Patent Troll Tracker Case Settled... So When Can Frenkel Start Blogging Again?

from the pretty-pretty-please... dept

We'd already noted that it seemed like an uphill battle for the lawyers in Eastern Texas to prove defamation claims against the "Patent Troll Tracker" Rick Frenkel, and last night the judge chose the high bar of an "actual malice" standard to determine if Frenkel was guilty of defamation. With such a high standard, it seemed exceedingly unlikely that the plaintiffs could win a case, so perhaps it's no surprise that the two sides agreed to settle the case before it went to the jury. While no one knows the details of the settlement, Frenkel and Cisco issued an "apology," and I'd guess not much more, if anything.

But, really, all that's besides the point. The real question is whether or not this means Frenkel will start blogging again. Some of his statements in the past (and having to go through this entire ridiculous process) suggest that he may not blog again. However, I'm hopeful that he'll get back to it, though obviously not anonymously any more. His work in highlighting some of the more nefarious actions of patent system abusers is still sorely missed.

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Patent Troll Tracker Trial: Defamation Or A Chance To Silence A Voice Some Patent Lawyers Didn't Like

from the which-do-you-think dept

As you hopefully recall, back in late 2007, a wonderful, informative and useful blog suddenly popped up on the scene, highlighting some of the worst abuses of the patent system by shell corporations suing companies that were actually innovating. This side of the patent dispute had never really received too much of a spotlight. While there were certainly complaints about "patent trolls" and about the fact that so many patent lawsuits were all being filed in eastern Texas, there was little attention actually being paid to who was behind these lawsuits and some of the sneakier tactics they used (such as a variety of shell companies to hide the true identity of who was behind the lawsuits). The anonymous Patent Troll Tracker blog did a really nice job turning a nice spotlight on some of these practices -- and that, of course, upset those who had made a nice little (actually, a huge multi-million dollar) business for themselves being involved in such lawsuits. They went crazy trying to dig up any and all information on who the anonymous blogger was, and eventually got him to reveal himself as Rick Frenkel, a Cisco lawyer, by filing a defamation lawsuit against him (Update: To clarify, Frenkel revealed himself prior to the actual defamation lawsuit being filed, but one of the lawyers had been trying to get Google to reveal the name, claiming that the posts were defamatory). The issue was a blog post where he noted that a lawsuit had been filed on October 15th, 2007, even though the patent in question had not been issued until October 16th. Yet, even though the original documents showed an October 15th date, the date later changed to the 16th, raising reasonable questions about what happened, how the original date showed up and how it was changed.

The lawyers who had filed the lawsuit claimed that this was defamation, in that the posts accused them of a crime, and claimed all sorts of damages. They added Cisco to the lawsuit and the trial finally began last week. Joe Mullin is doing an amazing job reporting live from the trial, and has detailed the opening statements, Rick Frenkel's testimony and the testimony of the lawyers accusing Frenkel of defamation.

The East Texas patent lawyers are trying to paint a picture of some conspiracy theory to make them look bad, but it's difficult to see how that's supported. So far, it appears that the factual points that Frenkel noted were accurate. The filing did originally have the earlier date on it, and the court clerk was later convinced to change it. That, alone, is pretty suspicious -- and a point worth raising, as Frenkel did. No one seems to be disputing that. Instead, they're making it out to be a big conspiracy theory against them, and are claiming all sorts of emotional damage and that they were accused of being criminals (which Frenkel did not do), but haven't shown how there was any real harm. Instead, in the lawyers' testimony, they admit that when they saw the blog post, their first thought was "Let's get this shut down." In other words, on the stand, they admit that their lawsuit wasn't about defamation or harm, but about them trying to stifle free speech.

Who knows how the trial will end up, but from the testimony so far, it certainly looks like the lawyers are admitting that the case was really about exposing and silencing Frenkel, rather than about any real "harm" done to them or their reputation.

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Will Technology Really Displace Business Travel This Time?

from the trendwatching dept

For many, many years, there's been talk about how business travel was living on borrowed time, because it was going to be replaced by things like videoconferencing that offered the same benefits at a cheaper price and with less hassle. But every time this sort of boom is predicted, it fails to materialize. After 9/11, video and web conferencing took off for about three months when travel dropped, but then use fell right back down. Several months ago, more such predictions were made with oil prices driving the cost of business travel through the roof, and now, the motivation is apparently the drive to cut costs. For instance, Cisco's CEO John Chambers says that by using the company's own communications technology, it's been able to slice its per-employee travel spending by more than half, and that it won't increase again, even after the recession. Of course, as the NYT notes, Chambers is making a look-how-we-eat-our-own-dog-food sales pitch. But it's worth wondering if a prolonged recession could finally give these travel-replacement technologies the boost they've long been looking for, and supplant business travel, rather than just add to it, as they have largely done thus far.

