Trust the Leaders Summer 2018

Leaders Trust the

A PUBLICATION OF SMITH, GAMBRELL & RUSSELL, LLP

The FAQ Issue

Answering your most frequently asked questions about our practices

SUMMER 2018

SGRLAW.COM

Trust the Summer 2018

3 Editor’s Letter 4 Legal Briefs

News and views from the offices of Smith, Gambrell & Russell.

8 Entertainment, Arts & Sports Practice

Common copyright issues in literary publishing and the unique legal challenges faced by the motion picture industry.

10 Appellate Practice

We explore the strategic considerations in presenting an appeal in the state and federal courts.

12 Nonprofit Practice

SGR has a long history of providing legal services to nonprofit and charitable organizations.

14 Japan Practice

A day in the life of the attorneys in SGR’s Japan Practice.

16 Timber Practice

How we assist our clients to buy, sell, finance and manage timberlands.

18 Public-Private Partnerships

The procurement of public infrastructure using private-sector resources requires sound legal advice.

21 Tax Practice

Smith,Gambrell

&Russell, llp Attorneys at Law

1230 Peachtree Street, N.E. Promenade, Suite 3100 Atlanta, GA 30309-3592 editor@sgrlaw.com editor-in-chief

Dana Richens editorial advisory board

Nicole Haff Brett Lockwood Jim Monacell Jim Porter

sgr marketing team

Lee Watts Kerry Franklin Jaleesa Smith Cheryl Walker Mollie Werner Sharon Williams

Trust the Leaders is published on behalf of Smith, Gambrell & Russell, LLP by Fourth Element Creative.

The information contained herein has been obtained from sources believed to be reliable.

The content and information in this publication do not constitute legal advice, do not in all cases reflect the opinions of SGR or its attorneys and are not in all cases complete or current as of the publication date. This publication is not

How the recent changes to the U.S. tax code could affect a company’s operations.

legal opinion. Legal advice should be obtained

24 Universities and IP Law

Permission is granted to use and reproduce this

intended to and does not create an attorneyclient relationship or provide legal advice or from one’s legal counsel.

publication in whole or in part for internal and

An overview of the IP challenges and issues faced by colleges and universities.

personal reference, provided that proper attribu-

26 Finish Line

in whole or in part, in any form or by any means

Meet Roger Maldonado, a partner in SGR’s New York Litigation Practice and the new President of the New York City Bar Association.

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tion of authorship is given. Except for material in the public domain, this publication may not be further copied, modified, used or distributed, without the written permission of Smith, Gambrell & Russell, LLP. All other rights expressly reserved. © 2018 Smith, Gambrell & Russell, LLP. Leaders

used with permission of Leaders Magazine, Inc.

Editor’s Letter

Editor’s Letter Welcome to the 2018 summer issue of Trust the Leaders, the magazine of Smith, Gambrell & Russell, LLP. This issue features eight of the Firm’s practices: appellate; entertainment, arts & sports; Japan; nonprofit; public-private partnerships; tax; timber; and universities & IP law. In the pages that follow, our lawyers answer some of the questions they most commonly face about their practices in these areas of the law. Some of the featured practices are ones you would expect to find from a full-service firm like SGR. Others are more specialized, “niche” practices that may be new to you. I think you will enjoy learning about some of the interesting areas in which our attorneys serve as trusted advisers to our clients on a daily basis.

Of course, this issue only scratches the surface of the more than 80 practice areas in which SGR lawyers provide legal services. We hope to answer “FAQs” about other practices in future issues.

This issue has many playful graphics and has been a lot of fun for our authors, editorial advisory board and marketing department. We hope you enjoy reading it as much as we enjoyed putting it together!

FOLLOW US ONLINE

Our attorney blogs cover the following SGR practices:

Appellate Construction Co-op Condo Estate Planning Franchise Health Care Insurance Intellectual Property

Dana Richens

Israeli

Editor-In-Chief editor@sgrlaw.com

Litigation Sustainability Technology

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ONLINE

BLOGS: sgrlaw.com/blog TWITTER: twitter.com/sgrlaw LINKEDIN: linkedin.com/companies/27889

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LEGAL BRIEFS

THE LATEST NEWS AND UPDATES FROM THE SGR OFFICES

ATTORNEYS IN THE NEWS Honorable Leah Ward Sears, a partner in SGR’s Litigation Practice, was the featured speaker in a fireside chat at the Law Firm Diversity Symposium presented by Florida Blue and the Jacksonville, Florida chapter of the Association of Corporate Counsel.

Laura Andrew, a partner in SGR’s Executive Compensation and Employee Benefits and Health Care practices in Jacksonville, moderated a panel on diversity and inclusion at the symposium.

FBA leadership meets at Capitol Hill

Walter Killmer spoke on “Traversing the Cross-Border

John McCarthy, a partner in SGR’s

impacting the administration of justice and

Minefield: An English Family

New York Litigation Section and

the federal courts, including adequate funding

in the Golden State” to the

Chair of the Federal Litigation Section

for the federal courts, prompt filling of judicial

Estate and Succession Planning Group

of the Federal Bar Association (FBA),

vacancies, sufficient judgeships to render justice

of ProVisors, a Los Angeles-based

joined dozens of FBA leaders from across the

and the creation of an Article I immigration

professional network. Walter discussed

country for the organization’s annual Capitol Hill

court. John joined other FBA leaders from New

special considerations in estate planning

Day. FBA leadership met with House and Senate

York during meetings with senior staffers for

for international clients, using as a case

offices to discuss important legislative issues

senators from New York and Connecticut.

study an English couple who moved to California and had assets in both the

SGR attorney heads aviation and space committee Marc Latman, a partner in SGR’s Corporate and Global Transportation practices, has been named Chair of the newly formed Aviation and Space Finance Committee of the American Bar Association’s Forum on Air and Space Law. The committee was formed to be the organization of choice for in-house, government and private-practice lawyers in the world of aviation finance and leasing.

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U.K. and the U.S. Walter is a partner in the Private Wealth Services Practice in SGR’s Los Angeles office.

RECENT REPRESENTATIONS New York City development SGR served as legal counsel to Montrose Associates in its sale of 1514 First Avenue in Manhattan to Extell Development. The purchase of the 9,000-square-foot building is one of the final acquisitions as Extell secures a 10-parcel assemblage totaling more than 200,000 buildable square feet, spanning First Avenue between 79th and 80th streets, for its next development project. The SGR New York legal team included Real Estate Practice partner and Section Head Sean Altschul and associate Dexterrie Ramirez.

Aviation finance SGR served as legal counsel to

Direct mail sale

Insurance firm acquired

Avianca in its pre-delivery payment

SGR served as legal counsel

SGR served as legal counsel to

financing by SMBC Aviation Capital

to Mudlick Mail, LLC, a

Genesee General, a managing general

for 11 Airbus aircraft, including nine

direct mail provider, in

agency and wholesale insurance

A320 NEO aircraft, scheduled to

its sale to an affiliate of

broker, in its acquisition by JenCap

be delivered in 2018 and 2019,

Clearview Capital, LLC, a

Holdings, a premier national specialty

along with two standalone A321

private equity firm. The

insurance business owned by The

NEO aircraft, which were delivered

SGR Atlanta legal team included

Carlyle Group. The SGR legal team

in 2017. The SGR legal team

partners John Ethridge and Nick

was led by partner Rett Peaden

included partners Pete Barlow and

Rueter and associate Jonathan

and associate Jonathan Hurt in the

Howard Turner, associates Erin

Hurt in the Mergers & Acquisitions Practice

Atlanta Mergers & Acquisitions Practice. Partner

Peterson and Robert Fuessler,

with partner Rett Peaden handling tax law.

