07.26.2011

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Updates

The Perkins Coie Retail & Consumer Products industry group is proud to introduce its sixth annual "Perkins Coie Wrapping Papers" series. These updates highlight legal issues facing retailers during this critically important season. We are pleased to offer the first update for the 2011 series. We hope you enjoy the series of updates.

All of the tools and tricks you will use this holiday season to catch consumers' eyes and capture their dollars will likely involve intellectual property (IP) rights.  New products (patents?  copyrights?) with catchy names (trademarks?) and bright packaging (trade dress?) supported by huge advertising campaigns (more copyrights?) are distributed through new channels to attract new customers (trade secrets?).  You've registered your trademarks and copyrights and thought about whether you have any patentable inventions.  But your IP rights are implicated in many other areas of your business, especially during the holiday season. 

Focusing on policies and documents that you might not typically consider when thinking about IP, this wrapping paper offers a handful of practical suggestions for ensuring that your IP is well-protected this holiday season and that you are adequately protected against claims related to IP violations.

1.  As you consider your holiday season staffing needs, take a fresh look at how your employment practices and policies secure your IP rights. 
  • Review and revise your agreements that address and prohibit the use or disclosure of confidential information.  If appropriate, require new employees to sign an agreement that assigns to you any IP rights developed during their employment, as well as noncompetition and nonsolicitation agreements.
  • Require all new employees to acknowledge that they do not have and/or will not use any prior employers' trade secrets or proprietary information.
  • Review and revise, as appropriate, company security policies to protect your IP assets, including the use of computer and mobile devices, passwords and the like.  Control physical access to trade secret information, including physical access (locked doors and cabinets, access cards, etc.) and computer access (encryption, firewalls, etc.). 
  • Require all nonemployees, especially those engaged to create or contribute to copyrightable works such as advertising or art, to enter into work-for-hire agreements with an express assignment of IP ownership rights.
  • Be sure to secure your IP assets when the holiday season ends.  In exit interviews with departing employees, discuss IP issues such as trade secrets, technology and inventions.  Remind departing seasonal employees of any nondisclosure or noncompete obligations.  Ensure that all company property has been returned.
  • If you have operations and employees in more than one state, be aware that different states have different laws.  These differences  may impact your employees and your IP.
2.  As you prepare your holiday advertising blitz, now is the time to work with your broker or legal advisors to review your insurance policies to ensure that they protect you against advertising liabilities, including risks associated with the Internet or your IP.  Consider supplementing your coverage if your IP portfolio, product offerings, advertising strategies or retail presence have materially changed.  Among others, consider the following types of policies:    
  • Generally. To ensure that your insurance coverage tracks your marketing activities, you should closely examine not only the terms of these policies (including definitions, conditions, and exclusions), but also the limits of coverage, deductible requirements and reputations of the insurance providers involved.
  • Advertising Injury and Personal Injury Liability Coverage.  Under the advertising injury prong, trademark and copyright infringement and trade secret claims might be covered if the claims relate to your advertising activities.  But make sure you examine the policy exclusions closely, because they sometimes specifically exclude risks like trademark infringement.  Other claims, including those related to privacy, might be covered by the personal injury coverage prong.  Patent infringement claims are typically not covered under such policies, and, if this is a significant foreseeable risk, you should consider adding specialized infringement coverage to supplement your general liability insurance. 

  • Media/Technology Coverage.  You might also consider buying specialized policies to expand your coverage for IP-related liability by, for example, purchasing policies that limit advertising liability restrictions, expand the definitions of covered "media," include costs related to investigations and crisis management, or specifically address cyberattacks.
3.  As you arrange your distribution channels for the holiday season — maybe a pop-up store here or an airport or mall kiosk there — reexamine the numerous associated contracts and licenses that involve IP rights, either yours or a partner's.  Are the IP-related risks allocated correctly?  Should they be adjusted?
    • If you are using another party's IP during the holiday season, examine the licenses closely to ensure that you receive strong indemnities against IP infringement and related claims.  And if you are allowing other parties to use your IP during this holiday season, draft the licenses carefully to include indemnities against tort and product liability claims related to their use.  In all events, you don't want to get stuck cleaning up someone else's mess.
    • Do your existing distributor and dealer contracts address your current IP portfolio?  If your holiday plans will involve products or services that incorporate new IP — a new toy, a jaunty jingle, art that pops — you should review your existing contracts and guidelines to ensure that you and your IP are adequately protected and that your partners understand your expectations for how your new IP can and cannot be used. 
    • Take another look at your websites.  Do they include the IP basics, such as copyright and trademark notices and symbols and patent notices and disclaimers?  Do your terms of service and privacy policies adequately protect your IP rights and acknowledge the rights of others?  Do you need to establish or tweak your IP dispute procedures (e.g., DMCA take-downs, trademark complaints) to handle potential holiday hassles?  

    © 2011 Perkins Coie LLP