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You know what I never heard squat about during my Biglaw days? Annual Operation Planning, aka AOP. Oh sure, I heard plenty about boosting my billable hours while simultaneously being expected to keep the tab down on fixed-fee matters, but AOP was not a thing. Which in retrospect, was great, because I’m now convinced that AOP is a special circle of hell reserved for betrayers, heretics, and in-house counsel.

Look, I’m not anti-planning. I’m a huge advocate of it. And I can see why it would be useful to plan for events that need to happen in order to achieve goals and objectives (in other words, set in motion certain actions that will ultimately determine my bonus. Cool, cool, cool). I’ll even go as far to say that I can appreciate why Finance feels the need to spend so much time analyzing each variance and miss during AOP. And then discussing it with us. Months later.

And even though I know it’s coming and what to expect, each year I dread the pre-AOP pep talk and the expression that I can only describe as “cat butt face” that Jake, my counterpart in Finance, will don when he comes to talk to me about how much I suck at AOP and how I need to do better.

Never mind that my AOP budget is impeccable in terms of my ability to plan for all of my known expenses: bar and professional membership fees, legal subscriptions, and conferences. Check, check, check. Why? Because all of those expenses are easily calculated and predictable. I need a license to practice. There is a fee associated with it. Ergo, bar fees line item.

But you know what’s not easily calculated or predictable? And makes Jake pull out his cat butt face?

MY OUTSIDE COUNSEL AND LITIGATION SPEND.

And why is that, Jake asks? Because I have no idea what hot mess my business partners are going to get into this year. And let me tell you, every year they are getting more and more creative with their hot messes. Maybe this is the year Stan the Man is finally going to see if that vendor means business about that MFN. Or maybe we’re headed for a courtroom brawl because Engineering just can’t resist the forbidden fruit and keeps hiring people subject to non-competes.

Of course, that’s just the hot messes my business partners get into. Then there’s the shit storms that the outside world visits upon us. I’m not entirely sure Jake is aware of this fact, but we do make products that we sell to the general public. And while those products are labeled with clear and coherent warnings (if I do say so myself), no one actually expects the general public to read them or behave in a clear and coherent manner. Inevitably, some goober will decide to put our METAL product into a microwave and press on. Or submerge our NOT AT ALL WATERPROOF product in liquid and then press on. And as one can imagine, bad, expensive things follow.

Products liability aside, there’s also the issue of that enterprising and opportunistic crew (I’m not calling out patent trolls here…no wait, I’m totally calling out patent trolls here) that pick the issue du jour and hit us up for stupid gotcha money. For the umpteenth year in a row, I explain to Jake that frivolous lawsuits do not just go away like a bad Tinder swipe. It takes time, eDiscovery, and vaguely threatening letters to make these bottom feeders go away. And sometimes you still have to shell out, not because these bottom feeders could find a legal argument with two hands and a flashlight, but because it’s cheaper to just pay them to go away.

So when I tell Jake I’m doing my best to look at the past trends of our legal spend and trying to make smart guesses about where future suits will come from, I mean, I am in fact doing my effing best to put a number on the unknown. I don’t just pick this number out of a hat. It’s not like I’m in Sales. Okay, maybe it’s a little like Sales. I do pick out a semi-reasonable number … and then inflate it by a factor of three. But that’s only to protect us in the event that this is the year for bet-the-company litigation, as in, all bets are off, I have no idea how much it would cost to pull us out of whatever hole we’re in.

Jake calls this puffing up the numbers. When he says this, he puts on his cat butt face to make sure I understand that we cannot puff up the numbers. But I also cannot be under on my estimates either, Jake informs me. Because then I’ll be over my imaginary AOP number. And let’s be serious, it’s imaginary, a guideline at best, because if we do find ourselves in bet-the-company territory, you better believe our board will greenlight every dollar we need to right the ship.

