Archive for the ‘New Businesses’ Category

Jul
05

ANOTHER TRADEMARK APPLICATION BITES THE DUST BECAUSE OF UNACCEPTABLE SPECIMENS!

Imagine having a proposed mark meet the requirements for overcoming a finding of likelihood of confusion or mere descriptiveness only to have the mark rejected for registration as the result of insufficient specimens. As this post discusses, specimens can make or break a trademark application.

THANK YOU FOR READING THIS BLOG.  PLEASE SHARE IT WITH ANYONE WHO MIGHT BENEFIT.  AS ALWAYS, THE CONTENT IS NOT LEGAL ADVICE AND IS PRESENTED FOR INFORMATIONAL PURPOSES ONLY.

Perhaps no other area of trademark application prosecution is more misunderstood by applicants than the requirement that specimens must show use of the proposed mark with the applicant’s specified goods or services. The commentator, Susan D. Troy, who is in charge of the business and intellectual property law practice areas for the law firm, has previously posted blogs on this important topic. Today’s post relates to the Trademark Trial and Appeal Board’s (“Board”) recent affirmance of the refusal to register the mark THE CARDIO GROUP & Design for the Applicant’s failure to submit specimens reflective of the Applicant’s services.  In re The Cardio Group, LLC  (TTAB June 20, 2019) [precedential] (Application SN 86840860).

The application’s specified services under international class 35 were for “retail store services featuring medical devices.” The Board found that the Applicant is clearly engaged in selling products. Nevertheless, the inclusion of the words “retail services” suggests that the Applicant’s products were either being sold being sold in a brick-and-mortar location, on-line, or via catalogues. The Applicant, however, did not provide specimens showing how the mark was being used in the “retail services” arena. This commentator notes that maybe the original description of services incorrectly used the word retail.

In reaching its conclusion, the Board focused on “whether the evidence of Applicant’s use of its mark creates an association between the mark and the Applicant’s retail store services.” Importantly, the specimens must show a direct association between the mark and the service activity [or goods] and the source of the services [or goods]. To create such a “direct association,” the specimens must contain a reference to the service and identify the service and its source (generally the applicant which may be an entity or an individual).

Here, the Applicant submitted a website screenshot, a confidential sales agreement, and an invoice, all displaying the proposed mark. The website specimen merely presented the results of an analysis from a medical device and no information that the Applicant was making the device available for sale on-line, by personal sales calls, or otherwise. The invoice likewise did not refer to any activity that might be considered a retail store service. The commentator notes that invoices are generally not acceptable specimens for goods or services but can serve as a proof that the mark was in in commerce as of the invoice’s date. Additionally, why the Applicant, would have provided a confidential sales agreement as a specimen that becomes available to the public at www.USPTO.gov is indeed puzzling.

The Board concluded that the Applicant’s specimens of use were unacceptable because they failed to show the mark used in connection with the specified “retail services.” Although the Applicant is engaged in selling products, “nothing in the documents submitted by Applicant … refer to a retail store (of either on-line or brick-and-mortar variety) or create an association of any kind between THE CARDIO GROUP and design and a retail store service.”

In assessing the adequacy of specimens, the USPTO must consider any explanations offered by an applicant that “clarify the nature, content, or context of use of the specimen that are consistent with what the specimen itself shows.” See In re Pitney Bowes, Inc., 125 U.S.P.Q.2d 1417, 1420 (T.T.A.B. 2018); In re DSM Pharms., Inc., 87 U.S.P.Q.2d 1623, 1626 (T.T.A.B. 2008). Here, the Applicant stated that its services are in the nature of activities provided by a retail store – i.e., it is selling goods – and it argued that such activities do not have to take place in an actual retail store. The Board noted that retail stores services may be offered in various ways, including through physical locations, catalogs, or on-line, but the Applicant’s specimens did not suggest that any of these retail “avenues” were being used to make the medical device available in interstate commerce.

