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social mediaSocial media has provided near-countless ways for people to communicate with one another. The “marketplaces of ideas” that social media companies provide, however, require constant moderation in order to enforce rules against inappropriate and illegal content. Facebook, which is based in Northern California, has been the world’s largest social media service for over a decade, and now has more than two billion active monthly users. The company employs content moderators, through a staffing agency, to review posts by Facebook users and remove those that violate the service’s rules. A former content moderator has filed a putative class action alleging that the company has negligently failed to maintain a safe work environment for its content moderators, and that this has caused her to “suffer[] from significant psychological trauma and post-traumatic stress disorder.” Scola v. Facebook, Inc. et al, No. 18CIV05135, complaint at 2 (Cal. Super. Ct., San Mateo Cty., Sep. 21, 2018). The lawsuit also asserts several causes of action under the California Unfair Competition Law (CUCL). If you have a question about an issue you’re experiencing at work, contact a California business lawyer.

The Scola lawsuit is primarily based on the common-law theory of negligence. In order to prevail on a negligence claim in a court of law, a plaintiff must prove four elements by a preponderance of evidence: (1) the defendant owed a duty of care to the plaintiff or the general public; (2) the defendant breached this duty of care; (3) this breach was the proximate cause of the plaintiff’s injuries; and (4) the plaintiff has suffered a measurable loss because of these injuries.

The CUCL defines “unfair competition,” in part, as “any unlawful…business act or practice.” Cal. Bus. & Prof. Code § 17200. The plaintiff in Scola cites various provisions of the California Labor Code, and alleges that violations by the defendants constitute “unfair competition.” State law generally requires employers to “furnish employment and a place of employment that is safe and healthful for the employees therein.” Cal. Lab. Code § 6400(a). Employers must take various affirmative steps to safeguard the workplace and their employees, including the use of “an effective injury prevention program.” Id. at § 6401.7(a).
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trademark lawTrademark protection, while commonly associated with brand names, slogans, and logos, is available for almost anything visual or tangible that distinctly identifies a product or service. In some situations, this may include the shape of a product. The U.S. Patent and Trademark Office only has authority to register trademarks within the United States, so California businesses that operate abroad or in international commerce may need to seek additional protection. International registration is possible through a treaty framework known as the Madrid Protocol. The European Union (EU) also maintains a system for trademark registration for its member countries. The European Court of Justice (ECJ), the EU’s highest court, recently ruled on a trademark claim by Nestlé regarding the “four-finger” shape of its KitKat chocolate bar in Société des produits Nestlé SA v Mondelez UK Holdings & Services Ltd. A lower court had ruled that Nestlé’s trademark was invalid under EU law. The ECJ dismissed Nestlé’s appeal, affirming the lower court’s finding that the mark—i.e. the shape of the KitKat bar—did not meet the “distinctiveness” requirement. The legal basis for the ruling is similar to what might happen in a U.S. court. If you have questions about this often nuanced and complex area of law, get in touch with a California intellectual property attorney.

In order to obtain trademark protection through the USPTO, an applicant for registration must be able to demonstrate that they are using the mark in commerce, or that they have a “bona fide intention to use [it] in commerce.” 15 U.S.C. § 1127. The mark itself may consist of “any word, name, symbol, or device, or any combination thereof.” Id. Subject to certain restrictions, any mark that “has become distinctive of the applicant’s goods in commerce” may be eligible for registration. Id. at § 1052(f). The EU has similar requirements. The regulation in force at the time of the dispute in the Nestlé case specified that “trade marks which are devoid of any distinctive character” are ineligible for registration, unless a mark has become distinctive because of its use in connection with a particular good or service. European Council Regulation No. 207/2009 Arts. 7(1)(b), (3).

