The U.S. Court of Appeals for the Federal Circuit’s blockbuster patent ruling Thursday in the In re Bilski case obviously has important repercussions for the future of software patents, a subject I wrote about in the post entitled, “Ending software patents: Has the time come?“

Since I am under a difficult deadline on an unrelated matter, I can’t yet tackle this subject myself, but I did want to refer readers to a couple remarkable postings from a pro-software patent attorney who takes the position that Bilski amounts to a complete rejection of the whole notion of software patents – a position that, if true, would have enormous repercussions for companies like Microsoft (MSFT), which has invested millions to compile vast arsenals of them, as well as the patent-threatened Linux community, and its promoters like Novell (NOVL) and Red Hat (RHT). The poster, Gene Quinn, is a New Hampshire patent attorney at White & Quinn, and a contributing editor to the PLI’s (Practicing Law Institute’s) Patent Brief Web site, where these posts appear.

I haven’t read Bilski yet, so I’m not vouching in any way for the cogency of Quinn’s interpretation, but I just wanted to let readers see the posts, assess them, and express comments. For a quick summary of Bilski and why it’s important, here’s the Wall Street Journal Law Blog’s discussion. Here’s Quinn’s first post, entitled Federal Circuit Decides Software No Longer Patentable, and here’s the second, entitled “State Street Overruled … PERIOD.”

Will presidential candidates say anything to pander to voters? Last week I took John McCain to task for his dumb idea of spending $300 billion to buy mortgages so that so-called homeowners can be bailed out instead of Wall Street banks. The highlights of the McCain plan are the determination of who is creditworthy as well as a pre-determined, finger-in-the-wind interest rate of 5%, which sounds so attractive to me that I’d like one of those too.

Even better would be the ability of those of us who are current on our mortgages to participate in one of Barack Obama’s latest proposals to save the economy, a three-month moratorium on foreclosures for mortgage holders who are trying “in good faith” to pay their mortgages but can’t. I wouldn’t mind skipping three months of mortgage payments, assuming I didn’t face a penalty for doing so. I promise I’d put the money to good use too. Maybe I’d buy a car.

Obama has done a relatively good job so far on the pander-meter, such as when he stayed away from the gas-tax holiday McCain and Hillary Clinton advocated last summer. Then there’s this idea, which might buy some votes but isn’t likely to sit right with people who really do own a piece of their homes because they are current on their mortgages.

The execution of a moratorium would be interesting. Would borrowers still owe the full amount, including interest, they didn’t pay during their mortgage holiday? How to determine “good faith?” Does Obama plan for the Treasury to compensate banks for the non-payments or for the time the bank loses between foreclosing and attempting to recover something for their seized asset?

The good news is that, as far as whose plan wins out, we’ll know soon enough.

I’ve been trying hard to understand John McCain’s mortgage proposal. Here are my two favorite elements: 1) that all troubled but heretofore creditworthy mortgage holders would be eligible to participate; and 2) that once the government purchased their mortgage it would then lend the money again, pegged to the “new” value and, importantly, at a 30-year-fixed rate of 5%.

Let’s take these one at a time. McCain’s definition of creditworthiness seems to be that the borrower didn’t falsify information at the time of the initial loan and that they “provided a down payment.” This is silly in the extreme. It’s plainly obvious that all sorts of people couldn’t afford the homes they bought, whether or not they told the truth and whether or not they had good credit. Simply having made a down payment isn’t particularly meaningful, either. The size of the down payment and the validity of the appraisal are far more relevant.

As for McCain boldly suggesting that 10 million “homeowners” (I use quotes because these poor souls are renters, not owners) should receive a fixed-rate mortgage at 5%, about a full percentage point below the current rates, I repeat my thought when various politicians and policymakers floated a similar idea last year: I want my mortgage rate frozen too. It’d be lovely to get a below-market-rate mortgage, and doesn’t McCain think the folks who acted prudently when they bought their homes would like a break too? I know I would.

