A case study of a successful private entrepreneurship.

Author:Davies, William A.
Position:Canada-United States Law Institute Annual Conference on Comparative Legal Aspects of Entrepreneurship in Canada and the United States
 
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INTRODUCTION

Richard Cunningham

MR. CUNNINGHAM: The title that we have on the program is "A Case Study of Successful Private Entrepreneurship."

This is one of the successful case studies of private entrepreneurship, but I am in a difficult position. I have been asked to introduce the senior executive of a company that destroyed my dream; that totally ruined my great ambition in life. Let me tell you a story that illustrates my ambition.

My law firm, Steptoe & Johnson--I am Dick Cunningham of Steptoe & Johnson, for those of you who didn't know--there was sort of a grand old man in my law firm, Steve Ales. He was Secretary of Defense in the Kennedy Administration, head of the Association of American Railroads, famous litigator in Washington, and all of that.

Ales was, at one point, involved as one of the lead litigators in the battle for the takeover of Metro-Goldwyn-Mayer. Ales was an enthusiastic, manic fisherman, and in the second week of June every year, come what may, nuclear attack, whatever, Ales would go up to Maine to go salmon fishing.

So, in the year when the MGM battle was raging, come the second week of May, Ales went off to Maine. Sure enough, because the great law of nature dictates that this would happen, a crisis breaks out in the MGM takeover case. A younger lawyer--a fellow by the name of Smokey Miller, who Ales entrusted the case to--had run into Ales's office and was shocked: no Ales. Smokey runs across the hall to Ales's secretary and says, "Got to call Steve; crisis in the MGM case. Got to get him back."

She says, "Mr. Miller, it is the second week of June. You know and I know that Mr. Ales has gone salmon fishing in Maine."

Says Miller, "Call him back. Get him on the phone. Crisis in the MGM case. Got to get him back."

"Mr. Miller, you know that Mr. Ales goes to a salmon fishing camp in the north woods of Maine, a hundred miles from the nearest telephone. I can't call the boss."

Miller says, "Call Western Union."

The site of the story shifts: we are now in the north woods of Maine. Salmon were everywhere. Early one morning, Ales and others are out casting a fly for salmon, and out of the underbrush stumbles a Western Union messenger who I picture in one of these sort of Call-for-Phillip-Morris outfits with a cap and the gold brocade, except it is all torn to ribbons as he has gone through the underbrush looking for Ales.

And he says, "Are one of you guys named Steve Ales?"

And Ales says, "I am Ales."

The kid says, "Telegram for you." He hands him the telegram. Ales opens the telegram, and it says, "Imperative you return immediately, or MGM case is lost." Signed, "Smokey Miller." Ales looks at it, reaches into his pocket, takes out a $20 bill, puts it on top of the telegram, hands it back to the messenger and says, "You couldn't find Ales."

It has always been my ambition to get to the point in my life where I would have sufficient prestige and grandiose and all that sort of stuff that I could say in a situation like that, "You couldn't find Cunningham."

But I can't do that any more. As you can imagine from hearing that story, that ambition is no longer achievable, and it is this man's company, Research in Motion, that is to blame. Today everybody is reachable everywhere, all the time, through their Blackberries.

So, what you are going to hear today is not just a story of a very successful private entrepreneurship. You are going to hear how a private entrepreneurship has changed all of our lives. The fellow we have here, Bill Davies, is going to tell you that story, but he is also going to talk about some intellectual property issues that I think are really important in our consideration of the viability--the travails of technology oriented entrepreneurship.

All of you who read the business section--I am not going to take a show of hands--but all of you who read the business section know that for weeks on end during the last year Research in Motion has been in the papers as a life and death struggle on intellectual property.

Bill Davies is the ideal guy to tell you about all this stuff. He is the General Manager and President of Research in Motion in their Barbados operation. This is not his first step in the technology word. He worked at several positions with Motorola, including as Vice-President and Director of Technology Transfer. Later he was the leader of their governed relations team for Latin America.

He is a lawyer. Sorry about that, guys, but this is, after all, the law school of Case Western Reserve and the Canada United States Law Institute.

His current assignment is to champion Research in Motion's efforts to reform intellectual property law. We were just discussing this. He told me that his major focus is those regulation- addicted Europeans, and what they do in this sort of thing, although God knows there are enough problems with that in the United States and Canada, too.

