September 29th, 2010
Dana
Dur-a-Flex v. Laticrete International illustrates the value of a well-drafted nondisclosure agreement (NDA) – not to mention one that includes an attorneys’ fee provision.
Dur-a-Flex developed a trade-secret process for producing colored sand. Laticrete was a long-time Dur-a-Flex customer and the only customer for this product.
When Laticrete’s orders dropped significantly, Dur-a-Flex suspected that Laticrete was using the Dur-a-Flex process in violation of the NDA that Laticrete had signed.
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September 22nd, 2010
Dana
Detail from an illustration of a machine by Leonardo da Vinci
Your invention is so novel and non-obvious that you have applied for a patent. You have formed a legal entity (see Should I form an LLC or a corporation?) to turn the patent, once it issues, into a revenue stream. How do you assign the patent application to your new entity so your startup company can begin conducting business?
First, you need to prepare an Assignment Agreement. The most important point is that the agreement must assign not just the application, itself, but any patents that are issued with respect to the invention. Here is an example of operative assignment language adapted from Drafting Patent License Agreements by Brian G. Brunsvold and Dennis P. O’Reilly:
I hereby sell and assign to ABC Company the entire right, title and interest in and to the [name of invention] invented by me as described in U.S. patent application number __________, and any and all applications for patent and patents in any and all countries, including all divisions, continuations,reissues and extensions thereof, and all rights of priority resulting from the filing of said U.S. application.
Second, you need to record assignment of the application using the U.S. Patent and Trademark Office’s Electronic Patent Assignment System (EPAS).
Related post: How Can I Switch from a Sole Proprietorship to a Corporation?
Photo credit: Leonardo3
Dana H. Shultz, Attorney at Law +1 510 547-0545 dana [at] danashultz [dot] com
This blog does not provide legal advice and does not create an attorney-client relationship. If you need legal advice, please contact a lawyer directly.
September 15th, 2010
Dana
This post is based on (and is an edited version of) a Quora question and my answer. Q. How do you switch from a sole proprietorship to a corporation? You do, of course, want to keep all your intellectual property and brand and street cred and so on. Can you treat that as equity?
A. Yes, you can treat the assets of your sole proprietorship as the consideration for which your shares are issued. You need to create an agreement by which you (as an individual) assign those assets (including the intellectual property rights therein) to the corporation. This is, of course, a friendly transaction, so the assignment agreement can be simple – no need for endless pages of legal boilerplate to protect against litigation that never will occur.
Related post: How to Assign a Patent Application to Your Startup Company
Dana H. Shultz, Attorney at Law +1 510 547-0545 dana [at] danashultz [dot] com
This blog does not provide legal advice and does not create an attorney-client relationship. If you need legal advice, please contact a lawyer directly.
September 13th, 2010
Dana
A client’s former employee / co-founder departed to form a competing business. Violating the client’s copyrights, he posted dozens of the client’s images on his website and blog. I sent takedown notices to the website’s and the blog’s service providers (see “Terms of Use and the Digital Millennium Copyright Act [DMCA]“). I wondered how expeditiously the service providers would respond.
17 USC Section 512(c)(1)(C) provides a “safe harbor” incentive for service providers to remove, or disable access to, infringing works expeditiously. Unfortunately, “expeditiously” is not defined (see “Defining Expeditious: Uncharted Territory of the DMCA Safe Harbor Provision“).
I faxed the notices last Wednesday evening and followed up by certified mail Thursday morning. Network Solutions, the website host, responded to the infringer by e-mail, with a cc to me, Friday morning. I consider that quite expeditious. The infringer removed all of the infringing works over the weekend.
Meanwhile, as I write this early Monday evening, I have not yet heard back from Google Blogger, the blog host. I consider that quite disappointing. I’ll try to follow up in a couple of days if I do not receive anything before then. The only saving grace is that the vast majority of the infringing works were on the website, rather than the blog.
Check out all posts about DMCA takedown notices.
Dana H. Shultz, Attorney at Law +1 510 547-0545 dana [at] danashultz [dot] com
This blog does not provide legal advice and does not create an attorney-client relationship. If you need legal advice, please contact a lawyer directly.