***

I read an interesting quote in The Wall Street Journal earlier in the week, back when Americans had lost only $2 trillion in their retirement plans in the previous 15 months. The article ended with the following suggestion:

Teresa Ghilarducci, a professor of economic policy at the New School for Social Research in New York, said Congress should let workers trade 401(k) assets to the government – perhaps valued at mid-August prices – for a retirement account composed of government bonds. She called the 401(k) a “failed experiment.”

My first reaction to this was, ‘What a ridiculous suggestion.’ Re-pricing bad decisions being guaranteed valuations from another time and place? Who wouldn’t take that offer and imagine how much it would cost the government? No way. Then I thought for a moment about all the crazy things the government is doing, and suddenly this idea didn’t quite so ludicrous.

***

The Journal had comments today from Sequoia Capital and Benchmark Capital, two prominent VC firms, advising their portfolio companies to hunker down. Ron Conway, a successful and well connected ‘angel’ investor, had this advice earlier in the week for companies in which he has invested:

The message is simple.  Raising capital will be much more difficult now.

You should lower your “burn rate” to raise at least 3-6 months or more of funding via cost reductions, even if it means staff reductions and reduced marketing and G&A expenses.  This is the equivalent to “raising an internal round” through cost reductions to buy you more time until you need to raise money again; hopefully when fund raising is more feasible.  Letting go of staff is hard and often gut wrenching.  A re-evaluation of timelines and re-focus on milestones with the eye of doing more with less will allow you to live many more days, and the name of the game in this environment in some respects is survival–survival until conditions change.

 

 

***

And finally, an e-mail from Fortune Managing Editor Andy Serwer, who happened to be in San Francisco at the beginning of the week: “New Wachovia branch .. on the corner of Geary and Market …Big sign in the window: ‘Coming soon!’ … Actually, not.”

Yahoo’s ad alliance with Google seems like a great deal to Messrs. Brin, Page, and Yang. Now they just have to win over the Justice Department.

Google and Yahoo had hoped to have it all up and running by now. As you may recall, the two Internet giants announced an alliance last June in which Google would supply Yahoo with search ads to supplement Yahoo’s own. Google would get a big new customer for its ad-delivery service, while Yahoo would get a new source of revenue – and best of all, they’d keep Microsoft from swallowing Yahoo.

Then Washington got in the way. Due to pushback from antitrust regulators, in early October, Google (GOOG) and Yahoo (YHOO) put off the launch to give the Justice Department more time to chew on it. In September, Justice reportedly hired veteran antitrust litigator (and former Walt Disney vice chairman) Sandy Litvack to help review the deal, and soon thereafter Canadian authorities hired an outside lawyer too. The European Union is also taking a hard look.

What’s the hang-up? Well, there are three basic concerns about just what this alliance really amounts to. First, if it had been a merger between Google, with 70% share in the paid-search market, and Yahoo, with the next 20%, it would clearly violate antitrust laws by creating a monopoly. (Paid-search ads are the ones that show up near the top of a search-result screen or off to the side, under the rubric “sponsored links.”) Second, if Google were paying Yahoo to exit the paid-search arena, that would be an illegal agreement between competitors to allocate markets. Third, if Google and Yahoo were agreeing to set a price floor for the two companies’ paid-search offerings, that would be illegal price-fixing.

Yahoo’s ad alliance with Google seems like a great deal to Messrs. Brin, Page, and Yang. Now they just have to win over the Justice Department.

Google and Yahoo had hoped to have it all up and running by now. As you may recall, the two Internet giants announced an alliance last June in which Google would supply Yahoo with search ads to supplement Yahoo’s own. Google would get a big new customer for its ad-delivery service, while Yahoo would get a new source of revenue – and best of all, they’d keep Microsoft from swallowing Yahoo.

