Welcome to the HGB Law Blog. Thoughts shared here do not constitute legal advice.

A Look Back at 2011 as We Head into 2012

December 28, 2011

Ready for a New Year in litigation?  Well, 2011 had some interesting developments in the securities arena, while preparing for 2012 means focusing on records management.

In the post Dodd-Frank world, the Securities and Exchange Commission (SEC) has enthusiastically brought actions against big and small violations at an unprecedented rate.  The SEC filed a record number of cases in the fiscal year that ended Sept. 30.  The SEC brought 735 cases in 2011, up from 677 cases in 2010. However, despite this increased number, the commission collected just $2.8 billion in penalties, which is slightly down from last year’s $2.85 billion.

Many of the cases brought in 2011 involved complex products, transactions and market practices, and were related to the financial crisis and insider trading.

Cases alleging breach of fiduciary duty in connection with a merger or an acquisition continue to be filed in large numbers. The number as of December of this year—61—has declined only slightly from last year’s total of 68 such suits. M&A objection lawsuits continue to be the single largest category of non-standard cases tracked by NERA (National Economic Research Associates).

In 2010, M&A cases took that top spot from credit crisis-related suits. Presently, the wave of credit crisis-related filings largely seems to have subsided. With 11 federal class actions filed in 2011 relating to the credit crisis, such litigation is approximately one-third of its level last year, when it had already declined by about two-thirds from its 2008 peak.

The percentage of suits alleging damages in connection with complex financial instruments such as mortgage-backed securities and collateralized debt obligations has also declined from the elevated levels observed over the past several years to levels consistent with those observed in 2005 and 2006.

The median settlement in 2011 fell to $8.7 million, below last year’s record high of $11.0 million, and lower than both 2009 and 2010, but still the third highest since the passage of the Private Securities Litigation Reform Act (PSLRA) in late 1995.

 

What should a business to do to get ready for 2012?

Think records management, advises Law Technology News:

  1. Update and enforce your records management protocols, inventory your existing records management policies and procedures, and update and draft protocols as needed to address your current business circumstances.
  2. Control your email. Do you have and enforce email retention policies, or does your company still have every email sent since it was formed?
  3. Designate a records clean-up day.  With budget constraints and legal holds, not all records management protocols can be automated.
  4. Rethink disaster recovery because it’s important to balance disaster recovery goals with risk management agendas.
  5. Enforce compliance by training your workers about their specific roles and responsibilities regarding records management.

Happy New Year from Hornberger & Brewer!

General Articles, Los Angeles Attorneys

Ageist Culture Boomerangs on Baby Boomers

December 21, 2011

Not trusting anyone under 60?

Despite the number of baby boomers in the workforce, age discrimination remains a problem in many businesses.  A multitude of companies engage in deceitful and sometimes illegal practices to lay off or fire older workers so they won’t have to pay higher salaries or benefits.

We at Hornberger & Brewer have a proven approach for getting business clients the results they seek when fighting age discrimination cases. There’s so much of this unlawful activity going on today that it produces a steady flow of news.  Recent high-profile examples include:

  • On Oct. 26, 2011, telecommunications giant AT&T agreed to cease discriminatory policies to settle an age discrimination lawsuit filed by the U.S. Equal Employment Opportunity Commission (EEOC). The EEOC had charged that AT&T Inc. and a number of its subsidiaries discriminated against a class of retired AT&T workers by denying them the opportunity for reemployment solely because they retired under certain early retirement or enhanced severance programs. This practice violated the Age Discrimination in Employment Act (ADEA), the EEOC said.
  • On Oct. 27, 2011, the Screen Actors Guild and AFTRA issued a press release denouncing The Internet Movie Database (IMDb) and its owner Amazon.com for IMDb’s practice of revealing the ages of performers without their consent. The organizations claim the practice has led to shrinking work options and age-discrimination for actors. According to the release, SAG, AFTRA and other entertainment unions had been negotiating with IMDb to reach a solution, but IMDb has rejected their efforts.

