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Patents are an essential element in the progress of science and technology. They are a company’s most valuable assets. For example, Google is working to acquire Motorola Mobility primarily for their patent portfolio, for an astronomical $12.5 billion. Based on the prices companies are willing to pay to acquire patents indicates how important patents are in furthering business and invention.

Patents protect an inventor’s work and time by granting her a limited monopoly over their useful discoveries. This means that for 20 years an inventor has exclusive control over the use of her invention. She may give others permission to use her discoveries through licensing agreements in exchange for money. If a rival company or inventor does use her hard work without a license, she may sue for infringement. Companies spend thousands of dollars annually to protect their products through patent litigation and this effectively prevents others from using their valuable ideas and processes.

Image Credit: Joe Altario

The recent ratification of the Leahy-Smith America Invents Act (AIA) is going to cause many changes to occur in the area of patent law. The AIA will take full effect on March 1, 2013, and there have been mixed reviews regarding the changes that will occur and how those changes will affect future patent law. Small-scale inventors and companies with less available capital think that the new bill favors larger corporations and better-funded research. Others, especially larger companies, believe that the changes will help promote the progress of science and improve the patenting system by encouraging earlier disclosure of inventions. Unfortunately, there is no consensus among patent lawyers of how these changes will affect the law.

The changes regarded to be the most important include changing from first to invent to first to file, altering the best mode defense in litigation, increased importance of provisional patent applications, and creating a statutory limit of the ability to patent a human organism. Since many provisions of the AIA will not be in effect for 17 months, patent attorneys are speculating how they will change patent law. Despite the unknown effects, this is a brief foray into the confusing and uncertain world of patent law under the America Invents Act.

First to File

Under a ‘first to file’ system, even if an inventor is not the first person to create an invention, they may still receive a patent if they file with the Patent and Trademark Office (PTO) first, as long as they actually invented the device. A ‘first to file’ system will mean that if two scientists develop an idea independently (Sue and Bob), but Sue filed an application first she would receive the patent even though Bob first invented the process. This rule is used in European and other foreign patent rules. This change will make American patent law more similar to those around the world.

Prior to the AIA, America used a ‘first to invent’ system. Using this rule, Bob could invalidate or cancel Sue’s patent, even though she filed it first, as long as he could prove he was the first to invent the idea. In patent litigation, this would require courts to delve into the complicated world research journals and records proving who was the original inventor. This rule allowed inventors to consider whether their invention would produce financial benefit by allowing them to take time to assess the marketability of her invention. However, historically it also created some problems.  Under the old law some nefarious inventors would not make any move to put to use or patent their invention, and then later bring forward law suits claiming ownership to issued patents.

There have been recent concerns that the ‘first to file’ rule will favor larger companies and inventors with more capital to spend on the expensive patenting process. However, some patent attorneys disagree and believe that smaller groups will rely more on provisional applications, which provide them with an extra year to file a full application by retaining the earlier filing date  (see below). Luckily, rules for disclosing an invention have also changed to help alleviate complications from disclosing to the public what you have invented (also see below, prior art).

Provisional Applications

Patent applicants may use provisional applications to obtain an early patent application priority filing date. They do not require the same level of formality as a non-provisional or formal patent application, and are thus easier to receive. They allow a patent application to secure their “patent date” while continuing to work on drafting their claims of the full, non-provisional application for up to 12 months. If after 12 months the applicant does not file a non-provisional application they forfeit their reserved filing date.

With the change from “first to invent” to “first to file” more applicants are expected to provisional applications to protect patentability of their invention. Now, more than ever, there will be a race to the PTO to protect an inventor’s work. Increased use of this tool may help to assuage fears held by small companies and inventors, allowing them more time to secure the funds to pay for costly applications.

Disclosure and Prior Art

In patent law “prior art” is any information that has been disclosed to the public before the date of a patent application. It includes any articles, patents, or public demonstrations relating to the subject matter of a patent. Prior use is also used to judge whether an invention is obvious to anyone skilled in the subject matter (referred to as art) of the patent. Any third party disclosure prior to the inventor’s filing date was normally treated as prior art, and would act to bar an invention from being patented.

Pre-AIA patent law stated that “a person could not receive a patent if the invention was known or used in this country, or patented or described in a publication here and abroad; it is described in another patent application in the US before the invention by the applicant, with within a patent granted to another before the invention of the applicant; or was invented by another inventor who had not abandoned, suppressed, or concealed it” (among other requirements). Under these requirements, if the invention is released into the public domain in any form, including any oral or written communications of the development, a patent application will be barred.

The AIA changes these requirements, and secures the inventor a short grace period for third party disclosures within one year of the applicant’s filing date if (1) the inventor discussed the invention prior to the disclosure, or (2) the third party disclosure was derived from the inventors. This encourages applicants to disclose their invention to some extent, to act as a mechanism for defeating any prior art arguments. Patent lawyers think this will help to further the progress of science and technology by encouraging some disclosure of the invention. If fellow inventors know of concurrent projects an inventor will turn her inquiry elsewhere, possibly resulting in the production of more inventions and useful discoveries.

The AIA also creates a prior use defense infringement for prior commercial use.  If a company can prove they used a process (including machines, process of manufacture, composition of matter, or business process) within the company for internal commercial use, they are immune from patents that are filed more than a year later. It allows companies to continue to use the method without fear of infringing a patent.

Best Mode requirement

The “best mode” requirement requires that the inventor must include the best-known mode of carrying out her invention in the application. This allowed a person skilled in the art of the invention to perform or recreate the invention. The best mode requirement helps to protect the constitutional purpose of patents in “promoting the progress of science and the useful arts.” If an inventor were able to conceal the preferred embodiments of the patent from the public, yet still be granted a monopoly for the invention it would slow progress. Other inventors would be required to experiment to find the best use and embodiment of the patent, which may have been previously discovered by the patent holder. Due to its importance this requirement has not been removed by the America Invents act, but it has now been removed as a defense during litigation.

In a patent infringement cases a potential infringer could use this as a defense by invalidating an issued patent. If the inventor failed to disclose their best mode, it was a basis for invalidating, cancelling, or making a claim unenforceable if the inventor knew of a best mode and did not disclose it to the PTO. If the inventor did not know or realize the best mode prior to filing the application, the patent could not be invalidated. However, if they knew of the best mode concealment from the PTO would result in invalidation of the patent. Removal of the defense removes the tedious process of a subjective inquiry into the inventor’s state of mind. No longer may a fellow inventor assert that the patent holder knew of this embodiment, but did not disclose it to invalidate the patent. The purpose of this change was to do away with the troublesome subjective nature of this defense, while still requiring full disclosure in order to gain a monopoly over the invention.

Human Organisms

Lastly, the AIA has created a statutory bar for issuing a patent on a claim directed to or encompassing a human organism.  The concept of excluding human organisms from the scope of patentable subject matter is not new. Prior to the Act, it was policy under the USPTO that a human organism may not be patented. The act now codifies this requirement, writing it as a it law rather than a policy of the PTO. So if you were hoping to patent your clone, you are out of luck.

The above describes only a few changes the AIA will put into effect in patent law. Regardless of which version of patent law applies to an invention, the rules are complicated and confusing. Any inventor working to protect their idea should consult with an expert patent attorney. As technology becomes a more important aspect of daily life patents and the new ideas they protect will continue to gain importance. Hopefully will result in amazing new ideas and patent jobs for humble law students.

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So you have an idea!  Maybe it’s a pirate-vampire-zombie-graphic novel or a perhaps it’s hand-crafted-vegan doughnuts.  But you have this idea and it’s occupying all of your time. You keep thinking about how well it would work, the profits you’d most definitely make, and how your friends and family would find you impressive when you put together a traveling exhibition of the global dispersion of your family over 100 years from a small village in Lithuania. The problem is, what do you do with this great idea? How do you turn an idea into a financed project? A business? A movement? Whether the 99% Movement inspires you, or you just want to sculpt filigree skulls, a new way of raising money is quickly becoming the hipster’s Wall Street. These platforms are connecting people with cool ideas to those who want to pledge money to the idea.

Photo: Matthew Field

And if I Share With You My Story, Would You Share Your Dollar With Me?

These platforms are part of a new movement that is growing in popularity, “crowdfunding.” Crowdfunding is a means of raising money from numerous investors through existing Internet social media platforms. By facilitating relationships through Web 2.0, entrepreneurs can tap this resource when seeking capital to start a new business. Crowdfunding is a way of generating smaller dollar investments from numerous investors. Crowdfunding has long been a source of investment dollars in the entertainment industry for movie projects, documentaries, and bands on tour. As credit remains scarce, crowdfunding has increasingly provided small business owners with new sources of capital. Currently, the money raised through crowdfunding is completed as a contribution only with rewards limited to cool perks and merchandise to avoid any violation of Federal Securities Regulations.

In a speech given by the President last month, the White House released the American Jobs Act. The American Jobs Act covers a variety of proposals meant to stimulate the economy, some even have bipartisan support. One of the proposals is to create policies that support entrepreneur and small business access to capital. In this economic climate, where traditional financing is hard to come by because of increased restrictions on loans, entrepreneurs have turned to creative sources for gathering capital. As funding sources have evolved for small businesses, investors and entrepreneurs have faced hurdles in existing regulations that have not kept up with the dynamic nature of investing. As part of the job-boost outlined by the President, the Obama Administration indicated that it would work with the Securities and Exchange Commission (SEC) to review securities regulations from the perspective of small business with the aim of reducing regulatory burdens and increasing access to capital.

Regulators, Mount Up.

While crowdfunding has bi-partisan support from Congress and support from the business community, the laws that regulate securities remain a hurdle. The Securities Act of 1933 (the Securities Act) requires those selling securities publicly to register a particular offering with the SEC, which includes providing certain financial information and documentation in the form of a registration statement and detailed prospectus. Section 5 of the Securities Act prohibits promotion or solicitation of securities without registering an offering. This registration process can be extremely costly to small business owners. Congress recognized this burden and provided exemptions from registration including private offerings under §4(2) of the Securities Act. The exemption was clarified in the safe harbor rule under Regulation D.  Congress never explicitly provided parameters for determining the difference between a private and public offering. The Supreme Court has said that the important factors in determining if an offer is private are the sophistication of the investors and their access to all relevant information rather than any limit on the number of investors or dollar amount. These private offerings also have definite prohibitions against general solicitations. Another provision within Regulation D, Rule 504, provides an exemption for an issuer to raise up to $1 million. By falling within certain parameters, a company can sell freely tradable public securities through general solicitations. In order to do so, the company must be a fully operating company, beyond the development stage, and must maintain current filings under a state registration system.

