The High-touch Legal Services® Blog…for Startups!

© 2009-2021 Dana H. Shultz

Protect Your IP when You Hire a Freelancer

Upwork logo for post about freelancer work product and intellectual property

This post explains how to make sure that you own work product and intellectual property (IP) when you use a freelancer service. Most of the following first appeared on Quora. Please see How can I protect my source code and its Intellectual Property Right while working with a very large team of remote freelancers (Upwork and Fiverr etc)? Are freelancing platforms ensuring IP protection?

When you use a freelancing platform, you need to ensure that you have an agreement with each freelancer. And that agreement must assign to you all work product and all intellectual property rights.

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Design Copyright Explained

Copyright Office logo fo Dana Shultz post about design copyrightMany people are familiar with copyrights for literary and musical works, movies, and the like. This post is about a different type of copyright, the design copyright.

Title 17, Chapter 13 of the United States Code contains the relevant statutes.

Design Copyright Elements

17 USC Section 1301(a)(1) identifies the basic elements of a design copyright (emphasis added): (more…)

How Much Can My Product Look Like Another Company’s Product?

Logo for Quora, where Dana Shultz answered a question about "How much can my product look like another company's product?"This post discusses how much one company’s product can look like another company’s product without creating intellectual property problems. It largely copies a Quora answer that I wrote recently. Please see How much can my product look like another company’s product without infringing the other company’s intellectual property rights in that product? (more…)

Which Types of Intellectual Property Can Protect an Idea?

Logo for Quora, where Dana Shultz answered a question about types of intellectual property protectionThis post explains why the various types of intellectual property (“IP”) cannot protect a mere idea. However, IP may protect items that one creates based on such an idea.

I first wrote about this subject on Quora. Please see Which types of intellectual property protection can I receive for my idea? (more…)

Creativity and Copyright

Copyright Office logo fo Dana Shultz post about creativity and copyrightCreativity is important socially and aesthetically. It also is required for a work to be copyrightable.

The Compendium of U.S. Copyright Office Practices is the administrative manual of the Register of Copyrights. The Compendium concerns Title 17 of the United States Code and Chapter 37 of the Code of Federal Regulations. (more…)

DMCA Designated Agent List Going Online

Logo of US Copyright Office, which announced that its DMCA designated agent paper filings will transition to an online systemThe U.S. Copyright Office maintains designated agent records under the Digital Millennium Copyright Act (DMCA). The Office recently announced that will be moving from paper to an online system.

DMCA Background

The DMCA protects online service providers against liability for user-provided content that infringes third parties’ copyrights. (Please see Terms of Use and the Digital Millennium Copyright Act (DMCA) .) However, there are several requirements for that protection to exist. (more…)

What are Novelty and Non-obviousness?

Logo for Quora, where Dana Shultz answered a question about novelty and non-obviousness for utility patentsNovelty and non-obviousness are requirements for a utility patent to be granted in the United States.

This post explains the meaning of novelty and non-obviousness. I have based this on my answer to a Quora question. Please see What exactly defines novelty and non-obvious in regards to patenting?

USPTO on Novelty and Non-obviousness

I have copied, below (emphasis added), portions of what the U.S. Patent and Trademark Office says about these criteria. For more information, please see General information concerning patents. (more…)

Trade Secrets Receive Federal Protection

Photo of volumes of the United States Code, symbolizing DTSA protection of trade secretsThis post discusses the civil and criminal protections for trade secrets available since May 12, 2016 under the federal Defend Trade Secrets Act (DTSA).

Relevant definitions in the DTSA roughly follow – with numerous modest differences – those in the Uniform Trade Secrets Act , which has been adopted, with various modifications, by almost all states. (more…)

DTSA (Defend Trade Secrets Act) Requires Notice to Employees

Photo of Obama signing a bill, symbolizing enactment of DTSAUntil recently, trade secrets were solely a matter of state law.  However, on May 11, 2016, President Obama signed the DTSA, the Defend Trade Secrets Act of 2016.

Because of the DTSA, trade secret misappropriation suits with an interstate component now can be filed in federal court. For more information about civil and criminal enforcement, please see Trade Secrets Receive Federal Protection. (more…)

Monthly Missives Compilation Now Available

Picture of a calendar, symbolizing Dana Shultz's monthly missivesFrom late 2004 to early 2016, I published a not-quite-monthly email newsletter on various business-related legal topics – what I called my “monthly missives“.

I recently compiled the nearly 100 emails and have made the collection available on the Downloads page.

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What is a DMCA Counter Notification?

Screen shot from YouTube tutorial re filing a DMCA counter notification

Screen shot from YouTube counter notification tutorial

In Terms of Use and the Digital Millennium Copyright Act (DMCA), I discussed DMCA provisions pertaining to takedown notices. This post discusses how an online service provider should respond to a takedown notice and the role of the counter notification.

17 U.S.C. Section 512(c)(1)(C) states that for a provider to be protected by the DMCA, it must respond to a valid takedown notice by “respond[ing] expeditiously to remove, or disable access to, the material that is claimed to be infringing….” (more…)

Consider Fair Use Before Sending DMCA Takedown Notice

Logo for YouTube, which was involved in a case illustrating why one must consider fair use before sending a DMCA takedown noticeThis post is based on a recent federal appellate case, Lenz v. Universal Music. That case held that one must consider fair use as a possible defense for an online service provider before sending a takedown notice under the Digital Millennium Copyright Act (DMCA).

DMCA Background

I provided an overview of the DMCA in Terms of Use and the Digital Millennium Copyright Act (DMCA). Quoting a portion of that post: (more…)

“Work Made for Hire” Can Convert a Contractor to an Employee

California Labor Code, whcih can convert a contractor to an employeeIn California, a “work made for hire” (WMFH) provision in a contract can convert a contractor to an employee. This post describes the statutory basis for this little-known area of the  law.

Before providing details, I will note that the (likely unwanted) ability to convert a contractor to an employee will arise only under narrowly-defined circumstances.

  • The independent contractor must be an individual rather than a legal entity (a corporation or limited liability company).
  • The relevant contract must expressly specify WMFH treatment for the contractor’s work product.
  • The contractual relationship must be governed by California law. (I don’t know whether any other states have similar laws.)

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“Happy Birthday” May Be in the Public Domain, After All

Photo of lit candles on a cake that spell "Happy Birthday"You probably have sung Happy Birthday [to You]” countless times. This post is about a company that has been collecting royalties from that song and the possibility that those royalties soon may stop.

In 1893, sisters Mildred Jane Hill and Patty Smith Hill published a collection of children’s songs. One of the songs – with the tune that we now know for “Happy Birthday to You” – was “Good Morning to All”.

Good morning to you,
Good morning to you,
Good morning, dear children,
Good morning to all.

While no one knows for sure who wrote the “Happy Birthday” lyrics, their first known publication was in 1912. (more…)

What is the Origin of the Copyright Symbol (©)?

Logo for Quora, where Dana Shultz answered a question about the copyright symbol "©"This post about the origin of the copyright symbol (©) is based on my answer to a Quora question. See Why are the symbols of “©” and “®” used to identify copyrights and registered trademarks?

Copyright Symbol as Part of Copyright Notice

The copyright symbol “©” can be part of a copyright notice under current copyright law. See 17 USC Section 401(b). (For more information about copyright notices, see Copyright Protection in Once Easy Lesson .) (more…)

Fraudulent Takedown Notice Leads to $25,000 Judgment

Logo for WordPress, which won a lawsuit about a fraudulent takedown noticeEarlier this month, the U.S. District Court for the Northern District of California ordered the author of a fraudulent takedown notice under the Digital Millennium Copyright Act to pay more than $25,000.

U.K. Student Journalist Oliver Hotham has a blog on WordPress.com, which is operated by San Francisco-based Automattic Inc. (more…)

How to Perfect an Intellectual Property Security Interest

COpyright Office Document Cover Sheet - can be used to record an intellectual property security interest

Copyright Office Document Cover Sheet

Last week I explained what a security interest is and how it can be perfected, i.e., made effective against third parties. (See What is a Security Interest, and Why Should I Care?) This post discusses how to perfect an intellectual property security interest.

