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Oct 29 – East End Executive Business Breakfast

Posted: October 6th, 2015

Please Join Us for the East End’s First Executive Business Breakfast
A forum for networking and learning.

Together with Markowitz, Fenelon & Bank, LLP, we recognize the need for East End businesses to have a platform to meet other East End businesses, build relationships, share referrals, and learn something new.

October 29th, 2015
8:00 am to 10:00 am

We Invite You to Join Us at the Sea Star in Riverhead as Rich Isaac of Sandler Training Presents…

LinkedIn – A Business Relationship Tool

Learn How To Use LinkedIn to Increase Sales and Grow Your Business

You’ll learn:
• Powerful, insider best practices for LinkedIn for effective social selling
• The value of using LinkedIn to grow your pipeline
• How to leverage LinkedIn to generate warm referrals from your existing contact network
• How to harness LinkedIn to create a powerful, self-updating contact list
________________________________________
The event is complimentary but reservations are required.

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September 2015 Legal Brief – Firm Newsletter

Posted: September 30th, 2015

Earnout Payments and the Implied Covenant of Good Faith

Posted: September 25th, 2015

Tags: commercial litigation, M&A

Summary

An earnout is a contractual provision in an agreement for the purchase and sale of a business in which the Seller’s receipt of payment is contingent upon or varies with achievement of certain business goals, such as revenue or profitability targets (a sample is available under “the Earnout Provision,” below).

Under Delaware Law, the Implied Covenant of Good Faith and Fair Dealing (Implied Covenant) prohibits the Buyer of a business from purposefully interfering with the Seller’s earnout. However, the Implied Covenant does not, in itself, obligate a Buyer to create conditions for a Seller to receive an earnout if those conditions did not already exist.

Case Description

American Capital Acquisition Partners, LLC v. LPL Holdings, Inc. 2014 WL 354496 (Del. Ch. Feb. 3, 2014).

Facts: On April 20, 2011, LPL Financial LLC (Buyer) purchased 100% of the equity of Concord Capital Partners, Inc. (Target), a subsidiary of American Capital Acquisition Partners, LLC (Seller). In addition to a specified purchase price, the Stock Purchase Agreement included an earnout provision in which payment was contingent on achieving gross margin targets, as follows (the Earnout):

The Earnout Provision:

In addition to the Closing Purchase Price payable at Closing, and subject to the terms and conditions set forth in this Section 2.06, [Seller] shall be entitled to an additional purchase price payment from [LPL] in an aggregate amount, if any (such aggregate purchase price payment is referred to herein as the “Contingent Purchase Price Payment ”) of (i) for every $250,000 in 2013 Gross Margin in excess of $5,500,000 but less than or equal to $7,250,000, $215,000 up to a maximum payment of $1,500,000 and (ii) for every $250,000 in 2013 Gross Margin in excess of $7,250,000, $675,000 up to a maximum payment of $13,500,000; provided, however, the maximum Contingent Purchase Price Payment shall not exceed $15,000,000.[1]

Achievement of the Earnout targets depended upon the Buyer’s ability to integrate its technology with the Target, which Seller was lead to believe would be a simple matter. However, the Stock Purchase Agreement did not include any obligation of the Buyer to integrate its technology with the Target, but it did include an “anti-reliance” clause in which stated that Seller was not relying on any representation or warranty other than those set forth in the Stock Purchase Agreement.

The Non-Reliance Provision:

Non–Reliance. Except for the representations and warranties by the Company in this Agreement, Buyer and Seller each acknowledge and agree that no Person is making, and Buyer nor Seller is not relying on, any representation or warranty of any kind or nature, express or implied, at law or in equity, or otherwise, in respect of the Company, the Business, the Sellers or the Buyer, including in respect of the Company’s Liabilities, operations, assets, results of operations or condition.[2]

After the acquisition, Seller realized that Buyer’s computer system could not be easily adapted to allow Seller to benefit from the synergies between Buyer and Target, which could significantly limit Seller’s ability to achieve the Earnout. At the same time, Seller claimed that Buyer began shifting employees and customers from the Target to the Buyer, allegedly hurting Seller’s ability to achieve the Earnout.

