Saturday, December 31, 2011

Company Caught Downloading Competitor's Software Just Has To Pay The Fee To Buy One License

Here's an interesting case highlighted by Eric Goldman, involving two competing software companies. One of the companies, Real View, downloaded an infringing copy of the other company's (20-20 Technologies) software via a file sharing network. It seems this part is not contested. Real View then used the software to learn about what 20-20 was offering, and modified its own software to include some similar features, and then used a different business model which undercut 20-20's business model quite a bit. 20-20 sued for infringement both over the download and over the software. The jury, quite reasonably, said that the new software didn't violate anyone's copyright, as reverse engineering similar features to a competitor is not infringement.

However, since the initial download was infringing, the jury did have to rule on the damages there. I'll let Eric summarize this part:

20-20 argued that Real View should pay $38M, which is the amount 20-20 spent to buy a competitor company. Failing that, 20-20 argued that Real View should pay $2M due to "price erosion." Real View said it should pay 20-20's standard license fee of $4,200--although apparently 20-20 wouldn't have licensed the software at all to Real View, making the license fee calculation somewhat hypothetical. Real View also admitted to about making three-quarter million dollars in profits from its own licenses.

The jury came back with an award of $1.37M. In this ruling, the judge issued a remittitur down to $4,200, holding that Real View only was liable for the license fee for the unauthorized download--everything else wasn't proved or was irrelevant. For example, the court rejects all of 20-20's arguments about Real View's "saved development" costs as speculative. Perhaps more importantly, 20-20's claims of price erosion were irrelevant; any price erosion occurred due to Real View's non-infringing competitive software, not the infringing software download itself, and 20-20 didn't prove the causal link between the two well enough. Similarly, the court says 20-20 can't get any of Real View's profits from the non-infringing competitive software simply because it was facilitated by the illegal download.

This seems perfectly reasonable, and it's too bad that the jury seemed to have completely ignored the basics and seems to want to punish Real View for competing legally. Thankfully, the judge saw through that and reduced the jury's award. Of course, as we've seen with the remitittur process in the Jammie Thomas case, that allows 20-20 to "reject" the remitittur and get a new trial -- which appears to be exactly what 20-20 is doing. Again to Eric:
This case is interesting because it highlight how copyright owners can easily overclaim damages. Even if one step in the defendants' process involving infringing activity, that doesn't mean that the copyright owner gets to disgorge the defendant of all of its profits. For example, if a defendant impermissibly scrapes a plaintiff's website--making unauthorized copies into RAM while doing so--but the defendant's resulting publication doesn't infringe the plaintiff's copyright, arguably this case would take the defendant's profits off the table, leaving only the potentially meager and overly speculative damages from the illegal download.
I agree, but I also think it's interesting because it's rare that we see copyright cases where they argue over actual damages, rather than statutory damages. Copyright holders love to jump straight to statutory damages, because they tend to be so high (and totally out of proportion with actual damages). That's why something like this ruling is interesting, as it suggests (again) that perhaps the payment for downloading music should be the cost of licensing it for personal use -- or around $1. But as with the Jammie Thomas and Joel Tenenbaum trials, juries seem to massively inflate what they'd like to award for damages, even if there's no evidence that the downloads directly caused any real or significant damage.

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Friday, December 30, 2011

Can A Company Keep An Employee's LinkedIn Account After They're No Longer Employed?

Legal Issues


by Mike Masnick

Fri, Dec 30th 2011 4:50am


Venkat Balasubramani has the story of a bizarre fight between a company, Sawabeh Information Services, and the founders of Edcomm, a company that Sawabeh bought in 2010. A few months later, the... Filed Under:
contacts, linda eagle, ownership, social media

Companies:
edcomm, linkedin, sawabeh information services, siscom


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Venkat Balasubramani has the story of a bizarre fight between a company, Sawabeh Information Services, and the founders of Edcomm, a company that Sawabeh bought in 2010. A few months later, the founders of Edcomm were fired, and the lawsuits commenced. There are a variety of issues here, and Venkat's post goes through most of them in detail, but I wanted to focus on just one: the fight over who gets to control Dr. Linda Eagle's LinkedIn account. Eagle was one of the founders of Edcomm and the key figure in this fight. Sawabeh claims that Eagle "misappropriated" her own LinkedIn account and the contacts associated with it, by continuing to use it after being fired.


While I can kind of understand some of the legal fights over who gets to control Twitter accounts, the entire point of a LinkedIn account is to represent an individual and their job history. How would it possibly make sense for a company to control an ex-employee's LinkedIn account?


