Clearly not, according to a California federal court that didn’t find any problem with Amazon’s merchandising practices. Multi Time Machine, Inc., (MTM), a watchmaker filed suit against Amazon for displaying competitor’s watches whenever Amazon customers searched for MTM’s.

In this specific case, Amazon does not sell MTM watches. Searching for MTM watches only yields results from competitors instead. Amazon’s merchandising practices implemented various keywords including trademarks into its internal search engine. So whenever a customer searches for a product, the search results not only include the original product (if Amazon sells it), but also competing products alongside it. This practice led MTM to sue Amazon for trademark infringement.

This case stands for the idea that Amazon’s merchandising practice is acceptable in online retail if using other vendors’ trademarks is not likely to confuse consumers. Amazon’s use of the actual MTM trademark was clearly NOT part of the results, instead shown only as verification that Amazon’s internal search engine understood what you were searching for.

This is where clear labeling and context was critically important. In context, it was clear Amazon was merchandising, showing you products similar to those for which you searched. The only thing Amazon could have done further is show a heading that says explicitly: “NONE OF THESE  WATCHES ARE MADE BY MTM.”

The takeaway here is that Amazon developed an intuitive, user-friendly interface with its trademark concerns in mind. By thinking about their potential liabilities earlier, Amazon was able to keep its merchandising practice and search tool intact. As for similar trademark practices, be careful with context and labeling to make sure that whatever you’re selling is clearly marked. Merchandising is OK so long as you do everything you reasonably can to minimize likelihood of confusion about vendors.

Social Media Campaigns, sweepstakes, and crowd sourcing are great ways to solicit ideas, inspire innovation, produce relevant videos, photographs, and testimonials, build user engagement, and cultivate your brand. However, high profile companies, which i’m sure you can think of a few as you read this, have learned the hard way that curating content without clear intentions can be disastrous for the company’s trust with its users and reputation. Rather than waiting until the damage is done, it is critical to take steps NOW to ensure your intent is clear and you convey a message of respect for your user’s proprietary rights.

THREE MAIN POINTS TO CONSIDER

WHEN CURATING USER GENERATED CONTENT

1.  Describe your Intent: Be specific and transparent about how you intend to use the user content to derive commercial value. Whether it be to sell it, curate it to ultimately deliver an end product, or to use it to drive users to the service or application– regardless of how you might derive value out of the content you need to communicate with the users your intent.

2. Set Expectations: Users have an expectation that they will not be exploited. It is critical to your success to explain to the users that you are requesting a license to use their proprietary information for value.  The license should be limited and should coincide with your intent. Be sure to give users the option not to participate or opt out. In addition, a company should reassure its user that it respects their privacy by having a clear and concise privacy policy.

3. Give something of Value.  There is no such thing as a free lunch; and the saying applies here as well. Users are not going to engage unless they are getting something out of the deal. Most user generated activities offer an award for participation. Rules and Regulations are a great way to provide limitations and describe in detail what a user may or may not “win”, how to “win” the award, and what will happen with their content during and after the activity.

Conveying the above points through a solid set of transparent rules, disclaimers, terms, and regulations will help you manage your users and their content.  Being respectful of user contribution will go a long way in maintaining trust and generating new unique users.

From my perspective, its all in how you convey the policies. Terms of use and privacy policies for most websites seems like a bunch of legal mumbo jumbo thrown together (or better yet copied from another website offering similar services). However, I believe there is a way to both protect your company’s interest and communicate with your users so they feel safe while using your web or mobile service. Failing to be transparent and clear is what generally gets folks in trouble.

If you are a provider of web or mobile services here are a few tips to consider when crafting your Terms of Use and Privacy Policy. These are best practices and not to be construed as legal advice. As always, you are encouraged to seek legal counsel when drafting these policies preferably one who can draft in plain English. 

1. The Policies should be in plain English.  There is no need for the ‘hereto’ ‘where from’ language. A well written policy can achieve the same legal protection without all the legal jargon. I will however, say that there are some areas that will forever sound legal no matter what one does. Those areas are generally focused on indemnification and warranties. That being said that does not mean you could not accompany the ‘legal’ paragraph with a side bar that explains in one-two sentences what that term means to the user.

