Articles Posted in Unfair Competition

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A battle between two titans of the lucrative corporate finance restructuring industry is brewing in New York. Jay Alix is suing McKinsey & Company on a range of alleged racketeering charges.

Lawsuit-64354059-001Jay Alix is a veteran of the post-bankruptcy landscape for big-name corporations. They helped to save General Motors and the Detroit Public School System when both were on the verge of collapse. However, Alix claims in his lawsuit that a newer competitor, McKinsey & Company, isn’t competing fairly in the industry. In fact, he accuses them of widespread criminal activity.

According to the complaint, McKinsey and company leadership, “knowingly and intentionally submitted false and materially misleading declarations under oath in … bankruptcy proceedings … in order to … avoid revealing numerous disqualifying conflicts of interest …” that should have prevented them from representing certain clients. Accordingly, Alix charges McKinsey with bankruptcy, mail and wire fraud among other crimes. Alix asserts that this activity enabled McKinsey to pocket tens of millions of dollars in fees that it was not legally entitled to.

The problem arises, as alleged by Alix, because McKinsey did not disclose its connections to certain “interested parties” in the restructurings it handled. If McKinsey had complied with the law that required them to disclose any possible conflicts of interest, they would have been prevented from representing certain clients.

Further, the complaint charges that McKinsey conducted nefarious “pay to play” relationships with bankruptcy attorneys who routinely handled cases for major corporate clients. McKinsey expected those bankruptcy attorneys to refer all of their clients to McKinsey in exchange for access to McKinsey’s impressive network of clients.

Alix additionally claims that Dominic Barton, CEO at McKinsey, essentially admitted to these crimes several months ago, saying that McKinsey was going to be backing off such activity and going into different lines of work. However, that has not been the case.

The referenced case is Jay Alix vs. McKinsey & Co., 18-04141, U.S. District Court, Southern District of New York.

It is imperative that business owners be aware of all state and federal laws that may affect the operation of their business. Not being aware of a certain law never works as a defense. Work closely with an experienced business attorney to protect your interests.

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When an individual or a company obtains a trademark registration in the U.S., they are granted certain rights and protections. If they discover that another party is using a mark that is the same as or confusingly similar to their registered trademark, then they have a right to bring legal action against the alleged infringer. This concept is at the heart of a lawsuit against well-known outdoor outfitter company L.L. Bean.

Trademarks-47837347-001A good trademark acts as a source indicator for the products it covers. However, what happens when two companies in the same industry decide to adopt similar marks? Consumers may have difficulty differentiating the offerings of one company from those of its competitor. The result can mean lost sales and a tarnished reputation if the products are not as good as those of the competition.

Utah-based outdoor and mountaineering gear manufacturer Alfwear, which uses the KÜHL trademark as their brand name for outdoor clothing, brought the lawsuit against L.L. Bean based on their registration of “The Outsider” mark. The mark is registered for “rugged outdoor clothing, namely, belts, bottoms, hats, jackets, pants, shirts, shorts, T-shirts, tops,” and has been in use since June 2015.

Recently, L.L. Bean launched a marketing campaign with the tagline “Be an Outsider.” The company even filed a trademark application to register the mark “Be an Outsider” in June 2017. The phrase is being used in various advertisements across the country.

The lawsuit from Alfwear argues that these marks are too confusingly similar. Moreover, Alfwear believes that L.L. Bean deliberately choose their “Be an Outsider” phrase in an attempt to mislead, confuse or deceive consumers.

Among other relief, Alfwear is asking that L.L. Bean be ordered to stop using the phrase “Be an Outsider” altogether. The company is seeking damages for lost profits as a result of consumer confusion.

L.L. Bean has not publicly commented on the lawsuit, but it is natural to assume that they will be fighting against Alfwear’s claims. Intellectual property is one of a company’s most valuable assets, and protecting it with the help of a California business attorney is imperative.

