Former Morgan Stanley Exec Should Have
Purged His Blackberry Before Selling it on eBay
August 26, 2003
Wired magazine has a story about an (unidentified) former Morgan Stanley executive who, some time after leaving the firm, sold his Blackberry email pager on eBay. He didn’t seem to realize that he had left a great deal of confidential information on the pager. Some of that information conceivably could have gotten him in trouble with the SEC if the buyer had traded on inside information. His former employer was not pleased.
Quotable quotes:
- “Paige Steinbock, a partner in headhunting agency Korn/Ferry International, called the database of Morgan Stanley employee names and home phone numbers ‘a virtual gold mine of information.’”
- “The VP who sold the BlackBerry said he had no idea data could remain on a device long after the battery was removed.”
- “Judging from the windfall of info captured on the VP’s BlackBerry, the financial expert interviewed for this story said he could only imagine the wealth of information people could gather if they placed ads for used BlackBerries online and waited for the devices to roll in.”
Doctors Have to Explain Joke
Chart Notations on Witness Stand
August 25, 2003
The BBC’s Web site reports that many doctors are being more cautious about the notes they write in their patients’ medical records. Why is that? Because the doctors are starting to realize that someday, on the witness stand, they might have to explain their abbreviations and slang. Here’s a sampling:
- CTD: Circling the Drain [i.e., the patient is not expected to live long]
- DBI: Dirt Bag Index
- LOBNH: Lights On But Nobody Home
- TTFO: Told To [Go Away] — see the BBC story to read the “save” by the quick-thinking doctor who was asked about that one in court.
Sorta makes me glad my writing isn’t funny.
NY Times: Some Dot-Com Refugees
Learned Career-Enhancing Lessons
August 24, 2003
There’s a very interesting article in today’s New York Times (free subscription required). It explores some of the practical business lessons learned by former “corporate types” who defected to dot-com companies but then later returned, chastened, to the corporate world.
Someone’s Parodying Your Slogan?
You May Just Have to Get Used to It
August 24, 2003
A Fox News Network business strategy backfired last week when Fox was literally laughed out of court. Fox News tried to stop Al Franken, the alleged comedian and satirist, from using its trademarked phrase “fair and balanced” in the subtitle of his new book. Fox News got something of a black eye in the press coverage of the case. And, in a classic illustration of the law of unintended — but surely not unforeseeable — consequences, Fox News did Franken a huge favor by generating priceless publicity for his book. All in all, Fox News doubtless would have been much better off gritting its collective teeth and keeping its mouth shut about Franken’s book.
Backdating Contracts Leads to Prison Term —
But It Can Be Entirely Proper
August 23, 2003
From the notes I took while getting ready to start this blog:
A former public-company CFO was recently sentenced to three and a half years in federal prison. His company, Media Vision Technology, had inflated its reported revenues, in part by backdating sales contracts. Because of the inflated revenue reports, the company’s stock price went up – until the truth came out, which eventually drove the company into bankruptcy. (We’ve all seen that particular movie in the past couple of years, eh?)
The judge noted that the CFO had an otherwise-exemplary record. If the new, stiffer penalties of the post-Enron sentencing guidelines had applied, however, the CFO likely would have faced more than 10 years in prison. (The Recorder, Apr. 8, 2003; see archived story.)
But backdating a contract is not necessarily illegal, depending on the circumstances.
Article: When Your Company Gets Hit
With a Search Warrant
August 22, 2003
An article by some lawyers at Latham & Watkins (a big L.A. firm), posted on law.com (paid subscription required), lists the immediate actions the authors say you should take if The Law shows up with a search warrant.
I found what appears to be another version of the same article in HTML and PDF formats at the Latham & Watkins Web site.
(Usual disclaimers: I can’t vouch for the accuracy or completeness of the information at external sites; if your company gets served with a search warrant, you really ought to call your lawyer right away.)
