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Vol. 38. NO.2

8Treading the Murky Watersof Arkansas TradeSecretProtectionAlan Crone

20How BankruptcyCan Affect aClient's IntellectualProperty RightsBrent Capehart

15The Intersection of

IntellectualProperty and

Franchising LawPatrick W. McAlpine

The Arkansas

awerfeatures

general

BOARD OF COVERNORSM. Stephen Bingham

Anthony W. BlackJudge Wiley A. Branton,. Jr.

F. Thomas CurryElizabeth Danielson

Boyce R. Davis

Lance B. GamerDave Wisdom HarrodRobert "Skip" Henry

Gwendolyn D. HodgeJim L. Julian

Philip E. KaplanSean T. Keith

Marie-Bemarde MillerChalk S. Mitchell

W. Frank MorledgeDonna C. PettusTerry M. Poynte.r

James M. Simpson,. Jr.Eddie H. Walker, Jr.

Robert E. Young

llAlSON MEMBERSJudge Ted Capeheart Steve T. ShultsDon Hollingsworth Teresa M. WmelandJack McNulty Carolyn B. Witherspoon

PUBLISHERArkansas Bar AssociatiollPhone: (SOl) 375-4606

Fax: (SOl) 375-4901Homepage: www.arkbar.com

E-Mail: aconaway@arkbar.com

EDITORIAL BOARDStuart P. Miller, Chair

Judge Wiley A. Branton, Jr.O. Milton Fine IIMorton GitelmanJ. Leon Holmes

dlristopher TravisBrian Anthony Vandiver

David H. WilliamsJacqueline S. Wright

OFFICERSPresident

H. MUlTay Claycomb

Board of Governors ChairJames D. Sprott

President-ElectThomas A. Daily

Immediate Past PresidentSandra Wilson Cherry

Secretary-TreasurerWilliam A. Martin

ParliamentarianJeannette Denham

Young Lawyers Section ChairCindy Thyer

Executive DirectorDon Hollingsworth

Associate Executive DirectorJudith Gray

GRAPHIC DESIGNSRrQ umdis

EDITORAllllt' Conaway

Thr A,kan'ws unuyn (USPS 546-040) is published quarter­ly by the Arkansas Bar Association. Periodicals postagepaid at lillIe Rock. Arkansas. POSTMASTER: sendaddll'SS changes to Thf ArkAnslU Lllwyer. 400 WestMarkham, Little Rod:. Arkansas 72201. Subscription priceto non-members of the Arkansas Bar Association $25.00 peryear. Any opinion expressed herein is that of the author.and not occcssarily thlll of the Arkansas Bar Association orThe A,kAns",s Lawye,. Contributions to Thr A,hllsasLawyer are welcome and should be sent in two copies toEDITOR. The Ark,mslU lAwyer. 400 W'-'$t Markham. UttleRock, Arkansas 72201. All inquiries regarding ad ....ertisingshould be sent to Editor, Tht Ark,mSlls lAwyer; at the abo....eaddress. Copyright 2003, Arkansas Bar Association. Allrights reserved.

Book Review ofThe Scrivener: A Primer on Legal WritingBeth Deere

Your Board of GovernorsAnne Conaway

Contents Continued on Page 2

38

28

The Arkansas

awerVol. 38. o. 2

in this issueCLE Calendar

Judicial Advisory Opinions

Professionalism Task Force Report

Lawyer Disciplinary Actions

Sustaining Members

In Memoriam

Arkansas Bar Foundation Memorialsand Honorariums

Classified Advertising/Ad Index

29

30

31

32

39

40

43

44

columnsPresident's ReportMurray Claycomb

Executive Director's ReportDon Hollingsworth

3

5

CED1m Arkansas Bar Association

400 W. Ma.rkham Little Rock, Arkansas 72201

HOUSE OF DELEGATES

Delegate District I-SE: Ray Allen Goodwin Delegate District 2-SE: Karharine C. Wilson

Delegate District 3-SE: Paul D. Waddell, Dennis Zolper, Jeff Puryear Delegate District 4-5E: Bill E. Bracey. Jr.

Delegate District 5-5E: Kent J. Rubens Delegate District 6-5E: ChristOpher M. Morledge Delegate District 7-5E: Buck GibsonDelegate District 8-SE: Howard L. Martin Delegate District 9-5E: Jim Pat Flowers

Delegate District 10-SE: David L. Sims, Anthony A.Hilliard Delegate District 11-5E: Richard L. Roper Delegate District 12-SE: James A. Hamilton

Delegate District 13-SE: Brian H. Ratcliff, Robin J. Carroll Delegate District 14·SE: Christie Adams, Matthew Kimmel

Delegate District 15-SE: Todd M. Turner, Bryan T. McKinney Delegate District 16-SE: John T. Vines, Janie M. Evins

Delegate District 11-SE: James Ralph Jackson

Delegate District I-NW: Hardy W. Croxton, Jr., George R. Spe:nce, Edwin . McClurt, Lisa L. Kelley

Delegate District 2-NW: Shannon L. Fam, Raymond L. iblock, Steven S. Uga, TIm Snively, Mauhcw R. Durrcu, Chris R. Reed. April M. Rye,

Crisli Beaumonl, David J. Whil'2kcr, Michael J. Hodson

Delegate District 3-NW: Shannon L. 81m, TImmhy C. Sharum, Niki T. Cung, Jason A. Manina. James O. Cox, Ben H. Shipley

Delegate District 4·NW: Daniel B. Thrailkill Delegate District 5·NW: SIC'o'e B. Davis

Delegate District 6·NW: David L. Eddy, John T. TalUm II

Delegate District 1·NW: Danny M. Rasmussen, Rhonda K. Wood Delegate District 8-NW: Ted Sanders

Delegate District I-e: Charles L. Schlumberger, Don K. Barnes, Elizabeth A. Thomas Smilh, Harry A. Light, Melva J. Harmon, John C. Wade, Jeff Broadwater,

Marcella J. Taylor, Reed R. Edwards, M. Stephen Bingham, John C. Wyvill, Callsley Edwards, Brad Hendricks, David w. S,erling. Patrick Harris,

Brenda N. Stallings, Mark H. Allison, David Raupp, Rick Ramsay. Patrick D. Wilson, Valerie Kelly, Gregory L. Crow, William C. Mann, Lacy Kennedy. Harold J. Evans,

Colette D. Honor:lble, C. Tad Bohannon, Jerry Larkowski, Amy Lee Stewart, Danyelle J. Walker

Law Student Representatives: Man Lindsey, University of Arkansas School of Law; Joel G. Hargis, UALR William H. Bowen School of Law

2 n,e Arkansas Lawyer www.arkbar.com

Prcsidcnt's Rcport

What Has Happened?

by Murray Claycomb

Already the Annual Meering and the endof the Bar Association year will be heresoon, along with me changing of the guard.

What has transpired during this exceed­ingly active and busy year? What has yourAssociation accomplished? How has me Barprofession benefitted? Here is a brief sum·mary which is prepared at the risk of over­looking some very valuable and worthyefforts of so many members of the ArkansasBar Association. My apologies to those whohave worked on any projects that have beenoverlooked. Due to limited space in thisanicle. only a few of the projects can behighlighted.

The most visib.le, if cyberspace is visible,thanks especially to Price Marshall, TomDaily, and Don Hollingsworth, is ArkansasVersusLaw. After I II.l years of planning.study, negotiating, and testing by the TaskForce on Future Internet Presence, ArkansasVersusLaw is now on our website atwww.arkbar.com.Itis the special Arkansasand nationwide legaJ research resource avail­able only to Association members at noextra cose. This resource can save membersand law firms significant expense for legalresearch, a vitaJ requirement for the lawpractice. More information about ArkansasVersusLaw is provided in Don Hollings­worm's column in this issue of Th~ArkansaslAwy<T.

The Committee on ProfessionaJ Ethicshas been busy doing an in-depth srudy ofthe revisions to the Model Rules ofProfessionaJ Responsibility recently adopcedby the American Bar Association. Mythanks co John Lile, Chair, and the mem­bers of his commirree, with a speciaJ manksco W. A. Marrin, Stark Ligon, and HowardBrill for their extra efforts. When suchamendments are made by the American BarAssociation from time to time, the ArkansasBar Association reviews these changes anddecides whether the changes are appropriatefor Arkansas as written or as we modify

them. The approved changes are submittedto me House of Delegates, and if approved,then are sent to the Arkansas SupremeCourt for its consideration. The ArkansasSupreme Court will determine if thosechanges, or a portion of them, should beadopted. The Committee report wil1 be pre­sented to the House of Delegates on June14,2003.

2003 is a Legislarure Year. A grear deal oftime and effort has gone into review of allthe bills introduced in the Legislature by theBar Association Legislation Committee.The Chair of this Committee, CharlesSchlumberger, has done an excellent job, ashave the other members of the commictee:Tom Daily, Boyce Davis, Bill Haughr,Dustin McDaniel, Donna Pectus, CindyThyer, and Mike Wilson. As AssociationPresidenr, I aJso serve on the LegislationCommirree, and I can personally testify to

the enormous amount of time and efforeexpended by the commirree. Jack McNultyhas served well as the Bar Association's full­time lobbyist. Various sections and othercommittees have assisted by studying cer­rain bills referred to them and then makingrecommendations to the LegislationCommicree.

Although this column is written in mid­March while the GeneraJ Assembly is still insession, I can report that our Association,through the Legislation Committee and thehelp of many of you, have monitored hun­dreds of bills which impacr the legal systemand legaJ profession, including opposing orsupporting specific bills. More specificinformation on our efforts will be availableafter the session, and members are welcomero contact me or other members of theLegislation Committee at any time.

The Judicial Article ImplementationTask Force has cominued to work on legis­lation to implement Amendment 80.Through the efforts of Professor JohnWatkins and task force members, a 386-

It is risky to make predic-

tions in a column written

almost two months before its

publication, but our

Membership Development

Committee,

so ably chaired by

Mark Hodge, will lead us

in breaking last year's mem-

bership record of 4633.

page technical corrections bill was preparedfor consideration by the Legislature.

The Professional Practicum proposal thatwould require new lawyers to take a speciaJprogram on professionaJism has been sub­mitted ro the Supreme Court. The programwas produced by our Arkansas ProfessionalPracticum Committee, chaired by BrianRosenthal.

The Association's Judicial CouncilLiaison Committee, that interacts with theArkansas Judicial Council, undertook astudy at the suggestion of some members ofthe Judicial Council. The purpose was to setup a mechanism co respond on behalf ofany judge co unfair cricicism that the judgeis unable to answer. The object is to increasethe public's understanding and to uphold

President's ReportContinued on page 37

Vol. 38 No. 2/Spring 2003 TI,e Arbnsas Lawyer 3

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Executive Director's Report

More on Arkansas VersusLaw

. by Don Hollingsworth

email: dhollingsworth@arkbar.com

have to srop and pinch myself when

reflecting on what your volunreer leaders,

including the members of the Task Force

011 Future Internet Presence, Board of

Governors and House of Delegates. have

accomplished through Arkansas VersusLaw.

As S[atc and metropolitan bar associations

around the United Stares go, rhe Arkansas

Bar Association is onc of the smallest and is

voluntary (most sure bar associations are

mandatOry.)

Yet we now have an online legal library

for our members, including an excellentsearch engine. Initial feedback from many

of you confirm what a tremendous accom­

plishment this is for our emire membership.

(Firms not yet using Arkansas VersusLaw

have seen their COStS for online legal

research reduced because of ArkansasVersusLaw, and members in governmem

agencies which provide online legal research

now have free online research outside the

office.)

Free Customer Service. This service

from the experts at VersusLaw is available at

1-888-377-8752 (88- VERS USLAW).

Customer service hours are Monday ­

Friday 9:00 a.m. - 7:00 p.m., and Saturdayfrom noon until 7:00 p.m. These experts

will answer your questions about ArkansasVersusLaw as well as its content.

If you experience problems which cus­

romer service cannot solve, please contactRando Hicks at this office: (50 I) 375-4606,

(800) 609-5668 or rhicks@arkbar.com.

Help. At the top right of each pagel

screen in Arkansas VersusLaw, there is a red

"help" link. This takes you to complete

information on researching Versus­

Law, and they have a printable version of

the entire research manual.Quick Reference Guide. This Guide is

available on the second page of Arkansas

VersusLaw. Further, you may contact this

office for a laminated version of the Quick

Reference Guide which is handy for keep­

ing by your computer.Training. The next training on Arkansas

VersusLaw will be provided during the

Annual Meeting in June. \Vle plan to run

the training sessions almost continuously

during June II. 12 and 13. Experrs ftom

VersusL1w will conduct the training.Save As / Print. A neat feature is the ease

with which one may copy/paste text from asearch [Q a workable document. Simply

click 011 the save as / print link at the rop of

the page. On the "search results" page

which lists the different documents found

for your specific search, this link is at the

top right of the page. On the "dQcument

view" page Qn which the entire document is

presented, the link is on the left top Qf the

page.E-mailing the research results or docu­

ment. If you wish ro e-mail the search

results page Qr a specific document, click

the "File" buttQn on your roQI bar, and then

click "send". This gives YQU the option tQ

select the e-mail function, and once you

click 011 it, your e-mail program will appear

with the document in it. [Not sure this is

available on all software programs. It is onMicrosoft.]

Password system. One may change

her/his password on our website. If YQUexperience difficulcy in doing so, please

conmcr Rando Hicks.Supreme Court Number. It is essential

to remember rhat rhere is nQt a dash (-) in

Supreme Court Numbers. If you enter a

Supreme Courr Number with a dash or any

other extraneous symbols, your IQg in

attempt will fail.

Terms and Conditions. At the bottom

Qf the Arkansas VersusLaw page, there is alink to rhe tcrms and conditions for utiliz­

ing the online library. As an Arkansas BarA'\socia[iQn member. YQU ignore the condi­

tion about payment of a monthly fee since

your fee has been paid by your Association.

Member Directory. This is the Qnly

other password-prQtected parr Qf our web­

site. Members may access up-to-dare con­

tact information on individual members as

well as see which attorneys in a specific ciry

in Arkansas or another state are Associarion

members. The directory includes a~mail link fQr individual members, thereby

enabling one to click on that individual and

send him/her an immediate e-mail using

your computer's e-mail software.

We welcome any and all quesrions abour

Arkansas Versus Law and other fearures on

our website.

ARKANSAS

VERSUSLAW

TRAINING

During the Annual Meering this June

in Hot Springs, there will be training

sessions throughQut the days of June

11 tho 12th and 13th.

ETHICS ADVISORY OPINION 2003-01

The Professional Ethics Committee of

the Arkansas Bar Association has issued

an Opinion dealing with compensarion

from a trust company to an atrorney

for trust services provided to a cliem.

The Qpinion is available at w,vw.ark­

bar.com, [click PrQfessional ResQurces

on the left side menu bar, and then

dick Ethics InformatiQn.]

vol. 38 No. 2/Spring 2003 TI,e Arkansas Lawyer 5

The POWER ofArkansas VersusLaw provides a unique online library oflegal materials that is only available as a benefit

through your membership in the Arkansas Bar Association. This specialized material includes Arkansas

Statutes, Judicial Opinions, Attorney General Opinions, Court Rules, and recent decisions from the

U.S. District Courts for the Eastern and Western Districts of Arkansas. Arkansas Judicial Opinions date

from 1900. Attorney General Opinions currently go back to 1991 and will soon include all opinions from

1973 to the present. Your Association and VersusLaw will be expanding the Arkansas legal products during

the remainder of 2003.

Arkansas VersusLaw also includes decisions from the U.S. Supreme Court, federal circuits, all state appellate

courts, state statutes and a growing number of U.S. District Courts.

Free customer service is available to Association members at 1-888-377-8752 (88-VERSUSLAW). Cuscomer service hours are M-F.

9:00am. - 7p.m .• and Saturday noon to 7:00 p.m. Customer service representatives will answer your questions about this

online research producr.

Arkansas VersusLaw is a joint product ofVerslisLaw and the Arkansas Bar Association, and it is a trade name used with the permis­

sion of VersusLaw.

Practice Handbooks

Have it Vimr Wayl Cwtomize Ytmr Library ofAssociationHandbooks to Suit }Our Personal Style

Select from among nri.uI offerings including the Arkansas FormBook, Domestic Relations, Debtor/Creditor, Probate Law,

Handling Appeals or Real Estate Tide Standards in Arkansas.OR

Choose the Arkansas Form Book, Debtor/Creditor or ProbateLaw Handbooks in word processing formar.

OROpt for rhe simplicity of a CD ROM cOlHaining anyone or

any combination of the following: Arkansas Form Book,Debtor/Creditor, Probate Law, Handling Appeals in Arkansas

or Real Estate Title Standards in Arkansas. The handbooks arealso available in the Arkansas Secondary Law Menu from

LexisNexisTM at www.lexis.com.

To order call 501-375-4606 or 800-609-5668, emailrhicks@arkbar.com, or visit www.arkbar.com for further

information.

6 TIle Arkansas Lav.ycr WVv'W.arkbar.com

Legislative Advocacy Network

Association Members are encouraged to Participate

in this Electronic Network by clicking on Legislative

Advocacy Network at www.arkbar.com.

Parricipants will receive AJerts on Pending

Bills which affect the Legal System.

Online Member Directory

www.arkbar.com

Access RestriC[ed to Association Members

Most Up-to-date and Accurate Comacr

Information for Arkansas-Licensed Attorneys (whether residing

in Arkansas or our of stare),

including LlVE email addresses

our Membershiparkansasfindalawyer

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United Scates.

It's nor always black and white.In the practice of law, mere's alor of gray. Your Association's

Professional Ethics andGrievance Committee can

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For details visitwww.arkbar.com

Booklets & Guides

Consumer Law (English andSpanish versions)Senior Citizens/CaregiversGuideSmall Claims CourtArkansas Veterans'HandbookHandbook for PersonalRepresenu[ives

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To purchase

mailing labels of members

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caU (50 I) 375-4606.

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Members can utilize the con­ference room or receptionarea at the Arkansas Bar

Center for client meetings,depositions and similar mat­

ters.

Legal Career Center

Legal job listings andresume postings at

www.arkbar.com

vol. 38 No. 2/Spring 2003 TI1C Arbnsas I.lI\rycr 7

~,.-.--:rREADING THE MURKOF ARKANSAS TRAD

PR

- -. ''}

Vol. 38 No. 21Spring 2003 n,e Arkansas lawyer 9

Awn G. Crolle is nil

attorney in Memphis,unn. He is tbeManaging Member ofCrone 6- Mason, PLC.Mr. Crone's practice isdevoted to complex com­mercial, business andemploymem-relaud Iili-

know that it was a trade secretand that knowledge of it hadbeen acquired by accident ormistake.