If you’re over age 40 and feel you’ve been fired from your job due to your age, filing an age discrimination lawsuit may be your last chance at justice.

Even though we are attorneys, we recommend that before calling us you first exhaust all other options to resolve the situation. Start by gathering all the facts of your case and presenting them to the union or grievance board at your company.  If you work for a smaller company and don’t have this option, contact the EEOC and file a complaint with them.

If your complaint with the EEOC is dismissed, begin compiling all the necessary details for a court case that we can pursue on your behalf. We will have to prove conclusively that you were let go because of your age.

Understand that the Age Discrimination in Employment Act (ADEA) of 1967 forbids employment discrimination against anyone at least 40 years of age in the United States.  The ADEA also applies to standards for pensions and benefits provided by employers.  In addition, it requires that information about the needs of older workers be provided to the general public.

Consult with Hornberger & Brewer regarding your business dispute involving purported employment-related age discrimination.  We will fight to help you resolve the case to your advantage.

Employment law

Negligence & Liability can Threaten a Business

December 14, 2011

Managing a business involves great legal responsibilities towards your customers, employees and the public in general.

We at Hornberger & Brewer have a proven approach for getting business clients the results they are looking for when involved in disputes common to the business community.

Negligence involves the failure to exercise the degree of care that, in the circumstances, the law requires for the protection of other persons or those interests of other persons that may be injuriously affected by the want of such care.

Take for example an accountant’s failure to conduct an audit with “due care.”

  • Ordinary negligence applies to judgment errors resulting from a lack of experience, training, or oversight: it is unintentional.
  • Gross negligence results when the accountant recklessly disregards established accounting, reporting, and auditing standards.

You are also at risk in case you have signed a personal guarantee for a loan, do not operate your business as a separate entity, or happened to act in an irresponsible manner.

In addition to financial injury, persons can suffer from physical injury as a result of negligence on the part of a business.

All of this exposes you as the business owner to legal liability–accountability and responsibility to another that is enforceable by civil remedies or criminal sanctions.

At the very highest levels of American business, the amounts involving liability can be staggering:

  • $4.8 billion proposal from American Home Products to settle the fen-phen diet drug litigation.
  • $246 billion settlement between the tobacco industry and the U.S. states’ attorneys general.

A host of wrongful criminal and civil acts may expose a business to liability.  Examples include a physician defrauding the Medi-Cal program, a distributor reneging on a contract to provide a fixed amount of memory chips at a preset price, or a dealership selling a car with a defectively designed fuel tank.

Of these three, tort law covers the last example – civil wrongs, other than a breach of contract, that injure persons, property, economic interests or business relationships and are caused by the acts or omissions of others.

Even the smallest business owner may have a legal responsibility to pay damages if you or your employees have been negligent and caused injury to your employees or members of the public.

You or a member of your company can make a mistake that may injure someone or damage some property. Such mistakes could ruin the company’s reputation, or worse.

Depending on the degree of harm, a lawsuit could easily bankrupt your business. The legal proceedings can be very time consuming, which adds to a significant cost of your defense. Then, the fact that about 80 percent of all U.S. businesses are partnerships or sole proprietorships adds to the forces constantly putting your business and personal assets at risk.

To avoid debilitating verdicts and bottomless attorney fees, all businesses need a basic understanding of tort principles. This will allow owners to identify and minimize potential risks and to select the best form of business.

It is also necessary to identify the safety and health needs of your business activities by carrying out a risk assessment. Keep in mind that when changes are made in your workplace, you may need to reassess the hazards, since wise business management is an ongoing process.

The Health and Safety at Work Act 1974 and its associated Regulations should serve as your guide here. You may consult with an insurance representative and your industry association, as Liability Insurance is one of the most important constituent elements of a company’s success.

