MA Gov. Wants State to Become Only the Fifth to Ban Non-Compete Agreements

| June 18, 2014

Massachusetts Democratic Gov. Duval Patrick has submitted legislation that would make his only the fifth state in the nation to place an outright ban on employee non-compete agreements. The legislation is part of a larger package aimed to address the state’s competitiveness with other states with large-scale technology-based enterprises where non-competes are sometimes seen as obstacles to innovation.

Massachusetts would join California, Montana, North Dakota and Oklahoma as the only states in the union that prohibit such agreements. The state is also considering adopting the national Uniform Trade Secrets Act (UTSA), on which it is one of only two state holdouts (the other being New York).

Because the Massachusetts legislative year ends on July 31, it is seen by proponents of the new law as essential that action be taken before that date. Once that date passes, any lone legislator can object to the bill continuing to be considered. Since Massachusetts will also elect a new governor before the next legislative session, it seems unlikely the bill will become law if it isn’t enacted before the end of July.

Non-compete agreements are just one way to protect a company’s trade secrets. Non-disclosure agreements, which are legal in some form in all 50 states, are a generally acceptable way to prevent the theft of company proprietary information and its use for the benefit of competitors.

The USTA explicitly states that it does not address the issue of non-competes, leaving this question up to the individual states.

 

No Patent Reform in Current Congressional Term as Senate Bill Get Yanked

| June 4, 2014

The prospects for patent law reform being passed by the current Congress disappeared last week when Sen. Patrick Leahy (D-Vt) pulled his bill after several contentious months of no consensus.

The Senate’s Judiciary Committee Chairman had been fighting to get the Senate to adopt patent reform in the wake of the House of Representatives’ overwhelming passage of legislation earlier in the session. The primary target of Leahy’s proposed bill was the conduct of patent “trolls.”

A troll is defined in Wikipedia as “a person or company who enforces patent rights against accused infringers in an attempt to collect licensing fees, but does not manufacture products or supply services based upon the patents in question.” Many in the world of intellectual property, including inventors and many law firms, view the practice as shoddy and have been supportive of legislative attempts to curb it.

Many critics of the House legislation expressed concern that it could have a strong negative impact on small inventors and companies without the resources to produce products on their own. Leahy’s bill was designed to temper some of the House bill’s provisions in an effort to respond to those critics.

Observers suspect that with the mid-term elections pending, it’s unlikely patent troll legislation will be adopted this year.

 

Trademark Panel Cancels Mark Despite Lack of U.S. Use

| June 4, 2014

In a precedent-setting case, the Trademark Trial and Appeals Board (TTAB) has rescinded a trademark even though the trademark holder doesn’t use that mark in the United States and has no plans to do so. The case, which can be found here, illustrates that the “misrepresentation as to source” provision of the Lanham Act can be a useful tool in some cases.

Bayer Consumer Care AG sells a pain-reliever in Mexico under the brand name FLANAX. (It offers the same product in the United States as ALEVE). Belmora LLC described its business in filings as “providing a…menu of OTC remedies for common ailments to U.S. residents of Hispanic background.” Several of those remedies incorporated the word “Flanax” in their names.

In addition, Belmora LLC essentially copied the packaging Bayer uses for Flanax in Mexico, including the type font and color scheme.

Belmora LLC’s contention was that Bayer was not entitled to any trademark relief under the principle that marks are territorial in nature. Bayer essentially argued that this activity should be seen as a violation of its trademark under the “well-known marks” doctrine. On this basis, companies who use marks that are well-established abroad have created similar or competing products in their own nations and used those international marks in marketing and promotion.

The TTAB essentially agreed with Bayer’s contention.

This ruling means, among other things, that owners of famous trademarks outside the United States can argue the misrepresentation of source doctrine in opposing or canceling federal trademark registrations where there is evidence of actual attempts to masquerade as the trademarked goods (a practice known in legal terms as “passing off”).

 

Be Prepared: Do Not Track Laws Will Affect Your Business

| May 29, 2014

As is so often the case, California is again leading the nation in the definition and enforcement of online privacy rules. The latest announcement from California Attorney General Kamala Harris, while not legally effective in other states, should serve as a beginning point for you to begin thinking about how your company will handle these new online privacy requirements as they emerge in your area.

California recently enacted tough “do not track” laws. In an effort to equip businesses to re-draft online privacy policies to comply with the new rules, Harris issued some guidelines. Among other things, these guidelines recommend that businesses:

  • prominently label the section of their online privacy policies that cover online tracking;
  • describe how they respond to a browser’s Do Not Track signal within the policies themselves, rather than providing a link to another website;
  • reveal in the online privacy policy whether third parties are or may collect personally identifiable information (PII);
  • explain any use they make of PII beyond what is necessary to fulfill a transaction or for the site or app to function;
  • describe what PII they collect from users, how they use it and how long they store it;
  • delineate the choices consumers have governing the collection, use and sharing of his or her PII; and
  • use plain, straightforward language, avoiding legal jargon, and publish in a format that makes the policy readable;

As always, it’s a good idea to have in-house counsel or your law firm review any revisions to your published online privacy policy.

EU High Court Ruling on Google Search Results

| May 20, 2014

The European Union’s high court has ruled that Google must respond to requests by individuals and companies to take down from search results any information that the petitioner views as outdated, inaccurate or irrelevant.

In its zeal to create a “right to be forgotten,” the Court has told Google that it is responsible for hiding it from view. I believe this ruling incorrectly places the burden on the search engine to determine when an individual’s request to remove search results should be honored.

To be clear, this decision does not require that search engines remove the underlying data from the Web.  Instead, search engines must make the underlying data harder to locate. Given that there are over 250 search engines on the Web today, implementing this decision will face technical challenges. Where the material in question is posted to a social network, it would seem more appropriate for the individual or business to take the initiative to remove (or have removed) the erroneous or offensive information.

From a strictly practical logistical perspective, this ruling also faces challenges.  Search engines will need to direct scarce resources to the task of considering these requests.  The fact that the court provided little guidance on which to base these decisions magnifies this problem.  It is also worth considering that the court has given Google or a similar search engines the power to make these decisions – are search engines the parties best equipped to be the arbiter of these requests?