Articles Posted in Intellectual Property

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The central provisions of the Leahy-Smith America Invents Act (the “AIA”) went into effect in March 2013, revolutionizing the United States patent system. Traditionally, the United States had maintained a “first-to-invent” patent system, which awarded patent rights to the first inventor who created a unique invention. However, as the AIA went into effect, not only did the statute change the effects of U.S. patent law, but it also affected how inventors will make the decision of whether to file patents.

How Does the AIA Change the U.S. Patent System?

Before this new provision, the United States Patent and Trademark Office (“USPTO”) awarded patents to the individual or entity that invented first, rather than the individual or entity that filed an application for a patent first. Now, an inventor could lose patent rights to another inventor who potentially created the same invention later in time, but managed to file a patent application for the same invention sooner. Essentially, regardless of who conceptualized an invention first, the first to submit a good-faith patent application secures patent rights.

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The illegal downloads of music and movies, and the corresponding financial consequences for music labels and movie production companies, introduced online piracy to the forefront of newsworthy discussions. Today, online piracy has expanded into an online market that allows criminals to profit from stealing intellectual property (such as patents, trademarks, copyrights) from American owners and selling such valuable property online. Such “rogue sites” are usually located outside of America and organizations are able to maintain these sites by circumventing U.S. laws. The rogue sites will sell everything from movies and music, to medicine and automotive parts. In fact, counterfeit baby food comprises a large sector of the online piracy market, endangering the health and wellbeing of American consumers.

In light of this growing threat to American consumers, and their intellectual property rights, there is a call for more stringent online privacy laws to protect against these threats. Illegal piracy costs America $100 billion and thousands of jobs each year. Accordingly, Congress proposed the Stop Online Piracy Act (“SOPA”) to protect American consumers and American intellectual property. SOPA intends to target foreign websites that manage the sale and traffic of counterfeit products.

However, opponents of the bill have spread misinformation over the Internet to block SOPA’s passage. For example, Google openly opposes SOPA. To that effect, Google paid $500 million to settle a case alleging that Google promotes illegal foreign online pharmacies. The case suggested that these pharmacies pose a health risk for American consumers. Google argues that SOPA will allow for online censorship. Proponents of SOPA argue that the law does not aim to censor the Internet. Instead, this law only focuses on online activity that is already illegal. Furthermore, SOPA only covers foreign websites that are specifically involved in infringing activity. The National Association of Manufacturers, International Union of Police Associations, United States Conference of Mayors, National Songwriters Association, and the National Center for Victims of Crime all support SOPA and its overall purpose. Additionally, both the United States Chamber of Commerce and the American Federation of Labor and Congress of Industrial Organizations have formed a unique bond to support SOPA.

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After an investigation by U.S. Immigration Customs Enforcement’s Homeland Security Investigations unit, U.S. District Judge Arenda L. Wright found members of IMAGiNE Group guilty of criminal copyright infringement. The court found IMAGiNE Group, an Internet piracy circle, guilty of perpetuating an effort to release movies available only in movie theaters. A representative of the Motion Picture Association of America testified that IMAGiNE was responsible for the most expansive effort to release pirated films between September 2009 and September 2011.

Judge Wright sentenced Jeremiah B. Perkins, a leading member of IMAGiNE, to prison and ordered him to pay $15,000 in restitution damages. After prison, Perkins will also face three years of supervised release. Perkins was responsible for recording films in theaters and compiling data into complete movie files to share on the Internet. Perkins admitted to renting computers, registering domain names, and opening email and PayPal accounts to help run IMAGiNE’s operation.

The National Intellectual Property Rights Coordination Center (“IPR Center”) within the United States Department of Homeland Security has supported the underlying investigation in this case. This center is one of the federal government’s greatest weapons in the fight against counterfeiting and piracy. The IPR Center works closely with other agencies within the Department of Justice to facilitate information sharing in an effort to establish and enforce initiatives that deter intellectual property theft. This case was part of the IPR Center’s greater effort to hinder and stop the spread of intellectual property theft. Attorney General Eric Holder instigated these efforts in response to the increasing crimes against intellectual property. Additionally, in light of recent news concerning threats of international cyber attacks, these efforts also go a long way towards protecting American consumers, their health, and their safety. Preventing intellectually property theft also protects the American economy by prohibiting outside parties from profiting on American products and intellectual property. The IPR Center aims to increase intellectual property right protections by implementing stricter criminal and civil liability for property right infringements. Additionally, the IPR Center seeks to organize greater coordination among federal, state, and local law enforcement agencies. Finally, the task force aims to refocus efforts on international property right protections by establishing and strengthening relationships with foreign governments.

