California Attorney General Reports Businesses Paid $17 Million to Settle Private Prop 65 Cases in 2013

Posted by:

And that’s the “good news” – in 2012 it was $20 million.

The California Attorney General’s Office recently released its annual report of Proposition 65 settlements.  The report confirms what most businesses are already painfully aware:  Proposition 65 continues to be a thriving business for private Proposition 65 plaintiffs and their lawyers, who make millions of dollars in the name of the “public interest.”

While private plaintiffs did not reap as much in 2013 as they did in 2012 ($20 million), they did manage to collect $17 million.  That represents the third largest haul for bounty hunters since 2000, when the Attorney General’s Office began collecting the data and publishing annual reports.net

The summary reveals that in 2013 alone, private Proposition 65 plaintiffs acting in the “public interest” and their lawyers entered into a whopping 350 private settlements or consent judgments with businesses alleged to be in violation of Proposition 65, and collected $16,812,396.  In contrast, the Attorney General and local District Attorney each filed a single action.

Proposition 65 requires the State of California to publish a list of chemicals known to cause cancer, birth defects or other reproductive harm.  Businesses are required to warn consumers before exposing them to any one of more than 800 listed chemicals, by either labeling or posting a notice.  If a business does not comply, it can be liable for substantial civil penalties of up to $2,500 per day.

Proposition 65 has become a disturbingly lucrative operation for private enforcers, frequently called “bounty hunters,” who serve dozens if not hundreds of Notices of Violation on unsuspecting businesses.  These bounty hunters threaten to sue unless they are paid off in private settlements.  If a private settlement cannot be reached, they proceed with a lawsuit and try to force a settlement to avoid the cost of defense.

Proposition 65 allows private enforcers to keep 25 percent of all civil penalties collected, with the remaining 75 percent going to the California Office of Environmental Health Hazard Assessment (OEHHA).  In addition, private enforcers pocket 100% of so-called payments in lieu of penalties, or PILPs.  Whereas OEHHA would receive 75% of monies designated as civil penalties, OEHHA does not receive any portion of monies designated as PILPs.  Finally and most significantly, private enforcers’ lawyers are entitled to reasonable attorneys’ fees and costs under the State’s private attorney general doctrine.

The 2013 report shows that only one-tenth of all monies collected by private enforcers went to the State of California.  The rest of the money went to the bounty hunters and their lawyers:

  • $12,426,052, or 74%, went directly to the private enforcers’ lawyers as attorneys’ fees and costs
  • $596,977.25, or 3.6%, went directly to private-enforcer plaintiffs
  • $1,998,435, or 12%, went indirectly to private-enforcer plaintiffs as a payment in lieu of penalty
  • $1,790,931.75, or 11%, went to OEHHA.

The report also shows continued aggressive activity by a handful of Proposition 65 private enforcers.  At the top of the list are:

  • Center for Environmental Health (represented by Lexington Law Group) with 62 settlements or consent judgments totaling more than $3.3 million
  • Russell Brimer (represented by Chanler Group) with 60 settlements or consent judgments totaling more than $2.4 million
  • Peter Englander (represented by Chanler Group) with 46 settlements or consent judgments totaling more than $1.6 million
  • John Moore (represented by Chanler Group) with 41 settlements or consent judgments totaling more than $2 million
  • Environmental Research Center (represented by various law firms including Law Office of Karen A. Evans and Michael Freund & Associates) with 34 settlements or consent judgments totaling more than $2.8 million
  • Consumer Advocacy Group (represented by Yeroushalmi & Associates) with 25 settlements or consent judgments totaling more than $1.3 million

The Prop 65 outlook for businesses in 2014 does not look much better.  In particular, the June 2013 listing of cocamide DEA, a common ingredient in beauty and personal care products, such as liquid soaps and shampoos, has spawned dozens of lawsuits and hundreds of businesses have been named as defendants.  Numerous settlements have already been approved by the Alameda Superior Court this year, leading to speculation that the total settlements in 2014 will likely exceed the total settlements in 2013.

