Ten Wolfe Commandments: Leadership Lessons From Hamilton

Ten Wolfe Commandments: Leadership Lessons From Hamilton

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I doubt I’m the only one addicted to the original cast recording of Hamilton: An American Musical. If you haven’t heard it, you are missing out on a musical and lyric masterpiece. Plus, lawyers and other business people can learn a lot about leadership from Hamilton.

1, 2, 3, 4, 5, 6, 7, 8, 9 . . . it’s the ten Wolfe commandments.

Number 1: “Don’t let them know what you’re against or what you’re for”? (Aaron Burr, Sir)

“Talk less, smile more.” This is how ever-slippery Aaron Burr begins his advice to a young Alexander Hamilton. “Don’t let them know what you’re against or what you’re for.”

Hamilton, of course, completely rejects this advice. No founding father more boldly told people exactly what he thought about public issues, regardless of the personal or political consequences. “Burr, drop the niceties,” Hamilton says later in Farmer Refuted, “I’d rather be divisive than indecisive.” While Hamilton’s bold opinions inspired his supporters, his lack of diplomacy and tact ultimately rendered him ineffective when the political tide turned.

Burr, on the other hand, shows the limits of pursuing power without any guiding principles. People will catch on. When the chips are down and Burr needs Hamilton’s support, Hamilton is so repulsed by Burr’s history of crass opportunism that he endorses Jefferson, his own arch-enemy. As Hamilton explains, “Jefferson has beliefs, Burr has none” (The Election of 1800).

Lawyers tend to be timid about expressing views on controversial issues, afraid they might offend that next potential client. But the most effective leaders will strike the right balance: be decisive without being divisive.

lafayette
“America’s favorite fighting Frenchman”

Number 2: “I’ve never had a group of friends before” (My Shot)

“I’m only 19, but my mind is older.” By the time young Hamilton sailed from the Caribbean to New York, he was already a precocious writer, probably a genius. But to accomplish the “million things” he wanted to do, he would need more than his top-notch brain. In the vernacular of contemporary business literature, the young Hamilton was lacking in “emotional intelligence.”

Fortunately for Hamilton, he walks into a bar and immediately strikes up a friendship with southern abolitionist John Laurens, tailor-turned-spy Hercules Mulligan, and “America’s favorite fighting Frenchman,” the Marquis de Lafayette. Together, they help Washington win the war and start a new nation. Even the most intelligent leader needs a little help from some friends.

Number 3: “Include women in the sequel” (The Schuyler Sisters)

Angelica, Eliza . . . and Peggy. The Schuyler sisters. These daughters of wealthy New Yorker Philip Schuyler are downtown to watch all the guys. But Angelica is looking for more than that: “I’m looking for a mind at work.” See, Angelica has been reading Common Sense by Thomas Paine, and she can hold her own with the men. In my teenage daughter’s favorite line, Angelica says: “We hold these truths to be self-evident, that all men are created equal, and when I meet Thomas Jefferson, I’m ‘a compel him to include women in the sequel.”

Mrs_John_Barker_Church_Son_Philip_and_Servant_John_Trumbull
“Include women in the sequel”

In today’s professional workplace, we are “in the sequel.” In a traditionally male-dominated profession like practicing law, men sometimes forget that. Effective leadership is going to require including women as leaders and team members.

“Work!”

Number 4: “I’m gonna need a right hand man” (Right Hand Man)

“We are outgunned, outmanned, outnumbered, out-planned.” These are the first inspiring words we hear from the pride of Mt. Vernon, George Washington. This shows us that a leader doesn’t have to sugarcoat the facts, nor does he need to affect an air of invulnerability. Right Hand Man teaches that even a great leader can let his guard down and admit weakness. “Can I be real a second?” Washington says. “Let down my guard and tell the people how I feel a second?” He then admits, “I’m in dire need of assistance.”

Like every leader, Washington needed someone to help him. “I cannot be everywhere at once, people.” In fact, the greater your level of responsibility, the more you will need to delegate. Like Washington, you’re “gonna need a right-hand man.”

Or a right-hand woman. See no. 3, supra.

Battle of Yorktown
“The code word is Rochambeau, dig me?”

5: “Immigrants, we get the job done” (Yorktown)

On the cusp of the decisive battle of the Revolutionary War, Hamilton and his friend Lafayette reunite and look back at their accomplishments. “We’re finally on the field, we’ve had quite a run—immigrants, we get the job done.” This may be my adopted son’s favorite line.

Apparently this line started generating so much applause that they had to add a break in the song. It also caused such a ruckus that Donald Trump pledged to build a wall around the theater. (Ok, I stole that joke.)

The lesson here is not necessarily that good leaders need to be immigrants, or that good leaders need to hire immigrants—let’s not take it too literally. For me, it’s a lesson about not judging people by where they come from, what they look like, or what accent they have. It’s about performance, not pedigree.

Number 6: “Why do you write like you’re running out of time?” (Non-Stop)

Hamilton, author of most of the Federalist Papers, was a great, prolific writer. If Hamilton had a weakness as a writer, it was that he wrote too much. In Non-Stop, Burr acknowledges Hamilton’s skill with the quill, but he admonishes Hamilton to be more concise in his oratory (“Our client Levi Weeks is innocent, call your first witness, that’s all you had to say”).

Hamilton also goes wrong by relying too heavily on his writing. Exhibit 1: the misguided and embarrassing “Reynolds Pamphlet.” Hamilton’s experience shows us that, while good writing is important, it’s not everything. A leader has to recognize the limits of the written word and know how to relate to people in person. Sometimes it’s better to pick up the phone or walk down the hall than to fire off another email.

