IP Basics

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This presentation will orient you in the complex world of intellectual property. You'll learn about copyright, trademarks, trade secrets, and patents, and how they apply to software. We'll also touch on open source licensing and patent trolls. You'll learn what that funny ® symbol means, and how KFC keeps Col. Sanders' famous fried chicken recipe a trade secret. Especially useful for founders, this talk was born from feedback from last year's Code Camp session, "Don't Screw Up Your Licensing".

I gave this talk at Silicon Valley Code Camp 2015.

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IP Basics

  1. 1. IP BASICS October 4, 2015 ©  2015  Kronenberger  Rosenfeld,  LLP  
  2. 2. Who Am I? Lawyer     •  Star%ng  startups   •  Keeping  startups  out  of   hot  water   •  Suing  bad  guys   Hacker     •  Since  age  10   •  Lex  Machina   •  Mechanical  Turk  module  for   Boto  (AWS  for  Python)   •  Raspberry  Pi  &  Arduino  robot   •  Common  Form     Writer     •  TechCrunch  contributor   •  legal  tech   •  startup  law   •  computer  crime   •  Paper  on  Somali  mari%me   piracy  and  transna%onal   organized  crime   Daddy  
  3. 3. Lawyer Disclaimers! 1.     IANAL     IAAL     but     IANYL   2.     This  is  general   informaCon  for   educa%onal   purposes.     It  might  not  be   right  for  you!       Talk  to  a  lawyer  for   advice  about  your   own  specific   situa%on.  
  4. 4. Agenda What  is  IP,  and  Why  Do  We  Have  It?   The  Four  Kinds  of  IP   Copyrights   Trademarks   Patents   Trade  Secrets   Licensing   Open  Source   Miscellaneous  
  5. 5. What is Property? a : something owned or possessed; specifically : a piece of real estate b : the exclusive right to possess, enjoy, and dispose of a thing : ownership c : something to which a person or business has a legal title d : one (as a performer) who is under contract and whose work is especially valuable e : a book or script purchased for publication or production Source: Merriam-Webster
  6. 6. What is Intellectual Property? •  property (as an idea, invention, or process) that derives from the work of the mind or intellect; also : an application, right, or registration relating to this Intellectual property grants a right to exclude others from using ideas, inventions, creative works, etc. Translation: Without a license, you cannot use someone else’s IP.
  7. 7. Why Do We Have IP? IP is supposed to incentivize innovation. Parents and copyrights are in the US Constitution: To promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries… —Article I, section 8, clause 8
  8. 8. Why Do We Have IP? Does IP actually incentivize innovation? •  It’s very hard to know. •  Some experts think it doesn’t— especially patents, and especially in high tech. •  The case for patents is more clear in some industries than others—for example, pharmaceuticals. IP does protect a business, though.
  9. 9. Agenda What  is  IP,  and  Why  Do  We  Have  It?   The  Four  Kinds  of  IP   Copyrights   Trademarks   Patents   Trade  Secrets   Licensing   Open  Source   Miscellaneous  
  10. 10. The Four Kinds of IP Kind   Protects   Laws   Patent   Technological   inven%ons   Federal   Copyright   Original  expression   Federal   Trademark   Signals  of  source   Both  Federal  and  State   Trade  Secrets   Informa%on  that  is   valuable  because  it  is   secret   Mostly  State  
  11. 11. Agenda What  is  IP,  and  Why  Do  We  Have  It?   The  Four  Kinds  of  IP   Copyrights   Trademarks   Patents   Trade  Secrets   Licensing   Open  Source   Miscellaneous  
  12. 12. What is Copyrightable? Copyright protection subsists…in original works of authorship fixed in any tangible medium of expression, now known or later developed, from which they can be perceived, reproduced, or otherwise communicated, either directly or with the aid of a machine or device. 17 U.S.C. § 102(a) Original Expression
  13. 13. What is Copyrightable? Works of authorship include the following categories: (1) literary works; (2) musical works, including any accompanying words; (3) dramatic works, including any accompanying music; (4) pantomimes and choreographic works; (5) pictorial, graphic, and sculptural works; (6) motion pictures and other audiovisual works; (7) sound recordings; and (8) architectural works. 17 U.S.C. § 102(a) Includes software Two aspects of music are protected separately
  14. 14. What is NOT Copyrightable? In no case does copyright protection for an original work of authorship extend to any idea, procedure, process, system, method of operation, concept, principle, or discovery, regardless of the form in which it is described, explained, illustrated, or embodied in such work. 17 U.S.C. § 102(b)  Ideas,  Inven%ons,  etc.      Patents  do  this.    
