“TV anywhere” startup Aereo is doing its best to stave off attacks that its business is operating illegally, and it has now asked a federal court in New York to block broadcast network CBS from filing additional lawsuits.

Aereo provides a service that enables people to watch and record the free over-the-air local television content online via desktops, computers, set-top boxes, and mobile devices. It does this by providing tiny antennae for each subscriber, thus making the service legal in the eyes of at least East Coast federal judges so far. But major broadcast stations like Fox, ABC, and yes, CBS are arguing that Aereo should have to pay a licensing fee for repurposing that content. And those broadcasters have filed several lawsuits to stop the startup from operating.

Right now Aereo is only in a handful of markets, but broadcasters like CBS have vowed to continue suing in each of the new cities Aereo plans to launch in. That’s what’s behind Aereo’s move to ask the New York federal court to stop CBS and others from filing more lawsuits.

The broadcasters are so spooked with the thought of Aereo’s continued existence that both Fox and CBS have threatened to take their programing off the air and transform themselves into cable networks. CBS has even made investments in startups that can mimic Aereo’s functionality.

Via Reuters

Photo by Devindra Hardawar/VentureBeat

Back in late February, top Bitcoin exchange Mt. Gox struck a deal to let Seattle startup CoinLab handle its U.S. operations. But now what looked like it would be a beautiful friendship has turned into an ugly mess.

CoinLab is suing Mt. Gox for $75 million over failure to give CoinLab exclusive access to Bitcoin account information and to maintain an exclusive partnership. “Defendants have breached the exclusivity provisions of the Agreement by directly servicing customers in the United States and Canada since the Agreement took effect,” the lawsuit says.

The original purpose of the partnership was to give Japan-based Mt. Gox better reach into the United States market. With backing from Silicon Valley Bank, CoinLab planned to give institutional investors and wealthy individuals a way to buy and sell large amounts of Bitcoin on a platform that was safer than any other.

CoinLab CEO Peter Vessenes said in an open letter that Bitcoin buyers have lost a lot of money due to Mt. Gox’s technical difficulties and other issues in the Bitcoin system. He’s been extremely frustrated and even told us a few weeks ago that technical stability couldn’t come to Mt. Gox “soon enough.”

While these technical difficulties have frustrated him, what forced his hand was that Mt. Gox had not delivered passwords, Yubikeys, administrative logins, and other security information that was needed to facilitate U.S.-based transactions. Vessenes writes in his letter:

When we spun up our initial alpha customers, they included companies that from one perspective could reasonably be deemed to be our competitors, some of the best companies in our space. We worked extremely hard to provide them great service, because I want to build our ecosystem; I want a robust economy and a broad base of service and product for everyone.

What tipped us into filing was our complete inability to get Mt. Gox to deliver on the few simple things left that were needed for customers to move over en-masse; we were often left just apologizing to our alpha customers while their own businesses suffered. I’m just not willing to put any of our customers in that position — if we can’t do a good job for you, I won’t promise that we can.

What I hope is that Mt. Gox has this same interest in the good of Bitcoin, and Bitcoiners, and finds a way to work this out.

Check out the lawsuit documents below via Gawker.

Bitcoin screenshot via Duncan Elms/Vimeo

July 9-10, 2013
San Francisco, CA

Early Bird Tickets on Sale

If you’ve ever had an issue with Apple refusing to honor your iPhone or iPod Touch warranty, you could soon have some settlement dollars coming your way.

Apple has agreed to pay $53 million to settle a class action lawsuit in San Francisco, Wired reports.

At issue was Apple’s refusal to cover devices under warranty — either the standard one-year coverage or extended two-year plan — that it believed were water damaged. Warranties for Apple and many other device makers typically cover standard usage malfunctions like cracked screens, but not water damage.

The company relied on white indicator tapes inside of its devices that would turn pink or red upon water contact. But according to 3M, the manufacturer of that indicator tape, humidity can also cause it to turn pink. Now that it’s no longer certain that the tape shows water damage, Apple had no choice but to offer the settlement.

The settlement applies to owners of Apple’s first iPhone up to its 3GS model, as well as the second and third-gen iPod Touch. According to Wired, settlement payouts will be around $200, but could be reduced or doubled depending on how many people make claims.

Photo: Hakan Dahlstrom/Flickr

Apple has swiftly responded to a lawsuit filed this morning by investor David Einhorn’s hedge fund Green Light Capital, in an attempt to quell further outcry from investors.

Einhorn believed Apple was planning to remove preferred shares (higher ranking shares than typical common stock) with a change to its charter, the New York Times reported this morning. But in its statement, Apple denied the preferred share change and said that it would welcome feedback from Greenlight and other investors.

“Contrary to Greenlight’s statements, adoption of Proposal #2 would not prevent the issuance of preferred stock,” Apple wrote. Apple shares rose by $13.55, or around 3 percent, when it released its statement this afternoon.

Many investors are worried about Apple’s slowing stock performance, after falling more than 26 percent in the last six month, as well as its increasingly large stockpile of cash (now around $137 billion). But Einhorn is the first to publicly take action. Last year, Apple announced that it would be returning $45 billion to investors over the next three years, starting with a dividend.

Apple’s full statement is below.

By early last year, Apple’s cash balance had built to a point beyond what we needed to run our business and maintain flexibility to take advantage of strategic opportunities, so we announced a plan to return $45 billion to shareholders over three years. As of next week we will have executed $10 billion of that plan.

We find ourselves in the fortunate position of continuing to generate large amounts of cash, including $23 billion in cash flow from operations in the last quarter alone.

Apple’s management team and Board of Directors have been in active discussions about returning additional cash to shareholders. As part of our review, we will thoroughly evaluate Greenlight Capital’s current proposal to issue some form of preferred stock. We welcome Greenlight’s views and the views of all of our shareholders.

As a part of our efforts to further enhance corporate governance and serve our shareholders’ best interests, Proposal #2 in our proxy includes some recommended changes to our articles of incorporation. These changes were recommended independently of Greenlight’s proposal and would not preclude Apple from adopting their concept. Contrary to Greenlight’s statements, adoption of Proposal #2 would not prevent the issuance of preferred stock. Currently, Apple’s articles of incorporation provide for the issuance of “blank check” preferred stock by the Board of Directors without shareholder approval. If Proposal #2 is adopted, our shareholders would have the right to approve the issuance of preferred stock. As such, Proposal #2 has the support of many of our shareholders.

