Monday, March 21, 2011
Drunk on Licensing Fees and Patents, Microsoft Has Become a Joke
Ultimately, the companies named as defendants will end up settling this case for something only slightly more than they would have paid had they not bothered with the litigation in the first place. 98% of cases settle, so the likelihood is that this case will do likewise.
Patents permit a monopoly on certain technological processes and methods, but the quotations from the lawsuit as to how the technologies violate Microsoft's patents are surely far too broad, for the reasons stated by the writer in this article on Techcrunch.
What will this lawsuit cost Microsoft in terms of bad PR? Are they hurting their own business? I would love to have been a fly on the wall in the meeting in which it was decided to pursue this litigation. I'm not just poking fun - I mean it - there had to have been some serious consideration paid to the negative publicity that this lawsuit was going to engender as well as other business issues.
It will be interesting to follow this lawsuit on PACER.
Thursday, May 27, 2010
For Businesses, Bully Lawsuits May Pose New Threat
Who's afraid of the big, bad boss?
A significant number of U.S. workers say they are— and soon those in New York may be able to sue their employers, including small businesses, for any suffering they experience at the hands of a toxic boss or other workplace bully.
Earlier this month, the Empire State's Senate passed a bipartisan measure that would allow workers who've been physically, psychologically or economically abused while on the job to file charges against their employers in civil court. The bill applies to organizations of all sizes, unlike other employee-friendly laws that exempt small businesses, such as the federal government's Family and Medical Leave Act. It also holds employers responsible for the bullying of workers by colleagues and not just supervisors.
Employees at Road Science LLC, which has a policy against jerks.
In addition to New York, 16 other states have introduced legislation in recent years aimed at curbing workplace bullying, but none have become law. New York's passage by the state's Senate is considered significant because the issue is generally deemed a liberal cause; the state's Senate is made up of a slight Democratic majority and one of the bill's two leading sponsors is Republican. The bill next moves to a vote by the labor committee of the state's Democratic-majority Assembly at a to-be-determined date.
Business owners nationwide should take note, as a chain reaction is likely to ensue if the measure becomes law, says Jennifer Rubin, a partner in the employment-law practice at New York law firm Mintz, Levin, Cohn, Ferris, Glovsky and Popeo P.C. "It's only a matter of time before this trends to other states," she says. "It's politically popular."
New York's anti-bullying bill defines bullying broadly and includes the repeated use of derogatory remarks, insults and epithets, as well as conduct that a "reasonable person" would find threatening, intimidating or humiliating.
Mathew Tully, founding partner of Tully Rinckey PLLC in Albany, N.Y., says he's concerned that his 77-employee law firm could get sued as a result of the bill because it operates within a high-pressure environment. "Generally, our employees are acting in a professional manner, but every so often there may be a burst of anger," he says.
On the flip side, Mr. Tully figures that his firm would likely see an increase in demand for its legal services if the bill were to become law, as he's already heard from more than a dozen clients seeking advice on how to avoid litigation. "It's going to drum up a lot of business for us," he says. "This is almost guaranteed to flood the courts."
Road Science LLC, a Tulsa, Okla., technology company with 110 workers, pledges in its employee handbook to maintain a "jerk-free" culture. Anti-bullying bills were proposed—but never passed—in Oklahoma in 2004, 2007 and 2009. Frank Panzer, Road Science's chief executive, says he opposes such legislation because it could prompt false claims from workers. "The danger is you create a victim mentality," he says. "Just because you're being disciplined doesn't mean someone's bullying you. A lot of (managers) are just very forthright. If they feel it, they say it. They don't have much tact."
According to New York lawmakers, between 16% and 21% of employees have experienced health-endangering workplace bullying, abuse and harassment, and such behavior is four times more prevalent than sexual harassment.
The problem is just as common in small businesses as large ones, says Wayne A. Hochwarter, a management professor at Florida State University's College of Business, who surveyed 980 workers in March and April on the topic. One third of respondents said they work for companies with about 100 employees or less, and of those, 23.5% reported experiencing supervisor bullying on a weekly basis, compared with 21.3% of the other two-thirds of respondents who said they work for larger organizations.
