REPORT FROM COUNSEL
WINTER 2002 ISSUE
Table of Contents
- IS YOUR NAME PROTECTED?
- EMPLOYEES CAN DONATE THE VALUE OF LEAVE TIME TAX FREE
- SAVING FOR COLLEGE CAN BE AN ESTATE PLANNING TOOL
- LESS PAPERWORK FOR EMPLOYERS
- LANDLORDS, TENANTS, AND SATELLITE DISHES
- FREELANCERS' ARTICLES ARE NOT FREE
- CASE BY CASE
IS YOUR NAME PROTECTED?
By Kim M. Argo
"Hey, that guy stole my business name!" Don't let this happen to you. Your business name and/or logo defines your business and promotes goodwill to others. It is one of your most valuable assets and it needs to be protected.
There are many reasons to protect your business name and/or logo and different ways to protect it. Implementing appropriate name protectors will prevent third parties from using your name without your permission and may protect you from infringing upon another person's name or logo.
Federal and state laws provide certain rights and protections for business names and logos. We would be happy to help you decide which option is right for your business.
Trademarks and Service Marks
Trademarks and service marks are words, phrases, designs, sounds or symbols protected under "common law" rights which come into existence by one's actual use of a particular mark either in connection with a tangible good (trademark) or a service provided to others (service mark). Generally, the first to either use a mark in commerce or file an Intent to Use Application with the U.S. Patent and Trademark Office has the ultimate right to use and register the mark.
Common law rights are based on "likelihood of confusion" standards and are limited to the geographical areas where the mark is used. Registration of a particular mark at either the federal or state level is optional, however, registration (particularly at the federal level) is strongly encouraged because of certain additional benefits available to the registrant. For example, the owner of a registered federal trademark is entitled to receive attorney's fees and costs of litigation in an infringement case whereas such costs and expenses are normally not recoverable by the owner of a non-registered mark. Registration also serves an important evidentiary function in that one's actual use of the mark is a matter of public record.
Copyright
A copyright protects intangible original works of authorship which are fixed in a tangible medium of expression, and includes logos or other pictorial works. Copyright is a statutory property right which grants to the creators of the logo or pictorial work certain exclusive rights in their creations for a limited period of time. Copyright includes the right to reproduce the copyrighted work, to make derivative works based upon the copyrighted work, to distribute the copyrighted work to the public, and to publicly display such work. Copyright arises upon creation of the work and endures for the life of the author plus 50 years. Although registration of a copyrighted work with the U.S. Copyright Office is not required for a copyright to exist, federal registration is encouraged because such registration is a prerequisite to a lawsuit for copyright infringement and for certain legal remedies.
Trade Names
Nebraska law defines a trade name as every name under which any person does or transacts any business in the state other than the true name of such person and requires that anyone doing business in Nebraska using a trade name register such trade name with the Secretary of State. Upon registration of a trade name in Nebraska, the owner of the trade name will be able to limit reproduction and imitation of the trade name by third parties in any manner that is likely to cause confusion, mistake, or deception.
Please feel free to call our office if you have any questions or concerns regarding the protection of your business name or logo.
EMPLOYEES CAN DONATE THE VALUE OF LEAVE TIME TAX FREE
By Sandra L. Maass
The events of September 11th have changed our lives in many ways, as well as the way we conduct our business lives. Employers are looking at different ways in which they can offer assistance to those in need. A number of employers have adopted or are considering adopting leave-based donation programs. This type of program allows employees to forgo their vacation, sick, or personal leave in exchange for their employers' contributing the value of that leave to charity.
On October 24, 2001, the Treasury and IRS issued Notices 2001-64 and 2001-69 which waive longstanding assignment-of-income and constructive receipt doctrines by enabling employees to contribute the value of vacation, sick, or personal leave time directly to charity without first having to take it into income. "In the aftermath of the September 11th attacks employers and employees are trying to make a difference by contributing to various relief funds. We want to facilitate these worthwhile efforts by eliminating concerns about the tax consequences," stated Mark Weinberger, Treasury Assistant Secretary for Tax Policy. By addressing the Federal income tax treatment of payments under donation programs, the Notices help to eliminate uncertainty on taxes by providing that employees will not be taxed on donated leave.
The only two restrictions to date are the payments must be made to the charitable organizations prior to January 1, 2003 and participating employees may not claim a charitable contribution deduction under section 170 for the amount of the leave which was excluded from their compensation and wages.
For further information, please contact Sandra L. Maass at 402-392-1250.
