Start at the End: Planning for Termination of Sales Representative Relationships

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Start at the End: Planning for Termination of Sales Representative Relationships

Conkle, Kremer & Engel attorney Evan Pitchford recently published Start at the End: Planning for Termination of the Principal-Representative Relationship in the April 2023 edition of Agency Sales, the nationwide publication of the Manufacturers & Agents National Association (MANA).  Although no one likes to think about the potential end of a business relationship just when they finally succeeded in getting it off the ground, it is wise for sales representatives and principals alike to do just that.

Thoughtful preparation for the eventual termination of the sales representatives’ relationship will greatly improve the relationship throughout its existence, by making clear the terms that will apply as it comes to an end.  To understand their ongoing duties to each other, both parties should clearly understand the consequences of a termination under the various circumstances that may apply, such as a change by the principal to direct sales, contractual breaches, or just dissatisfaction of either side.  Specialized state statutes directed to sales representative contracts sometimes limit some of the termination provisions, but such statutes typically allow the parties to establish most or all of the terms for themselves.  It is definitely not wise for either side to just assume an applicable state statute will define what happens upon termination.

There are a great many options for termination provisions, including absolute cutoffs upon termination (which may be subject to “procuring cause” post-termination sales commission claims in some states), to timed durations of sales commission tails based on when the commission is considered earned, to phased termination extending commission tale periods based on longevity or achievement.  The only limits to the terms that can be agreed upon are the requirements of each state’s specialized sales commission statutes and the imagination and negotiating leverage of the parties.  Parties considering sales commission agreements are well-advised to seek the counsel of attorneys who are very familiar with sales representatives laws and practices, such as  attorneys at the Conkle firm.

18
AUG
0

Banking and Finance, Beauty Industry, Contracts, Contracts, Business and Finance, Employment Law, Fashion, Food, Craft Beer and Nutrition, Litigation, Arbitration and Mediation, Manufacturing, Real Estate & Construction, Sales, Sales Commissions, Technology

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Trade Secrets: Part 2 of CKE Article on Restraints of Trade

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Trade Secrets: Part 2 of CKE Article on Restraints of Trade

As described in earlier posts, Conkle, Kremer & Engel represents commissioned sales representatives (“reps”) and manufacturers or distributors (often termed “principals”) who contract with them.  Contracts drafted by manufacturers or distributors often include post-termination non-competition clauses, which can be tricky for both parties.  California generally disallows non-competition clauses as unlawful restraints of trade, but it is nonetheless possible to have effective trade secret agreements that can substantially restrict a former rep from working with competitors.  In addition, reps and principals often work across state lines and many states allow post-termination non-competition terms that are “reasonable” in scope.  Principals and reps must be conscious of which state’s law controls their agreement, and the state venue in which any dispute would be determined by a court or arbitrator.

CK&E attorney Eric S. Engel earlier contributed an article to the October 2016 edition of Agency Sales Magazine, published by the Manufacturers’ Agents National Association (MANA) to help reps and principals understand and grapple with the non-competition/restraint of trade issues that they face.  In November 2016, the second installment of this article, Trade Secret Protection in Rep Agreements, was published in Agency Sales Magazine to further explain the related issues of trade secret protection in the principal-rep relationship, and how trade secret concerns can limit the ability of a rep to compete with his or her principal during or after termination of the representation.

CK&E is proud to be able to assist reps and principals to negotiate the sometimes difficult legal issues that can help or hinder their effective partnership in serving their customers.

18
NOV
0

Manufacturing, Sales, Trade Secret Misappropriation, Unfair Competition

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CKE Publishes on Restraints of Trade Affecting Manufacturers’ Sales Reps

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CKE Publishes on Restraints of Trade Affecting Manufacturers’ Sales Reps

Conkle, Kremer & Engel represents commissioned sales representatives (“reps”) and manufacturers or distributors (often termed “principals”) who contract with them.  Often, contracts drafted by manufacturers or distributors include post-termination non-competition clauses that can be problematic in several respects.  California generally disallows non-competition clauses as unlawful restraints of trade, but it is often possible to have effective trade secret agreements that can substantially restrict a former representatives from working with competitors.  Further, reps and principals often work across state lines, and many states allow post-termination non-competition terms that are “reasonable” in scope.  Principals and reps must be conscious of which state’s law controls their agreement, and the state venue in which any dispute would be determined by a court or arbitrator.  To help reps and principals understand issues that they face, CK&E attorney Eric S. Engel contributed an article to the October 2016 edition of Agency Sales Magazine, published by the Manufacturers’ Agents National Association (MANA).  The October 2016 article, Limiting the Risks of Restraint of Trade, is the first of two parts addressing the enforceability of restraints of trade in various states, and methods to assure that a favorable venue is available if a dispute arises. Next month’s article will focus on the intersection of restraints of trade and trade secret protection.