  15. 15. Copyright’s “Bundle of Rights” Subject to sections 107 through 122, the owner of copyright under this title has the exclusive rights to do and to authorize any of the following: (1) to reproduce the copyrighted work in copies or phonorecords; (2) to prepare derivative works based upon the copyrighted work; (3) to distribute copies or phonorecords of the copyrighted work to the public by sale or other transfer of ownership, or by rental, lease, or lending; (4) in the case of literary, musical, dramatic, and choreographic works, pantomimes, and motion pictures and other audiovisual works, to perform the copyrighted work publicly; (5) in the case of literary, musical, dramatic, and choreographic works, pantomimes, and pictorial, graphic, or sculptural works, including the individual images of a motion picture or other audiovisual work, to display the copyrighted work publicly; and (6) in the case of sound recordings, to perform the copyrighted work publicly by means of a digital audio transmission. 17 U.S.C. § 106
  16. 16. History of Copyright Law 1710: Statute of Anne 1790: Copyright Act 1886: Berne Convention 1976: Copyright Act 1998: Digital Millennium Copyright Act
  17. 17. Duration of Copyrights 1710: Statute of Anne: 14 years 1790: Copyright Act: 14 years 1976: Copyright Act –  life of author + 50 years –  75 years for corporate authorship 1998: Sonny Bono Copyright Term Extension Act –  life of author + 70 years –  120 years or 95 years after publication for corporate authorship Published  1928   Enters  public  domain  2023  
  18. 18. Duration of Copyrights Published  1928   Enters  public  domain  2023   Source:  Tom  W.  Bell,  Copyright  Dura%on  and  the  Mickey  Mouse  Curve  
  19. 19. Fair Use •  Allows me to use a small Steamboat Willie image in this educational presentation •  Available only under US law
  20. 20. Fair Use—Four Factors Notwithstanding the provisions of sections 106 and 106A, the fair use of a copyrighted work, including such use by reproduction in copies or phonorecords or by any other means specified by that section, for purposes such as criticism, comment, news reporting, teaching (including multiple copies for classroom use), scholarship, or research, is not an infringement of copyright. In determining whether the use made of a work in any particular case is a fair use the factors to be considered shall include— (1) the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes; (2) the nature of the copyrighted work; (3) the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and (4) the effect of the use upon the potential market for or value of the copyrighted work. … 17 U.S.C. § 107
  21. 21. Copyright Takeaways •  Automatic: Copyright exists by default •  Registration: More and better remedies •  Long Duration: Copyright lasts as long as Mickey Mouse needs it •  Fair Use: Probably not what you think it is (and doesn’t exist outside the US)
  22. 22. Agenda What  is  IP,  and  Why  Do  We  Have  It?   The  Four  Kinds  of  IP   Copyrights   Trademarks   Patents   Trade  Secrets   Licensing   Open  Source   Miscellaneous  
  23. 23. These Are All Trademarks Toyota More  on  this  later  
  24. 24. What is a Trademark? •  Trademarks identify the source of a product. •  “A trademark is a word, phrase, symbol or design, or a combination of words, phrases, symbols or designs, that identifies and distinguishes the source of the goods of one party from those of others.” (USPTO) •  “Service mark”: same thing, but for services. (Technically, “trademark” refers only to goods. In practice, using just “trademark” is fine in almost all cases.)
