Posts tagged as:

competition through litigation

“I’m sure you realize the asymmetry in the financial resources of our respective companies when you say: ‘We will both just end up paying a lot of lawyers a lot of money.’” [TheVerge.com]

At Cato at Liberty, I find that uncannily reminiscent of a famous Bastiat parody (& IEA, Tim Worstall).

More from Coyote: “left unsaid is how they would jack up their prices when at least two other companies (Bing, Mapquest) also provide mapping services online for free.” But note that the French case arose not from Google’s furnishing of its free map service to individual end customers, but from its furnishing of its map API to businesses that typically adapt it for use in their own sites; as commenters at BoingBoing and Reddit as well as news reports point out, Google has indeed introduced fees for its largest business users of this type (which has caused some of them to adapt by switching from Google’s API to OpenStreetMap, a free wiki-based map service).

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Public-spirited litigants Western Sugar Cooperative, Michigan Sugar Company and C & H Sugar Company, Inc., have filed a lawsuit charging corn refiners with false advertising in their recent campaign to relabel high-fructose corn syrup as “corn sugar.” “The sugar producers seek an injunction to end the advertising campaign and also seek damages, including compensation for corrective advertising.” [PR Newswire]

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Ocean Spray sues a competitor over its alleged involvement in a social media campaign. [Charlie Mead, AmLaw Daily]

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Or at least it wasn’t for one video firm [Paul Alan Levy, Consumer Law and Policy]

“It doesn’t matter whether you have a case or not.” Reflections on legal friction between competing websites that assist in bringing reporters together with sources [Alain Raynaud, FairSoftware, via Pete Warden]

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The New York Times doesn’t have statistics, but its reporter thinks Lanham Act litigation (filed by companies against their competitors over allegedly misleading advertising) is on the rise these days.

“The American Booksellers Association loves people who buy books. It loves them so much that it wants to protect them from wicked retailers who sell popular titles at affordable prices.” [Jeff Jacoby, Boston Globe] More: Mark Perry.

Related: antitrust laws mostly “used today by one group of competitors to try to hamstring another competitor in their business” [Coyote on IBM mainframe investigation]

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Ride the Ducks says it has been inviting customers to toot on kazoos for a decade as part of its water-land tours in various cities. Now it is suing competitor Bay Quackers, which pioneered the duck tour concept in San Francisco (and was more recently joined there as a competitor by Ride the Ducks) for infringing its “sound mark”, an “auditory equivalent of a trademark”. [New York Times] [Corrected 2:30 p.m. after reader Kim S. pointed out that I hadn't correctly conveyed the details of which company operated where and when.]

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Sara Lee sues Kraft over its advertising claims regarding the taste of hot dogs.

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May 14 roundup

by Walter Olson on May 14, 2009

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July 6 roundup

by Ted Frank on July 6, 2008

  • Beck and Herrmann fisk a NEJM anti-preemption editorial. [Beck/Herrmann; NEJM]
  • Lessons of the Grasso case. [Hodak]
  • You think BigLaw has it bad? Plaintiffs’ attorney who invented the benefit-of-the-bargain theory for pharmaceutical class actions where no one has suffered any cognizable injury, has made his firm tens of millions, but still hasn’t made partner. “Zigler said he never meets most of the people he represents in these high-profile cases.” [St.L. Post-Dispatch; related analysis from Beck/Herrmann]
  • Speaking of harmless lawsuits, “an atrocity in Arkansas,” as Arkansas Supreme Court ignores basic principles of due process and civil procedure to certify an extortionate pre-CAFA class action from MIller County. [Hmm, that's Beck/Herrmann again; General Motors v. Bryant; related from Greve]
  • Speedo competitor: unfair competition to say your innovative swimsuit has an advantage just because 38 out of the last 42 world records (as of June 30) were broken in the suit. [Am Law Daily]
  • Background on bogus shower curtain scare story (earlier). [NYT; related AEI event]
  • EMTALA-orama: don’t discuss payment in the emergency room if you don’t want to get sued. [ER Stories]

I’ve previously criticized the unrealistic notions judges have of the expense of litigation. (For example: Budget Rent A Car (7th Cir. 2005).) As I said, “[T]he mistake of thinking that legal practice is so frictionless is what encourages so many judges to deny motions to dismiss and deny motions for summary judgment and fail to restrain discovery.” The Spalding Labs v. ARBICO case, No. CV 06-1157 ODW (SHx), 2008 WL 2227501 (C.D. Cal., May 29, 2008) (via Tushnet) provides another example.

