Hotline's Civil War
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HOTLINE'S CIVIL WAR - The company behind a hot program takes its teenage inventor to court -- while devoted users stew.
BY JANELLE BROWN
"Liars." "Rapists of the company." "A thief in the night."
These are just some of the phrases that Hotline Communications Limited is now using to describe the company's founder, 20-year-old Adam Hinkley, and his father, according to the Australian newspaper the Age.
It's a bitter end for a group of software enthusiasts who first came together with utopian visions of online community. While Hotline users around the globe have assembled around this piece of shareware -- a server system that enables them to swap everything from warez to ideas -- the founders of Hotline Communications Limited have become embroiled in a lawsuit over who, exactly, is the rightful owner of Hotline's program code.
Lawyers for Hinkley describe their client as a young prodigy who was manipulated by cynical businessmen. Lawyers for Hotline call Hinkley a dishonest larcenist. It's an ugly battle fought over increasingly important Internet-age questions of intellectual property. And while it rages, the Hotline community is drifting away.
Adam Hinkley, affectionately known among Hotline users as "Hinks," was just 17 years old when he began developing Hotline in 1996. He aimed to bypass the slow, kludgy Web and find a quicker, easier way to transfer files and chat -- hence Hotline's motto, "There is more than the Web." Hinkley's sleek set of applications quickly grew popular via word of mouth. By early 1997, he had been convinced by a few of the regulars in the Hotline chat rooms -- including Jason Roks, who would become Hotline's dynamic vice president of business development -- to try to turn his baby into a software company.
The Hotline Company Overview describes in almost reverential terms how a group of roughly half a dozen international devotees, intent on spreading the word about Hotline, formed "The Evangelistic Hotline Public Relations and Marketing Team." This team formally became a company in July 1997, debuting the company as Hotline Communications Limited at MacWorld Boston in August 1997. The company was based in Toronto. Adam Hinkley moved there from Australia, along with his father, Paul (also a programmer), and assumed a position in the company as lead engineer and majority shareholder. He also signed his rights to his code over to the new company.
Explains Roks, "We all met on Hotline, we had never met in any way on the Net before. I saw a bunch of kids out there making some interesting software, with talent, and I thought I knew a lot of people in the industry and could help out. Some people took it more seriously than others; some people just did it as a side project, writing press releases and stuff. But it ended up growing into something a lot larger."
By late 1997 Hotline Communications Limited had acquired an official investor, venture capitalist Austin Page, who had promised $500,000 in capital. The company was frantically working on a Windows version of its Macintosh software, and was developing other types of applications -- such as NetScrawl, a tool that allows designers to collaborate remotely on creating images.
But just six months later, in March 1998, Hotline fell into chaos when Adam Hinkley suddenly shut down the company's Web site and bolted from Vancouver -- taking the code for Hotline (a toolkit known as "AppWarrior") with him and encrypting everything that he left behind. Now, Hotline is suing Hinkley for removing the intellectual property of the company -- arguing that although Hinkley may have written the code, it now belongs to Hotline Communications. In September 1998, authorities raided Hinkley's home in Australia in search of the source code, threatening jail time and seizing boxes of floppy disks.
Why did Hinkley bolt? The Hinkleys, father and son, are both under court-mandated gag orders and can't talk to journalists. Adam Hinkley's mother, Meg Lehmann, has in the past spoken to the press and maintained a pointed Web site, but after she was threatened with contempt of court, she removed most of the site's content. Hotline officials are reticent to speak about the case. Still, there is plenty of material online to piece together the Hinkley story.
One account has appeared in the technology section of the Age in Australia. Sporting a picture of schoolteacher Lehmann somberly holding a snapshot of an adolescent Adam Hinkley, the story portrays "Hinks" as a naive and persecuted youth prodigy who had unwittingly signed away the rights to his baby, only to watch the company go in a direction he didn't condone. As the article explained, "According to his mother, his dream turned to nightmare when, separated from family and friends on the other side of the world and grinding through 12-hour days, six days a week, the development money was not forthcoming."
