Abuse Of Process In A Lanham Act Suit May Trigger Award Of Attorneys' Fees

A recent opinion from the Seventh Circuit Court of Appeals (Nightingale Home Healthcare, Inc. v. Andodyne Therapy, LLC) attempts to clarify when the prosecution or defense of a Lanham Act suit renders the case "exceptional," so as to allow for an award of attorneys' fees to the prevailing party. In doing so, the court addressed the increasing trend of businesses in bringing or defending trademark infringement and false advertising lawsuits against competitors solely to obtain a competitive advantage independent of the outcome of the case. The court held that where a party is guilty of such "abuse of process," an award of attorneys' fees would be warranted. This summary further elaborates upon the court's reasoning and why businesses must exercise caution in bringing or defending against intellectual property claims under the Lanham Act.

The Court's Opinion

Anodyne, the seller of a medical device, was the prevailing party in the underlying false advertising lawsuit brought against it by its customer, Nightingale. The trial court awarded Anodyne the attorneys' fees it incurred pursuant to a specific provision of the Lanham Act, which allows for an award to the prevailing party in "exceptional cases." Nightingale appealed this award to the Seventh Circuit Court of Appeals.

In tackling whether the case was exceptional enough to sustain the award of attorneys' fees, the court was perplexed by the varying standards used by the other circuit courts of appeals to make this determination and that those standards were often too vague to be applied objectively.

Taking a step back to find some clarity, the court looked to the policy behind the Lanham Act's provision for attorneys' fees and found that a "practical concern is the potential for businesses to use Lanham Act litigation for strategic purposes -- not to obtain a judgment or defeat a claim but to obtain a competitive advantage independent of the outcome of the case by piling litigation costs on a competitor."

In light of this policy, the court arrived at the following conclusion as to when a case under the Lanham Act is to be deemed exceptional so as to warrant an award of attorneys' fees: (1) If the defendant prevails and the plaintiff was guilty of abuse of process; or (2) If the plaintiff prevails and the defendant had no defense, but persisted in trademark infringement or false advertising to impose costs on the plaintiff.

In further explaining this standard, the court explained that abuse of process is the use of litigation for an improper purpose, whether or not the claim is colorable, often to compel the victim to yield on some matter not involved in the suit. The court found that predatory initiation of a suit is the same as predatory resistance to valid Lanham Act claims. To justify an award, the party seeking it must show that his opponent's claim or defense was "objectively unreasonable." In other words, the claim or defense was pursued not to obtain a favorable judgment, but only to impose disproportionate costs on his opponent or for purposes of extortion.

In addressing the facts of the case before it, the court noted that Nightingale had brought a Lanham Act claim that had no merit. The court held that what made the case exceptional, however, was the fact that Nightingale had initiated the claim only to coerce Anodyne into reducing the price of its medical devices sold to Nightingale. The court sustained the award of attorneys' fees to Anodyne.

What This Means For You

Though this opinion is binding only in the Seventh Circuit, other jurisdictions may certainly heed its well reasoned approach. Courts do not look kindly upon businesses that use litigation to improperly gain a market advantage. If your business is faced with the prosecution or defense of Lanham Act claims, it would be prudent to take a step back and carefully examine the merits and reasonableness of each side's respective positions to determine whether the case is merely an abuse of process.

-- Anuj Desai, Esq.

Not If, But How

Arnall Golden Gregory LLP has significant experience in intellectual property law, including patents, trademarks, and copyright. Do not hesitate to contact us if we can be of help to you.

Please visit our web site for more information: www.agg.com.

Think Twice Before Selling Used Copies of Software

Roughly a year ago, I wrote about a couple of federal district court decisions. These cases ruled that a software license could, in certain circumstances, be characterized as a sale. Recently, one of those decisions, Vernor v. Autodesk, Inc., was overruled by the Ninth Circuit. This decision will give software owners some relief and better control in managing the distribution of their software in the marketplace. Nevertheless, software owners must continue to remain vigilant to protect their intellectual property.

