Technology & Digital Media Law

New White Paper: Is 2011 the "Year of the Mobile Privacy Lawsuit?"

2011-02-14T10:46:00.000-06:00

My new white paper discusses recent litigation in the Mobile Privacy area and steps to reduce the risk associated with a mobile marketing campaign.

If you're interested, check it out at the Remodista/Bricks +Mobile website. http://tinyurl.com/4e9vcwz

The Top 10 Questions Tech Entrepreneurs Ask

2011-02-02T17:02:00.001-06:00

Here is a good summary of legal issues for tech entrepreneurs: The Top 10 Questions Tech Entrepreneurs Ask.

Chicago Needs More Angels (or Recognition of Them)

2010-09-30T12:28:00.002-06:00

Source: Read Write Start

I attended midventuresLaunch this week. The conference organizers designed the content to be informative and a rallying cry for entrepreneurship in Chicago and the Midwest. I'm glad to see Chicago entrepreneurs gaining confidence unlike the situation in 2008 when I wrote this blog post.

Several initiatives came out of the conference. Brendan Mulligan, founder of Artist Data, which was recently purchased by SonicBids, challenged 40 Chicago angel investors to sign up for Angelist by November 1st. Chicago currently has only 8 angels on the list compared to Silicon Valley's 201 angels.

Also, the members of the Keynote Panel entitled "The 3 Stages of Not Being Silicon Valley" started a blog to discuss the panel topic before the panel presented. They had over 12,000 participants from all over the world participate in the discussion.

I'm going to add a suggestion to the mix. Why not have a blog with a list of companies from Chicago/Midwest that get Angel/VC funding? Freshwater Venture was a good start, but it hasn't been updated. I'm thinking something simpler - just a list with Company/Angel/Fund names and amounts. Maybe Chicago Tech Scene or the ITA could add a page to their current sites? A comprehensive list really shows that Chicago firms are getting funded and highlights angels and funds that are active in the Midwest.

A page with listing exits would be great, too. According to Matt McCall in a Fast Company article about start ups in Chicago:

I don't want to misspeak here, but for the last five years, there were I think $23 billion worth of exits out of Chicago and in this region in general.

Publishing a list or chart highlighting the successful exits could be a great boost to entrepreneurs here.

Maybe something like this already exists? If so, comment!

Off to Potbelly (oh yes, another successful Chicago start up) to grab a sandwich for lunch.

Total Ban on Tattoo Parlors Unconstitutional

2010-09-21T10:29:00.000-06:00

The 9th Circuit recently held that a total ban on Tattoo Parlors by the city of Hermosa Beach is a violation of the 1st Amendment. "We hold that tattooing is purely expressive activity fully protected by the First Amendment," wrote Ninth Circuit Judge Jay Bybee. "And that a total ban on such activity is not a reasonable `time, place, or manner' restriction."

Hmmmmm, I wonder if Judge Bybee is sporting a tattoo or two himself?

Nominate an Outstanding Technology Student Today: 50 For the Future

2010-03-05T12:39:00.003-06:00

The Illinois Technology Foundation, a Chicago-based non-profit organization dedicated to fueling the technology talent and human capital pipeline through facilitated collaboration between academia and industry, has begun accepting nominations for 50 for the Future, an event honoring Illinois’ most promising technology students.

The event, now in its fourth year, is designed to provide students using technology in innovative ways a means to excel by connecting them with business leaders early in their academic careers. The program is open to candidates enrolled in institutions of higher learning throughout Illinois.

Over 30 of the region’s top technology companies, supporting organizations, and institutions of higher learning have become involved in the competition, offering their C-level executives as judges.

Students who win the award will receive recognition at an April event attended by the competition’s judges and nominators, have access to prospective employers via round tables, web seminars and mentoring programs through the Illinois Technology Foundation, and will have preferred status for limited-capacity activities.

To find out more information or to nominate an outstanding technology student, visit www.50forthefuture.org.

The 10 Legal Mistakes That Can Destroy A Mobile Marketing Campaign and How to Avoid Them

2010-02-08T15:52:00.004-06:00

I'm proud to be a guest blogger at Tim Cascio's Mobile Marketing, Monetization and Methods blog. Tim's blog is a great resource for mobile marketers. He also co-chairs the dynamic Mobile Visionary Roundtable at the Illinois Technology Association. Here's the link. Hope you enjoy it.

http://timcascio.wordpress.com/2010/02/08/the-10-legal-mistakes-that-can-destroy-a-mobile-marketing-campaign-and-how-to-avoid-them/

Does the First Amendment trump the Right of Publicity in Advertising? - Part 2 and 3

2010-01-11T10:52:00.008-06:00

Last year, American Apparel used the First Amendment as a defense in Woody Allen's suit against the company for the unauthorized use of his image in an ad campaign. The case settled on the eve of the trial with Woody Allen receiving $5 million.

Now, PETA has publicly stated that the First Amendment protects its right to use Michelle Obama's image without the First Lady's permission in a recent ad advocating a "Fur Free" livestyle.

Finally, Weatherproof agreed to remove its ads containing a picture of President Obama from its billboards after speaking to White House representatives who voiced displeasure at the use of his image in an ad. WSJ's Law Blog comments that it would have made an interesting case if Weatherproof didn't relent and the Obama White House had decided to file a law suit.

I wonder what the FTC position on the ads given its new guidelines regarding endorsements and testimonials? Are the advertisers misleading consumers when they use celebrities images without permission? Are the ads deceptive?

The Bilski Business Process Patent Case

2009-09-23T12:05:00.004-06:00

The US Patent and Trademark Office website, lists the questions presented in the Bilski Patent case that is pending before the Supreme Court. The case will be argued on November 9, 2009. The Electronic Frontier Foundation also has a nice summary of the issues and the ramifications for the technology community.

