Employee Agreement Review

A good way to test the adequacy of your current employee agreement is to consider what help it provides with common problems.

What happens if your employee assigns an invention to someone else? An employee agreement that includes both an agreement to assign future inventions, as well as a present assignment of future inventions. That way the employee has nothing left to assign to someone else.

What happens if your employee is unable to (or refuses to) execute an assignment in the future? Often times, you can use the employee agreement, but it would be handy if the employee gave someone at the company a power of attorney to execute documents on behalf of the employee.

What happens if your employee is unable to (or refuses to) execute an patent declaration in the future? U.S. Patent laws now address for this contingency, allowing a co-inventor of the company to sign for the inventor, but it would be nice to have the inventor affirmation that the company may do so.

What happens if your employee leaves to compete with you, and attacks the validity of the patent he or she assigned to you? At least for now, the Doctrine of Assignor Estoppel prevents someone who assigns a patent from later challenging that patent, but Assignor Estoppel does not apply to validity challenges in the U.S. Patent and Trademark Office (e.g., ex parte reexamination, post grant reviews, and inter parte reviews.) An employee can agree to never challenge patents on the invention he or she assigns to the company.

What happens if your employee leaves with your confidential information (or that of your customers or suppliers)? Your employee agreement should require employees to maintain the confidentiality of your information, as well as that of your customers and suppliers. It should also give you the right to obtain an injunction to prevent disclosure and use of your information. Finally to make sure that you have full access to all of the available statutory protections, your agreement should have a whistle blower exception so that you can take advantage of the Defend Trade Secrets Act.

What happens if your employee misuses your computer systems? There are federal statutes (the Computer Fraud and Abuse Act) and state statutes that protect computer systems from improper access and use. The problem is that employees are generally deemed to have authorization to access their employer’s computer system. An employee agreement can define an employee’s authorization to access the employer’s computer system, potentially facilitating action for misuse.

Reducing Costs: Patent Maintenance Fees

Most patent-issuing authorities charge maintenance fees or annuities to maintain a patent after it issues. In the U.S. these fees are due 3 1/2, 7 1/2, and 11 1/2 years after issuance, and are $1600, $3600, and $7400. In most other countries these fees are charged annually, typically starting low and quickly escalating to a thousand dollars or more per year.

Early on the fees are low and the technology is new, and paying the fees seems a no-brainer. But after several years, if the technology hasn’t proven itself, and as the maintenance fees begin to claim, the decision is not so clear cut. A business can realize substantial savings by dropping patents on technologies that are not adding value to the business. However, there is significant resistance to do so, because after all so much as been already spent, what’s another thousand dollars? And, no one wants to be responsible for dropping that one patent that — against all odds — suddenly becomes valuable in its twilight years.

However a smart business will periodically review its patent portfolios, and drop the patents that are not likely to contribute value. These resources are better directed toward the protection of new, promising technologies. It is for this reason that each year between about 15% and 20% of U.S patents due for maintenance fees are abandoned.

As the charge above, illustrates fewer than 20% of Korean and European patents are maintained through their full 20 year terms, fewer than 30% of Japanese patents are maintained for their full 20 year terms, and only about 50% of U.S. patents are maintained for their full 20 year terms. (The higher U.S. Maintenance rates are an artifact of the fact that the last maintenance fee is due 11 1/2 years of issuance, and optimistic patent owners are unwilling to make the difficult decision at that point to allow the patent to lapse. But the maintenance rates of patents in other countries, suggest that they should.

The above chart of cumulative maintenance fee costs shows that maintaining a patent through its entire life dwarfs’ the cost of obtaining the patent, and should be reserved only for those patents that are actively adding value to the business.

19 Things You Can Do During the Lock Down, To Improve Your IP Portfolio

Lock Down fatigue is setting in, and budgets are tightening, but there are plenty of things that you can do at little or no cost while hunkered down at home to improve your Company’s IP Portfolio for when the business resumes.