In Terms of Use and the Digital Millennium Copyright Act (DMCA) I described the six elements that a copyright owner must include in a “takedown notice” sent to a service provider that is hosting infringing content. Perfect 10 v. Google shows that a notice will not be effective if it lacks the required information.
Perfect 10, which creates and sells photos of nude models, brought suit against Google, alleging, among other things, copyright infringement based on caching and hosting of photos.
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BusyBox Logo
Erik Anderson developed certain software that he contributed to BusyBox, a compact set of embedded Linux utilities licensed under the GNU General Public License, Version 2 (the “GPL”). In October 2008, Anderson registered a copyright on the code that he contributed.
On September 2, 2009, Anderson’s counsel notified Westinghouse that it was infringing Anderson’s copyright because it was distributing BusyBox – both integrated into Westinghouse televisions and separately with other software – on terms that are more restrictive than the GPL. Westinghouse continued infringing Anderson’s copyright.
Anderson and the Software Freedom Conservancy brought suit against Westinghouse and 13 other defendants on December 14, 2009. Westinghouse initially mounted a defense, but stopped participating in the suit when it filed for bankruptcy.
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Let’s assume that your website has a particularly effective visual and interactive elements that you would not want another website to copy. How can you protect this “look and feel”?
Look and feel falls in the category of trade dress, i.e., visual appearance that signifies the source of a product or service. You may be able to obtain a federal trademark registration for the non-functional elements of the website’s look and feel and bring suit against infringers based on that registration. (Please see Trademark Protection in One Easy Lesson.)
Look and feel is not eligible for copyright protection because look and feel is not a work of authorship. (Please see Copyright Protection in One Easy Lesson.)
Dana H. Shultz, Attorney at Law +1 510 547-0545 dana [at] danashultz [dot] com
This blog does not provide legal advice and does not create an attorney-client relationship. If you need legal advice, please contact a lawyer directly.
Someone has obtained a domain name that is the same as, or confusingly similar to, a trademark or service mark that you own. How can you take the domain name from this “cybersquatter”?
When he registered the domain name, the cybersquatter (the Registrant) agreed to ICANN’s Uniform Domain Name Dispute Resolution Policy (UDRP).
Under the UDRP, you (the Complainant) will be required to prove the following:
(i) the domain name is identical or confusingly similar to a trademark or service mark in which you have rights; and
(ii) the Registrant has no rights or legitimate interests in respect of the domain name; and
(iii) the domain name has been registered and is being used in bad faith.
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Many software companies rely on a combination of copyright and trade secret protection for their products. There is a potential problem, however: The requirement to submit source code with a copyright registration is somewhat at odds with the confidentiality requirements of a trade secret.
Fortunately, the U.S Copyright Office offers some flexibility in its deposit requirements for software containing trade secrets. The applicant may deposit any of the following:
- First 25 and last 25 pages of source code with portions containing trade secrets blocked out; or
- First 10 and last 10 pages of source code alone, with no blocked out portions; or
- First 25 and last 25 pages of object code plus any 10 or more consecutive pages of source code, with no blocked-out portions; or
- For programs 50 pages or less in length, entire source code with trade secret portions blocked out.
Finally, an applicant who is unwilling or unable to deposit source code may deposit object code, though the software will be registered under the rule of doubt – meaning that the Copyright Office has not determined the existence of copyrightable authorship, so the value of the registration may be compromised.
These issues are addressed in greater detail in Copyright Office Circular 61.
Dana H. Shultz, Attorney at Law +1 510 547-0545 dana [at] danashultz [dot] com
This blog does not provide legal advice and does not create an attorney-client relationship. If you need legal advice, please contact a lawyer directly.
Many people know that, when one leaves a job in California, the former employer typically cannot stop the former employee from working for a competitor. However, some people mistakenly believe that the right to compete includes the right to steal the former employer’s customers!
According to Civil Code Section 3426.1(d), a trade secret is “information…that [d]erives independent economic value…from not being generally known to the public…and [i]s the subject of efforts that are reasonable under the circumstances to maintain its secrecy.” For many employers, a customer list is an important trade secret.
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Dana Shultz is a business-savvy lawyer located in Northern California's San Francisco Bay Area (in the East Bay, near Oakland) who has in-depth knowledge of law, business, technology, and the needs of startup and early-stage companies.