A.C.A. 4-75-601(2). Ex-employees wouldfall under the category of those who, with­out permission. disclose a trade secret withknowledge that they acquired that secretunder circumstances placing them under aduty of non-disclosure.

The Ad defines a trade secret as "infor­mation, including a formula, pattern, com­pilation, program, device, method, tech­nique, or process, that: (A) Derives inde­pendent economic value, actual or poten­tial, from not being generally known to, andnot being readily ascertainable by propermeans by, other persons who can obtaineconomic value from its disclosure or use,and (B) Is the subjed of efforts that are rea­sonable under the circumstances to main­tain its secrecy." A.c.A. 4-75-601(4). Thus,under the Act. to qualify as a trade secret,the information must have independenteconomic value, it must be somewhat diffi­cult to compile or discover, and its ownermust have taken reasonable measures tomaintain its secrecy.

galion.

The Act and Case lawPractitioners cannot, however, rely on just

the Act when counseling clients on protect­ing their trade secrets. The ArkansasSupreme Court has expanded on therequirements that must be met for informa­tion to qualify as a trade secret. For anexcellent and far more in-depth treatmentof this issue, see Brandon B. Cate, CaseNote, Sa foro & Associates, Inc. " PorocelCorp.: The Failure of the Uniform TradeSecrets Act to Clarify the Doubtful andConfused Status of Common Law TradeSecret Principles, 53 ARK. l. REV. 687(2000).

In Safora & Associates, Inc. " Porace/,337 Ark. 553, 991 S.W.2d 117 (1999) theArkansas Supreme Court adopted six factors

The ActThe Arkansas Trade Secrets Act became

effective in 1981 and incorporates many,but not all, of the provisions of the UniformTrade Secrets Act. The heart of the Ad isfound in the definitions sedion, A.c.A. 4­75-601. This sedion provides that misappro­priation means:

(A) Acquisition of a trade secret ofanother by a person who knows orhas reason to know that the tradesecret was acquired by impropermeans; or

(B) Disclosure or use of a trade secret ofanother without express or impliedconsent by a person who:(i) Used improper means to acquire

knowledge of the trade secret;or

(ii) At the time of disclosure or use,knew or had reason to knowthat his knowledge of the tradesecret was:(a) Derived from or through a

person who had utilizedimproper means to acquireit;

(b) Acquired under circum­stances giving rise to a dutyto maintain its secrecy orlimit its use; or

(c) Derived from or through aperson who owed a duty tothe person seeking relief tomaintain its secrecy or limitits use; or

(iii) Before a material change of hisposition, knew or had reason to

Many businesses are concernedwith proteding that informationwhich they consider proprietary.

This information could include customerlists, pricing structures, technological orindustrial processes, recipes or formulas,plans for infiltrating certain markets, andmany other types of information developedby businesses for the purpose of competingin the marketplace. But what steps can abusiness take to proted this information,especially from its dissemination by ex­employees? In order to answer this ques­tion, attorneys need a firm understanding ofthe Arkansas Trade Secrets Act, A.c.A. §§ 4­75-601, et seq., and the cases construingand applying the Ad. Unfortunately, thecase law does not always seem entirely con­sistent, which can make it difficult to pro­vide sure guidance to a client.

from the Restatement (First) of Torts § 757,cmt. b (1939)' See afso Waf-Mart Stores,fnc. v. PO. Market, fnc., 347 Ark. 651, 665.W3d 620, 630 (2002). These factors areas follows:

(1) [T]he extent to which the informationis known outside the business;

(2) the extent to which the informationis known by employees and othersinvolved in the business;

(3) the extent of measures taken ... toguard the secrecy of the information;

(4) the value of the information to [thebusiness] and to its competitors;

(5) the amount of effort or moneyexpended ... in developing the infor­mation; and,

(6) the ease or difficulty with which theinformation could be properlyacquired or duplicated by others.

Waf-Mart, 66 S.w.3d at 630. Each one ofthese factors, in addition to the statutoryrequirements, must be met for informationto be protected as a trade secret. fd. This isimportant because some of the six factorsadopted by the Saforo Court are not readilyevident by the statutory requirements.' Inparticular, the second and fifth factors donot necessarily follow from the Act.

Regarding the second factor, while it cancertainly be argued that knowledge of cer­tain information by employees of a businesssheds light on the extent to which the busi­ness has gone to protect its secrets, someinformation, such as customer lists, needs tobe widely known by the employees so thatthey can use the information to successfullyconduct business. This is especially true forsmall businesses where there are fewemployees and for businesses where theemployees themselves are actively involvedin gathering the information or creating theprocesses that the company wishes to pro­tect.

10 n,C Arkansas La'rycr www.arkbar.com

Likewise, regarding the fifth factor, whilethe effort and money spent by a company indeveloping information can evidence thedifficulty facing a competitor in duplicatingthat information, it does not necessarily fol­low that aff proprietary information need bearrived at through such effort and expense.A secret arrived at by pure accident, withoutgreat effort and expense, can still have valueto its originator and might well not be read­ily ascertainable to competitors. Justbecause Newton was inspired by the luckyaccident of a falling apple does nothing todiminish the fact that the theory of gravitywas his and that. without that happy acci­dent, it might have been years before any­one developed the theory. Furthermore, ithas been argued that, since patents can beissued for chance discoveries, trade secretprotection should also be afforded such dis-

coveries. See Cate, supra, at 710-11.Regardless, all six common-law factors

must be met for information to be affordedtrade secret status. Reliance on the statutealone is insufficient.

Inconsistent Case law?Meeting both the statutory and six com­

mon-law requirements, though, is by nomeans an easy task, and practitioners shouldwarn their clients that they should nevertake for granted that their proprietary infor­mation has achieved trade secret status. Theseemingly inconsistent results in twoArkansas cases, Cardinaf Freight Carriers,fnc. v. 1.8. Hunt Transport Servs., fnc., 336Ark. 143,987 S.w2d 642 (1999) and CitySlICkers, fnc. v. Dougfas, 73 Ark. App. 64, 40S.W3d 805 (200n, highlight the uncertain­ty in this area.

In Cardinal Freight, several employees leftJ.B. Hunt Transport Services and went towork for a competitor, Cardinal FreightCarriers. Each employee, upon joining Hunt,

had signed a confidentiality agreementwhich, among other things, recognized theconfidential status of much of the informa­tion the employees would be privy to andprovided that the signing employee wouldnot divulge such information during hisemployment with Hunt and for a year fol­lowing the cessation of employment. Whenthe employees left and went to work forCardinal, Hunt sued to enjoin the employeesfrom divulging, and Cardinal from using,several trade secrets. These alleged tradesecrets consisted of information regardingthe profit Hunt made on contracts with spe­cific customers; Hunt's margin of profitabili­ty used in its pricing model; the long-termbuying habits of Hunt's customers; Hunt'sbusiness methods, including "its processes,operations, marketing programs, computerprograms, and future plans"; and Hunt'sstrategies for the future and for penetratingcertain markets with specific customers.Cardinal, 987 S.W2d at 644-45.

The Cardinaf Court found that this infor­mation constituted trade secrets. The Courtnoted that trial testimony established thatthe information had economic value to Huntand that it also would give an edge to Hunt'scompetition in the marketplace. The Courtalso found that the information was notgenerally known or readily ascertainable tothose who would find it of interest and thatHunt took reasonable measures to keep theinformation secret. It therefore upheld theinjunction issued by the lower court.

One would expect a similar result in CitySlickers, fnc. v. Douglas, 73 Ark. App. 64, 40S.w.3d 805 (2001). The information at issuewas similar to that in Cardinaf, but the CitySlickers court came to a different conclusionregarding its status. In City Slickers, theappellanVpetitioner, City Slickers, Inc., pro­vided on-site, oil-changing services to cus­tomers with large fleets of cars, such asautomobile rental companies. City Slickerswas a Tennessee company that intended toexpand its business into Arkansas. Toaccomplish that end, it hired theappellee/respondent, Joseph Douglas, as ageneral manager and assigned him the jobof developing the Arkansas business.Douglas signed three different non-disclo­sure/confidentiality agreements. After app­roximately six weeks, Douglas resigned fromhis position with City Slickers and shortlythereafter opened his own competing busi­ness in the Little Rock area. City Slickerssued to enjoin Douglas from competing, butthe Pulaski County Chancery Court denied

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Just because Newton was inspired by the lucky accidentof an apple falling does nothing to diminish the fact thatthe theory of gravity was his and that, without thathappy accident, it might have been years before anyonedeveloped the theory.

that relief. The appellate court affirmed.To aid Douglas in his job, City Slickers had

provided him with company documents,including copies of its "Executive Summary[and) Business Plan Overview" and a hand­book titled "2000 Little Rock Launch."Douglas was privy to information such ascustomer lists, priCing information andadvertising plans. City Slickers had takentwo years to develop its bUSiness plan at acost of S10,000 to S12,000. City Slickershad presented testimony at trial that theinformation provided to Douglas would loseits value if it got into the hands of a com­petitor and that the information wouldenable a competitor to undermine CitySlickers' pricing strudure and anticipate itsmoves to develop the Little Rock market.Furthermore, City Slickers had taken steps toprotect this information by requiringemployees to sign confidentiality agree­ments and by using control numbers oneach copy of its sensitive documents so itcould keep track of which employees had acopy.

Despite all this, the appellate court foundthat City Slickers' documents and informa­tion did not rise to the level of protedabletrade secrets. Key to this determination wasthe court's belief that much of the informa­tion City Slickers desired to protect was eas­ily ascertainable and the fact that CitySlickers had few Little Rock customers:

Information in the subject documents canbe ascertained without utilizing CitySlickers' documents. City Slickers has onlyone adual customer in Little Rock; thebusiness plan uses statistics from publicsurveys and studies; its customer profileand competition figures are easily ascer­tainable from phone books and surveys;its marketing campaign in the businessplan does not include the Little Rock mar­ket; and the master customer list includesonly Memphis bUSinesses.

Id. at Bl0. The court also noted that theadvertising plans for the Little Rock marketwere based on time-slot demographics thatwere easily available through various mediaoutlets, that City Slickers admitted that any­one with reasonable intelligence coulddetermine which companies would haveautomotive fleets in need of servicing, andthat City Slickers had no proof that Douglashad used any of the allegedly proprietaryinformation in his possession. In addition,the court distinguished the case fromCardinal by pointing out that Cardinalinvolved employees who had been with the

company for Six years, whereas Douglas hadworked only six weeks for City Slickers.

A strong dISsent In the case points out theweaknesses in the majority's reasoning.While agreeing with the majority that CitySlickers' customer list was not a trade secret,the dissent disagreed with the majority'sposition that "the detailed information spe­cific to City Slickers contained in the LittleRock Launch 2000 marketing plan and inthe business plan were not trade secrets."Id.at812.

Regarding the launch handbook, the dis­sent pointed out that it involved specificplans for penetrating the Little Rock market,including a comprehensive schedule foradvertising in various media, a detailed pub­lic relations campaign, and City Slickers'budget for the Little Rock launch. Only fourcopies existed of the launch handbook, andDouglas had one of those copies, which henever returned.

Regarding the business plan, the dissentargued that the plan included many types ofinformation that was entitled to trade secretprotedion. Among the information pointedto by the dissent was City Slickers' detaileddiscussion of its operations; a declaration ofits intent to expand into Little Rock withinthe neXl 12 months; its long-range market­ing plans, pricing information, detailsregarding overhead, operating expenses andcorporate expenses; and explicit corporatefinancial reports and projedions. CitingCardinal, the dISsent noted that "[Arkansas'l

Linda L. Taylor

supreme court has held that informationsuch as pllce modeling, customer profit mar­gins, logistiCS, future plans, and specific mar­keting strategies are proteded under theTrade Secrets Ad." Id. at 813. The dissentalso believed that this information wouldpass the six-fador test enunciated in Saforo,specifically arguing that, while some of theinformation was readily accessible, much ofit was not. being far too detailed and beingtailored to City Slickers' plans. Additionally,the dissent pointed out that City Slickerswent to considerable time and expense toacquire the information, and that CitySlickers took proper measures to keep thatinformation secret.

Furthermore, the dissent took issue withthe majority's emphasis on the short dura­tion of Doulgas' employment, which the dis­sent argued was irrelevant. The dissent alsodismissed the fact that Douglas had not yetused any of the information, pointing outthat the test for determining trade secretstatus is not a but-for test but rather aninquiry into whether or not the ex-employ­ee's new Job will inevitably lead him to relyon the trade secrets. Finally, the dissent dis­agreed With the majority's argument thatCity Slickers had no legitimate businessinterest in the Little Rock market, pointing tothe amount of time and effort expended byCity Slickers in preparing to enter that mar­ket. The dissent concluded that the infor­mation contained 10 the business plan andlaunch handbook would likely prove to be

Howard (Bear) Chandler

Vol. 38 No. 21Spring 2003 n,e Arkansas Lawyer II

trade secrets.

Applying the LawGiven the apparently inconsistent results

in Cardinal and City Slickers, what shouldpractitioners tell clients to do to protect con­fidential information? First of all, the infor­mation must meet the statutory require­ments. It must have economic value to boththe business and its competitors. Generally,the information is going to either be of valueor not-little can be done about that. Onething a business can do, however, is to artic­ulate the reasons why that information isvaluable and communicate that informationto all its employees and executives. This canbe accomplished through a carefully con­structed confidentiality agreement thatexplains why the company's secrets are valu­able assets to be protected.

To be protected, the information mustalso be such that it is neither generallyknown to competitors nor readily ascertain­able. Not much can be done if the informa­tion is already known by others, but if theinformation contains easily ascertainableinformation, it might be protected by infus­ing it with information not readily available.For instance, take a client list, which can eas­ily be duplicated by using the phone book.Including such information as the namesand numbers of personal contacts withinthose client businesses, details of specificand/or special needs of those clients, e-mailaddresses, names of people who providedreferrals that helped gain access to thoseclients, references by those clients to otherpotential clients, and any other informationthat can only be gained through time andeffort can help to protect the list. Of course,

there is always the danger that a court couldignore the confidential aspects of the listand define all the information as non-propri­etary, simply because the names themselvescan be easily garnered from the phonebook. If that occurs, the attorney needs toargue that the confidential Informationshould be redacted from the list.

Furthermore, a business should take asmany precautions as possible to keep itsinformation secret. It should limit the num­ber of employees, including executives, whohave access to the secrets; place sensitivematerial in computer files that are passwordprotected; keep hard copies of informationunder lock and key; develop strict guidelinesregarding copying the information and/orremoving it from the premises; code andtrack sensitive documents; and haveemployees and executives sign confidentiali·tyagreements. In addition, if the informa­tion is shared with clients or potentialclients, develop guidelines for them to fol­low in guarding the information, and havethem sign confidentiality agreements. It isalso a good idea to have executives sign anadditional confidentiality agreement to theone signed by all employees.

Once the statutory factors are met, thenthe common-law factors should beaddressed. If all the statutory requirementshave been satisfied, then factors one, three,four and six have also most likely been met.Factor two, the extent to which the infor­mation is known by employees and others inthe business, can be satisfied by limiting, asmuch as possible, the people who haveaccess to that information. Only those whoabsolutely need the information to performtheir tasks should have access to it. Factor

five, the amount of effort or money expend­

ed in developing the information, can moreeasily be met at trial if the business has keptrecords documenting its efforts and expen­ditures.

Finally, the business should definitely havea non-competition agreement with all of itsemployees and executives who have accessto its trade secrets. While such an agree­ment is not absolutely necessary, seeCardinal, 987 S.W2d at 643-44, in CitySlickers, the petitioner did not have a non­competition agreement, and that almostcertainly resulted in closer scrutiny of thetrade secrets by the trial court, which foundthat the confidentiality agreements signedby the employee" constituted an unreason­able and unlawful restraint of trade, andthat it was an overly broad covenant not tocompete masquerading as a confidentialityand nondisclosure agreement." Also, seeConAgra, Inc. v. Tyson Foods, Inc., 342 Ark.672, 30 SW.3d 725 (2000), where severalexecutives had not been required to sign anon·compete.

While the ocean of trade secret law cansometimes be murky and turbulent for bothbusinesses and practitioners alike, beingmindful of the statutory and common-lawrequirements can help keep a client's confi­dential, proprietary information afloat..

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12 TI,e Arkansas Lawyer www.arkbar.com

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a ccessArka usa s.o rg/sos

is only successful if the mark

ketplace...a franchise business

At the heart of each franchise

are registered trademarks or

cant value in the relevant mar-

service marks that have signifi-

attracts customers to the goods

that it represents.

Patrick \V McAlpin~ is an associtlu at th~

Little Rock law firm ofQuattlebaum, Crooms,Tit/I 6- Burrow PLLeH~ is a gradullu oftiltUfliv~rsity ofArkansas(B.A., summa cumlaude, 1996) and theUniversity ofArkamasat Lictle Rock U-D.,

with high honors. 1999), He served as Editor­in-Chiefofthe UALR Low Rrvirw in 1998­1999 and is a member of the Arkamas BarAssociation S Intel/untal Proptrry Surion.Mr. McAlpin~'s primary ar~as ofpractiu artinullutulll property and frnnchist law, civiland comm~rcial litigation and immigration/naturnlizn.tion law.

as a fraud or deceit upon any person'Violations of this section are Class Bfelonies.-

The Act also provides for a private civilcause of action. 10 Any franchisee harmedby a violation of the Act by a franchisor isentitled to recover treble damages in a civilaction or obtain injunctive relief and attor­neys' fees and costs." The injured franchiseealso has the right to demand that the fran­chisor repurchase the franchisee's goodsrelated to the franchise." Further, theAttorney General can file an injunctive pro­ceeding against any franchisor in the PulaskiCounty Circuit Court. 13

The most recent version of the ArkansasModel Jury Instructions (Civil 4th) ("AMI")include jury instructions for the FranchisePractices Act." The comments to thoseinstrudions and the instructions themselvesare a valuable resource for research aboutthe various sections of the Act. The ArkansasAct is not based on a uniform act. In fact.

chise by the franchisee;(0) franchisee's conviction of a felonysubstantially related to the business con­ducted pursuant to the franchise;(E) any act by a franchisee that substan­tially impairs the franchisor's trademarksor trade name;(F) institution of insolvency or bankruptcyproceedings by a franchisee;(G) loss of the right to occupy the premis­es from which the franchise business isoperated; and(H) failure of the franchisee to pay thefranchisor within 10 days of any sumsowing to the franchisor.'A franchisee cannot terminate a franchise

for (A) or (B) unless the franchisor first givesthe franchisee gO-days notice of the pro­posed termination and a 30-day period tocure the deficiencies.4 However. the lawalso provides that if a franchisee has repeat­ed deficiencies over a one-year period, thefranchisee's cure period is shortened to 10days.'

