Transcript - Milton Springut
Joshua Williams: Retail Revolution is a special, limited podcast created specifically for "Retailing and Service Design," a unique course that is part of the Fashion Management graduate program at Parsons school of Design in New York City. Each episode features in depth conversations with guest experts in omnichannel retailing with myriad perspectives: technology, consumer engagement, data analytics, merchandising, and more. We pay special attention to the short- and long- term challenges and implications of COVID-19 and potential opportunities to rethink retail's future. Retail Revolution is produced by Joshua Williams and hosted by Christopher Lacy, both are Assistant Professors in the School of Fashion at Parsons.
Christopher Lacy: I am your host, Christopher Lacy, and welcome to another episode of Retail Revolution podcast. Please be sure to subscribe to Retail Revolution podcast on your preferred streaming platform. You can find us on Apple Podcasts, Spotify, Stitcher, and TuneIn. You can also access the Retail Revolution podcast, blog, transcripts, and previous episodes at retailrevolutionpodcast.com.
Joining me today is Founding Partner of Springut Law. He specializes in intellectual property litigation and contracts across computer software and hardware, electrical and electronic arts, fashion and luxury goods.
He has been selected as a super lawyer in the field of intellectual property litigation and rated by Martindale Hubbell as an AB preeminent lawyer; it's highest rating. Welcome to the show Milton.
Milton Springut: Hello, how are you?
Christopher Lacy: I'm good. How about you this morning?
Milton Springut: Terrific. It's just a beautiful day as we've discussed.
Christopher Lacy: It is. So, Milton. Will you tell our listeners about yourself?
Milton Springut: So, as you already mentioned, I've been an intellectual property lawyer for over 25 years, representing large and small companies. And one of the things I really love to do is work in the fashion and luxury goods area.
By way of education, I am an electrical engineer, computer science guy. After graduating college, I started working for a company called Bell Labs, which was a terrific company that no longer exists. And a couple of years after being there, they wanted me to go and get a PhD.
But in the external world, engineers were being laid off left and right. And I kind of scratched my head about that. Meanwhile, my best friend in college had started working for the patent office and he was going to law school. He said, go to law school. You like it? Okay. So, instead of getting the PhD, I go to law school and before I know it, I've got a law degree.
So, what do you do with a law degree and a background in engineering and science? You go to a patent and intellectual property firm. And I did that. And the way I got involved in fashion law, basically on the intellectual property side of it, is one afternoon I'm sitting in my office and a partner walks in and says to me, what are you doing? And I guess I didn't have anything greatly tremendous on my plate that day. He said, come with me. Well, he introduces me to this company called Polo Ralph Lauren, who has at that time the beginning of a counterfeiting problem, with the polo player symbol.
And from there, it goes on to overseeing over a hundred simultaneous litigations in the federal court. And that's something you don't see very much anymore. But at that time, there was a tremendous counterfeiting problem in that area. And companies did things differently.
So, from there, I've gone to represent a lot of other companies in this space, including Cartier, Gucci, Guess, van Cleef, Panorai, companies like that. And its really helping companies, from how to protect their intellectual property to once they have that intellectual property, enforcing it against people who copy it.
Christopher Lacy: Wow. Now, that's a great career trajectory. And I always love hearing how people kind of got to where they are, but there were twists and turns in the route to getting there. So, before we talk about intellectual property, ‘cause we are going to talk about that. I actually want to start out with you on news that broke on June 6th. And, it's in result to the coronavirus pandemic and we have Simon Property suing Gap for nonpayment of rent. And it's to the tune of 65.9 million, and just for three months of rent. So, I want to ask you as you're dealing with different organizations, and as you see this on the landscape, this coronavirus pandemic, what do you think we'll see playing out when it comes to contracts and landlords and retailers?
Milton Springut: That's really a very interesting question. And, when you move forward, it becomes rather complicated. So, let me see if I can just, put it in a little bit of perspective here.
COVID-19 clearly has had a major economic impact. And as you mentioned, one example, numerous tenants have become unable to pay their rental obligation, which in turn affects the landlord's ability to pay its mortgage, taxes and other obligations. And this obviously affects the supply chain all the way up.
In terms of contractual obligations, there's going to be a flood. You're seeing the tip of the iceberg. And courts are going to have to work this out.
There is really no one simple answer, but there are really three big legal ideas that will come into play. First, many contracts contain, what is known as a force majeure clause, which lists specific, extreme events that will excuse contractual obligations. Some of these typically include epidemics, acts of government, which in the COVID-19 situation would include government lockdown orders. So, first step is to check what's in the contract.
Second big area is called impossibility, which also excuses, contractual performance. And this is going to come into play, in some cases, the circumstances were such that it was not possible to perform the contract. However, this rarely succeeds, but you can expect that people are going to bring this up.
And finally, there's a third concept called frustration of purpose. This basically means that you contracted for something that turned out to be worthless. For example, someone contracted for retail space and then because of COVID-19, it was useless because the government shut down these retail operations.
