Category: Digital Advocate

Michael J. Hanby II

Published May 2022

The romantic getaway with my wife had to be perfect. Couples with young children understand what a rare gift a weekend away can be.  The Airbnb I reserved was gorgeous.  Thanks to OpenTable, our dinner reservation at a coveted Michelin star restaurant I found on Google was secured.  Fortunately, the restaurant accepted American Express because if I am paying premium prices, I might as well earn some air miles at the same time.  The Uber got us there on time, but not before we used our AT&T unlimited plan to tell the kids goodnight.  My bouillabaisse was delicious, and dessert was decadent.  Far less appetizing were the forced arbitration clauses buried in the user agreements utilized by many of these companies which forever bar the door to the courthouse for consumers.

Most people have no idea that by simply downloading an app, or by checking a box agreeing to a company’s terms of service, they are sacrificing their right to sue that company in court regardless of its misconduct.  Such agreements are couched in hard to understand legalize and are often buried in the fine print.  Because it is common for forced arbitration clauses to be required in agreeing to even the most basic and fundamental services that consumers depend on, there is often no real choice but to agree. By depriving people of their access to the court system, forced arbitration clauses result in the silencing of consumers and shield large corporations from accountability.

Not only are consumers negatively impacted by forced arbitration clauses, but employees are often forced to give up their rights as well.  Consider an employee who was laid off during the pandemic and later offered a job from a major corporation.

A common condition of employment is that the employee agrees, in advance, to give up their constitutional right to seek redress in the courts. The person needing a job is faced with a Hobson’s choice of giving up their right to go to court in order to accept a job that will provide for their family.

A recent study found that eighty-one companies in the Fortune 100 use arbitration agreements to force their customers to give up their right to go to court.¹ The consequence of this is staggering as it is estimated that up to 75% of American households are subject to arbitration agreements.² The widespread use of inserting arbitration agreements in consumer contracts has only accelerated during the COVID-19 pandemic.³

While the use of forced arbitration clauses has become commonplace, there are rising movements against the continued use of such tactics. On the legislative side, a rare glimpse of bipartisanship offers the promise of protecting consumer rights.  Employee and consumer activism is also having a tangible impact on corporations’ willingness to use forced arbitration.  Whether this consumer lead pushback will lead to meaningful change in the way companies behave is yet to be seen but there is no doubt that the rights of Idaho’s citizens hang in the balance.

Forced arbitration defined

Broadly speaking, forced arbitration clauses require legal disputes to be heard and resolved by private third-party neutrals, instead of a judge or jury.⁴ The decisions are binding and there is no path for appeal.⁵ Also, the results of the arbitration are not accessible to the public in the way court decisions are available.⁶ Forced arbitration agreements are often broad and become effective before a dispute between the parties has even arisen.

The use of forced arbitration agreements has become widespread as they are found in almost every type of consumer contract such as mortgage applications, car loans, credit card contracts, nursing home facilities, and television cable contracts, just to name a few.⁷  Employers also often require employees to submit to such terms before accepting employment.  In fact, it is estimated that 60 million American workers are subject to mandatory arbitration.⁸

Congress enacted The Federal Arbitration Act (“FAA”) in 1925.⁹  Section 2 of The FAA states: “[a] written provision in any maritime transaction or a contract evidencing a transaction involving commerce to settle by arbitration a controversy thereafter arising out of such contract or transaction, or the refusal to perform the whole or any part thereof, or an agreement in writing to submit to arbitration an existing controversy arising out of such a contract, transaction, or refusal, shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.”¹⁰

Courts began to recognize and acknowledge that the FAA “declared a national policy favoring arbitration and withdrew the power of the states to require a judicial forum for the resolution of claims which the contracting parties agreed to resolve by arbitration.”¹¹  The scope of the applicability of the FAA was in question until 1995 when the United States Supreme Court found that The FAA’s “control over interstate commerce reaches not only the actual physical interstate shipment of goods but also contracts relating to interstate commerce.”¹² Subsequently, the Supreme Court concluded that employers could subject employees to forced arbitration agreements as well.¹³

Soon after these decisions, forced arbitration provisions started to become more common, both in consumer contracts and employment agreements.  By 2018, it was estimated that there were at least 826,537,000 consumer arbitration agreements in place.¹⁴  These numbers demonstrate that the ability of consumers and employees to access the judicial system has been significantly impacted.

Soon after these decisions, forced arbitration provisions started to become more common, both in consumer contracts and employment agreements.

The Promise v. The Reality

Business groups and other advocates of forced arbitration argue that taking disputes out of the over-crowded court system, where disputes often take years, is a far more efficient way to resolve claims.¹⁵  In addition to quicker resolutions, proponents argue that arbitration is fair to both parties because the dispute is resolved by a neutral third-party.¹⁶ Arbitration fees are often paid by the company which, proponents say, results in a less expensive alternative for the claimant than going to court.¹⁷ Critics dispute the accuracy of these claims.

Consumer advocates have raised serious concerns with the fairness of the arbitration process itself.  When the Consumer Financial Protection Bureau studied the issue in 2015, it found that consumers were only successful in about 20% of the time.¹⁸  The numbers in employment related claims are even worse.  According to a recent study conducted by the American Association for Justice (“AAJ”), employees obtained monetary awards only 1.6 percent of the time in 2020.¹⁹  AAJ further found that on average, 382 consumers win a monetary award per year—less than the number of people struck by lightning each year in the United States.²⁰

While the data concerning the success rates of claimants whose claims are resolved through forced arbitration may be somewhat in dispute, many other critiques of forced arbitration must be acknowledged.

An in-depth analysis conducted by the New York Times in 2015 found that many of the largest corporations face very few arbitration claims.²¹ Verizon, for example, faced a mere 65 consumer arbitrations between 2010 and 2014, despite having a customer base exceeding 125 million subscribers.²²  The result is clear. Forced arbitration agreements dissuade almost all consumers from ever filing a claim. The corporation wins before the game even starts.

The stakes are high

The legitimacy of the American justice system is directly tied to its accessibility by the public. As Fifth Circuit Judge Don R. Willett eloquently penned: “The Constitution’s first three words make clear that ultimate sovereignty is wielded not by government but by the governed. And because “We the People” are not meant to be bystanders, the default expectation is transparency—that what happens in the halls of government happens in public view.  Americans cannot keep a watchful eye, either in capitols or in courthouses, if they are wearing blindfolds.”²³

Secrecy and opacity are intentionally built into the system of arbitration. The American Arbitration Association (“AAA”) and JAMS (formerly, “Judicial Arbitration and Mediation Services”), the two largest arbitration providers in the country, provide only limited information regarding their proceedings.²⁴  The lack of transparency is the most significant threat posed by forced arbitration to our system of justice. By choice and design, the rulings made by arbitrators are private. They cannot act as precedent nor are they capable of being compiled in way that would demonstrate pattern or practice of the company. By keeping not only the outcomes but their transgressions secret, corporations escape accountability while endangering the legitimacy of the justice system.

Forced arbitration clauses further restrict access to the courts because they often contain restrictions on class action lawsuits. As stated by the New York Times in its 2015 investigation, “Once blocked from going to court as a group, most people dropped their claims entirely.”²⁵ This works to benefit only the corporation and allows it to side-step an effective tool that keeps powerful companies in check.

As the data above demonstrates, the use of forced arbitration is on the rise. Because such clauses have become routine, consumers must sacrifice their access to the court system to use even the most basic and common products and services.  The consequence is that consumers and employees are left with no meaningful choice when ‘agreeing’ to forced arbitration. Due to the low participation and meager success rates, the end result is that corporations often escape responsibly and accountability.

A potential way forward

While forced arbitration clauses have largely withstood scrutiny in the courts, recent action from legislators and consumers may forecast a change.  The first major breakthrough in this arena can be traced to the progress made by the #metoo movement in recent years. 

Senator Kirsten Gillibrand (D-NY) and Senator Lindsey Graham (R-SC) cosponsored a bill that would end forced arbitration in sexual assault and sexual harassment claims.²⁶  The bill was championed by former Fox News anchor, Gretchen Carlson, who had sued her former employer Roger Ailes after she refused his sexual advances.²⁷

The historic level of vitriol between the country’s two major political parties provided little hope that bipartisanship would advance the rights of consumers in such a tangible way.  On February 7, 2022, H.R. 4445 passed the House.²⁸  The yeas were 335 and the nays were 97.²⁹  In the end, 113 republicans and 222 democrats voted to support the bill.³⁰  Idaho’s representatives split their vote with Representative Russ Fulcher voting ‘nay’ and Representative Mike Simpson voting ‘yea.’³¹

With its fate uncertain, the bill went in front of the Senate on February 10, 2022.³²  It passed without amendment by voice vote, the result of which was a unanimous vote, with no recorded dissenters.³³  After this exceedingly rare show of bi-partisan support, President Biden signed the bill into law on March 3, 2022.³⁴ At the signing ceremony, the President remarked: “Between half and three-quarters of all women report that they have faced some form of sexual harassment in the workplace, and too often they’re denied a voice and a fair chance to do anything about it. Today, we send a clear and strong message that we stand with you for safety, dignity and for justice.”³⁵

The future

While the passage of H.R. 4445 was a significant and historic step, the narrowness of the bill demonstrates that there is more that can be done to protect the rights of consumers and workers.  In February 2021, Rep. Hank Johnson (D-GA-4) introduced H.R. 963 (“the FAIR Act”) into the House.³⁶ The FAIR act would prohibit pre-dispute arbitration agreements from being enforceable in employment, consumer, antitrust, and civil rights disputes.³⁷  What remains to be seen is whether the same level of bi-partisan support can be leveraged to pass this broader and more expansive bill that would protect the rights of consumers and workers in an even more momentous way.

The future of forced arbitration in this country is at a crossroads. While corporations wield immense power in deciding whether to include forced arbitration clauses in their consumer and employment contracts, they are starting to face push back from lawmakers and activists alike.  One road leads down the familiar path of allowing large corporations to hide their misconduct in the shadows and to evade responsibility.  The other would offer greater protection to consumers and employees by reviving our justice system’s promise of openness, transparency, and accountability.  Continued activism and bipartisanship may just pave the way.

BIO: Michael Hanby graduated cum laude from Boise State University and received his J.D. from the University of Idaho College of Law. While in law school, he served as Fall Edition Editor of the Idaho Law Review and participated in the Semester in Practice program where he interned for the Honorable Larry M. Boyle, U.S. District Court. Michael’s legal practice focuses on representing plaintiffs in personal injury cases, medical malpractice claims, automobile and trucking accidents and wrongful death cases. He also handles insurance disputes, bad faith insurance claims, and insurance agent errors and omissions. Michael proudly serves on the board of the Idaho Trial Lawyers Associa­tion and is a member of American Association of Justice.

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Endnotes

1. Imre Stephen Szalai, The Prevalence of Consumer Arbitration Agreements by America’s Top Companies, 52 UC Davis L. Rev. 233, 234 (2019).

2. Id.

3. American Association for Justice, Forced Arbitration During a Pandemic: Corporations Double Down (Oct. 2021).

4. Consumer Financial Protection Bureau (CFPB), Arbitration Study (March 2015), https://files.consumerfinance.gov/f/201503_cfpb_arbitration-study-report-to-congress-2015.pdf

5. Id.

6. Id.

7. Abha Bhattarai, As closed-door arbitration soared last year, workers won cases against employers just 1.6 percent of the time, The Washington Post (Oct. 27, 2021).

8. Alexander J.S. Colvin, The Growing Use of Mandatory Arbitration, Economic Policy Institute (April 6, 2018).

9. 9 U.S.C ⸹ 2.

10. Id.

11. Southland Corp. v. Keating, 465 U.S. 1, 10 (1984).

12. Allied-Bruce Terminix Cos., Inc. v. Dobson, 513 U.S. 265, 274 (1995).

13. Circuit City Stores, Inc. v. Adams, 532 U.S. 105, 109 (2001).

14. Imre Stephen Szalai, The Prevalence of Consumer Arbitration Agreements by America’s Top Companies, 52 UC Davis L. Rev. 233, 234 (2019).

15. U.S. Chamber Letter on the “Forced Arbitration Injustice Repeal (FAIR) Act,” (October 27, 2021), https://www.uschamber.com/assets/documents/211027_H.R.963_FAIR-Act_House-Judiciary.pdf.

