Header graphic for print

MoFo Tech

A blog dedicated to information, trend spotting & analysis for science- & tech-based companies

Just What the Data Ordered

San Francisco-based software provider Splunk’s data collection and analysis product, Splunk Enterprise, was an almost instant hit upon its debut in 2006. The software, which collects and analyzes machine data generated by websites, applications, networks, and RFID assets, can identify traits like user transaction patterns and performance issues, making it useful for everyone from pizza companies to disaster relief agencies.

Companies can use Splunk Enterprise to identify fraudulent wire transfers while they’re happening, route telecommunication carrier calls more efficiently, understand order delivery delays, and improve dozens of other operations.

In its first five years, Splunk’s customer base swelled from 150 clients to more than 3,000. But it still relied exclusively on outside counsel to handle legal needs—until Splunk CEO Godfrey Sullivan met Lenny Stein. The former chief legal officer at winemaker Jackson Family Enterprises was introduced to Sullivan by mutual friends. Sullivan wasn’t looking for a GC, Stein says. But the two got along well, and within three weeks, Stein had joined Splunk. Continue Reading

Worn on the Sleeve

Watches that monitor sleep quality. Skullcaps that gauge head injury. An infant bodysuit that sends temperature and breathing updates to a mobile device. Ear buds that track your heart rate. These are just some of the innovations now emerging in the hot new field of wearable technology. Currently estimated at $1.6 billion, the wearable device market is expected to grow to $5 billion in revenue by 2016, according to Gartner. If upcoming releases like Google Glass (scheduled for mass distribution later this year) prove as popular as smartphones and tablets—whose combined revenue topped $66 billion in 2013, according to the Consumer Electronics Association—wearable devices stand to become a major new realm in technology.

But the technology is already garnering a lot of attention from lawyers and lawmakers with concerns about how the devices—and the information they collect—can be misused. Wearable devices are just one more example of how technology gets ahead of the law, says Gabriel Meister, a New York-based partner in Morrison & Foerster’s Technology Transactions Group. “Often, the legislative response to perceived risks is very blunt, until we figure out exactly what the risks are.” Continue Reading

Rooting Out Conflict Minerals

If your company manufactures consumer electronics, avionics, or any product incorporating even trace amounts of gold, coltan, cassiterite, or wolframite— including their derivatives, tantalum, tin, and tungsten—you may need to ask how well you know your conflict minerals story.

Under Dodd-Frank, public companies may soon be required to report on their use of any of these minerals originating from the Democratic Republic of the Congo and nine other African nations. “The SEC adopted the rule, but it has been subject to a legal challenge to the validity of its rulemaking,” says Morrison & Foerster securities partner David Lynn. “A decision was reached in April holding that the statute and the SEC rule violate the First Amendment of the Constitution. If the rule ultimately requires reporting, the practical implication is to be ready to tell your sourcing story.”

Compliance could be potentially costly and complicated. Lynn suggests that companies know the country of origin; ensure that downstream suppliers (including mines, smelters, and refiners) are conflict free; review and revise sourcing policies and contracts as necessary; and raise awareness of this issue with your entire supply chain.

SEC: The New Cyber-Cop

It seems scarcely a week goes by without a headline blaring news of a major cybersecurity breach. And with ongoing revelations about the data-tracking activities of the National Security Agency, the public isn’t growing less concerned about privacy. So it’s no surprise Congress has pressed the Securities and Exchange Commission on cybersecurity.

What does that mean for corporate disclosures? “The SEC continues to hear from Congress on cybersecurity disclosures, so it will continue to focus on the issue,” says David Lynn, a partner in Morrison & Foerster’s Washington office and co-chair of its Corporate Finance Practice. “That means companies need to be vigilant about their disclosures.” Continue Reading

German Federal Government Plans Tax Exemption of INVEST – Subsidy for Venture Capital

The German Federal Government has given an important insight to its plans and future measures regarding taxation of the start-up- and VC-ecosystem in Germany by officially answer to a parliamentary request by several members of parliament. These plans are not only important for young companies and their investors, but also for Germany’s attractiveness as a start-up destination itself. This is especially true considering that Berlin is becoming Europe’s top start-up destination and the call for governmental support for the German start-up scene increased recently.

One encouraging trend set out in the Government’s recent statements is the announced tax exemption of the so-called INVEST-Subsidy for Venture Capital (INVEST – Zuschuss für Wagniskapital). Under this program, business angels get 20 percent of their investment reimbursed from a special governmental fund if certain conditions are met. Whereas currently such subsidy triggers German income tax, in the future its incentive effect as a tax-exempt gain will be much higher. Another positive highlight is that the government announced to adhere to the concept of a lower taxation of “carried interest” received by VC-fund initiators (40% exemption from income tax). Continue Reading