Then Washington got in the way. Due to pushback from antitrust regulators, in early October, Google (GOOG) and Yahoo (YHOO) put off the launch to give the Justice Department more time to chew on it. In September, Justice reportedly hired veteran antitrust litigator (and former Walt Disney vice chairman) Sandy Litvack to help review the deal, and soon thereafter Canadian authorities hired an outside lawyer too. The European Union is also taking a hard look.

What’s the hang-up? Well, there are three basic concerns about just what this alliance really amounts to. First, if it had been a merger between Google, with 70% share in the paid-search market, and Yahoo, with the next 20%, it would clearly violate antitrust laws by creating a monopoly. (Paid-search ads are the ones that show up near the top of a search-result screen or off to the side, under the rubric “sponsored links.”) Second, if Google were paying Yahoo to exit the paid-search arena, that would be an illegal agreement between competitors to allocate markets. Third, if Google and Yahoo were agreeing to set a price floor for the two companies’ paid-search offerings, that would be illegal price-fixing.

Russia’s $22.5 billion case against the Bank of New York Mellon now appears to hinge upon a stray misstatement contained in a continuing legal education outline written by a lawyer who’s never been involved in the case, and who was simply repeating a misstatement contained in a government press release that was later amended to delete the misstatement due to its inaccuracy.

This takes a little while to explain, but I really think it’s worth the trouble. I’ve never seen anything quite like it.

Last week, I explained here that Manhattan federal prosecutors seemed to have blown a massive hole in the Russian Federal Customs Service’s exceedingly unusual $22.5 billion civil RICO case against the Bank of New York Mellon (BK), a case that, notwithstanding its purported reliance on U.S. law, Russia has chosen to file in a commercial court in Moscow, known as an arbitrazh court.

As explained in that earlier post, Russia’s lead lawyer, a Miami-based airplane-crash lawyer named Steven C. Marks of Podhurst Orseck, has predicated his case in large part on the premise that when Bank of New York entered into a non-prosecution agreement in Nov. 2005, it admitted criminal responsibility for the actions of rogue vice president Lucy Edwards in the late 1990s. Edwards pled guilty in 2000 to having helped Russian citizens illegally wire transfer their money out of that country via Bank of New York accounts.

This July, however, the federal prosecutors office that had investigated the bank refuted Marks’ claim, explaining that the bank had never admitted “criminal culpability.” (The clarification came in this letter, which I published last week.)

Although nothing in the nonprosecution agreement itself had ever said that the bank admitted criminal responsibility for Edwards’ conduct, a poorly-written government press release that accompanied the nonprosecution agreement did leave that misimpression, stating that the bank had “admitted its criminal conduct.” It did so in part because it was actually reporting the resolution of two unrelated probes tied to different Bank of New York branches. In the view of the prosecutors, the bank was, in fact, admitting criminal responsibility for certain wrongdoing at a branch on Long Island (which had nothing to do with Russia), but not for what Lucy Edwards had done, which related to a branch in Manhattan.)

In August of this year, federal prosecutors further tried to clarify the situation by issuing an amended version of the original press release, deleting from it the language about the bank having “admitted its criminal conduct” that Marks had repeatedly quoted in statements to the press, bank stock analysts, and the court. The amended release also made clear that certain other language in the release — including language quoted by Russia’s retained expert Alan Dershowitz in his affidavit in the case — actually related to the Long Island probe, not the Lucy Edwards matter. I described that situation in this feature story for the Sept, 29 issue of Fortune. (As reported there, Dershowitz never responded to my inquiries about the apparent mistake, and Marks’s comment was cryptic and hard to characterize; you can read it for yourself there.)

On Monday of this week, at the resumption of a pretrial hearing in the case, two of the bank’s key experts testified. One of them, former U.S. attorney general Richard Thornburgh, addressed the meaning of the nonprosecution agreement, the government press release, the press release’s amendment, and the July letter from the Manhattan U.S. Attorney’s Office stating that the bank had never admitted criminal culpability in connection with Edwards’ conduct. Thornburgh, now a partner at the K&L Gates law firm, testified that the bank had never been charged with criminal conduct, let alone admitted any.

