August 2006

Recent Business Law Decisions From the Mass State Courts

August 18, 2006

Noncompete Agreements. Plaintiffs seeking to enforce noncompete agreements by means of preliminary injunctions have been up against it as of late. In Payson’s Trucking v. Yeskevicz (pdf file) Judge Peter Agnes denied the plaintiff’s motion, which was brought against a contracting party (as opposed to an employee), on the grounds (among others) that the agreement was too vague as to its geographic reach and in the identification of the plaintiff’s actual customers. In Merchant Business Solutions v. Arst (pdf file) Judge Richard Connon denied a preliminary injunction against a former sales employee on the grounds that the geographical limits were too broad and that the plaintiff was seeking protection from ordinary competition (among other reasons). Both cases are worth reviewing, since the impression one takes away is that the pendulum has swung (yet again) in the direction away from enforcement of these agreements. A plaintiff simply needs better facts than the parties had here in order to obtain a preliminary injunction to enforce a noncompete agreement. Derivative Shareholder Suits. When it turns out a company has made an operational mistake it can expect two lawsuits. The ubiquitous and much publicized class action and the less well-known derivative shareholder suit. The latter seeks damages on behalf of the corporation from the officers and directors who allegedly were involved in the wrongdoing. Often the two suits are coordinated by plaintiffs’ counsel,hoping that…

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Just another boring August afternoon in the Internet Age

August 18, 2006

First, Google wants to digitize every book ever written. Now, YouTube wants to make available, for free, every music video ever created: YouTube, which sprung out of nowhere a year ago to now claim over 100 millions views a day, is negotiating for rights to post current and archive music videos on its site, and said any commercial model it decides on will offer the videos free. “What we really want to do is in six to 12 months, maybe 18 months, to have every music video ever created up on YouTube,” co-founder Steve Chen told Reuters. “We’re trying to bring in as much of this content as we can on to the site.” (continued) Right. When will Westlaw or Lexis step up and make every law case ever decided available for free? Now that would be worth getting excited about.

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Of iPods, Lock-Ins and the DMCA

August 15, 2006

As an ambivalent owner of an Apple iPod I’ve given a lot of thought to the fact that songs I download from Apple’s iTunes will not play on a portable device other than an Apple iPod. If I want to play my iTunes music collection on another manufacturer’s MP3 player, today or five years from now, I’ll be unable to play the tunes downloaded from iTunes. The Digital Millennium Copyright Act prevents competitors from reverse engineering the protection Apple embeds in these files, and therefore Apple has, in effect, a government enabled lock-in. The only legal way around this restriction requires users to burn the iTunes songs to a CD and then import (rip) them back into iTunes as MP3 files. This eliminates Apple’s digital rights management (DRM) and “frees” these tunes, but what a hassle and disincentive to buy music from iTunes. Do I do this? Yes. Do I like it? Ah …. (If you’d like to gain a better understanding of how iTunes DRM works and how to avoid it, click here.) Cory Doctorow has written a scathing editorial in Information Week discussing the policy and legal issues involved in Apple’s DRM program. A few choice quotes from the article: Reverse engineering is a common practice in most industries. You can reverse-engineer a blender and make your own blades, you can reverse-engineer a car and make your own…

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An Update on Google Book Search

August 14, 2006

University of California joins in. The University of California is joining Google’s book-scanning project, throwing the weight of another 100 academic libraries behind an ambitious venture that’s under legal attack for alleged copyright infringement. Link here for full story. For an earlier and in depth discussion of this issue click here.