Nestlé first applied to the European Union Intellectual Property Office (EUIPO) to register the KitKat’s shape in March 2002. The EUIPO approved the application in July 2006. The following year, Cadbury, a competing candy bar maker, filed an application seeking to invalidate the trademark. The EUIPO granted the application and invalidated the trademark in 2011. An appellate board later reversed that decision, accepting Nestlé’s argument that the KitKat shape had acquired distinctiveness under Article 7(3) of Regulation 207/2009. Cadbury, through its parent company Mondelez, appealed this ruling to the European General Court (EGC).
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fists upState and federal wage laws require employers to pay a minimum wage and overtime to non-exempt employees. The U.S. Supreme Court has identified an exception when the alleged amount of unpaid wages is particularly small, known as the “de minimis doctrine.” It applies to wage claims under federal law, but not necessarily to state wage claims. The California Supreme Court recently ruled on a certified question from the Ninth Circuit Court of Appeals, asking whether the federal de minimis doctrine applies to California wage laws. The state high court ruled that it does not apply in Troester v. Starbucks Corp., No. S234969, slip op. (Cal., Jul. 26, 2018).

The federal Fair Labor Standards Act (FLSA) currently sets the national minimum wage at $7.25 per hour. 29 U.S.C. § 206(a)(1)(C). It allows states to enact their own statutes with a higher, but not lower, minimum wage. Id. at § 218(a). California law sets a minimum wage of $10.50 per hour for employers with up to twenty-five employees, and $11 per hour for employers with at least twenty-six employees. Cal. Lab. Code §§ 1182.12(b)(1)(B), (2)(A). Both state and federal law establish an overtime wage rate of one-and-a-half times a non-exempt employee’s usual wage for work in excess of forty hours in a week. 29 U.S.C. § 207(a)(1), Cal. Lab. Code § 510.

The FLSA’s de minimis doctrine holds that employers are not liable for wage law violations when the amounts in question are sufficiently small, based on three factors:
1. When the amount of time in question “is so miniscule that it cannot, as an administrative matter, be recorded for payroll purposes”;
2. When “the size of the aggregate claim” is “insubstantial”; and
3. When “the claimants [did not] perform[] the work on a regular basis.”
Lindow v. United States, 738 F. 2d 1057, 1063 (9th Cir. 1984). See also Anderson v. Mt. Clemens Pottery Co., 328 US 680, 692 (1946); 29 C.F.R. § 785.47.
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Without financing, home ownership would likely remain out of reach for most people in this country. Few homebuyers have the means to pay the full purchase price in cash. Mortgages typically include a deed of trust granting the lender the right to foreclose on the property. The foreclosure process allows the lender to recover some or all of their investment if a borrower defaults. Most deeds of trust include a “power of sale” clause, which allows a trustee designated by the lender to sell the property without a court order. This is known as nonjudicial foreclosure. California foreclosure law protects homeowners by requiring trustees and lenders to follow a rigid process before selling a property. Federal law protects consumers from unscrupulous debt collection practices, but courts have reached differing conclusions about whether federal debt collection laws apply to nonjudicial foreclosure. The U.S. Supreme Court recently agreed to hear a case that raises this question, Obduskey v. McCarthy & Holthus LLP.Legal News Gavel

The federal Fair Debt Collection Practices Act (FDCPA) prohibits “abusive, deceptive, and unfair debt collection practices” by debt collectors. 15 U.S.C. § 1692(a). It defines “debt collectors” as anyone who “collects or attempts to collect” debts owed to other people or businesses in interstate commerce, or who engages in such activities as a regular business. Id. at § 1692a(6). In addition to its prohibitions on misleading and abusive practices, the FDCPA also requires debt collectors, after contacting a consumer regarding an alleged debt, to provide them with information validating the debt. Id. at § 1692g.

California’s nonjudicial foreclosure laws also require notice and disclosures to debtors. A mortgage lender or trustee must provide notice to a borrower at least 30 days before filing a notice of default in the public record, and it cannot conduct a sale of the property for several months after that. Cal. Civ. Code §§ 2923.5, 2924. California homeowners’ associations (HOAs) can pursue nonjudicial foreclosure as a remedy for unpaid assessments, but only if the total delinquent amount is at least $1,800, or the delinquency has persisted for over 12 months. Id. at § 5730. In addition to various notice requirements, an HOA’s board must vote on the foreclosure at least 30 days before they may sell the property. Id. at § 5705.

