Nondisclosure Agreements (“NDA”) are everywhere: a Silicon Valley Don Juan had an NDA ready for every date. However, NDAs are not created equal — what is good for the discloser is not good for the recipient. The “Silicon Handshake” can become a hangman’s noose for the unwary.

Questions to Ask.

Any potential signer to an NDA needs to answer several questions before signing. Those questions are:

1. Whose secrets are being protected? Is the NDA mutual — does it cover the secrets of both parties? If you are presenting an NDA to protect your trade secrets, you may not want to bind yourself to protecting the other side’s secrets. Alternatively, if someone presents you with an NDA, you may want to make sure your own secrets are protected.
2. What secrets are being protected? Is everything discussed to be considered confidential? This can be a trap for the unwary. If someone mentions something in passing, you could be foreclosing future opportunities for your company. Do documents have to be marked as confidential to receive protection under the NDA, or does it cover everything that the recipient remembers? How will the recipient know what is protected and what is not? Obviously, no NDA can specifically spell out in advance all the details of what is being disclosed. But an NDA that is too broad could restrict the recipient’s future operations. What is good for the discloser is not always good for the recipient.
3. Who is covered by the NDA? Does the NDA allow for independent derivation? If your R&D office is, without your knowledge, working on a similar project, has your signature cut off future development of that project? Is there an option for independent development? Have you bound one of your independent partners? Is the protection limited only to those actually signing the NDA?
4. How long does the NDA last? Is the NDA to last into perpetuity? Does it carry over into new companies or ventures that a party may enter into? Is there any way of removing oneself from its provisions, such as returning all documents?
5. What are the exceptions? Are documents otherwise publicly available covered? Is the recipient released from the duty to protect the documents if they later become publicly available? If the recipient receives the information independently, does the duty to protect end?
6. Whose law governs? Jurisdiction and choice of law questions are not excess verbiage designed to keep lawyers employed. They have important consequences, particularly because states often have very different protections. California tends to protect employees’ rights to pursue a livelihood more than other states. If a choice is available, an attorney should review the NDA to see what is best for you.

Advantages v. Disadvantages.

Never is the old saw “where you stand depends on where you sit” more true than when considering an NDA. The discloser’s motives are radically different from the recipient’s: thus, the discloser’s NDA should be different than the one you would be willing to sign as a recipient. An NDA covering mutual disclosures should not resemble that of a one-way disclosure. Good preparation should include having three different NDAs — one for when you disclose documents, one for when you receive documents, and one for mutual disclosure. The mantra to remember is: how does this NDA help me maximize my gains, and minimize my risks?

Strategic Considerations.

NDAs are more than just the latest fashion in attorney make-work, but an integral part of business operations. If someone could use your information to triumph over you, you need an NDA. Alternatively, if you, as the discloser, would not sue someone for using the information being disclosed, an NDA is not necessary. Indeed, by revealing distrust of the other party, it could inhibit the relationship.

A Shield Can Be a Sword. Commonly a shield, NDAs can also be a weapon. An unwary recipient can prevent itself from developing a new line of business that the discloser reveals — and it can even handcuff those in alliances with the recipient. Sometimes two-layered NDAs are appropriate. The first layer is to someone who acts as a gatekeeper, to decide if the information threatens the recipient or its alliances; the second is for a broader, operational distribution.

Keeping Track of NDAs.

Who keeps track of the NDAs your business signs? Does anyone? If your VP of marketing left tomorrow, who at your company would know what NDAs exist that she may have signed, binding the company? Is there anyone at your company who knows enough to gauge whether the NDA your R&D guy is about to sign conflicts with any other project you have? “Gee, I didn’t know . . . “ is usually the prelude to a disaster. With the prevalence of NDAs today, your company needs a firm-wide policy. One person or group should be the gatekeeper of every NDA your company signs. Do not allow your partner — or potential adversary — to dictate the progress of the relationship. Impatience in allowing your general counsel to review the NDA before signing can be a warning signal that you may have more to lose than to gain.

No one wants to repeat the well-known mistake one software company made when it refused to sign an NDA with IBM: IBM instead did business with a young company called Microsoft. However, the more common problem is finding the “silicon handshake” transformed into a noose around your neck.

