Fitbug, the online activity tracker and wellness coach, has filed a complaint against popular fit-tech startup Fitbit alleging trademark infringement and unfair competition and business practices.

Fitbug claims Fitbit has caused irreparable harm and damage to their company, and it has asked the U.S. District Court in Northern California to order Fitbit to stop allegedly using its Fitbit mark and conduct that causes confusion with Fitbug’s brand.

Founded in 2005, Fitbug combines activity-tracking devices with web and mobile technology that gives personalized weekly activity and nutrition targets as well as advice, feedback, and encouragement. The U.K.-based company started using its trademark “Fitbug” in the U.S. the same year.

Fitbug was one of the first companies in the fitness-technology market, combining electronic tracking devices with digital coaching to help people become healthy and lose weight.

The lawsuit alleges Fitbit created and distributed identical devices and services four years after Fitbug began its operations in the U.S. These actions, and the nearly identical names and marks, have caused confusion among consumers and are damaging Fitbug’s business, according to the suit.

Fitbug said that over the past year, the company has received numerous customer service requests from users needing assistance with their Fitbit devices, and media publications, social media, and potential business partners have confused their products as well.

According to the complaint, Fitbit has mirrored Fitbug’s logo, icons, photographs and imagery on the website, products, and packaging materials, going as far as including a blue dot over the letter “i.” Fitbug recently changed its logo and no longer uses the blue dot.

Fitbit uses similar bright colors, photography, silhouettes, packaging, and imagery on its product that Fitbug began using in 2006. Diagrams monitoring users’ food intake and energy levels are almost identical as well. Some images presented in the suit are shown below.

The lawsuit was filed on March 29. Fitbit has yet to respond to the allegations.

Ever scrolled to the bottom of a long page on your iPhone, then watched the page lift up from the bottom of the screen and then bounce back? Apple patented that rubber-banding effect, and it was reportedly one of Steve Jobs’ favorite things about the iPhone, since it adds verisimilitude, making what is virtual act as if it is real.

That specific iPhone behavior was one of the issues in Apple’s billion-dollar courtroom victory over Samsung, seven months ago. Now, that patent is on shaky ground, and so is Apple’s legal win — or at least part of the proceeds of that win.

According to a recent Samsung court filing, Apple patent 7,469,381 patent has been invalidated by the U.S. Patent and Trademark Office in a statement called a “Final Office Action:”

This Final Office Action by the USPTO is relevant because it finally rejects multiple claims of the ‘381 patent …

This final rejection includes claim 19, which is the only claim of the ‘381 patent at issue in this action. The jury found at trial that 21 accused Samsung products infringed claim 19 of the ‘381 patent.

Claim 19, along with 18, comprise the bounce-back portion of this patent — the ability of the iPhone to show a surface “beneath” a document when the end of the document is reached and then bounce the document back over it.

Apple’s original billion-dollar victory, of course, was reduced by Justice Koh a month ago to $450 million. And a new trial is expected to determine the final value of the judgement. With Samsung arguing that one of Apple’s key patents has now been ruled invalid, the amount could go down yet again. Both companies are, of course, posturing, with Apple claiming in late 2012 that the billion dollar settlement was $700 too little. Originally, Apple had requested $2.5 billion in compensation.

According to Samsung, the USPTO rejected the patent on March 29 of this year. Apple is likely to appeal the ruling.

The never-ending trial of the smartphone giants continues …

Image credit: Devindra Hardawar/VentureBeat

Today, Apple is being sued by state-owned movie maker Shanghai Animation Film Studio, which is accusing Apple of selling 110 movies that it owns via the App Store without its approval, the South China Morning Post reports.

This follows days of attacks on Apple from various sources that are all connected to the government.

First, China Central Television aired an Apple “exposé,” claiming that the company’s warranty policies were discriminating against Chinese consumers. That was accompanied by a clumsily-coordinated astroturf social media campaign via Sina Weibo, the Chinese Twitter/Facebook hybrid. Then the People’s Daily, the government’s main propaganda outlet, attacked Apple for those same warranty policies. And just two days ago, Apple appeared in court to answer a lawsuit claiming that Siri infringes a Chinese company’s patents.

A sample of the movies that were allegedly pirated:

On the face of it, the new copyright lawsuit is a little challenging to process.

Apple does not generally seek out content for iTunes or the App Store and load that content onto the store itself. Instead, authorized representatives of companies, or individuals, upload their own content or apps for sale via iTunes. However, there have been cases in China where pirates have uploaded stolen content to iTunes and the intellectual property owners have successfully sued Apple for damages.

Apple provides steps on its website for reporting precisely that problem; however, short of conducting an exhaustive provenance search for each and every piece of content it sells, it’s hard to see how Apple can know whether content is being pirated or not … and how, given the legal documentation and forms surrounding the upload process, it can be held responsible for pirates’ actions.

However, a similar case involving China Encyclopedia Publishing in September resulted in Apple being required to pay 520,000 yuan in compensation. That’s only about $85,000, but it does set a precedent in China that Apple will be held responsible even if pirates upload stolen content to sell via iTunes or the App Store.

I’ve asked Apple for comment and will update this post if Apple responds.

Interestingly, the South China Morning Post story references a quote from a Shanghai Animation Film Studio representative, who references the “controversies” that “surround” Apple in China right now:

“We want to keep tight-lipped on this case because, as we see it, it’s just a litigation in which we want to get compensation [for our product],” said an official from the Shanghai studio. “It’s a sensitive period now since Apple is a big multinational company and it is surrounded by controversies on its practices in China.”

It’s as if there’s blood in the water and the sharks are smelling it.

One other quote in the story has me scratching my head and wondering what’s really behind this either highly-coincidental or else coordinated set of attacks.

“The cases are not good signs,” the South China Morning Post quotes an “iPhone owner” named Dong Jun as saying. And apparently he added these words: “They convinced me of quitting Apple products later now that my phone has quality problems.”

All I can say is that I personally would tend to identify a source a little more specifically than “iPhone owner,” particularly in a nation of more than a billion people. And that this is a mighty convenient quote, given the extensive and seemingly government-initiated set of attacks on Apple.

The plaintiffs — Dawn-Shemain Weeks, Margaret Hines, and Shannon Schlagenhauf — formerly worked as executive assistants for CMEA and are making 35 different allegations regarding inappropriate sexual behavior. Most of the complaints are direct at John Haag, who served as CMEA’s chief operating partner between 2006 and 2012.

“Throughout the duration of their employment at CMEA, Haag spoke and/or behaved in sexually and racially inappropriate ways. Comments and ‘jokes’ about women, sex, and race were a common and tolerated part of the work environment at CMEA. CMEA’s owner and partners also spoke and behaved in ways that inappropriately injected sex into the workplace,” the lawsuit outlines.

Allegations the three made against Haag include watching porn on his work computer, rude nicknames, explicit and vulgar gestures, and threats to fire the plaintiffs if they “did anything to displease him.”

On April 30, the plaintiffs decided to report Haag’s conduct to CMEA’s three managing directors, who were allegedly aware of it through the reports of other women. They reportedly conducted an investigation through the third-party human resources providers, which uncovered years of the alleged behavior, and negotiated a “buy-out” of Haag’s interest in CMEA’s funds. The firm then took measures to improve the workplace atmosphere, but it allegedly continued to act inappropriately and make comments implying the plaintiffs’ jobs were on the line. Weeks resigned at the end of January.

The plaintiffs are claiming to have suffered significant injuries, trauma, and distress that have adversely impacted their mental and emotional health as well as financial loss. They are asking for a jury trial for all causes of action, general and compensatory damages, attorney’s fees and costs, punitive and exemplary damages, and prejudgment interest on all amounts claimed.

Sexual harassment and gender discrimination are pervasive problems in the male-dominated tech world, and part of this is due to the lack of women in the industry. A study conducted by Stanford in conjunction with the Kauffman Foundation and Women 2.0 found that nearly 18 percent of women in tech had experienced discrimination, and the average tech workplace is not an inviting environment for women and minorities.

Last year, another major sexual harassment scandal hit tech when Ellen Pao brought a sexual harassment and gender discrimination suit against her employer, well-known venture capital firm Kleiner Perkins Caufield & Byers. Mistreatment of women in tech extends all the way from executive offices in Sand Hill road to offhand jokes in co-working spaces.

Women represent less than 10 percent of venture capitalists, 3 percent of startup founders, and 14 percent of executive officer positions.

Warning! Not for innocent eyes- read the full suit below:

Haag Case

Photo Credit: Shutterstock

July 9-10, 2013
San Francisco, CA

Early Bird Tickets on Sale

Daddy’s definitely not happy. And he’s not sure he trusts what junior’s telling him.

