January 29, 2010 by Robert Tharp at 2:46:40 pm Businesses trying to protect the secret sauce recipe at all costs
The battle for a competitive edge among rivals in the highly competitive luxury hotel market has turned ugly between Starwood Hotels and Hilton Worldwide, and shines an important light on the value that businesses place on trade secrets and the lengths they'll go to protect them.
Last April, Starwood sued Hilton for bringing in two former Starwood executives who reportedly defected from Starwood with more than 100,000 internal documents. Starwood claims that Hilton executives at the highest levels condoned the use of the stolen information as Hilton worked to create a luxury hotel to compete with Starwood's `W' hotel chain. Additionally, federal prosecutors are reportedly considering whether Hilton and two former executives should face criminal charges for stealing trade secrets. The Wall Street Journal reports that Starwood's demands go beyond monetary damages and also wants to place Hilton in a "penalty box," preventing the company from developing its own luxury brand for a period of time.
Key employees at successful companies will always be highly coveted hires by industry rivals, but as the Starwood/Hilton saga shows, a worker's knowledge may prove invaluable to their new employers but bringing along actual company secrets can spell real trouble. "When you leave a job, especially when you work in an industry in as much turmoil as the hospitality industry, you have to leave all the confidential material behind," says attorney Richard Barrett-Cuetara of Dallas' Cowles & Thompson.. "And if you learn your new employee has ‘hot goods' you must contact the former employer immediately and quarantine the data until you can return it. A delay on any of those fronts may only help ensure that you will find yourself embroiled in a lawsuit."
January 26, 2010 by Robert Tharp at 4:38:03 pm Dallas jury's $4.6 reminder that even video game makers have to play fair
Media outlets devoted to the video game industry are lit up today over a bitter contract dispute unfolding in a Dallas County courtroom. On Friday, following a 12-day trial involving claims of fraud, tortious interference and breach of contract, a jury ordered casual game maker PopCap to pay $4.6 million in damages to former business partner, MumboJumbo.
Writes Gamasutra: The two companies signed a game retail distribution agreement in July 2006, in which Dallas-based MumboJumbo was meant to provide sales and distribution services for PopCap and its games. That deal eventually went sour, with PopCap suing MumboJumbo for payments allegedly owed under the agreement, and MumboJumbo countersuing.
The jury found PopCap liable for fraud, tortious interference, and breach of contract, according to the lawyers for MumboJumbo, which is responsible for games such as Midnight Mysteries: The Edgar Allan Poe Conspiracy and Luxor Adventures.
Through the use of trial testimony and exhibits, MumboJumbo's attorneys from Dallas-based Rose•Walker showed that PopCap committed fraud and tortious interference when it severely damaged a key business relationship between MumboJumbo and a key retailer. Rose•Walker attorneys Marty Rose, Mike Richardson, Ross Cunningham and Bryan Rose used PopCap's own internal e-mail communications to show jurors how PopCap employed a calculated use of false and misleading statements to sour that relationship.
The jury's verdict includes $4.6 million in actual damages, and a separate hearing will be held to decide on the amount of attorneys' fees to add to the damages.
"The law allows you to do plenty of things to be successful in business," says Rose•Walker co-founder Marty Rose. "However, it does not allow you to commit fraud or interfere with a company's business relationships. The jury's verdict is a clear signal that this type of business conduct is not going to be tolerated."
Headquartered in Dallas, Texas, MumboJumbo LLCTM (http://www.mumbojumbo.com) is a worldwide publisher, developer and mass marketer of premium casual games for PCs and game consoles. MumboJumbo games are downloadable at its website as well as key game portals, or purchased at retail through mass merchants, computer retailers and specialty outlets.
January 18, 2010 by Robert Tharp at 3:48:06 pm Industrial injury at BP's Texas City refinery leads to $1.72 million jury verdict for Arnold & Itkin
New Braunfels resident Ernesto Tamez was supervising a job at BP America's refinery in Texas City, Texas, when the unthinkable happened. A crane operator lifted a heavy oil burner without waiting on a signal from workers on the ground that the area was clear. The oil burner struck him, causing serious crushing injuries to his ribs, back, neck and shoulder.