16. U.S. Chamber Institute for Legal Reform, Fairer, Faster, Better: An Empirical Assessment of Employment Arbitration (May, 2019).

17. Id.

18. Consumer Financial Protection Bureau (CFPB), Arbitration Study (March 2015), https://files.consumerfinance.gov/f/201503_cfpb_arbitration-study-report-to-congress-2015.pdf

19. American Association for Justice, The Truth About Forced Arbitration, September 2019, https://www.justice.org/resources/research/the-truth-about-forced-arbitration.

20. Id.

21. Jessica Silver-Greenberg & Robert Begeloff, Arbitration Everywhere, Stacking the Deck of Justice, N.Y. Times, October 31, 2015.

22. Id.

23. Binh Hoa Le v. Exeter Finance Corp., 990 F.3d 410, 417 (2021) (internal citation omitted).

24. American Association for Justice, The Truth About Forced Arbitration, September 2019, https://www.justice.org/resources/research/the-truth-about-forced-arbitration.

25. Jessica Silver-Greenberg & Robert Begeloff, Arbitration Everywhere, Stacking the Deck of Justice, N.Y. Times, October 31, 2015.

26. David Dayden, Chamber of Commerce Tries to Silence Sexual Harassment Victims, The American Prospect (Nov. 15, 2021).  

27. Id.

28. https://www.congress.gov/bill/117th-congress/house-bill/4445/actions

29. Id.

30. https://clerk.house.gov/Votes/202233

31. Id.

32. https://www.congress.gov/bill/117th-congress/house-bill/4445/actions

33. Id.

34. https://www.washingtonpost.com/politics/2022/03/03/biden-signs-new-law-ending-forced-arbitration-sex-assault-harassment/

35. Id.

36. https://www.congress.gov/bill/117th-congress/house-bill/963

37. Id.

T. Guy Hallam Jr.

Published May 2022

Trial lawyers are important. The Idaho Trial Lawyers Association (“ITLA”) has been protecting the access to justice for all and working to preserve the constitutional right to a trial by jury for nearly 55 years.

A handful of Idaho attorneys founded the ITLA in 1967 to ensure that Article I, Section 7 of the Idaho Constitution, which says that “The right of trial by jury shall remain inviolate,” is consistently upheld. That handful of attorneys has become a team of hundreds of trial lawyers working to better the legal community in Idaho while championing the access to courts for all Idaho citizens. Some of the programs of the ITLA include:

The Street Law Clinic

For years, the ITLA Street Law Clinic has provided pro bono legal advice to citizens of Idaho who might otherwise be unable to afford to get their legal questions answered. At the ITLA Street Law Clinic, law students work with volunteer ITLA trial attorneys to provide this service to the community.

Because of Covid-19 restrictions, this previously in-person clinic has morphed into a telephonic and/or video undertaking which serves persons throughout Idaho. Hundreds of law student and trial attorney volunteers have provided thousands of hours of time over the course of Street Law Clinic operations. Upcoming dates and details regarding the ITLA Street Law Clinic can be found on the ITLA website, at: https://www.itla.org/?pg=StreetLawClinic.

Education

The ITLA also provides top tier education and courses for attorneys. At least three times a year, the ITLA provides a full day of continuing legal education classes. The speakers at ITLA classes are nationally recognized attorneys and experts, state and federal judges, and local trial attorneys who cover cutting edge topics and practical trial skills. The ITLA believes that the location of its courses should also highlight the beauty and activities of Idaho, so summer events and CLEs are in Sun Valley, fall events and CLEs in McCall, with additional stops in Boise, Coeur d’Alene, Jackson, Wyoming, and an occasional trip to Jackpot, Nevada.

Legislative advocacy

The ITLA is committed to ensuring that changes to Idaho law do not erode a citizen’s access to our courts. ITLA has a governmental relations committee which reviews legislation, suggests amendments to bills, and assures the ability of Idahoans to hold others accountable for their actions under the civil justice system. The associated ITLA PAC was organized to support and elect candidates who will uphold and strengthen the civil justice system and defend the constitutional right to trial by jury.

Building a community of Idaho Trial Lawyers

Most importantly, the ITLA is about building a community of trial lawyers who serve the citizens of Idaho. ITLA members are able to access the expertise of fellow trial lawyers, whether it be through networking at meetings and CLEs, during practice specific working groups, or through a trial lawyer only listserve. The ITLA also recognizes greatness and service amongst its members, whether it be excellence in trial advocacy (the James J. May Trial Lawyer of the Year Award), outstanding professionalism in the practice of law (the Walter H. Bithell Professionalism Award), service to the ITLA (the Darrel Aherin ITLA Service Award), or years of supporting efforts to improve civil justice (the ITLA Civil Justice Partner Award).

                Despite all of these ongoing accomplishments and activities, this is the first time that the ITLA has sponsored an issue of the Advocate. We hope that you will enjoy this issue, which contains articles on a variety of topics important to trial attorneys and litigants in Idaho.

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Erin E. Tomlin

Published March/ April 2022

Leadership, lawyering, and livelihood. These three categories are not always related and what is good for one is not always good for the other. However, in private practice they must work in tandem for successful professional, ethical, and business outcomes. All three categories become more robust by supporting, empowering, and retaining female attorneys in law firms.

While good lawyering may affect positive livelihood outcomes, the real challenge for many private practitioners is managing the business side of a law office or firm.  The legal profession should be responsive to business industry metrics and regional economic growth patterns. With this kind of pulse on business dynamics, lawyers owning or managing a law firm are primed to demonstrate transformational leadership and respond to industry dynamics in a way that sets the bar higher with each leadership decision.

Walking through the halls at the University of Idaho College of Law in Moscow reminds us how certain demographics change over time. Once featuring predominantly male graduating classes through a black and white lens, more current class photo montages are a vivid reminder of the progress to date as more diverse students and faculty reflect changing demographics.  National figures indicate that female attendance at accredited law schools is consistently increasing. ¹ More females are attending law school than ever before – in some states, female students now outnumber male students.²

Law firms prioritizing retention of female attorneys and partners³ makes business sense and promotes growth.  Why are female attorneys, in general, paid less and promoted less if there are more of them coming into the profession than ever before?⁴ Even more alarming, why are female attorneys leaving their jobs (or the legal profession altogether) disproportionate to male attorneys? ⁵ The legal profession, as an industry, must evaluate why more than half of incoming attorneys, i.e., those who identify as female, experience disproportionate pay and are retained less. The disconnect between increasing incoming attorneys and the decreasing retention and promotion of those attorneys is an industry problem indicative of potential challenges beyond inefficient business models.

How can private practice business owners improve attrition rates for female attorneys, both associates and partners alike? Doing so helps firms stand out as leaders at a time of unprecedented growth in Idaho. ⁶ Work life balance is often touted as a primary way to increase career satisfaction and retention, but the suggestions below may prompt firms to implement changes specific to the legal profession industry retention metrics available to us.  

By taking some or all the following action steps, law firms become more competitive and valuable in a dynamic economic climate.⁷

Hiring and promotion practices

In 2015, the National Association of Women Lawyers announced its One-Third by 2020 Challenge, “calling for an increase in the representation of women across five different areas of the law.”  ⁸ Obstacles for female attorneys in the legal profession won’t stop here but we can’t change attrition rates if female attorneys aren’t hired in the first place. Legal industry leaders and decision-makers must promote female attorneys, hire female law student interns/externs, and create pathways to promotion for female attorneys where one may have not existed before or improve upon existing pathways, and be intentional and follow-through.  Firms with diverse attorneys are better able to meet dynamic clients’ needs in a changing socio-economic landscape.

Obstacles for female attorneys in the legal profession won’t stop here but we can’t change attrition rates if female attorneys aren’t hired in the first place.

Listen to female colleagues

Create environments and resources that facilitate comfortable communication about uncomfortable topics.

Listen to your colleague when she shares an experience that you, as the listener, may not have a frame of reference for because you have not experienced what it’s like to be a female attorney in the legal profession. Acknowledge the foundational power-dynamic of the discussion in and of itself while listening to the substantive conversation at hand. These are opportunities to move beyond dutiful HR -isms to a place of self-awareness, change, and advocacy.  Are we glossing over someone’s experience because we can’t hear or see them outside of our worldview or experiences?

Finally, listen to respond, not react. Attorneys like to offer solutions and tend to think they have them. Good listening requires a pause or reflection before a reaction. Such pause could be vital when having a conversation about someone else’s experience and how it could be better. Knee-jerk reactions or explanations can come across as disingenuous, defensive, or placating to someone looking for earnest leadership. Good communication starts with the humility to listen differently.  

Internal fine print: Create intentional and inclusive firm policies

By creating firm infrastructure that supports an employee’s holistic health, firms are taking a critical look at how people multi-task and handle stress, both at work and outside of work. Employers who understand the impact of external stresses on business outcomes are employers demonstrating leadership as well. Part of creating impactive policies is a willingness to notice change in trends or work/life dynamics and help transform lives because it does make for happier and more productive employees and partners.

Other helpful policies include formal succession plans and firm mission statements. Formal succession plans can ensure that female associates and partners are included in the transfer of valuable clients and important client relationships.

Yes, virtue-signaling can live comfortably in touted firm infrastructure but handbooks and policy manuals make it a lot harder to signal without action and follow-through. They provide a framework for accountability. When written policy and processes reflect good intentions, those intentions are more likely to become actions. 

Support sponsorship and mentorship programs

Firms that support attorneys, associates, partners, and staff create a sought-after workplace for those entering the profession. When firms pay for membership to professional organizations that offer professional camaraderie and support, they are building a community for a valued employee or partner. If you have employees or partners who would benefit from mentorship and community resources specific to their experiences, facilitate that and make sure it’s an intentional practice and procedure for the firm.  

Transformational leadership: Making individuals part of a true team

The articulated concept of ‘transformational leadership’ was introduced to the world in a Pulitzer Prize-winning and seminal study on leadership by its author and researcher James Burns approximately fifty years ago. ⁹ Transformational, rather than transactional leadership, focuses on relationships and working together for the common benefit of a collective goal or group. Use of transformational leadership creates situations in which “leaders and followers raise one another to higher levels of motivation and morality”.¹⁰

Transformational leadership is, arguably, good for business yet lawyering often focuses on individual performance, i.e., billing. Transformational leadership requires business owners to think beyond basic lawyering billing metrics and assess how they want to build a team for success. It is often best implemented or explained in an office environment by encouraging leaders to set an example of aspirational values or behaviors. This requires owners and partners to speak up and be intentional in setting examples and taking initiatives.

If firm owners and partners are merely focused on individual transactions when reviewing broader firm productivity, the value of an individual will always be emphasized over the value of the group. While this might not be problematic in terms of churning out billable hours, it is short sighted in an industry poised to grow in unprecedented ways. Leadership understands that individuals perform better when their value is measured in more than one way and transformational leadership creates reciprocity between colleagues and empowers firm growth and retention.

Look your metrics in the mirror

Equal pay conversations should have more depth than who is getting paid less or more than someone else.  Some helpful ways to identify the equality of the pay versus the output of the attorney is to ask the following: Is there an expectation the attorney will bill the same as other attorneys but has different, i.e., less, resources to do it? Is an attorney with a part-time support staff expected to bill the same as an attorney with full-time staff support? Does the attorney have access to the same kind of billing opportunities that other attorneys do, i.e., similarly paying clients and kinds of cases? Did all attorneys benefit from a succession plan or transfer of pre-existing clients and are equally able to bill more? Or was it more selective? Are attorneys limited in what kinds of cases they can take?

If the metrics don’t add up because attorneys aren’t equipped with similar or equal resources to succeed, then the metrics perpetuate inequality. If ill-equipped attorneys or partners also happen to be females outnumbered by males who do have more resources or access to more lucrative case opportunities, well, that’s not only not a good look but it’s likely indicative of a problem that runs deeper than optics.

In addition to creating equal opportunities for attorneys to bill equal amounts, firms must include female attorneys in leadership. From firm administration to managerial tasks, these duties should be shared.   

Implicit bias training

Whether it’s formal training to identify implicit biases or other trainings, being willing to learn and critically assess individual biases and limitations is a hallmark of effective leadership. Many industries already require implicit bias training. The legal profession, as an industry, relies on good credibility for livelihood. If attorneys lose their credibility because they cannot identify implicit biases, they shortchange their ability to improve in an industry that is characterized by its requirement for ‘life-long learning’.

