Technology Transactions, Software and Internet Law

Issue #5 of Harry Boadwee’s Technology Law Letter is now available.

The lead article is: Should You Sign Your Term Sheets?  The Power of Commitment and Consistency.

For a free subscription, please visit www.BoadweeLaw.com/subscribe.

I welcome your comments and suggestions!

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Issue #4 of Harry Boadwee’s Technology Law Letter is now available.

The lead article is: Contract Provisions for Troubled Times: Part 4 - Myths and Realities of Bankruptcy.  For a free subscription, please visit www.BoadweeLaw.com/subscribe.

I welcome your comments and suggestions!

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Here are some of the big ideas in business over the past 100 years, according to a short feature in BusinessWeek.  Many were fads, but most — even the early ones — have had staying power:

• Open Innovation - 2000
• Reengineering - 19990
• Outsourcing - 1989
• Six Sigma - 1987
• 360-Degree Performance Reviews - 1973
• Scenario Planning - 1967
• Lean Manufacturing - 1950’s
• Skunk Works - 1943
• Brand Management - 1931
• Market Segmentation - 1920
• The Assembly Line - 1910

I haven’t found a comparable list of ideas in Law, but I’m intrigued by a book, The Little Book of Big Ideas: Law by Robert Hockett, forthcoming this spring.

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How much would you pay for this software program:

• It determines what 300 million Yahoo users see each month, and helps Yahoo customize its home page content.
• Facebook uses it to manage 40 billion stored photographs.
• Microsoft changed its internal policies so that its team could develop on this software

The software is Hadoop, named after a stuffed toy elephant.  Hadoop was developed by a consultant, Doug Cutting, based on papers published by Google concerning its extremely valuable MapReduce technology.  According to Google, MapReduce is used to distribute searches and information-intensive processing across batteries of commodity computers, and is intended to enable even inexperienced programmers to easily use a large distributed system — terabytes of data on thousands of machines.

The price is zero — it is open source under the relatively lenient Apache License.

[Source: "Hadoop, a Free Software Program Finds Uses beyond Search, by Ashee Vance, The New York Times, March 17, 2009. The name "Hadoop" and depictions of the Hadoop logo and mascot are reserved for use by The Apache Software Foundation.]

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Issue #3 of Harry Boadwee’s Technology Law Letter is now available.

The lead article is: Contract Provisions for Troubled Times: Part 3 - How Third Parties Can Assure Performance.

For a free subscription, please visit www.BoadweeLaw.com/subscribe.

I welcome your comments and suggestions!

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Issue #2 of Harry Boadwee’s Technology Law Letter is now available.

The lead article is: Contract Provisions for Troubled Times: Part 2 - Making Sure the Other Party Performs.

For a free subscription, please visit www.BoadweeLaw.com/subscribe.

I welcome your comments and suggestions!

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With the new year, you should review your web sites and offerings to see if they need any updates on the legal side.

Consider this 6 point list.  These are the most common updates I see, not a complete list.  Your business may need more.

• Updating the site’s copyright notice to include the new year, if you are creating new content this year.  If you continue to publish content from prior years, you’ll want to include those prior years too.  For example, you might update “Copyright © 2006-2008 YourCompanyName, Inc.” to “Copyright © 2006-2009 YourCompanyName, Inc.”
• Revising your site’s terms of use to reflect any changes in your offerings, terms, conditions and pricing.
• Updating your privacy policy to reflect any new data collected or changes in your privacy practices, such as using cookies or web beacons.
• If your site includes user generated content, you may want to register your company as a designated agent with the U.S. Copyright Office per the Digital Millennium Copyright Act (DMCA).  See my previous posting on Business Tips for Providers of User-generated Content.
• If you are planning to use new distribution channels, such as an affiliate program, you should start considering what rights and support you’ll need to provide to your new channels.  For example, you may need separate legal documents, policies and web pages to support them.
• Think about whether you need to upgrade your insurance.  For example, if your business has changed, you may need to raise your policy limits, or even consider obtaining media liability insurance, errors & omissions insurance or umbrella coverage.  If your company plans to work with large corporations, keep in mind that large companies often require smaller partners to hold insurance policies, to reduce the risk of claims against the large company’s “deep pockets.”  Speak to a good commercial insurance agent to get a better understanding of the policy coverages and costs.

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Clive Thompson describes how an Italian group applied open source principles to hardware for the Arduino microcontroller circuit board, a device that can monitor and respond to sensors, control small motors and the like.  Over 50,000 units have been sold worldwide since mass production began.

This is NOT open source software that runs inside of the hardware.  Instead, the Arduino group is open-sourcing all of the schematics and hardware design files for its circuit board, in addition to the software for it.  Anyone is free to build or modify their own hardware based on these schematics and designs.  It’s another example of the trend among tech-savvy consumers to reverse engineer, hack and customize their consumer devices (such as iPhones, Tivo’s and Furby toys).

Although open sourcing is well established for software, it would be considered heresy or even suicide in the hardware business.

How can the Arduino group take this approach?

• They are academics in Italy, and want to build a reputation.  They don’t answer to a board of directors or shareholders.
• Manufacturing is now a commodity, and it’s extremely easy for foreign low-cost manufacturers to knock off any hardware.  The Arduino approach beats the counterfeiters at their own game, by treating ALL manufacturing as a commodity.
• The Arduino circuit board is a low-function simple device.  In isolation, it doesn’t provide a huge value-add.
• The hardware designs are licensed under an open license that requires all user modifications and improvements to be licensed under the same license terms.  Specifically, the license to the hardware designs is a Creative Commons “Attribution - Share Alike” license.  This Share Alike condition is the dreaded “reciprocity clause” that concerns many businesses.  It prevents other businesses from making proprietary modifications, and taking all the value of an improved device.
• The group reserved to itself a critical piece of intellectual property, namely the trademark and trade name ARDUINO, so that the Arduino group can make sure its brand is not harmed by low-quality copies of its circuit board.
• Hobbyists and others contribute bug fixes and improvements without pay, and the Arduino group receives early learning of new and unique uses of the hardware.

The article describes two economic models:

1. “Sell your expertise as the inventor,” in the form of consulting and support.  This is a familiar open-source model, long used in the software world by companies such as Red Hat, a major supplier of the Linux open source operating system.
2. “Sell your device by trying to keep ahead of the competition.”  This it the age-old time-to-market strategy.  Thompson’s article points out that, in practice, the foreign knock-offs using the Arduino open source schematics and designs have low quality.  The Arduino group stays on top of of the competition by developing know-how that keeps it ahead of others.

Thompson presents a tantalizing vision going forward. The media have evolved from one-way offline broadcasts into vast collaborative communities (e.g., blogs and their readers’ comments; WikiPedia).  Similarly, hardware design will become community-driven, with the actual fabrication of hardware becoming a mere commodity.

The Arduino project is an interesting first step, but there is still a long way to go.

(Source: Build It. Share It. Profit. Can Open Source Hardware Work? by Clive Thompson, Wired Magazine)

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Search Engine Land uncovers on a new wiki containing a directory of blogs and twitter accounts used by Fortune 500 companies.

The Fortune 500 Business Blogging Wiki is located here.  It began as collaborative project between Chris Anderson of Wired Magazine and Ross Mayfield of Socialtext.

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