No Vacancy: Duff on Hospitality Law

NLRB Employee Rights Posting Requirement - Deadline Extended to April 30, 2012

Diana Shukis — Fri, 27 Jan 2012 15:18:54 -0800

As you have likely read in the past months, the National Labor Relations Board (the “Board”) recently adopted a new rule requiring almost all employers, including those with non-unionized workplaces, to post a Notice advising employees of certain rights provided to them under the National Labor Relations Act (the “Act”). There was considerable controversy surrounding the new rule, and several postponements of the deadline for compliance. The deadline was last extended from January 31 to April 30, 2012, and the April 30 deadline seems to be sticking. So, if you have put the requirement out of your mind given the postponements, it is time to remember them. Information to help you comply with the posting requirement, including downloadable versions of the required Notice can be found at the Board’s site. The Notice summarizes employees’ rights to negotiate the terms of their employment, form a union, engage in collective bargaining with their employer, strike and picket. Legal restrictions on certain actions by employers and unions are also listed, along with an explanation of the obligation to bargain in good faith when a union has been selected by employees.

What are the posting requirements?

The Notice may be downloaded from the Board’s website, but it must be printed to at least 11 inches x 17 inches in size.
The Notice must be posted in conspicuous places where notices to employees are normally posted. If employee rules and policies are customarily posted on a company’s intranet or internet site, the notice must also be posted there in full or by a link to the Board’s website where the full text of the notice is located.
Employers must take steps to ensure the notice is not altered, defaced, or covered with other materials.
If 20 percent of an employer’s workforce is not proficient in English, and those persons speak the same foreign language, the employer must also post the notice physically (and electronically, if applicable) in that language. The Board has provided downloadable copies of the Notice in several languages at the above-referenced website, with more to come.

What are the consequences of noncompliance?

Failure to post the Notice may be treated as an unfair labor practice under the Act. If the Board finds the employer has failed to post, it will be ordered to cease and desist from the unlawful conduct and to post both the Notice and a remedial notice. In some cases, additional remedies may be imposed.
Any employer that threatens or retaliates against an employee for filing charges or testifying at a hearing concerning alleged violations of the posting requirements may be found to have committed an unfair labor practice.
Failure to post could also extend the time for employees to file unfair labor practice charges.
A willful failure to post can further be used as evidence of an unlawful motive in an unfair labor practice case under the Act.

Who must comply?

All employers who fall under the Board’s jurisdiction must comply. The Board’s jurisdiction is very broad, and it is hard to imagine an employer in the hospitality industry that would not come under its purview.
There are some employers that are specifically excluded from the requirement, but none are likely to apply to hospitality industry employers.
Federal contractors may comply with the new rule by posting notices to employees as required under the Department of Labor’s similar notice-posting rule found in 29 CFR part 471.

Recommendations:

Make sure to post the new notice no later than April 30, 2012.
Provide training to your supervisors on how to respond appropriately to questions from employees about unions and union organizing activities.

If you have any questions, please contact us.

Days 2 and 3 - Recap of Americas Lodging Investment Summit (ALIS) at LA LIVE in Los Angeles

Greg Duff — Thu, 26 Jan 2012 15:45:33 -0800

Days 2 and 3 at this year's ALIS conference were filled with numerous highlights, including a very well attended presentation (or should I say, political commentary) in the Nokia Theater by "the Donald" himself, Mr. Donald Trump. Days 2 and 3 were also filled with hundreds of meetings by conference attendees in nearly every hallway and corner of the hosts JW Marriott and Ritz Carlton.

While optimism continued to be the theme most often heard in the meetings I attended, the optimism was far from unbridled. With so many unknowns remaining in the world (e.g. European debt crises, continued high unemployment, the upcoming presidential election), nearly everyone recognized that the many signs pointing to an industry rebound could quickly change.

Some additional observations from the two days’ meetings:

The much publicized industry recovery is definitely a regional or local recovery being led by both coasts of the United States and the top 25 markets. Despite record level demand in 2011 (over 1 billion room nights sold), many markets in the Midwest, South and other regions continue to suffer.
A number of the owners and operators I spoke with felt that the 2012 forecasts presented by PKF and STR at the conference the day before were rather conservative. Several owners and operators (with properties in multiple markets) indicated that they anticipated exceeding forecasted REVPAR increases.
Debt continues to be a mystery for many. Those I met with represented both ends of the availability spectrum with debt being either impossible to obtain or readily available. Construction financing seems to be returning on a limited basis for quality developers in quality markets. One national developer I spoke with indicated that construction financing was becoming easier to obtain through national and regional lenders at approximately 65% LTC with limited recourse.
The much publicized refocus on enforcement of brand standards by the leading franchise companies appears to be limited to top tier franchisors only. Second tier franchise companies may be increasingly willing to waive or postpone standards requirements to maintain or grow needed distribution.
Nearly everyone believes that lenders and special servicers will grow increasingly impatient with nonperforming loans and take needed steps to bring those properties to market over the next year.
The Northwest continues to be an area of interest for lenders, investors and operators. All but one of the investors featured as part of the ALIS Talks Money segment (including Aimbridge Hospitality, Apple REIT Companies, Carey Watermark Investors, Felcor Lodging Trust, HEI Hotels & Resorts, Kimpton, Noble Investment Group and Thayer Lodging Group) identified the Northwest as a prime target for 2012.
Unions were surprisingly active this year. At least two developers I spoke with mentioned that they had been approached by union representatives at the conference to discuss the developers' design review and staffing plans for their new hotels.
As you might imagine, a great deal of discussion surrounded the recent launch of Room Key (see my colleague Ruth Walter’s recent post on the Room Key launch) and its effects on the current distribution landscape. One of the more interesting panel discussions occurred when Michael Shannon, managing director of KSL Capital Partners, questioned whether Room Key would succeed. Michael’s co-panelists, Richard Solomons, CEO of Intercontinental Hotels Group (one of the website’s founding partners) and Steve Joyce, President and CEO of Choice Hotels (also a founding partner of Room Key) strongly disagreed. Only time will tell whether this new travel search platform receives the acceptance necessary to make it a long-standing player in the on-line travel distribution landscape.

Finally, for those of you that were not at ALIS and are interested in seeing PKF’s 2012 national forecast, I’ve attached a complete copy of Mark Woodworth’s presentation here.

I look forward to seeing everyone at next year’s conference in January 2013.

Rebound! Day 1 of 2012 Americas Lodging Investment Summit (ALIS) at LA LIVE, Los Angeles

Greg Duff — Tue, 24 Jan 2012 13:29:54 -0800

It has been reported that the producers of the conference this year were torn between an exclamation point and question mark in the program title As you can see, the optimistic decision was made to include an exclamation point. As I explain below, I tend to agree with that decision.

Monday marked the opening of the 11th annual ALIS here in Los Angeles. This year's attendance of 2400 makes the 2012 conference the third largest in its 11 year history. From the many conversations I had throughout the day, the optimism expressed in pre-conference survey results was shared by many.

The first day included an opening presentation by Wells Fargo chief economist John Silvia. According to John, five key economic fundamentals that he regularly follows (growth, profits, interest rates, inflation, and currency) lead him to believe that the United States will continue to enjoy sustained growth in 2012, though at rates lower than prior economic recoveries.