But I don’t say any of that last bit to Jake. Because gloating about a potential company disaster isn’t a good look on anyone. No, that’s not it. It’s that I can accept that as a denizen of Finance, Jake deals in black-and-white absolutes, while I live squarely in the mists of the ever-shifting gray. And although AOP will always be this imperfect, unsatisfying process for both of us, it does somehow reflect the reality of the situation by providing for not only those black-and-white items we know about, but the gray unknown we can’t predict. Of course, if I try and point that out to Jake, you know the face he’s going to make.

It might be worth it.

Kay Thrace (not her real name) is a harried in-house counsel at a well-known company that everyone loves to hate. When not scuffing dirt on the sacrosanct line between business and the law, Kay enjoys pub trivia domination and eradicating incorrect usage of the Oxford comma. You can contact her by email at KayThraceATL@gmail.com or follow her on Twitter @KayThrace.

What happens when a female general counsel in Texas allegedly has her buttocks grabbed in a courthouse? Unfortunately, the answer is not much, and the woman in question is understandably upset about it.

Michelle Acosta is the general counsel of a Houston vegetation management company, but it was following an appearance on behalf of her brother in a child custody matter when family law solo practitioner Allan Manka allegedly touched Acosta without her consent. “He gets a handful of my rear end and squeezed. It wasn’t like a pat: It was a grab and squeeze,” she said. “It really caught me off-guard.”

Here’s a relevant excerpt from the criminal complaint Acosta filed against Manka:

Manka pleaded not guilty, but leader accepted a plea deal under which he will pay a $400 fine and donate $100 to a children’s services nonprofit. He must also complete 90 days of deferred disposition, refrain from all criminal conduct to avoid the charge appearing on his record. Acosta is completely unsatisfied with how the situation was resolved, and posted at length about her experience with Manka on Facebook:

Texas Lawyer has more information on why Manka was offered the plea deal:

Wilson County Attorney Tom Caldwell said Manka’s charge was a Class C misdemeanor, the same level as a traffic ticket, which carries a maximum fine of $500 and no jail time. It’s normal for first-time offenders to receive deferred disposition, he added.

“From a criminal standpoint, from what I’ve seen, it was simple assault. It definitely wasn’t going to rise to something we could charge more severely,” Caldwell said.

“I want a conviction,” Acosta said in an interview with Texas Lawyer. “Giving him deferred adjudication is a small slap on the wrist.”

Female GC Fuming After Plea Deal for Lawyer Who Allegedly Grabbed Her Buttocks [Texas Lawyer]

Staci Zaretsky is a senior editor at Above the Law, where she’s worked since 2011. She’d love to hear from you, so please feel free to email her with any tips, questions, comments, or critiques. You can follow her on Twitter or connect with her on LinkedIn.

When it comes to discussion of interesting IP cases, The Fashion Law blog is hard to top. Rarely do I visit the blog without finding at least one recent article well worth the time to read. Last week, I saw an article on the $100mm+ verdict in Liqwd Inc. v. L’Oreal USA Inc., 1:17-cv-00014 (D. Del.), one of the biggest IP verdicts of the year so far. I will commend you to the article for the factual background of the case, as well as the case docket for more details on the verdict. For purposes of this column, however, I want to focus on what we can learn from Olaplex’s “David v. Goliath win (as characterized by the Fashion Law)” over cosmetics giant L’Oreal. Yes, the decision will be appealed and the case can settle at anytime. In the meantime, it is good for us to think about how Olaplex navigated its way to a huge jury verdict, and what lessons other IP “David’s” can learn going forward from Olaplex’s experience.

First, the decision illustrates the importance of monitoring companies that were once counterparties to a non-disclosure agreement. Such agreements are commonplace where actual or prospective IP issues are discussed between companies. Post-discussion monitoring, however, can lean towards the sporadic. Which can lead to missed opportunities, or at least delay, in bringing viable claims for breach when such claims arise. It is a good practice, therefore, for at least someone at the client (or at the law firm that handled drafting of the NDA) to set a reminder to monitor any counterparties for any breaches down the road. Best to keep in mind that any such breach may take some time to develop — sometimes years later — further putting a premium on someone (whether the client or lawyer) taking responsibility for this important task. 

