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Tech Bankruptcy
March 19, 2010
  sex.com bankruptcy
According to the Associated Press, the company that previously purchased the domain name "sex.com" for an estimated $14 million in 2006, has been placed into an involuntary bankruptcy on the eve of a scheduled foreclosure sale of the domain name. Domain name owner Escom, LLC financed the purchase through a secured loan from Domain Capital, LLC. When Escom failed to make its payments, Domain Capital, LLC called the loan and scheduled a foreclosure auction of the domain name. On March 17, three creditors filed a Chapter 11 involuntary in the Central District of California, case no. 10-13001, to stop the auction sale. Counsel for the petitioning creditors is listed as a Mark Chassman.

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March 09, 2010
  The first thing we do, let's hire all the lawyers
Anyone who has worked on patent prosecutions knows how the work generally gets done and billed. First, you hire a trusted U.S. firm to handle the overall prosecution effort. Then, that firm lines up the various other firms it works with to handle international work. The local firm coordinates and supervises the international work and also monitors the costs. Fees and costs incurred by the foreign firms are charged back to the primary prosecution firm, which passes the charges along to the client. Generally, these charges are fairly limited - perhaps a few hundred dollars or maybe just a couple of thousand dollars.

This structure serves a number of purposes. First, it makes sure the lead patent prosecution firm is comfortable with how the international work is being handled. Second, it eliminates the need for the client to deal with multiple firms - most of which are performing minor technical tasks that the client does not understand. Third, it allows the lead firm to work with the client to coordinate strategy and translate the foreign activity into terms the client can understand. Overall, the system works pretty well.

Not so fast, according to Judge Tchaikovsky of the U.S. Bankruptcy Court for the Northern District of California. In In re Lipid Sciences, Inc., 2010 WL 234840 (Bankr. N.D. Cal.), Judge Tchaikovsky denied a fee application filed by patent counsel to a Chapter 7 trustee. Pointing out that the fee application included as costs the fees of foreign patent counsel, the Judge stated "this portion of the costs is entirely inappropriate. Fees may be paid only to court appointed professionals." In her view, each of the foreign counsel would have to be separately retained by the Chapter 7 trustee and file their own fee applications.

This may be correct as a matter of law, but all I can say is good luck getting a firm in London or maybe China to jump through those hoops for what might only be a couple of hundred bucks.

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Warren E. Agin is a partner in Swiggart & Agin, LLC, a boutique law firm in Boston, Massachusetts focusing on the needs of technology companies. Mr. Agin heads its bankruptcy department. The author of the book Bankruptcy and Secured Lending in Cyberspace (3rd Ed. West 2005), Mr. Agin also chaired the ABA's E-commerce and Insolvency Subcommittee from 1999 to 2005, co-chaired the Boston Bar Association's Internet and Computer Law Committee (2003-2005), and served on the American Bar Association's Standing Committee on Technology and Information Services (2008-2011). Mr. Agin currently co-chairs the Editorial Board of Business Law Today. A contributing editor to Norton Bankruptcy Law and Practice, 3d, and co-author of its chapter on intellectual property for the past fifteen years, he is author of numerous legal articles and addresses on topics of technology, internet and bankruptcy law.

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