The Virginia Business Litigation Blog

May 18, 2009

D.C. Circuit Upholds Redskins Trademark Victory

Back in 1992, a group of Native American activists challenged the validity of the Washington Redskins trademarks on the ground the trademarks were impermissibly disparaging towards their ethnic group. After scoring early victories before the Patent and Trademark Office and the Trademark Trial and Appeal Board (TTAB), resulting in a temporary cancellation of the marks (which deprived Pro Football of the ability to go after infringers), the U.S. District Court for the District of Columbia sided with the Washington Redskins about six years ago. The rationale had nothing to do with whether the term “Redskins” is disparaging to Native Americans, but with the equitable defense of “laches.” The Court of Appeals reversed that ruling due to a faulty application of that defense, but the District Court again ruled in favor of Pro Football (the owner of the Redskins trademarks) last year. The matter was again appealed. This time, however, the Court of Appeals affirmed the District Court, solidifying the Redskins’ victory and the validity of the marks.

“Laches” is a doctrine which, like a statute of limitations, serves as a defense to legal proceedings when the plaintiff has waited too long before bringing the claim. It applies where there is (1) lack of diligence by the party against whom the defense is asserted; and (2) prejudice (i.e., harm) to the party asserting the defense.

The first time the question was presented to the District Court, it applied the laches defense because the TTAB proceeding was not brought until 25 years after the marks were first registered. The Court of Appeals reversed that ruling because the defense is intended to apply where there has been unjustified delay by a particular person. One of the plaintiffs was only a year old when the Redskins trademark was first registered. So on remand, the District Court focused only on whether that particular individual, Mateo Romero, delayed in asserting his rights, beginning the analysis with the date of his eighteenth birthday (the legal age of majority). From that perspective, the alleged delay was not 25 years but less than 8.

May 13, 2009

Injunctions in Virginia

by Lee E. Berlik

Filing a lawsuit against another company or individual in Virginia is not always about money. Sometimes, it is necessary to get a court order compelling the defendant to take some desired action (like perform a contractual obligation to purchase real estate) or restraining the defendant from acting in a manner that would harm your business (like sharing trade secrets with a competitor). The injunction remedy does not award money damages to the injured party, but protects property and other rights from irreparable injury by prohibiting or commanding acts that would (or are likely to) result in such injuries.

When time is of the essence, Virginia courts will allow a plaintiff to move for a temporary, preliminary injunction to restrain or compel the conduct at issue at the outset of a case, pending further investigation and trial. The purpose of a preliminary injunction is to preserve the relative positions of the parties (i.e., the “status quo”) either while the suit is pending or for some shorter period of time determined by the court. In certain emergency situations, it may be possible to obtain an injunction at a hearing of which the defendant is not notified. This is sometimes necessary when there is a legitimate fear that the defendant would take the feared action (or inaction) upon learning of the lawsuit or motion.

An injunction is considered an “extraordinary” remedy and is generally more difficult to obtain than an award of money damages. Of the different types of injunctions available, the form that compels another party to perform an act (as opposed to merely preserving the status quo and prohibiting certain actions) is considered the most extraordinary and is the most difficult to obtain in court.

May 6, 2009

Older Employees Claim Age Discrimination by 3M

by Lee E. Berlik

Like it or not, if you are 40 years old or older, your employer or coworkers may consider you downright geriatric and mistakenly assume that you are no longer able to perform the requirements of your position as well as a younger person. When you turn 40, you officially join the ranks of “old people” against whom discrimination is prohibited by law. The Age Discrimination in Employment Act of 1967 (ADEA) protects employees and job applicants aged 40 and older from discrimination in employment. The ADEA makes it unlawful for employers with 20 or more employees to discriminate on the basis of age with respect to any term, condition, or privilege of employment. This includes hiring, termination, promotions, salary, benefits, job assignments, and training.

According to a new class-action lawsuit filed in federal court in California against 3M Company, 3M engaged in a pattern of discrimination against employees older than 46 by giving them negative performance reviews, inferior training, lower pay, and fewer opportunities for promotion. The suit claims 3M discriminates against older workers throughout the entire United States, effectively shutting them out of top management positions. The Plaintiffs estimate over 2000 workers have been the victims of 3M’s discriminatory employment practices.

The crux of the allegations apears to be that 3M singled out younger workers for inclusion in their intentsive “Six Sigma” management training program, virtually assuring that 3M leadership would be comprised entirely of younger workers. The suit also claims that workers were asked to sign releases upon departing the company that contained misrepresentations of their legal rights. The plaintiffs are asking the court to declare the releases unenforceable as a matter of law.

