When last we tuned in to the ongoing drama that is the patent-infringement lawsuit that Yahoo aimed at Facebook, Yahoo had a CEO — Scott Thompson — who was full steam ahead in pressing the controversial legal action.

Now, multiple sources said, the Silicon Valley Internet giant has got a new one — interim CEO Ross Levinsohn — who is already reaching out to top execs at the social networking giant in hopes of finding a settlement.

Still, until peace reigns in the digital kingdom, the legal wrangling grinds on and, today, Facebook has answered Yahoo’s most recent claim of “inequitable conduct” because of false statement by moving to dismiss it.

Yahoo had called many of Facebook’s counterclaims — using some of its own newly obtained patents — “tainted,” and said Facebook’s actions were “retaliatory.”

Not so, answered Facebook lawyers today, claiming that Yahoo did not do its homework, and also that Yahoo had “no coherent theory or facts suggesting deceptive intent.”

Among other issues, Facebook alleges in the claim that Yahoo did not check if Facebook had filed an inventor affidavit with the Patent Office, related to two of the patents. Except, um, it did.

“Yahoo claims that two of the ten patents Facebook asserts are unenforceable due to inequitable conduct. But all of these allegations are unsupportable and/or deficient,” said the Facebook filing, which is embedded below. “First, Yahoo claims these patents do not list Joseph Liauw as an inventor and that there is no sworn statement by Mr. Liauw in the Patent Office records explaining his omission. Yahoo’s claim is demonstrably false. Yahoo made this allegation without actually reviewing the publically available Patent Office records, because these records include the exact sworn statement from Mr. Liauw Yahoo claims is missing.”

What? Yahoo not good at checking? Hmm … that sounds familiar!

It’s interesting that Facebook struck on the eve of its IPO on Friday, perhaps making it clear to investors that it was not going to pay up big bucks to Yahoo in what it clearly considers a patent shakedown.

I have a call into Yahoo PR for a comment, but have not heard back as yet.

Here is the latest filing, which is getting more legally confusing by the millisecond (I am now totally glad I decided not to go to law school, so make it stop, Ross!):

FINAL

And here is more affidavit stuff:

FH-60104311

Palo Alto, Calif.-based Nest, maker of a “smart” thermostat and target of a patent-infringement lawsuit filed by industrial giant Honeywell, has submitted a formal response to Honeywell’s claims.

The start-up has also brought Richard “Chip” Lutton, a 10-year Apple Inc. veteran who managed the company’s patent portfolio, on board as vice president and general counsel.

In Honeywell’s suit against Nest, first filed in a U.S. district court in Minnesota on Feb. 6, Honeywell, maker of the iconic round thermostat, identified seven patents it believes Nest Labs infringes on with its Nest Learning Thermostat, a digital thermostat that came to market late last year. (You can read more about Honeywell’s complaint here.)

And now Nest has fired back.

“Nest does not use the Honeywell patents; but even if the patents covered what Honeywell alleges, they are hopelessly invalid. They are retreads — already invented by others years before …” the response reads.

Nest goes on to point out that specific patents — around remotely controlling temperature set-point marks, displaying temperature set points on an LCD inside a rotating ring, and presenting a user of an HVAC controller with “complete grammatical sentences” — are either indistinguishable from earlier Honeywell patents or aren’t worthy of a patent.

Chip Lutton, Nest's new vice president and general counsel.

The start-up does admit it was using Honeywell thermostats as research in its labs, stating, “Nest Labs admits that some Honeywell thermostats and/or boxes for Honeywell thermostats are shown in the photograph.” In the original filing, Honeywell references an AllThingsD video from last year showing that Nest Labs was examining “numerous” Honeywell thermostats in its research, indicating that Nest was aware of Honeywell’s contributions to the thermostat industry.

Despite the fact that Honeywell is an “industrial behemoth” with revenues that exceeded $36 billion in 2011, Nest says the company hasn’t innovated. “That ‘blah-looking controller’ on the market today is very often from Honeywell, which has long dominated the thermostat market, but has yet to generate a device that offers ordinary consumers as much as the Nest Learning Thermostat,” Nest claims.

Through the nature of its response and by bringing in Lutton, Nest doesn’t seem to be shying away from a battle with Honeywell, despite the David-and-Goliath nature of the fight.

Lutton’s departure from Apple was first reported last July, just as Apple was filing another complaint with the U.S. International Trade Commission, seeking a ban on the import of electronics and software made by rival HTC. That, of course, was just one complaint amid an ever-expanding web of patent lawsuits flying between Apple, Samsung, Motorola and Nokia, to name a few.

According to the Reuters report, Lutton is well-known in IP circles, and was once mentioned as a possible nominee for the Federal Circuit, which hears patent appeals.

According to sources close to the situation, Yahoo’s massive round of layoffs — which is likely to impact up to 2,000 employees — is just the tip of the proverbial iceberg that will hit the storied Silicon Valley Internet giant in the months to come.

Sources said Yahoo is currently planning to announce the cuts in staff in the early morning, just as the markets open. That could change, of course, but the cuts will definitely occur within the next two days.

The layoffs, which will touch all units of the company, are expected to hit hardest in the product division, which is headed by Blake Irving.

But the fate of two key parts of the soon-to-be-blown-apart unit — Yahoo’s advertising technology businesses, Right Media and APT, and its search business — is still being contemplated, as I have previously reported. Possible scenarios include a sale or a joint venture transaction for both, which employ thousands of Yahoo staffers.

Also set to be hard hit are Yahoo’s local businesses, as well as its marketing and research divisions. While still sustaining losses, its media units will not be as badly impacted. And it’s not clear how many employee terminations will be aimed at the company’s general and administrative staff.

The layoffs tomorrow are not the end of the road in cutting costs. Along with the likely shedding of its ad tech and search businesses, Yahoo leadership is also looking at future cuts as it evaluates current businesses, which could lop even more employees off its roster.

That said, Yahoo will be “doubling down” in some older and new arenas, so there would also be simultaneous hiring in the months ahead.

But not tomorrow, which will be one of the tougher days in Yahoo’s long history of periodic layoffs. Newly installed CEO Scott Thompson had told employees in memos and also in recent meetings that “real change” was coming to the company.

That is indeed the case, which is causing massive strain throughout the company, which now employs over 14,000 and has many thousands more hired as contractors.

Along with the trauma of the layoffs, Yahoo is also facing two other tense face-offs externally. In one, activist shareholder Third Point is waging a proxy fight for board seats and stepped up the public pressure this week; and Facebook struck back hard at Yahoo’s patent lawsuit with a counter-claim of its own.

After the layoffs tomorrow, sources say Yahoo will be announcing a new organization by next week, which will create several major, soup-to-nuts units at the company. Thompson, along with consultants he has hired from the Boston Consulting Group, are making what appear to be profound changes.

Sources said Yahoo will most likely be comprised of a global media division, one that encompasses Yahoo’s consumer products businesses and one focused on global and regional sales. There could also be a small organization of about 50 employees aimed at future innovation.

Americas head Ross Levinsohn is pegged to run the media arm, which will also include its leads/commerce businesses, such as autos; Shashi Seth — who now heads search and marketplaces — is likely to run consumer products, which will include Yahoo’s communications and search businesses.

Yahoo has already been conducting a search for a new worldwide sales head, who will also be boss of the U.S., Asia and Europe, Middle East and Africa sales regions. Rich Riley, who was recently running EMEA, is reportedly the pick for U.S. sales; Rose Tsou, who is running Asia, would presumably stay put; Yahoo is looking for an EMEA sales lead.

Some current operational execs — such as service engineering and ops head David Dibble, CFO Tim Morse, and top lawyer Mike Callahan — are likely to continue to operate as before.

One big question mark is how Chief Product Officer Irving fits in the possible new org, in which the new units get control of their product development. Irving has reportedly had several incoming job offers, although it is not clear if he has responded to that interest.

Let’s hope that Yahoos who will be let go tomorrow find themselves with many new employment choices after the ax falls.

Here are the actual 10 patents that Facebook is using in its just-filed counter-claim against Yahoo’s patent infringement lawsuit.

Several are held by Facebook CEO and co-founder Mark Zuckerberg, as well as other employees of the social networking giant, in areas such as personalized news feeds, tagging digital media and headline posting algorithms.

The patent ball, as irritating lawyers say, is in Yahoo’s court.

Enjoy:

Exhibit A – US7827208

Exhibit B – US7945653

Exhibit C – US6288717

Exhibit D – US6216133

Exhibit E – US6411949

Exhibit F – US6236978

Exhibit G – US7603331

Exhibit H – US8103611

Exhibit I – US8005896

Exhibit J- US8150913

Yahoo is preparing to begin layoffs of what could be thousands of employees starting next week, according to multiple sources, and is then expected to announce a new restructuring of the company the week after.

The swirl at the Silicon Valley Internet giant has grown more intense this week, as new CEO Scott Thompson has brought in top management for a series of meetings both Tuesday and Wednesday to outline the plans.

What has emerged — although sources noted that Thompson and others communicating the pending changes said nothing was yet set in stone — is the picture of a drastically slimmed-down organization with a focus on media, advertising and new but unclear “future” initiatives.

First the layoffs: Sources said the cuts will be deep and mostly aimed at the product, research and marketing units of Yahoo, which are likely to take place Wednesday. The ultimate goal, said multiple sources, is to cut many thousands from Yahoo’s staff of close to 14,000 employees, which is actually much larger, due to contract workers not officially in its roster.