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A company’s intellectual property is easily one of its most valuable assets. It’s vital to protect this information at all times, and to ensure that all necessary legal precautions have been taken. Even when a company’s owners think they have done everything correctly to protect their intellectual property, things can still go wrong.

Lawsuit word breaking through red glass to illustrate legal action brought by a plantiff against a defendant in a court of law through opposing lawers or attorneys

That is the case for a Santa Barbara-based startup called Olaplex LLC. The company claims to have pioneered a revolutionary three-step process for protecting hair while it is being bleached in a salon. Bleaching is harmful to hair, causing it to become dry, brittle and damaged. Nonetheless, many people still undergo the treatments, particularly celebrities who must change their hair color for various roles. The result is lighter hair, but at a high cost.

Olaplex set out to change that with a new chemical bonding process that was designed to protect hair strands during the bleaching process. They filed a patent application to protect their invention, which they called Olaplex Bond Multiplier No. 1. It debuted in 2014 and quickly began winning awards. L’Oreal, a French-based conglomerate known for many beauty products, began trying to lure away certain Olaplex employees early in 2015. When that effort didn’t prove successful, L’Oreal and Olaplex entered negotiations in which the larger company proposed to acquire the startup.

Confidentiality and non-disclosure agreements were signed. However, the deal eventually fell through. Olaplex started noticing a few months later that L’Oreal seemed to be selling a product that was remarkably similar to theirs. What’s more, their advertising campaign seemed strangely familiar.

Olaplex has now filed a patent infringement and false advertising lawsuit against L’Oreal. The plaintiff argues that the defendant gained access to secret, proprietary information while the acquisition negotiations were underway. Olaplex argues that this gave L’Oreal access to their exclusive chemical process, which the older company then used to create a knock-off product.

Officials from L’Oreal strenuously deny the allegations. Nonetheless, this entire situation is a crucial reminder of how important it is for all companies, large and small, to protect their intellectual property with the help of an experienced attorney.

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A class action lawsuit has been filed against online flash-sale retailer HauteLook. Plaintiffs claim that they were sold purportedly genuine Rolex watches at a substantially reduced price. However, the watches they received were damaged or contained inferior replacement parts.

Rolex%20NOT%2088997580-001.jpgClass representative Vahdat Aghdasy purchased what he believed was an authentic Rolex watch from the HauteLook website. A large part of HauteLook’s appeal is that they claim to sell 100% authentic merchandise straight from the designer or manufacturer. Accordingly, customers are led to expect a certain level of quality. The vintage Rolex watches that the website offers from time to time were no different. HauteLook specifies that the watches are sold “as is,” meaning that there may be some level of damage.

Nonetheless, the company promised to provide certified appraisals of each watch after it was purchased. Aghdasy and other class members received an appraisal from a company calling themselves Swiss Watch Appraisers. However, they note that there is no contact information for the company except for a telephone number that is disconnected. The lawsuit alleges that the appraisal certificates are fraudulent and that the watches have never been appraised.

Moreover, HauteLook’s claim that the watches are 100% authentic is also coming under fire. Consumers are finding that their watches contain inferior, non-Rolex parts and that the watches do not come from the brand as promised by the website. Instead, plaintiffs believe that the watches are coming from various jewelry stores and other retailers.

Plaintiffs are seeking damages against HauteLook and Nordstrom, the company that purchased the web retailer in 2011. The basis for the lawsuit includes common law fraud, breach of implied and express warranties, unjust enrichment and conspiracy to commit fraud. Plaintiffs argue that HauteLook significantly misrepresents the actual value of the watches. Accordingly, they are seeking actual damages and exemplary and/or punitive damages in addition to attorney fees and interest.

Rolex, a company known for vigilant protection of its intellectual property rights, has yet to comment on the lawsuit. It would not be surprising if the Swiss watch-making company decided to sue HauteLook and Nordstrom as well.