Carlo Longino is an expert at the Insight Community. To get insight and analysis from Carlo Longino and other experts on challenges your company faces, click here.

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Why Couldn't Cisco And FSF Come To An Agreement?

from the this-makes-no-sense dept

There's lots of talk in tech circles about the fact that the Free Software Foundation is now suing Cisco for copyright infringement, over Cisco's misuse of GPL'd code in its Linksys routers. What seems odd is that this got as far as it did. The issue with Linksys and its use of GPL'd code has been talked about for years, and it seems like there should have been a simple solution from the very beginning: Cisco/Linksys should have made the code available, as per the terms of the license. So why didn't they? Well, the details from the case suggest that, while Cisco did drag its feet in releasing the code, FSF then came back with additional demands, specifically:

• Cisco needed to appoint a "free software compliance officer."
• Cisco needed to try to inform all past customers of its failed compliance
• Cisco needed to pay FSF a chunk of money

It appears that it's these issues over which the two parties disagree and the lawsuit was filed. While I'm sympathetic to the FSF's position, this might be going a bit too far. Nothing in the GPL requires someone to set up a "compliance officer." Yes, due to Cisco's foot-dragging, you can see why FSF would ask for such a thing, but it's difficult to see how it should be required, or eventually involve a lawsuit. Also, it's unclear why Cisco should need to inform people. The folks who actually care are likely to hear about this anyway. Yes, Cisco violated the GPL, and yes, it was slow to get itself in compliance, but FSF seems to be demanding an awful lot in response.

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Because There Aren't Enough Anti-Piracy Lobbying Groups...

from the we've-got-another-one! dept

There are already a ton of lobbying/industry groups out there that push "anti-piracy" campaigns. You've got the RIAA, MPAA, BSA and ESA, each covering different industry segments. Then, of course, a year ago, a bunch of entertainment industry companies got together and put together the ridiculous Copyright Alliance, whose main mission in life seems to be to spew utterly false propaganda in favor of stronger copyrights at every turn. But, apparently, that just wasn't enough. So, word came out this week of a new anti-piracy lobbying "supergroup" with the innocuous sounding name "Arts+Labs." The big difference here? Well, the entertainment companies convinced a few tech companies to join up as well: AT&T, Microsoft and Cisco. AT&T, of course, has been drifting towards filtering its network -- and Cisco wants to sell filtering equipment. Microsoft, of course, has always been vocally against "piracy" even while quietly admitting how much piracy benefits the company.

This new group will be headed by Mike McCurry -- who you may remember as the former head of the anti-net neutrality group "Hands Off the Internet" who had a slight problem in that he couldn't stop lying, and simply ignored it when people called him on it. My favorite, of course, was his claim that Google didn't pay a dime for its bandwidth, and net neutrality was all about making others pay for Google's bandwidth usage. I challenged McCurry to swap his home broadband bill with Google's (which, according to McCurry was "not a dime") to which, Hands Off responded with deafening silence -- though, the group had no problem then lying about our positions on things when it suited the group (and, again, not responding when I asked them to correct their false statements about us).

So, expect a string of similar tactics from this group.

To begin with, the group appears to be positioning "piracy" as something similar to "viruses" or "spam," suggesting an equivalency that should lead to widespread use of filtering equipment. Of course, they seem to be missing the fact that piracy isn't about others with nefarious intent trying to harm or scam you -- but about people getting content that they want. But in Mike McCurry's "up is down, down is up" world, piracy is apparently something that consumers themselves need to be protected from:

"We want consumers to have exponentially greater opportunities to access creative content in a variety of formats, and with confidence that they are safe from viruses, hackers, malware, illegal file trafficking and other net pollution that puts them at risk."

