Battling Big Business Bullies On The IP Playground: Minimizing The Risk Of Intellectual Property Litigation

The best way to avoid intellectual property litigation is to prepare for IP litigation, and the only way to prepare is to know the rules, says Christopher Rosario of McManis Faulkner. The post Battling Big Business Bullies On The IP Playground: Minimizing The Risk Of Intellectual Property Litigation appeared first on Young Upstarts.

Battling Big Business Bullies On The IP Playground: Minimizing The Risk Of Intellectual Property Litigation

by Christopher Rosario, associate attorney with McManis Faulkner

Business is inherently risky. It is even riskier if you are the new kid on the block. Big businesses  have the means to bully fresh-faced startups into the red—permanently. While some of this bullying may be unlawful, the courts are a common tool used by large corporations to protect their turf. Aspiring entrepreneurs may mitigate the risk of litigation however by taking steps to avoid infringing the legal rights of established players. Intellectual property (IP), which is often the heart of a startup’s business strategy, constitutes a small subset of those legal rights.

Not surprisingly, the best way to avoid IP litigation is to prepare for IP litigation, and the only way to prepare is to know the rules. The four types of intellectual property are trademarks, copyrights, trade secrets and patents. Patent law is complex, highly specialized, and beyond the scope of this article.  Since patents must be publicly registered with the United States Patent and Trademark Office (USPTO) however, a licensed patent attorney may provide valuable advice based on the parameters specified in a competitor’s patent.


Trademarks are an easily recognizable form of intellectual property. They include any combination of words, names, symbols or devices that are used or registered to identify and distinguish the trademark owner’s goods from those manufactured or sold by others. Generally, popular name brands are trademarks.

Federal trademark law protects the public from the likelihood of confusion as to the source of goods. Courts consider several factors when determining whether confusion is likely, including the similarity of the marks, the similarity of the goods, the similarity of trade channels, the fame of the established mark, and the care customers take when buying the product, among others.

To avoid infringing the marks of direct and indirect competitors, a startup should, before establishing its own mark, research the trademarks of established businesses. Common sense and general market research are good starting points. However, the USPTO provides a free searchable database of federally registered trademarks on the Trademark Electronic Search System (TESS). A few TESS searches may help narrow the entrepreneur’s search for the perfect brand name. While the TESS is publicly available, an experienced trademark attorney should be consulted before making any final legal decisions.


Copyrights are also highly visible. Copyright is most known for its protection of entertainment media. However, copyrightable subject matter includes sculptural, architectural, dramatic, pantomimic  and choreographic works, in addition to sound recordings and music; literary works; pictorial, graphic and motion picture arts; and other audio-visual works.

Generally, the Copyright Act allows a copyright owner to prevent others from reproducing the work, preparing derivative works, distributing copies, or publicly displaying works. These exclusive rights are often monetized by the owner through the use of licensing agreements. For example, a computer program may be considered a literary work protected by copyright. The owner of such a copyright generally distributes the computer program to customers, subject to an end user license agreement, which usually allows necessary copies to be made on the end user’s machines. Violating the terms of the license agreement may be an infringement of the owner’s copyright.

The Copyright Act also provides a well-known limitation to the exclusive rights above — fair use.  The number of apparent fair uses has exploded in online content, with many creators stating  they do not own the copyrighted material they use, do not intend to infringe any copyrights and only use the copyrighted material for educational purposes. However, these statements are about as effective at avoiding copyright infringement as yelling “bankruptcy!” at the mirror when filing for bankruptcy.

Depending on the nature of a startup’s business, purchasing or licensing copyrighted material may be impractical or unnecessary. To avoid infringing a copyright, the entrepreneur should understand the basics of fair use. A court may consider these factors when determining whether a use is fair use: the purpose and character of the use (commercial weighs against fair use; nonprofit weighs for), the nature of the work (fictional no; factual yes), the amount and substantiality of the portion used compared to the work as a whole (small and obscure portion weighs in favor of fair use), and the effect of the use on the potential market or value of the work.

Trade Secrets.

A trade secret is information that derives economic value from not being generally known and that is the subject of reasonable measures to keep it secret. Common trade secrets include recipes, formulas and customer lists. While the ingredients of a trade secret recipe must be kept secret, the fact that a recipe exists may be public.

“Infringement” of a trade secret is called misappropriation, and there are two kinds. Generally, a person may directly misappropriate a trade secret when that person improperly acquires, discloses or uses the protected information. A person may indirectly misappropriate a trade secret when that person knew or had reason to know that knowledge of the protected information came from someone who wrongfully acquired the trade secret or violated a duty to maintain the secrecy of the information. In other words, your business could be exposed to a misappropriation claim for information possessed by an incoming employee.

