“That infringement threatens not just significant monetary damages, but the potential for injunctive relief that would threaten Twitter’s ongoing business as currently operated.”
This feels like an extremely important part of this story that no one is even discussing. What ended up happening here?
“Mr. Zatko alleges that:
Twitter’s platform is built in significant part on the misappropriation and infringement of third party intellectual property”
https://twitter.com/sparklingruby/status/1620625924097179649?s=20&t=8yV-HY-qn0MdTaQQOI5iTQ
This isn’t idiocy. But the tweet talking about this should be read at face value. There seems to be some confusion from the comments on that tweet. Some people seem to think that this was some sort of oversight on Musk’s part, like as if the contract didn’t contain the entirety of twitter. What it is saying is that Twitter (1) is just stealing intellectual property and weaving it into their business without the right to do so; and (2) represented to Musk that it was not doing so. Twitter had a duty to be truthful and forthcoming with this information prior to making any deal because it is material to any prospective new owner.
If the potential damages from such unlicensed use are substantial, it would be grounds to void the contract and seek major damages. Twitter didn’t exactly have a laundry list of potential buyers. It could be felony theft by deception, too.
Hypothetically, if shit hit the fan and this was a multi billion dollar unlicensed use of IP, where does Elon go for damages? This I have no answer for. Are individual shareholders going to be liable? I doubt it. Who else has pockets deep enough who would be culpable here to cough up that kind of cash? I don’t know how you’d rescind this contract and get all your money back at this point, either. If you can’t recover the damages, how are you going to recover 10x that number to undo the deal?
Uncle Sam, of course. If the govt. supplied twitter with I.P. or other tax payer funded tech, and failed to reveal (concealed) that to Elon, then the govt. would owe him some money.
Maybe. But doubtful. Damages don’t come from the provision of said IP, but rather the use. Which was exclusively twitter’s in this circumstance. Best case scenario is some type of joint and several liability. But unless Uncle Sam consents to be sued in this circumstance you cannot sue them over it.
Yes, you make good points. However, if (assuming a lot of "if's" here) the govt. did not reveal that it was providing hardware/software/IP to twitter in order to support vital functions required for twitter to operate, then the govt. might just find itself ensnared in fraud litigation. And fraud would remove legal protections, potentially allowing Musk to go after them for damages. Maybe, based on my armchair lawyer perspective.
The worst part has to be that any funds Uncle Sam has to pay are ours. And I don’t like that I have to contribute to something I had no knowledge or control over.
There aren't any more shareholders. Elon was buying them out too. That's how he was able to buy it: he tendered an offer directly to the shareholders. The board then had a fiduciary and legal responsibility to put it to a vote for the shareholders. They accepted it, and there was nothing the board could do at that point.
Some of them rolled their shares into the new twitter that is private. I want to say that saved him like 2 billion or something. Not quite sure.
In ordinary fraud cases, you sell me something based on fraud, I sue you for rescission, you give me my money back. How does that work with a publicly traded company? How can you rescind a contract in this circumstance? Given that there isn’t anyone with deep enough pockets to pay the unlicensed IP use damages, there’s also nobody to get your 50 billion back from. That’s fucked. No idea what could happen there.