USSC I: Freelance
Writers Prevail in Copyright Suit.
The long-awaited decision in New
York Times vs. Tasini, # 00-201, U.S.S.C., (June 25, 2001),
was issued as we go to press. The high court ruled that databases
that reproduce and distribute articles standing alone and not
in context, and not as part of that particular collective work
to which the author contributed, are not revisions for purposes
of the 17
USC 201(c) safe harbor from copyright infringement. Ruling
7-2, the Court held that a compilation in an electronic database
is different from other kinds of archival or library storage
of material that once appeared in print. For analysis and commentary
of the effect of the decision on the industry, see the Chicago
Tribune article online, and Reuters.
USSC II: RICO
Action May Be Brought Against Corporation and its Sole Shareholder;
Sole Shareholder Separate from Corporate Entity for Purposes
of Rico.
Petitioner sued Don King, the president and sole shareholder
of a rival boxing promotion corporation, alleging that King had
conducted his corporation’s affairs in violation of the
Racketeer Influenced and Corrupt Organizations Act, (RICO), 18 U.S.C.
§ 1962(c). The District Court dismissed the complaint,
and the Second Circuit affirmed on the grounds that the corporation
and its sole shareholder did not constitute two separate entities,
as King, in a legal sense, was part of the corporation, not a
“person,” distinct from the “enterprise.”
But the U.S.Supreme Court ruled that the employee and the corporation
are different “persons,” even where the employee is
the corporation’s sole owner. Cedric
Kushner Promotions, Ltd. vs. King, #00-549, U.S.S.C., (June
11, 2001).
Intellectual Property: German Court Orders Hewlett-Packard to Pay for Copyright
Infringement Because of its Sale of CD Burners. Following
a flat-fee system requiring fee payment for duplication devices
such as photocopiers and tape recorders, a German Court has ordered
the German division of Hewlett-Packard (HP) to pay a flat fee
for each CD burner it has sold in Germany over the last three
years. The Court has not established the amount of the fee, but
the ruling requires HP to report the number of units it has sold
since in Germany since 1998. HP is the named Plaintiff in this
test case on behalf of all hardware manufacturers. http://www.thestandard.com/article/0,1902,27374,00.html
From the European Union: EU Adopts Standardized Pro-Privacy Contract Language
for International Business Agreements. In an effort
to protect its citizens from involuntary disclosure of personal
information, the European Union (EU) has prohibited the transfer
of data to companies outside the EU who do not meet EU's privacy
directives, or agree to be bound by its standardized contract
language. To date, only Switzerland, Hungary and the United
States have privacy provisions deemed adequate by the EU. The
new ruling would affect all other countries wishing to do business
with EU citizens. http://www.newsbytes.com/news/01/166971.html
Forum Selection I: California Refuses to Enforce AOL's Clickwrap Forum
Selection Clause.
Plaintiff Mendoza, on behalf of all potential class members,
sued America On Line (AOL) in California State Court alleging
violations of California's Consumer Fraud laws, among others.
AOL moved to dismiss, citing the forum selection clause in its
contract which selected the application of Virginia law and a
Virginia forum. The California Appellate affirmed the trial court's
rejection of dismissal on two separate grounds: first, that complaint
sought remedies under the California Consumer Legal Remedies
Act, which voids any purported waiver of consumer rights; and
second, on the grounds that since Virginia does not permit class
actions, the plaintiffs' rights would be substantially diminished
if they were forced to litigate in Virginia, which was against
California public policy. Despite AOL's choice of law and forum,
the case will be litigated in California law, and California
law will apply. AOL
vs. Superior Court of Alameda County, Mendoza, et al, Real Parties
at Interest, # A 092813, (June 21, 2001).
