Wednesday, April 9, 2014

Significant Changes Made by ROC to its Complaint and Hearing Process

By J. Gregory Cahill

For the last 25 years, the Arizona Registrar of Contractors’ enforcement procedures have been best described as “complainant driven.” That is, the ROC typically deferred to the claimant (usually a homeowner) as to whether a citation should be issued (even if the agency’s own investigation found the complaint to be without merit) as well as whether to request a formal hearing. The ROC was less a regulator and more a referee between the complainant and the contractor.

Under the ROC’s new procedures, instituted in late 2013, citations will not be issued solely at the request of the person filing the complaint. Rather, the ROC will first determine whether the evidence provided by the complainant and gathered by the ROC investigator supports a finding that there has likely been a substantial violation of law by the contractor. This procedure will place the ROC in line with other regulatory agencies both inside and outside Arizona. It will also likely result in fewer citations being issued. The intent of these changes is to allow the ROC to focus its regulatory efforts on “problem contractors” rather than on minor violations of law.

The ROC investigators are now charged with gathering all facts and making an initial determination as to whether the allegations in the complaint are substantiated. If the investigation reveals no substantial violations of law, the investigator will close the file with no further action. Notably, the complainant will have no recourse if the ROC determines that there has been no substantial violation of law.

If however, the investigator determines that there is a substantial violation of law, the ROC will have the option as to what type of discipline to pursue. Under its new graduated disciplinary scheme, if the ROC determines that there has likely been a substantial violation of law, it can choose to issue: (1) a Letter of Concern, (2) a Written Directive or (3) a Citation.

A Letter of Concern is a written warning that advises the contractor of the ROC’s concerns and that the case is closed. In its warning, the ROC can also inform the contractors that it reserves the right to reopen the matter or that it may use it as an aggravating factor in the event of future complaints. A Letter of Concern is not considered discipline and, therefore, the contractor has no right to seek a hearing on the appropriateness of its issuance.

A Written Directive is similar to the old “Corrective Work Order.” In the directive, the ROC instructs the contractor to address or rectify a claimed deficiency. The matter remains open until the ROC determines that the contractor has complied with the directive. If the contractor complies, the case is closed. If not, the ROC may proceed to issue a citation.

A Citation involves a formal complaint by the ROC charging the contractor with a substantial violation of law and the matter is referred to an Administrative Hearing. The ROC is the named complainant and it has the burden to prove the alleged violation of law. Prosecution is performed by the Arizona Attorney General’s office. In response, the contractor can choose to defend the claim or, alternatively, request a settlement conference to attempt to resolve the matter.

These changes make it even more imperative that a contractor provide the ROC with its position on the claim, preferably in writing. Contractors need to prepare to aggressively defend any claim at the outset.

Wednesday, February 5, 2014

Inside the World of Trademarks with John Blattner

John Blattner knows brands for a living. In particular, he knows what is trademarked, what can be trademarked, and how to stop another brand from infringing on your trademark. Why is this important? Because trademarks can protect a brand’s recognition and equity and that’s where trademark attorneys like John come into play.

John is a Member in Dickinson Wright’s Ann Arbor office. He practices brand creation and protection law, including trademark counseling, clearance, registration, maintenance, and enforcement both in the U.S. and overseas. He went into law after an 18 year career in publishing, marketing and nonprofit development which exposed him to his fair share of marketing and trademark issues.

“It was kind of a natural outgrowth [becoming a lawyer] of my publishing career,” John says. “I bumped into a fair amount of trademark issues that enable me to bring real-world business experience into my practice, including the fashion, financial services, cosmetics, sporting goods, automotive, technology, pharma, publishing and other industries.”

How can companies protect their brands? John says first to get clear on what trademarks you actually have. “I frequently look at a client’s web site and find names, slogans, designs, or other things that are functioning as trademarks but that the client isn’t fully aware of,” John says. The next step – especially when choosing a new trademark – is to do a clearance search to make sure someone else doesn’t already have rights: “There’s no sense setting yourself up for a cease-and-desist letter.” Then apply to register the trademark, not just in the U.S. but also in other countries where the business is or will be active. Finally, monitor the marketplace to make sure third parties aren’t infringing your rights.

