Contracts

District of Massachusetts Case Shows Challenges in Software Development Litigation

Custom software development agreements that go awry and end up in litigation are notoriously difficult cases.

The reasons for this (to name just a few) are the finger-pointing (“your fault, no yours”), the complexity, ambiguity or incompleteness of the functional/technical specifications, the presence of third-party developers or hardware vendors (who can also be blamed), and the obscure, technical nature of the cases, which make them distasteful to judges and dull to juries.

Massachusetts U.S District Court Judge Richard G. Stearns issued a rare decision in one of these disputes last week. The case, Liberty Bay v. Open Solutions, involved loan origination software developed under a standard, milestone payment-based License Agreement. After a four year development project plagued with difficulties the Client terminated the agreement and the software Vendor filed suit, seeking the balance owed under the license agreement. The Client, for its part, wanted a refund of monies paid and additional consequential damages.… Read the full article

Online Agreements - Easy To Get Right, Easy To Get Wrong

It’s easy to create an enforceable online “click-wrap” agreement.  But, as two recent cases remind us, it’s also easy to do it wrong.  Two recent cases are a reminder of this.

In the first case, In re Zappos.com Security Breach Litigation, Zappos was sued in connection with a large data security breach. Responding to the predictable class action lawsuit, Zappos argued that the plaintiffs were required to arbitrate under Zappos’ online user agreement. However, Zappos didn’t have a ‘user agreement,” it only had terms and conditions.  And, it did not require purchasers to “click through” to indicate acceptance of those terms.  The terms, which included the arbitration requirement, were under a link users were not even required to access while making a purchase, much less consent to. Quoting the court:

we cannot conclude that Plaintiffs ever viewed, let alone manifested assent to, the Terms of Use. The Terms of Use is inconspicuous, buried in the middle to bottom of every Zappos.com

Read the full article

A contract between a company and its supplier states that the supplier shall not “develop any other product derived from or based on” the company’s product.  Can the company enforce this provision against the supplier when the supplier develops a product that does not appropriate any trade secrets or novel features of the company’s product?

Not according to a decision of the First Circuit issued on September 4th.

Where the features of the product are well known in the art, and there has been no appropriation of novel features of the product, such a contract provision cannot be used to enjoin sales of the “derived” product: “a private contract may restrict copying of an idea that was not in the public domain at the time of contracting, but may not withdraw any idea from the public domain.”

Contour Design, Inc. v. Chance Mold Steel Co., Ltd. (1st Cir., Sept. 4, 2012)Read the full article

The Road Goes on Forever, But the Lawsuits Never End: ConnectU, Facebook, Their Entourages

The ConnectU/Facebook legal saga is truly astounding.  Imagine a mature Oak tree.  Now give the it properties of Kudzu vine (the “vine that ate the South”).  Each branch of this tree is another lawsuit involving ConnectU, Facebook, the principals, and their lawyers.

Now, a new branch has burst forth.  Wayne Chang has sued ConnectU and its lawyers in Superior Court Business Litigation Session in Suffolk County, Boston, claiming that Chang is entitled to as much as 50% of the value of the ConnectU/Facebook settlement (so called, since ConnectU has challenged the finality of the settlement).

You can read about the ConnectU/Facebook saga here, or wait until the movie comes out.

Here is the complaint in the Chang case, and apologies to Robert Earl Keen.

Chang v. Winklevoss Complaint Read the full article