The company seems to think that the LinkedIn account was more like a rolodex. Because (for reasons that are beyond me), Eagle had let others in the company access and manage her account, as soon as she was fired, people at the company accessed her account and then changed her "name" and profile picture to someone else at the company. That would be pretty shocking for her connections, who might not know who the guy was at all. They also tried to do this with the account of one of the other fired founders, but they didn't have his password. Apparently the company asked LinkedIn to hand over the password, and LinkedIn, properly, told the company to get lost.


Either way, the court digs into the "misappropriation" question with the LinkedIn account and refuses to dismiss it out of hand (at this stage of the case), which seems too bad. However, there's an unclear issue of who "developed" the contacts in the account:

The Counterclaim Complaint expressly alleges that, with respect to the LinkedIn account connections and content, "Edcomm personnel, not Dr. Eagle, developed and maintained all connections and much of the content on the LinkedIn Account, actions that were taken solely at Edcomm?s expense and exclusively for its own benefit." ... While Plaintiff argues that Edcomm fails to allege facts that would show that it made a substantial investment of time, effort, and money into creating the cell phone number or LinkedIn account, Edcomm counters that its employees developed the accounts and maintained the connections, which are the route through which Edcomm contacts instructors and specific personnel within its clients. As these conflicting allegations create an issue of fact requiring further discovery, the Court must deny the Motion for Judgment on the Pleadings as to the misappropriation counterclaim.
Of course, I wonder if they're arguing about the wrong thing here. If the company developed the contacts, perhaps it has a right to ask for a copy of the contacts, but the account itself seems like it should belong to Eagle. Part of the problem here is the idea that contacts are some scarce resource. Both parties can have them, and the simplest thing would be, if there is a legitimate claim that the company developed those relationships, to require that their contact info be provided to the company -- but leave the account in the hands of Eagle.

Either way, the case should be a warning for any company that wants to control the LinkedIn accounts of its employees.

View the original article here

GoDaddy Officially Has Name Removed From Judiciary's List Of SOPA Supporters

There was some concern that GoDaddy had only said they were pulling their support for SOPA, but hadn't actually done so. However, the company is now pointing out that it officially asked to be removed from the Judiciary Committee's list of SOPA supporters and that's now been done. I will note, however, that despite the claims that it is no longer supporting SOPA, the Graphic Artists Guild is still listed. Add to this the Judiciary Committee having to scrub the list of a bunch of law firms who never agreed to support the bill, as well as companies like Gibson Guitar, and it seems that the Judiciary Committee is going to be kept busy whittling down this list.


Of course, it's unclear why the Judiciary Committee only puts up a list of (rapidly shrinking) supporters. If it wanted to present the various opinions on the bill, shouldn't it actually show the large and growing list of SOPA opponents?


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Thursday, December 29, 2011

The Latest Entrant In 'How Not To Do Marketing' In An Online World: Ocean Marketing Fail

One of the key points that we've been making for years is that, in an online world, pissing off (or simply not caring about) customers is no longer a viable business strategy. A good business today recognizes that the customers' best interests are also the company's best interests. If you don't realize that... well, then you get into a situation like Paul Christoforo and Ocean Marketing that's taken the internet world by storm today. It begins with a must read email thread posted at Penny Arcade. Seriously, just go read the whole thing.


The short version for those who don't read it, is that a guy, Dave, who pre-ordered some gaming controllers that hadn't arrived, emailed Ocean Marketing and got back less than optimal customer service from Christoforo, who runs Ocean Marketing. Actually, he got back obnoxious customer service. Beyond not being helpful Christoforo is outright insulting of the customer (who has already paid for the item not yet delivered) and bragging about how "connected" he is. In response, the customer (Dave) wrote back explaining why this was totally unacceptable, and cc'd some various gaming websites/blogs. Gabe (aka Mike Krahulik) from PA chimed in, especially when he saw Christorofo brush off Dave by mentioning PA's own event PAX East. After replying to both that Christoforo won't be allowed to exhibit at PAX, Christoforo (apparently not realizing who he was dealing with) simply makes a bad situation worse:

We?re not renting a booth at pax east this year , bigger and better shows to be at we got nothing from the show . Oh so you know this guy has sold over 500 thousand dollars of product in Dec and is my main distribution arm landing us in GameStop , fry?s , Myers , Best buy , Activision , MLG , play N trade and a lot more . Were in 6 countries and you?re not going to take my money for a booth that?s a crock I can guarantee I?ll get a booth if I want one money buys a lot and connections go even further. He?s a native Bostonian from Little Italy . Who are you again ?
Amazingly, this actually comes after Dave had told Mike "Please don?t cancel their booth on my account. As much as I hate this asshole, I still WANT his product and think it should be out there." Mike explains to Christoforo that he runs PAX, but Christoforo still doesn't get it:
OK Mike whatever you say lol , are you sure hour not in Boston I spoke to the person who ran the show in Boston last year. If you let some little kid influence you over a pre order then we don?t want to be a your show ,Ill be on the floor anyway so come find me , I?m born and raised in Boston I know the people who run the city inside and out watch the way you talk to people you never know who they know it?s a small industry and everyone knows everyone. Your acting like a douchbag not that it matters pax east pax west , e3 , CES , Gamer Con , SSXW ,Comic Con, Germany I?m all over the place. If we want to be there we will be there with industry badges or with a booth you think I can?t team up with turtle beach , Callibur or Koy Christmas , I can?t get Kevin Kelly to pull some strings or G4 , Paul Eibler Ex CEO of take 2 , Rich Larocco Konami , Cliff Blizinski Epic who were working with on a gears version , Activision who were working with on a MW3 and Spider man Bundle , The Convention Center Owners themselves , Mayor of Boston come on Bud you run a show that?s all you do and lease a center in Cities you have no pull in its all about who you know not what you do. I?ll see space where ever I want , with who I want when I want and where I want so many ways around you and so many connections in this industry its silly. Anyway , I have no issue with you Sean Buckley Engadget, Scott Lowe IGN and the list goes on and on. Little kids unhappy with a PRE ORDER starting trouble and you email that to us , he?s a customer unless you?re his boyfriend then you should side with the company not the customer. Be Careful
And it gets worse from there. Of course, once Gabe posted it to Penny Arcade, it started to get picked up elsewhere including (of course) Reddit, and from there it just began exploding. Popehat has a bunch of links including the fact that Christoforo went ballistic on Scott Lowe from IGN, after Lowe told Christoforo to stop saying IGN supported him. Christoforo responded on Tiwtter calling him a "douchebag" and suggesting that because he sent IGN review units he should support him. That tweet has since been removed, but the screenshot lives on.

Separately, people have turned up more examples of poor customer service experiences involving Ocean Marketing and Christoforo, as well as claims that Ocean Marketing has been plagiarizing a ton of articles from around the web on its own blog. Andrew Galbraith from Examiner.com has the details:

It seems the plot has thickened a bit further. Apparently, as pointed out by @williambgoss on twitter, Ocean Marketing has been lifting articles from across the web for their blog with little to no attribution of sources whatsoever. An article published on Forbes is clearly posted wholesale on the Ocean Marketing blog with no sourcing roughly two weeks after initially hitting the web. Moreover, the same is done with a BizReport article, appearing as Ocean Marketing's "original work" no less than two days later.  
The story has been getting picked up in a ton of places, but you have to wonder why anyone would hire Christoforo to market any of their products ever again. The Popehat link above notes that when you outsource your marketing, you're outsourcing your reputation. And that can be dangerous...

In the meantime, it appears that Christoforo, beyond digging himself a deeper hole, has also tried to well, dig himself a deeper hole. He first threatened to have his "lawyers" contact Penny Arcade, followed up by some begging:

"You have the power Mike Please make it stop"
Of course, as Gabe/Mike points out, he really doesn't have the power. Once these things are out there, they're out there. Then comes the non-apology apology, where Christoforo apologies for not knowing how big Penny Arcade/PAX are and for getting exposed -- but not for his actual actions:
I just wanted to apologize for the way our emails progressed I didn?t know how big your site was and I really didn?t believe you ran Pax , So for what?s its worth I am very sorry. Your post has obviously made my life very difficult and I have not slept yet dealing with all the spam and personal information intrusion as well as my family being smeared on the internet.
That's not a real apology at all. That's someone digging even deeper.

Update: Ah, and now reports of pretending to be someone else. Kotaku apparently reached out to Bruce Brandon Leidel, who had been their contact in the past on the controller in question, and they noticed something odd in the response -- which suggested that it actually came from Christoforo. Then Leidel apparently reached out to Kotaku separately saying that he no longer works with that client, in part because of Christoforo...


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Wednesday, December 28, 2011

Macs no longer immune to viruses, experts say

SAN FRANCISCO — Benjamin Daines was browsing the Web when he clicked on a series of links that promised pictures of an unreleased update to his computer’s operating system.

Instead, a window opened on the screen and strange commands ran as if the machine was under the control of someone — or something — else. Daines was the victim of a computer virus.

Such headaches are hardly unusual on PCs running Microsoft Corp.’s Windows operating system. Daines, however, was using a Mac — an Apple Computer Inc. machine often touted as being immune to such risks.

