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There is no way to overstate the importance of a company’s trademark, which is why it is so important that California business owners closely monitor the use of their trademark. By being on top of a possible infringement, they can protect their brand and business proactively against threats to their trademark. When a company’s trademark becomes famous and well-known, such as Nike, Coca-Cola, Apple or Google, they might face a high risk of infringement, and possibly a higher risk of trademark dilution. WHAT IS THE DIFFERENCE? Trademark infringement and dilution are different, even though they frequently occur in the same situations and legal claims. It is helpful if business owners understand the differences between the two claims. For example: Trademark infringement: As we have discussed in past blog posts, this is the unauthorized use of a company’s trademark by a third party. This misuse creates confusion for consumers. Trademark dilution: This is the use of a famous trademark that causes the original mark to lose elements of its unique identity or damages the trademark’s worth and brand. Courts will consider several factors to determine if the trademark is famous enough to suffer dilution, such as the overall brand recognition as well as the registration information. THE BIGGEST ISSUE WITH DILUTION? PARODIES A diluted trademark is often a parody of the original trademark. Since it is one of the most common reasons for trademark dilution, it is also one of the most common defenses. For example, one of the most recent cases involved the famous whiskey brand, Jack Daniels. The parent company of the other party, VIP Products, created a dog toy called “Bad Spaniels,” which held the same shape and design as the Jack Daniels bottle. Despite humorous intentions, Jack Daniels filed a trademark dilution suit. Even though there is no likelihood of confusion, Jack Daniels’ claim insinuates that their business and products could suffer damage through the mockery of their trademark. Yet, the culture and focus on free speech that surrounds parodies makes these claims particularly challenging. Regardless of whether businesses face a trademark infringement or dilution threat, they must ensure they understand the details of federal and California trademark laws before they move forward. It is also helpful in these cases to consult with an experienced business attorney, so business owners can protect their rights to their trademarks.

The concept of monitoring employees is nothing new in the workplace. It is a common practice to ensure employees meet production goals efficiently. Even though it is common, California employers must make sure they comply with the law to avoid complex legal issues and disputes with their employees. MONITORING IS OFTEN ESSENTIAL TO ENSURE SECURITY The primary goal of monitoring employees at work is to protect the company as a whole. It allows employers to ensure their records are accurate, their employees are safe and their property is secure. Common methods that employers use for monitoring often include: Timecards to track the hours employees work Security cameras in the workplace to increase efficiency and safety GPS tracking, especially for commercial drivers Even so, employers must consider privacy. This is especially critical in the new reality of working remotely. WHAT SHOULD EMPLOYERS DO WHEN MONITORING REMOTE WORK? Working from home full time is a whole new territory for many. It is forcing employers to change how their business operates. And it is also requiring them to adjust their methods of monitoring employee productivity. While monitoring employees may be legal, virtual work can pose many challenges to employers. So, what must employers consider as they move forward? When it comes to monitoring practices, all employers should: Inform their employees: The Harvard Business Review recommends that employers be transparent and respectful with their employees in their monitoring practices. Tell them the purpose of monitoring, as well as how the company will supervise them on the job. It is common to provide this information in the employee handbook or the employment contract. Consider the legal impacts: California law states that employers can monitor employees’ communication and activity on company devices. Therefore, employers can monitor workers remotely. However, they must take note of the recent amendments to the California Consumer Privacy Act (CCPA) that cover employees’ private information as well. Working remotely might change the landscape of employee monitoring needs and practices. But employers must make sure they approach this issue with great care. It may be helpful for employers to consult an experienced business attorney to make sure they understand the laws protecting employees’ privacy, so they do not violate their rights.

