Devoted to Corporate Attorneys, Corporate Lawyers, and Corporate Counsel

While employed as the general manager of CPT, Olsen received kickback payments from the owner and operator of an independent trucking company, through a sham company owned by a co-conspirator, in exchange for ensuring that the trucking company received CPT’s business. In addition to the kickback payments, Olsen diverted profits from CPT's glyphosate business and used the money for his own personal benefit. Glyphosate is a herbicide used to control grasses and weeds.

The conspiracy charge, a violation of 18 U.S.C. § 371, carries a maximum term of imprisonment of five years and a maximum fine of $250,000 for an individual for each count. The tax charge, a violation of 26 U.S.C. § 7206(1), carries a maximum penalty per count of three years' imprisonment and a $100,000 fine. The maximum fine for each count may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.

While on the job, an employee engages in what seems to be outrageous conduct and injures someone. Will the company be liable for the employee’s conduct? Probably not, might be a corporate counsel's answer. However, as demonstrated by the Seventh Circuit’s decision in Jones v. Patrick & Associates Detective Agency, Inc., the answer ultimately will depend on the facts.

The 19-year old and the 14-year old sued the security guard, his employer, Patrick & Associates, the on-duty police officer, and the city of North Chicago. Everyone settled except for Patrick & Associates. The district court entered summary judgment in favor of Patrick & Associates under the doctrine of respondeat superior, ruling that the security guard’s actions were not within the scope of the his employment.

On appeal, the Seventh Circuit reversed. It held:

• That the security guard’s attacks were related to his employment;

• That the guard was “still on duty, still wearing his uniform, and still carrying his employer-issued weapons at the time of the attacks”;

• That although “the holding cell area at the police station was ‘officially’ off-limits to him, it’s doubtful that [the guard] would have been able to talk his way back there if he were anything other than a security guard in uniform;”

• That the guard’s job predictably entails “the occasional use of force to subdue rule breakers”;

• That “these factors weigh in favor of finding that the issue of respondeat superior liability is for the jury to decide”; and

• That the guard’s attacks “may in fact be outrageous enough to fall outside the scope of [his] employment, [b]ut . . . this is a question for a jury, not a judge on summary judgment, to resolve.”

• DealLawyers.com will host a 45-minute webcast, 2nd Annual M&A Nuggets, on Tuesday, March 21, beginning at 4 pm ET.
• The ACC will host a 1-hour webcast, Twenty-five Basic Employment Law Questions and Answers for Managing Foreign-based Employees, on Tuesday, March 21, beginning at 1:00 PM ET;
  
• The ABA will host a teleconference/audio webcast, Ethical Considerations for a U.S. Practitioner in Planning for a U.S. Multinational Client, on Wednesday, March 22, beginng at 1:00 ET;
• The ACC will host a webcast, Spring Cleaning: Steps to Reduce Electronic Discovery Costs Under the New FRCP Amendments, on Thursday, March 23, beginning at 1:00 PM ET.

Judge James Ware of the US District Court for the Northern District of California issued a ruling in Gonzales v. Google, Inc. that gave Google a partial victory over the government. Judge Ware held that Google must give the government a random selection of 50,000 URLs in Google’s search index, but refused to compel Google to disclose user search queries. The court further ruled that Google will “not be required to disclose proprietary information” and that the government will have to pay “the reasonable cost incurred by Google” in extracting the URL information. According to this post by Google's Associate General Counsel, the company will comply with the court's order.

Background

The ACLU files a suit, challenging the Child Online Protection Act under the First Amendment. The government loses and appeals, eventually taking the case to the US Supreme Court. The Court holds that the government deserves a shot at a trial, but it will have to show that the statute is more effective at preventing minors from viewing “harmful” content on the Internet than other alternatives that would be “less restrictive” of First Amendment rights. The Court specifically focused on blocking and filtering software as a “less restrictive alternative.”

