Merrill Lynch may subpoena Microsoft over identity of racist emailer
Posted by Benjamin J. Romano at 1:15 PM
Brokerage giant Merrill Lynch is going after someone who has sent racist e-mails to black Wall Street brokers and Al Sharpton posing as a Merrill manager.
According to coverage by The Associated Press and Dow Jones, the company filed suit in U.S. District Court in Manhattan late yesterday seeking to identify and stop the sender, who is using a Microsoft Hotmail -- now Windows Live Hotmail -- e-mail account.
Merrill Lynch thinks the defendant, identified in the suit as "John Doe," is somewhere in the Midwest.
"The offensive e-mails were sent to a number of our employees by an anonymous sender," Merrill Lynch spokesman Mark Herr said in an e-mailed statement. "We have sued the anonymous sender and will move to subpoena both the ISP and Microsoft Hotmail for information that would reveal the identity of the sender."
I've asked Microsoft for a response.
Update: "Microsoft opposes discrimination in any form and will take swift action when it learns its products or services are being used in an abusive or harmful manner," reads a statement from David Bowermaster, a Microsoft senior public relations manager. "In taking such action, Microsoft maintains its commitment to protecting the privacy of its customers. Microsoft complies with properly issued and served subpoenas, search warrants and court orders."
(Bowermaster was formerly a reporter for The Seattle Times.)
Privacy is a huge issue for Microsoft and other providers of online services such as e-mail and instant messaging. It's recently been raised as in issue around targeted online advertising.
Here are some key passages from Microsoft's Online Privacy statement, updated most recently this month:
"Except as described in this statement, we will not disclose your personal information outside of Microsoft and its controlled subsidiaries and affiliates without your consent. ... We may access and/or disclose your personal information if we believe such action is necessary to: (a) comply with the law or legal process served on Microsoft; (b) protect and defend the rights or property of Microsoft (including the enforcement of our agreements); or (c) act in urgent circumstances to protect the personal safety of users of Microsoft services or members of the public." (Emphasis added.)
Judge taking extra time to mull extension of Microsoft oversight
Posted by Benjamin J. Romano at 1:44 PM
The landmark antitrust case against Microsoft will plod along for at least another three months so the parties will have enough time fully argue whether it should be extended for five years.
The re-jiggering of the schedule comes after most of the states involved in the case filed motions earlier this month asking U.S. District Court Judge Colleen Kollar-Kotelly to extend oversight of the company by five years. Most of the important pieces of the settlement were due to expire Nov. 12, but the states argued that the 2002 antitrust settlement agreement is only just beginning to foster competition and needs more time to work.
In a joint motion filed today the states and Microsoft asked for an extension to no later than Jan. 31, 2008, "solely for procedural purposes to allow the parties to brief, and the court to consider, the motions."
The filing also lays out a schedule for Microsoft and the Department of Justice to respond to the states' motions to extend. Microsoft's argument in opposition is due Nov. 6, and the DOJ, which said in a filing earlier this month that it opposes extending the settlement, has until Nov. 9 to make its arguments.
The states would file counter-arguments by Nov. 16, and Kollar-Kotelly will determine whether another hearing is needed.
More states call for extension of antitrust oversight of Microsoft
Posted by Benjamin J. Romano at 1:21 PM
New York, Maryland, Louisiana and Florida have joined the California group of states in calling for an extension of judicial oversight of Microsoft.
In a motion filed Thursday in the court overseeing the landmark antitrust settlement, the states write:
An extension is appropriate to assure that marketplace participants have sufficient opportunity to establish positions to compete against Microsoft, an entrenched monopolist. Indeed, experience since entry of the Court's decree in 2002 refutes the central assumption that supported departure from the 10-year term typical of antitrust remedial decrees -- that the industry section was characterized by rapid change. Just the opposite: Microsoft's Windows monopoly is indisputably resilient.
The motion for an extension by New York, Maryland, Louisiana and Florida is notable because they agreed with the Department of Justice's assessment in August that the consent decree had been successful. Thursday's filing (PDF, 9 pages) addresses that point, noting that in the August review, the New York group wrote "that the Final Judgments have begun to foster competitive conditions among middleware products, and more generally in the delivery of web-based applications and services. ... However, the process envisioned by the Final Judgments is far from complete. The inescapable fact remains that, at the client operating system level, Microsoft has a 90%+ market share."
Thursday's filing also provides a score card of sorts on where each of the states stands on extension of judicial oversight.
Of the 17 states plus the District of Columbia, 11 support extension; three have no objection to an extension; three have not taken a position on the matter; and one, Wisconsin, does not join the motion for extension.
