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Posts Tagged ‘legal’

You can learn all sorts of interesting tidbits from legal documents. For instance, in one of the legal briefs unsealed today in the YouTube-Viacom dispute, such as the amount of money YouTube co-founder Chad Hurley made from the $1.65 billion sale of the company to Google in 2006. His take: $334 million (based on the November, 13, 2006 closing price of Google’s stock). In other words, the young CEO owned about 20 percent of YouTube at the time of the sale.

YouTube’s other co-founder Steve Chen’s stake was worth $301 million at the time of the sale, and the third co-founder Jawed Karim walked away with $66 million. Even YouTube interface designer Christina Brodbeck “received Google shares worth $9.09 million.”

The VCs did even better. Sequoia Capital, YouTube’s venture backer, turned a $9 million investment into $516 million (or about 31 percent of the total). And Artis Capital turned a $3 million investment into $85 million.

Another notable stat from the legal docs: in the past five years, more than 500 million videos have been uploaded to YouTube overall.

Hulu investor Providence Equity Partners is pumping $50 million into a new online video company set up by Chinese Internet search giant Baidu.

The news comes roughly 7 weeks after Baidu confirmed plans to established a new independent company to provide licensed, advertising-supported online video content to Chinese Internet users.

Although it isn’t yet explicitly confirming that the name of the new company will be Qiyi in the press release about the investment, Baidu says it has registered the domain name qiyi.com for the venture.

Reuters broke the news about a possible forthcoming investment by Providence Equity Partners in the new venture on January 5, citing local news sources who reported that the new joint venture company had received about $60 million in private equity funds, with Baidu investing about $10 million into the firm.

If those reports were accurate, that means Qiyi only has Baidu and Providence as its backers for now. Baidu has also said that it will continue to maintain majority ownership in Qiyi.

According to eMarketer, China will have 518 million Internet users in 2010. The size of the country’s online video market was approximately 162 million yuan ($23.73 million) in Q3 2009, according to data from research firm Analysys International, and analysts expect sales to triple in the coming years.

Update: more context on the space is available here (via comments).

Baidu stresses that it will work with regulators to ensure the “lawful distribution” of professionally produced media and entertainment content on the Internet.

From the About page:

Qiyi (www.qiyi.com) is an independent operated video website created by the world’s largest Chinese search engine Baidu Inc(BIDU.O). Qiyi intends to be a high-definition online video platform, offering the latest, the most complete, and most professional high-quality licensed content to users for free.

Under the premise of orientating correct public opinions and strictly executing the government policy and regulation, Qiyi provides diversified licensed video content and launches various channels for hit TV shows, movies, documentaries, cartoons, music, variety shows, etc., to fulfill the increasing needs from the users and to enriches customers’ cultural life.

According to the customer-oriented principle of Baidu, Qiyi aspires to reach the highest satisfaction of customers, and strives for perfection of exclusive content, reasonable products and viewing experience.

Meanwhile, Qiyi will strictly abide by copyright laws and administrative regulations, to take copyright protection measures to protect the legitimate rights and interests of copyright holders. Qiyi copyright of all content through legitimate channels such as procurement obtained.

Qiyi adopts meanwhile a series of measures to protect the legal rights of content providers and follows strictly the copyright-related laws and regulations. All videos on Qiyi are from legal channels.

Qiyi makes profit from advertisers on the websites and will also committed to developing other profit models supported by both of the users and the advertisers. The licensed online videos are totally free for internet users.

Qiyi keeps making efforts in the future operations to be the favorite video viewing platform of Chinese internet users’, and meanwhile to spread the advanced socialism culture by undertaking its social responsibility as an outstanding corporate citizen. Qiyi is playing a positive role in developing a harmonious society.

It’s just like Hulu, only with governmental censorship!

(Via press release)

It’s getting to be a mighty dangerous place out there for DS pirates. Several months ago , Nintendo decided to sue a few of the big DS hacking companies out there, and although that ended up causing a major boost to those companies’ sales, it looks like the big N is starting to crack down on resellers too

Read the rest here: 
Nintendo successfully sues Aussie etailer for selling DS flash cartridges

Intelius, a site that helps users find information about others, continues to have more bad news around its senior execs. John Arnold, a cofounder and EVP, has been indicted on a charge of lying to a grand jury about having sex with a dancer.

