after one gpl body blow, skype yells uncle

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As most of you probably know, there has been a case that just went to court earlier today in Germany on the GPL. It had been described by Harald Welte as one of the more time consuming cases he has worked on. For those of you not familiar with him, Mr. Welte founded gpl-violations.org, an organization that helps to enforce the provisions of the GPL.

Skype had apparently used certain elements of the Linux kernel in its WiFi phones without complying with the GPL, and was set to challenge the validity of the GPL based on its alleged contraventions of German legislation – in particular anti-trust legislation. It would be interesting to see the analysis in that regard, particularly on the anti-trust front, but so far I’ve not been able to get my hands on a translated copy of the pleadings – if anyone knows where to locate, do let me know.

Anyway, apparently, they didn’t get too far. According to the entry in Harald Welte’s blog, apart from the validity of such claims, the somewhat ironic result to which the court alluded at the hearing is that if Skype were able to successfully assert the invalidity of the license, then it would also be difficult for them to claim any right to use the impugned code. Makes sense. Invalid license = no use rights.

After the court suggested that Skype’s likelihood of success would be low, Skype apparently threw in the towel in such a manner that they would not be able to revisit it further, effectively giving the victory to Welte.

I find the case and Skype’s litigation strategy somewhat puzzling, both given the decision in the 2006 D-Link case, also in Germany and the relative costs of litigation in comparison to compliance. That being said, I haven’t been able to obtain much in the way of original documentation regarding the particular GPL violations that Skype allegedly committed. Presumably, Skype went down a path in its use of GPL code that would result in it incurring significant expenses (or facing significant risk, of some sort – perhaps exposure of their own proprietary IP?) if they were required to comply after the fact. Presumably, they would not have found themselves in this situation if they had turned their mind toward structuring their use of GPL code appropriately, by either ensuring they could comply in a cost-effective manner, or not using the GPL code.

arbitrary electronic search & seizure + us border = ok

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I imagine its not much of a surprise given the current environment in the states (as well as, to some extent, similar past rulings in the US). Wired reports arbitrary searches of electronics are OK:

Federal agents at the border do not need any reason to search through travelers’ laptops, cell phones or digital cameras for evidence of crimes, a federal appeals court ruled Monday, extending the government’s power to look through belongings like suitcases at the border to electronics.

Needless to say, consideration should be given to taking some steps to protect confidential or sensitive records that you would not want to be seized. And no, I don’t mean nudie pictures or the like, but things such as confidential information of your business, or that of third parties who have entrusted you with confidential information, or personal information. That being said, Wired also made this observation:

The 9th’s ruling did not, however, clarify whether a traveler has to help the government search his computer, by providing the login information, or what would happen when the government decided to search a laptop with encrypted data on the drive. The defendant in the case can appeal the decision to the U.S. Supreme Court, but the Court is unlikely to take up an issue that two separate appeals courts have agreed upon.

Alternatively, better to leave all sensitive data at the office and, if required, connect through a VPN, retrieve, then erase before crossing.

Well, at least we can thank our stars that the ruling doesn’t apply to “highly intrusive searches of the person”. Yet.

Update: The EFF has published an article on possible ways to minimize the risk of laptop searches. They point out that encryption might not be all that handy:

If, however, you don’t respond to CBP’s demands, the agency does have the authority to search, detain, and even prohibit you from entering the county. CBP has more authority to turn non-citizens away than it does to exclude U.S. persons from entering the country, but we don’t know how the agents are allowed to use this authority to execute searches or get access to password protected information. CBP also has the authority to seize your property at the border. Agents cannot seize anything they like (for example, your wedding ring), but we do not know what standards agents are told to follow to determine whether they can and should take your laptop but let you by.

Elaborating on my suggested approach, they point out the following:

Another option is to bring a clean laptop and get the information you need over the internet once you arrive at your destination, send your work product back, and then delete the data before returning to the United States. Historically, the Foreign Intelligence Surveillance Act (FISA) generally prohibited warrantless interception of this information exchange. However, the Protect America Act amended FISA so that surveillance of people reasonably believed to be located outside the United States no longer requires a warrant. Your email or telnet session can now be intercepted without a warrant. If all you are concerned about is keeping border agents from rummaging through your revealing vacation photos, you may not care. If you are dealing with trade secrets or confidential client data, an encrypted VPN is a better solution.

Anyway, worth a read if you do cross the border with sensitive information.

