Curt Harler

Monday, 26 May 2008 20:00

Servicing needs

Like soothing oil on a sunburned back, a good merchant banker can help a company take the sting out of managing its revenue stream.

“Merchant services goes beyond the acceptance of credit cards,” says LeighAnn L. Wolff, merchant account executive for FirstMerit Bank. “Merchant services means forming a business partnership with someone who can help you optimize the way you take payments for your goods and services.”

Wolff adds that it’s important to find a partner who will take the time to understand the needs of your business and help you not only look at the costs associated with accepting payments but how to grow business. Merchant services can pay back their costs handsomely — but only if the provider is chosen carefully and offers programs that fit a business’s needs.

Smart Business spoke with Wolff about merchant services and how your business can get the most out of them.

What are typical merchant services, and how do they help?

Merchant services companies offer an array of products, including e-check and gift cards. E-check is the ability to convert a check into an electronic transaction in order to speed up the availability of your funds. Typically, you can also opt to have the e-check transaction guaranteed. Depending on your average ticket, eliminating one to three returned checks a month may pay for this service and will reduce your overall exposure. As an added benefit, you may be able to reduce the number of times you have to pay employees to run to the bank to make deposits.

Acceptance of credit cards can typically raise your sales volume by sheer convenience and the fact that customers are not limited by what is in their wallet.

Closed-looped gift cards, which can only be used in the store where purchased, take it one step further. On average, 56 percent of consumers spend more than what is on the gift card and typically buy bigger ticket items. This will directly help you raise your revenue and build loyalty. A new business or a business looking to lift market share will give out gift cards to employees of adjacent businesses or directly to clients in order to build traffic and gain recognition.

How do you build a comfort level with a merchant banker?

Going beyond the product offerings, stability and capability of your partner are probably most important. Retailers are contacted several times a month by merchant services providers stating they can save them money. As with everything in life, you get what you pay for. Make sure the deal is as good as you think. Because your partner is handling the lifeblood of your organization — revenue — it is imperative you know who you are doing business with and that the provider will be in business tomorrow. You don’t give credit to clients or pick suppliers without knowing their financial stability. Many merchant businesses are independent sale organizations (ISOs). While affiliated with a bank, they are not part of the bank. Do your homework on the actual provider and its stability, not just its sponsor bank. If you pick a bank that directly offers merchant services, you get the added advantage that the bank can track all of your activity from point-of-sale to what is deposited in your account. When there is a problem with settlement of your card or e-check services, this can save headaches and time trying to work through issues with two different entities.

How does the fee structure typically work?

Understanding exactly what your rates will be after converting is another homework item. Often a sales agent will show you rates that look better than your existing rates but that may not translate to true savings. If an agent does not ask you for three months of statements from different parts of your season, the agent is not providing you a reasonably accurate estimate of your costs. It is easy to show a lower rate on any type of card or activity, but first ascertain whether it is aligned well with your actual card volume types and how you take cards (over the phone versus in-person). Also, watch out for low rates coupled to an expensive leased terminal for 36 or 48 months. Many such contracts carry a high early termination fee on equipment. In addition, some are proprietary and cannot be reprogrammed for use with another provider. This leaves you in a tough situation. Even if the new provider fails to provide quality service and its pricing is not as good as you thought based on your actual volume or growing volume, it just may be too expensive to break your contracts.

Are there regulatory concerns?

One of the most important topics in card processing today is Payment Card Industry (PCI) compliance. Companies that accept, process or store credit card information need to comply with the standards set by the PCI and the card associations. PCI compliance helps you protect yourself and your customers from fraud. It is a mandate in order to accept cards. If the merchant provider you intend to do business with does not include an education — or, more importantly, have a partner to work with you directly — you will likely be surprised by additional charges and run the risk of heavy fines from being out of compliance. On top of this comes the potential of reputation risk and liability from not maintaining a level of diligence around customer data that is required in this industry.

LEIGHANN L. WOLFF is a merchant account executive for FirstMerit Bank. Reach her at or (800) 572-6039.

Monday, 26 May 2008 20:00

Follow the leader

Most executives prize those people in their organization who exhibit leadership qualities — whether they are in the executive suite or on the front line. Yet, it’s an executive’s responsibility to help employees develop leadership qualities.

As president and CEO of InfoCision Management Corp., Carl Albright has a lot of experience developing and nurturing leaders. “People look for leaders in all walks of life to inspire them to do well, to be better than they can be,” Albright says, adding that good leaders never will ask their people to do anything they wouldn’t do, whether it’s working on a Saturday, coming in early or working late.

Smart Business spoke with Albright about leaders and what makes them tick.

What is leadership in a business setting?

People want to be led by people who know what they are doing and have done the job before. People like working for people who have their best interests at heart. And people want to work for people who will help them become leaders.

How do you develop leadership in your management team?

