At a time when #media creation & consumption is traveling across a growing number of devices, at increasing speeds, and without care for for borders whether physical, digital, or geographic, licensing, distribution and use of digital content can cause problems.
The case of Fastcase, Inc. v. Lawriter, LLC, Case No. 17-14110 (11th Cir. Oct. 29, 2018) (Tjoflat, J), involved a dispute between two legal publication service companies over the right to re-publish the Georgia Regulations.
The Declaratory Judgment defendant and presumptive rights owner had no enforceable copyright or contract rights in the Regulations. Defendant updated the terms so that unauthorized re-publication of the Regulations would result in liquidated damages of $20,000 per instance, which was relevant to the jurisdictional issues of whether § 411(a) is a jurisdictional bar.
From The National Law Review, source for this story: “Practice Note: A demand letter alleging infringement under the Copyright Act—or even alleging state law claims that would arguably be preempted by the Copyright Act—confers jurisdiction on a federal court to hear the recipient’s declaratory judgment action.”
Every business in this, the Information Age, is highly dependent on confidential and proprietary information. As many design and creative professionals know, a design business is often based on intimate, personal relationships with clients. As a result, relationships are built upon a high degree of trust and the professional reputation of the designer. In addition, the designer brings a host of regular vendors and proprietary skills, knowledge, experience, including private and confidential information about clients, used for operating the Business. It is not surprising that businesses will seek to prevent disclosure of business, technical and financial information (including information relating to clients, employees and vendors, as well information an employee learns during her employment.
Do I need a Non-solicitation agreement for my Design Business?
Increasingly, I am being asked by clients to prevent departing employees from using proprietary and confidential information and form poaching clients and employees. These non-disclosure or non-solicitation provisions seek to prevent an employee from encouraging or soliciting any client, employee, vendor, or contractor to leave. Unfortunately,
Restrictive Covenants Are Hard to Enforce!
Post-employment restrictive covenants are carefully scrutinized by Illinois courts because they operate as partial restrictions on trade. Fifieldv. Premier Dealer Services, Inc., 2013 IL App (1st) 993 N.E.2d 938 (citing Cambridge Engineering, Inc. v. Mercury Partners90 BI, Inc., 378 Ill.App.3d 437, 447 (2007) ). In order for a restrictive covenant to be valid and enforceable, the terms of the covenant must be reasonable. It is established in Illinois that a restrictive covenant is reasonable only if the covenant (1) is no greater than is required for the protection of a legitimate business interest of the employer, (2) does not impose undue hardship on the employee, and (3) is not injurious to the public. Reliable Fire Equipment Co. v. Arredondo, 965 N.E.2d 393 (2011). The courts consider the unique factors and circumstances of the case when determining the reasonableness of a restrictive covenant. Millard Maintenance Service Co. v. Bernero, 566 N.E.2d 379 (1990). However, before even considering whether a restrictive covenant is reasonable, the court must make two determinations: (1) whether the restrictive covenant is ancillary to a valid contract; and (2) whether the restrictive covenant is supported by adequate consideration. Fifield, 993 N.E.2d 938. Absent adequate consideration, a covenant, though otherwise reasonable, is not enforceable. Id. ¶ 14 (citing Brown & Brown, Inc. v. Mudron, 887 N.E.2d 437 (2008) ); see also Millard, 566 N.E.2d 379.
For most businesses, enforceability of such covenants turns on the concept of “consideration.” The current Illinois authority on “consideration” is Fifieldv. Premier Dealer Services, Inc., 2013 IL App (1st) 120327. In Fifield, the Illinois appellate court noted that Illinois courts have repeatedly held that there must be at least two years or more of continued employment to constitute “adequate consideration” in support of a restrictive covenant. The court also clarified the process by adding that “Fifield [did not overrule or modify] Brown, which engaged in a fact-specific approach in determining consideration.
As a general rule, courts do not inquire into the adequacy of consideration. However, postemployment restrictive covenants are excepted from this general rule because “a promise of continued employment may be an illusory benefit where the employment is at-will.” Most design businesses have at-will employees.
Fifield is equally important for both what it says and for what it does not. Clearly employment alone – any less than two years duration – is NOT adequate consideration. However, the Fifieldcourt also stated that there could be other or additional factors such as an “added bonus in exchange for this restrictive covenant, more sick days, some incentives, [or] some kind of newfangled compensation,” that could be considered additional compensation that could support enforcement of the covenant.
