Chicago Business Lawyer Blog

Technology giant Apple recently won a key ruling in a case regarding the software in some of HTC's Android smartphones, CNNMoney reports.

Issues of intellectual property in Chicago are critical because protecting your ideas is the only way to run a successful business. This is especially true in the world of technology, which is constantly changing and improving.

Our Chicago small business lawyers understand that protecting your company is critical in surviving the market in which you are competing. Often, these matters require litigation in order to fix an issue that is a result of theft of ideas.

In this case, the U.S. International Trade Commission ruled in Apple's favor that the software used in some of HTC's Android smartphones violated a provision of Apple's patent. The ruling means that some of those phones will no longer be allowed in the United States.

Apple officials had hoped for a broader ruling, which bans HTCs phones in April. That gives the company time to figure out how to fix the phones without the Apple-patented software.

CNN reports that Apple had hoped for a "knockout punch" ruling that it didn't get from the commission. Analysts said that a "data tapping patent" was at issue, an invention that marks up phone numbers or other formatted data in emails, for instance, and allows users to bring up other programs that process the data. This is common when a user brings up a phone number from a website and it automatically brings up the phone dialer function to dial the phone number.

The CNN article reports that the ban won't affect HTC phones that don't have the feature or phones that implement it in ways that avoid the Apple patent. It's possible Google can implement the feature without using the Apple patents. If so, the ban will have little or no effect on the companies.

Obviously, the fight among smartphone companies is highly competitive. These phones are constantly changing and becoming more technologically advanced by the year. With millions sold each year and the products costing hundreds of dollars, the companies that design these machines are making a ton of money. They will go to great lengths to protect the technology that has made them successful.

Protecting ideas and patents is critical to ensuring a business survives. The reason that patents are registered and made public is so companies can check to make sure others aren't stealing their ideas. If everything were private, these patents could be stolen or sold improperly from business to business.

But, still, companies often try to skirt the rules and take credit for ideas that aren't there own. This can potentially sink a successful company if another business is able to get away with taking this information.

That's where an experienced Chicago intellectual property law firm becomes valuable. In protecting your small business from other competitors and larger businesses that attempt to run people out of the market, it's possible that bringing a lawsuit will be the only way to successfully defend against these unlawful acts.

Continue reading "Apple Wins Key Chicago Intellectual Property Ruling in Android Case" »

A recent lawsuit filed in Chicago alleges that giant cell phone company Motorola misappropriated trade secrets on technology that allows cellular networks to track emergency callers.

This lawsuit comes down to employment issues that Chicago small businesses deal with all the time.

This is especially true with technology start-ups because of how intense the competition is and how high-impact the development of new technologies can be. In this global economy, new technology is perhaps the most valuable asset a company can have. Being able to create something that completely changes the face of business or consumer products can be very profitable.

But it can also be easily pilfered by employees who leave the company and take the company's trade secrets with them. This is why a small business start-up must consult with an experienced Chicago small business attorney.

Many small business owners are so concerned with office space, financing, registering the business and other important first-step acts that they don't consider the implications of structuring employment contracts, establishing policies and handbooks and making sure there are provisions to ensure employees don't steal company secrets when they leave.

In this case, Lemko Corp. alleges, an engineer that created technology that allows emergency callers from cell phones to be detected by law enforcement went to Motorola because she had "access to and knowledge of Lemko's trade secrets," according to a lawsuit filed in Chicago.

The engineer left Lemko, the lawsuit states, and then was hired by Motorola, which then incorporated the technology into its phones. The giant cell phone company, which is being acquired by Google Inc., allegedly destroyed computer files showing that it used Lemko's computer code. The engineer was fired in 2008, Bloomberg reports.

Lemko is asking for compensation for the loss of royalties as well as unspecified damages. The company alleges the engineer should have known or did know that she would be using her former company's trade secrets in creating the technology for Motorola.

Trade secrets are a major factor in making sure a business is successful and they can be illegally stolen through a variety of means. Trade shows can lead to leaked secrets, but employees tend to be a major source of this type of theft. A strongly worded and appropriately written employment contract can ensure that employees don't run off with important details or intellectual property that belongs to the company.

