Indiana Civil & Business Lawyer

And to All, A Good Night - Going on Hiatus

2009-10-31T12:21:00.002-05:00

This year has been rocky with this blog as it has been for this part of my practice. With the current economy, it seems unlikely to grow and I need the time I would need to spend on this blog and this practice area in other areas which can keep the bills paid. Even that might be too optimistic at this time. In the past month alone I have been dealing with flu, an eight year old with a broken leg and training a new secretary and all that in addition to the usual tasks of running an office. Overwork and too little rest now have me fighting off bronchitis and the future is not so bright that I need to wear shades. One client has already left me - even though I am still waiting for that court costs check they said they mailed - because of the delays here. With all this in mind, I am taking a hiatus on this blog until the first of next year.

I am also closing out comments. Sorry but I am trying to conserve as much time as energy as possible. At this point, it is a matter of survival.

Trade Secrets - Criminal Case and Interesting Issues

2009-10-30T09:44:00.001-05:00

Not too often do I make a big deal about a criminal case, but Silicon Valley 'Spies Like Us': Trial begins for 2 engineers accused of economic espionage involving China doe shave interestng points.

First, the facts:

According to the indictment, the defendants allegedly created a company, SICO Microsystems, "for the purpose of developing and marketing products derived from and using the stolen trade secrets," which were related to computer chip design and development. The defendants also allegedly sought to obtain venture capital funding for their company from the government of China, in particular the 863 Program and the General Armaments Department (GAD). The 863 program is a funding plan created and operated by the government of China. It was designed by leading Chinese scientists to develop and encourage the creation of technology in China, with an emphasis on military applications. Meanwhile, GAD of the People’s Liberation Army was responsible for the army, navy, and air force in China and oversaw the development of weapons systems used by the country. GAD had a regular role in, and was a major user of, the 863 program, according to the DoJ.
The case is being heard in US District Court for the Northern District of California and actually dates back some seven years when in 2002 the CEO of NetLogic received an e-mail from Ge's wife tipping him off to the alleged theft. She also made an anonymous call to the FBI, according to reports.

***

According to reports, most of the documents found on Lee's and Ge's computers had to do with business agreements between SICO and China-based venture capital firms regarding the 863 program.
Prosecutors are relying on a somewhat rarely used provision of the Economic Espionage Act (EEA) of 1996, which deals with the theft of trade secrets for the benefit of a foreign nation. The EEA was passed to protect US trade secrets and IP from foreign government-sponsored theft, however, is difficult to prove in court. Indeed, only a handful of have been indicted under EEA, with less actually found guilty.

***
It's a highly complicated case from both the legal argument and IP/entrepreneurial sides that will surely stump even the most law-savvy and technically astute member of the jury. That being so, the case could be seen as one that perhaps evidences that US laws don’t match or keep up with technology, so-called trade secrets or IP, and tech business practices. If these two engineers were indeed acting as spies for China and indisputably offering true trade secrets/IP that would not only hurt proprietary company information but also damage US security or ability to innovate, then off to jail they should go. There's no question about that. But if these engineers do turn out to be entrepreneurs who did not steal trade secrets/IP and were instead truly trying to build an honest start-up, with investment only from 863 no further government interference, then they have not gone wrong.

The article ends with what - for me is a truly interesting question:

What do you think? Is this a case of espionage or a misinterpretation of tech industry business practices? What defines a trade secret? Will more cases like this come down the pike regarding IP rights?....

My imagination fails to think of another industry where its busines spractices might be confused with stealing

Non-Competition - Policy Ideas

2009-10-29T07:02:00.000-05:00

I have eruitten before aobut Massachusetts liberality towards non-compete agreements here and here. NECN reported a potential change its Mass. non-compete culture to change?

Warner said he believes limiting or banning non-competes would lead to more companies like Google, Cisco Systems, and Avid getting launched in this area instead of Silicon Valley or other parts of the country.

"Here's what happens with non-competes: People think about starting a new company, but they can't leave their current company and go to a competing company,'' Warner said in an interview at a Massachusetts Technology Leadership Council conference this week. "The non-compete issue is hurting us more than you might ever know.''

It's unclear if this bill moves this year. The state's biggest business lobby, Associated Industries of Massachusetts, which represents over 7,000 employers, isn't opposing or backing the bill, saying it sees deep division on the issue. AIM said it thinks fixing other issues -- like taxes, unemployment insurance and electricity costs -- would do far more to improve the Bay State business climate than would the change in non-competes.

***

Beck said he agrees some more could be done to unlock the flow of tech talent in Massachusetts, short of a total Silicon-Valley-style ban on non-competes. He's working pro bono with Brownsberger and Ehrlich and advocates on various sides of the issue to find middle ground and get legislation enacted -- building on the two legislators' own agreement to mesh their previously separate non-compete reform bills. "We're trying to find a compromise between the legitimate business interests of the employer and the right of the employee to continue to work" in their field after leaving an employer, Beck said.

