There appears to be a large absence of any direct cases who have addressed this issue, however, this issue has been the subject of many disputes between departing employees and employers for some time.  Unfortunately, without any court ruling to provide precedence, it is unclear how the law will determine the ownership of various social media accounts.  Under traditional intellectual property laws, including copyright and trademark, the ownership of work created outside of an employment context is generally considered to be that of the “Artist,” the Tweet-er or Facebook-er.  If the work is prepared in the context of an employment relationship, it may be considered the property of the employer.  However, there is a gray line, in between these two, which may be addressed in PhoneDog. Some factors the court may consider may include whether an agreement denoting ownership existed.  In the absence of an agreement, the court may consider other factors including:  whose e-mail address was used to establish the account; was the account used primarily for the employer’s business; was updating the account one of the employee’s job responsibilities; and when and where the employee accessed the account.  In most cases, it is likely that courts will find the employer owns contacts or content created during or as a result of employment.

PhoneDog v. Noah Kravitz is also being closely followed because of the recent decision in Sasqua Group v. Courtney where the court ruled that an employer’s customer list was not a trade secret.  In Sasqua, the testimony of the ex-employee, was a factor for the court’s decision, most notably her response to what she would do if she had amnesia tomorrow and lost her blackberry.  Courtney, the ex-employee, explained how she could easily obtain all the information on the Internet through LinkedIn and Google searches.   In light of this the court concluded that the customer list information was publicly available and therefore, not a trade secret.  While PhoneDog differs in the respect that “Twitter followers” are at stake rather than a customer list, the court may be forced to compare the two and consider whether “Twitter followers” could ever be construed as a trade secret.

As the Internet grows, the amount of information that is publically accessible also continues to grow.  This may have an impact on the law of trade secrets, which traditionally covered things like customer lists.  As the court in Sasqua commented,

[t]he information in [the employer’s] database concerning … its clients… may well have been a protectable trade secret in the early years of [the employer’s business] when greater time, energy and resources may have been necessary to acquire the level of detailed information to build and retain the business relationships at issue here. However, for good or bad, the exponential proliferation of information made available through full-blown use of the Internet and the powerful tools it provides to access such information in 2010 is a very different story.” Sasqua Group, Inc. v. Courtney, 2010 WL 3613855 (E.D.N.Y. Aug. 2, 2010).

While this may be somewhat troubling for businesses’ with trade secrets, it should be noted that in Sasqua, no written agreement existed between the employee and employer.

Even though social media and the expansion of the Internet have created disputes between employees and employers regarding trade secrets and the ownership of social media accounts, nearly all of them could have been avoided through the use of agreements like, Non-Compete or Confidentiality Agreements.

If you would like to discuss trade secret protection of the impact of social media on your company’s business, we would be happy to schedule a time to meet with one of our attorneys.

In Prometheus, the patents at issue addressed a process for drug treatment and how the body reacts to the drug in that certain metabolite levels increase or decrease as a result of the interaction between the body and the drug.  The changed metabolite level indicates whether or not the body reacted favorably to the treatment.   In the patent, the claims include a limitation to a metabolite level which is between over-treatment and under-treatment.

The Court interpreted the claim as a process of (1) measuring the current level of the relevant metabolite, (2) use a particular law of nature to calculate the current toxicity/inefficacy levels associated with the metabolite within the patient, and (3) evaluating the drug dosage in light of the metabolite level.  The law of nature relates to how the body processes the treatment drug and produces the relevant metabolite in response to the drug.  According to the Court, the claimed process added nothing to the laws of nature other than what is well-understood, routine, conventional and previously engaged in activity by doctors [those in the field].

The Court rejected the patents by ruling that the correlation of the metabolite level between over/under treatment was an unpatentable law of nature. The metabolite level was a consequence to the way in which the body metabolized the treatment drug — an entirely natural processes.  The Court indicated that a patent that simply describes that natural relation is an attempt to claim a law of nature and therefore is unpatentable.

