Editor’s note: Linda Markus Daniels is a founder of and principal in the Research Triangle Park law firm of Daniels Daniels & Verdonik, P.A.

RESEARCH TRIANGLE PARK, N.C. At this time of year it is common to reflect on what you have learned over the last year. I thought I would share some of what I found to be the more interesting legal tidbits. These tidbits are not necessarily new law, but issues I had not addressed in the past, and thus things that are not every-day type issues addressed by a law firm with a focus on technology law.

It Is Federal Criminal Offense to Deprive Another of The “Intangible Right of Honest Services”

While casually reading about Kevin Geddings and his conviction for mail fraud in connection with the NC lottery commission, I noticed that he had been specifically convicted under the statue for a scheme to deprive others of the “intangible right of honest services.” What was that, I wondered? So, I looked it up.

Under the wire/mail fraud statutes, a scheme or artifice to defraud includes actions which “deprive another of the intangible right of honest services.” So what does this mean and how can it be applied since an infraction of it could land one in jail? It turns out that courts are not entirely sure, and don’t agree on what “honest services” are or what the right is, but there seems to be a consensus that if the wrongful action is a tort (a wrong or injury independent of a contract) rather than a breach of contract, then the statute applies. Federal prosecutors are using the statute in almost every corruption arrest, and there is discussion that it will also be used with increasing frequency in matters that were once purely civil lawsuits.

Think about what happens when an employee leaves an employer, and in preparation for departure has spent several months not really working and transferring trade secrets to the new employer. Certainly the employee has not been providing honest services to the first employer, but can this result in a federal criminal indictment? If so, the landscape would change markedly from the current situation of the employer facing a difficult civil lawsuit.

Consider the widely publicized case of Jack Abramoff with respect to the employee issue. At the time of his arrest he was employed by a law firm. In the course of his employment he agreed to represent a wireless company in attempting to secure a license to install wireless telephones in Congress. Abramoff instructed the client to pay his fee to a non-profit entity he controlled rather than to his employer-law firm, and did not disclose his arrangement to his employer. In his guilty plea, Abramoff admitted to honest services fraud against his employer for this action. Thus, while most of the honest services convictions involve some form of government corruption (and certainly the Abramoff conviction has many such counts), it is clear that indictment for actions by an employee in defrauding his private employer can be sustained under this statue. Whether federal prosecutors will be willing to initiate an indictment for this absent a public corruption count is yet to be seen, although there have been several prosecutions without a public nexus in non employer-employee contexts.

There Is No Way to Cancel a Copyright Registration

One would imagine that if you have registered your software code or written work with the U.S. Copyright Office there would be a simple filing to say you no longer want the registration. After all, if you don’t want your corporation any more you can file with the Secretary of State and have the corporation dissolved. But, this is not the fact with a copyright registration. There is technically no way that the party registering the copyright can decide, unilaterally, to dissolve the registration.

Under federal copyright law a copyright can only be formally canceled by the Copyright Office under two circumstances: the registration is invalid under the applicable law and regulations, or the registration number is eliminated and a new registration is made under a different class and number. In other words, ignoring the re-registration situation, the Copyright Office will cancel a completed registration only in those cases where it is clear that no registration should have been made because the work did not constitute copyrightable subject matter or otherwise failed to satisfy the other legal and formal requirements for obtaining copyright. So, if the registration was valid when made it will not be canceled by the Copyright Office, even if you as the owner of the copyright wish to do so.

Upon inquiry to the Copyright Office as to what to do when a copyright holder wishes to cancel its validly registered copyright, we were advised that while there is currently no provision in the copyright law for disclaiming, withdrawing or canceling a copyright once registration is made, the Office will accept and record a statement of the claimant’s intention to relinquish rights and make such statement part of the official Copyright Office records. Thus the copyright owner can file and record a document indicating its abandonment of the copyright. It is not clear what the effect of such abandonment would have, however, since abandonment is more than just a request to terminate rights granted by registration. If the copyright is wholly abandoned, doesn’t that mean the rights that would exist absent the registration are also lost?

You Can (Theoretically) Recover Your Money From “Expired” Gift Cards

In North Carolina if a business issues a gift card which expires, the money left on the card at expiration has to go into the escheat managed by the Office of the Treasurer of North Carolina. This fund is for all property that results from the failure of a person legally entitled to that property to make a valid claim against the holder of the property within a prescribed period of time. While it often applies to property not claimed as a result of a death, there are over 100 types of property which may become “unclaimed,” including bank accounts, wages, refunds, utility deposits, insurance policy proceeds, stocks, bonds, contents of safe deposit boxes—and gift cards.

The statute on gift cards provides that: “Any gift certificate or electronic gift card bearing an expiration date and remaining unredeemed or dormant for more than three years after the gift certificate or electronic gift card was sold is deemed abandoned. The amount abandoned is deemed to be sixty percent (60%) of the unredeemed portion of the face value of the gift certificate or the electronic gift card.” A gift certificate or electronic gift card is not deemed abandoned property at any time, however, if it states that it does not expire or bears no expiration date. All holders of property that is to be escheated must file a report and deposit the funds before November 1 of each year for the 12 months preceding July 1 of that year.

The law also requires that if the value of the property is $50 or more the holder of the funds to be escheated must make a good faith effort to locate the owner and shall send a written notice by first-class mail to the apparent owner not more than 120 days or less than 60 days before filing the report. In most cases a business will not know who has a gift card, but does this impose on those who sell gift certificates with expiration dates a duty to record at least the name and address of the buyer and then to notify the buyer before escheat?

This also leads to an interesting question as to how a consumer recovers “unclaimed” funds from a gift card from the escheat fund. If, as many gift certificates do, the certificate says it expires in a year, and if you don’t use the card, then it seems the certificate is deemed abandoned at the end of the year and then presumably you have to wait two more years (three years from the date of sale) to apply to the escheat fund for 60% of the value of the card. If anyone tries to recover the funds from an expired gift card I’d like to hear your story as to what happens; I may report it in another column.

Daniels Daniels & Verdonik, P.A. has been serving the legal needs of entrepreneurial and high technology clients for more than 20 years. Linda Markus Daniels concentrates her practice in the representation of entrepreneurial and technology-based businesses, focusing on corporate, technology and international matters. Comments or questions can be sent to ldaniels@d2vlaw.com