Gibbons Law Alert
On October 3, 2011, the United States Court of Appeals for the Ninth Circuit determined that the Electronic Communications Privacy Act of 1986 (“ECPA”), 18 U.S.C. §§ 2510 2522, applies to foreign citizens, giving them the same privacy protections Congress afforded U.S. citizens in connection with the disclosure of electronic data by third-parties service providers.
In the recent In re Klein decision, the Federal Circuit reversed the Board of Patent Appeals and Interferences’ decision because five separate obviousness rejections were not based on analogous art as compared to the claimed invention. In re Klein, 647 F.3d 1343, 1345 (Fed. Cir. 2011). The claimed invention was a device for preparing sugar-water nectar for various species comprised of a vessel having a movable partition capable of separating water and sugar until it was desired to mix them. Id. at 1345-46. The partition could be inserted into the vessel at different tracks so that, when filled to a predetermined level, a nectar of the desired concentration of sugar would result from mixing the contents. Id. at 1350-51.
The “Dos” and “Don’ts” of litigation hold notices were discussed at the Fifth Annual Gibbons E-Discovery Conference on November 3, 2011. The distinguished panel included the Honorable John J. Hughes, U.S.M.J. (Ret.), the Director and Chair of the firm’s E-Discovery Task Force Mark Sidoti, and Melissa DeHonney, an associate in the Gibbons Business & Commercial Litigation Department and member of the firm’s E-Discovery Task Force.
Cybercrime has increased tremendously in the digital economy. “According to the American Society for Industrial Security, American businesses [are] losing $250 billion a year from intellectual property theft since the mid-1990’s.” There is a clear and growing threat of Chinese industrial espionage targeted at American companies. In a recent case, a Michigan couple was accused of stealing $40 million worth of trade secrets from General Motors and selling them to a Chinese car maker. Aside from hackers, the threat also exists within organizations from insiders. A recent study commissioned by Cisco found that “[i]n the hands of uninformed, careless, or disgruntled employees, every device that accesses the network or stores data is a potential risk to intellectual property or sensitive customer data.”
In the few months since the Supreme Court announced the bright line rule of Janus Capital Group, a number of courts have applied the rule, giving us a better picture Rule 10b-5 liability post-Janus. The Supreme Court held in Janus that, for purposes of Rule 10b-5, the maker of a statement is “the person or entity with ultimate authority over the statement, including its content and whether and how to communicate it.” The Court analogized to the relationship between a speechwriter and a speaker: a speechwriter may draft a speech, but the content is within the control of the speaker who delivers it. Thus, the Court found that the investment adviser to a mutual fund was not liable for alleged misrepresentations in the fund’s prospectuses under Rule 10b-5, because the fund, and not the manager, was the maker of the statements.
On the heels of National Cybersecurity Awareness Month in October, the second panel discussion at the Fifth Annual Gibbons E-Discovery Conference dealt with pressing issues involving cybersecurity and their effect on private industries. Moderated by Gibbons Director and senior E-Discovery Task Force member Jeffrey L. Nagel, Esq., the panel opened with a presentation by Erez Lieberman, Esq., Deputy Chief of the Economic Crimes Unit and Chief of the Computer Hacking and Intellectual Property Section, Office of the United States Attorney, District of New Jersey. Mr. Lieberman discussed several cases of high profile cybersecurity breaches in recent years and the government’s role in those cases. Mr. Lieberman identified the various types of cybercrimes affecting businesses and provided the audience with a unique understanding of the interaction and coordination between his office, the Secret Service, the Federal Bureau of Investigations, and private companies. Mr. Lieberman also addressed the effect of data breaches on the public sector and the impact of public perception on the business.
Defense attorneys, beware: your client’s technical violation of the New Jersey Consumer Fraud Act may result in its having to pay the plaintiff’s lofty legal bill despite the plaintiff’s failure to demonstrate any injury. The New Jersey Appellate Division recently held that plaintiffs who show a technical violation of the NJCFA but fall short of demonstrating an ascertainable loss at trial may still be entitled to counsel fees.
The Clean Water Act regulates the placement of fill into the “waters of the United States.” That term has come to include wetlands — or at least some wetlands. The Supreme Court’s last attempt, in Rapanos v. United States, to clarify which wetlands fall within the statute’s coverage caused great confusion, as the five Justices who agreed on the judgment (a four-Justice plurality led by Justice Scalia, and Justice Kennedy, who concurred separately) generated two separate tests for jurisdiction. Which test should lower courts apply? In an opinion released on October 31, the Third Circuit said, “both” — if the wetlands in question satisfy either Justice Scalia’s test or Justice Kennedy’s test, they fall within the statute’s reach.
The New Jersey Intellectual Property Law Association (“NJIPLA”) will be hosting its first annual “Electronics, Telecom and Software Patent Practice Update” next Wednesday, November 9, 2011, from 12:00-5:15 pm at the New Brunswick Hyatt. This informative event is co-chaired by Robert E. Rudnick, a Director in the Gibbons Intellectual Property Department and Vice President of the NJIPLA, who will also be a panelist at the event speaking on the recently enacted Leahy-Smith America Invents Act and its impact on patent protection in the electrical arts.
In September of this year, the Third Circuit reaffirmed that creditor claims against corporate directors and officers for fiduciary duty and related breaches under the “deepening insolvency” theory are alive and well, at least under Pennsylvania law. In Official Committee of Unsecured Creditors, on Behalf of the Estate of Lemington Home for the Aged v. Baldwin, the court considered an appeal from the District Court’s grant of summary judgment in favor of the D&O defendants, predicated upon that court’s finding that (i) the business judgment rule and the in pari delicto defense barred recovery on fiduciary duty claims and (ii) the Committee failed to establish a material issue of fact as to whether the defendants committed the fraud necessary to sustain a deepening insolvency claim.