Emerging Technologies:
Upcoming SlideShare
Loading in...5
×
 

Like this? Share it with your network

Share

Emerging Technologies:

on

  • 902 views

 

Statistics

Views

Total Views
902
Views on SlideShare
902
Embed Views
0

Actions

Likes
0
Downloads
1
Comments
0

0 Embeds 0

No embeds

Accessibility

Categories

Upload Details

Uploaded via as Microsoft Word

Usage Rights

© All Rights Reserved

Report content

Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
  • Full Name Full Name Comment goes here.
    Are you sure you want to
    Your message goes here
    Processing…
Post Comment
Edit your comment

Emerging Technologies: Document Transcript

  • 1. EMERGING TECHNOLOGIES: A LEGAL TOOL KIT FOR RESPONDING TO RESULTING INTELLECTUAL PROPERTY ISSUES BY SEEMA A. KHAN A INTRODUCTION In the last twenty years, new technologies and their resultant new intellectual property (“IP”) issues have developed at such rapid pace that the law has struggled to respond. Federal agencies, therefore, are reviewing the effect of intellectual property on competition and innovation.1 At least one federal judge is calling for the creation of a national law reform commission2, while academics are pondering the whys and wherefores of intellectual property law in an effort to create new constructs.3 Practitioners though are the ones that are caught in the crosshairs of emerging technologies and IP issues. At the forefront of the legal landscape because they actually deal with the clients creating the new technologies, practitioners are left with the unenviable task of having to apply uncertain law and new legal theories to clients who have already moved to the next best thing. From electronic signatures,4 original business content on web pages,5 hyperlinks/deep links/framing,6 virtual reality games on the internet,7 reverse engineering encrypted technologies,8 to yourcompanysucks.com and aA Ms. Khan is Of Counsel to Tradescape Corp., a corporate group that consists of securities, brokerage, technology and ECN companies. 1 See (hptl) PTO, IP REPRESENTATIVES SEE NO NEED FOR LEGISLATIVE CURBS ON INTERNET PATENTS, 61 PTCJ 573 (April 13, 2001); See also FOREWORD: BEYOND MICROSOFT: ANTITRUST, TECHNOLOGY, AND INTELLECTUAL PROPERTY, Glasgow, Lara J.; Vaz, Alicia N., 16 Berkeley Tech. L.J. 525 (Spring 2001) 2 See FEDERAL JUDGE CALL FOR PATENT REFORM COMMISSION, Sandburg, Brenda, The Recorder, March 6, 2002, (hptl:Brenda Sandburg,The Recorder) 3 See DOES TECHNOLOGY REQUIRE NEW LAW?, Friedman, David, 25 Harv. J.L. & Pub. Pol'y 71 (Winter 2002), and see also INTELLECTUAL PROPERTY, ANTITRUST AND THE NEW ECONOMY, Cohen, Linda R.; Noll, Roger G., 62 U. Pitt. L. Rev. 453 (Spring 2001). 4 See FEDERAL AND STATE ELECTRONIC SIGNATURE LAW IN THE UNITED STATES: FROM THE E-SIGN ACT TO CLICK WRAP: A LEGAL GUIDE TO THE CREATION OF BINDING TRANSACTIONS IN ELECTRONIC COMMERCE , Hillis, Bradley J. , 634 PLI/Pat 161, Practising Law Institute PLI Order No. G0-00N1 (February 2001). 5 See COPYRIGHT AND THE INTERNET, Oratz, Lisa T.; Wagner, Matt, 3 NO. 8 E-Commerce L. Rep. 2 (June 2001). 6 See E-COMMERCE DISPUTES: LEGISLATION AND LITIGATION ARE THE BRAVE NEW WORLD, Lunseth II, John B., 68 Def. Couns. J. 280 (July 2001). 7 See THE NEW PATENT LANDSCAPE, Freed, Joel M.; Reynolds, Thomas C., Computer and Internet Lawyer 1 (December 2001) 8 See Universal City Studios, Inc. v. Reimerdes, 111F. Supp. 2d 294 (S.D.N.Y. 2000).
  • 2. other cybersquatting nightmares,9 emerging technologies are changing the way attorneys advise their clients and handle their roles as in-house or outside counsel. This paper seeks to provide practical guidance on counseling e-commerce businesses on the intellectual property issues that face them when they generate new technologies. To best deliver practical advice as to “what to do” versus just identifying issues and then explaining the current state of the law, Part I recognizes the common themes that run through the intellectual property issues in new technologies, and examines the law’s response to such themes to date. Then, Part II delivers a legal tool kit, similar to a programmer’s software tool kit, that a practitioner can take into any legal role, to perform her job well. Part II also presents practitioners with a business and interpersonal skills action plan that will increase the impact of their advice. PART I EMERGING TECHNOLOGIES IN E-COMMERCE BUSINESSES: NEW INTELLECTUAL PROPERTY ISSUES WITH OLD THEMES In the last sixty years, three major developments have blended to transform the global economy – the invention of the computer,10 the creation of the Internet,11 and the proliferation of the two within global society. Combined, the foregoing events have ushered in the Information Age. This is a time in which easy access to information and technology has created commerce based on data versus physical goods and services, which has proven a catalyst for new inventions and revolutionized underlying methods of doing business. Such “e-commerce” businesses, whether focused on business-to- business models (B2B) or business-to-consumer models (B2C), have broken IP ground and propelled IP into the virtual arena as well. Examining the four areas of IP law and certain representative new technologies and their issues within them will help