Commercial Litigation Archives - Page 3 of 11

October 5, 2021-

Facebook is not “off the hook” after the Third Circuit ruled Section 230 of The Communications Decency Act does not protect the social media giant from liability in the use of a news anchor’s image in ads for adult dating services on its platform. Hepp v. Facebook, Inc., No. 20-2725 (3d Cir. 2021).

Karen Hepp, a morning news anchor for Fox 29’s Good Day Philadelphia, was made aware by colleagues in 2018 that her picture was appearing in ads for erectile dysfunction products and adult dating services on Facebook. The images were posted without Hepp’s knowledge or approval, nor was she receiving compensation for the use of her image.

In her suit against Facebook, Ms. Hepp alleged violations of her right to control her public image and likeness under Pennsylvania law, made more pertinent by the fact her face is well recognized by the public in her professional capacity as a television news anchor.

Though internet providers like Facebook are generally protected by the Communications Decency Act from liability stemming from third-party content, the Third Circuit ruled in favor of Ms. Hepp, citing her intellectual property rights and status as a public figure in the section 230 carve out. The fact the image was used for the sale of “prurient” goods on Facebook without Hepp’s permission or compensation helped bolster the narrow 2:1 opinion on the Court. The majority opinion held section 230 did not bar the state intellectual property claims, while the dissent did not see them as falling under the federal statute.

The case has brought the issues of free speech in new media and intellectual property to the foreground, and has attracted the attention of The Electronic Frontier Foundation (in support of Facebook) and The Screen Actors Guild (showing support for Ms. Hepp’s interest in controlling the use of her image and likeness). The Third Circuit’s split away from a Ninth Circuit decision on the same issue could bring Ms. Hepp’s case as far as the Supreme Court.

Click here to read the original article from the Associated Press.

Click here to read the opinion of the Third Circuit. Hepp v. Facebook, Inc., No. 20-2725 (3d Cir. 2021).

Click here to read how AC-Counsel can help you in matters of Intellectual Property.

October 4, 2021-

The New York International Arbitration Center’s (NYIAC) press release on September 21^st confirmed New York City as a leader in International Arbitration and solidified the city’s growth in the area.

The International Court of Arbitration of the International Chamber of Commerce (ICC) released statistics showing a marked increase in the number of new US arbitration appointments, up from 107 in 2019 to 153 appointees this year alone. Their data also show of 929 new cases involving 2,507 parties, 25% were from the Americas.

Behind only UK nationals, US citizens were the second highest selected group of arbitrators, consisting of a diverse group of individuals experienced in solving both US and international disputes. Of 88 cases seated in the US, 49 took place in New York City, affirming the importance of the New York chapter of the ICC and the NYIAC.

To read the full press release and learn more about the NYIAC, click here.

To learn how AC-Counsel can help you with matters of International Arbitration, click here.

June 4, 2020 — The phased reopening of New York City and the surrounding boroughs raises a plethora of issues and considerations for stores, restaurants, bars, and other customer-facing businesses planning to operate during the ongoing pandemic. Chief among those concerns is likely potential liability to customers who may be exposed to COVID-19 at your place of business. It is not hard to imagine endless scenarios involving business patronage and sudden onset of COVID-19 symptoms, so how can your business adequately protect itself from an onslaught of lawsuits related to the novel virus? Exculpatory agreements.

Exculpatory Agreements Explained

Exculpatory agreements are contracts that limit the legal duties owed by one party to the other. In the case of customer-facing businesses, exculpatory agreements may be used to limit liabilities to customers by having customers waive their rights to sue the business on certain grounds. Although it is essential for business to take the necessary and proper steps to protect their patrons, it is equally essential for business owners to mitigate their liabilities in such uncertain times. Utilizing an arbitration clause or class action waiver in an exculpatory agreement could further fortify protections against COVID-19 related liabilities. In essence, the goal of utilizing exculpatory agreements is to prevent rebuilding businesses from the burden of extensive litigation costs for perceived negligence or circumstances out of the business’s control.

Although insisting that patrons sign waivers before dining at a restaurant or shopping at a store may seem to be extraordinary, consumers and business owners alike must recognize that the risk of returning to non-essential daily activities cannot be a one-way street.

Exculpatory Agreements in New York

In New York, the ability to enforce exculpatory agreements depends on the nature of the business. Waiver of rights will always be met with close judicial scrutiny, but nonessential businesses should be able to enforce clear and unambiguous exculpatory agreements that protect them from liability for negligence, but not for gross negligence, recklessness, or more serious deviations from their standard duty of care. New York courts have found that such exculpatory agreements will be upheld in commercial settings and for nonessential social activities that “are freely engaged in by consenting parties.” Rosenthal v. Bologna, 211 A.D.2d 436 (N.Y. Sup. Ct. 1995). Even so, New York public policy considerations may be used to invalidate exculpatory agreements depending on the parties’ relationship, such as with common carriers, utility companies, employer-employee relations, or hospice care, or if the agreement runs afoul of New York’s interest in the health and welfare of its citizens.

