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A New York state judge has confirmed lawyer firm Quinn Emanuel’s $13 million payout for representing ConnectU in intellectual property litigation against Facebook, distorting its former client’s attempts to stay the award while it challenges the $65 million settlement it struck with Facebook back in 2008.

Ok, that may be a bit of a confusing lede, so let’s tackle this one from A to Z. Trust me, it’s quite worth the read.

Assuming you’ve read up on Facebook‘s origins, or if you’ve seen the movie The Social Network, you know that Mark Zuckerberg and co allegedly stole the idea for the site from fellow Harvard students Tyler and Cameron Winklevoss and classmate Divya Narendra. The latter three men co-founded HarvardConnection, which was later renamed ConnectU, and took Zuckerberg to court, alleging that he had copied their idea and illegally used source code intended for the website he was hired to create.

The lawsuit against Facebook was filed in 2004, and a settlement agreement for both cases was reached in February, 2008, valued at $65 million. In May 2010, it was reported that ConnectU was accusing Facebook of securities fraud on the value of the stock that was part of the settlement, alleging the stock was worth $11 million instead of $45 million that the social networking giant had proclaimed.

The Winklevoss twins and Darendra then moved to get the settlement undone.

One of ConnectU’s law firms, Quinn Emanuel, didn’t want to wait for their part of the settlement deal, 20 percent of the settlement fee, or $13 million, as part of a contingency agreement. ConnectU subsequently fired Quinn Emanuel and sued the law firm for malpractice.

On August 25, 2010, an arbitration panel ruled that Quinn Emanuel “earned its full contingency fee” and found that the firm had committed no malpractice.

In a decision filed Monday, Judge Richard Lowe of the Supreme Court of the State of New York concluded that Quinn Emanuel has waited long enough for its contingency fee, although he refused to bump the interest on the award from 6 to 9 percent as requested by the firm.

ConnectU had urged Judge Lowe to stay confirmation of the arbitration award until the U.S. Court of Appeals for the Ninth Circuit rules on the validity of the Facebook settlement, claiming a successful appeal would obliterate Quinn Emanuel’s claim to its portion.

“The respondents have waited over two years for its fee, and have had to oppose several attempts to delay the payment,” Judge Lowe said. “To continue to stall payment of the award would be to frustrate the very purpose of and reason for the arbitration.”

TL;DR: ConnectU retains law firm, sues Facebook and reaches a settlement with them for a reported $65 million. ConnectU later appeals for a higher settlement fee and delays payment to said law firm, Quinn Emanuel. Law firm doesn’t want to wait for its money and gets sued by ConnectU. A judge has now awarded Quinn Emmanuel its $13 million contingency fee.

(Source: Law360)

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On Tuesday, Akamai (AKAM) and MIT filed a patent infringement lawsuit against Cotendo in reference to patents 7,693,959, 6,820,133 and 7,293,093. I find this an interesting turn of events as in the past, Akamai tended not to sue any company until– in my opinion– they felt that company was starting to become competitive. Speedera was out in the market for a few years before Akamai sued them and Limelight (LLNW) was operating for a couple years before Akamai went after them as well.

Cotendo has been around for just under two years, but with their recent deal with AT&T (T) and some of Cotendo’s recent wins, Cotendo has the potential to become a real competitor to Akamai, directly or indirectly via someone like AT&T, over time. If Cotendo was just offering CDN services I don’t think Akamai would have really cared, but the fact that Cotendo focuses on DSA and app acceleration, services where there is a lot of high-margin business at stake, I’m not surprised to see the suit.

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If the reports are true then parents can sleep easy in their beds: with the removal of one putrid, misspelled ebook, the Internet is now completely free of pedophiles.

Except, of course, it isn’t.

I was going to leave this story alone. Partly I wanted to avoid the frothing ire of the “YOU’RE JUST DRAWING MORE PUBLICITY TO SOMETHING BAD” crowd (yes, drawing attention to bad things is what we’re supposed to do). Partly, too, I didn’t want to write another post that puts me at odds with my esteemed TechCrunch collegues. Mainly, though, my reason for wanting to give the story a wide berth is because – for all the sound and fury over this sick, twisted little tome being on sale – I still haven’t heard anyone  adequately explain what all the fuss is about.

