An important federal appeals court has determined that a Connecticut court has jurisdiction over a Canadian citizen whose only act in Connecticut was accessing information on a computer server located in Connecticut.  In MacDermid, Inc. v. Deiter, 702 F.3d 72 (Dec. 26. 2012), a Connecticut-based company, MacDermid, Inc., sued its former employee, Deiter, a Canadian citizen who worked from Canada, in federal court in Connecticut for misappropriation of MacDermid’s trade secrets.  MacDermid alleged that Deiter sent confidential company information from her company email account to her personal email account.  The lower court dismissed the case, saying that Connecticut courts did not have jurisdiction over Deiter because she never set foot in Connecticut and only used a computer terminal in Canada.  MacDermid appealed.  The U.S. Court of Appeals for the Second Circuit, in New York, reversed, holding that it was proper for a Connecticut court to exercise personal jurisdiction over a Canadian employee of a Connecticut company because, even though she was located in Canada and physically interacted only with a computer in Canada, she “used” a server in Connecticut.


Background

MacDermid is a chemical company located in Connecticut.  Dieter, a resident of Ontario, Canada, worked for MacDermid’s Canadian subsidiary.  The email system for both MacDermid and its Canadian subsidiary is located on a server in Waterbury, Connecticut.  Just before Dieter was about to be fired, she forwarded what MacDermid claims is confidential information from her MacDermid email account to her personal email account.  In doing so, Dieter accessed MacDermid’s email server in Connecticut, even though she did so while located in Canada and physically interacting only with her computer terminal in Canada (albeit a company computer).  MacDermid sued Dieter in Connecticut for trade secrets misappropriation, and Dieter moved to dismiss, arguing that Connecticut courts did not have jurisdiction over her, as she had never left Canada.  The issue was whether the Connecticut “long arm” statute gave Connecticut courts jurisdiction over someone outside of Connecticut, and whether such jurisdiction would be constitutional.  One section of the “long arm” statute gives Connecticut courts jurisdiction over someone who “uses a computer” or “a computer network” located in Connecticut.  Therefore, the issue became whether accessing email via a server located in Connecticut constituted “using” a Connecticut computer or network.

Analysis

The lower court dismissed the case because it found that Dieter had not “used” a Connecticut computer or Connecticut computer network, but had only sent email from one computer in Canada to another computer in Canada.  The Second Circuit court disagreed.  It concluded that “using” a computer or network may involve more than just the act of physically interacting with a computer.  While Dieter had physically interacted only with her terminal in Canada, she had “used” MacDermid’s network in Connecticut by accessing it electronically when she sent an email from her company account to her personal account.  The Second Circuit pointed out that the “long arm” statute does not require that user be located in Connecticut, but only that the computer or network – i.e., the thing that is “used” – be located there.  In other words, the “long arm” statute extends to people who access Connecticut computers or networks remotely.

But, having determined that Connecticut’s “long arm” statute extended to Dieter, the Second Circuit still had to determine whether exercising jurisdiction over Dieter would be  constitutional.  It found that it was.  The court found that Dieter knew that, in using MacDermid’s email system, she was accessing a server in Connecticut.  Even though Dieter would have to travel from Ontario to Connecticut to defend herself in the lawsuit, that would not be an unreasonable burden on her.  Furthermore, according to the court, Connecticut has a significant interest in interpreting its misappropriation laws.  The Second Circuit concluded that it was proper for Dieter to be sued in Connecticut for the wrong she was alleged to have committed.

Implications

While this decision was based on Connecticut law, the Second Circuit federal appeals court covers New York, Connecticut, and Vermont.  Moreover, it is considered an important authority on commercial law.  So its analysis on personal jurisdiction could be persuasive in other courts.

Lesson

The lesson here is that if you think you are safe from suit in a particular state in the U.S. just because you access a computer from the comfort of a faraway state – or even, as in this case, another country – you might be gravely mistaken.