The company has been trying to go public despite hundreds of scam complaints, and the atrocious legal record of CEO Naveen Jain. We covered many of the issues back in 2008. Last year the U.S. Senate began an investigation into the post transaction marketing offers that drive much of Intelius’ revenue.

The new charges are somewhat ironic, since Intelius recently launched an iPhone dating application called datecheck.

Arnold, now charged with lying to a grand jury about his sexual exploits, said of datecheck:

Date Check is like having a private investigator in your purse..Letting a stranger into your life is a huge risk, and in the age of Internet anonymity, a simple online search isn’t enough to tell you everything you need to know.

Indeed. Except, datecheck isn’t so useful if you want to date an Intelius cofounder. The company has removed the legal records of its own founders from the application.

In my recent post on how stealth mode is a bad idea, I advised entrepreneurs to come out of their shells.  To build marketable products, you need feedback from customers, potential investors/partners and business advisers. And the veil of secrecy which comes with being in stealth mode blocks this feedback. But there is a flip-side that I want to make entrepreneurs more aware of: It is a tough world out there and some big and small competitors will deliberately or accidentally steal your ideas. A few of these players are predators much like the beasts of Pandora. So there needs to be a balance. You need to air your ideas, but use every available mechanism to protect yourself. When you do come under attack, run as fast as you can or fight like hell.

I’m going to explain all this through three examples. But first, I’ll cover the basics about patents.

A patent gives the holder the legal right to exclude others from making, using, or selling their invention. So the idea becomes like a piece of land, and patenting the idea before someone else does is like buying that land. Patents can be valuable when done right, but most are not. The vast majority of the patents out there are worth less than the paper they are printed on because they are obscure inventions with little real world relevance or they are filed in a way that they do not provide any protection. I’ve written about this for BusinessWeek and you can read some more tips on patenting here.

The problem is that even when you have a good patent, it can be very costly to enforce. Take the case of Amit Jaipuria, founder of GizaPage, which is based in Bangalore, India. Amit believes he owns the second patent in the world in the social networking space (the first being the “six degrees” Weinreich patent which was bought by LinkedIn in 2002-03). In early 2000 (well before Friendster, Myspace, Facebook and Twitter came into existence), he had an idea for creating an online social network for professional networking. He filed a provisional patent in India and then started the process for filing in the U.S on July 11, 2001. Five years and  three “non-final rejections” by the US Patent Office (USPTO) later, Amit was granted Patent 7047202 in May 2006 titled “Method and apparatus for optimizing networking potential using a secured system for an online community”.

By this time, the social networking space had evolved and Amit was convinced he was sitting on a goldmine. So, Amit headed to Silicon Valley with the patent and a PowerPoint presentation to raise funding for a play in the social networking space. His hope was to raise venture capital based on the intellectual property (IP) he owned. However, since the patent had not been licensed by anyone, the VCs didn’t bite. And he couldn’t get any law firm to take his case on full contingency (they wanted him to share part of their costs – and he couldn’t afford this). He decided to auction the patent through OceanTomo (which specializes in selling IP). Unfortunately, he put in a reserve for  $3 million for it and the bidding stopped at around $2.5 million. Since the patent did not reach the reserve, it did not sell that day. However immediately after that, Amit was contacted by all the major social networks. One of them even offered a hybrid arrangement with a cash and stock sale. During these negotiations, someone anonymously challenged the patent with a claim of prior art. This claim asserted that evidence existed showing a similar patent or IP  pre-dated Amit’s patent.  The challenge muddied the waters and all the social networks walked away from the deal.

After subsequent reexaminations Amit got a final decision on his patent in early 2009. The USPTO narrowed Amit’s  claims due to the evidence of prior art cited in the appeal. But other claims related to key social networking features were granted as part of the narrowed patent. Amit feels these features are unique to the industry and can cover key potential areas for feature expansion. The patent is valid until 2020 and Amit is happy he has his patent. With limited resources and a focus on building his new venture, Amit hopes that he will be able to monetize his patent sometime in the future.