to identify recognizable IP themes that run through these issues. Intellectual Property Law and New Issues New technologies have besieged all four main areas of IP: patents, copyrights, trademarks, and trade secrets/confidential information. Patents have proliferated without understanding of the technologies that seek patent protection. Technologies that once protected copyrightable works even without copyright law have now led to technologies that make copyright law powerless to protect even registered, copyrighted materials. Trademarks have entered into a no-man’s land on the domain name system. For all 9 See Notes from the 3rd E-commerce Roundtable, 12-2 PM Tuesday, June 13, 2000, held at the US PIRG Office, Washington, D.C. 10 The first computer utilizing electronic storage of data was invented in 1945. The first economically attainable personal computers were sold in 1975. For a full history of the development of the computer, see www.computerhistory.org. 11 The military commissioned the first inter-computer communication network, based on a Defense Department study that such a network would be most secure in the event of a nuclear attack. The physical network was actually constructed in 1969, linking four nodes: University of California at Los Angeles, SRI (in Stanford), University of California at Santa Barbara, and University of Utah. For an efficient timeline of the Internet’s history, see www.davesite.com.
  • 3. practical purposes, trade secrets & confidential information are only a click away from general dissemination on the Internet.12 IP law has been unable to respond to these problems with the same efficiencies as those created by the technologies it seeks to regulate or protect. Emerging technologies impact the law in the following manner: (1) they adjust the cost of violations, and enforcements, of existing legal rules; (2) they alter the underlying facts that justify legal rules; or (3) they change the underlying facts implicitly assumed by the law, making existing legal concepts and categories obsolete, even meaningless.13 The law responds to such changes by selectively altering its rules legislatively or via judicial interpretation. Rarely does the law select to transform itself anew. Because new technologies have revolutionized existing industries or created new ones, they more often than not fall into category 3 in terms of impact, but the law has only responded in its age old fashion. However, this may be the only way that courts and the legislature may be able to respond, as one Federal Circuit Court judge has stated. “Courts aren't equipped to tinker with the patent system. We're backward-looking, interpretive. Congress also is limited in its ability to modify the patent system. Every time Congress reforms patent law it has to issue follow-on law for the next four or five years. . . .at which time the next round of change is being advocated.”14 The judge has proposed establishing a Law Reform Commission (consisting of members of academia, industry, and the legal community), similar to one in Australia, which would have the running task of revising intellectual property law.15 Until that occurs, however, the prospect facing practitioners is one of wading through legal rules that result in strange consequences. Patents On the patent scene, the seminal case of State Street Bank & Trust Co. v. Signature Financial Group, Inc.16 has in essence created a new category of patents (business method patents, and their offshoot – Internet patents – usually based in the software industry), but the United States Patent and Trademark Office (“USPTO”) has been unable to apply it effectively because of the sharp increase in number of patent applications being filed each year.17 Prior to State Street, conventional wisdom dictated that patents that attempted to cover business methods were overly broad.18 The appellate court reversed, and State Street has now been interpreted to define business methods patents as patents for those methods for processing data (or performing calculation operations) and uniquely designed for or used in practicing, administrating, or managing 12 For more examples of how new technologies have raised new intellectual property issues, see SYMPOSIUM FOREWORD: INTELLECTUAL PROPERTY CHALLENGES IN THE NEXT CENTURY, Kesan, Jay P.; Ulen, Thomas S., 2001 U. Ill. L. Rev. 57 (2001). 13 DOES TECHNOLOGY REQUIRE NEW LAW?, Friedman, David, 25 Harv. J.L. & Pub. Pol'y 71, 71 (Winter 2002). 14 Supra Note 3, at 1 (Judge Paul Michel of the U.S. Court of Appeals for the Federal Circuit). 15 Id., at 2. 16 149 F.3d 1368 (Fed. Cir. 1998). 17 Reportedly, business method and Internet patent applications have exceeded 10,000 in the past three years. See Supra Note 2, 61 PTCJ 573. 18 927 F. Supp. 502, 516 (D. Mass. 1996)
