Indiana Civil & Business Lawyer

Lindsay Lohan Stealing Trade Secrets?

2009-07-20T11:04:00.004-05:00

Not quite the kind of trouble one associates with Lindsay Lohan but this is the news.

New York Injury News - Lindsey Lohan sued!

Lawsuit claim Lohan stole sunless tanning lotion formula that retails at Sephora.

Tampa, FL–Lindsey Lohan and her business partner, Lorit Simon, are embroiled in a lawsuit, accusing the pair of stealing a St. Petersburg chemist’s formula for Lohan’s sunless tanning line, Sevin Nyne. The New York Daily News reported, the chemist, Jennifer Sunday, alleges Simon and Lohan breached their signed confidentiality agreement after the duo were made privy of Sunday’s exclusive tanning formula.

Lohan teamed up with the business woman, Simon, who owns a Las Vegas business, that applies airbrush tans to celebrities and high profile clients to help develop the sunless tanning concoction, Sevin Nyne. The lawsuit, which was filed in a Tampa, Florida, federal court, charges Lohan, Simon, and Simon’s company for breach of contract, theft of trade secrets, civil conspiracy, intentional indifference with contractual relations, and deceptive and unfair trade practices. Sunday and Simon were reportedly in negotiations when Simon was shown the sunless formula at Sunday’s company, White Wave International Labs, but they never confirmed an agreement.

Sevin Nyne, which is remarkably similar to Sundays formula, contains, goji berries, caramel, Chardonnay extracts, and a sugar free coconut base. Lohan’s “sunless secret” was launched this summer at Sephora and is reportedly being retailed for $35. According to the Sephora website http://www.sephora.com, a portion of the proceeds of Sevin Nyne are being used to benefit skin cancer awareness charities.

I found a bit more legal information on the Daily News' Gossip page's Lindsay Lohan sued for stealing formula for Sevin Nyne tanning spray:

According to the St. Petersburg Times, Sunday is suing Lohan, Simon, and Simon’s company for breach of contract, theft of trade secrets, civil conspiracy, intentional interference with contractual relations and deceptive and unfair trade practices.
In January, Sunday’s company, White Wave International Labs, signed a confidentiality agreement with Simon. Sunday claims that the two sides had been in negotiations, but had not reached an agreement on pricing.
"The next thing we know, Lorit Simon and Lindsay Lohan are partnering and Ms. Lohan is taking credit for developing this formula, which she indeed had no role in," Cohen told the St. Petersburg Times on Monday.

Okay, I do not know much about Ms. Lohan other what I have seen in the news and from watching one and one-half of her movies. From what I do know, I cannot see her as an inventor.

Which leads me to wonder what is her connection to the theft of trade secrets. As a partner to an offending party, she could be liable but that is the danger of partnerships.

The third party interference claim makes some sense in the abstract and you can read my article here on that subject.

It maybe that there is more to it than merely looking for a deep pocket, but I would have to see more information to overcome my skepticism.

Qui Tam Case for Indiana: Carol A. Glaser v. Wound Care Consultants Inc

2009-07-20T06:04:00.003-05:00

The issue for the Seventh Circuit Court of Appeals in Carol A. Glaser v. Wound Care Consultants Inc., et al. was jurisdiction:

SYKES, Circuit Judge. Carol Glaser received medical treatment from Wound Care Consultants and was later contacted by an attorney who told her that Wound Care might have improperly billed Medicaid for her treatment. She filed this qui tam action under the False Claims Act (“FCA”), 31 U.S.C. § 3730, seeking recovery as a relator for money the government paid as a result of alleged false or fraudulent Medicare and Medicaid claims submitted by Wound Care. But the government was already aware of the possible improprieties in Wound Care’s billing practices and had commenced an investigation more than four months before Glaser filed her lawsuit. Accordingly, the district court dismissed Glaser’s complaint for lack of subject-matter jurisdiction under 31 U.S.C. § 3730(e)(4), which blocks jurisdiction if the FCA action is “based upon” a “public disclosure” of the alleged fraudulent conduct “unless . . . the person bringing the action is an original source of the information.” Glaser appealed.

The Seventh Circuit had a different standard for determining a public disclosure and has now changed that standard:

The threshold jurisdictional question in this case requires us to determine whether Glaser’s lawsuit is “based upon” a “public disclosure” of Wound Care’s alleged fraudulent billing practices. We take this opportunity to revisit our prior interpretation of the phrase “based upon” in § 3730(e)(4)(A). In United States v. Bank of Farmington, we held that an FCA lawsuit is “based upon” a public disclosure and therefore subject to the jurisdictional bar of § 3730(e)(4) when the lawsuit “depends essentially upon publicly disclosed information and is actually derived from such information.” 166 F.3d 853, 864 (7th Cir. 1999). Although we reaffirmed
the Bank of Farmington holding in United States ex rel. Fowler v. Caremark RX, L.L.C., we acknowledged that it is the minority interpretation. 496 F.3d 730, 738 (7th Cir. 2007). To date, eight other circuits have read the phrase “based upon” in § 3730(e)(4)(A) more broadly, holding that an FCA lawsuit is “based upon” a public disclosure when the relator’s complaint describes allegations or transactions that are substantially similar to those already in the public domain.

