On February 27th, a proposed bill was introduced in Congress to curb such tactics by NPEs. If passed, the SHIELD Act, H.R. 845, would significantly reduce litigation by NPEs. The bill would require NPEs to pay the entire litigation costs, including reasonable attorneys’ fees, if the NPE fails to prove is patent is valid and infringed. The bill also requires that for the NPE plaintiff to bring a lawsuit, it has to show that it is either a university, the original inventor of the patent, or a company that is making a substantial investment in the commercial exploitation of the invention covered by the patent.

Although the bill may not be the perfect solution in stemming the unnecessary litigation brought by NPEs, it sends a strong message to NPEs that there is bipartisan support in Congress to address the tactics used by NPEs to extort money from businesses.

If you have questions about patent litigation or other intellectual property matters, please contact Janet Phipps Burkhead at 515-246-4531 or jphipps@dickinsonlaw.com

The other significant changes to the law only apply to residential construction. Within 10 days of the commencement of a residential project, a general contractor must post a “commencement notice” on the Secretary of State’s website. This short filing will contain basic information about the nature of the project, and will be linked to the project’s address, contractor’s name, and other information. If a general contractor fails to post the notice within ten days of commencing work then the general contractor forfeits his or her right to a mechanic’s lien.

When a general contractor hires a subcontractor to perform work on a residential project, the subcontractor must first run a search through the mechanic’s lien database on the Secretary of State’s website for the specific project the subcontractor will be working on. Once the subcontractor finds the commencement notice, the subcontractor must then complete a short form linking the subcontractor to the project. This is a “preliminary notice.”

The preliminary notice should be posted as soon as the subcontractor commences work. If the subcontractor fails to post a preliminary notice with the Secretary of State before final payment is made on the project then the subcontractor will forfeit the opportunity to perfect a mechanic’s lien. This new rule means that suppliers providing materials for the beginning of a project will have a lot longer to post a preliminary notice than subcontractors doing finishing work such as landscaping.

Once a subcontractor posts a preliminary notice, his or her option to perfect a mechanic’s lien is protected. If the subcontractor needs to a perfect a mechanic’s lien then he or she still has 90 days from the end of the project to perfect. Perfection should also be done online.

The Secretary of State does provide an option to post and perfect by mailing a paper form. However, using a paper form has drawbacks. Mechanic’s lien priority is determined by the order that the liens are posted to the online Secretary of State database. When a subcontractor posts or perfects a lien through the website then the lien is placed in the database instantly.

In contrast, paper filings must first arrive at the Secretary of State. Then, a Secretary of State employee must manually enter the information before it posts to the database—a process that could take up to three days from the date the filing arrives at the Secretary of State’s office.

The key points for contractors to be aware of:

Residential Construction:

1. Within 10 days of commencing work on a residential project a general contractor must post a commencement notice on the Secretary of State’s website;

a. The general contractor will receive a Mechanic’s Notice and Lien Registry (“MNLR”) number;

b. The general contractor should provide that number to all subcontractors;

2. When a subcontractor starts work on a project the subcontractor must search for the general contractor’s commencement notice and then post a preliminary notice for the subcontractor’s work;

a. The subcontractor can either use the general contractor’s MNLR number, or the project’s address to find the general contractor’s commencement notice;

3. If the general contractor has not posted a commencement notice then the subcontractor must post a commencement notice before posting a preliminary notice;

4. The subcontractor’s preliminary notice can be converted into a mechanic’s lien if the subcontractor needs to perfect a lien;

5. Priority of mechanics’ liens is determined by the order they are entered into the database;

6. Fees will be as follows:

a. Preliminary notice – $7 if filed online, $10 if filed on paper;

b. Commencement notice – $10;

c. Mechanic’s lien – $30 if filed online, $40 if filed on paper;

d. Lien waivers – Free.

Commercial Construction:

1. A general contractor on a commercial project does not have to post a commencement notice on the Secretary of State’s website;

2. A subcontractor does not have to post a preliminary notice on the Secretary of State’s website;

3. The old rules for filing mechanic’s liens on commercial projects still apply with one critical exception—liens must be filed with the Secretary of State, preferably using the online system.

At a minimum, every contractor should get on the Secretary of State’s website and create a username and password. As always, contractors and subcontractors should consult legal counsel with specific questions regarding the mechanic’s lien law changes.

There are four classifications of trademarks and associated strength. The stronger the mark, the greater protection is afforded the mark.

Fanciful marks are the strongest and are afforded the strongest protection. A fanciful mark is a made-up word that only functions as a trademark or service mark. Since the term is a made-up term, consumers are more likely to associate these new terms with your company. Some well-known fanciful marks include XEROX, POLAROID, REEBOK, EXXON, and GOOGLE.