So let me ask Bill Davies to come on and talk to you about Research in Motion, about entrepreneurship, about intellectual property, and the travails that one goes through and what ought to be done with intellectual property to enhance entrepreneurship. And I think you are going to really enjoy this.

SPEAKER

William A. Davies *

MR. DAVIES: Okay. Well, after that sort of stirring introduction, I find it hard because the first thing that happened to me was Deborah said, "Well, give him about 15 minutes." So I got to get all of that in 15 minutes. And then she said--and this was the one that really hurt--"No Power Points."

I have been in the high-tech industry for 30-plus years, and I am not supposed to give a Power Point presentation? Well, okay. So I didn't do it. I was very good, and I don't have any Power Points. However, I did want to start off with a historical quote. A very intelligent, brilliant leader, Winston Churchill, once said, "The only statistics that you can believe are the ones that you fiddle yourself."

And I want to tell you some statistics that I gathered today. The first one is that I have met four Case Western students. So, I can tell you that 100 percent of them are beautiful women. Okay?

The second one is that 50 percent of them did not know where the law school was.

Now, the other two, one is a student here, and the other one was an alumnae. So there you have the statistics for today.

Well, I have been thinking that I was going to give you a long and rather boring lecture and talk about E-Bay, and we were going to talk about the different opinions and how some of them didn't make sense, and how did they get so many different ones to all come out unanimous?

But, that would be more boring than you could possibly take on Friday evening after cocktails. And so we are not going to do that. We will just talk a little bit about the way the world seems to be working on entrepreneurship.

[Phone rings.] And people call. I have no idea why they called that.

MR. CUNNINGHAM: You are proving the truth of my story. Someone is looking for Dick Cunningham.

MR. DAVIES: That's right. Absolutely. Didn't say that, but it probably was.

As a matter of fact, this is, by the way, not the absolutely newest version, but this is the first sort of consumer version of the Blackberry, and it actually has a camera in it. It actually has an MP3 player in it. I don't know how to use the MP3 player, and I can barely take a picture with it. But it does have those things.

I am very amazed at how they can manage to get all the stuff into these little tiny packages. I will also tell you one other thing. Now they have keyboards that are this thin and just a little bit bigger but with a full QWERTY keyboard. That's what I want. They haven't given me one of those yet.

So let's talk about entrepreneurship and the law, and we will get some anecdotes about how RIM is doing. As you know, RIM fell prey to somebody who could be described as a troll. (1) A patent troll is normally a patent-holder who does not develop technology on their own. (2) They go out and buy technology, or acquire it in some way, and then go around and sue people. Now, that is a fairly, you would think, innocuous sort of thing to do. I mean, that's what we do for a living, isn't it? We sue people.

However, the problem with a patent suit in the United States, at least, is that until the E-Bay case, injunctions were automatic. (3) There was no consideration. The normal equitable considerations for whether an injunction should flow or not were left out. So you had a Draconian remedy.

And so it became very easy to be a patent troll because you can easily put a company like RIM out of business. Before we really go further into that, though, I want to talk about why it is that these patent trolls exist. This wasn't a problem thirty years ago. (4)

There are two separate reasons why it wasn't a problem thirty years ago. One of them is the fact that North America, Europe, and Japan even, have started to de-industrialize. (5) We don't make things any more. China and the little tigers, India, have become our factories.

As a matter of fact, I made an interesting observation the other day. I saw that there is a real issue in Los Angeles about what to do with containers. Containers come over on ships and are big and 40 feet long and 20 feet wide. Well, they are heavy, and you don't send them back.

It is too expensive to send them back, so they end up piling up in Los Angeles. They have acres and acres of them in Los Angeles. They don't know what to do with them because we don't sell anything to China. (6) China sells to us. So it is kind of interesting.

There are some things that we do sell to China. And obviously, it is very high-tech things, which are, at the moment at least, still such small markets that only several firms can have the volume. For example, commercial aircraft, where you have four firms total that make up the entire market for commercial aircraft--two that dominate it: Boeing and Airbus--and a couple of others like Embraer and Bombardier. (7)

As a matter of fact,...

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