A daily look at legal news and the business of law:
eBay Didn't Infringe Tiffany's Trademark, Court Decides
In a case that may echo into the Google/YouTube v. Viacom copyright showdown, the 2nd U.S. Circuit Court of Appeals ruled Thursday that eBay is not liable to Tiffany's for trademark infringement, despite the significant volume of counterfeit Tiffany goods auctioned on the site. eBay's (EBAY) "notice-and-takedown" approach to responding to counterfeit sales was sufficient to protect it from Tiffany's (TIF) claims, the three-judge panel ruled, given that Tiffany did not show eBay was willfully blind to the sales. Google (GOOG) claims its "notice-and-takedown" approach to protecting copyright owners on YouTube is a similarly effective defense against Viacom's (VIA) claims. Google joined a friend-of-the-court brief on eBay's side, so it certainly will take note of the decision.
The cases differ, however, in so many respects that the Tiffany case can't give Google much comfort. First, trademark infringement is not the same as copyright infringement. The Tiffany decision notes that contributory trademark protection is much narrower, meaning Tiffany had a harder burden than Viacom does. Moreover, eBay appears to have tried harder to protect trademark holders than Google did to protect copyright holders: eBay used filtering programs in an attempt to proactively screen out infringing listings across its site, something Google did only for copyright holders that licensed material to Google. Finally, Viacom has offered evidence that in YouTube's early days, it was a "Grokster"-style pirate site, and that, at least in the early days of its notice-and-take down policy, it was being willfully blind to copyright violations.
Ratings Agencies Continue Legal Winning Streak
Investor lawsuits against the credit ratings agencies for their AAA ratings of mortgage backed securities that turned out to be junk so far haven't gotten much traction. On Wednesday, U.S. District Judge Jed Rakoff of Manhattan added another one to the trash heap, although we don't yet know why. His two-page order promised a full opinion at a later date.
KBR Overbilled U.S. Government
Kellogg, Brown and Root, a major contractor for the U.S. government in Iraq, billed taxpayers for private security services allegedly not covered by its contracts, which were for food, transportation, laundry and mail services. Although the Department of Justice's complaint does not name a dollar amount for the overbilling, the charges must have been substantial: They came not only from KBR, but also from more than 30 KBR subcontractors.
SEC Asks If Anyone Else Copied Lehman's Creative Accounting
Floyd Norris at The New York Times reports that the Securities and Exchange Commission has formally asked other Wall Street firms if they used Lehman-esque swap "sales" to hide the leverage on their books. While Norris notes that if the discount on the "sales" is great enough (e.g. 10%) the accounting could be legitimate albeit deceptive, remember that Lehman could not get any American law firm to agree that Lehman's 5% discount was enough to get the sales accounting treatment.
Pfizer Settles Neurontin Suicide Case
Pfizer (PFE) paid $400,000 to the family of a man who committed suicide after taking Neurontin, Bloomberg reports. While that seems like a substantial sum of money, Pfizer says it is less than the remaining costs of defending the case.
New Yorkers Get More Protection From Police Strip-Searches
Until Thursday's New York Court of Appeals decision, police could strip search everyone at a property covered by an "all-persons-present" warrant, The New York Times reports. Now, police can only search people at the property who they have probable cause to believe are involved in criminal activity. The court rooted the protection in the New York Constitution as well as the federal one, so an appeal to the U.S. Supreme Court would not allow the ruling to be overturned.
And in the Business of Law...
Contract attorneys, hired by big firms to do document review while associates do the "real" legal work associated with cases, are getting new competition: associates. The New York Times reported on Wednesday about some new Kaye Scholer associates who went from being offered normal $160,000-a-year associate positions to being offered $60,000 positions doing pro bono work only, to being told that, in addition to their pro bono work, they were to bill 40 hours a week of document review at $30 an hour. Contract attorneys typically make $35 an hour for similar work, although it can be more or less, so no one will be happy if this arrangement if it becomes more common.