SAVING FOR COLLEGE CAN BE AN ESTATE PLANNING TOOL
529 Plans
The ever-rising cost of a college education has led to the creation of college savings plans that have been given various federal tax advantages. Among these are "529 plans," named after the section of the Internal Revenue Code that sets forth requirements for favorable tax treatment of qualified state tuition programs. 529 plans vary from state to state with regard to investment options, contribution maximums, and state income tax treatment. One type of 529 plan allows taxpayers to purchase tuition credits for a designated beneficiary, thereby locking in today's college costs. A second type allows the donor to contribute to an investment account to pay for a beneficiary's higher education expenses, such as tuition and room and board.
Individuals can contribute up to $50,000 to a 529 plan in one year on behalf of a beneficiary ($100,000 for married couples) without being subject to gift tax. In effect, the $50,000 contribution is treated as five separate $10,000 annual exclusion gifts. Gift tax is avoided so long as no other gifts are made to the beneficiary in the same five-year period.
Anyone can contribute to a 529 plan on behalf of the beneficiary. Grandparents, other relatives, or friends of the family can use 529 plans as an effective estate planning tool. The plans are unusual in that donors still can retain control over the account, and even take it back if necessary, while reducing the size of their estates. Under current law, earnings in a 529 plan are tax deferred, but the 2001 tax law provides that, beginning January 1, 2002, earnings taken out to pay college expenses will be tax free.
Other important changes in 529 plans were made by the 2001 federal tax legislation. Whereas plans previously had to be sponsored by a state or state agency, one or more educational institutions, including private schools, can set up prepaid tuition programs. Under the new law, money from one 529 plan can be rolled over into another such plan up to three times for the same beneficiary without having the transaction considered to be a distribution. A penalty of at least 10% of earnings formerly was imposed if the donor took back the money or the money was used for anything other than qualified expenses, but now there is a flat 10% penalty. Lastly, the new law allows a taxpayer to claim a federal tax credit for paying for a child to go to school while excluding from gross income funds distributed from a 529 plan for the same student, as long as they are used for different expenses.
Coverdell Education Savings Accounts
For individuals who want more control over their investments, a Coverdell Education Savings Account (formerly called an "Education IRA") may be an attractive alternative to a 529 plan. A contributor to a Coverdell account can choose investments and change them, depending on his or her investment strategy. Earnings are tax-free as long as they are used for qualified education expenses. The 2001 tax law also has improved this method of saving for elementary, secondary, and college education costs. Beginning January 1, 2002, the annual limit on contributions will increase from $500 to $2,000.
An increase in the phase-out income range for married taxpayers filing jointly will allow more taxpayers to contribute to a Coverdell account. For beneficiaries with special needs, rules stopping contributions when the beneficiary turns 18 and requiring that the account be emptied when he or she turns 30 have been removed. As with 529 plans, a contributor to a Coverdell account can claim an education tax credit, though not for the same educational expenses for which Coverdell account money was used.
One note of caution: The changes to both 529 plans and Coverdell accounts made by the 2001 tax legislation will expire on December 31, 2010, unless Congress acts before then to continue them.
LESS PAPERWORK FOR EMPLOYERS
The Internal Revenue Service has lightened the paperwork load for about a million small businesses. Employers are required by the Internal Revenue Code to deduct and withhold Social Security and income taxes from the wages paid to their employees. The withheld taxes are then held by the employer in trust for the benefit of the United States. Depending on the amount of employment taxes withheld, at various time intervals an employer must deposit the withheld amounts in an approved bank.
Before the IRS issued the new regulation, an employer could avoid having to deposit accumulated employment taxes every month if the total amount of such taxes was less than $1,000. The new regulation raises that threshold to $2,500. For quarterly and annual return periods beginning January 1, 2001, businesses with less than $2,500 in employment taxes for a return period may pay the full amount with the regular return for that period, rather than having to make monthly deposits.
LANDLORDS, TENANTS, AND SATELLITE DISHES
In 1996, the Federal Communications Commission (FCC) issued a rule that prohibited certain restrictions on the use of antennas designed to receive direct broadcast satellite service or television broadcast signals. Two years later the FCC expanded the rule to cover lease provisions where the antenna user was the tenant. Associations representing owners and managers of real estate unsuccessfully challenged the expanded rule in federal court.
The argument that the FCC had overstepped the bounds of the authority given to it by Congress failed. Congress has granted the FCC very broad regulatory authority so that it can keep pace with rapidly evolving technologies. As for "direct-to-home" satellite services, in particular, the FCC has exclusive regulatory jurisdiction, and has been charged by Congress to issue regulations to prohibit restrictions that impede viewers from using necessary devices.
In the view of the federal court, it was only a small and appropriate step for the FCC to extend its original authority over local or state land-use restrictions, restrictive covenants, and homeowner association rules to cover provisions in a lease. Given its mandate from Congress to prohibit restrictions on the provision of a regulated means of communication, the FCC can exercise its jurisdiction over a landlord who creates such a restriction even though, in so doing, the FCC alters property rights created under state law.
