When to Disclose Acquisition Negotiations

“The negotiations involved in acquisition deals are very vital from the business perspective. Whenever a public company enters into negotiations to acquire or merge with another company, the directors of the public company must decide when such negotiations should be reported to the public. If the company discloses the existence of its confidential business negotiations too soon, the publicity could cause the transaction to fall apart. Furthermore, early disclosure of negotiations could unduly raise the public’s expectations that the transaction will be completed, even if the completion of the proposed transaction is still speculative at best. On the other hand, if the information is disclosed too late, the company and its directors could face liability for failure to disclose material information on a timely basis. The paper discusses these issues in detail. ”

Abstract of a New York Law Journal article available here from BNET.com.

Price Fixing Law in Flux?

“For many years, the law was relatively clear. Even in highly concentrated industries (what economists call oligopolies), competitors could charge identical prices and change them nearly simultaneously without committing an actionable conspiracy – as long as they didn’t communicate about prices and reach an agreement.

Proving an agreement existed among competitors requires either direct evidence or circumstantial evidence of parallel pricing, combined with so-called ‘plus factors’ that rule out the possibility that the pricing behavior is consistent with independent conduct or a legitimate business purpose. These plus factors may include (1) an opportunity to conspire, for example, at trade association meetings; (2) price moves that would not be in the best interest of the individual business absent an agreement; (3) high levels of inter-firm communications; (4) departure from normal business practices; and (5) a motive to conspire.

Based on this law, businesses could establish some clear-cut rules to avoid liability. In order to prevent the appearance of a price-fixing conspiracy, competing businesses in concentrated industries should:

-Not communicate with each other about prices or costs;
-Make pricing decisions unilaterally in the interests of the business; and
-Participate cautiously in any trade association or other meetings where competitors might discuss prices.”

According to this Faegre & Benson LLP article, the foregoing still states the law and good advice in this area despite recent decisions that initially cast doubt on both.

Low-Tech Businesses Are Booming

“Forget Web sites and molecular imaging. The biggest fields of opportunity for aspiring entrepreneurs are the same mundane ventures that have been kicking around for decades.

Think landscaping companies, child-care providers, janitorial services and nail and hair salons. In a generally buoyant market for low-technology businesses, those are four of the biggest winners by far. Altogether, sole proprietorships in the United States, a rough measure of the size of the small-business low-technology sector, grew by nearly 4 percent in 2002, the latest year with statistics available, to 17.6 million, and their combined revenue increased by 5.5 percent, to $770 billion. The figures come from the Census Bureau’s Economic Census, a snapshot of the American economy that is taken every five years.

And the trends that drove the increases in low-tech businesses have only accelerated, the bureau’s economists say, as the nation’s economy has rebounded and employment has recovered.”

Read more in this NY Times article.

Start a Startup; Make Microsoft Hire You

“Most CS undergrads hope to get a good job when they graduate. But as the age of startup founders creeps downward, I foresee an alternative path for the most ambitious: instead of going to work for Microsoft, start a startup and make Microsoft buy it to get you.

This change will do more than make some young hackers richer. It will fuse recruitment with product development. Instead of applying for a job and then being told what to work on, you join the company as a complete development team, with a beta version. Results: (a) a shift in power from companies to hackers, and (b) an increase in the rate at which new technology gets developed.

Obviously this new model will be a better deal for the best hackers. But I think it will also be better for the Microsofts. The few tens of millions extra that they’ll pay will be a bargain for what they’ll get. ”

From the abstract of an upcoming talk by Paul Grahamto be presented by the Computer Science Undergraduate Association of the University of California at Berkeley.