Don’t treat a partner like an employee

A recent effort by The Pay Equity Taskforce of the National Association of Women Lawyers (NAWL) has examined an alarming phenomenon; partners who are that in name only. ¹¹ In addition to tax liabilities inherent in treating partners like employees, other concerns arise when analyzing gender disparities in the legal profession. In this study, NAWL highlights case law throughout the nation that analyzes and interprets the Equal Pay Act, Title VII, and other related employment discrimination statutes. As mentioned elsewhere in this article, compensation metrics should be increasingly scrutinized as that might be the best hiding place for gender discrimination.  However, it’s not that great of a hiding spot as:

Courts are also being asked to examine the law firm compensation model itself to detect if there is any inherent gender bias in profit allocations. For example, in Knepper v. Ogletree, Deakins, Nash, Smoak & Stewart, P.C., No. 3:18-cv-00303 (N.D. Cal. filed Jan. 12, 2018), a woman partner alleges that the firm’s lack of female representation in leadership has led to pervasive gender discrimination. In particular, she has drawn attention to the firm’s practice of allocating compensation credit based on “originating credits, managing credits, responsible credits, working credits, and billable hours.” Id. The plaintiff is asserting that while originating and managing credits are the primary metrics used to determine compensation, women partners are not given proportionate opportunities to develop the business that would generate such credits. Furthermore, the plaintiff contends that women partners are assigned tasks that are not highly valued and that do not lead to business origination and matter managing credit. ¹²

Bring in a professional.

Many firms pay accountants, web site designers, tech support, or public relations/marketing professionals to provide necessary and helpful services for law firm business operations. Why not recognize the benefit of improving attrition rates and reducing the likelihood an office or firm is running afoul of equal employment claims by bringing in a consultant? A consultant is meant to collaborate with businesses and identify processes and inefficiencies for improvement. If gender bias pitfalls and discrepancies are affecting a firm’s culture and climate, an external professional may be able to offer helpful suggestions and, in the same turn, help improve a firm’s marketability and accessibility amid a changing socio-economic environment.

If firms and lawyer business owners are willing to implement or take heed of these practical suggestions, they can raise the bar higher and meet industry demands in a competitive way.  Changes such as the ones suggested here are good for business and meet progress at the next cornerstone of dynamic commerce and professional morality.

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Endnotes

1. “Enjuris.” ABA for Law Students, February 28, 2019. https://abaforlawstudents.com/author/enjuris/.

2. Id.

3. Reference to the word ‘partner’ is broadly used and meant to include all other business entity ownership interests, i.e., member, shareholder, for the sake of simplicity but in no way means to equate various business interests or confuse the reader.  

4. Sterling, Joyce, and Linda Chanow. “In Their Own Words: Experienced Women Explain Why They Are Leaving Their Firms and the Profession.” Americanbar.org, May 3, 2021.

5. Id.

6. Bureau, U.S. Census. “Idaho Was the Second-Fastest Growing State Last Decade.” Census.gov, October 8, 2021. https://www.census.gov/library/stories/state-by-state/idaho-population-change-between-census-decade.html.

7. Id.

8. “NAWL One-Third By 2020: The NAWL Challenge.” NAWL. National Association of Women Lawyers, March 15, 2016. https://www.nawl.org/page/the-nawl-challenge.  

9. Burns, James Macgregor. Leadership. New York: Harper Perennial, 2010.

10. Id at 20.

11. “NAWL Pay Equity Taskforce Series: In Name Only, Are Some Law Firm Partners Actually Employees?” Women Lawyers Journal 103, no. 2 (2018): 13–15.

12. Id at 15.  

Mo Haws

Published March/ April 2022

In his commencement address to Kenyon College’s class of 2005, writer David Foster Wallace began by sharing the following story:

There are these two young fish swimming along and they happen to meet an older fish swimming the other way, who nods at them and says “Morning, boys. How’s the water?” And the two young fish swim on for a bit, and then eventually one of them looks over at the other and asks, “What the hell is water?”

Wallace goes on to explain that the point of the fish story is to illustrate that “the most obvious, important realities are often the ones that are hardest to see and talk about.”

As the child of a single mother who raised me while simultaneously advancing her career in the medical field, the disparate regard toward women in professional settings has been visible to me from a young age. I’ve known other women who have struggled in their professional endeavors to gain an equal footing with their male counterparts and avail themselves of equal pay and opportunities. Despite this firsthand experience, I must admit, I still find it challenging to talk about the particular burdens faced by women in the workplace because, try as I may, I’m incapable of fully understanding the challenges professional women face, given the appanage of my race and gender. However, I do understand that merely sympathizing with women is neither sufficient nor helpful. What is helpful, indeed required, is to recognize the difficulties faced by women in the workplace, to hear how women ask to be supported professionally, and to actively sponsor women for promotion within the workplace and the judiciary.

Two caveats at the outset: first, although this article speaks in terms of men and women, the dichotomy should be considered more broadly to include all historically marginalized persons. Second, although this article speaks of women lawyers, the same principles should apply equally to women who are part of a firm’s broader team.

The water

The mission of Idaho Women Lawyers (“IWL”) is to advance “diversity through the promotion of equal rights and opportunities for women in the legal profession.” This mission, as discussed herein, is best accomplished through bundling the efforts of men and women alike.

As of January 7, 2022, there were 5,420 active members of the Idaho Bar.¹ In 2018, women accounted for just 28% of active lawyers in Idaho.² The American Bar Association estimates that nationwide, the gender gap between men and women lawyers in practice is 63% to 37%, putting Idaho well below the nation’s average.³ Additionally, a study by the American Constitution Society found that in 2014, women made up only 30% of all state court judges nationwide.⁴ Again, in Idaho, the disparity is starker—in 2018, across the Idaho judiciary, women held only 32 of the 147 total judgeships.⁵ When broken down further to account for representation of other historically marginalized groups, the gap across the nation is even more severe.⁶

Diving deeper: for women lawyers, economic disadvantages based on gender ensue. A 2020 survey from the National Association of Women Lawyers found that despite making up on average 47% of law firm associates nationwide, women represent only 31% of non-equity partners and 21% of equity partners in those same firms.⁷ The gap in Idaho tracks the national average according to University of Idaho Professor Jessica Gunder, who showed that despite holding 35.2% of associate positions in large Idaho law firms in 2004, only 18.8% of women held partnership positions at the same firms in 2019.⁸

When these statistics are considered with the fact that women make up slightly more than 50% of the population in the United States,⁹ the disparity in representation of women as counselors at law and judges on the bench is especially discouraging. While a host of factors shed light on the facts behind this reality, men cannot ignore the fact that women as a whole are actively seeking greater representation within these bodies. In 2019, women made up 53.3% of all law students nationwide.¹⁰ Nevertheless, the proportion of representation of women in the upper echelons of law firms and on the bench fails to correlate. This is the water.

Turning the tide

In her November, 2018 TEDWomen talk, “How to Find the Person Who Can Help You Get Ahead at Work,” Carla Harris, a woman of color and Wall Street veteran, described the “aha moment” she experienced at her first corporate roundtable in 1988, where names of candidates for promotion were being rapidly categorized into “buckets” based on their value to the firm according to its decision makers.¹¹ Sitting at that roundtable, Carla observed how as each candidate’s name was announced, somebody in the room spoke on the candidate’s behalf and explained their merits (or lack thereof), and that the candidate was quickly placed in a corresponding “bucket” based on the speaker’s recommendation; all with no discussion, and no input from the candidate themselves. Carla explained, “It was in that moment that I clutched my pearls and asked—who’s going to speak for me?”

Carla went on to say, “I knew at that moment that somebody would have to be behind closed doors arguing on my behalf, presenting content in such a way that other decision makers around that table would answer in my best favor,” because, Carla posited, “you cannot have a 100 percent meritocratic environment when there is a human element involved in the evaluative equation, because by definition, that makes it subjective.”

Vexed by the predicament of not having “that somebody,” not knowing what to call them or where to find them, Carla endeavored on a thought journey, which lasted a few years. Then one day, while speaking on the topic to MBA students at the University of Michigan, Carla realized, “Oh, this person that is carrying your interest, or as I like to say, carrying your paper into the room, this person who is spending their valuable political and social capital on you, this person who is going to pound the table on your behalf, this is a sponsor. This is a sponsor.”

Research suggests the key is to sponsor women, because a concerted effort by men and women alike to sponsor women within the Idaho Bar can garner the equality of opportunity necessary to effect proportional representation, at least.

In light of the forgoing, and recognition of the powerful and influential positions largely and historically held by men within the Idaho Bar, as well as the fact that promotions within law firms and the Bar generally occur behind closed doors by certain decision makers, there’s something men can do today to buoy representation and equality for women within the workplace and the judiciary, as the percentage of women to men grows in our field. Research suggests the key is to Sponsor women, because a concerted effort by men and women alike to sponsor women within the Idaho Bar can garner the equality of opportunity necessary to effect proportional representation, at least. 

Although the words “sponsor” and “mentor” are often used interchangeably in common parlance, to sponsor means to take responsibility for someone or something;¹² no such onus is denoted by the latter. A sponsor uses his or her position of power or influence to help further their protégé’s career. “A sponsor needs to know the skills and capabilities of their protégé, see their potential, and be able to orchestrate their advancement—but they don’t have to show them how to play the instrument or encourage them to practice.”¹³ Unlike a mentor, the sponsor and the protégé need not have the same economic goals—their glue is the goal of bolstering the position of the protégé.

The reputation of the Idaho Bar is that it is uniquely collegial, and that sponsorship abounds. This has been my experience as a relatively new attorney—I have had many willing sponsors “carry my paper” into the rooms where decisions are made. While not all of my sponsors have been men of my race, most of them have. The fact is: sponsors tend to select proteges who are like themselves. One explanation as to why this occurs is the unconscious bias of “like supporting like.”

Herminia Ibarra, Professor of Organization Behavior at the London Business School, asserts, “[p]eople’s tendency to gravitate to those who are like them on salient dimensions such as gender increases the likelihood that powerful men will sponsor and advocate for other men when leadership opportunities arise.”¹⁴ Ibarra’s theory is confirmed by a recent study by the Center for Talent and Innovation, which identified that 71% of executives in their study had proteges whose race and gender matched their own.¹⁵ As such,  in order to effectuate equality of opportunity, and bridge the gap in gender disparities in representation and equality within law firms and courts in Idaho, more men in the majority must actively seek to break the unconscious bias chain by sponsoring women.

Ending her TED talk, Carla encouraged would-be sponsors; “If you have been invited into the room, know that you have a seat at that table, and if you have a seat at the table, you have a responsibility to speak . . . If somebody is worthy of your currency—spend it. One thing I have learned after several decades on Wall Street is the way to grow your power is to give it away, and your voice is at the heart.”¹⁶

Unsure how to be a sponsor? Ibarra explains that sponsorship is a spectrum, it’s not an either/or role.¹⁷ What begins as a mentorship may morph into a sponsorship, but the distinguishing mark of a sponsor is their election to put their name and reputation on the line for their protégé. Here are five things you can do to sponsor women in the legal profession, borrowed from Karen Catlin, founder of Better Allies.¹⁸

Speak your protégé’s name when they aren’t around

A true sponsor will not hesitate to spend some of their social capital advocating for their protégé to decision makers. Often, this is the most effective way for a decision maker to truly hear the sponsor’s accolades and advocacy of their protégé. In the confidence of a meeting where the protégé isn’t present, an inherent trust in the genuineness of the sponsor’s endorsement of her is cultivated.

Endorse your protégé publicly

Where the rubber truly hits the road for sponsorship is when the sponsor publicly endorses their protégé. This sort of public endorsement can take many forms. A sponsor may publicly endorse their protégé in front of important clients, partners in their firm, and members of the Bar. This, like the following tip, will help garner trust and reliance on the part of decision maker in the protégé.

Invite your protégé to high profile meetings

Inviting your protégé to participate in high profile meetings, whether with clients or other partners, demonstrates your vote of confidence in her. This sort of overt action also bolsters her visibility before decision makers and cultivates their confidence in her. Direct relationships between your protégé and the decision maker are more likely to follow when the decision maker’s confidence in your protégé is borrowed from their confidence in you. 