Matt Warenzak in the Atlanta Intellectual

and paralegal Lorna Virts in the Firm’s Air

Partner Lisa Carrasco and associate Quinn

Property Practice and associate Brandon

Transport Industry Group.

Baker in the Jacksonville Employee Benefits

Sherlinski in the Jacksonville Employee Benefits

Practice assisted.

Practice assisted.

Precision engineering SGR served as legal counsel to

Media acquisition terms

Yarn firms entwined

WST Präzisionstechnik GmbH, a

The Firm served as legal counsel

SGR served as legal counsel to Patrick Yarn Mill,

leading supplier of precision turned

to the FORUM Media Group, an

Inc., a manufacturer of industrial yarns, in its

parts, in its majority acquisition of

international media company, in

acquisition by industrial-thread manufacturer

GB CNC, LLC, a turn-mill center

its acquisition of Trade Press Media

Coats Group, PLC. Benefitting from Coats’s

parts maker. The SGR Atlanta

Group, Inc., a business-to-business

corporate brand and global footprint, the

legal team included partner Rett Peaden

media and event production

acquisition creates growth opportunities

in the Corporate Practice, associate

company. The SGR legal team

for Patrick Yarns while enhancing Coats’s

Heiko Gruenwald in the Corporate

included partner Tom Hong and

capabilities in the engineered-textile industry.

associates Emily McConnell, Erin

SGR’s legal team included John Ethridge,

and International practices, and partner Florian Stamm in the International and

Peterson and Nick Flint in the Atlanta

Nick Rueter and Nick Flint in the Mergers

Site Selection practices.

Mergers & Acquisitions Practice.

& Acquisitions Practice.

TRUST THE LEADERS | Summer 2018 | SGRLAW.com

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LEGAL BRIEFS THE LATEST NEWS FROM THE SGR OFFICES

LITIGATION SUCCESSES

SGR advises client in product labeling compliance case An SGR international client faced

comply with strict requirements adopted pursuant

possible civil sanctions of more than

to the Consumer Product Safety Act and related

$16 million, criminal prosecution and

laws. SGR advised the client on how to quickly bring

forfeiture for allegedly mislabeled

its labeling program into compliance, and prepared

building products, until SGR’s

responses to several CPSC notices of noncompliance.

Environmental Practice swung into

Steve and Vickie worked with the CPSC

action. Led by partner Steve O’Day

throughout its investigation, which was ultimately

and associate Vickie Rusek, SGR

concluded with no penalties, fines, forfeiture

investigated claims by the Consumer Product

or further prosecution, and secured permission

Safety Commission (CPSC) that the labeling did not

for the client to sell its existing inventory.

SGR achieves settlement for Chattahoochee Riverkeeper SGR Environmental Practice partner Andy Thompson represented Chattahoochee Riverkeeper in a federal Clean Water Act citizen suit against the developer of an industrial park for discharges of silt and sediment into a tributary of the Chattahoochee River. The lawsuit resulted in a settlement pursuant to which the developer is coming into compliance with the Clean Water Act and paying $250,000 to five nonprofits, including the Turner Environmental Law Clinic at Emory School of Law, the Chattahoochee Parks Conservancy, the Chattahoochee Nature Center, the Elachee Nature Science Center and the Southern Environmental Law Center, for supplemental environmental projects improving water quality in the watershed.

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IN BRIEF...

Scott Cahalan, a partner in SGR’s Construction Practice in Atlanta, was a guest lecturer for a graduate-level class in advanced construction cost management at the Georgia Institute of Technology. Scott also presented webinars for construction professionals on implied obligations and “pay when paid” and “pay if paid” clauses in construction contracts.

SGR’s U.K.-based trainee solicitor Samuel Chapman recently completed a six-month secondment to aircraft leasing company and SGR client Aergo Capital. Stationed in Aergo’s headquarters in Dublin, Ireland, Sam worked on Aergo’s first asset-backed securitization program, known in the market as Metal 2017-1. Sam also gained important knowledge about Aergo’s overall business.

Danila Duò has been elected to the Board of Directors of the Italy-America Chamber of Commerce (IACC). Founded in New York in 1887, the IACC is devoted to fostering trade, tourism, investments and economic cooperation between Italy and the U.S. Danila is Counsel in SGR’s Corporate Practice and head of the Firm’s Italian Practice.

ESTATE PLANNING ALERT

BY LAURA WARTNER

Estate Planning After the Tax Cuts and Jobs Act of 2017: A Review Needed?

Many clients who had taxable estates in 2017

exemption, you should consider having your

estate plan may no longer accomplish your

(more than $11 million for a married couple)

documents reviewed and updated, especially

goals. For example, a will that leaves your

or even 2009 (more than $7 million for a

if you live in a state that has no state estate

exemption amount to your children and the

married couple) now no longer have taxable

tax. New York and Connecticut continue to

remainder of your estate to your spouse

estates, thanks to the Tax Cuts and Jobs Act

have an estate tax with much lower estate tax

could result in your entire estate passing to

of 2017 (the “Act”). What does that mean for

exemptions. Georgia, Florida and California

your children.

you and what action do you need to take?

have no estate tax.

A plan to minimize estate tax where no

To further complicate matters, the increased exemption is scheduled to expire on January

What is new?

tax is due may be inefficient for income tax

1, 2026, so providing for flexibility in your

The Act essentially doubles the estate and

purposes. At death, your assets receive a

estate planning documents is crucial. Do

gift tax (and generation-skipping transfer

“step-up” in basis, e.g., all that capital gain in

your beneficiaries a big favor: have your

tax) exemption amount to $11.18 million per

your home you bought 30 years ago is wiped

documents reviewed and updated to make

person, and is subject to inflation adjustments

away and your heirs receive a basis in the

sure they continue to meet your estate

annually. A married couple can now transfer

home equal to its fair market value at

planning goals.

up to $22.36 million in 2018 to their family or

your death. With no estate tax to worry

other beneficiaries without estate or gift tax.

about, the focus of your estate plan can

increased exemption during your lifetime

shift to income tax planning and beneficiary

to save estate tax should it revert to a lower

How might this affect an existing will or

protection, i.e., protecting beneficiaries from

amount in 2026. Spouses are able to make

revocable trust?

themselves and their creditors (including

transfers in a way that would allow each

If your documents were designed to minimize

former spouses).

of them to potentially have access to the

Finally, consider using some of the

transferred assets.

the federal estate tax – for example, they contain provisions for a “family trust” or a

How else can the increased exemption

“credit shelter trust” – and you are not likely

affect your goals?

Laura Wartner is a partner in and head

to have a taxable estate due to the increased

Due to the increased exemption, your current

of SGR’s Tax Pactice. lwartner@sgrlaw.com.

TRUST THE LEADERS | Summer 2018 | SGRLAW.com

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ENTERTAINMENT, ARTS & SPORTS PRACTICE

The attorneys in SGR’s Entertainment, Arts and Sports Practice have a wealth of experience representing individual artists, writers, actors, producers, managers, agents, sports figures and other professionals and companies engaged in the music, film, performing and visual arts, literary publishing, and sports industries.

by Kate Rowe, Rich Rivera, Steve O’Day and A.J. Rollins

MOTION PICTURES Can I make a film about a living person?

