The harmonic convergence


The thesis of “The Laws of Disruption” is that the accelerating pace of digital life increases the conflicts between innovation and the much-slower paced legal system.

On The New York Times website yesterday, all three “Technology” headlines were in fact stories about the conflict:

Government Urges Changes to Google Books Deal
Skype Founders Escalate Legal Fight Over Sale
F.C.C. Seeks to Protect Free Flow of Internet Data

The first story continues Miguel Helft’s excellent coverage of the Google Books class action settlement, about which see earlier posts.

The third story concerns the resurrection of the Net Neutrality debate, about which I will post on Monday after the FCC announces its proposed new rules for ISPs.

The Skype story is a nice example of how legal proceedings are now a standard part of complicated business deals–a cautionary tale for executives who think they can leave legal matters entirely to lawyers.

When IP telephone start-up Skype sold a majority of its business to eBay (a deal that never made any sense), the company retained ownership of the actual software that is at the core of its service. Over the last several days, Skype’s former owners have filed various lawsuits aimed at stopping the sale of Skype, which the former owners wanted to buy back. EBay is planning to sell 65% of their interest, instead, to outside investors, including former friends of Skype’s original owners.

The various lawsuits claim that eBay and the potential new owners have infringed copyrights in the Skype software, and that a former board member of Joost, which is owned by the former Skype owners, misused his position at Joost to get information that helped his investment company’s successful bid for Skype.

Brad Stone cites an unnamed source who nicely sums up the role played by law in this business negotiation:

“This is emotional,” this person said. “This is, ‘You stole my baby,’ ” the person continued. “They have staying power. They know how the legal system works, and they are not wimps.”

Knowing how the legal system works is, increasingly, a critical business skill for technology enterprises. Do you have it?