Consult with Hornberger & Brewer regarding your business dispute involving purported negligence and potential liability, and you can be sure that our insight can help you resolve the case to your advantage.

Litigation

Sexual Harassment Litigation Helps Protect Workers on the Job

December 7, 2011

Sexual harassment is a form of sex discrimination that violates Title VII of the Civil Rights Act of 1964.

At Hornberger & Brewer, our business litigation experience is useful not just in legal disputes over employment contracts, but in court cases involving the more recognizable employment law issues of racial discrimination, wrongful termination … and sexual harassment.

Sexual harassment involves intimidation, bullying or coercion of a sexual nature, or the unwelcome or inappropriate promise of rewards in exchange for sexual favors.

  • Barnes v. Train (1974) is commonly viewed as the first sexual harassment case in America, even though the term “sexual harassment” was not used.
  • In 1976, Williams v. Saxbe established sexual harassment as a form of sex discrimination when sexual advances by a male supervisor towards a female employee, if proven, would be deemed an artificial barrier to employment placed before one gender and not another.
  • Even though the first sexual harassment decision was actually handed down in 1976, it wasn’t until the 1991 confirmation hearings of Justice Clarence Thomas that the concept entered national consciousness.  Since allegations by Anita Hill were never part of a lawsuit, Hill’s claims were not proved or disproved.
  • In 1991, Jenson v. Eveleth Taconite Co. became the first sexual harassment case to be given class action status, paving the way for others.
  • Also in 1991, President Bill Clinton came under fire for alleged sexual harassment of Paula Jones, a state employee when Clinton was Governor of Arkansas. Clinton denied all allegations.
  • During 2007 alone, the U.S. Equal Employment Opportunity Commission (EEOC) and related state agencies received 12,510 new charges of sexual harassment on the job.

Unwelcome sexual advances, requests for sexual favors, and other verbal or physical conduct of a sexual nature constitutes sexual harassment when submission to or rejection of this conduct explicitly or implicitly affects an individual’s employment, unreasonably interferes with an individual’s work performance or creates an intimidating, hostile or offensive work environment.

Sexual harassment can occur in a variety of circumstances, including but not limited to the following:

  • The victim as well as the harasser may be a woman or a man. The victim does not have to be of the opposite sex.
  • The harasser can be the victim’s supervisor, an agent of the employer, a supervisor in another area, a co-worker, or a non-employee.
  • The victim does not have to be the person harassed but could be anyone affected by the offensive conduct.
  • Unlawful sexual harassment may occur without economic injury to or discharge of the victim.
  • The harasser’s conduct must be unwelcome.
  • It is helpful for the victim to directly inform the harasser that the conduct is unwelcome and must stop. The victim should use any employer complaint mechanism or grievance system available.

When investigating allegations of sexual harassment, the EEOC looks at the whole record: the circumstances, such as the nature of the sexual advances, and the context in which the alleged incidents occurred.  A determination on the allegations is made from the facts on a case-by-case basis.

Prevention is the best tool to eliminate sexual harassment in the workplace. Employers are encouraged to take steps necessary to prevent sexual harassment from occurring. They should clearly communicate to employees that sexual harassment will not be tolerated.  They can do so by establishing an effective complaint or grievance process and taking immediate and appropriate action when an employee complains.

But if a sexual harassment case proceeds to litigation, an in-depth understanding how to handle lawsuits involving these issues is necessary.  But this is never easy. There are many related matters involved, such as free speech rights.  The law on the subject is expansive.  At Hornberger & Brewer, our employment attorneys have a thorough understanding of California state and federal employment law. We bring our trial lawyer experience and civil litigation expertise to the vigorous representation of clients involved in employment law disputes.

Employment law

Intellectual Property Litigation – Part II: Understanding Patent Law

November 30, 2011

The cost of intellectual property (IP) litigation can be astronomical, and continues to increase each year.  In certain cases, the high stakes of IP litigation can pose a very real threat to the survival of a company.