Which may put a premium on getting to federal court quickly:

Applying this standard to Glaser’s case, we affirm the district court’s application of the jurisdictional bar. Allegations that Wound Care was improperly billing Medicare
and Medicaid for services performed by physician’s assistants were publicly disclosed in early 2005 when the government notified Wound Care that it was investigating these billing practices. Glaser’s complaint is based on this publicly disclosed information in that her allegations of fraudulent billing are substantially similar to those the government had already lodged against Wound Care in its investigation. Glaser cannot show she is an original source of the allegations in her complaint because she learned about Wound Care’s alleged fraudulent billing from her attorney and then asserted the attorney-client privilege to avoid divulging how her attorney learned of this information. The district court properly dismissed Glaser’s complaint for lack of subject-matter jurisdiction.

If you think you have a whistleblower, government fraud case, call an attorney now.

Jimi Hendrix and Trademarks

2009-07-13T08:21:00.000-05:00

I admit to being a fan of both trademarks and Jimi Hendrix. Which made noting Ron Coleman's post “Excuse me while I kiss this guy” from his blog LIKELIHOOD OF CONFUSION® a no-brainer:

The signature was a trademark? It had secondary meaning? I think maybe John Hancock’s signature has secondary meaning, but I can’t think of too many other ones, though I am sure there are. But Hendrix’s? Here’s the reasoning, per Mike’s excerpt from the opinion:

During oral argument, counsel for defendants indicated that defendants are now confining their use of the signature to posters, fine art prints, and apparel. The Court interprets counsel’s remark as a concession that defendants’ use of Jimi Hendrix’s signature constitutes branding, and it is not exempted from infringement liability by either the nominative or the classic fair use doctrine.

“Branding” — “infringement” — “liabilty” — “fair use” — all very interesting concepts.

But they only apply to trademarks, Your Honor! How you got a trademark here?

Avoiding Common Legal Business Mistakes

2009-07-11T08:03:00.000-05:00

I find I do can find no way to easily summarize Common Legal Mistakes Businesses Make and How to Avoid Them, Part II from John L. Watkins. The best I can do is list the topics covered:

Mistake Number 6: Ignoring Key Contractual Provisions
Mistake No. 7: Assuming it's Non-Negotiable
Mistake No. 8: Using Internet Forms
Mistake No. 9: Letting Your Employees Vary Your Terms and Conditions

Business owners - read this article. Anyone reading me for any length of time knows that I emphasize preventive law. Here is an article showing business owners what can be prevented.

Messy Inheritance or Not?

2009-07-11T07:16:00.002-05:00

Read Avoid the Inheritance Nightmare

What Happens to the Business if There is a Divorce?

2009-07-10T12:34:00.001-05:00

Consider this scenario from The Golden Scribe's Prenuptial Agreements to Protect the Family :

In a similar fashion, business partners can be protected with a prenuptial agreement. If Tom and Scott have worked over the past five years to create a successful business, and Tom is about to get married, the business and its assets can be protected by the prenuptial agreement. This not only protects Tom, but it protects Scott, as well. Without a prenuptial agreement, Tom and Scott’s business could potentially be torn apart by a divorce.

What happens to your business if this was you or a partner or other co-owner? Don't know for sure? Get yourself to a lawyer ASAP. If you are in Indiana and do not already have legal counsel, give me a call.

Oh, what if everyone is married before starting the business? Think about a post-nuptial agreement.

Obama Changing Enforcement of Immigration Laws?

2009-07-10T07:05:00.001-05:00

I hope employers saw the news on this but if not take a look at Jackson Lewis' ICE Sends Over 650 Employers I-9 Audit Notices in Nationwide Immigration Enforcement Initiative

Six hundred fifty-two employers throughout the country are receiving I-9 Notice of Inspections (NOIs) from the Department of Homeland Security’s Immigration and Customs Enforcement (ICE) unit, the Government has announced. ICE is the federal agency responsible for investigating employers for immigration worksite violations. The NOIs require employers to provide copies to ICE of all of their employee Form I-9s and supporting documents by a specified date. In most instances, however, employers are given only three business days to present their records to the local ICE office.

In announcing the initiative, ICE Assistant Secretary John Morton emphasized ICE’s commitment to worksite enforcement. He said the audits were “a first step in ICE’s long-term strategy to address and deter illegal employment.” ICE noted that the employers were selected for inspection as a result of “leads and information obtained through other investigative means.” The 652 NOIs exceed the total number of NOIs issued by ICE in all of Fiscal Year 2008. ICE declined to identify the companies receiving these notices on account of the “ongoing, law enforcement sensitive nature of these audits.”

