Author: Scott R. Bialecki

Scott Bialecki, a former FTC attorney and IP litigator, is the co-Chair of Sheridan Ross P.C.'s Litigation Group.

Don’t Underestimate Copyright Protection: Organizational Management Diagram Found To Be Protectable

Scott R. Bialecki
Often the most important asset of a consulting company is its intellectual property.  As such, don’t overlook the potential to protect unique flow diagrams and/or charts that you’ve developed when developing your IP portfolio.  In late May of this year, the Tenth Circuit in Enterprise Management Ltd. V. Warrick found that an organizational management diagram was indeed eligible for copyright protection. The diagram-at-issue depicted a listing of variables and possible outcomes.  The alleged infringer incorporated a similar diagram into his course materials and consulting business. After later discovering that the diagram had been created by the Plaintiff, he gave her credit for the work at the bottom of his diagram. However, he argued that the Plaintiff’s diagram was not eligible for copyright protection because it consisted only of unprotected ideas and expressions so intertwined with those ideas that they could not be protected under the “merger doctrine.”  Although the District Court was persuaded by this argument, the Tenth Circuit disagreed.  The Tenth Circuit focused on the expressive choices that the Plaintiff had made to convey her concepts and offered that such information could have been arranged in a myriad of ways. Her selection of symbols and word choices were persuasive factors. In the end, what appeared to be a fairly mundane flow diagram was found to be eligible for copyright protection. The lesson here is if you incorporate material that you did not create into your business, make sure that you have the legal right to do so. Copyright cases are fact intensive and are not always straight forward.  

2 Technologies That Would Amaze My Grandparents….

Scott R. Bialecki
Technology is becoming more and more integrated into our daily lives and undoubtedly companies are seeking related IP protection. It was recently reported that Coupons.com has released its KitchMe app, which works in conjunction with Google Glass. Now, cooks can be sent shopping lists and recipes with step-by-step instructions by merely looking at available ingredients in their kitchens.  Technology is certainly converging with our everyday lives. Here’s another head spinner. Yesterday, it was reported that during a press conference, David Marcus, President of PayPal, discussed the issues associated with trying to pay for things in space.  As companies like Virgin and SpaceX are forging ahead to make space tourism a reality, companies are apparently thinking about how to pay for services rendered in space.  Indeed, PayPal is allegedly developing “PayPal Galactic” as a vehicle to buy things while in outer space.  It will be interesting to see how it tries to implement and protect this technology as there are no IP addresses in space.  These advancements are truly amazing.

How Many Calories Are In Your Nightcap? Alcoholic Beverages May Soon Contain Nutrition Labels

Scott R. Bialecki
You’ve always heard about the carbs in alcoholic drinks, but now, you might just learn more than you want to know.  At the end of May, the Department of the Treasury’s Alcohol and Tobacco Tax and Trade Bureau approved beer, wine and spirits companies’ use of nutrition labels on their products, which can list, among other things, calories, carbohydrates, protein and fat per serving.  Since the labeling is voluntary, it will be at the beverage companies’ discretion as to whether to use them. The labeling regulation is only temporary while the Treasury Department considers final rules on alcohol labels. It has been suggested that the recent labeling regulation is the result of lobbying by hard liquor companies that historically sell products with lower calories and carbohydrates than their beer competitors. As this is a competitive industry, we will probably start to see entire ad campaigns develop around specific amounts of calories and carbohydrates in various beverages.  If there is an edge to be had, companies will be sure to highlight it for consumers.  So, an after dinner beer or scotch?  We may soon learn which one helps us out more with our diets.

