Our Take on Things

What does the field of psychology have to say on how to collect a debt from your customer? 

You may not think it has much to offer.  But you would be wrong.

Consider what psychologists call the “anchoring effect”.  It’s a simple concept.  If you give a debtor a minimum amount that has to be paid to the account, then the debtor is more likely to pay exactly that amount rather than a higher number.

We see this all the time with credit card bills.  The credit card company sets a minimum payment to be made to the account to allow the debtor to still maintain credit with the card company.  There are those debtors who will make payment in full and thus maintain no balance and pay no interest.  However, there are a significant number of debtors who choose to pay exactly the minimum amount set out by the card company.  The debt balance continues to the next month and the credit card company begins to collect on a massive interest debt as well.

Dr. Neil Stewart of the Department of Psychology at the University of Warwick, UK, published a paper in Psychological Science in 2009 called “The Cost of Anchoring on Credit–Card Minimum Repayments”.  His findings were as follows:

– if a minimum payment amount was set out, then debtors who plan on making only a partial payment were more likely to pay that exact amount rather than a higher number.

– those who plan to pay the bill in full are not affected by a set minimum payment, as they plan on paying the bill in full regardless.

So what is your goal in recovering debts from partial payers – to recover payment from that debtor quickly or allow the debt to linger so that you collect interest as per your repayment terms?

If you want to let the debt continue to collect interest, then set a minimum payment to be made each month that gives you principle recovery and also allows interest to accumulate.  Whatever the minimum amount is that you set, the science of psychology will tell you that this is the amount that your malingering debtor is most likely to pay.

Paul H. Voorn, Associate, Andriessen & Associates Prof. Corp.

There is word on the wire from the World Cup watch that several Dutch women have been arrested for engaging in a scantily clad “ambush campaign” to promote a Dutch beer at the games in South Africa.  And of course, as this firm officially supports the Oranje and all things Dutch (GO ENGLAND!), this is of particular interest to us.  Or more to the point, as we are nerdishly interested in trade-mark news around the world, this is of particular interest to us (GO ENGLAND!).

 

The offense in question is an offense because the games have licensed Budweiser as the official beer of the 2010 World Cup.  Part of that license agreement likely has some very explicit wording about the depiction of unlicensed competitor’s brands during the games.  So much so, that in some reported instances (at prior World Cup events) fans have stripped down to their (undoubtedly orange) skivvies after having been asked to remove their (ahem) branded lederhosen.

 

This may seem extreme, but when you consider the worldwide viewership that the event brings, even an incidental glimpse of a brand name or trade-mark may have exposure to hundreds of millions of consumers in dozens of markets.  As such, the organizers take these things very seriously.

 

This is a great example about the obligations that rights-holders bear.  Although when most businesses think about their trade-marks, they think about the rights they have, not enough time and energy is spent thinking about the obligations that come along with those rights.

 

First and foremost of course is the obligation to maintain the distinctiveness of the brand.  This is trade-mark law 101.  If you want to protect your right to restrict others from encroaching on your brand, then you need to keep an eye on what’s going on in the marketplace and make sure that your distinct brand stays distinct.  For some rights owners this means engaging the services of professionals who conduct regular searches through industry sources, public listings, the internet, government registries and various other sources to make sure that no one is stepping on your brand, while for others it means signing up for some well thought-out Google alerts and keeping an eye on the industry media.

 

But the World Cup case (GO ENGLAND!) highlights a secondary level of obligations – that of maintaining the integrity of the use of your trade-mark.  Whether you are entering into broad licensing agreements that will give your marks wide coverage, or if you use your marks in a limited capacity, you need to ensure that your brand is enjoying the exclusivity granted to it.  License agreements should be well drafted and give a wide berth to your mark and licensees need to be strictly monitored for compliance.  Even your own use must be well thought out and regularly assessed. 

 

Are your marks dominant in representing your products or services?  Are other brands capitalizing on your marketing efforts?  Are other brands infringing on your marketing venues?  Are you the subject of a dastardly ambush marketing campaign by cute Dutch women, who in addition to flouting international trade-mark conventions, support a team who are unlikely to progress past the Group of 16?

 

If these issues are new to you or if you have any questions about your business branding or your trade-marks portfolio, please give me a call.  And GO ENGLAND!

 

Scott R. Young

In the Greater Toronto Area we’re about to enter a few weeks that likely will result in some notable challenges for businesses including  absences of employees from the workplace.

