Vogel Internet, Information Technology and e-Discovery Blog : Texas Internet, Information Technology, eCommerce & E-Discovery Lawyer & Attorney Peter S. Vogel : Gardere Wynne Sewell Law Firm : Dallas TX

After getting a new iPhone that had test pictures inside the Chinese factory where is was made, Mike Daisey was intrigued to learn more about the individuals who actually make the Apple products (and Dell, and many others). Daisey recently told his story on This American Life radio about his trip to China to see the Foxconn plant in Shenzhen that had about 400,000 workers. He discovered that children, no more than 12 years old work on the assembly lines, slept in Foxconn dorms, and there were many suicides. Students and Scholars Against Corporate Misbehavior (SACOM) have challenged Apple, and other computer companies, for abusing workers for working too many hours and using toxic chemicals among many abuses.

Daisey’s story probably helps explain why so many cell devices and computers are made in China where the laws do not protect children as SACOM claims. So it seems that modern technology is not so clean and has an uglier side that we don’t hear much about.

 

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A NY Times stock market report for August 8, 2011 highlighed the fact that Apple’s stock was the most valuable company in the world ahead of Exxon Mobil, but by the close of the day Exxon Mobil was still number one. Many stock analysts “expect Apple and Exxon Mobil to continue jockeying for the top slot while the markets remain volatile.”

I welcome you to read my August Technology Law Column at eCommerce Times entitled “Apple Mounting Trademark Challenges.”  

Given the headlines of Apple’s great market value my column was very timely to explain Apple’s legal risks at a time of great success.

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Apple did not prove that App Store was famous and not descriptive, therefore Apple failed to establish a likelihood of success at trial. On July 6, 2011 US District Judge Phyllis Hamilton denied Apple’s request to enjoin Amazon from using “App Store” as she ruled that it was unlikely that there would be any confusion between customers of Apple and Amazon.

Actually the standard to obtain a temporary injunction is so high they are rarely granted. 

Apple needed to prove that it had irreparable harm, money damages would not suffice, and it would ultimately win at trial. Which meant that at the trial Apple would have to prove “trademark infringement, Apple must show ownership of a legally protectable mark and a likelihood of confusion arising from Amazon’s use.” Amazon’s defense was that App Store is a generic mark “because Apple’s App Store is simply an online store where consumers can search for, choose, and download apps.” 

Apple reported it 10 billion apps had been downloaded since Apple started the app business.  However the truly amazing statistic is that Apple announced six months later that another 5 billion apps have been downloaded, for a total of 15 billion apps!  We can all watch to see if Judge Hamilton’s ruling has an impact on the future for Apple and the app world!
 

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Google was the most valuable brand name in the world for 4 years, and now Apple has finally surpassed Google as the most valuable brand.  Rounding out the top 10 are very familar names:

1. Apple
2. Google
3. IBM
4. McDonald’s
5. Microsoft
6. Coca-Cola
7. AT&T
8. Marlboro
9. China Mobile
10. GE

Of course one reason for Apple’s value has been its great success in retail. No wonder J.C. Penny hired Ron Johnson to be their new CEO (Johnson was Apple’s senior vice president of retail).

Since so much of the world is dependent on eCommerce, including J.C. Penny, it will be interesting to see how Apple and J.C. Penny fare. I wonder what this portends for the future of eCommerce?

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Researchers reported that Apple iOS4 operating system secretly logs unencrypted location data for iPhones, iPads, and those computers on which the devices synch to iTunes. Apparently the data resides on these devices only, so the largest problem will occur if the devices are lost, stolen, or hacked into. As a result of this revelation Senator Al Franken sent Steve Jobs a letter in which he raised a number of questions including:

Why does Apple collect and compile this location data?
How is this data generated (GPS, cell tower triangulation, WiFi triangulation, etc.)
Why is this data not encrypted?
Does Apple believe that this conduct is permissible under the terms of its privacy policy?

We all know that cell phone contain GPS devices so our location hardly a secret, and Google even uses GPS movement to help display Traffic on Google Maps.  However Apple’s collection of this data creates a new level of public awareness.

What do you think?

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Apple claims 160 million iPhone, iPod, and iPad users world-wide and given the popularity of Apple apps- it’s no surprise at Apple's announcement of 10 billion apps downloaded. The 10 billion apps comes on the heels of Steve Jobs’ announcement of his departure for medical leave, once again. Which is not good news for Apple. Before the iPod apps got started Apple’s market share was on the decline, and after the 2001 Napster ruling Jobs decided that Apple should offer apps at a small fee for each download, even though Napster music was free. How ironic that paying a minimal fee has been such a roaring success, but without Jobs at the helm it’s possible that Apple may not have a great future!

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Is HP’s purchase of Palm for $1.2 billion seems too little too late for HP to compete in the smart phone market? As the largest manufacturer of computers in the world it does seem like HP should be in the smart phone market, and yet few people realize that HP already sells the iPaq which isn’t even in the top 20 in the smart phone market and falling rapidly. The iPaq is primarily sold to businesses and relies on the Microsoft operating system. Which is not where the market appears headed. So HP’s purchase of Palm may have saved the brand for a while, but the odds are not great for success against the power of Apple and RIM (iPhone and BlackBerry) to name a few. However, it’s definitely worth watching given HP’s market power. Remember HP acquired Compaq and EDS  and Dell acquired Perot Systems to grow hardware and services markets, and the smart phone is critical.

