Legal Archive

In the last few days there have been several stories about the sentencing of Eric Lundgren in a case that began in 2012, and we have received a number of questions about this case and our role in it. Although the case was not one that we brought, the questions raised recently have caused us to carefully review the publicly available court documents. All of the information we are sharing in this blog is drawn from those documents. We are sharing this information now and responding publicly because we believe both Microsoft’s role in the case and the facts themselves are being misrepresented.

Earlier this week Eric Lundgren was sentenced to 15 months in prison for selling what Microsoft claimed was "counterfeit software", but which was in fact only recovery CDs loaded with data anyone can download for free. The company has now put up a blog post setting "the facts" straight, though it's something of a limited set of those facts.

"We are sharing this information now and responding publicly because we believe both Microsoft's role in the case and the facts themselves are being misrepresented," the company wrote. But it carefully avoids the deliberate misconception about software that it promulgated in court.

Eric Lundgren is resigned to doing prison time. After spending his life working on e-waste recycling programs, Lundgren was arrested and charged with "counterfeiting" Microsoft restore discs, part of a controversial, years-long legal fight that ended this week when an appeals court declined to overturn a lower court's decision.

Google's use of Java shortcuts to develop Android went too far and was a violation of Oracle's copyrights, the U.S. Court of Appeals for the Federal Circuit ruled Tuesday. The case - first filed in 2010 - was remanded to a federal court in California to determine how much the Alphabet Inc. unit should pay. Oracle had been seeking $8.8 billion, though that number could grow. Google expressed disappointment and said it's considering its next steps in the case.

The dispute, which could have far-reaching implications for the entire software industry, has divided Silicon Valley for years between those who develop the code that makes software steps function and those who develop software programs and say their "fair use" of the code is an exception to copyright law.

"It's a momentous decision on the issue of fair use," lawyer Mark Schonfeld of Burns & Levinson in Boston, who's been following the case and isn't involved. "It is very, very important for the software industry. I think it's going to go to the Supreme Court because the Federal Circuit has made a very controversial decision."

Spotify is finally gearing up to go public, and the company’s February 28th filing with the SEC offers a detailed look at its finances. More than a decade after Spotify’s launch in 2006, the world’s leading music streaming service is still struggling to turn a profit, reporting a net loss of nearly $1.5 billion last year. Meanwhile, the company has some weird lawsuits hanging over its head, the most eye-popping being the $1.6 billion lawsuit filed by Wixen Publishing, a music publishing company that includes the likes of Tom Petty, The Doors, and Rage Against the Machine.

So, what happened here? Did Spotify really fail to pay artists to the tune of a billion dollars all the while losing money? Is digital streaming just a black hole that sucks up money and spits it out into the cold vacuum of space?

The answer is complicated.

Should the United States government be able to conduct a search of your emails if they are stored on a server in another country, or does the government’s right to examine digital evidence stop at the border?

That is a central question in United States v. Microsoft, a case scheduled to be argued on Tuesday before the Supreme Court.

Both sides in the case have legitimate concerns. If the court sides with Microsoft and declines to allow searches for data stored in another country, the government will be hampered in investigating crimes like terrorism, child pornography and fraud.

If the court sides with the government and rules that it may demand data stored overseas by American companies, those companies will find it much harder to do business abroad. This is because many foreigners fear that United States warrants authorizing such searches will disregard privacy protections afforded by their country. The government of Germany, a country with stringent privacy laws, has already indicated it will not use any American company for its data services if the court decides to allow searches.

Eric Lundgren is obsessed with recycling electronics.

He built an electric car out of recycled parts that far outdistanced a Tesla in a test. He launched what he thinks is the first "electronic hybrid recycling" facility in the United States, which turns discarded cellphones and other electronics into functional devices, slowing the stream of harmful chemicals and metals into landfills and the environment. His California-based company processes more than 41 million pounds of e-waste each year and counts IBM, Motorola and Sprint among its clients.

But an idea Lundgren had to prolong the life of personal computers could land him in prison.

The European Commission has fined Qualcomm €997m for abusing its market dominance in LTE baseband chipsets. Qualcomm prevented rivals from competing in the market by making significant payments to a key customer on condition it would not buy from rivals. This is illegal under EU antitrust rules.