All of these questions will form the answers to what John can do to help you protect your brand, especially if you feel another company or person is infringing on your brand. Trademark infringement can lead to confusion among consumers and dilute the strength of your brand in the marketplace. Proper protections need to be in place to combat trademark infringement.

John has extensive experience in IP enforcement, including a wide range of patent, trademark, copyright, and antitrust litigation in state and federal courts; appellate litigation in state and federal courts of appeals, including the Federal Circuit; and opposition and cancellation proceedings before the Trademark Trial and Appeal Board. All of this experience has led to an adjunct professorship at the Michigan State University College of Law where he focuses on trademarks and unfair competition.

“I teach my courses from a practitioner’s point of view,” says John. “You inevitably have to cover a lot of ground throughout the semester and I choose certain areas of law based on my experience. What I try to impart on my students is when you are learning an area of trademark law, to not only think about it from a lawyer’s point of view but to think about it as if you are the business owner as well.”

His prior career and his practical views on trademark law make John a valuable commodity to his clients. He hopes in the end, that his real-world experience and his passion for brand awareness will help his clients think about the legal implications first when trying to launch a new product/program rather than having to scramble afterwards when that inevitable cease-and-desist letter shows up on his client’s doorstep.

To learn more about John and his practice, please click here and to learn more about John’s insights into branding and trademark, check out his newsletter, Brandmarking.

Wednesday, January 29, 2014

Tennessee Court of Appeals Interprets Exclusionary Clause in Automobile Casualty Insurance Policy

By John E. Anderson

Recently, the Tennessee Court of Appeals issued an opinion involving the interpretation of an exclusionary clause in an automobile casualty insurance company. In the case of Weed v. First Acceptance Insurance Company of Tennessee, Inc. No. E2013-00150-COA-R3-CV, 2013 Tenn. App. LEXIS 572 (Tenn. Ct. App. Aug. 29, 2013), the issue before the Court was an interpretation of the “regular or frequent operator” exclusion. This exclusion precludes coverage for a loss or accident arising from an accident which occurs while the automobile is being driven in any manner by an unlisted driver who is a regular or frequent operator of any vehicle insured under the policy.

In Weed, Caleb Jenkins, who was not listed on the policy as a “driver,” was involved in an accident while driving the vehicle owned by Kelly Weed (“insured”). The insurer, Federal Acceptance Insurance Company of Tennessee, Inc. (“insurer”) moved for summary judgment, relying upon the “regular or frequent operator” exclusion. In support of its Motion, the insurer filed an affidavit of its claims processor who testified that she received a call from the insured reporting her claim and took a recorded statement. In the statement, the insured advised that the driver was a fairly regular driver who drove the vehicle once or twice a week for some six months. The insured did not deny or dispute making this statement nor did she deny its accuracy.

The trial court held that the driver was not a “regular” operator of the vehicle but was a “frequent” operator of the vehicle. It granted the insurer’s Motion for Summary Judgment, finding the policy exclusion was not ambiguous when attributing the ordinary meaning of the words in the exclusion.

The issue on appeal was whether the trial court erred in holding that driving a vehicle once or twice a week for six months constitutes regular or frequent use and falls within the exclusionary clause. The Tennessee Court of Appeals reviewed prior case law and dictionary definitions of the terms “regular” and “frequent.” It noted that the insured described the driver, at the time of the accident, as a “fairly regular” driver of her car who had driven it once or twice a week for the six months prior to the accident. “By this admission, insured established that Jenkins had routinely been driving the vehicle at fairly short intervals, for a total of between 26 and 52 times in the six-month period. Under the circumstances, we hold that Jenkins’ use of insured’s vehicle was ‘regular or frequent’ and therefore there was no coverage for loss resulting from the accident under the unambiguous terms of the exclusionary clause.”

Wednesday, January 22, 2014

How to Win the Olympic Gold Medal in the Super Bowl of Trademark Infringement

By John Blattner

Like any red-blooded American sports fan, the realization that both the Super Bowl and the Winter Olympics are only a few weeks away makes my thoughts turn to only one thing.

Trademark infringement.

Both of these iconic events have famous trademarks with extensive legal protection – and owners who take their rights very, very seriously.

The National Football League owns trademark rights, not only in its own name and logo, and in the names and logos of all 32 member teams, but also in the word SUPER BOWL and related logos. The league has been known to take a dim view of people using its registered marks without permission.