QUESTIONS PRESENTED:

Whether the Federal Circuit erred by holding that a "process" must be tied to a particular machine or apparatus, or transform a particular article into a different state or thing ("machine-or-transformation" test), to be eligible for patenting under 35 U.S.C. § 101, despite this Court's precedent declining to limit the broad statutory grant of patent eligibility for "any" new and useful process beyond excluding patents for "laws of nature, physical phenomena, and abstract ideas."

"Whether the Federal Circuit's "machine-or-transformation" test for patent eligibility, which effectively forecloses meaningful patent protection to many business methods, contradicts the clear Congressional intent that patents protect "method[s] of doing or conducting business."

Is Chicago Now the 14th City, Technically Speaking?

2009-09-11T10:31:00.002-06:00

Several tech leaders banded together to write a response to Greg Burns' column in the Chicago Tribune, where he states that Chicago falls short in tech leadership and focus.

Burns starts his column with the connotation that the $1.2 billion sale of SPSS to IBM is BAD news. In most markets, a local tech company that is purchased for over $1 billion is a major success story. But here, it's another reason to kick ourselves (or for the Trib to kick the tech community again).

Here's the well worded response, which outlines the many resources available to support and lead the tech community in Chicago.

Turning Regional Strengths Into a Global Technology Powerhouse

When a city is known for its broad shoulders, and when a region is known for its work ethic, the status quo does not go unchallenged. Today public officials, private industry executives and academic centers of excellence leaders are collaborating toward a common goal: to make Chicago, Illinois and the surrounding Midwest one of the top technology and life sciences centers in the world. We are cultivating venture capital firms willing to finance startups, increasing public sector support, and combining talent and resources to drive the region’s growth.

We are confident that our region will improve its ability to translate the amazing quality, breadth, and depth of scientific research conducted here into an even more vibrant technology-based community, including the launching and nurturing of startup companies. Our respective organizations, along with other private and public sector leaders, particularly the past and current directors of the Illinois Department of Commerce and Economic Opportunity (DCEO), will accept nothing less.

Fortunately we are starting from an often-underappreciated position of strength. Our universities and research centers are world-class assets, as are our global information technology, medical device and biopharmaceutical corporations. When local startups mature and either acquire other companies or become acquired themselves, they represent a desired and healthy evolution for our community. It is only through this process that a sustainable technology ecosystem can develop.

With an eye toward future growth in employment and tax revenues, Illinois Governor Pat Quinn last month approved the state's first capital and infrastructure program in a decade. The package directs approximately $300 million to science and technology investments, and provides several hundred million dollars more for university-based construction projects. The capital plan is expected to create or retain 439,000 jobs in Illinois.

How are we contributing to the growth of our region? Here are just a few examples:

Since its launch in June 2007, iBIO’s PROPEL programs have helped 48 formation-stage and early-stage life sciences companies by providing entrepreneurs with access to specialized resources and expertise. The iBIO Institute helps Illinois high school teachers incorporate biotechnology into their curricula, and encourages students to explore career opportunities in the life sciences.

The NanoBusiness Alliance is placing our top science, technology, engineering and mathematics (STEM) students in research internships in Chicago-area nanotechnology companies to inspire our best and brightest students to stick with careers in science. It has also relocated its national conference to Chicago, bringing nanotech companies from all over the country to Chicago for local industry to engage.

The ISTC is fostering public-private partnerships to develop and execute R&D projects, advocating for funding for R&D initiatives, and collaborating with public and private partners to attract and retain R&D resources and talent in Illinois.

ITA communicates with some 3500 technology companies in Illinois who are engaged in the community, and participates directly in strategy development for many of these companies. The ITA also manages Chicago’s TechNexus, a clubhouse of sorts for the Illinois technology community. Each month, more than 1500 executives interact through the program, and 30 TechNexus companies have attracted more than $27 million in investment capital.

Celebrating its 10^th anniversary, World Business Chicago has worked in concert with the public/private sector, and alongside our university partners, to foster the attraction or expansion of hundreds of Chicago-area technology-based firms. We navigate the site selection process for businesses by providing economic and industry data, state and local incentive information, and site location assistance to current and prospective Chicago companies. By working with our area’s leaders to aggressively promote and market Chicago’s strengths as a global technology hub, world-class companies from Boeing to NAVTEQ, Orbitz to CareerBuilder, Motorola to US Cellular call Chicago their home.

Illinois residents and business are fortunate to have a first-rate Congressional delegation that works to ensure investment comes home. Thanks to the number of technology-savvy supporters increasing in Springfield and Washington, and with new public-private partnerships forming constantly, Chicago and Illinois will build upon their demonstrated strengths to create new technology-based solutions in industry, medicine and agriculture. In so doing, we will create new jobs and contribute to a stronger economy in the region and nationwide.

Our organizations couldn’t exist without the active support of private businesses and public research centers, but that doesn’t stop us from aggressively pushing them to accept even greater responsibility for helping Illinois earn its rightful place as a global technology leader. As we dedicate our organizations to the vigilant pursuit of excellence, we encourage our friends and colleagues in the media to celebrate the successes occurring in our backyard. Our businesses and tax base would surely benefit if the world regularly heard about the innovations that emanate from Illinois. We also call upon the business community to apply their broad shoulders and renowned work ethic to this critically important objective. Together, we will leave the status quo behind and create a new and exciting future for Illinois, the United States and the world.

Fred Hoch, President

Illinois Technology Association (ITA)

Dan Lyne, Director, Technology Development

World Business Chicago (WBC)

David Miller, President & CEO

Illinois Biotechnology Industry Organization (iBIO)

Sean Murdock, Executive Chairman

NanoBusiness Alliance

Matthew Summy, President & CEO

Illinois Science & Technology Coalition (ISTC)

Best Efforts - Friend or Foe?

2009-08-05T12:57:00.009-06:00

I draft a lot of agreements. I like writing and I enjoy working with business people to document the specific terms of a transaction. It's not always easy and can involve a bit of guesswork to get going. However, it is satisfying when, after of few rounds of back and forth, voila, the party's agree on a final version and a new business relationship is launched.