Patent Trolling Convincingly Defended

Below are excerpts from an excellent rant from IP Litigation Law Blog that puts the “patent terrorism” issue in perhaps a more proper perspective:

“Yet another article I came across — this time in The Motley Fool — that intentionally or unintentionally spreads lies, untruths and disinformation about the patent system…

Last I checked, Article I, Section 8 of the Constitution speaks of “promot[ing] the progress of science and useful arts,” not “regulating and encouraging fair business.” And it speaks of doing so “by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries,” not, as the author of this article claims, by ‘businesses us[ing] patents and copyrights to protect their intellectual ideas as a defensive moat.’…

The author goes on to say, “Often, these organizations [i.e, patent terrorists] purchased the patents or swallowed companies that were going under to acquire the ideas, which is called patent trolling.” Let me get this straight — going out into the open market and “acquiring the [patented] ideas” of a failing business is somehow wrong?…

Big business is and always has been the primary beneficiary of the patent system. The cries we hear now are not those of innocents “victimized” by an unfair system. Rather, they are the cries of those who don’t like finding out they’re expected to follow the laws and live under the same system they have mostly created themselves. Some call that unfair. Others call that justice.”

Online Business Intelligence Resource Guide Available

An Internet MiniGuide, released 04-26-05, titled “Business Intelligence Online Resources,” is a 23 page research paper listing selected resources for online business intelligence, and is available via this post from Marcus P. Zillman, M.S., A.M.H.A. Author/Speaker/Consultant.

Trade Dress Better Protection for Computer Graphical User Interfaces

“Trade dress law is better suited to protect computer graphical user interfaces than copyright law. In order to secure and enforce trade dress rights, three requirements must be met.

First, the trade dress must be either inherently distinctive or have acquired secondary meaning. Second, there must be a likelihood of confusion with a competitor’s interface. Third, the trade dress must be nonfunctional.

Each of these requirements present unique obstacles that must be overcome. Functionality is the most significant obstacle, and actions outlined in this paper can maximize the likelihood of obtaining trade dress protection for interfaces.”

Read more in this article by John P. Musone for the University of Richmond Law Review.

Introduction to Hostile Takeovers

From PLI’s Course Handbook on Contests for Corporate Control 2005: Current Offensive & Defensive Strategies in M&A Transactions #5836 comes:

INTRODUCTION TO HOSTILE TAKEOVERS by Meredith M. Brown, Paul S. Bird and William D. Regner of Debevoise & Plimpton LLP.

Via this InhouseBlog post.

Compliance with CA Privacy Laws Requires Attention

“The California state legislature has already enacted more than a dozen laws that regulate how businesses, universities and other organizations that collect personal information on California residents must manage private data. And that’s just the beginning…

Like a large hurricane sweeping in off the Pacific, these laws will wreak havoc on all kinds of business processes, including how websites can collect personal data and the management of databases that store personal information on customers. They will influence how companies share personal data with third parties and restrict their ability to contact consumers via cell phones and faxes. State lawmakers are also considering laws that could affect how your company outsources services that handle personal information.

And keep in mind: Any company that sells a product or service to a California resident, even if the company is based outside the state, may be affected. Just having a website that a California resident visits—and one out of 10 Americans lives in California—can put you under the jurisdiction of these laws…

Many CIOs whose companies do business in California may think they are in compliance with some of these laws. But they would be wrong. For example, executives may assume they are in compliance with the law requiring a privacy notice on their corporate website that states clearly what personal information is being gathered on browsers. However, as many as 80 percent of the privacy policies at corporate sites are out of compliance, according to the Ponemon Institute, which conducted a survey of up to 500 randomly selected websites…”

Read more in this article from CIO Magazine.

IP Allocation Strategies in Joint Ventures

“The term “joint venture” is commonly used to mean “an association of economically independent business entities . . . for a common commercial purpose of defined scope and duration, by contract or in the form of a new business entity, and by means of which the [v]enturers pool resources and share risks, rewards and control.” Typically, each joint venturer contributes a unique attribute (e.g., technology, capital, management expertise, or product distribution and marketing) toward a shared common objective and acceptance of risk. Other terms that are commonly used to describe joint ventures include “strategic alliance,” and “partnership.”

This paper examines issues of intellectual property strategy for those joint ventures (or “JVs”) in which the development or acquisition of intellectual property rights (“IP”) is contemplated. This paper presents an analysis of the relevant considerations for forming, administering and unwinding the IP-related aspects of the JV.”

Via this EEJD Blog post.