The Layered Look: Copyrights and Visual Arts

People are generally aware that a painting, photograph, sculpture or other works of art are subject to copyright protection but many are less aware that copyright has many layers of possible protection which can present legal traps for the unwary.

An original work of art which may be a painting, photograph or sculpture, is subject to copyright from the time of creation of the work.  The copyright is owned by the artist or creator unless the work was produced as a work for hire where the creator is an employee acting within the scope of his or her employment duties, or by written agreement between the creator and a party who commissioned or ordered the work.

The exclusive rights of copyright for a visual work include:

• The right to make copies;
• The right to make derivatives;
• The right to distribute copies;
• The right to publicly display the work; and
• The right to reproduce the work on any article or item.

Here are a few examples to ponder in relation to these rights.

A photograph may itself be a separately copyrightable work apart from an original work being photographed.  For example, an old master painting may not itself be the subject of a copyright by reason of its age but a photograph of that master painting can be a copyrightable work of the photographer, or other owner if a work for hire.  The copyright owner of the photograph is entitled to control its copying and public display.

What if you wish to photograph a painting that is copyrighted?  Without permission of the copyright holder such a photograph will be a violation of copyright.

The risks of infringing a copyrighted work are heightened by today's ease of electronic transmission by use of the Internet, social media, cell phones, etc. What if you photograph a copyrighted painting or sculpture and post it on your Facebook page?  That posting can be considered copying and also considered a public display, both of which are violations of the owner's copyright, if done without permission.

Another right of copyright is the right to publicly display a copyrighted work or copies of that work.  Say you purchased an Ansel Adams photograph of a Yosemite landscape, you may display that photograph for your own enjoyment or within you usual social circle but you have no right to publicly display that photograph unless you were granted that right of public display by the copyright owner.

What if you take a copyrighted photograph and Photoshop it into an altered image?  As one of the rights of copyright is to make derivative works, your Photoshopped image would be a non-authorized derivative and also an unauthorized copy of the original work.

Can you put a commercial photo of your favorite band on a tee shirt?  You cannot (absent permission) since the copyright owner has the right to reproduce the photo on any item.

Liability for copyright infringement can be significant.  An owner of a registered copyright can claim damages based on actual provable economic loss or more often statutory damages which can be in the range of $750.00 to $30,000 for each infringement, as a Court may determine.  In cases of willful infringement, a Court can award costs and attorney's fees.  A court may also issue an injunction against ongoing infringement.

In a case of willful infringement under certain circumstances generally relating to commercial piracy of copyrighted works, there can be criminal liability for copyright infringement with penalties including fines and/or imprisonment.  
A defense to an assertion of copyright infringement is the right of fair use of the copyrighted work, which generally allows non-commercial use or copying for purposes of criticism, comment, news, teaching, scholarship and the like.

It would be safe to assume that copyright attaches to most paintings, photographs, sculptures and other visual arts and you should seek permission for any intended commercial activity. Permission may be sought directly from the copyright owner or most conveniently from various licensing organizations which exist for the purpose of providing such permissions.  Usually the permission is for a fee in an amount which depends upon the extent of intended use of the work. Well known licensing organizations for the visual arts include Corbis, Getty Images, Artists Rights Society (ARS), and stock photo companies, among others.

That’s Patentable? The Far-Reaching Definition of an “Invention”

U.S. patent law provides that “Whoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent therefor,” 35 U.S. Code §101. This leaves open a broad range for potential patent protection. The categories of a “machine, manufacture, or composition of matter” provide for many traditional concepts of an invention, such as devices, chemicals or other physical objects. Focusing on these physical items as being invention ignores the “process” category. The process (or method) type of patent has been used to cover a broad range of technologies – from manufacturing techniques to medical procedures. It is this category’s open-endedness which has presented a number of extraordinary patent opportunities as well as a fair share of headaches.

Concerns that method patents may be used to cover broader concepts than is appropriate has caused many to struggle to determine what types of technologies should be allowed to receive patents. The myriad court decisions and United States Patent and Trademark Office rules in the past few decades alone have created a complicated thicket of patent eligibility rules. Despite these issues some interesting ideas and non-traditional concepts have been granted patents. While some might argue that such patents are not appropriate, the Patent Office’s willingness to grant such patents introduces some leeway into determining what might be patentable and that might otherwise be overlooked.

In some cases, patents have been issued for processes used to play card games. One patent that has reached a particular level of notoriety (or infamy) is US 5,662,332. This patent covers a method of playing trading card games where each player constructs a deck of cards. The claims include coverage for “designating the [card] being brought into play by rotating the [card] from an original orientation to a second orientation.” Further claims cover a rotating, or ‘tapping,’ to make players are aware the trading card is in use.

Patent protection has also been awarded to methods involved in the presentation used in computer games. Patent US 6,935,954 was awarded for a sanity system used in a video game where the “character may experience hallucinations as a result of the sanity level.” During game play, the sanity level of the game character is modified based on a character reaction and an amount of character preparation. As the game continues, game play is impacted by varying game effects according to the game character sanity level.

In another patent, US 8,082,499, the graphical interface for an interactive dialog is presented. A dialog choice indicator is shown which has a number of directional choices. Dialog responses corresponding to a particular emotion are then provided in a consistent location/direction.

In 2014, the U.S. Supreme Court decided CLS Bank International v. Alice Corp which invalidated claims that were determined to be drawn to an abstract idea. In response to this case, the USPTO has adjusted their stance regarding patentable subject matter and has rejected many applications held to be too “abstract”. However, this has not prevented the Patent Office from still issuing patents directed to some intriguing methods.

Patent US 8,920,245 is directed to a video game award method. According to the claimed method, the player is awarded a digital gaming object while playing a first game and is then able to use the digital gaming object within a different game.

A language-based video game method is protected by US 8,825,492. In this method, the game display shows an animated portion of a human head related to speech to show a pronunciation of selected text. The text is then transformed into a non-textual form which can be used by the avatar to overcome at least one challenge, for example, a letter of the alphabet may be transformed into a rope which can be used to overcome a rock climbing challenge.

In another post-Alice patent, protection extends beyond graphic displays. US 8,721,415 covers a computer-based solitaire game with stack-based pay table. The player is provided a payout which is calculated based on a per-card payout award and the actual number of cards transferred during the game.

These examples demonstrate that patentable inventions can be made in non-traditional fields. Simply because an invention is not incorporated in a physical object, such as a motor or a chemical composition, or relates to an industrial process, doesn’t mean that patent protection is unavailable. While care must be taken to ensure the claims comply with patentable subject matter restrictions, great opportunities still exist for patenting concepts which might otherwise be overlooked. 