There is no denying how important diversity is in the business world, and current events have only placed even more emphasis on this matter. Many sources, from Forbes to the Harvard Business Review, stress the need for diversity and provide business owners with tips and resources to improve inclusion in their businesses. However, California lawmakers have taken it a step further. AB 979 REQUIRES REPRESENTATION ON CORPORATE BOARDS In a previous blog post, we discussed the state law enacted in 2018 requiring companies to include women on their board. While this law faced pushback from several business owners, lawmakers passed a new addition to this law in 2020. Assembly Bill 979 expands the requirements for representation on corporate boards. Within the bill, lawmakers identify several disparities that exist within the business world. The goal of this law is to reduce those disparities. Therefore, by the end of 2021, this law will require publicly held companies in California to have at least one board member from underrepresented communities. The law specifically states this refers to anyone who identifies themselves as: Black African American Hispanic Latino Asian Pacific Islander Native American Native Hawaiian Alaska Native LGBT Depending on the number of directors or board members, companies will have to meet different conditions and numbers under the law. Business owners must file the information about their board members with the Secretary of State to confirm that they meet the requirements under the law. Failing to comply with the terms of the new law can lead to significant financial penalties for businesses. WHAT SHOULD BUSINESS OWNERS DO? Take steps to comply with this law. Even though it currently faces pushback and legal challenges, it is still critical to be proactive in these matters to avoid potential penalties. Regardless of the new law, however, it is a good idea for business owners to review the job descriptions, recruiting practices and policies laid out for the board of directors to: Ensure that the board maintains the best interests of the business Understand how diversity could improve and help their business Improving diversity on the board of directors has many benefits for businesses at many levels. The combination of different perspectives and experiences is always valuable in the business world, and business owners should reevaluate their goals regularly as they move forward to make sure they safeguard the future success of their business at all levels.

While business owners strive for success, they must also make sure they adhere to state and federal regulations on competition. No matter the size or kind of business, it is important to avoid any action that could be construed as violating antitrust laws to avoid serious long-term legal issues or penalties as illustrated by a recent landmark case against Facebook. FIRST: WHAT IS THE PURPOSE OF ANTITRUST LAWS? The federal government enforces antitrust laws to ensure fair competition across all industries in the business world. These laws prevent companies from: Fixing prices of their products or services Arranging bids for contracts or other business deals Engaging in exclusionary or unfair tactics that force competitors’ hands GOVERNMENT FILES ANTITRUST LAWSUIT AGAINST FACEBOOK There is a long history of companies facing antitrust lawsuits in the United States. While they are not as common as many other legal issues businesses could face, antitrust actions can have much larger consequences. In December of 2020, the U.S. government made waves in the business world when it filed an antitrust lawsuit against the social media giant Facebook. The federal lawsuit, in addition to a lawsuit involving 46 states, claims that Facebook is stifling competition in the tech and social media world, using tactics to specifically damage competitors. This is an effect of the larger inquiry into the world of tech business as a whole, as the government investigates how companies like Amazon, Apple, Google and now Facebook impact the market in this industry. WHY SHOULD BUSINESS OWNERS TAKE NOTE? The effects of this case could be monumental on the tech world – and the business world as a whole. It could: For Facebook namely, result in an order to break up the company Impact the limits of tech start-ups, according to CNN Set a precedent for antitrust issues for tech companies, which in this developing industry is an often-complex matter Lead to additional regulations for consumer privacy, on top of those outlined by the new California Privacy Rights Act (CPRA) Even business owners who do not operate in the tech sector should ensure they are aware of the risks such a lawsuit – and the particular outcome of this action – could pose to the future of the business world.

California lawmakers passed the Right to Repair Act back in 2003, but it remains one of the most important laws for builders to understand if they face a construction defect claim. A 2018 case, McMillin Albany LLC et al. v. the Superior Court of Kern County, solidified this act’s relevancy. The case determined that this law was the only avenue homeowners could take to seek damages for certain construction defects. This decision has both benefits and drawbacks for builders. HOW DOES THE RIGHT TO REPAIR ACT WORK? The Right to Repair Act is incredibly complex. It is often beneficial to consult an experienced attorney to fully understand the regulations of this law, but here is a brief overview. The three main functions of the act include: It defines a homeowner’s rights when they pursue damages for a construction defect. It also prescribes a builder’s liability for construction defects. It outlines the specific process of these claims. On one hand the act offers some benefits for builders. The act essentially requires homeowners to engage in a dispute resolution process when they file a claim. Homeowners must give builders plenty of notice about their claim before they can pursue litigation. Additionally, it gives builders a chance to repair the defect and resolve matters out of court. However, the drawback is that it essentially forces builders or construction companies to implicitly admit fault. The law might govern the dispute resolution process over construction defects, but builders must still approach these cases carefully. PROPER DOCUMENTATION IS NECESSARY UNDER THIS ACT To protect the company’s reputation, most builders, contractors and designers wish to avoid admitting fault. In many cases, the builders might not be at fault for a defect at all. So, how can builders proactively protect their business against the risk of construction defect claims? One of the best strategies is to ensure the company has an organized and thorough record-keeping system. The statute of limitations on many construction defect cases can extend up to 10 years. And the Right to Repair Act requires builders to provide property owners with copies of several documents pertaining to the project, including: Building plans; Grading plans; Soils reports; Engineering calculations; and Department of Real Estate public reports. Keeping extensive and detailed records is not only essential under the Right to Repair Act, but it can help builders navigate these cases efficiently and even prove they were not at fault for the defect.

