Align U.S. and European patent filing strategies for maximum efficiency

Filing patent applications with the European Patent Office (EPO) requires a different approach than when filing solely in the U.S. The differences range from administrative to technical. There are, however, filing strategies that will save applicants time and improve their chances of success.

“There are many ways to adjust your drafting technique for your U.S. patent application that won’t hurt you when submitting it in America, but will align it with European standards. A little more work up front will save you a lot of money down the road,” says John Ling, partner at Fay Sharpe LLP.

Smart Business spoke with Ling about how to save money and ensure success when filing patents with the EPO.

How should companies approach filing patents in multiple countries?

Some companies file informal provisional patent applications that establish an early effective filing date in the U.S. and then file a Patent Cooperation Treaty (PCT) application, which makes it possible to seek patent protection simultaneously in many countries, on or before the 12-month deadline from filing the provisional application. This identifies individual countries and/or regions in which the company desires patent protection.

Let’s say a company files a provisional patent application in the U.S., files the PCT application a year later, and then elects to file national stage patent applications in Europe, the U.S., and China. In this scenario, the company has postponed the expense of the national stage filings by several years, which permits the company to evaluate whether the invention is still commercially valuable before it elects to pursue a potentially expensive patent application elsewhere.

In this instance, it can be advantageous to draft the U.S. provisional application in a somewhat universal manner so that minimal alterations to the invention are required when filing in multiple countries.

What are some key ways to save money and time when filing with the EPO?

Some patent attorneys draft lengthy and redundant patent applications. They write patent specifications that are 50 or more pages, taking multiple pages to describe an embodiment and then copy and paste that multi-page description in when describing only minor alterations to the embodiment. This approach lacks foresight when the intention is to file in multiple countries because the application potentially will need to be translated into several languages. Translation services typically charge by the word or page, so brevity can be beneficial.

Additionally, European patent practice permits the use of multiple-dependent claims — dependent claims further narrow the scope of the independent claim —without additional fees. If you make multiple dependent claims in the U.S., they’re filed separately and incur costs separately. In Europe, however, you can essentially bundle dependent claims together by claiming multiple dependency from ‘any one of the preceding claims,’ rather than from a specific single claim, giving you more claim scope coverage. Just make sure that each multiple dependent claim has a basis in the claims from which it depends.

What should patent applicants consider before filing for patent rights with the EPO?

In Europe, the examiners apply a problem-solution approach when examining patent applications. Applicants, therefore, must be able to point to a technical solution, described in the patent application, to a problem when defending claims.

Different art groups handle unique areas of patent processing. Some are more liberal than others in their problem-solution approach. Savvy companies craft claims to appeal to specific art units, which is important since once an application is assigned to an art group it stays there.

If one applicant repeatedly files applications directed toward subject matter known to be difficult to patent in the EPO, that applicant will get a reputation with an art group for filing unpatentable inventions. Over time, those examiners may recognize that and the applicant will lose credibility.

Smart businesses do their analysis early to determine whether and how to purse a European patent. Find an attorney to help determine your chances of success. No one likes bad news, but it’s better than the cost of rejection.

Insights Legal Affairs is brought to you by Fay Sharpe LLP

Why you should involve an attorney when leasing real estate

Costs and expenses associated with real estate leases often account for a significant portion of a business’ overhead. Many business owners do not pay attention to the terms of a lease, other than the amount of rent and the length of the term, and may be surprised when required to pay unexpected expenses associated with the lease. Having an attorney experienced in leasing assist an owner from the outset will help avoid these surprises and other pitfalls. An experienced attorney will help level the playing field with a sophisticated landlord.

“It’s best to engage an attorney from the very beginning of the leasing process,” says Craig Chernoff, a member at Semanoff Ormsby Greenberg & Torchia, LLC. “Business owners typically do not deal with leases on a regular basis. Attorneys experienced with leasing do this work frequently, and are aware of the pitfalls.”

Smart Business spoke with Chernoff about the importance of having an attorney assist in the leasing process.

Why have an attorney review your real estate lease?

Many business owners will sign a lease presented to them without having an attorney review it. Many do not even read the lease, thinking ‘Oh, it is only $5,000 per month, and it is just a form.’ This is a serious mistake.