So, you're going to see many arguments that some aspect of the crisis, excuse the party under a contract. And in some cases, those arguments should succeed.
Christopher Lacy: Thinking about how a contract is, I mean, most contracts relative to rent, manufacturing, things like that are beyond a one-year situation. It's a two-year, three-year. Does it really hold up if the pandemic only impacted a certain number of months? Does it make the entire contract void? Because the pandemic, and it's still going, impacted a lot of businesses being non- essential for three months, it reverberates after.
So, is there a timeframe that works within that? Or, how does that go?
Milton Springut: So again, it's too early for any definitive answers because no cases have really moved to trial or summary judgment where there's some kind of ruling.
Christopher Lacy: Hmm.
Milton Springut: But I would think that certainly for that three-month period, if the government shut down, the ability of the renter to use his space, then there's going to be a good argument for that.
What happens after? Open question. Maybe there's some spillover, but right now, very unclear how that's all going to be worked out.
Christopher Lacy: Thank you. I was looking forward to this conversation with you because it's been something that's on my mind a lot, as to how this plays out for retailers.
So, your expertise as we've discussed is IP law. I'd actually like for you to explain just the general meaning of IP law and what it does.
Milton Springut: IP law relates to non-tangible rights a person or company might have. And usually when people list those rights, the four big ones are patents, copyrights, trademarks, and trade secrets.
And there's some others, but those are really the big four. And IP law really does two things. First thing is, to secure rights in those things that includes getting the appropriate documents issued by a government body, like a patent office. It also means making sure that assignments of rights that people like creators have, that they provide to the companies are in place.
And then the second part is enforcing those rights against parties, who we say infringe on them. And this can include investigation, writing letters and in cases were none of that seems to work, litigation.
Christopher Lacy: Got it. There's something I've heard before; it's called an IP audit. Is an IP audit necessary for a person who's doing a startup or has an idea?
Milton Springut: At some point in the startups path, an IP audit is probably a very good idea. So let's start, what is an IP audit? It's really an assessment of what IP a company has, whether it's been properly secured and what efforts have been made to secure it.
And again, that includes all the background paperwork and the government filings that are needed. And in some other cases, it includes making sure that the company is acting in a way that preserves its rights. And by that, I guess, I mean, trade secret protection. Trade secrets require that accompany, take reasonable efforts to maintain the information they are holding as confidential.
And these are steps a court will expect the company to do. So, in order to confirm that in fact, the company is actually following those things, especially as a startup comes to a part of its operation where it's looking for money. People who are going to give it money, want to know that that company has secured its rights. Does it own the trademarks that it's using? Does it own the copyrights? Has it filed for patents for inventions that it's created? And again, that goes very much to how much money a company is worth and how much someone's going to put into it. But one of the basic things is to have some feeling that a foundation exists that you own what you say you own.
Christopher Lacy: I guess whenever you kind of are coming up with an idea, should you really meet with a lawyer right away to ask them, look, help me understand if this, what I have right here is something that's, one not owned by somebody else, or trademarked by somebody else. Is that really the first step when you're coming up with your business plan?
Milton Springut: It ought to be, but in reality, it's very different because we know that startups always have limited amounts of cash. And there are a lot of things that the startup needs to do. And many startups treat IP as no more than a C minus issue.
Christopher Lacy: Hmm.
Milton Springut: It's probably a mistake. So, it's really important for startups to figure out what is their intellectual property that makes them different? Because, if there is no intellectual property, then they're subject to being copied. And what is it about them that gives them an advantage; in many cases, without some intellectual property right, there is no advantage because you can be easily copied. So, again, it's always a matter of triage, one needs to look at what are the most important things to do. And as time goes by you work your way down that triage list. But yes, with IP, it's very important to try to protect it as early as possible.
Christopher Lacy: I remember, this is like years ago, 15-20 years ago that I remember someone mentioning that if you had an idea about something, but you couldn't afford a lawyer, what you would do is, or you could do, is certify mail the idea, like write it all out and certify mail it to yourself, but then never open it. Is that actually a true thing?
Milton Springut: Not really. it might be able to prove that you had an idea at some certain point, so it might be a defensive thing, but again, without getting a patent, you don't have the ability to keep other people away from what you're doing.
Christopher Lacy: Ah, perfect. Okay.
So, we know that right now we're in a market that, it's a global market, and technology has helped make us global and be able to reach out to other areas of the world. If you are in the US, are there other considerations that need to be made when assessing IP law, or is this something that's pretty universal?
Milton Springut: IP law is generally, when we say territorial, mean that it's limited to a particular country. If you're just operating in the US and you have some intellectual property, you want to protect, you'll do it in the US. But that doesn't mean that you've protected it anywhere else. And if in fact your business really is more than just the US, you really need to start thinking about protecting it in the market places where you think you're going to be going.