When making an artistic work involving the characteristics of a real person, there are few safe harbors. In 2005, the Florida Supreme Court found that the producers and distributors of the film The Perfect Storm did not violate the state law prohibiting commercial appropriation because the film was not directly used to market goods for sale. Likewise, in March of this year, a California appeals court dismissed a lawsuit by Olivia de Havilland over her portrayal in the FX series, Feud: Bette and Joan. The California court found that the First Amendment permitted FX to accurately portray her role in the infamous feud.

But other states’ laws are less clear. Three days after the de Havilland case, New York’s highest court ruled that a character in a video game could violate

New York’s invasion of privacy law. However, the court found that the character in question was not recognizable as Lindsay Lohan, the plaintiff in that case.

The New York privacy law, however, does not require that the persona be used to market other goods; rather, it need only be used for a commercial purpose.

Notably, the New York high court did not adopt a standard used by the lower court that would exempt works of fiction or satire from the statute. And more than one court has found that sports-themed video games that depict real players can violate the players’ rights of privacy.

In short, it depends. The inclusion of any real person in a dramatic work must be analyzed based on the similarities between the real person and the character as well as the aims of the work, its medium, the extent of artistic variation input into the work and the states whose laws would apply.

Does OSHA apply to film production?

Yes. Although a film set is different from a factory or other traditional workplaces in terms of the risk of injury to employees, film production companies are still considered employers who have a duty under regulations promulgated by the Occupational Safety and Health Administration (OSHA) to provide a workplace free from hazards.

Kate Rowe is a partner in SGR’s Intellectual Property Practice and also heads the Entertainment Practice, where she advises on software and Internet technology marketing, publishing, visual arts and licensing issues. krowe@sgrlaw.com.

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Rich Rivera works both in the Litigation and Intellectual Property practices. He focuses on commercial litigation, with a special emphasis on defending actions brought under consumer protection statutes. rrivera@sgrlaw.com.

Entertainment, Arts & Sports Practice

LITERARY PUBLISHING Must publishers own the copyright to an author’s book?

No. It is not essential for a publisher to own the copyright to an author’s book to be entitled to publish it. The author can grant the publisher a license to publish, and yet still retain the copyright. Indeed, the license granted can be tailored to the rights applicable to the arrangement. For example, some book publishers focus only on U.S. English language book rights, including printed (hardcover and softcover) rights. Others require more extensive book rights, such as exclusive worldwide printed book rights, electronic book rights, and foreign language and audio book rights. Some publishers ask for stage and motion picture rights as part of the package of rights they seek. Each publishing arrangement can be different, depending on the type of book, the relative negotiating clout of the parties and the publisher’s normal author arrangements.

Some publishers do insist on an assignment of copyright. This is more common in the academic and professional fields, for special commissions

and for textbooks. There are some concerns for an author when granting the copyright to the publisher. The copyright owner controls the right to modify the work (to change the words and substitute new illustrations, for example), and controls the right to permit new works to be created based on the work (such as a book series, a film or a television program). Authors who grant copyright to a publisher may be able to reduce their concerns by restricting in the publishing contract what the publisher is entitled to do, requiring author approval of the exercise of certain rights and providing for a reversion of rights upon the occurrence (or nonoccurrence) of certain events.

What OSHA standards are most likely to apply to a film set?

What parts of film production are eligible for Georgia Entertainment Industry Investment Act tax credit?

Set construction may require the use of ladders and scaffolding or electrical equipment, which may trigger OSHA standards. Shooting on location, particularly in older or abandoned buildings, may potentially expose crew members and actors to lead or asbestos, both of which are regulated by OSHA. The performance of stunts and special effects, which are not subject to a specific set of standards, may fall under the general duty clause, which requires employers to provide a place of employment that is “free from recognizable hazards that are causing or likely to cause death or serious harm to employees.”

Georgia provides a transferable tax credit of up to 30% of a Georgia production’s expenditures. A production can be a single televised commercial, a music video, a feature film, a TV episode or an original video game developed in Georgia. The project must spend at least $500,000 in a single tax year. Eligible expenses include most everything spent in Georgia, but payroll is limited to $500,000 per person for W-2 employees and must be for employees working in Georgia. Credit is even available for FICA and federal and state unemployment if attributed to Georgia.

Have OSHA citations been issued to the film industry?

What can be done with a Georgia Entertainment Industry Investment Act tax credit?

Yes. In 2016, California’s Division of Occupational Safety and Health (better known as “Cal/OSHA”) conducted 19 inspections of film productions that resulted in citations for 15 violations. OSHA has paid increasing attention to the growing film industry in Georgia. In 2014, a film crew member for the movie Midnight Rider was killed while setting up a set on an active train trestle that was used without the railroad company’s permission. OSHA issued citations for serious violations for failing to adequately guard the sides of the trestle and exposing employees to fall hazards. More recently, the accidental death of a stunt person resulted in an OSHA citation for a single alleged general duty clause violation.

Steve O’Day is head of SGR’s Sustainability Practice. He advises clients on sustainability initiatives, sustainable businesses and business practices, and renewable energy business issues, planning and litigation. soday@sgrlaw.com.

The credit is claimed when the tax return is filed for the tax year in which the expenditures are incurred. The production company can use the credit against its own income tax liability or it can be assigned to any Georgia taxpayer.

This can be done directly by the production company or through the use of a broker. With advance notice to the Georgia Department of Revenue via Form IT-WH, the production company can even apply the credit against withholding, or the production company can assign the credit to affiliated entities under O.C.G.A. § 48-7-42.

A.J. Rollins is a partner in SGR’s Tax Practice. He focuses on representing individuals and businesses in their day-to-day operations, tax planning and tax controversies. arollins@sgrlaw.com.

TRUST THE LEADERS | Summer 2018 | SGRLAW.com

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APPELLATE PRACTICE

by Honorable Leah Ward Sears

Appellate practice is a distinct discipline – a “last chance” to undo an unfavorable judgment or to preserve a hard-fought victory. SGR represents clients in appeals before the United States Supreme Court and federal and state appellate courts across the country. We serve existing clients, clients who come to us for the first time to handle their appeal and clients seeking to participate in appeals as “friends of the court” in the filing of amicus curiae briefs.

Is trial advocacy different from appellate advocacy?

Yes, the skills needed in a trial court are different from those needed on appeal. A trial lawyer’s talent in a jury trial is best utilized in selecting a jury, persuading that jury, raising timely objections, examining witnesses and maintaining an active presence for the fact finder, whether that happens to be the judge or jury. These skills don’t often translate well into the appellate arena, especially as lawyers have become increasingly specialized.

The types of arguments that sway juries don’t often persuade appellate judges. And writing an appellate brief is fundamentally different from writing a memorandum of law or trial brief to a trial court. A good appellate brief, for example, is not one that merely scoops all of the issues raised at trial into a brief on appeal without first undertaking additional analysis, research and reordering.

What makes a good appellate lawyer?

Good appellate lawyers know how appellate courts operate and the issues that are important to appellate judges. Good appellate lawyers also understand that appellate judges will always try to (1) apply the correct standard of review to the merits of a case; (2) develop the law in the jurisdiction in a way that makes sense; and (3) create precedent that is consistent and helpful. Appellate judges are also always thinking about whether the decisions they make will open the floodgates to frivolous litigation, create even more issues that will drain the resources of future litigants as well as the courts, or confuse an issue of law in a way that will inhibit parties from resolving disputes using alternative methods of dispute resolution.