(b) Unlawful Practices Of FranchisorsFranchisors may not contract for a release

from liability under the Act as part of a fran­chise agreement. They may not prevent freeassociation among franchisees. In general,franchisors must deal with franchisees in acommercially reasonable manner and ingood faith' The AMI instruction on unlaw­ful franchisor practices provides a greatsource for both advising franchisors and liti­

gating franchise disputes if necessary.'(c) PenaltiesThe Act also contains a criminal compo­

nent. No person may knowingly: (1) employany device, scheme or artifice to defraud; (2)make any untrue statement of a materialfact or omit to state a material fact; or (3)engage in any practice which would operate

Vol. 38 No. 2/Spring 2003 TI,C Arkansas La"Ycr 15

by Patrick W. McAlpine

The Intersection ofIntellectual Propertyand Franchising Law

A. Basic Franchise Law1. The Arkansas Franchise Practices

ActThe Arkansas Franchise Practices Act, Ark.

Code Ann. § 4-72-201 et seq., is applicableto a franchise relationship if, and only if, thefranchisee is required to do business inArkansas.' A" franchise" is defined as "awritten or oral agreement for a definite orindefinite period in which a person grants toanother person a license to use a tradename, trademark, service mark, or relatedcharacteristic within an exclusive or nonex­

clusive territory or to sell or distribute goodsor services within an exclusive or nonexclu­sive territory at wholesale or retail, by leaseagreement, or otherwise.• 2

(a) Termination ProvisionsAt the heart of the Arkansas Act are its

provisions for termination. The Act makes ita violation to terminate, cancel or fail torenew a franchise without "good cause."

Good cause is defined as:(A) failure by a franchisee to substantiallycomply with nondiscriminatory require­ments imposed by a franchisor;(B) failure by a franchisee to act in goodfaith and in a commercially reasonablemanner;(C) voluntary abandonment of the fran-

Franchise law is one area of commerciallaw that is significantly impacted by intellec­tual property concepts. While franchise prac­tice in Arkansas is focused mainly on fran­chisees, there are some Arkansas-basedclients interested in franchising their busi­ness concepts. Arkansas practitioners shouldtherefore be aware of the framework offranchise law and how the various types ofintellectual property impact franchise rela­tionships.

desire to expand their business rapidly.Expansion is rarely limited to in-state fran­chisees. Therefore, it is imperative to obtainfederal regIStration for all trademarks orservice marks that are important to the fran­chised business at the earliest possible date.

Also, obtaining an Arkansas registrationonly could be a factor that the Arkansascourts will examine to determine whetherthe Arkansas Franchise Practices Act coversthe relationship entered Into by the parties.Obviously, a franchisor who has a federal

registration IS more likely to be covered bythe FTC rule on franchises and thus NOTcovered by the Arkansas Act.

2. Trade Dress

Trade dress is a very important corollary tothe use of trademarks in a franchised busi­ness. Trade dress is 'the total image of aproduct and may Include features such assize, shape, color or color combinations, tex­ture, graphics or even particular sales tech­niques. '26 Trade dress also includes theshape, style or other recognizable means ofidentifying the source of goods or services.The classic example of protectible tradedress is the shape and color of a particular

Franchised

businesses typically

encounter copyright

issues. The most common

place where copyrights

are a concern IS

a franchisor's manuals,

handbooks and

written operations

procedures,

1. Trademarks/Service MarksAt the heart of each franchise are regis­

tered trademarks or service marks that havesignificant value in the relevant marketplace.Trademarks represent goods sold by a partic­ular bUSiness. and service marks representservices prOVided by a business. Both typesof marks may be registered nationally,stateWide or both. The United States Patentand Trademark Office (the 'USPTO') ISresponSible for regIStration of marks on thefederal level", while the Arkansas Secretary

of State's offICe is responSible for registeringmarks on the state leveL"

In the marks lie the basic value of thefranchise because a franchise business isonly successful if the mark attracts cus­tomers to the goods that it represents.Commonly, trademarks used in franchisingare federally registered, thus entitling themark to nationwide protection. It is possi­ble, however, to franchise a business withinthe state of Arkansas using a mark protect­ed only by state registration. For a variety ofreasons, this path is not recommended.

Franchisors usually begin franchising theirbusinesses because they are motivated by a

B. Intersection of Franchising lawWith Traditional Intellectual PropertyConcepts

no states have adopted the NationalConference of Commissioners on UniformState Laws' proposed act'S

2, The FTC Rule On Fran­chising

16 C.F.R. § 436.1 is the FederalTrade Commission's rule concern-ing Disclosure Requirements andProhibitions Concerning Franchisingand Business OpportUnity Ventures.The FTC rule lists 20 categories ofInformation that must be provided to aprospective franchisee prior to signing aFranchise Agreement.'. The FTC rulemakes it an unfair or deceptive practiceunder the FTC Act for any franchise to beoffered Without a disclosure statementwhich Includes the 20 categories of informa­tlon,17 The FTC may impose civil penaltiesfor committing an unfair or deceptive prac­tice within the meaning of the FTC Act.'.There is no private cause of action under theFTC Act for violation of the franchise disclo­sure requirements. 19

3. Relationship of the Arkansas Actand the FTC Rule on Franchising

By its terms, the Arkansas FranchisePractices Act excludes 'those business rela­tions, actions. transactions, or franchisessubject to the provisions of ... the FTC rule

.. '20 The FTC rule applies to all franchis­es advertised, offered, licensed, contracted,sold or other promotion in or affecting com­merce, as 'commerce' is defined in the FTCAct." In the FTC Act, commerce is definedas:

Commerce among the several Statesor With foreign natIons, or in anyTerritory of the United States or in theDistrict of Columbia, of between anysuch Territory and another, or betweenany such Territory and any State or for­eign nation, or between the District ofColumbia and any State or Territory orforeign natlon.22

Therefore, because the FTC Rule appliesto all franchISes InvolVing interstate com­merce, the Arkansas Act seemingly onlyapplies to those franchise relationships thatare wholly within the state of Arkansas. Thisrestrictive view of the applicability of theArkansas Act has not been fully tested in thecourts, although there are several decisionsdeclining to apply the Franchise Practices Actto a dispute with ties to this state."

16 n,e Arkansas Lawyer www.arkbar.com

for Plaintiff and Defense Related Cases,

Electrical Accident Investigation and Analysis,

Contact Cases and Electrocutions, Electrical Injuries,

Property and Equipment Damage, Electrical Fires,

proprietary sohware, it will likely grant eachfranchisee a license to the software for aseparate fee. If the sohware-licensing fee isseparate from the initial franchise fee. itmust be disclosed in the Offering Circular."

4, Trade SecretsArkansas' Trade Secrets Ad defines a

trade secret as: "information, including aformula, pattern, compilation, program,device, method, technique, or process, that:

(A) Derives independent economic value,actual or potential, from not being gen­erally known to, and not being readilyascertainable by proper means by, otherpersons who can obtain economic valuefrom its disclosure or use; and(B) Is the subject of efforts that are rea­sonable under the circumstances tomaintain its secrecy... 36

The Supreme Court of Arkansas has pub­lished several important trade secret deci­sions in recent years.37 In those decisions,the court has adopted a six-factor test tohelp determine whether something is atrade secret.38

Trade secrets are a crucial part of fran­chised businesses and are ohen improperlyprotected by franchisors. Often, a fran­chisor's trade secrets are more importantthan the franchisor's trade marks. Tradesecrets are especially important in food serv-

Paul D. Mixon, Ph,D" P,E.Engineering Consultant

P,O, Box 3338State Un.iversity, AR 72467

(870) 972-2088 (870) 972-3948 FAXpmixon@navajo.astate.edu

ELECTRICAL ACCIDENTS

Safety Codes (NEC, NESC, UL), Expert Witnessing

chisor's manuals, handbooks and writtenoperations procedures. Many franchisorsneglect to take the simple steps of markingall such materials with the copyright mark[©] and the author's name. If the hand­book, manuals or other information is origi­nal work of the franchisor or its agents, itshould be registered with the copyrightoffice. Further, restrictions on use of copy­righted materials by franchisees should beexplicitly covered in the Franchise Agree­ment, Uniform Offering Circular and in thebody of the materials themselves. Mostfranchisors include limited rights to copyhandbooks, manuals and training materialsas part of the franchise. Each set of materi­als should be considered separately.

Another growing area of which fran­chisors and franchisees should be aware isthe copyright in computer software used infranchised businesses. Copyrights in soh­ware are ordinarily owned by third parties.The standard arrangement is where the thirdparty grants a master license (exclusive ornon-exclusive) to the franchisor for use in itsfranchised stores. The franchisor then hasthe power to grant sublicenses to use thesoftware to its franchisees. The sohwarecompany may also elect to do separatelicense agreements with each individualfranchisee. If a franchisor develops its own

restaurant chain." It can also include thesize or shape of the container in which thecompany's goods are sold.

Trade dress can be a vital component ofprotection for franchised businesses. Someof the most successful franchises have tradedress that is more recognizable than theirtrademarks or service marks. Franchisedbusinesses often use trade dress in the shapeand style of their retail locations, the pack­aging of their products and especially intheir advertising. Attorneys advising fran­chisors should be aware that trade dressmay be protected separate and apart fromtrademarks or service marks under theLanham Act."

3. CopyrightCopyrights are governed by both com­

mon law and federal statutes." In general,copyrights protect "original works ofauthorship fixed in any tangible medium ofexpression, now known or later developed,from which they can be perceived, repro­duced, or otherwise communicated, eitherdirectly or with the aid of a machine ordevice.' 30 Works of authorship include thefollowing categories:

(A) literary works;(B) musical works, including any accom­panying words;(C) dramatic works, including anyaccompanying music;(D) pantomimes and choreographicworks;(E) pictorial, graphic, and sculpturalworks;(F) motion pictures and other audiovisualworks;(G) sound recordings; and(H) architectural works"In order to register a copyright, the

author should deposit two copies of thework with the Library of Congress. TheLibrary of Congress also administers theCopyright Office. The forms, fees and appro­priate methods of filing for a copyright areavailable on the Copyright Office's Internetsite.32 Once a copyright is registered withthe Copyright Office, and marked with thecopyright mark [©l, the owner of the copy­right may sue infringers in federal court. Ifsuccessful, the owner can recover statutorydamages of $750.00 to $30,000.00.33 Thedistrict court may award attorneys' fees andcosts to the prevailing party in its discre­tion,34

Franchised businesses typically encountercopyright issues. The most common placewhere copyrights are a concern is a fran-

Vol. 38 No. 2/Spring 2003 TI,e Arkansas La\\yer 17

~ Tim Cullen ~Cullen & Co., PLLC

Iam pleased to announce the formation of Cullen & Co. PLLC

at III Main Street, Suite A Little Rock, Arkansas 7220l.

The firm's mailing address is P.O. Box 3255, Little Rock,

Arkansas 72203. Our phone number is (501) 370-4800 and

the facsimile is (50]) 370-9198. You may reach me bye-mail

at tim@cullenandcompany.com. I will continue to practice

primarily in the areas of personal injury litigation

(including automobile accidents. medical negligence and

products liability). insurance disputes. and general civil

litigation. I am also devoting a growing portion of my

practice to assisting other attorneys with their Arkansas

state court appeals. Please contact me if I can be of service

to you or your clients.

ice franchises. For example, a franchisecould be built around a particular recipe formeatloaf. Assuming that the meatloaf wasso tasty that public demand allowed fran­chise stores to develop, the franchisor's onlymeans of protecting the recipe for the meat­loaf would be through trade secrecy.

Franchisors must be advised about thestate of trade secret law, especially because

of the numerous Judicial decisions that havebeen issued in this state in the last twoyears. Franchisors must be careful to allowonly certain key individuals owning the fran­chised business to know protected tradesecrets. Those individuals should also signconfidentiality and non-disclosure agree­ments, which should extend the confiden­tiality and non-disclosure provisions post-ter-

mination.39 This presents special problems inthe context of franchises, when manyemployees who need to know confidentialinformation are short-term, possibly low- orminimum-wage employees. In the meatloaffranchise restaurant example, the personswith the greatest need to know the tradesecret may be the cooks, who have highturnover. The franchisee in this situationmust be very diligent to ensure that allemployees exposed to the trade secret keepit confidential.

5. Internet Domain Names And WebSites

Persons considering involvement in fran­chises must also be aware of the changinglaws and regulations regarding Internetdomain names. The United States Congressenacted the Anti-Cybersquatting ConsumerProtection Act" (the "ACPA "), in partbecause of complaints from large franchisorswhose domain names had been registeredby persons not affiliated with their business.Franchisors should ensure that domainnames similar to their trade name have dis­claimers or other indications that they arenot affiliated with the franchisor. Moreover,franchisors must maintain strict control overfranchisees' use of the domain name andrelated domains. The ACPA provides a use­ful vehicle for franchisors to enforce theirdomain name rights in federal court; howev·er, many persons who use franchised namesin a disparaging manner are very difficult tolocate and serve with legal process. The bestadvice for franchisors is to be Internet·savvyand ensure that the franchisor is aware ofany unauthorized use of the domains.

Endnotes1 Ark. Code Ann. § 4-72-203; see also

JRT, Inc. v. TCBY Systems, 52 F.3d 734(8th Cir. 1995).

2 Ark. Code Ann. § 4-72-202(1)(A).3 Ark. Code Ann. § 4-72-204(a)(1);

Ark. Code Ann. § 4-72-202(7).4 Ark. Code Ann. §4-72-204(d).5 Ark. Code Ann. § 4-72-204(d).6 Ark. Code Ann. § 4-72-206(6).7 Arkansas Model Jury Instructions

("AMI"), AMI 3305.8 Ark. Code Ann. § 4-72-207(a).9 Ark. Code Ann. § 4-72-207(b). Class

B felonies carry a maximum penaltyof twenty years' imprisonment. Ark.Code Ann. § 5-4-401 (a)(3)

10 Ark. Code Ann. § 4-72-208(b).11 Ark. Code Ann. § 4-72-208(a).12 Ark. Code Ann. § 4-72-209.

18 n,e Arkansas Law)'er www.arkbar.com

13 Ark. Code Ann. § 4-72-208(c).14 AMI 3301-AMI 3307.15 See National Conference of

Commissioners on Uniform Statelaws' Internet site, http://www.nccusl.org/nccusl/DesktopDefault.aspx (last visited February 12, 2003) andhttp://www.law.comell.edu/uni­form/uniform.htm!. (last visitedFebruary 12, 2003).

16 16 C.F.R. § 436.1(a).17 16 C.F.R. § 436.1.18 15 USc. §. 45.19 15 U.S.c. § 45(a)(2); 45(m)20 Ark. Code Ann. 4-72-203.21 16C.F.R.§436.1.22 15 USc. § 44.23 See, e.g., JRT, Inc. v TCBY Sys., 52

F.3d 734 (8th Cir. 1995); see also

Mary Kay, Inc. v Isbell, 338 Ark. 556,999 SW2d 669 (1999).

24 15 U.S.c. § 1051 et seq.

25 Ark. Code Ann. § 4-71-201 et seq.

26 Two Pesos, Inc. v Taco Cabana, Inc.,

529 U.S 205, 112 S. Ct. 2753(1992).

27 Id.

28 The lanham Act is the federal trade­

mark statutes, 15 U.s.c. § 1051 et

seq.

29 17 U.s.c. § 101 et seq. 17 U.S.c. §201 provides that ownership of acopyright vests originally in theauthor of the work. This is the codi­fication of the common law copy­right. Once the creator of a workcommits it to a tangible medium, it is

protected. Even though commonlaw protection applies, all authors

should consider federally registeringtheir works in order to take advan­tage of the federal statutory copy­right protections.

30 17 U.s.c. § 102(a).31 17 USc. § 102(a)(1)-(8).32 located at http://www.copyright.gov.33 17 U.S.c. § 504(c). If the infringe-

ment is found to be willful, the statu­tory damage range goes up to a max­imum of $150,000.00. Id. If theinfringement is found to be innocent,the court may, in its discretion lowerthe amount to $200.00 per infringe­ment. Id.

34 17 U.s.c. § 505.35 16 (F.R. § 4361(10).36 Ark. Code Ann. § 4-75-601(4).37 See, e.g., Statco Wireless LLC v

Southwestern Bell Wireless, LLC, 80

Ark. App. 284, 95 S.w3d 13 (2003);Tyson Foods, Inc. v ConAgra, Inc.,

349 Ark. 469, 79 SW3d 326 (2002);Weigh Systems South, Inc. v Mark's

Scales & Equipment, Inc., 347 Ark.868, 68 SW.3d 299 (2002); Wal­

Mart Stores, Inc. v PO. Market, Inc.,

347 Ark. 651, 66 SW3d 620 (2002);

and ConAgra, Inc. v Tyson Foods,

Inc., 342 Ark. 672, 30 S.w3d 725(2000).

38 See Statco Wireless, supra note 37.The six factors are: (1) the extent towhich the information is known out­side the business; (2) the extent towhich the information is known byemployees and others involved in thebusiness; (3) the extent of measurestaken by plaintiff to guard the secre-

cy of the information; (4) the value ofthe information to plaintiff and itscompetitors; (5) the amount of effortor money expended by plaintiff indeveloping the information; and (6)the ease or difficulty with which theinformation could properly beacquired by others. Id.

39 See Tyson Foods, Inc. v ConAgra,

Inc., 349 Ark. 469, 79 S.w3d 326,329-30 (2002). There, the supremecourt held that while a post-employ­ment confidentiality agreement is notan absolute prerequisite to finding atrade secret. it is a significant factorfor courts to review in trade secret lit­

igation.40 15 U.S.c. § 1125(d); 15 U.S.c. §

1129.

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aconaway@arkbar.com.

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Vol. 38 No. VSprlng 2003 TI,e Arkansas lawyer 19

A. Introduction

Many attorneys believe intellectual prop­erty has little application to their practice.intellectual property, however, is very perva­sive in today's business society. A client'sability to carry on its day-to-day business canbe affected by the many facets of intellectu­al property. One such facet involves thetreatment of intellectual property in a bank­ruptcy proceeding. Due to the increase ofbankruptcy filings over the past few years, itis critical for any attorney who has corporateclients, regardless of size, to understandhow intellectual property rights can beaffected by a bankruptcy filing.