The possibility of being shut down by a competitor is a perennial danger to businesses, especially small companies, who cannot afford to spend millions of dollars defending a patent suit.  High-tech startups are even more vulnerable: they often have very low cash or profits, making them even less able to defend a patent lawsuit.  And because they use newer technology, they are also more likely to infringe patents.  It is virtually impossible to be aware of all the patents that are out there, or that are about to emerge, or that have just been filed (and that are secret for 18 months after filing).

Patent Litigation

Patent litigation is the prime example of the growing likelihood and expense of IP litigation.

A patent is a form of IP consisting of a set of exclusive rights granted by a sovereign state to an inventor or their assignee for a limited period of time in exchange for the public disclosure of an invention. Patents provide rights for up to 20 years for inventions in three broad categories:

  • Utility patents protect useful processes, machines, articles of manufacture, and compositions of matter. Some examples: fiber optics, computer hardware, medications.
  • Design patents guard the unauthorized use of new, original, and ornamental designs for articles of manufacture. The look of an athletic shoe, a bicycle helmet, the Star Wars characters are all protected by design patents.
  • Plant patents are the way we protect invented or discovered asexually reproduced plant varieties. Hybrid tea roses, Silver Queen corn, Better Boy tomatoes are all types of plant patents.

The procedure for granting patents, the requirements placed on the patentee, and the extent of the exclusive rights vary widely between countries according to national laws and international agreements. Typically, however, a patent application must include one or more claims defining the invention which must meet the relevant patentability requirements such as novelty and non-obviousness.

IP litigation is serious business for all businesses, which is why it is a Hornberger & Brewer specialty.  We’ve represented clients in complex disputes involving patents, trade secrets, trademarks, copyrights, unfair competition and antitrust issues.

For the business client, our commercial litigation experience is an invaluable asset.  Let our trial lawyers at Hornberger & Brewer fight your business and commercial litigation battles.

Intellectual Property Litigation – Part I: Defending Creations of the Mind

General Articles, patent litigation | Tagged , , , ,

Intellectual Property Litigation – Part I: Defending Creations of the Mind

November 28, 2011

Do you know your legal rights in Intellectual Property (IP) disputes?

Trademarks, copyrights and patents all differ.  A copyright protects an original artistic or literary work.  A patent protects an invention.  A trademark is a word, phrase, symbol or design, or a combination of words, phrases, symbols or designs, that identifies and distinguishes the source of the goods of one party from those of others.

Patent litigation is all in the news, and Hornberger & Brewer‘s attorneys specializing in intellectual property law are keeping a close watch on developments.

— The U.S. International Trade Commission ruled on Nov. 22, 2011, that Apple Inc. products don’t infringe on patents held by HTC Corp.’s recently acquired subsidiary S3 Graphics, a setback for the Android handset maker. The news sent shares of the Taiwan-based smartphone maker down by more than five percent, as the decision called into question the rationale behind HTC’s $300 million acquisition.

— On Sept. 16, 2011, President Obama signed into law the Leahy-Smith America Invents Act (AIA), the first significant overhaul of the U.S. patent system in nearly 60 years. Marking a new era of patent litigation, the statute presents a host of opportunities for companies, especially those defending against patent infringement actions.   The Act switches the U.S. patent system from a “first to invent” to a “first to file” system, eliminates interference proceedings, and develops post-grant opposition.  Opponents of the Act contend that the revisions create greater options for accused infringers while weakening the rights of patentees, and that patent reform should remain in the hands of the court system.

— In January 2011, Microsoft signed with third-party patent acquirer RPX as “insurance” in fending off patent lawsuits.  Microsoft has been sued at least 49 times in the past six years for patent infringement by small shops that buy up patents from inventors and bankrupt companies, according to researcher PatentFreedom. Lawsuits from “patent trolls,” says the software giant, are a costly blight on the technology industry. “Patent litigation costs the industry billions of dollars per year,” says Horacio Gutierrez, corporate vice-president and deputy general counsel at Microsoft.

