Can't Compete

We cover court cases and deals which law firms have been advising on this week.

Hi ZipLawyer! I'm Ludo Lugnani and this is ZipLaw. Today we bring you a new edition of ZipTracker where we cover court cases and deals which law firms have been advising on to make you stand out in applications and interviews and develop your Commercial Awareness!

Today's newsletter is a 9 min read:

• ⚖️ In Court: Lenovo tries to block a 3G patent, Aldi faces a non-compete claim, banks liability for fraud and cricket league founder fights investor accusations.
• 🤝 Deals Time: Uranium share placing, a renewable share buy-back and a vegetable acquisition.
• 📊 Who's featuring? We've got 11 law firms (3 UK, 3 US, and 5 International) and 8 Chambers featured in today's ZipTracker!

⚖️ In Court

Can't Compete

Summary: An Aldi executive, David Hills, has sued the budget supermarket chain in the High Court to invalidate a non-compete agreement. Hills argues that the restriction, which blocks him from starting a similar job with rival retailer Asda, is unreasonable and goes "further than reasonably necessary."

Background to the case: David Hills has been a part of the Aldi family since 2007 and worked his way up to becoming the Group Buying Director in 2013. But in November 2022, he decided it was time for a change and gave his six months' notice. Aldi decided to put him on garden leave and informed him of their intention to enforce the non-compete agreement.

Key Points to note

• Invalidating a Non-Compete Agreement: The Aldi executive, David Hills, is suing the supermarket chain to invalidate a non-compete agreement that is preventing him from starting a similar job with rival retailer Asda.
• Changes to the Agreement: Hills signed a non-compete agreement in 2013, which stated that he couldn't work for a competitor for six months after resigning. However, in 2020, he was asked to sign an amended version of the agreement, which added that he couldn't work in a similar position to the one he had at Aldi for the previous two years, and included several retailers to the list of competitors.
• Unenforceable Terms: Hills claims that the amended clause is "unreasonable" and goes beyond the "legitimate business interests" of Aldi. He also argues that the words "similar position" are too uncertain and/or broad to be enforceable.
• Power Imbalance: Hills claims that there was a "very significant inequality of bargaining power" between him and the employer when he was asked by the managing director to promptly sign the document and that he had no time to "properly consider" the amended document.

Who advised on this?

• David Hills is represented by John Mehrzad KC and Matthew Sheridan of Littleton Chambers, instructed by Addleshaw Goddard.
• Aldi is represented by Freeths.

⚖️ In Court

Patent Battles

Summary: A London court ruled in favour of InterDigital, a US-based wireless tech company, over Lenovo, a Chinese tech giant. The court found InterDigital's patent to be valid and essential to the 3G technology standard. Lenovo had attempted to challenge the validity of the patent.

Background to the case: InterDigital sued Lenovo for infringing several of its telecommunication patents and using the technology without a license. Lenovo then challenged the validity of the patents, including the one at issue in this ruling.

Key Points to note:

• Expert witness: The expert witness for Lenovo also argued that the first claim of the patent was invalid as a specialist in the field would be able to eventually arrive at the solution described in the claim through "routine work" by running into a "transmission-blocking problem" posed by the 3G network.
• What is obvious? Despite the expert witness, the Court sided with InterDigital that the path to overcoming the transmission-blocking problem was only obvious "in hindsight."
• Kim Possible: The High Court also shut down Lenovo's attempt to use a piece of prior art called "Kim" to prove InterDigital's patent-protected technology was already known. Although the court acknowledged that a professional in the field could use the central idea of Kim for other communication systems, like the one in InterDigital's patent, it wasn't enough to claim Kim anticipated the patent.
• More to come: This is just the start of a string of trials in front of the Court of Appeal that will decide the validity of InterDigital's patents and whether Lenovo is guilty of infringing and needs to accept a fair and just license for them.

Who advised on this?

• InterDigital was represented by Douglas Campbell KC and Joe Delaney of Three New Square, instructed by Bird & Bird.
• Lenovo was represented by James Abrahams KC of 8 New Square, Benjamin Longstaff of Hogarth Chambers, and Kyra Nezami of 11 South Square, instructed by Kirkland & Ellis.

⚖️ In Court

A Banker's Duty?

Summary: In a recent hearing at the UK Supreme Court, counsel for a victim of push-payment fraud argued that the banking industry cannot escape responsibility for digital payment fraud, as lenders were aware of the growing threat and had even tried to prevent customers from being defrauded. The case could have major implications for other victims of authorized push-payment scams, which grew during the COVID-19 pandemic.

Background to the case: Fiona Philipp, a customer of Barclays Bank, is fighting to uphold findings by the Court of Appeal in March 2022, that the Quincecare duty on banks, which obliges them to use "reasonable skill and care'' when executing a transaction, can arise when an individual customer authorizes a payment as a result of fraud. Fiona sued Barclays after she was duped by fraudsters impersonating the police into transferring her life savings into two foreign bank accounts.

Key Points to note:

• The Quincecare Duty on Banks: The Quincecare duty obliges banks to use "reasonable skill and care" when executing a transaction and can arise when an individual customer authorizes a payment as a result of fraud. The Court of Appeal found this duty to apply to the case of Fiona Philipp, who sued Barclays for negligence after she was duped by fraudsters into transferring her life savings. A ruling, in this case, could have major implications for other victims of authorized push-payment scams.
• A growing threat: The banking industry has been made aware of the growing threat of digital payment fraud and has tried to prevent customers from being defrauded.
• Got to question them: Banks have assumed a legal duty to protect customers from push-payment fraud when they created systems to identify and stop suspicious transactions. They have an "implicit" obligation to question their customers' wishes if they suspect something is wrong.

Who advised on this?