Please don’t misunderstand me here. I’m not asking what the fuss is about pedophila – that’s an easy one, I hope – but rather I’m unclear what is achieved by forcing Amazon to ban a single disgusting ebook from sale. Or, indeed, what precise harm we think will result if they refuse?

Are we, as intelligent adults, really suggesting that other less intelligent adults who have until now never so much as considered the idea of molesting a child and going to download a copy of ‘the Pedophile’s Guide to Love and Pleasure: a Child-lover’s Code of Conduct’ and think to themselves “by golly, this pedophile stuff sounds like fun – I think I’ll give it a try?”. Surely not. If we’re concerned that a book glamourising man-child love is going to bring down the downfall of society then we’d better demand the removal of Lolita too. At least Nabokov could spell.

Maybe, then, those supporting the ban are concerned that the book might act as a dummies’ guide for the enthusiastic non-practicing pedophile: men who are already grotesque sexual devients but haven’t yet figured out the practicalities of turning thought into action. If that’s the concern, then I fear that particular ship has sailed. I admit I haven’t looked – no-one needs that on their Google search history – but I’m pretty sure there’s enough of that kind of information available on the web that doesn’t require a potential child rapist to plunk down his credit card information and thus leave a paper trail back to his lair.

Or perhaps the concern is simply that the author is profiting from his vile fantasies. But then again, if that is the worry, maybe the YOU’RE DRAWING ATTENTION TO IT crowd has a point.

Before the book hit the headlines today, its author claims it had sold precisely one copy. After we, the media, had done our work, it had shifted enough units to make the top 100 list. That’s annoying, but does this mean the nation is about to be overrun by newbie pederasts? It seems unlikely: judging by the reviews of the book on Amazon, most purchasers ordered it only to determine the precise level of contempt they have for its author. By the end of the week it will have been forgotten about again and author Philip R Greaves II will return to his poverty; the only difference being that a few million people will know his name and the authorities will know to keep a very close eye on him, particularly when it comes to his proximity to schools.

And that’s exactly how things are supposed to work in a free society. Since the advent of the printing press –  hell, since the advent of speech – morons and criminals have used words to espouse their despicable views. Meanwhile, right thinking people have had the choice to either ignore those views or listen long enough to dismiss or demolish them in public forums. We make laws to protect against specific incitement and certain types of hate speech, but otherwise our ability to debate broader ideas – no matter how abhorrent we believe them to be – is what separates us from the apes.

Despite what some (including Amazon) have suggested, the company’s decision to pull Greaves’ “book” from their virtual shelves (if that’s what they’ve done) was neither censorship nor a curb on free speech, but rather a perfectly rational economic decision by a public company in response to a threatened boycott. And perhaps that alone is worth celebrating: however indirectly, Amazon was profiting from this vile little book (much as they do when they sell copies of Mein Kampf) – and now, it seems, they’re not.

But what the ban most certainly is not is an anti-pedophile victory of any meaningful kind, any more than YouTube’s decision (under pressure, in part, from the British government) to remove hate speech by Anwar al Awlaki was a particularly meaningful triumph in the war against terror. In fact, if either ban has achieved anything (and it probably hasn’t) it’s simply to drive another vile little man further underground, to join the thousands of other vile little men (and the occasional vile little woman) who ooze far below the surface of the Internet, in private chat rooms and IRC channels and password protected forums. Philip R Greaves’ fetid little fantasies haven’t been destroyed, but rather will now be added to the countless other sick fictions and how-tos – not to mention the far more troubling, and illegal, images and videos of actual criminal acts – that lie in the darkest corners of the web, away from the glare of public derision.

It’s that other material – the truly vile and illegal stuff, hidden from public view – that represents the true threat to the fabric of decent society. And it’s that material that we need to figure out how to banish from the Internet before we start congratulating ourselves on a job well done. Anything else is just a self-congratulatory meme. Misdirection accomplished.