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Tech Companies Team Up To Buy Up Patents To Keep Them Away From Others

from the this-won't-help dept

Google, Verizon, HP, Cisco and some others are apparently teaming up to put money towards buying patents to keep them out of the hands of patent hoarders who would turn around and sue them. This isn't a new concept, and has been tried before -- and it didn't help much. The problem is that many of the worst patent suits aren't from "known" patents, but someone claiming a patent on some minor feature that everyone thought was obvious. Also, this type of action only encourages more bad patent activities by adding another buyer to the market. Now, questionable patent holders will recognize that they can also just sell to this patent pool, rather than selling to some patent hoarding firm. This is one of those ideas that sounds good on paper, but will have little to no effect on slowing down or stopping bad patent lawsuits, and may actually encourage more of that activity.

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The Meaningless WiMax Patent Pool

from the somebody's-missing.... dept

There are some folks who believe that the solution to patent problems is to just have everyone who claims to have a patent on a certain technology throw it into a "patent pool" and then those who use the technology pay up a fee that gets divided up among pool members. It sounds nice, but in practice, it almost never works. Setting up a patent pool actually encourages the wrong behavior: it encourages plenty of other patent holders to claim they deserve to be a part of the pool, and if they're not included, they start suing like crazy. Also, it encourages companies to try to get any kind of patent that might get them included in a pool, leading to all sorts of crazy claims. It's the exact opposite of the type of behavior that should be encouraged.

So, don't read too much into the fact that a bunch of companies in the WiMax space have agreed to put together a patent pool under the amusingly inaccurately named "Open Patent Alliance." The companies involved, Cisco, Intel, Samsung, Sprint, Alcatel-Lucent, and Clearwire are all betting big on WiMax deployments, so they know it's in their best interest to get the licensing out of the way. But you'll notice that there are a lot of companies missing -- including Wi-LAN who has been claiming that it owns all the key patents over WiMax technology for years. The patent pool sounds nice, but it's certainly not going to diminish the number of patent lawsuits that arise over WiMax technology. If anything, it's just going to make all those other companies even angrier.

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Should We Be Concerned That The Military Will Use Counterfeit Routers Bought Off eBay?

from the it's-not-pretty dept

There was a story last week that got a lot of press about how the FBI discovered that the military was using a ton of counterfeit technology equipment, including thousands of fake Cisco routers. Dan Wallach has an excellent writeup looking at the security implications of what happened. From the description, it certainly doesn't sound like any of the equipment was found to include any kind of questionable technology for spying, but the point is that it would have been easy enough if someone had wanted to do so. Basically, the background is that while the government only buys equipment from approved vendors, those vendors can subcontract out the actual tech purchases to anyone. That leads to situations where (no joke) one subcontractor purchased a bunch of fake routers off of eBay and then resold them to the government via an authorized vendor. Or, try to follow the details of the case of the US Navy contracting with Lockheed Martin for equipment. Lockheed outsourced the deal to an unauthorized Cisco reseller as a subcontractor. That subcontractor turned to its own subcontractor who (yup, you guessed it) hired another subcontractor who shipped the equipment straight to the Navy. If you lost count, that's five layers deep, with most of those layers having no real oversight on what they did. You would think the government (and especially the military) would be a bit more careful in where it sourced its products from, but it certainly doesn't seem as though that's the case at all. Given all that, it's almost difficult to believe that compromised equipment hasn't been sold to the government at some point.

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More Lawyers Want To Get The Troll Tracker In Court

from the shutting-up-a-valuable-voice dept

Last month, we noted that Rick Frenkel, who for months had been the anonymous "Troll Tracker," was being sued for defamation for some of the posts on his blog. Now, it appears that another set of patent attorneys that Frenkel wrote about are trying to get him into court. This concerned the rather infamous case of a patent attorney at a large law firm who got his own patents, and then used them to sue companies who were clients of his own firm for patent infringement. The lawyer in question, Scott Harris, is represented by Niro Scavone, who was another target of Frenkel and whose named partner not only proudly claims that the term "patent troll" was based on him, but also put out a bounty to anyone who could identify the Troll Tracker.

So why is Frenkel being dragged into the Harris case? Apparently Harris and his lawyers are trying to build a big conspiracy theory around Frenkel. Because Frenkel worked at Cisco, and Harris' former employer (Fish & Richardson) did work for Cisco, Frenkel's blog posts really were just a big plot to help out Fish & Richardson while devaluing Harris' patents. That sounds pretty far-fetched by any stretch of the imagination, and would require an awful lot of proof. But, what's most likely really happening is that the folks that Frenkel helped shed some light on are now taking advantage of the situation to drag him into court whenever and however possible.

