I’ve posted the slides from a CLE talk I gave on Wednesday, April 25th.  Hopefully, the  slides are informative standing alone.  They address the very recent DMCA decisions by the 9th Circuit (Veoh) and 2nd Circuit (Youtube), the copyright “first sale” doctrine as applied to digital files in the Redigi case pending in SDNY, and recent trademark “keyword advertising” cases decided in the 4th and 9th Circuits (Rosetta Stone in the 4th Circuit, Network Automation and Louis Vuitton in the 9th).  There are also some slides devoted to the CFAA, including the 9th Circuit’s en banc decision in the Nosal case.

If the embedded Scribd document doesn’t appear on your computer directly below, click here to go directly to Scribd

Copyright and Trademark Issues on the Internet

I’ll be reading this decision, issued today, more carefully in the next day or two, but my first impression is that it’s a win for supporters of the DMCA safeharbor statute based on various legal rulings, and a loss for Youtube based on the really dumb behavior of Youtube’s founders.  Of course, these guys didn’t know, back in 2005, that seven years later the courts would be judging whether they were aware that they were hosting copyrighted videos.  If they had known, they might not have emailed each other comments like these:

• “[W]e need views, [but] I’m a little concerned with the recent [S]upreme [C]ourt ruling on copyrighted material”
• “[S]ave your meal money for some lawsuits!”
• “concentrate all of our efforts in building up our numbers as aggressively as we can through whatever tactics, however evil”
• “our dirty little secret . . . is that we actually just want to sell out quickly”

And there’s more like that. Ouch!

In the future companies with Youtube-like businesses will, one hopes, not create evidentiary grist of this sort for content owners to use in lawsuits against them.  So, this case may turn out to be a great lesson for the online industry (careful what you say), and an expensive lesson for Google, which will likely have to add some dollars to the $1.65 billion it paid for Youtube in 2006.

Second Circuit decision in Viacom v. Youtube

Here is an unusual spin on Massachusetts non-compete law.  As best I can understand the facts (which require a bit of “between the lines” reading) Trillium sued Cheung, a former employee of Trillium.  Cheung had, it appears, released an employee from a non-compete agreement without company approval.

Trillium’s suit asserted breach of fiduciary duty to the company.

A trial ensued, but at the outset the judge observed that if the underlying non-compete agreement had not been enforceable the release had caused no harm to Trillium, and hence there had been no legal wrong committed by Cheung.  In other words, the trial involved a concept that lawyers dislike greatly: a “trial within a trial.”  (Think Russian nesting dolls). Here, the two trials involved the question of whether the non-compete was enforceable and, if so, whether Cheung acted illegally by releasing the employee from the agreement.

The trial began with a jury proceeding, during which the jury was asked to decide the second of these issues first  - whether Cheung had improperly given the employee a release from  the non-compete.  However, in an odd twist the parties agreed that the judge, not the jury, would rule on damages.  Before doing so, however, the judge addressed the second issue (which, one would think, should have gone first),  held that the non-compete agreement was unenforceable, and concluded therefore that Trillium had suffered no damages.  Case over.

The Appeals Court found several problems with this outcome, and sent the case back for a new trial.  First, the judge failed to describe the legal standard he had applied to determine the enforceability of the non-compete agreement. The Appeals Court had no way of reviewing a trial judge’s decision if he failed to state, on the record in open court or in a written decision, the legal grounds  for his conclusion.  Making matters even worse, the Appeals Court indicated that the trial judge had heard evidence developed during the jury  trial which contributed to his conclusion that the non-compete was unenforceable, but he failed to describe these facts so that the Appeals Court could review them and determine if the trial court had correctly applied the legal grounds to them.  The Appeals Court had no record upon which is could review the ruling on the law or the facts.

This case illustrates a crucial aspect of legal proceedings that we sometimes take for granted, but which somehow got lost in this case.  The Appeals Court observed that as far back as 1923 (and likely long before 1923) the Massachusetts Supreme Judicial Court noted “the underlying principle that a judge must set forth the legal grounds on which he makes his legal determination . . .  the court shall specify with particularity the grounds on which his mind rests in reaching his conclusion. The parties thus are advised of the exact foundation for the action taken by the judge.”  Without this information, there is no basis for appellate review.

Of course, when a case is decided by a jury things proceed a bit differently – a jury renders a verdict with no explanation of its grounds, and that decision is inviolate, so long as the judge properly instructs the jury on the law and follows the rules of evidence (more or less).

