Zombie Cinderella ‘Survives’ Walt Disney’s Cinderella Trademark- No Likelihood of Confusion

United Trademark Holdings, Inc. (“Applicant”) appealed a decision by the U.S. Patent & Trademark Office refusing registration of its “ZOMBIE CINDERELLA” trademark for dolls when the USPTO held that it was confusingly similar to the registered “WALT DISNEY’S CINDERELLA” trademark.

In any likelihood of confusion analysis, two key considerations are the similarities between the marks and the similarities between the goods at issue. Applicant demonstrated that the story of “Cinderella,” is a “well-known narrative … involving a beautiful young lady, her antagonistic stepsisters, a fairy godmother, a ball, a prince, and a pair of glass slippers, existing since at least as early as 1697.”

The USPTO cited to nine other doll lines that use the name “Cinderella” holding that: 1) the mark is weak, and 2) CINDERELLA is not the dominant component of the cited, registered mark. The court found that while the dominant part of the mark -the term CINDERELLA – was similar, use of the terms “Walt Disney” and “Zombie” differentiated the two. The USPTO also found that “the design element of “WALT DISNEY’S CINDERELLA” may function, for juvenile customers, as a stronger source indicator than the term CINDERELLA, because it depicts a specific version of Cinderella that is associated with the Walt Disney animated film” of the same name.

Lastly, although the word “zombie” has little significance or distinctiveness as a source indicator in the marketplace for toys, the combination of ZOMBIE with CINDERELLA creates a unitary mark with an incongruous impression.

Latest Illinois Case on Restrictive Covenants Increases Uncertainty, Burden For Employers

English: A customer signing the at A Stone's T...
English: A customer signing the at A Stone’s Throw Jewelers in . (Photo credit: Wikipedia)

Fifield v. Premier Dealer Services, Inc.

BACKGROUND

The plaintiff in this declaratory judgment action had been employed by a subsidiary of an insurance company that marketed finance and insurance products to the automotive industry. After a sale of that business, plaintiff’s employment was terminated, but he was offered employment conditioned upon his acceptance of an “Employee Confidentiality and Inventions Agreement” (the agreement) which included non-solicitation and non-compete provisions. The agreement states in pertinent part:

“Employee agrees that for a period of two (2) years from the date Employee’s employment terminates for any reason, Employee will not, directly or indirectly, within any of the 50 states of the United States, for the purposes of providing products or services in competition with the Company (i) solicit any customers, dealers, agents, reinsurers, PARCs, and/or producers to cease their relationship with the Company *** or (ii) interfere with or damage any relationship between the Company and customers, dealers, agents, reinsurers , PARCs, and/or producers *** or (iii) *** accept business of any former customers, dealers, agents, reinsurers, PARCs, and/or producers with whom the Company had a business relationship within the previous twelve (12) months prior to Employee’s termination.”

Plaintiff successfully negotiated with Premier a provision that the restrictive covenants would NOT apply if he was terminated without cause during the first year of his employment (the first-year provision). Three months later, plaintiff resigned, began working for a competitor and sued to have the restrictive covenants held unenforceable stating that plaintiff had no access to confidential and proprietary information. The trial court held that the restrictive Covenants were unenforceable for lack of “consideration” – a legal term of art that generally means a bargained-for exchange of value. The appeals court affirmed.

ANALYSIS

Defendant argued that the non-solicitation and non-compete provisions were enforceable because the offer of employment was adequate consideration, there was a mutual exchange of promises (employment in exchange for restrictions), and the covenants were pre-employment, not post- employment. Defendant further argued that “the purpose of Illinois law regarding restrictive covenants is to protect against the illusory benefit of at-will employment” which was “nullified by the inclusion of the first-year [non-enforcement] provision in the agreement.”

