Employers Don’t Own Your Brain; They Merely Rent it

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Apparently, New Jersey is about to join the list of states with statutes that protect the rights of inventors.  Generally, inventions made by employees belong to the employee, unless (1) that employee was specifically hired to invent, or is later assigned that task; or (2) there is an agreement between the employer and the employee.  However, in most states there is no restriction on the scope of these agreements.  Most times, an employer is content with owning inventions made using the time, material, or information of the employer, or which otherwise relate to the employers’ business.  However, some employers contract for all inventions made by the employer regarding of when or where it is made, or to what it relates.  It is this last category of employer that is targeted by the bill passed by the New Jersey legislature.

If the bill becomes law, New Jersey will join the small, but growing list of states that have statutes that affect employer’s claims to employee’s inventions:

  • California (California Labor Code § 2870)
  • Delaware (Delaware Code Annotated, Title 19, § 805)
  • Illinois (Illinois Revised Statutes, Chapter 140, §§ 301-303)
  • Kansas (Kansas Statutes Annotated §§ 44-130)
  • Minnesota (Minnesota Statutes Annotated § 181.78)
  • North Carolina (North Carolina General Statutes §§ 66-57.1, 66-57.2)
  • Utah (Utah Code Annotated §§ 34-39-2, 34-39-3), and
  • Washington (Washington Revised Code Annotated §§ 49.44.140, 49.44.150).

Employers with employees living or working in one of these states should be aware of these statutes and their requirements, or the employer may find that it does not have the rights it thought it did in its employees’ inventions.

Undersecretary Nelotsky is Alive and Well!

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In the landmark misappropriation case International News Service v. Associated Press, 248 U.S. 215 (1918),  the Supreme Court identified a quasi-property right created by the investment of effort and money in an intangible thing, such as “hot new.”  The case arose from INS’s copying and redistribution of news stories gathered by AP, which was allegedly discovered when INS ran a false planted story about a Russian Foreign Undersecretary Nelotsky (“STOLEN” spelled backwards, with a “KY” added for Russiany goodness).

The misappropriation doctrine or INS doctrine, as it is sometimes called, has been criticized over the years, but is not entirely discredited.  This is probably due to a general sense of unfairness felt when someone is caught “reaping where they have not sown.”

World Chess US, Inc. dusted off the misappropriation doctrine when it sued Chessgames Services, LLC, in the Southern District of New York (Civil Action 1:16-cv-08629-VM) for its real time republication of moves in chess games reported by World Chess and its authorized licensees.  The websites of World Chess and its licensees prohibits any such viewers from publishing updates of the games for the duration of each game.

The continued validity of the misappropriation doctrine is an interesting question, as is the validity of terms of use that attempt  impose an embargo on information during the game.   If someone gets information from World Chess’s site and starts a discussion, that results in postings on Chessgames Services’ site, is Chessgames Services to blame?  Can you make someone keep information secret that is not really secret?

This will be an interesting case to watch.  Your move Chessgames Services!

 

Losing Control of V

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A common client question is: “Can I ‘get in trouble’ for copying a picture, drawing, or cartoon and pasting it into my report, PowerPoint, etc.?”  Before you can answer, they try to answer their own question adding “everyone is doing it, so it must be ok”.  That answer is only half right — everyone is doing it.  It is so easy to copy <CTRL> C and paste <CTRL> V virtually anything you can find in a Google search, and add that extra something to your soporific presentation that only a cat video or epic fail image can provide.

However copying is copying, an fair use does not extend as far as every PowerPoint maestro believes (or hopes) it does. This was most recently illustrated by in a lawsuit filed in the Northern District of Illinois by David Kittos against the Trump Campaign, complaining about their use of his photograph of a bowl of skittles to illustrate a tweet send by Donald Trump, Jr., and retweeted by the campaign, infringed his copyright.

Donald, Jr. probably thought a bowl of skittles is a bowl of skittles.  He obvious did not appreciate the artistry involved in photographing confections in crockery:

skittles-2

 

Assuming that getting sued meets the threshold for the original “get in trouble” question posed at the beginning of this post, the answer to that question is a resounding “yes,” you can get in trouble for copying other people’s work, even if the leave it carelessly lying around on the internet.  The likelihood of getting in trouble depends upon whether the author of the copied work finds out about it, and whether the author objects to the use.  If your last name is Trump, the answer is almost always going to be “yes” and “yes,” but even if your name is not as famous, if you are copying someone’s work for a business or commercial purpose, there is a chance they will find out about it, and a chance they are not going to appreciate it.