It is important to keep in mind that the difficulty of monitoring NDA compliance can vary widely. Olaplex, for example, had a relatively easy time noticing L’Oreal’s breach. It met with L’Oreal in May 2015 and saw talks break off relatively quickly, followed by L’Oreal allegedly breaching the NDA by releasing copycat products less than a year later. (As the verdict shows, despite L’Oreal’s protestations, the jury found found in Olaplex’s favor.) Keep in mind that a single product line company like Olaplex will have an easier time policing breaches than a company with a more varied lineup of product offerings. On the flip side, if the disclosed technology relates to only one function or feature of a competitor’s product, it may be harder to police NDA breaches without careful monitoring. Either way, it is well worth it for companies and their lawyers to recommit to checking up with companies that have been a counterparty to an NDA. For Olaplex, demonstrating the NDA breach was worth over $20mm in the jury’s verdict, just as much as L’Oreal’s damages for trade secret misappropriation — and breach of contract is usually easier to prove than IP claims, to boot.

Second, Olaplex’s win should remind us of the value of “layering” IP claims, especially when a case has compelling facts that also have jury appeal. Here, Olaplex was able to successfully integrate its claims for trade secret misappropriation, breach of contract, and patent infringement into a cohesive whole at trial — benefiting from a larger overall verdict as a result. In particular, the marrying of a breach of contract claim into the narrative of L’Oreal acting badly was likely a powerful addition to the IP infringement claims. Trials are morality plays — the more substantiated claims of improper behavior by a defendant, the more likely a jury is to administer a comprehensive punishment. “Davids” like Olaplex would always do well to consider including as many different types of claims as possible when confronting a larger adversary. You never know which claims are going to resonate with a jury, for one. And considering how difficult it is to win on even simple IP claims, if you can find a more general non-IP claim to layer in, all the better.

Third, this case is a poster child for the value of seeking patent protection as early as possible in a company’s life cycle. Here, Olaplex was able to parlay its unpublished patent application into entering an NDA with L’Oreal, leading to the chain of events culminating in the jury verdict. Had Olaplex not had an application on file, it is reasonable to assume that L’Oreal may have balked at entering into an NDA before discussions — common practice among large corporations, which often leverage their size into demanding either no NDA (or one-sided NDA terms) before talking to startups. Olaplex’s patent application helped shift that balance of power at the critical early moment of the company’s first contact with L’Oreal. Furthermore, Olaplex’s commitment to seeing that application and others to patent issuance helped give rise to its future patent infringement claim — a claim that led to significant portion of the verdict it received at trial. At bottom, investing in IP is critical for would-be “Davids,” irrespective of how difficult the patent environment is reported as being at any given point in time.

Ultimately, verdicts like the one in Liqwd are potent reminders of the power of IP rights to give a fighting chance to upstart innovators forced to take on a larger adversary in a court of law. It also reminds would-be infringers, especially willful ones, that there are consequences to disrespecting the rights of smaller innovators. Whether this verdict stands up on appeal is an open question. But it has already provided some strategies for litigation success that erstwhile IP “Davids” can think about, while hoping that their own IP victories remain in slingshot range.

Please feel free to send comments or questions to me at gkroub@kskiplaw.com or via Twitter: @gkroub. Any topic suggestions or thoughts are most welcome.

Gaston Kroub lives in Brooklyn and is a founding partner of Kroub, Silbersher & Kolmykov PLLC, an intellectual property litigation boutique, and Markman Advisors LLC, a leading consultancy on patent issues for the investment community. Gaston’s practice focuses on intellectual property litigation and related counseling, with a strong focus on patent matters. You can reach him at gkroub@kskiplaw.com or follow him on Twitter: @gkroub.