What Can Go Wrong – It's Just A Non-Disclosure Agreement

A Non-Disclosure Agreement (“NDA”), also known as a Confidentiality Agreement, is an agreement that precludes the use of confidential information provided by one party (a “Disclosing Party”)  to another party (a “Receiving Party”) for any purpose other than that expressly contemplated by the agreement.  Such agreements are routinely used in business. For example, when one party desires to enter into discussions with another party with respect to a potential business relationship or transaction, it is frequently necessary for the disclosing party to communicate confidential business and/or technical information to the other party in furtherance of the relationship or transaction. 

 

NDAs can be either unidirectional or reciprocal.  A unidirectional NDA contemplates disclosure of confidential information from only one of the parties to the other.  A reciprocal NDA contemplates the disclosure of confidential information from each party to the other and obligates each receiving party to maintain in confidence the other’s confidential information upon the terms set forth in the Agreement. 

Things Can Go Wrong

It should not come as a great surprise that from time to time, a party will utilize a form of NDA they have found on the Web, an NDA that may have been appropriate from some other transaction or an NDA provided by the other party without a lot of consideration for the content of the agreement.  This can be a colossal mistake.  Perhaps, since NDAs have a well understood premise – i.e. that the receiving party should hold the received information in confidence – these agreements are dealt with more casually than some other agreements.

 

I am reminded of a situation in which a potential client advised he had disclosed quite a bit of his confidential technical information to a large company.  He was considering granting a know-how license that would permit the large company to utilize his “confidential information.”  When I inquired whether an NDA had preceded the disclosure of his information to the potential licensee I was assured that this had been addressed by his office manager.  As it turned out, an NDA had in fact been signed, although upon review of the NDA, it was discovered that the signed NDA was a unidirectional NDA that protected confidential information disclosed by the potential licensee.  The NDA included no limitations with respect to the use or further disclosure of the information already disclosed by the potential client.

 

The complexity appropriate to any NDA can vary considerably based on the contemplated business relationship or transaction.  The provisions in any NDA should be commensurate in complexity with the transaction under consideration. One would seldom need a 20 page NDA for a small value transaction. 

Terms For Consideration

Some terms to consider when entering into an NDA are listed below:

1. What uses should be permitted by a receiving party with respect to a disclosing party’s confidential information?
2. Should the NDA be unidirectional or reciprocal?
3. How long should the receiving party be required to maintain the received information as Confidential Information?
4. Who, at the receiving party, should have have access to the confidential information of the disclosing party?
5. What information of a disclosing party should not be considered Confidential Information even if so designated by the Disclosing Party? Typically, the recipient of information deemed confidential by a disclosing party is not bound to retain the information in confidence if the information is publicly known, already known to the recipient or if the information falls within certain other classifications of information  for which no expectation of confidentiality would be appropriate.
6. When is the NDA terminable by a party and what are the obligations of the parties upon termination of the Agreement with respect to the return or destruction of a party’s Confidential Information?
7. Should the receiving party be precluded from using information obtained from a disclosing party to fashion or amend patent claims in a pending patent application of the receiving party?
8. Other terms involving ownership of information, disclaimers with respect to accuracy or completeness of disclosed information, injunctive relief in the event of a breach by a receiving party, non-solicitation of employees of the other party, governing law and arbitration provisions, among others may be appropriate for specific circumstances.

Generally, it is recommended that NDAs be prepared or reviewed by counsel prior to execution.

Copyright and Trademark Protection for Your Logo Artwork

Trademark owners should consider applying to register copyright rights in their logo artwork, in addition to trademark registration.  A logo may qualify for a copyright registration if it is sufficiently original and creative.

A copyright registration for logo artwork may provide a number of strategic advantages.  The owner of a copyright registration may file suit in federal court for infringement of copyright rights in logo artwork, even if the logo is not covered in U.S. trademark registration (e.g., if a trademark application is pending, a trademark registration was declined, or a trademark registration lapses or is deemed abandoned based on 3 years of non-use or other grounds).  A U.S. copyright registration (or rejected application) is required before filing suit for copyright infringement.

Remedies for copyright infringement may include:

1. A federal injunction; 
2. An order to impound, destroy, or otherwise dispose of infringing articles; 
3. Actual damages plus any additional profits of the infringer or, alternatively, statutory damages up to $30,000 per infringed work; 
4. Enhanced statutory damages up to $150,000 per work infringed willfully; 
5. An order to pay costs; and 
6. Attorney fees to the prevailing party

Willful copyright infringement may also result in criminal liability.

Copyright infringement may sometimes be easier to prove than trademark infringement.  To prove trademark infringement, the trademark owner must show that there is a reasonable likelihood of confusion, which involves analysis of multiple factors and may be subjective.  To prove copyright infringement, the copyright owner must show that copyrightable elements were copied, which may be satisfied by proving access to the infringed work plus “substantial similarity.”

A copyright registrant may record a copyright registration with U.S. Customs and Border Protection (CBP), to enable CBP to monitor and take action to protect against infringing imports and gray market goods.

It is beneficial to promptly apply for copyright registration.  If the copyright owner files a copyright application no later than three months after the work is first “published,” the owner may elect statutory damages (up to $30,000 per infringed work or up to $150,000 per willfully infringed work) and receive attorney fees in a copyright infringement action, even if infringement occurred before the application filing date.  These remedies are not available to copyright owners who file a copyright application after an act of infringement has occurred outside of the three month grace period.

Trademark rights in a logo may be perpetual as long as the logo remains in use.  However, trademark rights and registrations may be abandoned by non-use (3 years of non-use may be deemed an abandonment of trademark rights).  Federal trademark rights and “incontestability” status may be abandoned by non-use or by allowing a U.S. trademark registration to lapse.  In comparison, copyright rights and registrations are not dependent upon proof of continued use of a logo.  A copyright registration does not require periodic registration renewal filings and evidence of continued use, unlike a trademark registration.  Copyright rights in a logo created after January 1, 1978 may endure for 70 years after the author’s death (unless the logo was a “work made for hire,” in which case copyright rights may endure until the earlier of 95 years after publication or 120 years after creation).

In summary, the owner of a logo may be able to take advantage of valuable rights and remedies under both trademark and copyright laws.  Consultation with an experienced trademark and copyright attorney is advisable.

Is Your Trademark Registration Stuck in the Past? A USPTO Pilot Program May Allow You to Modernize It

On Sept. 1, 2015, the United States Patent and Trademark Office (USPTO) rolled out a new pilot program that may help trademark registrants breathe new life into older registrations. 

Normally, once a trademark has been registered for particular goods/services, it is not possible to later amend those goods/services beyond the scope of the current identification.  But technology evolves, and goods or services may be phased out in favor of modern counterparts.  In the past, a registrant for a mark applied to outdated goods/services had to file a new application, thus giving up an earlier date of use.

Under the new pilot program, a registrant may petition the Director of the USPTO to amend the respective goods/services beyond the scope of the current identification.  But, the petitioner must show that it no longer uses the respective mark with any of the original goods/services and that the newly recited goods/services are the result of newly evolved technology in the manner or medium by which products and services are offered for sale or provided to customers.  The registrant must delete the old, original goods/services in favor of the newly evolved goods/services.

