Real Tough

Robert Kimball, general counsel of Seattle-based RealNetworks, has two extraordinary accomplishments on his r?(C)sum?(C). The first is that he played football for the University of Michigan as a defensive back under Bo Schembechler. This storied football program has produced such NFL standouts as Dan Dierdorf, Charles Woodson and Tom Brady. One of Kimball's responsibilities on the team was to cover future Pro Bowl receiver Anthony Carter during practice. "He scored a lot of touchdowns against me," Kimball says.

His second accomplishment is that he took on Microsoft and won. In 2003 RealNetworks sued Microsoft for $1 billion for allegedly using its operating system to crush rivals in the digital media space. After being engaged in a bitter battle with Microsoft's lawyers for three years, Kimball and his team convinced Bill Gates to settle the case for a whopping $761 million.

Kimball also was instrumental in negotiating some of the first agreements with record companies to offer their catalogs online. Those agreements served as the foundation for RealNetworks' popular Rhapsody music site. Unlike iTunes, which is basically an online record store, Rhapsody is a membership-based service that allows unlimited access to entire catalogs of music.

Kimball credits much of his success at RealNetworks to three things--his training at Sidley & Austin (1990--1994); his in-house experience at IBM (1994--1999); and his college football days.

Q:How has college football helped you as a lawyer?
A:It was an education in the amount of commitment and discipline it takes to be great. It's amazing what my teammates had to go through to compete at that level and also go to school. You need that same kind of commitment and willingness to sacrifice to succeed in the legal profession.

Q:How did you end up in law school?
A:I have always been a voracious reader. I love language and words, and I am very competitive. You can't play football at Michigan unless you are a highly competitive, driven person. The combination of those two things led me
to law school.

Q:You spent a few years as a litigator at Sidley. Did you enjoy it?
A:I loved the firm and the people I worked with. But I soon realized that litigation wasn't a good fit for me. Ninety-eight percent of it is absolute drudgery.

Q:How did you end up at IBM?
A:I was playing basketball with a friend from Michigan who worked for IBM. He told me about an opening there. I went the next day, interviewed and got the job. It was over in a day. I didn't even have a r?(C)sum?(C).

Q:What kind of issues did you deal with there?
A:At IBM I learned the fundamentals of a technology licensing business. A lot of the deals I worked on were in the tens to hundreds of millions of dollars. That served as a fabulous foundation for coming to RealNetworks. So I learned how to do it right at the sort of Harvard of big business.

Q:It had to be a big cultural shock going from Big Blue to RealNetworks.
A:It was. I joined RealNetworks [in 1999 as associate general counsel] at the height of the Internet boom. It was crazy. It was like the Wild West in those days. People worked crazy hours and came to work wearing just about anything. For me it was a much more creative and vibrant environment to be stepping into. But it was also more out of control. You have to be comfortable with a certain amount of chaos to work at a place like this.

Q:What was the state of the company at the time?
A:It was deeply into streaming audio and video and was just making the break into music. It had already been working to get licenses from the major recording labels.

Q:Was Apple already in the music game at that point?
A:Not at all. At the time we were the pioneers in this space. My team negotiated the first agreements with the major labels to take their full catalogs online and allow them to be used on the Internet. In fact Apple's agreements are based on the ones we negotiated.

Q:Were they tough deals?
A:I couldn't do another set of deals like the ones it took to get that first set of agreements worked out. It took me several years to recover from those negotiations. It was backbreaking work.

Q:Why did you let Apple run away with the prize?
A:Two things happened. First, they came up with the iPod-- a player that was simple, elegant and that worked. Second, they were able to get the rights from the labels to do ? la carte offerings. And Apple was able to convince the labels to let it do that because it was only going to offer that feature on the Apple operating system. The record companies were comfortable that it wouldn't cannibalize their business. By the time Apple moved iTunes onto the Windows platforms, it had a huge market lead.

Q:That had to be tough to swallow.
A: It was. We really broke our ass negotiating those deals to make all this happen. But you have to give them credit. They took the ball and ran with it.

Q:So how do you go about reining them in?
A: I don't think the play is necessarily to try to run out there and beat them in the device space. What we are doing is providing full on-demand access to the entire catalog of music, without requiring you to buy each individual track. And we have designed it so you can access that music anywhere at
anytime--whether you are on your friend's computer or your work computer.

Q:You took on Microsoft and won. That is no easy task, right?
A:That was a life-changing effort that consumed me from probably the time I walked into the door until we settled the case.

Q:Who worked on the case?
A:It was basically myself and [my former deputy general counsel], David Stewart. It was an absolutely insane amount of work--and difficult work. We were fighting against the most well-funded company in the world. They are also really smart. They know antitrust law backward and forward, and they have extremely deep political connections.

Q:Sounds like a classic David and Goliath story.
A: It was. It was actually fun to be David in this case because we were fighting Microsoft in the digital media arena--which we know better than anybody, including them.

Q:Tell me about the negotiations.
A:We did it over a weekend. We took over an entire floor of the Bellevue Hyatt Regency. We had negotiations going on in six conference rooms. [Microsoft GC] Brad Smith and I went from room to room putting out fires and dealing with the emergencies. It was a massive deal. We created a few phone books' worth of paper that weekend.

Q:Did you get a lot of help from outside counsel on it?
A:No. We ran it all internally. At RealNetworks we have the best small law firm in the world. We have some of the most phenomenal lawyers here in the digital media space.

Q:Was the settlement your proudest accomplishment?
A:By far. It is hard for me to come up with the words to describe how hard it was and how much work it took and how many all-nighters we pulled. It took an amazing effort to make all that happen with our tiny little group. I am really proud of that, far beyond anything else I've ever done professionally.

Q:And you were well-rewarded for your efforts, right?
A:I was. I got a $3 million-plus bonus.

Q:What is the strangest legal issue you have had to deal with at RealNetworks?
A:We had an employee arrested and taken to jail for jaywalking in front of our building. We helped defend the guy.

Q:How is that a corporate legal problem?
A:It wasn't. But it seemed like the right thing to do. He works for us. He is part of the family. I mean he was walking to work. Our CEO [Robert Glaser] believed it was our duty to defend him. That's the kind of
company we are.

staff Writer

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