Thursday, June 12, 2014

Tesla patents

While not very impressive grammatically, the statement published today on Tesla's website that "all our patent are belong to you" might have some earthshaking consequences in the intellectual property world. Tesla has decided that in the interest of developing an electric car market and battery infrastructure, they will no longer bring patent infringement lawsuits against anyone using their electric car technology in good faith. Perhaps there is an element of "save the world" altruism in this gesture, as Tesla claims to be motivated by a desire to get all gasoline-powered vehicles off the road. And Tesla acknowledges that they themselves can't possibly build enough electric cars to accomplish that goal. But Tesla's new policy also seems like a remarkable recognition that the usual strategy of protecting intellectual property rights for the purpose of preventing competition or obtaining license revenue, might actually be counter-productive to Tesla's interest in building the electric car market, and creating the necessary support network of charging stations that will sustain it. Non-enforcement might be better for business.

Will Tesla's new stance cause other companies to re-think the value of enforcing their patent rights? Quite possibly if the patent-holder is, like Tesla, trying to expand the market for its products, and encourage the development of related technology. But even apart from that situation, some patent holders might well question whether the pursuit of patent infringement claims is worth the enormous cost and risk, and whether a more open approach to technology might better serve companies' business interests. Elon Musk's explanation of his company's new policy notes that receiving a patent often only buys you a ticket to a costly lawsuit, something that many other patent-holders have learned the hard way.

I'm not necessarily endorsing Tesla's new strategy for everyone, as it probably doesn't make sense for a lot of businesses, and I'm not sure whether it's good for my business either. But the question whether to pursue litigation to enforce or defend against intellectual property claims, as opposed to some other strategy, is always worth careful consideration for every business on either side of the issue.


Read more...

Thursday, June 05, 2014

Employment Claims and the DFEH

I heard a talk recently by Phyllis Cheng, the director of the California Department of Fair Employment and Housing ("DFEH"). Ms. Cheng walked through the process of resolving employment claims in the department. For cases not processed by issuing an immediate right to sue notice, the department offers numerous opportunities to steer those cases to a negotiated resolution, as opposed to a judicially or administratively determined outcome, and maintains a staff of 11 mediators for the purpose. In all, the number of cases resolved consensually far exceeds the number that the Department prosecutes.

Given the huge numbers of settlements, in contrast to adjudications, we should perhaps think of the DFEH not so much as a law enforcement agency, charged with putting teeth into statutory prohibitions against discrimination, but rather as a conflict resolution service offered by the government to assist parties in dealing with all manner of employment disputes.

That role also appears to flow naturally from the gradual expansion of the department's mandate. Over time, statutes prohibiting discrimination based on race, sex or religion have expanded their reach to embrace all manner of categories, including age, sexual preference, harassment, etc. Currently, the fastest growing category of cases, according to Director Cheng, is discrimination or failure to make accommodations for disabilities.

I have observed in my own practice of representing clients in employment disputes, that at bottom, many of these claims arise out of actual or perceived unfair treatment of an employee that doesn't necessarily fit comfortably within the law's pigeonholes. For example, an employee may have a personality clash with a supervisor, or feel victimized by some new management practice, but cannot simply file a complaint alleging that he or she was treated unfairly at work. The law only allows employees to seek redress for discrimination based on a recognized category. But the perception has gradually taken hold that there should be a remedy for any sort of harassment or unfair treatment at work, whether or not based on such a category.

Given the gradual expansion of categories of discrimination, a complainant can usually find some available legal "hook" on which to hang her complaint. Eventually the real cause of the dispute comes into play, because resolution of the discrimination claim requires the court or the agency or the parties themselves to talk about the claimed underlying unfairness or policy change or personality clash that actually caused the dispute. The difference is that in a lawsuit or administrative adjudication, the determination of whether an adverse employment action was taken for impermissible reasons is supposed to be dispositive, but in a consensual resolution, an employee's ability to prove that the employer acted for the wrong legal reason may be less important, thus giving the parties the ability to concentrate on their real grievances, whether or not they overlap with legal requirements. (Note that I am not arguing that discrimination has been eliminated, or that claims of discrimination are always pretextual. Discrimination remains a serious problem. What I'm saying is that claims of unfair treatment at work don't always include legally cognizable discrimination. Yet employees understandably feel aggrieved by any sort of unfair treatment.)