The opinion relies upon prior case law which rejected claims including natural phenomena even though they included certain additional elements.  The additional elements were basically equated by the Court to nothing more than a trick to obtain coverage for non-“genuine applications of those laws[, but] rather ..  to monopolize the [naturally occurring] correlations.”  Of note is that the Court found that the correlation and the additional elements were already known in the art.

Because methods for making such determinations were well known in the art, this step simply tells doctors to engage in well-understood, routine, conventional activity previously engaged in by scientists in the field. Such activity is normally not sufficient to transform an unpatentable law of nature into a patent-eligible application of such a law.

Prior to the Court’s ruling in Prometheus, the general rule was that a process was not unpatentable simply because it contained a law of nature.  An application of a law of nature to a known process may well be deserving of patent protection. If a claim, considered as a whole, entails a physical transformation of matter and produces useful, concrete and tangible results.  The prior standard was known as the machine or transformation test and under the test, “[a] claimed process is patent-eligible if:(1) it is tied to a particular machine or apparatus, or (2) it transforms a particular article into a different state or thing.”

While this case deals directly with the medical profession, the case could have farther reaching implications.  This case coupled with the recent S.Crt ruling in Bilski v. Kappos could have greater implications in the software and computer technologies.  In Bilski, the S. Crt. narrowed the statutory eligibility for business methods in determining that a process for hedging risks of price changes was not patentable.

Patents on software have been debated since their inception.  Software can be covered under copyright.  They have also been protected as patenable inventions since the S.Crt ruling in State Street.  However, the patent protection afforded to Software is a constant source of litigation and has been argued against by lobbyists organization.  One example includes, Apple’s  multi-national litigation over the “slide to unlock” feature.  A reading of Mayo suggests that the Court may extend the challenge to patent elligiblity to software and other computer related inventions as being natural phenomena.

Software patents (and many computer systems tied to a particular software) fundamentally protect a set of computer instructions programmed into a computer chip which as a result of a mathematical calculation causes a task to be preformed. Mathematical calculations themselves are unpatentable.  If the machine, because it preforms mathematical calculations is determined to be nothing more than a calculator and if the transformation test previously adopted by the Court’s is denied, then the software may be considered an unpatentable natural phonenema and Software patents may become a thing of the past.

Whatever the implications are, you can be sure in the near future medical process patents will become more difficult to obtain, patent attorneys will learn new ways to write medical process patents and pharmaceutical companies will be lobbying congress to draft new laws to ensure their pharmaceutical patents will be covered.

On September 16, 2011, President Obama Signed the Patent Reform Act of 2011 into law.  The Act made the most significant changes in US patent law since the 1952 Patent Act.  The stated purpose was that the changes were made to harmonize the US system with patent systems around the world and to address 3^rd party demands.   While, I don’t believe the US Patent system needed to be downgraded, (which is the model which most other country’s attempt to emulate based upon the innovation which the US is known for) just because everyone else does it the wrong way.   Below is a summary of some of the most controversial provisions.

• First Inventor to File.

Changes from a “first-to-invent” to a “first-inventor-to-file” patent system while maintaining a 1-year grace period for disclosures by the inventor.  Prior to this change, the US was the only country which rewarded the first true inventor, rather than the inventor who was first to rush to the Patent Office.

• Post-Grant Review Proceedings.

(i) Replaces “optional interpartes reexamination” with “interpartes review” to be conducted by Patent Trial and Appeal Board within 1 year. The threshold showing is “reasonable likelihood” that the petitioner will prevail based on published prior art. The estoppel standard is “raised or reasonably could have raised” before the USPTO and the courts. Appeals are directed to the Federal Circuit.

(ii) Establishes a “post-grant review” before the Patent Trial and Appeal Board to review validity of issued patents within 9 months of grant on any patentability issue. The threshold showing is “more likely than not” that at least 1 claim is unpatentable. The estoppel standard is “raised or reasonably could have raised” before the USPTO and the courts.

(iii) Establishes an 8-year transitional post-grant review proceeding for review of the validity of business method patents for financial products or services by defendants accused of infringement.

