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Employers face a significant amount of stress when an employee files a complaint. After all, if an employee claims they suffered harassment or discrimination, the company could face serious financial and legal consequences. In such a case, employers must take immediate action to investigate the claims, and should consider the following tips. OBJECTIVITY IS ESSENTIAL This is one of the most important things employers must remember. It is easy to only see the threat that a complaint could pose to a business. However, understanding and complying with employees’ rights in these situations often helps to protect the business in the long run by preventing long-lasting legal issues or even litigation. Therefore, employers should conduct an objective investigation dedicated to collecting the facts. More and more to ensure such objectivity, employers have been hiring employments specialists – which routinely includes law firms – to conduct the investigation which tends to allow witnesses to be more candid, particularly the complaining employee. ACT QUICKLY, BUT STRATEGICALLY Employers should outline an investigation plan long before they face a complaint in their employee handbook. That way, both employees and employers understand the process before a complaint ever arises, and also serves as an important weapon in an owner’s defense arsenal. Consider the investigation process but customize it to the situation. For example, it is helpful to plan: What process to utilize to investigate the matter; What team member will be the point-person in the investigator’s investigation; and What types of resources are necessary for the investigation. Moreover, to maximize the chance to collect all potentially important information the employer should inform the entire workforce to place a “litigation hold” on all hard-copy and electronic files, meaning everyone must maintain their text messages, emails, notes, letters and any other form of material that could in any way be related to the claims raised in the complaint.

Businesses enter a contract with good faith, expecting the other party – often a business partner – to fulfill the responsibilities laid out. That is why negotiating a contract requires a strategic approach in such a way that business owners can ensure that the elements of the contract are fulfilled. Notwithstanding the agreement, the other party sometimes fails to meet their obligations, and one example is anticipatory breach of contract. WHAT IS AN ANTICIPATORY BREACH OF CONTRACT? Anticipatory breach of contract occurs when one of the parties demonstrates, either through its words or its actions, that it does not intend to comply with one or more of its obligations in the contract. An easy example is if a landlord and tenant have a one-year lease agreement, and the tenant informs the landlord after six months that they have no intention of paying the last six months of rent. Anticipatory breach might give business owners some time to mitigate their damages and obtain the services needed from another source. However, businesses should not overlook any type of breach of contract case. That is why it is important that business owners know they can take legal action. WHAT CAN BUSINESS OWNERS DO? Business owners have a few options when it comes to an anticipatory contract breach. They can: Take immediate action: The aggrieved party can immediately claim a breach of contract and seek remedies such as payment. They do not need to wait until the end of the term of the contract. Extend the terms: In cases where the other party informs the business of the failure to meet a deadline, it might be possible to renegotiate the contract. Businesses might favor this option to avoid litigation. It also allows them to maintain a profitable business relationship. Delay legal action: There is another option in cases of an anticipatory breach of contract – though it involves a significant amount of risk. California precedent determines that business owners can wait until an actual breach of contract, whether material or partial, occurs and then file a claim against the violating party. These situations can be complex, but if business owners understand the options available to them, they can effectively navigate these cases and reduce risks.

A business’s trademark is its identifier. It is the symbol that represents the business to any consumer that sees or hears it. All trademarks must meet specific standards to be federally registrable, which often means they must be unique, but also distinctive from any other registered trademarks. A recent ruling by the Supreme Court of the United States does not deny these requirements, but it did make some changes of which business owners should be aware. SCOTUS SIDES WITH COMPANY’S CASE OVER “GENERIC” TERM IN TRADEMARK Booking.com is a popular website that allows travelers to make reservations all across the globe. The website name – Booking.com – is also the name of their company and domain. Therefore, the company filed a trademark for its name. The US Patent and Trademark Office (USPTO) denied the trademark registration, stating that the term “booking” was too common for the company to trademark. However, according to NBC News, the Supreme Court ruled that the addition of “dot com” made the common term “booking” recognizable enough as a specific brand – and therefore a specific and recognizable trademark. COULD THE RULING INCREASE THE RISK OF LITIGATION? The article from NBC News also reports that some worry this ruling could only increase the chance of trademark disputes and litigation over infringement. One of the most common causes of trademark infringement cases is that the symbol or name is too similar to another business’s, which could: Confuse consumers; Lead to lost business; and Impact the business’s reputation. Experts worry that SCOTUS approving the use of generic terms – as long as they are still identifiable – could lead to such confusion. Although this case pertained to online companies, we have already seen a similar dispute play out with the Lucky Brand case SCOTUS ruled on in May, as we discussed in a previous blog post. There is no way to know for sure how this ruling will impact future business, but California business owners with online platforms should be consciously aware of the effects this new ruling could have.