Yesterday U.S. Magistrate Judge Paul S. Grewal ordered Apple to not only turn over more evidence in an ongoing iPhone privacy case but also to explain — in detail — exactly how it obtained the data. Apple had previously been ordered to turn over documents that relate to how its iOS mobile operating system tracked users’ location data, even when location services were ostensibly turned off.

Apple failed to turn over all the required evidence, according to the judge. And, according to Bloomberg, Judge Grewal says he no longer trusts what Apple is telling him.

“Luckily for the plaintiffs, Apple has provided more than enough evidence itself to suggest to the court that it has not fully complied with the court’s order,” Grewal wrote. “In light of Apple’s performance in this case, the court cannot rely on its representations that this time it really has or will produce all responsive documents.”

The trend of judges getting unusually peeved with Apple seems to be growing. In the UK, Sir Robin Jacob told Apple to apologize to Samsung publicly for claiming that Samsung had copied its designs and forced the company to redo the apology several times until it was acceptable. (The same judge is now working for Samsung, believe it or not.) Unfortunately, the company seems to be getting a reputation in legal circles for not complying fully, or minimally complying, very slowly, to judicial orders.

Speaking of slow, the iPhone tracking issue and subsequent legal battle has been ongoing for two years now. Apple blamed software bugs for the large databases of cell tower and Wi-Fi hotspot locations that some users found accumulating on their computers. When the issue received public attention, Apple limited the records to a trailing seven days of data.

Slow is not going to cut it in this current case, however. Grewal has requested the data today.

photo credit: &y via photopin cc

This ed-tech startup is fighting back against the three major textbook publishers that are suing it. Today, Boundless filed answers and counterclaims with the court, denying all allegations of wrongdoing.

“They are using litigation to try and stifle innovation,” said founder and CEO Ariel Diaz in an interview with VentureBeat. “They are trying to protect their stagnant product and wielding them as a legal offense.”

Boundless provides free digital textbooks and study resources to make educational content more accessible to students. Drawing from Open Educational Resources and a team of experts, Boundless offers an alternative to bulky and expensive textbooks that weigh most college students down on a daily basis. Thousands of students are responding well to the product, and Boundless raised $8 million last year to accelerate product development (aka the process of making physical textbooks obsolete).

The fact that students preferred more lightweight, cheaper, interactive content caused a few of the old-school textbook publishers to sweat. Last March, Pearson Education, Cengage Learning, and Bedford, Freeman & Worth Publishing Group sued Boundless with five claims. Since then, Boundless has made significant updates to the product, including SmartNotes summaries, flash cards, quizzes, tools to create collaborative study guides, social features as well as expanding into 18 academic subjects. Diaz said that the claims have no grounds, and furthermore, are based on Boundless’ 1.0 version, which has since evolved significantly, making them even more illegitimate.

“Three of the major publishers ganged up and sued us for a beta product that is no longer even available,” Diaz said. “We will continue to defend the original product while also highlighting that the product as it is today is fundamentally different. The content they are trying to protect is not copyrightable. The content in introductory textbooks are facts and ideas, and the order in which they are presented is pretty common for each subject area. These things are not copyrightable.”

Of the five claims, three are for copyright violation, one is for false advertising, and one for unfair competition. The complaint is that while Boundless takes its content from open resources, the “sequencing of the concepts” was wrongly taken. Lead counselor for the publishers Matt Oppenheim sent the following reply in an email:

David Einhorn has dropped his lawsuit against Apple in which he and his investment firm, Greenlight Capital, were seeking to force Apple to unbundle three proposed company charter changes, one of which he thought would have killed preferred stock.

FLASH: Einhorn drops suit against Apple over shareholder vote

— Bloomberg News (@BloombergNews) March 1

Tim Cook called the lawsuit “a silly sideshow,” but Apple did rush to calm investors shortly after the suit’s filling, and ultimately, Einhorn was successful, as the controversial proposals were eventually dropped from Apple’s shareholder meeting.

Einhorn had argued that bundling the proposals was against SEC rules, and a judge had agreed with him, ruling that Apple was not in compliance. The case was not yet fully completed, but given that the shareholders’ meeting is over and the proposed change was stricken, from Einhorn’s perspective the lawsuit is no longer necessary.

Einhorn and his PR representatives were not available to talk about the issue when VentureBeat contacted Greenlight.

photo credit: Will Montague via photopin cc

July 9-10, 2013
San Francisco, CA

Early Bird Tickets on Sale

The U.K. judge who ruled that Samsung’s tablets did not ape the iPad and forced Apple to apologize to Samsung on its website and in advertisements has been hired by Samsung to help it defend itself against patent infringement complaints by Ericsson.

This isn’t illegal, apparently, but it is a bit of a shake-your-head moment.

FOSS Patents uncovered Sir Robin Jacob’s new gig in documents relating to the new Erisson-Samsung case. One positive: He’s not working on projects — that we know of — that affect Apple. But it’s obviously something that has massive potential for conflict of interest if judges who make rulings affecting companies start getting hired by those very same companies.

Sir Robin was one of the judges that forced Apple to acknowledge publicly on its website that Samsung’s tablet was not a copy of the iPad. When Apple did not comply satisfactorily, he and two other judges then admonished Apple for doing it in confusing, roundabout legalese, and they also told Apple to place ads in U.K. newspapers (how antique!) with a similar message.

Interestingly, Sir Robin had publicly criticized Apple for what he thought was a lack of integrity, adding that he hoped “that the lack of integrity involved in this incident is entirely atypical of Apple.”

I’m fairly sure most companies and people hope that the possible conflict of interest implicit in this judge’s new job is entirely atypical of U.K. jurisprudence.

photo credit: JD Hancock via photopin cc

A U.S. judge ruled today in favor of stopping a vote by Apple shareholders on a proposal to change the company’s policy for issuing preferred stock.

Earlier this month Apple investor David Einhorn’s hedge fund Greenlight Capital filed a lawsuit against Apple, believing that the company was planning to remove preferred shares (higher ranking shares than typical common stock) with a change to its charter within a proposal.

Some investors are worried about Apple’s 26 percent stock price decline over the last six month, as well as its mountain of cash ($137 billion). The hedge fund has previously urged Apple to issue preferred stock for the purpose of returning more of the company’s accumulated cash to shareholders. (So basically, Einhorn feels like shareholders are getting screwed.)

The lawsuit takes issue with a portion of the proposal that would eliminate the company’s power to issue preferred shares without a shareholder vote and claims that its in violation of SEC rules — a claim Apple flatly denied. Today, U.S. District Judge Richard Sullivan stopped the vote on the proposal, which was scheduled to take place February 27 during the company’s annual stockholders’ meeting.

Greenlight Capital issued the following statement about the rule:

This is a significant win for all Apple shareholders and for good corporate governance. We are pleased the Court has recognized that Apple’s proxy is not compliant with the SEC’s rules because it bundles different matters in Proposal 2. We look forward to Apple’s evaluation of our iPref idea and we encourage fellow shareholders to urge Apple to unlock the significant value residing on its balance sheet.

Apple image via Shutterstock

Via The Verge

And to tell investors why each Apple shareholder should get perpetual preferred stock, for free.

Preferred stock is simply stock that, when it comes to payments of any dividends or other benefits, is first in line. Apple is attempting to change a rule in its charter which Greenlight’s David Einhorn has interpreted as eliminating preferred stock, although Apple has denied that charge, and CEO Tim Cook has called the Greenlight lawsuit a “silly sideshow.”

Greenlight is suing Apple to force the company to “unbundle” three proposed charter changes which are being presented as a package, saying that SEC rules prohibit grouping of proposals which must be voted on together.

One thing that’s unclear to me: the Greenlight lawsuit and shareholder campaign is, ostensibly, about “unlocking significant value for all shareholders.” Einhorn obviously wants an acceleration of Apple’s dividend program, which is already committed to returning $45 billion to shareholders’ pockets over the next few years.

That sounds good, but it’s hard to know how you can give everyone preferred shares. After all, if everyone’s special, no-one’s special. Right?

Here’s the announcement from Greenlight Capital, with all the conference details:

Greenlight Capital, Inc. (“Greenlight”), a value oriented, research-driven investment management firm, today announced that it will host a public conference call and webcast to discuss Apple Inc.’s (NasdaqGS: AAPL) capital allocation strategy and Greenlight’s proposal to unlock significant value for all shareholders.  Greenlight continues to ask shareholders to vote AGAINST Proposal 2 in Apple’s proxy, which would eliminate preferred stock from Apple’s charter and restrict the Board’s flexibility on capital allocation decisions.  On the call, Greenlight will provide additional details regarding the options available to Apple, including the merits of Greenlight’s suggestion of distributing perpetual preferred stock to Apple shareholders for free.

