Harwood Law PLLC Harwood Law PLLC 2020-11-09T16:43:49Z https://www.aharwoodlaw.com/feed/atom/ WordPress On behalf of Harwood Law PLLC <![CDATA[Welcome To Our Blog]]> https://www.aharwoodlaw.com/?p=48601 2019-07-15T23:36:24Z 2019-07-15T23:30:27Z On behalf of Harwood Law PLLC <![CDATA[Threats to Report Attorneys’ Breaches of Professional Conduct]]> https://www.aharwoodlaw.com/?p=48660 2020-04-13T10:07:00Z 2016-05-03T05:00:00Z Are Threats to Report Violations of the Rules of Professional Conduct Permissible? by Tony Harwood Suppose you are a lawyer representing a client in a civil matter in which the adverse lawyer violates the Rules of Professional Conduct. Can you threaten to report that to obtain a better settlement offer in a lawsuit or better terms in a transaction? A. The Debate About Rule 3.4(e) In New York, unlike some other states, the Rules of Professional Conduct do not directly answer this question. Rule 3.4(e) and its predecessor, Rule 7-105 of the Disciplinary Code, prohibit threats of criminal prosecution solely to obtain an advantage in a civil case. However, neither rule expressly prohibits threats to report attorneys’ violations of the Rules of Professional Conduct. The authorities in New York disagree about whether Rule 3.4 and its predecessor apply to violations of the Rules of Professional Conduct. The Nassau County Bar Association held in opinion 98-12 that Rule 7-105 prohibits threats to report attorneys’ misconduct. By contrast, both the New York State Bar Association (Opinion 772) and the New York City Bar Association (Opinion 2015-5) held that Rule 3.4(e) and its predecessor are inapplicable. B. Other Potentially Applicable Rules Although the City Bar and State Bar concluded that Rule 3.4 and its predecessor are inapplicable, they held that under other rules it would be improper: 1. To threaten to bring frivolous charges to a disciplinary committee (citing Rule 3.1(a) and (b) and DR 7-102); 2. To make knowing misstatements of law or fact in making a threat (Rules 3.3 and 3.4 and DR 7-102); 3. To make a threat that serves no substantial purpose other than to embarrass or harm another lawyer or that lawyer’s client (citing Rule 4.4(a)). 4. To make a threat that violates state or federal laws on extortion, coercion or larceny. 5. To make a threat to report a violation that a lawyer has a duty to report under Rule 8.3(a). Rule 8.4(d) also could apply to bar threats. That rule prohibits conduct prejudicial to the administration of justice. The Appellate Division, First Department disciplined an attorney under Rule 8.4(d) for making an implied threat to report misconduct to gain an advantage in settlement negotiations. In re Dimick, 105 A.D.3d 30 (1st Dep’t 2013). C. What Constitutes a Threat? Another risk is the lack of clarity about what constitutes a threat. Opinion 772 of the New York State Bar, relying on cases involving threats of criminal prosecution, stated that courts sometimes will interpret “the mere allusion to a criminal prosecution or criminal penalties or even the use of criminal law labels to describe the opposing party’s conduct in a letter as a veiled threat . . .” That opinion concluded: “A letter containing an accusation of criminal wrongdoing likely constitutes a threat, especially when coupled with a demand that the accused wrongdoer remedy the civil wrong.” If the same analysis applies to threats to report attorneys’ misconduct, then even a reference to violations without an express threat could be deemed a violation. D. Guidance from the State Bar The New York State Bar’s Commercial and Federal Litigation Section issued a report advising attorneys who are considering making threats to evaluate whether:
  • the lawyer has a duty to report the misconduct, in which case a threat would be improper;
  • the lawyer lacks a good-faith belief that there is misconduct, in which case a threat would be improper;
  • the lawyer is making the threat merely to embarrass or harm another lawyer, which would be improper;
  • the threat would violate criminal laws, which would be improper;
  • the threat serves solely to gain an advantage in a civil matter, which would be improper under authorities that apply rule 3.4 to attorneys’ misconduct; and
  • the “mere allusion” to a violation of the rules of professional conduct, without an explicit threat, might be construed as a threat.
The report advised attorneys who have been threatened with the possibility of a report of misconduct to consider whether:
  • to report the threat to the attorney’s malpractice insurer;
  • to report the threat to a disciplinary committee;
  • to consult with an expert on ethics about how to respond;
  • to provide information to the attorney making the threat, to demonstrate that there is no basis for the threat;
  • to advise the client of the threat and analyze whether it creates a conflict with the client that may be waived or may require withdrawal from the representation; and
  • to report the threat to a prosecutor’s office as a violation of criminal laws.