Conkle, Kremer & Engel routinely represents businesses against Proposition 65 claims and lawsuits brought by private enforcers, as well as counsels businesses on compliance with Proposition 65 in order to avoid becoming a future target of private enforcers.

 

Print Friendly, PDF & Email
0

The Conkle Firm Helps MANA Evict Domain Name Cybersquatter

Posted by:

What do you do when someone else has taken your trademark and used it in an Internet domain name?  Just accept it, even if they’re offering competing products and services?  Do you have to go to court and file a trademark infringement lawsuit?  Fortunately, these questions all have the same answer: No.   You don’t have to accept it, and there are faster and less expensive ways to force the cybersquatter to give up the infringing domain name.

CK&E recently demonstrated this by helping its client, the Manufacturers’ Agents National Association (commonly known as MANA) defeat a cybersquatter and force the squatter to transfer the “manaonline.com” domain name to MANA.

All domains ending in a generic Top Level Domain (gTLD) – such as .com, .org or .net – are automatically subject to ICANN’s Uniform Domain Name Dispute Resolution Policy, an streamlined arbitration process referred to as UDRP.  UDRP provides an efficient method for a trademark owner to resolve its rights to a domain name that uses a substantial part of the trademark or is otherwise confusingly similar to the trademark.  Instead of going to court to sue for trademark infringement, the business owner can file a complaint online with one of several authorized arbitration providers, such as the National Arbitration Forum (NAF) or the Arbitration and Mediation Center of the World Intellectual Property Organization (WIPO).  Through a process that is conducted entirely online, these arbitration providers are empowered to force a domain name registrar to transfer a domain to its rightful owner.  This is especially useful if the cybersquatter is in some remote offshore location and cannot be reached by regular legal process, because the domain name registrars are always available and can be directed to transfer the domain name.

To force the transfer of a domain through UDRP, the business owner must show:  (1) the domain name is confusingly similar to a trademark owned by the business;  (2) the current registrant has no rights or legitimate interests in the domain name; and  (3) the domain name has been registered and is being used in bad faith.

In the case in which CK&E helped MANA, another company called “Dvlpmnt Marketing” based out of Saint Kitts and Nevis, in the Caribbean, had registered the “manaonline.com” domain name – which was essentially identical to MANA’s “manaonline.org”   Dvlpmnt had used the domain name to park a webpage featuring “pay-per-click” links to other websites offering services competing with those offered by MANA.  Dvlpmnt owns tens of thousands of domains, and has been the subject of several NAF and WIPO proceedings in the past.

CK&E attorney Zachary Page initiated a Complaint with NAF on behalf of MANA, charging Dvlpmnt with cybersquatting by registering and maintaining in bad faith, and with no legitimate rights, the manaonline.com domain name that was confusingly similar to MANA, whose genuine website is found at manaonline.org.  The different gTLD extensions, .com and .org, are legally insignificant in the UDRP process – effectively, the domain names were regarded as identical.  After the UDRP hearing, the NAF Panel held:

“Considering the totality of the circumstances present here—including the similarity between the disputed domain name and Complainant’s domain name, and the content of the website to which the disputed domain name resolves—the Panel infers that Respondent was aware of Complainant when it registered the domain name and that Respondent is using the domain name in a manner intended to exploit confusion with Complainant’s website and service mark.  These inferences are indicative of bad faith.”

Manufacturers’ Agents National Association v. Domain Administrator / DVLPMNT MARKETING, INC., National Arbitration Forum Claim Number FA1404001553434

A successful UDRP claimant generally has a choice to have the domain registration cancelled or to have the domain name transferred to the claimant.  It is almost always better to have the domain name transferred, so that it cannot be taken by another cybersquatter in the future.  CK&E is proud to have helped its client, MANA, successfully force the cybersquatter to transfer the manaonline.com domain name to MANA.

Print Friendly, PDF & Email
0

Can Containers be Copyrighted?