But, phase two of this case was a judge case, not a jury case, and why the judge didn’t explain the factual and legal bases for his decision is something of a mystery.  The trial took place in early 2009 and now, three years later, the parties will have to undergo a retrial. However, it will still be a “trial within a trial” – as the Appeals Court stated, “we remand the matter for a new trial on the issue of damages, which shall include determination of the predicate issue of enforceability of the [non-compete] agreement.”

Trillium v. Cheung

Noncompete opinions from the Massachusetts Superior Court are few and far between, so the two decisions that have been issued so far this year — one from Judge Peter Lauriat sitting in the Suffolk Business Litigation Section (BLS), the other from Judge Thomas R. Murtagh in Middlesex Cournty — are worth noting.  Both judges are respected judicial veterans, and each decision illustrates a legal principle basic to this controversial and often confusing area of law.

The more note-worthy of the two cases is Judge Lauriat’s decision in Grace Hunt IT Soutions v. SIS Software, LLC.   There are relatively few ways to wriggle out of a non-compete, but one that should be near the top of every lawyer’s list is the question whether there has been a “material change” in the employment relationship since the non-compete agreement was signed.  If so, a “pre-change” non-compete may be unenforceable.  In this case the court found that there had been such a change, and therefore it denied a motion for preliminary injunction to enforce the  non-compete  covenant against the defendants.  Of course, what constitutes a “material change” can vary, depending upon the eye of the beholder, which in a preliminary injunction context is the judge.  In this case Judge Lauriat concluded that a 20% cut in salary was enough of a change to satisfy this standard.  Also, the employees had signed the non-compete with a company that had subsequently been acquired, and the acquiring company was attempting to enforce the non-compete agreement.  Judge Lauriat  seemed to put some weight on the fact that the new employer had asked the employees to  sign new non-competition agreements after the acquisition,  implying that the new employer had thought the employment relationships had materially changed, requiring new agreements.*  Preliminary injunction denied.

*Sometimes an acquisition alone will void a non-compete. That was not the case here, likely because the employment agreements permitted assignment.  However, many agreements do not include assignment clauses, preventing the post-acquisition employer from enforcing a non-compete agreement signed with the pre-acquisition employer.  See the discussion of L-3 Communications v. Reveal Imagining at this prior post (non-compete agreement signed not assigned as part of a sale to current employer was not enforceable).

The second of the two decisions illustrates more of a cookie-cutter approach to the enforcement of a non-compete covenant.  In this case, A.R.S. Services v. Baker, the plaintiff, a company disaster restoration field, asked the  court to enforce a one year non-compete provision against an employee who had resigned from the plaintiff’s firm .  It appears that the only argument Baker could make against enforcement was that his former employer had asked him to engage in “a fraudulent act involving moral turpitude,” and that this was a “material breach” of the non-compete agreement, rendering it unenforceable.  It is true that a material breach by an employer can invalidate a non-compete covenant.  However, this case appears to have involved  little  more than an internal disagreement between Baker and the employer over a cost estimate to rebuild a home.  The judge didn’t buy it – quite rightly, if the evidence in support of this assertion was as weak as the decision suggests.  This case was “plain vanilla.”  Preliminary injunction allowed.

Grace Hunt IT Soutions v. SIS Software, LLC

A.R.S. Services v. Baker

You know all those used music stores you used to love to go to back in the day when you bought music on CDs?  You could browse through used CDs and buy them for less than retail.  Maybe you still do (kudos to Deja Vu Records in Natick, Mass.).  Of course, you can do the same thing online.

The founders of Massachsetts-based Redigi figured, why can’t we create a marketplace that will allow people to do the same thing with their digital music files?  Or, as Redigi puts it: ” Sell your old songs legally – The world’s first used digital music marketplace - Buy used music insanely cheap”.  However, in starting this business Redigi may have run smack into the disconnect between the U.S. copyright statute and digital media.  And, it has been forced to defend against a full-on assault by the RIAA  (in the form of its apparent designee, Capitol Records).

Redigi’s service launched in October 2011, and by reason of the sheer chutzpah of its business model the copyright industry (the usual ragtag collection of lawyers, industry types, bloggers, reporters and hangers-on) was soon debating the legality or illegality of its service. By early November Redigi was holding a ”roll over and die” letter from the RIAA. By early January 2012 Capitol had filed suit against Redigi in the Southern District of New York.

Issue was joined quickly when Capitol filed a motion for preliminary injunction seeking, in effect, to shut Redigi down and end the case with a single, crushing legal blow.  The district court denied the motion, so Redigi remains alive for now.  However, the case is on a fast track – Capitol and Redigi have waived a jury trial, and the parties will be filing summary judgment motions this summer.  The case is likely to be resolved before the end of the year, at least in the trial court.