Occasionally, I'm tasked with defining the indefinable. The parties want to document their agreement, but factors are unknown or they honestly can't state with certainty what will happen during the performance of the agreement. This is when our old friend, the "best efforts" clause comes into play. The parties propose using their "best efforts" or “commercially reasonable efforts” to address these unknown future factors.

While the various types of "efforts" clauses can be a convenient stop-gap measure, Lawyers often cringe at using the term. Courts have created a perfect storm of uncertainty by determining that "best efforts" clauses are indefinite, but not so vague as to be unenforceable. Illinois is an exception. Here, the courts have determined that best efforts clauses, without a further definition in the contract, are unenforceable.

According to Kenneth Adams, an expert and author on contract drafting, the conventional wisdom among corporate attorneys and business people is that “best efforts” is the most onerous provision and other “efforts” provision (e.g. “commercially reasonable” or “reasonable” efforts) are less onerous. However, courts have not followed this interpretation when deciding cases.

The case law, in general, has held that “best efforts” do not require a party to make every conceivable effort to fulfill the contractual provision. Rather, “best efforts” requires good faith by the performing party. Some courts have held that the slightly higher standard of diligence applies. Diligence is defined as “the attention and care required by the typical person in a given situation, or industry standard performance, if a business is obligated to perform”. Both of these standards, good faith and diligence, are based on “reasonableness” – what a reasonable person or business would do in a similar situation. Therefore, whether you use the term “best efforts”, “commercially reasonable efforts” or just “reasonable efforts”, the court often applies the same standard.

“Reasonable” is a relative term and applies to that which is appropriate for a particular situation. Under the law, this is a fact-based determination that is best made by a jury. If there is a contract dispute, this means, worst case, expensive litigation and, best case, protracted negotiation of a settlement.

To avoid expensive litigation, protracted settlement negotiations or unenforceability in Illinois, the parties to a contract should include a clear set of guidelines for measuring performance of “best efforts” provisions. For example, a clause could state that the party who is required to perform with its “best efforts” is required to do X, but not required to go as far as Y. In a technology support agreement, a clause might read: “Best efforts requires Tech Company to escalate problems to the highest level within its standard customer support organization, but not does not require Tech Company to send personnel to the customer’s location.”

Best Efforts – friend or foe? A “Best Efforts” clause can be a friend when writing a contract just remember to take the time to incorporate specific parameters for measuring performance or you may end up with an unruly foe to contain if there is a dispute.

Q&A with a Potential Entrepreneur - Intellectual Property

2009-07-23T16:11:00.015-06:00

Recently someone who was considering hanging out his consulting shingle after a long career in corporate America contacted me with questions regarding intellectual property protection.

With the economy in the doldrums and unemployment at a such a high rate, I thought a general version of the questions might be useful to anyone else thinking about starting his or her own business.

Q: What does it mean by a $45 filing fee for copyright? Filed with what entity?

A: It is not required to register copyrightable works with the U.S. Copyright Office. You have a copyright in your work at the moment in it created (fixed in a tangible form). There are benefits to registering such as a record of the date of creation of your work and damages that are set by statute (you don't have to prove specific damages) plus the right to attorney's fees if you win your infringement case and the copyright infringement occurs after registration. Copyright registration is easy and only costs $45/work or $35 if you file online.

Q: Can I copyright the business model I created when I worked at with my last employer?

A: Unfortunately, a business method, itself, cannot be protected by copyright. Any presentations, reports or descriptions of the method are copyrightable by your employer.

Q: But my employer did not have me sign any agreement giving them the rights to any Intellectual Property I created while working there. So it is my property, isn’t it?

A: Under copyright law, any copyrightable work that is created and fixed in a tangible form (e.g., written down) during the course of your full-time employment is a "work made for hire" and is owned by your employer. The law is very clear on this point.

Patent law is less clear in an employment situation. Under patent law, the employee-inventor is considered to be the first owner of any patent rights. In theory, an employee must assign his/her invention to an employer for the employer to have any rights in the invention (including the right to obtain a patent). In practice, even in the absence of such an express assignment, an implied assignment is often deemed to exist, where an invention was made "in the course of employment". The courts have interpreted "in the course of employment" on the facts of each case. Some of the factors tending to support an implied assignment include:

* inventor is a director or an officer of the company;
* use of company funds or equipment to do R & D on the invention;
* development (e.g. software) done on company time;
* inventor was hired in research, engineering, or experimental capacity.

So, in most cases, if something was created or invented on the job, your employer owns the rights to it.

However, employers cannot claim ownership in generalized know-how, ideas, and concepts-"residual knowledge"-that evolve during the working relationship and that exist in intangible form mostly in the memories of the employees. You won't violate your formers employer’s rights if you can recreate your business method without copying any work you created during your employment or violating any confidentiality obligations with your former employer (again using "residual knowledge" is OK as long as you're not disclosing specific, confidential information of your former employer).

Q: Should I file for a copyright or a patent? I have business methods or techniques that I would like to provide as part of a consulting business.

A: Business methods can't be protected under copyright and are expensive and difficult to enforce under patent laws in the U.S. The Supreme Court is going to hear a case (the Bilski case) on the patent-ability of business methods next term. This is the first patent case heard by the Supreme Court in over 20 years. The status of business method patents is uncertain because of this case.

Many successful consulting companies don't rely on patent or copyrights laws to protect their "methodologies". They utilize trade secret laws in each state by requiring that each client sign a confidentiality agreement before disclosing any of their methods. You could have trouble enforcing a confidentiality agreement if your methods have been disclosed previously without an obligation of confidentiality. However, any improvements you make to your business method can be treated as a trade secret or confidential information. There is a nice, basic description of trade secrets here.

Finally, any report templates, questionnaires or consulting tools that you create to support your consulting business can be copyrighted and protected as a trade secret. Which leads me back to your first question on copyright registration - you are required to deposit a copy of your work with the copyright office when you register it. You may be able to redact portions of the item when deposited if is confidential. Another option is to forgo registration altogether (and the benefits of registration) if the work contains confidential information. You still have copyrights in the work and can rely on trade secret protection with the use of a confidentiality agreement.

