Commercial Law International

By: Ainsley Brown

It would seem that Android, the smartphone software platform, has landed Google in some hot water. And, no it’s not some glitch in the system – Android users can now breath a sigh of relief.

The hot water comes in the form of a lawsuit filed in the US District Court for the Northern District of California: Oracle of America Inc. v. Google Inc.. In the suit Oracle claims that Google in developing Android “knowingly, directly and repeatedly infringed Oracle’s Java related intellectual property.”  Parts of Java, according to Oracle, were included in the “stack” or package of software that forms Android.

Although Android was introduced less than two years ago it has fast become one of the most widely used smartphone operating systems and forms a major part of Google’s strategy to establish a beachhead in the fast growing mobile world. Android guarantees Google a platform for its search and advertising service as well as providing a hedge in case rival smartphone makers decide to block Google from their systems in the future. If Google loses the suit it could result in a major rethink in Google’s mobile strategy as Oracle could either force a redesign of Android or in all likelihood exact fees from some type of licensing agreement.

By: Ainsley Brown

So what is brand management law?

The best definition that I can give is the law or legal practice that facilitates a company or companies managing their band or brands. Yes, I know, I know the definition is a bit circular but hey what do you expect, I am a lawyer after all.

Then what is brand management?

Brand management according to BusinessDictionary.com is: the process of maintaining, improving, and upholding a brand so that the name is associated with positive results…Brand management is built on a marketing foundation, but focuses directly on the brand and how that brand can remain favorable to customers.

Brand management law (BML) is thus defined as the legal facilitation of the above process. It is a multi-disciplinary practice area and brings together many differing areas of law (Intellectual property (IP), litigation, contracts, tax, etc) but more importantly by its very nature also encompasses the non-legal (marketing, public relations, consumer care, business sensibility/sensitivity, etc).

BML is not just a simple matter of commercial awareness or knowing your clients business – both of which are important very important aspects of this area of law, however BML goes beyond either of them. That is to say it is not just a matter of discerning what the client’s interests are, then moving to put in place the requisite legal instruments that establish some right “to” or “in” and then defending said right or rights. Take for example a client that has expended millions on research and development, this client clearly has an interest in seeing a return on this expenditure, a lawyer would move to protect the client’s work product by intellectual propertizing it as much as possible (e.g. registering patents and trademarks), the lawyer would then act as a kind of sentinel, safeguarding the client’s IP through the threat (real or potential) of legal action.

BML is this but much more. Its is practice area that requires a lawyer to be able to keep the legal and non-legal in sync – always remembering that it is the brand that matters.

This practice area requires from a lawyer certain degree of intellectual flexibility. From the nature of our profession lawyers are problem solvers – some might beg to differ – to be more specific we are legal problem solvers. To put it succinctly we will find the legal solution to your business problem. And here lays the problem for many a lawyer when it comes to BML.

Lawyers are good at finding legal solutions to business problems; well that’s what we were trained to do after all. However, BML requires a lawyer to go beyond this and to realize that some times what is in fact needed is a business solution to a legal problem.

What is the difference between these two approaches, isn’t it just matter of semantics? Well, you will just have to stay tuned.

By: Ainsley Brown

Judge David Hammerschlag – German for hammer blow – does just that, delivers a hammer blow to the investment bank JP Morgan.

In the case of JP Morgan Australia Limited v. Consolidated Minerals Limited, Judge  Hammer Blow , sorry I just couldn’t resist, I mean Judge Hammerschlag has ruled that the fees the bank charged  Consolidated Minerals (ConMin) in the latter’s sales were “capricious, unreasonable and unjust.” Before I go any further I need to make a bit of a confession. In a previous post I accused the lawyers from ConMin of being either arrogant or capitulant in their decision not to call any witnesses or submit any documents to support the defense of their client. I was wrong, it was a brilliant move. In not having any witnesses or documents the lawyers avoided any potentially awkward or damaging moments in the public specter know as the courtroom. In so doing they effectively managed the ConMin brand and for that I Salute You!

The case, followed very closely by those in the investment banking community, has helped but not totally shined the spotlight on the fees investment banks charge during mergers and accusations, namely on their defense response fees. Defense response fees are basically the fees a bank would charge its client to ward off an unwelcomed takeover bid by for instance soliciting a rival bid.

Before ConMin was sold to Palmary Enterprises with its A$1.3 billion share cash offer a three way bidding war ensued between Palmary, Territory Resources and Pallinghurst which drove up the market value of ConMin. It is this rise in value that is at the centre of JP Morgan’s claim to compensation. The bank believed that its incentive, including its defense response fee ought to be based on the difference between the first take over bid which was made by Pallinghurst and the final and wining offer from Palmary. The judge however did not see it that way, according to Judge Hammerschlag as it pertain to the rival bids “there was no need for either of them to be repelled or warded off.”  Thus, JP Morgan’s fees ought to be based on the difference between Palmary’s first and winning offer.

