A class action in California is looking to call Microsoft to account for its part in selling software that is vulnerable to so many viruses, worms, and other security attacks. It was just filed at the end of September. It's different from prior lawsuits in that it relies in part on a California law that requires notice to a consumer when a computer security breach compromises the consumer's security. I'm looking for a copy of the Complaint and will report back.

Here's some evidence of rationality in the law: Dangers of smoking were common knowledge in the 50s and 60s. The First Circuit Court of Appeals just affirmed a judgment in favor of RJ Reynolds in a lawsuit by a smoker's family, claiming that his death was caused by smoking and RJ Reynolds failed to warn him of the dangers. Now, again, I'm no big fan of smoking, but I'm even less of a fan of lawsuits trying to blame other people (or corporations) for bad things that happen when people make a conscious choice to take a risk -- like smoking even though you know how bad it is for you. (And I know how hard it is to quit. I quit in October 1992. It can be done.)

Now, this decision is not a panacea for the tobacco companies. It is based on the conclusion that there was no evidence to contradict RJ Reynolds' evidence that the dangers of smoking were common knowledge, even many years ago. That means in future cases, if the plaintiffs can come up with an "expert" (see my post from yesterday) who will testify that the dangers were not common knowledge, then the next plaintiff is off to the races. The basis for the opinion of the RJ Reynolds expert was pretty darn strong, so a competing expert for the plaintiffs down the line will have to work hard to come up with a plausible basis for his or her opinion, but it might be doable.

A monster day in legal news. A videotape of Kozlowski's infamous $2 million birthday party for his wife is going to be shown to the jury (with some tasteful bits such as the ice statue of Michelango urinating vodka edited out). I say let 'em see the whole thing. K's earned it.

Judge Patti Saris of the U.S. District Court in Boston has issued a ruling in favor of the artist, David Phillips, who sued Fidelity Investments to prevent it from messing with a series of sculptures it commissioned him to create in Eastport Park, near Boston's World Trade Center. Judge Saris held that the federal Visual Artists Rights Act did not protect art created for a specific site, and so did not apply. But she held that the Massachusetts Art Preservation Act did protect the work. (See M.G.L. ch. 231, sec. 85S.) Too bad for Fidelity, but is this a disaster for companies in the future who might like to commission a sculpture for a building, but might fear getting stuck with it until Armageddon -- or for artists who can no longer peddle their work because no one wants the potential liability? I doubt it. Subsection g of the Act provides for express written waivers of the artist's rights under the Act. You can bet there will be a waiver in every contract signed in Massachusetts in the future or there had better be anyway. I wouldn't want to be the lawyer who forgets to plug that waiver into a contract with an artist like this one down the line.

The other interesting bit that I read in the Globe today is that a family who opposes the plan to put wind turbines in Nantucket Sound has commissioned a study by an environmental economist named Jonathan Haughton of the Beacon Hill Institute at Suffolk University, who has miraculously concluded that if the turbines were put up, Cape tourism would suffer to the tune of $64 million per year, and 1300 jobs would be lost. Haughton also suggests that the property values in the closest towns would drop 4%. If I'm reading the article right, this data is extrapolated from a survey of 497 "tourists," of whom 3% said that the turbines would "affect future vacation plans." This despite other studies that have found no damage to tourism from wind turbines, and the actual experience in Denmark where towns developed tourism by setting up centers to accomodate people who come to see the turbines themselves. This just slays me. The study cost $100,000, most of which was paid by the Egan Family. One of the deeply cynical lessons of litigation is that you can find an "expert" to say anything if you have the dough. Well, we could be a notch less cynical and conclude that the results of the study are driven by the political/environmental world view of the author and not purely by money. Either way, sounds like pure drivel to me. As an aside, I don't have a strong opinion either way on whether the turbines are a good idea or not. But I can't believe that they'll hurt tourism, jobs or property values. That's pure propaganda.

Here's an idea I find it hard to get behind: Driver's licenses for illegal aliens. Oh, sorry, I guess we call them "undocumented citizens" these days. Here's an idea that strikes me: what if federal law making these people illegally in the country preempts state attempts to legitimize them.

If we want to just let anyone into the country, then that is a high level policy decision to be made by our federal legislature. It seems to me that if people are in the country illegally -- i.e., in violation of federal law -- then they're not just "undocumented" and the more we legitimize them the more hypocritical we are. According to this article, there are 150,000 people in Massachusetts alone who are "undocumented." Maybe that's great for Massachusetts, maybe they do all sorts of jobs that otherwise would go undone, maybe they pump the economy full of money. I don't know either way. But we either have to enforce the darn laws or admit they aren't laws at all.