The Lawsuit.

Autodesk makes AutoCAD, the popular computer-aided design software. Timothy Vernor purchased several copies of AutoCAD from one of Autodesk's customers, and then listed them at various times for sale on eBay. On each occasion, Autodesk sent Vernor and eBay a takedown notice under the Digital Millennium Copyright Act. Vernor believed that he was authorized to sell the software under the First Sale Doctrine and, therefore, brought suit in federal district court to establish that his resales of AutoCAD copies did not constitute copyright infringement.

The First Sale Doctrine places a limitation on a copyright owner's exclusive right to distribute a copyrighted work: the doctrine allows owners of copies of copyrighted works to resell those copies. This defense, however, is unavailable to mere licensees of copyrighted works. The district court found that Autodesk's customers were owners that could resell copies of AutoCAD under the First Sale Doctrine because Autodesk's license did not require its customers to return unused copies of AutoCAD. After an extensive review of precedent, however, the Ninth Circuit held that Autodesk's customers were merely licensees because the AutoCAD license (1) specifies that the user is granted a license; (2) significantly restricts the user's ability to transfer the software; and (3) imposes notable use restrictions. Hence, both Autodesk's original AutoCAD customers and Vernor were not entitled to resell AutoCAD under the First Sale Doctrine, but rather both had infringed upon Autodesk's exclusive right to distribution under the Copyright Act.

What This Means For You

Although the Ninth Circuit's reversal of the district court decision in Vernor gives software companies better control over the secondary market for their products, this decision is not binding outside of that circuit, and intellectual property law in this area will continue to evolve. Other courts may rule differently. Hence, as I wrote in my previous post: give your software product's license a careful review and determine whether you need to insert end-of-use termination provisions or a clause terminating the license after a particular date.

-- Anuj Desai, Esq.

Not If, But How

Arnall Golden Gregory LLP has significant experience in intellectual property law, including patents, trademarks, and copyright. Do not hesitate to contact us if we can be of help to you.

Please visit our web site for more information: www.agg.com.

Lessons from the Doll Wars: Drafting A Workable Invention Assignment Clause

The blockbuster film Inception describes a seemingly impossible feat of corporate espionage, entering another person’s thoughts and extracting ideas. Considering this kind of appropriation both intrigues and chills us. We consider our private thoughts sacred, and our ideas, our own. So it surprises many business owners that with the right contract language, they can, in effect, claim ownership over the thoughts of employees.

It is less Orwellian than it sounds. An invention assignment provision allows a business to assert ownership over valuable ideas and conceptions by its employees, even ones that arise while the employee is away from the workplace. Yes, these are intangible “thoughts,” but the good news for those skeptical about the thought control implications is that courts have established limits on the scope of such provisions. A company cannot claim protection over concepts that are already public, or ideas that are so general they have no value. In one Georgia case, for example, an appeals court invalidated as too broad language that prohibited an employee from disclosing “any information concerning any matters affecting or relating to the business of employer.”

Precise drafting and work choice is critical. Otherwise, courts will not enforce these clauses. That means language appropriate to the industry, individual business and jurisdiction is critical. It also means that a business must give thought to what it wants to protect, define those parameters precisely, and make sure a defensible business interest in that scope of protection exists. In another Georgia case, a different appeals court upheld an assignment by the employee of non-public “discoveries, inventions, patents and application for patents.”

Very recently, we saw the point about draftsmanship driven home again. In federal court in California, toymaker Mattel has been battling with competitor MGA over who owns the rights to the “urban, multi-ethnic and trendy” line of dolls sold by MGA, the “Bratz.” Mattel claimed its former employee came up with the idea for the Bratz on company time and then took the idea to MGA. The employee’s contract assigned to Mattel “inventions” he may have “conceived or reduced to practice” at Mattel, which “includes, but is not limited to, all discoveries, improvements, processes, developments, designs, [and] know-how.” The trial court decided that the agreement included “ideas,” and a jury found against MGA, concluding that one of these ideas was for dolls named “Bratz.” After the verdict, the trial court entered an order that basically gave Mattel rights to the whole line of dolls and derivative properties, including spin-off films, and hundreds of millions in actual and potential profits.

