December 2007

Go Directly to Jail

December 19, 2007

We’re always warning our standards setting clients that U.S. antitrust laws are about more than just money – you can go to jail. After a while, it feels like these warnings lose their force. This recent press release from DOJ is a reminder that a violation of the antitrust laws is both a criminal and a civil violation: An independent consultant and two executives of Dunlop Oil & Marine Ltd., a manufacturer of marine hose located in Grimsby, United Kingdom, pleaded guilty today and have agreed to serve record-setting prison sentences for participating in a conspiracy to rig bids, fix prices, and allocate market shares of marine hose sold in the United States, . . . . . . Under the terms of their plea agreements, Whittle has agreed to serve 30 months in jail, Allison has agreed to serve 24 months in jail and Brammar has agreed to serve 20 months in jail. These are the longest prison sentences that foreign national defendants charged with antitrust offenses have agreed to serve in the Division’s history. ‘Nuff said. This is serious stuff. You have to wonder if these guys knew that they were playing with fire until it was too late.

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First Circuit Decision on Copyright Preemption

December 18, 2007

The First Circuit has published a complex decision involving copyright preemption of a state law claim for an accounting of profits between co-authors of a copyrighted work. The case, Cambridge Literary Properties, Ltd. v.W. GoebelPorzellanfabrik G.m.b.H & Co. KG (1st Cir. Dec. 13, 2007), has a tortured procedural history. In fact, the First Circuit issued an earlier decision in the case as far back as 2002. The case is quite complex, and involves the chain of copyright ownership in the famous Hummel figurines designed in Germany in 1931 The fundamental holding is that the federal Copyright statute bars a state law action for an accounting of profits between co-owners (co-owners of a copyright work are have a duty to account to each other for profits) because the condition precedent for that claim — co-authorship status — is premised on copyright law, which has a three year statute of limitations. Here the co-ownership claim was barred by this statute of limitations. First Circuit Judge Conrad K, Cyr, who recently assumed senior status on the First Circuit, wrote a strong dissent, calling the majority’s decision “unprecedented and potentially pernicious,” and arguing that the majority improperly interposed federal law to frustrate what was properly a state law issue. This case addresses some very thorny issues involving the intersection of federal copyright law and state law claims, and will bear close scrutiny by litigants…

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Massachusetts Judges Reluctant to Enforce Noncompete Agreements

December 13, 2007

Further to my post below, commenting on whether the enforceability of noncompete agreements in Massachusetts has been a major factor in Silicon Valley’s relatively greater success in attracting high tech start-ups, a review of recent Massachusetts noncompete cases shows how difficult it has become to enforce these agreements in Massachusetts. Judges appear to be leaning over backwards to deny preliminary injunction motions (which is where the real action lies in these cases). Here is a quick summary of several recent state court cases. In Bank of America v. Verille, decided by Superior Court Judge Thomas A Connors in Norfolk County in August, the Court denied BoA a preliminary injunction to enforce a non-soliciation agreement (a close relative of noncompete agreements), on the grounds that the customers that followed the former employee to his new job signed affidavits to the effect that they were not solicited by him. To put this in context, many years ago I saw a Superior Court judge state from the bench that the line between “soliciting” a customer and the customer “following” an employee is so fine that she would presume that a customer had been solicited, even in the face of affidavits from the customer stating it had not been solicited. I doubt that this judge would draw the same inference today. In addition, in the Verille case the judge questions whether the “goodwill” (that…

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Why Has Silicon Valley Outperformed Boston/ Route 128 as a High Tech Hub?

December 6, 2007

In a post on TechDirt Mike Masnick argues (with references to supporting studies) that the fact that noncompete agreements are enforceable in Massachusetts but not in California has been a major factor in Silicon Valley’s success. A few excerpts from the article: Ronald Gilson . . . [found that the success of Silicon Valley] had much less to do with cultural reasons and much more to do with the legal differences between the two places, specifically: California does not enforce noncompetes, while Massachusetts does. Gilson looks at a few of the other possible explanations for the difference and shows how they’re all lacking, leaving the difference in noncompetes as being the key difference between the two regions in terms of the flow of information and ideas leading to new innovations. * * * . . . [T]he Federal Reserve and the National Bureau of Economic Research, . . . produced some data to back up the[se] findings . . . in their report Job Hopping in Silicon Valley. Their data showed that, indeed, there was much greater mobility in Silicon Valley than elsewhere. Their research further backed up Gilson’s suggestion that it was noncompetes that made the difference by showing that other high tech communities in California outside of Silicon Valley also showed greater job mobility — suggesting it was a California-wide phenomenon. Finally, to make the case even more…

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Ray Niro Offers $5,000 for Identity of Author of "Troll Tracker" Blog

December 6, 2007

It appears that infamous Chicago patent attorney Ray Niro has offered $5,000 for anyone who will identify the author of the Patent Troll Tracker, which Niro apparently believes has made uncharitable comments about him. The anonymous author of the Patent Troll Tracker blog takes this in good humor, describing the offer as a “bounty” and stating: I have never had a bounty on my head before (see also blog post here). And I can’t imagine why Ray Niro would pay $5,000 to find out who I am. I emailed him to find out (from the corner internet cafe, heh). He didn’t respond. Ray: if you up it to $50,000, can I collect the reward? . . . Yes, Ray Niro has decided to offer $5,000 to find out who I am. According to the article, he wants to know “who is saying all those nasty things” about him. . . . PS To my very few friends, family, and colleagues in the know, if you’re reading this, please don’t call Niro and collect the bounty. That would be tacky. OK, thanks. Wow, who knew patent law could be so interesting? More on this controversy (huh?) here.

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