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Arrington CrunchPad Suit Paints Him As Naïve

It's tough when you want to be the arbiter of technology. You get attacked hither, thither, and yon and everyone one of your mistakes will be paraded out for all to see. But no matter what they call it, it's OK, except for one thing: an amateur. And the lawsuit that Michael Arrington, owner of TechCrunch and would-be seller of the CrunchPad, comes across as exactly that in his own court filings in his suit against Fusion Garage over alleged misappropriate of business ideas, fraud and deceit, and a few other things. Apparently, over an extended period of time, he missed every red flag and failed to take the steps that any prudent and experienced high tech executive would have caught and undertaken. That leaves you wondering just how much he really understands about how the industry works.

Check the court filings (provided by a service that Arrington uses, so I don't know if there are any other filings not included):

SF-38-303-C2_20091210160410_00000001 - For example, the complaint mentions that TechCrunch called for a $200 machine that would run customized Linux and Firefox code. (My, that almost sounds like what Google wants to do, except running Chrome on top of Linux. But, to be fair, that company's announcement of Chrome OS came in just over a year later than the TechCrunch call.) Here's part of what Arrington said at the time:

We'll organize a small team of people to spec this out. First is the marketing document that just outlines what the machine will do â€" we have a first draft of that already and will post it soon. Then we'll spec out the hardware and get people to help write the customized Linux and Firefox code. Once we've completed the design we'll start to work with the supply chain company to get an idea on the cost of the machine (the goal is $200), and hopefully build a few prototypes. Anyone who contributes significantly to the project would get one of those first prototypes. If everything works well, we'd then open source the design and software and let anyone build one that wants to.
Let anyone build one? Oops. Sounds like officially giving away any IP. Arrington claims that a prototype was ready by August 2008, though doesn't really say what the prototype really entailed. The complaint goes on to mention a number of individuals who were involved with initial work on a design.

By April 2009, Arrington is publicly giving credit to the hardware design to Fusion Garage, though the complaint says that the "graciously attributed" credit wasn't really accurate, and maybe Fusion Garage didn't do that much, after all. By June, Fusion Garage was, according to Arrington, looking to TechCrunch to put money up on its behalf because of its "financial straits." Yup, absolutely I like doing projects with people who don't have money to do projects.

Supposedly there was talk of a merger that went back and forth and eventually settled on TechCrunch's terms. Then, by the summer, Arrington says that Fusion Garage was missing key deadlines. Things only got worse. Eventually, Fusion Garage allegedly registers a domain name,, apparently for the device that it would eventually announce. Arrington seemed to get strung along until early December, when Fusion Garage announced its own device.

Quite a lot of lead-up, I know. And there's plenty more, including the the "see what they claimed but here's what they were actually doing," that you can read for yourself. However, a few things, or their lack, jumped out at me:

  • I don't see any remark about a non-compete or a non-disclosure that was signed. Maybe there was. But why not mention it as evidence that there had been a legal understanding that one party could not go ahead without the other?
  • Similarly, there was no evidence that Arrington asked anyone to sign an agreement acknowledging who owned what, particularly with that statement at the outset that he intended to let anyone make the device who wanted to? Oh, that's a bad bit of written intent to have floating about.
  • Did anyone ever heard of due diligence? As in checking out the reputation of a business partner and its claims before going forward? Did Arrington do that? It's a lot trickier when dealing with a firm overseas.
  • Why did it take Arrington, et. al., so long to see the signs that something was not right in the relationship? And even when it seemed to be apparent, why not take steps far more quickly? When someone needs you to bail them out and then keeps dodging you after you do, you should know you're being taken for a ride.
There's a bit difference between covering high tech and actually doing it. Michael Arrington clearly thought he could walk in both worlds. But aside from the valid questions that arise from him covering areas of technology without adequate disclosures of his own financial interests in the outcome, you have to wonder whether one reason for the normal prohibition of journalists mixing in the businesses they cover is because they're going to make a mess of it.

Image via stock.xchng user linusb4, site standard license.

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