Executive pay that is disproportionate to a company’s past performance may also signal that poor returns are coming, according to a study released by shareholder activist group As You Sow and reported by Reuters.

The California nonprofit claimed returns for the 100 S&P 500 companies it had identified as having the most questionable pay went on to underperform the index by 2.9 percentage points over a roughly two-year period ended on Jan. 31, writes Ross Kerber.

Among the chief executive officers it labeled as “overpaid” was Discovery Communications Inc. CEO David Zaslav, who received $32.4 million in 2015. During the study period, Discovery shares fell 12 percent.

Read the Reuters article.

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Above the Law has fleshed out earlier reporting about significant staff layoffs at K&L Gates, this time with fairly specific numbers of people who have lost their jobs with the big law firm.

Quoting one of his sources, David Lat reported: “The firm let go nearly 200 staff across the firm, including director levels in Human Resources and Marketing. IT was the hardest hit, but other departments, including Human Resources, Business Development, the paralegal group, and marketing, also saw large numbers let go.”

Another source confirmed that the number of staffers affected was in triple digits.

That source also said he or she knew of no attorneys who were included in the layoffs.

Read the Above the Law article.

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Healthlaw Publishing announces the upcoming release of Healthcare and the False Claims Act, 2016 Survey. Registration is available now for free downloading of the survey report.

Healthcare and the False Claims Act, 2016 Survey summarizes the important laws, regulations, pronouncements, and cases of the past year, to inform healthcare providers and healthcare attorneys on this crucial statute in the healthcare industry.

On Dec. 14, 2016, the United States Department of Justice announced the recovery of more than $4.7 billion in False Claims Act (“FCA”) settlements and judgments. It was the third-highest total in history, and more than $2.5 billion came from the healthcare industry. During the eight years of the Obama Administration, the Department of Justice recovered more than $31 billion in FCA settlements and judgments, taking more than $19.3 billion from healthcare providers and other participants in the healthcare industry.

2016 was a pivotal year for the FCA. It was the year of a tremendously important Supreme Court decision that could expose healthcare providers to whole new areas of FCA liability based upon state and federal regulations. The penalties were more than doubled to a minimum of more than $11,000 per claim and a maximum of more than $22,000 per claim, massively increasing both the risk of litigation and the likelihood of settling FCA cases even in the absence of wrongdoing. And it saw a new focus on the investigation and even the criminal indictment of individuals involved with entities sued under the FCA. 2016 also saw new regulations and new court interpretations of laws first put in place in 2009 and 2010 to turbocharge the FCA and encourage greater participation by whistleblowers.

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By Christopher Barnett
Scott & Scott LLP

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Software-compliance audits initiated by IBM can be extremely burdensome and time-consuming and can force companies to face challenges that are somewhat unique among major-publisher audits. For one example, a significant component of IBM’s business model is the acquisition of other software vendors and the integration of those vendors into IBM’s product portfolio, which can complicate the task of identifying the appropriate license metrics and entitlements owned. For another example, companies seeking to license IBM products based on processor resources in virtualized environments must use IBM’s License Metric Tool (ILMT) in order to avoid licensing the products based on the full capacity of the host infrastructure. The ILMT question can become a significant satellite issue to explore during an audit, and failure to demonstrate compliance can yield substantial licensing exposure.

However, once all of the data-collection and license-reconciliation tasks have been addressed, IBM’s auditors will generate a final audit report, and IBM will prepare a proposal to resolve the audit findings. At this stage, companies will need to turn their attention on structuring an appropriate settlement framework that definitively resolves all calculated license shortfalls as well as all, underlying licensing concerns that may have contributed to an imperfect outcome.

Here are some important subjects to keep in mind when negotiating the resolution with IBM:

• Fair Purchasing Options

IBM’s default audit resolution typically will incorporate a requirement to purchase licenses equal in kind and quantity to any license shortfalls calculated during the audit. Thus, if a company was found to be over-deployed for WebSphere Application Server (WAS) by 1,000 Processor Value Units (PVUs), IBM will require the company to purchase 1,000 PVU license for WAS. In addition, IBM also usually will require the company to purchase two years of retroactive support for the shortfall license quantity. However, there often are a number of opportunities to maximize the value of the audit resolution:

(1) Minimize Retroactive Support.

