Posts by: LevinGinsburg

Estate Tax Developments under the New Tax Act – What about Illinois residents?

Under the Tax Cuts and Jobs Act, the new federal estate tax system “exempts” from federal estate tax, all estates under $11.2 million for each decedent, meaning that a married couple could have an estate of $22.4 million and not incur any federal estate taxes. This higher amount means that most estates will not be subject to federal estate tax. These amounts will be subject to increase, based upon increases in the Consumer Price Index; however, the amount “sunsets” after 2026, and the amounts will be reduced by half.  The good news is that many estate plans can be drafted with little regard to federal estate taxes in some states. The bad news is that residents of Illinois are subject to a much lower threshold and may need to examine their estate plans in light of the Illinois thresholds.

Illinois taxes all estates in excess of $4 million AND, if not structured properly, both spouses may not be able to take advantage of the full amount. While federal law generally permits a surviving spouse to “use” any unused exemption amount of their deceased spouse, Illinois does not permit this. For federal tax purposes, if one spouse dies with a $6 million dollar taxable estate, then under some circumstances, the surviving spouse may use his or her own exemption of $11.2 million, plus the “unused” $5.2 million of the deceased spouse.

“Typical” estate planning has often maximized the federal exemption amount on the first spouse to die by putting that into a segregated trust while leaving everything else to the surviving spouse. If you have not looked at your estate planning documents, you should do so immediately. Under the “typical” plan, the surviving spouse is often only entitled to receive income from that segregated trust which holds the maximum federal exemption amount; principal distributions are based upon need. Thus, the surviving spouse may not be able to access principal of the decedent’s estate without establishing a need. And to make matters worse, if that trust holds more than $4 million dollars, then there will be liability for Illinois estate taxes upon the death of the first spouse.

If you have any questions about your estate plan or how federal and Illinois estate taxes affect your estate planning, please call or contact:

Morris Saunders at:

312-368-0100 or msaunders@lgattorneys.com.

 

New York Toy Fair Is Approaching. Are You Legally Prepared?

February 17, 2018 is fast approaching.  Anyone who is anyone in the toy industry will be at Javits Convention Center showcasing the latest and greatest in toy innovation.  All businesses in the toy industry are putting the final touches on their displays and their presentations.  Is a meeting with the company’s lawyer on the pre-show checklist?  If not, why not?

Consulting with the Company’s lawyer may save a company tens, even hundreds of thousands of dollars.  The following is a short discussion of some of the items that should be on every toy company’s “To-Do” list prior to attending Day One of the New York Toy Fair.

  1. Intellectual Property.

At the very least, the company should consider applying for a trademark registration for the name of the company and its products.  Unfortunately, the number one thing most companies forget or ignore until there is a legal battle ensuing is to properly protect the Company’s intellectual property, such as its name and the names of its products.  Trademarks for product names are fairly inexpensive to search and protect, and yet, may cost a company dearly if those names were to become the subject of a cease and desist letter and resulting federal court infringement litigation.  We defended a toy manufacturer in a trademark infringement lawsuit that allegedly infringed a competitor’s trademark.  After two years and in excess of $50,000 in legal fees (pretty inexpensive in trademark dispute litigation) the matter was resolved.  Consulting with counsel and filing the appropriate trademark applications could have avoided the huge waste of time and expense.

Another form of legal protection often overlooked is copyright for the toy’s design.   If the design meets the requirements of a sculptural work, such as a plush toy design, then copyright can be a powerful tool in locking out your competition from the use of designs that are “substantially similar”.  Prior to any trade show, toy companies must identify and protect its intellectual property, or risk the very goodwill of the company.  Intellectual property can give a company significant value.