Arbitrary marks are real words which have no relationship to the good or service. The pairing of the word with a particular good or service is random. Again, these types of marks are afforded strong protection. Some well-known arbitrary marks include APPLE for computers, IVORY for bar soap, BEEFEATER for gin, and JAGUAR for a car.

Suggestive marks ‘suggest’ rather than describe a feature or characteristic of the good or service. These marks require thought, imagination and perception to reach a conclusion about the good or service to which it applies. Some well-known suggestive marks are COPPERTONE for suntan products, GREYHOUND for bus services, CHICKEN OF THE SEA for tuna, and LIQUID PAPER for correction fluid.

Descriptive marks describe a characteristic, ingredient, quality, feature, or purpose of the good or service. These marks are not afforded a great deal of protection unless they acquire distinctiveness through secondary meaning. Secondary meaning may be acquired through long-term use and a showing of a considerable amount of money or marketing of the good or service in conjunction with the descriptive mark. Some well-known descriptive marks that have attained federal registration are BUFFERIN for analgesics, COMPUTERLAND for maintenance and repair of computers, NATURE’S MEDICINE for nutritional and dietary supplements, and WORLD BOOK for books.

The selection of your mark is just one step in the process of using and seeking registration of your mark. However, this is an important step in creating a valuable asset and establishing goodwill for your company. If you have any questions about this process, please contact Janet Phipps Burkhead at 515-246-4531.

The Dickinson attorneys listed in 2013 Best Lawyers in America are:

Howard Hagen (Banking Services Regulation Law; Banking and Finance Law), David Repp, (Tax Law; Trusts & Estates; Non-Profit/Charities Law), Ann Holden Kendell (Employment Law‐Management; Labor Law‐Management; Litigation-Labor & Employment), Jeffrey Krausman (Employment Law‐Management; Labor Law‐Management; Education Law), Dick Lyford (Commercial Litigation; Litigation-Land Use & Zoning), Rick Malm (Corporate Law; Derivatives and Futures Law; Eminent Domain and Condemnation Law, Litigation-Construction), Bridget Penick (Employment Law-Management; Litigation-Labor & Employment; Immigration Law), Russ Samson (Employment Law‐Management; Labor Law‐Management), Jon Sullivan (Banking and Finance Law; Bankruptcy and Creditor Debtor Rights/Insolvency and Reorganization Law; Real Estate Law; Mortgage Banking Foreclosure Law), Paul Tyler (Real Estate Law; Land Use & Zoning Law), John Vernon (Family Law), Marc Ward (Banking and Finance Law; Business Organizations Including LLCs and Partnerships; Corporate Law; Financial Services Regulation Law; Mergers & Acquisitions Law), Fred Schneider (Corporate Law), Bill Stiles (Land Use & Zoning Law), Jill Jensen-Welch (Litigation-Labor & Employment), Bill Serangeli (Litigation-Land Use & Zoning; Litigation-Real Estate; Real Estate Law), Ron Mountsier (Tax Law), and Christine Fleming Halbrook (Trusts & Estates).

The FFEIC’s recent paper identifies cloud computing as just another form of outsourcing with the same basic risk characteristics and risk management requirements as traditional forms of outsourcing.  As detailed in the FFEIC’s Outsourcing Booklet, a due diligence review should be performed to ensure that the provider will meet the institution’s requirements.  Following are the potential issues identified by the FFEIC related to cloud computing:

Data classification:  How sensitive is the data that will be place in the cloud and what controls should be in place to ensure it is properly protected?  Does the cloud service provider appropriately encrypt or otherwise protect non-public personal
information (NPPI) and other data?

Data segregation: Will the financial institution’s data share resources with data from other cloud clients?  If so, what controls does the service provider have to ensure the integrity and confidentiality of the financial institution’s data?

Recoverability: How will the service provider respond to disasters and ensure continued service? Do the financial institution’s disaster recovery and business continuity plans to include appropriate consideration of this form of outsourcing, the service provider’s disaster recovery and business continuity plans, and the availability of essential communications links?

Regulatory requirements: Is the service provider able to implement changes to meet regulatory requirements?

Disengagement:  In the event of a contract termination, can the institution disengage without the loss and integrity of the data for a smooth transition to another provider?

Although many of the risks identified above are applicable to any outsourced provider, cloud computing may require more robust controls due to the nature of the service.  Thorough due diligence and risk assessment specific to cloud computing services must be performed prior to entering into an agreement.

Three Guidance Documents Issued by NLRB General Counsel

In August of last year, the Office of General Counsel (“OGC”) issued a report summarizing investigations and outcomes in 14 different cases involving social media, and issued an updated report in early 2012. The first two reports focused largely on policies or provisions the OGC considered illegal. On May 30, 2012, the OGC issued a third guidance document, this time published as an Operations Management Memorandum. The most recent document discusses seven recent cases. According to the OGC, at least some of the policy language in six of those cases were overbroad and unlawful under the National Labor Relations Act (“NLRA”). However, he approved an entire social media policy in the last case this time, finally giving employers a more meaningful starting place for drafting or updating social media policies of their own.