Affidavits filed on behalf of the Hinkleys have filled in some of the blanks in Adam's personal story. His younger sister had been kidnapped and murdered just a few months before he signed the shareholder agreements. Hinks was, his lawyers have alleged in court, put into a situation that was almost abusive: They describe him as a young boy, far from home, forced to put in grueling hours and pressured into signing a shareholder agreement that he didn't understand. They have also argued that an oral agreement gave Adam Hinkley independent ownership of the AppWarrior code.
The ensuing lawsuit has been long, convoluted and international. Besides demanding that Hinkley return the source code -- relinquishing any right to it and agreeing to a year-long noncompete agreement -- Hotline is also claiming rights to rights to the code underlying etext, a software product produced by Paul Hinkley that Hotline says is also based on AppWarrior and Paradox, another software tool that Adam has developed. The dispute has been fought in two countries: In Canada, a judge last month ruled that Hotline Communications Limited does indeed have rights to AppWarrior, and in Australia, the main trial is currently unfolding. The plaintiffs and defendants have filed a voluminous 1,000 pages of legal documents and affidavits; the evidence includes chat transcripts from Hotline fan sites.
It is a highly emotional lawsuit. As Hotline CEO Steve Bielawski now describes what the company's goals were in their first court appearance, "We wanted vindication ... though I don't want to use that word."
But beyond the simple cost of the legal battles, the ongoing lawsuit is causing other major problems for Hotline. The soon-to-be released version 1.5 of Hotline is lagging behind schedule, nearly two years since the last major upgrade. This is, not surprisingly, partly because Hinkley disappeared with the company's code and encrypted what was left behind, and partly because the company has been distracted by its legal troubles. Hotline users are impatient nonetheless.
Already, there has been a furor in the Hotline community over the sudden appearance of a shareware product called Carracho. Carracho, still an unstable beta product, closely resembles Hotline, but many Hotline buffs say it offers features Hotline still lacks -- like threaded bulletin-board discussions and remote administration. Carracho has already been downloaded thousands of times in the few weeks of its existence, and on sites like The Hotline Conspiracy (which is offline as we publish this article) and Bad Moon, as well as on the bulletin boards of Hotline servers, fans are loudly trumpeting the new software's advantages.
"Carracho is the first major competition Hotline has yet to see. Unfortunately for them, it may be their last. About 99 percent of the people we've talked to have either switched to Carracho already, or are simply waiting for the product to become a little more stable," writes one of the four anonymous editors of the Hotline Conspiracy, who describes himself as a 22-year-old computer science major. "Carracho just may be what will shake HCL's grasp on the Internet BBS market."
Hotline, however, poo-poohs the competition, and executives are quick to laud the promised features in version 1.5. "There have been a lot of applications that have copied Hotline in the past -- this one is better than most of those," says Roks. "Is it a Hotline killer? That's a strong word for something that hasn't even been released yet. No, nothing is going to kill us."
But the company's troubles go further than just the appearance of competitors on the horizon: It is losing face in the eyes of its devoted users. The Hotline community, bonded by its chat rooms and news sites, has been closely following the lawsuit; compared to the young programmer Hinks, whom many users personally know and love, the plaintiffs at Hotline Communications look like the bad guys. Jason Roks, a strong personality within the Hotline community, is regarded as a kind of malevolent Bill Gates who has imprisoned their beloved shareware inside a sluggish commercial company.
Among the Hotline fanatics are many like Zach Sparer, a 16-year-old "self-employed custom builder of computers" who has started a petition in support of Adam Hinkley. He began the petition as a way "to help this genius-programmer kid who I can easily identify with," he explains. He hopes that his petition will sway the decision of judges and jury in the case.
But this kind of earnest self-righteousness strikes many Hotline observers as futile. Explains Noah Daniels, a Hotline veteran: "The Net in general represents the idea of open source -- free exchange of ideas. Many users of Hotline see Hinks as standing up for the average geek programmer, and Roks standing for big bad business. They think Hinks wrote the code, he has the rights for it, he should get it back. But he signed it away. I feel bad for him, but it's nothing that a user petition will ever effect. Roks was being a businessman, and Hinks was being a programmer -- he got screwed, and Hotline got screwed by Hinks encrypting the code. They had conflicting goals and never settled down and tried to discuss it."
