Monday, March 27th, 2006
Yes, but one size does not fit all. Recent Virginia Supreme Court decisions demonstrate the importance of properly tailoring an agreement to address the specific interests of the company and the activities of the employee. While the duration and geographic scope of the noncompetition agreement remain critically important, companies must now pay particular attention to the type of activity that they seek to prohibit their employee from performing. The activities which the employee is prohibited from performing should be limited to: (1) the same or similar type of work performed by the employee for the company and (2) activities that are in actual competition with the company.
The first component is often referred to as the “janitor” rule. If the noncompete provision prevents the employee from working for a competing company in “any capacity” or in a non-competing role (i.e. as a janitor), the Court may likely conclude it is overbroad. For example, if Suzie the sales manager is prohibited from working as “an employee for a competing company,” the agreement may be overbroad because Suzie is arguably prohibited from working in a non-competing position such as a janitor. The language of the agreement should be limited to preventing Suzie from working in the same or similar position for a competing company. Simply put, if the noncompete agreement overreaches, it provides opposing counsel, and the court for that matter, the opportunity to conjure up hypothetical scenarios (no matter how absurd) that may render the agreement meaningless.
The second and equally important component is to make sure that the restriction is limited to working for competing companies. While such a statement may seem obvious, many agreements overreach. For example, if Suzie the sales manager is prohibited from working in sales for a company that is the same or similar to her former company, the court may still strike down the agreement because it did not limit the restriction to “competing” companies.
The lessons are clear. Noncompetition agreements need to be reasonable not only as to duration and geographic scope, but also as to the activities to be prohibited. Likewise, not every employee should be required to sign an agreement or the same agreement as it potentially dilutes the importance of those agreements that really matter. Given the recent case decisions, existing agreements should be reviewed to ensure that they are not overbroad and actually worth the paper they are written on.
Friday, March 17th, 2006
Economic Development is the implementation of a very well-defined plan by a community, region or state to attract new businesses and help existing ones grow. Success depends on an awareness of the importance of growth, and sincere cooperation among regional governments, the business community and the general public. For Western Virginia, it may be the difference between being competitive and being left behind.
The business of economic development should not be reserved only to our local governments. It is the responsibility of the business leaders in the Roanoke and New River Valleys and the Alleghany Highlands to assume a major role in the discussions about how to enhance economic prosperity in the NewVa region.
We have most of what it takes to successfully compete with other communities and states for companies that create new jobs and improve our economy: land available for development; a skilled workforce and the means to retrain them; reasonable taxes and low electricity costs; accessibility by road, rail and air; good public schools; a vibrant urban center; close proximity to local colleges and a major research university; a growing spirit of entrepreneurship that embraces technology, research and development; significant arts and cultural amenities; beautiful surroundings with boundless recreational activities; a wonderful quality of life; and local governments in the Roanoke Valley that continue to increase the level of cooperation among themselves, as evidenced by the creation of the Western Virginia Water Authority between Roanoke City and Roanoke County, and the new regional jail that will serve Roanoke County, Roanoke City, Salem and Montgomery County. Importantly, Expansion Magazine has recognized the Roanoke region as one of the best places to locate a company for the last five years. This is confirmed by the fact that Koyo Steering Systems of USA, Dynax America, Virginia Forge, Integrity Windows & Doors, Cardinal Glass, Trinity Packaging, Tecton and others have located plants here, and Novozymes Biologicals, MW Windows and ITT Night Vision and others have expanded, resulting in more than 6,000 announced new jobs and more than $770 million in announced new investment.
What is lacking is a level of awareness of the benefit of promoting ourselves as a greater region; state and regional elected officials who consistently make decisions that are pro-business, pro-economic development, and pro-regionalism; adequate funding to compete with other states that offer incentive packages far in excess of what Virginia can do; and most important, a clear, cohesive, collaborative regional economic strategy supported by all constituents.
What is needed is an unwavering commitment to improve communications among all stakeholders to eliminate suspicion and break down the barriers that hold us back, and acceptance of the results of the Regional Economic Strategy developed by the Fifth Planning District Regional Alliance in 2002. The strategy identified six objectives and the tactics necessary to satisfy them: Regional Visibility, Connectivity, Quality of Life Amenities, Knowledge Workforce, Innovation and Entrepreneurship, and Economic Transformation (www.rvarc.org/alliance). Most of the tactics under each objective have been completed or are in process. One that remains is the adoption and full use of NewVa, the new regional brand identity, by all those who live and work in the communities that comprise the NewVa region. What matters is not whether everyone likes the new name or logo, but what it will do, which is to cause others to identify us as a greater region, and us to realize that we are only as good as the sum of our collective parts. The business community needs to get behind an effort to update the Regional Economic Strategy, identify new objectives that will greatly enhance our competitiveness as a region, and have the will to take the steps necessary to successfully implement that plan.
This is a rallying cry to every business person who reads the Blue Ridge Business Journal. Take the time to become knowledgeable of the good work being done by the Roanoke Regional Chamber of Commerce, the Roanoke Valley Economic Development Partnership, the New River Valley Economic Development Partnership, the New River Valley Alliance, the Roanoke Valley Business Council, the NewVa Corridor Technology Council, the Center for Innovative Strategies, and other organizations involved in economic development. Get actively involved, talk about these issues openly, and encourage dialog and understanding. Make it a part of your company’s business plan to support these efforts financially and with your time and talent. Our futures depend on it.
