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NewsOK Q&A: Doing business by email can cause legal concerns

A. Michelle Campney

As a litigation attorney, A. Michelle Campney represents companies in a wide range of business litigation matters with an emphasis on the construction industry.

In this article, Oklahoma City Attorney A. Michelle Campney discusses email practices that could be considered in legal matters.

What are the general legal concerns regarding conducting business through email?

It is estimated that there will be almost 3 billion email users by the end of this year, with an average of 128 business emails sent and received per person, per day. Often, only passively mentioned in employee handbooks and with little to no training during onboarding, employers and employees adopt varied practices for email use. The sheer volume of emails creates logistical problems for businesses (e.g., server space, data protection), but it can also create legal issues when exchanges can bind companies or reveal confidential, privileged or personal information.

How can emails bind someone until they actually sign an agreement?

Does the party you are working with know that you require hard copy agreement with handwritten signatures? If not, and if the email contains all the material terms and the facts, and circumstances surrounding that show that you were conducting the transaction electronically, then you could have an enforceable agreement under the Oklahoma Uniform Electronic Transactions Act (“UETA”).

But no one actually signed the agreement, so how can it be enforceable?

Not all agreements have to be signed to be enforceable, and specifically under the UETA, a signature only need be “attributable to a person if it was the act of the person.” Furthermore, an electronic signature under the act is “determined from the context and surrounding circumstances at the time of its creation, execution, or adoption … .” While Oklahoma does not have any case law on the issue, a Texas court found a simple “Thank you, Clyde” typed above the signature block was sufficient for a signature. Parks v. Seybold (Tex. App.—Dallas, 2015). Additionally, some courts (including those in Texas) broadly interpret the signature requirement to include an automatically generated signature block.

What are other potential concerns for email?

Let’s say that your company is involved in litigation regarding a contractual dispute. Most attorneys ask that all communications, including email communications, regarding the issue be turned over during the discovery process. While the communication may not ultimately be admissible in court, if there are emails between employees discussing the dispute and the surrounding facts and circumstances, those will generally have to be turned over to the other side. Additionally, if certain individuals are involved then you may have to turn over all emails regarding that person. Thus, if any mentions of any disciplinary action regarding that person or even your own personal feelings about the person are on email those may have to be turned over. While the emails may not ultimately impact your case, they could embarrass your company.

Are there any practices or policies that would help alleviate the concerns surrounding email?

While policies and procedures will be specific to each type of business and its standard practices, at the most basic level, having a robust email use policy will set a good foundation and, if properly drafted, help educate your employees on what to do and not to do. One important thing to remember is that email will only continue to grow as a means of communication. Setting good groundwork for how it is to be used in your company may help prevent issues down the road.

 

Published: 4/11/19; by Paula Burkes
Original article: https://newsok.com/article/5628396/doing-business-by-email-can-cause-legal-concerns

NewsOK Q&A: IP assignment agreement is key to invention ownership

Phillips Murrah Patent Attorney Cody J. Cooper

Cody Cooper is a Patent Attorney in the Intellectual Property Practice Group and represents individuals and companies in a wide range of intellectual property, patent, trademark and copyright matters. His practice also includes commercial litigation.

In this article, Oklahoma City Patent Attorney Cody J. Cooper discusses the rights inventors have when inventing under the employment of someone else.

Q: When an employee invents something during the course of his or her employment, who owns the invention?

A: The employee owns the invention. Inventors’ exclusive right to their inventions is specifically written into the United States Constitution and, as such, courts have generally interpreted ownership of inventions to favor individuals, except in very narrow circumstances.

Q: How can an employer assure ownership when an employee conceives of an invention on the job?

A: The employer must have employees sign an intellectual property (IP) assignment agreement. Because the general rule is that an inventor owns the rights, courts strictly interpret IP assignment agreements. Recent case law has instructed employers that how you draft the assignment agreement is equally as important as having an agreement in the first place. In fact, the Federal Circuit recently determined, in Advance Video Technologies LLC v. HTC Corporation Inc., that an IP assignment must include language saying the employee “assigns” — present tense, not future tense — their employer all IP rights. The small difference in language had a tremendous impact on the employer’s ability to sue another company for patent infringement.

