Monday, July 28, 2003

DOMAN NAMES LIKE TANGIBLE PROPERTY That's what the Judge Alex Kozinski of the 9th Circuit has ruled. And if you leave your car with a valet, the valet's responsible for safeguarding it. So too with Network Solutions, Inc. or any other web registries. It is interesting to consider the potential application of this decision to other intangible property, and whether we need to start beefing up our reps and warranties (or limit them, as the case may be) regarding ownership and protection of certain IP, especially any IP registered with a third party administrator. Here's a pdf file of the opinion.

Oh yeah, the case was about sex.com. That should increase this Blawg's hits.

Wednesday, July 23, 2003

"TRIAL LAWYERS" = LOBBY Larry Sullivan over at the Delaware Law Office goes ballistic on the President for demonizing "trial lawyers," and gets tied up in the definition of the term at the expense of understanding its accepted political meaning. "Trial Lawyers," as serious followers of politics understand, are typically plaintiff's counsel backed up by their national lobbying group, the Association of Trial Lawyers of America, who is busy stuffing cash into the pockets of Senator Johnny Edwards of North Carolina (sometimes illegally). Here's the summation:
Sure, there are erroneous trial results. That's why we have courts of appeals. Don't be distracted by the few examples held up on politically motivated banners. But let us work together to improve the judicial system with reforms that really help all of the people, not just the special interest campaign contributors.
The utopian result, again, is to ignore those effected by the proposed changes to the law, from the insurance and medical industries, to Big Law, and pretend Congress can just do the right thing. So naive. And as for the "few examples held up on politically motivated banners", I've seen enough "trial lawyers" that are more than ready threaten suit and send you a "courtesy" copy of the draft in order to extort money from deep pocketed clients that I'm not ready to write off the problems as mere anecdotes by the politically motivated (as though being politically motivated is any worse than the monetary motivation of many of these trial lawyers).

David Giacalone has a good response to Larry as well over at ethicalEsq?.

Monday, July 21, 2003

SILICON VALLEY VCs IN STAR WARS In Episode II: Attack of the Clones we are introduced to representatives of the various entities that were supporting the separatist forces, including the chairman of the Banking Clan. He was the tall skinny guy who looked like a banker out of central casting from 1930s Hollywood. His name wasn't used in the movie (that I remember), but he has a name, as do all of George Lucas's characters: San Hill.

While San Hill is joining with Count Dooku in his rebellious movement against the Old Republic, it remains to be seen whether the Banking Clan will end up with the Rebel Alliance or the new Empire. Only then will be know if Lucas is dissing the venture capitalists that reside on Sand Hill Road in the Valley.

Other creative naming in Star Wars: Trade Federation Bad Guy Nute Gunray (from Newt Gingrich and Ronald Reagan) and Trade Federation representative to the Galactic Senate Lott Dod (Trent Lott and Christopher Dodd).

Friday, July 18, 2003

OOH, OOH, PIK ME You may find that VCs or other lenders may choose to have notes accrue "payment-in-kind interest," or PIK interest. The "in kind" feature may provide for interest under a note to be paid in stock or other securities of the Company. Here's a good discussion of how PIK can be advantagous to a VC.

But here's a practice note. Your client may ask you to prepare a note that provides PIK interest, when all he really means is compounded interest. Say, compounded quarterly. His thinking is that the interest accrues and is being paid "in-kind" but increasing the principal balance of the note by the amount of accrued interest. Sure, your client should use the work compounded if that what he means, but we all know how VCs love to use "terms of art" or other business clichés.

Wednesday, July 09, 2003

THEORETICALLY SPEAKING Just ran across the Legal Theory Blog -- don't know how I missed it for so long. Very good stuff.

ALTHEIMER R.I.P. As we saw with Brobeck, and now with Altheimer & Gray, it's amazing how quickly major law firms can dissolve. It just shows that conservative leadership and building your own book of business are the only real keys to job security. Having worked with Altheimer attorneys and their professional staff on deals in the past, I wish them all the best of luck.

Tuesday, July 08, 2003

PROVE YOUR ALLEGATIONS At least from a PR perspective, if the lawyer aruges that delay occasioned by the lawsuit is costly, then once the suit is resolved, the client should proceed with all dispatch. Spike TV (f/k/a The New TNN, f/k/a The National Network, f/k/a TNN, né The Nashville Network) and Spike Lee settled their lawsuit in which Spike TV argued that Spike Lee's imprudently issued temporary injuction was costing Spike TV millions of dollars and would continue to cost it millions of dollars. However, The New TNN seems to be the name of the First Network for Men over at their website.