  1. Privacy and Security.

Toy companies, like all companies, must take steps to protect the data of the company, minimize the risk of a breach, and put in place technological and legal measures designed to decrease liability in the event a breach does occur.  A comprehensive privacy program including but not limited to updated privacy notices, terms and conditions, internal policies, incident response plans and insurance coverage all geared toward reducing risk of legal liability is imperative if the company is to survive.  If the toys being showcased are “smart” or “connected” toys, privacy and security issues involving the Internet of Things will be at the forefront of manufacturers’, retailers’, and consumers’ minds.  Retailers seeking to avoid liability undoubtedly will have questions as to how the software works, what, if any, personally identifiable data is collected, how is it being stored, retained and destroyed.  Additionally, if a third party vendor will be used to provide software for a smart or connected toy, the company must seek counsel knowledgeable in privacy and security in order to reduce legal risk to the company that may result from the use of such software.

  1. Labeling / Advertising.

Federal law requires product packaging and certain advertisements for toys and games intended for use by children 12 years of age and under to display cautionary statements regarding choking and other hazards.  Safety related labeling and advertising for toys generally depends upon the category of toy and the age of the child for which the toy is intended.  It is imperative that toy companies be familiar with these laws and engage counsel who is familiar.

For more information, please contact:

Natalie A. Remien at:

(312) 368-0100 or nremien@lgattorneys.com.

Is Your Business BIPA Compliant?

In order to increase productivity and efficiency, businesses are increasingly using biometric data to identify employees, customers and other individuals.  For example, some employers use biometric data to identify their employees and track work hours for purposes of compensation.   Biometric information includes fingerprints, retina scans, facial scans, hand scans, or other identifiers that are biologically unique to a particular person.   While convenient, and seemingly secure, such biometric identification methods raise serious privacy concerns.  The Illinois Biometric Information Privacy Act, 740 ILCS 14, et seq. (“BIPA”), imposes many requirements concerning the collection, use, storage, and destruction of biometric information with which businesses, including employers, must comply, or risk liability.

Under BIPA, before an Illinois business collects, stores, or uses biometric identifiers, it must develop a written policy and make the policy available to the public.  The policy must include a retention schedule describing how long such data will be stored, and provide guidelines for its destruction when the reason for the original collection of the data no longer exists, such as when an employee resigns.  Additionally, Illinois businesses must describe and adhere to a destruction schedule for biometric information that it is no longer using.  If no schedule is provided, then BIPA requires that a business destroy such information within three years of the individual’s last interaction with the business.

In addition to the required written policy, Illinois businesses must obtain consent and a written release from an individual prior to collecting biometric information.  BIPA is currently one of the strictest state statutes regarding the collection, retention, storage and use of biometric information.  Before biometric information may be collected, all Illinois private entities must (1) inform the individual in writing that a biometric identifier is being collected or stored, (2) inform the individual in writing of the specific purpose and length of time for which the biometric identifier is being collected, stored and used, and (3) receive a written release executed by the individual assenting to the collection, storage and use of a biometric identifier.  Absent a court order or law enforcement directive, businesses may not share biometric information without express consent from the individual.

Illinois businesses that utilize biometric identifiers but do not comply with BIPA may face severe consequences. BIPA provides that individuals may bring an action against a business that negligently or intentionally violates a provision of BIPA.  If the claim is for negligence, the business may be liable for damages up to $1,000 per violation, and if the claim is for an intentional violation of BIPA, the business may be liable for damages up to $5,000 per violation.  Damages in either category may be higher if actual damages exceed these numbers.  An aggrieved party may also receive attorneys’ fees and costs, an injunction, and other relief.

Recently, privacy-related claims are on the rise as a result of BIPA.  Since mid-2017, over 25 lawsuits have been filed in Illinois alleging violations of BIPA.  The majority of the cases are class action lawsuits by employees claiming violations of BIPA relating to employee time clock technology that uses an employee’s fingerprint as a means of identification.  Time will only tell whether employers will spend the additional resources necessary to comply with BIPA, or choose to avoid the use of biometric identifiers and information altogether.

For more information regarding BIPA compliance and other privacy issues, please contact:

Natalie A. Remien at:

(312) 368-0100 or nremien@lgattorneys.com.

