Europe’s Cyber Security Directive Could Cost Organizations Billions

Europe’s Cyber Security Directive Could Cost Organizations Billions.


Judge Sanctions 6 Qualcomm Lawyers


A federal magistrate issued sanctions against six Qualcomm Inc. attorneys for mishandling evidence in a high-stakes patent case against Broadcom Corp.

U.S. Magistrate Judge Barbara Major referred the conduct of the six lawyers to the California State Bar Association for an investigation of possible ethical violations. She decided not to sanction 13 other Qualcomm attorneys involved in the case.

Judge Major also issued an $8.5 million judgment against Qualcomm, though that ruling actually carries no cost to the company. Another federal judge had already ordered Qualcomm to pay Broadcom that amount to cover attorney’s fees, and the judge ruled that no additional monetary penalty was necessary because the original penalty was so large.

Five in-house Qualcomm attorneys were ordered to take part in a “comprehensive” review of the company’s procedures and obligations associated with producing evidence.

The case and its aftermath were a hot topic in the legal community after the discovery that Qualcomm had failed to produce thousands of pages of documents that had been requested by Broadcom.

Qualcomm, a San Diego chip maker, had originally sued Broadcom in October 2005 for allegedly infringing two patents on video-compression technology. One of Broadcom’s defenses to the allegations was that Qualcomm violated an obligation to disclose its patents to an industry committee setting standards on the technology. Qualcomm insisted that it hadn’t participated in the group.

During the final days of trial, a senior Qualcomm engineer disclosed that she had emails related to the group that hadn’t been turned over to Broadcom. Following the trial, which Qualcomm lost, thousands more documents were discovered; Qualcomm’s general counsel apologized for what happened and later resigned.

Judge Major ordered 19 Qualcomm lawyers to appear at a hearing in October to defend their actions. That task was complicated by the fact that communication between the lawyers and Qualcomm was protected by confidentiality rules, and so was not released. The lawyers issued declarations explaining their actions and insisting that they had no intention of deliberately withholding evidence.

But the judge concluded that their declarations and other evidence lead to “the inevitable conclusion that Qualcomm intentionally withheld tens of thousands of decisive documents from its opponent in an effort to win this case and gain a strategic business advantage over Broadcom,” according to 48-page order released late yesterday.

“Qualcomm could not have achieved this goal without some type of assistance or deliberate ignorance from its retained attorneys,” she added.

Broadcom declined to comment. A Qualcomm spokeswoman said the company regrets the errors that occurred in the case, but said its actions after the errors were found “defy any suggestion that Qualcomm engaged in intentional misconduct. We are considering our options, including further appeal.”

Which GCs Are Most at Risk in Backdating Cases?

Firm partner’s research shows that general counsel who understood backdating’s accounting implications are getting hit hardest

Corporate Counsel
January 3, 2008

Why is the government taking action against some general counsel who backdated stock options, while letting others off the hook? According to John Villa, the key is whether GCs knew that backdating creates an accounting problem. If they did — and did nothing to fix it — they’re more likely to face a civil suit from the Securities and Exchange Commission or criminal charges from the U.S. Department of Justice.

Villa, a partner at Williams & Connolly, reached his conclusion after looking at the cases of seven general counsel who face criminal or civil charges for backdating. He recently published his findings in ACC Docket, the magazine of the Association of Corporate Counsel. Though Villa’s article does not name all of the seven legal chiefs that he studied, they are Lisa Berry of KLA-Tencor Corp. and Juniper Networks Inc.; Nancy Heinen of Apple Inc.; Myron Olesnyckyj of Monster Worldwide Inc.; Kent Roberts of McAfee Inc.; Kenneth Selterman of Take-Two Interactive Software Inc.; Susan Skaer of Mercury Interactive Corp.; and William Sorin of Comverse Technology Inc.

For more see

SEC Wants Another Delay on Section 404 — One-Year Extension for Small Companies

SEC Chairman Christopher Cox testified briefly today before the House Committee on Small Business and revealed plans to give non-accelerated filers yet another extension to comply with SOX 404.  The SEC intends to conduct a study of Section 404 costs and benefits in 2008.  The SEC is going to give small businesses another extension pending completion of that analysis. If approved, this latest action will be the third extension for small companies.  This one comes on the eve of the December 15 deadline for filings.  One has to wonder how much money small businesses have spent in anticipation of having to comply next week?  