This pilot program is not available to those whose applications are still pending.  Also, it is not available to those who continue to use the subject mark with some or all of the original goods/services; registrants who use the mark on “old” and “new” goods/services must file a new application for the “new” goods/services.

The petition itself has certain specific filing requirements, including a request for amendment, fees, specimens, and dates of first use of the mark with respect to the amended goods/services.  The petition must be filed through the Trademark Electronic Application System (TEAS).  The procedural details can be found on the USPTO web site, and registrants unfamiliar with practice before the USPTO are recommended to rely on the services of an experienced trademark attorney.

In announcing this pilot program, the USPTO has suggested it is proceeding with caution to avoid causing harm to other users of a relevant mark.  Before an amendment under the program is approved, an examining attorney must perform a new search for conflicting uses.  Petitioners must agree to not file an affidavit or declaration of incontestability under §15 of the Trademark Act as to the amended goods/services for a period of five years from the amendment.  Also, once an amendment has been approved, it will be published by the USPTO and third parties who believe they may be harmed by the amendment will have a thirty day period in which to comment.

The USPTO has provided on its web site a number of example amendments that would be acceptable under this pilot program, as well as some that would not be allowed.  Key points to keep in mind are that the original goods/services are no longer in use due to the evolution of technology and that the new goods/services must pertain to the same subject matter as the original. 

As an interesting example, the USPTO points out that “streaming of audio material in the nature of music” in International Class 38 would not be an acceptable replacement for “phonograph records featuring music” in International Class 9.  The proposed use is to identify a telecommunications-provider service as opposed to identifying the source of content.  “Providing on-line music, not downloadable” in International Class 41 would be an acceptable amendment in this case.

In an era of rapid technological evolution, the USPTO’s pilot program offers trademark registrants a useful tool for preserving valuable rights.

Is Patentability Smothered by the “All Encompassing” Prior Art Reference?

Patent owners may welcome the Allergan, Inc. v. Sandoz, Inc. decision earlier this month when the Federal Circuit affirmed the validity of five patents relating to the pharmaceutical formulation Lumingan ® .01%. The Federal Circuit also affirmed that Hi-Tech Pharmacol Co., Inc. infringed at least some of those patents with their proposed generic solution.

Lumingan ® .01% is a bimatoprost ophthalmic solution used for the reduction of high eye pressure, also called intraocular pressure, in people with open angle glaucoma or ocular hypertension.

Others may find that the Federal Circuit has set the validity bar too high, however…

In the Allergan case, among their arguments, Appellants argued that the patents were obviously over prior art which teaches a compositional range which encompasses the narrower range recited in the patents.

The appeals court cited Galderma stating “where there is a range disclosed in the prior art, and the claimed invention falls within that range, a relevant inquiry is whether there would have been a motivation to select the claimed composition from the prior art ranges.” Galderma Laboratories, L.P. v. Tolmar, 737 F.3d 731, 37-38 (Fed. Cir. 2013). The appeals court reasoned “[i]n those circumstances, ‘the burden of production falls upon the patentee to come forward with evidence that (1) the prior art taught away from the claimed invention; (2) there were new and unexpected results relative to the prior art; or (3) there were other pertinent considerations.” Id. at 738. Ultimately, the appeals court concluded that there was no error in the district court’s finding that Allergan had produced ample evidence of teaching away and unexpected results, and that such evidence fully supported the district court’s conclusion of nonobviousness.

Notably, the cited prior art includes in their range of possible compositions, some compositions which are ineffectual and/or dangerous. Thus, some commentators have opined that the Federal Circuit may have set the bar too high for the proving of non-obviousness. In other words, what happens if prior art teaches a wide encompassing range of compositions which include effectual and/or safe compositions … Can the patent applicant or owner still show that an invention including a narrower range encompassed by the prior art range is not obvious and therefore patentable?

Practitioners may wish to look to the Allergan case for help. The appeals court stated “It may also be true here that ‘the disclosed range[s are] so broad as to encompass a very large number of possible distinctions’, In re Peterson, 315 F.3 1325, 1330 n.1 (Fed. Cir. 2003), such that they do not teach any specific amounts or combinations and that the burden of producing evidence of teaching away, unexpected results, and other pertinent second considerations did not shift to Allergan.” Ultimately, the appeals court did not decide this issue given the ample evidence produced by Allergan, but their dicta leaves the door open to those faced with challenges based upon the wide “all encompassing” prior art reference. Such patent applicants or owners may argue that they do not have to assume the burden of proof when the cited prior art encompasses such a very large number of combinations that the prior art effectively fails to teach anything specific.

Closing the U.S. Border Gates Against Infringing Imports

Could infringing imports be jeopardizing your intellectual property rights without your knowledge? U.S. Customs and Border Protection (CBP) may be a valuable resource to protect your registered U.S. trademarks and copyrights, trade name, and U.S. patents at the border gates.

These benefits and protections to IP owners do not automatically follow issuance of a U.S. patent, trademark registration, or copyright registration, however. IP owners must take affirmative steps.

CBP is the primary federal agency responsible for securing America’s borders. With more than 60,000 employees, CBP monitors U.S. borders at and between 328 ports of entry, including more than 95,000 miles of shoreline, 1,900 miles of border with Mexico, and 5,000 miles of border with Canada. On a typical day, CBP welcomes nearly 1 million visitors, screens more than 67,000 cargo containers, arrests more than 1,100 individuals, and seizes nearly 6 tons of illicit drugs. CBP is also armed with the legal authority to detain, seize, examine, and forfeit or destroy infringing goods, and can make infringement determinations, subject to appellate review by U.S. federal courts. CPB is not required to establish personal jurisdiction over the importing party or prove intent to infringe to take enforcement action.

In fiscal year 2014, CBP processed 31.6 million trade entries, and seized approximately $1.2 billion worth of goods believed to infringe U.S. IP rights. The commodities that CBP seized in connection with more than 23,000 seizures included apparel and accessories, consumer electronics, pharmaceuticals and personal care products, footwear, watches, jewelry, optical media, computers and accessories, labels, tags, toys, and other goods. CBP analyzed samples and found intellectual property rights violations in commercial products that included integrated circuits, networking devices, gaming devices, and cell phones. Approximately 63% of the seized goods originated in China.

In comparison, CBP processed more than $2.3 trillion in trade in fiscal year 2013, including nearly 25 million cargo containers. CBP conducted more than 24,000 seizures of goods that violated intellectual property rights, with a total retail value of $1.7 billion, representing a 38 percent increase in value from fiscal year 2012.

