Bimbo Bakeries and U.S. Bakery recently found out that consumer confusion, like politics, is local, and that “local” means what the local consumer says it means. Let’s unbraid this loaf. In Bimbo Bakeries USA, Inc. v. Sycamore, No. 2:13-CV-00749, 2019 WL 1058234 (D. Utah Mar. 5, 2019), the jury originally awarded Bimbo $8,027,720 in damages on its false advertising claim against U.S. Bakery, who tried multiple times to convince the court that what makes bread “local” is really a matter of the seller’s opinion, or at least that claiming bread is “local” is mere puffery. According to U.S. Bakery, “local” was a geographical term, but not a geographically descriptive term entitled to Lanham Act protection, because “local” was not a specified location. “Local,” as the Bimbo court noted, is a location, albeit one without a set definition. No matter, according to the court, because the question is not whether U.S. Bakery’s use of the term was false, but rather whether it was false or misleading. Bimbo presented evidence that customers in Utah interpreted “local” to mean “as least … in the state.” Because U.S. Bakery’s “local” bread did not meet that definition or even come close and the use of “local” suggested the “bread products were particularly fresh and of high quality because they were baked within the geographic vicinity of where they were sold,” the court held that the jury’s verdict on false advertising liability was supported by sufficient evidence. But not so the jury’s damages award for unjust enrichment. Bimbo presented evidence of confusion only as to consumers in Utah, and presented no evidence that that data could be extrapolated to consumers in other states. The expert actually admitted that consumers in other states may have different interpretations about what makes a product “local.” Because the damages calculation was keyed to the consumer confusion data, the court found the damages must be limited to Utah, and remitted the $8 million damages award down to $80K. Bimbo appears not quite ready to accept the loss of all that dough and has filed a notice of appeal, which joins a previous appeal filed by a co-defendant. The court’s treatment of the consumer confusion evidence demonstrates the problem with its treatment of “local.” Because the definition of the term is highly subjective, evidence of confusion and damages will need to be more nuanced and tailored to whatever a party wants “local” to mean. U.S. Bakery might say that this problem could be avoided by adopting a rule that geographically descriptive terms must describe specific locations, but at least in this case, that argument is getting stale. Parties looking to enforce false advertising claims based on these types of general geographically descriptive terms should recognize their accoutrements: Bimbo wanted a vague, subjective term to be factual—excellent choice for finding liability—but it only wanted to present a narrow slice of evidence, which is more cost-effective and easier to present to a jury. Bimbo’s win on the first issue had unforeseen consequences on the second. At least until the Tenth Circuit weighs in, this case is a cautionary tale about trying to butter an $8 million piece of bread on both sides. Should you have any questions about your bread, the Venable team is here to help. Let’s Get This “Local” Bread! published first on https://888migrationservicesau.tumblr.com via Tumblr Let’s Get This “Local” Bread!
