Experienced attorneys have learned this lesson the hard way. There is not a “one size fits” all non-disclosure agreement. The language depends on the circumstances. Are you the party disclosing the information or receiving it? If you are disclosing the information, you’ll want to be sure that it captures all of the information and has convenient remedies if there is a breach.
Conversely, if you are receiving confidential information, you’ll want to make sure that the disclosing party clearly marks all “confidential” information so that there is no confusion in the event of a dispute. This means that if information is orally conveyed, it should be followed up with a written confirmation that memorializes the discussion as “confidential.”
Similarly, the receiving party will want to make sure that it protects its ability to continue to use information already in its possession or learned from another source. As such, there should be carve outs expressly pertaining to these issues. If you are the disclosing party, you may want to require that the receiving party have prior written evidence of its possession of such information. However, if you are the receiving party, you may view this as being too onerous, especially if your company is not great about maintaining historical records.
In the patent context, an often overlooked area pertains to “improvements” to the disclosed technology. Technically, whoever invents the “improvement” is the owner. However, the discloser can certainly take the position that but for its disclosure, the improvement would have never happened and as such, it should own any improvements.
In short, there are many potential traps associated with NDAs and enclosed are just a few. As they don’t need to be too lengthy, NDAs are often overlooked and quickly signed. However, they can be an extremely important tool to protect a company’s rights and as such, should be carefully tailored to meet a company’s needs. Beware. One NDA may not be adequate for all situations.
PATENT PROSECUTORS BEWARE: YOUR BILLS COULD COME BACK TO HAUNT YOU
Not much time is devoted to training lawyers how to record their time. It rarely becomes an issue in litigation so not much thought is given to it until creative litigation counsel pushes the issue. Last week, a Court in California issued a discovery order seeking the patent prosecutor’s invoices in connection with the opposing party’s patent prosecution laches and inequitable conduct claims. The Court held that the non-privileged aspects of the patent attorney’s invoices could be relevant as to “when each particular prosecution matter was opened, how long it took between the initial opening and when the application was first filed, what activities occurred during prosecution of each application, when each activity occurred, and how much time was spent on the activity.” Equally disturbing, the Court found that the amount of annual compensation received by the patent attorney for prosecuting the patents-at-issue was discoverable in connection with the “specific intent to deceive” aspect of the asserted inequitable conduct claim. The Court also noted that the amount of annual compensation could be relevant to the patent attorney’s credibility.
Recording time is a daily task that has fallen under the radar for most firms. This case may be an anomaly, but patent prosecutors should take notice. Most lawyers merely assume that their bills will never make their way into court. However, in this case, various time entries could create some issues.
Recording time is a daily task that has fallen under the radar for most firms. This case may be an anomaly, but patent prosecutors should take notice. Most lawyers merely assume that their bills will never make their way into court. However, in this case, various time entries could create some issues.
WHAT DOES IT TAKE TO FILE A COPYRIGHT CASE?
A perplexing question for litigators is whether copyright owners need to receive their registration before suing. In certain jurisdictions, they could file as long as they had an application on file. In others, they had to wait until a registration issued or action was taken on the application. Finally, the Supreme Court will resolve this looming issue as it agreed to hear the issue in the case of Fourth Estate Public Benefit Corp. v. Wall-Street.com LLC.
END OF AN ERA FOR TEXAS? SUPREME COURT RULES ON PATENT VENUE
Today, in the long-awaited case of TC Heartland v. Kraft Foods Group Brands, the US Supreme Court unanimously determined where a domestic corporation “resides” for purposes of establishing proper venue in patent cases. In short, a domestic corporation “resides” only in its State of incorporation.
Why is this relevant? And will this have any effect on patent infringement cases going forward?
For years, if it could be shown that a company was subject to personal jurisdiction in that district, then it “resided” in that district and venue was proper. As such, many plaintiffs brought cases in pro-plaintiff jurisdictions, like Marshall, TX, even though defendants’ principal places of business were elsewhere.
Going forward, in patent infringement lawsuits, there will be two choices to bring cases: (1) where the US defendant is incorporated or (2) where “the [US] defendant has committed acts of infringement and has a regular and established place of business.” 28 U.S.C.§ 1400(b)(emphasis added). The focus may now shift to where companies have their “regular and established place of business.” States, like Delaware (where many companies are incorporated) or California and New York (where companies have established businesses), could become the new forums of choice.
Why is this relevant? And will this have any effect on patent infringement cases going forward?