Roscoe’s Chicken and Waffles used to have a restaurant near the Bay Oak Law offices in Oakland; an assistant used to visit nearly every weekend with her fiancé. Unfortunately, the Oakland branch closed a few years ago, and Roscoe’s is currently only in Southern California.

Unfortunately, Roscoe’s was in the legal news today because it lost a copyright infringement suit. The case itself is fairly standard: after years of ignoring requests to license music to be played, Roscoe’s Long Beach restaurant was caught playing eight songs for which it did not have a license – the house band played several John Coltrane selections and the CD player played several songs by the jazz fusion group Hiroshima. The “good” news is that the court awarded “only” $4,500 per song ($36,000 total) – it could have been far more. Some copyright infringement suits have up to $30,000 in damages per work. The “bad” news is that the plaintiffs were awarded $162,000 in attorneys’ fees, because the works infringed had their copyrights registered within 90 days of being published. This is one of the most important advantages to registering copyrights when they are published – the attorneys’ fee issue can (and often does) dominate the size of the case.

Which is worse – being hit by a “Trane” or having someone go all “Hiroshima” on you? It looks like Roscoe’s got a little bit of both.

Due Process and Trade Secret Misappropriation
Cal. Civ. Proc. Code § 2019.210

by: Andrew K Jacobson
The Fifth Amendment to the US Constitution guarantees due process of law. One type of due process is knowing the details of the accusations in a court of law against you. But in trade secret misappropriation cases, the trade secret owner has a good reason not to put the details of the trade secret in the complaint: as a public document, anyone can see it. Some trade secret owners use this secrecy as a way of bashing former employees, by preventing the trade secret defendants from knowing what they are alleged to have stolen. How do courts balance the interests of the trade secret owner in preventing the trade secret from being generally known, and the interest of the defendants in knowing what they are being accused of taking?

In California, Cal. Civ. Proc. Code § 2019.210

“was enacted to curb unsupported trade secret lawsuits routinely commenced to harass competitors and former employees. The California legislature understood that plaintiffs in trade secret cases are often unable to identify any trade secrets, even after months of extensive discovery. Trade secret claims are especially prone to discovery abuse since neither the court nor the defendant can delineate the scope of permissible discovery without an identification of plaintiff’s alleged trade secrets. By restricting a plaintiff’s ability to engage in discovery until it identifies its trade secrets “with reasonable particularity,”[Cal. Civ. Proc. Code § 2019.210] strikes a balance between a plaintiff’s right to protect its trade secrets and a defendant’s right to be free from the burdens associated with unsupported trade secrets claims.”

Computer Economics, Inc. v. Gartner Group, Inc., 50 F. Supp. 2d 980, 992 (S.D. Cal. 1999). (Cal. Civ. Proc. Code § 2019.210 was known as Cal. Civ. Proc. Code § 2019(d) before it was renumbered effective January 2005. 33 Cal.L.Rev.Comm. Reports 825 (2004).)

“Reasonable Particularity.” Cal. Civ. Proc. Code § 2019.210 requires that plaintiffs disclose with “reasonable particularity” the trade secrets defendants are alleged to have misappropriated. Until this occurs, plaintiffs cannot start discovery – including written interrogatories, requests for documents, and depositions. Defendants can use this Cal. Civ. Proc. Code § 2019.210 as a shield to slow down the blitzkrieg that trade secret cases often start with.

Background. The roots of what is now Cal. Civ. Proc. Code § 2019.210 date back almost 50 years. In Diodes, Inc. v. Franzen, 260 Cal. App. 2d 244, 253 (1968), the appellate court recognized the due process rights of the defendant, and held that a plaintiff must “describe the subject matter of the trade secret with sufficient particularity to separate it from matters of general knowledge of those persons who are skilled in the trade, and to permit the defendant to ascertain the boundaries within which the secret lies.”