Patent Trolls Take Note: Vermont Takes A Stand

Scott R. Bialecki
On Wednesday, the Vermont Attorney General’s Office brought suit against an alleged patent troll, MPHJ Technology Investments, LLC, for violation of Vermont’s Consumer Protection Act.  The Vermont AG claims that the troll engaged in “unfair and deceptive acts” by sending numerous, threatening letters via a host of shell companies to small businesses and not-for-profit organizations in Vermont.  The Defendant claims to have a patent on the process of scanning documents and attaching them to email via a network. At first glance, the suit complains of, among other things, tactics that are fairly commonplace in this arena:
  • threatening litigation when the Defendant was neither prepared or likely to bring a litigation;
  • targeting small businesses that were unlikely to have the resources to fight patent-litigation; and
  • sending letters threatening infringement without independent evidence of infringement.
However, this is probably not what caught the attention of the Vermont AG’s Office.  Rather, the numerous complaints by small, Vermont-based businesses and the pursuit of not-for-profit organizations, such as one providing home care to developmentally disabled Vermonters, probably provided the impetus for the State to take action. The AG claims that various deceptive statements were made in what appears to have been an aggressive letter writing campaign, including:
  • Defendant’s licensing program had received a positive response from the business community;
  • Many or most businesses were interested in promptly purchasing a license from Defendant;
  • The fair price of a license was $900-$1200 per employee (when the average license fee was under $900 in total);
  • The shell companies had exclusive enforcement rights; and
  • Defendant would sue the target business if it did not respond within two weeks (when Defendant and/or its shell companies had never sued anyone anywhere in the U.S., much less in Vermont).
Ordinarily, you don’t see a state becoming involved in private patent infringement disputes.  However, one can understand Vermont’s involvement because of the numerous complaints by those without adequate resources to respond, especially the local, not-for-profit agencies servicing disabled Vermonters. In spite of the foregoing, it’s not likely that we’ll see other states take action against patent trolls engaging in aggressive patent infringement campaigns against mainstream companies. The states don’t have the resources or the stake in the fight to get involved.  Nonetheless, if one of your clients is a small business that receives a baseless infringement letter, it might be worthwhile to check in with your state’s AG’s Office.  If enough companies have received similar threatening suits in your state, the AG’s Office may follow Vermont’s lead and consider taking action.

BlackBerry: Can It Save Its Diluted Brand?

Scott R. Bialecki
Not long ago, the only smart phone that people knew about was the BlackBerry. Now, it’s been recently reported that BlackBerry has fallen to #4, behind Windows, Android and Apple.  What happened? Decentralization and resulting dilution. BlackBerry was experiencing tremendous growth in the marketplace.  However, rather than delivering a consistent message that leveraged off its tremendous name recognition, BlackBerry decentralized its product line, offering a host of models that appear to have cannibalized BlackBerry’s market share. To this day,  it’s hard to know the differences between the Curve, Bold, Torch, Tour and Storm models. Apple and Samsung, on the other hand, went on a marketing frenzy, bombarding consumers with more centralized messages around their iPhone and Galaxy products and reportedly spending ten times that of BlackBerry.  Armed with a new CMO, BlackBerry appears to be on the mend, focusing on regaining brand recognition. As the weeks unfold, we will see more about the BlackBerry Q5 and BlackBerry Z10.  The company is returning to the brand that put it on the map.  The question is whether it can regain its lost ground. What can be learned? If you have a strong brand, leverage it. Focus on what works and resist the temptation to diversify to the point of cannibalizing your own market share.  We’ll see if BlackBerry can regain its position as #1.    

Hopefully Siri Can Keep A Secret….

Scott R. Bialecki
My children often use my iPhone to ask Siri the most bizarre questions. No matter what the question, however, Siri always seems to have an immediate answer. Had I thought about it in any detail, I probably would have figured out that there was some form of back end data gathering/analysis being performed in order for this to have happened.  Yet, I must confess that I had no idea that my Siri voice requests were being gathered, analyzed and more importantly, stored for any length of time. Late last week, it was reported that Apple disclosed just how long it keeps this data- 2 years.  Apple allegedly anonymizes the data by assigning random numbers to represent the user and associates the voice request files with that number. After 6 months, Apple allegedly disassociates the number from the voice file.  The disassociated files are allegedly kept for up to another 18 months for “testing and product improvement purposes.”  If Siri is turned off, the associated data is allegedly deleted. I was so spellbound by the technology that I forgot to inquire about the related privacy issues.  The ACLU is pushing for greater disclosure of Apple’s privacy practices on its Siri FAQ page.  Meanwhile, hopefully Siri can keep a secret.