7: “You have to find a compromise” (Cabinet Battle #1)

In Cabinet Battle #1, President Washington must decide whether to support Treasury Secretary Hamilton’s plan to establish a national bank and assume state debts. Secretary of State Jefferson is adamantly against it. Naturally, Washington relies on an old-school rap battle to resolve the dispute.

Thomas Jefferson
“Such a blunder, sometimes it makes me wonder, why I even bring the thunder.”

Jefferson and Hamilton then trade some stinging barbs. My favorites:

Jefferson: His plan would have the government assumes states’ debts. Now, place your bets as to who that benefits: The very seat of government where Hamilton sits.

Hamilton: A civics lesson from a slaver. Hey neighbor, your debts are paid because you don’t pay for labor.

As Jefferson and Madison taunt Hamilton (“you don’t have the votes”), Washington asks for a word with Hamilton privately. Hamilton would still rather be divisive than indecisive (“we need bold strokes”), but the wiser Washington tells him, “no, you have to convince more folks.” Rather than praising Hamilton for his clever retorts, Washington gives Hamilton an order: “You have to find a compromise.”

This is an especially valuable lesson for lawyers. Remember who you need to persuade and how you need to persuade them. It doesn’t matter how brilliant your argument is if you “don’t have the votes.” Keep in mind who you have to convince, whether it’s a judge, jury, client, or even the opposing party. That might mean you keep your most scathing points to yourself. And understand that convincing those people may require compromise, rather than showing them how smart you are.

Eliza Hamilton
“Tell this man John Adams spends the summer with his family”

Number 8:“Take a break” (Take a Break)

In contemporary business jargon, Take a Break is Eliza Hamilton’s plea to her husband for “work-life balance.” It gets me every time when Eliza sings: “There’s a little surprise before supper, and it cannot wait. Your son is nine years old today, he has something he would like to say, he’s been practicing all day . . .” Most of us are not busy trying to found a nation’s financial system, but every parent with a demanding job can relate.

The lesson here is simple: even great leaders sometimes need to take a break. When Hamilton doesn’t take a break, the consequences are disastrous (see no. 9).

Number 9: “Show me how to say no this” (Say No to This)

This song is so well written and performed that, as a man, I feel guilty just listening to it. I won’t give it all away, but let’s just say that when confronted with temptation, Hamilton says “Lord, show me how to say no to this” and then proceeds to say yes. Leaders are often under great stress and confronted with all kinds of temptations, personal and professional. Unlike Hamilton, you have to find a way to “say no to this.”

1, 2, 3, 4, 5, 6, 7, 8, 9 . . .

Washington resigning commission
“I’m stepping down . . .”

Number 10: “I may have committed many errors” (One Last Time)

I love One Last Time. That Lin Manuel-Miranda could write an emotionally moving song about a presidential farewell address is further evidence of his genius.

Washington asks Hamilton to see him. He gives Hamilton the news that Secretary of State Jefferson has resigned to run for President. Hamilton laughs, “good luck defeating you, sir!” But Washington has surprising news: “I’m stepping down, I’m not running for president.” (This compresses the actual events—forgivable artistic license.)

Hamilton is shocked; he doesn’t understand. But he agrees to help write the farewell address. Rather than trumpeting his accomplishments, Washington emphasizes his own fallibility: “I am too sensible of my defects not to think it probable that I may have committed many errors.”

Washington, the towering military hero, the man of action, shows us here where his true greatness lies: restraint and humility.

“One last time.”

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Zach Wolfe practices business litigation with Fleckman & McGlynn, PLLC, a Texas law firm with offices in Austin, Houston, and The Woodlands.

He has never performed on stage in a Broadway musical but hopes someday to play the title role in Hamilton. Or at least Hercules Mulligan.

Injunction Junction, What’s Your Function?

TexasBarToday_TopTen_Badge_VectorGraphicA Recent Case Shows What it Takes for a Texas Trade Secrets Injunction to Hold Up on Appeal

I previously wrote here about how not to enforce an injunction in a non-compete lawsuit. But when an employee takes your client’s confidential information or trade secrets, what evidence do you need to get an injunction in the first place?

Most lawyers can recite the buzzwords courts have used thousands of times: “imminent harm,” “irreparable injury,” “no adequate remedy at law.” But let’s face it. Courts have a hard time coherently explaining these concepts. The recent Texas case Daugherty v. Highland Capital Management is no exception.[1]

dangling-car
Imminent harm? Yes. Irreparable injury? Probably not.

Lawyers who handle these cases should understand that imminent harm and irreparable injury mean two different things:

  • “Imminent harm” means that harm is about to happen if the court doesn’t stop it. This has nothing to do with whether the harm is “irreparable.”
  • “Irreparable injury” means that awarding damages would be an inadequate remedy for the harm. This has nothing to do with whether the harm is about to happen or not.

Unfortunately, courts often confuse these two requirements. For example, a court will cite evidence that a competitor is in a position to use a company’s trade secrets as establishing “irreparable injury,” when that fact actually goes to the issue of “imminent harm.”[2]

Another recurring problem is that when courts cite evidence of “irreparable injury” in a trade secrets case, they often cite evidence that is either tautological or generic. In other words, they tend to cite evidence that is either (a) true by definition or (b) recited in virtually every trade secrets case. This renders the analysis less than satisfying.