At the heart of the Redigi case is what seems to be a question of first impression under copyright law: does the the copyright “first sale” doctrine apply to the transmission of digital audio files?  The first sale doctrine says, in essence, if you have purchased and own a work protected by copyright law, you can resell it.*  If this were not the case it would be illegal for the owners of books, records, cassette tapes, CDs and DVDs to resell them.  Stephen King cannot complain, under copyright law, if a copy of  11/22/63 is legally purchased and then sold and resold 50 times, depriving King and his publisher of what might have been the revenue from 50 separate sales.

*But not if you’ve “licensed” it, and the license prohibits resale.  That is a whole other topic. And, it is likely the reason Redigi limits itself to music that originated with iTunes.  The same practice using music files from Amazon might not be permissible, since Amazon does purport to “license” its downloads, and the license prohibits transfers. 

However, its not clear that the first sale doctrine applies to digital recordings.  Capitol records argues it does not, at least in the form sold by Redigi, and the motivation behind its position, at least in part, is no secret – since you can replicate a digital audio file without limit, and every copy is identical to the original (no degradation in quality), what’s to stop someone from selling a copy and keeping the original?  If you are the prospective purchaser of the 30th resale of a Stephen King novel, you may hesitate – what shape is the book in? What’s that dark smudge on page 200?  Whose phone number is written in the margin of page 2?  If you’re buying a used CD you have to ask whether it’s scratched.

In the world of digital files, these concerns don’t exist – the distinction between an “original” and a “copy” is non-existent.  If you can purchase a legal “used” copy of Thunder Road for 79 cents through Redigi (yes, that tune is for sale (resale?) on Redigi), why pay $1.29 for it on iTunes?  And, of course, the RIAA executives are asking themselves, what’s to stop people from uploaded and selling tens of thousands of audio files on Redigi while keeping a “copy” that is the same, in all respects, on another device?  Looking beyond Redigi, who knows what Pandora’s box of illegal copying may be opened if first sale permits the resale of digital recordings?  Better to stop the leak before it becomes a flood.  Or so the RIAA may be thinking.

Redigi claims to have an answer to the music industry’s objections to its service, and it is quite clever.  Redigi advertises that it “has the technologies in place to ensure that once you sell a song, you no longer have access to it.  This is how ReDigi stays legit, and how you now have access to a new marketplace where rights long accepted in the physical world may now be applied to digital goods.”  More specifically, Redigi claims that its technology (1) verifies a potential seller owns a non-infringing copy, and  (2) ensures that any items sold will not remain on their computer or synced devices, such as an iPod or iPhone. Of course, this assumes a certain level of naiveté - if the seller is motivated and clever enough to move a “copy” of the file to an unsynced device, the owner of the file can have the file and sell it too.  Two computers will do the trick.  However, the fact that a user may go to this extreme to game the system seems irrelevant (legally) – Redigi is not encouraging it, and the fact that a legal product may be put to an illegal use is hardly the legal responsibility of the product’s manufacturer, as long as the illegal use is not encouraged.

Digging more deeply, it is clear that Redigi has put together an ingenious system.  As I understand it from the various court filings (mea culpa), Redigi operates as follows:

Step One: the user establishes a Redigi account and uploads a music file to the Redigi “music locker.”  The user, and only the user, can stream the track on her computer.  This act is legal under copyright law, since this kind of “space shifting,” as its called, is protected as “fair use.”  Thus far, Redigi asserts, it’s in the clear.  Moreover, in this process Redigi verifies that the file was purchased from iTunes and it is legal – that is, it was not ripped from a cd or is itself a copy.  Redigi digitally fingerprints the file, so that multiple copies of the file cannot be sold on Redigi.  And, importantly, Redigi deletes the copy on the user’s computer and synced devices, such as an iPod.  Thus, at this point the file exists only on the Redigi servers, the “Redigi cloud.”  If the user wants to listen to it, they must do so by streaming from the cloud.

Step Two: At some point the user tags the track as “for sale,” and potential buyers are able to see that the track is for sale.  If someone decides to purchase the track, it is re-designated in Redigi’s system as belonging to the new owner.   Redigi does not create a new copy of the file, it simply transfers “title” to the file on its system.

Step Three: The new owner can leave her new audio file on the Redigi server (the cloud locker) and stream it for her listening pleasure.  If the new owner decides to download it to her computer, it is deleted from Redigi.  A download by the new user is legal, since moving a file between the cloud and the owner’s computer is permissible.

