Sunday, August 29, 2010

Judge Says TechCrunch Case vs. JooJoo Tablet Likely Has Merit

I Just read on Daring Fireball that the judge has denied TechCrunch's claim for preliminary injunction against their former tablet partners and makers of JooJoo, Fusion Garage.

Gruber claims that "Mike Arrington gets smacked around in the first round of his lawsuit over the JooJoo/CrunchPad. In short: TechCrunch didn’t get much in writing regarding their “partnership” with Fusion Garage to develop the product, and, well, they should have."

He then goes on too snarkily add, "Curiously, I’ve seen no coverage of this decision on TechCrunch."

Because I am admittedly fascinated with the case, I actually took the time to read the judge's decision. Perhaps Gruber's snark would have been appropriate if his "in short" was anywhere within several miles of the truth regarding the decision. Honestly, the whole JooJoo thing seems like such distant and irrelevant news in light of the iPad, and soon Android and Chrome OS tablets. But its fascinating to me that Gruber feels compelled to totally misrepresent what the judge said.

The real "in short" of the judge's decision is this. The judge said that the preliminary injunction request was denied, essentially because it was not specific enough about how much profit there would be in the device, if any at all. He also said that there was no evidence that if TechCrunch prevailed in the final case that the injunction was necessary to insure that TechCrunch could receive a recovery. There were additional and more detailed legal conclusions, but they were all narrow and only relevant to immediate injunctive relief. So TechCrunch's request that 100% of the revenue of the *sales* of the device was overreaching, and legally insufficient and was therefore denied.

But the judge, then went on to spend quite a few pages laying out that it was likely that TechCrunch was in a partnership/joint venture with defendant FusionGarage, and that it was likely that Fusion Garage had breached its fiduciary duty, contrary to their assertions. It seems *very* likely to me, from reading the decision, that TechCrunch will win the case.

Specifically, the judge said, "Accordingly, TechCrunch has made a credible showing that it may be able to establish the existence of a joint venture under which Fusion Garage owed it certain fiduciary duties. Such duties may have precluded Fusion Garage from proceeding to market with the joojoo without taking appropriate steps to dissolve the relationship and to compensate TechCrunch."

If there were any money to be made, it is likely that TechCrunch would be getting a nice piece of it. Alas, given the circumstances, a victory here would be pyrrhic. The JooJoo will never make money and so the whole thing is moot. What's not moot is that Gruber, for some strange reason felt compelled to summarize the judge's decision in a patently false manner. Re: Daring Fireball, caveat emptor.

24 comments:

  1. It never ceases to amaze me how many people reporting on legal matters fail to take the time to read, let alone understand, the opinions of the judges or the filings of the parties. Without some basic background in business law at a minimum, mis-reporting is all but a guaranteed outcome of such ignorant word-mongering.

    This phenomenon is not, of course, confined to technology, but it seems somewhat more prevalent here where simplistic "analysis" is often nothing more than attempting to create a legal framework around a pre-established and unfounded opinion.

    Thanks for setting this one straight by actually reading the frigging document!

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  2. TechCrunch seems like a broken company. Maybe its the founder, but suing someone whos not going to even make any money anyway seems like poor sportmanship. Also, if you listen to the joojoo guys side, its sounds like they had had enough of arringtons BS. Maybe the judge should hang out with arrington for a few weeks and see if he understands the other point of view.

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  3. Gruber spinning things? I can't believe it!

    *Swoon*

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  4. hmm so you know for fact Gruber didnt read the doc? cuz judging from the snark, id say someone has an axe to grind.

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  5. Jesus, Gruber wrote a three sentence summary and you jump all over it. Big deal. He did link to the judge's decision so the reader could decide for himself. How is that misleading?

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  6. nola, I dont believe I said he didnt read the doc. Of course if he did read it and wrote what he wrote it is all the more disturbing since there was nothing in the decision about how TC should have gotten a contract. So that was a totally incorrect statement. It was either because he didnt read it, or worse, he did read it and didnt care that he was saying something not true.

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  7. Keiffus, "How is that misleading?"

    Duh. Because what he wrote wasn't true.

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  8. "It was either because he didnt read it, or worse, he did read it and didnt care that he was saying something not true."

