Tomlinson & Shapiro, P.C.

SCOTUS Clarifies Contributory Copyright Liability — Inducement or “No Substantial Lawful Uses” Required

2026-07-02T06:01:27Z

On March 25, 2026, the Supreme Court handed down its decision in Cox Communications, Inc. v. Sony Music Entertainment, clarifying the boundaries of contributory copyright infringement liability. Lower courts have already applied the Cox standards in other contexts. What the Court held: The Supreme Court reversed a contributory-infringement judgment against Cox. Mere knowledge that users infringe, even coupled with insufficient action, is not enough. Plaintiffs must prove that the provider either induced infringement through specific acts or offered a service not capable of substantial or commercially significant noninfringing uses. Application to Cox: Cox neither induced infringement nor offered a service tailored to it. The record shows Cox provided general internet access—used for many lawful purposes—and issued warnings, suspensions, and some terminations, though plaintiffs pointed to limited terminations and internal statements. What changed from the Fourth Circuit: The Court rejected a knowledge-plus-inaction standard as beyond Grokster and Sony, reiterating that knowledge alone cannot establish the required intent. DMCA clarification: The DMCA safe harbors do not impose liability for serving known infringers; they provide defenses, and failing to qualify does not negate a provider’s non-infringement defense. What this could mean beyond ISPs: While the case addresses Cox’s internet service, the framework established may apply to other platforms, including social media and AI. Key questions likely to shape future disputes include:

Whether the service has substantial, commercially significant lawful uses;
Whether the provider promoted or designed for infringing uses; and
Whether meaningful guardrails (policies, warnings, enforcement) exist.

Concurrence Caution: A concurrence agreed Cox was not liable on the facts presented but cautioned that other common-law secondary-liability theories (such as aiding and abetting) may remain viable in copyright, depending on proof of intent. This is a developing area, and the practical lines will get tested in the lower courts. For example, in Strike 3 Holdings, LLC v. Meta Platforms, Inc. (N.D. Cal. June 11, 2026), the court applied and distinguished Cox in refusing to dismiss a claim, finding the plaintiff plausibly alleging inducement by claiming that Meta “took active steps to encourage torrenting by implementing an algorithm and establishing VPCs—tools tailored to infringe copyrighted works using BitTorrent.” We will continue to closely monitor how this standard gets applied to social media and emerging technology. Questions about how this decision affects your business or platform? Let's talk.

Tomlinson & Shapiro Welcomes Meaghan Fuhrman

2026-05-12T05:36:49Z

Tomlinson & Shapiro is excited to announce that Meaghan Fuhrman joined the firm in late 2025. Meaghan advises businesses on employment matters, contracts, trademarks, and corporate issues. After working closely with business leadership teams throughout her career, she understands the importance of aligning legal strategy with business operations and provides practical advice tailored to each client's unique circumstances. Prior to joining Tomlinson & Shapiro, Meaghan spent a combined 10 years in in-house and compliance counsel positions. That experience gives her extensive knowledge advising on employment matters, compliance in regulated industries, a wide range of contract issues, and general corporate matters. Meaghan is located in Texas, where she is admitted to the bar, affording Tomlinson & Shapiro even greater opportunities to serve our clients and their operations there. We are very happy to welcome Meaghan to the firm. She is a great addition to our team. Tomlinson & Shapiro assists businesses and individuals in numerous kinds of transactions and litigation. Please contact us by calling [nap_phone id="LOCAL-REGULAR-NUMBER-1"] or by filling out the form at https://www.tomlinsonshapiro.com/contact/ to schedule a consultation.

Can tech startups protect trade secrets without patents?

2026-04-10T12:13:51Z

In Chicago, Illinois, a tech startup can win or lose on what you know that nobody else does. You can protect that edge without patents through trade secret law. But when your contracts and security habits do not match how your team actually works, that protection can weaken fast.

