When Groupon decided to launch a new product with the name of Gnome they either forgot to check if it was already a registered trademark, or simply didn’t care that it already was.  The “GNOME” has been a registered trademark since 2008, and has been known a known name in software for the last 17 years.

The GNOME Foundation recently found itself in an odd situation when Groupon (NASDAQ:GRPN) decided to roll out a new tablet based point of sale solution for merchants.  Groupon somehow came up with the name of GNOME for the products. For the last 17 years GNOME been a name known in software, as it has been a desktop environment environment for GNU/Linum and BSD operating systems.  This has been a staple for Red Hat Enterprise Linux and SUSE Linux Enterprise Server distrobutions.  It is also the go to the desktop environment for many other distros.  With the recognition that it had, it is surprising that nobody thought there was a problem before Groupon made 28 trademark applications even with a simple web search.

The GNOME Foundation reached out to Gropon to request that they pick another name.  The reasoning behind that was that Groupon was trying to use the name on something so closely related to the GNOME desktop and its technology.  Groupon refused to reconsider the name, and even filed more trademark applications after they received the request.  So the foundation decided to file formal proceedings to oppose 10 of the trademark applications by December 3rd 2014.  They also made an appeal to the public to help raise funds to fight Groupon, as its counsel advised them it would need $80,00 to do so,  This is a bit like David taking on Goliath as the foundation is a non-profit and Groupon is a multi-billion dollar company.  The foundation raised $87,693.47  to cover its costs.

When the media picked up on this after the foundation made the appeal, they gained a lot of support.  They received so much that Groupon backed down and abandoned all of the 28 pending trademark applications.  This was confirmed after the foundation made an update to its website where it made the appeal to the public.  Groupon has agreed to change the name of its new product, and the foundation thanks its supporters for this outcome.  This is just another gleaming example of the little guy standing up for itself and winning.

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Being an innovator, Uber has faced various legal hurdles, especially in relation to franchise and license regulations in certain jurisdictions. In Manila, an Uber car was apprehended through a sting operation run by the Philippines’ Land Transportation, Franchise and Regulatory Board (LTFRB). The owner was fined PhP 200,000 (US$4,461), with the possibility of the car being impounded for up to three months.

It’s the same story in Germany and certain cities in the US like Las Vegas, Portland and Little Rock. More often than not, the move to ban Uber is initiated by taxi operators, who understandably wish to protect their industry. Uber has established its presence in 128 cities globally, thereby disrupting the traditional franchise-oriented transport business models in these locations. While users have appreciated the convenience that a black car or inexpensive UberX ride can provide, resistance from the old guard is somewhat expected.

The Manila incident was initially reported by TV5’s James Beltran, who said the black SUV was impounded with an LTFRB agent posing as a passenger leading the bust.

Yesterday, a black SUV with plate # WII-360 was impounded when LTFRB booked a trip through Uber. Owner fined P200,000. @news5aksyon

— James Beltran (@iamjamestv5) October 23, 2014

“We are just being fair with legitimate franchise owners,” says LTFRB Executive Director Roberto Cabrera, who says the agency understands the advantages of the new technology for users, but expresses concern for the safety of passengers. He says companies like Uber and Tripid (a ride-sharing app that facilitates carpools) operate a “public service” and are therefore required to have a franchise.

The agency had earlier received complaints from the Philippine National Taxi Operators Association about Uber running a “colorum” (illegal or without franchise) for-hire vehicle operation in Metro Manila. This is similar to how taxi operators in Berlin complained against the e-hailing service, citing that it does not provide adequate insurance to its passengers, whereas licensed operators do.

In stark contrast however, riding the public transport system in the Philippines — taxis included — is oft considered unsafe due to incidences of theft and reckless driving resulting in accidents. Independent taxi operators rarely — if ever — have insurance coverage for their passengers. Meanwhile, Uber supposedly works with established car rental services in the country to provide its unmarked cars.

LTFRB Chairman Winston Ginez has clarified that Uber in itself does not violate the law, but the practical application of its service does. “[Uber] doesn’t need to secure a franchise because it’s not a transport company, they don’t carry passengers. But through its application, private unlicensed vehicles are able to engage in public land transportation without securing a franchise from LTFRB,” he said.

In an interesting twist of events, the Metropolitan Manila Development Authority (MMDA), an inter-city governmental body tasked to enforce traffic rules and discipline in the metro, has sided with Uber, citing its benefits in easing traffic congestion. MMDA Chairman Francis Tolentino gave advice to the LTFRB in a statement saying government’s role is to reasonably assist new transport services in complying with the law (or perhaps making amendments to the law), rather than summarily impounding vehicles based on archaic regulations.

“The muscle of the law and the procedural and technical arms of government agencies alone cannot resolve the lack of alternate means of transportation problem, they can only increase apprehension records, Uber or hybrid carpooling is a well-meaning technology-driven effort intended for public safety and convenience that’s why people are patronizing it,” said Tolentino. “We cannot curtail their mobility rights. This is similar to private bridal cars and private ambulances for rent which is a private transaction between the rider and the owner of the vehicle.”