I remain unconvinced that Indiana's conservative approach to non-competition agreements makes Indiana any more attractive to businesses than other states. I think Massachusetts has not been able to translate its academic talents for technology (remember that MIT stands for Massachusetts Istitute of Technology) as California has because of its non-compete policy.

News: Settlement from IMI in Concrete Price Fixing Case

2009-10-28T21:48:00.000-05:00

$29M deal reached in IMI price-fixing lawsuit | IndyStar.com | The Indianapolis Star

IMI's settlement must be approved by a federal judge before it's official. It would boost the amount of settlement money paid by the companies in the case to $53 million.

"This is an historic settlement. We could not be more thrilled," Irwin Levin, lead attorney for the plaintiffs, said Tuesday.

The settlement funds, minus legal fees and other costs, will be paid to a court-approved class of about 5,000 individuals and companies that bought $700 million of ready-mixed concrete from the seven companies during the four years of the conspiracy, 2000 to 2004. Of the $24 million in settlements, attorney fees and other costs have eaten up $8 million. The fees and costs for the IMI settlement are not known.

Levin, an attorney for the Indianapolis firm Cohen & Malad, said the settlements so far, counting IMI, amount to "one of the highest percentage recoveries in civil antitrust cases in history."

The settlement money will cover more than 90 percent of the estimated overcharges from the price-fixing, Levin said. The first checks to plaintiffs will be mailed late this year or early next year and amount to a kind of eagerly awaited economic stimulus check.

"A lot of contractors are going through difficult times," Levin said. "We need to get this (money) out to them as quickly as possible."

Trade Secret Litigation News - Ideas About Evidence

2009-10-28T07:02:00.005-05:00

Reading New Hampshire news, business and sports - Stonyfield secrets dispute heading toward trial from UnionLeader.com had me thinking:

Before its relationship with Agro-Farma, Stonyfield had not produced or marketed Greek yogurt and did not have the knowledge and expertise necessary to do so, LaPlante wrote in his opinion and order. "Agro-Farma, however, did have such knowledge and expertise."

I would call that pretty good prima facie evidence that there is a trade secrets leak.

News on Social Media in the Workplace

2009-10-27T07:02:00.002-05:00

From The Tennessean comes Businesses crack down on workers using social network sites

Workplace restrictions on the digital world are forcing employees to give their fingers a rest, even though we've become a society that can't get enough of social networking sites and other online diversions.

Among U.S. companies, 54 percent completely prohibit workers from visiting social networking sites for any reason while at work, according to a report last week from Robert Half Technology.

Nearly one-fifth permit social networking for business purposes only, and 16 percent allow limited personal use.

In the future, more companies will move to block access to social media and monitor what their employees do online, although not completely ban Internet use, said Nancy Flynn, founder and executive director of the ePolicy Institute, which advises employers on how to limit cyber risks.

She doesn't recommend that companies ban all personal Web use or prohibit texting on personal cell phones.

"What I do recommend is that employers put clear rules into place as to how much time you're allowed for personal electronic communication and the times of day to engage in personal use, whether that's the lunch hour or during breaks or for an hour a day," Flynn said.

I emphasized that paragraph. Clear rules help on several levels. Take a good look at what your employees do and your business's needs.

About the business' needs, take a look at Breaking: Twitter costs British economy less than people who gaze out the window.

Cossing The Border With Trade Secrets

2009-09-01T06:49:00.002-05:00

On the border laptops remain an interest to Obama's Department of Homeland Security as much as guns and bullets (my apologies to Al Stewart).

From The Los Angeles Times: Taking an international trip? Scrub those hard drives!.

As News.com's Declan McCullagh reported, the Obama administration continues to take an extremely permissive view toward the power of federal agents at the border. The new directives from Immigration and Customs Enforcement and U.S. Customs and Border Protection reiterate the Bush administration's stance that agents have the authority to search any digital storage device entering the country, even when there is no suspicion of wrongdoing. They'll need to show probable cause only if they want to seize the device or retain copies of its contents. The primary change in policy is more administrative oversight over how the devices and data are handled after they're seized....
***
The best argument that the DHS makes for its approach is that criminals are using new electronic storage devices to smuggle illegal items into the United States:
As the world of information technology evolves, the techniques used by CBP and ICE and other law enforcement agencies must also evolve to identify, investigate, and prosecute individuals using new technologies in the perpetration of crimes. Failure to do so would create a dangerous loophole for criminals seeking to import or export merchandise contrary to law.

No way can I summarizeGovernment Directive Addresses Traveler’s Attempt To Prevent Search In A Timely Fashion with its information dumps of DHS regulations and so I will not. From what I see, the article contains good research.