Walter Judge is a litigation partner at Downs Rachlin Martin PLLC who blogs on intellectual property litigation topics
Bookmark and Share

 

The recent experience of the passengers the Carnival Triumph debacle once again raises the question of remedies sought and available for cruise passengers who suffer harms while at sea.  As with the Costa Concordia shipwreck a year ago, and with most hospitality-related providers, there are limitations on how and what guests can recover.  Forum selection clauses, of a similar type to what most of our clients use, frequently limit where suits can be brought.  For cruise passengers, who frequently travel from another location to the port city, the limitation on permissible fora can be an insurmountable hurdle to bringing suit.  For the passengers on the Triumph, any claims face the additional obstacle that recoveries are likely limited to only those individuals who suffered some physical harm as a result of the incident. 

These limitations are once again causing outrage among some who believe that the recourse of cruise passengers is too limited.  But before jumping on that bandwagon, it is important to consider the consequences of opening the floodgates to more claims.  For example, invalidating the forum selection clauses on cruise ship agreements could also open up hospitality providers like ski resorts or amusement parks, to claims far outside their operating jurisdictions. 

Extending the ability of a party to recover damages for emotional “injuries” without any physical harm could also dramatically change the legal landscape.  Would that allow individuals who claim to receive a “bad” dinner or view an “offensive” show the ability to recover damages for their claimed emotional injuries even without a physical harm?  Even with limitations for only egregious conduct, the implications could be far-reaching for those throughout the hospitality industry and beyond.

It seems as though Carnival is attempting to thwart the legal onslaught, and possibly the push for legal changes, by offering full refunds to passengers plus cash and a voucher for future travel.  We will see if it is enough.  In the meantime, I wonder if those vouchers are transferrable? 

Cynthia P. Arends, carends@nilanjohnson.com


Bookmark and Share

 

What does Rocky Mariciano, one of the greatest heavyweight boxers of all time, have to do with evidentiary privileges? Plenty, as it turns out, for it was a libel case arising from Mariciano’s comments following his famous 1952 fight against Jersey Joe Walcott that solidified the then-evolving theory that the government-information privilege applies in civil actions.


The Government-Informant Privilege

The government-informant privilege protects from compelled disclosure the identity of persons, or informers, who supply information about legal violations to the appropriate law-enforcement personnel. Despite the name’s implication, the privilege belongs to the government, not the informer, but protects informers from retaliation or retribution and encourages citizens to communicate their knowledge of violations of law to government officials.

The privilege is qualified, meaning that it may be overcome upon a sufficient showing of need by the defendant. In a landmark decision, the Supreme Court in Roviaro v. United States, 353 U.S. 53 (1957), explained that the privilege must “give way” when disclosure of the informer’s identity is relevant and helpful to the defense or is essential to a fair determination of the cause. And to determine whether either of these standards is met, courts must balance the public’s interest in keeping the informer’s identity confidential against the defendant’s right to prepare a defense.

There is no fixed rule on when disclosure is required; courts must make the assessment on a case-by-case basis,and have sole discretion to determine whether the evidence justifies disclosure.  The court must consider several factors when balancing the competing interests, such as the crime charged, the possible defenses, significance of the informer’s testimony, and danger to the informant if his identity is revealed.

Does the Privilege Apply in Civil Actions?

The government-informant privilege is routinely asserted in criminal cases, with the typical situation involving a criminally accused seeking to discover the identity of the informer who provided police with the tip that led to the accused’s arrest.  But the question arises whether this privilege may be applied in civil actions and, if so, whether the same standard governs the privilege.

The situation can arise in two situations.  First, a plaintiff may seek disclosure of an informer’s identity during a civil action against the government, such as a civil rights action under 42 U.S.C § 1983.  Similarly, a party involved in a civil action against another private party may seek third-party discovery from a law-enforcement agency.  Second, the question arises whether private entities may assert the government-informant privilege to preclude disclosure of a whistleblower, or one who reported misconduct up the corporate chain of command in addition to a regulatory enforcement agency.

In the latter situation, most courts hold that the privilege does not apply where the whistleblower’s identity is sought from the private entity, but in the former situation, most courts hold that the privilege applies where the informer’s identity is sought from a governmental agency.  And a case involving one of the greatest fights–and knockout punches–of Rocky Marciano’s career illustrates the point.