How trade secret law can protect you in 2026

Trade secret law covers information that gives you economic value because others do not know it, and because you keep it secret. Two main laws apply: the Illinois Trade Secrets Act and the federal Defend Trade Secrets Act of 2016. Courts often focus on one issue, which is whether you took reasonable steps to keep the information confidential. The reasonable-steps standard often means more than a generic or template nondisclosure agreement (NDA). Judges may look for access limits, audit trails and clear internal rules on who can use sensitive data and where they can use it. If your code sits in a shared drive open to every intern, or your team pastes it into public large language model tools, the other side may argue you never had a trade secret to begin with.

Why your NDA can fail under new Illinois rules

Illinois also changed the contract side of trade secret protection. Amendments to the Illinois Workplace Transparency Act took effect Jan. 1, 2026, and they can weaken a take-it-or-leave-it NDA. If a judge rejects those terms, your trade secret case can get harder and more expensive. Disputes often turn on points like these:

You give real, bargained-for value for restrictive terms, not just continued employment.
You include carve-outs that allow reports of unlawful workplace conduct.
You keep confidentiality language narrow enough to match real business needs.

When your legal documentation does not hold up, a former employee may challenge enforcement and a competitor may claim independent development.

How disputes usually start

Many trade secret fights start after an employee exit, a co-founder split or a vendor fallout. The conflict can turn into a proof problem when your documents, access logs and communications do not line up. A skilled Chicago intellectual property lawyer can help you preserve evidence early and present a clean story when a dispute hits.

Why are executive restrictive covenants treated differently?

2026-03-13T07:45:10Z

Restrictive covenants in job contracts help protect a company’s business. For most workers, these rules stop them from competing with their old employer or taking clients right away. But executive restrictive covenants are different. They get special treatment because of the important jobs these people do at a company.

What are executive restrictive covenants?

Executive restrictive covenants usually include rules about not competing, not trying to get clients, and keeping secrets. These agreements stop executives from using special knowledge, secret information, and smart ideas they learned at their job to hurt their old employer. They aim to protect company secrets, customer relationships, and the company’s lead over competitors. Unlike agreements for regular employees, executive rules often show that executives know a lot about how the company works and have access to private details.

Why are executives treated differently?

Courts and laws treat executive restrictive covenants in a unique way. This is because executives have a significant impact on a company’s success. Executives know a lot about business plans, money matters, and important customer ties. If they leave and then compete, it can really harm their old employer’s place in the market and how much money they make. So, these rules are often wider and looked at more carefully. This balances the executive’s right to work with the employer’s need to guard important business items. Executives also get paid more and have more power. This also leads to them being treated differently.

Seeking legal support

It is important to understand the specific parts of executive restrictive covenants. An executive’s special job and their access to confidential information change how courts understand and carry out these agreements. Legal support can help companies in writing these rules and for executives dealing with them. This smart step makes sure everyone knows their rights and duties.

3 types of restrictive covenants every business owner should know

2026-01-20T12:34:35Z

Imagine you spent years building your business from the ground up, only to watch a key employee leave and take your trade secrets to a competitor. Restrictive covenants can prevent this situation. These legal clauses set clear boundaries for employees and business partners, protecting your valuable information and relationships.

What is a restrictive covenant?

Restrictive covenants are rules that limit what employees or partners can do during or after their time with your company. Business owners in Chicago typically add these rules to employment contracts or sale agreements to protect their trade secrets, customer lists, and edge over the competition. Illinois law requires these agreements to be reasonable. They cannot last too long or cover too much ground. Working with a business lawyer helps you create a solid, enforceable contract. Once you understand the three main types of covenants, you can choose the right level of security for your company.

Non-compete agreements

First, there are non-compete agreements. These contracts often prevent former employees from starting a rival company or joining a competitor. Usually, these rules only apply to a specific geographic area and a set period of time. For Chicago business owners, these agreements protect your market share by stopping key staff from taking their talents directly to your rivals. Illinois courts typically support these contracts if they protect real business interests and do not unfairly limit a person's ability to work. While non-competes block direct competition, you should also use other tools to protect your relationships with clients and staff.

