Well Done, Michael Jordan

When is an advertisment not an ad? When it’s a “unofficial, non-commercial congratulation to a celebrity for a job well-done.”

In the layout published in a special 2009 edition of Sports Illustrated on Jordan, Jewel-Osco congratulated the six-time NBA champion on his induction into the Basketball Hall of Fame, and it included a large Jewel-Osco logo under the text.

“The page does not propose any kind of commercial transaction, as readers would be at a loss to explain what they have been invited to buy,” U.S. District Judge Gary Feinerman said in an opinion posted late Wednesday on Jordan’s lawsuit against the company.

Celebrities such as Jordon meticulously guard their images, and others have successfully sued companies for appearing to employ praise as a way to slip in references to a public figure into an advertisement.

via Washington Post – Judge rules layout featuring Michael Jordan shoes, number was free speech, not ad

Corporate Email Vanishing Act

In-house corporate lawyers know the best way to never get caught is to eliminate your paper trail but in subtle enough way to avoid the appearance that you’re eliminating your paper trail. This is where a corporate email archive deletion policy comes in.

If you delete relevant emails, after you have been sued, that is spoliation and it will get everyone down the line, especially you as an in-house lawyer, in a lot of trouble. BUT if you have a regular corporate policy of periodically deleting emails, and you happen to delete crucial evidence the day before a suit was anticipated, then it’s not spoliation.

While general counsel will claim publicly that these policies are in place to streamline their email systems, everyone knows they are really there to delete potentially incriminating evidence in future lawsuits.

Companies know that incriminating evidence always exists in emails because emails document the conversations and decision-making that goes on in all organizations. But they need a justification other than “We don’t want to get caught.” So that’s how you get corporate doublespeak like “e-mail stabilization and modernization” programs, with its vague suggestion that there is a technical reason to delete old emails, as if a company’s entire email system might crash under the weight of old emails stored on a server.

via Tech Crunch – The Only Reason Companies Delete Emails Is To Destroy Evidence

A Tale of Two Ebays

Two cases in 2008 involving Ebay and Tiffany (the jewelry company) show how the law of different jurisdictions can create completely opposite results under the same facts. One Ebay is an innocent online forum. The other is a guilty online counterfeiter. When learning how to anticipate and prevent problems for your clients, you should keep this in mind…

So your competitors and others with a vested interest in the status quo will continue to rely on conflicting legal systems and antique precedents to hold you back. You may not be able to avoid lawsuits, but most companies can do a much better job of anticipating them.

via CIO Insight – eBay and the Legal Problems with Online Marketplaces

It Pays to Do the Right Thing

A lot of “preventative” law in the online space is about understanding the way the business on the internet works. Where I work, we regularly counsel people that one of the best things they can do to prevent a legal issue is to “avoid making people angry.”

The internet has created so many reasons for businesses to spend a little extra money and time to do the right thing…

One broken guitar (and a lack of empathetic customer service) resulted in over 11 million views on YouTube of the catchy jingle United Breaks Guitars. A decision by GoDaddy to support the Stop Online Privacy Act led to an online petition on Reddit (and partially instigated by Tamar) that got thousands of domain owners to transfer their domains off GoDaddy, a revenue loss of around $370,000 a year. NetFlix’s sudden and dramatic increase in prices led to massive consumer backlash, including 67,000 negative comments on their Facebook page. Need I go on? How about Verizon’s decision (and quick retraction) to add a $2 convenience fee, or Bank of America charging $5 to consumers to use debit cards.

Social media makes it easy for like-minded consumers to band together and amplify their message, it spreads rapidly, and it always feels more genuine than the talking heads from a corporate PR team. As a result, we’re seeing large corporations closely monitoring any complaints on social media, and addressing them in hours, instead of weeks or months.

via Techipedia – Attack of the Consumer! The Many Ways Consumers Can Put You Out of Business Online

Ask for private data, and ye shall receive

Sometimes, to steal millions of dollars worth of private data, all you need to do is ask nicely…

The facts alleged in Baidu’s complaint are enough to send both giggles and shivers down the spine of any techie or information security officer. The intruder contacted Register’s tech support chatline and asked to change the e-mail address for the Baidu account. The intruder gave an incorrect answer to the Register representative’s security verification question, but the representative nonetheless e-mailed a security code to the on-file Baidu address for the intruder to repeat through the chat service. Not having access to Baidu’s e-mail, the intruder repeated back a code that Register.com claimed was similar to the correct one (that is, if you consider 96879818 a similar number to the correct code, which was 81336134!).

