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Archive for the ‘Professional Liability and MPL’ Category

Google’s Use of Oracle’s java Application Programming Interfaces declared “Fair Use” by the United States Supreme Court

Posted on: April 30th, 2021

By: Kirsten Patzer

In a 6-2 decision, the Supreme Court of the United States(the “Court”) reversed the US Court of Appeals for the Federal Circuit in Google LLC v. Oracle America, Inc., holding Google’s use of Oracle’s Java Application Programming Interfaces (API) in its Android operating system was “fair use.”

The Court granted Google’s certiorari petition on two issues: 1) whether Oracle’s Java API is copyrightable; and 2) was Google’s use of the Java API “fair use.” The Court declined to undertake any analysis of the first question, rendering their opinion on the assumption that the Java API is copyrightable, and examined only whether Google’s use of 11,500 lines of programming code infringed on Oracle’s copyright or if Google’s use of the code was “fair  use” under US copyright law.

To establish whether Google’s employment of the Java API did, in fact, constitute “fair use” the Court examined the four factors set forth in the Copyright Act’s fair use provision: 1) the purpose and character of the use; 2) the nature of the copyrighted work; 3) the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and 4) the effect of the potential market value of the copyrighted work.

Justice Breyer, writing for the majority, began his assessment with the second factor, holding the nature of the copyrighted work favored a finding of fair use. The Court differentiated between the copied Java API “declaring code” and Google’s “implementing code” explaining the former is more “utilitarian” in nature, and is inherently bound together with the latter’s more “creative” counterpart, suggesting that the Java API code, standing alone, was not at the “core” of copyright protection.

The Court then determined Google’s “purpose and character” of the use was “transformative”, noting Google used the code to create an operating system for a different platform and computing environment. Thus, Google’s use of the code was “consistent with the creative process.” The Court also found the third prong, the amount and substantiality of the use, weighed in Google’s favor, noting the 11,500 lines Google copied were less than one percent of the code in the entire API.

Turning to the fourth factor, the Court determined Google’s Android smartphone platform did not replace Java and did not usurp its place in the market. Furthermore, Oracle would benefit from the reimplementation of their code into the market. The Court noted  Oracle “was poorly positioned to succeed in the mobile phone market” and Google’s Android platform differed from Oracle’s: “Google’s Android platform was part of a distinct (and more advanced) market than Java software.”

In sum, the Court concluded that Google took “only what was needed” to allow their programmers to “put their accrued talents to work in a new and transformative program” thus, Google’s copying of Java API code was fair use of that material as a matter of law.

For more information on this topic, please contact Kirsten Patzer at [email protected].

Departing Lawyers’ “Theft of Files” May Lead to a Violation of M.G.L.c. 93A

Posted on: April 29th, 2021

By: Nancy Reimer, Jennifer Markowski and Lori Eller

The Massachusetts Supreme Judicial Court recently held in Governo Law Firm LLC v. Bergeron, 487 Mass. 188 (2021), that the inapplicability of G. L. c. 93A, § 11, to disputes arising from an employment relationship does not mean that an employee never can be liable to its employer under G. L. c. 93A, § 11. Rather, where an employee misappropriates her employer’s proprietary materials during the course of employment and then later uses the materials in the marketplace, that conduct is not purely internal and it comprises a marketplace transaction that may give rise to a claim under G. L. c. 93A.

In this case, Governo Law Firm (GLF) sued to protect materials stolen by a group of its nonequity partners as they left GLF and prepared to start a new law firm, CMBG3 Law LLC. Governo had created a research library containing over 20 years of materials it had collected on asbestos litigation, along with an electronic database used to search the library. The nonequity partners secretly downloaded the library and databases, along with administrative materials such as GLF’s employee handbook and client lists while still employed with GLF. They then made an offer to GLF’s sole owner to purchase GLF and stated if the offer was not accepted that same day, they would resign. GLF’s owner rejected the offer and—too late—locked the attorneys out of GLF’s computer systems. The next day, those attorneys opened for business under CMBG3 and began using the stolen materials.

