by Lee Gesmer | Jun 21, 2006 | Noncompete Agreements
Noncompete Agreements. Plaintiffs trying to obtain preliminary injunctions to enforce noncompete contracts in the Massachusetts states courts are off to a bad start this year.
In February Superior Court Judge Richard Connon refused to enforce a noncompete clause against a former employee for a reason we see all to often: the employee signed the noncompete with one company, and then worked for another (presumably related) company with which he had not signed a noncompete. Sorry, this may be only a technical detail, but it’s always enough prevent the noncompete from being enforced. The case is Merchant Business Solutions v. Arst.
In mid-March Judge Jonathan Brant refused to enforce a preliminary injunction when the plaintiff’s former employee went to work for a competitor with the former employer’s blessing. A year later the former employer changed its mind and filed suit, seeking a preliminary injunction. A year is far too long, the judge ruled – motion denied. The case is New England Speciality Lumber v. Jarvl.
Finally, in late March Judge Peter Agnes denied a request for a preliminary injunction that the plaintiff brought against a contractor (as opposed to an employee). Judge Agnes denied the injunction, holding that two years was too long in the context of the business in question and the agreement was too vague as to its geographic reach. The case is Payson’s Trucking v. Yeskevicz.
The lessons from these cases are, for the most part, obvious. Make sure the employee signs the noncompete with the company he works for. Don’t sit on your hands for a year before signing trying to enforce an agreement; and try to keep the duration and geography as narrow as possible. Although Massachusetts judge used to be willing to narrow these contracts as written to make then reasonable, there seems to be a trend away from this practice.
by Lee Gesmer | Jun 13, 2006 | Readings and Novelties
What I’m Reading. A fascinating, in depth article about my favorite music download site, eMusic.com:
The Holy Grail of online music sales is the ability to offer iPod-compatible tracks. Like the quest for the mythical cup itself, the search for iPod compatibility has been largely fruitless for Apple’s competitors, whose DRM schemes are incompatible with the iconic music player. For a music store that wants to succeed, reaching the iPod audience is all but a necessity in the US market, where Apple products account for 78 percent of the total players sold. Perhaps that’s why eMusic CEO David Pakman sounds downright gleeful when he points out that “there’s only two companies in the world that can sell to them-Apple and eMusic.”
Read on ……
by Lee Gesmer | Jun 2, 2006 | Readings and Novelties
What I’m Reading. Some interesting thoughts on American education (or the decline and fall of same) by blogger Bob Kronish [link]
This opening anecdote/joke on the evolution of teaching math since 1950 will give you a sense of his point of view:
Here is how it progresses: Teaching math in 1950: A logger sells a truckload of lumber for $100. His cost of production is 4/5th of the price. What is his profit? Teaching math in 1960: a logger sells a truckload of lumber for $100. His cost of production is $80. What is his profit? Teaching math in 1970: a logger sells a truckload of lumber for $100. His cost of production is $80. Did he make a profit? Teaching math in 1980: A logger sells a truckload of lumber for $100. His cost of production is $80 and his profit is $20. Your assignment-underline the number 20. Teaching math in 1990: A logger cuts down a beautiful forest because he is selfish and inconsiderate and cares nothing for the habitat of animals or the preservation or our woodlands. He does this so he can make a profit of $20. What do you think of this way of making a living? Topic for class participation after answering the question-how did the birds and animals feel as the logger cut down their homes? There are no wrong answers. Teaching math in 2006: Un ranchero vende una carretera de Madera por $100. El cuesto do la produccion era $80. Cuantos tortillas se puede compar?”
Link to the full entry, and read on ….
by Lee Gesmer | May 17, 2006 | What Were They Thinking
What Were They Thinking? Even the least experienced Massachusetts lawyer knows that when an answer to a lawsuit is not filed within the requisite 20 days and a default judgment is issued, the default is easily set aside as a matter of course based on even the flimsiest excuse. And, if the answer is filed only one day late professional courtesy mandates that the plaintiff permit the defendant to file late.
