Collateral
Ethics & Privilege | Business Ethics
| Tips & Insights | Practice Resources
As general counsel, Michael Wu is responsible for
all legal, corporate governance, government affairs
and compliance matters at Rosetta Stone Inc. After
coming to the company in 2006, Wu established
Rosetta Stone’s corporate compliance and governance
functions, and anti-piracy and anti-fraud enforcement
program. In 2009, Wu oversaw the company’s successful initial public offering on the New York Stock
Exchange (NYSE). Before Rosetta Stone, Wu was
general counsel at Montrealbased Teleglobe International
Holdings Ltd. And prior to Tele-
globe, he was a senior attorney in the Hong Kong
and Reston, Va., offices of Global One. Wu was also
associated with a predecessor firm of Bingham McCutchen LLP, and Baker Botts LLP, where he focused
on corporate transactions.
Wu holds a JD from the University of Virginia
School of Law and a BA from Emory University. He
serves on the boards of the Business Software Alliance, ACC’s Washington Metropolitan Area Corporate
Counsel Association Chapter, and the DC Chapter of
the Emory Alumni Association.He can be contacted at
mwu@rosettastone.com.
Rosetta Stone’s Global Reach:
An Interview with General
Counsel Michael Wu
As the first language-learning
software company to be publicly traded
on a stock exchange, Rosetta Stone,
Inc., owes its marketability and success
to globalization. And while some may
say the foothills of the Shenandoah
Valley are in “the middle of nowhere,”
General Counsel Michael Wu says the
Rosetta Stone operational headquarters in Harrisonburg, Va., has become
a global meeting place.
“When you walk down the hall, it’s
amazing the languages you hear —
people from all over the world have
relocated to Harrisonburg because of
our company,” he says. “It’s also a reflection of our management practices,
in which we recruit employees who
have international business experience
or backgrounds.”
A look at the senior management
team exemplifies this practice. Rosetta
Stone’s CEO Tom Adams is Swedish, but grew up in France and the
United Kingdom. The senior VP of
business development is Canadian
but has lived around the world, the
heads of international development
and customer success have worked
extensively overseas, and the president
of International is Brazilian, but of
Chinese descent. Wu grew up in the
United States, South Korea, Saudi
Arabia and Austria, and speaks both
“When you walk down
the hall, it’s amazing the
languages you hear —
people from all over the
world have relocated to
Harrisonburg because of
our company,” he says.
English and Mandarin because his
parents spoke both languages at home
during his childhood.
Rosetta Stone has two offices in
Virginia, an office in Boulder, Colo.,
and four international offices in Japan, Korea, the United Kingdom and
Germany. Although office culture is
different based on the region, Rosetta
Stone is unique because each office
ACC Docket 154 June 2011
has staff with extensive international
experience, so company-wide values
hold strong, says Wu. Among these
values is “openness,” he says. “Our
offices look similar, each with a lot of
open space to encourage collaboration among colleagues, and foosball
tables — it is our nod to a hip, hightech culture.”
Since Wu joined Rosetta Stone in
2006, he built up the legal department
from three people to 19 — including seven lawyers and 12 non-lawyer
staff members. The non-lawyer staff
are anti-piracy enforcement specialists, contract administrators and
paralegals, all of whom are based in
the Harrisonburg and Arlington, Va.
offices. All lawyers are based in the
Arlington office, with the exception
of one in Tokyo, and one in London.
Regardless of where they end up,
however, legal department members
are required to complete an on-boarding process, during which they spend
four to six weeks in the Harrisonburg office, integrating into the legal
department. Overseas lawyers support
their local offices, and lawyers in the
United States are primarily generalists
who support the other departments.
To keep his team connected, Wu
has a weekly department meeting
that can be joined either by phone or
video conference, during which the
team covers key action items and best
practices. Wu personally speaks with
overseas counsel a few times a week,
and the department holds an annual
retreat in Harrisonburg. Rather than
focusing on legal issues, the retreat
places an emphasis on team-building
through a variety of activities like
ziplining and canoeing. “I believe that
our weekly and annual meetings help
in terms of ensuring that we function
as a high-performing team without all
of the office politics that may occur at
other companies,” says Wu.
One of Wu’s biggest projects
while at Rosetta Stone was overseeing the company’s initial public
offering on the New York Stock Ex-
change in April, 2009. After going
through this process, his advice to
in-house counsel is to build a strong
compliance system and clean up any
corporate housekeeping issues long
before going public.
The first item on Wu’s list when
he arrived at Rosetta Stone was
adopting a code of conduct. Shortly
thereafter, he implemented a conflict
of interest and ethics policy, and set
up an internet and phone hotline.