The Applicant also tried to amend its description of services to retail sales services, but the Board found that the proposed change simply restated that applicant’s specimens “reflect a product sale” and not that any retail store services were provided in selling the product. Considering all the specimens along with Applicant’s explanations, the Board found “no direct association in any of the specimens between THE CARDIO GROUP and design and any type of retail store service.” The Board emphasized that the specimens had to establish that the mark and design were a source indicator for retail services. Emphasis added. Nothing in provided specimens demonstrated to the Board’s satisfaction that consumers would perceive THE CARDIO GROUP and design as a source indicator for retail store services. “Ultimate consumers who choose to purchase Applicant’s products very well may understand they are engaging in a retail sales transaction with Applicant, but even if this is assumed, it would not establish that such consumers, prior to making their decision to make such a  purchase, were exposed to any advertising or promotion of Applicant as the operator of a retail store selling medical devices.”

In conclusion, specimens can make or break a trademark application. Don’t let this situation happen to you!

A Note to Trademark Applicants

Trademark applicants who become the clients of Troy & Schwartz, LLC will understand the requirements for specimens for 1A applications from the get-go. Attorney Susan Troy also works closely with clients for whom intent-to-use applications are filed to ensure that the subsequent specimens will comply with the USPTO’s requirements by keeping in contact with these clients to discuss the specimen creation progress.  For example, she reviews websites where screen shots are to be provided as specimens to ensure that they are presented in the manner required for “website page” specimens and will make suggestions to the website designer where changes are required in her opinion to comply with specimen requirements. This hands-on approach is an example of the added value of working with our firm to achieve your trademark registration and branding goals.  We are about providing value in all our attorney-client relationships.

© Troy & Schwartz, LLC

Where Legal Meets Entrepreneurship™

 

Jun
03

Trademark Symbol Usage – Are You Using the Correct Symbol?

The three trademark symbols are the circled R, and the capital letters TM for trademark and SM for service mark.  All three symbols are generally presented as a superscript.

The circled R symbol (federal registration notice) is reserved for those trademarks and service marks that have been registered by the USPTO as the result of a formal trademark application evaluation process.   Additionally, the circled R should only be used in connection with the goods or services that are listed in the federal registration issued by the USPTO.  For example, if a mark is registered for clothing goods only as evidenced by the federal registration, the federal registration symbol should not be used by the mark owner on any non-clothing goods.  The owner of the “initial” registered marks may apply for registration of the mark for non-clothing goods to obtain broader “registered mark” coverage.

Nor does registration of a mark in one or more of the fifty states of the United States entitle a person to use the federal registration notice.  The circled R is to be used only to denote actual registration of the mark by the USPTO for the goods and services shown in the registration.

The mere submission of a trademark application in no way means that the applicant can start using the registered mark while the application is pending.  Any usage of the circled R absent formal registration of the mark is a violation of federal law and may cause the USPTO to deny registration of the trademark application even if the application is otherwise acceptable.

The USPTO’s refusal to register a mark may have unintended economic consequences for applicants who have spent already considerable funds on developing their brand only to be denied registration of the mark. For example, a registered trademark can be a valuable business asset.   Lack of a formally registered mark may reduce the value of the business or interfere with the franchising process which generally involves the licensing of a federally registered mark(s). Although other factors may result in refusal by the USPTO to register the mark, applicants should also avoid losing out on acquiring registered trademark rights by misusing the circled R symbol.

Until when and if a mark is formally registered with the USPTO, the provider of goods and/or services should use the TM (trademark) or SM (service mark). These are not official or statutory symbols of federal registration.  Nevertheless, both symbols provide notice to would-be infringers that the mark owner views the mark as a trademark/service mark and that it will defend it against would-be infringers. It is entirely acceptable if specimens submitted to the USPTO’s trademark application examining attorney includes either the TM or the SM.