If the company can demonstrate that product installations associated with license shortfalls were deployed within the two years prior to the audit, then that information should be discussed in order to reduce the amount demanded for retroactive support.

(2) Reduced or Compromise Purchase Quantities.

Audited companies should not hesitate to request compromises associated with inadvertent licensing shortfalls. For example, if a compliance problem resulted from the company’s failure to deploy and use ILMT, then the company should seek to reduce the number of licenses to be purchased for the product in question, provided either that the products are re-deployed or that ILMT is installed following settlement. These arguments sometimes are more compelling when the company can demonstrate unsuccessful attempts to satisfy the licensing requirements prior to the audit. Furthermore, they can be especially compelling when the company can demonstrate that IBM had an opportunity to advise the company regarding the compliance concern prior to the audit – and failed to do so – or that IBM had an affirmative obligation to satisfy the licensing requirement (such as through a statement of work for implementation services).

(3) Substitute Products & Services.

Whenever a quantity of licenses included in an audit settlement demand would address calculated shortfalls without providing prospective value to the company (for example, because the software either can be re-deployed or uninstalled following settlement), the audited company should seek to substitute those purchase quantities with alternative purchases consistent with the company’s go-forward needs. This approach typically is easiest for IBM to accommodate when licenses for one product are to be substituted with licenses for another product that was not found to be a compliance problem during the audit. IBM also has a strong desire to transition business to a cloud-services model, and it also may be willing to substitute those services in place of a perpetual-license demand. However, IBM’s hardware and professional-services offerings usually are not accepted as substitute purchases.

(4) Strategic Pricing Discounts.

Never underestimate the power of direct negotiations between business teams. IBM may be willing to offer further discounts if it perceives an opportunity to become a strategic vendor for the audited company. This can be especially true for companies willing to commit to subscription or other ongoing service-delivery relationships with IBM.

• Post-Settlement Compliance Obligations

Any product-specific compliance problems outside of license shortfalls that were identified during the audit need to be definitively resolved through the audit settlement.

The most obvious item falling within this category would be a prospective need to deploy ILMT. Large organizations especially may be unable to install and configure the tool quickly following settlement of an audit. Therefore, the audit close letter or settlement agreement needs to define the post-settlement ILMT deployment obligation, providing for sufficient time to complete the project. It also may be advisable to seek IBM’s commitment to support the ILMT implementation and to allow for additional time to complete the project, provided that the company has made reasonable progress toward completion.

Another item to keep in mind here would be any compliance concerns that may have resulted from IBM’s acquisition of a vendor from which the audited company previously may have purchased licenses. If there were any licensing allowances granted by that vendor prior to the acquisition, then the audit close letter should address whether and to what extent those allowances will be carried forward, either to facilitate the company’s continued use of pre-acquisition versions of the software in question, or to transition to post-acquisition versions of that software.

• Release, Forbearance and Other Legal Terms

Finally, it is critical to ensure that the audit settlement really is a complete settlement of all issues reviewed through the audit process. This means including a strong release of past liability in the audit close letter or settlement agreement that includes all audited products and business operations. It also means seeking a reasonable period of audit forbearance following the audit, so that the company has time to adjust its software-asset management procedures in preparation of the next licensing review. In addition, if any licenses need to be assigned from one organization to another within the company’s enterprise in order to ensure co-forward compliance, those issues also should be resolved with the audit settlement.

Yerra Solutions has selected Béatrix de Russé for the IP Hall of Fame.

A paper in Yerra’s People in IP series details how de Russé was able to transform a struggling IP department into a key driver of revenue for her company, elevating her to the executive committee of the major international corporation and qualifying her for the IP Hall of Fame.

The paper begins with de Russé writing:

Most IP people that I know just seem to fall into IP along the way. Well, I am no exception. Having graduated with Masters in English and Law, I accepted my first position as an attorney with Thomson CSF where I was in charge of drafting standard contracts for training foreign students to become qualified professionals in their countries’ factories.

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Hogan Lovells announces that Gregory C. Hill will join the firm’s corporate practice as a partner in the Houston office.