You may have a fair use defense — just as Donald Jr. may have — but you may not be in a good a position to assert it.  When copying and pasting materials in your work, look for materials you created or materials that are in the public domain or that you have permission to use.  If you must use copyrighted materials, make sure that you have a bona fide fair use defense (saving your audience from boredom is not such a bona fide fair use).  In other words, control your <CTRL> V.

 

Where’s My %$^&# Dollar?

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The issue of consideration in an assignment is always in the background, but only occasionally comes up.  In Memorylink Corp. v. Motorola Solutions, Inc., 773 F.3d 1266, 113 USPQ2d 1088 (Fed. Cir. 2014). the Federal Circuit had to a resolve over the adequacy of consideration in a patent assignment.  Memorylink claimed that its assignment to Motorola was void for lack of consideration, since it was supported by Motofola assignment to Memorylink, which was illusory because Motorola had no rights because its employees were not inventors,

The Federal Circuit started with the axiom that consideration is a basic requirement of a contract, but nominal consideration will suffice.  Courts will not inquire into the adequacy of consideration.  The Assignment on its face stated:

 [f]or and in consideration of goods and valuable consideration of the sum of One Dollar to us in hand paid, and other good and valuable consideration, the receipt of which is hereby acknowledged . . .

The Federal Circuit agreed there was no issue of material fact because the assignment explicitly acknowledges consideration for the assignment.  The Federal Circuit said that discounting extrinsic evidence, the four corners of the agreement recited consideration,  Memorylink complained that this was merely boilerplate, but the Federal Circuit said that the use of boilerplate language does not make the stated consideration invalid or non-existent.

Other courts that have faced the issue reached similar conclusion.  In Network Protection Sciences, LLC, v. Fortinet, Inc., 2013 WL 4479336 (N.D. Cal. 2013), the district court, applying Texas law, said that the recital “[f]or good and valuable consideration, the receipt of which is hereby acknowledged” was “conclusive” even if no actual consideration were paid.

The lesson is that a recitation of consideration and acknowledgement of receipt is likely to be accepted by the Federal Circuit, and should be considered in every assignment.

Brexit Stage Right

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KEEP_CALMThe Brexit referendum has raised a number of issues related to disentangling United Kingdom from the European Union.  Intellectual Property owners are understandably concerned about their European Intellectual property.

 

Patents

There is no need to be concerned about European Patents.  The European Patent Convention predates the 1993 establishment of the European Union.  Among the 38 contracting states to the EPC, several are not members of the EU: Albania, Iceland, Liechtenstein, Lithuania, Macedonia, San Marino, Serbia, Switzerland, and Turkey.  Upon the departure of United Kingdom from the EU, it can continue its membership in the EPC.

The United Kingdom leaving the EU will impact the proposed new Unitary Patent system and the Unified Patent Court. The United Kingdom was one of the jurisdictions required to ratify the Agreement on the Unified Patent Court, and London was one of the agreed locations for the Unified Patent Court.

Trademarks

With respect to the European Union Trade Mark system, the United Kingdom’s departure from the EU will likely affect the geographic scope of European Union Trademarks.  Some provision will be made to continue the protection of European Union Trademark registrations in the United Kingdom post-separation.  There will be at least two years before the separation occurs, and during which this transition issue will certainly be resolved.  For new applications, applicants should consider a Madrid Protocol application designating both the Community Trademark and the United Kingdom.

Designs

With respect to Community Designs, the United Kingdom’s departure from the EU will likely affect the geographic scope of Community Designs.  Some provision will be made to continue the protection of designs in the United Kingdom post-separation.  As pointed out above, it will be at least two years before the separation occurs, and during which this transition issue will certainly be resolved. For applications filed today, applicants should consider filing both United Kingdom and the European Community designs applications.  If the United Kingdom joins the Hague Convention, this double filing will become easier.

Is the Inevitable Disclosure Doctrine Inevitable?

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An important feature of the recently enacted Defense of Trade Secrets Act was that it left state trade secret law intact.  This meant that states that had adopted the Inevitable Disclosure Doctrine could continue to apply it, and states that had not adopted the Doctrine (e.g., California Bayer Corp. v. Roche Molecular Sys.,
Inc., 72 F.Supp.2d 1111 (N.D. Cal. 1999), and Florida Del Monte Fresh Produce Co. v. Dole Food Co., Inc., 148 F.Supp.2d 1326 (S.D. Fla. 2001).) were not forced to adopt it.  This Doctrine, established by the Seventh Circuit in PepsiCo, Inc. v. Redmond, 54 F.3d 1262, 1269 (7th Cir. 1995), allows a trade secret owner to prove a claim of trade secret misappropriation by demonstrating that the defendant’s new employment will inevitably lead him to rely on the plaintiff’s trade secrets.