• Barclays Bank was represented by Patrick Goodall KC of Fountain Court Chambers and Alexia Knight of 3VB, instructed by TLT.
• UK Finance was represented by Sonia Tolaney KC of One Essex Court.
• Fiona Philipp was represented by Hugh Sims KC of Guildhall Chambers, instructed by Squire Biggs Law.

⚖️ In Court

Big promises

Summary: The founder of the Indian cricket Premier League, Lalit Modi, has appeared before the Court of Appeal to defend claims by Gurpreet Gill Maag that he misled her into investing $2 million in his cancer treatment clinic. Maag is seeking to overturn a High Court decision that Modi did not make false representations but is entitled to claim repayment of $800,000 under an agreement with Modi.

Background to the case: Maag, through her company Quantum Care Ltd., has accused Modi of "deceiving her" during a 2018 meeting in Dubai to discuss Modi's Swiss company, Ion Care AG. According to the lawsuit, Modi lied about wealthy individuals acting as ambassadors for the company and investing a total of $260 million.

Key Points to note:

• Appeal Time: The key aspect that Maag is seeking to overturn is the judge's finding that Modi did not deceive her, that it wouldn't have induced her to invest if he had and that she is not entitled to a consequential loss for profits that she would have made investing elsewhere.
• Not enough: Counsel for Modi is arguing that even if false representations were made to Maag, she would not have been taken in because she is a sophisticated investor. Modi's claims about well-known individuals being involved with his brand had more to do with his "vision" for the company rather than a statement that the people in question were already on board.
• Unreliable witness: On the other hand, counsel for Maag is keen to discredit Modi's accounts of their conversation with Maag. The judge accepted that version of events even though Mr Modi said he didn't recall the meeting, even though the judge found Mr Modi to be an unreliable witness. They argue that the High Court ignored significant evidence that Modi had in fact made the false statement.

Who advised on this?

• Quantum Care Ltd. is represented by Tony Singla KC and Jessie Ingle of Brick Court Chambers, instructed by Mishcon de Reya.
• Lalit Modi is represented by Ian Mill KC of Blackstone Chamber.

🤝 Deals Time

Nuclear Deals

Summary: Yellow Cake PLC, a uranium commodities company is using a share placing to buy up some more uranium and deal with some short-term obligations. The company has boosted its placing size to a cool $75 million.

Key Points to note:

• Share placing? This is a method used by companies to raise capital by issuing new shares to investors. In a share placing, a company offers new shares for sale to a select group of investors, typically institutional investors such as mutual funds, pension funds, and hedge funds, rather than to the general public.
• Premiums: In share placings, the new shares are typically issued at a premium to the current market price and are often sold at a fixed price agreed in advance between the company and the investors. Share placings are typically faster and less costly than an initial public offering and allow companies to raise capital more quickly and efficiently than through other methods.
• Slice of the cake: The company has placed 15 million new ordinary shares at a set price of 412 pence each. These new shares represent around 8.2% of the company's current stock in circulation.
• What's Yellow Cake going to do with all this money? Well, they're planning to buy some uranium from Kazatomprom, the world's largest producer of nuclear fuel, and also to cover some of their "short-term obligations" and general company expenses.

Who advised on this?

• Yellow Cake was advised by Linklaters.

🤝 Deals Time

Time to Buy Back

Summary: Aquila European Renewables PLC has approved a stock buyback program of up to €20 million. The company believes that its current share price is undervalued. The buyback was authorized by shareholders at the company's last annual general meeting, in June. Aquila expects to fund the program from its own funds and income from its investments in wind energy, solar panels, and hydropower.

Key Points to note:

• Decision time: Aquila European Renewables has approved a stock buyback program of up to €20 million. The company expects to fund the program from its own funds and income from its investments in renewable energy projects
• Share Buyback? A share buyback, also known as a stock buyback, is a program in which a company buys back its own outstanding shares from the market. This reduces the number of shares outstanding and can help boost the company's earnings per share and stock price. The company may buy back shares for a variety of reasons, including to increase shareholder value, to boost the company's stock price, to offset dilution from employee stock options, or to return excess cash to shareholders. Share buybacks are a popular way for companies to show confidence in their own stock and to return value to shareholders.
• Renewables trend: Europe is seeking to free itself from carbon-based fuel products amid environmental concerns, high energy bills and Russia's war in Ukraine, which has hit the supply of gas. Aquila is not the only one boosting its presence in the sector. Voltalia, a French renewable energy business, announced in November that is looking to raise approximately €490 million to fund its projects and boost its production capacity.

Who advised on this?

• CMS Cameron McKenna Nabarro Olswang advised Aquila.

🤝 Deals Time

Retirement Deals

Summary: A subsidiary of Chiquita Holdings is set to purchase the fresh vegetable division of rival Dole in a deal worth $293 million.

Key Points to note:

• Pay Time: The deal will result in gross proceeds of $ 293 million. Dole will use the sale proceeds to pay down its debt. Dole's vegetable division processes and sells iceberg, romaine, cauliflower, broccoli and more! The division reported $1.28 billion in revenue for 2021
• Restructuring: The fresh vegetable division will be operated under the umbrella of Fresh Express, the brand name under which Chiquita Holdings' vegetables and salads are sold in the United States. Dole will use the sale proceeds to pay down its debt.
• Counter-Measures: The combination of Fresh Express and the vegetable division will allow Chiquita to increase its production to fight back against the workforce shortage in the agriculture sector. It will also help mitigate inflationary pressures by being able to produce more internally (without relying on external suppliers) thus cutting down on production costs.

Who advised on this?

• Dole was represented by Skadden Arps Slate Meagher & Flom
• Fresh Express and Chiquita were represented by Willkie Farr & Gallagher