To take advantage of CBP’s formidable IP enforcement resources and intercept foreign pirated, counterfeit, or gray market goods at the border, intellectual property owners may record U.S. trademark and copyright registrations and trade names with CBP. Owners of U.S. trademark registrations may also apply for “Lever rule” protection to prevent parallel imports of gray market goods, which are branded goods that are purchased outside the U.S. and imported for sale into the U.S. without authorization from the U.S. trademark owner. Patent owners cannot presently record U.S. patents with CBP, but may be entitled to exclusion of infringing imports into the U.S. under Section 337 of the Tariff Act of 1930.

Trademarks

A trademark owner who has registered a trademark with the United States Patent and Trademark Office (USPTO) may apply to record the trademark registration with CBP, and may also apply for “Lever rule” protection against parallel imports or gray market goods. CBP primarily focuses its border trademark enforcement efforts on marks that have been recorded with CBP.

Trade Names

A trade name is the name under which a company does business. Trade names are not registered with the USPTO, but may be recorded with CBP if they have been used to identify a trade or manufacturer for at least six months. Notice of tentative recordation of a trade name is published in the Federal Register and the Customs Bulletin and Decisions (Customs Bulletin) to provide notice to the public and give interested parties an opportunity to oppose the recordation.

Copyrights

CBP’s border enforcement of copyrights is primarily concentrated on works of authorship covered under copyrights that are registered with the U.S. Copyright Office (USCO) and have been recorded with the agency.

Patents

Although a patent that is issued by the USPTO may not be recorded with CBP, the agency enforces exclusion orders issued by the U.S. International Trade Commission (ITC) pursuant to Section 337 of the Tariff Act of 1930 (19 U.S.C. § 1337), which provides relief to U.S. industries that have established the existence of unfair trade practices in importing. ITC exclusion orders are issued for findings of patent infringement, among other things. CBP has authority to exclude importation of articles that infringe a patent pursuant to an exclusion order issued by the ITC.

To harness the powers of CBP to close the border gates on infringing imports, consult with an experienced intellectual property attorney.

U.S. Supreme Court No Help to Google in API Copying Case

Back in October 2014, the U.S. Supreme Court was asked to take up the appeal for Oracle v. Google (Oracle America, Inc. v. Google Inc.). This case offered the Supreme Court a chance to weigh in on the IP protections afforded software. After receiving the requested input from the Solicitor General, the Supreme Court opted to follow the Solicitor General’s suggestion and denied the writ of certiorari. This leaves standing the Federal Circuit Court’s decision that the “declaring code and the structure, sequence, and organization of the 37 Java API packages” were entitled to copyright protection.

The Solicitor General’s recommendation was premised on several factors included a rejection of a distinction between declaring code and implementing code and an assertion that many of the anti-copyright arguments presented would be better handled as a matter of fair use.

Many of the arguments presented in support of the notion that APIs should not be covered by copyright included an implicit distinction between declaring code and other elements of the software. The Solicitor General’s brief did away with this idea by using a statutory interpretation of ‘computer program’ to include both declaring code and implementing code. The brief goes as far as to state: “Nothing about the declaring code at issue here materially distinguishes it from other computer code”.

The argument for denying copyright for declaring code asserted that declaring code was a functional aspect of the program designed to perform a process and that copyright protections could not extend to cover such aspects. By doing away with the distinction between declaring code and other parts of the program, the Solicitor General’s brief relies on the express intent of the statute to provide copyright protection for computer programs despite their functional aspects. This bolsters the proposition that APIs are copyright eligible as they are simply another piece of the program. Thus, even though the declaring code may have functional aspects it is still entitled to copyright protection like any other computer program or portion thereof.

The Solicitor General’s brief provides some guidance as to further consideration of APIs. The brief notes that arguments directed to interoperability should be directed to a fair use defense rather than attempting to carve an exclusion from copyright protection. However, the discussion notes that in this case the copying was not done so that the Android platform was interoperable with the Java platform or programs. Instead, the copying was done “so that programmers familiar with the Java platform would be able to switch over to the Android platform without having to learn entirely new commands for invoking commonly used methods” which would appear to undermine any fair use claim based on interoperability.

The Supreme Court in refusing the appeal has provided the opportunity for a more suitable case to come before it which may allow the Court to better address the underlying distinctions between copyright and patent protections available to software. While some would have preferred a clear signal from the Court at this time, the lessons learned from the Solicitor General’s brief may provide a potential roadmap as to how to avoid some of the pitfalls from Oracle v. Google. Although Google still has the chance to argue their fair use defenses in the lower courts this case will likely be focused on copyright issues from here on out.

What do you mean I can't display the picture I bought? Photographs and Copyrights

So you have a photograph which you purchased some years ago of a beautiful early morning harbor view.  This photo would be perfect as a wall display in your commercial real estate office on the waterfront.  You have an enlargement made of the photograph and hang it in your office for all to see.

Not long after the picture is put on display, you receive an email from an attorney representing the photographer who asserts that you have no right to publicly display the photograph or to make an enlarged version of it, and asks that you immediately take down the photograph and destroy it. 

Is such a demand legitimate?    Yes it is.              

The photograph you purchased is subject to copyright protection which has a variety of associated rights.   Your purchase of the photograph provides ownership of the physical copy but not the associated copyright.  The purchase of the photograph does not give you any rights of copyright unless specifically conveyed in a written agreement between you and the copyright owner, in this case the photographer. 

As the owner of the photograph, you may display the photograph for your own pleasure, such as display in your home or private office.  But public display of the photograph is a right of copyright reserved to the copyright owner unless separately contracted for.

What to do now?  Work out a settlement with the photographer which may entail paying some amount for the right to commercially display the photograph.  Or comply with the demand to take down the photograph and destroy the copy.

Photographs, works of art and other copyrightable works are protected by copyright from the moment they are created.  The photographer has the exclusive right to reproduce his or her photograph and to control use of the photograph.  Without permission from the photographer (or other copyright owner), you cannot copy (in hard copy or electronic form), sell, distribute, publicly display or create derivative works of the photograph.

If you are contracting with a photographer to create photos for you, you should be mindful of the rights of copyright you wish to acquire in addition to a physical copy of the photograph.  You may wish to acquire all rights of copyright or just some.  It is often easier to negotiate a transfer of copyright interest at the time of engaging the photographer when he or she is more likely to be eager for the business, rather than later when circumstances may make the transfer of copyright less appealing.

The situation is similar for other works of art.  Laws in other countries are generally similar but of course individual country laws must be reviewed in specific situations.

If you acquire a photograph from a stock photo organization, the rights for use of that photograph are usually specified in the terms of sale or license.

There can be many nuances to transactions involving photographs and other artistic or visual works, and therefore prior consultation with an experienced IP attorney would be prudent.