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"Fantasy Baseball" Decision

August 10, 2006

[Update:] Matt Mattari sent me a link to his article on this topic, which was published in the Harvard Journal of Law & Technology before the publication of the decision. Click here to read the article (pdf file). Here is a link (pdf file) to the federal district court decision in the C.B.C. Distribution and Marketing Inc. v. Major League Baseball Advanced Media and Major League Baseball Players’ Association case, issued on August 8, 2006. Quoting from the decision: The court finds that the undisputed facts establish that the players do not have a right of publicity in their names and playing records as used in CBC’s fantasy games and that CBC has not violated the players’ claimed right of publicity. The court further finds, alternatively, that even if the players have a claimed right of publicity, the First Amendment takes precedence over such a right. The court further finds that the undisputed facts establish that the names and playing records of Major League baseball players as used in CBC’s fantasy games are not copyrightable and, therefore, federal copyright law does not preempt the players’ claimed right of publicity. Additionally, the court finds that the no-challenge provision of the 2002 Agreement between CBC and the Players’ Association and the provision of this Agreement which prohibits CBC from using players’ names and playing records after the expiration of the Agreement are…

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Son of Rambus

August 9, 2006

Foundry Networks, Inc. has filed suit against Alcatel in federal court in Delaware. The claims are very similar to the claims in the Rambus litigations. A copy of the complaint is here (pdf file). Andy Updegrove discusses this case and its similarities to Rambus in his “Son of Rambus” post, here.

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"Hideous Company Sends Boing-Boing Pre-Emptive Nastygram"

August 7, 2006

One of the risks of sending a legal demand letter to someone in the Internet age is that they will post it on the web and ridicule you. That’s what happened when the Baker & McKenzie law firm sent the very popular web site Boing Boing a letter warning it not to broadcast the World Cup competition, and containing the ominous threat that it would have its “agents actively monitor your website and others to identify unlawful activity.” Boing Boing published the letter here. (The letter is an image, so you may have to print it to read it). Is a preemptive strike like this legally effective? Almost certainly it is not, except as a warning to the web site owner itself not to publish video or audio from the Cup. However, no sane, established web site owner would do so even without such a warning, since the site owner would risk significant damages (and particularly “statutory” damages – aka punitive damages) of up to $150,000 per infringement ). The far greater likelihood is that a third party will publish the audio or video (on a video site such as YouTube.com, for example, where videos of the Cup continue to be rampant), and that it was publications of this nature that Baker & McKenzie was targeting. However, the owners of the World Cup broadcast rights must give notice after the…

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100 Million Videos, Daily

August 4, 2006

An interesting article in Business Week on the copyright issues raised by YouTube’s tremendous success. When YouTube Inc. was sued on July 14 for copyright infringement, the shock wasn’t that the video-sharing service was being yanked into court. Questions had been swirling for months about whether the upstart, which now dishes up 100 million daily videos, was crossing copyright boundaries by letting its members upload videos with little oversight. continue . . YouTube has a strong answer to this complaint based on the Digital Millennium Copyright Act (pdf file), which allows publishers like YouTube to avoid copyright liability for infringements posted by third parties, so long as an infringement is taken down after notice to the publisher.

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Covenant Not-to-Compete Not Enforceable Against English-Challenged Russian Immigrant

August 4, 2006

It’s a bad day when your client wants you to enforce a noncompete agreement against a $10/hour Russian immigrant with “a very limited command of English,” who sends most of her earnings back to her son and elderly parents in Russia, and who, after a year of at-will employment and with no further payment of consideration, was told that unless she signed the noncompete agreement she’d be fired the next day. Nevertheless, that’s what the plaintiff’s lawyer faced in Zabota Community Center, Inc. v. Frolova. Not surprisingly, Judge Allan van Gestel of the Suffolk County Business Litigation Session threw the book at the plaintiff in this case, denying the motion for every reason conceivable. You can read the case here (pdf file).

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Long-Awaited Rambus FTC Decision

August 2, 2006

Here is a link to the FTC decision, which is adverse to Rambus. More to come …. [Link] Update: Andy Updegrove discusses the background of this case and the implications of the decision on Consortiuminfo.com: In what can only be called a stunning development in a high profile standards case, the U.S. Federal Trade Commission (FTC) unanimously reversed the earlier decision of one of its own Administrative Law Judges and ruled that semiconductor technology company Rambus, Inc. had “unlawfully monopolized the markets for four computer memory technologies that have been incorporated into industry standards for dynamic random access memory,” or DRAM. The FTC will deliberate further before announcing the penalties to be levied against Rambus. continue . . .

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