Hubris

As more and more details come out about this week’s security breakdown at Sony, one thing is becoming clear:  even if you think you’re safe, add a couple of more security layers.  Because you are not safe. 

According to the New York Times, the hackers made off with a database that included customer names, addresses, usernames, passwords and as many as 2.2 million credit card numbers.  Reuters is running a story that covers the number of class action lawsuits being filed on account of the breach.  The price Sony could eventually pay out in time, legal fees and lawyer costs are on the clock. 

Why? 

VentureBeat tracked down George Hotz, aka “GeoHot”, who recently settled a lawsuit with the company over hacking into the PlayStation 3’s hardware. While Sony may consider him as public enemy number one, Hotz relies that he had nothing to do with the attack.  Considering the fact that he recently settled with Sony rather than go through years of legal wrangling, (plus the fact Hotz’s main gig is hardware hacking, not database cracking), it would tend to exclude him from the line up.  But his reaction sums up what is going on nicely:

“The fault lies with the executives who declared a war on hackers, laughed at the idea of people penetrating the fortress that once was Sony, whined incessantly about piracy, and kept hiring more lawyers when they really needed to hire good security experts. Alienating the hacker community is not a good idea.”

And therein lies the point.   Companies feel it is easier to hire another lawyer rather than to fix the problem.  That the threat of lawsuits is a deterrent to hackers.  It isn’t.  You have a database with the names of customers and and their credit card numbers.  Threatening legal action with a room full of empty suits doesn’t matter, especially when the chance of catching the bad guys is slim. 

As Hotz points out, engaging the hacker community may be the best option.  Hackers are, for the most part, highly intelligent and creative people who are usually more than happy to point out the failures of your system. Make it a once a year game – give the money you would pay an overpriced lawyer to write nasty letters to the first person who can crack your system and show you where to fix it.  Admit you don’t have all the answers. 

After this fiasco, it might even be seen as a huge cost savings.

Sue First And Ask Questions Later

If you maintain a blog or website, and you post blockquoted text, photos, or images from copyrighted sources such as newspaper websites, you could unknowingly find yourself served with a lawsuit from a firm called Righthaven. 

In case you didn’t know, Righthaven is a company based in Las Vegas that sprang to life last spring for the sole purpose of suing blogs and websites that repost, or even excerpt, Las Vegas-Review Journal articles without permission. It has filed a large number of  lawsuits, and settled dozens of them in its favor.  Righthaven’s tactics are pretty straightforward and extremely legal:  it purchases the copyright to an article or image and then searches the web for anyone who has published the article or image in question without authorization.  It gets the information concerning the person who has posted said information and then proceeds to sue them into oblivion.  While most out there would ask the blogger or group to take down said article before resorting to lawsuits, Righthaven goes straight for the jugular like a school of hungry piranha.  Most or all of their  lawsuits have demanded the statutory maximum of $150,000 in damages as well as surrendering ownership of the domain name. That’s a lot of money for the bulk of bloggers out here, so most of the cases have settled out of court. Basically when you are served by Righthaven, you either have to pay thousands of dollars in court costs to defend yourself if you think your use of the material was fair use or you have to settle the case and still lose hundreds or thousands of dollars. It’s what they call “instant litigation”.  Apparently it works pretty well.

“But what about Fair Use?”  you may ask. 

Oh yes, that.  Recently, Realty One Group fought back and was awarded a summary dismissal based on the finding that eight of 30 sentences from a Review Journal story about the real estate market qualified as fair use of the material.  Righthaven came out afterwards and say they would not pursue “instant litigation” against those whose use is less than seventy five percent of a copyrighted work. 

They also stepped ino it when they decided to sue the Democratic Underground site for a publication of four paragraphs from a 34 paragraph article about Senate hopeful Sharron Angle.  The Electronic Frontier Foundation stepped in to defend Democratic Underground and counter-sued Righthaven for abusing copyright law.  Righthaven backed off, asking U.S. District Judge Roger Hunt to dismiss its original claim, but maintaining that that it still could win if it really wanted to.  The problem here is that there really is not any amount set by the law that tells you how much is fair use and how much is too much.  In that respect it’s kind of like pornography: you know it when you see it. 

So continue blogging folks, but watch your sources and your backs.  Lawyer infestations are worse than bedbugs.

Now That’s What I Call Infringement! Volume 2!

