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German High Court Decision Could Limit Derivatives Business

May 19, 2011 By Leave a Comment

(Thomson Reuters Accelus) A recent judgment from the Bundesgerichtshof, Germany’s highest civil court, on the sale of an interest-rate derivative investment to a corporate client could have far-reaching implications for the distribution of derivatives in the country, local officials said.

In a ruling on March 22 the court set out new standards for advising clients on the purchase of complex derivatives products, which could limit banks’ activities. What is more, the ruling could still herald the beginning of new legislation prohibiting the sale of risky investments to some classes of investors, particularly municipalities and other public entities.

Marc Benzler, partner at Clifford Chance in Frankfurt, said: “We cannot entirely exclude that in relation to this case and others there may be some further legislation. It is currently difficult to predict in which direction it may go.”

The court’s judgment against Deutsche Bank, which awarded its client Ille Papier Service €541,047 in damages, has already emboldened investors to sue banks to recoup losses incurred from risky derivatives investments which they claim they were mis-sold. German lawyers have warned, however, that the high court ruling will not automatically result in big pay-outs for unhappy investors.

via German High Court Decision Could Limit Derivatives Business.

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Court Orders Payment of E-Discovery Costs Pursuant to Title 28 U.S.C. § 1920(4) : Electronic Discovery Law

May 18, 2011 By Leave a Comment

Race Tires Amer., Inc. v. Hoosier Racing Tire, Corp., No. 2:07-cv-1294, 2011 WL 1748620 (W.D. Pa. May 6, 2011)

Following summary judgment, the Clerk of Court issued his Taxation of Costs which allowed for recovery of defendants’ e-discovery costs.  Plaintiffs objected, arguing that such costs were not taxable pursuant to Title 28 U.S.C. § 1920 and sought review of the issue.  Following careful analysis, the court upheld the determination of the Clerk of Court.

Defendants in this antitrust case were granted summary judgment upon the court’s determination that plaintiffs failed to establish they had “sustained an antitrust injury.”  Following the subsequent appeal (in which defendants prevailed), defendants each filed a Bill of Costs “in which the majority of amounts requested involve[d] e-discovery costs.”  Plaintiffs objected but were overruled and the Clerk of Court thereafter issued his Taxation of Costs which allowed for defendants’ recovery of their e-discovery costs in a reduced amount.  Plaintiffs sought review.

The court first established that its review of the Taxation of Costs would be de novo and identified the relevant statute at issue, which allows assessment of costs including, “fees for exemplification and the costs of making copies of any materials where the copies are necessarily obtained for use in the case.”  The court went on to note that “[a] finding that costs incurred were ‘necessary’ to the proceedings requires more than mere assertions from the party requesting payment” and that “[t]he dividing line between ‘necessary’ and ‘for the convenience of counsel’ . . . is not particularly well established.”

The court then turned to its discussion of the present case and established that at the outset of litigation the parties anticipated that “discovery would be in the form of electronically stored information (“ESI”)” and entered into a detailed Case Management Order requiring production in a specific format and according to specific parameters.

via Court Orders Payment of E-Discovery Costs Pursuant to Title 28 U.S.C. § 1920(4) : Electronic Discovery Law.

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Agent’s Spoliation Results in Serious Sanctions : Electronic Discovery Law

March 23, 2011 By Leave a Comment

Rosenthal Collins Group, LLC v. Trading Techs. Int’l, No. 05 C 4088, 2011 WL 722467 (N.D. Ill. Feb. 23, 2011)

In this case, the court ordered default judgment, ordered plaintiff to pay $1,000,000 in monetary sanctions, and ordered counsel to pay “the costs and attorneys fees incurred in litigating this motion” where plaintiff’s agent modified metadata related to relevant source code and wiped several relevant disks and devices prior to their production and where the court found counsel participated in “presenting misleading, false information, materially altered evidence and willful non-compliance with the Court’s orders.”

After plaintiff filed for summary judgment its retained consultant admitted in deposition that he had modified relevant source code prior to its production.  Upon defendant’s motion for sanctions, the court declined to order default judgment but imposed monetary sanctions, struck the consultant’s declaration in support of summary judgment, and struck plaintiff’s motion for summary judgment.

Thereafter further spoliation was revealed.  Specifically, the consultant admitted to “turning back the clock” to change the “last modified” date on the previously modified source code to make it appear that the modifications had occurred much earlier and to wiping 6 of 7 disks produced for inspection (while the seventh disk was also wiped, it remained unclear who was responsible).  It was also discovered that “various disks, USB drives and computers that RCG finally produced had been ‘wiped’” prior to production and that the hard drive produced in the “test machine” had been manufactured in 2008 (much later than would be expected in light of relevant time frames).  Accordingly, defendant moved for additional sanctions.

