Articles Posted in Internet Law

May 13, 2011

Confidential Settlement Agreements and the Public’s Right of Access

Confidentiality terms in settlement agreements are fairly commonplace, but most people do not know that until recently the courts would often ignore them. Historically, the public’s “right of access” to judicial records outweighed a party’s desire to keep their settlement confidential. This makes sense when the issues involve public interests or safety concerns. But when the settlement involves trade secrets or other proprietary information, businesses have long argued the public’s right of access should be more limited. In many cases, especially with regard to hi-tech and growth companies, the desire for confidentiality is the prime motivation for settling the case.

In a recent 3rd Circuit ruling, LEAP Systems Inc. v. MoneyTrax, the court shifted away from previous decisions to allow business’s a better chance at maintaining the confidentiality of settlement agreements. In the LEAP case, the settlement was based on assurances from the court that the agreement would remain confidential. The district court’s assurances of confidentiality were clearly a pervasive factor for the 3rd Circuit, and not something every trial judge is going to agree to put on the record. But counsel certainly should ask for a statement on the record that confidentiality is a key term of the settlement. Also, in most cases the business will want to justify the reasons for the confidentiality on the record, since the importance of trade secrets may not be as apparent to courts reviewing the matter in the future as it is to the trial judge overseeing the settlement discussions. These were both factors considered by the 3rd Circuit in finding in favor of LEAP on the confidentiality issue.

One way around this privacy risk has always been to keep the terms of your settlement agreements away from the courthouse. But in many cases, especially in certain federal courts or business law courts like Philadelphia’s Commerce Program, judges may be highly involved in facilitating the settlement process. When that happens, the settlement agreements or even the oral transcripts of the proceeding may be considered judicial records subject to public access. Even if the parties reach a settlement on their own, the court often becomes involved with motions to enforce down the line. The LEAP case begins an outline of how to maintain the confidentiality of these records.
Continue reading

September 15, 2010

Cybersquatting and Protection of your Good Name

by H. Adam Shapiro

Did you know your disgruntled customers could set up a website using your business name? It’s called cybersquatting, and unfortunately it’s a growing problem for businesses these days. While the issue has been resolved in some areas of the country, for Pennsylvania, New Jersey, and Delaware businesses cybersquatting is still a very real threat.

These so-called gripe cites are set up by disgruntled customers and even former employees to tarnish your businesses good name. A recent example of this phenomenon was the gripe site levinsonaxelrodreallysucks.com, set up by a former associate at the Levinson Axelrod law firm. In that case, the former associate had also set up a squatting site at levinsonaxelrod.net (the real firm site has a .com address). Although both sites were ultimately taken down as a result of litigation and a confidential settlement, the firm had to deal with months of time and cost in order to protect their business reputation. No doubt significantly more expensive where the services of the online reputation management firm they were forced to hire in order to keep perspective clients from finding the wrong website.

Currently, there is another case pending before the Third Circuit addressing a similar gripe site. In this case the site was set up by the former patient of 2 Lasik doctors who lost his sight after surgery. The jury found in favor of the doctors in the medical malpractice case, but the patient found another way to go after the doctors – he set up multiple sites in an attempt to ruin the reputation of the doctors who performed the surgery. The physicians responded by filing both a federal lawsuit as well as an arbitration dispute under the rule set out by ICANN, the organization set up to oversee Internet names. The arbitrator ruled that the sites were confusingly similar and ordered them taken down. The federal court claim is still proceeding to determine if the patient’s First Amendment right to complain trumps the doctors’ right to their own names. Because this issue has not been decided by the Court of Appeals in the Third Circuit before, businesses in the area are waiting on the results.

The most effective time for businesses to take action, as always, is before the problem arises. In many cases the simplest and cheapest thing to do is to register not just your domain name but all variations on your name and site address so that they’re under your ownership and control. If you become aware of a gripe site attacking your business, the intellectual property laws require that you take action promptly in order to protect your good name, or you could lose the right to do so. The attorneys at Danziger Shapiro believe in a multipronged approach to protecting your business, while litigation is often at the heart of that approach, sometimes there are faster ways to protect your good name wall the court case is ongoing.
Continue reading

April 16, 2010

Email Policies for Small Businesses in the Greater Philadelphia Region

by H. Adam Shapiro

The New Jersey Supreme Court recently held that an employee has a reasonable expectation of privacy for emails sent through a personal email account (name@gmail.com for example) over her employer’s network. This is significant because prior law had held just the opposite-namely that the employer did have access to anything an employee was sending over the employer’s network. While this case focused extensively on the relationship between the attorney client privilege (because the personal email the employee sent was to her lawyer about a lawsuit against her employer) and the employer’s right to review company email — this case should give pause to human resource departments that it might be a good time to update or perhaps create your employee manuals.

At our Philadelphia business law firm, we like to think of an employee handbook as not only benefiting the employee, but also providing tremendous legal benefits for the employer. By having a clearly defined policy or procedure in place, along with defined consequences for the failure to meet them, exposure to litigation is greatly reduced. In fact, business insurance carriers will often reduce your premium if you have clearly defined policies for email, communication, sexual harassment, and anti-discrimination.

As a result of this case we are now advising our clients to have communication policies in place that provide notice to employees that personal email accounts (name@gmail or name@yahoo.com for example) are subject to monitoring when sent over the company network. In addition, even if you elect not to monitor personal emails sent over the company’s network, everyone should be aware that records of such emails may be discoverable in litigation. This could lead to very embarrassing situations for you and your employees. Any company, whether it is small or large, can benefit by having a strong electronic communications policy in effect to reduce company exposure in litigation.
Continue reading

February 15, 2010

Business Bloggers Liability for their Posts

by H. Adam Shapiro

I thought it made sense to start off this blog with a post about the risks of blogging itself. More and more businesses are using both blogs and social media (such as Facebook, Twitter and others) to expand their brand visibility and attract new customers. While there are numerous seminars to teach you how to use all this stuff to your advantage, there are a few legal points you need to keep in mind.

The 3rd Circuit (the appellate court for PA, NJ, DE, and the Virgin Islands) held a few years ago in Dimeo v Max that bloggers are not liable for comments other people post on their sites. Like everything in the law, there are exceptions, but the general rule is that unless you wrote it or had someone else write it on your behalf you’re not responsible.

So the next question is, what about the stuff you write yourself? Blogs are supposed to be open exchanges of information, and the best of them often break news quickly. Does this mean as a blogger you are now a full fledged member of the media, entitled to source protection and back stage passes? Not according to a recent case in New Jersey. In Too Much Media v Hale, the defendant in a defamation case argued that she could protect her sources under NJ’s press shield law. In a decision that relied more on an analysis of the facts of Ms. Hale’s actions rather than a verdict against bloggers as a whole, the court found a distinction between her posts and those of someone in the business of disseminating news for the general public. While this is good news for companies who are the target of online smear campaigns, it raises some real questions about liability for those bloggers who regularly intersperse news with commentary.