The moral of Amit’s story is simple. Even if you have a patent, you probably will have trouble defending it because large entities can outgun you in court and risk-averse lawyers are generally unwilling to take dicey cases for small clients on a contingency basis. In other words, a patent is really nice on your wall but it may not give you magical powers to negotiate deals with tech titans.

There are many other cases where an entrepreneur thinks they are first with a great idea but don’t really have anything a patent can defend. Such is the case with Kent Fuselier, an indie record label owner and entrepreneur who sought to launch a reality TV programming business that relied on a Facebook fan group to generate content and vote on ideas and winners and losers. He called his business “The Texas Producer”. Kent sent out promo packets and several days later Simon Fuller, a co-creator of the TV blockbuster “American Idol” announced he was launching a similar program. Kent was beside himself and worried that this new entry with a huge backer would steal his thunder.

So Kent emailed me to ask for advice on how he can defend his IP. I am answering him here. Simply, you can’t defend that kind of IP and you need to run like hell to stay ahead of Simon Fuller and his crew if you hope to make your business work. Getting a patent on a piece of technology is hard enough but convincing a court of law that a television show concept is some form of IP is nearly impossible. Why? Because prior art of some sort is everywhere. Somewhere, someone probably discussed or nearly launched a similar concept.

Which leads me to the second part of my advice. Namely, a small company that wants to go toe-to-toe with a Goliath and win should rely on its speed and nimbleness. For Simon Fuller to get his program launched and running, it will likely take months of work and meeting after meeting after meeting. Kent can launch his program as fast as he wants to. Major networks are impossible to crack for new shows even for experienced producers, let alone those with no major national television credits. But perhaps Kent can garner a large enough Web audience that can turn his program into a viable business in its own right or even into a program that the major national content producers find appealing. So run, Kent, run and don’t look back at any IP violations, real or perceived.

In the rare instance when an entrepreneur has a very clear case and has a decent amount of resources to start a legal battle against a Goliath, the message to all the entrepreneurial David’s in the world is this. Forget about standard hand-to-hand combat or even hopes of niceties and use that slingshot right from the get go. If you are going to sue a big company, make sure they know it and you can bring it in a way that causes them real pain. Line up a crackerjack attorney. Make it clear you are in this game for the duration, even if it means selling your pet hamster and mortgaging your house. Big companies like picking on easy targets but once a corporate lawyer gets a whiff of a real fight in a case where they are likely to lose, the big corporate lawyer as often as not does the math and realizes settling on your terms might not be such a bad thing.

Three years back I wrote about Kivin Varghese, founder of BrandPort, in a BusinessWeek article on the perils of partnering. Kivin had a brilliant idea. He would pay people to watch advertisements on their handsets or on their television. His unique twist on the pay-to-view model got the attention of big name TV advertisers like Procter & Gamble, Coca-Cola, and L’Oréal. Kivin also managed to get in the door to talk to Virgin Mobile USA, a huge potential partner.

The bigwigs at Virgin told Kivin they loved his idea and asked to see his technology and model in detail. They wanted to partner together to build a service that would give their mobile users free minutes for watching ads through the BrandPort process. His negotiations were going well until he woke up one day to read in the New York Times that Virgin Mobile had launched a new product called Sugar Mama – which was exactly like his product. When Kivin protested, they essentially told him to “buzz off”. That morning, Kivin called me to ask for advice. He explained “I had a good non-disclosure agreement, we marked things confidential, had pending patents. I did everything right. A startup that relies on deals with partners as a core part of their business model (like mine) has no choice but to reveal everything about the innovation in order to convince them it’ll be a big revenue boost for them. If I held anything back, I probably wouldn’t have gotten the deal.”

My advice was to fight for what was right and show no mercy. And that is what he did. Reluctantly.

After over a year of litigation and probably spending millions of dollars, Virgin settled the dispute. Kivin won his case and got them to license his technology so there were limits on what they could do with it. But my guess is that Kivin failed to reap any significant income. The settlement likely covered his attorneys fees but not much more. (Kivin is under non-disclosure and won’t comment.  This is what I have inferred  from our discussions before he signed the agreement and settled the case).

