WHAT IS A RETAINER AGREEMENT?

A retainer agreement is a legal contract between a law firm (or attorney) and the client by which the client agrees to hire the law firm for particular legal services.  The retainer agreement provides a detailed description of the parties to the agreement, the scope of legal services to be performed, the rules and manner in which those services will be performed, and a recitation of the agreed-upon fee arrangement between the parties.  Generally speaking, the law firm will require the client to review the agreement, sign the agreement if there are no changes to be made, and return the executed agreement along with a retainer fee (or deposit) to the law firm before any legal services are performed on a particular matter.

Authored by: Scott A. Meyer and John Sokatch

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Chalker Flores, LLP provides business, corporate, litigation and intellectual property legal services to individuals, inventors, entrepreneurs, start-ups, spin-offs, universities, research institutes, and small to large public and private companies and businesses.  Founded by Dr. Edwin Flores and Daniel Chalker, additional partners include Scott Meyer, Chainey Singleton and Tom Jacks.  The lawyers of Chalker Flores, LLP provide big-firm expertise with boutique service and pricing.

If you would like more information about Chalker Flores, LLP, or to schedule an appointment please contact us 214-445-4040 or info@chalkerflores.com.  Please follow us on Twitter at @chalkerflores.

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Rep. Paul Seeks Assistance from United Nations in Acquiring RonPaul.com from Loyal Supporters

In a seemingly ironic series of events, former U.S. Congressman and three-time presidential candidate, Rep. Ron Paul, has turned to, of all places, the United Nations, an international organization repeatedly criticized by Rep. Paul throughout his political campaigns, for assistance in acquiring the domain name rights of two websites bearing his own namesake: <RonPaul.com> and <RonPaul.org>.  Even more surprising may be the fact that the Respondents in this case appear to be ardent grassroots supporters of Rep. Paul who initially created the websites during Rep. Paul’s 2008 presidential campaign.

The World Intellectual Property Organization (“WIPO”), one of the seventeen specialized agencies of the United Nations, permits trademark owners to file complaints against domain-name registrants for purposes of obtaining relief or resolving disputes in matters concerning the registration and ownership of domain names.  For example, oftentimes, the Uniform Domain-Name Dispute-Resolution Policy (“UDRP”) procedures will be used to combat cybersquatting or situations where an individual will register a domain name with the bad faith intent to profiteer from the goodwill associated with another’s trademark by selling the rights to the mark owner at an inflated price.

On February 7, 2013, Rep. Paul filed his complaint against several unknown Respondents generally alleging in accordance with UDRP requirements that:

1)      The domain names are identical or confusingly similar to Ron Paul’s RON PAUL trademark;

2)      The registrants have no rights or legitimate interests in the domain names; and

3)      The registrants have registered and are using the domain names in “bad faith.”

The complaint further requests that the two domain names be transferred to Rep. Paul without any form of compensation to the current registrants.

While the complaint fails to allege any federal registrations of the RON PAUL mark, Rep. Paul’s complaint, instead, claims common-law rights to the RON PAUL mark by virtue of its use in the United States and in association with Rep. Paul’s “books, articles, public appearances, and political commentary.”  Even though UDRP procedures do not require successful claimants to obtain federal registrations of their marks, such evidence can be helpful in establishing the complainant’s ownership of the mark.  Notably, a search on the Trademark Electronic Search System (“TESS”) reveals that the rights to a RON PAUL mark once held by the Ron Paul Consulting Company were abandoned in November of 2009 due to a failure to file a Statement of Use of the mark.

Additionally, the complaint alleges a lack of any evidence that the Respondents have actually used the two domain names “in connection with a bona fide offering of goods and services,” that the Respondents only registered the two domain names for the purposes of “selling them to [Rep. Paul] for more than [Respondents’] out-of-pocket costs,” and that “the domain names are being used to sell Ron Paul merchandise by third party vendors which competes directly with [Rep. Paul].”

Many reports indicate that the domain owners initially made an offer to sell the domain name <RonPaul.com> to Rep. Paul prior to his filing of the complaint for $848,000.  The owners subsequently reduced their offer to only $250,000 and were even willing to throw in the rights to <RonPaul.org>.

To date, it does not appear that the Respondents have answered the Complaint or made any further efforts to settle or resolve the matter outside of the UDRP process.

Authored by: Scott A. Meyer and John Sokatch, March 9, 2013.