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Antitrust law trips up pillar-of-counterculture-journalism Village Voice Media, cont’d: “San Francisco Superior Court Judge Marla Miller raised the amount the Weekly [SF Weekly] must pay in damages to the Bay Guardian — from $6.3 million to $15.9 million — for undercutting its rival with below-cost ads.” (Meredith May, “Judge raises damages in case against SF Weekly”, San Francisco Chronicle, May 21; earlier; sample SF Weekly business-bashing piece, channeling plaintiff’s lawyers’ contentions in Parmalat case). “Predatory pricing — selling ads below cost with the goal of putting your competition out of business — is typically something alt weeklies cover, not something they get caught and fined for.” (Josh Feit, TheStranger.com (which competes with VVM’s Seattle Weekly), Mar. 5).

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March 19 roundup

by Walter Olson on March 19, 2008

  • UK: Paramedic twists ankle on steps responding to emergency call, plans to sue elderly couple [Daily Mail]
  • Critics say litigiousness is part of the business plan for rental outfit Leasecomm, which has sued its customers more than 92,000 times [Boston Globe, Daily News Transcript]
  • Great big predators of the alternative press? Jury awards $15 million against SF Weekly to its main competitor, Bay Guardian [SF Chronicle]
  • Tacoma public schools sued after mentally ill student brings gun to school and kills classmate [KOMO]
  • How the parties traded positions with each other on trade [Gordon, Commentary]
  • Now Canada has its own “human rights” complaint against plastic surgeon who declines to undertake transgender-related surgery [Steyn, Macleans; earlier Catholic hospital case from California]
  • Florida Supreme Court hears appeal of Joe Anderson $18 million “false light” defamation verdict against Gannett’s Pensacola News-Journal [WSJ law blog; earlier]
  • Ottawa lawyer Richard Warman keeps suing bloggers and dragging websites before those Canadian hate-speech tribunals, so no criticizing him please [Levant, Five Feet of Fury (& more), Steyn]
  • Discontent continues over judges’ standardless discretion in granting alimony awards [NLJ]
  • Death of widow Alice Lawrence isn’t expected to end her litigation with law firm Graubard Miller over contingency fee [NYLJ; earlier]
  • Labor arbitrator tells Florida school to rehire employee who reported to work with cocaine in his system [six years ago on Overlawyered]

U. S District Court Judge Robert Matsch recently got so infuriated by the conduct of McDermott, Will and Emery attorneys Terrance McMahon and Vera Elson that he overturned a jury’s $51 million verdict, then ordered the lawyers to pay the fees and costs of the opposing lawyers, a sum that could total several million dollars. (Denver Post, Feb. 25)

From the decision (Medtronic Navigation, Inc. v. BrainLAB Medizinische, 2008 WL 410413):

In essence, the response from the plaintiff and MWE, through new counsel, is that the Court had the obligation to stop any trial conduct that stepped over the line of zealous advocacy. In short, they argue that they should not be held responsible for what they were able to get away with during the trial presentation. The adamant denial that there was any abuse of advocacy in this case is in disregard of what this Court has already concluded and displays the same arrogance that has colored this case almost from its inception. Throughout these proceedings Medtronic and the MWE lawyers have demonstrated that when they are faced with adverse court rulings, they proceed undeterred, with only superficial observance of the court’s determinations. Such conduct supports the conclusion that after the Markman rulings, Medtronic’s primary objective in pursuing this litigation was to put economic pressure on its competitor in the market.

Medtronic’s counsel proceeded cavalierly, with reckless indifference to the merits of Medtronic’s infringement claims. The continued prosecution of a claim after its lack of merit has become apparent warrants sanctions under § 1927. At trial, MWE’s conduct was in disregard for the duty of candor, reflecting an attitude of “what can I get away with?” Throughout the trial, the MWE lawyers artfully avoided the limitations of the patent claims and created an illusion of infringement. They did so with full awareness that their case was without merit.