On Friday -- more than four years after the tragedy -- a Galveston County jury found that Bridgeville, Pa.-based Maxim Crane Works was completely liable for causing the injuries that Mr. Tamez suffered. Jurors found Maxim Crane Works 100 percent liable for the injuries sustained by Mr. Tamez. The $1.72 million verdict includes $300,000 in lost wages, $550,000 in medical expenses and $170,000 to the injured worker's wife. Prior to trial, Maxim Crane Works made no settlement offers. Attorneys for Houston trial law firm Arnold & Itkin LLP presented evidence that the crane operator lifted the oil burner before receiving any signals from workers on the ground that the area below was safe. Additionally, trial evidence revealed that the crane's boom had been moved in such a away that it was no longer aligned. Mr. Tamez and his wife were represented by Arnold & Itkin attorneys Cory Itkin and Michael Pierce.
"Maxim Crane Works' Web site says ‘zero accidents is the only goal,' but sadly in this instance they failed," says Mr. Itkin. "It has taken four years to get to this point, but our hope is that this verdict will help our client and his family move on with their life."
"The greatest tragedy of this case is that the pain and suffering experienced by Mr. Tamez and his wife easily could have been prevented," says Mr. Pierce. "We are pleased that the jury stood up and held this company accountable."
January 14, 2010 by Robert Tharp at 4:26:55 pm Small, snarky clothing company facing trademark showdown
A plucky response has been filed in one of the most unusual trademark infringement lawsuits of 2009. Apparel manufacturer The North Face has sued 19-year-old University of Missouri freshman James Winkelmann for trademark infringement and dilution. At issue is James Winkelmann's small business, The South Butt, which utilizes a logo and tagline that are similar to -- and arguably parodies of -- The North Face's marks. As The American Lawyer notes: Last week Winkelmann and his attorneys filed an irreverent reply brief along with a motion to dismiss the suit. According to his filing -- as well as his Web site and his attorney, Albert Watkins of St. Louis firm Kodner, Watkins, Muchnick, Weigley & Brison -- Winkelmann started the clothing line as a joke. Winkelmann says he was inspired to do so after noticing that all his friends were buying North Face gear even though they weren't mountaineers. He decided to poke fun at the idea by coming up with a "South Butt" logo; slapping it on T-shirts, jackets and sweatshirts; and selling the clothes via a Columbia, Mo., pharmacy and the Web. North Face didn't find the joke funny. The company learned that Winkelmann had moved to trademark the South Butt name, and in August sent him a cease-and-desist letter. Winkelmann -- who Watkins claims had sold less than $5,000 worth of South Butt merchandise by that point -- ignored the demand. Winkelmann's answer is clearly intended to play to the sympathies offered by the particular defendant, referred to in the filing as "Little Jimmy Winkelmann." It's also intended to draw smiles.Trademark attorney Dyan House of Munck Carter in Dallas says that while there is a parody defense, it may not be successful in this case. "What makes this different is that The South Butt sells fleece jackets and other clothing and therefore competes directly with The North Face. That may be reason for a jury to go against the defendant." By contrast, House says Louis Vuitton lost to a company making "Chewy Vuiton" toys primarily because the latter company makes pet toys and not designer handbags. In this case, the relatedness of the goods offered under the marks will likely be a key element in the analysis.
January 14, 2010 by Robert Tharp at 11:32:31 am January: 'Tis the season for divorce filings
The Psychology Today blog has an interesting take on the perennial uptick in divorce filings every January.It may be because the holidays are over or that people want a fresh start at the New Year. Some couples who've been planning to break up choose to avoid disrupting their families during the holidays. Others may be hoping that their situation or their partner's behaviors will change, and when nothing shifts, they opt for dissolution, which at best is a sad thing.Family law attorney Brad LaMorgese from the Dallas office of McCurley Orsinger McCurley Nelson & Downing, agrees. "People make it through the pressures of the holidays, then decide that they don't want to face those same arguments or disappointments again," says LaMorgese. "There are greater opportunities for conflicts involving finances or relatives this time of year, plus it's also a time when it's normal to think about and make plans for the future."