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Copyright law allows the owners of copyrighted works to control or prevent the use of those works by others. The Fair Use Doctrine sets limits on copyright owners’ ability to prevent certain unauthorized uses, such as the inclusion of a copyrighted image in a news report or the use of a copyrighted film clip by a film critic. Courts have also recognized an exception to copyright infringement when the unauthorized use of a copyrighted work is deemed “de minimis,” or too minor and trivial to merit court intervention. A recent New York court ruling, Gayle v. Home Box Office, Inc., No. 1:17-cv-05867, mem. op. (S.D.N.Y., May 1, 2018), addressed a de minimis claim in a case alleging copyright infringement. Courts have reached similar rulings in California intellectual property cases involving music, software, and other copyrighted works.Legal News Gavel

Federal law allows copyright protection for “original works of authorship fixed in any tangible medium of expression.” 17 U.S.C. § 102(a). The owner of a copyrighted work has the exclusive right to use the work for a wide range of purposes, including making and distributing copies of the work and creating new derivative works. Id. at § 106. The Fair Use Doctrine allows certain unlicensed or unauthorized uses, however, “for purposes such as criticism, comment, news reporting, teaching…, scholarship, or research.” Id. at § 107. The statute identifies several factors to consider in determining whether Fair Use should apply, including the “substantiality” of the infringing use.

The de minimis exception gets its name from the legal maxim “de minimis non curat lex,” or “the law does not govern trifles.” It is partly derived from the “substantiality” element of Fair Use, but it is not necessarily an example of Fair Use. The Ninth Circuit has held that “a use is de minimis only if the average audience would not recognize the appropriation.” Newton v. Diamond, 388 F.3d 1189, 1193 (9th Cir. 2004). The Second Circuit has held that the de minimis exception involves copyright infringement that is “so trivial that the law will not impose legal consequences.” Ringgold v. Black Entertainment Television, Inc., 126 F.3d 70, 74 (2d Cir. 1997).
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Legal News GavelWhen a company does business across state lines, it may need to consider questions about jurisdiction over various potential disputes. An extensive and complicated body of law addresses when and how courts may exercise personal jurisdiction over defendants. Many contracts include “choice of law” or “forum selection” provisions, which identify a specific state and county as the proper jurisdiction and venue for lawsuits. The Delaware Court of Chancery recently ruled on a dispute over a choice of law provision, in which the defendant argued that the plaintiffs’ consent to jurisdiction in Kentucky required them to bring their lawsuit there. The court disagreed, noting that the contract did not “contain clear language indicating that litigation will proceed exclusively in the designated forum.” In re Bay Hills Emerging Partners I, L.P., et al, C.A. No. 2018-0234-JRS, mem. op. at 13 (Del. Ct. Chanc., Jul. 2, 2018).

Forum selection is an important part of any contract that involves parties in different jurisdictions, especially when relevant laws significantly differ from one another. This includes conflicts between the laws of two or more states, and conflicts between federal and state law. The parties to a contract need to know which laws will apply. Courts have developed rules and procedures for determining which jurisdiction’s laws apply in a particular situation, but that procedure is never simple or easy. Agreeing in advance to jurisdiction and venue can save a great deal of headache in many situations.

The defendant in Bay Hills is the official administrator of the Commonwealth of Kentucky’s retirement system. Through investments, it became the sole limited partner in four Delaware-based limited partnerships (LPs). It executed limited partnership agreements (LPAs) that included provisions allowing it to remove general partners “for cause.” Bay Hills at 4. In May 2017, the defendant exercised this right as to the general partners of all four LPs. It later withdrew its notice of removal, but served a second notice of removal on all four general partners in February 2018.
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Legal News GavelCybersecurity and data privacy are vital issues that business owners need to understand. Many Northern California businesses rely on the availability of customer data for their business operations. State and federal cybersecurity and privacy laws require businesses to take various steps to safeguard certain types of customer information. Businesses that have an international presence must also abide by certain international treaties and the laws of some foreign countries. Since 2015, the U.S. and the European Union (E.U.) have attempted to develop a framework that allows U.S. companies to transmit customer information from Europe, while protecting European consumers’ privacy. They agreed on a framework known as the “EU-US Privacy Shield” in 2016. A recent ruling from an Irish court, however, could significantly alter the flow of information from European consumers to U.S. businesses.

