Archive for Litigation

Ridiculous Yelp Lawsuit Alleges Reviewers are Employees

Yelp logo - post about ridiculous Yelp lawsuit alleging reviewers and employeesDo you wonder why lawyers often have a bad reputation? If so, consider the ridiculous Yelp lawsuit alleging that Yelp’s reviewers are employees of the company.

Yelp is an online review site and local business search service. Consumers are encouraged to write reviews of, and rate their satisfaction with, various products and services.

Historically, controversies have concerned whether Yelp punishes businesses for not advertising on the site (which Yelp denies). More recently, business owners have complained about Yelp’s automated tools for removing false or inappropriate (e.g., paid) reviews based on unpublished criteria.

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The First Sale Doctrine: If I Own It, I Can Sell It

Green traffic light - symbol of first sale doctrine providing go-ahead, defense against IP infringement claim

Copyright and trademark owners typically like to exercise their legal rights as broadly as possible. There is however, a well-known limit to those rights called the “first sale doctrine“.

Actually, they are two separate but similar doctrines. One pertains to copyrights, the other to trademarks:

  • Copyrights17 USC Section 109(a) states, with certain exceptions, that the owner of a lawfully-made copy of a work may sell or dispose of the work. Consent of the copyright owner is not required. So, for example, if you legitimately possess a book or a CD, you may sell it or give it to someone else or throw it into a trash bin.
  • Trademarks – The trademark first sale doctrine is a product of case law rather than statute. In Sebastian International, Inc. v. Longs Drug Stores Corporation, the United States Court of Appeals for the Ninth Circuit wrote: “[W]ith certain well-defined exceptions, the right of a producer to control distribution of its trademarked product does not extend beyond the first sale of the product. Resale by the first purchaser of the original article under the producer’s trademark is neither trademark infringement nor unfair competition.” The exceptions include, for example, stolen or counterfeit goods or goods that have avoided the producer’s quality control systems.

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Chubby Checker Files Ridiculous Trademark Infringement Suit

Photo of Chubby Checker

Chubby Checker (real name Ernest Evans) – the singer famous for The Twist dance craze in the 1960s – and certain corporations that he controls have filed a lawsuit against Hewlett-Packard Company and Palm, Inc. The suit concerns a no-longer-available app named “The Chubby Checker”.

The app purported to allow women to calculate the size of a man’s penis based on his shoe size. According to webOS Nation, the app was downloaded only 84 times before it was removed in September 2012. Yet press reports state that the plaintiffs are seeking damages of $500 million for trademark infringement and unfair competition!

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“Doing Business” Requires More than an Employee and an Office

 

Cover page from commercial office lease

In Doing Business in CA? Be Sure to Register, I wrote that an out-of-state corporation that “enter[s] into repeated and successive transactions of its business in [California] other than interstate or foreign commerce” must register with the Secretary of State as a foreign corporation, and that a penalty for failing to do so is being precluded from maintaining actions in California courts. A recent case in the US District Court for the Northern District of California (Jarzab v. KM Enterprises) provides an example of what does not constitute “repeated and successive transactions”.

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Corporate Officers in California Need to Be More Careful than Directors

Logo of Indymac Bank, whose corporate officers were not protected by the Business Judgment Rule

In California, corporate directors are protected by the so-called Business Judgment Rule (“BJR“): They are not responsible for honest mistakes of business judgment. A recent case revealed that in California the BJR does not protect corporate officers.

During 2007, Indymac Bank bought more than $10 billion in risky residential loans, ultimately generating losses of more than $600 million. Indymac closed, and the Federal Deposit Insurance Corporation was appointed receiver.

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Here’s an Arbitration Provision I Like!

Second Life logo

I’m not a big fan of mandatory arbitration clauses in contracts: Although arbitration is likely to proceed more quickly than litigation (other than small-claims cases), it is not necessarily less expensive. However, I recently saw an arbitration clause that I like quite a bit.

Linden Research, Inc., developer of the Second Life multi-user online service, includes the following in its Terms of Service (emphasis added):

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What is Copyright Infringement?

Logo of the United States Copyright Office

I recently realized that I have referred to copyright infringement in quite a few posts, but I neglected to? define that term.? It is time to correct that oversight.

Generally, copyright infringement occurs when a copyrighted work is reproduced, distributed, performed, publicly displayed, or made into a derivative work without the permission of the copyright owner – i.e., in violation of the copyright owner’s exclusive rights.

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How to Defeat a Cybersquatter, Part 2: Going to Court

Picture of columns in front of courthouse, looking up

In How to Defeat a Cybersquatter, I wrote about ICANN?s Uniform Domain Name Dispute Resolution Policy. The UDRP provides a quick, inexpensive way to recover a domain name from a cybersquatter (someone who has obtained a domain name that is the same as, or confusingly similar to, a trademark or service mark that you own). However, if you want to recover money, you will have to go to court.

Before proceeding further, let me be clear: I think lawsuits should be avoided whenever possible. As a trial lawyer told me many years ago, “Litigation is a terrible way to run a business.” Unfortunately, litigation sometimes is necessary.

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Handbook Defeats Employee Claim of Attorney-Client Confidentiality

Cover of an employee handbook

In “Inspection of Employee Text Messages ? Be Careful“, I described provisions concerning company-provided technology that every employer should include in its employee handbook. A recent California Court of Appeal case, Holmes v. Petrovich Development Co., shows that such provisions are strong enough to defeat a claim of attorney-client confidentiality!

Gina Holmes brought suit against her former employer, alleging sexual harassment, wrongful termination and other causes of action. The employer presented as evidence e-mails between Holmes and her attorney – e-mails sent from her employer’s computer – that supported the employer’s case.

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International Contracts: Choice of Law when the Parties Disagree

OnStartups.com logo

This post is based on an OnStartups.com question (edited here) that I answered a few minutes ago. Q. I am drafting a website-development agreement with a firm in India. I am in Australia. I prefer that the agreement be governed by Australian law, but the developer prefers Indian law. What is normally done in similar circumstances?

A. Several thoughts based on my experience in similar matters:

  1. While governing law is important, venue – i.e., where a lawsuit must be filed – is even more important tactically if a dispute arises.
  2. If there is a great disparity in negotiating power between the parties, the one with the greater power is likely to prevail on this issue (and many others).
  3. If a compromise is desired, choose a neutral country (with an appropriate legal system) for governing law and venue. In your part of the world, Singapore could be a good choice.
  4. An approach that will reduce the likelihood of a lawsuit being filed: If one party initiates a legal action, it must be filed in the other party’s country, and that country’s law will govern.

Dana H. Shultz, Attorney at Law  +1 510 547-0545  dana [at] danashultz [dot] com
This blog does not provide legal advice and does not create an attorney-client relationship. If you need legal advice, please contact a lawyer directly.