States seek to extend judicial oversight of Microsoft
Posted by Benjamin J. Romano at 1:54 PM
On Tuesday, California, Connecticut, Iowa, Kansas, Minnesota, the Commonwealth of Massachusetts and the District of Columbia formally asked the judge overseeing the soon-to-expire antitrust settlement between Microsoft and state and federal governments to extend it for five years.
Major provisions of the settlement are due to expire Nov. 12, while some other provisions around technical documentation have already been extended for two years. The filing (26-page PDF) cites "continuing problems" with the availability of documentation, and how the lack of documentation has hampered competitors ability to benefit from the settlement.
The main focus is on the portions of the settlement regarding middleware -- software that runs on top of the operating system, such as media players and Web browsers. The states say these provisions need more time to work.
The settlement "has yet to pry open the OEM channel of distribution to competitive browsers, because no major OEM currently distributes a browser other than Microsoft's Internet Explorer (IE)," the California group of states wrote.
That's important because:
"Many new middleware technologies are just now appearing that may, in the near
future, pose a competitive threat to Microsoft's operating system monopoly.
These technologies substantially depend upon the browser. Because Microsoft
still retains control of the OEM channel for browser distribution, in part because
its illegal conduct with respect to IE has not yet been fully remedied, it is critical
that [the middleware provisions] be continued until these technologies mature."
The filing Tuesday followed a request the states made at a hearing in Judge Colleen Kollar-Kotelly's courtroom in September to extend oversight.
That request followed conflicting reports from the various government parties to the settlement on its effectiveness.
Microsoft to study ruling before deciding on appeal
Posted by Benjamin J. Romano at 2:24 AM
In a brief press conference with reporters outside the Luxembourg court room where Microsoft was handed a defeat in Europe today, General Counsel Brad Smith said the company still has to evaluate the ruling before deciding whether to exhaust its last avenue of appeal.
"I think we need to read the decision before we make any kind of decisions," Smith told a scrum of reporters. "I believe in these kinds of things that although there's a lot of drama, one needs to step back and read first, think second and decide third ... and that is the order in which we're going to take things."
A video of his remarks can be found here (.wmv file).
Smith acknowledged that the Court of First Instance agreed with the European Commission on the most important points in the case.
He struck a conciliatory tone, recommitting Microsoft to compliance with the European competition laws it violated.
"It's clearly very important for us as a company that we comply with our obligations under European law," Smith said. "We'll study this decision carefully and if there are additional steps that we need to take in order to comply with it, we will take them. It will take us a little bit of time, at least over the next few hours, to read the decision carefully, but certainly that is one of our strongest convictions as we go forward."
He recounted efforts Microsoft has made to ensure that Windows Vista, the latest version of the operating system software in which it has a monopoly, did not run afoul of the European Commission's 2004 decision, which has now been upheld by Europe's second-highest court.
Smith said Microsoft is "gratified" that it was able to have "constructive discussions with the European Commission last year that enabled us to bring to market Windows Vista in conformity with the Commission's 2004 decision."
Smith reflected on what has transpired since the European Commission started its investigation into Microsoft's business practices in 1998:
"The world has changed. The industry has changed and our company has changed. We sought to underscore that over a year ago when we published what we describe as our Windows Principles, principles intended to ensure that future versions of Windows, starting with Windows Vista, would comport not only with U.S. law, but with the principles that are applicable here in Europe as well.
"We've sought to be open and transparent and we've sought to strengthen our ties with the rest of our industry. Indeed it's notable, that just last week we announced a new agreement with Sun Microsystems and the week before that we announced a new agreement with Novell -- two of the companies that started out on the other side of this case almost nine years ago."
Smith said one constant is the company's commitment to Europe. He said when the case started, Microsoft offered Windows in 24 European languages; today it is available in 41. In 1998, the company had 3,900 employees on the continent. Today it has 13,000. Its research and development investment has also ballooned during the past decade from $3 million in 1998 to nearly $500 million now.
Smith is expected to hold a formal press conference at 5:30 a.m., Redmond time, with reporters from around the world. Check back here afterwards for updates.
Meanwhile, European Commission officials applauded the court's decision.
"This judgment confirms the objectivity and the cerdibility odf the Commission's competition policy," Commission President Jose Manuel Barroso said in a statement, according to Reuters.
EC Competition Commissioner Neelie Kroes, viewed as a driving force behind the Microsoft case, suggested the decision could have implications for other companies, particularly those in high tech.
"The court has upheld a landmark commission decision to give consumers more choice in software markets. That decision sets an important precedent in terms of the obligations of dominant companies to allow competition, in particular in high tech industries," Kroes said, according to a report by Dow Jones.
