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grellas

37,828 karma · joined June 20, 2009

Silicon Valley business lawyer - I founded a boutique firm specializing in early-stage tech startups - since 1984.

Homepage: http://www.grellas.com

LinkedIn: http://www.linkedin.com/in/grellas

Twitter: http://www.twitter.com/grellas

Startup Law 101: https://grellas.com/resources/startup-101/

gg@ <mydomain>

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grellas··on Google (Potentially) Blows the Door Off Oracle's Copyright Claims
Copyright protects expressive works in tangible form. So, a computer language can't be protected because it is an abstraction. But the source code for any implementation of that language can. Here, Oracle is not claiming a copyright in the Java language, nor is it claiming that Google copied any source code (except very insubstantial elements). Oracle claims that the API is protected by copyright and that Google infringed various API elements by copying the structure, etc. in spite of its having done so through a clean-room development. Therefore, Oracle's ultimate copyright claims in the case all turn on its assertion that it can sue upon only a a subset (the API pieces) of the overall copyrighted work (Java) and not the whole work.

The other important piece of the analysis is as follows: copyright protection applies automatically as a work is created and takes a tangible means of expression; however, you cannot sue for infringement of a copyright work unless it is registered as a federal copyright with the Copyright Office.

The Google motion contends that Oracle registered the entire work (Java) and not any subset of that work. Oracle claims it was registered as a "collective work" and that this gives it the right to sue on a component part of the work only. In its motion, Google says that the work was not registered as a collective work and that Oracle therefore can't - as a matter of law - sue over a component piece only.

The motion turns on technical issues but they are ones that would seem to be verifiable one way or the other and thereafter tested under the legal standards just summarized. If the Java registration fails to meet the test, the Oracle loses on its copyright claims as a matter of law (meaning the judge tosses it and it doesn't even go to the jury).

This is truly a bombshell and appears to have caught the Oracle attorneys completely off stride. We will see what happens.

grellas··on Don’t work. Be hated. Love someone. (2008)
Work is anything that you are compelled to do. By its very nature, it is undesirable.

The speaker draws a dichotomy between work and play, as he defines these terms, with work being things done under compulsion and play being things done based on desire (and especially passionate desire). His theme is a clarion call to shape your life, and the way you make a living, around things you love to do and to avoid dying a slow death by simply doing a job that makes money - the point being that it makes no sense to pursue modest comforts at the cost of spending your life doing soul-deadening things you don't like doing just because they earn you a livelihood. That is what "average" people do, and it is a pit that college kids facing life all fresh and ready should by all means avoid.

A few comments on this:

1. Hard work, even lousy forms of work, can be precisely the sort of thing that allows you to develop into someone who has the talent and character to be able to do the extraordinary things you might love. The prototypical person who has all the time and ability to pursue nothing but his passions, I would contend, is the spoiled heir, the person who has never had to work a day in his life in the way the speaker here defines work, i.e., as doing something that only a drudge or a drone would bother with. It is no secret that many persons of privilege of this type will wind up frittering away their lives with little focus or purpose and will never develop the character traits that would enable them to excel in life. They can pursue their "passions" all they like but, in the end, they stand a considerable risk of being spendthrifts, worthless heirs, or whatever other pejorative term captures what it means to waste one's life away in the name of pursuing passions without focus or purpose. Work - hard work, even menial work - is exactly what helps shape most people to rise above the frittering stage and to make something of themselves. For me, as a young kid and through my early adult years, it meant preparing myself for life's challenges by doing a whole host of things that I was "compelled to do" as the speaker uses the term: (a) enduring the drudgery of many parts of the education system itself, (b) selling papers, delivering donuts, working in a cannery, washing dishes, busing tables, waiting tables, tending bar, running delivery routes for a pharmaceutical wholesaler (yes, I know where most every pharmacy is in the Bay Area), (c) learning Latin on my own to help fill a deficit in my vocabulary and grammatical skills, (d) doing scut work to help meet family obligations, (e) working as a slave in a large law firm doing endless round-the-clock tasks of the dreary kind that young attorneys employed by large law firms often do (and quite a few other things to boot). Eventually, all these things led me to a position where I developed the skill and talent to do what I loved, and to do it well. But there was no short-cut to getting there. Work, pain, and adversity are an integral part of life and it is no loss - indeed, it is great gain - to spend some years doing things you don't necessarily love if they help shape your character in a strong way and if they help you develop skill sets that you can later apply in a more optimal way. It is called "growing up."

2. What most young people lack is not passion or intelligence but wisdom. That is, they do not yet know at their stage in life how best to apply the skills, talents, and strengths that they know they possess. They have a sense of what they want but insufficient life experiences to make right judgments about how best to proceed. In this sense, the old, dreary job - with all its limitations - is very often a good way to get out in the world and discover important things about yourself as you gradually grow and develop to face even more important challenges ahead (which, by the way, can consist of doing exciting things in the form of a job - not all jobs are dreary and many provide all the excitement and challenge one would expect even in a startup). I would add that merely deciding to "play" (as the speaker uses the term) can be decidedly dangerous in this sense because it assumes, very often contrary to fact, that the goals you want to play with are really worth pursuing - of course, they may be and I am all for those who want to throw themselves headlong into what they love doing, but many young people will simply not be equipped to make the sort of good judgment at an early age that they could make later after they have had a few working years under their belt. Wisdom combines intelligence with good practical judgments; to make good practical judgments, one needs to know life and not simply from the vantage point of a 22-year-old who normally has not yet developed to a fully mature stage.

3. Many people throughout the world do not have the privilege of completing a college education and it simply cannot be a rule of life that "play" is the operative way of doing things. Hardship and privation are everywhere in many large pockets of the world and people live life doing many things they wouldn't do if they had different circumstances. Often this takes the form of hard, manual labor, agricultural or otherwise. Can it be said that such a large segment of humanity is doing nothing ennobling but is merely spending life dying a slow death while living worthless lives because work is done of necessity? This to me comes off as exceedingly elitist. There is much in life that is precious and people everywhere share these things, whether they are forced to do things they don't want or not to earn a livelihood. My parents were immigrants who grew up in conditions of squalor. They couldn't wait to come to America to have the chance to better themselves, and they did. But they did so through incredible hard work of the type that the speaker here denigrates. To this, I say to him, "get out of your bubble and get a broader perspective."

4. All that said, I liked the punchy, colorful style with which the speaker presented his points and I can appreciate that the points made, and the manner of presentation, can cause young graduates to examine their premises and to think about what they really want to do with their lives. No one with even a modicum of ambition really strives to be average. On that broad theme, the speaker's points resonated with me. By all means, strive to rise above the mediocre. I would just take issue with the idea that hard work of even the "deadening" type is not an important part of that process.

grellas··on The JOBS Act will very nearly legalize fraud in the stock market
You raise some excellent points, the kind that stimulate further thinking.

I still remember the bubble years vividly. A couple of indicators of the mania: patent firms were requiring that startups give them a 5% equity piece just to take on their work (this was in addition to paying full fees, i.e., it was akin to a toll charge just to get in); at least one prominent IPO law firm was taking 25% equity pieces for fee deferrals out to IPO (which followed in a compressed time frame of as little as 18 months). Both indicators show that there was a mad rush at the time to get quick sucker money from public purchasers and it had reached such an insane stage that even lawyers, of all people, had become as critical to the value proposition as the entrepreneurs and investors. That is because the value proposition had shifted. At its worst in that era, it was no longer the goal to build a great company. The goal was to package a company profile, fill it with the most extreme hype imaginable, and market it to the public markets via IPO so that both founders and investors could do a quick cash out while leaving the public purchasers holding garbage in the end. Of course, there were also solid offerings but no one can deny - and I certainly don't - that there was a high volume of trash as well.

That said, I believe that SOX was such a piece of heavy-handed regulation that it went too far in choking off the IPO markets. Yes, this means that private equity deals with the dubious stuff, which never sees the light of day in public markets. But, in recent years, it also has meant that a good number of very solid offerings have not seen the light of day either. In practical terms, what this has meant is that founders get short-changed in being left mostly with just the M&A option - this means that (in general) acquisition pricing is suppressed, quick turns of ventures become the rule, and all sorts of conditions are imposed by the acquirers in the deals that further lessen value for founders. The net result is a lessening of founder leverage at the M&A stage because there is no viable alternative for exit. Of course, some companies might choose to go for the long haul, make great profits, and distribute these to owners (as you suggest, and, yes, that is a good thing) but these are by far the exception and not the rule in the startup world.

As to crowdfunding, I have my own reservations and actually agree with your point, even strongly so. I am encouraged, however, by the idea of experimenting with new fundraising techniques that are made possible only by modern technology and I think it is well worth the experiment. If companies use the new provisions to try to load up with a lot of small shareholders from which they seek to get quickie money based on dubious offerings, the experiment will clearly fail in my eyes. I am excited about this but cautious as well.

grellas··on The JOBS Act will very nearly legalize fraud in the stock market
Thanks for the thoughtful response. My comment was focused on developing the theme that securities laws have never been absolute in emphasizing the absolute maximum in investor protections, regardless of practicalities, and that the JOBS Act fits within this tradition (contrary to the underlying piece's claims). It remains to be seen whether it was a correct policy decision in light of the historic events that prompted passage of SOX in the first place. You present a spirited counter-point and you might be right. Only time will tell.
grellas··on The JOBS Act will very nearly legalize fraud in the stock market
Securities laws, in general, have never been absolute in the United States. When companies offer stock or other securities to purchasers, the broad rule is that "you can offer anything you want, even something junky, so long as you disclose all material elements associated with the offering such that a reasonable investor can make an informed decision in deciding to purchase it." In other words, there is no all-seeing, all-knowing authority supervising the process who declares that the offering is substantively sound. It may or may not be. All that is required is that the issuer meet the requirements imposed by securities laws for disclosing all material facts relating to the investment. That is what the registration statement does in a public offering. And that is all it does. If that is done, and junk is offered, and the public wants to buy junk, the securities laws permit this.

