DISH did win the case, but didn’t get the 10 figure outcome that company lawyers hoped for. Instead, after one day’s deliberation by the jury, NDS was ordered to pay $46.69 for reverse engineering one of DISH’s smart cards and $1,000 in punitive damages.

Both sides are calling this a victory. DISH says they won the case, which they did, but their legal fees clearly outweigh what they earned. And, let’s be honest, this is going to do zero damage to NDS’ credibility. NDS claims a victory because they don’t have to pay one billion dollars to DISH. As NDS attorney Richard Stone said after the jury’s verdict came in, “We’ve been completely vindicated on this whole lawsuit.”

The ban is based on concerns brought up by France’s General Secretariat for National Defense over two years ago after a study, released by France’s head of economic intelligence, claimed that Blackberries cause a security threat.

Research in Motion (RIM), maker of the Blackberry devices, believes their products are secure as “no one, including RIM, has the ability to view the content of any data communication sent using the BlackBerry Enterprise Solution,” the company said. Additionally, the device has been approved for official use by the UK, U.S., Australia, New Zealand, Austria, Canada and NATO.

Commentary: Despite the ban, there have been reports of French government officials using the device in secret. Vive la resistance.

Now the emails are posted on various sites around the web.

One key strategy that MediaDefender employs to combat illegal downloads is flooding various BitTorrent applications with phony material. However, the stolen emails also exposed some of MediaDefender’s less-scrupulous endeavors.

One such strategy was a fake pirate site called WiiVii.com that offered copyrighted files ready to download. As someone downloaded from that site, their IP address was saved in MediaDefender’s databases. Additionally, software was unknowingly installed on the user’s computer effectively turning it into a “zombie machine” helping to send fake files across file-sharing networks.

Commentary: There’s no real “good guy” in this situation. Yes, the emails were stolen, but they showed off some of the dirtier tactics employed by MediaDefender. Companies have started using progressive methods of fighting piracy and it’s inevitable that they’re going to have to do the same thing with online file sharing. All that money and effort fighting Napster early this century didn’t put a dent in peer-to-peer networks, or the new and improved methods of downloading files through BitTorrent.

At issue was that in trying to protect competitive secrets, court officials didn’t sufficiently “black out” redacted portions of the court filings – and thereby the information could still be read.

Among the inadvertent disclosures was that Whole Foods prohibits its suppliers from doing business directly with Wal-Mart as Whole Foods “wants Wal-Mart to have to go through distributors because that raises Wal-Mart’s costs.”

The Rocky Mountain News has the best piece on what was supposed to be secret.

Commentary: Someone needs to get a better black magic marker.

The most recent setback was a very embarrassing federal judge ruling last week that Qualcomm had knowingly failed to turn over thousands of relevant documents in a patent trial against Broadcom. Judge Rudi Brewster said that Qualcomm knowingly concealed the documents and ordered that the company pay all of Broadcom’s legal expenses as result. Lupin had written an apology letter to the judge back in April after Qualcomm’s outside counsel discovered documents the company hadn’t previously produced that revealed facts “inconsistent with certain arguments that we made on Qualcomm’s behalf.”

Commentary: Perhaps most interesting is how the stock price reacted… it went up by nearly 3%. With 1.67 billion Qualcomm shares outstanding, that translates into a $1.72 billion gain for investors. Maybe they should fire more people as it seems to be working! Not sure how sustainable that business model would be though.

Mr. Aguirre had been leading the SEC investigation into possible illegal insider trading by large hedge fund Pequot Capital that is run by Arthur J. Samberg.

Aguirre was fired after complaining that his superiors were interfering by improperly narrowing the scope of the investigation and preventing him from interviewing Morgan Stanley’s CEO John Mack (who allegedly could have been the source for some of the “inside information”).

Now, two years later, the congressional report agrees that the SEC bungled the investigation in a major way and that this resulted in a lost opportunity to broadly crack down on hedge fund insider trading. Here is an excerpt of the report:

“The investigation of Pequot Capital Management could have been an ideal opportunity for the S.E.C. to develop expertise and visibility into the operations of a major hedge fund while deterring institutional insider trading and market manipulation through vigorous enforcement…”

Pequot Capital originally came under SEC scrutiny in 2004 after stock exchange officials found up to 25 sets of highly suspicious trades made by the hedge fund prior to major announcements. The SEC closed the Pequot inquiry last fall without taking action against the fund or its management.

