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Message: After reading Sunpoop's courtroom report
Apple's dark side populated with lawyers
Michael Wolff, USA TODAY 3:48 p.m. EDT May 28, 2013

Columnist Michael Wolff. (Photo: Todd Plitt, USA TODAY)

The Apple culture, or cult, which has been the envy of so many other companies — and which was on display in front of the U.S. Senate last week for its artful tax-planning strategies — has a dark side, long hiding in plain sight, that helps explain its special difference: lawyers.

They turn out to be at least as important to the company as software engineers and product designers.

There is, as Apple would undoubtedly point out, nothing illegal about lawyers doing their job well. A better question about its tax schemes might be not why or on what moral rationale it was so aggressively able to game the system, but how come it did it so much better than so many other companies?

A corollary question: Might not its competitors have had greater marketplace power if they, like Apple, had so astutely figured out how to not pay taxes?

Apple's most artful vision and true business advantage might not so much involve interface or hardware design, or the mobile future, but how to negotiate with the Irish government, which allowed Apple to store much of its non-U.S. income in Ireland at a tax rate of almost nothing.

Actually, Apple's lawyers are good at negotiating with just about everybody, as the music industry found when Apple's iTunes took their business from them.

Apple has long been a lawyer's company.

Put another way, most successful technology companies are products of skillful and especially vile legal departments — the more skillful and vile, the more successful.

Apple once bet almost everything on suing Microsoft for what it charged was Windows' infringement of the Mac desktop look and feel. It lost that case and, it would have appeared, its future.

But in the same way it didn't give up on what always seemed to be a misguided resistance to licensing its operating system, Apple did not give up on its belief that good lawyers and constant legal threats are good for business.

It's very hard to find anyone in the technology business who, at one time or another, hasn't been menaced by Apple's lawyers.

Apple, which famously grew its business by an artful appropriation of its basic desktop interface, has become itself a great patent bully.

There is, of course, its huge case against Samsung, in many ways a reprise of its case against Microsoft, but which this time, being all-powerful Apple instead of the no-power Apple it once was, it won.

But as well, as TechCrunch reports, Apple, running its own huge patenting business — that is, getting its lawyers to get the federal government to grant it an ever-expanding basket of free intellectual property rights — now turns over its patents to actual trollers, the real bottom-feeders of the technology business. Trollers are people (that is, lawyers) who have no purpose but to sue, generating income from technology they would not otherwise develop themselves. Nice legal work, if you can get it.

Then there is Steve Jobs, a saint with lawyers.

On his way to sainthood, Jobs also became an options back-dater. That is, the company granted him options but fudged the date they were granted to his advantage.

Not only did Apple's lawyers get Jobs out of this not insubstantial jam, but Apple's general counsel, Nancy Heinen, actually threw herself in front of Jobs and took the bullet. She was the one charged with SEC violations and lying to Apple's auditors to further Jobs' options deal.

In another legendary piece of legal legerdemain, Jobs, desperately and, as it turned out, mortally ill, managed to give the back of his hand to the SEC and lie to his shareholders about his condition.

In hindsight, this astute and cunning threading of the legal needle became the backdrop for the company to avoid taxes at a brilliant, cynical and epochal level.

Then, too, with the great confidence in its legal team, its executives appeared before Congress last week and blithely dissembled about it.

"We pay all the taxes we owe — every single dollar," said Jobs' successor, CEO Tim Cook, to what seemed like star-struck approval by the Senate.

In fairness, it's not just the lawyers — who do, pretty blindly, what they are told to — who create a systematic plan and temperament for circumnavigating disadvantageous laws and aggressively pressing advantageous ones. It is lots of lawyers combined with a unique sense of your own invulnerability.

The government, when it senses you're crossing the line, when you've become especially arrogant about the law, as in, for instance, options backdating, untrue disclosures under SEC rules and, especially, tax avoidance, often comes after you.

That's the threat that keeps responsible companies from pressing the envelope too far.

But government, as was evident in the Senate chamber last week, has a fine understanding of where power really lies, preferring unpopular targets to popular ones.

Apple has been protected by its lawyers, but also by its legend. Jobs was a man of sui generis arrogance and entitlement, as well as pitiless lawyers, who managed to convince seemly virtually everybody that he and his company were an exception to a great many rules, including, apparently, taxes.

It one day may be that exceptionalism rather than its technology that Apple will be remembered for.

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