A question often asked is whether businesses and individuals can avoid contract performance because of the COVID-19 pandemic? This question permeates all aspects of the business world, from office leases to product purchase and sale contracts to loan contracts and myriad other contractual arrangements.

Here are two recent white papers by some very esteemed lawyers that discuss the topic in detail:

http://www.cblg.biz/resources/force-majeure-and-covid-19/

https://www.bricker.com/resource-center/COVID19/publications/force-majeure-provisions-dusting-off-a-law-school-exam-topic-for-the-covid-19-pandemic

Please call us if you have any questions.

This post is courtesy of our law clerk Ashley Franco, an exceptional student at California Western School of Law who just finished her second year:

The answer to the question in the title to this post is the typical lawyerly “it depends.” It is important to distinguish between the ownership rights to the tangible tattoo (the skin itself) and the exclusive rights provided by copyright for the design of the tattoo. The ownership rights to the tangible tattoo (the skin itself) belong of course to the tattoo bearer. However, the “author” of the tattoo (i.e. tattoo artist) may have exclusive copyright rights in the tattoo design.

Under section 101 of the Copyright Act, a creator of original work that is fixed in a tangible medium of expression for more than a transitory duration is given copyright protection for the original elements of the work. A tattoo may be an original work (depending on the design) and of course is fixed to a tangible medium (the body) for more than a transitory duration. Therefore, the copyright doctrine applies to tattoos and may provide the tattoo artists with copyright protection for original designs.

Copyright protection grants the copyright owner six exclusive rights, which he or she may transfer: (1) the right to reproduce (2) the right to prepare derivative works (3) the right to distribute (4) the right to perform the work publicly (5) the right to display the work publicly, and (6) the right to perform the work publicly by digital transmission.
To determine the ownership of the exclusive rights, it is important to determine who is the “author” of the tattoo. The “author” may be the tattoo artist, the tattoo bearer, or both if they both contributed to the tattoo design. The “author” may also be the tattoo artist’s employer, through a doctrine known as the “work made for hire” doctrine.

Most tattoo copyright infringement cases are filed by tattoo artists and are settled. Therefore, the courts have yet to decide what the tattoo bearer has the right to do with his or her tattoo. In Whitmill v. Warner Brothers (a tattoo infringement case), Judge Perry did comment that tattoos could be copyrighted, and that there was a high likelihood of Whitmill prevailing on the merits. In Whitmill, Victor Whitmill designed the famous tribal tattoo for Mike Tyson, which he had tattooed on his face. An exact copy the tattoo later appeared in the movie “The Hangover II”, on Ed Helms’s face. Thereafter, Whitmill filed suit seeking monetary damages for copyright infringement of the Tyson tribal tattoo, and a preliminary injunction preventing the release of the film. However, the parties settled before the court could weigh in on the application of the copyright doctrine to tattoos.

As tattoos have gained popularity, more suits have arisen by tattoo artists claiming copyright infringement. Many of these suits are against the NFL and NBA and/or their marketing partners because athletes’ tattoos are copied and displayed on an array of media (i.e. posters, video games). Consequently, companies are now implementing contracts in which the tattoo artist waives his or her rights to copyright.

We expect that so-called “tattoo infringement” litigation will increase as tattoos continue to gain popularity and prominence among celebrities, athletes and common folk, and tattoo designs become more elaborate and unique. Therefore, for a person spending a lot of money getting a tattoo or a tattoo artist developing unique and original tattoo designs, it is a wise investment to have an attorney draft a contract to clearly state who owns what rights to the tattoo.

Here’s an excellent post by our Of Counsel Ashley Franco:

As new technologies appear, so do laws that regulate them. Changes in technology usually outpace laws put in place to regulate them; as a result, there is usually a gap between the time the technology emerges and time a law is enacted to regulate it. Until recently, the increasingly popular e-cigarette went without regulation. On May 5, 2016, the U.S. Food and Drug Administration finalized a rule extending its authority to include e-cigarettes as part of the tobacco products it can regulate. The new rule, effective August 8, 2016, imposes disclosure requirements to companies selling and/or manufacturing the e-cigarettes and/or any of its affiliated products.

One major implication of the new rule is that e-cigarette manufacturers will have to undergo a premarket review in which they must disclose the ingredients in the e-liquids used in the e-cigarette. The FDA stated the new requirements are in the interest of the consumers who should have the opportunity to evaluate the potential risks associated with consuming the e-cigarette liquids, which usually contain nicotine derived from tobacco.