Intellectual property includes branding, trade secrets, and other developed ideas that a company relies on in order to thrive. An experienced Chicago business litigation attorney can help companies implement these secrets and protect them from outside businesses. From trademark registration to protecting those secrets along the way, this is one area of business that can't be taken lightly.

In this ultra-competitive market, companies must do all they can to protect what is theirs and what they have developed through their own hard work. Letting employees take this technology and carry it to competitors can have a crippling effect on a small business.

Continue reading "Motorola Sued By Lemko For Trade Secret Theft in Chicago" »

The Internet has opened a new legal frontier; businesses must now be as concerned about online ownership, trademark and copyright issues as they are about their brick-and-mortar operations.

In some cases, businesses survive and thrive entirely online. In all case, protecting the online name and reputation of your business is critical to success. Annual Internet sales are increasing by double digits each year -- and passed $100 billion a year in 2007. When issues involving intellectual property and technology threaten the health and welfare of your business, a Chicago business law firm familiar with Internet issues must be contacted at the earliest stages of such cases.

In Go Pets Ltd. v. Hise, GoPets LTD. filed a lawsuit against Joseph Hise and a California corporation over www.gopets.com. The suit was filed under the Anticybersquatting Consumer Protection Act.

The court ruled Hise registered the domain in 1999, long before GoPets LTD registered its service mark, and therefore he was not in violation of the cyber squatting laws. The law was put in place to prevent individuals from buying domain names for a few dollars each and then holding them hostage for outrageous fees.

Where the court found Hise in violation, was for registering additional domain names. The U.S. Court of Appeals for the Ninth District found he had acted in bad faith and affirmed the district decision that Hise violated the Lanham Act with his use of www.gopets.com. The case was returned to the district court for a determination of damages.

In this case, the defendant had registered the domain and built a business plan as part of a marketing class in 1999. The defendant, together with a relative who was a veterinarian, also owned a company that had owned and registered more than 1,300 domain names. Most seemed to be geared toward plausible businesses but were not the names of existing corporations.

By 2004, a South Korean company, Go Pets Ltd., had made several attempts to register the name. In 2005, the companies filed a dispute over ownership of the domain with the Internet Corporation for Assigned Names and Numbers (ICANN), which oversees domain names. A dispute was also later field with the World Intellectual Property Organization (WIPO), which administers ICANN's dispute policy. A WIPO arbitrator found in favor of Edward Hise. It was ruled Hise had been registering the name for years and had not initially registered it in bad faith.

Hise later sent a letter stating that Go Pets Ltd's registration of www.gopetslive.com could confuse consumers and hurt the www.gopets.com name. While purchase of the name could clear up any confusion and provide for less search result competition. The letter offered to sell the domain for $5 million. Meanwhile, screen captures of Internet archives reveal that Hise began building site content for the domain and turning it into a viable web property. After the decision by WIPO, company owned by Hise began registering other names similar to www.gopets.com

In 2007, the South Korean company filed the complaint in U.S. District Court, claiming a violation of the cybersquatting statute and unfair competition under the Lanham Act. The Lanham Act violation stems from putting content on the site and calling it the "Official GoPets site." The Act contains the statutes covering federal trademark law.

In other words, the court found Hise may have had the right to the domain name but did not have the right to conduct business or infringe upon the trademark rights of GoPets Ltd.

Continue reading "Go Pets Ltd. v. Hise Highlights Importance of Internet Property Rights for Chicago Businesses" »

Helferich has filed a patent lawsuit against Nokia, saying the company is violating its patent protection in Illinois, Reuters News reported.

Intellectual property attorneys in Chicago have watched as the copyright wars have heated up among smartphone companies. Many companies are snapping up patents by the thousands in order to avoid litigation or the need for dispute resolution.

Helferich Patent Licensing vs. Nokia Corp. contends 27 other companies, including Motorola Mobility Holdings Inc., have honored Helferich's patents or obtained licenses. The company is seeking an injunction against Nokia that would prohibit the company for making or selling products using technology for which Helferich owns the patents.

Apple, Microsoft and other tech companies have spent billions snapping up thousands of available patents in recent years -- to avoid such litigation. CNN Money reports Apple recently shelled out $4.5 billion for 6,000 patents owned by Nortel.