Hill focuses on representing clients on transactional matters including mergers and acquisitions, capital investment and fund formation. He works with private equity funds, as well as private and public companies on acquisitions, dispositions, mergers, joint ventures, and fund raising activities. Hill also has experience representing companies in agricultural, financial services, technology, and waste/recycling and renewable sectors, the firm said in a release.

The release continues:

“Texas is a prominent market for energy, cross-border and other significant transactions. Greg’s practice is a natural complement to the firm’s capabilities, both in the region and globally,” said David Gibbons, Hogan Lovells’ Global Corporate Practice leader, “He is a well-established and respected corporate lawyer in Houston, who will be able to utilize the firm’s platform to enhance the value and services we provide for clients.”

In addition to his transactional practice, Hill represents boards, audit committees and special committees on matters related to conflict of interest transactions and internal investigations. He has an in-depth knowledge of the Foreign Corrupt Practices Act, the Office of Foreign Assets Control, and general financial fraud issues.

“Greg’s versatile experience in complex transactions and governance matters will contribute significantly to the development and growth of our footprint in Houston,” said Bruce Oakley, Managing Partner of the firm’s Houston office. “His arrival exemplifies the strategic investment the firm is making in the market. We have tripled our headcount since 2014 and look forward to Greg playing a leading role in the continued expansion of our transactional practice as we move to our office space in the new 609 Main building.”

Prior to joining Hogan Lovells Hill was a partner in Locke Lord’s Houston office where he chaired the firm’s corporate governance practice. He earned his J.D. from Vanderbilt University School of Law and his B.A. in Political Science, cum laude, from Texas Christian University.

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Hugh Marbury, a partner in DLA Piper’s Baltimore Litigation practice, has joined the Members Consultative Group for the American Law Institute’s Restatement of Copyright law project. The Restatement strives for clear formulations of common law and its statutory elements and reflects the law as it presently stands or might appropriately be stated by a court. Marbury joins approximately 60 top intellectual property practitioners, professors and judges from around the country to contribute to this important scholarly work.

Founded in 1923, ALI is the nation’s leading independent organization that produces citable clarification and modernization of the law. The Copyright project is expected to include 11 chapters, including: General Principles; Subject Matter and Standards; Scope of Protection; Ownership; Duration; Formalities; Rights and Limitations; Infringement; Secondary Liability; Remedies; and Copyright Protection and Management Systems.

Marbury’s business litigation practice focuses on complex financial transactions and commercial disputes. His intellectual property litigation practice includes patent, trademark, copyright and trade secret litigation. He was first elected to be a member of ALI in 2009.

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A client alert from Cowan Liebowitz & Latman discusses two recent developments conveying similar messages regarding the need to maintain supporting evidence at both the trademark application and registration stages.

According to the report by William M. Borchard and Vanessa P. Costantini, “if you file an application alleging an intention to use the mark in commerce, you may be required to support that allegation if it is challenged in an opposition, cancellation or infringement proceeding.”

They added that the United States Patent and Trademark Office may now require proof of the actual use of the mark in connection with all of the goods and services listed in the trademark application or registration.

Read the article.

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Navex Global will present a complimentary webinar titled “Managing Workplace Harassment: Trends and Objectives under the New Administration” on Wednesday, Feb. 22. The event will begin at 9 a.m. Pacific time/noon Eastern time.

On its website, Navex says incidents of prejudice and discrimination are increasing in today’s polarized society—including harassment in the workplace. How do you mitigate this risk while tensions continue to flare?

Join this webinar to hear:

• What actions constitute discrimination in the workplace
• How to manage workplace harassment
• Appropriate disciplinary measures

Navex also will share strategies for developing training plans for all levels of employment to minimize and avoid workplace harassment from the top down.

Register for the webinar.

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Exterro has published an e-discovery guide examining must-have and new data collection best practices, which will empower a legal team to create streamlined and cost-saving data collection policies.

The guide is available for free downloading.

The guide includes:

• 19 pages of best practices and innovative, new data collection/processing tips from e-discovery experts.
• 6 chapters on everything you need to know about e-discovery data collections/processings.
• 1 checklist to ensure you are creating an effective, proportional collection process.