Handling employee complaints or claims on top of managing a business can be complex. However, employers often have the opportunity to mitigate the risk of employment disputes – and litigation – as long as they respond to employee complaints efficiently. Failure to do so can be devastating to the business, and the prevailing trend appears to be that businesses are falling short. EMPLOYEES REPORT INAPPROPRIATE RESPONSES TO COMPLAINTS It seems that a large percentage of employees believe that their supervisors do not handle complaints or workplace conflicts properly. The study from the Chartered Institute of Personnel and Development (CIPD) found that: 24% of employees report that supervisors ignored complaints of bullying or incidents of harassment in the workplace 31% of workers said that their supervisors did not even take their complaints seriously California employers must take complaints seriously; otherwise, employees often feel their only resort is to take greater legal action that could pose a larger risk to businesses. In some cases, this could even involve employees filing charges with the Equal Employment Opportunity Commission (EEOC). WHAT IF EMPLOYERS FACE CHARGES FROM THE EEOC? Complaints with the EEOC can build up into a long train of issues for employers. They often lead to investigations, significant legal expenses and penalties and harmful press reports. Employers and business owners should be sure to take proactive action to protect their business. First, it is critical to understand what to expect and the steps they might have to take in response to these charges. Understanding the steps required when facing a lawsuit from the EEOC can help employers immensely in these situations, but it is also critical to consult an experienced attorney before moving forward. A CAREFUL RESPONSE TO ALL EMPLOYEE MATTERS IS ESSENTIAL Even if some complaints might seem trivial, employers must ensure they treat all complaints equally and seriously. Taking steps to respond effectively to employee concerns the first time can help employers avoid a greater risk of litigation in the future.

When employers face employment claims, they should know that they also face significant legal risks. Dealing with the claim itself can be time-consuming and expensive, but companies can also face a barrage of bad press coverage if these claims become public as well. However, these are not the only risks that could put the business in jeopardy. As a recent case illustrates, companies could also face legal disputes with the shareholders of their company. REPORT: SHAREHOLDERS TAKE LEGAL ACTION AGAINST PINTEREST Throughout 2020, Pinterest faced a number of discrimination claims from individuals at all levels of their business, with several complaints from their employees and their former chief operating officer. And the company’s shareholders compounded these legal cases by adding their own in December. Pinterest’s shareholders filed a lawsuit against the company, executives and the board of directors, claiming that they failed to: Address illegal workplace biases and actions Monitor issues of unequal pay Prevent a toxic culture of racial and sexual discrimination Uphold their fiduciary duty to investors The claims state that the defendants were aware of these issues but did not act to resolve them. PROMPT ACTION IS ESSENTIAL TO AVOID THIS RISK Shareholders reserve the right to sue directors of the company if they cause harm to the business – and, in turn, the shareholder’s investment in the business. Employers must be proactively aware of this risk. Any issues that could harm the businesses could lead to shareholder disputes that could develop into litigation. This often only spells greater losses for businesses on top of the other legal issues they face. Employee claims are a common risk that business owners face, but there are steps they can take to reduce the harm they cause to the overall business. Business owners should: Ensure their employee handbook and policies comply with California law Make sure they adhere to those policies Respond efficiently and effectively to employee complaints and reports A consistently fair and prompt response can help avoid larger legal issues with the employees themselves, as well as ensuing shareholder disputes in the long run.