For years, if it could be shown that a company was subject to personal jurisdiction in that district, then it “resided” in that district and venue was proper. As such, many plaintiffs brought cases in pro-plaintiff jurisdictions, like Marshall, TX, even though defendants’ principal places of business were elsewhere.
Going forward, in patent infringement lawsuits, there will be two choices to bring cases: (1) where the US defendant is incorporated or (2) where “the [US] defendant has committed acts of infringement and has a regular and established place of business.” 28 U.S.C.§ 1400(b)(emphasis added). The focus may now shift to where companies have their “regular and established place of business.” States, like Delaware (where many companies are incorporated) or California and New York (where companies have established businesses), could become the new forums of choice.
Akamai Lesson: Craft Claims For Single Party Infringement
By now, you have undoubtedly received ten thousand E-mails informing you of the Federal Circuit’s recent decision in Akamai Technologies, Inc. v. Limelight Networks, Inc. in which the Court continued to wrestle with the notion of divided infringement under 35 U.S.C.§ 271. In short, the Court refused to extend a new joint tortfeasor approach to direct infringement under 35 U.S.C. § 271(a), noting that to do so would make the other indirect infringement provisions of §§ 271(b) and (c) redundant. Instead, the Court reiterated that for direct infringement under §271(a) to occur, all steps of a method claim must be performed by or attributable to a single entity.
When can the combined acts of multiple parties be “attributed” to a single party? Yet again, the Court pointed to a “mastermind” theory in which one party exercises “direction or control” over the entire process to the point that every step is attributable to the controlling party.
The Court also outlined when vicarious liability might trigger direct infringement under §271(a): (1) principal-agent relationships; (2) contractual relationships; and (3) joint enterprises. The most interesting was “joint enterprise,” which occurs when there is an agreement between members sharing a “community of pecuniary interest” in a “common purpose,” with each having an “equal right to voice direction of the enterprise,” thereby giving “equal right of control.” What’s important to note is that none of these scenarios involved arms-length seller-customer relationships.
Since the Supreme Court last decided Akamai, the safest bet for patent prosecutors has been to craft claims to capture infringing activity by a single party. The Federal Circuit’s comments that “the claim drafter is the least cost avoider of the problem of unenforceable patents due to joint infringement” only reinforce this approach. Claiming the acts of your customers is rarely beneficial and, in light of the Federal Circuit’s recent decision, will not make your infringement case any easier.
Chances Were Slim to None: Shapewear Claims Fall Short
Just when you thought that you heard it all, the FTC announced yesterday that it settled with marketers of caffeine-infused “shapewear” over unsubstantiated weight loss claims. According to the FTC, marketers urged consumers to wear a fabric that was allegedly infused with, among other things, caffeine for metabolizing fat. The caffeine was supposed to dehydrate fat cells, making the wearer appear slimmer and firmer. Claims like “[t]ake up to 2” off hips,” “[i]nstant trimming when you wear them,” and “works with your body to eliminate cellulite” came under attack by the Commission.
The FTC was critical of the studies that had been offered as alleged substantiation. Besides being uncontrolled and unblinded, the studies revealed average reported hip reductions of less than of fractions of an inch. Outlier results were not persuasive. In the end, the companies entered into proposed Consent Orders requiring over $1.5 million to be refunded to consumers.
Once again, companies have been pursued when the Commission felt that they distorted results and made outlandish claims. Consumers continue to search for quick fixes for weight loss and the FTC continues to hold companies accountable. This sector has been a priority for the Commission for years due to the inherent health-related concerns associated with specious weight loss claims. Any company operating in this domain should err on the side of caution in its advertising.
Copyright Office Does Not Monkey Around
Selfies (self-portrait photographs) appear daily on the Internet. However, you don’t often see them taken by a monkey. There has been a lot of recent press about the ownership rights associated with a macaque monkey’s “selfie” created with a British photographer’s camera. The monkey allegedly swiped the photographer’s camera back in 2011 while he was trekking in an Indonesian forest. Wikimedia Commons got a hold of the photo and made it available for free, public use. Arguing that the monkey was akin to his assistant, the photographer claimed that the photo had been misappropriated and that he had lost tens of thousands of dollars in revenue associated with this photograph that went viral.
Rarely does the government react so quickly to resolve private disputes, but on Tuesday, the U.S. Copyright Office updated its Compendium of U.S. Copyright Office Practices and addressed this very issue. The Office clarified that it “will not register works product by nature, animals or plants. . . Examples: A photograph taken by a monkey….” In case there was any doubt, “[a] mural painted by an elephant” is also not protected.