I do love the smell of Schadenfreude in the morning.

About a year ago, I wrote about a little trouble brewing in Canada between the record companies and recording artists.  Now, there is a longstanding practice of the recording industry in Canada, described as “exploit now, pay later if at all.” It involves the use of works that are often included in compilation CDs (you know, those “That’s What I Call Total Crap”) or live recordings. The record labels create, press, distribute and sell the CDs, but do not obtain the necessary copyright licenses.  Instead, the names of the songs on the CDs are placed on a “pending list,” which signifies that approval and payment is pending. This pending list has been going on since the late 1980’s. 

The list was supposedly up to 300,000 songs. 

And that, as they say, is when the lawsuit started.  I mean, this wasn’t as if these were bad hipster bands you never heard of before.  These were unknown artists like Beyonce and Bruce Springsteen.  And in the original class action lawsuit, the artists  were asking for $20,000 per infringement - the same amount the record companies ask for when bringing a lawsuit against little Betty Jo Stingray for illegally downloading the latest Justin Bieber album.  The phrase “hoisted by one’s own petard” applies here.

Apparently after a year of legal wrangling, the four major record labels that comprise the Canadian Recording Industry Association – EMI Music Canada Inc., Sony Music Entertainment Canada Inc., Universal Music Canada Inc. and Warner Music Canada Co. – have agreed to pay $45 million.  That comes out to about $150 per song, or as the the lawyers call it, chump change.  It certainly beats dishing out about six billion. It also establishes a new mechanism to help ensure that artists are paid more promptly.  Apparently everyone is happy, though it is striking that it took a class action settlement to get the record labels to address their own ongoing copyright infringing practices in paying artists for the use of their works.

After all, these are the folks who are supposedly fighting for the rights of the artists they were ripping off.

YouTube:1, Viacom:0

Today, a verdict was rendered in this first round of the fight between YouTube and Viacom.  Advantage, YouTube. 

For those unaware of the fight, here’s the short version:  Viacom was suing YouTube for 1 billion dollars (yeah, billion, with a “b”) for copyright infringement.  After all, YouTube allows people to put up video clips, and sometimes those clips are from Comedy Central and other Viacom properties.  Viacom’s argument was that YouTube knew full well what was being posted and was therefore responsible. So therefore they should get a billion, because people like posting last night’s episode of  The Daily Show. 

The fight has been going on since 2007 and while there have been some leaked memos, most everything has been low key.  So it was in some ways surprising today when U.S. District Court Judge Louis Stanton decided that the Digital Millennium Copyright Act protects YouTube from Viacom’s claims and threw the case out.

You see, according to the DMCA, when it comes to copyright on the web, it is the holder of the copyright that is responsible for the takedown notice, not the hosting company.  This is what is known as the “safe harbor” provision.  As long as the company complies with the request, then it is safe from legal action.  The judge found that while there were a huge number of infringing videos on YouTube, the site did take them down when notified. In fact, he points out one instance in 2007 when Viacom gave YouTube a single takedown notices for 100,000 videos. By the next day they were down.

Now there are many in Hollywood who would like to see that position reversed, because it takes a lot of time, people and money to find every copy of South Park that is being posted.  Money that could obviously be used to support Lindsay Lohan’s (alleged)cocaine habit.  But I digress.  The point is, if the situation were reversed, then YouTube would basically cease to exist, along with lots of other sites that allow for user input, like WordPress, the company that hosts this blog.   Because they would have to hire an “Input Police Force” to make sure that anything remotely “infringable” stayed very far away from the net. 

Of course, an appeal is pretty much certain, but the fact that Viacom could not even get this puppy to trial sets a bad precedent.  Winner of the next round takes on Viki Carr in the finals. 

WordPress Tags: Law, YouTube, Viacom, DMCA, Copyright

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The NBA-Where Lawsuits Happen

Oh my.  Bad times in Dallas. The  Dallas Mavericks, not only lost in the first round of the playoffs to a decrepit San Antonio team, but now are being sued by Ross Perot, Jr. 

At least Mark Cuban is.

According to the Business Insider, Perot is claiming that Cuban has recklessly managed the business and that the Mavericks are on the edge of insolvency.  Perot wants damages, the team put into receivership, and would like to see a forensic accountant appointed to examine the teams finances.