John's presentation was followed by very brief presentations by each of the industry's usual cast of economic forecasters - Smith Travel (Jan Freitag), HVS (Susan Mellen) and PKF (Mark Woodworth). Here are the highlights:

1. Smith Travel

World is recovering in majority of hotel markets
2011 REVPAR was up 8.2%, driven largely by occupancy
2012 forecast: 4.3% REVPAR growth driven by 3.8% ADR growth and .5% occupancy growth

2. HVS

Hotel transactions in 2011 by dollar volume increased over 70%
2011 average price per key exceeded $200,000
REITs accounted for 43% of transactions in 2011
Cap rates will continue to fall in 2012

3. PKF

2012 forecast: Occupancy 60.5% and 4.7% ADR growth
"Headwinds diminish and tailwinds develop"

Stay tuned for more details from ALIS later this week.

Buzz, Skepticism about Room Key Hotel Search Site

Ruth Walters — Mon, 23 Jan 2012 13:18:56 -0800

Room Key, a brand new player in the on-line hospitality market, launched in beta on January 11, 2012 to some excitement and some hard questions. Room Key is a joint venture among six U.S.-based hotel chains—Choice Hotels International, Hilton Worldwide, Hyatt Hotels*, InterContinental Hotels, Marriott International* and Wyndham Hotel Group—that allows users to search for available rooms at almost all of the chains’ global properties, or about 23,000 rooms total. More Kayak than Expedia, users search the Room Key site for inventory and are then redirected to the individual property (or chain’s) home site to complete booking. The idea is to drive traffic to the hotel websites and away from on-line travel agencies (OTAs) like Expedia, Priceline, and Travelocity. And, of course, to provide a customized, personable hotel booking experience to the user--and who better to do that then a group of hoteliers--says CEO John Davis.

While often perceived—accurately—as partners with hotels, OTAs also compete with them. Virtually all hotels, whether chain or independent, have their own websites and booking capabilities. Expedia et al. can provide greater distribution, higher booking percentages and the convenience of packaging flights, rental cars and activities, but it’s at a price to the hotel. Room Key is making an effort to lower or eliminate that price, while still providing some meta-search convenience and, later, social media components. Room Key’s launch reflects hoteliers’ growing concerns with the cost of distribution, particularly on-line, and their understanding of the shifting roles hotel booking websites might play in 2012.

The OTAs will almost always have more and more diverse inventory and currently they are not participating in the Room Key platform. It’s an open question as to whether they will be permitted to do so; for example, TravelWeb, a similar multi-chain venture in the early 2000’s, was partially owned by Priceline which then acquired a majority ownership position and folded the TravelWeb brand and function into the main Priceline site. It is also not clear whether any GDS will be able to participate.

While called a “shot across the OTAs’ bows” by industry analyst Henry Harteveldt, there is also skepticism on the part of certain financial analysts who see Room Key’s limited inventory and high start-up marketing costs as significant negatives in the on-line hospitality space. Then again, Room Key did announce the day after launch that Best Western International was to be its inaugural commercial partner and other hotels interested in participating are invited to simply email Room Key at partners@roomkey.com.

The site officially launches in March, so stay tuned for more developments.

*Full disclosure: Marriott and Hyatt are clients of our firm.

Beware the Ides of March - ADA Revisions Become Effective on that Date

Mike Brunet — Fri, 13 Jan 2012 15:01:21 -0800

This week’s post comes from Hospitality Team member Mike Brunet (Employment and Litigation), as a follow-up to his January 21, 2011 post on revisions to the public accommodations sections of the Americans with Disabilities Act. Mike recently presented on these revisions to the Seattle Hotel Association, and, in this post, shares his extensive presentation on the ADA revisions, applicable deadlines, and what you should get done before March 15.

In a blog post here almost a year ago, I provided an overview of the first significant revisions to the ADA regulations since 1991. At that time, I focused primarily on the new regulations that became effective in March 2011, related to communications accessibility, service animals, and mobility devices. Hopefully you were able to implement changes to your operations and policies to address those regulations; if not, then this blog post should serve as a reminder to do so as soon as possible.

Although the linked presentation touches upon those same topics, albeit in more detail than in my prior post, its primary focus is on the 2010 Standards for Accessible Design. These standards mandate revisions to existing features, including common-area and in-room bathrooms, parking, and accessible seating. For the first time, accessibility standards have also been introduced for features common in hospitality properties such as swimming pools, saunas, and exercise rooms.

I encourage you to review the linked presentation carefully, and to contact me with any questions that you may have. The 2010 Standards become mandatory, with limited exceptions, on March 15, 2012, so it is important to take action on these regulations quite soon.

Many thanks to Kevin Maher of the American Hotel & Lodging Association, whose presentation at the Washington Lodging Association Conference was extremely helpful in preparing my materials.

Warning: Eating Here May Kill You!

Ryan McFarland — Thu, 12 Jan 2012 12:27:37 -0800

Understanding Basic Menu Health Warning Requirements in the State of Washington

Our current post comes from our Seattle Hospitality Team member Ryan McFarland. Over the past several months, we’ve received a number of client inquiries regarding menu labeling requirements, specifically the warnings required under Washington’s Food Code. A companion piece on Oregon’s requirements will be posted soon. Enjoy.

From fine dining to family-style restaurants, menus set the tone and begin a dialog with their patrons about the variety of food and drink options offered by the dining establishment. They also serve as real estate for public safety and legal disclaimers intended to protect patrons from food borne illness--and restaurateurs from claims and lawsuits. Aside from Pacific Northwest Portlandia comic relief (a television show based in Portland whose first episode features diners inquiring about the quality of life of the chicken they are about to order), many actually read the fine print off menus: Where are those oysters from? How was that albacore caught? Are the tomatoes heirloom?

The fine print is everywhere. For instance, the state of Washington requires certain disclosures regarding automatic service fees, as well as the calorie count for a cheeseburger at chain restaurants. For the sake of simplicity, start with your menu. Restaurateurs need to consider warnings for food and drink that could cause fairly immediate sickness--primarily food and drinks that are purposefully undercooked or not fully pasteurized.

The specific requirements for menu “warnings” in Washington are contained primarily, but not exclusively, within the State’s adopted version of the National Food Code (See WAC 246-215). Generally speaking, under the adopted Food Code, a menu warning is required when a restaurant offers unpasteurized juices or feeds of animal origin that are served raw or undercooked. There are a few specific exceptions to the rule that may be worth looking into on an individual restaurant basis. Identification should be at the point where the food is selected by the consumer which is often the menu, but in other cases may be a placard or order board.

If your restaurant serves the types of food for which warnings are required, then you need to provide a two-prong warning containing a Disclosure and a Reminder.

The first part of the warning is the DISCLOSURE, for instance:

The cooking status is explained in the menu description:

Oysters on the half-shell (raw oysters)
Raw-egg Caesar salad
Our Steaks are cooked to order; or

A footnote (with asterisk or other indicator) states that the marked items:

Are served raw or undercooked, or
Contain (or may contain) raw or undercooked ingredients.

The second part of the warning is the REMINDER, so for instance:

Consuming raw or undercooked meats, poultry, seafood, shellfish or eggs may increase your risk of foodborne illness.

Unpasteurized juice may increase the risk of foodborne disease to people with certain medical conditions.

The Disclaimer and Reminder need to be located next to one another and where menus are concerned must be visually equivalent to 11 point font.