Summary of NLRB Guidance Documents

The reports issued by the OGC can be boiled down into essentially two categories of issues:  First, was an employee unlawfully disciplined or fired for engaging in activity protected under the NLRA?  Second, did the employer violate the NLRA by maintaining a work rule that would chill employees in the exercise of their Section 7 rights?  Taken together, we can glean some insight into apparent expectations of the OGC for workplace rules and policies regulating social media activity by employees.

Non-Disparagement Provisions. Non-disparagement or similar clauses appear in most social media (or even more general) workplace policies. For example, policies often prohibit employees from “making disparaging comments about the company, co-workers, or vendors” or “discriminatory, defamatory, or harassing comments about specific employees, work environment, or work-related issues.” According to the OGC, these broad rules are unlawful.  Prohibiting “disparaging comments about the company,” for example, might include remarks that an employer isn’t treating employees fairly or paying them enough — and those kinds of remarks would be protected under the NLRA.

Defamation. Even a policy prohibiting defamatory comments is overbroad. This seems counterintuitive, because defamation is itself illegal . . . so how can it be protected? For purposes of the NLRA, the NLRB says defamatory statements do not lose protection unless the comments are not only false, but maliciously false.  The OGC says this principle applies the same in the context of social media.

Unprofessional, Inappropriate, or Disrespectful Communications. On a related note, policies often prohibit conduct or communications that are inappropriate, disrespectful, rude, offensive, or statements an employee wouldn’t want her boss to see, and so on. The OGC explained that forbidding things like “offensive or disrespectful conduct” would prohibit such a broad spectrum of conduct, a reasonable employee could interpret such a policy as intending to limit Section 7 activity.

Prohibiting Work-Related Communications. Employers often try to prohibit communications among employees about any work-related concerns. For example, the OGC has looked at a policy saying employees would face discipline if they failed to take workplace concerns first to immediate supervisor. The General Counsel said that policy violated the Act, particularly because of the threat of discipline, as it would tend to chill protected employee complaints.

In fact, the OGC indicated it’s even unlawful for a social media policy to encourage employees to vent concerns through internal mechanisms rather than social media. The OGC said it would violated the NLRA to tell employees, “You are encouraged to resolve concerns about work by speaking with co-workers, supervisors, or managers” and “to consider using available internal resources, rather than social media or other online forums,” to resolve concerns. According to the Memo, telling employees they “should use internal resources rather than airing their grievances online” would likely chill or inhibit employees from seeking redress through alternative forums, which is protected activity.

Prohibiting Friending of Co-Workers. Similarly, the OGC said telling employees to “[t]hink carefully about ‘friending’ co-workers . . . on external social media sites” was unlawfully overbroad because it would discourage communications among co-workers, and therefore interferes with protected Section 7 activity. However, earlier guidance approved of an employer policy stating that no employee should ever be pressured to “friend” or otherwise connect with a co-worker via social media. This kind of rule is specific enough, and clearly applies only to harassing conduct, so a reasonable employee would not understand it to restrict Section 7 activity. (In a similar vein, a company may be able to limit a manager from sending a friend request to an insubordinate without running afoul of the NLRA.)

Confidential Information. Employers often wish to limit online employee communication by prohibiting employees from “disclosing or communicating . . . confidential, sensitive, or non-public information concerning the company on or through company property to anyone outside the company without prior approval of senior management or the law department.”  The OGC has rejected that very policy language and similar policies.

Obviously, employers must be able to protect trade secrets and confidential information, but need to ensure they do not hinder employees’ ability to discuss things like wages and working conditions. The OGC takes issue with confidentiality provisions if the employer offers no definition or guidance as to what it considers to be confidential.

Prohibiting Use of Company Name, Logo, or Intellectual Property. In earlier guidance, the OGC concluded that a policy prohibiting “use of the company’s name or service marks outside the course of business without prior approval of the law department” to be overbroad. The OGC reasoned that employees have a right under the NLRA to use an employer’s name or logo when engaged in concerted activity – akin to electronic leaflets, picket signs, or protesting employment conditions. However, the May 2012 Memo approved of a policy instructing employees to “Respect all copyright and other intellectual property laws. For [Employer’s] protection as well as your own, it is critical that you show proper respect for the laws governing copyright, fair use of copyrighted material owned by others, trademarks and other intellectual property, including [Employer’s] own copyrights, trademarks and brands.”  According to the General Counsel, this rule passed muster because it did not prohibit employees from using copyrighted material in their online communications, but simply urged employees to respect copyright and other intellectual property laws. (He went on to say the next sentence requiring employees to “[g]et permission before reusing others’ content or images” was unlawful.)