Good leaders are good followers. Look for people who are good team members. I teach nine or 10 sessions a year on all aspects of management, including how to manage people and how to get the most out of them. Encourage people in your company who exhibit leadership to take classes. Best of all, tell them to watch closely those people who inspire them. Take notes on how those people operate — whether it’s a boss, a teacher or a sports coach. If there is someone in your operation who became an account executive in four years, go up and ask how he or she did it. Ask what he did to help himself succeed.

How do you develop leadership in workers?

Look for people who are good at the job they’re doing now and who have the right attitudes. Some people can be very good at their jobs but have poor attitudes. Others love the company but don’t do the best job. Look at attendance and work ethic. Do they want to move up. Do they get results? Do they have good attitudes? Do they have the company’s best interests at heart? Conversely, you should show them you have their best interests at heart. Everyone starts low and moves up if he or she does well.

How do you recognize or identify those people with leadership qualities?

First, people should always know where they stand. There should be a formal review process after the first 90 days, six months and then annually. However, if your staff members do not know how you feel about their job before you sit down for the review, there is a problem. Good leaders will tell people when they are doing great. If a worker is struggling, he or she should know that well before the review. One rule of leadership is that there should be no surprises.

What helps to bring out leadership qualities in employees?

Mentoring programs are great. If you identify someone early on who has leadership qualities, pair that person with someone outside his or her department who has similar job functions. Then, give that person more challenges to see if he or she can lead as well as follow. You want to see if that employee can go beyond following a straight line from A to Z and exhibit leadership qualities. Then, encourage the employee to attend seminars or go to classes. Tell that person to emulate a sports coach, teacher or manager whose style he or she admires.

How do you handle situations where two good leaders’ ideas conflict?

That is bound to happen. Good people can have differences of opinion. However, when you leave the conference room, you need to have an agreement. Executive vice presidents don’t always think alike. So, there has to be compromise. Everyone has to come out of the room on the same page. It does no good to force a policy on people. You need to get buy-in from everyone. Be sure everyone is on board.

Are there books or seminars you’d recommend for developing leadership skills?

If you have people who get nervous in a crowd, send them to Toastmasters. Have guest lecturers and speakers come in to your office. Have your best managers mentor people. I have a library of books 25 or 30 feet long — books on managing time, managing people and motivating people. I love to read the philosophies of sports coaches, such as Pat Riley, Rick Pitino and John Wooden. Right now, I’m recommending Jim Collins’ ‘Good to Great.’ I’ve always liked GE’s Jack Welch and books like ‘Straight from the Gut.’ Gordon Bethune’s ‘From Worst to First’ is another good read. On top of that, take notes on people whose style you admire. Follow up with people. Leaders give credit where credit is due, but take blame when things don’t go well.

CARL ALBRIGHT is president and CEO of InfoCision Management Corp. Reach him at InfoCision Management Corporation is the second largest privately held teleservices company and a leading provider of customer care services, commercial sales and marketing for a variety of Fortune100 companies and smaller businesses. InfoCision is also a leader of inbound and outbound marketing for nonprofit, religious and political organizations. InfoCision operates 32 call centers at 13 locations throughout Ohio, Pennsylvania and West Virginia. For more information, visit

Friday, 25 April 2008 20:00

Keeping tabs

One of the key elements of modern health care is preventive medicine, as opposed to fixing problems once they occur. Many corporations run a good wellness program as part of their overall employee fitness initiative. Those programs need to go beyond helping workers quit smoking or teaching them about proper diet and weight control.

Regular screenings for employees and physicals for executives are critical components of any effective wellness programs, according to Ron Hawes, M.D., the medical director of executive health at Akron General Health System.

Also, Hawes adds, both employers and payers should emphasize and incentivize those actions that show individuals are trying to take personal responsibility for the improvement of their and their family’s health. In other words, stop basing health care on sick care and how to pay for it, instead focusing on driving home wellness and prevention.

Smart Business spoke with Hawes about what it takes for a company to implement a successful wellness program for its executives and employees.

Why are regular screenings and physicals important to an effective wellness program?

Prevention, prevention and prevention. These programs can and should be designed to find problem areas in an employee’s or executive’s health and enable these conditions to be identified and addressed in a timely manner. Health problems are easier to solve or treat the earlier they are identified, especially in the older age groups.

Who on the executive or management team should get mandatory physicals?

Anyone who has a family or health history where there are areas of concern should be seriously encouraged to participate. Key executives owe it to themselves and the company they are working for to do all that there is in their power to take good care of themselves, including living healthy lifestyles and following up on any medical problems identified by their partners in their health planning/treatments.

Are we talking annual physicals?

This depends. Most executives do not need annual physical assessments unless there is some medical condition or risk factor that needs to be carefully followed. Age is also a factor. The older a person becomes the more intensely prevention needs to be followed.

How about the staff?