The trend in California is far greater particularity than ever before. It is not enough to claim general categories: a Cal. Civ. Proc. Code § 2019.210 designation requires identifying the exact trade secret misappropriated. The case of Perlan Therapeutics, Inc. v. Superior Court, 178 Cal. App. 4th 1333 (2009) squarely rejects the typical trade secret plaintiff move of making a tremendously overbroad attempt to designate everything a trade secret. In Perlan, plaintiff provided four pages of “trade secrets,” but “[m]uch of the text simply repeats the narrative available in the publicly filed second amended complaint and provides additional technical detail that is nonetheless publicly available. . . . Despite the highly technical language used, it is apparent that this description does not provide specific identifications of the peptides or reagents used in the process.” Id. at 1338-1339. The Perlan appellate court upheld requiring the plaintiff to identify the alleged trade secrets misappropriated with far more particularity.

While Cal. Civ. Proc. Code § 2019.210 is a California state discovery statute, federal district courts have substantively applied the statue in federal actions dealing with misappropriation of trade secrets. See, e.g., Advante Int’l Corp v. Mintel Learning Tech., No. C-05-01022, 2006 WL 3371576, at * 3 n. 4 (N.D. Cal. Nov. 21, 2006) (Cal. Civ. Proc. Code § 2019.210 “provides an appropriate guide in the absence of specific provisions in the federal rules governing trade secret discovery.”)

In Computer Economics, above, the Southern District of California held that federal courts cannot carve Cal. Civ. Proc. Code § 2019.210 out of the California Uniform Trade Secrets Act (“CUTSA”) “without frustrating the legislature’s legitimate goals and disregarding the purposes of [Erie R.R. Co. v. Tompkins, 304 U.S. 64 (1938)].” Computer Economics, 50 F. Supp. 2d at 992. Failing to apply Cal. Civ. Proc. Code § 2019.210 “would entitle a plaintiff to virtually unlimited discovery, enhancing its settlement leverage and allowing it to conform misappropriation claims to the evidence produced by the defendant in discovery.” Prohibiting these tactical abuses is the precise reason that Cal. Civ. Proc. Code § 2019.210 requires identification of the alleged trade secrets with particularity before discovery of the alleged misappropriator can commence. The Computer Economics court noted that Cal. Civ. Proc. Code § 2019.210 serves several purposes: “(1) it promotes investigation of claims prior to suit and discourages the filing of meritless trade secret complaints; (2) it prevents plaintiff from using the discovery process as a means to obtain the defendant’s trade secrets; (3) it frames the appropriate scope of discovery; and (4) it enables the defendant to form complete and well-reasoned defenses.” Computer Economics, 50 F. Supp. 2d at 985.

The Ninth Circuit’s opinion in Imax Corp. v. Cinema Technologies, 152 F.3d 1161 (9th Cir. 1998) illustrates how Cal. Civ. Proc. Code § 2019.210 transforms into a tool of substantive law. In discovery, the plaintiff identified the trade secrets as, among other things, “the design of the cam unit, including every dimension and tolerance that defines or reflects that design.” Id. at 1166. The defendant moved for summary judgment on the grounds that the plaintiff had failed to specifically identify the trade secrets at issue and, therefore, had not demonstrated that such information constituted trade secrets. Id. The court agreed, holding that plaintiff’s failure to identify the precise numerical dimensions and tolerances of the purported trade secret rendered its claim fatally defective. Id. at 1166-68; see also Universal Analytics. Inc. v. MacNeal-Schwendler Corp., 707 F.Supp. 1170, 1177-78 (C.D.Cal. 1989).

This concern is particularly important where a plaintiff is unfairly trying to claim ownership not of a trade secret, but of former employees’ skill, experience, and general knowledge. See Diodes, 260 Cal. App. 2d at 250. “The concept of a trade secret does not include a man’s aptitude, his skill, his dexterity, his manual and mental ability, and such other subjective knowledge he obtains while in the course of his employment … the right to use and expand these powers remains his property.” SI Handling Systems, Inc. v. Heisley, 753 F.2d 1244, 1255 (3rd Cir. 1985).

Lessons for Defendants: As soon as a defendant is served in a trade secret action, it should serve a demand for identification of trade secrets under Cal. Civ. Proc. Code § 2019.210. Until plaintiff complies, plaintiff cannot proceed with any discovery. Crafty defendants take advantage of the initial delay of discovery by plaintiffs to serve plaintiffs with discovery, for which they are often unprepared.