This fiendishly clever invention has some serious brainpower behind it (Larry Rudolph, who has a PhD in computer science and has worked at MIT, Carnegie-Mellon and Hebrew University), and a patent pending.

How does Capitol respond?  Poppycock, claims Capitol Records in its lawsuit.  To quote a Capitol court filing, “rather than acknowledge what its service really does, Redigi recasts itself as a benign ‘cloud storage’ medium.  It dissects its service into isolated components, where users upload and download songs to ‘space shift’ for ‘personal, non-commercial’ use, and ‘pointers’ are ‘modified in the cloud’ so that no copying occurs during a resale transaction.”  In truth, Capitol argues, Redigi is an illegal “marketplace,” and Redigi is falsely trying to recast itself as a “cloud service.”

On another level, apart from name calling, hyperbole and accusations aimed at Redigi’s “true” purpose (all standard stuff when it comes to lawyering, I’m sorry to say), the case is being debated at in highly technical terms – technical in both the “computer sense” and the “copyright sense.”  Capitol has raised a multitude of claims, and Redigi as many defenses, but after you filter out the arguments that appear to be weak or red herrings, the central issue appears to be whether the resales facilitated by Redigi are protected by the first sale doctrine.  The law does not, Capitol argues, permit the resale of a digital file unless a material object changes hands, and Capitol assumes that electrons are not material objects.

Capital argues that the first sale doctrine permits owners of a “particular copy” (a “material object”)  in which a copyrighted work is “fixed,” to ”dispose of the possession of that copy.” However, the first sale doctrine does not apply to digital transmissions, which by their very nature do not involve the physical transfer of a material object, or so Capitol claims. If a digital resale can only be accomplished by reproduction of the original file and creation of a new copy, first sale does not apply.  Simply put, you don’t have the right to copy a copyrighted work in order to distribute or sell it to someone else, even if you destroy the original.  When a Redigi buyer purchases an audio file from Redigi, she is purchasing a “copy” of the purchasers file.  The only way this would not be true is if the purchase involved the physical object holding the file.  That, after all, is what a CD is – a disk holding digital files.  The first sale doctrine protects this kind of sale, whether the object being sold is on a vinyl disk, cassette tape, CD or DVD.  It would even allow someone to sell their iPod, loaded with iTunes songs.  But it doesn’t allow a digital transmission of a file, even if the original is simultaneously destroyed.

Many of these issues came to a head for the first time (but hopefully not the last) in early February, when U.S. District Court Judge Richard J. Sullivan heard Capitol’s motion for a preliminary injunction in federal court in New York.  Before the hearing Google requested leave to intervene in the case, noting the “complex and profound legal issues” raised by the case.  Judge Sullivan denied that motion.  However, Google made many of its point in its request letter, and Judge Sullivan undoubtedly got the message that in the small world of digital copyright law, this case is a big deal.

The outcome of the hearing was both good and bad for Redigi: the judge denied the injunction (which would have shut Redigi down while the case proceeded, and likely have ended Redigi’s existence altogether).  However, he did this on the relatively narrow, non-copyright-specific, ground that Capitol would not suffer “irreparable harm” without an injunction – that is, that Capitol could recover money damages if it ultimately won the case, and therefore any injunction should await final judgment in the case.  For Redigi, this was good.  However, according to the transcript of the hearing the judge also made comments suggesting he thought Capitol had the better case: “ I think likelihood of success on the merits is something that plaintiffs have demonstrated.”  This was bad.

The transcript (link below) makes interesting reading.  The judge appeared to be prepared, and he peppered the lawyers on both sides with hypothetical questions that the lawyers sometimes had difficulty addressing. For example, Capitol’s lawyer conceded that Capitol was not challenging the right to store a legally purchased digital recording in the cloud, if the purpose is not resale of the recording.  In a humorous exchange Capitol also allowed that it would have no objection to the Judge selling his iPod, loaded with recordings, to his law clerk.  ”That’s fine, because you transferred the material object.”*

* Tough question since it’s hard to disagree with a hypothetical that restricts the  judge and his clerk’s freedom of action.  The Capitol lawyer didn’t point out that if the original copies of these songs remained on the Judge’s computer (as is typically the case with iTunes music files), this would be an illegal transfer.  

However, based on a reading of the briefs and the transcript, it’s not clear that the judge really had a nuanced understanding of how Redigi works, or how copyright law might apply to Redigi’s system. Nothing in the transcript suggests that the judge understood that each “step” in the Redigi process was permitted, and therefore the system as a whole may be permissible.  Most judges and lawyers are not strong on computer technologies, and the hearing seemed to suffer from this shortcoming all around.  The judge even seemed to think it was relevant that Redigi could be misused (by the “second computer” trick, mentioned above). However, if Redigi doesn’t encourage misuse of the system, it can’t be blamed for the hypothetical misuse of it, so this should be irrelevant.