To be sure, New York's anti-bullying legislation says that employers may not be held liable if they take steps to prevent or promptly correct abusive behavior. Small-business owners should therefore be sure to have a policy that prohibits bullying by both supervisors and colleagues, says Rick Gibbs, a senior human-resources specialist for Administaff Inc., a Kingwood, Texas, human-resources-outsourcing firm. Owners should also create ways for employees to notify them about instances of abuse, such as by installing an anonymous hotline.
Suzanne Miller once worked for a toxic boss.
Of course, it can also be helpful to try and avoid hiring workers who might be perceived as bullies in the first place. Suzanne Miller, owner of SPM Communications LP, a public-relations company in Dallas with 18 employees, says she asks candidates about their experiences working with others to get a sense of whether they might have abusive tendencies. "If you take the time to get to know a person and what motivates them in business and in life, you're going to find that you choose the right people," she says.
Ms. Miller says she's glad the New York legislation recognizes bullying as unhealthy. Part of what motivated her to become an entrepreneur in 1999 was a prior three-year stint working for a toxic boss. "She would scream at me before she would check the facts," says Ms. Miller of her former employer. "I felt belittled for no apparent reason."
Business owners should also consider the possibility that they might actually be bullies. One telltale sign: A high turnover rate, says Gary Namie, co-founder of the Workplace Bullying Institute, an employee-rights group in Bellingham, Wash. "You're creating a place that reasonable people don't want to stay in," he says. "You've probably focused on whatever it is you make or sell and don't have an incentive to get management skills."
Another indicator of a bully business owner is if he or she takes all the credit for their company's success, says Vicky Oliver, author of "Bad Bosses, Crazy Coworkers & Other Office Idiots." "If everything is your idea," she says, "it's probably because you're bullying the people who work for you into submission."
Write to Sarah E. Needleman at sarah.needleman@wsj.com
Tuesday, May 18, 2010
Convicted by Text Message - Overcoming Authentication and Hearsay Objections
A wife was convicted of simple assault on her husband. Text messages were used in her conviction to show her state of mind. The Defendant appealed her conviction, claiming the text messages from her phone, the victim’s phone and a photo exhibit of a text message were improperly admitted on foundational and hearsay grounds. State v. Thompson, 2010 ND 10, P1 (N.D. 2010).
The Supreme Court of North Dakota did not agree with her.
The Facts: An SMS State of Mind of Assault
Halloween 2008: the Defendant “texted” her husband for money to buy their children Halloween costumes. Thompson,at *P3. One text message sent at 8:20 am contained threatening and profane language. Id.
After the husband and wife drove the children to school, the Defendant demanded money and refused to get out of the victim’s car. The victim had to drive to the police department for the Defendant to be removed from the car. Thompson, at *P3.
Police were called to the Defendant’s house after 11:00 pm that night, finding the victim nursing an injured eye and several blows to the face and back. The husband was hit several times by the wife in a fight over money. Thompson, at *P3.
The wife was arrested and convicted for assault.
Motion in Limine to Exclude Text Messages
The Defendant brought a motion in limine to exclude any testimony or evidence of the text messages. Thompson, at *P6. The Defendant claimed the texts were not relevant and inadmissible. Thompson, at *P9.
Text Messages at Trial
The victim testified at trial about a threatening and profane text message sent the morning of the day he was attacked by the Defendant. Thompson, at *P7. The State offered a photo of the text message as a trial exhibit. Id.
The Defendant claimed the victim could have sent himself the threatening text from the Defendant’s phone. Thompson, at *P7.
Text Messages State of Mind
The trial court allowed the text messages at trial to show the Defendant’s state of mind the day of the attack. Thompson, at *P11.
Defendant’s Arguments
The Defendant claimed the State failed to authenticate the text messages.
The Defendant argued that “text messages are inherently unreliable because of their relative anonymity and can rarely be connected, to a certainty, with a specific author.” Thompson, at *P12.
Direct Examination of Victim
The husband stated on direct examination that the text messages were from the Defendant. The victim explained that he stored his wife’s phone number as “Fr: Jen.” Each text message began with the Defendant’s stored phone number in the victim’s phone. The text messages were all “signed” with the Defendant’s signature “cuzImJenIcan.” Thompson, at *P16.
