Ideas for Businesses and Business Owners Unexpectedly Working From Home Part I

Working from home woman business owner typing and texting.

Well, here we are, at the start of Week 2 of social distancing for Iowa and Minnesota. We are facing restrictions on travel, groups congregating, and operations of businesses. We are advised to stay at least 6 feet away from other people and (say it with me) wash our hands frequently for at least 20 seconds. We are at home with our families and our pets. We have a lot of downtime on our hands—as do our employees.

There is no sugar coating it: this is going to be a very tough time for small and mid-size businesses. Unemployment is up, and sales are down. We recently posted a list of resources for small businesses, including links to a variety of governmental agencies. We will be adding new links and those linked pages will all be updated regularly, so we encourage you to check back regularly. Please also feel free to reach out to us to suggest updates to that list. At the time of this writing, the new Families First Coronavirus Response Act, Public Law No. 116-127, is not yet in effect, and the Department of Labor has not yet provided the details about how it will address the exceptions for businesses with fewer than 50 employees. We will provide information as it becomes available.

While you and your employees are working remotely is a good time to work on some of those long-term projects you’ve been putting off—both personal and business. It may help your business emerge from this crisis in fighting shape. And if you, like so many business owners, have gone online unexpectedly, there are a number of things you may not have had to consider in a brick-and-mortar state that you should start thinking about now. We’ve put together some things to consider working on over the next weeks.

For Businesses Newly Online

If you have never run your business online before, it seems pretty straightforward: build an ecommerce website or move your yoga classes to a Zoom meeting and run with it. But there are a lot of other things to consider when you move online. Here are a few:

  • Sales taxes. If you had only one location and all of your customers came to you before, you needed to pay sales tax only for that location. The calculation changes when your customers are not coming to you. If your business is based in Iowa, look for more information from the Iowa Department of Revenue. If your business is based in Minnesota, look for more information from the Minnesota Department of Revenue. Both states may have special exceptions and updated information as the crisis unfolds, so check regularly for updates. Both states also participate in the Streamlined Sales and Use Tax Agreement, which aims to simplify the sales tax process for online retailers.
  • Website Privacy Policy, Terms of Use, and Terms of Sale. A website’s Privacy Policy explains how the website owner collects and uses data, including personal data, about people who use the website. A website’s Terms of Use are an agreement between the owner of the site and the site’s users. A website’s Terms of Sale are a contract between users who order from the site and the website owner. A Privacy Policy is required by the laws of some states, most notably California, if your website is accessible to users in those states. Terms of Use and Terms of Sale exist to protect the business owner and ensure that both parties know what happens under various circumstances—especially if an item doesn’t arrive, or needs to be returned, a prospect which you may not be relishing at the moment.
  • Liability Waivers. If you are suddenly giving fitness classes online, you have no way of knowing whether the spaces your customers are using are safe. To protect your business, you will want to ensure that your customers understand that they are responsible for ensuring they are using a safe space. If you already have a liability waiver, you may need to update it to reflect the new situation.

If you need assistance with these or any other concerns relating to your unexpected foray into e-commerce, please feel free to contact us.

For Businesses Looking for Things To Do

While it is not for the best of reasons, you and your employees may suddenly have a lot of down time from your regular business work. Especially if you are and/or you have employees scrounging for things to do in the midst of the disruption, this is the perfect time to pursue some of those long-term projects. If you don’t have your own list (or you’ve already worked through it), here are some ideas:

  • Adjust to the times. If your business’s organizing documents require any kind of in-person meeting without exceptions, it’s time to amend those. If you haven’t figured out what video chat software is most compatible with your business model (either free or paid), it’s time to find it. If you haven’t figured out how to work from home with the kids present, or if you have policies in place that make it unreasonably difficult for your employees to do so, it’s time to adjust those.
  • Get organized. Complete the filing. Make sure your electronic records are all in order. If you don’t have a system for managing customers, develop one or find a vendor who supplies one. If you’ve been thinking you’re outgrowing the capabilities of a software program or a vendor you rely on, take some time to do the research and determine what vendor offers the best solution for your business and implement it. If you aren’t there yet but might get there relatively soon, familiarize yourself with the marketplace so you’ll be ready for the transition later.
  • Get ahead. If you have a blog, create some evergreen content (content that will be timely no matter what is going on in the world). If you are a website designer, create some new templates to have ready to go for customers when they are ready to buy. Now is a good time to do any kind of preparatory work that you normally try to get ahead on in the slow times.
  • Take stock of your template agreements. I’ll soon write a post on the neglected Force Majeure clause that everyone is talking about now, but for the moment, this is a great time to evaluate the form contracts you have been using. How have they been working for your business? Do they cover everything that they should? Is there a situation that comes up frequently that isn’t included? Do they match the way your business actually operates? That last one can be a big problem if you just grabbed a form from the internet or if you simply haven’t updated your contracts in several years.
  • Work on legal compliance issues. Sometimes, compliance matters can fall by the wayside, or a new law with a lot of requirements can be too overwhelming to address before it goes into effect. Sometimes, smaller businesses rely on their small size to hope that no regulators will notice their non-compliance. Now is a good time to address the General Data Protection Regulation in the European Economic Area or the California Consumer Privacy Protection Act if you haven’t already.
  • Develop or revisit your trade secret protection regime. A trade secret is a type of intellectual property that creates value for its owner because it is secret. Trade secret protection is used to protect information and/or ideas that: 1) have actual or potential economic value if they are kept secret; 2) cannot be easily ascertained by others who are using proper means; 3) are minimally novel; and 4) are the subject of reasonable efforts to maintain them as secret. A trade secret must be protected in a way that is reasonable under the circumstances—it has to be secret enough to stay hidden, but revealed enough to be useful. Trade secrets should be protected with physical, procedural, and technological means. If you have never created a systematic method of protecting your trade secrets, or if you have but haven’t re-evaluated your method recently, now is a good time to do so.
  • Consider protecting other intellectual property. Registering copyright with the U.S. Copyright Office is not difficult, but is time-consuming. If you aren’t sure how to go about it, we offer copyright registration training remotely, and we’ll get you set up to register your own copyrights going forward. If you already know how to do it, and you suddenly have a lot of free time, now is a pretty good time to get things moving. Registering trademarks with the U.S. Patent and Trademark Office generally takes a little more work and benefits from assistance from an attorney. You can learn more about the benefits of trademark registration from this blog post.

This post is plenty long, so we will stop here; Part II will include suggestions for businesses facing changes, for people contemplating starting a new business, and for helping you to help your business.

If you would like help with any of the legal issues we’ve mentioned above, or any other legal issues, remember, we’re open and able to help with legal issues businesses are facing in this public health crisis. We offer telephone and video chat consultations, including free initial 30-minute consultations. We are also able to work with businesses facing financial hardships at this time. Please feel free to contact us to discuss your business’s options.

The PTO, the First Amendment, and Disparaging (Re)Marks

A note before we start: This post contains racial slurs because they are a part of the trademarks at issue in the cases I am discussing. After struggling with how to address this fact, I have decided to spell them out in full because 1) they are spelled out in the trademarks as well as the cases; and 2) in one case, the slur was deliberately chosen by a member of the relevant racial group as a political statement. I wish to handle this matter with sensitivity, and I welcome an open and honest discussion about this choice; if you choose to comment, though, refer to my Terms of Use for my comment policy.

By now, you have probably heard about the Washington Redskins “losing” their trademarks. Some of the reports going around are a little overblown; the team hasn’t actually lost its ability to use the trademark, but the federal trial court in the Eastern District of Virginia has ruled that the U.S. Patent and Trademark Office (PTO) acted appropriately when it decided to remove the trademark from the Principal Register (cancel the mark registration) because it was a disparaging term. The Principal Register is a list that the PTO maintains of trademarks that meet its standards for receiving certain nationwide statutory protections. Among the standards: a mark cannot be “immoral, deceptive, or scandalous matter; or matter which may disparage or falsely suggest a connection with persons, living or dead, institutions, beliefs, or national symbols, or bring them into contempt, or disrepute.” Sometimes the PTO believes a mark meets its standards and registers a mark, but later a third party introduces evidence that convinces the PTO that the mark did not actually meet the standards. That is what happened here: a group of Native Americans brought evidence to the PTO showing that the “Redskins” marks were disparaging, so the PTO decided to cancel registration. If a mark is not registered with the PTO, the owner can still use the mark, and the mark may still be eligible for common law protection. The team certainly did not lose its marks entirely. In fact, because this was a trial court decision about a PTO decision, it is not yet final by a long shot; the decision may be appealed to the Circuit Court of Appeals with jurisdiction over the trial court (in this case, the Fourth Circuit), and from there it may even be heard by the Supreme Court. The team’s marks are therefore still showing as “registered” on the PTO website.

What you may not have heard is that the Federal Circuit Court of Appeals (the FCCA) also recently ruled in a trademark case involving a racial slur, and it’s a doozie. The FCCA ruled that the First Amendment prohibits the government from denying federal registration of trademarks on the basis that they are disparaging. This overturns part of the Lanham Act, the law that allows the PTO to decide which trademarks to register, and opens the door to overturning other parts (e.g., the prohibition on “scandalous” marks). The case focused on a band named The Slants, a name selected by the group in order to reclaim a racial slur. The PTO had denied registration on the basis that the term was disparaging, the same reason it agreed to cancel registration of the Washington Redskins’ trademarks.