Regulation of securities was born out of a demand for federal protection of investors after the stock market crash of 1929. The purpose of the Securities Act was to provide investors with sufficient information to make informed investment decisions and to prevent fraud on the part of issuers. Following the Securities Act, the Securities Exchange Act of 1934 (the Exchange Act) provided further regulation regarding disclosure by publicly traded companies. The Exchange Act provides registration requirements in §12(g) based on a company’s number of shareholders and total assets.  A company with more than 500 shareholders and assets exceeding $10 million must register with the SEC under the Exchange Act. This registration imposes periodic disclosure requirements on a company including filing of an annual report, a quarterly report, and periodic reports.

Crowdfunding, as a source of investors rather than contributors, would not currently fall under any exemption to the Securities Act because it is not limited on the sophistication of purchasers, it is not private by nature, and the call to invest is a general solicitation. In addition, there is no limit on the number of investors, so the company would be required to register under the Exchange Act. Because raising investment capital through crowdfunding is not an exempted offering, an entrepreneur is required to meet the hurdles of registration.

The current guidelines of these crowdfunding forums provide for how a contributor can be rewarded. To avoid any implications of pledges being considered investments, the rules of the game are that you can offer rewards that are not financial incentives. The sites provide guidance on how to offer perks while making it clear that all funds are contributions rather than investments. With the changes in securities regulation being proposed, these sites would now be available to entrepreneurs seeking actual investors to buy a financial interest in the company. These crowdfunding forums would become investment domains to buy a security interest in startups.

The next obvious question is what is a security and how do I know that I am selling one? The 1933 Act defines a security in §2(a)(1) and includes under this definition, the investment contract. The Supreme Court adopted the Howey test for determining what constitutes an investment contract, and therefore, a security under the 1933 Act.  In SEC v. W.J. Howey Co., the Court looked at four factors in identifying transactions as those dealing in securities: “(1) an investment of money (2) in a common enterprise and (3) is led to expect profits (4) solely from the efforts of others.” Based on these definitions, for example, it is highly likely that selling shares of interest through an open invitation on the Internet in order to raise money for starting a new food-cart would fall under the 1933 Act Registration Requirements.

The Times, They Are a’Changin.

As part of the American Jobs Act, the Obama Administration indicated that it supported changes in securities regulations to provide for a crowdfunding exemption. The legislation, originally proposed by Representative Patrick McHenry, would provide an exemption from SEC registration requirements for businesses seeking to raise capital through lots of small investors. The exemption would cover businesses or entrepreneurs who raise up to $5 million in capital, with a limit on individual investments of the lesser of $10,000 or ten percent of an individual investor’s income. The limits on the numbers of unaccredited investors would be erased in favor of this dollar limit. These changes, called the Entrepreneur Access to Capital Act, would allow businesses to access capital through crowdfunding without having to meet the rigorous requirements of Federal Securities Regulations. On October 5, 2011, the House subcommittee responsible for the Entrepreneur Access to Capital Act forwarded the bill to the full committee for approval.

While the benefit of these changes would be increased access to capital, the potential danger would be exposure to precisely what securities regulations aim to protect against. By not requiring companies to disclose certain financial information, investors may be left in the dark as to the actual viability of a company. There is concern that by allowing unaccredited investors the ability to invest large amounts of capital without the protection that securities regulation requirements provide, there is room for fraud and impropriety. In response, those in favor of crowdfunding find that investor protection rests on a fundamental aspect of this financing, opening it to lots of people for investment. This “crowd” aspect creates transparency, which may temper the effects of deregulation. There is also a stronger sense of community support through this style of investing. Crowdfunding makes venture capital accessible to small-scale business owners.

The Obama Administration has indicated that a key component of its economic recovery policy will be supporting small business. Beyond making capital accessible to small enterprises, the Administration has announced new programs including public-private partnerships, mentorship programs, and increased lending to small businesses. The hope is that these programs combined will serve as a launching pad for economic growth and, in turn, fuel the economic recovery. Crowdfunding has already skyrocketed in popularity with numerous websites dedicated to providing this platform. With deregulation allowing the scope of these platforms to expand to providing investment opportunities, crowdfunding could revolutionize financing as we know it.

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Four years ago the economy sunk like a brick battle ship. Every industry and every part of the country has been affected, leaving an underemployed and cash-strapped populace ill equipped to spend its money on legal services. Traditionally a strong sector, the current recession hit the legal industry hard. Slow business growth has left transactional attorneys hurting for work, and government cutbacks have forced layoffs of public sector attorneys. Law schools compound the problem by charging future laywers exorbitant tuition fees and accepting more and more students who will eventually enter the market and further add to the surplus of labor.  But from the depths of depression, I mean recession, there may be hope. Lawyers and firms are learning to adapt to the changing market, and young attorneys may be in a unique position to take advantage of the new ways that the business is evolving.

Everybody’s got problems

Before we get into possible solutions, we need to get down to the nitty gritty of what the problems are. The main problem facing lawyers, and everyone else for that matter, is a sustained lack of work. While most firms made it through the dot com bubble relatively unscathed, the scope and length of the current recession is forcing everyone to tighten their belts. Evidence of this abounds, for example, the legal industry suffered a net loss of 4,900 jobs in the first half of 2011. Like most sectors of the economy, the main culprits behind job loss in the legal sector are a combination of slowdown in private business and government budget cuts. These two factors create a snowball effect that suffocates  hopeful job seekers in its path.

Another issue for lawyers, especially young lawyers, is the additional problem of massive debt that one must incur to even enter the market. Debt exacerbates the effects of unemployment and some people speculate that student loans will become the next economic bubble to burst. In fact, the price of law school has easily outpaced inflation for the last 20 years, rising nearly 200% since the late 1980’s. Mounting debt has not deterred prospective law students, as the availability of loans and the allure of a high paying job has resulted in increases in law school applications of over 35% over in the last decade. Naturally, all of these law students will be seeking jobs every year, crowding the market and making jobs all the more scarce.

Simply put the legal industry is facing some serious problems. But is that where the story ends? No, that would be too depressing. Fear not timid reader, a few rays of sunshine can be seen breaking through the oppressive-looking clouds of unemployment and debt.

Out with the old, in with the new

Although transactional practice and government work, the two mainstays of the legal profession, have been on the decline, some areas of legal practice are surviving and actually thriving. Growing practices are generally associated with areas of law that experience activity during economic down turns; such as transfers of property (i.e. foreclosures), employment law, bankruptcy, and tax law. In addition, lawyers who have civil litigation and intellectual property practices are finding work as more corporations and individuals use the legal system to protect their economic interests. Finally, the small field of environmental law is going strong as government regulations and popular demand are driving more and more corporations to “go green,” and renewable energy projects are expanding. History teaches us that a bad economy can lead to new possibilities; for example, the field of administrative law (and not to mention a large expansion of government employment) emerged from the depths of the Great Depression. Tough times can lead to moments of great opportunity.

With everyone pinching pennies, firms with traditional practices have been forced to change. For example, clients looking to save a buck have taken on the bread and butter of law firms, billable hours. While a firm’s billable hours have always drawn the suspicious eye of a client, some clients in this economy are insisting on a flat fee billing scale, refusing to compensate lawyers based on an hourly rate. However, when it comes to high stakes legal battles, clients are still willing to put up the big bucks to go all in.

The decline of the billable hour system, while troublesome for lawyers of all stripes, is even worse for new associates. One of the main advantages of the billable hour was the ability to shift the cost of training new lawyers to clients since new lawyers will inevitably bill more hours as they learn the job. When that option is taken away firms will look to hire lawyers that can produce instant results without expensive handholding. On the other hand, if firms are forced to charge flat fees the market could become more competitive and newer or smaller firms may have an opportunity to undercut their big law brethren.

Broken Dreams: An Exercise in Coping

With the recession in its third year, attorneys have begun to find ways to deal with the down turn. Some have adopted cutthroat tactics by looking for ways to make themselves more valuable than other attorneys at their firm; like hikers that are chased by a bear, they don’t need to outrun the bear, just the other hiker. Other attorneys have taken a different approach and turn to each other for support during tough times. The formerly employed have begun banding together to network, offer job leads, and support each other.

Still, other out-of-work lawyers are jumping ship from the legal sector altogether, finding non-traditional work to either tide them over or as part of a more lasting career change. Newly minted lawyers must use any or all of the preceding coping mechanisms. However, some young legal eagles have found a different way to deal with the woes of the recession, a way that it is both cathartic and potentially financially rewarding. That’s right, the one-two punch of debt and joblessness has motivated a group of recent law school grads to sue their alma maters for allegedly misrepresenting post-graduation employment figures. Current standards of employment reporting allow schools to include graduates employed in any profession, be it waiting tables or arguing cases. These standards also do not factor in salary information from graduates who do not report it. This is a problem as it can result in a skewed picture of earning power if one makes the fair assumption that those who do not report their salaries are probably not doing so well. Employment reporting was thrust into the spotlight last June when the U.S. Dept. of Education questioned whether law schools are taking adequate steps to collect job placement information from their graduates. The disgruntled grads suing their universities argue that they would have never gone to law school if they had known the grim reality that awaited them.

Moving Forward

While the legal market is still facing some lean times, there is little doubt that the market will eventually recover. It has to, otherwise I will have to sue the University of Oregon and I am just not ready to go toe to toe with Phil Knight’s legal team. The recovery, when it comes, will necessitate that law firms and law schools learn to change the way they do business. The industry will not disappear; it will merely be different. After all, who can imagine a world without lawyers?

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April 20, 2011, marked the one-year anniversary of the largest environmental disaster in US history – the BP oil spill.  While the news cycle forever churns forward and we face new global disasters, the sludge from the oil spill is now settling on the ocean floor and the long-term problems are beginning to be defined. The Deepwater Horizon oil rig, leased by BP and owned and operated by Transocean, exploded into a fiery mass on top of an active oil well, coughing up billowy gray smoke as it burned chemicals for two days. The explosion killed 11 people and injured 17 people before it sank to the bottom of the Gulf.  In its wake, the inferno left an uncapped oil well that rapidly discharged oil like a carbonated bottle that had been violently shaken and uncapped.  The gushing well was finally capped on July 15 and sealed on September 19.  Three months and 4.9 million barrels later, the Gulf has been severely impacted and scientists are just beginning to see how extensive the damage is.  Immediately following the explosion, lawsuits began springing up around this disaster and continue to be filed each month.  Though the lawsuits are from a variety of sources, seeking damages for different types of harm, they all share one common concern with regard to the disaster left by the oil in the Gulf -accountability.  Sorting out who is to blame and allocating financial responsibility will likely to take years.