It seems that we are almost to the point--given the agency's predominant focus on alternative dispute resolution as opposed to adjudication--where the DFEH can deal with any type of workplace unfairness as long as the original complaint is appropriately labeled with a charge of discrimination to get it past the agency's door. The agency doesn't yet have an explicit mandate to deal with all types of workplace conflict, even though a lot of workplace conflicts that don't necessarily arise from legally cognizable discrimination are already sneaking through that door. But private resolution, either within companies' workplace grievance procedures, or outside them, does have that capacity.

Read more...

Tuesday, March 25, 2014

Penalties

Another Court of Appeal opinion in California reaffirmed the rule that penalty provisions in settlement agreements are not enforceable. In a settlement agreement entered in Purcell v. Schweitzer, the plaintiff agreed to accept payments totaling $38,000, but provided that in the event of a default, judgment in the full amount of $85,000 could be entered. Evidently hoping to make such a judgment enforceable, the settlement agreement also recited that the $85,000 "is an agreed upon amount of monies actually owed . . . and is neither a penalty nor is it a forfeiture." Further, the agreement set forth a host of reasons why an $85,000 judgment was reasonable, and barred the defendant from appealing or otherwise contesting this amount.

No dice, said the Court of Appeal. The additional amounts over and above the damages and interest resulting from breach of the settlement agreement, could not be justified, and the contractual language attempting to characterize these amounts as something other than a penalty was swept aside as contrary to public policy.

It is understandable that parties that agree to accept payment plans are interested in whatever measures they can impose to incentivize the paying party to make all of the payments on time. I expect they will continue asking for such provisions. Paying parties can feel fairly safe making those agreements first in the hope that they will actually be able to make all the payments on time, but second in the comfort of knowing that such penalties will probably be held unenforceable.

Read more...

Wednesday, March 19, 2014

Settlement confidentiality

A recent case from the Court of Appeal in Florida illustrates the perils of confidentiality clauses in settlement agreements, but something more as well. Patrick Snay brought an age discrimination suit against a private school that did not renew his contract as headmaster, and settled the case for $80,000 plus $60,000 in attorneys' fees. So far, so good. The settlement agreement contained a strict confidentiality clause prohibiting the plaintiff from disclosing, directly or indirectly, any information whatsoever about the existence or terms of the agreement to anyone except professional advisers. But Snay's daughter, who was a student at the school, and apparently had also suffered as a result of the dispute, had to be told something, Mr. Snay figured. So he simply informed her that the case was settled and that he was happy with the result.

Snay's daughter promptly published the following on her facebook page:
"Mama and Papa Snay won the case against Gulliver. Gulliver is now officially paying for my vacation to Europe this summer. SUCK IT."
The school refused to make the $80,000 payment. Snay moved to enforce the settlement agreement. The trial court granted his motion, but the Court of Appeal reversed, holding that he had breached the agreement by informing his daughter that the case was settled and that he was happy with the result.

On one level, the case simply provides a cautionary tale about the drafting and enforcement of confidentiality clauses. These need to be considered very carefully! Had the parties inserted language commonly used that permits them to announce that the case has been resolved to both parties' satisfaction, but bars any further disclosures, the problem could have been avoided. Had family members been included in the list of people to whom disclosure could have been made, the problem could have been avoided. Had the father simply told his daughter that he could not say anything to her about the case at all, the problem could have been avoided. Had the father, despite his breach, sworn his daughter to secrecy, most likely the problem could have been avoided. Perhaps better yet, had the daughter, who appears to have been affected by the case to such an extent that she needed counseling, participated in some fashion in the settlement negotiations so that she better understood all of the reasons that the case was being resolved, the problem perhaps could have been avoided. (See my prior post on agents, noting the importance of including all affected parties so as to avoid miscommunications.)

On another level, this case might be about more than a breach of a confidentiality clause. It has been widely reported that it was the daughter's facebook post that cost her father the $80,000 settlement payment. Strictly speaking, that is not true. The daughter was not a party to the settlement agreement, and the school could not refuse to perform based on her actions. The Court of Appeal makes clear in its opinion that it was only the father's comments to his daughter that breached the settlement agreement, not the daughter's facebook post. So why did the court even mention the details of the daughter's facebook post, or the fact that it was disseminated to her 1200 facebook friends? It's hard not to draw the conclusion that the tone of the facebook post influenced first the school's decision to withdraw the agreed-upon payment, and second the Court of Appeal's decision to validate this refusal to perform the agreement.