Another update: More advice from Bruce Schneier on how to deal with customs (both in the US and elsewhere) and also safeguard sensitive information. I particularly like this suggestion (which he offers after also suggesting the VPN approach that I mentioned above) though it does require a little white lie:

If you can’t [use a clean laptop and download via secure VPN], consider putting your sensitive data on a USB drive or even a camera memory card: even 16GB cards are reasonably priced these days. Encrypt it, of course, because it’s easy to lose something that small. Slip it in your pocket, and it’s likely to remain unnoticed even if the customs agent pokes through your laptop. If someone does discover it, you can try saying: “I don’t know what’s on there. My boss told me to give it to the head of the New York office.” If you’ve chosen a strong encryption password, you won’t care if he confiscates it.

Further update: US customs, presumably emboldened by the court’s decision, have published their official policy (PDF) describing arbitrary search. The good news is that the reaction, at least in some corners, is somewhat less than favourable. From a recent article in the Washington Post:

“The policies . . . are truly alarming,” said Sen. Russell Feingold (D-Wis.), who is probing the government’s border search practices. He said he intends to introduce legislation soon that would require reasonable suspicion for border searches, as well as prohibit profiling on race, religion or national origin.

There’s also some description of what the good folks at Customs would do, including treatment of privileged materials, etc. If you frequently travel to the US with sensitive business materials, you would do well to review the policy. I may post a summary at some point…

Also, another less than enthusiastic op-ed piece in USA Today.

wherefore art thou, shareholders agreement?

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Most of you have already seen the news about eBay‘s claim again Craigslist reported in Wired and other places. Apparently, eBay is concerned about some action that the Craigslist folks took that diluted eBay’s holdings. Which left me scratching my head a bit, given the little I know about Craigslist, which is that I found it surprising that they would have sought financing (as I couldn’t see why they would want or need it given Craigslist particular approach to its site). However the Wired article explained:

EBay, the world’s largest online auctioneer, was an unsolicited suitor to quirky Craigslist in 2004. An unnamed former Craigslist shareholder sought out eBay and sealed a deal whose financial terms were never disclosed.

Ouch. Presumably, the folks at Craigslist either did not have that shareholder under a shareholders agreement, or they did, but it did not have provisions that would, for example, allow for the right to repurchase shares in certain situations, such as when the shareholder is thinking of selling to someone else, who might, for example, be a competitor, or become a competitor.

Which is why the first piece of advice I give to startups and other early stage companies is that they should be very, very, very careful when it comes to issuing stock or options. Its great that companies want employees and others to share in their prosperity as they grow, but very often what is overlooked is that shares (or stock as those Yanks call it) in addition to providing an economic benefit as they appreciate, also provides for a whole host of rights that you may or may not necessarily want to give out. And which don’t require a majority to exercise (but which can still be a royal pain to deal with), as eBay’s claim illustrates (I should emphasize that I’m not commenting on whether or not eBay’s claim has merit, but rather the circumstances that allowed it to happen in the first place).

Shareholders, even small shareholders, have the potential to cause a lot of difficuties for companies (particular smaller companies) through not only their voting rights, but also statutory rights, such as claims of oppression or the ability to require a company to be audited. For those considering option plans or share ownership plans, its usually a good idea to investigate alternative but equivalent forms of compensation (profit sharing, phantom stock) before going with option or share plans. And if even if you do decide on options or shares, please, please, please get a shareholders agreement in place – trust me, you won’t regret it.

antigua – sun, fun and… pirates?

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Probably only catching up on things as its been quite busy and alas this blog is unfortunately low on the list of priorities… Anyway, I was stunned to read in Variety that

The government of Antigua is likely to abrogate intellectual property treaties with the U.S. by the end of March and authorize wholesale copying of American movies, music and other “soft targets” if the Bush administration fails to respond to proposals for settling a trade dispute between the two counties, according to the lawyer representing the Caribbean island nation.

The history is quite interesting. Apparently Antigua has prevailed several times at the WTO in respect of US trade practices related to offshore gambling sites which are hosted in Antigua but the US has taken no action. After roughly five years of proceedings, apparently Antigua is now looking to this course of action as a retaliatory measure. The WTO has to some extent, blessed this course of action. From the article:

The most recent victory was in December, when the WTO ruled that Antigua could exact damages by ignoring IP agreements with the U.S. should a negotiated settlement fail.

