IP Law Blog

Join us March 26!

Weintraub Tobin and the LAVA Digital Media Group will host a panel discussion: "The Role of Digital Media in Influencing Public Perception and Behavior" on Tuesday, March 26.

Digital Media plays a significant role in creating and defining cultural norms and influencing individual behavior. Join our panel of experts in a discussion about how digital media shapes public perception, influences individual beliefs and triggers events in the physical world.

This evening event is designed to bring together entrepreneurs, start-ups, accelerators, venture capitalists, and businessmen and women alike to discuss the role of digital media and the way it shapes our culture. Enjoy a social hour from 6:30-7 p.m. followed by the panel discussion and a Q&A session.

Panelists include:

•     Anton Vuljaj, Analytical Lead, Google Elections and Issue Advocacy
•     Joe Mathews, California editor, Zocalo Public Square (zocalopublicsquare.org) fellow
•     Joel Fox, Editor-In-Chief of FoxAndHoundsDaily.com
•     Bryan Merica, founder and president of ID Media
•     Gary Brown, President of Political Data (politicaldata.com)
•     Moderated by Scott Hervey, Shareholder, Weintraub Tobin

"The Role of Digital Media in Influencing Public Perception and Behavior" takes place Tuesday, March 26th at ROC, 604 Arizona Street in Santa Monica. Register here.

Follow the event on Twitter: @weintraub_law
#wtdmg

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By Lisa Y. Wang

One usually thinks of a librarian as a calm and lawsuit-free job. However, a librarian in Canada is facing a $3.5-million lawsuit over a personal blog post he wrote three years ago. Dale Askey, an associate librarian at McMaster University, is being sued by Edwin Mellen Press Ltd., an international academic publishing company, who filed two lawsuits last June.

Mellen Press alleges that Askey accused them of “accepting second class authors” and urging “university libraries not to buy (their) titles because they are of poor quality and poor scholarship.” While this lawsuit will be heard in Canadian court under Canadian law, bloggers have been threatened with lawsuits in the US for articles they’ve written and opinions they’ve expressed. This brings up a whole slew of First Amendment issues and the SLAPP statute. 

If this lawsuit were filed in the United States, it might be considered a “SLAPP” (Strategic Lawsuit Against Public Participation) lawsuit. SLAPP refers to a lawsuit or legal threat intended to censor, intimidate, and silence critics by burdening them with the cost of a legal defense until they abandon their criticism or opposition. Typically SLAPP lawsuits target ordinary citizens who cannot afford to pay the hefty legal fees it takes to defend such a lawsuit. They are a method used to intimate others from participating in debate and free speech and can be a strong method of silencing critics. SLAPP lawsuits often come in the form of a lawsuit claiming defamation or libel. The defining characteristic of a SLAPP lawsuit is that the plaintiff usually loses the case. However, a typical SLAPP lawsuit does not get to the trial phase as it is method used to chill the speech of citizens.

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By: James Kachmar

In late December, the Ninth Circuit revisited the “safe harbor” provisions of the Digital Millennium Copyright Act (“DMCA”) in the case UMG Recordings, Inc. v. Veoh Networks, Inc., 101 U.S.P.Q.2D (BNA) 1001. Veoh is a web service that allows users to view videos uploaded by other users.   Veoh was sued for copyright infringement by UMG, one of the world’s largest music and music publishing companies. 

Before a user can upload and share a video, on Veoh’s site, he/she must agree to Veoh’s publisher terms and conditions and terms of use, both of which bar the user from uploading any videos that infringe on another’s copyrights. Also immediately prior to uploading a video, a message appears on Veoh’s website warning the user not to upload infringing videos. 

Continue Reading Posted In Copyright Law , Entertainment Law , Web/Tech
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By Nathan Geronimo

Kinbook, LLC, an online social networking company, recently sued Microsoft for unfair competition and reverse trademark infringement in United States District Court.  (Kinbook, LLC v. Microsoft Corp.,2012 U.S. Dist. LEXIS 8570.) Kinbook created a Facebook application called “Kinbox,” which allows Facebook users to create private sub-social networks for sharing of information within a subset of their list of Facebook friends.  Kinbox was formally launched on Facebook in December 2009, and Kinbook’s use of the Kinbox mark was approved in September 2010.

