June 2013

Joel Tenenbaum Has Reached the End of the Line (Probably)

June 26, 2013

The recording industry’s case against Joel Tenenbaum for downloading 30 copyrighted songs has almost certainly come to an end with yesterday’s decision upholding the jury’s copyright infringement verdict of $675,000, or $22,500 per song. This case—one of only two out of tens of thousands filed against downloaders to actually go to trial (the others settled or were dismissed on various technicalities)—has been through a trial, two appeals to the First Circuit and one appeal to the Supreme Court. However, it seems almost certain that the case has reached the end of the line; all that’s left to Tenenbaum is an appeal to the Supreme Court, which has already declined an appeal from him once before. In retrospect, this case should never have taken this path. Tenenbaum could have settled for a few thousand dollars at the outset, but he chose (along with Harvard Law professor Charles Nesson, who reportedly represented him at no charge), to pursue the case on principle. The heart of his argument has been that statutory damages under the Copyright Act (which can be as great as $150,000 per infringement) violate due process because they are not tied to the actual injury caused by his downloads. The district court judge and the First Circuit didn’t buy it, in large part because (a) the copyright statute itself provides notice of the scope of the potential award, and (b)…

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Bringing an Antitrust Suit Alleging an Illegal “Agreement” is More Difficult Than You Think, But Not as Difficult as Massachusetts District Court Judge Stearns Made It

June 25, 2013

If you want to bring an antitrust suit based on an illegal agreement among competitors (say, a boycott), you face a possible Catch-22: you can’t get the evidence you need to prove an illegal agreement until you file the suit (and conduct discovery), but you can’t file an antitrust suit unless you are able to provide sufficient evidence of the agreement in your complaint. This is the problem the plaintiff faced in Evergreen Partnering Group v. Forrest, decided by the First Circuit on June 19th. Evergreen alleged that the defendants (a small group of companies that controlled the disposable plastics industry) refused in concert to deal with it—in other words, they boycotted Evergreen. Massachusetts federal district court judge Richard Stearns dismissed the case on the complaint, holding that Evergreen had failed to plead a viable claim of conspiracy to boycott. In other words, the complaint didn’t contain enough “facts” to establish, directly or through inference, that the defendants had entered into an agreement to boycott. For example, each of the defendants could have acted alone (unilaterally), and if so there would be no antitrust violation. Evergreen was caught in the antitrust pleading “Catch 22.” The First Circuit reversed, remanding the case to the district court for further proceedings. Interpreting the Supreme Court’s 2007 decision in Bell Atlantic v. Twombly (an antitrust case in which the Supreme Court issued an important decision…

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Aereo, Antenna Farms and Copyright Law: Creative Destruction Comes to Broadcast TV (Part 4)

June 21, 2013

“Streaming copyrighted works without permission would drastically change the industry, to plaintiffs’ detriment. . . . The strength of [broadcasters’] negotiating platform and business model would decline. The quantity and quality of efforts put into creating television programming, retransmission and advertising revenues, distribution models and schedules — all would be adversely affected. These harms would extend to other copyright holders of television programming. Continued live retransmissions of copyrighted television programming over the Internet without consent would thus threaten to destabilize the entire industry.”  – Second Circuit in  WPIX, Inc. v. ivi, Inc. (2012) ___________________ This is the last in this four-part series of posts. Click here to access Part 3. Did the Second Circuit make a mistake in Cablevision and compound it by its decision in Aereo? What are the potential business, legal and legislative strategies available to the broadcast companies as Aereo continues its 22 city rollout? These are the questions I’ll discuss in this last of a four post series on the Aereo case. Did the Second Circuit Misapply the Copyright Statute in Cablevision and Aereo? The holdings in Cablevision and Aereo have been controversial in the copyright law community. Few observers doubt that there is a significant risk that courts outside the Second Circuit, including the Supreme Court, will knock out the key leg of Cablevision’s three-legged stool*: the holding that the retransmission of broadcast signals are not a public…

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Material Change In Employment Relationship Leaves Noncompete Agreement Unenforceable

June 17, 2013

My late May post on Rent-A-PC, Inc. v. Robert March, et al.  discussed a Massachusetts federal district court case in which Judge O’Toole refused to issue a preliminary injunction enforcing noncompete provisions against two former employees of Rent-A-PC because their job responsibilities had substantially changed since their non-compete agreements had been signed. In a decision issued by a Massachusetts Superior Court Judge in May, the court refused to issue a preliminary injunction on the same grounds. In Intepros v. Athy one defendant, Paul Athy, had advanced from branch manager to regional vice president. Relying on the hoary case of F.A. Bartlett Tree Expert Co. v. Barrington (1968), as well as several more recent cases, the court held that this change in job title responsibilities, as well as changes in pay, constituted a material change rendering the noncompete agreement void and unenforceable. A second defendant, Anne Marie Canty, had been hired and fired twice, and had signed a noncompete agreement on the first two hires. However, she was not asked to sign a noncompete agreement at the time of her third hire, a fact that left the employer without an enforceable noncompete agreement against her. Ms. Canty’s case was open and shut: if you fire an employee don’t expect a noncompete provision from that employment to be enforceable if you rehire the employee and don’t get a new agreement. Mr. Athy’s case is more difficult. Must an employer require…

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Whitey Bulger and Gorky Park

June 14, 2013

“The FBI is an unindicted coconspirator in the massive racketeering case against Whitey.” – Kevin Cullen, Boston Globe, June 14, 2013 _______________ I wonder if Martin Cruz Smith had Bulger in mind when he wrote this in 1981: The FBI doesn’t conduct investigations, they pay informers. … Their informers are mental cases and hit men. Where the bureau touches the real world, suddenly you get all these freaks who know how to kill people with piano wire. Say a freak gets caught … he tells the bureau what it wants to hear and makes up what he doesn’t know. See, that’s the basic difference. A cop goes out on the street and digs up information for himself. He’s willing to get dirty because his ambition in life is to be a detective. But a bureau agent is really a lawyer or an accountant; he wants to work in an office and dress nice, maybe go into politics. That son of a bitch will buy a freak a day. … When their freaks are finished testifying, they move them and give them new names. If the freak kills someone else, they move him again. There are psychopaths that have been moved four, five times — totally immune; they’ve got better pardons than Nixon. That’s what happens when you don’t do the job yourself, when you use freaks. Gorky Park, p. 387-388.

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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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