Q: Should IP assignment agreements only be used by businesses in manufacturing, research or product development?

A: No. I would suggest any company consider having its employees sign an IP assignment agreement if the company expects employees to create work or inventions to which the company would expect to have rights and expects to protect it through application for apply for a trademark, patent, copyright or other appropriate protection to keep others from using it without permission.

Q: What are some other employer considerations regarding IP assignment agreements?

A: Make sure that your employees sign IP assignments before they begin working for you, and make sure that you consult an attorney on the drafting of the IP assignment to ensure that it complies with current law and effectively assigns the IP rights you are seeking to protect.

Q: What if an employer has employees who’ve already created inventions that the employer presumed the company owned but doesn’t have an IP assignment in place? Can the company enter into an IP assignment agreement retroactively?

A: If this is the case, the invention is owned by the employee, and the employer likely has no rights to the invention. Nevertheless, the employer and employee can still enter into a IP assignment agreement, but there must be some sort of consideration (exchange in value) passed between the parties. The law makes clear that it is not enough for the employer to say that the consideration the employee is receiving is that they get to keep their job — there must be something more passing to the employee for their assignment of their invention (i.e. money, stock, etc.).

 

Published: 1/30/19; by Paula Burkes
Original article: https://newsok.com/article/5621521/qa-with-cody-j-cooper-ip-assignment-agreement-is-key-to-invention-ownership

 

NewsOK Q&A: Mineral owners should be informed about leasing, selling options

Zac Bradt

Zac Bradt is an attorney in the Energy & Natural Resources Practice Group. He represents both privately-owned and public companies in a wide variety of oil and gas matters, with a strong emphasis on oil and gas title examination.

In this article, Oklahoma City Oil and Gas Title attorney Zachary K. Bradt discusses the advantages mineral owners have when taking action with their mineral interests.

Q: What options are mineral owners faced with in today’s market?

A: As oil and gas activity in the state remains strong, mineral owners are seeing more opportunities related to their mineral interests. Some are being approached about signing new leases, while others are receiving calls and letters about selling their mineral interests. Whether leasing or selling, mineral owners are being presented with options that create certain advantages to an informed mineral owner.

Q: What advantages can leasing provide over selling?

A: The obvious answer is that the mineral owner will get to keep their mineral interest. By signing a new lease, the mineral owner will receive a bonus payment that is calculated based on the number of mineral acres owned, and a royalty on any production occurring during the term of the lease. The bonus and royalty can be negotiated with the lessee, but mineral owners should be aware of the inverse relationship between the two. A higher bonus will offer a lower royalty, whereas a lower bonus will provide for a higher royalty.

Q: What advantages can selling provide over leasing?

A: Selling mineral interests presents a financial advantage over leasing. If a mineral owner is financially incentivized, they may feel comfortable selling their interests away to a third party. Much like the bonus payment, mineral owners will receive a price per mineral acre offer to buy from third parties. The difference with selling is that there is a direct correlation between the royalty and purchase price. Minerals with a higher lease royalty will bring in a higher price per acre from potential buyers.

Q: How can a mineral owner decide what is the best option?

 

Published: 9/25/18; by Paula Burkes
Original article: https://newsok.com/article/5609461/qa-with-zac-k.-bradt-mineral-owners-should-be-informed-about-leasing-selling-options

NewsOK Q&A: Budget act makes auditing partnerships easier, more efficient

From NewsOK / by Paula Burkes
Published: January 19, 2018
Click to see full story – Budget act makes auditing partnerships easier, more efficient

Click to see Erica K. Halley’s attorney profile

Erica K. Halley represents individuals and businesses in a broad range of transactional matters.

Q: What is the Bipartisan Budget Act of 2015 and why should LLCs and other partnerships pay attention?

A: Effective this month, the Bipartisan Budget Act of 2015 changes how the Internal Revenue Service audits and assesses taxes of entities taxed as partnerships, including most limited liability companies. One such change includes replacing the “Tax Matters Partner” with the “Partnership Representative,” which is much more than a mere name modification. In essence, the act makes auditing partnerships easier and more efficient for the IRS, so understanding the weight of designating your Partnership Representative is critical in preparing for your company’s increased exposure to potential audits beginning this year.