Friday, March 17th, 2006
Land is a finite resource. Planning for its use may determine the future of a community, and will likely be the difference between smart growth and haphazard or no growth. Understanding the concepts, terminology and process used in setting land use policy is the key to successful zoning decisions.
What is a comprehensive plan?
A comprehensive plan is a document containing the general principles and goals intended to guide land use decisions. Virginia law requires local governments to update their comprehensive plans every five years. A municipality will often invite its citizens to participate in this process. The result should be a comprehensive plan that encompasses the collective vision of a community as to how land should be used.
How does zoning relate to a comprehensive plan?
Zoning ordinances specify which uses are authorized in each zoning district and contain the procedures that must be satisfied in order to change the use of a parcel of land. Local governments should revise their zoning ordinances following any update of a comprehensive plan to ensure consistency and to implement the objectives of the plan.
What is a “permitted” use?
A permitted use is one that is allowed by right in a zoning district without any further approval by a municipality. Land may not be put to a use not permitted by right unless it is approved for a “special” use or is rezoned.
What is a “special” use?
Zoning ordinances generally contain a separate category of uses in each zoning district that may be allowed only if a municipality issues a “special use permit” or approves a “special exception.” These terms may be used interchangeably.
Who makes these decisions?
Zoning decisions are made by the governing body of a municipality – City Council, Town Council or a Board of Supervisors for a County. Zoning applications are first reviewed by planning staff and considered at a public hearing by a Planning Commission appointed by the governing body to make recommendations. The governing body, after a separate public hearing, makes the decision to approve or deny the request. Any appeal of the decision is made to the Circuit Court of that jurisdiction.
What is a “variance”?
A variance is a request for a waiver or modification of a requirement that must be satisfied in order to obtain approval for a particular use. Requests for variances often relate to a technical requirement, such as a setback from adjacent property. Under Virginia law, variances may be granted only in very limited circumstances. The basis for any variance must relate to a particular circumstance unique to a specific parcel, such as its size, shape or other peculiar circumstance. The failure to grant a variance must also be shown to cause an “undue hardship”. These decisions are generally made by a Board of Zoning Appeals, which is a special body authorized by state law and typically appointed by the Circuit Court of a locality for this purpose.
What are “development standards”?
These are technical requirements that must be satisfied in order to obtain a building permit once a zoning request is approved. A site plan for development for the project must be submitted demonstrating compliance with the applicable development standards. Understanding how these standards apply to a particular project is often times more important than the rezoning itself. Requesting advice from an experienced lawyer or engineer may be a prudent investment in order to avoid unforeseen and expensive pitfalls that impede the success of the project.
It is true that there isn’t any more land being made. But through proper planning and reasonable and consistent land use decisions, we should be able to make the most of what there is.
Friday, March 17th, 2006
Communications technology changes almost daily. Often, both statutory and case law lag behind the new technology. In this dynamic environment, there is necessarily unpredictability that makes us all uncomfortable. As lawyers it is our role to bring some predictability that the business world demands. Here are several questions growing out of our reliance on this rapidly evolving technology.
As an employer, may I monitor use of company computers by my employees?
Congress enacted the Electronic Communications Privacy Act in 2003 when employee use of e-mail was not as wide spread. The ECPA is potentially broad enough to encompass electronic communication by computer. The ECPA’s precise scope and effect remain undetermined; however, employer monitoring is not expressly exempted. An employer wishing to retain the authority to monitor employee e-mail should use exceptions such as consensual monitoring, monitoring by the service provider, and monitoring done in the ordinary course of business. To do so, an employer should adopt computer use policies defining computer system ownership (both hardware and software), employee usage as permissive only and not by right, and employee usage as constituting agreement to monitoring, so that there is no expectation of privacy. As with all personnel policies, employers should retain documentary evidence that each employee has received and acknowledged the policy.
I make extensive use of my cell phone in my business but there is a gap in the coverage area of my wireless company. What is the likelihood that my locality would allow a new cell tower to fill the gap?
In 1996, Congress enacted the Telecommunications Act (TCA). The TCA attempts to balance two competing interests: the need to accelerate the deployment of telecommunications technology and the desire to preserve state and local control over zoning matters. Applying the TCA, our own Fourth Circuit has been very protective of local zoning powers. Of course, in exercising the zoning power, local governments must adhere to traditional state zoning law principles. Localities, therefore, do not have a blank check to act arbitrarily and unreasonably in denying applications for new wireless facilities. Also, over the last several years, most local governments have come to realize that businesses rely heavily on wireless communications (lack of coverage can be an economic development deterrent) and that citizens demand coverage for reasons of safety and convenience. Accordingly, some local ordinances have adopted a more moderate approach, allowing new towers of reasonable height when antennas cannot be collocated on existing facilities. Therefore, if your carrier can find a location that is not incompatible with the surrounding neighborhood, there is a reasonable likelihood that a new tower would be permitted to address a significant gap in coverage.
I use a web phone. Will I have the security of 911 protection with my web phone?