But, you said these disclaimers may actually help me—how does warning people that a Caesar salad can kill them help the restaurant? In short, the regulations help because they attempt to create a clear legal duty for the restaurant. If you comply and a patron ignores the warning and gets sick, you have something to talk about when they call up to tell you about how great their lawyer is. Indeed, the basis for most tort claims in restaurants is “negligence” – the failure of the restaurant to comply with a duty owed to its customer. These “duties” are not always clear, however, and within case-law, continue to change and evolve. When the State creates a specific legal requirement, however, most courts will treat that as the “standard of care” or “duty” that was required of the restaurant. If the restaurant complies, it will be considerably more difficult for a plaintiff to successfully sue. Unfortunately, there are still some issues on the edges that are not settled such as disclaimers about nuts, alcohol in food, and the potential for bits and bones. Disclosures of these types are not squarely within Washington’s current menu disclaimer regulations and so restaurants and their lawyers are left to determine whether specific additional warnings are advisable.

Anyone with further questions can contact Greg or me in Seattle, or Joy Ellis, in Portland.

Tip Pooling Remains a Hot Topic

Eric Lindenauer — Fri, 23 Dec 2011 11:05:54 -0800

As many of you will recall, I dedicated two posts earlier this year to tip pooling and Oregon and Washington restaurant owners' ability to share tips with traditionally non-tipped employees - Tip Pooling in Oregon and Washington, Tip Pooling Update. With the amount of attention that tip pooling continues to receive, I thought it time to enlist my Portland, Oregon partner, Eric A. Lindenauer, the lawyer who actually represented the Portland restaurant owner in the seminal Cumbie v. Woody Woo, Inc. decision, to provide a brief summary of the Woody Woo decision and recent developments in the ongoing tip pooling saga.

Thank you Eric for updating all of us.

The extent to which an employer can require employees to share tips with non-tipped employees remains a hot topic, especially in the federal Ninth Circuit, which encompasses Alaska, Washington, Montana, Idaho, Oregon, Nevada, California, Arizona and Hawaii.

Under the Fair Labor Standards Act (“FLSA”) where an employer claims “tip credit” toward the federal minimum wage, the employer may only require that employees pool tips with other employees who “customarily and regularly receive tips.” Assuming an employee is informed of the intent to take tip credit and other requirements are met, an employer can use an employee’s tips to offset all but $2.13 of the federal minimum wage.

In Cumbie v. Woody Woo, Inc., dba Vida Cafe, 596 P.2d 577 (9th Cir. 2010), the Court of Appeals held that the FLSA’s mandatory limitation on tip sharing to customarily tipped employees applies only when the federal tip credit is claimed. Accordingly, where no tip credit was claimed, a restaurant could require servers to share tips with “back of the house” employees (cooks and dishwashers) who did not customarily receive tips.

The United States Department of Labor (“DOL”) has explicitly stated disagreement with the Ninth Circuit’s ruling in comments published in the Federal Register accompanying newly promulgated DOL regulations governing tipped employees. According to the DOL regulations “tips are the property of the employee whether or not the employer has taken a tip credit under Section 3(m) of the FLSA.” 29 C.F.R. § 531.52. The regulations restrict tip pools to “customarily” tipped employees. Notwithstanding the DOL’s position and the new regulations, it is unlikely the DOL can enforce its position in Ninth Circuit states unless Cumbie v. Woody Woo is overturned. Accordingly, the battle over tip sharing with non-tipped employees has shifted to state law and state courts.

Last month a Nevada trial judge ruled that the Nevada State Labor Commissioner erred when he held that a Wynn Resort Ltd. (“Wynn”) tip sharing policy did not violate Nevada state law. The issue is significant in the casino industry, because dealers often receive hefty tips and typically make more than their bosses. Wynn required card dealers to share tips with floor supervisors and pit managers. Clark County, Nevada, Judge Kenneth Cory held that Nevada state statutes prohibited Wynn’s tip sharing requirement. The attorney for the dealers believes if the ruling stands, he may be able to recover up to $30 million he believes was wrongfully taken from Wynn dealers since 2006. The issue is expected to be ultimately decided by the Nevada Supreme Court.

If you have questions or would like more information on tip pooling or any related tip issues, please don't hesitate to contact Greg, in Seattle, or me, here in Portland.

New Horizons Ahead

Greg Duff — Tue, 29 Nov 2011 10:42:51 -0800

We’re back . . . With the incredibly busy and challenging past four weeks behind us, it gives me great pleasure to announce that Diana Shukis, Ryan McFarland, Michael Brunet, Ruth Walters and I have joined the team of attorneys at the law firm of Garvey Schubert Barer. Effective November 1, 2011, our hospitality team joined Garvey Schubert Barer to launch Garvey Schubert Barer’s new Hospitality, Travel and Tourism practice.

As part of the 100+ attorneys that comprise Garvey Schubert Barer’s five offices (Seattle, Portland, New York, Washington D.C. and Beijing), our team can now provide our hospitality clients local knowledge and contacts well beyond Washington as well as new and/or deeper skills and expertise in such substantive areas as labor and employment, immigration, employee benefits, debt and equity financing, tribal law, regulatory, intellectual property protection and licensing, tax and international and cross border transactions (with a special focus on Canada and the Pacific Rim). Beyond its own five offices, Garvey Schubert Barer also enjoys affiliations with a select group of similarly-sized independent law firms across the United States and abroad, which only serves to further expand our ability to provide resources to our hospitality clients wherever they may be.

We are all incredibly excited by this recent change and look forward to sharing more information about Garvey Schubert Barer and introducing you to our new hospitality colleagues in the months ahead. Upcoming posts will include an overview on King County menu labeling requirements, an update on recent ADA changes, tip pooling (from our colleagues in our Portland office who actually tried and won the Woody Woo case) and group sales.

Finally, a word of thanks to our many clients, colleagues and friends who supported and encouraged us through our recent transition. Thank you

No More Service Parrots

Margaret Breen — Mon, 24 Oct 2011 10:24:12 -0800

This week's post comes courtesy of Cairncross & Hempelmann attorney, Margaret Breen and highlights changes to the Washington State and United States definition of "service animal' as it relates to required accommodations in public places, such as hotels, motels and restaurants.

Both the Washington legislature and the U.S. Department of Justice have acted recently to specify what is and is not a service animal requiring accommodation in public places and to limit abuses of the Americans with Disabilities Act by extreme animal lovers.

Under the Washington Law Against Discrimination (WLAD), hospitality providers who own “places of public accommodation” are required not only to permit patrons to be accompanied by service animals, but cannot discriminate by any policy or practice: they may not “treat a person with a disability as not welcome, accepted, desired, or solicited because of their use of a service animal.” You may prohibit pets, but not service animals – and how do you tell the difference? Under WLAD and the ADA, you may ask if the animal is a service animal required by a disability, and you may ask what tasks it performs for its owner. You may not ask for any proof of a disability or for certification of the service animal’s status. Further inquiries may leave a host open to a claim of discrimination.

Because of this risk, until now, most advisors have suggested that, if a guest says that any animal is a service animal, the host should take the guest at his or her word and provide accommodation. And just what is a service animal? Until recently, a “service animal” was very broadly defined to include many types of animals, including exotics and those used for emotional support and companionship. In 2003, for example, the Department of Transportation instituted regulations saying that a service animal could be of any species, and did not need to be specially trained. One woman defended a charge of illegal import by the Arizona Game and Fish Department and countersued, saying that her chimpanzee was trained to bring her sugar during diabetic episodes; a psychotic man was permitted to use a large gray parrot to “talk him down” from manic episodes. Municipalities and merchants’ groups facing monkeys in the grocery store aisles have raised questions about where to draw the line between reasonable accommodations and public health and safety. See, e.g., Skloot, Creature Comforts, New York Times 12/31/2008.