Let’s use Highland Capital as an example. The basic facts were typical: Employee signs confidentiality agreement with Employer, Employee leaves Employer, Employer sues Employee for taking Confidential Stuff.

steam-locomotive-wreck
Imminent harm, or irreparable injury?

The jury verdict, on the other hand, was a little unusual. The jury found that Employee breached the confidentiality agreement, Employer’s damages were zero dollars, and Employer’s reasonable attorneys’ fees were $2.8 million. The judge awarded Employer the attorneys’ fees plus an injunction against retaining, using, or disclosing Employer’s confidential information.

This raises important questions. First, where can I find one of these clients who will pay $2.8 million to try a confidentiality agreement case? Second, what does Highland Capital teach us about what evidence is necessary for a trade secrets injunction to hold up on appeal?

Evidence of Imminent Harm?

Here are six things the Highland Capital court cited as evidence of imminent harm, followed by my questions:

1. The court said there was “evidence that [Employee] took, kept, and used confidential information.”

This is evidence that the employee breached his confidentiality agreement, but is it evidence of imminent harm?

2. The court cited “demands and protracted litigation.”

Saying the litigation was “protracted” reminds me of what Nathan Arizona said when the police asked if he had any disgruntled employees. “Hell, they’re all disgruntled . . .”

3. Employer’s expert testified: “this information goes to the core of what [Employer] does as a business and what [Employer] is in terms of its value.”

This is fairly generic. Believe me, every company thinks the information the employee took “goes to the core” of the company’s value.

4. Employer’s expert: the information’s “existence away from [Employer] harms [Employer] because there’s always the possibility that it can get into general distribution . . . or to a competitor.”

This seems tautological. By definition, doesn’t the fact that someone else has the confidential information create a “possibility” that it could become public or known by a competitor?

grand-central-station
Does the “possibility” of confidential information becoming public show imminent harm?

5. Employer’s expert: the harm “may not be immediate, but the harm may occur over a long period of time.”

Doesn’t the fact that the harm may occur over a long period of time suggest it is not imminent?

6. Employer’s expert testified “I cannot quantify the total harm,” and “it may be that I can’t measure the specific relationship of these documents to that harm. . . you can’t measure things that you don’t know have occurred.” Asked if he performed “any sort of statistical analysis to try to put a number to this harm,” the expert said, “We did not and could not.”

Do these statements go to whether the harm is imminent, or whether the harm is irreparable? It seems like the court put this evidence in the wrong section of the opinion.

Evidence of Irreparable Injury?

As for irreparable injury, the Highland Capital court cited these key points from the testimony of Employer’s co-founder:

1. “A specific document [Employee] took and failed to return revealed [Employer]’s current and prospective investment strategies.”

In other words, Defendant misappropriated confidential information. But does that make the injury irreparable?

2. There was “[a] particular document [Employee] failed to return in which one of [Employer]’s investors was identified as well as names of our other clients and the investment objectives which are confidential.”

Again, this is evidence of misappropriation of confidential information, but how is it evidence of irreparable injury?

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The damage caused by stolen confidential information can be difficult to quantify

3. “Some of the people in the marketplace can replicate our firm strategies and our investment objectives and form competing funds with these materials like marketing materials.”

This could be evidence of imminent harm, but how does it show that the harm could not be compensated by damages?

4. “If our investors see that we don’t have enough safeguards over our confidential information they would refuse to invest with us, we would be violating our agreements with them, we would be violating the law.”

Again, this is evidence of the possibility of injury, but how does it establish irreparable injury?

5. “Putting a dollar value is almost impossible. But it’s very valuable to us. It’s very, very important.”

Now we’re getting somewhere. This goes to the issue of irreparable injury. But this testimony seems generic. Very, very generic.

Based on this testimony, the court said there was “evidence of harm that could not be quantified,” and therefore, evidence of irreparable injury.

What Did We Learn Today? 

So what do you think? Does the analysis of imminent harm and irreparable injury in Highland Capital support my point that courts often get these two requirements confused? Does it show that courts often rely on tautological or generic statements to uphold an injunction?

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Understand what you need to prove to stop the use of your client’s confidential information

The more practical lesson for litigators is this: If you are trying to get an injunction for your client, offer evidence showing that the defendant is going to use or disclose the confidential information soon if an injunction is not granted (imminent harm), and that damages would be an inadequate remedy because the harm is inherently difficult to quantify (irreparable injury). Even if courts get confused, don’t mix up these concepts in your own mind.

Irreparable injury can be tricky. You need to show that quantifying the damage is inherently difficult, but without conceding that the damage is speculative. This balancing act is especially difficult when, as in Highland Capital, you are also trying to persuade the jury to award lost profits or some other form of damages.

Don’t forget to prepare your witnesses to say the right “magic words,” like “putting a dollar value on this is almost impossible” (if that’s true). But take it a step further and have your witnesses explain why quantifying the damage is difficult. Because it’s not enough to have some generic testimony to uphold the injunction on appeal. It’s also important to persuade the trial court judge to grant the injunction in the first place.

Very, very important.

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Zach Wolfe practices business litigation with Fleckman & McGlynn, PLLC, a Texas law firm with offices in Austin, Houston, and The Woodlands.

These are his opinions, not the opinions of his firm or clients, so don’t cite part of this post against him in an actual case. Every case is different, so don’t rely on this post as legal advice for your case.