About two weeks ago, the federal court of appeals reversed the trial court and sent the case back. The appeals court disagreed that the Mattel agreement covered “ideas,” pointing out that the clause might cover ideas, but did not have to. If the evidence conflicts, a jury will need to resolve what the parties meant. As another example, the designer’s agreement covered inventions conceived “at any time during my employment by the Company.” The federal appeals court decided this language, and the concept of company time, was also not particularly clear. The phrase “at any time during my employment” could refer to the whole calendar week, but it could also refer only to inventions that the employee came up with during work hours. Getting clarity on the meaning of this language formed part of the rationale for reversing a sizeable trial verdict and substantial injunction.

The lesson is not to eschew these agreements, but just to be thoughtful about how they are drafted and used. Although Mattel’s agreement was ambiguity in places, the appeals court did acknowledge, as have other courts, that a business can claim contract-based ownership over employee “ideas” – a much broader set than “inventions” alone. With the right language and balancing of its interests against the employee’s right to seek employment elsewhere, the business may own those inventions even if the employee conceived of them on his or her “personal” time.

For businesses with proprietary and evolving technology, these agreements are essential. For all businesses, they are key competitive tools, providing a valuable means of prohibiting competition by employees the business trained and exposed to confidential information.

--Andrew Flake

Andrew B. Flake is a partner in the Litigation Group at Arnall Golden Gregory LLP (andrew.flake@agg.com). Our firm serves the business needs of growing public and private companies, helping clients turn legal challenges into business opportunities. We don't just tell you if something is possible, we show you how to make it happen. Please visit our website for more information, www.agg.com.

Does Your Web Site Violate The Copyright Act?

Like many businesses, your business probably has an eye-catching web site managed by a hosting or IT services company. This company may have even added slick pictures or graphics to make your web site stand out. If this sounds familiar, you may want to consider the hypothetical tale below to ensure that your web site hosting company has secured copyright permissions on your behalf to display third-party pictures and other copyrighted material. Otherwise, you may be accused of infringement by the copyright owners, which, if true, could end up costing you a tidy sum of money.

The Demand Letter

ABC Company receives a demand letter from an international firm that serves as a licensing clearinghouse for photographers. The firm claims that ABC's web site displays photographs that are only available for license through the firm, and that the firm has no record of ABC ever obtaining a license for those photographs. Hence, the firm claims that ABC has committed copyright infringement. The firm demands that ABC remove the photographs from the web site and that it pay several thousand dollars to settle the matter.

ABC balks at this demand. It is confident that its web site hosting company has used legitimate, licensed photographs on the web site. Upon investigation, however, the hosting company cannot produce any records of where the photographs came from or how they were purchased. The licensing firm has no record of the photographs being purchased by the web site hosting company either.

While ABC may be of the opinion that this dispute is between its hosting company and the licensing firm, the Copyright Act holds the entity publicly displaying or distributing the photographs, i.e, ABC, liable for infringement. Moreover, ABC's lack of knowledge as to whether the images were or were not licensed does not serve as an excuse under the Copyright Act. Ultimately, ABC's web site displayed the photographs at issue, and, therefore, ABC is solely responsible under the Copyright Act to ensure that those photographs were licensed.

Lesson Learned

ABC ultimately removed the photographs from its web site and settled the licensing firm’s demand for a significant sum. This illustration should caution you to audit your own web site, whether it is hosted in-house or by a third party, to ensure that all of the imagery and text on the web site is validly licensed or owned by your business. Otherwise, you may also be an unfortunate recipient of a similar demand letter.

-- Anuj Desai, Esq.

