Author: Artaev at Law

Dan Artaev is an expert attorney, specializing in business law issues that affect modern high-tech businesses. Dan’s international background, as well as 10+ years of experience in private business litigation, contract law, and as a government labor lawyer are especially valuable to his clients. Dan is also a proud husband, dad, and cat owner with many hobbies, including triathlon training.

e-mail: dan@artaevatlaw.com

What is a Self-Directed IRA and Is It Legal in Michigan? 5 Essentials to Know Before Taking Control of Your Retirement Accounts.

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You may have seen YouTube videos or advertisements touting the merits of the self-directed IRA (“SDIRA”) as a “magic” way to leverage your retirement accounts and outperform the stock market by investing in private companies, real estate, gold, and even cryptocurrency. SDIRAs are perfectly legal when done right and for the right reasons, but unfortunately there is nothing “magic” about them. Nor are they appropriate for everyone. They are a sophisticated investment tool for persons who want to diversify their retirement account holdings and invest in something other than the stock market or mutual funds. It also gives the beneficiary (or owner) direct control over the investments, rather than relying on a bank or investment firm like Merrill Lynch to choose what stocks to buy. An SDIRA can invest traditional securities like stocks and bonds, and also in rental properties, precious metals, and yes, even cryptocurrency.

As an IRA, the SDIRA enjoys certain tax benefits (similar to a traditional IRA or 401k). There is also a self-directed Roth option. Federal law has a complicated set of rules and restrictions for SDIRAs because of the potential for abuse by SDIRA owners, and the IRS field manual and policies contain detailed instructions regarding various schemes and situations to spot the prohibited transactions. Violating these rules has significant tax consequences – an illegal transaction effectively distributes all assets of your retirement account early, with retroactive capital gains liability and penalties.

It goes without saying that you should hire an experienced professional to advise you on the SDIRA structure. Not all attorneys and accountants are knowledgeable and experienced in this area, so make sure you are talking to the right person. While there is a lot to know about SDIRAs and books have been written on the subject, here are 5 essentials to know if you are thinking about taking control of your retirement investments.

1. An SDIRA is not a source of start-up capital for your small business. One common misconception is that an SDIRA can fund a transition from “corporate America” to “small business owner.” That is not the case – the IRS rules prohibit related-party transactions. For example, you cannot use the SDIRA to invest in a used-car dealership and then you work at the dealership and draw a salary, commissions, or some other compensation personally. Nor can you use the SDIRA to loan money to your business, even if the transaction is commercially reasonable, papered, and your business pays market interest on the loan.

2. An SDIRA cannot buy real property from you or your family, or for you or your family to live in or use. Another misconception is that since real estate is a common SDIRA investment, you can transfer your mortgage to the SDIRA and basically pay interest to your retirement account on your house. Or, that the SDIRA can invest in rental or vacation property that your kids can use during winter break. Self-dealing with the SDIRA is prohibited. You cannot sell property from your own self to the SDIRA. Nor can you personally benefit from the SDIRA’s ownership of property, such as for example staying at the property or letting your kids use it during vacation.

3. Using a corporate entity as a conduit for investing is a good idea, but it must be set up in the right way. A common structure for investing is to create an LLC or corporation for the SDIRA to own 100% – which then can then create its own bank account, own property as the LLC, and protect the SDIRA and its owner from liability. For example, if the investment is a rental property and a tenant is injured, the tenant would be limited to suing the LLC (and the property insurance would pay), instead of the entire IRA or the IRA owner personally. That is not to say that the IRA is somehow immune from bad investments, creditors, or losses. Rather, the IRA/LLC structure allows to compartmentalize and limit liability to certain assets. Another important thing about the LLC structure is that a normal operating agreement does not work for an LLC that will be owned by an SDIRA. Special provisions are necessary to comply with IRS rules, as well as certain restrictions that preclude prohibited transactions and self-dealing. The custodian for the SDIRA will likely require a review of such an operating agreement before creating an SDIRA.

4. A special SDIRA custodian needs to be involved to create and administer the SDIRA. Not all banks or investment companies handle SDIRAs. This is not because there is something illegal about them – rather, self-directed investments are more expensive to administer and require more direct oversight than a traditional mutual fund, index fund, stock, or bond investment. Special SDIRA custodians that meet certain federal criteria exist to serve as administrators for these accounts. Because of the higher involvement, they usually charge higher administrative fees. They also will require documents (like the operating agreement or corporate bylaws if you are using a corporate entity structure). Some may even require an opinion letter from an attorney or qualified financial advisor attesting to the legality of a structure before they open your account. And, to the frustration of some, the custodian cannot give financial or legal advice to their clients.

5. Even if you do everything right, you may still be audited or end up in tax court. The IRS has spent a lot of time and resources litigating SDIRA cases and structures. They have lost some cases and won others. The bottom line is that unless you want to invest tens of thousands of dollars into making precedent and trailblazing new law in the area, conservative investing is your best bet. Simple is better. The golden rule is this: passive investments are ok, active investments are prohibited. So long as you stick to a conservative investing approach, do not commingle personal and SDIRA business interests, and treat the SDIRA as an investment opportunity for your retirement account, you will be in good shape. However, there are no guarantees that you will not have to defend your structure in tax court, and the more entities, companies, and investors are involved, the higher the risk.

In sum, SDIRAs are out there and make it possible to leverage your retirement assets into self-directed investments. Real estate, privately-held businesses, precious metals, and even debt portfolios are all potential avenues to receive greater-than-market returns for your retirement account. Or, it is also a great way to lose your entire nest egg if you invest in the wrong venture. Even when making a prudent investment, it is critical to do it right and act only with the counsel of experienced attorneys, accountants, or financial advisors. This is not a simple area and is rife with potential pitfalls and hazards. Use caution.

More questions? Thinking about funding your retirement through an SDIRA? Contact Dan Artaev by email or call or text to set up your initial consultation.

Disclaimer: This guide is for general informational and promotional purposes only. Nothing herein constitutes legal, investment, or tax advice. Every situation is different and faces its own unique set of challenges. Do not take any action or sign any contract until you have obtained specific guidance from a qualified professional.


© 2021 Artaev at Law PLLC. All rights reserved.

Categories
independent contractors

Are Non-Compete Agreements Enforceable Against Independent Contractors in Michigan?

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This is one of those gray legal areas where the answer is “it depends on the facts of the situation.” Previously, I wrote about the basics of non-compete and non-solicitation agreements that are becoming increasingly common in all industries. At their core, non-compete agreements restrain the free labor market, and are therefore analyzed under the Michigan Anti-Trust Reform Act (“MARA”) (MCL 445.774a), which sets out a four-factor “reasonableness” test for the agreement. To be enforceable, the non-compete must: (1) Protect a reasonable competitive business interest; (2) Be reasonable in terms of duration; (3) Be reasonable in terms of geographical area; and (4) Be reasonable in terms of the the type of employment or business affected. Although the four-factor test in MARA expressly refers to “employer” and “employee,” lawyers and businesses frequently cited the same test when evaluating non-competes in other relationships, such as between two sophisticated business entities or an independent contractor.

In a 2017 opinion, Innovation Ventures v. Liquid Manufacturing, the Michigan Supreme Court clarified that the MARA test only applies to employment relationships. A different test applies to commercial agreements between sophisticated business entities. The case involved the manufacturer of 5-Hour Energy, and the Court looked at the plain language used by the Legislature to determine that the test does not apply to agreements between businesses. The Court further explained that MARA does not set forth a test for commercial agreements, but instead instructs courts to look to federal anti-trust law for similar legal analysis. The applicable test is the so-called “rule of reason,” which can be summarized as whether, under all relevant facts, the covenant unreasonably restrains competition. While the test may seem similar to the MARA four-factor analysis, it is different because it focuses on the reasonableness of the effect on the free market, rather than the impact on the restrained party.