By now, employers and business owners are very familiar with California’s Assembly Bill 5 and the new – and highly controversial – rules for classifying whether workers are employees or independent contractors. Regardless of what an employer’s feelings are about these new guidelines, they are a reality for California employers. Challenges and disputes over this new law continue to arise. September 2020 brought a new bill that added even more exemptions to this rule in response to these challenges. However, many businesses face yet another concern regarding this law. FRANCHISEES CONCERNED ABOUT EFFECTS OF AB5 Several franchise organizations have filed a lawsuit challenging AB5’s effects. These organizations do not necessarily oppose AB5’s guidelines or the ABC test in general, but they are concerned that the law: Conflicts directly with federal franchise laws and organizational structure Affects the franchisee’s place in the business world Impacts the business relationship between franchisees and franchisors The organization of franchises is unique in the business world, and owners are concerned that the language of AB5 would jeopardize the franchisee’s place – essentially defining them as the franchisor’s employee. SHOULD BUSINESS OWNERS BE CONCERNED? Franchisees are small business owners in their own right. After all, a franchise is generally considered a joint venture. These business owners simply have the license to operate under a larger company’s trademark and with their business model. While they do have to protect the brand and adhere to specific rules of the larger company, they are independent. However, that does not classify them as an employee or independent contractor. State lawmakers have been quite responsive to the concerns over AB5. Additionally, federal law already clearly defines franchise regulations and rules. Therefore, business owners involved with franchises should not worry, but they should monitor this lawsuit and take measures to protect their business.

We have discussed the potential risks that remote working poses to a company’s trade secrets on this blog before. Business owners are likely aware of these concerns, since many of their workers are using their home internet, and maintaining digital security can be complex outside the company’s physical boundaries. However, it bears repeating that business owners must take precautions since a recent case demonstrates the gravity of this particular risk. RECENT CASE HIGHLIGHTS TRADE SECRET RISKS ON DIGITAL PLATFORMS Even though this case was in Delaware courts, California business owners should take note of the elements of this lawsuit. Near the end of 2020, Smash Franchise Partners, LLC, filed a case claiming trade secret misappropriation. The company had held open meetings over the popular video-conferencing platform Zoom to discuss: Franchising opportunities Business strategies Growth opportunities One of the attendees used the information offered in these meetings to launch their own business in competition, leading to the lawsuit. However, the Delaware court ruled against Smash Franchise Partners’ claim. THE PRIMARY ISSUE: FAILURE TO TAKE REASONABLE STEPS The World Intellectual Property Organization (WIPO) defines that a trade secret must meet three requirements. Businesses must: Keep the matter secret, so it is valuable to the business in the commercial world Ensure only a few people know the trade secret Take reasonable steps to protect the trade secret and keep it confidential This last factor is the primary reason why the court ruled there was no misappropriation of trade secrets in this recent case. The company did not take steps to restrict who attended the Zoom meetings. Additionally, they did not treat confidential information differently from non-confidential information. Therefore, the matters discussed could not be considered trade secrets according to WIPO’s rules. WHAT ARE THE TAKEAWAYS FOR CALIFORNIA BUSINESS OWNERS? This case shows just how important it is for business owners in California and across the country to take precautions and make sure they protect their trade secrets – especially while working virtually. Business owners must take such reasonable steps for two reasons: To prevent trade secret theft or misappropriation To effectively take legal action in cases of misappropriation Trade secrets are invaluable in the business world. It is critical to learn from matters like this and avoid the risk of damaging consequences and litigation.

How do business owners determine if a competitor has infringed on their trademark? It might seem straightforward if a start-up uses a name too similar to your company’s, or other companies sell products with designs that match your logo too closely. The evidence of infringement might be clear, but there is one more factor that influences infringement – confusion. CONFUSION: THE BASIS FOR INFRINGEMENT CASES The likelihood of confusion is often at the center of most trademark infringement cases. This concept refers to the confusion on the consumer’s part. For example, if two trademarked products share a similar name, consumers might confuse the source, or maker, of those products. Generally, the United States Patent and Trademark Office (USPTO) will review the likelihood of confusion in the process of registering a trademark. That way, they can ensure it does not resemble one that a business has already registered. However, as Forbes reports, these cases are common, and they are a considerable risk to a business’s success and brand. HOW DO COURTS DETERMINE IF THERE IS A LIKELIHOOD OF CONFUSION? According to USPTO, the likelihood of confusion is based on the similarities, specifically: The similarities between the appearance, sound, impression or even the meaning of the name, brand, logo or product. The similarities between the products or services provided by the entity. These are the most important factors to consider, since these similarities increase the risk of consumer confusion, and therefore become an issue of unfair competition as well as infringement. As a business owner in California, it is critical that you understand this concept. It can help you ensure you create effective and unique trademarks, but also protect your current trademarks – and your loyal consumers.