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The guidelines state that offensive material (which they define as “about what you would expect”) will be rejected or removed, yet they stated today that “it is censorship not to sell certain books simply because we or others believe their message is objectionable.” They can’t have it both ways, and it’s dangerous for such a sensitive question to remain unanswered when the company shapes digital publishing to so significant an extent. So what’s it going to be?

Both sides have a legitimate defense. Amazon is not the government, they are a corporation, and it is their prerogative whether or not to publish something. They are not in a position to censor, they are in a position to choose whether or not to provide a service. That’s a different thing altogether. And it’s actually, if you look at their content guidelines, their present policy. That’s why the decision not to remove this book is so surprising.

On the other hand, while it isn’t easy to defend pedophilia, it isn’t really necessary. Free speech is protected in this country, with very few exceptions, and even those are difficult to prove. Usually they have to do with a clear and present danger, something which this book, awful as it is, does not present. If it is Amazon’s position that they will make available anything that is not demonstrably illegal, then they are only assailable on grounds of what constitutes good taste.

That’s a hell of a position to take, but the fact is someone is going to take it whether Amazon does or not. While the comparison is in some ways a poor one, it is a natural one, so I may as well say that the “curated” App Store versus the “open” Android Market constitutes a similar fundamental antagonism. That kind of divide is only going to grow, and because both sides get to claim the high ground, there’s good reason for both to exist. The same will happen with the book market, and (to some extent) the rest of the internet. This is just an advance skirmish brought about by a particularly repulsive book on a particularly influential platform. What Amazon does with a hot potato like this will draw a line in the sand. And like most lines in the sand, people tend to get on one side or the other of them.

Let’s say Amazon recants and pulls the book. While many will congratulate them for a showing of prudence and good taste, the other booksellers, which are hovering above this debacle like buzzards, will settle in and feast. “Can you trust Amazon?” “Every book in our store is hand-approved.” The taglines write themselves.

They also leave themselves vulnerable to criticism from some ambitious e-book market, who says “So first they pull 1984 from your Kindle. Next they make some rules, then let in a book against those rules. Then they say those rules don’t apply. Then they apply them, but only after public outcry. Is that integrity? We may not agree with what you write, but we will defend to bankruptcy your right to publish it.” Or something to that effect. It may not be pretty, but the fact is it is a stand some people are very passionate about taking. Even if their store ended up being nothing but rape manuals and racist screeds, all they need to do is point to the first amendment and say that theirs is a legal and needful operation. And it’s not a long walk from there to Wikileaks.

If they choose not to pull the book, they must clarify their position in all this, and that is not going to be easy after this opening act. Is Amazon bold enough to be the bookseller I describe above? I somehow doubt that’s a position that will please shareholders.

Wherever Amazon chooses to stand after this incident, someone will define themselves by its shadow. The only appropriate action they could have taken would have been to immediately pull the book on being notified of its existence, and take the position that it slipped through the cracks and they’ll be hiring more people to oversee content control. These things do happen, though I’d be suspicious of any content control process with cracks big enough to let such a blatant red flag such as “The Pedophile’s Guide to Love and Pleasure” through them.

We expect to hear from Amazon soon on whether they truly have subscribed to either free speech and good taste, two principles which in this case appear to be incompossible. Who knows but this might have been a watershed moment for the e-book market? I doubt this one will just get swept under the rug.

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Developed by Imeem execs Dalton Caldwell and Bryan Berg, Picplz aims to be a dead simple way for users to share the photos they take on the phone on the web. Pictures taken with picplz are synced to your profile on picplz.com and tagged with your location and place. And you can post directly from the app to Facebook, Twitter, and can also check-in to Foursquare when you take a picture. The app also allows you to follow other users’ photo streams, similar to the Twitter model.

The startup initially launched an Android app in May and then rolled out an iPhone version in August. Between the two apps, Picplz has seen over 100,000 downloads.

PicPlz most recently rolled out updated apps with the ability to add special affects to pictures, a new UI and improved photo upload speeds.