Specimens submitted to the USPTO examining attorney that include the circled R may present problems for the applicant. For applicants not using the services of a trademark attorney, it is therefore cautioned that the applicant ensure that website pages, marketing materials, displays, etc. submitted to the examining attorney as specimens do not show the circled R. An advantage of hiring a trademark attorney to handle trademark applications is that the attorney will:  1) verify that the specimens are suitable for submission by personally evaluating the specimens for compliance with the law prior to submission; 2) alert the applicant of any observed misusage of the federal registration notice in the specimens; 3) request new specimens for submission to the USPTO; and 4) direct the applicant to immediately refrain from using the circled R.   That is, a thorough trademark attorney will do much more than merely fill out a trademark application form.

Besides possible problems with trademark applications, are there any other legal ramifications associated with the usage of the circled R for unregistered marks?  Many times the usage of the circled R is inadvertent and based on a misunderstanding of how and when the circled R can be used.  That is, the misuse is an honest mistake.

However, the misuse of the circled R can also result in allegations of fraud to knowingly and willfully deceive or mislead consumers or others in the trade into believing that the mark was registered.  Where the cause of action is before the Trademark Trial and Appeal Board (TTAB) such as an opposition proceeding, the TTAB may deny registration of an otherwise registrable mark.  Such conduct would also likely sustain a petition to cancel a registered mark with the TTAB.

Where the cause of action is before a federal court in a trademark infringement proceeding, fraud claims may result in invalidation of a registered mark.  Also, the defendant in a trademark infringement lawsuit may have possible false advertising claims against the mark owner who has knowingly misused the circle R symbol and a possible unclean hands defense especially when the plaintiff’s misuse of the circled R symbol is accompanied by a bad faith intent to deceive.

Generally, fraud claims must be alleged with particularity whether the matter is before the TTAB or a federal court.   Fraud claims are not easy to prove because of the requisite intent requirement as it pertains to deceiving of the public.  The Federal Circuit has held that how quickly a trademark owner corrects misuse of the registration symbol after learning of the misuse, will impact the determination of whether the trademark owner is charged with an intention to deceive the public.  Therefore, trademark owners should periodically review the presentation of their marks to the public to ensure that the proper trademark symbol is being used.

Example: A website designer is told that the owner of the website has a trademark or service mark. The website designer, thinking that the mark(s) is registered, uses the circled R when the appropriate symbol was the TM or SM.   The mark owner should ensure that the circled R symbol wherever used on the website is removed and replaced with the appropriate TM or SM symbol until when and if a registered mark is secured.

In conclusion, to avoid any unpleasant legal surprises resulting from the misuse of the circled R symbol, just don’t use this symbol unless the mark is listed as a registered mark according to the public records available at www.uspto.gov.   And then use it only with the mark owner’s goods and services specified for the registered mark.

WE HOPE YOU FIND THE ARTICLE INSTRUCTIVE. HOWEVER, THE INFORMATION PRESENTED IS NOT LEGAL ADVICE AND IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY.

 

© Troy & Schwartz, LLC 2019

Where Legal Meets Entrepreneurship™

 

 

 

 

 

 

Jun
03

Trademark Registration Pitfalls: Not Understanding that Certain International Classifications of Goods/Services Are Considered Closely Related by the USPTO for Section 2(d) Rejection Purposes

A company wanting to protect its brand identity and thereby enhance its valuation generally seeks federal registration of its trademark/service marks which may include names, logos, and slogans.   In applying for a mark that is “close” to an already registered mark, applicants sometimes make the mistake that the examining attorney will not find a likelihood of confusion if the applicant’s mark involves a different international classification (IC) of goods/services from the registered mark’s specified IC(s).

This assumption is incorrect.   Sometimes applied-for marks that are deemed by the USPTO’s examining attorney to convey a similar commercial impression with an existing registered mark will be denied registration even if the two marks do not involve the same international classifications of goods/services.   One of the determining factors is whether the specified international classes involve closely related goods/services.  Thus a registered mark for IC class 030 (e.g., pizza as a food product) and an applied-for mark for IC 035 (restaurant services) may be found to involve related goods and services that could result in a likelihood of confusion as to the provider of the pizza food product/restaurant services.