On May 19, the Federal Communications Commission (FCC) issued an order on so called “web phones” or Voice Over Internet Protocol (VOIP) which will set strict new 911 requirements for most Internet phone providers. The order applies to interconnected VOIP service providers that are similar to traditional telephone providers in that they allow customers to receive calls from and terminate calls to the public switched telephone network. Interconnected VOIP providers must deliver all 911 calls to the customer’s local emergency operator as a standard, rather than an optional service feature. Interconnected VOIP providers must also provide emergency operators with the callback number and location information of their customers (E911) where the emergency operator is capable of receiving it. Although the customer must provide the location information, the VOIP provider must provide the customer a means of updating this information, whether he or she is at home or away from home. Service providers must comply with the new regulations no later than 120 days after the effective date. Legislation similar to the FCC requirements has been introduced in both the U. S. Senate and House.
Friday, March 17th, 2006
Over the last five to ten years, the remediation and redevelopment of contaminated property, commonly called “brownfields,” has become more prevalent, in part due to both federal and state legislation which makes remediation of contaminated property easier, and provides additional liability protections for those undertaking cleanups. A “brownfield” is generally defined as “real property, the expansion, redevelopment, or reuse of which may be complicated by the presence or potential presence of a hazardous substance, pollutant, or contaminant.”
A state voluntary cleanup program, and new liability protections under federal and Virginia Brownfields Acts, are two of the major drivers of land renewal in Virginia.
What is the Voluntary Remediation Program?
The cornerstone of land renewal in Virginia is the Voluntary Remediation Program (“VRP”), administered by the Virginia Department of Environmental Quality (“VDEQ”). Through the VRP, an owner or buyer of contaminated real estate can clean up a site to risk based standards, put the property back into use, and not incur liability relating to the disclosed environmental contamination. The VRP is only available if no other regulatory scheme mandates cleanup.
The VRP allows owners or purchasers of contaminated property to voluntarily undertake cleanup of the property based on risk-based standards, rather than the more draconian cleanup standards found in many environmental laws. These risk-based standards take a more common sense approach, for the most part, and look at real threats to human health and the environment. A remediation strategy is suggested by the applicant, and then approved by the VDEQ. Remediation under the VRP can be significantly cheaper and take less time.
Upon completion of the VRP, the applicant is issued a Certificate which gives the owner or purchaser protection from liability regarding the contamination addressed in the VRP (but not unknown contamination).
What Statutory Liability Protections Are Available?
Both the federal and state statutes provide additional liability protections for certain owners and buyers in an effort to provide assurance that if a brownfield is redeveloped, liability for certain contamination will not be an issue at the time of acquisition or at any time in the future. These protections are not absolute, and do not apply to all environmental liabilities, but are helpful and significant nevertheless. The liability protections apply to three different types of parties: prospective purchasers, contiguous landowners, and innocent landowners. New regulations which go into effect in November 2006 set forth what must be done in order to qualify for the liability protections.
The VRP and the new statutory liability protections provide more, albeit limited, protection for purchasers of Brownfields than has existed in the past, and should aid in getting unused or underutilized properties back in productive use.
Thursday, March 16th, 2006
Accountants to Veterinarians: Professional Liability a Concern
Issues arising from professional liability should be of great interest to professionals in today’s business environment. The general public has become increasingly aware of its legal and contractual rights and seemingly believe that a legal action may, and should, be initiated from any factual scenario that leads to an unexpected outcome. As lawyers, we are faced with these issues on a day-to-day basis – both from a preventative standpoint and in a representative capacity.
What is a professional?
Professionals are generally defined as those with specialized knowledge in a profession with labor and skill that is predominantly mental or intellectual, as opposed to physical or manual. The Virginia Code defines “professional service” as “any type of personal service to the public which requires as a condition precedent to the rendering of such service or use of such title the obtaining of a license, certification or other legal authorization and shall be limited to the personal services rendered by pharmacists, optometrists, practitioners of the healing arts, nurse practitioners, practitioners of the behavioral science professions, veterinarians, surgeons, dentists, architects, professional engineers, land surveyors, certified landscape architects, certified interior designers, public accountants, certified public accountants, attorneys-at-law, insurance consultants, audiologists or speech pathologists, and clinical nurse specialists.”
What is professional liability?
Although it can be considered a breach of a contract, professional liability generally arises where a professional is negligent, that is, where the professional breaches a duty of care to another person. For example, a doctor has a duty of care to a patient, and accountants, lawyers, engineers, architects, contractors and real estate agents have a duty of care to their clients. The duty is to perform the required task to the standard of skill, care and diligence of a reasonable person performing similar work. A person who suffers a loss because of a negligent act can make a civil claim for compensation for that loss.
Why be concerned?
It is a fact of life that mistakes and misunderstandings happen in business. An unsatisfied client can sue you or your business even if you believe there is no basis for it. Initially, you will be forced to seek and retain legal counsel. Defense costs can be significant, even for a single case. Also, if you were to lose a suit, you could be forced to pay damages or fines. Again, the costs could be high. Finally, the publicity generated by such an action, if negative, could be devastating to your business. You could lose some of your current clients or have difficulty attracting new ones in the future. It is important to note that, according to the Virginia Code, professionals have personal liability and cannot be protected from liability for professional negligence by a corporation.
What can I do to avoid professional liability?