E. Conclusion Threats to report attorneys’ misconduct to obtain an advantage in a civil matter are fraught with risks. Although there is some disagreement about the applicable rules, there is a consensus that in many situations, such threats are improper and could expose threatening attorneys to the risk of discipline or criminal prosecution. tony-harwood   Anthony J. Harwood tel: 212-867-6820 fax: 212-937-3167 tony.harwood@aharwoodlaw.com ]]>
On behalf of Harwood Law PLLC <![CDATA[Trademark Assignments]]> https://www.aharwoodlaw.com/?p=48656 2019-07-18T07:12:50Z 2016-04-07T05:00:00Z Marshak v. Green, 746 F.2d 927, 929 (2d Cir. 1984). Trademark assignments in gross typically occur when a trademark is sold without any of the assets of the business that owns the trademark. The consequence of an assignment in gross is that the trademark assignment is invalid, and the purchaser of the trademark does not have the right to use it or protect it against infringement by other parties. This can arise in a number of contexts. For example, a business that has purchased a trademark may bring a claim of trademark infringement to stop another business from using that mark. The business defending the suit may be able to show that the trademark is invalid because it was assigned in gross. See Inter State Net Bank v. NetB@nk, Inc., 348 F.Supp.2d 340 (D.N.J. 2004) (dismissing a claim for trademark infringement when the trademark was assigned in gross). Another scenario is that a debtor in bankruptcy will transfer its trademarks to a new entity attempting to prevent its creditors from obtaining the trademarks. See Impact Distributors, Inc. v. Cuzcatlan Beverages, Inc., 260 B.R. 48 (S.D. Fla. 2001) (invalidating trademark assignments as an assignment in gross from bankrupt debtor to related parties). Conversely, a creditor that has a judgment against a trademark owner may attempt to attach the trademark to sell it in satisfaction of the judgment. Marshak, 746 F.2d 927 (reversing an order directing levy of execution and sale of a registered trademark on the ground that the sale would constitute an assignment in gross). Normally in determining whether there are trademark assignments in gross, courts will look for a transfer of assets associated with the trademark. But a transfer of assets is not always necessary. International Cosmetics Exchange v. Gapardis Health & Beauty, Inc., 303 F.3d 1242, 1246 (11th Cir. 2002). If no physical assets are transferred, the transfer will only be valid if the assignee’s products or services are “substantially similar” to those of the assignor and if “consumers will not be deceived or harmed.” Inter State Net Bank, 348 F.Supp.2d at 349. For example, in Main Street Outfitters, Inc. v. Federated Department Stores, Inc., 730 F. Supp. 289, 291 (2d Cir. 1989), the seller, which owned and operated department stores, sold women’s coats under the Main Street trademark. It sold the mark to Federated Department Stores, without any transfer of tangible assets. Federated used the mark on apparel, including jackets and rain wear. The court held that the trademark assignment was valid because the assignee applied the mark to articles of apparel that were substantially the same as those that the assignor had sold under the mark. The lesson of these cases is that trademark assignments require special care to be effective. A buyer of a trademark should take care to obtain other assets of the assignor related to the mark, or to apply it to goods or services that are substantially similar to those of the seller. Additionally, a business that is accused of trademark infringement would be wise to investigate prior trademark assignments to see if the assignment in gross doctrine provides a defense. tony-harwood   Anthony J. Harwood tel: 212-867-6820 fax: 212-937-3167 tony.harwood@aharwoodlaw.com ]]> On behalf of Harwood Law PLLC <![CDATA[Non-compete Agreements: Restricting an Employee’s Right to Compete]]> https://www.aharwoodlaw.com/?p=48653 2019-07-18T07:10:31Z 2016-01-29T06:00:00Z BDO Seidman v. Hirshberg, 93 N.Y.2d 382 (1999) This case serves as an example of some of the legitimate interests of the employer that the courts in New York will protect: trade secrets and non-public customer relationships that have been developed at the employer’s expense. The competing concern is that courts generally do not want employees to be in situations where they are unemployable and may have no other choice than to turn to state benefits while they wait for a non-compete agreement to expire.   To advance this policy, the courts are very careful to make sure that non-compete clauses are narrow in terms of geographic scope and duration. When they are too broad, or one of the provisions is perceived as being unfair, there is a tendency for courts either to strike them down or narrow their scope. Weighing the competing interests of the employer and the employee is particularly pertinent when an employee has been involuntarily terminated. There is a tendency in the courts to view enforcement of a non-compete clause against an employee who has been involuntarily terminated as unfair, and often, that will lead to the court denying the employer the right to enforce the agreement through an injunction. A case in point is  Eastman Kodak Co. v. Carmosino, 77 A.D.3d 1434 (4th Dep’t 2010).  