Apple Purchases Fast Chip Manufacturer

While HP purchased Palm, Apple announced its purchase of Intrinsity “known for making zippy versions of a computer chip often found in mobile devices.” Surely this gives Apple more power for its future while making HP’s seem even later to this dance.

No Surprise – Now a Degree in Video Game Design

George Mason University now offers a video game design. Given the size of this market it’s no wonder that such a degree is now offered. It’s a marvel that video game design degrees are just getting started and surely more schools will offers degrees in this space. No doubt HP and Apple will have a role in the video game future, and between smart phones, iPads, and computers this evolution is interesting to observe.

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The EU finally concluded its antitrust case against Microsoft by allowing customers to select browsers from a variety of 12 options including Google (Chrome), Apple (Safari), Mozilla (Firefox), and Opera. Under the plan “in March Microsoft will issue an update that enables the more than 100 million European users of Windows XP, Vista and Windows 7 to choose among a variety of browsers available for installation in addition to -- or instead of -- its Internet Explorer.” Since Microsoft will remain liable for fines it is likely that Internet Explorer’s market share will decline to the benefit of others.

How Can Bing Compete in China?

Microsoft recently announced that it planned to enlarge Bing (its search engine) in China:

"Microsoft is committed to the China market and the search market in China is the most important strategic market for Microsoft," Microsoft told Reuters on Dec. 29. "We specifically set the search technology center in China to get a deeper understanding of what Chinese users need, to be able to deliver the best product to them."

However:

“According to research company Analysys International, as cited by Reuters, Chinese search engine Baidu currently leads the country's search engine market with 63.9 percent, followed by Google with 31.3 percent. Meanwhile, another research company estimated that Bing (which launched in China in June, and is still technically a beta) occupied less than 1 percent of the Chinese search engine market in the second quarter of 2009.”

So the likelihood of a Bing’s success seems remote any time soon.

Google Still Dominates

Since Google’s search engine continues to grow in the US and China it seems unlikely that Microsoft can make any inroads unless Microsoft changes its business plans. There is an increase in the use of cloud computing for business around the world which makes it debatable if users need new operating systems to replace older systems whether Microsoft, Apple, or Linux. Right now it is hard to tell how Microsoft’s new operating system Windows 7 will fare. If it is not a fabulous success, maybe Microsoft will only get smaller throughout the world.

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A Minneapolis jury awarded a number of recording companies damages for willful infringement of 24 songs in the only trial for file-sharing by the Recording Industry Association of America (RIAA) of the estimated 30,000 lawsuits they filed before ceasing litigation last year. The RIAA settled most lawsuits for about $3,500 and now the RIAA stopped filing suits and is working with ISPs to stop file-sharing.

Second Trial

The first jury trial in 2007 resulted in a verdict of $222,000 but the federal judge vacated the verdict as result of improper jury instructions. Apparently the second jury was also convinced that Jammie Thomas-Rasset willfully infringed 24 songs by file-sharing and awarded damages of $80,000 per song. Ms. Thomas-Rasset, a single mother of four, asserts that she cannot pay these damages.

Willful Infringement

Under the 1976 Copyright Act damages for willful infringement damages could be as high as $150,000. So in both of Ms. Thomas-Rasset’s trials the juries concluded that she was a willful infringer. The fact that the RIAA stopped filing lawsuits was based on the large number of alleged infringers bespeaks volumes about the fact that file-sharing is a very large problem on the Internet, and litigation may not be the best way to solve the problem.

Apple to the Rescue

In 2001 when the 9th Circuit upheld infringement claims for contributory and vicarious copyright infringement against Napster under the Digital Millennium Copyright Act of 1998 (DMCA) there were many requests for the US Congress to reform the Copyright Act and the DMCA since that the Internet had changed the way people listen to music, however neither the Copyright Act nor DMCA were changed. Actually Apple solved the problem by introducing the iPod and allowing people to inexpensively downloading music, tv shows, and movies. Not only did the iPod solve this copyright problem it also improved Apple’s financial circumstances and market share.

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Apparently the US Justice Department is investigating anticompetitive behavior concerning among others Google, Yahoo! , and Apple since many Internet companies restrict recruiting and hiring of one another’s employees. Since anticompetitive employment agreements in the technology industry are the norm it’s particularly interesting that the Justice Department is pursuing these companies. Internet and IT companies rely of these non-competition provisions to protect trade secrets and Intellectual Property so it will be interesting to see how this develops.

EU Unhappy with Microsoft for Not Distributing a Browser

Following the antitrust dispute in the EU regarding Microsoft’s alleged monopolization of the browser market, Microsoft recently announced that when it distributes Windows 7 there not be any browser. The EU regulators are unhappy with this solution, even though on the surface it does seem that the complaining browser companies (Google, Mozilla, and Opera) should be pleased since they claimed that Microsoft’s embedded Internet Explorer violates antitrust laws.

Are Antitrust Laws Out of Touch with the Internet?

Since antitrust laws evolved from the need to try control monopolies in the 1800’s how much sense does it make to still use these concepts in the Internet world of 2009? Microsoft’s deployment of its operations systems took over the PC market was great for the users since before Microsoft there was no operating system standard on PCs. My Internet Third Big Bang was the 1981 advent of the PC, not just because IBM and Microsoft got into the market, but as result of the PC Clones using Microsoft operating systems a de facto standard developed on Microsof. As a result users could depend on continuity and consistency between software and applications. So maybe the US and EU should re-evaluate antitrust laws for the Internet and IT world that we live with today and in the future.

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