The government subsequently initiated a study designed to show the effectiveness of blocking and filtering software. It served Google, among others, with a subpoena that required the company to produce a list of all the URLs available to its users and the text of users’ search queries for a full month. Google objected to the subpoena. During the ensuing negotiations, the government agreed to accept a sample of 50,000 URLs and 5,000 searches from Google’s query log. Google nevertheless refused to comply with the subpoena. The government filed a motion to compel.

Google’s Arguments

Google advanced two major arguments: First, it argued that the information sought by the government is not reasonably calculated to lead to evidence admissible in the underlying litigation. Second, it argued that the production of the information is unduly burdensome. Google’s burden arguments focused on:

1. the out-of-pocket expenses that it would incur in complying with the subpoena;
2. the technological burden caused by having the government executing a high volume of searches on Google;
3. the potential for loss of user trust that could harm Google’s business by deterring users to conduct certain searches; and
4. the possible disclosure of Google’s trade secrets.

Google did not challenge the government’s subpoena on privacy grounds.

Court’s Analysis of Google’s Arguments

On the issue of relevance, the court observed that the government had failed to provide even a “rudimentary level of general detail as to what it intends to do with the sample of URLs.” After “envisioning” and “imagining” how the government might be able to use the information to measure the effectiveness of filtering software, it gave the government “the benefit of the doubt” and held that the government sought relevant information.

Regarding the government’s demand for search query information, the court found that the government sought information relevant “to the creation of a test set on which to test the effectiveness of search filters in general."

Next, the court turned to Google’s arguments on burden. The court was unpersuaded by most of them. The government’s offer to compensate Google for the costs it would incur in complying with the subpoena dispensed with the cost issue. As to Google’s technological burden argument, the court held that the effect on Google’s search engine of the government’s searches is likely to be de minimus.

Regarding Google’s concerns about loss of user trust, the court found that some Google users might expect some degree of privacy in their searches. Although Google’s privacy policy clearly states it does not apply to such information, the court concluded that Google might lose the goodwill of users who unreasonably expect some sort of privacy in their searches. As a result, the court agreed that that loss of goodwill could be a burden on Google.

On the trade secret issue, the court noted that Google had conceded that production of the small data samples sought by the government was unlikely to compromise Google’s trade secrets per se. The court nevertheless expressed concern “that a narrow sample of Google’s proprietary index and query log, while in itself not likely to lead to the disclosure of confidential information, may act as the thin blade of the wedge in exposing Google to potential disclosure of its confidential commercial information.” This finding thus shifted the burden to the government to demonstrate that the “requested discovery is relevant and essential to a judicial determination of its case.”

Government Denied Search Query Data

The court concluded that the government “demonstrated a substantial need for some information from Google in creating a set of URLs to run through filtering software.” It noted that Google has 45% of the search engine market, and that the government’s study “may be significantly hampered if it” lacks access to information “from the most often used search engine.” However, the court found that the government had failed to demonstrate a substantial need for both a sample of URLs and the set of search queries.

Citing the “Government’s general statements of purpose,” the court stated that the URL sample and the set of search queries both “are aimed at providing a list of URLs which will be categorized and run through the filtering software in an effort to determine the effectiveness of filtering software as to certain categories.” According to the court, this very “similarity . . . in their presumed utility" suggests that the government's requests are "unreasonably cumulative and duplicative.”

As the government failed to express a preference for which data set it preferred, the court chose for it. Having already held that the government's request for search query data would impose a "marginal burden" on Google due to the loss of user trust, the choice was easy. Even this "marginal burden" could not be outweighed by a request calling for information whose benefit is cumulative and duplicative. The thus granted the government’s motion to compel only as to the sample of 50,000 URLs from Google’s search index, denying the government the search query data.

No Rulings on Privacy Concerns, Applicability of Electronic Communications Privacy Act

Judge Ware, sua sponte, raised concerns about the privacy of Google’s users, but made no rulings on the issue. The court observed that personal, sensitive information could be included in the search queries themselves, particularly if users search to see if their own identifying information is available on the Internet. However, having already ruled against the government regarding its request for search query data, Judge Ware declined to “express an opinion on this issue.”