2. Don’t try to be sneaky with your Intellectual Property terms.  Be absolutely clear in what you own, don’t own, license, or don’t license. This is a big problem for web and app service providers in that they try to own everything and then some. You want to engage with users and not make them think you are profiting off of them. User generated content has become a very personal issue for users and Company’s need to address these issues up front. If you want to own it then be clear about it don’t try to get around the fact by inserting a bunch of legal terms. If you want a irrevocable license, same suggestion applies, don’t be sneaky and hide in the language.

3. Be Conspicuous.  This really is a an art form. You might have seen various ways in which to ‘accept’ terms and conditions. The reason for this is you want to make it clear to your users that terms of use exist and they need to at least acknowledge them. I encourage you to be creative and respectful here. Its best to display the terms in a place where most users would look for them. If you have a service that allows for user engagement such as posting comments, submitting content, playing a game, etc. be sure there is some way for the user to click and accept the terms of use.  If you try to hide the terms, this will not serve you well when trying to defend your position, or trying to comply with the DMCA regulations, or otherwise.

 User Engagement is a part of just about every business’s marketing or business growth strategy.  With all that effort and dollars behind building user engagement don’t throw it away with overtly legal and hidden policies.

The Wage and Hour Division (WHD) of the Department of Labor (DOL) published a fact sheet in 2010 that outlines the Fair Labor Standards Act’s guidelines for when labor may be exempted from wage and hour laws (Washington’s rules currently mirror the federal rules).  In order for an unpaid internship to comply with federal and state law, it must meet 6 criteria:

1. Interns have to receive similar training to what they might get in school. This means that they shouldn’t be performing routine or regularly recurring work, and the business shouldn’t be dependent on the intern’s work. Even if the intern is benefitting from the experience, if the intern is performing standard operations of the business, the intern may be entitled to compensation.
2. The training must be for the benefit of the trainee.
3. Interns can’t displace regular employees. If, without hiring the intern, the employer would have hired additional employees or required existing staff to work additional hours, the intern would likely be classified as an employee and entitled to compensation. For example, job shadowing, where the intern learns under close supervision, but doesn’t really do any actual work, would be more likely to be considered an educational experience.
4. The internship doesn’t immediately benefit the employer’s business (and may even impede it).
5. Interns aren’t necessarily entitled to a job for participating in the internship. The internship should be for a fixed duration, and internships shouldn’t be used as a trial period prior to employment.
6. Interns must understand that they aren’t entitled to compensation.

The 6-part test, a remnant of a 1947 case regarding exemptions from FLSA for workplace training programs (Walling v. Portland Terminal Co., 330 U.S. 148 (1947)), has yet to be further tested in court. The WHD has provided some guidance via “opinion letters“, but this guidance hasn’t been very definitive.  Just providing school credit doesn’t appear to be sufficient, and the amount of supervision appears to matter. Further, just because the internship is part-time, and therefore doesn’t displace full-time employees, won’t overcome the fact that the intern is performing routine work and thus assuming a role as regular staff.

This lack of clear guidance, however, may be in for a change.  2 private suits have been filed against the film and publishing industries since last September by interns claiming that they should have been paid.  Whether the courts will help to clarify the issue or muddle things further, however, remains to be seen.

These minimum standards do not apply to employers uniformly across the board. Instead, degree of compliance with PSST varies based on a 3-tier system corresponding to an employer’s total number of “full-time equivalent” employees.

This full-time equivalent employees concept can be confusing and calculating the total number is the tricky part. Basically, to arrive at the number of your full-time equivalent employees, factor in all hours worked by employees in a preceding year and divide by the hours amounting to work performed by 1 full-time employee.

I thought it would be helpful to visualize what is meant by full-time equivalent along with basic steps for determining PSST compliance. Please feel free to pass around the cheat sheet below, your feedback is welcomed as well.

Before you examine the cheat sheet below and the subsequent PSST links, there are two crucial pieces of information that I need to clarify.

1. The term “full-time equivalent employee” does not interchangeably mean or equal “full-time employee“.
2. PSST only applies to employees working in Seattle while working in Seattle, but to determine compliance an employer must factor in all of its employees even those who work outside of Seattle.

Click here to download in PDF

Resources and Additional Information

• Seattle Office for Civil Right’s PSST page
• General Summary of PSST by OfCR
• What Employers Need to Know About Seattle’s PSST
• Map of Seattle City Limits and Zip Codes
• PSST Poster by OfCR
• PSST PowerPoint by OfCR

Incorporating or reorganizing as a social purpose corporation (SPC) allows socially conscious businesses greater flexibility to support social and environmental goals.