U.S. Supreme Court to Hear Business Methods Patent Case

2009-06-01T12:31:00.003-06:00

Scotusblog is reporting today that the U.S. Supreme Court will rule on Bilski v. Doll in its next term starting October 5, 2009. The case involves a patent for "a method of managing risk for a business potentially affected by unpredictable price fluctuations (such as in the purchase of raw materials, or commodities)." This is an important case for the technology community and the outcome of the case will be closely watched by parties on both sides of the issues.

According to Scotusblog:

The Bilski patent case that the Court agreed to hear will give the Justices the option of defining the scope of patent law to take account of the impact of the digital age on developing software that controls human activity, such as making business decisions about how to scope with economic risk. The U.S. Solicitor General had urged the Court to bypass the case, but the Justices did not take that advice. The case has generated hot, and even worldwide, controversy since two inventors in 1997 filed an application for a patent.

This is the first time since 1981 that the Supreme Court will rule on the scope of patent protection.

Corporate Filings - Scam Alert!

2009-04-17T09:07:00.009-06:00

It's annual report filing season for Illinois corporations and LLC's. Many company annual reports are due during the first months of the year.

The Illinois Secretary of State has the following warning on its website about a company that is scamming businesses out of $150:

WARNING! A fraudulent company called "Illinois Corporate Compliance" is contacting Illinois businesses with a deceitful solicitation to collect a $150 fee to file corporate meeting minutes. This solicitation is an illegal scam - do not respond to it.

It's a good idea to make sure your corporation has prepared it annual meeting minutes, but the only place the minutes need to be filed are in your minute book!

Another company runs a similar scam by contacting trademark and patent holders with a deceitful solicitation regarding monitoring services. The notice looks very official and infers that the monitoring services are somehow affiliated with the US Patent and Trademark Office. Here's what the USPTO says:

You may receive unsolicited communications from companies requesting fees for trademark related services, such as monitoring and document filing. Although solicitations from these companies frequently display customer-specific information, including USPTO serial number or registration number and owner name, companies who offer these services are not affiliated or associated with the USPTO or any other federal agency. The USPTO does not provide trademark monitoring or any similar services.

Be wary of any correspondence that looks like its from a government agency, but asks for a payment to a private company. When in doubt, do a quick search on the Internet for more information.

The New Pepsi Challenge: Gatorade v. Powerade

2009-04-14T13:11:00.006-06:00

PepsiCo, Inc. sued Coca-Cola Co. over Coke's ad campaign touting the superiority of Powerade over Gatorade. Pepsi is claiming that Coke's ads are deceptive. Coke states that its sports drink is superior and Gatorade is "incomplete" because Powerade ION4 contains calcium and magnesium. According to Pepsi, that the amount of the minerals in Powerade ION4 is less than 0.5 percent of their recommended daily allowance and that most tap water contains more minerals.

It reminds me of when the FTC challenged an advertisement by Nestle that claimed Carnation Instant Breakfast has as much mineral nourishment as two slices of bacon. The problem? Bacon has no minerals.

The FTC encourages advertisers to run comparative ads - they're viewed as beneficial to consumers so long as they don't mislead. Coke's statement that Gatorade is incomplete without an insignificant amount of calcium and magnesium isn't a comparative ad - it is a claim and ad claims must be substantiated. Coke will have a tough time substantiating a claim that Gatorade is incomplete without an insignificant amount of minerals.

It looks like Coke might just lose the Pepsi challenge again.

A Real Taste of Chicago Fashion - April 2nd

2009-03-16T14:10:00.006-06:00

Orphan Works Bill

2008-09-30T10:31:00.004-06:00

http://www.flickr.com/photos/isaosan/

A letter I wrote to my Representative today regarding the Orphan Works Bill. Let's create an easier copyright registration system instead of giving a "free pass" to publishers and media conglomerates to use copyrighted works without an author's designation.

Re: Do Not Pass the Orphan Works Bill

Dear Representative Gutierrez:

As a constituent and a lawyer who represents with artists, authors and musicians, I AM STRONGLY OPPOSED TO THE ORPHAN WORKS ACT OF 2008 (H.R. 5889). The Senate just passed their version of this legislation by hotline: The Shawn Bentley Orphan Works Act (S. 2913). I am deeply concerned that the House Judiciary Committee might adopt the Senate version. PLEASE DO NOT LET THAT HAPPEN.

This bill, while well intentioned, shifts the burden of policing the use of copyrighted work to the individual artists that I represent. The 1976 revisions to the copyright act, which created these so-called "orphan works", were intended to relieve individual artists from becoming experts in the area of copyright to receive protection for their work.

This bill shifts the burden of policing use and payment for copyrighted work back to individual artists, who have the least amount of resources to do this. It is the publishers and media conglomerates who want to use the orphan works that have PAID STAFF to research copyright ownership issues. Individual artists have to sacrifice time devoted to CREATING ART in order to police illegal the use of their work.

THIS BILL PUTS FINANCIAL GAIN AHEAD OF CULTURAL ENRICHMENT. The artists in the United States need your support to create beauty AND earn a living. This bill values money over art, and should not be supported. Copyright owners neither want nor need this legislation. It will do great harm to small businesses.

We're already planning on subsidizing the financial sector through a government-backed bailout. Let's not create a copyright bailout for BIG MEDIA.

PLEASE DO NOT LET THE HOUSE ADOPT THE SENATE VERSION OF THIS BILL.

Sincerely,
Tammi Franke

Velvet Ropes Drop at Chicago New Media Summit

2008-08-25T09:25:00.011-06:00

Today the Chicago New Media Summit dropped its invitation-only policy for the upcoming summit on September 15th and 16th. CNMS, the self-proclaimed, "TED of the Midwest", has increasingly come under fire for the policy, which was dubbed as elitist by some in the tech/web 2.0 community.