Similarly, IC 025 for clothing is a class that the USPTO routinely finds overlaps with other IC classes, particularly jewelry (IC 014), purses (IC 018), and eyewear (IC 09). The “clothing” applicant will generally not prevail if the examining attorney can provide evidence that a single entity is likely to offer for sale both clothing and complementary items such as jewelry, purses, and eyewear.  For example, in In re Manja Studio SDN BHD (May 17, 2019), the Trademark Trial and Appeal Board (TTAB) affirmed the rejection of the applicant’s mark for clothing, finding that the applied-for mark was likely to cause confusion with an existing similar registered mark for watches.    The rejection was affirmed even though that applicant’s mark was for relatively inexpensive “T-shirts, outerwear, and hats” while the registrant’s mark was for “luxury designer watches.”

Take Home Points:

The trademark registration is not as simple as it seems.  Many factors can enter into the calculus.  An experienced trademark attorney can help identify pitfalls upfront.  Sure, an applicant can appeal a rejection to the TTAB but statistics show that the TTAB affirms about ninety percent (90 %) of likelihood of confusion rejections.  Besides, appeals are expensive.  Why spend money on the process if there is a solid chance of rejection?

If you are considering filing a trademark application with the USPTO or have encountered trademark registration problems, contact the commentator to discuss your trademark registration questions and learn about our reasonable legal fees for prosecuting trademark registrations on behalf of clients both in the U.S. and abroad. Clients’ applications are handled at all stages by an attorney and all clients are advised upfront of potential registration issues.

 

WE HOPE YOU FIND THE ARTICLE INSTRUCTIVE. HOWEVER, THE INFORMATION PRESENTED IS NOT LEGAL ADVICE AND IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY.

 

© Troy & Schwartz, LLC 2019

Where Legal Meets Entrepreneurship™

 

Aug
06

Don’t Lose Out on Trademark Registration by Submitting Faulty Specimens!

I.   Background

Trademark applicants may mistakenly assume the USPTO’s specimen requirements play second fiddle to other trademark registration requirements (e.g., no likelihood of confusion, not merely descriptive or generic, etc.)  That is, if the examining attorney finds that the proposed mark meets non-specimen related registration requirements, the submission of specimens is a mere formality for being granted registration of the mark.  This misplaced belief can result in a refusal by the examining attorney to register the mark.

The commentator has previously blogged about specimen-related issues that will likely prevent an otherwise satisfactory applied-for mark from being registered.  The Trademark Trial and Appeal Board’s recent decision in In re Midwestern Pet Foods, Inc. (July 18, 2018) is another reminder that non-compliant specimens will prevent registration of the mark.

In Midwestern, the applicant’s word mark EARTHBORN REBORN for pet food, submitted to the USPTO  as in intent-to-use application, received a Notice of Approval.  The applicant’s registration problems started when it submitted specimens with its Statement of Use.   Under the Trademark Act, the specimen must show a substantially exact representation of the mark as used in commerce.  Additionally, for goods (in this case pet food under International Class 31) the specimen must establish that the mark is used in connection with the identified goods.  Put another way, the specimens must establish that the consumer will readily identify the mark as being associated with the goods the consumer plans to purchase.

In Midwestern, the applicant had submitted a website shot of the actual product as its specimen.   Oddly the screen shot mentioned nothing about a pet food product but instead stated “Turn your empty earthborn holistic bags into recycled products and earn money for pet charities in the process.”   The applied-for mark was a simple word mark for the words EARTHBORN REBORN.  The specimen displayed the mark as EARTHBORN HOLISTIC inside of a circular design with the wording REBORN below and overlapping the circle.  Basically the specimen showed a mark with the intervening word  “holistic” separating the words Earthborn and Reborn.  This presentation was deemed an unacceptable material alternation of the approved word mark EARTHBORN REBORN.  Nor was there any reference to pet food in the submitted specimen.

The types of specimens acceptable for goods include tags, labels, instruction manuals, and packaging showing the mark on the actual goods or displays associated with the actual goods at their point of sale.  The USPTO, in recognition of the fact that many goods are sold on websites, will accept webpages as specimens as long as they include a picture or textual description of the goods associated with the marks and specify the means to order the odds or services associated with the mark.  Generally, the mark in combination with the good/service and the ordering means must be presented on the same webpage.  Such a website page layout should serve as an acceptable point of display of the mark.