When California business owners face a dispute with their business partner, usually the last thing they want to do is take the dispute to court. In some cases, litigation is necessary to find a fair resolution; however, it is usually expensive, time-consuming and exhausting while drawing your attention away from your company. On the other hand, declining to consult an attorney can result in your business being taken away from you, or worse. If you, as a business owner, strive to keep any sort of partnership disputes out of court – as well as preserve your business partnership – then try to ensure that you and your partners are prepared to sit down together and figure out a solution. While undoubtedly uncomfortable, it is far less expensive and destructive than litigation. LISTENING IS ESSENTIAL TO RESOLVE A PARTNERSHIP DISPUTE Business owners should schedule a time to meet with their business partners and have an honest and open discussion about the dispute. At this meeting, business owners should: Designate time for each partner to discuss their perspective; Address the issues and concerns regarding the dispute; and Concentrate only on the present issues before considering a solution. This allows business partners to discuss the conflict in-depth, and negotiate in-house before taking any form of legal action. It is often highly beneficial for business owners to address a meeting such as this in the dispute-resolution clause of their partnership agreement, such as a mediation provision. This informal process allows a third-party (such as a retired judge or expert in the field of the business) to helps the parties resolve the dispute before it escalates. NOTE: KEEP EMOTIONS OUT OF THE CONVERSATION It can be difficult to keep emotions out of these kinds of disputes, especially since many business partners commonly have an established friendship outside of the business. However, it is critical to set emotions aside and focus only on the business relationship and the business itself. Letting emotions cloud your judgment can impede your ability to understand – which, in turn, can prevent business partners from reaching a solution.

Employers typically take great care when hiring new employees. They want to ensure they have the proper skills and ambition to help the company succeed. Regardless of how careful employers are, the risk of legal issues remains. It is impossible to avoid all employment issues, and dealing with disgruntled employees can be one of the most challenging. Employers must handle matters carefully when it comes to disgruntled employees, to mitigate the risks that they pose to the company. A PRIMARY CONCERN: DISGRUNTLED EMPLOYEES CAN IMPACT THE WORKPLACE As most employers know, disgruntled employees can pose a serious risk to their business. Some of the most common concerns employers have in these cases include: Disgruntled employees could create a hostile work environment for other employees; and They could instigate other legal issues, often through complaints. The legal issues could potentially stem from the disgruntled employee themselves, or from the hostile work environment they create. THEY ARE ALSO A SECURITY THREAT However, recent reports have found that disgruntled employees could pose a much larger threat to the company at large. These reports find that there is an increasing risk to company security from insider threats, with insiders and employees causing 30% of all data breaches, on purpose or accidentally. How can this happen? The primary risk seems to be that many employees can still access company systems even after they leave. For example, another recent study found that: Roughly 90% of employees could still access company applications, such as the company Facebook, even after leaving employment; and 68% of employees could access accounts and systems, such as their former email, and store company data. This can be dangerous when it comes to disgruntled employees, who may have a vendetta. There have been many cases of disgruntled employees using this access and information against their former employers, with one case involving an individual who downloaded data and intellectual property from a former employer, leading to $425,000 in damages. EMPLOYERS MUST TAKE GREAT CARE These reports only emphasize why employers must handle disgruntled employees carefully – whether they are handling the employee’s complaint or their termination. If employers face issues with a disgruntled employee, they should contact a knowledgeable business attorney to minimize the risks their business could face.

