March 2015
From the Colorado Bar Association
Business Law Section

Ed Naylor, Editor
In this issue...
Buffalo Bill and Trademark Enforcement—Protect Your Marks
By Daniel Graham, Faegre Baker Daniels LLP, CBA Franchise Subsection Chair

Businesses need to protect their trademarks. This is not a novel idea, but it is worth repeating. If a trademark holder neglects to police infringement, the mark will weaken and eventually become less enforceable and less valuable. 3 McCarthy on Trademarks and Unfair Competition § 17:17 (4th ed.). This weakening results naturally from a failure to prosecute infringement because if multiple competitors are using the trademark, then the trademark loses its ability to identify the source of the goods. Id. (citing Herman Miller, Inc. v. Palazzetti Imports & Exports, Inc., 270 F.3d 298, 317 (6th Cir. 2001)). A company started by Buffalo Bill learned this lesson the hard way. Col. W.F. Cody Historical Picture Co. v. Colonial Amusement Co., 284 F. 873, 877 (D. Colo. 1922).

In Col. W.F. Cody, Buffalo Bill’s company sought a temporary injunction to stop the defendant from using the name Buffalo Bill in the name of its movie. Id. at 874. The court denied the motion for temporary injunction after emphasizing how widespread the use of the name Buffalo Bill had become. Id. at 878. In particular, the court noted that the name Buffalo Bill had been used in “plays, stories of adventure, circuses, and Wild West performances, for many years before the discovery of motion pictures, and thereafter for moving picture purposes before the complainants produced their picture.” Id. at 876. In its ruling, the court stated that if Buffalo Bill had wanted to protect a right to the name Buffalo Bill, he should have done so sooner:

If Col. Cody had desired to assert or keep in himself any exclusive use of the name, he should have asserted his rights with reasonable promptness many years ago, and it is too late now for anyone to assert the same in his behalf.

Id. at 877. The situation in Col. W.F. Cody is analogous to the situation where a trademark holder neglects to enforce its mark, and it shows the importance of protecting marks from use by infringers. A party that fails to protect its mark can eventually lose its ability to protect that mark. Franchisors must keep this lesson in mind. A franchise relationship often focuses on the use of the franchisor’s mark by the franchisee. The franchisor must carefully monitor use of its marks by franchisees and non-franchisees to ensure that its marks remain valuable and enforceable. In particular, the termination of a franchise agreement may cause the franchisor to police the franchisee’s unauthorized use of the franchisor’s marks post termination. This situation arose in Steak N Shake Enters., Inc. v. Globex Co., LLC, No. 13-cv-01751-RM-CBS, 2013 WL 4718757 (D. Colo. Sept. 3, 2013).

In Steak N Shake, the franchisor terminated the franchisee after the franchisee failed to participate in meal promotions and failed to open a third store as scheduled. Id. at *8–10. After termination, the franchisee continued to use the franchisor’s trademarks. Id. at *12. The franchisor filed suit (and later a motion for preliminary injunction) in part to stop the unauthorized use of its marks by the franchisee. Id. at *1, 6. The court found that the franchisor had established a strong likelihood of success on the merits of its infringement claims and noted that unauthorized use of a mark by one that was previously authorized to use that mark—like a franchisee—is more likely to cause consumer confusion than unauthorized use by a “random infringer.” Id. at *11–12 (citing 4 McCarthy on Trademarks and Unfair Competition § 25:31 (4th ed.)). Thus, unauthorized use of a trademark by a franchisee or former franchisee is a potentially more urgent matter. Among other relief granted to the franchisor in Steak N Shake, the court ordered the franchisee to immediately stop using the franchisor’s marks. Id. at *16.

The rulings in Col. W.F. Cody and Steak N Shake provide an important reminder regarding the value of trademarks and the need to police for infringement. Prompt action can save a company’s valuable marks, while inaction can lead to weak and potentially unenforceable marks.

Getting Social Media Records Into Evidence
By Jack W. Berryhill, Moye White LLP

In the October 2014 Business Law Newsletter I discussed the liberality of Colorado courts in admitting business records, including computer-generated records. So shouldn’t this apply with equal force to social media communications, such as Facebook?