The entire cut will not take place at once, said sources, since Thompson and others are still trying to figure out how to dispense with its ad technology org and, potentially, its search business. He has been in discussions with both Microsoft and Google about this, although there are other possibilities, too.

Both these parts of Yahoo together have about 2,500 staffers, whose fate is not yet sorted out.

Also still baking is the new structure, although sources said it is most likely to be comprised of a global media division, one that encompasses Yahoo’s communications and search businesses, and ones focused on global and also regional sales. There could also be a small organization of about 50 aimed at future innovation.

Americas head Ross Levinsohn is the likeliest exec to run the media arm, while Shashi Seth — who now heads search and marketplaces — would be the obvious candidate for the the communications/search one.

Thompson has already been conducting a search for a new worldwide sales head, although one possible internal exec for the job could be Rich Riley, who was recently running Yahoo’s Europe, Africa and Middle East region.

It is not clear how Chief Product Officer Blake Irving fits in the possible new org, since much of the development could now move to the decentralized units.

Some current operational execs — such as service engineering and ops head David Dibble, CFO Tim Morse, and top lawyer Mike Callahan — are likely to continue to operate as before.

Thompson, along with consultants he has hired from the Boston Consulting Group, presented the possible plan in front of Yahoo’s senior execs on Tuesday. That was followed by more meetings with a wider range of top management yesterday, although Thompson was not as highly specific in these meetings.

In fact, according to a half-dozen sources, Thompson apparently grew somewhat testy in one of the gatherings, when asked if there was a strategy he was going to announce in more detail to the group.

(Dear Scott, these are very talented employees who love the company and who have been through the wringer and it’s not their fault that leadership has failed them, so it might be a good idea to treat them with as much respect as possible right now.)

More to come, obviously.

Persistence — even if it is the whiny, likely undeserved, lunkheaded legal version of it — certainly pays off.

But you have to marvel at the bizarre karma going on, given that my favorite matching pair of digital ottomans, Cameron and Tyler Winklevoss, are poised to collect up to $300 million from the shares they got in a settlement with Facebook and its CEO and co-founder Mark Zuckerberg over the founding of the social networking giant.

That’s right, folks, the rich do get richer, especially if they pursue their case well past the point of shame.

It’s not clear how many of the 1.2 million shares the Winklevii still have from the settlement they got in 2008, since they wrangled with their own lawyers over it, and the stock has also split.

But let’s assume the Olympic rowers kept a chunk, which will be worth a lot of gold-plated oars if Facebook reaches the upward of $80 billion valuation it is expected to in its upcoming initial public offering.

Facebook filed its long-expected IPO earlier this week.

And here’s a lovely tweet about the IPO from Cameron Winklevoss, who is looking very fetching on his Twitter page, even if it is perhaps about time to lose the rower meme image thing, given he’s on the closer side of 30 years old.

We r excited 4the #FacebookIPO + wish the company + all involved the very best,an amazing accomplishment! cc @tylerwinklevoss @DivyaNarendra

— Cameron Winklevoss (@winklevoss) February 2, 2012

He sent it to his twin brother, Tyler, and also to Divya Narendra, their other partner in the ill-fated ConnectU service.

Without going into all the well-gone-over deets (go see the Aaron Sorkin-penned movie and believe about 26 percent of it), ConnectU was the Harvard University dating site that Zuckerberg allegedly submarined in order to start Facebook.

Well, presumably water under bridge — unless you are talking about the perpetually disgruntled Winklevii.

At the time they finally dropped their seven-year fraud lawsuit this past summer, they then reopened to a different one then pending.

“The Social Network 2: The Overly Compensated Vii Strike Back,” anyone?

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Airbnb, the San Francisco online vacation rentals start-up, said it has hired a key former Yahoo lawyer, Belinda Johnson, as its new general counsel.

The legal issues at Airbnb are both interesting and challenging, all around the new arena of global sharing or, as the company calls it, “collaborative consumption.”

Johnson is one of several recent major hires by Airbnb, which has been adding more seasoned execs to its team of late. Other recent key Airbnb hires include Monroe Labouisse as head of trust and safety and customer service, and Vivek Wagle as head of content.

Johnson left Yahoo several months ago as its deputy general counsel, after a long tenure there working on a wide variety of issues.

Among other things, she oversaw legal strategy for Yahoo’s global products, and worked on deals like its search and advertising alliance with Microsoft. Johnson came to Yahoo from its Web 1.0 acquisition of Broadcast.com, where she had served as general counsel.

She attended both college and law school at the University of Texas.

Microsoft–furious over a recent talent grab of its top advertising exec by Facebook–has been considering a wide range of options, including legal action to block the move, according to sources close to the situation.

Lawyer at both companies have been in back-and-forth talks in recent days after the hiring of Microsoft’s global ad sales head Carolyn Everson by the Silicon Valley social networking powerhouse to be its VP of global sales.

Among the more likely solutions being discussed: Barring Everson–a longtime ad sales exec who came to Microsoft from MTV Networks–from using any strategic information she learned at the company and also from contacting certain ad clients on behalf of Facebook for a certain period of time.

While a legal action to stop her from actually taking the position is the most serious option, it is certainly not without precedent for Microsoft. The company recently got a temporary restraining order to block one of its top government relations execs, Matt Miszewski, from working at Salesforce.com, pointing to non-compete and confidentiality contracts.

Whatever happens, it is clear the Everson hiring has infuriated Microsoft execs, especially CEO Steve Ballmer, since the company regards Facebook as a close partner. Microsoft is also a longtime investor in Facebook.

While considering a temporary restraining order against Everson in this kind of situation–since it is essentially the same job–is standard operating procedure for any company, several sources said tensions are higher than usual.

“This is just tone deaf on Facebook’s part not to think this would not be a problem,” said one person.

One particularly irksome aspect–top Facebook execs did not call Ballmer before news of the appointment leaked out to assuage the situation.

Facebook COO Sheryl Sandberg did release a statement when BoomTown broke news of the move in mid-February, in an attempt to make nice.

“Microsoft was one of our earliest partners and is still one of our most valued,” she said, in part. “We look forward to continuing to expand our relationship with them.”

Her dulcet words have apparently not worked.

In fact, the talent raid came as a surprise to many at Microsoft, especially since Everson (pictured here) had been hired in June after a long search and had become a high-profile presence at internal and external Microsoft events.

That included organizing the splashy “Imagine 2011, Microsoft Advertising’s Marketing Leadership Summit.” The event is set to take place at the end of March at the software giant’s Redmond, Wa. HQ and will include an evening concert by the band Train.

Now she will be doing such things for Facebook, where Everson will be replacing longtime and well-regarded ad exec Mike Murphy, who left the Palo Alto, Calif., company last fall. She will report to former Googler David Fischer, VP of Advertising and Global Operations.

Having a top exec who is amenable to and well known by Madison Avenue is key for Facebook as it ramps up its business, in anticipation of an IPO next year.

Despite being private, Facebook has recently been valued at between $50 and $60 billion by investors, who have been eagerly buying up shares of the company on secondary markets.

Under Murphy and Fischer, ad sales have been doing well already. Facebook’s share of online display advertising has more than quadrupled, from about three percent to almost 14 percent of the nearly $9 billion U.S. market, according to a recent survey.

In growing so quickly, Facebook has grabbed ad revenue–reportedly $2 billion last year–from old online powerhouses, especially Yahoo, Microsoft and AOL, and is also in a big fight with Google over premium ad sales.

Facebook’s surging usage and engagement are the reasons for the increased interest from advertisers, as well as its global growth in both market share and mindshare of consumers.

The opportunity at Facebook is clearly a big–and probably irresistible–move for the dynamic Everson, who has mostly worked in the mainstream media for much of her career.

Still, while movement of execs among top tech companies is not uncommon, there has been a lot less from Microsoft to Facebook.

Instead, Facebook has been most aggressive in its efforts to attract talent from Google.

No longer. In fact, the week before Facebook grabbed Everson, it also hired an up-and-coming exec, Chris Daniels, GM of Bing Mobile Product Management, to be its director of business development.

Still, there is some hiring war history between the companies. In late 2008, Microsoft’s Ballmer managed to lure former Yahoo exec Qi Lu to run its Online Services Division, several sources at both companies said, after he had told Facebook he would work there as its engineering lead. Lu had also been heavily recruited by Google.

Eventually, that was water under the bridge, which is what Facebook is hoping will happen with Microsoft over Everson.

Also important in the weighing of options at Microsoft is the obvious importance of keeping up good relations with Facebook. It is an important partnership, especially for its Bing search business, as an advantage over Google.

“Everyone is hoping to resolve this amicably,” said one person close to the situation. “There has been some damage to the relationship for sure, but the question is whether Microsoft wants to do something that would escalate that damage.”

Not surprisingly, both Facebook and Microsoft declined to comment on the fracas.

The firm’s clients include several prominent Internet companies, including Yahoo, social gaming giant Zynga, Myspace (a unit of News Corp., parent of this Web site) and Cablevision.

Granick gained a reputation as a lawyer willing to defend accused computer hackers. Her clients have included the hacker-turned-journalist Kevin Poulsen. I wrote this profile of her for Forbes.com in 2000, describing her as the person you might call if your day begins with an FBI raid.

