Alone, Unarmed (maybe), and Uninsured
October 31, 2003
Here’s a story about a software vendor that found out — in probably the worst possible way — that its general-liability insurance policy did not have the specific coverage that was probably the most crucial for the vendor’s software business. Not a good day for the vendor’s risk-management people.
A Fable
October 29, 2003
From a CLE [continuing legal education] presentation I did a while back:
Once upon a time there were two companies. The companies had to negotiate a contract. The companies were represented by smart, experienced executives. The executives understood the business. The executives understood each other.
The executives hit it off on a personal level. The executives played golf. The executives supped. The executives sipped. Things looked good.
Victoria’s Secret Exposes Too Much
(It’s Not What You Think)
October 28, 2003
No, it’s not what you think. Victoria’s Secret had computer security problems that allowed customers to browse through other customers’ on-line orders. (Insert your choice of joke here.) That attracted the attention of NY attorney general Elliot Spitzer. When the dust settled, the Victoria’s Secret parent company agreed to give refunds or credits to customers in New York and to pay the state of New York a $50,000 fine. See the AP story.
POSSIBLE LESSON: This is yet another example of how companies doing business on the Internet may have to contend with multiple legal authorities. Some other examples:
- Earlier this month, Google was ordered to pay a French company 75,000 euros in damages for allowing paid advertisements to be linked to the French company’s trademark in search terms; see the Reuters story.
- Last December, an Australian court ruled that a local business executive could bring suit — in Australia — against Dow Jones for allegedly libelous statements posted on a U.S. Web site. See this BBC analysis.
- In November 2000, another French judge ordered Yahoo! to block French access to Nazi-memorabilia sites; see this BBC story.
Advertising Heartburn
October 15, 2003
Sometimes it seems there’s no shortage of object lessons about the troubles that over-enthusiastic advertising can cause. Procter & Gamble (P&G) ran ads for a new heartburn product, Prilosec OTC. The ad copy read, “One pill. 24 Hours. Zero Heartburn” The ad copy apparently gave Johnson & Johnson heartburn of a different sort – it filed suit against P&G.
In response to J&J’s motion for a preliminary injunction, a federal judge in New York found that P&G had engaged in false advertising. The judge prohibited P&G from continuing its ad campaign pending a full trial. (Johnson & Johnson-Merck Consumer Pharmaceuticals Co. v. The Procter & Gamble Company, No. 03 Civ.7042(JES) (S.D.N.Y. Sept. 25, 2003).)
If the parties don’t settle before trial, P&G may find itself staring down the barrel of a big damages award for corrective advertising, under precedent such as one of my favorite case stories, that of U-Haul v. Jartran.
Mother Always Said, Don’t Brag
October 14, 2003
The exuberance and assertiveness of marketing people can make enormous contributions to a company. They can also put the company in a deep hole. Here’s an example of the latter: Some not-atypical, faintly boastful language in a company’s press releases language, of a kind your marketing people might well have used themselves, kept the company mired in a securities class-action lawsuit, when the lawsuit might otherwise have been dismissed.
How Much Would Actual Subscriptions Have Cost?
October 13, 2003
MSNBC reported last week that money-management firm Legg Mason was hit with a $20 million jury verdict for copyright infringement, for internally distributing a stock-market newsletter when they had only paid for a single subscription. Thanks to TechLawAdvisor for the tip.
P—d Off
October 12, 2003
Natural Biologics LLC really knows how to p–s off a federal judge (bad pun intended). Earlier this month, the judge seriously hammered Natural Biologics for misappropriating trade secrets relating to the processing of horse urine. She hit Natural Biologics even harder than usual, essentially putting them out of the business – and for somewhat unusual reasons.
Bye-Bye, Carolina; Hello, California
October 11, 2003
Late last month, a North Carolina customer of Oracle Corporation found itself involuntarily headed for California to pursue its lawsuit against Oracle. This came to pass because the customer — probably without even knowing it — agreed to a forum-selection clause when it bought its Oracle software license.
Dinosaur Bones
October 11, 2003
Frank Quattrone’s trial for obstruction of justice continues; see this story from the AP. On Thursday, Quattrone took the witness stand in his own defense. Quattrone’s lawyer, John Keker, asked him about an unrelated investor lawsuit against his former firm, Morgan Stanley. Quattrone had been a witness in that lawsuit. According to the WSJ, Quattrone commented, “I was amazed how the plaintiff’s lawyer would take extraneous documents and twist and turn them to make it sound like something bad.” (Wall Street Journal, Oct. 10, 2003, at C1, C10 cols. 2-3.)
Quattrone’s comment reminded me of how, in a former life, I sometimes used to explain trials to clients. Think of a trial lawyer as a paleontologist, working with a pile of dinosaur bones (documents, witness testimony) to convince a jury that the dinosaur looked like this. The paleontologist describes her vision of the dinosaur, and tries to show the jury how the bones fit together in a way that matches her vision. Perhaps the bones don’t fit together perfectly, however. Perhaps some bones are missing. Of course, there’s an opposing paleontologist in the courtroom, twisting and turning the bones in a different way in support of his own vision.
The jurors typically knew little or nothing about dinosaurs before the trial, and of course they don’t get to see the dinosaur in real life. They still have to decide what the beast really looked like. Their decision can change — or end — lives, reputations, and bank balances.
Backdated Sales Contracts Resurface Years Later
October 9, 2003
The CFO of software giant Computer Associates was forced to resign, along with two other senior financial executives of the company — and who knows what else now lies in store for those folks — because several years ago the company “held the books open” to recognize revenue for sales contracts signed after the quarter had ended.
According to CA’s press release of yesterday, in the fiscal year ended March 31, 2000, the company took sales into revenue in Quarter X even though the contracts weren’t signed until after the end of the quarter. See also these stories from Reuters, the AP, and Dow Jones.
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