That article did lead me to DHS: Expect your computer to be seized without suspicion with sources and some interesting points:

The guidelines for Customs & Border Patrol (CBP) agents says pretty much the same thing, adding that whenever a CBP agent encounters technical trouble figuring out how a mechanism works, or what the meaning of some piece of information is, he can seek help from other US government sources. "In such situations, Officers may transmit electronic devices or copies of information contained therein to seek technical assistance from other federal agencies," reads the CBP guidelines (PDF available here).

What's been a subject of contention ever since the government tightened border inspection policies in the wake of 9/11 hasn't been so much agents' rights to act without suspicion (although for some, that already crosses the line) as the authority DHS grants them to transmit the information they find elsewhere, under the auspices of "seeking help." Both guidelines now state that agents may only seek help from other federal sources, but they are not explicit with regard to what level -- for example, whether a private consultant under retainer for the FBI would qualify.

In their assessment of the extent of the risks this clarified policy might pose to citizens' and visitors' personal privacy, published last Tuesday (PDF available here), both border agencies, acting jointly, identified six specific areas: "(1) travelers may need additional information regarding the authority [agents have] to conduct border searches; (2) the traveler may be unaware of the viewing or detention of his/her information by CBP and ICE; (3) personally identifiable information (PII) may be detained where it is not needed; (4) PII may be misused by CBP and ICE officers; (5) CBP and ICE may disclose PII to other agencies that may misuse or mishandle it; and (6) new privacy risks may arise as the technology involved in this activity is ever-changing."

Trade Secrets and Cloud Computing

2009-08-31T08:03:00.001-05:00

GLG News' Cloud computing an antagonists view presents a trade secrets issue I had not thought of:

I have trade secrets. I go to extremes to protect these secrets. Part of the process is to ensure that my systems exceed Title 18 standards. What happens when everyone has their trade secrets in a cloud and someone shatters these "virtual" walls in those systems.

I reserved my judgment until I had completed my research. My research is done and I do not trust cloud computing with my secrets. Sure, it has its place. Even fun in some aspects. What it is not is even slightly secure.

I suggest - strongly - reading the whole of the article. I have had reservations about many of the cloud computing resources over who controlled content and client confidentiality. I have passed on several things (such as online backup) because of this question.

Limited Liability Companies - Get the Operating Agreement

2009-08-31T07:47:00.000-05:00

Nothing from Why You Need Professional Advice and an Operating Agreement for Your LLC differs greatly from what I advise people wnating to start a limited liability company, so pay attention.

Absent an operating agreement, many critical issues will be determined by statute. Let’s say, hypothetically, that a business person establishes an LLC, coming up with the business plan and strategy and contributing the capital to start the business. Further assume that she decides that a trusted assistant should have a small equity interest in the business, both as a reward and an incentive to perform. Thus, the founder files the LLC paperwork listing herself and the assistant as the two members.

In Indiana . the same surprise awaits the unwary creator of a LLC:

The founder may be surprised to find at a later date that, because there is no written operating agreement, she and the assistant are, by Georgia statute, entitled to equal votes in managing the business. O.C.G.A. § 14-11-308(a)(1). In addition, the founder and the assistant are entitled to equal profit distributions. O.C.G.A. § 14-11-403. The founder will also find, as a consequence, that the assistant has the legal right effectively to block anything the founder wants to do with the business.

Which is why I suggested last week to a potential client that an LLC would not do what he wanted to do - maintain control.

I like the sense of hope given in this paragraph but I would not want to rely on anyone's altruism in a business situation. As Cindy Lauper once sang, money changes everything.

It may be possible, if the assistant is a reasonable person, to clean this up at a later date by adopting an operating agreement that makes the assistant the minority equity holder and that allocates voting rights and profit distributions as was originally intended. However, if there has been a falling out between the two members, or if they simply honestly disagree on what their respective rights should be, it can lead to a very difficult dispute.

Pay attention to this paragraph:

Of course, if the founder had consulted a lawyer in establishing the LLC, this scenario would have been avoided. The issues would have been addressed in an operating agreement, making the founder the manager, establishing the percentages for profit distributions, and dealing with many other issues.

I spoke wiht another person this past week who is looking to litigate a business set up problem. When I asked if the business had been incorporated, I was told that the other people decided a lawyer was too costly. Thiose same people will now be paying more to defend a lawsuit with a likelihood of paying damages. So much for saving money on lawyers.

Trade Secrets Roundup : Untrustworthy Employees and Partners, Inevitable Disclosure

2009-08-31T07:20:00.000-05:00

Report: Man stole trade secrets - Local - Bradenton.com

Manatee County Sheriff’s Office detectives arrested Darrin Stephen Zaza, 44, after viewing surveillance video of him entering a conference room in a local Comfort Suite motel, April 5, where his former boss was planning to hold the event.