Not that people haven’t tried, of course. Applications to register all of the following have been filed in the Trademark Office, and all have failed:

  • Super Bowl of Motocross
  • Super Bowl of Poker
  • Sooper Bowl of Comedy
  • Super Bowl of Portable Restrooms (I swear I didn’t make that up).

There are others. And those are only the ones that someone applied to register. Imagine how many there must be that weren’t applied for.

But the strength of the NFL’s rights pale in comparison with those of the people who run the Olympics, whose marks are protected not by the usual trademark laws but by their very own statutes, whose liability standards and potential penalties are especially stringent.

Here in the U.S., the Ted Stevens Olympic and Amateur Sports Act, 36 U.S.C. § 220501 et seq., gives the United States Olympic Committee exclusive control over the following symbols, terms, and phrases, among others:

  • The Olympic symbol (five interlocking rings representing the five continents)
  • “Olympic”
  • “Olympiad”
  • “Citius. Altius. Fortius.” (“Swifter. Higher. Stronger.”)

The statute permits the USOC to sue anyone who, without permission, uses the Olympic trademarks to market goods or services, or to promote a theatrical exhibition, athletic performance, or competition. A showing of likelihood of consumer confusion – usually the touchstone of trademark infringement – is not required. Other countries have their own statutes, which may differ in various respects.

Two years ago, the Summer Olympics in London produced a number of stories about small-town merchants who got nasty-grams from the sponsoring committee. Some of the situations – like the butcher who made a five-ring display out of sausage links – were mildly amusing. One shudders to think about what kinds of cease-and-desist letters they write in Russia…

The lesson is simple. If you’re thinking about using any Olympics- or Super Bowl-related words, slogans, or symbols to market your goods and services, think again. And talk to a trademark lawyer before proceeding.

Wednesday, January 15, 2014

Senate Passes an Antitrust “Whistleblower” Protection Bill

By James M. Burns

On November 4, 2013, the United States Senate passed S. 42, the “Criminal Antitrust Anti-Retaliation Act,” by unanimous consent. The legislation, introduced back in January of 2013 with bipartisan support (Senators Leahy (D) and Grassley (R)), provides protections to employees that provide information to the federal government about possible antitrust violations by their employer. Specifically, no employer may “discharge, demote, suspend, threaten, harass or in any other manner discriminate” against an employee that, in good faith, reports a potential antitrust violation to the federal government.

An employee whose rights under the Act has been violated may either file a complaint with the Secretary of Labor or commence his or her own private lawsuit in federal district court seeking relief for the alleged violation of the Act. Prevailing plaintiffs under the Act can obtain all of the following forms of relief: (1) reinstatement with the same seniority status that the employee would have had, absent the discrimination; (2) back pay, with interest; and (3) compensation for any special damages incurred, including attorney’s fees, expert witness fees and litigation costs.

The bill was received in the House on November 12, 2013, and, at present, is being “held at the desk” (i.e., is awaiting either referral to a House Committee for further action or being place on the House calendar for a vote). Given the apparent bipartisan support for the legislation, it would not be surprising if, rather than being sent to a House committee for further consideration, it is instead presented directly to the full House for vote (or unanimous consent) once Congress returns from its Christmas recess in January. If enacted, the legislation would be codified as Section 216 of the Antitrust Criminal Penalty Enhancement and Reform Act of 2004 (Public Law 108-237).

Thursday, December 19, 2013

Homeowners Cannot Assert Claims Against Subcontractors for Breach of Implied Warranty

By Stephen E. Richman and Todd A. Baxter

Since 1979, Arizona courts have recognized an implied warranty of workmanship and habitability (“Implied Warranty”) regarding new home construction. Although a contractual relationship (“privity”) is generally required to bring a claim for breach of the Implied Warranty, since the doctrine was first recognized, the Arizona Supreme Court has created two exceptions.

The first exception allows a subsequent home purchaser to bring an Implied Warranty claim against a builder-vendor, because latent defects in a home are equally devastating to original and subsequent purchasers, and the builder-vendor, being in the better position to prevent major problems, should bear the costs of poor workmanship. More than two decades later, the Supreme Court created an additional privity exception, allowing Implied Warranty claims against a non-vendor builder. In that instance, the court reasoned that “innocent buyers of defectively constructed homes should not be denied redress on the implied warranty simply because of the form of the business deal chosen by the builder and vendor.”

