legal issues

Whether it is hiring/terminating employees, liability for the actions of your employees, contract development, or antitrust rules, legal issues are more prevalent today than ever. Where there may seem to be an endless supply of topic matter, this section will attempt to address legal matters that seem to be of great concern to members.

If you have any questions or suggestions for improvement, please email:

Dean Kurtis
VP Finance and Information Technology


Proposition 65

Background on Proposition 65:
Receiving notice of an alleged violation under California’s Proposition 65 can truly ruin a business executive’s day. This is true particularly since it can appear on the executive’s desk without warning from a bounty hunter authorized to pursue the claim on behalf of the citizens of California even when the California Attorney General’s Office is not involved. With potential fines of $2,500 per day, and the threat of having to redesign the product at issue, notice of an alleged Prop 65 violation should be addressed immediately. The accompanying presentation focuses on the basics of the regulatory scheme known as California Prop 65 and provides practical advice in managing the vexatious claim and its ramifications, which can be burdensome, expensive and distracting.

IHA commissioned the presentation on the belief that in these matters forewarned is forearmed. If the presentation elicits further questions or comments the author P. Mark Mahoney of Schiff Hardin LLP can be reached at +1-415-901-8775.

Educate Yourself on Prop 65

Listen to the Proposition 65 presentation audio:



Prop 65 Program: Help Shield your Company from Lawsuits.


NJ Truth-in-Consumer Contract, Warranty and Notice Act ("TCCWNA")

There seems to be an increase in the number of reported lawsuits levied by plaintiffs against IHA members alleging that the Terms and Conditions of their online ecommerce websites violate New Jersey’s arcane Truth-in-Consumer Contract, Warranty and Notice Act (“TCCWNA”).

These lawsuits don’t have to prove there has been a loss or damage suffered by the consumer. Your company doesn’t have to be incorporated in the state of New Jersey or be domiciled in the state for this law to impact your exposure to a potential lawsuit. The claim simply asserts a mere technical violation of New Jersey and federal laws and regulations affecting consumer rights. IHA reached out to legal counsel and have obtained sample language that may circumvent a potential lawsuit. This sample language is appropriate for each member company’s Terms and Conditions section of their website.

The sample language reads:

THESE TERMS REQUIRE YOU TO ARBITRATE DISPUTES, WAIVE YOUR RIGHT TO A JURY TRIAL AND LIMIT THE MANNER IN WHICH YOU CAN SEEK RELIEF FOR ANY ALLEGED BREACH OF THESE TERMS TO THE FULLEST EXTENT PERMITTED BY LAW. Any dispute or claim relating in any way to these terms of use, this website, or any products or services sold or distributed by or through this website, will be resolved by binding arbitration, rather than in court, except that you may assert claims in small claims court if your claims so qualify. The Federal Arbitration Act and federal arbitration law will apply to any arbitration conducted in connection with these terms and conditions, and any such arbitration will be conducted confidentially by a single arbitrator in accordance with the rules of the American Arbitration Association (“AAA”). To the fullest extent permitted by law, we each agree that any arbitration or other dispute resolution proceedings will be conducted only on an individual basis and not in a class, consolidated or representative action. You and [Insert Company Name] agree, to the fullest extent permitted by law, to waive any objection based on lack of personal jurisdiction, place of residence, improper venue or forum non-conveniens, and you agree to give up any right to a jury trial in any such arbitration or other dispute resolution proceeding.

None of this should be construed as legal advice and each of you should seek legal counsel to insure proper protection under the law for your particular situation. If you would like to read further into this issue, the authors of the sample language above, the law firm of Schiff Hardin who is IHA’s preferred law firm on this topic, has prepared some additional material which explains the situation in more detail.

If you would like to seek further legal advice from Schiff Hardin on this topic, you can reach out to either Joe Krasovec at +1-312-258-5639 or Dale Matschullat at +1-312-258-5507 or +1-404-514-4348.


intellectual property

general information and definitions

Intellectual property are the exclusive rights that an owner has been granted over its intangible assets such as musical, literary, and artistic works (copyrights); discoveries and inventions (patents); and words, phrases, symbols, and designs (trademarks).

Copyrights generally expire 70 years after the author's death. Trademarks renew every 10 years after registration, but activity must be shown on the trademark every 5 years. Most patents expire after 17 years from the issue date.

More information about copyright law can be found at the U.S. Copyright Office at www.copyright.gov. An application for a copyright can be completed online.