You could say that an appeal is a postmortem of sorts, except you have the rare opportunity, if you win, to bring your case back to life. Appellate lawyers try to do this by diagnosing the problems at trial, presenting them clearly, creatively and intelligently to an appellate court by dissecting and, at times, reassembling, the facts and the applicable law to present a persuasive argument to the court. And just as most postmortems aren’t performed by the treating physician, most appeals shouldn’t be prosecuted without the sound advice and counsel of an appellate lawyer.

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Appellate Practice

After receiving an unfavorable outcome at trial, how do I decide whether it makes sense to appeal?

Appealing a case is a costly decision. We provide our clients with the estimated cost of pursuing an appeal, the expected duration of the appellate process and a forecast of the likelihood of success of their appeal. We do this by selecting which issues should be the focus of an appeal to ensure the highest probability of success. This process requires a careful review of the record. Appealing weak issues and including bad arguments in a brief can damage a client both by reducing the credibility of counsel to appellate judges as well as by wasting precious words and pages in a brief that could be better spent on issues that can be won. We know from experience, for example, that the best appeals seek to overturn just two or three issues, at most.

Should I add an appellate lawyer to my trial team?

In more complex cases you should seriously consider adding an appellate lawyer to your trial team to spot potential appealable issues early and ensure that legal arguments aren’t waived. Appellate counsel can also assist trial counsel present and preserve evidence in a manner that will help, should an appeal be necessary.

An appellate lawyer can also assist with pleadings, dispositive pretrial motions, jury instructions and verdict forms. Moreover, by engaging an appellate lawyer at the trial level, you’re sending a strong signal to opposing counsel, as well as the trial judge, that you’re in this for the long haul and are serious about pursuing the case to the highest court if you have to.

Are there reasons to hire an appellate attorney who was not trial counsel?

Yes, here are three good ones.

FIRST, an appellate lawyer will look at the case with “fresh eyes” and, in that respect, she’s looking at it in the same way an appellate judge will. That perspective allows her to view the case more objectively than the trial lawyer who has lived and breathed it for a long time and who therefore may not be able to identify the more limited core issues that are winnable on appeal.

SECOND, an appellate lawyer understands what appellate judges care about. Of course, all judges, both at trial and on appeal, seek to apply the law consistently and correctly. But they confront issues before them from very different places.

For instance, a trial judge is much more focused on the facts of the case at hand and, depending upon the stage of the case, has participated in its evolution. An appellate court, on the other hand, views the case for the first time when the judges start to read the briefs. On appeal, the parties have just one or two briefs, then an argument, to make an impression. That’s it, in most cases. The lawyer on appeal has to have the experience and skills to best take advantage of these opportunities that are limited by space and time.

THIRD, an appellate lawyer generally doesn’t have a personal stake in the arguments made and issues raised at trial, since he usually wasn’t on the trial team. As a result, he is in a better position to take a more dispassionate view about which issues to discard and which ones to keep – a decision that is essential to presenting a strong appeal.

There is a significant cost to every issue or argument that’s briefed on appeal. Adding weak arguments to a brief can dilute the strong arguments and draw the court’s attention away from them.

Honorable Leah Ward Sears is a partner in SGR’s Litigation Practice. As a retired Georgia Supreme Court Chief Justice, she draws on her background to bring a unique combination of skills and outstanding value to her clients. Among her many roles, she is an appellate lawyer, oral advocate and strategist, in addition to often serving as a neutral in arbitration proceedings and mediations. lsears@sgrlaw.com.

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The FAQ Issue

N O N P R O F I T P R A C T I C E

By Jim Bikoff

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Jim Bikoff Jim is a partner in SGR’s Washington, D.C. office.

He focuses on intellectual property and Internet law. He is also head of the Firm’s International Trademark Practice. jbikoff@ sgrlaw.com.

F

or many years, SGR has represented nonprofit organizations. We incorporated our longest-standing trade association client more than

100 years ago.

PRO BONO AND NONPROFIT R E P R E S E N TATI O N S

A S E L E C T I O N O F N O N P R O F I T G RO U P S S G R H A S R E C E N T LY A DV I S E D Heroes, Inc.

What types of entities are represented by your Nonprofit Practice?

SGR represents domestic and foreign nonprofit clients, including fraternal, benevolent and religious orders and institutions; public charities; international nongovernmental organizations; private foundations; and organizations dedicated to rescue of animals and providing for the families of policemen, firemen and other first responders who die in the line of duty. We represent highereducation institutions and associations that promote education outside the U.S. We also represent the world’s largest sports nonprofit organization.

What are some representative matters handled by the lawyers in your Nonprofit Practice? ● Assisted the oldest agricultural cooperation fraternal order in the U.S. in protection of its 175-year-old trademarks and copyrighted works and in litigation against infringers and cybersquatters. ● Advised an international sports organization on trademark and domain-name policy and enforcement matters, including litigation and arbitration proceedings. ● Designed and implemented antitrust compliance policies for numerous trade and professional

Heroes, Inc. is a Washington, D.C.-area nonprofit that provides support and assistance to the survivors of law enforcement officers and firefighters who die in the line of duty. SGR handles trademark, copyright and domain registration, litigation and counseling services for this client, including representing them in two recent federal court cases in which SGR obtained judgments against trademark infringers. www.heroesinc.com

Pilots N Paws Pilots N Paws is a 501(c)(3) organization based in Landrum, South Carolina. Its website is a meeting place for volunteers engaged in rescuing, sheltering and adopting animals, and volunteer pilots and plane owners willing to assist with animal transportation.

The mission of Pilots N Paws is to provide an environment in which volunteers can come together to arrange and/or schedule rescue flights, overnight foster care or shelter, and other related activities. For nearly 10 years, SGR lawyers have been providing legal services in the field of intellectual property. The Firm has helped Pilots N Paws register trademarks in the U.S., Canada and Mexico to protect the valuable goodwill associated with its services. We have counseled them on proper trademark use and helped update their website to protect their intellectual property.

We also represent the organization in licensing agreements and copyright infringement matters.

Recently, we assisted Pilots N Paws in addressing the unauthorized use of its marks on social media, shutting down Facebook pages of a competing “breakaway” organization as well as a counterfeit group page. SGR’s efforts on behalf of Pilots N Paws have been recognized by the National Aeronautic Association and Air Care Alliance. www.pilotsnpaws.org

societies.

National Coalition for the Homeless

● Managed state regulatory and legislative

For more than a decade, SGR has been providing legal services to this Washington D.C.-based charitable organization whose mission is to “prevent and end homelessness while ensuring the immediate needs of those experiencing homelessness are met and their civil rights protected.” To raise money and awareness, and build solidarity with those experiencing homelessness, the National Coalition encourages members of the community to participate in various “sleep out” events throughout the annual National Hunger and Homelessness Awareness Week.

SGR recently defended the National Coalition from an attack on its use of the generic term “sleep out” by a much larger organization providing similar services, ensuring that our client can continue to use this phrase in connection with its events. www.nationalhomeless.org

programs for surgeons’ societies. ● Advised several nonprofits on Internet governance and policy issues. ● Negotiated charitable gift agreements for gifts to large charitable organizations. ● Advised charitable organizations on unrelatedbusiness tax issues. ● Advised charitable organizations about complex structures, such as joint ventures, single-member LLCs and blocker corporations. ● Reviewed charitable organizations for compliance with group ruling requirements.

TRUST THE LEADERS | Summer 2018 | SGRLAW.com

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Japan Practice

by Kiyo Kojima

The Japan Practice is one of several country- or region-specific groups at SGR providing legal services to our international clients.

What is the Japan Practice?