Intellectual Property (IP)

IP refers to creations of the mind: inventions, literary and artistic works, and symbols, names, images, and designs used in commerce.  Just like other kinds of property, IP needs to be protected from unauthorized use.  IP is divided into two categories:

— Industrial property includes inventions (patents), trademarks, industrial designs and geographic indications of source.

— Copyright includes literary and artistic works such as novels, poems and plays, films, musical works, artistic works such as drawings, paintings, photographs and sculptures, and architectural designs.  Rights related to copyright include those of performing artists in their performances, producers of phonograms in their recordings, and those of broadcasters in their radio and television programs.

For the business client, our commercial litigation experience is an invaluable asset.  Let our trial lawyers at Hornberger & Brewer fight your business and commercial litigation battles.

Intellectual Property Litigation – Part II: Understanding Patent Law

business litigation, Intellectual Property Law | Tagged , ,

Ensuring that Businesses are Assured about Insurance Litigation

November 19, 2011

The attorneys at Hornberger & Brewer have a proven method for getting business clients the results they seek in business and commercial litigation.  Our practice has touched on many disputes common to the business community.

In the area of insurance litigation, we have in-depth experience regarding insurance defense, insurance agent or broker error, fraud or malpractice, insurance coverage and bad faith issues.

Insurance fraud occurs when companies, agents, adjusters, health care providers or consumers intentionally deceive others or misrepresent facts for financial gain.

Since companies divide the costs of claims among policyholders, fraudulent insurance claims drive up premium costs. Each year, insurance fraud costs consumers an estimated $150 billion, an average of almost $1,000 per family in additional insurance premiums.

Fraud against Businesses

Businesses with risks that are hard to insure and small businesses that have difficulty affording coverage are particularly vulnerable to insurance fraud.

Some insurance companies or agents, many times unlicensed, often target businesses to sell fraudulent insurance policies.

In October 2011, the owner of a Houston-based insurance brokerage pleaded guilty in a Texas federal court to one count of conspiracy to commit wire fraud.  Christopher Purser, who owned Monarch Insurance Services Inc., faces up to 20 years in federal prison for selling a fake insurance policy to an upstate New York tour boat operator.  He then tried to retroactively limit the policy after a 2005 boating accident that killed 20 passengers.

A fraudulent insurer might also claim its plan is exempt from state regulation because it is self-funded or offers an authorized federal Employee Retirement Income Security Act (ERISA) plan.  While it is true that ERISA plans are exempt from most state laws, they are usually created by businesses and organizations to cover their own employees or members.  A business will almost never be sold a valid ERISA plan from an outside company or agent.

Business insurance fraud also often involves workers’ compensation coverage.  In most cases, employers with a valid workers’ compensation policy are legally protected from lawsuits brought by injured employees.  Policies sold by unlicensed or fraudulent companies are not considered workers’ compensation under state law and do not provide this protection.

Fraud-minded insurance companies and agents might also try to sell the following types of policies:

  • Medical malpractice
  • Commercial general liability
  • Contractor performance bonds
  • Auto liability coverage for truckers

Remember, if you have insurance litigation issues, the attorneys at Hornberger & Brewer thoroughly understand underlying business concepts and California business law.

insurance fraud, Insurance ligitation | Tagged , , , ,

Product Liability Tops Personal Injury Claims & Payouts

November 11, 2011

Remember the story about the woman who suffered third-degree burns on six percent of her skin after she dropped a scalding cup of McDonald’s coffee in her lap?  The victim claimed the coffee was defective since it was too hot for consumption. She obtained a $2.86 million settlement (later reduced to $640,000).

That’s just one of the more famous cases involving personal injury from defective products.  According to statistics, among all areas of personal injury law, product liability lawsuits generate the second highest verdict and settlement amounts.

Taking it Personal

Personal injury is a legal term for an injury to the body (or even mind and emotions), as opposed to an injury to property.