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Last September, the National Advertising Division (“NAD”) published a decision assessing whether the editorial content surrounding an affiliate link constituted “national advertising” requiring substantiation. At issue were two statements in a BuzzFeed “shopping guide,” in which the author tested and recommended various skincare products. The NAD reviewed BuzzFeed’s internal procedures with respect to the editorial content and the affiliate link and determined it did not constitute “national advertising” and was therefore outside the NAD’s jurisdiction. But how would the FTC treat editorial content surrounding an affiliate link? The NAD acknowledged that the “FTC … does not directly address whether the act of placing an affiliate link next to content about the related product renders the content ‘advertising’ that requires substantiation.” The FTC recently ended its silence. In her remarks at the NAD West Coast Conference earlier this month, Mary K. Engle, the associate director of the FTC’s Division of Advertising Practices, indicated that the FTC would follow the same analysis the NAD conducted to determine whether “advertising” includes the editorial content surrounding an affiliate link. The central question in the NAD decision was “whether online publishers using affiliate links can use the aegis of editorial independence to avoid the requirement that it have substantiation for any product claims in the content.” So how exactly did the NAD assess the statements in the BuzzFeed shopping guide? The NAD reviewed the BuzzFeed content within the framework established by the FTC in the 1988 R.J. Reynolds Tobacco Co. case (111 F.T.C. 539) to determine whether the speech was commercial. That framework considers:
The NAD’s decision ultimately turned on the fifth factor. The shopping guide author wrote the content independent of the “economic or commercial motivation” an affiliate link would introduce. Essentially, neither the BuzzFeed business staff nor any retailer or brand representatives had any say in whether the author recommended the product or what was said about the product. And, the affiliate links were added after the editorial content was completed. In sum, the NAD found that the primary motivation for the shopping guide was to drive page views and foster reader engagement, which mirrors the primary motivation of other digital editorial content on BuzzFeed. While this framework for analysis is certainly instructive, it is important to note that the NAD’s assessment came with a few caveats. Even though BuzzFeed kept the editorial operations apart from business operations, which the NAD deemed “sufficient in this matter, the enumerated elements of BuzzFeed’s process are neither exhaustive nor necessary to show that such content is not a ‘paid commercial message.‘” Thus, for the time being, it appears that each challenge will be fact-specific and unique to the business operations of the publisher or advertiser involved. What the FTC does with that open door remains to be seen. Stay tuned. FTC Hints It’s Feeling the Buzz published first on https://888migrationservicesau.tumblr.com via Tumblr FTC Hints It’s Feeling the Buzz As Tommy Callahan asks his customers in the high-brow ‘90s movie, Tommy Boy, “why would somebody put a guarantee on a box?” What does it mean and why it is useful? This post provides a high-level primer on commercial and consumer warranties on products. I. Types of WarrantiesThere are two types of warranties: express warranties and implied warranties. A. Implied Warranties. Sections 2-314 and 2-315 of the U.C.C. impose on sellers broad implied warranties of merchantability and fitness for particular purpose, and provide for the possibility of other, implied warranties arising from course of dealing or usage of trade (in addition to the warranties of title and freedom from infringement found in U.C.C. § 2-312).
B. Express Warranties. Express warranties are created by (a) any statement of fact or promise made by the seller to the buyer which relates to the goods, (b) any description of the goods, and © any sample or model, in each case which is made part of the basis of the agreement to sell. It is not necessary that the seller use formal words such as “warrant” or “guarantee” or that the seller have a specific intention to make a warranty. U.C.C. § 2-313. II. Warranty Remedies.A. U.C.C. Remedies. The “warrantor” (the person giving the warranty) is responsible to the buyer for all losses that can be shown to have resulted from the breach (see U.C.C. §§ 2-714 and 2-715). B. Limitation on Remedies. Remedies can be limited, but
C. Sole and Exclusive Remedies. Warranty remedies in supply agreements are typically limited to repair or replacement of the non-conforming products or reimbursement of the purchase price paid by the buyer for the non-conforming products. From the Seller’s perspective, the foregoing remedies should expressly state that they are the sole and exclusive remedies available to the buyer for a breach of the warranties. U.C.C. § 2-719(1)(b). III. Consumer Warranties.There are additional warranty laws and regulations in place to protect consumers when a warranty is given. The below is a brief overview of such laws and regulations: A. Federal Law Regulating Written Consumer Warranties (15 U.S.C. § 2301 (2018) et seq., the “Magnuson-Moss Warranty Act”).
B. FTC Rules Regulating Written Consumer Warranties (16 C.F.R. Parts 701, 702 and 703). These rules apply only to warranties on products costing more than $15 at retail. Disclosures required include: specific wording, and additional specific wording if implied warranties are disclaimed or damages are limited; both warrantors and retail sellers must make the full warranty text available pre-sale, through the use of one or more specified means. Those rules have the force of law; and violations may lead to FTC fines, mandated consumer protection and/or injunctions. Consumers may not enforce them. C. State Statutes. There is a haphazard body of state legislation/regulations of consumer warranties on specific products (see, e.g., Wis. Stat. § 100.205, as to motor vehicle rustproofing warranties). Further, California has adopted a generally applicable statute (called the “Song-Beverly Consumer Warranty Act”, Cal. Civ. Code § 1790 et seq.), notably adding that “warranty registration” cards, and even the use of that phrase, are prohibited. Most state “little FTC” laws permit consumers to make claims under the principles embodied in the FTC Magnuson-Moss rules. D. General Federal Anti-Deception Law.