Plaintiff countered with the argument that the provisions in the agreement are unenforceable because Illinois law requires employment to continue for a substantial period of time and that “Illinois courts have repeatedly held that two years of continued employment is adequate consideration to support a restrictive covenant…regardless of whether an employee is terminated or decides to resign on his own.”

The appellate court agreed with plaintiff citing Brown & Brown, Inc. v. Mudron, 379 Ill. App. 3d 724, 728 (2008) which held that the promise of continued employment in the context of post-employment restrictive covenants may be an illusory benefit where the employment is at-will. “Illinois courts have held that continued employment for two years or more constitutes adequate consideration. Id. at 728-29.”

TAKE AWAYS

The Fifield decisions has already generated a great deal of discussion from corporate board rooms to legal blogs. Unfortunately for businesses and their lawyers, the case leaves many unanswered questions.

For example, the court does not discuss whether the outcome would have been different if the employee were a high-level executive with immediate access to a wide range of highly sensitive confidential and proprietary information. At best,mother court simply mentions the plaintiff’s allegations that he had no access to such information.

Another area of uncertainty impacts start-up and early stage businesses. Very young businesses are often highly dynamic and early employees have access to a broad swath of the company’s Intangible assets such as business and revenue models, marketing plans, computer software and hardware and prospective customers, regardless of whether they serve a customer service function or “C-suite” executive function. The requirement that an employee have two years continued employment before a restrictive covenant becomes enforceable ignores the very real dynamic of start-up companies.

Lastly, an important question that went unanswered is whether the employer can offer some other “consideration” besides two years continued employment. For example, is there a pure monetary consideration that would support enforcement of the covenant? What if the covenant only lasted as long as the period of the departing employee’s employment?

NEXT STEPS

If you have restrictive covenants in your agreements with employees, it is strongly recommended that you meet with your lawyer to discuss the impact of this case on these agreements and your business. At the very least, you should carefully review your non-compete and non-solicitation agreements to see if they are supported by adequate consideration. If you have questions or concerns, or just don’t know how to begin, feel free to contact the lawyers at Leavens, Strand, Glover & Adler for a free, in-person or over-the-phone consultation. You can also email the author here: dadler@lsglegal.com.

In U.S. Regulators, Legislators Fill Privacy Void

Over the last few years privacy, and the lack of comprehensive protection, have made numerous headlines. From overly inquisitive mobile applications that fail to disclose how cell photo data is accessed and shared (Path) to handset manufacturers failures to properly inculcate privacy in the design and manufacturing process (HTC) to security lapses at government databases resulting in exposure of sensitive personal information (South Carolina), consumers, regulators and legislators are waking up to privacy issues.

Recent developments highlight the trend in Privacy

In the U.S. we lack a single comprehensive privacy law, although many state and federal laws address various aspects of collecting, storing and sharing personal information. In the absence of a single, over-arching, mandate, legislators and regulators are stepping into fill at perceived need.

GPS, Location & Privacy

The Geolocation Privacy and Surveillance (GPS) Act addresses use of location data by law enforcement. The bill (not yet law) requires police to obtain a warrant based on probable cause whenever it seeks “location information.” Unfortunately, the term “location information” is very broadly defined, does not distinguish requests for access based on the level of precision, time period, or whether the information is for past or future conduct.

Proposed Federal Privacy Standards

Two bills introduced this year aim to create a baseline level of privacy protection at the federal level. John Kerry (D-MA) and Sen. John McCain (R-AZ) introduced S. 799, the Commercial Privacy Bill of Rights Act of 2011, to create a regulatory framework for the comprehensive protection of personal data for individuals, enforceable by the Federal Trade Commission (FTC). Similarly, Rep. Cliff Stearns (R-FL) is promoting a Consumer Privacy Protection Act (H.R.1528), directed at consumers and focused on restricting the sale or disclosure of personal information.

