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In This IssueNew Federal Law Encourages Private-Sector Disaster Preparedness There’s a relatively new disaster-related federal law with which few people are familiar. Over the next several years, however, this law, which deals with preparedness for natural and manmade disasters, could affect virtually every business in the country. Signed by President Bush in August 2007, the law is entitled "Implementing Recommendations of the 9/11 Commission Act of 2007" ("Act") and is also referred to as "H.R. 1" and "Public Law 110-53." The Act requires the federal Department of Homeland Security ("DHS") to develop a voluntary program ("Program") for certifying that private-sector entities, both businesses and not-for-profit organizations, are prepared for disasters. The Program will create a financial incentive for preparedness, as the proposed certification will provide a way to confirm that an entity is adequately prepared and allow the market to reward it accordingly. Moreover, not being prepared pursuant to the Act could well subject an organization to liability to shareholders and customers. Thus, businesses and not-for-profits should carefully monitor the development and implementation of the Program and any related regulations. To be developed in consultation with key stakeholders, the Program will reflect existing best practices and standards for disaster preparedness. The Program’s goal is to establish a consistent method of, and procedures for, certifying the preparedness of private-sector organizations for all disaster threats, not just terrorism. The federal government will not run the Program. Rather, the Program will be administered by third-party organizations with expertise in managing and implementing voluntary accreditation and certification programs. One or more existing preparedness standards can be designated and integrated into the Program. Examples include the National Fire Protection Association Standard on Disaster/Emergency Management and Business Continuity Programs (ANSI/NFPA 1600). In addition, the Act calls for standards to address the unique nature of various subsectors. For instance, special consideration will be made for small businesses. The standards will also ensure the protection of confidential and other proprietary information. DHS has four basic implementing tasks to complete. First, DHS will designate one or more organizations to act as an accrediting body. Second, DHS will separately designate one or more standards for assessing private-sector preparedness. Third, DHS will provide relevant information and promote the business case for voluntary compliance with preparedness standards. Fourth, DHS will monitor the effectiveness of the Program on an ongoing basis. The portion of the Act that deals with private-sector preparedness and certification is Title IX. Section 901 of the Act is codified at 6 U.S.C.A. § 321m (West Supp. 2008), and Section 902 is codified at 6 U.S.C.A. § 112 (West 2007 & Supp. 2008). The Act is now the most comprehensive federal law dealing with private-sector preparedness. However, several other federal laws also deal with the subject, either directly or implicitly, by requiring entities to keep certain records and be able to produce them–even after disasters occur. Laws applicable to publicly traded companies such as the Securities Exchange Act of 1934 and the Sarbanes-Oxley Act impose reporting requirements that dictate disaster preparedness. IRS regulations do so as well, as do the laws of some states such as California. However, the common law has long imposed a duty on businesses to be prepared for disasters. The seminal case In re The T.J. Hooper, 60 F.2d 737 (2d Cir. 1932), in which a tugboat company was held liable for failing to have weather-warning radios on its vessels, established the principle that there are "precautions so imperative that even their universal disregard does not excuse their omission." The implication of the "Hooper Doctrine" is that a company cannot avoid liability simply because there is no statutory requirement to be prepared for disasters. Despite that fact, however, many companies do not have a disaster-preparedness plan. The Act, with its evolving financial incentive for preparedness, seems likely to prod them to develop and implement such plans. When forming a business entity, an important and seemingly simple step is choosing an official and sometimes an unofficial name. Beyond the implications for brand awareness, goodwill, and other business concerns, there are often-overlooked legal issues that should be addressed before choosing the entity name. Failure to resolve these issues in advance can result in unnecessary delay, expense, and legal problems. For instance, there is the issue of similar names. In Virginia an entity name must be distinguishable on the records of the State Corporation Commission ("SCC") from the names of other Virginia entities, reserved names, and the names of foreign entities registered to conduct business in Virginia. In addition, since 2003, Virginia law has not allowed two entities to have the same name even if they are of a different "species" (e.g., one is a corporation and the other a limited liability company). Before filing formation documents with the SCC, you can determine whether the name is available by conducting an online search or simply calling the SCC. Another consideration is whether the proposed name is similar, even if distinguishable, to an existing or dissolved entity. Not only may a similar name confuse your suppliers, customers, and other parties, any negative connotations associated with the similarly named entity could also reflect poorly on your entity. For example, I once had a client with a name similar to that of an entity in financial distress, and my client’s bank account was mistakenly liened for taxes owed by the other entity. The mistake was ultimately corrected, but only after legal expenses and bank fees for a few bounced checks. Are you having trouble deciding what name to use or have you narrowed