A settlement agreement is supposed to represent peace. Ideally, both parties should be at peace with the result. It's best not to view settlement as a victory or defeat for one side or the other, but instead and most importantly as a peaceful resolution of the dispute that benefits both sides, especially compared to the costs of continued conflict. I am of course speculating here, but perhaps because she was not included in the settlement negotiations, and perhaps because she had suffered herself as a result of her father's dismissal from her school, Snay's daughter was not fully at peace with the result. She needed to take a final jab at the family's adversary, and brag about their victory. What she might not have understood was that such jabs are not considered good form after cases are settled, and that they create a new offense, stirring up all of the negative feelings created by the dispute itself. Likely the school had its reasons for not renewing the contract, valid or not, and its officials probably felt the payment was excessive, and only justified to avoid the even higher costs and risks of continuing the litigation. I'm speculating about that as well, but that is usually the employer's response to discrimination claims by employees.

There are good reasons for confidentiality provisions in settlement agreements. They should be drafted carefully, of course, so they don't turn into a trap for the unwary that can allow the other side to renege on its promises. But they also serve the purpose of enforcing good behavior on both sides, allowing them to remain at peace.

Read more...

Friday, November 22, 2013

Civil collaborative law

Collaborative law has firmly established itself in the family law arena, where parties (and attorneys) are often willing to commit in advance to do everything they can to resolve divorce cases out of court. Not so much on the civil side, where the whole idea appears antithetical to traditional litigators. There have been attempts in the past to make civil litigation more, well . . . civil, but the codes that were created in some jurisdictions to encourage more gentlemanly (or ladylike) conduct never seem to get at the root of the problem. The root of the problem lies in the nature of the adversarial system itself, and its tendency to encourage adversarial behavior.

More recently, however, it seems that an increasing number of civil litigators may be starting to experiment with ways of resolving contested civil cases with little or no reliance on the court, or at least with trying to reduce the cost and acrimony associated with discovery, motion practice, and other nasty features of civil litigation. Some call this movement "planned early negotiation." Others call it "integrative law." In some ways the idea seems a throwback to a bygone era (which may never have existed) in which attorneys maintained more trusting relationships with opposing counsel, and attempted to resolve disputes in a reasonable way. A more collaborative approach also seems to flow naturally into mediation, as opposed to the way mediation usually arises in hotly contested cases, as a temporary truce called in the middle of a war.  

Since the majority of cases are going to be resolved by negotiated agreement, why start a conflict resolution process by filing a lawsuit, and then preparing for a trial that in most cases is never going to happen? Wouldn't it make more sense to steer the case toward a negotiated resolution from the outset? I have been shifting my own approach to litigation in this direction: trying to keep clients out of court altogether if possible, trying to resolve problems in litigation with less court assistance, and trying to steer cases toward a negotiated resolution. I still feel the need, however, to keep the hammer of litigation in my back pocket. Lawsuits are also a legitimate form of "alternative" dispute resolution. Even if most cases should be settled, some should still go to trial. And even in the vast majority of cases resolved by negotiated agreement, the threat of litigation was still probably a factor contributing to those resolutions.

What I understand from others who have tried to advance the discipline of civil collaborative is that most civil trial lawyers feel the same way I do. Thus, one of the chief stumbling blocks to developing civil collaborative practice has been the resistance of civil trial lawyers to sign participation agreements of the type recommended in family law cases, in which the attorneys who work on resolving the case agree in advance that if they fail to achieve an agreement, they will not be the attorneys representing the clients in any court case. Are such agreements essential to the practice of collaborative law? Or can we develop a species of more cooperative dispute resolution in the civil area that does not require the use of participation agreements? If such a movement is going to succeed, I think we might need a better name for it than any that have been proposed so far. Collaboration just sounds too foreign to what clients expect from civil litigators, and what we expect from ourselves. How about constructive dispute resolution?  


I think it's possible to achieve better results within litigation by attempting to resolve issues in cases without motion practice, and by relating to opposing counsel with a view toward reaching settlement, rather that conducting settlement discussions only as a time out from unrelenting hostility. It's even possible to resolve disputes without filing a complaint at all. The difficulty arises when opposing counsel has not signed on to the same program. And that is where the collaborative family lawyers are probably a step ahead of the civil litigators who are attempting to practice in a more cooperative way.

Read more...