I remember a similar clash of new v. old media when I attended the National Association of Broadcasters (NAB) conference in 2000. With the Internet bubble bulging, traditional broadcasters felt they were being left behind by the faster-paced new media entrepreneurs. To compensate, NAB opened up a section of the exhibit floor to new media companies.

I was VP of business development for akoo.com, an internet radio broadcaster and search engine. We set up our 10x 20 booth in the new media section with all the other young, tech companies. In typical trade-show fashion, we had music playing, computer screens, raffles, games and give-aways to attract people to our booth.

In contrast, the old media section, which included most of the major broadcasters, cable and television production companies, had HUGE booths to emulate their posh Manhattan offices with receptionists, velvet ropes and waiting areas. No one was allowed in without an appointment. Periodically throughout the day, each old media company would schedule an autograph session by a broadcast personality simultaneously appeasing the "little people" and demonstrating their clout in the industry.

As I walked the exhibit hall, I couldn't help but chuckle at the elitism in the old media section and the naïve enthusiasm in the new. Each section wanted something the other one had. Old media needed the excitement and growth potential of new media. New media companies needed a viable, sustainable audience that would pay for something (or at least watch an ad or two).

The attitude of old v. new media is a reflection of the medium itself. As Marshall McLuhan said, "the medium is the message". Traditional broadcasters rely on the allocation of scarce broadcast spectrum to the few who could afford to pay costly licensing fees. For the most part, traditional broadcasters are an elite group who control a powerful communication tool.

On the other hand, the attitude of new media participants reflect the open nature of the Internet. Anyone with a computer, $15 webcam and and internet connection can participate. There are no gate-keepers or velvet ropes in the world of new media - just content and lots of it.

CNMS invitation-only policy was the equivalent of the velvet-ropes outside the old media booths at NAB. Dropping the policy is the right thing to do. I also suggest dropping the rigid CNMS music submission policy, which is much more like an old school record-label submission policy than a new media effort.

I applaud the vision behind CNMS. I hope they continue to embrace an inclusive attitude that reflects the openness of the Internet versus the exclusionary tactics of old media.

Besides, everyone knows that, in Chicago, only posers go to clubs with velvet ropes outside.

Chicago Entrepreneurs Prefer Meat and Potatoes

2008-07-21T06:28:00.011-06:00

Apparently, New Enterprise Associates managing general partner Peter Barris agrees with the "Pooh v. Tigger" assessment of the Chicago startup scene in my last post. According to last Monday's Tech Matters column by Brad Spirrison in the Chicago Sun-Times:

"Barris appreciates a “less-faddish” and more meat-and-potatoes approach to building new businesses. He says Chicago is a place where profitability is more important than novelty."

Unfortunately, Barris' comments also reinforce the stereotype that Chicago is not the best place to start a new business:

Barris compared area entrepreneurs to grapes in Napa Valley that manage to persevere through "rocky, inhabitable soil". He added: "They have to work at it. The process of working at it is what gives the grapes that distinct quality."

Funny. Chicago's "rocky soil" has many great supportive organizations for the tech community such as the ITA, ITDA and Tech Cocktail; several entrepreneurial centers; great universities; (Fast Company's U.S. city of the year); experienced lawyers; and a huge financial community. There are plenty of Chicago tech success stories - Spirrison lists three in his article. Aircell, based in Itasca, just closed a $265 million round of financing.

So why the bad rap? Does it really matter anyway? Here in Chicago, we just get da job done.

Pooh and the Chicago Technology Community

2008-07-18T14:50:00.014-06:00

This week I attended the ITP Policy Kickoff Meeting. I sat with some interesting people - Bret Johnson, director of the Homeland Security Innovation & Entrepreneurship Center
and Laura Hale, founder of a fan fiction history wiki.

I'm not going to comment on the ITP or its role as yet another technology advocacy organization in Illinois. Ron May covered the topic quite nicely in his newsletter.

What I found frustrating at the meeting was Chicago's typical "second city" technology industry attitude. Everyone knows that Chicago is WAY down on the list of locations where VC's invest and that the East and West Coasts are pulling talent from here. Please don't tell me that again.

Can the Chicago tech community please lose the "kick-me" sticker on its back? No one at the meeting mentioned that Fast Company named Chicago the 2008 U.S. City of the Year!

U.S. City of the Year: Chicago | Fast Company

Maybe it was old news to some, but what a great endorsement from a magazine that bills itself as: "A blended media website and community platform for people passionate about business ideas. Our core topics of concern are innovation, technology, leadership, management, social responsibility, design, careers and work/life balance." The award is definitely worth repeating.

Here's one quote from the article:

"A punk rocker from Wales once declared that he avoided L.A., because there they talked about whom they were going to play with; and he avoided New York, because there they talked about the projects they were going to do. In Chicago, he said, they come to work -- without regard for what others might think."

In the world of Pooh, you might say we view ourselves as Eeyore, the intelligent, humble and slightly depressed donkey. Silicon Valley sees itself as Tigger, the bouncy, egotistical tiger who thinks it can accomplish anything, but often doesn't. If Pooh were a VC, would he give his money to Eeyore or Tigger?

Oh, Fast Company, Chicago's tech community says "thanks for noticing me".

Comment on Dim Bulb: The Ethics of Ethics

2008-05-16T13:03:00.011-06:00

Here's link to my good friend's branding and marketing blog, Dim Bulb. He discusses whether socially responsible corporations actually have an advantage in the marketplace.

Dim Bulb: The Ethics of Ethics

As Jonathan points out, and several people commenting confirm, consumers often don't "do as they say". Ethical consumerism sounds good but people aren't always willing to make the personal sacrifice.

I was a vegetarian for many years. Inevitably the topic came up during meals and most carnivores at the table felt compelled to explain why they were eating less meat. Usually, the reason involved their health. They assumed I didn't eat meat because I wanted to be more healthy. I try to be a healthy eater, but that wasn't the reason I was a vegetarian. I was a vegetarian because I was opposed to factory farming and the inhumane treatment of animals. When I mentioned factory farming as the reason, generally the friendly conversation about meat-eating ended rather abruptly.