The World Cup starts tomorrow (Hup Holland! ) and with that, there may be a temptation to discipline employees who are operating at less than their normal productivity level.

Lest any business think that skipping work to watch a team be crushed by Holland is “cause for dismissal” let me assure you, it is not.   If you feel you absolutely must add to your employees’ blue mood after the loss, then a letter of warning is likely the strongest step you want to take. 

The letter needs to address the nature of the behaviour and offer suggestions as how to improve it – ie. vacation time, taping the game and watching it at home after work, etc.  The letter also needs to state what will happen if the behaviour is repeated, which it will be, until the middle of July.  

Ultimately, if termination is the next step, that needs to be something the employee is aware of, though it is not likely any Judge sitting on a law suit flowing out of a dismissal during the World Cup (if that is the only employee problem) is likely to see escalating letters during the month as “just cause”.

The G20 meeting in Toronto will also present challenges to businesses in the Greater Toronto Area.  The potential losses to businesses, not just in the downtown core, are staggering and this may lead many to consider: who should be responsible for these losses?

It is unlikely a law suit against the G20 will result in a successful outcome.  Similarly, a law suit against the government for inviting the G20 to Toronto is also not likely to succeed.  Unless your business had the incredible foresight to obtain insurance against “business loss arising out of meetings of large numbers of heads of states”  (and if you did, please email me as I want your broker) it is likely, you are your own insurer.  It may be best to simply close shop for the few days the world is in town and take in a game or two of the World Cup. (Hup Holland!)

To a degree, the World Cup and G20 are both much like the predatory Bears that have been popping up in the Orillia area of late. 

You know that they’re there.  You know that they can impact your life.  However, until you encounter them face to face, you’re not sure how it’s going to turn out.

Hup Holland !! (the official World Cup Soccer team of our firm, regardless of what others might say if asked)

Inga B. Andriessen sr. Lawyer (proud Canadian of Dutch heritage)

I am hoping that two consecutive blogs about pending legislation doesn’t mean this is turning into a political blog.  But the introduction of the bill this week caught me by surprise and it looks like it might have a few tidbits that will be of interest to many of my clients.

 

The bill contains numerous amendments to the Personal Information Protection and Electronic Documents Act (PIPEDA).  There are some definitional amendments that exempt business contacts from some of the sections and a few other minor changes.  But most notably, the bill features a provision that requires an organization who has experienced a security breach to report that breach to the federal privacy Commissioner.  While this seems to strengthen the existing privacy framework and provide greater comfort for those of us who divulge our personal information to various organizations on a daily basis, some critics have complained that the provisions are comparatively weak.

 

The concern is that the bill will create a false sense of comfort where an illusion of transparency is created, but that the lack of significant penalties will not engender compliance.  I don’t think that’s a fair criticism.

 

I think generally speaking, Canada’s experience with privacy laws has been a positive one.  Although our overall framework carries little in the way of penalties for organizations that do not meet their responsibilities with respect to the personal information that they collect, store and transmit, my experience has been that businesses take the laws very seriously.

 

We have worked with various types of businesses, in creating and implementing privacy policies and in ensuring that ongoing practices are compliant with not only PIPEDA, but the OECD core privacy principles themselves.

 

As the privacy landscape evolves, I am confident that business will evolve likewise.  And as the ongoing – and very public – experience of Facebook has shown, compliance is not only a matter of avoiding statutory penalties, it is a matter of making a good name for yourself in an area of increasing importance to consumers.

 

If you have any questions about your current privacy practices or the statutory and common law landscape in this area, please contact me.

 

Scott R. Young

Experts predict that sweeping changes to our current copyright system will be tabled in Parliament sometime next month.  With mounting pressure from the United States, it is likely that the current effort will bring about actual legislation this time – a fate different that that of Bill C-61 and its predecessors.

 

Earlier reform proposals were coupled with some of the broadest public consultations in recent memory.  Advocates of a US Digital Millennium Copyright Act style bill were met with fierce opposition (which in today’s parlance usually means a very active Facebook group and an e-mail campaign or two).  Despite that, there are suggestions that the new bill will mimic the bill C-61 proposal.  For his part, Canadian Heritage Minister James Moore has warned people not to criticize the bill until they read it…

 

As a refresher, C-61 purported to support rights-owners with tools such as Digital Rights Management, and rejected a flexible fair dealing approach.  As well, the bill contained tough anti-circumvention measures and opposed time shifting and format shifting provisions.  Many criticized the measures as anti-consumer, and even a significant portion of the rights holder and business communities have begun to change their stance on DRM in recent years.

