Friday, January 27, 2017

Copyright - Independent contractor and work-for-hire

     Independent contractor. Work-for-hire. These terms appear inextricably linked. However, work-for-hire isn’t quite the panacea people believe it to be.

     Under copyright law, the author of a work is the copyright holder. See 17 U.S.C. 201. But, under the work-for-hire doctrine, copyright ownership doesn’t flow to the person who made the work instead it flows to the employer or the person for whom the work is prepared. See 17 U.S.C. 101 (definition of "work made for hire"). This sounds great for an independent contractor situation. Unfortunately, the work-for-hire doctrine only applies to:
(1) works prepared by an employee within the scope of the employee's job, or
(2) works specially ordered or commissioned for use
(i) as a contribution to a collective work [which is a work, such as a periodical issue, anthology, or encyclopedia, in which a number of contributions, constituting separate and independent works in themselves, are assembled into a collective whole],
(ii) as a part of a motion picture or other audiovisual work,
(iii) as a translation,
(iv) as a supplementary work [which is a work prepared for publication as a secondary adjunct to a work by another author for the purpose of introducing, concluding, illustrating, explaining, revising, commenting upon, or assisting in the use of the other work, such as forewords, afterwords, pictorial illustrations, maps, charts, tables, editorial notes, musical arrangements, answer material for tests, bibliographies, appendixes, and indexes],
(v) as a compilation [which is a work formed by the collection and assembling of preexisting materials or of data that are selected, coordinated, or arranged in such a way that the resulting work as a whole constitutes an original work of authorship],
(vi) as an instructional text [which is a literary, pictorial, or graphic work prepared for publication and with the purpose of use in systematic instructional activities],
(vii) as a test,
(viii) as answer material for a test, or
(ix) as an atlas,
if the parties expressly agree in a written instrument signed by them that the work shall be considered a work made for hire.

Thus, if your independent contractor agreement contains a work-for-hire provision but, the work created by the independent contractor doesn't fall into one of these nine categories, then the copyright remains with the independent contrator. Simply calling a work a work-for-hire doesn't make it so.

     Fortunately, there are a few solutions and here are two of them:  (1) determine if the work falls into one of the nine categories and then use either a work-for-hire provision or a copyright assignment whichever is appropriate, or (2) if you are not going to determine if the work falls into one of the nine categories, then include a work-for-hire provision and also a copyright assignment provision, as a backup.

     [Update]  If your independent contractor agreement contains a work-for-hire provision and is governed by California law, then there are additional considerations. Under California laws, if a business hires an independent contractor with a work-for-hire provision, then the business is considered an employer and the contractor an employee.  Cal. Labor Code Section 3351.5(c), Cal. Unemployment Ins. Code Section 686 and Section 621(d).  This treatment imposes numerous regulatory burdens on the business, such as obtaining unemployment insurance and state disability insurance, paying payroll taxes, and filing tax forms.  Los Angeles Lawyer, March 2016 at p25.  Failure to comply with regulations can lead to penalties, interest charges and fines.

     [Update 2] If you working under California law, you may want to make sure that the independent contractor is signing as a business entity (LLC, Corp.).  Los Angeles Lawyer, March 2016 at p25

- Henry Park

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Monday, January 23, 2017

Patents - Three reminders about patent assignments

      First, there is a difference between an assignment and an obligation to assign. If your "assignment" document states "agree to assign" or similar language, then it is merely a promise to assign rights in the future and "not an immediate transfer of expectant interests" (Board of Trustees v. Roche, 583 F.3d 832, 841-42 (Fed. Cir. 2009).  This means that a subsequent and proper assignment needs to be executed in the future.  To effect an immediate transfer, your assignment should state "do hereby assign" or similar language (cite).

     Second, patent assignments should be recorded with the US Patent & Trademark Office within three months of execution. 35 U.S.C. § 261. If you fail to record within three months, you should still record the assignment because late recording is better than never recording.  The purpose of recording is to provide notice to the public and to prevent a bona fide purchaser from creating a potentially costly mess over the ownership of the patent.

     Third, you can record patent assignments for free on the USPTO website (cite).  If you wish to submit paper documents, it will cost $40.

- Henry Park

Wednesday, January 18, 2017

USPTO and Java v8 update 121 build 13

    On my Macintosh, I received a notice that there is an updated version of Java v8 update 121 build 13 (released on January 17).


      I called the US Patent Electronic Business Center (EBC), and they have not tested the update, and that suggested holding off on the update for a few days.

- Henry Park

Monday, January 16, 2017

Patent - How does this complaint satisfy Iqbal and Twombly?