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Technology plays an amazing role in Hollywood’s movies. Many of the most popular movies are visually stunning thanks to an array of high-tech gadgets. Today’s moviegoers are pretty savvy, and they are very familiar with the idea of motion capture, the process through which markers are placed on an actor’s body so that their movements can be faithfully recorded. A related technology, known as MOVA, is now the subject of more than one lawsuit.

Trademarks%2047837347-001.jpgMOVA works like motion capture, but it’s focused on the actor’s face. Phosphorescent makeup is applied to an actor’s face, and then specialized software and hardware work together to convert even the subtlest of facial expressions into data. The technology has already been used on many movies such as “Guardians of the Galaxy,” “Terminator Genisys,” “Deadpool” and more. MOVA is so successful that it received a Scientific and Technical Oscar award at a ceremony in early 2015. The trouble is, there seems to be quite a bit of disagreement about who developed MOVA and who actually owns the rights to it.

The first lawsuit came in February of 2015 when a Chinese tech company known as Shenzhenshi Haitiecheng Science and Technology, or SHST, filed a lawsuit in California against a company called Rearden LLC. The plaintiffs claimed that Rearden was wrongfully claiming ownership of MOVA. In the complaint, SHST alleges that ownership of the MOVA technology shifted several times in the months leading up to receipt of the Oscar. The technology was originally developed by inventor Steve Perlman, but SHST argues that he sold it to another organization. The assets traded hands two or three more times before coming to SHST.

Perlman and Rearden LLC have now launched a countersuit, claiming that SHST has committed various patent and copyright violations. Ultimately, Rearden’s complaint seeks to block the release of movies that use the MOVA technology until the courts can resolve who actually owns the rights to the invention. Legal consultants believe that the suit won’t be able to block the distribution of current films, but it may halt production on some before a settlement is reached.
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Deceptive and misleading advertising, deaths and heart attacks are among the claims in lawsuits filed against energy drink makers.

Energy%20Drinks%2048725117-001.jpgVermont, Washington and Oregon have sued Living Essentials, makers of 5-Hour Energy for “deceptive and misleading” advertising. 5-Hour Energy claims include “hours of energy, no crash later” and apparently Attorneys General of those three states do not agree. It is likely that other states will join and file lawsuits in the near future.

If you bought one or more cans of Red Bull in the last 12 years, and it failed to “Give You Wings”, you may file a claim to receive your settlement of $10 cash or $15 worth of Red Bull products. The makers of Red Bull agreed to a $13 Million settlement with US consumers to settle a class action lawsuit alleging that promises of increased performance and concentration fell short of delivering more effectiveness than a cup of coffee.

The Red Bull settlement is awaiting U.S. District Court approval. Red Bull does not admit any wrongdoing. Watch for settlement application forms online, no proof of purchase is required.

Six adverse reports of energy drinks have been entered into the Food and Drug Administration’s voluntary reporting system. FDA spokeswoman Shelly Burgess states that it is not clear whether the drinks caused or even contributed to the five reported deaths and one reported heart attack. She goes on to say “…that’s why we’re taking this seriously and looking into it.”

Most recently, the family of 14 year old Anais Fournier sued Monster Energy Drinks. Anais died after consuming two 24 ounce Monster Energy drinks within 24 hours. The last one shortly before her death which the autopsy attributed to cardiac arrhythmia due to caffeine toxicity.
48 ounces of Monster Energy contains almost the same amount of caffeine as 14 cans of Coca-Cola, approximately 480 milligrams.

In a statement, Monster said they believed they were not responsible for the girl’s death and would vigorously defend itself.

On a final note, the Attorney General of New Your issued subpoenas in July to Monster, PepsiCo (makers of AMP), and 5-Hour Energy’s Living Essentials. The AG is seeking information about the companies’ advertising and marketing practices.

