Another argument for using contract forms that start in mid-field
June 30, 2009
According to Justin Fogarty, IACCM president Tim Cummins reported that an unidentified IACCM member had its sell-side negotiators review the contract forms used by the buy-siders, and vice versa. Each was “apopletic.” (Hat tip: Jason Anderman of WhichDraft)
Letters of intent: their highest and best use is disavowing a binding contract
June 30, 2009
A letter of intent — aka an LOI, sometimes known as a memorandum of understanding or MOU — is the equivalent of comfort food; it’s something you can show your boss to reassure her that the transaction you’re supposed to make happen is moving forward.
The most useful function of a letter of intent, though – arguably its only proper function – is to make it clear that the parties do not intend to enter into a binding contract at that time — that they will do so only through a formal, signed, final written agreement. That makes it more difficult (although not impossible) for one party to claim later that the parties had reached an oral agreement.
ADDED 7/1/09: See Letters of intent: Use with caution!, Weightmans Commercial Property Focus [UK], May 2009 (summarizing case in which court held LOI to be a binding contract, not just a precursor to one).
Amazon.com drops marketing affiliates in NC, RI to avoid having to collect sales tax – good thing they had a termination-at-will clause in their contract
June 30, 2009
Amazon.com is dropping its online marketing affiliates in North Carolina and Rhode Island. It did so to avoid having to deal with recent sales-tax legislation in Rhode Island and North Carolina. These bills would require Amazon and other companies to collect sales tax for in-state sales if they had any online marketing affiliates in the state. Amazon is disputing the constitutionality of the new provisions. (For a more extensive background discussion, including comments from representatives of the affiliates, see the two linked articles above, from the Wall Street Journal.)
I was curious whether Amazon’s affiliate agreement allowed it to terminate this way. The answer seems to be "yes." I used The Wayback Machine to look up a March 2006 version of the Amazon affiliate agreement. It says in paragraph 12, "Either you or we may terminate this Agreement at any time, with or without cause, by giving the other party written notice of termination." Amazon is probably glad someone on their legal team thought to include that language.
Nail down what happens to your personal data – Jeff Gordon
June 29, 2009
Jeff Gordon at LicensingHandbook.com points out that Clear — the company that was supposed to speed up frequent travelers’ airline security screenings, but suddenly shut down — apparently will be selling the user data it collected. He notes that this is something that should be explicitly addressed in relevant contract documents.
Sales rep crosses the line by first hinting, then flatly misstating, that his company was part of a competitor
June 29, 2009
A sales rep working for a company called Alliantgroup made marketing phone calls to customers of a competitor, BDO. The Alliantgroup sales rep used a script that said things like, “I am calling because you are part of the BDO Alliance and we are having great success with BDO Alliance firms.” See BDO Seidman LLP v. Alliantgroup L.P., No. H-08-905, slip op. at 4, para. 13 (S.D. Tex. Jun. 8, 2009).
All by itself, the script was problematic; according to the court, it strayed too close to suggesting an association between Alliantgroup and BDO. And not surprisingly, the Alliantgroup sales rep couldn’t seem to confine himself to the script: The judge believed testimony by people who had been telephoned, to the effect that the sale rep had said that Alliantgroup was part of the BDO Alliance.
The judge described the sales rep as “not a credible witness” when he denied having any intent to misrepresent. Finally, the judge found that the sale rep’s conduct had created actual confusion. The judge concluded that:
Alliantgroup, with its usage of the BDO and Alliance marks, crossed the line into unfair competition …. Its marketing campaign intentionally manipulated the targeted customers into believing Alliantgroup was affiliated with the BDO and the Alliance when it was not. Alliantgroup offers the same services, bears a similar name, targets the members of the plaintiff’s organization, continued marketing even though it knew it was causing confusion, deliberately misled as to affiliation, and admitted none of the use of Plaintiff’s marks had any legal purpose apart from deriving benefit from the goodwill of the Plaintiff.
The judge slammed Alliantgroup, enjoining it from using BDO’s trademarks and indicating that she would award BDO its attorneys’ fees. In subsequently-filed documents, BDO requested in excess of $46,000 in attorneys’ fees, plus $4,600-some in court costs.
(For other commentary, see Margaret A. Esquenet (Finnegan Henderson), in Incontestable, June 2009.)
Think twice before suing a departed employee for trade-secret misappropriation in California, or risk a big attorneys’ fees award
June 28, 2009
“The court affirmed a judgment both denying an injunction and awarding the ex-employees $1,641,216.78 in attorneys’ fees where their former employer was found to have sought an injunction in bad faith—since misappropriation was possible but not actually ‘threatened’ ….” Rodger R. Cole and Rachael G. Samberg (Fenwick & West), Litigation Alert: FLIR Systems, Inc. v. Parrish (June 22, 2009).
“This case provides employers with an important reminder of California’s strong public policy in favor of employee mobility and the right to compete with a former employer. … Employers cannot use the California Uniform Trade Secrets Act to do an end-run around [California's ban on post-employment noncompetition clauses] by, for example, bringing a trade secret action against a former employee to prevent them from forming a competing business or joining a competitor unless there is evidence of threatened or actual misappropriation of trade secrets.” Michele Haydel Gehrke (Sheppard Mullin), Employers should carefully consider whether to sue former employees for threatened trade secret misappropriation … (June 19, 2009).
Professional-liability insurance policy doesn’t cover patent infringement, says Penn. appeals court
June 28, 2009
“For two reasons, we reverse and direct that judgment be entered in [insurance company] Caliber’s favor.
- “First, because we find that a patent infringement action brought by another vendor is not a ‘professional liability’ action under the terms of the policy.
- “Second, this is an action for inducing a third party to violate a patent, not a direct patent infringement action. Because that patent action can only be brought if the violation is knowing, and there is an exclusion in the policy for ‘knowing’ actions, there is no coverage for this action.”
Transcore LP v. Caliber One Indemn. Co., 2009 Pa. Super. 81, No. 3352 EDA 2007, slip op. at 1-2 (Pa. App. Div. Apr. 27, 2009) (emphasis, extra paragraphing, and bullets added).
The court later elaborated that “a professional liability insurance policy is not designed for claims brought by third parties, such as contract or patent infringement claims. Professional liability typically encompasses those claims made by entities that have a professional relationship with the insured.” Id. at 4 (emphasis added).
Reminder: Different blog feeds for different interests
June 27, 2009
Readers who are interested only in blog posts on particular topics can (without disclosing personal information here) sign up for sign up for specific feeds that, in effect, provide different blogs addressing:
- particular topics
- department-specific topics – e.g., R&D, HR, Finance, BusDev, etc.
- role-specific topics – e.g., CEO/COO, executives, general counsel, IP counsel, junior attorney, etc.
Netflix Prize contest rules – a crowdsourcing drafting resource
June 27, 2009
A multinational team claims to have qualified for Netflix’s $1 million prize for coming up with an improved algorithm for recommending specific movie rentals to subscribers. The contest is a real bargain for Netflix: it gets thousands of contestants doing free R&D work for them (not to mention the free publicity associated with the contest), while having to pay the prize money only to the winner (plus smaller annual best-progress prizes).
The contest rules appear to be a useful resource for anyone drafting rules for a similar contest for R&D, marketing, etc.
Preparing for a corporate-representative deposition – article with good pointers
June 27, 2009
Weil Gotshal litigators Lori Pines and Ardith Bronson have a useful piece coming out in Monday’s Corporate Counsel about how to prepare for a corporate-representative deposition under federal-court rule 30(b)(6).
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