If you are interested in obtaining a complimentary copy of the Supply Chain Desk Reference, which contains this article and others, please send your name, organization, and mailing address to [email protected] (subject to availability). Commercial and Consumer Warranties: A Primer published first on https://888migrationservicesau.tumblr.com via Tumblr Commercial and Consumer Warranties: A Primer FTC Chairman Joseph Simons used his opening keynote address at the 2019 ANA Advertising Law & Public Policy Conference to put his audience on notice: the FTC has its eye on national advertisers. Simons made it clear that even in a Republican administration, under his leadership, the Bureau of Consumer Protection will no longer be the forgotten half of the agency. Simons characterized the FTC as the “primary cops on the beat,” the foot soldiers charged with enforcing the “level playing field” on which companies compete “based on the merits and unique features of their products and services.” Simons made it clear that consumer protection is not limited to policing “worthless or harmful” products. Instead, he reminded the audience that the FTC has, does, and will continue to bring enforcement actions against bona fide products if they make claims that overstep or play fast and loose with the truth. Citing a dozen high-profile examples, he emphasized that the Commission will take these cases into federal court where necessary. National advertisers can expect no quarter for being white hat providers of “legitimate” goods and services if they employ unscrupulous methods of advertising. Going forward, he stressed, the FTC will reconsider its approach to remedies in consumer protection matters. He cited civil monetary penalties, corporate officer liability, and consumer notices as primary tools in the FTC’s toolbox. The FTC’s penalties can be severe—rising into eleven figures, even—and its enforcement eye is not blinded by only high-profile cases. Chairman Simons closed his remarks with the example of data privacy as a growing focus of concern for the Commission. While stakeholders from the FCC to the plaintiffs’ bar to industry self-regulators each try to carve out enforcement powers over Big Data, the FTC reminded the ANA that it continues to retain jurisdiction over the messaging that consumers receive. When it comes to disclosing how data will be collected and used, Chairman Simons was clear about the standard the FTC will hold advertisers to: “Tell the full truth.” Thus, while other regulatory bodies under the Trump Administration have taken a lighter touch, the FTC under Simons appears to be ready to come down heavy and hard. FTC Commissioner Simons Addresses 2019 ANA Conference published first on https://888migrationservicesau.tumblr.com via Tumblr FTC Commissioner Simons Addresses 2019 ANA Conference While the economy overall is strong and vehicle sales are still robust, there are risks in the industry that may affect the supply chain and cause disruptions throughout the year. Chief among these are the ongoing concerns regarding tariffs on products such as steel and aluminum, along with the on-again, off-again trade disputes with China. In addition to the upheaval in global markets, the shift away from passenger cars and toward trucks and sport utility vehicles has caused automakers to realign their product offerings and even end the production of several car models. For suppliers, who have been dependent on contracts to provide parts for these vehicles, this realignment could be problematic. In addition, higher interest rates may complicate financing for businesses that need additional capital to address these changed circumstances. Global Trade UncertaintiesThe Trump administration’s policies – which are designed, among other things, to correct perceived trade imbalances with America’s largest trading partners – are having a significant impact on the automotive industry. Commodity costs are rising dramatically due to increased tariffs and the retaliatory tariffs other countries have imposed. Increased commodity costs also negatively impact suppliers’ profitability, particularly smaller suppliers that are already grappling with pressure from higher raw materials costs that cannot be passed on to customers under fixed-price contracts. Perhaps more alarming than the stress higher tariffs are causing for the industry is the constant uncertainty of what the future holds. For example, President Trump’s recent decision to delay new tariffs on Chinese imports is a positive development, but it is still unclear whether trade negotiations will be successful. The Trump administration’s threat to add tariffs to certain imported vehicles (particularly German cars) is also a cause for concern among automakers and suppliers. Suppliers that may be subject to new tariffs or restrictions on product sales are in a difficult position as they have little ability to anticipate these changes and react accordingly. Therefore, as the ongoing trade disputes with China and Europe, among others, continue to develop, customers will need to be aware of