One aspect of the United States bank­ruptcy laws that affect intellectual propertyrights include the rights of licensors andlicensees. This article reviews how a licensor

However, in order to receive that protection,the inventor must apply for and diligentlypursue the patent, or else the patent rightscould be forfeited.

Trademarks and service marks arise underfederal, state and common law. A trade­mark proteds a name, symbol, word orcombination thereof used by a person toidentify and distinguish his or her goods orservices from those provided or manufac­tured by others. The primary purposes of atrademark or service mark are identifyingthe origin of the subject goods or servicesand providing some measure of qualityassurance. A mark needs to be distinctive orrecognizable in order to serve as an identifi·er; e.g., Exxon, Wal-Mart, Tyson.

Copyrights are also created and governedby federal law. Copyrights cover "original

for trade secret protection if its limited avail­ability gives it economic value and it is rea­sonably guarded. Examples of trade secretsare customer lists, prices, costs, processesand formulae.

C. General Overview of IntellectualProperty Licenses in Bankruptcy1. In General

When a party has licensed Intellectualproperty from a licensor who subsequentlybecomes a debtor in a bankruptcy case, twoimmediate questions arise: (a) Was thelicense considered an "executory contract"?and (b) What is the effect of the "rejection"of the debtor? Section 365 of theBankruptcy Code' generally provides that,subject to certain limitations and qualifica­tions, a trustee "may assume or reject any

..

or licensee's intellectual property rights couldbe affected when the other party files forbankruptcy protection.

B. Intellectual PropertyIntellectual property generally includes

the following: (a) patent rights, (b) trade­mark and service mark rights, (c) copyrightrights and (d) trade secrets.

Patent rights are created and governed byU.s. federal law. Generally speaking, patentscover inventions of new and usefulmachines, processes and improvementsthereof; e.g., medical implants, businessmethods, etc. Patents encourage inventionby providing an owner/inventor with a tem­porary monopoly (generally 20 years) on theinvention, which allows the inventor to con­trol the usage and sale of the invention.

works of authorship fixed in any tangiblemedium of expression"; e.g., music, com­puter programs, books. A copyright ownerpossesses the exclusive right to (a) reproducethe work, (b) prepare derivative works fromthe work, (c) distribute copies of the work tothe public, (d) publicly perform the work and(e) publicly display the work. An author neednot register his copyright to get protection­the only requirements are originality and fix­ation in a tangible expression. Nonetheless,to enforce one's rights by bringing an actionin Federal Court, (and in order for a securedcreditor to properly perfect a security inter­est in a copyright), the author must registerthe work with the Copyright Office.

Trade secrets are protected under statelaw only. Trade secrets are given broad pro­tection; virtually any information qualifies

executory contract or unexpired lease of thedebtor. "2 Executory contracts are those con­tracts where there is such performance duefrom each party to the contract that non­performance by either party would be amaterial breach of the contract.32. Exclusive Intellectual Property Licenses

As a general rule, exclusive licenses of

BrentA. Capehart is the principle o[the Tulsa­based Capehart LawFirm, PLLC, a lawfirm devoted to patent,trademark, copyrightand other related intel­lectual property mat­ters. He can be reachedat (9J8) 747-4600 or

bcapehart@capehartlaw.com

Vol. 38 No. 2/Spring 2003 The Arkansas Lawyer 21

patents, copyrights and trademarks aretreated as "executory contracts" pursuant tothe Bankruptcy Code because the licensorhas a continuing obligation to refrain fromlicensing the intellectual property to thirdparties, and the licensee has a continuingobligation to pay royalties, account to thelicensor, etc.4 A bankruptcy trustee mayreject an executory contract, assume an

ment.?Depending on the type of bankruptcy fil­

ing, the trustee mayor may not be required

to render a decision to assume or reject an

executory contract within a specific timeframe. In a Chapter 7 liquidation, thetrustee must assume or reject executory con­tracts within 60 days of the bankruptcy peti­tion unless the Bankruptcy Court extends

existed immediately before the commence­ment of the bankruptcy case. 10 If the licens­ee elects to retain its rights, the licensor (ortrustee, if one has been appointed) isrequired, to the extent the license sorequires, to provide the licensee with anyintellectual property in its possession and toallow the licensee to exercise all of its rightsunder the license for the duration of the

As society's dependence on advanced technology grows, businesses are taking

greater care to secure their rights in new discoveries or innovations, thus making

it common for the principal assets of any given company to consist of intellectu­

al property.

executory contract or assume and assign anexecutory contract. 5 If the trustee rejects theexecutory contract, the contract is breached(but generally not automatically terminated)and the non-debtor party has a pre-petitionclaim for that breach of contract.

If the trustee assumes an executory con­tract, or assumes and assigns the executorycontract, the trustee must: (a) cure, or pro­vide adequate assurance of cure, of anydefault, (b) compensate the non-debtor

party, or provide adequate assurance ofcompensation, for any actual pecuniary lossfor any default, and (c) provide adequateassurance of future performance under theexecutory contract' Upon assumption ofthe executory contract, all obligations underthe contract become post-petition obliga­tions of the bankruptcy estate. However, ifthe executory contract is assumed andassigned, the bankruptcy estate is relieved ofall obligations accruing after the assign-

22 TIle Arkansas La\\ycr www.arkbar.com

that deadline. Otherwise, the executory con­tract will be deemed rejected' In a Chapter11 reorganization, there is generally no timelimit prior to confirmation of a plan of reor­ganization for the trustee to assume orreject an executory contract. Yet, any partymay seek to have the Bankruptcy Courtimpose such a deadline or compel theassumption or rejection of the executorycontract. 9

If the licensor rejects the license, therejection is generally treated as a breach of

the license as of the date of the bankruptcyfiling. Section 365(n) of the BankruptcyCode provides that if a trustee or debtor inpossession rejects "an executory contractunder which the debtor is a licensor of aright to intellectual property," the licenseeunder the contract may elect to retain itsrights to the use of the intellectual property(including exclusivity provisions) for theduration of the contract because such rights

license because such rights existed as of thedate of the bankruptcy filing (includingexclusivity rights, but specifically excludingany other right to specific performance). Toretain its rights, the licensee is required topay all royalties due under the license, andthe licensee must waive any setoff rights itmay have and any administrative claim itmay have in the licensor's bankruptcy case.If the licensee elects to terminate the license,any claim by the licensee for damages forbreach of the contract is treated as a non­priority general unsecured claim. 11 Section365(n), however, has several limitations thatmust be considered when dealing withagreements involving the use of intellectualproperty.

First, "intellectual property" as defined bythe Bankruptcy Code does not includetrademarks. If a trademark license is rejectedby the licensor, the licensee will lose its rightsto use the trademarks under the license. If

tlte t:!=~~:!==:=~~=~Ullited States ofAmerica. -PREAMBLE TO THE U.S. CONSTITUTION

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tates, ill order to fonll a more perfect Ullioll, establisll JlIstice,

perfect Ullioll, establislt JlIstice, illsllre dOlllestic Trallqllility,

alld seclIre tile Blessillgs of Liberty to ollrselves alld Ollr

, prolllote tl'e gelleral Welfare, alld secllre tile Blessillgs ofLiberty

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Provide for tile COIIW'OIl defellse, prolllote tl'e gelleral Welfare,

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2002AnnualReport

justice by fUnding

programs that

target the civil legal

needs oflow-income

Arkansans and by

encouraging projects

that improve the

administration

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priorities are:

• HSSJO, r ~

STATE,lE. 'T

The Foundationj

mission is to

increase access to

Arkansas[OLTA

Foundation

2002-2003IBOARD OFDITRECTORS

OFFICERS

Hon. Thomas RayPRESIDENTLittle Rock

James A. RossVICE PRESIDENTMonticello

Freeman McKindraSECRETARYLittle Rock

James D. GingerichTREASURERConway

DIRECTORS

Sherry P. BartleyLittle Rock

Vandell Bland, Sr.West Helena

Nate CoulterLittle Rock

Jim JansenPocahontas

Louis B. (Bucky) Jones, Jr.Fayetteville

Larry KircherBald Knob

Glenn NishimuraLittle Rock

Anna ViaDardanelle

EX OFFICIO

Don HollingsworthExecutive DirectorArkansas Bar Association

• •ILETTER FROM THE IPRESKDENT

D EXECUT1VE IDrrRECTOR

Dear Colleagues,

The Arkansas IOLTA program traces its existence to 1984 when it wascreated by a Per Curiam Order of the Arkansas Supreme Court. UnderRule 1.15 of Arkansas' Rules of Professional Conduct, lawyers certifytheir compliance with proper trust account practices. This rule, whjchprovides the guidelines for safekeeping the property of others, requiresaU Arkansas lawyers who hold c1jent trust funds that are short-term ornommal in nature to place these funds in pooled IOLTA accounts. Theinterest from IOLTA trust accounts is paid to the Foundation. TheFoundation then awards grants from these funds to programs thatprovide civil legal representation to poor Arkansans, for law schoolscholarships, and for projects that aid in the adrllicistration of justice.During 2002 the Foundation paid $1,067,136 in grants in these threecategories.

Unfortunately, as interest rates plummeted in 2002, so did theFoundation's income. Most Arkansas banks were paying interest of 2%or higher prior to the tragic events of September]1, 2001, but wereunable to continue to do so due to economic events following that saddate. The average interest rate paid on IOLTA accounts during 2002 fellto 1.00%. However, over 240 Arkansas banks offer IOLTA accounts, andmost still do so without charging fees. This enables the Foundation tomaximize the amount of funds that are available for grants for law­related commu.city activities. The Foundation sincerely appreciates thissupport from the Arkansas banking community.

Please take a few mmutes to review thjs report---especially the casevignettes that exemplify the good work done by Arkansas lawyers. Weappreciate the positive response and leadershjp of the legal commumtyin Arkansas. With the efforts of each of you, real people with real legalproblems are able to access justice even though they are too poor to payfor civil legal services. The interest from your IOLTA account does makea difference daily in the lives of people who need legal help.

STAFF

Susie PointerExecutive Director

Dawn WestAdministrative Assistant

Thomas RayPresident, 200]-2002

•Susie Pointer

Executive Director

•

UNIVERSITY OF ARKANSAS SCHOOL OF LAW, FAYETTEVILLEThe following law students at the University of Arkansas School of Law, Fayetteville, received IOLTA scholarships for fall

of 2002:

Judy S. Barton received the Arkansas Bankers Association IOLTA Scholarship. Ms. Barton, a resident of Fayetteville, earned aBA degree in Psychology with a minor in Social Work from the University of Arkansas. Her mother, Ms. ludy Baldwin, residesin Fayetteville.

Torree M. Dyson received the Arkansas League of Savings Institutions IOLTA Scholarship. Ms. Dyson obtained her SAdegree in Psychology and her Masters of Art degree in Communications from the University of Arkansas. Her grandparents,Mr. and Mrs. Booker Jones, reside in North Little Rock.

Walter R. Hellums received the Arkansas Bar Association IOLTA Scholarship. Mr. Hellums graduatee from Lyon College witha BA degree in English. His parents, Mr. and Mrs. Albert Hellums, reside in Oxford, Arkansas.

Susan K. Weaver is the recipient of the Walter R. Niblock IOLTA Foundation Scholarship. Ms. Weaver is a graduate of theUniversity of Central Arkansas with a BS degree in Speech-Language-Pathology. Her parents, Mr. and Mrs. Ferrell Weaver,reside in Clinton.

Recipients of Arkansas IOLTA Foundation Scholarships are Lajoy Nicole james and Michael jared Medlock. Ms. Jamesreceived her undergraduate degree in Public Administration from the University of Arkansas. Her parents reside in ForrestCity. Mr. Medlock, a native of Mulberry, received his undergraduate degree in Political Science from the University ofArkansas.

liPSOLARSW SCHOOL SC

UNIVERSITY OF ARKANSAS AT LITTlE ROCK BOWEN SCHOOL OF LAWThe following law students at the University of Arkansas at little Rock Bowen School of Law received IOLTA scholarships forfall 2002:

KaTona R. Hodge received the Arkansas Bankers Association IOLTA Scholarship. She graduated from Hendrix College. Herparents, Mr. and Mrs. Billy Robinson, live in lillie Rock.

Suzanne L. Kellar received the Arkansas League of Savings Institutions IOLTA Scholarship. She graduated from the Universityof Arkansas at Little Rock with a SA in Criminal Justice and a minor in Legal Studies. Her parents, Mr. and Mrs. GlenVantrease, reside in Little Rock.

Lori Burrows received the Arkansas Bar Association IOLTA Scholarship. Ms. Burrows, who is a resident of Maumelle,graduated from the University of Central Arkansas with a SA in Speech Communication.

Tequiero Smith is the recipient of the Walter R. Niblock tOLTA Foundalion Scholarship. She resides in little Rock and is agraduate of Arkansas State University with a degree in Sports Medicine/Athletic Training.

Recipients of Arkansas IOLTA Foundation Scholarships are Leslie ligon and Tasha C. Sossamon. Ms. Ligon graduated fromthe University of Arkansas with a SA in History. Her parents, Mr. and Mrs. Micky Ligon, reside in Marvell. Ms. Sossamon,who is a resident of Little Rock, graduated summa cum laude from the UniverSity of Central Arkansas with a SA in Englishand a minor in Computer Information Systems and an emphasis in Spanish. Her parents, Mr. and Mrs. Wesley Sossamon,reside in Marshall.

UNIVERSITY OF ARKANSASSCHOOL OF LAW

FAYETTEVILLE

I haw bttn awartkd an IOLTA scho/anhip in thrtlmount ofS2.000ptr 1mIt'Sltr through Ilu Arka1lUli"IOLTA roundalion. Inr. I would likt to taltt tlJisopportunity to tell you lJou/ much I apprrriatf thufinantinl assistanu. I hoJK thm SOnltdny I u-NI bt ablr10 ""Ip nCl'dy srwltnu p"nut I/uir rducation in the 14mtm/llln" as you haw llfSilUd mt ;', /"tarhi"g my goal,.

Sjnrrrrly,SUldn K. Wral/t'r

UNIVERSITY OF ARKANSAS AT LITTLE ROCK SCHOOL OF LAWA-fy IIIm/t is Tasha C. SoSS/llllon. / am a fim yar lawstudmt at thr \'(filltam N. &uttn &11001 ofLaw and am IH}1/0r,J to

br II rrripirllt oftbis yrar's IOLTA Foul/titl/ion &holarship. I wam to rxprrss my sil/rrrr Ilpprtei4lio/1 for your grllrrosisy inprrllliding IIIr will, Ibis scholarship. II il nlu-aYI inspiring to tram OfptOpk ami organizalionl. mrb as IOLTA, thaI arrjnurrsud in hrlpi"g and supporting ot/~. I ani elptrially grauftlfor tht fillllllrinl tfSSistlwCt you haw providtd to IJrIpftnd my kgal rduralion. Funlurmort. I am inrpirrd byyour mission to "inrrran arms tojusrirf~ by 4SfiSling loul im"Jnupopu!JJtio1l1 that arr currtntly unahk to rrrrivr kgal ftT/Iirn. Whist a wondrrfNl objrrtivr! / am MgtT" 10 u'Orlt with you inaehitvint, IIIU goal through partidpalin: in Ihe law JfhoolS ltgal dink and otbtT" 1'Oluntrrr opponunitits in 11KfUtU".

I am thrilkd that 11K IOLTA &holanhip roup/rd with tM Fat value offrrrd i" kgal tJuralion at tlK &UKn SrhfH,1ofuw will allow mt to gnu/uau witb minimal tkbt. tlKrrjDrr mhanril/g"t] rarrrr options afttT"!JJw Jfhool

I u,ill do my hnt to mmt tM gift you haw au:artkd to mt. Onu agail/. thaI/it you for your gtnmJlity to mt and yourfrirmlsbip 10 UALR \'(Iilliam H. BoU~1I &htJoI ofLnu'.

Sinrtrt/y yours,Tasha C. Sossamon

• 2002IF'li L KNIFORM TK •2002 ARKANS.AS KOLT GR JT'RE lIPJ(ENT§

'Audit of the Foundations books will be completed by the end of April. Final audited figures will be available from theFoundation's office after May 15, 2003. If you would like a copy, please call the Foundation office at 376-1801 or 1-800-449­6560. The unaudited information presented above is based on the Treasurer's Report for January 1 to December 31, 2002.

INCOMEIOlTA AccountsInterest earned on operating accountInterest earned on unemployment accountInterest earned on money market accountInterest earned on CD.'sTotal Revenue for Period

EXPENSESAdministrative expensesGrant disbursementsTotal Expenses for Period

•

$508,4592,588

202,740

28.481$542,288

$ 144,8581,067,136

$1,211,944

•

LJE:G. \1[, AKD 1"0 THE !POOR,2002 !HlG:HlLT GlUTS

CENTER FOR ARKANSAS LEGAL SERVtCES (Center) $437,541Providing qua/lty lega! representation to low-Income Ar/<Bnsans In Arkansas, Ashley. Bradley, Calhoun,Chlcot, Clark, Cleveland, Columbia, Conway, Crawford, Dallas, DeS/la, Drew. Feulkner, Franklin, Garland,Grant, Hempsteod, Hot Spring, Howard, Jefferson, Johnson, LaFayoue, Lincoln, Little River, Logan, Lonoke,Mil/or, Montgomery, Nevada, Ouachita, Perry, Plhe, Polk, Pope, Prairie, Pulaski, saline, Scott, Sebastian,Sevier, Union White and Yell counties. The Center continued 10 operate the HelpLine, a cenlralized tele­phone intake system to serve clients In the program's 44 counties. The Helpline was staffed by one full-timemanaging attorney, three lull-time scrooners (support staff), two full-time staff attorneys, and five part-timeattorneys taking morning or afternoon shifts. The Helpline operated lor six hours per day live days per week,offering free legal advice and brief services to low-Income Arkansans. The Center continued to oller oul·reach activities to low-income Arkansans In lts service area. The following are a few examples of such activ­ities: -Workshops were held at Senior Centors In Arkadolphla, Murfreesboro, Pike ond Pulaski counties.-AltOfneys Betsy Hampton and Gr1f Stockley presented workshops on guardianstllps and alternatives 10 theKinship Caregivers, a provider group jointly sponsored by the Arkansas Department of Human Services andthe Centers for Youth &Families. -The Center continued Its partnership with the Centers for Youth & Familiesin providing education and training to relatives who care for the children of incarcerated parents. -AttorneyJennifer Thornton of the EI Dorado Branch Office represented the Center at community service providersfairs In Union and Columbia counties. -Attorney Ben seey, also of the Et Dorado office, spoke at a CourtAppointed Special Advocates (CASAl training about dependency-neglect cases and how attornoys ondguardian ad lItoms represent children In these matters. -The American Association or Retired Persons(AARP) brought their National Legal Training Project to LIttle Rock, where several of the Center's stafl mem­bers and private pro bono attorneys were trained in Ihe Substantive Law & Skills and the TraIning of Trainersprograms. Participants In the Substantive law program then served as trainers in other parts of the state,educating pro bono attorneys and Legal Services staff in those areas. -The MRP also hosted a symposiumIn LIttle Rock on building strategIc alliances between non-profit organizations inclUding Legal Services pro­grams. -~WOfds to tho Wlse"-prcventatlve law workshops for the elderly-were hosted throughout theCenter's servIce area.•The Center was awarded a grant funded by the Vlolenco Against Women Act ryAWA).From October 1, 2001, through June 30, 2002, the Center opened 209 cases for victims of domestic vio­lence and closed 90 of those cases successfully. Ms. Jean Turner Carter is Exacul/ve Director of!he Center.

must be purchased) based on focus group input from a Journalism class at Arkansas Slate University andmodeled after the media campaign developed by the Project lor the Future of Equal Justice. -A pro bonoprocedure training was held In Helena In March and In Fayetteville in May. -eLE training on guardianships,offered al a reduced rate to private volunteer attorneys, was held in Uttle Rock in April and in Fayettevilleand Wast Memphis In May. This training was in conjunction with the Resource Coordlnatlon and TrainingUnit. Ms. Susan Purtle served as Pro Bono Coordinator of the EAlP.