Commentary: To us, it has seemed that there has been something fishy in this case since the get-go. That being said, Morgan Stanley CEO John Mack is surely far too smart to be passing along privileged information to a hedge for insider trading purposes. Yet, it’s rare that an experienced and fairly senior government official risk everything like this in “whistleblowing” unless there is real merit to the case. The Congressional investigation report appears to agree.

Records show that Pequot MUST have been improperly trading on inside information and that the SEC lost a tremendous opportunity to prove and prosecute. Unfortunately, nothing will likely come out it at this point in time – which makes our regulatory system (in this case) look about as fair and just as something designed by Putin.

On a lighter note, wondering what the picture is? That’s an illustration of a Pequot village from the mid-1600s (remember: Pequot is an Native American tribe). Know what the Pequot tribe does today? They are the wealthiest tribe in the nation and their holdings include the popular Foxwoods Hotel and Casino in Mystic CT. Perhaps Samberg had ‘gambling’ on his mind when decide what to name his hedge fund. So far his gaming seems to be working.

In this latest settlement, CBM Environmental Services and its CEO will pay $350,000 for conspiring to rig bids for cleanup work associated with leaky underground petroleum tanks.

CBM is the eighth services firm to be implicated in the case, which started back in April 2003 when officials sued the firms after receiving uniformly suspiciously high bids to clean up tanks around the state in response to an RFP. Read more about it here.

Commentary: Not an earth-shattering case, but an interesting learning moment/vignette to share with employees. Obviously, it is not easy to get 8 firms to collude and have it be kept a secret.

Schetty, concerned that Rohm and Haas would steal Technic’s bid with Intel, convinced unnamed Technic and Amkor employees to sabotage Rohm and Haas’ test at an Amkor facility in the Philippines. Schetty is looking at a possible maximum sentence of 10 years in prison, 3 years probation and a $250,000 fine. He agreed to pay $15,536 in restitution to Rohm and Haas.

Read the full article.

Commentary: Talk about going to extremes to stop the competition. Schetty actually convinced Technic employees that it was ‘good business’ to destroy a rival’s product. Another example of how one employee can ruin an entire company (even their own).

Stora’s North American division is a subsidiary of the Finnish paper, packaging and forest products manufacturer Stora Enso Oyj.

To many, the decision by Stora Enso to fight the charges in court was a curious one for three reasons:

(1) the company’s alleged collusion partner, competitor UPM-Kymmene Corp. (also of Finland) had already taken advantage of a corporate leniency agreement and received amnesty through “tattling” on Stora Enso. This create a negative perception of assumptive guilt which would have to be overcome;

(2) Juries are generally more sympathetic to people, not corporations;

(3) DOJ’s Antitrust Division has a criminal prosecution winning record better than the 1927 Yankees (with 454 wins and 11 losses over the past 10 years).

Thank you to www.overlawyered.com for that last statistic. The website boasts an interesting analysis of this case called Fighting Collusion Through Collusion.

Commentary: A tip of the hat to David Rosenbloom, the national head of McDermott Will & Emery’s white-collar practice, who let his client take its chances in court (and successfully defended them), as that was an incredibly gutsy move.

Police confirmed the deaths which were caused when at least twenty billboards collapsed as heavy winds pounded different parts of the city…

Another massive-size billboard on Korangi Road fell on a rickshaw, injuring three persons. Eyewitnesses said that the billboard didn’t fall down right under its location but due to the high pressure of wind, it fell about 30 ft far away from where it was actually fixed…

The City District Government Karachi (CDGK) had banned oversized billboards for a year but allowed them following intense pressure from advertisers…

At the same time, citizens have expressed extreme annoyance with the city’s statement that has asked the citizens to stay in their homes. “I am sure no where in the world citizens have had experienced what we did today,” said one, adding that the citizens of this mega city feel threatened from the ‘mega’ hoardings that have covered the whole city like monsters who can kill anyone, anywhere, and anytime.

Commentary: Now that’s reporting (cover the whole city like monsters who can kill anyone, anywhere and anytime)! Hey Hollywood… see anything interesting here as a movie plot?