What does this mean for JP Morgan?

It means that it will just have to be satisfied with the A$20 million that ConMin has already paid it. However, this may not be the end of this story for these two; the ruling is subject to appeal by the bank.

What does this mean for investment banks?

Investment banks will certainly be paying closer scrutiny to the language in their fees structure, namely with respect to incentive and defense response fees. I suspect that banks will seek/impose greater clarity in to the murky world of what they actually do vs. what eventually happens in takeovers. Additional, I also suspect that investment bank will be facing more and tougher questions from their clients who will want fees explained and justified.

By: Omar Ha- Redeye and posted on Slaw on March 23, 2010. 

Luxury good maker Louis Vuitton Moet Hennessy (LVMH), who produces Moet & Chandon champagne and Dior perfume, claimed that Google’s advertising polices violated their trademark.  The practice in question was the use of key words related to brand names by counterfeiters, who would then link to online stores.

Based on reported coverage of the case, the European Court of Justice made several main findings in a decision released this morning:

1. Google has not infringed copyright simply for allowing companies to purchase trade mark key words
2. Google cannot be liable for advertising requests if it removes them when informed that a trade mark has been abused
3. Trade mark owners have the right to stop their use in AdWords when they suggest they are linked to the owner or create confusion about the owner
4. Companies can still claim compensation if a court rules that the misuse of trade mark damages the brand
5. Google will be liable for infringement if it does not act quickly to stop the misuse of trade mark

Both sides are claiming victory.

A copy of the decision can be found here, and a summary of the case by the court here.  Google’s blog post in response to the case can be found here, and a press release by LVMH can be found here.

By: Ainsley Brown

This forms part of the Middle Passage Law Series on Law Is Cool.

American International Group, better know by its acronym AIG, it seems these days can rarely catch a break. It just seems negative news follows negative news for this company. This time the negative news for this too big to fail company – deeply wounded by the global credit crunch and later recession – has two of its units being accused of racial discrimination in their lending practices.

It is important to note that AIG has not been found guilty of anything; in fact it wasn’t even accused of any wrong doing.

WHAT?

I know, I know, it seem like I am saying that AIG is involved yet not involved in this case. And yes that is exactly what I am saying.

All of this may seem totally contradictory but let me assure you it is not. What we have here is a classic illustration of legal reality vs. public perception of a company’s brand. In order to be successful companies have to be mindful of the differences between these two concepts and effectively manage their interrelation.

The Department of Justice (DOJ) allegations were never directed at AIG, the parent company, but were instead directed at two of its subsidiaries –AIG Federal Savings Bank (FSB) and Willmington Finance Incorporated (WFI). Both banks were accused of not sufficiently monitoring the activities of mortgage brokers who sold mortgages that they funded. The brokers were, according to the DOJ, offered African-American borrowers less favorably borrowing terms than similarly financially situated whites. The two have agreed to settle the case with the DOJ and have agreed to pay at least $US6.1 million without admitting liability as part of the terms of settlement.

The case broke no new ground as far as banks in the US being accused of racial against minorities, namely African-American and Latino-Americans, in fact similar settlements or even full blown litigation involving other US banks will surely be making the headlines in the near future. The case however did break new legal ground in that for the first time US authorities held a lender directly responsible for the racial discriminatory acts of brokers. As a consequence, from now on banks will have a positive duty to monitor the activities/policies of brokers that they fund, to the best of their ability, in order to ensure that they are not using race to determine borrowing terms. This duty also of course carries with the co-duty to take positive action whenever a bank believes that a broker is using race.

From a strict legal perspective AIG, the parent, hands remain totally clean is this matter. It is important to reiterate that AIG was never accused of anything; the allegations were solely directed at the two subsidiaries. And no this is not a simple matter of splitting hairs, while related all three companies are separate. The legal concept of the corporate veil - the independent legal identity of companies, even if related – is a fundamental one in corporate law. The corporate veil is best understood as a shield that is used to protect all the right that come with incorporation. This is not to say that it can never be lifted/pierced, for it can, but this is only done in rear and specific instances where for example fraud is alleged or where for some reason the directing/controlling mind of a corporation needs to be identified.

However, these allegations go beyond strictures of the corporate veil and this is where public perception of the brand and effective management of that brand become important.  AIG and its army of brand management specialists both know that the general public are often not so discerning as to make the distinction between parent and subsidiary; as far as the public is concerned AIG is AIG.  This is the reason I believe that there was such a quick settlement – the last thing AIG, the parent, needs is a protracted legal battle involving accusations of racial discrimination, albeit involving subsidiaries. This would be a public relations nightmare.