Why did the two courts take such very different approaches to the issue? There are several reasons, but it boils down to this: the court in the case that was decided first, the Redskins case, was a federal trial court. It was constrained by precedent (that is, by what higher courts had decided before on the same subject). The court in the Slants case (the FCCA) was an appellate court and was empowered to overturn its own precedent—and it did just that. In fact, the FCCA overturned one of the cases that the Virginia trial court relied upon in ruling against the football team. The Virginia court held that the decision not to register the mark was a form of government speech, outside the purview of the First Amendment; and that the speech was not prohibited by canceling the mark anyway. The Federal Circuit held that the government had no business constraining the speech of others by withholding the benefits associated with registration based on the content of the speech (the trademark).

What happens next could be the interesting part. For those who are unfamiliar with our court system, in the hierarchy of courts, there are many district courts throughout the country. Each district court’s decisions can be appealed to one of the twelve Circuit Courts of Appeals, depending mostly upon its geographic location. And each of the Circuit Courts of appeals’ decisions can, in turn, be appealed to the Supreme Court of the United States (SCOTUS). SCOTUS will usually only hear an appeal when there is a split among the Circuit Courts of Appeals—that is, when there is disagreement among the Circuits about how a particular legal issue ought to be handled.

The Federal Circuit Court of Appeals may have just created a split. The Virginia court’s ruling is on appeal to the Fourth Circuit Court of Appeals. If the Fourth Circuit decides not to overrule its own precedent on the subject of disparaging trademarks and the First Amendment, we could very well see the Supreme Court resolving this issue within the next few years.

My thought: it is surprising that it took this long for this First Amendment ruling to occur. The First Amendment has been methodically knocking down morality clause-like parts of statutes (like this portion of the Lanham Act) since the 1950s. At one time, the Post Office famously would not carry the book Lady Chatterley’s Lover, which it considered to be obscenity. The thought of the Post Office discriminating based on the intellectual content of the mail today is laughable. Today, the rulings upholding the Lanham Act’s prohibitions on disparaging marks have been twisting themselves in knots trying to draw distinctions between government speech and other speech. It has felt inconsistent with the progress of the First Amendment cases. I will be slightly surprised if there is still a circuit split after the Fourth Circuit rules on the Redskins case. If SCOTUS hears these cases, though, I will be shocked if this “morality clause” does not fall to the First Amendment.

What do you think?

Preventative Practices: Dodging Trademark Bullying

Various sticky trademark disputes have been in the news lately. First, there was the dispute between Apple and Proview Technology over the IPAD trademark in China (the dispute was settled on July 2). Then there was the still-ongoing dispute between the United States Olympic Committee and the knitting website Ravelry over the crafters’ use of the term RAVELYMPICS in connection with an Olympics-viewing event. My local newspaper is even getting in on the act, writing about how devastating a trademark dispute can be to small businesses.

So what can you, as a small business owner, do to protect yourself from a trademark dispute? Take some good old-fashioned advice!

  • An ounce of prevention is worth a pound of cure. Do not choose your business name or other trademarks without making sure that they are available and will not infringe on another company’s marks. This means conducting a thorough search. If you have the budget for it, hire a trademark attorney to obtain and interpret a full search report from a third-party provider. If you don’t have the budget for it, your attorney should at minimum conduct a preliminary check of potentially problematic trademarks in the U.S. Patent and Trademark Office (PTO) database and on the web.

  • Don’t cry over spilled milk. If you find that your favorite trademark is already taken, especially if it’s been taken by a company with deep pockets, take a deep breath and bid it farewell. As the examples in the Star Tribune article demonstrate, responding to an allegation of infringement can be financially devastating to a business. It is much better to let it go now and find a new mark that will better differentiate your business from the competition anyway.

  • The best defense is a good offense. Register your trademark as soon as possible. If you are operating only in one state, register it with the state. If you are operating in more than one state, register it federally with the PTO.

  • Know thyself. Keep good records regarding how you have used your trademark and in what markets. Keep copies of every advertisement you run in a file for each trademark you own (for electronic advertising, keep a record of what trademarks you have advertised in what geographic areas, your view rate, and your and click-through rate). Keep copies of complimentary (or not-so-complimentary) letters and emails from outside your immediate geographic region so that you know who has heard of your company and where they live. Keep track of where and when you have made sales. These records can be vital evidence of your geographic scope of ownership in the event of a dispute.