Even respecting disclosure, though, the U.S. securities laws have always tempered the burdens associated with making detailed disclosures of the type required in a registration statement with important rules saying, in effect, "we as regulators realize that requiring companies to go through a multi-million process just to offer their securities to investors is too much and therefore we will exempt a broad number of categories from the registration and detailed disclosure requirements to enable small companies to offer their stock for sale as well." That premise underlies a whole range of securities law "exemptions" that permit small offerings, etc. so that companies can grow and develop without choking on process. The ultimate exemption under federal law is Section 4(2) of the Securities Law of 1933, which basically exempts private placements from the burdens of going through the registration process. Section 4(2) has been around forever and has no formal requirements. It simply provides that anything that is a true private placement, as opposed to a public offering, is exempt. Because the assessment of what is a private versus a public offering turned on detailed facts and circumstances, and this in turn led to substantial uncertainty and lots of litigation (is an offering made to 20 people "public"? how about if you don't know them? how about if you advertise the offering to get them interested? how about if they are small, unsophisticated investors?), the ultimate exemption - or, more accurately, "safe harbor" that assured an issuer that an offering would be exempt - was Regulation D, adopted by the SEC in 1982 and widely used by startups ever since that date to make tons of private placements that have been streamlined, simple, and cost-efficient ways of offering their stock to investors.

As is apparent from the above, the securities laws have always sought to strike a balance between imposing regulatory requirements (and burdens) that are aimed at protecting investors, on the one hand, and moderating the burdens so imposed to facilitate capital formation for situations where it makes no sense to impose needlessly burdensome requirements on small issuers and where less burdensome, fallback protections can be used instead of the full panoply of protections that apply to larger-scale offerings. By definition, this means that U.S. securities laws have always recognized a trade-off between having strong regulatory requirements aimed at investor protection, on the one hand, and lessening such requirements for some situations so as to give practical routes for capital formation for companies unable to meet the rigorous requirements. At many points along the way, the legislators who pass such laws and the regulators who administer them make multiple social policy judgments saying, in effect, "this is a situation that calls for the maximum protections but this one will leave investors fairly protected with more minimal protections in place." That is why it costs many millions of dollars to do the legal and accounting work to take a company public but only a couple of thousand to issue stock in a new corporation and only a few tens of thousands to raise a few million in a Series A private placement. The law is designed to accommodate the practical needs of companies that want to raise capital. Securities laws don't vanish in the private placement context. They simply impose far fewer requirements aimed at investor protection and all the more so when investors are presumed to have a strong ability to protect their interests (this is why offerings are often limited to "accredited investors," i.e., high net-worth or high income individuals, among others).

The JOBS Act is a piece of legislation that takes the rather burdensome accounting requirements first imposed by Sarbanes-Oxley on all publicly traded companies - and adding $1M+ in annual costs to even the smallest issuer in order to attain regulatory compliance under those rules - and exempts a set of relatively smaller publicly-traded companies from having to comply with those requirements for a 5-year ramp-up period after first going public. This part of the Act says, in effect, "we realize that the IPO market has been moribund ever since SOX was enacted and, because part of the reason is the heavy regulatory burdens imposed by SOX, we will seek to encourage more IPOs by giving issuers more incentive to go public without having to face huge expenses right out the gate." Now, this social policy judgment made by Congress may or may not be sound. But it is a policy judgment declaring that the SOX rules are just too much for relatively small companies just going public and therefore should be relaxed for such companies in order to enable them to realize their practical goals of going public, building momentum, and only later having to comply with the full SOX rules. One can question this judgment but one cannot question that it falls squarely within the pattern and practice of U.S. securities laws as implemented for decades. It is always a trade-off between optimum investor protections and practical limitations on such protections in the name of letting legitimate capital formation get done. Will this "legalize fraud," as suggested in this piece? I doubt it. The SOX rules have a short history and securities laws go back to the 1930s, more or less ably protecting investors during their long tenure before SOX took effect. Such protections will continue to exist for offerings made by these small issuers who will get some interim relief from SOX requirements. One can argue that it is bad policy to afford such relief. But to suggest that it "legalizes fraud" is to absurdly overstate the case.

The JOBS Act similarly loosens requirements for crowd-funding, for enabling private companies to have larger numbers of shareholders before having to register as publicly-traded companies, and for other contexts as well. On balance, it is aimed at promoting more effective capital formation by loosening otherwise strict SEC rules when new conditions warrant. This, to me, is very good for startups and the Act as a whole should, in my judgment, lead to many excellent results. That is why it has received almost uniform and very strong support from pretty much the entire startup community. It does not legalize fraud. It strikes a classic balance between formal investor protections and real-world practicalities. If the balance proves wrong, nothing will stop Congress from pulling back. In the meantime, let's see if crowd-funding can be used to give us new ways of raising capital and if the IPO market can't be rejuvenated after a long dead spell. The Act stands to benefit startups in major ways and, though not exempt from criticism, is by no means some radical departure away from investor protection under U.S. securities laws. On the contrary, it stands squarely within the traditions of those laws and is a good example of precisely how such laws have been implemented for many decades.

grellas··on Judge Chooses Pi Day To Reject Lawsuit Over Attempt To Copyright Pi As A Song
For those who are not categorically opposed to the idea of copyright (I am not), this case illustrates both the good and the bad of the current system.

Copyright when properly applied ultimately protects creative forms of expression (see http://news.ycombinator.com/item?id=3479959). It does so by giving the originator of a creative work (the "author") a monopoly on it for a limited time, the effect of which is to allow that person to control who can copy it, alter it, etc. Because the goal is to protect creativity, copyright cannot legitimately be used to give anyone a monopoly over ideas themselves (such as the idea of transposing pi to musical notes), or over expressions of ideas that are indistinguishable from the underlying ideas themselves, or over standard or stock elements (e.g., stock character types in plays), or over facts. Even if a work itself is properly copyrighted, that protection extends only to the elements of that work that are sufficiently original as to be protectible and not to other elements. Thus, if someone claims infringement and the only concrete similarities between two works relate to elements not protected by copyright (e.g., facts or ideas), there can be no infringement. Applying these rules here, a judge well-versed in copyright law held that pi is a non-copyrightable fact, the transcription of pi to music is a non-copyrightable idea, the resulting pattern of notes is an expression that merges with the non-copyrightable idea of transcribing pi to music, and the remaining elements of similarity in the two works are so incidental and scattered that there is no way it can be said that the works are substantially similar - hence, no infringement can be found even if the works might be found to sound similar in certain ways. In focusing strongly on the underlying principle of what copyright is all about (to protect original forms of creative expression), the judge held that the "Pi Symphony" creator, though possibly holding a valid copyright on his overall work, was entitled to protect that work against only virtually identical copying because any broader form of legal protection would allow that creator to overreach and to claim what would amount essentially to a monopoly over the very concept of transposing pi to music. This is what older generations would have called a "felicitous result" - one that allows creative work to be legally protected within the strict limits justified by the purpose of the copyright law and no more. The result comports with both law and common sense and is well-articulated by this judge in a solid opinion. That is the good part.

The bad part is that an Oregon resident had to fight a federal lawsuit, first in the distant forum of Nebraska in order to challenge jurisdiction and venue, and then through what was undoubtedly a set of motions in Oregon that had to cost at least tens of thousands of dollars. For big companies, maybe this is reasonable but, for an average person trying to defend against this sort of attack, the process itself becomes obnoxious. This is a big reason that IP bullying can be so easily practiced and why so many have to cave to it - even if they are in the right. In a digital age, such bullying has become even more obnoxious, driving many to the point of despising copyright altogether in spite of its historic purposes and merits.

grellas··on After 244 Years, Encyclopaedia Britannica Stops the Presses
It is easy to disparage the Encyclopedia Britannica from a modern perspective - out-of-step, overpriced, outmaneuvered by competitors - but there is a great sadness here at the demise of something that represented an effort by western scholars to "capture the world's knowledge." Imagine assembling a "A" team of scholars and scientists, getting them to make substantial, substantive contributions in each of their respective areas of expertise, and publishing the results under the guidance of a top editorial board. The results echoed in the western world at the highest levels for no less than two centuries, culminating in a famous 1911 edition that was widely regarded as the pinnacle in assembled human knowledge to that time - something to be marveled at. For years, collectors paid a great premium to buy the 1911 edition, just for that reason. Even in the period leading up to the 1960s, the EB was a staple in most every western home where parents valued education and academic achievement for their kids. Whole hordes of door-to-door salesmen supported their families very comfortably just by selling this particular product.

So, yes, the EB became kind of laughable with its clumsy marketing efforts and awkward efforts to adapt to modern technology in the past couple of decades, but be kind to its memory. It was one of the great attempts in all history to try to do what many dream of doing today through the internet and the advantages of the digital age: limited by the resources of that day, for sure, but an amazing achievement nonetheless. There is something special that has died here and, if only for old time's sake, we can mourn its passing.

grellas··on Games Where The Only Winning Move Is Not To Play
By now the blogosphere, twitterverse, and even mainstream media is abuzz with the absurd decision that Yahoo has made to sue Facebook over ten software patents with the assertion that Facebook’s entire business is based on Yahoo’s patented inventions.