For more see the Text of Commissioner Cox’s Testimony.


Chevron to Pay $30 Million to Settle Charges For Improper Payments to Iraq Under U.N. Oil For Food Program

The Securities and Exchange Commission has charged Chevron Corporation for its role in illegal kickback payments that were made to Iraq in 2001 and 2002 in connection with the company’s purchases of crude oil under the U.N. Oil for Food Program.

Chevron, based in San Ramon, Calif., agreed to pay $30 million to settle the charges brought under the Foreign Corrupt Practices Act (FCPA) without admitting or denying the SEC’s allegations.

The U.N. Oil for Food Program was intended to provide humanitarian relief to the Iraqi people while Iraq was subject to international trade sanctions. According to the Commission’s complaint, third parties under contract with Chevron made approximately $20 million in illicit payments that bypassed the Oil for Food escrow account and were paid directly to Iraqi-controlled bank accounts in Jordan and Lebanon. The SEC alleged that Chevron knew, or should have known, that third parties were using portions of the premiums they received from Chevron’s oil purchases to pay illegal surcharges to Iraq. The SEC also alleged that Chevron failed to devise and maintain a system of internal accounting controls to detect and prevent such illicit payments, and Chevron’s accounting for its Oil for Food transactions failed to properly record the true nature of the company’s payments to third parties.

“This is the Commission’s fifth action against a company for participating in the Oil for Food kickback scheme and demonstrates our continuing commitment to combating violations of the Foreign Corrupt Practices Act,” said Linda Chatman Thomsen, Director of the SEC’s Division of Enforcement.

For more see the SEC Complaint filed in the U.S. District Court for the Southern District of New York.

New U.S. Law Creating a Voluntary Certification Program for Corporate Preparedness & the Opportunity to Advance Key Incentives for Business

Executive Summary:   Legislation was signed into law on August 3, 2007 that requires the U.S. Department of Homeland Security (DHS) to provide for the development of a private sector led voluntary certification program for all-hazards business emergency preparedness.  This program is to be developed in consultation with key stakeholders reflecting existing best practices and standards.  The program represents a significant opportunity to link preparedness activities by business with bottom-line market based incentives.

The Law:  The law is titled ‘‘Implementing Recommendations of the 9/11 Commission Act of 2007’’ and is also referred to as H.R. 1 and Public Law 110-53.  Title IX of the Act addresses private sector preparedness and the certification program.  Full text of the law is available at:

Key Points of New Program and Legislation:   

  • Goal of the program is to provide a method to independently certify the emergency preparedness of private sector organizations including their disaster/emergency management and business continuity programs.   The program focuses on certifying the preparedness of businesses and other private sector entities and does not involve any individual professional certification.  The focus is on all-hazards preparedness and does not focus on terrorism. Continue reading

American Lawyers Will March to Supreme Court to Show Solidarity with Pakistani Lawyers

Images this week of police beating and jailing almost 3,000 Pakistani lawyers were almost as shocking as Gen. Pervez Musharraf suspending Pakistan’s constitution and putting its Supreme Court under house arrest.

The American Bar Association immediately spoke out against these clear breaches of the rule of law. But, American lawyers must do more to object to conditions in Pakistan.

On Wednesday, November 14, the ABA is organizing a lawyers’ march in Washington, D.C., to support the rule of law and lawyers in Pakistan. At 11:30 a.m., lawyers will gather in the plaza in front of the James Madison Building of the Library of Congress before walking around the Supreme Court. Lawyers across the country are participating in similar marches in their communities, and the ABA is encouraging and supporting these local efforts.

Over the last few days, brave Pakistani lawyers have dressed for work and headed to court knowing that they would be met by policemen’s batons and tear gas instead of their clients. These lawyers went to work anyway because of their belief in the rule of law.

It is time for us to demonstrate that we share Pakistani lawyers’ commitment to justice. Please wear your black suit and join lawyers in Washington, D.C., or in your community as we walk to court on November 14. Together, we will show that Pakistan’s lawyers are not fighting alone.