Lessons for Plaintiffs: Trade secret plaintiffs must avoid being lulled into complacency. While the trade secrets at issue cannot be inserted into the complaint itself in any detail, the plaintiff should prepare a designation of trade secrets under Cal. Civ. Proc. Code § 2019.210 in as much detail as possible, and be prepared to serve it once a protective order is in place.

Trade secret misappropriation cases are usually sprints, not marathons. Plaintiffs hope to catch defendants off-balance, while defendants seek to wear down plaintiffs. Cal. Civ. Proc. Code § 2019.210 levels the playing field.

By: Andrew K Jacobson

One of the things that good lawyers do is plan for future possibilities – even when the client, a psychic and astrologer, can (supposedly) see the future. My mentor, Dan Minutillo, repeatedly drilled into me the need to “double-think” – to ask the “what if” questions, even if the client assures us that everything will be hunky-dory forever.

Walter Mercado “was” a psychic and astrologer in Puerto Rico. (Don’t worry; Mercado is still around; see the last paragraph for why the past tense is used.)

On August 4, 1995, Mercado and Bart [Enterprises] signed the Agreement, under which Bart would develop and distribute materials and products related to Mercado’s psychic and astrological services. As part of the Agreement, Mercado granted Bart several rights “during the Term and throughout the Territory” of the Agreement. The Agreement defines “Territory” as the universe. . . . . It defines “Term” to mean “in perpetuity,” subject to a termination provision which, inter alia, allows Mercado to terminate the Agreement after fifteen days’ written notice if Bart fails to pay Mercado any agreed compensation within sixty days of the due date.

Mercado-Salinas v. Bart Enters. Int’l Ltd., (1st Cir. 12/20/2011,  free subscription required).

Mercado gave Bart an irrevocable assignment in copyrights to certain preexisting materials, and to develop new materials using Mercado’s name. Mercado also irrevocably assigned all rights to the common law trademark “Walter Mercado” to Bart – meaning someone else permanently took over – the rights to his name. For all this, Mercado received $25,000 a month in base salary, along with $5,000 a month in clothing allowance, and $2,000 a month for up to 25 three-minute segments per month.

“Finally, the Agreement provides that ‘all grants granted or assigned by this agreement shall be irrevocable under all or any circumstances, and shall not be subject to rescission, termination or injunction. In the case of breach of this agreement by Bart, Mercado’s sole remedy shall be limited to an action at law for damages.’”

Id.

Mercado even helped Bart register the “Walter Mercado” trademark by filing affidavits authorizing Bart to use and register the trademarks, both in the United States and in Mexico.

All went well for the first decade of the agreement, but beginning in 2006, Mercado stopped providing new material or appearing at scheduled appearances. In turn, Bart stopped compensating him. Despite the irrevocability of his agreement with Bart, Mercado tried to terminate the agreement, and the courthouse fight soon commenced, both in Florida, and later in Puerto Rico. Mercado was enjoined from using the “Walter Mercado” trademark, id. at 279, and could not terminate the agreement, because his own breach caused Bart to withhold payment. The 1st Circuit Court of Appeal upheld the injunction, finding that by failing to meet his own contractual obligations, Mercado was barred from asserting that Bart breached the Agreement between them: a “party’s breach effectively suspends the nonbreaching party’s duty to tender performance.”

Where Mercado’s psychic powers and his counsel failed him is in not recognizing that in the future he might not want to be obligated under the Agreement anymore, and he might want to control his own identity. While the $25,000 a month stipend (and $5,000 clothing allowance!) was no doubt tempting, surrendering control over your name as a trademark to someone else is ripe for disaster. Some more doublethinking should have been done.

The amazing Mercado managed to bounce back quickly. A mere six days after the district court enjoined him from using his name, he transformed into Shanti Ananda. Betcha saw that one coming.

Law regarding trade secrets has long been seen as the ugly step-sister of intellectual property. Patents, trademarks, and copyrights have traditionally been held to be federal concerns, while trade secrets have been seen as principally protected by state laws. Now, two senators want to allow the trade secret Cinderella into federal court by introducing a federal cause of action for trade secret misappropriation. The question is whether this is necessary.