It comes as no surprise that the FDA has decided to regulate e-cigarettes, since there are obvious health risks associated with consuming tobacco products. Since the e-cigarette’s introduction, it has gone under the radar with little to no regulation. You will most likely find individuals smoking e-cigarettes in the non-smoking sections of restaurants and bars. It has become a way for smokers to get their nicotine fix in areas where the common cigarette is banned by regulation. That seems to be heading to an end with the new regulation because under the new rule the FDA will be able to evaluate the dangers of the e-cigarette.

Under the new rule’s premarket review requirement, the FDA will be able to evaluate the dangers of the e-cigarette. For example, tobacco smokers are prohibited from smoking regular cigarettes in certain areas because of the known health risks associated with second hand smoke. The effects of e-cigarette second hand smoke is not certain as of yet, but will be investigated as part of the new rule and will most likely have an affect on where e-cigarette smokers can enjoy their e-cigarettes.

Who should worry about the outcomes of the new rule? Small businesses should certainly start looking into the impact this new rule will have on them. The new disclosure requirements will most likely have a negative effect on small businesses that may not be able to cover the costs of the additional disclosure requirements. The premarket review requirement imposes a great costs to all businesses that sell and/or manufacturer e-cigarettes and affiliated products.

If you manufacture e-cigarettes the rule requires you to:

1.  Submit an application and obtain FDA authorization to market the e-cigarette
2. Register establishment(s) an submit the product listing to FDA by December 31, 2016
3. Submit a list of the ingredients associated with your e-cigarette and affiliated products
4. Submit information on the harmful and potentially harmful constituents (HPHCs)
5. Submit tobacco health documents
6. Manufacture your tobacco product with the required warning statement on packaging and advertisements
7. Market your tobacco product in compliance with the other applicable statutory requirements, rules and regulations.

If you sell e-cigarettes or their component parts that are made or derived from tobacco you are also subject to certain FDA requirements.

Complying with the law may be a long and complex process. We recommend you consult with a lawyer to help you understand and comply with the FDA regulations and policies.

For a copy of the Final Rule see https://www.federalregister.gov/articles/2016/05/10/2016-10685/deeming-tobacco-products-to-be-subject-to-the-federal-food-drug-and-cosmetic-act-as-amended-by-the#h-9

Here’s an interesting post written by our associate attorney Ashley Franco about the recent Volkswagen scandal:

In 1973 Volkswagen (VW) settled with the Justice Department for $120,000 for cheating on its emissions test.  Now more than forty years later, Volkswagen has again been caught cheating on its emissions test.  Apparently VW installed software in its diesel vehicles which was specifically designed to pass emissions tests without actually being in compliance.

So what exactly is the harm done by Volkswagen?  The Environmental Protection Agency states that the cheating software allows specific VW models to pass emissions test while actually emitting more than 40 times the legal limit.  This means that the VW vehicles with the cheating software emit 40 times more that the amount of harmful fumes allowed.  VW has admitted to creating the software specifically to lower the emissions reported by its vehicles during inspections.  Cheating on its emissions tests has already resulted in a dramatic plunge in VW’s stock price.  VW also lost its CEO and is facing billions of dollars in fines.

What everyone should learn from VW’s mistake is that when dealing with state and federal laws, you don’t want to swindle your way into compliance.  It is important to consult with a lawyer to make sure that your business practices are in conformity with applicable laws and regulations.  Even if you are not intentionally breaking the law, you may still be inadvertently in violation of a law and/or regulation, thereby  putting you at risk of civil and criminal liability.

In VW’s case, under the Clean Air Act (the federal law designed to control air pollution), each violation may result in up to a $37,500 fine.  VW is suspected of having more than 400,000 violations. A $37,500 fine multiplied by 400,000 violations results in over $15 billion in potential fines being faced by VW simply by cheating on its emissions tests.

This isn’t the first time a car company has been fined by US regulators. Last year General Motors (GM) was facing civil and criminal penalties for installing faulty ignition switches in over 2.6 million vehicles.  However, GM reached a $900 million settlement with US officials.  The main difference between GM’s liability and VW’s potential liability is that VW’s cheating devices did not cause any deaths, whereas GM’s faulty ignition switches did.  That doesn’t mean that there won’t be suits filed.  A recent survey by Big Law Business of the nation’s court dockets identified that twenty federal lawsuits have already been filed against VW based on the diesel scandal.   As of the date of this posting there have not been any settlements by VW so it is still too early to predict how the VW scandal will resolve.  However, companies certainly can learn from the VW scandal that it simply does not pay to cheat on compliance with federal and state laws and regulations.

Last year we posted an article suggesting to keep an eye out on certain cases pending to be heard by the Supreme Court during its 2014-2015 term (see here: https://affinitylaw.wordpress.com/wp-admin/post.php?post=226&action=edit). Here’s a post from our excellent law clerk Ashley Franco following up on how the Supreme Court decided those cases. For a brief overview of the facts surrounding each case please see our previous post on the matter.