Sometimes we are just plain happy for simple things… like not living in Kararchi. Life is complex enough without having to worry about attacking billboards. On a serious note, the pressure from advertisers is real as the Pakistani economy has been on fire over the past few years (growing at nearly 10% annually) – in part due to the ‘global war on terror.’

To help protect its reputation, IBM announced this week that it was establishing a code of conduct to govern its more than 5,000 employees who have a presence (or “avatar”) on “Second Life” and other online universes.

IBM appears to be the first corporation to create rules governing virtual worlds- its guidelines address such things as protection of intellectual property, export controls (!), proper attire, and even sexual harassment and discrimination:

IBM strives to create a workplace that is free from discrimination or harassment and takes steps to remedy any such problems. External virtual worlds, however, are outside of IBM’s control. If you are in a virtual environment in conjunction with your work at IBM and you encounter behavior there that would not be acceptable inside IBM, the recommended approach is to ignore such behavior and to “walk away” or even sign out of the virtual world.

Commentary:Check out the full IBM net-world guidelines here.

Back in the Q2 edition of Ethisphere, we reviewed IBM’s “real world” code of conduct and were impressed – while this online code is not quite as good, they are the first corporation to have established one of its kind, which is impressive in its own right.

See the avatar in the picture up above? That’s the avatar of Sam Palmisano, the CEO of IBM. Other than dressing himself in the IBM blue, it looks like he grew about a foot and hit the gym… sure beats having to work out for real.

According to the Ontario Securities Commission, Shane Bashir Shuman, who worked in the IT department of MDS Sciex, improperly used knowledge of a pending takeover offer for Molecular Devices Corporation (based in California).

Susman learned about the takeover when he was asked by Sciex’s communications officer to help retrieve some documents after her computer crashed on January 23. This executive asked Shuman to search for any documents which included the code name of the transaction (“Monument”), but told him that the information in the emails was so sensitive that he should not view the document once it was recovered.

Six days later, the deal was announced and the stock of MDCC soared by 50%. This netted Shuman nearly $1 million on the 12,000 shares and 900 option contracts he had just purchased through an E-Trade account.

Commentary: Curiosity killed the cat… or at least is likely to put him in jail. Perhaps a simple training program in illegal insider trading could have prevented all of this.

The Commodity Futures Trading Commision filed a civil complaint against Brian Hunter, the former chief energy trader of the company, as well as Amaranth. Hunter earned over $100 million in 2005.

Read the full story.

Commentary: There is no planned jail time if Hunter is convicted. A monetary punishment may not be sufficient for him after his reported earnings of over $100 million.

Investigators found that between 1997 and 2003, the operators regularly exchanged information about new and canceled contracts and used this information to maintain their market shares and match commercial strategies.

While the Conseil did not find specific evidence of price fixing, it did consider that the exchange of information restricted competition by allowing the three operators to react to one another’s marketing strategies.

Commentary: One interesting element of this case is that regulators did not find specific proof of price-fixing, but simply inferred it from the other information that was exchanged – that information, in regulators’ minds, would have been enough to coordinate strategies on product services, offerings, billing practices (and thereby resultant pricing).

On the positive side, we can commend the French school system for its history curriculum – one of the handwritten documents unearthed in discovery referred to the practices as a “market-share Yalta” among the competitors which would “pacify the market” (a reference to the historic 1945 agreement between Russia, the U.K. and the U.S. to partition post-war Europe influence).

Medtronic has been facing approximately 2,000 claims over battery defects in the defibrillators which are potentially fatal and had tried to keep the settlement confidential. The corporation, however, did reserve the right to pull out of the agreement if 90% of claimants did accept it.

In the past Medtronic recalled 87,000 defibrillators because of battery failures – but said that no deaths were linked to any failures of the devices. Plaintiff lawyers contend that Medtronic officials, despite know of the defects, continued selling flawed products for two years after learning in 2003 about the battery-failure glitches.

Commentary: Medtronic is hardly the only company having trouble with defibrillators however. Guidant (now owned by Boston Scientific) did a 2005 recall of over 100,000 defibrillators (and like Medtronic, the plaintiff bar is arguing that the company knew of the defects but hid them to protect sales – but unlike Medtronic, the Guidant defibrillators were linked to at least seven deaths). Just two weeks ago, Guidant agreed to pay $195 million to settle roughly 4,000 claims (which probably set the dollar range and motivation behind this similar settlement). The third-largest heart device maker, St. Jude, also conducted a monster recall of 75,000 defibrillators in 2005.