Employees received in-person
training on the code of conduct,
followed by online training on the
code and other issues, depending on
the employee’s department. Wu also
worked closely with management
and the board of directors on corporate organization, capital structure
and corporate governance issues
prior to the initial public offering.
“As the general counsel of a company being taken public, you quarter-
back the whole process,” says Wu. He
acknowledges significant increased
legal risk for companies going through
this process, including potential officer and director liability for misstatements or ommissions in the IPO
registration statement, other periodic
reports, communications with stock
holders, press releases and other
public disclosures. “And when you’re
a young, growing company, which a
lot of companies are as they’re going
public, there are a lot of fluctuations
in performance, which can result in
litigation and potential exposure and
liability,” he says.
Wu says one of his biggest challenges was drafting Rosetta Stone’s registration statement, which describes the
company’s business, strategy, strengths
and weaknesses, in a manner that was
satisfactory to the senior management
team. “The other members of senior
management may look at this docu-
ACC Value Index
Connecting Law Firm Value to Client Satisfaction.
FIND AND BENCHMARK OUTSIDE COUNSEL.
Leverage your ACC network to make sure you have the best law firm representation available.
• Search for firms that excel in specific practice areas and markets.
• Read helpful comments about firm attributes and value practices.
• Ping reviewers to get more information or initiate direct conversation.
Find counsel. Drive change. Improve value.
www.acc.com/valueindex
Collateral
Ethics & Privilege | Business Ethics
| Tips & Insights | Practice Resources
ment as a marketing document to sell
shares of the company,” says Wu. “But
from the legal perspective, it’s really a
document ensuring that you have the
proper disclosures in place, and that
there are no material misstatements or
omissions.”
Another challenge he faced was
the timeline for the IPO. “Everyone
wants to complete the process as
soon as possible, but there are so
many moving parts as part of going
public — whether it’s drafting and
revising the registration statement: the
SEC comment process; preparing the
company for the due diligence review
by the underwriters and underwriters’ counsel; or selecting underwriters, outside counsel, transfer agents,
financial printers, D&O insurance
brokers, D&O insurers and which
stock exchange to list on.”
As general counsel, says Wu, it
is important to join the CEO, CFO
and board members with a seat at
the table. Wu participated in sessions
during which underwriters pitched
for the business, and he helped narrow down 12 firms to a final five
during a “bake off” process. When
choosing underwriters Wu looked at
each team’s track record, presentations on how they would position the
company and market the deal, and
team chemistry. “If you’re going to be
spending a significant amount of time
with the investment bankers at drafting sessions and preparing for the
‘road show,’ you want to determine
who you will work well with,” he
says. Wu was also involved in selecting the financial printers and D&O
insurance broker, visiting the NYSE
and NASDAQ and selecting the stock
exchange, and picking the transfer
agent. “It’s very important as in-house
counsel that you’re involved in the
whole process.”
Rosetta Stone is growing rapidly
and expanding into new regions —
when the CEO came in 2003, the
company had 100 employees; it now
has approximately 2,000 — and Wu’s
team works with local counsel to
review company policies and make
sure they comply with local laws. To
stay on top of global issues, Wu says
he relies heavily on ACC — his whole
department has ACC membership —
law firm updates, and resources from
other organizations such as the International Trademark Association.
Among many issues, Wu’s team is
watching changes to the UK Bribery
Act, which have not yet taken effect.
“It’s not clear whether companies
must change their policies around
hospitality and facilitation payments,”
says Wu, who has his local lawyer in
All Rosetta Stone
software is made in
the United States,
so anything coming
from overseas is
pirated, explains Wu.
London following this issue. Rosetta
Stone already has a global anti-bribery
policy, but will review the need to
change its policies when the Ministry
of Justice issues its guidance on the
UK anti-bribery law.
Bribery is an area of law to which
Wu pays careful attention because of
past experience. While at a previous
employer, Wu’s company acquired
a publicly-traded company. Shortly
after the acquisition, his company
discovered that the acquired company
had hired foreign agents who were
employees of government-owned
telecommunications companies in several African countries. His company
self-reported the violations to the
SEC and DOJ, conducted an internal
investigation with outside counsel,
went through a NASDAQ de-listing
ACC Docket 156 June 2011
hearing because the company could
not file its quarterly report on a timely
basis, and terminated several executives and employees of the acquired
company, some of whom received
prison sentences.
