NEED MORE THAN CC’ING YOUR LAWYER

It’s inevitable. Companies need to discuss legal issues. But how can employees do so while maintaining privilege? A California U.S. District Court recently took the position that merely CC’ing a company’s counsel on an email is not enough to maintain privilege. There must be evidence of an intent to obtain legal advice.

Here’s the practice pointer. If your employees are discussing a legal matter at the request of counsel, say so in the email. Something like, “per our lawyers’ request, we are contacting you” should give the company a fighting chance at maintaining privilege.

The California matter is a reminder that routine business communications cannot be shielded by privilege.

SUPREME COURT MAKES FTC’S JOB MORE DIFFICULT

For years, pursuant to Section 13(b) of the FTC Act, the FTC has been able to pursue violators in court for permanent injunctive relief as well as restitution or disgorgement. However, a question arose as to whether Section 13(b) actually allows a federal Court to award equitable monetary relief of this nature. 

Yesterday, the Supreme Court answered the question in the case of AMG Capital Management, LLC v. FTC.  The FTC may not seek restitution or disgorgement under Section 13(b) of the FTC Act. 

While the FTC may still seek monetary relief after it has engaged in administrative proceedings and issued cease and desist orders, this ruling is a significant blow to its enforcement powers.  Administrative proceedings typically take longer and are more cumbersome.  Restitution and disgorgement under Section 13(b) were effective tools that I used at the FTC to address consumer fraud.   

It will be interesting to see how this ruling affects the FTC’s approach as to future consumer protection matters.

COVID-19 CONSUMER PROTECTION ACT CLAIMS FIRST CULPRIT

Sometimes, companies decide to “test” the market with their advertising before having adequate substantiation. If they are first-time offenders, the mistaken belief is that the FTC will not do much to them if they are caught for violating Section 5 of the FTC Act.  They think that the FTC will merely require them to take the product off of the market.

Enter the COVID-19 Consumer Protection Act (“Act”), which was enacted in late December 2020 for the duration of the COVID-19 public health emergency. This Act allows the FTC to seek civil penalties against first-time offenders that violate Section 5 of the FTC Act by engaging in deceptive acts or practices “associated with the treatment, cure, prevention, mitigation, or diagnosis of COVID-19.”  Indeed, the FTC brought its first case just last week against a company for marketing Vitamin D and Zinc products that were allegedly as, or more, effective than currently available vaccines.

Per the Act, the FTC can seek a maximum civil penalty of $43,280 per violation. However, it is unclear how this penalty will be applied.

The lesson is that companies marketing products in the COVID-19 space need to be weary of the significant civil penalties associated with this Act.  First-time offenders of Section 5 of the FTC Act are no longer insulated from civil penalties while this COVID-19 law is operative.

 

DON’T FORGET ABOUT THE WEBSITE

Sometimes, companies spend significant resources trying to develop a particular theme for an advertising campaign while ignoring even more egregious claims being made on their website.  So how does this happen? There is a disconnect between Legal and Marketing.

Legal might approve a particular ad and then Marketing decides that it can use a portion of it in another context because it has been “cleared.”  The problem is that ads are vetted based on the “net impression” that is made on consumers.  As such, taking a claim out of the context of the particular ad can cause an issue.

Often, companies list customer testimonials on their website, which contain atypical performance-related claims. They think that since they are truthful, there isn’t any sort of liability, which is untrue.  Indeed, the performance claims (e.g., saved $1000) may be even more aggressive than the claims being vetted for use in the primary ad campaign. 

Disclaimers are another area of concern. While certain disclaimers may have been approved for use in print advertising, they may not be effective when presented online because consumers can’t see them. 

Simply stated, one size does not fit all when it comes to advertising. As such, companies should take a holistic approach to ensure that claims are being properly presented in all respective media.

NO NEWS IS STILL WORTHY OF AN UPDATE

Lawyers like to have many clients. However, dealing with so many different problems, lawyers sometimes fail to realize the impact that an issue has on a particular client. 

It is like going to the doctor and awaiting test results. You want your doctor to be as concerned about receiving your results as you are. If it is a Friday afternoon, you want your doctor to call you and let you know that s/he is on top of the issue even if there is nothing new to report before you head into the weekend.

It is the same with the law. Clients want to know that you are on top of their issue even when there is new nothing to report. Providing periodic updates will assure clients that you have not forgotten about their issue and will help to ease their anxiety.  And while it is up to you, you might want to provide these non-material updates on a non-billable basis. The goal is to maintain a long-term relationship, not to nickel and dime clients. So, remember that sometimes “no news” is still worthy of an update. Your clients will thank you.