And that becomes rather expensive, needless to say so again, it's always a question of money, how you do this and the temporal issue when you have the money to do this.
Christopher Lacy: Have you seen scenarios where you have a brand, or a person, or an idea that they have this IP in the US, they want to bridge out into another area and someone else has that kind of same IP in that other territory. Is that something that you've seen happen before?
Milton Springut: Oh, absolutely. And the best example of that is when you create a trademark that all of a sudden becomes hot and you haven't protected it outside the US and later on, you have more money to do that. You may very well find that third parties have filed on that trademark in other countries; then becomes more difficult to deal with that.
Christopher Lacy: As you mentioned that it makes me think of Supreme. they had trademarked in the US, but I think business for Supreme in Italy was not being done by Supreme. So people were buying what they thought was Supreme in Italy, but it wasn't, and it was actually a completely different group. And so Supreme then had to kind of go back and start trying to get their trademarks back. That process, how difficult is it? Because what are the things that need to be proven in those instances?
Milton Springut: It could become very difficult, depending on the country. Some countries allow trademark owners who have, what would they call famous trademarks to have rights to defeat other parties who then grab that mark in that country.
But it's always a difficult and many times an expensive proposition to get those rights back.
Christopher Lacy: Geez. So, yeah, you're right. Like, let's get it done right in the beginning!
Milton Springut: Which is a problem because at the beginning there's always too many things to apply your money to and not enough left to do all the things you should be doing.
Christopher Lacy: And let's talk about the things that one should be doing. When you're starting out a business, it's coming at you from every way of the things you need to do. Do you establish yourself as an LLC? Do you establish yourself as an S corp or a C Corp? So, you've got that. You've got the contracts you're dealing with, if you're producing things, trying to get clients in some cases. There's all those things that kind of go into the muck of it, getting the money, but what is the biggest mistake? And I know that earlier you said, the first thing they really should think about is the IP process that they consider to be a C minus task. But what is the biggest mistake that you've seen new businesses make and how do you feel they can avoid this in the future?
Milton Springut: The biggest mistake is what I already alluded to is, failing to secure rights early on, which I call laying a foundation. And what I guess businesses really don't understand is, that at least in the US, the default rule is that everything is free to be copied unless it's secured by some positive IP right. Supreme Court has said that in a number of decisions over the years. So, many people think that because they've worked hard and created something, they have a moral right to prevent others from taking their hard work. And while yes, that might be a moral right. It's not the law. The law is you can copy anything you have, unless you have some specific right to protect you.
And that's where IP comes in. Because IP protects different aspects of each business. And each IP has its own rules and scope of protection. And that's how an IP lawyer, I guess, helps business understand what it has, and how to protect it, and how to enforce these rights. But again, you always have to worry, do you have the money to do this? And so it's a matter of triage for the most cases.
Christopher Lacy: So, if you are starting out, you mentioned the whole financial aspect of it. Are there networks that these up and comers can use to kind of help them through this process if they don't have the funds to really hire a lawyer? Is there somewhere they can go or, a group of, of lawyers that kind of work, to help new businesses in this area?
Milton Springut: There are lawyers who help startups in this. And, you know, if you find the right lawyer, the right lawyer will appreciate that there's a limited amount of money, and that there are certain goals that the company has and that lawyer will try to work with you. And as you grow bigger, there are more things that can be done, but the idea is to try to find a lawyer that understands you're a startup, understands that you have limited funds and is willing to work with you on that basis and watch how you grow and the practice with that probably will grow.
Christopher Lacy: Fantastic. That's good news out there for a lot of our listeners who are working on a startup. I think we become very frightened about how the law works and contracts and all those legalities and not having money to pay an actual lawyer for that.
I think you're an amazing lawyer, obviously, with a wealth of knowledge. So, how can our listeners get in touch with you to maybe get advice or to hear about the things that you're doing in this space?
Milton Springut: The easiest way is to go to my website, easy way to get there and just Google my name. But the website is springutlaw.com. And on there, you'll find out all information about the firm and a lot of information about patents, trademarks, copyrights, and trade secrets, and how to, contact myself and my colleagues.
Christopher Lacy: Fantastic. I have to tell you Milton, it has been such a pleasure having you with us today because I want to say a lot of our students, they're in this process of what do they do next? And I think this was something that we needed to, to allow them to have access to as they pursue the retail world, as they look at becoming a startup, so that they do it confidently.
So we appreciate your time.
Milton Springut: And let me thank you. It was my pleasure to do this.
Christopher Lacy: Thank you so much. You take care.
Milton Springut: You too.
Joshua Williams: Thank you for listening to this episode of Retail Revolution. A very special thank you to everyone who has helped make this podcast possible, our guests, our students and fellow faculty at Parsons School of Design, especially in such an extraordinary and unprecedented time. Our theme music was composed by Spencer Powell.
Be well and stay tuned for our next episode.