The Economic Espionage Act (“EEA”), 18 U.S.C. § 1831-1837, criminalizes the theft of trade secrets used in interstate or international commerce, with prison terms of up to 10 years, and fines up to $5,000,000. While most of the public focus on the EEA has been on its provisions on foreign (including commercial) espionage, 18 U.S.C. § 1832 allows criminal prosecution of those who misappropriate trade secrets in interstate commerce, without a foreign actor or entity. While currently there is no private right of action under 18 U.S.C. § 1832, on October 5, 2011, Senators Herb Kohl (D-WI) and Chris Coons (D-DE) introduced an amendment to a bill that would introduce a private right of action in federal court in trade secret misappropriation cases when there is “either substantial need for nationwide service of process or misappropriation of trade secrets from the United States to another country.” The senators claim that the amendment would allow for a uniform, nationwide cause of action. The press release of Senator Kohl (who sponsored the EEA back in 1996) claims that “[t]his amendment will help fill a gap in federal intellectual property law by providing legal protections for non-patentable, non-copyrightable innovations.” However, a Federal Circuit case decided just six days after the amendment was introduced indicates that the amendment may be redundant.

The International Trade Commission. The Federal Circuit Court of Appeals recently acknowledged that the International Trade Commission (“ITC”) has the authority to bar importing foreign products that used an American company’s trade secrets.

The intervenor in TianRui Group Co. Ltd. v. Int’l Trade Commission, — F.3d —, (Fed. Cir. Oct. 11, 2011), Amsted Industries, Inc., licensed one of its secret processes for making railway wheels to foundries in China. Appellants TianRui Group Co., Ltd. and TianRui Group Foundry Co. Ltd. (jointly, “TianRui”) make the same type of wheels, and sought to license Amsted’s secret process. The negotiations failed, and TianRui retaliated by hiring away nine employees from one of Amsted’s Chinese licensees. These employees had been trained in the secret process, and had been admonished about the importance of not disclosing the process to outsiders; all but one had signed confidentiality agreements. Amsted then filed a complaint with the International Trade Commission to prevent the import of TianRui’s products.

TianRui sought to end the proceedings, arguing that because the misappropriation occurred outside the United States, the ITC did not have jurisdiction. The administrative law judge disagreed, as the law authorizing the barring the import of products that infringe upon intellectual property rights, 19 U.S.C. § 1337 focuses on the injury to the industry in the United States, not where the wrong occurred. The judge eventually found TianRui to have stolen 128 trade secrets that Amsted had licensed, and barred the import of TianRui’s steel railway wheels.

The Federal Circuit largely upheld the trial court, with one exception. Instead of using trade secret misappropriation law of Amsted’s home state of Illinois, it used federal common law regarding trade secret misappropriation, which is largely identical across many states. In fact, on January 9, 2011, New Jersey became the 46th state (along with the District of Columbia, Puerto Rico, and the US Virgin Islands) to use substantially the same law: the Uniform Trade Secrets Act. Only Texas, North Dakota, New York, and Massachusetts.

Federal courts already have diversity jurisdiction in cases where the plaintiff and defendants reside in different states, and TianRui shows that where there might be damage from the importation of products using trade secrets stolen from the United States, the products can be barred from landing in the US. When the vast majority of the American population and industry reside in states that use a uniform set of laws about trade secret misappropriation, the need for a federalized code of law about trade secrets seems redundant.

Computer-Related Trade Secret Misappropriation. While trade secret misappropriation law as a whole has yet to be federalized, when the misappropriation involves computers or electronic data, there are already both federal criminal and civil claims available under 18 U.S.C. § 1030, which protects any data from a “protected” computer – which includes just about any computer around. Even those, like employees, who have some access to the computer but exceed their authorized access are liable under 18 U.S.C. § 1030(a)(4). For criminal violations, the Secret Service has primary authority to investigate, although the Federal Bureau of Investigation also has the right to investigate when the subject matter involves the FBI’s general authority. A private right of action, allowing a plaintiff to sue under 18 U.S.C. § 1030, does require proof of damages of at least $5000. In 2010, Oracle relied on 18 U.S.C. § 1030 to get a federal judgment against SAP for what, in essence, was the misappropriation of trade secrets (although earlier this year Judge Phyllis Hamilton ordered a new trial unless Oracle accepted “just” $272 million in damages).