By: Ainsley Brown

When it comes to the hype around a new product no body does it better than Apple. In fact you could even say that Apple has made the hype surrounding a new product a large part of its advertising and marketing campaign.

However, the key to such marketing is maintaining such levels of secrecy that would make the CIA proud. This same approach was taken with all its “i” products – the iPod, the iPhone and now the iPad. With the importance of secrecy such high levels of secrecy it’s only a matter of time before the lawyers get involved.

And yes, they did get involved.

In the lead up the release of the iPad this week, Apple’s lawyers Orrick, Herrington & Sutcliffe LLP sent out a stern warning letter to a website that offered a cash bounty to any one that could produce pictures of the then unnamed iPad. The Silicon Valley gossip website, Valleywag received the warning after it offered $10,000 for a photo, $20,000 for a video and $50,000 for a video with Apple co-founder/CEO Steve Jobs holding the iPad.

Now if this was simply a joke by Valleywag, and I don’t know if it was or wasn’t, Apple and their lawyers certainly weren’t laughing. In the letter to Valleywag, Orrick, Herrington & Sutcliffe warned: “While Apple values and appreciate vibrant public commentary about its products, we believe you and your company crossed the line by offering a bounty for the theft of Apple’s trade secrets. Such an offer is illegal and Apple insists that you immediately discontinue the Scavenger Hunt.”

There is no word of if Valleywag was moved by the warning but it is important to note that the iPad was released without incident to the joy of Apple.

Remember The Greater Commercial Interest...Don't Get Crushed By Your Own Litigation

First posted on Law is Cool on Jan 9, 2010.

This is a blog post by current University of Western Ontario third year law student and Law is Cool blogger, John Magyar that I just had to share. It is a perfect illustraion of why here at Commercial Law International we say that: Commercial Awareness Is Global.

The story featured in the post is not gobal in the geographic sence but rather in the sense of being all encompassing. It illustrates very nicely why persuing a cliam or legal right while making perfect legal sense may not make much business sense. It gives a stark warning to current and future lawyers and their cleints for that matter to have  a Global-Big Picture outlook by examining how the best interests of the client are served; especially when considering persuing litigation. 

Enjoy:

According to an article by Canadian Press, Loblaws has seen the light and will no longer sue the man ‘deemed to be at fault’ for a collision involving a Loblaws truck that caused the death of the man’s wife and 6 teenage boys.  The legal action had been a lingering PR disaster that motivated outraged communities to push for a boycott.

Having spent all of 4 minutes considering the matter, I am struck by the lack of circumspect. This accident was a highly publicized tragedy that made front-page national news. Prime Minister Harper sent a letter of condolence to the school that the teenagers attended, according to CBC news, and no where in the coverage was the driver blamed.

This man was a basketball coach.  He was driving a van that carried the basketball team plus his wife and daughter.  It was winter and the road conditions were not good when the van fish-tailed on a highway and unspeakable tragedy ensued. This man might have been driving too fast, and his negligence might have caused damage to a Loblaws truck, however, from where I sit, public backlash seems a likely outcome of litigation. He made a horrible mistake and paid very dearly for it:  He lost his wife, he could have lost his daughter.  Many families in the community lost a son. Meanwhile, amidst all of this loss of life, Loblaws wants to recover for a damaged truck and lost inventory.  This looks cold-hearted to say the least.

There is lesson to be learned here.  As we graduate from law school and become involved in that financial bloodsport called litigation, we should remember that law suits do not occur in a vacuum.  Even though the law says you can, and even if you’re impervious to emotional reactions to sympathetic defendants, you should consider the potential for public outcry.  The client likely values his or her public profile more than money, and this applies whether the matter is civil, family or criminal.

From where I sit this seems so obvious …  but maybe things look different after swimming in shark-infested water for a few years.  Perhaps the real lesson is to remember what things look like from the outside when your on the inside.

By: Ainsley Brown

“Old pirates, yes they rob I.”

The opening words to Redemption Song are as hard hitting now as they were when first bellowed by the iconic musical legend – Bob Marley - years ago. These words however may be taking on a new meaning in this era digitization and globalization where information is king. This era is all about IP – Intellectual Property – and the right to access, control and exploit for ones own benefit the concepts encapsulated within creativity.

As a matter of course the Brand – how you package and sell your IP, in fact branding itself becomes a form of IP – in this era becomes of great import. In fact one could argue that brand is not the everything but is the only thing. Consumers no longer simply buy a product or service – no, no – rather they are buying a brand.