Despite the recognition that the bar is set high for the amount of consideration necessary to enforce restrictive covenants, it makes sense to include them in your agreements with those who work for you.
In addition to the non-solicitation language, one should create a strong and broad definition of protectable proprietary and confidential information. While it may not always be possible to stop a former employee from directly competing against you, it is possible to prevent said employee from using your own proprietary and confidential information against you.
In today’s world, business is no longer about simply having an online presence. Digital business is transactional and social across platforms and networks across thew globe. The previous model of one-to-one transactional business relationships has evolved to one that is reciprocal, collaborative and highly interactive.
This new level of engagement is not without risks. As businesses expand into new online areas for marketing and commerce, businesses should be aware of a myriad of laws and risk areas implicated when one conducts business online. Business lawyers must be familiar with Technology Law.
There are a wide variety of services around the most common types of content and businesses need legal disclaimers, protection of intellectual property rights and other ways to limit liability.
Generally, the key areas and issues are:
Trade & Commerce Issues
- Advertising & Promotions Laws (these vary by state)
- Affiliate Marketing Agreements/Relationships
- Federal Regulatory Guidelines
- Industry Regulations & Guidelines
- CAN-SPAM Act
- Limits of Liability
- Sales & Taxation/Clarifying Nexus Confusion
- Choice of Law/Forum
- Insurance Law
- Website Representations and Warranties
Intellectual Property Issues
- Copyright & Digital Millennium Copyright Act
- Defamation/Free Speech
- Trademark Law
- Unfair Internet Business Practices Such as Domain Name Hijacking & Cybersquatting
- Anti-cybersquatting Consumer Protection Act
- Patent Law
- Trade Secrets
Privacy & Security Issues
- Credit Cards / Transaction Processing
- E-Payment and Credit Card Security/Privacy
- Children’s Online Privacy Protection Act
- Data Breach Notification Laws
- Data Privacy Laws
Human Resources & Employment Issues
- BYOD & Computer Usage Guidelines for Employees
- Employment and Labor Laws
- Social Media Guidelines for Employees
We look forward to the opportunity to discuss any questions you may have regarding the range of business, technology and intellectual property services we offer. Our law office is based in Chicago, Illinois. Please feel free to call us at (866) 734-2568 should you have any questions.
Every business transaction is governed by contract law, even if the parties don’t realize it. Despite the overwhelming role it plays in our lives, contract law can be incredibly difficult to understand.
Successful Interior Designers know how to manage the legal needs of the business while bringing a creative vision to life for a client or project. Confusion about rights, obligations, and remedies when things go wrong can strain and even ruin an otherwise promising professional relationship.
This program teaches new designers and entrepreneurs answers to some basic questions, such as:
- What to do when clients / vendors / contractors don’t pay?
- How can one use Indemnifications, Disclaimers and Limitations of Liability clauses to balance business risk when the parties may not be economically balanced?
- What types of remedies are available and what are the limitations in scope for certain types of monetary and “equitable” remedies?
Take a deeper dive into advanced issues for interior design professionals. Learn how contracts can protect your design business and how to safeguard your rights.
Qualifies for .1 CEU credit.
This program was originally delivered on Aug. 17, 2017 at the Design Center at theMART 14th Floor Conference Center, 222 Merchandise Mart Plaza, Chicago, IL 60654
Ever had an Interior Design client refuse to pay, not give you credit for your work, or use your design without actually hiring you? As unfair as these situations sound, the truth is they happen often. Poor planning, client management or incomplete contracts account for most of these situations. Get expert legal advice from a Chicago-based lawyer who understands the ins and outs of the design industry and learn how to address some of the biggest risk factors designers face today and how your contract can (and more importantly, should) protect you. Follow the link for access to the free informational prevention about improving your interior design contracts.
Have you ever had a client refuse to pay a bill, not give you credit for your work, or use your design scheme without hiring you? As loathsome as these situations sound, the reality is that they happen more often than we like to admit. The best way to avoid these issues is to arm yourself with an airtight contract. For this task, we’ve enlisted David Adler, a Chicago-based lawyer who understands the ins and outs of the design industry, to serve as your legal expert for the morning. He will address some of the biggest risk factors interior designers face today and how your contract can (and more importantly, should) cover you. You’ll leave with a better understanding of how you can tighten up your existing contract so you don’t have to learn the hard way.