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Friday, December 30, 2005

High level analysis of settlement

We found out Thursday that a class action lawsuit in the Federal District Court for the S.D.N.Y. against Sony BMG, SunnComm, and First 4 Internet has preliminarily settled. Originally, I thought that this was a legal maneuver to short circuit other pending lawsuits against Sony, et al. on terms more favorable than they would otherwise get. But late Thurs. night, the Electronic Freedom Foundation, the closest thing to a consumer group involved, announced that they were joining this proposed settlement. Presumably, this means that they are dropping their pending class action lawsuit against these parties in CA.

Personally, I have a lot more faith in the EFF than I do in the attorneys in NY that are asking to be named lead class counsel. After all, in many class action lawsuits, it appears to me that the attorneys ostensibly representing the class plaintiffs are really primarily representing themselves, with the result that they are often the first, and sometimes only, people who actually get paid.

The EFF on the other hand has been involved as a consumer group in this area at least since Mike Godwin was their attorney and one of their only employees almost 15 years ago when I first met him in person at a BBS (Bulletin Boarding System) convention in Colorado Springs. Shows how both the technology and the EFF have progressed since then.

In any case, I think that the addition of the EFF in the proposed settlement is a pretty good indication that this is probably about as good a settlement as can be expected. Yes, Sony is going to escape with their assets intact. But apparently, they are committing themselves to not utilizing DRM for the next two years - and that is the sort of thing that the EFF would be asking for, and not the putative class action counsel.

As I suggested at Freedom to Tinker, this may end up being taught in Business Schools as how to respond to this sort of public relations disaster. After several false starts, management said make the issue go away, and they are doing that. They are now putting the fiasco behind them as quickly as they can.

Finally, in conjunction with the previous point, it should be remembered that Sony is a Japanese company. Getting into this mess in the first place is probably partially a result of this. Ditto for the initial false starts in addressing the matter. But then when it became apparent to top management that something needed to be done, word came down from the top to make it go away, and it is going away. The Japanese don't like litigation, and, as a result, in many cases appear much quicker to settle than comparable U.S. companies.

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