Insider Trader Convicted –
And He Wasn’t Even an Insider
August 22, 2003
Today’s National Law Journal has a story that illustrates yet again how vigorously the SEC goes after people it thinks are trading on on “inside” information. This one involves a stock broker who was convicted by a jury of insider trading.
The broker had learned that certain companies were about to be mentioned in the “Inside Wall Street” column of a business magazine. He got this information second-hand, from a colleague who in turn had a contact at the business magazine. The SEC got suspicious when the stock prices of companies mentioned in the column started going up before the publication dates.
I thought four things were particularly interesting about the story: First was the reminder that the SEC monitors stock prices to sniff out possible insider trading. Second, the broker wasn’t an insider at any of the companies whose stock he traded. Third, the guy ended up spending about $75K in legal expenses and is now working as the manager of a donut shop — honorable work, and nothing to be embarrassed about, but probably not what he expected to be doing for a living. Finally, the judge apparently wasn’t totally sure that what the broker did was a crime, but he felt that he had to sustain the conviction; then, when the SEC asked that the broker be ordered to disgorge his profits (about $5K), the judge said “enough is enough,” and awarded the SEC $1. (The story doesn’t say whether the broker will face any prison time.)
Watch Out for State Spam Laws
August 21, 2003
There’s been a lot of debate lately about whether Congress should enact anti-spam legislation. No matter what side of the debate you’re on, if your company does email blasts, it’s important to remember that numerous states have anti-spam laws that conceivably might apply to your company.
See http://www.spamlaws.com/state/summary.html for what appears to be a useful summary of state laws and links to the text of the legislation; I don’t know how accurate or up-to-date it is. Other countries and the EU might also have anti-spam laws that could come into play.
Music Industry Could Go After
Your Company for File-Swapping
August 19, 2003
You’ve probably heard about the controversy over the music industry’s battle against Internet song-swappers. In a recent letter to a U.S. senator, the president of the Recording Industry Association of America pledged that “RIAA is gathering evidence and preparing lawsuits only against individual computer users who are illegally distributing a substantial amount of copyrighted music.” See Reuters story.
Suppose that your employees were surreptitiously swapping songs, not just with their home computers, but with your company’s servers. Now suppose that RIAA were to discover that fact — possibly because of a whistleblower within your company. RIAA might view your company as a tempting target for a copyright-infringement lawsuit, with the intent of making your company into a very public example. (Software industry groups such as the Business Software Alliance have done much the same thing with their anti-piracy campaigns.)
Deliberate Copying of Patented Technology
Leads to Doubling of Damage Award
August 18, 2003
Last Friday, chipmaker Microtune announced that “On August 12, 2003, a federal judge awarded Microtune double its compensatory damages and all of its attorney’s fees against Broadcom Corporation in Microtune’s patent infringement lawsuit against Broadcom. Microtune estimates that the total judgment against Broadcom will be between $7 and $10 million.” See also CNET news story.
Quotable quote from Microtune press release:
In issuing the order, the Court cited “the existence of a substantial amount of circumstantial evidence that Broadcom deliberately copied Microtune’s technology” in Broadcom’s BCM3415 tuner chipset. Because of the “jury’s unanimous finding by clear and convincing evidence that Broadcom’s infringement of the ‘035 patent was willful,” the Court also took the exceptional step of awarding attorney’s fees to the Company.
A doubling or even trebling of the damage award is not particularly unusual for patent-infringement cases if the judge and jury are persuaded that the defendant intentionally copied the patented technology.
In fact, a defendant can be found to be a “willful” infringer, and subject to an increased damage award, even if all it did was to go about its business after learning of the potential relevance of the patent. The way the courts have interpreted the law, once a company learns about a patent that might affect its business, it has an affirmative duty to use due care — which usually means getting advice from a patent attorney — to make sure it is not infringing. (I’ll save my editorial comment on that interpretation of the law for another day.)