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Chalker Flores, LLP provides business, corporate, litigation and intellectual property legal services to individuals, inventors, entrepreneurs, start-ups, spin-offs, universities, research institutes, and small to large public and private companies and businesses.  Founded by Dr. Edwin Flores and Daniel Chalker, additional partners include Scott Meyer, Chainey Singleton and Tom Jacks.  The lawyers of Chalker Flores, LLP provide big-firm expertise with boutique service and pricing.

If you would like more information about Chalker Flores, LLP, or to schedule an appointment please contact us 214-445-4040 or info@chalkerflores.com.  Please follow us on Twitter at @chalkerflores.

Unilaterally-Issued “Covenant Not to Sue” May Divest Trademark Claimants of Article III Standing

According to the recent Supreme Court ruling in Already, LLC v. Nike, Inc., __U.S.__, 133 S. Ct. 721 (2013), a broadly-drafted, unilaterally-issued “Covenant Not to Sue” may now provide defendants with alternative measures to combat cancellations of their federally-registered trademarks.

In July of 2009, Nike, Inc. (“Nike”) filed a complaint against Already, LLC d/b/a Yums (“Yums”) generally alleging claims of trademark infringement of the design of Nike’s Air Force 1 shoe product line.  Known for its distinctive stitching and numerous color combinations, Nike had originally obtained the registration for the Air Force 1’s shoe design in June of 2008 (U.S. Reg. No. 3,451,905).  In response, Yums filed a counter-claim by challenging the validity of the mark’s registration and seeking cancellation.

Four months later, Nike delivered to Yums a comprehensive “Covenant Not to Sue,” whereby Nike “unconditionally and irrevocably covenant[ed] to refrain from making any claim(s) or demand(s) . . . against [Yums] . . . on account of any possible cause of action based on or involving trademark infringement, unfair competition, or dilution, under state or federal law . . . relating to the [Air Force 1 mark] based on appearance of any of [Yums’] current and/or previous footwear product designs, and any colorable imitations thereof . . ..”  Nike also dropped the remainder of its claims against Yums.

Amid investors’ prospective concerns for potential lawsuits from Nike and fear of tarnishment of its reputation in the shoe industry, Yums ignored Nike’s efforts to dismiss the matter in its entirety and continued to maintain its counter-claims to cancel Nike’s design mark.

But according to Nike’s attorneys, Yums’ federal claims had been rendered moot vis-à-vis Nike’s unilateral “Covenant Not to Sue”—i.e., Yums no longer possessed Article III standing as there was no longer a “case” or “controversy” between Nike and Yums.  Yums countered with evidence of investor concerns and statements that Nike had intimidated other retailers into refusing to carry Yums’ products, but to no avail.  The district court dismissed Yums’ counter-claims and the issue was appealed up to the Supreme Court.

Reviewing the issue in light of the “voluntary cessation” doctrine, the Court determined that the breadth of Nike’s unconditional and irrevocable Covenant sufficiently demonstrated that it “could not reasonably be expected” to resume its enforcement efforts again Yums.  In other words, once Nike asserted that it would permit Yums to produce all of its existing footwear designs, or any “colorable imitations” of the Air Force 1’s design, such assurances made it “absolutely clear” that Nike would no longer seek to enforce its mark against Yums.

As a result, the Court held that Yums lacked any “legally cognizable interest in the outcome” of the litigation and that the district court had been divested of subject-matter jurisdiction over Yums’ cancellation proceedings.  The Court additionally noted, however, that in any future trademark proceedings Nike would be bound by the Covenant’s broad language; therefore, Nike was precluded from initiating any suit against Yums for alleged infringement unless the shoe was “an exact copy or counterfeit version of the Air Force 1 shoe.”

Authored by: John C. Sokatch and Scott A. Meyer

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Chalker Flores, LLP provides intellectual property, business, corporate and litigation legal services to individuals, inventors, entrepreneurs, start-ups, spin-offs, universities, research institutes, and small to large public and private companies and businesses.  Founded by Dr. Edwin Flores and Daniel Chalker, additional partners include Scott Meyer, Chainey Singleton and Tom Jacks.  The lawyers of Chalker Flores, LLP provide big-firm expertise with boutique service and pricing.

If you would like more information about Chalker Flores, LLP, or to schedule an appointment please contact us 214-445-4021 or by email at info@chalkerflores.com.  Please follow us on Twitter at @chalkerflores.

SCOTT MEYER ASSISTS WITH $64 MILLION DEAL

Scott Meyer of Chalker Flores, LLP, recently helped close a stock sale valued at $64,000,000 for one of its valued clients.  Mr. Meyer dealt primarily with intellectual property issues related to the transaction.