-Research in Motion and Ericsson partnered to put up $1.1 billion.

-Microsoft and Sony spent another $1 billion.

Google apparently played number games at a recent auction, bidding 1.902160540 (Brun's constant) and 3.14159 (pi). The company was apparently having a little fun. Yet its Android partners -- including HTC, Motorola and Samsung -- continue to be under fire by companies claiming copyright infringement.

When it comes to patent protection, tech giants have been in a buying frenzy. Google bought 282 patents last year. Apple bought 563. Microsoft led the way with 3,121. Industry watchers say Google has not yet placed the emphasis on protecting itself through patent purchases; Microsoft made a similar mistake in its infancy.

"There are a lot of phenomenal portfolios for sale," Dean Becker, a patent broker, told Bloomberg News. "Every operating company is in the market because of the expense, distraction and the potential financial risk of patent litigation."

Winning the bidding for Nortel's portfolio would have increased Google's patent holdings ninefold; currently the company has about 700 patents, according to the U.S. Patent & Trademark Office.

Google is facing lawsuits from Oracle Corp. Meanwhile, Apple is demanding licensing revenue from makers of products that run Google's Android operating system. In some cases, a Google executive said, lawsuits have involved low-quality software patents. By purchasing and maintaining large war chests of patents, companies hope to discourage such lawsuits.

"One of a company's best defenses against this kind of litigation is (ironically) to have a formidable patent portfolio," said Google's General Counsel Kent Walker.

Helferich Patent Licensing is a Chicago company that holds, manages and licenses patented technology involving multimedia delivery.

Continue reading "Helferich Patent Licensing vs. Nokia Corp. filed as Smart Phone Copyright Wars come to Chicago" »

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.

Our Chicago technology attorneys were interested in a recent example of how patent owners can relatively quickly seek resolution of certain infringement claims.

In March of 2010, Apple filed a complaint against HTC Corporation claiming that the company infringed 10 of its patents with respect to Droid and other smartphone elements. On July 15, 2011, the U.S. International Trade Commission ("ITC") issued an initial ruling in Apple's favor on two of the patents at issue.

Because the ITC has the power to ban products from coming into the United States, a final ruling against HTC could mean that HTC products will be unable to enter the country. Given such a ruling could have widespread implications for HTC, the company plans on appealing the decision. However, if the appeal is not successful, HTC might have to settle with Apple. This means that in addition to paying Microsoft $5 for each Android device they sell, HTC might also have to pay Apple royalties from its sales. The General Counsel for HTC, Grace Lei, recently commented that "we are highly confident we have a strong case for the ITC appeals process and are fully prepared to defend ourselves using all means possible." However, these may just be fighting words.

This is not the first time that the ITC has had the potential to affect large companies in patent disputes. In fact, the ITC is quickly becoming a popular forum for owners of intellectual property trying to prohibit infringing products from the United States market. Using the ITC as a forum for resolving patent disputes has its advantages. Since it usually takes less than a year for cases going though the ITC to go to trial, the ITC is generally able to provide quick verdicts. The ITC also has in rem jurisdiction over the imports in question. This means that a complainant can bring one action against several respondents in different jurisdictions. Lastly, using a jury is not an option in ITC trials. Rather, an administrative law judge presides over the proceeding. As the judge usually has specialized knowledge in patent law, the result is arguably a fairer trial than if a jury was present.

However, going the ITC route is not without its problems. Since the ITC is a federal agency, ITC final decisions do not bind a U.S. District Court. This means that parties unsatisfied by an ITC ruling can choose to bring suit again in district court. Lastly, to have standing with the ITC, the complaining party needs to show that there is or will be a U.S. industry connected to the products protected by the alleged intellectual property rights. Such a requirement does not exist if a suit is being filed in a U.S. district court.

An ITC action is one of the first measures to be considered when considering patent infringement strategies involving imported goods or articles.

This post was prepared by summer research assistant Yelena R. Our Chicago business lawyers frequently counsel clients about protecting or defending their patent, trademark, copyright, trade secret and other intellectual property rights with corporations, limited liabilities companies and individuals in Illinois.