Somewhat surprising but the ruling can be found at the WTO site (note – link is to a 74 page PDF) and awards Antigua:

6.1 For the reasons set out above, the Arbitrator determines that the annual level of nullification or impairment of benefits accuing to Antigua in this case is US$21 million and that Antigua has followed the principles and procedures of Article 22.3 of the DSU in determining that it is not practicable or effective to suspend concessions or other obligations under the GATS and that the circumstances were serious enough. Accordingly, the Arbitrator determines that Antigua may request authorization from the DSB, to suspend the obligations under the TRIPS Agreement mentioned in paragraph 5.6 above, at a level not exceeding US$21 million annually.

I’m surprised this hasn’t gained more prominence, since the implications could, needless to say, be huge, particularly given other trade disputes that the US has with the EU and others (and in which it has taken a similar course of action). I did not an article that mentioned that Slysoft, the company which broke Blu-Ray’s DRM system, is based in Antigua.

Then again I have been living (or rather working) under a rock lately so may just be late to tune in to this news.

patent tides turning?

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Alas – been too long, old blog. And I see I have a backlog of 174 partially written entries. Anyway, just a brief mention of a very interesting decision reported by The Denver Post about a rather unusual turn of events in a patent infringement case:

A federal judge recently got so infuriated by the conduct of two highly regarded trial attorneys that he overturned a jury’s $51 million verdict, then ordered the lawyers to pay the fees and costs of the opposing lawyers, a sum that could total several million dollars.

U.S. District Senior Judge Richard P. Matsch sanctioned attorneys Terrance McMahon and Vera Elson of the firm McDermott, Will and Emery, of Chicago and San Francisco, for “cavalier and abusive” misconduct and for having a “what can I get away with?” attitude during a 13-day patent infringement trial in Denver.

Not surprisingly the decision is the subject of much comment on the interwebs, many wondering if this marks the turning point in patent litigation by so-called patent trolls in the US. Still working on finding the judgement itself.

Update – someone posted the decision on slashdot.  Would read it but alas drafting to do…

dvorak on productivity

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Sometimes I love John Dvorak. Other times, not so much. Recently, he has railed on about “lost productivity” and how, basically, its BS – at least when used within the context of sales pitches. To wit:

This is the modern version of a snake-oil cure. Close relatives include the “lost productivity” indexes as well as “sales lost to piracy.” If sales were indeed lost to piracy, then why hasn’t this become a line item on the books and therefore tax deductible? Seriously, if all this intellectual property theft is theft in any conceivable way, then take the IRS deduction based on the press announcements and see how far you get.

Ah, John, John, John. Mistake number one, unless of course I’m misreading. The reason why its not taxable is because the sales were never made. Hence, nothing to deduct. This is not the case of someone taking something that you already have, but rather someone depriving you of sales because they have wrongly taken your IP. How could you seriously allude that IP theft isn’t theft in any conceivable way? Perhaps if someone ripped off all of your columns and diverted traffic from the sites that pay you to ones that don’t, you might start to reconsider that statement.

Then there’s this argument:

My grumblings date back to the early days of the Xerox machine. One rationale for selling the expensive photocopier was a bogus calculation about how much productivity was lost by secretaries who had to grab extra paper and put carbon paper between the pages to make copies. There were real numbers and costs attached to this practice, and the company could show that the Xerox machine would pay for itself by eliminating this productivity drain. And I suppose this number would be accurate and true if the secretary had actually been working 8 nonstop hours rather than chatting and doing her nails half the time. No matter what the experts like to think, the office environment is not like the assembly line, where you can make genuine tweaks to productivity.

Gotta say I must disagree. Carbon paper being no less productive than photocopiers? If the premise is correct, then presumably it would continue to apply to today’s photocopiers, would it not? Is he truly asserting that using carbon paper would be as efficient (and therefore as productive) as high-speed photocopiers that would allow an office to generate 100 copies of a document in an hour or two for its clients? Could there not be a bit of productivity gained by using photocopiers instead of carbon paper? What about computers? Surely he’s not suggesting that, for example, banking was no less productive in the days of manual ledgers?