On this same subject is Work-Site Enforcement Official Wants to Work With Employers:

John Morton, assistant secretary for U.S. Immigration and Customs Enforcement in the Department of Homeland Security, reiterated in a speech Tuesday, June 16, in Arlington, Virginia, the administration’s policy of pursuing criminal prosecutions against employers who knowingly hire illegal workers.

But Morton, who has been on the job for four weeks, also said that he wants to work with companies that are fastidious about compliance.

“I want employers to view ICE as a true partner to find ways to stay within the law,” he said in a speech at an American Council on International Personnel conference. “As we move forward, I hope we have a much better relationship.”

A source of tension between employers and the Department of Homeland Security is an electronic employment verification system called E-Verify. About 128,000 employers have voluntarily signed up to use the mechanism, which checks new-hire information against DHS and Social Security databases.

New Indiana Business Law Blog - Internet Start Ups

2009-07-09T11:51:00.000-05:00

I want to point out Brian Powers' Indianapolis Business Law Blog. I just learned about this blog in the past few days. Mr. Powers appears to be taking on a niche that is a bit different for Indiana and more specific than what I do on this blog: Internet start ups.

Give him a look if you are looking at an Internet (and I would think a tech start up).

By the way, for those lawyers reading this - take a look at his blog. Very interesting and a design that is very useful. Ah, so much enjoyable than this blog.

Old News: US Supreme Did Not Take Indiana's Wine Case

2009-07-09T10:25:00.001-05:00

I caught SCOTUS denies Indiana wine case from The Indiana Lawyer Daily during my hiatus from this blog. I think it still worth publicizing.

The Supreme Court of the United States won't consider whether Indiana's wine shipping law is constitutional by requiring in-person contact before any direct delivery is allowed.

Justices considered the case of Patrick L. Baude, et al. v. David L. Heath and Indiana Wine and Spirits Wholesalers of Indiana, Nos. 07-3323 and 07-3338, at a private conference on Thursday, and the decision denying the writ of certiorari came this morning when the order list was released.

Attorneys had asked the court in early February to accept the case, which challenged an Aug. 7, 2008, ruling from the 7th Circuit Court of Appeals.

The Circuit court ruled that Hoosiers must first make face-to-face contact at a winery to verify their age before being allowed to purchase any alcohol online or by phone. Appellate judges reversed a 2007 decision from then-U.S. District Judge John D. Tinder in Indianapolis, who'd struck down part of the state's 2006 law banning out-of-state shipments to Indiana customers without that initial in-person contact.

Silliness prevails in Indianapolis over alcoholic beverages but they might take a serious look at what this may do to our developing wine and beer industry. More importantly, considering Indiana's budget problems, what it will do tax revenues.

What is a Litigation Attorney?

2009-07-09T07:46:00.002-05:00

I suspect I will get comments from other lawyers about the difference between a a litigation attorney and a trial lawyer. Relax. I did not write this post for us lawyers but for the non-lawyers. (For the record, I do think of myself as a trial lawyer and not a litigation attorney). And, Attorney at large, has written a good article for laypeople about what litigation attorney or a trial lawyer does:

What Does A Litigation Attorney Do, Anyway
Litigation Takes A Long Period Of Time.

Very rarely does the litigation process go quickly. It’s not that litigation attorneys don’t want to expedite the process as much as possible – it’s just that there are an unbelievable number of details and legal procedures that have to be followed in any type of litigation. Court systems and their rules also introduce their own level of bureaucracy that only extends the amount of time needed for litigation attorneys to cover all the bases necessary.

Again, litigation is a very complicated process. While it might sound simple to simply carry a lawsuit through the court process, every experienced litigation attorney knows that this is just not the case at all!

The Costs of Restructuring A Business

2009-07-08T12:05:00.001-05:00

Canada's Slaw raises a point with its Focus on Employees: The Hidden Costs of Restructuring a Business that I think often gets overlooked when restructuring a business (whether in or out of bankruptcy) - the employees. Yes, we know they are there but do we really pay attention?

Planning for a business restructuring often takes months; yet in my experience, insufficient resources are typically devoted to managing the human resources consequences, leading to significant additional or ‘hidden’ costs. The following are some examples of strategies that can mitigate costs and losses associated with terminated or disaffected employees:

* Rumours of a pending sale of a business or layoffs are worrisome and distracting to employees, resulting in lost productivity, higher benefit costs, poorer client relations and service, and attrition of key employees. Emphasize the importance of taking steps to maintain confidentiality throughout the planning or negotiating stages.
*

How fairly employees believe they and laid off co-workers were treated during the restructuring will affect retained employees’ commitment and productivity. Consider what if any steps you can take to minimize the chances that employees will become disaffected and/or leave as a result of the restructuring.
*

If you are considering providing ‘working notice’ of termination for employees, consider the hidden costs of such a plan including increased benefit claims and costs, the potential negative impact on service to clients and customers during the working notice period, and the risk that those employees will not complete critical tasks or facilitate a transition prior to their termination. Offering a closing bonus or increased severance offer payable at the end of the working notice period dependent upon maintaining service levels or completion of the key tasks, is one way to manage those risks.
*

