Crackberry One Step Closer to Rehab

Well if you're shaking and trembling right now, it's because you know that your crackberry habit might be on its way to rehab. The Supremes have just denied cert to RIM on its high stakes patent infringement battle, meaning they will not step into the fray and delay the potential injunction awaiting RIM. The Supreme court, as expected, did not see fit to clarify "soft" policy based arguments concerning the application of patent law in a digital world at this juncture. We now wait with baited breath and may actually experiment drafting a letter on paper, to of fear for the next patent fracas.

Cash Hungry?-Factor In Your Receivables

Short term cash flow is the kryptonite of most small and start-up businesses destined for Superman status. Often lawyers and other business consultants throw around venture capital or bank financing as though these are the only viable or desirable means to bridge the gap. The reality is that neither of these options address the majority of businesses for a variety of reasons. Simply, many businesses do not have the operating history and/or the "wonder" product to avail themselves of either bank or VC financing.

"Factoring" may offer a solution for such company's short term financial needs. Factoring institutions use a company's account receivables as the collateral for small sum "loans." Factoring really behaves like a line of credit, but is in actuality a sale of specific accounts receivable/invoices to the factoring firm. In other words, a company can trade in an outstanding invoice for immediate cash. Of course, the factoring company will take a fee, usually a percentage of the factored invoice.

The application process is relatively straightforward. Along with an application, you must generally submit recent financial statements, recent tax returns, an accounts receivable aging and an accounts payable aging. In addition, the factoring firm will conduct a lien search (or a UCC-1 search) to determine if there are any other liens staked on your company's accounts receivable as collateral. So for example where a bank has a first lien on your receivables, that bank must consent and "subordinate" its lien to accommodate the factor. Secondly, the factor will assess the credit of your customer(s) and will rely on any history and information you can provide about your customer in addition to consulting credit databases.

Where a company is cash strapped, strategic use of factoring services can be extremely helpful. When considering whether to factor your invoices, you must evaluate the time value of money to your company. If routine cash flow problems interrupt production or if there is a short term opportunity that requires financing, the factoring service fee may be worth it. However, every situation is different and the only general rule is that all financing comes at a cost--if you don't need the capital, don't borrow. Also, factoring may be viable for your business assuming: (1) conventional bank or government loans are inaccessible; and (2) your operations can absorb the factoring fees. Factoring is simply another form of borrowing with the interest and collateral both being given up front. Finally, since factoring is a business, shop around for the best deal for your invoices.

Kaiser Wahab

How Will Software Publishers Engage A Post Skylarov World?

Not so much news in the sense this is a current event, as it is "news" to those who have not yet grasped the increasingly difficult international copyright landscape that we live in. The DMCA, or the less cuddly moniker "Digital Millennium Copyright Act" is a congressional response to digital copyright infringement. Without delving into the specifics of the Act which has been discussed ad nauseum as to its anticipated benefits/chilling effects, I will simply mention that it prohibits the following: 1) circumventing access controls [1201(a)(1)(A)]; 2) access control circumvention devices [1201(a)(2)]; 3) copyright protection circumvention devices [1201(b)]; and, 4) removal of copyright management information (CMI) [1202(b)].

The interplay of increasingly stiff domestic copyright laws, such as the DMCA, and the ubiquitously global character of software development/piracy pose an interesting dilemma. A common feature of the software development universe is third party accessory and utility development in support of a big publisher software. Consider the ubiquitous PDF, the second reason computers were invented after porn according to the more wry desktop users throughout the world. It is a tremendous office asset, which has become integral to many company processes, mine included. However, there are a universe of tasks and functions that the actual Adobe Acrobat software does not provide. Enter the third party developers who identify niche needs and tasks and code complimentary software that in some way employs PDF's. This is akin to the explosion of 3^rd party accessories for your iPod. Where a domestic copyright statue has been allegedly breached by virtue of third party software development enterprise, to what extent should a foreign national be subject to its penalties, and what is the acceptable mechanism to do so?

There are those that believe the manner and extent of the DMCA's application should be to the fullest. Such was the case with the arrest of Dmitry Sklyarov, a software engineer at a small Russian software company Elcomsoft. He assisted in Elcomsoft's development of the Advanced eBook Processor (AEBPR) software. According to Elcomsoft, the software permits eBook owners to convert Adobe's secure eBook format into PDF. Since eBooks are typically locked to a particular machine, Elcomsoft claimed it filled a public demand by allowing people to make "backups" of their eBooks for archiving or use on another computer. Adobe felt that this was a circumvention of their encryption device and proceeded to take legal action. Upon Adobe's notification to the Justice Department, following a series of unheeded cease and desist letters, Skylarov was arrested in Las Vegas while attending a conference and subsequently both he and Elcomsoft were prosecuted.

Ultimately Skylarov posted $50,000 bail, returned to Russia and the Justice Dept. lost its DMCA claim against Elcomsoft. The jury, instructed by the judge to interpret the DMCA to punish only "willful" conduct, concluded that Elcomsoft simply did not know its software transgressed the DMCA. An obvious setback for the major software publishers, the Skylarov decision essentially allows foreign entities to claim ignorance to bypass the DMCA. However, is this necessarily a bad outcome? Is it not wiser for the big publishers to pursue outright piracy as opposed to the Elcomsofts of the world? More importantly, does the Skylarov decision put more pressure on a software industry reeling from piracy to pursue individual copyright suits ala the RIAA/MPAA? Given the fact the DMCA's wings have been clipped in this regard, the answer may soon be yes. However, the fallout that Adobe faced with the Skylarov decision may make them trigger shy.

Kaiser Wahab

Content goes Cellular…Again, with Motorola's Debut Cell Phone Radio Service

To begin the new year with a ringtone, seems quaintly 2005, as Motorola unveils a new cell driven radio service.

As an attorney routinely dealing with licensing, a common practice pitfall is the under utilization or under segmentation of a property. In other words, why license a song exclusively to one interest in perpetuity, when you can generate multiple parallel revenues streams across segmented territories, platforms, uses, etc. To most attorneys, this premise is as much a fundamental as it is obvious. However, as the number of competing technologies and venues increases, so too will the need for unique licensing schemes that allow for fair compensation and flexibility. Consider the dilemma facing podcasting with regard to popular copyrighted content. Similarly, now that even manufacturers such as Motorola are entering the content game, the acceleration of the problem is definite.

In the meantime, another development to look forward to is the convergence of devices that makes such multiplicity less daunting. Motorola, I think is less interested in being a content king, then it is in trying to convince the buying public that their iPod is redundant.

Kaiser Wahab