The United States is quickly becoming a far less hospitable environment for patent trolls. A so-called “patent troll,” or less derogatorily, a “patent holding company” is an entity whose sole business is amassing large portfolios of patents. The patents are often bought from companies on the verge of bankruptcy. 112 Penn St. L. Rev. 29, at 296. The patent troll has no interest in creating, manufacturing, or otherwise distributing any products, but rather seeks to target companies who are unknowingly infringing upon an existing patent which they own. Id. Besides attacking companies who have been using a product or technique for many years without any notice or contemplation of infringement, another common target is the budding young venture. A patent troll, knowing that an invention integrated into a new venture infringes on a patent it owns, waits until many millions of dollars have been invested in the venture before attacking the unsuspecting young company with threats of litigation. Id. at 299.
JPMorgan’s Madoff Deal: Are Banks Too Big To Jail?
JPMorgan Chase has tentatively agreed to pay around $2B to resolve a claim that it ignored signs of illegal activity on the part of Bernie Madoff, its former client. The settlement will include more than $1B in penalties to resolve the criminal case. Additionally, some portion will also go toward compensating Madoff’s victims.
This settlement centers on breakdowns of JPMorgan’s compliance system, and how the bank ignored red flag warnings relating to suspicious activity in Madoff’s accounts. Irving Picard, a trustee for Madoff’s victims, sued JPMorgan for $19.9B, accusing the bank of ignoring warning signs about Madoff. A judge dismissed all but $425 million in Picard’s lawsuit. An appeal of the ruling to the U.S. Supreme Court is pending.
Under the deal, JPMorgan will avoid criminal charges, but will enter a “deferred prosecution agreement,” where JPMorgan will agree that it broke criminal laws and that any criminal action will be deferred as long as the bank keeps a clean slate. No bank executives will be indicted. Manhattan prosecutors, including U.S. Attorney for the Southern District of New York, Preet Bharara, considered and rejected the idea of forcing the bank to plead guilty to criminal charges.
Arbitration Clauses in Corporate Bylaws: Forestalling Costly and Burdensome Shareholder Litigation
In American Express Co. v. Italian Colors Restaurant (June 20, 2013) (“Amex”), the Supreme Court reaffirmed that the Federal Arbitration Act (FAA) makes arbitration “a matter of contract,” requiring courts to “rigorously enforce arbitration agreements according to their terms. In Amex, Italian Colors Restaurant, along with other merchants, sued American Express in a class action lawsuit. The plaintiffs alleged that American Express violated antitrust law by compelling merchants to accept American Express credit cards and pay exorbitant rates.
Bank of England Curbs Funding for Lending Scheme to Focus on Small Business Lending
Effective beginning 2014, the Bank of England will scale back the Funding for Lending Scheme (FLS), which was introduced on July 13, 2012, by removing funding supplied to banks for the purpose of stimulating mortgage lending. By doing so, it aims to refocus the program solely towards stimulating business loans for small firms.
The FLS program was originally designed to “[incentivize] banks and building societies to boost their lending to the UK real economy.” Participating banks may borrow UK Treasury Bills in exchange for eligible collateral, which consists of all collateral eligible in the Bank’s Discount Window Facility. According to the Bank, “[l]ending to smaller businesses in 2014 will continue to be encouraged by allowing banks to draw £5 in the scheme for every £1 of net lending to SMEs. The fee for all drawings from the FLS extension will be set at 25 basis points, which is the lowest point of the previous fee scale.”
The U.S. Supreme Court Declines to Hear Internet Tax Law Appeal by Amazon.com and Overstock.com
On Monday, December 2, the U.S. Supreme Court denied petitions for certiorari by Amazon.com and Overstock.com in their cases against the New York State Department of Taxation and Finance. Both appeals challenged the constitutionality of New York Tax Law Section 1101(b)(8)(vi), the 2008 “Internet tax law” sometimes referred to as an “Amazon law” or a “click-through nexus” law, because it affects only the largest internet retailers. The section at issue requires out-of-state Internet retailers that employ in-state web marketing affiliates, such as Amazon.com, to collect state taxes on all sales to New Yorkers, even if the company has no physical presence in the state.
SEC & DOJ: Friends Or Foes In Civil Securities Litigation?
The U.S. Department of Justice (“DOJ”) and the Securities and Exchange Commission (“SEC”), have found themselves fighting in the same arena this year as the DOJ aggressively tackled two high profile civil cases. The overlap has sparked speculation as to why the DOJ is poaching territory that is usually under the SEC’s purview.
Potential Cable Industry Megamerger?
News has been spreading in the cable industry about a potential merger or buyout of Time Warner Cable (TWC). Speculation surrounding the possible buyout has been fueled by interest from companies like Comcast, Charter Communications, and Cox.
Supreme Court’s Review of Halliburton: Potential Turn in the Foundations of Securities Class Actions
On November 15, 2013 the Supreme Court agreed to hear Halliburton Co. v. Erica P. John Fund, Inc., a case that has the potential to overturn one of the foundations of securities class actions. In Halliburton, the Court will decide whether to continue applying the fraud-on-the-market doctrine to securities class actions.
CFPB Unveils New Integrated Disclosures Under RESPA and TILA
On November 20, 2013, in a broadcast streamed live on the internet, the CFPB unveiled the long awaited final rule that contains the Integrated Mortgage Disclosures under the Real Estate Settlement Procedures Act (“RESPA”), Regulation X, and the Truth-In-Lending Act (“TILA”), Regulation Z.
A Pension Dispute Could Have Billion-Dollar Implications for Private Equity Investors
The Obama administration has been fighting to eliminate a “tax loophole” that benefits private equity executives by taxing their profits from investments in companies (“carried interest”) by the capital gains rate of 20 percent instead of the regular income rate of nearly 40 percent. Congress has kept this from happening, but the decision in a recent case by the Federal Court of Appeals for the First Circuit in Massachusetts might put enough power in the hands of the Treasury Department and the Internal Revenue Service to win the fight.