Share your protégé’s career goals with decision-makers

For a sponsor to be able to share their protégé’s career goals, they must first understand where she is trying to go. Take time to understand your protégé’s career goals and then share them with the decision makers who can facilitate bringing those goals to fruition. Again, direct relationships between your protégé and the decision maker are more likely to follow when you help the decision maker recognize the role they can play in helping your protégé reach her goals.

Recommend your protégé for stretch-assignments and speaking opportunities

A sponsor who truly knows their protégé and her capabilities will not hesitate to recommend her for tasks which will allow her to develop credibility with others by demonstrating her skills. If you have true confidence in your protégé to succeed in an assignment, recommend her and continue to encourage her to success—the reward of her succeeding will be felt by you both.

The importance of sponsorship can’t be understated. If Carla Harris is correct in her assessment that there is no such thing as a true meritocracy, then those who reach new heights within an organization have almost certainly benefitted from a sponsor—someone “carrying their paper into the room.” Of course, this sponsorship paradigm necessitates cooperation between would-be sponsors and would-be protégés.

True sponsorship compels the sponsor to know their protégé’s goals, meaning that sponsorship should not be approached unilaterally in most cases; as such, would-be protégés have as much responsibility to seek or accept sponsorship as sponsors have to offer it. Nevertheless, as Ibarra explained, there is no strict formality required in sponsorship. This is important to bear in mind because some of your female colleagues may not be struggling to have a voice before decision makers, but rather to simply have your vote.

In short, what I advocate for here, is for those who have been, are, or will be in the position to be a sponsor, to recognize the unique opportunity you may have to turn the tide for the benefit of all in our profession, as well as those who we serve.

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Endnotes

1. Idaho State Bar Association Membership, https://isb.idaho.gov/licensing-mcle/membership-count-statuses/.

2.Jessica Gunder, “Women in Law: A Statistical Review of the Status of Women Attorneys in Idaho” (2019) (referencing Idaho Supreme Court Data found in 2018), available at https://digitalcommons.law.uidaho.edu/cgi/viewcontent.cgi?article=1189&context=faculty_scholarship.

3. Id. at 34; see also American Constitution Society “The Gavel Gap—Who Sits in Judgment on State Courts,”  available at https://www.acslaw.org/wp-content/uploads/2018/02/gavel-gap-report.pdf.

4. American Constitution Society, “The Gavel Gap—Who Sits in Judgment on State Courts,” available at https://www.acslaw.org/wp-content/uploads/2018/02/gavel-gap-report.pdf.

5. Supra note 2.

6. In 2020, 86% of all attorneys in the United States identified as white. ABA National Lawyer Population Survey, available at https://www.americanbar.org/content/dam/aba/administrative/news/2020/07/potlp2020.pdf.

7. NAWL 2020 “Survey on Promotion and Retention of Women in Law Firms,” available at https://www.nawl.org/p/cm/ld/fid=2019,

8. Supra note 2.

9. U.S. Census Bureau, Census Quick Facts, https://www.census.gov/quick-facts/fact/table/US/PST045217.

10. Id.

11. Carla Harris, “How to Find to Find the Person Who Can Help You Get Ahead at Work” TEDWomen (2018), available at https://www.ted.com/talks/carla_harris_how_to_find_the_person_who_can_help_you_get_ahead_at_work.

12. Sponsor Definition, Merriam-Webster.com, https://www.merriam webster.com/dictionary/sponsor (last visited Jan. 13, 2022).

13. https://hbr.org/2019/08/what-men-can-do-to-be-better-mentors-and-sponsors-to-women.

14. https://hbr.org/2019/08/a-lack-of-sponsorship-is-keeping-women-from-advancing-into-leadership.

15. https://www.talentinnovation.org/_private/assets/TheSponsorDividend_KeyFindingsCombined-CTI.pdf?eminfo=%7b%22EMAIL%22%3a%22Hc8ZphJgxOZCTbtnlHI4qpefYRZ2I%2bKJ3ocalZtETZo%3d%22%2c%22BRAND%22%3a%22FO%22%2c%22CONTENT%22%3a%22Newsletter%22%2c%22UID%22%25 cited by https://hbr.org/2019/08/what-men-can-do-to-be-better-mentors-and-sponsors-to-women.

16. Supra note 6.

17. Supra note 14.

18. https://betterallies.medium.com/5-things-allies-can-do-to-sponsor-coworkers-from-underrepresented-groups-266cd512e289.

19. William Stafford, A Ritual to Read to Each Other, The Way It Is: New and Selected Poems (1998).

Ashley Jennings

Published March/April 2022

The Importance of Mentors for Female Attorneys in Idaho

By Ashley Jennings

“There is a special place in hell for women who don’t help other women.” – Former Secretary of State Madeleine Albright

In 2009, my last year of law school, Carole Wells, my Victim’s Rights Professor, approached me with the idea of starting a women’s lawyer group at her house on Thursday nights. Carole is what Malcolm Gladwell in his book The Tipping Point calls a “connector,” a person who has a knack for making friends and acquaintances with very different and disparate people and then using those relationships to grow and connect those people to each other. Thankfully, my introverted inclinations were put aside, and I agreed to meet Carole’s other “lady” lawyer friends. This group of women have met regularly for the past 13 years. I was not cognizant of the gift that Carole was giving me at the time, but now solidly into my career, I am fully aware. This group of women mentors have become my closest friends and my sounding board for career advice.

I have also benefitted from the mentorship of males, namely my boss Bill Thompson, Latah County Prosecutor. Bill has been the elected prosecutor for 29 years. The education he provides regarding county policy, criminal law, civil law, and leadership is irreplaceable and uniquely different than that of my “lady” lawyer mentors. Of course, it is important for both men and women to have mentors. However historically in the legal profession, especially in Idaho, men have been able to do that for each other. Networking and obtaining leadership roles have not been a problem for men. For a woman building a law career there is an inclination to rely on other experienced women who have walked a similar path. However, my experience is that there is value in learning from those with different experiences and perspectives, including men. Seeking varied mentorships will allow women to become more well-rounded attorneys who will hopefully earn more seats at the leadership tables.

What is a mentor?

According to Maryann Bruce, former Fortune 100 Division President and CEO, a mentor is an individual “who takes an active interest in your career, serves as a sounding board, shares their experiences and wisdom, encourages new ways of thinking, challenges your assumptions, and helps you learn new skills.” A mentor should be someone with a similar professional goal or mindset. A mentor can be any age, at any level, and in any field. Women are also not limited to one mentor.¹ It is beneficial to have multiple mentors with different skill sets and life experiences.

Female mentors who have walked a similar path are invaluable in helping women find their own way through their experiences. However, male mentors, free from patriarchal constraints, can help women think expansively about career matters. Casey Foss in her article “Why Women Shouldn’t Rely Exclusively on Female Mentors” states, “My male mentors apply that expansive thinking to me, helping me see beyond the expectations the world places on me, and I subconsciously place on myself, as a woman.”²

Finding a mentor

Many women want a mentor but do not know how to ask. According to Bruce, “The best way to choose a mentor is to find someone you admire, someone who has a professional style you want to emulate, or a skill set you want to develop—then ask that individual.” It can be as simple as approaching this person and saying, “I admire the way you work and the values you display. Would you be willing to meet with me regularly? I believe there is much I could learn from you.”³

Find a connector such as Carole Wells and ask for introductions. If you are a connector, start a group and make it a point to meet and discuss successes and challenges. A mentor can also be found by identifying activities in common. Having something in common is the most comfortable place to start a mentorship. A co-worker can also serve as a mentor. Peers can help to motivate and encourage each another, while holding each other accountable for reaching goals. Lastly, many organizations have a formal mentorship program in place that employees only need to sign up to participate.

The role of a mentor

According to James E. Meadows, co-founder of the largest woman-owned law firm in the country, there are three “Cs” to being a good mentor: Consultant, Counselor, and Cheerleader. ⁴ As a consultant, the mentor is someone the mentee can trust, confide in, can seek advice from, as well as provide a safe space to discuss concerns that might be uncomfortable discussing with his or her boss. Counseling involves understanding and listening to the mentee and then tailoring advice to fit an individual’s situation. A good mentor should brainstorm ideas and potential outcomes around specific issues, but the final decision should be the mentee’s. It is not about a mentor feeding the answers; it is about the mentee being empowered to learn and grow in a positive direction. Mentors are also cheerleaders who provide support and champion mentees within their profession by providing encouragement, reassurance, and positive suggestions.

A good mentor should brainstorm ideas and potential outcomes around specific issues, but the final decision should be the mentee’s.

According to Andie Kramer, a workplace consultant, the best mentors “are good listeners, good questioners, and good strategic thinkers.” A bad mentor will pretend to know all the answers and will provide specific advice about how the mentee should behave. A good mentor, on the other hand, will not know all the answers and will be honest about those limitations. The best mentors know how to seek out others who are better suited to deal with specific issues.⁵

Women attorneys need mentors – Especially in Idaho

Currently according to the Federal Judicial Center only 28% of all federal judges are women. Approximately, 37% of all justices on state supreme courts are women, according to the Brennan Center for Justice at New York University. This is the same percentage of women in the legal profession in 2020 – 37%.⁹

Idaho does not fare better. Idaho ranks nearly last in the nation when it comes to the percentage of women judges on the state’s courts. Women make up just 30 percent of the members of the Idaho State Bar. Only 27 percent of Idaho’s 95 magistrate positions are women.¹⁰ The Idaho Court of Appeals has some parity with two women judges: Molly Huskey and Jessica Lorello, and the Idaho Supreme Court has two women out of five justices: Robyn Brody and Colleen Zahn. However, studies have found that women have been graduating from law schools at rates near those of men for approximately two decades but are not advancing at the same rates. ¹¹

Women mentoring women is critical for women to gain access to opportunities in what is still a male-dominated legal environment at the leadership level. With mentorships more women will rise to senior positions of leadership, creating diversified leadership teams. A growing body of research shows the benefits of having women leaders.¹² Studies show women often have a broader perspective, increase innovation, consider the of the rights of others, ask questions, and take a more cooperative approach to decision-making. This approach has led to increased positive outcomes for businesses with women at the decision-making table.¹³

To create parity, it is imperative that members of the bar, both men and women, help pave a smoother road for the women coming up the bar to guide them through their career and help them obtain leadership positions which will ultimately benefit the entire Idaho State Bar.

BIO: Ashley Jennings graduated from the University of Idaho College of Law in 2010. She is currently the Senior Deputy Prosecutor for Latah County. She also an adjunct professor for the University of Idaho College of Law teaching Domestic Violence and the Law.

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Endnotes

1. Maryann Bruce, Mentoring Matters: The Importance of Female Mentorship, October, 26, 2021, forbes.com.

2. Casey Foss, Why Women Shouldn’t Rely Exclusively On Female Mentors, February 21, 2019, forbes.com.

3. Maryann Bruce, Mentoring Matters: The Importance of Female Mentorship, October, 26, 2021, forbes.com.

4. James E. Meadows, Mentorship Is Essential to Fixing the ‘Women’s Recession’, October 27, 2020, Bloomberg law.com.

5. Andie Kramer, Women Need Mentors Now More Than Ever, July 14, 2021, forbes.com.

6. [6] Chahira Solh, How I Made It: Advice on Mentoring the Next Generation of Law Firm Leaders, January 7, 2022, law.com.

7. Andie Kramer, Women Need Mentors Now More Than Ever, July 14, 2021, forbes.com.

8. Chahira Solh, How I Made It: Advice on Mentoring the Next Generation of Law Firm Leaders, January 7, 2022, law.com.

9. Aspiring Judges Need Female Mentors, March 29, 2021, www.americanbar.org.

10. Hon. Michael J. Oths, Who Are We?, Digital Advocate, January 25, 2021, isb.idaho.gov.

11. Cynthia Fuchs Epstein et al., Glass Ceilings and Open Doors: Women’s Advancement in the Legal Profession, 64 Fordham L. Rev. 291, 356 (1995).

12. Dr. Margie Warrell, Gender Diversity At Leadership Tables: It Takes More Than Good Optics, August 23, 2021, forbes.com.

13. McMaster University, Women make better decisions than men, study suggests. ScienceDaily. ScienceDaily, March 26, 2013. www.sciencedaily.com/releases/2013/03/130326101616.htm.