In November 2010 Microsoft released “Kinect,” a motion-sensor interface device for the XBOX 360 that allows users to control the XBOX 360 through gestures and voice commands.  In April 2010, Microsoft released the “Kin” phone, a mobile smart phone for use with the Verizon Wireless mobile phone service.  Microsoft stopped production of the Kin after just two months due to a lack of consumer demand for the product.

Continue Reading Posted In Trademark Law , Web/Tech
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By Zachary Wadlé

In my last column of 2011 I wrote about the proposed “Stop Online Piracy Act” (“SOPA”) introduced in the United States Congress to provide the government with enhanced, but highly controversial, tools to fight online copyright infringement. As I noted, SOPA “spawned a fierce public relations and lobbying battle between Silicon Valley and Hollywood that will play out in the media and in the halls of Congress in the months to come.” Despite the spotty record of my predictive powers, these words turned out to be prescient. The debate over SOPA has blown up in recent weeks, culminating with Wikipedia’s (and many other well-known internet sites) decision to black out their website on January 19, 2012. Google got in on the act too by “censoring” the Google logo on its homepage, (but still allowing use of its search engine and all other Google web services).

The online blackout led by Wikipedia had an immediate effect. The next day, Senate Majority Leader Harry Reid (D-NV) and Congressman Lamar Smith (R-TX), chairman of the House of Representatives Judiciary Committee, postponed critical votes on SOPA (and its companion Senate Bill – the “Protect Intellectual Property Act” or “PIPA”). Rumors swirled that Reid did not have the necessary 60 votes in the Senate to move the legislation past a key procedural hurdle, and Smith said, “I have heard from the critics and I take seriously their concerns regarding proposed legislation to address the problem of online piracy.” For now, the legislation is tabled for further negotiation and re-drafting in light of the substantial criticism from internet heavyweights.

Continue Reading Posted In Cyberspace Law , Web/Tech
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By Nathan Geronimo

People are better connected with friends and family than ever before.  Social media sites such as Facebook and Twitter can be an excellent way to stay in touch with loved ones, and to get daily updates of people’s lives.  Similarly, through sites such as YouTube, people are able to share videos and information with others almost instantaneously.  While these sites can be great to disseminate images and information to a desired audience, they can also make information readily available to audiences that are less desirable to, and not contemplated by the poster.  There has been a great deal of buzz in recent years about employers using social media sites to perform “background checks” on prospective employees, and warning job applicants to be conscious of this fact when posting on social media sites.  In addition to this concern, recent cases illustrate a possible new concern for social media posters: use of social media posts in litigation.

In a recent decision in Louisiana, Boudwin v. General Ins. Co., Plaintiffs sued an individual and an insurance company based on alleged injuries arising out of a car accident.  In the lower Court, Plaintiff’s prevailed on the question of liability, but were unsatisfied with the jury awards of $25, 000 to the first Plaintiff, and $50,000 to the second Plaintiff.  On appeal, Plaintiffs argued that the jury erred in failing to award them any damages for physical disability or loss of enjoyment of life.  To recover based on a theory of detrimental lifestyle change, a court looks at both the severity of the injury, and Plaintiff’s lifestyle prior to the injury.

Continue Reading Posted In Privacy , Cyberspace Law , Web/Tech
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By Zachary Wadlé

On Oct. 26, 2011, the Stop Online Piracy Act “SOPA” (H.R. 3261) was introduced in the United States House of Representatives. One of SOPA’s primary goals is to address the continuing problem of online digital piracy of counterfeit movie, music, and other copyrightable works engaged in through foreign websites. 

The 1998 Digital Millennium Copyright Act (DMCA) and the Copyright Act of 1976 are the primary existing U.S. laws that address copyright infringement, but both have limited ability to address foreign based websites that engage in digital piracy. SOPA attacks this problem by giving both government officials and copyright owners new powers to target foreign websites and infringers through the search engines, web hosts, and payment system providers that allow foreign websites to reach the U.S. market. 

Continue Reading Posted In Copyright Law , Cyberspace Law , Entertainment Law , Web/Tech
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By Dale Campbell

The Ninth Circuit has attempted to end the disputes arising from the creation of Facebook. As dramatized in the Hollywood blockbuster, The Social Network, the Winklevoss twins and other Harvard graduates claimed that Mark Zuckerberg stole the idea for Facebook from them. The Winklevosses claimed they conceived and created the idea for a social network, then known as Harvard Connection and later as ConnectU, and hired Zuckerberg to complete the programming.