What makes this emerging corporate entity unique is that maximizing the financial bottom line isn’t a social purpose corporation’s sole and primary objective.

Potentially as an SPC, a business could more easily go green, help give back to communities, require fair trade practices, invest in their employees, or engage in many other sustainable and social goods.

Required General Social Purpose and Optional Specific Social Purpose
The foundational elemental of all SPCs is the same, ultimately the business purpose must promote the general social purpose mandate. Washington State law states:

“[SPC must] promote positive short-term or long-term effects of, or minimize adverse short-term or long-term effects of, the corporation’s activities upon any or all of

(1) the corporation’s employees, suppliers, or customers;
(2) the local, state, national, or world community; or
(3) the environment.”

This is pretty broad and allows an SPC to the freedom to define and implement its social or environmental goals. In addition to the general social purpose, a corporation can choose to promote one or more specific social purposes. Quite simply, an SPC would need to articulate the specific social purpose in a statement as part of its articles of incorporation.

SPCs and Shareholders

“The mission of this social purpose corporation is not necessarily compatible with and may be contrary to maximizing profits and earnings for shareholders, or maximizing shareholder value in any sale, merger, acquisition, or other similar actions of the corporation.”

Traditionally, a corporation’s duty to its shareholders means means increasing the bottom line above all else. In contrast, the director of an SPC will not incur liability for acting in support of the corporation’s social purpose. Instead, actions intending to promote the corporation’s social purpose are in line with its best interets.

While this alternative may not appeal everyone, an SPC can draw in likeminded investors. For one, the SPC must demonstrate its commitment to social good through transparency.

The SPC must make available an annual social purpose report that details efforts to promote its social purposes and assesses the effectiveness of those efforts. Shareholders are able to monitor and evaluate whether the SPC truly reflects its social purpose as intended.

In the 2 years since Pinterest launched itself as an invite-only social bookmarking service, the size of its user base and web traffic have made Pinterest into a social network heavy weight. Consequently, we need to understand how Pinterest handles third-party intellectual property. In relation to such content, in this post we discuss how is used on the website, Pinterest’s relevant policies towards such content, and what options are available to rights holders.

How It Works

Pinterest has been categorized as a virtual pinboard or image-based social bookmarking system. However, in a lot of ways Pinterest functions more similarly to the microblogging service Tumblr as opposed to a website like del.icio.us. Users can upload or link to media content (i.e. images and videos), and then organize and tag the content based on a category of interest. Other users can follow, like, or re-link the content.

Similar to Facebook or Twitter’s newsfeed, users can follow content streams or lookup certain categories of content based on how its tagged. Clicking through the content may credit or link back to the original source, but that depends on the user to do so.

Terms of Use and User-Submitted Content

Pinterest’s terms of use and related policies are under a lot of heat of late. While Cold Brew Labs, Inc., the company that provides Pinterest, does not claims any ownership rights in user-submitted content, it does retain a broad license to use such content.

“…[Y]ou hereby grant to Cold Brew Labs a worldwide, irrevocable, perpetual, non-exclusive, transferable, royalty-free license, with the right to sublicense, to use, copy, adapt, modify, distribute, license, sell, transfer, publicly display, publicly perform, transmit, stream, broadcast, access, view, and otherwise exploit such Member Content only on, through or by means of the Site, Application or Services.”

Claiming such licensing rights is typical of social networking services. However, problematically, Pinterest seeks to retain a license that is irrevocable and perpetual. The license will not expire once a user removes submitted content or deletes his or her account. Pinterest further explains this in the following provision:

“Following termination or deactivation of your account, or if you remove any User Content from your account or your boards, Pinterest may retain your User Content for a commercially reasonable period of time for backup, archival, or audit purposes. Furthermore, Pinterest and other Users may retain and continue to display, reproduce, re-pin, modify, re-arrange, and distribute any of your User Content that other Users have re-pinned to their own boards or which you have posted to public or semi-public areas of the Service.”

Options Available to Rights Holders

Legally, content owners and rights holders can scour Pinterest regularly and submit DMCA takedown notices to Pinterest directly or its web host, Amazon Web Services (for more information on issuing alleged infringement complaints, please see our past post here). Although time consuming, this is the legal option available to rights holders. Also, follow this link to Pinterest’s page for alleging copyright infringement and submitting DMCA takedown notices.