While it’s generally not advisable to take someone else’s work, for now, the works of the animal kingdom are fair game.
AAA Trap: What Rules Apply?
It’s not uncommon for companies to use an arbitration provision in their contracts to resolve disputes as an attempt to control costs. Many cite to the pending rules of the American Arbitration Association or AAA. Depending on whether your case is a “Large, Complex” case (i.e., your claims are at least $500,000), you might not have as much structure as you may desire to govern the handling of your dispute, thereby causing uncertainty and potentially driving up the cost.
In the case of Large, Complex matters, the arbiter is granted more deference in establishing the discovery to be exchanged and depositions to be conducted. In smaller matters, however, there is an argument that the arbiter does not have as much discretion. More importantly, nowhere does it mention what procedural rules and limitations apply.
For example, how many interrogatories or depositions will be permitted? What is reasonable notice for a deposition to occur? Normally, applicable state or federal rules of civil procedure would provide a framework to answer these questions. However, they don’t necessarily apply in arbitration unless specifically called out in the arbitration provision.
This uncertainty can cause disputes between the parties, thereby driving up the cost. Depending on which side of the dispute your company is on, you may or may not want to have extensive discovery to assist you with your case. So, if you want more certainty, make sure to spell out what rules of civil procedure should apply in the event of arbitration.
What Will Be the Standard for Direct Infringement for Method Claims?
Much has been written about the Supreme Court’s recent Akamai decision. However, a more interesting topic is whether the Federal Circuit will revisit its standard for direct infringement of a method claim.
In Muniauction, the Federal Circuit held that for direct infringement of a method claim to occur, all of the claimed steps have to be attributable to a single actor, either by performing them itself or by directing or controlling others to perform them. In Akamai, the Supreme Court appeared to question this standard, stating that “[a]ssuming without deciding that the Federal Circuit’s holding in Muniauction is correct…” and allowing the Federal Circuit the opportunity “to revisit the § 271(a) question if it so chooses.” Even though it acknowledged that under the Federal Circuit’s standard, a party could evade liability by dividing up performance of the steps of a method claim with another which the party did not direct or control, the Supreme Court was unwilling to create a new standard for indirect infringement that did not have a statutory basis.
Until the Federal Circuit changes the law, the Muniauction standard stands- i.e., there can be no direct infringement of a method claim if all the steps are not attributable to one actor. More importantly, if there is no direct infringement, there can be no indirect infringement.
Patent prosecutors should keep this in mind when crafting claims and clients should consider this when they participate in a multi-step process. Claims should be drafted to ensnare a single actor and clients should evaluate whether one entity directs or controls an entire process when a method patent claim is at issue.
The Good, The Bad And/Or The Ugly
In case you have been on vacation for the past two weeks, here is a quick update of some major developments in the intellectual property arena. Depending on your position, they may represent the “good,” the “bad” or the “ugly.”
Alice Corporation Supreme Court Decision
Yesterday, in the Alice Corporation case, the Supreme Court provided further comment on patent-eligible subject matter under 35 U.S.C. § 101 in the computer software context. The patent claims-at-issue were directed to “a computerized scheme for mitigating ‘settlement risk.’” The Court held, in part, that “the claims at issue [were] drawn to the abstract idea of intermediated settlement, and that merely requiring generic computer implementation fails to transform that abstract idea into a patent-eligible invention.” The takeaway is that merely reciting a computer system configured to implement an abstract concept will not be patent-eligible subject matter.
Rader Resigns
As previously reported, Federal Circuit Judge Randall Rader stepped down as chief judge last month in the midst of criticism over his controversial e-mail. Last week, Judge Radar announced that he will be retiring from the bench at the end of the month. He intends to teach.
Washington Redskins Trademarks Cancelled
On June 18, 2014, the Trademark Trail and Appeal Board (“TTAB”) in the Amanda Blackhorse matter cancelled Pro-Football, Inc.’s trademark registrations consisting in whole or in part for the term REDSKINS for professional football-related services. The marks were cancelled because they were found to be disparaging to Native Americans and as such, were obtained in violation of 15 U.S.C. §1052(a), which prohibits “registration of marks that may disparage persons or bring them into contempt or disrepute.” The TTAB was quick to point out that its decision solely related to the right to register these marks and does not deal with the right to use such marks. This is an important distinction as this case will surely be appealed and does not extinguish any common law enforcement rights that may exist. Thus, if you are thinking about starting your own REDSKINS clothing line, you might want to rethink that decision.