Employees may generally need the same preventive screening tests as executives. Again, the major differences are not due to the level of work one does but what his or her family history shows. Past health risk factors and current conditions that are already diagnosed will dictate who and when to test.

Should checkups be simple blood and weight screenings or something more complex?

Simple screening tests, such as blood pressure, weights, urinalysis, cholesterol or blood sugar, can be done more frequently and cost effectively. More involved testing, such as cardiac stress testing, colon cancer screening, or breast cancer screening, can be reserved for those individuals at recommended ages and who are at higher risk.

These tests would be done less frequently but individually directed based upon risk factors to maintain cost-effectiveness while balancing recommended medical guidelines.

What else should be covered?

Many types of testing can be covered, but all are generally aimed at discovering diseases that can benefit from early detection and treatment. Above all, the testing must be cost-effective. As much as possible, the program should avoid duplication of services with the primary care physician.

What about workers with known conditions like diabetes or back problems?

It is best if the program’s goal is to screen for conditions, but treatments should be followed up by the employee’s physician for medical management. The employee-physician relationship and the medical home concept with the primary care physician continue to be the best models of health care delivery. Any program sponsored at the work-place should augment or supplement care given by the employee’s personal physician.

Will health insurance plans cover these company-mandated checkups?

The reimbursement issue is best predetermined by the employer and the insurance company and should be designed to ensure maximum participation of the working staff. Only by maximum participation with a full understanding of the nature and burden of expenses involved will this kind of health program be successful.

Should employees use a company-appointed physician or their own doctor?

In all cases, having both types of medical practitioners participating is ideal. In some cases, there may be a company-appointed physician, complemented by a referral list of primary care physicians for employees to pick from for their long-term care. In other cases, a primary care physician could also double as the company physician.

RON HAWES, M.D., is the medical director of executive health at Akron General Health System. Reach him at

Wednesday, 26 March 2008 20:00

Market survival

It is impossible to open the Wall Street Journal or watch CNBC without seeing news about the financial, stock and housing markets. While there are some disturbing reports, it is not necessarily all rough sailing for all businesses, according to Bob Friend, senior vice president of commercial banking at FirstMerit Bank in Columbus. Still, it pays to be aware of what your bank might be going through.

“As much as your bank keeps an eye on your business, you should keep an eye on your bank’s business,” Friend says.

Smart Business spoke with Friend about what companies should think about when reviewing their banking relationships in light of current financial news.

Is there a real crisis in financial markets?

There is certainly a great deal of consternation and turmoil going on in the market today. It is especially true in the real estate market and residential and condominium projects, in particular. In general, banks have tightened their underwriting standards and, in some cases, stopped lending completely in certain market segments. Many banks took significant charges in the fourth quarter related to various facets of the real estate and related markets, so banks are being much more cautious in the types of lending they do and in the structuring of those loans. In the traditional C&I middle market segment, banks are still aggressively pursuing new business opportunities to well-performing companies. However, the underwriting requirements have likely been stepped up due to concern of the economy and the possibility of a recession.

Is the situation the same at most banks?

No. Banks are affected differently based on their respective credit cultures, industry concentrations and capital positions. Over the past few years, some banks tightened or changed their lending standards earlier than others. Some banks were aggressive in certain market segments, such as sub-prime lending, which turned into a problem area. As a result, individual banks have different risk tolerances and risk profiles.

The impact of these tolerances and the potential poor credit decisions can lead a bank to incur subsequent losses resulting in a lower capital position for the bank.

Do all banks have similar capital positions?

No, they do not. Capital positions can vary significantly between banks based on policies and performance. A number of banks’ capital positions were negatively impacted during the fourth quarter due to significant write downs. A bank’s capital position is a measure of the health of the bank. A low capital ratio can impact a bank’s ability to borrow funds or the rate in which it borrows. Consequently, a higher cost of capital to the bank can potentially be passed on to the borrower as a higher interest rate or affect the bank’s ability to be competitive.

Are banks pulling back on loans?

In certain segments, banks are pulling back. As discussed above, banks are clearly pulling back or closely evaluating certain types of loans. In fact, some banks have reportedly stopped making new loans in certain real estate sectors, again principally in the areas of residential construction. In addition, the overall health of the Ohio economy can be a factor in the evaluation process. But banks still want to make loans. However, it might be that some of the conditions or requirements to obtain a loan have changed. Borrowers may find that conditions, such as guarantees, covenants or equity requirements have become more demanding.

Is there a drive for more consistency in credit underwriting?

Yes, definitely. All banks seem to be placing greater emphasis on the underwriting and documentation process. Some of the activity is being driven from the oversight of federal examiners. However, most of the focus is being driven by the management of the banks in an attempt to identify and manage risks at an early stage in the process. This process has a direct impact on customers in the form of heightened information requests and follow-up.

What should I be discussing with my local bank manager?