The court also declined to opine on the applicability of the Electronic Communications Privacy Act. It nevertheless noted that this statute “does not bar the Government’s request for [sic] sample of 50,000 URLs from Google’s index through civil subpoena.”

Read the final part of this post here.

In a case demonstrating the perils of the “do-it-yourself” approach to negotiating contracts, Baum v. Helget Gas Products, Inc., the Eighth Circuit held that whether handwritten notes signed by both parties constituted an enforceable contract was an issue best left to a jury, not a judge. The case involved a dispute between a salesman and his employer over the former’s termination.

Plaintiff applied for a sales job at Helget Gas Products (HGP). He met with two HGP representatives to discuss his application, insisting on a written, three-year employment contract. The three then discussed the salary and benefits which plaintiff would receive in each of three years. HGP subsequently offered plaintiff a job. At plaintiff’s request, HGP agreed to have plaintiff’s meeting notes typed up and signed. When HGP didn’t produce a draft of the agreement, plaintiff asked HGP to sign plaintiff’s meeting notes. After plaintiff and HGP added the words "contract with HGP Gas Products St. Louis Mo. Market" to the notes, they signed the document. The document did not expressly state that plaintiff would be employed for a three-year term.

When things didn’t work out, HGP fired plaintiff. Plaintiff sued, alleging breach of contract and negligent and fraudulent misrepresentation. The district court entered summary judgment in HGP’s favor on all claims. According to the court, the handwritten paper could be construed as a contract projecting salary and benefits for three years, but found that it didn’t obligate HGP to employ plaintiff for a definite term. The court also concluded that no one at HGP made any misrepresentations to plaintiff.

The Eight Circuit reversed on the contract claim. It held:

• That in Missouri employment relationships are terminable at will unless a contract specifies the employment’s duration or limits the reasons for discharge;

• That summary judgment in a contract case is appropriate only where the contract language is so clear and unambiguous that the contract's meaning is readily apparent from its face;

• That where the contract is ambiguous, a question of material fact exists as to the parties' intent that must be resolved by a jury;

• That the contract was reasonably susceptible to more than one interpretation, given it’s label as a "contract with Helget Gas Products" and the nature of some of the benefits offered to plaintiff by HGP; and

• That because the contract is ambiguous on its face, a jury must determine the parties’ intent.

To stay competitive in a global market, companies must aggressively manage the skyrocketing cost of providing healthcare benefits to employees. For Auburn Gear, Inc., that meant terminating healthcare benefits provided to retired employees. Not surprisingly, the retirees sued.

In Cherry v. Auburn Gear, Inc., the employees alleged that their collectively bargained insurance agreements provided “lifetime benefits” that could not be terminated. The district court disagreed, holding that the benefits expired when the agreements themselves did. It refused to consider extrinsic evidence suggesting otherwise.

The Seventh Circuit affirmed. The court's opinion is noteworthy for its careful contract analysis. It's well worth reading, particularly by corporate counsel who regularly negotiate contracts.

The court held:

• That benefits provided pursuant to a collective bargaining agreement do not vest automatically;

• That unless the agreement provides for the vesting of benefits, the presumption is that benefits terminate when the agreement ends;

• That this presumption can be rebutted by extrinsic evidence only if the agreement contains a patent or latent ambiguity or if there is a “‘yawning void . . . that cries out for an implied term’”;

• That the collective bargaining agreement contained no patent ambiguities: it unambiguously obligated Auburn Gear to provide benefits “during the period of this agreement” but not beyond;

• That evidence suggesting "alternative interpretations of the contract” does not mean the contract contains latent ambiguities; and

• That the union should have obtained the benefits they promised their members "through explicit contractual language."

You have to use "explicit contractual language" to achieve the desired objectives of the contract? Who would've thought?

