Category Archives: Uncategorized

Word density

Why is that parties are limited to only so many words or pages, or density of type when pleading a cause, but courts can use unlimited pages to set out their decisions.  Presumably, the pleader is the better editor, relying on clearer, declarative sentences, while the deciders just let it all flow across endless pages. 
Maybe some judicial decisions should be released on  twitter.

Licensed to Pay, But Cancelled One Day.

Licensing disputes so often involve termination provisions.  Someone wants out, but has to manufacture a way out – and, the other party sues for wrongful termination.  Many of the decisions are fairly pedestrian contract interpretation ruling, but then there’s Brunskill Associates, Inc. v. Rapid Payroll, Inc., 2010 WL 779688 (Cal.App. 2nd Dist. March 09, 2010).

A software developer named Olsen licensed his payroll processing package to Mr. & Mrs. Brunskill, who grew from one-client to a @2M/yr business.  As business grew, they relied on the Olsen software, and paid the license fee.  The license (possibly not authored by counsel) did not allow either party to cancel.  It too assured support to the licensees, and if that was not provided, the source code would be delivered to them.

Along comes Paychex, another one-client outfit that grew into a really huge firm.  At the behest of its founder, Thomas Golisano, a subidiary Rapid Payroll was set up, which acquired the software and licensing clients of Olsen.  Internal memos indicated a plan to expand in a market not served by Paychex.  After providing substantial assurances to the licensees, including the Brunskills, all of the software licenses were cancelled by Rapid.

The Brunskills’ business was ‘hard-wired’ to use of the Olsen software, and the loss of its use caused significant lost business and revenue.  A jury determined that the cancellation was wrongful, and that pretextual reasons were given for it.  Possibly as a tactic to limit liability, Rapid declared bankruptcy, ostensibly because cancelling the licenses ended its receipt of licensing revenues.  The automatic stay was lifted.

A substantial judgment was assessed against defendants, and too, punitive damages of $10Mil were awarded to the Brunskills against Paychex founder Golisano (reportedly, a billionaire).  These judgments were affirmed.  This was not your average disagreement between geekhead software types and payroll clerks, for as the court stated: “Golisano followed a strategy of falsely and publicly assuaging licensees’ fears while secretly planning to take over their businesses by vaporizing the software that was their economic lifeline.”  That’s not contract interpretation.

FTC Thinks Surround Sound Comparable to Stereo.

The FTC decided, after public comment, to retain the Amplifier Rule, which is for consumers to compare power outputs of amps used in home entertainment products. http://www.ftc.gov/opa/2008/02/amp.shtm

It decided there was no present reason to amend the rule due to the multi-channel home theater and surround sound systems, which now take up a lot of the market.

When you bought that last amp for your home sound system, did you use the Amplifier Rule or the ‘that one sounds better than that one’ standard?

Way to Punch Up Your Law Practice.

IP and acheter kamagra en france

patent attorneys tend to wonder how best to position their advertising.  The back, and fold-over on the phone books are taken up with ‘are you injured?’ as is most of afternoon TV.

Saturday night at the Hard Rock Hotel, few knew about the super flyweight bout, but it too was sporting some lawyer advertising.  On the front of the boxing trunks of pugilist Robles, who hails from Kansas City, was embroidered “Immigration Law” below the firm name.  Now there’s an option for some TV time that few considered.

Except as Provided Elsewhere, or Trumped, I’ll Own all the IP.

An IP decision of the Delaware Chancery Court reminds of two risks – wholesale incorporation by reference between separate IP agreements, and judicial misreading of patent law. In Cepahlon v. Johns Hopkins, 2009 WL 4896227 (Del. Ch. 12/18/09), three forms of agreement dealt with the ultimate ownership of IP developed by a university researcher. Rather than reading these separately and, if possible, consistently, the Vice Chancellor ruled that the terms of one “trumps any contrary language” in the other. Also, instead of defining the agreed terms using the common and accepted meanings, the VC applied definitions unique to patent law.

The first lesson is to avoid having two provisions dealing with the same subject matter, because of the risk of inconsistency, or of inconsistent interpretations. A form of drafting simplicity, to be avoided in IP transactions, is simply referring to parts of separate agreements rather than making revisions so as to make it all consistent. What good can come in court from phrases like ‘except as otherwise provided in [other provisions or agreements],’ or that ‘the foregoing does [not] supersede provisions [else where] not inconsistent herewith.’ Those flaws were not found in this case, but the outcome on ownership was not what Cephalon expected.

Cephalon supported the research, and its agreement with JHU (A) required the JHU researcher to “disclose to Cephalon any discovery or invention, whether or not patentable, that is conceived or reduced to practice,” and (B) it granted to Cephalon “all rights in and title to …all Inventions that result from the …use of” its proprietary compounds, and to “all ..intellectual property rights related thereto.”

The first misstroke of the pen was having the duty to disclose provision end with a shorthand, collective term “Invention.” On that basis, the court took that “Invention” definition and applied it where it appeared in the grant provision. The effect was that Cephalon did not own “any discovery.” Rather its ownership was limited to any “Invention” that was “conceived or reduced to practice,” and limited to conception and reduction to practice as defined in patent caselaw. An alternative construction would recognize that “any discovery” is much broader than “invention”, and broadened still by the term “whether or not patentable.” A “discovery” implies no usage confined to any legal regime.  Discovery is just that, and is distinct from an “invention,” which flows from legally-cognizable “conception” and “reduction to practice.”  Indeed, the opinion suggest that the researcher made discoveries about what compounds met certain criteria, but that only after all the agreements had expired did the claimed invention reach the stage of being an invention.