    You leave out a third option, which is that Gruber doesn't know much about law and didn't understand what he was reading. As a lawyer, I've found that many people without legal training can't read a legal document correctly. TechCrunch's request for a preliminary injunction was denied and several counts were dismissed; superficially, that looks bad for TechCrunch. The significance of fact that they were dismissed with leave to replead is less obvious to a non-lawyer.

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  9. David, I would agree, but so much of the document is spent describing how weak Fusion Garage's defense to the actual charges is. The issue of being dismissed with leave to replead is indeed subtle. Perhaps its because I have read so much of this stuff and been involved in a fair bit of litigation, but the judge's disposition seems quite obvious. But my biggest problem with Gruber's boil down is that his statement about how Arrington should have signed a contract is nowhere in the document. In fact the judge goes to great pains with plenty of case law to explain why that is totally irrelevant.

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  10. Keiffus:

    Gruber's blog is read by a lot of people. It's important to point out when he's wrong, because some people will believe what he says and use it to form their opinions.

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  11. I'm still trying to figure out what Gruber got 'wrong.'

    He said, "Mike Arrington (as TechCrunch) gets smacked around in the first round of his lawsuit over the JooJoo/CrunchPad."

    Based on a reading of the decision, that would appear to be the case. How much of a 'smack' is a matter of degree and perception, I guess.

    And, finally...

    "In short: TechCrunch didn’t get much in writing regarding their “partnership” with Fusion Garage to develop the product, and, well, they should have. Curiously, I’ve seen no coverage of this decision on TechCrunch."

    And, that appears to be the case, too. "There wasn't much in writing" is not disputed. As to whether "there should have been" is an opinion, of course.

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  12. "Based on a reading of the decision, that would appear to be the case. How much of a 'smack' is a matter of degree and perception, I guess."

    uh, no. The judge basically said FG was wrong and TC was right. Not granting injunctions is not being smacked around. Plaintiffs always try to overreach and injunctions are almost never granted. So unless you are saying plaintiffs are always "smacked around" your statement is just false. The key issue is what did the judge think of the merits. Who is likely to win. And the judge was clear.

    "And, that appears to be the case, too. "There wasn't much in writing" is not disputed. As to whether "there should have been" is an opinion, of course."

    Gruber's comments were presented not as part of his personal opinion, but as his summary of the decision. Interestingly the judge went out of his way to indicate that having things in writing is not at all necessary or relevant.

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  13. Well, he has at least linked to this page in the interests of balance. I enjoy reading Gruber but while I don't always agree with everything he says, he does at least acknowledge (and link to) contrary opinions or rebuttals, which is more than a lot of the blogosphere bigmouths do.

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  14. "Gruber's comments were presented not as part of his personal opinion, but as his summary of the decision. Interestingly the judge went out of his way to indicate that having things in writing is not at all necessary or relevant."

    And that wasn't Gruber's opinion?

    Puhleeze.

    Still haven't figured out where the statement is 'wrong.' Saying something is false doesn't make it so. TC/MA got smacked around by the judge. Change the words however you want, split hairs until you're bald, but TC/MA didn't get what they wanted from the judge, hence the 'smack.'

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  15. @google, Still haven't figured out where the statement is 'wrong.'

    Because apparently reading isn't one of your strengths.

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  16. "Because apparently reading isn't one of your strengths."

    And reasoned discussion, it would seem, is not one of yours.

    Maybe, as @google suggested, it's a matter of degree and perception. Or maybe "smack" is the wrong term to use altogether, but I too read the Judge's decision, and there's no denying that he was critical of TC's claims, both in content and in the lack of specificity with which they were presented.
    That TC has been found to still have a valid claim, whilst also having the chance to amend previously dismissed claims, does not lessen that fact.

    You denied accusing Gruber of not reading the judgement himself, but the inference in your words was clear: Gruber didn't reach the same conclusion as you, so it must be down to ignorance on his part.

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  17. As an attorney who does this kind of thing for a living, this was an injunction request that was bound to fail. You simply can't get injunctive relief where the injury can be compensated by a damages award. Generally, losing a PI results in the case being settled, but that rule is only applicable in relatively pure injunction cases, which this is not.

    The judge's opinion leaving a breach of fiduciary duty claim intact is a big win. Why? Because TechCrunch will now get to take discovery on the merits and get at internal documents, emails, etc. that bear on the case. Civil discovery is a highly intrusive process and sometimes it is enough, standing alone, to result in a settlement. That is especially true if the evidence that will be discovered is negative.