According to Baidu’s complaint, the representative did not compare the two numbers, but rather went ahead and processed the intruder’s request to change the e-mail address on file to antiwahabi2008@gmail.com. (Not only is this a rather odd-looking address for the third largest search engine in the world, but, as the court noted, “’gmail.com’ is the domain name of a competitor of Baidu….”). The intruder then went to the Register.com site and requested a new username and password by clicking on the “forgot password” button. The system generated an e-mail to the intruder’s address enclosing Baidu’s username and a link allowing the intruder to change the password for the account and gain access. Baidu’s operations were interrupted for five hours, and, according to the complaint, Register did not even begin to address the problem until two hours after first being contacted by Baidu.

via With Security, You Can’t Always Hide Behind Disclaimers

Google Buzz fiasco creates FTC Backlash

Usually, the FTC is extremely hands off in ensuing that businesses comply with their privacy policies. Most times, as long as you have something that you nominally refer to as a privacy policy, it will probably never be an issue what that policy actually says and whether or not it’s even remotely accurate to the site’s actual data-practices.

Unfortunately for Google, the launch of Buzz failed in such an epic, high-profile way that the FTC decided that someone had to take responsibility.

When Google (NSDQ: GOOG) launched Buzz last year, users were given two options: “Sweet! Check out Buzz” or “Nah, go to my Inbox.” The problem is, you became part of Buzz no matter which one users clicked on. Some folks understandably freaked out, since the program revealed to others which contacts people had emailed and chatted with the most. But Google’s Buzz program wasn’t just an annoying failure as a product—it violated the law, according to the Federal Trade Commission. Now the FTC has reached a settlement with Google, forcing the search giant to meet a privacy rule that no other internet company is currently subject to—it must ask users to “opt-in” before sharing their information.

This is the first legal action in which the FTC has required a company to make significant alterations to its privacy policy, and it’s suggestive of what the FTC would like to see going forward.

Whether or not you think the FTC’s move is good or bad, it’s definitely unprecedented. And all of this scrutiny from the FTC, including a requirement that Google’s privacy policy has to be independently audited every two years for the next 20 years (if Google is still around in 20 years), is all because of a business move (automatically subscribing Gmail users to Buzz) that doesn’t even seem that ill-advised on its face. Of course, in retrospect, it was a nightmare for a lot of people, but hindsight is 20/20.

Lesson: High-profile business mistakes create high-profile policy reactions from the federal agencies that are supposed to be keeping an eye on you.

via PaidContent, In Unprecedented Move, FTC Will Make Google Get Users’ OK To Share Information

Contract Drafting Word Salad

At one point, I imagine this contract’s insurance provision was readable:

and the certificate or other evidence of coverage shall provide that if the same policy applies to activities of BUILDER not covered by this Agreement then the limits in the applicable certificate relating to the additional insured coverage of AGENCY shall pertain only to liability for activities of BUILDER under this Agreement, and that the insurance provided is primary coverage to AGENCY with respect to any insurance or self-insurance programs maintained by AGENCY

Then over the years, it was probably added to and amended into the word salad that it is now. Keep in mind that that excerpt was only the last half of that sentence.

Instead of making additions, some contract language just need to be demolished and rebuilt from the ground up.

A Manual of Style for Contract Drafting and Working With Contracts: What Law School Doesn’t Teach You may help

iPhone Developer Agreement: Contract With the Devil?

If you sign contract with terms that you can’t negotiate, you’ll often end up agreeing to all sorts of things that no-one in their right mind would agree to. iPhone game and application developers should know that they’re not exempt.

Prospective developers should make sure they read and understand the agreement they enter into with Apple when submitting a new App to the App Store for approval.

If you’re just furious by what you read there, keep this in mind: Apple isn’t being “evil,” it’s just being pragmatic. Apple understands its position: the App Store is extremely popular and for better or worse, people will agree to anything to get their software sold there. Also, it’s very possible that any of the apps submitted to the store could cause a lot of trouble for Apple, so naturally Apple would want to do everything it can to shift those problems away from the company and back onto the hands of the developers.