The proper way to view a lease is to approach it as an investment. For example, a $5,000 per month lease for a term of 10 years is a $600,000 investment. This is significant. Perhaps even more so than constructing a $1 million building, which will have significant residual value. Also, the lease is not just a $5,000 per month expense. There will likely be rent increases each year. The lease may also be a triple net lease, meaning a tenant will pay its share of operating expenses, taxes and insurance. These expenses will be significant, and there are many pitfalls.

What are some of the pitfalls associated with a triple net lease?

Hidden expenses are a major pitfall of a triple net lease. The most common are included as operating expenses. Leases may broadly define operating expenses, which may cause a tenant to incur significant, unexpected expenses. Having an attorney negotiate the lease could help limit these expenses.

At a minimum, the business owner will know what expenses may be imposed upon the business. For example, assume a tenant is responsible for 20 percent of operating expenses, and operating expenses include replacements. Now assume the roof is destroyed in the final year of the lease and the replacement cost is $1 million. While tenant will only benefit from the new roof for a few months, tenant will be responsible to pay $200,000 or 20 percent of a new 20-year roof. This is unreasonable, but it is what many form leases provide. An experienced attorney will recognize this issue and will limit these, and other, expenses.

Can the business owner be personally liable under the lease?

If the business is an entity, its owner is not personally liable if the entity is the tenant. However, many landlords will require the owner to sign a lease guarantee, whereby the owner guarantees all of the business’ obligations under the lease. If the business defaults under the lease, the landlord may pursue the business and the owner individually.

While the provision of a guarantee is not uncommon, there are instances when providing a guarantee is not appropriate, such as when a business is financially strong, and there are instances when the owner’s obligations under a guarantee may be limited. This should be negotiated at the letter of intent stage. An experienced attorney will suggest various methods to eliminate or limit a guarantee.

At what point in the leasing process should a business owner engage an attorney?

A business owner is best served by engaging an attorney prior to negotiating the term sheet. An experienced attorney will know what is common and what is not. The earlier an attorney is involved, the more level the playing field will be for the business and the business may save money and heartache in the future.

Insights Legal Affairs is brought to you by Semanoff Ormsby Greenberg & Torchia, LLC

Being proactive is the way to go when it comes to environmental policy

Environmental compliance may not always be a top priority for business owners, but fail to secure the required permits and adhere to the regulations that apply to your company and it could quickly catch up to you.

“I have seen instances where the agency proposed penalties that were so high, payment would put companies out of business,” says Meagan L. Moore, partner, Environmental Practice Group, Brouse McDowell.

“There is also the risk that a certain stigma would attach to your company if an environmental agency comes in and realizes you are not in compliance and haven’t been for some time. The agency might consider your operation more stringently than others because you now have this reputation of not giving proper consideration to environmental regulations.”

Fortunately, there are solutions to avoid these dire consequences.

Smart Business spoke with Moore about what business owners can do to stay on the right side of environmental law.

Where do companies miss on environmental compliance?

Often, things that you don’t typically consider can become problems. If you’re doing an expansion or you are building on your property, you might not consider the need to get a storm water permit for your construction activities.

You also may not be aware of universal waste regulations and the specific ways to store and dispose of fluorescent light bulbs.

These might seem like little things, but if an agency came out for an inspection and detected them, they would cite you and seek a penalty.

One of the biggest trouble spots is not looking into whether you have obtained the necessary permits, licenses and registrations for your operations. The permitting process can take time as some environmental permits are written for specific sources.

Getting the proper permit might take a few months and you often need more than one permit.

The first thing you should do to get in compliance is see if what you are doing has any impact on the environment.

If you’re a new business or you’re buying property to add on to your operations, look into past uses for the property. Determine if an environmental site assessment has been performed or if there are any zoning issues.

If you’re in an industry that makes some sort of product, are there uncontrolled air emissions?

Are boilers, generators or fuel consumption equipment being used? If so, these items may need to be registered. Water and waste are two areas that present a number of complex issues in terms of sourcing and disposal that require attention.

Even non-hazardous waste has certain regulations that need to be followed in regard to how that waste is going to be disposed.

What type of assistance is available to conduct an environmental evaluation?

One option to help with this process is to reach out to an environmental consultant or environmental attorney, but this is not always financially feasible. The Ohio Environmental Protection Agency offers the Small Business Assistance Program for companies with fewer than 100 employees to help identify environmental compliance issues you could encounter.

It’s a free, non-regulatory program where the agency will send someone to your business to do an on-site environmental inspection. The program is entirely confidential. During the inspection, the agency will compile a list of compliance issues that exist, offer guidance and, if necessary, work with you through the process of getting a permit.