Photo: Lars Gange

Types of Lawsuits

On March 3, 2011, the state of Louisiana filed a complaint under the Louisiana Oil Prevention Act and the Louisiana Environmental Quality Act in federal court, seeking declaratory judgment against BP, Anadarko, Transocean, MOEX Offshore, among others, asking that they be held jointly, severally, and strictly liable for unlimited removal costs.  The complaint alleges that BP and the other defendants disregarded safety procedures and regulations, from the design and building of the well to the operating procedures on the day of the explosion.  The state is demanding $1 million per day from the companies.  In the complaint, the state outlines the varied damages incurred as a result of the oil spill—the loss of wetlands, response costs, costs incurred by losses to the fishing industry, costs incurred to evaluate the safety of the fish and shellfish coming from the Gulf, and other environmental and economic damages.

In December, the Department of Justice (DOJ) filed a lawsuit against BP claiming willful negligence and seeking civil environmental damages under the Clean Water Act (CWA).  The DOJ sought penalties under the CWA at $1,000 to $4,300 per barrel of oil spilled.  With scientists estimating that oil spilled out of the well at the rate of 53,000 to 60,000 barrels per day, that could lead to damages totaling $4 billion to $20 billion.  BP filed a response this month claiming that they were not willfully negligent and that the CWA allows for calculation of damages at a per diem rate of days that oil was spilling into the Gulf.  This method of calculation would lead to total damages in the $2.8 to $4.9 million range.  Any fines that a court awarded under the CWA would be paid straight to the Federal Treasury.  Senators from Louisiana and Florida have introduced bills that would funnel all fines paid out under the Clean Water Act by BP to the restoration of the Gulf Coast, rather than going straight to the Federal Treasury.

Over 500 other claims have been filed in courts across the United States, mostly in the Fifth and Eleventh Circuits, including a variety of class actions. Some class action suits are based on the “commonality of plaintiffs” through industry.  For example, the loss of income to the fishing industry of each Gulf state and loss of revenue to commercial charter fishing guide businesses, provides commonality.  Some class actions were filed by commonality of location by state, and those suits present common factual and legal claims of property damage to coastal cities.  In addition to the numerous class actions brought, many individuals are also seeking relief.  Deepwater Horizon workers have filed personal injury claims and wrongful death actions are being pursued on behalf of workers killed during the explosion. Even local boat owners hired to conduct cleanup are seeking personal injury and property damage claims.  BP itself is now seeking to share the financial burden created by the explosion of Deepwater Horizon and has filed lawsuits against Transocean, Halliburton, and Cameron.  BP is seeking $40 billion in damages and contribution from Transocean as the operator of Deepwater Horizon alleging misconduct and violation of maritime law.  In addition, BP filed suit against Halliburton, alleging that it played a critical role in the disaster (Halliburton poured the cement for the well).  BP is also suing Cameron, manufacturer of the blowout preventer, alleging faulty design and negligence in the maintenance.

Beyond the litigation surrounding the environmental and economic disaster that was created by the Deepwater Horizon explosion, shareholder derivative suits are starting to multiply.  State pension funds have filed civil suits as shareholders of BP who are seeking compensatory and punitive damages.  The state pension funds of Ohio and New York claim that BP shares lost over $90 billion of value and that BP misled investors to believe that the company was less risky than it actually was.  Shareholders have also filed separate derivative suits against BP’s corporate executives for breach of fiduciary duty and corporate waste.

The Gulf Coast Claims Facility

As an alternative to litigation, the Gulf Coast Claims Facility (GCCF) was established under the Oil Pollution Act of 1990 as a means to provide monetary settlement of certain claims related to the oil spill.  The Oil Pollution Act of 1990 was established in the wake of the Exxon Valdez oil spill to establish strict liability to the party responsible for the facility from which oil is discharged and outlined requirements of government and industry. The BP Compensation Fund, which funds and administers the GCCF, is headed by Kenneth Feinberg, who was jointly appointed by BP and the White House as administrator. BP established GCCF after the oil spill to pay damages resulting from the oil spill.  Those affected by the spill may file claims in lieu of going to court.  The types of claims that the GCCF will provide compensation for are: removal and clean up costs; damages to real and personal property; lost earnings or profits; loss of subsistence use of natural resources; and physical injury or death.  The payment options vary from providing interim payments to other final payments with the attached condition that you give up your right to file a lawsuit.  BP’s response to the oil spill has been massive.  BP has set aside $20 billion to the BP Compensation Fund that funds GCCF as well as $500 million to an independent environmental impact research project.  At the height of the disaster, BP suspended dividend payments and began to sell assets to cover the costs incurred by the spill.  In addition to financial considerations, the company conducted oil-skimming operations, beach cleanup, wildlife rehabilitation, and recognition that environmental and economic restoration efforts will be long term.

Moving Forward

By the end of 2010, BP estimated that its costs related to the oil spill would total $40 billion.  Scientists estimate it will be years before the full effects will be known. Mr. Feinberg, for the BP Compensation Fund, on the other hand, estimates that the Gulf of Mexico will have fully recovered by the end of 2012.  NOAA recently reopened the last 1,000 square miles of the closed Federal Gulf waters to fishing after indications that there was no detectable oil.  At one point, 88,522 square miles of the Gulf of Mexico were closed around the spill.  Whatever the long-term consequences are from this egregious environmental and economic tragedy to the Gulf coast region, the extent of the impact is apparent, as claims seeking damages continue to be filed. The number of claims thus far has amassed a mountain of litigation in multiple venues, which is increasingly difficult to monitor.  People will be looking to BP and others involved in the failed operation of Deepwater Horizon, to provide reimbursement for the associated losses to the fishing industry, tourism, local business, marshes, wildlife, ocean waters, and countless other areas that were impacted.

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In the Digital Age we live in now, everything you could want to know about a person is likely just a click away. From the TV shows “liked” on Facebook to today’s lunch as the latest tweet, there is a smorgasbord of information available out in the Interwebs; and for better or worse, more and more employers are mining that data. Some use it in their hiring decisions, but increasingly more companies are finding reasons to fire employees over what they’ve said online.

Hiring with Social Media

Photo Credit Johan Larsson

Social networking sites can be a gold mine for employers, assisting them in separating the wheat from the chaff of potential hires. A survey done last summer found that 83% of employers used social networking sites such as LinkedIn, Facebook, and Twitter in helping them evaluate job seekers. So does that mean you should lock up your online world so tight that potential employers can’t see how drunk you got last New Year’s? Well, maybe. Or, maybe not. Or even better yet, every law student’s favorite answer: it depends.

Even though hiring managers can peruse tweets and check out applicants’ Facebook walls, it might not be in their best interest to do so. They face potential liability from accusations of discriminatory hiring practices. Also, because Latinos and African-Americans are disproportionately underrepresented on social media sites like LinkedIn and Facebook, companies that use these sites face potential disparate impact claims. Title VII of the Civil Rights Act of 1964 prohibits employers from using policies that adversely impact a protected class, even if the employer did not intend any discrimination. So if an employer is only using LinkedIn to gather information about applicants, then the applicant pool may not be diverse enough due to the smaller number of minorities represented on LinkedIn. Thus, minority job seekers could be disparately impacted by this practice.

Another risk hiring professionals run while examining social media data is that they may stumble upon information they aren’t allowed to ask the applicant. Several topics, like age, religion, and family status, are off-limits in a job interview. Employers can try to mitigate the potential damage by creating a “wall” between the person who makes the hiring decision and the social media information. To accomplish this, another employee will gather the social media information, delete the protected information, and pass along what’s left to the hiring manager making the decision.

Firing with Social Media

While social media has many implications in the world of hiring, the firing over social media use is getting more recent attention. For instance, look to Aflac firing Gilbert Gottfried as the voice of the Aflac duck over his insensitive jokes on Twitter about the tsunami crisis in Japan. Also, there was a high profile firing of a social media firm used by Chrysler. The firm employee was let go after sending out a profane tweet via Chrysler’s Twitter account on accident (the employee meant to tweet the profanity on his personal account). Firing employees for their comments on the Internet is certainly not a new concept, but some studies estimate that the amount of employers firing over social media abuses is on the rise, from four percent in 2008 to eight percent in 2009.

NLRB Getting it Done

The employment law community’s interest recently spiked in social media firings thanks to the National Labor Relations Board (NLRB) stepping into the arena in two recent cases involving employees who were fired or disciplined for their comments on Facebook and Twitter. The NLRB filed a complaint last November against an employer who fired an employee for posting negative comments about her supervisor on Facebook. That case recently settled. Almost two weeks ago, the NLRB notified Thomson Reuters that it planned to file a complaint for disciplining an employee who tweeted that the company could improve the workplace by dealing honestly with the union.

The NLRB is a federal agency empowered by the National Labor Relations Act (NLRA) to protect the rights of employees and employers. The NLRA protects an employee’s right to discuss working conditions and unionization with other employees. In both the Facebook and Twitter cases, the NLRB found the employers at fault for impinging on this right.

In the Facebook case, a medical technician had criticized her supervisor in a Facebook status update. Other employees chimed in, supporting the employee’s negative remarks. The employer defended the firing, saying that she was not fired for the comments, but instead due to complaints from patients and other staff members. The NLRB stepped in because the company’s social media policy was overly broad and had been used to prohibit employees from discussing working conditions. The case settled in February, with the employer agreeing to change its social media policy so that it no longer restricts employees from engaging in protected concerted activities.

In the Twitter case, a supervisor invited employees to tweet about how the company could improve working conditions, so the employee replied via her twitter account that the company could deal better with the union. The next day, she received a call from management advising her that the company’s social media policy prohibited her from saying anything online that would damage the company’s reputation. The employee felt intimidated, but the employer defends the action by saying that it did not discipline her. Again, the NLRB stepped in to defend the worker’s right to discuss working conditions and unionization. This case is ongoing (Update 5/7/2011: it settled).

Is MySpace a SafeSpace?

Employers need not only be concerned about firing over social media postings if the posting could be construed as discussing working conditions, but they should also be careful how they obtain social media postings. Many people use privacy settings to control who can see what they’ve posted on Facebook, Twitter, or other social media sites, and some sites are better at ensuring privacy than others. If an employee locks up his/her social media presence, it’s probably a bad idea for an employer to find other means of getting at that data.