In an attempt to force Buyer to integrate the computer systems, Seller filed a lawsuit which claimed, among other things, that Buyer breached the Implied Covenant by: (1) failing to make the technical adaptations necessary for Seller to achieve the Earnout; and (2) shifting employees and customers away from Target, making the Earnout harder to achieve.

Delaware Chancery Court’s Ruling: Buyer filed a motion to dismiss Seller’s claims, and in deciding the motion, the Delaware Chancery Court:

Permitted Seller’s claim for breach of the Implied Covenant to continue based on Buyer shifting employees and customers away from Target because Seller alleged that Buyer had an obligation to avoid shifting resources away from Target in a way that hurt the Earnout.

However, the Chancery Court also

Dismissed Seller’s separate claim for breach of the Implied Covenant which was based upon Buyer’s failure to integrate its technology with Seller, because the Stock Purchase Agreement did not contain any obligation for Buyer to integrate the systems, and Seller did not allege that the parties failed to anticipate the need for such integration (in fact, Seller explicitly alleged that the parties had discussed technical integration).

Takeaways

The Implied Covenant of Good Faith and Fair Dealing “requires a party in a contractual relationship to refrain from arbitrary or unreasonable conduct which has the effect of preventing the other party to the contract from receiving the fruits of the bargain.”^{^[3]}

“The covenant of good faith and fair dealing is implied in every contract,[4] and serves a gap-filling function by creating obligations only where the parties to the contract did not anticipate some contingency, and had they thought of it, the parties would have agreed at the time of contracting to create that obligation.”^{^[5]}

If you are the Seller in an acquisition that includes an Earnout it is important to:

a. conduct due diligence on the Buyer to identify whether the Buyer has the ability and incentive to allow the earnout to be achieved; and

b. include language in the purchase agreement that gives the Buyer an obligation and incentives to achieve the earnout or at least create and maintain the conditions under which the earnout may reasonably be achieved.

[1] American Capital Acquisition Partners, LLC v. LPL Holdings, Inc. 2014 WL 354496 at 2 (Del. Ch. Feb. 3, 2014).

[2] Id. at 10*

[3] Id. (quoting Dunlap v. State Farm Fire & Cas. Co., 878 A.2d 434, 442 (Del.2005)).

[4] Winshall v. Viacom Int’l, Inc., 55 A.3d 629, 636 (Del. Ch.2011).

[5] Winshall, 55 A.3d at 637.

The Estates of the Rich and Infamous

Posted: September 25th, 2015

By: Martin Glass, Esq. email

Published In: null

Tags: estate planning

Being rich and famous doesn’t always mean that you’ve got a good estate plan, and there’s no guarantee that there won’t be estate litigation contests. Here are just some examples of things that can go wrong.

Sometimes it doesn’t even get to the estate plan. In the case of famous DJ and radio personality Casey Kasem, his second wife and his daughter (from his first marriage) disagreed over having him cremated and where to bury him. Despite a court order, the wife had the body moved to Montreal and eventually had him buried in Oslo, Norway. In New York, he could have appointed someone before his death who could legally step in as his agent in charge of the disposition of his last remains.

And even when there are millions of dollars in the estate, that’s often not the issue. Take Robin Williams for example. He carefully set up trusts for his children and heirs. So instead, they fought over his personal items. His children fought with his wife (not their mother) in court over things including his memorabilia and watches.

Diana, Princess of Wales, left a detailed Will leaving most of her fortune in trust for Princes William and Henry. She also attached a “letter of wishes” dividing her belongings among her sons and her 17 god children. While England may allow this letter by reference in the Will, New York does not. Your wishes are not legally binding if they’re not in the Will.

Then there’s Dr. Martin Luther King, Jr. Despite his messages of peace and unity, the peace among his three children didn’t last very long. They are at odds over selling or keeping his Nobel Prize medal and annotated Bible as well as the licensing of his intellectual property. Most notably, they disagree (yes, in a court battle) about how to license Dr. King’s famous “I Have a Dream” speech.