potential risks to their downline suppliers and anticipate future problems before they affect the supply chain. Reduced Volumes and Changes in Consumer TasteIn the past few years, the demand for passenger cars in the U.S. has decreased. While the demand for SUVs and light truck products has increased, this is unlikely to offset the reduced car demand. Manufacturers are already responding by changing their product lines and eliminating car models altogether. Late last year, GM announced that it would stop producing several car models, idling five plants in North America and implementing layoffs of more than 10 percent of its workforce. Earlier in the year, Ford announced that it would no longer produce any passenger cars, except for the Mustang. According to Laura Marcero, the industrial practice leader at Huron Consulting Group, suppliers are likely to see softening volumes in the near-term due to these production changes. These shift in demand will affect suppliers that focus on producing products for passenger cars, and also those that may have already been experiencing some financial difficulty. This is likely to exacerbate the effect of increasing commodity costs and trade woes facing suppliers and the industry as a whole. Increasing Interest RatesThe Federal Reserve increased interest rates several times in 2018. As interest rates go up, borrowing becomes more expensive, both for businesses that rely on commercial credit, and for consumers, including those looking to finance new vehicle purchases. Furthermore, while credit has been relatively easy to obtain in the past few years, many businesses are carrying significant debt loads and may have trouble financing those obligations in the future, causing them to falter. Identifying and Protecting Against Troubled SuppliersThe market conditions above are likely to cause some suppliers to have difficulty fulfilling their contracts, or to seek price increases from their customers, including other, higher-tier suppliers. In addition, the shift away from passenger cars may cause individual suppliers who are either dependent on those products or who are operating on thin margins to falter. A troubled supplier can cause significant harm to the upstream suppliers and ultimately customers. Customers should routinely evaluate the companies in their supply chain for warning signs of distress. Here are some of the top warning signs for troubled suppliers, along with potential actions to reduce the disruption that may be caused by a troubled supplier: A. Warning Signs of Supplier DistressKey warning signs to look for include:
B. Action Plans for Customers of Troubled SuppliersWhere these signs exist, the exercise of common law and statutory remedies may allow a customer of a troubled supplier to achieve proactive changes to standard terms and conditions of new contracts (or negotiated changes to existing contracts). By using these tactics, customers can prioritize, understand and address troubled supplier situations with greater advance awareness, leverage and options. Customers also should routinely analyze their contracts to maximize their position in dealing with potentially troubled suppliers. A customer’s existing contracts with a given supplier have a substantial effect on the customer’s rights and remedies, both pre-bankruptcy and post-bankruptcy. For example, the terms of the contracts govern critical issues such as:
Through the imposition and application of statutory and common law contract rights, manufacturers can avoid troubled companies’ use of their own ordinarily broad bankruptcy rights to reject contracts for continued supply of goods. Where signs of financial distress are apparent, or a manufacturer otherwise has reasonable grounds to believe that a supplier’s future performance is in doubt, a manufacturer may be able to demand adequate assurance of future performance from the supplier under section 2-609 of the UCC. If such assurance is not provided, a manufacturer may be able to consider the contract repudiated, which allows them to either resource or suspend shipment, or to negotiate or impose more protective or otherwise better terms in order to “shore up” contract rights before a bankruptcy filing. These strategies can drastically alter the parties’ rights after a bankruptcy filing and provide greater leverage in negotiations and better outcomes. To preserve supply, manufacturers also may participate in a pre-bankruptcy workout – which is intended to keep a troubled supplier on the verge of bankruptcy from ceasing production of necessary parts – by restructuring the supplier’s debt and capital structure. These transactions often include tripartite agreements among the troubled supplier, its significant customers, and its secured lenders in order to solidify each party’s commitments to keep the supplier operating during the workout (or bankruptcy). These agreements commonly consist of access and accommodation agreements, as well as subordinated participation agreements. Through an accommodation agreement, the customers may provide (often as a group) accommodations