This is quite tragic for a variety of reasons. No matter what one thinks of Frenkel's anonymity while working for Cisco, you cannot deny that he brought to light many of the shadier tactics being used by patent hoarding firms, often hiding behind shell corporation names and suing many companies at once. Since Frenkel stopped blogging, many of those stories are remaining underground. No one has stepped into the void, unfortunately, perhaps afraid that they, too, will become targets in various lawsuits. The information that Frenkel was bringing to light (while potentially biased by his position at Cisco) did help point a light at some questionable activities that had been hidden for far too long.

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Troll Tracker Sued For Defamatation By Patent Attorneys In East Texas

from the you-knew-that-was-coming... dept

Just this morning we were lamenting the fact that the formerly anonymous Patent Troll Tracker had shut down his blog, but now we know why. It appears that two patent attorneys in East Texas have sued him and Cisco for defamation. One of the attorneys happens to also be the son of the judge who helped make Marshall, Texas famous as a favorite for patent holders. The details on the case suggest that this lawsuit may have been the reason that Rick Frenkel outed himself, as it was actually filed back in November and used as a way to unmask the Troll Tracker.

The defamation claim is based on a post that Frenkel put up back in October, which we wrote about. It involved the fact that the Texas lawyers in question had filed a patent lawsuit against Cisco in Texas, the day before the actual patent was issued (which you're not supposed to do). In response, Cisco (perhaps Frenkel himself) had quickly filed for a declaratory judgment in Connecticut. Later on, the date on the original filing in Texas was changed, a fact that Frenkel found quite questionable. No matter what, that case was eventually dismissed entirely -- but the lawyers in question are still suing both him and Cisco for defamation. Cisco, I'd imagine, isn't thrilled about the whole situation, but one would hope execs there are reasonable enough not to punish Frenkel for this. It would be great if lawyers could weigh in on the defamation claim. The links above have most of the text being used in the defamation claim, and I'm struggling to figure out what's actually defamatory about it. There doesn't seem to be anything that would count as defamation at all. Even if there is some defamation in there somewhere, it's also difficult to see how Cisco could be found responsible for the speech. Even though Frenkel worked at Cisco, he clearly did not post the story as a representative of Cisco, and was quite careful to point to other sources that had reported the news first (i.e., not using internal Cisco info). Anyone know if Texas has a SLAPP law in place?

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Can Someone Explain Why Google's Free Voicemail Offer Is Newsworthy?

from the it's-been-done,-it's-free-for-anyone-already dept

Google got a bunch of press earlier this week for giving out "free voicemail accounts" to the homeless. I tried to ignore the story, but it keeps getting written about, and it seemed like there were a few points worth making. First of all, this concept isn't new. Almost five years ago, we wrote about Cisco doing the same thing. There's a whole organization, called Community Voicemail, that has done this for years. But, an even more important point: Google's GrandCentral service is already free. For anyone. Whether you have a home or not. So, offering it for free to the homeless isn't anything special. In fact, it would really only seem newsworthy if, for some reason, the company were not offering accounts to the homeless. So, yes, basically, this is a story about how Google is offering its already free service to the homeless, even though the homeless have already had free voicemail offerings for years. Next thing you know, we're going to see a press release about how the homeless can now use search engines for free too... Plus, I hear that the homeless can get free Gmail accounts!

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SEC Allows Market-Based Options Expensing... Though Questions Linger

from the is-the-market-accurate? dept

A few years ago, there was a big debate over whether or not companies should be forced to expense stock options. Most companies did not count stock option grants as an "expense" on the income statement, even though it could impact the company's financial situation. Some argued that this gave companies a way to hide compensation -- though, that was somewhat misleading. Most of the necessary information was still in the footnotes -- it just didn't play directly into the numbers. There was some speculation that if forced to expense stock options, companies would stop using them as an incentive and it would hurt the stock of many companies as it would be harder to appear profitable (more expenses dragging down the net income number). Of course, this was silly also. Since the number of stock option grants didn't have any real immediate impact on cash, it wasn't impacting the actual cash position of the company. It seemed likely that the market had already calculated in the "expense" of options. Indeed, after FASB decided that companies should expense options, the impending doom many predicted failed to appear.