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On March 19, 2013, the Supreme Court reached a decision in Kirtsaeng v. John Wiley & Sons, Inc. In this case, respondent John Wiley & Sons, Inc. (“Wiley”), a publisher, brought suit against Petitioner Supap Kirtsaeng alleging violation of the Copyright Act, under Title 17 U.S.C. §§ 101-810. Kirstaeng a student in the United States, studying mathematics at Cornell University and the University of Southern California, sold textbooks to help pay for his education and living expenses. Kirtsaeng’s relatives would buy these textbooks in Thailand, where they live, and ship them to Kirtsaeng, who would sell the textbooks in America once he was done using them for his classes. Wiley’s subsidiaries in Thailand manufactured these textbooks.

Wiley contended that by selling foreign manufactured textbooks in America, Kirtsaeng was violating Title 17 U.S.C. § 602(a)(1) of the Copyright Act. According to 17 U.S.C. § 602(a)(1), a copyright owner’s exclusive distribution right encompasses the importation of copyrighted work into the United States. Importing copyrighted work into the United States without the consent of the copyright owner constitutes a violation of copyright law. Under copyright law, a copyright owner has the exclusive right to distribute copies of a copyrighted work to the public. However, Kirtsaeng argued that the First Sale Doctrine protects him from any liability because according to the doctrine the copyright owner loses an exclusive interest in copyrighted work after the first sale. The First Sale Doctrine, which is codified under Title 17 U.S.C. § 109, limits copyright owners’ distribution right to the first sale of the copyrighted work. Once the work is transferred, the copyright owner no longer retains an interest in the work.

In its opinion, the Supreme Court held that copyright law, and specifically the First Sale Doctrine, applies to copyrighted works manufactured abroad. Accordingly, copyright owners, such as the publisher in this case, lose their distribution rights and interests in a foreign manufactured copyrighted work after the first sale of the work. As such, Wiley lost its exclusive distribution right in the textbooks when its subsidiaries first sold the textbooks to Kirtsaeng’s relatives in Thailand. When the relatives then sent the textbooks to Kirtsaeng, who proceeded to resell the textbooks in America, Wiley no longer retained a copyright interest in the textbooks.

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Employers use non-compete agreements often to protect trade secrets and keep valuable employees from moving to competing firms. Most employers who conduct business involving highly valuable business secrets require employees to sign non-compete agreements before commencing employment. These contracts prohibit employees from releasing trade secrets to competing companies. Additionally, non-compete agreements prevent employees from working for a direct competitor within a period of time after leaving the company.

In light of the emphasis that the legal system places on an individual’s right to earn a living, courts require a high level of reasonableness to uphold non-compete agreements. Courts generally look at the length of time, geographic area, and types of business that these contracts cover to determine whether they place an undue hardship on an employee’s ability to seek employment. In states that allow for non-compete agreements, courts require reasonable scope and duration in order to uphold such contracts. Furthermore, non-compete agreements may be valid regardless of whether an employee leaves of his own choosing or is terminated.

California’s policy regarding non-compete agreements emphasizes a strong public interest in open competition. The California Business and Professions Code § 16600 dictates that any contract that restricts business is “void” unless the agreement falls within the exception outlined in Business and Professions Code Section 16601. The exception looks to whether competition would dispose of a substantial ownership interest or goodwill of the company. However, California employers maintain the option of using non-solicitation agreements and non-disclosure agreements to protect trade secrets and employees from competitors. Non-solicitation agreements prevent employees from seeking out the company’s clients after leaving, unless the employee developed a relationship with the client before working for the company. Nondisclosure agreements are contracts that hold the parties responsible for protecting confidential information utilized in the course of employment or during a business transaction.

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According to California Civil Code § 3426, the Uniform Trade Secrets Act, a “trade secret” is information that maintains independent economic value from non-disclosure and is a result of efforts that justify non-disclosure under the circumstances. The knowingly wrongful taking or disclosure of trade secrets is defined as “misappropriation” within the Code, and is considered unfair competition, a civil offense.