  1. Establish an Company wide IP Policy. An IP Policy can help cast the company in a more favorable light should a dispute arise, and they can actually drive employee conduct.
  2. Establish a formal trade secret program, including protocols for protecting the Company’s trade secrets and confidential information, and an employee training program to make sure those protocols are followed.
  3. Update the Company’s Employee Agreement. Does your agreement include a present assignment of employee inventions? Does it take into account the Defend Trade Secret Act? Does it take into account state employee inventor statutes. Does it give the Company a power of attorney to act for departed or uncooperative employees?
  4. Update your invention disclosure form. Does it take into account the changes in the AIA? Does it include a assignment of rights?
  5. Establish a virtual IP Committee that can meet using an online documents to evaluate new disclosures and make maintenance decisions.
  6. Cull the IP portfolio to reduce on-going maintenance costs. Look for donation opportunities to off-load unused IP at a tax-advantageous manner. Consider making some IP available for compulsory licensing, which can reduce maintenance costs by as much as 50%,
  7. Look for licensing opportunities, to generate revenue from the portfolio. A good source of licensees are owners of patents and applications cited in your own patents and applications, and the owners of patents and applications which cite to your patents and applications.
  8. Look for enforcement opportunities. A good source are the owners of subsequent patent applications where your patents have been cited.
  9. Finally polish up your Confidential Disclosure Agreements. Do they take into account effects of the AIA?
  10. Establish procedures for handling the receipt of unsolicited ideas form outside the Company. These continue to be a source of risk from unfounded claims.
  11. Audit patent marking, and finally get around to virtual patent marking under 35 USC 287(a).
  12. Audit trademark marking, and particularly where U.S. products with brands marked with an ®, are exported to countries where the mark is not registered.
  13. Create definitive trademark use guidelines,
  14. Revamp the Company’s website’s terms and conditions.
  15. Establish a Company social networking policy and email guidelines
  16. Finally take the time to see how the Madrid Protocol can reduce maintenance costs, and expand the scope of the Company’s trademark portfolio.
  17. Create a permissions for to address requests for permissions to use the Company’s trademarks and copyrighted materials.
  18. Register the copyright to the Company’s product literature, packaging advertising and promotional materials. Registration is a prerequisite to bringing suit, and obtaining the registration before infringement begins gives access to an award of statutory damages and attorneys’ fees.
  19. Create a new employee IP orientation program.

File When Ready!

It may come as a surprise that even patent attorneys don’t believe that every invention should be patented. The time, effort and expense of preparing and filing a patent application should be reserved for those inventions that are likely to provide an advantage. Here is a list of criteria to help judge evaluate whether an invention should patented. These can also help prioritize multiple inventions, and help decide which inventions may be worthy of extra investment.