Sheriff’s detectives say the victim, owner of a Davenport golf equipment business, was holding a trade show in the conference room when Zaza stole from him, the sheriff’s report said.

Zaza is accused stealing documents containing the victim’s list of suppliers, bank account information, inventory lists, show schedules and business contacts. He also took documents containing the victim’s business strategy and future plans, according to the sheriff’s report.

Ad agency sued over Bing commercials

Denizen, a small ad company registered in Delaware, claims an advertising concept in which a commercial serves to advance the plot of the TV show during which it runs.

Denizen sued ad agency JWT and its parent, WPP Group, over a commercial during "The Philanthropist" when character A.J. Butterfield (Lindy Booth) pines to go places featured on the home page of Bing, such as Italy's Cinque Terre. Another commercial features Booth and co-star Michael Kenneth Williams using Bing to search for information on cholera.

***

In its complaint (PDF), Denizen says company representatives met with London-based WPP and disclosed trade secrets regarding the patented advertising technique, agreeing to confidentiality. Among other charges, Denizen alleges JWT and WPP misappropriated trade secrets and broke their contract with Denizen.

LendingTree sues vendor over Google deal - Charlotte Business Journal:

LendingTree is suing one of its vendors, contending the vendor’s work with Google Inc. to set up a competing loan-referral service will reveal LendingTree trade secrets to Google.

LendingTree seeks an injunction against vendor.

The company filed the suit Tuesday in U.S. District Court in Charlotte. It accuses Mortech Inc. of Lincoln, Neb., of violating contracts with LendingTree in its recent decision to work with Google (NASDAQ:GOOG) as well as LendingTree.

***

LendingTree says it has used Mortech as a “referred provider” for that service since signing an agreement with the company in April 2008. The contract was amended in November, the suit says, to “limit Mortech’s ability to make its pricing engine services available” for use by competitors.
After signing that agreement, LendingTree says, it shared confidential information with Mortech it would not have shared otherwise.

Now, LendingTree says, it has learned Mortech intends provide pricing-engine services to Google for an online loan exchange it will launch late this month or in early September.
“In the course of its collaboration with Google, Mortech will inevitably disclose the confidential, proprietary, and secret information that it has about LendingTree,” the suit states. “And such disclosure will irreparably damage LendingTree’s future business.”

Trade Secrets Twofer: Smalls Business and What Makes a Trade Secrets Case

2009-08-30T20:05:00.001-05:00

Remember trade secrets affect small businesses , too. This reminder comes from the Pasadena Star-News - Trade secrets: Local company counter-sues printer giant

HACIENDA HEIGHTS - A local green startup firm has counter-sued a printing giant, claiming that it illegally cracked down on the right to resell its used product.

Hacienda Heights-based Green Project Inc. alleges in a lawsuit filed July 27 in U.S. District Court in Oregon that Epson America Inc. and its parent, Japan-based Seiko Epson Corp., sent a company spy into the facility to gain access to trade secrets.

The company also claims that Epson punished it and firms like it for reselling recycled Epson cartridges.

***

But Epson's lawyers maintained they have a case against Green Project.

Axelrod pointed to the "first sale" doctrine, adding that the doctrine of first sale does not apply in this case, because there is evidence the used cartridges were collected out of the U.S. Wu said his firm works with brokers who document that cartridges were collected in the U.S.

Wu's company is seeking to be dropped from Epson's original suit, and for Epson to pay damages and legal fees. It's also looking to stop Epson from using any secrets that Seitz allegedly obtained.

Although a press release, Fifth Circuit Court of Appeals Rules on a Trade Secret Matter has the virtue of clearly pointing out what makes a trade secrets case:

The Fifth Circuit Court of Appeals recently vacated summary judgment in a trade secret case. Cudd Pressure Control Inc. v. Roles, No. 08-20389 (5th Cir. June 11, 2009), available at http://www.ca5.uscourts.gov/opinions%5Cunpub%5C08/08-20389.0.wpd.pdf.

Ronnie Roles worked for Cudd Pressure Control Inc. until he (and several other former Cudd employees) joined a newly-formed competing business. Cudd filed suit, alleging violations of trade secret laws. The district court granted summary judgment for the former employees on the ground that the information at issue did not constitute trade secrets.

The Court reversed the summary judgment because the former employees did not move for summary judgment on the ground it was granted on and the district court could not grant summary judgment sua sponte on a ground not requested by the moving party. The Court then examined whether summary judgment was proper on the grounds advanced by the former employees and concluded that it was not. First, summary judgment was improper on the ground that the former employees did not use Cudd’s confidential information because evidence indicated that the former employees did use this information to lure investors and to build a business plan. Second, summary judgment on the ground that Cudd failed to show damages was improper because Cudd had not had a sufficient opportunity to gather evidence regarding its damages. Thus, the Court vacated the summary judgment award and remanded the case.

