What's in a name?  Sometimes, a great deal of value.

Apple Computers?  Nike shoes?

Many of our clients approach the firm to assist them create legal entities to carry out what are often well-considered business plans.  Those plans often involve the use of a particular name or logo to describe the business and its products or services.

However, despite taking pains to develop those names or logos, sometimes our clients have not given sufficient thought to investigating whether the use of the proposed name or logo violates the rights of others, and if not, how to properly protect the name or logo.

That's where we at the Chapar Firm can help.

A trademark is a name, phrase, symbol or design or a combination of these elements that is used to identify and/or distinguish the goods of a company.  A servicemark is used to identify and/or distinguish the services of a company or individual.

The purpose of having a trademark or servicemark is to prevent any confusion to consumers as to the source of the goods or services.  Registering a mark at the federal level provides important legal protection for your "brand" by preventing others from using your mark to sell the same or similar products or services.  Federal trademarks are protectable nationwide and for related goods and services.  One a federal trademark application is filed, it is searchable through the United States Patent and Trademark Office ("USPTO"), allowing others who may be considering the same name for their similar goods or services to have notice that the name is being used by another.

Not all names are trademarkable.  The more descriptive the mark is to the product or service, the less likely it is to be granted exclusive trademark rights.   The more "fanciful" or "arbitrary"  the mark, the more likely it will be protectable.  The more "suggestive" or "descriptive" the mark, the less protectable it is.  

Fanciful marks are generally "coined" terms that have no meaning before their use as a trademark. Fanciful marks are afforded the greatest amount of trademark protection.  "Starbucks" and Kodak" are examples of fanciful marks.  

An arbitrary mark is one that uses a common word having no relationship to the product or service; therefore, they are generally easy to trademark.  An example of a arbitrary mark is "Target" or "Apple."

A suggestive mark is one which alludes to some quality or characteristic of the product or service and requires the consumer to use their imagination to determine the exact nature of the mark.  

Lastly, a mark that is descriptive is one in which the consumer can identify the product or service provide simply by reading the mark.  Descriptive marks are not initally entitled to registration because descriptive marks also describe the products or services of competitors.  Descriptive marks may be trademarkable if the owner can show that consumers identify the descriptive term only with that owner.  That is usually difficult and expensive to attempt and often the owner is unable to prevent others from using the mark.

Please note that registering a mark does not prevent everyone from using the same mark.  Trade names and marks are not registered "generally."  Rather, they are registered in particular classes of goods and services.  Thus, the registration of "Apple" in computing does not bar an apple grower from using the word "apple" in connection with the sale of fruit.

However, if a mark is famous, in some circumstances it can be protected even in classes in which it was not registrated   A famous mark is one that is so famous that it is reasonable to believe that there would be consumer confusion if the mark were used by another, even for unrelated goods and services.  A good example of a famous mark is "Coca-Cola."   

One registraton of a mark is approved by the USPTO, the owner must aggressively protect the mark to keep it from falling into the public domain.  If the owner of a makr allows the mark to be used in unauthorized ways or in ways that cause the consumer to cease identifying the source of the specific goods or services, the protection of the mark may be lost.  Further, rights may be lost if the mark becomes generic.  For example, the word "cellophane" was originally a protected trademark used to identify the "Cellophane" brand of plastic wrap.  The word became so widely used to describe that type of wrap, regardless of the source, that it lost its protection.

Arbitrary marks are common words that are used in such a way that their normal meaning has no relationship to the goods or services to which they are applied.

Trademark law should be an early consideration in any business that markets to the public.  An early investment may prevent you from being forced by a prior registrant to give up a name that you have spent a lot of time and money branding.  It also can ensure that you have the highest level of protection against those who may infringe upon your name or mark.

Call us with any questions.

On its face, whether to include a binding arbitration clause may seem like the least important aspect of the big contract you have asked your attorney to consider.  While it might not be the most important aspect of the deal, an arbitration clause at least warrants a brief discussion with counsel. A dispute is usually resolved faster in arbitration than if it had been litigated in the court system, discovery is informal, and, as a result, the attorney’s fees are often lower.  With all that upside, why does anyone still go to court?  The very short answer is limited judicial review. 

O.C.G.A. §9-9-13(b) provides:

The award shall be vacated on the application of a party who either participated in the arbitration or was served with a demand for arbitration if the court finds that the rights of that party were prejudiced by:     (1) Corruption, fraud, or misconduct in procuring the award;     (2) Partiality of an arbitrator appointed as a neutral;     (3) An overstepping by the arbitrators of their authority or such imperfect execution of it that a final and definite award upon the subject matter submitted was not made;     (4) A failure to follow the procedure of this part, unless the party applying to vacate the award continued with the arbitration with notice of this failure and without objection; or     (5) The arbitrator's manifest disregard of the law.   

“Absent one of these statutory grounds, the trial court must confirm the award.”  Airtab Inc. v. Limbach Co. LLC, A08A1909 (2009). Manifest Disregard of the Law   If a court returns a verdict that reflects a misapplication of law to fact, the aggrieved party in most cases has a right of appeal. In contrast, if the same dispute were arbitrated, the standard applied is manifest disregard of the law.  “[T]he concept of manifest disregard ‘has never been the equivalent of insufficiency of the evidence or a misapplication of the law to the facts.’ It is a much narrower standard, requiring ‘a showing in the record, other than the result obtained, that the arbitrators knew the law and expressly disregarded it.’”  Id. (footnotes omitted, emphasis supplied). 