Internet users are very familiar, of course, with ".com," ".org," and ".net." These are examples of some of the existing generic top-level domains ("gTLDs"). There are now only twenty-two of these gTLDs available. However, a recent decision by the Internet Corporation for Assigned Names and Numbers ("ICANN") provides that starting from January of 2012, domain registers will essentially have unlimited access to all the words in the English language, as well as access to virtually any type of character when choosing a domain name. For example, your business name could serve as a new gTLD.

Although it may seem like just about anyone can apply for a new domain name, this is not the case with these expanded domain names. Not only does the registration process include a complicated 200-page application, but it also comes with a hefty price tag. Applying for a new gTLD alone will cost $185,000; this does not even include the additional $25,000 yearly fee. The procedures will include measures to protect trademark rights.

The existence of essentially an unlimited number of domain names has important implications for business recognition and branding. For a large business, the expansion means an opportunity to reinforce one's brand name. For a small business, the expansion means the ability to pick domain names that are no longer "available" at the dotcom level. This translates into an opportunity to enhance business recognition.

It is important to remember, however, that if businesses fail to register as many domain names as possible that "match their brands," they may fall victim to competitors who will try to lure customers away from their site. Such pressure to protect their brands may cause businesses to unnecessarily register too many domain names.

Our Chicago business attorneys advise you to decide if, based on the expense and burden, application for a gTLD is a feasible option. If it is, you should anticipate and prepare responses to potential competitors and/or third-party gTLD applicants.

Our Chicago Interent lawyers can help you assess the merits of pursuing a new gTLD. For instance, there are uncertainties currently surrounding the issue. It is not clear how ICANN will handle two companies that apply for the same gTLD. And, business owners should keep in mind the benefits of registrations to prevent cybersquatters from obtaining control of a desirable domain name. Although it is not feasible to register every possible important term, it is important to consider the most common ones.

This post was prepared by summer research assistant Yelena R. Please contact us to discuss this or any other Internet or other information technology law matter.

Because it is a powerful tool for indicating the source of a good or service, Chicago business lawyers advise companies to protect their intellectual property by obtaining trademark registrations. Most items subject to trademark protection fall into one of the following categories: a phrase, a word, a logo, a symbol, an image, or a design. However, trademark protection has also been extended to various "unconventional" things including color, smell and sound.

One company that has been especially pronounced in obtaining trademark protection for unconventional items is Apple Inc. As trademark protection is very important to businesses, it is no surprise that the company has recently obtained a trademark on every possible use of "iCloud." However, this is not the first time that Apple received trademark protection for its products. In June of 2004, Apple obtained a trademark for the artistic depiction of half of an apple, while in July of 2006, the company received trademark protection for the outline of a human with a compact disk. Since then, the company has obtained numerous seemingly unconventional marks on everything from the packing of its iPhone to its glass cube retail store.

Although it is not uncommon for companies to be aggressive in protecting the image of their product, Chicago business lawyers may argue that Apple has been a little too aggressive in protecting its intellectual property. Such a perspective is supported by the company's recent suit against Samsung for purportedly infringing on Apple's trademarked packaging and icons. Getting trademark protection for odd items is, however, also quite difficult. Obtaining a nontraditional trademark requires the seeker of the trademark to convince the U.S. Patent and Trademark Office that the average consumer will associate the design in question only with the company trying to get the trademark and it takes many years to build such an association in the minds of consumers.

If you are a Chicago business owner seeking nontraditional trademark protection, Chicago business lawyers recommend pursuing the following steps: 1) provide a unique name for the product and get a traditional trademark; 2) get utility and design patents so that you can begin creating a barrier against competitors and a link to nontraditional trademarks; 3) make ads that spotlights the features that form the foundation of the association with the company; 4) apply for more traditional trademarks that help strengthen the association and boost the product; and 5) apply for the nontraditional trademark.

This item was prepared by summer research assistant Yelena R. Please contact Jeremy Gibson to discuss nontraditional trademark or other Chicago intellectual property law matters.

The owners of Vienna Beef is suing the grandson of one of the company's founders, alleging he ripped off the company's century-old recipe, the Chicago Tribune reports.

Chicago Trade Secret Lawyers have years of experience battling inside and outside the courtroom for the rights of businesses who either have been ripped off by competitors or wrongly accused of such. Trademark infringement in Chicago is a serious allegation and can do a world of damage to a business, small or large. This case demonstrates the importance of carefully preparing an intellectual property agreement to maximize your company's ability to enforce non-disclosure and non-competition obligations.