Not if, but how

Arnall Golden Gregory, LLP has significant experience in the area of copyright licensing and disputes. Do not hesitate to contact us if we can be of help to you.

Please visit our web site for more information, www.agg.com.

1-800 Contacts Seeing Red Over Alleged Trademark Infringement

Can a company purchase a competitor’s trademark as a keyword to help its Internet search results? These are murky legal waters, and contact lens distributor 1-800 Contacts has waded into them again. A frequent litigant over use of its trademarks, 1-800 Contacts just sued the Walgreen drugstore chain in federal district court in Utah. 1-800 Contacts believes consumers are confused when they run a search on variants of 1-800 contacts, and in their results they see a link for Walgreen’s website and contact lens offerings. As of today, I confirmed that Walgreen’s website appeared on the right of the screen in search results for searches under “1-800 Contacts,” and “1-800Contacts” but not under “1 800 Contacts.” When it did appear, it was as a sponsored link.

Whether 1-800 Contacts succeeds will have a lot to do with what viewers of these results think about Walgreen’s relationship to 1-800 Contacts. The law is still not settled when it comes to how trademarks work in the context of Internet search engines, but the major premise of trademark law is that it protects a company’s goodwill and brand identity against competitive confusion. Even though 1-800 Contacts has filed suit in Utah, where the governing case law is favorable and allows a claim based on purchase of a competitor’s trademark, 1-800 Contacts still has to show that consumers are being confused. If the sponsored link is the only basis for confusion, 1-800 Contacts has some problems. I suspect most Internet users are now aware of the difference between organic search results, based upon a search engine’s algorithm, and sponsored links, for which a competitor pays.

There’s another interesting twist. The Complaint implies that though Walgreen itself may have stopped purchasing 1-800 Contact’s trademarks, Walgreen has an obligation to go further and affirmatively purchase “negative keywords” to make sure that its website does not come up in searches for 1-800 Contacts. In effect, that means paying Google not to display the Walgreen’s site when someone searches on certain terms. But Walgreen does not have any control over the algorithm used by Google or other search engines. In responding to 1-800 Contact’s claim, then, it can fairly pose the question: Should a business be required to handicap itself in the market, and in the process, restrict the information that consumers have about an alternative source of products?

--Andrew Flake

Andrew B. Flake is a partner in the Litigation Group at Arnall Golden Gregory LLP (andrew.flake@agg.com). Our firm serves the business needs of growing public and private companies, helping clients turn legal challenges into business opportunities. We don't just tell you if something is possible, we show you how to make it happen. Please visit our website for more information, www.agg.com.

Georgia Senate Sends Restrictive Covenant Law to the Ballot

Readers of the blog know we’ve been following the proposed change in Georgia’s restrictive covenant laws. At the close of this year’s General Assembly, the Senate took the penultimate step toward approval when it voted to send the issue to the ballot. In November, you will see on your ballot a constitutional referendum, which if approved, will enable and trigger the new law.

You will recall that right now, Georgia is one of the most difficult states in which to restrict competitive activity by former employees. The principle is written into our state constitution: any restraint on trade – and these kinds of contracts are considered restraints – are against our public policy. Frequently, what companies thought were carefully drafted agreements come before trial courts on motions to enjoin employees and are then struck down as unenforceable.

Faced with this challenge, the General Assembly proposes to exempt agreements that are consistent with the new law (House Bill 173) from the kinds of contracts that are illegal and void against public policy. Freely negotiated employment agreements designed to protect trade secrets, confidential information and customer relationships would no longer be categorized with “contracts tending to corrupt the legislation or the judiciary” or, perhaps more common “wagering contracts.”