In Pietrylo v. Hillstone Restaurant Group, two employees set up a MySpace group (yes, MySpace still exists!) for past and current employees to vent about their employer. The group was password-protected and invite-only. Eventually, a manager learned of the group and with the help of another manager, convinced an employee with access to give them her login and password. The employees were then fired. Because of the manner in which the managers gained access to the group, the court found that the company had violated the Stored Communications Act (a really complicated act that most judges don’t even understand, but is essentially violated if you don’t have authorization to access stored data). The bottom line for employers: don’t snoop where you’re not allowed.

What up, Privacy Controls

With more and more companies monitoring social media sites for employee misconduct and to assist in recruiting efforts, employees and job seekers need to be aware of what they are saying online and who can access that information. Employers may not be able to fire you over what you say regarding working conditions, but that doesn’t mean that everything said online is protected from an employer’s action.

The news isn’t all bad, though. Since more employers are glancing at your online profile, you can use this to your advantage as an applicant. Companies have been successful at branding themselves with social media, and so can the employees. Each social media platform can be used to maximize one’s presence within a field of expertise. In this way, a public profile can actually help you find a job!

The Pietrylo case provides good news for employees and job seekers. If you don’t authorize your employer (or the company you’re seeking employment from) to access your private site, then the company faces liability if they try to access it through other means. However, publicly available information is fair game, so make sure your privacy settings are secure. Also, even if your tweets are protected or your Facebook privacy settings are maximized, if your boss is a Facebook friend or following you on Twitter, then what you say is available for their use. Don’t become this person.  Of course, it also can’t hurt to remember Thumper’s law when interacting with others online: “If you can’t say something nice, don’t say nothing at all.”

Setting the Stage

While Perezhilton.com is vehemently covering the conflict between Charlie Sheen and his own brain, every other news source is closely following the escalating situation in Libya. If Perez happens to be your only news source, let’s get you up to speed.

(PDF version of this article)

Perhaps inspired by the recent overthrows in the neighboring countries of Tunisia and Egypt, Libya too has found itself in the midst of civil war. By the end of February, a full-scale protest had begun. Many Libyans are up in arms over leader Muammar el-Qaddafi’s more than forty-year reign and are ready to pull the plug. Since the commencement of the rebellion, Qaddafi has used military force to suppress opposition to his regime. Qaddafi has ordered a multitude of attacks on opposition-supporting towns and cities, producing the loss of hundreds of civilian lives. Somehow in the crux of this turmoil, Qaddafi has become quite the media-junkie, using various news outlets to publicly threaten to “crush” the rebellious movement.

Qaddafi’s media savvy certainly comes at a price, and the world is collectively responding to his actions. The UN and its allies have spoken out fervently against the inhumane treatment of Libyan citizens. The United Nations Human Rights Council has even gone so far as to expel Libya from the Council. Many human rights organizations support the U.N. in promulgating its vivid message that those world leaders who “commit crimes against humanity will be punished”. Aside from the UN’s efforts, collective retaliation also involves the United States, along with Australia and Canada, all of whom have imposed economic sanctions against Libya.

As the protests continue in Libya, President Obama has inserted United States military forces directly into the country, characterizing U.S. intervention as a “humanitarian mission” to end social unrest in the country. The U.S. Constitution and international law doctrines, all of which proscribe legal limits on the President’s military authority, govern the United State’s participation in Libya. These doctrines are likely one of the many sources of controversy as the United States continues its involvement in Libya.

There is this Document… You Might Have Heard of It… The U.S. Constitution…

As the situation in Libya escalates, the United States must use its discretion in determining the level of its involvement, so as to not run afoul of international governance and to stay in compliance with our own U.S. Constitution.  Our “law of the land” describes the President as the Commander-in-Chief of the Army and Navy of the United States. This provision also confers to the President the power to lead the military in war once Congress has declared it.

However, the President’s powers are also constrained under the Constitution. Nowhere in the document is the President given express powers to declare war. In fact, that power resides solely within the province of Congress. Because the President must overcome these Congressional hurdles in order to go to war, the United States has only formally declared war on another country five times. You might ask: “What about our involvement in Iraq?” Fair enough. The War on Terrorism is considered an “undeclared war.”  Presidents have often sent the military into other countries under the guise of “undeclared wars” in order to avoid running afoul of the U.S. Constitution. Thus, a President who has reservations about Congress’s support might refrain from entering a country with express intentions of war. A President might instead enter a country under the auspices of a humanitarian mission or an intervention. (hint: the current president and the country this article is about).

I Do What I Want!

While the Constitution clearly – or not so clearly, depending on interpretation – enumerates the President can only lead a war, that belief has certainly gone to the wayside in the last fifty years. Since the end of World War II, there has been a steady shift in attitudes favoring the President’s power to wage war. Experts in constitutional law have taken note that after WWII, Presidents continue to develop the notion that “they can go to war whenever they want and ignore Congress.”  Given this purported leeway, it may seem that President Obama could to go to war anytime he sees fit. However, it’s not quite that simple, Article 1 Section 8 of the Constitution still says that Congress holds the war powers and no one else.  But if the Constitution is a living and breathing document, can’t things be molded to fit different interpretations? Yes, to an extent.

There Are Rules to Be Followed

There is no question that times, views, and opinions have changed since 1789, when the framers of the Constitution divided the war powers between the President and Congress. Some say this division was created with the intention that they would work together on the matters of war and that no one branch would have more power than another. Others argue that because the Constitution bestows the duty of Commander-in-Chief to the President, he would have the power to order the military to engage in hostile action, including war.  Even if it is widely believed that the President can declare war unilaterally, it does not necessarily follow that the President will receive support for the war. Congress ultimately has the ability to defund military operations ordered by the President. Thus, even though the President has already sent troops to Libya, Congress can jump in at any point and cut off funding.

The United Nations – of which the United States is a member – has initiated a no-fly zone in Libya and has “stressed the need to intensify efforts to find a solution to the crisis”. The UN Security Council has also authorized joint efforts that include the use of military force. However, the UN authorization does not supersede that of the United States Congress. Some citizens are questioning whether the UN’s authorization is enough to compel America to aid the efforts in Libya, let alone possibly engage in war. These critics contend that Congress – as a more accurate voice of the people – should have a say in when the U.S. is thinking about going to war.

President Obama has legally sent military forces to Libya under the War Powers Resolution (WPR). The Resolution states that “the President’s powers as Commander-in-Chief to introduce U.S. forces into hostilities or imminent hostilities, are exercised only pursuant to (1) a declaration of war; (2) specific statutory authorization; or (3) a national emergency created by an attack on the United States or its forces.”  However, even under the WPR, time is slipping away.  Congress must either declare war or authorize military action within sixty-days of the commencement of the recent U.S. military action; otherwise the President’s actions will be a constitutional violation.

Why Libya? Why Now?

Some have also criticized the United States’ decision to engage in Libya, when there are many countries facing similar social unrest. Some argue that there are alternative motives for the U.S.’s involvement in the Libyan revolution, while many echo the President’s rationale for supporting U.S. involvement in this foreign matter.Some argue along the lines of economic efficiency, urging that the U.S. only has so many resources and cannot be in every country at the same time. Others allege that the U.S. is acting selfishly. For example, there have been calls for the government to intervene in Yemen, where just last week, pro-Yemen governmental forces killed fifty protesters. Still, others speculate that the U.S. is hesitant to involve itself in these matters because Yemen and Bahrain are United States’ allies. Yemen is a key player in the war with al-Qaeda, and the fear is that the war on terrorism would be jeopardized by a U.S. intervention. Finally, some argue that the U.S. is keeping the involvement in Libya minimal because entering into a war with Libya would raise the U.S. tally of wars in the Middle East to three, which might objectively indicate that the United States has overreached itself in foreign affairs.

In an address to the nation, President Obama openly stated the U.S. involvement in Libya is for both “strategic and moral” reasons.  The President stood firm, stating that the U.S. will only take a supporting role to the UN in the efforts in Libya. Similarly, President Obama believes that to take no action in Libya would be a blatant disregard for the very morals and traditions the United States was built upon. But maybe some traditions should be changed? That is the sentiment from at least some Americans.

More Team America, Less World Police

Perhaps ironically, many of the critiques of U.S. involvement in Libya come from the same people who played a significant role in getting the President elected – the Millennials. The Millennials are the generation born between the years 1980 – 2005 and will be the next leaders of the country. The Millennials, by in large, are against foreign involvement. According to a new study by the Brookings Institution, the Millennials will likely be less “world power-ish” than our current government leaders and will err on the side of isolationism instead of globalism. Many of the young people who were surveyed felt the U.S. is too heavily involved in foreign conflicts. Many expressed a desire to scale back the military reach of the United States.

It’s possible the Millennial generation has taken notes from the history books and will not repeat the mistakes of its predecessors. Instead, it can be anticipated that the Millennials will look to the past to ensure that they intervene only where human rights are being grossly violated and where they are of the upmost concern. One thing we certainly know about this generation is that they are technologically savvy – just like Qaddafi. And whatever the future holds for Libya-like situations, you can be sure the Millennials will at least be tweeting about their generation’s constitutional controversies.

.pdf version of this article here

Take a second to think about how many times each day you use a computer to complete routine tasks.  Now, imagine that a government-instituted “Internet blackout” blocked all access to the Internet – no broadband, no Wi-Fi – not even a dial up connection. Without the Internet, you would lose the ability to read news, access Skype, Facebook, or Twitter, chat or email, and purchase products through Amazon or eBay. The recent events in Egypt have generated a lot of buzz about a government’s ability to regulate and potentially shut down the Internet.  On January 27, 2011, thousands of Egyptian citizens flooded the streets of Cairo to protest against the Egyptian government.  Two days later, Internet access began to dwindle, until service was no longer available in Egypt.  This Internet blackout continued for five days.  Why would a government order a shut down of the Internet?  Put simply, the Egyptian protesters were using social-networking sites such as Twitter and Facebook to organize the massive protests.  In an attempt to stop the demonstrations, the Egyptian government ordered the country’s four major Internet service providers to shut down service.  Meanwhile, in the U.S., the Cybersecurity and Internet Freedom Act (“CIFA”), aptly nicknamed the “Internet kill switch,” has been introduced in the Senate as a means to combat another kind of cyber threat.

Picture by Mike Licht, NotionsCapital.com

IS THE CIFA AN “INTERNET KILL SWITCH”?

