By
Jim Verdonik
I'm
an attorney with Ward and Smith PA. I also write a column about business and
law for American Business Journals, have authored multiple books and teach an
eLearning course for entrepreneurs. You can reach me at JFV@WardandSmith.com or JimV@eLearnSuccess.com. Or you can
check out my eLearning course at http://www.elearnsuccess.com/start.aspx?menuid=3075 or http://www.youtube.com/user/eLearnSuccessor or you can purchase my books at http://www.amazon.com/Jim-Verdonik/e/B0040GUBRW
I thought you might be
interested in my comments about how investors should be careful in the legal
conflict between the Internet world and the physical world in this article
published by WRAL Techwire yesterday about the US Supreme Court's decision in
the Aereo case that upheld broadcast TV's rights over Aereo's service that
charged mobile device users to see TV shows.
You cannot profit from other
people's copyrighted content even if it goes through the air to others for
free. Copyright owners have the right to decide who can use it for free
and who has to pay.
This will not be the last case
where this type of legal battle will be fought between Internet
entrepreneurs and people who think their rights are being infringed.
Personally, I'm a neutral party
in this war, but investors should be careful not be caught by surprise in the
middle of this battleground.
WRALTECHWIRE.COM ARTICLE
VC attorney: Aereo case will deter investors,
not entrepreneurs
Published: 2014-06-25 12:21:00
Updated: 2014-06-25 15:36:31
Updated: 2014-06-25 15:36:31
Raleigh, N.C. — Technology startups aren't
likely to be scared away from innovation due to Aereo's loss at the Supreme
Court, but investors are going to "be more careful," says Jim
Verdonik, a veteran attorney who works with venture capitals and startups.
The nation's High Court on Wednesday handed
Aereo a stinging rebuke, ruling the company violated copyright laws by
using innovative, miniature antennas to in data centers to capture and resend
TV programs to subscribers who pay monthly fees.
But the biggest losers may be the investors, such as Barry Diller, who had
poured close to $100 million into Aereo.
So while entrepreneurs will likely keep looking to upend existing
businesses, investors need to be more cautious.
So says Verdonik, who works at Ward and Smith, P.A., in Raleigh and is one
of the most respected legal minds in the region's startup community.
But the caution flags have been raised for angels, VCs and others thinking
about making a tech play.
"Investors, however, will be more careful about investing in companies
that violate the rights of others," Verdonik explains.
"The technology/legal lesson is that just because you can do something
with technology, it doesn't mean you should finance it."
And he blames part of Aereo's court failure on the money people who saw a
chance to upend broadcasting and cable TV as we know it.
"Entrepreneurs by nature always have their feet on the accelerator. In
this case investors forgot it was their job to apply the brakes," Verdonik
says. "The result was a crash."
Ryan radia, associate director of technology studies at the Competitive
Enterprise Institute, a think tank in Washington, D.C., also doesn't see
innovation ending - as long as it's "legal."
“Today the Supreme Court ruled in favor of network television programming
and the rights of its creators and distributors. Companies like Aereo, who had
essentially been free-riding on broadcast content, will have to stop operating
without permission," Radia said. “But, this isn’t the end of online
television, since companies like Hulu, Netflix, iTunes all pay the networks for
their content and share it in a legal way.
“People should not worry that this decision will halt innovation in online
entertainment; this case was about protecting companies’ original content from
unauthorized resell. It also does not endanger cloud computing; as the Court
said, this decision does not render companies such as Dropbox and YouTube
liable for uploads posted by individual subscribers.”
However, more crashes may be coming, Verdonik warns.
Et tu, Uber?
Uber, for example, which is already encountering strong headwinds in
Europe.
"Uber faces similar issues," Verdonik says.
"Investors giving Uber an $18 billion valuation are ignoring legal issues.
Investors hope that Uber can change legal reality.
"But powerful groups that include taxi owners and workers and city
officials who want tax revenue are lining up against Uber. Time will tell who
wins that battle, which will involve a mixture of legal issues and political
clout."
Verdonik also cautions against belief that technology can lead to change
when the opposition is well-armed.
"Looking at the big picture, I think you see increasing conflict
between the online/mobile device world and the physical world," he says.
"The Arab Spring uprisings were attributed to the power of the Online
device world. But the physical world of guns and boots on the ground seems to
have quickly reversed initial losses.
"We should not be too quick to judge winners and losers in these
struggles between the online world and the physical world. There will be many
skirmishes in a long war."
And investors may soon learn in a very costly fashion that technology does
have its limits - in court or in the street.
Read more at http://wraltechwire.com/vc-attorney-aereo-case-will-deter-investors-not-entrepreneurs/13763863/#Mq2ohXyle0T3rfRy.99
If
you would like to learn more about learning how to grow your business or other
issues important to your success, you can reach me at JFV@WardandSmith.com or JimV@eLearnSuccess.com. Or you can
check out my eLearning course at http://www.elearnsuccess.com/start.aspx?menuid=3075 or http://www.youtube.com/user/eLearnSuccess or you can
purchase my books at http://www.amazon.com/Jim-Verdonik/e/B0040GUBRW
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