The Adoption of a Competitor's Trademarks as Search Terms In Google AdWords May Not Be Such a Great Idea

Google AdWords and similar services display highly prioritized links as search results when someone enters a predetermined search term into a search engine.  It wasn’t long after such services became available that companies realized that by using trademarks and product names of a competitor as search terms with such services, a company could greatly increase the likelihood that a party performing an online search for the competitor’s products or services could be diverted to the website for the potential economic benefit of one other than the trademark owner.   The practice of using a competitor’s trademarks and product names in this manner comes with some risk.

Typically, trademark infringement results when the use of a mark by one company in conjunction with its own products or services is reasonably likely to result in confusion in the marketplace with the use of a similar mark by another having superior trademark rights.  The question of whether there is a likelihood of confusion has typically been viewed as of the time of the acquisition of a product or service.  However, under a legal doctrine known as “initial interest confusion” courts have found parties liable for trademark infringement in circumstances where a potential consumer was initially confused as to the source of origin of the product or service, but where no confusion existed as of the time of the ultimate acquisition of the product or service.

In view of the adoption of the initial interest confusion doctrine by some courts, there is a risk that the use of the trademarks or product names of a competitor as search terms to increase the potential economic benefit of another could result in a cause of action for trademark infringement. For this reason, such practices are generally not recommended.

GOOGLE and ADWORDS are trademarks of Google Inc.

IP Owners Beware! A Con Artist May Be Behind that Official-Looking Letter

The World Wide Web promised an infrastructure for the free flow of information.  For Intellectual Property (IP) owners, this meant free, instant access to patent and trademark administrative details and status.  Unfortunately, the same types of people who call at inconvenient hours, professing to be from the “Revenue Service,” and demanding payment of a (fictitious) delinquent debt are using the same Web resources to target patent and trademark owners.  Despite efforts aimed at raising awareness in the IP community, scammers continue to produce sophisticated, official-looking communications that sometimes succeed in trapping the unwary.

Trademark owners have been the targets of several types of fraudulent schemes.  Here are some of the more common ones:

“Greetings from [a foreign country].  We have been asked by company ABC to register the mark XYZ as their brand name and their domain name.  But, we noticed XYZ is similar to your brand name. Let us know if you gave them permission.” 

Company ABC is most likely fictitious.  If you write back saying you did not give ABC permission to pursue these registrations, you will be given the opportunity to pursue domain name and trademark applications in that country.  Even if legitimate filings result, you may be paying excessive fees.

“Greetings from the United States Trademark Registration Office (USTRO).  Upon payment of this invoice for $395, we will register your trademark XYZ with the U.S. Customs and Border Patrol.  In addition, we will monitor your mark with our proprietary search engine and alert you to possible third party infringement.  We look forward to your prompt payment.”

“USTRO” sounds a lot like “USPTO,’ the acronym for the United States Patent and Trademark Office.  While the USPTO is a U.S. government agency, the USTRO is a private firm in Los Angeles offering expensive and possibly unnecessary registration services.  Variations of this scam have come from sources such as the “United State Trademark Agency” or the “Trademark Monitoring Service” with offers to monitor the progress of your trademark application for you or to provide trademark renewal reminder services, neither of which have much value and would be duplicative of the efforts of your trademark counsel.

“You are cordially invited to have us list your trademark in the TM REGISTER / The International Trade Marks and Service Marks Catalog.”

This is an invitation to extract a hefty sum from your bank account in exchange for the opportunity to include your trademark in a publication that no one looks at and that has no value.

On the patent side, there have been similar efforts:

“The international patent application cited above has been Published in the WIPO Gazette.  This form is an offer to register your international patent application in our internet database and access to all database services.”

This offer appears in the form of a very official-looking invoice from “World Patent & Trademark Services,” or “World Patent & Trademark Organization,” or “World Intelligent Property Office,” etc.  The latter is particularly devious because of its similarity to the legitimate “World Intellectual Property Office” (WIPO).  When you file an international patent application, it does get published in the WIPO Gazette, so that part of their letter is true.  In fact, that’s where they got the administrative details of your international patent application that may be printed in their letter, perhaps along with the abstract or a representative figure from your application.  It may even have a fancy seal embossed into it.  Those who are taken in by this “offer” may have their international patent application included in a database that no one looks at, in exchange for hundreds or even thousands of dollars.

We’ve seen fewer attempts to take advantage of U.S. patent applicants with similar offers, but vigilance is always called for. 

The bottom line: if you’re in doubt, contact your IP attorney with any suspicious correspondence - he or she will be able to quickly assess its validity and help you avoid such costly and valueless schemes.

 

 

 

 

 

 

Jointly Owned Inventions and Patents

Difficulties can arise with respect to jointly owned inventions and patents if a written agreement is not in place which specifies the rights and responsibilities of the respective joint owners.  Do not rely on oral understandings or ignore the matter of joint ownership.

Joint inventions typically arise in one of two ways.  In one instance joint ownership can arise for an invention made by two or more persons.  If there is no obligation to assign the invention to a single entity, such as the employer of the inventors, ownership of the jointly made invention is jointly held by the two or more inventors.  In another instance, joint inventions can arise when two or more companies or other organizations work together on a project.  For example, a university and research sponsor may collaborate on a development project, or two or more parties may collaborate on a joint development project.  In the absence of an agreement between the parties to the joint activity, inventions and patents resulting from the joint project are jointly owned by the parties.  By statute (35 U.S.C.§261, 262), each co-owner of a joint invention or patent can act independently of the others and without accounting to the others.  The result of such potential independent action can often thwart the effective utilization or licensing of the jointly owned technology and associated inventions and patents.

It is therefore essential to have a written agreement between the joint owners which sets forth rights and responsibilities of each of the parties.  Such an agreement should specify respective ownership interests, responsibility for control of patent filing, prosecution and maintenance activities, sharing of patent expenses, sharing of royalty or other income, management of licensing or other transactions in respect of the jointly owned intellectual property and management of litigation relating to the joint intellectual property.  In the absence of an appropriate agreement, each owner could compete with the other co-owners and attempt to separately license or exploit the invention.  In addition, no co-owner has any obligation to account to any of the other co-owners with respect to the sharing of income from the jointly owned invention, or otherwise.

Ownership of an invention and any resulting patent is a matter of state law and any dispute regarding ownership would be a matter for resolution by state court action, unless there is diversity or other federal court jurisdiction.  Such disputes often involve interpretation of  an agreement to assign invention rights, interpretation of a consulting agreement under which an invention arose, or interpretation of an employment agreement under which an invention is said to have arisen.

A further issue relating to a jointly owned patent arises if there is to be litigation alleging infringement of the joint patent..  All co-owners must jointly sue the infringing party.  An agreement among the co-owners may specify that one party can manage such litigation although the other co-owners must usually be named as parties to suit jurisdictional requirements.

Bottom line – have a written agreement with all co-owners.

