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Preview: Indiana Business Litigation and Collections Law

Indiana Business Litigation and Collections Law



Here I write about non-competition, trade secrets, and other business related lawsuits. Then, too, I am writing about how to get the money after a lawsuit - receiverships, assignments for the benefit of creditors, and other collection methods. If you ar



Updated: 2017-02-08T23:47:26.629-05:00

 



Receiverships in The News

2010-03-03T07:40:01.001-05:00

From The Indianapolis Business Journal comes Fair Finance going along with appointment of receiver:
"Attorneys for Tim Durham’s Fair Finance Co. on Wednesday filed court papers saying they don’t object to putting the Akron, Ohio-based company under the control of a receiver."

***
In Wednesday’s filing, attorneys with the Indianapolis office of Taft Stettinius & Hollister representing Fair and its parent—a holding company owned by Durham and fellow Indianapolis businessman Jim Cochran—denied any fraud occurred but said putting both firms into receivership nonetheless made sense.

And this from The Indianapolis Star, Receivers named for rental complexes:
Indianapolis -- Court-appointed receivers were named recently to run apartment complexes on the Westside and Southeastside taken over by lenders. Alexandra Jackiw of Buckingham Management was named receiver to run Cedars Apartments, near 34th Street and Lafayette Road. Mark Figg of NAI Olympia Partners was named receiver for Emerson Apartments, 5140 Emerson Village Place. The projects were run by corporations headed by Gustan L. Cho, Hoffman Estates, Ill.



“It is in the best interests of Fair, [its investors] and other creditors that some order and structure replace the wild speculation and reckless accusations that have permeated the environment since Fair’s offices were raided in late November,” Wednesday’s filing said.



What If The Non-Compete Is Too Tough?

2010-03-02T08:39:00.520-05:00

LEGAL FORUM from November of 1996 may have an answer in A Too-Tough Noncompete Clause Could Defeat Its Own Purpose:
"Many groups are willing to compromise on their noncompete provisions. When I represent physician employees, I often negotiate such compromises. But I also resist them strongly when representing an established medical group."

Here is my reasoning. The enforceability of a noncompete provision is directly related to its reasonableness. Part of what makes the covenant reasonable is that it is necessary to prevent the departed physician from taking something (the group's market leverage) that would harm the medical group. But if the medical group starts allowing exceptions to the noncompete clause, it effectively has stated that the employee's departure is not harmful to the group, or that the harm is O.K. in certain circumstances. This is dangerous, because it suggests that the noncompete clause may not be an essential protection for the group, increasing the chances that a court may find it inappropriate and thus unenforceable. There certainly are reasons why this vulnerability may not apply in certain circumstances, or why this vulnerability may otherwise be acceptable. But weigh the issues carefully before you agree to compromise.

A medical group that is open to compromise has a number of options to consider. A covenant may only apply if the employee physician is terminated for cause, or departs the group without cause. (Be sure to define "cause" carefully!) Or the covenant may only preclude independent medical practice, so that the departed physician may become a hospital employee. Or the noncompete provision may disappear or change its focus after a certain period of continued employment. There are many permutations. In general, though, an employer should only agree to compromises that can be justified in the contract as both fair and consistent with the premise that underlies the covenant.