Recent amendments to Title II of the ADA say that only dogs and miniature horses may qualify as service animals; other species are now excluded. See 75 FR § 56193. Moreover, to qualify as a service animal, the dog must actually do “work” or “perform tasks” that are related to its owner’s disability. Emotional support animals – those whose function is merely to provide comfort to their owners – are no longer included. However, hosts must continue to use care: service dogs and miniature horses that perform psychiatric services must still be accommodated. The key in the commentary here seems to be the use of training for specific actions. A dog who is trained, for example, to specifically aid an owner during PTSD flashbacks, for example, would likely qualify.

This change in federal law does not apply in all contexts. The Americans With Disabilities Act incorporates the limits on the definition of a “service animal” to address the policy of the impact of uncontrollable animals on the general public, but the Fair Housing Act, affecting families’ lives more than public interaction, retains the older,much broader definition. The FHA applies to most permanent and semi permanent residences; it doesn’t apply to hotels, motels, and bed-and-breakfasts.

The Washington bill passed in July reinforced the general state prohibition against discrimination in public accommodations against persons with disabilities, specifically including those accompanied by guide dogs or service animals, with an exception for “behavior or actions constituting a risk to property or other persons” , i.e., dangerous and incontinent animals. A host need not accommodate a service animal whose owner cannot control it, or who is not housebroken.

“Service animals” in the state bill include dogs (and, in restaurants, miniature horses) that perform tasks directly related to ameliorating their owners’ physical, mental, psychiatric, or intellectual abilities, for example, by pulling a wheelchair, finding medication, or interrupting a seizure or destructive behavior. Other species are excluded, as are emotional support, companionship, or comfort animals whose mere presence helps their owners.

The new federal and state laws attempt to keep the spirit of nondiscrimination codified by the old ones, and continue to restrict a hosts’ ability to intrude into a disabled person’s health status. However, they attempt to balance the animal owner’s right to equal treatment and to privacy against the public safety and nuisance concerns of wild animals and untrained pets in restaurants, hotels, and other places where the general public is present.

Washington Lodging Forecast and More: Highlights from Washington Lodging Association's 2011 Annual Conference October 2-4, 2011 - Tulalip Resort

Greg Duff — Fri, 14 Oct 2011 09:45:46 -0800

Washington hotel owners, operators and suppliers enjoyed two days of learning, socializing and recognizing their colleagues' successes at the recent Washington Lodging Association's 2011 Annual Conference at the incredible Tulalip Resort and Spa. This year's Conference featured a variety of presentations on workforce challenges, recent changes to the ADA, revenue management, fraud prevention and social media.

I had the opportunity to again moderate a general session on the current state of the lodging industry. This year, in addition to featuring the regular industry forecast from Chris Kraus of PKF, the panel included representatives from each of the three key guest segments (corporate, group and leisure) responsible for generating future lodging demand. This year's panelists included Amy Severson of Expedia, Kathy Gerke of CRG Events, Linda Broderick of HelmsBriscoe, Lisa Bliss of Boeing and Chris. A copy of Chris' presentation is available here.

Kevin L. Maher, SVP of Governmental Affairs for the American Hotel & Lodging Association ended the Conference on Tuesday morning with a very informative presentation on the widely publicized changes to the ADA (which while not officially taking effect until March of next year, may already impact decision making going on today) and their effect on the hospitality industry. Rather than summarize Kevin’s presentation, I have attached a copy of the presentation here. If you would like more information on the recent changes to the ADA and how they might impact you and/or your property, please contact my partner, Diana Shukis. Diana chairs our firm’s Labor and Employment practice and is a member of our firm’s Hospitality, Travel and Tourism practice. Diana is currently working with a number of hotel clients to thoroughly examine and implement these important changes.

In close, I want to acknowledge and congratulate Howard Cohen, Vice President of the Clise Hotel Division. Howard was recognized at this year’s Conference as the 2011 WLA Hotelier of the Year. Well done Howard.

Highlights from 2011 Oregon Restaurant and Lodging Association Annual Conference September 25 -27, 2011

Greg Duff — Fri, 07 Oct 2011 08:03:32 -0800

Just two weeks ago over 300 restaurateurs, hoteliers and industry suppliers came together in Bend, Oregon, for the 2011 Oregon Restaurant and Lodging Association Annual Conference. I had the chance to attend this year's Conference and to present during Sunday's opening sessions.

This year's Conference featured a good mix of speakers and presentations. Highlights from the Conference included the following:

Smith Travel confirmed that Portland (like many other West Coast cities) is currently enjoying unprecedented growth in lodging demand, solid growth in occupancy and mediocre growth in rate. Unfortunately, given the steep decline that occurred in each category over the past few years, the Portland market still has a long way to go. A complete copy of Smith Travel's presentation, including 2012 forecast, can be found at www.hotelnewsnow.com.
Vikram Singh of Evision Worldwide presented on the rapidly changing world of mobile marketing and the importance of creating a tailored mobile presence different from existing on-line and web-based efforts. Vikram is a regular presenter at lodging and restaurant industry events, so if you missed seeing him in Bend, look for an opportunity to see him at another industry event.

Like so many other conferences occurring this fall, this year's Conference had a clear focus on evolving technology and media forms and their use in the hotel and restaurant industries. Several of the Conference's exhibitors (see for example, CoHo-Res) and at least five presenters talked about the impact of technology and new media forms on members' operations, sales and marketing. If you've not yet considered how social media, flash sales or consumers' increasing use of mobile devices and applications will affect your property, you need to do so now.

I was invited to speak during Sunday's opening breakout session on the variety of intellectual property issues that are affecting both restaurateurs and hoteliers on a daily basis. Entitled, "Whose Property Is It? Practical Guidance for Handling Third Parties' Music, Images and Brands," the presentation covered music licensing, image and video licensing, patent trolls, illegal downloads by customers and guests, keyword search and privacy. Much to my surprise, the presentation engendered more discussion among attendees than just about any other presentation I have given over the past several years as several debated the need for performing rights organizations' aggressive enforcement of copyright holders' interests. A downloadable PDF copy of the much debated presentation is available (linked above) if you would like to review it. I welcome your thoughts and questions.

Attendees' sentiment at this year's Conference was more positive than the sentiment expressed at last year's conference, though several attendees expressed concern over the macro economic environment and its likely effects on the hotel and restaurant industries. Interestingly, there were a number of hotel owners talking about future new development, a topic that wasn't on anyone's mind last year.

Congratulations to ORLA on another great conference. I look forward to attending again next year.

Highlights from 2011 ZINO Zillionaire Investment Forum September 13, 2011

Greg Duff — Wed, 28 Sep 2011 08:17:48 -0800

I know. I know. Here it is the end of September and I am only now posting details on the 2011 ZINO Zillionaire Investment Forum that occurred weeks ago. What can I say, it is fall conference season and the many seminars, conferences, panels and presentations scheduled for the months of September, October, November and December are taking their toll. That said, I wanted to take the time to share highlights from this terrific all day investment forum put on by our friends at ZINO at Seattle's Museum of History and Industry.

