Broker Copyright Infringement Claim not Time-Barred, Court Rules
A three-judge court of appeals ruled that a federal district court should not have reversed a copyright infringement case brought by broker The Graham Co. against broker USI Holdings Corp.
In this case, insurance brokerage USI infringed copyright law by using client proposal templates from Graham, an insurance brokerage firm that provides property and casualty insurance services to businesses.
Thomas Haughey worked for Graham as a producer—serving as an intermediary between clients and insurance companies—until 1991, according to the court opinion. Graham’s president, William Graham, developed a template called the Standard Works to be used by producers for client-specific proposals.
After Haughey left the firm, he continued to use the Standard Works, distributing it to employees at his new employer, insurance brokerage firm Flanigan, O’Hara & Gentry (FOG). In 1995, FOG was acquired by USI Holdings, and the Standard Works were made available to USI employees. Graham did not discover USI’s infringement until November 2004, when a client showed one of Graham’s producers a copy of a USI proposal to the client.
The Case
The Copyright Act only allows a three-year window for civil action—however, in this case, Graham said it discovered the infringement within three years of bringing suit. The court had to decide whether the three years count from the discovery of a copyright infringement, rather than the actual infringement.
The District Court concluded that the discovery rule applied to civil actions under the Copyright Act, and the case proceeded to a jury trial, according to the court opinion. The jury concluded that Graham’s infringement claims were not time-barred and awarded him $16.6 million against USI and another $2.3 million against Haughey.
However, a district court overturned that finding, ruling that Graham was time-barred from recovering for acts of infringement that occurred more than three years before it filed suit.
The case went to a second jury trial for damages for the three-year before Graham’s filing, and Graham was awarded $1.4 million against USI and $268,000 against Hauhney.
Last week, the 3rd Circuit Court of Appeals reversed the district court’s ruling, saying that the court erred in ruling that Graham’s claims were time-barred. The court is sending the case back to the district court to reconsider.
The case is William A. Graham Company d/b/a The Graham Company v. Thomas P. Haughney; USI MidAtlantic Inc., No. 08-2007.
BlackRock, Inc. says it has executed a purchase agreement to acquire Barclays Global Investors (BGI), including its iShares exchange-traded fund (ETF) platform.
According to a press release, the combination of BlackRock and BGI brings together “market leaders in active and index strategies to create the preeminent asset management firm” operating under the name BlackRock Global Investors (“BlackRock”). The transaction would create an independent and fully integrated asset management firm with combined assets under management of over $2.7 trillion.
The deal was valued at about $13.5 billion.
The announcement noted that Barclays previously entered into an agreement to sell BGI’s iShares business to another party under a “go shop” arrangement, and that, unless Barclays receives an offer from that party within five business days that considers to match the terms of BlackRock’s agreement to acquire BGI, the Board of Directors of Barclays will execute the purchase agreement with BlackRock and recommend it to Barclays’ shareholders for approval.
The firm’s products will include equities, fixed income, cash management and alternatives, and will offer clients diversified access to global markets through separate accounts, common trust funds, mutual funds, ETFs, hedge funds, and closed-end funds.
The ability to offer BlackRock’s global mutual funds alongside iShares will create what the firm’s termed “an unmatched ability to tailor portfolios for retail investors.” iShares has over $300 billion of assets under management (AUM) in more than 350 funds worldwide.
At the closing of this transaction, which the firms say is expected to occur in the fourth quarter, Barclays will hold a 19.9% economic interest in BlackRock. The two firms will seek to expand their relationships in investment banking and wealth management.
At closing, BlackRock will have more than 9,000 employees in 24 countries and have a meaningful presence in all major markets around the world. The addition of the BGI San Francisco office will substantially expand the firm’s U.S. footprint, according to the firms.
Terms of the Transaction
Under the terms of the transaction, BlackRock would acquire BGI in exchange for 37.8 million shares of common and common equivalents in BlackRock and $6.6 billion of cash. The shares will represent a 4.9% voting interest and an aggregate 19.9% economic interest in the combined firm, which will be renamed BlackRock Global Investors.
Under the terms of the agreement, Barclays will have certain restrictions on the sale or acquisition of shares in BlackRock, but will have the right to maintain its ownership percentage if BlackRock issues additional shares in the future.
The cash portion of the purchase price will be funded through a mix of existing cash, committed debt facilities and proceeds from the issuance of equity securities to a group of institutional investors. The cash portion of the purchase price is 100% committed.
A group of banks, including Barclays, Citi and Credit Suisse, has committed to provide BlackRock with a new 364-day revolving credit facility of up to $2.0 billion. The facility would be drawn at closing to the extent necessary and repaid during the term from the proceeds of any capital raising transactions. It is BlackRock’s intent to refinance any draw down under this facility with the proceeds of term debt financings.
BlackRock has received commitments from a group of institutional investors to purchase 19.9 million shares at the closing of the transaction for a total of $2.8 billion.
In addition to the conclusion of the go-shop arrangement, the transaction is subject to approval by Barclays shareholders, regulatory approvals, client consents and customary conditions.
“We are incredibly excited about the potential to significantly expand the scale and scope of our work with investors throughout the world. The combination of active and passive investment products will be unsurpassed, and will enhance our ability to offer comprehensive solutions and tailored portfolios to institutional and retail clients,” said Laurence D. Fink, BlackRock Chairman and CEO.
“People are at the heart of successful firms, and the depth of talent in BlackRock Global Investors will be tremendous. The thought leadership and intellectual capital of the combined firm ensure we will remain at the forefront of addressing key investment issues and trends that have emerged over the past decade and are now accelerating dramatically, including globalization of capital markets, a greater focus on asset allocation, multi-asset class solutions, fiduciary management, risk management and advisory services.”
“I am thrilled that Blake Grossman, CEO of BGI, will serve as a Vice Chairman of the combined firm, head of Scientific Investing, and a member of the Office of the Chairman. I look forward to welcoming him as my partner in leading the organization. I am equally excited about the deeper relationship with Barclays Capital and Barclays Wealth, and look forward to having John Varley and Bob Diamond join BlackRock’s Board of Directors.”
“We have long held BGI in the highest regard, and know that our cultures and values are strongly aligned. Both of our organizations place great emphasis on teamwork, excellence and integrity. The two firms have worked together for over seven years through BlackRock Solutions, where BGI’s U.S. Fixed Income Group is already a client. This relationship will considerably ease integration as we go forward.”
“This relationship offers the opportunity to form a closer relationship between our investment banking and wealth management business and BlackRock,” said Robert E. Diamond, Jr., President of Barclays PLC. “The strength and breadth of BlackRock’s combined platform will deepen our collaboration in serving clients worldwide.”
Citi and Credit Suisse served as lead financial advisors to BlackRock. Banc of America Merrill Lynch Securities, Morgan Stanley, and Perella Weinberg Partners provided additional financial advisory support. Skadden, Arps, Slate, Meagher & Flom served as legal counsel to BlackRock.
