back to article Four charged with tricking Qualcomm into buying $150m startup

The US Department of Justice has charged four people with conspiring to fraudulently sell a startup for $150 million to a San Diego based multinational tech company that The Reg has identified as Qualcomm. The DoJ claims this was despite the fledgling company's supposedly proprietary tech having been developed by Qualcomm …

  1. Potemkine! Silver badge

    I guess it's a cultural thing

    I'm always disturbed to see names published when no conviction occurred yet. Presumption of innocence should prevail, right? With their names published on the web from where nothing really disappear, their reputation is now tarnished whatever the result of the incoming trial.

    1. DS999 Silver badge

      Re: I guess it's a cultural thing

      It is kind of a damned if you do, damned if you don't thing. Yes, the problems from publishing the names are obvious as you state.

      But consider if the names were withheld, and charges are later dropped, or they are found innocent in a closed court proceeding (it would have to be closed to prevent their names from getting out) How do you know justice has been done, rather than been perverted by who the defendants were or the connections they had?

      Already the US has issues with equal justice under the law, as rich people are able to afford a much better defense than poor people who have to accept a state's attorney appointed for them. If you hide the identities, it is virtually certain that gap would become far worse.

      If you're a rich person indicted for a crime today, maybe you can make it go away if you have the right connections and the means to make the right donations or promise a cushy job to the right people. But when the fact you were indicted is publicly known, the status of that indictment can be tracked and if the charges are dropped it can be looked into - and if there are campaign contributions made around that time or if the person who made the call to drop the charges later gets a $1 million salary working for you it looks mighty suspicious. If that all happens in secret, none of that looks suspicious, so the odds of any rich well connected person ever going to jail falls to near zero.

      Edit: another reason pointed out below - in a conspiracy you may not get everyone. Making the indictments public causes those involved who haven't been caught yet to shit bricks they're going to be named. Maybe they choose to surrender voluntarily, admit their role and testify against the rest to reduce their sentence before it is too late!

      1. Potemkine! Silver badge

        Re: I guess it's a cultural thing

        But consider if the names were withheld, and charges are later dropped, or they are found innocent in a closed court proceeding (it would have to be closed to prevent their names from getting out) How do you know justice has been done, rather than been perverted by who the defendants were or the connections they had?

        If they are found innocent, then justice has been done, it's the trial that matters.

        I don't see pilloried people before the trial as a guarantee that justice won't "perverted by who the defendants were or the connections they had". The trial is public of course, but media should not necessarily be allowed to write the names.

        Please answer frankly: after reading the article, do you believe the people involved may be innocent, or do you consider they are guilty?

        If that all happens in secret, none of that looks suspicious, so the odds of any rich well connected person ever going to jail falls to near zero.

        If you believe rich people get the same justice or the same sentences than the poor ones, I've got an Eiffel tower to sell you ^^

    2. The Man Who Fell To Earth Silver badge
      FAIL

      Re: I guess it's a cultural thing

      In the United States, all trials are public. So your name is public as soon as you are indicted.

      Amendment VI of the US Constitution

      In all criminal prosecutions, the accused shall enjoy the right to a speedy and public trial, by an impartial jury of the state and district wherein the crime shall have been committed, which district shall have been previously ascertained by law, and to be informed of the nature and cause of the accusation; to be confronted with the witnesses against him; to have compulsory process for obtaining witnesses in his favor, and to have the assistance of counsel for his defense.

      1. An_Old_Dog Silver badge

        Constitutional Rights

        Points here being, (1) no excessive pre-trial languishing-in-jail at the displeasure of a possibly-corrupt government, and (2) no secret star chambers dispensing injustice, hidden from the light of day.

        ... except for extraordinary renditions to that U.S. base at Guantanamo.

      2. big_D Silver badge

        Re: I guess it's a cultural thing

        Trials, here in Germany, are also open, but the press cannot report the surnames of the defendants or witnesses. If you go to the court & pull the records, you will find the full names, but you cannot report them, before the verdict is in. Likewise, images of the defendants and witnesses have to have the faces blurred out.

