Muller Law Firm Blog


June 23, 2017: Patent Litigation Forum Selection: Texas, Delaware, or Good Ol' NC?

 

(Originally published by the NC Bar Association Intellectual Property Section on May 26, 2017)


In a much-anticipated ruling on May 22, 2017, the United States Supreme Court in TC Heartland v. Kraft Foods narrowed the definition of venue for patent infringement cases. Until last week, a patent holder could sue an alleged infringer in any venue where the defendant was doing business, causing forum shopping and a very high concentration of patent cases in plaintiff-friendly venues like Eastern District of Texas. Roughly 40 percent of infringement suits, many filed by non-practicing entities, have been filed in ED TX in the last two years. Now, however, patent enforcers must file suit in the judicial district in which the corporate defendant “resides” (meaning state of incorporation) or where it has committed alleged acts of infringement AND has a regular and established place of business. Experts predict TC Heartland will increase the cost of litigation and drastically end forum shopping. They forecast a flood of litigation into other states, including Delaware, where so many companies incorporate, or tech-sector states like California and New Jersey. Possible?  Sure, but litigators are a clever bunch when they put on their thinking caps. If they found work-arounds to the America Invents Act, they may just find creative ways to stay in their favorite jurisdiction, perhaps by shifting their focus from producers to sellers and retailers.

Plus, even if TC Heartland reduces litigation in Texas as predicted, might it also lead to a surge of patent litigation in North Carolina, which, according to the Economic Development Partnership of North Carolina, was home to more than 600 life science companies in 2016? North Carolina’s federal courts are sophisticated and well-equipped to handle a large docket of patent litigation, and there is no shortage of highly skilled intellectual property litigators (and mediators, of course). Selfishly, as a homebody who avoids jet-setting whenever possible, I’m crossing my fingers that plaintiffs now will litigate right here in North Carolina. What are your predictions…the end of business trips to Texas, or more of the same?  


March 28, 2017:  Legal Risk Management : Dot Com Owner Should've Dot Settled

Perhaps the best way to resolve a false advertising dispute over intellectual property is to settle quickly and confidentially.  In an opinion that has gained national attention (and thus free advertising for the new domain .xyz), the Fourth Circuit Court of Appeals held on February 8, 2017 that XYZ.com (owner of the domain .xyz) did not violate the Lanham Act's prohibition against false advertising by promoting its product as "the next .com" and by criticizing its competitor's product.  Plaintiff is the exclusive operator of .com. and .net domains. In 2014, XYZ launched the .xyz domain and began making self-promotional statements about its popularity.  For example, XYZ advertised that .xyz was "the next .com," and it allegedly disparaged plaintiff by saying that in .com domains, it is "impossible to find the domain name that you want.” 

To win on a false advertising claim under the Lanham Act, a plaintiff must show, among other things, that it suffered or is likely to suffer an injury by diversion of sales or lessening of goodwill. In this case, plaintiff presented expert testimony that it lost $527,000 in profits due to diverted sales.  However, the Court ruled in favor of XYZ, on the basis that plaintiff’s expert testimony about lost profits proved only a temporal link rather than the causal link required by the Lanham Act. Also, the Court held that XYZ's allegedly disparaging statements about .com did not constitute false or misleading factual statements, but instead were mere opinion or puffery. 


So, what is the dot lesson in all this?  Parties in any kind of legal dispute – intellectual property, business, or personal – should use the mediation process early on to weigh the real costs of litigation versus the benefits of a voluntary settlement.  Admittedly, I do not know whether plaintiff maximized the mediation process before litigating (and before kindly providing all this free advertising to .xyz,) but I’m guessing it now regrets its decision not to settle quickly, early, and confidentially.  For one, as a result of the very public litigation and very public appeal that plaintiff voluntarily pursued, folks around the globe who had never heard of plaintiff’s new competitor .xyz are buzzing about it.  Plus, plaintiff undoubtedly has incurred a small fortune in legal fees since suing .xzy way back in 2014.  Free advertising for a global competitor and three years of legal fees over a $527,000 dispute?  Let this case serve as another fine example of the importance of considering alternative dispute resolution when addressing legal risk management strategies.    