Although certainly not an exhaustive list, the following suggestions can help limit your susceptibility to such a claim:
- Make sure that everyone is on the same page from the beginning – a simple “engagement letter” agreed to by all of the parties involved can help with differences down the road
- Involve good attorneys to review documents and provide advice in specific situations
- Limit your involvement to assignments or projects that are within your realm of expertise
- Have accountants review financial records and prepare tax returns on a regular basis
- Document your client files as extensively as possible; do not ignore continuing problems
- Be responsive to client needs and keep the client informed (i.e. return phone calls and letters)
- Buy plenty of the necessary insurance from a reputable company
Monday, September 19th, 2005
Keith Ferrell is a free lance writer based in Franklin County. Reprinted from the Sept. 19, 2005 edition of the Blue Ridge Business Journal.
If you have to see an ophthalmologist as a result of the eyestrain you get from reading the hundreds of pages of government prose in the Health Insurance Portability and Accountability Act (HIPAA) — or for that matter a physical therapist for your strained back from picking it up — you can rest assured that its provisions are intended to protect both the continuity of your health care coverage, and the privacy of your personal medical records.
That, anyway, is the intent.
But a funny thing happened on the way to the Act’s implementation: the Internet.
The portability aspects of HIPAA are designed to provide continuity of coverage should you change jobs, requiring that a new employer enrolling you in a group health plan within two months of your leaving your former job not impose pre-existing condition restrictions on treatments covered under your previous plan.
So far, so good.
Another, and in most ways larger, aspect of the initial plan was designed to simplify medical administration, and through simplification reduce skyrocketing costs.
The result of decades of work by committees and industry groups, HIPAA included among its goals the creation of a uniform set of claims codes for electronic transmission, filing and management of health care coverage records.
According to some sources, this is one case of a government cost-savings initiative that has actually worked, generating administrative savings measured in the billions.
But as HIPAA progressed through the actual stages of its phased implementation, beginning in 1996, Congress became concerned that the increasingly electronic world of medicine offered substantial opportunity for medical records to lose their privacy through intercepted emails, hacked computers and other dangers of our digital age.
Enter security
Enter the privacy and security aspects of HIPAA.
“Broadly,” says Heman Marshall of Roanoke law firm Woods Rogers, “the purpose of the privacy aspects is to restrict unauthorized and unnecessary disclosures of protected health information (PHI).”
Additionally, HIPAA provided, for the first time, a national policy guaranteeing patients the right to have access to their medical records.
PHI privacy regulations went into effect in 2003, affecting who is permitted to have access to medical records.
Compliance-required security rules took hold in 2004, requiring that physical medical records be kept behind locked doors, with the digital equivalent of those locks required for electronic files.
Penalties for violations by organizations and companies covered by the rules — known by the government as “covered entities” — include both monetary fines and possible prison terms.
Compliance
Who’s required to comply?
“Covered entities include health care providers that transmit PHI electronically,” Marshall says, “as well as health care clearinghouses (companies that convert healthcare data from one form to another) and health plans, including health insurers, HMOs, PPOs and employee health plans.”
The important thing to understand is that it is the plan — insurance companies, health care providers, Medicare, Medicaid, etc. –that’s covered by HIPAA, not the employer.
Clearly a business owner who’s a physician, or whose business is a pharmacy, would be considered a covered entity — as far as medical records of patients and customers goes. (Personnel files are not covered under HIPAA — only medical records.)
But a typical business which provides employees with third-party health insurance would not be. The insurance company is the HIPAA-affected covered entity.
Should the company provide self-funded group coverage, though, the company may becomes a covered entity, depending on the size of the coverage and the number of claims filed each year.
Self-funding organizations that are HIPAA-bound are required to keep those aspects of the business that deal with protected PHI records separate from other office management.
Medical records must be kept separate from other aspects of the employee’s personnel file.
Need to know
“Only the people who need to know the information should have any access to it,” says Roanoke attorney Robyn Ellis of Gentry Locke Rakes & Moore. “Benefits administrators, human resource directors — these are the only people who should have access.”
The problem for small and medium-size businesses lies in determining whether they may provide a benefit or service that itself could be considered a covered entity.
Does a weight-loss or stop-smoking program that keeps track of employee progress count as a covered entity? What about an on-site clinic or nurse’s station?
“Generally,” says Ellis, who has written frequently on HIPAA-related topics, “these sorts of programs are managed by outside contractors, who are the HIPAA covered entities. But if an employer has a health care professional on staff, there are HIPAA issues that should be reviewed with a qualified consultant or attorney.”
There are other complications. Suppose you’re an employer who is designated as a HIPAA covered entity.
Should one of your employees change jobs, and request that health coverage records be forwarded to the new employer, that request — like all medical records access requests – must be made in writing, on an official HIPAA authorization form. Without that authorization, employers must keep the records under lock and key.
HIPAA has also run into inconsistencies with state health records requirements. “HIPAA has to be read together with state laws on medical information privacy,” Marshall notes.
In addressing those inconsistencies, the rules again become complex.
“As far as access to medical records,” Marshall says, “the stricter of the two privacy rules trumps. But in terms of the patient’s own access to medical records, the regulation that provides patients with the most access trumps.”
Most employers and employees are insulated from the variety of questions and fine-points surrounding HIPAA: responsibility for meeting the guidelines rests with the actual plan administrators.
