Not all trademarks are created equal.  Some trademarks are ‘stronger’ in the legal sense than others, meaning that some marks are easier to register and enforce than other marks.  Trademarks need to be unique, distinctive, and not easily confused with other existing trademarks when they are applied to a product or service in order to be registerable with the United States Patent and Trademark Office (“USPTO”).

Trademarks are intellectual property that are classified into one of four categories of marks, based on how legally strong they are. The categories, listed in increasing strength, include: generic marks, descriptive marks, suggestive marks and fanciful or arbitrary marks.

Generic Marks

Generic marks are the weakest category of marks, and are not registerable or enforceable against others who use them. Generic marks are commonly used phrases associated with goods or services. Generic marks can either be generic at the outset of their use or become generic through improper use over a prolonged period of time. For example, using the mark SODA for sweet carbonated beverages would be a generic mark as the public associates the term “soda” with sweet carbonated beverages; the mark is considered generic at the outset of its use in this situation.

Marks that were once valid trademarks can further be reduced to a generic mark if the unauthorized use of the mark goes unpoliced. Distinctive, suggestive or fanciful or arbitrary marks can turn into unenforceable generic marks if the public commonly uses the mark in association with a particular good or service, and the trademark holder fails to police the use of its mark for an extended period of time. Common examples of once valid trademarks turning into generic marks include ZIPPER, ESCALATOR and ASPIRIN.

Descriptive Marks

Registerability and enforceability of descriptive marks is hit-or-miss, and that is why they are considered to be fairly weak marks. These types of marks describe some aspect of the product or service that the mark is being applied to. Descriptive marks fall into two subclasses: merely descriptive, and distinctive. Merely descriptive marks are not registerable, as they merely describe the product or services that the mark applies to (i.e., an image of brooms, vacuums and dusters for a cleaning service). However, a notable exemption allows descriptive marks that acquire distinctiveness to gain trademark protection. Distinctive marks can gain distinctiveness through extensive use in commerce for a period of 5 years or more.

Suggestive Marks

Suggestive marks are fairly strong marks, as they suggest something about the product or service to which they are applied, but do not describe the product or service. Some examples of suggestive marks include RAVISHING for a cosmetic line (suggesting that the make-up will make the user look ravishing).

Fanciful or Arbitrary Marks

The strongest marks are ones that are fanciful or arbitrary. These types of marks are easy to register and enforce based on their uniqueness.

• Fanciful marks are marks that are created from imagination. They have no definition in the dictionary, are completely unique, and are unusual. An example of a fanciful marks would be CHEMZA for use with selling hats. It is a made up word, with no significance other than being used as a trademark for selling hats.
• Arbitrary marks are marks that generally are a known thing applied to a completely different thing or service. Good examples of arbitrary marks include the mark KITTENS for use with hair accessories or MAJESTIC for weight loss management services.

For more information on the strength/distinctiveness of your mark, how to register a trademark or should you need advisement in an intellectual property matter, please reach out to our office.

On Monday, May 4 it was announced that Steve Easterbrook, new CEO of McDonald’s Corporation, would reorganize the company’s business units, cut costs, and sell restaurants to franchisees in an effort to transform the world’s largest restaurant chain into a “modern, progressive burger company.” Easterbrook made the announcement via video, in which he vowed to eliminate “cumbersome” management and thoroughly analyze the business for inefficiencies in an effort to save the corporation about $300 million net annually, most of which he anticipated would be realized by the end of 2017.

Mike Andres leads the U.S. McDonald’s market, which news reports at Reuters claim account for more than 40% of the fast-food giant’s operating income. He will continue to lead this market. In the video, Easterbrook said that in the year 2015, $8 to $9 billion would be returned to shareholders of McDonald’s.

Ultimately, the goal is to improve how consumers perceive McDonald’s restaurants in terms of slow service and food quality. In recent years, McDonald’s has been in a decline in the burger fast-food franchise industry. Easterbrook said in his announcement following one of the iconic fast-food restaurant’s worst years that he would “not shy away from the urgent need to reset this business.” Easterbrook took the McDonald’s helm on March 1 of this year.

Prior to Easterbrook taking over the helm, it was planned that McDonald’s would sell 1,500 restaurants by 2016. Under Easterbrook’s management, the plan is to sell 3,500 restaurants by 2018 to franchisees, which would result in an increase of franchisee ownership around the world from 81% to 90%. However, it appears that investors were not thoroughly impressed by Easterbrook’s plan, considering that the announcement seemed to provoke a “prove it” sentiment in immediate reactions noticed in investors according to Stephen Anderson, analyst at Miller Tabak & Co.