May 3, 2009

Trademark Dispute Breaks Up Relationship Between Marriage Marketers

by Lee E. Berlik

Maryland-based Marriage Savers, Inc., a non-profit marriage counseling service and operator of www.marriagesavers.com, has filed a trademark action in the Eastern District of Virginia against Lovepath International, Inc., another marriage counseling organization, which allegedly has been conducting business using the confusingly similar domain name marriagesaver.com. As of this writing, www.marriagesaver.com has been taken down.

According to the complaint, Marriage Savers owns the federally registered trademark “MARRIAGE SAVERS” and has used the mark since the early 1990’s in connection with a wide variety of products and services, including writing printed materials and publications in the field of marriage, conducting workshops and seminars to community leaders, and offering counseling to couples.

Lovepath, according to the suit, also offers seminars, books, and online resources geared to marriage counseling and markets them using the name “Marriage Saver.” Marriage Savers contends that Joe Beam, Lovepath’s founder and president, is not only familiar with Marriage Savers and its trademarks but has actually been a speaker at its conferences.

April 28, 2009

Herndon Company Unable to Obtain Preliminary Injunction Against Breach of Non-Compete

by Lee E. Berlik

Herndon-based Deltek, Inc., surely thought it would have little trouble enjoining its former employees from forming a competing company in direct violation of their employment contracts. After all, the defendants admitted that they were competing with their former employer in a manner that would fall under the noncompete provisions of their respective employment agreements. However, in a written opinion issued on April 20, 2009, by Judge Trenga of the United States District Court for the Eastern District of Virginia (Alexandria Division), the court denied the requested injunctive relief.

Uncontested evidence demonstrated that three former Deltek employees, a Managing Director, Consulting Manager, and Services Coordinator, all of whom had access to information considered by Deltek to be confidential, proprietary, and trade secret information, left Deltek and joined Iuvo Systems, Inc., in Chantilly, Virginia. Iuvo’s business involves providing consulting and application management services relating to Deltek’s proprietary accounting and financial software. All three employees had signed noncompetition and nondisclosure agreements with Deltek.

The relevant noncompete language provided that the employees could not, for a period of two years after the termination of their employment, “directly or indirectly be engaged as an employee or consultant of any firm or corporation engaged in a business which is in competition with [Deltek].” The agreements also prohibited the use or disclosure of “Confidential Information” or “Confidential or Proprietary Information” both during and after employment.

April 20, 2009

Your Rights as a Disabled Employee

by Lee E. Berlik

Qualified individuals with disabilities are entitled to an equal opportunity to benefit from the full range of employment-related opportunities available to others. The Americans with Disabilities Act (ADA) prohibits discrimination in the workplace (as well as in government and other contexts) on the basis of disability. It applies to employers with 15 or more employees and covers recruitment, hiring, promotions, training, pay, social activities, and other privileges of employment. The ADA also restricts the questions that can be asked about an applicant’s disability before a job offer is made, and it requires that employers make reasonable accommodations to the known physical or mental limitations of otherwise qualified individuals with disabilities, unless doing so would result in undue hardship.

To be protected by the ADA, one must qualify as having a “disability” (or as having a close relationship with a disabled person) as that term is defined in the Act. Under the ADA, a disabled person is: (1) one having a physical or mental impairment that substantially limits one or more major life activities, (2) a person who has a history or record of such an impairment, or (3) a person who is perceived by others as having such an impairment. See 42 U.S.C. § 12102(2). The ADA does not specifically list or identify all possible impairments that would be considered disabilities.

April 18, 2009

Discrimination Against Hispanics By Nordstrom Leads to Settlement

by Lee E. Berlik

Days before the case was scheduled to go to trial, national department store chain Nordstrom, Inc., opted to settle the Title VII lawsuit brought against it by the United States Equal Employment Opportunity Commission in which the EEOC alleged Nordstrom violated Title VII of the Civil Rights Act of 1964 by subjecting Hispanic and black employees to racial and ethnic slurs. While Nordstrom did not admit wrongdoing, it nevertheless agreed to a Consent Decree requiring it to pay $292,500 to 10 former employees, to distribute its anti-harassment policy to all employees in the two Florida stores at issue, and to take other steps to prevent future acts of unlawful discrimination.

According to the lawsuit, an alterations department manager complained that she “hate[d] Hispanics,” and that Hispanics were “lazy” and “ignorant.” She made similar derogatory remarks about African Americans, such as “I don’t like blacks” and “you’re black, you stink.” When the employees complained about the treatment, the manager retaliated by making more racially offensive comments, unfairly berating employees and citing them for alleged performance problems.

The settlement also requires Nordstrom to post a notice regarding the lawsuit and settlement in a conspicuous location at its two stores, written in multiple languages. Included in the notice is a statement that “Appropriate corrective action, up to and including termination, based upon the circumstances involved, shall be taken against any employee (including management personnel) found the have violated the Nordstrom policy prohibiting discrimination.”