We remain committed to having an ongoing dialogue with our shareholders to get perspectives around return of capital and driving shareholder value.

Check out Einhorn’s lawsuit filing below, via the New York Times:

Photo: Heather Kelly/VentureBeat

Ray Felts is North American president of crowdsource patent-research company Article One Partners; David DiGiammarino is a director with the company.

You’re a venture capitalist. You just invested in a promising startup, e-Widgets. The future looks bright. Suddenly, out of nowhere, e-Widgets gets a certified letter in the mail. The letter claims that the company’s flagship software is infringing on an existing patent. Instead of focusing on innovation that e-Widgets can bring to market, the company suddenly gets sidetracked into a legal battle that could ultimately destroy its business.

This is not an uncommon scenario.

Patent trolls, a common term for non-practicing entities (NPEs), are shell companies that do not design, manufacture or distribute products. Rather, their sole purpose is to acquire and license patents to unsuspecting businesses. Last year, NPE litigation cost tech companies $29 billion, up more than 400 percent from 2005.

The “Small Change” Hold-Up Strategy

The majority of NPE litigation consists of “nuisance suits” that target smaller companies for hundreds of thousands of dollars. NPEs take advantage of the fact that most venture-backed companies don’t have the resources of big corporate players, which often include a first-class legal team.

As a result, the venture-backed company is subject to something of an old-fashioned hold up.  Here’s how it works. The patent troll threatens to sue for significant royalties. The financial threat, business distraction and cost of defending the company disposes the startup to a lower settlement. Faced with possible ruin, the venture-backed company agrees to a tidy settlement of $20,000. If they instead choose to engage in a legal battle, the settlement threshold goes up, forcing them back to the initially intended amount. In the end, the startup takes the path of least resistance, and the NPE makes it up on volume.

This is how the patent trolls build their war chests to go after bigger fish. For example Lodsys, a well-known patent troll, has settled with about 150 iOS developers so far. Startups, meanwhile, are frustrated that instead of spending $20K to grow their business, they have to pay off a patent troll.

New Developments to Help Small Businesses

Rather than cooperating with the scheme, entrepreneurs can invest in solutions that derail patent trolls. When they do, they stop the “innovation tax” in its tracks. NPEs like the path of least resistance, so companies that earn a reputation as easy targets may be harvested repeatedly. On the other hand, companies that earn a reputation for shielding themselves against NPEs deter further attacks.

A small but growing body of resources is empowering smaller businesses to fend off NPEs. One such resource involves new ways of finding prior art, evidence that the patented idea existed prior to the patent application date. The process of finding prior art can take months (and lots of money) due to the amount and complexity of information available. The traditional solution to the prior art problem is to hire a specialist to do the search, but most VCs can’t afford the time or financial investment. New solutions can be found in crowdsourcing prior art research, tapping into multilingual experts whose collective experience and diversity of knowledge makes them efficient identifiers of prior art across languages and industries.

In addition, venture-backed companies can now access a number of resources dedicated to helping them defend themselves from litigation. The Electronic Frontier Foundation (EFF), for one, offers an excellent knowledge base and resources at EFF.org/patent. UC Berkeley has developed the Defensive Patent License (DPL), in which inventors share their intellectual property without worrying about being sued, and agreeing not to sue other members.

In the private sector, patent enforcement insurance is another tool that small businesses are increasingly considering in their fight against patent trolls.

When Will Venture-Backed Companies Stop Hiding?

Small businesses are the lifeblood of America’s economy. When innovators are forced to divert resources from productive to unproductive uses, their very existence is threatened and the implications are broad. It’s crucial for venture-backed companies to understand and prepare for the growing threat of NPEs.

photo credit: kevin dooley via photopin cc

Paul Ceglia, a recently arrested New York businessman suing Facebook founder Mark Zuckerberg for half his company, just lost his attorney after an investigation found Celgia falsified evidence.

Dean Boland of Boland Legal, Ceglia’s lawyer, officially filed a “motion for withdrawal from representation” today, specifically stating that it has nothing to do with the fraudulent evidence found. Instead he cited personal reasons which will be provided to Ceglia after Boland find out which detention center he is being held in.

Facebook declined to comment on this story.

“The reasons underlying this request, provided to the court for its review, have nothing to do with any belief by the undersigned that Plaintiff is engaged in now or has been engaged in during the past, fraud regarding this case,” he said in the request.

Ceglia’s “evidence” against Zuckerberg was recently put under the microscope by investigators and found to be forged. A series of emails Ceglia claimed to have had with Zuckerberg, as well as a contract in which Zuckerberg promises Ceglia half of Facebook were found to be forged. A look at Harvard’s email servers — the university where Zuckerberg first created Facebook — turned up no such emails between the two. Furthermore, investigators searched Ceglia’s computer and found the original contract, which made no mention of the fifty percent agreement. Instead, it was a contract for work Zuckerberg did for Ceglia’s company “StreetFax.”

He was arrested for the fraud last week.

Courtroom image via Shutterstock

Police arrested Paul Ceglia this week for forging documents in his years-long lawsuit against Facebook founder Mark Zuckerberg.

Ceglia sued Zuckerberg in 2010 stating that he signed a contract with the Facebook founder that promised Ceglia 50 percent of the social network. The “contract,” which was allegedly signed in 2003, was originally for work Zuckerberg did for Ceglia’s company “StreetFax.” The contract sited two projects, including Facebook (also referred to as “Page Book”), for which Cegia paid Zuckerberg and allegedly was also promised the share in the company.

But according to CBS, after searching Ceglia’s computer, investigators found the original contract, citing major inconsistencies between the two. They also searched Harvard’s email servers, the university where Zuckerberg was going to school during the time he and Ceglia did business together. The email Ceglia submitted as evidence against Zuckerberg did not exist on the servers.

In the end, investigators concluded that Ceglia forged the contract and email in what U.S. Attorney Preet Bharara called “a massive fraud attempt” and “attempted corruption of our legal system.”

“We commend the United States Attorney for charging Ceglia with federal crimes in connection with his fraudulent lawsuit against Facebook. Ceglia used the federal court system to perpetuate his fraud and will now be held accountable for his criminal scheme,” said Orin Snyder, a partner at Gibson Dunn and attorney for Facebook and Mark Zuckerberg.

In May 2011, Facebook responded to the lawsuit saying Ceglia is a scam artist and that the “lawsuit is a brazen and outrageous fraud on the Court. Plaintiff is an inveterate scam artist who misconduct extends across decades and borders.”