Courts are getting tougher and tougher on tort plaintiffs, even when they’re big defense contractors. The First Circuit just affirmed summary judgment against Lockheed Martin, which sought to recover economic losses in a product liability case. Lockheed Martin Corp. v. Rantec Power Systems, Inc. presented the following facts:

Lockheed Martin hired Rantec to construct anechoic chambers, which are foam-padded, steel-shielded rooms used by Lockheed to test antenna signals for aerospace and military applications. Rantec installed fire detection and sprinkler systems in each chamber. However, the systems in two chambers malfunctioned and caused flooding that damaged not only the chambers themselves but equipment contained in the chambers. Lockheed sued, asserting negligence, strict liability, and breach of implied warranties claims. The company sought to recover for the damages to the chambers and the fire detection and sprinkler systems caused by the flooding.

The district court granted summary judgment in Rantec’s favor. It held that Lockheed Martin could not recover economic losses in a tort action under New Hampshire law, and that Lockheed’s warranty claim was barred by the statute of limitations. Lockheed Martin appealed. To the delight of the defense bar, the First Circuit affirmed the lower court's decision.

Normally, a “modification” to a “stationary source of air pollution” that will increase emissions triggers a Clean Air Act permitting process that imposes pollution control requirements. The EPA promulgated a rule excluding modifications effected by routine maintenance, repair, and replacement from that New Source Review (NSR) process.

The agency then decided to expand the rule, stating “categorically that the replacement of components with identical or functionally equivalent components that do not exceed 20% of the replacement value of the process unit and does not change its basic design parameters is not a change” that triggers the NSR process regardless of the effect on emissions. Industry liked the new Equipment Replacement Provision (ERP); states and environmentalists didn’t. They sued.

Yesterday, the DC Circuit Court of Appeals handed them a victory in State of New York v. Environmental Protection Agency. The court held that the EPA’s new rule conflicted with the plain language of the Clean Air Act and vacated it.

Much of the court's legal analysis turned on Congress' use of the word “any” in Section 111(a)(4) of the Clean Air Act, which defines “modification” to mean “any physical change . . .” Only lawyers could quibble about the meaning of the word “any”—a word commonly used and understood by the most uneducated among us. Yes, even pre-schoolers. Can “any” really mean “any”?  Congress couldn't possibly have meant “any” in the “any” sense, argued the EPA. Think I'm kidding? Read the opinion.

Today, the SEC announced that it has settled a securities fraud case against Bear Stearns & Co., Inc. (Bear Stearns). The SEC charged Bear Stearns with securities fraud for facilitating unlawful late trading and deceptive market timing of mutual funds by its customers and customers of its introducing brokers.

Pursuant to the settlement agreement, Bear Stearns will pay $160 million in disgorgement and $90 million in civil penalties for a total of $250 million. The money will go to the affected mutual funds and their shareholders. Bear Stearns also agreed to undertake significant reforms.

NYSE also penalized Bear Stearns, censuring and fining the company. However, the fine imposed by the NYSE will be satisfied by the payment of the $250 million required by the SEC. To learn more, read the SEC's Order Instituting Administrative and Cease-And-Desist Proceedings.

Today, the SEC and the United Kingdom's Financial Services Authority announced the signing of a Memorandum of Understanding Concerning Consultation, Cooperation and the Exchange of Information Related to the Supervision of Financial Services Firms and Market Oversight. The "landmark" agreement "will facilitate the exchange of confidential supervisory information currently collected by both regulators." The agreement also "provides for exchange of information about regulated entities and investment banking groups that operate both in the United States and the United Kingdom."

The SEC also announced the filing of a securities fraud action against three hedge funds, Langley Partners, North Olmsted Partners, and Quantico Partners (collectively, "Langley Partners"), and their portfolio manager, Jeffrey Thorp. The complaint accuses defendants of perpetrating an illegal trading scheme to evade registration requirements in connection with 23 unregistered securities offerings and of engaging in insider trading. Defendants settled: Langley Partners will disgorge $8.8 million; Langley Partners and Thorp will pay civil penalties totaling $7 million.

