Internet & Technology Law Blog

Liability to Employers

by Jeffrey A. Cohen, Cohen & Richardson

Blackberrys, iPhones, Palms, Droids… the list goes on. Smartphones  are becoming a staple in everyday life and in many industries it is virtually expected by your customers that your employees will be able to access their email during the day regardless of whether they are in their office or not. Furthermore, it is often assumed that workers will have access to their email after hours, on weekends, on holidays and even when they are on vacation.

In the world of employment law there was a time when the claims De Jure typically involved issues surrounding work breaks, lunch breaks, travel time and expenses. Increasingly, however, plaintiff’s lawyers are looking at PDA usage as fodder for their latest claims strategy. We see this issue as particularly important for Internet and technology companies to pay special attention to because the level of employee connectivity tends to rank well above other industries.

The issue involves non-exempt, hourly employees and whether you have established a company policy that requires your employees to check their emails and/or respond to them in their off hours. Such a policy could open your company up to liability for this new brand of employment claim. One solution is not issuing PDAs to hourly employees at all. Another might be altering your employment manual to make it clear that checking and/or responding to emails after hours is purely voluntary and is not required by the company.

Regardless, we expect to see new litigation claims presented on this issue and eventually new legislation to deal with the issue.

Copyright (c) 2010 – JACO Product Development LLC – All Rights Reserved.

Jeffrey A. Cohen is the founder of InternetLitigators and a partner in the El Segundo, California office of Cohen & Richardson, LLP. Mr. Cohen can be reached at JCohen [at] InternetLitigators.com. Mr. Cohen’s practice is focused upon the representation of Internet and technology companies. The reader is cautioned that the information contained herein is not legal advice and is not a substitute for legal advice. There is no attorney client relationship created by this information.

InternetLitigators is proud to announce the selection of Jeffrey A. Cohen as a speaker at HostingCon 2010. Mr. Cohen will be featured in a panel entitled “3 Easy Strategies to Minimize Litigation in the Cloud”. This seminar will discuss the legal risks to your web hosting company from a cloud strategy whether you are offering cloud based services or providing third party cloud services to your customers.

By Jeffrey A. Cohen
and Vanessa Pfaff
April 7, 2010

The U.S. Court of Appeals threw out the Federal Communications Commission’s 2008 cease and desist order against Comcast on Tuesday, thereby ruling that the FCC does not have the legal authority to enforce Net neutrality regulations on Internet providers.

In August 2008, as a part of their effort to regulate providers and promote Net neutrality, the FCC issued a cease and desist order to stop broadband provider Comcast from favoring certain sites and services over others. Specifically, the FCC order was aimed at Comcast’s 2007 interference with BitTorrent, an online file-sharing service. Comcast had attempted to control BitTorrent’s access to bandwidth, claiming that BitTorrent’s subscribers were using too much bandwidth and subsequently were slowing Internet traffic. The FCC stepped in to prevent Comcast from interfering with the FCC’s Net neutrality policies, doing so by issuing an order forbidding Comcast from blocking these subscribers’ use of bandwidth.

Comcast complied with the order, but then responded by suing the FCC, arguing that the FCC’s order was illegal and that the FCC lacked the authority to enforce such an order in the broadband sector, which had been deregulated by law under President George W. Bush. The FCC maintained, however, that it had the authority under existing law to set certain rules for information services, such as broadband, and that these rules could include Net neutrality rules.

On Tuesday, the U.S. Court of Appeals for the District of Columbia Circuit ruled that the FCC had no such authority to enforce this policy, rejecting the FCC’S reasoning and making future litigation in this area likely.