  25. 25. History of Trademarks •  Marks on ancient pottery •  Blacksmiths in the Roman Empire •  Medieval guilds marked their goods (bell makers, watermarks on paper, etc.) •  1618: Southern v. How in England •  1870: U.S. federal trademark legistlation •  1946: Lanham Act •  1999: Anticybersquatting Consumer Protection Act
  26. 26. How to Get a Trademark •  Start using it in commerce! –  Trademark rights are established by use. –  You cannot stockpile trademarks you don’t use. –  Trademarks are abandoned through non-use. •  Optionally, register it with the USPTO
  27. 27. Trademark Licensing •  Tricky: license will be invalid if results confuse consumers. •  Owner must maintain quality control over goods delivered under trademark—else abandoned through “naked licensing.”
  28. 28. Agenda What  is  IP,  and  Why  Do  We  Have  It?   The  Four  Kinds  of  IP   Copyrights   Trademarks   Patents   Trade  Secrets   Licensing   Open  Source   Miscellaneous  
  29. 29. Seriously? More Disclaimers??? I’m not a patent lawyer, which means: •  I can talk about patents. •  I can litigate patent cases. BUT •  I can’t write patents. •  I can’t file patent applications.
  30. 30. What is a Patent? •  Government-granted exclusivity right •  Covers technological inventions, designs, or methods
  31. 31. The Patent Quid Pro Quo Government grants a limited monopoly in exchange for public knowledge (publication of patent)
  32. 32. Kinds of Patents Stage •  Provisional •  Non-Provisional •  Reissue Kind •  Utility •  Design •  Plant
  33. 33. What Can Be Patented? 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, subject to the conditions and requirements of this title. 35 U.S.C. § 101
  34. 34. Novelty (a)  Novelty; Prior Art.— A person shall be entitled to a patent unless— (1) the claimed invention was patented, described in a printed publication, or in public use, on sale, or otherwise available to the public before the effective filing date of the claimed invention; or… 35 U.S.C. § 102
  35. 35. Non-Obviousness A patent for a claimed invention may not be obtained, notwithstanding that the claimed invention is not identically disclosed as set forth in section 102, if the differences between the claimed invention and the prior art are such that the claimed invention as a whole would have been obvious before the effective filing date of the claimed invention to a person having ordinary skill in the art to which the claimed invention pertains. Patentability shall not be negated by the manner in which the invention was made. 35 U.S.C. § 103
  36. 36. Abstract Ideas •  Patents must be for something concrete— not abstract ideas. •  Supreme Court rejected a set of software patents as abstract ideas in Alice v. CLS Bank (2014): “We have long held that this provision contains an important implicit exception: Laws of nature, natural phenomena, and abstract ideas are not patentable.” Association for Molecular Pathology v. Myriad Genetics, Inc. (2013). We have interpreted § 101 and its predecessors in light of this exception for more than 150 years. Bilski v. Kappos (2010); see also O’Reilly v. Morse (1854); Le Roy v. Tatham,(1853). 