Q: What is the difference between the Tax Matters Partner and the Partnership Representative?

A: There are two key differences between the Tax Matters Partner of the past and the Partnership Representative of the present and future. First, the Partnership Representative isn’t necessarily a partner (or member, in the case of an LLC) of the entity. Like a manager of an LLC, a Partnership Representative may be any person the company deems fit to serve in such role, who may or may not be an owner of the company. Second, the Partnership Representative has complete authority to act on behalf of the company when communicating with the IRS. Importantly, and unlike the laws previously in effect, there’s no statutory obligation to notify the partners or members of the existence or status of an audit, much less include them in any decisions that may significantly impact the tax treatment of the company.

Q: What do businesses need to do to prepare for the change?

A: The partners or members of a company will need to agree on the expectations they have for their Partnership Representative and the desired scope of his or her authority. Then, they should amend their company’s governing documents, such as their partnership agreement or operating agreement, accordingly. In addition to providing for the appointment, removal and replacement of the Partnership Representative, they also should consider demanding timely notice to each partner or member of all IRS communications. Other considerations include requiring the Partnership Representative to make certain elections on behalf of the entity, or obligating the Partnership Representative to use his or her best efforts. Companies also may want to add certain indemnification provisions that bind the Partnership Representative to his or her duties with respect to an audit. Finally, and essentially, they must designate their Partnership Representative on their entity’s return each year. As the IRS isn’t bound by any partnership or operating agreement, if a company fails to make the designation on the return, the IRS may select a company’s Partnership Representative for them.

NewsOK Q&A: Data security, cyber threats are everyone’s concern

From NewsOK / by Paula Burkes
Published: September 20, 2017
Click to see full story – Data security, cyber threats are everyone’s concern

Click to see Fred Leibrock’s attorney profile

Fred A. Leibrock is an experienced trial lawyer who has tried dozens of jury trials and has served as lead counsel in a number of significant cases involving complex, multi-jurisdiction issues.

Q: With the recent breach of Equifax, it seems that vulnerability to identity fraud is everywhere. Are there measures I can take on behalf of my company and employees to minimize risk?

A: Act now and seek professional technical assistance. Hire the right technical person or firm to help you test your systems, assess your vulnerabilities and implement your protection and recovery plans. The question isn’t whether someone will try to steal your data, but when. You need to be ready.

Q: From a legal standpoint, if my company’s data is breached, can my company be held liable for harm to employees or customers whose information may have been compromised?

A: Yes. Although this is a rapidly emerging area of the law, as a general rule an entity that is negligent in safeguarding confidential customer or employee data can be held liable as a result of a breach, or as a result of disregarding legal notice requirements after the breach. The principal question on the issue of liability is whether the entity took reasonable steps before the breach to protect the data, and after the breach to protect and notify the customers or employees. What’s reasonable is a moving target that must be determined on a case-by-case basis. However, there are few legitimate excuses in this day and age for a company to not take significant affirmative steps to safeguard electronic data.

Q: What are some of the bigger mistakes that companies make when it comes to protecting their data?

A: According to the Federal Trade Commission, the principal unreasonable practices that result in data breaches include weak password policies, lack of encryption, broad dissemination of administrative passwords, and lack of security between systems with sensitive data and other computers inside and outside the network.

Q: What measures can I take to protect my company from a data breach?

A: Engage in advance planning. To reduce the risks of a data breach, follow the recommendations of the National Institute for Standards & Technology by planning ahead of a breach to: identify the components of your systems and their vulnerabilities; protect the components from penetration; detect latent threats that may have already penetrated your systems; respond to a breach and recover from a breach. Also, train your employees to be alert to cybersecurity risks.

Q: It seems like all businesses rely on digital data transfer, whether it’s using file transfer services or sending sensitive documents through email. How do I continue to take advantage of these conveniences and still secure my information?

A: Avoid unnecessary risks. There are a million affordable products on the market that allow you to encrypt stored data and data in transmission. Use them and be willing to pay for data protection. If you must transmit sensitive data over an unsecure network, at a minimum encrypt it with a strong password before transmitting it.