This ruling has placed a roadblock in front of the FCC’s pending initiative to draft formal Net neutrality rules, which it announced last October. According to the FCC, whose policies are committed to promoting open and affordable broadband to all of the U.S., such rules are necessary to prevent phone and cable companies from restricting online access to users.
The Court stated that the FCC’s regulatory behavior was not backed by Congressional law and that the FCC did not have the power to regulate the neutrality of Internet providers. Judge David Tatel’s Opinion on Petition for Review of an Order of the FCC of April 6, 2010, states that the FCC does not have “authority to regulate an Internet service provider’s network management practices” unless “it demonstrates that its action…is reasonably ancillary to the…effective performance of its statutorily mandated responsibilities.” In this case, the Court has ruled that the FCC’s cease and desist order is does not meet such qualification and is outside the FCC’s legal authority.

This ruling also has an effect on some of the other plans that the FCC has, such as its National Broadband Plan, which it announced last month. This plan, headed by FCC Chairman Julius Genachowski, is intended to make high-speed Internet widely accessible and affordable across the U.S. Actions through which the FCC assumes some level of regulatory power now appear to be under the threat of litigation.

Although this decision has implications on the FCC’s ability to control and enforce Net neutrality, the Opinion issued by Judge Tatel did not contain any assessment of the importance of Net neutrality as a policy. Neither did the Opinion express any judgment or acquittal of Comcast’s interference with broadband use. The ruling was specific to this case, but still set a precedent for future FCC regulation disputes. The Court has found Net neutrality, in this instance, to be unenforceable, at least by the FCC.

Copyright (c) 2010 – JACO Product Development LLC – All Rights Reserved.

Jeffrey A. Cohen is the founder of InternetLitigators and a partner in the El Segundo, California office of Cohen & Richardson, LLP. Mr. Cohen can be reached at JCohen [at] InternetLitigators.com. Mr. Cohen’s practice is focused upon the representation of Internet and technology companies. Miss Pfaff is a Law Clerk for the firm. The reader is cautioned that the information contained herein is not legal advice and is not a substitute for legal advice. There is no attorney client relationship created by this information.

Our Founder Jeffrey A.  Cohen was interviewed by WHIR TV on the subject of the establishment of InternetLitigators, Cohen & Richardson, LLP and current events in Internet Law.

InternetLitigators represents clients in cities all of over the United States and many other countries. This includes clients in the City of Los Angeles. As of 2001, out of the 20 largest US Cities only three imposed a Gross Receipts Tax upon their businesses. See Chart. Of those Gross Receipts Taxes, the City of Los Angeles was by far the highest. The City of Los Angeles’s tax rate is variable depending upon the type of business conducted. In 2009 the City of Los Angeles Gross Receipts Tax ranged from a low of $1.01 to a high of $5.07 for each $1,000.00 of Gross Receipts earned within the City. By way of illustration, on Gross Revenue of $20 million that is a range from $20,200/yr to $101,400/yr depending upon the classification that you are placed in.

Another factor that can greatly effect your overall tax liability is the allocation of gross revenue between operations that you may have within the City and outside the City. With regard to web hosting, the city may argue that it is the location of your web hosting servers that is determinative and not your sales, customer service or web design services. This is an unpleasant reality currently facing Los Angeles Data Centers. Specifically, the City of Los Angeles has become aggressive not only in increasing its audit percentages but in attempting to reclassify businesses previously accepted as falling within reduced tax classifications. In addition, the City of Los Angeles has become aggressive in expanding the definition of revenue that is earned within the City. For businesses in the City of Los Angeles this can be a shocking combination. There are numerous reports of companies simply leaving the city rather than deal with these reclassifications thereby resulting in what appears to be a net loss to the City as the result of their efforts.

The InternetLitigators team of attorneys recently prevailed against the City in an administrative hearing against just such a claim. Our litigation team successfully argued that web hosting, when combined with the standard web development services provided by most if not all web hosting companies does fall within the definition of a “multimedia business” according to the City of Los Angeles guidelines and historical notes for that exception despite the City’s assertion to the contrary. If the City complies with the ruling of the hearing officer we will successfully have avoided the trouble and expense of litigation against the City for our client.