January 13, 2010 by Robert Tharp at 4:42:08 pm IRS Cracking Down on Paid Tax Preparers
Beginning next year, the Internal Revenue Service plans to regulate paid tax preparers by requiring them to register with the government, pass competency tests and commit to a code of ethics. The agency's stated goal is to reduce the chance of errors and fraud by tax preparers, and provide an increased assurance of proper advice in preparing returns. "This represents a major expansion of the IRS role as a regulator of tax preparers," says Emily Parker of Thompson & Knight, a former IRS Acting Chief Counsel and Deputy Chief Counsel. "But there are also significant challenges due to the large number of preparers and the limited resources the IRS inherently has to enforce such regulations." It's estimated that as many as 1.4 million people work as paid tax preparers, and most are unregulated.
According to the New York Times, more than 80 percent of taxpayers use a paid tax preparer or tax software to complete their yearly returns. However, paid tax preparers are unregulated in many states, unless they are also lawyers, certified public accountants or enrolled agents who represent taxpayers before the I.R.S. Lawyers, certified public accountants and enrolled agents will not be affected by the new regulations. Though the new regulations will not be in place this year, IRS Commissioner Douglas Shulman said the I.R.S. was stepping up enforcement of preparers this tax season. He said the agency would send notices to 10,000 preparers who had had frequent errors. He said agents would also visit thousands of tax preparers. Some of the visits will be announced ahead of time; others will not. In some visits, agents will pose as taxpayers to see if they get accurate advice from preparers, Mr. Shulman said. Mr. Shulman said taxpayers should avoid preparers who promise larger refunds, or those who charge fees based on the size of the refund.
January 13, 2010 by Robert Tharp at 4:09:11 pm Former SEC Cyber Crime Chief John Reed Stark Joins Stroz Friedberg's D.C. Office
John Reed Stark, the former Chief of the SEC's Office of Internet Enforcement, has been named Managing Director and head of international digital forensics firm Stroz Friedberg LLC.As Securites Docket recently noted, Stark played a central role in bringing the SEC into the digital age: Stark was among the first at the SEC to identify the imminent, newfangled threat of online securities fraud. He was instrumental in establishing the SEC's first informal "office" of people interested in Internet-related investigations and litigation, and became the first Chief of the SEC Office of Internet Enforcement when it was created in July 1998. The OIE evolved over time to handle cases running the gamut from conventional manipulation and insider trading to sophisticated account intrusions, hedge fund short sale violations, major offering disclosure violations, and violations of anti-money-laundering rules. Mr. Stark successfully oversaw scores of investigations and dozens of major Internet and online-related securities prosecutions at the SEC. "We pioneered the Internet Sweep and cracked some of the online world's most challenging cases," he notes, "including groundbreaking matters involving network hacking, identity theft, unauthorized intrusions into brokerage accounts, and money laundering matters, while also handling an array of traditional SEC cases such as those involving insider trading, hedge fund fraud, violations of the Foreign Corrupt Practices Act, and market manipulations." Additionally, Mr. Stark is a preeminent commentator on securities, cyberspace, and other technology issues pertaining to white-collar crime and to regulation and cyber law.Stroz Friedberg is the leading global consulting firm for managing digital risk and uncovering digital evidence. The company specializes in digital and mobile device forensics, electronic discovery, data breach and cybercrime response, anti-money laundering, and cyber and traditional investigations. Working at the cutting edge of law, policy, and technology, we provide technical assistance and strategic advice to help clients effectively manage electronic information: its sources, its trails, and its implications.
January 13, 2010 by Robert Tharp at 3:06:46 pm Federal Estate Tax Has Lapsed in 2010, For Now at Least
We all know what they say about death and taxes, but there is now some question about whether the estate tax will or won't be around for 2010. As of now, there is no estate tax after Congress failed to extend the Tax Act for 2010, allowing the estate tax to lapse. But Allen B. Craig III, head of the tax practice group at Gardere Wynne Sewell LLP, says it is certain that Congress will seek a retroactive amendment in 2010, however any such amendment will likely result in lawsuits challenging the constitutionality of retroactivity for transactions and deaths that occurred before enactment
The Economic Growth and Tax Relief Reconciliation Act of 2001 imposes a 45 percent tax on estates valued over $3.5 million($7 million per couple). If Congress fails to amend the law in 2010, the Tax Act will automatically reinstate the estate tax in 2011 with an exemption amount of $1 million, not $3.5 million, and a maximum tax rate of 55 percent.