As TianRui, 18 U.S.C. § 1030, and Oracle v. SAP show, trade secret misappropriation is no longer hidden from federal view: this Cinderella of Intellectual Property has already been allowed to attend the ball to find its Judge Charming.

Would you encourage your employees take a five-fingered discount from the office supply store? Probably not. Would you cheat a hard-working employee by not paying her? Of course not. However, in the press of the Great Recession, software piracy is still prevalent, and lax controls on software may be jeopardizing your company.

When buying new computers, it is easy to forget that there is more than just the cost for the hardware – you have to buy software, too. From word processors and spreadsheet programs to customized programs for your industry, it is tempting to copy programs with a single license onto multiple computers. Because after all, since you have the original media, you can do what you want, right? And who is going to check, anyway – the software sheriff?

There are two problems with this scenario, besides the fact that it is illegal. First, many programs today are subject to constant updating, and most updating is done only once per license. Your program may be missing important parts that keep it secure and let it work right. Second, there is a “software sheriff” around – the Business Software Alliance, or “BSA.” BSA’s members include some of the world’s leading software companies, like, Microsoft, Adobe, and Cisco.

Why Should You Care? The BSA is actively offering “rewards” to those who disclose illegal use of software. All a competitor or disgruntled ex-employee needs to do to mess with your business and cost you thousands of dollars and many hours of time is to contact the BSA and claim that your company is using unlicensed software. BSA is getting companies to pay $100,000 or more for their unlicensed software. This does not count the time you, your company and your counsel spend dealing with this unproductive hassle. You will save a lot of money by ensuring that you do not get stung. If your company gets taken to court for copyright infringement, your company can be held liable for up to $150,000 for willful infringement of each registered copyright, plus the attorneys’ fees and costs of the plaintiff, which can be even more substantial. Your company would also be stuck with paying for its own legal counsel, and the lost hours of employees and managers as they are called to participate in the litigation.

What to Do on Your Own. A preliminary step can be done by your own company: do a quick inventory of the software on a few computers. Select those computers that have been around the longest. Do not trust the employee using the computer to report the software – have someone else catalog all the software on each computer. Many programs are licensed for free, like Adobe Reader or Dropbox, and can be quite useful for many tasks. Others, like Adobe Photoshop or the Microsoft Office Suite can cost hundreds of dollars a copy, and are the type of software that the BSA is on the lookout for. Other common programs that are unlicensed are Symantec Antivirus programs and Microsoft Server. Match a license for each program installed. If you find an unlicensed copy or two, delete it and, if the program is needed, buy a new, licensed copy. If there is are a lot of unlicensed copies, stop and contact legal counsel for the next step.

(Incidentally, the software inventory can also turn up some other issues, such as BitTorrent clients like uTorrent, Deluge, or Vuze. Unless there is a legitimate purpose for using such software, such as distributing very large files within your business, an employee is probably using the bit torrent client to illegally copy and distribute music and movies. Since your company’s internet protocol (“IP”) address appears as the downloader, it will probably subject your company to liability. That is a nightmare you want to avoid.)

What to Do If The BSA Contacts You. If the BSA contacts you, or your preliminary inventory discovers a lot of unlicensed software, do not wait and hope that your company or your local computer guy can handle the problem. IT professionals do not have the legal background to understand the details of software licenses, which are written by legal professionals to bore and obfuscate. More importantly, your employees, or an IT professional that you employ to investigate, can be called as a witness against you if your company is sued for copyright infringement. The last thing you want is to give unfettered access to your computers to someone who can then be subpoenaed to reveal everything on your computers. If an IT professional is necessary, let your counsel do the hiring. Then the professional’s work is protected by the attorney work product doctrine or the attorney-client privilege. These concepts give attorneys and their clients private space to determine what to do, without the threat of those facts and discussions being revealed.