Next, the SEC announced the filing of a lawsuit seeking an order to enforce investigative subpoenas served on Gary Lynn McDuff. McDuff is suspected of participating in a ponzi scheme. Finally, the SEC announced the retirement of its Executive Director, Jim McConnell. McConnell, who has served as the Executive Director for 16 years, will retire effective June 2006.

This week's events for corporate counsel include:

• The Association of Corporate Counsel will host a webcast, Hot SOX: Executivce Compensation and other Sarbanes-Oxley Developments, on Tuesday, March 14, at 1:00 PM ET.

• The Environmental Law Institute will host a discussion, The Jurisprudential Legacy of William Rehnqauist on Environmental, Natural Resources, and Regulatory Takings Law, in Washington, DC on Wednesday, March 15, beginning at 12:00 PM ET.

• The American Intellectual Property Association will host a live, online seminar, Conflicts in Trademark Law Among Circuit Courts and the TTAB: Substantive Considerations in Forum Selection, on Friday, March 17, from 12:30 to 2:00 PM ET.

California's Court of Appeal for the First Appellate District handed asbestos defendants a major defeat in Boyle v. Certainteed Corporation. The appellate court invalidated a standing general order issued by San Francisco County Superior Court that allows defendants to seek and obtain summary judgment in their favor on an expedited basis in asbestos injury cases.

Certainteed moved for expedited summary judgment under the general order, which allows defendants in asbestos injury cases to request expedited summary judgment on 60 days notice without supporting papers based on an attorney certification that plaintiff’s discovery responses fail to identify evidence showing exposure to asbestos for which the defendant is responsible. Overriding plaintiffs' objection to the general order, the trial court granted Certainteed's motion for summary judgment.

On appeal, the Court of Appeal for the First Appellate District reversed. The court held that the general order conflicts with § 437c of the California Code of Civil Procedure, the statewide statute governing summary judgment motions.

§ 437c requires 75 days notice and supporting evidence. Supporting evidence includes "affidavits, declarations, admissions, answers to interrogatories, depositions, and matters of which judicial notice shall or may be taken." The statute, as interpreted by the California Supreme Court, requires defendant to "present evidence and [] not simply point out through argument that the plaintiff lacks needed evidence."

The general order on its face conflicts with § 437c. It therefore cannot stand, ruled the court.

Yes, that's right. Hell's Angels is suing Walt Disney Motion Pictures Group (d/b/a Buena Vista Motion Pictures) (Disney) and Tollin/Robbins Productions (Tollin) for trademark dilution and infringement and unfair competition. The motorcycle club filed its suit in the US District Court for the Central District of California.

The complaint focuses on the Hell's Angel's design mark, which depicts a "helmeted, horned and feathered skull," and the word mark HELLS ANGELS. The dispute with Disney and movie production company, Tollin, arose when the companies announced their intention to develop and produce a film entitled "Wild Hogs."  The complaint states that the movie has been described as, "'A group of middle-aged wannabe bikers look for adventure out on the open road, where they soon encounter a chapter of Hell's Angels.'" (Doubt this one is Oscar-bound.)

According to the complaint, announcements regarding the movie continuously use the Hell's Angels marks but neither Disney nor Tollin sought permission to use the marks. The complaint alleges violations of the Lanham Act for trademark dilution and trademark infringement, a violation of  California law for trademark dilution, and a violation of California's Unfair Competition Law.

The Unfair Competition count is well, let's call it perfunctory. The count cites a license agreement between Hell's Angels and Twentieth Century Fox Film Corporation that grants the film company an exclusive license to use the Hell's Angels marks, and cursorily alleges that Disney and Tolllins' alleged infringement constitutes unfair competition. Apparently, Hell's Angels wants the court to infer unfair competition from the mere fact that a Disney competitor has an exclusive license to the Hell's Angels marks. That's, let's see, what's the technical term I'm looking for, oh, I got it, lame. Anyway, Hell's Angels seeks a permanent injunction, costs, and whatever "other and further relief" the Court deems appropriate.