Sunday, July 06, 2003

THE LIMITS OF TRANSACTION LAWYERS We aren't perfect. We can't do everything. We can't stop time, speed up the harvest or teleport you off this rock. No matter how good a contract we prepare, it won't prevent bad faith, insane interpretation or a claim that you aren't performing despite your clear adherence to the strict terms of the agreement. Here's a good example from the world of intellectual property licensing.

Video game maker Activision has sued Viacom over its $20 million purchase of the right to make Star Trek video games. From the Reuters report:
In the complaint filed in Superior Court in Los Angeles on Monday, Activision said Viacom's "critical failure to perform" included not releasing "Star Trek" films from 1998-2002 and allegedly deciding recently not to make any more "Star Trek" films or TV shows.
I haven't read the contract, but based on the allegations made public, I suspect that there was no obligation on the part of Viacom (parent of Paramount) to release more Star Trek movies or to keep Deep Space Nine or Voyager on the air. Chances are, Activision contracted for the exclusive right to make Star Trek video games, and the only real limitation on Viacom was not to license video game rights to anyone else. Activision probably never considered what would happen if the Star Trek name lost some of its luster. After all, in 1998, there were two Trek series on the air, and the movie Star Trek: Insurrection was a big disappointment, yet Activision still negotiated to pay $20M. The franchise was still believed to be powerful and it was futile to resist it.

Years later, circumstances changed in a way not envisioned by the business principals or their counsel. While one might argue that Activision should have negotiated a terminiation right if Viacom ran the franchise into the ground, I can't imagine what the standards would have been. Certainly I'd have advised Viacom to refuse any vague standard regarding dilution of the Star Trek mark or degredation of its value, or any more specific standard requiring movies to be produced every so many years (after all, you'd have contracting issues with temperamental actors as well other unknowns surrounding availability of cast, crew and release dates).

So, what happened, I suspect, is that these issues were not addressed and Activision determined later that it was wrong to agree to pay $20 million, especially after the dismal performance of Star Trek: Nemesis and the announcement by Patrick Stewart that he was through with Star Trek. I doubt any reasonable laywer would have allowed a licensee to terminate upon the occurrence of these events.

Determination of price is always an allocation of risks: to the buyer who agrees to pay more than something is worth, to the seller who accepts less. Imagine if the latest Star Trek movie had been a big hit and nominated for Oscars and the television show Enterprise was a consistent top 10 show, then surely Viacom would feel it had asked for too little from Activision.

It comes down to this: no matter how tight your contract is, if one party believes it made a horribly bad deal, it will try to get out. I suspect that's what's happening here.

Wednesday, July 02, 2003

CORPORATE ESPIONAGE Interesting story about a North Carolina baker going after the recipes of a Philadelphia bread company. The real lesson here is that the NC baker should have been going after Amoroso rolls, which Philadelphians use for their hoagies and cheesesteaks. They are tasty, light and crusty (if reheated) "hearth baked Italian rolls", that are very unlike the thick and hard rolls that they pass off for hoagie rolls in NC. And I'm from North Carolina. If you know of any place I can get Amoroso rolls in North Carolina, or where the serve a good Philly-style cheesesteak, e-mail me.

Tuesday, July 01, 2003

MULTI-DISCIPLINARY PRACTICE WITHIN THE RULES Rather than sharing profits with non-lawyers (a no-no), why not just buy the non-lawyers and make them a subsidiary. I wonder if this is the future? I can't imagine a good accountant being content working for a bunch of lawyers with no chance of owning his accounting practice. Here's an article from 2001 on the subject.

FOCUS ON BUSINESS It bears repeating that the most successful entrepreneurs and CEOs are those who are able to focus on the substantive business transaction, and not on the procedural issues involved. Sure, it's important for the businessman to understand the mechanics of a legal document, but only insofar as those mechanics effect the underlying business deal. And never get hung up over the failure of the other side of the deal, be it a lender, borrower, buyer or seller, to follow all of the procedural details if you're not prejudiced thereby and the other side has since come into compliance. That's the path to the destruction of the relationship.