* Law firm expenses outpaced revenue for the first half of 2019 and there’s no way that’s going to come back and haunt us. [American Lawyer]

* The DOJ is siding with Led Zeppelin in the Stairway to Heaven copyright fight. Good to know this DOJ has everything else under control. [Rolling Stone]

* California has a new law that says police should only kill when “necessary” and consider the kind of dystopian world we live in where this needed to be spelled out in a law. [NPR]

* Barr announces new BOP head to exploit Epstein’s death for the sake of some boondoggle in prison spending. [Courthouse News Service]

* The NRA tried to insert itself into Oliver North’s deposition in an act of stunning chutzpah. They got denied. [Law360]

* A follow-up on law student’s suicide and his family’s efforts to help others. [Good Men Project]

* CFTC faces scrutiny for “being honest.” [National Law Journal]

President Emmerson Mnangagwa was elected a year ago on a pro-reform ticket, promising a break with the political repression that characterised Robert Mugabe’s 37-year rule and an economic upturn.

But the economy is mired in its worst crisis in a decade, and security forces have used strong-arm tactics to snuff out three attempts by the main opposition Movement for Democratic Change (MDC) to hold street demonstrations since Friday.

“There is a determined effort by the regime to ensure that there is no more democratic space,” MDC national spokesman Daniel Molokele said.

“They are also deploying a lot of military and police in the streets… It clearly shows that the new government is even worse than that of Robert Mugabe.”

Tuesday’s heavy security deployment was in the central city of Gweru, where police – who had banned the march on Monday night – patrolled on foot and in lorries and cordoned off a university, a local journalist told Reuters.

The MDC said it would challenge the ban in court on Tuesday. The party failed to overturn two previous bans on marches in the capital Harare on Friday – where police rounded up MDC followers and dispersed them with batons and water cannon and tear gas – and in the second city Bulawayo on Monday.

In the days before the planned Harare demonstration, six political activists were abducted from their homes at night and beaten by armed men, rights groups say.

They also say the government has this year levied subversion charges against at least 24 activists and opposition leaders, the highest number in a single year.

The MDC says the protest bans are unconstitutional, while police said they have had evidence the protests would turn violent and did not have enough manpower to monitor them.

Bulawayo saw massive looting and destruction of property in January as protests against a steep rise in the price of fuel turned violent, triggering an army crackdown that killed more than a dozen people.

Those deaths set a question mark against the 76-year-old president’s pledge to end the Mugabe-era repression – which the bans of recent days have further undermined.

“The move to ban demonstrations predicated on a spurious assertion that the opposition is plotting violent regime change, is not sustainable,” said analyst Piers Pigou, Crisis Group’s senior consultant for southern Africa.

“…This is contrary to the precepts of a “new administration” that President Mnangagwa and his team want to sell to the world.

The president, who served as a Mugabe aide over four decades, is also struggling to make good on promises that austerity-driven reforms will revive the economy, as popular anger mounts over triple-digit inflation, rolling power cuts and shortages of U.S. dollars, fuel and bread.

The crisis has revived memories of the hyperinflation of a decade ago that forced Zimbabwe to ditch its currency.

Post published in: Featured

The return to a fully fledged local currency exchangeable outside the country’s borders will be backed by an undisclosed amount of foreign-exchange reserves, gold and loans, Finance Minister Mthuli Ncube said in an interview on August 15 in the capital, Harare.

A Treasury spokesman on Monday said it first needed to compile data on the country’s reserves before commenting on how much foreign exchange would be used to back the new currency.

“We already have our own local currency, but this will be the first Zimbabwe dollar notes which will trade at parity to the bond notes,” Ncube said.

The southern African nation abandoned the Zimbabwe dollar in 2009, after a bout of hyperinflation, in favor of a basket of currencies including the US dollar and the rand. In a bid to deal with the subsequent cash shortages, it introduced so-called bond notes, and RTGS$ in their electronic form, which aren’t accepted outside the country.

Ncube reintroduced the Zimbabwe dollar in June, accompanied by a ban on the use of foreign currencies. This led to a rapid erosion of spending power with the local dollar trading at almost 10 to the greenback. Bond notes were officially said to be at parity as recently as February.

Post published in: Business

Phelekezela Mphoko, 79, who served under long-time ruler Robert Mugabe, was due at the police in Bulawayo, the country’s second city, to record a statement on the allegations.