[1] Daugherty v. Highland Capital Mgm’t, L.P., No. 05-14-01215-CV, 2016 WL 4446158 (Tex. App.—Dallas Aug. 22, 2016).

[2] For example, in Tranter, Inc. v. Liss, No. 02-13-00167-CV, 2014 WL 1257278 (Tex. App.—Fort Worth March 27, 2014, no pet.), the court said that “[a] highly trained employee’s continued breach of a noncompete agreement creates a rebuttable presumption that the employer is suffering an irreparable injury.” While the fact that an employee is competing in violation of his non-compete suggests imminent harm, it does not show that the harm is irreparable.

Public Speaking Tips for Lawyers and Other Humans: Part 3 – Fluff and Stuff

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In Part 2 of my series on public speaking, I explained how to make your tone engaging. But how do you make your content engaging?

Let’s use an example. If you’re a lawyer, you have probably seen presentations on the duty to preserve electronically stored information (ESI) for litigation. If you’re not a lawyer, count yourself lucky.

ESI was a hot topic in legal circles—until lawyers got sick of it. But it is still an important topic, because failing to preserve ESI can result in sanctions for “spoliation” of evidence, and that is a trial lawyer’s nightmare.

So let’s say you are assigned to talk about preservation of ESI for 45 minutes. How would you make your content engaging?

  1. Substance vs. Fluff

First, you want to strike the right balance between substance and fluff. People often complain that seminar speakers sound like they are just reading their papers. You could easily give a 45-minute summary of the facts and legal holdings in five key cases on spoliation of evidence. This might be engaging if everyone in your audience is fascinated by spoliation law, but for most people that would be too much substance.

Or you could spend 45 minutes talking about your law practice, how e-discovery has taken all the fun out of litigation, and why preservation of ESI is really important. Tell a few war stories, show some cartoons about e-discovery, and maybe throw in a photo of Hillary Clinton with a caption about deleting emails. If you are actually funny (see Part 1), you might hold the audience’s attention, but they will leave the presentation feeling like there was too much fluff, not enough substance.

The best presentations expertly manage to entertain and inform at the same time. Most of us are just chasing this ideal, but once in a while you will run across someone who does this just right. Take a lesson from that person and strive for the right balance of substance and fluff. Cover some key points of spoliation law, but illustrate them with memorable stories.

  1. The “Deep Sample” vs. the “Shallow Survey.”

Selecting the topics to cover and the amount of detail to devote to each topic is critical to making your content engaging. Many speakers go wrong by trying to cover too many topics and covering each one with either too much or too little detail.

For simplicity, let’s assume that the subject of preserving ESI consists of these topics:

  1. The Zubulake cases
  2. Other notable spoliation cases
  3. Key Texas cases on spoliation
  4. Federal rules on spoliation sanctions
  5. How to issue a litigation hold
  6. Technical issues with preserving ESI
  7. Ethical issues concerning spoliation of evidence

Given 45 minutes, many speakers would try to cover all seven topics, devoting about six minutes to each topic. The result would be a relatively shallow treatment of each topic, the “Shallow Survey.” Graphically, it looks like this:

Diagram 1

Here’s the problem with the Shallow Survey: Unless the subject is totally new to your audience, they probably won’t learn much they didn’t already know.

On the other hand, some of you may share with me an almost obsessive compulsion to be comprehensive and detailed when covering a topic. You try to pack a treatise into a 45-minute presentation. I call this the “Attempted Comprehensive Survey.” Graphically the plan looks like this:

Diagram 2

The problem, of course, is that you are going to run out of time. That’s why I call it “Attempted.” You feel rushed and get stressed. When an audience member asks an interesting question, you brush it aside so you can get back to your 75 bullet points. When the moderator holds up a sign that says “5 minutes left,” you’re not even half way through.

Instead of doing the Shallow Survey or the Attempted Comprehensive Survey, try the “Deep Sample.” It looks like this:

Diagram 3

Pick three of the seven topics you find most interesting, and cover them with enough detail that you are teaching the audience something they didn’t know. (TexasBarCLE gives similar advice in this helpful video.) Then you can relax and cover each point as fully as you want. You might even have time to interact with the audience (more on this coming in Part 5). Don’t worry about the points you didn’t cover, especially if they are in your paper.

By the way, the Deep Sample can also work in the courtroom (more on this coming in Part 4).

  1. Concrete vs. Abstract

There is a danger in making a presentation too concrete. For example, in spoliation law there is a seminal series of cases called Zubulake. If you want to impress your date at a cocktail party, just say stuff like “yeah, Judge Scheindlin got it right in Zubulake IV, but she just took it too far in Zubulake V.”

Anyway, if I spent 45 minutes explaining the facts, holdings, and reasoning of the Zubulake cases, it would certainly be concrete. But it would be missing something critical: general lessons.

You need to connect the dots and tell your audience the key “takeaways” from the presentation. Try to boil this down to three or four important things to remember. These lessons will necessarily be abstract, but that’s the point. Imagine someone in your audience goes back to his office and is asked, “so what did you learn from that presentation?” If he struggles to know what to say, you didn’t do your job.

On the other hand, the danger of making a presentation too abstract is obvious. It’s hard to learn from pure generalities. This is the very reason law schools typically use the case method: studying cases that show the development and application of general legal principles, rather than just reading treatises that summarize the general principles.

Imagine a presentation on spoliation law that consisted of reading the applicable rules of civil procedure. Not very engaging. It would be like trying to learn contract law by simply reading the Uniform Commercial Code. Truly understanding the general principles is difficult without names, facts, and stories.