To recap, a security interest is an interest in an asset (the “collateral”) intended to secure performance of an obligation. Typically, that obligation is payment of a debt. Perfection typically consists of filing, with one of more secretaries of state, documents that identify the debtor, the creditor and the collateral. (more…)

URS – ICANN Offers Uniform Rapid Suspension against Cybersquatters

Logo for ICANN, which developed URS - Uniform Rapid SuspensionI have written several times about ICANN’s longstanding Uniform Domain Name Dispute Resolution Policy (UDRP). This post discusses a more recent way to thwart some cybersquatters, namely, URS – Uniform Rapid Suspension.

According to ICANN explains, URS exists to “provide rapid relief to trademark holders for the most clear-cut cases of infringement“. Furthermore, URS is cheaper and faster than UDRP. (more…)

Negotiating Software Licenses – What Really Counts

Photo of shaking hands, which symbolizes negotiating software license agreementsThis post addresses the most important issues that are raised in negotiating software licenses.

I will assume that parties have agreed on pricing. (Otherwise, there is no point negotiating license terms!) In addition, I will ignore the lengthy legal “boilerplate” that appears in most software license agreements.

Four Critical Issues in Negotiating Software Licenses

In my experience, there are four issues that must be examined closely, and often result in much discussion, when negotiating software licenses. (more…)

Plagiarism and Copyright Infringement – Two Sides of the Same Coin

Logo for Quora, where Dana Shultz answered a question about plagiarismThis post compares plagiarism and copyright infringement. It is prompted by a Quora question that I answered several months ago. (See Have your ideas or works ever been plagiarized? What happened?)

Plagiarism Defined

Plagiarism is the wrongful appropriate on another’s work and presenting it as one’s own. One typically thinks of plagiarism occurring in academia or journalism. However, as discussed below, it can occur in other professions, too.

Copyright Infringement Defined

The holder of the copyright in a work has certain exclusive rights with respect to that work. These include (as applicable) the rights to reproduce, distribute, publicly perform, publicly display, and make derivative works of the work. Copyright infringement is use of a work, without permission of the copyright holder, that infringes on one of those exclusive rights.

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Patent Licensee: Have a Track Record if You Want to Succeed

Logo for Quora where Dana Shultz answered a question from a prospective patent licenseeThis post is adapted from my answer to a Quora question from a prospective patent licensee. Q. How do I propose a licensing agreement with a patent holder?

A. In my experience, the most important thing that a prospective patent licensee needs to bring to the table is a successful track record.

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Which Open Source License Should We Choose?

Logo for the Open Source Initiative, which can help developers choose which open source license to useSoftware developers may have decided to provide open source software, but they may not know which open source license to use. This post describes three resources developers can consult to help make that decision.

First, Open Source Initiative maintains a comprehensive list of open source software licenses. Licenses are grouped into categories, starting with the most popular licenses. However, the OSI site does not provide any tools to help decide which open source license to use.

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Is a Copyright Notice with Multiple Years Legitimate?

Circle-C symbol representing a copyright notice with multiple yearsWe all have seen a typical copyright notice (e.g., “Copyright 2013 Anyhow, Inc.”) countless times. However, every once in a while, someone will see a copyright notice with multiple years (e.g., “2010-2013”) and will wonder whether it is legitimate.

As is explained in Copyright Protection in One Easy Lesson, 17 USC Section 401 states that a copyright notice must contain three elements.

  1. The symbol © (the letter C in a circle), the word “Copyright”, or the abbreviation “Copr.”
  2. The year of first publication.
  3. The name of the copyright owner.

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The First Sale Doctrine: If I Own It, I Can Sell It

Green traffic light - symbol of first sale doctrine providing go-ahead, defense against IP infringement claim

Copyright and trademark owners typically like to exercise their legal rights as broadly as possible. There is however, a well-known limit to those rights called the “first sale doctrine“.

Actually, they are two separate but similar doctrines. One pertains to copyrights, the other to trademarks:

  • Copyrights17 USC Section 109(a) states, with certain exceptions, that the owner of a lawfully-made copy of a work may sell or dispose of the work. Consent of the copyright owner is not required. So, for example, if you legitimately possess a book or a CD, you may sell it or give it to someone else or throw it into a trash bin.
  • Trademarks – The trademark first sale doctrine is a product of case law rather than statute. In Sebastian International, Inc. v. Longs Drug Stores Corporation, the United States Court of Appeals for the Ninth Circuit wrote: “[W]ith certain well-defined exceptions, the right of a producer to control distribution of its trademarked product does not extend beyond the first sale of the product. Resale by the first purchaser of the original article under the producer’s trademark is neither trademark infringement nor unfair competition.” The exceptions include, for example, stolen or counterfeit goods or goods that have avoided the producer’s quality control systems.

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Chubby Checker Files Ridiculous Trademark Infringement Suit

Photo of Chubby Checker

Chubby Checker (real name Ernest Evans) – the singer famous for The Twist dance craze in the 1960s – and certain corporations that he controls have filed a lawsuit against Hewlett-Packard Company and Palm, Inc. The suit concerns a no-longer-available app named “The Chubby Checker”.

The app purported to allow women to calculate the size of a man’s penis based on his shoe size. According to webOS Nation, the app was downloaded only 84 times before it was removed in September 2012. Yet press reports state that the plaintiffs are seeking damages of $500 million for trademark infringement and unfair competition!

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How Can I Make Sure I Receive My Full Royalty?

Curled paper tape from a calculator

Intellectual property license agreements often include a provision by which the licensor is paid a royalty that is calculated as a percentage of the revenue received by the licensee from licensed products. Given that licensees have a financial incentive to reduce the amount of revenue that is reported*, the prudent licensor includes an audit provision in the license agreement.

The audit provision typically:

  • Specifies the frequency and nature of audits that may be conducted;
  • Provides that the licensee will pay any underpayment amount that is discovered plus interest; and
  • Obligates the licensor to pay for the audit unless the underpayment exceeds X% of the royalty that was due, in which case the licensee must reimburse the licensor for the cost of the audit.

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Who Owns My Text Messages?

Quora logo

This post is adapted from the answer that I provided to a Quora question, “Who owns our text messages?”

To start, I wondered what it means to “own” a text message. Black’s Law Dictionary provides such definitions as “have good legal title”, “hold as property” and “possess”. I don’t think the questioner had these in mind, so I think it is correct to focus on ownership of any copyright that may subsist in text messages.

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I’m One of Several Inventors – Who Owns the Patent?

A recently-acquired client is one of three inventors of a device that received a U.S. patent. She asked me whether she can freely license to an LLC owned by two of the inventors the right to manufacture products covered by the license. I replied “yes” – here’s why.

35 U.S.C. Section 262 says:

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.

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Corporate Officer Can Be Personally Liable for Copyright Infringement

Blue Nile logo

In Blue Nile v. Ideal Diamond Solutions, the U.S. District Court for the Western District of Washington held that co-defendant Larry Chasin, founder and an officer of defendant IDS, was personally liable for infringement of plaintiff Blue Nile’s copyrighted images, even though Chasin claimed he had no role in putting infringing images on websites and he did not know the images were infringing.

Blue Nile is an online jewelry and diamond retailer. Chasin founded and operated IDS to create websites for brick-and-mortar jewelers to help them compete online. The websites included some of Blue Nile’s copyrighted images.

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Non-compete Enforced to Protect Trade Secrets

Cover page from Richmond Technologies v. Aumtech court decision, which saw a non-compete enforcedCalifornia is well-known for enforcing post-employment non-compete provisions only under narrowly-defined circumstances. A recent case in the United States District Court for the Northern District of California (Richmond Technologies v. Aumtech Business Solutions) saw a non-compete enforced for the protection of trade secrets.

Jennifer Polito, a former employee of plaintiff Richmond Technologies (which does business as ePayware), started working for defendant Aumtech. ePayware brought suit, alleging that Ms. Polito misappropriated ePayware’s source code, license keys and customer list to help Aumtech compete against ePayware. (more…)

Sometimes You *Shouldn’t* Assign All Rights

Screen display of HTML code

I have written, on several occasions, about the importance of assigning copyrights (and other intellectual property rights) when work is done by an independent contractor. (See, e.g., Independent Contractors: How to Assign Copyrights.) Sometimes, however – as suggested in a comment to What is a Derivative Work, and Why should I Care? – it is appropriate not to assign all rights.