Sometimes, the millions of dollars in the estate is the issue – especially if it’s left to the family pet. In the case of Leona Helmsley, there were four grandchildren and a dog. She disinherited two of the grandchildren and made the other two jump through hoops to get any of the money that had been put in trusts for them. The dog, Trouble, got $12 million in trust (a New York judge reduced the amount to $3 million).

Speaking of leaving odd things, William Shakespeare left his “second best bed” to his wife. Nothing else! Although in New York it’s perfectly legal to write such a Will, the surviving spouse always has what’s called a Right of Election. He or she can elect whatever is in the Will or one-third of the decedent’s estate. So no, try as you like, you really cannot disinherit your spouse.

But what about disinheriting children? Generally, children have no right to inherit from their parents. Take the case of Vickie Lynn Marshall (a.k.a “Anna Nicole Smith”). She claimed in her Will that she had one child, Daniel. But Daniel predeceased Anna Nicole. In reality, Anna Nicole also had a daughter, Danni Lynn, who did survive her mom. If Anna Nicole’s Will had said who should get her estate if Daniel predeceases, that person has the right to claim it. In this case, the court found that Anna Nicole was probably too busy to get around to amending her Will to include her daughter and Danni Lynn isn’t getting anything.

In Anna Nicole’s case, probably the only people who made out were the attorneys. In the case of Tom Carvel, it was definitely the attorneys who made out. His Will was poorly drafted and open to multiple interpretations – so many that it took 18 years to probate it. Ultimately, $30 million of Tom’s $70 million estate went to his attorneys.

James Gandolfini (a.k.a. “Tony Soprano”) got much closer to creating a well thought out estate plan. He created trusts for his two children and had almost all of the assets of his $70 million in various living trusts. The problem is that his kids get the assets when they turn 21. Most estate planning attorneys agree that 21 is too young to give that much control over that large an estate. And in Gandolfini’s case, the biggest winner turned out to be the IRS. They took almost $30 million in federal estate taxes.

After all these problem cases, I thought I’d end on a positive note. Jacqueline Kennedy Onassis died with an estate estimated at $200 million. Through careful planning and the use of various trusts, she minimized the estate tax consequences. The bulk of her estate passed to Charitable Lead Trusts (CLT). This is where the charity gets a small percent of the trust each year for a certain number of years. After that, the remainder of the CLT passes to her grandchildren. She was able to pass all except about 11% of her estate instead of losing 58% of it to various estate taxes and fees.

SAPA and Timely and Sufficient DEC Permit Renewal Applications

Posted: September 25th, 2015

As published in the September issue of the Suffolk Lawyer

On August 27, 2015, Newsday reported that Baykeeper, an environmental group, intends to commence a lawsuit against the New York State Department of Environmental Conservation (“DEC”) and National Grid because the effluent from the Northport power plant is killing millions of fish each year. The article notes that the DEC’s permit for the power plant expired in 2011, “but under state rules it can operate while its application is reviewed.”

The referenced “state rules” are the subject of this article, but the focus is on clients you may have who require permits from the DEC, not the potential lawsuit discussed in the Newsday article. If your clients have such permits, they are issued for finite periods of time and require renewals, or they lapse. Whether the renewal application is timely filed and sufficient may be of critical importance to your client.

Section 401(2) of the State Administrative Review Act (“SAPA”) states:

When a licensee has made timely and sufficient application

for the renewal of a license or a new license with reference

to any activity of a continuing nature, the existing license

does not expire until the application has been finally

determined by the agency, and, in case the application is

denied or the terms of the new license limited, until the

last day for seeking review of the agency order or a later

date fixed by order of the reviewing court, ….