What about independent contractors? Can a hiring party insist on a non-compete as part of the independent contractor agreement? And if so, what are the parameters for a valid non-compete for an independent contractor? First, parties are generally free to contract for anything, and so an independent contractor may certainly agree to a non-compete clause as part of their contract. Second, the non-compete will be evaluated under the same “rule of reason” as an agreement between two sophisticated commercial entities. This is because an independent contractor is not an employee – thus MARA’s four-factor test does not apply. Where MARA does not apply, the Legislature instructs courts to look at federal anti-trust law. Thus, the outcome is the same as with commercial contracts under Innovation Ventures. That means the rule of reason applies and the court will look at the effect of the restraint on the relevant market.

In applying federal anti-trust law, there is also a concept called a “per se” anti-trust violation. A “per se” violation is conduct that violates Section 1 of the Sherman Anti-Trust Act by its very nature and does not require proofs of the actual anti-competitive effect or the relevant market. Simply put, a “per se” anti-trust violation is one where there is no redeeming competition-facilitating effect. A classic example in the employment arena is the low-wage hourly worker non-compete. A restraint on an $11-per-hour janitor precluding him or her to work for a competitor serves no legitimate purpose whatsoever and is clearly abusive. A court will not enforce such a “per-se” violation. The independent contractor analysis would be similar – if there is no legitimate pro-competitive justification for the non-compete, it may not be enforceable.

One final word of warning. If you are a business considering or using non-compete clauses in your independent contractor agreements, some courts consider such clauses indicative of an employment relationship. If an individual or government agency (like the worker’s compensation agency) challenges your classification, a non-compete clause is evidence of control that weighs in favor of finding someone is an employee. And, if someone is misclassified as an independent contractor, there are a myriad of penalties, fines, and other problems that you may face.

Non-compete and non-solicitation clauses and contracts are becoming more and more standard. However, it is a mistake to blindly use them for all your employees or independent contractors. Each situation warrants its own analysis. Otherwise, your business risks not only losing non-compete litigation, but also risks other unintended adverse effects, such as a finding of an employment relationship where one was not intended.

More questions? Need a non-compete reviewed or drafted for your situation? Contact Dan Artaev by email or call or text to set up your initial consultation.

Disclaimer: This guide is for general informational and promotional purposes only. Nothing herein constitutes legal advice. Every situation is different and faces its own unique set of challenges. Do not take any action or sign any contract until you have obtained specific guidance from a qualified professional.


© 2021 Artaev at Law PLLC. All rights reserved.

Who Owns Your Invention? The Concepts and Inventions Assignment Clause, Work-For-Hire, and the Shop Right Doctrine.

In the modern employment context, there are plenty of on-boarding documents, including a handbook, that the employee may be asked to sign as part of getting hired. Lurking in these pages of seemingly innocuous workplace policies may be critical obligations and restrictions that significantly restrict the employee’s rights. For example, non-compete and non-solicitation clauses are becoming more and more common in all industries. Also, there may be another Trojan Horse to watch for, especially in high-tech industries – the so-called “concepts and inventions assignment clause.” This clause essentially assigns all of the employee’s inventions, innovations, and discoveries that they make or create while working for the employer to the employer. And even in the absence of such a clause, the employer may claim rights as work-for-hire, or have limited rights under the “shop right doctrine.”

A “concepts and inventions clause” is a contractual obligation that is becoming increasingly standard in employment documents. It can be stand-alone, part of an employment contract, or even hidden in an employee handbook or manual. The clause gives the employer automatic and exclusive rights to inventions, conceptualizations, and other ideas created during the employer-employee relationship. The idea is that since the employer is paying the employee to dedicate 100% of his or her time to the business, and the employer is also providing the tools, space, and other means for the employee to work, the employer owns all of the fruits of the employee’s labor. The scope and breadth of the contract is up to the parties. However, some states (most notably California), limit the scope of such agreements by law. In those states, the agreement may not cover independent inventions – meaning inventions that are created on the employee’s own time without using any of the employer’s resources. For example, if an employee is a software designer, but goes home and creates a new type of mechanical circular saw in her garage during evening hours. Even if there is a general assignment clause, it likely would not be enforceable. Michigan does not have a law limiting the scope of the assignment clause/contract, which means that a Michigan employer could potentially claim rights to the new saw design, even if the invention has nothing to do with the employer.

In a high-tech context, a “concepts and inventions clause” may also list express exclusions. If Company A is hiring an inventor, the inventor would list all of the prior inventions that Company A has no rights to and the inventor retains. At the same time, the list benefits Company A because the inventor cannot later claim rights to an invention that is not on the list. Additionally, the clause (whether it is stand-alone or part of a broader employment agreement) often contains an integration clause, which prevents parties from claiming they had a side-deal or different understanding. And, there are “teeth” to provide that in case of a litigated dispute, the losing party would pay the prevailing party’s attorney fees, thereby discouraging lawsuits over ownership of an invention.

A similar situation occurs when an employer hires an employee for a specific purpose – that is to create a work-for-hire. Even without a contractual assignment clause, the employer will own the rights to any resulting invention where it is the outcome of the specific employment relationship. For example, Company A hires an engineer to invent a new chassis platform to use across Company A’s pickup truck line. The work results in a patentable invention and Company A owns 100% of the rights to the chassis. Even if the inventor did some of the work on his or her own time or otherwise made out-of-work contributions to the project, it would be considered a “work-for-hire” where the employer – or the “hirer” – owns all rights to the resulting innovation. The owner Company A is then free to license, sell, or otherwise assign the patent rights, and keep all of the profit, without providing the inventor with any additional compensation.

What about the situation where there is no “concepts and inventions clause” and there is no specific “work-for-hire” arrangement? Does the inventor always own 100% of the rights to his or her invention, even if created on company time? No, because of something called the “shop right doctrine.” The doctrine is a common-law concept (meaning it is a principle created by the courts, as opposed to the legislature). In general, the doctrine allows the employer to continue using the invention, but precludes the assignment or licensing of the invention to third-parties. In other words, the employer gets a royalty-free limited license to use the invention, but cannot sell it. The doctrine also requires that the invention be created using an employer’s resources, such as a laboratory, computer, or analytical equipment. The shop right doctrine is a defense to patent infringement that the employer can rely on if sued by the inventor – it is not an affirmative or assignable right.

What does this mean for employers and employees? If you are hiring or being hired, and anticipate the relationship may produce a valuable invention, concept, or other innovation, you should consult with an attorney to ensure your rights are protected. After-the-fact litigation is not only costly, but incredibly uncertain in outcome, and should be avoided as much as possible. As an employer, you want to make sure to have solid and well-defined assignment clauses for your employees to sign. And, because at least 9 states have statutory limitations on the scope of the assignment agreement, it is best practice to draft any assignment to be enforceable across the entire United States. As an employee, you need to make sure you are not inadvertently signing away more rights than you intend to, and are fully aware of your respective rights and obligations.

On a final note, these concepts (as well as other intellectual property concerns) also apply in the university context. Professors and graduate students are constantly innovating and creating, but whether they or the university own the final outcome may be something that they have not considered. In a famous example, Larry Page (one of the founders of Google), is listed as an inventor on one of the key patents that served as the foundation for Google. However, Stanford University owns the patent because Larry Page was a Ph. D. student there at the time of the invention. Consequently, Google had to license the patent from Stanford University for a hefty nine-figure sum. So while a university may not claim rights to inventions made by students as a matter of policy, they will likely claim rights to inventions made by employees. A graduate student or a post-doc is like a professor, in the sense that they are often employees of the university. Your specific institution likely has a tech transfer department, as well as its own policies and regulations. Again, an experienced attorney can help you protect yourself and stay informed of your rights and obligations.

Questions or concerns about your situation? Contact Artaev at Law PLLC to set up your initial consultation or call or text Dan today.

Disclaimer: This guide is for general informational and promotional purposes only. Nothing herein constitutes legal advice. Every situation is different and faces its own unique set of challenges. Do not take any action or sign any contract until you have obtained specific guidance from a qualified professional.


© 2021 Artaev at Law PLLC. All rights reserved.

So You’ve Designed a Board Game. Do You Need a Patent, Copyright, or Trademark?