If approved by the voters, the new law will replaces the rigid “geographic scope” test, thereby modernizing restrictive covenant enforcement. Instead of trying to define an employee’s territory based on where the employee physically has done business for the employer, the new law permits a court to accommodate not just geography, but the area where activities are actually conducted. House Bill 173 alternatively allows employers to simply list prohibited competitors instead of a prohibited geographic territory. Thus, employers and employees have more flexibility in negotiating what kinds of post-employment conduct is prohibited, and the employer does not have to worry about constantly having to update the agreement as the business relationship between the parties changes over time. At the same time, the employee is afforded more certainty in the protections negotiated in the event that the agreement has to be enforced.

The proposed definition of “employee” in the new law would extend only to executives, persons with true access to confidential information (such as research and development personnel) and persons with specifically sensitive customer information that is generated from the employee’s tenure with the employer – not every employee. In other words, House Bill 173 is targeted precisely to protect the entrusting of competitively sensitive information by the employer to the employee in exchange for the compensation and benefits attendant to the job.

Moreover, even defined “employees” subject to the new presumptions in favor of restrictive covenant agreements drafted in accordance with House Bill 173 have the legal ability to challenge particular agreements as being overbroad in fact. Unlike the current state of the law where agreements are “good” or “bad” as written and cannot be modified to balance competing interests, the new law gives the courts the ultimate ability to “blue pencil” or “modify” arguably overbroad agreements. Thus, the courts still serve as a check against an employer who has reached too far in fact, but the courts now have to account for the concerns of business as well in evaluating the scope of the restriction sought to be imposed by the employer. At present, lacking the ability to “blue pencil,” courts can only invalidate a restrictive covenant that may reach just beyond what is reasonable.

Businesses drafting restrictive covenants, and the professionals assisting them, will find additional certainty in the bill. For all kinds of prospective restrictive covenants, the Georgia Assembly included presumptions as to the duration of covenants. For covenants provided in the employment context, House Bill 173 states that a period of up to two years is presumptively reasonable. For covenants executed in other situations, the length of the permissible restriction may increase, e.g., for up to three years in a franchise or licensing context and up to five years when covenants are provided in connection with the sale of a business.

If approved by in November, the new law will apply prospectively, that is, to agreements entered after the effective date of HB 173. You can find the text of Georgia House Bill 173 at http://www.legis.ga.gov/legis/2009_10/versions/hb173_HB_173_AP_7.htm and some further discussion of its implications at http://www.agg.com/media/interior/publications/AGG_White_Paper-Georgia_House_Bill_173.pdf.

Andrew Flake is a partner in the Litigation Group at Arnall Golden Gregory LLP (andrew.flake@agg.com). Our firm serves the business needs of growing public and private companies, helping clients turn legal challenges into business opportunities. We don't just tell you if something is possible, we show you how to make it happen. Please visit our website for more information, www.agg.com.

Policing Your Trademark

After acquiring a trademark registration, you may feel that you have done all there needs to be done to protect the name of your company or brand. While a trademark registration affords significant protection, it is not always enough to combat trademark infringement. In certain circumstances, if enough third-parties in the marketplace begin using a mark confusingly similar to yours, your mark may be weakened and consumers may be less likely to be confused by the infringing third-party use. Hence, remaining vigilant in the marketplace and taking swift action against infringing use is an important consideration for your trademark portfolio. As discussed below, there are a couple of efficient ways to accomplish this goal.

New USPTO Applications

A relatively easy way to keep an eye on third-parties that may be infringing your mark is to periodically review new applications submitted to the United States Patent and Trademark Office (USPTO) for marks that have words or phrases similar to your registered mark. There are numerous “watch” services, including those used by this firm, that can review these applications for you and alert you when a potentially infringing trademark application is submitted to the USPTO. Depending upon the circumstances, you may then find it appropriate to oppose the trademark application through a formal USPTO proceeding and/or send a demand letter to the applicant to cease the infringing use.

Under the Radar

Often, however, it is difficult to root out third-parties infringing your mark because some entities may not seek a trademark registration or make their presence known on the Internet. These third-parties may, however, be using your mark or a confusingly similar mark in their business names or brand names. A periodic search for such businesses through various nationwide business directories and government registries (available in report form from the vendors mentioned above) can quickly identify any such third-parties, and help you investigate whether further action against those third-parties is necessary. Through your vigilance, you may discover that a business operating just a few streets away has adopted your trademark, and that it may even be luring away your customers.