Don’t get me wrong – I am still probably one of Mr. Dvorak’s biggest fans. But sometimes, very rarely, from time to time, I read one of his columns, like this one, and I scratch my head and wonder…

mature industries

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This may be just me. In fact I’m probably sure it is. But I seem to note a correlation between lawsuits of the sort that make me wonder a bit why they bother and the maturity of the industry in which they take place. And by maturity I mean in terms of industrial growth cycle, and not (necessarily) in terms of developmental psychology. To wit, a claim that had a writeup by Manatt Phelps & Phillips LLP:

Hormel Foods has sued rival Campbell’s over the latter’s description of its Chunky Fully Loaded soup as a “stew.”In its lawsuit, Hormel charges Campbell’s with “misrepresenting the nature, characteristics, ingredients, benefits and qualities of its Chunky Fully Loaded soup products in commercial advertising and promotion.”

Which leads me to believe that the soup/stew market is relatively mature. What do you think? Dumb rule?

privacy vs the news (us version)

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Interesting case summarized by Loeb and Loeb. A guy bitten by a killer whale sues someone for broadcasting the tape showing the incident without his consent. The guy claims, amongst other things, infringement of rights of privacy. Interestingly, the court held:

…that the plaintiff did not have a reasonable expectation of privacy in a video that he had previously licensed for broadcast on national television. The court rejected plaintiff’s argument that once-public facts could become private again and held that, even if the video were considered private, its broadcast
was protected as a newsworthy event.

What I find particularly interesting is the very last part, which seems to suggest that if it’s newsworthy, that somehow trumps the right to privacy. I can imagine that this would likely not be the case here in Canada. One example of where the courts here have done in directly the opposite direction is with respect to the horrific crimes of Paul Bernardo and Karla Homolka, where a wide ban was imposed on materials related to the murders of two young women in order to protect the victims and their families.

I wonder how such a statement (albeit something that could very well be considered obiter) might be applied in other circumstances involving the victims of accidents or crimes, to the detriment of those victims…

conversion of data (and not the conversion you’re probably thinking of)

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Very interesting piece from Duane Morris on a case in New York. My ultra short summary of the summary: Insurance company leases computer to agent. Agent puts all his business and personal data on it. Insurance company terminates agency, takes back the computer and all data on it, and refuses to give the agent access to any of it. Agent sues, loses, but then wins on appeal.

The interesting part is the basis on which he won, which was a claim under “conversion”. Not necessarily incredibly groundbreaking, as other cases have dealt with conversion as applied to intangibles previously, but, as the folks at Duane note:

Under the merger doctrine, a conversion claim will apply to intangible property, such as shares of stock, that are merged or converted into a document, such as a stock certificate. Accordingly, conversion of the certificate may be treated as conversion of the shares of stock represented by the certificate. More recently, the court ruled that a plaintiff could maintain a cause of action for conversion where the defendant infringed the plaintiff’s intangible property right to a musical performance by misappropriating a master recording, a tangible item of property capable of being physically taken.

Thyroff was the Court’s first opportunity to consider whether the common law should permit conversion for intangible property that did not strictly satisfy the merger test. Recognizing that it “is the strength of the common law to respond, albeit cautiously and intelligently, to the demands of common sense justice in an evolving society,” the Court decided that the time had arrived to depart from the strict common-law limitation of conversion.

Interestingly, in their analysis of the decision, they conclude that:

This decision provides a powerful remedy for New York employers to bring a cause of action against employees who steal company information or [intangible] property. Unlike claims for breach of fiduciary duty or misappropriation of trade secrets, conversion may be easier to plead than other claims because it does not require that the employer establish willfulness or wrongful conduct.

Hmmm. Not quite sure I’d agree – after all, the “conversion” itself would need to be established. Also, I’m not sure that a rogue employee who takes a copy of his or her employer’s confidential information but leaves the original copy with their employer, would be the basis for a cause of action under conversion, which, if I understand the case correctly, has more to do with depriving someone of property that is rightfully theirs. Absconding with confidential information does not deprive the owner of that information of the data, but rather the value the owner of the data can realize by virtue of the fact it can only be used by that owner. That situation seems somewhat different than the one in Thyroff – the analogy there would be if insurance company did not deny the agent access to his information, but rather took a copy of it and used it in a way they weren’t supposed to. It would be interesting to see whether the court would extend a claim of conversion to deprivation not of the intangible information itself, but rather value of the rights to exploit it exclusively. Alternatively, it may be that the ruling could be read broadly enough to already take that into account.

I also wonder what sort of effect this might have on those who might have otherwise leapt at the opportunity to become an agent for the insurance company…