The USPTO allows an applicant to submit a substitute specimen if the original specimen is not accepted by the examining attorney for registration purposes.  Surprisingly, the Midwestern applicant did not submit a substitute specimen but instead filed a response that did not address the specimen’s deficiencies and even stated that the recycling container depicted in the specimen as an acceptable point-of-sale display as ancillary services to goods.

Not surprisingly, the examining attorney issued a final refusal.  Then the applicant filed a Request for Reconsideration and submitted a substitute specimen.  The substitute specimen was an advertisement faxed to the USPTO containing an image of the applicant’s recycling bin which now featured the prominent EARTHBORN REBORN abutting images of the applicant’s pet food contained in bags.  The substitute specimen was accompanied by an affidavit of a corporate representative stating that the recycling bins featuring the mark are located in the same retail locations as the where the applicant’s pet food is sold, thus “encouraging our customers to buy our pet foods and recycle out bags.”  The affidavit further stated that the bins serve as point-of-sale displays that further “strengthen our customers’ association of the EARTHBORN REBORN mark with our pet food.”

The examining attorney denied the Request for Reconsideration on the same grounds she had specified in her final rejection and the applicant appealed.  The Board considered both the original and substitute specimens in rendering its opinion.

II. The Board’s Conclusions

  • The original specimen was not a substantially exact representation of the mark because EARTHBORN HOLISTIC is not congruent with the word REBORN. As depicted, the word EARTHBORN is “entwined” both physically and conceptually with the word HOLISTIC.   This presentation prevents EARTHBORN and REBORN from “engendering a separate commercial impression apart from the remaining elements” of the specimens.   That is the mark EARTHBORN REBORN is not presented  as a “stand-alone” mark.
  • The substitute specimen which included the words “Through our EARTHBORN REBORN” recycling program . . . .” Here, the Board deemed this presentation as a substantially exact representation of the drawing presented in the application.
  • Both the original and substitute specimens failed to show the applied-for mark in connection with the identified goods. The Board noted that the specimens did not involve containers, tags, or labels.  The deciding factor was whether the provided specimens constituted a display associated with the goods specified in the application, namely pet food.   To be an appropriate point of sale display, the usage of the mark must be at the “point of sale location to provide a customer with the opportunity to look to the displayed mark as a means of identifying and distinguishing the source of the goods.”  The Board citing In re Sones, 590 F.3d 1282, 1293 (Fed. Cir. 2009).

Regarding the original specimen, the Board found that the webpage specimen did not contain a picture or textual representation of pet food;  it did not show the mark EARTHBORN REBORN in association with pet food; and it did not provide a recognizable means for the customer to order the pet food.  The only product depicted was a recycling bin.  The Board also stated that website tabs labelled, e.g., “Learn Me” and “Find a Dealer” are not recognized means of ordering website goods for trademark specimen purposes.

Regarding the substitute specimen (which was found to meet the first prong of the specimen suitability test), the applicant argued that the advertisement constituted a point of sale display.  Again, the Board found that EARTHBORN REBORN mark functioned as a source identified for a recycling program, not pet food.  The Board had no information as to how the flyer was used in connection with the marketing and sale of the applicant’s pet food in retail locations.  Accordingly the Board refused to register the mark because the substitute specimen failed to meet the “point of display” requirement.

III.  Discussion and Take-Home Points

This case is a good example of how lack of communication can result in the rejection of an otherwise acceptable mark.  Here the applicant had come up with a catchy mark which was subsequently denied registration on “inadequate” specimen grounds.   So what went wrong?

It is this commentator’s opinion that an attorney who files, in particular an intent-to-use application, should inform the applicant of the specimen requirements should the mark receive a Notice of Approval early on.  Sometimes a great deal of time can pass between the issuance of the Notice of Approval and the submission of the required Statement of Use because the applicant is working on the getting the product to market and can request up to 5 extensions of time for submitting the required specimens.  The attorney should also inform the applicant that it would be a good idea for the attorney to review labels, marketing materials, etc. showing the mark before these items are actually used in commerce to ensure that they will meet the requirements of the USPTO from a specimen perspective. This would include examining website pages to ensure that the “point-of-sale” requirements will be met with a website page specimen.