Australia, Canada, France, Germany, and the UK will comprise the new “international lead” market according to Reuters, which accounts for 40% of the burger franchisors’ operating income.

McDonald’s has been a successful franchise in the U.S. and many international markets for decades, and has proven a successful business model for tens of thousands of franchisees. However, the latest news can make anyone who is thinking of investing in a McDonald’s franchise apprehensive, to say the least. Anyone considering a franchise investment should consult with an experienced and knowledgeable attorney before making a decision that could change your life, and your financial future. Count on the Los Angeles business attorneys at Spotora & Associates for sound legal guidance and support in franchising or any business matter.

Recently, it was announced that Two Toasters, a design and development agency for applications on Google and Apple platforms, was acquired by Ticketmaster, a divisions of Live Nation Entertainment. While Ticketmaster had little to say about the acquisition, it did confirm on the company’s website that the acquisition “further demonstrates Ticketmaster’s commitment to expanding its mobile capacity.”

While the amount Ticketmaster paid to acquire Two Toasters was not disclosed in news reports, the American Tobacco Campus-based company will be known as Ticketmaster Mobile Studio, according to the Herald Sun. On Tuesday, March 31, Ticketmaster issued a statement saying that the acquisition of Two Toasters “further demonstrates Ticketmaster’s commitment to expanding its mobile capacity and creating a truly end-to-end platform unlike any other in the live event and entertainment space.”

According to news sources, Two Toasters has been successful in the launch of more than 50 mobile applications for a wide array of companies, some of which include Regal Entertainment Group, Birchbox, Ebates, and Airbnb, among others. Two Toasters currently employs 32 individuals. The company was founded by Adit and Rachit Shukla, brothers. The deal is an important strategic undertaking for Ticketmaster, according to sources, who say the deal establishes a solid presence for Live Nation in the Triangle.

Two Toasters’ CEO Rachit Shukla said in the statement issued by Ticketmaster that, “We’ve assembled one of the best mobile teams in the region and Two Toasters has become a magnet for new talent.” Shukla went on to say that by Two Toasters joining Ticketmaster, the company’s visions has been expanded, and the talented team given the opportunity to take ownership and build a completely new mobile standard in the industry as Ticketmaster Mobile Studio.

Spotora & Associates is a talented team of Los Angeles business attorneys dedicated to achieving and exceeding your business goals. We specialize in mergers and acquisitions and successfully represent businesses in a wide array of industries; if you are in the process of acquiring a new entity or being acquired, we can help you ensure all bases are covered at every step. We know the complexities involved and will provide the expertise and knowledge essential to helping you make a smart and profitable business decision. Our primary goal is to obtain your objectives in business transactions from the simplest, to the most complex. Contact us to get started right away.

Recently it was announced that two giants in the food industry, Kraft and Heinz, would merge. Once combined into one company, Kraft Heinz will be the 5th largest food and beverage groups in the world, according to an article at the New York Times. In fact, the Kraft Heinz Company is expected to have a market value in excess of $80 billion. As you can imagine, this is the largest merger of 2015 thus far.

While Heinz focused primarily on condiments and canned goods such as ketchup, baby food, Classico spaghetti sauces, and other sauces, meals, and infant/nutrition, 3G Capital will take control of Kraft Foods, famous for Planters nuts, Jell-O, Mac and cheese, Oscar Mayer label meats, and other foods. 3G acquired Berkshire Hathaway, a companied formed by billionaire investor Warren Buffett, in 2013.

What is the intention of the merger? 3G, who took over beer giant Anheuser-Busch in 2008, intends to take ownership of iconic brands in an effort to expand the companies internationally, and drastically cut costs. According to news resources, Warren Buffett and 3G are hoping that combining Heinz and Kraft will result in steady growth of sales for such names as Velveeta, Lunchables, and Kool-Aid, just as the Heinz ketchup brand has risen in sales steadily since its acquisition in 2013.

Currently, the majority of Kraft products are sold in the U.S., while most of Heinz sales are generated abroad. 3G chairman of Kraft Heinz Alex Behring hopes that by merging, Kraft’s sales will expand into the global market. According to Behring, “Combining our two businesses, we’ll create the third-largest food and beverage company in North America, and the fifth-largest food and beverage company in the world.” Behring went on to say that the merger will enjoy a substantially enhanced scale at both the retail and food service channels in North America, its key market.

