Tag: technology

Grandma’s going to jail for digital trespassing?
By Ryan Long

Grandma’s going to jail for digital trespassing?

“No digital trespassing! Violators will be sued. Survivors will be sued again!” Ever seen that sign? Not likely. That’s because, technically, there is no law against digital trespassing per se. This occurs when your grandma’s new universal remote control climbs over, figuratively speaking, the encryption security fence on copyrighted content, such as the software to her old garage opener, so as to enable communication between the new control and old garage door opener. And yet some copyright owners want to hold your grandma civilly or even criminally liable under federal law for such trespassing. Allowing them to bust grandma would be an unwise expansion of their copyright monopoly.

Say you buy your grandma a garage door opener made by Acme Inc. The garage door opener comes with a control. Now, granny has a lot of controls, and she is too old to futz around with a control for her television, one for her radio, and one for her garage. Given you love your grandma and want to make her happy, you buy her Bling Inc.’s universal remote control. Bling’s one size fits all control circumvents the encryption technology fence on Acme’s garage door opener. In so doing, Bling’s remote is now able to gain access to Acme’s copyrighted software, thereby enabling interoperability. Otherwise, they wouldn’t be able to communicate because Bling’s remote would be speaking kilometers per hour to the miles per hour garage door opener without a translation protocol.

Does Acme have a claim for digital trespass against Bling or your grandmother? In the view of some copyright holders, the answer is yes. That’s because, in their view, Bling’s universal remote control has enabled your grandma to violate the anti-circumvention provisions of what is called the Digital Millennium Copyright Act (“DMCA”). This is so even if neither Bling nor your grandma infringe, or otherwise induce infringement of, Acme’s copyright in the source code by copying, reproducing, or otherwise publishing it. Under this view, there is a per se — automatic — violation of the DMCA whenever Bling or your grandma trespass, regardless of the circumstances.

But in the view of federal courts, there is no per se rule against digital trespassing under the DMCA. Bling’s universal remote control allows for what is called interoperability between grandma’s different devices, which is an efficiency that Congress didn’t want to do away with when passing the DMCA. In fact, the DMCA explicitly states as much in Section 1201(f)(1), in case you want to bore yourself by looking it up. What is more, courts have dismissed claims brought under the DMCA where the plaintiff is only able to allege or prove digital trespass, no corresponding copyright infringement or conscious inducement of the same.

Then why do companies like Acme file lawsuits seeking redress for digital trespassing? There are various reasons. One is security. Closed software universes, like Apple’s, protect better against viruses that can more easily attack porous systems that are liberal in their approaches to interoperability. This is one of the reasons why Apple’s computers are hacked less often than personal computers. The second is the fear that digital trespassers will pirate copyrighted content. The third is lost revenues. Conversion technology which allows newer kilometers per hour devices to communicate with older miles per hour ones via a translation protocol cost companies money. Rather than forcing granny to buy a new television in order for her to gain access to content protected by new encryption technology, conversion technology enables her old television to communicate with the new encrypted content. In the process, new technology sales suffer.

In the end, your 92 year old grandma isn’t going to jail! One reason is that her and her friends pack heat with silencers. The other is that the DMCA didn’t expand the scope of a copyright holder’s monopoly, and it expressly says that. However, it may take some more court decisions to make that clear to aggressive copyright holders who seek to pursue granny for digital trespass merely because she uses conversion technology to watch Netflix’s “Just Call Saul” on an old outdated screen. Otherwise, grandma’s crew might just shoot them all.

An offer you can’t refuse.
By Ryan Long

An offer you can’t refuse.

The WSJ recently reported in Zynga Leans on Some Workers to Surrender Pre-IPO Shares that the technology company is making certain employees an offer they can’t refuse: cough up your pre-IPO stock options or your first born is dead.  Well, not really. The threat is that the employee will lose his or her job. While it is understandable that the company doesn’t want to have another Google cook who makes out like a bandit when Zynga goes IPO, it is also unclear whether Zynga’s approach is either legal or wise.

Under New York’s Limited Liability Company Act, for example, an employee’s sweat equity is valued like a cash contribution. So if you offer $50,000.00 of your cooking services to a cash starved start-up in exchange for 2% of the company and a measly $25,000.00 salary, you are in the same position as another investor who put in $50,000.00 cash for 2%. Of course, you could end up getting a windfall if the company eventually goes public and is worth $2 billion.

That is the position Zynga is about to find itself when it goes public. To rectify the problem of attracting new talent with not enough shares to dole out, the company is apparently going to certain employees and demanding that they return some or all of their stock options, or else. If this is merely a case buyer’s remorse, then Zynga will be asking for a great deal of breach of contract and wrongful termination litigation from terminated employees. Of course, if the employees have not lived up to their part of the bargain, then the law in New York at least allows companies like Zynga to ask for interests back under threat of breach of contract litigation against the employee.

In either case, it doesn’t seem like good business. People will be more reticent to work with start-ups if they expect that, down the line, the company will finagle them out of their not yet vested stock options so that they can go to more efficient resources — i.e. more valuable people. If a company is worried about getting itself into a tight bind like this, it seems better to hybrid the transaction with some cash so that the company doesn’t find itself later on with not enough stock to go around, or, worse, embroiled in class action litigation. Otherwise, the company shouldn’t make the deal in the first place.