European court upholds decision against Microsoft
Posted by Benjamin J. Romano at 12:45 AM
The Court of First Instance just issued its highly anticipated ruling on Microsoft's appeal of a March 2004 decision by the European Commission to sanction and fine the company for abusing its monopoly in PC operating systems. The decision is relatively straightforward, but, as expected, it's still nuanced, as indicated by the headline on this news release the court issued shortly after delivering its brief decision this morning (PDF, five pages):
THE COURT OF FIRST INSTANCE ESSENTIALLY UPHOLDS THE COMMISSION'S DECISION FINDING THAT MICROSOFT ABUSED ITS DOMINANT POSITION
However, the Court has annulled certain parts of the decision relating to the appointment of a monitoring trustee, which have no legal basis in Community law
On March 24, 2004, the European Commission completed a five-year inquiry and found that Microsoft's Windows operating system "broke European Union competition law by leveraging its near monopoly in the market for PC operating systems onto the markets for work group server operating systems and for media players." Here's the EC's news release from that time.
The company was given six months to make available to competitors "the interfaces required for their products to be able to 'talk' with the ubiquitous Windows OS," also described as "interoperability information." The company was also ordered to offer European consumers an unbundled version of Windows without Windows Media Player built in. Microsoft was also fined an eye-popping 497 million euros, or $613 million.
The European Commission also called for the apointment of a monitoring trustee to assist it in monitoring Microsoft's adherence to the decision. According to the Court of First Instance's statement today, "He was to have access to Microsoft's assistance, information, documents, premises and employees and to the source code of the relevant Microsoft products. All the costs associated with the monitoring trustee, including his remuneration, were to be borne by Microsoft."
In June 2004, Microsoft challenged the EC's decision and the fine before the Court of First Instance, one step below the highest judicial authority in Europe. Today's ruling is the outcome of that appeal.
On the question of interoperability information, the court found that the EC correctly determined that Microsoft's refusal to share that information resulted in an abuse of its dominant position in the operating system market.
Also, the court found that the "degree" of interoperability between Windows and server software sought by the EC was "well founded" and the remedy it imposed -- forcing Microsoft to "disclose the 'specifications' of its client/server and server/server communication protocols to any undertaking wishing to develop and distribute work group server operating systems" -- was appropriate.
Further, the court rejected "Microsoft's claims that the degree of interoperability required by the Commission is intended in reality to enable competing work group server operating systems to function in every respect like a Windows system and, accordingly, to enable Microsoft's competitors to clone or reproduce its products."
The court concluded, "The absence of such interoperability has the effect of reinforcing Microsoft's competitive position on the market and creates a risk that competition will be eliminated."
On the question of bundling Windows Media Player into the Windows operating system, the court agreed with the EC's decision that the two products were tied together, to the detriment of consumer choice, and upheld the remedy requiring Microsoft to offer a version of Windows without the player.
The court noted that "independent companies, like [Seattle-based] RealNetworks, ... design and supply competing [media player] products independently of operating systems." This was one of several ways the court determined that Windows Media Player and Windows are in fact seperate products -- a precursor to the finding that they were illegally tied together.
RealNetworks, which settled with Microsoft on the question of bundling two years ago, applauded the court's decision. "The standards affirmed by the European Court should help ensure fair competition for all Windows application developers," Real's General Counsel Bob Kimball said in a statement this morning.
The hefty fine was upheld. The court determined that the EC "did not err in assessing the gravity and duration of the infringement and did not err in setting the amount of the fine."
Finally, on the question of the monitoring trustee, the court found that the EC's creation of such a position -- with its own "powers of investigation and capable of being called upon to act by third parties" -- went "far beyond" merely seeking an outside expert to help with its investigation and monitoring of Microsoft. It struck down the creation of the monitoring trustee position.
Decisions of the Court of First Instance can be appealed to the brought before the Court of Justice of the European Communities, the highest court in Europe. Microsoft would have two months from today to decide to appeal.
As of 1:50 a.m., Redmond time, the company's General Counsel Brad Smith, who was in the Luxembourg court room to hear the decision, had not yet issued a statement on the ruling. He is expected to hold a press conference later this morning.
iPhones for sale in China, but no bargain
Posted by Kristi Heim at 10:05 AM
When the hottest electronics gadget in years meets the world's biggest producer of counterfeit goods, it just seemed inevitable that fake iPhones would spawn.