It would appear that the Inevitable Disclosure Doctrine is but one way of proving a “threatend missapproiation” prohibited by Mo.Rev. State. 417.455 of the Missouri Uniform Trade Secrets Act.  However the status of the Doctrine of Inevitable Disclosure in Missouri is unclear.  At least three cases discuss the Doctrine, and while they found it inapplicable under the particular circumstances, did not reject the Doctrine outright.  See, Lasco Foods,, Inc. v. Hall & Shaw Sales, Mktg. & Consulting, L.L.C., No. 4:08cv01683, January-February 2015 / 33 2009 WL 3834099, at *2 (E.D. Mo. Nov. 16,2009); Carboline Co. v. Lebeck, 990 F.Supp. 762, 767-68 (E.D. Mo. 1997), and H & R Block Eastern Tax Servs., Inc. v. Enchura, 122 F. Supp. 2d 1067, 1075 (W.D. Mo. 2000).

In H & R Block Eastern Tax Servs., Inc. v. Enchura, 122 F. Supp. 2d 1067, 1075 (W.D. Mo. 2000), the district court indicated that “inevitability alone is insufficient to justify injunctive relief; rather, demonstrated inevitability in combination with a finding that there is unwillingness to preserve confidentiality is required.” Other factors that might be analyzed in determining whether to apply the doctrine:include:

  • whether the employee will have a decision making role at the new employment;
  • whether the responsibilities at the respective jobs are similar;
  • whether the employee will be developing new products; whether the employee was involved in the creation of the trade secrets at issue; and
  • whether the trade secrets are easily subject to memorization.

It would seem that if in fact the disclosure of a trade secret could be shown to be inevitable, then relief under the Missouri Uniform Trade Secret Act (Mo.Rev. State. 417.455), which authorizes injunction again threatened misappropriation would be appropriate. Such an injunction would even appear to be appropriate under the Defense of Trade Secrets Act, which requires that “conditions placed on such employment shall be based on evidence of threatened misappropriation and not merely on the information the person knows” would also be appropriate.  18 USC 1936(b)(3)(A)(i)(I).

Where to Protect Trademarks Abroad

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For the most part, where a business should protect its trademarks aligns with where the business uses or is likely to use those trademarks.  However, it can be helpful to benchmark a foreign filing strategy with what other businesses are doing, so here it the top ten list of countries where U.S. businesses file for trademark protection.

  1. China
  2. Canada
  3. Mexico
  4. Office for Harmonization in the Internal Market
  5. Brazil
  6. Australia
  7. Japan
  8. Republic of Korea
  9. India
  10. Argentina

(Based upon WIPO data for 2014).  Whenever you see a list of what others are doing, you need to do a reality check for your own particular circumstances.  Mom had a point when she asked: “If everyone else was jumping off a bridge, would you jump too?”

Here is the whole list

Continue reading →

Protecting Websites

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The graphics on a web page can be protected by copyright.  If they are distinctive enough, they can also be protected as a trademark, and even registered.  However, a third alternative, design patent, which can protect such things as website backgrounds and other website features.  See, for example,  U.S. Patent No. D570,362 on the background image for a portion of a display screen:

Background

 

Google obtained U.S. Patent No. D599,372 on its landing page:

Google_Page

 

 

 

 

 

 

 

Timing is Everything

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In Trieme Medical, LLC v. Angioscore, Inc., [2015-1504] (February 5, 2015) the Federal Circuit reversed the dismissal of Trieme’s complaint to have its assignor, Dr. Lotan, named as an inventor of Angioscore’s patents.