In order to initiate a claim for the misappropriation of a trade secret, the following elements must be met:

– The subject of the claim must fall within the protection of the Code,

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According to Article I, Section 8 of the United States Constitution, Congress has the power to protect the exclusive rights of “authors and inventors” in order to support scientific and artistic innovation. As such, Congress enacted the Copyright Act under Title 17 of the United States Code outlining the legal framework of copyrights in order to provide legal protection for authors and inventors.

Section 101 of the Copyright Act defines the various terms associated with copyright law. For example, for purposes of the Copyright Act, a “work” constitutes a tangible product when it is initially “fixed in a copy.” Section 102 lists the types of works that the Copyright Act applies to, which include, among others, written, musical, and photographic works. A copyright owner has certain exclusive rights in relation to his or her creation. Under Section 106 of the Copyright Act, copyright owners have the right to reproduce, distribute, perform, and display their works. This implies that non-owners do not have these same rights towards copyrighted material, which generates issues of copyright infringement and unauthorized use of copyrighted material.

Copyright infringement is the violation of a copyright owner’s exclusive rights under the Copyright Act. Sections 501-513 of the Copyright Act outline penalties for copyright infringement, which may include payment for damages, a court order to stop the unauthorized use of copyrighted material (i.e., injunction), and jail time.

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The lawsuit between Apple, Inc. and Samsung Electronics Company, Ltd. over issues of patent infringement finally came to a close with a judgment in Apple’s favor.

The judgment found Samsung guilty of infringing six Apple patents, including the quick search box, structure detection feature, slide-to-unlock, and auto-correct feature. The jury also found that Samsung willfully infringed on several Apple software and hardware patents. This will allow presiding Judge Lucy H. Koh to triple the award of damages if she finds it appropriate. Apple received an award of over $1 billion. Although this falls short of Apple’s $2.5 billion request, it still qualifies as one of the largest awards in an intellectual property case.

Samsung is anticipated to file an appeal. Samsung representatives explain that the verdict threatens to limit consumer options in the market and therefore the verdict should be overturned. Samsung intends to file post-verdict motions to overturn the ruling and seek relief from the judgment.

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Avenues of social media such as YouTube and Facebook allow users to contribute to individual pages with self-generated content that may infringe upon intellectual property rights. Accordingly, as social media continues to thrive, so do potential trademark infringement disputes. In attempting to resolve these disputes, it is helpful to consider strategies that will lead to desirable outcomes for the involved parties.

First, it is important to establish contact with the other side. Initiate communication through the medium that houses the violation to get the other side’s attention. For example, if the violation involves an unauthorized Facebook page, send a message on Facebook regarding the page in question.

As you begin to establish contact, remember that the most aggressive approach is not always the most effective. The offending party will likely ignore a stern cease and desist letter, or alternatively, become defensive, making future interactions more difficult and strained. A cordial and even-toned letter is more likely to generate an effective response and a possible resolution. For example, it is ineffective to immediately send a letter demanding that the opposing party take down the infringing material under the Digital Millennium Copyright Act (“DMCA”). The DMCA criminalizes the improper use of trademark material and allows for parties to issue a “takedown notice” asking the violating party to remove the infringing material from the social medium. Nonetheless, communicating with the other party before taking strong action, allows for the opportunity to gather background information while sustaining the right to proceed with DMCA procedures later. In addition, gathering such information will prevent the possibility of liability for making false claims of infringement under 17 U.S.C. § 512(f).

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The United States District Court in the Northern District of California has issued a preliminary injunction in favor of Apple, Inc. that prevents Samsung Electronics Company, Ltd. from manufacturing or distributing its Galaxy Nexus smartphone in the United States.

A preliminary injunction is a court order that temporarily prevents or requires a certain action until the court has time to reach a judgment in the case. Under the Patent Act, courts “may grant injunctions” in order to maintain equity between parties and protect the rights secured by a patent. Courts may grant a preliminary injunction where the requesting party shows that it is likely to succeed in the case, the party is likely to suffer “immediate and irreparable harm” without a preliminary injunction, a balance of equities weighs in favor of the requesting party, and a preliminary injunction is in the public’s interest.

Apple filed a lawsuit against Samsung for approximately $2.5 billion, alleging that Samsung’s Galaxy Nexus smartphone violates four Apple, Inc. patents, causing injury to iPhone sales. This is one of the largest patent suits of this kind.

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