NATURE OF THE INVENTION
Does the invention relate to a new product or service?
Does the invention relate to an improvement in an existing product or service?
Does the invention relate to an improvement in the manufacturing or distribution of an existing product or service?
TECHNOLOGICAL SIGNIFICANCE
The invention solves a problem only faced by Company’s particular approach.
The invention solves a problem faced by Company’s major competitor(s).
The invention solves a problem faced by the Industry at large.
The invention provides a new capability for Company’s products.
The invention provides a new capability for Company’s and major competitor’s products
The invention provides a new capability for the products of the industry at large.
The invention improves quality.
The invention makes the product easier to use/more reliable.
The invention makes the product safer.
The invention reduces costs.
TIMELINESS
The invention is being implemented.
Implementation of the invention is scheduled.
Implementation of the invention is planned.
No immediate plans to implement the invention.
The invention is presently fully developed.
The invention could be fully developed as a routine matter with minimal resources.
The invention will require significant resources to completely develop.
The invention will require a major project to completely develop.
The invention is currently only theoretically possible.
COMMERCIAL SIGNIFICANCE
The invention relates to a high volume, high profit product.
The invention relates to a medium volume, high profit product.
The invention relates to a high volume, medium profit product.
The invention relates to a low volume, high profit product.
The invention relates to a medium volume, medium profit product.
The invention relates to a high volume, low profit product.
The invention relates to a low volume, medium profit product.
The invention relates to a medium volume, low profit product.
The invention relates to a low volume, low profit product.
COMMERCIAL IMPACT
      DEMAND
The invention creates an entirely new product or service.
The invention involves a feature that makes the Company’s product critical to all or most customers
The invention adds a feature that makes the Company’s product superior to all or most customers.
The invention adds a features that is critical to an important subgroup of customers.
      SALES
The invention will make it more likely most consumers would purchase the Company’s product/service. 
The invention will make it more likely that some customers will purchase the Company’s product/service.
The invention will allow the Company to sell other unrelated products.
      PRICING
The invention will allow the Company to increase prices.
The invention will allow the Company to maintain prices.
The invention will force competitors to reduce prices to compete.
NON-INFRINGING ALTERNATIVES
The anticipated claim scope cannot be designed around.
The anticipated claim scope cannot be designed around without considerable time or expense.
The anticipated claim scope cannot be designed around without competitively significant delay or expense.
The anticipated claim scope cannot be designed around without inconvenient delay or expense.
The non-infringing alternatives are equivalent.
The non-infringing alternatives are acceptable.
The non-infringing alternatives would be regarded as unsatisfactory to most customers.
The non-infringing alternatives would be regarded as unsatisfactory to a significant subset of customers.
SCOPE OF PROTECTION
The invention relates to entirely new technology with great prospects of patentability.
The invention relates to a new application of technology with good prospects of patentability.
The invention is a minor advance with surprising result and fair prospects of patentability.
The invention is a minor improvement with a chance of patentability
The patent would be infringed by a single entity (vs. multiple entities acting together).
The patent would be infringed in a single country.
Infringements of the patent could be easily detected.
The Company is likely to enforce the patent against anticipated infringers.
The Company might enforce the patent against anticipated infringers.
The Company probably would not enforce the patent against anticipated infringers.
ALTERNATIVE PROTECTION
The invention can be protected in whole or in part as a trade secret.
The invention can be protected in whole or in part with copyright.
The invention can be protected in whole or in part with trademark or trade dress.
The invention can be protected in whole or in part with a design patent. 
OTHER CONSIDERATIONS
Patenting the invention is important to building/maintaining a portfolio.
Patenting the invention is important to the marketing department.
Patenting the invention is important to an important customer.
Patenting the invention is important to a strategic partner.
Patenting the invention is politically expedient (important to management).
Patenting the invention is required by contractual obligation.
Patenting the invention is useful as a defensive position.
Patenting the invention could be useful in future licensing or cross-licensing.

Design Patent Infringement is a Matter of Appearance and Appearances

Nike recently sued Skechers for infringement of twelve of Nike’s design patents. The Complaint convincingly establishes the similarity of the appearance of the shoes:

In addition to appearance, the Complaint also develops a convincing case on appearances, detailing Sketchers strategy of copying:

Nike explains Skecher’s practice of Skecherizing competitor’s designs:

Nike’s Complaint recognizes that while competition is legitimate, people inately believe that copying is wrong. While Skechers appears to embrace its conduct, most business work to preserve its image as a legitimate competitor, and not merely a copier. To this end, a business should pay attention to how it characterizes its own conduct. Internal project names that make the business look like a pirate, or internal communications that talk about “ripping off, “knocking off,” or even “copying,” can cast the company in a bad light to a judge or jury. If what the business is doing is legimate, there is no need to characterize the conduct as improper or inappropriate — when the issue is design patent infringement, appearances can matter just as much as appearance.

A Lesson in History, and in Particular Who Owns it

Last month, General Chuck Yeager sued Airbus for violation of right of publicity, false endorsement, and trademark infringement. The basis of his complaint? In introducing its new Racer high-speed, cost effective helicopter, Air Bus referenced General Yeager’s breaking of the sound barrier at a press conference, and then repeating the reference on line and in print. Specifically, Air Bus said:

Exhibit A to General Yeager’s Complaint

This seems little more than an innocuous reference to a historical fact. It adds some information and interest to an otherwise bland commercial statement, but it seems highly unlikely to cause anyone to believe that General Yeager is in any way connected with the Racer helicopter, let alone endorses it. Shouldn’t anyone, including a commerical entity, have the right to reference a historical event to make a point — at least if they do so in a way that doesn’t make it seem that they have the approval or endorsement of those involved in the event?

Unfortunately, the right of commercial speakers to reference historical events is not so clear. Had Air Bus been a slightly better student of history, it might of known that this is a lesson that General Yeager taught AT&T nearly a decade earlier. AT&T Mobility — then called Cingular — referenced General Yeager in an eerily similar press release:

To paraphrase George Santayana, those who don’t study history are doomed to repeat it. One might add that if you are commercial entity, even if you study history, you best not talk about it!