But should you want learn more — or be concerned that you need to — there are plenty of resources available.
“There’s a lot of HIPAA information available,” Marshall says, “both on the Web, and in books. Human resource associations have also put together a large amount of information. People can also get help from qualified consultants and lawyers.”
One word of warning: if you do decide to read the actual HIPAA regulations yourself, don’t drop it on your foot.
Wednesday, December 15th, 2004
- Sherman Act
- Restraint of Trade
- Every contract, combination or conspiracy in restraint of trade or commerce among the States is illegal. 15 U.S.C. Section 1.
- A restraint of trade cause of action requires showing that:
- the activities are in or affect interstate or foreign commerce;
- the activities are performed by two or more persons;
- the activities are the result of concerted action;
- the concerted action is a restraint on commerce; and
- the restraint is unreasonable.
See Levine v. McLeskey, 881 F. Supp. 1030, 1044 (E.D. Va. 1995); Estate Constr. Co. v. Miller & Smith Holding Co., 14 F. 3d 213, 220 (4th Cir. 1994).
- The following tests are used to determine if a restraint on trade is unreasonable:
- Per se unreasonable restraints. Examples include: price fixing, group boycotts (concerted refusals to deal), and market allocation agreements among competitors.
- Rule of reason (most cases)Evaluate the situation on a case-by-case basis and consider the impact of competition in the relevant market. See Berlyn, Inc. v. Gazette Newspapers, Inc., 157 F. Supp. 2d 609, 615-16 (D. Md. 2001).
- Monopoly
- Monopolizing or attempting to monopolize, or combining or conspiring to monopolize, any part of the trade or commerce among States is illegal. 15 U.S.C. Section 2. Monopoly power is the power to control prices or exclude competition. Price maker rather than price taker.
- The defendant must possess monopoly power in the relevant market and must willfully acquire and maintain that power. See Levine v. McLeskey, 881 F. Supp. 1030, 1046 (E.D. Va. 1995).
- Having a monopoly legitimately is not illegal. These monopolies are tolerated but not cherished by the antitrust laws.
- Concerted action is not required, but two or more parties combining to monopolize is still a violation. William C. Holmes, Intellectual Property and Antitrust Law Sections 6.01, 6.03 (West 2004).
- Attempt to monopolize requires:
- specific intent to achieve monopoly in the relevant market;
- anticompetitive or predatory actions; and
- dangerous probability of successfully achieving monopoly power.
- Conspiracy to monopolize requires:
- concerted action;
- specific intent to achieve unlawful monopoly;
- commission of overt act in furtherance of conspiracy; and
- antitrust injury. See Virginia Vermiculite v. W.R. Grace & Co., 144 F. Supp. 2d 558, 590 (W.D. Va. 2001).
- Predatory pricing. A competitor, particularly one with significant market power, cannot price its goods or services below cost in an effort to hurt competition.
- Clayton Act
- A. Price Discrimination (Robinson-Patman Act)
- Unlawful to discriminate in price between different purchasers of commodities of like grade and quality where the effect of the discrimination may be substantially to lessen competition or to create a monopoly. 15 U.S.C. Section 13(a).
- Most services are not a “commodity” under federal law. See Berlyn, Inc. v. Gazette Newspapers, Inc., 157 F. Supp. 2d 609, 621 (D. Md. 2001).
- Mergers/Acquisitions
- Acquisitions that may substantially lessen competition or create a monopoly are prohibited. 15 U.S.C. Section 18.
- Virginia Antitrust Act
- Contract, combination or conspiracy in restraint of trade or commerce of the Commonwealth is unlawful. Va. Code Section 59.1-95.
- Conspiracy, combination, attempt to monopolize, or monopolization of trade or commerce of the Commonwealth is unlawful. Va. Code Section 59.1-9.6.
- Unlawful to discriminate in price between different purchasers of commodities[1] or services[2] of like grade or quality, where the purchasers are in competition and where the discrimination may substantially lessen competition or may tend to create a monopoly. Va. Code Section 59.1-9.7(a).
- Copyright Act
- Copyrightable Material
- Certain categories of materials are copyrightable. 17 U.S.C. Section 102(a).
- literary works[3]
- musical works
- dramatic works
- pantomimes and choreographic works
- pictorial, graphic and sculptural works[4]
- motion pictures and other audiovisual works
- sound recordings
- architectural works
- The work must be original. 17 U.S.C. Section 102(a).
- The work must be creative. “The requisite level of creativity is extremely low.” Alcatel USA, Inc. v. DGI Technologies, Inc., 166 F. 3d 772, 787 (5th Cir. 1999).
- The work must be “fixed” in a tangible medium of expression. “A work is ‘fixed’ in a tangible medium of expression when its embodiment in a copy or phonorecord, by or under the authority of the author, is sufficiently permanent or stable to permit it to be perceived, reproduced, or otherwise communicated for a period of more than transitory duration.” 17 U.S.C. Section 101.
- News articles are copyrightable, but copyright protection does not extend to factual information in the articles. See Feist Publications, Inc. v. Rural Telephone Service Co., Inc., 499 U.S. 340, 353-54 (1991).