The Occupational Safety and Health Administration (“OSHA”) defines a whistleblower as someone who informs the authorities about a person or organization engaged in illegal or unacceptable behavior. OSHA’s whistleblower laws protect employees from employer retaliation, such as dismissal, discipline, harassment, and demotion. California has additional Whistleblower laws that also come into play. Employers often have two very different perspectives when it comes to whistleblowers. Some wish to encourage their employees to come forward if they witness issues in the workplace, while others might see whistleblowers as a threat. Regardless of these perspectives, all employers must take great care whenever they are faced with a whistleblower complaint. So, here is a brief overview of how employers should handle these situations within their company. REVIEW THE WHISTLEBLOWER POLICY It is critical to be proactive. Even if employers do not have a complaint on their hands currently, they should review their whistleblower program. For example, employers should consider: What message does the company policy send? Does the company have an anonymous hotline employees can use? How do employers train supervisors to handle whistleblower reports? What is the company’s policy on retaliation? Creating a program that responds to employee complaints effectively and efficiently can make all the difference to prevent a lawsuit. Forbes provides some advice that employers can review to create an effective whistleblower program. PLAN THE INVESTIGATION CAREFULLY Employers must take the claims seriously by conducting a proper investigation of the claims to gather the facts. It is always important for employers to: Craft a strategy for the investigation before starting, but act with efficiency; Determine whether they should start an internal investigation, or bring in a third-party; Remain objective while conducting interviews with employees; and Protect the whistleblower’s anonymity during the investigation. It is natural for employers to feel the need to defend their company when whistleblowers come forward. However, employers must take great care to make rational decisions to avoid violating the whistleblower’s rights. This can help to protect the company in the long run. KEEP UP TO DATE WITH RETALIATION LAWS California law prohibits employers from retaliating against employees who engage in protected actions, such as blowing the whistle. Preventing retaliation is essential since whistleblower complaints can become exponentially worse for a company if they experience illegal retaliation. Additionally, employers should also understand all of the protections whistleblowers have in California. This has two primary benefits, including: Understanding precisely when whistleblowers can take action, and whether they followed the proper legal process; and Knowing what actions they can take without facing legal consequences. If employers ensure they comply with the law, then they are on track to reduce the risk their company faces.

Trademark infringement is a serious and complex risk for business owners. However, it can often be difficult to determine if an action – or in some cases, a word – truly infringes on another company’s protected and valid symbol, especially when it comes down to common terms shared by many companies. A recent Supreme Court case emphasizes just how difficult these types of trademark infringement disputes can be. SUCCESS FOR LUCKY IN YEARS-LONG TRADEMARK DISPUTES The clothing brand Lucky is a well-known name in both the consumer world. The Beverly Hills-based company holds high rank in the fashion world, which can, unfortunately, lead it to face higher risks. For example, the Miami-based Marcel Fashion Group has filed several trademark infringement lawsuits against Lucky over the years. The dispute began when Lucky used the phrase “Get Lucky” in an ad campaign. Marcel already had a trademark on this phrase. In the original settlement, Lucky agreed not to use “Get Lucky” in any further campaigns. However, in the following years, Marcel claimed Lucky infringed again, using phrases with the term “lucky.” This led the two companies to go back and forth for years, through circuit courts and appeals courts. In May, the Supreme Court of the United States determined that Lucky did not infringe on Marcel’s trademarks after the initial settlement, proving to be a win for Lucky after decades. WHAT CAN BUSINESS OWNERS LEARN FROM THIS CASE? Legal issues involving trademarks are not easy to manage. And as the case between Lucky and Marcel demonstrates, these matters can be prolonged and painstaking – especially if they are not resolved properly to begin with. That is why business owners must take great care to protect their trademark. It is often beneficial to speak with an experienced business attorney to create a proactive plan to protect intellectual property. However, California business owners must also: Fully understand their trademark rights; Monitor the use of their trademark; and Take swift – but strategic – action against infringement. Proactive action is essential not only to secure trademarks but also to avoid lengthy and expensive litigation.

