Austin Technology Law Blog : Texas Technology Lawyers & Attorneys for Copyright, Trademarks & Software Licensing in Houston, Dallas & Austin TX

Having solved all the other problems in Texas, including the problem of gun violence (prayer) and the problem of uninsured citizens (cutting Medicaid) the Texas legislature has turned to the burning issue of employers requiring employees to provide access information to employee's private social media accounts.

House Bill 318 has been introduced to make it an "unfair employment practice" if an employer "...requires or requests that an employee or applicant for employment disclose a user name, password, or other means for accessing a personal account of the employee or applicant, including a personal e-mail account or a social networking website account or profile, through an electronic communication device."

This bill still allows "monitoring" employee usage of employer provided media and also allows employer policies prohibiting use of company provided resources for personal use.  It doesn't provide for a specific remedy or a damages cap and it will likely be amended substantially before it passes, if it passes at all.  This would make Texas one of a handful of states that has jumped on this burning issue.  Crisis averted.

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Here's the situation:  You establish a Twitter, Facebook, LinkedIn, etc. account while you are employed and use the account to tweet, post, blog, etc. about your employer.  Then your employer falls out of love with you and you are no longer employed.  Who owns your followers on Twitter or your Facebook or LinkedIn account?  That's a really good question and one that the courts are dealing with right now.

Rich Sanchez was an anchor on CNN and has a Twitter account with the handle: "richsanchezcnn".  Rich was rendered unemployed because of some ill advised statements he made.  So, does CNN own the account or was Rich popular with the Twitter followers because of his good looks and sex appeal or because he was on CNN?  Should he have to change his handle?  This was settled out of sight, so we don't know what happened there.

On another front, a company called PhoneDog LLC filed a suit against former employee Noah Kravitz.  Noah tweeted while an employee of PhoneDog under the name "PhoneDog_Noah" but then changed it to "noahkravitz" after the break up.  PhoneDog alleges that Noah's 17,000 followers are worth $2.50 per month for 8 months and are asking for a $340,000 judgment against our friend Noah.  PhoneDog has, for the moment, survived a motion for summary judgment with the judge finding enough question of fact about "trade secrets" in the account to let the case go on for a little longer.

Then there's the strange case of Dr. Linda Eagle, who was one of the original founders of Sawabeh Information Services.  As is the case sometimes, all the founders were fired and Sawabeh alleges that it owns Dr. Eagle's LinkedIn account and that she has somehow "misappropriated" her own  account.  As you know, most LinkedIn accounts (as was Dr. Eagle's) are in the employee's name alone and refers to the company in the employment history and in the connections established.

We have explored the issues of who owns clients of an LLC and whether a toxic ex-spouse might have some rights in a patent in a community property state, but this is an area of the law that is developing.

In most instances, this is probably not a huge issue but employers who want to have control over these accounts (and the wisdom of this should be evaluated thoroughly), should provide guidelines in the social media section of their employment rules.  If stated clearly, there seems to be no reason why the employer would not be entitled to control and ownership of such accounts if they fall into the parameters set out in such policy.  Otherwise, it's pretty gray.

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Here is a couple of technology law related things that happened this week and they are only marginally connected.

1.  Facebook sued a site called Faceporn in a federal court in California.  They are aggressive about this.  See here and here.  Faceporn is in Norway but uses a .com website.  They also have 250 users in California and 1000 users in the U.S.  Faceporm failed to file an answer and Facebook moved for default judgment.  The Court denied the motion, finding that it did not have personal jurisdiction over Faceporn in that personal jurisdiction requires more than "simply registering someone else's trademark as a domain name and posting a web site on the internet".  Hence, no default judgment.

2.  In a recent  case in Massachusetts involving the claim of copyright infringement for an adult film, the judge wondered aloud in a Footnote 2 whether there was actually any copyright protection available for a pornographic product.  A couple of cases had refused to provide such protection (beginning in the early days of Broadway, see Martinetti v. Maquire, 1867) but basically on the grounds that scant dialog and nude women were not a dramatic composition and therefore not entitled to copyright protection.  A 1979 case allowed for such protection because found that the concept of decency and pornography is constantly changing and "denying copyright protection to works adjudged obscene by the standards of one era would frequently result in lack of copyright protection (and thus lack of financial incentive to create) for works that later generations might consider to be not only non-obscene but even of great literary merit".  It seems incongruous that porn is not entitled to any copyright protection but cases as late as 1998 found that hard core porn that was "bereft of any plot and with very little dialog" was not entitled to injunctive relief against copyright infringement.

