Austin Technology Law Blog : Texas Technology Lawyers & Attorneys for Copyright, Trademarks & Software Licensing in Houston, Dallas & Austin TX

The recent political battle over the extension of the debt ceiling is a stark example of both sides of an issue using some variation of this rule to attempt to gain an advantage.  We've all been there.  It's the "Buy now or the price goes up tomorrow" sale approach or the "If you don't reduce the price and comply with my unreasonable contract terms, you won't get it done by the end of the quarter and consequently, you won't make your numbers."  Sometimes it's not that blatant but it often is a definite undercurrent to a negotiation.  "Settle now or we'll just go to trial" is another oft used ploy. 

The obvious answer is to anticipate the deadlines and allow sufficient time for all the issues to be completely discussed.  This is sometimes difficult if you are not the party that will benefit by the approaching of the looming deadline.  Also, because of human nature, it is sometimes hard to get agreement unless each side feels the heat of a deadline.  Is it wise to disclose your deadline?  If it is a real deadline and you are prepared to not do a deal if you miss the deadline, it probably is.  Here is where you consider your "BATNA" that we talked about earlier - the best alternative to a negotiated agreement.

I have used an example of negotiating by someone else's rules in a class I have taught in negotiating.  In that, I tell them that I will auction off a $20 bill.  The rules are only that each bid has to be at least in increments of $1 and that the party that doesn't buy it has to pay me their last bid.  The obvious ploy is for the bidders to cooperate and bid $1 without a competing bid and then share the profits among the co-conspirators.  However, that rarely happens and the bidding rapidly progresses until both (there's usually only two) realize that the maximum advantage ($20) is rapidly dwindling and that neither can afford to lose.  I have had bids as high as $100 before I've stopped it and made the point about negotiating according to another's rules without giving it sufficient thought.  The point to all of this is to try to attain an equal footing in regard to scheduling, times, places, deadlines and selected issues.  The other party has tried to impose its rules on you for a reason and it's certainly not because it is to your advantage.

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Snarky titles aside, President Obama today signed into law the America Invents Act.  This bill passed the Senate by a vote of 95 to 5, so given the political climate in Washington today, you almost have to assume that it doesn't do much, but that might be unfair.  Some of its features include:

• Changes the definitive date from the first to invent to the first to file.  This is designed to eliminate controversy and the necessity of a court to review a lot of evidence to determine who has prior rights.  It also puts the U.S. into conformance with most of the rest of the world on this issue.  It also creates a race to the USPTO and may favor large companies with money and staff over inventors with less resources.
• Allowing the USPTO to set its fees and keep most of the fees itself in contrast to having them siphoned off to fund other agencies as in the past.  This supposedly will help clear up a backlog of approximately 1 million applications.
• Giving rights to third parties to challenge a patent within 9 months after its issuance.  It also limits patent rights for tax systems and financial products or systems.

Large companies like IBM touted the legislation but others weren't so impressed.

A full text of the bill can be found here.  Problems solved.

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 In 2005, SAP acquired TomorrowNow, a company designed to provide third party maintenance for Oracle software.  Unfortunately, TomorrowNow chose to reduce its operating costs by pirating a bunch of Oracle software and then using it in its business.  

Oracle found that to be somewhat offensive and sued TomorrowNow and SAP and originally obtained a judgment against them for $1.3 billion dollars.  We recently noted that a judge had reduced this amount to a mere $272 million.

During the civil trial, federal prosecutors listened and then filed criminal charges against TomorrowNow.  TomorrowNow is basically defunct and has fewer than ten employees and no individuals were named in the indictment.  This was done as part of a plea bargain and SAP worked out a deal where they would pay a $20 million dollar fine for TomorrowNow, even though SAP was not named in the indictment either.  One would have to assume that some individual actually performed the criminal act of stealing the software, although in this case, it appears that Mitt Romney is correct in that: "Corporations are people, my friend."  At least for plea bargains.

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Once again we stand at the intersection of Ethics Street and Technology Avenue and notice that the traffic signals are insufficient to avoid multiple mishaps here.  Florid prose aside, attorneys must understand that certain methods of electronic communications may put them in an ethical problem if they don't warn their client that using such method may harm the confidential nature of the communication.

You will recall that we wrote recently on a court holding that using a computer or network provided by your employer to communicate with your attorney about a potential complaint against the employer could waive the attorney-client privilege.  Now the ABA has issued a formal opinion on the subject and the gist is that the attorney has an affirmative duty to warn the client about such an eventuality.  In Formal Opinion 11-459 issued August 4, 2011 the Committee on Ethics and Professional Responsibility states that if a client communicates with an attorney about "substantive" issues and such communications originate from an employer owned computer, device (e.g. smart phone) or network (even if from a private e-mail address), the attorney must assume that the employer has a right to access such communications and therefore, the attorney has a duty to warn the client about the risk.  Also, if the client does not heed the risk, the attorney should refrain from communicating with the client via the suspect method.

This duty arises as soon as the attorney-client relationship arises and the attorney knows or should know that the client is likely to send or receive attorney-client communications where there is a significant risk that the communications will be read by the employer or another third party.  This would appear to be particularly applicable in disputes with the employer and in matrimonial issues where the other spouse may have access to the device used for communications.  It also can arise from the use of public computers like libraries or hotels or the use of borrowed devices.

So, the question then arises: What is sufficient notice/warning to comply with this requirement?  The opinion doesn't specifically state but does mention that "reasonable" efforts must be made.  Would a standard tag line on your e-mail signature such as the following be enough?

"Anyone communicating to or from this office by means of an electronic device (including computers, smart phones, tablets or others) and using electronic communication (including e-mail, text messages, instant messages, chat rooms, comments on blogs or websites or others) are advised that such communications may not be confidential, particularly in instances where you are transmitting personal information using your employer's devices or networks or where you are using you are using public computers (such as libraries or hotels) or using a public wireless internet connection.  The effect of the loss of confidentiality will be the loss of attorney-client privilege and the possibility that such communications may not be protected from disclosure in any legal procedure in which you are involved.  You are cautioned to act accordingly."

Using such language as a part of your common electronic communication signature may be advisable and probably doesn't hurt but good practice would indicate an additional communication (such as the engagement/fee arrangement letter) in which the client acknowledges that they have received and understand the warning.  Also, we run the danger of having our e-mail signatures become documents in and of themselves that require our clients to have other attorneys review (hyperbole alert).

We would be interested in any measures that other attorneys have instituted to address this issue.

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Once upon a time, SAP purchased a company called TomorrowNow.  TomorrowNow apparently downloaded Oracle software thousands of time in an effort to get the software cheaply (free) and obtain some of Oracle's customers.  Oracle sued and SAP did not contest the fact of the downloads but alleged that the damages to Oracle should be equal to the profits that Oracle would have realized from the pirated software.  The Court allowed the jury to find damages based on a "hypothetical license" that would have existed between Oracle and SAP if Oracle allowed SAP to use the software in question.  This allowed the jury to find damages in the amount of $1.3 billion, the largest copyright infringement verdict in history.  However, today, in the U.S. District Court for the Northern District of California, the judge found that there was no evidence that Oracle would have ever granted such a license and that damages must be based on evidence and not speculation or guesswork.  The judge then said that the judgment could be reduced to $272 million and if the parties could agree on that, then it would be settled.  If they do not agree, then a new trial will be ordered.

It's an interesting world when a $272 million dollar verdict is considered a victory for the defense.

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