*********************

September 20, 2016:  Double Check That Appellate Brief!

Appellate procedure matters –- a lot -- says the Court of Appeals in Yarborough v. Duke University  (unpublished). Among other arguments, Plaintiff contended that one of the witnesses, Mr. Whitley, a biomedical engineer and accident reconstructionist, lacked the expertise to give an expert medical opinion. Unfortunately for Plaintiff, her appellate brief focused on only one particular finding regarding the extent of Mr. Whitley’s knowledge of anatomy.  Plaintiff’s brief, according to the Court, neglected to challenge a separate finding in which the Full Commission found that Mr. Whitley had been tendered without objection as an expert. This case is a great reminder that, although the NC Rules of Appellate Procedure no longer require those dreaded Assignments of Error, the failure to challenge an important finding on appeal can be disastrous. Especially in workers’ compensation appeals, which usually involve many pieces of factual evidence, appellate attorneys should proceed with caution.  For more information about NC workers' compensation law, visit www.mullerlawfirm.com.


*******************

August 31, 2016:  Governor Pat McCrory announced a new agreement signed between the North Carolina Industrial Commission and the Wage and Hour Division of the United States Department of Labor (USDOL) that focuses on protecting the rights of workers and lawful businesses by correctly classifying workers as employees rather than independent contractors. This agreement builds on the progress of Executive Order 83, which Governor McCrory issued in December 2015 and is aimed at preventing and combating the abuses associated with employee misclassification.
 
Under the agreement, the state and federal governments will collaborate in a closer fashion on both compliance investigations, as well as outreach and education programs that aim to reduce worker misclassification.
The three-year Memorandum of Understanding agreement with the U.S. Department of Labor will help North Carolina meet several objectives.  Workers and honest employers are hoping that this agreement will solve some of the problems experienced in recent years in our State.


***************


Workers' Comp Reform:  Who Needs the Legislature?

January 20, 2016:  More exciting news from the North Carolina Industrial Commission as workers’ compensation attorneys settle in to the new norm of sweeping change within this important government agency: 

1.
Andrew Heath, Chairman of the NC Industrial Commission since 2013, is leaving the Industrial Commission following his appointment as North Carolina’s State Budget Director. 
2.  Before Chairman Heath’s departure, he appointed Bradley Hicks as the head of the new Director of Employee Misclassification Section.  Mr. Hicks is currently the deputy director of the Department of Administration’s Office for Historically Underutilized Businesses (HUB). Hopefully Mr. Hicks will effectively tackle the pervasive problem of employment misclassification. 
3.  Also before Chairman Heath departed, Governor McCrory and Chairman Heath announced three new appointments for Deputy Commissioners:  Brian P. LiVecchi (from NC State Board of Elections), Dane Scalise (civil litigator from Wilmington) and Tyler Younts (former law clerk to Commissioner Allen). These appointments encompass a six-year term and are effective February 2, 2016.
4.  Finally, Governor McCrory reappointed Deputy Commissioner Thomas H. Perlungher and Deputy Commissioner John C. Schafer for six-year terms.

North Carolina workers, employers, insurers, and attorneys throughout the state undoubtedly are hoping that these changes will benefit the system designed to ensure fair treatment to both injured workers and their employers. 


************************


Making A List And Checking It Twice:
A Pre-Christmas Crackdown On Naughty NC Employers

In a surprise move on December 18, 2015, NC Governor Pat McCrory announced the establishment of a new NC Industrial Commission department tasked with identifying and punishing employers who misclassify their workers to shave costs.

For years, honest business owners in North Carolina have lobbied for crackdowns on their cheating competitors -- employers who call their workers "independent contractors" to avoid paying worker's compensation benefits, unemployment taxes and even income taxes. The government's failure consistently to identify and punish these companies robs employees of benefits and, likewise, unfairly punishes honest employers who struggle to compete. Some say the construction industry, for one, is overrun by bosses who incorrectly classify their true employees as contractors, depriving them of benefits like workers' comp and unemployment. According to some industry whistleblowers, those employers enjoy higher profit margins and lower overhead, thus regularly outbidding their rule-abiding counterparts.