(iv) Allows a pre-issuance submissions procedure for published prior art but not public, use, sale or improper inventorship, which current 35 U.S.C. 122(c) continues to provide for. Submission must be made before the earlier of (a) allowance, or (b) later of 6 months after the date of application publication or the date of first rejection.

• USPTO’s Fee Setting Authority and Funding.

Give the Director fee setting authority to cover operating and administrative costs. This authority is subject to a 7 year sunset clause.  A recent article by J. Michele suggests that Congress’s continued siphoning of funds from the USPTO is a principle cause for the backlog if left unchallenged may lead to the ruin of the US Patent system, notably one of the world’s premier patent systems.

It should be noted that the effective dates of the key provisions of the act differ.  For instance, the USPTO’s Fee setting Authority took effect immediately after the passage of the act, while the “first-inventor-to-file” provision takes effect 18 months after the passage of the Act for patents and applications with a claim having an effective date on or after September 16, 2011.  The USPTO has provided a document further explaining the Key Effective Dates.

• Summary of Key Effective Dates

In summary, there appears to be four dates of significant importance: September 16, 2011 (the date of passage), September 26, 2011 – November 16, 2011, September 16, 2012 (one year after passage) and March 16, 2013 (eighteen months after passage).

Some of the provisions which went into effect on September 16, 2011 include: the Prior user defense for patents issued on or after 9/16/11, Standard for inter parties reexam changes to “reasonable likelihood,” CAFC assumes jurisdiction for appeals to patentablity, Micro-entity provisions (§123), Funding agreement provisions, Tax strategies deemed to be within prior art for pending patent applications and issued patents, Best mode provisions, Patent marking provisions and jurisdictional provisions for any civil actions.

From the time period from September 16, 2011 thru November 16, 2011 the USPTO will begin charging a surcharge for paper filings (after November 16, 2011) and allowing prioritized examination with payment of surcharge (after September 26, 2011).

Beginning one year after enactment of the legislation (September 16, 2012) a number of key provisions go into effect related to: inter parties review (§311 – §310); post grant review process (§321-329); the new PTAB provisions; the pre-issuance third party submissions (§122); Supplemental patent examination; Advice of Counsel defense for willful infringement; business method patents, prioritized examination for “important technologies,” along with a number of technical amendments, including changes to reissued patents.

Finally, on March 16, 2013 the new §102 and §103 including the first to file rule go into effect.

The proposed SOPA/PIPA legislation (the Bills) were designed to increase the remedies available to copyright holders and to increase the liability of copyright infringers.  The Bills provide for enhanced criminal and civil remedies including the right to obtain monetary damages, seek court orders against websites accused of enabling or facilitating copyright infringement and to stop online commerce with those sites. Depending on who makes the request, the court order may bar electronic commerce with any website accused of facilitating the infringement including the ability to stop online advertising networks and payment facilitators from conducting business with the infringing website, barring search engine links, and requiring Internet service providers to block access to such sites. The bills would also criminalize unauthorized streaming of copyrighted content, with a maximum penalty of five years in prison for ten such infringements within six months. The bills also grants immunity to ISPs that voluntarily take action against websites, and provides for damages against false accusations from copyright holders.

Supporters of the bills include lobbyists for Hollywood, the Pharmacy Companies, media firms and the U.S. Chamber of Commerce. They claim it protects the intellectual property market and corresponding industry, jobs and revenue, and is necessary to bolster enforcement of copyright laws, especially against foreign websites. To support their claim, the supporters cite Google’s $500 million settlement with the Department of Justice for its involvement with ads targeted to consumers offering prescription drugs from Canadian pharmacies.

Opponents of the bill claim that the bill would violate the First Amendment, would effectively create a censorship ban upon the internet, will cripple the free flowing information aspects of the Internet and will threaten whistle-blowing and other free speech activities.