The conference call and webcast will take place on February 21, 2013 at 2:00 p.m. Eastern.  The conference call may be accessed by dialing 1-800-901-5241 (U.S. callers) or 1-617-786-2963 (International callers) and entering the passcode 62063868#.  Those who intend to participate in the call should dial in at least 20 minutes in advance.   A replay of the call will be available through March 6, 2013 by dialing 1-888-286-8010 (U.S. callers) or 1-617-801-6888 (International callers) and entering the passcode 45128663#.  The webcast can be accessed by visiting www.media-server.com/m/p/aj2p6kq7.

photo credit: lemagit via photopin cc

The Apple CEO has a lot to say to investors. His company’s stock has been ravaged by Wall Street in the past year, causing the company’s valuation to drop over $200 billion in the last half-year. Revenue in a record first quarter of almost $55 billion and profit of $13.1 billion didn’t make Wall Street happy, and Apple stock has continued to sag in 2013.

Source: Google Finance

Apple stock in the last six months

Cook started out with a bang, responding to questions about Apple’s cash stash and suggestions that Apple has a “depression-era” mentality, hoarding cash under its mattress.

Also see Tim Cook: “Apple is the center of innovation”

“Apple makes bold and ambitious bets on products, and we’re conservative financially,” Cook disagreed. “And last year, we invested 10B in CapEx, we think we’ll do similar this year … I don’t think those are the actions of a depression-era mentality.”

He did admit: ”We do have some cash.”

Apple has about $137 billion in cash on hand, and has committed to returning $45 billion of that to shareholders over the next few years.

On the topic of investor David Einhorn’s hedge fund Green Light Capital’s lawsuit, which aims to prevent Apple from removing preferred shares, Cook was straightforward, calling the lawsuit a “silly sideshow,” adding that Apple would go to shareholders before making any changes.

See also: No cheap iPhone: Apple’s religion is ‘we must do something great’

“Frankly, I find it bizarre that we would be sued for doing something that’s good for shareholders,” he said, adding that the lawsuit itself was a waste of shareholder money.

On acquisitions?

In what might be a surprising answer even for long-term Apple followers, Cook said that over the last three years, Apple has averaged an acquisition about every other month. And, also surprisingly, Apple has looked at large acquisitions.

“In the case of large acquisitions, we have looked at large companies,” Cook said. “In each case we’ve done that thus far, it didn’t pass our test. We’re disciplined and thoughtful … and we don’t feel a pressure to go out and just acquire revenue.”

After speaking about Apple’s retail stores adding 30 new locations in 2013 and commenting on cheap iPhone rumors, Cook ended his time by gently but firmly responding to Apple critics, many of whom wear ties, use cufflinks, and trade stocks daily.

“We don’t care if people are lobbing grenades from the sidelines,” Cook said.

Rather, Cook plans to stay the course and continue what Apple is doing best, which Cook feels is “pretty incredible.”

Image credit: Dean Takahashi

Instant non-starter, right?

Don’t be so quick to pre-judge. The lawyer handling the case, Tom Melsheimer, previously won a $41 million judgement from a contact lens manufacturer for the very same plaintif who is bringing this suit, and he sounds confident.

“I wouldn’t have filed the case if we didn’t feel very confident in our position,” Melsheimer told me this morning as he was stepping off an airplane in Dallas. “This was a case that I liked, our firm liked, and I think we have a reasonable chance of winning.”

Melsheimer won’t say how much he hopes to charge Facebook for the patent, only that that he and Rembrandt Social Media LP, which owns the patents in question, are aiming “for a reasonable royalty.” Of course, even at a penny – or a fraction of a cent – per “like,” the billions and billions of likes that now permeate the web could quickly add up to a very big number with a lot of zeroes behind it.

One of the patents is a “method and apparatus” of created a web page diary with “multimedia references to contents of websites.” The other is a “system and method” of creative universal addresses for digital data.

Both were originally filed by a now-deceased Dutch programmer over a decade ago, ”Jos” van der Meer, who attempted to build Surfbook.com (now defunct). Apparently, Surfbook was intended to be a sort of social diary, not terribly dissimilar to Facebook — or any other social networking site.

Put them together and there’s no doubt that the two patents do describe, at least in some general way, processes of adding digital content from sites around the web to a personal profile page. The question, however, is whether that general description means that Facebook’s specific implementation of its wall, status updates, and timeline criminally infringe on the patents.

The patents are now held by that infamous type of company, a non-practicing entity, otherwise known as patent troll. Rembrandt Social Media LP, which is the specific company in this case, has previously claimed ownership of critical technologies in the digital TV and cable modems, in both cases buying patents and then ignoring agreements which were made to license those patents cheaply and easily.

“Rembrandt is a company that seeks out inventors with compelling story to tell about technology that has become core technology in a significant industry,” Melsheimer told me when I asked if the company was a typical patent troll. “It’s not an outfit that scoops up patents at a garage sale or something like that.”

The attorney firm handling the lawsuit for Rembrandt, Fish & Richardson, was founded in 1878 and has been named the “top patent litigation firm in the country” for each of the past nine years.

In other words, while this seems like a typical frivolous patent troll lawsuit, it’s probably a little more serious than the Paul Ceglia I-own-half-of-Facebook nonsense.

photo credit: iluvcocacola via photopin cc

Steve Jobs initiated the lawsuit against Samsung as part of a “thermo-nuclear” strategy to keep iPhone clones off the market, according to a long story in Reuters. But Tim Cook, then-lieutenant and now chief executive of Apple, never wanted to sue the South Korean electronics giant because it was a critical supplier.

Apple bought about $8 billion worth of parts from Samsung last year, the story says, even though it was locked in litigation that eventually won Apple a large settlement. Apple alleged that Samsung benefited immensely from the market insight it gained by being so tightly woven into Apple’s supply chain. The companies appear to be “frenemies” for life, where they compete on one front and cooperate in many other ways as customer and supplier. Apple’s operations chief, Jeff Williams, told Reuters last month that Samsung was an important partner and they had a strong relationship on the supply side.

There are some precedents for Cook’s concerns that Reuters didn’t mention. Back in the 1990s, various customers or suppliers of Intel considered suing the chip giant for antitrust violations. Alabama’s Intergraph sued Intel in 1997 for antitrust violations, saying that Intel threatened to choke off a supply of chips and product information if Intergraph followed through with a plan to enforce its patents against computer makers. Chief executive Jim Meadlock alleged that Intel executives . In 1999, Intel settled with the Federal Trade Commission by promising that it would no longer retaliate against companies that sued it. The lawsuit was eventually dismissed. But the much-weakened Intergraph exited the hardware business in 2000 and was eventually acquired. In other words, Intergraph spurred an important legal point with the FTC settlement, but it paid the price for going to war with its key supplier.

Of course, the difference here is that Apple probably has some alternatives to using Samsung as a supplier, whereas Intergraph was very dependent on Intel. Advanced Micro Devices provided alternative chips, but in those days, AMD wasn’t as competitive as it is today. Intel effectively had a monopoly. Today, it’s not clear whether Apple has to depend on Samsung for any single part. If it does, then Samsung has monopoly power and it would be subject to compliance with the FTC about retaliation.

Reuters said the relationship between Apple and Samsung dates back to 2005, when Apple needed a stable supplier of flash memory. Apple had tossed aside the hard drive in its small devices and needed big volumes of flash chips for the iPod shuffle, iPod nano, and the upcoming iPhone. Initially, Apple used Samsung application processors, but then it began designing its own ARM-based chips and took over full control of chip development. But Samsung still serves a key role as a foundry, or a contract manufacturer that takes the Apple chip designs and manufactures them.

By designing its own processors, Apple keeps a lot of the margin that would otherwise go to Samsung. But Samsung still rules flash memory and other key components, as it spends $21 billion a year on capital expenditures. Samsung declined to comment to Reuters, while Apple only made the terse comment about Samsung being important.

Apple’s lawsuit about Samsung’s copycat tactics illuminates the risks of being dependent on a supplier, and other systems companies in the electronics industry are likely to want alternatives to Samsung, which has a black eye for allegedly copycatting a key customer’s designs.

Today on “As Silicon Valley Turns,” we learn the true reason for Square chief operating officer Keith Rabois’ departure: He’s being accused of sexually harassing a Square employee.

In a very personal blog post this afternoon, Rabois detailed the story of meeting and befriending a man who would eventually go on to work at Square. Seemingly out of the blue, a New York attorney representing the employee threatened Rabois and Square with a lawsuit last week, accusing him of a nonconsensual relationship and “some pretty horrible things.” The lawyer claimed the accusation would be dropped if Rabois paid millions of dollars.

“I realize that continuing any physical relationship after he began working at Square was poor judgment on my part,” Rabois wrote. “But let me be unequivocal with the facts: (1) The relationship was welcome. (2) Square did not know of the relationship before a lawsuit was threatened; it came as a complete surprise to the company. (3) He never received nor was denied any reward or benefits based on our relationship. And (4), I did not do the horrendous things I am told I may be accused of. While I have certainly made mistakes, this threat feels like a shakedown, and I will defend myself to the full extent of the law.”