A startup should implement several protocols to protect itself from the second type of misappropriation. First, incoming employees should be educated on what a trade secret is. Second, incoming employees should agree, preferably in writing, not to use or disclose the trade secrets of former employers in company projects.

Minimizing Risk.

Ultimately, no amount of preparation can completely preclude the possibility of bullying by big business. However, the risk of expensive litigation later may be minimized by taking proactive cautionary steps today.


Christopher Rosario is an associate attorney with trial law firm McManis Faulkner in San Jose, CA. He represents clients in a various litigation topics, and he is a member of the firm’s Civil Litigation, Highly Regulated Industries and Criminal Law practice groups. He earned his J.D. from Santa Clara University School of Law in 2018. He may be reached at .

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9 Answers to Your Most Pressing Unemployment Questions

Many business owners and their employees affected by COVID-19 have questions about unemployment and Paycheck Protection Program (PPP) loans. Legal experts answer the most commonly asked questions. The post 9 Answers to Your Most Pressing Unemployment Questions appeared first on Click for more information about Gerri Detweiler. Copyright 2020 by All rights reserved. The content and images contained in this RSS feed may only be used through an RSS reader and may not be reproduced on another website without the express written permission of the owner of

9 Answers to Your Most Pressing Unemployment Questions

When Congress created the Pandemic Unemployment Assistance program as part of the CARES Act, it made as well as certain workers who may not be able to work for a variety of coronavirus-related reasons. Pandemic Unemployment Compensation (PUC) added an additional $600 weekly payment through July 31, 2020, to certain eligible individuals who are receiving other benefits, and Pandemic Emergency Unemployment Compensation (PEUC) extends certain benefits. 

All of these programs provide some welcome relief to those who qualify. But they’ve also created lots of questions from small business owners and their employees. Here, legal experts tackle questions you may be hearing from your employees or wondering about for your own business. 

Please note: The opinions in this article are for informational purposes only, are general in nature, and should not be relied upon or construed as a legal opinion or legal advice. Employers and employees should consult their own attorney for advice about their specific situation. 

1. What happens if my employer brings me back to work and pays me back pay for time when I was collecting unemployment?

My employer laid us off on March 19 and directed us to apply for unemployment. I got a call [from my employer] on April 17 saying they were getting the PPP (Paycheck Protection Program) loan and they may pay us on April 24. I had been on unemployment before this. We did end up getting the payment from my employer on the 24th but we have not been asked to come in and work. How do I report this on my weekly claim to unemployment? Would it be considered a severance payment? Can I still receive unemployment?

On my weekly unemployment claim there is no option for reporting this. It only asks if we worked. And on the pay stub I was sent it says the pay period was for 4/6 to 4/19 but I already filed claims for those weeks before I even knew about this. Will I have to pay my UI benefits back? 

Answer from Ian Meklinsky, Partner, Fox Rothschild:

In the event your employer returns you to work and pays you “back pay” for some or all of the time you were laid off/furloughed, in most states, you are technically required to repay your unemployment compensation benefit at least with respect to the time period your employer is paying you retroactively for. With that said, states may not have the bandwidth to pursue repayment of the unemployment compensation benefits, but you should be prepared to repay.

2. What happens to workers who are brought back at reduced pay?

I’m currently on unemployment and my employer got approved for the PPP loan. He stated when the funds come in I can no longer collect unemployment (which I understand) and told me that I will be working 20 hours a week instead of 40 hours a week. I’m a server. I will not be making enough to get by. Will I still be eligible for unemployment?

Answer by Travis Hockaday, Attorney at Smith Anderson:

Workers who are working reduced hours as a direct result of COVID-19 may be eligible for unemployment benefits, and should apply if they believe that they may qualify. For instance, in North Carolina, an employee working reduced hours because of a COVID-19-related reason may still be eligible. However, according to the North Carolina Division of Employment Security, the amount of money that these employees earn while working their reduced hours could affect their weekly benefit amounts. They can earn up to 20% of their weekly benefit amount without the earnings counting against their weekly benefits; earnings over that amount are deducted from the weekly benefits. These workers must report the money they are earning on their weekly certification reports for unemployment benefits. 

3. Can my employer force me to come into the workplace because they are paying us after obtaining PPP?

I’m a dental assistant and our office has been shut down except for emergencies. My employer is approved for a PPP loan. This means all of the employees will go off unemployment and she will pay us. Can the dentist make us work in the office if it is non-essential or to do menial jobs?