Rocky Marciano & the Greatest Punch of All-Time

With a record of 49-0, Rocky Marciano is the only boxer to retire as heavyweight champion with an undefeated record and is recognized as one of the greatest boxers of all time.  Marciano won his title on September 23, 1952 when he defeated reigning champion Jersey Joe Walcott by a Round 13 knockout.  Marciano later described the knockout punch as “the best punch I ever landed,” and boxing historians generally agree that Marciano’s punch was one of the greatest punches in all of boxing history. 

As originally posted on November 27 on Presnell on Privileges
Bookmark and Share

 

ON YOUR MARK…., GET SET…., SHOP!

Posted on November 15, 2012 02:17 by Philip M. Gulisano

With the start of the holiday shopping rush just a week away, retailers should be mindful of their responsibility to keep customers safe when large crowds gather to take advantage of well-advertised and highly-anticipated sales. Customers, drawn by the promise of “doorbuster savings” and warned of limited quantities, do not always act in the most courteous manner when rushing to enter the store and running toward the products they desire.  Sadly, it has become all too common for injury, whether accidental or intentional, to occur as customers dash into and through stores during these special sales, and when a customer is injured during the clamor, a retailer can be held liable.

Although the law varies from state to state, in many states, a retailer’s duty to use reasonable care to protect customers from reasonably anticipated injuries includes foreseeing that large crowds might gather due to the advertised sales and that individuals might be injured due to the overcrowding, the congestion at the door, or the unruliness of the other customers.  Consequently, a retailer may be held liable to a customer who is injured due to pushing, crowding, trampling, or jostling by other customers when the retailer conducts a promotional activity or sale that will foreseeably cause crowds to gather and push.

At least one jury has determined that reasonable care when undertaking a special promotion that might cause people to run, push, and shove includes the retailer giving warnings of the dangers involved, taking steps to control or police the crowd, using loud speakers to warn the crowd not to run over people, and warning the elderly or children to stay out of the crowd.    Given the tragedies that have occurred in the past several years during “Black Friday Sales,” it is advisable for retailers to, at the very least, implement the above measures.  However, the above measures may not be sufficient given the particular circumstances of a retailer.  That is why each retailer should conduct a careful risk assessment evaluation that is tailored to its location and history.  This assessment will allow the retailer to develop and implement a plan that keeps its customers safe and happy during this holiday season. Now go shopping!

Bookmark and Share

 

On Tuesday October 30th, the NCAA Board of Directors announced the adoption of a new enforcement structure that, among other things, creates additional levels of infractions, enhances accountability for head coaches, and seeks to punish violators with sanctions that more appropriately align with the actions that occurred.  The most striking of these new initiatives, to be implemented beginning in August of 2013, is the creation of the new four-tiered structure for violation classification.  

Under the current model, violations are classified as either major or secondary.  The new system sets forth violations as follows: Level I, Severe breach of conduct; Level II, Significant breach of conduct; Level III, Breach of conduct; and Level IV, Incidental issues.  A copy of the NCAA’s press release may be found here.  This new structure is the product of a year-long effort by the thirteen-member Board comprised of presidents, athletic directors, and conference commissioners.   President Mark Emmert described the changes as part of a devotion to “protecting the collegiate model,” in part by “remov[ing] the ‘risk-reward’ analysis that has tempted people.”   

These changes come on the heels of increasing external pressure for a more consistent and transparent process, with a number of major infractions cases serving as the backdrop for this magnified criticism.   Greater accountability and stricter sanctions is undoubtedly a step in the right direction when it comes to enforcement of what would be considered major infractions under the current framework.  The NCAA should be applauded for taking measures to ensure consequences for coaches who plead ignorance while violations blatantly occur on their watches.  But at the same time, the new violation structure is troublesome.   Despite admirable efforts to construct a better system, this new four-tiered structure for violation classification fails to ameliorate many of the common concerns expressed with respect to NCAA Bylaws and enforcement of the same.  Hopefully, this will be cleared-up with the upcoming changes to the substantive “rules” in the Bylaws.    

