The Days of the Vultures (Silicon Valley – Season 2 Finale)

This season’s finale of Silicon Valley provided Richard with only the briefest moment of victory before he once again faces losing Pied Piper.  First, the arbitrator rules that because Richard used a Hooli computer while developing Pied Piper, under the invention assignment provision of Richard’s employment agreement with Hooli, Hooli would have the right to Pied Piper’s technology.  However, because the employment agreement also contained unlawful non-compete provisions, the arbitrator held that the entire employment agreement was unenforceable, including the invention assignment portion.  Therefore, Hooli had no right to Pied Piper’s technology, and Richard won!  In the meantime, the Pied Piper team triumphs by successfully livestreaming the condor cam video to 200,000 viewers—including Laurie, the head of Raviga Capital.  Laurie is so impressed with the technology that once Hooli loses the arbitration, Raviga buys out Russ’s stake in Pied Piper.  Raviga now controls three of Pied Piper’s five board seats:  Russ’s two seats plus the seat filled by Monica as Raviga’s designee.  However, Laurie is also underwhelmed by Richard’s performance as CEO.  After gaining control of the board, Raviga promptly votes its majority control to remove Richard as CEO of Pied Piper.

Click here to read the full article posted on our Video Game blog, Law of the Level.

Rogue Witnesses (Silicon Valley, Episode 17)

In Episode 17, Hooli’s lawsuit appears to be nearing its end – with Hooli poised as the apparent victor.  In Episodes 9 and 10 the show had positioned the case so we thought Pied Piper was sure to win.  What happened?  The impact of a rogue witness should not be underestimated.

Click here to read the full article posted on our Video Game blog, Law of the Level.

Board Games (Silicon Valley, Episode 16)

Episode 16 culminates with a disastrous end to the Intersite bake-off, and highlights an issue that’s cropped up in several episodes:  troublesome or under-performing board members.  To recap, Pied Piper is competing against nemesis Endframe in a “bake-off” to win a $15 million contract with Intersite.  In the course of the bake-off, Pied Piper’s (formerly) billionaire investor and board member, Russ Hanneman, unknowingly sets a tequila bottle on the delete key of Richard’s laptop causing the deletion of 9,000 hours of Intersite’s premium content, and Pied Piper loses the bake-off.

Click here to read the full article posted on our Video Game blog, Law of the Level.

Other Peoples’ Content (Episode 15)

There are so many legal issues in Episode 15 that it’s hard to know where to begin, so I’m going to start at the end: porn.  Pied Piper is competing against nemesis Endframe for a $15 million contract from the online porn company Intersite.  If Pied Piper wins the contract it will allow Pied Piper to stay afloat and avoid being absorbed and obliterated by Endframe.

Click here to read the full article posted on our Video Game blog, Law of the Level.

“‘Say it ain’t so!’” (Episode 14)

Previously we’ve discussed Hooli’s reverse engineering of Pied Piper’s technology and the threatened lawsuit for ownership of the technology.  In Episode 14, Pied Piper faces a new threat:  Endframe, a Pied Piper competitor, has also stolen Pied Piper’s technology, in collusion with VC firm Branscomb Ventures.  This started back in Episode 10, when the Pied Piper team pitched to Branscomb and were “brain raped.”  The team shared the intimate, technical details of Pied Piper’s middle-out technology before realizing what was happening.  Branscomb/Endframe then used the information Pied Piper revealed to create their competing product.  But was there anything Pied Piper could have done to protect itself?

Click here to read the full article posted on our Video Game blog, Law of the Level.

Hooli is suing Pied Piper (Episodes 9 and 10) continued

Last post I mused that had Richard taken certain steps in the first season of Silicon Valley, he might now have ammunition to use against Hooli’s lawsuit. What am I talking about? To very crudely recap what happened last season, Richard invented Pied Piper, a music copyright search service that hid within it amazing lossless compression technology. Richard shared his software with two “brogrammers” at Hooli, who (being slightly smarter than they appeared) realize the importance of Richard’s compression technology and informed Gavin Belson (Hooli’s CEO). After Richard refused to sell Pied Piper to Hooli, Hooli reverse-engineered Pied Piper and used Pied Piper’s technology as the basis of Hooli’s competing product called Nucleus.

Click here to read the full article posted on our Video Game blog, Law of the Level.

Hooli is suing Pied Piper (Episodes 9 and 10)

HBO’s “Silicon Valley” has quickly become a must watch for all budding entrepreneurs, but the second season has opened up with a multitude of real world risks and roadblocks that could be faced by real world entrepreneurs.  Here, we take a light look at the legal issues arising from the latest episodes.

Click here to read the full article posted on our Video Game blog, Law of the Level.

SAFEs and KISSes Poised to Be the Next Generation of Startup Financing

Overview

In late 2013, startup accelerator Y Combinator unveiled its Simple Agreement for Future Equity (“SAFE”) investment instrument as an alternative to convertible debt.  While SAFE templates surfaced in different varieties, the purported goal was to create a standardized set of basic funding terms between startups and investors while deferring decisions about valuation, liquidation preferences and participation rights until later-stage rounds of financing.  In mid-2014, another accelerator, 500 Startups, introduced a competing document, dubbed the Keep It Simple Security (“KISS”).  Although investors were initially nervous about accepting either of the new investment forms, these alternatives to conventional notes (“note-alternatives”) have become an increasingly popular tool for investing in early stage companies. Continue Reading

A Change for the Better? The Arguments For and Against a Venture Exchange

With a total of 284 U.S. operating company IPOs in 2014, the U.S. securities market might appear to be on an upswing – after all, this was its biggest year since the dot com era ended in 2000.  Nonetheless, this figure does not compare with what it should be given our annual 3% GDP growth rate, which would have required 520 IPOs if the dot com era is used as the baseline.  Furthermore, the U.S. is no longer the world leader in IPOs – it has fallen to #2 in large IPOs and #12 in small IPOs, and has experienced a decrease to only 5,000 listed companies from 9,000 in 1997.  The shrinking U.S. IPO market brings associated potential problems: lackluster employment opportunities, decreased innovation and failure of the U.S. to sustain itself as a market leader. Continue Reading

S.E.C. Adopts Final Rules Amending Regulation A

On March 25, 2015, the Securities and Exchange Commission adopted final rules amending its Regulation A, i.e., the so-called “Regulation A+ Rules”. Regulation A has been a little used provision in the securities laws due to, among other shortcomings, the limit on offering size to $5 million in any 12-month period and the requirement that these offerings be cleared not just by the SEC but any state in which an issuer was planning to offer and sell the securities. From 2012 to 2014, there were only 26 Regulation A offerings. Instead, private companies have relied heavily on Rule 506 of Regulation D, which offers no cap on the amount that can be raised and federal preemption of state securities laws. Continue Reading

LexBlog