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Do You Know What’s In Your NDA?

You’d better.  If you don’t you’re going to screw it up.  Earlier this year, Convolve lost a trade secrets case against Seagate and Compaq because the personnel involved either didn’t know or forgot what was in the NDA.  The NDA required that in order to trigger any obligation of confidentiality, disclosed information must be: “(1) marked as confidential at the time of disclosure; or (2) unmarked, but treated as confidential at the time of disclosure, and later designated confidential in a written memorandum summarizing and identifying the confidential information.” Why they included the second provision is beyond me.  In this post I wrote that it is important to have a bright line test concerning what is confidential because you don’t want to litigate whether about whether the information was appropriately identified.  What does it mean for information to be treated as confidential at the time of the disclosure?  Who is going to remember to send a memorandum and why would one want such a memorandum describing the confidential information to exist?

In any event, sure enough Convolve disclosed unmarked information in meetings and failed to follow-up with a written memorandum, and then sued based on alleged misuse of that information.  Convolve lost summary judgment.  Convolve tried to argue that, notwithstanding the words in the written contract, everyone knew the information at issue was confidential and marking wasn’t necessary.  The Federal Circuit would have none of it.  The court wrote:  “the NDAs do not appear to be reasonably susceptible to the interpretation Convolve urges. Convolve’s assertion that the parties understood that all oral and visual disclosures were under the purview of the NDAs absent a written follow-up memorandum so stating is contrary to the terms of the NDAs. Thus, Convolve’s interpretation is unreasonable and would render paragraph 7 of the NDA a dead letter.”

Copyright Litigation: Analyzing Substantial Similarity

A new article I’ve written, Copyright Litigation: Analyzing Substantial Similarity has just been published by the Practical Law Company.  Think of it as Substantial Similarity in Copyright Law light.  It discusses just the very basics of what you need to know when evaluating a copyright infringement claim.  If you want detailed information, you still have to get the book.

Trademark Information For Business Owners, Executives and Managers

Today at 12:30 Eastern, Eric Osterberg will be discussing A Business Owner’s Guide to Trademarks and Service Marks with Jaqueline Crosby on the Blog Talk Radio show Legalocity.  The discussion will be useful for business owners and managers with questions about how to consider trademarks as part of their business planning.

2013 Substantial Similarity Supplement Available

The 2013 annual supplement to our treatise Substantial Similarity in Copyright Law is now available.  It is a complete replacement of the entire text, so if you’ve fallen behind, now is an excellent time to update.  It has now been 10 years since the first publication.  Thank you to PLI and all who have contributed to its longevity.

Highlights of the 2013 Copyright Society Annual Meeting II

Here of some highlights from today’s sessions at the annual meeting of the Copyright Society of the USA, Bolton Landing, NY June 11, 2013

Panel on Future of TV and Radio Copyright Litigation: Elenor Lackman, Bruce Joseph, Kelly Klaus, David Leichtman, Fritz Attaway

  • David Leichtman gave overview stating with Sony
  • Bruce Joseph suggest courts get deep in the weeds to understand he nature of technology and suggest that it really matters, is this a good thing? Every defendant raises fair use, courts ask what is the nature of the harm
  • Kelly Klaus suggest services are being designed around judicial system, good guy bad guy matters in these cases, is this critical innovation or attempt to skirt copyright law
  • Fritz Attaway suggests judges are often unfamiliar with new technologies and cases have been mostly correctly decided except Aereo
  • Discussion of rights and wrongs of Cablevision and Aereo cases
  • David Leichtman points out none of these cases have been tried
  • Existing copyright remedy structure may not fit these cases, maybe we should be looking at those
  • Fritz Attaway suggests man of the services at issues never got traction with consumers, consumers are mostly using services where copyright owners are getting paid and service providers are making money, that’s really what we want

Criminal Copyright Enforcement: Joe Demarco, Paul Doda, (Elsevier) Ed McCoyd (AAP), David Szuchman (NY County D.A.)

  • Manhattan DA has cybercrime and identity theft bureau, work extensively with federal investigative agencies
  • NY Failure to disclose origin of recording statute can apply, affects CDs and DVDs, associated laws make criminal manufacture, sale and operation of device
  • NY statute prohibits unlawful use of secret scientific material, unlawful duplication od computer related material
  • Advantages of criminal: deterrence, expanded resources, discovery advantages, additional charges
  • Call DA sooner rather than later
  • Pros: faster, cheaper, gov’t evidence gathering advantage, deterrence
  • Cons: loss of control, no damages, fickle nature of gov’t priorities, inability to pursue civil actions or use criminal to coerce settlement

Panel Regarding Library Digitization of Books: Marybeth Peters, Jan Constantine (Authors Guild); Jack Bernard (U Michigan), Joseph Petersen, Ed Rosenthal

  • Demo of HathiTrust website www.hathitrust.org
  • Orphan works project has been abandoned for now because expensive and poorly implemented
  • Discussion of advantages of digitization for the disabled and for preservation
  • Debate concerning whether new legislation is needed or proper to analyze under existing structure as Supreme Court did in Sony
  • HathiTrust is adamant that digitization project is fair use

Highlights of the 2013 Copyright Society Annual Meeting

Highlights from the first days sessions at the annual meeting of the Copyright Society of the USA, Bolton Landing, NY June 10, 2013.