Administrative Law:

In the two consolidated cases of Perez v. Mortgage Bankers Association and Nickolas v. Mortgage Bankers Association, the issue was whether a federal agency must engage in a notice and comment procedure before it can significantly alter an interpretation of one of its own rules.  On March 9, 2015 the court held that agencies are not required to follow notice-and–comment rulemaking procedures when amending or repealing their interpretations of its own rules. The effect of this decision allows agencies to modify their regulations faster and easier.

Employment Law:

The Supreme Court’s ruling in the following case is bad news for employees who must spend extra hours going through security screenings as part of their employment. In Integrity Staffing Solutions, Inc. v. Busk, the issue was whether the employee should be compensated for the time spent in security screenings after work hours. On December 9, 2014 the court held the time spent in the security screenings at issue were not compensable work time. The basis for the court’s decision was that the security screenings (1) were not the “principal activities” which the employees were employed to perform, and (2) were not “integral and indispensable” to the employees’ duties. Employers should take a close look at the Supreme Court’s opinion in order to determine whether they must compensate employees for activities performed before and after work hours.

Criminal Law:

In Heien v. North Carolina, the issue presented was whether a police officer’s mistake of law provides justification for a search under the Fourth Amendment.  On December 15, 2014 the Supreme Court held in an 8-1 decision that a search or seizure is reasonable under the Fourth Amendment when an officer makes a reasonable factual or legal mistake. What does this mean? This holding offers great leeway to police officers. In other words, a police office may stop you even if he is mistaken as to whether your actions are illegal. Justice Sonia Sotomayor’s dissenting opinion addressed her concerns with the majority’s holding stating, “there is nothing in our case law requiring us to hold that a reasonable mistake of law can justify a seizure under the Fourth Amendment and quite a bit suggesting just the opposite. I see nothing to be gained from such holding and much to be lost.”

Constitutional Law:

In the consolidated cases of Alabama Legis. Black Caucus v. Alabama and Alabama Democratic Conference v. Alabama, the issue presented was whether Alabama’s legislative redistricting plans unconstitutionally classified black voters by race by intentionally packing them in districts designed to maintain supermajority percentages produced when 2010 census data are applied to the 2001 majority-black districts.  On March 25, 2015, in a 5-4 decision. the court reversed the district court’s decision and remanded the case for further proceedings. The court held that that the district court erred in focusing on whether the redistricting plan as a whole was unconstitutional racial gerrymandering, rather than making the determination on a district-by-district basis. The court stated the case would be remanded for the district court to consider whether the individual districts, not the state as a whole, were drawn with race as a predominant factor. This holding is a victory for the plaintiffs’ civil rights.

The Supreme Court has heard oral argument on the following important cases, but has yet to release a decision:

Business Law:

In Kellogg Brown & Root Services, Inc. v. United States ex rel. Carter, one of the two issues presented is whether the False Claims Act’s “first-to-file” bar functions as a “one-case-at-a-time” rule allowing an infinite series of duplicative claims so long as no prior claim is pending at the time of filing. Oral argument heard on January 13, 2015.

Criminal Law:

In Elonis v. United States the issue presented was whether consistent with the First Amendment (freedom of speech) and Virginia v. Black, conviction of threatening another person under 18 U.S.C. § 875(c) requires proof of the defendant’s subjective intent to threaten, or whether it is enough to show that a “reasonable person” would regard the statement as threatening. Oral argument was heard on December 1, 2014. However, the Court has not yet ruled on this case. This case is one to keep on eye on, as we are now in the era of where internet threats are increasing, and using them as “true threats” can have substantial implications for those who post them.

If you are interested in reading the full transcript or listening to the oral argument of any of the above cases they may be found at the Supreme Court’s website at http://www.supremecourt.gov.

One issue that has generated much commentary and controversy in the trademark litigation field is whether decisions of the Trademark Trial and Appeal Board (TTAB) can/should be given issue preclusion (collateral estoppel to us old timers).  This morning, the United States Supreme Court issued its long-awaited decision in B&B Hardware, Inc. v. Hargis Industries, Inc., where the Supreme Court found that TTAB decisions can be the basis for issue preclusion so long as the requirements for issue preclusion are met.

This is a significant decision with substantial implications not only for future trademark litigation matters where there has been prior TTAB litigation but also for decisions whether to seek registration for a particular trademark.  Most significantly (as was the situation in the B&B Hardware case), a party who is denied trademark registration because of the likelihood of confusion with another mark may be precluded from challenging the likelihood of confusion finding in subsequent trademark infringement litigation.

A copy of the B&B Hardware decision can be found here:  http://www.supremecourt.gov/opinions/14pdf/13-352_c0n2.pdf