- The Copyright Act “protects expression, not facts. A compilation of facts is not entitled to copyright protection unless the compilation itself possesses some degree of originality.” Alcatel USA, Inc. v. DGI Technologies, Inc., 166 F. 3d 772, 786 (5th Cir. 1999); see also Konor Enterprises, Inc. v. Eagle Publications, Inc., 878 F.2d 138 (4th Cir. 1989).
- New media such as websites (home pages, etc.) have copyright protection.
- Copyright Ownership
- The copyright belongs to the author. 17 U.S.C. Section 201(a).
- With “works for hire,” the employer for whom the work was prepared is considered the author unless the parties have agreed otherwise in a written instrument signed by them. 17 U.S.C. Section 201(b).
- Work is “for hire” if it is:
- prepared by an employee within the scope of his or her employment; or
- specially ordered or commissioned for use as a contribution to a collective work or a compilation if the parties expressly agree in a written instrument signed by them that the work shall be considered a work for hire. 17 U.S.C. Section 101.
- Ownership may be affected by whether the work is performed by an employee or an independent contractor. Use common law agency principles to determine whether a person is an employee or an independent contractor. See Community for Creative Non-Violence v. Reid, 490 U.S. 730 (1989).
- Copyright owner has the exclusive right to:
- Reproduction (right to copy, duplicate, imitate, translate, etc.);
- Modification (make a new work based on an old work, e.g. Gone With the Wind sequel);
- Distribution;
- Performance (shown in public);
- Display (directly or indirectly to the public).
- Fair Use Doctrine
- No infringement of copyright if “fair use,” which includes criticism, comment, and news reporting. 17 U.S.C. Section 107.
- This is largely a case-by-case determination. Factors to consider to determine if a use is a “fair use”:
- purpose and character of the use (non-commercial use is more likely to be “fair”);
- nature of the copyrighted work (factual, creative, etc.);
- amount and substantiality of the portion used in relation to the copyrighted work as a whole (court also considers quality of portion selected); and
- effect of the use upon the potential market for or value of the copyrighted work.
- 17 U.S.C. Section 107(1)-(4); see Religious Technology Center v. Lerma, 908 F. Supp. 1362 (E.D. Va. 1995) (copying documents for news gathering and news reporting may not be a violation of a copyright if the four factors for “fair use” are satisfied).
- Unauthorized reproduction of a photo generally violates the Copyright Act, but a “fair use” may exist if the photo has already been disseminated, the photo is particularly newsworthy, and the user acquired the photo in good faith. See Nunez v. Caribbean Int’l. News Corp., 235 F. 3d 18 (1st Cir. 2000).
- Public Domain
- Materials in the public domain are not protected by copyright and, therefore, may be used without permission. 18 Am. Jur. 2d Copyright Section 215 (1985);
- Works in the public domain include:
- works not copyrightable, such as ideas, facts, titles, and names;
- works that have lost copyright protection (applies only to works published prior to 1978[5] and some works published between 1978 and 1989[6]
- works for which the statutory copyright period has expired (post January 1, 1978, life of author plus 50 years; or, with works for hire, the lesser of 75 years from publication of 100 years from creation);
- federal documents and publications[7];
- works that the copyright owner has granted to the public domain.
- Removing Some Basic Misconceptions
- The copyright symbol is not required. (optional after March 1, 1989)[8]. Do not think you can use a work just because there is no copyright notice.
- Citing the author (avoiding plagiarism) is not a defense to copyright infringement.
- Internet availability does not mean there is no copyright. Owners/authors do not give up copyrights by placing material on the internet.
- The fact that your “publication” is free is not determinative.
- International: Almost all major countries have signed the Berne Copyright Convention, making every creative work copyrighted at the time it is put into tangible form.
- Lanham Act Trademark law makes it unlawful to use “any word, term, symbol, or device, or any combination thereof, or any false designation of origin, false or misleading description of fact, or false or misleading representation of fact,” in connection with any goods or services if the use is likely to cause confusion or mistake by another person. 15 U.S.C. Section 1125(a)(1); see The Hub, Inc. v. Manhattan-Ward, Inc., 673 F. Supp. 770 (W.D. Va. 1987). (Examples using similar designs to trademark, trade dress, or business name).
- Business Torts
- Tortious Interference
- Tortious interference with existing contractual or business relations involves the following elements:
- the existence of a valid contractual relationship or business expectancy;
- knowledge of the relationship or expectancy on the part of the interferer;
- intentional interference inducing or causing a breach or termination of the relationship or expectancy; and
- damage to the party whose relationship or expectancy has been disrupted.
See Chaves v. Johnson, 230 Va. 112, 120 (1985); see also Meadow Limited Partnership v. Heritage Savings & Loan, 639 F. Supp. 643, 651 (E.D. Va. 1986).
- The law is not settled regarding whether a person can tortiously interfere with his or her own contract. See Chaves v. Johnson, 230 Va. 112, 120 (1985) (providing that a person cannot tortiously interfere with a contract to which he or she is a party). But see Worrie v. Boze, 198 Va. 533, 540 (1957) (allowing a tort action for conspiring to breach one’s own contract); Elliott v. Shore Stop, Inc., 238 Va. 237 (1989) (allowing an employee to maintain a tortious interference claim against the employer based on a contract to which the employee was a party); Catercorp, Inc. v. Catering Concepts, Inc., 246 Va. 22 (1993) (reaffirming a cause of action for conspiring to breach one’s own contract).