The Winklevosses claimed that Zuckerberg was involved in all aspects of the website development and business planning for Harvard Connection and acted as a member of the Harvard Connection development team. Zuckerberg was allegedly entrusted with the basic idea for the project and enterprise, including database and website design. Moreover, the Winkelvosses alleged that Zuckerberg was provided information regarding the website’s business model, functionality, concepts, and information to be collected from users. The Winklevosses alleged that Zuckerberg utilized all of this information in creating Facebook and failed to advise the Winklevosses that he had stopped working on the Harvard Connection code but, instead, was developing a competing website. The complaint alleged a variety of business torts including copyright infringement, misappropriation of trade secrets, breach of the covenant of good faith and fair dealing, breach of fiduciary duty, and interference with prospective economic advantage. 

Continue Reading Posted In Copyright Law , Web/Tech , Trade Secrets
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By: Jeffrey Pietsch

A New Jersey Superior Court recently granted summary judgment in favor of online ticket resellers who were sued by the New Jersey Attorney General’s Office for violating New Jersey’s Consumer Fraud Act and Advertising Regulations. The summary judgment was granted by the court based on the immunity provided by Section 230 of the Communication Decency Act of 1996 (CDA).

The CDA was initially proposed in 1996 to regulate indecency and obscenity on the internet. Major parts of the bill were eventually eliminated because they were deemed to violate the first amendment. Section 230 of the bill, however, increased the scope of free speech on the internet by limiting the liability of online service providers for speech made by their customers. Section 230 was enacted as a direct result of the ruling issued by the New York State Supreme Court in Stratton Oakmont, Inc. v. Prodigy Services Co. In that case, the court ruled that Prodigy was essentially a publisher of the words of its customers and therefore could be liable for acts of its customers. Without Section 230 overturning this ruling, the internet landscape would be quite different than it is today.

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By Dale C. Campbell and David Muradyan

The Seventh Circuit and the Ninth Circuit do not agree on what constitutes “authorization” under the Computer Fraud and Abuse Act, 18 U.S.C. § 1030 (2004) (“CFAA”)?  The CFAA prohibits accessing computers “without authorization” or “exceed[ing] authorized access” to take various forbidden actions, ranging from obtaining information to damaging a computer or computer data.  See 18 U.S.C. § 1030(a)(1)-(7). Notably, the CFAA provides a private cause of action for persons who have suffered harm resulting from computer fraud.  Id. § 1030(g).  The CFAA provides, in relevant part: “Any person who suffers damage or loss by reason of a violation of this section may maintain a civil action against the violator to obtain compensatory damages and injunctive relief or other equitable relief.” Id. To assert a viable claim, the harmed plaintiff must allege, among other things, that the defendant intentionally accessed its information “without authorization” or “exceeds authorized access.” Id. § 1030(a)(2). Congress enacted the CFAA in 1984 to enhance the government’s ability to prosecute computer crimes.  LVRC Holdings LLC v. Brekka, 581 F.3d 1127, 1130 (9th Cir. 2009).  The CFAA was targeted to rein in hackers who illegally accessed computers to steal data or to disrupt or destroy computer functionality. Id. The CFAA was also designed to target criminals who possessed the capacity to “’access and control high technology processes vital to our everyday lives . . ..’”  Id. at 1130-31 (citing H.R. Rep. 98-894, 1984 U.S.C.C.A.N. 3689, 3694 (July 24, 1984).

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by Jeff Pietsch

In a recent case from the Eastern District of Missouri, Cornelius v. DeLuca (E.D. Aug. 18, 2009), the district court addressed whether a fitness website and online retailer was liable for negative comments and reviews posted by users concerning plaintiffs’ dietary supplements.  In Cornelius, plaintiffs Cornelius and Syntrax Innovations, Inc. alleged that its competitors were posting on defendants’ website “libelous statements” about the plaintiff and had “tortuously interfered with plaintiffs’ business expectancies.”  Further, plaintiffs alleged that Ryan Deluca and Bryna Mathews DeLuca, principals of the website in question, Bodybuilding.com, had engaged in a “civil conspiracy” with the competitors to “post libelous statements and to tortuously interfere with plaintiffs’ business expectancies.” Specifically, plaintiffs alleged that the internet website bodybuilding.com was an online retailer for the sale of nutraceuticals, including those manufactured by plaintiffs, and that the website allowed representatives of plaintiffs’ competitors to post “libelous statements regarding plaintiffs and their products” in the public forums and comments. Finally, plaintiffs alleged that the defendants assisted the competitors by posting the libelous statements which were false and open to the public.