In its defense, “RCG [did] not dispute any of the new allegations of misconduct” but instead sought to distance itself from “its own agent, employed for the purposes of pursuing this litigation” and disavowed any “actual knowledge” of wrongdoing.  RCG’s counsel similarly disavowed “any personal wrongdoing and any actual knowledge of any wrongdoing, while unequivocally distancing themselves and RCG from [the consultant].”

via Agent’s Spoliation Results in Serious Sanctions : Electronic Discovery Law.

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“[T]hrowing the Laptop Off a Building; Running Over the Laptop with a Vehicle; and Stating ‘If This Gets Us into Trouble, I Hope We’re Prison Buddies,’ Unquestionably Demonstrate Bad Faith.” : Electronic Discovery Law

February 25, 2011 By Leave a Comment

Daynight, LLC v. Mobilight, Inc., 2011 WL 241084 (Utah Ct. App. Jan. 27, 2011)

Appellants appealed the district court’s decision to enter default judgment against a third-party defendant for the destruction of evidence.  Appellants argued that the sanction was excessive and unduly harsh and that the Utah Rules of Civil Procedure require a finding of willfulness, bad faith or persistent dilatory tactics in order to impose sanctions.  Rejecting appellants’ reliance on Utah R. Civ. P. 37(b)(2), a rule “which typically pertains only to a delay in the production of evidence,” the Court of Appeals established that the appropriately applied rule, Utah R. Civ. P. 37(g), did “not require a showing of ‘willfulness, bad faith, or dilatory tactics’ or the violation of court order before a court may sanction a party” – including by ordering default judgment.  Moreover, the court noted that even if such a showing were necessary, the district court concluded that the third-party “chose to willfully and in bad faith destroy the laptop” as evidenced by employees’ recorded comments about “their destruction of ‘potential[ly] harmful evidence that might link [them] to any sort of lawsuit.’”  The Court of Appeals further concluded that the there could be no reliance on Rule 37(g)’s good faith exception (which is identical to the safe harbor provision in Fed. R. Civ. P. 37(e)) in light of certain “actions and words attributable to the third-party defendant after it filed suit, including throwing the laptop off the building; running over the laptop with a vehicle; and stating ‘[I]f this gets us into trouble, I hope we’re prison buddies’” – activities which “unquestionably demonstrate bad faith and a general disregard for the judicial process.”  Acknowledging that an order of default judgment was an “extreme” sanction, the court nonetheless found no abuse of discretion in light of the third-party defendant’s behavior and affirmed the order of the district court.

via “[T]hrowing the Laptop Off a Building; Running Over the Laptop with a Vehicle; and Stating ‘If This Gets Us into Trouble, I Hope We’re Prison Buddies,’ Unquestionably Demonstrate Bad Faith.” : Electronic Discovery Law.

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AppleInsider | Apple adds 12 more patents to lawsuit against Motorola

December 5, 2010 By Leave a Comment

Apple has amended its lawsuit against Motorola to include 12 more patents, bringing the total count of patents that Apple accuses Motorola of violating to 24, while Motorola alleges that Apple has infringed on 18 of its patents.

Motorola first sued Apple in October in what many believe was a preemptive move after Apple sued HTC for violation of smartphone patents that the company holds. Motorola and HTC are two of the most prominent makers of Android-based smartphones.

"We can sit by and watch competitors steal our patented inventions, or we can do something about it," Apple Chief Executive Steve Jobs said of his company’s case against HTC. "We’ve decided to do something about it."

In its suit against Apple, Motorola accused the iPhone maker of refusing to pay a license after "lengthy negotiations." Motorola also claims Apple infringed upon patents relating to technologies that include 3G, GPRS, 802.11 wireless and antenna design.

After Motorola sued Apple, the Cupertino, Calif., company quickly responded with a countersuit. Last week, the U.S. International Trade Commission announced that it was launching a formal investigation of Motorola in response to Apple’s allegations.

Apple’s motion this week to add an additional 12 patents to its lawsuit against Motorola counters a preemptive request filed by Motorola in October for a declaratory judgment that would block Apple from using those patents against Motorola in court. The declaratory judgment references 11 patents that Apple used in its suit against HTC, but had yet to use against Motorola.

via AppleInsider | Apple adds 12 more patents to lawsuit against Motorola.