What is the potentially depressive effect on Facebook's IPO price come this May (or whenever) if it has a lawsuit hanging over it claiming that its entire business model is based on Yahoo's patented inventions and that it would face a ruinous liability should Yahoo prevail?

I suppose the timing could be coincidental but I doubt it. After all, the problem for Facebook can easily go away if it is just willing to be "reasonable" in resolving this quickly. Truly a new low in patent trolling.

grellas··on Defining Property
I watched some really lousy movie the other day while doing the treadmill (without the sound on, of course) and, as I went through my boring routine, the movie ended and the credits scrolled through for what seemed like an interminable period. As I did so, it struck me what a very large number of people are involved in the production of a movie. Not just actors, not just the director, but literally thousands of people who contribute in one way or the other to the effort and (I assume) all get paid something for their contributions. One or the other of them, or perhaps most, may be getting taken advantage of by the studio that produced the thing, but they are all making some aspect of their living in being part of the process. What would happen to these people, then, if copyright were abolished and the studio incurring the expense of that production could no longer claim exclusive rights to the creative product on the grounds that there is a no-cost distribution system intact for generating as many digital copies of that product as anyone cares to make? Well, the studio could no longer use the traditional model for producing such movies because it could not "own" the resulting product. The result: any consumer could download the product without having to pay anything for it; any person could freely distribute the product for free or for a charge, as circumstances permitted, without any obligation whatever to the originating studio; any person could take the characters in that production and use them freely in any independent production without obligation to the originating studio. What is more, the studio itself could take the latest blockbuster novel and could create a movie about it without any obligation to the author. And any other author could take the conceptions of the original author and borrow them freely to create derivative characters based on the originals without obligation to the original author. And so on and so on. One can argue, of course, that all this would lead to a better society but no one can deny that it would radically change the way creative works are produced and financed. Perhaps we would see a renaissance of creativity once everything is open to be instantly shared. Perhaps we would see the opposite. One thing is sure: that large group of people whose names scrolled by on the credits would no longer be able to be paid for their work on movie productions as we have known them.

PG essentially answers, "it depends" to the question whether producers should be able to charge for content but seems to argue that the existence of no-cost distribution mechanisms is a strong factor tilting the argument toward the "possibly no" direction.

I would say that the no-cost distribution mechanism is only one factor and perhaps not even among the most important.

Protecting creative effort is to me the most important factor favoring continued copyright protection (see http://news.ycombinator.com/item?id=3479959 for my elaboration of this theme). And this is no small point. There are literally countless scenarios apart from movie studio production where people invest creative effort into a product that is protected by copyright. My wife recently attended a conference teaching the "Gottman method" for marriage/family therapists. She received a thick workbook explaining the techniques used by the originators of that method. That material took years to develop. Yet, without copyright, my wife could take the materials, reproduce them as much as she likes, sell them for her own profit, and even modify them as she likes and distribute them as her own, all without obligation to the creators of that material. Should the law be, no, she can't do that because she received hard copies only of the materials but, had the creators distributed the materials digitally, then she could? That would be the result if the only relevant factor were the ease of distribution. But of course it is not. Nor do I think PG is arguing that it is. Insofar as his argument might be interpreted that way, I think it would be wrong.

So, yes, the legal definition of property continually changes. And the ease of distribution is a relevant factor in how those definitions should be shaped. But it can and should be outweighed by other factors such as society’s stake in protecting creative effort within proper bounds (i.e., for limited times and in limited ways). Our copyright laws suck today because they were largely fashioned in 1976, well before the mass digital age. They urgently need updating. They do not need updating in the SOPA manner, with the use of oppressive and overreaching legal remedies that would in their own way be "warping society" in order to achieve enforcement goals. They need to be updated in a way that strikes a balance between protecting creative effort and not having the heavy hand of the law fall on relatively trivial transgressions. This seems to be what PG is arguing. I would only take issue with placing an over-emphasis on limiting or abrogating the protections based on the distribution mechanism.

grellas··on Why Are Lawyers So Expensive Even With The Excess Supply Of Lawyers?
A few quick thoughts (am about to go into a meeting):

1. Lawyers are not immune from market forces. This is easily seen at the micro level: a new practitioner with no established reputation can charge $800 per hour and see where that gets him (of course, precisely nowhere). On the macro level, law has been a boom business ever since at least the 1960s when expansive liability theories came to be widely adopted by the legislatures and the courts. So, what used to be regarded as a dispute over garbage at the local dump becomes a massive environmental enforcement action by which dozens of parties face multi-million dollar liabilities; what used to be a distribution chain in which only the end-point seller typically bore liability to the consumer becomes massive product liability suits going back to the manufacturers and imposing strict liability on them in ways that can ruin a multi-billion business; what used to be the $.25 that a cab driver overcharged you because of some shifty trade practice becomes a major class action in which all the vendors in the area are swept in to face a protracted legal fight and potentially substantial damage exposure; etc., etc., etc. The point being: the legal landscape has changed dramatically and, for example, the Big Law firm that I worked at in the early 1980s grew from 23 lawyers in 1965 to about 250 in 1980 and is today over 1,000 lawyers. Demand is up in a huge way over the decades and law remains a boom business in this respect (certainly Big Law remains so) notwithstanding the recent economic calamities that have beset us all. That is the main reason why the very high fees are charged: because businesses are willing to pay them (when they are not, overt or disguised discounting occurs with great regularity).

2. That said, I am no fan of the Big Law model and have expressed my criticisms at some length elsewhere (see, e.g., http://news.ycombinator.com/item?id=1648342). I also have stated in some detail why I think the large firms have been left reeling from the recent economic shock and how this has caused a general revulsion against the billable fee structure used in these firms (see http://news.ycombinator.com/item?id=1649507).

3. In reality, the legal field is pretty diverse and price does matter for those who consume legal services (why shouldn't it?). The providers of those services who remain stuck in old ways will need to adapt to the short-term problems but they obviously hope to keep the old structures in place in hopes that the good old days will return. For the broader legal market, however, there is already wide variety in the range of services and pricing offered. As a consumer, you need to do your due diligence and shop around. In the broader market, lawyers want your business and will adapt as needed to get it.

grellas··on Why I Don't Do Unpaid Overtime and Neither Should You
Actually, you are correct concerning federal law. I practice in California where state law requires that a computer professional make a much higher salary (or comparable hourly rate) in order to be exempt. My statement is correct for the context in which I practice, therefore, but I communicated it poorly to leave an incorrect impression about the federal law. Your point is a good one and thanks for pointing this out.
grellas··on Why I Don't Do Unpaid Overtime and Neither Should You
The U.S. has a strong free enterprise foundation and its laws reflect this. Freedom of contract remains the rule even though it is much criticized in some circles and has been hedged considerably over the years. In employment, the old rule was that you could pretty much fire anyone at will for any reason and, if you did, you incurred no legal consequence. This is pure freedom of contract. In time, this unrestricted freedom came to be deemed repugnant where it bumped into important social policies - for example, that employers not discriminate on the basis of race. Hence, protective laws were passed and these circumscribed the old unrestricted freedom to have pure at-will employment relationships that gave an employer an open ticket to fire people for any reason whatever, even a repugnant one. That said, however, when you get down to the day-to-day employment relationships that most of us encounter, the at-will rules still prevail and, with limited exceptions, it really does remain the case that most people can be fired for any reason at any time and almost always without legal consequence. This may be seen as good or bad but it is the way of life under U.S. law with its strong bent toward free enterprise and freedom of contract.

The same pertains to overtime rules for employees. The U.S. does have a body of protective laws that require employers to pay overtime for excess hours worked, either by the day or by the week. But the historic relationship between employer and employee had a strong bias toward freedom of contract - that is, if an employer and an employee agreed to a certain working relationship, that was their prerogative and the government had no say in the matter. Again, this older form of unrestricted freedom led to consequences deemed repugnant as a matter of social policy (e.g., sweatshops). Thus, laws were enacted to abridge the older unrestricted freedom of contract (wage and hour laws, in the example considered here). But, as in the case of at-will rules, these laws did not disturb the large measure of freedom of contract that formerly prevailed except for the specific situations where a policy judgment was made that the workers were most vulnerable and in need of protection. Thus, U.S. overtime rules apply without question to low-skilled jobs and to low-paying jobs and to jobs where the employees have little or no independence or control over how they perform their duties. But these protective rules can and do peacefully co-exist with an equally important set of rules providing that high-skilled employees, skilled professionals, employees with substantial administrative responsibilities with managerial functions, and like positions are expressly exempted from the overtime rules. The idea is that, in a free economy, as a matter of policy, it is better for parties to retain freedom in defining the work requirements of a position than for the government to dictate protective rules where the parties are not deemed in need of protection. In other words, the employer-employee relationships for such exempt categories are deemed to be healthier if the parties are free to negotiate salary/bonuses or other compensation that is not tied to rigid rules about overtime. The laws let the parties have much more flexibility in deciding how to frame their relationships, and this basically reflects the old-style freedom of contract that has always characterized the U.S. economy. Protections were adopted as deemed necessary but they are limited as a matter of public policy. This can be seen as good or bad but it is the law in the U.S.

What does this mean in practice? It means, for example, that a computer professional can be paid a salary of $100K/yr and be asked to work like a slave, all without overtime compensation. But that same professional, if paid $30K/yr, is required to be paid overtime for excess hours worked, even if that person is on salary. One case is treated as appropriate for free choice by the parties without overriding restrictions; the other is not. And the difference, in this case, turns on the amount of salary paid - the highly-paid worker is treated as being able to protect his own interests while the relatively low-paid worker is not.