Give With Your Heart to the Victims of Boston, But Be Smart

Scott R. Bialecki
What happened at the Boston Marathon last week was horrific. And even though unfathomable, there are some people that will try to profit from this tragedy.  As the FTC warns, refrain from giving cash donations to unknown sources and consider these simple rules provided by the FTC when solicited in person, online or on the phone:
  • Ask for the name of the charity if contacted by phone and the telemarketer does not provide it promptly;
  • Ask what percentage of your donation will support the cause described in the solicitation;
  • Verify that the charity has authorized the solicitation;
  • Do not provide any credit card or bank information until you have reviewed all information from the charity and made the decision to donate; and
  • Ask for a receipt showing the amount of the contribution and stating that it is tax deductible.
 Giving to those in need should be encouraged.  Give from the heart, but be smart.

What’s On the FTC’s Radar? Chairwoman Ramirez Explains….

Scott R. Bialecki
The FTC has limited resources.  Knowing what it has focused on in the last year can give you a sense of the types of issues that might be more likely to trigger a FTC inquiry.  As Chairwoman Ramirez recently explained, in 2012, the Agency brought actions in the following areas:
  • Privacy, especially in the digital arena
    • Data security failures, collecting personal information and children’s online privacy;
  • Health care mergers and anti-competitive health care provider conduct;
  • Standard setting and pharmaceutical pay-for-delay patent settlements;
  • Health and safety claims;
  • Business opportunity and “get rich quick” schemes;
  • Tech support scams; and
  • Marketing of healthier food choices to children and teens.
As can be seen, health care antitrust, privacy, health claims and marketing to children continue to be important areas of focus for the Commission.  There is no reason to believe that this will change in 2013.  If your company operates in any of these areas, it should proceed with caution. Additionally, as consumers become bombarded with more online and mobile advertising, the Commission will continue to be concerned about marketing in this new media. Indeed, the Commission recently updated its .com Disclosures to include, among other things, examples of adequate disclosures in mobile contexts.  An upcoming blog post will address some of the highlights from this guide.

Tradeshows and Patents: Like Oil and Water

Scott R. Bialecki
Your company has just developed a new invention that it intends to unveil at your annual industry trade show. In advance of the show, your marketing department sends out a press release describing your new invention in detail and launches photos of your invention on your website. The problem is that your marketing department is not in sync with your intellectual property strategy and you never filed a patent application prior to these public disclosures. There is a great demand for your product and now your CEO wants you to seek patent protection in the U.S. and China. The problem is China, like many other non-U.S. countries, is an “absolute novelty” country and as such, requires a patent application to be on file before the invention is first publicly disclosed.  While certain countries, like the U.S., have a limited grace period, many do not. Thus, you should always make sure that your global patent strategy tracks your marketing efforts or you may forfeit your ability to seek foreign patent rights.

What’s “Reasonable” Under Section 273?

Scott R. Bialecki
The America Invents Act significantly expanded the “Prior Use” defense under 35 U.S.C. § 273 to patent infringement.  Prior thereto, the defense was limited to use against claims of business method patents. Now, a litigant may assert this affirmative defense if it commercially used, in good faith, a process, machine, manufacture, or composition of matter that is asserted to infringe the patent-at-issue. While this sounds good on paper, there is a catch. If it is shown that a defendant failed to have a “reasonable” basis for asserting this defense, the “court shall find the case exceptional for the purpose of awarding attorneys’ fees under section 285.”  35 U.S.C. § 273(f)(emphasis added).  The problem is that the Courts have failed to address what “reasonable” means.  Thus, companies facing patent infringement claims must decide whether it’s worth the risk. If they don’t produce enough information to sustain the defense, they might have to pay the patentee’s attorneys’ fees- a remedy generally available only in instances of willful infringement.