Cases
Case 1
Facts Mark Zuckerberg, Cameron Winklevoss, Tyler Winklevoss, and Divya Narendra were schoolmates at Harvard University. The Winklevoss twins, along with Narendra, started a company called ConnectU. They alleged that Zuckerberg stole their idea and created Facebook, and they filed a lawsuit against Facebook and Zuckerberg. The court ordered the parties to mediate their dispute. After a day of negotiations, the parties signed a handwritten, one-and-one-third-page “Term Sheet & Settlement Agreement.” In the agreement, the Winklevosses agreed to give up their claims in exchange for cash and Facebook stock. The Winklevosses were to receive $20 million in cash and $45 million in Facebook stock, valued at $36 per share. The parties stipulated that the settlement agreement was confidential and binding and “may be submitted into evidence to enforce it.” The agreement granted all parties mutual releases. The agreement stated that the Winklevosses represented and warranted that “they have no further right to assert against Facebook” and have “no further claims against Facebook and its related parties.” Facebook became an extremely successful social networking site, with its value exceeding over $30 billion at the time the next legal dispute arose. Subsequently, in a lawsuit, the Winklevosses brought claims against Facebook and Zuckerberg, alleging that Facebook and Zuckerberg had engaged in fraud at the time of forming the settlement agreement. The Winklevosses alleged that Facebook and Zuckerberg had misled them into believing that Facebook shares were worth $36 per share at the time of settlement, when in fact an internal Facebook document valued the stock at $8.88 per share for tax code purposes. The Winklevosses sought to rescind the settlement agreement. The U.S. district court enforced the settlement agreement. The Winklevosses appealed. Issue Is the settlement agreement enforceable? Language of the Court The Winklevosses are sophisticated parties who were locked in a contentious struggle over ownership rights in one of the world’s fastest-growing companies. They brought half-a-dozen lawyers to the mediation. When adversaries in a roughly equivalent bargaining position and with ready access to counsel sign an agreement to “establish a general peace,” we enforce the clear terms of the agreement. There are also very important policies that favor giving effect to agreements that put an end to the expensive and disruptive process of litigation. For whatever reason, the Winklevosses now want to back out. Like the district court, we see no basis for allowing them to do so. At some point, litigation must come to an end. That point has now been reached. Decision The U.S. court of appeals upheld the decision of the U.S. district court that enforced the settlement agreement. Critical Legal Thinking Questions Should the Winklevosses have had their claims of fraud decided by the court? Did anyone act unethically in this case?
Case 2
Facts The New York Yankees Partnership d/b/a/ The New York Yankees Baseball Club (Yankees) is among the world’s most recognized and followed sports teams, having won more than 20 World Series Championships and more than 30 American League pennants. The Yankees own the trademark for the NEW YORK YANKEES (Reg. No. 1,073,346), which was issued to the Yankees by the U.S. Patent and Trademark Office (PTO) on September 13, 1977. Moniker Online Services, Inc. (Moniker) registered the domain name. Moniker operated a commercial
website under this domain name where it offered links to third-party commercial websites that sell tickets to Yankees baseball games and sell merchandise bearing the NEW YORK YANKEES trademark without the Yankees’ permission. The Yankees filed a complaint with the National Arbitration Forum alleging that Moniker had registered the domain in bad faith in violation of the Internet Corporation for Assigned Names and Numbers (ICANN) Uniform Domain Dispute Resolution Policy and seeking to obtain the domain name from Moniker. Issue Did Moniker violate the ICANN’s Uniform Domain Dispute Resolution Policy (Policy)? Language of the Arbitrator Complaint has sufficiently demonstrated that Moniker’s domain name is confusingly similar to complainant’s NEW YORK YANKEES mark. There is no evidence in the record to suggest that Moniker is commonly known by the disputed domain name. Such use by Moniker is indicative of an intent to disrupt the business of the Yankees, and constitutes registration and use of the disputed domain name in bad faith. Decision The arbitrator held that Moniker violated the ICANN Policy and ordered that the domain name be transferred from Moniker to the Yankees. Critical Legal Thinking Questions Did Moniker act ethically in obtaining and using the domain name and website? Do you think that the element of bad faith was shown in this case? Read the paragraph below and discuss if this case would have been settled differently if Moniker was located outside of the U.S. and all web information on servers outside of the U.S. ? Individuals and businesses in most countries of the world are connected to the internet and engage in text messaging, email, social media, and other electronic communications. Currently, no international law governs the internet. Although U.S. law may make certain internet activities illegal, such as internet fraud, these laws do not reach internet sources located outside the United States. Some countries control or censure the use of the internet by its citizens.