Patent and Copyright Protection for Software API

Recently the United States Court of Appeals for the Federal Circuit had a chance to weigh in on the IP protections afforded software. When deciding Oracle v. Google (Oracle America, Inc. v. Google Inc.), the Court concluded that Google violated Oracle’s copyright in the Java API. The court reasoned that the “declaring code and the structure, sequence, and organization of the 37 Java API packages” were entitled to copyright protection. Some viewed this as a reversal of the perception that API’s were not copyrightable.

API’s (or application program interfaces) are critical elements in modern software that allows programs to interact. The API describes how one program can call to another. This is often seen as a functional requirement for compatibility. By enabling one program to use features from another program, programmers can avoid recreating large amounts of code. Using similar APIs allows programs to be more easily ported from one system to another. Additionally, APIs can encourage development by third party programmers by making interoperability easier which can lead to a richer software environment that is more appealing to customers.

While the Court’s decision revolved mostly around copyright issues, the court acknowledged the potential relationship with patent laws and indicated that computer software may be covered by both copyright and patent laws.

Copyright protection has the potential to be extremely problematic. However, patent protections are equally problematic. In truth, both forms of protection have inherent balancing factors. Patents require going through the U.S. Patent and Trademark Office application process which ensures patents meet certain requirements, such as novelty, subject matter, non-obviousness, etc. This makes seeking patent protection a large investment in both time and money. In contrast, copyright protection may be seen as considerably easier to get as there is no substantive examination process. Additionally, a copyright’s duration is considerably longer than a patent’s.

However, these differences are offset by the associated scope of protection afforded by copyrights and patents. Where copyrights are limited to a specific expression, patents may have a broader coverage for the underlying structure and functionality of the software. This can make working around a patent claim considerably more difficult than avoiding a copyrighted expression.

Software programs are currently deemed eligible for protection from both copyright and patent laws. To some, this may seem counter-intuitive since software is often considered functional since it has instructions for a process. Copyrights do not protect procedures; whereas, patents do (although neither extends protections to cover abstract ideas). However, this reasoning overlooks the fact that software programs can be viewed as having distinct aspects: namely an expressive aspect and a functional aspect.

Even when a program is written in order to provide a particular result, there can still be a variation (or expression) in the way the program is written. For example, there are a number of programing contests where programmers attempt to make the least understandable program. These obfuscated code contest entries produce functioning programs despite being nearly indecipherable as written.

Generally, programmers are encouraged to follow best practices so that anyone who later works with the program can easily understand the nature of the code. This still leaves room for personal style and expression. Returning to the API, the declaration is typically defined as a short command line call for each function. In practice there is limited room for personal expression. A function to return the larger of two integers would be expected to be written as “max (int a, int b)” or as “maximum (int a, int b).” Though the options are varied, using a declaration of add (int a, int b) for such a function would be highly unusual.

One allegation against Google is that the copying of the API is an attempt to gain the benefit of the existing Java environment in order to leech off of the work originally done to establish the Java platform. While this particular fact pattern has the potential to create problems for people hoping to maintain legacy software environments, there appears to be little risk to developers working with an existing platform. This case does not involve the use of the API in programs intended to operate with the Java platform but rather the attempt to create a replacement of the Java platform. Furthermore, the Federal Circuit emphasized the significance of the copying of the structure and organization of the API packages – not simply the use of the API.

Ultimately, this issue is now in the hands of the U.S. Supreme Court who have been asked to take up the case. Some are concerned that given the Supreme Court’s track record against software protection, the Supreme Court may make a ruling which proves problematic for software protection. It is still unlikely they will totally do away with the dual protections of copyright and patents for software, if they take up the case.

Patents In the Shark Tank

My family and I enjoy watching Shark Tank. It’s a mix of business, technology, humor and, in some cases, is a testament to the entrepreneurial spirit of people. Of course, we realize it is mainly about entertainment. It doesn’t mean, however, that there aren’t some learning opportunities to be had.

As a patent attorney, my ears perk up a bit when I hear a shark ask about patents or patent applications or when the team seeking investment (the “contestant?”) mentions either having a patent or having applied for a patent. I have previously written about the differences between having obtained a patent and having applied for a patent. When this issue comes up on Shark Tank, I point it out to my wife and daughter but they just roll their eyes and say “we know, we know.”

When patents come up on Shark Tank, there isn’t an in-depth discussion of what the issued claims cover or what scope of coverage is being pursued. The show isn’t set up for that type of analysis and, I will admit, would be deadly boring if ever there was such a discussion. It is surprising to me, however, that sometimes the sharks consider having or not having patent protection (pending or issued – it doesn’t seem to matter) is important to whether or not they will invest without having any idea as to the scope of protection. Again, merely saying one has a patent or a pending application, without providing an understanding of what the claims cover, might give a potential investor some comfort but it really doesn’t convey any useful information.

Recently, Funbites came on seeking an investment. Funbites sells a device that cuts kids’ food into different shapes. During the pitch, Funbites told the sharks that they had an issued patent and they were ultimately successful in landing a shark. It’s not clear that having a patent helped land a shark, however, looking at the device, I wondered what the patent claims covered.

It didn’t take too much research to find Funbites’ U.S. Patent 8,695,220 (‘’the ‘220 patent”) with the not-so-fun-sounding title “Hand-Held Food Cutter with Shape Imparting Device.” As we know, however, it is the patent’s claims that determine the scope of coverage, i.e., its strength, as they define what others cannot make, use or sell without possibly being liable for infringement.

There are some general rules when it comes to claim interpretation:

1. broad claims are better than narrow (more specific) claims; 
2. long claims are narrower than short claims; and 
3. it’s easier to avoid infringing a narrow claim. The second rule is true because long claims include more components and make it more specific as to what the claim covers. The third rule tends to be true because, generally, infringement can be avoided by not including one or more component recited in a claim and, as there are more components in a long claim, it’s likely something can be removed or changed.

The ‘220 patent includes 14 claims with claim 1 being the only independent claim – and it is pretty long and, therefore, narrow. This is not surprising as it may have been necessary for the claim to be more specific in order to overcome the prior art cited against it during its examination in the Patent Office. The evolution of a claim during its pendency in the Patent Office will have to be the topic of a separate article. Suffice it to say that they obtained a patent but it’s narrow.

So, where does that leave us? Someone wanting to compete with Funbites or understand the scope of coverage will read the ‘220 patent and review claim 1. This review would probably include determining what components are “specific” and, therefore, might be changeable to make a cutting device that would not infringe the claim.

Without reciting the whole claim here, there are a number of terms in the claim that could be removed or changed in a competing device such that the competing device would likely not infringe. For example, the claim requires “an arcuate convex shaped bottom edge that is beveled for cutting the food” and “bottom edges” of second walls that are “V-shaped cutting edges” and where “bottom edges” of “vertical end walls only are beveled along an inner surface thereof.” (emphasis added). What if the competing device has a bottom edge that is not an “arcuate convex” shape and is not “beveled for cutting?” What if something different than a “V-shaped cutting edge” is provided? What if the vertical end walls are not beveled only “along an inner surface?” It may be arguable that these changes take the competing device out from the scope of the claim.