“License” includes permits.[1]

Why is it important that your client’s DEC permit continue until a determination is made? First, of course, is the obvious reason that the permit will lapse upon the expiration date of the permit if renewal has not been granted. If DEC does not promptly make a determination, the old permit will continue to authorize the permit holder to operate if a timely and sufficient renewal application was filed.[2] More importantly, however, is that the DEC’s Uniform Procedures permit the Department to suspend permit review if there is an outstanding enforcement action. See 6 NYCRR §621.3(e). Thus, if your client has made “timely and sufficient” application for renewal of the DEC permit, the expiring permit will continue in effect even if the enforcement action is not resolved until after the expiration date of the permit.[3]

An enforcement hearing is commenced by service of a Notice of Hearing and Complaint. 6 NYCRR §622.3. For a period of years, Region 1 of the DEC took the position that service of a Notice of Violation commenced an enforcement action for purposes of invoking its right to suspend permit review. This position left permit holders in an impossible negotiating position when they tried to resolve DEC’s alleged violations. Without a Notice of Violation and Complaint, they had no administrative vehicle to challenge the validity of the violations alleged in the Notice of Violation, and their permit would expire unless they had filed a timely and sufficient renewal application.[4]

“Timely renewal” turns on the type of DEC permit in question. Permits for Hazardous Waste Management Facilities, Solid Waste Management Facilities, Air Permits, and Remedial Action Plans require that the renewal application be submitted 180 days before permit expiration in order to be timely. All other permit renewals must be submitted at least 30 days before expiration.[5]

The protection of SAPA §401(2) also requires that the application be “sufficient.” DEC defines a “sufficient application for renewal” to mean “properly completed application forms, supplemental information and plans required by specific program regulations for renewing permits, and identification of any material changes in regulated operations or environmental conditions at the permitted facility or site.” 6 NYCRR §621.2(ad). Requirements for specific DEC permit applications can be found at 6 NYCRR §621.4.

Failure to provide all required information does not necessarily deprive the applicant of the protection against the permit lapsing while renewal applications are being considered. The DEC is required to notify the applicant whether the application is complete or incomplete within 60 days for permits delegated by the Federal Government (generally, RCRA, Clean Water Act, and certain Clean Air Permits),[6] and within 15 days for all other permits.[7] If DEC fails to meet these deadlines, the application is deemed to be complete.[8] While DEC may still require additional information from the applicant,[9] SAPA §401(2) will preclude the permit for which renewal is sought from expiring prior to DEC’s determination.[10]

The moral is: call your clients, find out if they have DEC permits, and make sure they file timely and sufficient applications for renewal.

[1]SAPA §102(4): “‘License’ includes the whole or part of any agency permit, certificate, approval, registration charter, or similar form of permission required by law.”

[2] See, e.g., Riverkeeper Inc. v. Crotty, 28 A.D.3d 957 (3^rd Dep’t 2006) (Timely application by power plant for SPDES permit renewal; DEC did not make a determination. Permit good for five years. Riverkeeper challenged the DEC’s failure to make a determination ten years after the original application expired. Court ruled SAPA §401(2) authorized the power plant to continue operating lawfully, and Riverkeeper’s claim that the DEC’s failure to make a determination five years after the original renewal would have expired provided a basis to compel DEC to act was dismissed on statute of limitations grounds).

[3] One exception to this is SAPA§401(3), which authorizes the agency to immediately suspend a permit if it finds that “public health, safety, or welfare imperatively requires emergency action” and the agency provides a prompt hearing to determine the propriety of the suspension.

[4] Although beyond the scope of this article, treating a Notice of Violation as commencement of an enforcement action for purposes of suspending permit review should be considered an unconstitutional deprivation of the permittee’s right to Due Process.

[5] 6 NYCRR §622.11(a)(1).

[6] 6 NYCRR §621.2(g).

[7] 6 NYCRR §621.6(c)(1 and 2).

[8] 6 NYCRR §621.6(h).

[9] 6 NYCRR §621.6(h) goes on to state: “Nothing in this Section …precludes the department from requesting additional information in accordance with section 621.14(b) of this Part.”

[10] See, e.g., Jamaica Recycling Inc. v. New York State Department of Environmental Conservation, 308 A.D.2d 538 (2d Dep’t 2003).

Starting a Successful Business

Posted: September 25th, 2015

By Marc Alessi

As a self-proclaimed serial entrepreneur, I find myself immersed in the startup entrepreneurial ecosystem, specifically here on Long Island. I thrive on the process of taking an idea, helping to make it a product, and helping to build a business around it. To have the power to take something from “all talk” to “all action” and to build wealth from it is incredibly empowering. I’d like to use this blog platform as a resource to anyone looking to take a leap into entrepreneurship and bring their business startup dreams to life. I believe anyone can make this transition. No matter what your background, you can become an entrepreneur, and you can learn the formula to take your ideas and make them a profitable reality.

