawyer. “Included in the agreement are specifics on what authority each partner has when it comes to borrowing or lending money, buying supplies, executing lease agreements or entering other types of legal contracts.”

Perhaps certain business transactions can only take place with the consent of both partners. Perhaps Person A exclusively handles the purchasing of supplies while Person B exclusively handles the hiring of new employees. Whatever the arrangement, it is important to make the rules of the game clear to all.

The partnership agreement might also want to include procedures if one partner wants to leave or passes on, how profits will be shared, how an additional partner would be added, management responsibilities, how each partner contributes cash flow, management restrictions and other decision-making protocol.

Each state has a uniform business partnership law, but a partnership agreement can override this law to suit your particular needs. A partnership agreement is a small investment in time and resources that can often mean the difference between success and failure.

There is a lot to consider when putting together a partnership agreement so it is best to consult an attorney with experience in such matters.

To learn more, visit https://www.spotoralaw.com/

Your business has a great name, logo and slogan to stimulate brand recognition. Are those creations copyrightable?

One of the most common questions an intellectual lawyer gets asked relates to copyrighting a brand name, title or a logo. Is it possible to copyright those creations? The short answer is no, and in fact, brand names, short phrases, business names and slogans are explicitly excluded from protection; something that usually comes as a significant disappointment to businesses hoping to protect their identities.

The exclusion is actually quite wide and is applicable to any kind of a title, short ad expression, catch-phrase or name. Let’s say your forte was collecting and writing about recipes the great chefs of the world made famous. There are a lot of people who would copy those recipes and give them a whirl. Isn’t that a copyright violation? In the instance of labels, formulas, recipes and ingredient lists, the answer is they are not protected by copyright. However, the text with the directions, explanations and other descriptions may be eligible for copyright. Tread cautiously.

What about a person who wants to use a name in business/commerce? This is different. Business names, brand names and even slogans may be protected. Trademark law says those things are protected if and when they are used in commerce to make a product stand out from someone else’s. Just to throw a spanner into the works, trademark law also says you have exclusive rights to a trademark if you are the first user (under certain conditions). You would need to speak to an intellectual property lawyer about this to find out how it may apply to your circumstances.

In general, there is some trademark protection available automatically if you use your marks in commerce/business. But you still need to register a trademark federally in order to be covered nationwide.

Just to backtrack a bit, that bestselling cookbook about the world’s greatest chefs has recipes and formulas in it, and they aren’t protected by copyright or trademark law. If you want to protect them, you either have to consider that they are trade secrets, or patent them. To that end, you can only patent a recipe or formula if it is new and not just a combo of things already in existence. Drug makers pull that kind of stunt all the time by combining two existing drugs into one and calling it a new drug.

What about the recipe for Pepsi or Dr. Pepper? While these two drinks are recipes, their origin is a formula and is therefore a trade secret. That means they’re protected indefinitely just so long as no one exposes them. A patent would grant up to 20 years protection. If you don’t know if your product or other good may be copyrightable or qualify for a patent, ask an intellectual property attorney. Finding out now saves potential litigation grief later.

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

So you’re a talented songwriter and damn it, you deserve a big publishing deal! Now, if only a well-connected, successful, efficient music publisher would listen to your music with the same enthusiasm in which you created it, it’d be a done deal! You’d be set!

So, how-oh-how do you get to that music publisher so he or she can offer you the deal you have worked so hard for and that you most certainly deserve? How do you find that person that will share in your passion that transcends into your music, who really understands each song, who will do everything he or she can to sell and/or license those songs over and over again?

Well, think back for a minute to all of the networking events you’ve attended; to the places where you wrote those songs for countless hours; to the pitch meetings you landed; to those encouraging meetings you held with your manager. Now, think of the one thing each of those places or events had in common → you!

Your publisher is your greatest untapped resource and quite likely, it is you! Who better knows your music? Who better can you entrust it with? Who better to really work hard for the money? Who better to run your business, than you? Likely, nobody!

Upon inspection, you would find that many, if not most successful songwriters in any large publishing company are, more times than not, persons that first became successful music publishers on their own. They simply learned, some for the sake of survival, how to pitch their music; how to develop and manage their catalog; how to secure and protect their copyrights; how to build not only a business plan, but a business team and; how to create a presence or ‘buzz’ for themselves in the infamous ‘industry.’ And, once they had done so and in turn, established for themselves an operable entity, they then also stood in a much greater position to enter into a coventure relationship with a larger, more productive and more lucrative company.