Of course, that doesn't mean there still aren't question about how you expense stock options as there's no really good way to know how much they're worth. The standard method for calculating the price of an option, the Black-Scholes method, isn't really accurate for high growth companies -- but it's what is most commonly used. However, there have been some experiments to more accurately price options. Cisco kicked off the debate on this topic a couple years ago by proposing derivatives based on the options that could be publicly traded. Then, Cisco could expense the actual options based on the market price of the derivatives. The SEC rejected this plan, but it appeared that the rejection was mainly on some finer technical points. When another company, Zions Bancorp, proposed a very similar model, the SEC seemed much more willing to along with it. The latest is that the SEC has now approved Zions' plan for options expensing based on publicly traded derivatives. The story at Gigaom provides some of the reasons why this might not actually be a very accurate way of expensing options -- but it seems a lot more accurate than something like Black-Scholes. Also, again, the market has most likely already priced in the real impact of these numbers games into the stock price, so it shouldn't have any real impact. Given the approval, though, expect many other high growth companies to jump on board with similar plans, as it's likely to reduce the "expense" associated with options.

In the meantime, we're still surprised that there hasn't been more discussion about Google's experiment with actually allowing employees with stock options to sell the options themselves to institutional traders. That seems like it could be an even more accurate way of pricing the options, since there will be a real market for them. However, it still seems like it's being used merely as an employee perk, rather than a method for expensing options.

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Before Filing Patent Infringement Lawsuit, Please Make Sure The Patent In Question Has Been Granted

from the premature-litigation dept

Apparently some patent holders simply can't wait to get their lawsuits going. A shell company that appears to not do anything went and sued Cisco on Tuesday of this week for violating its patent. There was just one little problem. The patent wasn't granted until Wednesday, so the case was quickly dismissed. Of course, the company refiled with a new date, but it's still pretty amusing that the patent holder was so anxious to get the lawsuit going (and shows that the company isn't particularly interested in trying to license the technology -- suing is apparently much more lucrative). Perhaps they want to make sure the lawsuit gets in before the Supreme Court (or Congress) crack down on ridiculous patent abuse.

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More Tech Firms Stung By Weak Financial Sector

from the ouch dept

Because a company can only be as strong as its customers, there's no way for tech companies to be completely insulated from broader economic events. Companies with a lot of exposure on Wall St. are going to be particularly susceptible to a slowdown, as some companies, like Cisco, have already stated that they're seeing weakness in this market. The latest to sound a similar warning is Tibco, a software provider with a lot of customers in finance. The firm described the financial sector as "notably weak" blaming it for an overall earnings shortfall. It should be noted that Tibco hasn't had a particularly stellar few years, so the company was already struggling a bit. Still, what's affecting Tibco is likely to affect a host of other related companies. Right now, there's a lot of concern about the health of the financial sector, but if troubles continue to persist, then the malaise is likely to spread elsewhere, potentially leading to spending slowdowns in other sectors.

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Widening Credit Crunch Slowly Hitting Tech Vendors

from the bad-credit dept

By most accounts the tech industry continues to do well, but the rest of the economy is growing increasingly jittery about the long-term impact of the mortgage fallout. Of course, it's silly to assume that tech is an island, unaffected by the storms around it. Already, a number of firms have felt the effects of a tighter credit market, as it has affected their ability to do stock buybacks and M&A. And, of course, a company is only as strong as its customers, so if buyers of tech get nervous, this will start to affect corporate capital spending. That was the concern among analysts on yesterday's quarterly earnings call with Cisco. Although the company reported strong earnings, it did acknowledge weakness in the automotive and financial sectors, which makes sense given the turmoil in both of those industries. If things continue to spread to other sectors, and there's evidence that they will, more tech firms are likely to suffer from customer weakness.

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Tech Industry Forced To Care About Interest Rates

from the where-credit-is-due dept

Historically, major tech firms have shunned debt financing, but in recent years, this has changed somewhat. Highly acquisitive companies like Cisco and Oracle have started to use some debt to finance their purchases. As with the increasing presence of private equity in the tech industry, low interest rates have helped fuel this trend. But the low interest rate environment appears to be coming to an end, and its effects are already being felt in the industry. Yesterday, online travel site Expedia announced that it would suspend a planned share buyback program because it couldn't acquire the necessary capital to finance the purchases. Meanwhile, a few non-tech private equity deals are hitting the skids for similar reasons. In the past, industry, might have ignored these economic developments, but it's likely that a number of companies, particularly mature ones, are going to feel a pinch.

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