The merging of Heinz and Kraft has been in the works for years, however it wasn’t until the beginning of 2015, when John T. Cahill took over as CEO at 3G that Mr. Buffett approached Kraft about the two companies merging. In a statement, Buffett said that he was “delighted to play a part in bringing these two winning companies and their iconic brands together.” Buffett went on to reveal his excitement and anticipation of the opportunities possible for the newly combined organization.

At Spotora & Associates, our LA business merger attorneys know the complexities involved when two companies become one, and the potential pitfalls. Whether your company is small and local or known globally, work with a skilled and experienced Los Angeles business attorney to ensure positive, profitable results for your company.

At Spotora & Associates, our Los Angeles mergers and acquisitions attorneys understand the complexities involved when one company acquires or merges with another.  Purchasing another company must be approached carefully and thoughtfully, with the assistance of a skilled lawyer.  Recently, El Segundo’s PCM Inc. purchased some of the assets of En Pointe Technologies Sales Inc., an IT firm who specializes in Microsoft products according to an article at the Los Angeles Business Journal.

PCM Inc. manufactures MacMall and PC Mall technology product catalogs in addition to information technology solutions designed for both local governments and businesses.  In acquiring specific assets from En Pointe Technologies Sales, PCM agreed to pay $15 million for the IT solutions acquired from En Pointe, a Gardena-based company.  Over the next three years, PCM will also pay 10% of certain agreed upon services revenues and 22 1/2% of the company’s future adjusted gross profit, according to a filing with the SEC (Securities and Exchange Commission.)

En Pointe is expected to retain its inventory and accounts receivable; this includes a $72 million contract over the next five years to provide more than 30 Los Angeles County departments with cloud-based software, a contract that was signed in June of 2014.  At the time the company’s year ended on September 30, 2014, revenue was reported to be $393 million.

The acquisition deal between PCM and En Pointe is scheduled to close on April 1st of this year, with PCM planning the creation of a new division which will assume the En Pointe name.

According to chairman and chief executive of PCM Frank Khulusi, the company feels that acquiring En Pointe will complement PCM’s commercial and public sector segments.  In addition, the 240 employees of En Pointe will be offered equivalent positions at PCM.

Bob Din, Chief Executive at En Pointe, founded the company more than two decades ago in 1993.  When the acquisition of En Pointe by PCM was announced on Monday, shares at PCM closed at $9.11, an increase of one percent.

We understand how difficult it can be in making a decision to acquire a company, and all of the issues involved including often times difficult negotiations, regulatory filings, reaching your objectives and goals, tax implications, and more.  At Spotora & Associates, our LA acquisition lawyers want to help ensure your decisions are solid, smart, and most important of all, that all transactions and strategies are sound, protecting you from potential litigation in the future.

As experienced Los Angeles business attorneys we understand the issues franchisees often face in running a franchise.  Recently, a former 7-Eleven executive allegedly blew the whistle on company executives who put him in charge of ‘Operation Take-Back,’ a project that was designed to rid the franchise stores in New Jersey of South Asian and Indian franchisee owners, deemed no longer a part of the company’s vision.

According to a news article at NJ.com, Ian Shehaiber was hired by 7-Eleven as a district manager/field consultant in 2010.  Soon after, he was given a $1,500 cash reward and named 2011 Rookie Field Consultant of the Year.  However, all of that changed when his bosses placed Shehaiber in charge of the project in 2012.

Shehaiber filed suit against 7-Eleven in December in state Superior Court in Middlesex County, thereafter the company requested a change of venue to the U.S. District Court due to federal labor and discrimination law issues.  According to Gerald Marks, Shehaiber’s attorney, the franchise has taken action over the past two years to interrogate, dehumanize, and ridicule Indian franchisees in their effort to retake the 7-Eleven stores and resell them at a profit.

Margaret Chabris, a spokeswoman for 7-Eleven, said in a statement that “The allegations made in this complaint are false.”  She went on in the statement to say that the franchise is dedicated to protecting other franchisees, employees, and guests by terminating the relationship with franchisees who violate the franchise agreement or the law when appropriate, and that “a few” franchisees had been caught in violation of the law and/or their contractual obligations.  Shehaiber’s attorney did not comment on Chabris’ statement.