There are certainly other aspects of the claim that might be changed to avoid its infringement and the foregoing was not meant to be an exhaustive list. It does seem, however, that there are points that could be changed in order to avoid being accused of infringement. Generally, however, when considering whether a device is “cleared” with respect to an issued patent it’s highly recommended that you consult with an experienced patent attorney.

I recognize that the sums of money that the sharks are investing on the show are relatively small and that there isn’t a lot of time for due diligence including patent portfolio review. I would expect that their larger deals include a comprehensive review of the IP positions of the parties. I just want the reader to understand that merely saying one has a patent or has applied for a patent doesn’t necessarily mean that a strong position has been staked out and that it doesn’t take that much to make such a determination.

DISCLAIMER: These are just the personal opinions and musings of one who watches too much television and thinks too much, sometimes, about patents. No one should rely on this analysis as to the relative strength or weakness of any patent discussed herein nor should anyone base any business decisions on the opinions expressed herein.

Starting a New Company? Protect Your Intellectual Property Now or Maybe Never

When getting a startup off the ground and in the course of ongoing operations, it is important to take care of some fundamental housekeeping matters.  The failure to do so can result in problems that could be costly and/or difficult to resolve later.

Incorporation
Steps should be taken to incorporate early.  The entity form and jurisdiction should be discussed with legal counsel so that appropriate tax and legal issues can be considered.  When more than one individual is involved, the terms of an operating agreement that address contingencies and matters of corporate control should be discussed at the outset. Some firms offer special fee arrangements for startups which can be attractive.  This firm, through the PRETI FLAHERTY BUSINESS LAUNCH PAD ™, assists in the formation of new ventures under certain guidelines.

Employment Agreements
All employees, members and key individuals of the company should be required to execute confidentiality and assignment agreements.  These agreements should address basic obligations to the company including the obligation to maintain sensitive company information in confidence, the obligation to assign intellectual property to the company, an identification of pre-existing intellectual property of the individual, non-compete obligations, non-solicitation obligations with respect to customers and other employees and assurances that the employment will not conflict with any prior obligations of the employee.  A failure to enter into such agreements upon the formation of a company with key personnel can result in claims that the company does not own its intellectual property or claims that the company does not possess the exclusive rights to its intellectual property.

Consulting Agreements
Frequently, startups need to rely on other parties for expertise in specialized areas.  Prior to the commencement of work with any consultants, a consulting agreement should be put in place that provides, in addition to a work statement that addresses the specifics of the undertaking and compensation arrangements, obligations of confidentiality of company information and information developed in the course of the undertaking, a right of use with respect to any intellectual property of the consultant embodied in the deliverables, obligations to assign intellectual property developed pursuant to the agreement, an agreement not to solicit employees of the company and assurances that the undertaking does not conflict with any prior obligations assumed by the consultant.  Absent an express agreement with consultants, disputes regarding the ownership and use of intellectual property developed by the consultant can arise.

Filing of Patent Applications on Inventions
As a result of changes in the patent law over the last several years, the party who first files a patent application for a particular invention in the US typically has superior rights over parties that file later. For this reason it is advantageous to pursue the filing of patent application on subject matter that is perceived to be of commercial value as soon as the basic ideas are sufficiently defined when patent protection is available.  When a startup pursues funding, a sale of the company or an initial public offering, it is inevitable that one of the checklist questions that will be asked is whether patent protection has been pursued so as to establish a barrier to entry of the marketplace by competitors. Frequently, the initial patent application filed will be a provisional patent application in recognition that the technology may evolve in the initial one-year period after the filing of the provisional application by which time a non-provisional application must be filed to preserve the priority date of the provisional application.  A failure to file a patent application within specified periods can result in a bar to a later filing and a loss of an ability to pursue patent protection which can detract from the perceived value of the company.

Name Clearance and Filing of Trademark Applications for Significant Trademarks
Prior to formalizing and registering a corporate or other entity, a name clearance search should be undertaken to determine if objections are likely to be raised by others with respect to the use or registration of the name by other business entities.  The costs associated with such clearance searches are generally considerably lower than the costs associated with changing a corporate name and rebranding activities that must be undertaken if a name change is later required due to a conflict with a preexisting business. Since at the outset most startups will not have used any marks in interstate commerce, they should consider filing applications for federal registration of significant trademarks based on an ”intent to use” the mark(s) in the future.  If it is determined by the U.S. Patent and Trademark Office that a mark is registrable, a Notice of Allowance is issued.  Once the mark is used in interstate commerce, a statement of use is filed and the registration is issued.   The inattention to the filing of trademarks can result in the adoption and registration of the marks by others and an inability to use the marks in conjunction with the business of the company.
 
Use of Non-Disclosure Agreements
Discussions with parties outside the company should be undertaken pursuant to non-disclosure agreements.  Such agreements obligate the recipient of confidential company information to maintain the information in confidence and limit the use of such information solely to the limited purpose specified in the agreement.  The failure to utilize non-disclosure agreements when disclosing sensitive company information to other parties can result in the loss of the right to file patent applications on inventions of the company in certain circumstances, the use of the company information in a manner adverse to the company, or the public disclosure of information that the company desired to maintain in confidence.

Should a startup pursue external funding or get to a point at which it is considering a liquidity event, due diligence investigations will be pursued to ascertain whether the company has taken appropriate steps to protect its intellectual property assets. A failure to assure that the above-identified housekeeping matters have been appropriately addressed can adversely affect the valuation of the company or the ability to achieve desired funding.

Don't Get Burned by Unsolicited Ideas

The Company Perspective
Many companies are unsure what to do when receiving unsolicited suggestions from outside the Company. A sound intellectual property program will include a policy regarding the receipt of unsolicited suggestions, ideas and/or inventions, including both patented and unpatented inventions (the idea). The policy should be designed to avoid any misunderstanding that the Submitter is entitled to compensation and/or that the Company agrees to pursue the idea upon receipt of the unsolicited information.

Preferably, the policy should require each Submitter to review and to sign a waiver related to the submission. Suggestions should only be received in written form. The waiver can include the following provisions:

• The Company’s receipt and/or evaluation of a submission do not imply or guarantee confidentiality, a promise to pay compensation, a promise to pursue the information and/or recognition of the novelty of the suggestion. 
• The Company accepts no responsibility for loss or destruction of any samples received from the Submitter or for maintaining the confidentiality of the idea. 
• The Company will compensate the Submitter only if the Company agrees to pursue the idea, has received the idea only from the Submitter and was not previously aware of or working on the idea, and reaches an agreement with the Submitter as to the terms and conditions related to the exploitation of the underlying idea.
• The Submitter will not make known the Company’s potential interest in the idea or use the Company’s name without prior written permission from the Company. 
• The Company is under no obligation to make known to the Submitter the Company’s research and development or that of its competitors.
• The Submitter agrees to negotiate with the Company for rights related to the idea if the Company is interested in pursuing the suggestion.
• The Submitter agrees that the Company is not required to provide any explanation for its reasons should the Company decide not to pursue the idea. 
• The Submitter agrees that the all of the provisions of the waiver apply to any information submitted related to the underlying idea.
• The Submitter has read and understood all the provisions of the waiver.
• The Submitter has the right to discuss the suggestion and is not aware of any express or implied agreement inconsistent with said right.
• The executed waiver is preferably reviewed by counsel and forwarded onto the Company personnel who will review the idea to determine the Company’s interest level. Interest or lack thereof in the idea should be confirmed in writing and reviewed by counsel and oral conversations indicating interest level should be avoided. 