Zuckerberg image via Guillaume Paumier/Flickr

July 9-10, 2013
San Francisco, CA

Early Bird Tickets on Sale

Samsung claims that the jury foreman who helped deliver Apple its $1.05 billion victory in court did not disclose key details from his past, and in turn, it wants a new trial, Bloomberg reports.

Jury foreman Velvin Hogan, who has spoken out several times about the case, apparently filed for bankruptcy in 1993 and was sued by former employer Seagate. Samsung said that because Seagate and Samsung have a “substantial strategic relationship,” Hogan could have been tainted from that past case.

“Mr. Hogan’s failure to disclose the Seagate suit raises issues of bias that Samsung should have been allowed to explore,” Samsung said in its request for a new trial.

Hogan said he did nothing wrong, as the court only asked for disclosure of any litigation jurors were involved with during the past 10 years. His lawsuit back in 1993 clearly would fall outside these parameters.

“Had I been asked an open-ended question with no time constraint, of course I would’ve disclosed that,” Hogan told Bloomberg. “I’m willing to go in front of the judge to tell her that I had no intention of being on this jury, let alone withholding anything that would’ve allowed me to be excused.”

Hogan has speculated that Samsung let him be on the jury “just to have an excuse for a new trial if it didn’t go in their favor.”

The fight between Samsung and Apple will likely continue, with Samsung lawyers recently adding the iPhone 5 to the company’s patent infringement lawsuit against Apple.

Velvin Hogan photo via Bloomberg

Despite months of fighting a subpoena from a New York judge, Twitter released a backlog of tweets from an Occupy Wall Street protester, reports Reuters.

Today was the deadline for Twitter to either hand over the tweets to the Manhattan criminal court or face charges of its own as well as a hefty fine.

The protester, Malcolm Harris, was one of several people taken into custody during a gathering at the Brooklyn Bridge in October 2011. He claims that police led the group of people on to the road and subsequently arrested them on charges of obstructing traffic. Harris’ tweet history during and leading up to the protest event are no longer available online, which prompted authorities to force Twitter to hand them over. The Manhattan district attorney believes the tweets will punch holes in Harris’ defense.

However, Twitter isn’t very keen on surrendering user information. Last week, the company’s chief lawyer Alexander Macgillivray even went on record saying that protecting privacy and freedom of speech is a competitive advantage Twitter has over rival social networks and digital communication channels.

And while the court does have Harris’ tweet history, the information will remain sealed until Harris appeals again next week.

Occupy protesters photo via Glynnis Jones/Shutterstock

The federal judge in the Oracle v. Google trial has ordered that Oracle cough up $1.13 million in court fees after Google prevailed in the case.

“Google was the prevailing party in this action,” Judge William Alsup wrote. “Oracle initially sought six billion dollars in damages and injunctive relief but recovered nothing after nearly two years of litigation and six weeks of trial.”

Oracle is on the hook for the cost of court-appointed expert Dr. James Kearl. Google actually wanted Oracle to pay $4,030,669 in total costs, but the judge only approved about $1 million of those fees.

On another interesting note, Alsup has stopped trying to find more paid bloggers and commentators in the case. Oracle admitted that it had paid FOSSPatents’ Florian Mueller as a consultant. Oracle said Mueller was not retained to write about the case itself.

“The Court takes this opportunity to state that it will take no further action regarding the subject of payments by the litigants to commentators and journalists and reassures both sides that no commentary has in any way influenced the Court’s orders and ruling herein save and except for any treatise or article expressly cited in an order or ruling,” Alsup wrote.

You can take a look at the court fees filing in more detail below.

Court gavel on cash via zimmytws/Shutterstock

July 9-10, 2013
San Francisco, CA

Early Bird Tickets on Sale

Emboldened as ever by its court win over Samsung last week, Apple today said that Samsung’s Galaxy S III flagship smartphone and Galaxy Note infringe on its patents in a separate court case.

Unlike the Apple v. Samsung trial that relied on design patents, utility patents, and trade dress infringement (which led to more than $1 billion in damages lodged against Samsung), this case is focused on eight different utility patents Apple says Samsung has infringed on.

To make things even more confusing, this particular case is also being handled by District Judge Lucy Koh at the same San Jose federal court as last week’s Apple v. Samsung trial.

Back in July, Apple successfully scored a preliminary injunction against Samsung’s Galaxy Nexus with the second case, but Judge Koh suspended the sales ban temporarily. Apple previously tried to add the Galaxy S III to the case back in June, well before its U.S. release.

In its court filing tonight (PDF link), Apple added two models each of the Galaxy S III and Galaxy Note to the case, which was initially filed in February and listed 17 infringing Samsung devices. Some of the devices were also listed in Apple’s earlier case against Samsung, like the Galaxy S II line, but this case also includes Samsung’s tablets and media players.

Among the utility patents Apple is listing are patent ’721, which refers to unlocking a phone with gestures on an unlock image, and patent ’172, which deals with a system and interface for offering word recommendations.

Given that Apple is now targeting newer Samsung devices, like the Galaxy S III and the just-released Galaxy Note 10.1 tablet, any sales ban could seriously hurt Samsung in the U.S. I wouldn’t be surprised if Apple decided to go the extra mile in this case after Samsung’s poor court showing last week.

Via The Verge, AppleInsider; photo via Devindra Hardawar/VentureBeat

July 9-10, 2013
San Francisco, CA

Early Bird Tickets on Sale

Google and Apple’s chief executives are reportedly having chats about each others’ intellectual property. The reported calls follow a lawsuit between and Apple and Samsung that resulted in $1 billion in damages awarded to the iPhone maker.

According to Reuters, Larry Page, the CEO of Google, and Tim Cook, the CEO of Apple, talked on the phone about their respective patents. All eyes are turning toward Google after Samsung’s huge loss because many of the Korean manufacturer’s phones in question run the Android operating system. A number of the patents the jury found Samsung infringing pertained to Apple’s mobile operating system iOS.

One of Reuters’ sources said the two were possibly discussing how to end current arguments over whether Google or Apple is infringing on basic parts of a mobile operating system. Another source says the two CEOs were supposed to talk again Friday but had to push back the date for a couple weeks for unspecified reasons.

Shortly after the Apple versus Samsung verdict, Google released a statement saying the claims in the case did not deal with the core Android operating system, but rather modifications that Samsung made. Some are saying that Google should release a new version of Android soon so as to not be associated with the loss or with products that could be pulled of the market.