What's surprising is that some unauthorized iPhones sold in electronics markets in China's biggest cities, according to a Chinese news story, are actually more than double the price. It's not clear to me whether the iPhones in question are real or copies. The phones are manufactured for Apple by Hon Hai Precision Industry in Shenzhen, one of the cities where shoppers can find the unauthorized gadget for sale.
The fact that at least some people in China are willing to shell out $1,170 for this device speaks to the nature of the world's largest mobile phone market. Here's a good photo comparing a real iPhone with a Chinese version on the right.
While Chinese consumers seem unwilling to pay much for software, they're obsessive over the latest hardware. To keep trend-conscious users interested, new versions of mobile phones are released every six months, a much shorter time frame than they're updated here.
By the time Apple releases its iPhone in China in 2008, perhaps the country's more advanced mobile phone users will have moved on to the next craze.
DOJ says Microsoft antitrust settlement a success; California, other states disagree
Posted by Benjamin J. Romano at 11:08 AM
The Department of Justice issued a news release this morning saying, "competition and consumers have benefited from the final judgments entered because of the Department's antitrust enforcement efforts against Microsoft."
The Justice Department was joined by a handful of states. But several others, known as the California group, disagreed.
From Bloomberg News:
Antitrust regulators from California and five other states said in a filing today that Microsoft still maintains a monopoly over personal computer operating system software and some provisions of the settlement have yielded "little, if any, tangible pro-competitive results."
"There can be little doubt that Microsoft's market power remains undiminished,"' state regulators said in the filing in federal court in Washington. Key provisions of the settlement "have had little or no competitively significant impact."
The California group never agreed to the final judgment and was forced to join in it.
The Justice Department release was timed to a series of filings by the parties in the broad antitrust settlement, most of which expires this November, including Microsoft, the department and the states.
In a statement this morning, Microsoft General Counsel Brad Smith noted that the company intends to continue its compliance with terms of the settlement after it expires and codified its own view of its responsibilities in a set of Windows Principles issued last year.
"As it was specifically intended, the Consent Decree defined clear rules for how Microsoft competes without pre-ordaining winners in the technology marketplace. The Consent Decree shaped how we view our responsibilities and led us to adopt a set of voluntary principles that will continue to apply even after major parts of the U.S. antitrust ruling expire this November," Smith said.
The Justice Department cited several examples of middleware competitors -- including Web browsers such as Mozilla's Firefox, Opera, and Apple's Safari; and multimedia players from Apple and Adobe -- to support its assertion that the final judgment has protected competition. I asked a department spokeswoman for the hard data on which these statements are based; she said she would get back to me.
It's important to note -- and the Justice Department does -- that the settlement was aimed only at preserving competition in this middleware software category. It was not an attempt to roll back Microsoft's monopoly in operating system software. Windows is still the dominant OS, running more than 90 percent of the world's computers.
From the department's statement:
"The core allegation in the original lawsuit, upheld by the U.S. Court of Appeals in June 2001, was that Microsoft had unlawfully maintained its monopoly in PC-based operating systems by excluding competing software products known as middleware that posed a nascent threat to the Windows operating system. Specifically, the Court of Appeals upheld the District Court's conclusion that Microsoft engaged in unlawful exclusionary conduct by using contractual provisions to prohibit computer manufacturers from supporting competing middleware products on Microsoft's operating system, prohibiting consumers and computer manufacturers from removing access to Microsoft's middleware products in the operating system, and reaching agreements with software developers and third parties to exclude or impede competing middleware products."
"[A]s Microsoft was never found to have acquired or increased its monopoly market share unlawfully, the final judgments were not designed to eliminate Microsoft's Windows monopoly or reduce Windows' market share by any particular amount. Rather, the final judgments were designed to re-invigorate competitive conditions that Microsoft had suppressed so that the market could determine the success of these software products. The final judgments are succeeding in that goal."
Here's the Justice Department's final judgment review, filed today with the court. (PDF, 11 pages).
Microsoft also filed its own report on the final judgment (PDF, 12 pages), supported by two expert reports (PDF, 44 pages), (PDF, 45 pages).
Update: Here is the filing from the California group. (PDF, 21 pages).
Software piracy gangs busted in China
Posted by Kristi Heim at 1:11 PM
Microsoft is applauding a joint campaign by the FBI and Chinese police that broke up two software piracy gangs and seized software worth, well, somewhere in the millions, mostly bound for the United States.
The two-year effort resulted in arrests of 25 people, allegedly part of a ring operating from Shanghai and Shenzhen.
Chinese authorities and the FBI placed a different dollar value on the goods, according to this story. The Chinese Ministry of Public Security said it seized 360,000 programs and property valued at $7.9 million, while the FBI's Los Angeles office estimated the seized software's retail value to be $500 million. That would make each program worth almost $1,400.