  37. 37. History of Patent Laws •  1450: Venice •  16th century: English letters patent •  US Constitution •  1952: Patent Act •  2011: America Invents Act
  38. 38. How to Get a Patent (Grossly Oversimplified) •  Hire a patent lawyer •  File a provisional patent early (US only!) •  Decide whether to go forward with full application •  Decide in which additional countries to file •  File a non-provisional application (< 1 year from the provisional filing) •  Wait •  Respond to office actions (issues raised by patent examiner)
  39. 39. Patent  Trolls   •  Assert patents without practicing them •  Frequently buy patents from individual inventors, failing businesses, at auction, etc. •  Aggressive tactics (sue first, negotiate later) •  Huge spike in 2000s (~60% of all U.S. patent cases) •  Other terms: •  PAE (patent assertion entity) •  NPE (non-practicing entity)
  40. 40. Patent Reform 2011: America Invents Act •  First-to-file: matches rest of world •  Streamlined post-issuance challenge procedures •  Special challenge to business-method patents •  Reduced fees for “micro entities” (some startups) •  Branch offices for USPTO
  41. 41. Design Patents •  Protect only ornamental design (NOT utility / functionality) •  17 year term •  Less uniform international coverage – also called “industrial designs” or “registered designs” in other countries (with some differences)
  42. 42. Patent Litigation •  Average patent case costs over $2M to defend •  Damages may be in hundreds of millions of dollars •  Injunctions can stop sales of infringing products •  Imports may be blocked by U.S. International Trade Commission
  43. 43. Recent Cases and Software Patents The Supreme Court has been on a tear… •  Bilski v. Kappos (2010) Abstract ideas not patentable (method of hedging risk) •  Alice Corp. v. CLS Bank (2014) Can’t just add a computer to an abstract idea (intermediated settlement in financial markets) •  Highmark v. Allcare and Octane Fitness v. Icon Health & Fitness (2014) More deference for lower courts to shift fees in “exceptional” cases
  44. 44. Agenda What  is  IP,  and  Why  Do  We  Have  It?   The  Four  Kinds  of  IP   Copyrights   Trademarks   Patents   Trade  Secrets   Licensing   Open  Source   Miscellaneous  
  45. 45. What is a Trade Secret? Examples •  Customer list •  Unpublished source code •  Ingredients and amounts for KFC spices
  46. 46. What is a Trade Secret? “In 2008, when the company updated its headquarters, it gave reporters a glimpse behind the curtain. The ingredient list is kept in a computerized vault with two separate locks, alongside vials of the eleven seasonings, and only two executives have access to the full recipe.” Shhh: 10 Make-or-Break Trade Secrets
  47. 47. What is a Trade Secret? “Trade secret” means information, including a formula, pattern, compilation, program, device, method, technique, or process, that: (1) Derives independent economic value, actual or potential, from not being generally known to the public or to other persons who can obtain economic value from its disclosure or use; and (2) Is the subject of efforts that are reasonable under the circumstances to maintain its secrecy. Cal. Civil Code § 3426.1(d)
  48. 48. History of Trade Secrets Law •  English common law •  American common law •  1939: Restatement of Torts •  1979, 1985–: Uniform Trade Secrets Act –  47 states (except NY, MA, NC) •  1996: Economic Espionage Act •  Next: National federal legislation??
  49. 49. Misappropriation (another word for infringement) (b) “Misappropriation” means: (1) Acquisition of a trade secret of another by a person who knows or has reason to know that the trade secret was acquired by improper means; or (2) Disclosure or use of a trade secret of another without express or implied consent by a person who: (A) Used improper means to acquire knowledge of the trade secret; or (B) At the time of disclosure or use, knew or had reason to know that his or her knowledge of the trade secret was: (i) Derived from or through a person who had utilized improper means to acquire it; (ii) Acquired under circumstances giving rise to a duty to maintain its secrecy or limit its use; or (iii) Derived from or through a person who owed a duty to the person seeking relief to maintain its secrecy or limit its use; or (C) Before a material change of his or her position, knew or had reason to know that it was a trade secret and that knowledge of it had been acquired by accident or mistake. Cal. Civil Code § 3426.1
  50. 50. Misappropriation (a) “Improper means” includes theft, bribery, misrepresentation, breach or inducement of a breach of a duty to maintain secrecy, or espionage through electronic or other means. Reverse engineering or independent derivation alone shall not be considered improper means. Cal. Civil Code § 3426.1
  51. 51. Common Scenarios •  Departing employees •  Competitors poaching employees •  Hacking (along with Computer Fraud and Abuse Act claims)
  52. 52. Reasonable Security Precautions in Software Development •  Lock the building •  Passwords •  Employee confidentiality agreements, NDAs •  “Strong” passwords and rotation policy? •  Two factor authentication? •  Biometrics? •  No Internet connection for the building? “…Is  the  subject  of  efforts  that  are   reasonable  under  the  circumstances   to  maintain  its  secrecy.”  