Updates to Construction Contracts

As is its custom every ten years, the American Institute of Architects (AIA) has released updated versions of many of its industry standard construction documents commonly used by owners, architects and contractors.  The A101 (Standard Form of Agreement between Owner and Contractor) and A201 (General Conditions of the Contract of Construction) – which constitute the most commonly used owner/contractor construction forms – contain a number of notable changes.  Some of the more important substantive changes that owners and contractors will need to consider are as follows:

  • Owner Termination for Convenience – The 2007 A101 and 2007 A201 provided that if an owner terminates the contractor for convenience (as opposed to a termination on account of the contractor’s default), than the contractor may recoup projected overhead and profit for anticipated work that had not yet been performed as of the termination date.  The 2017 versions contemplates a stipulated termination fee which will need to be negotiated by the parties.
  • Owner Financial Information – The 2017 A201 version has provided the contractor the express right to refuse to proceed with the work or stop work in progress if the owner fails to provide reasonable evidence that the owner has made sufficient financial arrangements to fulfill its payment obligations under the contract.
  • Warranties – The 2017 A201 version now provides that all warranties issued in connection with the work, such as warranties from material or equipment providers, must be issued in the name of the owner or provide that they are transferable to the owner.
  • Owner/Contractor Communications – The 2007 A201 stated that owners and contractors shall “endeavor” to communicate through Architect.  The 2017 version now contemplates that owners and contractors will communicate directly and will keep the architect informed of the nature and substance of those communications.
  • Minor Changes in the Work – The 2007 A201 provided that the architect may order minor changes in the work that do not adjust the contract sum or contract time.  The 2017 revisions now incorporate a mechanism for the contractor to register its objections to the architect’s proposed changes and the right not to proceed with the changed work until the objection is resolved.
  • Lien Waivers – Subcontractor and supplier lien waivers now must be included in each draw request.
  • Contractor Lien Indemnification – The 2017 A201 now provides that so long as the owner has funded its payment obligations, the contractor must indemnify the owner for lien claims and other claims for non-payment by such contractor’s subcontractors or suppliers.

Many of these changes are intended to approximate the types of modifications that owners and contractors negotiate when entering into construction contracts using the AIA forms.  Nevertheless, it is important for the parties to take note of these provisions when using the forms without specific consideration of these issues.

For further information regarding construction contracts and the construction process, please contact:

Jeffrey M. Galkin at:

312-368-0100 or jgalkin@lgattorneys.com.

Trademarks for Apps

If you are a typical person today, you’ve likely used at least three different apps before 9 am.  You get up in the morning and click on your weather app of choice to figure out what to wear and whether to take your umbrella.  Then you grab an UBER® to get to the office and during the ride, you order your coffee so it is ready for you as you breeze through the building on the way to the elevator.  No sense in waiting for the coffee, as this is a needless waste of time.  With more and more people relying on apps, app design, branding, marketing, and protection are more important than ever.

The number of mobile apps is exploding. In June 2016, Apple® reported approximately 2,000,000 total apps in its app store.  By May 2017, that number had increased by approximately 200,000.  Mobile apps may be discussed in three categories – mobile web apps that enhance web browsing, apps that offer users a new service not previously available via a smart phone, and traditional brands whose business is widely known (such as WALGREENS®).  With all of the competition in the marketplace, companies must consider how to protect their app brand as a trademark, before it launches the new app into the marketplace.

To be “protectable” as a U.S. trademark, an app must have a few key characteristics.  First, consider the name of the app.  Does it describe a feature or function of the app?  If so, the owner may want to reconsider, as the U.S. Patent & Trademark Office typically does not allow registration of descriptive marks.  Instead, the owner of the app will need to come up with a name that is either merely suggestive of the service the app provides or is arbitrary.  Arbitrary names of apps are those that do not describe or suggest anything about the app.  APPLE® itself is a good example of an arbitrary trademark, as APPLE® is a trademark for computers, pads, phones and other goods and services, all having nothing to do with fruit.  Suggestive trademarks may be the happy medium where the function of the app is not outwardly described, but the app name hints at the meaning.  For example, ENLIGHT® is a photo editor app and would be considered suggestive because it suggests something about photo editing but does not describe it.