If Russia had wanted to cross-examine Thornburgh, it could have, of course. Instead, to the amazement of the bank’s lawyers, Russia sent no representatives at all to the long-scheduled hearing, as I reported here. Instead, its lawyers simply sent a fax to the judge that morning asking for an adjournment, explaining that all of its lawyers were too busy to attend. Though Marks was checked in at his Moscow hotel, according to what a hotel receptionist told me, and had apparently flown to Russia solely to attend that hearing, he didn’t show up. The judge rejected the faxed request and took testimony anyway — it was, after all, the third time Thornburgh and the other expert, Greg Joseph, had made the trip to Russia hoping to testify. At the end of the day the judge adjourned the hearing until Nov. 13.

Marks never returned a Monday voicemail or email seeking comment about why none of Russia’s lawyers attended, and Russia’s public relations firm, the Miami office of Burson Marsteller, has not yet responded to the same question, which I posed to it yesterday at about 12:30 pm.

What Burson Marsteller did do yesterday, however, was issue this statement, which does not explain or even allude to the fact that its client failed to show up. The statement also does not explain or even allude to the recently revealed July letter from the Manhattan prosecutors office — denying that the bank ever admitted criminal culpability — that, as I’ve said, seems to blow a massive hole in its case. Instead, Burson Marsteller’s statement reveals how Russia purportedly would cross-examine Thornburgh in the event that the bank agrees to schlep him back to Russia at some time in the future (and assuming, of course, that Russia’s lawyers aren’t still too busy with other matters to attend).

Here’s how Russia purportedly would undermine Thornburgh’s credibility, according to Burson Marsteller: “He and/or his firm stated the following in an article written with his assistance: ‘the Non-Prosecution Agreement relates to BNY’s responsibility for crimes involving fraud and money laundering, as well as BNY’s failure to comply with mandatory reporting obligations… As part of the non-prosecution agreement, BNY agreed to… admit to its criminal conduct.’”

I was familiar with the “article” Burson Marsteller was referring to, since Marks had cited it prominently in a document called “Case Summary for the Press,” which he sent to me when I first started looking into the case. (The article was highlighted in paragraph two of Marks’s five-page press document; paragraph one had been devoted to the subsequently deleted language from the government press release.)

In conversations with me, Marks usually referred to this document as “the Thornburgh memo,” and the digital file he sent me of it was labeled “Thornb article.” All it really is, however, is this Continuing Legal Education document, written by Barry Hartman, who, like Thornburgh, is a partner at K&L Gates, which is a firm of 1,235 lawyers and 243 partners, according to The American Lawyer. (Hartman declined to comment for this story. Suffice it to say that I am aware of no public record anywhere suggesting that Hartman has ever personally represented the Bank of New York in any matter whatsoever. A different law firm entirely, Sullivan & Cromwell, represented the bank in connection with its non-prosecution agreement in 2005.)

In the section of Hartman’s presentation relating to non-prosecution agreements, he lists 12 examples, including the Bank of New York’s, and gives a short, blurb-like summary of each. Footnotes explain the sources of Hartman’s information. For the Bank of New York entry (see page 15) Hartman’s footnote (footnote 24) lists his sole source of information as — you guessed it — the government’s Nov, 8, 2005 press release that was, in August of this year, amended to delete the language that Russia and Burson Marsteller are still trying to draw our attention to.

That leaves one final question. Why do Russia, Burson Marsteller, and Marks think that Thornburgh had anything to do with Hartman’s CLE outline? I asked Marks that question some weeks back, and he drew my attention to footnote 1 of the document (page 2) in which Hartman acknowledges that he’s made use of a CLE outline Thornburgh wrote on the subject of internal corporate investigations. What’s that got to do with anything? Probably nothing at all, since, as is apparent from the title page, Hartman’s talk had two parts: part one was about internal corporate investigations, and part two was about nonprosecution agreements. Thornburgh’s outline was pertinent to part one.