The term “personal injury” is most commonly used to refer to a type of lawsuit alleging that the plaintiff’s injury has been caused by the negligence of some other person or entity.  Personal injury law is often also referred to as tort law and cases are handled in civil, rather than criminal, court. A tort is a wrongful act that results in an injury for which the injured party is entitled to compensation.

Personal injury law covers many different situations and provides the opportunity for an injured person to sue another party at fault for those injuries. A person or business may face both civil and criminal charges for the same action, but the key differences include a lesser burden of proof in civil cases and the fact that civil penalties usually take the form of money damages paid to the injured party.

Liability Lawsuits over Defective Products

Product liability refers to a manufacturer or seller being held liable for placing a defective product into the hands of a consumer.   Every year in the U.S., defective or dangerous products are the cause of thousands of injuries.

“Product liability law,” the legal rules concerning who is determined to be responsible for defective or dangerous products, is different from ordinary injury law, and this set of rules sometimes makes it easier for an injured person to recover damages.

Well-Known Product Liability Settlements

When a defective product causes a burn injury, brain injury, spinal cord injury or wrongful death, the victim or his or her family can pursue compensation for damages. There are many types of cases that fall under the category of product liability, including cases involving dangerous prescription drugs and motor vehicle crashworthiness and design.

Like the Spilled McDonald’s Coffee Accident of 1994, the following verdicts and settlements achieved in past product liability cases have become famous:

  • $32 Million Settlement in Prescription Drug Defect (April 2006) – The widow of a 71-year-old man was awarded compensation after her husband’s death due to use of the painkiller Vioxx®.  The victim had been taking the drug for a month when he died of a heart attack in 2001. In 2004, Merck & Co., the drug’s manufacturer, pulled Vioxx® from the market when research showed that the medication increased the risk of heart attack and stroke. The widow was awarded $32 million in damages, which was later cut to about $7.75 million to conform to state limits on damages.
  • $38 Million Settlement in Bridge Collapse (May 2008) – Victims of a 2007 bridge collapse in Minnesota obtained a $38 million dollar settlement for their losses. The collapse killed 13 and injured 145.  The National Transportation Safety Board focused its investigation on design flaws that may have caused the collapse.

Responsibility for a product defect that causes injury lies with all sellers of the product who are in the distribution chain. Potentially liable parties include: the product  manufacturer, manufacturers of component parts, the wholesaler and the retail store that sold the product to the consumer.

A defense often raised in product liability cases is that the plaintiff has not sufficiently identified the supplier of the product that allegedly caused the injury.  A plaintiff must be able to connect the product with the party(ies) responsible for manufacturing or supplying it.

Another defense a manufacturer might raise is that the plaintiff substantially altered the product after it left the manufacturer’s control, and this alteration caused the plaintiff’s injury.

Legal Help for a Defective Product Injury

Product liability actions are often quite complex, and establishing legal fault often requires the assistance and testimony of experts. There are several theories under which a plaintiff might bring a claim, and several defenses that might defeat such a claim.  Additionally, every state has its own laws and specific statutes that will affect a product liability action. Accordingly, it is important to consult an experienced attorney if you or a loved one suffers injury caused by a potentially defective product.

At Hornberger & Brewer, we are California personal injury lawyers with a difference. We welcome the opportunity to try cases, because we know we can do well for our clients.  In major personal injury litigation, we are adept at proving that another party negligently or purposely caused the accident resulting in harm.  Depending on the case, we pursue monetary damages for:

  • Pain and suffering
  • Lost income
  • Medical bills
  • Permanent injury and disfigurement
  • Loss of enjoyment, love and affection
  • Wrongful death

Effective Case Strategies

Winning catastrophic personal injury cases in which serious damage occurs requires a firm grasp of medical and scientific issues and years of experience in the areas of law, medicine and engineering.

