Corporate Law

Massachusetts Tech Tax Repealed

September 30, 2013

Gesmer Updegrove Client Advisory – Massachusetts Tech Tax Repealed.  Click here to download a pdf from gesmer.com.  

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Client Advisory: New Law Applies Mass Sales and Use Tax to Software-Related Services

July 30, 2013

Click here for direct access to a pdf of this document. This advisory was updated on August 1, 2013, to reference a FAQ issued by DOR on July 31, 2013.

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93A Opinion in Baker v. Goldman Sachs: What Happens When You Mix In Equal Parts A Start-Up, a Fraudulent Purchaser, a Tech Bubble and a New York Investment Banker?

June 13, 2013

Earlier this year, on the eve of trial in Baker v. Goldman Sachs in federal district court in Boston, I published a blog post describing the facts behind this unusual case, which involved the acquisition of Dragon Systems by Lernout & Hauspie in a $600 million all-stock deal. Soon after the acquisition closed the market discovered that Lernout had fabricated its Asian sales figures. This was quickly followed by Lernout’s bankruptcy, which left Dragon (owned by the Bakers, husband and wife founders) holding worthless Lernout stock. (Baker v. Goldman Sachs – The Business Deal From Hell). The acquisition was negotiated and concluded in the first half of 2000, just as the technology bubble was beginning to deflate.  After a lengthy trial the jury ruled in favor of Goldman Sachs on all issues except the claim that Goldman violated M.G.L. c. 93A, the Massachusetts statute that makes illegal “unfair or deceptive acts or practices.” Under Massachusetts law, that claim must be decided by the judge. Now, Massachusetts federal district court judge Patti Saris has issued her decision on the Baker’s 93A claims, holding that Goldman Sachs did not violate 93A. This ruling is not a surprise; judges rarely find a violation of 93A when a jury rules against a plaintiff on the underlying claims, which in this case were negligence, breach of fiduciary duty and fraud. However, her opinion is a fascinating…

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Baker v. Goldman Sachs – The Business Deal From Hell

December 10, 2012

An interesting “David v. Goliath” jury trial is scheduled to begin in Massachusetts U.S. District Court Judge Patti Saris’s Boston courtroom this week. The case has received a fair amount of press coverage, but not nearly enough in my opinion.  (Steven Syre Boston Globe column today, July 2012 NYT article). The events in Baker v. Goldman Sachs date back to the heady days of the dotcom era. In short, James and Janet Baker (pictured here) spent much of their careers pioneering speech recognition technology which they commercialized under their company Dragon Systems, based in Newton, Massachusetts. The Bakers were legendary in the Massachusetts tech community in the 1990s – home-based technologists who came up with a promising-today, sky-is-the-limit-tomorrow technology. In 2000 they sold Dragon for almost $600 million to Lernout & Hauspie, a Dutch company. Unfortunately, they were paid fully in Lernout stock, and almost immediately after the sale Lernout was discovered to have been cooking its books.  The stock went to zero, and so did the consideration the Bakers received for their company. For the Bakers, this was a business catastrophe of mythical proportions.  One day they owned an immensely valuable company that that owned technology they had spent decades developing.  The next day they had sold the company in exchange for almost $600 million of Lernout stock.  Within a few months, their company was gone and their stock worth…

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Massachusetts Quick Links – October 2012

November 5, 2012

Oriental Financial Group, Inc. v.  Cooperativa De Ahorro y Crédito Oriental (1st Cir. October 18, 2012) — In this case the First Circuit adopts the trademark law “progressive encroachment doctrine,” joining the 6th, 7th, 8th, 9th and 11th circuits. The progressive encroachment doctrine may be used as an offensive countermeasure to the affirmative defense of laches (delay in brining suit) where the trademark owner can show that “(1) during the period of the delay the plaintiff could reasonably conclude that it should not bring suit to challenge the allegedly infringing activity; (2) the defendant materially altered its infringing activities; and (3) suit was not unreasonably delayed after the alteration in infringing activity” (quoting Oriental Financial). Harlan Laboratories, Inc. v. Gerald Campbell (D. Mass. October 25, 2012) — Applying Indiana law, Judge Patti Saris issues a preliminary injunction enforcing a one year non-compete agreement. However, the opinion makes liberal use of Massachusetts and First Circuit precedents. Blake v. Professional Coin Grading Service (D. Mass. October 6, 2012) — In this case, which involves alleged trade secrets associated with a method to grade the “eye appeal” of coins, Judge William Young concluded that the “method” was not subject to trade secret protection due to the fact it had been publicly disseminated before being disclosed to the defendants. However, Judge Young ruled that the case could proceed based on the alleged misappropriation of a proposed marketing plan.  In addition to…

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Key Legal Issues Involving Downsizing and Corporate Officers in Troubled Companies

March 6, 2009

While I shy away from posting PowerPoint outlines on this blog, the materials from two talks that my partner Sean Gilligan recently gave to attorneys in our firm are sufficiently comprehensive as to be an exception. Both outlines are on scribd.com, and are embedded below: Issues Facing Officers and Directors in Financially Troubled Companies Publish at Scribd or explore others: Academic Work Business review culture Key Issues for Corporations Facing Downsizing, Insolvency or Liquidation Publish at Scribd or explore others: culture corporate

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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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