  • 4. an enterprise; techniques used in athletics, instruction, or personal skill; and any computer assisted implementations of such methods and techniques.19 Utilizing the State Street logic, a recent bill considered by Congress defined a business method invention as meaning any invention that is a business method (including software or other apparatus) and any invention composed of any claim that is a business method.20 A sub-set of business method patents - Internet patents - utilize the same logic.21 The problem with State Street is that it results in potentially any computerized method of doing business becoming eligible for patenting. Congress has considered this problem by introducing legislation that would create a more rigorous review for such patent applications and improve upon the prior art available for consideration during the review.22 Most interestingly, the proposed legislation has carved out the business/Internet patents that are creating the greatest consternation: non- novel computer implementations of a pre-existing invention, for the most rigorous review. Such review would include opportunities for the general public to present prior art before issuance, require applicants to disclose prior art search results, and implement an opposition proceeding for granted business method patents (including appeal rights for opposers).23 Congress seems to be attempting to yank the patent subject matter and patent process for business method and Internet patents after State Street back into familiar territory so that it is in line with all aspects of patent analysis – emphasizing again the novelty and unobvious nature of the subject matter as a whole, versus novelty of process alone. Copyrights The Internet has led the entertainment industry into nightmare territory not even envisioned by Clive Barker – free dissemination of entertainment industry products. Recent litigations involving Napster, MP3.com, and DeCSS have changed the focus of copyright law application to the problem of piracy. Whereas copyright law enforcement appeared to be concentrated on large scale, organized pirating, now it focuses on the technology that results in pirating.24 Such technology makes the individual, a previously invisible actor in the piracy field, a real threat to entertainment industry economics because the technology enables the individual to find and use all desired products for free. The cost prohibitive nature of prosecuting each person who used the technology forced the aggrieved parties to prosecute the technology providers themselves.25 The result has been to open the legal analysis on copyright protection to concentrate on the 19 See Supra Note 8, at 2. 20 Id. 21 Id. 22 Id. at 2-3. 23 Id. at 3. 24 The technology at issue allows for de-encryption of any protective encryption code, and the ability to download products such as songs from one personal computer to another. 25 See A&M Records v. Napster Inc., 239 F.3d 1004 (9th Cir. 2001) , aff'g in part, rev'g in part and remanding, 114 F. Supp.2d 896 (N.D. Cal 2000); UMG Recordings Inc. v. MP3.com Inc., 92 F. Supp.2d 349 (S.D.N.Y. 2000); DVD Copy Control Association Inc. v. McLaughlin, 2000 WL 48512 (No. CV 786804, January 21, 2000, Superior Court, Santa Clara County, California, order granting preliminary injunction).
  • 5. purpose of the technology at issue. If the technology serves no other legitimate purpose than to circumvent copyright status, then it will be enjoined from use.26 However, practical problems are inherent in the judicial interpretation of copyright law to allow for prosecution of technology providers or inventors as contributory actors in copyright infringement actions. While federal copyright law has pre-eminence in the United States, it does not have pre-eminence on the Internet. Proliferation of banned technology can occur through virtual grass roots distribution regardless of official sponsorship by a company. The cases cited above are too recent to determine whether they will have a chilling effect on technological innovation (although that is unlikely given the maverick mentality of Internet denizens). Because technology has made it impractical to rely on copyright law alone, Congress has stepped in to offer some respite in the form of the Digital Millennium Copyright Act27 and the No Electronic Theft Act28 both of which deal primarily with copyright issues.29 In sum, the acts allow owners of intellectual property to protect it by non-legal mechanisms, such as impeding the spread of devices for subverting technological protection. A side benefit of the acts could be advances in technologies that prevent de-encryption or improve firewall protection, which may create a whole new host of IP issues. The reality is that technology is leading the law, and probably will for some time to come. Trademarks Trademark law is no exception. A representative example of the tensions facing trademark law in new technologies is the domain name disputes. Although Congress has passed legislation proscribing “cybersquatting”,30 domain name systems do not yet differentiate between applicants who hold trademarks in names, and those who may be registering the names for financial gain. Instead, they still operate on a “first come, first served” basis, even for top-level domain name addresses. Trademark owners must prove bad faith on the part of a registrant to enjoin use of the domain name or regain ownership of it.31 Judicial review of the issue has resulted in tests that balance trademark law and rights against First Amendment rights.32 Regardless of prohibitively costly enforcement actions, the domain name dispute can become a practical business and legal headache if not handled appropriately at the outset as illustrated by the following “VerizonReallySucks.com” example. A Verizon representative discussed Bell Atlantic’s problems with cybersquatting in a roundtable discussion on the issue. Because Bell Atlantic actively polices certain of 26 See supra Note 8. 