Posted by:

There are some containers that have achieved trademark status. Among the most famous are the Coca-Cola bottle and the OPI nail lacquer bottle. Ownership of a trademark in container design requires a solid showing of secondary meaning, which generally takes considerable time, sales volume, and promotional efforts. Ownership of a copyright in a new creative work, on the other hand, is automatic. Copyright registration is usually quick and inexpensive.

So why not protect a container design through copyright? Because a container design that is functional is not copyrightable.

According to the Ninth Circuit Court of Appeals in its recent decision of Inhale, Inc. v. Starbuzz Tobacco, Inc., a case about a copyright claim on a hookah water pipe, copyright protection is not available for functional features of a useful article like a bottle or a chair. As a “useful article,” the shape of a container (including a hookah pipe) is copyrightable “only if, and only to the extent that, [it] incorporates . . . sculptural features that can be identified separately from, and are capable of existing independently of, the utilitarian aspects of the container.” 17 U.S.C. § 101.

Courts have said that the non-functional, sculptural features must be “conceptually” or “physically” separable from the container in order to be protected by copyright. “Physically separable” is an easy concept – a printed label or a fancy emblem that is applied to the container can usually be protected by copyright, because it can exist separately from the container. “Conceptually separate” is more esoteric. The Ninth Circuit held that “the shape of a container is not independent of the container’s utilitarian function – to hold the contents within its shape – because the shape accomplishes the function.” In other words, as long as the shape of the container merely holds the container’s contents, the shape is not subject to copyright.

The Ninth Circuit left unanswered whether a “ring shape” that is molded into the bottle but does not conform to the interior container might be copyrightable as “conceptually separate” from the functional container. In any event, the Court’s lesson seems to be that, for copyright protection for a container, the copyrighted feature should serve no purpose in holding the contents. Conkle, Kremer & Engel attorneys regularly work with clients to most effectively secure and protect their valuable intellectual property, regardless of whether it’s a traditional trademark, artwork, a fragrance or a container.

Print Friendly, PDF & Email
0

The Conkle Firm Teaches International Entrepreneurs in BIMA Program

Posted by:

Conkle, Kremer & Engel attorney Mark Kremer has been honored to participate in and contribute to the revolutionary Beauty Industry Market Access (BIMA) program through the Center for International Trade Development (CITD).  The BIMA program was developed and is led by beauty industry guru Patty Schmucker and international trade expert Cesar Arellanes, the Director of CITD in Long Beach.   BIMA is a five week intensive international trade and business education program taught by leading health and beauty industry experts. BIMA participants focus on key program principles distinct to conducting business overseas, receive bi-monthly objectives for assessing their business, and ultimately produce an export growth plan exclusive to their business. Participants also have access to upcoming trade missions to the world’s largest emerging market beauty trade shows – effective venues for executing learned principles and business plans.

Mark contributes to the BIMA educational program by teaching modules on domestic and foreign intellectual property protection, domestic regulatory compliance, and international distribution agreements.   Participants are particularly interested in cost-effective methods of protecting their intellectual property internationally, such as international trademark registrations through the Madrid System.  The Madrid System offers a centralized application process for trademark registration in over 90 countries based on a brand owner’s domestic application or registration.  Participants are also interested in CK&E’s practical approach to domestic regulatory compliance, including California’s evolving green chemistry initiative, Safe Cosmetics Act and Proposition 65.  Participants have also benefited from CK&E’s tips for forging fruitful business relationships with distributors, based on decades of experience representing clients in the personal care products industry.

CK&E will join Patty Schmucker and several graduates of the BIMA educational program to Cosmoprof Worldwide in Bologna in April 2014.  Mark looks forward to the next BIMA session, which begins on June 26, 2014.  Click for further information about joining the BIMA program: BIMA_Summer-Fall_2014

 

 

 

Print Friendly, PDF & Email
0

gTLDs are Already Causing Confusion – Just Ask Wayne Knight and TMZ

Posted by:

UPDATED July 15, 2015

Actor Wayne Knight (best known as Newman on Seinfeld) was forced to tweet his “proof of life” on Twitter, after a website that uses the domain name TMZ.today reported that he was killed in a traffic accident and the story went viral.  It has been reported that many users credited the story of the death of Wayne Knight because it was circulated with attribution to the website TMZ.today.  TMZ is well known as a major source of real entertainment news and celebrity gossip.  TMZ uses the domain name TMZ.com, but the domain name TMZ.today links to an entirely different website called ebuzzd.com that is actually an unrelated, deliberately fake news website – a website dedicated to hoaxes.

