The Scrabulous Lawsuit: Heading Toward Default?

I’ve posted extensively recently on Hasbro v. RJ Softwares, the Scrabulous lawsuit, including a four-part series on PrawfsBlawg and two posts here on the similar litigation in India. See my last post for links to all of those materials, and see this article for background if you’re just tuning in.

In the PrawfsBlawg series, I noted a number of interesting legal issues that might be raised during any litigation or, even better, appeal of the dispute between Hasbro, the owners of the North American rights to Scrabble, and RJ Softwares et al., the makers of Scrabulous. In particular, I noted some surprising weaknesses with Hasbro’s copyright claims, including the blackletter rule that games are not copyrightable, lack of ownership over the Scrabble dictionary, and the apparent lack of registration of the Scrabble letter tiles. Even more troubling, I noted a possible formalities problem with all of the Scrabble copyrights dating back to the original 1948 registrations. On the plus side for Hasbro, I questioned the purpose of the under-theorized blackletter rule, although I ultimately concluded it played an important role in copyright law.

Much as I would like to see these issues play out in court, however, I may not get that chance. On Thursday, Hasbro filed proof of service with the court, showing that the defendants were served on August 13. My guess would be that a motion for a default judgement will be hot on its heels. For civ pro junkies, I’ll go into a few more details after the jump.

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Priorities for the Next President: Securities Regulation

The current crisis our nation faces on Wall Street and in the broader economy will be the primary focus of the next President. The crisis is complex, with many facets, and any solution will be equally complex. Issues such as the effectiveness of regulatory oversight versus deregulation, the transparency of specific types of financial transactions and market actors under current law, and the proper accounting rules to ensure an accurate depiction of a banking institution’s financial health will all be part of the debate over how to resolve the present crisis and how to prevent a future recurrence. However, my advice to the next President is that he should not overlook the beneficial role that private civil lawsuits under the securities laws can play in deterring risky market behavior.

Much has been made of the greed and speculative fervor that gripped the investment professionals on Wall Street. Clearly bets were being made with borrowed money that risked the very existence of institutions that are necessary to preserve the liquidity of capital in our markets. Expanding the oversight of the Treasury Department, increasing the transparency of transactions that involve derivatives and hedge funds, and re-examining accounting rules may all be necessary components of a plan to avoid such risk-taking in the future, but they will not be sufficient in and of themselves. From personal experience in the boardroom, I can vouch that nothing deters executive approval of speculative investment strategies as much as the prospect of a potential civil lawsuit if the deal goes sour.

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Wall Street Collapse = ERISA Stock Drop Litigation

Graphup Not a surprising development at all. From BNA Daily Labor Report (subscription required):

As several heavy hitters in the financial world have come under pressure or have gone bankrupt in the past couple of months because of the subprime mortgage and lending crisis that has battered investment firms and banks, the employer “stock drop” cases that proliferated in the post-Enron Corp. and post-WorldCom Inc. age are on the rise.

Although the Employee Retirement Income Security Act claims raised in these stock drop cases have not been identical, there are two central claims that arise in these cases. The first claim typically raised is that the plan fiduciaries breached their duties by offering company stock as a plan investment option when the stock was an imprudent or unwise investment. The second claim focuses on the disclosure obligations of the plan fiduciaries and often alleges that the fiduciaries breached their duties by not telling plan participants of financial matters of the plan sponsor that made the sponsor’s stock an imprudent investment.

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