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Don’t Use Social Media if You Have Something to Hide

Groupon logo

A client sells high-quality collectibles manufactured from authentic sports-related materials (game-used balls, uniforms, arena flooring, stadium seats, etc.). The company ensures that all materials are licensed by the applicable university or professional sports organizations so it can use the organizations’ names and trademarks in promotional activities. Some competitors do not pay for the required licenses, however – and one of these recently was caught as the result of a Groupon promotion.

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Copyright Infringement Explained

Logo of the United States Copyright Office, symbolizing this post about copyright infringement

I recently realized that I have referred to copyright infringement in quite a few posts. However, I neglected to define that term. It is time to correct that oversight.

Copyright Infringement Defined

Generally, infringement occurs when a copyrighted work is reproduced, distributed, performed, publicly displayed, or made into a derivative work without the permission of the copyright owner. I.e., copyright infringement is a violation of the copyright owner’s exclusive rights. (See Copyright Protection in One Easy Lesson.) (more…)

ICANN to Help Trademark Owners Prevent Cybersquatting

ICANN logo

In an interview in today’s San Francisco Chronicle (“Rod Beckstrom, CEO of ICANN, talks about new domain names“), the CEO of the Internet Corporation for Assigned Names and Numbers stated that ICANN will create a global marks database to help protect trademark owners against cybersquatting.

The database will be developed in conjunction with ICANN’s forthcoming implementation new generic top-level domains (gTLDs). ICANN CEO Rod Beckstrom is quoted in the Chron article as saying (emphasis added): (more…)

What is a Derivative Work, and Why should I Care?

Picture of Leonardo's Mona Lisa with mustache and goatee added by Marcel Duchamp

Marcel Duchamp’s derivative work of Leonardo’s Mona Lisa

On occasion I am asked about the extent to which a new work can incorporate elements of a pre-existing work without infringing the pre-existing work’s copyright. To answer such a question, one must understand derivative works.

17 U.S.C. Section 101 says (emphasis added):

A “derivative work” is a work based upon one or more preexisting works, such as a translation, musical arrangement, dramatization, fictionalization, motion picture version, sound recording, art reproduction, abridgment, condensation, or any other form in which a work may be recast, transformed, or adapted. A work consisting of editorial revisions, annotations, elaborations, or other modifications which, as a whole, represent an original work of authorship, is a “derivative work”.

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How to Defeat a Cybersquatter, Part 2: Going to Court

Picture of columns in front of courthouse, looking up

In How the UDRP can Defeat a Cybersquatter, I wrote about ICANN’s Uniform Domain Name Dispute Resolution Policy. The UDRP provides a quick, inexpensive way to recover a domain name from a cybersquatter (someone who has obtained a domain name that is the same as, or confusingly similar to, a trademark or service mark that you own). However, if you want to recover money, you will have to go to court.

Before proceeding further, let me be clear: I think lawsuits should be avoided whenever possible. As a trial lawyer told me many years ago, “Litigation is a terrible way to run a business.” Unfortunately, litigation sometimes is necessary.

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Three Ways to Protect Yourself when Developing Software Offshore

Picture of man at computer with head in hands

Many startups have software developed offshore to save money. There is good reason to be concerned, however, about loss of money or, even worse, loss of intellectual property when a developer is located half-way around the world. This post discusses ways to minimize those concerns.

I recommend the following:

  1. Ensure that the agreement with your overseas developer assigns all rights to the software (including all intellectual property rights) to you.
  2. Don’t send your “family jewels” offshore. For any portion of the development that requires disclosure of your most important trade secrets, use a local developer.
  3. Time deliverables and payments such that you never will be too severely financially exposed. If your relationship with the developer sours, you can go somewhere else without a catastrophic financial loss.

If you take care of these three points properly, everything else should be pretty routine.

Photo credit: Rajesh Sundaram via stock.xchng

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.

Does My New Employer Now Own My Software?

Quora logo

This post is adapted (with editing) from a Quora question that I answered. Q. I developed a software application on my own, then adapted it for my new employer, where it is used enterprise-wide. What are my ownership rights in this situation?

A. It would help to know whether you signed any type of proprietary information and inventions agreement with your employer. If you did, its terms (obviously) will be of great importance. You did not mention any such agreement, so I will assume, for the purposes of the discussion below, that there is no such agreement.

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Present Assignment is Important for Patents, Too

Stanford University logo

In “Copyright: Why You Need Presence of Mind about Present Assignments“, I wrote about why copyright assignments should be expressed as present assignments (e.g., “I hereby assign”) rather than obligations to assign in the future (e.g., “I hereby agree to assign”). This suggestion applies to assignment of patents, too.

A researcher at Stanford University, in collaboration with Roche predecessor Cetus, developed methods for quantifying Human Immunodeficiency Virus in human blood samples, and correlating those measurements to the therapeutic effectiveness of antiretroviral drugs.

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Recover Your Domain Name, and Perhaps Some Money, Too

Display from defendant Nahum's website at the hijacked domain

From defendant Nahum’s website at the hijacked domain

Just over a year ago (Who is the Master of Your Domain? [or, How to Prevent Domain Name Hijacking]), I wrote about recovering a client’s domain name from a disgruntled former employee via ICANN’s Uniform Domain-Name Dispute-Resolution Policy. A recent case from the U.S. Court of Appeals for the Ninth Circuit (DSPT International v. Nahum) shows that under federal trademark law, an aggrieved domain name owner may be able to recover monetary damages, too.

Defendant Lucky Nahum worked for plaintiff DSPT International and worked with an outside supplier to set up DSPT’s website. Without telling DSPT’s owner, Nahum registered the website’s domain name in his own name.

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Lamebook v. Facebook: Trademark Infringement or Protected Parody?

Logo for Lamebook, whose trademark dispute with Facebook is the subject of this post

Lamebook is a site that features particularly lame or funny (and sometimes vulgar) Facebook posts. That company has brought suit against Facebook, seeking a declaratory judgment that Lamebook is not infringing Facebook’s trademark.

Several months ago, Facebook asked Lamebook to change the name of its service, alleging that the company’s name both infringes and dilutes Facebook’s famous mark. A letter from Facebook’s counsel lays out the elements of these allegations. (more…)

How Old Can a Copyrighted Work Be?

Cover of Time Magazine published March 3, 1923

Cover of Time Magazine published March 3, 1923

Sometimes people want to know whether a work is so old that it it can be copied without any possibility of infringing anyone’s copyright. This post provides the answer (in the United States).

Before January 1, 1979 – when then-existing copyrights were automatically extended to 95 years from the end of the year in which the copyright was secured – copyrights were in effect for 28 years, with extension, if requested, for a second 28-year period (total of 56 years).

So the earliest a work could have been copyrighted (which, at that time, required publication with a copyright notice) and still received the automatic extension was 56 years before January 1, 1979, i.e., January 1, 1923. The copyright for such a work would expire on December 31, 2018 (after 95 years).

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What is a Sublicense Agreement?

LinkedIn logo

This post is based on a LinkedIn question that I answered recently. (The Q&A no longer are available at LinkedIn, which has discontinued that feature.) Q. What is a sublicense agreement?

A. A license is an agreement by which the owner (the licensor) of something (in the case of the LinkedIn question, a trademark) grants, to someone else (the licensee), rights that are less that all of the rights to that thing. “Licensing 101“, and the download to which it refers, provide basic information about licensing. (more…)

Why Your Lawyer Need Not Sign an NDA

Cover page from California Business and Professions Code

Once in a while, when I send an engagement letter, the prospective client wants to add confidentiality provisions to protect its trade secrets. The following is the explanation that I provide as to why such provisions – let alone a separate nondisclosure agreement (NDA) – are not required in an attorney’s engagement letter.

California Business and Professions Code Section 6068 specifies the fundamental obligations of an attorney. Subsection (e)(1) states that each attorney must “maintain inviolate the confidence, and at every peril to himself or herself to preserve the secrets, of his or her client.” (Emphasis added.) Attorneys in other states have similar obligations.