FTC Protects Privacy Under Mantle of Consumer Protection

As a result of alleged data security failures that led to three data breaches at Wyndham hotels in less than two years, the Federal Trade Commission filed suit against hospitality company Wyndham Worldwide Corporation. The case against Wyndham is part of the FTC’s ongoing efforts to make sure that companies live up to the promises they make about privacy and data security.

Wyndham’s web site privacy policy claimed that, “We recognize the importance of protecting the privacy of individual-specific (personally identifiable) information collected about guests, callers to our central reservation centers, visitors to our Web sites, and members participating in our Loyalty Program …”

The FTC complaint alleges that Wyndham failed to maintain adequate and industry standard security measures by storing credit-card information in unencrypted format, allowing servers to remain unpatched, and failing to use firewalls.

The FTC alleges that these failures led to fraudulent charges on consumers’ accounts, millions of dollars in fraud loss, and the export of hundreds of thousands of consumers’ payment card account information to an Internet domain address registered in Russia.

Most notably, the lawsuit will test whether the Federal Trade Commission has the jurisdiction to compel companies to provide a certain level of cybersecurity in order to safeguard consumer personal information.

Privacy Remains Top Concern

Many companies across many industries, financial services, higher education and healthcare, just to name a few, are facing a wide range of security and privacy concerns, scrambling to implement A defensible security framework and demonstrate compliance. It’s alarming, considering the significant consequences associated with not complying.

Organizations can lose contracts, customers and their reputation. That could put some out of business.

Compliance Preparation & Best Practices

Large organizations can spend many months and millions of dollars on compliance. Your business need not go to such extremes. To prevent getting caught by surprise and to prepare for the compliance journey, I’ve listed below some suggested best practices.

Periodic risk assessments. Evaluate potential damage and disruption caused by unauthorized access, use, disclosure, modification, or destruction of data or systems.

Policies and procedures. Incorporate procedures for detecting, reporting, and responding to security incidents, as well as business continuity plans.

Standardize. Set standards of acceptable information security for networks, facilities, and information systems.

Train Employees. Awareness training for employees, contractors, and other users of information systems is critical. Articulate the security risks associated with activities and define users’ responsibility for complying with policies and procedures.

Test & Evaluate. Periodic assessment of the effectiveness of information security policies, procedures, practices, and controls helps determine weak spots. At a minimum they should be conducted annually, according to Ford.

Respond & Repair. Have a pre-defined process for planning, implementing, evaluating, and documenting remedial actions designed to address legal, PR, HR and related risks in the event of a breach.

THIS IS NOT LEGAL ADVICE. The procedures outlined above are merely suggestions and there is no guarantee that implementation will reduce risk or mitigate liability.

Please contact Leavens, Strand, Glover & Adler at 866-734-2568 for a free consultation to learn how LSGA can help meet your specific needs.

#Bank Information #Security: The Evolving Threat From Insiders

VIDEO: The Evolving Insider Threat– Dawn Cappelli, Randy Trzeciak of CMU’s Insider Threat Center

This video from RSA Conference 2013 discusses:

  • Who typically commits insider crimes – and how;
  • How employees are being victimized from outside;
  • Why our critical infrastructure is at heightened risk.

Even if you are an employer using standard commercial verification measures, you should be cautious about misuse of any information by employees, managers and contractors. Accordingly, you should be careful with training and education and not on only newly-hired employees. Further, plan on how login credential and access to sensitive information will be handled and/or turned over when training or when terminating, suspending, withholding pay, lowering pay, or taking any other adverse action against an employee.

Whose Social Media Account Is It Anyway?

As a result of the rapid shift in marketing from unilateral one-to-many communications, to the multilateral, many-to-many or many-to-one conversations enabled by Social Media, employees and employers are struggling to manage accounts that are used for both work and personal purposes.

This new phenomenon has benefits, but it also creates a number of legal challenges. For employees, it may result in greater efficiency, more opportunities for authentic customers engagement and the ability to stay on top of the most current grands and business issues. For employers, it presents opportunity to reap substantial benefits from lower communications and customer support costs. For in-house counsel, it raises a host of legal and practical issues with few easy solutions and significant liability and regulatory risks.

