Section 5 of the Federal Trade Commission Act — the Act that established the FTC in the first place — makes it unlawful to engage in “unfair methods of competition … and unfair or deceptive acts or practices…” Though the words seem simple enough, its application in today’s world is anything but simple, particularly when you talk about data privacy. Two companies — Wyndham Worldwide Corp. and LabMD Inc. — are publicly, and independently, challenging the FTC’s authority over their data security policies (and subsequent lapses). This post is a quick update about LabMD’s challenge.
In August 2013, the FTC filed an administrative complaint against LabMD, alleging that it lacked appropriate data security and unreasonably exposed the health and personal data of its consumers. LabMD conducts clinical laboratory tests on patients and reports its finding to patients’ health care providers. In performing the needed tests, LabMD typically obtains personal information, including names, addresses, dates of birth, SSNs, bank account or credit card information, laboratory tests, test codes and results, diagnoses, clinical histories, and health insurance company names and policy numbers. LabMD possesses such data for approximately 1 million consumers.
The FTC charged that LabMD “failed to provide reasonable and appropriate security for personal information on its computer networks.” Among other things, the complaint states that LabMD failed to: Continue Reading
A court in the Southern District of Ohio recently ordered the defendants in a wrongful death case to answer interrogatories asking them to explain “what procedures or methods were used to search for responsive electronically stored information, or ESI,” and “what efforts they made to comply with plaintiffs’ previous discovery requests.” Ruiz-Bueno v. Scott, No. 12-cv-0809 (S.D. Ohio Nov. 15, 2013). The court ordered this “discovery about discovery” because the plaintiffs’ concern about the volume of ESI produced appeared to be reasonably grounded and the defendants “were less than forthcoming with information needed to make further discussion of the issue a collaborative rather than contrarian process.”
The court stressed the importance of engaging in a collaborative discovery process either as part of the Rule 26(f) planning process, or as part of the attempted resolution of an ESI dispute: “In an ideal world (a situation which apparently does not exist here), these types of disputes would never be presented to the Court because counsel would have recognized, early in the case, the potential for disagreements about proper search protocols, and would have actively sought to avoid such disagreements through collaboration.” According to the court, the concept of collaboration appears in Rule 26(f) and is “completely consistent” with a lawyer’s duty to represent a client zealously. Continue Reading
China has passed a new trademark law that becomes effective May 1, 2014. The new law includes:
- A requirement that trademarks shall be registered and used “by the principle of honesty and credibility;”
- Some important changes to the trademark application and appeal processes; and
- As discussed here, several notable provisions designed to improve trademark enforcement in China.
A. Mechanism designed to discourage trademark hijacking by business partners
Trademark “hijacking” in China refers to the situation in which a third party registers a company’s established trademark in China, often before the company enters the Chinese marketplace, then attempts to sell the trademark registration to the company when the company begins conducting business in China. Trademark hijacking has been a serious problem in China and, in some cases, trademarks have been hijacked by individuals assisting the legitimate trademark owner in manufacturing or otherwise. Continue Reading
Here are my thoughts on key e-discovery cases decided in October, including a decision in which the court was highly critical of a party’s “single-minded focus on discovery of ESI,” a couple of cases in which the court applied principles of proportionality to decide whether the producing party should run additional search terms requested by the other side, and a decision holding that an employer had a duty to preserve its officers’ personal emails.