At Hornberger & Brewer, our years of trial experience have gained us the experience and ability to blend medical and technical knowledge into a persuasive legal strategy that often obtains a great client result.

Personal Injury, products liability | Tagged , , ,

Misappropriation of Trade Secrets — Fighting What’s Unfair

November 4, 2011
  • On April 06, 2011, E.I. DuPont de Nemours & Co. filed a lawsuit against USA Performance Technology Inc. and two individuals for allegedly misappropriating trade secrets and proprietary information related to the company’s titanium technologies business.  The diversified manufacturing and science group, which is the largest manufacturer of titanium dioxide, filed the suit in U.S. Federal Court in California. The suit seeks an injunction requiring the return of all alleged misappropriated confidential or trade secret information and prohibiting the use or release of the company’s proprietary information.   The suit also seeks unspecified monetary damages and fees and costs, DuPont said.
  • On May 26, 2011, PayPal Filed a trade secret lawsuit against Google and two former employees. PayPal’s lawsuit against Google alleged that a one-time key PayPal employee who was working on mobile payments for the Internet funds transfer company left for Google (which has launched its own mobile payment system), and on his way out the door misappropriated PayPal trade secrets. The suit was filed in state court in California’s Santa Clara County, which includes much of Silicon Valley. The suit also claimed that another Googler and former PayPal employee violated her agreement with PayPal by recruiting the other employee.

These high-profile cases are just two of the most notable among thousands of similar cases that get filed annually in America’s courts in the never-ending cycle of business litigation.

While our attorneys at Hornberger & Brewer focus our practice on business disputes of any type, e.g., breach of contract, fraud, interference with contract and and all other business related torts, we have a particular affinity for misappropriation of trade secrets.

A trade secret may consist of any formula, pattern, device, or compilation of information which is used in business and which gives the business an opportunity to obtain an advantage over competitors who do not know how to use it.

Trade secret misappropriation can be thought of as a type of unfair competition — and our firm is always interested in fighting against what is unfair.

Trade Secrets Fragile

A trade secret is defined as any valuable business information that is not generally known and is subject to reasonable efforts to preserve confidentiality.

Generally speaking, a trade secret will be protected from exploitation by those who either obtain access through improper means, those who obtain the information from someone who they know or should have known gained access through improper means, or those who breach a promise to keep the information confidential. While virtually every business has at least some trade secrets, these secrets are quite fragile because they protect hidden information and resources, which necessarily means that protection is lost if and when the secret becomes publicly known.

For that reason, when other forms of intellectual property protection are available, such as copyright or patent protection, one should carefully weigh the benefits of relying on trade secret protection.

California Code

California has strong legal protections for workers that choose to move from one company to a competitor. State courts have generally refused to enforce the kind of “non-compete” agreements that are common in many other states. However, California also has strong trade secret laws, which include tough penalties. So sometimes trade secret laws are used as a weapon to attempt to control the movement of key employees.

California’s Civil Code defines a trade secret as consisting of information, including a formula, pattern, compilation, program, device, method, technique or process that:

  1. derives independent economic value, actual or potential, from not being generally known to the public or to other persons who can obtain economic value from its disclosure or use; and
  2. is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.

In most states, to state a claim for misappropriation of trade secrets, a party must show that:

  1. the information incorporates a trade secret;
  2. the party took reasonable steps to preserve the secrecy of the trade secret; and
  3. the defendant misappropriated the secret or used improper means, in breach of a confidential relationship, to acquire the trade secret.

Trade secret protection derives from state law and therefore varies by jurisdiction. Federal law generally does not preempt or apply to state law claims involving trade secrets.

However, states may not offer patent-like protection to intellectual creations which otherwise remain unprotected as a matter of federal law.

Therefore, anything that does not fall within the domain of patent or copyright law may be protectable as a trade secret under state law.