Not so fast, says the Colorado Court of Appeals in People v. Glover, 2015 COA 16 (Feb. 26, 2015). There, the prosecutor wanted to present incriminating conversations recorded on the defendant’s Facebook account. The prosecutor produced an affidavit from a Facebook records custodian stating that the records were made and kept by the automated systems of Facebook in the course of regularly conducted activity as a regular practice of Facebook and were made at or near the time the information was transmitted by the Facebook user—to make the printouts self-authenticating business records under C.R.E. 902(11) and an exception to the rule against hearsay under C.R.E. 803(6). After all, as the trial court recognized, Facebook records are analogous to phone records and e-mails. In Colorado, e-mails may be authenticated under either C.R.E. 901(b)(1), by testimony of a witness with knowledge that a matter is what it is claimed to be, or C.R.E. 901(b)(4), through consideration of distinctive characteristics shown by an examination of their contents and substance in light of the circumstances of the case.

This is not as easy as it might first appear.

The Court of Appeals pointed out that anyone can establish a fictitious profile under any name and, additionally, a person may gain access to another person’s account by obtaining the user’s ID and password.

Furthermore, even though an arguable business relationship exists between Facebook and its users, there was no evidence presented that Facebook substantially relies for any business purpose on information contained in its users’ profiles and communications. Thus, the Facebook printouts were neither authenticable under C.R.E. 902(11) nor admissible under C.R.E. (6).

The prosecution still won this case. The Court of Appeals held the Facebook printouts had been sufficiently authenticated under C.R.E. 901 and that the defendant’s postings were non-hearsay as admissions of a party opponent under C.R.E. 801(d)(2)(A). In a different case, the Denver Post reported on March 19, 2015 that a suspect arrested in connection with a recent robbery used the nickname “Crook” on his Facebook page. He probably has more to worry about than the business records exception to the hearsay rule.

DU Law Program Cancelled

The University of Denver must regretfully announce the cancellation of the Harvey Pitt event scheduled for April 2. We hope to have a similar event later in April. We apologize for any inconvenience and will keep you posted on our alternate event.

Business Law Section Activities
Bankruptcy Subsection

Bankruptcy Court Technology Trainings
Friday, April 10 and Friday, May 8, 10 to 11 a.m.

The Bankruptcy Court and the CBA Bankruptcy Subsection are offering a free, one-hour, courtroom technology training in Courtroom C, U.S. Bankruptcy Court. For more information on the training, please contact Andy Johnson. To register, please email Jill Lafrenz.

Bankruptcy Case Law Update
Thursday, April 16, 4 to 6 p.m.

The next case law update will cover cases from September 2014 through March 2015, with a networking happy hour to follow.

Presenters: Honorable Elizabeth E. Brown, U.S. Bankruptcy Court; Kinny Bagga, Brownstein Hyatt Farber Schreck; and Timothy Swanson, Moye White.

The free program will be held at the CBA-CLE Classroom, 1900 Grant Street, Ste 300, Denver. This program is offered for 1 general CLE credit. To register, please email Jill Lafrenz.

Coming Up… Election for new Co-Chairs for the CBA Bankruptcy Subsection

The two-year term for current co-chairs Leigh Flanagan and Andy Johnson ends in June 2015. If you are interested in serving as a co-chair for the CBA Bankruptcy Subsection for the 2015–17 term, please contact Leigh Flanagan and Andy Johnson.

Financial Institutions Subsection

Reporting Foreign Accounts & Interests: An IRS Priority
Wednesday, April 15, noon to 1 p.m (option to purchase lunch)

Co-sponsored by the Financial Institutions Subsection of the CBA Business Law Section

Nicholas J. Richards, Esq., a partner with Anderson & Jahde, P.C., will discuss reporting requirements for individuals and businesses with foreign accounts and interests, a priority, if not, the number one priority, of the IRS. You will learn that compliance does not cause an increase in tax—but failure to comply can trigger devastating penalties. You will gain knowledge and understanding of the foreign account and entity reporting requirements, and the options for those who have failed to comply in the past.

The program will be held at the CBA-CLE offices, 1900 Grant Street, Suite 300, Denver. This program is offered for 1 general CLE credit. Learn more, view program faculty, and register online.

Save the Date for the upcoming Financial Institutions Subsection Program on Wednesday, May 20.