the choices but are not yet ready to "pull the trigger?" If so, you can reserve a name by filing a reservation application with the SCC. For a $10 filing fee plus any applicable legal fees the reservation application gives you the right to a name for 120 days, and the reservation can be renewed indefinitely. Even if you don’t plan to use the name, this procedure may be worthwhile to prevent others from using it. Another nuance to the name game that must be considered is derivations of the principal name or acronyms that will be used in commerce. Improper use of fictitious names or "doing business as" ("d/b/a") names can cause problems. In fact, if you conduct business other than under the legal business name, Virginia law requires you to file a fictitious or assumed name certificate with the clerk of the circuit court in every Virginia city or county where you conduct business. (Whether you "conduct business" in a given location is a facts-and-circumstances inquiry.) In addition, a limited partnership, limited liability company, or corporation using a fictitious name must file a copy of its fictitious name certificate, attested by the clerk of the circuit court where the original was filed, with the clerk of the SCC and pay a $10 filing fee. Failure to comply with these requirements can prevent an entity from bringing a lawsuit in Virginia courts and more importantly is a misdemeanor punishable by a fine not exceeding $2,500 or confinement in jail for up to 12 months or both. Although it is not a legal requirement, most people forming a new entity will also want to check on the availability of internet domain names with derivations of the intended entity name. Availability is easily determined by a search on an internet registration service such as Network Solutions (www.networksolutions.com). Perhaps the last piece of the legal puzzle in choosing a name is to check whether the name is available as a federal trademark or service mark. Even if you don’t currently plan to undertake the expense of registering the name as a mark with the United States Patent and Trademark Office, a quick search to see if the name is being used by someone else in your business sector could avoid considerable legal headaches down the road and can be accomplished at minimal cost. U.S. Patent and Trademark Office Broadens Mark-Description Requirements On March 14, 2008, the U.S. Patent and Trademark Office ("PTO") issued a final rule requiring a description of marks in all applications where the mark is not in standard characters. The new rule went into effect May 13, 2008. Previously, the PTO permitted descriptions of marks to be filed with applications, and the PTO examining attorney assigned to an application could require such a description pursuant to Trademark Rule 2.37. The PTO amended Rule 2.37 to require descriptions for all applications that are not in standard characters. The PTO says the change will "facilitate greater accuracy and efficiency in design coding and pseudo-mark [homophone] data determinations," which in turn will "promote better searchability of marks within the [PTO’s] trademark database." The PTO declined to permit applicants to suggest design codes on the relevant Trademark Electronic Application System forms. The PTO explained that because requesting or requiring submissions for design codes on the application forms "would likely prove unnecessarily confusing to many applicants," the PTO prefers to provide such codes to the applicant and then let the applicant respond. In response to several requests for clarification of the effect of the new rules, the PTO explained that (1) no identification of the name of a stylized font will be required; (2) applications lacking a description will not be denied a filing date; and (3) the PTO will issue an examination guide on the new rule, which will be incorporated into the next edition of the PTO’s Trademark Manual of Examining Procedure ("TMEP"). Finally, in response to concerns that the description requirement might unintentionally limit or restrict marks, the PTO reiterated its position, set forth in TMEP § 808.02, that a "mark’s meaning is based on the impression actually created by the mark in the minds of consumers, not on the impression that the applicant states that the mark is intended to convey."
PTO Proposes Eliminating "Snail Mail" Trademark Filing Options The United States Patent and Trademark Office ("PTO") has proposed eliminating the Express Mail certificate and certificate of mailing/transmission for all filings that can be made online through the PTO’s Trademark Electronic Application System ("TEAS"). The certificates currently permit a trademark owner to obtain a filing date as of the date a document is mailed or transmitted rather than the date the PTO receives it. The PTO says that "the purpose of the rule change is to promote electronic filing, increase efficiency, and improve the quality and integrity of critical data in the [PTO’s] automated systems." The proposed rules build upon changes the PTO made in 2002 to the Express Mail certificate rules. Those changes eliminated the use of Express Mail certificates to establish the date of filing for documents that could be filed online at the time. However, the 2002 changes did not affect certificates of mailing or certificates of transmission. The proposed rules would go even further and would eliminate the use of all such certificates for any documents that can be filed online via TEAS. Documents for which an Express Mail certificate or certificate of mailing/transmission would not be effective include:
For filings for which no form is available on TEAS, such as a request to divide an application, applicants would still be able to use a certificate. If TEAS is not available due to technical problems, applicants would be permitted to show that a filing was attempted but could not be completed. The PTO accepted comments on the proposed rules changes through April and is expected shortly to announce its decision on the proposed rules.
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