In Eastman, the employer eliminated the employee’s position due to a corporate reorganization.  The court held that the balance of equities did not favor an injunction, because the employee was terminated without cause.  Eastman relied on the opinion of the New York Court of Appeals in Post v. Merrill Lynch, 48 N.Y.2d 84, 89 (1979), which held that when an employer terminates an employee without cause, the employer cannot condition the employee’s receipt of a previously earned pension on compliance with a restrictive covenant. However, when the loss of an earned pension is not involved, an agreement not to compete may still be enforceable, even when an the employer involuntarily terminates the employee.  For example, in Novendstern v. Mt. Kisco Medical Group, 177 A.D.2d 623 (2d Dep’t 1991), the court granted an injunction enforcing an employee’s agreement not to compete even though the employer involuntarily terminated the employee pursuant to the procedures in the employment agreement.  Similarly, in Hyde v. KLS  Professional Advisors Group LLC, Slip op. 12-1484-cv, an unpublished opinion of the United States Court of Appeals for the Second Circuit, the court refused to bar the employer from enforcing an agreement not to compete.  The district court in Hyde had held that under Post, restrictive covenants are per se unenforceable in New York against an employee terminated without cause.  The Second Circuit criticized the district court for “extending Post beyond its holding,” stating that Post involved the loss of an earned pension, which did not occur in the Hyde case. The lesson of these cases is that agreements preventing an employee from competing against a former employer are enforceable in New York in limited circumstances, even when an employee is involuntarily terminated. ]]> On behalf of Harwood Law PLLC <![CDATA[Technology and Legal Ethics: Deception in Undercover Investigations]]> https://www.aharwoodlaw.com/?p=48659 2019-07-18T07:26:30Z 2015-12-28T06:00:00Z People v. Palter, 35 P.3d 571 (Colo. 2001). In the trademark context, where an investigator poses as a customer, the conduct is not as deceptive as in the example from Colorado.  In a case in New York considering the trademark fact pattern, the court ruled that the evidence is admissible, but that ruling did not address the question of whether the lawyer violated the rules of ethics.  See, e.g., Gidatex, S.r.L. v. Campaniello Imports, Ltd., 82 F. Supp. 2d 119 (S.D.N.Y. 1999).  That leaves lawyers in a conundrum.  If they use the evidence, their liability for violations of the ethics rules is unclear.  But if they don’t use the evidence, they may be prejudicing their clients’ rights.  A lawyer in this situation may be able to avoid discipline because the deception was minimal and the duty to the client took precedence.  See Apple Corps. Ltd. v. Int’l Collectors Society, 15 F. Supp. 2d 456, 475-76 (D.N.J. 1998) (rules against deception only apply to material deception, not to misrepresentation as to identity or motive solely for the purpose of gathering evidence). Another complication is the no contact rule prohibiting a lawyer from communicating with or causing someone to communicate with a person represented by counsel (Rule 4.2).  Suppose there is already a lawsuit pending in which the trademark owner has obtained an injunction barring the retailer from selling counterfeit goods.  Both parties are represented by counsel.  If the investigator, acting under the lawyer’s direction, enters the store to make a purchase to test whether the retailer is violating the injunction, does that violate the no contact rule?  The Apple Corps. case held that it is only a prohibited contact if the person whom the investigator contacted was a member of the litigation control group of the company that sold the products. The bar associations have tried to bring some clarity to this area.  The New York City Bar has proposed an amendment to the Rules of Professional Conduct that would allow deception in investigations, provided that it did not violate other laws and did not violate the no contact rule.  The Commercial and Federal Litigation Section endorsed this proposal in its own report in 2015.  The New York County Lawyers Association adopted opinion 737 allowing, in very limited circumstances,  “dissemblance” as distinct from “dishonesty, fraud and deceit.” While the bar associations seem to favor some limited use of deception, the circumstances in which they would permit it are not clear, the bar association opinions and reports are not binding on the Courts, and  there is no indication that the Courts are likely to adopt a rule change anytime soon.  This leaves the lawyer considering the use of deception in an undercover investigation in an uncertain position. ]]>