The results of yesterdays sit in was statistically amazing, the protests included blackouts of portions of Wikipedia and Google’s website, online petitions and blogging related activities.  As a result of the protests it has been reported that 162 million people experienced the blackout at Wikipedia and another 8 million took Wikipedia’s suggestion and looked up their congressional reps from their site. Google reported that an estimated 4.5 million people had signed its petition asking lawmakers to reject the SOFA/PIPA legilstation.  Twitter said 2.4 million SOPA-related tweets were made.  WordPress reports that at least 25,000 WordPress blogs joined the SOPA and PIPA protest by blacking out their blogs entirely, and an additional 12,500 had posted a “Stop Censorship” ribbon.

While the outcome is yet to be determined, they have certainly illustrated the power the internet can have on the dissemination of information, something which may be lost if the internet becomes censored.  In addition, the information gathering aspect of the internet was additionally illustrated when the one reader targeted a sponsor of the bill and reported that a website operated for him is allegedly using copyright material in violation of the proposed legislation.

Last month, Asus expanded their computer line with the “Transformer Prime,” a tablet-laptop computer. Asus, the lastest “Decepticon” to join in the Transformer battle may be hoping it can capitalize on the success which the Transformers are currently having. However, as any child will tell you the “Decepticons” always loose.

Hasbro, however, is not so pleased with Asus’s marketing endeavors. Hasbro began the Transformer line of toys in 1984 as a line of tiny robots that converted into vehicles. The toys have been hugely successful and today the Transformer brand is utilized widely in books, cartoons, movies, apparel and various other paraphernalia including a car.

In a lawsuit filed last week, Hasbro said it contacted Asus about the use of the Transformer mark and Asus refused to comply.

Hasbro claims that marketing of Asus’s Transformer Prime uses scenes which “closely resembles imagery used in Transformers movies and video games, in particular evoking the Transformers home planet of Cybertron.”

The lawsuit is for trademark infringement, unfair competition, and trademark dilution. Hasbro is seeking damages and injunctive relief.

Some speculate that Google has been buying patents from IBM and others to help it defend its Android software from the challenges involving Apple’s iPhone.

Google’s largest deal so far involved the purchase of Motorola’s Mobility for $12.5 billion to acquire the mobile patents. So far, Google has purchased more than 1,000 patents from IBM.

The recent purchased patents, although undisclosed, relates to patents used in cellphones. The transfers were registered with the U.S. Patent and Trademark Office last week.

The bill is the houses version of the Senates PROTECT IP bill. The PROTECT IP legislation was introduced by Sen. Judiciary Committee Chairman Patrick Leahy (D-Vt.) and currently has 34 bipartisan co-sponsors.

Upon the introduction of the Stop Online Piracy Act, Cary Sherman, Chairman and CEO, RIAA, offered the following statement:

Whether youre in a taxicab in Paris, a hotel in Calcutta or a restaurant in Tokyo, American music can be heard the world over. The global appeal of American music is also a prime reason that rogue operators set up shop overseas and offer easy access to illegal downloads that pay nothing to creators and result in thousands of lost jobs and fewer opportunities for aspiring musicians.

This legislation as suggested by the RIAA, is a first step towards a brighter day when these rogue offshore websites can no longer duck accountability under U.S. laws, all the while providing a critical boost to the marketplace for legal digital music services.

While, I think the RIAA is once again using it’s lobbying arm to coerce a continued course along a dying model, I do support efforts to protect american intellectual property rights. However, I have strong reservations about the effectiveness of an extra-territorial effort to enforce U.S laws on developing countries like China or India.

If signed into law, which is fully anticipated, the America Invents Act would transition the U.S. Patent system from a first-to-invent system to a first-inventor-to-file system.  THIS IS HUGE. Previously, the US employed a first to invent system, which traditionally favors the sole or independent inventor.  The first-inventor-to-file system would give inventorship priority to the first individual inventor to file a patent application for a particular invention. That system follows the procedures already in place in Europe but would contrast sharply with the U.S.’s current system, which generally gives priority under the patent laws to the first inventor, even if that inventor is not the first to file an application with the USPTO.  The recently passed legislation also adds a new nine-month window for post-grant review of patent validity and reform the already existing inter partes reexamination process into a new inter partes review process. With both post-grant review and the new inter partes review, the burden of proof on the challenger would be to demonstrate that the claims are invalid by a preponderance of the evidence, and the challenger would be precluded citing the same prior art in an action for infringement in Federal Court.