But Marks saw it differently when he emailed me on Sept. 2: “Presumably, before his partner put his name on the article, he showed it to him and Mr. Thornburgh explicitly or at least implicitly agreed to the contents. For all we know, his important contribution concerned that very section,” Marks wrote, referring to the part about the Bank of New York’s nonprosecution agreement, whose source had been explicitly identified as the government’s later corrected press release.

Is this the stuff that $22.5 billion lawsuits are made of?

I have 251 “friends” on Facebook. That’s incredible to me, since I never use Facebook. On my Facebook home page, I also have 103 friend requests I’m not likely to accept, 66 “other requests” I’ll probably never read and four suggestions about which I have no intention of learning.

Once, I probably could be accused of not “getting” Facebook. That’s not true anymore. I get it. I think it’s not only a great way for friends (more on that charming concept later) to keep in touch with each other. It’s also a compelling form of entertainment.  In “researching” this post, I spent quite a few enjoyable minutes reading about some of the things people I know are doing.

So why don’t I use Facebook? First of all, I can barely get through my e-mail inbox each week. I definitely can’t finish the three newspapers I get each day, and I really like to read them. They’re loaded with nontrivial information. When I am in the mood for mush, however, I’d so much rather be watching mindless television than spending even more time in front of a computer.

But that’s not the only reason. I’m a really gregarious guy. I have lots of friends and even more acquaintances. But 354 bosom buddies with whom I’d like to share the most intimate details of my life? Definitely not. One thing I’ve considered doing is suggesting to all my business contacts who have attempted to “friend” me on Facebook that instead we be “contacts” on LinkedIn. Then I could manage down my friend list on Facebook to, well, my friends.

Incidentally, it’ll be interesting to see how Facebook does in a rough economy. Jeff Segal at Breakingviews.com posted a compelling piece on how the startup, which is leaking top executives, will likely need to raise more money soon. Smart startups are busy conserving cash and Facebook is distributing it. That’s an effect I’d like to read about in my buddy David Kirkpatrick’s book on Facebook next year.

Since a number of people have emailed me seeking English translations of the various international rulings relating to whether eBay (or other online auction houses, of course) can be held liable when visitors sell counterfeit goods on its site, I thought I’d collect and post all the translations I have in one location. They might be easier to find this way using a search engine. If and when I obtain more, I’ll add them. (I’m not bothering with accents and the like because they’re a hassle to produce and also sometimes foil searches when the query doesn’t include them.)

BELGIUM
July 31, 2008: Lancome Parfums et Beaute (L’Oreal) v. eBay in the Commercial Court in Brussels (Tribunal de commerce de Bruxelles)
Lancome (L’Oreal) in English
Lancome (L’Oreal) in French

FRANCE:
June 4, 2008: Hermes v. eBay in the Troyes Court of First Instance (Tribunal de grande instance de Troyes)
Hermes ruling in English (This file also includes English translations of all the LVMH rulings)
Hermes ruling in French or French link

June 30, 2008: The three LVMH rulings in the Commercial Court of Paris (Tribunal de commerce de Paris):
1. SA Louis Vuitton Malletier v. eBay
Louis Vuitton Malletier in English
Louis Vuitton Malletier in French
2. Christian Dior Couture v. eBay
Christian Dior Couture in English
Christian Dior Couture in French (link)
3. SA Parfums Christian Dior v. eBay
Parfums Christian Dior in English
Parfums Christian Dior in French (link)

July 11: stay denied in Parfums Christian Dior (Guerlain) appeals by Court of Appeal of Paris (Cour d’appel de Paris)
[sorry, no English translation yet]
French link

GERMANY
April 30, 2008: ricardo.de v Rolex in the Federal Court of Justice
Rolex in English
[ricardo.de is not eBay, of course; it's a different online auction house. eBay itself was also sued by Rolex, with a ruling against eBay in April 2007 having been controlled, I'm told, by the earlier rulings in the ricardo.de case. I don't have an English translation of the actual eBay case. The German language Rolex v eBay ruling is here.]