NewsOK Q&A: Forced pooling in mineral land leasing has upsides, downsides

From NewsOK / by Paula Burkes
Published: August 31, 2017
Click to see full story – Forced pooling in mineral land leasing has upsides, downsides

Click to see Melissa Gardner’s attorney profile

Melissa Gardner is a Director who practices in the Energy & Natural Resources Practice Group.

Q: If you’re approached about leasing minerals, do you have options?

A: You do have options. However, none of those options include avoiding leasing your minerals. In Oklahoma, the development of minerals is a compelling state interest. Therefore, if you refuse to lease your minerals, you will be subject to forced pooling. Forced pooling of minerals is similar, in many ways, to acquiring property via eminent domain. However, in this context, it’s a private company acquiring the minerals for a period of time to develop a spacing unit. Because such acquisition is a “taking,” it’s in a much more limited form than leasing the same minerals.

Q: Why would the state allow companies to “take” individuals’ minerals?

A: If an individual in the middle of a spacing unit refused to negotiate or lease their minerals to an operator, their “holdout” would prevent the surrounding mineral owners from developing their assets. This, combined with the aforementioned state interest of developing oil and gas in our state, has led courts and the Legislature to determine it’s in everyone’s best interest to ensure production.

Q: What are the pros and cons of leasing versus being made subject to a forced pooling order?

A: If you choose to sign a lease, you will have the ability to negotiate more of the specifics of the usage of your minerals. You are in a position to get the oil and gas companies to agree to some conditions and special provisions. If you are subject to a forced pooling (as managed by the Oklahoma Corporation Commission), you’re not in a position to negotiate these details.

Second, you can negotiate bonus and royalty costs. If you are subject to a forced pooling order, you’re given three options, being a combination of the prevailing prices in the surrounding areas, with no option to negotiate those prices. In the alternative, if you allow yourself to be subject to the OCC forced pooling order, the applicant is given a shorter time within which it has to commence operations. The average lease is valid for three to five years, whereas the average pooling order is valid for six months to a year, both of which extend after production has been initiated. This keeps your minerals under contract for a shorter period of time.

Additionally, the minerals only are forced pooled as to certain, limited geological formations. If a well is drilled and producing from those zones, your minerals are still open and unleased as to other, non-pooled zones. In the alternative, most leases cover all depths or, at a minimum, from the surface to a certain depth below the surface. Finally, forced pooling orders expire at the end of production. If a producing well is drilled during the first year of a five-year lease and only produces for two years, the lease remains valid, and your minerals remain unmarketable for re-lease, for an additional three years.

NewsOK Q&A: Laws allow for various contingencies in dealing with bankrupt companies

From NewsOK / by Paula Burkes
Published: April 18, 2017
Click to see full story – Laws allow for various contingencies in dealing with bankrupt companies

Click to see Gretchen Latham’s attorney profile

Gretchen M. Latham’s practice focuses on representing creditors in foreclosure, bankruptcy, collection and replevin cases. She offers these services to her clients on a statewide basis as well as in all three Bankruptcy and Federal Court Districts in Oklahoma.

Q: Can a lender still do business with a bankrupt company?

A: Most generally, yes. When a business files for bankruptcy, the type of case is most commonly a Chapter 11 case. In a Chapter 11, it’s possible for the company to remain in possession of its assets, including equipment and inventory, and continue to do business. This includes interacting with vendors and lenders on a regular basis. As a creditor, the safeguard in place for repayment of any loan made to a company operating under a Chapter 11 is that post-petition debts are given priority as an administrative claim. This helps to eliminate some of the risk, and provide assurances of repayment. However, if the type of case filed is a Chapter 7, the company will no longer be operating its business and all of its assets are scheduled for liquidation.

Q: Can goods that are shipped to a Chapter 11 debtor be recovered?

A: The Bankruptcy Code does allow for reclamation of recently shipped goods, pursuant to 11 U.S.C. Section 546. There’s a somewhat tight timeline for exercising the right of reclamation, which must be precipitated by making demand.

Q: How can I get paid by a Chapter 11 debtor?

A: An option for making a payment claim, which is not unique to a Chapter 11 case, is for a creditor to file a proof of claim. The proof of claim will set forth the balance due and payment terms. The deadline to get a claim on file will vary from court to court, and the required form is typically provided with notice of the filing. Payment on a proof of claim can take a while, so be prepared to wait for the case to come to completion.