Building relationships is an important part of any business strategy, which takes time and careful effort to establish these relationships or business partnerships. What happens, however, if a competitor interferes with a business relationship? Business owners can take legal action against wrongful interference, but they must know what elements are necessary to prove such interference occurred. THE FOUR ELEMENTS OF WRONGFUL INTERFERENCE Evidence plays the most critical role in these lawsuits. Even if business owners know that a competitor interfered with their contractual relationship or partnership, it is critical to gather and save evidence. There are four factors that business owners must prove in these cases, and the evidence collected should reflect these factors, which include: There was a valid contract: Business owners should obtain a copy of the legal contract proving the business maintained a commercial relationship or partnership. The third-party knew of the contract: This element may be more challenging to prove. Business contracts are rarely public records, and the third party might deny they had any knowledge of the contract to avoid legal penalties. The third-party interfered: There are two parts to this factor. Business owners must prove that the third party: 1) intended to interfere with the business relationship, and 2) did interfere. For example, the third-party persuaded the partner to end the current business partnership and become a partner of the third party’s instead. The business suffered damages: The business must have suffered economic damages from this interference. Business owners will generally have financial records of these damages and losses to provide as evidence. Proving these elements can be challenging. It is often beneficial for California business owners to consult a trusted attorney if they wish to pursue damages for wrongful interference.

Any business owner understands the challenge of starting a business. Between drafting business plans, market research, building the infrastructure, securing space, hiring, and securing funding, there is little room for error. The process of dissolving a corporation is also challenging. Workers cannot just stop business operations and hang up a “closed” sign. Mistakes in this process can result in monetary fines and penalties. If your business is a corporation, understanding how to dissolve it is important to avoid having to look over your shoulder for years to come. FOLLOW THESE STEPS TO DISSOLVE A COMPANY California law requires corporation owners to complete a multi-step dissolution process: Hold a board meeting and a vote: A corporation’s board of directors must vote to dissolve the business. Though the board may already be aware of the reasons for dissolution, a formal motion must be made which should be clear and concise. A majority of shareholders must give their authorization to approve the dissolution. The, all the corporate owners should then sign a written agreement detailing the dissolution. File a Certificate of Dissolution: The board must then file a Certificate of Dissolution with the California Secretary of State. If the vote to dissolve was not unanimous, the board must also file a Certificate of Election to Wind Up and Dissolve. Advise government tax agencies: The administrator must then inform the Internal Revenue Service (IRS) and the California Franchise Tax Board (CFTB). Corporations will pay taxes one final time, filing them under “Final Return.” A “tax clearance” certificate will go to the Secretary of State. Close accounts and cancel licenses: Corporations must then close all their bank accounts, end lines of credit, shut down vendor accounts, and notify consumers and suppliers of the dissolution. Remember to terminate any special licenses or permits. CONSIDER LEGAL CONSULTATION Corporations looking for a smooth and quick dissolution process can reach out to a local attorney familiar with business law. A lawyer will help draft notices, file certificates and help manage any claims against the business.

Business owners work hard for what their company has achieved. Everything from the purpose of the business to the carefully cultivated clients is a valued and protected asset for entrepreneurs. Even the logo or branding represents a hard-fought victory full of symbolism, dedication, pride – and perhaps most importantly crucial brand identity and value. Consequently, when another company or individual misappropriates these important assets, either intentionally or not, it can seem like a direct attack on the livelihood of the business. Upon learning of such a misappropriation, the business owner should retain an attorney to write an impactful cease-and-desist letter to the offending party identifying the unlawful conduct and demanding that they immediately stop. CEASE-AND-DESIST LETTER BASICS There is an art to writing a cease-and-desist letter. Too strong, and it may incite resistance which may result in having to file a lawsuit to enforce your rights. Too weak and it will likely be ignored. Firmly encouraging compliance and cooperation rather than seeking punitive remediation if often preferred. For example, in 2012, the popular whiskey brand Jack Daniel’s sent a cease-and-desist letter to an author who used a likeness of their whiskey label as a cover for his book. Instead of immediately threatening legal action, the liquor mogul politely asked him to change the cover for the next printing. They even offered to help pay for a redesign. The author immediately acquiesced, declining the extra funds and making the changes. LEGAL COUNSEL PROVIDES A PROFESSIONAL EYE The Jack Daniel’s approach may not work for every company. Those looking for a more professional voice can hire a local lawyer familiar with intellectual property law. An attorney can draft a professional letter that lays out legal claims clearly and concisely.