David S. Jensen

Published January 2022

The current Idaho Nonprofit Corporation Act (Idaho Act) is one of the “spokes” of the Idaho Uniform Business Organizations Code (UBOC). Idaho adopted the UBOC in 2015. At that time, the Idaho Act was modified only to the extent necessary to fit it into the “hub and spoke” structure of the UBOC. The core of the Idaho Act, however, remains the same as it was when enacted in 1993, closely following the 2^nd edition of the Model Nonprofit Corporation Act (Model Act) published by the American Bar Association’s Business Law Section. After almost 30 years with little substantive change, it is time to update Idaho’s nonprofit corporation statutes to reflect recent developments in nonprofit and corporate law and to improve and modernize Idaho law for nonprofits.

For the past year, a committee of the Business and Corporate Law Section (Committee) has been reviewing the Idaho Act and the 4^th edition of the Model Act in order to propose to the Idaho Legislature revisions to the Idaho Act.¹

The Model Act

In order to get the full benefit from using a model act, the Committee decided that the language in the 4^th edition of the Model Act² should be adopted in Idaho unless a specific reason was identified for alternate language. This approach is useful in Idaho since we generally do not have a lot of judicial decisions interpreting the Idaho Act. By following a model act, the judicial decisions from the other states that have adopted the Model Act can be researched for potential guidance in Idaho.

The general approach of the 4^th edition of the Model Act is to follow the language of the Model Business Corporation Act except where a substantive difference between the two laws is intended. Where the language is the same, it should be interpreted in the same way.

Idaho differences from the Model Act

The hub chapter and the entity transactions chapter of the UBOC, Chapters 21 and 22, Title 30, Idaho Code, govern many aspects of business organizations that are the same for the different entities included within the UBOC. As a result, the revised act (defined below) does not incorporate the full Model Act. The provisions from the Model Act with respect to corporate name, registered office and agent, and foreign corporations are covered in the hub chapter of the UBOC. Many of the definitions and filing provisions in chapter 1 of the Model Act are likewise covered in the UBOC hub.

Similarly, most of the provisions covering mergers, interest exchanges, domestications, and conversions are principally covered in the entity transactions chapter of the UBOC. No changes are proposed to the hub or entity transactions chapters of the UBOC as part of the revised act. References in this article to the “revised act” means the Idaho Act as will be proposed to the Idaho Legislature by the Committee.

The revised act continues several differences from the Model Act that were incorporated into the Idaho Act when the current act was enacted in 1993. For example, the Idaho Act includes many provisions that are applicable to cooperative corporations. While many states have a separate act governing cooperative corporations, Idaho includes such corporations within the scope of nonprofit corporations.

A cooperative corporation is defined in the Idaho Act as “any nonprofit corporation, operating on a cooperative basis, owned, operated, organized and maintained by its members, for the purpose of providing goods or services to its members.” Under the revised act, cooperative corporations will continue to be subject to the same rules as any nonprofit corporation, unless an exception is specified, and all existing substantive exceptions will remain.

The 4^th edition of the Model Act includes several special rules for religious nonprofit corporations. Most of these are a continuation of rules for religious nonprofit corporations in the current Idaho Act. In several instances, though, the 4^th edition of the Model Act chose to drop the special rule for religious corporations. While the drafters of the 4^th edition may not have intended a substantive change as a result of reducing the instances of special rules for religious corporations, the Committee has chosen to retain all previous substantive special rules for religious corporations.

Another example of the revised act continuing a previous difference from the Model Act involves action by the members of a nonprofit corporation without a meeting. Under the Model Act, the default rule is that all the members entitled to vote on a matter must sign a written consent to take action. The articles of incorporation or bylaws may provide for consent by less than all the members or prohibit any action without a meeting. The current Idaho Act requires that a written consent be signed by at least 80% of the members for a nonprofit corporation to act without a meeting. The revised act will continue the 80% threshold as the default rule but will also follow the Model Act and allow the articles or bylaws to set a lesser percentage.

The bulk of the proposed changes to the Idaho Act are not substantive, but merely use different language in order to follow the language of the Model Act. Of the limited number of substantive changes to the Idaho Act, the majority are additions to the act. The following are descriptions of several of the more substantive changes in the revised act.

Charitable corporation

The revised act adds the concept of a “charitable corporation.” A charitable corporation is defined as “a domestic nonprofit corporation that is operated primarily or exclusively for one or more charitable purposes.” “Charitable purpose” is defined to mean a purpose: “(i) that would make a corporation operated exclusively for that purpose eligible to be exempt from taxation under Section 501(c)(3) or (4) of the Internal Revenue Code; or (ii) considered charitable under law other than this [act] or the Internal Revenue Code.”

The comments to the model act explain that “there are certain areas in which public policy concerns are more sensitive with respect to some nonprofit corporations than others. The act accordingly provides different rules for charitable corporations with respect to certain subjects.” For example, the new section on standards of liability for directors provides an automatic liability shield for directors of a charitable corporation. To limit the liability of a director of a non-charitable corporation, the limitation must be included in the corporation’s articles of incorporation. Another example is the restriction that a person who is a member of a charitable corporation may not receive a financial benefit in connection with a disposition of assets by the corporation unless the person is a charitable corporation or an unincorporated entity that has a charitable purpose.

Designated body

Under the current Idaho Act, the articles of incorporation may “authorize a person or persons to exercise some or all of the powers which would otherwise be exercised by a board.³” The Model Act expands this concept and makes it more transparent. The revised act follows the Model Act and adds the concept of a “designated body.” A “designated body” is defined as: “A person or group, other than a committee of the board of directors, that has been vested by the articles of incorporation or bylaws with powers that, if not vested by the articles or bylaws in that person or group, would be required by this chapter to be exercised by the board or the members.⁴”

A new section of the revised act provides that some, but less than all, of the powers, authority, or functions of the board of directors may be vested in a designated body. If that is done, provisions of law relating to the board of directors will apply to the designated body (§812(a)(1)), directors will be relieved from their duties and liabilities with respect to the powers, authority, and functions to the extent they have been vested in a designated body (§812(a)(2)), and members of the designated body are entitled to indemnification and exoneration from liability the same as the directors (§812(a)(3)).

Director duties and liabilities

The provisions of the revised act with respect to the duties and liabilities of directors of nonprofit corporations closely follow the provisions of the Idaho Business Corporation Act, which is based on the Model Business Corporation Act, on the same subjects. This is consistent with the view that the relationship of directors to a nonprofit corporation is more like that of directors of business corporations than to that of trustees to their beneficiaries. As explained above, a liability shield automatically applies to directors of charitable corporations with an optional liability shield available for directors of other corporations. The director indemnification provisions in the revised act also follow the business corporation statutes.

What it means to be a member

The revised act adopts a new definition of “member,” which means “a person in whose name a membership is registered on the records of the corporation and who has the right, not solely as a delegate, to select or vote for the election of directors or delegates or to vote on any type of fundamental transaction.”⁵ With this new definition, voting becomes central to what it means to be a member, as explained in an official comment to the definition: “A nonprofit corporation will sometimes refer to contributors or other persons interested in the activities of the corporation as ‘members’ even though those persons do not fit within the definition of ‘member.’” However, “[i]f a person does not have the right to vote for the election of directors or delegates or to vote on fundamental transactions, the person will not be a ‘member’ for purposes of the Act even though the person may be referred to by the corporation as a member.”⁶ Therefore, just because a person is referred to as a member, if they do not have voting rights, they are not a member within the meaning of the Idaho Act.

Elimination of cumulative voting

The current Idaho Act permits the articles of incorporation or bylaws of a nonprofit corporation to authorize cumulative voting. The revised act prohibits cumulative voting, but existing cumulative voting rights are grandfathered in so that a provision in a corporation’s articles or bylaws that authorizes cumulative voting and is adopted before the enactment of the revised act will continue to apply until the articles or bylaws are amended.

Electronic technology

The revised act broadly validates the use of electronic technology and uses terminology developed in the Uniform Electronic Transmissions Act (UETA) and the federal Electronic Signatures in Global and National Commerce Act (E-Sign).

In the past few years, the manner in which corporations hold meetings has changed significantly. The revised act authorizes the board of directors to permit members to participate in meetings by means of remote communication, such as over the internet or through telephone conference calls, subject to certain conditions set forth in the revised act and any other guidelines and procedures that the board of directors may adopt.

This would include the use of electronic ballots to the extent authorized by the board of directors. The revised act also authorizes the board of directors to provide for a meeting of members to be held solely by means of remote communication and to dispense with having a geographic location for the meeting. This authority may be eliminated in the corporation’s articles of incorporation or bylaws.

In addition to the authorization for remote participation in member meetings, the revised act provides that “directors may participate in a meeting of the board through the use of any means of communication by which all directors participating may simultaneously hear each other during the meeting.” This authorization for remote participation in board of director meetings may be restricted by the articles of incorporation or bylaws.

Ratification of defective corporate actions

The revised act provides a statutory ratification procedure for corporate actions that may not have been properly authorized. Examples of defective corporate actions subject to ratification include corporate action taken without board resolutions or other action of the board or members that authorizes the action and corporate action taken without obtaining member approval when member approval of the corporate action is required. This statutory ratification procedure is designed to supplement common law ratification.

At the time this article was written, the Committee had not completed its proposed revisions to the Idaho Act, so the final proposal to the Legislature could be different in some respects from what is reflected in this article. For more information about the revised act, contact one of the members of the Committee.

The revised act should prove to be very helpful to Idaho nonprofit corporation by providing an up-to-date statute that provides the structure and flexibility necessary for the various types of nonprofit corporations that exist today.

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Endnotes

1. The members of the Committee are Crystal Berry, Thomas Everson, Eric Taylor, Nicholas Gourley, James Hovren, David Jensen, Jason Mau, Matthew Purcell, Sarah Reed, Michael Short, and Paul Street, with research assistance from law student Charlotte Cunnington.

2. The 4^th edition of the Model Act with comments can be found at the following link:  www.americanbar.org/content/dam/aba/administrative/business_law/nonprofit/mnca.pdf.

3. I.C. § 30-30-601(3).

4. Model Act (4th ed.), § 102.

5. Id.

6. Model Act (4th ed.) § 102, cmt. 10.

Elizabeth Herbst Schierman

Published January 2022

Intellectual property—like patents, trademarks, etc.—is reportedly “the most valuable asset class on the planet,”¹ and a company’s intangible assets are often the largest percentage of the business’s value. This value percentage has nearly tripled in the past thirty-five years, from 32% in 1985, to 80% in 2005, and to 90% in 2020 for the S&P 500 companies.^2,3 But, while patent-forward companies like IBM spend hundreds of millions of dollars annually on patents alone,⁴ most companies understandably have more limited resources and must select which assets to formally protect.

Identifying the inventions and trademarks of the greatest potential value is an important step in allocating limited resources to maximize the value and strength of a company’s patent and trademark portfolios. This article provides a roadmap of what businesses should consider when selecting the inventions to patent and the trademarks to register.

Identifying All Potentially-Protectable Inventions and Trademarks

First and foremost, it is important for any company to recognize all the invention and trademark assets the company possesses.

Patentable inventions extend beyond just devices, machines, and other physical articles of “manufacture,” to subject matter such as processes (e.g., methods of fabrication or use), compositions of matter (e.g., innovative materials),⁵ and designs.⁶ Even improvements to already-known inventions may be patentable.⁷ One “product” may be associated with numerous inventions, any or all of which may be patentable if novel (i.e., not previously patented or otherwise publicly known technology),⁸ non-obvious (i.e., not an obvious modification of known technology),⁹ and useful.

Trademarks, too, extend beyond just logos to practically any indication of the source, sponsorship, or endorsement of goods or services.¹⁰ Each such “mark” may be separately registerable. For example, a business may have a standard character company name (e.g., MCDONALD’S®¹¹), nicknames (e.g., MICKEY DS®¹²), product names (e.g., BIG MAC®¹³), design logos (e.g., the McDonald’s arches¹⁴), mascots (e.g., Ronald McDonald¹⁵), trade dress (e.g., a restaurant’s yellow awning¹⁶), or even sound marks (e.g., the A-B-C-E-D audio tone note progression¹⁷ of the “I’m Lovin’ It” commercials).

With very few exceptions, the only way to hold exclusive rights to make, use, offer to sell, or sell an invention within the United States, or to import the invention into the United States, is to secure an issued U.S. patent.¹⁸ Without a patent in hand, there is usually no way to prevent a competitor from making and selling the same invention, whether copied from the original or independently produced.