VOLUNTEERS' ORGANIZATION, CENTER FOR AR LEGAL SERVICES (VOCALS) $45,038VOCALS won the prestigious Harrison Tweed Award' In 1985. The program was started In 1982 by tfJePulashl County Bar Association In an effort to help the Center for Mansas Legal Services meet tfJe legalneeds ofpoor people In Pulaski County. Through a cooperative venture between eight centro! Mansas barassociations, individual attorneys and the Center, over 840 volunteer lawyers now provide free legal assfs~tance to poor people in the Center's 44-county service area. -Poverty law Manuals were dislributed to allvolunleer altorneys In January and February. -In February all pro bono coordinators for the Genter (siX) mettogether. Regular meotlngs of this group were held to facilitate the mergors with Western Arkansas legalServices and East Texas legal Services and to Increase referrals. -Guardianship training was held for vol­unteer attorneys In Pine Bluff, Fayetteville and West Memphis. -Mr. Clalbourne Patty was named VOCALSAttorney 01 the Year and he was honored at the annual dinner meeling 01 the Pulaski County Bar AssociationIn May. -Mr. Ray Fulmer was named VOCALS Attorney of the Year for VAP and was honored at a luncheon01 the sebastian and Crawford County Bar Associations in December. The annual dinner meeting 01 theJefferson County Bar Association was also held In December In Pine Bluff. Mr. Kyle Havner and Mr. HoraceFikes were recogniZed lor their outstanding service to clients in that area of the state. -VOCALS exceededboth Its fundralslng and membership goals for the 2001-2002 year. Approximately $152,175 was raised Incontributions from Puloskl County attorneys. -In July Ms. Mary Henry presented a two-session workshopat the Regional Elder Rights, Advocacy and Care Training sponsored by the Area Agency on Aging Ark~Tex

Region In Texarkanna, Texas. She focused on the Center's outreach program ~Words to the Wise. ~ Over 100Individuals attended, representing both providers and COflsumern. Information on the statewide web sUeand AVlE was distributed during the conference. --Words to the Wise- seminars were held in Glenwood,Hot Springs, Jacksonville, Monticello, Morrilton, Murfreesboro, ond Russellville. -All pro bono coordinatorsmet In August and October as part of tha Statewide Pro Bono Task Force. Tho trlsk force doveloped rI linkto the Arkansas Bar Association's web site so that attorneys may join the pro bono progrorn In their areaon-line. The program's administrators we~ Ms. Mary Henry, Volunteer Services Coordinator, Ms. PatriciaYoung, Pro Bono Coordinator, and Ms. Shannon Eversole, VAP Pro Bono Coordinator.

GRANT DKSTRKBUTKON [-USTORY

$900,000

$800,000

$700,000

$650,000

$600,000

$550,000

$500,000

$450,000

$400,000

$350,000

$300,000

$250,000

$200,000

$150,000

$100,000

$50,000

$0 l

• LEGAL AID .PAJ

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LEGAL ED

LEGAL AID of ARKANSAS (LAA) $291,694Providing quality legal representation to low-income Mansans in Baxter, Benton, Boone, CarroI/, Clay,Cleburne, Craighead, Crittenden, Cross, Fulton, Greene, Independence, Izard. Jachson, LBwrence, Lee,Madison, Marion, Mirsissippl, Monroe, Newton, Phillips, Poinsett, Randolph, St. Francis, Searcy, Sharp,Stone, Van Bu~n, Was/llngton, and Woodruff counties. -Sorbara Griffin served as the managing attorneyfor the Newport office of LAA, Ms. Griffin continued to specialize In housing cases and assisted anotherattorney with housing classes in West Memphis. She will soon facilitate these classes In theJonesborolNewport area. At her request, she was designated the CommunitY Educatioo Assistant for theNewport office service area. She will worK with the Community Education Coordinator to design and Imple­ment public training on Issues affecting low-income communities. -Margaret Reger. managing attorney Inthe Harrison office for 20 years, worked as a solo attorney in the office, havlng lost her VAWA attorney whenthe grant was not renewed. -Renla Robinette, who was hired as an attorney In January of 2002, left lAA inDecember to return to the Department of Human SeJVlces. She left 60 pending cases, which were trans­ferred to the m.maging otlorney. -Sherrl Stewort, managing attorney or the Mountain View orrlce, wrote eweekly newspaper article sharing legal information. Ms. Stewart is certilied under AOC protocols to repre­sent children and parents In juvenile court proceedings. She also lunctioned as the area's CommunityEducatlon Assistant. -Donald llppett, who had worked for L.AA in the Jonesboro office, transferred to theFayetteVIlle office. He was then called to active duty in the Middle East lor an indefinite period of time. Hiscases were assigned either to the Equal Access to Justice Panel or to another staff attorney. -JeanetteWhatley, managlng attomey In the Wost Memphis office, also supervised the Delto Service Corps volunteerworking In that office. She served as Director of the Housing Unit of legal Aid of Arkansas. SI1e is certifiedby the Arkansas Department or Finance & Admlnlstration to teach first-time homebuyers about homeown­er issues such as closing, bUdgeting lor maintenance and repairs, etc. Ms. MOM Teague Is ExecutiveDirector of Legal Aid of Arkansas.

ARKANSAS VOLUNTEER LAWYERS FOR THE ELDERLY (AVLE) $25,000AVLE is a joint venture of the Arkansas Bar Association, the states' two Legal Services programs, and theDepBT1ment of Human Services, Division of Aging and Adult Services. AVLE staff works closely with theLegal Services programs and tile Aroll Agenclos on Aging to Insure older Arkansans get the legal reprosrm­tation they need. In 2002 over 559 low~incomoelderly Arkansans were assisted wah civil legal problemsthrough the efforts ollhese 609 volunteer attorneys. Several of these attorneys assisted AVLE staff In mak­ing presentations to 23 senior citizen groups, Mr. Joet JotInson of FI. Smith received AVlFs Pro BonoAttorney of the Year Aword at the Annual Meeting of the ArKansas Bar AssocIation In Hot Springs. Ms.catherine Edwards is the Director of AVLE

EQUAL ACCESS TO JUSTICE PRO BONO PANEL (EAJP/LAA) $58,354-LAA, Arkansas Volunteer Lawyers for the Elderly (AVlE). and the Whlte Rivor Area Agoncy on Aging joint·iy co-sponsored an event tilled "Legal Awareness for the Elderly" on September 12, 2002. The event washeld in Sharp County, which has a large senior population. A similar program, jolntly sponsored with tho EastArkansas Area Agency on Aging, was held on November 19 in Jonesboro. ThaI seminar stressed the Impor­tance of wllls and eslate planning, with emphasis on how these tools can be used to avold land loss. Thelast program of Ihe year was held in West Memphis In December. -The project held a community educationevent In Lee County (a historically underserved part of the service area) entitled -Things You Need to KnowWhen Purchasing a Used Car." This seminar was also presented in Helene and was well-attended. A localnewspaper covered the ovent. -lAA and Arkansas Volunteer Lawyers for the Elderly (AVLE) undertook aJoint project of community education and outreach to the elderly. AVLE received a seed grant from theAmerican Bar Association lor this project, with the purpose 01 educating the elderly about free legal servicesfor the poor. (An Arkansas legal needs survey found that "85% of low-income Ari<ansans are not aware offree Iega! services to the poor. i A leading Anl.ansas advertising agency will produce free media ads (air time

PR JfECI'S TO 1l\1:PROYO;THE ADl1iLlNnSTRATlO,'f OF JUSTICE

ARKANSAS BAR ASSOCIATION/ARKANSAS BAR COMMISSION ON DIVERSITY PRESENTSA JOURNEY OF FAITH, CONFIDENCE & EQUALITY ON THE ROAD TO JUSTICE $14,750This grant, to the Mansas Bar Association, was to assist in efforts to Increase diversity of the Associationby expanding the numbel'" and the level of partk:ipation by minority attomeys and judges. The longer-termgoal of the project was to increase public conlidence In the justice system through Visibility 01 these minor­ity attorneys and Judges at work in the system. In April the Arkansas Bar Association Commission onDiversity, a group composed of minority end majority attorneys. met to discuss goals and 0 timetable foraccomplishing these goals. As part of this project, Mr. Bryan Stevenson, Director of the Equal JusticeInitiative of Alabamo, delivered the keynote address at the 104th Annual Meeting of the Arkansas BarAssociation. A diversity seminar was held by the Commission in October. Guest speakers included VirginiaGrant 01 the Milwaukee-based consuiling firm Altman Weil, Inc., and Ray Carpenter, a partner and tax lIIi­gator In the Atlanta office of caporate giant Holland & Knight. The seminar was well attended. ABeD spon­sored Us first job fair the following day at the UALR Bowen School of Law.

ARKANSAS BAA ASSOCIATION, YOUTH EDUCATION, MOCK TRIAL COMPETtTION $18,800Twelve judges (Including Chlcf Justice W.H. "Dub" Arnold). 36 lawyers, and numerous other volunteersstaffed the 2002 mock trial effort with 26 high schools participating. The case concerned an Illegal soarchand seizure. Forrest City High School was the state champion for the second year In a row and went to thenational competition in Minneapolis-51. PauL Attorney Phyllls McKenzie served as Chair of the Mock TrialCommittee, and Rando Hicks was the Ar1<ansas Bar Association's coordinator for this protect. The partici­pating high schools Included Barton High School, Bentonville High School, Booneville High School,Bradford Public School, Clarendon High School, Conway High School-East, Cutter Morning Star; ForrestCity High School, Hamburg High School. Izard County High School, J.A. Fair High School, Jasper HighSchool. Junction City High School, lake Hamilton High School, Molvern High School, Marion High School,Mountainburg High Schoo), Nettleton High SChool, Newport High School, Oak Grove High SChool, OdenHigh School, Pangburn High School, Parkvlew High School, Rogers High School, Russellvllle High School,and Tuckennan High School.

CENTERS FOR YOUTH AND FAMILIES, SPANISH EDITIONOF PARENTAL RIGHTS HANDBOOK FOR INCARCERATED PARENTS $14,77312,000 copies of the handbook were printed, 8,000 of the English version and 4,000 of the Spanish version.Following ora some hlghHghts of this project: -Attorneys Clayton Blackstock and Frank Newell provIded tholegal writing for the handbook. Jenny Boshears served as the editor, and Michel Leldermann was the Spanishtranslator. A professor In the Spanish Department at UALR, Ms. leah Wilkinson, proofed the Sponlsh editionand commented favorably on Its readability. Robin Richards served as layout artist. Judge Joyce Warrenpermitted the Centers to eXC9!'Pt her booklet on dependency/neglect court procedures, and Legal Serviceslor Prisoners In San Francisco allowed their policy on Juvenile Immigrant Status to be excerpted for theArkansas handbook. -The handbook wlll be distf1buted at statewide forums on children of prisoners to beconducted by the Centers. -Notice of availability of the handbooks will be given to state legislators, judges,prosecutors, public defenders, the Department of Corrections, the Arkansas Sheriff's Association, and otherentities that work In the criminal justice community. -The handbook will be online through Centers for Youthand Families web site and AETN's new web site for mothers in prison. The Centers will also "market" place­ment of the handbook on several national web sites, including Family and Corrections Network In Virginiaand the Federal Resource Center for Children 01 Prisonern In Washington. D.C.

Volunteer Attorneys Assist ClientsIIFor The Puhlic Good"

The following legal matters we"e handledfor free by attorneys in p,';vate pmctice '0hovolunteered thei"legal services to p"o bono (meaning 'for the good") programs in the;"c01",,,,mities. While the cases al'e real, the *names al'e fictitious to p,'otect client identity.

~ A Saline County client; Ms. *Critel; calledfinntic about ber 11-year-old son, *Marty.Marty bad been told by bis bigb scbool counselor tbat be could not graduate with bis class in MIlY 2003unless be attended SlImmer scbool. Due to bis filtber's instability ii, moving around, tbe SO" did not baveenough high school credits. The fnther told the son that he lOllS planning to move again. The son did notwant to move and risk not being able to f51'rtduate. Additionally, the ex-busband ofMs. Critel; who hadcustody ofMarty, lollS refusing to allow the client any summer visitation. Tbe son indicated tbat his fiuherthreatened to knock bis teeth down his tbroat ifbe even talked to his mother. Ms. G'iter WflS referred to aVOC4LS attomey, who immediately filed a petition fOr change ofcustody The eme'gency petition wassuccessful. Marty is now living with his mother and attending summer school. Since livil1g in SalineCOUl1ty, Mm'ty has done well il1 school, and a counselor has assisted bim with course selection, so he will beable to graduate.

~ 'OMs. Fraze,; an elderly woman il1 Monroe Cou"ty, whose home repairs hlld not been completedsatisftctori/y, was referred to an EAJP volunteer attorney in Monroe County. BecallSe ofthe potentially fte­generating nature ofthe case, AVLE could not make tbe reftrral. The attorney sued the contractor and got IIfavorable judgment for Ms. Frazer.

~ 'OMs. Bates, a 41-year-old woman in Mississippi County, needed a glladianship over het severelydisabled daughter, *janie. A private attomey fOr the EAJP project met with Ms. Bates and obtained aguardiambip fOr this fitl1lily.

~ *Mr. Hicks cOl1tacted the Hot Springs office ofthe Center fOr Arkansas Legal Services becallSe thelocal sheriffhlldjust served him with a Writ ofExecution 011 his trudl. Mr. Hicks needed the truck to keephis job. The facts ofthe client's collection problems were complex. In 2001, MI: Hicks entered imo a verbalagreemem with his landlord III exchange fOr bis work as apartment manager at tbe complex where helived, she promised to reduce bis rent by olle-half Several montbs lllter, Mr. Hicks !Vaj hired by the milrOlldand irrfvrmed the landlord that he could no longer pelform the managemem duties. The landlord becameangry and sued Mr. Hicks ill small claims court for back rent. The client did not seek legal counsel, anda judgment was entered against bim in the amount of$3,000. Afterward, lhe /andlord told MI: Hicksthat she lOllS sorry and wOlild not collect tbe judgmem. Eight months later, Mr. Hicks gave notice to tbelandlord tbat he lollS movillg out. She became angry again andproceeded to execute on her judgment.Tbe case WflS referred to a Garlalld County VOCALS attorney. Tbe volunteer attorney immediately filedII bankruptcy on bebalfofMr. Hicks, wbicb saved his truck and bis job.

Legal Services Help People Who Need Help

Attor1leys f01' the Legal Se,'vices p"ogmms b, A,'kansas haudled the followiug cases, While the cases al'e real, the *names are

fictitious to p1'Otect client idetltity.

~ *Alma lollS referred fOr flSsistance with representation in an order ofprotectioll hearing brought against her by her busband,

*Tom. Sbe bad been physically beaten by him on ChristmllS Day. Alma sllffered a serious injury to be,. eye andjinctures to ber cheek

and skull. She also S1IjJered blurred vision from trauma to the optic nerve. The police were called, and her husband was arrested.

Prior to the arrival ofthe police, Tom took the pllrtiel 16-momb-old child, *David, to his parents' hOllSe, and they would notgive

the child back to Alma. After Tom !VflS l'eletlsedfi'om jail the following day, be immediately contacted Victim Assistance and obtained

a temporary OI't1er ofprotection against his wife and an order giving him cllStody ofbaby David The case WflS assigned to a staff

attorney for the Center, who filed for a protective order against Tom. At tbe Court hellril,g, Tom's temporary order was dismissed, and

the Cemer successfitlly gained custody ofDavidfOr our cliem, Alma. A divorce IIction is pending.

~ 'OTonja, tbe motber ofa nille-year old child, *Maxxie, 10170 wflS receiving 551 and Medicaid bellefits fOr cerebral palsy,

was notified by the Social Secllrity Administratioll (SSA) ofa $7,616 overpayment ofbenefits. SSA stated that the overpayment WIlS

dlle to the foct tbat tbe motbe,. bad received cbild suppott, SSA planned to collect the ove,.paymentfrom the child's benefit checks.

Tonja sought the Center's help. The case was assiglled to a paralegal who appealed the overpayment. Evidence was presented fit the

bearing that the mother had reported the child support to DHS, and tllere lOllS coufllsiol1 cllused by different reporting requirements

for state andftderal benefit programs. Tonja lost her job wbile dealing witb tbe stress ofMllxxie's eigbt slllgeries. Tbe cbild lOllS also

scheduled/Or additional s"''ge,.y for her eyes. SSA found tbat tbe client, Mllxxie, and 1m' motber weI'e witbout fault and that recovety

ofthe overpayment would be a hfll'tlship. Tonja WIIS giveu advice on how to comply with the child support and iucome Ieporting

requirements ofSSA and DH5.