Maria Pallante, Register of Copyrights gave an update on activities at the Copyright Office.

  • Cell phone unlocking requirements will be continued, likely by reinstating recently expired exemption in the DMCA, although present DMCA exemption is not as effective as consumers think.
  • Hearings regarding review and potential update of copyright law will begin in the fall, areas of interest are: (1) scope of exclusive rights; (2) updating exceptions and limitations; (3) first sale; (4) formalities; (5) orphan works; (6) mass digitization; (7) updating enforcement provisions; (8) review DMCA; (9) statutory damages; (10) small copyright claims; (11) educational use; (12) litigation reform; (13) a few other issues on a slide she went through too fast for me.
  • Copyright Office Budget is 2/3 fees, 1/3 appropriations, Maria feels gov’t should pay, entire copyright system should not be funded by copyright owners because various stakeholder benefit, fees would increase tremendously; reserve fund is important.
  • Copyright Office is reorganizing, adding senior positions:  Director of Repositories; Director of Information and Education.
  • Copyright Office is studying and making recommendations for updating Copyright Office technology and databases.
  • Copyright Office Compendium III is coming.
  • Copyright Office staff training lunches with market participants will be open to the publics
  • Podcasting Nimmer 50th anniversary events, hoping to podcast more events, video will be up on Copyright Office site in 2 weeks
  • Maria’s comments on the utility of reviewing the Copyright Act are available on the Copyright Office website:  www.copyright.gov

There was a panel discussion on authorship and fixation, focusing on Chapman Kelley v. Chicago Park District (landscaping is not copyrightable)

  • Hillel Parness of Robins Kaplan moderated, Chapman Kelley was on the panel, with Rob Kasunic of the Copyright Office, June Besek and Martin Schaefer
  • Courts ruled against Kelley holding that he did not have a copyright in his landscape design, district court held that wildflower works were not original because natural; court of appeals said not fixed because perishable  Hillel did a nice job using Monty Python and the Holy Grail to set the scene, clearly fair use and the highlight of the day;
  • Discussion of the bowl of food case
  • What about ice sculpture?  Clearly perishable, subject to copyright?
  • Books written by computer?  The Policeman’s Beard
  • Monkey takes a photograph, copyrightable? Does the author have to be human?
  • Chapman Kelley offered the following.  He is a painter. Wildflower works started as a way to make a larger painting than could be done on canvass.  Live material v. dead material was an issue at trial.  He paints on canvas with natural pigments, those degrade over time, so do all paints. Effect of decision on artists is that it has become a damper, artists feel this a limit on art.
  • June Besek gave a historic overview of fixation and authorship issues.
  • Rob Kasunic – courts are struggling with these issues, legislation not entirely clear, offered a number of works for consideration of issues of fixation and originality, would gardens be published or unpublished?
  • Martin Schaefer – fixation typically not required in Europe, works of garden art specifically included in some countries, Russia for example, but not France or Italy, in Germany, moral rights applied to garden works.

Bob Clarida gave his annual update of last year’s copyright highlights.  With respect to substantial similarity he discussed Blehm v. Jacobs and Harney v. Sony Pictures, both discussed and illustrated in Substantial Similarity in Copyright Law.

Making the Digital Deal, panel featuring Lisa Weiss, Stephen Dallas (Warner Chappell), Steve Englund, Elizabeth Moody (YouTube), Alexis Shapiro (The Orchard) focusing on key deal points in digital licenses

  • Scope of grant of rights – defining authorized devices can be complicated, sublicensing rights to have use on third party sites, content owners still trying to limit rights granted to what is actually necessary, service like the Orchard needs to navigate both sides, threshold question is what exactly is the licensee doing and how may that foreseeably change, music publishers reluctant to give “all rights necessary”, service should know the rights it needs, don’t want to have to renegotiate every time service evolves, MDY v. Blizzard re: cheats, condition must go to one of the exclusive rights or involve payment, everything else is a covenant which only give rise to damages for breach
  • Scope of content commitment – licensees want to know they’re getting as much content as competitors, limited exclusives short of most favored nations, if you want all content you have to promise to actively distribute all
  • Holdback and takedown – negotiate takedown when licensor loses rights or if third party claims licensor does not have rights, need time frames for takedown, YouTube allows licensors to block user video
  • Representations, warranties and indemnities – aggregator indemnifies licensed services, gets similar warranties and indemnities from its licensors, for startups can cap liability on indemnity but carve out crucial indemnities from cap, indemnity only as good as indemnitor
  • Data reporting and sharing – seeking uniformity of reporting and maintenance of data, aggregate v. personally identifiable information, U.S. v. international, inconsistent reporting requirements is a problem
  • Transcode – right to change into different formats
  • Window – grant a right for a limited “window” of time
  • Provide for what happens to digital files at the end of the term

There is no lobster dinner this year to the disappointment of many.  Joe Salvo, President CUSA, took the blame and apologized.  Barry Slotnick offered to bean him in the annual softball game.