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Copyright: Why You Need Presence of Mind about Present Assignments

One page from a calendar

In Independent Contractors: How to Assign Copyrights, I provided sample language for an independent contractor’s assignment of copyrights to a client. This post explains why the present assignment aspect of that language is critical.

Here (with emphasis added) is the relevant portion of the pivotal sentence:

Contractor hereby irrevocably assigns, transfers and conveys to Client all of its right, title and interest in and to the Deliverables, including complete, unconditional and worldwide ownership of all intellectual property rights in any draft or final version of the Deliverables.

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NDA Nets Plaintiff $50 Million

Dur-a-Flex Logo

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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How to Assign a Patent Application to Your Startup

Detail from an illustration of a machine by Leonardo da Vinci symbolizing a patent application

Detail from an illustration of a machine by Leonardo da Vinci

Your invention is so novel and non-obvious that you have submitted a patent application to the U.S. Patent and Trademark Office. Good for you!

Furthermore, you have formed a legal entity to turn the patent, once it issues, into a revenue stream. (See Should I form an LLC or a corporation?)

This post explains how you can assign the patent application to your new entity so your startup company can begin conducting business. (more…)

How Can I Switch from a Sole Proprietorship to a Corporation?

Sample Articles of Incorporation

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.

DMCA Takedown: How Soon is “Expeditiously”?

Copy of takedown notice on Dana Shultz letterhead

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“).

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If You Provide a DMCA Takedown Notice, Provide It Properly

Logo of Perfect 10, a company involved in DMCA takedown notice litigation

In Terms of Use and the Digital Millennium Copyright Act (DMCA) I described the six elements that a copyright owner must include in a DMCA takedown notice sent to a service provider that is hosting infringing content. Perfect 10 v. Google shows that a DMCA takedown 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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Open Source Developer Wins Big – But Can He Collect?

BusyBox Logo

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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How Can I Protect the Look and Feel of My Website?

U.S. Patent and Trademark Office Seal, symbolizing trade dress and design patent protection of website look and feel

This post discusses whether and how you can protect your website’s “look and feel.

The reason you would want such protection: Your website has particularly effective visual and interactive elements that help promote your business. You would not want another website to copy those elements, thus make your website and your business less special.

Look and Feel as Trade Dress

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. (more…)

How the UDRP can Defeat a Cybersquatter

Logo of ICANN, which promulgated the UDRP

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”? The UDRP (explained below) may come to the rescue!

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 all of the following:

(i) The domain name is identical or confusingly similar to a trademark or service mark in which you have rights.
(ii) The Registrant has no rights or legitimate interests in respect of the domain name.
(iii) The domain name has been registered and is being used in bad faith.

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Protecting Software: Keeping Trade Secrets while Registering Copyrights

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: (more…)

Don’t Steal Your Former Employer’s Customers (Unless You’re Confident…)

Photo of a man with a finger blicking his lips, symbolizing that an employer's customers may be a trade secretMany 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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Trade Secret Protection of Software has Limits

Developers of proprietary software typically rely copyright and trade secret protection of their works. A recent California case (Silvaco Data Systems v. Intel Corporation) illustrates how far trade secret protection does, and does not, go.

Silvaco develops and markets electronic circuit design software. Silvaco won a suit against Circuit Semantics, Inc., claiming that CSI, with the help of two former Silvaco employees, misappropriated Silvaco trade secrets, in the form of source code, by incorporating them into CSI’s software. Silvaco obtained an injunction against continued use of the technology incorporating its trade secrets.

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Professors Confirm Limits on Startup Interest in Patents

Last November, I wrote You Can Have a Successful Business Even if You Don?t Have a Patent. Many of the points that I made in that post are reiterated in an article that will be published this summer in the Berkeley Technology Law Journal.

The article, “High Technology Entrepreneurs and the Patent System”, is available as a Free Download on the Downloads page. Among the findings presented in the article:

  • Whereas life sciences companies see patents as critical, software and Internet companies rely more on copyrights and trademarks.
  • Patents are used to reduce competition and to attract capital; they do not provide strong incentives to innovate.
  • The major reason why companies do not apply for patents is that they are expensive to obtain and to enforce.
  • Many companies find it is more important to be the “first mover” than to obtain patents.

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.

Implied Copyright License: A Life-and-Death Example

Seal of the US Court of Appeals for the First Circuit, which decided an implied copyright license caseSeveral months ago, I wrote about the circumstances under which courts will find an implied copyright license if there has not been an assignment of copyright. (If You Don’t Set the Terms of a Copyright License, a Court Will) In a recent case (Estate of Hevia v. Portrio Corp.), the U.S. Court of Appeals for the First Circuit held that there was an implied copyright license in a partnership context.

The decedent, Roberto Hevia-Acosta, was an architect. Following his death, his estate and heirs waged an intensive legal battle against his business partner over copyrights in the decedent’s architectural designs.

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Top Ten Intellectual Property Mistakes of Startup Entrepreneurs

The document Top Ten Intellectual Property Mistakes of Startup Entrepreneurs is available as a Free Download on the Downloads page.

Here are the ten mistakes that are discussed:

  1. Failing to use employee invention agreements
  2. Assuming that the company owns contractors’ work product
  3. Using another company’s license agreement
  4. Thinking that patents are the only IP that matters
  5. Filing a for provisional patent before the scope of the invention is clear
  6. Treating the federal government like non-governmental infringers
  7. Neglecting to identify and protect trade secrets
  8. Believing that “open source” means “no restrictions”
  9. Giving the “family jewels” to an overseas supplier
  10. Registering the wrong entity as the owner of IP

Related post: The Top Ten Legal Mistakes of Startup and Early-stage Companies

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.

Fair Use, Trash Talk, and the DMCA

Over the weekend, I answered a LinkedIn question [no longer available there because LinkedIn ended its Q&A feature] about whether posting a copyrighted photo of another company’s product with disparaging comments about that product might be protected by the “fair use” defense to copyright infringement. I am reproducing the question and answer, in edited form, below.

Q. My website is copyrighted and the newest product is trademark and patent pending. The image was “clipped/copied” by an individual and placed on a website without my permission to do so. Am I right that this is not “fair use” of my work?

A. The “Fair Use” Defense: One Term, Two Different Meanings discusses the four elements of copyright fair use. The analysis always is highly fact-specific, so it is difficult to say whether use on cpaptalk.com qualifies for that defense, but I think there is a reasonable argument that it does.

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Where to File Your Patent Case? Probably NOT Where You Think

Stanford Law School Professor Mark A. Lemley has published a draft paper, Where to File Your Patent Case.

Lemley started with the assumption that plaintiffs frequently look for forums that favor patentees, where cases go to trial (summary judgments strongly tending to favor defendants), and that move cases along quickly. Defendants are likely to want the opposite, a forum that is unlikely to send cases to jury trial, that regularly rules for defendants, and that takes a long time to do both.

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IP Indemnification: Who Will Be There to Satisfy the Obligation?

Almost a year ago, I posted IP Warranties and Indemnification: How Much is Reasonable? This post addresses a related subject: If you get the other party to agree to indemnify you, who will be around to satisfy the obligation?

A client is in the process of acquiring all of the rights to certain software, which was developed by several recent college graduates who formed a limited liability company (LLC). The client knew to ask for indemnification against claims that the software infringes any third party’s intellectual property rights.

What the client had not thought about, however, was whether the LLC could satisfy the indemnification obligation – which is unlikely, given that the LLC probably (a) has few assets and (b) will be dissolved once the transaction is consummated.

Accordingly, I recommended that we include in the agreement the LLC members’ covenant to satisfy the indemnification obligation if the LLC, itself, doesn’t. The members may be unhappy, but if they want the transaction badly enough, they will agree.

Lesson: An indemnification obligation is only as valuable as the party takes it on.

Photo credit: Anna H-G via stock.xchng

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.

Watch Out for “You Don’t Own It until You Pay”

A start-up entrepreneur recently told me about the agreement he signed with the developer of his website. The agreement has what I consider, from the entrepreneur’s perspective, a most pernicious provision: Ownership of the website, and its intellectual property rights, does not pass from the developer to his client until the fee is paid in full.

