If Intellectual Property is Important to Your Business, It Deserves Your Attention

If Intellectual Property is Important to Your Business, It Deserves Your Attention

      Peter Mahler, in his blog New York Business Divorce, has in a recent posting discussed a pair of cases demonstrating the significant problems that can arise when a business fails to focus upon the ownership and control of its intellectual property.

      In the first of the cases discussed, Freedmen v. McInnis, 2018 NY Slip op. 30210(u) [Sup. Ct. NY County Feb. 2, 2018], arose in connection with the use of the name “Root & Bone” for certain restaurants. While the court was willing to issue an injunction against certain uses of those names by certain of the members in business ventures unrelated to the LLC, that injunction was premised upon the plaintiff member posting a $500,000 bond.

      This dispute had its basis in the fact that, before the LLC’s formation, one of the members, McInnis, filed a trademark registration for “Root & Bone” with the US Patent and Trademark Office in his own name. While McInnis did not disclose this registration, the LLC’s operating agreement failed to address the name and failed to require that each member contribute any intellectual property rights in the name to the LLC.

      In the second case, Oliver v. Johanson, 5:17-cv-05129 [W.D. Ark. June 29, 2018], the ownership of a significant software package, substantially crafted by one of and LLC’s members, arose, with the author member claiming it was not a “work for hire” because he was not an employee of the LLC, but rather an independent contractor.

      Again, the failure to specifically address ownership in the operating agreement gave rise to the dispute.

       These decisions are reviewed by Peter Mahler in his posting Dissension Follows When Business Owners Don’t Put Their IP House in Order (July 23, 2018); HERE IS A LINK to that posting.