So, lack of personal jurisdiction just because you have a .com domain and a question raised about copyright protection for pornography.  How do these affect technology and law?  Well, the internet issue for personal jurisdiction will continue to develop over the years, copyright issues for any medium is a hot item in technology protection and any mention of porn lights up the search engines and gets us more readers.  Reasons enough?

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We have chronicled the saga of the Winklevoss twins in these pages before (see here, here, here and here) and frankly, we're a little embarrassed we have spent so much time on this.  As you will remember, the twins succeeded beyond most mere mortals wildest expectations when they settled their claim against mighty Mark for a portion of Facebook now estimated to be worth more than 9 figures.  That definitely made them a member of the one percent.  They then decided that they had been scammed and tried a number of times to set the settlement aside.  As indicated in the posts described above, they have been singularly unsuccessful in that endeavor.

They engaged the firm of Quinn Emanuel to pursue the initial law suit against Facebook.  The arrangement with Quinn Emanuel provided for a contingency fee based on the amount ultimately recovered through suit or settlement.  They signed an engagement letter that they had reviewed by independent counsel.  After the settlement with Facebook, the twins decided not to pay Quinn Emanuel the $13 million in legal fees that Quinn Emanuel claimed under the engagement letter.  Quinn Emanuel instituted arbitration in accordance with the engagement letter.  The twins sought a court order enjoining the arbitration proceeding.  That was denied.  An arbitration panel awarded Quinn Emanuel the $13 million dollars.  The twins appealed again to the New York Supreme Court seeking to set aside the award because of the law firm's alleged malpractice.  Denied again.

The Winklevoss twins entered into a settlement that made them even wealthier than they already were.  They then decided that they didn't like what they had agreed to and have set out to avoid anything relating to that settlement.  They are zero for career in that category.  I wonder if the law firm representing them in the matter against Quinn Emanuel asked for up front payment.  They would be guilty of malpractice on their own behalf if they didn't.

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We have covered the Winklevoss twins versus Zuckerberg/Facebook legal struggle on way too many occasions (see here, here, here and here).  We rejoiced when we found out that the Winklevosses would not go away as we felt it would make for easy blog posting.  Well, this is one.  About a month after the Winklevosses decided not to take their appeal to the U.S. Supreme Court and instead pursued a suit in District Court in Massachusetts, that court has dismissed their claim on the grounds that other courts had already considered and rejected their substantive claims (res judicata).  The twins' attorney will file a motion for post judgment relief and we can only hope that this continues until we need another easy post.

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Yesterday we announced prematurely the cessation of combat operations in the Winklevoss v. Zuckerberg saga/soap opera/high grossing movie plot.  It seems that even though the twins had decided to forgo their appeal to the U.S. Supreme Court, they are pressing the attack in an existing suit in Boston.  Thank you, whatever deity is responsible for providing material for blog posts.  Our faith in you is renewed.

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This blog has been in sort of a TMZish mode regarding the unfolding drama of the Winklevoss twins vs. Zuckerberg.  See here, here and here.  Apparently the era of easy blog posts is coming to an end as the twins have announced through a filing that they will not pursue an appeal to the U.S. Supreme Court.

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You will remember that the Winklevoss twins had tried to get their settlement with Facebook overturned.  The Ninth Circuit had decided that the settlement should stand and that litigation should end at some point.  The Winklevosses did not take the hint and asked for a rehearing en banc (i.e. that all the judges of the Ninth Circuit hear it as a panel rather than the three judge panel that originally sat on the case).  That motion was denied without comment.  The only option left for the twins is to appeal to the U.S. Supreme Court.  In order to decide to grant certiorari (i.e. the decision to put the case on the Supreme Court docket), the Supremes will have to believe there is some constitutional issue to be decided.  That will not be easy in this case as the issues deal primarily with contract law and the allegations of fraud.

We had mentioned before that we hope the Ninth Circuit granted a rehearing for no other reason than it gave us fodder for further posts.  We now wish the same for the Supreme Court.