So what are you doing to protect your trade secrets?

The Cyberskank Case

2009-08-27T08:05:00.001-05:00

Beware what you do online.

Cybersmear - the Skank Blogger Plans to Sue Google for $15m for Disclosing Her Identity:

A recent ruling about an alleged anonymous slanderous blogs about a New York City model made it to the front page of every news media on the Internet when a New York City Judge ruled that Google had to identify the name of the person who ran the blog called “Skanks of NYC.” When Liskula Cohen (the defamed model ) learned the identity of the anonymous blogger was Rosemary Port, a 27-year-old student at the Fashion Institute of Technology, Cohen decided to not pursue any slander claims against Port. In an interesting turn of events, now Port claims that Google somehow breached a fiduciary duty and Port’s attorney is bringing a claim against Google for $15M.

***

In this instance Port claims the only person on the Internet who saw "Skanks of NYC" blogs was Cohen, and ironically because of Cohen’s lawsuit and the alleged violate by Google of Port’s rights, now everyone on earth knows. I’m sure there a lesson in this case but generally I’m reminded of the New Yorker Cartoon where two dogs are talking and one says to the other “I had my own blog for a while, but decided to go back to pointless, incessant barking.”

Oddly, PC Magazine hits on the legal points better in 'Skank' blogger talks, sues Google for $15m

Legal time-out. That strikes me as nonsensical concept: the fiduciary relationship is the highest, most stringent duty one can have to another, typically the directors duty to shareholders, or a trustee’s duty to beneficiaries. To create such a relationship between a company and someone who creates a free blogging account makes a mockery of the relationship. And what is the duty to protect anonymity? That is definitely not listed in the treatises’ lists of fiduciary duties. What is listed is the duty not to profit from one’s position as the fiduciary. The idea that Google has undertaken a fiduciary relationship with users - and that the duty includes disobeying a court order - is laughable. Now back to our catfight…

Google has a fiduciary duty? Creative is good when kept when the bounds of reality. This idea has only a passing familiarity with reality, but this next argument has even less relationship with reality:

This seemingly trivial yet voyeuristic spat is in fact a major First Amendment case in the making, the lawyer thinks.
I’m ready to take this all the way to the Supreme Court. Our Founding Fathers wrote ‘The Federalist Papers’ under pseudonyms. Inherent in the First Amendment is the right to speak anonymously. Shouldn’t that right extend to the new public square of the Internet?

I think Maureen Dowd does a droll destruction of this argument in her Stung by the Perfect Sting:

Yet in this infinite realm of truth-telling, many want to hide. Who are these people prepared to tell you what they think, but not who they are? What is the mentality that lets them get in our face while wearing a mask? Shredding somebody’s character before the entire world and not being held accountable seems like the perfect sting.

Pseudonyms have a noble history. Revolutionaries in France, founding fathers and Soviet dissidents used them. The great poet Fernando Pessoa used heteronyms to write in different styles and even to review the work composed under his other names.

As Hugo Black wrote in 1960, “It is plain that anonymity has sometimes been assumed for the most constructive purposes.”

But on the Internet, it’s often less about being constructive and more about being cowardly.

I really do not see this as a landmark on the road of free speech.

For background on the case, here is JUDGE ORDERS 'SKANKS IN NYC' BLOGGER TO REVEAL IDENTITY TO LISKULA COHEN.

Cohen's lawyer, Steven Wagner, said he hopes the decision sends a message to bloggers, Twitterers, and whoever else would use the anonymity of the Internet for cowardly defamations.

"The rules for defamation on the Web -- for actual reality as well as virtual reality -- are the same," Wagner said. "The Internet is not a free-for-all."

But the lawyer for the anonymous blogger warned that the real free-for-all will happen in the court system if everyone who's ever suffered an ugly insult online decides to take their complaint before a judge.

"The floodgates would be opened if you tried to regulate these very broad, common insults and invective on the Internet," said Anne Salisbury.

"You can be really, really mean to people -- you just can't lie about a set of facts that are provable as lies, and that you knew or recklessly disregarded the truth of."

Logos and Trademarking

2009-08-27T07:05:00.001-05:00

David Airey's blog has an interesting post in Logo trademarking tips: A legal perspective

But, before addressing the legal implications, it’s worth noting that a number of our insightful readers and commenters have already helped articulate a variety of pros and cons from a business and marketing perspective (view the comments on Duets Blog). By my count, there appears to be consensus on at least two important points:

1. Having an iconic stand-alone non-verbal logo or wordless trademark symbol is highly desirable, especially for truly international brands; but
2. be prepared to spend a lot of time, effort, and significant resources to achieve one.

Logo trademarking tips: A legal perspective | David Airey, graphic designer

The combination logo is your best bet for trademarking

Generally, this format and style is more flexible, easier to clear for adoption and use, easier to register and protect each element separately, and easier to enforce rights in both verbal and non-verbal elements.