“There’s a lesson I learned from
that experience. Although in-house
attorneys should try to assist their
businesses in achieving their financial
objectives, there are certain times
when you just have to say, ‘No, we
can’t proceed with a transaction because of the legal ramifications,” says
Wu. “You read about FCPA cases,
where companies that made hundreds
of thousands or multimillions of
dollars receive significant fines that
dwarf the profits they made, from a
transaction involving a bribe, and it’s
just not worth it.”
Wu’s team is also focused heavily
on IP and enforcement issues. Along
with Microsoft, Adobe, Symantec and
Apple, Rosetta Stone is a member of
the Business Software Alliance (BSA).
Through the BSA, Wu met with many
of the industry’s anti-piracy leaders
and their general counsel to discuss
best practices. Piracy of Rosetta Stone
software occurs mostly online, including through foreign websites that
mirror the Rosetta Stone site and use
URLs that are very similar, says Wu.
To tackle this issue, Wu transferred
members of the IT department and
created an enforcement team. “I chose
smart, tech-savvy employees who
could learn about anti-piracy issues
and law enforcement.” The IT staff
on the enforcement team developed
internal tools to track search engines
for pirate-sponsored links and ads,
and scan daily for rogue websites.
Through BSA and other trade associations that Rosetta Stone has joined,
the enforcement team also started
meeting with law enforcement entities and created training manuals for
them, which educate law enforcement
on the difference between authentic
and pirated Rosetta Stone software.
Getting to Know:
Michael Wu
What I learned in law school
that I still apply today
It’s not the legal skills, but really the
art of networking, and unlike any other
law school that I’m aware of, there’s a
strong social component at the University of Virginia School of Law. That’s
an invaluable skill that I picked up — to
constantly network with people. You
never know who may become a client,
who has information that you need or
who has a job for you.
My most pivotal career move
When I left Global One to join Teleglobe. I was considered a very junior lawyer at Global One, seven years out of law
school. I moved over to Teleglobe, and it
was much more entrepreneurial environment. Our GC and Deputy GC, who was
my supervisor, were in their mid-40s
All Rosetta Stone software
is made in the United States,
so anything coming from
overseas is pirated, explains
Wu. The company now works
throughout the United States with
the US Customs and Border Patrol
Protection, the US Secret Service,
the FBI and local police. In 2010,
customs and border patrol seized
more than 400 counterfeit products
in 35 US cities. In addition, law enforcement made arrests in the United
States, United Kingdom, Japan, Vietnam and Jordan in connection with
Rosetta Stone’s enforcement efforts.
The company also entered into more
than 100 settlement agreements with
and they typically hired attorneys who
were 6-10 years out of top law schools
with experience at large law firms. We
received very interesting and complex
work, which I would have been too junior
to work on at Global One.
The best advice I ever received
Advice from my parents growing up
was to work hard. A lot of people are always thinking about how to to advance
through office politics, but if you work
hard in a collegial manner the opportunities will come to you.
What’s next for Michael Wu
I’m going to work with our senior
management team and board on growing Rosetta Stone’s business and taking
it to the next level. In particular, growing our institutional and international
businesses, and establishing more
overseas subsidiaries.
The greatest misconceptions
about in-house counsel
That we don’t work very hard or do
sophisticated work. I believe that it is
more interesting working in-house because you see issues through, and make
business and strategic decisions as you
software pirates in 2010.
“We sell our software at high
price points, so it’s very attractive for
these counterfeiters,” says Wu. “So
let’s say our program costs $200. The
software pirate will advertise at $170,
so customers believe they are purchasing authentic software through some
other channel.”
Piracy is against the law around the
world. “The problem is how seriously
these jurisdictions take it, and the extent to which they enforce their laws,”
says Wu, who adds that being the
squeaky wheel has helped his enforcement team make progress. “My team
will repeatedly contact law enforcement on specific cases; they will basi-
attain more senior positions. That
was my goal from law school — to practice in-house.
There’s not enough time
in the day to
Focus on every single legal issue that comes my way.
Worst Job I ever had
My parents were living in Saudi
Arabia during my college years so I
worked in a warehouse located on the
King Khalid Military City military base
near the Kuwaiti border during my summer breaks. The warehouse was not
air conditioned and we had to fight off
camel spiders — they looked like tarantulas — and scorpions. It was a “hairy”
experience, so to speak. Work/life balance:
How I get it all done
I have a fantastic wife and my mother
retired from the federal government to
help us with our children. My wife is also
a lawyer practicing in-house so we really
appreciate my parents’ help. I try to get
home at a reasonable hour before my
children’s bedtime and then I log back on
when they’re asleep.
cally hand them everything wrapped
in a bow — all the information, all the
evidence, etc. — to try and encourage
them to take up the case, and many
times they do.”