The Defendant challenged the admission of the text messages at trial as hearsay. Thompson, at *P16. The trial court ruled the text messages were “a declaration against interest and therefore not subject to [the] hearsay rule.” Thompson, at *P16.
Rules of Authentication
Authentication is a “condition precedent to admissibility is satisfied by evidence sufficient to support a finding that the matter in question is what its proponent claims.” Thompson, at *P21.
Pursuant to the Federal Rules of Evidence (which in this case mirrored the state rules), the party offering the evidence “must provide proof sufficient for a reasonable juror to find the evidence is what it purports to be. Thompson, at *P21, citing United States v. Hyles,479 F.3d 958, 968-69 (8th Cir. 2007).
Authentication of Electronically Stored Information
The Supreme Court of North Dakota had not addressed text message authentication before and examined other case law where electronically stored information had been authenticated. Thompson, at *P24. In all of the cases the Supreme Court of North Dakota discussed, circumstantial evidence was used to authenticate electronically stored information. Thompson, at *P24.
Authentication examples summarized by the Supreme Court of North Dakota included:
E-mails properly authenticated when they included defendant’s e-mail address, the reply function automatically dialed defendant’s e-mail address as sender, messages contained factual details known to defendant, messages included defendant’s nickname, and messages were followed with phone conversations on same topic.
United States v. Siddiqui, 235 F.3d 1318, 1322-23 (11th Cir. 2000)
Foundational requirement for chat room conversation established when defendant admitted he used screen name “Cessna” when he participated in recorded conversations, several co-conspirators testified he used that name, and defendant showed up at meeting arranged with person using screen name “Cessna.”
United States v. Tank, 200 F.3d 627, 630-31 (9th Cir. 2000)
Threatening text messages received by victim on cell phone were properly authenticated when circumstantial evidence provided adequate proof message was sent by defendant.
Dickens v. State, 927 A.2d 32, 36-38 (Md. Ct. Spec. App. 2007)
Text messages properly authenticated when telephone employees testified about logistics for text messages and about how particular text messages were stored and received and messages contained sufficient circumstantial evidence the victim was the person who sent and received the messages.
State v. Taylor, 632 S.E.2d 218, 230-31 (N.C. Ct. App. 2006)
Instant messages properly authenticated through circumstantial evidence including screen names and context of messages and surrounding circumstances.
In re F.P., 878 A.2d 91, 93-95 (Pa. Super. Ct. 2005)
All cases quoted from Thompson, at *P24.
Text Message Authentication
The Supreme Court of North Dakota held that the authentication of the text messages were proper. The trial court was presented evidence from the victim of his knowledge of the Defendant’s cell phone number and her signature on text messages. This evidence was sufficient under the Evidence Code to authenticate the text messages. Thompson, at *P26.
Hearsay Challenge
The Supreme Court of North Dakota curtly dealt with the hearsay challenge: A party’s own statements are not hearsay. Thompson, at *P31.
The Unreliable Text Message Argument
The Supreme Court of North Dakota quickly shot down the arguments that a text message was “unreliable” and could have been sent by the victim. Thompson, at *P25-26.
The Court, echoing a Pennsylvania Superior Court that addressed the authentication of instant messages, rejected the “argument that electronic messages are inherently unreliable because of the messages’ relative anonymity.” Thompson,at *P25.
As noted in by the Pennsylvania court in In re F.P., 878 A.2d 91 (Pa. Super. Ct. 2005), paper documents can also be subject to forgery or signature letterhead stolen and used by another. Id. As the F.P. court stated:
We believe that e-mail messages and similar forms of electronic communication can be properly authenticated within the existing framework of Pa. R.E. 901 and Pennsylvania case law. We see no justification for constructing unique rules for admissibility of electronic communications such as instant messages; they are to be evaluated on a case-by-case basis as any other document to determine whether or not there has been an adequate foundational showing of their relevance and authenticity.
Thompson, at *P25, citing In re F.P., 878 A.2d 91, 93-95 (Pa. Super. Ct. 2005).
The Supreme Court found no error in the trial court’s finding of the victim’s authentication of the text messages and rejected the argument the text messages were “unreliable.” Thompson, at *P26.