Europe clearly has taken a different approach and this too can be seen as good or bad depending on one's perspective. In general, in Europe, the idea of open-ended freedom of contract is suppressed in favor of more sweeping protective laws favoring employees. Whether this leads to a robust economy or chokes enterprise is open to debate but it clearly differs from the U.S. approach.

In this piece, the author criticizes the U.S. employment pattern as, in effect, requiring exempt computer professionals to work for free when they are required to work excessive hours tied to a fixed salary. In making this point, the author admits that his European biases are showing. The "U.S. view," if I can call it that, is not that the worker is being made to work for free but rather that the worker has not agreed to be paid by any hourly measure but rather for an overall performance to be rendered, no matter how many hours it takes. This might be regarded as "slavery," but (taking, for example, the exemption for executives) does anyone really believe that top executives have as their focus the exact number of hours worked as opposed to broader goals related to their job performance. The same can be said of professionals, as many computer professionals look primarily to the task and not to the hourly measure as the mark of their jobs. In my field, lawyers too see the hours worked as entirely secondary to their jobs. For every such executive and professional who would be deemed "helped" by overtime laws that might be extended to apply to their jobs, there would undoubtedly be many who would recoil at the limitations of suddenly not being able to do their jobs without regard to the scope of hours worked. I don't believe that most such employees see their work as "slavery" when they have to work excessive hours. I think they see it as career development. And, in any case, the U.S. law gives such employees freedom to become "slaves" if they so choose for their own reason. It is the old freedom of contract and highly skilled, highly compensated workers in the U.S. retain that freedom to choose, as do their employers.

Work-life balance is very important as well, a point the author emphasizes. He seems to have made that choice later in life (as did I) and I commend him for it. But, while I can exhort others too to strive for such balance, I will not begrudge them the choice to work exceedingly hard (especially as they are first developing in their careers) to achieve other "unbalanced" goals. People do accomplish insanely great things by working insanely hard. If they choose to do this in their work as employees, that is their privilege and, as long as they are highly-skilled and highly compensated, I say more power to them if they do it without the benefit of protective labor laws.

grellas··on Hacker Monthly: best of the Internet, printed out, and it’s turning a profit
The copyright belongs to an author or poster, respectively, depending on whether it is an article or comment. HN gets an implied license to display the comments and cannot be held to infringe from a typical link to an outside article.

I have to confess to having felt pretty idiotic when I went many months ordering individual print issues, thinking all along that Hacker Monthly might not last for a full subscription year (in time, I subscribed). This is far and away the most popular item in the reading area of our office, with many, many clients asking for copies of articles from it. It is a great product and I am happy both to subscribe and to feature it for clients. Lim has done something pretty amazing here.

grellas··on Tesla responds to "bricking" issue
Deposition line of questioning suggested after reading this piece:

Q. Is it true that the battery has catastrophic failure when it drains to zero and is left in that state for a sustained period?

A. The company has built in countless safeguards to ensure that the battery never drains to zero.

Q. That is not what I asked. Please answer the question.

A. It is an unfounded rumor that many owners have incurred such a catastrophic failure and only an irrational fear would permit anyone to believe that.

Q. I didn't ask about many owners, only whether it is possible to incur a catastrophic failure as described. Please answer the question.

A. Our documentation clearly tells owners that it is vital to keep their car plugged in and we give them ever-escalating warnings to ensure that no rational person could ever let the car get close to that state.

Q. I didn't ask about the likelihood of this happening, only whether it can happen. Please answer the question.

A. We value our customers more than you can imagine and it is slanderous to suggest that we would subject them to risks that can be avoided.

Q. Again, not what I asked, please answer the question.

A. Every car has risks of catastrophic failure if it is badly misused.

Q. Does this mean the Tesla does too with its engine?

A. We will not dignify a mere rumor with an answer to that question.

Q. And is it true that it costs $40K to replace the battery?

A. I object to that as irrelevant.

Q. And that it is not covered under warranty?

A. Ditto - irrelevant.

Q. And constitutes an uninsurable risk?

A. We really are off track here. I will not answer.

Q. So you do not regard it as worthy of disclosure to your buyers that, should their battery drain to zero for any sustained period, the only remedy is to replace it at their own expense at a $40K cost.

A. That disclosure would not fit with our marketing plans. Plus we say something of the sort at page 487 of our owner's manual.

Q.Well I guess this was all pretty pointless.

A. Of course, nothing wrong here. Ignore the man behind the curtain. What a stupid thing to ask about anyway. The revolution is apace and you shouldn't bother me with little details.

grellas··on Oracle v. Google: "the value of this case keeps getting smaller and smaller"
I have mixed feelings about a loser-pays system and have articulated the reasons why I believe that such a system can sometimes work undue hardships on average people who go to court to try to obtain redress (see http://news.ycombinator.com/item?id=1792353). While such a system would undoubtedly serve to deter certain forms of abusive litigation, I think its benefits would be outweighed by the detriments it might bring.

As to the chances of its ever being adopted in the U.S., I think these are basically nil. The U.S. departed from the UK on this issue dating back to the formation of the country and both judges and state legislatures (which now fashion these rules) are very committed to the current rules. Among other things, those rules are seen as helping plaintiffs (such as consumers and personal injury victims) and those who fashion such rules are not prone to disturb the existing system because of this. Moreover, in cases where legislatures do consciously want to tip the balance, they enact special statutes that allow for fee-shifting in favor of plaintiffs (e.g., in certain civil rights cases where a plaintiff can get a fee award as prevailing party even though traditional rules would require such a party to bear its own fees). With sentiments (and prejudices) being so heavily weighted toward plaintiffs in general, I don't see any movement whatever toward a loser-pays system even though this might help lessen frivolous litigation (I do believe that an occasional U.S. state has adopted such rules but this is a rare exception).

By the way, I don't see the Oracle case as frivolous. It is, in my view, grossly overstated in its damage claims but it may be that Android is infringing certain of the patents and that Oracle may be entitled to some damages. I say this even though I am not sympathetically aligned with Oracle's case and believe it was a mistake to bring it. As to the final outcome, only time will tell.

grellas··on Oracle v. Google: "the value of this case keeps getting smaller and smaller"
I began my legal career working for several years at in Big Law. In one case, a stultifying bureaucratic management for a major steel company was building a new plant. After hiring a firm out of the midwest to manage the construction on a fixed-fee contract, it proceeded to make life miserable for that firm by making never-ending revisions to the project plans throughout the course of construction and this not only caused that firm to incur cost overruns but also had the effect of causing substantial delays in getting the work done. Everything was done through a multi-layered committee committee structure, with memos continually being circulated about needs to separate the "wheat from the shaft" and like gems. When it was all done, this mega-sized steel company went out and hired a professional hatchet firm to assemble a "delay damages report" (I don't remember the exact name but I am sure it was much more high-toned than my description here). It then used this report to send a demand letter to the midwest firm, claiming that their management of the construction project was inept and that it had to pay millions of dollars in damages on account of the delays in construction. When they refused, they got sued for the claimed damages.

I can still vividly remember how, as a young lawyer, I was so stunned by the sheer phoniness of this so-called expert report - here were a bunch of bungling, bureaucratic committee types who couldn't make a key decision to save their lives using a sham report to try to lay the blame for their own faults at the feet of an innocent firm that had simply done its job. Everything in that report was couched in passive voice and dressed in self-important language - to a point where you had no idea who had done what but had only a vague sense that this or that "had transpired" with this or that result "having ensued." What is worse, the report was replete with dishonest (and obviously deliberate) renderings of key facts and with conclusions that could only be reached by the most absurd disregard of logic imaginable. I remember thinking to myself: "this is the suit-and-tie version of a stick-up in some back alley." And the case worked out true to form, with what must have appeared to be surreal results from the viewpoint of the midwest firm's executive management. Six lawyers and four paralegals were assigned to the case. Thousands of boxes of documents were assembled with lawyers and paralegals being tasked to go through each document mindlessly summarizing it on a "digest sheet," with the results ultimately to be compiled into an omnibus analysis report that could in turn be used by competing experts to attempt to rebut the absurdities of the original report. Thousands of hours of billable time racked up and this process was maybe 10 or 15% done when I decided to do a very careful analysis of a relatively few key documents only, to put the story in a context that readily demonstrated the sham nature of the "delay damages report," to summarize everything in a 50-page write-up, and to give that to the partner in charge. Within a short time, the executive management of our client used that write-up to meet face-to-face with their counterpart executives on the other side and the case quickly settled for a very modest money payment. What a mess, I thought at the time, and all from a phony expert report.

As the facts are emerging in Oracle's attack upon Google, it is clear that there are many complex elements here by which Android might ultimately be found to infringe upon Java in this or that respect but it is equally clear that, when it is all put in context, the damage claims being asserted by Oracle are about as phony as one could imagine. This Groklaw piece does a splendid job of picking the high points from the critique that Google's lawyers have put together to decimate the report of Oracle's key damages expert. All I could think of as I read this was how this sort of phony "expert analysis" remains as prevalent as it did back in my early days of lawyering (over 30 years ago) - different legal context, different facts, same exact techniques, same sort of hired guns. It is enough to give anyone a very jaded view of law and how its outworkings can harm people. Here, Google is more than capable of being able to afford to hire the best in order to defend itself. But what does an average person or company do when faced with such situations? It is truly dismaying to contemplate.