With respect to enhanced flexibility, a trademark owner can elect to always use the verbal and non-verbal elements together, perhaps as a way of reducing the risk of infringing on another’s prior rights in a mark perhaps similar to either the verbal or non-verbal element.

It may also be worth taking a look at "NO FRIGGIN CLUE" Confusingly Similar to "CLUE" for Video Games, Says TTAB from The TTABlog

This blog is #172

2009-08-21T09:58:00.001-05:00

Well, that is according to Avvo and the Alexa page ranking on this page. Thank you, readers. (The Alexa ranking of 2,173,549 does instill a serious sense of humility here.)

Trademarks Post for the Week

2009-08-18T09:27:00.001-05:00

British but some concept cross over the Atlantic and it is a well written article that provokes some thoughts. So take a look at Pitcher's, Pimms, Passing Off

Archbishop Passing Off is already robing up behind the drinks counter to enter the unholy fray with his ‘holy trinty’ of Reputation, Confusion and Damage but who will survive the refining fire of this test?

Is Sainsbury’s passing off its product as that of Diageo? Is there a trade mark infringement?

Surely, no problem with Reputation. Pimm’s has established itself globally as an iconic brand, synonymous with Wimbledon, Henley, May Balls, picnics (see Twitter #VTPP) and all that is sacred about the British Summer.

And, surely, no issue with Damage. One can almost see the out-stretched hand of the thirsty British consumer waivering and submitting momentarily to curiousity and the lower price tag of the Sainsbury’s ‘equivalent’ with huge consequential loss for Diageo.

So the legal armies must face each other on the uncertain legal battle-field of Confusion. But is there really any Confusion? The name is similar and theSainsbury’s product clearly echoes (deafeningly!) the Pimm’s brand ..but we are not talking puffins and penguins here. The product is pretty obviously not the original although it is clearly trading off its reputation.

Another Law Blog Oriented Towards Business

2009-08-17T15:40:00.001-05:00

I jsut ran across Inhouselegal’s Blog today. I found it interesting enough to add it to the blogroll. Give it a look for a different perspective on lawyers and business clients.

New Business Related Law Blog

2009-08-16T12:46:00.002-05:00

Out-House General Counsel is my discovery for today. Not much published but take a look at the links and information flow into the blog - very much oriented to small business. More than a bit envious as Mr. Alexander has found a way into an area I have been trying to figure out: outside general counsel.

For Business: Hiring Decisions

2009-08-09T10:58:00.001-05:00

From Manta.com comes Why Small Business Owners Make Bad Hiring Decisions

Here are 5 reasons why small business owners fail to make good hiring decisions:

1. Lack of time: The business owner is swamped as discussed above and is unable to take the time to make sure that he is making the best hiring decision.

2. Needs a body right now: Typically a small business owner does not have enough back-up staff to handles tasks within the organization if an employee leaves. This creates a crisis and the employer is forced to make decisions too quickly. As you know - haste makes waste.

3. Too emotionally close to the decision: Due to lack of enough people to help make a hiring decision, the employer is the key decision maker and maybe, the only decision maker. Unfortunately this puts the employer too close to the candidate and the process of hiring. Hence the employer may make decisions which are more based on emotion than information.

4. No formal training in hiring: Hiring seems to be almost like an additional, unwanted and unimportant task which befalls a manager. So very few employers go through enough training to understand the intricacies of hiring.

5. Lack of funds: The employer is usually working with a limited budget and sacrifices getting hiring support from a consultant, background checks, use of assessments and proper legal counsel and ends up hiring a candidate that may have shown up as a problem employee if a more detailed investigation had taken place.

More whistleblower suits to come?

2009-08-08T13:21:00.000-05:00

Such was workforce.com's prediction in Outcry on Exec Pay May Spur Rise In Whistle-Blower Suits

As public outrage over executive compensation intensifies, experts believe there will be an increase in whistle-blower lawsuits filed by employees alleging they were fired for opposing their executives’ compensation packages.

Two such lawsuits were filed in March—one involving Citizens Republic Bancorp, a Flint, Michigan-based bank that has been approved to receive $300 million in bailout funds through the Troubled Asset Relief Program, and the other against
McDonald’s Corp.
Experts say that given the heightened scrutiny regarding executive compensation, particularly in the wake of President Barack Obama’s opposition to bonuses given to AIG executives, more lawsuits are coming.

***

Similarly, on March 26 Lisa Bridges, McDonald’s former senior director of compensation, filed a suit in federal court stating she was fired after refusing to certify some executive compensation disclosures in the company’s 2007 proxy statements.
Among the issues that the suit says Bridges opposed were McDonald’s failure to disclose that it had paid for two country club memberships, totaling $3,000, for Tim Fenton, president of the company’s
Asian operations.