Despite journalists' exposure of the problem and the hard work of the General Assembly to crack down on those employers, proposed bipartisan legislation fizzled months ago following a dispute over whether newspaper deliverers could qualify for an exemption. Now it seems Governor McCrory is taking matters into his own hands. Most agree that, whether it was taken for strategic political gain or not, the new executive order is a step in the right direction for NC workers and companies alike. Although the new order creates no new penalties for cheating employers (that was the goal of the failed legislation), it establishes a new department and other resources to target the rampant problem.

Key changes:
1. Commissioner Andrew Heath, the chair of North Carolina Industrial Commission, will appoint a director to head up a new section called Employee Classification. The director will have the authority to employ investigators and staff as necessary.
2. The new section will be open during regular business hours to receive complaints from the public and to investigate allegations.
3.  The section will have liaisons with various state departments in an effort to coordinate information and facilitate investigation.

A possible game changer or just another wasteful government program?  The verdict may just be in the hands of Commissioner Heath as he selects key staff.  For developments, stay tuned.


***********************************


Just in time for Halloween…
BOGO—Buy One Body Part, Get One Free


 On October 6, 2015, the NC Court of Appeals stunned many workers’ compensation attorneys in the case of Wilkes v. City of Greenville. Now, if an employer “buys” a claim by admitting that a worker injured a certain body part in an accident, the worker is entitled to a presumption (albeit rebuttable) that other body parts and medical conditions are also covered…BOGO! A big win for workers but ghastly for employers, huh?

We’ve known for years that this presumption, called the “Parsons Presumption,” applies to the same body part initially admitted in a Form 60, but now it will apply much more broadly to other conditions, even psychological ones. In a unanimous decision, the Court agreed with worker’s attorney Anita Hunt that since the employer admitted that the worker injured his neck, ribs, etc. in an auto accident, then the Parsons Presumption applies to other medical conditions—in this case, depression and anxiety. Plaintiffs’ attorneys have made this argument theoretically for years, but defense attorneys usually shrug it off, given the lack of any appellate authority on the subject. Is this opinion a big win for injured workers?  Perhaps.  Time will tell if, instead, it causes employers to deny more cases, given the risk of increased exposure after filing a Form 60.  

As if that part of the case weren’t shocking enough, the Court essentially reversed its own earlier 2015 decision of Fields v. H & E Equip.Servs. by holding that the injured worker does not have to produce expert vocational reports to support a claim of loss of earning potential. In essence, the Court held that, in light of the physical limitations, the lay evidence (cognitive limitations, lack of transferable skills, and age) was enough to establish disability and to entitle the worker to disability benefits. This is a huge win for workers who are often too cash-strapped after an injury to hire a vocational expert.

 

                                                                                    Tag…You’re It! 
                             Corporate Laser Tag Party Exposes NC Employer to Workers’ Comp Liability


 August 18, 2015:  Work is work, and play is play, right?  For years, NC litigators have argued about what type of company outings and social events expose employers to liability under the Workers’ Compensation Act, and the answer is highly fact-specific.  After all, employers often host social events to build morale, develop teambuilding skills, and encourage camaraderie, so the question of whether participation furthers the business of the employer depends heavily on the facts of each case.  For the most part, injuries occurring at company parties, when attendance is voluntary and employees are not paid, do not arise out of the employment and thus are not covered under the Workers’ Comp Act.  The test includes six factors to consider to determine if the activity arose out of employment:  (1) Did the employer in fact sponsor the event? (2) To what extent was attendance really voluntary? (3) Was there some degree of encouragement to attend (4) Did the employer finance the occasion to a substantial extent? (5) Did the employees regard it as an employment benefit to which they were entitled as of right? (6) Did the employer benefit from the event? 