Care to know an interesting (and spooky) thought? The St. Jude recall was in part due to battery failures resulting from interference from cosmic rays!!! Better call Dr. Spock.

The cases against Verizon allege that the company violated federal and local laws that restrict unsolicited faxed advertisements. The company has agreed to pay $625 per fax in addition to sums paid to the plaintiffs and their attorneys.

Commentary: Interestingly enough, the charges and settlement come two years after Verizon unsuccessfully petitioned that the Telephone Consumer Protection Act violated the First Amendment because it regulated commercial speech.

The problem?

A typo and proofing goof led to all 50,000 tickets declaring the ticket holder as the $1,000 grand prize winner when scratched off.

The general manager of the dealership, Jeff Kohn said that the dealership is “making a full-faith effort” to investigate the mistake, which he said is “not how we portray ourselves or our community.”

Commentary: As if the car dealership industry didn’t already have enough credibility problems with their marketing techniques. Move along people… not much to see (or learn from) here – but funny all the same.

A Montreal man, Olivier Dumoulin, had filed suit against Dell because the company refused to honor the lower prices for Axim handheld personal digital assistants on its Canadian website. The company had incorrectly listed the Axims for $89 and $118 when the real prices were $379 and $549 respectively. In 2004, the Quebec Superior Court granted Dumoulin and a consumer group class-action certification.

The Supreme court tossed the case because of a required arbitration clause on the Dell website.

Commentary: Dear Canadian Consumer: STOP TRYING TO EMULATE AMERICAN CONSUMERS AND OUR ENTHUSIASM FOR LAWSUITS. While the real reason for the dismissal was that the consumers were required to pursue arbitration (per a small print clause on the Dell website), we wished the court had tossed it due to it simply being “une bêtise.” Monsieur Dumoulin, Dell’s prices are low enough already and you have wasted a lot of people’s time and energy on this case. Move on.

According to the analysts, the warning they received from the Office Depot Investor Relations Department re-emphasized earlier alerts about the current business environment and soft spending by businesses. They also mentioned that the calls did not provide specific outlooks for sales and profits.

While lawyers say that the disclosure may go against the SEC’s Regulation FD, which is aimed at preventing selective disclosure of material information to analysts, Office Depot insiders insist that nothing material was disclosed. Even so, the hint was enough for most of the company’s analysts to cut their earnings estimates and for options traders to take positions that would pay off if Office Depot’s stock fell.

Commentary: This is nearly unbelievable that a company would do this in today’s environment. It has garnered surprisingly little press. The SEC appears to be sleeping through it too. And Office Depot is claiming that their calls with the analysts were routine? Then how do you explain that the stock dropped over 8% from $34.46 at close of business on June 21st (the day before they first started ‘tipping’ analysts) down to $31.81 on June 28th on stock trading volume that was nearly 4 TIMES AS HIGH AS NORMAL? This wiped more than $700 million off the market capitalization of the company.

Then the company finally announced in a June 29th filing with the SEC that it expected soft earnings. The stock dropped another couple percentage points after the announcement (when the rest of the world got the news), but that was only a fraction of the overall loss that had already occurred in the prior week.

The executives were originally convicted on conspiracy and fraud charges during a December 2006 trial.

In U.S. District Court for the District of New Hampshire, Judge Paul Barbadoro sentenced former Enterasys CFO Robert J. Gagalis to 11 1/2 years in prison. Bruce D. Kay, another former Enterasys finance executive, was sentenced to 9 1/2 years in prison. The prior week, former Enterasys accountant Robert G. Barber was sentenced to just over 8 years in prison.

Gagalis reportedly tried to stand up and read a statement, but broke into tears. His attorney ended up reading it for him, in which he apologized for his actions and especially regretted the “sorrow, pain and anxiety his actions caused to his three children and his wife.”

In levying the sentences, Judge Barbadoro said: “These kinds of crimes endanger our markets. It is vitally important to me that we do everything we can to protect the integrity of our markets.”

The case dates back to May 2004 when the executives were indicted over allegations that they had artificially inflated revenues between March 2000 and December 2001 as Entrasys became an independent spin-off from the computer computer networking company, Cabletron.