The two companies have enough patents to throw at each other for years should one lobby a big lawsuit against the other. Indeed, Motorola Mobility, which is now owned by Google, initiated the battle recently by suing Apple for a number of its operating system patents. But it looks like to two companies want to work something out before the bullets fly.

via Reuters; Tim Cook image via Dylan Tweney/VentureBeat

Craigslist appears to be creating its own version of PadMapper, the apartment-rentals website that overlays apartment listings on top of Google Maps, making it easier to browse by location.  TPM caught this feature, and it says that this is currently being tested in San Francisco and Portland areas.

VentureBeat checked and confirmed that embedded maps appear on some apartment listings in both areas.

Apartment hunters in these areas can now see a map in Craigslist’s apartment classifieds with a pindrop over the location of the rental. The website is using OpenStreetMap, which is a “free wiki world map,” which Apple also uses to supply some information to its maps app. The traditional links to Google and Yahoo maps, which Craigslist has had for awhile, are still available at the bottom of the listings.

Unlike PadMapper, the Craigslist listings show only a single location at a time. This should make it easier to find your way to a prospective pad, but it doesn’t simplify browsing by neighborhood, unless Craigslist decides to add more features.

PadMapper currently does its mapping using Google Maps. The website collects apartment advertisements from around the web and shows them as pindrops over a map. It used to include Craigslist data until the online classifieds company told PadMapper to back down. For awhile PadMapper respected that request, until PadMapper founder (and sole employee) Eric DeMenthon decided that his site saved apartment hunters time and that he owed it to them to continue serving up as many relevant listings as possible.

From there he teamed up with 3taps to pump Craigslist data to PadMapper without scraping its servers, but Craigslist still wasn’t satisfied. It sued both PadMapper and 3taps in July.

Since then, Craigslist even added a clause in its terms of use that gave the website “exclusive” rights to all submitted listings — meaning people selling items through Craigslist would not be allowed repost their advertisements anywhere else. After chatting with the Electronic Frontier Foundation, however, Craigslist removed this clause.

Broadcast TV network Fox is asking U.S. courts to block certain functionality from satellite television service Dish Network’s Hopper DVR box, which allows Dish subscribers to automatically skip commercial interruptions with a single button.

Fox, along with NBCUniversal and CBS, initially filed a lawsuit against Dish back in May. The broadcast TV companies alleged that Dish violated content licensing agreements by allowing its customers to block out advertising, which is their primary source of revenue, and by automatically recording all prime-time programs from the major networks.

Reuters is reporting that Fox is now asking the courts to forbid Dish from offering these two functions on its Hopper box until a verdict is reached from the forthcoming trial. The rationale behind Fox’s request is that the company will lose quite a bit of money in the months leading up to said trial.

Unless Fox can prove that it’s losing money, I don’t see the court granting its request. Advertisers typically pay TV networks upfront to air their commercials based on projected audience viewing totals for each time slot. Since Fox isn’t about to pitch its advertisers with lower projected audiences, I doubt it’ll be able to easily prove that Dish’s commerical-skipping Hopper box is hurting its profits in the short-term.

As for the automatically recording prime time programming, I also think Fox will have a hard time proving that Dish is violating content licensing — in part due to Barry Diller-run Aereo TV’s recent legal win against the networks.

Kangaroo photo via Dave Mitchell/Shutterstock;

July 9-10, 2013
San Francisco, CA

Early Bird Tickets on Sale

While we’re still waiting on the jury’s response to the Apple v. Samsung case in San Jose, a South Korean court has issued its own verdict, which finds that both companies infringed on the other’s patents.

The court granted small damages to both Apple and Samsung, and it also ordered them to stop sales of the infringing devices, the Wall Street Journal reports. Luckily for both companies, the sales ban only affects older products: the iPhone 4 and iPad 2 for Apple, and the Galaxy S (I and II), Galaxy Nexus, and Galaxy Tab (both the original and 10.1 model) for Samsung.

Notably, the court ruled against one of the most prominent arguments in the U.S. Apple v. Samsung case: It found that there was “no possibility” that consumers would confuse smartphones from the companies. Additionally, the three-judge panel said Samsung’s icons don’t infringe on Apple’s design patents, but they did say Samsung infringed on Apple’s “bounce back” technology, which occurs when a user reaches the end of a mobile screen.

As with the other court cases happening worldwide, Apple was arguing that Samsung copied its designs, while Samsung was arguing that Apple is infringing on its wireless technology. The particular case was started by Samsung in June 2012 to counter Apple’s lawsuits in other countries, which led Apple to countersue in South Korea.

While both Apple and Samsung were seeking damages of 100 million won (around $90,000), the court ordered Apple to pay up 20 million won (around $17,650) for each patent it violated. Samsung has to pay 25 million won (around $22,000) per infringed patent.

The judges ordered Apple to pay 20 million won, or $17,650 in damages, for each violated patent. Samsung was ordered to pay 25 million won, or $22,000. Both companies had sought damages of 100 million won, or about $90,000, from the other.

Apple and Samsung can appeal the decision, but thanks to the complexities of South Korean courts, that would an involve a rehearing of the entire case, according to the WSJ. While the damages weren’t too significant in this case, both companies will likely fight back to be able to sell their older products (the iPad 2 is still a great bargain for tablet buyers, and the Galaxy Nexus remains one of the best Android devices).

Photo: Devindra Hardawar/VentureBeat

Now that bad week is in turn becoming a bad month as August starts with yet more lawsuits being announced, and a C-level executive demotion to boot.

San Francisco law firm Kessler Topaz Meltzer & Check has now filed suit, alleging that Zynga acted improperly in allowing key executives and investors to sell their stock earlier than other employees. And Robbins Geller Rudman & Dowd joined the party yesterday, alleging that Zynga “issued false and misleading statements regarding Zynga’s business and prospects.”

Those are both in addition to law firm Newman Ferrara’s suit, which we reported on yesterday, making three lawsuits so far. Three may not be the final tale of the tape, however, as other firms are also considering their own lawsuits.

That’s a big enough sea of troubles, you might think, but there’s additional trouble in Zyngaville: Chief operating officer John Schappert was demoted recently, according to Bloomberg, losing oversight on new games.

If the name sounds familiar, that’s because Schappert sold $3.9 million of stock in the now-infamous executive sell-off and is, you guessed it, a defendent named in the insider trading lawsuits.