He and at least one other person who clicked on the links were infected by what security experts call the first-ever virus for Mac OS X, the operating system that has shipped with every Mac sold since 2001 and has survived virtually unscathed from the onslaught of malware unleashed on the Internet in recent years.

“It just shows people that no matter what kind of computer you use you are still open to some level of attack,” said Daines, a 29-year-old British chemical engineer who once considered Macs invulnerable to such attacks.

Apple’s iconic status, growing market share and adoption of same microprocessors used in machines running Windows are making Macs a bigger target, some experts warn.

Apple’s most recent wake-up call came last week, as a Southern California researcher reported seven new vulnerabilities. Tom Ferris said malicious Web sites can exploit the holes without a user’s knowledge, potentially allowing a criminal to execute code remotely and gain access to passwords and other sensitive information.

Ferris said he warned Apple of the vulnerabilities in January and February and that the company has yet to patch the holes, prompting him to compare the Cupertino-based computer maker to Microsoft three years ago, when the world’s largest software company was criticized for being slow to respond to weaknesses in its products.

(MSNBC.com is a Microsoft - NBC joint venture.)

“They didn’t know how to deal with security, and I think Apple is in the same situation now,” said Ferris, himself a Mac user.

Apple officials point to the company’s virtually unvarnished security track record and disputed claims that Mac OS X is more susceptible to attack now than in the past.

Apple plans to patch the holes reported by Ferris in the next automatic update of Mac OS X, and there have been no reports of them being exploited, spokeswoman Natalie Kerris said. She disagreed that the vulnerabilities make it possible for a criminal to run code on a targeted machine.

In Daines’ infection, a bug in the virus’ code prevented it from doing much damage. Still, several of his operating system files were deleted, several new files were created and several applications, including a program for recording audio, were crippled.

Behind the scenes, the virus also managed to hijack his instant messaging program so the rogue file was blasted to 10 people on his buddy list.

“A lot of Mac users are in denial and have blinders on that say, ‘Nothing is ever going to get to us,”’ said Neil Fryer, a computer security consultant who works for an international financial institution in Britain. “I can’t say I agree with them.”

Fryer, also a Mac user, said he has begun taking additional precautions over the past year to make sure he doesn’t fall victim to an attack. He spends more time than in the past scrutinizing his security logs for signs of intruders, and he uses a firewall and additional security applications, just as he would with a Windows-based machine.

Among the other signs Macs are a growing target:

  • The SANS Institute, a computer-security organization in Bethesda, Md., added Mac OS X to its 2005 list of the top-20 Internet vulnerabilities. It was the first time the Mac has been included since the experts started compiling the list in 2000.
  • This week, SANS updated the list to warn against flaws in Safari, the Mac Web browser, which the group said criminals were able to attack before Apple could fix it.
  • The number of discovered Mac vulnerabilities has soared in recent years, with 81 found last year, up from 46 in 2004 and 27 in 2003, according to the Open Source Vulnerability Database, which is maintained by a nonprofit group that tracks security vulnerabilities on many different hardware and software platforms.
  • Less than a week after Daines was attacked in mid-February, a 25-year-old computer security researcher released three benign Mac-based worms to prove a serious vulnerability in Mac OS X could be exploited. Apple asked the man, Kevin Finisterre, to hold off publishing the code until it could patch the flaw.

The Mac’s vulnerability could also increase as Apple transitions to a product line that uses microprocessors made by Intel Corp., security experts said.

With new Macs running the same processor that powers Windows-based machines, far more people will know how to exploit weaknesses in Apple machines than in the past, when they ran on the PowerPC chips made by IBM Corp. and Motorola Corp. spinoff Freescale Semiconductor Inc.

“They have eliminated their genetic diversity,” said independent security consultant Rodney Thayer. “The fear is that we’re going to run into a new class of attacks.”

Bud Tribble, Apple’s senior vice president of software technology, disagreed.

“All the things we’ve been doing to make Mac OS X secure continue to be relevant on Intel,” he said.

Mac OS X, he said, is designed to be Internet safe out of the box, without the need for firewalls or additional security software. He praised Mac OS X for making it easy for users to automatically install security patches.

He noted that the operating system was derived from FreeBSD, open source software that was built from the ground up to provide security for computers networked together. Since its origins in the early 1990s, the Unix-based FreeBSD has continually been battle-tested by college students and computer security specialists.

“The bottom line is we still feel more comfortable using a Mac than a (Windows) PC,” said Alan Paller, director of research for SANS.

But as Daines can attest, there are no guarantees.