Rather than making the situation worse for Square, Rabois said he decided to leave the company, which is now breaking into the mainstream via Starbucks and sitting on a new $200 million funding round at a $3.25 billion evaluation.

“I deeply regret that I let my personal and professional lives to become intertwined, and I apologize to my colleagues and friends (at Square and elsewhere) who I’ve let down, and who will bear the brunt of some of the unnecessary, negative attention this situation will likely bring,” Rabois wrote.

But he won’t stay quiet for long — Rabois hints that he’s working on a new project to be announced in February.

Square offered the following statement to VentureBeat and other news outlets:

The first we heard of any of these allegations was when we received the threat of a lawsuit two weeks ago. We took these allegations very seriously and we immediately launched a full investigation to ascertain the facts. While we have not found evidence to support any claims, Keith exercised poor judgment that ultimately undermined his ability to remain an effective leader at Square. We accepted his resignation.

Photo: Yaniv Golan/Flickr

Earlier this month, the Internet learned of a Kickstarter backer who brought a lawsuit against a Kickstarter project creator.

The story of Hanfree, Seth Quest, and Neil Singh was first reported by Eric Markowitz in Inc. magazine. This is reportedly the first time a Kickstarter backer had sued a project creator, and it eventually led to a secondary story about how rowdfunding is serious business.

Quick summary: Seth Quest launched a Kickstarter campaign in March 2011 for Hanfree, a standing iPad mount he’d devised. The crowdfunding campaign was a success, and he raised $35,000. Production was a disaster, though, and Quest ended up unable to fulfill his backers’ pre-orders. Neil Singh was one of those backers, and he filed a lawsuit against Quest.

As Markowitz reported:

The lawsuit forced [Quest] into bankruptcy. From there, things only got worse.

Later that year, Quest moved to Brooklyn, but because of the damage to his reputation, he could only find part-time work in what he calls a non-design-related field. To deal with his anxiety and hypertension, he picked up yoga and joined a boxing gym. These days, he’s doing better, but it’s a part of his life he hopes to move on from.

Was Singh a jerk for putting Quest through this ordeal over $70? I posed the question in a blog post I wrote; to my surprise, Singh left a comment in an attempt to set the record straight.

Realizing there was more to this story, I decided to follow up with Singh to hear more about his experience, why he filed the lawsuit, and what he knew about Quest. Hopefully current and future crowdfunders can learn something from this experience.

Crowdfund Insider: What did you know about Kickstarter before you contributed to Mr. Quest’s campaign? What was your experience with the platform, if any?

Neil Singh: The facts leading up to my purchasing that product are pretty much the way they are laid out in that article by Inc. I really didn’t know anything about Kickstarter. I went on the website and I don’t know how I found it. … I have no memory, but you know, I was reading through different projects and how the web site worked so I did have an understanding of how it worked. …

There’s a clarity with which Seth Quest and the entire Hanfree project described what you’re going to be getting if you turn in $50. At the time it was $50, so I understood that it was his idea and it wasn’t the same thing as going to Walmart, but the terms were pretty clear. “You send us $50, and we’ll send you a Hanfree product. You send us $100, we will send you two products.” That’s what I read, that’s what I understood and that’s what I did.

Crowdfund Insider: In your opinion, knowing what you know now about Kickstarter and how it works, is that text misleading? A lot of times under the rewards themselves, these campaigns are very direct and to the point, e.g., “You will receive this.” That is not necessarily the case.

Singh: It’s an interesting issue, and I think it does come down to exactly what is in the text. … I could go into the legal analysis, but it’s really a fundamental thing of telling people what your intentions are. So if your intentions are that … “Look, I’m an entrepreneur, this is a risky venture for me, I’m seeing whats going to happen, and I want to reward you for believing in me in some way by sending you the final product if I am successful, but here’s what’s going to happen if I’m not successful, or I’m going to do my best and I can’t make any promises.” Something like that would be fuzzy in terms of what you’re actually getting, but it would be honest.

I think where you get into trouble is where you just tell people, “Send the $50, and this is what you’re getting.” In Seth Quest’s case, I think what made it worse for him among many other things was the fact that he initially started with $50 and then he posted an update and said “Oh, um, shipping charges — I need to add shipping charges. So another $20 if you’re in the United States, if you’re in Canada another $30,” and I think in Europe it was even higher.

The shipping surcharge … it turns out because I got the documentation from the project after the fact, it was really for nothing. They were nowhere close to having a product finished so they kind of just made up a shipping surcharge to generate more money.

So to answer your original question, the point is if you’re on Kickstarter and you’re offering something you need to be honest about exactly what it is you’re doing; and if there’s a risk of the backers not getting something that you don’t want to be bound to, then that should be stated in the website.

Crowdfund Insider: In your opinion, how much of that lands on Kickstarter and how much of that lands on the person doing the offering?

Singh: For obvious reasons I would look at it from a legal standpoint. From a business standpoint, maybe there’s different considerations here, but where I would go to look at what Kickstarter has to say about this is the Terms of Service, and that’s the first place I went when I realized that this thing was going sour. Kickstarter makes it very clear that this is not [its] problem. “We’ve collected our commission, and these are the terms that govern our relationship with you, the backer.” If there’s any fight between the backer and the creator, that is basically not [Kickstarter’s] problem.

That was their original stance. Since then, they’ve kind of updated their position to say, “We encourage creators to be responsible, and they might be held legally liable if something goes wrong,” but really, they haven’t changed anything. This issue remains that this is not [Kickstarter's] problem.

Here’s one other way of looking at it, too, that I thought of a long time ago. … Somebody like Seth Quest who’s inexperienced, he didn’t really know what he was doing, he didn’t have any business background or anything like that. … Kickstarter kind of encouraged somebody in his circumstances to think that you can just be the CEO of a venture project just by putting together a few designs and creating a video and slapping it up on Kickstarter. If it looks good, hey, I’m a CEO, and suddenly I’m the head of this project. That was a little unrealistic, so I think Kickstarter could have avoided the situation for somebody like him or probably for other projects as well.

Crowdfund Insider: You spoke earlier about Mr. Quest coming back asking for shipping charges after he had already solicited and secured contributions. What other mistakes did he make along the way that were easily avoidable or maybe made you feel uncomfortable about his savvy as an entrepreneur?

Singh: I think from beginning to end, it was something that he did not think through. He just didn’t think it through. He didn’t plan anything, he didn’t plan what he was going to do with the money, where he should keep the money, how he was going to handle the budget, whether he needed a business plan. … None of the very elementary, fundamental steps were followed by him from A to Z.

I would say the worst thing that he actually did, the most disturbing thing that he actually did, was he took that $35,000. … He just deposited it into his personal bank account, and the thing that bothered me the most but not enough to pursue him beyond what I did, is that there’s no accounting for what he did with that money. My speculation is that if you put it into your personal banking account you’re intermingling it with your personal expenses and you start using that money for personal expenses, and that can get you in a heap load of legal trouble. That was probably the biggest mistake that he made right there, but again, if he had just gone back and talked to somebody with business savvy they would have told him you need to set up a corporation, the corporation needs to have a bank account, you should probably have an accounting person and all that stuff.

Crowdfund Insider: Other media outlets have reported that the lawsuit has proven pivotal in bankrupting Mr. Quest. Your comment disputes that. Would you care to expand on that and what your knowledge is of Mr. Quest’s situation?

Singh: As far as the bankruptcy is concerned, my lawsuit was actually little more than a small claims lawsuit. If you file a real lawsuit in Arizona you file that in superior court. I filed it in a court that is lower than that called the justice court, and it’s not actually small claims court. For legal reasons, I didn’t file it in small claims. It has to do with the fact that I wanted a declaration that we were not investors, we were buyers. You can’t do that in small claims court, so I filed it in justice court.

All I was asking for (and the other backer who joined me) was our refunds. All we were asking for was our $70 refunds. So, my claim for $70 is not what bankrupted Seth Quest.

What bankrupted him was $35,000 that he owed to 400-plus people, and I learned through the bankruptcy papers that we all got after he declared that he was also being sued by at least one of his other credit card companies. He was facing multiple liabilities and I guess he had no way of paying it back and that’s why he decided to declare bankruptcy.

Crowdfund Insider: Knowing what you know now, would you ever contribute to a crowdfunding campaign again? Has this made the whole industry sour?

Singh: I think that something like $35,000 just kind of disappearing is probably just one of the growing pains that this entire concept has to go through before people start to figure out what the boundaries are, what the rules and standards should be.

So, my answer to your question would be that I am not opposed to crowdfunding in general. I would probably be happy to contribute to some project that was interesting to me provided that I was pretty confident in exactly how it was being run and what was being promised and I knew what the probability was of actually obtaining the reward, whatever that would be.

