December 2008

Website Hook-Ups: if a Hook-Up Site Requires its Members to Represent That They are Over 18, is the Site Liable When a User is Busted for Having Sex With a Member Who is a Minor?

December 31, 2008

The answer to the question posed in the title is:  No.  No, no, no, no, no. Only a lawyer with really bad judgment would file a suit alleging breach of contract, fraud, and related claims.  And, after losing in federal district court, appeal to the Sixth Circuit. If you really want to know the “legal” grounds for dismissal in this case, the decision is Doe v. SexSearch.com,* But, ’nuff said on this one. If you feel compelled to use a site like SexSearch.com (not that there’s anythingwrong with that), it might be prudent to ask your partner for an I.D. before, …. well, you know. Hmmm …. on second thought, maybe its best to just stay home and watch the telly. * The online contract between SexSearch and its members states: SexSearch “cannot guarantee, and assume[s] no responsibility for verifying, the accuracy of the information provided by other users of the Service.”

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Additional Amici Briefs Added to Rambus Group Page in FTC v. Rambus

December 30, 2008

The amici briefs of “Twenty Scholars,” Hynix, Micron and Nvidia, the CCIA and the American Antitrust Institute have been added to the Rambus group page on scribd.com. Click here for a recent post discussing this appeal.

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Judge Young Lays Down the Law on Earn-Outs

December 30, 2008

[Update: the decision discussed below was reversed by the First Circuit in October 2009.  Decision here] So, you have a great little business, and a large company wants to acquire it. The buyer argues that payment for your company should be determined by an “earn-out” — the buyer’s sales of your product will determine the purchase price (in whole or in part) based on an agreed-upon formula. “Perfectly normal,” your lawyer assures you. “Seen it done in 8 acquisitions out of 10,” he says. You say nothing – your lawyer knows the ropes, right? But, as Massachusetts federal district court Judge William Young made clear in his recent decision in Sonoran Scanners v. PerkinElmer, if you (the seller, in this case tiny Sonoran Scanners) expect the buyer (in this case the much larger PerkinElmer) to market your product (leading to sales and payments to you under the earn-out formula), you’d better make sure that the contract spells out the actions the buyer is expected to take to promote the product. Otherwise, you risk the fate that Sonoran Scanners experienced after it sold its business to PerkinElmer – PerkinElmer did little or nothing to promote the product properly during the five year earn-out period, sales were almost zilch, and in the end Sonoran Scanners was paid nothing. It’s true that sometime you just gotta sell, and you have to take what…

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Amici Briefs Supporting Supreme Court Review in FTC v. Rambus

December 25, 2008

When old engineers (and old lawyers) sit around decades from now reminiscing about patent and antitrust law in the late 1990s and early 2000s, the name of Rambus is sure to come up.  The topic will not be the Rambus DRAM (or RDRAM) chip technologies, but rather the massive volume of litigation that Rambus set off as result of its alleged “patent hold-up” actions and its patent enforcement efforts. Rambus, the lawyers on either side of its many cases, the courts, antitrust experts and economists, and of course investors in Rambus’ stock (a particularly loyal and attentive group), have debated the pros and cons and nuances of these lawsuits for years, and during this season (late 2008) an important and timely Rambus case is taking a run at the Supreme Court. The FTC adminstrative action against Rambus, which bothAndy Updegrove and Ihave written about at length in the past, involves somewhat arcane issues of single-firm conduct under Section 2 of the Sherman Act. However, the case also exists at a level that doesn’t require a degree in law and economics to understand – Rambus is accused of of withholding from an important standards-setting organization (SSO)  the fact that it had pending patent applications, resulting in adoption of the Rambus technology as a standard, following which Rambus used it patents to “hold up” the industry for unreasonable royalties. What a wonderful…

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Creative Commons Celebrates Its Sixth Anniversary

December 20, 2008

My partners Andy Updegrove, Peter Moldave and I attended this celebration of the sixth anniversary of Creative Commons at Harvard the evening of Friday, December 13, 2008. We could have waited a few days and watched the event on YouTube, but then we would have missed the cold weather, the greatest ice storm in modern Massachusetts history, the difficult parking and, well …. It was actually a great deal of fun, and looking around the room at the 150 or so people that attended there appeared to be relatively few lawyers, a fact that made us feel superior, as if we were really part of the Harvard cognoscenti, which of course we aren’t. (How could we tell there weren’t many lawyers there? – the number of people who had that useless, predatory look common to lawyers was minimal.) Speakers were: Jonathan Zittrain, moderator, panelists James Boyle, Lawrence Lessig and Molly S. Van Houweling, and Special Guests Elena Kagan and Charles Nesson.

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Really Judge Murphy. Really !?!

