WILT TOIKKA KRAFT, LLP

Sixth Circuit Extends Family and Medical Leave Act Protections to Additional Family Relationships The Family and Medical Leave Act (FMLA) offers job-protected, unpaid time off to eligible U.S. employees for various family and medical reasons, including pregnancy, childbirth, adoption, and personal or family illness. Under the statute, eligible employees are permitted to take FMLA leave to care for a family member with a serious health condition. However, the law restricts the definition of “family member” to a parent, spouse, or child—excluding siblings. This limitation became a point of contention in 2019 when Celestia Chapman requested continuous FMLA leave from her employer, Brentlinger Enterprises, operating as the Midwestern Auto Group (MAG), to care for her adult sister who was dying of cancer in another state. MAG, a luxury car dealership in Columbus, Ohio, denied the request, citing the restrictions of the FMLA. Undeterred, Chapman filed a lawsuit, asserting that the FMLA allows leave to care for someone functioning in an “in loco parentis” role, meaning a person who acts as a parent to a child, even if not biologically related. Chapman argued that, at the time of her request, she was performing parental duties for her incapacitated sister, which should have qualified her for FMLA leave. However, the trial court rejected her argument, ruling that the FMLA required proof of a parent-child relationship before the sister’s incapacity. Since Chapman had not served as her sister’s guardian or caretaker before her sister’s illness, the court determined that Chapman could not claim an “in loco parentis” status. The Sixth Circuit, however, disagreed with the trial court’s narrow interpretation of the statute. The Court found that the FMLA does not specify when an “in loco parentis” relationship must begin, whether before or after the age of 18, or even before a person becomes incapacitated. The Sixth Circuit instead looked to the common law meaning of the term, which does not impose such temporal restrictions. The Court concluded that by including “in loco parentis” relationships in the scope of FMLA protections, Congress intended to include individuals outside the traditional nuclear family—such as an employee who assumes a parental role for a critically ill dependent relative. The Sixth Circuit’s ruling introduces new considerations for employers who previously believed that the FMLA’s definition of family relationships was straightforward. Employers in the Sixth Circuit (which covers Ohio, Kentucky, Michigan, and Tennessee) must now exercise caution before automatically denying FMLA leave requests, particularly when employees present information that suggests their caregiving responsibilities go beyond the typical sibling role. Our DC employment are here to help if employees have assumed a parental role.

Copyright Office Delays Final Report on Artificial Intelligence to 2025 This week, Director Shira Perlmutter announced that the publication of part two of the U.S. Copyright Office’s three-part report on copyright issues surrounding artificial intelligence (AI) will be delayed further. In a letter addressed to the ranking members of the Senate Subcommittee on Intellectual Property and the House Subcommittee on Courts, Intellectual Property, and the Internet, Director Perlmutter explained that while “substantial progress had been made,” the Office will not be able to release part two by the end of 2024. Instead, the new expected publication date is “early 2025.” Part two of the report will focus on the copyrightability of generative AI outputs, building upon part one, which covers digital replicas. Director Perlmutter further noted that, following the release of part two, the third and final part of the report would be published in the first quarter of 2025. This final section will address “analyzing the legal issues related to the ingestion of copyrighted works to train AI models, including licensing considerations and the allocation of potential liability.”