Ten years from now, a Seth Quest-type situation probably could not occur even if someone wanted it to I assume, because the rules will be much clearer and people will be much more savvy about what’s a good project versus a bad project.

A version of this story originally appeared on Crowdfund Insider. Charles Luzar is the director of Crowded Media Group and Crowdfund Insider, a blog dedicated to crowdfunding in the United States and around the world. Crowdfund Insider is helping to bring a global perspective to crowdfunding in advance of the JOBS Act becoming law in 2013.

Apple’s Tim Cook will shortly be hearing a question something like that, as Justice Lucy Koh has ordered him to appear in court to give a deposition regarding alleged antitrust violations. Apple is one of a list of companies, including Intuit, Adobe, Google, and Pixar, that are being accused of agreeing not to recruit each other’s employees.

The case has been ongoing, believe it or not, since late 2010, when the Department of Justice required the tech companies to nix those agreements and reached a settlement with them.

According to the DOJ, the anti-poaching agreements reached back as far as 2005 for Apple and Adobe, 2006 for Apple and Google, and 2007 for Apple and Pixar. The settlement at the time prohibited the companies from “entering, maintaining or enforcing any agreement that in any way prevents any person from soliciting, cold calling, recruiting, or otherwise competing for employees.”

The current lawsuit is a follow-on action brought by employees who claim that the companies’ illegal agreements harmed their employment prospects. And while Cook was not Apple’s CEO at the time,  Bloomberg reports that Justice Koh told Apple lawyers that since Steve Jobs was copied on emails about the practice, she found it hard to believe that Cook would not have been consulted as well.

There’s currently no timetable for Cook’s deposition, but Google’s Eric Schmidt will be deposed on February 20, and Intel’s Paul Otellini will be grilled in the next few weeks.

If Apple and the other tech companies lose the lawsuit, which is being brought employees as varied as engineers and chefs, they would be liable for additional salary and compensation for the affected staff.

Justice Koh is the same judge who is presiding over many of the Apple-Samsung legal battles. You’d think she’d be getting a little tired of seeing the Cupertino company in her courtroom.

photo credit: igrec via photopin cc

This year we woke up to the reality that much of U.S. tech policy is either deficient or horribly outdated.

But if 2012 has taught us anything, it’s that the average, often faceless Internet user’s voice can make a difference like never before. To be better prepared to make such a difference going forward, you’ll want know this year’s biggest tech policy issues. We’ve highlighted what we think are ten of the most important policy stories below; feel free to call out any we missed in the comment section.

10. Killing SOPA/PIPA

The SOPA/PIPA legislation was the epitome of awful tech policy. It asked for sweeping authority to shut down any website domain suspected of copyright infringement or piracy. The legislation claimed to protect American businesses from theft. In reality, it would have allowed major media companies to censor anything they didn’t like. SOPA/PIPA was also so vague that it could have started a slow decay of our current privacy rights.

The story: “Following the news that the Senate is delaying a vote the Protect Intellectual Property Act (PIPA), House Judiciary Committee Chairman Lamar Smith (R-Texas) issued a statement today admitting that Congress may need to rethink its approach to thwarting piracy. Smith is the author of the House version of PIPA, the Stop Online Piracy Act. Last week, he announced that a vote on SOPA would be delayed until February, but the delay could actually end up being much longer — like forever.”

9. CISPA & Obama’s cybersecurity executive order

CISPA was yet another piece of legislation that could reasonably do more harm than good if not kept in check. The bill sought to give American companies more legal breathing room (protection against lawsuits) when collecting and sharing consumer/user data for the purpose of preventing massive Internet security threats. It passed a House vote with few guarantees that it wouldn’t grossly violate a person’s privacy rights (even in the face of a presidential veto threat). The White House eventually put a stamp of approval on the bill, pending certain amendments. But the Senate vote failed, and the president resorted to other methods.

The story: “President Obama signed a new cybersecurity directive in mid-October that begins to outline the government’s involvement in securing the private sector and how it will act when on the offensive. For the most part, the directive is still secretive and murky. A senior administrative official told the Washington Post that it will deal specifically with the issue of defensive measures or protecting the government and citizens from being hacked, and offensive measures, how the U.S. should act when pushing back.”

8. LightSquared vs. FCC

U.S. businesses are increasingly becoming both connected and mobile, which makes the need for additional wireless spectrum even more dire. You’d think that in this sort of climate that the government would be eager to bend over backward for any company willing to launch a wireless carrier startup to fulfill those needs. Well, you’d be wrong, at least in the case of LightSquared.

The story: “After spending the better part of 2011 fighting regulators, the wholesale wireless company LightSquared suffered a killer blow from the FCC today that could squash its 4G LTE network plans. We’ve been hearing from government regulators since June that Lightsquared’s proposed LTE network could interfere with GPS devices. Today the NTIA, an agency that oversees spectrum use, issued a letter to the FCC that claims Lightsquared’s network will indeed impact GPS services, and that ‘there is no practical way to mitigate the interference at this time.’”

7. The JOBS Act

The rise of crowdfunding platforms like Kickstarter and IndieGoGo is enabling a new wave of hungry entrepreneurs to disrupt the markets with business plans deemed too risky to gain investment by conventional means (venture capital, loans, angel funding, etc.). The JOBS (Jumpstart Our Business Startups) Act is a direct response to the crowdfunding movement and would permit startups to solicit the public for microinvestments, which process is currently illegal. Despite getting passed, the JOBS Act isn’t currently being implemented. It still needs the SEC to determine a finalized set of rules outlining how the JOBS Act will be enforced.

The story: “The JOBS Act that passed in the House today contains some big changes for crowdfunding startups. It now moves on to the Senate. Right now, it’s illegal for a startup to solicit investors on platforms like Twitter or Kickstarter. But the JOBS Act would change that. For startups raising $1 million or less, anyone can now buy up to $10,000 or 10 percent of the annual income (whichever is less) in equity.”

6. Verizon’s $3.6 Billion spectrum purchase

With the failed AT&T/T-Mobile merger still fresh in everyone’s mind, Verizon found itself running into constant road blocks when trying to buy a block of wireless spectrum from a joint venture made up of big cable TV companies. The deal would have allowed Verizon to buy the spectrum and begin selling  cable/broadband Internet packages from big cable companies (like Comcast) with its wireless service plans. (Verizon was also quietly trying to halt plans to grow its own cable TV/Internet business, FiOS.) U.S. regulators raised lots of red flags about how the spectrum sale could hinder competition, and attached all sorts of stipulations before giving the sale final approval.

The story: “Federal Communications Committee has approved a deal that will see Verizon purchase a portion of wireless spectrum from a handful of big cable television providers, the federal committee announced today. … Originally, the deal would have allowed Verizon to purchase the licenses for the spectrum for $3.6 billion and allow cable companies to run their own branded wireless services through Verizon as well as cross-promote their existing cable TV services within Verizon Wireless retail stores. After some push back from federal regulators as well as other wireless carriers, the Department of Justice approved the deal last week, provided certain stipulations were met.”

5. Driverless car legislation!

Google — best known for its search engine, advertising, and various web services — is working on a side project that will enable automobiles to drive without being under the constant control of a human being. As the company showed off the new technology in demo videos, it slowly started pushing state governments to pass new laws allowing cars to drive themselves.

The story: “California just added its name to the list of states allowing driverless cars to operate on public roads — and inadvertently made David Hasselhoff’s work on Knight Rider a bit more relevant to future generations. Governor Jerry Brown signed bill SB1298 into law today, thus adding automated vehicles to the state’s safety standards and permissions. This is, of course, wonderful news for tech giant and California native Google, which has been developing its own driverless car for the past few years. Brown even visited Google headquarters to sign the proper documents.”

4. U.S. domain seizures

This year marked the continuation of U.S. authorities seizing domain names accused of conducting piracy and copyright infringement. The big problem with this was the operation’s questionable legality. Prosecuting the owners of these domains (as well as the websites those domains pointed to) became even foggier because many were operating outside the United States’ borders. February’s “Operation Fake Sweep” sparked an important discussion about domain regulation — a discussion that’s likely to continue in 2013.

The story: “The U.S. Department of Justice has issued a new round of domain seizures today targeted at websites that provide access to illegal live sports streaming video. The DOJ’s timing is likely related to this Sunday’s NFL Super Bowl championship football game, which has routinely become the most watched televised event of the year with over 100 million viewers. In December, television affiliate NBC and the NFL announced that the big game would stream for free online for the first time — meaning illegal sports streaming sites could hypothetically steal traffic away from NBC.”