Bottom Line: In the event of an audit, we recommend that you closely evaluate the purported gross revenue which serves as the basis for any assessment and the methodology used for reaching those figures. We recommend that you evaluate your “out of city” operations and perform your own allocation between “in city” and “out of city”  revenue sources. Finally, we recommend that you closely evaluate your possible entitlement to classification within any of the reduced tax classification categories.  Seek the assistance of a CPA and legal counsel familiar with the city’s administrative procedures and classification guidelines.

The 2009 City of Los Angeles Tax Classification Table can be found here.

Copyright (c) 2010 – JACO Product Development LLC – All Rights Reserved.

Jeffrey A. Cohen is the founder of InternetLitigators and a partner in the El Segundo, California office of Cohen & Richardson, LLP. Mr. Cohen can be reached at JCohen [at] InternetLitigators.com. Mr. Cohen’s practice is focused upon the representation of Internet and technology companies.  The reader is cautioned that the information contained herein is not legal advice and is not a substitute for legal advice. There is no attorney client relationship created by this information.

This month we have seen several issues arise concerning the use of domain names with respect to the rights of registered trademark owners. Registering a domain name is not the same as registering a trademark and I thought some information as to the difference and how they might interrelate would be helpful. Understanding the difference and taking steps to protect the trademarks that you have some claim to can save you significant aggravation and expense down the line and help you avoid the risk of possibly losing your domain name or your marks.

According to the United States Trademark Act which is also known as the Lanham Act 15 U.S.C. §1127 defines a trademark as follows:  Any word, name, symbol, or device, or any combination thereof (1) used by a person, or(2) which a person has a bona fide intention to use in commerce and applies to register on the principal register established by this Act,to identify and distinguish his or her goods, including a unique product, from those manufactured or sold by others and to indicate the source of the goods, even if that source is unknown.

Servicemark is the correct term used for services as opposed to products.

One key to the ability to register a mark is that there must be either an actual use or an intent to use the purported mark in commerce or trade in a manner that indicates the source of the goods and distinguish them from the goods of others. Registering a domain name is most certainly insufficient by itself to qualify for trademark registration or protection.

Furthermore, registering a domain name does very little to secure your trademark rights under the Lanham Act. While you own a trademark upon your use of the mark in commerce, in order to secure your right to protection under federal trademark law you must register your mark with the United States Patent and Trademark Office. This process involves the submission of an application, payment of the appropriate fees which is based upon the number of International Classes of products or services that you offer under the mark. Approximately 6 months from the submission of the application you will receive your first contact from your assigned trademark examiner.

If the evidence that you have submitted in support of your mark is appropriate for the information in your application and your mark is otherwise the type of mark that is able to be registered and there is no prior conflicting use of your mark and there is no opposition to your application then you may be granted publication in the Principal register. Only then can you be said to have registered your trademark. The process takes approximately one year from start to finish.

An attorney is not required for this process. An applicant is responsible, however, to observe and comply with all substantive and procedural issues and requirements whether or not they are represented by an attorney. In many instances even where you feel comfortable making our own filing it may be desirable to employ the services of an attorney who is familiar with trademark matters to greatly simplify the procedure.

Only federally registered trademarks may be designated by the federal registration designation ®. The SM and TM marks are used to designate a claimed trademark right however their use may be governed by the law of your particular state. The federal registration symbol should only be used on goods or services which have been identified in the applicable federal registration.

Federal trademark registration has the following benefits.(1) It provides constructive notice to the world of your claim to the ownership of the mark.(2) It serves as evidence of ownership of the mark.(3) You may bring actions in Federal Court to protect your mark.(4) It may be used as a basis to secure registration in Foreign Countries(5) With respect to goods, your mark can be filed with the US Customs service to prevent the importation of infringing foreign goods.