Oracle will of course fight to resist Google's challenges to its damages claims and it will be up to the judge to decide. But the judge recently warned Oracle that this cycle will likely be its last chance to fix the problems with its expert's report (see http://news.ycombinator.com/item?id=3500459 for a detailed analysis of this) and so this will soon reach a decisive point. The result will be, I believe, that Oracle will get its day in court but will only be able to proceed with a much-stripped-down version of its claims - something that might hurt Google a bit financially but will pose no real threat to the Android platform as a whole and will amount in time to nothing more than a blip on the radar.

grellas··on Copyright enforcement and the Internet: we just haven't tried hard enough?
Copyright and patents are not property. They literally cannot be owned.

It may be a broken metaphor but the law says you can own intangible rights without question - or at least gives you rights that equate to pretty much everything that an owner of tangible property has (the right to exclusive control, the right to sell/buy/assign/lease/license/bequeath to heirs, etc., and the right to sue to enforce these rights in a court of law - see http://news.ycombinator.com/item?id=3463640 for elaboration). This is the bundle of rights that the law calls "ownership" and, in this sense, you certainly can "own" copyrights and patents.

You are arguing, in effect, that the law should be otherwise and that is fine. I also agree that the term "theft" is a loaded term that distorts the discussion on infringement. But it is not right (in terms of law) to "call out" those who use the term "property" for using a label that accurately describes exactly how the law treats the intangible rights (copyright, patent) with which you take issue. You may disagree with this but this is what the law currently holds. It is also, in practice, exactly how every startup I have ever worked with (many thousands) regards the IP rights that it develops (i.e., something "owned" by the company).

Trade secret rights, by the way, are also treated by the law as property. Such rights extend only to information that is confidential and proprietary - "proprietary" literally comes from a Latin root that means "one's own" and refers to information (whether formulas, customer lists, confidential pricing information, or whatever) that is owned by a particular company (as opposed to being public information). This too is another example of the law treating information as something capable of being "owned." Indeed, that is the essence of most intangible rights that the law protects, including contract rights. It protects them by giving them the attributes of ownership. This may be question-begging ("they are only property because an illegitimate law calls them "property") but it is reality and is very deeply ingrained in current law. It would take nothing less than a revolutionary way of looking at the concept of property to change it.

grellas··on Hit men, click whores, and paid apologists: Welcome to the Silicon Cesspool
Silicon Valley once was home to scientists and engineers — people who wanted to build things. Then it became a casino. Now it is being turned into a silicon cesspool, an upside-down world filled with spammers, liars, flippers, privacy invaders, information stealers — and their grubby cadre of paid apologists and pygmy hangers-on.

Silicon Valley has not fundamentally changed over the decades and I can say that from the perspective of someone who has lived here for over 40 years and who has been in the thick of the startup world since the early 1980s. Opportunism has always existed and always will. But great ventures are not fundamentally built upon opportunism. They are built upon incredible skills, daring forms of risk-taking, amazingly hard work, and like traits that are quite admirable. Those traits showed themselves strongly here in the Valley 30 years ago and they continue to do so today. Indeed, the heart of the Valley consists of anything but the "upside-down world filled with spammers, liars, flippers, privacy invaders, information stealers" that the author here attempts to depict. Sleazy elements exist as they do whenever money is at stake but to suggest that they are what most defines the Valley is to slander a lot of good people who are doing great things and who have nothing whatever to do with the world of which the author writes.

The author is an excellent writer but this piece is seriously flawed by an intemperate tone, extreme ad hominem attacks, and gross overstatement. In my view, such flaws seriously weaken it as a piece of advocacy. And the lurid headline does not help either, especially when one writes to criticize "click whores." It is not that the piece is bad on substance. It just could have been so much better had the author chosen to strike a more judicious tone.

grellas··on VEVO Execs Must Face Criminal Charges For Copyright Infringement
VEVO Execs Must Face Criminal Charges For Copyright Infringement

Criminal charges are a serious business and I don't think it promotes healthy debate to sling around loose statements suggesting that they be pursued recklessly by the authorities, no matter how unattractive the party involved in the wrongdoing. No self-respecting prosecutor would even consider bringing charges where only a one-time incident is involved and where the alleged perpetrator claims (as here) that the incident was inadvertent (however lacking in credibility this may be, it is a classic "plausible deniability" excuse). Do we really want our government devoting substantial resources toward trying to prove guilt beyond a reasonable doubt in such a case? And does anyone seriously want this to be the standard by which criminal prosecutions for alleged copyright infringement are brought?

Since I would assume the answer to these questions is no, then the only point of this piece is to use an absurdly overstated headline to draw attention to itself.

I am against hypocrisy as much as the next guy, and I have no particular sympathy for the musical labels (or even for the sort of glitzy events at which this incident occurred), but it does not advance the cause of attaining sane copyright legislation to make "off with his head" demands that have no basis in reality.

Music industry hypocrisy is fair game for advocating against draconian copyright enforcement and in itself makes for a potent argument. The effect is much diluted, however, when the argument cannot be taken seriously. If instead this is not intended to be taken seriously but is rather a form of street theater intended to dramatize a point, then it is (in my view) just lame and ineffective.

This is a case of infringement by which the copyright holder can choose to take civil action or not as suits its purposes. If a cost-benefit legal analysis suggests that little damage in fact occurred and that the incident is non-recurring or plausibly explainable, then there is likely nothing worth pursuing. What the incident boils down to, then, is a horrible embarrassment for the music industry execs involved and, at the level, it does carry a sting. The rest is fluff.

grellas··on On pirates and piracy
Jerf is correct in this. Public domain materials remain so except as modified or improved by the creative work of others and, in that case, only the creative improvements fall under copyright, not the original materials.

The recent case of Golan v. Holder held that Congress has the constitutional power to revive the copyright on foreign works that had fallen into the U.S. public domain as part of its treaty-based efforts to promote the arts through reciprocal arrangements with foreign countries. It further held that such "re-copyrighting" doesn't violate the first amendment rights of persons who had relied on the prior public domain status of the works that had been removed from public-domain status.

The Golan case is, to me, a really absurd outcome and reflects a weird mix of liberals on the Court (e.g., Ruth Bader Ginsburg, who wrote the opinion) upholding sharp encroachments on free speech and conservatives (who joined in a 6-2 ruling) upholding rather large assertions of constitutional legislative power where a strict construction of the constitutional language ("limited times," etc.) would seem to point in the opposite direction. I think it is a bad decision. But it by no means empowers any private party to try to claim that anything in the public domain somehow shifts back to copyright status by virtue of what that private party does. The case is irrelevant to that issue.

grellas··on Oracle v. Google: Judge leaves Oracle reeling on viability of its damages claims
A few thoughts:

1. Oracle has stepped into a bear-trap in this case and is trying to extricate itself. This does not mean that it has a losing case on the merits. That is a matter yet to be decided and it will get as fair a trial in this court as it would anywhere else. Given the nature of its claims, and the murky standards associated with its patent and copyright claims, it likely will get some damage award. But Oracle does not want just some damage award. It wants to hold the prospect of a potentially devastating damage award over the corporate head of Google and to use that as leverage to gain a lasting foothold in the dollar flow of the mobile space via a settlement with Google on potentially brutal terms.

2. Judge Alsup is as fair-minded and talented judge as one could want but he also is a tough judge in terms of managing what he allows to come before his court. And he is not buying the outrageously phony damage claims that Oracle is trying to foist upon this trial via its designated expert. Because the law permits him to do so, he is effectively pre-screening what can come before a jury in the case and he has declared that he will put a tight limit on what is permissible. This means that Oracle will not be able to take its crap-shoot before the jury in hopes of gaining in terrorem settlement leverage over Google through the possibility that a crazy jury might be inclined to try to slam Google with a monstrously large damage award.

3. Just last year, Judge Phyllis Hamilton, a colleague of Judge Alsup's, reversed a $1.3 billion award in favor of Oracle against SAP. That case involved blatant theft of Oracle's software by TomorrowNow, an SAP subsidiary, and was so bad that SAP admitted liability up front such that the only issue to be tried was the amount of the damages suffered by Oracle. In that case, Oracle put Larry Ellison on the stand and had him speculate that Oracle must have lost $4 billion in software sales as a result of the admitted infringements. There was no factual basis for this claim - just the opinion of the company CEO. Yet that sort of evidence was allowed to go before a jury and the jury bought it. In rethinking the issue (for she had been the judge who had initially allowed it), Judge Hamilton held that this was improper and, in doing so, reduced the verdict to less than a fourth of what the jury had entered. (see, e.g., this report on the case: http://www.crn.com/news/applications-os/231600674/judge-redu...) This was a correct ruling and Oracle's prospects of getting it reversed are about zero.

4. What Judge Alsup is doing here is acting as gate-keeper to make sure that such junk does not enter into this trial either. In theory, Oracle should not mind this. If all they want is a fair trial, there is nothing wrong with excluding unsupportable expert testimony from that trial. But that is not what Oracle wants. It wants, above all, to be able to hold a huge threat over Google to pressure it into settling on very bad terms.

