Tag: lawsuit

AdvertisingInformation & Communication TechnologySearch Engine OptimizationSEO

Google Antitrust (Part 1): Search Engine Optimization, Or Monopolization?

On October 20th, 2020, The United States government, along with several states (AR, FL, GA, IN, KY, LA, MS, MO, MT SC, and TX), filed an antitrust lawsuit against technology company, Google LLC, for illicitly continuing monopolies in general search services, general search text advertising, and search advertising. Google has been accused of maintaining control of these markets through exclusionary practices, which prohibits the expansion of competition throughout the internet technology industry. The basis for this accusation is Google’s alleged violation of Section 2 of the Sherman Act, 15 U.S.C. § 2, which bans monopolies in trade and commerce. Along with previous antitrust cases, it is important to review the nature of the lawsuit. Since Google is being accused of antitrust in several areas, the case’s foundation will be broken up into two sections.

1. General Search Services: Within the last twenty years, Google has transitioned from a new start-up to one of the richest companies on Earth, making as much as $160 billion a year. Because search engines are dispersed throughout a variety of devices, such as smartphones, tablets, and laptops, user search queries in the United States have surged in the last decade. Search engines are the most effective when they are set as the default. For example, if a consumer uses a Dell, they are more likely to have Bing as the default search engine, unless the user changes it to Google, Firefox, etc., which rarely occurs. In addition, Google pays billions to a plethora of distributors spanning from device manufacturers, wireless carriers, and browser developers to set their search engine services as the default. Because Google pays companies like Apple, Motorola, Mozilla, AT&T, and UCWeb to secure their search engine as the default, along with the lack of users changing their default engine themselves, the lawsuit alleges the deals made by Google were intended to eliminate competition among other search engine providers. In fact, 90% of all generated-search engine queries have been searched through Google. It does not cost anything to search online. So, it begs the question: how were they able to make billions of dollars?

Google Search adding site favicons to every result - 9to5Google

2. Search Advertising/General Search Text Advertising: Google utilizes consumer information and search queries to sell advertising. Since Google is the default search engine for various devices, they receive almost $40 billion from advertisers to place ads on their search engine results pages (SERP). Because Google receives 90% of search engine traffic (that’s billions of eyeballs on tailored ads), these deals create difficulty for smaller rival search businesses to compete and incentivizes advertisers to stay with Google rather than switching to another company that cannot perform on such a grand scale. The services Google provides require intricate algorithms which collect vast amounts of data used to tailor content based on a user’s search query. For example, if you search holiday discounts for a Keurig coffee maker, you might see an ad for the exact search entry two days later, which is what advertisers want. These deals ultimately engender a continuous cycle of anticompetitive behavior from Google and thwart potential competition, giving the United States government and various states another reason to issue an antitrust lawsuit.

With the nature of the case in mind, Google’s ever-growing power is concerning. Is Big Tech too influential in the economic and advertising sectors? Shouldn’t consumers be aware of Google’s seemingly anticompetitive tactics? As the world continues to enter a digital age, how will this case change the ways in which internet companies conduct business ventures? Stay tuned as our Experts.com Members give their input on the subject in Part 2: coming soon.

FraudSecurities

Nikola: The Next Tesla, Or A Fraud?

Nikola founder, Trevor Milton, recently resigned from his position as Executive Chairman of the Board after facing accusations of fraud. Before delving into the fraud allegations, it is important to understand the genesis of the company, which adds to the gravity of the situation. You may recall, last week we delved into the upcoming fraud trial for former Theranos CEO Elizabeth Holmes. We wanted to continue covering this topic of high profile fraud.

Milton built Nikola in 2014 hoping to reform the transportation sector. His plan in accomplishing this goal was to create mainstream battery-electric and hydrogen-powered vehicles from state-of-the-art zero-emissions technology. Establishing a company based on the same inventor and mission as another company, Tesla to be specific, is not the only suspicious act Milton has committed.