that solidify the lenders’ collateral base through protections on inventory and receivables, commitments to continue sourcing of existing parts to the troubled supplier and limitations on setoffs, while the lender agrees to provide working capital financing and not to foreclose. Furthermore, customer accommodations may include financing support, in which case the customer should obtain a participation agreement to obtain collateral for any financing it provides. An access agreement permits the customer, under certain circumstances threatening production and only as a last resort, to access the supplier’s plant to produce parts using the supplier’s own equipment, and employees, pending transfer of the contract or facility to a healthier supplier. Faced with unknown foreign trade risks, increasing commodity costs and interest rates, and the realignment of vehicle lines to account for shifting consumer demand, all suppliers and customers need to be aware of any potential disruption in the supply chain. By actively monitoring vendors and taking the proactive steps outlined above, automotive suppliers can protect the supply of critical parts and continue to fulfill their contracts with their own customers. For more on this and other trending topics in the automotive industry, click here to download Foley’s white paper, Top Legal Issues Facing the Automotive Industry in 2019. Storm Clouds on the Horizon: Restructuring Risks Facing the Auto Industry published first on https://888migrationservicesau.tumblr.com via Tumblr Storm Clouds on the Horizon: Restructuring Risks Facing the Auto Industry The United States is currently nearing full employment with the unemployment rate under 4%. Such a hypercompetitive labor market calls for innovation and creativity in luring and retaining top talent. A new study that sheds light on how employees value benefits may help employers maximize the “bang for the buck” of benefits packages offered to prospective and current workers. An article published by Bloomberg highlights a National Bureau of Economic Research working paper that reveals which benefits employees prefer, and actually assigns a dollar amount that employees are willing to forgo in the form of wages in exchange for each benefit. The study’s data (displayed below) shows that in many cases American workers are willing to forgo “substantial” earnings in exchange for specific non-wage benefits that more than offset the equivalent cost to the employer of offering such benefits. Importantly for employers, the data indicates that more paid time off and a flexible schedule could lead to reduced cost of labor for employers as well as happier employees – this holds true regardless of the job. For example, while a 10-day workweek represents only 4 percent of a standard work year, employees value 10 paid days off from work as the equivalent of 16.4% of their wages. This result is not surprising considering that Millennials currently make up the majority of the American workforce. More than any preceding generation, Millennials seem to desire more balance between work life and home life. Regardless of the job title or industry, many want the freedom to live and work on their own terms. When you couple the study’s findings with the fact that most Americans feel overworked, it is not surprising that companies are adjusting their approach to employee compensation and benefits. Just recently, Amazon began allowing some of its employees to work a 30-hour workweek instead of 40 hours or more. Under this new optional compensation plan, Amazon’s employees receive 75% of their salary, but retain full benefits, such as paid leave and flex hours. Amazon hopes the pilot program not only lures people who historically have trouble entering the full-time workforce‒like students and parents‒but also increases productivity. According to a study from Stanford University, employee output slows sharply after a 50-hour workweek and continues to diminish rapidly after that. Other companies with similar goals, such as KPMG and Deloitte, have instituted similar 30-hour-workweek options for their employees with the expectations that a worker with more agency and work-life balance will be motivated to produce at a high level. As always, employers should weigh their business goals against the risks of altering compensation strategies. Economic pressures and industry specific restrictions may prevent companies from offering certain benefits, but employers should keep an eye on new data, as well as the strategies employed by innovative early adopters, in this increasingly competitive labor market. *Special thanks to Thomas Raine, who assisted in the drafting of this post. Thomas is a third year Juris Doctor Candidate at the University of Miami School of Law. An Ounce of Benefits is Worth a Pound of Pay published first on https://888migrationservicesau.tumblr.com via Tumblr An Ounce of Benefits is Worth a Pound of Pay The rapid adoption of Industry 4.0 technologies leaves manufacturers with a choice: accelerate with the market or be left behind. According to a 2019 Global Market Insights, Inc. report, the market for artificial intelligence in manufacturing will grow to $16 billion by 2025. Factors driving the adoption of Industry 4.0, the general name given to the deployment of cyber-physical systems, Internet-of-Things technologies and cognitive computing in the manufacturing environment, include:
Achieving these goals is supported by two main principles: interconnection and information transparency. Interconnection refers to the ability of machines, devices, sensors and people to connect and communicate with each other. Information transparency provides operators with large amounts of useful information needed to make appropriate decisions. The interconnected nature of machines and systems in an Industry 4.0 environment combined with information transparency allows manufacturers greater insight into the current operating conditions and operational efficiency of the factory. Comparison of operating conditions and health information between machines facilitates just-in-time maintenance. Leveraging that information using big data analytics (perhaps using cloud-based services) will allow manufacturers to gain many advantages, including near-zero downtime. However, the promise of interconnection comes with its own challenges: (1) data security issues are exacerbated by the need to open previously non-existent lines of communication with vendors, partners and customers; and (2) manufacturers may find it harder to maintain the confidentiality of their processes. Data security is a complicated area. All 50 states, the District of Columbia, Guam, Puerto Rico and the Virgin Islands have legislation requiring that entities notify individuals when security breaches of personally identifiable information occur. While most people will think of financial information when they think of “personally identifiable information,” the reality is that personally identifiable information is broader and may implicate the kinds of information maintained by manufacturers that can be inadvertently disclosed or intentionally targeted by bad actors. Manufacturers need to be aware whether their systems include “personally identifiable information” and where vulnerabilities may exist in their systems. For example, Internet-of-Things-enabled devices can allow outside attackers to compromise equipment. More prosaically, as highlighted in a recent data threat report by Honeywell, USB devices are a major threat to manufacturing and industrial facilities. In addition to being aware of the systems that have been deployed in the factory, manufacturers should also strongly consider having a response plan in place should a breach occur. Information about machines and sensors, i.e., process line information, may be shared with vendors who process the information on the manufacturer’s behalf to surface actionable insights, partners who will use the information to optimize supply chain operations, or customers so that the manufacturer can provide personalized mass-market products, which can create risk for companies around protecting their trade secrets. When drafting and executing vendor, partnership and customer agreements, manufacturers need to consider carefully what information is being shared, how that information is being shared, and what happens to the information after the agreement expires or terminates. Thought also needs to be given to whether it is likely that either party will generate intellectual property apart from the data during the course of the relationship and how ownership of any such intellectual property will be determined. Manufacturers who adopt principles of Industry 4.0 while keeping their eye on the legal issues presented by those principles will be well-positioned to succeed in the Fourth Industrial Revolution. Adoption of Artificial Intelligence in Manufacturing Accelerating published first on https://888migrationservicesau.tumblr.com via Tumblr Adoption of Artificial Intelligence in Manufacturing Accelerating In February 2018, the FTC teamed up with the Missouri Attorney General’s office in filing a complaint against a prize promotions company and others that allegedly operated a large-scale deceptive prize scam targeting the elderly. A little more than a year later, the FTC and the Missouri AG’s office announced that they reached a settlement to the tune of $30 million. The settlement is comprised of $21 million in cash, and the remainder will be made up by liquidating assets owned by the individual defendants, such as luxury vacation homes, a yacht, a Bentley automobile, and other personal property. The full judgment, which will become due immediately if the defendants are found to have misrepresented their financial condition, amounts to $114.7 million. According to the complaint, the defendants allegedly sent tens of millions of deceptive personalized mailers to consumers around the world. One category of mailer falsely told recipients they had won a substantial cash prize, and a subset of this group were merely a means of disguising newsletter subscription solicitations. Another