Most employers know that wage and hour claims are some of the most common legal issues they will face. Even though they are common, they can lead to serious issues and risks for companies. A recent case involving Apple showcases only one example of the effect these cases can have – even when it boils down to one seemingly unrelated policy. APPLE ORDERED TO PAY EMPLOYEES FOR MISSED WAGES In 2013, two employees of Apple retail stores filed lawsuits to recover lost pay due to off-the-clock-bag checks. The policy was to ensure employees did not carry any company products or trade secrets out of the store, but these bag checks could take up to 20 minutes each day. This totaled up to over an hour of unpaid work each week. In February 2020, the California Supreme Court ruled that Apple would have to reimburse employees for this time. After all, the employees were still under the employer’s control during the checks. Apple appealed the ruling. But in September, the U.S. Court of Appeals for the Ninth Circuit maintained that Apple had to give back-pay to employees for the time spent checking their bags. According to Observer, this ruling will require Apple to repay a total of $60 million in missed wages. TWO CRITICAL ISSUES EMPLOYERS MUST NOTE The execution of this policy led to significant legal and financial consequences for Apple, and finding a resolution took a considerable amount of time and money away from business matters. However, there are two primary subjects that are especially important for employers to understand from this case: Know the law: Employers must review federal and California wage and hour laws, as well as keep up to date with any relevant changes that could impact their business. It is an employer’s responsibility to ensure that their policies and pay practices comply with these rules to avoid wage and hour lawsuits. Review policies at all levels: Additionally, employers must also make sure they are fully aware of the policies enforced at every level of their company. Observer reported that Apple’s CEO, Tim Cook, was not aware of the bag-check policy until employees filed complaints with him directly. Employers should take measures to avoid this mistake and ensure policies are enforced fairly and identically throughout every level of the business. Mitigating the risk of wage and hour lawsuits is possible, but employers must be vigilant when it comes to creating and enforcing policies that comply with the law.

While the brick-and-mortar shop remains strong, there is no doubt that online commerce has become a fierce competitor in the business world, particularly in light of the past two years of Covid-19. For example, sales in e-commerce rose by 16% between 2016 and 2017 alone. The more consumers take to their computers to shop, the more businesses must strategically expand their online presence to meet this demand. This is one of the primary reasons that domain names have become a significant point of contention in trademark disputes. DOMAIN NAME DISPUTES ARE BECOMING A COMMON ISSUE Websites are now at the center of many cases involving trademark infringement, as we have discussed in past blog posts. However, why is this becoming such a considerable issue for businesses? Trademark infringement is often a risk when it comes to anything carrying a business’s name, logo or brand – including the business’s website or domain. However, there are only so many domain names available. And registering the domain name is not the same as registering a trademark, even if it gives businesses exclusive rights to use that name for their website. This can lead to disputes over similar domain names and confusion for consumers. In some cases, “trademark trolls” will even register several domain names just to hold a monopoly. As e-commerce increases each year, becoming a larger influence in a business’s strategy, it is critical to take the proper precautions to protect the online presence of a business. SHOULD BUSINESS OWNERS TRADEMARK THEIR DOMAIN NAME? Trademarking a domain name is often a beneficial route for businesses to protect: The financial investment they made in creating an online presence Their consumer base using their website and seeking their service Their brand, especially if the domain name is connected to the brand Establishing a trademark also gives businesses legal rights to act if another individual or entity infringes on their domain name and creates confusion. It is important to note that not all domain names can be trademarked. The domain name must meet the qualifications of a trademark, and business owners must still go through the steps of registering the trademark. Even so, business owners also must take great care when selecting a domain name. They should use an easily recognizable name, but one that is not similar to others in use so they can avoid accusations of infringement themselves.