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by Dale Campbell and Emily Hirsekorn

State rules concerning electronic discovery just got clearer. On June 29, 2009, Governor Schwarzenegger signed the Electronic Discovery Act (the “Act”), which became effective immediately. Just last year, the Governor vetoed an almost identical version of the Act in order to focus more attention on the budget crisis. Of course, we see how well that plan worked. The Act is modeled after the 2006 amendments to the Federal Rules of Civil Procedure. The new rules govern the discovery procedure for electronically stored information (“ESI”) in California civil actions.

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By Jeff Pietsch

Last year, Google lost the first round of a court battle against Vulcan Golf, a golf club manufacturer, in a trademark and cybersquatting dispute. In that decision, the US District Court in Illinois ruled that Google could be sued for its role in serving ads on websites that use domain names that violate trademark and cybersquatting laws. In the latest round of decisions on this case, the court denied class certification damaging the plaintiffs’ hopes in prevailing in this matter.  

 

Continue Reading Posted In Trademark Law , Cyberspace Law , Web/Tech
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by Scott Cameron

 

eBay describes itself on its website as: “The World's Online Marketplace®, enabling trade on a local, national and international basis. With a diverse and passionate community of individuals and small businesses, eBay offers an online platform where millions of items are traded each day.” Nearly anything can be bought and sold on eBay. However, the Ninth Circuit recently announced that one thing you do not buy on eBay is personal jurisdiction.

 

The decision, Boschetto v. Hansing, 539 F.3d 1011 (9^th Cir. 2008), begins by stating that the “appeal presents a question that remains surprisingly unanswered by the circuit courts: Does the sale of an item via the eBay Internet auction site provide sufficient ‘minimum contacts’ to support personal jurisdiction over a nonresident defendant in the buyer’s forum state?” In the Ninth Circuit it does not.

Continue Reading Posted In Cyberspace Law , Web/Tech
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By James Kachmar

          A California appellate court affirmed last month that an employer is entitled to immunity from tort liability for threatening emails sent on or through the employer’s internet/email system by one of its employees. On December 14, 2006, the Sixth Appellate District in the case Delfino v. Agilent Technologies, Inc., 2006 WL3635399, affirmed summary judgment in Agilent’s favor finding that Agilent, as an employer, was immune from tort liability under the Communications Decency Act of 1996 (“CDA”) for threatening emails sent and posted by one of its employees. This case, apparently one of first impression, extended the immunity protections of the CDA to cover corporate employers who provide their employees with internet access through internal computer systems. Employers thus have additional protection from claims that their employees have used the employer’s computer system to commit torts against third persons.

Continue Reading Posted In Privacy , Cyberspace Law , Web/Tech
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By: R. Todd Wilson

Early stage companies often hope to gain significant operational advantage by forming strategic alliances.#160 Such alliances may significantly accelerate the growth of such companies.#160 By collaborating to achieve mutual commercialization or implementation goals, the entities that form such alliances seek to maximize the value of each entity's intellectual property in ways that, without such collaboration, would not be individually possible.