type of mailer claimed the recipient could win a substantial cash prize by answering simple arithmetic questions and paying a registration fee. These mailers failed to disclose, though, that they were the first in a series of multiple rounds in a larger “game of skill”—in other words, a contest—and that the recipient would have to pay additional fees to advance to the next round. The contest culminated in a final, complex mathematical puzzle that few people, if any, can solve. Consumers allegedly lost more than $110 million to the defendants’ scheme. In light of the Justice Department’s recently announced “largest coordinated sweep of elder fraud cases in history,” we expect the FTC to take a closer look at consumer complaints from the elderly. As a particularly vulnerable group of consumers, it is especially important that advertising aimed at the elderly contain clear and conspicuous language disclosing all material terms, particularly any required purchases. Moreover, while some potential prize promotion sponsors view games of skill as less heavily regulated than the more common sweepstakes or games of chance, this case shows that this is not the case. It’s important to understand that many federal and state laws make no distinction between the two when it comes to the material disclosures that are required in advertising and the rules, and moreover, there are specific laws that regulate particular kinds of skill promotions. For example, California has a law dictating specific disclosures when conducting multi-level puzzle promotions, and the federal Deceptive Mail Prevention and Enforcement Act requires the publication of the full rules in any mailer for a skill or chance promotion that includes an entry form (among other requirements). Should you have any questions about best practices for running your promotions, the Venable team is here to help. Definitely not “Winning”: Scammers Pay Millions to FTC and Missouri Attorney General for Running Deceptive Prize Scheme published first on https://888migrationservicesau.tumblr.com via Tumblr Definitely not “Winning”: Scammers Pay Millions to FTC and Missouri Attorney General for Running Deceptive Prize Scheme Many automotive suppliers and OEMs have announced plans to bring autonomous vehicles (AVs) – and related components, software and services – to market, often collaborating with technology startup companies to develop the underlying hardware or software. As these parties work together to develop technical solutions, the resulting intellectual property (IP) can become a key asset of the automotive supplier, the technology startup company or both. Failure to properly protect and capture IP around technical solutions can impede business goals, as well as delay the development and deployment of AVs. This article outlines key considerations for automotive suppliers and technology startups to protect their IP. 1. What is an IP strategy?An IP strategy that aligns with the company’s short and long-term business goals is essential to successfully bringing AV-related systems, components, software and services to market. A well-executed IP strategy allows the owner of the IP assets to leverage these assets during negotiations, increase their valuation, publicly promote their innovations in marketing materials, keep out competitors, and monetize their IP by generating a royalty-based revenue stream. The IP strategy should include how and when the technology startup and automotive supplier will pursue and protect their joint or respective IP in a manner that fits the business goals, and also takes into account ownership of the resulting IP. The IP strategy should support the technology startup’s growth and exit strategy, while also supporting the automotive supplier’s goals for creating barriers to entry. An ideal IP strategy is one that creates value, reduces risk and is realistically achievable for both parties, thereby facilitating the successful deployment of AVs to market. 2. How does the IP strategy protect proprietary competitive information?An IP strategy and plan leverages legal tools to identify and capture a company’s proprietary competitive information, and should account for any inherent challenges raised by the company’s culture, expedited development and deployment roadmap, and strategic goals. A variety of cultural challenges can come about from early-stage AV technology startups, including the openness with which founders sometimes discuss their innovations with third parties. This can happen when they are operating in collaborative shared workspace environments where individuals bounce ideas off each other, or through initial discussions when recruiting new talent or potential partners. Even as the company moves beyond early stage, additional challenges arise from its need to make public disclosures either to persuade potential customers or to inform regulatory entities of its AV-related innovations. Common scenarios for inadvertent public disclosure of IP include:
Companies may also overlook protecting their IP around their software-related innovations, such as their Artificial Intelligence or algorithms used to enhance the AV’s safety, accuracy, reliability, robustness, efficiency or user experience. Establishing and executing an effective IP strategy is essential to obtaining IP protection at an early stage before any public disclosures take place. In order to protect proprietary competitive information, the company should establish a plan and process for identifying the functional features of its solution that differentiate it from the competition, and the innovations that enable such features. The company needs to identify which individuals or parties contributed to the innovation, and then determine which tools in the toolbox of IP protection (trade secret, copyright, trademark, patent, or contractual) to deploy to protect the innovation. Upon identifying the IP tools to protect the innovation, the company should take action or work with outside counsel to create the IP asset. Actions may include filing a patent application, executing confidentiality or non-disclosure agreements, registering trademarks and copyrights, and ensuring documents are marked and kept confidential. 3. How does the IP strategy account for ownership?The ultimate goal of an IP strategy is to obtain ownership so that IP can be monetized. Therefore, it is not sufficient to merely create the IP asset without also having a plan to retain the appropriate ownership or rights. In the absence of any formal agreement governing ownership of IP, the rights generated or derived from an individual’s employment or consulting relationship may inadvertently be waived or may be owned by another company. As part of an IP strategy, companies should take steps to ensure that they retain ownership in the IP prior to collaboration with other parties. Likewise, automotive suppliers that may not have historically collaborated with technology startups should be aware of potential cultural differences in how they operate, such as loose or non-existent non-compete clauses, and the ease and rate at which employees can switch from one technology company to another. Failure to take steps to retain ownership of IP may prove costly and may impede both capital formation and product development. To mitigate these and other risks related to IP, technology startup investors usually perform due diligence to determine whether any IP ownership issues exist. If the startup has not taken steps to protect and retain ownership of its IP, it may be inhibited from commercializing its innovations with other companies. A comprehensive IP strategy can play a pivotal role for both automotive suppliers and technology startups in successfully developing and deploying AV solutions, while avoiding pitfalls and challenges that come with IP protection and ownership. For more on this and other trending topics in the automotive industry, click here to download Foley’s white paper, Top Legal Issues Facing the Automotive Industry in 2019. IP Considerations for Autonomous Vehicle Technology Startups and Automotive Suppliers published first on https://888migrationservicesau.tumblr.com via Tumblr IP Considerations for Autonomous Vehicle Technology Startups and Automotive Suppliers Reading Your Employment Policy Documents Probably Wont Win You $10000- It Could Be Worth Much More3/12/2019 Recently, an insurance company released a story about a secret contest it launched offering $10,000 to the first person who read their insurance policy. The catch: the only way you could find out about the contest was to actually read the policy. 73 policies were sold and sent out before someone claimed the prize. Insurance policies are not the only important documents that people fail to read. Most people receive a hefty stack of paperwork when starting a new job such as the employee handbook, benefits documents and other important documents. Most people just read the first few pages before signing a form stating that they agree to all the terms and conditions. Although it is important for all employees to read and understand these documents, the real question is when was the last time YOU and others on your HR team, actually read these documents? What about documents for your benefits plans such as service provider agreements, insurance policies, plans, and summary plan descriptions? We recommend that employers routinely review all their HR related documents to make sure that the documents accurately reflect your company’s practices and any recent changes in law (anyone remember revising their social media policies to comply with the National Labor Relations Board guidance?). While is it unlikely you will win $10,000 for reading these documents, you may be able to avoid other potential problems- and that could be worth much more than $10,000. Reading Your Employment Policy Documents Probably Won’t Win You $10,000- It Could Be Worth Much More published first on https://888migrationservicesau.tumblr.com via Tumblr Reading Your Employment Policy Documents Probably Won’t Win You $10,000- It Could Be Worth Much More |
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