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Last week we talked about the Ninth Circuit refusing to set aside the Winklevoss/Zuckerberg/Facebook/ConnectU settlement agreement.  Yesterday, the famous twins decided to ignore the part of the opinion that said that now is the time for the litigation to come to an end and filed a Petition For Rehearing En Banc.  This means that they are asking all the judges of the Ninth Circuit to rehear the case rather than the panel that originally heard it. 

From the language of the Petition, the twins seem to take umbrage at some of the snarkier language in the original opinion.  They find issue with: "bested by a competitor", "backing out", "quite favorable", "enough" and allege that "sophistication is no defense".

We can only hope that a rehearing will be granted, if for no other reason than it will give us fodder for several more posts.  Stay tuned.

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We've all seen the movie.  Mark Zuckerberg versus the Winklevoss twins.  Uber-nerd versus uber-jocks.  Outsider versus the privileged and connected.  In the balance rests the right to violate the privacy of virtually everybody in the "civilized" world.

The movie shows some of the discovery proceedings in the lawsuit filed by the Winklevosses in Massachusetts alleging that Zuckerberg stole the Facebook idea.  Zuckerberg filed a countersuit in California (typical Facebook ploy, see here) against the twins and ConnectU, alleging that ConnectU had hacked into Facebook and stolen information and attempted to steal Facebook users by spamming them.  The California dismissed the action against the Winkelvosses, finding that there was no personal jurisdiction over them. The Court then ordered the parties to mediate to attempt to find a settlement to all their issues.

Then things start to get stranger.  With billions of dollars at stake, the parties mediate for one day, reach a settlement and document it with a one and a third pages of hand written notes with the title: "Term Sheet and Settlement Agreement".  This Agreement envisions the transfer of ConnectU to Facebook in exchange for cash and an interest in Facebook.  Facebook lawyers then present 130 pages of documents to flesh out the Agreement (merely 100 times the volume of the Agreement).  The deal then comes off the tracks for a number of reasons including the Winklevosses asserting that the value of the Facebook stock is less that they were lead to believe.  Facebook files a motion to enforce the Agreement.  The twins alleged that the Agreement is not enforceable because it lacks material terms and was procured by fraud.  The Court finds the Agreement enforceable and the Winklevosses appeal.

Then Ninth Circuit, in a decision released yesterday, upheld the enforcement of the Settlement Agreement.  The Winklevosses had alleged that the Agreement violated Rule 10b-5 of the Securities Act and as such was void.  The Ninth Circuit rejected this argument and found: "The Winklevosses are sophisticated parties who were locked in a contentious struggle over ownership rights in one of the world's fastest-growing companies. They engaged in discovery, which gave them access to a good deal of information about their opponents. They brought half-a-dozen lawyers to the mediation. Howard Winklevoss—father of Cameron and Tyler, former accounting professor at Wharton School of Business and an expert in valuation—also participated."

The Court also held: "The Winklevosses are not the first parties bested by a competitor who then seek to gain through litigation what they were unable to achieve in the marketplace. And the courts might have obliged, had the Winklevosses not settled their dispute and signed a release of all claims against Facebook. With the help of a team of lawyers and a financial advisor, they made a deal that appears quite favorable in light of recent market activity. See Geoffrey A. Fowler & Liz Rappaport, Facebook Deal Raises $1 Billion, Wall St. J., Jan. 22, 2011, at B4 (reporting that investors valued Facebook at $50 billion —3.33 times the value the Winklevosses claim they thought Facebook's shares were worth at the mediation). For whatever reason, they now want to back out. Like the district court, we see no basis for allowing them to do so. At some point, litigation must come to an end. That point has now been reached." (Emphasis added)

So, the poor Winklevoss twins are stuck with a deal that is only worth millions and not billions.  In the lessons learned department, we are struck by the fact that you probably couldn't turn around in the mediation room without tripping on a lawyer or a financial advisor and yet, they ended up with slightly over a page long, hand written document.  That either means you don't need lawyers at all or you really need them to do their job. 

Maybe we'll find the answer in the next sequel, "Social Network III, The Legal Grievance Phase".

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Sometimes referred to as the Facebook for the business set, LinkedIn provides a multitude of information and contacts to its members.  Last week, LinkedIn notched its 100 millionth user.  According to the metrics on my LinkedIn page, I'm connected to about 4 percent of them.  That's a lot.  I hope they don't all decide to come over to the house at once.