And, of course, Frank Quattrone scored a mistrial in the first round of his legal battle. He's on the front page of this morning's Boston Globe, with that same big smug grin on his face. You can bet the prosecutors are game for round two. And with Frank's smarmy face on the front page of so many major papers, I think he'll face rougher sledding the second time around.

Can Boston University stop a company from paying students for their lecture notes and then reselling them to other students? It's sure going to try. It contends that the professors' ideas, as expressed during the lectures, are the university's intellectual property, and a commercial company is not entitled to free ride on it.

It's been several years since I studied copyright law, so my memories may be a bit misty, but it seems to me that BU has at least a plausible contention. I would say it's far from a sure fire winner though. If I remember right, BU will have to be able to claim that the notes are a protected "derivative work," since they plainly are not a verbatim transcription or recording.

Seems to me that the shortest distance between two points for BU is to clamp down on the students who are selling the notes. It's a private university. Just make selling notes an offense for which the penalty is expulsion. My guess is that would put a real damper on the note selling business in a hurry.

The latest incarnation of the "Class Action Fairness Act" SB 274 died in the Senate. The basic idea was to force more class actions into federal court to prevent forum shopping by class action plaintiffs' lawyers. Business interests supported it, Consumer groups opposed it. See, e.g., consumer group position; American Association of Health Plan's position. You can read the House version of the Bill, HR 1115, here. The New York Times was pretty unenthusiastic about it.

Business groups clearly believed that this bill would improve things and invested a lot in promoting it.

Looks like Quattrone is giving the prosecutors a run for their money (or vice versa). Still no verdict, and the judge today asked the jury to try harder to come up with one. I don't know who I'm rooting for anymore, but I'll be interested to see how it turns out.

Interesting article today in the WSJ about how the Internet is affecting copyright law. In particular, the music downloading/piracy craze that has been besieging the music industry is allegedly the harbinger of the death of copyright. Maybe copyright law could use some tweaking, but I would say the reports of its demise are overstated.

The article discussed a proposal by Harvard Law Professor William Fisher, who teaches intellectual property law and is the Director of the Berkman Center for Law and the Internt at the Law School. He apparently thinks that copyright law is doomed because it cannot be enforced in the Internet age. He proposes to do away with copyright law as we know it and then to levy a stiff tax (circa 15%) on sales of the equipment to play back copyrighted materials (like DVD players, MP3 players and the like) and then have the government dibby up the dough among the producers of creative works. Yikes. Talk about an idea that proves that smart people can miss the mark badly.

First, I would say that the premise -- that technology will make copyright unenforceable -- is way off. That's like saying that people shouldn't keep money in banks because the bad guys will just steal it. There is sure to be a technological solution that will allow producers of copyrighted materials to protect their works. Will there be an arms race as the thieves look for ways around the protections? Sure. But the industry has more money, more incentive, and more horsepower than the bad guys. At the end of the day, my money is on the industry to come up with ways to protect its stuff.

Second, the idea that turning anything over to the government is a solution to anything has been proven wrong a thousand times over. Levying a flat tax and leaving it up to the government to decide who gets what is just a form of price control and smacks of socialism. It's bound to fail. Coincidentally, I was also reading Jim Rogers's book, Investment Biker while riding the stationary bike at the gym today. He says this: "[I]f we could get the government out of most things . . . everybody would be better off." (at page 265, right after discussing how price controls destroyed corn production in Zimbabwe). I can think of no better way to ensure that creative artists find other lines of work than to put the government in charge of their incomes.

The base line lesson here, that a law isn't a law if it isn't or can't be enforced, is one to take to heart. But let's be slow to turn any more of the world over to the government than we have to.

According to the Boston Globe this morning, the judge in the Quattrone case was not impressed by Quattrone's testimony and called it inconsistent with some of the e-mail evidence. That doesn't bode well for Quattrone. The jury may see it differently of course, but having the judge all but call you a liar is not a good thing.

Also in the Globe this morning was a report of testimony in the Kozlowski trial. Kozlowski's predecessor admitted to sporting himself the odd perk as well (*gasp*). Of course, the admitted perks were on a whole different order of magnitude from say, throwing a $2 million birthday party for your wife with Jimmy Buffett as the entertainment, and giving the tab to the Company. Here's hoping Kozlowski takes it in the chops.