Social Media is Still Media

Le-Vel Brands, LLC recently sued Thrival Nutrition, LLC in the Eastern District of Texas (4:19-cv-00698-SDJ) for trademark infringement and unfair competition arising from Le-Vel’s use of THRIVE and Thrival’s use of THRIVAL

To prevail, Le-Vel will of course have to prove the there is a likelihood of confusion, but Le-Vel has help in meeting this burden from an unlikely source — Thrival’s own social media posts. As set forth in the very first paragraph of the Complain, Thrival has admitted on its Facebook page that there is confusion between the two companies:

Thrival’s Facebook posts from Paragraph I of Le-Vel’s Complaint.

While Thrival may ultimately be able to explain away these posts, the bottom line is that they are going to have to. Lured by the ease and informality of posting in social media businesses often post messages without vetting the content. The reality is that such posts are virtually permanent, and relatively easy to find, and thus the content should be vetted the same way it would review formal press releases and advertising

A business should restrict who can post on its behalf, and should have some process for vetting the content of those posts to avoid embarrassment or worse — liability.

Protect your Intellectual Property or You’ll Lose Your Shirt

It seems everyone has great idea for a t-shirt. Fortunately there are numerous ways to protect these great ideas.

Utility Patents

Although t-shirts have been around for more than 100 years, a novel and non-obvious improved t-shirt can still be protected with a utility patent. A utility patent protects the construction or function of the t-shirt and not its appearance. It typically takes just over 24 months to get a patent, and even on a simple invention like a t-shirt it can cost $7,500 or more. Utility patent protection is not for every invention, but it can provide 20 years of exclusivity for inventions that meet the three tests of utility, novelty, and non-obviousness.

U.S. Patent No. 9,215,899 protects a t-shirt with a pocket made from a necktie.

Design Patents

Design patents protect the appearance of a product, not its construction or function. The inventor of a t-shirt with a new and non-obvious appearance can protect that appearance for 15 years with a design patent. It is generally faster, easier, and less expensive to get a design patent than a utility patent, and thus can be a better option, and if the appearance is the only novel feature, it may be the only option.

U.S. Patent No. D848,119 protects the appearance of a shirt with a stripe.
U.S. Patent No. D843,686 protects the appearance of a shirt with a design
U.S. Patent No. D836,301 protects the appearance of a design around the waist of a t-shirt.
U.S. Patent No. D808,665 protects the logo of Northern Iowa applied to a t-shirt
U.S. Patent No. D773,150 protects the appearance of a tshirt that looks like a safety vest.
U.S. Patent No. D669,249 protects the appearance of a t-shirt with a necktie.

Trademarks

The words and designs on a t-shirt may function as a trademark. The owner can claim common law (unregistered) rights in these trademarks, but the rights are stronger and easier to enforce if the owner registers the trademark. Trademarks can be registered at the state or federal level. A federal registration provides nationwide protection of the mark, it allows the owner to use the ® symbol, and it makes enforcement easier and less expensive. However, it can be difficult to obtain a registration words and graphics on the exterior of the shirt, because the USPTO may regard the text or graphics as merely ornamental, and not as a trademark. Thus, some additional effort may be required to show that the mark is more than mere ornamentation.

A state registration is relatively fast, easy, and inexpensive to obtain, but it does not provide the same strong benefits of a federal trademark registration and what limited rights it does provide are limited to the borders of the state, Nevertheless, a state registration may provide some benefit where a federal registration is not an option.

Copyright

Copyright provides protection of graphics against copying, but does not protect single words or short phrases or designs that do not exhibit minimal authorship. Copyright arises automatically from the moment a the work is fixed in tangible form, but two steps will ensure the strongest possible copyright rights: First, applying copyright notice to the work. Copyright notice consists of the © symbol, the name of the copyright owner, and the year of first publication. For example for a work first published in 2018, the notice might be: © Copyright Owner 2018, even though it is no longer 2018. Second, registering the copyright with the Copyright Office. Although the copyright exists without registration, prompt registration entitles the copyright owner to statutory damages and attorneys fees.

Form-seekers

Physicians have their problems with prescription-seekers, and lawyers have our problems with form-seekers — client’s who call up requesting the lawyer to send them a form so that they can fill it out themselves. The most common request for intellectual property lawyers is an NDA — a non-disclosure agreement.