True entrepreneurs continually seek out information and advice to grow their businesses and assist them in various aspects of business management, from marketing to sales, human resources, and more. There are countless resources out there to find relevant content, one of my favorite being Entrepreneur Magazine and Entrepreneur.com, which has evolved into one of the most widely used website by entrepreneurs and leaders in business worldwide.

Carol Roth, contributor to Entrepreneur.com and entrepreneur herself, recently published a piece called, “9 Steps That Will Help Your Chances of Starting a Successful Business,” an adaption from her bestselling book, The Entrepreneur Equation. It offers some great points on preparation before you start your own business.

9 Steps That Will Help Your Chances of Starting a Successful Business

By Carol Roth

If you are unemployed, underemployed or unhappily employed, the idea of taking control and becoming your own boss might be sounding pretty sexy right about now. Plus, the past decade has shown us that jobs aren’t quite as dependable as perhaps we previously thought.

However, the success rates for new business are quite scary too, with the majority of all new businesses failing in just a few years’ time. While there is never going to be a “sure thing,” if you are thinking of leaving your job to hang out your own shingle, there are significant benefits to preparing before you take the leap.

Here are nine ways to make sure that you are prepared before you start your own business, so that you can give yourself the best chances to succeed. These are adapted from my bestselling book, The Entrepreneur Equation.

1. Define and evaluate your goals.

You can’t figure out a path to get somewhere if you don’t know where it is you want to get to. Plus, once you have that goal, you need to know if your path is the most direct route to achieving what you want.

Ask yourself tough questions about why you really want to start a business. Are you looking to get rich quick? Do you want to showcase your talent, new product idea or service? Are you tired of your boss taking credit for what you do?

These kinds of goals might lead you down the wrong path. On the other hand, if you love the idea of running an entity, if you like creating systems and procedures, adore servicing customers and if you thrive on wearing many different hats and balancing responsibilities, then entrepreneurship could be the perfect path for you.

2. Stash some cash.

The cost of starting a business in many industries has come down substantially. However, that is only part of the story. Businesses often take a few years to gain a solid foundation, so you need to have enough money to start the business, operate it while it stabilizes and also be able to live.

If you don’t have the money yourself, identify whether you have credible access to capital. The downturn has made it more difficult to secure financing and you don’t want to be three months into a business and have to decide whether to keep the business open or pay your rent or mortgage — that’s a losing proposition.

3. Get relevant experience.

Being able to manage employees and vendors is the type of skill you’ll need to acquire before starting your own business. You’ll also need to know your industry inside and out, including aspects that you may not be familiar with or even like, including marketing, accounting and more.

Don’t have the experience? Spend time working in a similar company, shadow a business owner in your industry or take a job on nights and weekends in a comparable business. Test the waters first with a trial run before you start your own company.

4. Build your network.

Business sometimes comes down to not what you know, but whom you know. If you don’t know many people or if you just haven’t warmed up your contacts in a while, now is the time to focus on building a solid network.

Strong connections can provide valuable business advice and provide introductions to get you more favorable financing, prices, terms and conditions from business suppliers and professional services. Connections are your best source of marketing and customer referrals, which is critical for a new business.

5. Know yourself.

Do you prefer the “status quo” and like to avoid the unexpected? Can you handle a life of highs and lows — including financial highs and lows? Could your savings and bank account handle financial lows as well?

If you are a person who likes stability and control, or if you prefer when things go as planned, the roller-coaster ride of a new business may not be right for you. Be honest about your personality before you take the leap.

6. Visit your lawyer.

If you are going to go into a business that competes (directly or even indirectly) with your current employer or if you plan to call on prior customers or contacts, you may find yourself in a legal bind, depending on the paperwork that you have signed with you current (or previous) employer.

Check with your lawyer to make sure that you are in the clear or to find out what you need to do to avoid any sticky legal situations.