Follow these tips and make sure you have a great trademark attorney on your side, and you may be able to avoid disputes altogether. If not, you will be in good shape going into any disputes.

Legal Terms in Real Life: Genericide (Or: The Death of Google)

This series explains legal terms in plain language and gives examples from everyday life.

Today’s Legal Word of the Day is “genericide,” from trademark law. Genericide has been in the news recently because of Arizona resident David Elliott’s lawsuit to cancel two of Google’s trademark registrations for the term “GOOGLE” (Reg. Nos. 2,806,075 and 2,884,502). Black’s Law Dictionary (8th Ed.) defines “genericide” as: “The loss or cancellation of a trademark that no longer distinguishes the owner’s product from others’ products.”

Trademarks are words, symbols, or other source indicators (even colors, sounds, or scents) that help a consumer distinguish the products or services of one company from those of another. When a consumer is in the store, he or she can choose to purchase toothpaste labeled Crest, Arm & Hammer, Colgate, or any of a number of other toothpaste brands. The name on the box helps the consumer distinguish one from another. Trademark law is, at its heart, a form of consumer protection, although businesses, not consumers, must spend their time, energy, and money on building up and protecting trademarks as source identifiers.

As you know from our previous Legal Word of the Day, distinctiveness, there is a continuum of trademark strength, from fanciful to generic. Trademarks can move along this continuum. A mark that starts out as descriptive can become distinctive through long use and/or an advertising blitz, so that consumers associate what would be a descriptive name exclusively with a single product. For example, the clothing store The Children’s Place has at least arguably acquired distinctiveness as to its THE CHILDREN’S PLACE trademark.

Conversely, trademarks can move in the opposite direction along this continuum. A mark that starts out as fanciful or arbitrary may become the generic term for a product if consumers begin to believe that the trademark is the name of the product. This is genericide. Examples of marks that have been killed through genericide include ASPIRIN and THERMOS. Examples of marks that have at one time or another become endangered include BAND-AID, VELCRO, and TEFLON.

Whether Mr. Elliott successfully has Google’s GOOGLE trademark canceled will depend on whether he can show that the term has become so ubiquitous as a word meaning “to search” that consumers no longer associate the term with any particular search engine. He has several examples showing that the mark is often used as a verb meaning “to conduct an internet search”; however, he may have to show that consumers use the word to signify searching on any search engine, not only on Google’s search engine. This may prove difficult for him; I was unable to locate serious examples of people referring to “googling on Bing,” though parodies do exist.

Genericide is a fairly ironic death for a trademark; it signals that a company has become so successful at making its mark so well-known that the general public can no longer distinguish the trademark from the product. Genericide is death by success.

Legal Terms in Real Life: Distinctiveness

Intellectual Property Copyright Trademark Trade Secret

This series explains legal terms in plain language and gives examples from everyday life.

Today’s Legal Word of the Day is “distinctiveness,” from trademark law. Black’s Law Dictionary (8th Ed.) defines “distinctiveness” as: “The quality of a trademarked word, symbol, or device that identifies the goods of a particular merchant and distinguishes them from the goods of others.”

The United States Patent and Trademark Office (PTO) defines distinctiveness in relation to descriptiveness; a mark may be placed on the continuum between distinctive and descriptive as follows:

Distinctive ————————————————————————–> Descriptive Generic
Fanciful (invented for the sole purpose of being a mark) Arbitrary (real words that do not suggest or describe the goods or services) Suggestive (real words that require imagination to reach the goods or services) Merely descriptive (describes something about the goods or services) Generic (common or class name for the goods or services)

 

The real concern in trademark law, what makes a trademark a “strong” or “weak” mark, is whether or not the mark can distinguish the goods or services of a particular company from the goods or services of another company. This is why the PTO rates marks as distinctive or not. If the mark is describing a characteristic of the goods, it isn’t serving as a strong mark and may not deserve protection—more to the point, its owner may be trying to take words needed to describe the goods away from competitors. Here are some everyday examples:

Distinctive ————————————————————————–> Descriptive Generic
Fanciful: XEROX, GOOGLE,

KODAK

Arbitrary: APPLE (with electronics),

CARIBOU (with coffee)

Suggestive: ROLLER BLADES (with in-line skates),

COPPERTONE (with sunscreen),

UNCLE HUGO’S (with a book store specializing in science fiction)

Merely descriptive: FOR THE CURE (with charitable services for curing an illness),

TRAVELERS (with auto insurance)

Generic: USED BOOKS (for a used book store)

 

In short: distinctiveness refers to the quality of a trademark (or service mark) being unrelated to the goods (or services) it is used to identify.

Have a word or term you would like to see defined in this series? Contact me and let me know!