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Board games are still big business. Even before the pandemic limited entertainment options, the board game industry already accounted for $1.8 billion of sales in 2013 – or almost 10% of the entire toy market in the United States. In the first half of 2020’s lockdown, Hasbro reported a 4% increase in gaming revenue over the same six month period in 2019. The global board game market is projected to grow to over $20 billion by 2025, and the ubiquity of online retail has made board games a truly global industry. And, digitization of board games (making them available on smartphones and tablets) has only increased the popularity and accessibility of these products for mainstream consumers.

Although the board game market is not as big as video games, board games have significantly lower development costs and can be designed without specialized knowledge like graphic design, coding, etc. Like writing a book, anyone can do it, so long as they come up with a good concept, it is entertaining, and the execution works. For example, one of the most popular games that has made millions of dollars is Cards Against Humanity. An R-rated version of Apples of Apples, the design and concept is extraordinarily simple – it consists of questions or concepts on black cards, and words or sentences to create an absurd/funny/offensive response on the white cards. Yet the concept was so well-executed and entertaining that it became an instant hit.

The relative simplicity of board game design however poses a host of unique legal issues. As a developer, you may have already been threatened with legal action, or worse, have had to defend yourself from a lawsuit. Or, perhaps you are considering legal action against a blatant copy of your original idea. Protecting your concepts and business requires an understanding of the three primary forms of intellectual property protections: copyright, trademark, and patent law. So what do you need? As always, the answer is “it depends.”

Copyright

Intuitively, board games should enjoy some sort of copyright protection. After all, they consist of booklets, printed boards, and other materials not dissimilar from literary works. As a general rule, the rules, boards, artwork, and other aesthetic or literary elements to a game are copyrightable and protected as such. These protected elements are referred to as the “theme” of the game. Distinct from the “theme” of the game are the game mechanics, which cannot be copyrighted. “Game mechanics” is the actual gameplay – which can be as simple as roll the dice and move a token. The United States Copyright Act codifies this concept and expressly states that copyright protection does not extend to “any idea, procedure, process, system, method of operation, concept, principle, or discovery, regardless of the form in which it is described, explained, illustrated, or embodied in such work.” 17 USC 102(b). As an example, the “Monopoly” name, mascot, property names, and token designs would all likely be protected under copyright law. However, the game play concept itself – that is moving around the board, buying up properties, and charging rent to other players who land there – is not. There is no bright line rule however, especially given the increased complexity of board games and card games, and each situation will be driven by its own unique factors.

Trademark

Trademark protection exists chiefly to prevent customer confusion and to protect the integrity of a brand. In the board game context, trademark will primarily protect the name of the game, but can also protect unique “trade dress” elements that constitute unique game board designs, cards, and tokens. For example, in addition to owning the trademark for “Monopoly,” Hasbro also registered recognizable designs from the game, including the railroad symbol, the “jail” and “go to jail” images, and the layout of the “Monopoly” game money. As an aside, the actual status of the “Monopoly” trademark is unsettled, as following years of legal proceedings, a 1983 appellate court case decided that “Monopoly” had become a generic terms and no longer was associated with the source publisher, Parker Brothers. Congress responded to the ruling by amending the Lanham Act to clarify that purchaser motivation is not the test and that a mark can only be deemed generic when its “primary significance” to the general public is the generic description of particular goods or services.

Patent

Patents are most often associated with scientific discoveries and mechanical devices. In the board game context, a patent may be available to protect a game’s unique mechanics. Again, we are not talking about general methods of play here, but rather something truly unique. A so-called utility patent could be available if the mechanics meet the unique and non-obvious test. However, patent protection is fairly expensive to obtain and to police, so while patent protection may be available, it may not be practical. Also, any sort of public disclosure, such as playtesting, may defeat patent claims. “Monopoly” was actually patented in 1935 by Parker Brothers, with the description including the rules, the “apparatus of a board game consisting of a continuous path around the board,” and other claims, including the Chance and Community Chest cards. The patent has little value however, as it expires in 20 years, and is so specific that it likely limits the protective scope of the patent itself.

Other Intellectual Property Concerns

The most two common questions designers ask are: (1) I am making a game; how can I prevent someone from copying it? and (2) I am making a game that is similar to X; how do I avoid getting in trouble for copying? While you may have taken steps to protect your intellectual property, the fact is that board games are especially vulnerable to knockoffs and plagiarism. The low development cost and lack of “trade secret” type secret components make it simple for an unscrupulous developer to simply take a game, rebrand it, and release it as their own. International law may even become an issue if an overseas company takes and repurposes your idea. By hiring an attorney as part of your team, you can ensure that you have taken the right steps to obtain copyright protection for your rules, art, etc., and that you have properly registered your trademarks. An attorney can also ensure that any contractors – such as artists – properly assign all rights back to the game developer through “work for hire” agreements. Licensing agreements with any publisher must also delineate the rights and responsibilities of all parties. Royalties and assignments must be fair, clear, and definite. If you have a co-designer or a business partner, you must absolutely have a business agreement before your idea starts making money, so there are no surprises or hard feelings. If there are copyright concerns or knockoffs, a DMCA takedown notice or demand letter is often an effective tool to dissuade would-be thieves. Conversely, if you are receive a takedown notice or demand from another designer, you need to have an effective and prepared attorney ready to respond.

Contact Artaev at Law PLLC to set up your initial consultation. We are Michigan’s gaming law firm and we specialize in the unique concerns that you may encounter as a game designer.

Disclaimer: This guide is for general informational and promotional purposes only. Nothing herein constitutes legal advice. Every situation is different and faces its own unique set of challenges. Do not take any action or sign any contract until you have obtained specific guidance from a qualified professional.


© 2021 Artaev at Law PLLC. All rights reserved.

Categories
sports law

Can College Athletes Get Paid in Michigan? Here’s What You Need to Know.

In addition to being an experienced business lawyer, Dan Artaev is a former Division III collegiate tennis player. If you are considering a potential endorsement deal, contact Dan for a consultation to ensure your rights are protected and you are doing it right.

Yes, NCAA athletes can receive compensation for their name, image, and likeness starting in 2023, with certain caveats and limitations. The intellectual property right to one’s name, image, and likeness is called the “right of publicity” and professional athletes, musicians, and other public figures have historically leveraged that right into lucrative multi-million dollar sponsorship contracts. On December 31, 2020, Michigan became just the second state to enact such legislation (California was first with its 2019 Fair Pay to Play Act).

Under current NCAA bylaws, athletes lose their “amateur” status and become ineligible when they receive payment through commercial advertisement, promotion, or endorsement. This new law is intended to prompt the NCAA to revise those bylaws to avoid conflict with the law once it goes into effect in 2023. Presumably, if the NCAA fails to act, Michigan colleges and universities will not be able to abide by the bylaws and no longer be members of the NCAA. Besides Michigan and California, at least 19 other states are in various stages of introducing similar legislation, and this collective action will likely prompt the NCAA to act well before 2023 to bring its bylaws in line with “name, image, and likeness” statutes that are being enacted across the United States.

This does not mean that college players are suddenly free to sign multi-million dollar deals with Nike or Adidas like professionals. Nor does the law give universities the right to pay student-athletes, treat them like employees, or to give them “perks” outside the normal scholarship process. There are important limitations and nuances to consider.

  • First, the Michigan legislation does not take effect until 2023. Again, this is to give the NCAA time to enact a national policy and to update its bylaws to be consistent with state law.
  • Second, the law does not allow student-athletes to sign their own apparel sponsorship deals that conflict with a team’s contract. Essentially, when a student is engaged in official team activities, his or her commercial rights are subordinate to existing team contracts.
  • Third, the new law does not mandate that a college create any special commercial opportunities – rather, it acts as a “you shall not prohibit” mandate. The NCAA cannot bar student-athlete participation solely based on earning compensation from the use of the student’s name, likeness, or image. Colleges themselves also may not reduce an athlete’s scholarship based on an endorsement, nor can they act on behalf of the NCAA to penalize a student-athlete for receiving name, image, or likeness compensation.

Student-athletes will have certain responsibilities under the new law as well. An athlete must notify his or her school’s coordinator at least 7 days before signing any contract so that the school has time to review. In the case of a conflict between a school’s existing contractual obligations and the proposed student contract, it is on the student to renegotiate the terms to avoid such conflict. At the same time, a team’s contract shall not prevent a student-athlete from being compensated for his or her likeness when not engaged in official team activities.