Gardening Leave Remedies

2010-02-14T08:29:00.446-05:00

I wrote about the uses of gardening leave here. What if an employee decides to breach the gardening leave contract? I thought only injunction relief until I read Protect your firm when staff leave from Microscope in the UK.Getting an injunction as set out in this paragraph ought to be familiar to anyone filing a suit on a non -compete agreement:The employer can apply for a court order, an "injunction", to enforce either the employee’s implied duties of honesty, loyalty and faithful service; and/or any express term such as a garden leave clause which will prohibit the employee from having other business interests during the course of employment - which includes employment with another employer.When does the litigation being? When there is a garden leave agreement in place and the employee quits without giving the notice required under the agreement.By resigning without notice the employee is breaching the contract. To enforce a garden leave clause, the employer should refuse to accept the attempted termination of the contract, hold the employee to the obligation to give notice and (assuming the contract so empowers you) suspend them for the entire notice period. Where, however, despite these steps, the employee commences work elsewhere, injunction proceedings (see above) may be required.It is for the client to decide if suit needs filed, but with the remedy being an injunction the time spent on reaching a decision can be injurious to both the business and the suit.Although framed as a breach of fiduciary duty, Bartholomew v. Alstom Power, Inc., (SD Ohio, Eastern Div. 2005)does involve a garden clause. Violating the garden clause was used by the former employer as one basis for the lawsuit. On the other hand, the jury decided against the employer.The New South Wales (Australia) courts limited any remedy during garden leave. Mallesons Stephen Jaques noted this in its Can an employer enforce restraints during gardening leave?The Supreme Court of New South Wales has held that an employer could enforce restraints against an employee on extended gardening leave only to the extent that the restraints were reasonable.The employee, a broker, was on a fixed term contract which included a restraint on taking up employment with a competitor or soliciting clients or employees. The restraint purported to apply during the term and for three months afterwards. The employee resigned more than a year before the end of the term to take up a position with a competitor. The employer continued to treat the contract as on foot. It placed the employee on gardening leave (that is, continued to pay him but did not require him to attend for work), and sought an injunction preventing him from working for the competitor for the balance of the contract term.The Court held that while the contract had not been terminated by the employee’s resignation (because it was for a fixed term, and the employer had not agreed to termination), the employment relationship had come to an end. While non-compete and non-solicit restraints are generally enforceable during employment, after employment they are only enforceable to the extent they are reasonable and not contrary to public policy. Based on the nature of the employment and the employer’s business, the Court held that in this case a reasonable period was six months. This meant the employee was prevented from competing or soliciting clients or employees for only six months after he resigned (despite the fact that the fixed term contract continued for a longer period, and the employee would have been paid for the time he was out of the workforce).Tullett Prebon (Australia) Pty Ltd v Purcell [2008] NSWSC 852[...]



Trust Litigation - Indiana,The Simon Trust

2010-02-04T13:03:00.325-05:00

Here is some news from Indianapolis. Deborah Simon says other potential trustees have conflicts
Deborah Simon, who’s seeking to remove her stepmother from overseeing a trust that holds her late father Melvin’s fortune, is asking a court to pass over the two Indianapolis businessmen who normally would be next in line for the job.

Language in the trust stipulates that if the stepmother, Bren Simon, is unable to serve as trustee because of incapacitation, resignation or death, Deborah’s brother, David, Simon Property Group’s chairman and CEO, would step into the role. And if he couldn’t serve, retired Katz Sapper & Miller partner Bruce Jacobson would become trustee.

But in a filing Monday seeking Bren’s ouster, Deborah instead favors appointment of a disinterested corporate trustee. The filing, first reported by IBJ, says that neither David Simon nor Jacobson should fill the role because both will be witnesses in the lawsuit she filed Jan. 7 contesting changes in the will that Melvin executed in February 2009—seven months before he died at age 82.

The changes boosted the portion of Melvin’s estate going directly to Bren, 66, from one-third to one-half. They also wiped out the portion that was to go to Deborah, David and their sister, Cynthia Simon-Skjodt.
The point to take from all this? Regardless of how much planning there is in preventing litigation, there is just no way to prevent all litigation. But as I learned in Boy Scouts, being prepared helps more a whole lot more than no preparation.

Without any business succession planning, this kind of fight would have no boundaries. As it stands now, the fight has boundaries.

What planning have you done to prevent the business from being swallowed whole by litigation? If you have not done any, why not?