According to Business Insider, on September 10th, 2020, a report published by the Hindenburg Research investment firm contains evidence of Milton providing false statements about his products. More specifically, the report accuses Milton of exaggerating the viability of his products and thus misinforming investors, partners, and consumers. An example of these fraudulent statements is based on a video demo advertising Nikola’s debut semi-truck, the allegedly hydrogen-powered “Nikola One.” The report revealed an exchange of text messages from a Nikola employee developing a plan to roll the vehicle down a hill to manipulate the “high-speed” aspect of the truck. Nikola diverted from the issue by stating the prototype was discarded and therefore irrelevant. To add, they thought the Hindenburg report was released as sabotage considering Nikola’s partnership with General Motors was finalized two days prior. It should be noted, Hindenburg is a short-seller, so they were interested in seeing Nikola’s stock price decline. (Photo Source: Twitter @HindenburgRes).

The company started trading on June 4th, after a reverse merger with VectoIQ. VectoIQ is a publicly-traded special purpose acquisition organization led by Stephen Girsky, the former Vice Chairman of General Motors. Before the Hindenburg report, Nikola was performing well in the stock market. A CNBC article stated that shares of Nikola Corporation increased by 20% at the end of the month. According to the closing price, Nikola was valued at almost $28.8 billion, making the corporation more valuable than Ford. However, Nikola’s stock market surge stemmed from Milton’s announcement of the company’s new battery-electric fuel-cell truck, the Badger. He followed his announcement confirming the company’s partnership with General Motors, a necessary move to get the new truck to market. Nikola did not anticipate to generate income until 2021, but investors were willing to provide a hefty sum for promising vehicles.

Despite the incident that led to his resignation, analysts think Milton’s exodus is a positive and necessary step for the progression of both Nikola and General Motors. Whether the motive for resigning was personal or strictly business, with Milton absent there will be less negative publicity.

What does this mean for Trevor Milton? Along with his resignation, he agreed to relinquish $166 million of equity and a two-year $20 million consulting contract. However, Milton gets to possess $3.1 billion in stock due to a recently finalized separation agreement. He agreed to assist the corporation as an unpaid consultant, but his role in company operations and decision-making are paused for at least three years. In the aftermath of Milton’s resignation, Nikola’s shares decreased significantly in premarket trading, opening Monday, September 21st, at $24.97, the lowest opening price since the company went public in June. It ended the day, closing down 19% at $27.58. As he continues to defend himself against the Hindenburg Research report, Milton’s legal expenses are paid for by Nikola as long as they receive copies of evidence.

With Milton out of the picture, Stephen Girsky has been appointed chairman of the board. General Motors’ main priority is to plan production of the battery-powered Badger truck starting late 2021 or early 2022, ultimately continuing the partnership with Nikola. Although General Motors bears the responsibility for its creation, Nikola will remain in charge of marketing and selling the product upon its release. Because Nikola lacks the cushion of intellectual property and revenue, they heavily rely on the investor’s contribution through the stock market. Nikola’s tarnished reputation requires damage control in order to maintain enough revenue until the Badger is released.

UPDATE: Now that time has passed from Nikola’s public fraud incident, the aftermath has unraveled. As of Monday, November 30th, 2020, General Motors decided to remove themselves from their deal with Nikola, thus relinquishing their $11 million equity stake. Because Nikola failed to live up to their “fast-paced” evolution of electric and hybrid vehicles, General Motors believed it was in their best interest to maintain distance for their future business ventures. Since the manufacture of Nikola’s hydrogen-powered Badger pickup truck relied on a partnership with an automaker, the vehicle’s production has been paused. According to The Verge, the two companies will cooperate to bring, “GM’s Hydrotec fuel-cell technology into Nikola’s Class 7 and Class 8 zero-emission semi-trucks for the medium- and long-haul trucking sectors.” With Nikola partly out of the picture, General Motors can focus on their multi-billion-dollar pursuit for a future involving all-electric vehicles. This requires the automaker to invest $2.2 billion to reconfigure their vehicle assembly plant and create the development process for its modular battery-electric platform, Ultium. They announced last week their $2.2 billion electrification investment will become $27 billion through 2025.  

UPDATE – 07/29/2021

We sort of knew it was coming. The grand jury had been convened. Mr. Milton had a lot of very public statements that were likely false or misleading. So, it was no surprise today when the grand jury indicted him on three counts of fraud. Here’s an update on the matter from CNBC.

AutomotiveEngineeringExpert Witness

Tesla Whistleblower Alleges Inflated Production, Safety Hazards

Former Tesla employee Martin Tripp has blown the whistle accusing the company of what may be securities fraud peppered with dangerous safety concerns.

This is an update on our last post: Tesla Trade Secrets Lawsuit: Investigators & Expert Witnesses.

