American History 1988
Chapter 146 - 140: The Delayed Lawyer’s Letter

Chapter 146: Chapter 140: The Delayed Lawyer’s Letter

"Guys, who can tell me what exactly happened?" Dean, who had rushed back from Virginia overnight, gathered all the senior executives of Byte Software at the first opportunity.

Chief Executive Officer Joe Scalcini, Chief Operations Officer Jimmy Trebik, Chief Financial Officer Ross Tano, and two directors from Morgan Tailer and Mayfield.

Together with the board, a total of nine senior executives gathered in the office of Byte Software. When Dean pushed the door open and entered, he found everyone with a serious expression on their faces.

"Dean, we’re in trouble," David Morgentaler pushed a lawyer’s notice in front of him.

"Honestly, it came later than I expected," Dean said, still not having read the content, but the formal layout of the document oddly relaxed his mood.

"I thought they would have been mailed to us as soon as the ’San Francisco Chronicle’ published the news about our collaboration with 3Com. It seems now that our opponents are a bit sluggish in their response."

"I’m glad you can still remain optimistic now, but I suggest you better look at who sent us the legal notice," Glenn Miller from Mayfield emphasized, pointing at the logo on the notice, "See? Southern Bell Company."

"Oh~, so it’s the Bell Octopus~" Dean’s humorous exclamation failed to relax everyone’s tense expression, but this time the nickname "Bell Octopus" did make everyone smile.

In America, octopus is quite different from the delicacy in teppanyaki; it symbolizes greed and evil.

Bell Company got this nickname due to the 1950s incident where AT&T exploited its market monopoly to drive up telephone charges.

Since the American people deeply detested AT&T’s monopolistic practices, they gave it the nickname "Bell Octopus."

Now, although Dean did not yet know why they had sent a legal notice, it was likely about infringement or something to do with patents.

Calling them "Bell Octopus" for this action was certainly not a mistake.

"You are not wrong, Dean, we’re just another prey under that octopus’ tentacles," David Morgentaler finished clipping his cigar and then knocked on the table, "Perhaps you’ve also prepared for this moment?"

In the meantime, Dean had finished reading the legal notice in his hand. "Southern Bell is accusing us of infringing on their ADPCM technology patent and has ordered Byte Software to immediately cease the sales of Teams, as well as to provide them with a total compensation of 7.96 million US dollars."

"Yeah~ when the octopus bares its fangs and claws, it’s not at all funny, guys," Glenn Miller remained preoccupied, "That’s 7.96 million US dollars; I seriously doubt they based the compensation on Teams’ sales volume and peak selling price."

"So they’re aiming to kill Byte Software in one blow, not planning to leave us any chance~" The cigar smoke filling the boardroom made Dean squint his eyes slightly.

"Things don’t seem optimistic," David’s face showed no change, "Dean, what do you think about Southern Bell’s accusations?"

"A piece of waste paper," Dean flicked with his finger, and the Southern Bell legal notice whooshed towards Marcus.

As Marcus looked bewildered, Dean smiled and instructed, "Keep it well, it can be put in Byte Software’s trophy room in the future."

"OK, I’ve wanted such a trophy for a while," Marcus’s eyes lit up, liking the idea.

The rest of the room remained silent, waiting for Dean’s explanation.

"Alright, before we start, let me ask one thing~" Dean’s gaze swept the room, "Where’s our lawyer?"

He had spent a good sum to sign a contract with WSGR; it was time for them to appear.

David looked at his wristwatch, "I think they should be here any moment."

Click, just as David finished speaking, the meeting room door was pushed open.

A Puerto Rican man with brown skin walked in with an assistant.

"Sorry guys, I was delayed checking some data; I hope I didn’t miss the most exciting part."

"Boris Feldman," David lifted his chin to introduce him to everyone, "A partner lawyer at WSGR and also the chief lawyer for the technology department."

"Right on time, Mr. Feldman," Dean greeted him first; WSGR’s technology department was quite famed.

As far as Dean knew, the lawyers working in this department were mainly PhDs, specializing in fields such as intellectual property protection and litigation.

Partner lawyer, it seemed WSGR was taking this case very seriously.

After the other party sat down, Dean pointed to the notice in front of Marcus, "Have you received a copy of Southern Bell’s legal notice at WSGR?"

"Of course, I’ve been researching related legal provisions all night." Facing the formidable Bell, Boris also had to be fully alert.

"OK, now that everyone is here, let me explain why this legal notice is just a piece of waste paper."

Dean got up intending to find a computer to demonstrate Teams, but considering that everyone present was deeply familiar with Byte Software, he gave up the idea.

"The ADPCM technology patent Southern Bell is accusing us of presumably refers to the use of the G.722 standard by Teams software."

Dean himself had taken the lead in the core development of Teams; he could not be clearer about it.

"G.722 is a broadband audio coding standard, and its technical foundation is the ADPCM technology.