For those of you not familiar with ZINO, the organization was founded in 2005 as a membership network of Seattle angel investors. We became involved last year after receiving an invitation to attend a ZINO investment forum dedicated to the hospitality industry. Impressed by the forum, the presenting companies and the investors participating (and following a little arm twisting by the wonderful ZINO marketing director, Mary Holmes), we became sponsors of ZINO and ZINO's efforts in the hospitality arena.

The Zillionaire Investment Forum is one of several events held by ZINO each year. This year's Forum included presentations by 30 early stage and startup companies seeking funding. The Forum's opening session, entitled "Hospitality, Food and Travel" featured a brief introductory discussion by a panel of well-known local hospitality experts and presentations by five companies in the hospitality industry. I had the distinct pleasure of presenting the opening session and moderating the discussion among panelists Kurt Dammeier of Sugar Mountain Capital, Howard S. Wright III of SH Worldwide, Bob Seidel, chair of our firm's corporate finance practice, and successful chef and restaurateur Tom Douglas. Topics covered during our opening discussion included French toast (apparently the impetus behind Kurt's foray into food and cooking), birth control (yes, birth control does have a connection to Tom Douglas' path to celebrity chef status), Tibetan chefs, food trucks, concept development and the pros and cons of using money from friends and family to fund initial startups. As you might imagine, the discussion was lively and entertaining.

Following the panel discussion, the following five companies presented their company and business plan:

BeDynamic

Prosperity Organic Foods, Inc.

Unicorn Booty

Your Local Market

Thrive

Each of the company's presentations was well received and elicited numerous questions from our panel and attending investors. In fact, Prosperity Organic Foods, Inc. was recently announced as one of the Forum's six fund finalists and awaits word on whether it will be the recipient of funding from ZINO. Congratulations to Prosperity Organic Foods, Inc. and all of the presenting hospitality companies.

If you would like more information about ZINO or details about presenting at the next ZINO investment forum, please let me know.

Seattle's Mandatory Paid Sick Leave Requirement -- Ready or Not, it's Here

Diana Shukis — Tue, 27 Sep 2011 09:39:30 -0800

This week, Employment Law partner & Hospitality team member, Diana Shukis, breaks down the effects of Seattle’s recently enacted “Sick Leave” requirement. On September 12, 2011 the Seattle City Council approved an ordinance that requires businesses with five or more employees to provide paid leave for employees when they or their family members are ill or a victim of domestic violence. The new leave requirement goes into effect on September 1, 2012. Here are answers to common questions to help guide you as you think ahead toward compliance:

How much leave is required?

Businesses with fewer than five employees (called “micro-businesses”) are exempt. All other employees working in Seattle are entitled to accrue sick and safe leave based on the size of the business where they work. The size of the business is determined by total full-time equivalent employees, based on a 40-hour work week (“FTE”), regardless of where those employees work. For example, if the business has 100 FTEs total, but only 10 work in Seattle, the 10 Seattle-based employees are entitled to earn paid sick and safe days at the Tier 2 accrual rate.

	Employer Size	Accrual Rate	Annual Cap
Tier 1	5-49 FTEs	1 hour for every 40 hours worked	40 hours (5 days)
Tier 2	50-249 FTEs	1 hour for every 40 hours worked	56 hours (7 days)
Tier 3	Over 250 FTEs	1 hour for every 30 hours worked	72 hours (9 days)

Workers must work in Seattle for at least 240 hours per calendar year in order to be covered by the ordinance.

How can the leave be used?

Employees may use sick and safe leave for any of the following reasons:

The employee’s own illness or injury, diagnosis, treatment, and preventative care.
The health needs of an employee’s child, spouse, domestic partner, parent, parent-in-law, or grandparent.
To deal with the consequences of domestic abuse, sexual assault, or stalking.
The closure of a place of business, a child’s school, or a child’s place of care due to a public health emergency.

Employers may require documentation of illness if an employee uses three consecutive days of leave. If the employer does not offer health insurance, the employer and employee must share the expense of obtaining such documentation.

When can the leave be used?

Waiting period to use leave: A Seattle-based employee begins to accrue leave immediately upon starting work, but cannot use the leave until 180 days after starting work.

Carry over: Accrued but unused sick and safe leave carries over to the following year. However, unless allowed by the employer, employees are not entitled to use more leave than the cap amount in any given year. As a practical matter, the carry over will make paid sick and safe leave available for absences early in the year before much leave has been accrued.

No pay out on termination: The ordinance does not require an employer to pay out accrued but unused sick and safe leave upon termination.

Does an existing voluntary paid leave policy fulfill the requirement?

Employers who already provide paid sick leave or other paid time off to employees do not have to provide additional paid leave as long as the existing leave meets the minimum accrual rates and employees are allowed to use the paid leave for the same reasons and in the same manner as required by the Seattle ordinance. Keep in mind that an existing policy may need some revisions in order to fully comply.

As the compliance deadline approaches, we will provide additional information and answer questions. As always, please let us know if you have questions or would like more information about this topic.

Protect Your Brand! Sunrise Period for Preemptive Registration of .XXX Domain Names

Ruth Walters — Sun, 25 Sep 2011 21:23:58 -0800

If you have a trademark that is registered with the United States Patent & Trademark Office before September 1, 2011, and you are not in the adult entertainment business, you should consider making a pre-emptive registration of the URL [your trademark].xxx now, to prevent someone who is in the adult entertainment industry from registering it later.

ICM Registry, the domain name registry administering the .xxx domain, is holding a “Sunrise Period B,” during which owners of registered trademarks who are not in the adult entertainment industry may register .xxx domains for exact matches to their registered marks. The Sunrise Period ends October 28, 2011. Registration can be made through a number of familiar domain name registrars listed on ICM’s site here. The links on this page will take you to the registrars, where you can find additional information about how to proceed.

The Internet is administered by a non-profit corporation called the Internet Corporation for Net Names and Numbers (ICANN). It is this entity that decides, among other things, what types of top-level domains (TLDs) (.com, .net, .museum, .gov) will exist and how registration for them will proceed. There are three basic groups of TLDs: generic TLDS (gTLDs) (.com, .biz., .info), country-code TLDs (ccTLDs) (.us, .co.uk, .cn, .es, .ca) and sponsored TLDs (sTLDs) (.aero, .coop, .mobi), which require all domain name registrants to be part of the “sponsored community.”.xxx is an sTLD, and the sponsoring community consists of adult entertainment providers and suppliers to that industry.

Sunrise Period B, and earlier sunrise periods for other TLDs, are part of a general effort on the part of ICANN and the associated domain name registries, to make things a little easier for trademark owners, particularly those who may not be in the business required by an sTLD. And with this particular sTLD, you might imagine a trademark owner’s concern at not being able to protect her brand.

Of course, this is not a trademark owner’s only recourse and, because it is limited to owners of federally registered brands, is no recourse at all for owners of common-law (unregistered) marks or trademarks registered at the state level. If someone registers a .xxx with your trademark, and the site is active, you have a number of options for proceeding; however, they will almost certainly be more complicated (lawsuits, arbitration) and likely more expensive.

So, if you are eligible, the Sunrise Period provides you an excellent opportunity to protect your brand at a comparatively low cost and with a pretty easy registration process. There may be complications—for example, if an adult entertainment provider legitimately shares your brand and has already registered the .xxx during a separate Sunrise Period—but on the whole, it’s the best and earliest chance you have to help make sure your brand stays, as best it can, under your control on the Internet.