Additionally, New York statutes prohibit liability waivers in the context of landlords, caterers, building service or maintenance contractors, maintenance of parking garages, pools, gyms, or places of public amusement or recreation. N.Y. CLS Gen Oblig. Law § 5-321 et. seq. Whether a restaurant or retail store can be considered a place of public amusement or recreation is unclear at this time. Another point of caution concerns businesses geared toward minors because minors are generally able to void any contract they enter into and courts are somewhat reluctant to enforce agreements waiving a minor’s rights when parents sign on their behalf.

Learn how CASTAYBERT PLLC can support your exculpatory agreement needs here.

June 3, 2020 — In a dispute between GE Energy Power Conversion France and Outokumpu Stainless USA, the Supreme Court of the United States issued a unanimous opinion holding that non-signatories to arbitration agreements can compel arbitration in the United States. The Court found that the New York Convention, an international pact between 160 member countries to enforce arbitration agreements between member state companies, was silent as to whether non-signatories to such arbitration agreements could compel arbitration. After acknowledging that the Convention was drafted to permit domestic law to fill the gaps left by the Convention and considering the historical application of the New York Convention, the Court saw no reason to prohibit non-signatories from enforcing applicable arbitration provisions.

Find more detail on this case here. Learn how CASTAYBERT PLLC can help you with your commercial litigation and arbitration needs here.

May 4, 2020

Online marketplaces like Grailed, GOAT and The RealReal have emerged in recent years as fashion retail disruptors. Emerging online marketplaces have provided high-fashion consumers and “sneakerheads” access to an incredible assortment of “genuine” new, used, and vintage clothing, shoes, and accessories, often in a peer-to-peer marketplace, for well-below retail prices. As with eBay in its 2010 dispute with Tiffany & Co., however, these emerging second-hand fashion marketplaces are now having to defend their use of genuine trademarks and marketing of counterfeit goods.

Background

A recent case concerning second-hand fashion marketplaces involves a dispute between iconic fashion house, Chanel, and high fashion consignment-retailer, The RealReal. Chanel needs no introduction, but to those unfamiliar with The RealReal, it is an online and brick and mortar consignment shop that sells high-fashion second-hand merchandise to consumers through an online “marketplace.” The RealReal prides itself on its rigorous authentication process designed to ensure that every item for sale on The RealReal is “100% the real thing.” Unfortunately, these authenticity guarantees were not “100%” supported by its sales, as at least seven counterfeit Chanel items were sold to consumers by The RealReal.

The Court’s Decision

On March 30, 2020, Judge Vernon S. Broderick of the United States Southern District of New York issued a notable decision on Chanel’s trademark infringement and counterfeiting claims against The RealReal. Judge Broderick distinguished the Second Circuit’s decision in Tiffany v. eBay and denied The RealReal’s motion to dismiss Chanel’s counterfeiting and false advertising claims. The Court, however, granted The RealReal’s motion to dismiss Chanel’s trademark infringement claims.

Counterfeiting Claim

Chanel brought trademark counterfeiting claims against The RealReal pursuant to 15 U.S.C. § 1114(1)(a) on the grounds that The RealReal had sold counterfeit Chanel products through its marketplace. In its motion to dismiss, The RealReal analogized its marketplace to eBay’s and argued that it was not liable for the sale of counterfeit products in its marketplace. The RealReal maintained that the Second Circuit decision rendered in Tiffany v. eBay should prevent the Court from holding The RealReal liable to Chanel.

The Tiffany Court held that eBay’s knowledge that users sold counterfeit goods on its marketplaces could not be the basis for a direct trademark infringement or counterfeiting liability because eBay had consistently removed counterfeit listings and taken steps to identify and remove any counterfeit Tiffany products for sale. The RealReal argued that, like eBay, it has implemented stringent measures to ensure the authenticity of the products in its marketplace and that it does not knowingly list counterfeit products for sale.

Despite these similarities, Judge Broderick rejected The RealReal’s argument and found that The RealReal’s marketplace differed significantly from eBay’s. The Court’s distinction was largely premised on the fact that The RealReal “takes possession of all items and physically evaluates every item to authenticate it.” Chanel Inc. v. RealReal, Inc., 18-CV-10626 (S.D.N.Y. Mar 30, 2020). The Court found that while eBay serves as merely a sales platform for peer-to-peer third party sales, and is not involved in any aspect of the individual sales, The RealReal is heavily involved with every aspect of every sale on its marketplace.

