Beware of open and shut cases

Microsoft executives must be getting really sick of the inside of courtrooms. The software giant has had a couple of good breaks with the EU and the US DoJ recently but the same can't be said for its lawsuit against Lindows.

What seemed like an open and shut case of trademark infringement ended with the smaller firm $20m and a whole lot of publicity better off. Microsoft on the other hand has been left looking not just like a bully for instigating the lawsuit -- but an inept one for losing. Not only that, but the company has left a big-fat question mark over the validity of its Windows trademark -- not a great day in court by any means. I'd almost feel sorry for Microsoft if it wasn't so funny.

We'll probably never know who was the real aggressor in this instance: was Micrsoft simply trying to defend its patent from an exploitative smaller player keen to ride on its shirt-tails or was Redmond giant throwing its weight around again? But one thing is certain: there's no such thing as an open and shut case. If you want a brilliant insight into how an apparent David versus Goliath story can turn out to be anything but then look into the legal fist-fight that erupted between Etoy and eToys at the height of the dot-com boom.

Back in 1999, one of the aggressive new breed of online retailers, eToys, took a group of Swiss artists/anarchists to court over the use of the domain name etoy.com -- which has been on the Web for two years, albeit in that small backwater of Europe, before the US toy retailer got going.

Wham, bam -- another case of evil corporate America throwing its weight around, right? On the face of it yes, but drill into the story and a tale of greed, ineptitude, and unfathomable arrogance on the part of both sides emerges. The whole sorry story is brilliantly analysed in a book called "Leaving Reality Behind: Etoy Vs eToys.com & Other Battles to Control Cyberspace" by Adam Wishart and Regula Bochsler. The study really shows how complex a supposedly 'simple' case can be.

At one stage eToys.com was the dot-com success story of its time – blowing competitors out of the water, left right and centre. Revenues were in the millions, staff morale was high, brand awareness was massive – it was just that itty, bitty issue of profits that were missing. Etoys.com eventually went the way of so many other dot-com start-ups, a victim of mismanagement and over-confidence. But for a couple of years, it was a great place to work, with employees at all levels getting genuine satisfaction from lending a hand in the packing room to make sure all the right gifts reached the right children in time for Christmas.

The artist/anarchists Etoy on the other hand were portrayed in the media as heroic freedom fighters but emerge over the course of the book as belligerent and frustrated. Basically a group of savvy tech and art students with a penchant for orange boiler suits and mohicans, Etoy decided they wanted to be famous or infamous and would do whatever it took to achieve their aim. They did create some legitimately interesting art along the way but although they began the battle as a victim, they milked the battle for their own ends and refused numerous generous options to settle.

The kind of extremist energy driving Etoy is quite accurately characterised in this less than legible quote from Wired, reporting one of the artist/anarchists at the height of the conflict: "Now a lot of people turn into terrorists if this goes on. They don't see any chance of our getting our rights. That's when riots start, when people feel powerless and nobody listens to arguments, only money matters."

What Etoy was after was attention, not money, and the more they strung out the case, the more their status grew. To nobody's surprise the group eventually split apart - a victim of the same in-fighting and arrogance that did for its US namesake. Similarly, years of business experience and MBAs failed to protect eToys from falling foul of the same self-delusion that eventually finished Etoy.

The moral of this story is that both organisations were guilty of deluding themselves and their investors: the scale may have been different but the same foggy thinking that permeated the whole tech community at that time enabled the two groups to create businesses built on little more than positive thinking with spectacularly disastrous results.

The Etoy/eToys story shows that our hardwired response to root for the underdog is not always useful or trustworthy. The authors of "Leaving Reality Behind" cleverly question the validity of sympathising with the smaller contender in any fight. Over the course of the book the central struggle moves from penniless artists versus evil capitalist dot-com superpower to belligerent anarchists kicking honest, hard-working folks when they are down.

The reader starts off in the comfortable territory of a large company apparently bullying a smaller outfit. But after numerous examples of the in-fighting and pointless aggression on the part of the allegedly put-upon Etoy artists - you're left wondering who's in the right? Both sides are motivated by personal ambition and luck with altruism playing a very minor role indeed. eToys' board of so-called businesses professionals are shown to be open to the exactly the same self-delusion and arrogance as the amateur artists in Etoy.

The take-away message: assume nothing. What may seem like a Goliath throwing its weight around could actually be a legitimate software company forced to defend itself after being put in an untenable position by a publicity-seeking group of gold-diggers or but equally the opposite can be true. And if you're one of the companies involved -- don't get the lawyers involved unless you really have to. Cliches usually attest to underlying truth and when it comes to court cases, the one about lawyers of often being the only winners seems pretty spot-on