Tesla Gave Up Its Patents, But People Are Freaked Out That Faraday Future Put Its Own Into A Separate Company
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Over the last couple of years, there's been a tremendous amount of attention placed on upstart electric car maker, Faraday Future. The company, that originally had very secretive backers (later revealed to extraordinarily wealthy Chinese investors), sprung out of nowhere a year ago and was quickly touted as an expected competitor to Tesla. What a difference a year makes. In the last few weeks, there have been a bunch of reports about how the company is flailing. It kicked off with a pretty damning Buzzfeed story about serious problems at the company, including unpaid bills and a bizarre situation involving having workers focus on designing another car for a totally different company owned by their major investor:In December 2015, employees at Faraday's headquarters in Gardena, California, received a mandate from Jia: Design a prototype LeEco car that could be shown off publicly at a spring event in Beijing. According to several former employees, some of Faraday's designers were pulled off of their core projects to work on the vehicle. And in April 2016, LeEco unveiled a sleek, electric sedan called LeSee. On stage, Jia, who has been outspoken about his plans to usurp Tesla, touted LeSee as a LeEco creation as the white sedan glided across the stage to park in a mock garage. The audience couldn't see that the seemingly self-driving car was in fact being piloted from backstage via remote control.
Back in California, some Faraday employees were unsettled, sources told BuzzFeed News. Though they'd designed the car for LeEco per Jia's request, they were not given credit for doing so, and the company didn't receive payment in exchange. And the development of the LeSee had distracted them from work on Faraday's own vehicles. [The LeSee project] certainly added pressure onto the design team. It crunched timelines, a former employee with knowledge of the project told BuzzFeed News. It certainly made getting deadlines met that much more difficult. Faraday declined to comment on the project and the specifics of its relationship with LeEco. LeEco declined to comment on the project as well. In a statement to BuzzFeed News, LeEco said that the two companies are strategic partners by bringing together global resources in several areas. The Verge then did its own big report on problems at Faraday Future, which included the somewhat bizarre claim that Faraday Future's "intellectual property" was owned by... an entirely different company:In addition, these sources revealed to The Verge that the company's intellectual property is not owned by FF, but by a separate entity named FF Cayman Global, a revelation which raises questions about Faraday Future's relationship with its investors and suppliers, and could further endanger the company's success. Later in the article it notes:According to former employees, FF is in effect not one, but two companies, with a separate entity based out of the Cayman Islands just for FF's intellectual property. If you're an investor, you're fucked, one ex-executive said. The company doesn't own the IP. And that resulted in other publications, like Business Insider putting out an entire article freaking out about the idea that "Faraday Future doesn't own its intellectual property," as if that was the worst thing in the world. It got another quote from another anonymous ex-employee saying more or less the same thing:"Some of the reasons some of us left was because we were afraid that all of the work that's being done in the US, there is no proper corporate structure or legal entity structure," the employee told Business Insider. "The feeling we had was that the IP [intellectual property] was not protected and if and when Faraday goes under, these guys would just pick up all the IP and all these other people in the US would be out of a job." That's all interesting... but what's amazing is that in all of these discussions about how Faraday Future "doesn't own its intellectual property" absolutely no one seems to point out the fact that the company that everyone compares it to, Tesla, famously dumped all its patents into the public domain and told anyone to go ahead and use them. That seems like a relevant point to make in articles about this upstart competitor and its "intellectual property." Of course, it's possible that the articles could mean something else when it says "intellectual property" -- such as trademarks -- but it seems unlikely that the trademarks for a flailing company that is unlikely to ever get anything on the market are that valuable.
The whole story, and the ignoring of Tesla's stance on patents... is just strange. It is true that sometimes failing companies hang onto their patents as a sort of last ditch effort to extract some return for their investors in a patent fire sale. But if you've reached that point, things have already gone way too far south to really matter. Tesla has shown that it can build a pretty damn successful company without relying on "intellectual property." It seems that people should stop freaking out that Faraday Future may have dumped its patents into some offshore company, and focus on the company's real problems -- like the fact that its execs are racing out the door as fast as possible.