The NCAA Bylaws are often denounced as too lengthy and too complex, and deservedly so.  Moving from a two-tiered violation structure to a four-tiered system, if not matched-up with more common sense in rule substance, is an obvious step backward, and is counterintuitive if the desired outcome is a more workable framework.  Increased confusion is even more likely when one considers the near endless interpretations that could be attributed to the definitions describing each tier.  For example, consider the difference between a violation that “threatens the integrity of the NCAA,” versus a violation that merely “provides more than a minimal, but less than a substantial…advantage.”  One definition classifies a Level I violation, while the other corresponds with Level II, but is there really a difference?   The definitions may mean something different to a coach versus someone in compliance at a school or enforcement at the NCAA, so how then is the goal of deterrence met for the problem that President Emmert describes as a calculation of risk vs. reward made by coaches who currently do not have sufficient risk to their livelihoods or respective programs.

Under this system, inconsistencies may abound to an even greater degree than under the current model.  This is likely to complicate the NCAA’s investigative measures, which is problematic given the Association’s already limited resources; resources so limited that some have even suggested that the NCAA get out of the enforcement business altogether (for a more in depth discussion of this proposal, see this well-done piece by Attorney Stephen A. Miller, recently published in The Atlantic).  Finally, if the NCAA is really student-athlete first, then this measure does nothing to address the countless Bylaws that punish student-athletes for technical violations that provide no competitive advantage, and do little more than burden an already overwhelmed enforcement staff.  Again, it is worth pondering, is an “incidental issue” even worth sanctioning?  I hope that reforms not just in terms of a scholarship enhancement, but in terms of rules affecting student-athletes’ behavior on a day-to-day basis are addressed in the coming months.

Since the NCAA has chosen to divert its attention first to the method in which these intricate and often superfluous regulations are classified, my worry is that dealing with the substance later will lead to a continuance in seeing violations shoe-horned into a rigid framework that sometimes, but does not always fit.  For those that desire more consistency in results, do you want the NCAA to have something akin to Federal Sentencing Guidelines, or more common sense in results?  I am not yet convinced that the new enforcement structure will get us more common sense in results, which many (myself included) would like to see as opposed to more rigidity.

Over time, perhaps this will prove to be a positive step toward a streamlined, consistent, and fair process.  For now though, a more detailed systemization of the NCAA’s enforcement structure only seems to complicate matters further if there is not significant overhaul to the substance of the rules themselves.  While my experiences may leave me a bit biased, until we see a comprehensive reassessment of the actual Bylaw language (promised in the next few months), I foresee this self-proclaimed “overhaul” as little more than a re-branding exercise.

Originally published on Sportslawblog *Hat tip to Brian Konkel for his work on this piece.

Bookmark and Share

 

DC Comics has filed a trademark infringement suit against a Florida barbershop owner in federal court.  The suit accuses the owners of “Supermen Fades to Fros LLC” of using signs, promotion materials and logos which bear DC Comics’ trademarked “Superman” materials.

DC Comics requested that the shop owner cease the use of the marks on multiple occasions without result.  DC’s complaint notes that “DC has never at any time authorized defendants to utilize the infringing promotions in conjunction with any barbershop business and/or the sale or offer for sale of hair groom services.  Defendants’ use of the infringing promotions is likely to cause confusion, to cause mistake and to deceive as to the affiliation, connection or association of defendants’ infringing barbershops with DC.”

The complaint also alleges that “Supermen Fades to Fros” shops use barber capes bearing the Superman logo and utilizes Superman imagery for advertisement purposes on the company’s website.  Aside from trademark infringement in violation of the Lanham Act, the suit also puts forth claims under the Federal Anicybersquatting Consumer Protection Action, and claims for dilution and unfair competition under Florida state and common law.

Republished with permission from sportslawblog.com  

Bookmark and Share

 

According to a group of women who filed a lawsuit last week, Maybelline should pay up for making false claims about its “Super Stay” lipstick products.  Filed in federal court in Manhattan, the complaint seeks declaratory relief and damages under several states’ consumer protection laws.  From the defense perspective, this is the latest attempt at a “no injury” class action where no actual injuries or damages exist. 

The Super Stay products at issue in the case include Super Stay 10HR Stain Gloss and Super Stay 14 HR Lipstick.  The Complaint alleges that Maybelline’s website and television commercials “boast that the Super Stay Gloss ‘stays vibrant and shiny, yet transparent, and won’t fade’ for a ten-hour period.”   Plaintiffs allege that to the contrary, “Super Stay Products do not remain on the wearer’s lips for the extended periods as advertised.”  Accordingly, “Maybelline overstates and misrepresents the staying power of its Super Stay Products as a means to induce consumers to purchase the product.”