Litigation as War 2 - More Thinking About Stategy

2010-01-16T07:02:00.393-05:00

In Litigation as War 1 - Thinking About Stategy, I wrote: "These questions are to find out your goals and what we have to do to reach those goals and how much you money and effort you want to put into getting to your goals." Today, I am borrowing from Deception and Settlement: The Application of Sun Tzu's Ancient Strategies of War to the Law to expand on these themes. "A lawsuit, like any competition, is essentially a form of warfare. The strategies of prosecuting or defending a suit are much the same as those mustered on the battlefield. Victory often goes not to the party with the stronger case, but to the party that makes the best use of the process, understanding tactics and strategy."Goals, got to know what you want from the lawsuit - settlement or trial depend on knowing this point:Settlement driven by common sense and efficiency will achieve the best results for the client. This is best seen in personal injury litigation, where the more time invested in a case often means a lower recovery for the attorney, with little additional benefit for the client. Many business litigators forget this point, in part, because in business lawsuits the parties do not limit themselves to the pursuit of compensation. Businesses also seek justice, punishment and a leg-up over their competitor. Generally speaking, business litigators also do not depend on settlement for compensation. They are paid hourly, often at premium rates. The motivation of some attorneys might be to keep the case going and avoid settlement.While that is a good argument against the hourly fees paradigm, the client drives the litigation, too. Some clients think settlement is a sign of weakness. I say that depends on the terms of the settlement. Keep reading as both the original author's statement and mine are explained below.This also brings me to my third theme: how much you money and effort you want to put into getting to your goals. Sun Tzu advises against this purposeless destruction. Each of the steps taken in a lawsuit should have a goal of encouraging settlement, albeit on your terms. This goal should be at the forefront whenever discovery is taken, motions are filed, and meetings with the opposition are held. This may not assure that fees and costs will be limited. Rather, it means that when money must be spent, it should be to encourage resolution of the matter. If it does not, then one should consider choosing a more effective course. This strategy should be pursued even when it appears that your opponent has failed to appreciate the benefits of settlement. If your opponent is bent on the destruction of your business at any cost, the skillful course is to encourage the opponent to spend frivolously. But even this is with the goal of exhausting the opponent and encouraging settlement. The important lesson to be learned from Sun Tzu, is that a mindless push for victory at any cost can destroy not only your opponent, but your business as well. (My emphasis.)If you do not have much knowledge of history, you will probably not have heard of Pyrrhus or of a Pyrrhic victory. The phrase wining every battle and losing the war may mean something then. That is what we are talking about here - putting so much into a case that after trial the company has no profit in its success. Put more drastically, the "successful" litigation drives the plaintiff into bankruptcy. I cannot accept that a litigation client wants me to pursue a case to the point that my client becomes bankrupt.[...]



Downside of Trade Secrets

2010-01-13T08:03:00.387-05:00

As a lawyer, I should be able to see both sides of this story from The Manchester Democrat Examiner, A trade secret no one wants but it is not so easy:
FairPoint Communications has presented a plan to address a long list of customer complaints. But pieces of that plan are being kept from the public because, according to the company, they are trade secrets.

Which begs the question:

Why would anyone want a trade secret from a company that, so far, has performed so poorly? It's not like they're doing so well that any of their practices would be copied anytime soon.
Spurious claims of trade secrets undermines legitimate business interests.

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Electronic Discovery & Computer Records - A Canadian Opinion

2010-01-11T08:26:00.223-05:00

I clipped Slaw's Well worth a read – George Paul’s “Foundations of Digital Evidence” quite a while back but never got around to publishing. I think the following probably lies outside mainstream thinking but it is a provocative piece. Since the Christmas bomber managed to show how screwed up software can be, the last paragraph resonates even stronger.Paul starts with evidence law’s preference for original records and argues it is both irrelevant and dangerous. It is irrelevant because digital records are comprised of “pure information” and can be modified without creating any evidence of change (metadata aside). It is dangerous because it invites inflated assumptions about a document’s authenticity, a problem aggravated because we often proffer digital information after it has been recorded on paper. That is, we proffer a physical rendition of digital information that appears to have integrity. Paul argues “trivial showings” based on inspection of paper documents should not support admissibility:***Paul also argues that the hearsay doctrine ought to bar the admission of computer-generated records – the output of computer processing – without special assurance of trustworthiness. He demonstrates, with case citations, that American courts have largely failed to recognize the risk posed by admitting out of court “statements” made by computers, often by utilizing the business records exception in a manner treats computer-generated as far more reliable than they deserve to be treated given the commonplace challenges in processing data: “Just because businesses rely on faulty computer programs does not necessarily mean that courts should follow suit.”Now let us consider these points:Applied DiscoveryThe court held that “name” terms should be used with particular technological references because searches of names alone would result in positive hits on virtually every document held by defendants’ relatively small business in which most employees were “key” employees. However, terms relating to the licensing of source code should not be used in conjunction with other terms, according to the court, because licensing activity of defendants’ company was “relatively small” and the result of a search of license terms only when found with other terms could be “excessively narrow.” The court invited the parties to return if results from the first search suggested some other search protocol might be needed. e-Discovery TeamClearone Communications v. Chiang, 2008 WL 704228 (D. Utah Mar. 10, 2008). Plaintiff filed a motion for sanctions in this case involving claims of misappropriation of trade secrets, breach of contract, and conversion. Plaintiff argued that sanctions were warranted because of Defendant’s misrepresentations concerning the late source code production and Defendant’s failure to produce “smoking gun” email, which was produced by another party to the litigation. The other party was the recipient of the “smoking gun” email. Defendant argued that its computer system did not retain copies of any sent emails.With our increasing dependence on digital technology, these problems will come down to businesses of all sizes. Be ready fo rit.[...]



