Technology Transactions, Software and Internet Law

This Washington Post article discusses a federal district court ruling last month, which apparently is the first to hold that the government must obtain a warrant based on probable cause of criminal activity before seeking location-based cell phone records.

According to an update to the article, two other district court rulings previously found that the government may obtain the data on a standard lower than probable cause.

The article goes on to say that the ruling could begin to establish the standard for such requests.

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Practical Ecommerce magazine has an online glossary of ecommerce terms: Practical eCommerce Glossary

It offers a good selection of ecommerce blogs, too.

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Many businesses don’t consider the benefits of an Application Programming Interface (API) to generate attention for their software or web services, gain backing of other companies and even lower their own customer support costs.  I often raise this approach with clients since I advised Intuit on setting up its Intuit Developer Network program a few years ago.

Here is a very simplified explanation for business people (not programmers!) of the difference between offering your company’s software as open source and making it available through an API. (Scroll to the bottom to see the differences between Closed Carl, Open Oscar and API Annie.)

Offering an API enables companies to test the waters by opening their products in some respects, but retaining legal and technical control over their use.  An API strategy often can be a middle ground between a fully proprietary approach and an open approach (e.g., making the software open source).

As I mention above, using an API can reduce a company’s customer support costs, because other companies who use the API can add and support their own extensions and functions.

If you are looking to use an API for another company’s product or web service, you may not see it advertised as an API.  Often, it will be licensed as part of a Software Development Kit (SDK), which may be part of a free or fee-paid developer program.

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Here’s a good feature article on Entrepreneur.com, which gives the “A to Z” of legal issues to consider for ecommerce websites. It’s an amusing overview really, and isn’t intended as comprehensive.

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Intellectual Ventures, the patent holding company started by the former CTO of Microsoft, Nathan Myhrvold,  has begun obtaining payments from licensees in the $200 million to $400 million range, according to a recent front-page Wall Street Journal article (Tech Guru Riles the Industry by Seeking Huge Patent Fees, by Amol Sharma and Don Clark, September 17, 2008).

In an interesting twist, many of the licensees also agree to become investors in investment funds operated by Mr. Myhrvold’s company.  The Journal reports that the company has not filed any infringement lawsuits yet against potential licensees — although this remains an “implicit threat” — but Myhrvold told the Journal that $1 billion in licensing fees have been returned to investors so far.  (This profitability apparently isn’t widely spread among other patent holding companies.  The Journal also reported that publicly-held Acacia Research Corp, which has several pending lawsuits against licensees, reported a net loss of $9.5 million in the first half of 2008.)

IV also announced plans to open offices in five Asian countries, including a new regional headquarters is in Singapore.

For an inside look at Intellectual Ventures, be sure to read Malcolm Gladwell’s recent profile in The New Yorker.

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The Deal posts an interesting story on how accelerators such as Y Combinator have replaced incubators for early stage funding of internet technology startups.

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Imagine working in an industry with no intellectual property protection at all.  Unlike the book, music, and high tech industries, you couldn’t use the law to shut down an infringer who was ripping off your products.

How would you stay in business?

Ask the fashion design business.  That’s what BusinessWeek did.  According to BW, garment designs are not copyrightable (but "counterfeit garments … right down to the label … are illegal").

BW found these strategies:

1. Protect what you can under existing intellectual property law - at the edge of IP, so to speak.  Diane Von Furstenberg has begun protecting her copyrights to fabric patterns (as opposed to the entire garment itself), as art.  Shoe designer Stuart Weitzman patented a shoe’s buckle and ornamentation.  Both Von Furstenberg and Weizman have sued to enforce their intellectual property rights.  (Similarly, blue jeans companies have for years registered and sued to protect their trademarks in the ornamental stitching on the back pockets of their jeans.  For example, see Levi Strauss’s U.S. trademark registration number 1,139,254.)

2. Use time to market to your advantage.  According to BusinessWeek, Designer Halston now makes its fashions available quickly at Net-a-Porter.com, to speed ahead of the inevitable copycats. Many industries have used this strategy successfully over the years, even the U.S. media industries in the late 19th century.  (See Stephen Breyer, "The Uneasy Case for Copyright: A Study of Copyright in Books, Photocopies, and Computer Programs," 84 Harvard Law Review 281 (1970).

3. Use "natural intellectual property" — materials or processes that others simply can’t copy, or that would be too expensive to knock-off cheaply.  For example, Weitzman is making shoe heels out of steel and titanium, which are too costly for low-price imitators.  When imitators try to use cheaper wooden materials, "the heels will snap."

4. Change the law.  The designers are supporting a proposed Design Piracy Prohibition Act.  But Congress is deliberative, and that path is slow and risky.  

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This month’s Wired magazine has a perceptive article about so-called "data scraping" or "screen scraping" practices.  It discusses the practical aspects of data scraping (such as IP address banning or blocking as a practical remedy to prevent scraping), use of cease and desist letters, and use of properly-licensed web services application programming interfaces (API’s) as a way to control such practices.

The article does not provide any detail about underlying legal theories or court cases to prevent data scraping, such as those based on the Computer Fraud and Abuse Act (CFAA) or court cases concerning unfair competition.

Source: Should Web Giants Let Startups Use the Information They Have About You?, by Josh McHugh. 

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A New York Times article describes where the "niche neighborhoods" and industry clusters are located in Silicon Valley, with web design and online advertising centered in San Francisco, software in the Palo Alto area, and semiconductors, disk drives and and network equipment located in the south Bay near San Jose.

No mention of Cupertino, where my office is located, which has an eclectic mix of hardware, software and great design: Apple Computer, Symantec, and the U.S. office of open source database developer, MySQL, among others. 

Source:  A Social Order Shaped By Technology and Traffic, by Steve Lohr, The New York Times, December 20, 2007.  "Silicon Valley is a collection of remarkably local clusters based on industry niches, skills, school ties, traffic patterns, ethnic groups and even weekend sports teams."

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