 On August 18, 2015, the NC Court of Appeals ruled in Holliday v. Tropical Nut & Fruit  that knee pain which developed during a game of Laser Tag at a mandatory company retreat was compensable, as it arose out of the employment.  This part of the opinion was not surprising, since attendance for the weekend event was mandatory and the employees were paid for attending, even though there was dispute about whether the Laser Tag itself was required.  Importantly, however, the employee was unable to identify anything unusual or unexpected that happened during the Laser Tag game to cause injury.  Nevertheless, the Court found that participating in the Laser Tag itself was such a deviation from his normal routine such that the employee did not need to show any other unexpected consequences or specific event to establish that the injury was related to employment.  This case should serve as a warning to employers when planning mandatory outings to make sure the planned events are as safe as possible, since injuries arising during those events will likely trigger coverage even if nothing unusual happens.


**********************************


May 22, 2015:  Today, NC Governor Pat McCrory signed into law House Bill 79.  Effective October 1, 2015, the law will be clear to trial courts, the NC Court of Appeals, and the NC Supreme Court as to the scope of trial courts to enforce stays while matters are on appeal.  Kudos to the NC General Assembly, Kim Crouch and staff at the NC Bar Association, the NC Bar Association Appellate Rules Committee, and many others who played an integral part in clearing up this ambiguity and making life easier for all parties and attorneys involved in the appellate system in NC.


****************************************


May 5, 2015:   Avoiding "oops" – How a simple mistake can lead to dismissal of your NC appeal
It can happen to any attorney: You know your case is a winner. After all, the trial court got it wrong. Surely the appellate courts will vindicate you and your client. You take pains to write your appellate brief, so focused on getting the substantive arguments just right, that you overlook a minor procedural requirement. No big deal, right? Just fix it in a reply brief? WRONG. Once again, continuing its trend of demanding strict compliance with the rules of appellate procedure, the NC Court of Appeals dismissed an appeal of a party who failed to meet one particular requirement – in this case, identifying the nature of appellate jurisdiction. On May 5, 2015, in Larsen v. Black Diamond French Truffles, Inc. (May 5, 2015), defendants appealed from an order granting plaintiffs’ motions for judgment on the pleadings. Appellants’ brief addressed the substantive issues in the case but neglected to identify the nature of appellate jurisdiction. Appellees pounced on the opportunity to move for dismissal of the appeal on the basis that it was interlocutory. Due to recent rules changes, appellants were entitled to a reply brief, in which they argued the basis for the jurisdiction. Problem solved? Nope. Unfortunately, the Court ruled the argument was made too late, and the entire appeal was dismissed. The opinion was written by Judge Hunter, with a concurrence by Judge Stephens and Judge Tyson.

Again, as we learned in earlier case law published by this same Court, a reply brief cannot be used to introduce new arguments or to correct deficiencies or mistakes in the principal brief. Appellate practitioners beware: don’t hold your cards and assume you will get a second chance to comply with the rules. With appellate procedure, one strike and you’re out.  For more information, contact tara@mullerlawfirm.com.


**********************************


March 3, 2015:  The North Carolina Court of Appeals dealt a clear win to an injured employee, and the broad holding likely will apply to workers across the state who are pursuing claims under the NC Workers’ Compensation Act.  For the first time in a published opinion, the Court of Appeals in Gonzalez v. Tidy Maids held that the Parsons Presumption (a presumption in an admitted case that the injury is related to the accident) applies even if the employer never formally admits compensability.  In this case, the employer filed a Form 63 (allowing extra time to investigate) but allowed it to expire without denying the claim.  The expiration of the Form 63 is deemed to be an acceptance, so the Court held that the Parsons Presumption applied, even though the employer never affirmatively filed an admission. 


This Gonzalez case is important on the disability front, as well.  If there were any doubt that the surprising recent holding in Philbeck (2014) is here to stay, the Gonzalez court cited to it in holding that plaintiff’s own testimony about her pain is enough to satisfy the Russell v. Lowe’s test to show disability (inability to work).  In other words, the Court’s broad interpretation of the definition of disability continues to expand and reduce the burden on the employee to obtain expert medical opinions.