Wayne Knight’s concerns aside, this story presents important lessons for trademark holders and domain name registrants:  New generic Top Level Domains (gTLDs) are here and must be reckoned with.  TMZ.com is not TMZ.today, but it’s a good bet that a substantial portion of the consuming public does not know that.  Will the consuming public realize that your company website “XYZ.com” is not affiliated with XYZ.Today, XYZ.News, XYZ.Info, XYZ.Web, XYZ.Blog, XYZ.Corp, XYZ.Inc, XYZ.London, XYZ.Charity or XYZ.Porn, or any of the 600+ other non-branded gTLDs that are available now and coming online within the next two years?

For a trademark holder, it can be a daunting prospect to try to police that many possible confusing domain names, but there are cost-effective brand protection strategies and solutions.  They begin with recognizing the issue, and making sure that you have taken all appropriate steps to protect your trademarks and domain names.  The most basic step is to obtain U.S. trademark registrations for your important trademarks – especially for your primary brand.  That is the key to many of the solutions that are offered at http://trademark-clearinghouse.com/, the administrative service established by ICANN to help control issuance of gTLDs.   Then, set a strategy that includes monitoring the “Sunrise Periods,” during which registered trademark holders can take the most efficient steps to protect against spurious registrations of confusingly similar domain names with the new gTLDs.

The best and most cost-effective methods of protection against gTLD infringers and domain name cybersquatters will be discussed in future blog posts.  Available methods include preemptive registration, blocking and various forms of policing.  Conkle, Kremer & Engel routinely guides its clients to protect their valuable intellectual property and domain names, including taking proactive steps to address the new threats to trademarks posed by gTLDs.  Contact us if you have questions and need assistance.


 

UPDATE July 15, 2015:  Another example of misuse of gTLD domain extensions happened again and demonstrates that real money can change hands when gTLD domain name extensions are abused.  Twitter stock jumped on July 14, 2015 after what appeared to be the Bloomberg Business website posted a news article reporting that Twitter had received a $31 billion buyout offer.  The story was fake, but it passed for real news by being posted on a website designed as a counterfeit of the Bloomberg Business website and using a new gTLD:  www.bloomberg.market.  The real Bloomberg website is actually found at www.bloomberg.com.  To help make a convincing appearance, the www.bloomberg.market website included links back to the real www.bloomberg.com website.  Enough readers were fooled that Twitter stock price spiked after news of the purported buyout offer was picked up in legitimate media.  gTLD confusion may continue to be a problem for trademark holders until they take affirmative steps to limit the possibilities of confusion and abuse.

 

Print Friendly, PDF & Email
0

Protecting Your Company When a Top Executive Leaves to Join a Competitor

Posted by:

 

What do you do when a key member of your team goes to work for a rival firm? Or, perhaps worse, how do you react when you receive a competitor’s demand that your latest hire, a new sales manager, stop working for you?

John Conkle recently participated in a discussion of experienced practitioners which looked at these and related topics at the 2014 American Bar Association (ABA) Section of Litigation, Corporate Counsel Committee’s Continuing Legal Education Seminar held in Rancho Mirage, California. The topic of the presentation was what actions inside and outside counsel need to take when a top executive of the company leaves to joins a competitor, when the company’s reputation, confidential information, and business could all be at risk. The panel addressed practical and legal strategies to help navigate the pitfalls presented by this high-stakes dilemma.

Protecting Your Company - ABA 2014

John was joined on the panel by the Hon. Gail Andler, Judge of the Orange County California Superior Court; Elizabeth K. Deardorff, Associate General Counsel of Hewlett-Packard Company; and Steven A. Weiss, of Schopf & Weiss LLP, a Chicago litigation boutique firm. More than 300 attorneys from law firms and law departments throughout the United States and from several foreign countries attended this year’s seminar.