27 17 U.S.C. §§1201-1204 (Supp. 2000). 28 105 P.L. 147; 111 Stat. 2678 (Dec. 16, 1997). 29 For an excellent summary of key provisions of both statutes, see supra Note 7. 30 The Anticybersquatting Consumer Protection Act, 15 U.S.C. §1125, see supra Note 7 for an excellent summary. 31 Id. 32 See supra Note 9; see also Whose Name Is It Anyway? Arbitration Panels Favoring Trademark Holders in Disputes Over Web Names, Flynn, Laurie J., N.Y. Times, Sept. 4, 2000, at C3; Suffix Expansion Starts Address Grab; New Web Domains Provoke deja vu, Cha, Ariana Eunjung, Wash. Post, Nov. 11, 2000, at E1.
  • 6. its marks, most significantly the “Verizon” one, it has run across practical problems in protecting its branding of the Verizon mark, including shutting down traffic that was diverted to porn sites. Discovering hundreds of domain names with the word “verizon” in them, Bell Atlantic investigated the sites by using the “Whois” database. One search result indicated that a private individual owned the registration to “verizonreallysucks.com”, but the site was not active and did not have any content. Bell Atlantic sent the individual a “cease and desist” letter, after which the site became active. To Bell Atlantic’s chagrin, the individual was also the editor of a popular Internet “hacker” magazine. The magazine then registered the domain name, "VerizonShouldSpendMoreTimeFixingItsNetworkAndLessMoneyOnLawyers.com", and began publishing articles on Bell Atlantic, the domain name controversy and other content designed (from a corporate perspective) to get Bell Atlantic’s proverbial goat.33 Similar treatment has been afforded to other companies that have utilized a heavy-handed approach in trademark enforcement, often creating greater public ill will, than that associated with the original complained-of site. Because of the relative anonymity of domain name registration, the exorbitant costs of enforcement, and the public relations problems that may result, companies are now supporting the creation of top-level domain name sites, such as “.sucks” that clearly indicate the registrant is utilizing the site for legitimate purposes (e.g. exercising First Amendment rights to critique the company) and prevent the owner from re-selling the site to the company being critiqued.34 The controversies associated between domain name registrants and trademark owners are not as fierce as they once were, but the inherent tensions remain, with solutions to those tensions arising from practical business applications rather than the law. Trade Secrets and Confidential Information Owners of trade secrets, whether corporate or academic, are applying the same principles of practical solutions to the problems associated with the Internet as trademark owners are, instead of relying on the law. In a time when a vast quantity of information can be stored on a tiny disc, and data can be sent with a click of a button, guarding a business’s trade secrets and confidential information has become more difficult than ever before. The rise of de-encryption technology has made even more difficult the task of protecting trade secrets, which can no longer even be hidden in embedded code. Although of not much practical use, courts have at least held that publication on the Internet of a trade secret does not extinguish the protected status of the trade secret.35 Basic Themes and Underlying Policy Goals of IP Law A review of the IP issues raised by new technologies, whether concerning patents, copyrights, trademarks, or trade secrets, indicates that at the heart of every issue lie basic themes that allow the IP issues to become approachable when inventing creative solutions and responses. No matter how new the technology or how innovative the inventions, the basic themes to IP analysis have remained the same: balancing ownership and rights 33 See supra Note 10, discussion with Beth Deutsch of Bell Atlantic. 34 See supra Note 10. 35 Religious Technology Center v. Netcom on-Line.com, 923 F. Supp. 1231 (N.D. Cal. 1995).
  • 7. associated thereto with access to information and control of that information. The need of the practitioner to provide cogent advice to her client in the face of uncertainties in the law, is met by answering the questions to the foregoing themes: -who owns the property in question? -what rights are associated with the ownership, if any? -who can use the property? -how can the property be used? -who has control of that use? -how is that use controlled? Furthermore, understanding that the underlying policy to IP law desires to foster social welfare innovation and efficiencies in the market place, also helps to generate practical responses to, and refines the analysis associated with answering, the questions above. PART II A LEGAL TOOL KIT FOR COUNSELING E-COMMERCE BUSINESSES ON EMERGING TECHNOLOGIES AND NEW IP ISSUES Appreciating the fundamental themes of, and policy reasoning for, IP law, makes the new IP issues that surround emerging technologies less thorny, and more an interesting puzzle whose key is just beyond reach. Finding