If the sale or closure of a business or business unit is delayed, do not expect that an extension of employees’ working notice will be welcomed by those employees. One consequence of that event is that any negotiations for the final severance packages, if not yet settled, will be negatively affected. If it is reasonably foreseeable that the sale or closure date may be delayed, consider the benefits of agreeing to more generous severance package terms in exchange for an early settlement coupled with a right for the employer to later apportion what part of the severance will consist of working notice and pay in lieu of notice.
*

Business owners who have agreed to sell their business but stay on as an employee after the closing are usually not prepared for and/or underestimate the difficulties associated with the change in control and culture that inevitably occurs. Ensure that any new employment agreements have good severance provisions that can be triggered by the former owner/now employee, and minimize any linkages to payment of the sale proceeds with the length of employment, post-closing.
*

If retention of key employees is a condition of sale, determine what is necessary to secure their employment, or continued employment. Key employees’ leverage increases as costs to negotiate and implement the sale have been incurred, and as closing nears. Consider the relative risks of early communication of a sale that may not close in order to secure key employees, versus the costs of not securing key employees early.
*

Consider the culture of an acquired business when imposing new employment contracts. Even when a purchaser agrees to offer employment to current employees on substantially the same terms, if the form of employment contract (i.e. formality, tone, or one-sided language) is at odds with what the employees are used to, the employee-purchaser relationship will get off to a bad start. That in turn may affect the employees’ willingness to buy into or adapt to operational changes implemented by the purchaser, or result in loss of productivity or other costs associated with attrition.

Yahoo and False Profiles - 9th Circuit Case

2009-07-08T09:16:00.000-05:00

Technologist blog gave me 9th Circuit Reopens Yahoo! Case Over False Profiles and I suggest it be read at length. First as a sign that we still have a lot to figure out how to legislate for the Web and secondly as a caution for honked off ex-significant others.

After the relationship ended, her former boyfriend created fake profiles for Barnes on Yahoo! websites containing nude and semi-nude photographs and a solicitation for sex. The ex also went on chat rooms posing as Barnes and directed men to these fake profiles, which also contained the contact information for Barnes' work.

Before too long, men began calling and showing up at Barnes' place of employment expecting sex. According to the complaint, Barnes asked Yahoo! to remove the profiles in writing, but after four letters had not received a response. Finally, just before a local TV news program ran a story on the fake profiles, Yahoo!'s Director of Communications allegedly contacted Barnes and promised that she would take action to have the profiles removed.

***

The 9th Circuit held last Thursday that Section 230 of the Communications
Decency Act granted Yahoo! immunity for the negligent undertaking
portion of Barnes' claim. Section 230 states that "[n]o provider or
user of an interactive computer service shall be treated as the
publisher or speaker of any information provided by another information
content provider."

The court found, and Barnes did not contest, that Yahoo! is an
"interactive computer service." The court then declared that Section
230 barred the negligent undertaking claim since the undertaking in
question was the de-publication of third-party material. The court
interpreted Section 230 to block a claim that would be based on an
interactive computer service's actions as a publisher, and held that
the district court correctly dismissed that portion of the action.

The court determined that the opposite held true for Barnes' claim
based on promissory estoppel, since the promise to engage in the
activities of a publisher is not the same thing as actually engaging in
the activities of a publisher, according to the court. Since the
promissory estoppel claim didn't involve treating Yahoo! as a publisher
of the information from a third-party, the court said, Section 230 did
not prevent the suit from moving forward.

In distinguishing between the two claims, Judge Diarmuid O'Scannlain
wrote that "[p]romising is different [from undertaking], because it is
not synonymous with the performance of the action promised."

Having seen something like this done to a friend of mine, I am sympathetic to the plaintiff but I got to wonder about the culpability of Yahoo on this one.

Worried About Financing a Case Needing Experts?

2009-07-07T08:49:00.000-05:00

Small Firm Business's Litigants Lacking Big Tech Bucks Can Still Play Ball has some interesting points that I have yet to really work out - at this point, I do not have this issue in any of my pending cases.

"In a survey, several federal district court judges also opined that Rule 403 permits the trial judge to bar the proponent's expert testimony when the opponent lacks the wherewithal to afford a rebuttal expert. Savikas & Silverman, 'Making the Poverty Objection: Parties Without Fancy Exhibits Could Claim Unfair Prejudice, But Not All Judges Would Agree,' NLJ, July 26, 1999, at C1.

Is it proper to invoke Rule 403 in that fashion? On the one hand, Rule 403 does not embody any egalitarian objective. Neither the text of the statute, the accompanying advisory committee note, nor any passages in the congressional deliberations over Rule 403 indicate that the drafters intended judges to resort to Rule 403 to compensate for an imbalance of financial resources between the litigants.

As quoted above, Rule 403 lists a number of probative dangers. Several other federal rules provisions contain lists. For example, Rule 404(b) lists some of the recognized noncharacter theories of logical relevance of uncharged misconduct. Likewise, Rule 407 enumerates several permissible purposes for introducing evidence of subsequent remedial measures."