The jury in the Superior Court action found some or all of the attorney defendants liable for conversion, breach of the duty of loyalty, and conspiracy, but found none of them liable for unfair or deceptive trade practices in violation of G.L c. 93A, § 11. CMBG3 was found liable for conversion and civil conspiracy. GLF was awarded $900,000 in damages calculated by lost profits and a permanent injunction was issued enjoining the defendants from using the library and the databases.

GLF appealed the judge’s trial instructions and his posttrial rulings regarding the 93A claim, the scope of the injunction, and interest on the damages award. The SJC on appeal agreed with GLF and held the judge erroneously instructed the jury that the defendants’ conduct prior to their separation of employment, namely the stealing of the materials while still employed at GLF, was not relevant to GLF’s claim under G.L. c. 93A § 11. The SJC held that in order for the jury to resolve the G. L. c. 93A, § 11 claim the jury should have considered whether the attorney defendants’ theft and subsequent use of GLF’s materials amounted to unfair or deceptive conduct.

The SJC further determined it was an abuse of discretion for the trial judge to exclude the stolen administrative materials, such as the employee handbook and client list, from the scope of the permanent injunction.  

Regarding interest, the SJC held that while prejudgment interest was not required due to the non-compensatory nature of the damages, which were awarded on the basis of the defendant’s profits and not to make the plaintiff whole, post-judgment interest was appropriate and would accrue from the date of entry of initial judgment until payment in full. This was contrary to the position taken by the attorney defendants and the trial judge that the deposit of damages with the court, rather than directly to GLF, would terminate the accrual of post-judgment interest.

If you have any questions of would like more information, please contact Nancy Reimer at  [email protected], Jennifer Markowski at [email protected] or any other member of our Lawyers’ Professional Liability Practice Group, or Employment Law Group a list of which can be found at www.fmglaw.com

A Quick Summary of the Ethics Rules on Discrimination for California Lawyers

Posted on: April 20th, 2021

By: Greg Fayard

For decades, the California State Bar had an anti-discrimination ethics rule applicable to lawyers. That rule prevented lawyers from unlawfully discriminating in hiring, promoting, firing, or accepting or not accepting cases based on certain protected characteristics—the big ones that people thought about in the early 1990s: race, sex, religion, sexual orientation, national origin, disability. However, for the State Bar to get jurisdiction over a lawyer for being discriminatory, a court had to first find the lawyer engaged in unlawful discrimination.

That never happened, so this rule was never enforced.

The current discrimination ethics rule addresses the prior jurisdictional gap, and now confers original jurisdiction upon the Office of the Chief Trial Counsel of the State Bar of California to investigate and prosecute discrimination claims and make recommendations on disciplinary orders to the California Supreme Court.  California’s ethics rule says lawyers shall not discriminate, harass, or retaliate in not taking a case, ending representation of case, or not hiring, or firing someone based on protected characteristics. These protected characteristics went from seven to 19 and now include genetic information, military status, veteran status, color, marital status, among others. There is no longer a requirement that a court first find the lawyer engaged in discrimination before this rule is triggered.

So in summary, rule of Professional Conduct 8.4.1, says a California lawyer cannot discriminate based on the 19 characteristics when:

  1. Representing,
  2. Terminating, and
  3. Refusing to accept a case.

As to a lawyer’s employees or potential employees, the lawyer cannot discriminate based on the 19 characteristics when:

  1. Hiring
  2. Refusing to hire or
  3. Firing.

If a lawyer is charged by the State Bar for violating this rule, the lawyer has to notify the California Department of Fair Employment and Housing, and the U.S. Department of Justice or federal Equal Employment Opportunity Commission of the disciplinary charge, depending on the type of charge. Given the breadth of civil state and federal discrimination law, this rule was controversial, passing the State Bar Board of Trustees and going to the California Supreme Court for approval on a 7 to 6 vote. In any event, civil liability is not the only penalty for the discriminatory lawyer. Now discriminatory California lawyers can be disciplined by the State Bar.

If you have any questions or would like more information, please contact Greg Fayard at [email protected], or any other member of our Lawyers Professional Liability Practice Group, a list of which can be found at www.fmglaw.com.