April 16, 2009

Fairfax County Jury Awards $3.2 Million to Injured Shopper

by Lee E. Berlik

As reported in the Washington Post, a jury trial in Fairfax County, Virginia, resulted in an award of $3.2 million in damages to a 36-year-old Arlington resident who was injured while shopping at IKEA’s Potomac Mills store. On July 28, 2006, as the shopper stopped near the store’s exit to inspect the bargain bin, a display of countertops weighing over 350 pounds came crashing down on her, crushing her pelvis.

Personal injury lawsuits based on theories of premises liability do not typically involve damages awards involving millions of dollars, especially in the conservative jurisdiction of Fairfax County, Virginia. In 2008, for example, only 15 jury verdicts across the entire Commonwealth of Virginia were for one million dollars or more. In this particular case, however, the jury was moved by the fact that the shopper was an athlete who frequently traveled to China, Europe, and across the United States to pursue hiking, biking, and climbing activities. Since the accident, she can only walk about three blocks before the pain becomes unbearable. In other words, IKEA’s negligence resulted in effectively terminating her athletic pursuits and the joy she derived therefrom. The jury decided to compensate her for this pain and suffering.

Business that invite customers to shop at their retail stores need to take precautions to ensure the safety of their shoppers. An injured patron will generally have grounds to sue the business if the patron is injured by falling merchandise and the patron did not cause the objects to fall. This would be true regardless of whether the business owner is guilty of active negligence or simply allowed a known dangerous condition to exist on the premises without taking steps to protect the store’s customers.

April 14, 2009

Trademark Litigation Between Coke and Pepsi Enters Another Round

by Lee E. Berlik

On Monday, the company that owns Gatorade (a Pepsi subsidiary) filed suit against Coca-Cola and Energy Brands, accusing them of false advertising and other unfair competition in connection with its two-week advertising campaign for Coke’s Powerade ION4 sports drink.

In the advertising campaign, Powerade (which continues to be marketed as “the complete sports drink“) was claimed to be superior to Gatorade (identified, by comparison, as an “incomplete” sports drink) due to Powerade’s inclusion of trace amounts of two electrolytes, calcium and magnesium. According to the lawsuit, no evidence exists to suggest that the addition of these two minerals–especially in such tiny quantities–provides any nutritional or physiological benefits. Pepsi says Coke isn’t playing fair when it displays a photo of a Gatorade bottle lopped in half alongside the slogan, “Don’t settle for an incomplete sports drink.” In legal terms, it claims Coke is guilty of “false advertising, trademark dilution, deceptive acts and practices, injury to business reputation and unfair competition.”

The Lanham Act, on which all of Pepsi’s claims are based in various forms, prohibits misleading advertisements. Specifically, Section 43(a) of the Lanham Act, found at 15 U.S.C.A. § 1125, makes a defendant liable for false advertising where all of the following conditions are met: (1) the defendant made a misrepresentation in commercial advertising or promotion concerning goods, services, or commercial activities; (2) the misrepresentation actually deceived or tended to deceive its recipients; (3) the misrepresentation was likely to influence purchasing decisions; (4) the misrepresentation injured or was likely to injure the plaintiff; and (5) the misrepresentation was made in commerce.

April 11, 2009

D.C. Sues Computer Leasing Companies for Fraud Scheme

by Lee E. Berlik

D.C. has brought an action in D.C. Superior Court against several computer-leasing companies, charging them with deceiving numerous church congregations into paying hundreds of thousands of dollars for unneeded or broken computer equipment.

In the lawsuit, filed last Wednesday, the city claims that United Leasing Associates of America, Television Broadcasting Online, and others hatched a plan to offer “free” computer equipment to hundreds of area church congregations, but then trick them into signing papers binding them to long-term lease payments of $50,000 or more. The equipment, marketed by the defendants as “information kiosks” designed to help congregations communicate with members of the community and post job listings, consisted of ordinary desktop computers disguised in mahogany casing. Those congregations who refused to pay the exorbitant monthly fees suffered harm to their credit rating.

Businesses need to conduct their operations in good faith and deal fairly with their customers. An action for fraud and deceit arises when a defendant makes (1) a false representation (2) in reference to material fact, (3) made with knowledge of its falsity, (4) with the intent to deceive, which (5) causes the subject of the fraud to take action in reliance upon the representation. See Atraqchi v. GUMC Unified Billing Servs., 788 A.2d 559, 563 (D.C. 2002). Stated more simply, you commit fraud if you lie to someone for the purpose of tricking them into doing something, and the person falls for it. Virginia has similar laws prohibiting fraudulent business transactions.

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