About the same time, she gave a heavily attended talk on “Hacking and the Law” at the DEF CON 8 hacker conference in Las Vegas. She went on to become executive director at Stanford University’s Center for Internet and Society. She also taught at Stanford.

I caught up with her yesterday, and she said part of her role will be to help establish ZwillGen’s office in San Francisco. The firm has been adding legal talent at a rapid clip. In June it added three lawyers: Elizabeth Banker, a former associate general counsel at Yahoo; Bart Huff, a former assistant United States attorney in Chicago with a history of prosecuting computer crime; and Leota Bates, a former associate at Perkins Coie in Washington, D.C. Granick is the firm’s eighth attorney.

Will she still have time to take calls from hackers staring down FBI agents? “I think I’ll still be able to do that,” she said. “They wanted me because of my experience and because of who I’ve represented.”

According to sources close to the situation, Google has offered $5.3 billion for Groupon, in what would be its largest acquisition yet, if completed.

Sources said the deal for the Chicago-based social buying site seems likely to be struck, even as early as tomorrow, although it certainly could fall apart right up to the end.

But, if done, it will move the search giant instantly to the top spot in local commerce online and give it huge troves of data about consumer buying habits and merchant information across the globe.

Combined with its pending $700 million acquisition of ITA Software, the travel data firm, that should freak out regulators worldwide and could be considered Google’s own version of a jobs plan for antitrust lawyers.

That said, it is a killer move for Google–despite the high price–given it has long tried to enter the local advertising space, with decidedly mixed results.

With its more than $33 billion in cash and strong stock, it had previously tried to buy local reviews site Yelp, in a deal that fell apart for reasons that are still unclear.

In contrast, Groupon, founded in 2008, has taken off like a Roman candle and dominates the huge market for social shopping and discounting.

While the $6 billion Google is considering paying seems high, Groupon’s fast-growing revenue and profitability make its multiples less daunting, said those familiar with the matter.

It will certainly be a big payoff for Groupon’s investors, including Silicon Valley’s Accel Partners, as well as Battery Ventures, New Enterprise Associates and Russia’s DST Global.

Groupon has gleaned about $170 million in venture funding from them, most of which it has not needed.

That’s because it has reportedly attracted upward of $50 million in monthly revenue.

It has done this by offering “daily deals”–getting a massive discount from local retailers in return for delivering customers via marketing via email and on social networks, especially Facebook and Twitter.

Typically, local merchants rely on less effective newspaper circulars or paper couponing.

In what will certainly be one of the deal’s ironies, Google could own a start-up that is largely powered by rival Facebook’s massive skein of social networking connections.

Facebook, of course, recently introduced its own Facebook Deals offering.

BoomTown first wrote about the deal discussions between Groupon and Google two weeks ago, noting the price would be well above the $2 billion to $3 billion offered by Yahoo.

That interest from Yahoo, which was first to sniff around the fast-growing social buying site, was first reported here too–mostly because I apparently like to stalk Groupon CEO and Justin Bieber lookalike Andrew Mason.

(And I will personally be fascinated to see how he’ll mesh with Marissa Mayer, the former search experience head who is now leading local for Google.)

The New York Times–which does not ever seem able to give credit, as All Things Digital and other blogs always do happily and without fuss–is also reporting a $6 billion price tag for Groupon.

While we all await the outcome of this potential blockbuster of a deal, here is a video interview I did with Mason this summer in Vancouver, where I asked him specifically about Google’s interest (actually, I suggested he mug Google co-founder Larry Page for dough).

Note the Bieber haircut:

Please see this disclosure related to me and Google.

]]> http://allthingsd.com/20101129/googles-groupon-offer-5-3-billion-with-700-million-earnout/feed/ 30 http://allthingsd.com/20101129/microsofts-plan-b-to-make-money-in-phones-patents/ http://allthingsd.com/20101129/microsofts-plan-b-to-make-money-in-phones-patents/#comments Tue, 30 Nov 2010 05:37:39 +0000 Ina Fried http://mobilized.allthingsd.com/?p=90 Although Microsoft is still hoping that Windows Phone 7 proves to be a hit, the company doesn’t see its success as the only way to make a profit from all those millions it has poured into mobile phone technology.

At a dinner with reporters on Monday night, Microsoft top lawyer Brad Smith said that the company also sees a chance to make money from its vast pool of smartphone-related patents. He wouldn’t quantify the revenue opportunity, but conceded it doesn’t expect to be able to get as much per phone as it does when someone uses its software.

That said, the overall market opportunity from patents might still be bigger, especially when you consider Microsoft’s paltry share of the phone market today.

Smith declined to put a total dollar figure on the patent opportunity or say how much it might equate to on a per-phone basis.

“We would be hard-pressed to get more for patents than we get for software,” he said. However, Smith also agreed that the patent revenue could eventually be vastly larger than what Microsoft has made to date by licensing Windows Mobile and now Windows Phone 7.

“We’d still rather sell software,” he said, but added, “either way, it gives us an opportunity to recoup [our] costs.”

At the moment, there is chaos in the phone patent arena, with Apple suing HTC, Microsoft suing Motorola and Oracle suing Google, to list just a partial court docket. However, Smith said he would not be at all surprised to see things shake out in the next couple of years into a manageable patent licensing arrangement, not unlike the one that exists with the radio portion of a cellphone today.

About $20 per modern phone goes to patents, with the lion’s share of that going to Qualcomm. On the smartphone side, Smith said Microsoft and Apple hold the lion’s share of the intellectual property.

“I think there is a good chance the industry will work through the patent issues over the next several years,” he said.

While Smith said he can’t speak for Apple, he said that Microsoft is actively interested in licensing its patents, noting the company’s agreement with Taiwanese cellphone maker HTC (a company that makes Android devices, as well as those running Microsoft’s mobile operating system).

“By entering into an agreement with HTC, we effectively signaled we are open for business when it comes to licensing,” Smith said.

Smith noted that Motorola and HTC, together, account for most of the Android market. This is probably the most fertile patent ground for Microsoft, since Apple and Microsoft have a patent-swap deal that covers some technologies and also both hold a fair bit of intellectual property in the area.

The generally affable Smith was not all sunshine and rainbows, however: “If we can’t get a reasonable royalty then we will seek an injunction.”

Of course, even if the monetary impact from licensing patents for phones could rival that of selling software, it lacks the strategic benefits Microsoft gets from having its operating system on phones.

Windows Phone 7 devices carry not only Microsoft’s operating system, but also versions of Office, Bing, Zune and Xbox Live.

The computing world is increasingly shifting to one in which key software runs not just on computers, but on a panoply of mobile devices as well. Microsoft itself has talked about the notion of “three screens and a cloud,” with the phone being one of those all-important three screens.

Smith says he expects the phone patent spat to spill over into the tablet arena as well, with similar issues at stake, although he expects any royalty amount to be higher for tablets than it is for smartphones.

]]> http://allthingsd.com/20101129/microsofts-plan-b-to-make-money-in-phones-patents/feed/ 0 http://allthingsd.com/20101118/swedish-court-issues-arrest-warrant-for-wikileaks-assange-in-rape-case/ http://allthingsd.com/20101118/swedish-court-issues-arrest-warrant-for-wikileaks-assange-in-rape-case/#comments Thu, 18 Nov 2010 23:55:08 +0000 Beth Callaghan http://voices.allthingsd.com/?p=32826 WikiLeaks founder Julian Assange, who faces charges of rape and sexual molestation in Sweden, is the subject of an international search, after a Swedish court issued an arrest warrant today. Assange has yet to be questioned as part of the investigation, although he denies all of the charges. According to his lawyer, Bjoern Hurtig, “We haven’t been able to settle on a date for the interrogation and apparently the prosecutor ran out of patience.”

]]> http://allthingsd.com/20101118/swedish-court-issues-arrest-warrant-for-wikileaks-assange-in-rape-case/feed/ 0 http://allthingsd.com/20101002/would-that-the-real-mark-zuckerberg-talked-as-much-as-the-facebook-movie-mark-zuckerberg/ http://allthingsd.com/20101002/would-that-the-real-mark-zuckerberg-talked-as-much-as-the-facebook-movie-mark-zuckerberg/#comments Sat, 02 Oct 2010 23:01:37 +0000 Kara Swisher http://kara.allthingsd.com/?p=34730

Mark Pincus can sure talk a blue streak. Mark Cuban can easily be classified as a chatterbox, both online and off. And Marc Andreessen certainly knows how to keep up his end of the conversation.

In other words, the pantheon of famous digital entrepreneurs is full of blabby Marks.

But Mark Zuckerberg, not so much.

So, when watching “The Social Network”–the movie about the rocky origins of Facebook–a person who has known the co-founder and CEO of the social networking powerhouse even longer than BoomTown has leaned over and said, “The Mark in this movie has said more in 15 minutes than I have heard the real Mark say in the first few years I knew him.”

And how.

If you want to know, although critics are raving over it, it’s like a very talky, very geeky version of “The West Wing.”

The Mark Zuckerberg in the movie, as penned by master wordsmith Aaron Sorkin, is able to parry with top-notch lawyers and deliver perfectly crafted rejoinders one after the next to friend and foe alike.

He can conduct several conversation streams at once–so much so that a soon-to-be-ex-girlfriend remarks that talking to him was like “being on a StairMaster.”