Fall Events: Oregon Restaurant & Lodging Association Annual Convention, Washington Lodging Association Annual Convention, ZZIF, Travel Distribution Summit and Others

Greg Duff — Fri, 26 Aug 2011 14:22:39 -0800

Fall is upon us and like every fall, there is no shortage of upcoming travel and tourism industry events to attend. Over the next few months, our team will be busy attending and speaking at a number of industry-related events.

Upcoming events include:

ZINO Society’s ZZIF (ZINO Zillionaire Investment Forum) – September 13, 2011 (Seattle). I will be moderating a panel on Hospitality, Food and Leisure at ZINO’s premier funding event for start-up and early stage companies. Panelists include Kurt Dammeier (Founder, Sugar Mountain Capital), Tom Douglas (Founder, Chef, Restaurateur, Tom Douglas), Curtis Kopf (Managing Director at Alaska Airlines), Howard S. Wright III (Partner & CEO, SH Worldwide), and Bob Seidel (Corporate Finance & M&A). Additional information can be found here.

EyeforTravel’s Travel Distribution Summit North America 2011 – September 19 & 20 (Las Vegas, NV). I will be attending this event focused on Marketing & Social Media, Distribution Strategies, Leveraging the Power of Mobile Media, and Revenue Management & Merchandising Strategies. Additional information about this event can be found here.

Oregon Restaurant & Lodging Association Annual Convention - September 25 & 26 (Bend, OR). I will again be attending ORLA’s annual meeting in Bend, Oregon. In addition, I'll be speaking during a breakout session on how hospitality businesses should handle third parties’ intellectual property, including dealing with patent trolls, music and image licensing, film and video licensing, and managing guest information. Breakouts will take place both Sunday and Monday; this particular program will take place on Sunday, September 25 at 2:45 p.m. If you haven't yet registered, and would like to attend, or would just like additional information, the full agenda can be found at ORLA’s website.

Washington Lodging Association 2011 Annual Convention and Trade Show – October 2-4 (Tulalip Resort Casino, WA). This year’s event will be held at the beautiful Tulalip Resort just north of Seattle. This year I will be moderating a general session on the current state of Washington’s hotel industry with predictions for 2012 and beyond. This year’s presentation will feature a panel of local, regional and national experts and demand generators including representatives from Expedia, PKF, CRG, HelmsBriscoe and the Boeing Company. If you would like more information about WLA’s upcoming annual convention, click here.

Appraisal Institute – Fall Real Estate Conference – October 27, 2011 (Seattle, WA). I will be participating at this year’s Fall Real Estate Conference for the Appraisal Institute’s Seattle Chapter as a panelist discussing current trends in the hospitality industry and hospitality transactions. For more information about the Appraisal Institute and its many upcoming fall meetings, please click here.
Academy of Hospitality Industry Attorneys Fall Conference - November 3-5, 2011 (San Antonio, TX). Both Ruth Walters and I will be attending the upcoming fall conference of the Academy of Hospitality Industry Attorneys. Ruth will be speaking on privacy related issues. If you would like more information about this great group of industry experts or the upcoming fall conference, please click here.

Academy of Hospitality Industry Attorneys Fall Conference - November 3-5, 2011 (San Antonio, TX). Both Ruth Walters and I will be attending the upcoming fall conference of the Academy of Hospitality Industry Attorneys. Ruth will be speaking on privacy-related issues. If you would like more information about this great group of industry experts or the upcoming fall conference, please click here.

Of course, if you have questions, or would like specific information about any of these events, please contact me. Of course, I will be live tweeting (@GregDuff) from each of these events, and watch for future blog posts detailing the latest and greatest from each.

Cease and Desist! Copyright Infringement.

Ruth Walters — Wed, 24 Aug 2011 14:58:27 -0800

(Companion post to “Do You Know What’s Happening on Your Network? Copyright Infringement.”)

A number of organizations, such as the Electronic Frontier Foundation and Chilling Effects, keep watch on what they consider overly aggressive policing of rights on the Internet by owners of copyrights and trademarks. Lately, a couple of extremely irate attorneys have taken up the cause against Getty Images and its ilk, going so far as to call them extortionists. BMI, ASCAP and SESAC are widely loathed in every industry but their own. Copyright owners these days are, depending on who you talk to, defending their rights against millions of infringers on the Internet, or filing lawsuits they never intend to pursue to make money by forcing settlement in a last, desperate attempt to prop up a business model that is doomed to failure in the Web 2.0 age. Either way, there seems to be a significant increase in policing of potentially illegal copying and use of protected materials that may find its way to you.

For example, you might receive a cease and desist or demand letter, or you might just receive a copy of a lawsuit that has been filed in some far-flung jurisdiction in which plaintiff copyright holder is suing John Does 1-7443 for copyright infringement in the form of illegal downloads, uploads and distribution. The complaint will be accompanied by a threatening letter stating that unless you pay $XXXX within a certain amount of time (usually 10-14 days from the date of the letter) to settle the matter, the plaintiff will file a motion to substitute you in for John Doe #436, say, and you will officially be a defendant in a lawsuit. It is believed by some that the copyright holders have absolutely no intention of following through with these lawsuits; rather, the idea is to frighten you into paying the requested settlement amount (or some lower amount that you can negotiate). In my experience, the communications are formulaic; websites are set up with click-through settlement agreements and 1-800 numbers in case you want to pay over the phone. It’s hard to get through to an attorney to actually discuss the matter.

Copyright holders can retain investigators or purchase software that allows them to locate unlawful copies of their materials, including the date, time, file type and IP address associated with the illegal action. They can then file suit against thousands of defendants at once, based solely on the IP addresses associated with the unlawful copying. Because the actual individuals or entities behind the IP addresses are not yet known, the defendants are called John Doe 1, 2, 3, and so on. The court hearing the suit may then, upon a motion by the plaintiff, issue subpoenas to the Internet service providers (ISPs) for the IP address/network for each infringement, who must then in turn disclose the subscriber name and contact information associated with the IP address from which the infringement occurred. ISPs may, but often do not, fight the subpoenas, and eventually, the plaintiff’s attorney finds you and sends you a nasty letter.

Once you’ve been contacted, I suggest you take Greg’s advice about how to deal with patent trolls, particularly steps 1-3. If your employees are illegally downloading porn on their work computers, you need to know that. If you figure out it was most likely a customer using your free Wi-Fi, you need to know that too.

Pending cheaper, more widely available technology and considerable changes in the level of monitoring network users are willing to accept, it is not likely you will be able to prevent infringement on your network. However, if you follow the basic “best practices” mentioned in my first post on this issue, you will go a long way to protecting yourself from being found legally liable for it.

Sample Lawsuit Letter 1

Sample Letter 2 (received after a brief, friendly phone call with a paralegal at the firm)

Washington State Franchise Law Catching Up

Margaret Breen — Mon, 15 Aug 2011 12:54:19 -0800

The Securities Division of the Washington State Department of Financial Institutions has just released a draft bill it is sending to the Legislature next January. The bill would make state franchise law more consistent with the modernized Federal Trade Commission (FTC)Rule governing the offer and sale of franchises.

Since 1970, the FTC Rule on Franchising has required franchisors to prepare and deliver to prospective franchisees an Offering Circular containing information about the management and financial condition of the franchisor, its history of operating franchises, and terms of the underlying contracts, before accepting either a binding contract or any money. The Rule was substantially revised and effective in 2007-2008. Document delivery requirements, which were timed in the sometimes-ambiguous “business days,” are now simplified so that a franchisor must deliver the Franchise Disclosure Document (formerly, the “Offering Circular”) 14 calendar days before the prospective franchisee is committed either by contract or payment. See 16 CFR § 436.2. The Rule also says that, if the franchisor changes any material term of the franchise agreement, the prospective franchisee must have at least 7 calendar days to review the changes before signing or making payment.