The Privacy Act of 1974, 5 U.S.C. § 552a, regulates the U.S. government’s use of information commonly known as “personally identifiable information” (PII). This includes names, addresses, Social Security and other identification numbers, and other information that can be used to identify a specific individual. The applicability of these protections to people outside the United States remains uncertain. Congress expanded the scope of the Privacy Act to include nationals of designated foreign countries in the Judicial Redress Act of 2015. Pub. L. 114-126, 130 Stat. 282 (Feb. 24, 2016). The White House, however, has directed federal agencies to “exclude persons who are not United States citizens or lawful permanent residents from the protections of the Privacy Act.” Exec. Order 13768, 82 Fed. Reg. 8799, 8802 (Jan. 30, 2017).

The U.S. and the E.U. developed a framework known as the International Safe Harbor Privacy Principles to address the handling of PII by private companies across national borders. The European Court of Justice (ECJ) ruled in 2000 that these principles were consistent with the E.U.’s Data Protection Directive, Directive 95/46/EC, which was in force at the time. The rise of social media, however, led to a complaint in 2014 from an Austrian citizen who was concerned about PII held by the social media company Facebook at its subsidiary facility in Ireland. Rather than concerns about identity theft, the complainant alleged that information submitted to Facebook would be subject to surveillance by the U.S. government.
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Legal News GavelPatent law gives inventors and designers to the right to exclusive use of their creations. These rights are similar to those granted by trademark registration, but the process of applying for a patent is usually much more complicated. In the event of infringement, patent and trademark owners have the right to sue for damages and to enjoin further unauthorized uses. A pair of lawsuits filed earlier this year by two competing tech companies demonstrate both the complexity of patent law and the types of business disputes that can arise in connection with alleged patent infringement. California businesses are undoubtedly familiar with many of the patent issues raised in Match Group, LLC v. Bumble Trading Inc. (“Match”), No. 6:18-cv-00080, complaint (W.D. Tex., Mar. 16, 2018), as well as the business torts alleged by Bumble Trading Inc. v. Match Group, LLC (“Bumble”), No. DC-18-04140, orig. pet. (Tex. Dist., Dallas Cty., Mar. 28, 2018).

Federal law allows patent protection for “new and useful” inventions, or “any new and useful improvement thereof.” 35 U.S.C. § 101. Patents that cover “useful” inventions are commonly known as “utility patents.” A “design patent” covers “new, original and ornamental design[s]” that are associated with a product without affecting its function. Id. at § 171(a). Both types of patents are protected from infringement, defined to include “mak[ing], us[ing], offer[ing] to sell, or sell[ing]” patented material without permission. Id. at § 271.

A trademark is a name, phrase, logo, or other design “by which the goods of the applicant may be distinguished from the goods of others.” 15 U.S.C. § 1052. More general designs and shapes that are associated with particular products are known as “trade dress.” Trademark law protects trade dress to the extent that it serves to identify a product. Federal law allows trademark owners to sue for various acts constituting infringement, including unauthorized use of copies or reproductions of a trademark in ways that are likely to cause confusion or dilution. Id. at §§ 1114(a), 1125(a).
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Legal News GavelCopyright law gives authors of creative works the ability to use those works in commerce, to license their use by others, and to prevent unauthorized use. This applies to a wide range of “works of authorship” that are “fixed in any tangible medium of expression.” See 17 U.S.C. § 102(a). Copyright owners have various exclusive rights, subject to various limitations. A recent Ninth Circuit Court of Appeals decision addressed a limitation on exclusive rights to a pictorial work that may be relevant to California intellectual property cases. The court held that the allegedly infringing work, a logo used in athletic apparel, was not “substantially similar” to a photograph taken by the plaintiff over 40 years ago, and therefore it did not infringe the copyright. Rentmeester v. Nike, Inc., 883 F. 3d 1111 (9th Cir. 2018).