I understand why developers like this type of provision: It gives them extra leverage to ensure that they are paid. (more…)

Court Says Tech Startups Special re Works Made for Hire

In a recently-decided case (JustMed v. Byce), the U.S. Court of Appeals for the Ninth Circuit decided that a software developer was an employee, rather than an independent contractor, even though the parties had completed almost no employment-related paperwork.

Byce took over development of JustMed’s software from an employee who had moved out of state. Byce’s compensation – the same as his predecessor’s – was 15,000 shares of JustMed stock (valued at $0.50 per share) per month.

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“Tea Party” Activists Seek Government Help re Trademarks

Protesters at the Philadelphia Tea Party on April 18, 2009

This is just too delicious: One group of “Tea Party” activists – known for opposing federal government intrusiveness – has brought suit against the registered Tea Party political party in the U.S. District Court for the Southern District of Florida (South Florida Tea Party, Inc. v. Tea Party). (more…)

Independent Contractors: How to Assign Copyrights

After reading If You Don’t Set the Terms of a Copyright License, a Court Will, a (non-lawyer) friend wrote: “I work with subcontractors on a regular basis in the creative area (photographers, graphic artists, website designers, etc.).? Do you know where I can find a sample [copyright assignment provision]?”

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No, You Can’t Just Scrape Someone Else’s Website

The following question was posed recently on LinkedIn: Let’s say that I want to scrape amazon’s and ebay’s product reviews and use on another site? I want to understand the legal fall-out that may happen in doing so.

Here, slightly edited, is the answer that I provided:

  1. You would be committing copyright infringement.
  2. You would be breaching Amazon’s Conditions of Use, which expressly prohibit “any use of data mining, robots, or similar data gathering and extraction tools”.
  3. Similarly, you would be breaching ebay’s User Agreement, which says that “You agree that you will not use any robot, spider, scraper, or other automated means to access the sites for any purpose without our express handwritten permission.”
  4. Other companies’ sites with well-thought-out terms of use have similar prohibitions.

This blog does not provide legal advice and does not create an attorney-client relationship. If you need legal advice, please contact an attorney directly.

Postal Service Stamp Infringes Copyright – Not Fair Use

Korean War Veterans Memorial - use of photo on postage stamp not fair use

Korean War Veterans Memorial

Several months ago, I wrote that the fair use” defense to copyright infringement often is poorly understood. The U.S. Postal Service illustrates this point. A recent court decision held that a postage stamp infringed the copyrights in certain sculptures and was not fair use thereof.

Frank Gaylord created, and registered the copyrights for, soldier sculptures in formation constituting part of the Korean War Veterans Memorial.Stamp with photo of Korean War Veterans memorial dtermined not fair use

John Alli took a photo of the Memorial. The Postal Service paid Alli $1,500 for the right to use that photo for a 37-cent stamp commemorating the 50th anniversary of the armistice of the Korean War. Alli told the Postal Service that it would need permission from the owner of the copyright in the sculptures; the Postal Service did not seek such permission. (more…)

Open Source Developer Prevails in Copyright Infringement Suit

Photo of model trains, subject of open source software involved in copyright infringement litigationA federal court of appeals held in 2008 that an open source developer case sue for copyright infringement despite the breadth of the open source license. The closely-watched case recently settled, meaning that the opinion may well be cited for many years to come.

Plaintiff Robert Jacobsen holds a copyright to certain computer programming code that he makes available for public download for free pursuant to the Artistic License, an open source license.

Defendants Matthew Katzer and Kamind Associates, Inc. develop commercial software products for the model train industry and hobbyists. Defendants copied certain materials from Jacobsen’s website and incorporated them into one of their software packages without following the terms of the Artistic License. Jacobsen sued for copyright infringement and moved for a preliminary injunction.

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If You Don’t Set the Terms of a Copyright License, a Court Will

Picture of a pen sitting on a contract sighature line, symbolizing an implied copyright licenseAlmost a year ago, I wrote about why independent contractors (as contrasted to employees) own the copyrights in works that they create. As a result, a prudent customer will ensure that the contractor assigns its copyrights to the customer (Work Made for Hire – a Term Made for Confusion). This post discusses the implied copyright license that is granted in the absence of an assignment.

If there is no assignment provision, a court will determine that there is an implied license under the copyright. The rationale is that it would be unfair to deprive the customer of all rights in a work for which the customer has paid. The issue, then, will be the terms of the implied license. (more…)

Can I assign a DBA to my new LLC?

Articles of Organization for an LLC, to which the founder wished to assign a DBAThis post is based on an answer that I provided on Avvo. The user wanted to know whether he could assign a fictitious business name (FBN) – or, colloquially, assign a DBA, short for “doing business as” – from his sole-proprietor business to a limited liability company (LLC) that he was about to form.

He probably would assign all of the sole-proprietor assets (and liabilities) to the new LLC. However, there are special considerations if one wants to assign a DBA / FBN. (more…)

Beware the Unintended Franchise

We all are familiar with well-known? franchises, such as McDonald’s restaurants. What many people do not realize, however, is that a trademark license agreement, if it has certain characteristics, can be considered a franchise agreement under state or federal law, creating huge potential liabilities for the unwary licensor.

In California, Corporations Code Section 31005(a) says that a franchise exists if three elements are satisfied:

  1. A franchisee is granted the right to engage in the business of offering, selling or distributing goods or services under a marketing plan or system prescribed in substantial part by a franchisor; and
  2. The operation of the franchisee’s business pursuant to such plan or system is substantially associated with the franchisor’s trademark, service mark, trade name, logotype, advertising or other commercial symbol designating the franchisor or its affiliate; and
  3. The franchisee is required to pay, directly or indirectly, a franchise fee.

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Can I Abandon a Copyright?

Copyright protects works of authorship and, in the U.S., subsists from the time the work is created in fixed form (see Copyright Protection in One Easy Lesson).

Demonstration in Sweden in support of file sharing, 2006

Demonstration in Sweden in support of file sharing, 2006

In certain circles, however, there is fervent opposition to copyright (see the Wikipedia entry for Anti-copyright).

Suppose that an anti-copyright author wants to abandon the copyrights in his works. (Sometimes this also is called dedicating work to the public domain.) Can he do so under U.S. law?

Although there is no statutory basis for abandonment, there is widely-accepted case law stating that a copyright owner may abandon his copyright by an overt act that manifests a purpose to surrender his rights to the work and let the public copy it.

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Copyright: If You’re Going to Register, Register Right Away

Several months ago (Copyright Registration: Whether, When and Why), I wrote about the benefits of registering a copyright. A recent case in the U.S. District Court for the Northern District of California (Dongxiao Yue, et al., v. Chordiant Software, Inc., et al.) shows that if you are going to register a copyright, you should register it right away.

Plaintiffs accused defendants of copyright infringement with respect to two pieces of software that were covered by registered copyrights. The defendants moved for a summary judgment that plaintiffs were not entitled to statutory damages and attorney fees because the alleged infringement began before the plaintiffs registered their copyrights.

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“Finding Rin Tin Tin” Sniffs Out Trademark Fair Use Defense

Cover of the DVD "Finding Rin Tin Tin", a movie in a lawsuit won based on the trademark fair use defense

Cover from “Finding Rin Tin Tin” DVD

Those of a certain age will recall watching “Rin Tin Tin” on TV as kids. The venerable canine recently was the subject of a trademark infringement suit (Rin Tin Tin, Inc., et al. v. First Look Studios, Inc., et al.). The defendants prevailed because of the trademark fair use defense.

Rin Tin Tin was a German Shepherd dog found in France during World War I. He became famous through movies and remains well-known to this day.

Plaintiffs breed German Shepherds descended from the original Rin Tin Tin and manage related business endeavors. Rin Tin Tin, Inc. obtained federal trademark registrations for “Rin Tin Tin” pertaining to puppies and dogs of the Rin Tin Tin lineage. (more…)

Gay Marriage Fight Leads to Trademark Smackdown

ProtectMarriage.com (left) and Courage Campaign Logos

It appears that at least some gay marriage foes need to learn a thing or two about trademark law.

