Articles Posted in Technology

A long-running dispute between former business partners has dissolved into a federal lawsuit filed by one of the parties. The former partner claims he was elbowed out of the business and denied the profits after developing the technology that made the company successful.
The case, Morley v. Square Inc., filed in the U.S. District Court for the Eastern District of Missouri, reveals how quickly business partnerships can crumble, and how carefully-drafted contracts can help to spare litigation.

Boston small business attorneys recognize that while the company in question, Square Inc., isn’t small now (it’s most recent valuation was somewhere around $5 billion), it started out with just three men and an idea a few short years ago.
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A Massachusetts technology lawsuit between Varian Semiconductor Equipment Associates Inc. (VSEA) and a group of its investors is heating up; shareholders claim they will be shortchanged by a $4.9 billion takeover offer from Applied Materials Inc. (AMAT).

As we reported recently, Massachusetts business law attorneys have seen an increase in merger and acquisition activity with the beginnings of the economic rebound. And while an experienced law firm is always required to handle such complex transactions, technology startups are best served by having experienced legal representation during the formation and investment stage. How a business is formed — and how investors are brought on board — can go a long way toward determining investor rights during such disputes.
In this case (Crane v. Varian Semiconductors, U.S. District Court, District of Massachusetts), investor David Crane contends members of the board of directors of Varian violated U.S. securities laws, issued misleading proxy materials, and failed to fully explain the sales process. The lawsuit also alleges that it’s unclear why the board chose to negotiate exclusively with Applied Materials Inc. Crane contends shareholders will not receive a fair price unless the transaction is stopped by a court.

Varian Semiconductor Equipment Associates Inc. is based in Gloucester, Massachusetts. The company designs, manufacturers and services semiconductor processing equipment used to make integrated circuits. The company has more than 3,000 high current, medium current and high energy implanters installed at facilities throughout the world. The systems implant more than 5 million wafers per day.

Applied Materials Inc., based in Santa Clara, California, provides equipment, services and software to manufacturers of semi conductor, flat panel display and solar photovoltaic products. Applied agreed to buy the company in anticipation of increased demand for microchip technology used in mobile devices. News of the lawsuit sent Varian stock up slightly; the stock has risen 66 percent so far this year.

Applied announced the signing of the merger agreement in May, which valued Varian at $63 a share. At the time, the price represented a 55 percent premium to Varian’s closing stock price. Upon completion of the deal, it was announced that Varian would operate as a business unit of Applied’s and would continue to be based on Gloucester.

“We believe the opportunity is very attractive for Varian’s customers, employees and shareholders,” Varian’s chief executive officer Gary Dickerson said at the time. “In addition to our combined strengths in the semiconductor space, Applied’s proven capability to extend its technology to adjacent markets like solar and display can help unlock the tremendous potential of ion implantation in these markets.”

Varian is a manufacturer of the ion implantation technology, which is currently used in Internet applications, personal computing and telecommunications. The companies have said the their combined efforts should open new markets for the technology.

The stock is currently trading at about $61 a share.
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USA Today reports a patent infringement lawsuit has been filed against Ford Motor Company, claiming its in-car communication system, Sync, is in violation of copyright law.

Our Massachusetts technology attorneys have posted here frequently about the need to protect intellectual property and the need for young companies to defend against allegations involving the theft of intellectual property.
Eagle Harbor Holdings and MediusTech claim Ford used their patent technology in the Sync system and in other in-car technologies, include Active Park Assist, Blind-Spot Identification System with Cross Traffic Alert, Integrated Control System for Stability Control and MyKey.

The Sync system allows people to integrate smartphones and other devices with their vehicle. Users can choose to have e-mails read to them and pick songs on the stereo via voice command. Eagle Harbor’s attorney estimates damages could be in the millions. Ford has thus far declined to comment.

Ever-changing technology makes protecting intellectual property via the patent process more important than ever before. So important, in fact, that tech companies are paying billions to snap up the patent rights to technology owned by failing enterprises. Bloomberg News recently reported that Google lost in its $4.5 billion bid for the patent portfolio of Nortel Networks Corp. Google is said to be using its $36.7 billion war chest to snap up available patents in part to protect itself against a slew of patent lawsuits.

In April, Google offered $900 million to buy more than 6,000 patents owned by a Canadian phone maker in bankruptcy protection.

The winner of the Nortel auction? Apple Inc.

Presently, Google owns little more than 700 patents. Last year it acquired approximately 300 patents. Apple, meanwhile, acquired more than 550 and Microsoft took control of more than 3,000. In recent months, Google has been sued by Oracle Corp. over technology in Android, its smartphone operating system. Apple, meanwhile, has sued several makers of phones using the Android platform, including HTC Corp. and Samsung Electronics.

Oracle claims in a federal patent- and copyright infringement lawsuit that Google copied Java programming language technology; the lawsuit seeks $6.1 billion in damages.

Google and Microsoft have been compared as both companies shunned patents in their infancy, only to race to protect themselves as they grew into economic and technological powerhouses. Ten years ago, Microsoft ranked 44th among companies receiving U.S. patents. Today it is third behind International Business Machines Corp and Samsung.
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