It seems this story is just heating up. Once again, Cyrus Farivar from Ars Technica, is doing some excellent reporting on this story and I only hope to follow in his footsteps with my own expert witness-based input.

Last Friday, former Tesla employee Martin Tripp, submitted a whistleblower tip to the SEC. According to Mr. Farivar’s reporting, Tripp did so using a “TCR” (tip, complaint, or referral form). Mr. Tripp is now represented by a lawyer specialized in whistleblower cases. Interestingly enough, he still is not represented by counsel in the Tesla trade secrets lawsuit filed against him and his lawyer on the whistleblower claim does not represent him in that suit.

CNN Money has some details of what is alleged in the claim to the SEC. Tripp alleges that Tesla regularly inflates productions numbers on the Model 3, meaning fewer than the supposed 5,000 vehicles a week are actually being produced. He further contends car batteries are defective because they contain dangerous punctures and Tesla had decreased vehicle safety specifications, all of which increases the likelihood of battery explosions and safety hazards.

If any of the above allegations are true, we are entering into the arena where the following expert witnesses may be needed in a whistle-blower litigation by the SEC.

Securities Fraud:

If Tesla is actually inflating number of vehicles produced and claiming they are meeting their production goals, they could be dealing with some securities fraud issues in addition to opening themselves up to a potential shareholder lawsuit. Claiming they’d be building 5,000 Model 3‘s each week, but not doing so, could be seen by the SEC as an attempt to manipulate the stock price and lie to shareholders, to which the directors and officers of the company owe a fiduciary duty. If this is the case, I expect to see reports from experts in director and officer liability and corporate governance.

Automotive Safety & Engineering:

If there are issues of defective or damaged car batteries being installed in the automobiles, the SEC will need experts to investigate, inspect, and report the validity of these claims. I’m going to avoid the classic product liability issues that may stem from these allegations since those would be involved in a different lawsuit.

However, the SEC will have to employ automotive safety and automotive engineering specialists to determine the legitimacy of Mr. Tripp’s claims. Is he making claims maliciously because he’s a disgruntled former employee? Or, are the batteries and the vehicles truly dangerous?

Another expert likely to be needed to test Mr. Tripp’s accusations would be a specialist in battery engineering. The big selling point for Tesla… the cars are sleek and environmentally friendly because they are electric (battery powered). However, Tripp alleges there are dangerous holes in the batteries.

If you’re like me, you know very little about the inner-workings of your automobile. I do know that a hole in a battery is not good, but the SEC can’t have me do a once over and let them know if the “holes” Mr. Tripp saw are truly dangerous. A battery expert will have to inspect a sample of Tesla car batteries to determine any legitimacy to his claims.

That’s the latest in this ongoing drama. I expect, however, we will be seeing more on the trade secrets matter, whistle-blowing matter, and any counter claims that may be filed. Until then…

Expert WitnessIntellectual PropertylegaltechSocial Media

Tinder v. Bumble: Swipe Right for Your Next Patent Infringement Expert Witness

Last Friday I was sitting at my desk trying to find the next topic to blog about. Friday was an incredibly slow news day and nothing had piqued my interest. So I reached out to some lawyer-friends in the LegalMinds Mastermind Group for some ideas. I received a lot of feedback with some really great ideas. However, this Tinder v. Bumble lawsuit sounded like the most fun. A special thanks to patent lawyer, Karima Gulick, for the idea.

In fact, I had not even heard about this lawsuit until Karima mentioned it. It seems that Tinder’s parent company, Match Group (think Match.com), has decided to sue Bumble for patent infringement. For those who haven’t heard of Bumble, it is another popular dating app that allows women to make the first move. It seems they are now using very similar features to Tinder. An article in The Verge described the two patents at issue:

“…one called ‘Matching Process System and Method,’ in which users swipe cards and mutually select one another, as well as ‘Display Screen or Portion Thereof With a Graphical User Interface of a Mobile Device,’ which it describes as an ‘ornamental aspect’ of Tinder’s App. The lawsuit also points to similarities between each companies’ apps, and Bumble’s descriptions of ‘swiping’ run afoul of Tinder’s registered trademarks.”