Plaintiffs seek nationwide class certification status on behalf of those who purchased and paid for Maybelline’s Super Stay products.  The three named plaintiffs, who reside in Michigan, New York, and New Jersey, also seek certification of subclasses of purchasers under those three states’ consumer protection laws.  The state consumer protection act claims assert that Maybelline’s advertising of these products constituted unfair and deceptive practices and that plaintiffs should be awarded compensatory and treble damages.

Courts have recently recognized the abstract and speculative nature of “no injury” class actions and have dismissed them based on a lack of Article III standing.  Plaintiffs must offer proof of (a) injury-in-fact; (2) causal connection between the injury and conduct complained of; and (3) a likelihood that the injury will be redressed by a favorable decision. In the context of class actions, the class representative must establish an injury-in-fact, not simply that other putative class members suffered injuries. See e.g., Rivera v. Wyeth-Averst Laboratories, 283 F. 3d 315 (5th Cir. 2002).  In the lipstick case, the federal court will have to determine whether the group of women suffered an injury-in-fact by purchasing a product that did not live up to its promises.  


R. Scott Adams
Spilman, Thomas & Battle, PLLC
Bookmark and Share

 

On Friday, August 24, a nine member jury entered a verdict in favor of Apple and awarded almost $1.05 billion in damages.  Apple filed suit against one of its largest competitors, Samsung Electronics, in April 2011, and alleged that Samsung’s Galaxy line of smartphones and tablets infringed seven of Apple’s patents covering the iPhone and iPod products.  In turn, Samsung countersued alleging that Apple infringed Samsung’s patents covering various wireless software components of its products.  After more than a year of highly contentious litigation and following a trial that began at the end of July and lasted the better part of August, the jury deliberated for less than three days before delivering the verdict in favor of Apple. 

Prior to trial, Apple received a significant e-discovery victory when the court sanctioned Samsung for its failure to preserve emails after Samsung should have anticipated the lawsuit by Apple.  The court determined that Samsung had a duty to preserve evidence as of August 23, 2010, and while Samsung issued a litigation hold and provided instructions detailing how to save emails using its email system, Samsung failed to disable the auto-delete function of its email system, which automatically deleted all emails every two weeks in Samsung’s Korean offices.  The court ordered that, as part of the sanctions, the jury would be allowed to draw an adverse inference against Samsung and that the jury would be told to presume that relevant evidence was destroyed and that the lost evidence was favorable to Apple.  

The court also entered pretrial preliminary injunctions against Samsung barring the sale of the Galaxy Nexus phone and the Galaxy Tab 10.1 in the United States. Moreover, the court delivered various ruling for and against both parties on various in limine motions.  One ruling against Samsung appeared to be very significant: Samsung took issue with the court’s ruling that, because Samsung failed to disclose in time contentions that Samsung’s designs were in development before the iPhone, Samsung was precluded from using slides containing images of the Samsung designs.      

In opening statements and during trial, Apple set forth its theory that Samsung had ripped off the unique design features of the iPad and iPhone and infringed certain utility patents.  Apple focused on comparisons between Samsung’s phones from 2006 to its newer smartphones from 2010.  Also, Apple relied on internal documents from Samsung comparing Samsung’s products with the iPhone hardware.  On the other hand, Samsung maintained the position that Apple had no right to claim a monopoly on certain design features that were not revolutionary.  Samsung’s theory to demonstrate non-infringement was to get the jury to focus on the specific legal requirements relating to each of Apple’s patents.  Samsung also went on the offensive by attempting to prove that Apple’s products use certain Samsung features for mobile devices, such as the process for emailing photos and the technology relating to easily finding photos in an album.  Moreover, Samsung attempted to demonstrate that Apple’s patents were invalid due to developments in technology that existed before Apple claimed to have invented such technology.  The parties relied on various liability and damages experts to support their respective positions. 

During closing arguments, counsel for Apple argued that Samsung copied Apple’s designs after realizing that Samsung could no longer compete with Apple.  Samsung, in turn, argued that a verdict in favor of Apple would severely suppress competition and reduce consumer choices.  In the end, with more than 100 pages of legal instructions, the jury was able to complete a 20 page-long verdict form and return a verdict in less than three days.    
       