The conclusion I draw from this (based purely on my personal anecdotal evidence) is that the majority of people change their behavior if there is a direct benefit to them. For most people, "doing the right thing" in a consumer situation doesn't result in enough of a direct benefit to make them change their behavior. Helping an old lady across the street provides direct feedback to the do-gooder. However, helping an old lady earn a living wage in Bolivia by purchasing fairly traded goods isn't quite the same.

What's my point? The best advertisers don't just rely on consumer's conscience to spur them to action. They give consumers a direct, personal benefit plus an ethical benefit. Clorox delayed the introduction of their Greenworks line by 6 months to make sure that it worked as well as other chemical-based cleaners. Many other eco-friendly lines of cleaners had failed to win over mainstream consumers because they just didn't work as well. The Greenwork's website contains an amalgamation of direct consumer and environmental benefits. While it might not win over the people who are already using environmentally friendly products, it goes a long way in giving the average consumer a reason to pay slightly more for a "green" product.

Elections and Nationalism

2008-02-04T09:55:00.000-06:00

I ran across this poem and it spoke to me during this election year.

My Country Awake

Where the mind is without fear and the head held high;
Where knowledge is free;
Where the world has not been broken up into fragments by narrow domestic walls;
Where words come out from the depth of truth;
Where tireless striving stretches its arms towards perfection;
Where the clear stream of reason has not lost its way into the dreary desert sand of dead habit;
Where the mind is led forward by Thee into ever-widening thought and action;
Into that heaven of freedom, my Father, let my country awake.

- Rabindranath Tagore

Asia's first Nobel laureate and named one of Time Magazine's most influencial Asian's of the 20th centurty, Rabindranath Tagore, was the greatest writer in modern Indian literature, a Bengali poet, novelist, educator, and an early advocate of independence for India. Tagore's influence over Gandhi and the founders of modern India was enormous, but his reputation as a writer and mystic has caused many to ignore his role as a political activist. In fact, one of his songs became the national anthem of India and another the national anthem of Bangladesh.

Tagore's travels lead him to write of the folly of borders and patriotism. He stressed the need for new world order based on cross-cultural values and ideas, the "unity consciousness." His ideal was the Universal Man. Tagore warned of the dangers of nationalistic thought. "Patriotism cannot be our final spiritual shelter; my refuge is humanity," he wrote.

In this U.S. election year, let us dream of a country where we are without fear and united, not with ourselves, but with the rest of world. Let us strive for unity and hope for Peace.

Let our minds be free to the possibilities of what should be and not what might happen. And with open hearts and minds, let our country awake to a new day.

Superbowl No Chicken Dance for the Patriots

2008-02-04T07:38:00.000-06:00

It's nice to have a Superbowl where the game is SO much better than the ads. How many times have you spent the Monday after the game discussing the ads and not the game with your colleagues at work? Not this year. What a game!

I'm not a big football fan, nor did I have a preference for either New England or Giants going into the game. But, I couldn't help cheering for the underdog Giants as they came from behind in the 4th quarter. Now that's good football.

On to the Chicken Dance. As you may have read, KFC challenged any scoring player or Tom Petty to do the Chicken Dance during the game. If they completed a 3 second dance, KFC would donate $260,000 to charity. NFL spokesman Brian McCarthy called it a case of "ambush marketing 101" and warned that any players participating could face stiff fines.

Chicken Dance winners and losers?

NFL is a big loser for even commenting on KFC's "ambush marketing". Why dignify the challenge with a response? Comment board traffic was overwhelmingly negative towards the NFL with one poster renaming it the "No Fun League".

KFC was a slight winner. They managed to jump on the Superbowl marketing machine without spending more than the cost of a press release distribution. They'd be a big winner if they had figured out a way not to seem so crass and opportunistic.

The players and Tom Petty were winners. Of course, neither the players nor Tom Petty Chicken Danced during the game. With the quality of the performances all around, they focused on winning the game rather than KFC or any of the other Superbowl hype. True professionals.

What a game! (Did I say that already?)

The Blurring Lines of Entertainment

2008-01-30T12:02:00.000-06:00

Despite the cold weather, My husband, son and I were nice and toasty last Saturday at the Girl Talk/Dan Deacon show at Metro. Markus and I stayed in the balcony while my son, Mars (aka Button), joined in the fray below.

Both Girl Talk and Dan Deacon blur the line between performer and audience. Dan Deacon performs in the middle of the crowd instead of on the stage. He becomes, not a showman for the audience, but the leader of a massive party experience. Everyone participates. Everyone is an entertainer.

Girl Talk (Gregg Gillis) performs on the stage, but invites people up on stage with him. Like Deacon, the crowd becomes the entertainment. Of course, Gillis became part of the crowd several times by crowd surfing or jumping in and dancing.

I'm not sure if the decision to break down audience barriers is because the performers are both solo acts and it's difficult to pull off a full set by yourself or because of the personalities of Deacon and Gillis. Both seemed to be humble and accessible - a sort of anti-rock star.

Both Deacon and Gillis are products of the current digital age of user generated content (can we think of a new name, please? DIYc?). With the collapse of the industrial music complex and the speed of exposure on the internet, it's no longer anointed stars that make it on to the stage. It's people like Deacon and Gillis who understand that creating an environment of social participation and interaction is the future of entertainment.

In the future, everyone is famous.

Tech Cocktail 7

2008-01-29T14:18:00.000-06:00

My law firm, Fitzgerald & Hewes, LLP, is one of the sponsors of Tech Cocktail 7. Stop by our table and say hello if you're there.

Details:

Date
Thursday, February 21, 2008

Time
6:30 pm CT - 9:00 pm CT

Location
John Barleycorn Wrigleyville
3524 N Clark St
Upstairs
Chicago, IL 60657

Be sure to register right away. The event is often fully booked.