Action Plan

While periodically reviewing and protecting your intellectual property portfolio may not be on the top of your list, it should be. Your trademark can be a valuable asset, and perhaps even the only thing that separates you from your competitors in the marketplace. Take the time to ensure that your trademark is not being infringed, and, if it is, be prudent and take swift action to stem any such infringement.

-- Anuj Desai, Esq.

Not If, But How

Arnall Golden Gregory, LLP has significant experience in trademark law. Do not hesitate to contact us if we can be of help to you.

Please visit our web site for more information, www.agg.com.

Gene Patenting Decision: Undesirable Result or Pointless Ban?

The gene patenting case by the ACLU and patient groups against biotech company Myriad Genetics is motivated in large part by a desire to have knowledge and use of discoveries free and open to all rather than owned and locked up by single patent holders. While this attractive aspiration has caught favor with most of the public, it conflicts with market realities of biomedical assays and therapies. The reality is that most new biomedical assays and therapies would not be developed unless the developer has some assurance that their (usually large) investment in development can be compensated by profits down the line. While the facts around development of any given assay or drug are complicated and will differ, two likely scenarios illustrate why the ACLU’s anti-gene patent position will either be counterproductive to development of biomedical assays and therapies (the Undesirable Result Scenario) or will be ineffective at producing free and open use of gene discoveries (the Pointless Ban Scenario).

In the Undesirable Result Scenario, assume that patent protection on a gene is essential for an assay developer to recoup development costs. In this scenario, the developer could spend millions of dollars developing and gaining approval of an assay, but without patent protection, could not prevent competitors from swooping in and simply implementing the developer’s assay with little development costs. Undercutting the developer’s price (due to lower investment), the competitors can capture the market and keep the developer from making back their development costs. In the real world, developers that see this scenario before them will simply refrain from developing an assay when they do not have effective patent protection. This effect, repeated many times over many years will ultimately limit the development of many new assays and therapies that depend on gene patents. This is the undesirable result.

In the Pointless Ban Scenario, assume that an assay can be protected by patenting some aspect other than the gene involved. In this scenario, the developer would spend millions of dollars developing and gaining approval of an assay safe in the knowledge that it could prevent competitors from copying the developer’s assay. The developer’s assay would be protected by a non-gene patent. But then a prime goal of the gene patent ban would not be realized, since the assay would still be controlled by the patent-holding developer. Although the first scenario shows that this is a desirable result in order to promote assay development, it renders a ban on gene patenting pointless.

Business and Legal Communities Supportive of Competition Law Changes

Readers of our Competition Law Blog know we've been following the progress of HB 173, sea change legislation that would make enforcement of non-competition and non-solicitation agreements easier. One of our white papers looks at some ways HB 173 would accomplish that, and in the process, help attract new business to the state. CityBiz just picked up this story, referencing the white paper and some testimony we recently offered in support of the new law. http://atlanta.citybizlist.com/yourcitybiznews/detail.aspx?id=67871.

So where does the law stand? With HB 173 signed into law last year, the legislative process is again moving forward. The Georgia legislature must first approve a constitutional amendment that would enable, and make effective, HB 173. Once both chambers approve that amendment -- and based upon a House hearing last week, there appears to be widespread support -- it goes to the ballot. In November, Georgians will then have an opportunity to vote by referendum.

We hope you'll assist in raising awareness and generating discussion about an important change to our state's competitive legal framework. For the full white paper, go to http://tinyurl.com/ybwd723.

Corporate Advertising: Conducting Your Own Due Diligence Is A Must

Without fail, one of the first responses from companies accused by competitors of false advertising is that “we didn’t know,” and it may well be that the advertising information came from a reputable source. But is the “innocent mistake” defense viable in false advertising litigation? Although it seems only fair that a company taking reasonable steps to verify information in its advertisements would be in the clear, federal advertising law holds companies strictly liable for false advertising. In other words, there is no good faith or innocent mistake defense to underlying liability.