Trade secret litigation is experiencing a boom in the U.S., driven by several key factors. These include the increasing mobility of the global workforce, the ease with which electronic data can be captured and transferred, the involvement of nation-state actors in information theft, and the time-limited benefits and uncertainties of patent litigation. For companies seeking recourse for trade secret theft, the U.S. offers significant advantages as a legal venue—particularly with its extraterritorial application of laws and a wide range of monetary remedies available in U.S. District Courts, as well as the powerful exclusion of goods at the border through U.S. International Trade Commission (ITC) Section 337 proceedings. The ITC offers a robust remedy for trade secret protection. The ITC has the authority to exclude imports that result from misappropriated trade secrets. Regardless of where the trade secrets were stolen, the ITC can issue exclusion orders that block the offending products from entering the U.S. market. While the ITC has worldwide jurisdiction over defendants who import goods into the U.S., complainants must prove the existence of a U.S. domestic industry related to the goods they seek to protect. Additionally, in trade secret cases, the complainant must present a specific theory demonstrating that the misappropriation has threatened or will substantially harm a U.S. industry. Several factors influence the decision of whether to pursue a trade secret claim in district court or at the ITC: – Nature of the Remedy Sought:U.S. District Courts offer monetary remedies, while the ITC provides exclusion orders. – Speed to Resolution: ITC cases typically take 19–20 months from complaint filing to final determination, with “file to trial” often taking less than 12 months. In contrast, district court litigation can exceed 2 years to reach a trial and disposition, impacting both time and cost. – Jurisdiction: As mentioned, the ITC has worldwide jurisdiction, while U.S. District Courts require defendants to be subject to personal jurisdiction. – Discovery: Discovery in U.S. District Court is extensive, while ITC discovery tends to be more streamlined, with responses due within 10 days of service compared to 30 days in U.S. District Court. – Adjudicator Expertise: ITC administrative law judges handle intellectual property cases daily, while U.S. District Court judges have varying levels of experience with trade secret law. – Preclusive Effects: Unlike patent disputes, where an ITC ruling is typically not preclusive in district court, a final ITC determination on trade secret misappropriation generally must be recognized by U.S. District Courts, meaning defendants cannot re-litigate the same claims. Choosing the right forum for trade secret misappropriation claims is a complex decision. However, defending against a claim in either forum can be challenging, but our DC IP lawyers are here to assist. 

Weathering the Storm: Key Wage and Hour Concerns for Employers During Inclement Weather When winter storms strike, businesses are often faced with the difficult decision of whether to shut down operations for employee safety, bringing wage and hour concerns to the forefront. During unexpected closures, employers must consider whether employees are entitled to be paid under the Fair Labor Standards Act (FLSA). Below is an overview of employers’ legal obligations during weather-related disruptions to operations. Exempt Employees Generally, employers must pay exempt employees their guaranteed salary under the FLSA, as employers cannot deduct pay for absences caused by the employer. This includes closures due to weather or business reasons. However, exempt employees who can work remotely during such closures are not affected from a wage and hour perspective. Employers may require exempt employees to use accrued paid time off (PTO) during these shutdowns, although some employers may choose not to do so to avoid negative impacts on employee morale, particularly during difficult times. Additionally, the nature of exempt employees’ job duties might allow them to continue working remotely even without power or internet. Nonexempt Employees The FLSA mandates that employers pay nonexempt employees for all hours worked. If an office or facility closes due to inclement weather and a nonexempt employee cannot work remotely due to the nature of the job, the employer is not required to pay the employee for that time. However, employers may still choose to pay employees in these situations as a policy decision. Similar to exempt employees, employers may allow or require nonexempt employees to use their PTO during weather-related closures. However, employers must be careful not to conflict with paid sick leave laws if they require employees to use too much PTO in a way that might violate local regulations. Key Takeaways Employers in areas frequently affected by winter storms should consider these wage and hour factors when creating policies for weather-related disruptions. Some businesses have removed such policies from handbooks due to most employees having remote work capabilities, particularly after the pandemic. Our DC employment lawyers are here to support employees need to remain safe during winter storm weather.