“With very few exceptions, the only way to hold exclusive rights to make, use, offer to sell, or sell an invention within the United States, or to import the invention into the United States, is to secure an issues U.S. patent. ¹⁸“

Enforceable and exclusive trademark rights, on the other hand, may arise through use of the trademark, even without a trademark registration. However, unregistered (i.e., “common law”) trademark rights tend to be limited and difficult to enforce. Federal registration provides significant

benefits, including a presumption of ownership and nation-wide exclusive right to use the registered trademark on or in combination with the goods/services listed in the trademark registration.

Selecting the Inventions to Patent

Once all the “inventions” have been identified, deciding which to protect via a patent should include considering more than just the cost of the patenting process.¹⁹ The following considerations are aimed at prioritizing the inventions with the greatest potential for valuable patent protection:

Has the invention already been publicly disclosed?

Under U.S. patent law, once an invention has been made public, a one-year, non-extendable window opens for filing a patent application.²⁰ When the window closes, so does the opportunity to secure a U.S. patent. In most other countries, the opportunity to seek a patent ends immediately upon a public disclosure of the invention, regardless of where in the world the disclosure occurred.²¹ (Thus, it is usually best to file a U.S. patent application before any disclosure of the invention to preserve the right to file foreign or international patent applications claiming priority to the U.S. filing.)

Is the invention new, non-obvious, and useful compared to prior-known technology in the relevant field?

Novelty, non-obviousness, and utility are the three primary requirements for patentability. The more similar an invention is to already-existing technology (i.e., “prior art”), the lower the likelihood of acquiring a patent and the more challenging, time consuming, and costly the patenting process is likely to be. This is also why a pre-application patent search, conducted by a knowledgeable patent practitioner, is usually advisable and provides an opportunity to evaluate the invention’s patentability and to focus the patent application toward the most innovative aspects of the invention.

How difficult would it be for a competitor to compete without using the innovative features of the invention?

The importance of this “design-around” consideration should not be overlooked. Any new, non-obvious, and useful invention may be patentable, but if a competitor could avoid practicing the invention and still have a competitive product—e.g., in terms of cost and performance—in the marketplace, a patent would hold little real-world value to the patent owner. On the other hand, if a competing product would be inferior or overly costly to produce or use without benefit of the invention, the more valuable a patent on that invention is likely to be.

What is the likelihood of a competitor reverse engineering or independently developing the invention?

A patent provides exclusive rights in an invention to the patent owner in exchange for publicly disclosing certain details about the invention.²² Contrarily, a process, composition, or other product maintained as a “trade secret”—and therefore not publicly disclosed—may be protected from misappropriation by others.²³

Trade secret law does not prohibit “reverse engineering,” such as independent examination of a commercially available, not-patented product to discern its features and then copying or modifying those features for a competing product. Trade secret law also does not prevent a competitor from independently developing the same process, composition, etc.

The higher the likelihood for competitor reverse engineering or independent development, the greater the value of patent protection. And, even for a patented product, the value of the patent depends on the scope of the claims, which should be crafted to cover foreseeable reverse engineering and other “design arounds” for competitor products.

Are subsequent, improved versions of the invention contemplated?

If an initial invention is likely to lead to modified versions down the road, securing broad patent protection for the initial invention is advisable, as are continuing patent applications (e.g., continuations, divisionals, and continuation-in-part patent applications) for the later “improvement” inventions. Skipping a patent application for the initial invention with a plan of patenting the later improved versions is ill advised because the initial, marketed (i.e., publically disclosed) invention will likely constitute “prior art” to the later-filed patent application, limiting the scope of potential protection available for the later improved versions.

Would patent infringement be detectable?

To prove patent infringement, the patent owner generally must prove, e.g., that an infringing device includes each and every claimed feature of a patented device, that an accused infringer has performed each and every claimed act of a patented process, and that an accused material includes each and every claimed ingredient/property of a patented composition. If examination of a competitor’s products would not enable a patent owner to determine whether or not each and every claimed feature, step, or ingredient/property has been practiced, then the patent is of little real-world value.

How litigious is the industry?

Patents are commonly understood to be swords for battling nefarious infringers, but the protective shield-like aspects of patents are often overlooked. A non-litigious company may think it unnecessary to secure patents if it has no present intention of ever enforcing patents in court. However, if that same company finds itself accused of infringing a competitor’s patents, having a strong patent portfolio of its own may provide opportunities for counter-claims, settlement leverage, and cross-licensing. One notorious company recently vowed not to initiate patent suits against others while warding off lawsuits and patent validity challenges against it.²⁴ Accordingly, building a diverse patent portfolio strengthens both sword and shield, the latter being very helpful in a litigation-prone industry.

How does the product’s expected commercial lifetime compare to the potential patent lifetime?

Generally, a U.S. utility patent is enforceable from the date the patent issues (also known as its “grant” date) until it expires, which—if all necessary maintenance fees are paid during the life of the patent—is a twenty years from the first effective filing date of the patent application.²⁵ But, it takes an average of about two years to secure a patent.²⁶

If a new product is likely to become commercially obsolete within its first two years in the marketplace, investing in the usual patenting process may not provide much value to the company. That said, there are opportunities to expedite the patenting process for additional cost,²⁷ and these opportunities should be considered for innovations with shorter commercial lifetimes.

The previous list of considerations is by no means exhaustive, but is intended to be a useful tool for allocating limited resources toward protecting the inventions with the greatest potential value so as to grow a patent portfolio of maximum value to the company.

These considerations also reflect best practices for securing the strongest patent protection for an invention once the decision to file a patent application has been made. These best practices generally include, e.g., keeping inventions secret before filing a patent application; engaging a patent practitioner to conduct a patent search and evaluation before drafting a patent application; tailoring patent claims toward innovative features while avoiding room for “design-arounds”; omitting trade secret information, where possible, in patent applications; drafting patent claims with all contemplated alternatives and improvements in mind; tailoring patent claims toward detectable features; and diversifying patent claims for strong patent portfolios.

Once the decision has been made to pursue patent protection for an invention, an appropriate prosecution strategy should be crafted to make best use of limited resources. For example, “small entity” and “micro entity” patent applicants may reduce required U.S. patent fees by 50% or 75%, respectively. Starting with a “provisional” patent application (i.e., a generally low-cost, informal application) may be a good strategy for businesses wishing to minimize initial costs and/or test the market with an inventive product, process, services, etc., for up to a year before investing in a full “nonprovisional” patent application.

When foreign—in addition to U.S.—patent rights are of definite interest, a single international patent application (known as a “PCT” or a “Patent Cooperation Treaty” application) may be filed first and used to retain the opportunity to later file for patents in any or all of more than 150 PCT-contracting countries/regions, including the U.S. This strategy can generally delay country-specific patenting costs for thirty or thirty-one months.

When filing a PCT application, the “International Searching Authority” (ISA) (i.e., the country whose patent office is selected by the applicant to examine the claims of the PCT application) should be strategically selected, too. For example, if Europe is an expected primary market for the invention, the European Patent Office (EPO) may be a good ISA choice and worth its relatively higher fees. Alternatively, the Korean Intellectual Property Office (KIPO) is generally a lower-cost ISA and may be good selection in some technology areas. Pursuing patents in more than one country may also provide opportunities to use patenting success in one jurisdiction to expedite the patenting process and save cost in other jurisdictions, by virtue of the widely-available “Patent Prosecution Highway” (PPH).

So, after deciding to file a patent application, the next steps should be just as carefully considered, planned, and tailored according to the particular needs and goals—budgetary and otherwise—of the business and invention.

Selecting the trademarks to register

As for trademarks,²⁸ the considerations for deciding which marks to register in the U.S. and/or abroad go beyond merely identifying names and logos used in interstate commerce as indications of the source, sponsorship, or endorsement of the goods and services. These considerations should include all of the following:

Which marks are most used by the company to distinguish itself and its goods/services?

A company may refer to itself in many ways, such as by a formally-registered business name, an assumed business name (i.e., a “d/b/a” name), initials, etc. The same may be true for individual product names and product line names. The names and symbols (i.e., the “marks”) most used by the company to distinguish itself and its goods/services from others are the marks most valuable for trademark registration.

Which marks are most used by others when referring to the company or its goods/services?

Regardless of how frequently a company refers to itself by its formally-registered business name or refers to its products by their company-chosen product name, its customers, its competitors, or others may choose to use alternative names, nicknames, initials, etc. These more frequently used marks may, therefore, gather more “good will” and a stronger association between customer and company than the marks frequently used by the company alone, making registration of these marks relatively more valuable to the company.

Which marks would lead to damaging confusion if a competitor were to start using something looking or sounding similar in association with similar goods/services?

The marks that, if adopted either exactly or similarly by a competitor, would result in the most confusion of customers and/or the greatest reputation damage to the company, are the marks that should be highly prioritized for formal federal registration. A competing product of inferior quality, marketed under a confusingly similar name or logo, is likely to lead customers to distrust the quality of the original product. Bad press about a similarly-named competitor may tarnish the reputation of the original company, too.

This concern may be greatest for goods/services marketed to consumers not likely to exercise great care in their purchasing decisions. For example, purchasers of relatively inexpensive goods on massive online shopping venues may be less likely to be investigate the seller and quality of purchased goods than purchasers of high-priced items sold in person by clearly-authorized distributors and in negotiated transactions.

The greater the likelihood and extent of damage—to company and/or goods/services reputation—if a competitor were to adopt a confusingly-similar mark, the more highly prioritized formal trademark registration should be.

For which marks would it be most detrimental if the company could not expand into additional geographic areas and/or goods/services areas?

Without a federal trademark registration, the scope of common law trademark rights is generally limited to only the areas of actual use. This more limited scope of rights of the common law trademark owner leaves open the chance for another to establish exclusive common law trademarks rights in the other areas (e.g., other geographic areas; other goods/services areas) or even to secure a federal trademark registration, either of which may inhibit the initial common law trademark owner from expanding its own trademark use or securing federal trademark registration. Accordingly, the marks for which expanded use is a possibility should be prioritized for trademark registration.

Which marks are expected to be in use long term and without significant change?

If a mark will be used only for a short time (e.g., for a one-season product line; for a one-time pop-up store) or if the mark is likely to be changed before settling on a final form (with a change in spelling, phrasing, design, etc.) federal trademark registration is unlikely to provide much value.

Which marks are most unique and distinctive?

The more unique (e.g., fanciful, arbitrary, or at least suggestive) a particular mark is, the more likely the mark will be registerable in the absence of a conflicting registration. Marks that merely describe the associated goods/services (e.g., an ingredient, quality, characteristic, function, feature, purpose, or use of the goods/services) will face rejection and a difficult road for registration.²⁹ Generic terms for the associated goods/services are not registerable, period.³⁰

At least for planned—but not yet in use—marks, is the mark available to use and register?

A mark not yet being used in commerce, but for which there is a good faith intention to make such use in the near future, may be the subject of a federal trademark registration application on an “intent-to-use” (ITU) basis.³¹ However, before choosing a new trademark to adopt and register, it is generally wise to have an experienced trademark attorney conduct a trademark search to see whether someone else has conflicting trademark rights, whether registered or unregistered.

In addition to the above, foreign manufacturing and/or markets raise the likely value of securing trademark registrations, in the U.S. and abroad, and should be carefully considered.

Conclusion

By identifying the inventions and trademarks with the highest potential value to the company, limited resources may be smartly allocated, and the patent and trademark portfolios developed by the company can provide the strongest possible protection to the business’s intangible assets.

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Endnotes

1. John P. Ogier, Intellectual Property, Finance and Economic Development, WIPO MAGAZINE, Feb. 2016, https://www.wipo.int/wipo_magazine/en/2016/01/article_0002.html.

2. Bruce Berman, Latest Data Show That Intangible Assets Comprise 90% of the Value of the S&P 500 Companies, IP CLOSEUP, Jan. 19, 2021, https://ipcloseup.com/2021/01/19/latest-data-show-that-intangible-assets-comprise-90-of-the-value-of-the-sp-500-companies/.

3. Aran Ali, The Soaring Value of Intangible Assets in the S&P 500, VISUAL CAPITALIST DATASTREAM, Nov. 12, 2020, https://www.visualcapitalist.com/the-soaring-value-of-intangible-assets-in-the-sp-500/.