Bow Tie Thoughts
State v. Thompson is a thoughtful opinion on the rules of Evidence and authenticating text messages. The one area that could have been worth exploring was how the text messages were collected.
One of the trial exhibits was a photo of the text message. Thompson,at *P7. This certainly is a powerful trial exhibit to show the Defendant’s phone number, the text message and signature line.
However, was the photo the sole means of preserving the text message? It is possible the investigating officers just took photos to preserve the evidence after the incident.
I encourage parties to defensibly preserve relevant electronically stored information using a product like Paraben when dealing with something as transitory as a text message on a cell phone. Alternatively, if the phone is no longer physically available, the cell phone text message history can also be requested from some service provider (this would depend on whether the service provider was retaining any of the text message history). While taking a photo of a text message has been done before, it is good for attorneys to realize the different methods of collection and preservation at their disposal.
This entry was posted on Wednesday, May 12th, 2010 at 3:50 pm and is filed under Admissibility, Electronically Stored Information, Text Messages,e-Discovery. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
Thursday, April 15, 2010
Wednesday, January 6, 2010
U.S. Software Maker Sues China, Alleging Piracy
BEIJING — A California software company has sued two Chinese technology firms, charging that they stole its computer code to make an Internet-monitoring program that China’s government sought to install on every computer in the country last year before backing down.
Cybersitter’s lawsuit also names as defendants seven Asian computer makers — including Sony, Lenovo and Acer — accusing them of willingly joining a Chinese government scheme to spread the software, known as Green Dam Youth Escort, throughout the country. The Chinese government was also named as a defendant.
Cybersitter said the two Chinese software companies had pirated 3,000 lines of its code to create Green Dam, which was ostensibly designed to block Web sites that featured pornography and violent content.
But critics and computer experts said the Chinese version was also tailored to enable Chinese government censors to block some political and religious speech and other content, such as references to the 1989 Tiananmen square protests, that the government deemed unsuitable.
Cybersitter’s suit, filed Tuesday in the U.S. District Court for California’s Central District, alleges that the pirated lines of code “include the heart of Cybersitter software: its proprietary content filters” that instruct a computer to block sites containing banned keywords.
The principal defendants, Zhengzhou Jinhui Computer System Engineering Ltd. and Beijing Dazheng Human Language Technology Academy Ltd., developed and marketed the software. They could not be reached for comment on the lawsuit. Lenovo, China’s largest computer maker, said it does not comment on pending litigation.
Each of the computer makers complied with a Chinese government requirement to install Green Dam on new computers, or to include a CD containing the program with each new computer. The lawsuit alleges that the computer makers eventually found out that the software included pirated code, but continued to comply with the government directive for fear of losing market share if their computers were banned in China.
The government originally sought to require that Green Dam be installed on every new computer sold in China. But authorities backed down last summer after an outcry from computer users, from ordinary web surfers to businesses, that saw the software as a threat to their free-speech rights and their computer security.
Some analysts had expressed fears that the software included “back doors” that might allow outsiders to see computer users’ files. Others said the software was so poorly designed that crashes and other problems posed a threat to the security of users’ data.
“They were conspiring to distribute an illegal program to millions of users. They continued to distribute even after everyone knew they were stolen programs,” Gregory Fayer, an attorney for Cybersitter, said in a phone interviewon Wednesday. “There were reports just last week that some of the defendants continue to distribute in China.”
The Chinese companies’ theft was so shoddily executed, Mr. Fayer said, that some of the software code in Green Dam includes announcements directing users to visit the Cybersitter Web site.
China has long been notorious for the ease with which films, computer games, music software and other intellectual property are pirated and sold openly, often on Chinese Web sites that are thoroughly patrolled and regulated by the government. Chinese authorities have made sporadic and unsuccessful stabs at limiting the piracy, but intellectual property rights have become a major point of disagreement between China and some Western nations.
Cybersitter said its $40 software has more than 2.4 million active users worldwide. But in the space of months, the suit alleges, China mandated the installation of the pirated program on 53 million computers designed for home use and a half-million school PCs. The software was downloaded by other users 3,270,000 times, the suit stated.
