SCOTUS Declares Lanham Act’s Prohibition Against Registering Disparaging Trademarks Unconstitutional

Posted in GT Alert, Intellectual Property & Technology

On June 19, 2017, the U.S. Supreme Court issued its decision in Matal v. Tam, affirming the Federal Circuit and holding that the Lanham Act’s prohibition against registering disparaging trademarks is unconstitutional because it “is not ‘narrowly drawn’ to drive out trademarks that support invidious discrimination.”

Background

The Lanham Act is a federal law that governs the use and registration of trademarks in the United States. Portions of the Lanham Act tell the Trademark Office how to examine trademarks. One rule is that the Trademark Office cannot approve proposed trademarks that are confusingly similar to already-registered trademarks. Another rule is that the Trademark Office cannot approve proposed trademarks that are immoral, scandalous, or disparaging. Most of these rules have existed since at least 1946, when the law was enacted.

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Sixth Circuit Refuses To Stop Collective Action Notice To Employees with Individual Arbitration Agreements

Posted in Labor & Employment

A Sixth Circuit opinion filed this week reaffirms what experienced Fair Labor Standards Act (FLSA) attorneys have known for some time:  when it comes to employer arbitration programs, they are not always the panacea that employers (and their lawyers) believe them to be. In Taylor v. Pilot Corp. et al., Case No. 16-5326, a plaintiff-employee filed a FLSA collective action against her employer. As is typical, she promptly asked the court to authorize the sending of notice of the lawsuit to other “similarly situated” employees, asking if they wanted to participate, or “opt in,” to the lawsuit. The defendant employer opposed, arguing in part that numerous putative collective action members were party to arbitration agreements that prevented them from participating in class, collective, or group actions. The district court nevertheless authorized sending the notice – including to those employees who had agreed to arbitrate any disputes they had with the defendant on an individual basis. The Sixth Circuit declined to disturb the district court’s decision to send notice to employees with individual arbitration agreements, holding that it lacked jurisdiction to do so because conditional certification decisions under the FLSA, unlike class certification decisions under Rule 23, are not subject to interlocutory appeal. The net effect is a ruling that arguably shifts the court’s role, tacitly authorizing broad notice programs in FLSA collective actions to include employees who admittedly may not be able to participate in the litigation due to an agreement to arbitrate.

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The DOJ’s Evolving View of the Interplay Between the Federal Arbitration Act and the National Labor Relations Act

Posted in Gaming, Labor & Employment

Employers in the gaming and hospitality arena are eagerly awaiting the results of the upcoming changes to the legal landscape that are expected to emerge from a business-oriented administration. These employers have long tried to reduce the costs and length of litigation, particularly in the context of wage and hour claims, by requiring employees to arbitrate work-related disputes on a bilateral, rather than collective or class-wide, basis.

The Trump administration has already begun to change course regarding the legality of class action waivers, which is affecting employers in dozens of cases. In a rather expected move, the Department of Justice now says it no longer believes that class action waivers in arbitration agreements infringe upon workers’ Section 7 rights under the National Labor Relations Act (NLRA). On June 16, the Department of Justice filed an amicus brief with the Supreme Court in NLRB v. Murphy Oil USA, Inc., which oral arguments on this issue are scheduled for October. The DOJ’s brief argues that, “Nothing in the NLRA’s legislative history indicates that Congress intended to bar enforcement of arbitration agreements like those at issue here…And while the National Labor Relations Board’s (“NLRB” or “Board”) reading of ambiguous NLRA language is entitled to judicial deference, the Board’s analysis of the interplay between the NLRA and the FAA is not.” The DOJ acknowledges that it previously filed a petition for a writ of certiorari on behalf of the NLRB, but that after the change in administration, it reconsidered the issue and has reached the opposite conclusion.

The saga started in January 2012 with the controversial ruling in D.R. Horton, Inc., in which the Board ruled that agreements between an employer and its individual employees interfere with the employees’ right to engage in concerted activities if the agreements require arbitration of work-related disputes on a bilateral rather than collective or class wide basis. This issue has created a split among the circuit courts. On review, the Fifth Circuit rejected the Board’s D.R. Horton analysis and held that enforcement of the challenged arbitration agreement would not deny a party any statutory right because the use of class action procedures is not a substantive right under the NLRA. The Seventh and Ninth Circuits have disagreed. In Epic Systems Corporations v. Jacob Lewis, the Seventh Circuit affirmed a district court’s ruling that an arbitration agreement requiring employees to waive the right to participate in a class proceeding was invalid and unenforceable under the NLRA.  In a similar case, the Ninth Circuit reversed a district court’s order granting an employer’s motion to compel bilateral arbitration. The Ninth Circuit held that the NLRA gives employees a “right to pursue work-related legal claims together” and that the employer had violated that right by requiring employees to resolve their legal claims in separate arbitration proceedings. Most recently, the NLRB’s General Counsel reaffirmed the Board’s prior decision in D.R. Horton, Inc., notwithstanding the Fifth Circuit’s ruling rejecting that decision, by issuing a complaint against Murphy Oil USA, Inc. for requiring its employees to waive their rights to commence or participate in a class action.

In October, the Supreme Court will address this split among the circuits and hear Murphy Oil, Epic Systems, and the Ninth Circuit case. Notably, on June 16, the NLRB announced that the Acting Solicitor General of the United States has authorized the NLRB to represent itself at the hearing. The General Counsel’s office, headed up by Richard F. Griffin, Jr. until his term ends in November, will represent the Board. It is unclear whether the DOJ will face off with the General Counsel, given its new take on this issue.