Copyright protection only extends to fixed forms of creative works, rather than the ideas behind the works. A work that uses similar concepts or ideas as a copyrighted work probably does not infringe that copyright unless it copies or reproduces specific, recognizable parts of the copyrighted work. The Ninth Circuit looks at whether a copyrighted work and an allegedly infringing work are “substantially similar” to each other. It outlined this standard in a decision involving the alleged infringement of Apple’s Macintosh operating system (OS) by Microsoft’s Windows OS in Apple v. Microsoft, 35 F.3d 1435 (9th Cir. 1994). The court looked at both “intrinsic” similarities “from the standpoint of the ordinary reasonable observer, with no expert assistance,” and “extrinsic…similarities in both ideas and expression.” Id. at 1442. It ruled against Apple’s infringement claims, concluding that the similar elements of the two OS’s were either licensed uses or were derived “from basic ideas and their obvious expression.” Id. at 1447. See also Mattel, Inc. v. MGA Entertainment, Inc., 616 F. 3d 904, 913-14 (9th Cir. 2010).

The work at issue in Rentmeester is the “Jumpman” logo used by Nike on basketball shoes and other products. The logo is based on a famous photograph of the basketball player Michael Jordan, which was taken by the plaintiff in 1984. The photograph depicted Jordan, who had not yet begun his professional basketball career, in a unique pose “inspired by ballet’s grand jeté.” Rentmeester, 883 F.3d at 1115. Life Magazine published the photograph that year as part of coverage of the upcoming Summer Olympic Games in Los Angeles. The plaintiff licensed the photo to Nike that year “for slide presentation only.” Id. at 1116.

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Legal News GavelThe United States Constitution grants authority to the federal judiciary to hear “cases and controversies” arising under various circumstances. U.S. Const., Art. III, § 2, cl. 1. If a plaintiff does not present a justiciable controversy, federal courts lack subject matter jurisdiction to hear the case. One part of this analysis involves determining whether a plaintiff has standing to sue. The U.S. Supreme Court has defined a general test to determine standing, which requires evidence of an “injury in fact,” a “causal connection” between this injury and the defendant’s alleged conduct, and a likelihood that a “favorable decision” would redress the injury. Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61 (1992). The court further addressed the “injury in fact” requirement in Spokeo, Inc. v. Robins, 578 U.S. ___ (2016), finding that the Ninth Circuit needed to consider both the “concrete” and the “particularized” aspects of the alleged injury. The Ninth Circuit, whose jurisdiction includes many California business disputes, cited Spokeo in two recent decisions finding that plaintiffs lacked standing to sue for alleged violations of a federal consumer protection statute. Bassett v. ABM Parking Services, Inc., 883 F. 3d 776 (9th Cir. 2018); Noble v. Nevada Checker Cab Corporation, No. 16-16573, slip op. (9th Cir., Mar. 9, 2018).

Both Bassett and Noble alleged violations of the Fair and Accurate Credit Transactions Act (FACTA) of 2003. This law amended the Fair Credit Reporting Act (FCRA), 15 U.S.C. § 1681 et seq., with various provisions granting consumers access to their own credit information and protecting against identity theft. Thanks to FACTA, consumers can receive a copy of their credit report from each of the major credit reporting agencies once a year, free of charge.

The two Ninth Circuit cases alleged violations of FACTA provisions requiring the truncation of credit and debit card numbers, printing no “more than the last 5 digits of the card number or the expiration date,” on receipts provided to consumers at the point of sale. Id. at § 1681c(g). Willful noncompliance with these requirements can result in liability to an aggrieved consumer for damages of $100 to $1,000, as well as actual damages and attorney’s fees. Id. at § 1681n(a).
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