The FTC does not review Franchise Disclosure Documents for compliance with the Rule, and it does not give an individual franchisee the right to sue a franchisor for violations. It leaves only the Department of Justice to pursue civil or criminal penalties for violation.

The Washington Securities Division has generally followed the federal Rule, but has taken it steps further to protect Washington franchisees. The Washington Franchise Investment Protection Act, RCW 19.100 and regulations under it have used the federal definitions, but have added a registration requirement. Before a franchisor may make any offer of a franchise (i) to a Washington resident, (ii) for a franchised business to be located wholly or partly in Washington, or (iii) offer and receive acceptance of the contract in Washington, it must first file the draft Franchise Disclosure Document with the Securities Division of the Department of Financial Institutions for merit review. The Division may request changes to make sure that the FDD complies with federal law and contains fairness provisions specific to Washington that protect franchisees (for example, a Washington franchisee must have the right to bring an action against the franchisor in Washington, and has the right to a minimum prior notice of termination of the agreement). The Securities Division will also examine the franchisor’s audited financial statements for financial stability, and may ask for an impound, surety bond, or deferral of initial fees if needed to ensure that a franchisor can actually do all it has promised to get a franchised business up and running before taking initial franchise fees.

The proposed revisions make Washington law more consistent with the new federal Rule. Definitions are made the same; a “prospective franchisee” has the same meaning as in the federal regulation, and the disclosure is now a “disclosure document” rather than an “offering circular.” The law has always said that the Director of the Department of Financial Institutions shall be guided in making rules for disclosure by the guidelines adopted by the North American Securities Administrators Association; it now specifically adds the Federal Trade Commission as a source of guidance. This suggests that the Washington state lawmakers and administrators may intend to have Washington courts consider legal developments in other states in interpreting and applying our law, and brings Washington closer to a more uniform interpretation of the laws.

The process of registration has always been paper-intensive, and three states that impose registration requirements now accept or require documentation to be submitted on CDs; California has used these to make an extremely useful public database available. Language in the bill expanding the definitions of "filing" a "Record" to include retrievable electronic formation suggests that Washington is on its way to implementing a similar system.

Finally, the Act revises the timing for requesting a hearing from fifteen to twenty calendar days to be consistent with the requirements set forth in Washington's Administrative Procedure Act, RCW 34.05.413. If you would like more information about these proposed changes, or have questions about franchising generally, please contact me.

Patent Trolls - Not Just for Technology Companies Any More

Greg Duff — Thu, 11 Aug 2011 15:13:14 -0800

Lately, we’ve been hearing from a number of our clients and friends in the industry of a startling increase in the number of letters and emails alleging patent infringement. As hospitality- and restaurant-industry businesses become bigger and bigger users of patentable technology, we expect we may see many more of these claims. In an effort to provide a straightforward set of guidelines to our clients and friends, I went to my litigation partner, Tom Richardson, who happens to be defending a number of alleged patent infringement claims right now, and good friend and patent attorney, Charles Moore, and asked them for a streamlined checklist of how to handle receipt of such a letter or email. Tom brings over 35 years of litigation experience to a broad range of complex cases, including anti-trust and business torts; securities; trademark, copyright and patent disputes; complex commercial contract cases; and product liability and warranty claims and risk avoidance. Charles is a patent attorney with the Portland, OR intellectual property firm of Alleman Hall McCoy Russell & Tuttle, LLP, where he represents clients in a variety of patent matters, including helping them defend against patent troll claims, and preparing and prosecuting patent applications before the U.S. Patent and Trademark Office. Charles also has over 13 years of in-house practice, most recently as Senior IP Counsel with Hewlett-Packard Company. Here are their suggestions:

Patent litigation filed by non-practicing entities, or “patent trolls,” has proliferated in recent years. The business model of the typical patent troll focuses on acquiring, licensing and litigating patents, most commonly against technology-based companies. Defendants in such suits face unique challenges, as most patent trolls do not sell products, provide services or engage in traditional business activities related to their patents. Hence the plaintiff-trolls are not subject to counterclaims often available to standard patent litigation defendants, such as patent infringement, unfair competition, and antitrust claims.

More recently, patent trolls have expanded their targeting to include traditional brick and mortar businesses like hotels and restaurants that do not make or sell the allegedly infringing products. Instead, these companies simply use the products in conducting their business or providing services to guests and customers. Additionally, in most cases these companies acquired the products from third parties, and thus have no or limited knowledge of the underlying technology that is alleged to infringe.

Innovatio Suit

A recent example of a patent troll targeting brick and mortar businesses is Innovatio IP Ventures, LLC (“Innovatio”). Earlier this year Innovatio acquired a family of 30 patents allegedly covering wireless Internet (“WiFi”) technology used in wireless local area network products, such as routers. The company then began a widespread campaign asserting the patents against traditional brick and mortar businesses, such as hotels, bakeries, and grocery stores. None of these businesses make or sell the accused technology, but merely use the products to provide wireless Internet services to their customers.

In March 2011 Innovatio sued 10 hotels, restaurants and grocery stores in the Northern District of Illinois for patent infringement, asserting that wireless Internet services provided by the defendants in their establishments infringe Innovatio’s patents[1]. In the suit, Innovatio is asserting 17 patents containing 340 claims. Infringement of just one of the 340 patent claims can mean liability for a defendant. Since filing this initial suit Innovatio has continued sending cease and desist letters to other retailers demanding that they take licenses to the patents. The company has also filed four additional infringement suits in various jurisdictions targeting other brick and mortar businesses, including suits in the Middle District of Florida and the District of Nevada. In May 2011 two suppliers of accused products, Cisco and Motorola, filed a declaratory judgment action in the District of Delaware for non-infringement and invalidity of the asserted Innovatio patents.[2]

Unfortunately for many of the brick and mortar businesses accused of infringement, patent litigation is unfamiliar territory. Upon receiving a cease and desist letter the business must quickly decide whether to fight the claim or pay a substantial license fee.

You’re in a troll’s crosshairs – now what?

If a troll accuses you of infringement, how do you protect your business while maximizing your chances of successfully ending the dispute? Here are a few suggestions:

1. Don’t Ignore. Don’t throw the letter away or delete the email because it seems preposterous or impossible to understand. Patent infringement is a strict liability legal rule. Even if your intentions are good, and you have no knowledge that any device or system in your property contains patented technology or processes (and in any event surely only the supplier of the device or system could be liable) —think again. If there is a true infringement all infringers can be held liable.

2. Get Help. Contact experienced litigation and/or patent counsel to evaluate the claim and patents at issue. Knowledgeable counsel can help you quickly decide whether to fight the case, take a wait-and-see approach, or pay a license fee to exit. Patent infringement litigation is particularly expensive, and costs and fees in patent troll cases are often a larger consideration than in standard cases against competitors involving core technology or business issues. When considering taking a license, you must also consider the risk of marking yourself as an easy target for future assertions.

3. Stay Off the Radar. Trolls often take a shotgun approach in their letter-writing campaigns, and quickly focus resources on any company that makes contact. While you should certainly perform appropriate due diligence to analyze the merits of the claim, an effective strategy often includes ignoring the troll’s requests for discussions.