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Suits by businesses over their competitors’ advertising are a staple for us, but this one has a somewhat new wrinkle:

Quiznos, the toasted-sandwich chain, [invited] the public to submit homemade commercials in a contest intended to attack a top rival, Subway. The contest rules made it clear that the videos should depict Quiznos sandwiches as “superior” to Subway’s.

Subway promptly sued Quiznos and iFilm, the Web site owned by Viacom that ran the contest, saying that many of the homemade videos made false claims and depicted its brand in a derogatory way. Subway is also objecting to ads that Quiznos itself created, showing people on the street choosing Quiznos over Subway.

The dispute over an ad is fairly standard — companies often sue one another over advertising claims — but the video contest raises a novel legal question: Quiznos did not make the insulting submissions, so should it be held liable for user-generated content created at its behest? …

If Subway wins, advertisers and media companies may find themselves liable for false advertising claims made by consumers who participate in their contests.

(Louise Story, “Can a Sandwich Be Slandered?”, New York Times, Jan. 29).

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No matter how absurd a lawsuit is, the plaintiff usually has an elaborate, ingenuous theory to explain why he deserves to be compensated for injuries caused in some convoluted, indirect way by the nefarious defendant, and the obligatory disclaimer about the case “not being about the money” is usually tacked on. Usually. And then there’s James Schlimpert, president of Oklahoma-based Garage Storage Cabinets LLC.

When asked why he brought a suit against a competitor (Don Mitchell/MGCS) for misappropriation of trade secrets and tortious interference with his company’s dealer contracts, he explained, forthrightly:

When deposed, GSC President John Schlimpert testified that his company held no trade secrets, had no exclusive dealer contracts, and had filed the lawsuit for the sole purpose of putting MGCS out of business.

“I am amazed in some respects that the plaintiff said that, and he said it more than once, said his purpose was to put them out of business,” reads the court record issued by the District Court of Payne County, Honorable Larry Brooks, judge. “I think, under the plaintiff’s stated purpose, he was bringing it just to be vexatious to the defendants. I think it’s vexatious litigation.”

Wow. Still, for anybody who wasn’t already convinced by the Roy Pearson case, the history of the suit illustrates the difficulty courts have in protecting defendants from frivolous suits.

Because the complaint, on its face, seemingly stated legitimate causes of action, the only way for Mitchell to establish that the suit was frivolous was to conduct discovery and take the deposition of the plaintiff. Then Mitchell had to get lucky; if Schlimpert hadn’t foolishly admitted the fraudulent nature of his suit, the court would almost certainly treated the suit as legitimate. (Mitchell could still have won, but wouldn’t have gotten sanctions.) Once Mitchell got lucky, he had to make a motion to the court to have the case thrown out.

Then, after having the case thrown out, Mitchell had to make a separate application to the court for sanctions — he actually botched this procedure, but the court let the issue slide — and then had to participate in a hearing to try to establish how much those sanctions should be. All of that cost more money, more attorneys fees, with no guarantee that these costs would be recouped. Indeed, in this case Mitchell asked for $49,300, and the judge awarded only $31,500, because Schlimpert was successful in finding an expert witness to convince the judge that the lower number should have been sufficient to beat his frivolous case.

Moreover, the judge refused to penalize the plaintiff’s lawyer, finding that just because Schlimpert was acting in bad faith didn’t mean his lawyer was.

And then, after all that, Schlimpert appealed. Finally, this month, the appeals court upheld the trial court’s decision. And now Mitchell has to go back to the trial court, after having spent another $8,000 on the appeal, and has to hope the judge will make him whole.

P.S. In case you were wondering: this suit was filed in May 2003. It took 17 months from the time the suit was filed until the time the judge ruled in favor of Mitchell. It took another 17 months for the judge to award sanctions to Mitchell. After Schlimpert appealed, it took yet another 17 months for the appeals court to rule. In other words, more than four years elapsed. But — as mentioned — it’s still not over, because now Mitchell has to return to the trial court, to be awarded fees because of Schlimpert’s appeal.

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