Lauth Bankruptcy Follow Up

2009-07-07T07:46:00.000-05:00

A bit of older news from The Indianapolis Star is Judge: Lauth can operate bankrupt subsidiaries. Interesting to see what they paid out in fees before filing bankruptcy. The real question for a Chapter 11 case is will the business survive the process (which ought to explain the caution and care taken with Chrysler and GM).

Judge Basil H. Lorch III ruled it's in the best interest of creditors and others for Lauth management to continue operating its bankrupt subsidiaries, despite a plea from a major lender that Lauth be removed.

The three Lauth subsidiaries that filed for Chapter 11 reorganization bankruptcy May 1 control dozens of Lauth-developed office, industrial and retail properties across the country.

"Many of the developments are only partially completed, and most are in financial distress," said a court filing by LIP Holdings, a Lauth debtor controlled by Inland American Real Estate Trust of Chicago.

***

The case figures to be one of the largest bankruptcies of an Indiana commercial developer.

Inland, acting through LIP Holdings, accused Lauth managers of trying to bail out the distressed properties with collateral from healthier properties from other subsidiaries. That would benefit Lauth executives who've personally guaranteed debts of some of the properties in bankruptcy, LIP charged.

In his ruling, the judge ordered Lauth not to "cross-collateralize" any assets in bankruptcy or issue new debt.

Resop said Lauth's court filings show it paid $100,000 to a Chicago law firm for debt counseling in November, an indication Lauth contemplated filing for bankruptcy long before Inland made its move in April to take control of some Lauth-developed properties.

Trade Secrets Litigation Round Up for The Week

2009-07-07T05:43:00.000-05:00

A Goldman trading scandal from Reuters might actually have broader interests, but I leave those broader issues to others:

While most in the United States were celebrating the Fourth of July holiday, a Russian immigrant living in New Jersey was being held on federal charges of stealing secret computer trading codes from a major New York-based financial institution.

Authorities did not identify the firm, but sources say the institution is none other than Goldman Sachs (GS.N).

The charges, if proven, are significant because the codes that the accused, Sergey Aleynikov, tried to steal are the secret sauce to Goldman's automated stock and commodities trading business.
***
The platform is one of the things that gives Goldman an advantage over the competition when it comes to the rapid-fire trading of stocks and commodities. Federal authorities say the platform quickly processes rapid developments in the markets and using secret mathematical formulas, allows the firm to make highly-profitable automated trades.

The criminal case has the potential to shed a light on the inner workings of an important profit center for Goldman and other Wall Street firms. The charges also raise serious questions about the safeguards that Wall Street firms deploy to protect these costly-to-build proprietary trading systems.

I think everyone who follows this blog knows the key to a trade secrets case is how well and in what ways the business keeps those secrets secret.

Bloomberg reports on Hartford Sues Arch Over Hiring of New York Employees (Update2) wherein former employees hired by a competitor become also defendants in a civil suit:

Hartford said in the lawsuit, filed today in New York state Supreme Court, that Arch “conducted an unlawful corporate ‘raid’” by hiring more than 60 managers, underwriters and employees from a unit that insures financial obligations and corporate boards. Hartford Financial Products, the New York- based subsidiary, employs about 250 people.

Hartford is guarding against employee and client defections after three consecutive quarterly losses depleted capital and a $3.4 billion U.S. bailout raised the prospect of government- imposed compensation curbs. Arch and a unit of Berkshire Hathaway Inc. settled a suit last year stemming from allegations that Arch stole trade secrets.

Hartford said in its complaint that Arch conspired with David McElroy, who left his job as president of the Hartford unit on June 5, to gain trade secrets and client information. McElroy, who is also named in the lawsuit, cooperated with Arch’s efforts to hire Hartford underwriters through “threats, bullying and repeated disparagement” of the insurer, according to the complaint.

Also from New York, Courthouse News Service reports on Ex-Partner Accused of AIP Trade Secret Theft:

A former managing partner of American Institutional Partners masterminded a scheme to steal the company's trade secrets from its owner, Pelican Equity claims in Federal Court.
Pelican Equity, which owns AIP's rights, says Robert Brazell partnered with Stephen Norris to form Talos Partners in order to steal AIP's confidential busines information for their own gain. At the time, Brazell was a managing partner of AIP, a stock loan business. The complaint paints a colorful picture of him, quoting his 2008 email to AIP founder Mark Robbins, in which he said he "humped the Prudential brochure" because he was so excited to be a partner in AIP.
Brazell used the company's computers to copy a Web site that AIP was developing, which he used for Talos, the lawsuit states. Pelican claims the copying was so sloppy that early forms of Talos' site still referred to AIP.
In the last 90 days, the defendants - acting through Talos - have closed more than $500 million in stock loans and have amassed a balance sheet of $350 million using AIP's confidential information, the suit states.

