November 2012

Employee non-compete agreements are unenforceable under California statutory law, but that hasn’t stopped many California tech companies from finding a back-room work-around.

In October 2010 I wrote a short post discussing the FTC’s complaint that a number of California companies had illegally agreed not to solicit each others employees – so-called “no-poach” agreements.  (Apple, Google, Have You No Shame? Really!).

Now, two years later, the DOJ has filed a suit against eBay which, the suit claims, entered into a no recruit/no hire agreement with Intuit. Intuit is one of the companies caught engaging in this practice in 2010, and is subject to an agreement not to do so. To make matters even worse, according to the DOJ press release the agreement was entered into at the highest levels of both companies – Meg Whitman (then eBay’s CEO) and Scott Cook (CEO of Intuit).

These companies have huge in-house legal departments (not to mention Big Law outside counsel).  … Read the full article

District of Massachusetts Case Shows Challenges in Software Development Litigation

Custom software development agreements that go awry and end up in litigation are notoriously difficult cases.

The reasons for this (to name just a few) are the finger-pointing (“your fault, no yours”), the complexity, ambiguity or incompleteness of the functional/technical specifications, the presence of third-party developers or hardware vendors (who can also be blamed), and the obscure, technical nature of the cases, which make them distasteful to judges and dull to juries.

Massachusetts U.S District Court Judge Richard G. Stearns issued a rare decision in one of these disputes last week. The case, Liberty Bay v. Open Solutions, involved loan origination software developed under a standard, milestone payment-based License Agreement. After a four year development project plagued with difficulties the Client terminated the agreement and the software Vendor filed suit, seeking the balance owed under the license agreement. The Client, for its part, wanted a refund of monies paid and additional consequential damages.… Read the full article

It’s not often that a Massachusetts Superior Court decision gets national attention, but if you search for Invidia, LLC, v. DiFonzo (Mass. Super. Ct. Oct. 22, 2012) you’ll see that legal blogs around the country have picked-up on this obscure case.

Why? Because anything that involves the intersection of law and social media gets attention.

In this case, the issue that attracted attention was whether a hairdresser employed by a beauty salon in Sudbury, Mass. “solicited” her former employer’s customers in violation of a noncompete/non-solicitation agreement. What did Ms. DiFonzo do to trigger this claim? She posted news of her job change on her Facebook page. The court held neither posting news of her new salon, nor friending several customers, constituted solicitation.

Professor Eric Goldman has a lot to say about this case, including his question of how widespread litigation in the hair salon industry improves social welfare. And, he quite rightly gloats over the fact that an agreement like Ms.… Read the full article

Sloppy Online Agreements Costs Plaintiff Its Breach of Contract and CFAA Claims

Last month I wrote a post titled “Online Agreements – Easy To Get Right, Easy To Get Wrong.” In that post I discussed two cases in which the plaintiff had failed to take appropriate steps to necessary to impose terms and conditions on its customers.

A recent case decided by the federal district court for the District of Pennsylvania provides yet another example of how sloppy online contracting can doom a claim based on an online agreement.

The case,  CollegeSource, Inc. v. AcademyOne, Inc., (E.D. Pa. October 25, 2012), involves the practice colloquially referred to as “screen scraping” — that is, copying information from displayed webpages, usually in large quantities for commercial use. See, e.g., Ef Cultural Travel Bv v. Explorica , 274 F.3d 577 (1st Cir. 2001) (describing screen scraping).

It’s easy — legally and technically — to prevent this by prohibiting it in the site’s online terms and conditions.… Read the full article