Instead, find a way to make your key points concrete (again, TexasBarCLE has a nice video making the same point). There are many effective ways to do this. If you’re speaking on the duty to preserve ESI, you could use Zubulake as a case study, going over the specific facts and then drawing out the general principles. Or you could pose a series of hypothetical questions about ESI issues, with multiple choice questions for the audience to focus their attention.

Or, if you are writing a blog post about public speaking, you could make your points more concrete by using a specific example, like giving a presentation on the duty to preserve ESI.

See what I did there?

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Zach Wolfe practices business litigation with Fleckman & McGlynn, PLLC, a Texas law firm with offices in Austin, Houston, and The Woodlands. His graphics person is off this week.

 

 

Court Holds Preliminary Injunction Hearing in “Houston College of Law” Trademark Case

Court Holds Preliminary Injunction Hearing in “Houston College of Law” Trademark Case

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There is something almost surreal about a Houston courtroom packed with Houston lawyers watching some of Houston’s most prominent lawyers argue about whether a Houston law school’s new name infringes the trademarks of another Houston law school.

That was the scene on Friday, August 26 in U.S. District Judge Keith Ellison’s courtroom. Judge Ellison heard lengthy presentations by two teams of lawyers. The judge interjected questions and comments but made no ruling. You can read the motion for injunction here and the response here.

For readers who are not Houston lawyers, a little background. South Texas College of Law is a private law school located in downtown Houston. It recently changed its name to Houston College of Law. The nearby University of Houston promptly sued Houston College of Law for trademark infringement, claiming that the new name is likely to be confused with the public University of Houston, which has its own law school.[1]

Houston College formerly
Houston College of Law argues it changed its name because “South Texas” gave people the wrong idea

Shortly after being sued, Houston College of Law received a gift: this opinion from the Eleventh Circuit Court of Appeals holding that there was no likelihood of confusion between “Florida International University” and “Florida National University.”[2] Houston College of Law argued that this Florida case provided a “blueprint” for the Houston case. However, the University of Houston argued that the Florida case had significantly different facts.

Watching this hearing was more educational than attending any trademark litigation seminar. Among a host of intriguing issues raised, these stood out:

  1. What is the Name of the Law School at the University of Houston?

You would think this would be an easy issue. Over the years, the law school at the University of Houston has called itself the “University of Houston College of Law,” “Bates College of Law,” and the “University of Houston Law Center.”

The defendant argued that “University of Houston Law Center” has been the name since 1982, and that UH has abandoned “University of Houston College of Law.” The plaintiff argued that despite the change to the primary name “University of Houston Law Center,” UH has continued to use “College of Law” on diplomas and other materials.

Houston College of Law Plaque and Diploma
UH argues it still uses the name “College of Law”

Why does it matter? For one thing, the University of Houston did not include “University of Houston Law Center” on the list of registered and common law trademarks it sought to protect. It is easier to show a likelihood of confusion between “Houston College of Law” and “University of Houston College of Law” than to show a likelihood of confusion between “Houston College of Law” and “University of Houston Law Center.” A rose by any other name may smell as sweet, but in trademark litigation, the name’s the thing.

Judge Ellison did not resolve this issue at the hearing, but it was interesting that he asked more than once whether the defendant’s new name could cause some confusion with the name “University of Houston Law Center.” There was also a lot of argument about school colors, but the judge seemed less interested in that.

  1. Who Are the Relevant Purchasers of Services from a Law School?

Houston College of Law argued that prospective students are the relevant consumers, while the University of Houston argued for a broader group that includes people who hire law school graduates. Why does this matter?

Let’s back up a little. The key issue in trademark infringement litigation is “likelihood of confusion.” To determine likelihood of confusion, courts consider a list of eight factors (for some reason trademark lawyers call them “digits”), which include the “identity of purchasers” and the “degree of care exercised by potential purchasers.”[3] A higher degree of care means a lower likelihood of confusion.

If, as Houston College of Law argues, the relevant consumers are prospective law school students, you would expect the likelihood of confusion to be lower. These are relatively sophisticated “purchasers” making a major life decision. They are likely to exercise a high degree of care in selecting the place where they are going to spend their lives (and money) for the next three years.

But if you expand the universe of “consumers” to a larger group that includes practicing lawyers and potential clients, you would expect the likelihood of confusion to be higher. In a sense, UH argues, a law school doesn’t just produce education, it produces law school graduates. The “consumers” of those graduates include the people who decide whether to hire the graduates. Those people are not making a life decision about where to go to law school and may be more likely to be confused.

Both arguments are plausible. But arguments are one thing, authorities are another. Judge Ellison asked more than once what authority—meaning case law—the University of Houston had to support its position that the relevant consumers are not just prospective law students. UH had an argument for its broader definition of relevant consumers, but it did not identify any direct authority for it.

UH Law Center
UH argues that the relevant consumers are not limited to prospective law students

But even if the relevant consumers are prospective students, UH argued, the survey conducted by its expert found that the confusion rate among prospective law students was actually higher than the confusion rate among other groups. Houston College of Law, on the other hand, argued that any initial confusion among prospective law students will be quickly dispelled as soon as they start investigating law schools. That argument dovetails with the next legal issue.

  1. Does “Initial-Interest Confusion” Matter When the Service at Issue is a Three-Year Law Degree?

When the defendant’s alleged infringement causes initial confusion among consumers that is later cleared up, trademark lawyers call it “initial-interest confusion.” Does evidence of initial-interest confusion establish a “likelihood of confusion”?