All right, I admit this raised my eyebrows. Hard to imagine the ineptitude of a managing partner who could not make sure that the highjacked HTML did not mention his old firm, but lucky for AIP that they did not. Thoughts of arrogant, boneheads from Wall Street do not need much stirring during the current state of our economy but those thoughts apply to both sides of this case. Again, what did AIP do to protect its trade secrets?

I do want to note a new trade secrets blog: Trading Secrets. Just found them via Google Alerts and only have had time to read FLIR Systems, Inc. v. Parrish: A Cautionary Tale for Trade Secrets Misappropriation Plaintiffs. I mentioned this case here. This post details what went wrong in the case and it is probably too long a critique for me to quote in full but I am compelled to point out these paragraphs:

• The absence of any evidence of misappropriation or threatened misappropriation of trade secrets. Notably, there was evidence at trial that one of the defendants, Parrish, had downloaded technological data onto a hard drive before leaving Indigo, and that he destroyed the hard drive a few months before the lawsuit was filed. Although evidence that an employee has downloaded confidential information shortly before leaving his employer is typically significant to support a misappropriation claim, here, the evidence was discounted because defendants first learned of the download after the complaint was filed, so it was not a consideration for bringing suit, and the download was not a threatened misappropriation because there was no evidence that the contents of the hard drive, “if such contents existed, were improperly accessed, used, or copied before the drive was destroyed.”

• Evidence that FLIR and Indigo had an anticompetitive motive in filing the lawsuit. On this point, the court found significant the testimony of FLIR’s CEO, who testified that “we can’t tolerate a direct competitive threat by [Parrish] and [Fitzgibbons],” inferring that the CEO had no evidence of wrongdoing but was bothered that defendants planned to compete with FLIR in the future. The Court also found significant the fact that another FLIR officer had voted to file the lawsuit but had no personal knowledge that defendants had committed a wrongful act.

• Failure by FLIR and Indigo to identify what trade secrets would be subject to the permanent injunction. The Court found as “strong evidence of bad faith” FLIR and Indigo’s proposed injunction, which barred defendants from developing certain products for a 12-month period even if they did not use FLIR and Indigo’s technology or trade secrets.

Trade Secrets Vault notes an interesting case with Dialysis centers locked in battle. What really perked me up was this from the original newspaper source:

DaVita has filed similar lawsuits against doctors and treatment centers in at least four other states, the newspaper reported.

DaVita issued a short statement saying ‘‘maintaining strong relationships with our business partners is a primary concern.’’

I did not know the dialysis business was so cut-throat. I think I might be even be a bit surprised.

And so ends this week of trade secrets litigation.

Music Downloading - How the Canadians Do It

2009-07-06T09:17:00.000-05:00

While I have posted on music downloading, this is actually more of an intellectual curiosity of mine. With that understood, here is Maybe the Jury Didn’t Like the Songs from Slaw:

So how might this have played out in Canada? The legality of file sharing has been hotly debated in this country for many years, and the issue boiled over again recently with the Canadian Recording Industry Association (CRIA) trading pot shots in the press with copyright luminaries like Michael Geist and Howard Knopf over both the legality of the practice and its effect on the recording industry. The best guidance available to Canadians on the issue comes from two cases, decided in 2004 and 2008 respectively, which still leave some uncertainty as to the legality of file sharing in Canada. What is clear, however, is that thus far CRIA has not had nearly the same success in the Canadian Courts that the RIAA has had in the U.S.

Under Canada’s Copyright Act, private copying of a musical recording for private use is expressly permitted. The trade off is the requirement for payment by consumers of a blank media levy, which levy is payable on blank CD-ROMs and other “audio recording media”. The blank media levy provisions of the Act were inserted at the behest of CRIA and others, who have since collected multi–millions of dollars in such levies.

The private copying exemption was inserted into the Act in the days of LPs, cassettes, 8 Tracks and reel to reel recording devices – long before the Internet and digital recording media made the process of copying a recording much simpler and faster, with no degradation in the quality of the original recording, no matter how many generations removed the copy is from the original.

***

So, musical tastes aside, a case similar to the Thomas-Rasset case in Canada would by no means have the same result. Even if CRIA were able to convince a Court to order an ISP to divulge the identity of the alleged file-sharer, and even if CRIA could prove to a Court that the defendant’s conduct in uploading or downloading the recordings in question was not within the private copying exemption, the total statutory damages that could be awarded to CRIA, if not grossly out of proportion to the damage suffered, could not exceed $20,000 per recording, for a total of $480,000 (Can.). Not a trifling amount to be sure, and if the Canadian Court decided to add punitive damages on top of that, a result not far off the Thomas-Rasset decision could arise.

Having said that, the likelihood of the music industry actually receiving payment of such monies from file-sharing defendants is pretty remote: as Ms. Thomas-Rasset rightly quipped, “You can’t get blood from a turnip”. Clearly, it is the publicity from such monumental awards that RIAA and CRIA really covet in their efforts to deter what they see as a serious threat to their livelihood. Whether such deterrence is actually achieved in the long run is anyone’s guess. In any event, we may never get the chance to see a case like this in Canada: it appears that the RIAA is now changing its strategy in the U.S. to target ISPs rather than individual file sharers, and it seems reasonable to assume that CRIA will, again, follow suit.