If a 1A application is to be submitted, the attorney should not be hesitant to tell the applicant to “design” or “fix” a specimen so as to prevent a registration problem.

Also, specimens are to be current representations showing usage of the mark in commerce.  Furthermore, any future updates of the specimens once the mark is registered must continue to show the mark as depicted in the application’s drawing; material alternations may affect the mark’s registration status.

In Midwestern, it is also not clear why the original application did not specify both pet food as a good and recycling services as a service for which trademark registration was being sought since it seems that its “favorite” marketing focus aspect was promoting the recyclability of its pet food’s packaging, not the pet food itself.  Nevertheless, a specimen showing usage of the mark in connection with the pet food good would still have been required.

In conclusion, with the appeal, the applicant spent a lot a money trying to overcome obvious specimen errors only to still be denied registration of its mark.   There were also some procedural issues concerning the appeal process itself that are not discussed here but are detailed in the opinion.

The Bottom Line: The trademark registration process should not be conducted in a vacuum. Attorneys should be consult with the applicant about the specifics concerning the presentation of the applied-for mark in its marketing endeavors from labels to website presentations to ensure that they comply with specimen and mark usage requirements.  This proactive approach will help ensure that an otherwise acceptable mark will not miss out on registration due to faulty specimens.

 

© 2018 by Troy & Schwartz, LLC

WE THANK YOU FOR READING THIS BLOG.  HOWEVER, THE FOREGOING IS NOT LEGAL ADVICE AND IS PRESENTED FOR INFORMATIONAL PURPOSES ONLY.  IF YOU ARE CONTEMPLATING ANY ACTION THAT MAY HAVE LEGAL CONSEQUENCES, YOU SHOULD CONSIDER CONSULTING WITH AN ATTORNEY.

Nov
28

An Employer’s Referral Sources May Be a Protected Legitimate Business Interest Under Fla. Stat. 542.335 According to Florida’s Supreme Court

Background

This blog discusses the September 14, 2017 Florida Supreme Court’s holding in the consolidated cases of White v. Mederi Caretenders Visiting Services of SE Florida, LLC, et al. and Americare Home Therapy, Inc. v. Hiles.

A previous blog discussed Florida’s restrictive covenant statute which, when compared to similar statutes in other states, is generally quite favorable to businesses when it comes to the enforcement of non-compete agreements.  Many lawsuits involving Fla. Stat. 542.335 involve a former employee who has left the employment of the business and either started a competing business or has gone to work for a competitor.  Generally, the employee has signed a non-compete agreement as a condition for employment with his former employer.  The former employer may commence a lawsuit to prevent the former employee and his new employer from using information associated with the former employer’s  legitimate business interests.  Where the former employee goes to work for a competitor of the former employer, both the former employee and new employer are often named as co-defendants.

Under the Florida statute, a contract providing restrictions on competition must involve a legitimate business interest as defined by statute to be enforceable.  Fla. Stat. 542.335(1)(b).  Both of the above referenced cases involved employees who had worked for businesses that relied on home health referral sources cultivated through extensive personal marketing and relationship building with potential referral sources, primarily physician’s offices.  Section 542.335 does not specify home health referral sources as a legitimate business interest but does provide a non-exhaustive list preceded by the words “legitimate business interest includes but is not limited to:

  1. Trade secretes as defined in s. 688.002(4);
  2. Valuable, confidential business or professional information that does not otherwise qualify as trade secrets;
  3. Substantial relationships with specific, prospective, or existing customers, patients, or clients;
  4. Customer, patient, or client goodwill associated with:  a) An on-going business or professional practice, by way of trade name, trademark, service mark, or trade dress; b) A specific geographic location; or c) Specific marketing or trade area;
  5. Extraordinary or specialized training.”