To which, the always open mouth of the NBA responded:

"The Mavs operations and debt are guaranteed by me. There is no risk of insolvency. Everyone always has been and will be paid on time… being in business with Ross Perot is one of the worst experiences of my business life. He could care less about Mavs fans. He could care less about winning.”

Now, of course, the purpose of a business is to make money, and in the time that Cuban has owned the Mavericks, they have become the sixth most valuable franchise in the NBA, according to Forbes.  But the point is, an NBA franchise is not a way to print money.  According to the commissioner himself, only about half of the teams make money.  This should be something that Mr. Perot Jr. should be familiar with-after all, when Cuban bought the franchise back in 1999, Perot was a minority owner then.  And trust me on this- at that point, no one wanted to be seen at a Dallas Mavericks game. 

But the point of the lawsuit is that Perot is claiming that Cuban has saddled the Mavs with debt, and that the resources of the team have gone to the benefit of Cuban’s other businesses.  Then again, Mr. Perot’s own enterprises have not been going all that well lately.  This past summer, Cuban accused Perot of "trying to find nickels in the sofa cushion" in an attempt to recapture losses stemming from the Victory project, a retail and office development surrounding the The American Airlines Center. An empty retail and office development center surrounding American Airlines Center, I might add.  Live by real estate, die by real estate.   

Either way, it always fun when two Dallas billionaires decide to take each other on.  After all, the season’s over, and free agency is coming up.  Might as well have some legal drama to fill in the time.

WordPress Tags: Basketball, Dallas, Sue sue Sue-dio, lawyers, drama

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Not The Lawyers!

There was a joke a few years ago – If Paris Hilton and Britney Spears were in a steel cage fight to the death, who would win?  Answer: The American public. 

For some reason, that was the first thought I had when I heard that Adobe was calling in the lawyers on Apple.  The only thing I can think of really working in Adobe’s favor here is if they have verifiable paper trails showing that Apple led them down the garden path with promises that Apple would accept Flash and then switched at the last minute.  Other than that, guys, what are you thinking?  Like I said last night, you are starting to sound like the ex-wife who has decided to destroy her former husband rather than getting on with the business of living.

That said, if it takes Adobe to knock some sense to the increasingly childish actions of Apple, I’m not complaining. I really dislike any company holding such a widely spread platform in crippling stranglehold, limiting user freedom and developer innovation.  Oh, I know, “I really don’t understand the problem here. Apple wants developers to make apps in Objective C. It’s their platform, and they can lay down whatever rules they want. Protest with your wallet (if you’re a consumer) and your skills (if you’re a developer)”.  Tell it to Oprah.  But folks, won’t someone take a step back a realize that Steve has been acting like a little tin god? It isn’t a color that looks good on him and he’s starting to wear it out.

The point is, code is code.  And you can write hack programs in Objective C just as easily as you can in Flash, Silverlight, C#, C++, VB, you name it.  To paint all products “bad” based solely on the language puts you in a category of being either lazy, stupid or trying a massive power grab with a rather obvious agenda.  And I’ll never accuse Steve Jobs of being either lazy or stupid. 

It makes no difference. Either Adobe gets their butts kicked and have to drop the prices of Creative Studio to get people to buy it or else they take Apple to the mat and people stop seeing Steve-o as Tech Jesus and more like the overbearing leader of a really great tech company. 

Now that would be a win-win for everyone.

WordPress Tags: Applestan, Adobe, lawyers, Sue sue Sue-dio

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Cry Havoc and Let Slip the Dogs of War

This has been a long time coming.  After months of bobbing, weaving, Apple finally said enough and went to court with guns blazing. Sort of.  In its passive aggressive way, Apple is suing Google by not suing Google. They are rather, suing HTC, the company that makes exquisite phones with Google brains. 

Yeah, I know it is gutless, but there is a strategy behind it.  First, size.  HTC is not large.  The threat of a patent lawsuit that could take years to complete is not something a company the size of HTC really wants to fight.  Its the reason Apple did not go up against Motorola, a company that has a room full of lawyers who are quite knowledgeable about these things and lots more patents to draw from.  Who would you rather fight in the Octagon – Randy Couture or Randy Couture’s mom? While Randy’s mom could probably kick your ass as well, you stand a better chance of surviving. 