The Submitter Perspective
The waiver above means that the Company does not guarantee confidentiality of your idea. Further, there is the potential for misunderstanding or ambiguity regarding what the Company already knew before receiving the idea and what they learn from the submittal of your idea. Therefore, it is often recommended that the Submitter file a patent application with the United States Patent and Trademark Office prior to approaching a company with a particular idea. In so doing, there is official documentation regarding the idea.

Security Interests in Intellectual Property

As collateral for a loan, lenders are accustomed to obtaining a security interest in the property of the borrower.  Such property usually includes tangible assets of the borrower such as real estate, machinery and other physical assets, and may often include intangible assets namely, patents, trademarks and copyrights which collectively are the borrower’s intellectual property.

Under the Uniform Commercial Code (UCC) Article 9, security interests are recorded in the Office of the Secretary of State in the state where the borrower resides; however, this UCC recording may not be sufficient for all intellectual property.  To perfect a security interest in copyrights, the security interest should be recorded at the Copyright Office to provide appropriate notice and to perfect the security interest.  For patents and trademarks, the UCC filing is usually sufficient to protect the lender, but may not be sufficient with respect to a future transfer of rights by the debtor to an innocent purchaser.  The better practice is to record in a timely manner, in addition to a UCC filing, a security interest in patents and trademarks at the U.S. Patent and Trademark Office (PTO).  Such recording at the PTO will provide proper notice which will prevent transfer of good title by the debtor to an innocent third party.

After repayment of a loan, it is important to timely record a release of the security interest with the appropriate Secretary of State’s Office, Copyright Office and Patent and Trademark Office, as applicable, to reflect the release in the public record.

Difficulties can arise by failure to timely record a release at the PTO or other applicable agency.  Often the lack of a recorded release is discovered much later than the original transaction and at a time when parties may not be available to execute appropriate documents.  All documents affecting title should be timely filed in the appropriate agencies to provide a publicly accessible chain of title.  If not done in a timely manner, the passage of time can lead to difficulties.

Consider the following scenario:  Your company is seeking to acquire another company and you discover that patents of the target company are subject to a security interest held by Town Bank and recorded at the PTO.  You learn from officers of the target company that the loan underlying the security interest was paid years ago but nobody paid attention to releasing the security interest at the PTO.  So far as the public record at the PTO reveals, a security interest is still in place. Town Bank has gone through several mergers and is now part of Megabank.  The security interest still reflected in the PTO public record presents an obstacle to the acquisition being completed and your company counsel requests that the target company clear this up.

What can now be done to remove this obstacle? The following options could be pursued:

• Find an officer of Town Bank willing to now sign an acknowledgment that the security interest was released as shown on attached copies of the loan release.
• If Megabank is willing, file a release signed by Megabank which traces the history back to Town Bank with appropriate documentation showing payment of the loan years ago and release of the security interest by Town Bank. 
• File a document from the target company with affidavits and exhibits showing that the loan was previously paid and that the security interest was in fact released by Town Bank years earlier.

The PTO response to such filings can be quite variable and may require subsequent filings of documents and/or affidavits to meet PTO requests.  This  hassle could have been avoided if a release of security interest had been recorded at the time the release from the bank occurred.

The lesson to be learned is the advisability for timely filing of releases of security interests to avoid problems of correcting record title to patents (and other intellectual property) which can be complicated by the passage of time such as parties disappearing, mergers,  people going missing, which can impede or prevent necessary signatures of pertinent parties being obtained.

Seeking Patent Protection on Computer Implemented Inventions? Disclose the Specific Algorithms Employed in the Implementation

I commented in a prior blog on the lack of clarity in the patent law with respect to the patent eligibility of computer-implemented inventions.  Recent cases reflect an even further tightening of the rules with respect to computer-implemented inventions and suggest that practitioners may need to reconsider the content that should be included in patent applications directed to such inventions.

Historically, the courts in the U.S. have held that “[t]he specification [of a patent] need not teach what is well-known in the art.”  The rationale for these decisions seemed to make sense.  Requiring a patent applicant to reiterate that which was well known in the field would simply increase the cost of preparing patent applications and would convey nothing new.  As a consequence, it has been a common practice not to include subject matter that was well known in the field.  Patent practitioners, at times, would expressly state that specific information was not being included because it was well known.  Recent cases suggest that this practice needs to be revisited.

A Recent Case Invalidates Claims for Failing to Adequately Disclose an Algorithm for Performing a Claimed Function

The Court of Appeals for the Federal Circuit recently issued a decision in which it invalidated a patent as indefinite for failing to adequately disclose an algorithm employed in a computer-implemented invention. Triton Tech of Texas, LLC v. Nintendo of America, Inc., 111 USPQ2d 1396 (Fed. Cir. 2014). There was no dispute that algorithms for performing the claimed invention were well known.  Nevertheless, the Court held the claims of the patent invalid as indefinite for failing to adequately disclose in the patent specification a specific algorithm for performing the well-known function.

How Means-Plus-Function Analysis Impacted the Case

The decision of the Court was directed to a claim element drafted in “means-plus-function” form.  Claims written in “means-plus-function” form recite a means for performing a particular function without describing any structure to perform the function.  While there is no structure recited in a claim element written in means-plus-function form, under the U.S. patent laws, an element of such a claim is construed to cover the corresponding structure described in the patent specification and equivalents thereof.  The Court reasoned that because the patent specification did not disclose a specific algorithm for performing the claimed function, even though many such algorithms for performing this function were well known in the field, the patent failed to disclose any structure in the patent specification that corresponded to the claimed function and thus failed to meet the statutory requirement.  Based on this logic, the court held the patent claims invalid as indefinite.
 
The Algorithms for Performing a Claimed Function Should be Disclosed in the Patent Specification for Computer-Implemented Inventions

To avoid the fate suffered by the patent owner in this recent case, the specific algorithms, steps and/or techniques employed in computer-implemented inventions should be disclosed in the patent specification, even in circumstances in which the disclosure involves subject matter that is considered well known in the art.  This is particularly important in patent applications that include claims written in means-plus-function form.