SGR’s Japan Practice is primarily tasked with providing legal services to: 1. Japanese entities investing into the U.S. market; 2. U.S. entities investing into the Japanese or other Asian markets; and 3. Japanese enterprises already in the U.S. market.

We represent enterprises in a wide variety of industries, including automotive, chemicals, facilities/infrastructure, apparel, food processing, construction, logistics and warehousing, insurance, IT ventures, and others.

The Practice provides services in countless areas of the law, such as general corporate (entity formation, general compliance, etc.), discrete transactions (various agreements, real estate transactions, IP registration and prosecutions), day-to-day HR and corporate strategy matters, dispute resolution (negotiation, mediation, arbitration, litigation), and compliance matters (environmental, tax, antitrust, etc.).

Why is SGR a good fit for clients of the Japan Practice?

SGR’s unique culture – collegial, collaborative, supportive and empathetic -- makes it a particularly comfortable “home” for start-ups, middle market enterprises and closely held businesses. Oftentimes, the U.S. subsidiaries of foreign companies start out small, so we are a great fit for that.

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However, make no mistake that we have the “horsepower” to service “blue chip companies” and household names as well, and we often do. As small U.S. subsidiaries grow into full-blown players in the local employment scene, with thousands of workers, we are there to support their

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needs. SGR also has an incredibly diverse array of practice areas, thus creating a “one-stop shop” opportunity for our clients.

Additionally, SGR has a favorable geographical platform, with a strong presence in the southeastern U.S., New York City, Los Angeles and Texas, all of which are

appealing areas for our Japanese clients.

The Japanese culture in general and Japanese enterprises in particular place a high premium on attention to detail, helpfulness and goodwill. We strive to deliver these benefits, at competitive rates, to our clients every day.

Japan Practice

What does a typical day look like for the lawyers in the Practice?

Listening to clients’ business plans, intended strategies and desired results, and providing ● recommendations on details of entity formation (i.e., what, where, when, why and how), taking into account supply routes, customer locations, and distribution networks.

● Discussing operational realities, including incentives (federal, state and local, both statutory and discretionary), workspace/real estate matters (greenfield projects, purchases, leases), personnel possibilities (including visa options), and potential permits/licensing and other compliance issues.

● Working hand in hand with clients on discrete transactional matters, such as mergers, asset purchases, joint ventures, licensing and distribution arrangements, IP ownership and use, etc.

● Providing counsel regarding day-to-day human resource issues (harassment or discrimination allegations, responding to EEOC, NLRB or OSHA filings, etc.) and operational and compliance matters. As the saying goes, “Deals come and go, but people are every day!”

● Vigorously representing clients in various forms of dispute resolution, whether by negotiating settlements informally, or in mediation, arbitration or litigation.

Do you encounter any particular challenges?

There are, of course, the realities of time zone differences and conference calls in the middle of the night. But the true challenge is working with clients to anticipate the legal hurdles that may come their way, or to properly react to any issue that presents itself, and to do so in a manner that is transparent, understandable and respectful of the clients’ business operations, especially the bottom line.

In order to do this, we work very hard to quickly understand the context of any given situation – whether in an incentives negotiation or proposed merger, or in a dispute – and to share that insight with clients so that we can closely work together to better formulate a coherent, realistic strategy and devise efficient and workable methods for achieving the desired result.

DESCRIBE THE KINDS OF COMPANIES YOU WORK WITH. We work with an incredibly diverse array of enterprises of all sizes, in countless industries and in various stages of maturity. Some are sales offices of a few people, while others are household names consisting of hundreds, if not thousands, of workers.

Depending on the industry, a client served by our Practice could have several hundred employees in a single or a few locations, or a handful of employees in dozens of locations. Workplaces can be manufacturing, warehouse or distribution centers, an office environment or outside sales. Each client is comprised of its unique background, current realities and operational objectives. We must understand each company individually to serve them effectively.

Kiyo Kojima is a partner in SGR’s Corporate Practice. He assists international companies in relocating, operating and establishing subsidiaries in the U.S. He also advises on incentives and site selection, real estate acquisitions and construction agreements, corporate formation and governance, regulatory compliance, and contracts of all types to help ensure a seamless U.S. launch or transition for his clients. kkojima@sgrlaw.com.

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TIMBER PRACTICE

by Mark Pottorff and Matt Moore

The attorneys in SGR’s Timber Practice assist clients with acquisition, sale, management and financing activities related to “timberlands” – forests with trees that are capable of being used as commercial products.

Who owns the forest?

In the last 35 years, owners of private timberlands in the U.S. have evolved from individuals, families and industrial ownership into a diverse group of ownership entities that include families, institutional investors, real estate investment trusts (REITs) and conservation organizations. The biggest change has been the decline of industrial timberland ownership and the rise of institutional timberland ownership.

Why would a REIT own a forest?

Timberlands emerged as an attractive investment option for institutional investors in the early 1980s due to the passage of the Employee Retirement Income Security Act (ERISA) which, among its many measures, pushed private pension funds to diversify their portfolios beyond ownership of equity and fixed

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income instruments. On the sale side, changes in the tax laws in 1986 caused industrial owners to lose favorable capital gains tax rates to income generated from timber harvesting. Since then, virtually all large publicly traded forest products companies have either sold most or all of their timberlands, often to institutional investors, or converted themselves to timberland REITs. Timberland REITs have shares that are either publicly traded or privately held, maintain a special tax designation for corporations that invest in real estate, such as commercial properties, farms or timberland, and offer the advantage of facing little or no corporate income tax relative to traditional C corporations.

Institutional investors also often hire forest professionals, called timberland investment management organizations (TIMOs), to look for, purchase, manage and sell timberlands on their behalf. While we have represented a number of individuals in buying and selling timberlands, most of our transactions are for TIMOs and REITs.

Timber Practice

What should buyers look for in a timberland transaction?

Aren’t timber companies the “bad guys” who cut down the rainforest?

Buyers want to make sure the timberlands they purchase are a good investment. To do so requires a significant amount of due diligence, both on the ground and in the office. On the ground, buyers will want to confirm the number, age and types of trees on the property through a timber cruise or some other type of inventory verification. They will also want to hire an environmental specialist to confirm there are no environmental issues or endangered species that could materially impact the use of the property as timberlands. Buyers will want to verify the income being produced by the property – income that can come in through a myriad of ways: supply agreements for the timber, surface use agreements and easements for the minerals on the property, and recreational leases, among others. The due diligence should also include determining whether there are any restrictions on the property, such as conservation or mitigation easements, that could limit the activities conducted or harvesting of timber on the property. As timberlands can often be owned by families for many generations, confirming the title ownership of the property is vitally important. In large tracts where normal surveying is not practical, new mapping technology or drone services can be utilized to confirm the boundaries of the property being purchased.

Our clients aren’t involved in cutting down the rainforest, and they are very attuned to harvesting and maintaining the forests in a sustainable fashion. For every tree our clients harvest, they typically plant at least one more. U.S. forests are protected by many recognized certifications and laws, such as the Forest Stewardship Council and the Sustainable Forestry Initiative. Federal laws, such as the Clean Water Act, the Clean Air Act, the Endangered Species Act, the Migratory Bird Treaty Act and the Coastal Zone Management Act govern forestry practices in woodlands and swamps. Further protections exist at the state level through water quality and best management practices enforced by state forestry and regulatory agencies.