  53. 53. Agenda What  is  IP,  and  Why  Do  We  Have  It?   The  Four  Kinds  of  IP   Copyrights   Trademarks   Patents   Trade  Secrets   Licensing   Open  Source   Miscellaneous  
  54. 54. What is a License? 1.  Contract (bargain and exchange of value) which 2.  Allows use of IP (because it’s prohibited by default) and 3.  Imposes conditions
  55. 55. Consequences of Screwing Up Licensing Lose control of your… •  code •  patents •  trade secrets •  company
  56. 56. Agenda What  is  IP,  and  Why  Do  We  Have  It?   The  Four  Kinds  of  IP   Copyrights   Trademarks   Patents   Trade  Secrets   Licensing   Open  Source   Miscellaneous  
  57. 57. Open Source “That,  as  we  enjoy  great  advantages  from  the   inven%ons  of  others,  we  should  be  glad  of  an   opportunity  to  serve  others  by  any  inven%on  of   ours;  and  this  we  should  do  freely  and   generously.”     —The  Autobiography  of  Benjamin  Franklin  
  58. 58. Too Much for Today bit.ly/OpenSourceKR  
  59. 59. What Is Open Source? The Open Source Definition by the Open Source Initiative: 10 paragraphs The Free Software Definition by the Free Software Foundation: 4 pages
  60. 60. What Is Open Source? “Open source software is software that can be freely used, changed, and shared (in modified or unmodified form) by anyone.” Free of charge Published source code Varying restrictions on commercial use
  61. 61. Proprietary Software vs. Open Source Proprietary  SoKware   Open  Source   High  price  tag   Free   Strong  warran%es   No  warran%es   Support  provided   No  support   Black  box  –  no  source  code   Source  code  provided   No  modifica%ons  or   reverse  engineering   Modifica%ons  encouraged   No  sublicensing   Sublicensing  with  condi%ons   Express  patent  license   Patent  treatment  varies  by  license  
  62. 62. Dimensions of Open Source Licenses •  Copyleft Your code must be under the same license •  Notice Must include notice and a copy of the license •  Source code disclosure Must include a copy of your source code •  Sublicensing Can you grant downstream licenses? •  Patent license Some give express patent license (GPLv2 is silent!)
  63. 63. Copyleft Requires that you MUST share modifications. “You must cause any work that you distribute or publish, that in whole or in part contains or is derived from the Program or any part thereof, to be licensed as a whole at no charge to all third parties under the terms of this License.” —GPL v2 § 2
  64. 64. History and the GPL •  1989 –  Berlin Wall falls –  GPL 1.0 •  1991 –  Gulf War –  Soviet Union Dissolves –  GPL 2.0 •  1993 –  Mosaic graphical web browser released •  2007 –  GPL 3.0
  65. 65. More Obscure Licenses DO WHAT THE FUCK YOU WANT TO PUBLIC LICENSE Version 2, December 2004 Copyright (C) 2004 Sam Hocevar <sam@hocevar.net> Everyone is permitted to copy and distribute verbatim or modified copies of this license document, and changing it is allowed as long as the name is changed. DO WHAT THE FUCK YOU WANT TO PUBLIC LICENSE TERMS AND CONDITIONS FOR COPYING, DISTRIBUTION AND MODIFICATION 0. You just DO WHAT THE FUCK YOU WANT TO. /* * ---------------------------------------------------------------------------- * "THE BEER-WARE LICENSE" (Revision 42): * <phk@FreeBSD.ORG> wrote this file. As long as you retain this notice you * can do whatever you want with this stuff. If we meet some day, and you think * this stuff is worth it, you can buy me a beer in return. Poul-Henning Kamp * ---------------------------------------------------------------------------- */ 1,089  items  in  Wikipedia   305  items  in  Wikipedia  
  66. 66. Open Source in Court •  Jacobsen v. Katzer Open source licenses are enforceable •  BusyBox cases GPL violations by embedded developers •  Linksys: Free Software Foundation, Inc. v. Cisco Systems, Inc. GPL violation in routers Settlement: $ donations to FSF + open source compliance director •  XimpleWare Corp. v. Versata Software, Inc. GPL violation in enterprise software •  VMWare case (Germany) Mixed proprietary/GPL Linux kernel
  67. 67. “I found this code on the web. I can use it, right?” Source:  Open  source  license  usage  on  GitHub.com  (March  9,  2015)   hgps://github.com/blog/1964-­‐open-­‐source-­‐license-­‐usage-­‐on-­‐github-­‐com    
  68. 68. “I found this code on the web. I can use it, right?” •  Not all “code on the web” is open source. •  All open source is not the same. •  Look for explicit licensing information—do not assume anything. •  When in doubt, ask the author. •  Without a license, you do not have permission to copy a copyrighted work!