What cost benefits can be realized through environmental compliance?

Smart management of environmental issues not only reduces regulatory risk, but also helps the business become more efficient. It can reduce operating costs and improve profitability. Consider saving money and protecting your business from potential enforcement by going beyond mere compliance. Take into consideration what you can do today and it will save you money in the long run.

Insights Legal Affairs is brought to you by Brouse McDowell

When employers help shape HR policy, it can make a big difference

The Ohio General Assembly recently sent 33 bills to Gov. John Kasich, some of which are expected to positively impact issues affecting the HR profession in areas of workforce development and unemployment insurance.

House Bill 486, for instance, requires coordination and collaboration among Ohio’s three major workforce development programs: Adult Basic Literacy Education, the Carl Perkins career technical program and the Workforce Investment Act.

The state agencies that oversee these programs are directed to work with the Governor’s Office of Workforce Transformation (OWT) to create a single state workforce plan for a waiver from certain federal requirements. The bill also requires the OWT to review the remaining 88 workforce-related programs and organize them into a comprehensive structure.

It’s now up to employers and their respective HR teams to be engaged with this effort to ensure it ultimately leads to a better pool of talent for Ohio businesses, says Tony Fiore, Of Counsel for Kegler, Brown, Hill + Ritter.

“If you’re not providing feedback as experts in the HR profession to individuals writing the laws or creating public policy, at the end of the day, compliance is something you really can’t complain about,” Fiore says.

Smart Business spoke with Fiore about the importance of having a strong voice in the policies that shape the state’s companies.

What factors led to the passage of HB 486?

Ohio has training programs geared to building a stronger workforce. But for too long, they have operated in silos, making them blind to what is happening outside of their specific areas of focus. The result is programs that continue despite not meeting the objectives that led to their implementation.

Talk to your political representatives about your company’s needs and explain which programs are helpful and which ones offer less support. Are there skills or talents absent in the existing pool of candidates that you hire from? Is this group lacking certain technical skills that community colleges, higher education institutes or workforce development institutes could easily incorporate into their curriculum? These are the people who can effect changes that benefit your employees and your business.

What is another area of HR policy that affects employers?

The federal unemployment tax has risen over the last four years whether or not your company terminated an employee. While unemployment is down and an emphasis by Gov. Kasich and lawmakers has been placed on job creation, Ohio’s unemployment insurance loan balance is still the third-highest in the nation at $1.38 billion.

Since the economic downturn of 2007, the state has been forced to borrow these funds from the federal unemployment account to pay unemployment insurance benefits.

Federal law states that until this loan balance is paid in full, Ohio employers will pay an additional $21 per employee each year to repay the loan. Since the state has carried a loan balance for the last six years, employers are paying $105 per employee for 2014 and face another $21 add-on in 2015.

HB 329 would require the director of budget and management to make payments on the balance of amounts borrowed by the state from the federal government. But many believe a more comprehensive unemployment compensation reform package is needed to address the current loan balance and rebuild the unemployment insurance trust fund to a position of strength to weather the next downturn.

Why should HR professionals care who wins the elections in November?

Thomas Jefferson had a great quote: ‘America is not governed by the majority, but a majority of those who participate.’ If you’re not providing some voice to those individuals making decisions that affect your business, you waive your right to complain.

In November, Ohio electors will have the opportunity to vote for all statewide officeholders, all 99 seats in the Ohio House, 17 of the 33 seats in the Ohio Senate, all 16 U.S. Congressional seats and two Ohio Supreme Court justices. The importance of educated voters cannot be overstated and leaders need to be informed about HR issues that affect Ohio’s businesses.

Insights Legal Affairs is brought to you by Kegler Brown Hill + Ritter

Commit agreements to writing or risk having no agreement at all

It is always a good idea to commit an agreement to writing, both to avoid disputes and enhance prospects for effective enforcement. But in certain instances, getting a deal memorialized in writing with signatures is more than just smart, it is essential.

“Illinois law provides for a number of situations when the enforceability of an agreement may turn on whether it is reduced to a signed writing,” says Michael A. Weinberg, a partner with the business litigation firm Novack and Macey LLP.

“Contracting parties who have a high level of mutual trust often believe that oral promises will be sufficient, but such confidence can prove fatal if the relationship breaks down, or a good faith dispute arises.”

