Articles Tagged with Los Angeles Business Lawsuit

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The Consumer Product Safety Act, or CPSA, and legislation like it, makes it a crime to sell products that are the subject of a safety recall. Nonetheless, that is precisely what the U.S. Consumer Product Safety Commission, or CPSC, says that retail giant Best Buy did between 2010 and 2015. The retailer recently agreed to pay a $3.8 million penalty to the CPSC for breaking the law.

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The CPSC accused Best Buy of continuing to sell 16 products even after those items had been recalled. Ranging from cameras and laptops to dishwashers and electric ranges, each product posed a safety hazard. A recalled dehumidifier sparked a fire after being sold by a Best Buy store years after it should have been quarantined from sale. Given the more stringent clauses of the CPSA, which was amended in 2008, it was only a matter of time before the CPSC took notice.

Best Buy stated that they had a recall system in place during the 2010 to 2015 period. However, the CPSC found that Best Buy’s system for finding and getting rid of recalled products was ineffective. Among the findings, the CPSC says that the Best Buy system failed to permanently block product codes for recalled items. Additionally, some of those product codes were reactivated or the system functions that should have prevented a sale were overridden.

In addition to paying the $3.8 million penalty, Best Buy must also set up a much more robust system for identifying recalled products and preventing them from being sold. This system will include an internal component of controls and procedures as well as an element that requires reporting information to the CPSC.

Best Buy’s experience serves as a cautionary tale for all retailers. The CPSC is growing increasingly vigilant about enforcing the CPSA, and that means that more companies are going to see large penalties being levied against them. It is more important than ever for retailers to understand the CPSA and to stay informed regarding current government and manufacturer recalls. Working with an experienced business attorney is one of the best ways to ensure compliance.

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Most people think Snapchat is just a fun messaging app. They use it to send photos and videos that self-destruct seconds after being viewed. Snapchat also features an app that makes it possible to creatively alter photographs. Known as “Lenses,” this app is what makes it possible for the photo’s subject to sport floppy dog ears, hearts instead of eyes or a floral headband. Now, this capability is at the center of a potential class action lawsuit.

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Illinois residents Jose Martinez and Malcolm Neal filed a complaint in Los Angeles in May of 2016, arguing that Snapchat violated their state’s Biometric Information Privacy Act. The law is aimed at preventing biometric identifiers from falling into questionable hands and sprang from concerns about how the necessary technology used to collect biometric identifiers might be used without the user’s knowledge or permission.

The lawsuit contends that Snapchat is collecting and maintaining detailed biometric information on their customers. This is being done without the knowledge and consent of the users, which is contrary to Illinois’ law.

Snapchat categorically denies the allegations, arguing that their service is not capable of collecting complex biometric information that would allow them to identify the face of one user as opposed to another. Instead, they say that the technology involved is merely for object recognition, which makes it possible for the program to determine which objects in a photo are faces and where the eyes, nose and mouth are located. Moreover, Snapchat denies that they are in any way storing the data that is used in the Lenses app.

Snapchat is not the first social media platform to be sued over similar technology. Both Facebook and Google are facing legal battles relating to face-recognition software that automatically identifies particular people in photographs.

This lawsuit is only in its beginning stages. It was moved to the federal courts in July 2016, and Snapchat may be facing stiff fines if their software is determined to be guilty of violating Illinois’ law. This incident demonstrates the powerful need for businesses to understand the laws of states where they will be operating.

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Sometimes, the only appropriate way to respond to a lawsuit is by filing a countersuit. At least, that seems to be the philosophy of Groupon, Inc. The story began a few months ago when International Business Machines, better known as IBM, filed a lawsuit against Groupon. IBM claimed that Groupon, which is an e-commerce marketplace that connects subscribers with merchants in their local area, infringed four of its patents.

Balance in digital background / A concept of technology law or tIBM claimed that at least two patents that are related to its late-1980s telecommunications service Prodigy are clearly infringed by the technology upon which Groupon bases its services. In their complaint, IBM asserts that they deserve compensation from Groupon for the newer company’s use of IBM’s patented technology. An IBM spokesperson notes, “Over the past three years, IBM has attempted to conclude a fair and reasonable patent license agreement with Groupon.” Frustrated in these efforts, IBM filed a lawsuit in Delaware where the company is organized.

Groupon chose to file a countersuit in Illinois, where it has its home base in Chicago. Among other charges in the complaint, Groupon skewers IBM as a “relic of once-great 20th Century technology firms.” Moreover, Groupon asserts that the technology giant “has now resorted to usurping the intellectual property of companies born this millennium.” A spokesperson from Groupon said in an emailed statement to journalists that: “Unfortunately, IBM is trying to shed its status as a dial-up-era dinosaur by infringing on the intellectual property rights of current technology companies, like Groupon.”

Groupon alleges in its countersuit that IBM actually infringes its patented technology with its WebSphere Commerce software. Merchants can use WebSphere to track customer orders and sales as well as offer special deals and pricing based on the customer’s current geographic location. Groupon insists that much of this technology has already been patented by them, which entitles them to royalties from the “billions of dollars in revenue that IBM has received” from their unfair use of Groupon’s technology.

The outcome of these cases remains pending, but the situation highlights the need to protect intellectual property and perform appropriate due diligence before developing new technology.