Non-solicitation agreements

Meanwhile, non-solicitation agreements stop former employees from poaching your staff or taking your customers after they leave. These rules keep your team stable and ensure your clients stay with you rather than following a former employee to a new company. Courts usually accept these agreements more easily than non-competes because they are less restrictive. Instead of blocking someone from working entirely, they simply protect your hard-earned professional relationships. Along with protecting your connections, you must also take steps to guard your private business information.

Non-disclosure agreements

Your business probably has important confidential information. An NDA, or non-disclosure agreement, stops employees and partners from sharing your trade secrets, methods and unique business data. This protection continues even after they leave the company. Former employees can't disclose your sensitive info to competitors or use it for themselves. NDAs, along with non-competes and non-solicitation agreements, help safeguard your business.

Protect your business with legal help today

Each of these rules serves a special purpose in keeping your company safe. However, writing these agreements yourself can be risky. Illinois courts often throw out poorly written contracts that are too broad or unfair. If a court rejects your agreement, you are left with no protection at all. An experienced business lawyer knows the specific Illinois rules and can write contracts that fit your exact industry and needs. Do not guess when it comes to your company's future. Schedule a consultation with a business lawyer today to ensure your restrictive covenants actually protect you.

Corporate Transparency Act of 2024

2024-01-06T01:38:59Z

As of January 1, 2024, the federal Corporate Transparency Act of 2024 (“CTA”) requires many small and medium-sized businesses to file a report with the United States Department of Treasury’s Financial Crimes Enforcement Network (“FinCEN”). The report must contain general information about the company and its formation, plus personally identifiable beneficial owner information (“BOI”). A “beneficial owner” is someone who either directly or indirectly has substantial control of the company or directly or indirectly owns or controls 25% or more of the company. This is a very broad definition and could include, for example, a non-owner officer, a non-owner director, or someone who owns options or warrants. It could also include trustees of trusts that hold ownership interests in an entity. The purpose of the CTA is to make it harder to use an entity to launder money or otherwise hide or protect assets that were acquired unlawfully and/or will be used for unlawful purposes (e.g., funding terrorism or tax evasion). In line with this, the exemptions from having to report are reserved for those companies in industries that are already highly regulated, such as securities firms, banks, credit unions, insurance companies, investment and venture capital related entities, not-for-profits, and certain companies that are broker-dealers or issuers of securities under the Securities Exchange Act. One key exemption exists for “large operating companies,” defined as companies with more than 20 full-time employees, a location in the United States, and gross receipts or sales derived within the United States in excess of $5 million. Certain subsidiaries of exempt companies (including “large operating companies”) are also exempt if they “are controlled or wholly owned, directly or indirectly, by one or more” other exempt entities. Notably, this does not appear to encompass entities that are part of the same “family” (e.g., parent/subsidiary structures) and share the same owners (unless those owners are themselves exempt entities). Because of that, each entity in a multi-layered structure must be examined carefully on its own merits to determine if it is exempt either on its own or as a subsidiary of an exempt entity. In terms of when a company must report, all companies formed before January 1, 2024 will have to file their reports to FinCEN no later than January 1, 2025. However, if you are planning on forming a company in 2024, then you will have 30 days to file with FinCEN. The information a company supplies to FinCEN will not be publicly available through, e.g., a Freedom of Information Act request. Not surprisingly, most of the circumstances that allow disclosure of the information relate to aiding law enforcement and government agencies to investigate and prosecute financial crimes. Finally, the mandate to file the report and to report full and accurate information is not optional and cannot be ignored. There are stiff penalties and fines for willfully failing to report complete and updated company information and BOI, and for willfully providing false or fraudulent information. These include a civil penalty of up to $500 per day for each day the violation continues, and a fine of up to $10,000 or imprisonment of up to 2 years, or both. If you have any questions or plan on forming any new entities in 2024, then please reach out to us.