Ignite Chicago

2007-12-07T08:22:00.000-06:00

Last night, my law firm, Fitzgerald & Hewes, co-sponsored the first Ignite event in Chicago. Ignite events are happening across the country. Thanks to the efforts of Sean Harper and Jesper Andersen the Chicago entrepreneurial community showed up to the party in their party dress.

If you're not familiar with the Ignite events, here's brief description:

If you had five minutes on stage what would you say? What if you only got 20 slides and they rotated automatically after 15 seconds? Around the world geeks have been putting together Ignite nights to show their answers.

Last night's event was a cross between a tech event (with free drinks thanks to us sponsors) and a poetry slam. Very cool. You could feel the brainwaves and creativity in the air. My husband, Markus Giolas, founder and president of Real Talent, hopped right on the shadow sculpting contest. We'll see if he won.

Ignite Chicago - don't miss the next one.

The Apple of RIAA's Eye

2007-02-09T15:46:00.000-06:00

You know you have a lawyer in the family when dinner table discussion often involves digital rights and illegal downloading. Actually, I can't only blame the lawyer (me) in this instance. My husband is a photographer and his profession involves licensing intellectual property rights in his photographs. My son is interested in pursuing a career in a creative field. We have many friends who are artists, writers,musicians and in the film industry. Also, the three of us (me, hubby and teenage son) are avid music fans.

I also worked at a startup that was in the internet radio/streaming music business. We had a direct interest in the RIAA's policies on digital rights and licensing. In 1999 and 2000, my business development team worked out licensing arrangements with several major and independent labels at prices that didn't make a whole lot of sense at the time. Hey, it was 1999 and startups were paying crazy prices for everything just to be the first one to make a deal. The labels liked our model because we didn't offer downloads and we were willing to pay them to play their artists on our internet radio stations. In the traditional radio world, it was often the other way around.

I noted with interest the recent exchange between Apple, EMI and the RIAA regarding digital rights management (DRM). EMI is contemplating a model where music is distributed without DRM and would, therefore, allow the digital music files to be freely transferred. EMI's first offer to online music retailers was an upfront, multi-million dollar "risk-insurance" payment that would not apply against future sales. This proposal didn't fly with the retailers. According to the Wall Street Journal, EMI has requested that the online retailers submit a proposal that indicates the size of advance they would be willing to pay. EMI received the proposals on February 8th. So far, no announcements have been made, but Yahoo Music's General Manager, Dave Goldberg, predicts that by Christmas most of Yahoo's catalog will be DRM free.

Apple's Steve Jobs jumped into the fray on February 6th (two days before the EMI proposal was due) with an essay on DRM entitled "Thoughts on Music". He states that CD's do not have DRM software, so the music industry currently sells 97% of music without DRM. What's all of this fuss about a measly 3% of the market? Isn't it an artifice to require Apple to use DRM when 97% of music sales are not protected? Can't we just all get along in an DRM-free world?

Nice try, Steve. Everyone knows (or assumes) that Apple is seeking complete and utter control over the remaining 97% of the market. And, while digital music sales are increasing, they aren't making up for lost CD sales, which fell by 23% between 2000 and 2006. Total music sales for 2006 fell by 3%.

The RIAA quickly reiterated its position on the necessity of DRM, and shot an arrow at Steve Jobs and Apple. The RIAA suggested that if the constraints of DRM are slowing the growth of digital downloads because files can't be transferred freely between devices, then Apple should remove the portion of their DRM that restricts songs purchased from Apple to playback on the iPod only. Wouldn't that solve the problem? Touché, Apple.

I'm not a big fan of the RIAA and their "sue first, and think outside the box later" strategy. I'm also not a big fan of the argument that record labels deserve it because they are big companies and they've been ripping off artists for years. If they deserve it, then why doesn't everyone loot their local Walmart? It's an extreme example, but one that highlights the fact that Intellectual Property is, just that, property. The number of files that have been traded online is equivalent to looting.

Back to the dinner table discussion. I think my son understands the consequences of illegal downloading. Not the punitive consequences that "you could get sued or go to jail", but the fact that people he knows, like his father and our friends, make a living from Intellectual Property by licensing the right to reproduce their creations. Copying other peoples work and not paying for it may be convenient, but it is still stealing.

A legal, convenient and inexpensive approach is needed. The RIAA's DRM solution is inconvenient. Apple's $0.99/track approach is too expensive. Actually, the solution that makes the most sense to me is the Electronic Frontier Foundation's proposal on a collective licensing arrangement. The artists and labels get paid and consumers get the convenience of file sharing at a reasonable cost.

Unfortunately, don't expect the RIAA or Apple to agree to this approach any time soon. They have too much invested in the current system. There are other alternatives, such as emusic, that are making headway with DRM-free downloads from independent music labels. Personally, I subscribe to two streaming music services, Yahoo Music Unlimited and Rhapsody from Real Networks. Because I don't have a long commute to work, I listen to music at home. With these services and my Kima KS-110 (shameless plug), I'm happy as can be. I have access to millions of songs, without advertising, and I don't have to worry about DRM or my hard drive crashing and losing 1000's of downloaded music files. I listen to more new music now than ever. However, most Americans listen to music primarily in their car where streaming music is just starting to be available. So, for now, a solution to the DRM-wars is still needed and don't expect it from the RIAA or Apple any time soon.

Fear and Loathing in Boston

2007-02-02T07:49:00.000-06:00

The saga continues on the Turner Broadcasting/Cartoon Network guerrilla marketing campaign. In textbook PR fashion, Turner Broadcasting quickly apologized and offered full restitution to the city of Boston. Turner also took out full page ads in Boston newspapers apologizing. From what I can tell, the media is treating them kindly for their efforts.

On the other hand, Sean Stevens and Peter Berdovsky, who were charged with placing a hoax device that causes panic, told reporters they would answer questions only about hair in the '70's. The media did not understand why the two would not answer their questions and used terms like "odd rant" and "nonsensical discussion" to describe what happened.