Houston College of Law argued that the concept of initial-interest confusion, if it applies at all in the Fifth Circuit, is limited to scenarios like bars and fast food restaurants. For example, if a restaurant on the highway uses the name “McDonalds” to get people to pull over and come in, it has caused McDonalds harm because once those people are “in the door,” they may decide to stay even after they realize “this isn’t the real McDonalds.” Similarly, if a bar uses the word “Elvis” in its name to get people in the door, it has benefitted from the association with the King, even if people later realize that the bar is not affiliated with the real Elvis Presley.[4]

coffee shop sign
A trademark that gets people “in the door” can create “initial-interest confusion”

Prospective law school students, on the other hand, are not going to walk into a law school because of the name and say “well, as long as I’m here, I might as well stay another three years and get a law degree.” Even if a prospective student initially thinks that Houston College of Law is affiliated with the University of Houston, that initial impression does not cause any harm to the University of Houston once the student learns he was mistaken. At least that is Houston College of Law’s argument on “initial-interest confusion.”

UPDATE: On September 13 Judge Ellison issued this order asking for supplemental briefing on this very issue. UH filed this brief on September 20. Houston College of Law’s brief is due on September 27.

  1. Does Trademark Infringement Create a Presumption of Irreparable Injury?

If the judge finds a likelihood of confusion, does UH get an injunction? Theoretically, a plaintiff seeking an injunction must show imminent “irreparable injury,” meaning injury that cannot be adequately compensated by money damages. I say “theoretically” because as a practical matter, this is one of the most ignored rules in litigation. The real rule seems to be that an injunction will be issued if the judge thinks the defendant’s conduct is not just bad, but really bad.

But that’s a subject for another post. In trademark litigation, it is usually enough for a plaintiff to prove that the defendant is infringing the plaintiff’s trademark. The court then issues an injunction ordering the defendant to stop doing the thing that is infringing the plaintiff’s trademark. This has become so commonplace that some say a showing of likelihood of confusion creates a presumption of irreparable injury, such that specific evidence of irreparable injury is not required.

ebay
Does the eBay case apply to trademark litigation?

However, in eBay Inc. v. MercExchange, L.L.C., the U.S. Supreme Court declined to adopt a categorical presumption that patent infringement causes irreparable harm favoring an injunction.[5]

Does the eBay principle apply to trademark infringement as well? This is an issue trademark lawyers love to argue, but it borders on academic. In most cases the plaintiff offers at least some evidence of irreparable harm. If the judge is inclined to grant an injunction, it is safer for the judge to cite evidence than to rely on a categorical presumption that may or may not apply.

The argument to Judge Ellison on this issue was typical. Houston College of Law argued that there is no presumption of irreparable injury and that the evidence did not prove irreparable injury. Conversely, the University of Houston argued that there is a presumption of irreparable injury and that even without a presumption, the evidence proves irreparable injury.

“How do you value a law school?” UH’s counsel pointedly asked in his summation. If the University of Houston Law Center’s national ranking drops because of confusion with Houston College of Law, he argued, that harm cannot be adequately compensated with dollars. The same number of students may enroll and pay the same tuition, but the quality of the students won’t be the same.

If Judge Ellison issues an injunction, I expect he will say something to this effect: “It is unclear in the Fifth Circuit whether a showing of trademark infringement creates a presumption of irreparable harm, but in this case it is unnecessary to decide that issue because there is evidence of irreparable harm.”

Will he issue an injunction? Stay tuned to Five Minute Law to find out.

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Zach Wolfe practices business litigation with Fleckman & McGlynn, PLLC, a Texas law firm with offices in Austin, Houston, and The Woodlands.

His references to arguments made in the lawsuit are not endorsements of the arguments. Any opinions expressed are his own, not the opinions of his firm or clients. Every case is different, so don’t rely on this post as legal advice for your case.

[1] Bd. of Regents of the Univ. of Houston Sys. v. Houston College of Law, Inc., No. 4:16-cv-01839 (S.D. Tex. 2016).

[2] Florida Int’l Univ. Bd. of Trustees v. Florida Nat. Univ., Inc., No. 15-11509, 2016 WL 4010164 (11th Cir. July 26, 2016).

[3] Am. Rice, Inc. v. Producers Rice Mill, Inc., 518 F.3d 321, 329 (5th Cir. 2008).

[4] This was an actual case: Elvis Presley Enterprises, Inc. v. Capece, 141 F.3d 188 (5th Cir. 1998).

[5] eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388, 393-94 (2006).

Webcast: Proving (or Attacking) Lost Profits Damages in Trade Secrets and Other Cases

Webcast: Proving (or Attacking) Lost Profits Damages in Trade Secrets and Other Cases

On August 25 I was excited to present a one-hour webcast on the Texas Supreme Court’s recent decision in Southwestern Energy v. Berry-Helfand and what it means for lost profits damages and trade secrets cases. I previously addressed the case here. Thanks to TexasBarCLE for hosting and to my panelists Kelly Leonard and Robert Ford for their insights. You can download the slides here.

If you have comments, feedback, or questions, please feel free to post them as comments below. Thanks!

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Zach Wolfe practices business litigation with Fleckman & McGlynn, PLLC, a Texas law firm with offices in Austin, Houston, and The Woodlands. 

These are his opinions, not the opinions of his firm or clients, so don’t cite part of this post against him in an actual case. Every case is different, so don’t rely on this post as legal advice for your case.

