Hotline
Recent developments of interest to corporate counsel.
Sarbanes-Oxley: Reflections Eight Months Later
Since it became the law on July 30, 2002, The Sarbanes-Oxley Act has been the subject of an endless stream of panel discussions, seminars, speeches, articles and media interpretations. It may or may not be a tsunami in the financial markets comparable to the changes brought by the regulatory scheme developed in the 1930s. But the statute and the corollary changes by stock exchanges to their listing requirements will alter the relationships between the participants in the financial markets in significant and long-term ways. This article highlights and places in context the changes wrought thus far, and concludes by noting areas in which further change is yet possible.
Trademark Dilution: Likelihood of Confusion Among the Courts?
As it stands now, if your company brings a trademark dilution claim in federal court, you are risking a ruling that your company's brand is not diluted or, even worse, 'not famous.' There is currently a great deal of confusion among the courts over the concept of trademark dilution, and none of the recent decisions are helping to clear the air. Courts across the country continue to struggle with the very concept of trademark dilution and its application. Issues the courts are struggling with include: How much fame is required for a mark to be 'famous' under the statute? What marks deserve protection under the Federal Trademark Dilution Act (FTDA)? What factors should a court consider when evaluating a dilution claim? Is proof of actual harm or injury required in order to prevail on a dilution claim? These issues are not easily resolved, and it is only the issue of proof of actual harm or injury on which the Supreme Court will provide guidance this spring. In light of these other continued uncertainties, companies should carefully analyze their case before putting their most prized brands at risk.
A Broker's Perspective: How to Position Your Company for Success in Subleasing Office Space
The ensuing softening of the commercial real estate market fueled by massive corporate restructuring, downsizing and changes in geographic locations has led to a flood of sublease space being placed on the market. As recently reported in the National Real Estate Investor, there are 124 million square feet of office space being offered for sublet today, which equates to approximately 25% of total available office space nationwide. <i>See</i> Parke Chapman and Matt Valley, 'The Sublease Overhang: A 124 Million Square Foot Headache', National Real Estate Investor (February, 2003). In order to mitigate the cost of leasing unused space, companies are subletting, or similarly, positioning their excess space so that a favorable lease termination fee or a lease buy out can be negotiated with the existing landlord. As tenant representatives, we are often retained by companies to assist with their disposition efforts. We recommend that the following subleasing strategies be considered for mitigating a company's remaining leasehold obligation effectively.
Strategies For No-Grief Rent Relief
Recent downturns in the economy have increasingly found retail and office tenants in the position of having to seek rent relief in varying degrees from their landlords in an effort to overcome short-term financial difficulties. While the landlord finds unpalatable the prospect of reducing a rental income stream to which it has become accustomed, the prospect of having a vacancy in a shopping center, with its attendant adverse effect on neighboring tenants, as well as the additional costs involved in replacing the tenant through the payment of brokerage fees and lease inducements, may be even more unpalatable.
Subrogation: Insured or Not Insured
Real estate lawyers have recently been reminded of the importance of carefully crafting 'waiver of subrogation' and 'release of liability' provisions in leases. For instance, in a recent New York case, <i>The GAP, Inc. v. Red Apple Companies, Inc.<i>, 282 A.D.2d 119 (N.Y. App. Div. 2001), such express clauses saved the landlord from liability to its tenant's insurance company; unfortunately, the provisions did not relieve the landlord from responsibility for the cost of its tenant's insurance deductible — a million dollar mistake.
How Commercial Landlords Can Position Themselves to Deal With Current Marketplace Conditions
The uncertainty of the duration of the downturn in the commercial leasing market, the vast amount of available first-and-second generation space and the increasing number of tenant bankruptcies have resulted in a situation where landlords must position themselves to endure potentially devastating economic times. Cutting rental rates and providing previously unheard of tenant concessions such as short-term leases and long periods of 'free rent' may seem like the only alternatives, but they are not. Landlords can enforce existing provisions in their leases and incorporate additional provisions into their lease forms that will improve their position in the marketplace.
Criminal Antitrust Violations: Current Limits
The two federal statutes that create criminal liability for antitrust violations are arguably the broadest and most poorly defined of all federal criminal statutes, even recognizing the tortured draftsmanship of the RICO statute and the securities laws' criminal provisions.
Furthering Insolvency?
What was Enron's Board thinking? Where were the Tyco directors while Dennis went shopping? Had MCI's directors been invited to Scott's new Florida mansion? This stuff makes the headlines, but all across the country, decisions are made by boards of directors that don't come close to this scale and will never see the light of day, much less a courtroom. However, these decisions are no less questionable and susceptible to attack, leaving a director in litigation for years. This is particularly true should the company end up in bankruptcy with creditors having been harmed.
