Connecticut Business Litigation Blog : Connecticut Business Lawyer & Attorney : N. Kane Bennett : Aeton Law Partners LLP : Hartford, Middletown, Glastonbury

Here are some quick hits from Blogs I read around the country on business litigation.

Dionne Searcey of the Wall Street Journal law blog reports on the intellectual property fight over the red, white, and blue "Hope" image of President Barrack Obama created by Los Angeles artist Shepard Fairey.  Fairey is claiming his rights to the work, but apparently is confused as to his source material leading to the withdrawal of his duped attorneys. 

Rush on Business breaks down his tips for negotiating Franchise Agreements. Rush highlights the need to have an attorney review your franchise agreement and not to believe any franchisor that says you do not need an attorney or that they will not hold you to certain terms of the agreement.

A win for digital technology was reported on by Mack Sperling in the North Carolina Business Litigation Report.  Mack reports on a case where a settlement agreement was challenged under the statue of frauds because it involved land and there were no written signatures.  You can read here an earlier post from me on the statute of frauds in Connecticut.  The court upheld the agreement in part based on electronic signatures in emails exchanged between counsel. 

Nancy Savitt of the Privacy Law Blog reports on an enforcement action concerning the Children's Online Privacy Protect Act (COPPA).  The Federal Trade Commission fined Iconix Brand Group, Inc $250,000 for "collecting personal information from children without complying with COPPA's parent consent..."  The personal information at issue was dates of birth.  Collecting personal identifiers such as dates of birth can be a real risk for any business.  Read here for some of my posts on how Connecticut businesses can address privacy concerns.

 Jeffrey Mehalic's West Virginia's Business Litigation Blog discusses an interesting suit involving misappropriation of trade secrets against the Pittsburgh Post-Gazette.  A corporation, Mylan, brought a lawsuit against the paper claiming misappropriation of trade secrets and conversion for articles that were allegedly not favorable to Mylan.

Edward McNally of Delaware Business Litigation Blog reports on a case upholding Delaware as a forum for a trade secret case.  This post is informative in that it discusses why Delaware is often a preferred forum for corporate litigants trying to protect trade secrets. 

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A whole series of new laws went into effect starting October 1, 2009.  For a full list of the laws you can find a link on Dan Schwartz's Employment Law Blog.  For a humorous "quick and dirty" summary you can go to Ryan McKeen's Connecticut Law Blog. If you want to know the new taxes and higher fees, read these articles by Susan Haigh of the Day and Christopher Keating of the Courant.

If you just want to know the laws affecting business, the Connecticut Office of Legislative Research puts together a nice summary.  From that summary, I offer a few highlights of the laws that went into effect October 1, 2009. 

BUSINESS CORPORATE ACT CHANGES-- PA09-55

There are several changes to the Connecticut Business Corporation Act.  To most significant change is on Dissolution and is summarized in section 23.  Here are the highlights:

• eliminates requirement that court dissolve corporation in certain situations involving deadlock in management and elections
• permits, instead of requires, court to dissolve corporation in certain situations involving deadlock and irreparable injury is threatened because of the deadlock

Safeguarding Personal Information-- PA 09-71

This is an act concerning state chartered banks and requires safeguarding of personal information, which is information that can be associated with an individual through an identifier like a Social Security number.  The act gives the Department of Banking authority to enforce the law against state chartered banks.  Any bank that adopts the security and privacy provisions that comply with the federal Gramm-Leach-Bliley Act is in compliance with the state act.

Penalty for Doing Business Without Authority -- PA09-83

This act increases the penalty on foreign businesses that conduct business without registering.  I covered this act on an earlier blog post here.

Consumer Privacy and Identify Theft -- PA 09-239

Several changes were made to social security numbers and the personal identifier information.  There were also changes to the laws concerning identity theft. 

Most significant to businesses are the provisions that penalize employers for failing to:

• obtain and retain job applications securely
• take reasonable steps to destroy applications when disposing of them
• allows the Department of Consumer Protection and Attorney General to enforce its provisions
• a civil penalty between $500 and $500,000 may be imposed for failure to comply. The fines will be deposited into a newly established Privacy Protection Guaranty and Enforcement Account

I intend to a more detailed blog post on this topic in the future.  Businesses should also be aware of the Act Concerning Social Security Numbers, which I wrote about in an earlier technology tip post here.

Customer Access to Restrooms - PA09-129

This act mandates that retail establishments give access to restrooms to individuals with certain medical conditions, even if the restroom is not open to the public.  The act applies to customers with proof of certain medical conditions, such as inflammatory bowel disease.  The act does not require any changes in construction for the non-public bathrooms.

 Employment--PA09101

This act makes changes to the ban on employer discrimination for gender in compensation to employees.  Allows the court to award back pay, compensatory, and punitive damages for claims that fall under the act.  Dan Schwartz details the provisions of this act here.

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As part of this Blog, I am going to regularly post technology tips for any Connecticut business to manage risks and avoid lawsuits. These tips will be based on a presentation I did for the Hartford Business Journal's Etechnology Summit concerning technology bombs that can sink a business.

Here's todays tip for Connecticut businesses to avoid financial loss as a result of datal loss and security breaches.

Implement a Data Loss Policy and Solution

Any business that stores third party information or personal indentifiers (credit card information, social security numbers) on its computer systems faces potential exposure under a host of privacy laws.  For a good resource on privacy laws go to the Privacy Law Blog by Proskauer Rose LLP.  For an example of a new privacy law in Connecticut, consider the"Act Concerning the Confidentiality of Social Security Numbers."  Connecticut's Unfair Trade Practices Act could also be implicated in a data loss case.

Data loss or a security breach can cause a huge financial problem, bad public realtions, and signficant down time.  Consider the recent case of TJX reported on by Sheri Qaulters for the National Law Journal.  Discount retailer TJX had a data breach involving exposure of 45 million credit and debit cards.   TJX entered into various settlements including payment of $9.75 million to 41 states; $30 to every consumer who used a credit or debit card; and an undisclosed settlement with three banks. Ouch.

TJX is an extreme example, but data loss can sink a small to medium sized business.  How can a business mimize its exposure to lawsuits from data loss or security breach?

Implement a data loss policy and solution for your business.   There is no one size fits all policy and solution and every business will have different needs.  If you already have a policy, you should have it reviewed regularly for changes in the law.  If you do not have a policy in place, you need to start somewhere.  For "do it yourselfers" there is the Federal Trade Commision's Guide for Business and Protecting Personal Information.  The FTC's guide is a 5 step plan from identifying your risk exposure to implementing procedures. 

 In addition  to implementing policies, any business with a significant risk exposure for data loss (i.e. medical practice, retailers, e commerce) should consider purchasing a cyber liability insurance policy.  These policies are now more afforadable and many insurers such as The Hartford are now actively underwriting polices to cover first and third party data loss claims and providing ongoing resources and information.  

The bottom line is, a business cannot afford to take the risk of ignoring data loss and security breach exposure.  Do not wait for the first breach or lawsuit. 

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