Call Crockett and Tubbs: Three Lessons from the Recent Miami Case on the Defend Trade Secrets Act

Call Crockett and Tubbs: Three Lessons from the Recent Miami Case on the Defend Trade Secrets Act

Last week I learned from Houston litigator Jason Sharp that a federal court in Florida recently issued an opinion concerning the new federal Defend Trade Secrets Act (DTSA). This is a big deal if you are a trade secrets litigation nerd. It’s probably kind of like how my mom felt as a teenager when a new Beatles record came out.

In M.C. Dean, Inc. v. City of Miami Beach, the federal district court dismissed a trade secrets lawsuit because the plaintiff failed to plead a plausible case that it made reasonable efforts to maintain the secrecy of the information and that the information was “misappropriated” by the defendants.[1]

This new case teaches us some important things about federal trade secrets litigation:

  1. It’s good to know people who keep up with new DTSA cases so you don’t have to.
  1. For Texas lawyers, who now have the option to file trade secrets lawsuits in state or federal court, the higher pleading standard in federal court is a factor to consider, but not that big a deal (as I will explain).
  1. No one should file a trade secrets case in federal court without using my essential checklist for properly pleading a DTSA claim.

Let’s break this down.

Lesson 1: Follow people who follow recent trade secret cases.

This one is self-evident.

Lesson 2: Federal pleading standards are a factor, but not a big factor, in deciding where to file a trade secrets lawsuit.

Lesson 2 arises from the difference in pleading standards between Texas state court and federal court. Most lawyers learned in law school that both state and federal courts allow “notice pleading,” meaning that it is sufficient to file a pleading that gives the other side “fair notice” of your claim. However, in the famous pair of cases Twombly and Iqbal, the U.S. Supreme Court held that what law school professors had been teaching all those years was wrong. It turns out that in federal court you have to plead specific facts sufficient to establish a “plausible” basis for your claims. The defendants in M.C. Dean used this principle to their advantage by arguing the plaintiff failed to plead a “plausible” trade secrets claim.

Beach
The City of Miami Beach argued the plaintiff failed to plead a plausible trade secrets claim

Texas state courts, in contrast, still allow notice pleading. Or do they? As hypothesized in this interesting post on a recent Texas Supreme Court case, Texas courts may be moving towards the higher “factual plausibility” standard of federal court. But for now it is probably safe to assume that pleading standards are higher in federal court.

Why does the difference in pleading standards matter for trade secrets cases? As I wrote in this earlier post, the Defend Trade Secrets Act is very similar to the Uniform Trade Secrets Act that most states have adopted, but it does not preempt state trade secrets law. Thus, as Sharp and I discussed in a webcast for TexasBarCLE, the primary practical effect of the DTSA is to give plaintiffs the option to file trade secrets lawsuits in federal court (as long as there is a sufficient connection to interstate or foreign commerce).

So when deciding whether to file a trade secrets claim in state or federal court, the M.C. Dean case shows that the higher pleading standard in federal court favors filing in state court, right?

Well, not so much. M.C. Dean was an unusual case in two ways. First, it was not the typical trade secrets case where an employee leaves a company and goes to work for a competitor, taking alleged trade secrets with him. Rather, it was a case where the plaintiff voluntarily provided the alleged trade secrets to another party pursuant to a contract. In the more typical case, it is easier to allege misappropriation.

Trade Secret File
Does M.C. Dean, Inc. v. City of Miami Beach show that it is better to file a trade secrets lawsuit in state court?

Second, the reason for dismissal in M.C. Dean was not that the plaintiff failed to plead sufficient facts to support the trade secrets claim. The problem was that undisputed facts—namely, the contract at issue—affirmatively negated the plaintiff’s trade secrets allegations. Specifically, the key fact that doomed the plaintiff’s trade secrets claim was that the plaintiff, a sub-contractor on a City construction project, signed a contract providing that the information at issue was the property of the City and could be used by the City without restriction. It is hard to see how pleading more facts would have saved the case from this fundamental defect.

In most cases, it’s really not that hard to plead a plausible trade secrets claim. So, if filing in federal court is otherwise a good strategy for your trade secrets case, the higher pleading standard in federal court is unlikely to change your decision.

M.C. Dean does provide a good reminder that lawyers who file trade secrets claims in federal court need to be careful to plead enough specific facts to state a plausible basis for the essential elements of the claim. If you find yourself struggling to plead facts establishing a plausible claim, that is a good sign that maybe you shouldn’t be filing the lawsuit in the first place.

Lesson 3: Use a checklist to make sure you adequately plead your federal trade secrets claim.

So, if you are filing a lawsuit in federal court under the Defend Trade Secrets Act, how can you make sure that you are alleging facts sufficient to avoid having your case dismissed? The only way to be certain is to use my special checklist, available for free here.

I’m kidding, of course (sort of). You can get the same points by reading the key provisions of the statute and making your own checklist.

But hey, like the Beatles said, “I need a job, and I want to be a paperback writer.”

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Zach Wolfe practices business litigation with Fleckman & McGlynn, PLLC, a Texas law firm with offices in Austin, Houston, and The Woodlands. His wife does the graphics (at least the good ones).

These are his opinions, not the opinions of his firm or clients, so don’t cite part of this post against him in an actual case. Every case is different, so don’t rely on this post as legal advice for your case.

[1] M.C. Dean, Inc. v. City of Miami Beach, 2016 WL 4179807, at *7-8 (S.D. Fla. Aug. 8, 2016).