The next pointer is not to introduce shorthand definitions, mid-sentence. It always is difficult to define known IP, and even harder to set metes and bounds on IP yet to be developed. “The possibilities of such circumstances cannot possibly be enumerated. If the inventor had merely a conception or was working towards development of that conception, it can be said there is not yet any ‘invention’.” UMC Electronics Co. v. U.S., 816 F.2d 647, 656-7 (Fed. Cir. 1987). Such definitional terms must be well-crafted, not shorthanded, and threshold definitions deserve to be set out early in the agreement, in or near the primary grant clause.

The crucial misstroke was a later-made amendment incorporating by reference the IP “policies” of Johns Hopkins, along with what the court called the “primacy” provision. Ostensibly, the amendment clarified that, although Cephalon was compensating the researcher, his primary duties were as a researcher in Hopkins’ employ. The incorporated “policies” gave Hopkins “the right to obtain [IP] developed as the result” of its supporting the research. The court ruled this was an outright grant of ownership to Hopkins, rather than an executory “right to obtain.” That conclusion hinged too on boilerplate that the “Hopkins’ policies” and the researcher’s “obligations to the University shall govern and be afforded primacy in the event a conflict arises with” the agreement granting all ownership to Cephalon.

It had to be unpleasant when that incorporation by reference provision was given primacy, so as to ‘trump’ an express grant of ownership; particularly, when fn. 94 points out that Cephalon never “received a copy of [the] JHU IP policy.” To that pain point, the court added the irritant that “Cephalon cannot rely on ignorance.”

Odd Inventions of Ought-Nine

The Telegraph of London devoted many-megapixels to show some odd inventions from this year.

Take a look at these.  The “Husband Hunting Bra”, the “robo-toilet” with the “AutoClose” feature, the “PediSedate,” which gently sedates youngsters, the “JetLev-Flyer” that flies you over your pool, or the “Isophone” that lets you speak with other in the pool, and the “Amphicoach” that drives on land or across water.http://www.telegraph.co.uk/news/picturegalleries/pictures-of-the-year/6867957/Pictures-of-the-year-2009-weird-inventions.html?image=27

Business Method – Reverse Auction by USPTO.

Your USPTO needs copy paper, and it solicits bids in a notice in FedBizOpps.  But, it is not a lowest, when-opened bid solicitation.  Rather, the Commerce Dept. uses a reverse auction method, as stated in the solicitation:                                            “United States Patent and Trademark Office intends to conduct an online competitive reverse auction to be facilitated by the third-party reverse auction provider, [which] has developed an online, anonymous, browser based application to conduct the reverse auction. An Offeror may submit a series of pricing bids, which descend in price during the specified period of time for the aforementioned reverse auction. The United States Patent and Trademark Office is taking this action in an effort to improve both vendor access and awareness of requests and the agency’s ability to gather multiple, competed, real-time bids.”                                             With its ‘other hand’ the USPTO has been issuing patents on methods for conducting online competitive reverse auctios, such as USP 7,376,593 or 7,571,131 or 7,412,412.  Perhaps the copy paper is needed for office actions on these sorts of business methods.

Spring IP

As 2009 winds down, I begin preparing to teach in the Spring semester. The greatest number of IP law courses yet are offered in the coming semester. My class on IP Transactions L936 is one among the classes offered in Copyright Law L929, Patent Law L934, and also, the seminars in Advanced Patent Law L 950 and IP Litigation L950. It shows the increased level of student interest in IP law.

Brand Assassins.

Businesses divide large blocks of time between building their brands, and managing risks. Crunch time comes when unforeseen actions give the brand a black-eye. The case is point is the F1 Grand Prix team of Renault, which like most motorsports teams, runs a car that resembles a rocket-shaped billboard. If you had to choose between the engineers and the sponsors, as to which group ‘keeps the wheels turning,’ it’d be hard not to choose the sponsors.

Consider that due to the massive audience for F1 racing, that the new-entrant Brawn team provided its sponsor with the equivalent of over $90M in TV exposure, because Brawn GP ran at the front of most of the early races. But, the sponsors can suffer when bad actors wearing the logos harm the team, and so too, its sponsors. The Renault team was managed by Flavio Briatore and Pat Symonds, and only a few years ago, won back to back championships. This past year, the team was not getting results. Some of the blame was shouldered by a young driver, Nelson Piquet, Jr. Mid-season he was let go, and unpleasantness ensued. Piquet reported to racing authorities that in an earlier race, he had been told to crash on purpose, so as to advantage his teammate. When the charges came out, Briatore went on the offensive with denials and threats of retributive litigation, and even criminal charges against Piquet.Then the FIA found probable cause, scheduled an emergency hearing to show cause why sanctions should not be imposed. Briatore and Symonds promptly resigned, and bans from the sport were imposed.Three brands took hits, Renault certainly, but also its key sponsors, ING, the Dutch banking concern and Mutua Madrilena, a Spanish insurer. As a result, both pulled their sponsorship, and their logos were pasted over on the racing car and equipment.

The difficult thing about brand management is that many risks are not foreseeable. Renault employees [allegedly] caused the debacle, but even if they are fired, the brand still is degraded by the bad publicity. On a more basic level, employees can put up a youtube video, e.g., the pizza workers cheese-up-the-nose video, or might post to Facebook some story that may be untrue but still gets into the news.

Brand assassination can result from negligence, from devious acts, or can be the work of competitors or the displeased public. All the goodwill that is carried by a strong brand can be undercut, quickly. Even after the Renault incident was resolved by the racing authorities, Briatore continues action in court, which extends the negative press against the brands.

Without an risk management plan in place, a company’s trademarks and brands can get lots of unwanted public exposure, and can sustain damage that is hard to repair.