Now this brings me to the House of Marley. The heirs of Bob Marley – the holders of the exclusive rights to the reggae superstar’s image – are drawing clear battle lines in the IP war on whom can access, control and exploit Marley’s iconic status. They have enlisted the aid of Canadian private equity firm Hilco Consumer Capital to package, manage, market, sell, monitor and protect the IP that is Bob Marley through the products sold under the new House of Marley brand.

Rather than attack the hawkers of existing wears, which would result in a multiplicity of protracted legal battles spread-out across the globe, Hilco and the House of Marley have instead embarked on a branding campaign. It is quite simple, the House of Marley will be authentic and all other comers will only be imitators – a potentially very lucrative strategy, if it can be pulled off.

According to reports, the Marley brand – name, sound and image – are estimated to generate $USD 600 million in a year and this is on the bootleg side alone. On the legal side, the brand generates a profitable but substantially smaller $USD 4 million a year.

With numbers like those no wonder the Marley heirs sought out and gained a partner like Hilco with a proven reputation in IP generally and branding specifically?

While I applauded this new venture, I can’t help but how long will it be before we see a court case or two? Maybe a few Anton Piller orders – best described but somewhat inaccurately as a civil search warrant, that feature so prominently in IP cases – or maybe the odd Mareva injunction – a court order freezing assets -?

The reason why I am thinking this is that it is impossible to escape the fact that branding – intellectual propertization – eventually means not only the allocation of exclusive rights but also the enforcement of those rights.

By: Ainsley Brown

Under a British Columbian Court of Appeal ruling Canada’s Most Reliable Network has gotten the boot – well the ad at least.

Rogers Communications Inc., the Canadian telephone, internet and cable company, that advertised as Canada’s Most Reliable Network has been told by the B.C. Court of Appeal that it has to drop the Most in its ads. The ruling enforces an injunction imposed on Rogers in November. Rogers can no longer without qualification claim, suggest or imply that it is Canada’s most reliable network – now its just Canada’s Reliable Network.

The injunction was a result of suit brought Telus Corp., after both it and Bell Canada upgraded their networks making Rogers’ claims untenable. The lower court and now the appellate court agreed with Telus and imposing the injunction on Rogers.

Rogers was given until December 18 to remove all ads baring the two year old slogan – including radio, TV, newsprint, in store flyers, posters, etc. All in all Rogers is taking the ruling in stride and according to reports is working steadfastly to following the court ruling.

By: Ainsley Brown

Imagine being told that you could no long buy a BlackBerry or being told that the services of the one you already own will be restricted, just imagine. Think it can’t happen; well think again for this has now entered the range of possibility in the United States.

The Canadian company, Research In Motion Ltd (RIM), the maker of the ubiquitous BlackBerry, could be banned in the US if it receives and adverse ruling by the International Trade Commission (ITC). Please, please don’t panic, your BlackBerry is still safe, please note I said “if”.

Let me be perfectly clear here, it is only a slim possibility, for now, as the ITC has to date not initiated an investigation of RIM. However, there has been a complaint made to the ITC by Prism Technologies LLC (Prism) that RIM has infringed its intellectual property.

The complaint made by made by Prism is its latest move to force a settlement from RIM. The two are embroiled in hotly contested patent case since last year in federal court in Nebraska were Prism claims that RIM through its BlackBerry has violated its patents held on desktop software and servers and an authentication system. In September of this year Microsoft settled its portion of the case with Prism.

In filing the ITC complaint what Prism is in effect trying to do is force RIM to settle the patent infringement case. But how, you might ask.

Well there are two reason and all of them having to do with the characteristics of the ITC. The ITC is a quasi-judicial federal agency set up to investigate and enforce US laws as they pertain to unfair trade practices. The agencies mandate extends from anti-dumping and countervailing duties to patent infringement.

The first of the two reasons is that the ITC unlike in a lawsuit, which could drag on for year, can complete its investigation in about 15 months. If an investigation is actually launched, RIM and its lawyers will have to weigh on the one hand the probability of an adverse finding with the finding surviving the subsequent appeals that are sure to come and on the other hand settling its issues with Prism so that any ITC investigation would be rendered a moot point. The speed with which the ITC can move will defiantly put RIM a weakened negotiating position – well played Prism lawyers, well played.

The second reason is that the ITC unlike courts do not have the authority to order royalties but they do have the power to stop any importation of any new devices; prohibit the sale of devices already imported; and even bar the transmission signals originating from another country. Here again Rim and its lawyers will have to do some business-legal analysis and determine what’s in its best interest – is it better to settle now ( with only an ITC complaint) or is it better to wait and let a potential ITC investigation or even adverse finding force its hand?

The good news for RIM is that it still has time, for now there is only an ITC complaint, no investigation.