US lawmakers have long worried about the security risks posed the alleged ties between Chinese companies Huawei and ZTE and the country's government. To that end, Texas Representative Mike Conaway introduced a bill last week called Defending U.S. Government Communications Act, which aims to ban US government agencies from using phones and equipment from the companies.

As part of this week's hearings into how Russia has used social media to influence American opinion, House lawmakers released several Facebook and Instagram ads linked to Kremlin meddling online. Although lawmakers have not yet released the full cache of ads, which includes about 3,000 examples provided to Congress by Facebook, the so-far disclosed ads offer one of the closest looks yet at the Russian operation.

Top officials from Facebook, Google, and Twitter told a congressional panel Tuesday that their platforms hosted a disinformation campaign carried out over their networks by Russian state actors. The propaganda centered on the presidential election, immigration, gun rights, gay rights, and racial issues, the companies said. None of the three organizations said they supported proposed legislation requiring them to disclose who is buying political advertisements on their platforms, although these Web companies promised more public transparency about who is buying ads on their networks.

The European Commission has concluded that Luxembourg granted undue tax benefits to Amazon of around €250 million. This is illegal under EU State aid rules because it allowed Amazon to pay substantially less tax than other businesses. Luxembourg must now recover the illegal aid.

The European Commission has decided to refer Ireland to the European Court of Justice for failing to recover from Apple illegal State aid worth up to €13 billion, as required by a Commission decision.

Today, more than one year after the Commission's decision, Ireland has still not recovered any of the illegal aid. Furthermore, although Ireland has made progress on the calculation of the exact amount of the illegal aid granted to Apple, it is only planning to conclude this work by March 2018 at the earliest.

Within a matter of weeks, Qualcomm, which had been valued at more than $100 billion in December 2016, had lost a quarter of its market capitalization, an outcome that Qualcomm executives say was Apple's intent all along. "Apple's game plan is to squeeze people until they finally say, 'OK, the pressure's too hard. I'll just take a deal,'" said Derek Aberle, then Qualcomm's president and the company's chief negotiator, in an interview in July. Apple, on the other hand, presents the dispute as a matter of fairness. "It's not that we can't pay," Sewell says. "It's that we shouldn't have to pay."

The case, which could go to trial in a San Diego federal court as early as next year, could have a profound impact on the mobile phone business. A Qualcomm win would hamper Apple’s efforts to cut costs and preserve margins that have allowed it to capture most of the profits generated by smartphone makers worldwide. If Apple wins and succeeds in ending the Qualcomm tax, that could marginalize one of the most powerful American technology companies and upend the balance of power in the semiconductor industry.

Equifax Inc. today announced a cybersecurity incident potentially impacting approximately 143 million U.S. consumers. Criminals exploited a U.S. website application vulnerability to gain access to certain files. Based on the company's investigation, the unauthorized access occurred from mid-May through July 2017. The company has found no evidence of unauthorized activity on Equifax's core consumer or commercial credit reporting databases.

The European Commission has fined Google €2.42 billion for breaching EU antitrust rules. Google has abused its market dominance as a search engine by giving an illegal advantage to another Google product, its comparison shopping service.

The company must now end the conduct within 90 days or face penalty payments of up to 5% of the average daily worldwide turnover of Alphabet, Google's parent company.

From 2008, Google began to implement in European markets a fundamental change in strategy to push its comparison shopping service. This strategy relied on Google's dominance in general internet search, instead of competition on the merits in comparison shopping markets:

• Google has systematically given prominent placement to its own comparison shopping service: when a consumer enters a query into the Google search engine in relation to which Google's comparison shopping service wants to show results, these are displayed at or near the top of the search results.
• Google has demoted rival comparison shopping services in its search results: rival comparison shopping services appear in Google's search results on the basis of Google's generic search algorithms. Google has included a number of criteria in these algorithms, as a result of which rival comparison shopping services are demoted. Evidence shows that even the most highly ranked rival service appears on average only on page four of Google's search results, and others appear even further down. Google's own comparison shopping service is not subject to Google's generic search algorithms, including such demotions.

As a result, Google's comparison shopping service is much more visible to consumers in Google's search results, whilst rival comparison shopping services are much less visible.