- Statutory Conspiracy
- Virginia Code Sections 18.2-499 and 18.2-500 make it unlawful to conspire to willfully and maliciously injure another person in his or her reputation, trade, business or profession, and create a civil cause of action to recover treble damages and attorney’s fees.
- The plaintiff must prove:
- a combination of two or more persons;
- for the purpose of willfully and maliciously injuring the plaintiff by any means; an
- resulting in damage to the plaintiff’s reputation, trade, business or profession
See Va. Code Section 18.2-499; Allen Realty Corp. v. Holbert, 227 Va. 441, 449 (1984).
- Misappropriation of Trade Secrets
- The Virginia Trade Secrets Act protects “information, including but not limited to, a formula, pattern, compilation, program, device, method, technique, or process, that: (1) derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use, and (2) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.” Va. Code Section 59.1-336.
- Misappropriation of trade secrets requires the plaintiff to prove that:
- it possessed a valid trade secret;
- the defendant acquired the trade secret; an
- the defendant knew or should have known that the trade secret was acquired by improper means
See Trandes Corp. v. Guy F. Atkinson Company, 996 F. 2d 655 (4th Cir. 1993); Religious Technology Center v. Lerma, 908 F. Supp. 1362, 1368 (E.D. Va. 1995).
- Generally, anything that is used to generate an advantage over competitors can be the subject of trade secret protection, but the plaintiff must take “reasonably security measures” to maintain the secrecy of the information. See Dionne v. Southeast Foam Converting and Packaging, Inc., 240 Va. 297 (1990).
- Defamation
- Defamation includes libel and slander.
- Libel is the publication of defamatory matter by written or printed words. 50 Am. Jur. 2d Libel and Slander Section 7 (1995).
- Slander is the publication of defamatory matter by spoken words or gestures. 50 Am. Jur. 2d Libel and Slander Section 8 (1995).
- Generally, a defamation cause of action requires proof of:
- a defamatory statement by the defendant about the plaintiff;
- publication of the defamatory statement to a third person; and
- damage to the plaintiff’s reputation.
See 50 Am. Jur. 2d Libel and Slander Sections 21-29 (1995).
- Types of Defamation
- 1. Defamation per se
- Imputes the commission of a criminal offense involving moral turpitude for which a party may be convicted;
- Imputes that the person is infected with a contagious disease which would exclude the party from society;
- Imputes an unfitness to perform the duties of a job or a lack of integrity in the performance of the duties; or
- Prejudices the party in his or her profession or trade.
See Yeagle v. Collegiate Times, 255 Va. 293, 297 (1998); Freelander v. Eden’s Broadcasting, Inc., 734 F. Supp. 221, 225 (E.D. Va. 1990).
- Defamation per quod: The defamatory meaning of the published statement arises by innuendo based on a combination of the published statement and known extrinsic facts. See Freelander v. Eden’s Broadcasting, Inc., 734 F. Supp. 221, 226 (E.D. Va. 1990).
- Private Figure v. Public Figure
- Private Figure
- To recover compensatory damages, the plaintiff must show that the defendant acted negligently. See Gazette, Inc. v. Harris, 229 Va. 1, 15 (1985) (stating that the plaintiff must prove by a preponderance of the evidence that the defendant knew the statement was false, or believed it to be true but lacked reasonable grounds for such belief, or acted negligently in failing to ascertain the facts on which publication was based).
- To recover punitive damages, the plaintiff must show actual malice on the part of the defendant. See Great Coastal Express, Inc. v. Ellington, 230 Va. 142, 152 (1985).
- Public Figure
- The plaintiff must prove that the defendant acted with actual malice (i.e., with knowledge that the publication of defamatory matter was false or with reckless disregard of whether it was false). See Freelander v. Eden’s Broadcasting, Inc.; 734 F. Supp. 221, 229 (E.D. Va. 1990). Smith v. Huntsville Times Co., Inc., No. 102199, 2004 WL 473377 (Ala. Mar. 12, 2004); Tucker v. Philadelphia Daily News, No. 47EAP2001, 2004 WL 909704 (Pa. Apr. 29, 2004).
- The determination of whether the plaintiff is a public figure is “based on two considerations: the plaintiff’s access to the media, and the extent to which the plaintiff, by virtue of his position in the community or involvement in a particular matter of public concern, can be said to invite public comment and attention.” Freelander v. Eden’s Broadcasting, Inc., 734 F. Supp. 221, 229 (E.D. Va. 1990); see also Gertz v. Welch, 418 U.S. 323, 344-45 (1974).
- Defenses
- Truth
- In a defamation action, truth is an absolute defense. See New York Times v. Sullivan, 376 U.S. 254, 279 (1964).
- In Virginia, “truth is no longer an affirmative defense to be established by the defendant. Instead, the plaintiff must prove falsity, because he is required to establish negligence with respect to such falsity.” Gazette, Inc. v. Harris, 229 Va. 1, 15 (1985).
- Consent: If a person invites, requests, or consents to a statement, no defamation cause of action exists. See 50 Am. Jur. 2d Libel and Slander Section 272 (1995).
- Absolute privilege
- Protects defendant from liability even if the statement was false and defendant acted with malice. See 50 Am. Jur. 2d Libel and Slander Section 274 (1995).