Is Your Business Staying Current With COVID-19 Workplace Policies?

2023-12-03T06:02:05Z

Running a business during the COVID-19 pandemic is difficult – and made even more so with the entry, stay, repeal, and revision of government-implemented regulations. On November 5, 2021, the Occupational Safety and Health Administration (“OSHA”) published an Emergency Temporary Standard (“ETS”) that employers with 100 or more employees (with some exceptions) must require COVID-19 vaccinations or regular testing and masks for its employees, among other things. (OSHA’s COVID–19 Vaccination and Testing; ETS, 86 Fed. Reg. 61402.) OSHA has withdrawn this ETS, effective as of January 26, 2022, following the U.S. Supreme Court’s (“Supreme Court”) stay. Nat’l Fed. of Independent Bus. v. Dep’t of Labor, OSHA, 595 U. S. ____ (2022), available at https:// www. supreme court .gov/ opinions/ 21pdf/ 21a244_hgci .pdf. The story does not, however, end here. Contrary to public perception, the Supreme Court did not render OSHA powerless to issue regulations contemplating COVID-19 exposure in the workplace. It simply said that the ETS, as written, did not fall within OSHA’s authority to make workplace safety standards. Thus, the Supreme Court opined: Where the virus poses a special danger because of the particular features of an employee’s job or workplace, targeted regulations are plainly permissible. We do not doubt, for example, that OSHA could regulate researchers who work with the COVID–19 virus. So too could OSHA regulate risks associated with working in particularly crowded or cramped environments. But the danger present in such workplaces differs in both degree and kind from the everyday risk of contracting COVID–19 that all face. Nat’l Fed. of Independent Bus., 595 U. S. ____, available at https:// www. supreme court. gov/ opinions/ 21pdf/ 21a244_hgci .pdf, p.7. So, while a stay exists, OSHA is maintaining the ETS as a proposed rule and is moving forward with issuing final standards for COVID-19 workplace safety. 29 CFR Part 1910, available at federalregister.gov/d/2022-01532. Here in Illinois, businesses must also adhere to state-wide and local directives. There is a statewide indoor mask requirement, which is planned to end on February 28, 2022. County and other municipal public health departments also regulate in this arena. These regulations vary across the state. What does this mean as a business owner? COVID-19 workplace safety measures are likely going to be here to stay. While OSHA continues its rule-making procedures, employers should be examining what measures they have already implemented, if any, and what else needs to be addressed. Employers should consider updating their employee handbooks to address safety protocols, issues surrounding mandatory and elective quarantines, work-from-home policies, and accommodation procedures. COVID-19 employment policies, like any employment policy, require an analysis of an individual business along with applicable laws and regulations. The attorneys at Tomlinson & Shapiro and are ready to assist your company. Please contact us by calling 312-715-8770 or by filling out the form at https:// www. tomlinson shapiro .com/ contact/ to schedule a consultation.

New Year, New Lawyer at Tomlinson & Shapiro

2022-08-03T06:29:07Z

Tomlinson & Shapiro is excited to announce that Carly Grant has joined the firm as Of Counsel effective January 2022. Carly’s practice includes a wide range of business services, focusing on forming entities, drafting contracts, creating policies, protecting intellectual property, and general business counseling. She also provides support for the firm’s litigation matters. Prior to joining to [nap_names id="FIRM-NAME-3"], Carly was a litigator in New York handling a wide range of business disputes. She also clerked for two federal judges in the Southern District of New York. We could not be happier to welcome Carly to the firm. She is a huge addition to our team. [nap_names id="FIRM-NAME-3"] assists businesses and individuals in numerous kinds of transactions and litigation. Please contact us by calling [nap_phone id="LOCAL-REGULAR-NUMBER-1"] or by filling out the form at https://www.tomlinsonshapiro.com/contact/ to schedule a consultation.