I think we need to rethink a lot of our intellectual property law in light of the Internet. However, Congress has a few things that are probably bit more pressing at just this moment. Meanwhile, this bit from John Dvorak's FTC Is Ready to Pounce on Dishonest Bloggers gets a thumbs up from me:

This is like the government, in cahoots with the RIAA, going after some mom in Ohio for stupidly leaving Kazaa running on her machine and discovering she's been a transit point for the "Best of Bee Gee's" for the past two years. Meanwhile, the Asian mobs off the Indonesian coast are cranking out commercial counterfeit CDs by the millions. Do something about that first before you go after the oh-so-dangerous mom in Ohio.

GM Bankruptcy Moving Forward

2009-07-06T07:06:00.003-05:00

So reports The New York Times:

A federal judge approved a plan by General Motors late on Sunday to sell its best assets to a new, government-backed company, a crucial step for the automaker to restructure and complete its trip through bankruptcy court.

I suppose being GM does get a judge to work on a holiday weekend (some holiday) and work he did:

In his 95-page opinion, Judge Gerber wrote that he agreed with G.M.’s main contention: that the asset sale was needed to preserve its business in the face of steep losses and government financing that is scheduled to run out by the end of the week.
“Bankruptcy courts have the power to authorize sales of assets at a time when there still is value to preserve — to prevent the death of the patient on the operating table,” Judge Gerber wrote.
With the approval of the restructuring plan, G.M. and the government are seeking to close the sale by Thursday afternoon, when a four-day stay of the judge’s order expires. The government, which is financing the reorganization, had given G.M. until Friday to win approval for the sale or risk losing its bankruptcy financing.

***

If completed by Friday, G.M. would be near the end of an unusually quick trip through the bankruptcy courts, turning itself into smaller company with fewer brands and a new focus on fuel-efficient cars.
Under the terms of the revised deal, G.M. would sell its most desirable assets, including the Chevrolet and Cadillac brands, to a new company owned largely by the American and Canadian governments and a health care trust for the United Automobile Workers union. The Obama administration anticipates taking the company, which will still bear the General Motors name, public next year.

Let us hope that is not old wine in new bottles for several reasons - our tax dollars, the employees, the economy and, frankly, the bankruptcy system.

And now from the creditors' side (or is it just some of them?):

It is possible that creditors who objected to the terms could file an appeal. Lawyers for several opponents argued during the hearings that the G.M. sale stripped them of their rights as creditors. A lawyer representing three dissident bondholders urged Judge Gerber to call what he said was the Obama administration’s bluff on the July 10 deadline.

Er, I think Obama is anything but a bluffer. Not something I would want reported in any newspaper. The fact is that this kind of case - really any Chapter 11 - there is a bit of gamesmanship, of gambling, to get the biggest slice for one's clients without killing the business. More can be gotten if the business is merely lamed and good chance of nothing if the business is in an iron lung.

Bankruptcy - Southern District of Indiana - New Rules

2009-07-06T07:05:00.002-05:00

Effective July 13:

http://www.insb.uscourts.gov/WebForms/notices/prodchange.pdf

Also:

There is a new notice posted regarding a revised general order on the use of electronic filing and a new ECF administrative policies and procedures manual.

http://www.insb.uscourts.gov/WebForms/notices/ecfadminnot.pdf

Contracts, Language and Making a Fetish of Archaic Style

2009-07-06T07:05:00.000-05:00

I really admire AdamsDrafting Blog and Mr. Adams sane approach to drafting contracts.

What to Do When the Other Side Wants to Change Your MSCD-Compliant Language may lack a punch of some other posts but it brings to mind similar discussions:

But that said, it’s likely that anyone who’s a mindless slave to traditional usages will, on reviewing an MSCD-compliant draft, instinctively seek to change the language back to what they’re used to. I don’t know how often that happens—I’d be interested to hear, dear readers, what your experience has been.

An obvious response would be to tell anyone requesting changes that you’re only going to consider changes that have a bearing on meaning, and that nothing would be gained by racking up lawyer time discussing stylistic changes. It’s standard deal etiquette that you stick with the drafter’s language unless you have good reason for asking for a change.

I think too many clients think that a contract not overflowing with legalisms (and especially archaic legalisms) must be necessarily shoddy when the opposite is true.

A contract should say what it means in language that all understand so all know what is required of them.

And for those who think anyone can write any contract, please understand plain English contracts are harder than one might think. Those who think so might just think that parodying Ernest Hemingway is also an easy task when it is not.

Those interested in contracts need to keep an eye on the Adams Drafting Blog.

Muncie - Tomorrow - Free Legal Consult

2009-07-06T04:36:00.002-05:00

So reports The Muncie Star-Press this morning:

Free legal assistance available on Tuesday -

Low-income residents can get free legal assistance on civil matters from an attorney 9 a.m.-noon Tuesday at Maring-Hunt Library, 2005 S. High St.