Chicagoans love their all-beef hot dogs fresh on a poppy seed bun chock full of pickles, onions, tomatoes, mustard and peppers. But they don't like ripoffs. And in this case, the allegation is that rival hot dog company Red Hot Chicago, headed by a person who had ties to Vienna, either stole the 118-year-old recipe or is lying by telling customers that its hot dogs are the real thing.

According to the lawsuit, the man who runs the rival company was formerly employed as a sales manager, but left Vienna in 1983. He signed employment and severance agreements, which included a gag order about Vienna's secret recipes. Three years after leaving, he started the Red Hot Chicago hot dog company. The lawsuit claims that he wasn't successful over the first 25 years in competing, but recently changed recipes and pretended to be Vienna.

Intellectual property, the ideas, products and other assets designed by a business or individual, are the bloodline of a successful business. Another company infringing on those ideas, patents, software or other assets must be challenged and often it requires litigation.

People across the globe can identify the Nike swoosh and the McDonald's golden arches because of great marketing by those two companies. If another company, possibly a rival, began using those symbols, which have great power in identifying those companies, Nike and McDonald's would swoop in to protect their identities.

While it may seem silly to think of a company other than Nike or McDonald's trying to use those symbols, what if a smaller less-popular company had their design stolen? While it may be less recognizable, every company has customers and a public symbol, and it can do real damage to a business if someone else is using their ideas for profit.

It's possible that these issues can be decided by dispute resolution in Chicago, such as by assessing the merits of a potential claim, contacting the other party and trying to work out the issue without court intervention. While that may be the quickest and cheapest alternative, it's not always the most likely. So, taking the case to trial and putting the allegations out into the open may also be a way of getting rivals to do the right thing.

Continue reading "Wiener Wars Heat Up in Chicago in Trademark Infringement Lawsuit" »

Apple Inc. has sent a letter to Congress, saying it must collect the controversial tracking data that has some privacy experts warning consumers about the iPhone and iPad tracking their whereabouts, according to The Consumerist.

Chicago technology attorneys understand how important it is to make sure user service agreements, privacy statements, and other legal documents protect companies from legal penalties as they deploy next-generation technologies. In this case, Apple prudently made sure its end user agreement or clickwrap agreement provided it with the authority to collect and maintain user location data.

Bloomberg News reports the revelation that the company tracks up to a year's worth of a user's movements, and stores them in an unencrypted file, could lead to greater regulatory scrutiny in both the United States and Europe.

Apple has said it saves the location of WiFi hotpots and cell phone towers used by the equipment to provide a better user experience (such as not having to login a password each time you use a wireless system at home or work).

PC Magazine reports that Apple has agreed to encrypt the data in the next version of its operating system. The company acknowledged that the data is sent to Apple, so that it can maintain a crowd-sourced list of wi-fi hotspots and cell phone towers. But it said the actual location of the user can be up to 100 miles away, depending on a tower's location and other variables.

Google's Street View mapping service has run up against similar privacy concerns. The company was fined $147,000 in France last month for violating that country's privacy rules.

Continue reading "Apple's Consumer-Tracking Controversy Illustrates Importance of End User Agreements" »

The former employee of a Chicago startup firm was sentenced to eight years in prison for stealing secret computer code used in a Wall Street bank's high-frequency trading system, the Chicago Tribune reported.

Intellectual property lawyers in Chicago understand that computer programs and other trade secrets are among a firm's most valuable assets. Protecting those assets is often critical to maintaining a company's competitive advantage, or even its survival. Establishing non-compete and/or confidentiality agreements in Illinois is one way to help ensure the protection of a business' intellectual property.

In this case the 41-year-old defendant was a former computer programmer at Goldman Sachs Group Inc. before taking a job at Teza Technologies LLC, a high-frequency trading startup in Chicago. He was convicted of theft of trade secrets and transporting stolen property across state lines. The verdict came following a two-week trial in federal court in Manhattan.

The defendant was sentenced to 97 months in prison and fined 12,500. The sentence was within the 8 to 10 year range recommended by the government. The theft involved the transfer of 500,000 lines of code to an outside server.