7. Stalk the competition.

Before you leap into entrepreneurship, take a hard look at the marketplace and your competition. Is your market saturated with successful businesses? Is your industry littered with so many bad businesses that it’s developed a bad reputation?

Both good and bad competitors will influence just how successful your business will be. You will need to market and brand your business to shine above the good competitors and to make up for the bad ones.

8. Test your idea’s scalability.

The most successful businesses rely on automation and delegation. Will other employees be able to do your work? If not, can you teach others what to do in an easy-to-follow format?

If your business relies on your skills, and your skills alone, you might have a successful job, but it may not be that business opportunity you are looking for.

9. Sell first!

Too many entrepreneurs spend time and money building out retail stores, manufacturing products or developing service offerings without truly assessing the viability of the market. See if you can garner interest (in the form of purchase orders, deposits, etc.) before you invest too much capital.

If you have a lot of interest in your offering, there will be less risk in pursuing it full time. If you don’t get any bites, you may want to rejigger your offering, pricing or business model before investing your full time and effort.

Putting in the time and effort up front to stack the odds in your favor will help you avoid having one of those businesses that ends up in that percentage of failures.

http://www.entrepreneur.com/article/250252

Court Holds Successor Corporation Liable For Judgment Against Defunct Entity

Posted: September 25th, 2015

In litigation, it is one thing to obtain a judgment against an individual or entity, but it is another thing to actually collect on that judgment. One scenario that often plays out occurs when a plaintiff has obtained a judgment against a business entity only to find out that the company is out of business and/or has transferred its assets and popped up under a different name. This strategy is undertaken for obvious reasons – to avoid collection efforts on the judgment while continuing to do business under a different identity. However, if you are the judgment holder, all is not lost. A recent decision from the Commercial Division in Suffolk County awarded a judgment holder with summary judgment against a successor corporation making it liable for the judgment of the defunct entity.

In All County Paving Corp. v. Darren Construction, Inc. (J. Emerson), plaintiff All County Paving Corp. (“All County”) had obtained a judgment against an entity known as Darren Construction Services, Ltd. (“Darren Construction Services”) back in 2011 in the sum of $82,275.74. Darren Construction Services was owned by Michael Fusco (“Fusco”) who acted as the sole officer, director and shareholder of that entity. All County then commenced this action against Fusco and a different company, Darren Construction, Inc. (“Darren Construction”) alleging that Fusco created Darren Construction in an effort to avoid paying All County and other creditors. The lawsuit alleged claims for fraudulent conveyances under the Debtor and Creditor Law and also sought personal liability against Fusco by piercing the corporate veil. Both All County and the defendants ultimately moved for summary judgment with respect to plaintiff’s claims.

In deciding the respective motions, the Court noted that New York permits recovery of transfers when there has been a fraudulent conveyance that unfairly diminishes a debtor’s estate. Under Debtor and Creditor Law § 273 and § 273-a, constructive fraud can be shown when the debtor transfers assets without fair consideration and the debtor is or becomes insolvent or the debtor has a judgment docketed against it that has not been satisfied. Additionally, transfers to controlling shareholders, officers or directors of an insolvent corporation are presumed to be fraudulent and made in bad faith. Matter of CIT Group/Commercial Servs. Inc. v. 160-09 Jamaica Ave. Ltd. Partnership, 25 A.D.3d 301, 303 (1^st Dep’t 2006). Under Debtor and Creditor Law § 276, the creditor must show actual intent to defraud on the part of the transferor in order to set aside a transfer as fraudulent.

In its examination of the facts here, the Court found that Darren Construction (the successor company) was formed August 22, 2011. Darren Construction Services then failed to appear at a Court conference in the prior litigation a mere two weeks later on October 4, 2011 and, as a result, a default judgment was entered against Darren Construction Services on October 11, 2011. The Court further noted that Fusco is the sole owner, shareholder and director of Darren Construction (as he was with Darren Construction Services) and the two businesses are the same, use the same phone number, and operate out of the same address. Even more telling was the fact that, as soon as Darren Construction was formed, Darren Construction Services went out of business. While the defendants attempted to argue that there was no transfer of assets between the two companies, the Court held otherwise, noting that the “good will” of Darren Construction Services, a saleable asset, was transferred to Darren Construction without any consideration being exchanged for such good will. Further, at the time of the transfer, Darren Construction Services was insolvent and the judgment was unsatisfied.