Among the bad-for-developer/good-for-Apple terms in the agreement that developers should be aware of are…

• (A) Apple can disable your app at any time (section 8),
• (B) rejected Apps can’t be distributed by competing app stores (section 7.2), and
• (C) if there’s ever a dispute, Apple will never owe you more than $50 (section 14) in damages.

It seems appropriate that Apple would also include section 10.4 which prohibits developers from making statements about the terms of the Agreement which keeps developers from sharing information about the agreement’s more onerous provisions.

Though more than 100,000 app developers have clicked “I agree,” public copies of the agreement are scarce, perhaps thanks to the prohibition on making any “public statements regarding this Agreement, its terms and conditions, or the relationship of the parties without Apple’s express prior written approval.” But when we saw the NASA App for iPhone, we used the Freedom of Information Act (FOIA) to ask NASA for a copy, so that the general public could see what rules controlled the technology they could use with their phones. NASA responded with the Rev. 3-17-09 version of the agreement.

via Electronic Frontier Foundation

Photo credit: Michael Batfish

An $150,000 Lesson In Supply and Demand

The law school I attended was wonderful, but law school generally is a racket. Too many schools pump out too many lawyers to fill an ever-shrinking amount of jobs. Just like in The Wire, law school administrators around the country “juke the stats” [ http://rc3.org/2008/04/23/how-law-schools-juke-the-stats/ ] to make it seem like the economic downturn didn’t affect the market for lawyers at all. That’s how some schools can report to their prospective students that 93% of their grads are employed, despite 15,000 BigLaw job cuts

[The way law student employment upon graudation statistics are calculated, they] don’t discriminate between the law grad working at Applebee’s and the grad working at Skadden. The high employment numbers are buttressed by salary figures released by some schools that show median private-sector starting salaries of $160,000, even at schools outside the U.S. News top 40.

Law school is sold to the uninitiated as a way to make a guaranteed, lucractive career. In actual practice, law school is just like any other educational opportunity. You really have to “want it” to come out with a good job. And you have to go above and beyond just “wanting it,” if you want to come out with a good job that pays well that you like doing everyday.

Everyone else, those law students lukewarm about the practice of law, and those who only enrolled because of a perceived lack of anything better to do are probably in trouble. They’re in trouble to the tune of $120,000 – $150,000.

Getting more education is always a good idea. Paying for that education through a graduate program, particularly if you’re only doing it because you don’t know what else to do, isn’t a good idea in almost every case.

Just like Wall Street, one day we might look back at this moment as the time when the higher education industry should’ve taken responsibility for bankrupting a generation of young people by selling dreams without any basis in reality.

[Law schools] just happen to be the most professional and visible private school type milking the guaranteed student loan cow. Some day soon, student loans will be exposed as a banking sector nearly as ugly as sub-prime mortgage lending. Making the loans exempt from bankruptcy discharge sheltered them from market forces, and the result has been a predictable and unsustainable spiral of greed.

via the ABA Journal

Photo credit:”The Law School Casebook” By David Ortez

Investor Due Diligence Is Not Black Magic

It’s common advice that before investing in a company or entering into long-term agreements with another company that you (and your lawyer) should do your “due-diligence.” It’s rare though that anyone actually elaborates exactly what you should be looking at in order to be diligent.

From what I’ve found, the goal of due diligence is to confirm that everything you’ve been told matches up to the facts on the ground, so you start that by evaluating everything from total intangibles like how well the key members of the business get along (through personal meetings/interviews etc.) to tangibles like intellectual property ownership and conflicts in contractual agreements (by reviewing existing contracts for points that may conflict with guarantees that have been made to you).

For no good reason, this process seems shrouded in mystery, when in fact it is nothing more than a final integrity check on all aspects of your business model, team, product, customers, and plan…

For small teams, every team member will likely be interviewed. Investors are looking for your depth of talent, loyalty and commitment, strengths and weaknesses, teamwork, and management style. A dysfunctional team, or even one naysayer in a critical position can stall your investment…

How well have you met previous financial and business milestones? Investors will validate pre-existing investments and stock ownership to create an accurate market capitalization sheet for your company. Founders with bad credit, active lawsuits, or recent bankruptcies dramatically increase the risk.

via Harvard Business Review