Wednesday, September 11, 2013

Crisis and Opportunity

The September issue of Advocate magazine (published by CAALA, the Consumer Attorneys Associations for Southern California) contains an article I wrote prompted by the funding crisis in California courts. These court cutbacks, which will cause delays and other problems in working cases through the court system, should cause the consumers of court services--both litigants and attorneys--to rethink the way they use the court system.

The title is borrowed from the fall conference I am helping to organize for the Southern California Mediation Association. Part of my article describes the new "Select a Mediator" program designed by SCMA in response to the closure of the LA County Superior Court's ADR program.

I also offer some suggestions for conducting litigation in an era where courts have fewer resources to deal with motions and trials. Lawyers and litigants are going to have to negotiate their way through pre-trial proceedings without bringing every controversy to a judge. That's a necessity caused by budget cutbacks, but doing that might also prove to benefit the parties by reducing the costs of court resolution of every dispute within a case.

Read more...

Thursday, January 24, 2013

More changes coming to state courts

The grand unwelcome budget-cutting experiment in which California courts are currently engaged may result in the undoing of reforms courts have developed over the past several decades to better manage their caseloads. Ideas that both the federal and state systems now consider best practices, such as the individual calendar system and closer judicial involvement in pre-trial proceedings, are in danger of being thrown out. Case in point: the LA County Superior Court, the largest local court system in the country, is seeking to jettison case management conferences, one of the main tools the court has at its disposal to check in with the parties early in the case and help steer cases to resolution. The court is also planning a return to master calendars for some categories of civil cases. The only rationale for these changes is that this kind of individualized case management consumes a fair amount of judicial and administrative time. But scrapping case management conferences could leave the court with no contact with counsel unless there is motion practice--and the court is also trying to discourage motion practice! The danger is that these unsupervised cases will simply languish in the system and contribute to increasing backlogs.

The prevailing forecast in our state court system is therefore for greater delays and less judicial attention. If only the courts could figure out a cost-saving way to divert their caseloads to other forms of resolution. But wait! Wasn't mediation supposed to do that? Right now a fairly large proportion of the court's caseload is sent to mediation, which has a high success rate in resolving litigated disputes. These dispositions save court personnel time in reduced motion practice, settlement conferences, and trials.

With the courts in financial crisis, one might expect them to propose even greater use of outside ADR procedures. Ironically, however, the court's mandated budget-cutting will more likely lead to less ADR. That's because the proposed reduction in judicial supervision, as well as the planned elimination of the court's own administration of ADR panels, will create fewer opportunities to prod the parties into seeking mediation or other alternative dispute resolution procedures. Leaving the courts without an effective procedure to refer cases to ADR also raises questions about the court's ability to comply with Code of Civil Procedure sections (C.C.P. 1141.10 et seq. and C.C.P. 1775 et seq.) that mandate the referral of certain categories of cases to arbitration or mediation. The courts will need to design effective alternative procedures to accomplish the same result, and it is not clear that they have the resources to do so.

Prior posts in this series:

I.    Ten courthouses

II.   Court-annexed mediation not dead yet

III.  Free mediation revisited

IV.  New rules

Read more...

Wednesday, January 02, 2013

Anatomy of a negotiation

The "fiscal cliff" negotiations of the last couple of months present an interesting case study showing the stages of negotiation usually necessary to make a deal. Congress set the process in motion more than a year ago with a budget agreement that essentially forced the two parties to make this deal by the January 1 deadline, otherwise a set of consequences would take effect that neither side wanted.

That created a situation not unlike the typical lawsuit, in which the court sets a trial date that will force both sides to incur substantial cost and risk, an event the parties can only avoid by making a deal that neither side views as optimal, but that is usually better for both sides than the alternative. To get to that point, however, parties often need to pass through a series of stages not unlike the Kubler-Ross model of the stages people usually go through to enable them to face the inevitability of death.

I wrote a series of posts on my mediation blog over the past couple of months, outlining as they took place the steps the parties followed to arrive at the negotiated agreement Congress just passed on January 1, 2013.

I.   Openings - the parties make unrealistic opening offers and demands.

II.  Impasse - negotiations break down in the middle stages.

III. Plan B -  the parties explore the alternatives to a negotiated agreement.

IV. End game -  the parties finally abandon previously inviolable positions.

V.  Who won? - the post-mortem.
This negotiation, led by the White House, but mainly between the Democratic and Republican leadership of the House and Senate, took a few surprising twists and turns, but in the end followed a familiar pattern to a predictable result.

Read more...

  © Blogger templates The Professional Template by Ourblogtemplates.com 2008

Back to TOP