As a result the Court found the transfer to be in violation of both § 273 and § 273-a of the Debtor and Creditor Law. The Court also found that, based on the circumstances of the transfer, there was an intent to defraud in violation of § 276 of the Debtor and Creditor Law which was further confirmed by Fusco’s deposition testimony. As such, the Court held that All County was entitled to summary judgment against Darren Construction due to the fraudulent conveyance. As an aside, the Court denied summary judgment against both sides as it pertained to the claims against Fusco individually under a corporate veil theory noting that neither side had met its burden to warrant summary judgment.

The important takeaway from this decision is that all is not lost if you have a judgment against what appears, on its face, to be a defunct entity. It is vital to conduct the proper due diligence even before a judgment is obtained to determine if the entity is still doing business under a different name and whether the defunct entity fraudulently transferred assets to avoid collection efforts. It is very possible, as was the case here, that a new door will open that will allow you to collect against an entity and/or individual with assets.

Trademark Registrations may now be Broadened to Account for Evolving Technology

Posted: September 25th, 2015

Tags: intellectual property, technology

The United States Patent and Trademark Office (USPTO) has launched a pilot program to allow amendments to goods/services in trademark registrations that would otherwise be beyond the scope of current specifications.

Typically, once a trademark has been registered for particular goods/services, it is not possible to later amend those goods/services beyond the current identification. However, this does not reflect the world of rapidly changing technology – goods and services may be quickly phased out in favor of their modern counterparts. When the new technology did not match the original goods/services, the trademark owner was forced to forego the old registration and file a new application, thus giving up an earlier date of use.

Under the new pilot program, trademark owners will be able to swap out the original outdated goods/services with the updated goods/services reflecting the technology advancements. This enables the trademark owners to maintain the existing registration and extends the protections afforded by the existing registrations.

While the new pilot program allows for amendments beyond the current identification, it is not without limitations. First, the amendment is allowed only in cases where the trademark owners can no longer show use on the goods/services in their original form due to evolving technology. Also, the trademark must still be used in connection with goods/services that reflect the same underlying content or subject matter. Further, any “incontestable” status that applied to the original goods/services will not apply to the newly amended goods/services; the trademark owner will have to file a declaration of incontestability five years following the modification to the “evolved” goods/services. Lastly, although the original dates of use would remain in effect, the “evolved dates” will be noted and made of public record, which will likely raise potential priority disputes.

Below are some examples the USPTO provided of acceptable amendments:

Original Identification Amended Identification

Phonograph records featuring music Musical sound recordings

Floppy discs for computers for word processing Providing on-line non-downloadable software for word processing

Printed books in the field of art history Downloadable electronic books in the field of art history

Downloadable software for use in database Software as a service (SAAS) services featuring

Management software for use in database management

The new pilot program is good news for trademark owners as it acknowledges the need to accommodate the rapidly evolving technology in the world today. The duration of the pilot program will depend on the volume of requests. Accordingly, trademark owners who are scheduled to renew their trademarks in the near future should take advantage of this program.

CMM featured in LIBN article “Law Internships Emphasize Real-World Experiences”

Posted: September 9th, 2015

li_business_news-photo

By Joseph Kellard, Long Island Business News

When Joe Campolo, managing partner at Ronkonkoma-based Campolo Middleton & McCormick, started his law firm in 2006, the first person he hired was a legal intern from Touro College Jacob D. Fuchsberg Law Center in Central Islip.

That intern, Arthur Yermash, remained with the firm and is now a senior associate.

As with many other private firms across Long Island, Campolo Middleton continues to work with interns and externs during the summer and school semesters.

“We think that the firm’s interns are critical to the firm’s growth as well as to the legal education process,” Campolo said.