The lawsuit claims that Shehaiber was instructed to take part in the project in mid 2012, the goal being to identify franchisees who had stolen money from the franchise.  Shehaiber also claims in the suit that meetings regarding the take-back were fueled by aggressive anti-Indian tactics and racial remarks.  He said that he was constantly in fear that he would be terminated if he spoke up; Shehaiber also claims in the lawsuit that due to his Christian faith and his supervisor’s contempt for those who are non-Muslim, he was discriminated against and forced to work in a hostile environment.

Executives at 7-Eleven who were allegedly involved in ‘Operation Take-back’ claimed that franchise owners who were Indian made a habit of attempting to take advantage of others.

It will be interesting to learn how this all turns out, and whether 7-Eleven is able to put the stores in question under corporate control.

Whether you are a franchisor or franchisee, it is important to consult with a Los Angeles business attorney specializing in franchising when problems or issues surface that you are not certain how to deal with.  At Spotora & Associates, our staff has the skill, knowledge, and experience to successfully advise and handle any and all franchise issues.

Recently, Cupertino-based Apple Inc. has been hit with a slew of new patent infringement lawsuits after the company was ordered last week to pay more than $530 million for infringing on the patents of a Texas company, according to an article at the LA Times.

Texas-based Smartflash was awarded $532.9 million by a jury, then filed an additional lawsuit on February 25 alleging that Apple violated the company’s patents in relation to devices that debuted after the original lawsuit was already in court. In the midst of all this, Ericsson, a pioneer in the Swedish mobile phone industry, hit Apple hard when the company filed seven federal lawsuits against Apple in an ongoing patent dispute, along with two complaints filed with the U.S. International Trade commission alleging that Apple had infringed on more than 40 patents in relation to various technologies relevant to iPads and iPhones.

In January of this year, a licensing agreement between Apple and Ericsson regarding royalties to be paid to the Swedish technology company for its mobile technology expired. Since that time, the companies have traded lawsuits, with Apple filing a suit against Ericsson in January regarding a fair rate for the rights to Ericsson’s patents. A spokeswoman for Apple revealed a statement made by Apple saying, “We’ve always been willing to pay a fair price to secure the rights to standards essential patents covering technology in our products. Unfortunately, we have not been able to agree with Ericsson on a fair rate for their patents so, as a last resort, we are asking the courts for help.”

Some of the patents Ericsson is taking legal action against Apple for include 2G, 3G, and 4G/LTE high-speed wireless technology; complaints filed in federal court also indicate Ericsson has taken legal action in regards to GPS technology.

While the initial lawsuit filed by Smartflash against Apple claimed infringement on three patents including devices that use iTunes and iTunes software, the new lawsuit filed by Smartflash LLC accused Apple of continuing to infringe on patents such as those for payment for songs, games, and other data in addition to methods utilized to manage digital rights. Apple denies the allegations, saying that the company manufactures no products, has no presence in the U.S., creates no jobs, and has no employees, and that Smartflash is exploiting Apple’s patent system in order to claim royalties for technology that Apple actually invented.

Spotora & Associates is a skilled team of Los Angeles intellectual property attorneys highly experienced and knowledgeable in the areas of patents, trademarks, copyright, trade secrets, and other areas of Internet law. Contact us today for unsurpassed legal guidance, support, and representation in matters regarding intangible rights.

Recently, a $90 million award against ABM Security was overturned by a California appeals court after the court found that the facts of the case were indisputable. The security company provided security guards with regular rest breaks, and the guards took them. In question was whether it was lawful for the security company to require the guards to leave radios/pagers on during these breaks, in addition to responding to security issues as needed while on break.

Essentially, plaintiffs in the case, which went to trial almost three years ago, claimed that ABM Security was not in compliance with California law because the company required guards to remain “on call” even during rest breaks. Plaintiffs maintained that during rest breaks, they should be relieved of all duties and not be required to respond to security issues, or leave pagers and radios on during these breaks. Following a lengthy court battle, plaintiffs in the case, Augustus v. ABM Security, which included thousands of former and current security guards with the company, were awarded a summary judgment.

The appeals court found that while meal breaks, or breaks that are unpaid, do not require security guards to remain on call, rest breaks do not require that employees are relieved of being on duty, only that security guards are relieved of performing actual work while on rest breaks under state law. The appeals court determined that being on call did not mean that employees perform work, however being available to work was not one and the same as performing actual work. The Court also noted that security guards for ABM engaged in activities such as making personal telephone calls and surfing the Internet while on rest break.

Ultimately, the California appeals court specified that meal breaks required that guards or employees are relieved of all duty in regards to work, while the definition of rest breaks contained no similar language.