I’d agree with that statement about the real Mark, except that the effort is quite the opposite of being dazzled by wild verbal gymnastics.

In fact, unlike a lot of Internet moguls, it has often been a struggle to get him to be fully articulate about the company, due mostly to a more taciturn, awkward and incredibly precise way of speaking.

When Zuckerberg famously asked Leslie Stahl of “60 Minutes” in a television interview–”Was that a question?”–right after she asked a question, I shuddered in recognition at the exchange.

In that way, he is a lot like the original leader of AOL (AOL), Steve Case, a person who created the first major social explosion online while also being incredibly shy and terse in real life.

Actor Jesse Eisenberg (pictured here) playing Zuckerberg in “The Social Network” certainly has the clipped delivery and often furrowed brow down–but the rest is a dude I certainly would love a chance to interview.

That said, he also plays Zuckerberg as a dour and wary person, also nothing like the real thing.

While I am in no way a personal friend of Zuckerberg’s, I have spent enough time with him to say that he strikes me as someone who generally tries to get along with people and makes a big effort to seem like a regular Joe, despite his fame and, well, billions of dollars worth of stock.

That does not mean he can’t be a bit robotic in tone or that he is not very much in charge at Facebook–indeed, one thing the movie does show is how very much the company is a creation of his single-minded devotion, restless innovation and intense forcefulness.

What I found perhaps most interesting about the movie was that it seems to, in fact, make the very case it is not trying to make.

Which is that, as the movie Zuckerberg says to the trio suing him for stealing the basic idea for Facebook: “If you guys were the inventors of Facebook, you’d have invented Facebook.”

Exactly. Because even if Zuckerberg did swipe the kernel of an idea about making a social network about friends from the Winklevoss twins at Harvard University–which seems obvious that he did indeed do– they were still incapable of creating what he created, even if they had gotten bigger head start.

Though hysterically played by actor Armie Hammer (pictured here, who does both of the Winklevii), these two seem more like rich kids with good chins, great bods and not much else.

So too Eduardo Saverin, Zuckerberg’s original partner in Facebook, who got left behind and then diluted out of his stake in the start-up.

While that move by Zuckerberg and his new investors was probably too cute by a half–and they had to pay up later for it–the movie makes clear that Saverin did almost nothing to make Facebook what it was, except write an early check.

In fact, in one scene, it’s clear he does not even know how to use it enough to change his relationship status. This, I believe.

(Also, incredibly, that Justin Timberlake–who plays the devilish Sean Parker–can actually act.)

Finally, there is the part about the impetus for Zuckerberg to make Facebook–which opens the movie–over a bad breakup with a girlfriend.

Again, it would be great for the origins of Facebook to be that interesting, but that trick is only there to provide a good ending shot of Zuckerberg hitting the refresh button.

And, of course, to lay out the big question of whether or not Zuckerberg is an “asshole” or not.

That’s from “The Social Network” and not me, which at the end twists that grand theme again.

Instead, it posits via a woman lawyer–the only truly positive portrayal of a woman in the entire film, by the way–to the Zuckerberg character that: “You are not an asshole, Mark. You’re just trying so hard to be one.”

I am afraid that is not really true either, at least in my experience.

Sure, Zuckerberg has been diffident, has treated some friends shabbily (even recently) and has even been borderline disingenuous once or twice with me.

But that’s not that different from a lot of people I cover in tech and that does not make him that proverbial “asshole” of the movie.

Oh, I sure have known a few of those in my time covering Silicon Valley, but that’s a list I’ll keep for my movie.

Kidding. Sort of. (You know who you are.)

]]> http://allthingsd.com/20101002/would-that-the-real-mark-zuckerberg-talked-as-much-as-the-facebook-movie-mark-zuckerberg/feed/ 3 http://allthingsd.com/20100812/hollywood-groups-weigh-in-on-fcc-internet-reclassification/ http://allthingsd.com/20100812/hollywood-groups-weigh-in-on-fcc-internet-reclassification/#comments Fri, 13 Aug 2010 00:35:39 +0000 Kara Swisher http://kara.allthingsd.com/?p=32045

An alphabet soup of entertainment-industry groups submitted briefs to the Federal Communications Commission today as part of its request for comment on a framework for broadband services.

Specifically, whether or not to reclassify the Internet as a telecommunications service, which would trigger all kinds of juicy regulatory power.

The Internet has been classified as an information service and not a phone service–a problem now, since a court ruling earlier this year said the FCC has no legal authority over an information service.

Rut-roh!–especially since FCC Chairman Julius Genachowski has wanted power to push for net neutrality and faster broadband.

There are all kinds of complex issues at stake, from net neutrality to piracy to open Internet to broadband access–and Hollywood groups have conflicting interests, all related to content distribution.

But everyone’s obvious concern is copyright infringement and how to create rules around it without also having too much regulation or not enough freedom.

Oh, so vexing to explain and so many lawyers clearly involved, so just read this pair of briefs–one a joint filing from AFTRA (American Federation of Television and Radio Artists), DGA (Directors Guild of America), IATSE (International Alliance of Theatrical and Stage Employees), SAG (Screen Actors Guild) and the MPAA (Motion Picture Association of America); and the other a different take from the WGAW (Writers Guild of America, West):

Broadband Reply Comments

And here is Genachowski talking about a lot of this in an interview with Walt Mossberg at the eighth D: All Things Digital conference in June:

]]> http://allthingsd.com/20100812/hollywood-groups-weigh-in-on-fcc-internet-reclassification/feed/ 0 http://allthingsd.com/20100608/popular-pulse-news-reader-ipad-app-gets-steve-jobs-praise-in-morning-then-booted-from-app-store-hours-later-after-new-york-times-complaint/ http://allthingsd.com/20100608/popular-pulse-news-reader-ipad-app-gets-steve-jobs-praise-in-morning-then-booted-from-app-store-hours-later-after-new-york-times-complaint/#comments Tue, 08 Jun 2010 07:53:45 +0000 Kara Swisher http://kara.allthingsd.com/?p=29175

Yesterday morning, the pair of Stanford University graduate students who made the hot news-reading iPad app, Pulse News Reader, were ecstatic to be mentioned first–for being among the most promising developers for the new tablet device–by Apple CEO Steve Jobs in his keynote speech at the Worldwide Developers Conference in San Francisco.

But by the afternoon, that flush of entrepreneurial success had turned sour, after Apple (AAPL) informed the two that Pulse was being pulled from the App Store after it received a written notice from the New York Times Company (NYT) declaring that “The New York Times Company believes your application named ‘Pulse News Reader’ infringes The New York Times Company’s rights.”

In an unusual coincidence, the Times Web site was on prominent display on a huge screenshot of the iPad during Jobs’s speech.

Ironically, the Times wrote a big wet kiss about Pulse last week in a blog post titled “The iPad Pulse Reader Scales the Charts,” by tech writer Brad Stone.

“Pulse is a stylish and easy-to-use news aggregator,” wrote Stone. “News organizations still puzzling over their iPad strategies can perhaps derive some hope from Pulse’s success–or at least its price tag.”

No longer. Pulse was down completely by 6:30 pm PT last night.

Reads a notice on iTunes now: “Your request could not be completed. The item you’ve requested is not currently available in the U.S. store.”

“I don’t blame Apple, because they have to respond when contacted by lawyers from the Times,” said Akshay Kothari, a 23-year-old student of well-known Silicon Valley investor Michael Dearing’s Launch Pad class at Stanford, of the letter the media giant sent to Apple (which is below, along with the take-down notice).

“But it was definitely a roller coaster of a day.”

In fact, it has been all up for the past four weeks, since Kothari and 22-year-old Ankit Gupta released the Pulse iPad app, creating it for the class, which requires students to develop and put out a product.

Both are at Stanford’s Institute of Design and created a company called Alphonso Labs.

The app was quickly approved after about four weeks of development. Since then, it has taken off strongly, downloaded 35,000 times at a $4 price tag, even rising to No. 1 in paid apps several times, as noted prominently in the lead of the Times story.

Kothari said that the pair plan to contact Apple in the morning and take steps to remove Times material from the feeds.

It is not immediately clear why they need to, since Pulse draws from publicly available Times RSS feeds, as do many other apps, and does no scraping.

In fact, Pulse is little more than a really well-designed RSS reader, which is what the Times said it was in its write-up. You add feeds to it and it visualizes them in a way that’s easy to get through.

The Times story did have one ominous-in-retrospect note about Pulse: “It also lets people easily share articles through Twitter and Facebook–bypassing the individual sharing tools presented by each news site.”

But Pulse is pretty basic and is similar to many others readers.

In the New York Times case, as with others, one view is plain text and only shows whatever the Times puts in its RSS feed, which isn’t much. And its Web view seems to be just an in-app browser that takes you straight to the page that is in the link with the RSS feed.

You can see both here below:

The Times lawyer, Richard Samson, sees it differently, apparently, since it is a paid app rather than a free one, noting in the Times June 3 notice to Apple, which came two days after the newspaper’s article about Pulse:

“The Pulse News Reader app, makes commercial use of the NYTimes.com and Boston.com RSS feeds, in violation of their Terms of Use*. Thus, the use of our content is unlicensed. The app also frames the NYTimes.com and Boston.com websites in violation of their respective Terms of Use.”

Samson also complained about how Pulse was marketed in the App Store, a screenshot of which you can see below:

BoomTown sent an email to Samson, as well as to Apple, for comment.