The FCC's preemptive power over satellite dishes does not leave landlords with no say in the matter whatsoever. First, since the FCC rule only applies to property within the exclusive use or control of the antenna user, a tenant does not have the unfettered right to put equipment on outside walls, rooftops, and other such areas where he may have access but not possession and exclusive control. Second, the rule itself states that a restriction "impairs" installation, maintenance, or use of an antenna if it "unreasonably" delays or prevents such use, "unreasonably" increases the cost of such use, or prevents reception of an acceptable quality signal. Thus, reasonable measures by landlords have their place. Finally, restrictions that would otherwise be prohibited are permitted where they accomplish a safety objective without singling out antennas, or they are necessary to preserve certain historic properties.
FREELANCERS' ARTICLES ARE NOT FREE
The U.S. Supreme Court has given a victory to freelance authors of newspaper and magazine articles, and a defeat to some major publishers of their work. The publishers hired the authors as independent contractors who would contribute articles to what is known in copyright law as a "collective work," that is, a newspaper or magazine. Under federal copyright law, the publishers were the owners of the copyright in the collective work, giving them the right to reproduce and distribute the contributions as part of the collective work or any revision of that work. The writers themselves, however, retained the rights to their individual articles.
The dispute arose when the publishers, without obtaining the authors' permission or agreeing to provide extra compensation to them, licensed the rights to copy and sell articles to a computerized database of periodicals and to the producer of CD-ROM products. When the authors claimed an infringement of their copyrights in their articles, the publishers defended by arguing that making the articles available on line or in a CD-ROM form constituted simply a "revision" of the collective work that was within the copyright of the collective work held by the publishers.
The Supreme Court sided with the writers. The newly created databases no longer presented and distributed the articles as part of the collective work in which they first appeared, or as part of a revision of that work. Instead, the articles stood alone and out of their original context. Each article had become merely a minuscule part of an ever-expanding database. As the Court put it, "The database no more constitutes a 'revision' of each constituent edition than a 400-page novel quoting a sonnet in passing would represent a 'revision' of that poem[.]" Therefore, the electronic reproduction of the authors' works could not be allowed without their permission.
CASE BY CASE
Broken Baseball Bats
A state court has overturned a $1 million jury verdict for a young girl who was injured when part of a broken bat struck her as she sat in the stands at a major league baseball game. The girl was seated behind a net that extended down the third base line, but the bat fragment curved around the net and hit her.
The girl argued that baseball officials were negligent in not having more protective screening for spectators. However, most courts apply a more lenient "limited-duty" rule to America's Pastime and this court was no exception. The majority of baseball fans prefer to be close to the action, with no protective screen that would block their view and prevent the possibility of catching a batted ball. Baseball teams reasonably accommodate this majority of their consumers, while providing protected seats behind home plate for those more concerned with safety. Under the limited-duty rule, when a stadium owner has made adequately screened seats available for all those desiring them, it has fulfilled its duty as a matter of law and it will not be liable for spectators injured by an object from the field.
The girl also asserted that the stadium owner had a duty to warn spectators about projectiles from the field. The court rejected this basis for liability because the risk involved was already well known by spectators. As a general rule, there is no duty to warn of open and obvious dangers. Even so, the stadium owner in this case had warned the fans with an announcement, a notice on a video board, and fine print on the tickets. Making no distinction between a broken bat and a baseball, the court quoted the observation of another court that "[n]o one of ordinary intelligence could see many innings of the ordinary [baseball] league game without coming to a full realization that batters cannot and do not control the direction of the ball."
Under-Covered
In another case, a woman called the insurance agency she had done business with for 10 years and told the agent she needed "full" automobile coverage. According to her, no one discussed what level of insurance would provide adequate protection. Instead, she was sold a policy that provided only the minimum amounts required by state law for uninsured and underinsured motorist coverage. The woman and her husband sued the insurance agency for negligence after their son was seriously injured when he was struck by an underinsured motorist and their expected damages exceeded their insurance coverage. The insurance agency, whose line of work is more used to criticism for overzealous selling, was instead in the position of being sued for not selling enough of its product.
Insurance agents are not personal financial counselors or risk managers for their customers. They generally fulfill their duty to the insured simply by providing the coverage requested by their customers, who typically know more about the extent of their assets and their ability to pay premiums. The agents do not have a duty to advise a client to obtain different or additional coverage. In this case, though, the court ruled that an exception to this no-duty rule arose because there was a "special relationship" between the insured and the insurance agent.
Such a relationship can come about in several ways. The theories that applied in this case were the failure of an agent to respond appropriately to an inquiry or request about a particular type or extent of coverage and the failure to clarify an ambiguous request before providing coverage. Although there were factual issues to be resolved, the court ruled that the woman should have a chance to present her case to a jury.