Discuss the bank’s performance over the past year and the past quarter. How does the bank’s performance compare to its peers. Ask if they have changed credit philosophy or the industry segments they serve. If a bank has taken charges or write-offs in a specific industry, ask if it has changed its policies toward that industry. Ask if there have been any significant changes in the management of the bank and how this could affect your company.

Customers should regularly perform an analysis of their bank in a similar fashion that a bank analyzes the company. Although a company’s results might be fine, unrelated outside events can affect the way a bank evaluates a customer, whether good or bad. In the end, a company must continually exercise its own due diligence to insure its banking relationship is the right one.

BOB FRIEND is the senior vice president of commercial banking at FirstMerit Bank, Columbus. Reach him at or (614) 545-2763.

Wednesday, 26 March 2008 20:00

Healthy rewards

Sometimes people need a nudge to get them to do what is right. Mom prodded you to eat your vegetables. Police offer rewards for information. Frequently, progressive businesses offer incentives to employees for getting and staying healthy.

“As more-enlightened organizations begin to introduce employee wellness programs, the emphasis no longer focuses on ‘should we or shouldn’t we,’ but, rather, ‘how do we maximize participation?’” says Doug Ribley, vice president of health and wellness services for the Akron General Health System.

Smart Business spoke with Ribley about how rewarding employees for staying healthy can work — if done correctly.

What kinds of rewards work?

Companies that are successful in the employee health arena experience reduced absenteeism, reduced workplace injuries, reduced employee turnover, reduced health care costs and increased employee morale — to name a few. The best health and wellness programs can be totally ineffective if employees don’t participate. As a result, many organizations are now working hard to introduce creative incentives that encourage significant participation. These incentives tend to fall into one of four categories: cash incentives, rewards, wellness center membership fee reimbursement and special consideration (discounts) on employee contributions toward health care premiums.

Are noncash rewards effective?

Cash incentives are becoming more common, however, this does not represent the only effective option. Noncash rewards that recognize effort, commitment and/or positive outcomes are very effective. Both large and small prizes can produce desired results. Many organizations will negotiate special membership rates for their employees at local wellness centers or commercial clubs, and provide direct reimbursement to the employee when certain criteria are met, such as 12 visits per month. It is important to note that not all fitness and wellness centers have the information technology in place to track this or other important statistics. These capabilities should be identified early in the process when planning the detail related to this category of employee incentives.

How often should rewards be presented?

People enjoy receiving recognition and rewards. However, a fine line exists when planning the timing of distribution. If rewards don’t occur often enough, participants can lose interest unless the reward is substantial. If rewards are distributed too often, they lose effectiveness because they are not valued. Typically, successful incentive programs reward success at least quarterly and no more than monthly. Some organizations have had success with rewards distributed on a six-month basis, but, in general, the longer the time between reward distribution, the greater the value of the reward should be.

Which employees are likely to participate?

When looking at the demographics of program participants, it is interesting to note that the engagement in well-developed employee health programs is far-reaching. Participation crosses the gender, age and fitness-level lines. The greatest challenge seems to be the extremes — the very fit and the very unfit. Although these groups typically do not represent the majority of the work force, special attention is required to encourage participation, primarily due to the fact that the unfit population, although not the majority, are responsible for the largest portion of employer related health care costs and have the greatest impact on insurance premiums.

Do group award programs work?

Team and group award programs represent an effective incentive strategy. Employees participating in this type of program are not only motivated by the reward but are motivated by their peers. Results tend to be meaningful and long-lasting. Effective program design and implementation is always the key to success. Often, organizations rely on third-party professionals to provide the creativity and leadership necessary to achieve the desired outcome. Follow-up programs are very important due to the fact that a need to provide motivation and incentives once the peer support concludes is necessary.

What happens if rewards are terminated?

Incentive based wellness programming cannot be a one-time or annual initiative to be effective. A strategy that includes a consistent and ongoing schedule of motivating, incentive-based programs and activities is important to organizational and individual success. Also, this schedule should take into consideration those times of the year when health and wellness program adherence is the most difficult, such as the holiday season or the summer months. It is important to develop and ongoing program that assists employees when support is needed the most.

What is the payback to the company?

From a pure dollars-and-cents standpoint, a company can expect to realize a $3 return for every dollar invested in employee health and wellness initiatives. But, this type of return will only be achieved through a consistent, committed and ongoing effort in which the organization embraces a culture that demonstrates a meaningful and real commitment to employee health.

DOUG RIBLEY is vice president of health and wellness services for the Akron General Health System. Reach him at

Tuesday, 29 January 2008 19:00

Patent case venue

There is a new leader in the number of patent suits filed in district courts. According to E. Leon Carter and Daniel E. Venglarik of the Dallas, Texas-based law firm of Munck Butrus Carter, P.C., in 2006, the Eastern District of Texas passed the Northern District of California in number of patent suits filed; in 2007 the Eastern District of Texas surpassed the Central District of California to become the top patent venue in the country.