According to the Georgia Forestry Commission, commercial timberlands in Georgia grow 19 million tons more wood each year than is harvested, resulting in growth exceeding removals by 38%. Because the net growth of Georgia’s forests has consistently exceeded net removals, the volume of timber in Georgia is greater now than it was in the 1930s! Providing paper and other forest-created products generates jobs and income for millions of Americans.

So, feel free to print out those emails, without any guilt.

Is it true that SGR was involved in the “largest land deal since the Louisiana Purchase”?

Why do lawyers need to be involved if it’s just a bunch of trees?

Commercial real estate lawyers who specialize in timberlands advise their clients in connection with negotiating timberland purchase and sale agreements, loan agreements and related documentation, conservation easements, timber deeds, timber management contracts and wood supply agreements. In addition to commercial real estate lawyers, a timber practice also includes tax, corporate and environmental lawyers who advise clients on structuring entities to acquire timberland properties, in negotiating investment management agreements with their investor clients, in complying with the Hart-Scott Rodino Act and in dealing with the often complex environmental and endangered-species issues facing a timberland investor.

Yes. In 2006-2007, International Paper sold almost six million acres of its timberlands for several billion dollars. SGR had a couple of clients who bought significant portions of that property – over one million acres valued in excess of a billion dollars.

Mark Pottorff is a partner in and head of SGR’s Atlanta Real Estate Practice. He advises in commercial real estate matters, with substantial experience in timberland acquisitions and dispositions nationwide and abroad. mpottorff@sgrlaw.com.

Matt Moore is an associate in SGR’s Real Estate Practice. He represents lenders and developers in commercial real estate lending transactions and general real estate sales, purchase and leasing transactions. mmoore@sgrlaw.com.

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PUBLIC-PRIVATE PARTNERSHIPS

by Mark de St. Aubin

SGR represents public owners, developers, contractors, financing sources and other parties in the design, construction, financing, maintenance and operation of infrastructure. Drawing on its expertise in public and private project financing, real estate, construction and other areas, SGR is well suited to provide guidance to both public procurement authorities and private entities partnering to deliver such projects.

What is a public-private partnership?

The term “public-private partnership,” or “P3,” is commonly misunderstood and can mean different things to different people. P3 is a method for the procurement of public infrastructure (e.g., roads, courthouses, mass transit, public university buildings, airport rental car facilities, among others) using the resources of the private sector. On a typical infrastructure project – for instance, a high-speed rail line connecting two cities – the government selects an engineering firm to design the project, then raises funds for the new train through the issuance of bonds.

Next, the government entity awards a contract for construction of the project to a general contractor, typically the one with the lowest competitive bid. Upon completion, the government repays the bonds with the revenues generated by the project, and operates and maintains the facility for its useful life.

A P3 procurement of a public project is substantially different. The public entity advertises its interest in a certain type of project and then requests proposals from private firms interested in designing, constructing, financing, operating and maintaining the project for a term of anywhere from 30 to 50 years. The more open-ended nature of a request for proposals allows the private sector an opportunity to present the governing authority with innovative concepts for the design, construction, financing and other aspects of the project. Often, though not always, the private sector can present the public decisionmaker options with which it would not otherwise be familiar or able to introduce on its own.

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Construction Law Practice

How is a public-private partnership project structured?

P3 projects are structured through long-term contracts between the public governing entity and the private firm that has agreed to deliver, finance and operate the project for compensation. At the end of the contract, often referred to as the “concession period,” the asset returns to the public sector. The contractual basis for the relationship permits the public entity to impose key performance incentives on the private firm responsible for the project, from on-time delivery at the outset of the project to requiring the maintenance of state-of-the-art amenities for end users during the term of the project.

The P3 method is often touted for quality incentives that make sense for the private firm and result in the design and construction of a better-performing asset for the benefit of the end user and the public entity to which the project is returned at the end of the concession period. For example, a private firm that designs and builds a new basketball arena for a state university has an incentive to design to the highest quality standards so that the cost of maintenance during the life of the project is decreased, since that same private firm owes the public entity a maintenance obligation for, say, the first 40 years of the project’s useful life.

What are the primary benefits to using a P3 method of delivery?

There are many benefits to P3. Risk can be transferred to the party best positioned to bear that risk. For instance, LaGuardia Airport is currently renovating a major terminal, and continuing to operate during the course of the renovation. The risk of providing air travelers secure, timely flights while building a busy terminal at the same time is one that the New York and New Jersey Port authorities decided could be better addressed by a consortium of private firms with extensive experience in airport design and construction. Capital costs are not paid on the front end of a project, freeing up borrowing capacity for other public infrastructure needs better suited to standard public project financing and procurement methods.

The private firm or concessionaire provides the public entity a single point of responsibility for design, construction and operation risk. Overall delivery times for P3-procured projects are typically shorter, bringing new public assets online sooner than would be the case if conventional procurement were used. When the concessionaire or private operator’s compensation relies on user-based revenue, there is a strong incentive for the private firm to design, operate and maintain a facility that offers state-of-the-art features.

Similarly, the taxpayer dollar, whether in the form of a user fee or other means of compensation to the private operator, results in greater value for the money, since the operator with the most efficient, value-driven concept should be awarded the project. Finally, with proper contract terms, the public entity can negotiate for greater transparency and high levels of accountability in the project on the part of the private operator.

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Construction Law Practice

Are certain project types better suited to P3 procurement than others?

Not necessarily. But there are certain types of projects that are developing a track record of general success in the U.S. Transportation projects, student housing projects on public university campuses, and airport consolidated car rental facilities, among others, have seen sufficient repeated success. A jurisdiction that has not used P3 before can take on similar projects with a lesser degree of risk, as there are numerous private players with experience in such asset types and colleagues in other states to share lessons learned. If a public entity is considering a P3 procurement, it would be wise not to attempt a P3 with an asset type that has never before been delivered using the P3 approach.

What are the drawbacks to the use of P3 for public infrastructure?

While P3 procurement has been successfully used in the U.K., Australia, Canada, South America and elsewhere around the world, it remains relatively new to the U.S. P3 is late arriving to the U.S. because public money for infrastructure has typically been plentiful and cheap through the use of taxexempt debt financing. However, as the need for new and renovated infrastructure is spiking and the states’ ability to fund new projects shrinking, states will inevitably have to look more closely at using P3 procurement as an alternative. That means that P3 projects will need political champions, and those champions will need to expose themselves to the risk of doing business in a new way for a public that has grown accustomed to having the best infrastructure in the world. Finding public officials to champion P3 delivery will be an ongoing challenge. These P3 project champions have to demonstrate leadership not only to the public, but also within public agencies that have grown accustomed to one way of doing business.

P3 deals are more complex for public agencies than the conventional method of delivery. These projects are more complicated, involve far more advisers and take much more time to bring to financial close. State, county and local governments that do not have the skill sets required for P3 procurement should proceed cautiously, recognizing the cost, resource and time commitment that accompanies successful P3 procurement. Because the complexity and cost of such deals is greater than for standard public project procurement, the size of the project is important to attracting qualified private bidders. The rule of thumb used in the industry is that a project value in excess of $100M is needed to attract the interest of multiple sophisticated bidders, though smaller scale projects have certainly succeeded across the U.S.

Mark de St. Aubin’s practice is concentrated in the area of construction law, but he also represents clients in complex commercial matters. Focusing primarily on resolving both national and international private project disputes through arbitration, mediation and the courts, he has also represented his clients in public contracting matters involving state and federal government agencies. mdestaubin@sgrlaw.com.

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TAX PRACTICE The United States recently enacted a host of changes to its income tax rules. This FAQ addresses the most significant changes to the business income tax rules.

by Joe Mandarino

Is it true that because of the new tax law I should run my business in a corporation rather than a pass-through entity?