3) VPPA Amendment (aka Netflix-Facebook sharing law)

It’s crazy to think that Netflix wasn’t allowed to integrate with Facebook in the U.S. when it was legal in so many other countries. But two years of lobbying efforts and judiciary hearing testimonies later, Netflix finally got Congress to explicitly state that it was OK to share a person’s video rental activity if they consented.

The story: “Soon, Netflix subscribers in the U.S. will be able to connect their accounts with their Facebook profiles thanks to new legislation that the Senate just passed. While the majority of digital media services have benefited from the social network giant, Netflix has previously been noticeably absent from Facebook’s Timeline feature due to a 1988 law that forbids video rental services from sharing a customer’s rental history. The current law, the Video Privacy Protection Act (VPPA), was initially created for the purpose of concealing physical media rentals, but until now, Congress hasn’t clarified whether digital video rentals also fall under the law’s jurisdiction.

2. Oracle vs. Google

Federal courts finally ruled on a two-year legal fight between Oracle and search giant Google. It’s seen as a particularly important case because it touches on whether companies can claim copyright infringement over a programming language.

The story: “Google scored a legal victory today, as a federal jury has decided that the search giant wasn’t guilty of patent infringement claims made by Oracle. The two companies have been wrapped up in a legal battle since August 2010, when Oracle accused Google’s mobile operating system Android of violating patents and copyrights related to Java that Oracle owns. The trial is seen as very important because it’d one of the most prominent battles over intellectual property in the software industry. In addition, it could set a precedent for whether or not a programming language can be copyrighted.”

1. Apple v. Samsung (The Patent Wars!)

I’d like to say that this particular legal fight over patent infringement by two major companies gave us some clarity on how to deal with future patent-related policy. Yet what the Apple v. Samsung case really did was expose how truly broken and inadequate our current patent system is. Sure, this is something most people already knew, but the Apple/Samsung case highlighted the ridiculousness of trying to apply our current policy. (Seriously, it even spawned its own meme based on the mom-like reprimands of the case’s federal judge, Lucy Koh.)

The story: “After just 21 hours of deliberation, the jury has reached a verdict in the Apple-Samsung patent trial, a landmark case that is set to change the way we look at competition in the mobile market. It’s a decisive win for Apple, with the jury awarding damages of $1,049,343,540 to Apple. … The jury found Samsung infringed many of Apple’s utility and design patents, particularly with regard to the nearly 20 phones that Apple had called into question. In addition, the jury found that in most cases, Samsung’s patent infringements were knowing and willful.”

Honorable Mention: Supreme Court’s Ruling on Obamacare

The U.S. Supreme Court ruled that the health care reform law (Affordable Care Act, dubbed Obamacare) did not violate the Constitution. And while this particular law didn’t originate in 2012, it certainly made an impact on the tech sector of the health care industry in the form of electronic medical records, new regulations, and more. A vibrant crop of health care tech startups are already out there, and these will continue thriving now that the threat of a Obamacare repeal is gone. Bottom line: Health care tech will be huge in 2013.

The story: “For cloud technology companies that are brave enough to tackle the healthcare industry, it’s a perfect storm — there are major challenges and opportunities. … By 2014, Obamacare mandates that hospitals and practitioners who have been maintaining paper records to switch to electronic medical records.”

Last week’s terms of service change by social photo sharing site Instagram has caused at least one user to lash out with more than just words — she’s taking her protest to court.

Reuters first caught wind of the legal battle today, but the suit itself was filed in a San Francisco federal court on Friday by a California Instagram user Lucy Funes. It’s also a proposed  class-action suit by law firm Finkelstein & Krinsk, which means that several of Instagram’s users can participate if the case goes through.

Instagram upset its users last week because it altered its terms of service to imply that the Facebook-owned service could sell photos that were uploaded without getting permission or use them for third-party advertising. Furthermore, the new terms forced users to enter into arbitration to settle legal disputes, thus waiving any right to sue Instagram. Of course, Instagram later recanted on its decision to change the terms of service in a response to the public outcry, but the damage was already done.

Facebook went through a number of growing pains when it began maneuvering to monetize user activity. For Instagram, it’s probably a bit different considering that the service was more in-tune with Twitter, which has a history of declaring that its users own their activity, until it was purchased by Facebook earlier this year.

July 9-10, 2013
San Francisco, CA

Early Bird Tickets on Sale

Anyone who thought a sudden wave of peace, love, and joy was going to erupt in the mobile marketplace just in time for Christmas — keep dreaming.

Unlike HTC, Samsung is not planning to pay Apple any patent royalties on its Android smartphone sales, according to the Korean company’s head of mobile. Rather, the fight will continue.

Just this past weekend Apple and HTC buried the hatchet, ceasing all lawsuits and cross-licensing each other’s patents. That settlement is believed to be worth between $6 to $8 per Android phone for Apple, and speculation was — yes, my speculation, too — that Samsung might be next.

But today, Samsung has closed that door, according to the AFP. Executive J.K. Shin, who leads the Korean company’s mobile division, was asked if Samsung would seek a similar arrangement.

“We have no such intention,” he replied.

Whether this is simply negotiation or the dug-in heels of a bitter competition between the two mobile giants is impossible to say right now. Samsung, of course, may be liable for up to $1.5 billion in a legal settlement that is still entangled with challenges and reviews — and potential increases. Both companies have had some legal wins and losses, and the two companies have more than 50 ongoing or filed lawsuits around the globe.

Meanwhile, Samsung is killing it in the marketplace, shipping 57 million smartphones last quarter and expecting as much or more this coming quarter, according to Shin.

All of which means that although Apple may be getting $160 million to $200 million a year in royalties from HTC, the company’s accountants should not yet start anticipating another $1.5 billion from Samsung.

And, that we can expect to see more Apple-Samsung courtroom battles.

photo credit: Dunechaser via photopin cc

Will Wright and his co-founder Jawad Ansari have resolved a lawsuit over control of startup Hive Mind. The move could free one of the industry’s greatest creative minds to start making games again based on his vision of “personal gaming.”

Wright, one of the most successful developers in history, and Ansari, a business man with a history in investments, started Hive Mind in the summer of 2011 to execute on some ideas created by Wright’s existing startup, the Stupid Fun Club. The Stupid Fun Club raised $10 million from Electronic Arts, Wright’s former employer, which (along with his previous company) has sold more than 100 million copies of Wright’s games, such as The Sims.

At Hive Mind, the business concept was to implement and monetize a “new cross-platform, cross-media social gaming experience that Wright had envisioned.” Wright’s idea was to include not only games but broadcast television shows. The platform would use location and situational awareness of an individual to enable entertainment, social, and lifestyle software applications. The game, app, and TV show would connect users who had the same goals in mind. One of the ideas was a Shadow Net game with a spy theme.

But Hive Mind ran aground trying to raise money, and Wright and another partner sought to remove Ansari from the company. Ansari sued Wright and co-founder Raj Parekh in February to stop the attempt. Now the trio appears to have patched things up.

In a statement, Wright said, “We are pleased to have reached a friendly and respectful resolution. Jawad’s entrepreneurial energy, passion for the expansion of the online game industry, and tenacious execution brought the necessary elements together to build Hive Mind to where the operating team can take the company forward.”

Ansari said in his own statement, “During my 18 years in the business, I have never met anyone who has the creativity and vision of Will Wright. Over the period of several months working with Will Wright, Will’s mentorship helped me develop a deep understanding of players’ psychology and thus the ability to see the world in dimensions that I did not know even existed. For this I would always be thankful to Will!”

Wright will continue to be affiliated with Stupid Fun Club, an incubator of online and media-related games in Berkeley, Calif. Ansari will devote himself to GCube Capital, which recently launched its GCube Special Situations Fund. The exact legal status of Hive Mind hasn’t been explained, but at least the litigation is over.

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GamesBeat 2013 is our fifth annual conference on disruption in the video game market. You'll get 360-degree perspectives from top gaming executives, developers, and analysts on what’s to come in the industry. Our theme this year is “The Battle Royal.” Check out full event details here, and grab your early-bird tickets here!

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July 9-10, 2013
San Francisco, CA

Early Bird Tickets on Sale

Federal Trade Commission staff are recommending the agency file a lawsuit against Google because of its efforts to block U.S. imports of iPhones and Windows Phones, according to Bloomberg.

Google subsidiary Motorola has been involved in two lawsuits against Apple at the ITC — International Trade Commission — over the past year, seeking import bans on competitors’ phones.

In the first, the ITC cleared Apple of infringement on three claims but found that one of Motorola’s patents related to a “sensor-controlled user interface” was possibly infringing. The second case alleged infringement of seven patents, including location reminders, email notifications, phone/video players, and Siri voice recognition.

Motorola had been asking for royalties of 2.25 percent on retail pricing, which would put almost $15 in Google’s pocket every time Apple sells an entry-level $649 iPhone 5.