The sale involved negotiations and agreement on the intellectual property to be transferred, concurrent use agreements, including a significant portfolio of patents and trademarks, licenses and the purchase of stock by a major industry player. “The sale allows our client to focus its business efforts on core strategies and on their development of new product materials,” reports Scott Meyer, one of the Chalker Flores partners who worked on the deal.

Authored by: Scott A. Meyer

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Chalker Flores, LLP provides intellectual property, business, corporate and litigation legal services to individuals, inventors, entrepreneurs, start-ups, spin-offs, universities, research institutes, and small to large public and private companies and businesses.  Founded by Dr. Edwin Flores and Daniel Chalker, additional partners include Scott Meyer, Chainey Singleton and Tom Jacks.  The lawyers of Chalker Flores, LLP provide big-firm expertise with boutique service and pricing.

If you would like more information about Chalker Flores, LLP, or to schedule an appointment please contact us at 214-445-4040 or send an email to info@chalkerflores.com.  Please follow us on Twitter at @chalkerflores.

Personal Liability of Officers for Corporate Guarantees

Last January, the 1st District Court of Appeals issued a noteworthy opinion reinforcing the personal liability for loan guarantees made by corporate officers while acting within their capacities as officers of the company.  The court’s ruling in 84 Lumber Co. v. Powers, No.-01009-00986-CV, 2012 Tex. App. LEXIS 590 (Tex. App.—Houston [1st Dist.] Jan. 26, 2012, no pet.), will likely force many corporate officers, including those in larger corporations, to now rethink placing their own necks on the line for those companies to which they owe fiduciary responsibilities.

David Powers, acting within his capacity as president of his company David Powers Homes, Inc., signed a statement that he “UNCONDITIONALLY AND IRREVOCABLY PERSONALLY GUARANTEE[D] [THE] CREDIT ACCOUNT….”  Mr. Powers took the position that he no longer possessed any personal liability for the loan because he signed the guarantee as a corporate officer and he no longer held that position.

In rejecting Mr. Powers’ stance that his personal liability was precluded by the statute of frauds (which requires the guaranty to be in writing and signed by the person to be charged), the court held that liability remained on Mr. Powers, individually, and not merely with the office of president of his company.  As the court noted, generally speaking a guarantor of a debt is an individual who willingly stands for the debt of another.  The court reasoned that had it ruled in favor of Mr. Powers, it would essentially render a guarantor agreement meaningless because personal liability would thereby reside in the same person—i.e., the company would then become both the account debtor and the guarantor of the corporate debt.

Ultimately, the court determined that Mr. Powers remained liable for his “unambiguous” guarantee of personal liability for the company’s debt, largely due to the fact that Mr. Powers was the owner of the company.  The court did, however, leave open the question regarding liability under situations involving more ambiguous contractual terms or where the corporate officer-guarantor owned minimal or no shares in his or her company.

Authored by Scott A. Meyer and John Sokatch.

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Chalker Flores, LLP provides intellectual property, business, corporate and litigation legal services to individuals, inventors, entrepreneurs, start-ups, spin-offs, universities, research institutes, and small to large public and private companies and businesses.  Founded by Dr. Edwin Flores and Daniel Chalker, additional partners include Scott Meyer, Chainey Singleton and Tom Jacks.  The lawyers of Chalker Flores, LLP provide big-firm expertise with boutique service and pricing.

If you would like more information about Chalker Flores, LLP, or to schedule an appointment please contact us at 214-445-4040.  Please follow us on Twitter at @chalkerflores.

Websites’ Terms of Use Agreement Traps

In response to the steady increase in online shopping and cyber-transactions, several website owners have resorted to implementing more precarious measures to increase website activity while still protecting the website’s legal interests.  Generally, “Terms and Conditions” of use for the website are accepted by forcing the user to manually click an “I Agree” or “Accept” button—a method termed in the industry as “Clickwrap” agreements.  This method of acceptance has been highly criticized for the manner in which it seemingly misleads consumers into accepting terms of which they are not fully aware.

More recently, however, many online shoppers have been forced to deal with a newer form of terms acceptance known as “Browsewrap” agreements.  Unlike the more readily-apparent “Clickwrap” agreements, “Browsewrap” agreements allow website owners to indiscreetly cache the content of such agreements somewhere on the website, which then become accessible only by clicking on the hidden hyperlink.