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Zapproved has published its new 2017 In-House E-Discovery Data Processing Benchmark Report, detailing the most satisfying and concerning aspects affecting data processing for e-discovery.

These insights can offer a roadmap to create better, more efficient data processing and review approaches in the year ahead, the company said on its website.

Each year, Zapproved produces a report on the the state of in-house e-discovery, based on a short survey. Participants include a range of in-house e-discovery professionals, from IT personnel to legal operations staff. The 2017 In-House E-Discovery Data Processing Benchmark Report reveals participant satisfaction with data processing speed, cost, ease of use, security and risk reduction. These attributes are correlated with business criteria, such as case types, matter sizes, data sources and future trends.

The resulting report illustrates what really impacts data processing decisions today and how to plan for the future.

It covers:

• What most influences speed, cost, ease of use, security and risk reduction
• When to use in-house versus external solutions
• Why spending more in-house can make sense
• Which data sources are the next big trend

Download the study findings.

Some of the  potential benefits of the U.S. House would give companies more incentive to keep jobs in the United States and less to overextend themselves on borrowed money, points out The New York Times.

And there could be big vast savings by reducing what companies spend on tax lawyers, who help them game the current system, writes Neil Irwin.

“Yet these changes could also set off a cascade of more harmful effects. The plan could shift trillions of dollars of wealth from Americans to foreigners; set off an emerging markets financial crisis; wreak havoc in global oil markets; and cause sustained harm to the American higher education and tourism industries (including, as it happens, luxury hotels with President Trump’s name on them),” Irwin writes.

He goes on to discuss effects on the value of the U.S. dollar by the proposed destination-based cash flow tax and its “border adjustment.”

Read the NYT article.

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Tolling agreements are a common feature of the energy industry. Through these agreements, a buyer will supply fuel to an electric generator and, in return, the generator will provide power back to the buyer, according to an article posted on the website of Hogan Lovells.

But a court recent ruled that such a tolling agreement, when entered into between companies that intended to merge, violated the Hart-Scott-Rodino Antitrust Improvements Act of 1976, leading to the imposition of significant financial penalties against the buyer.

“Parties that have or may have an interest in acquiring the other party to the agreement must be careful to avoid assuming beneficial ownership of the target before complying with the HSR Act’s reporting requirements if HSR notification would be required,” the article says. “Failure to do so may result in the tolling agreement being construed as evidence of gun-jumping and the acquiring person being subject to significant penalties of up to $40,654 per day for noncompliance.”

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Dylan O. Adams, a senior patent attorney and author of “Patents Demystified: An Insider’s Guide to Protecting Ideas and Inventions,” presents an on-demand webinar on patent protection.

The complimentary 53-minute video is available at BrightTalk.com.

Adams has experience with U.S. and foreign patents in a wide variety of technology fields, including software, computer hardware and biotechnology.

This webinar explores which patent protection strategy best fits a company’s business goals, both short and long-term. It also covers best practices on how to work with patent attorneys to craft the strategy that fits current and future budget constraints, and how to leverage patent assets and derive the most value from them.

Watch the on-demand video.

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Management’s standard response when an employee says they’re leaving the company is to walk that worker out the door immediately. But James Pooley writes on Orrick, Herrington & Sutcliffe LLP‘s website that the standard approach could put confidential information at risk.

“When you first learn of a departure, you are engaged in triage with two parallel priorities: find out what’s going on, and lock down the evidence,” he advises. “In most circumstances that may give you time for an initial meeting to get some details and perhaps try to turn the situation around. But you also have to be ready immediately to take actions that guarantee you get control over your data.”

Pooley provides a detailed exit interview checklist that covers possession of data and any restrictive agreements that will govern the departing employee’s behavior in his new job.

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The Ninth Circuit, in an unpublished opinion, has found that a contract, and therefore an arbitration clause within it, was unenforceable due to fraud in the inception, despite the fact that both parties had ample opportunity to review the contract in its entirety, reports Reinsurance Focus, a publication of Carlton Fields Jorden Burt, P.A.

“This result was required, the court found, because, assuming the allegations of the complaint to be true, the plaintiff did not know that by signing the contract it was agreeing to be a victim of defendants’ scheme,” writes Jason Brost.