Taking this strategic and time-tested approach to building your career can prove invaluable! It is simply reasonable and not only common but, common sense, that a large publishing company is much more likely to coventure with an established, smaller company than it is to bring on a beginning writer where they would have to assume a greater risk and the consequent burden of making the relationship successful.

Also, you may wish to keep in mind that most publishing deals nowadays are co-publishing deals whereby the writer receives 100% of the writer’s share of income and also a portion of the publisher’s monies. Does this sound like a deal that favors the writer? Well that’s only because it does! Maybe not such a terrible idea after all, this be-your-own-publisher idea, eh!?

If you’re still finding this to be a daunting task and need inspiration, just read the biographies of songwriting legends like Carole King and Jerry Leiber who followed a similar path. You’ll see that it may be more fiction than fact that days existed where songwriters worked in isolation, tapping their foot to the beat of their own drummer while their songs were being shopped all over town. Rather, an aggressive, strategic and well-thought out approach that is focused on shaping those musically-inclined dreams into reality is not only time-tested, but reasonably, provides more probable results.

Are there any guarantees? Well of course not! You don’t need anyone to tell you that. However, while common sense is sometimes not all that common; common sense here will tell you that creating your own publishing company and working hard to develop not only its operations but, its value, stands a much better chance of tendering you the riches and success you seek than does waiting for someone to show up at your door and offer it to you. Don’t get me wrong. . . it can happen; but I might rather choose the former approach . . .at least until someone comes a-knockin’!

While no one wants to think of a marriage as a business, it often is just that. The partners work together to run it by agreement.

One of the more controversial areas of California divorce law centers on whether or not to have a prenuptial agreement. Many feel it’s not exactly the epitome of being amorous. And frankly, it really isn’t all that romantic, but it’s necessary in case something happens later. Not being protected can be a major disaster to the spouse who happens to have less money and/or assets than the other. It’s not that a prenup is intentionally a power play involving finances, but some cases turn out that way when the marriage comes apart. California is a community property state, so everything is split 50/50 unless a prenup says otherwise.

Prenuptials are not just for the wealthy, although you’d wonder about that reading the newspapers and watching television. Mostly, it seems, that only celebrities opt to have a prenup. In reality, they are for everyone and anyone who wants one. There’s a very common myth floating around that a couple doesn’t need to go this route if they don’t have much money between them. This is not the case.

Virtually anything and everything can be the focus of a prenuptial agreement. Getting around the “not so romantic” stigma associated with them often works if the couple just has a very frank and wide-ranging discussion about how each of them handles finances before they get married. Finding out later that the husband spends thousands on sports equipment, while the wife thinks the money should be set aside for the children’s education, is not exactly conducive to a happy, well-balanced marriage. The bottom line is if you don’t want surprises later, get things out in the open now, because no one knows what will happen.

What if one of the spouses comes into more money in the future, as a result of their business or a talent they have? If you know how to handle the division of community property in advance of any possible divorce, you’ll be well ahead of the game and won’t necessarily have to face the bitter acrimony that sometimes accompanies divorces without a prenup in place. If you don’t know how to go about setting that kind of agreement up, contact an experienced attorney.

This brings up another very common belief, that prenuptials really only protect the partner with the most money and take it away from the partner that doesn’t have much. The reality is that prenuptial agreements are designed to protect both parties.

It should also be noted that just about anything can be written into a prenup, but that doesn’t mean that everything and the kitchen sink must be included in the agreement. These agreements can either be incredibly complex or strikingly simple. It’s up to the parties to decide what they want.

By the way, living together without the benefit of a marriage license is not the way to get around not having a prenuptial. Some couples think if they just live together, the live-in has no claim to the other’s property or income. Wrong. The person making the money and with the assets could be taking a huge risk just living together. It’s called palimony. If you want to protect what you’ve got, get a prenup drafted and signed.

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

Have you ever seen this brief legal ditty? Sure you have. And whether you know it or not, you likely accept contracts containing this language on a weekly, maybe even daily basis.

Ever valet park your car or use the services of your local dry cleaner; or, maybe you have attended an amusement park? Well then, without signing anything, you have just entered into an “adhesion contract”.

Adhesion contracts are contracts between two parties that do not allow for negotiation — it’s take it or leave it! However, can you realistically leave it? What would your options be anyway? Should you park your car elsewhere or take your clothes to a different cleaner? Won’t you just be faced with the same issue there? And what about that pocket size agreement? Will it really limit their liability? I mean really, who can even read that boilerplate it’s so small?!

And how about the long-form adhesion contract that you actually sign; a residential lease agreement, for example? Were you afforded the opportunity to negotiate its terms or, did the landlord stand in a position of such superior bargaining power that you signed it, knowing also that it would not be any different down the street?