In January, Senate Majority Leader Harry Reid and other congressional members put forth a placeholder bill named the “Cybersecurity and American Cyber Competitiveness Act of 2011,” and stressed that cybersecurity should be a top priority for the 112th Congress. Senators Lieberman, Collins, and Carper introduced the CIFA on February 17, 2011.  The objective of the bill is to give the government the power to limit Internet traffic in the event of a cybersecurity emergency.  It would grant the President the power to “authorize emergency measures to protect the nation’s most critical infrastructure, if a cyber vulnerability is being exploited or is about to be exploited.”  Any system or resource is considered to be part of the “critical infrastructure” if its destruction or disruption would cause a national or regional catastrophe.  The Department of Homeland Security and members of the private sector would work together to create a list of the systems and resources that would be part of the “critical infrastructure.”  This list would include both government and private sector facilities, such as banks, power plants, telephone companies, and Internet service providers.  In fact, 85% of the nation’s “critical infrastructure” is likely to be operated by the private sector. Also, the President could demand that access to any part of the “critical infrastructure” be shut off in the face of a significant threat. However, the exact meaning and scope of this language is being fiercely debated.

CENSORSHIP CONCERNS

Opponents of the CIFA range from civil liberties groups to owners and operators of the “critical infrastructure.”  They oppose the CIFA because they believe that the bill’s language is ambiguous. A letter written by the ACLU to the bill’s sponsors outlined three perceived risks with the CIFA.  First, the bill seems to grant the President a broad expansion of power over private companies, especially those deemed a part of the “critical infrastructure.”  Although the expansion of power would not authorize the President to take over the “critical infrastructure,” it would give him the authority to take undefined actions, such as limiting the public’s access for 30-day periods that may be renewed indefinitely.  The second concern is the ambiguity over which parts of the Internet would qualify as “critical infrastructure,” and to what extent these facilities would be shut down during a “cyber emergency.”  The ACLU is worried that the emergency actions taken by the President may shut down or limit Internet communications, which would limit systems that are necessary for the economy to function and for the public to communicate and access information.

Finally, the ACLU claims that the bill lacks an adequate definition for the term “cyber emergency.”  The CIFA does not define this term, but authorizes the Department of Homeland Security to “develop and coordinate the emergency measures necessary to preserve the reliable operation of the critical infrastructure.”  The underlying fear is that the government could use this bill to declare a cyber emergency in order to silence free speech or censor parts of or the entire Internet. Although the intention behind the CIFA may not be to stifle free speech, the bill will provide the government the ability to limit Internet traffic, and critics like the ACLU caution that this power has the potential to be abused.  In summary, the ACLU have asked that the power authorized under the CIFA be properly defined and restricted.

THE RESPONSE FROM THE SENATE: MYTH VS. REALITY

After the ACLU’s letter was sent to the committee, the Senators who authored the bill released a myth vs. reality fact sheet to address the concerns.  The fact sheet insists that the CIFA would not give the government the power to shut off all access to the Internet.  In support of this claim, it points to a provision in the CIFA which states, “neither the President . . . [n]or any other officer or employee of the United States Government shall have the authority to shut down the Internet.”  The Senators rebut the contention that the bill is an “internet kill switch” that will be used to regulate free speech or silence anti-government sentiment.  Instead, they view it as legislation intended solely to protect the U.S. from cyber attacks that would wreak havoc on the U.S. network.  They also argue that the bill is essential, because a cyber attack on certain areas of the “critical infrastructure” could affect a wide range of crucial components that are required to run the day-to-day activities of the US.

Each year, cyber attacks cost the government and private sector a significant amount of money. So far in 2011, attacks on US government facilities have cost over $1.8 billion per month. In addition, American businesses employing more than 500 people lose an average of $3,8000,000 per year to cyber attacks.  The attacks may worsen.  A quick Internet search of “hacked government websites” produces numerous articles and the details of the latest government sites that have been compromised. Every government site from the military to NASA has been hacked, and on the black market anyone with $500 can buy access to a hacked government site of their choosing.  The fear fueling the bill’s passage is that the next major cyber attack on either government or private sector facilities could prove to be disastrous.

The fact sheet also addressed the opponents’ concerns regarding the expansion of the President’s power over Internet traffic.  The Senators point to a provision that requires the President to use the “least disruptive means feasible” to respond to the threat, but does not authorize the government to take over the “critical infrastructure.”  In addition, the President would only be able to invoke this authority when a cyber attack results in mass casualties, severe economic consequences, long-term mass evacuations, or the severe degradation of national security capabilities.  Lastly, the fact sheet argues that the CIFA is actually a restriction of the President’s power, and they refer back to 1942, when Japan attacked Pearl Harbor.  In response to government fears about future foreign invasions, Congress passed legislation that gave President Franklin Roosevelt the authority to take over the telephone and telegraph networks.  After almost 70 years, the law is still on the books. Section 706(d) of the Communications Act grants the President broad authority to shutdown “any facility or station for wire communication,” when there is a war or a threat of war.  Although there is no mention of the Internet, this outdated provision would arguably extend the President’s ability to shut down the Internet any time there is a threat of war.  Thus, the provision in the CIFA stating that no government official will have the “authority to shut down the Internet” would actually limit the power the President currently has to control Internet traffic.  However, the effect that the CIFA would actually have on Section 706(d) is not clear.

THE FATE OF THE CIFA

The bill’s future is uncertain, and it has been referred to the Committee on Homeland Security and Governmental Affairs before it goes before the full Senate in the coming months.  Is the CIFA really an “Internet kill switch”?  Although it is unlikely that the President could actually shut down the Internet, there is always potential for abuse.  Ultimately, people have a right to speak freely without fear of government suppression, and the Internet is vital to communication.  But is governmental control of a private sector entity, even during a cyber emergency, what the U.S. needs?  Would it hurt the economy and stifle the free speech?  Or would it preserve the economic infrastructure for the greater good?  Regardless of your stance, one thing is for sure: any hint of a government-induced Internet blackout is bound to cause a ruckus.

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Now that the dust has settled on the 2010-11 NFL season, the springtime brings the annual tradition, known as “the offseason,” where millions of Americans must decide where to redirect their focus until next season’s kickoff. But in this around-the-clock, breaking news environment that has featured gripping tales such as the overthrow of Egypt’s president and the Congressional fight over this nation’s budget cuts, the discussion remains centered on the NFL. No, it’s not another game being played or a scandal involving a prized quarterback; this time it’s all about the labor negotiations between the player’s union (NFLPA) and the owners. Seriously.

NFL Commissioner Roger Goodell and NFLPA President DeMaurice Smith

The NFL’s popularity and grip over the masses is undeniable – this past Super Bowl was the most watched program and the most tweeted sporting event in history. But until a deal is reached between the thirty-two team owners and the NFLPA, there will be no NFL games played. At first glance, this appears to be nothing more than an argument between two groups of people who have more money than you and all of your friends put together, but fans are an important piece in the debate. It’s not just that public opinion matters; it’s also that countless non-players, non-owners, and cities stand to lose a lot of money if there is no football come August.

How did this happen? In May 2008, the owners voted to end the current revenue-sharing labor agreement after this past season in hopes of reaching a more favorable deal with the union. The main dispute arose over how to divide approximately $9 billion in annual revenue (additional issues include adding regular season games and a rookie wage scale). The following year, the teams began modifying the employment contracts for their top executives and coaches. Ironically, most non-player employees on teams work without any employment contracts. The modified contracts were written with a lockout in mind, and allow teams to cut salaries by up to 50% or terminate the employee with little notice if there is a work stoppage this season. As for the non-contract, “at-will” employees, teams are just laying them off as needed to cut costs.

An “at will” employee can be fired at any time for any legal reason (but not because of race, religion, gender, etc.) and has very limited legal recourses compared to a contract employee. The NFL employs thousands of people in positions ranging from equipment managers, talent scouts, and team doctors, all the way up to coaches and team executives such as presidents and general managers; these employees have salaries ranging from $50 per game for cheerleaders to $12.65 million annually for the league’s vice-president of media. The team owners currently refuse to disclose their teams’ financial records, which is another sticking point in the negotiations. So unless a generous owner or quarterback does his best Conan O’Brien impression, some of these employees, such as a New York Jets ticket sales team, will be without any help until the league starts up again.

Stadiums: A Love/Hate Relationship

If you think the relationship between non-players and the league ends at the employment line, think again. Increasingly over the years, teams in every professional sport have managed to capitalize on their ever-growing popularity to leverage their hometown cities into paying for lush new castles to house future home games. Also, cities are frequently held at gunpoint to pay for new stadiums; they either agree to some arguably lopsided financing deal, or risk losing the team to another city that is willing to pay up (please, a brief moment of silence for the NBA’s departed Sonics).

While many proposed stadium projects are approved and sometimes end up resembling the 8th wonder of the world, they are rarely without detractors. The most prominent example is Los Angeles, which has been yearning for an NFL team since the Raiders and Rams moved away after the 1994 season. One leading proposal offers a privately funded downtown stadium with a $1 billion price tag, but at a steep cost to the city. The proposal, led by Denver billionaire Phil Anschutz’s AEG, asks the city to lease out the lucrative downtown property for just $1 per year and to issue a $350 million bond – bonds are a city’s way of taking out a loan – to tear down part of an adjoining convention center. AEG assures that the bond money would be recovered through taxes generated by the stadium.

Additionally, AEG is lobbying state officials to exempt the stadium project from California’s Environmental Quality Act (EQA), which would render the stadium project immune from environmental lawsuits. A competing bid with plans to build the stadium some 30 miles away from downtown also faces some ardent opposition and has endured numerous political and legal battles. But this plan, backed by real estate mogul Edward Roski Jr., has already secured the critical EQA exemption via some very controversial lobbying efforts. Many see this exemption as a pivotal advantage between the two plans, as both Roski and AEG race to lure an NFL team to their project. As the Los Angeles saga unfolds and the 50 states face budget deficits estimated at $140 billion for next year, public financing might well become a thing of the past… or not.

The Woe of the Retired NFL Veteran

Finally, there are also the former players to think about. The NFL’s average player salary is $1.3 million, ranking them behind the NBA ($4.9 million), Major League Baseball ($2.6 million) and even the NHL ($1.8 million). NFL players also average the shortest careers (3.5 years), so a work stoppage could cripple any player who isn’t a marquee name, especially when you consider the spending habits of some who enjoy the high life a little too much. Though this may not arouse much sympathy, what could is the swarm of worker compensation claims filed by the numerous retired, less-compensated players. After years of “playing through pain,” their health care costs skyrocket due to rapidly declining health.

Last week, former Chicago Bears defensive back Dave Duerson committed suicide at age 50.  Follow-up reports suggest a link between brain damage and suicide among former players. Earlier in the month, ESPN featured a piece on another “Super Bowl Shuffle” alumnus, William “The Refrigerator” Perry, and his epic downward spiral into alcohol and obesity. So what legal avenues are available to retired players looking to treat old football injuries? The answer lies in the same place as it does for anybody looking to catch a big break – the Golden State.

