Friday, February 24, 2012

Ahhh, Those Start-Up Companies

Start-up companies sure can have fun with their company pictures.  (Don't miss the ukulele players, the juggler/unicyclist, the warning about leaving the toilet seat up, and the guy whose favorite color is FF69B4).

Monday, February 20, 2012

Sunday, February 12, 2012

Capitol v. Thomas: My Latest Amicus Brief

On Friday February 10, EFF filed an amicus brief I helped write.  The case is Capitol Records, Inc. et al. v. Jammie Thomas-Rasset.  Capitol had sued Ms. Thomas for unauthorized file-sharing of 24 songs.  After a jury awarded Capitol $1.5 million in damages, the trial judge reduced the award to $54,000, which is still many, many times the actual possible damages of about $360 (24 songs times $15/album on which they appear).  Capitol appealed, asking that the jury's million-dollar award be reinstated.

EFF's amicus brief discussed two issues.  First, it argued that statutory copyright damage awards must pass constitutional due process review, which the jury's $1.5 million award clearly didn't.  Second, the brief rejected Capitol's argument that "distribution" of a copyrighted work included merely "making available" the work to others, instead of an actual transfer of unauthorized copies.

Wednesday, February 8, 2012

Nifty Collection of Patent Tools

MaxVal Group has a nifty selection of Free Patent Tools.  These include a USPTO Widget, which searches multiple databases; a patent term estimator; a claim chart generator; and others. 

Sunday, February 5, 2012

Best Super Bowl 2012 Commercials

Here are the 2012 Super Bowl commercials I liked the most.  In decreasing order.  
 
1.  Chevrolet's "Mayan Apocalypse."

2.  Toyota's "Camry Reinvented."  If Toyota invented the rest of these things, it would be really cool.

3.  Best Buy's mobile phone ad.  Featuring some real inventors and their inventions.

4.  Chrysler and Clint Eastwood -- Halftime in America.  Inspiring.
 
5.  The FIAT 500 Abarth shows us what dreams are made of.

6.  Chevrolet's graduation present.  Or so he thinks.

7.  Doritos and the missing cat.  Because bribery works sometime.

8.  Pepsi Max plays another prank on that poor Coca-Cola driver.

9.  If you like vampires, you'll love the new Audi.

10.  Chevrolet's homage to stunt ads, not to be tried at home, or elsewhere.

11.  Seinfeld really wants this Acura.

12.  Skechers and the moonwalking dog.
 
Note that some of these links might disappear if the advertisers remove them.  (Not necessarily a DMCA issue, just an advertising issue.)

Wednesday, February 1, 2012

Facebook Files for its Public Offering

"A million dollars isn't cool, you know what's cool?  A billion dollars."
-- Attributed to Sean Parker in the 2010 movie, The Social Network.

Today Facebook filed for its public offering.  Its registration statement (SEC Form S-1) is here.
I'll let the corporate folks figure out the financial aspects of this thing.  But in 2011, Facebook had net income of $1 billion on revenue of $3.7 billion.  I did look at the document to see if there are any interesting disclosures about intellectual property or similar issues.  There were surprisingly few, and nothing of any real interest.  Mostly it's the same boilerplate you see in any technology SEC filing.

At the beginning, "Summary Risk Factors" merely says:
Our business is subject to complex and evolving U.S. and foreign laws and regulations regarding privacy, data protection, and other matters. Many of these laws and regulations are subject to change and uncertain interpretation, and could harm our business;
Next, there is a generic reference to "legislative proposals" that doesn't mention things like SOPA/PIPA explicitly:
Our business is subject to complex and evolving U.S. and foreign laws and regulations regarding privacy, data protection, and other matters. Many of these laws and regulations are subject to change and uncertain interpretation, and could result in claims, changes to our business practices, increased cost of operations, or declines in user growth or engagement, or otherwise harm our business.

We are subject to a variety of laws and regulations in the United States and abroad that involve matters central to our business, including user privacy, rights of publicity, data protection, content, intellectual property, distribution, electronic contracts and other communications, competition, protection of minors, consumer protection, taxation, and online payment services. Foreign data protection, privacy, and other laws and regulations are often more restrictive than those in the United States. These U.S. federal and state and foreign laws and regulations are constantly evolving and can be subject to significant change. In addition, the application and interpretation of these laws and regulations are often uncertain, particularly in the new and rapidly evolving industry in which we operate. For example, the interpretation of some laws and regulations that govern the use of names and likenesses in connection with advertising and marketing activities is unsettled and developments in this area could affect the manner in which we design our products, as well as our terms of use. A number of proposals are pending before federal, state, and foreign legislative and regulatory bodies that could significantly affect our business. For example, a revision to the 1995 European Union Data Protection Directive is currently being considered by European legislative bodies that may include more stringent operational requirements for data processors and significant penalties for non-compliance. Similarly, there have been a number of recent legislative proposals in the United States, at both the federal and state level, that would impose new obligations in areas such as privacy and liability for copyright infringement by third parties. These existing and proposed laws and regulations can be costly to comply with and can delay or impede the development of new products, result in negative publicity, increase our operating costs, require significant management time and attention, and subject us to claims or other remedies, including fines or demands that we modify or cease existing business practices.
Then there is a generic discussion of IP litigation that also doesn't mention anything in particular.
We are currently, and expect to be in the future, party to patent lawsuits and other intellectual property rights claims that are expensive and time consuming, and, if resolved adversely, could have a significant impact on our business, financial condition, or results of operations.