What Bay Oak Law Can Do for You. The sooner we are called in, the sooner we can cloak the investigation under the attorney work product doctrine and attorney-client privilege. We can manage the process to protect your data that might be demanded in a later lawsuit; if that information is destroyed, the modern trend in e-discovery is to sanction the party doing the destruction. Our lawyers have represented companies in many copyright infringement cases over the years. We can perform or supervise the license reviews. If necessary, we can assist in directing you to places where your company can buy properly licensed products. We can also assist in putting together the proper procedures to minimize future problems, including updating your employee handbook on this and other issues, like social media use.

Taking software is not cost-free – it can destroy your business. Paying for your software rewards those who work hard to develop the software, and is really much cheaper in the long run. If you have questions, call us at 510-208-5500, or contact andy@bayoaklaw.com.

Governor Brown has signed a law raising the upper limits for some small claims actions. Beginning (presumably) January 1, 2012, the upper limit for some small claims court actions will be $10,000 for individuals (though only twice each calendar year). The limit for bodily injury claims against insured drivers is still $7500. Corporations or businesses owned by more than one person (LLCs or partnerships) will still be limited to $5000 for each claim.

When I was a kid, on days when we couldn’t play outside, my friend Mike and I would play Pong on our TV sets. Growing up in the Los Angeles area, many of our friends wanted to be in Hollywood. Now, the video game industry has earned more than Hollywood movies for years.

The San Diego Union Tribune has a great story on the opportunities and risks of the mobile app community. Appy Entertainment (motto: “deadly serious about stupid fun”) is based in Carlsbad, CA, and one of its founders is Chris Ulm, a friend of mine from Sutter Junior High School. One of Chris’ Appy co-founders said that

“One of the reasons we did this start-up is we saw this as the opportunity of the century . . . . The way mobile has grown since the iPhone was launched, it’s historic. But also, we want to create new things. And the video game business became so risk adverse because the budgets were so high.”

Mobile gaming apps, an industry that didn’t really exist four years ago, has now moved on to its second incarnation, in which the products are free, but in-game purchases for the apps cost money. This creates its own set of problems, especially when it is just an Apple App Store account that is charged: never mind kids ordering things without their parents’ approval, certain middle-aged attorneys have had problems mistakenly ordering more puzzles while helping his son on a kids’ app. Not only does the game now have to be entertaining, it has to have in-game items worth buying. But for addictive games, the revenue stream can continue long after the last game is downloaded. Legal headaches await, though, for in-game purchases that are not clearly marked as to price or purchasability. Already one child paid $1400 for “Smurfberries” (a Smurfs app “currency”), and an attorney in Philadelphia has filed a class action suit because his daughter racked up $200 in in-game purchases.

The rapid evolution of the mobile gaming industry echos the Internet boom of the late 1990s, when websites raced to fill the empty niches of the Internet. Good ideas like Google and Amazon flourished, while pets.com and webvan.com couldn’t deliver the goods efficiently to customers. Eventually in mobile gaming a few mega-winners will arise, while smaller successes will fill the niches in between.

Plenty of legal questions will arise. I can’t sell an all-new Gucci handbag from my office – but can I sell its doppelgänger in my lifestyle game, if I don’t use the Gucci name on it? If I (legally) reverse engineer the code to someone else’s game, can I sell in-game items for that game? If I have a valuable in-game item like a special sword, can I sell it? Should the video game company get a share of the proceeds? And what is going to happen when someone counterfeits “smurfberries” or other currency in the game? Intellectual property attorneys look forward to making a living off such momentous questions.

When the Internet burst into popularity in the mid-1990s, the rush to get popular names resembled the Oklahoma land run of 1889 – but for far more fertile cyberspace locations. Cybersquatting became rampant, as parasites tried to trade on the reputations established by others.

Cybersquatting on the Internet is far less of a problem now, but now businesses and individuals face a new problem – Twittersquatting. Two years ago, Former Oakland A’s manager (and current St. Louis skipper) Tony La Russa sued Twitter over a parody Twitter account purportedly by him. The account was quickly shut down and the dispute settled, but apparently precedent has been set. Twitter squatting has been born and is set to fly.

During the Deepwater Horizon oil spill in 2010, an inspired Twitter squatter sent out tweets purportedly from BP’s public relations department. In June 2011, a secondary life insurance company called Coventry First has sued to find the identities of whoever started the @coventryfirst Twitter account, which pretends to note Coventry First’s distress when there are no plane crashes that “increase shareholder value.”