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By Adam Jones In a case that will dramatically impact both the pharmaceutical and biotech industries, the U.S. Supreme Court recently expanded the ability of researchers to experiment with patented drugs without being held liable for patent infringement.#160 In a unanimous ruling, the Court held that the use of patented compounds in preclinical studies is protected under the current "safe harbor" law allowing experimental use of patented compounds, as long as there is a reasonable basis for believing that the experiments will produce information relevant to filing for FDA approval.#160 The case, Merck KGaA v. Integra LifeSciences, was a clear victory for pharmaceutical researchers and may have the effect of speeding the development and delivery to the market of new and generic drugs, however, some biotech companies worry that the case could put them out of business. The dispute in the case began over Integra's ownership of patents related to short amino acid sequences, called RGD peptides, which play an important role in many biological functions.#160 Merck had been funding anti-cancer research looking for drug candidates that would inhibit angiogenesis, the process by which new blood vessels sprout from existing blood vessels.#160 Angiogenesis plays a critical role in the development and nourishment of tumors.#160 When Merck proceeded to make use of Integra's patented RGD peptides in its drug research without obtaining a license from Integra, Integra sued for infringement.#160 It is usually an act of patent infringement to make, use, offer to sell, or sell any patented invention, including pharmaceutical drugs and compounds.#160 However, in 1984 Congress created a "safe harbor" from patent infringement for certain activities related to drug research.#160 The purpose of this safe harbor, found in the Hatch Waxman Act of 1984, was to encourage the speedy delivery to market of generic drugs by allowing researchers to use whatever tools were available to them, without fear of liability for patent infringement.#160 Before enactment of the safe harbor, pharmaceutical companies owning a patent on a compound or drug could bar competitors from using the patented compound or drug for any purpose, including research, thus effectively stalling the development of potentially useful drugs by competitors until the term of the patent expired. Merck claimed that its angiogenesis research was protected under the safe harbor.#160 Integra argued that the safe harbor did not apply to Merck because not all of Merck's experiments using the patented compounds resulted in submission to the FDA of a product for regulatory approval.#160 The lower courts agreed with Integra, adopting a narrow view of the safe harbor protection, and essentially limiting the use of patented compounds to clinical trials, the final stages of drug research, rather than early-stage experiments that could determine which of several compounds would make a good drug candidate.#160 This interpretation of the safe harbor clause severely limited the research abilities of pharmaceutical companies.#160 Integra was awarded $15 million in damages based on patent infringement in a jury trial in the U.S. District Court in San Diego.#160 The Federal Circuit Court upheld Merck's liability for patent infringement, and the Merck appealed to the Supreme Court. After reviewing the case, the Supreme Court took a broad view of the safe harbor clause, finding that Congress intended to "leave adequate space for experimentation and failure on the road to regulatory approval."#160 The Court interpreted the safe harbor to exempt from infringement "all uses of patented compounds 'reasonably related' to the process of developing for submission under any federal law regulating the manufacture, use, or distribution of drugs."#160 The decision makes clear that the safe harbor for using patented compounds applies to a wide variety of medical and pharmaceutical research, not solely to research that will yield an FDA-approved drug.#160 Researchers must only have a reasonable basis for believing that a patented compound may be useful in creating a new drug for submission to the FDA for approval.#160 The decision allows researchers much greater freedom to experiment with patented compounds in an effort to create new and useful drugs.#160 One of the major benefits to patients that may come of the Court's ruling, though, may be in the increased availability of generic drugs.#160 The expanded scope of the safe harbor clause, will now allow pharmaceutical companies to more quickly obtain FDA approval for generic counterparts to brand-name drugs, and introduce the generic drugs to the market as soon as possible after expiration of the brand-name drug's patent.#160 Without a broad interpretation of the safe harbor clause, pharmaceutical companies would have to wait to perform research on patented drugs until the 20-year patent term had expired.#160 It typically takes many years to perform the experiments required to obtain FDA approval, and now pharmaceutical companies can begin the process of developing generic and competing drugs before the patents of the original drugs have expired.#160 The result is that companies are able to bring generic and competing drugs to market as soon as possible after the expiration of the relevant patents, rather than being delayed for up to a decade while maneuvering through the experimentation and FDA approval stages. Not everyone is happy with the Supreme Court's recent decision, though.#160 Many biotech companies produce patented compounds and products used in drug research.#160 The broad interpretation of the safe harbor clause could deprive them of valuable licensing revenue, and effectively put them out of business.#160 Also, universities that rely on licensing money from patents they hold for research techniques could be adversely affected.#160 The owners of existing drug patents that will now be freely available for use in research by their competitors argue that they spent substantial time and money to develop and market the patented drugs, and now their competitors will have an unfair head start in bringing competing drugs to market.#160 Patent law was established to provide a reward for innovation by granting its owner a limited monopoly on the patented invention, and some feel as though the expanded view of the safe harbor clause undercuts the reward function of patented drugs, and may in fact reduce the incentive to create new drugs based on compounds other than those already patented.#160 We continue to struggle to find a balance between rewarding innovation and making products freely available to the public.#160 Nowhere is this balance more difficult to achieve than in the pharmaceutical industry, where humanitarian concerns play an important role, and innovation is key to survival. 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By Julie Garcia