Arguably, if an arbitrator were ignorant of the law and ran afoul of it, then a court could not overturn it.  Similarly, if an arbitrator knew the law but applied the law to the facts incorrectly without expressly disregarding it, the award would stand.  The record must, independent of the result, demonstrate that the arbitrator disregarded the law.  Partiality of the Arbitrator  One must be prepared when entering arbitration for the differences between an arbitrator and a judge.  “According to Airtab, the arbitration panel’s chairman was overly deferential to Limbach, its counsel, and its witnesses; treated Airtab’s witnesses with hostility; and impeded Airtab’s case by questioning witnesses and interrupting counsel.”  Limbach disputed this contention and cited arbitral rules which permit the board to question witnesses. The trial court concluded that the chairman “was aggressive in his questioning, but was simply trying to ‘ferret out what really went on’ and exhibited no partiality.”   

Arbitration is an expedient method to resolve disputes.  However, the parties should consider not only the expediency and reduced cost of arbitration, but also the likely finality of the award given the narrow grounds for judicial intervention. 

The Chapar Firm routinely drafts and edits employment contracts which set forth restrictions on the employee after the employment ends and has also litigated numerous cases implicating the rights of employees who, following voluntary or involuntary departures, begin to work for competitors.

Under current Georgia law, employees generally have the right to bring their own skills to a competitor of a former employer and work freely, as long as those employees do not take the property of their former employer.

Certain limitations on that right are permitted if agreed to by a contract.  However, they must be in writing and be limited in duration and geographic scope.  The former employee can only be restricted from doing for his or her new employer the type of work that he or she did for the former employer.

Critically, under current law, if an employer attempts to restrict the rights of a former employee to a degree greater than permitted, the entire non-compete fails.

For example, if an employee only worked in two Georgia counties during his or her employment with the former employer, but a noncompete contract says the employee is forbidden to work in the entire state, a court would likely declare the entire agreement  unenforceable.   That is because under current law, courts do not have the ability to "blue pencil" or enforce the agreement to the extent it would have otherwise been permitted.

The Georgia General Assembly has previously passed laws to make it easier for employers to enforce restraints on competition.  However, those efforts have failed because the limits on the employers' rights to do so are contained in the Georgia Constitution itself.  The Constitution's prohibition of contacts in "restraint of trade" has been the basis of Georgia's antipathy to anti-competitive agreements.

A new effort to change Georgia's law concerning noncompetition agreements is underway in the form of House Bill 173, passed in 2009.  The bill is comprehensive in its scope, and would certainly make it easier for employers to create limits on the rights of former employees to compete.  Whether the proposed changes to the law governing no-competes are good policy or not is not within the scope of this article.  Employers certainly have an interest in protecting their legitimate interests by restricting certain competitive activities of their former employees, but they also need to be able to hire good experienced people.

If the bill becomes law, employers and employees will have to carefully evaluate the changes. Notably, the legal changes are to be effective only upon a vote in the 2010 General Election to amend the Georgia Constitution:

This Act shall become effective on the day following the ratification at the time of the 2010 general election of an amendment to the Constitution of Georgia providing for the enforcement of covenants in commercial contracts that limit competition and shall apply to contracts entered into on and after such date and shall not apply in actions determining the enforceability of restrictive covenants entered into before such date. If such amendment is not so ratified, then this Act shall stand automatically repealed.

The full text of House Bill 173 is found here.

Employers and employees are urged to seek the advice of counsel with regard to these laws before entering into a no-compete agreement or related restriction such as a non-solicit agreement.

UPDATE:   Previously schedule for enforcement on June 1, 2010, the FTC has delayed enforcement of the Red Flags Rule until December 31, 2010 or until Congress clarifies the scope of the entities subject to the Rule, whichever is earlier.

In an effort to reduce the number of identify thefts in this Country, the Federal Trade Commission (“FTC”) has implemented the “Red Flags Rule” which will affect nearly every business that maintains client accounts.  This article contains guidelines regarding the applicability of the Red Flags Rule.  The Chapar Firm would be pleased to assist you in determining whether the Red Flags Rule is applicable to your business.

The Red Flags Rule requires any entity that is a “creditor” or “financial institution” to implement a written policy that identifies potential identity theft through the detection of certain suspicious activities.  Those suspicious activities are referred to as “red flags.”  Not a creditor?  Don’t be so sure.  The FTC has defined creditor to include any business that allows customers or clients to defer payments or make payments over time for a good or service that they receive.  Under the FTC definition of creditor, most businesses are subject to the Red Flags Rule.  

The FTC requires each creditor to analyze the methods it uses to obtain and maintain its client's personal information and to draft a custom "Red Flags" policy for that business. The list of potential “red flags” that a business identifies should be as exhaustive as possible and should include those “red flags” typically found in the business’s industry and based upon the business’s conduct and history.  Further, the business is required to update its Red Flags Policy periodically to address new and ever-evolving methods of identity theft that are used by criminals to illegally obtain personal information.      

The policy must be customized to address the specific type of business and the manner in which a of each individual business and must include the manner in which the business will identify red flags, the procedures to detect the red flags, the steps the business will take upon detecting a red flag (such as notify the victim, close an account), and how and when the policy will be updated. 

Each customized policy must take into account, among other things, how well the business knows its debtors, whether it is in an industry where identity theft is common, how many debtors the business has, and how the account is accessed by the debtor (face-to-face versus on-line, for example).   A business that personally knows each debtor or works primarily in the customers’ homes or face-to-face is less like to encounter identity fraud than one which handles accounts on-line.  The policy must be written so that it does not cause privacy concerns.  For example, a business that asks for social security numbers from its clients but does not ever run a credit check may, as part of its Red Flags Policy, stop requiring its customers to provide their social security numbers.   

Upon completion of the customized Red Flags policy, the business must educate its employees on the policy.

Please contact one of our attorneys at 770/483-4115 to arrange a consultation to determine whether your business must comply with the Red Flags Rule.