Chicago Business Lawyer Blog

A Chicago catering company has been shut down by federal inspectors in the wake of claims that the company did not properly protect food from contamination.

Our Chicago small business attorneys know how devastating this can be to a restaurant or food-service business. To be shut down any time of year threatens a company's survival. But to be shut down at the holidays may very well force a catering company out of business. To say nothing of the damage to reputation that food-contamination allegations present.

Triple A Services, a South Throop Street caterer, agreed to take a number of food-safety measures, including the hiring of food sanitation of food processing experts, before reopening, according to the Chicago Tribune. The lawsuit filed on behalf of the U.S. Food and Drug Administration found violations during inspections in July and August of this year. The company operates a 46,0000 square foot Chicago facility with a 24-hour kitchen and bakery. It provides catering and office coffee and bottled water services.

Complying with environmental, health and safety regulations is critical to the health and viability of any business enterprise. As this case illustrates, consulting an attorney and putting plans in place to ensure compliance is often much easier, and much less expensive, than dealing with the fallout from citations and other non-compliance issues.

The lawsuit alleges bacteria was found at the facility as far back as 2001. The government's reaching into the past as part of the lawsuit illustrates why a legal defense is always required, even when a business or facility believes a common citation is the extent of the consequences. On the surface, this lawsuit also alleges relatively routine complaints, including a lack of a written plan for dealing with seafood, pest control issues, failure to fix a leaking water issue and employee cleanliness issues. These are all problems common within the restaurant industry. A thorough review of this case may also reveal that the company could have easily prevented the case from escalating by either defending itself or resolving a few simple issues.

Instead it has a public relations issue and is facing fines of $2,500 a day if it fails to comply with a consent decree. Forced closure will likely cost it thousands more. Remaining proactive from the start, and having a thorough understanding of your rights, can literally save your business when dealing with local, state or federal regulators.

Other common issues involving Environmental, Health and Safety regulations include:

-Regulations involving the Occupations Safety and Health Administration: Issues related to employment regulations and work safety.

-Regulations involving the Environmental Protection Agency: Administrative and court defense of alleged violations.

-Regulatory compliance and affairs: Clean Air Act, Resource Conservation and Recovery Act, Toxic Substance Control Act, Clean Water Act.

-Due diligence and risk management: Environmental site assessments and compliance audits.

-Remedial actions and Brownfield projects: Cleanup options and obligations.

-Governmental inspections and proceedings: Defense and administrative resolutions.

Continue reading "Health & Safety Regulatory Compliance Critical For Chicago Small Businesses" »

Our Chicago intellectual property lawyers were intrigued when, on July 20, reality star and celebrity Kim Kardashian filed a $20 million lawsuit in a federal district court against Old Navy and Gap, Inc., its parent, for using her doppelganger in an advertisement for the retail store.

First aired in February 2011, the ad shows the "look-alike" getting her picture taken by the paparazzi, finessing her way out of tickets, and dressing in clothing particular to Old Navy. The ad has already been viewed more than two million times on Old Navy's YouTube channel.

Kim Kardashian is arguing that the advertisement violates her "right to publicity" because it portrays her as falsely promoting Old Navy. She contends that since consumers may become confused by the advertisement and its endorsements, the advertisement violates her right to publicity noting that she "has invested substantial time, energy, finances, and entrepreneurial effort in developing her considerable professional and commercial achievements and success, as well as in developing her popularity, fame, and prominence in the public eye."

The right of publicity prevents the unauthorized commercial use of an individual's likeness, name, or some other recognizable quality. This means that the right of publicity gives an individual the limited right to license his or her identity for a commercial reason. The purpose behind the right of publicity is the protection of a person's economic interests.

This is not the first time that a celebrity has asserted her right of publicity. Bette Midler had previously filed a lawsuit against Ford Motor Co. alleging that the company violated her publicity rights by hiring an individual that sounded like her to sing in a car commercial. The jury ultimately ruled in favor of Midler holding that it is unlawful to imitate a person's voice to sell a product if the person has not given permission.

Although Bette Midler was successful, that does not necessarily mean that Kim Kardashian will be as well. To prevail under California law, she will have to establish the "knowing use of [her] name, photograph, or likeness for commercial purposes, and a direct connection between the use and the commercial purpose."