Indiana Legal Services sends an attorney to Muncie twice each month to offer free assistance.
No appointment is necessary.
To be eligible for services, a person must have a household income that is less than 125 percent of the federal poverty income level, meaning an income of $13,000 for a one-person household or an income of $26,500 for a four-person household. Those ages 60 or older are automatically eligible for services.
For civil legal problems requiring immediate attention, call (800) 869-0212

Indiana Lemon Law - New Case

2009-07-05T15:05:00.000-05:00

As I am still catching up from hiatus last month, I can only offer The Indiana Lawyer Daily report on a new lemon law case, COA rules on first impression lemon-law issue

The Indiana Court of Appeals tackled today an issue of first impression regarding the state's lemon law: Once a consumer has met the law's repair threshold, he can still file an action under the lemon law even if a subsequent repair fixes the problem.

In Metro Health Professionals, Inc. v. Chrysler, LLC,
No. 06A04-0809-CV-547, Metro Health Professionals purchased a Jeep from
a Chrysler dealer in October 2006. MHP took the vehicle in for service
at a repair facility authorized by Chrysler to address issues with all
the warning lights in the dash coming on, gauges that quit working,
headlights shutting on and off spontaneously, and the transmission
shifting into low gear spontaneously. Each time it was brought in,
Chrysler claimed there wasn't a problem. Finally, after the fifth time
MHP brought the car in for service, the repair facility replaced the
front control module and the problems haven't occurred since.

Congratulations to Robert Duff of Lebanon, Indiana for his win for the consumer.

Michael Jackson's Will...Why The Surprise?

2009-07-05T14:35:00.000-05:00

I caught a few headlines that expressed surprise that Michael Jackson left nothing to ex-wife. I am thinking, why should he have? More importantly, notice Jackson use of a trust.

The Associated Press headlined the story much more sedately with Judge: Mom has temp control of Jackson's property

LOS ANGELES (AP) — A judge ruled Wednesday that Katherine Jackson will retain limited control of 2,000 items from Neverland until another hearing is held Monday.

Superior Court Judge Mitchell Beckloff called for a speedy compromise between attorneys for Katherine Jackson and the two co-executors of Michael Jackson's will — lawyer John Branca and John McClain, a music executive and a family friend.

"I would like the family to sit down and try to make this work so that we don't have a difficult time in court," the judge said.

The New York Times has some interesting points in its Jackson’s Will Could Set Off Legal Struggle:

A five-page will written in 2002 and filed in state court Wednesday by two executors who were once business partners of Mr. Jackson gives the entire estate to a family trust, and names his mother, Katherine Jackson, as a beneficiary of the trust and as legal guardian of the children.

***

It was not clear if the will filed Wednesday was the only one. With Mr. Jackson employing a revolving door of legal advisers and others over the years, Mrs. Jackson’s lawyer, Burt Levitch, did not rule out possibility of multiple wills.

But if the 2002 will is deemed valid and a trust receives all of Mr. Jackson’s assets, many of the details of his finances could remain secret. The trust documents are private.

News: Sentate Version of Health Care Plan

2009-07-05T12:15:00.000-05:00

From msnbc.com's First Read blog comes Kennedy committee releases health plan

Employer Play or Play: ("Shared Responsibility of Employers")
-- companies that do not offer "adequate coverage" to full time workers would pay an annual fee of $750 per employee
-- companies that do not offer coverage for part-time workers pay $375 per employee
-- firms with less that 25 employees would be exempt from fees
-- companies most cover 60% of the cost of the monthly premiums to avoid fees

You Got an Online Presence But What If You Die?

2009-07-05T09:00:00.000-05:00

This little problem was in my mind when I ran across Legacy Locker (such as what would happen to this blog). This is how it describes itself:

The safe and secure way to pass your online accounts to your friends and loved ones.
Legacy Locker is a safe, secure repository for your digital property that lets you grant access to online assets for friends and loved ones in the event of death or disability.

Do give it a look.

Where Divorce and Business Law Intersect

2009-07-03T15:27:00.001-05:00

How can a divorce injure a business? I can think of several ways but Ex-Wife Can’t Talk About Divorce to Media—Ever, Conn. Court Rules from ABA Journal - Law News Now shows another way and the means of protection:

The ex-wife of a wealthy skin doctor can't talk about her divorce with the media—ever, Connecticut's Supreme Court has ruled.
The ruling establishes that private waivers of First Amendment free speech rights are "presumptively enforceable," the Connecticut Law Tribune reports.

Still, the state's high court said such decisions should be made on a case-by-case basis and should consider the abilities of the individual waiving rights.

The ruling enforces a confidentiality agreement signed by Madeleine Perricone, the wife of multimillionaire skin doctor Nicholas V. Perricone, who agreed not to talk about her divorce in the early stages of its bitter and contentious filing, the Associated Press reports.