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  18. >Maybe, as @google suggested, it's a matter of degree and perception. Or maybe "smack" is the wrong term to use altogether, but I too read the Judge's decision, and there's no denying that he was critical of TC's claims, both in content and in the lack of specificity with which they were presented.

    Regarding Gruber's "smacked around" comment, I agree with the author of this piece that it's not an accurate assessment, but I'm also not sure that it's meant to be a particularly fair assessment in the first place. I don't know how many of you watched the video posted to TechCrunch shortly after the antennagate presser in which Arrington interviewed Gruber and MG Siegler, but there doesn't seem to be much love lost between the two of them. I'm not surprised, really--Arrington strikes me as a bit of an ass. Perhaps Gruber was just rubbing things in a bit with his mini-analysis.

    Though, again, I think anyone who agrees with that assessment--as the author suggests--is reading the ruling wrong, or only focusing on the summary. I too read it and felt that he was overtly sympathetic to TC's claims.

    I wrote a pretty similar response shortly after seeing Gruber's link: http://tumblr.com/xojh40qyh

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  19. acidproduct. Its not a degree of perception. Knocking down a request for injunctive relief or summary judgement on technical grounds is not the same thing as knocking down actual defenses. I grow weary arguing legal issues with people that have probably never even heard the word injunctive relief. TC learned that the judge agree's with their core argument. Period. End of discussion. More importantly where did the judges decision say anything about, "TechCrunch didn’t get much in writing regarding their “partnership” with Fusion Garage to develop the product, and, well, they should have."". In fact the judge said the opposite.

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  20. Not being able to get an injunction is a big loss for TechCrunch. An injunction can put pressure on a Fusion Garage to settle out of court. Without an injunction, TechCrunch now has to go to court to get any satisfaction.

    Meanwhile, Fusion Garage is still selling the product and using the profits. And, Fusion Garage can modify the JooJoo and then claim that even if the old model stepped on TechCrunch's IP, the newer model does not. The longer the case drags out, the worse off TechCrunch will be.

    Of course, this is the JooJoo that we're talking about and we're talking about a system whose sales can still be measured in the dozens. I have no idea why these two guys are fighting it out.

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  21. >Not being able to get an injunction is a big loss for TechCrunch. An injunction can put pressure on a Fusion Garage to settle out of court.

    An injunction on what? As you admit, they're selling "dozens" of these things. I can't imagine them rushing to settle if they were told they had to hold off on selling a few more. I don't think the injunction means much of anything, frankly. I doubt TC cares much that they lost that fight.

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  22. Most of the time, it seems, asking for injunctions is rolling the dice; you ask for anything you can get away with, and you might luck out.

    TC's case survived its first hurdle -- winning this doesn't mean their case is good, either. Failing here would mean that they had nothing, but passing this test doesn't really mean they have much.

    And yes, going into business with someone without anything in writing is stupid.

    I agree with the commenter saying they don't understand why anyone's fighting this case. There are no profits to argue over. All it is is pride.

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  23. Geez, HW. I guess the only thing left when you can't make a coherent argument or explain yourself so the masses can understand is to be needlessly snarky. Hmmm. Just like Glenn Beck or Bill O'Reilly or so many others on Faux News.

    TC got smacked. The only nuance is in the definition of 'smack.' TC may have had their core argument upheld, but they got 'smacked,' too. Says who?

    That's how I see it. It's how others see it. Seeing it differently doesn't make it so. As to whether TC 'should' have had a contract, it's an opinion (legal or lay) either way.

    You are right about one thing. Everything here does suck.

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  24. TC got smacked. The only nuance is in the definition of 'smack.' TC may have had their core argument upheld, but they got 'smacked,' too. Says who?

    That this is your and other people's opinion doesn't make it correct. This is not politics; there is an objectively correct summary to derive from the actual ruling, and I'd be surprised if it was the one you're suggesting (though I've not myself read the ruling).

    BTW, HW's comment about reading comprehension, in the context of this thread, was totally called for. It might seem rude and unnecessarily snarky to you, but it was equally rude of you to fail to even properly read what he wrote before typing up a response. I get this all the time and I think we're all a bit tired of making and remaking the same point over and over again, just because others can't be bothered to actually read what we just said. If you take the time to respond to something, please also take the time to actually read it.

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