- Examples include communications between spouses, and judicial, legislative, and executive proceedings. See Elder v. Holland, 208 Va. 15, 21 (1967); 50 Am. Jur. 2d Libel and Slander Section 275 (1995).
- Qualified privilege
- Protects defendant when he acted without malice and within the scope of his duties and authority. See Elder v. Holland, 208 Va. 15, 21 (1967); 50 Am. Jur. 2d Libel and Slander Section 276 (1995).
- “A communication made in good faith on a subject matter in which the person communicating has an interest, or owes a duty, legal, moral, or social, is qualifiedly privileged if made to a person who has a corresponding interest or duty.” See Great Coastal Express, Inc. v. Ellington, 230 Va. 142, 153 (1985).
- Reports of public hearings or meetings may be protected by a qualified privilege. The privilege excuses accurate reports of statements that were false when made but does not excuse inaccuracies in the reporting of the statements. See 50 Am. Jur. 2d Libel and Slander Section 277 (1995).
- Comment and criticism are subject to the qualified privilege if the matter commented on is something in the public interest. See 50 Am. Jur. 2d Libel and Slander Section 277 (1995).
- Wire-service defense
- the newspaper “reproduced, without substantial change, an apparently accurate article released by a reputable newsgathering agency”;
- there is no evidence that the newspaper knew the article contained falsities; and
- there is nothing in the article itself that could reasonably have placed the newspaper on notice of potential inaccuracy.
See Howe v. Detroit Free Press, 586 N.W.2d 85 (Mich. 1998).
Please note: This page is provided for general informational purposes only and is a marketing publication of Gentry Locke Rakes & Moore, LLP. It is intended to alert visitors to developments in the law and is does not constitute legal advice or a legal opinion on any specific facts or circumstances. You are urged to consult your own lawyer concerning your situation and specific legal questions you may have.
[1] The term “commodity” includes any kind of real or personal property. Va. Code Section 59.1-9.3(c).
[2] The term “service” includes any activity that is performed in whole or in part for financial gain, including but not limited to personal service, rental, leasing or licensing for use. Va. Code Section 59.1-9.3(d). Advertising would qualify as a “service.” See Berlyn, Inc. v. Gazette Newspapers, Inc., 157 F. Supp. 2d 609, 626 (D. Md. 2001) (applying similar Maryland statute).
[3] “Literary works” includes “works, other than audiovisual works, expressed in words, numbers, or other verbal or numerical symbols or indicia, regardless of the nature of the material objects, such as books, periodicals, manuscripts, phonorecords, film, tapes, disks, or cards, in which they are embodied.” 17 U.S.C. Section 101.
[4] “Pictorial, graphic, and sculptural works” includes “two-dimensional and three-dimensional works of fine, graphic, and applied art, photographs, prints and art reproductions, maps, globes, charts, diagrams, model, and technical drawings, including architectural plans.” 17 U.S.C. Section 101.
[5] Works prior to 1978 , published without copyright notice.
[6] Works between 1978 and 1989 were given a five-year period to correct any publication without copyright notice.
[7] Government private subcontractors may obtain and transfer copyright to government.
[8] It is still common practice to give copyright notice. It is still required in some countries. We recommend: “‘Copyright symbol’ Copyright 2004 J. Scott Sexton, All Rights Reserved.” When giving the notice, the year of publication and author are required. On works for hire, the person paying for the work is designated as copyright holder (e.g. Reuters, Assoc. Press).
Friday, July 23rd, 2004
The full article is available in pre-formatted PDF format under the Additional Reading section.
ALFA International Labor and Employment Update, Summer 2004
W. David Paxton, July 23, 2004
Introduction
In a recent case out in the Tenth Circuit, two employees sued their former employer for retaliation after they were terminated for making allegations of harassment which the employer concluded were intentionally false. Renner-Wallace v. Cessna Aircraft Co., 2003 U.S. Dist. LEXIS 4134 (D. Kan.), aff’d 95 Fed. Appx. 967 (10th Cir. 2004). The district court granted the employer’s motion for summary judgment holding that the employees had failed to present any evidence that the proffered reason for the employees’ termination was a pretext for discrimination. This decision highlights the dilemma faced by employers who seek to respond to fabricated EEO claims in the face of an almost certain retaliation charge.
The Fourth Circuit has not had an occasion to address the exact situation presented in Renner-Wallace v. Cessna. This article considers how the Fourth Circuit is likely treat a retaliation claim based on a fabricated complaint of race, sex, religion, or national origin discrimination, focusing on the burden the court is likely to impose on employers defending such claims. This article also discusses the possible impact of the United States Supreme Court’s recent decision in Desert Palace v. Costa, 539 U.S. 90, 123 S. Ct. 2148 (2003), on the treatment of such claims.
Monday, July 19th, 2004
Published in Virginia Lawyers Weekly, July 19, 2004
The full article is available in pre-formatted PDF format under the Additional Reading section.
Introduction
Where plaintiffs assert their business and land suffered damage from flooding from a nearby owner’s property after he installed culverts in a stream, which overflowed during a flood, the carrier cannot rely on the “pollution exclusion” clause of a commercial general liability policy issued to defendant property owner’s business to deny a defense.