Written materials distributed at the seminar included an article written by John and Bill Garcia, Director of Legal Project Management at Thompson Hine LLP:    First Response to Surprise Departure of Top Executive to Marketplace Rival.  The article outlines first response actions to be taken by counsel in response to an executive’s departure. Bill Garcia had been scheduled to moderate the panel, which he helped conceive and orchestrate, but he was unfortunately snowed in and unable to leave Washington, D.C.

Losing a key executive to a competitor can be a serious and sensitive matter. CK&E is well versed in the options available to a company whose top executive leaves. CK&E has also represented the interests of the company acquiring the executive and employs various strategies and defenses to help resolve disputes over such hirings. CK&E lawyers have represented both sides of these issues, from recruitment of an entire sales team to competition by a former owner of an acquired business or product line.  CK&E’s vast experience in the area of employment law, non-competition and protection of trade secrets allows the firm to efficiently assist in-house counsel to reach a desired objective with a minimum of business disruption.

Print Friendly, PDF & Email
0

China Finds Parallel Imports Constitute Trademark Infringement

Posted by:

Chinese trademark law has no specific prohibitions against sale of gray market products diverted into the Chinese market, also known as parallel importation.  An important breakthrough occurred recently when the Suzhou Intermediate Court enforced trademark holders’ rights against an unauthorized reseller of gray market goods imported into China.

Pernod Ricard China (Trading) Co., Ltd. is the exclusive trademark licensee of Absolut Vodka (Images II-IV) in China.  Pernod Ricard and the trademark owner, Absolut Company Aktiebolag, brought a lawsuit in China against a local retailer of parallel imports of Absolut Vodka products, asserting trademark infringement and unfair competition.  The key facts were that the imported products had manufacturers’ identification codes removed and had added labels bearing Chinese characters for “Absolut” (Image I) and identifying an unauthorized importer and distributor.  The code removal and label addition infringed consumers’ right to know about the product origin, interfered with the trademark owners’ ability to track products to maintain product quality, and undermined the integrity and beauty of the genuine product.   The removal of the manufacturers’ identification code violated Article 52.5 of China’s Trademark Law, which is a catchall term prohibiting impairment of an exclusive right to use a registered trademark, and constituted unfair competition.  The addition of unauthorized labeling violated Article 52.1 & 52.2, prohibiting use of an identical or similar mark on the same or similar goods without the permission of the owner of the registered trademark, and infringed the exclusive right to use the registered trademark.

Absolut Vodka Images

Absolut Vodka Images

Conkle, Kremer & Engel works to protect its clients’ brands in the United States and abroad.

Print Friendly, PDF & Email
0

Organic products? Really?

Posted by:

Are your personal care products really organic? There is no federal regulation of cosmetics sold as “organic,” other than a voluntary USDA certification process, but California takes use of the term “organic” seriously.

The California Organic Products Act (COPA), requires that multi-ingredient cosmetics labeled or sold as organic contain at least 70% organically produced ingredients.  The Center for Environmental Health (CEH) sued 40 cosmetics manufacturers in 2011 and 2012 in Alameda County for violating COPA. One of the defendants in CEH’s first lawsuit was Todd Christopher International, dba Vogue International, (Vogue) the manufacturer of Organix brand products.  While the Organix products contained less than 10% organic ingredients, Vogue contended that the “active” ingredients in its products were organic.  Vogue argued that COPA did not apply to its Organix hair care products because hair care products are not “cosmetics” and that “Organix” is not a grammatical variation of the term “organic.”  The court rejected Vogue’s arguments.  In September 2012, Vogue agreed to either change its packaging and stop using “Organix,” or change the ingredients of its products to comply with COPA.