This is an interesting case and is a little different from soundalike cases, like Midler's. For example, with a "lookalike," the viewer has more information and opportunity to evaluate the actor. And, in this situation, there is no use of Kardashian's name. (We're not informed about reality TV news enough to know whether any ad elements would resemble any "signature" aspects of Kardashian's persona.) However, it seems highly likely that Melissa Molinaro, the ad's actress, was selected with awareness of her physical similarities to Kardashian and there is a reference to celebrity status in the ad. Furthermore, there clearly is a commercial purpose if a jury would find that the portrayal constitutes Kardashian's "likeness."

In any event, it seems like Kim Kardashian will not give up without a fight. Gary Hecker, the attorney who filed the suit on Kim Kardashian's behalf, noted that "Kim Kardashian is immediately recognizable and is known for her look and style. Her identity and persona are valuable. When her intellectual property rights are violated, she intends to enforce them." That is a very bold statement, and it will be interesting to see if it will be realized.

This post was prepared by summer research assistant Yelena R. Our Chicago business attorneys regularly assist clients with advertising, marketing and related intellectual property matters and our available to meet about your corporate law needs in Chicago, Deerfield, Northbrook, Oak Brook, Rosemont, Schaumburg, Skokie and other offices in the area.

A judge in Cleveland recently ruled that the Ford Motor Company must pay $2 billion as part of a class-action lawsuit accusing the company of overcharging truck dealerships over an 11-year period, The New York Times reports.

Chicago Distribution Attorneys believe this case demonstrates the importance of thinking through the implications of commercial contracts to maximize supplier flexibility. Chicago distribution and sales can be crucial to a company looking to gain increased exposure in the marketplace.

In the Ford case, the company plans to appeal the ruling, which stated that it violated agreements with about 3,100 dealerships from 1987 to 1998, using "hidden discounts" and unpublished prices to increase its profits at the expense of dealerships. Ford made dealers pay a total of $800 million more than they should have for nearly 475,000 medium- and heavy-duty trucks, including tractor-trailers and bulldozers.

Damages include $1.2 billion in interest and were calculated based on the formula used by a jury that in February awarded $4.5 million to an Ohio dealership. The company, in a statement, said the pricing program benefited dealers and didn't harm them.

The lawsuit was filed in 2002 and alleged that the company set wholesale prices on the trucks that were higher than the prices buyers were willing to pay for them. The dealers could request discounts from Ford so that they would be able to earn a profit, but each dealer was unaware of how much Ford was discounting the trucks to other dealers. As a result, the prices that dealers paid for identical trucks varied widely.

Our firm handles many areas of business law in Chicago and is well-equipped to bring a lawsuit either on behalf of a company or its distributors. We work with clients to structure these agreements and negotiate distribution, franchise and sales representative agreements. Many times, our firm has seen that licensing and trade secret agreements become an important part of these contracts.

Continue reading "Ford Forced to Pay $2 Billion to Dealerships in Chicago Distribution Ruling" »

There was an interesting piece in this past weekend's New York Times Magazine describing how brazen, entrenched and sophisticated the infrastructure is for making copies of brand name merchandise.

The article, entitled "Inside the Knockofff-Tennis-Shoe Factory," provides a look at how counterfeit products of famous brands are ordered from and made at the manufacturing centers in the Putian area of China. Among other things, authorities indicate that this business is attractive to criminal enterprises because the sanctions if caught are much less than those for trafficking in illegal drugs.

The story also details the ups and downs of U.S. federal enforcement efforts:

In 1998, the National Security Council studied the impact of intellectual-­property crimes and concluded that federal law-enforcement efforts lacked coordination. An executive order soon followed, sketching out the role of the National Intellectual Property Rights Coordination Center. Two years later a makeshift office opened in Washington, but after 9/11, chasing counterfeit goods lost priority. Ballman said: "Resources and focus changed overnight. Agents were detailed elsewhere and moved away from thinking about I.P. to counterterrorism and weapons of mass destruction."

The Obama administration has made intellectual property more of a focus. "Our single greatest asset is the innovation and the ingenuity and creativity of the American people," President Obama said in a speech in March. "But it's only a competitive advantage if our companies know that someone else can't just steal that idea and duplicate it with cheaper inputs and labor." To implement his intellectual-property strategy, Obama appointed an intellectual-property-enforcement coordinator, while Immigration and Customs Enforcement invigorated the property-rights coordination center.