I've been pretty much rooting for Frank Quattrone to get off. (He's the titan among investment bankers who sent an ill-advised e-mail to his subordinates urging them to follow the company's document retention policy, i.e. get to the shredder right away, when he arguably knew an investigation into the company's activities was under way.) All I know about the case is what I read in the papers, but I've been looking at his prosecution as an Enron/Worldcom/Tyco-inspired witch hunt (I feel the same way about Martha Stewart).

But every time I see a picture of Quattrone in the paper, he has this big smug grin on his face that makes you want to slap him. If I was his lawyer, I would. I hope he's not grinning like that at the jury. A criminal prosecution is a serious thing, and it wouldn't do Quattrone any harm to try and look like he's taking it seriously. I'm not recommending he look scared or nervous, but grinning like he's laughing at the court and the prosecutors is just plain dumb. I wonder if he realizes he's coming off that way.

When you're a massively rich investment banker, I think you have to be careful not to alienate the people on the jury, who collectively will not earn as much in their entire lives as you made last year. Time to smarten up Frank. You could lose, you know.

A fascinating wrangle going on right now among telecom regulators. Voice Over Internet Protocol ("VOIP") services are in a state of regulatory flux. I'm talking about services where you can make a long distance call, have the service provider route it over the Internet, and effectively make a long distance call for the cost of a local call. There are a bunch of providers out there these days who would supplant traditional telephone service altogether. In the past, VOIP has been pretty much unregulated, part of the Internet, rather than part of the telecom establishment. But state regulators are starting to think about treating VOIP as a telecom service, which brings with it a host of regulatory hoops to jump through and fees to pay. The feds, however, may occupy the field and keep the states under control. The biggest wrangle right now is in Minnesota, where the state decided to regulate a provider called Vonage. A federal court just enjoined the state from doing so. See Federal Court Throws Out Minnesota State Regulation of VOIP. This is going to be a big deal for consumers, although most of them probably don't know it yet. An area to watch. Let's root for the feds.

Good news for consumers nationwide, the 10th Circuit Court of Appeals has cleared the way for the FTC to start enforcing the do-not-call registry.

For the legal news junkies out there, I've been sifting through the Internet looking for good sites. I like Findlaw (which is already a link on the right of this blog). JURIST looks like it has a lot of content. I also like Daily Legal Newswire.

I have been reading more about electronic discovery recently (which mostly consists of demanding that your opponent in a lawsuit give you all his e-mail). A federal judge in New York last year used an eight-factor test in deciding that it was fair to make the party who demanded all the e-mail pay the expenses incurred in producing it. The Case is Rowe Entertainment, Inc. v. Sun Song Productions, Inc., 2002 U.S. Dist. LEXIS 8308 (S.D.N.Y. May 9, 2002). I have not found it on line, other than through a provider such as Lexis that charges for access. You can find the court's site here, which includes a section called "Rulings of Interest," but I guess the court didn't think this one made the list. It's certainly getting some attention from the bar.

I think the idea of cost-shifting is a pretty good one. Lawyers commonly send out demands for documents along the lines of "give me every document you've ever made that has anything to do with this at all, not matter how tenuous the connection." (They phrase it a bit more cleverly than that, but everyone knows that's what they mean.) This sort of request has the potential to impose a big burden on the other side, which is not always fair. (Sometimes it is fair.) The 8-factor test set out in Rowe Entertainment let's the court look at things on a case by case basis and decide when a party should have to pay it's own way. Clear guidelines are helpful, and this opinion may really catch on as the place to start the analysis when dealing with these situations.

An interesting article yesterday in the Wall Street Journal (page D1), talking about how arbitration clauses are popping up all over the place these days, including in the forms your doctor makes you sign when you come in. Arbitrations are private proceedings to resolve legal disputes, where the parties hire a private party (or panel) to act as the judge. The arbitration decision is binding, and it's mighty hard to appeal.

Critics claim that it's unfair to consumers because it subverts the right to a jury trial. Federal law (9 U.S.C. sec 1 et seq) and most state laws, however, favor arbitration.

In my experience, arbitration is no panacea for the big companies and not necessarily anything to fear as a consumer. I have seen the company lose big and be horrified by the lack of a right to appeal. I have also seen arbitrations take every bit as long and involve just as much "discovery" (formal investigation before the hearing) as any law suit. The theory behind arbitrations is that they will provide a faster, less expensive means of resolving a dispute. That's not always the case.

Of course, when it's not, the parties have only themselves to blame. It will be interesting to see if our government changes the law in response to a tidal wave of arbitration (if one is really coming). At a societal level, more arbitration is probably a good thing, as our taxes pay for all these court proceedings. There's a lot to be said for letting the parties pay their own way (see my post Sept. 30 about jury trials).