Of course, the NCAA may (and probably will) act ahead of 2023 and moot the need for Michigan’s new law. The National Association of Intercollegiate Sports (NAIA), which is a group of 249 small colleges and universities similar to Division III of the NCAA, already amended its rules to allow athletes to monetize their image. The amendment, effective immediately, to the existing NAIA amateur code allows student-athletes to receive compensation from promoting commercial products, enterprises, and for public appearances, when such commercialization references the student’s status as a college athlete. The NAIA’s progressive and proactive approach thus allows its student-athletes to monetize their image immediately, without waiting for the 2023 deadline.

Finally, a word about the growing esports scene. The NCAA does not govern esports programs and thus the “amateurism” requirement does not apply. Indeed, many college-level esports athletes are former professionals and may continue ongoing sponsorship deals. The National Organization of Collegiate Esports (NACE) has its own set of bylaws, which do limit the number of years an athlete is eligible and require that participants be full-time students in good academic standing. But NACE does not require amateur status or otherwise limit the esports athlete from commercializing their name, likeness, and image.

Whatever your sport, endorsement contracts are complicated and should not be signed without the advice of counsel. Indeed, the new Michigan law expressly encourages student athletes to obtain representation and prohibits a school from interfering with that right. Contact Dan today to set up your initial consultation.

Disclaimer: This guide is for general informational and promotional purposes only. Nothing herein constitutes legal advice. Every situation is different and faces its own unique set of challenges. Do not take any action or sign any contract until you have obtained specific guidance from a qualified professional.


© 2021 Artaev at Law PLLC. All rights reserved.

What’s New for 2021: An Updated Guide for Michigan Employers Navigating COVID Regulations.

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2020 is finally over, yet we are still in the middle of a pandemic, continued restrictions, ever-changing mandates, and regulations. So what’s new for business owners? Restaurants, entertainment venues, and other businesses are slowly seeing a transition to increased capacity. Vaccines are rolling out. There is new interim guidance for athletics from the MDHHS to review if you are in the sports business. Remember that the the federal Families First Coronavirus Response Act (“FFCRA”) expired on December 31, 2020 and has not been extended or renewed. Recall that the FFCRA required paid medical leave, paid child care leave, and offered extended FMLA benefits – including to employees who would not normally qualify for FMLA. While these benefits are no longer mandatory, employers who continue to offer paid sick time for COVID-related reasons, as well as extended FMLA benefits will continue to be eligible for a tax credit to compensate them for benefits offered through March 31, 2021.

From a Michigan law perspective, make sure that you are familiar with the the Michigan COVID-19 Response and Reopening Liability Act, which gives retroactive immunity from tort liability to businesses that have been following the various COVID-19 laws and regulations. Additionally, know your obligations under the new COVID-19 Employment Rights Act, MCL 419.401 et seq., which formally protects employees from COVID-related retaliation and imposes a mandatory quarantine period for employees of at least 10 days from the onset of symptoms, even if they test negative.

I am continuing to update my guide to give business owners some direction in this time of uncertainty. I generally recommend that business owners stay the course and continue doing what they have been doing with respect to COVID safety and employee treatment. You should maintain the same protocols for your customers and employees because OSHA and the Michigan Department of Health have the statutory authority to issue (and have issued) many of the same safety protocols that were previously enacted through executive orders. If you are unsure about your current protocols or otherwise have compliance concerns, retain an attorney to advise you.

Further, even if you are not concerned about government agencies, there is always civil liability. The new Michigan anti-retaliation law imposes retroactive liability to March 1, 2020, and the tort liability shield only applies to businesses who follow current government regulations.

Make no mistake, plaintiffs’ lawyers are already filing a number of COVID-related lawsuits against employers. If you are still without a compliance plan, or your plan is out of date, consider hiring an attorney.

Review the latest guidance from the CDC and the State of Michigan.

The State of Michigan maintains a very helpful State of Michigan COVID FAQ that answer some of the most common questions, including concerns about unemployment insurance, layoffs, and other related concerns. OSHA also maintains an informative industry-specific guide for COVID compliance. Also, review the latest orders from the Michigan Department of Health and Human Services that in large part reenact the same mask and gathering restrictions that were in effect under the Governor’s executive orders.

Pay special attention to the latest MDHHS guidelines for face coverings and social distancing. These regulations expand the capacity restrictions to certain business activities, such as retail stores, libraries, museums, gyms, other recreational sports activities, and others. Specific face covering rules are in effect for all nonresidential gatherings, businesses, and offices. Restaurants are subject to revised and expanded regulations, including limits of six people to a table, table spacing at least six feet apart, and limiting the total number of patrons to 50% of capacity. The MDHHS Epidemic Orders page also contains helpful FAQs, summaries, and infographics to distill the essentials for easy implementation.

The CDC continues to update its guidance for employers, including strategies for reducing COVID transmission risk among employees. These strategies include:

  • requiring sick employees to stay home;
  • identifying where and how workers may be exposed;
  • isolating sick employees; and
  • educating employees about safe practices.

The CDC guidance also has specific business continuity strategies to implement, such as appointing a COVID coordinator, assessing feasibility of remote work, and implementing social distancing and sanitizing policies and practices.

Assess your obligations under OSHA

Even if you run your business from an office building and have never given a second thought to OSHA (Occupational Safety and Health Administration) standards, you need to revisit the applicable safety standards. Under both state and federal workplace safety laws, employers have an obligation to provide a workplace free from recognized hazards that may cause death or serious physical harm to employees. COVID is a source of such potential harm and an employer risks OSHA fines and other sanctions if the employer does not take steps consistent with their general duty. Further, OSHA investigations and violations often form the basis for civil negligence and tort liability, increasing liability potential for employers.

Federal OSHA (which is part of the U.S. Department of Labor) has its own set of guidance for COVID, but at a minimum you should consider whether PPE (personal protective equipment) is required and whether respiratory protection regulations apply.

Develop and implement a COVID preparedness and response plan.

When it comes to defending against an employment lawsuit, there is no substitute for having and implementing a written plan. A written plan is not only an effective management strategy – it is also evidence of due care and compliance with the various governmental rules and regulations. Indeed, if your business is doing in-person work, you are required to have such a plan. If you are still remote and are preparing for a transition to in-person work in the future, having a written plan on day one is a wise and prudent management strategy.

OSHA’s workplace preparedness guide offers a good outline for such a plan. Essential steps include the following:

  • Specifically identifying sources of potential exposure, including risks of exposure to employees from home and community settings, and then specifically matching the controls necessary to address these sources;
  • Updating employee handbooks and issuing interim, COVID-specific policies and guidance to address business management;
  • Reviewing and amending any existing sick leave policies to encourage workers to stay home when feeling ill, and to ensure that existing policies are consistent with the latest governmental regulations that protect employees;
  • Addressing and planning for any business disruption due to reduced hours, remote work, and supply chain modification;
  • To the maximum extent possible, promoting remote work, staggered shifts, or other flexible work arrangements to minimize in-person contact;

Ensure that current polices and practices are free from discrimination.

Having polices in place is all well and good, but does you no favors if they are implemented in a discriminatory manner. Reminder: discrimination remains illegal both under federal and state law. Specifically, new state- and federal-level protections are in place that prohibit adverse employment actions against employees under certain COVID-related circumstances. In short, you cannot discharge, discipline, or otherwise retaliate against someone who is sick, is quarantined, or has contact with sick individuals (like family members.) The Michigan COVID-19 Employment Rights Act prohibits adverse employment actions against employees who do not report for work due to COVID-19 symptoms, report violations, or otherwise opposes an employer who is violating the law.

What this means in practice is that if you are terminating employees, reducing their hours, or even cutting pay, you should do so only after consulting with your attorney. Even if you are not intentionally discriminating against someone, you may be opening yourself up to a complaint or civil rights lawsuit by an employee who feels wronged. Remain flexible, and if you do need to reduce staff, salaries, or hours, do so in an open, even-handed manner that is supported by documented and legitimate business reasons.