“Sales of interests in real estate, certain sale of goods contracts, long-term employment contracts and agreements relating to extensions of credit are just some of the spheres of commerce where ‘written contract’ requirements are imposed.”

Smart Business spoke with Weinberg about various types of agreements that need to be in writing.

What contracts must be in written form?

The most familiar collection of laws mandating that certain types of agreements be in writing are those collectively referred to as the statute of frauds.

For example, contracts for the sale of real estate or interests therein are unenforceable if not written and signed by the parties to be bound, as are contracts that cannot be performed within the span of one year. Contracts for the sale of goods in excess of $500 will not be enforceable unless they are in writing and signed by the parties against whom enforcement is sought or their agents.

It should be noted that the various statute of frauds enactments do not say that oral contracts falling within their scope are per se void, but rather that they are voidable and may be unenforceable if contested.

There is no strictly mandated form that writings must take in order to satisfy the statute of frauds. As long as a court can glean the essential terms of the deal, the writing will likely pass muster.

Are the statute of frauds requirements iron clad?

Notwithstanding the seemingly uncompromising language of the statute of frauds acts, there are exceptions to those requirements that will allow an oral contract to be enforced even if the agreement in question falls within a category that normally must be reduced to writing.

Thus, for example, partial performance of certain types of oral contracts can make them enforceable even if the statute of frauds suggests otherwise, as can a long course of commercial dealing.

Must agreements with commercial lenders be in writing?

The Illinois Credit Agreements Act requires that a ‘credit agreement’ — a commitment by a creditor in a commercial context to lend money, extend credit, or delay or forbear repayment — be in writing and signed by the creditor and the borrower.

This has proven to be a trap for many unwary businesses. A borrower may be orally told that a loan has been approved, an extension to repay authorized or a technical default waived, but none of those oral promises are enforceable.

When else might a signed writing be required?

Without attempting to address all such instances, one situation that bears noting relates to amendments to written agreements.

Even where there is no statute prohibiting oral changes to the contract in question, the contract itself may have a provision that expressly requires that amendments be in writing and signed by all parties. The best way to protect yourself is to get everything in writing.  ●

Insights Legal Affairs is brought to you by Novack and Macey LLP

Negotiate photograph rights in advance to avoid costly copyright violations later

Companies may assume that when they pay for a professional photograph, the photo may be used for any purpose — marketing, websites and annual reports. However, without carefully negotiating a license or an assignment, they may find that their rights are limited.

“Even sophisticated companies may run into trouble because they either overlook or don’t fully understand the legal implications of using photographs in connection with their businesses,” says Aaron Moss, partner and copyright expert who chairs Greenberg Glusker’s Litigation Department.
“Just because a company hires a photographer or owns a particular copy of a photo does not automatically mean that the company has the right to reproduce or distribute copies of that photograph.”

Smart Business spoke with Moss about the proper uses of copyrighted images.

When a company hires a photographer for marketing materials or other purposes, who owns the photos?

In the absence of any written agreement, the photographer usually owns the copyright in the photos. If the company wants to obtain the right to use or reuse those photos in whatever ways it wants, it should get an assignment or license at the outset of the engagement that spells that out.

The photographer may ask for contractual limitations as to how the images can be used. But to have the most flexibility, the business will want to negotiate an assignment.

If this is not spelled out, what problems could arise?

Companies that hire photographers don’t always know how the resulting photos might be useful in the future. Unless the company acquires the copyright or gets a broad license in advance, it might need to go back to the photographer later on to seek permission and pay compensation for another use.

For example, a photographer may take some pictures based on the understanding that they will be used for the company’s website. The parties may never discuss what happens if the business wants to use them in marketing brochures. If this happens later, the photographer may feel that his or her rights have been violated and may assert an infringement claim against the company.

What else is beneficial to negotiate when first hiring a photographer?

If a company can’t negotiate an outright assignment, the parties should at least come to an agreement as to the type, extent and duration of the use in advance. Rights acquired at the outset of the engagement, before any disputes arise, are going to be less expensive than if they are obtained after an infringement claim is asserted. In negotiating a retroactive license, the photographer will have more leverage and will usually be able to extract a higher price.

What are some misconceptions about using photographs and other images on a company’s website?

Companies often obtain these photos from stock photo agencies. There are usually restrictions in those licenses, either as to the extent or duration of the use, or as to whether the license to use the photos includes the right to use the likenesses of any models appearing in the photos. Using photos for commercial purposes without permission could implicate the models’ right of publicity, even if the company has a copyright license.