Under California’s worker’s compensation laws, retired players can file claims for injuries sustained many years beforehand. To qualify for lifetime medical care from teams and insurance providers, a player must have participated in just one game in state. Enabling these suits is California’s statute of limitations, which does not begin to run until an employer notifies the worker of his right to a claim in the state. This allowed former players, such as Ralph Wenzel who played in the 1960’s, to file a claim just last year for assistance in treating his dementia. Teams have fought back, arguing that players waive such rights in their player-contracts, or that California lacks any jurisdiction to enforce the claims.

The Future of the Game

As of this writing, there is no new agreement in place for the lockout. But on February 17^th, the owners and players agreed to enter into federal mediation. Though this sounds promising, observers should remember that the Screen Actor’s Guild also entered into federal mediation before striking in 2008. Also, on March 1^st, a federal judge in Minnesota ruled that the owners’ contract with the TV networks (whereby the networks would still pay the owners $4 billion if no season were played) violated the collective bargaining agreement with the union. As expected, each side had its own interpretation of the judge’s ruling. Although nothing is certain until all appeals are exhausted and damages awarded, the ruling could prompt owners into a friendlier negotiating stance if their previously guaranteed revenues are withheld.

If nothing happens by March 4^th, the owners will figuratively and literally lock out the players, and there will be no football activities of any kind until a deal is reached. Naturally, both sides have and will continue to take to the airways and complain about how aggrieved they are and how their plight is unjust. In any event, fans everywhere are following the negotiations closely, because nobody wants to see a September without an excuse for avoiding families and household responsibilities on Sundays.

Written by: Sam Leineweber
Researched by: Laura Horton
Edited by: Kira O’Connor
Managing Editor: Adam Shelton

In case you haven’t heard, there has been a big to-do about the law and health care in the US since spring of last year.  Legal challenges to the Patient Protection and Affordable Care Act (“PPACA”), colloquially known as Health Care Reform or “ObamaCare” (depending on one’s political leaning), were filed mere months after its passage.  Recently, the PPACA was ruled unconstitutional in its entirety, setting the stage for an eventual Supreme Court showdown. The following article is a brief recap of what you need to know about the PPACA and the Constitution, so that the next time your legal-eagle friends try to lecture you about it, you can avoid feeling as lonely as a Clarence Thomas dissent.

Background

On March 23, 2010, the PPACA became law in the United States.  Key provisions of the PPACA expanded Medicaid coverage to people at 133% of the federal poverty line, closed the Medicare “donut hole”, prohibited denial of coverage for people with preexisting health conditions, and mandated individual insurance for all Americans by 2014.  The individual mandate portion of the PPACA has created of the most controversy and debate. A recent decision by a Florida district court, holding the individual mandate to be unconstitutional, may prove to be the entire Act’s undoing.  Three main the constitutional issues have arisen: 1) Federal power vs. State power 2) the scope of the Commerce Clause and 3) Severability.

Federal vs. State Powers

When Congress wants to pass national legislation, it must do so pursuant to one of its enumerated powers in Article 1 Section 8 of the US Constitution.  An act deemed to be overreaching one of these powers can be held unconstitutional.  On the other hand, a state has general powers from the 10th Amendment, to promote the health, safety, and welfare of its residents (“police powers”). These police powers give the state great leeway in law-making.

When a state law is challenged in federal court, a judge will generally apply a rational review standard, which determines whether a law is rationally related to advancing a police power. If a state law disproportionately affects a suspect class of persons, or infringes upon a fundamental right, the federal court will apply a higher level of scrutiny.  Conversely, when federal law mandates that the states adopt a law which would abrogate state police power, the federal government may be guilty of infringing upon state sovereignty.

For example, a state has the power to restrict the presence of guns in school zones through its power to promote the health, safety and welfare of its residents.  In Lopez, Congress tried to pass a similar law using its power to regulate interstate commerce. The Supreme Court struck the law down because Congress did not demonstrate that the presence of guns in schools zones substantially affects interstate commerce.

Congress uses its enumerated powers – such as the Commerce Clause – as the basis for passing most of our nation’s laws.  In the case of the PPACA, Congress used the Commerce Clause, and pundits immediately cried overreaching and voiced federalism concerns.

The Commerce Clause

Coincidentally, the second issue regarding health care reform is whether the PPACA is validly passed under Congress’ power to regulate interstate commerce.  Over time, the commerce clause has been interpreted to allow Congress to regulate nearly anything that affects economic activity between the states, including activity that does not seem commercial in nature.

For example, key pieces of civil rights legislation, such as outlawing discrimination in public establishments, were passed using the Commerce Clause.  The PPACA was passed with the idea that the health care industry and health insurance affect interstate commerce.  Given the lax treatment that courts have given Commerce Clause legislation over the past 80 years, this legislative theory seemed reasonable.  However, the individual mandate – requiring individuals to purchase private health insurance – has become a flash point for controversy.  Opponents say that the decision to not purchase something is a non-economic activity, and therefore cannot be mandated using the Commerce Clause.  Proponents argue that it doesn’t matter if one purchases or refuses to purchase health insurance, because either action would affect the health care market.

Severability

The final issue affecting the fate of the health care law is whether the individual mandate provision of the law is severable from the rest of the law.  Severability means that if one part of a law is unconstitutional, then it can be severed from the rest of the law. A severability clause is included in most legislation. But wouldn’t you guess it: the PPACA doesn’t include a severability clause, which means that if one provision of the law is found to be unconstitutional, the entire law may also be.

The Judicial Opinions

Of the lawsuits filed against the PPACA, twelve district courts have dismissed challenges on procedural grounds, and four federal court decisions have reached the constitutional merits.  There is an even split between the courts reaching the merits, with two courts holding the law to be constitutional, and two courts holding it to be unconstitutional. A Virginia district court held only the individual mandate provision unconstitutional, but a Florida court invalidated the entire law.

Judge Vinson is the Florida District Court judge who ruled that the PPACA was unconstitutional in its entirety.  His opinion was based on the three constitutional issues previously mentioned in this article. The first issue was whether the Medicaid provision infringed on state sovereignty.  The allegation stated that the Medicaid extension coerces the states to adopt the entire PPACA, due to the high cost it would impose on a state if a state did not adopt the Act.  Vinson sided with the PPACA on this issue, pointing out that because Medicaid is a voluntary program from which states are free to withdraw, the law could not be coercive.

The next challenge to the PPACA was that the individual mandate violated congressional Commerce Clause powers.  For this issue, Vinson seemed to take an originalist view of the Commerce Clause, focusing on the power of Congress to regulate the movement of goods across state lines, and making a sharp distinction between economic “activity and inactivity.” He invoked a “slippery slope” argument, reasoning that if the government could force a citizen to engage in a commercial transaction and call it the regulation of commerce, then Congress could do almost anything under its Commerce Clause power.

Finally, Vinson held that the individual mandate was not severable from the rest of the PPACA.  He largely based this decision on the PPACA’s lack of a severability clause, taking into consideration that the previous version of the bill included a severability clause. Vinson also acknowledged the argument made by the PPACA proponents, who claimed that the individual mandate is necessary for the functioning of the law as a whole. But as a result, most of the PPACA would be ineffectual without the individual mandate, which meant that severing it would nullify the law’s purpose. In short, Vinson held that the individual mandate exceeded the Commerce Clause power, and that without the individual mandate, the PPACA as a whole could not be upheld.

What Happens Next?

The Obama administration will be appealing the Florida v. HHS decision.  Ultimately, what everyone wants to know is how the Supreme Court will decide the case.  Most say the Supremes will have a 4-4 partisan split, with Kennedy supplying the swing vote. Although possible, there are additional factors that may come into play. First, in the past few decades, lower court precedent has had little influence on how the Supreme Court has come down on an issue.  With the lower courts evenly divided on the issue, the Supreme Court may not rely heavily on any individual opinion.

Next, because the fate of the PPACA is intertwined with modern Commerce Clause jurisprudence, it is important to review how major Commerce Clause legislation has been treated.  Recently, the Court has been putting the brakes on Congressional power. During the Depression, Congress was able to pass many laws through the Commerce Clause power that deviated from traditional regulation of goods in interstate commerce. However, beginning in 1995, the Supreme Court has been reigning in the Commerce Clause.  With that in mind, the fate of the individual mandate looks rather tenuous.

Finally, even if the Supreme Court invalidates the individual mandate, will it determine that the provision is severable?  While the PPACA does not contain a severability clause, many courts infer that an unconstitutional provision is severable even in the absence of a clause.  This means that Judge Vinson’s decision to invalidate the entire PPACA was not necessarily the correct one.

Now that you have an idea of what the PPACA does, the constitutional issues surrounding it, and its future, you can follow this debate with a discerning eye. If you’re worried about a certain outcome, you could move to one of the roughly thirty-two countries that already provides universal healthcare.  Alternatively, you could just have a celebratory cup of tea.

Bonus: click here to view a lively debate between University of Oregon School of Law Prof. John Greenman and former senatorial candidate Jim Huffman about the constitutionality of the PPACA.

Written by: Adam Shelton
Researched by: Jamie Dickinson
Edited by: Sam Leineweber
Managing Editor: Jennifer Hill

A Crackdown Close to Home…

In a special session held on November 20th, the Oregon Liquor Control Commission joined a growing number of states in adopting a temporary rule banning the sale and manufacturing of several caffeinated alcoholic drinks. The rule prohibits  the sale of a popular drink, Four Loko – colloquially known as “blackout in a can” – and several other alcoholic energy drinks, which have now been classified as “adulterated” under FDA regulations. These beverages earned that label because the FDA determined that the amount of caffeine contained therein is an “unsafe food additive” as used with the alcohol. According to the Oregon press release, the state is concerned with the drinks’ close resemblance to ‘normal’ energy beverages, which might make the drinks more attractive to underage consumers.

An analysis of the concoction from a scientific perspective reveals concerns with the increased risk of alcohol poisoning that these beverages can cause, due to the diminished sensation of intoxication. As early as 2006, a Wake Forest University study theorized that persons who combine large amounts of alcohol and caffeine do not perceive themselves to be as intoxicated as their blood alcohol content would indicate – thus increasing the risk they will drive drunk or consume more alcohol. While the new crusade against Four Loko has much public fervor, the drink has almost as many supporters as critics. This shouldn’t come as a surprise: caffeine and alcohol concoctions have long been an accepted part of our menus.

So… what on earth is Four Loko?