Also, remain sensitive to individual employees’ situations. Even if you have a legitimate business reason for discharging someone, you may have to defend against allegations of pretext – meaning that the real reason for the adverse action is due to an employee’s status as a member of a protected class. In other words, if you terminate someone who is a single parent, or has a special health condition, or cares for an elderly individual, you may face a charge of discrimination even if your motive was purely financial and not pretextual.

As always, general anti-discrimination laws still apply. Be sure to provide appropriate training and information on appropriate workplace behavior, and follow all applicable privacy guidelines (HIPPA) when dealing with information about employee health status.

Know that you are allowed to institute certain policies to keep employees safe.

Normally, the Americans with Disabilities Act (ADA) precludes inquiring about an employee’s health information. However, special rules apply during the pandemic, and the following actions are permitted (and in fact, are recommended as best-practice):

  • Asking employees who call in sick regarding whether they are experiencing COVID symptoms;
  • Measuring employees’ temperatures before they are allowed to enter the workplace;
  • Mandating employees leave the workplace and stay home if they experience COVID symptoms; and
  • Requiring that employees returning to work provide statements or other certifications of being fit for duty (i.e. COVID-free).

Employers may also screen potential employees for COVID symptoms as part of the hiring process, provided they do so in a uniform and non-discriminatory manner. A good rule of thumb is if you ask one applicant to take a temperature test, you better be asking all applicants to do the same.

The Michigan COVID-19 Employment Rights Act expressly prohibits employees who test positive for COVID-19 or who experience principal symptoms from coming to work. Likewise, an employer may not terminate an employee on grounds that they are unable to work due to COVID. Additionally, federal emergency legislation continues to require two weeks of paid sick leave for employees who have COVID-19 or are caring for those with the illness.

Make sure to account for and pay hourly employees for all the time worked remotely.

Hourly workers are a special challenge during COVID and the shift towards remote work. The Michigan Wage and Hour Division (which investigates and prosecutes wage complaints) is looking into many cases where hourly employees are not being paid for all time worked. Make sure that your time records are accurate and policies about reporting remote hours worked are clear and in writing.

Underreporting or failing to pay for actual time worked is a serious issue that exposes employers to significant fines and civil liability. This is an area where clear, written polices, as well as communication with your employees is a must.

What else?

There are a number of other topics that employers must be aware of when navigating the myriad of COVID rules and regulations. Here are some additional topics to discuss with your attorney, management, and other outside consultants like CPAs and insurance contacts:

  • Worker’s compensation issues and whether there are any special changes to your insurance policy;
  • Unemployment benefit changes; and
  • WARN Act obligations if you are an employer with more than 100 employees are are considering mass layoffs or plant closures.

The bottom line is plan ahead. While it is impossible to foresee every problem that will arise, a solid plan and a clear set of workplace policies will go a long way. Whether you have resumed in-person work or are getting ready for such work to resume, sound legal advice and consultation is a solid investment.

Dan Artaev is a former Assistant Attorney General with the State of Michigan in the Labor Division, and in private practice has represented numerous employers with respect to employment law matters, including responding to EEOC and wage and hour complaints. Email Dan at dan@artaevatlaw.com or call or text (269) 930-0254 to set up your consultation.

Disclaimer: This guide is for general informational and promotional purposes only. Nothing herein constitutes legal advice. Every business is different and faces its own unique set of challenges. Do not take any action with respect to your business until you have obtained specific guidance from a qualified professional.

© 2021 Artaev at Law PLLC. All rights reserved.

Your Twitch Channel is Worth How Much? Protect Your Right of Publicity in the 21st Century.

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Did you know that celebrities, professional athletes, actors, and other famous people have a valuable property right in their very persona? That property right is called the “right of publicity” and extends to gaming, particularly as streaming platforms like Twitch allow gamers to develop their own brand and following. There is no question that internet personalities like Ninja, Dr. Disrespect, Summit1G, Shroud, and others have their own brands – unique styles that have helped them gain millions of fans. That branding naturally translates into lucrative sponsorships and 6, 7, and even 8-figure exclusive streaming deals that are similar to those enjoyed by celebrities in movies, music, and sports.

However, you don’t have to have millions of followers to develop a brand that has value and should be protected. As a streamer, eSports professional, tournament organizer, or commentator, you may have developed a persona, a unique style, catchphrases, signature moves, and other aspects that may make you especially attractive to your audience. That unique brand is called your “right of publicity.” And protecting that right is protecting your brand – so it is not only critical to protect it from misappropriation (just as you would with a trademarked logo), it is also critical to ensure that you do not unwittingly sign a contract that transfers that valuable right without you receiving appropriate compensation.

The first step to protecting yourself is to educate yourself. Read on.

The International Trademark Association defines the “right of publicity” as:

An intellectual property right that protects against the misappropriation of a person’s name, likeness, or other indicia of personal identity – such as nickname, pseudonym, voice, signature, likeness, or photograph – for commercial benefit.

– http://www.inta.org/topics/right-of-publicity/

Unlike patents, copyrights, and trademarks, the “right of publicity” is not found in any federal statute. Rather, it is a matter of state law and thus varies from state to state. What is more confusing is that some states (like California) have specific laws that expressly protect certain aspects of a person’s identity and set out a statutory process to enforce that right. Other states (like Michigan) do not have statutes that protect the “right of publicity” but recognize that right through the common law (meaning there are court cases that can be cited to support a claim). However, even where a state like California protects only certain aspects of a person’s identity under state law, a person can still raise common law claims to other aspects – in other words, California statutory scheme is not exclusive of the common law. For example, a celebrity’s distinctive voice is expressly protected under California law, but an imitation of that same voice is not. However, a celebrity may still file suit against an unauthorized imitator under the common law even in states where there is a statute. Confused? The main point is regardless of which state you are in, you have rights and remedies to protect your persona from misuse and misappropriation.

So what do you need to prove for a right of publicity claim? Generally, the plaintiff needs to show (1) the use of “identity”; (2) the appropriation of the plaintiff’s “identity” to the defendant’s advantage, whether commercial or otherwise; (3) lack of consent; and (4) resulting injury. The term “identity” is defined broadly and essentially protects any unique personal aspects, such as tone of voice, manner of dress, catchphrases, color schemes, and many other categories. Recently, I wrote about Detroit’s Eastern Market Brewing Co. dealing with a cease-and-desist from Barry Sanders after the brewery released Same Old Lager (a play on the phrase “same old Lions” that describes the teams consistently underwhelming performance and leadership turmoil). The problem was not the slogan or the riffing on the Lions – rather, it was the brewery’s can design featuring a pixilated football player wearing the Lions’ silver uniform with Sanders’ number 20. According to Sanders’ legal team, the brewery misappropriated his “identity” and thereby implied an endorsement or connection that did not exist. In response, the brewery changed the can design to replace the football player with the brewery’s own mascot and Same Old Lager is available once again.

What about parodies and fair use? The right of publicity is not absolute and cannot suppress the right to free speech protected by the First Amendment. Parody, commentary, news, and other so-called “fair uses” are protected from right of publicity claims. Because each situation is different, there is no bright line test, and judges are essentially called on to serve as art critics to determine what merits protection. As a guideline, the courts rely on the “transformative use test” to determine whether the derivative work sufficiently “transforms” the original to acquire its own independent economic value. For example, a t-shirt with a charcoal drawing of the Three Stooges failed the transformative test because the primary value of the t-shirt came from the identity of the Three Stooges. The defendant t-shirt maker misappropriated the economic value associated with their identity, and the fact that the image was a charcoal drawing (as opposed to a photograph) was an insufficient creative element to predominate the work. See Comedy III Productions Inc. v. Gary Saderup Inc., 25 Cal. 4th 387, 58 USPQ2d 1823 (Cal. 2001). In contrast, a comic book series featuring characters based on Johnny and Edgar Winter as half-human/half-worm villains was sufficiently transformative to defeat the musicians’ right of publicity claim. Despite the similarity in names and depiction with long white hair and pale complexion, the court noted that the primary economic value of the comic book was in the “fanciful, creative characters” and not the actual identity of the Winter brothers. See Winter v. DC Comics, 30 Cal. 4th 881, 66 USPQ2d 1954 (Cal. 2003) (66 PTCJ 210, 6/13/03).