Trade Secrets: Barbie, Papermaster and Preventive Law

2009-08-07T07:05:00.000-05:00

Probably too long of a post but, businesspeople, you need to read this Enforcing Property Rights In Confidential And Proprietary I

In Bryant v. Mattel Inc. , a case pending in the United States District Court for the Central District of California, Mattel, maker of the Barbie doll, asserted that a former employee, Carter Bryant, began drawing designs for the Bratz doll - made by his new employer MGA Entertainment ("MGA") - while he was still employed by Mattel. Mattel instituted the action in 2004 claiming that Bryant violated his employment agreement, which, among other things, gave Mattel rights to all of his doll designs as an employee of Mattel. In August 2008, Mattel obtained a jury award of $100 million in damages for copyright infringement and contract-related claims. The court thereafter ruled that Mattel owned all the right, title and interest (including all copyrights) in and to the Bratz-related works, ideas and concepts that Bryant conceived, including the Bratz name, and Mattel obtained a permanent injunction against MGA's sale of the Bratz dolls. In January 2009, the court modified its prior order to allow MGA to continue to sell Bratz dolls through the end of 2009. At a hearing in February 2009, counsel to Mattel conveyed that Mattel was interested in settling the litigation and that there had been some activity on this front.

In International Business Machines Corp. v. Papermaster , 2008 WL 4974508 (S.D.N.Y. Nov. 21, 2008), the United States District Court for the Southern District of New York ordered Mark Papermaster, a former IBM senior executive, to immediately cease working as Apple's Senior Vice President, Devices Hardware Engineering, in the iPod/iPhone Division. Papermaster - who had worked for IBM for 26 years - had served as Vice President of IBM's Blade Development Unit in the preceding two years. Papermaster worked throughout his tenure at IBM on a technology used to develop microprocessors and servers, and he was viewed within IBM as its top expert in "Power" architecture. The Court found that Papermaster was "fully aware of many of IBM's most sensitive trade secrets," having "worked for years with some of the crown jewels of IBM's technology." Because of his expertise, IBM selected Papermaster to be a member of its Integration & Values Team, an elite group of approximately 300 executives that is comprised of its key leaders and develops IBM's corporate strategy.

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These cases underscore just a few steps that employers may take to enhance their litigation positions prior to ever setting foot in the courthouse.

1. Ensure that your confidentiality and restrictive covenant agreements have language confirming that inventions, innovations, processes, discoveries, improvements, ideas, system designs, technical know how, computer programs and related documentation, literary works, artistic works, copyright works or any other works of authorship developed, created, made, conceived, invented, discovered, acquired, suggested or reduced to practice by the employee, either alone or jointly with others during the employee's employment by the employer, whether or not during working hours, and related in any manner to the work or other activities carried on by the employer shall be (i) the sole property of the employer and (ii) works-made-for-hire to the extent allowed by the Copyright Act. The developments provision should also provide that to the extent the developments are not works-made-for-hire, the employee assigns all right, title and interest in the developments to the employer.

2. Based on the nature of the employer's business and the services the employee will be performing for the employer, the employer should also consider requiring the employee at the beginning of his employment to set forth a complete list of developments that he has conceived, developed, created, made, invented, discovered, acquired, suggested or reduced to practice prior to the commencement of his or her employment that he or she considers to be his or her property or that of third parties and that he or she wishes to have excluded from the scope of the confidentiality agreement he or she is being asked to execute.

3. Consider whether it is appropriate to ask a new or existing employee to execute an agreement with non-competition restrictions. The immediate reaction of many entities is that "tying up" as many employees as possible enhances their business goals. As the IBM/Apple dispute evidences, however, less is often more. That Papermaster - exposed to IBM's most sensitive trade secrets - was one of only a few hundred of IBM's 400,000 employees required to execute a non-competition agreement weighed in favor of the court's enforcement of the prohibition against him working for competitors within one year of leaving IBM.

4. Make sure your confidentiality and restrictive covenant agreements have language by which the employee acknowledges and agrees that, by virtue of his or her position, services, and access to and use of confidential records and proprietary information, any violation of any of the undertakings contained in the agreement would cause the employer immediate, substantial and irreparable injury for which it has no adequate remedy at law. The Papermaster court relied on Papermaster's acknowledgment that IBM would suffer irreparable harm if he violated the agreement in finding that IBM had proven a likelihood of irreparable harm.