Theoretically, the common debate relating to contracts of adhesion have reasonably focused on whether or not courts should enforce them. On the one hand, they undeniably fulfill an important role of efficiency in the marketplace. These standard form agreements can substantially reduce transaction costs by eliminating the need for buyers and sellers to negotiate the terms of every sale of goods or services. However, they may also consequently result in unjust terms being agreed to by the accepting party. Few would disagree that it is simply unfair for the seller to avoid all liability or to unilaterally give themselves the right to terminate the agreement.

So then, are these contracts enforceable?

In common law jurisdictions, these standard form agreements are treated like any other contract and a signature or other manifestation of acceptance and intent to be legally bound will bind the acceptor. This reality, however, has caused for many common law jurisdictions to develop special rules that govern such situations. As a general rule, courts in these jurisdictions will interpret the standard form agreement contra proferentem which, literally means — ‘against the proffering person.’

Most of the United States, however, follows the Uniform Commercial Code which, similar to the common law jurisdictions mentioned above, has provisions relating specifically to standard form contracts and; when a standard form contract is found to be a contract of adhesion, it is given special scrutiny.

For a contract to be treated as a contract of adhesion, it must be:

1. Presented on a standard form and on a “take it or leave it” basis; and
2. Give the consumer no ability to negotiate because of their unequal bargaining position.

Next, the “special scrutiny” may be performed in a number of ways, a few of which are:

1. If the term was beyond the reasonable expectations of the “adhering” party, the court can find it to not be enforceable; or
2. Under the equitable principles of the Doctrine of Unconscionability, unconscionability may be found and the contract held unenforceable when there is an “absence of meaningful choice on the part of one party due to the one-sided contract provisions, together with terms which are so oppressive that no reasonable person would make them and no fair and honest person would accept them.” (Fanning v. Fritz’s Pontiac-Cadillac-Buick Inc.)

So…the good news is: recourse may be available for the underdog!

The bad news is: both parties will have to expend time and money for a court to determine if the adhesion contract is enforceable.

The creative process that is so closely tied to the success of the entertainment industry often raises questions regarding ownership of creative works. While copyrights usually rest with the creator of a work, certain agreements can be made that transfer these rights to another party.

Generally, copyrights rest with the author or authors who originally create a work. However, the Copyright Act of 1976 contains a major exception, the “Work Made for Hire” Doctrine, which challenges the fundamental principle that copyright ownership lies with the individual who creates the work. In the case of a “Work Made for Hire,” the party for whom the work was completed is considered the author and thus holds the copyrights to the work created rather than the party who actually authored the work.

A Work Made for Hire is not, however, any work that you pay someone to create for you. In addition, it is not any work that you and a developer simply agree is a Work Made for Hire. Rather, “Work Made for Hire” is a specifically defined term in Copyright Law and applies only when certain conditions are met.

Disputes over what constitutes a “Work Made for Hire” often arise over two main issues: the distinction between an employee and a non-employee or independent contractor and whether or not the work in question qualifies as one or more of the nine categories outlined in the Copyright Act.

Section 101 of the Copyright Act defines a “work made for hire” as either:

1.  a work prepared by an employee within the scope of his or her employment; or

2.  a work by a freelancer (independent contractor) which is specially ordered or commissioned for use as a translation, as a part of a motion picture or other audiovisual work, as a contribution to a collective work, as an atlas, as a compilation, as an instructional text, as a test, as answer material for a test, or as a supplementary work such as a preface to a book, a forward or a musical arrangement, if the parties expressly agree in a written instrument signed by them that the work shall be considered a work made for hire.

If the condition of category one is met, copyright ownership belongs to the employer unless an employment contract specifies that the creation of copyrightable material is not within the scope of employment. If the creation of the work falls outside the scope of employment then the employee, and not the employer, would have copyright ownership of the work.

If the conditions in category two are met, then the party hiring the freelancer would own the copyrights. If, however, these requirements are not strictly followed and the work falls outside the nine categories enumerated by the Copyright Act or a written agreement does not exist, then the freelancer would retain copyright ownership in the work.

Los Angeles intellectual property attorney, Anthony Spotora, commented, “It is the lack of a written instrument specifying the intended “Work-Made-for-Hire” relationship with independent contractors that commonly creates “Work-Made-for-Hire” copyright ownership issues. All too often, the intended owner seeks to argue that a “Work-Made-for-Hire” relationship was agreed upon, although it was stated only verbally. Subsequently, authorship of the work at issue ultimately winds up with its creator, rather that the intended owner. The second biggest misperception in freelance arrangements is that a written agreement specifying that a work is intended to be created on a “Work-Made-for-Hire” basis makes it so when, in fact, that is only the case if the work falls into one of the nine exceptions listed in Section 101 of the U.S. Copyright Act.”