As video games have become more sophisticated, they have also become targets of right of publicity claims. In a recent case, Arizona State’s quarterback prevailed against Electronic Arts when their NCAA football game omitted the quarterback’s name, but used his number, position, height, weight, and other characteristics. Other football game cases against Electronic Arts established amateur and retired athletes’ rights to their likeness, even where the publisher changed the jersey numbers and physical likeness. There are many unsettled questions with regard to the law of publicity, especially as new kinds of celebrities and mediums are examined, and the law is constantly evolving.

What does this mean for streamers, eSports professionals, and tournament organizers? Initially, that means you have a protected and valuable right in your identity. For example, there is little doubt that Ninja (probably the most famous Fortnite player and streamer) has a protected right in his image. That includes not only his name and likeness, but his distinctive hairdo, characteristics of his gameplay, and other aspects. Also, be careful what you sign. The right of publicity, like other intellectual property rights, is assignable and can easily be transferred as a part of a contract. For example, many professional eSports contracts require the player to transfer all rights of publicity to the team organization. As an up-and-coming player you may not necessarily care or gloss over that part, but what happens if you develop an independent celebrity? What if you come up with a move, look, style, catchphrase that goes viral? The team would own it, and even if you left, it is possible that the team could successfully enforce that right to your own creation against you. As one of the more bizarre examples, Twitch suspended Dragonforce guitarist Herman Li for playing his “own” music. While details are murky and Li is back on Twitch, the likely reason is that Li assigned his rights to a label, and the label holds the right to demand a proper license from a streamer for the music’s reproduction. Music streaming licenses are a whole different issue – read my FAQ on playing music on Twitch to learn more.

Now that you are educated, the second step to protecting yourself is is retaining the right counsel who knows gaming. Intellectual property rights and licenses are paramount in the digital age. It is more important than ever to consult with a knowledgeable attorney before signing that team contract or sponsorship deal. And, when marketing a new product, attorney review is likewise essential to avoid legal issues that derail your launch. Remember, sharing your marketing idea, new product, or other money-making scheme with your attorney is confidential and is protected by attorney-client privilege. At the same time, failing to consult an attorney at the start can cost you much more later on in responding to cease-and-desist letters and even dealing with a lawsuit. Finally, if you suspect your persona or brand is being misused by someone else, talk to an attorney who can advise you of your rights, and if there is a violation, send a takedown demand or a cease-and-desist letter.

On a final note, the same principles apply to Instagram influencers, podcasters, Twitter accounts, and essentially anyone else who has built an online brand through an online presence. Protect yourself and your labors by doing it right.

Need an attorney who knows gaming law? Contact Dan Artaev by email or by call or text to set up your consultation.

Disclaimer: This article is not intended to be and does not constitute legal advice. Do not take any action or refrain from taking any action based on this article, and always consult with a qualified professional about the circumstances of your particular case.

© 2020 Artaev at Law PLLC. All rights reserved.

Employers: Know Your Obligations Under Michigan’s COVID-19 Employment Rights Act

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In late October 2020, Michigan enacted several important laws that affect employers’ rights and obligations in dealing with the COVID-19 pandemic in the workplace. I have updated my general COVID-19 guide for employers every month, and I have also written specifically about the COVID tort liability shield. Governor Whitmer also signed the COVID-19 Employment Rights Act (“COVID ERA”) – a significant set of Michigan-specific protections for workers that every employer should make sure they know and follow.

The Act itself is not lengthy or complicated. In general, it does two things: (1) imposes a mandatory quarantine for workers and sets forth specific criteria before they can come back to work; and (2) protects workers from retaliation for quarantining due to COVID. Employers must be familiar with and follow the Act for several reasons. The Act authorizes aggrieved employees to file suit in circuit court and collect a minimum of $5,000 in damages. Also, failure to enforce the quarantine mandate in the Act risks losing the tort liability protections of the COVID-19 Response and Reopening Liability Act. The tort liability shield is only available to those businesses that follow all applicable COVID laws and regulations – so a failure to follow the mandatory quarantine requirements in the COVID ERA may be used against employers in a subsequent lawsuit. For example, if the employer fails to enforce the 10-day quarantine, an employee comes back early and infects a customer, the customer may successfully pursue a negligence tort claim based on the fact that the business ignored the COVID ERA 10-day quarantine period.

Here is a more detailed summary of what the new Act requires:

First, the COVID ERA imposes a mandatory quarantine for workers and prohibits them coming to work if the worker:

  • Tests positive for COVID;
  • Is experiencing the principal symptoms of COVID; or
  • Has had close contact with another person who either tests positive for COVID or displays principal symptoms of COVID.

If the employee either tests positive or is experiencing principal symptoms (regardless of whether a subsequent test comes back negative) may not come back to work until:

  • It has been at least 24 hours since the employee’s fever has stopped without the use of fever-reducing medication and the other principal symptoms have improved; and
    • At least 10 days have passed since the onset of the COVID symptoms (even if testing yielded negative results); or
    • At least 10 days have passed since a positive test.

Employees who have had “close contact” with individuals who have tested positive for COVID or are experiencing principal symptoms must quarantine for at least 14 days or until the contact individual receives a medical determination that they did not have COVID at the time of the close contact.

Second, the COVID ERA prohibits employers from discharging, disciplining, or otherwise retaliating against employees who are observing the mandatory quarantine. Note that under the federal FFCRA that has been in effect since March, employees taking time off due to COVID are still entitled to 2 weeks of paid sick leave. This means that you will have to pay an employee observing the mandatory quarantine under the COVID ERA. Remember that a tax credit is available to offset the cost of this paid sick leave. Also, the FFCRA expires on December 31, 2020, and it is unclear if it will be extended or replaced at this time.

In addition, employers may not discharge, discipline, or otherwise retaliate against employees who “oppose a violation of this act [the COVID ERA]” or who report health violations related to COVID-19. In essence, employers may not retaliate against COVID whistleblowers.

To enforce the COVID ERA, the aggrieved employee may file a lawsuit in the circuit court, may seek an injunction and damages, and if the employee prevails, they are entitled to at least $5,000 in damages. This minimum damages provision is intended to encourage employees to enforce their rights under the COVID ERA and to allow them to secure representation, even where the actual damages may be difficult to prove or may be too small to justify legal action.

Finally, the COVID ERA applies retroactively to March 1, 2020, so an employer who illegally retaliated against an employee any time after March 1 can still be sued under this new Act. Note however that workers’ compensation applies to any employee injuries as a result of COVID. Thus, if an employee gets sick and blames their employer, their claim will likely fall under Michigan’s Worker’s Disability Compensation Act.

Questions about compliance with the COVID laws? Confused about the interplay between the various state and federal statutes? Contact attorney Dan Artaev by email or by call/text to set up a consultation.

Disclaimer: This guide is not intended to be and does not constitute legal advice. It is a summary of legislation for informative and promotional purposes only. Do not take any action or refrain from taking any action based on this guide, and always consult with a qualified professional about the circumstances of your particular case. Each set of facts is unique and different circumstances apply to each individual business.

© 2020 Artaev at Law PLLC. All rights reserved.

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Beer, the Lions, and Intellectual Property: An Updated Cautionary Thanksgiving Tale.

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Update: Since I originally published this article, Eastern Market Brewing has resolved its issues with Barry Sanders and no longer uses his likeness on the beer can. Same Old Lager is available again, and instead of a Lions player wearing the number 20, the brewery’s mascot graces the can against a pixilated, video-game style football field. The marketing and slogans still stand and continue to play on the Lions’ reputation for mediocrity – and perhaps Eastern Market can capitalize on the Lions’ recent coaching and GM change to push their cleverly branded lager.

Still, many lessons here for any enterprising business owner. Intellectual property law has many hidden pitfalls, and falling into one not only will cost legal fees to defend against a cease-and-desist, but also disrupt your marketing and sales.