        1. The Man Who Fell To Earth Silver badge
          Boffin

          Re: I guess it's a cultural thing

          Germany does not have the US's 1st Amendment.

          Amendment I

          Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the government for a redress of grievances.

          In other words, a Law like in Germany would be a violation of the US Constitution. The US 1st Amendment means the government cannot prevent publication of anything. (Private parties can if publishing violates a contract such as a non-Disclosure Agreement.) Even classified documents that end up in a publisher's hands can be published in the US, as was done with the Pentagon Papers in 1971. (The people who gave the classified documents to the publishers can be prosecuted for doing that. Participants in a trial who violate a judge's gag order can be held in contempt if they talk to the press, but the press can't be prevented from publishing what they learned.)

          https://en.wikipedia.org/wiki/Pentagon_Papers

    3. big_D Silver badge

      Re: I guess it's a cultural thing

      Yes, in Germany, at most, it would be Alan S. and Sanjiv A. for example and photos would have the faces blurred out, until the trial is finished and a guilty verdict has been handed down.

      Even when there is a manhunt on, often the face in the news is blurred out, or it is shown for the days when the hunt is on, but as soon as the person is apprehended, the face is blurred out again in news reports. The same for victims, real names and faces can't generally be shown.

      Really frustrating, when they have a 2 minute report with just a blurred faced on the screen, why show the images at all?

  2. Anonymous Coward
    Anonymous Coward

    "...supposedly proprietary tech having been developed by Qualcomm staff,"

    Doesn't mean anything. Does Adobe pay Microsoft for using their proprietary io drivers? How about Nvidia?

  3. aerogems

    Where were the lawyers?

    Not condoning fraud in any way, but where were Qualcomm's lawyers in all this? Shouldn't the basic due diligence on any M&A type agreement turn up this sort of thing? They take it to the CEO and/or Board when they think something is wrong, the VP is escorted out by some friendly security types, and they are given some time to reflect upon their actions while waiting for the inevitable legal shitstorm to come raining down from their former employer. It should have never gotten to the point where the company actually paid for something unless someone was asleep at the switch.

    1. Notas Badoff

      Re: Where were the lawyers?

      Proprietary this, patent that, all high tech stuff to be sure.

      Yet the resemblance for me is to the art world. People ooo and ahh about some new artist and their 'vision'. Suddenly large amounts of money flow to the recent unknown (and gallery owners).

      Later, sometimes much later, some slob pipes up with questions: doesn't this piece look derivative from X Van Y's charcoal sketches of 16xx? And that piece looks copied from something by a little-known photographer. And then things blow up.

      When 'experts' tell you the newly flung is bling, how are the lawyers supposed to object? Until the subterfuge is revealed, it's all about reputation (and insider placement).

    2. BobC

      Re: Where were the lawyers?

      As an engineer I've been on both sides of M&A due diligence efforts. Some of these have had disclosure limitations (generally regarding trade secrets) that complicated the effort, as well as other complex IP that required lots of effort to explain to lawyers and accountants to enable them to help assign an objective valuation.

      The hardest part was "capturing" the human assets. Much of M&A value isn't just in existing tech, but in creating more in the future. This requires establishing the bona fides of the existing IP and how it came to be. The most direct way to trace who did what comes from the patent process, and the employee notes documenting the path to the patent.

      This is often the easiest way to detect IP fraud: See who is named as a creator for parts of some specific tech, then interview them about not just the tech, but their process and timeline for creating it.

      1. aerogems

        Re: Where were the lawyers?

        Right, but as far as ownership of the company including someone who's basically on both sides of the table, you'd think that would definitely have come up and raised a few red flags. Then a few other former employees working on something similar to what they were working on before leaving the company. May be legit, may be an ASML v Xtal type thing where the former employees walked off with a whole mess of proprietary documents.

  4. Anonymous Coward
    Anonymous Coward

    @aerogems

    I totally agree with you which, to my cynical mind, means they haven't got everyone who was involved. I reckon at least one other person is shitting themselves incase one of the other 4 grasses on them.