 

 

Product Manuals and Copyright

Equipment manufacturers can gain a measure of control over distributors and repair shops by registering and enforcing copyrights in their product manuals. Notwithstanding their highly factual and utilitarian purpose, courts typically hold that manuals involve enough creativity to be copyrightable. Such creativity may be comprised of the wording of the text, the creative elements of photographs of the machine’s parts, or the selection, coordination or arrangement of the material in the manual. The Copyright Office willingly allows copyright registration of manuals, and by registering the manufacturer not only positions itself to sue competitors or unauthorized repair shops who copy the manual, the manufacturer gains the added advantage of a presumption that the manual is in fact copyrightable. Court challenges to the copyrightability of manuals generally have failed, even where the manufacturer is engaged in a regulated industry, such as the aircraft industry, and certain aspects of its manuals are required by government regulations.

Although the copyright in a manual does not prevent third parties from disseminating the facts contained in the manual, by gaining control over dissemination of the manual itself, the manufacturer makes it difficult for unauthorized personnel to access those facts. Manufacturers can strengthen their control by licensing their manuals to authorized distributors and repair shops only, and including in those licenses prohibitions on further copying or dissemination, or even limiting access to password protected Web sites, typically without running afoul of antitrust laws. Manufacturers can go even further by identifying information necessary for repair as trade secrets, and even further restricting its dissemination. Whatever degree of control the manufacturer chooses, exercising such control makes it difficult for unauthorized repair shops to compete with authorized ones, because the unauthorized cannot access the information needed to make the repairs without reverse engineering the product. That, in turn, may make licensed franchises more valuable, although it may ultimately harm sales because consumers will want to purchase products that can readily be fixed by numerous repair shops.

Manufacturers must make economic choices concerning the appropriate control to exercise over information necessary to repair their products. Copyright registration offers a cheap and easy way to enable reliable enforcement of that control. Manufacturers should consider sharply delineating versions of their manuals and securing copyright registration for each version.

New York Office

On the one year anniversary of Osterberg LLC, I’m pleased to announce the opening of a New York office at 112 West 34th Street, 18th Floor, New York, NY 10120.

2013 Substantial Similarity Shipped

I sent the 2013 update of Substantial Similarity in Copyright Law to the publisher PLI earlier this week.  This will be the tenth anniversary edition.  We’ve included more illustrations of the works at issue in the cases discussed, a significant revision of the chapter on useful articles, and more.  Look for it in on the PLI website and Amazon around May or June.

Work For Hire Part II – Scope of Employment

Following up on my last post concerning works made for hire, this post tackles the question: When is a work “prepared by an employee within the scope of his or her employment?”

The answer is determined based on common law principles as set forth in the Restatement (Second) of Agency. The three criteria are: (1) whether the work is of the kind of work the employee is employed to perform; (2) whether the work occurs substantially within authorized work hours; (3) whether it is motivated, at least in part, by a purpose to serve the employer.

When evaluating whether the work is of the kind the employee is employed to perform, courts generally have defined the scope of the employee’s work very broadly, holding that it encompasses work that is “incidental” to the employee’s work. Courts typically refer to comment b of Section 229 of the Restatement (2d) of Agency, which reads:

An act may be incidental to an authorized act, although considered separately it is an entirely different kind of act. To be incidental, however, it must be one which the servant is employed to perform. It must be within the ultimate objective of the principal and an act which it is not unlikely that such a servant might do. The fact that a particular employer has no reason to expect the particular servant to perform the act is not conclusive.

Applying that principle, one court held that software development work performed by a doctor employed as a research fellow was incidental to the work he was hired to do because his job description recited: “The fellows will acquire skills required to organize, administer, and direct a critical care unit, and to work effectively as a member of a multidisciplinary team.” The software, the court explained, helped organize and administer the critical care unit. In another case, a court found that computer programs developed by the supervisor of a quality control laboratory qualified as a work for hire because the supervisor was responsible for the organization and updating of the laboratory. The court held that “development of the computer programs was at least incidental to his job responsibilities because it was within the ultimate objective of the principal and an act which it is not unlikely that such a servant might do. ”

Of the three factors, the second, whether the work occurs substantially within authorized work hours, typically is the least important. Plenty of courts have found works created after hours to be works for hire. With respect to the third factor, it is important to remember that it is not necessary that the servant’s only motivation be to help his or her employer; the motivation only needs to be partial.