  69. 69. “This code is open source, that means I can do whatever I want with it, right?” •  Open source licenses have strings attached. (Lawyers call them terms and conditions.) •  Notice requirements are easy to mess up.
  70. 70. “I’ll be okay, because…fair use?” •  Probably not. •  The fair use doctrine is probably not what you think it is. •  The scope of protection is narrow. •  It exists only in the US. •  How it is applied is unpredictable and very fact-specific. •  Recent case law says fair use is a right, not an affirmative defense. (Lenz)
  71. 71. Open Source Audits •  Identify components in a code base •  Deep dependency tracing •  License identification •  Identify known security vulnerabilities in packages When? •  Due diligence (financing, acquisition) •  Enterprise software sales (e.g., warranting no copyleft)
  72. 72. Agenda What  is  IP,  and  Why  Do  We  Have  It?   The  Four  Kinds  of  IP   Copyrights   Trademarks   Patents   Trade  Secrets   Licensing   Open  Source   Miscellaneous  
  73. 73. Lawsuits •  Patent and copyright cases are exclusively in federal court. •  Trademark cases are usually in federal court. –  State trademark laws still exist, and may be enforced in state court. •  Trade secrets cases may be in either federal or state court.
  74. 74. How Long Does IP Last? •  Copyright –  life of author + 70 years –  120 years or 95 years after publication for corporate authorship –  until Mickey Mouse is no longer famous •  Patent –  20 years from filing (plus adjustments) •  Trademark –  potentially forever (as long as the mark is in use) •  Trade Secret –  potentially forever (as long as the secret is kept)
  75. 75. Those Funny Symbols © gives notice of copyright ownership ℗ is for audio recording copyright notices ™ gives notice that something is a trademark ℠ is for service marks ® is only for registered trademarks uses a Creative Commons license
  76. 76. Thank you! hgps://github.com/anseljh   @krinternetlaw   @anseljh   Ansel  Halliburton   KRONENBERGER  ROSENFELD,  LLP   (415)  955–1155  Ext.  122   ansel@krinternetlaw.com   hgps://krinternetlaw.com  
  77. 77. Appendix 1: Links •  Opensource.org: Read the Open Source Definition, review OSI-approved licenses •  tldrlegal.com: Better understand key open source license terms •  choosealicense.com (by GitHub): Pick the right license for your new project •  Copyright Statutes (17 U.S.C.) •  Trademark Statutes (15 U.S.C. Chapter 22) •  Patent Statutes (35 U.S.C.) •  California Trade Secret Statutes (Cal. Civ. Code § 3426–3426.11)
  78. 78. Appendix 2: Attributions •  The Open Source Initiative logo is a trademark of the Open Source Initiative. http://opensource.org/trademark- guidelines#Publications •  Beer mug by Nicubunu (public domain) https://openclipart.org/detail/14854/beer-mug •  “Percentage of repositories licensed” chart by Ben Balter at GitHub https://github.com/blog/1964-open-source-license- usage-on-github-com •  “Stop sign” photo by “Kt Ann” on Flickr (CC-BY) https://www.flickr.com/photos/ 54409200@N04/5070012761/ •  Tom W. Bell, Copyright Duration and the Mickey Mouse Curve

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