WHAT LAW SCHOOLS DON’T TEACH YOU

I was the first person in my family to become a lawyer so everything was new to me. While law school taught me how to write a brief, it failed to prepare me for law firm life. 

In the past 25 years, I’ve made a lot of mistakes.  However, as a result of these mistakes, I’ve developed a laundry list of lessons, which I will share in the upcoming weeks. Hopefully, they will help you as you navigate your law career.  There are a lot of great lawyers out there competing for work. There are few trusted advisors.

ALL NDAs ARE NOT CREATED EQUAL

Experienced attorneys have learned this lesson the hard way. There is not a “one size fits” all non-disclosure agreement. The language depends on the circumstances. Are you the party disclosing the information or receiving it? If you are disclosing the information, you’ll want to be sure that it captures all of the information and has convenient remedies if there is a breach.

Conversely, if you are receiving confidential information, you’ll want to make sure that the disclosing party clearly marks all “confidential” information so that there is no confusion in the event of a dispute.  This means that if information is orally conveyed, it should be followed up with a written confirmation that memorializes the discussion as “confidential.”

Similarly, the receiving party will want to make sure that it protects its ability to continue to use information already in its possession or learned from another source. As such, there should be carve outs expressly pertaining to these issues.  If you are the disclosing party, you may want to require that the receiving party have prior written evidence of its possession of such information.  However, if you are the receiving party, you may view this as being too onerous, especially if your company is not great about maintaining historical records.

In the patent context, an often overlooked area pertains to “improvements” to the disclosed technology. Technically, whoever invents the “improvement” is the owner. However, the discloser can certainly take the position that but for its disclosure, the improvement would have never happened and as such, it should own any improvements.

In short, there are many potential traps associated with NDAs and enclosed are just a few.  As they don’t need to be too lengthy, NDAs are often overlooked and quickly signed. However, they can be an extremely important tool to protect a company’s rights and as such, should be carefully tailored to meet a company’s needs. Beware. One NDA may not be adequate for all situations.

PATENT PROSECUTORS BEWARE: YOUR BILLS COULD COME BACK TO HAUNT YOU

Not much time is devoted to training lawyers how to record their time. It rarely becomes an issue in litigation so not much thought is given to it until creative litigation counsel pushes the issue.  Last week, a Court in California issued a discovery order seeking the patent prosecutor’s invoices in connection with the opposing party’s patent prosecution laches and inequitable conduct claims.  The Court held that the non-privileged aspects of the patent attorney’s invoices could be relevant as to “when each particular prosecution matter was opened, how long it took between the initial opening and when the application was first filed, what activities occurred during prosecution of each application, when each activity occurred, and how much time was spent on the activity.”  Equally disturbing, the Court found that the amount of annual compensation received by the patent attorney for prosecuting the patents-at-issue was discoverable in connection with the “specific intent to deceive” aspect of the asserted inequitable conduct claim.  The Court also noted that the amount of annual compensation could be relevant to the patent attorney’s credibility. 

Recording time is a daily task that has fallen under the radar for most firms. This case may be an anomaly, but patent prosecutors should take notice.  Most lawyers merely assume that their bills will never make their way into court.  However, in this case, various time entries could create some issues.

WHAT DOES IT TAKE TO FILE A COPYRIGHT CASE?

A perplexing question for litigators is whether copyright owners need to receive their registration before suing. In certain jurisdictions, they could file as long as they had an application on file. In others, they had to wait until a registration issued or action was taken on the application. Finally, the Supreme Court will resolve this looming issue as it agreed to hear the issue in the case of Fourth Estate Public Benefit Corp. v. Wall-Street.com LLC.

END OF AN ERA FOR TEXAS? SUPREME COURT RULES ON PATENT VENUE

Today, in the long-awaited case of TC Heartland v. Kraft Foods Group Brands, the US Supreme Court unanimously determined where a   domestic corporation “resides” for purposes of establishing proper venue in patent cases.  In short, a domestic corporation “resides” only in its State of incorporation. 

Why is this relevant? And will this have any effect on patent infringement cases going forward?

For years, if it could be shown that a company was subject to personal jurisdiction in that district, then it “resided” in that district and venue was proper.  As such, many plaintiffs brought cases in pro-plaintiff jurisdictions, like Marshall, TX, even though defendants’ principal places of business were elsewhere. 

Going forward, in patent infringement lawsuits, there will be two choices to bring cases: (1) where the US defendant is incorporated or (2) where “the [US] defendant has committed acts of infringement and has a regular and established place of business.” 28 U.S.C.§ 1400(b)(emphasis added).  The focus may now shift to where companies have their “regular and established place of business.”  States, like Delaware (where many companies are incorporated) or California and New York (where companies have established businesses), could become the new forums of choice.