Until I hear back, here is the email from the App store to Pulse, including the letter from the Times lawyer–I removed personal email addresses and phone numbers, along with the number of the Pulse case Apple gave it–as well as a lovely video of Pulse in action:

From: App Store Notices
Date: Mon, Jun 7, 2010 at 3:09 PM
Subject: Apple Inc. (our ref# APPXXXX)
To: Akshay Kothari

Dear Sir or Madam,

**Please include APPXXXX in the subject line of any future correspondence on this matter.**

We received a written notice from The New York Times Company that The New York Times Company believes your application named “Pulse News Reader” infringes The New York Times Company’s rights. A copy of the notice is attached.

Accordingly, we have pulled your application from the App Store. Please contact The New York Times Company directly regarding any questions or concerns you may have.

For any technical questions, please contact iTunes Connect: www.apple.com/itunes/go/itunesconnect/contactus.

Thank you for your immediate attention.

Sincerely,

? iTunes Music Marketing & IP Legal | Apple | 1 Infinite Loop | Cupertino | CA | 95014 | AppStoreNotices@apple.com

Begin forwarded message:

From: “Samson, Richard S”
Date: June 3, 2010 10:51:23 AM PDT
To:”‘appstorenotices@apple.com’”
Cc: “Samuels, Robert”, “Manning, Michael”
Subject: infringing “Pulse News Reader” iPad app

Hello-

I am writing again, on behalf of The Boston Globe, Boston.com and The New York Times Company, about the infringing iPad app, “Pulse News Reader” produced by Alphonso Labs Inc. (please see pertinent details, link and screenshots below).

The infringing app is available on the iTunes store here: http://itunes.apple.com/us/app/pulse-news-reader/id371088673?mt=8

The Pulse News Reader app, makes commercial use of the NYTimes.com and Boston.com RSS feeds, in violation of their Terms of Use*. Thus, the use of our content is unlicensed. The app also frames the NYTimes.com and Boston.com websites in violation of their respective Terms of Use.

I note that the app is delivered with the NYTimes.com RSS feed preloaded, which is prominently featured in the screen shots used to sell the app on iTunes.

I hereby declare, under penalty of perjury, that the information contained in this notification is accurate to the best of our knowledge and that I am authorized to act on behalf of the owner of the copyrights and trademarks of The Boston Globe, Boston.com and The New York Times Company. We hereby demand that you immediately and permanently remove this app from the iTunes site.

Please let me know if you need any further information or have any questions. I can be reached directly at this Email or at the phone number below.

Thank you.

Sincerely,

Richard Samson

Richard Samson
Senior Counsel
The New York Times Company
620 Eighth Avenue
New York, New York 10018

* NYTimes.com Terms of Service, paragraph 2.2: “The Service and its Contents are protected by copyright pursuant to U.S. and international copyright laws. You may not modify, publish, transmit, participate in the transfer or sale of, reproduce (except as provided in Section 2.3 of these Terms of Service), create new works from, distribute, perform, display, or in any way exploit, any of the Content or the Service (including software) in whole or in part.”

* Boston.com Terms of Service, paragraph 2.2: “The Service and its Contents are protected by copyright pursuant to U.S.and international copyright laws. You may not modify, publish, transmit, participate in the transfer or sale of, reproduce (except as provided in Section 2.3 of this Agreement), create new works from, distribute, perform, display, or in any way exploit, any of the Content or the Service (including software) in whole or in part.”

[All Things Digital intern Drake Martinet contributed to this report.]

]]> http://allthingsd.com/20100608/popular-pulse-news-reader-ipad-app-gets-steve-jobs-praise-in-morning-then-booted-from-app-store-hours-later-after-new-york-times-complaint/feed/ 47 http://allthingsd.com/20100304/series-seed-documents-legal-guru-ted-wang-speaks-plus-get-your-free-term-sheet-here/ http://allthingsd.com/20100304/series-seed-documents-legal-guru-ted-wang-speaks-plus-get-your-free-term-sheet-here/#comments Thu, 04 Mar 2010 13:30:38 +0000 Kara Swisher http://kara.allthingsd.com/?p=25002

BoomTown finally got to meet Silicon Valley lawyer Ted Wang today, which was kind of a thrill since most tight-lipped attorneys run in the other direction when they see me coming.

But Wang–who works for Fenwick & West and is a popular legal adviser to a spate of digital start-ups, such as Facebook, Aardvark and Twitter–has a lot to talk about with the launch of a new Web site called Series Seed Documents earlier this week.

It’s a laudable effort at simplifying the complex–especially since most lawyers mostly like to complexify the simple.

Instead, Wang has made templated but flexible legal documents available for free for entrepreneurs to use in seed-stage deals, and his effort is getting support from the top venture and angel investors in the arena, such as Andreessen Horowitz.

The point: So new companies don’t waste time and money negotiating often unnecessarily complicated–but usually standard–legal papers.

Wrote Wang in a blog post on the Series Seed site, titled “For the Faithful”:

Up until now, various smart people have talked or blogged about reducing the transaction costs associated with seed stage investment without rallying around a particular attack. Of course both entrepreneurs and investors would rather see their investment dollars used toward developing a new product and bringing it to market than toward what are usually routine transaction costs. The problem has been crafting a set of documents that provide adequate protections without being unduly burdensome. While traditional financing documents give broader rights and protections to investors, for a seed stage investment the benefits of simplification in the Series Seed documents outweigh the value of these additional rights and protections…

This endeavor will only be successful if the Documents gain widespread adoption–and that will require lawyers to get out of their comfort zones and think about the trade-offs suggested in the Documents. It will not be easy, but once a practitioner takes the plunge and makes the effort to think through the changes, I am convinced that a well thought-through standard set of seed documents will emerge. Moreover, if folks in our line of business do not come up with a set of documents that enable seed financings at a reasonable cost, the market is going to solve this problem in another way. To quote Gen Shinseki “[i]f you don’t like change, you are going to like irrelevance even less.”

Andreessen Horowitz, which was the first to agree to use Series Seed Documents, has been joined by a spate of high-profile angel and early-stage venture investors.

The group includes SV Angel’s Ron Conway, First Round Capital, “micro-cap” investor Mike Maples, SoftTechVC’s Jeff Clavier, True Ventures, Polaris Ventures, Charles River Ventures and Harrison Metal.

For a legal look-see, I embedded the four documents from Seed Series Documents below, which include: A Restated Certificate of Incorporation, an Investors’ Rights Agreement, a Series Seed Preferred Stock Purchase Agreement, and a Terms for Private Placement of Series Seed Preferred Stock of [Insert Company Name], Inc.

And here’s Wang talking about the effort–which he has been blogging about since 2007, actually–at Fenwick’s Mountain View, Calif., offices, with an impressive range of legal tomes behind him:

SeriesSeedFormCOI

SeriesSeedIRA

SeriesSeedFormSPA

SeriesSeedTermSheet-1

]]> http://allthingsd.com/20100304/series-seed-documents-legal-guru-ted-wang-speaks-plus-get-your-free-term-sheet-here/feed/ 3 http://allthingsd.com/20100301/series-seed-documents-with-a-big-assist-from-andreessen-horowitz-set-to-launch-to-help-entrepreneurs-with-legal-hairballs/ http://allthingsd.com/20100301/series-seed-documents-with-a-big-assist-from-andreessen-horowitz-set-to-launch-to-help-entrepreneurs-with-legal-hairballs/#comments Mon, 01 Mar 2010 17:03:48 +0000 Kara Swisher http://kara.allthingsd.com/?p=24896 Series Seed Documents, templated documents for entrepreneurs to use for seed-stage deals, will be launched today, part of an effort by Silicon Valley lawyer Ted Wang and pushed by venture capital firm Andreessen Horowitz.

The point: So new entrepreneurs don’t waste time and money negotiating often unnecessarily complex legal papers.

Series Seed Documents was planning its announcement tonight, after briefing reporters. But BoomTown was alerted to the move by a tweet last week from Fenwick & West lawyer Wang that read: “Excited about launching Series Seed documents next week.”

Oops!

The Twitter post has since been taken down (but here is an image of it, below, natch!).

“Who even knew that a corporate attorney would have a Twitter account?” joked Marc Andreessen of Andreessen Horowitz in an interview this morning.

Actually, Wang (pictured here) is Twitter’s lawyer!

His practice, which focuses on representation of “emerging companies,” as noted on his Fenwick & West Web site, also includes Aardvark, Billshrink, Clicker, Facebook, Flixster and Widgetbox.

Andreessen Horowitz, which was the first to agree to use Series Seed Documents, will be joined by a spate of high-profile angel and early-stage investors.

The group includes SV Angel’s Ron Conway, First Round Capital, “micro-cap” investor Mike Maples, SoftTechVC’s Jeff Clavier, True Ventures, Polaris Ventures, Charles River Ventures and Harrison Metal.

“We want to make the process as transparent as possible, which is to say, we want to take all the mystery out it,” said Andreessen. “And it is online for everyone to understand.”

Of course, noted Andreessen, the price for the round is still open to negotiation, but wrangling over typically standard legal issues often hurts deals.

“The big reason we are doing it is that we think for these early stage round, bashing over these terms does damage only brings mistrust,” he said.

Andreessen noted that this template approach is only appropriate for small, early rounds of about $500,000 to $1 million.