     For more than a year, Form 18 from the Appendix of Forms to the Federal Rules of Civil Procedure has been repealed (cite).  By repealing Form 18, bare bones patent infringement complaints no long meet the Supreme Court's Bell Atlantic Corp. v. Twombly and Ashcroft v. Iqbal heightened pleading standards (Twombly cite, Iqbal cite).  Under this heightened pleading standard, a plaintiff must plead a “plausible” claim.  In other words, the plaintiff must plead sufficient factual content to allow the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.

     Last week, Seatoun Media alleged that Apple was infringing its U.S. Patent 6,356,626 (Seatoun Media v. Apple).  Although determining whether a complaint meets the heightened pleading standard is handled at the district court level, this complaint may be in trouble.

1.  The case was assigned to Judge Gilstrap who has dismissed at least one case for not meeting the heightened pleading standard (see Ruby Sands LLC v. American Nat'l Bank of Texas link).

2.  The complaint fails to identify a representative claim that is alleged to have been infringed. Instead, the complaint takes a blunderbuss approach and alleges that Apple devices infringe at least one of the 19 claims either literally or under the doctrine of equivalents (see Complaint, 12).

3.  The complaint fails to allege sufficient facts concerning how the Apple devices directly infringe - literally or under the doctrine of equivalents - any of the claims.  Claim 1 is not a simple claim (as shown below).  Plaintiff attempts to distract the court from its failure to allege how Apple devices meet all the claim elements of any claim by boldly alleging, without any support, that Apple devices infringe because they "provide the capability to allow a user to record and/or play back voice messages through a communication link" (see Complaint, 13-14).

     It will be to see if Apple files a motion to dismiss.


     Claim 1 of the '626 Patent states (to make the claim easier to understand, I've added square brackets):
1. A voice message processor comprising, in a single, co-located, unit:

[a] a connection for a communication link capable of transmitting and receiving cells over a public communication network;

[b] a connection for a telephone set;

[c] a connection for a recordable voice message recording/playback device having an input for a signal representing a voice message to be recorded and an output for a signal representing a previously recorded voice message to be played back;

[d] a switching device providing:

     [i] a first state in which the telephone set connection and communication link connection are connected together,

     [ii] a second state in which the voice message recording/playback device input is connected to the communication link connection, and

     [iii] a third state in which voice message recording/playback device output is connected to the communication link connection; and

[e] a controller controlling said voice message recording/playback device to be selectively recorded and played back when said switching device is in its second state and controlling said voice message recording/playback device to be selectively played back when said switching device is in its third state.

 - Henry Park

Sunday, January 15, 2017

Trademark - Sears sold its Craftsman brand

    On January 5, 2017, Sears Holding Corporation announced that Stanley Black & Decker had purchased the Craftsman brand (link).  The devil, however, is in the details.

     Stanley will pay $525 million at closing, $250 million at the end of year three, and annual payments on new sales through year 15 (2.5% through 2020, 3% through January 2023, and 3.5% thereafter).

     In return, Stanley acquired the "rights to develop, manufacture and sell Craftsman-branded products in non-Sears Holdings retail, industrial and online sales channels across the U.S. and in other countries" (emphasis added).  Sears-Holding meanwhile "will continue to offer Craftsman-branded products, sourced from existing suppliers through its current retail channels via a perpetual license from Stanley Black & Decker".  Thus, Stanley basically purchased the right to sell Craftsman products to non-Sears Holdings related entities, which should be a large market as less than 10% of Craftsman sales currently are through such entities (link).

     It would be interesting to see the trademark license agreement portion of the sale to see how much "quality control" Stanley will be able to exercise over Sears.

- Henry Park

Sunday, January 8, 2017

Copyright - Innocent infringer defense?

     I was speaking with a colleague about issues with hiring third-parties to create content, and he mentioned an innocent infringer "defense" to copyright infringement.

     There are two innocent infringer "defenses".

     The first innocent infringer defense concerns copyrighted works (1) from which the copyright notice was omitted and (2) that were publicly distributed under the authority of the copyright owner before the effective date of the Berne Convention Implementation Act of 1988 (or March 1, 1989). Under this "defense", if an innocent infringer proves that they were misled by the missing copyright notice, then the innocent infringer cannot be found liable for actual or statutory damages for any infringing acts committed before receiving actual notice that the work is registered. 17 U.S.C. 405(b). Once notified of the registration, an infringing party cannot claim be to innocent, and they cannot continue to use the registered work without proper compensation.

     The second innocent infringer defense concerns awards of statutory damages. Although called a defense, it is not a defense to liability but rather a limitation on damages. By asserting this defense, a court in its discretion may reduce the amount of statutory damages to a sum of not less than $200 where the infringer proves that (1) he was not aware that the material was copyrighted and (2) had no reason to believe that he was committing copyright infringement. 17 U.S.C. 504(c)(2).

     As a copyright holder, the simplest way to defeat both of these "defenses" is to ensure that all copyrighted works bear an appropriate copyright notice.

- Henry Park

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