However, while most NDAs are very simple, some professional judgment actually goes in to selecting the right starting point. Does the client even need to exchange confidential information? Maybe an agreement is not even need. Is the client looking to make a protected disclosure of its own information, or trying to induce a third party to make a disclosure of its information? The level or protection probably should be different. Is there even a possibility that relevant technology may result from the disclosure? If so, a mere non-disclosure agreement won’t cut it, a development agreement that apportions rights in the technology is needed.

Here is a basic flow chart of the process for identifying the proper starting point for an NDA. Even at this basic level, the simple request for a form has at least five different outcomes.

Simple flow chart for identifying the right starting point when
a client thinks he/she needs an NDA.

The important thing is to make sure that we don’t enable Form-seekers, and make sure that professional judgment is exercised in determining the best type of agreement for a given situation. Strong IP protection requires more than correctly filling in the blanks in a form. Indiscriminately grabbing whatever NDA form is handy is a prescription for disaster.

Supreme Court Clarifies Two Small but Significant Copyright Question

Today the Supreme Court clarified two small but significant copyright issues, relying on the express words of the copyright statute in one, but deviating slightly in the other.  In Fourth Estate Public Benefit Corp. v. Wall-Street.com, LLC, [17–571] the Supreme Court held that §411 explicitly requires that a plaintiff actually have a copyright registration before bringing a copyright suit. However, in Rimini Street, Inc., v. Oracle USA, Inc., [17–1625] the Supreme Court held that the term the term “full costs” in §505 of the Copyright Act simply means the “costs” specified in the general costs statute codified at 28 U.S.C. §§1821 and 1920, and does not include a party’s other costs, in effect giving no weight to “full” in the statute.

In Fourth Estate Public Benefit Corp. v. Wall-Street.com, LLC, Fourth Estate sued for infringement of its news articles from Wall-Street’s failed to remove them from its website after canceling the parties’ license agreement. Fourth Estate had filed applications to register the articles with the Copyright Office, but the Register of Copyrights had not acted on those applications. The District Court dismissed the complaint because 17 U. S. C. §411(a) provides that “no civil action for infringement of the copyright in any United States work shall be instituted until . . . registration of the copyright claim has been made in accordance with this title.” The Eleventh Circuit affirmed, holding that registration has not been made under §411(a) until the Copyright Office actually registers the copyright.

The Supreme Court affirmed, agreeing that registration occurs, and a copyright claimant may commence an infringement suit, when the Copyright Office registers the copyright. This resolves a split in the circuits, as the Fifth, Seventh, and Ninth Circuits and a smattering of district courts held that merely filing a complete application was sufficient, while the Tenth and Eleventh Circuits, and other district courts maintained that “registration” in 17 USC §411 meant actual registration. Todays decision also does not leave copyright owners in too difficult position.  The Copyright Office has a process for expedited copyright registration (https://www.copyright.gov/help/faq/faq-special.html), and the Supreme Court reiterated that the copyright owner can still recover pre-registration damages.  At most this ruling should slow a copyright plaintiff a week or two, and cost a few hundred dollars more – barely a blip for a plaintiff heading off to federal court to enforce its rights.

In Rimini Street, Inc., v. Oracle USA, Inc., after a jury awarded Oracle damages for copyright infringement, the district court added Oracle’s fees and costs, including $12.8 million for litigation expenses such as expert witnesses, e-discovery, and jury consulting.  The Ninth Circuit affirmed the award, acknowledging that it covered expenses beyond the six categories of costs enumerated in general federal statutes authorizing district courts to award costs (28 U. S. C. §§1821 and 1920).  The Ninth Circuit explained that the additional award was appropriate because 17 U. S. C. §505 gives federal district courts discretion to award “full costs” to a party in copyright litigation. The Supreme Court reversed, holding that Sections 1821 and 1920 define what the term “costs” encompasses in subject-specific federal statutes such as §505.  The Supreme Court said that while Congress may authorize awards of expenses beyond the six categories specified in the general costs statutes, the courts may not award litigation expenses that are not specified in §§1821 and 1920 absent explicit authority. The Court said that its precedents have consistently adhered to that approach, and the Court rejected Oracles arguments that this ignored Congress’s use of “full” to modify costs in §505.