Companies in the Internet, technology, and media industries own large numbers of patents, copyrights, trademarks, and trade secrets, and frequently enter into litigation based on allegations of infringement, misappropriation, or other violations of intellectual property or other rights. In addition, various “non-practicing entities” that own patents and other intellectual property rights often attempt to aggressively assert their rights in order to extract value from technology companies. We presently are involved in many such lawsuits, and as we face increasing competition and gain an increasingly high profile, including in connection with our initial public offering, we expect the number of patent and other intellectual property claims against us to grow. In addition, from time to time we may introduce new products, including in areas where we currently do not compete, which could increase our exposure to patent and other intellectual property claims from competitors and non-practicing entities.

Although the results of litigation and claims cannot be predicted with certainty, we do not believe that the final outcome of intellectual property claims that we currently face will have a material adverse effect on our business, financial condition, or results of operations. However, defending patent and other intellectual property claims is costly and can impose a significant burden on management and employees, we may receive unfavorable preliminary or interim rulings in the course of litigation, and there can be no assurances that favorable final outcomes will be obtained in all cases. We may decide to settle such lawsuits and disputes on terms that are unfavorable to us. Similarly, if any litigation to which we are a party is resolved adversely, we may be subject to an unfavorable judgment that may not be reversed upon appeal. The terms of such a settlement or judgment may require us to cease some or all of our operations or pay substantial amounts to the other party. In addition, we may have to seek a license to continue practices found to be in violation of a third party’s rights, which may not be available on reasonable terms, or at all, and may significantly increase our operating costs and expenses. As a result, we may also be required to develop alternative non-infringing technology or practices or discontinue the practices. The development of alternative non-infringing technology or practices could require significant effort and expense or may not be feasible. Our business, financial condition, or results of operations could be adversely affected as a result.
The "Legal Proceedings" disclosure only mentions one specific lawsuit, the Paul Ceglia suit.
Legal Proceedings

We are currently parties to multiple lawsuits related to our products, including patent infringement lawsuits brought by both other companies and non-practicing entities as well as class action lawsuits brought by users and advertisers, and we may in the future be subject to additional lawsuits and disputes.

We are also involved in other claims, lawsuits, government investigations, settlements, and proceedings arising from the ordinary course of our business.

Paul D. Ceglia filed suit against us and Mark Zuckerberg on or about June 30, 2010, in the Supreme Court of the State of New York for the County of Allegheny claiming substantial ownership of our company based on a purported contract between Mr. Ceglia and Mr. Zuckerberg allegedly entered into in April 2003. We removed the case to the U.S. District Court for the Western District of New York, where the case is now pending. In his first amended complaint, filed on April 11, 2011, Mr. Ceglia revised his claims to include an alleged partnership with Mr. Zuckerberg, he revised his claims for relief to seek a substantial share of Mr. Zuckerberg’s ownership in us, and he included quotations from supposed emails that he claims to have exchanged with Mr. Zuckerberg in 2003 and 2004. On June 2, 2011, we filed a motion for expedited discovery based on evidence we submitted to the court showing that the alleged contract and emails upon which Mr. Ceglia bases his complaint are fraudulent. On July 1, 2011, the court granted our motion and ordered Mr. Ceglia to produce, among other things, all hard copy and electronic versions of the purported contract and emails. On January 10, 2012, the court granted our request for sanctions against Mr. Ceglia for his delay in compliance with that order. We continue to believe that Mr. Ceglia is attempting to perpetrate a fraud on the court and we intend to continue to defend the case vigorously.

The Enforcement Division of the Securities and Exchange Commission (SEC) has been conducting an inquiry into secondary transactions involving the sale of private company securities as well as the number of our stockholders of record. In connection with this inquiry, we have received both formal and informal requests for information from the staff of the SEC and we have been fully cooperating with the staff. We have provided all information requested and there are no requests for documents or information that remain outstanding. We believe that we have been in compliance with the provisions of the federal securities laws relating to these matters.

Although the results of claims, lawsuits, government investigations, and proceedings in which we are involved cannot be predicted with certainty, we do not believe that the final outcome of the matters discussed above will have a material adverse effect on our business, financial condition, or results of operations. However, defending these claims is costly and can impose a significant burden on management and employees, we may receive unfavorable preliminary or interim rulings in the course of litigation, and there can be no assurances that favorable final outcomes will be obtained.
Note 7 to the financial statements concludes with this: "We are party to various legal proceedings and claims which arise in the ordinary course of business. In the opinion of management, as of December 31, 2011, there was not at least a reasonable possibility that we had incurred a material loss, or a material loss in excess of a recorded accrual, with respect to loss contingencies."  Your call as to what the second sentence means.