“VCs who do angel rounds should be acting like a VC in a VC round and acting like an angel in an angel round,” he said. “The problems come when VCs act like VCs in angel rounds.”

Andreessen said using Series Seed Documents would cost start-ups about $7,000 compared with a low of $15,000 and up to $100,000 in many similar deals.

“It helps streamline the process and makes starting a company easier and more efficient,” said Conway of SV Angel, who is a well-known angel investor. “And cheaper–all in all, it is a benefit to both the entrepreneur and the investor.”

]]> http://allthingsd.com/20100301/series-seed-documents-with-a-big-assist-from-andreessen-horowitz-set-to-launch-to-help-entrepreneurs-with-legal-hairballs/feed/ 4 http://allthingsd.com/20091209/fred-davis-joins-cbs-quincy-smith-at-silicon-valley-boutique-bank-venture/ http://allthingsd.com/20091209/fred-davis-joins-cbs-quincy-smith-at-silicon-valley-boutique-bank-venture/#comments Thu, 10 Dec 2009 06:26:02 +0000 Kara Swisher http://kara.allthingsd.com/?p=21769 Fred Davis, the well-known entertainment lawyer, will join CBS Interactive head Quincy Smith at a new banking and advisory firm in Silicon Valley, according to several sources.

Davis (pictured here) is a senior partner at Davis, Shapiro, Lewit & Hayes. The entertainment law firm–which is based in both New York and Los Angeles–has an emphasis in music, digital rights, and branded entertainment, and works with a wide range of digital media companies, including YouTube.

After a BoomTown post in late October on Smith’s plans, CBS (CBS) confirmed the move, which will take place in January, noting that his new firm would remain an adviser to the media giant under a multiyear contract.

Davis is an interesting choice for the firm, which Smith hopes will emulate Hambrecht & Quist, one of the more influential among Silicon Valley investment banks during the first Web boom.

Along with Davis, Smith has been joined by CBS’s Mike Marquez.

Smit has also been collecting a high-profile group of advisers to the still-unnamed firm, including Danny Rimer of Index Ventures, former Netscape Communications CFO Peter Currie, and David Golden, EVP of former AOL CEO Steve Case’s Revolution LLC.

]]> http://allthingsd.com/20091209/fred-davis-joins-cbs-quincy-smith-at-silicon-valley-boutique-bank-venture/feed/ 4 http://allthingsd.com/20091204/microhoo-signs-on-the-dotted-line/ http://allthingsd.com/20091204/microhoo-signs-on-the-dotted-line/#comments Fri, 04 Dec 2009 23:09:46 +0000 Kara Swisher http://kara.allthingsd.com/?p=21495

Microsoft (MSFT) and Yahoo (YHOO) finally dotted all their i’s and crossed all their t’s today on the final definitive agreement for their search and online advertising partnership.

Somewhere a lawyer got his briefs.

No one but tech reporters and hair-trigger Wall Street analysts care, but the pair had to extend the deadline for inking the formal deal because it was so darn complex!

The companies have been near closure for weeks, but niggling details kept popping up, sources said, the better to sue each other if things went bad.

Now that this small hurdle has been cleared, MicroHoo has to wait for a variety of regulatory approvals before attempting their daring and quite possibly foolhardy ascent to the top of Mount Search, from whose peak Google (GOOG) has been enjoying the view all by its lonesome for a good long time now.

That is expected to happen early in 2010, and how the software giant and the Silicon Valley Internet icon traverse the dangerous crevasse of coordinating their advertising and tech systems will be gripping to watch (from the cozy safety of BoomTown’s HQ, of course).

And I can’t wait until MicroHoo has to master the blue links of death ice field.

You know: Because it’s there.

Here is their joint statement:

Yahoo! and Microsoft Finalize Search Agreement

SUNNYVALE, CA and REDMOND, WA–04 December, 2009–Yahoo! Inc. and Microsoft Corporation today announced that the companies have finalized and executed the definitive Search and Advertising Services and Sales Agreement and License Agreement in accordance with the letter agreement announced in July.

The companies released the following joint statement:

“Microsoft and Yahoo! believe that this deal will create a sustainable and more compelling alternative in search that can provide consumers, advertisers and publishers real choice, better value, and more innovation.

“Yahoo! and Microsoft welcome the broad support the deal has received from key players in the advertising industry and remain hopeful that the closing of the transaction can occur in early 2010.”

]]> http://allthingsd.com/20091204/microhoo-signs-on-the-dotted-line/feed/ 2 http://allthingsd.com/20091104/i-love-the-smell-of-settlement-in-the-morning-skype-founders-set-to-get-10-percent-option-to-buy-three-percent-more-and-two-board-seats/ http://allthingsd.com/20091104/i-love-the-smell-of-settlement-in-the-morning-skype-founders-set-to-get-10-percent-option-to-buy-three-percent-more-and-two-board-seats/#comments Thu, 05 Nov 2009 07:38:16 +0000 Kara Swisher http://kara.allthingsd.com/?p=20304

According to several sources close to the situation, barring any unforeseen delay, a deal to settle the Skype imbroglio is likely to be announced around the time the markets open tomorrow.

[UPDATE: The paperwork is taking longer than expected, so sit tight, said sources.]

While the massive agreement–which will settle three aggressive lawsuits lobbed by Skype co-founders Niklas Zennström and Janus Friis at a wide range of prominent Silicon Valley players–is not yet officially signed, sources said lawyers are apparently putting the finishing touches on the paperwork and have signature papers completed by both sides to be able to wrap it up quickly.

So, while nothing is ever over until it is over, it looks like it is over.

Sources also said that as part of the deal to end the legal madness, Zennström and Friis will get 10 percent of Skype back for rights to key software technology they control, an option to pay $83 million for another three percent of the Internet telephony service and two seats on the 23-member board.

Also, BoomTown has learned that a partridge in a pear tree will be thrown in to guarantee a lasting peace.

All kidding aside, the settlement is proof that squeaky wheels–especially if they hire the combative litigators of Skadden Arps–get the grease.

As has been previously reported, one of the investors in the consortium that won the bidding to buy 65 percent of Skype from eBay (EBAY)–which itself had bought it in 2005 from Zennström and Friis–has withdrawn its investment and involvement as part of the settlement.

That would be London-based Index Ventures, which was a smaller player in the group with–ironically–a three percent stake.

Nonetheless, Index had an outsized fight going on with Zennström and Friis.

That’s due to their ire, aimed at Index’s Mike Volpi, who was CEO of Joost, the failed online video site the pair founded.

After Zennström and Friis lost their own bid to buy back Skype, they quickly sued Index and Volpi via tech companies they control, Joltid and Joost, in Delaware.

The pair alleged that Volpi used confidential information gleaned from his time as Joost CEO to unfairly help the winning consortium acquire Skype.

The lawsuit was particularly vindictive, using embarrassing emails and making pointed accusations about Volpi plotting all kinds of nefarious schemes, like Lady Macbeth on steroids, on his way out of Joost.

I am not sure what law one can break for wanting to leave a job or how much damage one can do to an already failing business, but that did not stop Zennström and Friis from trying to pin some specious accusations on Volpi.

(I wouldn’t have been surprised if they had accused Volpi of being responsible for Balloon Boy.)

But such legal attacks obviously worked, making Index loath to stay in an economically less attractive deal with lessened influence over Skype.

And eBay and the other investors obviously wanted closure, so they could get on with the work of turbocharging Skype.

The fighting between Index and the Skype founders was just one part of the legal morass.

Zennström and Friis had already been in a battle over software licensing issues with eBay in London courts.

They also filed suit again in California against Skype and eBay for copyright violations.

For good measure, the pair added the winning buyout group, including Index, Silver Lake Partners, Andreessen Horowitz and the Canada Pension Plan Investment Board, in that lawsuit.

(In legalese–and in honor of the Yankees winning the World Series tonight–such massive lawsuit-making is called covering all your bases!)

Of course, Volpi and Index fired back in court filings and both sides armed themselves with powerful PR guns.

Presumably, those same mouthpieces–who have been slagging the other side for weeks–will now be at the ready with honeyed tales of reconciliation tomorrow.

Call me cynical, but we’ll see how long that lasts.

“[Zennström and Friis] got what they wanted by using Volpi as a pawn and the lawsuits as a club,” said one person close to the situation. “Everyone is moving on, but not everyone is going to forget what they did to get what they wanted.”

]]> http://allthingsd.com/20091104/i-love-the-smell-of-settlement-in-the-morning-skype-founders-set-to-get-10-percent-option-to-buy-three-percent-more-and-two-board-seats/feed/ 3 http://allthingsd.com/20090911/smells-like-mean-spirit-courtney-love-collects-check-from-guitar-hero-but-goes-on-twitter-rampage-anyway/ http://allthingsd.com/20090911/smells-like-mean-spirit-courtney-love-collects-check-from-guitar-hero-but-goes-on-twitter-rampage-anyway/#comments Fri, 11 Sep 2009 18:59:24 +0000 Kara Swisher http://kara.allthingsd.com/?p=18388

Courtney Love went into a Twitter frenzy yesterday, threatening to sue Activision Blizzard (ATVI) over of its use of the image of her late husband and grunge music legend Kurt Cobain in the latest version of its popular music game, Guitar Hero.

Some tweet gems:

“not in twenty JILLION years would i EVER have allowed this and this is lethal.”