But he drove off as soon as officials from the Zimbabwe Anti-Corruption Commission (ZACC) approached his car.

“We had agreed to meet at the police post at the magistrate’s court to record a warned-and- cautioned statement and have his fingerprints taken but when our officials approached his car, he drove away at high speed,” ZACC spokesperson John Makamure told AFP.

“He is now a fugitive from justice,” the spokesperson said, facing accusations of ordering the release from police custody of a chief executive officer and a non-executive director of the state-run roads authority.

Mphoko was, along with current president Emmerson Mnangagwa, one of two vice presidents at the time of the ouster by the military of Mugabe in November 2017.

He left the country as the coup unfolded but later returned.

An attempt to arrest him by ZACC last week was blocked by his family.

ZACC tweeted Friday that it was “sad” that Mphoko had “refused to collaborate with the enforcement officers and unfortunate that he and those around him believe that they are above the law”.

Lawyer Zibusiso Ncube told AFP that they had an agreement with ZACC that on Monday he would sign a statement at the police “but when we got there they said they (the police) had instructions to detain him”.

“He drove away and is at home.”

The lawyer said the ex-vice president was prepared to appear in court to answer the charges, but “Mphoko claims he heard from impeccable sources that if he is detained, he will be injected with a poisonous substance”.

He is the second high ranking member of the ruling Zanu-PF party under probe by the recently reconstituted ZACC.

Prisca Mupfumira, who was fired as tourism minister earlier this month, became in July the first high profile official to be arrested and detained for alleged graft. She is still in remand prison after being denied bail.

Post published in: Featured

Nashville-based teledentistry company SmileDirectClub has filed paperwork to go public in what turned out to be a banner year for IPOs in digital health.

In its S-1, the company said it plans to go public on the Nasdaq under the ticker symbol “SDC.” The offering price and number of shares to be offered in their initial public sale have not yet been determined.

The company offers personalized 3-D printed clear aligners – essentially a form of transparent plastic braces – in a direct to consumer model that it touts as cheaper and more convenient than traditional options. Average treatment times for SmileDirectClub customers is six months.

SmileDirectClub, which was started in 2014, has raised nearly $450 million from investors including a $380 million round last year led by private equity firm Clayton, Dubilier & Rice that valued the company at $3.2 billion.

According to its S-1, the company has had over 700,000 individual customers and more than 300 physical retail locations offering services in the U.S., Canada, Australia and the U.K.

Among the company’s stated business advantages are a standard $1,895 pricing for its clear aligners, its mix of teledentistry and retail locations, its ability to sell to consumers who don’t have access to an orthodontist and SmilePay financing option.

SmileDirectClub employers more than 5,000 workers and has a provider network of licensed orthodontists and general dentists in all 50 U.S. states, Puerto Rico, Canada, Australia, and the U.K.

Financially the company grew revenues from $146 million to $423.2 million between 2017 and 2018, an increase of 190 percent.

Still, like many of the healthcare technology companies who have gone public this year, SmileDirectClub has seen increasing losses since its founding. From 2017 to 2018 net losses grew from $32.8 million to $74,8 million. For the first half of 2019 alone, the company saw $52.9 million in net losses.

According to its S-1, the company sees continuing opportunities for growth in continuing to expand its services in its existing markets and internationally, as well as broadening its offering of products past clear aligners to develop recurring revenue lines.

One of the company’s potential business risks, as outlined in its SEC filing is the growing backlash to its service from a number of dental and orthodontics groups.

The American Association of Orthodontists has filed complaints with 36 state dental boards, alleging that SmileDirectClub violates regulatory standards by bypassing standard visits and diagnostics to determine whether clear aligners are appropriate to use with patients.

According to the S-1, CEO and Chairman David Katzman, also the founder of investment firm Camelot Venture Group, will hold controlling voting power over the company.

Other large shareholders in the company include co-founders Jordan Katzman and Alex Fenkell, COO Steven Katzman and the private equity firm Clayton, Dubilier & Rice.

Photo: jxfzsy, Getty Images