~ Ms. *Broum, an unemployed mother ofa three-year-old child, was ,'eceivil1g services in the fOrm ofTEA and Medicaid

for the child. She WflS required to Sigrl over rights to child support to the State, wbich is mllndated to establish paternity and collect

support from the putative father ofthe child. Afrer being corltacted by the Office ofCbild Support Ellforcement, the putative father

immediately cOlltacted Ms. Brown fllld threatened her. Sbe attempted to permade OCSE Ilot to pursue this matter because tbe filtber

had a formidable criminal record, whicb included mam1nctz,,'iug and sellil1g drugs, possession offireamls and other assoned criminal

activities. FurthemlOre, tbe cbild had been conceived when tbe putative fathe,; theu 27, fOrcibly raped the client when she was only 16

Legal Aid ofArkansas accepted the cllSe to pllrsue a "good cause" waiver fOr tbe client, which would allow her to receive benefits without

being coopelntive witb OCSE in obtainillg a fllltemity m'del: Afier investigatioll, LAA acquired the putative father's criminal andpolice

records, wbich were tben sellt to OCSE. Due to Ms. Brown's limited schooling and educatioll, LAA flSsisted bel' with making anotber

application al1d witb an interview betweell her and OCSE. The ''good cause" waiver was tben f51'(lllted witbout tbe l1eed fOr litigation.

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A special tllank you to tile following financial institutions for paying interest AND waiving service charges on attorney IOLTA accounls:_

Tllis listing is based on inlerest r~l'es on active attorney IOLTA accounts as reported to ti,e Foundation by individual banks in 2002.

r

~he People of the United

INTEREST ON UWYERS' TRUST ACCOUNTS. . . . ..

h this Constitntion fol' the United States ofA'llel'ica, -PREAMBLE

al/d seCllre the Blessillgs of Liberty to om·selves al1d 0111'

',pl"Omote tIle general Welfate, and secure tI,e Blessings ofLibettl)

eneral Welfare, flIld secnte the Blessings ofLibertl) to ourselves and

establish Justice, insure domestic Trallquility, Provide for the

re domestic Tranquility, Provide for tile COl1W'1Oll defense,

tates, in o,'der to f01"11I a 1IIore pelfect Union, establish lustice,

elves alld Ollr po

e the People of the UI/ited States, ill order to form a more perfect

ill order to form a 1Il0re pelfect Union, \'::::::!~~:;;

do orda;" and estabUsl, this COllstitl,tion for the United States of

. CONSTtTUTlON ~rePeople of tile United States, ;', order to

tates ofAlIletica. -PREAMBLE TO THE U.S. CONSTITUTtON ~ e the

ill order to form!or,QcniJ'estaCJ;;!ticAslIl'e

efor the com mOil ,seVth~l",re,.l'1...e

fOl' tile comma" tiefeuse, promote tJregenernl Welfare, and secure the

·bertl) to ollrselve

·berty to ourselves and our posterity, do otdaill alld establish this

tates ofAmerica. -PREAMBLE TO THE U.S. C «;he

I Provide for the conU1l01l defense, promote the general Welfare,

Ll!====~=:'::==~~llitedStates ofAmerica, -PREAMBLE TO THE u.S. CONSTITUTION

Peopl

MllSSllON ~ tiomes

STA\TEMlENT

The foundation's

mission is to

increase access to

justice by funding

programs that

target the civil legal

needs oflow~income

Arkansa1'lS and by

encouraging projects

that improve the

administration

ofjustice. Grant

ptiorities are:

... FOI" legal aid

to the pOOl"

~ .For student loans

and scholarships

'" Gthel" programs

for special projects

that improve the

administration

Ofjustice

auti se

Const

Peopl

2002 domes

IIAnnual theBl ,

Report the

Arkansas[OLTA

Foundation

Mcilroy Bank &Trust, FayettevillePeoples Bank &Trust,

Mountain Home

Regions Bank, MorriltonRegions Bank, NashvilleRegions Bank, OsceolaRegions Bank, RogersRegions Bank, RussellvilleRegions Bank, SearcyRegions Bank, TexarkanaRiver Valley Bank, RussellvilleSimmons First Bank, DumasSimmons First Bank, JonesboroSimmons First Bank, lake VillageSimmons First Bank, LincolnSimmons First Bank, SearcySimmons First Bank of Arkansas,

RussellvilleSimmons First Bank of EI DoradoSimmons First Bank of Northwest

Arkansas, SpringdaleSouthBank, ManilaSpringdale Bank &TrustSuperior Federal Bank, Fort SmithThe Bank of JonesboroTrustBank, Mounlain HomeTwin City Bank, Norlh little RockUnion Bank of BentonUnion Planters Bank, Forrest CityUnion Planters Bank, MarshallUnion Planters Bank, OsceolaUnion Planters Bank, Wesl MemphisUnion Planters Bank of Central

Arkansas, ClintonUnion Planters Bank of Northeast

Arkansas, JonesboroUnited Bank, SpringdaleU5Bank, Cincinnati, OH

Soulhern Bank of Commerce, ParagouldSouthern State Bank, MalvernSummitt Bank, MalvernThe Capital Bank, Little RockUnico Bank, ParagouldUnion Bank &Trust, MonticelloUnion Bank of MenaWarren Bank & Trust

First Arkansas Valley Bank, DardanelleFirst National Bank, RogersFirst Security Bank of Mountain HomeHibernia National Bank,

New Orleans, lA

First Service Bank, ClintonFirst State Bank, ConwayFirst State Bank, lonokeFirst State Bank of DeQueenFirst Western Bank, RogersFirstar Bank, MorriltonFirstar Bank, North little RockGreers Ferry lake Bank, Heber SpringsHeartland Community Bank, CamdenHeber Springs State BankHelena National BankMadison Bank &TrustMalvern National BankMarked Tree BankMcGcheellankMerchants & Farmers, DumasMerchants & Planters, NewportNational Bank of Arkansas,

North little RockNational Bank of Commerce,

Memphis, TNOnellank, Little RockPetit Jean State BankPiggott Stale BankPine Bluff National BankPorlland Bank, MonticelloPulaski lIank & Trust, lillie RockRegions Bank, BatesvilleRegions Bank, BentonRegions Bank, ClarksvilleRegions Bank, ClintonRegions Bank, ConwayRegions Bank, EI DoradoRegions Bank, HarrisonRegions Bank, Hot SpringsRegions Bank, JonesboroRegions Bank, Little RockRegions Bank, Memphis, TN

First State Bank, HuntsvilleFirst State Bank, WarrenForrest City BankHeritage Bank, ,onesboroMerchants & Planters Bank, ClarendonMetropolitan National Bank, little RockMidSouth Bank, JonesboroNewport Federal Savings BankPeoples Bank, ParagouldPinnacle Bank, little RockSimmons First National Bank, Pine BluffSmackover State Bank

First Community Bank, BatesvilleFirst Community Bank of Southeast

Arkansas, DermottFirst Financial Bank, EI DoradoFirst National Bank, DeWittFirst National Bank, HopeFirst National Bank, McGeheeFirst National Bank, MenaFirst National Bank, Mt. IdaFirst National Bank, ParagouldFirst National Bank, WynneFirst State Bank, Crosset!

Bank of McCroryChambers Bank, DanvilleElk Horn Bank & Trust, ArkadelphiaFarmers & Merchants Bank,

Prairie Grove

Community Bank 01 CabotCommunity Bank of FayettevilleCommunity First Bank, Eureka SpringsCommunity First Bank, HarrisonCorning Savings & loanFarmers and Merchants Bank, StuttgartFarmers Bank, GreenwoodFarmers Bank, HamburgFarmers Bank & Trust, BlythevilleFarmers Bank &Trust, C[arksvilleFarmers Bank &Trust, MagnoliaFirst Arkansas Bank & Trust, JacksonvilleFirst Arkansas Valley Bank, RussellvilleFirst Bank of South Arkansas, CamdenFirst Community Bank, ConwayFirst Community Bank, JonesboroFirst Community Bank, PocahontasFirst Delta Bank, Marked TreeFirst Federal Bank of Arkansas, HarrisonFirst National Bank, AshdownFirst National Bank, Ash FlatFirst National Bank, BerryvilleFirst National Bank, BlythevilleFirst National Bank, CrossettFirst National Bank, DeQueenFirsl National Bank, DierksFirst National Bank, El DoradoFirst National Bank, FI. SmithFirst National Bank, HelenaFirst National Bank, MariannaFirst National Bank, Mtn. HomeFirst National Bank, SpringdaleFirst National Bank of Eastern Arkansas,

Forresl CityFirst National Bank of lawrence

Counly, Walnut RidgeFirst National Bank of ParisFirst Security Bank, Searcy

Arkansas Slate Bank, Siloam SpringsArvest BankBanCorpSouth, HopeBank of America, Sf. louis, MOBank of Arkansas, Tulsa, OK

2002 ]IOJLTA. BANJ[( HONOR ROLJL

American State Bank, JonesboroAmerican State Bank, OsceolaAmerican State Bank, ParagouldArkansas Diamond Bank, GlenwoodArkansas National Bank, BentonvilleBanCorpSouth, AlmaBanCorpSouth, CamdenBanCorpSouth, EI DoradoBanCorpSouth, Ft. SmithBanCorpSouth, lillie RockBanCorpSouth, MagnoliaBanCorpSouth, MelbourneBanCorpSouth, StuttgartBank of AugustaBank of Cave CityBank of DardanelleBank of Delight, Nevada CountyBank of EnglandlIank of Eureka SpringsBank of FayettevilleBank of lake VillageBank of Mountain ViewBank of PocahontasBank of PrescottBank of RogersBank of SalemBank of Slar CityBank of the OzarksBank of TrumannBank of WaldronBank of VellvilleChart Bank, PerryvilleCitizens Bank, BatesvilleCitizens Bank, BoonevilleCitizens Bank &Trust, Van BurenCleburne County Bank, Heber SpringsCommercial Bank & Trust, MonticelloCommercial National Bank, Texarkana

The Arkansas IOLTA Foundation gives special recognition and thanks to the following financial institutions for paying an aver~lge interestr~lte of 1.5% or higher AND waiving service charges on attorney IOLTA accounls:

Thank you to these other participating IOLTA banks for paying interest in 2002: _

Alliance Bank, Hot SpringsBank of HarrisburgBank 01 Holly GroveBank of little RockCitizens State Bank, Bald KnobCross County BankDelta Trust, HamburgDelta Trust & Bank, Little RockDiamond State Bank, MurfreesboroDiamond State Bank, NashvilleEudora BankFidelily National Bank, West Memphis

200210LT B ,":K. HOJ. OR ROLL

Southern Bank of Commerce, ParagouldSouthern State Bank, MalvernSummitt Bank, MalvernThe Capitll Bank, little RockUnico Bank, ParagouldUnion Bank &T~ MonticelloUnion Bank of MenaWarren Bank & Trust

The Arkansas IOLTA Foundation gives special recognition and thanks to the following financial institutions (or paying an average interestrate o( 1.5% or higher AND waiving service charges on attorney IOLTA accounts:

Alliance Bank, Hot Springs Fir<t Community Bank, Batesville Fir<t State Bank, HuntsvilleBank of Harrisburg Fir<l Communily Bank of Southeast Fir<t Slate Bank, WarrenBank of Holly Crove Arlcansas, Dermott Forresl City BankBank of Little Rock First Financial Bank, EI Dorado Heritlge Bank, JonesboroCitizens Stile Bank, Bald Knob First National Bank, DeWitt Merchants & Planter< Bank, ClarendonCross County Bank Fir<1 National Bank, Hope Metropolitln ational Bank, Little RockDeltl Trus~ Hamburg First ational Bank, McGehee MidSouth Bank, JonesboroDeltl Trust & Bank, Little Rock First ational Bank, Mena ewport Federal Savings BankDiamond Slate Bank, Murfreesboro Fir<t National Bank, Ml. ldo Proples Bank, ParagouldDiamond Slate Bank, ashville First National Bank, Paragould Pinnade Bank, little RockEudora Bank Fir<t National Bank, Wynne Simmons Fir<1 National Bank, Pine BluffFidelity National Bank, West Memphis Fir<t Stlte Bank, Crossett Smackover Stlte Bank

A speciallhank you to the fol/owing financial institutions (or paying interest AND waiving service charges on attorney IOLTA aCCDunts:_

American Stlte Bank, JonesboroAmerican State Bank, OsceolaAmerican Slate Bank, ParagouldArlcansas Diamond Bank, ClenwoodArkansas National Bank, BentonvilleBanCorpSouth, AlmaBanCorpSouth, CamdenBanCorpSouth, EI DoradoBanCorpSouth, Fl. SmithBanCorpSouth, little RockBanCorpSouth, MagnoliaBanCorpSouth, MelbourneBanCorpSouth,StuttgarlBank of AugustaBank of Cave CityBank of DardanelleBank of Delight, Nevada CountyBank of EnglandBank of Eureka SpringsBank of FayettevilleBank of lake VillageBank of Mountain ViewBank of PocahontlsBank of PrescottBank of Roger<Bank of SalemBank of Stir CilyBank of the Ozark<Bank ofTrumannBank of WaldronBank of Yellvilleo..rt Bank, PerryvilleCitizens Bank, BatesvilleCitizens Bank, BoonevilleCitizens Bank &Trust, Van BurenC1ebume County Bank, Heber SpringsCommercial Bank &Trust, MonticelloCommercial National Bank, Texarkana

Community Bank of CibotCommunity Bank of Fal~tteville

Community First Bank, Eureka SpringsCommunity First Bank, HarrisonCorning Savings & loanFarmers and Merchants Bank, StuttgartFarmers Rank, GreenwoodFarmers Bank, HamburgFarmer< Bank & Trust, BlythevilleFarmers Bank &Trust, ClarksvilleFarmers Bank &Trust, MagnoliaFirst Arkansas Bank &Trust, JacksonvilleFir<t Arkansas Valley Bank, RussellvilleFir<t Bank of South Arkansas, CamdenFirst Community Bank, ConwayFir<t Community Bank, Jonesborofirst Community Bank, PocahontasFir<l Delta Bank, Marked TreeFir<t Federal Bank of Arkansas, Harrisonfirst ational Bank, AshdownFir<t National Bank, Ash FlatFir<t National Bank, BerryvilleFir<t ational Bank, BlythevilleFir<t National 8ank, CrossettFir<t alional Bank, DeQueenFir<t National Bank, DierksFir<t National Bank, EI DoradoFir<t National Bank, Fl. SmithFir<l ational Bank, HelenaFirst alional Bank, MariannaFir<l National Bank, Mtn. HomeFir<t alional 8ank, Sp<ingdoleFir<t ational Bank of E.slem Arlcansas,

Forrest CityFir<t National Bank of lawrence

Counly, Walnut RidgeFir<t National Bank of ParisFir<t Security Bank, Searcy

First Service Bank, OintonFirst State Bank, ConwayFir<t State Bank, lonokeFir<1 State Bank of DeQueenFirst Western Bank, RogersFirstar Bank, MorriltonFir<tlr Bank, North little RockCreer< Ferry lake Bank, Heber SpringsHeartland Community Bank, CamdenHeber Springs State BankHelena National BankMadison Bank & TrustMalvern National BankMarked Tree BankMcGehee BankMerchants & Farmers, DumasMerchants & Planters, NewportNational Bank of Arkansas,

North little RockNational Bank of Commerce,

Memphis, TNOneBank, little RockPetit Jean Stlte BankPiggott Stlte BankPine Bluff National BankPortland Bank, MonticelloPulaski Bank & Trust, little RockRegions Bank, BatesvilleRegions Bank, BentonRegions Bank, ClarksvilleRegions Bank, ClintonRegions Bank, ConwayRegions Bank, EI DoradoRegions Bank, HarrisonRegions Bank, Hot SpringsRegions Bank, jonesboroRegions Bank, little RockRegions Bank, Memphis, TN

Regions Bank, MorriltonRegions Bank, ashvilleRegions Bank, OsceolaRegions 8ank, Roger<Regions Bank, RussellvilleRegions Bank, SearcyRegions Bank, TexarkanaRiver Valley Bank, RussellvilleSimmons First Bank, DumasSimmons First Bank, JonesboroSimmons Fir<t Bank, lake VillageSimmons First Bank, lincolnSimmons First Bank, SearcySimmons First Bank of Arkansas,

RussellvilleSimmons Fir<t Bank of EI DoradoSimmons First Bank of Northwest

Arkansas, SpringdaleSouthBank, ManilaSpringdole Bank & TrustSuperior Federal Bank, Fort SmithThe Bank of JonesboroTrustBank, Mountlin HomeTwin City Bank, North little RockUnion Bank of BentonUnion Planter< Bank, Forresl CityUnion Planter< Bank, Mar<hallUnion Planter< Bank, OsceolaUnion Planter< Bank, West Memph~Union Planter< Bank of Central

Arkansas, OintonUnion Planter< Bank of ortheast

Arlcansas, JonesboroUnited Bank, SpringdoleUSBank, Cincinnati, OH

Thank you to these other participating IOLTA banks (or paying interest in 2002: _

Arlcansas State Bank, Siloam SpringsArvest BankBanCorpSouth, HopeBank of America, SI. louis, MOBank of Arkansas, Tulsa, OK

Bank of McCroryChambers Bank, DanvilleElk Horn Bank &Trust, ArkadelphiaFarmers & Merchants Bank,

Prairie Grove

Fir<t Arkansas Valley Bank, DardanelleFirst National Bank, RogersFir<1 Security Bank of Mountain HomeHibernia National Bank,

New Orleans, LA

Mcilroy Bank &Trus~ FayettevillePeoples 8ank & Trusl,

Mountain Home

This listing is based on interest rates on active attorney IOLTA accounts as reported to the Foundation by individual banks in 1001.

April 2003

Counselor:

The Arkansas Legal Directory, your Blue Book of Attorneys since1936, is the Official Directory of the Arkansas Bar Association.

Because of this agreement, you enjoy the following benefits:

You can purchase space in the blue biographical pages andhave thisinformation put on our new Arkansas Web Site (www.legaldirectories.com) for thefollowing rates:

A sole practitioner would pay $240.. .Iess than $5 per week.

A two member firm would pay $288... less than $6 per week.

Additional attorneys would cost $48 each... less than $1 per week.

Field of practice listings in both the Blue Book and the Web Site would be $30each... less than 60 cents per week.

Place a listing in the Arkansas Blue Book, and you will receive a complimentarydirectory.

If you are interested, please complete and return the form below to us OR call us at(800) 447-5375 extension 105.

Sincerely,

~Francis X. Sandweg, Sales ManagerLegal Directories Publishing CompanyP.O. Box 189000Dallas, TX 75218-9000

-------------------------------------------------------------------------------------------------~-------

Name

Finn

Address

City/StatelZip

Phone

Fax

o Please call me to make an appointment

o I am interested, but would like additionalinformation. Please contact me.

Dickerson Law Firm, PA. Seeking Anorneys

Dickerson Law Firm, P.A., Arkansas' leading debt relief firm and largest personalinjury/disabiliry firm is seeking artorneys for bankruprcy and personal injury. Excellemsalary and benefirs. Opporruniry for growth and aclv3ncemem. Training available.