On January 12, ProtectMarriage.com sent Courage Campaign a cease and desist letter, alleging that Courage Campaign’s Prop 8 Trial Tracker logo infringes ProjectMarriage.com’s trademark and copyright in its logo.

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Licensing Trademarks? Think about Domain Names, Too

The December 2009 issue of les Nouvelles, a publication of Licensing Executives Society International, has an interesting article about the interplay between domain name disputes and trademark licensing.

“WIPO Domain Name Cases Offer Trademark Licensing Lessons,” by Hee-Eun Kim, an LLM student in Munich, Germany, starts by describing the Uniform Domain Name Dispute Resolution Policy (UDRP) and the role of the World Intellectual Property Organization (WIPO) in resolving disputes under the UDRP. (more…)

Copyright Infringement Twofer: Website Designer and Customer Jointly Liable

Nick Starr, doing business as Master Maintenance, hired West Central Ohio Internet Link, Ltd. to redesign and host the website for Master Maintenance’s janitorial services.

The redesigned website included four photos owned by, but not properly licensed from, Corbis Corporation.

In Fall 2006, Corbis discovered Master Maintenance’s unauthorized use of its pictures. On November 17, 2006, Corbis sent Master Maintenance a letter informing it of the infringement. Master Maintenance directed West Central to remove the pictures, which West Central did. On December 7, 2007, Corbis filed suit for copyright infringement against Master Maintenance and West Central (Corbis Corporation v. Nick Starr).

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Orphan Works: Copyright Victims that Never will Be Adopted

Logo of the US Copyright Office, symbolizing orphan works

This post is about a frustration in U.S. copyright law: orphan works.

Suppose that you are willing to pay for a license to reproduce a copyrighted work, but you have no way to contact the owner of the copyright. You may not even be able to identify who the owner is. (See Copyright Office Circular 22, How to Investigate the Copyright Status of a Work.) (more…)

“High-touch Legal Services” Receives Federal Service Mark Registration

Last week, the U.S. Patent and Trademark Office confirmed that the service mark “High-touch Legal Services” has received Registration No. 3,726,914. The registration pertains both to legal services and to blogs that feature the law and legal matters.

The mark is on the Supplemental Register, rather than the Principal Register, because “high-touch” is descriptive of the services that I provide but has not yet acquired secondary meaning. With this registration, I have the right to use the ? symbol and to bar use of confusingly similar marks. (more…)

Copyright Infringement: Public Announcement was Barking up the Wrong Tree

In Bridgeport Music v. UMG Recordings, the United States Court of Appeals for the Sixth Circuit held that the song “D.O.G in Me” by Public Announcement willfully infringed Bridgeport’s copyright in the 1982 song “Atomic Dog” by George Clinton.

What intrigues me is that the finding of infringement was based the substantial similarity of only a limited amount of the lyrics: Use of the phrase ?Bow wow wow, yippie yo, yippie yea?, repetition of the word ?dog? in a low tone of voice at regular intervals, and the sound of rhythmic panting.

The court rejected UMG’s assertion of a fair use defense, noting, in particular, that although the substantial similarity pertained to relatively small elements of ?Atomic Dog?, they were the most distinctive and recognizable elements of the song.

What this case teaches us: Using even a small portion of someone’s copyrighted work can constitute infringement if that portion is sufficiently distinctive and recognizable.

This blog does not provide legal advice and does not create an attorney-client relationship. If you need legal advice, please contact an attorney directly.

Can I Create my Standard-form Contract by Starting with Someone Else’s?

Logo of LinkedIn, where Dana Shultz answered a question about creating a standard-form contractThis question was asked a few days ago (in different form) on LinkedIn. [Please note that the question is no longer available online because LinkedIn removed its Q&A feature.] The question was whether one can create a standard-form contract by starting with someone else’s standard-form contract.

The following is an edited version of the answer that I provided:

Case Outcome Depends on Facts

As is always the case with alleged copyright infringement, the outcome of the case will depend on the facts.

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You Can Have a Successful Business Even if You Don’t Have a Patent

I recently met a software developer who wants to start a business. He immediately started talking to me about obtaining a patent. Condensed a bit, our conversation went roughly as follows:

  • Dana: Without giving away information that would jeopardize your ability to obtain a patent, what would the software do?
  • Developer: It is enterprise customer relationship management (CRM) software.
  • Dana: What is novel and non-obvious about it?
  • Developer: It will be based on a unique algorithm.
  • Dana: You cannot patent an algorithm.
  • Developer: I can get a patent on software that implements an algorithm.
  • Dana: Perhaps. But there are other means, such as trade secrets, that might adequately protect the software [cut off in mid-sentence]….
  • Developer: VCs want to invest in companies that have patents.

Leaving aside the singular focus on VC funding – something that few entrepreneurs obtain (see Realistic Financing Options for Startup Companies) – the would-be entrepreneur was similarly myopic in focusing on a patent as the only type of intellectual property that matters.

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Autodesk Wins: Software License Restrictions Trump “First Sale” Doctrine

AutoCAD logo on software packaging

Update: On September 10, 2010, the Court of Appeals for the Ninth Circuit (in Vernor v. Autodesk) reversed the District Count decision discussed below. Supporting software licensors’ reasonable business expectations, the Court held “that a software user is a licensee rather than an owner of a copy where the copyright owner (1) specifies that the user is granted a license; (2) significantly restricts the user’s ability to transfer the software; and (3) imposes notable use restrictions.” [Emphasis added.] Accordingly, Vernor, as a licensee, was not protected by the first sale doctrine when he sold copies of Autodesk’s software.

* * *

In Vernor v. Autodesk, the U.S. District Court for the Western District of Washington told Autodesk that despite the restrictions in its license agreement, Autodesk could not preclude its customer from selling AutoCAD software to a third party.

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Hotels.com Loses Major Trademark Battle

On July 23, 2009 the United States Court of Appeals for the Federal Circuit decided, in In re Hotels.com, L.P., that Hotels.com was not entitled to a federal registration for its service mark HOTELS.COM. (For a brief overview of trademarks and service marks, see Trademark Protection in One Easy Lesson.)

Background: Hotels.com sought to register its mark for the services of ?providing information for others about temporary lodging; travel agency services, namely, making reservations and bookings for temporary lodging for others by means of telephone and the global computer network.? The Trademark Trial and Appeal Board (TTAB) refused the registration on the ground that the mark is a generic term for these services (generic terms, by definition, are incapable of indicating the source of goods or services). (more…)

Basketball Star Rescues 800 Domain Names from Cybersquatter

Photo of Chris Bosh

Chris Bosh

Cybersquatting is registering, trafficking in, or using a domain name with bad-faith intent to profit from a trademark belonging to someone else. NBA superstar Chris Bosh recently won a major victory against a serial cybersquatter.

On September 24, the U.S. District Court for the Central District of California granted an order requiring that Luis Zavala transfer all of his domain name holdings to Bosh. (A list of those holdings is available on this blog’s Downloads page as “Chris Bosh – Domain Names Awarded”.) This award is particularly significant because it is, to the best of my knowledge, the first time that a party has been awarded domain names that profit from third parties’ trademarks. (more…)

Louis Vuitton Wins $10.8 Million from ISPs

Louis Vuitton Logo

On August 28, a federal court jury awarded Louis Vuitton Malletier, S.A. $32.4 million in a suit against two Internet Service Providers and their owner. The suit alleged trademark and copyright infringement.

Louis Vuitton Wins at Trial

The jury concluded that:

  • The ISPs knew, or should have known, that their customers were selling, online, counterfeit goods that infringed LV trademarks and copyrights.
  • The ISPs willful contributed to sales of the counterfeit goods.
  • The ISPs were not entitled to the “safe harbor” protections of the Digital Millennium Copyright Act (see How Websites Can Avoid Liability for User-provided Content).

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Ralph Lauren’s Abuse of DMCA Backfires

This Ralph Lauren ad Ralph Lauren ad that let to DMCA takedown noticeshas been making the rounds of the Internet and television, recently. The reason: Photo retouching to the point of absurdity, producing a supermodel (Filippa Hamilton) who looks more like a Bratz doll than a human being.