Another available option is for content owners and right holders to preempt any potential infringement by joining Pinterest and maintain an account. The goal is to establish some control over how the content is displayed. A rights holder can upload the content and ensure that it has proper attribution, tags, watermarks, and website links back to them or their business. That way any re-linking of the material will anchor back to the original content owner and allow other users to see the owner’s information (i.e. website, where to purchase, etc.). The added benefit is gauging trends and the popularity of one’s content through the responses of other users.

This option has its inherent risks along with the broad licensing rights issue. If rights holders go this route, they should keep in mind that Pinterest’s terms of use discourage soliciting and self-promotion. Like most social media, Pinterest is better suited to organic interactions as opposed to solely treating it as marketing vehicle. Also, rights holders should avoid re-pinning content submitted by other users where the source is unknown. It’s better to seek permission or collaborate with other content owners interest. Lastly, rights holders should regularly review Pinterest’s terms of use, which are likely to be updated again as the service continues to grow.

Disclaimer
The content of this blog is for informational purposes only and does not constitute legal advice. This author, website, and MK Singh Law Office make no representations as to accuracy, completeness, currentness, suitability, or validity of any information on this site and will not be liable for any errors, omissions, or delays in this information or any losses, injuries, or damages arising from its display or use. All information is provided on an as-is basis.

In short, the bill will allow entrepreneurs to raise up to one million ($1,000,000) dollars per year through a special SEC registration for crowdfunding. This means that a regular person who normally doesn’t qualify as an Angel Investor will have the opportunity to invest in private entities. Investors who have an annual income of less than $100,000 will be able to invest up to $2,000 or 5% of their income. Investors who have income of more than $100,000 will be able to invest up to $100,000 or 10% of their income.

Stay tuned for more updates.

Targeting Piracy Through Stop Online Piracy Act (SOPA) and Protect IP Act (PIPA)

SOPA is the House bill and PIPA is the Senate version. Both seek to address Internet piracy differently from the DMCA approach. Instead of content removal and focusing on users, the bills propose targeting websites. This will widen the net beyond safe harbor such that content hosts must be more vigilant and self-police.

In relevant portion, under SOPA the Attorney General may take action against a website if at least a portion of it is directed to the U.S. and is used by users within the United States; offering goods or services in a manner that engages in, enables, or facilitates copyright infringement; or takes steps to avoid confirming a high probability of infringing use. In addition, SOPA also targets foreign websites or portion of such sites availing themselves to the U.S. that commit or facilitate infringing use or trafficking of counterfeit goods or services.

Upon a website allegedly falling under the aforementioned criteria, notified payment network providers (like credit card companies and PayPal) and internet advertising services would have 5 days within delivery of notification to suspend any services providing financial support to the website. Furthermore under SOPA, notified internet search engines have 5 days within delivery of notification to remove direct links to an allegedly infringing foreign website or a portion of such a site.

As of January 18, due to mounting pressure, legislators scrapped SOPA’s requirements for ISPs to block the domains for websites allegedly found in violation. Similarly, legislators are reconsidering this issue in regards to PIPA, which is quite similar to SOPA in it’s aim and enforcement measures. It specifically acts as a tool for rights holders to target foreign “rogue” websites. Like SOPA, measures include sending notices to suspend Internet financial services and transactions, and removal of direct links.

The Division Amongst Companies

Some of the biggest support for the bills comes from U.S. entertainment content providers who would be able seek enforcement against piracy by foreign websites, which generally remain outside U.S. jurisdiction.  The proposed bills would offer rights holders more options in terms of enforcement measures. Also, extending beyond removal of specific content, the measures would ostensibly throttle foreign “rogue” websites dedicated overall to piracy.

Part of the the opposition is comprised of U.S. tech and social media companies because Internet-based businesses will have to increase policing of suspected infringing use, and also comply with enforcement measures against alleged violating websites. Additionally, investors of Internet startups (such as these 55 venture capitalists in this letter) have expressed concern that enacting such measures will stymy innovation and growth, and be cost-prohibitive for legitimate ventures.

See below for links to the text

• Effect of Washington State’s new liquor law on local restaurants, bars, and craft distilleries.
• The annual adjustment of Washington’s minimum wage.
• New employment-related changes in Seattle.
• Requirement to post employee rights poster.
• Extension of tax rate for long-term capital gains and qualified dividends, along with a brief explanation of those terms.