The Florida Supreme Court’s Analysis

In White/Americare the Florida Supreme Court engaged in statutory interpretation to conclude home health referral sources were indeed legitimate business interests for several reasons.  First, the legislature’s stated examples were meant to be just that – examples.  The list was never intended to be exhaustive as clearly indicated by the words “includes but is not limited too.”

Second, the Court refused to interpret the statute in such a way so as to exclude a claimed legitimate business interest in non-identifiable prospective patients.  The Court tellingly stated “[g]enerally, it is improper to apply espressio unius to a statute in which the Legislature used the word include.  This follows the conventional rule in Florida that the Legislature uses the word “including” in a statute as a word of expansion, not one of limitation.” Slip opinion at 13.

Third, the Court noted that for home health care companies (HHCs), there is an “indispensable relationship between referral sources and their undisputed legitimate business interests in relationships with patients protected by the statute”  Furthermore, the Court noted that referral sources are somewhat analogous to customer goodwill which is expressly protected by the statute.  Slip opinion at 20.  It is important to understand the home health referral sources generally do not involve identifiable patients although the home health referral sources will hopefully result in referred patients who then of course become identifiable.

In reaching its conclusion, the Court was careful to point out that the statute does not protect covenants whose “sole purpose is to prevent competition per se because such contracts are void against public policy.  Even under Florida law with its pro-business stance, the courts have held that “[f]or an employer to be entitled to protection,   ‘there must be special facts present over and above ordinary competition such that, absent a non-competition agreement, the employee would gain an unfair advantage in future competition with the employer.’ ”  White/Americare citing Passal v. Naviant, Inc., 844 So. 2d 792, 795 (Fla. 4th DCA 2003).   Slip opinion at 21.

The statute also allows the courts to ameliorate any concern regarding overly restrictive covenants by commanding the courts to modify any non-competition agreement that is not reasonably necessary to protect the legitimate business interest and to grant only the relief necessary to protect such interests.  Fla. Stat. s. 542.115.  Here both non-competition agreements were limited to certain geographical areas – to the counties where the HHCs actually operated for a period of one year.

Conclusively, by finding for the HHCs, the Court was not expanding the reach of restrictive covenants to limit competition.  It was merely finding that the nature of an HHC-based business necessitates the classification of its referral sources as legitimate business interests.

Take-Home Points

After White/Americare, businesses may be able to more easily establish legitimate business interests to protect their interests in non-compete agreements where the alleged business interest is not specifically articulated by the statute.   The decision shows, however, that the analysis will be fact-specific, and that the agreement must still be reasonably tailored to cover a reasonable geographic area and time-frame.  The plaintiff will also need to be able to adequately explain why the subject matter is a legitimate business interest based on the nature of the business.

This commentator notes that the conduct of the employee in Hiles was particularly egregious with respect to her transferring of Americare’s confidential information, including patient information, to her personal e-mail account both before she even gave notice of her resignation and after she was let go a few days after giving notice to Americare prior to her notice’s specified “last day.”

Clearly the technology age has made the wrongful usage/theft of a business’s intellectual property and/or confidential information (intangible assets) easy.  It is up to businesses, no matter how small, to be proactive in protecting their intellectual property and confidential information from this wrongful usage.  As the White/Americare holding demonstrates for cases involving employees, a non-compete agreement does not always prevent problems after an employee resigns or is terminated.   Contact us to obtain a complimentary checklist of suggested steps to take to help protect your business’s intangible assets and thereby try to eliminate the need of future costly litigation to protect your business’s interests.

 

© 2017 by Troy & Schwartz, LLC

WE THANK YOU FOR READING THIS BLOG.  HOWEVER, THE FOREGOING IS NOT LEGAL ADVICE AND IS PRESENTED FOR INFORMATIONAL PURPOSES ONLY.  IF YOU ARE CONTEMPLATING ANY ACTION THAT MAY HAVE LEGAL CONSEQUENCES, YOU SHOULD CONSIDER CONSULTING WITH AN ATTORNEY.