Detroit’s own Eastern Market Brewing Company came up with a genius marketing idea: a beer called “Same Old Lager,” a clever play on the “same old Lions” saying that has become familiar to Detroit football fans after years of mediocre results. The slogan for the crisp 4.5% ABV lager is “don’t set your expectations too high” and the beer itself was announced the same day the Lions suffered a crushing 20-0 defeat to the Panthers, and just about a week out from the Lions’ annual Thanksgiving game. Clever marketing, impeccable timing, free media attention. Hit product, right?

Wrong. Apparently someone forgot to run the new product by their lawyer or if they did, their lawyer missed a big problem. The day after the new lager was announced, it was removed from sales in response to Barry Sanders’ cease-and-desist for unauthorized use of his likeness on the cans. The retro-video-game-style logo featured a pixelated football player in a Lions uniform with the number 20 (Barry Sanders’ famous number) carrying a football against a gridiron backdrop. Mr. Sanders quickly took to social media to disclaim any affiliation with the product and announced that his image was being used without his permission. As quickly as the new beer was announced, production and sales were halted. Opportunity lost and a genius marketing plan derailed.

I have previously written about Peloton and how the billion-dollar publicly-traded behemoth was facing millions dollars in liability for unlicensed use of music in their workout videos. In today’s digital world, intellectual property rights are more critical than ever, and the Eastern Market snafu is just the latest example of how (presumably inadvertent) infringement can happen. So what did the company do wrong? And how could they have done it right?

What did they do wrong?

The brewery’s marketing ploy was actually very clever. Nothing in the slogan or description expressly referred to the Lions. The Detroit Lions is a valuable trademark, along with the logo, so Eastern Market obviously did not want to pay for its use or licensing. A marketing campaign that riffs on the Lions’ reputation for consistent mediocrity, but does not expressly reference the Lions does not violate the trademark itself. In a nutshell, trademark law prohibits unauthorized use of a mark in a manner that is likely to cause confusion about the source of the goods or services. When something is clearly parody, let alone does not use the actual mark, there is no trademark violation. In other words, no one can reasonably claim that they think a beer called “Same Old Lager” is somehow actually endorsed by the Detroit Lions.

The problem was not trademark law – rather, it was the “right to publicity.” A pixelated video-game likeness of a Lions player wearing Barry Sanders’ famous number 20 jersey graces the front of the can. Generally, a celebrity like Mr. Sanders owns the rights to his own image and has the right to control its distribution. Here, the brewery used Mr. Sanders’ likeness on the beer, implying his endorsement. Accordingly, his legal team took action, which lead Eastern Market to take down its new product, likely pending a new can design. Even if Eastern Market decided to make the case in court and fight back, the campaign momentum has been disrupted, and even so, Mr. Sanders’ case appears to be fairly strong and supported by decades of caselaw. The “right to publicity” is a concept dating back to the 1950s and is related to copyright law, although they two are not the same. There are cases that have protected everything from Vanna White’s likeness that Samsung tried to replicate as a robot, to Bette Midler’s voice, to Johnny Carson’s catchphrase “Here’s Johnny,” to a human cannonball circus act. And, of course, there is a number of exceptions, including when a likeness is used for educational purposes, news items, public issues, and even “entertainment and amusement concerning interesting aspects of an individual’s identity.”

How could they have done it right?

The brewery should have requested a legal opinion from an attorney approving the marketing as well as the packaging. Once the attorney flagged the right to publicity issue and the possible misuse of Barry Sanders’ likeness, a minor redesign would have likely taken care of the issue. Changing the number of the player, removing the number, changing the uniform colors, or any other number of tweaks are possible options. Another potential issue is the design’s likeness to the beloved retro football game “Tecmo Bowl” – and an attorney should have researched and cleared that issue (potential copyright infringement) as well before the design went to print.

The bottom line is that the marketing team can get ahead of the legal team. Copyright, trademarks, patents, licensing, and the “right to publicity” are all important concepts that all business owners should be aware of. Doing it right may cost a little bit more in the short run, but can avoid significant costs down the line.

Need a legal opinion about your marketing campaign? New logo? Design? Product? Contact Dan Artaev by email or by text or call today to set up your free consultation.

Disclaimer: This article is for general informational and promotional purposes only. Nothing herein constitutes legal advice and is the author’s individual opinion. Every business is different and faces its own unique set of challenges. Do not take any action with respect to your business until you have obtained specific guidance from a qualified professional.

© 2020 Artaev at Law PLLC. All rights reserved.

COVID-related Employment Lawsuits Are on the Rise: What to Watch For and How to Avoid Them.

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Employment lawsuits and EEOC complaints are surging. All employers have had to adjust in response to federal, state, and local COVID orders. Small business not previously subject to FMLA have had to suddenly enact polices to comply with expanded regulations under the Families First Coronavirus Relief Act (“FFCRA”). Transitioning employees to remote work has not been easy either. However, businesses have to take extra care to make changes and transitions the right way, so that they are not subjected to employment discrimination or retaliation lawsuits. Litigation is not the only downside to employee strife – turnover is notoriously expensive and adding new team members during the pandemic brings its own set of challenges. Remember that communication, flexibility, and kindness goes a long way as we all continue to deal with a surging global pandemic.

An important note: Michigan recently enacted the COVID-19 Response and Reopening Liability Act that gives businesses immunity from COVID-related tort claims so long as they have been following all applicable laws and regulations. A tort claim is a claim that a customer or visitor can make against your business for an injury suffered on the premises. This new Act only applies to tort claims – it does not grant immunity from discrimination, contract, workers’ compensation, or any other type of claim or lawsuit.

What are some of the situations that may lead to an employment discrimination or retaliation claim against your business? There are many different situations, and each is fact-specific, but here are some common examples:

  • Discharging an employee because they or someone they have to care for contracted COVID.
  • Discharging an employee, reducing their hours, benefits, or otherwise treating them differently because they are taking leave under the FFCRA.
  • Denying an employee parental leave to care for a child whose school closed or when child care becomes unavailable.
  • Threatening to demote employees, reduce hours, or to reduce pay if they took leave under the FFCRA.
  • Denying reasonable accommodations for remote work or schedule adjustments.

Illegal retaliation is generally easier to prove than discrimination. Discrimination requires proof of an employer’s illegal motive. Retaliation simply requires proof that an employer treated an employee differently when they took leave or after they came back.

What can you do to protect your business from employment discrimination or retaliation claims? Again, each business and situation is fact-specific, so there is no one-size-fits-all approach. However, here are some general guidelines:

  • Be flexible and recognize that the pandemic has affected people with different family circumstances in different ways. People with children and single parents are more likely to need adjustments from their employers.
  • Make sure your workplace polices and employee handbook are up-to-date and consistent with the latest government guidance.
  • Educate managers and supervisors on the policies and applicable laws to ensure best practices.
  • Consult an attorney if you are not sure about how the new regulations apply to you or whether your organization is following federal and state employment laws.

Above all, be kind, flexible, and understanding. The pandemic is a world-wide crisis that has impacted everyone, and some more than others. From a business standpoint, a little flexibility can go a long way to reducing turnover cost, litigation costs, and boosting overall worker morale (which is invaluable).

Dan Artaev is a former Assistant Attorney General with the State of Michigan in the Labor Division, and in private practice has represented numerous employers with respect to employment law matters, including responding to EEOC and wage and hour complaints. Email Dan at dan@artaevatlaw.com or call or text (269) 930-0254 to set up your consultation.

Disclaimer: This guide is for general informational and promotional purposes only. Nothing herein constitutes legal advice. Every business is different and faces its own unique set of challenges. Do not take any action with respect to your business until you have obtained specific guidance from a qualified professional.

© 2020 Artaev at Law PLLC. All rights reserved.

FAQ: Michigan’s COVID-19 Response and Reopening Liability Act

In 2020, employers have been struggling to navigate a maze of ever-changing COVID laws, regulations, and guidance from both the state and federal levels. It has not been easy. Besides trying to keep their business open, make ends meet, and generally stay safe, employers now have another thing to worry about: liability lawsuits for potential COVID-19 exposure, illness, or injury.