Uber Philippines has issued a statement, saying it will continue to support partners and users, and will “seek swift resolution to this incident.”

Featured image credit: Uber

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A federal court has, upon request by the Federal Trade Commission (FTC), ordered the shutdown of Butterfly Labs, a company that specializes in building hardware for Bitcoin mining. According to a statement by the FTC, it has received complaints against Butterfly Labs and its officers relating to how the computer-maker failed to deliver its paid-for products on time, thereby resulting in these devices being useless due to the fast-changing nature of Bitcoin.

“The FTC’s complaint against the company and its corporate officers alleges that Butterfly Labs charged consumers thousands of dollars for its Bitcoin computers, but then failed to provide the computers until they were practically useless, or in many cases, did not provide the computers at all,” says the FTC statement.

The Monarch, Butterfly Labs’ 700 GH/s Bitcoin mining card

Useless Bitcoin mining equipment

As a cryptocurrency, Bitcoin does not go through a centralized exchange, but rather, transactions go through a public blockchain, which constitutes encryption and authentication. The virtual currency can either be exchanged as online cash, earned by selling goods, or mined by solving increasingly complex algorithmic formulas. It is through the latter in which companies gain to earn Bitcoins through mining. However, given the computational power required, specialized rigs are needed to mine coins, and the required computing power increases as more Bitcoins are mined.

Based on the complaint, Butterfly Labs started marketing its Bitcoin-mining BitForce computers as early as June 2012, with prices ranging from $149 to $28,899, depending on processing power. In August 2013, the company launched a new product line called Monarch, which retailed from $2,499 to $4,680. However, the complaint has alleged that Butterfly Labs “had delivered few, if any, Monarch computers as of August 2014.”

The nature of Bitcoin mining is that the algorithm becomes more and more difficult with time. With this, delayed delivery of mining rigs has resulted in lost opportunities and potential profits. The FTC cites one of its complainants as comparing Butterfly Labs machines that were delivered late to a being as effective as a “room heater”.

FTC’s war against Bitcoin?

In a September 2013 interview with cryptocurrency-focused publication CoinDesk, Butterfly Labs COO Josh Zerlan cited delays from upstream suppliers as the main cause of production delays and difficulties. Zerlan even went as far as to blame detractors who may actually have vested interest in their competitors canceling orders, because they would profit from the reduced competition from other Bitcoin miners themselves. “That’s really the crux of it: the less people mining, the more money you make as a miner,” he said.

In a statement responding to the court ruling, Butterfly Labs has expressed disappointment in the “heavy-handed actions of the [FTC],” and said the judgment had been rushed. The company is cooperating with its court-appointed receiver, and says it has already shipped $33 million worth of products to consumers and voluntarily refunded $17 million to others.

For the company, the court-ordered closure is considered an act by the FTC against Bitcoin as a whole, in reference to how the commission is seeking to regulate Bitcoin and other cryptocurrencies. “It appears the FTC has decided to go to war on bitcoin overall and is starting with Butterfly Labs.”

Butterfly Labs is not alone in its difficulties, however. Bliss Devices founder Paul Chen writes at Money  & Tech how the mining community has raised concerns on the viability of mining Bitcoin and other cryptocurrencies, especially given the exponentially-increasing difficulty associated with it. “Not only does it now require more upfront investment in hardware and infrastructure to compete, but mining operators also need an edge in terms of minimizing operational costs such as cheap power, low-cost datacenter leases, or natural cooling solutions to remain competitive.”

Case to be decided in court

According to figures cited CoinDesk, customers in 24 countries have lodged 283 complaints against Kansas-based Butterfly Labs since 2012, with 73% of these complainants coming from the US. The FTC says that at least 1,000 customers had been affected by the “bogus Bitcoin mining operation,” which has resulted in losses ranging from $20 to $50 million. This is the first ever Bitcoin-related case that the FTC has pursued, according to Helen Wong, an FTC attorney.

“We often see that when a new and little-understood opportunity like Bitcoin presents itself, scammers will find ways to capitalize on the public’s excitement and interest,” said Jessica Rich, director of the FTC’s Bureau of Consumer Protection.

The order requires Butterfly Labs to “immediately stop making misrepresentations about their products and services.” It also places a freeze on the company’s assets. According to the FTC, the commission “files a complaint when it has ‘reason to believe’ that the law has been or is being violated and it appears to the Commission that a proceeding is in the public interest.” The actual case will be decided in court.

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Think your online privacy is free from prying eyes outside of sovereign jurisdiction? Think again. In late July, Microsoft was ordered by a US judge to disclose email data of a customer, even with the actual data being stored on servers in Dublin, Ireland. The court ruled that control, not physical jurisdiction, determined whether data can be turned over for investigation. This has been challenged by Microsoft through an appeal, and other technology companies and privacy advocates have likewise expressed that this will set a bad precedent for international business relations.

