Why The Net Hates (And Needs) Lawyers

Lawyers looking for cases have always bedeviled the Net. I try to avoid them. For instance, I’m happy that my online newsletter’s domain is www.a-clue.com instead of clue.com, my first choice. It turns out Hasbro, which owns www.clue.net, thinks its trademarked board game means it owns the word. Its lawyers have gained many billable hours going after a small Colorado company, Clue Computing, that got to NSI first. I would not like to face those bills.

A few years ago, I was on Counsel Connect (now part of a larger American Lawyer site) to participate in a panel on Internet law. Most of the discussion concerned contentions that webmasters could, and should, be sued for links; that they constituted an “endorsement” of the content behind them. That’s fatuous nonsense, I replied, and there’s no case law to back it up, but my words were mainly ignored. After all, I’m not a lawyer, and lawyers react to the smell of a tort the way Julia Child reacts to the smell of a torte.

A few years ago, the patent office began allowing patents for business models, opening the door to protection for things like Priceline, but also opening the door to a host of lawsuits. I don’t like those suits. What makes a patent valuable is what you do with it, not what your lawyers do with it. Most lawsuits over business model patents I’ve seen have featured failed businesses going after those who executed properly.

There are also silly technology patents when the patent is so broad as to be meaningless. I’ll never forget a patent given Compton’s New Media for multimedia. Compton’s apparently took it too seriously and went out of business. I’m wondering if that will also prove to be the case with Audiohighway, which says its new patent covers all small digital audio players. Patent holders need to temper their excitement over patents against the cost of lawyers attacking rivals and the resulting loss of goodwill.

Even a lawsuit that sounds valid can make the plaintiff appear foolish. Nextcard, the web credit card company, this week sued Providian Financial, a rival issuer, for copying its web banners. At first glance, the suit sounds fair, but Kendall-Jackson lost a jury trial against Gallo’s alleged copying of its “Turning Leaf” logo on wine bottles. In other words, the cost of pursuing a trademark suit is always high, and the result is always uncertain.

When should you call the lawyers? I suggest a cost-benefit analysis; the same exercise you’d perform before making any big decision. If the principle is worth dropping all your other business for, if a rival’s actions threaten your business’ very existence, or if you really believe you’ve been robbed, I’ll agree you can’t just sit back and take it. But lawsuits are war by other means. Remember that lawyers can also negotiate.

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