5. In that light, let me translate a few of the items in this order and in the surrounding procedural context: (a) Oracle asked to be able to dismiss its patent infringement claims without prejudice (in effect, asking the court for permission to drop those claims for the moment so that it can reassert them pretty much any time it wants to at a later date, thus keeping a cloud of uncertainty hanging over the Android platform) - the judge said no - translation: "I am not about to let you play games with the judicial system for ulterior motives: you will get your trial and you will get it here, just as you asked for it in causing Google, the court, and a lot of others to devote huge resources to the handling of the issues you raised;" (b) Oracle asked that the judge bifurcate its claims such that the copyright claims would be tried first and the patent claims tried in a separate phase of the trial many months down the road - the judge said no - translation: "You will put on your entire case in one place and not be allowed to play the courts opportunistically by going for multiple bites at the apple;" (c) the judge took the unusual step of allowing Oracle yet a third try at amending its expert's damages claims even though he had ample discretion to say "enough is enough" at this point and to toss them altogether - the judge was not being "nice" in doing this - translation: "Unless you truly come in with something credible, I am going to slam your expert's claims once and for all and I am creating a solid record of giving you a full and final opportunity to fix the problems after fair warning that this was coming and in that way no appellate court will ever reverse that ruling."

6. This is a complex case that could take a variety of directions but one thing is certain: it is in the hands of a very able judge and, if Oracle will ultimately prevail with a big outcome, it will only do so because it deserves this under the law and not because it will get away with gaming the system (as it did, for example, in the TomorrowNow case). And that is why Oracle is reeling concerning its claimed damages in light of this ruling. It is getting trapped (as it should be for these sorts of shenanigans) and it knows it.

grellas··on Piracy - You can't have your cake and eat it
The Internet has made copyright law outdated. Social norms are in the process of adjusting to the new situation.

Well, the Internet certainly has led to a generation of young people who are accustomed to downloading freely from various sources without regard to copyright restrictions and, in this sense, I would concur that social norms are changing.

Unfortunately, the law itself is far from changing and, while some of this has to do with corporate lobbyists, the greatest reason is that copyright is a key part of many forms of commercial activity whose nature is not changed by the Internet and whose deep-seated roots require the continuation of copyright.

Just as one example, Steve Jobs had funded Pixar when it was a fledgling company primarily trying to design a hardware solution while also supporting a team of animators who were doing primarily experimental things. In time, it became clear that the hardware piece was not going to be promising but that the animation team might just produce a breakthrough in animated films. The problem: it took someone with tons of money and a huge appetite for risk to carry this through. A whole team of creative people and their families suffered through that one and did not come out whole even as it was - but they stuck it out, as did Mr. Jobs, who invested countless millions in the venture at a time when that strained his personal resources. The outcome: Toy Story (and the whole Pixar legacy). The outcome without copyright: a big goose egg. Why? Because the participants in this venture underwent great hardship to get to the final result and the only hope of a financial payoff lay in being able to have a film that would be owned, controlled, and marketed by the Pixar venture and that might become a large commercial success. This is indeed what happened but only because of the protections afforded by copyright.

Now take the whole universe of startups as a larger example, where founders are today offering massive incentives to highly skilled developers in order to develop key functionality based on proprietary code whose value lies precisely in the fact that it is protected by copyright. If all this were simply public domain, then funding for these ventures would vanish or the business models radically restructured. Unless and until someone comes up with a model by which public domain code can be used to gain competitive advantage in the standard startup of this type, copyright will continue to play a huge and important role.

Such examples could be replicated many times over. My point, though, is that, insofar as the law is concerned, copyright law is hardly "outdated" and the reasons for its existence and its commercial value have not gone away. That body of existing law does indeed protect the interests of mega-corporations who are using lobbying efforts to gain special privileges at the expense of us all, and this is despicable. But it also protects countless other people who create things - writers, musicians, film makers, software developers, etc. - whose livelihood in the economy as currently structured depends on it. Unless and until the needs of such creative people to control their works change, copyright law will persist as before (I did a lengthy post on the reasons for this here: http://news.ycombinator.com/item?id=3479959).

I am not saying that it is justified to mount a moral crusade against acts of infringement. But to suggest that a radical change in the law of copyright is imminent - or that it is about to be abolished - is, in my view, to misread the legal landscape in a serious way.

grellas··on Why I'm a Pirate
Creative effort - or at at least any that is truly worthy of the name - takes tears, and sweat, and blood. We can marvel at the output of an artist, or a writer, or a composer, or a film maker and yet fail to focus on the years of toil that often preceded that work. And I am not here speaking of some isolated genius. I still remember the days when I was so dissatisfied with my lack of writing skills that I decided to devour the subject with a non-stop investment of thousands of hours of work specifically aimed at improving those skills - and the seemingly fruitless results of what seemed to be mediocre output at the time - only to wind up, in time, with some degree competence in that area, competence that has served me well professionally and otherwise as I now exercise that skill set in various ways. That sort of creativity is something we all can do, each in his own way, and it is therefore common to us all and not limited to the work of the occasional genius. We all can create, some better than others, and we can all rejoice in that process because it is one of the fundamentally rewarding things we can do in life. It is in our nature to build things, and to improve upon them, and to innovate. This can be in writing, or drawing, or painting, or sculpting, or coding, or composing, or performing, or doing any other act requiring creativity. This is not some trivial take-it-or-leave-it part of life. It is often what defines us at our core.

Copyright, at its heart, is aimed at giving the person who creates something control over the creative work. If I write something, I control what is done with it. No random person can just come along and appropriate it to that person's use or profit. I can say no to that or I can say yes, as I determine. If I say yes, I can require that person to compensate me for using my work or I can decide that I don't want compensation because I want others to freely benefit from my work. The point is that it is my decision. I have sole control over what is done with that which I create. Why? Because the law protects that right. And it does so, for the most part, through copyright.

When people propose that copyright be abolished, they are saying, if effect, that anybody who produces a creative work immediately forfeits any right to control it and that any random person can come along and freely enjoy the benefits of that work and also freely reproduce and distribute that work. Under that sort of legal system, I can attempt to sell my work, or license it, or perform it publicly, but anybody else can do the same. Why? Because it is no longer "my" work, at least not legally. It is not protected in any way from the efforts of others to exploit it commercially or to give it away as they like. It is anyone's right to do with it what he will. Now, of course, I may rejoice in this. I may desire to create something wonderful and see to it that it is freely distributed to the maximum degree possible because I feel it is important that people benefit from my creative output without any obligation to me. Under a society in which copyright is protected, I can freely choose to do that if I like. I can place my work in the public domain and relinquish any right to compensation for it. Or I can let others use it freely but only on if they meet some condition that I impose on it, such as giving me attribution. The point is that this is my decision. If copyright does not exist, though, I have no such rights and I have no such control. In that case, anybody can use it, replicate it, seek to profit from it, claim it as his own, or whatever, all without my having any say whatever in that process. In such a system, anything created by anybody is simply common property. People can use it for good or for bad but I have no say in it. I may be the creator but that is beside the point. People like the author of this piece can simply saunter by and take it for whatever use the like.

When a society makes a decision to defend the right of a creative person to control his work, and to profit from it or give it away as he likes, it has to make all sorts of policy decisions. Should such control last indefinitely? Of course not. Why? Because the benefits that we all get from being able to control our creative work only last so long. After a time, and certainly after we die, we have presumably exhausted whatever benefit we get from such control. Then too, others also create and, in time, all sorts of people borrow from one another and build upon the efforts of others regardless of the degree of creativity that they add to the process. Given enough time, we get what is known as a "common heritage" - something that far transcends the creative work of any one person. And so we have what is known as a public domain - a rich collection of creative output that is freely available to all. Those who value copyright and its social benefits in protecting creative output also value the public domain because it is a natural concomitant to the protected core of works that fall under copyright in any given generation. Indeed, a key aspect of copyright is precisely to encourage people to create - to invest the very blood and sweat that it often takes to do something great - in order that society generally will be enhanced and improved as creative works are done, are made available to the world as the creator may decide, and eventually pass into the public domain. So a fundamental tenet of copyright is that it cannot be absolute. It needs to be strictly bounded to achieve its legitimate goals without being extended to a point where it defeats those goals and gives special privileges to persons for no good reason.

Today, copyright has been seriously abused in the U.S. and elsewhere and needs to be fixed. In particular, terms of copyright need to be brought back to sensible levels. The public domain as it exists needs to be preserved and a better system needs to be in place by which orphaned works can freely enter the public domain. Many other fixes are needed as well. What is most definitely not needed is a SOPA-style enforcement scheme that opens up legal channels to copyright holders that would permit all sorts of abusive actions against innocent parties in the name of copyright enforcement. This sort of thing merely perpetuates the abuse and does not fix anything. Those who have been paying attention strongly sense this, and it has been pretty amazing to watch people unite to oppose the back-room sleaziness that led to such legislative efforts in the first place.

To defeat SOPA, though, one must affirm copyright. Just as we recoil at legal abuse in a SOPA-style scheme, we equally recoil at self-righteous claims that people can freely take what others create with no consideration whatever given to those who create it. That sort of radical assertion will get us nowhere when it comes to shaping serious legal policy in the SOPA debate. It needs to be roundly rejected.

grellas··on What everyone in the SOPA debate is missing: IP is not a fundamental right
In the modern world, "property" may be tangible or intangible, as the law may recognize it.

Law may take all sorts of forms. In the U.S., it may take the form of a federal constitution or a state constitution, or of a federal statute or a state statute, or of a federal administrative regulation or a state administrative regulation, or of a federal court decision or a state court decision.