As a result, some Northern California companies have found themselves in patent disputes in the unfamiliar environs of Marshall, Tyler or Texarkana, Texas — which can sometimes be a disconcerting twist. However, recent trends reveal that the negative view of some of the Eastern District and its handling of patent cases is unwarranted.

Smart Business spoke to Carter and Venglarik about the significance of how patent cases are shaping up in the Eastern District of Texas.

Who’s filing patent cases in the Eastern District of Texas?

Although criticized as a ‘patent troll’ haven in 2007, the Eastern District of Texas has continued to see patent cases brought by a variety of domestic and foreign tech companies, such as Motorola, Sharp, Fujitsu/Hitachi, LG Electronics and Hewlett-Packard, to name a few.

Other patent infringement plaintiffs during that time include medical device and pharmaceutical companies, such as Medtronic and Aventis, energy sector companies, such as Weatherford and Halliburton, defense contractors, such as Raytheon, universities, such as CalTech, and ‘niche market’ enterprises, like Callaway Golf and Reebok. Even the harshest critics acknowledge that about 60 percent of recently filed Eastern District of Texas patent suits were not brought by so-called trolls.

A predictable process governed by local patent rules [modeled after those pioneered in the Northern District of California], experienced patent jurists and comparatively fast disposition times continue to attract all types of enterprises seeking to enforce their patent rights.

Do patent cases ever get transferred out of the Eastern District of Texas once filed there?

Venue is an issue that is not unique to patent cases, and is therefore controlled by the regional circuit — the Fifth Circuit, for the Eastern District of Texas — rather than by the specialized patent appeals court in Washington, the Federal Circuit. Recently, the Fifth Circuit overruled an Eastern District of Texas venue order in a products liability matter, stating in essence that the plaintiff’s choice of venue is not controlling. Rehearing of that decision has been requested, and a subsequent venue order in an Eastern District of Texas patent case suggests that patent venue will not necessarily be decided in the same manner as general venue due to factors such as the existence of local patent rules and fast disposition times. Nonetheless, the Fifth Circuit’s decision has the potential to improve the odds of removing a patent dispute from the Eastern District of Texas for Northern California companies in particular, since the Northern District of California has similar local patent rules and disposition times.

What else can be done to get patent cases out of the Eastern District of Texas?

Another mechanism for effectively changing forum in a patent dispute is to request reexamination of the asserted patent(s) at the

USPTO, and then request a stay of the district court proceeding until that re-examination is concluded. Unlike other top patent venues, this tactic had little success in the Eastern District of Texas — until recently. Several Eastern District of Texas decisions in the past year granted stays for pending reexaminations.

Who’s winning patent cases in the Eastern District of Texas?

Out of nine Eastern District of Texas patent jury trials in 2007, the patent owner at least partially prevailed on both infringement and validity in only four cases, one of which was subsequently overturned by the judge. That overall win rate of 33 percent is about half the national average. Factor in bench trials and summary judgments in favor of the defendants and the Eastern District of Texas has become, as one commentator states, ‘demonstrably where bad patent cases go to die.’

How long do patent cases last in the Eastern District of Texas?

The Eastern District of Texas’s fast and firm trial settings — which can save both sides as much as $1 million in litigation costs — continue but are slipping slightly due to increasing volume. Trials in 2007 were of cases that had been pending about 16 to 20 months. Looking forward via recent scheduling orders, however, trial settings are generally at about 20 to 24 months.

How often is the Eastern District of Texas ‘getting it right’?

While the ‘right’ outcome always depends on one’s perspective, rates of reversal on appeal are telling. In 2007, the Eastern District of Texas continued its seven-year streak of extremely low reversal rates on judgments, discovery orders and claim constructions. The two judges that handle more than half of the Eastern District of Texas patent cases were never reversed in 2007.

LEON CARTER is a trial attorney and DAN VENGLARIK is a patent attorney with Munck Butrus Carter, P.C., each practicing in the firm’s Dallas and Marshall, Texas, offices. Reach them at and, respectively.

Wednesday, 26 December 2007 19:00

Protect your ideas

Many companies’ trademarks are their face to the world. The process of keeping a trademark secure starts at the very inception of the concept.

“A smart CEO starts the process with development, evaluation and screening of potential trademarks,” says Cami Dawson Boyd, who is the head of the Trademark and Copyright Practice of Munck Butrus Carter, P.C. “The process continues with maintenance and enforcement of trademarks and service marks — both in the United States and around the world.”

What is the difference between a trademark, a service mark and a trade name?

A trademark is any word, name, symbol or combination of those things used in commerce to identify and distinguish the goods of one manufacturer or seller from the goods manufactured or sold by another and to indicate the source of those goods.