The case is now scheduled for summary judgment motions to be filed in mid-July, with oral argument to follow on August 17th.  A decision on these motions is likely to arrive sometime this Fall, and almost certainly by year end.  Hopefully, the outcome won’t turn on whether an electron is a “material object.”  And, one hopes that should the outcome be adverse to Redigi, it will have the resources to pursue an appeal to the Second Circuit Court of Appeals, which might be more receptive to the the “complex and profound” issues that lie at the heart of this case.*

Redigi Oral Argument Transcript (scribd)

Redigi Bench Ruling on Preliminary Injunction (scribd)

*Rick Sanders, at Aaron Sanders in Nashville, has written about this case at length (and in real time, as information on Redigi has been disclosed and the lawsuit has evolved) in a series of blog posts that are required reading for those seeking deeper understanding.  Click on “Redigi” under “Popular Tags” on Aaron Sanders site.

One of the risks of electing to resolve a dispute in arbitration is that, apart from a few narrow exceptions, the decision of the arbitrator is non-appealable.  This can be very hard on the losing party, who believes the arbitrator completely misapplied the law or, in the terminology of the courts, “manifestly disregarded” the law.

Affymax believed it was faced with such a situation when an arbitration panel ruled in favor of Otho-McNeil-Janssen on certain issues in a complicated patent dispute.  Affymax challenged the panel’s decision, and the federal district court reversed part of the arbitration panel’s award.

Wrong, said Chief Judge Easterbrook of the 7th Circuit Court of Appeals in Affymax, Inc. v. Ortho-McNeil-Janssen Pharmaceuticals, Inc., decided on October 3, 2011:  “Manifest disregard of the law” is not a ground on which a court may reject an arbitrator’s award.  The First Circuit, where I practice, has made this clear as well.  See Ramos-Santiago v. United Parcel Service, 524 F.3d 120, 124 n.3 (1st Cir. 2008) (“manifest disregard of the law is not a valid ground for vacating or modifying an arbitral award in cases brought under the Federal Arbitration Act”).

Earlier this year Massachusetts Continuing Legal Education  (MCLE)  asked me to update my 2009 chapter on Employee Noncompetition Agreements.   The revised chapter, part of the 2-volume Massachusetts Employment Law series, was published in June.

Below are links to the cases I added to this chapter.   I’ve also included a sentence or two regarding each case.  However, I did not make an effort to describe every legally significant aspects of each case.

• Ethicon Endo-Surgery, Inc. v. Pemberton, 27 Mass. L. Rptr. 541 (Super. Ct. 2010).  This case, decided by Judge Peter Lauriat  in the Suffolk Business Litigation Session, applies New Jersey non-compete law, but Massachusetts procedural law for purposes of ruling on a preliminary injunction.  The former employee filed suit in California first, but Judge Lauriat  refused to dismiss this case based on the “first filed” rule.  The court enforced an 18 month covenant not to compete against the former employee.

• Inner-Tite Corp. v. Brozowski, No. 2010-0156 (Worcester Super. Ct. 2010).  This lenghy decision was written by Judge Janet Kenton-Walker, sitting in Worcester County, following a bench trial.   The judge enforced a one year convenant not to compete against an employee who had worked for Inner-Tite in Georgia.  Given Brozowski’s  relatively low salary, and the fact that he was asked to sign the non-compete after beginning work for Inner-Tite, this contract would not have been enforceable under the various proposed Massachusetts non-compete statutes.  Either ground would have invalidated the agreement.  This was a tough outcome for the former employee, and one which might have had a different outcome in Suffolk, Middlesex or Norfolk counties, which tend to have more liberal leanings in these cases.

• Rohm & Haas Elec. Materials, LLC v. Elec. Circuits Supplies, Inc., 2010 U.S. Dist. LEXIS 136080 (D. Mass., Dec. 22, 2010).  In this case, brought against a corporate distributor of Rohm,  Judge Joseph Tauro denied a preliminary injunction for a variety of reasons, including Rohm’s failure to prove the  distributor possessed trade secrets or confidential information, and because Rohm’s damages were quantifiable and relatively small,

• Marino Company, Inc. v. Anderson, 2010 Mass. App. Unpub. LEXIS 448 (2010).  This case was moot on appeal where the employer sought specific performance of a three year non-compete agreement, but by the time of trial more than three years had already passed.  See EMC v. Arturi, below.