Regulating AI: Modify Current Laws or Enact New Legislation? Intangible assets account for over 90% of the value of every AI company. A robust intellectual property (IP) strategy is essential for protecting these assets, driving higher valuations, and providing leverage when commercializing technology. Here are some examples of how these nuances impact the development of IP strategies for AI technology or platforms: Data Intensity. AI companies are highly data-driven, and this is especially true when considering what will likely become the most valuable intangible assets of the company. Legal protection of data is complex and often varies by jurisdiction. Contracts Rule: More than in any other technology sector, AI companies must pay close attention to the drafting and negotiation of contracts related to both the development and commercialization of intangible assets. In many cases, ensuring that contracts clearly address issues such as ownership of derivative data or technology improvements, and the right to use third-party software or data to develop and commercialize AI products, is a key part of a successful IP strategy. Tough-to-Protect Innovations: Many AI companies’ most valuable intangible assets—those providing competitive advantage—are challenging to protect using traditional intellectual property mechanisms, like patents. Determining which IP tools to use for which aspects of the company’s AI innovations can be difficult, but given the crowded market and complex patent landscape, it’s crucial to dig into the specifics of the company’s technology and develop an appropriate patent strategy. Trade Secrets Strategy and Management: Protecting trade secrets is a key component of any well-managed AI company’s IP strategy. But to be effective, trade secrets protection must be intentional and supported by robust business processes. Too often, AI companies treat trade secrets as a catch-all category, lacking a clear strategy or processes for managing them. This approach becomes evident during due diligence in financing rounds or when a company must enforce its trade secrets—especially if an employee leaves to join a competitor. Open Source and Open Data: The use of open-source software and open data is common in AI, but not all “open” resources are as legally open as they may seem. The use of open-source software can sometimes be problematic depending on the terms and conditions of the license. In conclusion, all of these nuances can be effectively addressed by AI companies with a disciplined commitment to building a value-driven IP strategy that also mitigates risk. With expert guidance, companies can focus their efforts and resources on developing IP assets that matter and scale their efforts at the right points in the business’s growth.

SCOTUS Takes on Title VII and Reverse Discrimination Claims The U.S. Supreme Court has recently agreed to hear a highly contentious case that will examine the standards of proof for reverse discrimination claims under Title VII. This case follows closely behind the Court’s decision in Muldrow v. City of St. Louis, Mo., where it lowered the burden of proof for employees claiming adverse employment actions. In that ruling, employees are now required to show that they suffered “some harm respecting an identifiable term or condition of employment.” Looking ahead, the Court will address the issue of “reverse” discrimination in Ames v. Ohio Department of Youth Services, specifically considering whether members of majority groups must meet a higher pleading standard when filing their claims. In Ames, a heterosexual female employee filed a lawsuit against her employer, claiming that she was both demoted and denied a promotion due to her sexual orientation. The district court applied a higher pleading standard for claims involving majority group members, stating that the plaintiff needed to show “background circumstances to support the suspicion that the defendant is that unusual employer who discriminates against the majority.” The court dismissed the case, ruling that the plaintiff failed to provide adequate evidence of these “background circumstances.” The Sixth Circuit Court of Appeals upheld the lower court’s decision, applying the same heightened standard. While the appellate panel acknowledged that the plaintiff might have been able to establish a traditional discrimination case, her failure to present background circumstances—such as showing that “a member of the relevant minority group” was responsible for the adverse employment action or providing “statistical evidence demonstrating a pattern of discrimination by the employer against the members of the majority group”—was ultimately detrimental to her claim. In a concurring opinion, the Chief Judge agreed with the majority’s application of the background circumstances rule but disagreed with the use of such a standard. He expressed hope that the Supreme Court would eventually address the matter. With the Court agreeing to review the case, this decision aligns with the Supreme Court’s broader trend of increased scrutiny regarding the role that race, gender, and other protected categories play in legal matters, as seen in rulings like Muldrow and the Students for Fair Admissions case. Should the Supreme Court decide to invalidate the background circumstances rule, it could pave an easier path for non-traditional plaintiffs to prove reverse discrimination under Title VII. We will continue to track developments in this case and provide updates when SCOTUS renders its decision.