A service mark is any word, name, symbol or combination used in commerce to identify and distinguish the services of one provider from the services provided by another and to indicate the source of those services.

A trade name is the name by which a business is commercially known.

How does a business know its trademark is unique and enforceable?

A business owner should take the time and invest the resources necessary to evaluate and screen a trademark before the mark is adopted and used in commerce. This process is known as trademark clearance. There are different types of trademark clearance screening available. The scope and depth of the trademark clearance that may be necessary in a particular situation will vary from case to case. At a minimum, a prudent business owner needs to ensure that the business can both adopt and use the trademark in commerce and that it has a reasonable possibility of securing a registration for the mark. Trademark clearance screening can answer those questions.

A good mark clearly distinguishes the goods or services of the owner from those of another. There is a sliding scale of trademark distinctiveness and marks can generally be categorized into the following categories: fanciful or arbitrary [the strongest], suggestive, merely descriptive or generic [the weakest].

How do you obtain a trademark?

The first step is to retain counsel to conduct a clearance investigation to confirm that the trademark is available for adoption, use and registration. Then, the business must act to secure the registration of the mark in the United States and elsewhere in the world.

In the United States, trademark registration is handled by the United States Patent and Trademark Office (USPTO). An application can be made by mail or electronically. The process generally takes slightly longer than a year.

Clearing and registering a trademark typically costs between $1,000 and $3,500 in the United States, depending on the scope of the application to register and whether a trademark clearance investigation is performed. The USPTO charges a filing fee of $325 per class [of goods/services] in which an application for registration is filed. Costs for securing and registering a trademark elsewhere in the world vary widely. In all cases, the costs for securing protection of a mark prior to or at the time that use of the mark commences is a prudent allocation of resources. The costs of securing trademark rights at the outset are far less than the costs a business will incur in developing and promoting a mark that conflicts with another. In the United States, a trademark registration is currently good for 10 years and can then be renewed as needed. Other countries have similar registration terms.

What else must a company do to maintain its trademark?

The prudent business owner adopts standards within the company for the manner in which the trademark is used and aggressively polices the marketplace to ensure the mark is not infringed or diluted.

Is incorporation and/or assumed name filing enough to protect our trademark?

Absolutely not. This is one of the most common mistakes made by new business owners. The fact that a corporate name is available through the relevant secretary of state’s office or that your company has made an assumed name filing does not mean that you have established a trademark, that you are entitled to use your business name as a trademark or that you have done what you need to do to protect your trademark. To establish and maintain strong trademark rights, a company should adopt and use a strong trademark that is not identical or confusingly similar to the marks of any other company, secure U.S. and foreign trademark registration for the mark, and actively police and protect its trademark.

CAMI DAWSON BOYD is a shareholder and head of the Trademark and Copyright Practice at the Dallas Law Firm of Munck Butrus Carter, P.C. Reach her via e-mail at

Sunday, 25 November 2007 19:00

New rules

While the law is tied to tradition, it is an ever-changing body of rules and knowledge. Recently, changes were made in the United States Patent and Trademark Office’s (PTO) rules that may be detrimental.

Smart Business asked William A. Munck, chairman of the Intellectual Property section at the Dallas law firm of Munck Butrus Carter, P.C., to update us on PTO’s latest changes and why they may hurt patent applicants.

Why does it seem as though the U.S. PTO is amending its rules all the time?

The PTO continually proposes initiatives that the PTO believes will make its operations more efficient, will ensure that the patent application process promotes innovation and will improve the quality of issued patents.

As with any government entity, sometimes those changes are more effective than other times. One of the most controversial proposed rule changes occurred in August 2007 when the PTO published a ‘final rule notice’ in the Federal Register. This final rule revises the PTO’s rules of practice in patent applications relating to continuing applications and requests for continued examination practices and for the examination of claims in patent applications. Substantially all patent practitioners believe that the proposed final rules, if implemented, will both severely and negatively alter traditional patent prosecution practice.

How can the application of the new rules result in so much damage to the patent applicant?

Under the new rules, the restrictions on patent claim drafting and on continuation practice are both retroactive and fairly capricious. Implementing the final rules will, as a practical matter, cause patent applicants to strongly consider abandoning pending patent claims or, worse, entire patent applications.

The proposed rules include limitations that effectively limit the patent applicant to two continuation patent applications and one request for continued examination per patent family, whereas the current rules have no such limitations. Another fairly oppressive modification limits the patent applicant to five independent claims and 25 total patent claims per patent family, whereas applicants previously have had no such limitations.

If these rules are implemented ultimately, and in substantial part, retroactively, patent applicants will be forced to surrender the existing claim scope without first having adequate opportunity or consideration before the PTO. This is a violation of the patent applicant’s rights.