Apparently some lawyers in a large Boston law firm (unidentified) never got this message: they refused to agree to set aside a default under these circumstances, forcing the defendant (who filed his answer one day late) to file a motion to remove the default. After reviewing the law and (predictably) setting aside the default, Superior Court Judge Mitchell Sikora slammed the plaintiff’s lawyers hard:
Beyond the letter and purpose of the legal standards, conscientious judges and attorneys attempt to implement our litigation system with reasonable efficiency, civility, and common sense. This episode illustrates an egregious breach of those professional and cultural values. Counsel for Perrina Construction Company, a large Boston firm, has engaged in a mean-spirited and wasteful tactic. It has wasted the time and effort of an opposing attorney practicing in a small office. It has wasted the time and effort of the Superior Court. If one were to dramatize the public’s worst image of the contemporary litigator, it would employ the present scenario in which a large firm procures an instantaneous default and then stonewalls against its removal in utter disregard of the letter and purpose of the governing legal standards. The performance of the Perrina attorneys would be rich grist for the mill of a contemporary Dickens.
REMEDIAL ORDER FOR SANCTIONS
This cynical shenanigan will exact a price from its practitioners. The court will entertain a motion for an award of fees and costs from attorney Murphy. He will file and serve that application, supported by a verified itemization of the fees and costs, within ten days of the entry of the present Ruling and Order. From the date of service, counsel for Perrina Construction will have seven days for filing and service of any opposing papers.
The court will conduct a hearing upon that application on March 15, 2006. Attorney Murphy will attend. The court orders all three attorneys whose names appear on Perrina Construction Company’s opposition to the removal of default to attend that hearing. Attendance is not optional. All three attorneys shall attend.
Here is a link to the full case [link]
by Lee Gesmer | May 16, 2006 | Patents
Patents. “Patent trolls” or “patent litigation firms” — companies which buy patents not to produce a product or service, but solely to enforce them in the courts — must be quaking under their bridges this morning. In yesterday’s decision in eBay v. MercExchange the Supreme Court appears to have bought the anti-troll argument whole hog, giving the federal trial courts the discretion to enjoin a patent infringer, and to include in its decision factors such as whether a patent holder practices the patent, is a self-made inventor or university researcher (factors favoring an injunction) or instead has purchased the patent from the inventor to obtain license fees (a factor disfavoring an injunction).
Before this case there was a more-or-less presumptive rule that a patent owner successful in proving infringement was entitled to stop continued use by the defendant, regardless of the identity of the patent owner. The eBay decision abolishes that rule; instead, the courts have been instructed to apply the traditional four-factor test for permanent injunctions, which weighs various equitable factors.
This decision will make it much more difficult for a patent litigation firm to obtain a permanent injunction against an infringer, especially in cases where the threat of an injunction is used as a holdup device by patent holders who exploit the leverage they have when a patent covers only one component that is part of a multi-component product. As the concurring opinion by Justice Kennedy, Stevens, Souter and Breyer stated:
In cases now arising trial courts should bear in mind that in many instances the nature of the patent being enforced and the economic function of the patent holder present considerations quite unlike earlier cases. An industry has developed in which firms use patents not as a basis for producing and selling goods but, instead, primarily for obtaining licensing fees. . . . For these firms, an injunction, and the potentially serious sanctions arising from its violation, can be employed as a bargaining tool to charge exorbitant fees to companies that seek to buy licenses to practice the patent. . . . When the patented invention is but a small component of the product the companies seek to produce and the threat of an injunction is employed simply for undue leverage in negotiations, legal damages may well be sufficient to compensate for the infringement and an injunction may not serve the public interest.
Not only do these four justices accept the argument that patent litigation firms may be treated differently from “legitimate” inventors, but they take a swipe at “business method” patents as well:
In addition conjunctive relief may have different consequences for the burgeoning number of patents over business methods, which were not of much economic and legal significance in earlier times. The potential vagueness and suspect validity of some of these patents may affect the calculus under the four-factor test.
The majority opinion, written by Justice Thomas, is careful to urge protection for university researchers and self-made inventors, implicitly distinguishing them from patent litigation firms.
To sum up, patent litigation firms are in a far weaker position to negotiate lucrative settlements based on the threat of an injunction today than they were only 24 hours ago. Unfortunately, the decision comes too late for Research in Motion, the maker of Blackberry cell phones and email devices which, under threat of an injunction, settled a patent infringement case in March for over $600 million. Had the eBay decision arrived ten weeks earlier, RIM almost certainly would have saved a substantial amount of money on that settlement.
The full decision is here [link].