The charge of "placing a hoax device that causes panic", which carries a maximum penalty of five years in jail, requires the prosecutor to prove that the two men had a reasonable expectation that the devices would cause a panic when placed. The judge at the arraignment seemed skeptical that their intent was anything other than advertising.

The media was bewildered by their statements, but I say brilliant. No perp walk for these guys. If they dodged questions and left the building with hoods over their heads, they would look like criminals in the best case and terrorists in the worst case. They faced the press and, according to their defense attorney, performed. They are graffiti/performance artists who by their very nature have chosen an anti-establishment lifestyle. The press conference showed that 1) they were performers, not terrorists causing panic, and 2) only the establishment feared their actions.

After the press conference, young Bostonians couldn't wait to condemn the actions of the police. One young person called the police reaction "silly and insane" and said that Boston was "the laughing stock" of the country.

Those young and in the know are laughing at the older generation. Sounds a bit like the '60s, doesn't it?

From a PR perspective, the big loser is Interference Inc., the guerrilla marketing agency who couldn't be reached for comment. According to reports, their offices are closed and the CEO can't be located. Also, CNN reported that an employee from the company called one of the graffitti artists right after the panic started and told him to keep quiet. A textbook example of what not to do in a PR crisis. Any guesses on whether their offices will ever reopen?

Fearing the Flu & Cartoon Bombs

2007-02-01T10:29:00.000-06:00

It was an interesting day in the news.

Fearing the Flu. The Centers for Disease Control and Prevention are set to release 108 pages of guidelines for states to follow in the event of a flu pandemic. Though no one from the Centers are officially talking about the document before it's released, several commentators have said that it calls for a staged response to a flu pandemic. All stages include some type of voluntary quarantine of the families members of people who are infected.

When I heard the report this morning, I started down that long, dark tunnel of analysis that my husband claims all lawyers enter when confronted with a legal question. What kind of legal issues would a flu pandemic present for my business clients?

Here are some issues that I thought of -

When can employees return to work after a voluntary quarantine?
What if an employee who is under a voluntary quarantine comes to work?
Is an employee under a voluntary quarantine on vacation, sick or unpaid leave?
What if the school of an employee's child is closed and the employee can't attend work?
What if some employees can work from home and other's cannot?
If a supplier defaults on a contract, is a flu pandemic a force majeure (act of God)?

I'm sure there are many more. If you think of any, post a comment.

Cartoon Bombs. In what will go down as the biggest snafu in guerrilla marketing history, the Cartoon Network placed "guerrilla graffiti light installations" in public locations in Boston. Police responded by shutting down Interstate 93 and several other roads, closing two bridges between Boston and Cambridge and halting boat traffic on the Charles River. At least one of the installations was detonated by the bomb squad.

The devices were placed in the public locations by Interference, Inc. a guerrilla marketing agency who describes itself as a "nationwide guerrilla and alternative marketing agency from idiation through tactile implementation and staffing."

Turner Broadcasting's PR machine quickly issued a statement apologizing and that they notified officials of all locations of the devices as soon as they were aware that there was a problem. Interference, Inc., a much smaller company, did not comment. Its website is not operational and the CEO, Sam Ewen, could not be located.

Back in 2001, Sam Ewen was interviewed by atnewyork.com. In response to a question on the effectiveness of guerrilla marketing, he said:

"There are quite a few ways to tell if a campaign is working or not. If there is a promotion involved, you can use a promotion code, a unique URL or a special 800 number to track actual responses. Or, you can look at actual sales during the time of the campaign. If it's more like a brand building campaign, you look at general traffic at a site or store. The neat thing about guerrilla marketing is that the media can buy into it and the campaign becomes the story."

Well, this campaign certainly became a story and the media coverage was huge. Something tells me that the result will not be a large number of Bostonians tuning in to Aqua Teen Hunger Force on Cartoon Network. More likely, they'll be tuning into Court TV to see the results. According to Boston Mayor Thomas Menino, the city is prepared to take civil or criminal action against those responsible. "This is a heavy penalty, imprisonment, two to five years for each one of them," he said. "When it comes to public safety, we are throwing everything at them."

Next time Cartoon Network and Interference Inc. are "idiating" a guerrilla marketing campaign, they might want to check in with their lawyers first.

The Erosion of the Attorney-Client Privilege

2007-01-30T12:46:00.000-06:00

Welcome to my new Weblog! I hope you'll find it interesting and useful.

I just wrote a White Paper on a topic that concerns me as a corporate/business attorney: the recent erosion of the attorney - client privilege. It's a fundamental part of my relationship with clients. The obligation to keep client's information confidential reminds me that I'm part of a profession and like other professionals, such as medical doctors and clergy, our client's interest come first. The government's policies that attempt to circumvent the privilege and gain access to confidential communications between business attorneys and their clients are undermining a key principle of our legal system.

Here's an excerpt from the White Paper. If you'd like a copy, send me an email at tfranke (at) fitzhewlaw dot com.

"A fundamental part of honest and open communications between attorneys and their clients is the attorney/client privilege. This legal principle, which protects confidential communications between lawyers and clients, is one of the foundations of our legal system.

Increasingly, the Department of Justice (DOJ) is requesting waivers of the attorney-client privilege during an investigation into corporate misconduct. The DOJ has routinely viewed a waiver of the privilege as a sign of corporate cooperation in an investigation.

Corporate lawyers play a key role in helping companies and their officials understand and comply with complex laws and regulations. An open and confidential relationship between company lawyers and board members, business executives, and operating personnel is essential so that lawyers can represent the company effectively and ensure that compliance with laws and regulations is maintained. This relationship is threatened by a Federal government policy designed to make a prosecutor's job easier. While we all agree that corporate misconduct should be investigated and prosecuted if there is evidence of wrong-doing, this objective should not undermine one of the oldest and most sacrosanct privileges under U.S. law."