Microsoft General Counsel Brad Smith hailed the get-tough stance toward counterfeiters.
"Customers around the world are turning you in, governments and law enforcement have had enough, and private companies will act decisively to protect intellectual property," he said.
Avvo launches with glitches
Posted by Tricia Duryee at 10:26 AM
In today's paper, I wrote about Avvo, a Seattle startup that aims to create profiles of every attorney in the country. The service would compete with the Yellow Pages or other ways consumers find divorce lawyers or bankruptcy attorneys today.
Avvo aims to be more than a list of lawyers by providing ratings for each lawyer on a scale of 1 to 10.
I took a quick peek at the site last week after the company allowed a preview before the site's launch. I found nothing unusual, except that it was really slow.
However, CNET reports today a number of odd glitches and information it found:
According to Avvo's profiles of "licensed attorneys," President Abraham Lincoln, once a lawyer who traveled on horseback between county courthouses, and Scopes defense attorney Clarence Darrow, who died in 1938, have no disciplinary sanctions pending and are encouraged to update their profiles by personalizing them with "professional experience" and achievements. Supreme Court Justices Ruth Bader Ginsburg and Samuel Alito each receive hardly flattering "experience" and "trustworthiness" ratings of three out of five stars.
Avvo does not disclose how it comes up with its ratings.
Board member Rich Barton, the CEO of Zillow.com who helped Avvo CEO Mark Britton start the company, readily acknowledged to me in reporting today's story that the company's techniques will cause some controversy.
"As long as we stay focused on the fact that we are empowering the consumer with information, in the court of public opinion you will win," he said.
UPDATE: See the comment down below for Mark Britton's response that he sent to the CNET reporter regarding what he found on the Avvo site.
He said, in part: "We're working hard to constantly add more information and, now that we're live, lawyers and consumers can help by adding their own content. In just the few hours since launch, hundreds of attorneys have claimed their profiles and provided consumers valuable information regarding their body of work."
Bill Gates goes to China
Posted by Kristi Heim at 5:10 PM
ALAN BERNER / SEATTLE TIMES
Bill Gates has been a widely recognized figure in China for years, as evident in the Shanghai airport book store, which had his biography prominently displayed in this 2005 photo.
It's one measure of how far Chinese media and Internet technology have come that China Central Television (CCTV) and Internet portal Sina are asking for questions from Internet users for a TV interview with Microsoft Chairman Bill Gates, who is visiting China this week.
It's also a measure of how far Microsoft has come in its long march toward finding the right business strategy in China. After years of fits and starts, the company has made a lot of progress over the last year.
In late 2005 Lenovo became the first Chinese hardware maker to agree to preinstall Windows software on new machines. Now the two companies are partnering to open a research and development center. And Microsoft is finally announcing software prices that consumers in developing countries can afford.
It's also worth noting that the U.S. software industry, of which Microsoft is far and away the largest and most important player, didn't participate in the recent WTO case against China. The complaint mentions books, music, videos and movies.
As for Gates, some questions people in China are asking him are posted here.
Among them are:
Do you think China's software industry will surpass India's?
What's your outlook on the world today?
Is your success thanks to yourself or to your good luck in business?
When are you going to make Windows source code public?
More trade actions with China
Posted by Kristi Heim at 12:51 PM
MANUEL BALCE CENETA/AP
U.S. Trade Representative Susan Schwab holds a pirated DVD copy of "Night at the Museum," a couple of weeks before the DVD is scheduled to be released on April 24.
On the heels of a Commerce Department decision to impose punitive duties on Chinese paper imports, the Bush administration announced today it would file two new cases against China with the World Trade Organization.
The WTO complaints focuses on poor enforcement of intellectual property rights in China that has allowed rampant piracy of movies, music, books, software and pharmaceuticals.
China has set "excessively high thresholds for launching criminal prosecutions" against distributors of pirated products, the first complaint states. The second complaint challenges a policy that allows only state-owned importers to distribute foreign books, DVDs and other items, creating a bottleneck that encourages piracy.
"This is more than a handbag here or logo item there; it is often theft on a grand scale" said U.S. Trade Representative Susan Schwab.
The action sets in motion a 60-day period in which trade officials from the U.S. and China will try to resolve the disputes. It also raises tensions in an already anxious political climate.
The precarious but hugely important U.S.-China trade relationship was the subject of a major speech last week by Sen. Max Baucus, D-Mont., chairman of the Senate Finance Committee. The Washington State China Relations Council has a good analysis of the speech here, saying his "tough love" approach and engaging China in a "dialog of the possible" represent the best policy option in the current environment.