The Court found that, as a result, “The RealReal itself controls a secondary market for trademarked luxury goods, and by curating the product offered through that market and defining the terms on which customers can purchase those products, The RealReal reaps substantial benefit.” Id. at 22. Therefore, the Court held that The RealReal should bear the burden of the potential liabilities and permitted Chanel’s counterfeiting claims to proceed.

Takeaways

Tiffany v. eBay was previously understood to provide broad protections for online marketplaces from direct liability under anti-counterfeiting laws so long as the marketplace took substantial steps to thwart the sale of counterfeit goods. Judge Broderick, however, took a narrower view of Tiffany v. eBay decision in finding that online marketplaces with substantial control of product authentication and marketing could be held responsible for the sale of counterfeit goods. Although the full implications of this decision on online marketplaces are yet to be seen, companies similar to the RealReal, and entrepreneurs pursuing like-ventures, should take heed of the distinctions drawn in this case.

Trademark Infringement Claim

Chanel’s also alleged trademark infringement claims against The RealReal pursuant to 15 U.S.C. § 1114(1) based on The RealReal’s use of genuine Chanel trademarks. To determine whether there was a likelihood of consumer confusion, the Court applied the eight-factor Polaroid test that the Second Circuit adopted in Polaroid Corp v. Polarad Electronics Corp., 287 F.2d 492 (2d Cir. 1961).

The Court also applied the three nominative fair use factors derived from New Kids on the Block v. News America Publishing, Inc., 971 F.2d 302 (9th Cir. 1992). After analyzing the facts of the case using the applicable factors, the Court determined that The RealReal’s use of Chanels genuine trademarks constitutes nominative fair use. The Court reasoned that retailers are permitted to use genuine trademarks to describe products so long as the retailer does not create confusion by implying affiliation with the genuine trademark holder.

Likelihood of Confusion and Nominative Fair Use

In its Polaroid analysis, the Court found that: 1) Chanel’s marks are incredibly strong and recognizable; 2) despite competing against Chanel’s primary market offerings, evidence shows that The RealReal’s secondary market may in fact bolster the primary market; and 3) Chanel showed no evidence of actual consumer confusion. Balancing the factors, the Court concluded that “it is highly unlikely that a customer buying a secondhand Chanel product from The RealReal . . . would confuse the nature of the The RealReal’s business, the source of its products, or its affiliation—or lack thereof—with Chanel.” Chanel at 18.

The Court reached the same conclusion in its analysis of the nominative fair use factors, finding that “Chanel has not plausibly alleged facts suggesting that The RealReal ‘stepped over the line into a likelihood of confusion by using [Chanel’s] mark[s] too prominently or too often, in terms of size, emphasis, or repetition.” The Court also noted that The RealReal’s assurances of product authenticity, without more, were insufficient to create a likelihood of consumer confusion.

Because the Court found that Chanel had not demonstrated a likelihood of consumer confusion, overuse of Chanel’s marks, or an inaccurate depiction of the relationship between the parties, the Court granted The RealReal’s motion to dismiss Chanel’s trademark infringement claims. The Court also held that The RealReal’s use of Chanel’s marks amounted to nominative fair use.

Takeaways

Judge Broderick’s ruling essentially confirms the common understanding of the use of genuine marks to sell secondhand goods; nevertheless, this was a welcome affirmation for online marketplaces. In the wake of this decision, online retailers should remain cautious about their use of unaffiliated brands’ trademarks to ensure the use of genuine marks does not signal confusing affiliations to consumers.

Read the full decision here. For information on how CASTAYBERT PLLC can assist you with your intellectual property needs, visit our intellectual property page here.

March 20th, 2019 – Enacted by Congress in 1925, the Federal Arbitration Act (“FAA”) was intended to ensure the validity and enforcement of arbitration provisions in contracts. Since its enactment the FAA has been shown deference by State and Federal Courts alike reflecting Congress’s goal of encouraging disputes to be resolved outside of the Court system.

In case there was any doubt, both the Supreme Court and the New York Appellate Division – First Department have recently issued rulings reaffirming this deference to the arbitration process. The rulings demonstrate the courts’ willingness to strictly enforce arbitration agreements at the front-end of the process as well as showing deference to an arbitrators award at the back-end.

For details on these cases, please visit this article posted this month in the New York Law Journal.

For information on how Castaybert PLLC can assist you with your arbitration needs, please click here.

On January 25th, 2019 Governor Andrew Cuomo signed the Gender Expression Non-Discrimination Act (GENDA) which bans discrimination based on gender identity or expression. The statute defines “gender identity or expression” as a “person’s actual or perceived gender-related identity, appearance, behavior, expression, or other gender related characteristic regardless of the sex assigned to that person at birth, including, but not limited to, the status of being transgender.”

GENDA requires that gender identity and expression be treated as a protected class similar to race or sex. This means that employers in New York cannot hire, terminate, or discriminate against any employee on basis of their gender identity or expression. This measure will also extend to landlords and other places of public accommodation across New York.