Second, the discovery phase.  If there is anything they can stick onto Google, they’ll find it here.  That is really what this fishing expedition is for.  They are looking for smoking anythings at this point.  If it sticks in the first lawsuit, it will be front and center for the main event.

So about those patents – Nilay Patel at Engadget did some investigating to see what kind of patents we are talking here, and the review:

So here are the takeaways: as of right now, it’s impossible to predict what’s going to happen in this case — Apple and HTC could settle tomorrow, or it could turn into a ten year courtroom monster. But what we do know is that Apple’s specifically gone after HTC’s Android devices, and it’s organized its attack very carefully: it’s gone before the ITC with a collection of older patents on very deep OS-level functionality, which traditionally would be considered stronger patents, and it’s gone before the federal court with a different set of patents that include some very new claims on user interface features. Both courts have the ability to stop HTC from selling devices and issuing fines, but none of that is going to happen anytime soon. The real question now is how HTC is going to respond — and whether or not Google is going to get involved.

If this does turn into a years-long slog (and it could, quite easily), the world will not end.  The government will not shut down your Android phone.  Apple will not take over the world and really, neither will Google.  Fanbois aside, there are lots of people out there who could care less about the outcome and will continue to use their non-iPhone, non-Adroid phones as simply phones.  Not sexy, certainly not cutting edge, but there you have it.  Even Apple and HTC have to appear before a judge and have a hearing to determine exactly what these patents mean before the case can go to trial.  Meanwhile, Apple is already tied up in a patent lawsuit with Nokia, claiming Nokia is stealing Apple technology. Nokia says Apple is stealing its technology. Kodak is also suing Apple claiming technology theft.  So it looks like there are jobs in the tech sector-if you’re a lawyer. 

WordPress Tags: Applestan, HTC, Google, Lawsuits, Sue Sue Sue-dio

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That Crunching Sound You Hear

Interesting little wreck going on.  No, Not Tiger’s car wreck, but the wreck of the Crunchpad. 

According to Mr. Arrington, the Crunchpad, a very nicely designed tablet designed to surf the web, was ready to debut at the Real-Time Crunchup event on November 20.  Then, well, I’ll let Mr. Arrington take it from here:

“On November 17, our deadline date for greenlighting the debut three days later, the CEO of our partner on the project, Chandra Rathakrishnan, sent me an email with the subject “no good news.” Yuck, I thought. Another delay, probably with the screen that had been giving us so much trouble – capacitive touch at 12 inches isn’t trivial. And sure enough, the email started off with “no good news to update. updated hardware is still on its way , so that’s a timing issue. friday will be a challenge now.”

But the email went on. Bizarrely, we were being notified that we were no longer involved with the project. Our project. Chandra said that based on pressure from his shareholders he had decided to move forward and sell the device directly through Fusion Garage, without our involvement.”

Interesting, to say the least. Considering the intellectual property is shared between Arrington’s group and Fusion Garage, it makes one wonder exactly where someone could come up with the scenario of basically saying  “OK, well, thanks for all your hard work on your idea, I’ll be taking everything now and saying good-bye.”  As Arrington put it :

“This is the equivalent of Foxconn, who build the iPhone, notifying Apple a couple of days before launch that they’d be moving ahead and selling the iPhone directly without any involvement from Apple.”

Fusion Garage blames “shareholders” for the abrupt change in plans, at least in the e-mail that Arrington placed onto the blog.  Fusion Garage’s blog hasn’t been updated since February and no news has come out of the camp. 

While there are plenty of times when I don’t agree with Mr. Arrington, this is not one of them.  Something smells foul and it looks like it is coming from the direction of Fusion Garage.  Time, the courts and lots of lawyers will tell, but my gut is backing Arrington on this one. 

So what was it?  A renegotiation of the equity split gone sour?  Pure greed?  Corporate sabotage?    As I have said, tablets are “the next big thing”, whatever that is supposed to mean.  And there is more than one player out there in tablet-land.  And the fact is, things like this happen in corporate America all the time.  Great ideas have been bought and then conveniently left to rot because they might pose a market threat to another competitor.  The best ideas sometimes never make it out of the gates. 

This, I’m afraid, is one of those times. 

Now Playing: Cake – Prolonging the Magic – You Turn the Screws

WordPress Tags: Business, Crunchpad, lawyers, Sue sue Sue-dio, failure, Arrington, Fusion Garage