In a nice touch, the founder of LinkedIn sent a personal letter of thanks to the first 1 million adopters, specifically citing their order of signing up.  I didn't get a letter as I missed being in the first million by a mere 16,915,876.  If you are looking for your letter, you can determine if you are going to get one by looking at your full profile URL.  Your order in the LinkedIn hierarchy is listed after the "id=__" in the URL.

I'm probably not going to get a letter from Mark Zuckerberg either.

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It didn't take long.  You will recall that we discussed Lamebook's filing against Facebook here in an Austin court last Friday.  Yesterday Facebook struck back with a suit in the Northern District of California. 

Facebook will hope to get Lamebook's declaratory judgment action dismissed here and then proceed with their suit in California.  There will be much maneuvering and it will rapidly get expensive, particularly for Lamebook. 

As we said before, stay tuned.

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You may recall that we recently discussed that Facebook had unleashed the dogs of war on a website called Teachbook, a social network for teachers.  Messing with teachers is one thing, but now Facebook has stepped up their game a notch and has filed a similar action against something called Faceporn.  Until recently, Faceporn unpretentiously called itself "the number one socializing porn and sex network".  Now, it just calls itself down due to "unforeseen circumstances".  Like the suit against Teachbook, Facebook is asking for all of Faceporn's revenue and ownership of its domain name.  Faceporn says it is redesigning its site and will come back with the "best porn site the world has ever seen".  It's nice to know that Faceporn retains its humility through trying times.

Look for more of these suits from Facebook and maybe from others.  YouTube is yet to take on YouPorn, but that may just be a matter of time.   

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Recently, Paul Allen (co-founder of Microsoft and worth roughly the GDP of Jamaica) filed a patent infringement lawsuit against most of Silicon Valley.  The Defendant's list reads like a who's who of modern technology giants:  Apple, Google, Facebook, eBay, AOL, Netflix, Yahoo, Office Depot, Office Max, Staples, You Tube (not listed: Microsoft).

The patents at issue extend back to the late 90s when Allen's now defunct company, Interval Research, was granted a number of patents dealing with e-commerce and search process.  In fact, it was so long ago that Google wasn't even in existence when some of the patents were applied for. This is obviously a big deal for Silicon Valley companies as they struggle to work within the current patent system.  The sheer number of defendants and the issues at stake has lead some to surmise that this could be the tipping point for software patents as a whole.  Earlier this year, many were guessing/hoping that software patents would finally be invalidated in by the Supreme Court in the recent case, In Re Bilski, but that didn't happen.  Obviously, an entire industry cannot constantly be fighting out their innovations in the court room because in the long run, it only ends up hurting consumers and stifling progress.  So we'll see if this is actually a turning point in our current patent system or just another addition to our patent thicket.  Stay tuned. 

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Once upon a time, most schools distributed annuals or pictures, names and some personal information about students so that other students could make connections. Then Mark Zuckerberg hacked into the Harvard computers and obtained private information of students and put that into a Hot or Not knockoff called “Facemash”.
Harvard threatened Zuckerberg with expulsion, charges for breach of security and copyright infringement. Harvard later backed off and the rest is history.
Fast forward to today and the behemoth that has now evolved from Facemash to Facebook is rigorously trying to keep anyone from using either “Face” or “Book” in their name if the entity is remotely associated with social media.
Facebook recently induced a site called Placebook to change its name to TripTrace and has now filed suit against a site called Teachbook, which is not even operable yet but purports to be an online information sharing vehicle for teachers (a large number of whom are prohibited from being on Facebook by school administrators).
Facebook is alleging in the suit against Teachbook that the term “Book” is highly distinctive and that most people associate it with social networking. Facebook throws in a claim of cybersquatting and wants the court to give it the domain name Teachbook. For good measure, they included counts of trademark infringement, unfair competition, and trademark dilution. Teachbook has only a couple of employees. Hello fly, meet cannon.
This indicates that Facebook will be aggressive against any online vehicle containing any variety of “Face” plus something or something plus “Book”.
No word yet on their stance on BookFace (actual trademark application made and abandoned several years before Facebook came around).
 

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