It is currently unclear how the U.S. Supreme Court will decide this issue in October, or what effect the Department of Justice’s new position will have on its ultimate ruling. Either way, it is likely that employers will soon have new guidance on whether class waivers in arbitration agreements infringe upon workers’ Section 7 rights. Shortly after the hearing, President Trump is expected to nominate a new General Counsel whose views will certainly align with the business-friendly Trump administration. While we wait for the Supreme Court’s ruling and at least until Griffin’s term ends, employers should continue to consult counsel when considering including class waivers in their arbitration agreements.

Eleventh Circuit: Obtain a Copyright Registration before Initiating Litigation

Posted in Intellectual Property & Technology

According to U.S. copyright law, an original work of authorship receives copyright protection from the time the work is created in a fixed form. However, when can a copyright owner sue an alleged infringer for copyright infringement?  Is it sufficient that a copyright owner merely filed an application for registration with the U.S. Copyright Office or must the copyright owner wait until the Copyright Office either issues or refuses to issue a registration certificate? On May 18, 2017, the Eleventh Circuit widened the circuit split in its ruling, holding that the Copyright Office must register or refuse to register the copyright prior to the filing of a copyright infringement suit.

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Whack-A-Mole in Ransomware – Suggestions for Fighting the Evolving Problem

Posted in Cybersecurity

As you may have heard, a serious cyber security ransomware attack called WannaCry surfaced on Friday, May 12, and has spread across the globe. It has been described as a cyber pandemic. The initial attacks shut down hospitals in the U.K. and also Asia. Ransomware refers to malware that locks or threatens to lock a user’s computer systems unless a sum of money is paid.  Ransomware, like most forms of cyber attacks, constantly morphs in response to successfully deployed defenses. As defenders succeed in blocking a pathway, the malware pops up in a morphed version, requiring further changes in defensive tactics. Dealing with ransomeware is just like playing Whack-A-Mole, but with serious potential consequences. In today’s world, where attackers are often very well-funded, it is important to work together with others to mount a successful defense.

As the WannaCry ransomware is tackled, new variations are emerging. Even though the initial WannaCry Malware attack was thwarted when the kill switch was discovered, new more sophisticated variants are emerging that are more difficult to address. The WannaCry malware appears to be focusing on human vulnerability, namely the tendency of untrained users to open unexpected documents or click on unknown links, so a first step in addressing the attack starts at the ground level –by educating ourselves and our employees to detect the signs of malware attacks. Getting the word out can help others be prepared. In the event of an attack, it is important to respond quickly as the attacks are serious and ransomware continues to morph and spread.

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The FTC ‘Educates’ Celebrities & Social Media Influencers on its Endorsement Rules

Posted in FTC, GT Alert

As the power of Instagram and other social media platforms as marketing tools rises, so does the dollar figure of contracts between brands and the social media influencers (celebrities, athletes, reality stars, etc.) they use to endorse their products – some contracts are reported to be in the seven-figures. Couple this with the influencers’ ability to reach millions of consumers and the Federal Trade Commission (FTC) is taking notice. The FTC continues to keep a close eye on advertising activities by social media influencers as well as the brands themselves but historically, the FTC’s enforcement has been limited only to brands. However, in a much anticipated move, the FTC recently sent 90 letters to various influencers (including 45 celebrities) and brands “educating” them on its advertising disclosure requirements.

The FTC monitors advertising activities pursuant to the Federal Trade Commission Act, which charges the FTC with, among other things, preventing “unfair or deceptive acts or practices,” including advertising that is false or misleading in any material way. The FTC published the Guides Concerning the Use of Endorsements and Testimonials in Advertising (also known as the Endorsement Guides) to provide guidance regarding how the FTC evaluates certain endorsements and testimonials in advertising.

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House of Representatives Passes Overtime Bill to Give Workers Time Off Instead of Time-And-A-Half Pay

Posted in Labor & Employment

On May 2, 2017, the United States House of Representatives (the House) passed the Working Families Flexibility Act (the Act), which would give workers the option of receiving paid time off (PTO) instead of time-and-a-half pay currently mandated by the Fair Labor Standards Act (the FLSA). The Act passed 227-197, largely along party lines, with no Democrats in favor of it and six Republicans opposed.  The Act will now go to the Senate, where it is expected that the Act will face opposition from Senate Democrats. President Donald Trump has indicated that he would sign the Act into law if presented to him in its current form.

Under the FLSA, covered, non-exempt employees must receive overtime pay for hours worked over 40 in a workweek, at a rate not less than time and one-half their regular rate of pay. An employee’s regular rate of pay is determined on a piece-rate, salary, commission, or other basis, but the overtime pay rate must be calculated using the average hourly rate derived from the employee’s earnings. Employers determine the average hourly rate by dividing the total pay received by the employee in any work week by the 40 hours. The employer then pays the employee overtime for each hour over 40 at time-and-a-half of the average rate.

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DOL Announces Reversal of Employee/Independent Contractor Classification & Joint Employer Guidance

Posted in GT Alert, Labor & Employment

On June 7, 2017, the United States Department of Labor (DOL) reversed its previous guidance issued during the administration of President Barack Obama that broadened the circumstances in which employers could be held liable for misclassification of employees as independent contractors, and as a joint employer with a separate business.  New Secretary of Labor Alex Acosta announced that the DOL was withdrawing two letters: (1) a 2015 letter that encouraged scrutiny of employer-independent contractor relationship pursuant to the “economic realities test;” and (2) a separate 2016 letter that interpreted joint employment under the Fair Labor Standards Act (FLSA) with a separate entity as occurring, so long as both employers exercised “indirect” control over the worker.   Although the letters were never legally binding, they served as a blueprint for how the DOL enforced federal laws and represented persuasive authority to courts.

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