Tomlinson & Shapiro Wins Motion to Dismiss Tortious Interference and Deceptive Trade Practices Claims

2022-08-03T06:29:12Z

It is easy for a company to claim to have the exclusive right to distribute products in certain territories; however, it is much more difficult to plead and prove such claims. Often, companies claim exclusive sales territories without a legal basis to do so in an attempt to scare off lawful competition.

That is what happened to one of our clients recently, a nation-wide distributor of specialized snack products. A competing distributor filed a lawsuit in the United States District Court for the Northern District of Illinois alleging intentional interference with prospective economic advantage and violations of the Illinois Deceptive Trade Practices Act. The plaintiff claimed exclusive territory rights in locations where our client did business. Those claims were quickly dismissed after attorneys Michael Shapiro and Michael Tomlinson persuaded the court that no exclusive territory contract existed. The court granted the motion to dismiss before it was necessary to engage in costly discovery or further litigation. The court’s ruling can be found at Midland Distribution, Inc. v. Zest US Wholesale, Inc., No. 21 C 1403, 2021 WL 4745265 (N.D. Ill. Oct. 12, 2021).

Breach of Fiduciary Cases Still Require Specific Proof of Damages

2026-01-20T12:34:43Z

An officer or executive employee of a company usurps a business opportunity or misuses funds. Most clients assume this is an open-and-shut case of breach of fiduciary duty. Two recent decisions from the Illinois Court of Appeals serve as a reminder that proving damages in breach of fiduciary duty cases is rarely so simple. In one lawsuit, the plaintiff presented what seemed to be a clear breach of fiduciary duty case. See Tufo v. Tufo, 2021 IL App (1st) 192251. The defendant engaged in a series of questionable conduct, including diverting opportunities to a separate business and using a corporate line of credit for personal expenses. Despite the fact this conduct did not appear disputed, the court ruled that the plaintiff had not proven any damages resulting from the multiple breaches of fiduciary duties. The court reached that conclusion even though the plaintiff presented expert testimony from an accountant who had reviewed extensive financial and tax records. At first blush the ruling seems erroneous – clear breaches of the fiduciary duty coupled with expert accountant testimony should establish damages. But the cliché still applies that the “devil is in the details” and a close examination of the evidence demonstrates why the court reached its conclusion. Even where there has been a clear breach of a fiduciary duty, Illinois courts still require a reasonable basis for computing any damages. In the Tufo case, the court closely examined the expert testimony on damages and found it lacking. The accountant started strong, identifying questionable transactions and practices. But the expert did not take the necessary next step “to reconcile all of these transactions, documents, loans, and payments and to quantify his damages using additional evidence, such as the fair market value of the rent . . . or the cost of” supplies. In other words, it is not enough to identify questionable transactions. To prove damages, evidence is needed on the specific amount of harm from the misconduct. For example, where an officer causes the company to pay inflated rent to a landlord that the officer secretly owns, the plaintiff needs to prove the fair market value of the rent. Without such proof, a court will not award damages. A second case from the same court, decided one week later, contains a detailed example of adequate proof of damages. See Cahnman v. Timber Court LLC, 2021 IL App (1st) 200338. There, the plaintiff proved specific amounts of the improper transactions, linking them to the fiduciary duties. These cases provide lawyers and business owners with an important reminder. It is not enough to be right; it is still necessary to prove it. That lesson applies not just to whether a breach of fiduciary duty exists. It also applies to proving the harm from such a breach. Breach of fiduciary duty cases are complicated and require experienced counsel. Best practices can help avoid them in the first place, but sometimes litigation is necessary. The attorneys at Tomlinson & Shapiro regularly counsel clients on these matters – both to avoid litigation and to go to court when other options fail – and are ready to assist your company. Please contact us by calling [nap_phone id="LOCAL-REGULAR-NUMBER-1"] or by filling out the form at https://www.tomlinsonshapiro.com/contact/ to schedule a consultation.