The suit seeks more than $2.25 billion in damages, a figure attained by multiplying the number of Chinese computers using Green Dam by the price of the Cybersitter software.
David Barboza in Shanghai contributed reporting.Friday, November 20, 2009
ABA Seminar on Delaware Corporate Law and Potentially Increasing Federalization
ABA Seminar on Delaware Corporate Law and Potentially Increasing Federalization
I am blogging from the ABA Business Law Section Fall Meeting in D.C. This post is the product of the notes taken at the following panel presentation:
Federalization of Corporation Law in a Time of Crisis - Which Institutions are Best Able to Improve Corporate Governance and Performance Going Forward. Presented by: Business and Corporate Litigation Committee and The Committee on the Federal Regulation of Securities
Moderator: Rolin P. Bissell, Partner, Young Conaway Stargatt & Taylor LLP, Wilmington, DE
Speakers:
Hon. Myron T. Steele, Chief Justice, Supreme Court of Delaware, Dover, DE
Hon. J. Travis Laster, Vice Chancellor, Delaware Court of Chancery, Wilmington, DE
Jill E. Fisch, Perry Golkin Professor of Law and Co-Director, Institute for Law and Economics, University of Pennsylvania Law School, Philadelphia, PA
Thomas J. Kim, Chief Counsel and Associate Director, Division of Corporation Finance, U.S. Securities and Exchange Commission, Washington, DC
Michele E. Rose, Partner, Latham & Watkins LLP, Washington, DC
The financial meltdown injected urgency to the debate about the roles of federal and state law in corporate governance. Members of the Delaware judiciary, federal regulators and practitioners debate who should make the rules on proxy access, executive compensation and fiduciary duties and what those rules should be.
N.B. The following overview is not a transcript and merely constitutes my highlights of some statements made by the speakers on the panel (the members of which may not necessarily agree with the accuracy of my notetaking.) My random notes are below each speaker's name.
The Hon. Myron T. Steele, Chief Justice of the Delaware Supreme Court.
For many years, the corporate governance of the internal affairs of a corporation have been governed by the law of the state of incorporation. The allocation of authority between the board and the shareholders is governed by standards imposed by statute and case law, and by private ordering. The concept of federalization would seek to impose the same statutory standard to govern all 15,000 publicly held corporations. That standard would also be subject to various interpretations by 1,300 federal judges throughout the country. For example, is a federal standard that requires all corporations in all situations to separate the chairman and the CEO, too rigid?
Some suggested federal standards such as elimination of staggered boards, if we are consistent, should also make us reconsider the constitutional procedure of staggered elections for the U.S. Senate, which only stands for election in groups of one-third in each election cycle.
Most proposals are touted as giving shareholders more power, but would a single federal standard for all aspects of corporate governance truly give shareholders more power? The existing system is based on using the states, pursuant to federalism, to experiment with different options which allows shareholders to select which state they prefer. Regarding voting rights of shareholders, Delaware cases have carefully protected this franchise and have consistently prohibited any intereference with it.
As for disclosure, the Delaware Supreme Court (as constituted at that time), in Malone v. Brincat, made clear that the common law duty of disclosure applies when any information is disseminated by the board, even if no shareholder action is required.
The Chief Justice expressed his concern that federal legislation may be based on the false notion that corporate governance was the cause of the recent economic crisis, as opposed to regulatory enforcement, for example. As a concluding aside, His Honor suggested that boards should be enabled to fulfill their duty to focus on long-term maximization of shareholder wealth instead of spending an inordinate amount of time on compliance issues.
Thomas Kim, Chief Counsel and Associate Director, SEC Division of Corporation Finance.
The SEC's role has not changed. One of their goals is to regulate disclosures for the benefit of shareholders. For example, one requirement is that any director who does not attend at least 75% of all meetings be disclosed. Another example is the SOX requirement to disclose whether a financial expert is on the audit committee. Such disclosure requirements tend to impact behavior.
He would hope that state law is not displaced and in his view the SEC covers many matters not covered by state law. For example, disclosures regarding compensation are not covered by Delaware law. He quoted from the Delaware Chancery Court decision in Walt Disney in which the Court explained that the common law cannot require adherence to aspirational best practices. He sees the SEC's role as helping to form those aspirational goals.