U.S. Law

U.S. law defines a trade secret as:  all forms and types of financial, business, scientific, technical, economic, or engineering information, including patterns, plans, compilations, program devices, formulas, designs, prototypes, methods, techniques, processes, procedures, programs, or codes, whether tangible or intangible, and whether or how stored, compiled, or memorialized physically, electronically, graphically, photographically, or in writing if–

  1. the owner thereof has taken reasonable measures to keep such information secret; and
  2. the information derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable through proper means by, the public.

The abundance of state and federal laws dealing with trade secret litigation makes it is easy to understand why companies so often resort to the courts for resolution of these disputes.

The best way to protect yourself in these kinds of cases is to hire legal representation that has the knowledge and experience to get you the results you desire.

Disputes naturally arise in business relationships, often with significant consequences to core issues such as revenue, competitive position, or client relationships. Let our trial lawyers at Hornberger & Brewer fight your business and commercial litigation battles.

business litigation, Trade Secrets law

Litigation a Way of Life in Payments Processing Industry

October 28, 2011

On Oct. 12, 2011, MasterCard and Visa, the two largest credit cards and payment networks, were sued by the National ATM Counsel, Inc., a trade group representing operators of automated teller machines. The trade group claims that Visa and MasterCard fix prices and suppress competition between ATM networks.

In October 2010, the U.S. Department of Justice filed a civil antitrust lawsuit in U.S. District Court challenging rules that American Express, MasterCard and Visa had in place that prevented merchants from offering consumers discounts, rewards and information about card costs, ultimately resulting in consumers paying more for their purchases. The department also said that the rules increased merchants’ costs of doing business.

While American Express chose to fight the antitrust lawsuit, Visa and MasterCard quickly reached a settlement with the DoJ that let merchants reward consumers for paying with lower-cost credit or debit cards.  The settlement meant that about four million merchants across the U.S. that accept just Visa and MasterCard were free to steer customers to different credit cards or forms of payment by offering discounts, rebates or other special treatment.

Such is the world of payment processing — a complicated, constantly evolving industry highly prone to litigation because of the vast amounts of money at stake.

Innumerable transactions continue to migrate from cash and checks to credit cards, including most online transactions. In 2010, MasterCard and Visa processed more than half a trillion dollars worth of cash transactions in the U.S. alone.

Companies sue other companies because in this business there are just so many organizations involved, which means that there are a multitude of targets to sue.

Knowing the Players

An often confusing array of players fills the payments processing field.

  • Merchants get their accounts from Merchant Banks, which handle acceptance and payment of credit card transactions to the Merchant’s bank account.
  • Issuing Banks are the financial institutions that physically provide a credit card to an individual for use.
  • Card Associations like Visa, MasterCard, American Express and Discover work in conjunction with various local, state, territory and federal government agencies to make the rules regarding acceptance and use of credit cards.
  • Processors provide a point of connectivity for the Merchant to authorize and settle its credit card transactions through the appropriate payment network for each of the card types the Merchant accepts.

A Merchant Bank pays the Issuing Banks and Card Associations fees for transactions processed on behalf of its Merchant Account holders. In return, Merchant Banks provide their services to Merchants for a fee (normally called a Discount Rate).

Front-End Processors handle the up-front authorization of a credit card transaction. Back-End Processors receive settlement batches from the Front-End Processor. Processors are paid for their services on a per transaction fee basis. The fee is included in the Merchant’s Discount Rate.

Then there are local, state and federal government entities involved.  Now, what could possibly go wrong amongst all this back and forth?

The answer is, of course, plenty, as our attorneys at Hornberger & Brewer know all too well.

Legal disputes inevitably arise over issues such as nonpayment, breach of contract,credit card fraud, charge-backs, reserve accounts and more.

Because these disputes are so commonplace and so costly, Hornberger & Brewer has developed an extensive practice in this fast-growing and dynamic field.

Our law firm is one of the few in the country whose attorneys have an extensive track record representing businesses in the credit card processing industry.

Credit Card Dispute, Los Angeles Attorneys | Tagged ,
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