CEH then brought another lawsuit against Vogue.   This time, it was a class action aimed at stopping Vogue’s use of “Organix” nationwide – not just in California.  CEH claimed that Vogue’s labeling is unfair and deceptive under each state’s consumer protection laws because Vogue’s Organix products are not composed of predominately organic ingredients.  In October 2013, the federal court for the Northern District of California preliminarily approved a settlement of the class action in which Vogue would pay $6.5 million and stop using “Organix” for cosmetics that did not contain at least 70% organic ingredients.  The final approval hearing is set for April 3, 2014.  Vogue has already begun to transition its packaging and advertising to the more defensible “Ogx”.

Conkle, Kremer & Engel stays current on federal and state regulatory issues and helps its clients avoid the kind of labeling problem that befell Vogue.

Print Friendly, PDF & Email
0

The Conkle Firm Presents Hot California Regulatory Compliance Issues in New York

Posted by:

Conkle, Kremer & Engel attorney John A. Conkle was the featured speaker at a special presentation given on February 11, 2014 in New York, New York to business executives and lawyers.

The presentation, entitled “Are Your Products California-Bound?  Dealing With California’s Unique Regulatory Schemes,” provided valuable information about and insight into such California regulatory laws and initiatives as:

  • Proposition 65 (California’s Safe Drinking Water and Toxic Enforcement Act of 1986)
  • California Safe Cosmetics Act
  • California Green Chemistry Initiative (the Safer Consumer Products Regulations)
  • California Volatile Organic Compounds (VOC) Regulations
  • California Organic Products Act (COPA)
  • California Consumer Legal Remedies Act (CLRA)

California’s vast and ever-changing regulations pose a challenge for businesses no matter where they may be located.  Any business manufacturing, distributing or selling products into California needs to comply with California’s regulatory schemes to stay out of difficulty with the California Attorney General, regulatory agencies, non-governmental organizations (NGOs), bounty hunters, putative class action plaintiffs and even competitors.

CK&E was honored to team with the New York-based law firm Gottlieb, Rackman & Reisman, P.C., which specializes in intellectual property, to provide this presentation. CK&E has worked with the Gottlieb firm for nearly 25 years on matters of common interest to our clients. CK&E’s active regulatory compliance practice has helped clients in numerous industries – including  such diverse areas as personal care products, alcoholic beverages, construction and recreational equipment.

 

Print Friendly, PDF & Email
0

National Article Profiles the Conkle Firm’s $6.2 million Judgment for Unpaid Sales Commissions

Posted by:

Conkle, Kremer & Engel’s $6.2 million judgment against an electronics manufacturer is the subject of a feature article in the monthly publication of Manufacturers’ Agents National Association (MANA).  The article, Fallout From an Oral Contract, appears in the January 2014 issue of Agency Sales Magazine.

The article profiles Plaintiff Peter Reilly, a sales representative who was denied his commissions.  Author Jack Foster chronicles how CK&E lawyers Eric S. Engel and H. Kim Sim marshaled the facts and developed the law of the California’s Independent Wholesale Sales Representatives Contractual Relations Act to win a treble damages judgment for Mr. Reilly.

The Independent Wholesale Sales Representatives Contractual Relations Act is a little-known statute that requires a signed written contract containing specific terms in some commission agreements between manufacturers and sales representatives.  A willful failure to have a written contract that complies with the Act, or to account for and pay commissions as required by the written contract, can result in an award to the sales rep of three times the amount proved at trial, in addition to attorney fees.  In the Reilly v. Inquest case, the jury awarded the sales representative $2.1 million for unpaid commissions, which was trebled by the Court to more than $6.2 million.

The California Court of Appeal affirmed the award in full.  The Reilly v. Inquest Technology decision was unprecedented, because it is the first published decision to endorse the full scope of remedies available under the Independent Wholesale Sales Representatives Contractual Relations Act.

The Agency Sales Magazine article follows an article about Reilly v Inquest that appeared in the Los Angeles Daily Journal.

CK&E’s lawyers are well versed in issues affecting manufacturers and sales representatives.  CK&E lawyers litigate and resolve disputes over sales commissions and terminations, and use that knowledge to help manufacturers and sales representatives draft more effective contracts.  CK&E is a member of MANA and the Electronics Representatives Association (ERA).

Print Friendly, PDF & Email
0
Page 3 of 5 12345