First, there are hardware issues. Smartphones, tablets and other personal electronics often have social networking capabilities built in. in addition, they contain contain both personal and business data. Because these devices are always on and always connected, they are more than just personal property. They have become essential business tools. For both sides of the workplace equation, employers and employees must understand where the privacy lines fall between personal versus work-related information.

Second, there are data issues. Employers must balance their needs to monitor employee usage, employees’ privacy concerns, and the risk of liability for theft or exposure of data if a device is lost or stolen, or from lack of proper safeguards on account usage. For in-house counsel tasked with drafting policies to address these risks, , Prior to implementation of any policy, the legal team needs to educate front line employees and management on reasonable expectations of privacy and security and the harms that the organization seeks to prevent.

Lastly, recent cases such as the Cristou v. Beatport litigation, highlight the struggle to define and control the beginning and end of employee social media accounts, ownership and protection of intellectual property and the post termination risks that arise from the absence of appropriate policies.

As we prepare to start a new year, the time is ripe to establish security and privacy policies governing creation, maintenance and use of employees’ social media accounts for work functions. In-house counsel must lead the charge to educate, inform and train employees about privacy, security and evidence-recovery implications associated with use of social media.

Evidentiary Authentication of Social Media Data

Although courts have called the Internet “one large catalyst for rumor, innuendo, and misinformation,” nevertheless, it provides large amounts of evidence that may be relevant to litigation matters. Increasingly, courts are facing presentation of, and challenges to, data preserved from various websites. According to a survey conducted by the X1ediscovery blog, there are over 320 published cases involving social media/web data in the first half of 2012.

Evidentiary authentication of web-based data, whether it’s Internet site data available through browsers, or social media data derived from APIs or user credentials, presents challenges. Given the growing importance of social media posts and data, businesses should be prepared to offer foundational evidence to authenticate any posts that are vital to a case.

Authentication of social media and web data is a relatively novel issue for many courts. Courts have been extremely strict in applying foundation requirements due to the ease of creating a profile or posting while masquerading as someone else. Therefore it is important to go beyond the surface of a social media profile or a post to provide the foundation necessary to authenticate what he evidence for use in court.

Regardless of the type of data, it must be authenticated in all cases. The authentication standard is found in Federal Rule of Evidence 901(a), “The requirement of authentication … is satisfied by evidence sufficient to support a finding that the matter in question is what its proponent claims.” United States v. Simpson, 152 F.3d 1241, 1249 (10th Cir. 1998).

The foundational requirement of authentication is satisfied by evidence sufficient to support a finding that the matter in question is what its proponent claims. See US v. Tank, 200 F. 3d 627, 630 (9th Circuit 2000) (citing Fed.R.Evid. 901(a)). This burden is met when “sufficient proof has been introduced so that a reasonable juror could find in favor of authenticity.” This burden was met where the producer of chat room web logs explained how he created the logs with his computer and stated that the printouts appeared to be accurate representations. Additionally, the government established the connection between the defendant and the chat room log printouts based on IP addresses.

See also, Perfect 10, Inc. v. Cybernet Ventures, Inc. (C.D.Cal.2002) 213 F.Supp.2d 1146, 1154, and Lorraine v. Markel American Insurance Company, 241 F.R.D. 534, 546 (D.Md. May 4, 2007) (citing Perfect 10, and referencing additional elements of “circumstantial indicia” for authentication of electronic evidence).

Clearly, there is an emerging trend in the use of social media and web data as evidence. As the use of this type of evidence increases, so too will the consistency and predictability of the foundational matters required by courts. Thus, businesses are well advised to include web collection and social media support in the investigation process so they are prepared to offer the necessary foundational evidence to authenticate any social media posts that may be vital to a case.

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