With that understood, because of the large and always increasing number of top level domain names and the ease with which they may be registered, the owner of a trademark can often learn that another has either intentionally or unintentionally registered a domain name consisting of the trademark owner’s mark. In general, the owner of a federally registered mark has the luxury of a choice between (1) proceeding to Federal court to secure an order allowing the recovery of the domain name together with monetary or other damages according to proof or (2) proceeding under the Uniform Dispute Resolution Policy (UDRP) developed by ICANN.

Although it is helpful, trademark registration is not necessary to proceed under the UDRP however there can be no award of any damages other than an order to transfer the domain name in question. Under the UDRP an arbitrator or panel of arbitrators can issue a binding order to a registrar to transfer a particular domain name. There are some registrars that do not subscribe to the UDRP which can present certain difficulties when attempting to recover a domain name registered in bad faith.

The proof necessary to prevail in Federal Court for trademark infringement under the Lanham Act is not the same as the proof necessary to prevail under the UDRP. The specific proof necessary is dependant upon the nature of the cause of action which is beyond the scope of this entry. In general, however where you have registered a trademark for certain services (such as web hosting) and another company is offering the same or similar services under a domain name that is the same or confusingly similar you are likely well within your right to not only demand that the company stop the use of your mark but that they may be responsible to pay damages resulting from their use of your mark and that they must turn over the domain name to your control as well.

Often we are contacted by individuals that have received a cease and desist letter from a lawyer representing a trademark owner claiming a violation of trademark law. These individuals often express frustration based upon the misunderstanding that because the trademark owner left the domain name open by failing to register it that they are somehow entitled to some right simply because they have successfully registered the domain name. This is simply not the case. There are many domain names available for registration which are essentially useless to anyone but the owner of the mark.

Before you register a domain name, it would be prudent to examine whether the domain is registered as a trademark, is the type that is subject to registration, or is otherwise in use in commerce by others before you spend too much time and effort getting used to your new domain.

Copyright (c) 2007 – InternetLitigators

InternetLitigators has attended the premier web hosting event in the Country for the third year in a row. This year, HostingCon was at the beautiful Navy Pier in Chicago, IL. Sessions on Search Engine Marketing presented by Ben Fisher of TechPad Agency and Neil Patel of ACS offered valuable tidbits of information useful to anyone interested in raising their relevancy on the Internet. Derek Vaughn of TechPad Agency gave a Nostradamus like prediction of the future of the Internet and the place that web hosting will take in that future.

The merging of Media was an obvious theme and several examples were offered. We even got to see an iPhone obliterated in a blender to illustrate the point of thinking creatively in your marketing strategy.

Viewing Web Hosting as a somewhat ubiquitous commodity necessary only to provide the true products and services in demand by consumers was a common thread in many presentations. This was highlighted succinctly by Richard Rosenblatt of Demand Media in his presentation entitled Next Generation Web: What Lies Ahead for Hosting.  What is Web Hosting? asked Rosenblatt rhetorically. Lou Honick of HostMySite prophetically added a footnote to his own comments in the keynote panel discussion reminding the audience that dismissing the entrance of some larger companies into the web hosting market is unwise. Honick suggested that maybe it is the rest of us that should learn something about the products and services that these entities have chosen to offer to the public.

Overall HostingCon 2007 was a valuable opportunity to connect with the Web Hosting industry for educational and business opportunities alike.

As you have probably noticed, our new site was launched June 1, 2007 exactly on schedule. We are very pleased but it is what our clients think that is most important. Please let us know what you think of the design and function. If you notice any problems please let us know that as well. Your continued support is appreciated.

InternetLitigators Staff

InternetLitigators has a full service litigation team comprised of attorneys with vast experience in all aspects of commercial and business litigation arbitration and mediation including copyright, trademark, trade secret, employment, domain name, contract, unfair competition, CAN-SPAM Act, DMCA Arbitration and more. We have secured numerous favorable Judge and Jury Verdicts for clients throughout the Nation. We have achieved hundreds of favorable arbitration awards and mediation settlements and remain one of the Nations leading Internet law firms.