NewsOK Q&A: Data on your personal phone may be available to your employer

From NewsOK / by Paula Burkes
Published: July 19, 2016
Click to see full story – Data on your personal phone may be available to your employer

Click to see Kathy Terry’s attorney profile

The emphasis of Kathryn D. Terry’s litigation practice is in the areas of insurance coverage, labor and employment law and civil rights defense.

Q: What are personal electronic devices and why do they matter?

A: The use of personal electronic devices (PEDs) in the workplace is commonplace, but it’s not without risk for both the employer and the employee. If not managed properly, employers risk the dissemination of their confidential information and employees, perhaps rightly, have privacy concerns.

Q: What can an employer do to protect its business information?

A: Employers need a written PED, or bring your own device policy, signed by employees. Your policy should address several matters: the employer’s information always belongs to the employer; upon termination, it must be deleted immediately in the presence of the employer’s representative; all communications that go through the employer’s server are fair game for the employer and the employee has no expectation of privacy in those communications; only approved websites can be accessed via the employer’s server and accessing an unapproved website may result in severing of the server access and/or deletion of data, even the employee’s personal data, from the phone electronically; and the company always should have access to/be informed of the employee’s password for connectivity between the company server and the PED.

Q: So personal data, including contact lists, phone numbers and pictures, can be deleted from the employee’s own phone? 

A: Yes, though this area is evolving almost daily nationwide. There are lots of different federal laws and statutes in every state, including common law, which could be implicated. Please consult an attorney before charging ahead. Large companies are moving toward policies that give advance notice to an employee that upon termination if he/she fails to cooperate in the deletion of company information, the company can and will wipe all data from the phone (or other PED) and return it to factory settings. Most of the recent case law out there comes down in favor of the employer and rejects claims by employees under various federal laws, like the Electronic Communications Privacy Act or the Computer Fraud and Abuse Act.

Q: Don’t employees have a right to privacy in their own communications, on their own phones?

A: So far, there’s no case out there that has found an employer can’t, under any circumstances, search a PED for data. Courts looking at whether a private employer has overstepped by searching PED communications do emphasize privacy concerns and they recognize each case is fact specific. But, typically, if that data is coming through a company server, the company can take a look. We recommend the employer narrow any such search to work related/topic specific communications.

Q: Are the rules the same for government employers?

A: Not really. Governments have to worry about the Fourth Amendment, unreasonable searches and seizures, and more often than private employers, union contracts. So far, most court and administrative rulings favor the government employer who searches a PED, but those cases get close factual scrutiny. Also, in the case of public employees (elected officials included), the Freedom of Information Act and, here in Oklahoma, the Open Records Act, are applicable. Work-related communications, even on a PED, are public records. If a government employer needs to search for and retrieve communications that are work related from a PED, that search is going to be permissible.

Q: What about quality of life and working after hours?

A: If your employees aren’t overtime exempt, after-hours texting and emailing should be included in the employees’ time records, and they should be paid for it, even if it results in overtime pay at a higher rate. Employers concerned about the increased wage expenditures should consider limiting PEDs use to only overtime-exempt employees. If this isn’t possible, a policy should be written and adhered to that results in very limited after-hours communications, and includes clear guidelines on how to account for the time and resulting compensation when those communications do occur.

Q: Do we have to reimburse employees if they use PEDs for work?

A: In some states, the answer is yes. Here in Oklahoma, we don’t have a bright line rule requiring reimbursement for an employee who uses a PED to conduct work-related tasks. However, many Oklahoma employers are moving toward reimbursement, or partial reimbursement at minimum.

Q: What about litigation holds on electronic data that may be discoverable?

A: If you’ve ever had to produce electronic data during the course of a lawsuit, you know that can be very burdensome. You also know that if you’re on notice of a potential claim against your company, you will need to be sure the company has policies and practices in place that work to preserve potentially discoverable documents, communications and data. Certainly, if your company’s employees are communicating and working on PEDs, there needs to be a process in place designed to reasonably capture and preserve that information, communication and data that may be stored or saved to PEDs, as opposed to a company network server.