Answer from Ian Meklinsky: 

This is a common question we are receiving from employers and employees. An employer who receives a PPP loan, if it wants the loan (either in whole or in part) forgiven, has eight weeks to spend it on otherwise eligible expenses. As a result, many employers are having employees either return to work (state orders permitting) or are having employees not work and paying them nonetheless. This is permitted. The failure of employers to do this will result in their PPP loan not being fully forgiven. 

I understand the concern of employees here, as some may be earning more on unemployment compensation—as a result of the federal unemployment insurance supplement—but employers (state orders permitting) have the right to compel employees back to work.

4. There’s not enough work at our workplace. Can my employer make me make up hours off the clock later?

Is an employer allowed to “bank” hours that you don’t work and have you pay them back later if they pay you your full 40 hour weekly amount, but you end up not working all those hours in a week because either your business is not busy enough or you can’t keep proper social distancing with your coworkers?

Answer by Travis Hockaday:

Employees must be paid for time worked. 

Employees classified as exempt under the Fair Labor Standards Act (FLSA) must be paid their full, predetermined salary for any workweek in which they perform any work, regardless of the number of days or hours worked, unless a specific exception under the FLSA applies. 

Employees classified as non-exempt under the FLSA must be paid at their hourly rates for all time worked, and for overtime if applicable. Non-exempt employees should not be asked, required, or permitted to work “off the clock” under any circumstances. 

5. Can my employer require me to use my vacation time?

I work in accounts payable. During the last three weeks my hours have started to dwindle, and I am now only working three days a week. I have been using my personal/vacation time to compensate for the loss. My employer received the PPP. Do I have to keep using my personal time to cover lost hours?

Answer from Nick Oberheiden, Attorney & Founder of Oberheiden, P.C.:

If you are able to work and you choose not to do so, then your employer can require you to utilize vacation time that you have accrued—and your employer can place limitations on the use of vacation time that apply generally to all employees (e.g., vacation time can be subject to manager approval). 

With regard to the PPP and unemployment specifically, there are really two separate issues: If you are eligible for unemployment benefits, even temporarily, then you can file for and receive unemployment. If you are not eligible for unemployment because you are still employed and “available to work” (meaning you do not have a disability or illness that prevents you from working), then your employer can require you to either work or take vacation time.

Under the Emergency Paid Sick Leave Act (EPSLA), which is a part of the Families First Coronavirus Response Act, certain employees are eligible for paid time off and they do not need to exhaust their vacation hours prior to taking paid leave under the EPSLA. This includes employees who are self-isolating following a COVID-19 diagnosis and those who are caring for their child at home because their child’s “school or place of care has been closed, or the child care provider of such child is unavailable, due to coronavirus.” There are various other laws that may potentially come into play as well, and right now employers and employees alike need to be making decisions based on the specific facts and circumstances at hand. 

Related Articles:

  • Financial Help for Freelancers and Independent Contractors Affected by the Coronavirus Crisis
  • Where’s the Money? The Top 10 Frequently Asked Questions About CARES Act Loans
  • Small Business Relief: COVID-19 Resources for Startups
  • Newly Available CARES Act Loans: 10 Things Small Businesses Need to Know

6. Can my employer make me do work not related to my job (including personal errands) while our workplace is closed?

Are employers who get a PPP loan allowed to use it for “free labor,” having employees do work that they might not be qualified to do? For example, if there isn’t enough work to do based on your job description, can they transport you to an off-site location to install a personal property cow fence? Or to weed their property?

Answer from Rania V. Sedhom, Managing Partner, Sedhom Law Group: 

The short answer is yes, unless you are a collectively bargained employee or have an employment contract. However, if you are an at-will employee, an employer can ask you to help with personal errands and to work on matters that are unrelated to your job as long as the employer is paying you properly under the Fair Labor Standards Act and applicable state wage laws, the job is not harmful to your health, and you are capable of doing the job. Of course, the employer should not be requesting that you perform tasks unrelated to your job that may jeopardize your health. 

In either case, the request needs to be reasonable. If an employee is uncomfortable with a particular task, s/he should voice her concern. Is the task demeaning? Morally or ethically repugnant? Subjecting you to health issues? Check your job description. Most descriptions have all encompassing verbiage like “and other duties as requested by your manager” or “and other duties as assigned” or something similar. This language provides flexibility to the employer. 

