In the News

How Faulty Merchant Agreements Sink ISOs: Eugene Rome Authors Digital Transactions Article

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As many different types of merchant-service providers have learned the hard way, cutting corners by using a cut-and-paste approach to create merchant agreements can result in costly litigation. Independent sales organizations (ISOs), third-party processors, and payment facilitators must all make sure their merchant agreements are tailored to their particular business models and the types of merchants they service, as well as their potential exposure, depending on risk.

In his article “How Faulty Merchant Agreements Sink ISOs,” Partner Eugene Rome discusses the problems associated with using outdated merchant agreements, many of which read as though they were drafted in the 1990s. Mr. Rome writes, “Not surprisingly, such cut-and-paste jobs are often missing contractual terms important to protecting the service provider in connection with high-risk merchants operating in a card-not-present environment.”

Mr. Rome also outlines several best practices for effective merchant agreements, including: printing the terms and conditions in a format that is easy to read; sending the complete terms and conditions to the merchant along with the merchant application; having the merchant initial each page of the merchant package; obtaining the merchant’s signature on both the application and the terms and conditions; and using an electronic document-management and signature service for all merchant agreements.

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Eugene Rome Discusses the Latest Graffiti Artist to Take Action Against Fashion Designer

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Graffiti artists’ works are becoming commercially valuable and the artists are increasingly asserting their rights. A British graffiti artist’s complaint against a New York-based fashion boutique seems to be part of a trend in today’s legal disputes. As published by Bloomberg BNA, Partner Eugene Rome filed a lawsuit on behalf of British graffiti artist Mark Allsop, also known as “Malarko Hernandez” and “Malarky”, for violation of right of publicity and infringement against high-end active wear boutique Bandier. Although both parties previously discussed a potential collaboration, Malarky was unsatisfied with the approaches taken by Bandier, and they never reached an agreement. Bandier went ahead with the fashion line without Malarky’s authorization and began marketing the line under the name “Malarko Hernandez x Ultracor.”

Mr. Rome expressed to Bloomberg BNA that Bandier had to come to Malarky with a proposal, and it seemed that they had already started creating mock-ups using images taken of his existing work. “Bandier went ahead with the fashion line even though there was no final deal,” Mr. Rome commented.

With street art gaining the attention in the art industry, similar cases have escalated due to fashion houses failing to recognize the legitimate interests of graffiti artists the way they would recognize any other artist within the industry.

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Eugene Rome Authors Article on Rightful Ownership of Work Between Artists and Managers in Daily Journal

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In the article, “Who owns rights to art when a manager-artist relationship ends?” published by the Daily Journal,  Partner Eugene Rome discusses the symbiotic relationship between artists and their managers, and what happens when that relationship dissolves. When relationships end, the ownership of intellectual property rights and associated rights of the work become ambiguous, and neglecting this issue from the outset of the relationship can lead to lost revenue, loss of rights to the art and expensive legal fees.

A common assumption is that the images created by artists automatically belong to them, but that is not always the case. Typically, the rights to images created during a partnership belong to the LLC—meaning that artists have to buy back the rights to their own images in order to reproduce them. In order to avoid this scenario, Mr. Rome advises both parties to steer clear of general LLC agreements, which usually do not address any copyright issues or ownership of derivative rights.

“Artists may not realize the importance of understanding who owns the copyrights to their work, and managers often don’t want to spend thousands of dollars hiring an attorney to draft an agreement suited to their specific needs,” Mr. Rome said. “Therefore, operating agreements or partnership agreements need to be established early, ideally before the partners begin doing business.”