Many people argue that the changes in the patent law favor large corporations and disfavor smaller independent inventors.  If you have any thoughts regarding the newly passed legislation feel free to comment on our post.

Typically, with a new top-level domain, a “land grab” begins with everyone rushing to get great names.  That will selectively begin on November 8, with the general public registration process beginning on December 6th.  However, unlike prior registration processes, the new .xxx registration process is allowing owners of registered trademarks who do not want to see a “.xxx” at the end of their brand name to pre-register to prevent others from tarnishing or stealing their trademark or brand names in connection with the new .xxx domain suffix.

Sunrise Registration .XXX
The registration process allows for different mechanisms for trademark owners to protect their brands in the new .xxx TLD.  If preregistration is not addressed, there is a risk that someone can associate your brand name with sexually explicit material – which may cause customers to be misdirected to when searching for your products or services on the Internet.

The sunset provisions include:

• a defensive registration process during the “sunrise” period when .xxx takes effect
• a Start Up Trademark Opposition Procedure (“STOP”)
• a “Rapid Takedown” procedure for the clearest cases of abusive registrations

Sunrise Process
The sunrise period begins 7 September 2011 until 28 October 2011. During this “sunrise” period for .xxx to take effect, trademark owners not in the adult entertainment industry can request that their registered marks be blocked from registration by third parties using the .xxx domain. This will require payment of a onetime fee.  If you are seeking to preregister an adult website having a registered trademark, you can also preregister your domain name during this same time period.

Registration during the sunrise period, if successful, will allow the trademark owner the ability to reserve or block the registration of its trademark within the .xxx TLD.

Opposition Procedure
If preregistration process is not utilized, the STOP procedure may allow a trademark owner to prevent a proposed infringing use from being activated on the .xxx registry for a limited time, while an opposition procedure takes place.  The STOP procedure must be utilized during this short Oppostion time period, otherwise the domain will be registered.

Rapid Takedown
If a trademark owner wishes to contest the use of a domain name utilizing a trademark within the registered .xxx domain, the trademark owner may initiate a “Rapid Takedown” procedure. In order to initiate such an action, the trademark owner must provide “a short and simple statement of a claim involving a well-known or otherwise inherently distinctive mark and a domain name for which no conceivable good faith basis exists” in the .xxx registry. The claim may be reviewed within 48 hours whether to initiate the rapid takedown procedure, although such determination will not prejudice either party’s ability to pursue another dispute mechanism.

Please contact us if you have any questions regarding the .xxx domain registration process. (913-345-0900)

Some of you may remember when Apple filed suit against HTC back in early 2010 alleging that the company infringing 20 patents related to the iPhone’s user interface, underlying architecture, and hardware.  Here is a brief explanation of each of the twenty patents.  In the suit, Apple filed over 700 pages of exhibits in federal court.  Subsequently, the ITC (International Trade Commission) partially supported Apple’s claims when an ITC judge deeming that HTC had infringed two of Apple’s patents.  In July, 2011, HTC acquired graphics company S3G in a deal valued at $300 million in a move that some say was designed to purchase patents to fend off Apple in the ongoing lawsuit. Previously, the ITC made a preliminary ruling that Apple has infringed two of S3G’s patent claims.  Then Apple filed a new suit against HTC with a U.S. trade panel over some of Apple’s portable electronic devices and software.  Now, HTC has filed a separate suit against Apple based upon previously acquired patents (2008 and 2009).  Of course, HTC will probably add additional claims or an additional suit based upon the S3G patents.

While, the current litigation playbook employed by Apple is not uncommon between technologically sophisticated competitors, it is reminiscent of  the sort of playbook deployed by Microsoft against Apple so many years ago in which so many Apple loyalists came to their aid.  While the Fat Lady has not yet begun to prepare for her solo, one wonders if this sort of tactic may cause some Apple aficionados to start changes sides.