That’s a bad few days for Schappert: demoted and sued inside of a week.

But it’s just the tip of the iceberg of the chaos inside the company right now, if analyst Richard Greenfield is to be believed. He told Bloomberg yesterday that Zynga is “in utter meltdown mode.”

It’s enough to make an online gaming company want to press the reboot button.

Granddaddy-of-classifieds-sites Craigslist has sued smart apartment-hunting app PadMapper for continuing to use its listings after Craigslist issued a cease-and-desist letter.

PadMapper scrapes data from various apartment listing sites including Craigslist, Apartments.com, and Rent.com, and places those listings in Google Maps. It’s an ingenious app for apartment hunters who want to specifically compare listings and prices by neighborhood.

The drama between the two started back in June when Craigslist blocked PadMapper from using its API to list apartments. PadMapper complied and even opened its own sister service called PadLister to help fill the gap. But after finding a “legally kosher” way to use Craigslist’s listings again, PadMapper is back and running with listings from Craiglist included.

While PadMapper’s “legally kosher” way uses a third party to get its listings instead of using Craigslist’s data directly, Craigslist says this isn’t good enough. Craigslist claims that it has done all the hard work on the classifieds side and that PadMapper is piggybacking on that hard work. Craiglist says that PadMapper and third-party data service 3Taps are “unlawfully and unabashedly mass-harvesting and redistributing postings entrusted by craigslist users to their local craigslist sites.”

However, the problem with Craigslist is that its design and interface for apartment listings is clunky, ugly, and outdated. The company has not indicated that it wants to change, and it simply takes a lot of time for apartment hunters to use. PadMapper makes it much easier to look at listings by location, and it links back to the original listings, so Craigslist still gets traffic from it.

Check out the legal filing below:

July 9-10, 2013
San Francisco, CA

Early Bird Tickets on Sale

Poor Research in Motion just can’t catch a break. The BlackBerry maker has been ordered to pay $147.2 million to Mfomation Technologies over a patent dispute regarding wireless device remote management, Reuters reports.

Yesterday a San Francisco federal court ordered RIM to pay an $8 fee for each BlackBerry device connected to its BlackBerry Enterprise Server, according to Mformation attorney Amar Thakur. A RIM spokesperson, meanwhile, said the company could overturn the ruling with pending legal motions.

The news comes on the heels of a terrible quarterly earnings report for RIM, where it saw a huge operating loss,  announced the layoff of 5,000 workers, and confirmed that it would be delaying its next-gen BlackBerry 10 devices until 2013. The company’s stock took a further beating last week after a disappointing annual shareholder meeting.

Luckily for RIM, the damages only include BlackBerry devices sold in the U.S. up through the trial, and not future devices or international sales. But that’s a small silver lining for the cash-strapped company, which went as far as to sell its corporate jet to save money, according to a recent report. The damages from this suit won’t crush RIM, but it’s certainly the last thing the company needs to deal with right now.

The patent war between Yahoo and Facebook is over. The two companies not only settled the suit but extended the multiyear partnership between the two, including new deals for advertising.

The conflict began in March when Yahoo accused the social network of infringing on 10 of its patents. These included patents concerning displaying content, messaging users, controlling spam, and other topics. Facebook then returned with a countersuit Yahoo was actually infringing on 10 of Facebook’s patents. And Facebook went to the trouble of naming each offending Yahoo product, such as Yahoo’s home page, Flickr, and Yahoo Finance.

In June, Yahoo’s counsel requested an extension to respond to Facebook’s claims, saying that the extra days would help Yahoo and Facebook come to a settlement.

According to All Things D, today’s settlement includes a new advertising agreement, which will allow Yahoo to pull Facebook’s “like” data and display it on ads on Yahoo. Yahoo interim chief executive Ross Levinsohn and Facebook chief operating officer Sheryl Sandberg facilitated the deal. Both companies have also agreed to license some of the offending technology to each other. Facebook explained in a press release that it will help Yahoo with “large media event coverage” by integrating it on the social network.

The two companies have been involved for a long time now, with a “multiyear contract” that allowed Yahoo to use Facebook as a way to distribute content from its site. Yahoo then supported Facebook’s “Social Bar” on its sites, which Facebook says 90 million people have used.

The lawsuit, which began under Yahoo’s former chief executive Scott Thompson, looked like a last-ditch effort on Yahoo’s part to get money. The company has had a number of pitfalls as it tries to stay afloat in a new media industry. The company recently began laying off 2,000 employees and had plans to restructure. But Thompson who was behind many of these plans, was ousted as CEO in May after he was found lying about a computer science degree on his resume.

via All Things D; Image via Mark Zuckerberg/Facebook

Travel planning website Hipmunk isn’t going to take patent trolls lying down. The company, which was recently targeted by i2z Technology LLC to pay licensing fees for a 1994 patent, is taking i2z to court to prove it doesn’t owe it a cent.

“Unfortunately, I can’t comment on active legal proceedings,” said Hipmunk chief executive Adam Goldstein in a statement e-mailed to VentureBeat. “However, in general, we do believe in fighting against spurious intellectual property suits.”

Hipmunk states in its court documents that the patent “bears no relevance to Hipmunk’s technology,” and that it has no intention to pay “for a license it does not need.” It also calls i2z Technology a “non-practicing entity,” run by California lawyer Rakesh Ramde. The patent in question, United States Patent No. 5,345,551, belongs to i2z and involves technology that allows you to sync and present “data from different, but related, sources” in more than one computer window. Goldstein was contacted by Ramde on June 21, and quickly decided to file a lawsuit before i2z had the opportunity.

Ramde’s company has also sued AOL, Microsoft, Travelocity, Trip Advisor, Kayak, Google, Yahoo, Yelp, and others for the same patent.

As GigaOm points out, i2z’s demands come soon after Hipmunk announced its latest $15 million round. The round was led by Institutional Venture Partners (IVP). Goldstein plans to use the funding to expand internationally, hire more employees, and work on the product.

According to the court filing, this is the second time Hipmunk has been targeted by a “non-practicing entity.” The previous issue did not involve i2z Technology.

via GigaOm; Fighting image via Shutterstock

July 9-10, 2013
San Francisco, CA

Early Bird Tickets on Sale

Judge Richard Posner threw out a heated case between Apple and Google-owned Motorola Mobility yesterday, ending an infringement squabble between two companies in deep competition.