Phusion, a Chicago-based corporation founded in 2006 by three Ohio State University graduates, manufactures Four Loko. Phusion is a start-up company, which describes its business as a strong contributor to the economy (providing jobs to communities in 45 states), and philanthropic, contributing annual profits to fund a number of charities, including the American Cancer Society and the Ronald McDonald House.

The drink comes in a colorful, 23.5 ounce can (available in two main variations: 6% and 12% alcohol content). The can also features several warnings about the alcohol content and a “WE I.D.” notice. Phusion is adamant that 100% of their distributors receive and comply with the Phusion responsible drinking materials. The drinks are relatively cheap (approximately $12 for four cans), and seem to appeal to consumers who enjoy a more “up” feeling while drinking. The drink is quite popular with college-aged students because of the low cost and high alcohol content (the average beer contains less than 6% alcohol).

The Colorful Beast Rears its Head

The FDA first began investigating the drinks in 2009, at the urging of several state attorneys general. The FDA promptly alerted several major breweries and distributors of the investigation and requested that the manufacturers explain how these types of drinks were compliant with existing FDA regulations, or whether they had received any prior sanction from the FDA. Many brewers, including Miller (distributor of the popular “Tilt” and “Sparks” drinks) agreed to voluntarily take their energy-alcohol drinks off the market. Not surprisingly, public alarm about Four Loko also began to emerge around the time that the state attorneys general began issuing warnings.

Most of the governmental and public concern about the drink likely stemmed from the 2006 Wake Forest University study, which suggested a strong correlation between consuming drinks like Four Loko and increased risk for negative outcomes. In the last year, several tragic incidents involving Four Loko have made the national news. Students from Ramapo College in New Jersey and Central Washington University were hospitalized after consuming the beverage at parties – one incident may have even resulted in a fatality. In the aftermath of these events, many physicians publicly spoke out about the dangers of the drink.

Swift Moves by the the Federal Bureaucracy

Perhaps due to the intense media attention the drinks had accumulated, or simply as a result of their investigation, the FDA finally acted, sending out four different warning letters on November 17, 2010. The Alcohol and Tobacco Tax and Trade Bureau (TTB), which operates under a Memorandum of Understanding with the FDA, also sent letters to the four manufacturers. The FDA letters advised industry members that the FDA had reviewed seven malt beverage products produced by the four manufacturers, and concluded that: “as it was used in their products, caffeine is an unsafe food additive, and therefore the products are adulterated under section 402(a)(2)(C) of the Federal Food, Drug, and Cosmetic Act.”

Separate TTB letters informed the manufacturers of the same FDA findings, but also that the beverages were in violation of the FAA because they were mislabeled within the meaning of the Act. Additionally, the TTB letter encourages “all industry members who have received approvals from TTB and who have reason to believe that their products may not be in compliance with the FFDCA, to voluntarily surrender their approved labels and formulas to TTB.” The TTB assumed they would not need to take action, and that companies will comply voluntarily.

The Manufacturers’ Response

Before the FDA/TTB letters were postmarked, Phusion had already offered a public response, and agreed to remove caffeine, guarana and taurine from the drink. They will now produce only non-caffeinated versions of Four Loko. However, the response letter is unmistakably defensive: Phusion reiterates its belief that the combination of alcohol and caffeine is not inherently unsafe, and this is evidenced by the popularity of such combinations throughout history (e.g. rum and coke, Irish coffees). The response letter also states:

“If our products were unsafe, we would not have expected the federal agency responsible for approving alcoholic beverage formulas – the Tobacco Tax and Trade Bureau (TTB) – to have approved them. We hoped that clear, consistent, industry-wide standards regulating pre-packaged caffeinated alcoholic beverages would be the outcome of these conversations.  We also hoped others would share our commitment to transparency and fairness.   By taking this action today, we are again demonstrating leadership, cooperation and responsible corporate citizenship.”

Phusion representatives also criticized the police investigation from the Central Washington University incident. Phusion questioned why the officers had focused so heavily on Four Loko’s role, when other forms of alcohol were found at the campus party that ended with several students being hospitalized due to alcohol poisoning. According to the New York Times, Washington attorney general Rob McKenna responded that, “…some of the students who were hospitalized had only drank Four Loko.”

Meanwhile, Joose (United Brands Company Inc.), a less-popular brand that was also targeted by the FDA investigations, offered a different tone in their response letter. Like Phusion, United agreed to immediately remove all “energy drink substances” from its alcoholic beverages. Apparently, United was also eager to explain: “United Brands understands that the FDA ruling is a response to [...] incidents involved with consumption of a competitor’s products. However, United Brands is not aware of a single incident of injury or other harm associated with its products (emphasis added).” Ironically perhaps, Joose’s responsible drinking section on their website has less information on safe drinking than the Phusion site. Regardless, juxtaposing the differences in the two may cause one to ponder: does posting responsible drinking “information pages” really help to diminish the risks related with high-alcohol consumption? Does anyone (except this author) actually read them?

A Loko-Free Future?

Not all critics have boarded “ban Four Loko” train. Despite its recent prohibition in multiple states, some critics say parents are to blame—not Four Loko. To them, the assault on Four Loko has nothing to do with reliable scientific evidence and is just another moral panic that the media is propagating. Critics allege that the parents who are most vocal about the dangers of Four Loko simply wish to replace parental care with “gimmicky governmental oversight.” These ‘champions of individual choice’ say that education is the key to reducing alcohol related risks, and for combating the general rise in binge drinking. Others  echo the “nanny government” concern, and worry that the ban will actually do nothing to benefit public safety. Put simply: some consumers feel that if individuals want to mix alcohol and caffeine, they will find another way to do so. There is even fear that other products with added caffeine (like candy and soda) could also be affected by the FDA’s rationale.

Consumers may no longer be able to decide for themselves whether Four Loko is a party risk they’re willing to take. The FDA and TTB have prioritized their efforts to evaluate the risks the drink may pose. Recent studies seem to imply a nexus between caffeine consumption and the diminished “realization” that one is drunk, and hopefully research will continue to shed light on the subject. Meanwhile, in some states, a different sort of pandemonium seems to have taken hold: since the Four Loko ban, students in Florida and Massachusetts have resorted to guzzling alcohol-infused whipped cream instead. Until federal and state health agencies reach a verdict on whether they will tolerate a beverage with Four Loko’s potency, Americans will just have to live without this particular drink. But consumers won’t have to do it without some “Loko” comfort: there are still great options for dessert.

Written by: Moorisha Bey-Taylor

This football season, as many attempt to hone their “Teach Me How to Ducky” skills and zealously root for the nation’s top football program, local Internet rap sensation Supwitchugirl slowly contemplates its next licensing deal with the UO DuckStore. If it’s not licensing with what is considered one of the largest sports-merchandising agencies in the state of Oregon, then it’s being the topic of negotiations with major corporate entities, to assure Supwitchugirl is not infringing upon already existing legal property. What began as a trio of Duck fanatics creating a UO football-themed video for a journalism project, quickly went viral, and has since created a myriad of complex legal issues. Legal issues that many lawyers, let alone a group of undergraduate journalism students, may have never seen coming.

Who is Supwitchugirl?

Supwitchugirl ((h)wətsupwiðyoōgərl|), is a word mash-up derived from the phrase “Sup with it girl?”, which is commonly used as a pick up line directed at young women. The rap group Supwitchugirl consists of three University of Oregon seniors: Michael Bishop, Brian McAndrew, and Jamie Slade. These young men, now local celebrities, never dreamt their comical spoof on J-Kwon’s “Tipsy“, revolutionized into “I Love My Ducks (I Smell Roses)“, would take campus by storm, and generate close to one million You Tube hits. If that wasn’t enough, Supwitchugirl responded to the infectious demand, creating a second video, “I Love My Ducks (Return of the Quack)” (also a spoof, based on Mark Morrison’s “Return of the Mack“), which has quickly become the anthem for the Duck’s successful 2010 season. The latter video, released in September 2010, also has managed to attract close to one million You Tube Hits.

Outside of their tremendous success in mass media, the group has also been a sensation in sports merchandising.  It is estimated that they have sold over 75,000 shirts, with the words “I Love My Ducks” written conspicuously in bright yellow across the infamous ‘highlighter green’ shirts. For Supwitchugirl, the fortune and fame has managed to leak into every DuckStore – from Portland to Eugene – with the phrase being printed on everything from mugs to onesies.  It has been “I Love My Ducks” pandemonium, and the fans are loving it.  While this has been a dynamic time for Supwitchugirl and the University of Oregon, it has not come without pitfalls. As the saying goes, “with great success comes great responsibility.”

Trouble in Paradise: Puddles & the “Long-Term Handshake”

Supwitchugirl’s battle for intellectual property commenced when University of Oregon officials came down on them for the unauthorized use of the University of Oregon mascot, “Puddles,” in their first video. The university was largely concerned with the perception that the trademark governing the Oregon “Duck” was not the property of the University of Oregon, but rather property of the Walt Disney Company – due to its close resemblance with Donald Duck.

As the legend holds, in 1940, Walt Disney and university officials made a handshake deal in which Disney orally contracted with the university for permission to use “the Duck” as the University of Oregon’s official mascot. After the Disney Co. questioned the informal agreement in 1970, the parties stipulated into a formal agreement officially allowing the University of Oregon’s use of the Duck. Under its formal licensing agreements with Disney, the UO had to get Disney’s permission to use the Duck in any setting outside those described in the agreement. In terms of the actual mascot, the agreement said the UO had to ensure that the performer in the costume had “the ability to properly represent the DONALD DUCK character.” The agreement further listed where and when the costume could be used: generally at UO sporting events, or at fundraisers that Disney has approved of in writing in advance.

When Supwitchugirl featured the official mascot in their video, the university was concerned that this was a violation of the Disney agreement. The university went back to the drawing board with Disney, to again solidify the permissible uses of the “Duck”.  As a result of these negotiations, Disney concluded the “current incarnation of a costumed character featured at the University of Oregon’s athletic and promotional events (the ‘Oregon Duck’), is not substantially similar to Disney’s Donald Duck character.” Essentially, Disney concluded that Supwitchugirl’s use of Puddles in their video was not an infringement on the copyright.

I Love My Ducks: The Race to the Trademark Office

Supwitchugirl’s battle with the University did not stop at Puddles. Feathers were once again ruffled when the boys attempted to gain sole-ownership of the phrase “I Love My Ducks” by registering it with the US Patent and Trademark Office.  After entering into a licensing agreement with the University’s Office of Marketing & Brand Management, which permitted the university to produce and sell the shirts at rate of $12 per shirt and compensate Supwitchugirl $2 per shirt, the group decided that they wanted to own the phrase.