Artificial lines cannot be drawn easily between "corporate governance" and governing the corporation itself as an entity. He is sensitive to the states' right to address the internal affairs of corporations. He was instrumental in bringing to the Delaware Supreme Court the issue addressed in the CA, Inc. case. His Division as a whole takes seriously the role of Delaware law, and as an example of that he announced the recent addition to their Division's ranks of a respected scholar on Delaware corporate law, Professor Larry Hamermesh.
The Hon. J. Travis Laster, Vice Chancellor, Delaware Court of Chancery.
Although His Honor noted that he has only "been on the job for 42 days", he referred to the knowledge he acquired from spending his entire career before ascending to the bench, involved in Delaware corporate litigation on behalf of both shareholders and management.
He views Delaware and the SEC as having a collaborative and symbiotic relationship especially in the area of disclosure. The common law system is not a regulatory one, and the Delaware Courts can only rule on cases that come before them when a suit is filed.
An important part of the "Delaware culture" is that Delaware is neither "pro-management" nor "pro-shareholder". Rather Delaware is "pro-balance" and in the long run the investors benefit by allowing management to have the presumption of the Business Judgment Rule to maximize the value of the corporation. While in practice, His Honor represented bidders and targets, as well as investors and management, in almost equal measure, as do most firms in Delaware.
As a policy matter, Delaware takes a long term view, and if Delaware was not attractive to investors on an ongoing basis, it could reprise the role of New Jersey of over a century ago, and quickly lose the role that it now plays.
The beneficiaries of fiduciary duties are the shareholders. Delaware does not have a "constituency statute". Another aspect of Delaware is that the board can internalize risk. The board can rely on contract rights for bondholders and fulfill its fiduciary duties to shareholders.
In the Healthsouth case, the Delaware Chancery Court hit hard and early to address the breach of the duty of loyalty in that case. One area where the Delaware Courts cannot act as quickly is the compensation of executives. These issues are classically covered by the Business Judgment Rule, but as the recent Chancery decision in Citicorp demonstrated, Delaware has found situations where, based on existing law, excess compensation will be addressed.
What about federalization issues? Due to the Delaware culture, and the balanced approach it takes, Delaware has not made any drastic changes in policy. In addition, there are only 5 members of the Court of Chancery and then on appeal, only 5 members of the Delaware Supreme Court that make decisions on Delaware corporate law. The history of the savings and loan crisis shows that dozens of U.S. District Courts ruling on the same statute, and conflicting decisions of the U.S. Courts of Appeal on the same statutes, cause more confusion than consistency in the regulation of companies. In addition, unlike Federal judges, who are just are qualified, or moreso, Delaware judges have a more steady diet of corporate law issues, as compared to the more varied types of issues covered in the Federal Courts' docket.
The Delaware Constitution now allows the SEC to certify questions to the Delaware Supreme Court, which it has done. This is an example of collaboration.
The recent economic crisis can be explained more by massive debt and a federal policy that encouraged too much easy debt, as opposed to a problem with corporate governance.
Jill E. Fisch, Perry Golkin Professor of Law and Co-Director, Institute for Law and Economics, University of Pennsylvania Law School, Philadelphia, PA
The benefits of state law controlling this area include: incrementalism and experimenting. Also, there is a serious question about whether the federal proposals are better than the status quo.
There are studies, for example, that demonstrate that it does not always benefit shareholders to separate the CEO and Chairman. There is no statistical or empirical data to support the view that independent boards are necessarily "better" in terms of corporate performance. The NYSE has taken the view that independent boards are required. Delaware, however, has not mandated it in all cases, but takes it into account as a factor in the analysis. Though it impacts the standard of review, Delaware does not impose an independent board as a requirement.
As for executive compensation, the federal scheme pushed an option approach which turned out to be a source of many abuses. The Delaware approach is much more flexible, as befits a very nuanced and sensitive and multifaceted issue, as indicated in the Walt Disney case involving the compensation of Ovitz.
As for proxy access, for example, the recent efforts of the SEC indicate that the "one size fits all approach" is not the best solution.