Writes the Wall Street Journal yesterday:President-elect Barack Obama and congressional leaders plan to move soon to block the estate tax from disappearing in 2010, suggesting the levy might outlive the "Death Tax Repeal" movement that has tried mightily to kill it.The Democratic stance on the estate tax contrasts with Mr. Obama's reluctance to press forward with his campaign pledge to raise income-tax rates on top earners, which he worries could have an adverse economic impact during a recession.
But Democrats are determined to act quickly to prevent the estate tax's scheduled repeal. Elimination of the levy on big inheritances was approved by Congress under President George W. Bush in 2001, with rollbacks phased in slowly and its full elimination slated to take effect next year.The Senate Finance Committee will move within weeks on legislation to reverse that law, and Mr. Obama is expected to detail his estate-tax preservation proposal in his budget next month, congressional tax writers said.
January 12, 2010 by Robert Tharp at 4:39:29 pm Shackelford, Melton & McKinley beefing up corporate transactions and securities practice
Dallas law firm Shackelford, Melton & McKinley, LLP is expanding its corporate transactions and corporate securities practice with the addition of attorney Henry Exall IV. Exall joins the firm with more than two decades of corporate and legal experience. He will assist clients with corporate transactions and negotiations, as well as matters involving financial and operational issues. Mr. Exall previously worked as a managing director at a merchant banking corporation where he was responsible for all in-house legal matters, including contracting, capital raising and corporate structuring.
Many industry watchers expect corporate trasactions and securities cases to be legal industry bright spots in 2010. Law 360, among many others, reports an expected uptick in litigation in the coming year:With U.S. stocks rising and jobless claims down, legal industry experts are cautiously optimistic that a return to normal levels of business activity will translate to a modest increase in litigation spending after more than a 10 percent dip in 2009."Our research shows that litigation spending is going to go up only slightly," said Michael B. Rynowecer, president of BTI Consulting Group Inc. "That's good news, because it was down last year."Overall, spending on corporate litigation could increase by about 2.3 percent this year, according to data on corporate litigation spending compiled in BTI's Premium Practices Forecast 2010, and litigation attorneys would welcome such results.
January 12, 2010 by Robert Tharp at 4:07:44 pm Federal class-action lawsuit seeks fair pay for current and former Moody International hourly workers
Take a look at oil well and pipeline inspector John Williams' time cards and pay stubs and two things quickly become apparent: 1) Williams keeps an exhausting work schedule, often working as much as 160 hour in a single pay period and 2) His employer, Moody International Americas Inc., rarely pays him any overtime compensation. Last week, Williams and two former co-workers filed a federal class-action lawsuit charging that Moody International required them to work more than 40 hours per pay period but failed to pay them overtime as mandated by federal law.
Dallas attorney Charles W. "Trey" Branham III of the Law Offices of Charles W. Branham, III, L.P. filed the Fair Labor Standards Act class-action lawsuit in the U.S. District Court for the Eastern District of Texas in Lufkin on behalf of Williams and former co-workers Herbert "Jay" Fontenot and Tye Adair. The federal Fair Labor Standards Act mandates that employers pay overtime to non-exempt hourly employees who work more than 40 hours per pay period at a rate equal to one-and-a-half times their regular straight-time pay rate. Mr. Fontenot and Mr. Adair worked as inspectors and technicians for the company, and have asserted similar claims. Moody International is a subsidiary of UK-based Moody International Limited, which provides services to companies in oil and gas, power, mining and other industries."I'm concerned that what happened to John and the others in this case happened to other Moody International employees as well," Mr. Branham says. "With thousands of technical workers in the U.S., it could be that these three are just the tip of the iceberg."
Mr. Branham says Moody International's own employee handbook may become a key piece of evidence, including statements about the payment of overtime that may run counter to federal law. More information is available at http://www.branhamlegal.com.