In considering the name of the app, owners will also want to pay attention to the color and icon they will use with the app.  Will these elements convey a unique design that may lend itself to trademark protection?  While color is sometimes not claimed as part of a design trademark in the trademark application or emphasized in a typical enforcement setting, in the app setting it is important to claim color, as it is one mechanism to set the app apart from others.

Registration of an app name and design provides many benefits.  The most important benefit is having the presumption that the owner has the right to use the name, design, and color of the app nationwide over all others, subject to certain exceptions.  Another important benefit is that when the app name or design (or both) is a registered trademark, all others are put on notice of the owner’s rights.  That is, all others are held to know about the registered app, even if they did not actually know about it.  Finally, federally registered trademarks may obtain relief from an infringer without a lawsuit.  If the owner simply wants the infringer to stop using the confusingly similar name, design and/or color scheme, the owner need only submit proof to the marketplace on which the app is available, and the marketplace, such as the Apple® App Store, will assist in removing the infringing app.

For further inquiries pertaining to apps and trademark protection and related questions regarding your intellectual property, please contact:

Natalie A. Remien at:

312.368.0100 or nremien@lgattorneys.com.

*UBER®, WALGREENS®, APPLE®, and ENLIGHT® are all registered trademarks of their respective owners.

(Please note that we are not endorsing any products or services mentioned in this blog).

Is the Confession of Judgment Provision In My Contract Enforceable?

Answer: In a consumer transaction, no.¹ In a commercial transaction, it depends.

A typical “confession of judgment” provision in a commercial contract (e.g., a promissory note) authorizes the creditor upon a default under the agreement to obtain a judgment for the amount owed without notice to the debtor(s) or guarantor(s), and allows the creditor to immediately execute on the judgment. The clause will most likely contain a “warrant of attorney” authorizing the appointment of an attorney to appear for the debtor, to waive personal jurisdiction and service, and to consent to an amount due and owing by the creditor. Thus, a party in default under an agreement containing a confession of judgment provision often first learns about the lawsuit against him after collection efforts have begun, when his bank accounts have been frozen or a lien has been recorded against his property. Courts will permit this judicial “shortcut” only if (a) the contractual provision is enforceable in the first place, and (b) the creditor takes the right steps to obtain the judgment after a default.

On the first point, a judgment by confession is void where it requires extrinsic evidence to prove the underlying debt. The Illinois Supreme Court in Grundy County Nat. Bank v. Westfall, 49 Ill.2d 498, 500–01 (1971) has held: “Judgments by confession are circumspectly viewed. … ‘The power to confess a judgment must be clearly given and strictly pursued, and a departure from the authority conferred will render the confessed judgment void.’ The extent of the liability undertaken must be ascertainable from the face of the instrument in which the warrant is granted. … ‘A judgment by confession must be for a fixed and definite sum, and not in confession of a fact that can only be established by testimony outside of the written documents, required by the statute to be filed in order to enter up a judgment by confession.” See also Ninow v. Loughnane, 103 Ill.App.3d 833, 836 (1st Dist. 1981); State National Bank v. Epsteen, 59 Ill.App.3d 233 (1st Dist. 1978). Numerous other courts have likewise held that a guaranty or underlying instrument purporting to grant power to confession judgment that is all-encompassing—for example, one that refers to “any and all debts, liabilities and obligations of every nature or form of the debtor,” including future debts, is so broad as to be void. Thus, if your confession of judgment clause is broad-sweeping or does not clearly describe the extent of the debtor’s liability, or if proving the amount owed requires reference to other documents extraneous to the instrument itself, the confession of judgment clause – and any judgment later obtained thereon – is void. While it is certainly advisable for clients finding themselves on the defensive end of this situation to act quickly, Illinois law permits a void judgment to be attacked at any time.

