Today I was introduced to the Puget Sound Heath Alliance and was really fascinated by the work they are doing. This is a nonpartisan, not for profit organization focused on improving healthcare in our region. They focus on the need to improve the business of healthcare, emphasizing the fact that hospitals have grown up with minimal accountability from a business standpoint. They don't have a good understanding of their own costs and therefore, cannot clearly define success from a financial standpoint. One example that was shown looked at 10 of the top hospitals across the country and compared average costs for patients in their last two years of life. The overall costs ranged from a high of $106,000 to $55,000; a huge discrepancy across programs that are all considered "best" in the nation. As for our region, the Health Alliance has obtained information from health clinics and hospitals throughout the region to compare their performance on against standard metrics. The report can be found at www.wacommunitycheckup.org -- and it is a HUGE report. Fortunately, they recognize the need for this information to be available and usable by the public and in September 2008, it will become an interactive website that will allow users to drill down to details showing how well hospitals perform against one another. It is intended to be a public resource enabling consumers to make educated decisions based on actual performance and facts.
An "assignment" provision allows one party to a contract to transfer its rights and responsibilities under the contract to another party. This seems like a simple concept. A couple of examples: First, if I decide to move out of my leased space, either I or the landlord can find another party to move in and the new tenant takes over the rights and responsibilities of the lease. Second, if I have a contract with a distributor to sell my products and the distributor is acquired by another company, that new company takes over the distribution and is assigned the rights and responsibilities under the contract. They key issue here, though, is whether the non-assigning party is required to accept the new party to the contract and under what circumstances -- the assignment clause spells this out.
Often, the assignment clause simply states that neither party may assign their rights and obligations without the prior consent of the other party. This is very broad language that would allow either party to deny the assignment for any reason whatsoever.
Another phrasing of this provision is that consent to the assignment is required but will not be withheld "unreasonably," which begs the question, "What does 'unreasonably' mean?" Generally, the courts look to a "reasonable person" standard - what would a reasonable person in the same scenario do based on the facts of the situation? This remains a somewhat subjective determination, though, and much latitude is given to the non-assigning party to have the opportunity to choose who it does business with.
Finally, the assignment clause may specify certain circumstances where consent is or is not required. Business acquisitions are often specified as assignments requiring consent as the parties want to protect their business relationships and vet out a business partner rather than simply being assigned into the relationship.
Assignment provisions are one of those "miscellaneous" or "boiler plate" provisions that people often skim over assuming the language is always the same. There are many different variations and it's important that you read and understand how it applies to you under that particular contract.
Congress just passed the Consumer Product Safety Improvement Act of 2008. Its intent is to provide substanially more resources to the Consumer Product Safety Commission and to address the growing number of consumer product recalls we're seeing today. The U.S. Chamber of Commerce weighed in on this through a letter it wrote to the Senate. It expressed concerns regarding the following: 1) The law provides each State independently with a certain amount of authority to enforce consumer product regulations as they see fit which could create an environment where manufacturers must comply with 50 different interpretations and enforcers of consumer product safety regulations. 2) The law creates ambiguity as to who is responsible for enforcement creating conflict between State and Federal enforcement. 3) The law allows employees to claim knowledge of product safety violations and the Chamber has concerns about the potential actions by disgruntled employees. 4) The law requires the Commission to maintain a public database of complaints that can't be verified or validated. Many of these provisions are clearly connected to the overall intent of the law to create an environment to protect consumers yet I believe the backlash to manufacturers will be costly and ultimately slow down the enforcement process. My favorite comment from the Chamber: "A consumer product does not suddenly become more or less safe depending on the state in which it is sold."
Questions keep coming from clients regarding the difference between a trademark and tradename and whether their name and/or brand is adequately protected by being registered as a tradename or "dba" (doing business as) with the State. The name of the business "XYZ, Inc." or "ABC LLC" is simply a tax entity, like a person's full name or SSN. It identifies that "person" or "entity" with the State as a separate taxable entity. The business name in and of itself really has nothing to do with the branding or the trademark. It is used for taxes, contracts and any other legal or official documents. The business may have one or more "tradenames" or "DBAs" registered which are essentially nicknames, or names that people recognize the business as. Often these are the "trademarks" of the business as they are the words that customers link to the products and services of the company or business entity. Tradenames are a subset of trademarks. Trademarks are more comprehensive than tradenames because they can include words, graphics, symbols, smells, designs -- anything that connects a customer to the goods and services of a company. It's what makes the customer think of sneakers when they seek the Nike swoosh or what makes people think of Microsoft Windows when they see the 4 color "flag" logo or hear the Windows startup bells. Let's apply this all to an example: My company's business name is "Small Business Legal Services PLLC." It's the full name that is long and tedious to use sometimes but it's what is required for official legal documents such as contracts and taxes. Because it is long and tedious to use sometimes, I have registered multiple tradenames: "Small Business Legal Services" and "SBLS." My customers know my business by these names which makes them trademarks of my business. Similarly, my logo is a trademark as customers know my business by that logo and color scheme. These words and graphics are trademarks of my business regardless of whether they are registered with the State or the USPTO. The words are registered as tradenames which provides third parties some notice that I own them and am using them in Washington. The use in commerce, though, not the registration with the State is the driver for protecting the name. I recently registered www.smallbusinesslegalservices.com because I am noticing a number of attorneys across the country using this phrase in connection with their services. Even though it's my business name, I probably can't stop them from using these words together as they are descriptive of the services and probably not protectable. Alternatively, if one of them began using my logo, which is a trademark that is unique and protectable, I could pursue them. Therefore, simple registration is not enough but rather the connection of the words with the goods and services in customers minds that drives the need for protection -- and taking active steps to monitor the use of your name and trademarks is a critical aspect of protecting them.
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