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Rightscorp Rings In The New Year By Vowing To Find New Ways To Lose Money In 2017
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Rightscorp is doing some aggressive whistling in the dark. The company that thought it could tackle piracy with threatening letters, threatening robocalls, and suing ISPs for contributory infringement has been bleeding money since its inception.By the middle of 2015, Rightscorp's letter-writing campaign to torrenters had led to nothing resembling a viable business model.According to 10-K documents filed with the SEC earlier this month, the total loss from Rightscorp operations for 2014 was $3,398,873, with revenues of just $930,729 for the year. "As of December 31, 2014, our accumulated deficit was approximately $7,093,377," states the filing, adding that the company lacks the revenue to allow it to "continue as a going concern." Rightscorp stock price, meanwhile, similarly isn't much to write home about. Not so viable for a company that on a recent earnings call declared itself "one of the only viable solutions to the multi-billion dollar problem of peer-to-peer piracy." One year later, Rightscorp itself was finally questioning its own viability.The company, which monitors and targets repeated copyright infringers with extralegal payment notices, reported an operating loss of $784,180 during the three months ended March 31, a slight improvement from the $930,000 loss a year earlier. Rightscorp only generated revenues of $68,283, a 78 percent drop from 2015 Q1’s $307,904, and its services accrued only $49,142 due to copyright holders -- a third of the $153,952 gathered during the first three months of 2015. There's another 10-K from the company due in March. Chances are there will be nothing in it to reassure whatever investors the company has left. Its stock price is lower than it's ever been… which isn't really saying much as it's spent the last couple years south of the 25-cent mark.With more bad news on the near horizon, perhaps that's why it appears to be acting as its own cheerleader ahead of its eventual mandated disclosures. Its December 26 press release contains some questionable assertions, not the least of which is that it's the "content creator's champion."In the notice of infringement, Rightscorp offers a choice between paying a small settlement fee of $30 facing a possible lawsuit for damages of around $150,000 USD under the Digital Millennium Copyright Act (DMCA), the current law. It's a false choice. Rightscorp and the artists signed to it aren't going to sue individual infringers for $150,000 in statutory damages. (Instead, Rightscorp has intervened in questionable lawsuits against ISPs for contributory infringement.) The RIAA found out long ago that dragging people IP addresses to court generated more antagonism than revenue. There are a few copyright trolls out there milking porn/terrible films with speculative invoices filed in federal court against fistfuls of Does, but none of them have shown this reliably generates revenue, much less deters piracy.So far, Rightscorp is only chasing down music pirates. That plan of attack has worked so poorly the company can barely keep its doors open. Naturally, it's decided it isn't wasting its limited funds fast enough. (All grammatical/spelling errors in the original.)A small growing company with modest revenue, Rightscorp has by no means conquered the problem of Internet piracy. But with proven technology, a unique way monetize digital loss prevention, and an astute management team at the helm, investors should take a serious look at Rigthscorp. In 2017, the Company is pursuing an aggressive growth strategy in focused on expanding its reach in the film and television arenas. "Modest revenue." That's an understatement.Rightcorp's statement is accurate when it says it hasn't conquered internet piracy. The next sentence, however, is filled with assertions so blatantly wrong, the only way they could possibly be made with a straight face is via this exact form of communication: a self-congratulatory press release.The only thing "proven" about its "technology" is that it's able to uncover IP addresses. This is where its form of speculative invoicing originates, with letters going to ISPs, which are then asked to forward them to the subscribers at the listed IP addresses. Rightscorp doesn't know who the alleged infringers are, so there's not a lot technical wizardry going on here.And yes, Rightscorp has found a "unique way [to] monetize" its anti-piracy effort. It all depends on how you choose to define "unique." And "monetizaton." "Hardly at all" seems to be a fairly accurate summation of its "unique monetization." "Doesn't make much money at all, actually" is another tagline that could be applied to it.As for the "astute management" at the helm? I don't know. Rightscorp has already seen what isn't working and wants to do more of it for more forms of content. That's the definition of "insanity," not astuteness.I don't think Rightscorp has much left in the tank. Its decision to build its business model on something that has failed for many others was never a good idea, even if it routed its demand letters through ISPs, rather than federal courtrooms. Once you've suckered in the easily-intimidated and the poorly-informed, you're faced with the considerably more-uphill battle of talking file sharers out of $30 per alleged infringement using nothing more than boilerplate and the ethereal threat of statutory damages. It hasn't worked so far for Rightscorp. Adding movies and TV shows to the mix isn't going to fix what's fundamentally wrong with its strategy. It's only going to give Rightscorp new ways to fail.
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