• Palladium Group, Inc. v. MacGillivray, 2010-2246 (Middlesex Sup. Ct. 2010).  The court construed the non-compete agreement to provide only for forfeiture of benefits, and therefore injunctive relief against the former employee was not available to the former employer.

• Me. Pointe, LLC v. Starr, 2011 U.S. Dist. LEXIS 10442 (D. Mass. Feb. 3, 2011).  Judge O’Toole found that where a sales representative signed an independent contractor agreement on behalf of his company the agreement committed the company, but not the individual in his personal capacity.

• People’s Choice Mortgage, Inc. v. Premium Capital Funding, LLC, 26 Mass. L. Rptr. 582 (Super. Ct. 2010).  This opinion, written by Judge Stephen E. Neel sitting in Suffolk County, is notable because the new employer was found liable for tortious interference and violation of M.G.L. c. 93A.

• Ansys, Inc. v. Computational Dynamics North America, Ltd., 595 F.3d 75 (1st Cir. 2010).  The First Circuit, applying an “abuse of discretion” standard to denial of a preliminary injunction by the New Hampshire District Court, affirmed the lower court.  This case applied New Hampshire non-compete law.

• Parexel International Corp. v. Nanavati, 26 Mass. L. Rptr. 426 (Super. Ct. 2011).  In an odd twist (one which I can’t recall having seen before), Judge Thayer Fremont-Smith, sitting in Middlesex County, found that the fact that the new employer had agreed to pay the employee during the non-compete period, even if the employee was enjoined from working, was a factor that actually favored entry of the injunction, since the employee would not be injured by the injunction.

And a few cases that have been decided following the MCLE publication:

•  OfficeMax v. Levesque (1st Cir.).  In this case the non-compete agreements were found to be unenforceable because they were not assignable to OfficeMax as part of a corporate acquisition.  This probably came as a surprise to OfficeMax, and shows why “due diligence” is an important part of the corporate acquisition process.   (Applying Maine law).

• Empirix v. Ivanov (Middlesex Sup. Ct., May 17, 2011). Superior Court Judge Frances A. McIntyre, sitting in Suffolk County, issued an injunction enforcing a one year non-compete.

• EMC v. Arturi (1st Cir., Aug. 26, 2011) (Souter, J). In this decision, written by former Associate Supreme Court Justice Souter, the First Circuit upheld the denial of a preliminary injunction where the one-year non-compete period had expired.  “Like any contracting party, EMC makes its agreements subject to the rules of equity governing specific enforcement; rules, moreover, that were clearly in place in the governing federal and state cases well before the company required [the employee] to sign. Being forewarned, EMC could have contracted . . .  for tolling the term of the restriction during litigation, or for a period of restriction to commence upon preliminary finding of breach. But it did not.”  I would venture to say that this decision puts to rest, once and for all,  the argument that a noncompete provision can be enforced beyond its term in the absence of a tolling agreement.

• Aspect Software v. Barnett (D. Mass., May 27, 2011).  In this decision, Judge Denise Casper’s first non-compete case since she was appointed to the federal district court, the court granted a preliminary injunction that it deemed necessary to protect the former employer’s trade secrets.  The employee had moved to California, and argued that California law (which does not enforce employee non-compete agreements against employees) should apply.  However, the employee’s agreement with Aspect provided that  Massachusetts law controlled the agreement, and  therefore the court rejected the employee’s “California defense.”

I was interested to read the The Wall Street Journal’s report that Raj Rajaratnam spent $300,000 on jury consultants before the trial in which he was convicted on all 14 counts of securities law violations.  As my teenage daughter might say, “fail”!

OK, I admit that I’m being a bit unfair.  From everything I read in the press regarding this trial it would have been astounding if Mr. Rajaratnam had been acquitted. After all, the government had something quite rare in insider trading cases: audiotapes of the defendant, convicting him with his own words.  A jury consultant “fantasy team” comprised of Sigmund Freud and a certified psychic probably wouldn’t have been able to help in this case.

Nevertheless, it’s no great surprise that Raj’s attorneys chose to use jury consultants in this case.  $300,000 was a drop in the bucket given the “spare no expense” approach taken by defense counsel in this case.  Mr. Rajaratnam”s lawyers undoubtedly concluded that jury consultants might help, and couldn’t hurt.  The decision to utilize jury consultants probably was a prudent step in minimizing future regret.  (“If only we had used a jury consultant our client might not have been convicted! Darn.”).