Lotan worked as a consultant for Angioscore, and had signed a consulting agreement with a Section 9(a) that gave Angioscore a license to any preexisting inventions made by Dr. Lotan:

(a) Inventions Retained and Licensed. Consultant has attached hereto, as part of Exhibit C, a list describing all inventions, original works of authorship, developments, improvements, and trade secrets which were made by Consultant prior to the date of this Agreement (collectively referred to as “Prior Inventions”), that belong solely to Consultant or belong to Consultant jointly with another and that relate to any of the Company’s current or proposed businesses, products or research and development; or if no such list is attached, Consultant represents that there are no such Prior Inventions. If, in the course of providing the Services, Consultant incorporates into a Company product, process or machine or into any Invention (as defined below), a Prior Invention owned by Consultant or in which Consultant has an interest, the Company is hereby granted and shall have a non-exclusive license (with the right to sublicense) to make, have made, copy, modify, make derivative works of, use, sell and otherwise distribute such Prior Inventions as part of or in connection with such product, process, machine or Invention.

and a Section 9(b) that gave Angioscore ownership of any inventions made during the term of the agreement:

(b) Assignment of Inventions. Consultant agrees to promptly disclose to the Company and hereby assigns to the Company, or its designee, all right, title and interest in and to all inventions, original works of authorship, developments, concepts, know-how, improvements or trade secrets, whether or not patentable, that Consultant may solely or jointly conceive or develop or reduce to practice during the term of this Agreement that relate to the Services (collectively referred to as “Inventions”).

Angioscore’s problem was that while the agreement was executed on May 1, 2003, Dr. Lotan actually began working before May 1, 2003, and the results of such pre-agreement work was not assigned to Angioscore.

The Federal Circuit could not determine on the sparse record of the motion to dismiss, whether or not the agreement transferred all of Dr. Lotan’s rights to Angioscore, or whether he retained some ownership based upon his pre-agreement work that he could validly transfer to Angioscore.  Angioscore may still prevail, but this case highlights the importance of knowing when a consultant or other inventor began working on the invention, and making sure that all rights, including those created before the execution of the agreement, are properly addressed.

Share and Share Alike? Not so fast.

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The joint ownership of patents is governed by 35 USC 262:

In the absence of any agreement to the contrary, each of the joint owners of a patent may make, use, offer to sell, or sell the patented invention within the United States, or import the patented invention into the United States, without the consent of and without accounting to the other owners.

What this means, contrary to the likely expectations of the joint owners, is that any co-owner can do whatever he or she pleases with the patent, without accounting to the others.  The carefully crafted percentages that the owners allot themselves make no difference — a 1% owner can do whatever a 99% can do.

The solution to this potential problem is found in the first line of the statute: “in the absence of any agreement to the contrary.”  The peculiar effect of 35 USC 262 can be avoided by simply entering into an agreement, which the parties should consider recording to give public notice to the restrictions it places on the sale or license of patent rights.

What should be in a co-owners agreement depends upon the parties particular circumstances, but they should at least consider a provision governing the prosecution and maintenance of the patent applications and patents:

  • PARTY 1 and PARTY 2 agree to cooperate in the prosecution of any patent applications comprising the PATENT RIGHTS, and maintenance of any patents comprising the PATENT RIGHTS.

a provision regarding sharing the costs:

  • PARTY 1 and PARTY 2 agree to share equally all costs of prosecuting any patent applications comprising the PATENT RIGHTS, and maintaining any patents comprising the PATENT RIGHTS.

a provision restricting the individual exploitation of the patent applications and patents:

  • PARTY 1 and PARTY 2 agree to only exploit or license the PATENT RIGHTS jointly, and each agrees not exploit or license the PATENT RIGHTS without the agreement of, and participation of, the other, and further that any attempt by one of them to do so without the agreement of and participation of the other is void ab initio. PARTY 1 and PARTY 2 agree to share equally the costs of and proceeds from the joint exploitation and licensing of the PATENT RIGHTS.

and because such agreements can result in deadline, some provision addressing what happens if one party is unwilling or unable to pay its share of the costs:

  • In the event that one of the parties is unwilling and unable to pay his share of the costs of prosecuting a particular patent application comprising the PATENT RIGHTS, or maintaining a particular patent comprising the PATENT RIGHTS, and the other party is willing to and able to pay that share, then the party shall, promptly and without further consideration, assign all of its right, title, and interest in and to the particular patent application or particular patent to the other party in sufficient time to prosecute the application or maintain the patent, it being agreed that once a patent application or patent is owned by one person, it is no longer subject to this Agreement.

or if one of the parties wants to transfer its rights:

  • In the event that one of the parties (or their successor in interest) desires to sell all or part of its interest in the PATENT RIGHTS, that party shall first offer to sell that interest to the other party on the same terms and conditions, and hold such offer open for at least ten (10) business days.

Finally, because Federal Circuit has held that all owners are necessary parties, but an owner cannot be compelled to joint a suit, some provision regarding enforcement:

  • The parties agree to cooperate in the enforcement of the patent rights, including being named as a party in any agreed enforcement action, and sharing the costs and proceeds from any agreed enforcement action equally.