Determining the choice of entity for a high technology company can be a daunting task. In general, careful consideration should be given to the choice of entity when forming any type of company; however, high technology companies have additional issues that may alter the decision regarding the choice of entity. Generally, raising capital to fund the research, development and manufacturing of the company's products may determine the type of entity best suited to the needs of the new company. Typically, the type of entity will be either a corporation or a limited liability company. If a corporation is chosen, the decision as to whether the corporation will be a Subchapter S Corporation will also need to be made. Partnerships and sole proprietorships are not commonly chosen as the type of entity for high technology companies primarily due to liability concerns. Corporations and limited liability companies each have pros and cons that must be carefully considered for each situation when determining the type of entity.

Corporations have been in existence for a long time and generally have a well established base of both statutory and case law guidance. Although each jurisdiction may have different rules, regulations and cases that govern corporations and some jurisdictions may be more favorable to corporations than other jurisdictions, general corporate principles exist that can be examined when determining the type of entity to use for a new venture. If a corporation is chosen, the jurisdiction for formation should be carefully analyzed to determine the most advantageous jurisdiction. Many businesses prefer corporations because of the long standing history and general feeling of comfort regarding issues that are important to the founders of a business, such as liability protection and corporate governance. Financing a corporation is a path that has been well trodden and individual strategy based on the company's circumstances and business plan becomes the focus of financial planning. If a high technology company plans on funding its operations through venture capital, formation of a corporation is generally preferable to other types of entities due to general familiarity with the corporate structure and a long history of investments into corporations by venture capitalists, angel investors and institutional investors.

A Subchapter S Corporation, generally referred to as an S Corporation, is a variation on the corporate entity. An S Corporation provides the same general protections as a corporation and is subject to the same corporate governance rules and regulations as a corporation; however, S Corporations generally provide a tax benefit to the company. An S Corporation is subject to limitations on the number and type of eligible shareholders. An S Corporation is limited to 75 shareholders (subject to specified counting considerations, for example, husband and wife) and, in general, only individuals and not entities are allowed to be shareholders of an S corporation. In addition, shareholders cannot be nonresident aliens. There are a few exceptions to the rule denying entities as shareholders, however, the exceptions generally relate to trusts formed for estate planning purposes controlled by a shareholder. Another corporation is generally not allowed to be a shareholder of an S Corporation which may create an issue if the funding of the company depends on institutional investors or venture capitalists. Most high technology companies obtain financing from venture capital funds, institutional investors or angel investors which are generally formed as entities that are not allowed to be shareholders of an S Corporation. Although an S Corporation is generally favored by high technology companies that will be funded by the founders, a high technology company that plans on obtaining significant funding from external sources will generally not be eligible to become an S Corporation.

A limited liability company is a newer type of entity, as compared to corporations, that has gained wide acceptance and is the preferred choice of entity in certain industries and/or transactions. A limited liability company provides a lot of the same general protections as a corporation, and although an analogy can generally be made to the rules, regulations and case law governing corporations, significant areas of limited liability company rules and regulations have not yet been tested in the courts. Although capital can be raised for a limited liability company, the general structure of a limited liability company may impose an administrative burden if a significant number of investors are projected. Although a limited liability company operating agreement may allow for different classes of membership interests and ultimately may allow for more creativity in structuring the investment transaction, the lack of court and statutory guidance on a number of issues deter many smaller high technology companies from choosing the limited liability company structure.

High technology companies face a number of issues that a traditional company may not face due to concerns with its intellectual property protection and concerns relating to financing of the company. The traditional model for a high technology company seeking funding from venture capitalists or institutional investors is generally to form as a corporation and sell stock to raise capital. Although corporations may have different classes of stock and become complicated, the general nature of corporate governance may be more structured than a limited liability company and provide a better framework to handle a large number of investors. Although an S Corporation may be preferable, particularly from a tax perspective, it may not be a viable option if the company intends to seek investments from venture capitalists or institutional investors formed as entities to fund its research, development and product launch. A limited liability company, although preferable in a number of industries, may impose limitations on a high technology company that become burdensome and outweigh the tax advantages as the choice of entity. Careful consideration to the business plan, future financing needs and general operating structure of a new business venture should be made prior to the formation of a high technology company.

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