7. I would rather stay on unemployment. Is it my choice?

I was laid off, I am now collecting unemployment (including the extra $600/week) and my employer applied for the PPP loan AFTER they laid me off. I am actually making a lot more money on unemployment, so if they get the loan and want to bring me back, am I required to take my job back? 

Answer from Nick Oberheiden:

If an employee has been laid off, he or she cannot be forced to accept a “new” position with the company. However, in order to remain eligible for unemployment benefits, a former employee must be “available to work,” which means that he or she must be actively looking for employment and not suffering from a disability or other medical condition that impairs his or her ability to work. If a former employee declines an offer for a position that he or she is capable of filling, or if the company hires a replacement employee, then the former employee’s unemployment eligibility could be terminated. 

It is also important for former employees to keep in mind that the additional $600 per week they may be receiving under the federal CARES Act expires on July 31, 2020. Once this expires, unemployment benefits will return to their normal below-wage level.

8. What do I do if I am self-employed, applied for unemployment benefits, and was denied?

I applied for unemployment insurance in California once the CARES Act/PUA was open to the self-employed. I was thrilled to receive a “Notice of Unemployment Insurance Award” letter in the mail, only to see that my benefit amount is $0, and it shows $0 as my wages. I know this comes from not being paid wages as a sole proprietor. 

Answer from Rania V. Sedhom:

Check your application to determine whether you applied for traditional unemployment benefits (UI) or benefits under the Pandemic Unemployment Assistance (PUA). Self-employed individuals, including independent contractors, should apply for PUA (and are also eligible for the enhanced $600 weekly benefit from the federal government). A denial from UI will not affect your eligibility for PUA. Depending on when you applied, several states may not have been ready to process PUA applications. Some states were not ready until as late as April 21, 2020.

Also, self-employed individuals who have the ability to work from home or telework, or who are receiving other paid benefits, may be ineligible for PUA benefits. All PUA denials can be appealed.

The state in which you apply sets the rules for applying for PUA. For example, some states require self-employed people to file a separate application to receive benefits under the PUA program. In other states, applicants must first receive an unemployment denial before they can be considered for eligibility under the PUA program. 

9. Can my employer cut benefits after getting PPP?

My employer just received the PPP loan. Now she is saying she will no longer be paying into our IRA or paying for our health insurance. Can she do this even though she used to pay for both before she received the loan?

Answer from Peter L. Frattarelli, Partner and Chair of Labor & Employment at Archer & Greiner P.C.:

Yes, in most circumstances, employers can do this, although there may be some financial consequences to the employer. First, as far as the IRA contributions, employers often make contributions to certain IRAs, and (more often), also make matching contributions to an employee’s 401(k) account. To provide these benefits, employers have to set up written “plan documents” which set the rules for these contributions, including whether and how soon an employer can stop making them.

The only possible exception would be for employees with contracts and union employees, where those contracts would determine if an employer can stop making these payments. The problem for employees is that most of these “plan documents” give the employer the discretion to decide to stop, and often with only a few days’ or even no advance notice. So, an employee can check with their employer and look at those plan documents, but in most cases, the employer can decide to stop these payments.

As far as health insurance, the answer is more murky. Again, other than union employees or employees with written contracts, employers can change how much it pays towards health insurance, or stop paying this benefit altogether without running afoul of any employee protection laws. But there are two limits to this:

First, in some cases, depending on the insurance carrier and the plan documents, those kinds of changes cannot be done during the middle of a “plan year,” but would have to wait until the open enrollment period (which occurs on different dates for each health care plan). Second, any employer subject to the Affordable Care Act, which is generally employers with more than 50 employees, may be subject to ACA financial penalties (really, taxes) for not offering the same level of health insurance. This means that other than possibly having to wait until the end of a plan year, the employer is free to make these changes and an employee does not have any legal options to change that.

The PPP as currently written does not impact this. The advantage of the PPP to employers is that this money is a loan that does not have to be repaid if the money is used for the permitted reasons. The PPP does discourage employers from bringing back employees at a lower salary, as the amount of the loan that does not have to be paid back is lowered if salaries are not at least 75% of what they were before the COVID crisis. But the amount of the PPP loan to be repaid is not affected by any changes an employer may make to IRA/401(k) contributions or health insurance.

RELATED: How to Get $1,000 If You Are a Freelancer, Gig Worker or Independent Contractor

The post 9 Answers to Your Most Pressing Unemployment Questions appeared first on Click for more information about Gerri Detweiler. Copyright 2020 by All rights reserved. The content and images contained in this RSS feed may only be used through an RSS reader and may not be reproduced on another website without the express written permission of the owner of

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