As to the second point, because the confession of judgment remedy is a creature of an Illinois statute, it must be strictly construed. See 735 ILCS 5/2-1301(c).  Voidness issues aside, that section requires the creditor to file a confession judgment suit only in the county in which (1) the note or obligation containing the confession of judgment clause was executed, (2) one or more of the defendants reside, or (3) in which any real or personal property owned by any of the de­fendants is located.

Because Illinois courts view judgments by confession with some skepticism, the law affords various remedies and means of challenging them not covered by this article. For further information on how to defend a judgment by confession case or to use such a provision offensively, contact:

Katherine A. Grosh at:

(312) 368-0100 or kgrosh@lgattorneys.com.


¹ A “consumer transaction” is defined as the “sale, lease, assignment, loan, or other disposition of an item of goods, a consumer service, or an intangible to an individual for purposes that are primarily personal, family, or household.” 735 ILCS 5/2-1301(c). If the instrument authorizing the judgment by confession in a consumer transactions was executed prior to September 24, 1979, however, it is still enforceable. Id.

An Employer Can Be Liable for Accessing an Employee’s Personal Email Even if the Employee Engaged in Misconduct

Over the last several years, communication via email and text has become commonplace in the workplace. Oftentimes, employees use one device for both personal and work-related communication regardless of whether that device is employee-owned or employer-provided. There is no doubt that employers may have legitimate business reasons for monitoring employee communications. For example, an employee may leave the company and the employer is concerned that she has taken confidential information or illegally solicited clients. Employers feel entitled to review data stored on employer-provided, particularly where employees are instructed that the company owns the devices and has the right to monitor the data.  As a general rule, the law supports employers here.  An employer’s zeal to snoop, however, may subject it to both civil and criminal penalties under both federal and state statutes.

The Electronic Communication Privacy Act (ECPA) and the Stored Communications Act (SCA) both govern an employer’s ability to review electronic communications. The ECPA prohibits the interception of electronic communications, and the term “interception” as used in the ECPA has been interpreted narrowly. The SCA makes it illegal to “access without authorization a facility through which electronic communication service is provided,” making it illegal to obtain access to certain communications in electronic storage. With regard to an employer’s review of employee emails sent through web-based email accounts like Gmail or Hotmail, the most frequent scenario is where the former employer is able to access the former employee’s web-based email account because the employee saved his username and password on a device provided by the employer. In these cases, courts have typically sided with the former employee and have been reluctant to punish the former employee for failing to take appropriate steps to secure their own personal information and allegedly private communications.  The former employee’s own negligence in securing personal data is not a defense for the employer.

Bottom line – an employer should seek advice before accessing an employee’s personal email account without authorization even though it has the ability to do so.

For more information on this topic please contact:

Howard Teplinsky at:

312-368-0100 or hteplinsky@lgattorneys.com.

Revisions to the Illinois Limited Liability Act

The Illinois Limited Liability Company Act (805 ILCS 180) (the “LLC Act”) recently underwent significant revisions which became effective on July 1, 2017.  The changes to the LLC Act align with the revised Uniform Liability Company Act, and Illinois now joins fifteen other states in modeling the revised Uniform Liability Company Act.  Although the LLC Act is often minimally revised, this is the first major overhaul of the LLC Act in over two decades.  Some of the significant revisions are:

  1. Operating Agreements. The goal of the revisions is to make the LLC’s Operating Agreement (similar to a partnership agreement) the primary controlling document for the LLC.  Under the prior version of the LLC Act, the management of the LLC was designated in the Articles of Organization.  Now, the LLC is presumed to be member-managed unless the Operating Agreement indicates that the LLC is manager-managed. Further, the revised LLC Act now permits an LLC to have an oral Operating Agreement, exempting the Operating Agreement from complying with the Illinois Statute of Frauds (740 ILCS 80/2).  (The Illinois Statute of Frauds requires all documents that exist in effect for more than one year to be in writing.)  However, it is strongly recommended that all LLCs have a written Operating Agreement in the event a dispute arises between members as to the terms of such Agreement.
  1. Fiduciary Duty. Under the revised LLC Act, an LLC may now restrict or eliminate the fiduciary duties of a member or manager to the LLC so long as it is clear and ambiguous in the Operating Agreement.  The Operating Agreement can identify the specific activities that will not violate the member or manager’s fiduciary duties to the LLC.  Note, the duty of care cannot be waived or eliminated, but it may be altered by the Operating Agreement, so long as such alterations do not allow for intentional misconduct or a knowing violation of law.  Further, such modifications of the fiduciary duties, including the duty of care, cannot alter or eliminate the obligations of good faith and fair dealing.  It is highly recommended that an LLC’s Operating Agreement include specific language providing that any alterations or waivers will be allowed to the extent they are permissible under the LLC Act and other applicable law.
  1. Member’s Authority to Bind LLC. Previously, a member was able to bind an LLC to agreements “solely by being a member”.  Now, a third party can no longer rely on an individual’s status as a member of the LLC to bind the LLC to any agreements executed by the member. A third party will want to conduct further due diligence to confirm such member’s authority to bind the LLC.  The revised LLC Act requires that there be express authority granted by the LLC to the member in order for the member to bind the LLC to any contractual obligation.  A Statement of Authority may be filed by the LLC with the Illinois Secretary of State indicating which managers and members have the authority to bind the LLC and to what extent. The Statement of Authority will be deemed to be “constructive notice” to third parties. For example, the Statement of Authority will indicate which managers and members may execute documents for transactions relating to the LLC’s real estate and other transactions on behalf of the LLC.  If the Statement of Authority does pertain to real estate, the Statement may also be recorded in the county in which the real estate is located and can be relied on in good faith by potential purchasers. On the other hand, if a manager or member does not want the authority granted to it in a Statement of Authority, the manager or member has the option to file a Statement of Denial with the Secretary of State, retracting any such authority.

As a result of the significant changes to the LLC Act, it is imperative to have a current Operating Agreement in place for your LLC.  The LLC Act applies to all Illinois limited liability companies; therefore, where an LLC Operating Agreement is silent on a particular issue, the LLC Act’s provision governs.  We encourage you to consider the impact of the revisions on your LLC and its Operating Agreement, conduct a review of your LLC’s existing Operating Agreement, or consider preparing a new Operating Agreement.

For more information on this topic or to discuss any of the above recommendations, please contact:

Pamela Szelung at:

312-368-0100 or pszelung@lgattorneys.com.

Reminder to Chicago Landlords: Tenants Must be Notified of a Pending Foreclosure Action

Under the City of Chicago Residential Landlord Tenant Ordinance (“RLTO”), owners and landlords of residential property located in the City of Chicago must notify their tenants of a foreclosure action within seven (7) days of being served with the foreclosure complaint. If the foreclosure action is pending at the time the lease is executed, the owner or landlord must disclose in writing to the tenant that the foreclosure complaint is pending.

The notice must comply with the following requirements:

  • Be in writing;
  • Be sent to all tenants of the premises and to any other third party who has a consistent pattern and practice of paying rent on behalf of the tenant;
  • Identify the court in which the foreclosure action is pending, the case name, and the case number; and
  • Include the following language: “This is not a notice to vacate the premises. This notice does not mean ownership of the building has changed. All tenants are still responsible for payment of rent and other obligations under the rental agreement. The owner or landlord is still responsible for their obligations under the rental agreement. You shall receive additional notice if there is a change in owner.”

If an owner or landlord fails to provide the required notice, the tenant may terminate the rental agreement upon thirty days (30) written notice to the owner or landlord. Additionally, in a civil lawsuit, the tenant can recover $200 in statutory damages, plus any other actual damages incurred as a result of the owner or landlord’s failure to provide the requisite notice.

If you have any questions about your obligations under the RLTO, or would like assistance in issuing a foreclosure notice to your tenants, please contact:

Kristen E. O’Neill at:

(312) 368-0100 or koneill@lgattorneys.com.

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