VoL 38 No. 21Spring 2003

Intellectual PropertyContinued on page 37

TI,e Arkansas Lawyer 2S

Endnotes1 Section 365 of Title 11 of the United

States Code.2 11 U.s,c. § 365(a),3 Cinico/a v Scharffenberger, 248 F.3d

110, 123 (3d Cir, 2001); Kaler v Craig(In re Craig), 144 F.3d 593, 596 (8thCir. 1998); In re Helms Construction& Development Co" Inc., 110 F.3d1470,1472 (9th Cir. 1997).

4 See Encino Bus. Management, Inc. vPrize Frize, Inc. (In re Prize Frize, Inc.),32 F.3d 426, 428 (9th Cir. 1994);

5 11 U.S.c. § 365.6 11 U.s.c. § 365(b).7 11 U.S.c. § 365(k).8 11 U.s.c. § 365(dX1); University of

Connecticut Research & Develop­ment Corp. v Germain (In reBiopolymers, Inc.), 136 B.R. 28-29(Bankr, Conn. 1992) (exclusive patentlicense 1 Throughout this Paper, theterm "trustee" will also refer to thedebtor-in·possession in a Chapter 11reorganization unless expressly stat­ed otherwise. 2 473345v6 rejectedby operation of law upon trustee'sfailure to seek to assume licensewithin 60 days,).

9 11 U.S.c. § 365(d)(2),10 11 U.s.c. § 365(nX1)(B).11 11 U.S.c. § 365(nX2).12 11 U.S.c. § 365(cX1)13 In re West Electronics Inc., 852 F.2d

79, 82 (3d Cif. 1988) (emphasis inoriginal).

14 See In re Catapult Entertainment Inc.,165 F.3d 747,750 (9th Cir. 1999).

15 Institut Pasteur v Cambridge Biotech

greater care to secure their rights in new dis­coveries or innovatIons, thus making it com­mon for the prinCipal assets of any givencompany to consist of Intellectual property.The increased Significance of intellectualproperty assets in bankruptcy cases hasstarted to generate qUite a great deal of caselaw. However, many scenarios have notbeen explored In published opinions.Whether representing licensors or licensees,lawyers are finding new challenges in servic­ing their clients. Having a firm grasp of theunique positions facing those parties engag­ing in intellectual property agreements willaid in accomplishing the ultimate goal: pro­viding the best possible protection for yourclients.

fer of fights of ownership, not" mere licens­es," and a security interest In a patent thatdoes not involve a transfer of a fight of own­ership IS just a license" Nevertheless, It isstill a good idea to file a security interestwith the PTO. At least one district courtfound that while the Patent Act did notexpressly state that a creditor must file withthe PTO in order to perfect its security inter­est, such a recording would protect theassignee against the claim of a subsequentlien creditor. 18

In contrast, the Copyright Act doesspecifically provide for the filing of securityinterests in the Copyright Office, Due to thefact that registration of the copyright is notmandatory, a split in authority has devel­oped. This division centers on the treatmentof registered versus unregistered copyrights.When dealing with a registered copyright,the courts are fairly consistent in requiringthat the perfection of a security interest bedependant upon the filing of such in theCopyright Office." When the copyright isunregistered, most courts still hold that thefiling of a security interest in the CopyrightOffice is a requirement for perfection. Somecourts, however, have held that a securityinterest in an unregistered copyright neednot be recorded in the Copyright Office.20

With the splits in authority regardingwhether to file a security interest in the PTOor the Copyright Office, the best advicewould be to "file early, file often, file every­where," even though such filing may not benecessary.

ConclusionAs society's dependence on advanced

technology grows, businesses are taking

Send resumes to: Gail D. Ashmore, Dickerson L·nv Firm, P.A., 110 WoodbineHor pring', AR 7190 I, Fax: 501 321-9848

D. Perfection of Security Interests inIntellectual Property

When counseling clients on the proce­dures involving security interests, the "fileearly, file often, file everywhere" advice isusually given. When the collateral involvesintellectual property, however, such adviceshould still be given but may not be all thataccurate.

With respect to perfecting a securityinterest in a patent or trademark, there is norequirement in the Patent Act or the federaltrademark law'• that a security interest befiled in the United States Patent andTrademark Office (PTO). Section 261 of thePatent Act requires the recording of a trans-

has a nonexclusive license. 12

An example of the different treatment bythe courts involves a nonexclusive patentlicense. Most courts interpreting Section365(cX1) in the context of a nonexclusivepatent license apply a •hypothetical test'for determining whether assumption by adebtor may occur: Whether, under the appli­cable law, the licensor could refuse perform­ance from "an entity other than the debtoror the debtor-in-possession. -13 Thus,because federal patent law generally makesnonexclusive patent licenses personal, mostcourts effectively preclude a debtor-licenseefrom assuming a license without the licen­sor's consent. 14 A minority of jurisdictions,however, apply a different rule, known asthe "actual test,' which requires the courtto conduct a •case-by-case inquiry intowhether the nondebtor lis) 'forced to acceptperformance under its executory contractfrom someone other than the debtor partywith whom it actually contracted.'""

,;it www.arkbar.com

Beth Deere, Williams &Anderson LLP, Chair ofthe Annual MeetingCommittee, announcessome of the out-of­state speakers sched­uled to appear at thisyear's Annual Meeting.

W. Seaborn Jones is past presi­

dent of the National Conference

of Bar Presidents and a crusader

for professionalism.

John Payton, a partner with

Wilmer, Cutler & Pickering in

Washington, D.C., recently

argued the University of

Michigan's admission policy

before the Supreme Court of

the United States.

Stephen A. Saltzburg, a distin­

guished professor at George

Washington University, is a lead­

ing authority on the law of evi­

dence and in the fields of crimi­

nal procedure, criminal law and

trial advocacy education.

Rodney E. Slater is the former

Secretary of Transportation and

the third Arkansan to hold a

position in a President's Cabinet.

In 2001 he joined Patton Boggs

as a partner in its public policy

group in Washington, D.C.

Vic Snyder represents Arkansas'

Second District in the United States

House of Representatives. From 1991

to 1996 he served as an Arkansas

State Senator.

Graham Thatcher is a renowned

actor who will brilliantly portray

Clarence Darrow and Sir

Thomas More at this year's

annual meeting.

CLE CLE CLE CLE CLE CLE CLE CLE CLE CLE CLE CLE CLE CLE CLE

Arkansas BarAssociation

ClE Calendar

May 200316-17

7TH ANNUAL ENVIRONMENTAL

LAw CoNFERENCE

Inn of the Ozarks, Eureka Springs

lune 200311-14

105TH ANNUAL MEETING

Arlington Hotel, Hot Springs, AR

23 - 27BEST OF eLE

UALR Bowen School of Law

7th AnnualJoint Environmental

Law Conference

•May 16-17, 2003

•Inn of the Ozarks

Eureka Springs, AR10.5 Hours CLE credit(includes 1.0 ethics hour)

•Program Chair:

Kelly M. McQueen

MEETING DATESHOUSE OF DELEGATES

June 14, 2003

BOARD OF GOVERNORS

August 22-23, 2003For morc information, contact Virginia Hardgrave, Arkansas Bar Association, 800-609-5668,501-375-3957, vha<dgrave@arkbar.com OR CHECK OUT THE CLE PAGE arwww.arkbar.com

Vol. 38 No. 21Spring 2003 The Arkansas lawyer 29

Professionalism Task Force Report

RECLAIMING THE CORE VALVES OF THE

LEGAL PROFESSION

The Arkansas Bar Association'sProfessionalism Task Force is work­

ing on a number of peojeers andideas [0 improve professionalism among3norneys in our stare. This column repre­sems jusr one of those projecrs. and the con­cept is (0 provide Association members with

a forum in which to relate experiences andanecdotes mat give a "real-life" spin on themanner in which rhe practice of law should

be conducted. OUf belief is that it wouldcarry morc weight as a means of changingme mindser and the behavior of practicing

lawyers if they were presemed with examplesof siru3tions in which an anomey's actionsexemplified professionalism or the lackthereof. It would then aUow us an opportu­nity [0 learn from the behavior of others and[0 think [0 ourselves, "'If I were in that situ­

ation, then I would 3Ct as honorably as he orshe did," or alternatively, "'I would never do

what he or she did.' The anecdotes wouldbe written for publication without thenames of those involved and would be pre­

sented as a means of teaching rather than asa means of complaining. The idea is not [0

engage in lawyer bashing, but [0 raise aware­

ness.The Professional Reform Initiative (PRJ).

which includes lawyers, judges and non­lawyer members, is a project of the NationalConference of Bar Presidents, and it hasadopted the following as its mission state­ment: "'To increase public trUSt and confi­dence in the justice system and maintain therdevance of the legal profession in that sys­tem by promoting and nurturing effective

professional reform." As its first project,PRl has undertaken ro emphasize truthful­

ness, honesty and candor as constituting

"the core of the core values of the legal pro­fession." This initiative is based on the view

that untruthfulness by lawyers-to whatev­er extent the problem exists-requires thesystematic and long-term arrention of the

organized bar. Some would say that zeal­ously representing the interest of their

clients justifies a certain deviation from the

truth, and others would say that their mis­

statements are merely acts of puffing or roolsin negotiating. As former ABA PresidentJerome Shestack said in a 200 I Law Dayspeech entitled Rrfkcrions On Lying and Th<Honm '-awy". "Lying is real--.omethingthat we encounter daily in our personal livesand in our practice and affects the nature ofour profession and our personal character."

If we are going ro change the perception ofthe public and the practice of some attor­neys, then we need to begin with a newcommitment to telling the truth.

When the PRJ first presented it's projecton truthfulness, honesty and candor, someof the smaller bar associations respondedthat they did not have any such problems in

their states. Other bar associations respond­ed that the problem was tOO big and couldnot possibly be fLXed. We believe that theproblem in our state is closer to the smaller

end of the spectrum. Most of the arrorneysthat we deal with are honest, trustworthyand professional. However, there are excep­tions, and the challenge is to reclaim the

core values of the legal profession for allArkansas attorneys.

for this first anicle, the committeesolicited stories from the other members ofthe Professionalism Task Force. We submitthe following anecdotes on lying:

I. The Scare Tactic: An Estatereceived a large sum of money from a nurs­ing home lawsuit, and the family membersentered into a Family Settlement Agreemenrregarding the diStribution of the proceeds.Subsequently, the sisrer of the personal r~p­

resentative of the Estare decided thar she was

nor happy with the amount of money shereceived, and she retained an artorney to

assist her in her arrempr to obtain more

money. Rather than approach.ing the per­sonal representadve with a rational basis for

paying his client more money, the arrorn~y

prepared and filed a petition. signed by thesisrer, which alleged fraud upon the court,upon the beneficiaries, and upon the Estate,

all allegedly perperuated by the personal rep-

resentative. Nor only will the artorney andhis client be unable to prove any of the alle­garions contained in the perition, bur bothhe and his client will have losr any credibili­

ty they might otherwise have had with theprobate judge. and they have completelyalienared the personal representative. \Vle

can only imagine thar this scorched-earthapproach was an artempr to scare the per­sonal representative into offering more

money ro the disgruntled sisrer.2. Changing the Story: In a dispute over

the validiry of a Lease Agreement. the parryoccupying the premises wrore a lener to theartorney for the landowner and admirredthat he did nor have a lease on [h~ property.

Subsequently, in a response to interrogato­ries in connecrion with lirigarion over theproperty, the same person responded in averified response thar "'whar I meant was, Idon'r have a new lease on the property, butthe old lease is still in effect." This attorney

has convinced his client to lie in this caseprobably to avoid Summary Judgment.How would an arrorner convince his client

to sign a pleading under penalty of perjurywhen rhe client knows that the responses arelies? The only way that we can see is that theattorney convinced the client rhar it was

accepcable, and that "'everybody does it.".

Pkase send any commnlts 011 this articualld a,,) stories or mlecdota for futun! arti­cles to tlu PrOftSSiOIlAliml Task Force via tluArkausa.s Bar Association, 400 WMarkbam Strut, Little Rock. Arkallsas72201.

Vol. 38 No. 2/Spring 2003 TIle Arkansas la,,,,,r 31

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tion

ROBERT D. KLOCK, Bar No. 76066, of

Lowell, Arkansas, in No. 2002-131, on a

hourly rate.

MICHAEL W. FREY, Bar No. 96022, ofCamden, Arkansas, in No. 2002-140, on a

complaint by Yvonne Young, by Findingsand Order filed January 30, 2003, was cau­

tioned, fined $1,000, ordered ro pay restitu­

tion ro Young of $800, and assessed costs of

$50, for violating Rules 1.1, 1.3, 1.4(a),

1.4(b), 3.2, and 8.4(a). Young hired Frey

and paid him the $800 fee she said he quor­

ed to file a Chaprer 7 bankruprcy for her,

which he filed in March 2002. Frey failed to

timely file schedules for her and the case was

dismissed in June 2002. Young was unable

to contact Frey to get information on her

case. Frey responded that he quoted a fee of$850 and thar Young failed to provide him

certain information needed to complete herpaperwork. The Committee found no docu­

mentation to suppOrt Frey's claims.

STEPHEN KYLE HUNTER, Bar No.

85077, of Pine Bluff, Arkansas, in No.

2002-097, on a referral by the Arkansas

Supreme Courr in No. CR-1994-113,

Lenzy McCullough v. State, by Findings and

Consenr Order filed March 5, 2003, was

cautioned for violaring Rules 1.3 and 3.4(c).

Mr. Humer failed to timely file the record in

his client's appeaL

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Clarendon, Arkansas, in No. 2002-092, on

a complainr by Keith Grayson, by Findings

and Consent Order filed January \7,2003,was cautioned and ordered to pay restitution

of $400 for violating Rules 1.6(a), 1.9(a),1.9(c), 1.16(d), 3.3(a)(1), 3.4(c), 8.4(c), and

8.4(d). Mr. Carruth was hired to represent

Mr. Ho on a contingent fee contract in a

personal injury case in early 1997. Carruth

filed suit for Ho. The comract caJled for apercentage of recovery, but if Carruth wasdischarged by Ho, then Carrurh would have

a lien against any recovery based on his timeexpended ar $100 per hour. Ho discharged

Carrurh in June 2001, and Carrurh filed

both a lien claim for $22,366.42 (based on

$150 per hour) and filed an intervention in

his own client's pending lawsuit, making

ceHain disclosures therein that revealed con­

fidential client information. The order

entered in August 2001, relieving Carruth as

Ho's counsel directed him to deliver a copy

of his extensive case fiJe to Mr. Ho for use by

Ho and his new counsel, when retained. Mr.

Carrurh failed to deliver rhe file copy. Mr.

Grayson, Ho's new counsel, had to go to

some lengths, over six months, and pay our

$400 to ger a partial copy of rhe file, beforeCarruth allowed Grayson ro take the file and

make a full copy in Lirtle Rock. Carruth

filed an amended lien claim for $\5,953.92,

based on the correct $100 hourly rate, only

after the Office of Professional Conduct

pointed out his use of the incorrect $150

CAUTIONS:

JAMES SCOTT ADAMS, Bar No. 81001,

of Morrilton, Arkansas, in No. 2002-144,

011 a referral from the Arkansas Supreme

Courr in CR-2002-353, Carl Gene McGheev. Stau, by Findings and Consent Order

filed February 7, 2003, was cautioned for

violaring Rules 1.3 and 8.4(d) for failing to

perfect his client's appeaJ after timely filing a

notice of appeal, and for causing a delay of

three years in the resolution of his cliem's

appeal.

not discussed until much lacer. The panics

had disagreements as ro whether and when

the legal fees wefe paid, and gOt involved in

a subsequent problem when the Harpers

had a dispute with a local auto deaJer over

purchase of a vehkle, and a claim by Nickle

that the Harpers used his name without per­

mission in the dispute with the dealership.The Commirree found Nickle did nO( ade­

quately explain [0 the Harpers the basis forhis fees to them, char he was seeking addi­

tional fees from them, and would use their

non-payment of these additional fees as abasis for withdrawing as Mrs. Harper's attor­

ney.

FREDYE MAC La G ALFORD, Bar No.

76\65, of Texarkana, Texas, in No. 2002­

11\, on a complaint by Elizabeth Millwood,

by Findings and Consent Order filed March

4, 2003, was caurioned, fined $1,000, and

assessed COStS of $50 for violating Rules1.4(b) and 8.4(d). Ms. Long representedMs. Millwood in a divorce in which Mr.

Alford represented Mr. Millwood. Long and

AJford became good friends during the shortcourse of the case. Long failed ro disclose

this developing social relationship (Longand AJford later married) to Ms. Millwood

before Long filed a motion ro withdraw, so

Ms. Millwood had no chance to make an

informed decision about concinuing her

representation by Ms. Long. The manner in

which Ms. Long handled her motion to

withdraw did not give Ms. Millwood rea­

sonable notice so she could have had the

chance to objccr ro the motion, if she so

desired.

T. DAVlD CARRUTH, Bar No. 87027, of

Vol. 38 No. 21Spring 2003 TIle Arkansas la'ryer 35

Arkansas VersusLaw also includes decisions from rhe U.S. Supreme Court, federal cir­

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Corp., 104 F.3d 489, 493 (1st (ir.),cert. denied, 521 U.S. 1120(1997).

16 Lanham Act, 15 U.s.c. § 1051, et.seq.,

17 See In re Cybernetic Services, Inc.,252 F.3d 1039 (9th Cir. 2001).

18 See City Bank and Trust Co. ~ OttoFabric, Inc., 83 8.R. 780, 782 (D.

Kan. 1988).19 See National Peregrine, Inc. ~

Capitol Federal Savings and loanAss'n (In re Peregrine Entertain­ment, ltd.), 116 B.R. 194 (C.D.Cal. 1990).

20 See Aeraeon Engineering Inc. ~

Silicon Valley Bank (In re WorldAuxiliary Power Co.). 244 B.R. 149(Bankr. N.D. Cal. 1999).

presemed to the Board of Governors andHouse of Delegates, which may request theSupreme Coun to create the new entity.

At least 15 other committees and taskforces have been active on your behalf thisbar year. And many sections have beenactive, including the production of qualieyCLE. Their important work is appreciated.

lr has been a very great privilege and apleasure to know and work with so manymembers of the Arkansas Bar Associationthis year. The willingness, the volunteerwork and the cooperation of our colleaguesis a living testamenr to our profession and tothe Association. I especially have appreciat­ed working with the officers, members ofthe Board of Governors, House ofDelegates, committees. task forces, sectionchairs and their members, and our dedicat­ed and hard working staff. Much more willbe accomplished by and for the members ofthe Bar Association in the future .•

President's Report from page 3

the judicial independence of the Courts. Arepon with a proposed plan has been sub­mirred by the Commirree and will likely beconsidered by the House of Delegates onJune 14th. The Committee has been ablychaired by Elizaberh Danielson.