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

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Whether pertaining to your personal or professional life, chances are you have entered into, or sought to enter into a partnership at some point.  For some, it provides a sense of security; for others, a dinner drink led to a friendly discussion about an idea you had and WHAM, you’re going to move on that idea together – as partners, or; for those timid-hearted types, perhaps you gravitated toward a partnership because you simply wanted half the responsibility, half the risk, and half the potential blame.

Whatever your cause, and whatever your (personal) purpose, you could stand to save yourself a lot of time, frustration and money by knowing up front what sort of partnership you’re actually getting into.

Whereas some people use ‘partnership’ more as a term of art (i.e., corporation owners may call themselves ‘partners’, but that does not necessarily make it so), there are, in fact, a variety of legally recognized partnerships.  They are: (1) General Partnerships; (2) Limited Partnerships; (3) Limited Liability Partnerships; (4) Limited Liability Companies and; (5) Joint Ventures. And of these different types of partnerships – some governed by corporate law and still others governed more by contract law – the one that is of particular interest in this article is that of the “General Partnership”.

Attorneys are often surprised to find the staggering number of parties involved in general partnerships who believe they are being afforded certain corporate law advantages.  Let’s take a moment to touch upon a bit of the confusion.

A General Partnership is like a sole proprietorship except that there are two (2) or more persons conducting business under one name.  Unlike Limited Liability Companies, for example, no articles need to be filed with the Secretary of State, nor does the partnership even need to enter into a written partnership agreement (although it has been considered a terrible idea not to). A significant difference between formally established partnerships (i.e., LLC’s, LLP’s, etc.) and that of a general partnership is that each partner in a general partnership is jointly and severally liable for the actions and debts of the partnership.  Since any partner may bind the partnership, the other partners may be held liable for actions, contracts and/or debts in which they didn’t even know existed.  Take that one step further — partners can even be held personally liable for the acts of agents or employees that had apparent authority to bind the partnership.

So, for those of you not wishing to formally establish a partnership at the state level, and, whether you are willing to entertain and execute a partnership agreement or not, you may wish to have a better understanding of the risky business you could be entering into, or, may already be involved in, as a partner in a general partnership.

If an individual is looking to business-incorporation/”>form a new business, they may want to consider forming a Limited Liability Company. This type of business structure is similar to a corporation but is less formal, more flexible and offers several benefits, including personal liability protection, for its owners.

What is an LLC?

A “Limited Liability Company” (LLC) is a hybrid between a partnership and a corporation. It has the operating flexibility and “pass through” tax treatment of a partnership with the limited liability for its “members” accorded to corporate shareholders. “While an LLC is a business entity, it is best to think of it as an unincorporated association,” said Anthony Spotora, an extremely experienced business attorney. “Although sometimes incorrectly referred to as Limited Liability Corporations, they are in fact not corporations.” See California Corporations Code, Title 2.6.

Further Benefits

LLCs are highly attractive to some because of the flexibility in tax choices. LLC business ventures qualify for a single layer of taxation, which prevents ownership from being double-taxed under the corporate tax structure.

“However, LLCs may also elect to be taxed under a corporate tax structure if they wish,” Spotora advised. “In fact, the full list of taxation choices for LLCs are as a sole proprietor, a partnership and either an S- or C- Corporation.”

LLCs also often require much less administrative paperwork and record-keeping than do corporations. The laws also allow LLCs to customize the rules for how the LLC is best operated.

Drawbacks

Some people feel that LLCs do have disadvantages, however.

In California and a handful of other states, LLCs must pay a franchise or capital values tax on the business.

LLC’s in California must pay an annual tax to the state’s Franchise Tax Board. The fee is $800 per year, though if the LLC’s net annual income exceeds $250,000, then there will be an additional fee that must be paid, too.

Also, some people believe LLCs have a more difficult time raising financial capital because investors may be more comfortable investing funds into corporate firms.

If a person is considering forming a Limited Liability Company or other business entity, it is important for them to speak with a knowledgeable attorney. Anthony Spotora is a Los Angeles business attorney who specializes in incorporation and can guide you on the best strategy for your business.

You can visit our blog to learn more about corporate formation and other topics in business law, including the impact of RULLCA, California’s 2014 revision of the laws governing LLCs.