Dr. Augustine Fou's Online Scrapbook: Michael Arrington says CrunchPad litigation is "imminent," provides more details -- but where's the contract?

Saturday, December 05, 2009

Michael Arrington says CrunchPad litigation is "imminent," provides more details -- but where's the contract?

Source: http://www.engadget.com/2009/12/05/michael-arrington-says-crunchpad-litigation-is-imminent-provi/

The strange saga of the CrunchPad is getting even stranger: although Fusion Garage has a press conference scheduled for Monday, the company's apparently been hinting to some members of the press that the split with Michael Arrington was no surprise, and that TechCrunch didn't actually contribute anything of value to the CrunchPad. As you'd expect, that's got Arrington on the warpath. In a post titled "CrunchPad Litigation Imminent," he offers up an email from Fusion Garage CEO Chandra Rathakrishnan and two letters dispatched from his lawyers to both Fusion Garage and would-be CrunchPad ODM Pegatron that paint a much different picture: Chandra calls the split "out of the blue," Pegatron won't produce anything without TechCrunch's "explicit approval," and there was apparently even talk of merger between Fusion Garage and Arrington's CrunchPad, Inc. That certainly puts the timeline into dispute, but Mike's various CrunchPad intellectual property claims are far less solid, and unexpectedly weak -- even if you completely accept Arrington's side of the story, his CrunchPad dealings simply don't reflect his reputation as a bulldog Silicon Valley attorney. Let's break 'em down:

Arrington claims he's the "outright owner of the CrunchPad trademark," but that's simply not true: the CrunchPad trademark was only applied for on November 17, the same day Arrington says Fusion Garage notified him of the split. Oops -- and even stranger because Arrington's said the CrunchPad was due to be launched on November 20. Why wasn't this sewn up months ago?
Assuming there isn't some secret CrunchPad patent application we don't know about, the only major rights we can see TechCrunch asserting to the CrunchPad device have to do with the copyright to the code , and that's a total mess. Since Arrington apparently didn't draw up a contract giving him sole copyright to the CrunchPad's code, he and his lawyers are arguing that TechCrunch and Fusion Garage are "joint owners" to any rights, and that's just about the weakest position Arrington can be in. Joint copyright owners are legally considered to have equal rights to the entire product, and unless there's a written agreement (see how that keeps coming up?) saying they both have to sign off, each joint owner is allowed to non-exclusively sell the entire thing without the other's approval. In our experience it's pretty rare for joint copyright ownership to be an ideal business arrangement, and we can't imagine how Arrington got to within three days of launching the CrunchPad without hammering out the details of who owned what.
In fact, the most notable thing about the letter from Arrington's lawyers to Fusion Garage is that it doesn't contain any contractual language whatsoever -- it only references emails and conversations between the two companies. That's particularly odd because the letter to Pegatron says TechCrunch will be suing for breach of contract, so you'd think Arrington's attorneys would be laser-focused on his contractual rights if he could assert them. Then again, you'd think Arrington would have known better than to start this project without doing the appropriate paperwork first, so really anything's possible.

Now, we could be totally wrong about all of this: we haven't heard anything directly from Fusion Garage, and there very well could be contracts we haven't seen. But for right now, we're absolutely mystified as to how Michael Arrington -- who, again, is an attorney -- found himself in this position, and we're still mildly convinced this is all some kind of stunt. We're sure there's more drama to come, stay tuned.

Gallery: Letter to Jason Cheng (Pegatron Corp)