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The new U.S. tax act reduces the federal corporate income tax rate from 35% to 21%. For pass-through entities, the federal income tax rate will vary from 41% to 30%. At first glance, it would seem more efficient to operate a business in a corporation rather than a pass-through entity. However, even though it has a lower tax rate, a corporation may not be appropriate if the net cash flow of the business is distributed out to the owners frequently, or if there is a desire to sell the assets of the business in the future. The correct choice for a given business will depend on its operational model and exit strategy.

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Will the new tax law have any effect on the state income tax treatment of my business?

Because federal tax rates have decreased, there will be more pressure to optimize state tax rates. For example, on the corporate side, the high federal tax rate meant that state taxes were subsidized by 35%. That subsidy has decreased by 40% under the new U.S. tax act. In some jurisdictions, the state tax burden can approach half or more of the federal tax rate. Businesses with high state tax burdens may need to restructure operations to compete with more tax-efficient businesses.

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I understand that the new tax law cut the tax rates for corporations, but I operate a business in a pass-through.

Does the new tax law provide any incentives for me?

In an effort to reduce taxes on pass-through entities, the new U.S. tax act contains a special tax benefit for partnerships, trusts and sole proprietorships. Rather than creating a special tax rate just for pass-through income, the new U.S. tax act eliminates 20% of such income in calculating the owner’s ultimate taxes. For individual members of an LLC, for instance, this reduces the top tax rate from 37% to 29.6%. (Or from 40.8% to 33.4% if the 3.8% Affordable Care Act applies.)

This tax benefit is subject to several limitations:

• Income from certain service activities is excluded (the “service limitation”).

• Income from businesses without sufficient W-2 wages or assets is excluded (the “wage/property limitation”).

• Income and losses from all qualifying businesses are netted

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and any net loss carries forward to the next year (the “netting limitation”).

Significantly, the service and wage/property limitations do not apply to taxpayers who are under certain income thresholds.

The threshold is taxable income no greater than $157,500 ($315,000 for joint filers).

For taxpayers with taxable income in excess of $207,500 ($415,000 for joint filers), the limitations apply fully. For taxpayers with taxable income within these bounds, only a ratable portion of the benefit is permitted. For business owners who cannot utilize the income threshold, it will be extremely important to meet the service and wage/property limitations.

A business may have to be reorganized so that some or all of its income can qualify for the pass-through tax benefit.

Tax Practice

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I am considering selling my corporation this year. Will the new tax law impact how I structure the sale?

In structuring an acquisition of a regular corporation, there is a tension between the seller (who often prefers to sell the stock of the corporation) and the buyer (who will prefer to buy the assets of the corporation). The buyer, typically, will pay a premium for an asset purchase over a stock purchase.

Under old law, a seller in this situation would generally prefer not to do an asset sale unless it had significant net operating losses. Because of the reduction in the U.S. corporate tax rate, that premium may decrease. Conversely, many of the tangible assets acquired in a corporate asset sale can be immediately expensed under the new U.S. tax act. Under certain fact patterns it may be beneficial to the seller to do a taxable asset sale.

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The new U.S. tax act incentivizes U.S. corporations that earn “foreign-derived intangible income” – this is taxed at about 13% rather than the standard 21%. In certain circumstances, it may make sense to house intellectual property in the U.S. and license it to foreign affiliates. U.S. companies with foreign subsidiaries and/or a foreign parent need to carefully examine the new U.S. tax act to determine the best structure for developing, holding and licensing intangible property going forward.

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Does the new tax law provide incentives for the purchase of used assets?

My business includes significant foreign operations and/or foreign ownership. Does the new tax law impact how I should conduct operations?

The new U.S. tax act imposes a minimum tax on certain earnings of foreign affiliates, typically those in low-tax or no-tax jurisdictions. It also disallows some deductions for payments by a U.S. corporation to a foreign affiliate (e.g., royalties to a foreign parent). Although on balance the new rules appear to be more beneficial than not, they contain traps for the unwary and rely on nonsubstantive legal formalities. U.S. companies with foreign operations and/or a foreign parent should consider changes to their operations and capital structures to best navigate these new rules.

My business holds significant offshore earnings in foreign subsidiaries. Will the new tax law impact those holdings?

In the long term, U.S. companies with foreign subsidiaries may benefit significantly from the new U.S. tax act. For example, dividends from foreign subsidiaries are now generally exempt from U.S. tax. In contrast, the accumulated overseas income of any foreign subsidiaries prior to the new U.S. tax act is deemed repatriated. The repatriation income amount is generally taxed at a rate of 15.5% for cash items and 8% on all other assets.

The resulting tax liability can be spread out over eight years without an interest charge. In some cases, the repatriation income may be covered by a foreign tax treaty and, with careful cash flow management, may have zero net effect on worldwide tax expense. U.S. companies with accumulated offshore earnings should carefully manage the calculation and payment of the repatriation tax.

The new U.S. tax act provides a liberalized regime for expensing of tangible assets. This regime also applies to used assets acquired from unrelated parties in certain types of asset transactions. In the context of an asset acquisition, this format will generate pressure to allocate more value to tangible assets and less to intangible assets, such as goodwill.

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Does the new tax law have incentives to keep royalty income in the U.S.?

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My business has a lot of interest expense. Is it true that the new tax law restricts how much I can deduct?

Generally, the new U.S. tax act limits the deduction for net interest expense to 30% of the taxpayer’s EBITDA (starting in 2022, the limitation drops to 30% of EBIT). There is no transition relief – interest deductions for existing loans are limited just as for new loans. For businesses that have large amounts of net interest expense, alternatives to debt treatment may be available to fill the gap. For example, a sale-leaseback can generate equivalent rental deductions that are not subject to the interest limitation. A business with significant net interest expense may need to change its operations and/or capital structure to mitigate the loss of this tax benefit.

Joe Mandarino is a partner in SGR’s Tax Practice. He is well versed in a wide variety of businesses and transactions, including structuring M&A transactions (for both purchasers and sellers), international transactions (inbound and outbound), structuring private equity funds, financial products, and negotiating executive compensation and incentive arrangements. jmandarino@sgrlaw.com.

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Universities and Intellectual Property Law

by Matt Warenzak

Universities and colleges face intellectual property (“IP”) issues on a regular basis. The World Intellectual Property Organization (WIPO) refers to universities as “factories of the knowledge economy” that can utilize patents and copyrights to “disseminate the knowledge they generate and to have that knowledge used in the economic sector.” In other words, universities and public research institutions are large producers of IP through their research programs while also being large consumers of IP as they educate their students.

Who owns an invention developed at a university?

Universities are in a unique position when it comes to patents. Professors, researchers and students generate a great number of inventive concepts through research for which patents can be pursued. However, given the collaborative nature of research, there are ownership issues. Most graduate students and researchers are required to transfer ownership to the university for inventions that result from their research and studies. On the other hand, undergraduates, absent some other agreement, are normally allowed to retain ownership of inventions they develop while in school.

Ownership issues can vary tremendously when it comes to professors. For example, when professors move from university to university, their research travels with them. In such instances, joint ownership issues arise. In addition,

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Intellectual Property Practice

What type of copyright issues do universities face?

Universities are great distributors of information, including that which is developed from professors and other university sources. With that in mind, universities must make sure that they are diligent in protecting their copyrights from abuse from others, while also making sure that they do not infringe other’s copyrights.