UNITED STATES (for convenience and completeness)
July 14, 2008: Tiffany Inc. v eBay in the U.S. District Court, SDNY
Tiffany v eBay

Tuesday night’s “town-hall” meeting from Nashville had all the hallmarks of what voters have come to dislike about these non-debates. The candidates often avoided directly answering questions, they broke the rules their campaigns had agreed to, and they speechified rather than engage in a serious discussion of the issues.

And yet, for one moment, Barack Obama showed why he is ahead in the polls. He did it by giving the single best explanation I’ve seen from anyone — politician, Treasury Secretary Henry Paulson, the talking heads — of why the rescue plan Congress passed last week is good for the American people. Remember, the conventional wisdom, certainly among angry opponents of the bill, is this is a Wall Street bailout and doesn’t do enough for Main Street.

When Oliver Clark asked the candidates what’s in the plan to help ordinary people, John McCain answered first, railing against “greed and excess in Washington and Wall Street,” blaming Obama’s “cronies” at Fannie Mae (FNM) and Freddie Mac (FRE), patting himself on the back for suggesting two years ago that the housing situation needed fixing, all before finally saying, “So this rescue package means that we will stabilize markets, we will shore up these institutions.” McCain then took another swipe at Obama.

Here, from the CNN transcript of the debate, is Obama’s complete response, up to the point where he too began congratulating himself for his foresight on the issue:

Well, Oliver, first, let me tell you what’s in the rescue package for you. Right now, the credit markets are frozen up and what that means, as a practical matter, is that small businesses and some large businesses just can’t get loans. If they can’t get a loan, that means that they can’t make payroll. If they can’t make payroll, then they may end up having to shut their doors and lay people off.  And if you imagine just one company trying to deal with that, now imagine a million companies all across the country.  So it could end up having an adverse effect on everybody, and that’s why we had to take action.

Nailed it. This is exactly what a leader should do: communicate to the people in clear, truthful terms about important topics. Obama succinctly explained exactly why it’s important to inject liquidity into the system — and why that’s more important now than directly helping individuals. (I wondered, by the way, if it was accurate to refer to “millions” of companies in the United States. In fact, according to the IRS, 5.7 million corporations filed business income tax returns in 2005, the last year the agency provided data. Obama not only knows the price of gas in Nashville, he also knows how many companies there are in America. And he found a way to simplify a complex topic without dumbing down his explanation.

McCain wasn’t terrible Tuesday night. But he did whiff a number of times. Why would he mention as a potential Treasury chief Warren Buffett, while also noting that WB supports Obama? As for citing Meg Whitman, the former CEO of eBay (EBAY), because “she knows how to create jobs,” did anyone tell McCain that the company Whitman headed until six months ago, getting badly outmaneuvered by Google (GOOG) and Amazon.com (AMZN) in the process, just announced it is letting go 1,000 employees? His most newsworthy comment, a proposal to spend $300 billion on bad mortgages, came off as a hastily conceived gimmick that if he’s serious ought to have been part of the Senate debate, not a populist grenade tossed on national television.

Then there was McCain’s bizarre off-the-cuff comment about how perhaps he needs hair transplants in the context of, if you can follow this, the types of rich folks whose health insurance policies are so good (even hair plugs are covered!) that they wouldn’t benefit from his tax-credit plan.

Obama wasn’t perfect. He gave a Clintonian answer when asked if he’d defend Israel from an attack by Iran when a simple “yes” would have sent a more powerful message to Jewish voters. But then brevity and concision isn’t a strong point of either candidate.