While the above examples have been mostly humorous, twits using your business’s name could destroy your company’s reputation before you even know about it. Twitter does have an anti-squatting policy, but every business should participate in the Twitter land rush by claiming its own name. Besides being a potential marketing device, claiming your business’s name prevents it from being claimed by someone else. It’s free and took me less than 30 seconds to do.

Bay Oak Law’s own assistant extraordinaire, Kim Kennedy, published an article in the Spring 2011 issue of The Bulletin of the Alameda County Bar Association about something that came up for us a few years ago: using certified interpreters. Here’s her article:

Many California residents prefer using a language other than English. Judicial proceedings need all parties to communicate well with each other. Certified Interpreters can enable clear communication when a party is more comfortable in a different language.

Certified Interpreters. When using an interpreter, make sure to use a certified interpreter. The California Government Code specifies that “[e]xcept for good cause . . . , any person who interprets in a court proceeding using a language designated by the Judicial Council under subdivision (a) of Section 68652 shall be a certified court interpreter as defined in Section 68566 for the language used.” Cal. Gov’t Code § 68561(a), emphasis added. This certification requirement tries to provide consistency and accurate translation.

The Government Code states that“[t]he Legislature recognizes that the number of non-English speaking persons in California is increasing, and recognizes the need to provide equal justice under the law to all California citizens and residents and to provide for their special needs in their relations with the judicial and administrative law system.” Cal. Gov’t Code § 68560(e).

The Judicial Council lists its certified languages as

• American Sign Language
• Arabic
• Armenian (East and West dialects)
• Cantonese
• Japanese
• Korean
• Mandarin
• Portuguese
• Russian
• Spanish
• Tagalog, and
• Vietnamese.

Non-certified Languages. For all other languages, “[a]ny person who interprets in a court proceeding using a language not designated by the Judicial Council shall be qualified by the court under the qualification procedures and guidelines adopted by the Judicial Council. If this qualified interpreter also passes an English fluency examination offered by a testing entity approved by the Judicial Council, this person shall be designated a ‘registered interpreter.’” Cal. Gov’t Code § 68561 (d).

When a witness needs a language for which the Judicial Council has not listed any certified interpreters, subdivisions (c) and (d) allow for the appointment by the court of an uncertified translator if good cause is shown. The Code states that “[a] court may for good cause appoint an interpreter for a language designated by the Judicial Council who does not hold a court interpreter certificate. The court shall follow the good cause and qualification procedures and guidelines adopted by the Judicial Council.” Cal Gov’t Code § 68561(c). In these cases, another interpreter must be tested and made a “registered interpreter” or appointed by the trial court under subsection (c). However, for most cases, a certified interpreter will be available, and many are willing to travel.

Judicial Council Website. The Judicial Council lists certified and registered interpreters. The website offers tools to search by language and location for a certified interpreter to meet your needs. Best practices suggest the need to reserve an interpreter as soon as possible, as some languages and areas have fewer certified interpreters available than others. For example, out of about 65 interpreters certified in Korean, only one is based in the Bay Area.

Using a registered or certified interpreter ensures that information gathered is admissible in court under § 68561. Cal. Gov’t Code § 68561(a) states that “[e]xcept for good cause… any person who interprets in a court proceeding… shall be a certified court interpreter” (emphasis added) and the mandatory language suggests that interpretations using uncertified or unregistered interpreters are not admissible into evidence. Subsections (c) and (d) provide remedies when good cause is shown. There is no excuse for not following § 68561.

Translations. This Code applies to any translations of documents from another language as well. If a letter, newspaper article, or any other piece of written evidence must be translated into English, a registered or certified interpreter must be used. Also, if your opposition is appearing in propria persona or in forma pauperis and does not have strong English skills, they can qualify for an interpreter through the court’s financial need programs or under Cal. Gov’t Code § 68630 et seq.

The time when a lawyer could rely on a friend or associate who may speak the language in question is now past. Cal. Gov’t Code § 68561 lowers the language barriers in court while ensuring accurate communication.