Rosetta Stone, along with companies in many industries, trade associations and the US Chamber of Commerce (the Chamber), is also working
to reintroduce and pass legislation to
curb illegal activities of rogue websites,
which cost the US economy an estimated $58 billion in total annual output,
according to estimates by the Chamber.
Rosetta Stone’s CEO testified at a Sen-
Collateral
Ethics & Privilege | Business Ethics
| Tips & Insights | Practice Resources
ACC Extras on… Global Issues
ACC Docket
• Multijurisdictional Practice: Know Your Roaming Charges (Jan. 2011).
Explore different reforms on limitations to in-house practice in various
jurisdictions. www.acc.com/docket/roaming-charge_jan11
• Risk Factors for the Away Team in US Litigation (Dec. 2010). For those unfamiliar
with the US court system, consider these 10 factors — know where you
stand and what questions to ask. www.acc.com/docket/awayteam_dec10
Quick References
• Top Ten Tips for Running an Efficient International Legal
Department (Dec. 2010). This Top Ten resource provides tips from
general counsel who run legal departments in international and
multinational businesses. www.acc.com/topten/ild_dec10 • The Role of In-house Counsel: Global Distinctions (Sept. 2010). This
QuickCounsel addresses the evolving and expanding role of in-house counsel
in Canada and Europe. www.acc.com/quickcoun/glbldstnct_sep10
• Selecting and Managing International Law Firms (June 2009). This
QuickCounsel will help you get started in selecting and managing external
counsel internationally. www.acc.com/quickcoun/ilf_jun09
ACC has more material on this subject on our website. Visit www.acc.com,
where you can browse our resources by practice area or search by keyword.
The new GLD button lets you click to copy, print or email
a checklist from certain ACC online resources.
ate Judiciary Committee hearing, and
its chief technology officer testified at
a House of Representative’s Judiciary
Committee hearing earlier this year.
The legislation would go after foreign
illegitimate websites in a new way:
through facilitators such as internet
service providers, payment processors
and online advertising networks, which
enable pirated software to continue
being sold.
Rosetta Stone has been pushing
to ensure the definition of “online
advertising networks” includes search
engines ,which had been carved out
of the definition in a previous bill, the
Combating Online Infringement and
Counterfeit Act, introduced by Sen.
Patrick Leahy (D-VT) in September
2010. “Search engines have been a
gateway to piracy because they sell
sponsored ads to rogue websites, which
harm American businesses and consumers,” says Wu. ““We believe that
any rogue website legislation must empower the US Department of Justice to
prevent rogue websites from continuing
to transact with internet service providers, payment processors and online
advertising networks, especially search
engines. There is no good reason why
these companies should continue to
transact with criminals and facilitate
the rampant theft of American intellectual property.”
Wu says that if search engines are
not considered online advertisement
networks, Rosetta Stone will continue
to be forced to buy its own trademark
as a keyword advertisement to get
ACC Docket 158 June 2011
placement at the top of the sponsored
links. “And you pay a price per click —
every time a consumer clicks, you pay
something to the search engine,” he
says, “So we’re bidding against software pirates, and that increases costs to
companies like Rosetta Stone.”
Wu says that because search
engines are not considered online
advertisement networks, Rosetta
Stone will continue to be forced to
buy its own trademark as a keyword
advertisement to get placement at the
top of the sponsored links. “And you
pay a price per click — every time a
consumer clicks, you pay something
to Google,” he says. “So we’re bidding against software pirates, and
that increases costs to companies like
Rosetta Stone.”
The US Chamber of Commerce
calculated statistics for Rosetta
Stone’s recent testimonies on Capitol
Hill that say the US economy lost
$58 billion in total output in 2007,
because of piracy and copyright
infringement. They also say that in
2010, sales of counterfeit goods over
the internet amounted to approximately $135 billion in 2010.
Passing online infringement legislation is just one of the many projects
Wu will be focused on in upcoming
months. The executive team at Rosetta
Stone is also concentrating on expanding into new international markets.
“Because as we like to say at Rosetta
Stone, the US is really a cake market
for language learning, whereas many
markets overseas are bread markets,”
says Wu. “In the US people only need
to speak one language, but in many
countries, you need to also learn
English to really improve your career
prospects.” Wu says this is another
testament to the trend of globalization,
and the future of business.∑
— Maggy Baccinelli
Have a comment on this article? Visit
ACC’s blog at www.inhouseaccess.com/
articles/acc-docket.