"Expelled" Flunks Intellectual Property 101

The new Ben Stein movie Expelled is catching heat for using songs without permission. Yoko Ono is suing for their use of "Imagine," and others are likely to follow. In an incredible display of chutzpah, stupidity, or a combination thereof, the spokespeople for Expelled claim their use of the songs falls within the fair use doctrine because the movie is a documentary. I'll forgo any comments on whether it's a documentary because it doesn't matter. They incorporated someone else's intellectual property into their own for-profit work without permission. By definition, that lands nowhere near fair use.

People, nicking someone else's intellectual property is the same as hijacking someone else's truck to make your deliveries. And the ultimate result will be that one day someone who looks like Tony Soprano will serve you some nasty looking documents drafted by someone like me.

Goodbye, All My Memories

Draper scrapbooking store All My Memories closed yesterday. The Trib did a nice article on it last week, perhaps a bit too nice. The owner talked about closing the store because she didn't want to sign a five-year lease, and the reporter let that go at face value. Other bits and pieces in the story indicated that the problem was far deeper than a simple lease dispute, though. The owner had already shut down three other retail outlets and her supply manufacturing facility. That would indicate that, contrary to the owner's claim that the scrapbooking industry has plateaued, it is in fact careening down a cliff. That's information business owners and those of us who serve them would like to know, but the reporter didn't go there, pulling a Mary Sunshine instead.

I like media coverage of local business, but I like it to be coverage. Tossing softballs a la Larry King doesn't give readers the information they need.

A Tip of the Hat to the ABA

The American Bar Association has decided to demonstrate some proactivity concerning the current lending mess. It has set up a site called Safeborrowing.com, providing a lot of consumer information about mortgages, student loans, credit cards, and auto financing. Check it out.

JPMorgan Fogs One By

JPMorgan Chase announced better than expected Q1 earnings, and there was great rejoicing. The problem was what was going on behind the scenes. JPM simultaneously filed notice with the SEC that it was trying to raise $6 billion real quick-like. Is the Bear Stearns buy-out failing to prevent the unwinding of JPM's CDS positions as it had hoped? Is JPM expecting some barbarians to show up at the gates?

Another Retailer Spinning In

Watch for Linens 'n Things to file Chapter 11 this week. Retailer restructurings and bankruptcies seem to be picking up steam, which is a bad sign for owners of retail space, especially since we just keep building more. There is some debate over why all these stores are going dark. Some say it is just part of the general mall restructuring; stores are closing in traditional malls and opening in new, open-air malls. The numbers don't add up, though. There are more closings than openings. It also ignores the fact that strip malls, especially the newer ones, are effectively open-air, but they're hating life. And it ignores the reality of consumer confidence. The American consumer is tapped, people, and simply can't afford to buy stuff.

Watch for more dark boxes.

Byrne Takes a Counterpunch

Overstock.com's crusade against short sales, spearheaded by CEO Patrick Byrne, will take a serious turn this week. Overstock has been suing Gradient Analytics for allegedly conspiring to drive its stock price down (See my 22 September entry A "Victory" for Overstock.com.) as well as pursuing a separate suit against virtually every major brokerage. Beyond avoiding dismissal, Overstock has seen little success, and the SEC closed its investigation of Gradient over a year ago. Now Gradient is going to countersue Overstock and Byrne for defamation. Since damages are tough to get in such cases, I suspect Gradient is really angling for an injunction to shut Byrne up. Yeah, good luck with that.

As I've said before, the "Litigation Road to Success" business model is at best highly questionable and should be avoided (Ask Darl McBride.). If your company is bleeding cash, your time is better spent fixing your company, not riding off on crusades.

About that robust local economy...

...have you looked at the first quarter bankruptcy figures? Nationwide, bankruptcies were up 27% over first quarter 2007; in Utah they were up 44%. As usual, Utah is behind the curve, but that doesn't mean it isn't going down the same track.

Another Blow to Local Ownership

In the latest sign of the dependence of the local economy on the wider world, Iomega has been purchased by Boston-based EMC. Iomega has been hurting for awhile, and there were fears it was a goner, but it appears to have now been bailed out. It just won't be a Utah company any more, and it could be swept out of here in an instant. Welcome to modern times.

You too Can be a Securities Fraud

Many in the securities industry breathed a sigh of relief when the Supreme Court ruled in Stoneridge vs. Scientific-Atlanta that private individuals may not sue those who allegedly aid or abet a securities fraud (For a full examination of this, see Mark Perry's analysis.). You may wonder why this is a good thing; those who aid fraud should be sued. The problem is that the statutory and regulatory definition of "securities fraud" is so broad and the threshold for it is so low that virtually every law firm, accounting firm, securities firm, and business partner in the country could get swept up, and the resulting litigation tsunami would become the full-time job of the federal courts for time and eternity.

On the other hand, the Supremes made it very clear that the SEC has full authority to pursue such aiders and abettors, and that means if you're even tangentially involved with securities, there could be a wide net and a big club waiting for you. Attorneys and accountants are facing what OB-GYN doctors have faced for years: They can't afford insurance and so stop practicing in that field. It's to the point where the only professionals in the field are ones that small businesses (real small businesses, not ones that look like Microsoft but that the government still defines as small) can't afford. Small businesses will still need money, though it's just that they won't get professional help before they raise it, thus exacerbating the problem. So whether they're issuing promissory notes to investors, printing the money in the basement, or dealing meth behind the shop, they'll end up breaking the law. Except that dealing meth carries smaller fines and shorter prison sentences.