Identifying Employer or Other Employment Information. Many employers instruct employees not to identify their employer on personal profiles, not to mention their company affiliation, not to use company email addresses, and so on. These restrictions also violate the NLRA according to the General Counsel. As he pointed out, an important function of “personal profile pages” (listing employer information, etc.) is to allow employees to use social networks to find and communicate with their co-workers at their own or other locations. Banning employees from identifying their employers would be especially harmful to employees’ Section 7 rights for that reason, he said.

Generally, an employer implements this kind of policy to prevent disclosure of a certain piece or category of company information. Instead of broadly prohibiting disclosure of identifying information, employers can accomplish their goal by narrowly drafting the policy to address the specific concerns. Additionally, pursuant to Federal Trade Commission guidance, if an employee endorses an employer’s product or service online, the employee is required to disclose the employment relationship – and the employer can be liable if the employee does not do so.

Employee Disclaimers. Employers frequently instruct employees to include a disclaimer with their social media activities. For example, in one NLRB case, a policy required employees “expressly state that their comments are their personal opinions and do not necessarily reflect the Employer’s opinions.” According to the OGC, requiring employees to make this kind of disclaimer every time they communicate online would unduly burden the exercise of Section 7 rights to discuss working conditions or criticize the employer’s labor policies.

Want to protect essentially the same business interest? Employers should still be able to prohibit employees from speaking on behalf of the company without prior authorization to do so.

Employer Disclaimers. Following the first bits of unexpected feedback out of the NLRB’s OGC about social media policies, many employers began inserting disclaimers into handbooks or policies saying something like, “nothing in this policy is intended to interfere with your rights under the NLRA.”  But the OGC says this kind of disclaimer won’t save an overbroad policy.  For example, it wouldn’t save a policy broadly prohibiting “inappropriate content” because the employee still couldn’t be expected to know what the employer deemed “inappropriate.”

Bottom Line

The key take-home (or, rather, “take-to-the-office”) messages for employers looking for meaningful guidance on social media policies include the following:

• Ultimately, make it clear to employees that your policy is not intended to reach protected communications about working conditions.  Mere disclaimer language is insufficient, so this requires careful revision of various policies.
• Use limiting language and specific examples to illustrate the intended scope of the limitations.
• Try looking at the language approved in various cases before the OGC.  The most recent guidance includes a copy of the policy approved by the General Counsel.  Although the Memo didn’t discuss every component of that policy, it offers a good starting point.

Chambers & Partners, which publishes the annual guide, bases its rankings on in-depth interviews with attorneys and clients, giving greater weight to clients’ comments. Chambers published the following comments about Dickinson Law:

“They have always been spot-on with their legal guidance.”

“(The firm) communicates well, is accessible and has great knowledge of the regulatory landscape.”

This year, Chambers recognized the following attorneys as leading individuals in their respective areas of law:

Howard O. Hagen (Corporate/M&A: Banking & Finance)

(Hagen received special recognition as a “Star Individual” and the only Iowa attorney to be named a “Star Individual” in the area of Corporate/M&A: Banking & Finance)

Jill Jensen-Welch (Labor & Employment)

Ann Holden Kendell (Labor & Employment)

Jeffrey A. Krausman (Labor & Employment)

F. Richard Lyford (Litigation: General Commercial)

Richard A. Malm (Corporate/M&A)

Mollie M. Pawlosky (Litigation: General Commercial)

Bridget R. Penick (Labor & Employment and Labor & Employment: Immigration)

Russell L. Samson (Labor & Employment)

Jon P. Sullivan (Real Estate)

Paul R. Tyler (Real Estate)

(Tyler received special recognition as “Senior Statesmen” for his “impressive handling of transactional matters” and “expertise on estate planning and trusts.”)

J. Marc Ward (Corporate/M&A)

The complete 2012 Chambers USA rankings, along with researchers’ commentary on the Dickinson law firm and its attorneys, can be found online at chambersandpartners.com.

According to the complaint, Obama for America v. DemStore.com and Washington Promotions & Printing, Inc., 1:12-cv-00889, U.S. District Court for the District of Columbia, the campaign sent several cease and desist letters without satisfaction.
Obama for America alleges that the defendants’ use of the registered mark is a deliberate and willful attempt to draw on the goodwill and commercial magnetism of the trademark and the campaign. Additionally, as is typically plead in trademark infringement matters, Obama for America  alleges that DemStore’s use of the registered logo is likely to create confusion among
consumers, as well as hurt fundraising by the campaign.

DemStore CEO Steve Schwat said in an interview that he didn’t understand why the campaign was attempting to enforce its trademark against his company when “there are hundreds, if not thousands, of companies selling material with the Obama sunrise on it” without official permission. This age old, but unsound, “reasoning” is not uncommon. Just because others are doing it, doesn’t make it right!