We recently found a “juicy” illustration of the point. Pom Wonderful, the leading marketer of pomegranate juice, had noticed one of its smaller competitors using Pom’s own studies to market competing juice. With this competitor on the radar, Pom also noticed that the company, California-based Purely Juice, was marketing “100% pomegranate juice,” with “no added sugar.” Pom’s testing proved that claim incorrect, and after negotiation failed, Pom sued in federal court.

Purely Juice, it turns out, had been using a broker to find juice suppliers. The broker vouched for its suppliers, but, despite those assurances, the juice Purely Juice received was adulterated, so that the “100% pomegranate” and “no sugar” claims were false. Purely Juice claimed it had no idea of the adulteration, and that it took the word of its broker about the reliability of the juice supply.

Was that approach successful? Just last week, a court of appeals affirmed a trial award against Purely Juice of approximately $1.2 million in damages, disgorgement of more than $300,000 in its profits, and attorney’s fees of more than $620,000. One of the legal principles that resulted in the award is that a company is liable for false advertising regardless of its knowledge. Not only that, an officer or director is personally liable for false advertising in which she participates or that she directs, so the president of Purely Juice, also a defendant, shared in the liability.

It did not help Purely Juice that the trial court also found it “knew or should have known” about the shaky credentials and processes of its suppliers and therefore, of the adulteration. In that market, the limited supply of pomegranate juice means that many suppliers mix in other juice, and add sugar. Had the company conducted and abided by its own testing, and done better due diligence, one wonders if it could have avoided the litigation entirely.

For our own marketing teams, the lesson is clear. The advertising “buck” stops at the company’s door, and assurances from third parties about the quality or characteristics of supplied products, even from trusted suppliers or business partners, will not insulate the company from liability for false advertising. Thorough internal due diligence is a must.


--Andrew Flake

Andrew B. Flake is a partner in the Litigation Group at Arnall Golden Gregory LLP (andrew.flake@agg.com). Our firm serves the business needs of growing public and private companies, helping clients turn legal challenges into business opportunities. We don't just tell you if something is possible, we show you how to make it happen. Please visit our website for more information, www.agg.com.

Are Private E-mails Sent From Work Privileged?

The new year brings a recent ruling by a federal court judge, which raises a question as to whether employers have full access to their employees' workplace email correspondence. In light of this decision, employers should ensure that their employee policies expressly address the parameters of personal use for workplace computers and networks.

The Decision

A federal court judge in the District of Columbia has ruled that a federal prosecutor who sent emails to his attorney using workplace computers had the right to keep those emails concealed because they were privileged. This decision is novel because courts generally rule that employees have no expectation of privacy as to personal information on workplace computers and networks. In this case, however, the judge ruled in favor of finding a right of privacy because the federal prosecutor was allowed by his employer, the Department of Justice, to use workplace computers for personal matters, creating a reasonable expectation of privacy.

What This Means For You

If a company allows employees, whether in practice or through a formal policy, to use workplace computers for personal matters, an employee may be able to successfully keep confidential email correspondence and electronic files of a personal nature in the event of a dispute. To avoid this result, companies should strive to audit their formal policies and their practical application to ensure that employees are expressly prohibited from using workplace computers for personal matters. While the decision discussed above is not binding everywhere or the majority view at the moment, it may be indicative of a trend favoring employees and their expectation of privacy.

-- Anuj Desai, Esq.

Not If, But How

Arnall Golden Gregory, LLP has significant experience in drafting and auditing human resource policies and agreements, including those concerning employee use of workplace infrastructure. Do not hesitate to contact us if we can be of help to you.

Please visit our web site for more information, www.agg.com. Also, we thank you for reading our blog and wish you a very happy new year.