 

Even the rhetoric that has precipitated the pressure to reform the Copyright Act has started to weaken.  Recent reports from the Business Software Alliance have confirmed that Canada has one of the lowest piracy rates in the world, contrary to stereotypes of Canada as a haven for copyright pirates.

 

There are certainly a variety of positions on the issues presented with copyright reform, and any proposal will have a significant impact on many of my clients.  Whether the ultimate reforms are pro rights holder or pro consumer, the biggest impact will result from the mode of the changes.  With that in mind, I will be keeping a close eye on the developments and will keep you updated as the process moves forward. 

 

For your part, if you are interested, please get involved in the process.  Contact your local MP – and for those who really want to get politically active, the Facebook group is here.

 

Scott R. Young

For the past 11 years our firm has hired Articling Students.  These are men and women who have finished their law degrees, completed the required Law Society seminars and/or exams depending on when they graduated Law School and spent 12 or 10 months with our firm, depending on the Law Society requirements at the time of their Articles.

Tomorrow is the last day for the last Articling Student at our firm, ever.

The reason for the switch is mostly due to the increase in the Small Claims limit that has been discussed on this blog – matters that involve $ 25 000.00 rather than $ 10 000.00 tend to be more complicated and need a lawyer’s keen eye and accordingly, on Monday, April 19, 2010, Ann A. Hatsios, MBA, JD, joins our firm as our Junior Litigation Associate.

Ann will be handling the Small Claims matters at the same flat fee rate previously offered by the Articling Students.  However, Ann will also be able to assist in Superior Court matters without the restrictions placed on Students. 

We will, no doubt, miss the annual infusion of students into the office and the gentle way that they have of reminding us we’re getting old, however, this is what is best for our clients and at the end of the day, that is what matters: the client.

Inga B. Andriessen

Senior Lawyer,

It is the time of year again when we start sending out our corporate maintenance reminder letters.  And as such, I thought it would be appropriate to cover that issue here.

 

Various provincial and federal statutes require that corporations meet basic requirements in terms of annual record keeping and reporting.

 

In addition to the obvious requirement to report the corporation’s income for the purposes of taxation (which we will not discuss here), there are two major categories of annual maintenance that every corporation must concern itself with.

 

The first is the duty to maintain internal records of the annual meeting of the shareholders of the corporation. 

 

While neither the Ontario Business Corporations Act or the Canada Business Corporations Act specify the extent of detail that is required, experience tells us that the minutes should record attendance, the election of accountants and auditors (if required by the Acts), and the election of directors and officers.  As well, any resolutions passed at such meetings must be kept by the corporation.

 

The second duty is to keep the relevant governing body apprised of your basic corporation information on an annual basis – generally this relates to the names and address of current directors and the address of the corporation. 

 

In the case of provincially incorporated entities, the Corporations Information Act requires that you submit a CIA return, along with your annual income tax return.

 

For federal corporations, however, a separate corporate annual return must be submitted to Corporations Canada.

 

Penalties for failure to adhere to the annual requirements range from fines to having the corporation cancelled.  It’s something that should be taken seriously by all directors.

 

If you have any questions about this, or any other compliance matter, do not hesitate to contact me.

 

Scott R. Young

April Fools Day is almost upon us and as tempting as it is to prank our Blog, I think that April Fools jokes are probably best left to my personal, rather than professional life (my family is hereby on notice of potential pranks and warned that any pranks played on the writer of this blog will be met with harsh retribution).

 That being said, I would hate for any of our blog readers to think that lawyers and for that matter, Judges are without humour, and to that end, I recommend your read the decision of The Honourable Justice J.W. Quinn in Miller v. Carley – you can find it here: http://canlii.org/en/on/onsc/doc/2009/2009canlii39065/2009canlii39065.html

Appreciating that many of you don’t have the time to scan through the 218 paragraph decision, allow me to point out a few highlights that make this decision “entertaining”.  These are taken directly from the text of the Judgment:

INTRODUCTION

[1] After a busy day conducting illegal drug transactions, the plaintiff, the defendant and a mutual friend stopped at a corner store where the defendant purchased some “scratch” lottery tickets. One of the tickets proved to be a $5-million winner.

[2] The parties dispute ownership of the winning ticket. If the ticket were a child and the parties vying for custody, I would find them both unfit and bring in Family and Children’s Services.

