Tech on Judicial Radar

 
 
By Eric Lundquist  |  Posted 2005-07-11
 
 
 

The hottest action in high tech is taking place in courtrooms and at regulatory agencies. Maybe the shift from the labs and marketplace to legal venues is a sign of high tech becoming more mature, or maybe its a way to keep all those corporate lawyers employed. Whichever the case, recent decisions by the U.S. Supreme Court, lawsuits filed in other federal courts and regulators looking at foreign investment in U.S. companies have been the top technology stories over the past month.

The Supreme Court recently finished its session with a series of decisions, two of which are especially important to the technology community. The 9-0 decision in favor of recording companies and against file-sharing services sends a big chill through the file-sharing community.

Click here to read more about the decision in the MGM vs. Grokster case.

"We hold that one who distributes a device with the object of promoting its use to infringe copyright, as shown by the clear expression or other affirmative steps taken to foster infringement, is liable for the resulting acts of infringement by third parties," Justice David Souter wrote for the court. While I expect the legal arguments to be endless in interpreting this decision, in my Opinion, it essentially means that someone providing the means for distribution of copyrighted material is as liable as the person who distributes the music, video or other material without respecting the copyright. This is a big win for the music and movie recording industry and will spur the use of rights management software. File-sharing-services groups brought much of this on themselves by developing the service but pretending they were not responsible for how the service is used.

The other tech-related decision by the Supreme Court also favors the established industry over the challenger. In this case, it was a 6-3 vote in favor of the cable companies, which, after the courts ruling, are supported in their stance that they dont have to share their lines with ISPs. The cable companies (and probably the Baby Bells, which can expect similar support for DSL service) are happy. The ability to keep their lines closed to ISPs means they can concentrate on upselling cable customers with more Internet offerings, cable TV channels and VOIP via cable. The ISPs, which once seemed to be headed toward ruling the Internet access market, are getting further marginalized. They are going to have to figure out some type of end run that will provide high-speed, ubiquitous access. If they have the capital, Id expect to see ISPs bet big on high-speed, wide-range wireless.

A nasty court fight is shaping up in the U.S. District Court in Delaware. In a battle of the chip vendors, AMD has filed an antitrust lawsuit against Intel. The suit claims Intel has used illegal means to maintain a PC processor monopoly. Intel has denied the claim. As this case proceeds, I expect the public will learn a lot about how companies—by combining supply pressure, marketing pressure and dollars in exchange for exclusive contracts—can shape decisions before consumers. It would be nice if technology decisions were based solely on technical merits, service capabilities and alignment with customers business needs, but that is often not the case. The final value of this suit may be less in the outcome of the trial (which is sure to be appealed) than in forcing vendors to rethink how they should pursue market share.

China National Offshore Oils $18.5 billion bid to buy oil company Unocal is the latest—and by far the largest—bid by a Chinese company to buy a U.S. company. In the tech world, Lenovo Group paid $1.75 billion for the PC division of IBM earlier this year. And Haier America Trading (the U.S. arm of a Chinese company) has made a bid for Maytag. The Unocal bid will be reviewed by the U.S. Treasury Departments Committee on Foreign Investments in the United States. A pair of measures passed by the House of Representatives would make it difficult for this deal to go through if the bill survives intact through the Senate. If the bid goes through and Unocal becomes part of a Chinese company, the question would be, What will be the next tech brand to attract cash-rich Chinese investors looking for strong brands in markets they wish to enter or expand in?

Editor in Chief Eric Lundquist can be reached at eric_lundquist@ziffdavis.com.

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