Bottom line, if any company makes claims in its advertising, it better have proof to back up those claims, preferably before going to court.
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Ride sharing is enjoying growing popularity. Many of these services don’t provide a professional driver, opting instead to function more like a rental car company where the renter drives themselves.

Driver%20Uber%2013410617-001.jpgHowever, the ride share business run by Uber Technologies Inc. is different. The smartphone app based service provides clients with a car and a professional driver. The driver is not an employee of Uber. Instead, they are classified as an independent contractor, and Uber advertises that its drivers are essentially small business owners.

This means that Uber does not cover the cost of insurance, gas and other expenses associated with operation of the vehicles. These bills are taken care of by the drivers. These independent contractors are also obligated to send a portion of any gratuities they receive to Uber.

Shannon Liss-Riordan believes that Uber’s practices are exploitative. In a lawsuit filed in Massachusetts at Suffolk Superior Court, Liss-Riordan alleges that by deliberately classifying drivers as independent contractors, Uber is skirting Massachusetts’ employment laws. The state’s laws regarding employee rights are among the strongest in the nation. Among these laws is one that prevents employers from taking a portion of an employee’s tips.

This is not the first time that Liss-Riordan has taken on a case involving workers whom she believes are being treated unfairly. Past clients include a group of house cleaners and another of Starbucks baristas. The lawsuit against Uber Technologies was filed on behalf of one Massachusetts driver, Hakan Yucesory, but Liss-Riordan believes that all Uber drivers should be involved. A request for class action status was included in the complaint filing.

Uber has yet to comment substantively on the pending litigation. However, they are standing by their business model. Statistics released by the organization cite the creation of “20,000 new driver jobs every month” in the 38 countries in which Uber operates. Uber also says that its drivers in New York can earn $90,000 annually.

Liss-Riordan argues that these earnings do not reflect the expenses the drivers must pay for. It seems likely that this dispute will go to trial.

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Most American workers take it for granted that they can change employers at their discretion. This provides opportunity to seek better wages and benefits, as well as the chance to find more meaningful employment. At the same time, potential employers have the right to recruit new talent, sometimes aggressively, from competing firms.

Ebay%20Campus-001.jpgHowever, many employers in California’s Silicon Valley seem to have taken exception to these facts. In the ultra-competitive technology industries, giants like eBay, Google, Pixar and Apple entered into agreements by which they promised their competitors not to poach talent. Acceptance of the agreement meant that the people at Intuit could not recruit a person with a desirable resume at eBay. The result; employees at these firms were denied access to opportunities that would have advanced their careers along with salary and prestige.

The U.S. Justice Department took exception to these agreements, charging that they created an anticompetitive atmosphere. The Department filed lawsuits against several companies that participated in these agreements. Many of these lawsuits have already been settled, with eBay being the latest company to do so.

The settlement does not require eBay to admit to any wrongdoing. In fact, counsel for eBay insists that the agreements were “acceptable and legal.” However, Assistant Attorney General Bill Baer says “the behavior was blatant and egregious.” Under the terms of the settlement, eBay may not enter into any similar agreements for a period of five years. The company also reached a settlement with the California Attorney General in which it is liable to pay $3.75 million to workers at eBay and Intuit who may have been adversely affected by the recruitment freeze. The settlement in the Justice Department lawsuit is still pending approval by the court, which is expected to happen soon.

The Justice Department began investigating recruitment and hiring practices at Silicon Valley firms several years ago. As a result, a massive class action lawsuit that represents more than 60,000 employees has also been filed. Many years will likely be required before all of the lawsuits have been settled.
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Snack foods are big business in America. Just ask Trader Joe’s, a grocery store chain with a reputation for offering difficult-to-find foods. Among their most innovative and desirable products is the peanut butter pretzel, a salty-and-sweet confection involving a pretzel shell filled with peanut butter. It’s a delectable snack, and it can mean big money for whomever supplies Trader Joe’s with the product.

snacks%2053061838-001.jpgSince the early 1980s, Trader Joe’s supplier has been Maxim Marketing. This southern California business essentially acted as a middleman between the factories that were making peanut butter pretzels and the retailer. It was a lucrative setup, with Maxim selling approximately nine million dollars worth of pretzels to Trader Joe’s on an annual basis.