The work place discrimination provisions already took effect on February 24th, 2019. Thus, employers should take extra care to ensure all of their policies and procedures comply with GENDA and any necessary changes should be implemented swiftly.

For information on how Castaybert’s experience in employment law matters can help you, please click here.

Jan. 1, 2019 — André Castaybert, principal attorney at Castaybert PLLC, has received a “Preeminent” AV rating in ethical standards and legal ability from the 2019 Martindale-Hubbell peer review. This is the highest possible honor that Martindale-Hubbell can bestow upon an attorney. This marks 6 consecutive years that André has received this award.

September 28th, 2018
In New York the general policy is to facilitate the recognition and enforcement of foreign money and non-money judgments. Recognition is when a court converts a foreign judgment into a U.S. judgment which prevents re-litigation. Once recognized, a party can then invoke procedures for enforcement of the judgment under New York law. The law that governs money judgments is the Uniform-Foreign Country Money Judgments Recognition Act (the “Act”), whereas the non-money judgments are governed by New York common law.

For money judgments, the Act applies to any judgment of a foreign state granting or denying recovery of a sum of money. It does not cover judgments for taxes, fines, or other penalties; nor does it apply to support judgments in matrimonial or family cases. The Act has three requirements for recognition. First, it must be a final judgment. A judgment can be final even if it is subject to appeal. Second, it must be conclusive – meaning the judgment grants or denies recovery of a sum of money. Finally, the judgment must be enforceable where it was rendered. This means if there are any circumstances under the law in the country where the judgment was rendered that would make it unenforceable there, it cannot be enforced in New York. The most common of these is a statute of limitations in a foreign country that has expired for the recognition action in the U.S.

In addition to the three requirements, the Act provides two mandatory grounds on which a New York court must not recognize a foreign money judgment. First, is if the judgment was given under a system of law which does not provide procedures that comport with the New York standards of due process. An example of proper due process would be that the defendant was given notice of the proceedings and provided with adequate time to prepare his defense. Second, the foreign judgment must not be recognized if the foreign court did not have personal jurisdiction over the defendant – meaning the defendant must have had sufficient minimum contact with the jurisdiction in which the foreign court sits. The New York Court has discretion to refuse recognition when the claim on which the foreign judgment is based is contrary to New York public policy.

For non-money judgments, courts will generally recognize and enforce unless the foreign proceeding does not meet basic jurisdictional or due process requirements or if the foreign judgment violates fundamental rules of New York public policy.

In New York, a party can bring an action for recognition or enforcement before the New York state courts or before the US federal courts located in New York. The court must have a rational basis for asserting jurisdiction over the judgment debtor. Usually, if the funds to pay the judgment are located in New York, then that is sufficient to assert jurisdiction. Once a court is chosen, generally the party files a motion for summary judgment in lieu of complaint to begin the recognition process. New York courts will not review the merits of the suit, but only review for the relevant criteria under the Act to determine if the judgment can be recognized. Once a determination is made, an aggrieved party may file an appeal that decision, while the prevailing party can seek enforcement.

For a more detailed analysis, check out this article by Timothy G. Nelson and Jordan C. Wall of Skadden Arbs Slate Meagher & Flom LLP.

For more information about how Castaybert PLLC can assist you in enforcing a foreign judgment, click here.

In its recent decision, Crye Precision v. Duro Textiles, 689 Fed. Appx. 104 (2017), the Second Circuit scrutinized restrictions in an intellectual property licensing agreement under non-compete law, ultimately holding them to be overbroad. Traditionally, non-compete law has been applied only to employment agreements and agreements to sell a business. However, in Crye, the Court extended the law’s purview to an agreement in which the licensee of patented camouflage material, MULTICAM, was prohibited from making similar products after the term or expiration of the agreement.

The licensee, Duro, continued to sell a different kind of camouflage to the U.S. military after its agreement with the licensor, Crye, expired. Crye then sued because the licensing agreement prohibited Duro from making “any products that are similar to MULTICAM through color palette, pattern, arrangement or placement of any elements incorporated in MULTICAM.” The Second Circuit, applying non-compete law, evaluated the provision for reasonableness and undue hardship. It found that since most camouflage patterns share similar colors and arrangement of elements, the provision effectively restricted Duro from producing camouflage ever again. In doing so, the clause was unreasonable in scope and therefore unenforceable.

The Crye decision is especially noteworthy because it indicates that restrictions in intellectual property licensing agreements can and will be analyzed by New York courts under non-compete law. Accordingly, licensing restrictions should be drafted as narrowly as possible to avoid a determination of being overbroad.

To learn how Castaybert PLLC can assist with intellectual property law, please click here.

To learn how Castaybert PLLC can assist with commercial litigation, please click here.