4. See Thomas Alsop, Companies with the Most Patents Granted 2020, STATISTA, Feb. 1, 2021, https://www.statista.com/statistics/274825/companies-with-the-most-assigned-patents/ (identifying IBM as the company with the most U.S. patents granted to them in 2020, at 9,130 issued U.S. patents); see Pedram Sameni, Patexia Insight 94: IBM’s US Patent Budget is Estimated Around $280M Annually, PATEXIA, Oct. 28, 2020, https://www.patexia.com/feed/patexia-insight-94-estimating-the-ip-spending-for-uspto-s-largest-client-20201027.

5. Machines, manufactures (e.g., devices), processes, and compositions of matter are protectable by “utility” patents. See 35 U.S.C. § 101 (“Whoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent therefor, subject to the conditions and requirements of this title.”)

6. Designs are protectable by “design” patents. See 35 U.S.C. § 171(a) (“Whoever invents any new, original and ornamental design for an article of manufacture may obtain a patent therefor, subject to the conditions and requirements of this title.”)

7. 35 U.S.C. § 101.

8. 35 U.S.C. § 102.

9. 35 U.S.C. § 103.

10. See 15 U.S.C. § 1125(a).

11. U.S. Trademark Registration No. 743,572, registered Jan. 8, 1963.

12. U.S. Trademark Registration No. 1,292,557, registered Aug. 28, 1984.

13. U.S. Trademark Registration No. 1,126,102, registered Oct. 16, 1979.

14. See, e.g., U.S. Trademark Registration No. 4,568,939, registered July 15, 2014.

15. U.S. Trademark Registration No. 1,017,161, registered July 29, 1975.

16. U.S. Trademark Registration No. 4,676,898, registered Jan. 20, 2015.

17. U.S. Trademark Registration No. 3,034,331, registered Dec. 27, 2005.

18. See 35 U.S.C. § 271.

19. See Gene Quinn, The Cost of Obtaining a Patent in the US, IPWATCHDOG.COM, Apr. 4, 2015, https://www.ipwatchdog.com/2015/04/04/the-cost-of-obtaining-a-patent-in-the-us/id=56485/.

20. 35 U.S.C. § 102 (“A person shall be entitled to a patent unless . . . (b) the invention was patented or described in a printed publication in this or a foreign country or in public use or on sale in this country, more than one year prior to the date of the application for patent in the United States . . . .”).

21. See, e.g., European Patent Guide § 3.3.001 (discussing the principle of “absolute novelty”), available at https://www.epo.org/applying/european/Guide-for-applicants/html/e/ga_c3_3_1.html.

22. See U.S. Constitution, Art. I, Sec. 8, Cl. 8 (“To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries . . . .”).

23. See 18 U.S.C. § 1836; Idaho Code § 48-801.

24. Elon Musk, All Our Patent Are Belong to You, TESLA, June 12, 2014, https://www.tesla.com/blog/all-our-patent-are-belong-you (promising that “Tesla will not initiate patent lawsuits against anyone who, in good faith, wants to use our technology”). “Acting in good faith” involves certain requirements, such as not asserting patents or other intellectual property rights against Tesla, not challenging any Tesla patent, and not knocking-off Tesla products. Patent Pledge, TESLA, last updated Nov. 7, 20214, https://www.tesla.com/legal/additional-resources#patent-pledge.

25. 35 U.S.C. § 154(a)(2) (“Subject to the payment of fees under this title, such grant shall be for a term beginning on the date on which the patent issues and ending 20 years from the date on which the application for the patent was filed in the United States or, if the application contains a specific reference to an earlier filed application or applications . . . from the date on which the earliest such application was filed.”).

26. Patents Data, at a Glance August 2021, UNITED STATES PATENT AND TRADEMARK OFFICE, Aug. 2021, https://www.uspto.gov/dashboard/patents/ (listing “traditional total pendency” as 23.2 months).

27. USPTO’s Prioritized Patent Examination Program, USPTO, last visited Oct. 10, 2021, https://www.uspto.gov/ patents/initiatives/usptos-prioritized-patent-examination-program.

28. The terms “trademarks” is used generally in this article and includes all types of “marks” used in trade, including service marks, trade dress, collective marks, etc.

29. Possible Grounds for Refusal of a Mark, USPTO, last visited Oct. 10, 2021, https://www.uspto.gov/trademarks/ additional-guidance-and-resources/possible-grounds-refusal-mark.

30. TRADEMARK MANUAL OF EXAMINING PROCEDURE § 1209.01(c).

31. Trademark Applications – Intent-to-Use (ITU) Basis, USPTO, last visited Oct. 10, 2021, https://www.uspto.gov/ trademarks/apply/intent-use-itu-applications.

Ann-Marie Fulfer

Idaho State Bar President

First and Second Districts

Published January 2022

If I concentrate, I can still hear my father’s rich voice in his “neutral” American accent, which he had developed to replace the “M’waukee” accent of his youth.

Earl came from a working-class background in Milwaukee, Wisconsin. After he lived in the city orphanage from the ages of six to 12, his mother brought him and his brother home so they could work and help with household expenses.

When I was young, Dad and I would often sit together, chatting or reading. He introduced me to J.R.R. Tolkien when I was 11, and the magic I still feel when I read Lord of the Rings is inextricably tied to my memories of him. He was a gifted storyteller and child entertainer. Occasionally, when he and I were alone together, he would say, “You are bright, and with hard work, you can be anything you want to be.”

I love and miss my dad, and I still appreciate his supportive pronouncement. But his statement lacks both a definition of “hard work” as well as an acknowledgement of how becoming “anything you want to be” requires a support system that includes guidance. Without mentors, how do we know what to do and when to do it as we work toward achieving our goals and success (being what we want to be)? I think that just as we each define what our goals are and what success is, we also define what hard work is for ourselves. For me, it is giving my best effort at completing a task or tasks even (or perhaps especially) when I want to do something else – like re-read Tolkien.

When Dad was young, he discovered the choir at the Episcopal church; he loved singing and had a beautiful voice. It was at the church that he met a man who would become his mentor and would guide him through his teen years, encourage him to complete high school, and assist him in applying to the University of Wisconsin. For Dad, hard work was the time he dedicated to his studies as well as his actual jobs earning money. And one of his big successes was being the first college graduate in his family. Dad would spend the rest of his life committed to assisting people entering unfamiliar spaces through his mentorship as well as financial support.

Like almost anyone starting a new venture in an unfamiliar space, most law students need advice, mentoring, and experience to get them from day one of Law School to Attorney. For many years I have worked with law students. I love what I do and have met so many wonderful people who have taught me a lot through our conversations, and I hope I have returned the favor. But students also need real world exposure to the practice of law.  If a law student reaches out to you, take a minute to respond. Set up a phone call or a Zoom call and talk to them. If you have a pro bono case, think about whether you could have a student conduct research or write a memo for you.

If you do not already have a pro bono case but would like to donate your time to a low-income client, the Idaho Volunteer Lawyers Program (IVLP) matches volunteer attorneys with eligible applicants, provides malpractice insurance, offers training, and so much more. You can find more information on the Idaho State Bar’s website. IVLP will also work with you and the College of Law if you want to assign work to a law student for your pro bono case.

If you would like to mentor a student and help them learn necessary skills that lawyers should possess (e.g., effective communication, office management, problem solving, money matters), you can seek out the student members of your Practice Section or reach out to the College of Law where we have recently started a mentorship program that offers structure to the mentorship process.

As lawyers, we are bright and generally lead full, busy lives at work and at home, but if we can carve out time to mentor law students, or even take a few to lunch, we can maybe help them succeed in being who they want to be.

Before I close, I want to give a shout out to the Access to Justice Idaho Campaign, which raises supplemental funds to support three state-wide organizations that provide pro bono legal services to low-income, vulnerable Idahoans: IVLP, Idaho Legal Aid Services, and DisAbility Rights Idaho. If you have the means, please consider giving to this organization. You can do so online at www.isb.idaho.gov/AccesstoJustice.

I also want to thank the dynamic people with whom I have been sharing time in-person and via Zoom during my time as an Idaho State Bar Commissioner: current commissioners, Kurt Holzer, Kristin Bjorkman Dunn, Laird Stone, and Gary Cooper; past commissioners, Judge Mike Oths, David Kerrick, and Don Carey; and ISB staff Diane Minnich, Brad Andrews, Julia Crossland, Caralee Lambert, Maureen Braley, Teresa Baker, and Lindsey Welfley.

If you are from the First District or the Fourth District and are interested in serving as a commissioner, look out for the notice of elections in March. Nomination forms will be due on the first Tuesday of April.

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Matthew D. Purcell

Published January 2022

Everything is bigger in America and, it appears, its companies are no different. Following an unprecedented reduction in federal antitrust charges against corporations and individuals during the Trump Administration, the Biden Administration is ready to increase enforcement of federal antitrust laws against large corporations and individuals it views as engaging in anticompetitive practices in the marketplace.¹  This article will give a brief history of antitrust laws and the current statutory landscape. The article will then focus on the enforcement issues that plague this area of law and what this author believes we can expect from the Biden Administration.

Historical and current statutory landscape

Antitrust laws were initially enacted in the United States at a federal and state level in the late 1800’s and early 1900’s to counteract what many believed to be unfair business practices by large corporate monopolies and trusts. Since the initial introduction of antitrust legislation, federal and state antitrust laws have expanded to prohibit businesses from engaging in a wide range of anticompetitive activities, including (1) price-fixing schemes, (2) anticompetitive mergers, acquisitions, and joint ventures, (3) unfair and anticompetitive distribution models, and (4) other activities and transactions intended to achieve a monopoly. In summary, antitrust laws are intended to encourage competition in the marketplace and to discourage anticompetitive behaviors.

Principally, the federal antitrust laws in effect today are (1) the Sherman Act, including Section 1 which prohibits agreements that unreasonably restrain trade and Section 2 which prohibits monopolization, attempts to monopolize or conspiracies to monopolize ² (2) the Clayton Act, which, among other things, prohibits price discrimination, exclusive dealing or tying arrangements, and mergers and acquisitions that may substantially lessen competition,³ and (3) the FTC Act, which, in an attempt to bolster the Sherman Act, prohibits unfair methods of competition or deceptive acts or practices.⁴ In addition to the foregoing federal antitrust laws, there are state antitrust laws similar in scope to the federal laws, but they are not always identical, including those related to the enforcement of non-competition agreements between employers and employees.⁵

Enforcement issues

Enforcement of federal antitrust laws is largely the responsibility of the Antitrust Division of the Department of Justice and the Federal Trade Commission. However, just as federal antitrust laws are a patchwork of legislation, so is the enforcement. For example, a violation of Section 1 of the Sherman Act is subject to civil enforcement by the Department of Justice and the Federal Trade Commission.⁶ The DOJ may also bring criminal charges for Section 1 violations. In addition to the federal agency enforcement, violations of Section 1 can give rise to court actions for damages brought by private plaintiffs and state attorneys general on behalf of their residents.⁷

Federal enforcement of Section 2 of the Sherman Act is the same, except the DOJ does not generally prosecute violations of Section 2 criminally.⁸ Meanwhile, violations of the Clayton Act do not carry any criminal liability but do provide for civil penalties and may be enforced by private parties, the DOJ and the FTC.⁹ Predictably, the FTC Act is enforceable by the FTC, but it is not enforceable by private parties.¹⁰

Such a hodgepodge of federal antitrust laws—to say nothing of state antitrust laws—and the various means of enforcing those laws, results in a difficult and complex legal landscape of differing interpretations, policies, enforcement, and defenses. As one might imagine, due to this complexity and lack of uniformity, enforcement of antitrust laws lacks consistency and is prone to political pressures, societal and community viewpoints, and contemporary economic considerations.

“Such a hodgepodge of federal antitrust laws […] and the various means of enforcing those laws, results in a difficult and complex legal landscape of differing interpretations, policies, enforcement, and defenses.”