Can such efforts make a difference? "You're not going to arrest your way out of this," Bob Barchiesi, president of the International Anticounterfeiting Coalition, told me in a despairing tone this past spring. As long as there is a demand, he insisted, there will be supply. He had just returned from a trip to China, the point of origin for nearly 80 percent of all goods seized by Customs and Border Protection in the previous fiscal year. One day, Barchiesi observed a factory raid where counterfeit jeans were seized by the Chinese authorities. The factory, its employees and all its equipment remained in place. Barchiesi called the raid a "propaganda show."

So, it will remain to be seen if it is feasible to suppress the knockoff artists. However, there are a variety of business and legal reasons that make it important for owners of patents, trade secrets, trademarks and designs to police their rights and protect their intellectual property. These range from creating a credible deterrance threat to avoiding waiving ones' IP rights.

Contact Jeremy A. Gibson & Associates, PC if you believe your proprietary interests are being infringed. Our Chicago intellectual property lawyers can help assess your rights and develop and implement a prudent protection strategy. We are available to provide business law advice and representation in Chicago, Deerfield and throughout the region.

The U.S. Copryight Office announced yesterday amendments to anti-circumvention regulations pursuant to the Digital Millenium Copyright Act that would exempt "jailbreaking" the Apple iPhone from being illegal under federal law. The exemption was requested by the Electronic Frontier Foundation.

Here is an excerpt of the news release, which can be found at www.copyright.gov:

"The Librarian of Congress has announced the classes of works subject to the exemption from the prohibition against circumvention of technological measures that control access to copyrighted works. Persons making noninfringing uses of the following six classes of works will not be subject to the prohibition against circumventing access controls (17 U.S.C. § 1201(a)(1)) until the conclusion of the next rulemaking . . .

(2) Computer programs that enable wireless telephone handsets to execute software applications, where circumvention is accomplished for the sole purpose of enabling interoperability of such applications, when they have been lawfully obtained, with computer programs on the telephone handset.

(3) Computer programs, in the form of firmware or software, that enable used wireless telephone handsets to connect to a wireless telecommunications network, when circumvention is initiated by the owner of the copy of the computer program solely in order to connect to a wireless telecommunications network and access to the network is authorized by the operator of the network . . .

The Copyright Office is conducting this rulemaking proceeding mandated by the Digital Millennium Copyright Act, which provides that the Librarian of Congress may exempt certain classes of works from the prohibition against circumvention of technological measures that control access to copyrighted works."

Apple has proffered a number of reasons for preventing its customers from accessing applications, which basically can be summarized as Apple wanting to control the iPhone experience in the name of preventing the user experience from being degraded by unapproved vendors and apps that might not be available through the iTunes marketplace.

In general, from a business law perspective, this decision can be seen as of a piece with other legal restrictions that prevent a seller from trying to monopolize its customers. For example, in other settings, sellers in the past have tried to require customers as a warranty to maintain goods on a certain schedule using only the seller for services. This type of blatant restriction or tie-in generally is not permissible under antitrust and fair competetion laws. Instead, for example, rather than a car buyer having to use an auto dealer for onoging service, a purchaser should be free to choose independent shops and providers.

Similarly, although the Copyright Office's decision is rooted in intellectual property and copyright infringement considerations, it should be seen as an indication of suspicion of post-sale limitations on a purchaser's choices. Accordingly, business owners and managers should exercise care when contemplating legal ways to lock in or restrict their customers discretion after a sale.

Chicago business lawyer Jeremy A. Gibson is experienced in distribution & sales and intellectual proprty counseling would be pleaded to discuss your business law questions about the Apple iPhone jailbreaking case or similar post-sale requirements.

Our Illinois business lawyers recently worked with Bodacious Enterprises, Inc. to structure and negotiate a sales representation and marketing services agreement with Goodnighties, Inc. Under the agreement, Bodacious, based in north suburban Chicago, will be the exclusive representative in the United States and elsewhere for the Goodnighties brand of sleepwear, which initially is targeted for women. The firm also provided legal counseling regarding a variety of other corporate and contract matters.

The Goodnighties products incorporate a special, soft, wicking fabric containing extra negative ions that results from a licensed proprietary process and treatment first used for enhancing sports performance. Goodnighties sleep apparel is intended to provide more dry, comfortable and restorative sleep for women experiencing night sweats, soreness and/or injuries. The purpose of the increased negative ions is to elevate the flow of oxygen-rich blood to muscles. Goodnighties is based in Huntsville, Alabama.

The attorneys of Jeremy A. Gibson & Associates, P.C. have extensive experience assisting Chicago and other Illinois businesses with distribution, sales and licensing law issues, such as negotiating exclusivity, territory, commissions, intellectual property and termination provisions.