I just handled a matter in which the photo agency only had the right to license an image for editorial uses, but the licensing company thought it was getting commercial rights. If the photo agency hasn’t actually obtained the ability to license the model’s likeness, both the agency and the company using the photos may be held liable.

Another common misconception is that a company engaging a photographer owns the copyright in a photograph as a ‘work made for hire.’ Unless the photographer is the company’s employee, the company will need a written assignment, signed by the photographer, in order to acquire rights in the photo.

Copyright is a much more complicated subject than some companies realize. If a business does not have experience in this area, it should consult with legal counsel before beginning a new campaign or hiring a photographer to ensure there aren’t any unpleasant surprises later. ●

Insights Legal Affairs is brought to you by Greenberg Glusker

How to prepare for laws that give criminal offenders another chance

Ban the Box, a movement designed to provide additional opportunities to job candidates who have an arrest or conviction, is gaining steam. According to the National Employment Law Project, one in four Americans have either an arrest or conviction on their record, in most cases for nonviolent offenses. Ban the Box offers the vast majority of these individuals a second chance at an opportunity for employment.

The law does not require an employer to hire any candidate with a criminal background nor does it forbid employers from conducting background checks. Ban the Box simply requires employers to wait until later in the hiring process to ask the applicant about his or her criminal record.

“After the first interview, a potential employer may inquire about any criminal convictions the applicant may have,” says Michael B. Dubin, a member at Semanoff Ormsby Greenberg & Torchia, LLC. “The interview does not need to be a formal in person interview; it can be a telephone interview.”

Smart Business spoke with Dubin about Ban the Box legislation, how it affects employers and what penalties could arise from not following the law.

What is Ban the Box?

Ban the Box is a law that has been adopted in various states and municipalities that prohibits employers from inquiring about criminal convictions or arrests during the application process and the first interview. The law also prohibits employers from making personnel decisions based on arrests or criminal accusations that do not result in a conviction. Ban the Box was enacted by the City of Philadelphia in 2011, and with certain limited exceptions, applies to all city and private employers with 10 or more employees in the city. It was also recently signed into law in New Jersey and will take effect throughout the State of New Jersey on March 1, 2015 for all employers that have 15 or more employees and do business, employ persons, or take applications for employment in New Jersey.

How does Ban the Box affect employers?

Prior to the conclusion of the first interview, including on the employment application, employers are prohibited from inquiring about: (1) any arrest or criminal charge that did not result in a conviction and is not still open in court; and (2) criminal convictions.

After the first interview, employers are prohibited from inquiring about and/or making any adverse employment decisions based on any arrest or criminal charge that did not result in a conviction and is not still open in court. If an employer does not conduct interviews, then it is not permitted to conduct any criminal background inquiry.

There are several exceptions, for example, when an employer is mandated by state or federal law to consider criminal histories of applicants, such as when hiring law enforcement.

What are the penalties for violating Ban the Box laws?

Penalties differ by location. In Philadelphia, violators are subject to a fine of up to $2,000 per violation. In New Jersey, violators will be subject to a civil penalty not to exceed $1,000 for the first violation and $10,000 for each subsequent violation.

What must employers do to ensure they comply with Ban the Box laws?

Employers should review their form job applications and job posting advertisements to ensure they do not ask about criminal arrests or convictions. Any such inquiry should be removed.

Employers should also review the law in each state and municipality in which they either do business or have employees to ensure compliance. Human Resource personnel and hiring managers should be properly trained regarding Ban the Box laws and instructed as to what can and cannot be asked of job candidates and when criminal background inquiries may be made.

As the trend is moving toward more states and municipalities enacting Ban the Box legislation, multi-state and nationwide employers should be extra vigilant in ensuring compliance. The consequences of failing to do so could be extremely expensive for employers.

Insights Legal Affairs is brought to you by Semanoff Ormsby Greenberg & Torchia, LLC

What to do if your customer patents your invention

Many companies face an unrealized risk when approached by a customer with a problem. Companies will devote a great deal of time and money developing a solution, only to have that customer seek to secretly patent the solution without naming the company’s personnel as inventors or at least co-inventors.

“This leads to several bad outcomes, depending upon the particular facts,” says Steve Haas, a partner at Fay Sharpe LLP.