“we get NO money for this, travesty, Frances gets NO money for the rape.”

Except, oops, Love signed the contract herself and also, sources said, the check has long been cashed from Activision.

Smells like mean spirit!

“Guitar Hero secured the necessary licensing rights from the Cobain estate in a written agreement signed by Courtney Love to use Kurt Cobain’s likeness as a fully playable character in Guitar Hero® 5,” said Activision in a statement.

Cobain, who killed himself in 1994, is an “unlockable” character in the Guitar Hero 5 game recently released. When a character is unlockable, the avatar can play other songs too.

So, presumably Cobain could play Bon Jovi, which apparently pisses Love off.

In fact, Love’s lawyer told the TMZ.com Web site: “Activision is exploiting Kurt’s image in a manner anathema to the very essence of his music, spirit and essence. I along with Ms. Cobain hope those who love Kurt’s music strongly voice their sentiments to Activision and demand his image not be debased by singing the songs of Bon Jovi.”

But one still has to wonder why Love–who is now better known for her wacky antics than her own music (you can see a list of some of her frequent outbursts here from Entertainment Weekly)–chose to go nuts now rather than before the game was released.

Well, BoomTown has a very good guess, but I will keep it to myself!

So until the more dulcet meds kick in for Love, here’s a video from a recent tour I did at Guitar Hero HQ in Silicon Valley, on the release of GH5:

]]> http://allthingsd.com/20090911/smells-like-mean-spirit-courtney-love-collects-check-from-guitar-hero-but-goes-on-twitter-rampage-anyway/feed/ 1 http://allthingsd.com/20090909/to-kai-fu-lee/ http://allthingsd.com/20090909/to-kai-fu-lee/#comments Wed, 09 Sep 2009 07:00:57 +0000 John Paczkowski http://digitaldaily.allthingsd.com/?p=24271

Kai-Fu Lee’s uneventful departure from Google to start a Beijing incubator really belies the spectacle that attended the beginning of his tenure at the search giant.

Lee’s train-hopping from Microsoft (MSFT) to Google (GOOG) back in 2005 touched off a five-month pitched battle marked by all manner of inanities. Among them was this account of Microsoft CEO Steve Ballmer’s now-infamous alleged chair-tossing tantrum told by former Microsoft Distinguished Engineer Mark Lucovsky:

Prior to joining Google, I set up a meeting on or about November 11, 2004 with Microsoft’s CEO Steve Ballmer to discuss my planned departure…At some point in the conversation, Mr. Ballmer said: “Just tell me it’s not Google.” I told him it was Google.

At that point, Mr. Ballmer picked up a chair and threw it across the room hitting a table in his office. Mr. Ballmer then said: “F–king Eric Schmidt is a f–king p–sy. I’m going to f–king bury that guy, I have done it before, and I will do it again. I’m going to f–king kill Google.”

Thereafter, Mr. Ballmer resumed trying to persuade me to stay…Among other things, Mr. Ballmer told me that “Google’s not a real company. It’s a house of cards.”

And there were others as well. Certainly, the sourcing of some of Microsoft’s legal docs was amusing. As I wrote at the time:

Kai-Fu Lee may be a top-drawer research engineer, but his understanding of the mechanics of Microsoft’s desktop environment leaves a bit to be desired. Turns out Microsoft recovered Lee’s employment contract with Google, which figures prominently in its suit against the search leader (see “And, if you’re beaten by Microsoft thugs, our generous health plan will cover you”), from the “recycle bin” of one of Lee’s computers. Odd that Lee would choose to browse offers from his employer’s rivals on his work computer. Odder still that having done so, he would neglect to scrub them with a secure erase program. Clearly, he must have been a bit lightheaded after learning of Google’s promise to allow his stock options in the company to vest even if he was unable to start work for a year.

Then there was Lee’s testimony about a meeting with Bill Gates, during which the Microsoft chairman blew his top, shouting that the Chinese people and the Chinese government had “f—ked” Microsoft.

And, finally, there were the videotaped depositions, like one from Ballmer that included this great bit:

Ballmer: “Kai-Fu had a–a distinct commitment and responsibility on behalf of the company for being the senior executive here in Redmond, with responsibility for godfathering, shepherding all of our R&D activities in China. It’s a structure we also use for India. We have a senior executive with knowledge of India be the R&D godfather for India, encourage work to go there, shepherd, and–and mentor people in the area. Kai-Fu had that broad, important responsibility for China.”

Deposing lawyer: “This term, ‘godfather’–is that an official title within the Microsoft organization?”

Hard to believe Kai-Fu Lee’s tenure at Google China ended with such a whimper, although there are many quiet rumblings of trouble he had with Google’s top execs in Silicon Valley, given the bang it began with.

But it did. And here endeth the history lesson.

]]> http://allthingsd.com/20090909/to-kai-fu-lee/feed/ 0 http://allthingsd.com/20090817/sale-of-ilike-to-myspace-135-million-in-cash-6-million-for-talent-retention-delayed-over-tax-issues-reallyplus-the-list-of-other-suitors/ http://allthingsd.com/20090817/sale-of-ilike-to-myspace-135-million-in-cash-6-million-for-talent-retention-delayed-over-tax-issues-reallyplus-the-list-of-other-suitors/#comments Tue, 18 Aug 2009 06:25:06 +0000 Kara Swisher http://kara.allthingsd.com/?p=17756

The board of iLike planned a meeting earlier tonight to go over a buyout offer by MySpace, several sources close to the situation said. But it was suddenly canceled because of some thorny tax implications related to the talent-retention part of the deal to purchase the social music start-up.

This does not mean the pending acquisition is in jeopardy, sources said, and it could be on track to be signed as early as today, barring any more complications.

That is what both iLike and MySpace execs are hoping, said sources, one of whom described the outstanding issues as a “technicality.”

What’s also been unclear is the actual price the social networking giant is paying for iLike, which has been reported as about $20 million.

In fact, only $13.5 million will be paid upfront in cash, with about $8 million of that money likely going to one of its major shareholders, Ticketmaster Entertainment (TKTM), due to its preferred shares.

Another $6 million has been promised by MySpace in forward payments to retain some key employees–including iLike co-founders and twin brothers Ali and Hadi Partovi.

Although those employees can remain in Seattle, where iLike has its HQ, they must stay employed at Beverly Hills, Calif.-based MySpace for two and a half years to get their money.

It’s that talent part of the deal that caused the Partovis to cancel the iLike board meeting, which they explained to key investors was necessary due to some confusion over how the money paid to these employees would be taxed.

A person briefed on the issue said that if it was taxed as compensation, it would have a much higher tax rate than if it were considered long-term capital gains.

The Partovis said in the email that they were working on the problem with their advisers on the sale, Allen & Co., as well as with lawyers and accountants.

Tax snafus in the middle of a sale are not exactly the way the entrepreneurial Partovis envisioned it was going to go for iLike (see my various video interview related to iLike below) when they created the compelling music sharing and recommendation service in 2006.

After only a few years, the innovative start-up claims it has 50 million registered users overall.

A lot of that growth was due to iLike quickly becoming one of the most popular widgets on social networking sites like Facebook, where it has also been the top music application, with 10 million active monthly users.

The Partovis–who once were close with execs at Facebook (see my party video below), particularly founder and CEO Mark Zuckerberg–placed great faith in its growth lifting all Web 2.0 boats.

It did not turn out that way, though, especially from the important financial point of view, and iLike scrambled to diversify.

The iLike service recently began offering a music downloading service, for example, as well as other such features, all of which would be attractive to the music-centric focus at MySpace.

Once an Internet sensation, MySpace has been struggling to restructure itself after losing momentum and buzz in recent years, as well as a huge advertising revenue drop in its most recent quarter.

Its owner, News Corp. (NWS), replaced its founders with new management four months ago, including former Facebook exec Owen Van Natta as CEO.

After making major staff layoffs and rejiggering management, Van Natta and his new team have been working on an overhaul of the MySpace product and seem to be refocusing it to become a global music and entertainment service.

MySpace also has a joint venture with major music labels, MySpace Music, which has been trying to attract consumers and build a viable business. Sources said MySpace Music could also buy into the iLike deal or simply license its technology to improve its features.

Thus, purchasing iLike would fit in well with MySpace’s overall plans.

And iLike has also been in need of a fix itself.

For all its popularity, especially on Facebook, it has moved slowly toward profitabilty, and its $17 million in funding has been dwindling, as has its viability as a standalone company.

Back in more frothy Web 2.0 days, iLike’s generous funding gave it a valuation of more than $50 million, which has also lost steam over time and as the economy has worsened.

In the last quarter of fiscal 2008, for example, Ticketmaster wrote down its $13 million investment by $6 million.

Tensions between its execs and iLike have gotten worse over time, although some thought at one time that Ticketmaster would buy iLike.

No longer, which is why the founders turned to Allen & Co., as MediaMemo reported as far back as November, to find another big investor or buyer.

Wrote Peter Kafka: “Delivering free music on the Web has so far proven to be a high-cost, low-revenue endeavor…”

So, the New York deal-making firm ginned up a small group of suitors, which included Facebook, Activision Blizzard (ATVI) and Microsoft (MSFT), as well as MySpace.

Of the three, Activision was most serious, with interest in integrating iLike’s community and technology tools with its Guitar Hero franchise.

But Activision never actually made a formal bid, said sources.