Control, not physical location
In an August 2014 ruling, US District Judge Loretta Preska affirmed the earlier decision that required Microsoft to lawfully hand over email data pertaining to a certain account regardless of where it is actually stored. Data jurisdiction is dependent on the control of the company, regardless of the physical location of the servers, said the ruling by Judge Preska. Thus, service providers like Microsoft are legally bound to turn over data to government in the event of an inquiry, even if these are stored in a foreign country.

Said warrant was issued in light of the Stored Communications Act, requiring the service provider to disclose records under its control. It is necessary to note that the earlier court order stemmed from a criminal case involving narcotics, and government lawyers intend to use email records as evidence. Government has since sought for the judge to hold Microsoft in contempt in view of the company’s firm resolve against turning over the email data. In a statement, the Redmond firm says it “will not be turning over the e-mail.” General counsel Brad Smith stressed that in its appeal, Microsoft will “continue to advocate that people’s emails deserve strong privacy protection in the US and around the world.”

Data jurisdiction in question
This particular case will set a precedent among future court cases that involve data retrieval from cloud service companies. Cloud providers and telecom firms have actually weighed in on the issue, challenging the ruling. AT&T, Verizon and Apple, among others, have filed amicus briefs in court expressing their stance.

If anything, this legal battle puts into light the validity of data sovereignty, as well as conflicting legal frameworks in different countries. In its amicus brief in support of Microsoft, Verizon said such a ruling “would have an enormous detrimental impact on the international business of American companies, on international relations, and on privacy.” In fact, some governments, such as Germany, are already banning the use of cloud services run by American providers in order to mitigate the risk of data being accessed by authorities in the US.

And even if companies like Microsoft were to comply with the US court ruling, turning over data might, in turn, constitute an illegal breach of privacy in other jurisdictions. This has become the central argument in a so-called Umbrella Agreement for data sharing that the US and the EU are trying to work out.

Cloud computing has changed the dynamic of data storage and information storage, particularly with respect to jurisdiction, legal oversight and compliance. Data sovereignty is certainly among the key concerns for individuals or institutions who require a certain level of privacy and security. But if a country’s government can claim control over data that is supposedly physically stored in another country’s jurisdiction, then it’s a whole new ball game. With data being in the cloud, does control take precedence over physical jurisdiction? This argument will need threshing out amongst stakeholders, including governments, foreign policy-making bodies, technology providers and privacy advocates, among others.

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In the company’s continued efforts of not agreeing to settle with any patent trolls, Newegg has once again defeated a patent troll in partnership with GEICO to fight off BS patents and patent claims. In a blog post titled, Patent Trolls, They Fold Like a Cheap Suit When Faced With Trial, Newegg’s Chief Legal Officer,Lee Cheng talked about the company’s latest run in with a patent troll from the mecca of patent trolls, East Texas. The litigant, Macrosolve, started this series of litigation in 2011 with a filing of more than 75 lawsuits in the Eastern District of Texas against companies from all different types of industries. They claimed that these companies were distributing electronic forms over the internet or to mobile devices and then collection reviews and the responses would be liable for patent infringement. And as Newegg’s Lee Cheng states, with such a broad definition, virtually no company is safe from such a ridiculous patent.

Because Macrosolve is a patent troll, their plan was to sue a dozen or two companies at a time and offer them to settle. These settlements netted Macrosolve more than $4 million in settlements, while Newegg and GEICO held out and fought back. This is primarily because most companies’ lawyer fees if they were to go to court would be greater than if they were able to agree to a settlement. This mentality and legal climate is what enables these patent trolls to continue to exist and extort companies of all sizes. However, many of these patent trolls go after companies that they believe will settle rather than take them to court.

Lee Cheng also stated, “In a sense, we are disappointed because we were robbed of an opportunity to prove in court that Macrosolve was and is nothing more than a serial, shameless abuser of patent rights, with a poor-quality patent that has not even survived its first reexamination. Macrosolve failed to create products and services that real customers found valuable, whose principals decided to turn it into a corporate parasite. It is not a coincidence that faced with its first real opposition in Newegg and Geico, Macrosolve folded like a cheap suit, and dismissed its lawsuits against all defendants.” He continued, “I could never figure out how Macrosolve would not be required to publicly and timely disclose the fact that its primary asset, the ‘816 Patent,’ was the subject of a final rejection in reexamination or that it dismissed almost all pending lawsuits with prejudice. What was most bizarre was how Macrosolve’s stock price traded up the day that the USPTO issued the final rejection of the ‘816 Patent’. Curious. Definitely worth someone’s attention.”

So, even though the court dismissed all of Macrosolve’s claims against Newegg, Newegg still itends to seek all of its fees and costs against Macrosolve for abusive litigation tactics. However, because of the way of how these patent trolls are created and maintained, even if Newegg were to win these claims of fees and costs against the patent troll they would simply file for bankruptcy after paying out the $4m they’ve paid out to their principals and lawyers. The real truth is that nobody is being held accountable for these patent trolls litigation and that no individual is being held accountable for their actions. We need patent reform for a lot of reasons in America and this is clearly one of them. Hopefully this will ruin Macrosolve’s patent claims in future litigation so that others can simply point to Newegg’s dismissal and not waste legal resources and money on court.

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