International Transactions Subsection

Drafting International Arbitration Language/Agreements: Practical Tips
Tuesday, May 12, noon to 1 p.m. (option to purchase lunch)

Co-sponsored by the International Transactions Subsection of the CBA Business Law Section

This session is packed with practical tips for drafting international arbitration language in contracts for your clients doing business internationally. Your experienced presenters will address key considerations, provisions, clauses and principles. You will learn how to better draft arbitration clauses in sync with client needs and goals, and other provisions of the contract, plus learn what to look for when reviewing arbitration clauses in contracts prepared by others, taking into account procedural and substantive requirements of the governing law and that of the arbitration venue.

The program will be held at the CBA-CLE offices, 1900 Grant Street, Suite 300, Denver. This program is offered for 1 general CLE credit. Learn more, view program faculty, and register online.

Mergers & Acquisitions Subsection

M&A Post-Closing Disputes: What Now?
Tuesday, April 7, 8 to 9 a.m.

Co-sponsored by the M&A Subsection of the CBA Business Law Section

Post-closing disputes often arise among the parties to an M&A transaction for a number of reasons. Join us as Paul Wood identifies common causes of such disputes and offers insights on how to deal with those disputes, along with thoughts on how to best draft M&A agreements to avoid disputes or to put your client in the best position to prevail if a post-closing dispute arises.

The program will be held at the CBA-CLE offices, 1900 Grant Street, Suite 300, Denver. This program is offered for 1 general CLE credit. Learn more, view program faculty, and register online.

Save the Date for the upcoming M&A Subsection Breakfast CLE Program: Employment Law Issues in M&A—The Things That Fall Through the Cracks—Tuesday, May 5, 8 to 9 a.m.

Tax Subsection

Qualified Plans in Business Succession Planning
Wednesday, April 8, noon

Co-sponsored by the Tax Subsection of the CBA Business Law Section

This presentation will describe the use of qualified retirement plans in structuring and funding ownership transfers for closely held and family owned businesses. ESOPs, employer stock holding profit-sharing plans, cash balance and cross tested plans will be analyzed as tax favored funding mechanisms. Coordination with profits interests, SARs, NQDCs and other non-qualified arrangements will be addressed.

The program will be held at Davis Graham & Stubbs LLP, 1550 17th Street, Suite 500, Denver. The program is offered for 1 general CLE credit. Learn more, view program faculty, and register online. You may also RSVP via email at lunches@cobar.org.

You may participate in this luncheon by telephone. Please indicate when registering if you would like to participate by phone. The day before the program, we will email the materials as well as the call in number to registered call-in participants.

CBA-CLE Information

Unless noted, programs are held at the CBA-CLE offices, 1900 Grant St. Ste. 300, Denver

Closely Held Businesses: Strategies for Tackling Key Issues
Thursday, April 30, 8:55 a.m. to 4:15 p.m.

Co-sponsored by the Business Law Section of the Colorado Bar Association

Advising closely held businesses and their owners requires you to be knowledgeable on a wide range of issues. Your expert guidance must often include individual personalities and business dynamics along with financial and securities issues to avoid failure of a legal plan. Whether you are a seasoned business lawyer, expanding your practice, new to the field, or simply need a refresher, this program will provide you with practical advice in important areas for advising closely held business owners. Program highlights include:

  • Family Dynamics and Small Businesses
  • Impact of the Affordable Care Act on Small Businesses
  • Issues in Probating Business Interests
  • Charitable Planning Using Closely Held Business Interests
  • The Ethical Minefield of Advising Family Owned Businesses
  • Small Business Financials and Accounting
  • Securities Issues for Closely Held Businesses

The program is offered for 7 general CLE credits, including 1 ethics. Learn more, view faculty, and register online.

47th Annual Rocky Mountain Securities Conference
Thursday, May 7, from 7:50 a.m. to 5:10 p.m.

This is the Rocky Mountain Region's premier securities conference presented by many of the country’s most knowledgeable securities practitioners—with keynote speaker Hon. Mary Jo White, SEC Chair. With unmatched networking opportunities, you can learn from local, statewide, and national practice leaders.