The court cited a California Court of Appeals decision for the proposition that it was enough that defendants, as the party drafting the contract, drafted the contract “‘in such a way as to not apprise’ the other party of its intentions.”

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In a pun-laden opinion, the Eleventh Circuit Court of Appeals affirmed a district court’s ruling that the Kardashian sisters Kim, Kourtney and Khloe could not rely on the doctrine of equitable estoppel to compel plaintiff Kroma Makeup EU, LLC to arbitrate its claims, reports TheTMCA.com.

Those claims involved allegations of trademark infringement and tortious interference with contract.

As the court put it, “there is a wrinkle in this case:  the arbitration clause which the non-party to the agreement is seeking to enforce is explicitly limited to disputes between the parties.”

TheTMCA.com reports:

The Eleventh Circuit first clarified that although federal law generally governs arbitration agreements, the “issue of whether a non-signatory to an agreement can use an arbitration clause in that agreement to force a signatory to arbitrate a dispute between them is controlled by state law,” and that the parties “agree that Florida law controls on that issue.”

Read the article.

Members of an invitation-only organization of top trial lawyers have singled out attorney Mark Lanier as its Trial Lawyer of the Year, while recognizing The Lanier Law Firm among the Top 25 most influential litigation firms in the United States.

Lanier accepted the awards at The National Trial Lawyers’ February 2017 Trial Lawyers Summit in South Beach, Florida. In addition, members elected Lanier to the position of president-elect of The National Trial Lawyers; he will serve as president in 2018.

“Lawyers have an awesome charge in our society today and an obligation to use our courts to provide individuals with a level playing field,” Lanier said. “I’m proud of the justice that our firm has been able to attain for our clients, and I’m honored that our efforts have been recognized by ours peers in this way.”

In a release, the firm said:

The national honors for Lanier individually and the firm as a whole follow a string of large, high-profile jury verdicts on behalf of individuals and business interests. Most recently, the firm secured a second significant jury verdict in multidistrict litigation (MDL) against Johnson & Johnson and its subsidiary DePuy Orthopedics for injuries caused by defective metal-on-metal hip implants. Jurors returned a verdict of more than $1 billion for six patients who were injured by the defective DePuy implant in December 2016. A fourth MDL bellwether trial, which will involve 10 patients, has been scheduled by U.S. District Judge Ed Kinkeade in Dallas for September 2017.

The National Trial Lawyers summit included guest speakers addressing legal and business trends and a keynote address by NFL legend Joe Montana.

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The only large U.S. law firm in the country dedicated solely to immigration work is in crisis management mode in the wake of President Donald Trump’s immigration order, reports Bloomberg Law.

Blake Chisam, chief audit and privacy officer at Fragomen, Del Rey, Bernsen & Loewy, said the firm has started using two telephone briefings every day to alert partners about administrative issues, news updates, unsettled legal issues and upcoming risks. The firm has about 550 lawyers across the world, many of them gathering information as the situation unfolds.

The report says “Fragomen has helped clients draft letters to their board, briefed upset executives for meetings with the President, and even sued the Trump administration on behalf of a CNN journalist detained at the Atlanta airport. The firm’s attorneys have also jumped in on a pro bono basis to help travelers, visa and green card holders facing deportation and uncertainty.”

Read the Bloomberg article.

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A federal judge blocked the $54 billion merger between health insurance giants Anthem and Cigna, saying the deal would increase prices and reduce competition, according to a report by The Washington Post.

Carolyn Y. Johnson reports that this ruling is the second recent court decision to uphold the Justice Department’s opposition to deals that would have consolidated the five largest insurers in the United States into three companies.

“The evidence has also shown that the merger is likely to result in higher prices, and that it will have other anticompetitive effects: it will eliminate the two firms’ vigorous competition against each other for national accounts, reduce the number of national carriers available to respond to solicitations in the future, and diminish the prospects for innovation in the market,” U.S. District Judge Amy Berman Jackson wrote in a 12-page order.

In the merger agreement, Anthem had agreed to pay Cigna a $1.85 billion termination fee if the deal is blocked because of regulatory interference.

Read the Washington Post article.

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