4. Seek Indemnification. Engage your suppliers of the accused technology or providers of the accused services and ask them to defend you. If your contracts include defense/indemnity provisions, tender your claim promptly. In cases such as the Innovatio suits, suppliers of the products at issue may be highly motivated to defend their customers.

5. Contact Competitors. Reach out to others in your industry who have received similar letters. In troll assertions your competitors may become allies in formulating defenses and strategies. Fighting these cases together makes more sense than fighting alone. Also consider joining or forming a joint defense group to exchange information and share costs and expenses.

If you'd like additional information about patent troll litigation or any other topic covered in this blog, please feel free to contact me.
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[1] Innovatio IP Ventures, LLC v. ABP Corporation, et al., Case No. 1:11-cv-01638 (N.D. Ill Mar. 8, 2011)
[2] Cisco Systems, Inc. and Motorola Solutions, Inc. v. Innovatio IP Ventures, LLC, Case No. 1:11-cv-00425 (D. Del. May 13, 2011)

Two Proposed Bills to Watch in the Local Hospitality Industry

Mike Brunet — Thu, 04 Aug 2011 09:27:54 -0800

As lawyers, we’re responsible not only for knowing the existing law, but also keeping a close eye on proposed legislation. This week, Employment law specialist, Mike Brunet, highlights two proposed bills, one national and one local, that could have a huge impact on the hospitality industry.

On the national front, the National Labor Relations Board (NLRB), which publishes rules applicable to unions across the country, recently issued a proposed rule that has the potential to make unionization easier. It does so by changing various aspects of the procedure for union election campaigns. The most significant change is a shortened time frame between the date that union proponents file campaign documents to propose the creation of a union and the date that employees vote on whether to create a union. A process that normally takes weeks (median time frame is 38 days) could now take only 10 days. The shortened time frame is significant because it will give employers much less time to create and distribute educational materials to employees about the advantages and disadvantages of unions. Union proponents are not similarly pinched for time, given that they can prepare their entire campaign without disclosing it publicly until the date that it is filed. Other issues of concern for employers in the new proposed rule include:

Disclosure of private employee information. Pursuant to the rule, employers must disclose employee telephone numbers and email addresses, in addition to other private information. This mandatory disclosure violates principles of employee privacy, and could lead to worker complaints.

Deferral of disputes. The proposed rule defers litigation of certain disputes, such as the eligibility of voters in union elections, until after the elections are held. At that point, it may be too late to change the result of the election, even if it is held again.

The NLRB is currently seeking comments on the proposed rule, and will accept comments until August 22, 2011. If you would like to comment, you can do so by clicking on the following link: http://www.regulations.gov/#!submitComment;D=NLRB-2011-0002-0001.

Locally, the Seattle City Council is considering an ordinance that would require every employer with employees working in Seattle to provide those employees with annual paid sick leave. As you are likely aware, a number of Federal and State laws require employers to provide unpaid sick leave to eligible employees for various purposes, such as for medical care, military duty, and jury duty. It is sometimes difficult for employers to navigate these various laws to determine which ones apply, whether their employees are eligible, and what leave they must provide.

On the bright side, the proposed ordinance would simplify that process. It applies to employers of any size, all employees working 80 or more hours per year in Seattle are eligible, and it provides paid leave for employees to care for their own or their family members’ medical conditions, or to seek assistance related to domestic violence, sexual assault, or stalking. The amount of paid leave that must be offered varies depending on the size of employer, from 5 to 9 days per year.

Although it is more straightforward than the web of existing unpaid leave laws, the proposed ordinance would impose a significant cost on employers that they do not currently bear. Studies of the ordinance suggest that employers’ ability to provide the leave required by the proposed ordinance increases with size, so that small businesses would be most heavily burdened by the legislation.

The Ordinance is currently being considered by the Seattle Council Committee for Housing, Human Services, Health, and Culture. It will undoubtedly be vetted in multiple public hearings if it is passed out of committee, as there is already considerable controversy surrounding the bill.

Be sure to check back here for additional coverage of the proposed legislation.

Seattle Tourism Improvement Area Proposed

Greg Duff — Wed, 13 Jul 2011 09:56:32 -0800

We rarely publicly celebrate the successes of our hospitality and tourism clients. Tuesday's launch of the proposed Seattle Tourism Improvement Area (STIA) initiative at The Pacific Science Center is one of the best reasons I've seen in some time to break that rule.

The Seattle King County Convention and Visitors Bureau (SKCCVB) and the Seattle Hotel Association (SHA) have much to celebrate. Tuesday's well attended press conference, which included presentations by Councilmembers Tim Burgess and Jean Godden, SKCCVB President, Tom Norwalk, Seattle Mayor, Mike McGinn, and King County Executive, Dow Constantine, was the culmination of months of hard work and planning by the SKCCVB, SHA, the Seattle City Council (specifically, Tim Burgess), the Seattle City Attorney's Office and others. Relying on Washington statutory authority that permits the formation of Business Improvement Areas (RCW 35.87A) to support economic development through a variety of authorized activities, this group of local tourism industry leaders and supporters produced an initiative that garnered the support of 41 of the 53 downtown Seattle hotels proposed to be affected by the initiative, if enacted. If successful, the initiative will assess downtown Seattle hotels with 60 or more rooms $2.00 per occupied room per night, resulting in the creation of a $5 - $6 million annual fund dedicated to the promotion of leisure tourism in the City of Seattle. With the adoption of this initiative, Seattle will join the growing list of large West Coast metropolitan areas (e.g., Los Angeles, San Francisco, San Diego, Anaheim) that have resorted to self-assessed funding mechanisms to provide needed financial support to tourism.

The initiative now heads for the City legislative process, including a public hearing scheduled for August 8 at 5:30 p.m. before the City Council. If you are a member of the local tourism industry, are affected by the local tourism industry or just want to support the local tourism industry and its many benefits to the City and region, I encourage you to contact the Seattle City Council to support this important City initiative.

Richard Conlin, Council President, Position 2
Sally Bagshaw, Position 4
Tim Burgess, Position 7
Sally J. Clark, Position 9
Jean Godden, Position 1
Bruce A. Harrell, Position 3
Nick Licata, Position 6
Mike O'Brien, Position 8
Tom Rasmussen, Position 5

Mailing Address:
Seattle City Council
PO Box 34025
Seattle, WA 98124-4025
council@seattle.gov

Recent Press Coverage:

7/12/2011 - Puget Sound Business Journal - "Seattle hotels consider $2-per-night tourism tax" http://www.bizjournals.com/seattle/morning_call/2011/07/seattle-hotels-consider-2-per-night.html

7/12/2011 - KING 5 News - "Seattle hotels to charge $2-a-night tax for tourism campaign" http://www.king5.com/news/local/Seattle-hotels-proposing-2-fee-for-hotel--125408588.html

7/11/2011 - Hotel Online, "Seattle hotels seek $2-a-night tax for tourism campaign" http://www.hotel-online.com/Neo/News/2011_Jul_12/k.SEG.1310496257.html

7/11/2011 - Seattle Times, "Seattle hotels seek $2-a-night tax for tourism campaign" http://seattletimes.nwsource.com/html/localnews/2015580659_hoteltax12m.html

If you would like more information about the proposed STIA, or are interested in exploring the possibility of creating your own Business Improvement Area to provide or supplement important City services or objectives, please let me know.