Caldwell notes that the funding will be used to expand the scope of what the startup is doing in terms of monetization and new products. It’s unclear what the details are at the moment, but we’ll keep you updated on any new developments.

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As this disgusting saga plays out, something really interesting is going on behind the scenes. Guess who Amazon just acquired last week for $545 million?  Diapers.com. Guess who Diapers.com sells products to? Yep – Moms and Dads with little kids.

Take a look at this FaceBook thread with an official response from Diapers.com. Moms are in outrage. And Diapers.com wants no connection.

“Hi Everyone. While our parent company has been purchased by Amazon.com we have NO control over what is sold on their site. If there are any complaints or concerns please send them to Amazon.com”

It’s evident that the timing on this acquisition could hurt both companies. But the linkage to selling such an awful book could be even worse for Amazon for a more subtle reason.

It’s extremely likely that there is a high overlap in the customer base between Diapers.com and Amazon, since both are dominant e-tailers. Diapers.com customers are not only less likely to buy diapers from either Amazon or Diapers.com (to boycott the pending acquisition), but they are also less likely to buy ANYTHING from Amazon. And there’s no doubt they shop online at both places.

It’s also ironic timing, because I can guarantee that if Diapers.com were still independent, they’d be ALL OVER this story to pound Amazon in to a pulp by saying something damning publicly. Remember, prior to last week’s acquisition, the two companies were in all-out pricing war.

Here’s the financial background on why this could be material for Amazon. Companies – ranging from Starbucks to Amazon – relentlessly track “customer lifetime value” or CLV, which depends on the cost to acquire a customer, and the retention rate (or churn) of that customer over her lifetime. The biggest determinant in maximizing CLV is – by far – retention. When you lose her, CLV falls off a cliff.

This kind of stuff is a big deal in the brand sphere as well. In 2010 Interbrand declared Amazon the 36th most respected brand, with only Apple and Google notching a larger year-on-year increase than Amazon of the top 50.

When the news of this pedophile saga goes mainstream it could be the type of thing that permanently tinges Amazon’s image. Right now, a search for “pedophile amazon” on Google news is returning more and more hits to mainstream news sites like LA Times.  And pretty soon people will discover some of the other totally insane books that Amazon sells.

So, addition to it being disgusting that Amazon is defending its actions, as Mike writes, it may be a pretty bad financial decision too. Personally, I am considering cancelling my Amazon Prime account and shopping elsewhere. What do all the Moms out there think?

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Q3 2010 Earnings Call

November 10, 2010 5:00 PM ET

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We’ve just been alerted about an invite-only press event taking place next Monday, November 15 at 9:30 AM in San Francisco. At the bottom of the invite, it notes that “This special event is in advance of Mark Zuckerberg’s conversation on 11/16 at Web 2.0 Summit.”

So what will Facebook be talking about? Who knows. The invite has chat bubbles on it, but as we’ve learned in the past, these often have nothing to do with the event.

After Facebook’s last event, in which they unveiled some big updates to their Places product including Deals, we asked Zuckerberg if the company had any other big things to launch this year. He indicated that more was on the way, but at least one more big thing was coming soon.

Is this the big thing or a smaller thing? Tune in Monday to find out.

Update: Actually, looking at their icon again, you’ll notice it is their Inbox icon (at least on the iPhone) and not their chat icon. Could this be the unveiling of the new Facebook mail product — Project Titan? Let the speculation begin!

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We’ve just been alerted about an invite-only press event taking place next Monday, November 15 at 9:30 AM in San Francisco. At the bottom of the invite, it notes that “This special event is in advance of Mark Zuckerberg’s conversation on 11/16 at Web 2.0 Summit.”

So what will Facebook be talking about? Who knows. The invite has chat bubbles on it, but as we’ve learned in the past, these often have nothing to do with the event.

After Facebook’s last event, in which they unveiled some big updates to their Places product including Deals, we asked Zuckerberg if the company had anymore big things to launch this year. He indicated that more was on the way, but at least one more big thing was coming soon.

Is this the big thing or a smaller thing? Tune in Monday to find out.

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