that key becomes easier with a well-equipped legal tool kit. Some essential documents, a few template policies, certain guides to corporate behavior, and a personal plan of action, form the components of a legal tool kit for managing, maintaining, and protecting an e-commerce business’ new technologies. Like a software programmer’s tool kit, or a plumber’s favorite toolbox, the legal tool kit should enable a practitioner to respond to any situation both pro-actively and defensively. Because most e-commerce businesses develop at the same speed as the technologies upon which they operate, a personal plan of action should be the first item prepared, with IP policies following a close second. Finally, certain templates for employment & consulting agreements, corporate transactions, and tax strategies should round out the legal tool kit. Essential Personal and Business Skill Sets Whether in-house or outside counsel, the way in which lawyers counsel their clients has to change. Simply having facts relayed is no longer sufficient because they do not necessarily capture the reality of the new technologies. In-house counsel must become more actively immersed in the business, and outside counsel should do the same for those clients without in-house counsel.36 Understanding what the company does is more important than ever now because of the general lack of understanding of what emerging technologies actually do or how they impact the economy, other industry participants, their particular field, etc. After all, if a client’s counsel does not understand what the client does and how the client does it, how will the counsel defend the client or explain its position in the event of a dispute?37 Therefore, the cornerstones of the client relationship should be participation, education, and testing – a “PET Plan”. 36 Fee offerings of outside counsel need to become more competitive to respond to this type of time- intensive preparation required for constant counseling and legal management.
  • 8. “Participation” requires the practitioner to be available “24/7” in e-commerce parlance, because those are the hours that these businesses operate. Attend business strategy meetings or create them if none exist by requiring the senior executives to meet at least once a month to discuss focus of products, development of the business, realizing corporate opportunities etc. Meet with the company’s middle-management as they are the employees entrusted with actually executing strategies. Understanding what they do to effect the strategies is as important as understanding the strategies themselves. Go to technology development meetings, or if no such regularly scheduled meetings exist (which is often the case), drop in on the software programming team to chat. Technology teams are notoriously silent with attorneys and do not often share progress except with those whom they trust with the integrity of their thought processes and programming discoveries. The more visible, approachable and part of the fabric of business life the lawyer is, the more likely other employees will share information with her. The foregoing is easier for the in-house counsel to practice, but outside counsel who fulfill an in-house lawyer’s role for an e-commerce company, should make the time to “Education” mandates that counsel inform her business team of developments of the law and the effect of the IP policies that she drafts for the company. Organizing seminars on different topics such as the effect of patent portfolios on a company’s business, for example, creates a dynamic atmosphere for the business people and links their work to the world outside the company’s walls. Inviting speakers from other industries/companies to speak on such topics alleviates the burden of presenting on counsel and also stresses to the business people that “their” counsel is not the only one advocating certain conduct. While these are time consuming activities, educating the unsophisticated entrepeneur or updating the seasoned executive, will foster greater communication with counsel, and make her “Participation” more meaningful. “Testing” necessitates that lawyers should use the products and/or the services offered by their clients. The software experience, or following the route that information travels, or taking the services gives an entirely different perspective to the attorney. The lawyer obtains greater depth of understanding of her client’s business, and also is able to spot intellectual property, and other issues, more clearly because she is not relying solely on descriptive facts, but the product/conduct itself. New technologies, even if they have only revolutionized an older method of doing business or improved upon an existing product, are unique enough that simple descriptions do not always capture their essence. Testing is therefore essential to rendering good counsel. IP Policies 37 In fact, Judge Michel of the Federal Circuit has publicly lamented the lack of practical information contained in most, if not all, briefs for cases that come before him – especially as judicial precedent is not necessarily helpful in cases that concern novel issues. Supra Note 2, at 2.