In addition to reviewing these cases, I recommend to anyone looking for more analysis about the proposed new Civil Rule 37(e) to take a look at the public comments submitted by Tom Allman last month. They are available here. Allman was a member of the 2010 E-Discovery Panel at the Duke Conference and has actively participated in the rulemaking process. Allman maintains that the proposed rule should help promote a uniform approach to spoliation and sanctions and should “foreclose the current practice of using inherent sanctioning power as an end-around existing Rule 37(e).” Allman also makes suggestions to address some concerns he has with the current proposed language of the rule and the Committee Notes. Continue Reading
The ability to register a trademark in the member countries of the European Union (currently 30) in a single application has been available under the Community Trademark system (CTM) since the mid-1990’s. The basic fee (900€, currently about $1,215US) for filing a CTM covers the cost of filing in up to three classes.1
The European Commission (EC) proposed revisions to the current CTM system in March 2013. Among other revisions was a change to the fee schedule. Under the proposal, fees would be payable per class — 775€ for one class, 825€ for two classes and 900€ for three classes. Renewal fees are proposed at 1,000€ for one class, 1,100€ for two classes and 1,250€ for three classes.
The EC’s proposed revisions should assist most brand owners. Under the existing system, trademark owners typically select coverage in all three classes even though the mark may only be used in a single class. For example, a business may include class 16 (paper goods) even though it only uses paper goods for marketing the actual product. By moving to a one-class system, businesses will pay less when seeking to obtain protection for only one or two classes. In addition, proposed marks will face less barriers from unused marks on the register in classes arbitrarily picked under the old system. Lastly, the need to file unnecessary oppositions (actions to remove unused marks) should decrease.
While most of the EC’s proposed revisions must be adopted by the European Parliament and the European Council, the fee revision only requires prior endorsement by the OHIM Committee on fees. The meeting of the committee is scheduled for fall 2013, and the revised fees should be in place by early 2014.
1Most trademark offices around the world use the Nice Classification System of goods and services and base filing fees per class.
This past summer, the University of Amsterdam launched a new, week-long Privacy Law and Policy Summer Course related to the Internet, electronic communications, and online and social media. Course faculty included European and U.S. academics, European regulators and the head of the global privacy law practice at an international law firm, among others. Course participants consisted of 25 legal practitioners and post-graduate researchers from the Netherlands, Spain, Italy, Slovakia, the United States, Japan, Brazil, Kenya and other countries. I was lucky enough to serve as a co-organizer and faculty member for the course.
Taken together, the nine mini-seminars that constituted the backbone of the course provide a snapshot of developments in privacy law and policy in Europe and in the United States, and how they relate to one another. This should be of interest to U.S. lawyers and others who work in the areas of privacy law, compliance and management. What follows is a brief description of some key takeaways from the week, and an attempt to pull them together into a broader perspective.
Doing business over the Internet
Daniel Cooper, head of the Global Privacy Practice at Covington & Burling, discussed emerging legal and policy challenges facing European companies that seek to do business over the Internet. Cooper’s comprehensive presentation stressed that companies face a wide array of matters, including privacy issues related to online behavioral advertising and business use of social media, facial recognition technology, mobile apps, and big data. The 1995 Data Protection Directive pre-dates these technological developments and fits awkwardly with them. Continue Reading
In the second of this two part series, we dig a bit deeper on the FTC’s recently proposed study on patent assertion entity (PAE) activity. In Part 1, we covered some background on PAEs and why they are singled out separately from other types of patent holders. Here in part 2, we discuss potential antitrust concerns with PAE activity, what information the FTC is seeking from PAEs and others, and — importantly — what the study means for you.
Potential antitrust issues
To place into context the entire concern with PAEs, as well as to better understand why the Federal Trade Commission is seeking the type of information it is requesting, we delineate briefly the potential antitrust concerns with PAE activity. It must be understood that a valid patent holder unquestionably has the right to exercise his/her patent, or to sit back and sue for infringement should another entity utilize the patent without permission. The mere assertion or enforcement of a PAE patent cannot, without more, constitute an antitrust violation. Nevertheless, a number of different antitrust concerns are implicated with PAE activity, the most prominent of which are presented below.