The term patent usually refers to a right granted to anyone who invents or discovers any new and useful process, machine, article of manufacture, or composition of matter, or any new and useful improvement thereof. Patents can be further broken down between "design" patents (patents granted for the ornamental design of a functional item) and "utility" patents (granted to an invention which must be new, non-obvious, and useful or industrially applicable).

More information about trademarks and patents can be found at the U.S. Patent and Trademark Office at www.uspto.gov. Trademarks can be registered online as well. However, the website does recommend that you hire a patent attorney or a patent agent when completing your registration forms for a patent. The patent application requires accurate details and descriptions, precise drawings of the item, and research concerning related patents.

IHA's Strategic Position on Intellectual Property Rights Protection

general statement

The IHA Board of Directors and staff recognize the importance of all intellectual property rights (IPR) including trademarks, copyrights, and patents. IPR represent valuable business assets which are costly to develop and protect. In the U.S., IPR are recognized in courts of law as the personal rights of the owner of the IP. So, although IHA feels strongly about protecting the investment made by the IP owner, our role in that process must be, by law, very limited. IHA is not in a position to be a judge, jury, regulator or law enforcement agency. Recognizing the position taken by other non-U.S. international trade fairs, the IHA Board of Directors, with the recommendation of legal counsel, has directed IHA to contain our activity to assistance and education, adhering to U.S. laws and avoiding any potential Restraint of Trade issues.

during the show

IHA acts to mitigate the impact of IPR theft by offering assistance to exhibitors to avoid face-to-face confrontations on the Show floor, potentially in front of customers. IHA has and will continue to:

  • Maintain a record of all reported incidents to identify a pattern of repeated complaints.
  • Work with law firms and process-servers to assist in serving legal complaints while the offender is at the Show.
  • Assist law enforcement agencies in the execution of court orders.
  • Take serious action, including the possible suspension of future Show privileges, against any exhibitor convicted in a court of law of an IPR offense, and thereby violating IHA's Exhibitor Code of Conduct.
  • Provide exhibitors the names of several reputable firms that specialize in IPR if the exhibitor has no current legal representation.
  • Partner with the U.S. Department of Commerce's ("DOC") Office on Intellectual Property Rights. A representative has participated at the Show for the past several years. Their primary purpose is to visit with exhibitors on the Show floor to get a better understanding of current issues, educate exhibitors on IPR and suggest a plan to protect IPR, and visit with the offending organizations to add an authoritative presence to infer that the U.S. doesn't tolerate this type of activity.
  • Sponsor educational sessions in the Housewares Design Theater to provide information on the protection of IPR from the design phase all the way through to product distribution.
  • throughout the year
    IHA hopes to educate its membership on alternatives for self-help to provide proactive protection against IPR infringement. Some of the year-round activities include:

  • Recommending, where appropriate and agreeable to both parties, the use of binding arbitration in the effective resolution of IPR disputes. There is no denying that the cost of settling an IPR dispute within the court system can become very expensive. Arbitration is a means to reduce those costs and still receive an objective, fair settlement. IHA has posted general information regarding the arbitration process on our website along with a resource to file a case and have independent arbitrators assigned to case management.
  • Posting on IHA's website of information available from the U.S. DOC on the protection of IPR. Their website provides valuable information on how to "Stop Trade in Fakes!" at www.stopfakes.gov. The site provides:
    • Background information on IPR and the different organizations that provide protection:
    • Steps that organizations can take to protect their trademarks and copyrights through U.S. Customs and Border Protection; and,
    • Toolkits for various regions in the world that explain how to obtain and enforce IPR in those countries.
  • Periodically posting articles in IHA Reports, our monthly member communication, to remind members of tactical action items that can be taken to protect their valuable IPR.

attorneys

Many if not most of our members retain an intellectual property attorney if they have filed an application for IP protection. However, some members come to the International Home + Housewares Show in Chicago and find that they are in need of an attorney and don't have access to legal representation that resides back at their main office. The following are law firms in the Chicago area that have IP divisions within their law offices.

  Freeborn
Andrew L. Goldstein
311 South Wacker Drive, Ste. 3000
Chicago, IL 60606
+1-312-360-6000
+1-312-360-6520 (fax)
www.freebornpeters.com
Cook Alex
John L. Alex
200 W. Adams, Ste. 2850
Chicago, IL 60606
+1-312-236-8500
+1-312-236-8176 (fax)
www.cookalex.com/
     
  Fitch Even
John F. Flannery
120 S. LaSalle Street, Ste. 1600
Chicago, IL 60603
+1-312-577-7000)
+1-312-577-7007 (fax)
www.fitcheven.com
 

arbitration and mediation

Arbitration can be a faster, simpler, and less expensive alternative to traditional litigation methods for resolving disputes. Arbitration is an adjudicative process, in that the outcome is determined by private judging and the results are binding on the parties and enforceable in the courts. Those acting as arbitrators are traditionally retired judges and attorneys with experience in the fields in which they are arbitrating. Arbitration is usually less costly because the scope of discovery and the rights to appeal are limited. Arbitration can still be as confrontational between parties as typical litigation.