For example, with patents, you have a constitutional provision that empowers the federal legislative branch to authorize grants of limited patent monopolies, you have federal statutes dating back to 1792 that implement that authority by conferring rights on inventors to apply for and obtain patents, you have a regulatory framework under the USPTO that sets out a framework for evaluating what is or is not patentable, and you have federal courts that adjudicate disputes affecting the enforcement of patent rights. One can argue over whether patent grants are "property" or not but this is really more a philosophical argument than a legal one. Those who oppose patents philosophically will argue that patents are nothing more than monopoly grants that cannot be said to have equal dignity with tangible forms of property and that are therefore not worthy of the label "property." In this view, the "property" label has merely been hijacked by those who seek to unfairly skew the debate over whether patent monopolies should ever be granted in the first place. Yet, while this sort of discussion frames the philosophical debate, the law gives patent holders a full complement of rights that confer all the attributes of property: under indisputable governing law today, such rights can be owned exclusively by someone to the exclusion of all others, they can be licensed to others by the rights holder via a license in exchange for value given (fees or royalties, one-time or recurring) or otherwise, either exclusively or non-exclusively, they can be assigned, transferred, or sold for valuable consideration, they can be passed by inheritance in the case of individuals or sold out of bankruptcy court in the case of any holder, and each successive buyer of the rights has valuable, exclusive rights that certainly resemble "property" whatever the philosophical arguments pro or con in using that label. When the Nortel patents sell for several billion dollars on auction, or when Google buys Motorola for many billions of dollars when the main asset is its patent portfolio, the commercial players are buying valuable intangible assets, i.e., bundles of legal rights that can be possessed, used, improved upon, bought, sold, sued upon, and legally enforced to the exclusion of others. In every functional sense, that is "property" whether it is ultimately some fundamental right or not in the philosophical sense.

The same goes for copyright, which protects tangible forms of creative expression, whether writings, films, compositions, software code, or many other items. As with patents, the rights associated with legal protections of such creative expressions can have huge value and such rights can be "owned" by a specific holder to the exclusion of all others, can be licensed, sold, gifted, passed by will, etc. in much the same manner as can tangible forms of property. Such rights, then, in a legal functional sense, have all the attributes of "property" whatever they may be in a fundamental, philosophical sense.

The same goes for trademarks - a form of intangible right by which the law protects a merchant's right to use marks or symbols to identify the origin of goods or services so that others cannot fraudulently pass off their goods or services as those of another. Unlike patents and copyrights, trademarks have their origin in judicial decisions by which the courts decided to grant forms of "property" protection to protectible marks created by merchants while selling their goods or services in commerce. Later, federal statutes and regulatory structures were set up to facilitate more efficient registration of such marks. The result, though, is the same as in the case of patents and copyrights: trademark rights can be bought and sold, licensed, sued upon for enforcement, etc. in all the ways that tangible forms of property can be and in this legal, functional sense they are "property" as much as anything else can be called that.

So too trade secret rights are ascribed to commercial information that is both proprietary (i.e., "owned" by someone) and confidential and such rights similarly can be sold, etc., as in asset sales or stock sales by which entire companies are acquired.

At every level of law (federal and state constitutions, statutes, regulatory bodies, and courts), the foregoing forms of intangible rights are recognized and protected as "property." In the legal sense, then, IP is indisputably treated as "property" whether or not it is "fundamental."

SOPA is illegitimate not because copyrights are illegitimate by nature but because it seeks to take a reasonable enforcement scheme relating to copyrights across the web and turn it into a bastardized version that is grossly unfair and highly destructive. One can argue that copyrights are illegitimate by nature but that is a philosophical argument and not a legal one. Legally, copyrights have consistently been enforced in the U.S. since the adoption of the federal constitution. Are they always legitimately enforced? As a matter of policy, they have not been, in my view. The copyright extensions, the grabbing of public domain materials to put them back in copyright, etc. have been products of grotesque lobbying efforts and cravenly legislative efforts that serve no proper purpose other than to favor a privileged few in efforts that clearly damage the broader society (this is another way of saying they don't serve the legitimate purposes of copyright in the first place). That said, however, the core of copyright has a long and well-recognized place in American law and (I believe) broad significant support from the many people who believe that creative efforts should not be treated as common property but should be protected (within limits) for the benefit of their creators.

It thus seems to me irrelevant to say that IP is not a "fundamental" right (I would agree that IP rights are not fundamental in the constitutional sense). Yes, Congress could constitutionally act to repeal the implementing statutes. But so what? Copyright has been consistently implemented and enforced in the U.S. since the beginning of the nation and there is every reason to believe that it will continue to be protected as "property" in the sense I describe above for many years to come. Copyright may not be "fundamental" in the constitutional sense but it is deeply entrenched in our nation and (in my view) continues to have strong support among the broader public. One can support it while adamantly opposing SOPA. The two should not be confused.

grellas··on It Is Time To Stop Pretending To Endorse The Copyright Monopoly
A few thoughts:

1. I am against SOPA-style enforcement schemes as much as is anyone here at HN - laws that impose potentially ruinous penalties based on vague standards lacking all due process protections are laws that stink, however assessed, and SOPA offers that and little more amidst a drama featuring shady lobbyists, venal motives, and hordes of lawyers waiting in the wings to wreak havoc on the core elements of the Internet and the public at large in order to promote the interests of a narrow faction of copyright holders.

2. It is not true, however, that the continued enforcement of copyright laws in a hyper-connected world depends on having SOPA-style laws in effect. The legitimate concerns bothering people about mass infringement on the web were addressed years ago in the DMCA and its scheme of offering safe harbors to those who upheld copyright while allowing for legal action against those who didn't has been a reasonable solution to the difficult problem of how to curb infringement when copying digital content is so easy. The SOPA-style laws are clearly an attempted power grab by which content holders now seek to overreach to get special advantages for themselves at the expense of everyone else. This is wrong but it is not an inevitable part of maintaining copyright protection. Indeed, it is not even a wise or prudent part of maintaining such protection, as is evident from the reaction it has provoked. By framing his argument in the way of claiming that it is, then, the author is setting up a straw-man argument against which he can declaim (in effect, saying, "see, copyright is culturally oppressive and can only exist as part of a regime that denies people civil liberties and many other things they treasure" and it can be nothing else than this - therefore, you either support copyright and its inevitable accompanying oppression or you support civil liberties - this is a false dichotomy).

3. Copyright can easily be abused and that is why laws relating to it need to be very carefully framed. That said, the protection it affords is an integral part of our modern world and does protect creative effort to a significant degree. Without copyright, I could take apart J.K Rowling's billion dollar Harry Potter empire by simply republishing and selling all the works myself, without compensation to Ms. Rowling. Without copyright, I could take Pixar's Toy Story movies and characters and reproduce them for my profit at my whim. Without copyright, I could take any company's source code and lift it for my commercial use while leaving the company that spent millions developing it without recourse. Without copyright, anything you or I write on our blogs, or in books, or anywhere else, can freely be used by anybody, word-for-word, and passed off as something having nothing to do with the author who in fact put in the creative effort to compose it. This list of such consequences is long and extends far beyond a narrow "content industry" composed of conglomerates - it reaches down to everyday people who, knowingly or not, rely on copyright to ensure that their creative work belongs to them and cannot be used indiscriminately by others.

4. There is, of course, a philosophical argument that all information ought to be free and that its use and dissemination should not be restricted in any way by any form of legal restriction. There is a case to be made for this argument, one with which I would not agree but one which nonetheless can be made in good faith as a goal of trying to achieve a better society. I do not denigrate that argument even as I oppose it. It is undeniable, however, that a society cast in this way would be radically different in terms of how it treats intangible rights and I believe that most people would oppose those changes. SOPA has whatever momentum it does have precisely because many people do feel it is a problem that creative content can be copied at will and without compensation in so many ways across the web. This gives a colorable reason for why SOPA is needed and SOPA proponents exploit this widespread feeling among the public, in effect, to try to put one over on people.

5. In the U.S., copyright has deep roots and is seriously grounded in the federal constitution and in congressional enabling legislation going back to the nation's founding. While copyright acts dating back hundreds of years to England were sometimes used as instruments of government oppression, that can't be said of how such laws have been implemented and enforced in the U.S. for over 200 years now. This fact is not changed by using loaded expressions such as "cultural monopoly" to describe those laws. Yes, studios and publishing houses have used the force of those laws to set up distribution mechanisms that have often given them large slices of the profits from the creative efforts of authors, filmmakers, etc. But that simply reflects the fact that huge sums of capital were needed to set up and maintain such distribution mechanisms and few could afford to take such steps independently of a close group of large entities. This "monopoly," if you want to call it that, is being broken up today because of the increased independence creative people have with modern technology. Those creative people, though, want to profit from their efforts even as they shed the old constraints - they don't want their works to become instant common property, usable and salable by all without compensation to the original creator, simply because technology enables easy copying.

6. Therefore, it is possible to oppose SOPA and endorse copyright laws with complete consistency. One can oppose overreach that leads to manifold evils while protecting the core of something that is worthy of protection. I think this article gets it all wrong on this score and therefore, while making some good points, is flawed in its core premise.

grellas··on "Small-claims flash mob" - Car owner takes legal fight away from lawyers
In California, if a defendant loses in small claims court, there is an automatic appeal right to have the case heard de novo by a judge of the Superior Court. "De novo" means the case is heard fresh and the small claims proceeding has no bearing on it whatever - in essence, you get to go through the same sort of expedited hearing procedure (no formal pleadings, no discovery, no formal rules of evidence, etc.) but in front of a real judge. The hearing is held, typically lasts no more than an hour, and (usually) an immediate decision is rendered and that is where it ends. Thus, even after this sort of appeal, a lay plaintiff can still have a potentially effective remedy for getting a quick decision.