“Neither party is entitled to an injunction,” said Judge Posner in his Opinion and Order. “Neither has shown that damages would not be an adequate remedy. True, neither has presented sufficient evidence of damages to withstand summary judgment — but that is not because damages are impossible to calculate with reasonable certainty and are therefore an inadequate remedy; it’s because the parties have failed to present enough evidence to create a triable issue.”

The case was thrown out after both Apple and Motorola Mobility were unable to define their “right to relief.” More importantly, Apple was unable to prove how the Android phone could do significant financial damage to the iPhone’s bottom line. Posner tentatively dismissed the case earlier in June, saying that he may “change his mind.”

At the time, Posner had completely dismissed all further hearings regarding the suit, but he later acquiesced to Apple’s request for one more opportunity to state its case. Despite the extra time, the companies were still unable to justify why damages should be paid in either case. They had trouble organizing their arguments during earlier proceedings as well. In March, Judge Posner told Apple that its request for documents on the Android operating system was too broad and needed to be more specific in order for Motorola Mobility to comply.

By the end of the case, Apple was left with only four patents to defend after accusing Motorola Mobility of infringing on 15 of its patents while developing for Android. Motorola Mobility was left with only one. Judge Posner dismissed this last patent, saying it was based on an industry standard and that the technology was one of the components that makes cell phones cell phones.

The case was dismissed with prejudice, but Apple and Motorola Mobility are able to appeal the decision and are expected to do so.

hat tip The Verge and Foss Patents; Kick image via Shutterstock

Five disgruntled Facebook users have forced the social network to change how it manages its popular Sponsored Stories ad units.

The users, two of whom are minors, sought class-action status in a lawsuit against Facebook for using their names and faces in ad units without their consent, a violation of California law.

The suit, already in the settlement stages, as previously reported by VentureBeat, is costing Facebook $10 million in charity donations and up to $300,000 in legal fees. But that’s not all.

In a proposal filed Wednesday (embedded below), Facebook said that it would create new mechanisms to give members more insight into and control over the interactions, a.k.a. their status updates and “likes,” that have been used in Sponsored Stories.

But this isn’t a global opt-out option for Sponsored Stories. Instead, the language in the settlement puts forth a far more granular solution. The suggested controls will only apply to individual interactions or categories of interactions, which means users won’t be getting a broad, all-encompassing on-off switch.

“Facebook will create an easily accessible mechanism that enables users to view the subset of their interactions and other content that have been displayed in Sponsored Stories,” the company said in the settlement proposal. “Facebook will further engineer settings to enable users, upon viewing the interactions and other content that have been used in Sponsored Stories, to control which of these interactions and other content are eligible to appear in additional Sponsored Stories. Without limiting the foregoing, but for the sake of clarity, these settings will include the ability to enable users to prevent individual interactions and other content (or categories of interactions and other content) from appearing in additional Sponsored Stories.”

The company also said that it would revise its terms of use for minors and require parental approval before showing a minor’s name alongside an ad. In the settlement, Facebook committed to providing parents with easier access to info and links so that they can prevent their children’s names from appearing alongside ads.

It’s unclear how the changes will affect Facebook’s advertising business. Should members take advantage of the new controls en masse, Sponsored Stories, which appeal to advertisers because of the native member endorsements, would likely see fewer buyers.

The total value of the settlement, including the $10 million contribution and legal fees, is estimated to be $103.2 million.

Facebook declined to comment on this story.

[via Reuters]

Yahoo, which is suing social network Facebook over patents, requested more time from the courts before being forced to reply to Facebook’s claims in the lawsuit. The reason? The two companies are attempting to settle.

“The parties are currently engaged in settlement negotiations to resolve this dispute. The parties believe that a further extension will facilitate settlement,” said Yahoo counsel Kevin Smith in an amendment to the filing. “Yahoo and Facebook are in agreement that additional time is warranted for the parties to prepare their submissions, will not adversely affect the case schedule, and will facilitate a settlement.”

The extension was filed yesterday.

The two companies have been wrapped up in the lawsuit since March, when Yahoo claimed Facebook was infringing on 10 of the company’s patents. These patents pertained to displaying content, messaging users, controlling spam, among other things. Facebook, in return, filed a counterclaim saying that it was Yahoo who was infringing on 10 Facebook patents. Indeed, Facebook even named off each offending product:

“Yahoo! infringes the Facebook patents-in-suit through, by way of example and not limitation, the Yahoo! Home Page, Yahoo!’s Content Optimization and Relevance Engine (“C.O.R.E.”), the Yahoo! Flickr photo sharing service, and advertisements displayed throughout Yahoo! including on My Yahoo!, Yahoo! Finance, Yahoo! Sports, Yahoo! News, Yahoo! Games, Yahoo! Movies, Yahoo! Shopping, Yahoo! Travel, Yahoo! Autos, and Flickr.”

The two companies may be closer to settlement now that former Yahoo chief executive Scott Thompson is out of the picture. He was said to be a driving force behind the lawsuit but was ousted after a scandal involving a faked computer science degree. Yahoo will have to respond to Facebook’s counterclaims on July 5, extended from June 20. It will have to reply to Facebook’s motion to dismiss the case on July 26.

via Bloomberg; Yahoo image via Yodel Anecdotal/Flickr

The massive media conglomerate is refusing to comply with court-ordered requests to deliver the names and contact information of its customers to porn studios. The studios claim that Comcast’s clients have illegally downloaded their pornographic movies, and plan to use that information to sue the individuals for cash.

Comcast, which provides video, voice, and Internet to millions of Americans, has inspired numerous hate websites including Comcast Sucks and Comcast Sucks Balls, and routinely ranks high in the list of companies with the worst service. But with this latest stand, Comcast could actually be seen as a friend of Internet privacy.

Realistically, the reason Comcast is standing up for its customers’ privacy is probably less altruistic than practical.

For the company, dealing with the courts is a major (and costly) pain in the posterior. Hundreds of thousands of BitTorrent lawsuits, many but not all of which are from porn studios seeking damages for pirated videos, have been winding their way through the hallowed halls of American justice over the past few years.

Enough is enough, say Comcast’s lawyers.

Well, since they are lawyers, they actually said “plaintiffs should not be allowed to profit from unfair litigation tactics whereby they use the offices of the Court as an inexpensive means to gain Doe defendants’ personal information and coerce ‘settlements’ from them.”