    1. DS999 Silver badge

      Or he's hiring an attorney right now because he wants to surrender himself and testify against the people who were indicted, as part of a deal to reduce his sentence. The first squealer always gets the best deal so he has to act fast!

    2. Anonymous Coward
      Anonymous Coward

      Abreezio's patents

      Taneja isn't the only name listed as an inventor on Abreezio's patents. I wonder if the others will be summoned as witnesses in the case.

      And I could only find 6 patents listed under Abreezio's name at the USPTO. For $190M purchase price, that seems low.

  5. Anonymous Coward
    Anonymous Coward

    Abusive contracts

    Having worked for the Q, this is all about their abusive employment contract. The defendants likely did nothing wrong at all.

    First, there’s no allegation that Arabi invented anything on company time, or using company resources. There’s therefore absolutely no reason at all that Q should logically lay claim to any invention! However, Q employment contract assert ownerships of any IP that its employees own. To show how crazy this is, they assert ownership of copyright if you write a children’s book over the weekend. They also think that if the employee invented something ten years before they even joined the company, and the patent comes up for renewal while you are working there, you somehow have to assign ownership to them, or face termination. It’s all totally illegal under U.K. law, which was demonstrated in both the above cases, that Q *actually decided to fight in court and lost*.

    Second, there’s no real evidence that *their employee* did anything at all. The person named on the patent is the *sister*, a new graduate who perfectly could have invented this. And asked her older brother, a senior person in the industry, to help her with the process of patent filing and setting up a company. Hardly unlikely. They are actually accusing their employee of telling his sister “this is a well-known tech problem our industry faces, if you could invent a solution to that you’d be rich”. Only in the most delusional view is that a break of confidentiality.

    But again, Q abusive contract to the rescue…..In Q, the contract controls not only what *you* can do, e.g. not be a director in of a registered company, something fairly problematic in itself when you think about it some more. Oh no. The contract also claims to somehow limit what your *relatives* are legally entitled to do. It even enumerates them exhaustively: sister, brother, mother, father, aunt, uncle, cousin up to once removed, mother or father in law, spouse, child. It’s just bizarre. I don’t know how Q lawyers think this could possibly be legally binding, but they actually think that they can tell you what your *sister* can or cannot do.

    Hence this case. As far as Q is concerned, whether their employee invented the thing is actually irrelevant. Their follow-up claim is that they own the IP invented by employees sister. And that is why they brought this case. They and their lawyers were well aware of the facts before they bought the company, but in US law they couldn’t challenge the patent ownership because it had not yet been brought to commercial use, so there were no damages. So they were prepared to pay $150m purely to bring this as a *test case*. Their real goal is to have case law to be able to assert IP on all the relatives of the employee, not just employee themselves. The real targets of this are their employees in US locations with families in India and China - which is a very large percentage in their case. If this seems weird to you, you need to understand how Q sees itself. It sees itself as fundamentally an IP company, financially built on ownership of W-CDMA, UMTS and 5G patents. Not a tech company. Not a chip company that makes Snapdragons. The company Division that holds the IP rights rules the roost. They can (and have) made decisions sacrificing tens of billions of chip revenue, to ensure their strategic position in holding IP.

    Reader after about two years of this, I made my excuses and left….

    1. Auntie Dix
      Holmes

      Re: Abusive Contracts

      Q (not Bond's gadget buddy) may be wildly delusional and tyrannical in its prohibitions and overreach (begging the question, "Why would anyone brilliant join them in the first place?"), but that does not excuse what appear to be deliberate criminal business machinations and money-laundering on the part of the unsurprisingly ethnically similar defendants.

      Abusive contracts are indeed a plague in the United States.

      It is noteworthy that many average-joe Americans are now aware of arbitration clauses forced on them for basic products and services (Did any of you refuse an iPhone, cell-phone service, a job opportunity, etc., rather than sign away your right to sue in court?), but there is no collective outrage forcing well-lobbied Congressmen to prohibit once and for all these disgusting contracts of adhesion.

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