Litigation as War 1 - Thinking About Stategy

2010-01-09T09:25:20.638-05:00

I think some people think of litigation as needing no strategy. I cannot explain why they think so. Maybe watching too much Judge Wapner and his successors. Those television shows have as much reality to litigation as Jerry Springer has to civilized discourse. Perhaps people just do not understand that mere bluster does make for a successful case any more than its for a successful war.

If you are a potential client, I will ask a lot of questions about where you want to go with a case and about the facts and how much you want to want to put into the case. These questions are to find out your goals and what we have to do to reach those goals and how much you money and effort you want to put into getting to your goals.

Several years ago I had a client get into a snit over that last question. We parted ways over that very question. In that matter, the company looked to get $24,000.00. That could easily be eaten up by attorney fees. I am not averse to clients who want to spend as much as they will get back in a judgment but I do think clients need informing of the costs of litigation. If the client wants to pay me more than they will get back from the case, that is their business. My business is informing my client so that they can make the decision of telling me to go after the other party.

If you are a potential client reading this, then should you not expect to be informed of the risks and benefits of a case? Expect a dialog with this office, please. I freely admit my thinking on litigation strategy came from reading Sun Tzu's Art of War several times over the past twenty some years. This passage from The 'Trial Warrior': Applying Sun Tzu's The Art of War to Trial Advocacy captures my own opinion quite well:
...Most trial lawyers will likely identify themselves as a combination of two or all three conceptual models offered; however, the term “Trial Warrior” has a degree of verisimilitude: for the “zealous advocate”, The Art of War provides a blueprint for developing and executing a comprehensive client-focused litigation strategy....
I also strongly urge reading Machiavelli’s The Prince Meets Sun Tzu’s The Art of War. It does a very good job of describing how the mindset for litigation parallels that for war.



Electronic Discovery Resources

2010-01-06T10:14:00.226-05:00

Electronic discovery poses one of the biggest - if not the biggest - issues in modern litigation. Here is a list of online resources dealing with the issue:



Want to Start A Business in Indiana

2010-01-05T11:05:00.531-05:00

Then stop and take a look the Indiana Government site - Access Indiana. One page exists as pretty much a portal for businesses wanting to start up here or relocate here. Just follow this link.

I use pretty much as I do not find easily a link to the Indiana Secretary of State's Business Services Division page. A rather important page as it with the Secretary of State that registers corporations, and limited liability companies.



James Alexander Tanford 's Wine Litigation List

2010-01-04T12:40:00.275-05:00

Yes, it has not been updated since 2005 but still a useful start for research on wine shipping litigation. The page is here.



A Listing of False Claims/Qui Tam

2010-01-02T11:41:16.630-05:00

I still have my interest in False Claims Act litigation. If you think you have this kind of case, then take a look at these sites. If you still think you have one, give me a call.

I give these in no particular order:



Trade Secrets - Criminal Case and Interesting Issues

2009-12-25T18:31:03.496-05:00

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

2010-01-14T00:47:54.155-05:00

I have written before about 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 Institute of Technology) as California has because of its non-compete policy.

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Trade Secret Litigation News - Ideas About Evidence

2009-12-25T18:31:03.500-05:00

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.



Cossing The Border With Trade Secrets

2009-12-25T18:31:03.501-05:00

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."[...]



The Cyberskank Case

2009-12-25T18:31:03.503-05:00

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 $15mLegal 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 spee[...]



Trade Secrets: Barbie, Papermaster and Preventive Law

2009-12-25T18:31:03.505-05:00

Probably too long of a post but, businesspeople, you need to read this Enforcing Property Rights In Confidential And Proprietary IIn 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.***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 service[...]



Indiana Lawyers Cannot Use Trade-Names

2009-12-25T18:31:03.508-05:00

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.

***

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.


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Indiana Non-Compete Case

2009-12-25T18:31:03.509-05:00

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

2009-12-25T18:31:03.510-05:00

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.
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How Contracts Help Fight Fraud

2009-12-25T18:31:03.512-05:00

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.

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Lindsay Lohan Stealing Trade Secrets?

2009-12-25T18:31:03.513-05:00

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.[...]



What is a Litigation Attorney?

2009-12-25T18:31:03.515-05:00

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!





Worried About Financing a Case Needing Experts?

2009-12-25T18:31:03.516-05:00

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."