Washington State Initiative Measure No. 1183
The initiative became effective as of December 8, 2011, but the Washington State Liquor Control Board (WSLCB) will be making the transition to private liquor sales and distribution throughout the next two years.

As of March 1, 2012 on-premise licensees, such as restaurants and nightclubs, can begin purchasing spirits directly from distillers and spirits distributors. The downside here is that until then, local craft distilleries have limited options for selling their liquor to the public. Since state liquor stores are no longer purchasing liquor from local distilleries, until March the distilleries are limited to making sales through their tasting rooms. (See WSLCB notices regarding Craft Distillers; and The Daily Herald and MyNorthwest.com’s coverage regarding this).
 
 
Washington State Minimum Wage Increase and Poster Changes
Effective January 1, 2012, Washington’s minimum wage increased to $9.04 per hour. The increase applies to both agricultural and non-agricultural workers. However, 14 and 15-year-old workers may be paid 85% of the adult new minimum wage, which comes to $7.68 per hour.

This increase comes as per Initiative 688, which was approved by voters in 1998. It requires the Department of Labor & Industries (L&I) re-evaluate and accordingly adjust the minimum wage every September based on cost-of-living under the federal Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W).

The CPI-W measures the average change in prices over time of consumer goods and services such as food, shelter, medical care, transportation, and other such living costs. In the past year, the prices for most consumer goods and particularly fuel rose. Washington is one of 10 other states that adjust the minimum wage in this way, and as of this year has the highest state minimum wage.

L&I also announced that while employers are still required to the post the “Your Rights as a Worker” poster, L&I shall no loner publish an additional poster just for minimum wage.
 
 
Addition of Paid Sick Time and Paid Safe Time to Seattle Municipal Code
City of Seattle passed an employment-related ordinance that sets minimum standards for the provision of paid sick and paid safe time. Ordinance No. 123698 is effective September 1, 2012.

Employees covered under the ordinance must either work in Seattle or perform more than 240 hours of work in a calendar year in Seattle. Employees here consist of traditional employees, temporary, workers, and part-time employees.

Employers will be required to notify employees of their rights under Title Chapter 14.16. Employers will also be required to retain for up to 2 years records documenting employees’ hours worked and paid sick and safe time both accrued and taken.

This paid sick and safe time is set forth based on a 3-Tier system that categorizes employers. Generally, most new businesses/employers that will be subject to this ordinance have 2 years from the hiring date of their first employee to comply. We hope to cover this in greater detail in the coming months along with any updates. (See here for Ordinance No. 123698 information).
 
 
National Labor Relations Board (NLRB) Poster Requirement
As of April 30, 2012, most private sector employers covered under the NLRA must post a notice that informs employees of their rights under the Labor Relations Act (NLRA). To see if your business falls under the NLRB’s jurisdiction and is required to post the employee rights notice, follow this link to the NLRB’s related FAQ page.

However, if your business was unsure about the posting deadline please note that the effective date for the notice-posting rule was originally set for November 14, 2011, then postponed until January 31, 2012, and now it has changed to April 30, 2012.

The poster is required to be 11 x 17 inches and can be in color or black-and-white. It is available for free through the NLRB via download on it’s website or paper mail by placing an order by phone or submitting an e-form. (See NLRB page here for details).
 
 
Extension of Long-Term Capital Gains and Qualified Dividends Tax Rates
This reduced tax rate continues for 2012. It remains at 0% for taxpayers in the 10% and 15% income tax brackets, and the maximum tax rate remains capped at 15%.

Personal tax rates remain for 2012. Also for 2012, the capital gains tax rates on long-term gains and qualified dividends remains at 0% for those in the 10% and 15% income tax brackets.

Long-term capital gains are capital gains on assets held for more than 1 year. Qualified dividends are ordinary dividends paid by a U.S. corporation or a qualified foreign corporation on stock that is held for more than 60 days during the 121-day period that begins 60 days prior to the ex-dividend date. To get more technical here, the ex-dividend date generally occurs two business days before the date (record date) on which a shareholder must be on record to receive a declared dividend. Shareholders will not partake in a dividend payment if the stock was purchased on or after its ex-dividend date. (See IRS Publication 550 and SEC explanation).