“At worst, the company and its other customers can be sued for patent infringement by the first customer, even though the company created the solution. Also, the first customer can source the solution from a third-party supplier without compensating the company that solved the problem — the original company that developed the solution does not get to supply it and cannot stop the new supplier.”

Smart Business spoke with Haas about unscrupulous customers that profit from a company’s hard work, and how to avoid getting cheated out of an invention.

How can a company legally attribute another company’s invention as its own?

Technically speaking, the patent is not valid because it fails to name the correct inventors. Proving this, however, is often problematic because ideas and solutions are now generated and transmitted to a customer rapidly and without sufficient documentation. The routine emails that circulate while the project is ongoing are often vague and without the necessary evidence to invalidate the patent. Meetings are often informal and undocumented.

What can companies do to stop this?

Companies partnering to create an invention should work under a written joint development contract at the start of each engagement. This agreement specifies the rights and obligations concerning ownership of the intellectual property (IP) and the responsibility for filing and prosecuting patent applications. Negotiate these agreements carefully.

A company developing a solution on behalf of a customer should file at least a provisional patent application for all significant new developments and improvements to a product or process. If possible, the provisional patent application should be filed before disclosing the ideas and improvements to the customer. A provisional application establishes an early effective filing date and allows the term ‘patent pending’ to be used. The application filing fees for a provisional application are minimal compared to litigation and other fees that would result from a dispute.

Inventions should be carefully documented with written records, drawings and detailed letters/emails to the customer. It’s important to be very specific in these messages. So, instead of writing, ‘here is the latest thing we discussed,’ write ‘enclosed is the latest design for the project XYZ developed by our personnel to address ABC problem, which includes the following features.’ Save all correspondence and engineering records in a way that’s organized and easily searchable.

To be sure your development partner hasn’t snuck off and patented the invention without your knowledge, you should monitor the published patent applications of your customers and identify any with incorrect named inventors.

What can be done if a customer partner has filed for or obtained a patent?

In the event that this happens, consider initiating a derivation proceeding in the U.S. Patent and Trademark Office, a proceeding that allows the original inventor, who may not be the first to file, to challenge the first applicant’s right to a patent. This requires a showing of complete conception of the claimed invention and communication of the invention to the other party, which then filed the patent application without authorization. That’s why thorough documentation of the invention process is so important. A derivation proceeding must be initiated within one year of the first publication of the patent application or patent.

Another option is to initiate a federal court action that allows for the name of the inventor on a patent to be corrected by the court if the patent has already been issued.

In general, the best defense is a good offense. Aggressively pursuing patents for new ideas as soon as possible after development will minimize the chance that an unscrupulous customer will fraudulently secure patent rights for your IP.

Insights Legal Affairs is brought to you by Fay Sharpe LLP

Why IP insurance is a good way to secure what drives your business

Intellectual property (IP) insurance can be expensive, but the cost of not protecting the unique thoughts and ideas that give your company its identity could cost you even more.

“If you knowingly let someone infringe on your intellectual property, it becomes valueless,” says Michael Craig, an attorney in the Intellectual Property Group at Brouse McDowell. “If you let someone infringe on your trademark and you do nothing about it, your trademark may no longer be protectable because you let someone else use that trademark for the same thing. You have to actively manage this process to protect what you’ve worked hard to build.”

One of the reasons IP insurance is expensive is the litigation process that unfolds when the question of infringement comes about.

“When you have a personal injury, it’s very easy to understand,” Craig says. “Did the car hit the guy and what were his injuries? When you talk about patents, you are sometimes talking about manufacturing processes or electronic techniques that the lay person doesn’t understand, making trials more difficult.”

Smart Business spoke with Craig about why IP insurance is critical to achieving long-term success.

Why do you need IP insurance?

There are non-practicing entities, commonly known as ‘trolls,’ that don’t actually make any products or services. They just own patents and try to enforce them against people. These entities are often companies that understand the cost of going through this kind of litigation, so they can more easily pressure a target into settling. However, if they find out you have IP insurance to defend yourself and are willing to do so, they may go away in search of low-hanging fruit.

Proper IP management can also help you with your own insurers. If they see that you have an active IP management system in place and you’re trying to avoid infringement and do the things necessary to protect your IP internally, your IP insurance costs are going to be lower.

You have to weigh the cost of IP insurance versus the cost of what you think the ultimate outcome will be through litigation and how often you may experience this type of potential business interruption. Is it going to help you with market share? Is it going to lead you toward profit?