The Foundation of Innovation: Why Patent Searches Matter In today’s rapidly evolving landscape of innovation and intellectual property (IP) protection, understanding the patent environment is no longer just advantageous—it is essential. Patent searches are a fundamental part of the intellectual property lifecycle, serving as a critical tool for inventors, companies, and legal professionals. This article explores the importance of conducting thorough patent searches, the timing considerations, and the methodologies involved. It also examines the pros and cons of conducting patent searches internally at law firms versus outsourcing to specialized search firms, with the aim of encouraging a broader discussion about the strategic use of patent searches. What is a Patent Search? A patent search is a comprehensive investigation into existing patents, published patent applications, and public disclosures. This process is typically used to assess whether an invention is novel and non-obvious. Patent searches cover various databases, including those of national and international patent offices, to uncover prior art that might affect the patentability of an invention or a company’s freedom to operate (FTO) within a given domain. These searches can be customized to meet specific client needs, adjusting for factors such as geographic scope, time frame, field of technology, and other aspects influencing patentability and FTO. The Significance of Patent Searches Saving Time and Resources: A thorough patent search conducted before filing a patent application or preparing an FTO analysis can save valuable time and resources. By identifying potential patent infringements or uncovering closely related prior art early in the process, companies can avoid costly issues later on—such as amending or abandoning filed applications, defending against infringement claims in litigation, or challenging patent validity with the U.S. Patent and Trademark Office (USPTO). Conducting patent searches in-house within law firms offers the advantage of leveraging legal expertise and direct access to specialized databases. This approach can be efficient for firms with experienced IP professionals, as it allows seamless integration of search results into the patent preparation and prosecution process. Patent searches are a critical component of any intellectual property management strategy. Our DC IP lawyers know that by conducting thorough patent searches at key stages, inventors and legal professionals can navigate the patent landscape more effectively, ensuring that innovations are well-protected and positioned for success.

NLRB Revises Standard for Employer Comments on Unionization Efforts On November 8, 2024, the National Labor Relations Board (“NLRB”) issued a landmark decision in Siren Retail Corp. d/b/a Starbucks, overturning an almost 40-year-old precedent that allowed employers to tell employees how unionization could affect their working relationship. The NLRB’s new standard will apply to all cases filed after November 8, 2024. The Previous Standard In 1985, the NLRB ruled in “Tri-Cast, Inc.” that employers were lawfully permitted to inform employees that their relationship with the employer would change if they unionized. Specifically, employers could explain that once a union is involved, individual grievances would no longer be addressed directly by the employer. This decision established a broad rule allowing employers to communicate the negative consequences of unionization as long as the statements were truthful, which became the prevailing standard for decades. The Starbucks Case In the “Siren Retail Corp.” decision, the NLRB criticized the Tri-Cast rule, noting that it “categorically immunized nearly any employer statement to employees touching on the impact that unionization would have on the relationship between individual employees and their employer,” even if such statements “could have a reasonable tendency to coerce employees.” Although the Board applied the Tri-Cast standard in the Starbucks case to avoid an unfair outcome, it made clear that the rule would no longer apply in future cases. The NLRB overruled Tri-Cast prospectively, stating that this shift would take effect for all cases filed after November 8, 2024. The “New” Standard The NLRB’s ruling in “Siren Retail Corp.” effectively replaces the Tri-Cast framework with an older standard from NLRB v. Gissel Packing Co., a 1969 decision by the U.S. Supreme Court. Under the Gissel rule, employer statements regarding the impact of unionization are assessed on a case-by-case basis. Employers must “carefully phrase” these statements, ensuring they are based on “objective fact” and reflect the employer’s belief about the “demonstrably probable consequences” of unionization that are beyond the employer’s control. If, however, the statement suggests that the employer will act “solely on his own initiative for reasons unrelated to economic necessities,” it will be considered an unlawful threat. What Should Employers Do Now? With the new standard in place, employers are required to ensure that any statements they make about unionization are not only fact-based but also carefully worded to avoid any potential for coercion. Since the analysis is now conducted on a case-by-case basis, employers face uncertainty regarding the legality of their communications. Our DC employment lawyers recommend employees protect their rights and seek proper legal counsel. 