Unscrambled, that means they don’t want foreign and domestic porn studios using Comcast as a proxy for badgering randy Americans into massive cash settlements.

Whether Comcast is doing this out of the goodness of its heart, concern for its clients, or simply because dealing with all these cases is an expensive, draining hassle hardly matters. The good news is, someone is finally stepping up to protect some level of privacy.

At least, in this case, if you’re downloading naughty videos.

July 9-10, 2013
San Francisco, CA

Early Bird Tickets on Sale

Apple has agreed to pay $2.25 million to settle a legal complaint accusing the company of misleading Australian consumers about whether the new iPad included “4G” data abilities, according to The Australian.

In late March, we heard the Australia’s Competition and Consumer Commission intended to sue Apple for “misleading” claims when it comes to the latest iPad offering 4G, because the device is not compatible with Australian 4G networks. Apple said that it would give people their money back if they felt misled about the 4G labeling. But now it appears it will pony up a few million bucks to be completely done with the matter with a court settlement.

The settlement in Australia has not received final approval from a judge, but if it is approved, Apple will be done with the issue in that country.

Apple also took heat in the U.K. over the iPad’s 4G branding. In response to the U.K., Australia, and other countries, Apple changed the branding to “Wi-Fi + Cellular” instead of “Wi-Fi + 4G.”

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Social networking giant Facebook will face another lawsuit from investors contending that the company and banks misled them during the IPO, according to a CNET report.

Facebook had its IPO in mid-May and by all accounts, it was a botched affair. Not only did the NASDAQ exchange fizzle because of a volume overload, but also Facebook was accused of not giving enough information about its growth prospects to its non-bank investors. That led to a class-action lawsuit against Facebook and Morgan Stanley. Now there’s a second lawsuit on the table touting a similar argument. It reads:

Defendants failed to disclose in the Registration Statement and Prospectus that, during the roadshow conducted in connection with the IPO, certain Underwriter Defendants reduced their second quarter and full year 2012 performance estimates for Facebook. These reductions were material information which was not shared with all Facebook investors. Rather, this information was selectively disclosed by defendants to certain preferred investors, but it was omitted from the Registration Statement and Prospectus.

The case has been filed in the U.S. District Court for Southern New York, which is also where the first lawsuit was filed. You can read through the filing below:

In the convoluted case of the botched Facebook IPO, the story goes that the social network’s underwriters, with guidance from a Facebook executive, reduced their 2012 earnings estimates, shared that material information with a few, preferred investors, and let institutional and retail investors take the hit as Facebook’s stock value tanked.

So about those revisions to Facebook’s earnings estimates — just how bad are they? Pretty disconcerting, if you ask financial data company PrivCo CEO Sam Hamadeh. “These are enormously material changes in financial forecasts.”

According to the projected numbers of four banks, as shared with Reuters by an anonymous investor, Facebook could report 5.45 to 7.28 percent less revenue in the second quarter of 2012 and 3.61 to 6.13 percent less revenue for the full year than originally anticipated. The underwriters also reportedly reduced Facebook’s 2013 earnings per share estimates by has much as 7.35 percent.

The reduced figures, as shown in the table below, dramatically change the valuation of the company, Hamadeh said.

“The reduction to Facebook’s forecasts of this magnitude — reducing the revenue growth rate by over 6 percentage points — is so material that it should absolutely have been disclosed in a revised S-1 filing before the IPO pricing,” he said. “The combined net effect for Facebook in this case of both the reduction in the financials and the valuation multiple would have lowered Facebook’s valuation by at least one third.”

Facebook did file a revised S-1 on May 9, which spelled out that mobile was an even greater risk than originally stated. However, that warning, which stated that Facebook’s daily active users (DAUs) on mobile are increasing more rapidly than the number of ads it delivers, did not come with Q2 2012 or full year 2012 earnings estimates.

Morgan Stanley’s original full year 2012 revenue projection for Facebook was $5.036 billion, according to the Reuters report, or 35.74 percent year-over-year growth. By changing its forecast to $4.854 billion, the underwriter is predicting that Facebook will only grow revenue by 30.84 percent this year, which changes the perceived value of the company and the share price at which investors would be comfortable buying Facebook stock.

For comparison, Facebook’s revenue grew 88 percent year-over-year to $3.71 billion in 2011.

Bottom line? The accusation is that Morgan Stanley, Bank of America, JPMorgan, and Goldman Sachs shared their revenue revisions with their top investors, but regular institutional investors and retail investors weren’t provided with the additional guidance. Instead, these folks were left with Facebook’s May 9 S-1 amendment, which was woefully short on hard data.

Now, the legal question at hand is whether Facebook hid “a severe and pronounced reduction” in revenue from investors. For its part, Morgan Stanley is standing by its actions. A spokesperson said the following in a statement shared with VentureBeat:

Morgan Stanley followed the same procedures for the Facebook offering that it follows for all IPOs. These procedures are in compliance with all applicable regulations.

After Facebook released a revised S-1 filing on May 9th providing additional guidance with respect to business trends, a copy of the amendment was forwarded to all of MS’s institutional and retail investors and the amendment was widely publicized in the press at the time.

In response to the information about business trends, a significant number of research analysts in the syndicate who were participating in investor education reduced their earnings views to reflect their estimate of the impact of the new information. These revised views were taken into account in the pricing of the IPO.

Facebook publicly reported that it made $205 million in net income on $1.06 billion in the first quarter of 2012. The social network’s pre-IPO earnings report was a disappointment considering that it brought in 6 percent less revenue than it did in the previous quarter.

Facebook closed at $32 a share on the NASDAQ Wednesday, which is up from Tuesday’s close but down almost 16 percent from its $38 starting price and nearly 24 percent off its $42 opening.

Facebook declined to comment on this story.

Facebook shareholders have filed a class action lawsuit against the social network, as well as underwriting banks including Morgan Stanley, over its first-day trading slide, the law firm Robbins Geller Rudman & Dowd announced this morning.

The suit alleges that Facebook hid “a severe and pronounced  reduction” in revenue forecasts from its investors, due to a more widespread use of Facebook via mobile devices. Yesterday, Reuters reported that some investors were shocked when lead underwriter Morgan Stanley reduced its revenue forecasts of the company shortly before Facebook’s IPO, supposedly following an amendment to its S-1 filing on May 9 over increased mobile risk.