However, that’s not the main point; the main point is that G.722 is a standard approved and publicly promoted by the International Telecommunication Union."

Inferring from the Fair, Reasonable, and Non-Discriminatory (FRAND) principle, the G.722 can be freely promoted and used within member states.

Bell South’s charges against Byte Software completely violate the FRAND principle of the International Telecommunication Union.

"So I think it’s just a piece of paper, am I correct, Lawyer Feldman?"

"An astonishing technical interpretation," Boris Feldman couldn’t help but clap his hands, "though I would like to add a point."

"That’s exactly what I was hoping for," Dean, not a professional lawyer himself, also wanted to hear the other party’s opinion.

"What I’d like to remind you is that the International Telecommunication Union is merely a voluntary standard promoting organization, and its standards are also recommendatory in nature.

As for the FRAND principle, just like its name, it’s like a gentleman’s agreement."

"A gentleman’s agreement? A suggestion?" David Morgentaler keenly sensed the issue here, "So it can’t serve as a legal basis?"

"Perhaps I should explain the relationship between standard-setting organizations and patent licensing," Boris Feldman, flipping through the documents in his hand, decided to cut to the chase.

"Technologies that are promoted by standard organizations generally tend toward royalty-free licensing. Take G.722 for example, Bell Labs initially also agreed to promote it freely within member states.

The advantage of doing so is to promote one’s technical standard as an international standard, which correspondingly brings a broad market for the company’s other associated businesses.

However, there are certain prerequisites for royalty-free licensing, such as the user also making one of their patents available for free licensing.

It’s like everyone brings something out for mutual free sharing, and the patent pool is designed for this purpose.

But this isn’t a mandatory requirement, aside from a negligible license management fee, many companies are using international standards without paying any patent fees."

If we look at it solely from this angle, Bell South’s legal letter is indeed just a piece of paper.

Because we are using a free public standard, they have no right to demand any compensation from Byte Software.

"But..."

Well, finally, everyone in the conference room held their breath subconsciously.

Boris Feldman glanced around before continuing, "But ’free’ doesn’t mean that they have relinquished their patent rights.

If Bell South disregards the FRAND principle of the International Telecommunication Union and unilaterally initiates a patent lawsuit against Byte Software, that will cause us certain trouble."

Just as Boris Feldman has just mentioned, the initiatives of the International Telecommunication Union are mere gentlemen’s agreements and cannot serve as compulsory measures.

As long as Bell South has no shame, they can sue Byte Software.

Expecting an opponent, who has come with the intent to put you to death, to adhere to a gentleman’s agreement?

Don’t be foolish; everyone in the conference room automatically ruled out this possibility.

"If Bell South brings a lawsuit against us," Dean confirmed with a frown, "would Byte Software face a huge fine of $7.96 million?"

"No," Boris Feldman confidently shook his head, "Everything Byte Software has done complies with the rules, and the adoption of the G.722 standard was under the promotion of the International Telecommunication Union.

At that time, Bell South did not object to this, nor did we receive any written notification from them, so this claim is completely a scare tactic on their part."

The FRAND principle of the International Telecommunication Union cannot serve as a coercive measure, but it can be used as a defense in court.

WSGR is particularly good at this kind of case, which is why Boris Feldman is confident in making the other party’s claims amount to nothing.

"Then what’s our trouble?" Having heard that they wouldn’t face a huge claim, Glenn Miller also began looking for ways to defeat the other side.

"Bell South may unilaterally stop licensing to Byte Software or charge exorbitant licensing fees. In the worst-case scenario, Teams software must cease using the G.722 wideband audio decoding standard."

Ceasing the use of the G.722 standard would mean that Teams would be directly incapacitated. The opponent’s goal would be achieved, and Byte Software could potentially disappear directly.

"What can we do?" David Morgentaler asked calmly, believing that WAGR’s reputation was not unearned.

Boris Feldman shrugged, "We could counter-sue for standard-essential patent abuse or sue them for unfair competition. Bell just went through a breakup once, and they are very wary of such accusations.

By relying on these measures, WAGR could at least secure six months to a year for Byte Software to find alternative solutions, otherwise the worst-case scenario will occur."

"During the litigation, can Teams software continue to be sold?" If all business activities were to be suspended, it would still be a fatal blow to Byte Software.

"It’s possible, but I don’t recommend it. Because if the lawsuit fails, we will face compensation claims for sales during the litigation period."

Previously, the rationale of the International Telecommunication Union could be used as an excuse, but after the lawsuit is filed, this rationale would no longer stand.

Dammit! Dean had made all his calculations, using free or public technologies as much as possible. But still, he hadn’t expected that there would always be some unexpected traps waiting for him.

Seeing everyone’s serious expressions, Boris Feldman clapped his hands again, "Guys, it’s not like there aren’t any good news. Why don’t you ask me if there’s a Plan B?"

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