October 18

Terra, D.O.P. and the Lanham Act

San Marzano tomatoes are often praised as the best tomatoes in the world. But not every San Marzano tomato is a tomato grown in San Marzano sul Sarno in the Campania region of Italy because the label “San Marzano” refers to both a type of tomato and a location. And some producers are growing San Marzano style tomatoes in the United States, are calling them “pomodoros,” which is, of course, Italian for tomato, and may be giving Italian producers of authentic D.O.P. San Marzano tomatoes agida. Why? Because the American producer is relying on the good reputation of the San Marzano brand to sell its product that is not held to the strict guidelines imposed by Italian law.

Do the tomatoes grown in California taste the same as the ones grown in San Marzano sul Sarno, Italy? An American consumer, who has never tasted authentic, San Marzano tomatoes may never know. The purveyor of true San Marzano tomatoes not only loses out on the initial sale, but may lose future sales either because the consumer is underwhelmed by the inauthentic product or because the consumer is satisfied with it. In either case, the consumer is unlikely to reach for the more expensive, true San Marzano tomatoes the next time he/she is in the market. Thus, it looks like the tomatoes may be ripe for litigation.

Does terra matter under the law? The short answer is, yes, the producer of authentic San Marzano tomatoes might be able to obtain damages under U.S. law. Although there are no D.O.P.( Denominazione d’Origine Protetta), A.O.C. (Appellation d’Origine Contrôlée), or similar origin designation under U.S. law, the courts have made clear that a misrepresentation of product origin or even a label that is misleading about product origin can violate the Lanham Act, which protects against false affiliation and false advertising. And a competitor who can show injury can bring a civil action even if the FDCA takes no issue with the food label. Relief may include injunctive relief, lost profits, disgorgement of profits gained as a result of the false advertising, amounts necessary for corrective advertising, and, in the exceptional case, attorneys’ fees. The Lanham Act permits courts to increase damages to no more than three times the actual damages proved.

At Felicello Law, we are fascinated by food and the law. Contact us at info@felicellolaw.com or on Twitter @rfelicello if you are interested in continuing the discussion.


June 10

Do you need a business divorce?

Not only marriages fall apart. Business relationships often curdle as well, as a result of disagreements as to the direction of the business, concerns about management’s use of business resources, or personality riffs. If a business is public, it is easy for an investor to sell his or her interest and walk away from the venture. But in the case of non-public companies, sometimes the only way to get money out of a failing or dysfunctional venture is to head to court for a dissolution (referred to as a “business divorce”).

Of course, as in the case of family divorce, heading to court may not be the best solution. After all, litigation is often time-consuming and can be expensive. If the parties can agree to divorce amicably, divide their assets, and move on in separate directions, then the court process can be avoided. But even in these cases, guidance from an attorney can help the parties to be sure that the division of assets is fair and final, so that the exiting party is not left on the hook for future liabilities of the business.

Moreover, unfortunately, sometimes what starts as an amicable parting of ways becomes messy and difficult, especially where the parties can’t agree on valuation or if there is suspicion or evidence that one party has acted improperly either by misusing company assets or by making decisions that are detrimental to the business. That’s why it is important, especially for a party with a minority interest, to be sure to have an experienced attorney guiding the process.

One way to lessen the headache of a business divorce is to plan ahead with a business “pre-nup.” The Operating Agreement, Shareholders’ Agreement, or other operative document for the business should describe how a minority interest holder can exit the business and provide a procedure for valuing the interest upon exit.

If you are in need of a business “pre-nup” or divorce, contact us at Felicello Law P.C. (info@felicellolaw.com).

March 31

Simple Elegant Argument

As a litigator, I often find myself trying to simplify my clients problems as much as possible. Clients often resist this process and want to go after their opponent for every slight or hard feeling.

There are a few problems with a “kitchen sink” approach to litigating. First, you are virtually guaranteed not to have a quick resolution to the matter when you seek to argue about everything that went wrong in the parties’ relationship. The court and the parties are bound to get bogged down in the myriad details. The process is likely to be time-consuming, and both sides are going to end up with large legal bills. Second, not all problems or disagreements are legal problems that the law can fix. By simplifying the problems to those that have a clear legal answer, you can generally get to a positive outcome in a (relatively) shorter period of time. Third, and most importantly, simple arguments are more likely to win. If you are able to present the court with a simple, elegant solution to the dispute, the court is going to be more inclined to rule in your favor.

And it often turns out that once you solve the “simple” legal problem, the other details either become much less significant or work themselves out.

If you need help simplifying your business relationships, contact us at 646-480-5722 or info@felicellolaw.com.

September 16

The JOBS Act in the news:

open book

The S.E.C. and the S.B.A. are teaming up to promote new options for raising capital under the JOBS Act for small businesses. The first event will be held on September 25, 2014. For more information, visit here.

The WSJ is reporting that companies that have taken advantage of the JOBS Act exemptions to provide less transparency have seen their share prices fizzle within a year of their IPO. See: here.

We’ve never been a fan of the less transparency provided by the JOBS Act exemptions.

The S.E.C. still has not adopted its rules relating to crowdfunding.Here are a few videos of Rosanne discussing the JOBS Act:

S.E.C. rulemaking under the JOBS Act — http://trib.al/kdpwfYg

Why hedge funds still aren’t advertising — http://trib.al/59W9TEw

Crowdfunding under the JOBS Act — http://trib.al/cuZRrL1

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