“We’re all sort of waiting with bated breath to see if any problem will happen and the jury is still out,” said Thayer, the independent security consultant. “I don’t think you’ll find a consensus.”

© 2011 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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YouTube's 1 Trillion Playbacks Set Stage for Display Ad Growth

YouTube counted more than 1 trillion playbacks on the video-sharing site this year, or roughly 140 views for every person on Earth, Google's (NASDAQ:GOOG) video sharing Website said.

The Website, which said 48 hours of video are uploaded to the Website every minute, revealed its most-watched videos of 2011. The site gauged global view counts of popular videos uploaded throughout the year.

Rebecca Black's "Friday," video led the top 10 videos watched worldwide. YouTube rewarded her by letting her host this year's "YouTube Rewind" look back at the most-watched videos of the year.

YouTube isn't serving all that video content without some serious advertising. The video site also shared the most-watched ads on YouTube in 2011. This Volkswagen ad led the top 10 most-watched ads, while this Chevy ad came in third. Both were Super Bowl ads.

However, most of the ads never aired on broadcast TV, which illustrates the opportunity YouTube has going forward for pairing ads with original content.

These included T-Mobile's Royal Wedding at No. 2, and DC Shoe's Gymkhana Four, at No. 4. Both were exclusive to YouTube.

YouTube is evolving. While its first five years were a blur of user-generated content, YouTube hopes to boost user engagement by offering users streaming movie rentals and broadcast channels with original content. More users spending more time on YouTube significantly increases the ad-serving opportunities for Google.

Calling YouTube the "Super Bowl of the Web," Piper Jaffray analyst Gene Munster said that while YouTube may only account for 3.5 percent of Google's total gross revenue this year, YouTube portends great things for Google's display ad business.

The Website enjoys 800 million unique visitors per month, or the same volume as Facebook. YouTube also sees 25 billion searches a month, twice that of Yahoo and 10 times that of Facebook, he added in a Dec. 15 research note.

"We believe YouTube is the company's flagship offering in its display products and is encouraging advertisers to branch out to Google's other display products," Munster wrote. "We remain confident that YouTube will exceed $1.3 billion in gross revenue for 2011."

Moreover, he expects YouTube will grow revenue 60 percent year-over-year in 2012, surpassing $2 billion in gross revenue.

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Tuesday, December 27, 2011

Google Tablet in Six Months: Schmidt

As the tablet market continues to expand, Google executive chairman Eric Schmidt let slip to the Italian daily newspaper Corriere della Sera that the company was planning to directly manufacture tablet devices ?of the highest quality? and mentioned a six-month window for production. Google?s Android operating system is already running the tablets of major manufacturers like Motorola, HTC and Lenovo. The Google tablet would likely be marketed under the company's Nexus brand, which also includes smartphones.

The technology blog DigiTimes posted an article Dec. 26 that quoted unnamed sources in the PC industry in Taiwan as saying that Google?s potential launch of its own tablet could ?cause conflict with branded PC vendors who are cooperating with Google to launch Ice Cream Sandwich-based tablet PCs in the first half of 2012?.

Tablet market leader Apple is rumored to be releasing the third iteration of its iPad tablet in March or April 2012. In the past few months, reports on the Web have indicated that Apple is planning on some sort of higher-resolution display for the next iPad, possibly of the same quality as the ?retina display? currently available in later-model iPhones. The company may also release a small-screen version of the iPad later in 2012.

Amazon's Kindle Fire and Barnes & Noble's Nook Tablet will power the Android platform to 40.3 percent media-tablet market share in the fourth quarter of 2011, up from 32.4 percent in the third quarter, according to IDC. The IT research firm estimated the media-tablet market grew 24 percent on a sequential basis to 18.1 million units.

For an idea of how the tablet market has ballooned, that unit shipment total is higher than the 18 million units sold in all of 2010, according to IDC. Moreover, the market researcher is seeing such strong demand in this quarter that it has boosted its worldwide shipment forecast for 2011 to 63.3 million units, up from its previous tally of 62.5 million units.

One thing is for certain: Google?s proposed tablet and the next iPad will face a somewhat different competitive market than its predecessors. For one thing, Amazon?s newly released Kindle Fire?which runs a customized Android 2.3 Gingerbread OS?has a significant chance of dinging the iPad?s sales, according to some analysts.

?With our expectations for a new iPad launch during the March quarter leading to potentially lower inventory levels combined with increased competition from the $200 Kindle Fire,? T. Michael Walkley, an analyst with Canaccord Genuity, wrote in a Dec. 5 research note, ?we have slightly lowered our December quarter iPad estimates from 14 million to 13 million units.?


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