 Where the Internet is concerned, you need InternetLitigators in your corner.

On May 23, 2004 InternetLitigators launched what was at the time its third major website redesign. It was state of the art, well organized, easy to navigate and has served us exceedingly well since that date. As many of you know in coming weeks we will say a fond goodbye to the 5/23/04 design and launch InternetLitigators Version 4.0.

We are very excited about the new design. It is fresh, clean, better organized, easier to navigate and we feel that it represents our significant and substantial growth over the past three years and it also better highlights the large range of services that we provide.Members will receive a notice once the new site is launched. All passwords and user IDs will remain the same. Most importantly, members will continue to receive the same hands on, service oriented, efficient, effective, aggressive, and responsive service as always.

Thank you for helping to make our continued growth possible.

Los Angeles, CA, January 15, 2007 

InternetLitigators in association with the Law offices of Chapman, Glucksman & Dean apc  has announced that it has begun offering an exclusive Pre-Paid legal services plan designed specifically for Web Hosting company members of InternetLitigators. Unlike any other pre-paid legal services plan this arrangement is directly with a law firm that specializes in representing web hosting companies and will handle all matters in house.

Through this plan, InternetLitigators members receive access to one of the Nations leading Business law firms in the area of Internet and Web Hosting. Members will affordably gain access to and develop relationships with experienced individual attorneys so that when future legal issues arise they have immediate and unfettered access to the top experts in the field. This plan covers the real world legal issues faced by most Web Hosting companies on a day to day basis said Jeffrey Cohen of InternetLitigators. The new plan announced on Monday includes consultations, letter writing, and even litigation. Typical uses are expected to be Terms of Service and Privacy Policy review,  DMCA complaint response, National Security letter and Subpoena response as well as Trademark, Copyright and Corporate issues. This is a fully legitimate guaranteed arrangement for 5 hours of pre-paid legal services directly with a California law firm that practices Internet Law, Business Law, and Employment Law at an extremely favorable hourly rate said Cohen. This places our members in a position where they have unique and affordable access to the advice that they need immediately when issues arise.Legal services provided by law firms with relevant industry experience often charge rates in excess of $400.00 per hour. At $750.00 an InternetLitigators membership includes 5 hours of lawyer time which translates to a rate of $150.00 per hour.  Members then also receive the right to purchase additional hours at a significantly reduced member rate. Typically such discounted rates are offered by law firms only to their long standing and highest volume clients. By consolidating resources, InternetLitigators members are able to obtain these same advantages. This plan turns conventional law firm thinking on its head by offering the discounted rate up front in a clear move to create the long standing relationships going forward.Cohen, a partner in the Los Angeles office of Chapman, Glucksman & Dean and Chair of that firm’s Internet & Technology Practice Group created this arrangement in response to recognition that many hosting companies operate dangerously without ever seeking or even recognizing the need for proper legal advice until they find themselves in the midst of significant and costly legal issues. With proper advice of experienced counsel this situation can often be easily avoided. All legal services provided to InternetLitigators members are handled directly by the firm’s 5 offices throughout the State of California.

For additional information on the InternetLitigators Membership plan visit www.internetLitigators.com

The response to our new program has been amazing. Thank you to all of you that have signed up. It has been a pleasure to get to know all of you. The services that we have provided under the plan this week include letter writing, trademark applications, incorporation, pre-litigation negotiation, website review, employment agreement, insurance claim filing and several other items.

The member area is shaping up nicely so if you are a member and have not logged in yet please take a moment and check it out. If you need to purchase additional discount member hours you can easily do so there. You can also view our exclusive “members only” articles. We will continue to make additions of valuable member benefits with member discount codes so keep checking back.

Thank you for all your support and nice comments too! We look forward to exciting times ahead. 

InternetLitigators