By way of example, David Kappos, chief patent counsel for IBM, went on record to state that in order for IBM to comply with the retroactive requirements of new rules more than 30,000 issued patents and patent applications would have to be reviewed. Kappos stated that, in addition to the time, IBM would incur over $10 million in legal fees and internal expenses — exclusive of any loss of intellectual property rights.

Several parties filed suit against the Commissioner of Patents, is that correct?

Yes. The proposed new rules were opposed in separate lawsuits filed by GlaxoSmithKline (Glaxo) and earlier by Triantafyllos Tafas, a sole inventor, and supported by amicus curiae briefs from the American Intellectual Property Lawyers Association; Elan Pharmaceutical Corp.; HEXAS LLC, The Roskamp Institute, and Tikvah Therapeutics, Inc.; the pharmaceutical manufacturer’s trade organization; the Biotechnology Industry Organization; as well as a letter from Senator Charles Schumer of New York. Each of these parties uniformly opposed the proposed new rules.

On Nov. 1, 2007, Judge James Cacheris of the Eastern District of Virginia issued what is perhaps the most important ruling in U.S. patent law this year. Judge Cacheris granted Glaxo’s motion for a temporary restraining order and preliminary injunction against the Commissioner of Patents to prevent the PTO from implementing its new continuation and claims rules.

The court found preliminarily that the PTO was not granted substantive rule-making authority under the law. The court voiced ‘serious concerns’ that the new rules are contrary to the Patent Act, citing authority holding that the PTO did not have the power to restrict an applicant from filing a continuation application.

At the end of the day, do you believe that the new rules will be implemented?

The proposed new rules exceed the Commissioner’s and the PTO’s statutory authority, and the rules are contrary to the Patent Act. We feel that retroactive application of the new rules to pending applications is prohibited under the law to retroactive application of agency regulations. Fundamentally, irreparable harm will be in the uncertainty that the proposed new rules create and in the negative impact on investment that would follow from such uncertainty.

WILLIAM A. MUNCK is chairman of the Intellectual Property section at Munck Butrus Carter, P.C. where he concentrates his practice on domestic and foreign intellectual property procurement, exploitation, enforcement and counseling. He emphasizes long-range corporate strategies for private financing, public offerings, mergers, acquisitions and establishing market leadership. Reach him at

Sunday, 25 November 2007 19:00

Just a little patience

Business moves in cycles. Into late 2007, we saw a volatile stock market, good interest rates and a generally good economy. However, there are signs — the increasing national deficit, a slowing in housing and auto markets, and the consumer credit card crunch — that indicate we are moving into an economic slowdown.

Smart Business spoke with Dennis Gramann, a vice president in the business banking group at Fifth Third Bank in Cincinnati, about how an economic slowdown can present opportunities for the alert business manager.

Is it a good time to buy capital goods?

A company’s ability to purchase capital goods is dependent on the strength of its balance sheet. Companies with sufficient working capital and a strong debt to worth ratio have capacity to take on additional debt and allow for capital expenditures. The opposite is true for companies with a weak balance sheet. They will look to sell assets to reduce debt to improve cash flow and improve margins. They may even be looking for someone to acquire the business. There are always winners and losers in an economic downturn. Companies who control expenses, watch margins and make smart capital investments prior to downturns are primed for expansion when the economy turns for the better. They have greater flexibility and capabilities to grow their businesses.

Is it currently a good time to sell commercial real estate?

Anyone who reads the paper sees that the residential real estate market is hurting. It is not a great time to sell homes. But the commercial market has shown remarkable stability so far. Of course, the local market dictates the situation. There are areas of expansion and growth that will drive the commercial market values upward and produce strong sales activity.

What about interest rates?

The belief here is that the prime rate may drop another quarter at the end of the year.

We hope that will spur some economic incentive for business growth. Long-term rates have not had any dramatic change in the recent past. You might see short-term rates go down even more depending on the Fed’s view of the economy and inflation. Overall, long-term rates are still fairly low.

How can you keep your best workers happy?

If you look at the business models today, the majority of companies are going to performance-based pay. They offer a good base salary with incentives and bonuses based on what the employee brings in the door or contributes to the company’s bottom line. It’s always a good idea to pay good people for what they contribute. But, there are other areas to examine. Look at all of your expenses — employee expenses, insurance costs and other overhead expenses. Go to your vendors to get materials costs down. Make sure that all of your customer relationships are profitable ones. This process can make for difficult decisions , but it is necessary to allow the company to be a viable business.

What advice are you giving customers about planning for sales growth?

The place to start is to look at your niche market and see what successes and failures other businesses in that market have had. If you are in manufacturing and fabrication in the auto business, you might want to revisit your projections. In other industries, the economy may be going strong. Your individual industry is the paramount concern when planning sales growth. But good companies always find ways to go forward. Talk to your banker and to your accountant. They can benchmark your business against others in your industry. Look at your current ratio, working capital, debt-to-worth. If you are in line with other companies in your field, you’ll likely come through okay. If you are not, work with your banker and accountant to see what changes can be made to improve your company’s financial strength.