As I read this piece, however, I was most struck not so much by how the small claims remedy is particularly effective (in reality, this is a highly variable forum at best) but rather by what a joke the typical class action settlement can be. While that vehicle has occasionally proven effective in high profile cases, for the run-of-the-mill class action case you can often get a plaintiff's firm that is pretty much gaming the system to get a fee windfall for itself even as it puts a relatively low priority on the remedy it gets for the class of victims supposedly being represented. That is why remedies rarely take the form of significant cash payouts to members of the represented class and why the first instinct you have whenever you get one of those class notices is to simply throw it away rather than bothering to read all the fine print that might lead to your getting a $10 recovery or some such thing.

It is interesting to see how enhanced connectivity in our modern era is threatening to disrupt the cozy sorts of settlements so achieved through this vehicle. Probably the biggest losers will be the plaintiffs' class-action lawyers themselves, who might wind up having their back-room settlements more easily rejected and be left actually having to work hard to get a real recovery for the victims in lieu of taking a quick and inadequate deal that benefits primarily the lawyers.

grellas··on Watch a VC use my name to sell a con
"Those who work hard make good" is a profoundly American theme that dates back to Horatio Alger and before - it can hardly be said to originate from a cabal of VCs trying to "put one over" on hapless founders and startup employees in Silicon Valley. No doubt Mr. Arrington adds his peculiarly abrasive touch to the debate (toughen up, don't whine, and let's applaud Zynga for what it did to its employees), but he did something very similar not too long ago in chiding investors who were whining about being in the "middle of a terrible blubble" (http://techcrunch.com/2011/04/24/were-in-the-middle-of-a-ter...). Like it or not, this is his philosophy and outlook about what it takes to play the startup game. It is his expression of ideas and social commentary. One can disagree with it as much as one likes but it is unfair to say that this is nothing more than a con job. It is also unfair to take him to task for quoting from a publicly available source to support his idea of what the experiences of startup employees have been like in Silicon Valley - if the goal is to illustrate such experiences, then what better source to use than a diary whose purpose was precisely to document them. If the author of that diary wants to say, "no, that's not what I meant" in response, that is fine but that doesn't justify an ad hominem attack on the person using it to illustrate ideas he wants to espouse.

My point here is strictly about fair argumentation, not about the merits of the debate. Whether right or wrong on the merits, I think the author takes an unfair shot in the way he makes his points here. We all have ideas and core beliefs, even those who are VCs. We all should be free to express them without being accused of nefarious motives.

grellas··on What They Don’t Teach Law Students: Lawyering
While the article makes good points, I disagree with its fundamental premise that the case system is a bad way to prepare students for the practice of law.

The article offers what is really an academic critique of law school education. In effect, it says, "wouldn't it be so much better if we could just dispense with all that abstract case-law analysis and get on with teaching prospective lawyers how to draft contracts, how to try cases, how to handle client interviews, how to give strategic advice for doing acquisitions, how to negotiate personal injury settlements or divorce arrangements, how to represent clients before federal regulatory agencies, how to handle equity and debt funding for business ventures, and all the other things lawyers do." And it answers that question by saying, in effect, let's have experienced practitioners teach students in lieu of those who have been professors all their careers and who emphasize abstract academic writing as a primary means to career development, let's dispense with the classic core curriculum that teaches old cases like Hadley v. Baxendale as part of a student's foundational training and put in its place a lot of clinics where someone can guide students in how to negotiate, document, and close deals and in how to try cases, etc., and let's generally adopt an approach to legal education that allows students to be "client ready" by the time they first set foot in a law office on graduation. How is this to be achieved in a practical sense? The article does not say. It posits the problem and suggests that there are theoretical alternatives to the current system without offering answers.

To learn to practice law well is a huge undertaking. Here is crude guide:

1. Learn issue-spotting. This is analogous to a doctor learning how to diagnose maladies. If you never see what the legal issues are in a given situation, you will have no clue about what is or isn’t important in a deal or in a dispute. A do-it-yourselfer in law most often falls short here: he will fill in the form as instructed but will fail to see the traps and pitfalls along the way or will fail to spot strategic opportunities for doing something better just because he is flying blind. A law student will do better in having been trained to spot the issues in ways that academic knowledge affords. A seasoned practitioner will do all that and much more in being able to guide clients based on having been through real-world experiences involving those issues many times before. It is basically a combination of brains, foundational knowledge, and experience. Ultimately, you need all three if you are to practice law well.

2. Learn to communicate well, particularly in writing. Law is often about words, their meaning, and their impact. As a lawyer, you often need to persuade, or to reassure, or to cajole, or to intimidate, or to do whatever the occasion calls for in serving the legitimate needs of clients. If you can’t speak well, and if you can’t write well, you will be an inferior lawyer. Conversely, to be a skilled lawyer for many purposes, you need to master the art of both oral and written advocacy (I elaborate on this here: http://grellas.com/articles.html).

3. Learn to think strategically. Law can involve many complex areas. The student will have a grasp of the theoretical complexity. The inexperienced practitioner will have some sense of how that complexity works in practice. But only a partner-level lawyer will have a consistent ability to take all that complexity and be able to handle it strategically - that is, be able to see the big picture, to understand how all the component parts fit in, to identify what matters most for a given situation, and to know how to sort through it all intelligently and efficiently to help achieve a client’s goals.

A new grad in law will be at a serious disadvantage if he lacks a solid grasp of critical legal principles that are taught precisely by the case system. You won't be a great practitioner if that is all you have but you will likely be a poor one if you lack it. You will also be better for having done moot court or law review (or both) because these will help you master the art of communicating. But, even if a new grad comes in ideally equipped in all these ways, there is no bypassing the apprenticeship part of law, the learning by doing. In my experience, it takes about seven years for a new grad to grow from green lawyer into a highly efficient and strategic lawyer. That is what it means when a lawyer becomes a partner.

Can the apprenticeship part effectively be merged in with the academic part during law school? In limited ways, yes. But it can't displace the academic part without serious loss to the student. The current system of legal education is full of problems and flaws but the solution does not lie is dispensing with or severely minimizing the case system of learning legal principles. In the end, you can fault it all you like but I still say, "three cheers for Hadley v. Baxendale." In the end, this remains a foundational part of good lawyering.

grellas··on US Bill Creating the Great Firewall of America
Excellent comment. Any appeal to Congress that disrespects the value of copyright will not fly because, as the general public sees it, it is a serious problem when people have the value of their creative efforts diminished as they are spread across the web without compensation. The DMCA was never intended to protect infringers. It was designed to ensure that ISPs did not get caught in the cross-fire as copyright holders sought to protect their interests against those who did infringe. To do that, the ISPs had to abide by certain rules aimed at protecting copyright holders and their reward for doing this was to get "safe harbor" protection that shielded them from liability for the infringements that did occur on their sites. SOPA seeks to rip those protections away by effectively removing that shield. It also allows for what amounts to the creation of blacklists that will force search engines to ban allegedly transgressing sites from public view. All in all, then, it gives to the copyright holders (and to the Justice Department) a set of tools that will enable them to attack the websites directly for the infringements of others. In essence, this flips the DMCA on its head. Whereas DMCA nurtured the growth of the web by shielding innocent conveyers of information from liability as long as they played by the rules, SOPA (should it pass) will inhibit any such growth going forward by giving lawsuits and legal proceedings a central place in the copyright enforcement scheme across the web. This is why fledgling startups will be vulnerable to getting killed off before they can realize their potential: the copyright police will be there to shut them down before they can even develop proper systems for SOPA-style compliance. In other words, the issues here concern primarily the burden of litigation and whether, as a matter of public policy, people who have legitimate rights (copyright holders) should be given broad latitude to sue intermediate parties over what usually are infringements or whether they should be restricted in their right to impose liability on such intermediate parties, thereby giving such parties the room to breathe and to grow as companies and to further the information goals of the web itself. This is an important policy debate, and the people on the other side of it are not innately evil in arguing their case. I think they are wrong, very wrong, and that the consequences of what they are trying to do will be highly detrimental, as a matter of policy, to the future growth of the web. But it is important that the opposition to this not be centered on ad hominem attacks. That only detracts from the strength of the case to be made for internet freedom and growth and does indeed allow the opposition to dismiss bona fide complaints by casting SOPA opponents as people who are not focused rightly on the serious issues involved in this debate.
grellas··on Zynga to employees: Give back our stock or you'll be fired
It is very hard for a company to prove willful failure to perform duties when an engineer is actually executing on assigned projects, or at least attempting in good faith to execute. Engineers who have contractual protection against termination without cause are usually well-protected against arbitrary terminations on "non-performance" grounds and the company has to do a lot more than loosely assert (in "he said / she said" fashion) that someone's performance comes up short. Moreover, in most cases, the contract clause will specify that, in order to effect a termination on this ground, the company must give notice to the employee specifying why the performance is inadequate and give the employee a window within which to cure any defects in performance. This makes it doubly difficult to terminate someone on non-performance grounds because the charges have to be detailed and there will always be an argument about whether any deficiencies were cured if the employee is actually trying to perform all assigned duties. The company can try to document such cases all it wants but will normally hold a losing hand in trying to prove "cause" on that ground in such cases.

The Zynga cases are different, however, because the employees being squeezed in those cases are almost certainly pure at-will employees who have no contractual protection against being terminated without cause. Without the contractual protection, such employees can be terminated for pretty much any reason in the normal case and, if "non-performance" is cited as the reason, the company does not need to prove anything to back this up. "Non-performance" in such cases is often nothing more than a label used to rationalize a decision made on who knows what ground (e.g., on the ground that the company just wants to get someone's potentially valuable stock back before it vests).

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