Even more scandalous, Business Insider’s Henry Blodget reported last night that a Facebook executive actually told the underwriting banks to cut their estimates, but didn’t share that information with smaller investors. If true, Facebook could be on the hook for violating securities laws.

The situation is admittedly confusing, because Facebook’s amended S-1 was quite pessimistic about revenues from mobile devices, as we reported at the time. Since the S-1 is a public document, it’s hard to argue that Facebook was hiding anything, unless it was privately giving different information to the underwriters.

That’s exactly what the complaint alleges: That Facebook was giving even more pessimistic revenue guidance to its underwriters.

“The true facts at the time of the IPO were that Facebook was then experiencing a severe and pronounced reduction in revenue growth due to an increase of users of its Facebook app or website through mobile devices … such that the Company told the Underwriter Defendants to materially lower their revenue forecasts for 2012,” the complaint reads.

The underwriters then subsequently lowered their estimates for 2012, “which revisions were material information which was not shared with all Facebook investors, but rather, was selectively disclosed by defendants to certain preferred investors.” That’s exactly how an IPO process is not supposed to work.

Meanwhile, those same underwriters earned a bonus $100 million last week by selling their extra allotment of shares in order to stabilize the price on the IPO day, an option known as the “greenshoe.” How does that work? Essentially by shorting the stock, as Reuters writer Felix Salmon explains in a lucid post on the Facebook greenshoe.

Separately, the NASDAQ has admitted that it had trouble processing all the orders for Facebook shares, delaying the opening of trading by about half an hour. That glitch has bankers hopping mad, and at least one has even sued NASDAQ over the delays.

The suit was filed in in a Manhattan U.S. District Court this morning, and it comes on the heels of a suit filed yesterday in California as well as a subpoena filed in Massachusetts yesterday. We’ve asked Facebook for further comment and will report if we hear back. Find the full complaint below.

Via Reuters; Photo via Facebook

Leading Silicon Valley venture capital firm Kleiner Perkins Caufield and Byers got hit with a sexual harassment and gender discrimination suit earlier this month, rocking a firm that has been known for bringing women into the venture capital industry.

The complaint (below), filed May 10 in superior court in San Francisco, reads like a melodrama. Ellen Pao, who is currently an investment partner with the firm, alleges that in 2006, fellow partner Ajit Nazre pressed Pao to have sex with him on a trip to Germany. Nazre, who had been at the company for two years longer than Pao was managing her trip to Germany. After refusing and returning home, Pao alleges that Nazre continued his advances until she acquiesced and began a personal relationship with him later in 2006.

After ending the relationship after three intimate encounters, Pao says Nazre (pictured right) launched a five-year campaign of retaliation against her, the complaint claims. This included convincing a chief executive she was courting for a seat on one of her company’s boards to join one of Nazre’s boards instead. VentureBeat has identified that company as RPX Corporation, a patent litigation management company.

Pao’s complaint also alleges that KPCB partner Randy Komisar gave her a book by Leonard Cohen, “The Book of Longing,” that contained graphic sexual imagery, and invited her to dinner on Saturday night when his wife was away, a combination that Pao felt was “inappropriate in the workplace.”

Her complaint also alleges that the firm as a whole did not respond adequately when she brought the harassment to the attention of senior partners, including John Doerr, Ted Schlein, and Ray Lane.

TechCrunch broke the news earlier today.

Pao’s lawyers declined to comment when contacted by VentureBeat. KPCB provided a statement, which we’re including below.

Needless to say, KPCB is feeling some heat from the issue. Some are saying that the company should have informed the limited partners associated with the venture firm. Melinda S. Riechert, an employment lawyer with Morgan, Lewis & Bockius LLP (which is not involved in the case), thinks this would have been a mistake on Kleiner’s part.

“It’s exceedingly difficult to deal with a case by a current employee, because people have privacy rights. You try to keep these things on a need-to-know basis,” Riechert told VentureBeat. “The more people who know about small suits and claims… the more people who can be accused of retaliating.”

Kleiner is likely to argue that Pao turned to a harassment case after she began to receive poor performance reviews, as a way of deflecting responsibility. Pao’s lawyers, of course, will argue that this gets things backwards, and that the poor reviews were part of the harassment.

Why would Pao stay at a firm for years, given the negative climate? Riechert puts it into perspective:

“She obviously has the right to [keep her job at Kleiner], and I have many cases that I handle that are brought by current employees… It’s difficult, it’s not easy for everybody, but they have the right to stay employed and we make sure that rules and law are followed.”

Kleiner has been otherwise well-known in the venture industry for bringing on female partners. The venture firm has 12 female partners at the firm, of which nine are active investors. A number of these female partners have names well known in Silicon Valley, including Mary Meeker, who has invested in Twitter and Groupon, and Aileen Lee, who recently decided to create her own seed fund. However, its newest fund, KP15, only includes one woman among its 10 managing partners.

Here’s the full text of Pao’s complaint.

Here’s the statement from Kleiner:

In response to a discrimination complaint filed in the Superior Court of San Francisco by Ellen Pao, Christina Lee, a Kleiner Perkins spokesperson, stated the Firm regrets that the situation is being litigated publicly and had hoped the two parties could have reached resolution, particularly given Pao’s 7-year history with the firm. Following a thorough independent investigation of the facts, the firm believes the lawsuit is without merit and intends to vigorously defend the matter. The Firm has been a diversity pioneer in its industry and was one of the first venture capital firms to hire women as partners. The number of women partners at the firm is one of the highest within the venture capital arena and the firm has actively supported women in all respects.

Photo of Ellen Pao via KPCB; photo of Ajit Nazre via djevents/Flickr

Facebook has settled a lawsuit concerned “Sponsored Stories” that could have cost the company billions if the plaintiffs had won, according to a Reuters report.

In light of Facebook’s team taking the company public last Friday, it will have to start making more careful decisions on financial matters. Facebook’s shares on the Nasdaq exchange disappointingly closed at $31 on Tuesday.

The proposed class-action lawsuit was brought to federal court in San Jose, Calif. by five users who were upset at Facebook’s “Sponsored Stories.” That type of ad showed a product and noted which of your friends “liked” that advertiser. Reuters said the users alleged that the “Sponsored Stories” feature violated their right to publicity under California law.

The terms of the settlement were not listed, but it will almost certainly be less expensive to settle than to drag the case through court. If it had become a class-action suit, it could have included the nearly one-third of the U.S. that is on Facebook.

Mark Zuckerberg photo: Jim Merithew/Wired