A Massachusetts Attorney Is Suspended for Overbilling Clients

Posted on: April 7th, 2021

By: Nancy Reimer and Eleni Demestihas

In the Matter of [Attorney] (SJC 12850) the Massachusetts Supreme Judicial Court found the attorney not only charged excessive fees to multiple clients but did so intentionally over a matter of months. In 2015, as an equity partner, the attorney did not bill her time contemporaneously. Instead, she tasked her assistant with creating a weekly timesheet capturing her time using only handwritten notes, calendar entries, emails, correspondence, and pleadings. Her assistant did not generally have firsthand knowledge of the time the attorney spent on specific tasks, and the notes she left did not often indicate how much time was spent on each task. In reviewing these timesheets, the attorney did not adjust for any time her assistant might have missed. When her pre-bills arrived, however, she added approximately 450 total hours, including 100 to herself, 110 to a specific senior associate, and 240 to five other associates at the firm. This resulted in the firm billing almost $216,000 more to her clients than the pre-bills indicated.

The attorney claimed the bills represented work she did, even when she credited the work to other attorneys. She excused these misrepresentations by claiming creating new time entries of her own would have been administratively burdensome.  Also, she was benefiting her clients, as they received the benefit of her work at the associates’ price tag. The Board of Bar Overseers did not accept her claims.  The Board of Bar Overseers determined she intentionally inflated her own hours by misrepresenting her appearance at several depositions and calculating she would have had to work 11 hours each work day, every day of the year to meet the number of hours she recorded on her bills.  They suspended her license to practice law for two years.

The attorney appealed the suspension to a Single Justice of the SJC.  In support of her appeal, she submitted affidavits from clients stating how happy they were with her work and did not believe she over charged them for work performed.  Initially, the Single Justice concluded that a two-year suspension would be too harsh a punishment, as the attorney’s clients were satisfied with her work.  

On appeal, however, the Supreme Judicial Court determined the recommended 2-year suspension was an appropriate punishment. The attorney’s conduct was not mitigated by her clients’ satisfaction, the quality of her work, or the amount of stress she might have been under at the time.  The Supreme Judicial Court wrote in its decision, “It is not the sheer number of unworked hours that establishes a misconduct, but rather, the dishonesty manifested by billing for all them”.  Additionally, her ample experience in the practice of law, her evasiveness and lack of candor during testimony, and her failure to acknowledge the seriousness of her conduct necessitated a harsher punishment to protect the public and deter other attorneys from misconduct in the future.  The Supreme Judicial Court found the evidence unequivocally established that the attorney had intentionally billed for services that were not rendered violating Mass. R. Prof. C. 8.4 (c), 8.4 (h) and 1.5 9a). 

In rendering a two- year suspension the Supreme Judicial court found the attorney’s misconduct was more serious than that where an attorney charged an excessive fee.  It also found that a client’s satisfaction with an attorney’s work is no reason to justify excuse the dishonesty involved in billing for work that was not performed. 

For more information, please contact Nancy Reimer at [email protected].

Are Non-Refundable Lawyer Retainers Legal in California?

Posted on: January 26th, 2021

By: Greg Fayard

Joe wants to hire Bill, a California lawyer, to defend a breach of contract case. Bill agrees to defend Joe but will only take a $10,000 non-refundable retainer. Is this legal? No. 

Under Rule 1.5(d) of the Rules of Professional Conduct that govern California lawyers, non-refundable retainers are now permitted in a very limited circumstance—the rare “true retainer” situation. The “true retainer” is from an earlier time when there were fewer lawyers and a client needed to secure a lawyer’s services for a specified time in a specific matter.

True retainers are most often used by some lawyers who contract as general counsel for their clients. For example, in exchange for being on call 24/7 to handle accident emergencies for a trucking company, a true retainer arrangement is permissible where the trucking company would pay the lawyer, say $5,000, at the first of the month to secure the lawyer’s availability for the upcoming month. This “true retainer” ensures the lawyer’s immediate availability for that month.

In this situation, non-refundable legal fees are permitted so long as disclosed and agreed to in writing by the client. Otherwise, in our example, Bill cannot accept a non-refundable retainer to defend Joe’s breach of contract case. 

If you have any questions or would like more information, please contact Greg Fayard at [email protected], or any other member of our Lawyers Professional Liability Practice Group, a list of which can be found at www.fmglaw.com.