Trial lawyers have long been deeply divided on the question of whether jury consultants are “worth it.” Some of the consultants’ recommendations in this case  (as reported in the WSJ), are so obvious that it your lawyer doesn’t know them without a jury consultant’s advice, get a new lawyer.  For example, the Journal reports that the consultantants concluded that jurors who were members of ethnic minority groups were more sympathetic to Mr. Rajaratnam, who was born in Sri Lanka.  Hmm . . . . did OJ’s lawyers need jury consultants to tell them that people of color might be more favorably disposed to OJ than whites?  I hope not.  Lawyers shouldn’t need jury consultants to tell them that people are predisposed to like people  like themselves.  If my client is an ultra orthodox Jew, I want a jury of the same.  If my client is a native American . . . . well, you get it.

There are many “rules of thumb” that lawyers tend to develop to guide them in jury selection, and these are often specific  to the lawyer who is picking the jury (or, to be more precise, exercising the right to strike some of the jurors).  These rules change with the time -jury selection in Manhattan today is not what it was  in mid-19th century New York.  However, you don’t need a jury consultant to tell you the obvious.  Francis Wellman said this well in his classic, Day in Court, published 100 years ago:

Laboring men prefer their own kind. Each nationality will to some degree stand together. If the advocate is for the plaintiff, he wants to avoid the cold-blooded, narrow-minded, narrow-hearted types; he wants to select young men with warm natures and intelligent faces. One can often read a man’s character in his face, especially after middle life, although it should never be forgotten that an intelligent exterior sometimes conceals a very shallow mind. He should remember that a jury of landlords will deal unjustly with tenants. Farmers will invariably side with farmers. Railroad men have a natural prejudice against those who attack railroads. On the other hand, a dislike of great corporations makes a good plaintiff’s juror. Many a builder or expert mechanic has swayed the whole jury by knowing the case and explaining his version of it to his fellow-jurors. These are all distinctions that are so simple and plain that even mention of them seems unnecessary, were it not that they are overlooked every day in our courts, . . .

Of course, lawyers bring their stereotypes with them to court.  Some lawyers believe that women are more likely to give large monetary judgments then men, or vice versa.  Other lawyers believe that people with a particular ethnic background are more generous than the population at large  – – or less generous.  I recall reading many years ago about a comment by a juror of a particular religious persuasion who, after the jury found for the defendant in a wrongful death case, was quoted as stating, “we are all born to die,” suggesting that this particular philosophy was a factor in her jury vote.  Clearly, a plaintiff’s lawyer hoping for sympathy for a client who was severely injured, or for the survivors of someone who was killed as a result of what the plaintiff’s lawyer hopes the jury will conclude was negligence, would like to avoid someone with that particular set of beliefs.   If a jury consultant can help a lawyer who might otherwise be clueless about the demographics of the jury pool avoid someone like that (or help the defense lawyer, keep someone with that point of view on the jury), it would well be worth it.  However, situations like that must be very rare.

I will admit that I fall on the side of the skeptics on the question of whether to use jury consultants. I am hard-pressed to believe that a so-called jury consultant is able to add much in the way of value by providing advice regarding factors such as sex, age, education, ethnicity and work experience. And, after all, one never knows whether a jury consultant added value in any particular case.  You don’t get to try the case twice under controlled circumstances that will answer this question.  I suppose that if I were involved in a case that had a limitless budget (that is quite rare), I might listen to what a jury consultant had to say. But, I wouldn’t commit to being bound by that advise.

However, there is one major exception to these comments.  When the Wall Street Journal described Mr. Rajaratnam’s use of jury consultants, it also mentioned that the defendant’s trial team had conducted a “mock trial”. In other words, a group of people was brought together – – presumably a group that reflected the expected demographics of the jury pool in Manhattan – – and Mr. Rajaratnam’s lawyers “put on their case.”  Mock trials can vary greatly in scope.  Some are very elaborate, and include not only opening statements but actual direct and cross-examination of witnesses.  Others are quite abbreviated; the lawyers might grab a few secretaries or paralegals (or perhaps the spouses or friends of firm employees), and do nothing more than present opening statements.  Typically, one lawyer is asked to role-play a lawyer on the other side of the case.  The best mock trials actually include juror deliberations behind a one way mirror, while the attorneys are able to observe and videotape the deliberations.  To get the most out of this exercise it should be as realistic as possible, and the mock jury should not know which side of the case had hired them.

While I am not a strong believer in jury consultants who provide advice on what “type” of person is the ideal juror in a case (or the “anti-ideal juror”), I am a strong believer in the benefits of mock trials, and a jury consultant can help organize a mock trial and analyze the results.  There is nothing more humbling to a lawyer who has spent years developing his or her case theme, only to discover that it goes over like a lead ballon when presented to a mock jury.  Or, that the witness whom the lawyer is counting on to win the case is perceived as insincere or unpersuasive.  A mock trial can reveal these weaknesses.