Standard practice in the wireless industry, however, is to license essential patents at much lower cost, often referred to as FRAND: fair, reasonable, and non-discriminatory terms. The goal is that no one player can dominate the industry with exorbitant demands over a single patent.

Google and Motorola had dropped that patent lawsuit just last month, and at the time, it wasn’t clear why Google dropped the suit.

Seen in the light of today’s decision, it now seems possible that Google caught a hint of the FTC staff’s concerns and decided to get out of Dodge before getting into further trouble.

The threatened lawsuit, however, is just a recommendation from FTC staff and would need to be acted upon by federally-appointed FTC commissioners. That seems an unlikely option given that Google has withdrawn the complaint.

But it does give Apple plenty of ammo in its crusade to pay as little as possible to the creators of its greatest rival, the Android mobile operating system.

photo credit: loop_oh via photopin cc

July 9-10, 2013
San Francisco, CA

Early Bird Tickets on Sale

One day after the massive new introduction of the iPad mini, Apple has won a preliminary ruling against Samsung. An U.S.-based ITC judge said that Samsung has violated four Apple patents.

One of them, for touchscreen technology, was coinvented by Steve Jobs. Another, a design patent on the front face of the iPhone, lists Apple design chief Jony Ive among the inventors.

The ruling is only preliminary, and will receive a review from a larger group at the ITC, sometime before Feb. 25. If it’s upheld, however, Apple may succeed in blocking Samsung’s Galaxy Tab tablet and the Galaxy SII and Nexus smartphones, among other devices, but not including Samsung’s Galaxy S III.

Of course, that highlights one of the strategic problems of seeking market share solutions through patent and trademark litigation in the consumer electronics industry. By the time you succeed, the products are no longer relevant.

This case is just one of at least 19 ongoing disputes between Apple, Samsung, and other Android phone and tablet vendors. Samsung has won in Japan, the U.S., and today in the Netherlands.

But Apple is the company with the big billion-dollar win in August. At least, until Samsung appeals that ruling, as it will almost certainly appeal this new ITC ruling.

Interestingly, if the full commission upholds the preliminary ruling, President Barack Obama can uphold or overturn the ruling.

That, at least, would be interesting.

Zynga sued former CityVille general manager Alan Patmore after he left the company to work for social gaming rival Kixeye. Zynga alleges that Patmore (pictured below) took 763 confidential files from Zynga that contained game designs from teams around the company. Today, a judge in the case ordered Patmore to preserve any evidence as the case heads to trial.

But Will Harbin, chief executive of Kixeye, Patmore’s new employer, sent a withering reply against Zynga. He said, “Zynga is burning to the ground and bleeding top talent, and instead of trying to fix the problems — better work environment and better products — they are resorting to the only profit center that has ever really worked for them: their legal department. It is simply another case of Zynga vindictively persecuting a former employee as an individual.”

It is worth nothing that Zynga has not sued all of the former executives who have recently left the company. Zynga once sued some employees who left to work for Playdom, but that litigation has been settled for some time.

Harbin continued, “Given their financial situation, it all feels pretty desperate. Our games have little in common with the ones that Zynga is known for. We make synchronous combat-strategy games. They make asynchronous cow-clicking games. We have two of the top seven highest-grossing games on Facebook. Why on earth would we want to emulate a business that has seen a 75 percent decline in share price since their debut? According to their S1, their games average $.06 ARPDAU. Our games generate up to 20 times that. You do the math.”

Ouch. That hurts.

Meanwhile, Jay Monahan, the deputy general counsel at Zynga, issued a statement that said, “Today, the court ruled in our favor by continuing the temporary restraining order against Mr. Patmore, including anyone acting in concert with him. The Court also ordered three additional categories of relief in favor of Zynga ordering (1) expedited deposition of Patmore, (2) forensics of Patmore’s work issued computer, personal computer and iPhone, and (3) forensics of Patmore’s personal Dropbox account.

He added, “Patmore does not dispute that he took 763 files from Zynga, which contained confidential game designs from teams around the company, and that he transferred those files to his computer at Kixeye where he’s currently the VP of product. We are pleased with the judge’s decision and will continue to work to protect the ideas and assets of our employees.”

Kixeye also made the news recently when a former contractor accused the company of racism. Harbin denied those claims.

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GamesBeat 2013 is our fifth annual conference on disruption in the video game market. You'll get 360-degree perspectives from top gaming executives, developers, and analysts on what’s to come in the industry. Our theme this year is “The Battle Royal.” Check out full event details here, and grab your early-bird tickets here!

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According to Reuters, Facebook has proposed a new settlement in the sponsored stories class action lawsuit. One hundred and twenty-five million Facebook members, apparently, have been used in various ads created by companies based on those users’ interactions with their products or brands.

The only problem, of course, is that people had no say in what they essentially started pitching to their friends.

Source: Amazon

The infamous personal lubricant

The lawsuit has hung around much longer than Facebook would have liked. It was first reported to be settled in May, then in June when Facebook agreed to add opt-out controls. In each case, however, the settlement was conditional upon judicial approval.

Judge Richard Seeborg rejected the first $10 million settlement for being too low and for not providing funds for the actual Facebook users who were the injured parties.

The initial $10 million offer from Facebook was to go to charity after lawyer’s fees. But the new settlement sets aside $10 million for lawyers right off the bat, which is fairly revealing about what is most likely really driving this lawsuit. The rest of the money would go into a capped fund for affected users, who would be able to apply for a $10 payment individually.

No word yet on whether Seeborg will think $20 million — two solitary pennies for each affected Facebook user — will be enough, but the potential damages could theoretically have been in the billions. For example, if all 125 million affected people applied for the $10 payment, and if the total was uncapped, damages would run as high as $1.25 billion.

I asked Facebook for a comment, and the company issued a statement simply saying: ”We believe the revised settlement is fair, reasonable, and adequate and responds to the issues raised previously by the court.”

Facebook sponsored stories have proved to be highly successful, with much higher click-through rates than other Facebook ads.

They also, however, have the potential to be extremely expensive for the world’s leading social network if Seeborg rejects this offer as well.

photo credit: HikingArtist.com via photopin cc

July 9-10, 2013
San Francisco, CA

Early Bird Tickets on Sale

Four-star U.S. general Oliver P. Smith is credited with the statement: “We’re not retreating, we’re just advancing in a different direction.” He must have worked for Google in a different universe.

Google subsidiary Motorola has terminated its International Trade Commission complaint against Apple. That complaint was aimed at an import ban on basically all Apple devices due to alleged infringement of no fewer than seven patents, covering location reminders, media players, alerts and notifications, and yes, Siri-style voice recognition.

Now, however, Motorola has unilaterally and mysteriously withdrawn the complaint.

I checked with Google for an explanation, and received one almost immediately. What the response had in terms of speed, however, it lacked in detail. Google is stating only the following:

“As we have said many times before, we will continue to vigorously defend our partners.”

Googler with pink employee (no, not really)

Beyond that, everything is guesswork. Could this mean that there is some kind of deal being done between Google, Apple, and the major Android manufacturers that might lead to a lasting patent peace in mobile electronics?

Well, pink unicorns would be nice too.

That may be too much to ask for. But Google’s clearly saying here that it is “vigorously” defending Android licensees. If it’s not doing that in the ITC, it must be either doing that at the local court level … or, dare we hope, at the negotiation table.

There is one other option, of course.

The last time Apple, Android, and the ITC hooked up, HTC was the Google proxy victim, and the result was not pretty for the only significant non-iOS smartphone platform. HTC lost, and the trade commission judge found that its phones infringed two key Apple patents.

ITC battles are dangerous because they could lead to import bans and nearly immediate massive revenue losses. And Google/Motorola could be trying to avoid a tit-for-tat ITC action from Apple.

Or, perhaps Google has simply chosen another field of battle.

photo credit: portobeseno via photopin ccbandita via photopin cc

July 9-10, 2013
San Francisco, CA

Early Bird Tickets on Sale

They said they were going to do it. Now they’ve done it.

Samsung lawyers have added the iPhone 5 to the company’s patent infringement lawsuit against Apple, two weeks after threatening to do so. That lawsuit, one of many ongoing between the two mobile giants, concerns eight patents on data transfer, media syncing, touch screen technology, and more that Samsung says Apple violates.

Source: Apple

iPhone 5

The pre-emptive announcement had seemed suspiciously timed to interrupt the news cycle ramping up to the iPhone 5 launch, which broke records by pre-selling two million units in the first day.

Adding the iPhone 5 to the infringement lawsuit was completely expected — the iPhone 5, after all, shares much with the iPhone 4 in terms of operating system and user interface — but hugely significant. Initial estimates peg potential iPhone 5 sales at 50 million for the U.S. alone in just the first three months of its release.

That’s a lot of units, a lot of dollars, and a lot of infringement — if the courts agree.