For example, who retains the copyright for works generated by professors, students and the like? Does a university own copyright in research papers that are submitted to peer review publications? What about a professor’s book on a particular literary subject? Who owns graduate students’ dissertations? Universities must have well-established copyright policies in place to make sure these ownership issues are addressed before they come to a head. professors can have agreements in place with the university that allow the professor to retain certain rights as well. However, in most instances, the professors are required to assign their rights to the school.

Funding also impacts ownership rights. For example, while it is very prestigious for professors to obtain research grants, in most cases the benefactor will retain rights to the intellectual property that is generated from the research. This is especially true for government-funded research grants. Further, universities are research-driven institutions – development of commercial results is not their mission. Therefore, most universities will license the IP derived from the research to the private sector. As a result, universities must maintain a balance of satisfying the licensees’ commercial needs while also protecting the universities’ rights in the IP.

How does publication affect patent rights?

Another patent issue that frequently occurs with patents in the university setting is the impact that the push to publish can have on patent rights. The nature of research institutions requires that professors, graduate students and other researchers, in order to gain tenure, increase their reputation amongst the scientific community by publishing their research and its results in a continuous and rapid fashion. However, the rush to publish research can have an adverse impact on the patent rights. This is especially the case when the publication occurs before a patent application directed to the same information/inventive concept is filed. In such instances, the publication can be classified as a prior art disclosure that can prevent the acquisition of patent rights.

I can see how copyright and patent issues arise, but what about trademark issues?

Trademark issues also affect universities on a consistent basis. Just as universities own trademarks related to their athletic teams, they also own trademarks related to publications and to products that are generated by their research. Therefore, universities face the same burdens of traditional commercial entities to register and enforce such marks.

Another new issue that has appeared in the digital age is online learning, and the copyright issues that it generates.

For example, for distance learning, who owns the rights to video-captured lecture – the professor or the university?

What happens when a student records a lecture and posts it online – does the school have the right to request the video be taken down? To combat these issues as they occur, universities must develop policies that clearly lay out who owns the copyrighted material and what rights students have to information.

Lastly, professors frequently use other’s copyrighted material under the fair use doctrine. The fair use doctrine is the right to use portions of copyrighted materials without permission for purposes of education, commentary or parody. While it is an established doctrine, it does not protect all uses of copyrighted material. Therefore, to avoid uses that aren’t protected by fair use, universities should establish a copyright policy that outlines what uses by professors of others’ copyrighted works are covered by the fair use doctrine.

Matt Warenzak is a partner in SGR’s IP Practice. He specializes in patent litigation, patent prosecution and trademarks. He is an experienced general IP counsel, handling and litigating issues from all forms of IP matters, including patent, copyright, trademark and licensing. mwarenzak@sgrlaw.com.

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AnnePi t t eri sapar t neri nSGR’ s NewY or koffic e.

Shef oc us eson Cor por at eandReal Es t at el aw. api t t er @s gr l aw. c om

Finish Line

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f you are a hippie, a flower child or just a fan of ‘60s music, you

satisfactory result in that matter, Roger expanded his practice, representing

may recall these lyrics: “Only in America / Can a kid without a

underdog musicians against big record labels. At that point, Roger was a

cent / Get a break and maybe grow up to be President.”*

name partner in Balber Pickard Maldonado Van Der Tuin, PC. BPMV, a firm

Well, that did indeed happen to Roger Maldonado, SGR New

focusing on real estate, general business and litigation, was

York litigation partner, who became President of the New York City

a natural complement to SGR’s New York City office. The two combined

Bar Association in May.

in early 2017.

Roger comes from a family with a history of serving and protecting America.

Deep roots in New York City

His father and grandfather were both in the U.S. Army, and he was born on

Early in his career, while he was still with Legal Services, Roger joined the

a military base in Puerto Rico. At one time, Roger himself considered West

New York City Bar Association. With his Legal Service focus on housing

Point and a military career, but his father encouraged a broader approach to

issues, he naturally became a member of the City Bar’s Housing Court

service, believing that it would be easier to reach one’s full potential outside

Committee, becoming Chair of the Committee and of the Task Force on

the Army. It is not a stretch to see how the family tradition translated into a

Housing Court. Roger was fascinated with the process of bringing together

career upholding the law and making sure that the law operates to benefit

people with diverse points of view – pro-landlord and pro-tenant attorneys

all members of the community, not only those with means and access. That

and judges in the housing court system – to forge common ground and

in a nutshell is a key part of Roger’s overall mission as City Bar President, as

create a common policy. That experience led Roger to join other committees

Roger clearly declared in his inaugural address to the City Bar membership.

and take on other roles at the Bar Association. Over the years, he chaired

Roger’s early education was in schools on military bases and Catholic schools. For his advanced studies, Roger attended Yale University and then Yale Law School. His plan was to move back to Puerto Rico to practice law, but the best-laid plans went awry when he met his future wife, Betsy, in undergraduate school. Betsy wanted the same opportunity Roger had to get the best education possible, and she wanted to complete medical school and her residency in the U.S. Betsy might not recognize this in herself, but her insistence on having an equal career opportunity places her among the early crusaders in the equality-of-the-sexes movement.

the Council on Judicial Administration, the Task Force on International Legal Services and the Task Force on Puerto Rico, and served as Executive Vice

Roger has a true affinity for New York City. His roots there are as deep as they are in his native Puerto Rico, where much of his family still lives.

President of the Bar Association and a member of its Executive Committee.

Roger has a true affinity for New York City. His roots there are as deep as they are in his native Puerto Rico, where much of his family still lives. He married Betsy in 1985 at the World Trade Center. He has lived in the New York area his entire legal career and raised his two children, Roger David and Maria, there. Both of his children have continued the family tradition of service by becoming lawyers. Roger says he feels privileged to serve as President of the City Bar,

Dedicated to serving the community

without regard to the fact that he is the first Hispanic President of the Bar

The concept of service to community manifested itself in Roger’s first job

Association, but the significance of that achievement is not lost on others in

out of law school. He joined the South Brooklyn Legal Services office, which

the Hispanic community and the legal profession. Roger sees his presidency

provides civil legal aid to low-income residents. His focus was on housing

as an opportunity to further reach out to the New York community in

issues, and he put his bilingual skills to good use representing many in the

general and to focus on the Hispanic and other community issues that are

Latino community unfamiliar with the U.S. court system and laws. Roger

so important to him.

eventually became director of the Housing Unit.

After eight years at Legal Services, Roger left to try his hand at private

Despite being in the spotlight now that he is President (which has also earned him a mention in Wikipedia!), Roger is still humble and unassuming,

practice, where he became a general commercial litigator. Even at that early

doing his two jobs at SGR and at the Bar Association every day. According

stage in his career, colleagues recognized Roger’s dedication – it was one of

to Betsy, he even still takes out the trash. SGR is proud to claim Roger as

his opponents while Roger was working at Legal Services who introduced

one of its own. Future issues of Trust the Leaders will continue to feature

Roger to the Government Development Bank for Puerto Rico, which

the good works of the New York City Bar under

became one of Roger’s first major clients.

Roger’s leadership.

When one of the people with whom Roger worked at the Development Bank started his own practice, he sought out Roger to work together on a copyright matter on behalf of a Latin American musician. With a very

* These lyrics are from “Only in America,” written by Jerry Leiber, Mike Stoller, Barry Mann and Cynthia Weil, most famously sung by Jay and the Americans.

TRUST THE LEADERS | Summer 2018 | SGRLAW.com

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Trust the Leaders is printed on recycled paper