The innovations that companies develop are some of their most valuable assets, and theft of that asset – typically known as “intellectual property” or “IP” can be devastating. That theft can limit your business’s profitability, damage its reputation among consumers and have a long-term impact on your business’s success. If a person or company has stolen your business’s IP, the United States Department of Justice offers recommendations for the next steps. LAUNCH AN INTERNAL INVESTIGATION, AND KEEP CAREFUL RECORDS. Once you have discovered a breach, an internal investigation should be your first step. Whether you believe that your intellectual property was stolen through hacking, malware or misconduct by an employee, your internal investigation allows you to act quickly. During this internal investigation, you must keep records of your inquiry. Collect your existing documents related to the stolen IP. Carefully document interviews with employees and contractors, including those that may not seem relevant. Even if this investigation does not help you discover the person or company that infringed on your IP, it can provide a foundation for future investigation by authorities. For many reasons, the internal investigation is much better conducted by a law firm, which also utilizes the services of experienced investigators who carefully document all of their steps and findings. REPORT THE THEFT TO THE AUTHORITIES. Depending on the severity and extent of the theft, it may be appropriate to report it to the authorities. The National Crime Prevention Council has different recommendations for reporting these crimes, depending on the type of IP. These agencies include: The Federal Bureau of Investigation (FBI) The United States Food and Drug Administration (FDA) The National Intellectual Property Rights Coordination Center The United States Postal Inspection Service These authorities can continue your investigation and help you pursue justice. FILE A SUIT AGAINST THE PERSON OR COMPANY THAT HAS VIOLATED YOUR IP. In addition to the authorities’ investigation, you may be able to file a lawsuit against the thief. Speak to an attorney with experience in intellectual property rights to explore the available options and consider legal steps that could further strengthen your business’s IP.

Businesses struggle every day to remain competitive in their industry. With rapid advancements in technology and a constant pressure to innovate, a company’s trade secrets are vital to maintaining an edge. Protecting these trade secrets is typically crucial to your business’s survival. California helps businesses protect this information with the Universal Trade Secrets Act (UTSA). PROTECTED INFORMATION Lawmakers designed the UTSA with companies in mind. The law recognizes the importance of patented designs, logistical strategy and even inventory management. Data does not have to reach a certain value threshold before receiving protections under the law. Specifically, the UTSA covers information if a company takes a reasonable measure to protect it and if the information’s value is dependent upon its secrecy. The law does not limit “trade secrets” to those stolen via electronic heist or cracking the boss’ safe. In fact, more than 80% of information theft happens internally. A company’s employees are the primary perpetrators of data theft, or as the UTSA calls it, “misappropriation.” Intellectual property law is in a constant state of adaptation, so the UTSA has taken some hardline measures to define infractions. The legal definition of “misappropriation” covers two forms of violation: Acquisition by improper means: The law further defines “improper means” as theft, bribery, misrepresentation, breach or inducement of a breach of duty to maintain secrecy, or espionage through electronic or other means. The use or disclosure of trade secrets: The UTSA prohibits the use or disclosure of trade secrets, whether an employee uses information gathered from one job to another or informs a competitor, client, business partner or anyone else. CLARIFYING AMENDMENTS OF THE UTSA The UTSA does not just protect information physically stolen. The law also extends to the memories of former employees. If an employer can prove than an employee used or disclosed the contents of their memory regarding a trade secret, that employee may be subject to punitive measures under the UTSA. The law does stop short of prosecuting former employees for using “general business know-how” and skills learned in a previous job. However, legislators did reject an “inevitable disclosure doctrine” that would have introduced time limits to how long an employee must protect the trade secrets in their memory. CONSIDER A LEGAL REVIEW Companies must take care when protecting their information. A key tenet of the UTSA is that companies must take reasonable measures to keep secret information secret. Business owners with questions about their security can contact a local lawyer familiar with intellectual property law.