 

 

26
SEP
0

Beauty Industry, Contracts, Contracts, Business and Finance, Manufacturing, Sales, Sales Commissions, Technology, Trade Secret Misappropriation, Unfair Competition

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Prove It! Conkle Firm Attorney Publishes National Article

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Prove It! Conkle Firm Attorney Publishes National Article

Conkle, Kremer & Engel attorney Eric S. Engel has extensive experience in matters affecting manufacturers, distributors and sales representatives.  From drafting and negotiating contracts between principals and agents to litigating disputes over such matters as commissions and trade secrets, Eric brings deep knowledge of the dynamics of the independent commissioned sales relationships to the benefit of clients across a wide range of industries.  Among his achievements is leading the trial team to a jury trial verdict and judgment of $6.2 million in treble damages against a manufacturer who cheated a commissioned sales representative.  The judgment was fully upheld on appeal in the precedent-setting decision of Reilly v. Inquest Technology, Inc., 218 Cal. App. 4th 536 (2013).

Eric has been recognized as a “Rep Savvy Attorney” by the Manufacturers & Agents National Association (MANA).  Rep Savvy Attorneys are acknowledged for their acumen in handling disputes involving principals and agents concerning independent commissioned sales relationships.  In that role, Eric is pleased to offer his legal insight through legal articles published in MANA’s monthly magazine, Agency Sales, which receives national distribution.  Most recently, Eric wrote an article on preserving evidence to support your claims and defenses when a dispute arises:  Prove It!  Why Reps and Principals Need to Keep the Evidence, Agency Sales Magazine, May 2015

The Prove It! article focuses on the need to document the significant events that arise in parties’ commercial relationships, starting with a signed written contract that correctly states the terms of the parties’ agreement in a straightforward manner.  Then, events during performance, such as exceptions to the contractual terms and issues in obtaining performance by the other party, should be documented in plain and clear English by email or even by good old letters or faxes.  Documents that were created during the relationship should be carefully saved – a document that once existed but cannot be located can be as bad or worse than a document that never existed in the first place, as it raises the potential for spoliation of evidence penalties that can be very serious.  The Prove It! article is written for agents and principals, but the information contained in the article can be applied to almost any commercial situation.

CK&E attorneys are well versed in commercial disputes of all types and are ready to help you document your position and maintain good records of what you documented, so that you can position yourself as strongly as possible if a dispute arises.

 

10
JUN
0

Manufacturing, Sales, Sales Commissions

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The Conkle Firm Participates in MANA Attorney Forum in Chicago

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The Conkle Firm Participates in MANA Attorney Forum in Chicago

Conkle, Kremer & Engel attorney Kim Sim participated in the annual Manufacturers’ Agents National Association (MANA) Attorney Forum in Chicago in September 2014.  The MANA Attorney Forum is an annual event for “rep-savvy” attorneys from across the country to meet and discuss legal issues and developments in the law that uniquely affect independent manufacturer’s representatives.

This year’s Attorney Forum covered a wide range of topics including conflicts of interest for sales representatives who represent competing lines, aspects of international law that impact sales representative relationships, successor companies and liability, valuation of rep firms, differences in manufacturers’ representative laws among states, ownership of customer lists and the recent amendment to the Minnesota Commission Protection Act.

CK&E regularly represents manufacturers’ representatives with respect to disputes relating to commissions, including a 2011 victory on behalf of its sales representative client that resulted in the published decision Reilly v. Inquest Technology, in which the Court of Appeal affirmed a $6.2 million judgment in favor of the sales representative under special California laws protecting sales representatives.  CK&E is proud to be a member of MANA and is honored to be recognized by the leading association of manufacturers and agents as specialists in the area of rep law.

Published in MANA’s Agency Sales Magazine:
MANA Attorney Forum 2014

30
SEP
0

Beauty Industry, Fashion, Food, Craft Beer and Nutrition, Manufacturing, Sales, Sales Commissions, Technology

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The Conkle Firm Helps MANA Evict Domain Name Cybersquatter

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The Conkle Firm Helps MANA Evict Domain Name Cybersquatter

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.

17
JUN
0

Domain Names, Intellectual Property, Manufacturing, Sales, Sales Commissions, Technology, Trademarks, Unfair Competition

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

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

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).

29
JAN
0

Beauty Industry, Contracts, Contracts, Business and Finance, Fashion, Food, Craft Beer and Nutrition, Manufacturing, Sales, Sales Commissions, Technology, Unfair Competition

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