According to this article, Northwest Asks Court to Ground Class Suits Against Execs, Northwest Airlines asked US Bankruptcy Judge Allan L. Gropper to stay three class action suits filed against Northwest executives in federal district courts in Minnesota and New York. The airline, which filed for bankruptcy in the US Bankruptcy Court for the Southern District of New York, is not named in any of the suits.

Former Northwest employees filed two of the suits in Minnesota. They allege violations of the Employee Retirement Income Security Act. The other suit alleges "Northwest directors fraudulently dumped about $30 million of their company stock on unwitting investors in violation of federal securities laws."

Northwest told Judge Gropper, '"If the class actions are not stayed ... Northwest could be obligated to indemnify each defendant for the potentially hundreds of millions of dollars in damages claimed by the plaintiffs.'" This, so the argument goes, would adversely affect "bankruptcy-protected assets" and "'distract' the executives from the reorganization quest." Anyone care to offer an opinion on whether Judge Gropper will issue the stay?

Lots of interesting posts today.  My picks for corporate counsel:

• Read Bankruptcy and Financial Market Contracts from the ContractsProf Blog for an interesting discussion of how The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 affects "contracts that embody sophisticated financial transactions."

• Larry Ribstein of Ideoblog offers his take on California's recent attempt to tax LLC gross receipts without "apportion[ing] for receipts outside California."  His post, California LLC gross receipts tax: jurisdictional competition strikes again, links to a California court decision that invalidated California's LLC tax levies.

• Didn't get a chance to attend the PLI "SEC Speaks" conference?  No worries.  Broc Romanek of TheCorporateCounsel.net blog has you covered. He's offering notes on the conference.

• Be sure to read Broc's post, Notes from PLI's "SEC Speaks", for his take on a Google "gaffe" that resulted in the inadvertent disclosure of some information in an analyst presentation.

• The ISS' Corporate Governance Blog post, Contested Election Reimbursement Proposal Clears SEC Hurdle, discusses a proposal by the American Federal of State, County and Municipal Employees that calls on American Express, Citigroup, and Bank of New York to allow dissident shareholders to "get reimbursed for running proxy contests even if they lose."

The SEC today announced that it will hold a series of roundtables in Washington,  DC that will l focus "on speeding the implementation of new Internet tools that will help provide investors and analysts with better financial information about companies and funds."  Topics include:

• Reviewing the results of the one-year pilot program that used interactive data for company filings with the SEC;

• Identifying what interactive data investors and analysts are looking for;

• Accelerating the use of new software permitting dissemination of interactive financial data; and

• Designing the SEC's requirements for company disclosures.

The SEC also seeks comments from investors, registrants, auditors and others on their experiences with interactive data and XBRL.

This week's upcoming events for corporate counsel include:

• The American Enterprise Institute is hosting a panel discussion, Economic Engagement and Freedom in China, in Washington, DC on Tuesday, March 7, from 10:00 AM to 12:00 PM;

• The Association of Corporate Counsel is hosting a webcast, Assessing Corporate Vulnerability to New Union Organizing Tactics, Corporate Campaigns, and Two Labor Federations: The In-House Counsel's Playbook, on Wednesday, March 8, at 1:00 PM ET;

• The ABA is hosting a teleconference and webcast, Privacy and Data Protection in an Age of Heightened Security, on Thursday, March 9, from 11:30 AM to 1:00 PM ET;

• The ABA is also hosting a teleconference and webcast, Anti-Kickback Law Basics, on Thursday, March 9, from 12:00 PM to 1:30 PM ET; and
  

• Georgetown CLE is hosting its 10th Annual Corporate Counsel Institute in Washington, DC, on March 9-10.

Today, the SEC's Advisory Committee on Smaller Public Companies announced Exposure Draft of its Final Report. The 149-page report makes thirty-two recommendations, divided into two tiers. Included in the first tier are "primary recommendations." Some of these include:

• Establishing "a new system of scaled or proportional securities regulation for smaller public companies based on a stratification of smaller public companies into two groups, microcap companies and smallcap companies;"

• Exempting (at least for now) microcap companies with less than $125 million in annual revenue and to smallcap companies with less than $10 million in annual product revenue from Section 404 of the Sarbanes-Oxley Act and external auditor involvement; and

• Developing a “safe-harbor” protocol for accounting for transactions that would protect well-intentioned preparers from regulatory or legal action when the process is appropriately followed.