What did this mean for employers? The bottom line is that while Department of Labor Standards Enforcement opinions and prior court rulings do not agree in regards to the extent of control employers have over employees during rest breaks, employers are not required to relieve employees of all duties during these breaks, but cannot require that security guards or other employees perform actual work.

As experienced Los Angeles employment lawyers, we realize the issues employers face in regards to employment policies and issues. For unsurpassed legal guidance and support, trust the skilled and dedicated staff at Spotora & Associates.

You are excited about owning a franchise, have asked those you know who are franchisees about their experiences and success, and perhaps have already begun work on your business plan. Is this enough, or do you need to do more to protect ensure you are protected from a legal standpoint? The quick answer – you need to hire an experienced Los Angeles franchise lawyer. Here are a few of the reasons why taking this step is so important to your success.

Franchise attorneys understand what really matters. From FDD’s or Franchise Disclosure Documents to contracts, lawyers who focus in this area of the law know what is essential to ensuring you are up-to-date with the latest franchise laws, and the various restrictions/obligations you must abide by as a franchise owner in order to avoid termination.

Guidance on how to set up your franchise business. Few franchisees understand the various options when it comes to setting up their business as a C-Corporation, LLC (Limited Liability Corporation), or Subchapter S Corporations. What are the differences, and which is best in your situation in regards to how your business will be taxed? A skilled franchise lawyer in LA can provide the guidance you need in this area of your business.

When it looks like you are destined to fail, you need an attorney’s expertise. You never expected your franchise to fail, but it does happen – all too frequently, unfortunately. The location you chose may not have been the best, or you failed to profit fast enough to stay in the game. Perhaps the franchisor is partially to blame for the failure of your business. Franchisors have a responsibility to help franchisees with the “ins and outs” of the business in regards to location, the development of new services or products, the success of other franchisees, competitive factors such as price, and other details. Another reason it’s important to hire a capable franchise lawyer – and to thoroughly read and understand the FDD.

Those involved tell you that hiring an attorney will be a waste of money. If there is one red flag in owning a franchise, this is it! Franchise developers often advise potential franchisees that the agreement contains no negotiable terms, so hiring a lawyer will simply be a waste of money. Essentially, the top priority of the franchisor is to get the agreement signed, without a professional reading over the terms to advise you of any potential problems or issues that may in fact be negotiable.

Are you considering a franchising opportunity? Going forward with this type of business opportunity involves a certain level of uncertainty and stress. By hiring a qualified Los Angeles franchise lawyer, you will enjoy peace of mind – not to mention a more restful sleep at night.

When one successful company merges with or acquires another successful company, the deal attracts a lot of attention, particularly when the players are big names in high-profile industries. The growth potential of each entity can be enormous.

But what can also be profitable are strategic “carve-outs,” which occur when assets are “scooped out” of an ailing company. You may be able to purchase just the piece of the company that you are interested in, or you may be able to buy the entire company and then sell off the assets that you don’t care to keep.

There is more inherent risk with carve-outs because you are dealing with something that is currently troubled financially. The flipside is that these assets often come at a reduced price.

When looking to purchase a carve-out, it is imperative to look at every piece of the company’s financial puzzle and be sure the asset can be turned around successfully. Thorough analysis is paramount.

Some of the questions you want to ask yourself:

-From the ground up, what problems did the asset or company face?

-What does the expense structure look like?

-How long will it take to make the necessary adjustments for the company or asset to become profitable?

-Is the risk worth the potential reward?

Just because an entire company or asset is not performing well doesn’t mean it is worthless. Perhaps the asset simply needs a shift in its business strategy or a minor restructuring of its finances to put it in the black.

When looking for a carve-out, the best bets are within industries that you have experience with or carry the potential for “synergy” with your current business. This can save a lot of money and make the deal more profitable in the end. For example, if you manufacture household goods, you would do best to purchase a product that can be easily integrated into your current operation. Because you are purchasing a troubled asset, it makes little sense to take more risks than necessary.

While companies seeking carve-outs usually look to their local competition, sometimes it makes sense to go beyond your own borders, too, particularly in today’s challenging economic climate. To stay competitive and to diversify in tough times, it may make sense to expand to a global market. Of course, that carries with it a whole host of added legal requirements.

If you are a company looking to “carve-out” a competitor’s assets, it is important to speak with an experienced attorney.

Anthony Spotora is a Los Angeles entertainment lawyer and Los Angeles business attorney. To learn more, visit Spotoralaw.com.