On November 23, 2009, Supwitchugirl filed their trademark application. The current status of the application is “Abandoned.”  Supwitchugirl withdrew their trademark application shortly after receiving a letter from Klarquist Sparkman, a private law firm assisting the University in intellectual property related matters (and one of the Northwest’s largest intellectual property law firms).  That letter, dated October 12, 2010, highlights some of the University’s strongest arguments in opposition to Supwitchugirl coining the phrase as ‘theirs.’ Specifically, the letter proclaims:

“There can be no question the DUCKS in I LOVE MY DUCKS refers to the University of Oregon’s athletic nickname and trademark DUCKS. The University’s athletic nickname has been DUCKS for nearly a century. As most everyone in Oregon knows and is widely known throughout the country…

Thus it is obvious that Supwitchugirl’s unauthorized use of DUCKS in the mark I LOVE MY DUCKS is likely to lead the consumers to which the athletic apparel is marketed to mistakenly believe that such apparel is associated with, authorized, endorsed, or sponsored by the University of Oregon…”

The University claims that the phrase  “Ducks” is widely known to refer solely to the University of Oregon and its athletic programs, and that if Supwitchugirl was allowed to own the phrase, it would cause substantial confusion to consumers and thus infringe upon the University of Oregon’s protected rights.

Dazed n’ Confused: “Likelihood to Cause Confusion” Standard

The standard of “substantial similarity”, invoked by both Disney and the University, is the same standard courts will adopt when analyzing the merits of any alleged trademark infringement. If the trademark is “substantially similar” to another, this will trigger the likelihood of confusion—that is, the alleged infringer will be prohibited from using a trademark on a competing product if that use causes a likelihood of confusion in the mind of a relevant purchaser.

Essentially, if the competing product is so substantially similar, that it would cause consumer confusion as to where the mark, logo, or sound is derived, it would be considered an infringement on the original owner.  Some key factors to look for when evaluating the likelihood of confusion include: the closeness of the appearance, sound, and meaning of the conflicting marks; the relatedness of the goods on which the marks are used; the channels of commerce in which the marks are sold; and the sophistication of the relevant purchasers of the goods.

In the case of the University of Oregon’s mascot Puddles, Disney acknowledged the Duck was no longer Donald Duck and asserted no trademark claim over the Duck, thus rendering the issue moot. Conversely, the University’s opposition to Supwitchugirl trademark “I Love My Ducks” stems from concerns that consumers would associate “Ducks” with the University of Oregon, which would infringe on the University’s alleged ownership.

Settling the Score

Courts have previously visited this issue of substantial similarity in the context of universities. In the Smack case, the Court held that Smack was liable for intentional trademark infringement based on its use of the color combinations of the schools. The Court found that the collegiate institutions had achieved “secondary meaning” in the minds of the consumers through their color schemes, logos and designs. Establishing secondary meaning in their colors schemes was essential for the schools to prevail on their claims of infringing use of unregistered color schemes and trade dress.

The Smack case is very factually similar to the current battle between Supwitchugirl and the University of Oregon. Nevertheless, this is a largely unsettled area of law, and it’s unclear how a court would rule on a trademark infringement case involving the “Ducks”. What is clear: universities have become mega spaces for sports merchandising, but also incubators for an immense amount of student creativity. This provides the perfect landscape for intellectual property battles. However, in the case of Supwitchugirl, it’s possible that these particular Ducks may have to go to battle against the very institution that inspired them.

Written by: Moorisha Bey-Taylor
Researched by: Eric Blaine
Managing Editors: Jesus Miguel Palomares & Adam Shelton

An epidemic is a disease that simultaneously affects a disproportionately large number of individuals within a population, community, or region at in given time period. America currently boasts a $68 billion dollar snack industry as well as 23.4 million children ages 2-19 who are overweight and obese. These two stats demonstrate that America could be at the dawn of a childhood obesity epidemic. According to the first lady, Michelle Obama, the situation is urgent enough to warrant the creation of a taskforce and anti-obesity campaign called “Let’s Move”, which aims to reduce the childhood obesity rates within a generation. Her goals are ambitious, and she proclaims, “we don’t have a moment to waste – because a baby born today could be less than a decade away from showing the first signs of high cholesterol, high blood pressure, Type II diabetes, if he or she is obese as a child.”

The Snackpidemic

Perhaps the First Lady is correct. The snack food industry, which has permeated American pantries, may be making American children fatter. A recent study conducted by the University of North Carolina at Chapel Hill found that, from 1977 to 2006, American children have added 168 snack calories per day to their diets. This equates to snack food comprising 27% of their average daily calories. Over a year’s time, a child can pack on six extra pounds thanks to high fast food consumption.

“Honey We’re Killing the Kids” and its variants provide an interesting pop culture perspective on the issue, as do the various self-appointed champions who take up their own fight against childhood obesity. Doctors were initially at the forefront of this battle; now politicians and the media have joined. Lawyers too, have been instrumental in bringing to light the gravity of the situation. Most can recall the infamous lawsuit, Pelman v. McDonalds, in which a family sued McDonald’s for making it fat. Despite the criticism and mockery it attracted, Pelman arguably remains the most well known case in “obesity litigation”.

Pelman v. McDonalds

Pelman v. McDonalds was a class action lawsuit filed in 2003 by parents of several minors in New York. The plaintiffs claimed they were subjected to McDonald’s deceptive advertising and nutritional disclosure practices in violation of New York Consumer Protection Laws. The parents alleged these practices led them to purchase and consume large amounts of McDonald’s food. The class members were all “Heavy-Users,” defined as those who ate McDonald’s at least once or more per week, or “Super-Heavy Users,” consuming McDonald’s at least four times or more a week during the period when the alleged deceptive advertising occurred.

While the media mocked the suit for its alleged frivolity, the case survived through the US Court of Appeals 2nd Circuit with McDonald’s unable to simply laugh the plaintiffs out of court. Ultimately, McDonald’s reluctantly settled when faced with the alternative of tens of millions of dollars in litigation expenses. So what is to be made of this newfound plaintiffs’ success in “obesity suits”?

Social Policy Tort Litigation

Lawyers have long used litigation as a tool to combat various public health problems. For instance, we’ve seen litigation used for gun control and to impose responsibility on the tobacco industry. Litigation against fast food companies has thus become a part of this larger public health umbrella to combat the obesity epidemic. But what exactly is this “obesity litigation”?

Generally, obesity lawsuits “claim that companies failed to warn consumers of the harmful contents of their food; that food advertising is misleading or deceptive; that food is addictive . . . or that defendants’ food contributed to consumers’ obesity.” Essentially, because the fat content of the food was not conspicuous enough, plaintiffs argue that they were mislead and therefore could not understand that the food was leading to their obesity.

Unfortunately for plaintiffs, it is often very difficult to bring a tort suit against a food giant. These claims tend to fail in proving the causation element, because it is difficult to prove the link between one’s “choice” to consume fast food and one’s resulting obesity. Obesity suits often stand a better chance if brought under consumer protection statues. Instead of alleging the food “made” them fat, plaintiffs can use the consumer protection statues and argue that companies failed to warn their customers of the potential negative consequences of eating their food. Consumer protection statutes make it easier to demonstrate a link between the company’s behavior, such as a misleading advertisement, and the public’s direct losses—money that the consumer spent on supposed “healthy” products that were actually making them fat.

Getting the Industry into Shape

There are myriad ways whereby litigation can be a useful tool in fighting the obesity epidemic and shaping public health policy and legislation. Litigation can act as a catalyst for industry and cultural change, resulting in heightened social awareness. Further, obesity lawsuits can educate the public about the dangers of unhealthy food, facilitate increased prices for fast food, decrease consumption of such food, and compel the industry to cease deceptive marketing strategies. From a public health standpoint, successful litigation does not always require a victory in court; litigation is still effective if it results in change of public perception and incites change in industry practices. We have seen litigation result in an infectious spread of knowledge about the detrimental effects of tobacco. So can it have an analogous effect on the fast food industry?

Many legal scholars already assert that fast food litigation has led to several positive results. They argue obesity litigation has promoted voluntary changes in the food industry to offer healthier choices. Even when considering only the media attention brought by these suits, one can see the growing effect obesity litigation has on the public and private sectors. On one hand, the publicity causes a heightened public awareness – getting people talking about the issues. On the other hand, the heavy media attention can incite fear in many companies, who abhor negative publicity drawn to the ingredients of their products.

For example, shortly after the Pelman case, a nonprofit group filed a provider-focused lawsuit against Kraft Foods, attacking the company for including dangerous trans-fats in Oreo cookies and marketing them to young children. Immediately after the lawsuit received extensive news coverage in 2003, Kraft announced that it would eliminate the trans-fats and in 2004 introduced trans-fat-free varieties of the product. So perhaps litigation is serving a purpose in encouraging healthier choices.

Is the Court “Supersizing” its Judicial Power?

Other scholars, however, argue that litigation is not the proper mechanism for addressing the obesity problem. Berkeley law professors Stephen D. Sugarman & Nirit Sandman cite two reasons for this position: (1) that plaintiffs face many hurdles in establishing causation in obesity torts, and (2) using the courts to set such policy encourages judicial paternalism and violates the constitutionally mandated separation of powers—precluding the courts from deciding issues more suitable for the legislature. These critics view obesity litigation as a venue for judicial policymaking and therefore undemocratic. More specifically, they argue that the court’s role should be limited to enforcing strict adherence to procedural requirements, and that the courts undermine their own credibility as unelected, objective referees, when they impose legislative-type policy change. Under this view, only the legislative branch is equipped to weigh various public opinions and make difficult decisions about public health.

Other opponents argue that obesity and its causes are personal choices and solely the province of the individual to manage. These critics accuse the court of diminishing individual responsibility by allowing such cases to proceed. They argue that litigation creates a windfall for those who eat excessively and then blame the industry for their resulting poor health.

The Fight Continues…

Obesity litigation is a difficult puzzle to solve. It is a very complex, nascent area of the law where the claims are not always successful. Even proponents of obesity litigation, such as the Public Health Advocacy Institute, acknowledge that it should not be relied on as a unitary strategy. They argue that litigation, coupled with legislative action that pushes towards stricter FDA regulations and increased public education on healthy eating habits, presents the best multi-layered approach to improving public health. Although obesity litigation alone will not solve the obesity epidemic, it is an important component to a multidimensional strategy to combating the problem. Regardless, it remains a very sweet tort, and instead of “supersizing” that Happy Meal, many may start supersizing those law suits.