  • 9. Once a practitioner has prepared her PET Plan, she should have ready a portfolio of IP policies to instill if none exist, and to review for updating if policies have already been passed. Necessary IP policies for every e-commerce business are an IP development policy, strategic partnership policy, and a trade secret/confidential information policy, and an IP reward/employee participation program. All such policies should be reviewed at least annually for compliance with law and alignment with corporate purposes, and should be clearly communicated to all employees. An IP development policy should contain a game plan for the development of patents, copyrights, and trademarks/service marks. It should serve as the internal blueprint as to why, when, and how a company should pursue IP development. The policy should create an IP steering committee consisting of the following members: counsel, a business executive responsible for overall corporate strategy, a marketing/advertising/public relations strategist, and the chief technology officer – or equivalent thereto, all of whom would be responsible for a running review of the company’s IP portfolio and choosing which IP the company would develop. A template policy can be tailored to a specific business by correlating the development to the corporate purpose and general business progress. The products/services/business methods not chosen for specific development that have been brought to the steering committee or counsel’s attention, should be kept by counsel and relegated to trade secret status. The items rejected by the steering committee can become part of a company’s trade secret portfolio. The policy should provide for tracking of the company’s industry’s technological development. A strategic partnership policy guides a company’s management in its use of the company’s intellectual property in corporate relationships. In essence, it manages the company’s alliances. Clearly setting forth such a policy early in an e-commerce company’s development can help to focus the company in its goals and prevent it from wasting valuable resources by chasing every pot of gold that appears. Because the traditional merger and acquisition scenario is proving cost prohibitive for many e- commerce businesses to leverage their technologies, a strategic partnership policy should set forth what types of relationships in general a company will pursue. Licensing, joint ventures, and marketing initiatives are the current, preferred methods for capitalizing on symbiotic research and development and technologies. Counsel should have standardized agreements prepared that can be used as the base from which a company will negotiate. Such agreements at a minimum should have clauses dealing with the following subject matter areas: -ownership assignation of products created prior to the relationship, products created independently after the relationship , and products jointly created; -ownership and/or management of the customer relationship; -royalties provision in the event of patent grant; -designated/restricted use of trademarks, service marks, or other identifiable marks to a company, including quality control; -change in control/assignment/termination; -limitation of liability;
  • 10. -exit strategies in the event of bankruptcy, product death, etc.; -time limitation for definitive agreements in the event that letters of intent are entered into first (good faith/non-binding nature/exclusivity provisions). If the relationship is a major strategic initiative in which your company’s IP or material resources are at issue, conduct an IP due diligence inquiry on the other party similar to that conducted in a merger/acquisition transaction. As a special note, protecting intellectual property interests should be balanced against anti-trust issues. Therefore, in drafting such agreements, care should be taken that any contractual restrictions on the use of the company’s intellectual property do not convey monopoly power or unnecessarily restrict competition. Such clauses may constitute anti-competitive conduct, which may provide a competitor an independent basis for complaint that no amount of IP preparation will be able to counter.38 A general trade secret and confidential information policy seeks to set forth clearly the company’s views on protecting its confidential information. Restrictive covenant agreements (discussed infra section on General Legal Documents), corporate seminars on protection of confidential information and enforcement procedures for such protection all comprise such a policy. Publicize the policy on the company’s intranet, email it to all employees, and post it in the common areas. An IP reward/employee participation policy ensures that you have the cooperation of the business principals. After all, they are the source of the information you need. A reward policy creates a remuneration scheme to encourage employee participation in the IP development process, aligning their interests along with the company’s. It may grant bonuses upon identification of patentable materials, to the inventors identified upon filing of an application, or to the inventors upon the granting of an application. The policy could provide for contests with cash or other prizes to the employee whose submission is chosen for trade marking. A non-monetary, or recognition, component also works well in such policies. While a practitioner may have a standardized template on hand for such a policy, the corporate culture should drive the way the practitioner tailors the policy to realize maximum benefit. General Legal Document Templates Certain agreements should be considered necessary for e-commerce businesses. Every practitioner in this field should have them available to tailor her client’s needs. These agreements are employment-related agreements, licensing agreements, marketing agreements, and joint venture agreements (the latter three agreements are discussed supra). Finally, the practitioner should be prepared to conduct an annual IP assets audit, similar to a due diligence exercise in an acquisition scenario. 