To protect businesses, the Legislature has passed new laws intended to create some certainty and protection against costly litigation. These are referred to as HB 6030 or the “COVID-19 Response and reopening Liability Assurance Act.” While the legislation is by no means a “get out of court free” card, it seeks to reduce lawyer costs and keep insurance premiums down across the board. Governor Whitmer signed the bills into law on October 28, 2020, which are effective immediately.

Q: Why do Michigan businesses need a “liability shield” against COVID-19 lawsuits?

A: The new law offers protections from tort liability related to COVID-19. The idea is to prevent negligence lawsuits against employers who were substantially following the law and public health guidance. As a policy matter, it is important to give employers and insurance companies some predictability – otherwise, insurance premiums will quickly become unaffordable and businesses may have to face litigation-related shutdowns, bankruptcies, etc., which would further disrupt the economy.

Q: What does the COVID-19 Response and reopening Liability Assurance Act do for businesses?

A: The new law grants businesses retroactive immunity (to March 1, 2020) from lawsuits alleging a COVID-19 claim, which is a tort claim based on or related to COVID-19 exposure (or potential exposure). COVID-19 claims also include allegations related to a business’s efforts to reduce COVID-19 transmission such as a “health screening, testing, contact tracing.” However, the immunity is only available if the business operated in compliance with all federal, state, and local laws and rules that were in effect and deemed legal at the time of the alleged incident.

An example of a potential tort claim is if a customer caught COVID-19 at your business and was injured. The customer will likely pursue a standard negligence claim, arguing that the business had a duty to keep the customer safe, breached that duty by allowing COVID-19 exposure, the exposure was the proximate cause of injury, and the customer suffered damages. Normally, the business would respond by disproving any of these elements – however, the new law creates an affirmative defense that allows the business to avoid liability by showing compliance with all applicable COVID-19 laws and regulations at the time of alleged exposure.

Q: What kinds of evidence would I need to show compliance and to claim immunity under the COVID-19 Response and reopening Liability Assurance Act?

A: The answer depends on your particular facts, location, and situation. However, in general a COVID preparedness and response plan, a designated COVID-19 coordinator, workplace policies directly addressing things like social distancing, mask-wearing, and disinfection protocols are all useful in showing compliance. For the latest guidance on compliance, check out my updated Guide for Michigan Employers Navigating COVID Regulations.

Q: Does this mean I don’t have to follow the COVID orders about masks and social distancing anymore at my business?

A: No. The orders enacted by the Michigan Department of Health and the Occupational Safety and Health Administration still apply and must be followed. Ignoring the government’s orders not only risks the health and safety of your employees and customers, but it also exposes you to government citations and fines for creating a dangerous work environment. The new law only gives immunity from a private lawsuit to a business that “acts in compliance with all federal, state, and local statutes, rules, regulations, executive orders, and agency orders related to COVID-19 that had not been denied legal effect at the conduct or risk.” In other words, a business that deliberately or recklessly violates safety orders receives no protection and will be fully liable for any injury or death related to COVID. Further, the law does not grant immunity from any administrative proceedings or civil actions brought by government entities to enforce COVID-19 safety orders.

Q: Are there minimum injuries that someone has to suffer due to COVID in order to bring a lawsuit?

A: No. Early drafts of the legislation included a “minimum medical condition” threshold that required a certain level of injury to bring a lawsuit – for example, hospitalization for at least 24 hours. Once the plaintiff met the minimum threshold, the employer could then introduce evidence of compliance with the law to create a “presumption” of non-liability. The final version of the law does not have this “burden-shifting” framework – instead, the requirement is that the employer show compliance with government directives in effect at the time of the alleged injury. Note that the law requires substantial compliance and expressly notes that a minimal inconsequential deviation is not enough to defeat immunity.

Q: Does this new law affect the existing workers’ compensation obligations or change potential exposure under workers’ compensation law?

A: No. The new law expressly states that it does not affect the rights, remedies, or protections under the Worker’s Disability Compensation Act. That means that if you have an employee who suffered a COVID-19 related injury in the scope of their employment, workers’ compensation insurance will likely apply and the COVID-19 injury will be treated the same as if the employee fell off a ladder, was hit by a forklift, or suffered some other more traditional work related injury. Note that workers’ compensation insurance is mandatory for businesses with at least one full time employee or at least three part-time employees at the same time.

Have more questions? Contact attorney Dan Artaev by email at dan@artaevatlaw.com or by phone or text at (269) 930-0254.

Disclaimer: This guide is not intended to be and does not constitute legal advice. It is a summary of legislation for informative and promotional purposes only. Do not take any action or refrain from taking any action based on this guide, and always consult with a qualified professional about the circumstances of your particular case. Each set of facts is unique and different circumstances apply to each individual business.

© 2020 Artaev at Law PLLC. All rights reserved.

Fun Facts About the History of the World’s Oldest Hobby: Gambling.

For a change of pace, here is some short and fun reading about everyone’s favorite hobby – gambling. Whenever I do a gambling-related legal project or research, it amazes me how much time and effort has been spent by lawmakers across the United States regulating and restricting gambling in all its forms. And, it is equally amazing how much time and effort has been spent by people to evade those restrictions by designing every sort of workaround imaginable. The battle continues in the age of the Internet and evolves with each technological advance, with mobile gaming being the latest front.

The history of gaming and gambling is fascinating. For as long as people have been playing games, they have bet money on them. According to “The History of Backgammon” by Oswald Jacoby, the world’s original dice game (with dice carved from actual bones) was played as early as 3000 B.C. in southern Mesopotamia (modern day Iraq). Backgammon boards were found in King Tut’s tomb that date back to 1500 B.C., and evidence exists that Ancient Egyptians played for money and even designed an elaborate mechanical dice box to protect against cheaters. Real-money gaming was huge in the Roman Empire, both among royalty and ordinary Romans. Nero (among his other excesses) is said to have played a version of backgammon for an equivalent of $15,000 per point and Emperor Commodius turned the imperial palace into a grandiose casino. Wall paintings in Pompeii depict scenes of ordinary Romans playing in inns, arguing over a backgammon board, and being promptly thrown out by the innkeeper. Suddenly naming one of Las Vegas’s most popular casinos “Caesar’s Palace” makes sense.

Backgammon and gambling in general were so historically popular and addictive, that during the Third Crusade in 1190, Richard the First and his allies issued a joint proclamation that prohibited playing any game for money for any person “beneath the degree of a knight.” Knights and clergymen were permitted to gamble, but were restricted to losing no more than 20 shillings per day, with strict penalties for exceeding the limit, including being flogged naked through the army for 3 days. Sports betting dates back at least to Ancient Greece, where betting on the original Olympics was widespread.

Today, there are so many iterations, versions, and types games that people wager on, it is no wonder that each of the 50 United States has an extensive statutory scheme addressing gambling. Courts all over the U.S. have thousands of pages of options dating back more than a hundred years dedicated to analyzing various devices to determine whether they are prohibited “gambling devices.” Did you know that pinball machines were originally restricted as gambling devices and there remain detailed regulations in each state as to the maximum number of free games that a pinball machine can award? But that’s a topic for another day.

Despite heavy regulation, gambling and betting remain extremely popular across the world. The modern global casino industry is estimated to be worth in excess of $100 billion, with steady and continued growth expected. The sports betting market, which is tracked separately, is valued at approximately $85 billion worldwide. According to analysis by Morgan Stanley, the U.S. sports betting market is projected to grow from $833 million in 2019 to $7 to $8 billion by 2025. Although COVID-19 dropped casino and gambling related revenues by over 10% in the United States in 2020, the market is still expected to recover and grow robustly in the foreseeable future. Indeed, latest data indicates better-than-expected revenues in the gaming industry in 2020, as many people are turning to gaming (both video games and gambling) as entertainment, social interaction, and an escape from the stresses of daily life. Stay tuned.

Dan Artaev is an experienced attorney who has advised domestic and international clients regarding gambling regulations, legislation, and provided other gambling- and gaming-related representation. Contact Dan by email at dan@artaevatlaw.com or by phone or text at (269) 930-0254.

© 2020 Artaev at Law PLLC. All rights reserved.

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