For the specific articles from which the information in this summary was obtained, please visit http://newsandinsight.thomsonreuters.com/Legal/.  

Bookmark and Share

 

Apple, Samsung and Possible Sanctions

Posted on August 9, 2012 02:33 by Stacy Moon

Apple recently asked a judge hearing a patent infringement case to sanction attorneys for Samsung after those attorneys issued a press release with a link to documents that had been ruled inadmissible.  The actual quote from the press release was apparently, “"fundamental fairness requires that the jury decide the case based on all the evidence.”  Essentially, Samsung’s attorneys decided to try the case in the media, as well as in the courtroom.  Apple took the position that the press release was an attempt to influence the jury.  The attorneys for Samsung argued it was simply a press release.  The Judge has indicated additional investigation may take place after the trial, but that he would not allow “theatrics” or “sideshows” (his words, not mine) to interfere with the trial.

Trial publicity is an issue that crosses various legal disciplines.  It affects criminal and civil cases alike.  In Alabama, a lawyer is not permitted to make “an extrajudicial statement that a reasonable person would expect to be disseminated . . . if . . . it will have a substantial likelihood of materially prejudicing an adjudicative proceeding.”  Ala. R. Prof. Cond. 3.6.  Unfortunately, the vast majority of that rule deals with publicity around a criminal case, not a civil case.

Most clients carefully control the amount and type of publicity regarding a case, recognizing that the publicity can be a two-edge sword.  In many cases, clients do not want any public statements regarding the case.  In my opinion (and my personal opinion only), it is therefore unlikely that Samsung did not approve the press release.  The question is what purpose did it serve?  If it was a backdoor attempt to get the jurors to view the inadmissible documents, the press release and link was clearly improper, and (I would argue) potentially demonstrated contempt for the rules of evidence, and Samsung’s counsel should have refused.  If it was an attempt to put public pressure on the judge to reconsider his ruling on the admissibility of the documents, it failed miserably, and has potentially adversely affected the judge’s opinion of counsel.  Save such an attempt for the appeal.  Now, at trial, if it is a close call, the judge is unlikely to give Samsung’s attorneys the benefit of any doubt.  If it was for neither purpose, it seems like a somewhat pointless exercise (akin to a temper tantrum), which has now brought the attorneys’ credibility and professionalism into question in the middle of a high-profile trial.

All attorneys should ask themselves whether the risk of damaging their credibility in front of a trial judge in such a matter is really in the best interest of their clients.  Additionally, all firms should ensure that they have a clear policy in place, including designating one attorney to respond to press requests for a statement or release regarding a case.  That person should be required to carefully analyze the pros and cons of making any statement to the press before doing so.

Bookmark and Share

 

In the wake of the recent tragedy in Aurora, Colorado, retailers, restaurants and other establishments open to the public must be ever vigilant to the actions of “third-parties” to ensure, first and foremost, the safety of their patrons, as well as protect themselves from potential liability stemming from such actions.

In most states, New York included, businesses have a duty to maintain their premises in a reasonably safe condition, which includes taking minimal precautions to protect members of the public from the reasonably foreseeable criminal acts of third-persons.  Often in cases a plaintiff will allege that the proprietor should have anticipated the criminal actions of a third-party due to some advanced notice, such as specific comments or threats made, a highly publicized event, the expectation of an excessive number of people attending an event, and so on.  While many such lawsuits are typically broadly worded so as to “state a cause of action” and pass any initial dismissal challenges, few make it to a jury due to the difficult burden of establishing that a third-party’s criminal actions were or should have been anticipated.

With the horrible set of circumstances that are coming to light in Colorado, which seem too frequent lately, one must ask the question, will Courts eventually require proprietors to expect the unexpected?  For now, it is wise for proprietors to take any information they perceive or receive seriously to prevent such tragedies and avoid the legal system.


 

Bookmark and Share

 
 

Submit Blog

If you wish to submit a blog posting for DRI Today, send an email to today@dri.org with "Blog Post" in the subject line. Please include article title and any tags you would like to use for the post.
 
 
 

Search Blog


Recent Posts

Categories

Authors

Blogroll



Staff Login