Public Speaking Tips for Lawyers and Other Humans: Part 2 – Watch Your Tone!

Public Speaking Tips for Lawyers and Other Humans: Part 2 – Watch Your Tone!

In Part 1, I definitively resolved the debate over leading with a joke when you have to speak in front of a group of people. For most of us, it is better to ditch the jokes and focus on making the presentation engaging. Merriam-Webster says “engaging” means “attractive or pleasing in a way that holds your attention.”  In other words, you want people to pay attention to what you’re saying and to enjoy listening to you.

Step one to holding people’s attention is your tone. This is true whether you are a lawyer making an argument in court, a teacher in front of a classroom, or a pastor preaching from the pulpit. It is no accident that “tone” is also a musical term. It means the sound of your voice, apart from the particular words you are saying. Imagine someone who doesn’t speak your language listening to your speech or presentation. What would it sound like to that person? That’s your tone.

Fortunately, just as there are many different musical instruments that can sound good (or bad), there is no single “engaging” tone. But there are two common tones that are most definitely not engaging.

The first one is “Seminar Tone.” You’ve all heard it. It’s the tone that comes from someone trying to convey the impression that “I am a very serious expert in this topic addressing something very detailed and esoteric.” It is flat. It is monotone. It is uniformly mezzo-forte. It delights in acronyms, sections, and sub-sections. It’s what you would sound like if you had to read an excerpt from a textbook on a subject that bores you.

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There is no single “correct” tone, but there are tones to avoid

The problem with Seminar Tone is that it sounds like the adults in the Charlie Brown cartoons you watched on TV when you were a kid. Waa-waah-waa-waa-waaaah. What do kids do when adults talk? They tune out. And if you talk in Seminar Tone your audience will do the same.

The other common tone that most people should avoid is what I call “Speech Tone,” which sounds like someone giving a speech. Whereas Seminar Tone tries too hard to say “I’m a very serious person,” Speech Tone tries too hard to say “what I’m saying is very important.” It just doesn’t sound right when someone stands in front of a group of 20 people and speaks as if it were a political rally in a stadium. In 1956.

Don’t get me wrong. Speech Tone works for some people in some situations. But for those of us not named John F. Kennedy or Martin Luther King, Jr., it is usually not very engaging. Even for politicians, these days Speech Tone doesn’t work that well. You need to talk loud enough to be heard, but there is no need to shout, especially if you are amplified.

Speech Tone is common in the courtroom, especially with less experienced lawyers. Perhaps younger lawyers are nervous and don’t want to come across as inexperienced. To compensate, they adopt a tone that is too stiff and formal. Even seasoned litigators can lapse into Speech Tone, although when they do so it is usually in the form of an overly aggressive, argumentative tone.

The problem is that Speech Tone—whether the stiff variety or the overly aggressive variety—tends to make the judge tune out. If the judge wanted to hear a canned presentation that repeats what is in your brief, she could just read the papers. And if the tone is too argumentative, it starts to sound like mere rhetoric. In an effort to make your tone more persuasive, you can make it sound like propaganda.

Try a different tone. As one of my mentors would say, look at a hearing with the judge as a chance to “talk turkey.”[1] Rather than approaching a hearing like a high school debate contest where you try to rack up the most points, imagine that the judge walks into your office at the end of the day, sleeves rolled up, sits down and says “ok, tell me what this case is about and why I should rule in your favor.” It took me a while to learn this, but in most cases the judge is not asking herself “who can make a better argument?” but is asking “who can I trust on the facts and the law to tell me how to get this right?”

Concert Audience
Use the right tone to keep your audience engaged

Lawyers and witnesses, please note: This does not mean you should be casual in the courtroom. There is a difference between informal and casual. Casual is how you talk to your friends at happy hour. Informal is how you talk when you visit your grandmother and she brings you a glass of iced tea and some cookies.

Strangely enough, this advice for the courtroom holds true for most kinds of public speaking, regardless of profession. It turns out the antidote for both “Speech Tone” and “Seminar Tone” is the same: adopt a conversational tone. Talk as if you are having a conversation with a friend about an important subject that intrigues you. Like who you should draft as your third fantasy football wide receiver.

If you want to make your tone even more engaging, then I invite you to graduate from a conversational tone to a musical tone. Borrow a concept from music and use dynamics. It’s no accident that people will rave about a “dynamic” speaker, even if they don’t really know what that means. A truly dynamic speaker has a tone that varies from loud to soft and in between. It has crescendos and diminuendos. Like a good Van Halen song.

Try this next time, especially if you have a microphone: When you get to a key point, instead of talking louder, build up to it and then state the conclusion very softly. I bet people will be leaning forward eager to hear what you have to say. This is just one technique. The point is to vary your tone to keep your presentation engaging.

Of course, a great tone is not going to help much if your content is frivolous or boring. You could read the phone book like a virtuoso, but it wouldn’t hold anyone’s attention. So you need to prepare content that is as engaging as your tone. Tune in to Part 3 to find out how.

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Zach Wolfe practices business litigation with Fleckman & McGlynn, PLLC, a Texas law firm with offices in Austin, Houston, and The Woodlands.

These are his opinions, not the opinions of his firm or clients, so don’t cite part of this post against him in an actual case. Every case is different, so don’t rely on this post as legal advice for your case. You can, however, rely on it as public speaking advice.

[1] I love the expression “talk turkey” because in just two words it conveys both getting to the point and being frank. Apparently, the origin of the expression is not entirely clear.