Economists from Stanford University's Center for International Development have taken a contrarian perspective that the U.S. actually benefits from the trade deficit with China. Read their paper here.
Microsoft, AT&T and the Supremes
Posted by Benjamin J. Romano at 9:21 AM
Microsoft marked a milestone today, arguing for the first time before the U.S. Supreme Court in a patent dispute with AT&T.
While the company's long-running antitrust battle once looked like it would reach the highest court in the land, it never did.
Today's roughly hour-long argument stemmed from a patent claim filed by AT&T in 2001. A technology in Windows that converts recordings from analog to digital signals and back again for playback infringes on an AT&T patent. That's not disputed. The question is whether AT&T can collect royalties for copies of Windows made and sold overseas. It boils down to the reach of U.S. patent law. See this Bloomberg story we ran on Tuesday for more details.
A transcript of the oral arguments should be posted here later today.
Brad Smith, Microsoft's general counsel, gave this first take in an interview about 40 minutes after Microsoft's appearance before the Supreme Court:
The Justices were very well prepared and well informed and I think that contributed to a very good discussion with probing questions for both sides. But we certainly came away encouraged by our chances for success. We're certainly not going to predict any outcome on the basis of an oral argument. I don't think it's possible to do that. But I think we came out of the courtroom just as encouraged as we were when we went into it.
He said it was especially important to have the U.S. government arguing along side Microsoft in this case.
"That comes through very clearly when you read the transcript about why in the U.S. government's view and our view, it would be a mistake for the courts to seek to apply U.S. patent laws to activities that take place overseas," Smith said.
Smith seemed a bit awed by the stretch of the court's history:
"It's an amazing courtroom. It's the highest court in the country, obviously. It feels almost a little bit like a temple, a temple to justice. Here's a court that's over 200 years old, grappling with technology that is all very recent and is continuing to change very rapidly."
Applied Discovery hits milestone
Posted by Tricia Duryee at 11:06 AM
Bellevue-based Applied Discovery, a division of LexisNexis, said today that it has reached a new milestone.
The company helps law firms conduct discovery electronically. Today, it said in 2006 it processed 1.16 billion pages of electronic documents, representing a 49 percent jump over 2005 and a 65,186 percent increase over pages processed in 2001.
The company said the benchmark provides solid evidence that the $1.5 billion e-discovery market expanded quickly in 2006 and is an indicator of industry growth trends in 2007.
Electronic discovery technology enables law firms to quickly and securely capture, review and assess digital documents online as part of the "discovery" process in most legal cases.
It said the increase is linked to the growth of using digital communications for corporate communications. For example, the majority of corporate documents today are digital, through the use of email, instant messaging and mobile phone text messaging.
LexisNexis purchased Bellevue-based Applied Discovery in July 2003 for an undisclosed amount.
Microsoft's open-source spat
Posted by Benjamin J. Romano at 1:59 PM
Microsoft CEO Steve Ballmer's detailed answer to a question raised at a conference in Seattle last week has re-ignited controversy around the company's stance toward open-source software and called into question its pact with Novell.
The complex debate centers on whether users of Linux are violating Microsoft patents, and what Microsoft may or may not do about it. Ballmer suggested that Linux users -- other than those using Novell's offerings -- could be liable for violating Microsoft's intellectual property.
Novell strongly disagrees and offered this statement Monday:
Since our announcement, some parties have spoken about this patent agreement in a damaging way, and with a perspective that we do not share. We strongly challenge those statements here..
We disagree with the recent statements made by Microsoft on the topic of Linux and patents. Importantly, our agreement with Microsoft is in no way an acknowledgment that Linux infringes upon any Microsoft intellectual property. When we entered the patent cooperation agreement with Microsoft, Novell did not agree or admit that Linux or any other Novell offering violates Microsoft patents.
Now, there's a move afoot in the open-source community to change the GNU General Public License that covers Linux. The change, as reported by Reuters, would aim to extend protection granted to one segment of the open-source community (Novell users) to the rest of the community.
For more coverage and opinion on this ongoing story, check out: CNET and Mary Jo Foley.
Zillow targeted with complaint
Posted by Kim Peterson at 11:30 AM
A nonprofit group has filed a complaint against Seattle-based Zillow.com, saying that the online real estate site is so inaccurate when it comes to home valuations that it is causing bigger problems.
The complaint came from the National Community Reinvestment Coalition, which works to try to bring more private money into low- and moderate-income neighborhoods. That group said it founded the Center for Responsible Appraisals and Valuations.