On balance, Obama more frequently respected the undecided voters in the hall by answering their questions. He’d ask Americans to sacrifice by expanding the Peace Corps; he wouldn’t necessarily take up Social Security reform in the first two years of his administration because there are more pressing matters. McCain, meanwhile, wants a commission to solve the Medicare problem, referred to his “hero,” Ronald Reagan, before referring to “my hero, Teddy Roosevelt,” and more than once talked down to voters, suggesting that they’d probably never heard of Fannie and Freddie before a few months ago.

The political pundits all said McCain needed to deliver a knockout punch to get back in this race. Looks more like he swung and missed.

A weird case got weirder this morning, when the Russian Federal Customs Service failed to send any representative at all to appear in a Moscow court for the resumption of pretrial hearings in its $22.5 billion suit against the Bank of New York Mellon (BK), according to a lawyer for the bank.

According to Damien J. Marshall, a Boies Schiller & Flexner partner representing the bank at the hearing, Judge Lyodmila Pulova explained that the customs service had faxed her a petition this morning requesting a delay until Oct. 15, and explaining only that the the service’s lawyers were busy with other matters.

Overruling Russia’s request, the judge agreed to hear testimony anyway from two of the bank’s U.S. experts — including former attorney general Richard Thornburgh — who had traveled to Russia just for the hearing, according to Marshall. When the witnesses had finished (with no cross-examination, obviously), Judge Pulova put off continuation of the hearing until Nov. 13.

An email and voicemail message for Steven C. Marks of Miami’s Podhurst Orseck, the lead lawyer for Russia in the case, were not immediately returned. The voicemail was left at Marks’s Moscow hotel. (The receptionist confirmed that Marks had checked in.)

The suit stems from the conduct of a rogue Bank of New York vice president who pleaded guilty in February 2000 to having helped depositors of a Russian bank smuggle about $7.5 billion out of Russia from 1996 to 1999 through Bank of New York accounts. The bank was never charged in connection with the case, but did enter into a non-prosecution agreement on Nov. 8, 2005, in which it agreed to pay a $14 million fine, acknowledged various regulatory lapses, and accepted “responsibility” for what had happened.

The suit is unusual in that Russia has brought it under the American civil RICO statute, but has filed it in one of its own commercial courts, known as the Arbitrazh Court for the City of Moscow. There is substantial question among experts on the Russian legal system as to whether a Russian arbitrazh court has the judicial independence necessary to rule against the Russian government in a high-stakes case.

Here is a feature story I wrote about the case for Fortune’s Sept. 29 issue.

The issue at the pretrial hearings is whether the arbitrazh court — which, as a commercial court, has no jurisdiction to interpret criminal laws (even Russian criminal laws) — can adjudicate a civil RICO case, where liability of the bank hinges upon the court finding that it has violated U.S. criminal laws.

Russia had hoped to argue that the bank had already admitted criminal liability by entering into the nonprosecution agreement, and that, therefore, the Russian court would not have to interpret any criminal laws. However, in recent weeks, as explained in this update last week, the Manhattan prosecutors who investigated the bank have disputed Russia’s claim, stating in a letter that the bank never admitted “criminal culpability.”

At today’s hearing, RICO expert Gregory Joseph presented an 80-slide PowerPoint presentation to the court, explaining why he believes that the court’s task would inevitably require it to interpret U.S. criminal laws. His testimony was followed by that of former attorney general Thornburgh, who discussed the meaning of the non-prosecution agreement and the Manhattan prosecutors’ recent letter of clarification, and said that the bank had never been charged with, let alone admitted, criminal wrongdoing.

In a phone interview, the bank’s lead counsel, Jonathan Schiller of Boies Schiller & Flexner, acknowledges that he does not know the meaning of today’s events, but says they might reflect Russia’s “reconsideration of the claim and thoughtful review . . . of whether to proceed with the case. . . . The evidence presented today established the false and inaccurate assertions by the plaintiff’s U.S. attorney at the heart of the case, and made clear that the Bank of New York did not admit or engage in criminal wrongdoing as the plaintiff’s lawyer has represented in court.”