Comments are due on April 3, 2006.

The First Circuit today issued an amusing opinion in Cipes v. Mikasa, Inc., a copyright infringement case. Cipes, a photographer, took pictures that Mikasa used in advertisements. He copyrighted his photographs. Mikasa paid a flat fee in addition to a reuse fee, if it placed a photograph in a national publication.

When a  dispute arose between the parties over the reuse fees, Cipes sent Mikasa a letter that eliminated the reuse fees for photographs taken in 1999. Mikasa never responded, but kept buying Cipes' photographs. The parties decided to part company, after Cipes demanded reuse fees for 2000 and 2001 and Mikasa refused to pay them. After Mikasa continued  to use Cipes' photographs, Cipes filed a lawsuit alleging copyright infringement and breach of contract.

The jury found in Cipes' favor on the copyright infringement, but against him on the contract claim. Mikasa moved for judgment as a matter of law or, in the alternative, for a new trial. It asserted various claims of error, arguing, among other things, that the copyright infringement award was inconsistent with the jury's findings on the contract claim. The district court denied the motion. Mikasa appealed.

In its opening brief, Mikasa asserted several claims of error. After reviewing Cipes' response to its brief, Mikasa identified two new errors. Then, at oral argument, Mikasa gave up on all but one of its claims of error. It focused on a minor procedural error committed by the district court--an error to which Mikasa failed to object at trial.

Needless to say, the appeal didn't go well for Mikasa. The opinion makes interesting reading, though. I especially like the line that starts, "Straining at gnats while asking us to swallow a camel, Mikasa's appellate counsel also hypothesizes . . ."

The Supreme Court heard oral arguments yesterday in DaimlerChrysler v. Cuno, a case challenging the validity of tax incentives awarded to DaimlerChrysler by Toledo, Ohio. The Sixth Circuit invalidated the tax credits under the Commerce Clause of the US Constitution. The oral argument received a great deal of press.  TaxProf Blog offers a list of links to the press coverage here. Professor Bainbridge offers his take and invites comment on his post, Tax Subsidies.

On another note, you might be interested in a recently released study from the Tax Foundation, a non-partisan organization. The State Business Tax Climate Index identifies the states with the most "'business friendly'" tax systems, and ranks all 50 states. According to the study, the "most business-friendly tax systems are in Wyoming, South Dakota, Alaska, Florida, Nevada, New Hampshire, Texas, Delaware, Montana and Oregon. The least business-friendly tax codes are in New York, New Jersey, Rhode Island, Ohio, Vermont, Maine, Kentucky, Nebraska, Iowa and Arkansas."

The Supreme Court today issued its opinion in Illinois Tool Works Inc. v. Independent Ink, Inc., an antitrust case. The case challenges Illinois Tool Works’ practice of requiring original equipment manufacturers to purchase unpatented ink from Illinois Tool Works for use with its patented printhead system. Independent Ink alleged that this tying arrangement was per se unlawful under the Sherman Act because Illinois Tool Works had market power in the tying product, i.e., the patented printhead system. Illinois Tool Works offered no proof of that market power; rather, it relied on Supreme Court cases to argue that market power could be inferred from the patents themselves.

The district court disagreed, but the Federal Circuit reversed. It found the tying arrangement unlawful per se under the Sherman Act, relying on Supreme Court cases that established a rebuttable presumption of market power when the tying product is patented.

The Supreme Court unanimously reversed, as expected. The Court held that market power cannot be inferred from a patent alone; a plaintiff must prove defendant has market power in a relevant market. However, because Independent Ink reasonably relied on the Supreme Court’s prior opinions, the Court held that it should be given an opportunity to present such proof on remand.