Kivin would talk about his experience, however. What does he regret? He was too soft early on, and it wasn’t until the last bit of the case that he was able to bring on a strong litigation team. His thoughts on what he learned: If you are going to fight back, fight back hard and right from the start. If you want to fight back, get an attack dog attorney with big IP litigation chops, don’t go cheap. Be prepared to pay them big bucks for your case because good lawyers are expensive but worth it.  And be prepared to risk everything. And I’ll add one more – competitors know that he is no pushover and will think twice before doing this again.

So, to summarize, you need to be cautious in your dealings with the world. Don’t mindlessly “bear all”. You should file patents, but these patents provide less protection than you might think. Even if you have a great patent, you will need to fight hard to defend it and will need a good lawyer. In some spaces, you simply can’t get patents even for great, original ideas.  Your only recourse is to be faster and better than newer, bigger competitors. Finally, if you do feel you’ve been ripped off, then pull no punches and go for blood.

Editor’s note: Guest writer Vivek Wadhwa is an entrepreneur turned academic. He is a Visiting Scholar at UC-Berkeley, Senior Research Associate at Harvard Law School and Director of Research at the Center for Entrepreneurship and Research Commercialization at Duke University. Follow him on Twitter at @vwadhwa.

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After discovering that Apple had registered iSlate.com in late 2006 (we dug a little deeper and found trademarks had been filed for ‘ISLATE’ in both the United States and Europe by a company that was most likely a dummy corporation set up by Apple), MacRumors has now discovered another possible name for the upcoming Apple tablet.

MacRumors bases its report on the filing for a US trademark for ‘IGUIDE’ by another Delaware-registered company called iGuide Media LLC, which can be linked to Cupertino by means of signatures on the documents coming from Apple’s Senior Trademark Specialist, Regina Porter.

Let’s dig a little deeper, once again.

Domain names

There’s no indication that Apple owns any domain name that contains the term ‘iguide’. The identity if iguide.com is shielded from public WHOIS records, but not by Mark Monitor, the brand protection firm Apple usually works with. The domain name iguide.net belongs to a company called iGuide Media, a marketing and design firm started by Jon Warren back in 1997 and led by a Brian Noon from 2002 to 2006, when the company was sold.

I checked a couple of other TLDs (.ca, .fr, and more) and found no indication that Apple owns any of those.

Trademarks

Two trademarks were filed for ‘IGUIDE’ by iGuide Media LLC (through a James Johnston) in the United States: a principal and a service mark, both on 18 December 2007. The description of goods and services given to iGuide Media is very similar to the one given to Slate Computing, the supposed shell company set up by Apple used to register the trademark for ‘ISLATE’, although it leans a bit more to a focus on software and services than hardware.

On the exact same day, iGuide Media LLC filed for a trademark in Europe as well: search OHIM for ‘iguide’ and you find a trademark filing that has all the Apple marks on it: the legal representative is ‘EDWARDS ANGELL PALMER & DODGE UK LLP’ (the same as for ‘ISLATE’ and ‘MACBOOK’, among others), and the priority country is Trinidad & Tobago, the same as when Apple filed for the ‘iphone’ trademark in Europe.

Noteworthy: the status history suggests that the community trademark application was registered (not filed) in February 2009, and that the full examination of the CTM application has been completed very recently, on the 18th of December 2009 to be exact.

Final thoughts

If I were betting man, I’d still be putting my money on the name iSlate for the tablet, Magic Slate for a possible peripheral, and iGuide for a service linked to the hardware device(s).

Here’s why:

- Apple doesn’t seem to own, directly nor indirectly, any ‘iguide’ domain names
- The ‘ISLATE’ and ‘MAGIC SLATE’ US trademarks were not filed for separately as a service trademark, unlike ‘IGUIDE’
- The ‘ISLATE’ US trademark was filed earlier than ‘IGUIDE’, by a different shell corporation (and the same as ‘MAGIC SLATE’)
- NYTimes editor Bill Keller’s mention of an ‘Apple slate’ device in a past speech
- According to Trademarkia, the ‘ISLATE’ trademark application was extended a second time last September, to show use in commerce
- The slightly different description for ‘goods and services’ for both Slate Computing and iGuide Media

Or, of course, we’re all wrong, and none of these names will ever be actually used by Apple. I would deem that unlikely, but we can’t know for sure.