Later in the case, perhaps, my favourite quote from a decision, ever, is:

 [151] When confronted with this discrepancy in his evidence, the plaintiff stated, “I have a really bad memory, really, really, really.”[33]

 [33] It is difficult to win a lawsuit with an admission like that one.

 In case you’re wondering, the plaintiff went on to lose the case, the Judge not believing that he had paid for ½ of the lottery ticket that lead to the $ 5-million dollar win.

 Trusting this has convinced at least some of you, the law is not as completely dry & dour as many believe.

Inga B. Andriessen Sr. Lawyer

 

There is a great article in the Globe and Mail this week about the breakup of the business partnership behind the popular restaurant Le Papillon.

 

The story is an excellent example of what can go right when people plan ahead for the future of a business, and when, failing that, they act reasonably in the business’ evolution.  I think the co-sharing agreement regarding the branding is ingenious, and although the lawyer in me shudders at all of the potential for disaster such an arrangement entails, the business person in me revels in the simple elegance of the plan.

 

The story doesn’t, however, tell of all of the things that can and do go wrong when partners fail to plan for eventualities.  In a blatant attempt to scare you into making that sort of plan, let me give you a brief rundown of some recent situations I’ve encountered:

 

• A well-funded group of business people started a new media corporation, with the intention of establishing a ground-breaking online social media website.  Despite several meetings to iron out the details of a comprehensive shareholders agreement, the document was never signed.  A year later, the shareholders were trying to push out one of the original investors for a failure to comply with their expectations.  Referrals to several litigation firms followed.  It’ll be tens to hundreds of thousands of dollars in legal fees and years before the dispute is settled.  Funding to launch the website was tied up in legal expenses, thus making the whole thing virtually worthless.

 

• Two partners setting up a health club decide, against my advice, to go ahead and set up the business, incur debts and seek out financing, prior to papering their arrangement.  A minor fraud involving the planned lease of gym equipment spiraled into the loss of their financing, which in turn lead to their personal liability for a lease, as well as potential litigation from hundreds of gym members.  The litigators took over that one as well.

 

• Two corporations with a years-long joint venture-type relationship got into a dispute about the allocation of income.  When they brought the written agreements to us, it was clear that they had been drafted by the business people involved, who relied on found precedents that did not include many of the issues that were relevant to the parties, and were never reviewed by legal counsel.  The documents turned out to be worthless in terms of settling the dispute.  The parties are now faced with the prospect of litigating or setting aside their differences until they can figure out how to extricate themselves from the venture.

 

We’ve seen what can go wrong and we know where the pitfalls are.  Before getting into a business arrangement, or before going further down the road in your current arrangement without a plan, talk to me about planning for any future eventualities, before they happen.

 

Scott R. Young

Are you ready for the changes that are coming to the internet domain name registry system?  If you do business on the internet, or if your online presence represents a significant aspect of your brand, then you better get ready.

 

After years of consultation and planning, ICANN will be introducing two major changes to the Top Level Domain (TLD) system currently in place.  TLDs are the .com, .net, and .org identifier that follows a domain name.  In addition to the most popular three, currently there are various country code TLDs and just 21 generic TLDs (.biz, .gov,. .edu, etc.).

 

The first change is the addition of non-Latin script characters.  This means that existing TLDs will now be available in Arabic, Greek, Cyrillic and various other scripts.

 

The second change is a major opening of the generic TLD range.  It is expected that industry specific TLDs such as .law and .computers will be introduced, as well as a plethora of other TLDs from every possible interest area imaginable.  Current expectations are that 500 new TLDs will be introduced as the change is rolled out in the next year.

 

As a brand owner and trade-mark holder (whether your rights are registered or common law), these changes demand your consideration.  It is currently estimated that 14% of web searchers are hi-jacked away from their legitimate search target into misleading typosquatting sites or other unauthorized websites.  The changes to the TLD system represent an exponential increase in the potential for identity theft, brand misappropriation and website fraud.  Maintaining the value of your brand online is about to get very complex.

 

The new system will bring with it new remedies that address takedown provisions and other dispute resolution procedures.  The remedies may be vastly different among the different registries however and dispute resolution models currently in place do not appear to favour rights-holders to the extent that might be desired.

 

If you have any questions about the new system or your online branding, please contact me as soon as possible.  This promises to be an interesting year for the internet.

 

Scott R. Young