Hotline officials, in turn, feel like they're being shafted by the community. "There's been a lot of negative information coming through, untruths that have been filtering around," complains Hotline CEO Bielawski. "The perception is that he was left with nothing, and that we forced him out. But he's still the single largest shareholder in the company. That has never been clearly stated."
Regardless, the odds are slim that Hinkley will win in the Australian court case. Even his lawyers admitted in court last week that his theft of the AppWarrior code had been "inappropriate and wrongful conduct."
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Hotline was created as a shareware application, built on the old Net tenets of "information wants to be free" and an idealistic mentality in which Hotline users freely contributed ideas and suggestions to their friend Hinks. "It started out as a grass-roots effort," says Phil Hilton, Hotline's former public relations director. "A lot of people feel a personal attachment to the software, because in the beginning those people came up with a lot of ideas for the software. I, for example, helped come up with idea for the tracker."
Hotline Communications Limited, on the other hand, has become increasingly private and commercial. Although the founders were in their teens and mid-20s, the new executives are seasoned middle-aged managers and businessmen. According to court documents, Hotline has been negotiating with Apple, possibly about bundling Hotline in future Apple education products. Bielawski's comments about the company are dotted with terms like "value-added applications and solutions" for "vertical markets." Users who don't shell out for their shareware are now going to be given "incentives" to ante up -- apparently, discounted Hotline baseball caps. It's a far cry from the open environment that helped build Hotline in the first place.
But VP Roks says the change was inevitable: "The cyberworld is no different than the real world out there -- the same things happen, and everyone who thought they were creating a whole new culture that was good and a Garden of Eden is wrong ... When you try to involve everybody in a project that not everyone agrees with, there are way too many people, with way too many ideas, and way too many conflicts."
Hotline fans hope the lawsuit might lead to some kind of compromise -- that, as the editor of the Hotline Conspiracy hopes, Hotline can return to "the 'old skewl' days of frequent updates and an author that listened to the users." But it's hard to imagine a solution that would make both the profit-hungry Hotline happy and also let Adam Hinkley pursue his shareware vision. Hotline seems fearful that Hinkley might release their code into the public domain: As Hotline's lawyer, Simon Wilson, explained in court, "No one's going to invest in a company that doesn't have exclusive control of its own property."
"I can't recall in my recent history a more bizarre case," says Nathan Cochrane, author of the Age's stories and an observer of the trial. "You've got two software programs withering on the vine, and it could so easily be resolved. They could just open source it, and it would solve all the problems. [Hotline investor] Austin Page would have no problems turning around the business model for Hotline. Red Hat did it with Linux, why not Hotline?"
Perhaps the root of the problem lies in the age of Hotline's founders. Silicon Valley is full of success stories of youthful post-college programmers who managed to turn a brilliant idea and a great piece of code into a fat bank account and an IPO by the time they were in their mid-20s -- Marc Andreesen of Netscape, or David Filo and Jerry Yang of Yahoo. But there is youthful, and then there is just downright young.
The founders of Hotline would fall into the latter category. When you look at pictures of the founders, you get a sense of just how young they were: Of the initial group that started the company, more than half were still in their teens. The youthfulness of the founders was, perhaps, part of the reason such a strong community formed around Hotline; but the same youthfulness perhaps set the programmers up for trouble when they began to mix with more bottom-line-oriented businesspeople.
Let it be a warning to young programmers everywhere, Meg Lehmann recently posted on her own Web site (the text has since been removed). "There are many expensive and painful traps for young players in the intellectual property game. When Adam got involved with Hotline, he was only a teenager and very inexperienced in the business side of things. His subsequent experiences with them have been emotionally very draining and expensive for him and his family."
Her main advice: Get your own lawyer, and never sign away the rights to your software. Good advice -- but it won't help Hinkley now.
SALON | Feb. 25, 1999