High-frequency trading companies utilize computer-driven trading to trade shares in milliseconds with a goal of capitalizing on minute changes in stock prices, often just a fraction of a cent. The computer code upon which such systems run are closely guarded secrets.

The case is USA v Aleynikov, U.S. District Court for the Southern District of New York, No. 10-00096.

Continue reading "Chicago Man Sentenced for Theft of Trade Secrets in High-Frequency Computer Code Theft" »

This week a federal jury in Oakland, California awarded Oracle $1.3 billion in damages from SAP as a result of SAP's infringing the intellectual property of Oracle. The trial was limited to the question of damages. SAP already had admitted that personnel at a now closed Tomorrow Now subsidiary had intentionally gained access to, copied and resold software related to running the data centers of large corporations. SAP also obtained other propriety information and trade secrets, such as manuals and technical support guidance.

The case is stunning in many respects. It is a clear example of blatant copryright infringement and apparently patent infringement. It appears that numerous and senior mananagers at SAP were aware of the subterfuge. And, it demonstrates just how damaging a breach of corporate integrity can be in terms of money, publicity and prestige.

Perhaps, the most interesting aspect is how vulnerable a copyright infringer is if discovered. SAP argued that Oracle's damages should be in the $25 to $40 million range based upon the relatively few customers and amount of income that SAP gained from the effort. Oracles claimed that it would have charged SAP fees amount to as much as $2 billion if it had licensed the software and related materials to SAP. The jury appeared to give much of the benefit of the doubt to Oracle and settled on $1.3 billion, 35 to 40 times what SAP argued.

This reminds me of a case I handled where an advertising and marketing firm made a lengthy infomercial for an appliance that played on national outlets in heavy rotation. The infomercial allegedly included a short bit of background music for which a license had not been obtained. Most likely, the licensor would have charged a very nominal fee if the matter had been negotiated in advance, perhaps less than $50 ro $100. Howevever, after the fact, the licensor was free to demand a fee many, many times that, coupled with potential risks of litigation expenses and treble damages, even though any unlicensed use probably had been an oversight. Accordingly, the client concluded it was worth settling the case promptly for a reasonable amount, but one that was still greatly higher than if a license had been purchased upfront.

The principle in the infomercial case is the same as the one in the SAP trial, the exponentially different sums involved notwithstanding. Be very careful about misappropriating software, music, video or other content that has commerical value. Even if the misuse was inadvertent, if detected, you can now be held hostage for license fees far above an arms length level.

The Chicago intellectual property attorneys of Jeremy A. Gibson & Associates, PC frequently advise companies and employees on legal matters involving software and copyright protection, including trade secret and infringement issues. Our Illinois business and corporate attorneys are available throughout the region to meet at offices in Chicago, Deerfield, Rosemont, Schaumburg and Oak Brook and elsewhere. Please phone or email us to schedule your business law consultation.

There is another example of the importance of paying close attention to proprietary details when negotiating business deals. Last week brought the curious case of HP's former CEO Mark Hurd joining Oracle right after entering into a substantial severance agreement, leading HP to file suit immediately. It seemed very odd that Hurd's arrangement wouldn't have been structured so as to prevent Hurd from so quickly joining a potential competitor and possibly benefiting from HP's confidential information.

This week brings news of an apparent puzzling gap concerning trade name and trademark issues in a merger & acquisition transaction from 15 years ago involving a Chicago area funeral business. The essentials of the story involving Lloyd Mandel are as follows:

When he sold his funeral business in 1995, Lloyd Mandel Levayah Funerals, Mandel agreed to stay out of the Chicago-area funeral industry for 15 years. But on July 21, the day after that clause expired, Mandel opened a new shop, this time from a high-rise office building in Deerfield, operating as Lloyd Mandel Mitzvah Memorial Funerals. . . .

The new business has brought the ire of Service Corp. International, the company that paid him some "millions," as he estimates, for his old business.

So, Levayah, owned by Texas-based SCI, began buying weekly quarter-page ads next to the death notices. Billed as an open letter to clients, the ad describes the history of the business and warns customers that they are the original Lloyd Mandel funeral home -- not to be confused with the new venture by their namesake.

. . .