Zillow says the allegations are groundless. Here are some of the key portions in the complaint, which is online here.
Zillow says that most of its home valuations are within 10 percent of the selling price of the home as valued by the owner or a real estate professional, according to the group. But the NCRC did its own audit and found that Zillow came within that 10 percent zone less than a third of the time.
The group also said that Zillow overvalues homes in affluent areas and undervalues homes in neighborhoods that are primarily African American or Latino. That disrupts the NCRC's mission of bringing more private money into underserved areas.
The NCRC also said it was unfair that Zillow gets to freely give estimates while traditional appraisers have to deal with liability issues and reporting and record-keeping requirements.
New RIAA lawsuits: 3 in Washington in legal trouble
Posted by Kim Peterson at 11:51 AM
If you think that the recording industry has stopped its hunt for piracy violations, you'd better stop downloading that copy of "SexyBack" immediately.
Today the Recording Industry Association of America announced a new round of lawsuits, including three against Washington residents. According to the association, the people named in the lawsuits illegally distributed copyrighted music through peer-to-peer services. The association got everyone's names by sending subpoenaes to Internet service providers.
Some of these people may not have even known they were distributing the music. The way some peer-to-peer programs work, users automatically share the music on their computers unless they specifically turn that sharing feature off.
iPod maker in Taiwan sues reporters
Posted by Kristi Heim at 11:38 AM
If you thought Apple Computer's attempt to quash internal leaks by suing bloggers was excessive, consider this: a Taiwanese maker of iPods has sued two Chinese journalists for reporting on labor abuses at its factory in southern China, according to today's South China Morning Post.
It started when China Business News reported that workers at Hongfujin Precision Industry in Shenzhen had to work long hours under harsh conditions and more than half were sick. The company makes iPods for Apple and is a subsidiary of Taiwan-based Foxconn.
An Apple spokesman told the Associated Press that the company is working behind the scenes to resolve the dispute. Meanwhile, Hongfujin filed a 30 million yuan defamation suit (about $3.75 million) against the journalists and persuaded a Shenzhen court to freeze their personal assets: bank accounts, homes and a car.
This weekend: Penny Arcade Expo
Posted by Kim Peterson at 2:42 PM
An estimated 17,000 video game fans are expected to head to Bellevue's Meydenbauer Center this weekend for the Penny Arcade Expo.
This convention, just a few years old now, has grown to what seems to be the largest video game convention out there, especially now that E3 is scaling down to fewer than 10,000 people. PAX, as it is called, isn't an industry conference; rather, it's solely for video game fans.
Admission is about $25 each day. Check the convention home page for more information.
Tattle on your boss for money
Posted by Kristi Heim at 2:20 PM
The Business Software Association, which is now touting itself as a "watchdog group," is offering to pay employees cash to turn in their employers for using pirated software.
The industry organization, which includes tech giants Microsoft, Adobe, Apple and others, sent out a Wild West-style reward poster yesterday hinting at why it is "handing out cash." Today it formally announced payments from a "Rewards Program" that encourages individuals to report infringements in their current or former workplaces.
BSA said it gave $15,000 cash to three people for reports of software piracy that led to investigations and settlements. All three, including an IT support employee and a customer service representative, reported on their companies after leaving them. The BSA didn't say whether it had job openings for anyone fired after tattling.
Google as a verb: It's official
Posted by Kim Peterson at 10:57 AM
Google is now officially a verb. Oxford English Dictionary added the word in verb form June 15, so you can legitimately say you've "Googled" something.
Techdirt wonders if this move is going to move Google closer to losing the trademark on its brand name.
Gambling writers encouraged to take up knitting, water polo
Posted by Kim Peterson at 12:45 PM
Washington's new law banning online gambling even extends to people who write about the subject, and Seattle Times columnist Danny Westneat explores that area (possibly even breaking the law himself) in a column today.
State officials armed with the new law have targeted a Bellingham man named Todd Boutte who reviews online gambling sites, saying his Web page was illegal, according to Westneat.
"1984 has finally arrived," Boutte told Westneat. "I can't believe this is happening in a liberal place like Washington."
But, hey, "Web 2.1" might still be available
Posted by Kim Peterson at 2:30 PM
Quoted: "It's a pretty standard business practice." - Sara Winge, vice president of corporate communications at O'Reilly, on the company's request to register the term "Web 2.0" as a trademark when it relates to conferences.
O'Reilly has caused a small uproar by sending a letter demanding that IT@Cork, a non-profit networking group, not use the term in the title for a future conference.