December 19, 2008

Massachusetts Superior Court Judge Ernest Murphy won a $2 million libel verdict against the Boston Herald after the Herald incorrectly reported that he had said that a 14 year old female rape victim should “get over it.” Fair enough, but that was not the end of the story. The Herald appealed (ultimately losing), but during the appeal Judge Murphy sent two letters to Patrick J. Purcell, owner and publisher of the Herald, which led to today’s SJC decision publically reprimanding Judge Murphy for this incident. Here are quotes from the letters, taken from the SJC reprimand. The letters proposed a meeting between Judge Murphy and Patrick Purcell, were hand-written on Superior Court stationery, and proposed a luncheon meeting between Murphy, Purcell and (presumably) the Herald’s insurer. The letter went on to tell Purcell – to “have one person … at the meeting…. Under NO circumstances should you involve [counsel in the lawsuit] in this meeting…. You will bring to that meeting a cashier’s check, payable to me, in the sum of $3,260,000. No check, no meeting.” In the postscript, the judge writes that it would be “a mistake … to show this letter to anyone other than the gentleman whose authorized signature will be affixed to the check in question. In fact, a BIG mistake.” The letter of March 18, 2005, states, “[Y]ou have a ZERO chance of reversing my…

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The Ten Weirdest Cases of 2008

December 18, 2008

Courtesy of the London Times online. Here is number 1, which I assume even under the English version of “top ten” lists is the “winner.” – What’s in a name? A nine-year-old girl involved in a custody hearing in New Zealand drew international attention for her name: “Talula Does The Hula From Hawaii”. The judge decided that the name was a form of abuse and ordered the girl placed under the guardianship of the court. The judge noted that it was part of a wider phenomenon; other eccentric names given to children in New Zealand in recent times included “Number 16 Bus Shelter” and, for twins, “Benson” and “Hedges” and “Fish” and “Chips”.

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Sarah Richmond's Advice to Start-Up Companies

December 13, 2008

My partner Sarah Richmond has published an article in the December 12, 2008 issue of Mass High Tech titled Startup Founders: Success Requires Risk and Sacrifice – In this time of economic uncertainty, what can a founder of a startup do to increase his chances of attracting an outside investment and maximize the likelihood of his ultimate financial success? The answer may be counterintuitive: founders should not try to “hedge” their commitment to their new business in an effort to minimize downside risk. Without the founders taking on some risk, making sacrifices and giving an unfettered commitment to their startup, they will have a much harder time attracting investors and achieving their ultimate goals. Continue reading ….

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Illinois Governor Rod Blagojevich Forgot This Important Rule of Discretion

December 12, 2008

“Never write if you can speak; never speak if you can whisper; never whisper if you can nod; and never nod if you can wink.” Martin Lomasney (1859-1933) Massachusetts State Senator, State Representative, Alderman and Ward Boss of Boston’s Ward Eight.

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Decision Denying Dismissal in Jones Day v. Blockshopper

December 12, 2008

Here is a link to the decision of federal district court judge John W. Darrah (N.D. Ill.), denying the defendants motion to dismiss in the trademark suit brought by the Jones Day law firm against the web site Blockshopper.com, which reports on upscale residential real estate transactions in Chicago and other cities. I wrote about this case in some detail here. Jones Day’s assertion that a post on the site describing real estate purchases by two Jones Day attorneys could create confusion (and therefore constitute trademark infringement) has been widely ridiculed. The judge, however, disagreed. His decision is highly legalistic, and takes Jones Days’ allegations at face value, despite the fact that they are (in the opinion of many knowledgeable observers) implausible on their face (to put it mildly).  Go figure.

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Cyberbullying, Website Terms of Use and the CFAA: the Lori Drew Case

December 12, 2008

Suffice it to say, very few people realize that violating the “terms of use”  (aka the small print that no one reads) on a web site may constitute violation of a federal law that has both criminal and civil penalties.  Yet, this was the basis for the prosecution of Lori Drew,  the woman who allegedly created a MySpace account under the name of “Josh Evans.”   Using this account, Drew developed an online relationship with Megan Meier, a 13-year-old girl.  “Josh Evans” said hurtful things to Megan, who took her own life. Pamela Jones lays out the legal issues in this case on Groklaw, here, where she links to many key documents, and embeds the EFF’s amicus brief, in its entirety. I was trying to figure out how to explain to you all that is involved in the case of the U.S. v. Lori Drew, the cyberbullying case that so many lawyers are expressing concerns about. I felt I needed a lawyer to explain it, but where would I find one who felt like doing some unpaid work, and over the Thanksgiving holiday to boot? Then I had a brainstorm. I could show you the amicus brief [PDF] submitted in the case by the Electronic Frontier Foundation, the Center for Democracy and Technology, and Public Citizen, which was also signed by “14 individual faculty members listed in Appendix A who research,…

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"Excuse Me, What Isle is the Chutzpah In?"

December 11, 2008

Whole Foods, in the wake of the D.C. Circuit’s decision reinstating (in a manner of speaking) the FTC’s challenge to the Whole Foods – Wild Oats merger, has filed a most unusual lawsuit in the federal district court in the District of Columbia. Whole Foods is seeking to terminate the FTC’s administrative proceedings investigating the merger. The stated grounds are violation of the Due Process Clause and the Administrative Procedure Act (the APA). Here is a link to the complaint (scribd.com). This lawsuit is unusual, to say the least. The essence of Whole Foods complaint seems to be that the FTC has prejudged the case and set an unreasonably aggressive discovery schedule. I’m not aware of any grounds for this legal theory at this stage of an administrative proceeding, but I’m sure that Whole Foods’ lawyers have done their homework, and that these claims have some legal merit. Stay tuned.

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