Mediation, on the other hand, is not adjudicative but is more facilitative. It's a voluntary method by which parties come together to find a dispute resolution which is mutually agreeable. The mediator can be a person with a legal background but also may be an unbiased third-party with specific training in dispute mediation. The mediator does not decide substantive issues that would determine guilt or innocence, but encourages the parties to find common ground for resolution. Mediation may be better suited for parties that have and desire to continue to have an on-going business relationship.

For more information on both arbitration and mediation, visit the International Institute for Conflict Prevention and Resolution (CPR) website. Not only does the CPR website contain a great deal of helpful information and white papers concerning arbitration and mediation, they also manage relationships with a nation-wide group of active arbitrators and mediators. You can submit an application for your specific case and peruse a list of potential arbitrators or mediators that specialize in intellectual property infringement. Working with the other party involved, the online application can facilitate an expeditious resolution to your dispute.

government resources

According to the website developed by the U.S. Department of Commerce to address intellectual property theft, filing an application to register your copyright, trademark, or patent is just the first step toward protection of your assets in this global economy. Go to the U.S. Department of Commerce's website on intellectual property protection to review steps you can take to protect your rights. On their website you will find thorough information on the "who, what, where, and why" of intellectual property protection, including individual toolkits at your disposal for actionable steps you can take in different countries

In addition to the U.S. Department of Commerce, the U.S. Customs and Border Protection ("CBP"), through the Department of Homeland Security, can assist you in protecting your copyrights and trademarks from being copied and brought into the U.S. illegally. Check out U.S. Customs and Border Protection website for electronic registration of your intellectual property.


Alternative Dispute Resolution

A study conducted by the American Arbitration Association (AAA) reports that U.S. civil litigation costs are escalating to $200 billion - $300 billion annually. (American Arbitration Association-sponsored Research Study, 2006*) Litigation costs impact all businesses, both suppliers and retailers, and seem to be a function of just being "in business." If a company is conducting business, then they've probably experienced a need to defend themselves against a justified or frivolous claim of some type. Once litigation begins, they soon realize how quickly legal costs can climb to 4, 5 or even 6-digit figures while formulating a defense. The cost for lawyers, expert witnesses, discovery, court costs, document filings, etc. all add-up rapidly.

IHA has launched an initiative, Alternative Dispute Resolution (ADR), that can save members--both large and small--time and money relating to litigation and the escalating costs associated with defending a company against legal claims of all types.

ADR is a long-standing method to obtain satisfaction in cases without the need for litigation in a court-room setting. Both mediation and arbitration are considered types of ADR and can avoid some or most of the costs noted above. Both methods save time and money, provide for confidentiality, and result in a situation where both parties can feel the resolution was a win-win. The win-win can be especially important if the parties plan to have an on-going business relationship. In the AAA survey respondents, a majority of the companies reported that ADR methods reduce the time needed to resolve disputes and also reduce the cost of resolution (excluding judgments/awards). For more information on mediation and arbitration visit: www.cpradr.org

Although ADR rose to IHA's attention as an industry-wide initiative to address disputes pertaining to Intellectual Property Rights, an ADR strategy can apply to multiple types of legal disputes and begin to take a large bite out of that growing nation-wide litigation cost of $300 billion. IHA and its Board of Directors are asking members to sign a policy statement on the preference to resolve legal matters by first evaluating a solution using ADR methods as opposed to assuming litigation is the first and only method for resolution. The non-binding pledge asserts a company's support of the housewares industry in taking a stand against the escalating cost of litigation.

Click here to download and sign the pledge. Please complete the form and return it to Dean Kurtis at dkurtis@housewares.org or fax the document back to 847-292-4211.

If you would like more information about early dispute resolution, mediation, or arbitration, please contact:

Dale Matschullat, Esq.
Schiff Hardin LLP
233 South Wacker Drive, Ste. 6600
Chicago, IL 60606-6473
312-258-5507
dmatschullat@schiffhardin.com

*American Arbitration Association-Sponsored Research Study. (2006). Improving Economic and Non-Economic Outcomes in Managing Business Conflicts. New York: American Arbitration Association.