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Tech Companies Are Swimming in Lawsuits

Posted by: Olga Kharif on October 18, 2005

I just read some rather startling results from a survey done by law firm Fulbright & Jaworski. The firm asked 354 companies in various industries about their top legal concerns. And it turns out that tech companies are swimming in lawsuits — particularly if they are in the telecommunications business.

An average U.S. technology company currently faces 42 lawsuits vs. 37 lawsuit for an average company. The tech industry places third, after healthcare and energy companies, in the number of lawsuits it deals with. It’s ahead of the insurance industry, for Pete’s sake!

Needless to say, that's quite expensive. Nearly a third of these companies spend more than 2% of their gross revenue on legal expenses, according to one of the largest surveys of corporate counsel in America.

That probably has something to do with tech companies having by far the greatest number of in-house attorneys managing litigation - an average of nine per company. The overall average for all companies participating in the survey was 3.7. What are all these attorneys dealing with? Labor and contract work, followed by intellectual property and personal injury litigation.

Though I was astounded by these findings at first, I shouldn't have been. Many tech-related industries are changing fast: The telecom business, for instance, is being transformed by a technology called Voice over Internet Protocol. Lots of legal issues still have to be ironed out.

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Reader Comments

Nico van Leeuwen

October 22, 2005 12:05 AM

There would be less lawsuits if the stupid laws actually had something to do with the actual technologies that are being used. Most lawyers and Judges are too thick to actually understand how the technologies work. Therefore the laws are completely misconceived and this leads to a lot of wasted time and legal hassle.

It is about time IT professionals started putting their foot down! We need to play a more important role in the law making process and need to get our opinions heard.


October 22, 2005 01:14 PM

Well.. this is what happens when the law allows legal piracy, that is, expropriating copyrighted written works through patent law. No programming author of today can know for sure that they have their legitimate rights to their own individual writings. Today an author can be sued for what an unknown third man's computer does, when that man, on his own initiative, are letting his computer interpret the written publications of the author! (think about that, journalists)

Is it really tech companies this article spaks about, what is tech and what is not? What is a computer? That one i can answer. A Computer is a "Universal Turing Machine" and that is a physical machine that can read and interpret the description of any "Turing Machine", and to carry out what that other Turing Machine would have done. What is then a "Turing Machine"? That is an abstract logical "machine" that can compute anything computable, remember; its a computer, it computes.

Now if this makes your head spin.. that a Universal Turing Machine is itself only a particular kind of Turing machine, remember that any computer can be emulated as a program on another computer.. What does this mean then? It basically means that anything, even fairy tales is patentable if instructions for a Turing Machine can constitute patent infringement, since a TM can compute anything computable (that has also ben known since 1936). It also means that both computations and old things get patentable over and over again, you just need a new description that frames it in new technical wording. After all, how can something "technical" be that for real when it is being simulated?

Then there is the whole mixup between property and copyright. If i can read something in on the net, then some server has then *given* me a copy, that copy is then in my possession, information in my property, I do not have the copyright for it, but it is still my property because this information is given to me. No different from the books I own or paintings on my wall, thats my property, despite the fact that someone else wrote or painted them. In my private sphere I can do what I want with my property, the author do not have any say about that, with sensible laws obeying to human rights that is. And believe me, in a country where the law not has gone bad, that goes for all works, no matter what carrier the work is currently on.

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BusinessWeek writers Peter Burrows, Cliff Edwards, Olga Kharif, Aaron Ricadela, Douglas MacMillan, and Spencer Ante dig behind the headlines to analyze what’s really happening throughout the world of technology. One of the first mainstream media tech blogs, Tech Beat covers everything from tech bellwethers like Apple, Google, and Intel and emerging new leaders such as Facebook to new technologies, trends, and controversies.



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