Besides, has Apple announced that it’ll be selling a tablet computer yet?

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Whoever says the legal system in this country is broken, well, you’re right. Comcast was caught tampering with its customers’ packets two years ago.

Read more:
Comcast settles bandwidth throttling lawsuit for $16 million. That’s 4 hours of revenue.

This is just cool. The pic is of a camera blast shield that’s used to capture those spectacular but deadly explosion videos.

Go here to see the original: 
The camera blast shield is a one tough cookie

Now that Apple has responded to Nokia’s patent lawsuit filed last October with its own countersuit today, we have a clearer picture of what the dispute is all about. As suspected, it is about money, specifically the patent licensing fees Nokia is trying to get out of Apple for wireless patents it holds and it alleges are infringed by the iPhone.

But more broadly, it is about Nokia missing the boat on the shift from conventional phones to mobile computers where the phone functionality is relegated to one of many features, and not the most important one at that. Apple lays this argument out in its countersuit, saying that Nokia tried to overcharge it on patent fees because it missed the boat on the shift to smartphones.

In Apple’s countersuit today, it accuses Nokia of attempting a “patent hold-up.” The patents in question are part of industry standards, and as such Nokia must license them under fair and reasonable terms, argues Apple. But instead, Nokia tried to put the squeeze on Apple. Apple states in its countersuit:

In dealing with Apple, Nokia has sought to gain an unjust competitive advantage over Apple by charging unwarranted fees to use patets that allegedly cover industry compatability standards.

Whether or not Apple’s arguments hold water is for a court to decide. But Apple takes the opportunity of this legal battle to make a swipe at Nokia as a flailing competitor. If you read between the lines of the suit, the reason Nokia is not willing to license its patents under “fair, reasonable, and non-discriminatory terms” to Apple is because while Apple was creating a “revolutionary change in the mobile phone category” with the iPhone, Nokia was sitting on its haunches:

In contrast, Nokia made a different business decision and remained focussed on traditional mobile wireless handsets with conventional user interfaces. As a result, Nokia has rapidly lost share in the market for high-end mobile phones. . . . In response, Nokia chose to copy the iPhone.

In other words, Nokia is losing in the marketplace so it is falling back on the only thing it has left—its patents. Apple is already more a profitable phone manufacturer than Nokia, and it has no intention of returning those profits via exorbitant patent fees. Now, what exactly those proposed fees are and whether they are in fact exorbitant we don’t know because the numbers are not in the suit. Presumably, those will come out at trial.

Apple could lose that trial or end up paying a huge settlement fee. Both of these suits are negotiations by other means. Regardless of the outcome, though, it feels like Apple has already won the bigger battle in the marketplace.

Crunch Network: CrunchBase the free database of technology companies, people, and investors

DocuSign, an e-signature service, has raised $2 million from Second Century Ventures. The venture firm is the investment fund of the National Association of Realtors. This brings DocuSign’s total funding up to $30 million.

DocuSign, which was founded in 2003, allows companies to get legally binding signatures quickly over the internet instead of over the fax or mail. DocuSign certifies digital signatures over the web, acting as a intermediary who holds the documents and verifies the identity of the signature. The digital signature business was really opened up during the turn of the century with that passing of the UETA and ESIGN acts, which clarified the legal grounds for electronic signatures nationwide. To date, more than 25 million signature events have been executed using DocuSign and service currently has 2.5 million users.

DocuSign is seeing increased traction of its technology in the commercial and residential real estate spaces. Rather than driving across town to get a signature or forcing their clients to find a fax machine, real estate professionals use DocuSign to execute agreements with buyers and sellers electronically, eliminating the old process of printing, faxing, and waiting for the return fax. In an age where deals are increasingly made remotely, it makes sense for e-signature technology to be adapted in the real estate world. The new funding will be used for further development of DocuSign’s technology for the real estate space. Competitors include EchoSign, and VeriSign.

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