5. In cases regarding confidential information and restrictive covenants, e-mails between the departing employee and his or her new employer are often rich sources of favorable evidence. Employers must implement e-mail and communication policies which, among other things, confirm that (a) electronic communications are the property of the employer and not the private property of individuals, (b) employees' electronic communications are not considered private, (c) employees shall not transmit without prior express authorization any trade secrets or other confidential or proprietary information and (d) the employer reserves the right at any time, in its sole discretion, with or without notice, to review, monitor and disclose its employees' electronic communications. When a dispute arises with an employee or former employee regarding confidential information or restrictive covenants, the employer should promptly review the employee's e-mails to ascertain whether any incriminating evidence is included within those e-mails. In many industries, employers' most critical assets walk out the door at the end of each day.

Indiana Lawyers Cannot Use Trade-Names

2009-08-06T15:33:00.000-05:00

Another instance where the non-lawyers have us beat? I do not think so but still I thought it would be interesting to the general public.

Court reprimands attorneys for trade-name use

Three attorneys who practiced separately but advertised as an LLC were publicly reprimand by the Indiana Supreme Court for violating several Indiana Professional Conduct Rules by not letting clients know they didn't practice law as a firm.

The Supreme Court combined the disciplinary actions against J. Michael Loomis, Robert A. Grubbs, and Robert J. Wray into one order posted May 8 and agreed a public reprimand was the appropriate discipline for violating Rules 7.2(b), and 7.5(a) and (b). The sanction was consistent with discipline imposed in other cases involving misleading attorney communications.

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The Supreme Court found the attorneys' use of "Attorneys of Aboite, LLC" and "Attorneys of Aboite" to be improper because a lawyer in private practice shall not practice under a trade name. The use of "LLC" implied that the attorneys were practicing law together as a LLC and not as individuals just sharing office facilities. Using an LLC in a name implies the LLC maintains adequate professional liability insurance or other forms of adequate financial responsibility for the protections of clients and that the State Board of Law Examiners investigated the LLC and certified it, according to the order.

Indiana Non-Compete Case

2009-08-05T10:05:00.000-05:00

Still trying to round out the material from my hiatus.

Judges differ in non-compete agreement case

In a legal dispute regarding a non-compete agreement, the Indiana Court of Appeals judges disagreed as to whether the agreement could be enforced if the former employee's clients voluntarily left and contacted him to continue to be their accountant.

At issue in Craig P. Coffman and Coffman Proactive CPA Services, LLC v. Olson & Co., P.C., No. 53A04-0804-CV-190, is whether Olson & Co. had a protectable interest that could be enforced by a non-compete provision in an employment agreement and whether the trial court erred by voiding the liquidated damages provision in the agreement and calculating the damages award.

Craig Coffman worked as CPA for Olson & Co. and signed a confidential non-disclosure and client proprietary agreement that said upon termination of his employment with the company he couldn't contact or work with Olson clients for 24 months. If he did so, he would liable to Olson for two times the client's most recent 12-months billings with Olson if he informed the company of the violation of the agreement; if Coffman failed to inform Olson, he would be liable for three times the amount.

Marvell Semiconductor Suit Dismissed

2009-08-04T12:53:00.002-05:00

A little late but from Law.com comes IP Suit Against Marvell Semiconductor Dismissed for Lack of Standing and the end of one case:

Jasmine Networks Inc.'s epic trade secret case against Marvell Semiconductor Inc., featuring a general counsel's accidental voice mail confession, was suddenly dismissed (.pdf) Wednesday.

Santa Clara Superior Court Judge Thomas Edwards ruled that Jasmine doesn't have standing to sue because the bankrupt company had sold off the trade secrets in question.

Marvell's lawyers at Latham & Watkins filed a motion to dismiss the case in the midst of pretrial motions last week, nearly eight years after the case was filed.

Steven Bauer, who led the Latham team, said he wasn't authorized to comment on the case and a Marvell spokesman was traveling and couldn't be reached for comment.

See my earlier posts here and here on this case. Not sure who should say ouch loudest - plaintiff for not noticing it had sold off its right or defendant for not noticing earlier.

HIPAAA Information

2009-08-03T07:35:00.000-05:00

Health Information Privacy

The Office for Civil Rights enforces the HIPAA Privacy Rule, which protects the privacy of individually identifiable health information, and the confidentiality provisions of the Patient Safety Rule, which protect identifiable information being used to analyze patient safety events and improve patient safety.

How Contracts Help Fight Fraud

2009-08-02T07:05:00.000-05:00

From the Supply Excellence blog comes Fraud Risks (and how Contracts can help):

In other words, a head-in-the-sand approach or playing nice will not protect against fraud … it’ll just prevent you from knowing about it until it’s too late. And while communication early and often is key, the contract tweaks Neil highlighted also point to an important step technology can play in reducing risks of fraud.

Having pre-approved clause language and proper process and approvals in an automated contract management system may root out instances where fraud can take place in the first place. And, worse case, it provides improved after-the-fact visibility in the event that it is not caught proactively.

Notice it is just any contract but a well-written contract that helps fight fraud. Here is another point where a good relationship with the business' lawyer can help prevent problems - such as lost proftis.