How do you find the right IP insurance policy?

The first step is to sit down with your IP attorney, who can take a look at your IP portfolio and develop a specific roadmap as to what you need. You can use that to bargain with your insurance broker.

There are a number of different types of coverage. Defensive protection helps you against third-party IP claims for patent, copyright and/or trademark infringement. Offensive protection is for costs related to enforcing IP rights against potential infringers. First-party loss of value coverage is meant to protect the value of IP against a negative ruling in court.

A lot depends on the industry you are in and the size of your patent portfolio. If you are in the software realm, there is a higher likelihood of some type of infringement claim, particularly if your business is successful. So you might want to look at defensive coverage in this area. If you have some valuable trademarks, you may find some people who recognize the value and want to ride on your coattails. In that case, you would want to look at first-person offensive coverage.

You will pay anywhere from 1 to 10 percent of the coverage, so if you want a $2 million policy, you could be paying $200,000 a year. If, however, you’re a well-run, well-managed company and you use your IP assets properly – and you’re not in a very litigious area – you may end up on the lower end.

What if your claim is denied?

An insurance recovery attorney can review a claim to see if your existing coverage protects you against IP claims made against you when an insurance company turns down your claim. You could accidentally infringe on a trademark, which could be covered under your existing business insurance or general liability policy. It’s always a good practice if you are denied a claim to do another check to see if you can get a different result.

Insights Legal Affairs is brought to you by Brouse McDowell

Reasonable accommodations: Interaction with and providing leaves of absence to a disabled employee 

When an employee requests a leave of absence because of a disability, employers have two separate duties: 1) interact with the employee; and 2) provide a defined period of leave so the employee can obtain treatment and recover, as a reasonable accommodation. But if that employee seeks ongoing, or more successive weeks off from work, the obligations of the employer under state and federal law become less clear.

“The matter of deciding what accommodations are ‘reasonable’ and required is determined on a case-by-case basis and involves a good-faith, interactive process between the employer and the employee,” says Roberta Hayashi, partner, Employment Law Practice Group Chair at Berliner Cohen.

“This interactive process can include obtaining verification from a health care provider of the existence of a disability, the expected length of the leave and the likelihood of a release to return to work at the end of the leave. Failing to engage in an interactive process may violate State and Federal laws.”

Smart Business spoke with Hayashi about how critical a good faith, interactive process is in this matter.

What should a company consider when deciding about reasonable accommodation? Both California and federal law require an employer to provide reasonable accommodations that will enable a disabled employee to perform his or her job. Not only must the employer provide the accommodations, but the employer has to engage in a good faith, interactive process with the employee. During the process, the employer can verify whether the person has a disability. Information may be requested from the employer’s health care provider with the employee’s permission.

The employer has to identify and discuss potential accommodations, even if the employee has not requested them, and discuss whether the potential accommodations are reasonable for the particular employee given the nature of the work, the impact on co-workers, the cost and who pays.

What happens when the employer refuses to provide reasonable accommodation? 

If the employer refuses to engage in an interactive process, fails to identify potential accommodations or refuses an accommodation without proving that it was unreasonable, the employer may be open to an administrative claim or may be sued. Liability can include lost earnings, emotional distress, punitive damages and attorneys’ fees.

Are there concerns that apply only to California? 

In California, there is a very broad definition of who is disabled. Also the fact that an employee is merely ‘perceived’ as being disabled is enough to trigger the requirement of a good faith interactive process.

There was a case in California last year (Sanchez v. Swissport) in which the court held that the employer had to engage in a good-faith, interactive process and to provide reasonable accommodations in the form of additional leave of absence, even after the employee exhausted all her available pregnancy disability leave, but was still disabled due to pregnancy or childbirth.

What are some best routes for employers? 

Understand that the issue of reasonable accommodation is not only confined to physical disabilities of or access by wheelchair-dependent employees. It is a far broader issue, applicable to mental disabilities or employees with pregnancy-related disabilities.

Reasonable accommodation may require additional leave after FMLA, pregnancy disability leave or paid sick leave expire.

Prudent employers can proactively defend a claim by holding an interactive process whenever the company perceives that a disability may be involved.

If an employer denies accommodation, the employer must document factual support for the decision; consider consulting vocational rehab, medical, legal and other experts for advice and support for the decision.

Remember, if a lawsuit is filed, the prevailing plaintiff can recover attorney’s fees, making these claims extraordinarily expensive. ● 

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