Court Rules Against Raw Story, Dismissing DMCA Claims Against OpenAI OpenAI scored a major legal victory yesterday as Judge McMahon dismissed Raw Story Media’s Digital Millennium Copyright Act (DMCA) claims, ruling that the plaintiffs lacked standing—”No concrete harm, no standing.” Raw Story Media, Inc. and AlterNet Media, Inc., prominent players in the news industry with over 400,000 published articles, accused OpenAI of violating the DMCA, specifically Section 1202(b)(i). The plaintiffs claimed that OpenAI’s ChatGPT had ingested thousands of their copyrighted articles—without permission and stripped of author names, titles, and copyright notices—during its model training process. In a decisive ruling, Judge McMahon of the United States District Court for the Southern District of New York granted OpenAI’s motion to dismiss, stating that the plaintiffs failed to demonstrate any concrete harm. The court echoed the Supreme Court’s reasoning in TransUnion LLC v. Ramirez: “No concrete harm, no standing.” The court further emphasized that the removal of Copyright Management Information (CMI), without evidence of dissemination or actual damage, was “too abstract” to be considered a concrete injury. As the ruling explained, “Plaintiffs have not alleged any actual adverse effects stemming from this alleged DMCA violation.” The court also addressed the plaintiffs’ request for injunctive relief, which sought to compel OpenAI to remove their content from its systems due to a “substantial risk” that ChatGPT might generate verbatim responses reproducing their articles without credit. “Plaintiffs have not plausibly alleged that there is a ‘substantial risk’ that the current version of ChatGPT will generate a response plagiarizing one of Plaintiffs’ articles.” “An allegation of future injury may suffice if the threatened injury is ‘certainly impending,’ but that threshold has not been met here.” Judge McMahon also made it clear what the plaintiffs were truly after: “Let us be clear about what is really at stake here. The alleged injury for which Plaintiffs truly seek redress is not the exclusion of CMI from Defendants’ training sets, but rather Defendants’ use of Plaintiffs’ articles to develop ChatGPT without compensation to Plaintiffs.” In essence, the plaintiffs’ real issue was the unauthorized use of their articles without payment, which is not addressed by Section 1202(b)(i) of the DMCA. This distinction led the court to dismiss the claims. While the dismissal was without prejudice, allowing the plaintiffs a limited chance to amend their complaint, Judge McMahon expressed doubt: “I cannot ascertain whether amendment would be futile without seeing a proposed amended pleading. I am skeptical about Plaintiffs’ ability to allege a cognizable injury.” Our DC IP lawyers recognize this ruling underscores a key point: if you’re going to challenge a tech giant like OpenAI over copyright issues, you need evidence of actual harm.

EEOC Strengthens Enforcement of Pregnancy Discrimination Laws Under PWFA Just months after finalizing its rule to implement the Pregnant Workers Fairness Act (PWFA), the U.S. Equal Employment Opportunity Commission (EEOC) has taken legal action against multiple employers accused of violating the law. – The EEOC has filed several lawsuits under the PWFA, signaling its strong commitment to addressing pregnancy discrimination and ensuring that employers provide reasonable accommodations for pregnant workers. – The PWFA, which took effect on June 27, 2023, mandates that covered employers offer reasonable accommodations for pregnancy-related conditions. While these enforcement actions are still in the early stages, they offer insight into how the EEOC interprets the PWFA and the types of employer practices the agency is targeting. Notably, the EEOC is focused on ensuring that employers provide reasonable accommodations for pregnant workers and engage in the required interactive process. The agency is also holding employers accountable for practices that punish or disadvantage employees for pregnancy-related absences or missed time due to medical appointments. Our DC Employment Layers recommend employers should review their policies and procedures for providing workplace accommodations to ensure compliance with the PWFA. Additionally, training for HR professionals and managers on the new protections for pregnant employees may be necessary to prevent future violations.