It seemed to be a win-win situation until food giant ConAgra starting buying up the factories that produce peanut butter pretzels. Suddenly, Trader Joe’s began to see the value in contracting with ConAgra directly for its salty sweet fix.

That left Maxim Marketing out in the cold. With Trader Joe’s bypassing them to go directly to the source – something they have a reputation for doing in numerous situations as a cost saving strategy – Maxim’s bottom line was suffering. Things became dire for the marketing firm, and they filed a lawsuit against Trader Joe’s and ConAgra.

The complaint alleges that Trader Joe’s committed a breach of contract with their supplier, Maxim. Moreover, Maxim says that ConAgra has a monopoly on the peanut butter pretzel market because they own so many of the factories that make the snack. Maxim’s arguments amount to saying that the monopoly makes it impossible for them to conduct business.

Trader Joe’s has yet to comment publicly on the lawsuit, and has not yet filed an answer. A ConAgra spokesman calls the claims “baseless and built on false accusations.” While this may seem like a lot of unnecessary brouhaha over an inconsequential snack food, the reality is that a great deal of money is at stake. While the defendants have not officially responded to the litigation, it seems clear that the case will be aggressively defended before a decision is reached.
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Another chapter recently opened in the Facebook lawsuit chronicle. The plot of this latest litigious episode pits the popular social media site against a large class of angry litigants.

A comprehensive research study is the apparent catalyst of controversy. Authored by Tilburg University researcher Arnold Roosendaal, the report revealed that Facebook uses its famous “Like” button to track unsuspecting web surfers’ online activity. CLICK HERE to download report.

facebook%20like%20button.jpgThe piece also posited that Facebook discerns member identities via cookies that are covertly installed while users visit sites that display the “Like” icon. IP addresses thereby obtained are purportedly used to track Facebook members’ online activity.

Further research disclosed that similar cookies are also installed on non-members’ computers by sites that feature the “Facebook Connect” login platform. Intercepted data is then used to track subsequent visits to participating sites.

Personal privacy is the crux of the most recent Facebook litigation. The plaintiffs (California residents Ryan Ung, Chi Cheng and Alice Rosen ) assert that Facebook violated the reasonable expectation of privacy in one’s personal web-browsing history.

Another Facebook lawsuit was recently dismissed with leave to refile. The suit alleged that Facebook surreptitiously transmitted users’ personal data to online marketers via embedded header codes. Virtual advertisers obtained Facebook users’ names, ages, gender, and other personal data without prior user consent. This practice was in clear violation of Facebook’s stated privacy rules.

Yet another case in the long line of social media lawsuits against Facebook is on appeal to the Ninth Circuit. The Plaintiff-appellants are protesting a Facebook lawsuit settlement stemming from Facebook’s unauthorized dissemination of members’ e-commerce transactions.

According to the Wall Street Journal, Twitter and Google also admit to tracking web users’ surfing activities without the prior activation of a widget or icon. Google and Facebook both claimed to “anonymize” such compiled data, however.

Such assertions are akin to a former President’s admission of having smoked marijuana without inhaling. Why would social network sites expend considerable resources to furtively capture personal identifying data – to accomplishing nothing except its nullification by “anonymization?”

The online community must actively oppose practices that compromise personal security through pervasive invasions of individual privacy. Given the overall litigious climate in contemporary American society, social media lawsuits may be the most effective ammunition in the battle against Big Brother.

Indisputably, the internet’s vast commercial and informational capabilities serve many beneficial functions. Effective checks and balances are essential, however. Moderation is the best means of maintaining the best balance between personal and pecuniary freedoms.
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