The defendants had backdated and falsified documents and concealed terms of business transactions from Enterasys’ auditors, including creating false revenue by secretly investing company funds in other companies and having those companies to use the investment proceeds to buy Enterasys products.

According to DOJ, the loss to public investors due to these shenanigans was $97 million.

Read more about the case and its background here.

Commentary: WOW… We are against fraud just as much as the next guy, but even us were stunned by the length of these sentences. And more fun in “The Barber’s” courtroom is yet to come – with the former CEO of Entrasys and several others still awaiting sentencing.

This case is based on accusations of former Morgan Stanley assistant against her boss, a broker in the bank’s Melville, Long Island office. As the NY Daily News reported last week:

In a suit filed in Manhattan Supreme Court yesterday, Lisa LaMacchia, 30, claimed Richard Dorfman sexually tormented her. And when she complained to higher-ups, she was ordered transferred and ultimately fired, the court papers charge.

Morgan Stanley spokeswoman Christy Pollak insisted the firm’s policy against sexual harassment is “strongly enforced.” [but] LaMacchia’s lawyer, Joseph Ranni, scoffed at the notion.

“This is how these guys operate,” he said. “Subordinates are just fair game, especially young women. And if managers think they can do things with impunity, they’re emboldened.”

The suit is the latest in a string of legal actions against Morgan Stanley that have highlighted boorish boys’ club behavior on Wall Street. The bank has shelled out $100 million to settle sex-bias suits from women who claim they were shortchanged or forced to endure raunchy office shenanigans.

The lawyer said the abuse his client endured was especially egregious in light of the tens of millions Morgan Stanley has paid to settle sex-bias suits. “It shows they don’t want to get it,” he said. “They don’t want to do a thing about it.”

Commentary: We left out all the lurid details, leaving readers to go to the NY Daily News to check it out for themselves. It’s hard to miss though – just look for the NY Daily News headline, “BOSS STOLE MY UNDIES EX-MORGAN STANLEY WORKERS SAYS.” Rather embarrassing considering that the The NY Daily News has only…1 million subscribers.

The French campaign group SOS Racisme brought the case against the Garnier division of L’Oréal over a marketing campaign where it sought saleswomen to demonstrate its Fructis Style shampoo line in supermarkets outside Paris.

At issue was a secret code that L’Oréal and Adecco had used in materials that detailed the desired profile of the sought-after workers: women should be 18 to 22 in age, of a certain size, and be “BBR.”

Prosecutors argued that “BBR” stand for for bleu, blanc and rouge: not only the colors of the French flag, but a common shorthand notation used by the far right Nationalist Front political party and employers to mean “white” French people – excluding those of North African, African and Asian backgrounds.

The Garnier division and Adecco were both fined €30,000. A former Adecco employee was given a three-month suspended jail sentence.

Commentary: Ouch, that’s going to leave a stain. This case is particularly interesting in that, while French culture has long been known for its racial undertones (overtones, in fact, as a recent employer survey in France found that three out of four firms preferred white workers), this is the first and only case of systemic discrimination against a major ‘blue-chip’ company within France. The fallout on this case has been limited to pockets within the EU and the news has not made it into any U.S. media outlets. However, as the spokesperson for SOS Racisme told the Guardian, “Consumers of L’Oréal products in the UK and the U.S. would be horrified to learn about the racial discrimination.”

The case also serves as a reminder that in today’s age of increased outsourcing of “non-core competencies” to third-party providers, a company is still liable for the agents of its agents – as in this case with Adecco. “Out of hands” or “out of sight” does not mean “out of potential trouble.”

The jury awarded $5.4 million in punitive damages and $600,000 in compensatory damages.

Tomao had alleged in the civil suit that after being assured for several years she would be converted to an Abbott employee once she proved herself, she was denied the opportunity after she was diagnosed with Lupus.

Reportedly, during an interview for the new position which entailed physical activity the interviewing manager told Tomao that “we’re all getting older and can’t do things we used to” and asked her if she could still “get out there and climb around anymore”.

Commentary: Regardless of the facts, it never looks good when a company that is supposed to be investing in medical treatments is found guilty of discriminating against someone due to a physical ailment or disease. A company such as Abbott should be extra-sensitive to such potential claims.