January 11, 2010 by Robert Tharp at 3:27:46 pm The American Lawyer Names Fish & Richardson a Finalist for "IP Litigation Firm of the Year"
Law firms fortunate enough to find themselves on The American Lawyer's short list for "IP Litigation Firm of the Year" can typically point to a certain case or a specific line of work that is responsible for the national recognition. Some score gigantic monetary awards against household name corporations, some post a consistent string of legal victories or take the lead in litigation that ends up setting precedent or influencing policy. Finally, some firms successfully defend corporations against IP attacks.
The editors at The American Lawyer cited a little of everything in selecting Fish & Richardson as a finalist for the 2009 award.
The judges singled out the "extraordinary perseverance its lawyers have shown in turning big verdicts against its clients to dust," and specifically its success in reversing over $2 billion in damages awards against Microsoft Corp. According to the magazine, Fish's "2007 obliteration of Alcatel-Lucent's $1.5 billion win against Microsoft for allegedly infringing MP3 digital music patents" was upheld on appeal in 2008, which "started a series of defense wins that effectively ended Alcatel-Lucent's patent war against Microsoft - with the latter clearly on top." Fish also reversed a $388 million jury verdict against Microsoft in a patent infringement suit brought by Uniloc Corp.
The publication also highlighted Fish & Richardson's strong performance before the International Trade Commission, where the firm won five cases in the last two years and played a role in roughly one in every four cases filed in 2008. Finally, the publication recognized Fish's impressive work in the U.S. district court for the Eastern District of Texas, where the firm was responsible for two rare summary judgment motions. The magazine concluded that Fish is "on track to dominate two of the nation's hottest patent venues."
Also this month, the firm has been recognized by Law 360 as one of only six finalists for its "IP Law Firm of the Year" awards. Editors at Law 360 praised Fish for "setting the pace with massive verdicts and settlements, and key roles in policy changes." In addition to the reversals of the verdicts against Microsoft, Fish played an important role in creating new law through its defense of Bose Corp.'s WAVE trademark before the Trademark Trial and Appeal Board and the Federal Circuit. The appellate court determined that in order to force the cancellation of a trademark alleged to have been obtained by fraud, plaintiffs need to prove intent to deceive the U.S. Patent and Trademark Office. This precedent-setting case established a clear standard in a controversial, grey area of trademark law.
Meanwhile, IP Law & Business has named F&R a top IP law firm in its "Who Protects Innovation in America" survey of law firms used by Fortune 100 companies. Fish ranked second overall - with one less mention than the top firm - meaning that the firm is one of the most sought-after firms for both patent prosecution and patent litigation services among the Fortune 100.
January 5, 2010 by Robert Tharp at 10:39:24 am Stunning IP judgment against Microsoft Word and other 2009 headline grabbers land McKool Smith on Law 360's IP Firm's of the Year list
McKool Smith's patent litigation on behalf of i4i Inc. literally brought Microsoft's flagship software, Microsoft Word, to its knees in the last half of 2009. Just days before Christmas 2009, a federal upheld the judgment, tacked on an additional $90 million in damages and interest and ordered an injunction on the sales of Word.
That monumental case alone may have been enough to place McKool Smith on Law 360's list of the top six IP Firms of the Year. But as is custom for this growing and dynamic firm, 2009 was full of important patent cases. Besides the Microsoft verdict, Law 360 also noted the firm's $139 million verdict for Versata Software Inc against enterprise software provider SAP, a $267.5 million settlement for Visto Corp. against Blackberry maker Research in Motion and a $19 million verdict for OPTi Inc. against Apple Inc.
The Law 360 selection is only the latest honor for McKool Smith, which also represents clients in commercial litigation, white collar investigations and defense, and bankruptcy matters. The firm recently was recognized in Corporate Counsel magazine as a 2010 "Go-To Law Firm" for Fortune 500 companies. McKool Smith also was named to the inaugural "Midsize Hot List" published in The National Law Journal, and recognized in the same publication for winning more of the Top 100 U.S. Verdicts than any other law firm in the nation during the most recent survey period.
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