Of course, the lawyer has to learn this far enough in advance of trial to change course, and not on the eve of trial, when it may be too late.  If not . . .. well, there’s always the next case!

“I’m sorry this letter is so long, I didn’t have time to make it shorter.”
— George Bernard Shaw

Non-lawyers see lawyers arguing before judges on television and in the movies, and they get the mistaken impression that oral argument is the heart and soul of lawyering.  In fact, it’s not.  Most judges based their decision on a careful reading of the legal briefs submitted to them.  That’s particularly true of the Supreme Court, where each side to a case may spend hundreds or thousands of hours preparing their written briefs, and get all of 30 minutes per side for oral argument.  This wasn’t always the case – until the mid-1800′s the time for argument was unrestricted, and could go for days.  In 1849 the time per side was limited to two hours.  This was reduced to one hour in 1925, and 30 minutes in 1970.  And, as Justice Alito recently noted, half of the words spoken during those 30 minutes are spoken by the Justices themselves, while questioning the lawyers.

As the time available for oral argument has diminished the importance of written briefs has increased, and I think most lawyers would agree that most cases are won or lost on the briefs.  Hence, the increase in studies of how to use the written word most effectively to persuade Supreme Court justices.

In late 2006 and 2007, language savant Bryan Garner interviewed eight of the nine then-sitting Supreme Court justices on their views on writing and advocacy.   He posted videos of these interviews online.

Now, he has published full transcripts of the interviews in The Scribes Journal of Legal Writing.

The interviews are quite educational, and also amusing.   Most of what the justices have to say is no great surprise.  A few choice quotes:

• “I have yet to put down a brief and say, ‘I wish that had been longer’” (p. 35).

• “What the academy is doing, as far as I can tell, is largely of no use or interest to people who actually practice law” (p. 37).

• “I love But at the beginning of a sentence . . .” (p. 60).

• “[G]ood counsel welcomes, welcomes questions” (p. 70).

• “So the crafting of that issue . . . Man, that’s everything.  The rest is background music” (p. 75).

• “[T]he genius is having a ten-dollar idea in a five-cent sentence, not having a five-cent idea in a ten-dollar sentence” (p. 100).

• “I can’t bear it [legalese]” (p. 141). “Terrible! Terrible!” (p. 156).

The entire transcript is almost 200 pages long, and is recommended reading for those who want to understand how Supreme Court justices — who are likely representative of most judges in most respects — view the role of written persuasion.

One of the oldest, most hoary rules of the trial practice is this: if you have a bad fact, reveal it to the jury before your opponent does.  Otherwise, the theory goes, the jury (or judge) will think you are trying to hide it from them, and will count it against you. Worst case, you will lose credibility as an advocate – if this lawyer will try to hide a significant fact from me this time, what else is he or she hiding?  Why should I trust this attorney?

Disclosing the bad fact is OK, but even better, figure out some way to turn the “bad” fact to your advantage – “if you can’t fix it, feature it.”  For example, “my client was convicted of criminal fraud ten years ago.  We want you to know about this, jurors, and to know that he has paid his price to society, and been free of any allegations of wrong doing since.  Since then he has married, he is the father of triplets, and he hasn’t gotten into trouble since.  We all make mistakes – don’t hold this one against him.”

Doesn’t work all the time, but at least you’ve prevented the opposing lawyer from making it appear that you tried to hide the bad fact.

Hence, the raised eyebrows in the trial bar when, during the trial of Raj Rajaratnam, Raj’s lawyer called a witness for the defense, only to have the  prosecutor show, during cross-examination, that Raj had  invested $25 million with the witness shortly before trial.

Why didn’t Raj’s lawyer reveal this during direct examination of this witness?  It goes straigt to bias, of course (Raj: “hey, will you testify for me at trial?  And by the way, I’d like to invest $25 big ones with you first.  But don’t let that influence your testimony!”).  Why did Raj even do this?  Is it possible that  Raj’s lawyer wasn’t even aware of this before it was disclosed in court, and was he taken by surprise?  Clients do stuff like this, you know.  If Raj’s lawyer  didn’t know, kudos to him for not (a) fainting on the spot, or (b) strangling his client in open court.

Did this trial blunder have an impact on the verdict?  We’ll never know, of course, but it must have hurt, and it illustrates a key precept of trial practice:  if you can’t fix it feature it; or, at the very least, don’t appear to be hiding it.