Forum Selection II: Contract Forum Selection Clause Waives Right to Remove
to Federal Court. Defendant employer's forum selection clause specified
that suit under the agreement could be brought in state or federal
court, and consented "irrevocably" to such forum. But
having left the choice of forum to the suing employee, it had
negotiated with the plaintiff a clear right to establish "irrevocably"
the place where his suit could be filed and heard, and had waived
its right to remove the cause to Federal court. Waters
vs. Browning Ferris Industries, Inc., No 00-20519 (5th Cir.
June 08, 2001).
Landlord's Non-Waiver Clause Means Guarantor
Liable Under Lease. Even though tenant had not strictly
complied with lease renewal notice, and Landlord permitted lease
renewal, such waiver did not apply to remove liability from guarantor.
Guaranty explicitly provided that no waiver by Landlord would
release guarantor. T.C.T.
Building Partnership v. Tandy Corp. No. 1-00-1749, 1st Dist.,
4th Div., (May 31, 2001), Reversed and remanded.
Shareholder Who Signed Promissory Note
As Officer of Dissolved Corporation Personally Liable Even Though
Corporation Reinstated.
Even though the debt upon which it was based was a corporate
debt which arose prior to the corporation's dissolution, a shareholder
who signed a promissory note as an officer of the dissolved corporation
was personally liable under the note. The fact that the corporation
was reinstated did not change the officer's personal liability.
Cardem,
Inc. v. Marketron International. Ltd., No. 2-99-1451, Second
District, DuPage County, (May 31, 2001). Affirmed.
Summary of Major Changes to Business Corporation
Act,Limited Partnership Act and Others. Because SB
725 was so massive, and was amended so many times, it was
easy to get lost in trying to track its provisions. But thanks
to Lin Hanson, we have the following summary: (1) Not for
Profit Corporate Names. There has sometimes been a problem
that names chosen for not-for-profit corps tend to imply that
the entity is for profit. Example: West Side Dental Clinic. Names
can now be used, if they end with the designation "NFP".
(2) Not For Profit Statutory Purpose Clauses Expanded.
Not-for-profit corps must have a statutory purpose clause. Sometimes
its difficult to fit into one of the 33 on the list. Two new
ones have been added: any activity which qualifies for tax exemption
under §§501(c) or (d), and any activity which qualifies
the donor for deduction under §170(c) of the Internal Revenue
Code. (3) Avoiding Similar Names Between Corporations and
LLCs. For the first time, names of both corporations and
LLCs will be checked
to see if existing entities have similar names. (4) Mergers.
In the case of a cross-entity merger (such as a corporation into
an LLC), only the surviving entity need file the articles of
merger. (5) One Signature Filings. Hereafter Secretary
of State Filings will require only a single signature. (6) Change
of Registered Agent on Annual Report. Once again, the name
or address of a registered agent may be changed on an annual
report. (7) No More Certificates. Hereafter certificates,
such as certificate of incorporation will no longer be issued,
just a "filed" stamped copy of the document. (8) Residence
Addresses No Longer Required. The requirement of providing
residential addresses for officers and directors in filings has
been removed. (9) Indemnification. Mandatory indemnification
- past officers/directors; (10) No More SIC Codes. The
requirement to provide a SIC code on Articles for an LLC has
been removed. (11) Capital Contribution No Longer Required
on Certificate. Certificate of Limited Partnership no longer
requires amount of contributed capital. (12)Limited Partnership
Mergers. Limited Partnerships are now permitted to merge
without an LLC involved.
Better Read the Fine Print in That Next
Car Rental Contract!Relying on the car rental
company he had used many times before, James Turner rented a
van and set out on his business trip. The van, equipped with
Global Positioning Satellite (GPS) technology, reported each
time he exceeded the speed limit, and the car rental company
automatically deducted $150.00 from his bank account for each
infraction - for a total of $450.00. This was not the usual GPS
system, reportedly, but a far more sophisticated model that could
track his speed and location. The matter is now in court, and
a decision by the state consumer protection agency and the Attorney
General is expected soon. http://www.cnn.com/2001/TECH/ptech/06/22/gps.airiq/index.html