One area of particular enforcement concern is with regards to Hart-Scott-Rodino (HSR) filings.¹¹ The HSR Act (which amends the Clayton Act) established a federal premerger notification program which requires parties to report large mergers and acquisitions to the FTC and DOJ prior to closing the transaction.¹² Following the pre-closing filing, the parties to the transaction must wait for a specified period (typically, 30 days for the initial waiting period) which allows the agencies to review the proposed transaction to determine if the proposed transaction is likely to substantially harm competition.¹³ Following the waiting period, and assuming that the FTC and DOJ have not taken further action, the parties may close the transaction—albeit with the caveat that the agencies may always take a retroactive look back if necessary.¹⁴

In the event that the FTC and DOJ need more time to evaluate the proposed transaction, they can make a second request—thereby extending the waiting period and launching a more in-depth investigation.¹⁵ Regardless of whether the parties are subject only to the initial waiting period or whether they are subject to the second request, once that waiting period expires and the agencies have taken no action, it is largely accepted that the parties may consummate the transaction with very little risk that the FTC and DOJ will come back to further scrutinize, or perhaps even un-wind, the transaction.¹⁶

On August 3, 2021, the FTC announced that due to “a tidal wave of merger filings that is straining the agency’s capacity to rigorously investigate deals ahead of the statutory deadlines”, it is unlikely that the FTC will be able to fully investigate deals within the standard 30 day waiting period.¹⁷ As such, investigations that are not completed in the 30 day waiting period “remain open and ongoing” and parties that choose to proceed with closing transactions that have not been fully investigated do so at their own risk.¹⁸

In one sense, there is nothing new in this announcement as the FTC has always retained the right to determine if a merger is unlawful even after a pre-merger review has been completed. However, the proactive announcement combined with President Biden’s recent Executive Order on Promoting Competition in the American Economy (which expressly states that it is the Biden Administration’s policy to provide greater scrutiny of mergers and acquisitions even after the transactions have closed), should give parties to large transactions pause, particularly in the industries identified in the Executive Order as the focus of the administration’s antitrust enforcement efforts.¹⁹ Parties to large transactions should allocate risk in their transaction documents regarding HSR filings and the possibility of pre-closing or post-closing enforcement actions by the FTC.

The FTC and DOJ may seek to further amend their current HSR guidelines. The FTC and DOJ recently announced that “current guidelines deserve a hard look to determine whether they are overly permissive” and that the antitrust enforcers planned “to jointly launch a review of our merger guidelines with the goal of updating them to reflect a rigorous approach consistent with applicable law.”²⁰ We should expect further changes soon.

Executive Order on Promoting Competition in the American Economy

On July 9, 2021, President Biden signed an Executive Order on Promoting Competition in the American Economy.²¹ The primary focus of the Executive Order is to encourage and empower federal agencies to scrutinize large corporations across multiple sectors of the U.S. economy to curb anticompetitive activities. It adopts a “whole of government competition policy” to what has historically been a fragmented patchwork of laws, agency oversight, and enforcement^.22 In short, the Biden Administration wants to change the way the federal government approaches competition issues.²³

The rationale from the Biden Administration in issuing the Executive Order is the belief that (1) too few companies control too much of their respective markets, i.e., “Big is Bad,” (2) prices have increased too much, too fast, (3) barriers to competition are driving down wages for workers, and (4) innovation is stagnating. ²⁴ Certainly, arguments can be made that other factors besides the lack of enforcement of federal antitrust laws have contributed to these results. However, it is well-known that many industries have seen rapid consolidation of competition in recent years.

We need to look no further than the technology sector which has drastically consolidated since the beginning of the 21^st century. But it is not just the technology sector that has seen massive consolidation. For example, in the agricultural seed market, just four companies: (i) Bayer (which acquired Monsanto in 2018), (ii) Corteva (created through the merger of Dow and DuPont in 2017), (iii) Chem China (which acquired Syngenta in 2017), and (iv) BASF, control more than 60% of global proprietary seed sales—a fact which the accompanying Fact Sheet to the Executive Order highlights.²⁵

While hyper partisanship is en vogue in the United States, the Executive Order and enhanced antitrust enforcement is a rarity in that it largely enjoys bipartisan support, ²⁶ particularly when it comes to the colloquial terms of “Big Tech” (Facebook, Apple, Google, Microsoft, and Amazon) and “Big Ag.” Republicans often view the former, Big Tech, as having a unique ability to censor freedom of speech rights while viewing the latter, Big Ag, as having a detrimental effect on family-run farms, a sanctum sanctorum for conservatives and liberals alike.

The bipartisan support for further antitrust legislation and increased enforcement from both Democratic and Republican politicians is even enjoyed by many members of the judiciary and federal agencies. Current U.S. Attorney General, Merrick Garland, recently stated: “The Supreme Court has repeatedly referred to the antitrust laws as the charter of American economic liberty, and I deeply believe that.”²⁷ The position that a competitive marketplace is critical to our form of government is echoed in the opening lines of the Executive Order: “A fair, open, and competitive marketplace has long been a cornerstone of the American economy, while excessive market concentration threatens basic economic liberties, democratic accountability, and the welfare of workers, farmers, small businesses, startups, and consumers.”²⁸

The Executive Order creates 72 initiatives to address economic competition problems and specifically calls out—it appears in terms of priority—the following industries as the focus of the administration’s antitrust enforcement efforts: (1) technology, (2) agriculture, (3) healthcare, (4) banking and financial institutions, and (5) transportation.²⁹

Next steps for the Biden Administration

Based on the content of the Executive Order and the early actions of the Biden Administration, we should expect to see the following five developments over the next several years.

First, there will be an increase of antitrust enforcement charges filed by the FTC and DOJ against corporations and individuals during the Biden Administration. These charges are likely to be widespread across industries and federal and state antitrust laws, but should be particularly expected in the technology, agriculture, healthcare, banking and financial institutions, and transportation industries.

Second, in addition to enforcement actions by the FTC and DOJ, there will be an increase of federal and state investigations into the practices of large corporations, particularly in the Big Tech and Big Ag industries, which will likely result in increased class action litigation.

Third, there will be continued political pressure from both the left and the right on the Big Tech and Big Ag industries to stop further consolidation, and perhaps, to break-up the limited market participants. We have already seen the pressure increasing with a steady scrutiny from federal and state agencies, legislators, academics, trade organizations, interest groups, and grass roots organizations. This pressure even comes from unlikely sources, such as Yale Law School sponsoring a “Big Ag and Antitrust” conference in 2020.³⁰ Its purpose and underlying position are succinctly stated in the opening sentence of the conference guide: “Since the mid-20^th century, a handful of corporations have grown to dominate America’s farm and food sectors” and the conference aims “to explore the role of antitrust and competition policy in creating America’s food system and its potential for improving it.”³¹ Anticompetitive behaviors in Big Tech and Big Ag are in the crosshairs. Market participants have been warned.

Fourth, there will be increased scrutiny of previously completed, or soon-to-be-completed, mergers and acquisitions and a potential unwinding of large transactions that have anticompetitive results. In July 2021, the $30 billion merger of insurance brokers Aon Plc and Willis Towers Watson Plc was terminated following the DOJ’s lawsuit seeking to block the merger.³² This was the first major victory—and a very aggressive step—of the Biden Administration’s new antitrust enforcement policy. The action and end result, with Aon paying Willis a $1 billion break-up fee, was surprising considering that European regulators had recently approved the proposed merger (with qualifications)—and European regulators have typically taken a more stringent approach to antitrust enforcement^.33 The position of the Biden Administration on the Aon-Willis proposed merger should not be viewed as an isolated event. We should expect the Biden Administration to continue with its aggressive enforcement of antitrust laws to restructure the economy.³⁴

Fifth, the Executive Order took direct aim at employer non-competition agreements and burdensome occupational licensing requirements intended to restrict competition.³⁵ We should expect to see state legislatures (and court systems) further evaluate current laws and turn towards viewing overly restrictive non-competition agreements and occupational licensing requirements as inhibiting competition and restricting mobility in the labor markets. Unfettered employer-driven labor barriers or profession-driven occupational barriers are no longer du jour.

Conclusion

Our clients depend on us to identify legal issues and risks and to advise them accordingly. Both in-house and outside counsel should expend the time and resources necessary to educate their clients on antitrust risks and how to avoid anticompetitive behaviors and actions. These training opportunities should be a deep dive into what business activities may give rise to potential antitrust investigations and enforcement, such as relevant market share, supply and distribution agreements, strategic relationships and collaborations, and non-competition or exclusionary agreements.

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Endnotes

1. There were 274 charges filed against corporations and individuals in the last four years of the Obama Administration (2013-2016). There were less than half of that number (129) of charges filed against corporations and individuals in the four years of the Trump Administration (2017-2020). See “Antitrust Division Workload Statistics FY 2010-2019” available at https://www.https://www.justice.gov/atr/file/788426/download.

2. Sherman Antitrust Act of 1890, 15 U.S.C. §§1-7.

3. Clayton Antitrust Act of 1914, 15 U.S.C. §§12-27.

4. Federal Trade Commission Act of 1914, 15 U.S.C. §§41-58.

5. Exec. Order No. 14,036.

6. Sherman Act 15 U.S.C. §§1-7

7. Id.

8. Id.

9. Clayton Act 15 U.S.C. §§12-27

10. Federal Trade Commission Act of 1914, 15 U.S.C. §§41-58

11. Hart-Scott-Rodino Antitrust Improvements Act of 1976, 15 U.S.C. §§18a.

12. https://www.ftc.gov/enforcement/premerger-notification-program

13. Id.

14. Id.

15. Id.

16. Id.

17. Vedova, Holly, “Adjusting Merger Review To Deal With The Surge In Merger Filings,” Aug. 3, 2021, available at https://www.ftc.gov/news-events/blogs/competition-matters/2021/08/adjusting-merger-review-deal-surge-merger-filings

18. Id.

19. Exec. Order No. 14,036 86 FR 36987, available at https://www.whitehouse.gov/briefing-room/presidential-actions/2021/07/09/executive-order-on-promoting-competition-in-the-american-economy/

20. Statement of FTC Chair Lina Khan and Antitrust Division Acting Assistant Attorney General Richard A. Powers on Competition Executive Order’s Call to Consider Revisions to Merger Guidelines (July 9, 2021), https://www.ftc.gov/news-events/press-releases/2021/07/statement-ftc-chair-lina-khan-antitrust-division-acting-assistant.

21. Exec. Order No. 14,036.

22. Id. at Section 2.

23. Id. at Section 4. The Executive Order establishes a White House Competition Council within the Executive Office of the President. The Council will be led by the Assistant to the President for Economic Policy and Director of the National Economic Council consist of many cabinet-level members. The Council is responsible, among other things, for coordinating, promoting, and advancing federal government efforts to enforce antitrust laws.

24. Fact Sheet: Executive Order on Promoting Competition in the American Economy dated July 9, 2021 available at https://www.https://www.whitehouse.gov/briefing-room/statements-releases/2021/07/09/fact-sheet-executive-order-on-promoting-competition-in-the-american-economy/.

25. “The Sobering Details Behind the Latest Seed Monopoly Chart” by Kristina Kiki Hubbard dated January 11, 2019 available at https://civileats.com/2019/01/11/the-sobering-details-behind-the-latest-seed-monopoly-chart/

26. “Lawmakers unveil major bipartisan antitrust reforms that could reshape Amazon, Apple, Facebook and Google” dated June 11, 2021 by Lauren Feiner at CNBC available at: https://www.cnbc.com/2021/06/11/amazon-apple-facebook-and-google-targeted-in-bipartisan-antitrust-reform-bills.html

27. “Under Garland, DOJ Takes Harder Line on Antitrust” by John D. McKinnon and Aruna Viswanatha, Wall Street Journal, Tuesday, July 27, 2021 on page A6.

28. Exec. Order No. 14,036, Section 1.

29. Fact Sheet: Executive Order on Promoting Competition in the American Economy dated July 9, 2021 available at https://www.https://www.whitehouse.gov/briefing-room/statements-releases/2021/07/09/fact-sheet-executive-order-on-promoting-competition-in-the-american-economy/.

30. Big Ag & Antitrust: Competition Policy for a Sustainable and Humane Food System, dated January 16, 2021 available at https://law.yale.edu/animals/events/big-ag-antitrust-conference

31. Id.

32. “Aon, Willis halt $30 billion merger over monopoly concerns, delay” by Alwyn Scott and Sohini Podder, Reuters, July 26, 2021, available at https://www.reuters.com/business/finance/aon-willis-towers-watson-call-off-30-bln-merger-2021-07-26/

33. Id.

34. “Under Garland, DOJ Takes Harder Line on Antitrust” by John D. McKinnon and Aruna Viswanatha, Wall Street Journal, Tuesday, July 27, 2021 on page A6.

35. Exec. Order No. 14,036.