To Lloyd Mandel, there was only one thing to do: He had to reply. He bought a quarter-page ad in the Tribune, hoping Levayah would continue advertising on Wednesdays.

On Sept. 1, the fourth Levayah ad appeared, and Mandel's ad appeared right below it. In his rebuttal ad, Mandel disputed the competitor's advertisement and denounced their use of his name.

So, after 15 years, the purchaser of the acquired business now faces the original seller competing in the same market for the same clients with a very similar name. There seems to be a real possibility for confusion in the marketplace and it would not be at all surprising if this winds up in litigation eventually.

This is a very puzzling outcome. Mr. Mandel says he is entitled to use his own name. And, depending upon the terms of the business sale agreement that may be the case. If the documents are silent on the use of his name, then he may be right. However, from a purchaser's perspective it would be unfortunate if in all the legalese and negotiations regarding the deal, this specific issue was not addressed. One would expect in the case of an acquisition of a business with a founder's name, such as Bob Evans or Jenny Craig for instance, that more often the not the transaction documents would provide for the founder to not engage in a competitive business using his or her name.

Nonetheless, this is not to second guess whoever handled the deal here. Concessions often are made in the interest of obtaining another important objective or reaching a closing. And, there may have been higher priorities than worrying about what would happen 15 years later. (That is a very long non-compete covenant; the purchasing team may have very happy to leave well enough alone.) Still, determining and negotiating permitted and restricted business activities can be deceptively tricky, so great care is warranted to prevent an unfortunate surprise.

Jeremy A. Gibson is a Chicago business lawyer very experienced in the trademark, non-competition and other proprietary aspects of buying and selling of businesses. We would be happy to review your merger & acquisition situation. We can assist business buyers or sellers throughout the area, including Arlington Heights, Buffalo Grove, Chicago, Deerfield, Des Plaines, Evanston, Glenview, Highland Park, Hinsdale, Lake Forest, Libertyville, Mount Prospect, Naperville, Northbrook, Oak Brook, Palatine, Rolling Meadows, Schaumburg, Skokie, Oak Brook, Oak Park, Vernon Hills, Waukegan, Wheeling and Wilmette.

The commentary that I've observed so far suggests that HP's lawsuit in California against its former CEO, Mark Hurd, for joining Oracle in a president position is weak at best. (For background, here's a good article.) However, even if so, if I'm HP, then I would still be pursuing this action. That's because I can't think of a better set of facts for trying to protect trade secrets and other confidential information or intellectual property.

Here's why:

• Hurd was terminated for conduct that goes to his judgment, handling of information and veracity. (He allegedly misrepresented or omitted information from his expense reports concerning his dealings with an attractive marketing consultant.)
• Hurd presumably had access until just a few weeks ago to HP's most sensitive information including that concerning the markets and businesses with which it competes or will compete with Oracle.
• Hurd's new position at Oracle seems very likely to involve the exact sames markets and businesses as those he oversaw at HP.
• Hurd received millions and millions of dollars in compensation at HP, including as part of a generous severance package, and doesn't need this particular position or role to make a living.

HP's case has its challenges. Hurd, surprisingly, apparently is not subject to a non-compete covenant or similar restriction. California law typically errs on the side of protecting an individual's right to work in this context. It has not been alleged that Hurd has actually breached any confidentiality obligation he owes HP. And, Oracle and its chairman, Larry Ellison, are known to be tough negotiators and no doubt anticipated such a fight when they brought in Hurd.

That said, it is difficult to imagine ever having a stronger set of circumstances to present to a court for arguing that, at least for six or 12 months, an individual cannot possibly fulfill his or her duties without disclosing or using his previous employer's protected information. My guess is that HP's litigation efforts probably will result in delaying in Hurd's work or effectiveness for Oracle for a limited period of time. For example, whether by virtue of caution, settlement or court order, Hurd likely will have to limit the commencement or scope of his work.

The Chicago business lawyers of Jeremy A. Gibson & Associates, PC frequently advise companies and employees on confidentiality, trade secret and covenant not to compete issues. We are available to meet at offices in Chicago, Deerfield, Rosemont, Schaumburg and Oak Brook and elsewhere in Illinois. Contact us to schedule a consulation.

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.