Both Microsoft and Facebook also considered the purchase, but sources said they would only offer stock in a deal. But iLike wanted cash in the deal.

The Partovis were also was wary about working at either place.

Both Partovis, for example, had worked at Microsoft (Ali after selling it LinkExchange in 1998 for $265 million; Hadi several times, once following Microsoft’s acquisition of Tellme Networks, which he co-founded).

As it has turned out, in its short life, iLike’s last, best alternative is apparently MySpace.

“Look, iLike has been shopped around for a while, and while the team and technology are great, it only has one choice and that’s to be sold,” said one person involved in the various scenarios. “The question for the buyer then is whether it was worth it to pay up or just move on and do it ourselves.”

So until the bean counters settle this IRS nightmare, here is my video interview with Hadi Partovi about a year ago at iLike’s HQ in the Capitol Hill section of Seattle, when times were a little more hopeful:

And here is a very dark and very shaky video I did when iLike threw a fete in Silicon Valley to celebrate its start-up two years ago and to send some appreciation in Facebook’s direction–it is so dated that Facebook COO Sheryl Sandberg, who is in the video, is still at Google (GOOG).

(Full Disclosure: News Corp. also owns Dow Jones, which owns this site.)

]]> http://allthingsd.com/20090817/sale-of-ilike-to-myspace-135-million-in-cash-6-million-for-talent-retention-delayed-over-tax-issues-reallyplus-the-list-of-other-suitors/feed/ 4 http://allthingsd.com/20090428/fellowship-of-the-pings/ http://allthingsd.com/20090428/fellowship-of-the-pings/#comments Tue, 28 Apr 2009 11:55:33 +0000 John Paczkowski http://digitaldaily.allthingsd.com/?p=16492 Back in 2005, Google was represented in Washington by a lone staffer–Alan Davidson, a telecom attorney who once served as associate director of the Center for Democracy and Technology. The company’s political innocence was something of a joke among seasoned beltway players and it didn’t seem to care. Google (GOOG) was far too busy organizing the world’s information to pay much attention to Washington.

How quickly things changed. By 2007, Davidson had been joined by 11 other lobbyists, among them a former high-ranking Justice Department antitrust lawyer. And now, two years later, Google CEO Eric Schmidt has been named by President Obama to his Council of Advisors on Science and Technology. In that role he’ll work with a group of distinguished academics and executives–a group that, incidentally, includes Craig Mundie, chief research and strategy officer at Microsoft (MSFT)–to help the administration “formulate policy in the many areas where understanding of science, technology, and innovation is key to strengthening our economy and forming policy that works for the American people.”

Schmidt’s appointment isn’t all that surprising. He served as an informal adviser to Obama during his campaign and he’s a smart guy who’s got some strong opinions about network neutrality, next-generation broadband, and intellectual property–issues that figure high on the president’s tech agenda. Still, it’s one more indication–and the biggest one yet–that Google has become firmly part of the Washington establishment.

]]> http://allthingsd.com/20090428/fellowship-of-the-pings/feed/ 1 http://allthingsd.com/20090218/boomtown-decodes-the-zuckerberg-terms-of-service-my-bad-memo-now-with-10-percent-more-so-very-sorrys/ http://allthingsd.com/20090218/boomtown-decodes-the-zuckerberg-terms-of-service-my-bad-memo-now-with-10-percent-more-so-very-sorrys/#comments Wed, 18 Feb 2009 10:21:00 +0000 Kara Swisher http://kara.allthingsd.com/?p=9939

Under cover of darkness last night, Facebook founder and CEO Mark Zuckerberg announced on the social-networking site’s blog that it would “return to our previous terms of use while we resolve the issues that people have raised.”

Oh, this is just too good to resist. Therefore, BoomTown shall not tarry in our ongoing job of busting the chops of the young Facebook leader, whose minions have actually–and I am not joking here–given him the nickname: The Wizard.

Well, the Wizard obviously had to pull back the curtain last night and show some serious mea culpa to the people, before they got out the pitchforks.

That’s due to the controversy Facebook has been embroiled in this week about changes it recently made to its Terms of Service that gave the company unusually sweeping rights over customers’ content and privacy.

While Zuckerberg had said in his first post about the issue that Facebook was not in the content-stealing business, the strong language in the ToS sent the usual suspects into a major meltdown over the possibility that the young geek had gone into full-scale evil mogul mode.

As if!

In fact, Zuckerberg has been ensconced in his Silicon Valley lair for years now, counting down until he knows precisely everything about everyone’s drunken college days!

Until D-Day then, here is my translation of his latest backtracking post:

What the Wizard wrote: Update on Terms

by Mark Zuckerberg

Today at 10:17 pm

Translation: OK, I have reached my limit of being yelled at by Sheryl and Elliot, have had my usual breakfast of Red Bull and Frosted Flakes–they’re grrreat!–and am ready to eat some major digital crow this morning.

I mean, night, which is my morning, because I actually slept through all this noise today about this whole Terms of Service “controversy.”

What the Wizard wrote: A couple of weeks ago, we revised our terms of use hoping to clarify some parts for our users. Over the past couple of days, we received a lot of questions and comments about the changes and what they mean for people and their information. Based on this feedback, we have decided to return to our previous terms of use while we resolve the issues that people have raised.

Translation: Did you know crow is delicious if you eat it with a little Bosco on top?

More to the point, I would just like to assure you that we have taken our lawyers–who idiotically rewrote our ToS to give us ownership rights to the Bible, “American Idol” and everything Bill O’Reilly utters–and sent them over to our friends at MySpace, because their owner, News Corp. (NWS), already owns two of those three [and also this site!].

What the Wizard wrote: Many of us at Facebook spent most of today discussing how best to move forward. One approach would have been to quickly amend the new terms with new language to clarify our positions further. Another approach was simply to revert to our old terms while we begin working on our next version. As we thought through this, we reached out to respected organizations to get their input.

Translation: As in: More yelling by Sheryl and Elliott and more Fedexing of lawyers to MySpace HQ in Beverly Hills.

But after we calmed down, we all decided the best course of action was to shoot ourselves in the right foot to stop the bleeding from when we shot our left foot before.

We are, of course, completely out of feet now, so if these hijinks continue, sooner or later, someone is going to lose an eye. By someone, I mean, um, me.

What the Wizard wrote: Going forward, we’ve decided to take a new approach towards developing our terms. We concluded that returning to our previous terms was the right thing for now. As I said yesterday, we think that a lot of the language in our terms is overly formal and protective so we don’t plan to leave it there for long.

Translation: Facebook, of course, never had any intention of stealing content and copyright! Perish the thought! After all, that’s the job of Google (GOOG)!

By contrast, ours is to collect incredibly embarrassing photos of everyone in the United States until one of them runs for president, and then our nefarious scheme to control the world begins.

We were planning on blackmailing the world for one billllliiiion dollars then, but Microsoft kind of forked over 15 times that without any pressure.

Still, we would like to own Palo Alto, Calif., and get free parking 24/7, so there will be demands!

Until then, enjoy the sheep-throwing. Mwaahahahahahahaha! (Quick visual: I am petting my white cat right now with Ernst Stavro Blofeld-like evil glee, and am, of course, cackling.)

What the Wizard wrote: More than 175 million people use Facebook. If it were a country, it would be the sixth most populated country in the world. Our terms aren’t just a document that protect our rights; it’s the governing document for how the service is used by everyone across the world. Given its importance, we need to make sure the terms reflect the principles and values of the people using the service.

Translation: Not to be completely and utterly arrogant or anything, but we just passed Pakistan, and those Brazilians better get ready to samba.

By the way, once we get to No. 1–look out, China!–we plan on decreeing that everyone in the world speak Pig Latin and that forthwith it will be flip-flop Fridays.

Also: Esyay, Iway amway anway alienway omfray anotherway anetplay.

What the Wizard wrote: Our next version will be a substantial revision from where we are now. It will reflect the principles I described yesterday around how people share and control their information, and it will be written clearly in language everyone can understand. Since this will be the governing document that we’ll all live by, Facebook users will have a lot of input in crafting these terms.

Translation: Ybay ethay ayway, “Otay Ervesay Anmay”? It’sway away ookbookcay.

In other words, I am sure you will make delicious contributions, after which Facebook will “invite” you to our world-wide HQ to share in a lovely meal.

Especially those Winklevii. I look forward to the twins coming by soon!

What the Wizard wrote: You have my commitment that we’ll do all of these things, but in order to do them right it will take a little bit of time. We expect to complete this in the next few weeks. In the meantime, we’ve changed the terms back to what existed before the February 4th change, which was what most people asked us for and was the recommendation of the outside experts we consulted.

Translation: To my credit, I did give in much quicker than with the Beacon ad snafu. And you thought I learned nothing during that debacle!

And, by outside experts, I mean Microsoft (MSFT) CEO Steve Ballmer, who yells much, much louder than Sheryl or Elliot combined.

What the Wizard wrote: If you’d like to get involved in crafting our new terms, you can start posting your questions, comments and requests in the group we’ve created–Facebook Bill of Rights and Responsibilities. I’m looking forward to reading your input.

Translation: Here’s my first pass, based on the U.S. Bill of Rights, Amendment I:

Facebook shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition Faebook for a redress of grievances.*

*Exceptway, ithway ymay ompletecay iscretionday, enwhay Iway
ecideday otherwiseway.

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