Each summer the firm accepts one to three interns or externs from Touro or the Maurice A. Deane Law School at Hofstra University in Hempstead, and an attorney liaison manages their workflow and has them rotate to different departments throughout the summer. The intern’s primary role is to perform legal research and write first drafts of legal briefs, motions, transactional documents and the like, providing them hands-on experience not found in the classroom.

This fall, Campolo, Middleton, & McCormick will keep two summer interns on board throughout the semester in a part-time capacity. Historically, the firm hires one intern upon completion of law school per year. The firm currently employs five former interns.

“It’s a good way for us to get a good sense of the talent pool that’s out there – folks that fit a need both in personality and work ethic and in areas where we have a need for particular legal work,” Campolo said.

While internships are mostly unpaid, not-for-credit programs that have no academic or time requirements for students, externships are for-credit and require them to perform 200 hours of work during the summer or at least 12 hours per week during the 14-week semester.

Touro and Hofstra have various internships and externships, including legal services at private firms, both large and small, government agencies such as district attorney offices, and in-house counsel at businesses, including Melville-based Canon.

Jennifer Gundlach, Hofstra’s senior associate dean for experiential education, said that when placing students at law firms, she has the students formulate goals based on what they want to learn and communicate these to the supervising attorney. Hofstra requires of students a substantial amount of legal writing and drafting, she said, and through a memorandum of understanding, the school requires participating firms to offer these opportunities.

“So maybe it’s meeting with clients or going into court with the lawyers, doing negotiations and mediation with an opposing counsel of some kind, doing client interviews or counseling clients about different issues, doing legal research memos,” Gunlach said of the tasks it wants students to learn.

Hofstra has between 30 to 60 summer interns and externs, and 60 to 80 students perform externships each semester. The school tends to place students in solo practices and small firms because they typically provide the necessary educational and real-world experiences.

Howard Gilbert owns a small firm with his son, Jason, in Melville that specializes in labor, employment and educational law and has worked with students from Hofstra and Touro for the past few years. During summer, Gilbert works with two or three interns or externs; this fall three students will work at his office.

Gilbert said he feels a heavy responsibility to give them first-hand experiences and substantive knowledge. He has them perform various duties, whether it is interacting with government officials or judges, or investigating claims with a client, writing legal memoranda or preparing motions. Gilbert and his son interact with the interns and externs on the substance of law procedure.

“Actual experience in a law firm, I believe firmly, provides interns and externs with these real-world applications of problems and disputes involving real people,” said Gilbert, who frequently recommends the students to fellow attorneys and firms.

Myra Berman, associate dean for experiential learning at Touro, said the law school’s externship program in the past year has shifted, from a focus on academic substantive law to professional development.

Touro offers two extern programs that are judicial clerkships. One is in the chambers with Judge Leonard Wexler at the Eastern District Federal Court in Central Islip. The other is with Judge Fern Fisher, chief administrative judge for the New York City courts, who places the students in various city courts.

“In the past we had externship seminars for three hours a week that dealt more with what the court was dealing with substantively, rather than the experience of being in a judge’s chambers and what it means to be a professional in judges’ chambers,” Berman said.

During summer, Touro has as many as 20 interns and externs, and up to 70 of each throughout the entire school year. Berman said that while a large number of students remain interested in criminal law, many are eager to find jobs with businesses instead of law firms. Touro is developing an in-house counsel externship for them.

Campolo has found that as the court system has become overburdened with cases, most law schools are teaching students that mediation, arbitration and business solutions are good alternatives to litigation.

“I think that’s pushing a lot more interest into corporate transactional work than there is into litigation,” he said. “Every force out there is trying to push people out of litigation.”

[1] American Capital Acquisition Partners, LLC v. LPL Holdings, Inc. 2014 WL 354496 at 2 (Del. Ch. Feb. 3, 2014).

[2] Id. at *10

[3] Id. (quoting Dunlap v. State Farm Fire & Cas. Co., 878 A.2d 434, 442 (Del.2005)).

[4] Winshall v. Viacom Int’l, Inc., 55 A.3d 629, 636 (Del. Ch.2011).

[5] Winshall, 55 A.3d at 637.

[2] Id. at 10*