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Weekly Issues in the News

By Geisa Balla

Myspace as the Newest FTC Settlement

Myspace settled charges with the FTC that it misled millions of users about sharing personal information with advertisers. The settlement will require the company to create a comprehensive program that protects consumers' information and bars Myspace from misrepresenting how it protects its users' privacy. Myspace will be subject to independent reviews of its privacy program for the next 20 years. The FTC settled in 2010 with Twitter over failure to safeguard users' personal information, and in 2011 it found that Facebook and Google Inc. had also engaged in deceptive privacy practices. Facebook and Google are subject to 20 years of audits, and Twitter is subject to 10 years of audits.



The Second Circuit Court of Appeals held on May 10, 2012, that CBS Corp and its chief executive, Leslie Moonves, are not liable to shareholders to failing to quickly disclose that the company would take a $14 billion writedown during the 2008 financial crisis. The Court held that the shareholders did not sufficiently show that CBS committed securities fraud by ignoring accounting standards for valuing goodwill. CBS shares dropped 20 percent on October 10, 2008, when CBS announced the writedowns. CBS is required by the Financial Accounting Standards Board to examine whether to write down goodwill, which reflects the difference between a company's value taken as a whole and the company's book value. The shareholders claimed in their lawsuit that CBS should have reviewed its goodwill in early 2008, as the economic downturn was commencing and as its market value and advertising revenue were dropping. However, the Court did not agree. "All of the information alleged to constitute 'red flags' ... were matters of public knowledge," it said. "CBS's market price would at all pertinent times have reflected the need for, if any, or culpable failure to undertake, if any, interim impairment testing.... That being the case, the second amended complaint does not sufficiently allege reliance upon a fraudulently inflated price."



Zynga Inc., the publisher of popular Facebook games like FarmVille and CityVille filed a trademark infringement suit against French game publisher Kobojo in federal court in San Francisco. The lawsuit is based on Kobojo's release of PYRAMIDVILLE in early 2011. The complaint alleges that "Facebook users are likely to believe, erroneously, that PYRAMIDVILLE is a member of Zynga's 'VILLE Family of Games." Zynga's effort to secure a trademark for the word "Ville" has stalled in the USPTO. The complaint states that Zynga has "consistently promoted the 'VILLE Family of Games together as a family, identified by the distinctive 'VILLE suffix." "Zynga's "Ville" family includes many well-known games, including FarmVille, CityVille and CastleVille, and the "Ville" suffix is strongly associated by gamers with Zynga," Zynga said in a statement Monday. "Given Kojobo's refusal to change their game name, legal action was necessary to defend our famous marks and prevent player confusion." The claim seeks treble damages against Kobojo.


Christopher Burch

A new lawsuit against Christopher Burch, ex-husband and business partner of designer Tory Burch, alleges discrimination and preference for hiring gay men. The lawsuit claims that Mr. Burch openly stated that he "only hired gay men because they were productive and he trusted them." The plaintiff and former employee Jamie Ardigo allegedly found the remark "extremely offensive" and complained about it and other "inappropriate comments," resulting in his termination from his human resources job in February 2012. Burch's attorney stated: "The defendants deny the allegations of discrimination and retaliation set forth in the complaint and are prepared to mount a vigorous defense."



A Virginia court recently ruled that the "like" button on Facebook is not constitutionally protected speech. Six people in Virginia said they were fired after "liking" the page of their boss' election rival. Their boss, Sheriff B.J. Roberts, fired them for supporting an opponent in his 2009 re-election bid. The workers then sued, saying that their First Amendment rights were violated. While public employees are allowed to speak as citizens on matters of public concern, the judge on the case ruled that clicking the "like" button did not amount to expressive speech. The judge stated that while other courts have ruled that Facebook posts are protected speech, simply clicking on the "like" button is different and does not warrant First Amendment protection. "It's not a very deep one, but you're making a statement." James H. Shoemaker, a lawyer for one of the dismissed workers, said that he was surprised by the April 24th ruling and stated that it would be appealed.


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This page contains a single entry from the blog posted on May 11, 2012 9:52 AM.

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