I am not raising this issue to jump into the debate about skinny models and self-esteem of girls and women, which is being addressed at length elsewhere. (Disclosure: I have a wife and two daughters.) I am more interested in a huge legal and business mistake that Ralph Lauren made.

As soon as criticisms appeared online, Ralph Lauren lawyers issued takedown notices under the Digital Millennium Copyright Act. (See Terms of Use and the Digital Millennium Copyright Act.)

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“Fair Use”: One Term, Two Different Meanings

Button labeled "OK", symbolizing fair use

Fair use” is a legal term that does not necessarily mean what people often assumes it means (a free pass to use other people’s intellectual property). Indeed, the term has two different meanings, depending on whether copyrights or trademarks are at issue.

Copyright

Copyright protects works of authorship. See Copyright Protection in One Easy Lesson. The copyright owner has the exclusive right (as applicable) to reproduce, distribute, publicly perform, publicly display, and make derivative works of the copyrighted work.

Copyright infringement is the unauthorized exercise of one of the exclusive rights by someone other than the copyright owner. Thus, for example unauthorized copying of someone else’s music or movie constitutes copyright infringement.

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Trademark Protection in One Easy Lesson

A trademark or service mark is a word, phrase, symbol or design, or a combination of words, phrases, symbols or designs, that identifies and distinguishes the source of goods (trademark) or services (service mark).

(Throughout the remainder of this post, the term “trademark” is intended to include service mark, as well, except where specified otherwise.)

The owner of a trademark has the right to prevent others from using the mark or a confusingly similar mark. (more…)

How Websites can Avoid Liability for User-provided Content

Two U.S. District Court cases – Io Group, Inc. v. Veoh Networks, Inc. (8/27/2008) and UMG Recordings, Inc. v. Veoh Networks, Inc. (9/11/2009) – offer a recipe by which Internet-based service providers can avoid liability for user-provided content.

Update: UMG v. Veoh was affirmed by the Court of Appeals for the Ninth Circuit on December 20, 2011.

The cases are similar. Veoh operates an Internet-based service that allows users to share videos with others free of charge. Io and UMG (Universal Music Group) brought separate suits, each alleging that Veoh engaged in various forms of copyright infringement because it allowed users to upload videos that infringed the plaintiffs’ copyrights.

In each case, Veoh obtained a summary judgment in its favor based on compliance with the “safe harbor” provision of the Digital Millennium Copyright Act (DMCA), codified at 17 U.S.C. Section 512 (Limitations on liability relating to material online).

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You May Be a Content Pirate and Not Even Know It

Last month I posted You May Be a Software Pirate and Not Even Know It. The issues raised there now apply to equally content.

The Software & Information Industry Association is pursuing unlicensed use of content as aggressively as unlicensed use of software. For example, as recently reported in InfoWorld and elsewhere, Knowledge Networks agreed to pay SIIA $300,000 to settle a complaint that it distributed news articles to its employees without permission of the copyright owners. Similarly, in a media release earlier this year, SIIA announced that it was aggressively fighting graphics content piracy by filing lawsuits against individuals and companies that copied and distributed clip art without appropriate licenses. In another media release, SIIA touted the use of paid whistleblowers to help SIIA find infringers.

The implications are clear: Whether the subject is software, content or any other works of authorship, use and distribute the products only to the extent that you are authorized to do so by the terms of the applicable licenses.

This blog does not provide legal advice and does not create an attorney-client relationship. If you need legal advice, please contact an attorney directly.

Eminent Domain: The U.S. Giveth, the U.S. Taketh

Photo of a hand grabbing money, symbolizing the US government's eminent domain powersA fundamental tenet of patent law is that the owner of a patent can preclude others from using or manufacturing inventions that the patent covers. Because of eminent domain, however, that there is a major loophole regarding the U.S. government.

Section 1498(a) of Title 28 of the U.S. Code says, in part:

“Whenever an invention described in and covered by a patent of the United States is used or manufactured by or for the United States without license of the owner thereof or lawful right to use or manufacture the same, the owner’s remedy shall be action against the United States in the United States Court of Federal Claims for recovery of his reasonable and entire compensation for such use and manufacture.”

(Section 1498(b) provides similarly with respect to copyright infringement by the United States.) (more…)

Third-party Patent Infringement: Let the Licensee Beware

After months of effort, you have successfully negotiated a nonexclusive license under an important patent. The license agreement allows you to make, use, sell, offer for sale, and import products that are covered by the patent. Much to your horror, your arch-competitor starts making and selling competing products that use the licensed technology, pricing its products substantially below your planned price. When you inquire, the licensor says that the competitor does not have a license. What can you do to stop this “third-party” infringement of the patent?

You examine the license agreement but see nothing about third-party infringement of the licensed technology. Can you stop your competitor from using the technology? Can you force your licensor to stop the competitor? The short answer is “no”.

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Patent Licensing for Licensors: Know Your Industry

Photo of a stack of 100 Euro notes, symbolizing revenue from patent licensingOver the past few years, several of my clients who had obtained patents wanted to license their rights to third parties. Only one client achieved patent licensing success.

The reason: The successful client was intimately familiar with the industry where his technology had its greatest value. He had worked in that industry for many years. He knew highly-placed executives in the most important companies. He was familiar with the companies’ product development plans.

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IP Warranties and Indemnification: How Much is Reasonable?

Knowledgeable licensees of intellectual property (IP) seek indemnification protection to ensure that the licensed IP legitimately belongs to the licensor and not to a third party. This post explores the interplay between indemnification provisions and IP warranties.

While indemnification provisions vary from contract to contract, the following is illustrative:

Licensor will defend, indemnify and hold Licensee harmless from all costs, expenses, and damages arising from any third-party claim alleging that the Licensed IP infringes any patent or copyright or misappropriates any trade secret (a “Claim”), provided that Licensee has given Licensor prompt notice of the Claim, allows Licensor sole control of the defense of the Claim and of all negotiations for its settlement or compromise, and cooperates in all reasonable ways with Licensor’s defense or settlement of the Claim. If a Claim results in an injunction precluding Licensee’s use of the Licensed IP, Licensor will, at its option and expense, either (a) procure for Licensee the right to continue the enjoined use, or (b) replace or modify the Licensed IP so it is no longer subject to the injunction. If Licensor, after all commercially reasonable efforts, is unable to perform under either option (a) or (b) above, then Licensor will refund to Licensee an amount equal to the remaining undepreciated/unamortized value of the Licensed IP carried on Licensee’s books for U. S. federal income tax purposes as of the date that use of the Licensed IP was enjoined.

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A Practical Guide to GPL Compliance

I am pleased to make available on this blog’s Downloads page “A Practical Guide to GPL Compliance”, published by the Software Freedom Law Center.

In my opinion, this is a must read for anyone who is preparing or distributing software that is governed by the GPL.

This blog does not provide legal advice and does not create an attorney-client relationship. If you need legal advice, please contact an attorney directly.

Intellectual Property Essentials for Start-ups

Intellectual Property Essentials for Start-ups” now is available as a Free Download on the Downloads page.

Here are some of the questions that the document addresses:

  1. Which types of intellectual property (IP) should a start-up be aware of?
  2. How can we be sure to own IP created by independent contractors?
  3. Are there special considerations if the contractor is located overseas?
  4. It is pretty easy to register a trademark online; where might I go wrong?
  5. A provisional patent application is inexpensive and can be filed quickly; are there any risks I should keep in mind?
  6. Money is tight; can we use another company’s form of agreement rather than paying to develop one of our own?
  7. Open source software is hot; does it bring along any special dangers?

This blog does not provide legal advice and does not create an attorney-client relationship. If you need legal advice, please contact an attorney directly.

Securing IP Requires More than an NDA

Logo for Quora, where Dana Shultz answered a question about needing more than an NDA to secure intellectual propertyWhen it comes to protecting intellectual property (IP), non-disclosure agreements (NDAs) are ubiquitous. What many entrepreneurs fail to realize, however, is that securing IP requires more than an NDA. For an NDA to do its job, the company must actually own the IP in the first place!