**********************************


February 17, 2015: While the rest of Raleigh was homebound due to ice and snow, the NC Court of Appeals somehow managed to publish several opinions.  One of them, Bowden v. Young, et al, underscored the power and authority of the NC Industrial Commission in workers’ compensation claims.  While his workers’ compensation claim was pending at the Industrial Commission, the injured employee filed a civil claim for intentional misconduct by the insurer for wrongfully handling the claim.  In an opinion written by Judge Dietz, the majority of the Court of Appeals held in no uncertain terms that all matters relating to the handling of a workers’ compensation claim fall within the jurisdiction of the NC Industrial Commission, even if the allegations against the insurer include intentional misconduct.  In so doing, the Court majority acknowledged the well-established exception for Woodson claims against the employer, but specifically held that insurers are exempt from such civil claims.  While a concurring opinion by Judge Dillon indicates a concern that some intentional acts by the insurer may still be covered, the majority opinion rules in this published opinion.  This case solidifies the truly exclusive jurisdiction of the NC Industrial Commission. 


**********************************


January 22, 2015: The fate of recent Republican legislation removing teacher tenure in NC now is in the hands of three judges.  Oral argument took place today at the NC Court of Appeals before Judges Geer, Stephens, and Dillon on the controversial and significant issue of whether the legislature acted improperly by retroactively eliminating teacher tenure in NC.  Several months ago, Superior Court Judge Robert Hobgood ruled that the legislation was an unconstitutional violation of teachers’ property rights, and the state appealed.  Tenure does not prevent teachers from being fired for poor performance, but it does ensure a level of protection teachers say they counted on when they signed up to teach in NC, as tenure has been a benefit afforded to NC teachers for decades.  The three judges posed insightful questions and clearly had a thorough grasp of the complex constitutional issues before them.  They all peppered the two attorneys with questions throughout the arguments, but they directed the most heated questions toward Melissa Tripp of the NC Attorney General office, who argued that the legislation is constitutional because it still allows teachers to have a hearing and due process before being terminated.  Based on the questions they asked, it appears that the judges seemed especially concerned about the retroactivity of the removal of tenure and its effect on educators who came to NC with the understanding that they would be on a tenure track.

 It is always difficult to gauge the leanings of appellate judges during oral argument, and even harder to speculate an outcome.  However, in the personal opinion of this non-interested appellate attorney observer, at least two of the three judges appeared to be sympathetic to the position of attorney Narendra K. Ghosh of Patterson Harkavy, who represented the teachers and NC Association of Educators in their position that teachers are no longer entitled to so much as an explanation if an employment contract is not renewed.  Judge Linda Stephens summarized one of Mr. Ghosh’s policy arguments hypothetically by questioning how in the world NC will ever recruit good teachers if they are low paid and, on top of that, are not granted tenure.  In addition to the policy arguments, Mr. Ghosh relied on older cases of constitutionality which he argued were based on indistinguishable facts.  Ms. Tripp, however, argued that the case law may be binding but was from a different cultural era and thus should be taken in context.  It remains to be seen how the judges will rule.  In the meantime, there are undoubtedly a plethora of educators and supporters of NC public education who are keeping their fingers crossed.  For more information, contact tara@mullerlawfirm.com


**********************************


On December 18, 2014, the North Carolina Supreme Court held that some corporate entities such as limited liability companies may represent themselves pro se, or without an attorney, at administrative hearings.  The case involved administrative hearings at the NC Department of Motor Vehicles, not the Industrial Commission, but nevertheless the holding may open the door for insurance adjusters to represent defendants in workers' compensation litigation, a procedure which, until now, has been deemed to be the unauthorized practice of law.  It remains to be seen whether this case will cause insurers and third-party administrators to begin changing the way workers' compensation claims are litigated.  For more information, contact tara@mullerlawfirm.com