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UNKNOWN WIPO CLAIM BARRED BY SETTLEMENT AGREEMENT; EMPLOYER LIABLE FOR EMPLOYEE'S TRADEMARK INFRINGEMENT
August 15, 2006
UNKNOWN WIPO CLAIM BARRED BY SETTLEMENT AGREEMENT
A party that entered a settlement agreement which included mutual general releases of all claims, "known or unknown," could not pursue an action to force the other settling party to relinquish a domain name registered several months before the settlement agreement was signed. That's the ruling from a case recently decided by the U.S. Court of Appeals for the Fourth Circuit.
Ironically, the case began with a settlement agreement. In order to end litigation pending between them, Minnesota Convey Compliance Systems, Inc. ("Convey"), and 1099 Pro, Inc., entered into a settlement agreement that included mutual general releases of all claims, "known or unknown, arising out of any actions or events occurring in whole or part prior to or concurrent with the date" of the settlement. (we added the bold).
After the settlement, 1099 Pro initiated a proceeding against Convey with the World Intellectual Property Organization to compel Convey to relinguish an Internet domain name that Convey had acquired before the settlement. In response, Convey commenced an action for breach of the settlement agreement (usually settlement agreements are supposed to end litigation - not a good sign when the parties file two proceedings after signing the agreement).
1099 Pro asserted that it was not aware of the domain name dispute when it entered the settlement agreement. For that reason, it argued that its claim against Convey was not within the scope of claims intended to be released in the settlement agreement.
The court however, did not agree that ignorance was an excuse. In the court's view, the key question was whether the parties intended to release all unknown claims. If so, the language would be deemed binding.
The court found four factors to support its finding that the parties really intended to waive all claims. The court focused on: 1) the expansive language of the release itself; 2) independent evidence that the parties intended to release unknown claims; 3) the lack of evidence of fraud or misrepresentation, inequitable conduct, or duress during the negotiations; and 4) express evidence of the parties' intent to resolve all disputes between them, whether known or unknown.
So, if you sign an agreement waiving all claims, even unknown claims, be aware that some courts may actually hold you to that agreement!
EMPLOYER LIABLE FOR EMPLOYEE'S TRADEMARK INFRINGEMENT
Is the Lucent company liable for trademark infringement when an employee commits the infringement while using a company computer for his personal use? The answer is "oui" according to a recent decision from a French appellate court.
The case arose when Mr. Breil, a quality control technician for Lucent created a site that made fun of ESCOTA (Societe des Autoroutes Esterel-Cote d'Azur-Provence-Alpes), a company which manages toll roads in southern France. Breil's parody site transformed the company's logo into the shape of a penis (did we mention this was France?) and renamed the firm "Escroca"--a play on words of the French term "escroquer" (to swindle). In creating his parody site, the employee cut and pasted images from ESCOTA's Web site.
The lower court held both Breil and Lucent liable for trademark infringement and ordered the two to share 4,000 euros ($4,923) in damages plus court costs. The Aix-en-Provence Appeals Court upheld that ruling, but added an additional 10,000 euros ($12,305) in court costs and publication fees.
Lucent allowed employees to make "reasonable use" of company equipment and Internet connections for personal Web surfing, so long as they did so outside of normal working hours and so long as the use complied with French law and Lucent's internal rules.
The lower court was influenced, apparently, by the fact that Lucent never specifically told the employee he couldn't do what he did. The court noted that "[N]o specific ban was made on the eventual creation of Internet sites or uploading of information to personal pages."
On appeal, Lucent cited to French case law which established that employers cannot be held liable for unauthorized activity in the workplace that goes beyond the employee's specific job description or official role in the company. Lucent also argued that its failure to impose a specific ban on the creation and updating of personal Internet sites did not authorize Breil to carry out such activities.
The appeals court was unmoved. It noted that the employee's Internet activities appeared to comply with Lucent's "reasonable" personal use authorization, while his job description and role in the firm allowed him to use company computers and the Internet.
Even though this decision was rendered by a French court, the holding is worthy of note. In crafting use policies, it may be better to be expansive, to avoid confusion (and maybe liability) down the road.
This Newsletter is a periodic publication of Graydon Head & Ritchey LLP and should not be construed as legal advice or legal opinion on any specific facts or circumstances. The contents are intended for general information purposes only, and you are urged to consult your own advisor concerning your situation and any specific legal question you may have.