Topics include:

  • Enforcement Update: Current National and Regional Priorities, Legal Developments, and Notable Cases
  • The View from the Defense Side
  • A Conversation with the Division of Corporation Finance
  • Ethical Considerations in the SEC’s Whistleblower Program
  • Regulated Entities—Hot Topics
  • Audit Committees: Operating in an Environment of Increased Regulatory Scrutiny
  • Reg D and Crowdfunding: Practice and Regulatory Update
  • General Counsel Roundtable
  • The Boundaries of “Ethical” Representation—Defense and SEC Perspectives
  • Flash Courses: To Cooperate or Not to Cooperate? That is the Question; Litigating with the SEC: Does Forum Matter?; Fees in an Evolving Asset Management Industry

The program will be held at the Denver Marriott City Center, Denver, CO. The program is offered for 8 general CLE credits including 2 ethics. Learn more and register online.

A Primer on Advising Nonprofit Organizations
Thursday, May 14, 8:55 a.m. to 12:35 p.m.

Co-sponsored by the Business and Taxation Law Sections of the Colorado Bar Association, the Colorado Nonprofit Association, and the Colorado Society of Association Executives

The 2015 Primer is designed to introduce practitioners to more general aspects of the laws governing the formation and operation of nonprofit organizations, obtaining and retaining tax-exempt status, taxation of unrelated business income, the distinctions between nonprofit entities, and operational issues for tax-exempt organizations.

The program is offered for 4 general CLE credits. Learn more, view program faculty, and register online.

24th Annual Institute on Advising Nonprofit Organizations in Colorado
Friday, May 15, 8:55 a.m. to 4:25 p.m.

Co-sponsored by the Business and Taxation Law Sections of the Colorado Bar Association, the Colorado Nonprofit Association, and the Colorado Society of Association Executives

The 24th Annual Institute will present a comprehensive analysis of legal issues of concern to nonprofit organizations. The program will benefit attorneys, key representatives of nonprofit organizations, including board members, executive directors, chief financial officers, accountants, and representatives of governmental agencies. Program Highlights:

  • 2015 Tax Law Update
  • Fiduciary Duties of For-Profit Boards
  • 501(c)(4), 501(c)(5) and 501(c)(6) Entities: What are They and Why Should They Worry?
  • Sports & Anti-Doping
  • When is it Time to Right the Ship: Best Practices for Discipline and Termination
  • Secretary of State Update
  • Simplified & Streamlined—Considerations Related to Form 1023-EZ
  • Tax Exempt Bond Issuances
  • Volunteers

The program is offered for 7 general CLE credits. Learn more, view program faculty, and register online.

13th Annual Rocky Mountain Intellectual Property & Technology Institute
Thursday & Friday, May 28–29

The 2015 Rocky Mountain IP & Technology Law Institute provides a guide to how the new realities of protecting innovation, the rise of data security and privacy breaches and liability, social media and Big Data are affecting the way you practice. Four simultaneous tracks of sessions, led by practice and thought leaders nationwide, will examine how IP, tech and transactional law have changed and may impact the advice you give clients about protecting their innovations, commercializing those innovations through licensing, or funding or selling their enterprises.

The program will be held at the Westin Westminster Hotel, 10600 Westminster Blvd., Westminster, CO. The program is offered for 15 general CLE credits including 2 ethics. Learn more and register online.

Recent Homestudies

Check out the complete catalog of CLE Homestudies—search by practice area or credits.

New CBA-CLE Book

Limited Liability Companies and Partnerships in Colorado, 1st Ed.
By Herrick K. Lidstone Jr. and Allen Sparkman

Limited Liability Companies and Partnerships in Colorado walks the practitioner through choice of entity, formation and dissolution of the entity, creditor rights, securities and tax issues, as well as ethical considerations. Sample multi-member and single-member operating agreements included in the appendices provide an invaluable resource. To assist in research, the desk book contains a useful subject index and table of authorities, as well as a fully searchable CD-ROM.

Two outstanding attorneys, Herrick Lidstone and Allen Sparkman have provided their vast experience, diligence, and thoroughness in authoring this new book. Learn more and order the book online.

Contributions for future newsletters are welcome —
Contact Ed Naylor at ed.naylor@moyewhite.com or 303-292-2900

This newsletter is for information only and does not provide legal advice.

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