The most serious ownership problems arise when there is no written agreement between the company and the individual developing the IP. Depending on the nature of the IP (for example, whether copyright or patent protection applies) and whether the developer is an employee of the company or an independent contractor, the developer may own the IP.  If this is the case, the company has, at most, a non-exclusive license.

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Copyright Registration: Whether, When and Why

Circle-C symbol for copyright registrationIn the U.S., copyright protection subsists in a work of original authorship as soon as it is fixed in a tangible medium of expression. 17 U.S.C. Section 102 There is no requirement that the work be registered with the Copyright Office or that a copyright notice be affixed. As discussed below, however, there are circumstances when copyright registration and affixing a notice are advisable.

Copyright Registration Required to Bring Suit

17 U.S.C. Section 411(a) says that, generally, a copyright registration is required before the owner can bring suit for copyright infringement. Furthermore, Section 412 says that, generally, awards of statutory damages (Section 504(c)) and attorney’s fees (Section 505) are available only if the copyright has been registered within three months of publication or within one month of learning of infringement, whichever is earlier.

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You May Be a Software Pirate and Not Even Know It

I was retained by a small company that had received a letter from one of its most important software vendors. The letter said the company “may have installed on its computers more copies of… software than it is licensed to use.” It then pointed out that unauthorized duplication of proprietary software violates federal copyright law and the applicable license agreement and that “potential remedies… are significant.” [emphasis added] The letter ended by requesting that my client:

  • Audit all of its computers for copies of the vendor’s software and provide the audit results within three weeks
  • Not destroy any installed software
  • Not purchase any more of the vendor’s software until the matter is resolved

The client’s owner was concerned. She did not know of any illegally installed software; even worse, she was suspicious and uneasy about how the vendor could have such information.

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Employee Proprietary Rights Agreements – Be Careful

Some companies force employees to sign proprietary rights agreements under which the employee automatically assigns to the company any patent applications that the employee files within one year following separation from the company. I have always considered these provisions unjustifiable. California law apparently has reached the same conclusion.

Applied Materials Made a Mistake

In Applied Materials, Inc. v. Advanced Micro-Fabrication Equipment (Shanghai) Co., et al., 630 F.Supp.2d 1084 (2009), the U.S. District Court for the Northern District of California held that such a provision is unlawful. (more…)

Top Ten IP Mistakes of Small to Mid-size Tech Companies

Today I made a lunchtime presentation to the East Bay MashEx in Pleasanton.

I am pleased to make the Top Ten IP Mistakes of Small to Mid-size Tech Companies handout available as a Free Download on the Downloads page.

This blog does not provide legal advice and does not create an attorney-client relationship. If you need legal advice, please contact an attorney directly.

Facebook URLs: The Race is On

Facebook logo

Facebook recently began allowing users to name the URLs for their pages. For example, my Facebook page is at www.facebook.com/danashultz. The option to choose a URL appears as soon as the user logs in.

(Not surprisingly, Facebook’s servers appear to be overworked at this time. The first two times I tried to reserve my URL, I was hung up on a “Loading….” message. The third time worked.)

It is easy to anticipate, however, that trademark infringement and cybersquatting will run rampant. If you believe that another Facebook user has chosen a URL that infringes upon your trademark, you can report an infringement of your rights.

Check out all posts about cybersquatting.

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.

What Every Business Person Needs to Know about Licensing

A couple of years ago, at the State Bar of California’s Section Education Institute, I delivered a one-hour program titled “What Every Business Lawyer Needs to Know about Licensing”. The target audience was attorneys who work with businesses but are not particularly familiar with intellectual property or licensing issues.

The program covered the following topics: (more…)

Need a Sample Confidentiality Agreement / NDA?

I am pleased to make available as Free Downloads on the Downloads page the sample Mutual and Unilateral Nondisclosure Agreements that I originally made available via Legal OnRamp.

This blog does not provide legal advice and does not create an attorney-client relationship. If you need legal advice, please contact an attorney directly.

Work Made for Hire – a Term Made for Confusion

Logo of the US Copyright Office, symbolizing a work made for hireAs Alexander Pope wrote in An Essay on Criticism (1711), “A little Learning is a dang’rous Thing“. That certainly pertains to the legal concept of a “work made for hire” (WMFH).

People who have some knowledge of WMFH typically believe that it means the transfer of all rights in a work from the creator to a purchaser. So, for example, if an independent contractor writes software for a company, then according to this belief, the company will own all rights to the software if the parties’ contract says the software is a work made for hire. This belief is wrong! The following is an explanation of what work made for hire really means under copyright law and how parties actually can arrange for transfer of all rights in a work.

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Best Practices in Drafting Software Contracts

Logo of the American Law Institute, which published a treatis about drafting software contractsOn May 19, the American Law Institute approved the Proposed Final Draft of the Principles of the Law of Software Contracts. The 305-page document presents best practices that should be taken into account when drafting software contracts.

Implications of the Principles for Drafting Software Contracts

Here are some implications of the Principles that I find most interesting: (more…)

Top Ten IP Mistakes of Small to Mid-Size Tech Companies

On June 18, I will make a presentation to the East Bay MashEx. The title: “The Top Ten Intellectual Property Mistakes of Small to Mid-Size Technology Companies”. (The handout is available as a Free Download on the Downloads page.)

Here are the mistakes that I will talk about:

  1. Failing to use employee invention agreements
  2. Assuming that the company owns contractors’ work product
  3. Using another company’s license agreement
  4. Thinking that patents are the only IP that matters
  5. Filing for a provisional patent before the scope of the invention is clear
  6. Treating the federal government like non-government infringers
  7. Neglecting to identify and protect trade secrets
  8. Believing that “open source” means “no restrictions”
  9. Giving the “family jewels” to an overseas supplier
  10. Registering the wrong entity as the owner of IP

This blog does not provide legal advice and does not create an attorney-client relationship. If you need legal advice, please contact an attorney directly.

Intellectual Property Blogs

Here are some intellectual property blogs that I like and some of the reasons why they impress me:

  • Patent – Patently-O – Professor who says a lot without being too wordy or abstract.
  • Copyright – Exclusive Rights – In-house attorney with a sense of humor.
  • Trademark – The Trademark Blog – Private-practice attorney who provides case documents. Been blogging since 2002!
  • Trade secret – Trade Secrets Blog – Law firm that includes an eye-catching graphic with almost every post.

This blog does not provide legal advice and does not create an attorney-client relationship. If you need legal advice, please contact an attorney directly.

Terms of Use and the Digital Millennium Copyright Act (DMCA)

Logo of US Copyright Office, symbolizing the DMCARecently, several clients with existing websites asked me to review their online Terms of Use (“TOU”). While the TOU were respectable, there were areas where each could be improved. Interestingly, the area where all of the clients had made mistakes was with regard to the Digital Millennium Copyright Act (the “DMCA”). A summary of the DMCA is available from the U.S. Copyright Office. (more…)

Copyright Protection in One Easy Lesson

Circle-C symbol designating a registered copyright for this post about copyright protectionFrom time to time, clients ask me questions about copyright protection. For example: Should I put a notice on my work? What must the notice say? What about “all rights reserved”? Should I register my copyright? If so, when? Here is a brief overview of copyright formalities. This post discusses why they are not required in the U.S., but when, where and how they might help you.

Copyright Protection Basics in the U.S.

Copyright protects works of authorship and subsists from the time the work is created in fixed form. The owner has the exclusive right (as applicable) to reproduce, distribute, publicly perform, publicly display, and make derivative works of the copyrighted work.

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Will that NDA’s Residuals Clause Cost You Your Trade Secrets?

Envelope stamped Top Secret, symbolizing a residuals clause in an NDAAnyone who has worked in technology is familiar with nondisclosure agreements (NDAs). Differences among NDAs usually are small; they tend to cover the same territory in similar ways. However, NDAs from large companies often contain what I consider a most pernicious provision: A ” residuals clause “.

Residuals Clause Explained

A residuals clause excludes from confidentiality obligations information that the recipient’s personnel retain in their memories. Here is a typical provision, from the Microsoft Confidentiality Agreement for Licensing Discussions [document no longer available online]: (more…)