38 See GIVE THE SMALLER PLAYERS A CHANCE: SHAPING THE DIGITAL ECONOMY THROUGH ANTITRUST AND COPYRIGHT LAW, Rogers, Douglas L., 5 Marq. Intell. Prop. L. Rev. 13 (2001).
  • 11. Employment related agreements, including consultant agreements, should contain the following clauses: -clear and broad IP assignment; -agreement to cooperate on IP assignment after leaving the company for any reason; -prior invention disclosure; -agreement not to use a previous employer’s confidential information; -agreement to protect the company’s confidential information; -agreement to return the company’s confidential information upon leaving employment for any reason; -non-solicitation; and -where appropriate, a non-compete (for consideration) Ensuring that all employees or consultants, especially those involved in software development, have executed an appropriate agreement is a fundamental requirement in counseling e-commerce businesses. Annual IP Audit Armed with the intellectual property portion of a general due diligence check 39 list, conduct an annual audit of a company’s intellectual property assets. Such an audit is time-consuming but necessary, because the entire commercial value of a company may depend upon the extent to which it holds intellectual property rights in its technology and its relationships with the employees who develop or apply its technology. Therefore, a careful examination of the development history of the technology or early use of the name, the trail of legal ownership, and the steps taken to preserve such rights is essential.40 Assess the patent portfolio by considering the scope and validity of issued patents, the status of pending applications, and the risk of infringement of third party rights. Review all formal registrations including irregularities, pending applications and examiner objections, and any licensing agreements that transfer rights to trademarks or service marks. Determine all copyrightable works and follow their trail of creation, taking particular care to review formal registrations, applications of common law measures and proper notifications. Update the confidential information protection policy. Conduct general searches of the United States Patent and Trademark Office and the United States Copyright Office to determine if those databases confirm ownership the company presumably has indicated as being registered and discover any conflicting intellectual property that has been filed. Also conduct general searches by corporate names to ensure that the company has scheduled all assets that it does own and has not inadvertently misplaced some. 39 Checklists used in underwriter due diligence or in loan financings are often most rigorous because they require actual tracing and research of state and federal databases to determine trail of ownership. 40 For a full analysis of what is required in such an audit, see ACQUIRING OR SELLING THE PRIVATELY HELD COMPANY 2001 INTELLECTUAL PROPERTY ISSUES, Cicero, Anthony F. Lo; Hirshman, Neil; Scoular, Robert F., 1256 PLI/Corp 831, Practising Law Institute PLI Order No. B0-00Z0 (June-July 2001)
  • 12. In addition to the foregoing reviews, an audit should also analyze all IP assignment agreements, licenses, and any other corporate agreement concerning the company’s IP rights. After conducting the audit, counsel should be prepared structure what types of representations and warranties a company is prepared to make. An annual IP audit will then ensure that a company is always prepared for a major corporate transaction, and will minimize stress on corporate resources if such a transaction occurs. CONCLUSION The legal tool kit described above, ensures that counsel is pro-actively managing a company’s technology – riding the wave that the technology creates instead of being caught in its undertow. The various components of the tool kit are all designed to answer emphatically the questions flowing through the themes underlying IP law. The IP policies establish ownership, and methods of securing title, and the template agreements regulate use. Where the law is unclear, and the subject matter under consideration is of first impression, the conduct of the company itself may help establish what the potential treatment of a dispute may be.41 In such a case, the legal tool kit helps to guarantee that certain bases are covered, making the technologies approachable and the new issues arising from them manageable. 41 See ANTITRUST AND INTELLECTUAL PROPERTY: UNRESOLVED ISSUES AT THE HEART OF THE NEW ECONOMY, Pitofsky, Robert, 16 Berkley Tech. L.J. 535 (2001).