Legal Roundup: Elizabeth Holmes Found Guilty, Morgan Stanley Settles Data Breach Suit and More
Elizabeth Holmes Found Guilty on 4 Counts
The case: In 2018, the U.S. Department of Justice indicted Theranos founder Elizabeth Holmes, charging her with 11 counts of fraud for misrepresenting the company’s blood testing technology.
The U.S. Attorney claimed that Holmes “lied about the accuracy, types and number of tests Theranos’s machines could do to raise funding and secure business deals,” according to The New York Times.
The high profile trial captured attention worldwide, lasting four months. After evidence was presented, jurors deliberated for more than 50 hours over a week.
Scorecard: The jury found Holmes guilty on four counts, including “three counts of wire fraud and one count of conspiracy to commit wire fraud,” reported the Times; and “not guilty on four other counts related to defrauding patients.”
Takeaway: The Theranos trial stands out as a pushback against high-flying Silicon Valley startups that promise the world but do not deliver. The Times wrote that the case “came to symbolize the pitfalls of Silicon Valley’s culture of hustle, hype and greed.”
Each of the four counts carries a maximum sentence of 20 years, “likely to be served concurrently,” according to the Times. Holmes will probably appeal the verdict. The jury was unable to reach a verdict on three remaining counts, and a future court date will address those unresolved claims.
Monsanto Lawsuits Spark Class Action by Bayer Shareholders
The case: Around 320 investors who hold stock in the German company Bayer have filed a lawsuit alleging that the company withheld negative information about Monsanto during the takeover of the American agrochemical giant.
The suit was filed in the district court of Cologne, according to Reuters, and asks for around 2.2 billion Euros, or U.S. $2.5 billion. Tilp, the law firm handling the claim said “it believes Bayer deceived shareholders about the risks of consumer lawsuits pending in the United States linked to the weed killer Roundup.”
Scorecard: The case has just recently been filed and has not yet reached a resolution.
Takeaway: Bayer acquired Monsanto in 2016 for $63 million, and says that complaints are unfounded, as it “complied with the law and disclosure requirements” at the time of the takeover.
Just a month prior, the law firm handling the case disclosed that 250 investors were seeking restitution in the amount of more than one billion euros. This latest announcement represents a significant increase in the number of shareholders and the amount sought, according to Reuters.
Morgan Stanley Agrees to Settle Data Breach Lawsuit for $60 Million
The case: A consolidated class action suit charged Morgan Stanley of allowing a massive data breach that exposed the personal information of 15 million customers.
Back in 2016, the bank “exposed their personal data when it twice failed to properly retire some of its older information technology,” according to Reuters. The suit claims that Morgan Stanley used an “unknown and unqualified vendor to decommission its computer equipment,” and the servers were then resold with unencrypted data intact.
Scorecard: Morgan Stanley has filed a $60 million preliminary settlement in Manhattan federal court to shut down the proposed class action.
Takeaway: The proposed amount was calculated to allow customers to “receive at least two years of fraud insurance coverage, and each can apply for reimbursement of up to $10,000 in out-of-pocket losses,” according to Reuters.
By agreeing to settle, Morgan Stanley denied wrongdoing, and at the same time has bolstered its cybersecurity efforts. Back in 2020, the bank paid a $60 million civil fine “to resolve U.S. Office of the Comptroller of the Currency accusations concerning the incidents,” reported Reuters.
Sonos Wins Patent Infringement Case Against Google
The case: In 2020, Sonos accused Google’s Alphabet Inc. of patent infringement and technology theft in a case filed with the U.S. International Trade Commission and the U.S. District Court in Los Angeles, according to the Wall Street Journal.
The two companies had enjoyed a partnership pairing Sonos technology and Google services, but the relationship soured. “The suit claimed that Google gained knowledge, as early as 2013, of Sonos’s patented wireless multiroom technology,” reported the WSJ. As Google’s speaker business soared, it represented a competitive challenge to Sonos.
Scorecard: The U.S. International Trade Commission found Alphabet to be in violation of “five of Sonos’s patents related to synchronizing audio, adjusting volume and connecting to Wi-Fi,” according to the WSJ.
Takeaway: Alphabet is now barred from importing products, including the Nest speaker and Pixel smartphone, that use the violating patents.
The company plans to appeal the verdict, and it has since retooled its product line to eliminate the offending patents from designs.
“The court vetted those changes and ruled that the overhauled products can be shipped without violating the import ban,” reported the WSJ.
Last year, Google countersued Sonos for patent infringement. The Journal notes that “the tit-for-tat tussle over patents has become a regular strategy for tech players fighting to maintain their leadership in a category.” &