Winge goes on: "While we stand by the principle that we need to protect our 'Web 2.0' mark from unauthorized use in the context of conferences, we apologize for the way we initially handled the issue with IT@Cork."
More on F5 Networks and nationwide SEC probe
Posted by Kristi Heim at 12:52 PM
Today's story on federal investigations of F5 Networks and more than 20 other companies concerning the timing of stock option awards was picked up by McAdams Wright Ragen's Tim Bueneman.
He reiterated today that F5's management had strongly denied any backdating in a conversation with him last Thursday, prior to F5's announcements that the company received a grand jury subpoena from U.S. District Court in New York and was under investigation by the Securities and Exchange Commission. In his note to investors Monday, Bueneman said he had spoken with F5 Chief Accounting Officer John Rodriguez on May 18, who was explicit in saying "F5 has not back-dated any options."
May 18 is the same day F5 received the grand jury subpeona and a notice from the SEC of the inquiry, though F5 didn't announce those events publicly until Monday. F5 says it is cooperating with the grand jury and the SEC investigations, and that its board has authorized a review of the company's stock options grants, to be conducted with the help of outside independent legal counsel and independent accounting experts.
Software piracy down in emerging markets
Posted by Kristi Heim at 10:38 AM
China, Russia and India, usually given the dubious distinction as the world's biggest markets for pirated software, today topped the list of countries with the most progress on reducing software piracy last year, according to the Business Software Allilance. In both Russia and China, piracy rates dropped 4 percent, while the rate declined 2 percent in India. Ukraine and Morocco were also included in the group with the biggest reductions in piracy.
About 35 percent of software on the world's PCs last year was still illegal, according to the BSA, amounting to $34 billion in losses. But the progress in emerging markets was a positive sign. The BSA credited education, enforcement and policy efforts for the change.
Seems to me the progress has a lot to do with the development of homegrown software industries in those countries, and the government's desire to protect a nascent asset.
Even with the lowest rate of software piracy, the amount of damage was highest in the United States, where piracy was blamed for $6.9 billion in losses. Read the report here.
Some Northwest links in Milberg Weiss indictment
Posted by Mark Watanabe at 1:51 PM
From Deputy Business Editor Rami Grunbaum:
The law firm that corporate executives love to hate, Milberg Weiss Bershad & Schulman, was indicted Thursday along with two of its name partners on a litany of charges centering on alleged illegal kickbacks to plaintiffs who picked the firm to litigate their class-action securities lawsuits.
Microsoft, Infospace, Sonus Pharmaceuticals, Avenue A, Willamette Industries and most recently Boeing -- these and other local companies have felt the sting of lawsuits by Milberg Weiss (or a predecessor firm, which was not indicted). It's been the nation's leading practitioner of the securities class-action suit.
All told, according to the indictment, the firm collected more than $200 million for its work in more than 150 class-action and shareholder derivative-action lawsuits. It directed more than $11.3 million in illegal kickbacks to three "paid plaintiffs" who helped Milberg Weiss secure the coveted position of lead law firm in the suits, prosecutors said.
Did any of the alleged kickbacks to plaintiffs involve Northwest companies? The 102-page indictment identifies two for which the law firm allegedly made specific payments to a plaintiff.
-- For a suit against Heart Technology, a Redmond company that made artery-cleaning medical hardware, an unnamed co-conspirator was paid $19,859 in 1997, according to the indictment.
-- In a lawsuit against Oregon biotech company Epitope, $3,849 was paid in 1993 to one of the paid plaintiffs who was indicted earlier.
All plaintiffs in a class action are supposed to be treated equally, so such undisclosed payments for steering business to a law firm would be illegal.
Milberg Weiss has denied the allegations. A statement from the company also said it "is particularly incensed that the prosecutors decided to indict the firm itself. The firm has 125 attorneys and another 240 employees who, even according to the government, did not participate in or know anything about the matters at issue. But they will inevitably suffer serious personal and professional harm as a result of the government's actions."
You shall not pass?
Posted by Monica Soto at 10:37 AM
The U.S. Patent and Trademark Office decided to re-examine Amazon.com's "1-Click" check-out system patent after a New Zealand actor raised "compelling" concerns.
This isn't the first time the patent has landed Amazon in court. A month after its 1-Click patent was granted in Sept. 1999, Amazon sued BarnesandNoble.com for using a similar feature. The companies settled the lawsuit in March 2002.
In an odd twist, the patent's validity is being challenged by Peter Calveley -- among a dozen actors to provide motions for "The Lord of the Ring's" computer-generated elves and orcs.
We're sure Amazon wants to send the lawsuit into the firey chasms whence it came.