The Arkansas Bar Commission onDiversity has had an active year. InSeptember, it held its first seminar on diver­sity and the foUowing day, held a job fair. Itis currently studying other ways to improvediversiry in the legal profession and ourAssociation. It is co-chaired by Troy Priceand Petcr Kumpe.

The Sustaining Members Commirree.headed by Jack Davis. has done an out­standing job this year. The goal was to have300 sustaining members which would be a20 percent increase over the highest previ­ous record. The final rotal achieved is 302.

Our revised website at www.arkbar.comis a product of the Website OversiteCommittee whose members did an out­standing job. Special thanks to 2002-03Chair Karen Halbert and 2001-02 ChairTim Holthoff who understand the innerworkings of the !mernet, etc.

It is risky ro make predictions in a col­umn written almost rwo months before itspublication, bue OUf Membership Develop­ment Committee, so ably chaired by MarkHodge. will lead us in breaking last year'smembership record of 4633.

Beth Deere. our Annual Meecing pro­gram Chair, has been doing an excellent jobof organizing the program and recruitjngspeakers. The program should be one thatour members will find informative, helpfulto their practice, and enjoyable. TheArkansas Bar Association Annual Meeting isrecognized across the coumry as being oneof the most outstanding programs.

LaSt, but certainly not least of those men­tioned in this column, is the effort of ourAccess to justice Working Group chaired byDean Charles Goldner. Th is new project inArkansas is designed to create a permanentenriey that works to ensure ongoing fundingand resources to meet the need for legal rep­resentation for the poor. There arc a numberof programs that deal with some aspect ofproviding such services. There are still manygaps in coverage, and funding from year royear is uncertain. It is essential that theneeds for legal assistance be met to trulyprovide justice for all - and to assure matwe continue to have our system of laws. Aproposal from the Working Group is being

\

Vol. 38 No. 2/Spring 2003 TI,e Arkansas LalIYer 37

Sustaining Members of the Arkansas Bar Association for 2002-03Sustaining mmzbns as ofMarch 31.2003.

William AdairGene D. Adams, Jr.Michael L AJexanderH. William AllenOverton S. AndersonPhilip S. Ande"",nE1izaberh AndreoliKeith ArmanBen F. ArnoldJess L Askew, II IVirginia AtkinsonBrem BaberJames R BaberDonald H. BaconJames A. BadamiNancy H. BaileyKenneth B. BairnCharles W BakerDarryl E. BakerLes R. BaJedgeCharles A BanksBan}' D. BarberGary Bark"Marcia BarnesW. Christopher BarrierAlllhony W. BartelsSherry P. BarcleyPaul B. Benham, IIIEvans BemonM. Stephen BinghamDonald E. BishopJames B. BlairTed BoswellWIlliam H. BowenRobert B. BranchDebbie D. BransonWilliam C. BridgforthFrat E. BrinerEdward W. Brockman, Jr.William B. BuerglerRichard K. BurkeLarry W. BurksWilliam Jackson Butt, 11Paul ByrdJulie M. CabeRobert D. CabeJohn C. Calhoun, Jr.Jerry L. CanfieldDouglas M. C=onRobert M. Cearley, Jr.Mark B. ChadickJohn S. Cherry, Jr.Sandra Wilson CherryRobt:n ChowningWdliam M. Clark, Jr.H. Murray ClaycombJohn R. ClaytonRalph M. Cloar, Jr.Randy ColemanRobert C. ComptonJonann ConiglioBarry E. Coplin

BenCo~

ate CoulterKevin A. CrassMichael A CroekenJames E. CrouchH. E. CumminsF. Thomas CurryJames D. CypertThomas A. DailyElizabeth DanielsonCharles D. Davidson. Sr.Boyce R. DavisJohn A. Davis, IIISteven B. DavisT Manin DavisRobert T DawsonJ. c. DeaoonJack W DickersonM. Jane DiekeyMichelle H. DillardPhilip E. DixonDavid M. DonovanDarrell D. DoverWinslow DrummondDavis DutyB. Michael EasleyDon R. Elliott. Jr.George D. EllisJohn R. ElrodStephen EngstromWomen EpesJohn C. EverettMike EverettJimmy L FeatherstonOscar Fendler'Victor A. RemingJim Pat FlowersJohn A FoglemanRobert M. FordKay \Vest ForrestLarry R. FroelichPrice C. GardnerAllan GatesC. Alan GauldinJeffrey J. GearhartPamela B. GibsonSam E. Gibson\YI. Den< GirchelDavid M. GloverCharles W. Goldner, Jr.Roy A GoodwinJ. Douglas Gr.unlingAlbert Gr:aves. Jr.Albert Gr:aves, Sr..John C. GreggJoseph \YI. GregoryRonald L. GriggsDavid K. GuntiMichael E. HaleDonis B. HamiltonFrank S. HamlinDavid K. Harp

Kenneth A HarperJames E. HartisRon D. HarrisonDave WISdom HarrodCharles L Harn~1I

Richard F. HameldWilliam D. HaughlBrad L HendricksRobert L. Henry, 111Sam T HeuerGwendolyn D. HodgeCurtis E. Hogue\X1illiam R. HollandCyril HollingsworthDon HollingsworthRonA HopeRobert E. HornbergerEugene HumAnnabelle Climon ImberMichael E. IrwinAlston JenningsBradley D. JessonGlenn W. Jones, Jr.Louis B. Jones, Jr.Roben: L. Jones, Jr.Roben L Jones, IIIJim L. JulianPhilip E. KaplanSean T KeithTomJ. KeithWilliam H. Kennedy. IIIJudson C. KiddWarren O. Kimbrough'Mike KinardPeter G. Kum~Jerry LarkowskiDavid . ~rSam Lasc:rJohn T. LaveyIke Allen Laws, Jr.Sranley A. LeasureSamuel E. LedbenerRobert O. LeviAlice F. LightleJohn G. Lile, IIID. Price Marshall, Jr.WLiliam A. MartinDavid R. Marrh~Gail MatthewsStephen A. ManhewsRonaldA MayS. Hubert Mayes, Jr.Bobby D. MeCall~rerBobby MdJanieiPhillip H. MeMarhloner D. McMillanJack A. Me wryRuss MeeksLance R. MillerMarie-B. MillerPeter A. MillerChalk S. Mirchell

H. Maurice MitchellLaun Alchley MitchellMichael W. MirchellArk MonroeJames M. MoodyHarry Truman MooreRichard . Moore, Jr.W. Frank MorledgeSrcphen E. MorleyRosalind M. MouserWilliam Kirby MouserElizabeth R. MurrayRalph C. MurrayTimorhy J. MyersE. Sheffield e1sonRaymond L. iblockJohnny L. icholsWycliff isbetR. Gary NunerDebby Thetford yeBobby l.<t OdomConrad T OdomD. John OglesHugh R. OverhohCharles C. OwenCharles R. PadghamNicholas H. PanonC1aibourne W. Patty. Jr.Richard L. PeelB. Jeffery PeneeNc:aI R. PendergraftEdward M. PeniekDonna C. PettUSE. Lamar PetrusJohn V. PhelpsJim PhillipsNorwood PhillipsJohn B. PI<ggeFrank A. Poff, Jr.David M. PowellWLiliam I. PrewettThomas B. PryorDonald C. PullenJanet L. PulliamJohn I. PurtleLouis L. Ramsay, Jr.Brian H. RatcliffGordon S. Rolher, Jr.J. Thomas RayBen E. RiceElton A. RiC"o'es. JJIGregory . RobinsonCharles B. RoscopfCharles D. RoseopfKent J. RubensJohn L RushDonald . RyanTed H. SandersCharles L. SchllllllbergerDon M. SchnipperIsaac A. Scon, Jr.John S. Selig

Frank B. Sewallrknnis L hacklefordJ. Bmer Sharp IIISrephen M. SharumJ. L Shaver, Jr.Steve ShultsJames Marlon Simpson, Jr.H. Edward SkinnerTed C. SkokosDouglas O. Smith. Jr.James W. SmithLaura H. SmithRobert D. Smith, IIIDavid SolomonJames D. SprottThomas S. StoneWilliam R. StringfeUowJohn F. Stroud, Jr.\"(Ijlliam H. SuttonW. H. TaylorRex M. TerryWilliam L TerryRobert F. ThompsonDanny ThrailkillCindy ThyerJohn R. "r.OOaleFred S. UrseryJames R. Van DoverDavid B. VandergriffJohn C. WadeWyman R. Wade, Jr.Eddie H. Walker, Jr.Bill H. WalmsleyBill WaltersChris WallhallJohn D. WatsOnlimothy F. WatsOn. Sr.Bud B. WhetstoneDavid H. WLiliarruRobert H. WilliamsW. Jackson Williams, Jr.J. Gaston \'V'illiamson'Mike WilsonWilliam R. Wilson, Jr.Meredith WinelandTeresa M. \'V'inelandCarolyn B. WitherspoonTom D. \VomackMarsha C. WoodruffG. Alan \'(IootenRoben R. Wrighr, IIITruman E. YancqDamon YoungPaul B. YoungRobert E. YoungSteven S. Zega• d«eased

To become n SlUlntlltllgmember, plen.se contactBnrbflrn Tarkington at(501) 375-4606 or emailblflrkington@llrkbnr.com.

Vol. 38 No. 2/Spring 2003 n,e Arkansas la,\)'er 39

Bar Association exemplified her dedicationto juvenile justice. She repeatedly chairedthe Juvenile Justice Srandards Committee,receiving the Golden Gavel Award in 1985for her service. She was also a member of theAssociation's Execucive Committee andHouse of Delegates.

She served as Chair of the Arkansas advi­sory committee to rhe U.S. Commission onCivil Rights and on the board of directors ofrhe League of Women Voters ofWashingronCounty, Planned Parenthood of EasternOklahoma and Western Arkansas and rheUnjrarian Universalist Fellowship ofFaycncville.

Mcivor was also active with ArkansasAdvocates for Children and Families, andshe helped start the StateS highly regarded"Race for rhe Cure," which raises money forbreasr cancer research and education.

She is survived by her husband, MortGite!man of Fayeneville; her mother,Roberta Mcivor of Roanoke, Va.; a daugh­ter, Lynn Ohl of Hot Springs; a son, BruceWood of CarbondaJe, Colo.; three stepsons,Neil Gitelman of Laramie, Wyo., EliotGire!man of Mendon, Mich., and RonaldGitelman of New Haven, Conn.; a brother;a sister; and five grandchildren.

EUGENE O'DANIEL

Gene O'Daniel, 57, passed away January1 in his home, the day he was to be sworn inas Ozark city attorney.

A native of WaJdo, the 6'8" O'Danieigraduated with a degree in economics fromHendrix College where he was a four-yearletterman on me varsity basketball team.Later he earned his law degree from theUniversity of Arkansas School of Law.

He served as assistant United States attor­ney for the Eastern District of Arkansasfrom 1973 to 1978. From 1987 to 1998 hewas corporate counsel for Stephens Divers­ified Leasing.

O'Daniei was a longtime member of theArkansas Bar Association, serving six yearsin its House of Delegates. He also served onthe Association's Judicial NominationsCommince, the Federal Legislation andProceedings Committee and the PublicInformation Committee.

Also a member of the Pulaski County Bar

In Memoriam

Association, Q'Daniei was a stalwart in itssemiannual "Gridiron" theatre production.He spent many years practicing law in LittleRock before moving to Ozark last year.

An article in me Arkomas DemOCrdl­

Gazer" quoted O'Daniel's friend BillLancaster as saying, "He just moved on awhim to a small town, and when he gOtthere, he couldn't believe what he hadfound. He was so thrilled."

While living in Ozark, he served as grantschairman for Foothills Little Theatre. Hewas also a member of Ozark First UnitedMethodist Church and church choir, thelocal Rotary club and the local Kiwanis club.

He is survived by two children, Gingerand Connor.

LEM C.BRYAN

Lem C. Bryan, 94, of Fort Smith diedJan. 2 in Fort Smith. A native ofChananooga, Tenn., he received his LL.B.degree from the University of Arkansas in1938.

Before entering private practice, he servedas chief deputy prosecuting attorney for the13th Judicial District as well as in theArkansas House of Representatives.

Called to active duty in 1942, he servedthroughout the war and was discharged withthe ran.k of Commander. From 1946 to

1947 he served as attorney for the CivilAviation Administration for Arkansas.

He returned to law pracrice in FortSmith, later becoming a partner in Bryan &Finhugh.

\Vhile a member of the Arkansas BarAssociation he served on a number of com­mirrees, including serving as Chair of theProfessional Ethics and Grievance Comm­iuee.

He also served as president of theSebastian County Bar Associarion. He was amember of the American Bar Association,

Kappa Sigma Fraternity, the Medical CenterAdvisory Committee Board of Trustees ofthe University ofArkansas and the ExecutiveCommitree of the Arkansas MunicipalLeague.

He also served as chairman of theArkansas State Professional Ethics andGrievance Committee, as senior warden ofthe vestry of St. John's Episcopal Church,

and as president of the board of directors ofCarnegie City Library.

He is survived by his wife, Emily.

ROBERT L. ROBINSON, JR.

Robert Lafayette Robinson, Jr., 60, ofLittle Rock died Jan. 6.

Robinson's long legal career began III

1967 when he graduated from VanderbiltUniversity Law School with his LL.B.

A native of Newport, he served in rheArkansas Army National Guard as a firstlieutenant in the Judge Advocate General'sCorps from 1967 to 1974.

He was senior partner in me Little Rocklaw firm of Robinson, Staley, Marshall &Duke.

Robinson's membership in professionalorganizations was extensive. He was a long­time member of the Arkansas BarAssociation, serving on its Antitrust & TradeRegulation Committee, Eminent DomainCommirree and Annual Meetjng Comm·Ittee.

He was also a member of the PulaskiCounty Bar Association, the VolunreerOrganizarion for Central Arkansas LegalServices (VOCALS), the Arkansas TrialLawyers Association, the Defense ResearchInstitute and the American Bar Association.

He was a pasr presidenr of rhe localExchange Club, a community service organ­ization; board chairman of the CenrralYMCA; the 1983 Volunteer of rhe Year forme Central Branch of the YMCA; and amember of the Country Club of LittleRock.

He is survived by his wife, Mary JaneJamison Robinson of Little Rock; his moth­er, Sina Reaves Robinson of Newport; twO

Vol. 38 No. 2/Spring 2003 n,e Arkansas Lawyer 41

ArkansJs BJr FoundJtion McmoriJls Jnd Honorariums

The Arkansas Bar Foundation acknowledges with gratefi,1 appreciation the receipt ofthe fOllowing memorial, honorarium andscholarship contributio1lS received during the periodjanuary 1, 2003 through March 20, 2003

IN MEMORY OF O. C. "GOOGIE"BURNSIDE

John and Marjem Gill

IN MEMORY OF EDWINDUNNAWAY

Comer Boyette. Jr.

IN MEMORY OF JOHN R.ELDRIDGE

James G. Mixon

IN MEMORY OF OSCAR FENDLERMr. 311d Mrs. Wm. Jackson Burt IIJack C. DeaconJudirh GrayBarbara HalseyRoscopf & Roscopf, PA.Dr. and Mrs. Joseph RosenzweigJudge Elsijane T. RoyMiriam & David SolomonFred S. UrseryDr. Robert R. and

Judge Susan Webber Wrighr

IN MEMORY OF ALBERT GRAVESComer Bayeree, Jr.Judge and Mrs. Roben H. Dudley

IN MEMORY OF ROBERTHARGRAVES

Judge John and Marierta Stroud

IN MEMORY OF HUGH W.HARRISON, JR.

Judirh Gmy

IN MEMORY OF CLINT HUEYComer Boyett, Jr.

IN MEMORY OF JUDGE WARREN O.KIMBROUGH

Judith Gray

IN MEMORY OF KNOX KINNEYJudith Gray

IN MEMORY OF MS. CAPPILINDSEY

James G. Mixon

IN MEMORY OF MARCIA McIVORMax and Judge Ellen BrandeyJames A. MclartyDr. Roben R. and Judge Susan WebberWrightJudith Gray

IN MEMORY OF DAVID MARTINMOUSER

Judith GrayLeigh Baim Mansberg and DannyMansberg

IN MEMORY OF GENE O'DANIELJudge Annabelle Clinton ImberLouis B. Jones, Jr.B. Jeffery Pence

IN MEMORY OF EDWARD B.D1LWN,JR.

Judirh GmyDon Hollingsworth

IN MEMORY OF JAMES H.McKENZIE

Judge and Mrs. Robert H. Dudley

IN MEMORY OF ROBERT L.ROBINSON, JR.

Stephen EngstromJudge Annabelle C1inron ImberJames A. MclartyDr. Roben R. and Judge SusanWebberWright

IN MEMORY OF KENNETH E.SUGGS

B. Jeffery Pence

IN MEMORY OF THELMAWILLIAMS

Judge William R. Wilson and CathiCompton

IN MEMORY OF J. GASTONWILLIAMSON

Judge and Mrs. Robert H. Dudley

IN MEMORY OF JUDGE HENRYWOODS

Comer Boyen, Jr.

Judge and Mrs. Robert H. Dudley

IN HONOR OF JUDGE ROBERT F.FUSSELL

Katie and Win Drummond

SCHOLARSHIPS

Betty and Marrin Gilben

Judge James M. MoodyWilson & Associates, PLLC

BIRTHDAY, ANNIVERSARY ORRETIREMENT CELEBRATION?REMEMBER, THE ARKANSAS

BAR FOUNDATION...

The Arkansas Bar Foundation receives

contributions in honor of individuals

on a regular basis. To make a dona­

tion, the donor makes the check

payable [0 [he Arkansas Bar

Foundation and nOtes on the memo

line or cover letter the details of the

honorarium ("in honor of "

along with the address for the hon­

oree). In turn, the Foundation will

acknowledge receipt. A letter will be

senr to the honoree advising him or her

of the contribution and who gave me

donation in his or her honor. These

contributions to the Arkansas Bar

Foundation are tax deductible.

CONTRIBUTIONS MAY BEMAILED TO:

ARKANSAS BAR FOUNDATION,400 WEST MARKHAM

UTILE ROCK, ARKANSAS 72201

Vol. 38 No. 2/Spring 2003 TIle Arkansas 1.<Jwyer 43

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