New York Business Litigation Attorney | New York Breach of Contract Attorney » small business

How An Improperly Drafted Employment Contract Allowed Employee’s Claim To Collect Post-Termination Commissions To Survive Dismissal in New York

Jonathan Cooper — Sun, 17 Jan 2010 16:05:36 +0000

In a hot-off-the-presses decision that was handed down this past Thursday, and is scheduled to appear in Tuesday’s New York Law Journal, New York’s Appellate Division, First Department (which covers New York and Bronx Counties) reversed that portion of a trial court’s decision that dismissed a former at-will employee’s claims under Labor Law §§191 and 198 and Business Corporation Law §630, holding that although the plaintiff’s claim for unpaid salary was correctly dismissed (his employment contract allowed management to adjust his salary at their sole discretion), he had sufficiently stated a breach of contract claim for unpaid earned commissions that he “arranged” prior to his termination. In particular, the Appellate Court stated as follows:

“Once the commission is earned, it cannot be forfeited (see Davidson v. Regan Fund Mgt. Ltd., 13 AD3d 117 [2004];⁴ Yudell, 248 AD2d 189, supra). There is a long-standing policy against the forfeiture of earned wages, and this applies to earned, uncollected commissions as well (Weiner v. Diebold Group, Inc., 166, 166-167[1991]) …”

On the other hand, “although generally an at-will employee is not entitled to post-termination commissions, the parties are certainly free to provide otherwise in a written agreement.”

There is another important rule to consider, however. And that is the doctrine of contra proferentem, which states that an employment agreement should be construed against the drafter. In this case, the Court held that had Management “meant to foreclose the possibility that plaintiff might earn a post-termination commission on a placement” arranged by plaintiff, it “could have said so explicitly.” And this they clearly failed to do.

The moral of the story is obvious: be very, very careful in drafting your employment agreements.

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The Dangers of Failing to Protect Your Creative (and Proprietary) Work Under Federal Copyright Law

Jonathan Cooper — Tue, 22 Sep 2009 18:07:25 +0000

I was recently contacted by a small business owner who was looking to protect her company’s intellectual property. The problem is, she was contacting me to try and protect only after she was having a problem with one of her co-workers. She didn’t know that in order to properly protect the creative work that was generated for her company, she needed to have a written agreement that delineated everyone’s responsibilities, and most importantly, who would own the creative work product.

And therein lies the danger: the Copyright Act tends to favor (in terms of ownership) the one who actually created the work rather than the one who may have commissioned the work.

An article published in today’s New York Times, which notes the legal difficulties faced by Disney in its intended acquisition of Marvel Superheroes highlights these problems. In that case, Marvel’s ownership of the intellectual property rights to some of their superheroes has been challenged by the creators’ heirs, who claim that they are entitled to at least partial rights to selected characters. On the other hand, Sony apparently has undisputed movie rights to X-Men – forever.

Here’s the bottom line: if the creative business is worth anything significant (and if it isn’t, you’d better find one that is worth something), it should be worth the modest investment necessary to prepare a written agreement that protects it.

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How Having Your Trade Secrets Stolen Can Affect Your New York Business

Jonathan Cooper — Mon, 08 Jun 2009 19:28:00 +0000

A trade secret theft lawsuit that was recently filed in upstate New York by the Price Chopper chain store illustrates rather vividly how having your small business’s trade secrets – in this case pricing information – can dramatically impact your bottom line.

In its initial suit papers, Price Chopper claims that competitor Giant Market would have someone consistently and surreptitiously obtain copies of Price Choppers’ fliers that would announce their special sale items, and then undercut those specific sales items in their own advertisements, thereby depriving Price Choppers’ sales of any measurable impact, and giving Giant Market an unfair competitive advantage.

If true, the details set forth in Price Choppers’ complaint are indeed tantalizing, and if this case were ever to go to trial, would certainly have a great deal of jury appeal. For example, Price Chopper apparently has videotape of someone sneaking into the warehouse where their pre-publication fliers were stored, and then handing them to a Giant Market employee. And it appears that they have videotape of this occurring on several occasions.

One important tidbit to glean from this story is this: trade secret protection is not limited to proprietary technology and formulae; if your product marketing and pricing took time, effort, research and expense to develop, and is not readily available to the general public, it can be applied to that as well.

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Who Says Small Business Can’t Protect Its Proprietary Technology Against the Big Boys?

Jonathan Cooper — Fri, 22 May 2009 17:59:43 +0000

On May 21, a Texas jury rendered a verdict against software giant Microsoft, and awarded a relatively small Canadian software company $200 million after finding that Microsoft had infringed on i4i’s proprietary technology. And this isn’t even the first time this year that a jury has found in favor of a much smaller business in their infringement claims against Microsoft; just last month, a jury awarded another software development company nearly $400 million after concluding that Microsoft had improperly infringed on their intellectual property.

Perhaps there’s a lesson for small businesses here: if you’ve been wronged by a much bigger company, don’t be afraid to stand up and protect your own turf. The other company’s deeper pockets do not – by any means – guarantee their victory.

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