In Yanni v. Tucker Plumbing, Inc., No. 2 CA-CV2013-0024 (App. Nov. 20, 2013), the Arizona Court of Appeals denied a request by a group of homeowner plaintiffs to create another privity exception and allow homeowners to bring Implied Warranty claims against subcontractors. The plaintiffs asserted that the Implied Warranty arises from the construction of the home, rather than merely from the contract between the purchaser and the vendor, that the construction is performed by the subcontractors rather than the general contractor, and, therefore, that the claims “naturally extends to and is properly asserted against [subcontractors] who actually worked on the home.” Indeed, the plaintiffs asserted that the contractual privity requirement “has been abolished in the new home setting.”

The Court of Appeals disagreed, noting that “[t]here is a distinction between the creation of an implied warranty by virtue of construction of a structure and the contractual relationship required to assert its breach as a cause of action[,]” and that the policy reasons underlying the creation of the two previous exceptions were absent in this case. Finally, the court emphasized that its decision not to allow Implied Warranty claims against subcontractors did not leave the plaintiffs without a remedy, as they could seek relief from the homebuilder for the subcontractors’ defective work.

The decision in Yanni leaves important questions unanswered. Whether a homeowner can sue a subcontractor in negligence – which would require the existence of a duty from the subcontractor to the homeowner – remains an open question. Also, the court did not decide whether there is an Implied Warranty running from subcontractors to the general contractor.

Tuesday, December 17, 2013

Are you ready for the coming explosion of cybersquatting?

By John Blattner

The next wave of domain-name barbarians is gathering outside the gates. Here’s what you need to do now to keep your trademarks, and your e-commerce, safe.

Almost every business has had to deal with cybersquatters – pirates that launch web sites designed to divert customers by using domain names that mimic the business’s trademarks.

Until now, the war has focused primarily on domain names within the “.com” sphere. But the battlefront is about to expand – dramatically.

The international body that runs the Internet (called ICANN) has recently begun releasing new generic top-level domains (“gTLDs”). In addition to the familiar “.com,” this program makes it possible to set up a business name, a trademark, a geographic designation – virtually any word in any language – as a gTLD in its own right. Almost 2,000 applications for gTLDs were filed, and more than 1,000 will ultimately be granted. Because many of the new gTLDs will sell domain names to all comers without any attention to whether they are violative of someone else’s trademark rights, they will create a giant new arena in which domain name pirates can operate.

So what should you do now to protect your brands and your domain names?

1. Lock up the family jewels.

ICANN has mandated the creation of a Trade Mark Clearing House, in which owners can list their registered trademarks. It has also required that all newly-released gTLDs offer a 30-day “Sunrise” period in which owners of marks listed in the TMCH get first crack at registering them as domain names. In addition, during the Sunrise period and for sixty days thereafter, other parties that apply for those marks will be advised of the TMCH listing and, if they pursue their application, the owners of the TMCH-listed marks will be notified, giving them an opportunity to invoke various dispute-resolution procedures.

The Trademark Clearance House is now in operation, and it makes sense for brand owners to list at least their “core” trademarks there. These are the marks in which you have invested the most time, energy, and money; the ones most closely associated with your business; the ones you have already had to protect most often in the .com realm.

2. Plan now to make preemptive registrations in gTLDs of particular interest.

An important limitation of the Trade Mark Clearing House is that it protects only against domain names that are identical to your registered trademarks, not to common misspellings, typos, and so on. This leads to a second important step: being prepared to file preemptive domain name registrations for common variations of your brand.

Now is the time to identify specific gTLDs in which you will be especially interested in and to watch for their release dates. For instance, if you’re in the auto industry you will likely want to be active in such gTLDs as “.auto,” “.car,” and the like. As soon as the Sunrise period for one of your identified gTLDs opens, be ready to file immediately. This is an instance where the best defense is a vigorous offense.

Many brand owners were caught unawares years ago when the Internet burst upon the scene, and control of brand-related domain names became crucial. There’s no way to stop the next wave of cyberpiracy. But there’s also no reason not to be prepared for it.