1. Acquisition and licensing of patents
A patent is an asset and, like any other asset, the more one acquires within a given market, the greater the concern that the acquirer will eventually garner market power and the ability to price its products/services above competitive levels. Or, in the patent context, license the patents above competitive levels. Though not a concern indigenous to PAEs, many such companies have amassed a large portfolio of patents and use it to threaten potential infringers, demanding portfolio-wide licenses. The problem with this can be several-fold. First, many PAEs refuse to disclose the patents they own or even which patents they believe are being infringed. Thus, potential defendants must either choose between expensive litigation or taking a portfolio-wide license, all the while never fully knowing whether their product infringed anything at all. Second, many PAE portfolios combine several weak patents with a few strong patents, thus boosting the exclusionary effect of the weak patents. Continue Reading
Here are my thoughts on key e-discovery cases decided in September, including a decision showing how a company can defensibly delete data that it no longer needs, the recent case “trend” of courts requiring the disclosure of the sources and search terms used to find discoverable ESI, and a couple of cases addressing the issue of “possession, custody and control,” one involving a parent-subsidiary relationship and the other involving the personal computers and electronic devices of former and current employees.
In re Pradaxa (Dabigatran Etexilate) Product Liability Litigation, MDL No. 2385 (S.D. Ill. Sept. 25, 2013). As discussed in more detail here, the trial court denied the plaintiffs’ motion for spoliation of the emails and documents held by the defendant’s former vice president of marketing because the court found that the defendant properly destroyed the emails and documents pursuant to its document retention policies. Continue Reading
Almost half of all infringement actions brought these days are brought by patentholders that do not practice the invention, but rather by holders who seek to capitalize on the value of the patent through either licensing fees or via damage awards in infringement actions. While simply asserting patent rights cannot be an antitrust violation, the manner in which these patent holders — referred to Patent Assertion Entities (PAEs) or sometimes, pejoratively, as “patent trolls” — amass their portfolios and assert their patents can raise antitrust concerns. Given the enormous toll that patent litigation takes on our innovation economy, the Federal Trade Commission has proposed a study “to understand how PAE behavior compares with patent assertion activity by other patent owners.” This post provides background on the issue and why PAEs are singled out separately from other types of patent holders. A subsequent post will discuss potential antitrust concerns with PAE activity, what information the FTC is seeking from PAEs and others, and what the study means for you.
For years, patent law and antitrust law have butted heads because patent law, which grants the patentee the right to exclude, is the antithesis of antitrust law, which seeks to increase output and maximize consumer welfare. Although the Sherman Act, the federal government’s basic antitrust law, has been hailed as the “magna carta of free enterprise,” patent law is rooted in the Constitution and accordingly has emerged victorious when the two have come into conflict. Over the past decade, abuses of the patent system and the soaring cost of litigation has had many re-examine the traditional balancing of patent and antitrust policy. Much of the debate over the last several years has focused on two distinct areas — Standard Essential Patents (SEPs) and the activities of PAEs. The federal government has held workshops on both of these issues and is now, pursuant to Section 6(b) of the Federal Trade Commission Act, the FTC is proposing to collect non-public information from a number of industry participants in order to commence a research study that would investigate the impact of PAE activity. Continue Reading
When I present on e-discovery, I often use EDRM’s Electronic Discovery Reference Model to explain how decisions made about the creation, storage and deletion of electronically stored information (ESI) can affect how e-discovery is conducted in a lawsuit. The EDRM model illustrates how a company’s records and information management policies can impact the volume of ESI that may be relevant in a case, and how this volume can impact the overall cost of e-discovery.
Records retention policies that are carefully thought out and followed by a company can lower the volume of ESI that needs to be preserved, collected and reviewed during litigation, and also can reduce the risk of keeping records that the company no longer needs and carry inherent risks, such as documents with personally identifiable information. If a company is not making decisions about records retention at the organizational level, then it is leaving it up to individual employees to make ad hoc decisions about what is kept and deleted, and is likely increasing its long-term legal risks and costs.
An essential part of an effective records retention policy is the defensible deletion of data. Defensible deletion refers to the process of disposing of information that is no longer needed for business or legal reasons within the framework of an overall information governance strategy. Continue Reading