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Do You Own Your Software or Just ‘License’ It? | Corporate Counsel

June 11, 2010 By Leave a Comment

Is the software installed on your computer something you own — or did you simply buy a “license” to use it?

That's the issue at the heart of Vernor v. Autodesk Inc., a case argued Monday before the 9th U.S. Circuit Court of Appeals that represents a broad challenge to the software industry’s fundamental business model.

The dispute originated when plaintiff Craig Vernor, who earns a living selling used items on eBay, acquired several copies of AutoCAD, the 3-D modeling software that is Autodesk’s main product, at an office sale held by an architecture firm. New copies of AutoCAD software typically sell for about $4,000.

When Vernor listed those copies for sale on eBay, Autodesk sent the online auction company a takedown notice accusing him of copyright infringement. Vernor responded with a counter-notice to eBay emphasizing that he was reselling legitimate, not pirated, software. Ultimately, after receiving more complaints from Vernor, eBay suspended his account for a month. (Vernor ultimately sold two copies of the secondhand AutoCAD software for about $400 apiece.)

Vernor’s next move was to file a pro se declaratory judgment lawsuit in federal district court in Seattle. In his suit, Vernor sought a ruling that his resales of legitimate copies of AutoCAD did not infringe Autodesk’s copyright. Vernor soon got Greg Beck, a litigator at consumer nonprofit Public Citizen, to represent him. In 2008, federal district court judge Richard Jones ruled in Vernor’s favor on summary judgment, and Autodesk appealed that decision.

If the 9th Circuit affirms the district court ruling in Vernor’s favor, many standard software licenses — some form of which cover nearly all consumer software — could become legally meaningless. Fearful of just that result, a major software industry group, the Software and Information Industry Association, has filed an amicus brief in support of Autodesk’s position.

Autodesk general counsel Pascal di Fronzo referred an interview request to Jerry Falk, the Howard Rice partner representing the company in the appeal. Falk explains that if Vernor’s view on software resale is upheld by courts, the business model around which many software makers are built would have to change drastically. That, he says, is because a software vendor generally makes its software available under a “license,” while retaining the right to transfer copies, even after the initial sale. In other words, Autodesk’s position is that its customers are buying a license, and that the actual “ownership” of the copy stays with Autodesk.

via Law.com – Do You Own Your Software or Just ‘License’ It?.

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Microsoft Dealt Major Setback Over $290 Million Infringement Judgment | National Law Journal

May 12, 2010 By Leave a Comment
Microsoft Word
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The U.S. Patent and Trademark Office‘s recent confirmation of the validity of a patent that netted i4i Limited Partnership a $290 million infringement judgment against Microsoft Corp. means the U.S. Supreme Court is likely Microsoft’s last hope to overturn the judgment.

On Tuesday, i4i announced that the PTO affirmed the patentability of all the claims in its patent for processing and storing information about electronic documents’ structure. In its lawsuit, i4i claimed that Microsoft Word 2007 infringed that patent, and Microsoft had requested a re-examination in the hopes that the PTO would declare the patent invalid. The PTO has yet to issue a formal certificate confirming the patent’s validity, but the agency informed Canadian software company i4i of its notice of intent to issue an ex parte re-examination certificate on April 28.

In an e-mailed statement, Kevin Kutz, Microsoft’s director of public affairs, said that while the company is disappointed, “there still remain important matters of patent law at stake, and we are considering our options to get them addressed, including a petition to the Supreme Court.”

Microsoft’s bid to use its request for a patent office re-examination of i4i’s patent “has failed in a dramatic way,” said i4i’s lawyer for the re-examination, Rob Greene Sterne, founder of Washington-based Sterne, Kessler, Goldstein & Fox.

Microsoft filed its PTO re-examination request before the jury verdict but well into the lawsuit, probably as a backup plan in case it lost the lawsuit, Sterne said. “Microsoft, I’m sure, assumed that they would win the re-exam or create significant difficulties for i4i in the re-exam that would drive a better settlement,” he said.

Lawyers say that unless Microsoft finds grounds for a motion for relief from judgment, such as newly discovered evidence or fraud, the U.S. Supreme Court is its last avenue.

Microsoft is “pretty much at the end of their line” unless the Supreme Court takes its case as one of the handful of patent matters the Court hears each year, said Thomas Engellenner, the co-chair of the patent practice group at Boston’s Nutter, McClennen & Fish. Engellenner wasn’t involved in the case.

via Law.com – Microsoft Dealt Major Setback Over $290 Million Infringement Judgment.

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