It seems Tinder is accusing Bumble of infringing on the item that really made Tinder famous (i.e. swiping). Swiping did away with all that scrolling, reading, and learning about a potential romantic interest. Who has time for that? Even if you have time, who wants to do it? Instead, Tinder allowed you to make the important dating decision based on looks and looks alone, if you’re that shallow. It does appear there is a short biography portion some might want to read, but only if the potential match fits your physical requirements per their photo.

“Swipe right” and “swipe left” became a part of our nomenclature, often used outside of dating. I’ve heard comics and late show hosts use the terminology. There is no doubt in my mind, those using the terminology associate it with Tinder. Alas, Bumble decided to use the feature as well. Probably because users liked picking their mates via the swipe method.

There are some further accusations as set forth in this article by Recode, “[Tinder] also claims that early Bumble executives Chris Gulczynski and Sarah Mick, who both previously worked at Tinder, stole ‘confidential information related to proposed Tinder features,’ including the idea for a feature that lets users go back if they accidentally skip someone, according to the suit.” This is important, because when you’re swiping for volume (because it’s a numbers game) and get into a zone you might accidentally eliminate someone you find attractive. You need to undo that ASAP.

Finally, there is the issue of Match/Tinder trying to purchase Bumble last year. They offered $450 million, which was turned down, due to the acrimonious relationship between the two companies. Is Tinder using this case to apply some pressure on Bumble, thereby encouraging a sale? Quite possible.

If the case actually moves ahead and a sale is not negotiated, we can expect to see some expert witness participation. What kind of experts? I wish I could encourage you to swipe right to view them. However, you just have to keep reading!

Intellectual Property / Patent Infringement:

Intellectual property is sort of wide ranging term for expert witnesses. A broad range of expertise fits into the category intellectual property, such as patents, patent infringement, trademarks, trade dress, copyrights, licensing, trade secrets, and more.

In the Tinder v. Bumble issue, it appears they are only suing over a couple of patents and The Verge told us what those patents are. Both patents appear to be connected with the user interface, so I anticipate we will see intellectual property experts with software, programming,  and design engineering backgrounds. There is potential need for electronic engineering expert witnesses, but I think that will be less likely as it doesn’t appear hardware is at issue in this case.

Trademarks:

The lawsuit also claims that Bumble’s use of the word “swiping” infringes on Tinder’s registered trademarks. This legal dictionary from Cornell Law School’s Legal Information Institute describes a trademark as follows, “A trademark is any word, name, symbol, or design, or any combination thereof, used in commerce to identify and distinguish the goods of one manufacturer or seller from those of another and to indicate the source of the goods.”

The Legal Information Institute also tells us that “Two basic requirements must be met for a mark to be eligible for trademark protection: it must be in use in commerce and it must be distinctive.”

As I mentioned above, I knew that “swiping” was something associated with Tinder and I know that Tinder is a subscription based dating service. So, according to this layperson, the mark is being used in commerce and I recognize it as distinctive to Tinder. Now that I’ve made this information public, I cannot imagine Bumble wanting me on the jury. Luckily, the case has been filed in the US District Court in Waco, Texas.

Furthermore, a trademark expert witness retained by Bumble, may be able to provide information about “swiping” that indicates it is not distinctive. In fact, the terminology may be quite prevalent in software uses.

A Similar Matter?

The software matter I equate to this lawsuit would be the “Stories” issue between Snapchat and Instagram. Snapchat was the first social media platform to use the Stories feature, allowing users to post a continuing series of video clips or photos in order to create an ongoing story. Instagram copied it, nearly outright, and even admitted that they took the idea from Snapchat. To my knowledge, this has not resulted in litigation. However, the use of software-based features seem nearly identical and I wouldn’t be surprised to see a patent infringement and trademark dispute between Facebook (Instagram’s parent company) and Snapchat.

Requests:

As I am not practicing in this field, I think it would be great to get some feedback from a some lawyers who regularly deal with patents and trademarks.

I have asked Karima Gulick of Gulick Law and Joey Vitale of Indie Law to provide some real insight, rather than lay punditry, in the matter of Tinder v. Bumble.

UPDATE:

Intellectual property and patent attorney, Karima Gulick, has provided her insight about this case on her blog. Here is her blog post: Tinder v. Bumble: Patent dispute in app dating paradise.

Copyright and trademark attorney, Joey Vitale, has provided his insight about this case on his blog. Here is his blog post: Be careful if you “swipe”: trademark battles in Tinder v. Bumble.