In other news from yet another related Samsung v. Apple case, the temporary Galaxy Tab 10.1 ban has been lifted. According to FOSS Patents, that’s simply due to the fact that in the landmark billion-dollar Apple win in August, the jury did not find any infringement in the Tab.

That was, of course, the famous D899 “rounded corners” patent.

The courtroom soap opera continues …

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July 9-10, 2013
San Francisco, CA

Early Bird Tickets on Sale

Samsung owns 99 percent of the world’s OLED market. This is one reason why, the company claims, Korean rival LG has been hiring its engineers and stealing its intellectual property.

So Samsung is suing LG in a Seoul court.

It might appear to be a case of the pot calling the kettle black, considering Samsung’s recent loss in the iPhone patent case. However, this is a very different scenario.

According to the complaint, LG has been systematically recruiting key Samsung engineers, who are breaking noncompete employment contracts by signing on. As a Korean news agency states, Samsung claims that ”LG Display has consistently acquired our OLED technologies and other business secrets by inducing our researchers to transfer.”

Eleven people were indicted for stealing or improperly sharing Samsung’s corporate secrets in July, including a key engineer in Samsung’s development of AMOLED technology (Active-Matrix Organic Light-Emitting Diode).

With sales of OLED and AMOLED displays predicted to hit $44 billion in 2016, the battle is really about the future and who will own the bulk of that market. If Samsung can maintain its technology lead, it can effectively shut competitors — including LG — out of that business.

Samsung is demanding a billion won for each case of infringement, which is equivalent to about $900,000 U.S.

photo credit: khrawlings via photo pin cc

July 9-10, 2013
San Francisco, CA

Early Bird Tickets on Sale

It’s old news, I know. I took a long weekend and got a fishhook in my eye (long story, starting with 9-year-old-kid and ending with “never again”), so it’s a week late.

But no one has said what occurred to me right after reading Robert Scoble’s contention that Samsung copying Apple was a cheap way to get to the top of the mobile industry. So I have to write it myself.

Here it is.

Samsung’s billion-dollar fine, which could go as high as $3 billion, is a great, excellent, and wonderful thing for the entire smartphone industry. And it’s an awesome thing for you and me, smartphone users. Yeah, really.

Although I agree, it probably sucks for Samsung.

Before you come after me with pitchforks and torches, here are a couple of caveats. I hate software patents, too. I think they cost the U.S economy way too much. And even though Samsung probably did copy Apple, I think the better way to handle this was out of the court system.

But take a look at the state of the smartphone user interface today:

Android, iPhone, and BlackBerry. Blah.

Essentially, it’s a two-horse race: Android versus iPhone. Google and Apple together combine for 81.5 percent of the smartphone market. Add 6 percent for BlackBerry, a few points for Nokia platforms that are going away, and you’ve got almost 90 percent of everything that matters in phones.

The problem?

That’s almost 90 percent of basic sameness and conformity, which can be described at a high level as:

• full-screen devices with soft keyboards
• with apps
• that show up as square icons
• on a grid
• which can be stacked into folders
• and come from app stores
• with built-in, manufacturer-approved apps on a privileged bottom tray
• on a device with some sort of slide-to-unlock feature
• with a time display at the top, plus battery life, signal strength, and carrier information
• and a notification system
• and voice control
• and I could go on for a while …

Source: doCOMunderground

Windows Mobile 6, circa 1998

Sure, Android and iOS do things a little differently. Sure, there are slightly different user interface conventions. And yes, iOS is maybe a little more polished, and Android is maybe a little more versatile. But basically, they’re similar.

An iOS user can pick up an Android device and get along just fine, and vice versa.

They might not be twins, but they are certainly siblings.

The problem with this is a distinct lack of innovation in qualitatively different kinds of user interfaces for mobile devices. Phones and tablets seem locked into a gridded, iconified user interface.

Was that inevitable? Are there no alternatives? Apple may have shown the way over the past few years, but is iPhone really all that different, on a user interface level, than parts of Windows Mobile 6?

(Don’t misunderstand: The user experience is vastly different, which is primarily why iPhone is a huge success and Windows Mobile sucked and croaked. But surely the user interface has common ancestry.)

So that’s why I’m hoping that this multi-billion-dollar fine for rounded rectangles and bouncing rubber-banded lists and slide-to-unlocks will stimulate Google and others in the mobile industry to truly think different. To come up with some almost unbelievable, unimaginable, incredible new ways to interact with information on a small mobile device.

Most will probably suck. That’s life as an inventor: You fail more than you succeed. But the outcome would be creativity and innovation, and maybe some qualitatively better user interfaces — and experiences — on mobile devices.

Which brings me to Microsoft, of course.

Because Microsoft — supposedly noncreative, start-your-photocopiers-Redmond, copy-and-iterate Microsoft — is interesting, oddly, and fascinatingly the most differentiated and (arguably) innovative mobile operating system available today. Windows Phone is not a grid of siloed apps but an integrated tile view of events and information collected by the phone for the user’s convenience.

And Microsoft and Apple have a patent relationship, one which gives Microsoft free rein to innovate mobile in new directions while, doubtless incidentally, legitimizing Apple’s patents for battle against Redmond’s true enemy, Google.

The only fly in that ointment is that Windows Phone is a tiny blip on the market right now. It’s one step, and it’s probably due for some significant growth in 2013, but we need many more. We need Google, we need Intel, and we need other new innovators to step up and create something different, and possibly better.

So that’s why I’m hoping Samsung’s current pecuniary pain will lead to all of our collective future benefit.

Although I suppose that isn’t much comfort in Korea.

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Updated 6:16pm PT with new damages awarded to Apple.

After just 21 hours of deliberation, the jury has reached a verdict in the Apple-Samsung patent trial, a landmark case that is set to change the way we look at competition in the mobile market.

It’s a decisive win for Apple, with the jury awarding damages of $1,049,343,540 to Apple, after the jury re-deliberated on two points, changing the total from the original $1,051,855,000.

The jury found Samsung infringed many of Apple’s utility and design patents, particularly with regard to the nearly 20 phones that Apple had called into question. In addition, the jury found that in most cases, Samsung’s patent infringements were knowing and willful. It also found that Apple’s patents were valid.

Samsung did get one win, however, in the D’889 patent, which covers the look of the iPad’s design, including the edge-to-edge glass, thin bezel, and rounded corners. In this case, the jury found that the Galaxy Tab did not infringe Apple’s patents.

In terms of trade dress, or the nonfunctional design elements of the device, the jury found that Samsung copied from the iPhone 3G but not the iPad. This is an interesting finding, as Samsung argued that it Galaxy Tab 10.1 didn’t infringe upon the iPad due to piece of extra material on the back of the tablet.

Apple, on the other hand, was found to not infringe on any of Samsung’s patents, although the jury found that those patents were valid. As a result, the jury awarded no damages to Samsung.

We will continue updating this post as the details come in.

Apple and Samsung originally locked horns in 2010 when Apple approached the Korean manufacturer about a number of devices it felt copied the iPhone and iPad. When nothing could be resolved in the talks, Apple filed an official lawsuit in 2011. In it, Apple said Samsung infringed on seven of its patents pertaining to the design of its devices as well as different functions within its operating system. Over 20 of Samsung devices were called into question, which is more than likely one of the reasons it took the jury two days to deliberate. Apple is seeking $2.5 billion in damages.

Samsung countersued Apple, saying that it had infringed on some of its own telecommunications-related patents and others relating to the way a camera functions in a smartphone. It called for nearly $400 million in damages.

Both sides were given 25 hours to make their case, plus extra time for opening and closing arguments.

The case hasn’t been without hiccups. At the beginning, Samsung released rejected evidence to the press that it felt should have been considered by the jury.  Apple called on the court to sanction Samsung and give a summary judgement in favor of Apple. The iPhone creator didn’t get what it wanted, but U.S. District Court Judge Lucy Koh called Samsung’s lawyers out in court, saying she wouldn’t have any more “sideshows” distracting them from the matter at hand.

Judge Koh turned out to be the surprising entertainer throughout the trial, taking a no-nonsense attitude toward bad behavior in her courtroom and showing little patience for the mountains of paperwork both sides filed into the night. When one Apple lawyer tried to add more witnesses with only a few hours remaining for testimony, Koh said, “ Unless you’re smoking crack, you know these witnesses aren’t going to be called.”

Koh also urged Apple and Samsung’s chief executives to speak one more time in hopes that they’d come to a settlement, two years after they first met in 2010. Of course, they were unable to make an agreement.

Update: Judge Koh has scheduled the injunction hearing for the trial for September 20th, the Verge reports. This will be where the court decides if certain Samsung devices will have to be banned from the U.S. Apple has to file its requests by August 27th, and Samsung will have two weeks to respond.

Photo credit: Devindra Hardawar/VentureBeat. Homepage photo: Kai Hendry/Flickr