Do slowdowns mean the time is right to buy competitors out?

The answer is yes. There could be some excellent buys with very little premium. This might also be a good time to look at increasing market share, since the competition could be priced out of the market. But you can’t stay stagnant — look for diversification.

Is it a good time to refinance lines of credit?

Lines of credit are risk-based and based on a company’s strength. If you think you deserve a better rate, go ahead and ask for it. But it is not a given.

What other opportunities should a manager look for during a downturn?

Look at opportunities in other areas related to your basic business. You might be able to use your current equipment to expand into another product line. Diversify. There will be opportunities when other companies fall by the wayside. Smaller businesses can do only a little of this, larger ones more. Or, partner with someone in another industry with similar processes or process requirements. Diversification will help maintain the revenue stream in a downturn.

DENNIS GRAMANN is a vice president in the business banking group at FifthThird Bank. Reach him at

Friday, 26 October 2007 20:00

What’s on your screen?

Electronic communications and computers are supposed to make everyone’s job easier. However, there is great tension in the workplace between firms that want to protect themselves by limiting employee use of the Internet and e-mail and workers’ expectation of privacy.

Smart Business asked Audrey E. Mross of the Dallas law firm of Munck Butrus Carter, P.C. where the lines should be drawn.

What aspects of employee computer usage are most troubling to employers?

The most common worry is ‘cyberslackers’ whose workplace productivity has an inverse relationship to the amount of time they spend visiting Web sites and sending e-mails. Go to for an eye-opening list of ways to waste time on a computer, including virtual Bubble Wrap to pop. Less frequent but more serious offenses include transfer of trade secrets, violation of copyrights, trading in child porn and other illegal activities.

Can a firm prohibit all personal use of its computers?

In most cases, no. Selective enforcement of a ‘no nonbusiness use’ policy will set the company up for an unfair labor practice (ULP) charge under the National Labor Relations Act when the employer attempts to stop protected activity. For most companies, it’s not realistic to prohibit all personal use of e-mail.

What kinds of limits do make sense?

A good policy should expressly incorporate the company’s equal employment opportunity and harassment policies to make clear that images, voice and text that are intimidating, offensive, profane or hostile based upon gender, race, color, national origin, religion, disability, age or any other protected status are off limits. The employer’s systems should not be used to conduct a personal business enterprise, to spam others, to threaten violence or to express views that could be seen as the view of the company.

The systems should be used in ways that are consistent with security measures, which may include prohibiting employees’ access to their personal ISPs (e.g., Yahoo, AOL) from employer-provided systems, where such access would thwart firewalls and similar protective measures. Excessive personal use that monopolizes bandwidth or affects employee productivity is another act that could result in corrective action, up to and including discharge from employment.

Can the company be held responsible for its employees’ bad acts?

Yes. The doctrine of respondeat superior (‘let the master answer’) is frequently used to hold employers responsible for the mis-deeds of employees while in the course and scope of their employment. Negligence theories are used in cases where the misconduct took place outside of the employees’ normal duties.

For example, where an employer had knowledge that a worker was receiving and sending nude and seminude images of his 10-year-old stepdaughter on his work-place computer in order to gain access to child porn sites, the court found negligence and stated that the company had a duty to further investigate and take prompt and effective action to stop the employee by terminating his employment, reporting him to law enforcement or both (Doe v. XYC Corp.). The court remanded on the issue of whether the child could prove harm from the transmitted photos, but the employer withdrew its petition and the parties settled.

Is there any privacy protection for employees using a company system?

This is an area where unrealistic expectations collide. Employers often think there is no privacy, since the equipment used is theirs. Employees often think that there is privacy, especially where they have a secret password to access the system.

A few years ago, the Texas Supreme Court found an employee did have a reasonable expectation of privacy where the employer provided lockers for storing personal items but allowed the employees to bring their own locks (and not provide the combination or a spare key to the employer). The analogy to company-provided computers and employee-provided passwords is not much of a stretch. Employers must advise employees, in writing, that there is no reasonable expectation of privacy in use of the employers’ systems and employers should have written consent. This is normally accomplished by having an electronic communications policy in the employee handbook and securing a signed acknowledgment from each employee. As additional proof of consent (which is an absolute defense to a claim of invasion of privacy), some employers add a ‘no privacy’ reminder to the log-on screen on computers so the consent refreshes on a daily basis. Employers should also ask for and keep records of employee passwords to undercut privacy arguments and for practical reasons, such as accessing needed information when the employee is absent or has quit.

AUDREY E. MROSS is a shareholder at Munck Butrus Carter, P.C. leading the labor and employment group. She combines prior experience as a human resources professional with the current practice of law to provide preventive measures and practical solutions to employers. She authors a monthly e-newsletter, Legal Briefs for HR, which is available on request at