These “Browsewrap” agreements recently came under heavy judicial scrutiny when the online shopping website Zappos.com attempted to compel arbitration in a lawsuit with several customers whose online accounts had been hacked.  See In re Zappos.com, Inc., Customer Data Security Breach Litigation, Civ. No. 3:12-cv-00352-RCJ-VPC (D. Nev. Sept. 27, 2012).  Zappos.com’s “Disputes” section, which was buried within the site’s “Browsewrap” agreement, permitted Zappos to compel arbitration in the event a dispute arose between the website and the purchaser.

Despite the broad and liberal federal policy favoring arbitration, the District Court of Nevada maintained that “arbitration is a ‘matter of contract,’ and no party may be required to submit to arbitration [in] ‘any dispute which he has not agreed so to submit.’”  Id. (quoting Howsam v. Dean Witter Reynolders, Inc., 537 U.S. 79, 79 (2002).

In finding for the plaintiffs, the court struck down the arbitration provision because (1) the purchasers were never prompted to accept those terms and conditions, and (2) the provision permitted Zappos to unilaterally change the terms, thereby rendering the contract illusory.  The court’s ruling reinforced the notion that, notwithstanding the increased popularity of buying and selling on the Internet, such paradigmatic shift may not overcome even the basic principles of contractual formation (i.e., offer, acceptance, meeting of the minds, and consideration).  As such, the Zappos.com opinion appears to have essentially negated the enforceability of “Browsewrap” agreements, barring evidence that the user actually possessed constructive knowledge of their existence and terms of use.

Authored by: Scott A. Meyer and John Sokatch.

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Chalker Flores, LLP provides intellectual property, business, corporate and litigation legal services of the highest quality.  Founded by Dr. Edwin Flores and Daniel Chalker, additional partners include Scott Meyer, Chainey Singleton and Tom Jacks.  The lawyers of Chalker Flores, LLP provide big-firm expertise with boutique service and pricing.  Clients include individual inventors, start-ups, spin-offs, major national universities, research institutes and medium to large corporations.

If you would like more information about Chalker Flores, LLP, or to schedule an appointment please contact us 214-866-0001.  Please follow us on Twitter at @chalkerflores.

New Rule Proposals for Expedited Lawsuits in Texas

In 2011, the Texas Legislature passed HB 274 which, in part, mandated that the Texas Supreme Court promulgate rules for expedited actions.  The intent behind HB 274’s mandate was to facilitate more efficient and speedier resolutions of lawsuits involving disputed amounts of $100,000 or less.

The following highlights of the proposed rules regarding expedited actions will be available for comment through February 1, 2013, and will take final effect on March 1, 2013:

Tex. R. Civ. P. 169 (new)

  • Would mandate the “expedited actions process” to apply in all causes of action where the claimant seeks monetary relief of $100,000 or less (excludes lawsuits seeking non-monetary relief).
  • Would cap the amount recoverable under the expedited actions process to $100,000.
  • Would allow removal from the expedited actions process only with “good cause” or upon filing of an amended or supplemental pleading seeking relief (i) other than monetary relief or (ii) in excess of the $100,000 limit.
  • Would limit the entire trial process (i.e., jury selection, opening statements, presentation of evidence, direct and cross-examination of witnesses, and closing arguments) to a total of 5 hours.
  • Would preclude the court from ordering parties to engage in alternative dispute resolution (such as mediation), unless the parties previously consented to such a process by agreement or contract.
  • Would prohibit challenges to expert testimony unless requested by the party sponsoring the expert.

Tex. R. Civ. P. 190.2 (amended)

  • Discovery period would run from time the suit was filed until 180 days after the first discovery request is served on a party.
  • Would restrict the total time for examination and cross-examination of witnesses in oral depositions to 6 hours.  Time could be increased to 10 hours on agreement by the parties.
  • Would limit written discovery to 15 requests for interrogatories, 15 requests for production, and 15 requests for admissions.
  • Would permit a party to submit additional disclosure requests of all documents, electronic information, and tangible items that the disclosing party has in its possession, custody, or control and may use to support its claims or defenses.  Such additional requests would not count against a party’s requests for production.

Authored by: Scott A. Meyer and John Sokatch.

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Chalker Flores, LLP provides intellectual property, business, corporate and litigation legal services of the highest quality.  Founded by Dr. Edwin Flores and Daniel Chalker, additional partners include Scott Meyer, Chainey Singleton and Tom Jacks.  The lawyers of Chalker Flores, LLP provide big-firm expertise with boutique service and pricing.  Clients include individual inventors, start-ups, spin-offs, major national universities, research institutes and medium to large corporations.

If you would like more information about Chalker Flores, LLP, or to schedule an appointment please contact us 214-445-4021.  Please follow us on Twitter at @chalkerflores.