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Category Archives: Software

SaaS Providers – What Exactly Is Your Business?

Is a SaaS provider’s business making software, or performing the service the software automates? If you are a SaaS provider (or a lawyer who represents SaaS providers and licensees) you will likely answer: both. It’s Software as a Service, dummy.

Not so fast, at least not in the trademark world. Recent events involving the SaaS provider JobDiva in the USPTO and the Federal Circuit reveal that the answer may not be both in every instance. Whether a SaaS provider can establish trademark rights in both categories depends on whether the provider can demonstrate that a user would associate the trademark with the service performed by the software, as opposed to just the software. In other words, the question is whether the provider’s use of its marks creates in the minds of purchasers an association between the mark and the services, as opposed to just the software.

JobDiva makes software that automates certain aspects of the recruiting process. The Federal Circuit described JobDiva’s business as follows:

JobDiva’s software generally provides a database of employment applications that a hiring manager or recruiter might use to fill a job opening. The software performs multiple functions to facilitate this job filling process. It employs automated “harvesters” to find potential job candidates by automatically scraping job boards and aggregating relevant resumes. And it reviews and analyzes job candidates’ resumes to determine if any candidate’s qualifications match the job’s requirements. It thus “replaces a tedious manual search” previously performed by hiring managers or recruiters. JobDiva also helps hiring managers directly communicate with job candidates. For instance, it permits hiring managers to post job openings in a job candidate portal. This candidate portal may also be embedded into a company’s website. The software further assists job candidates by recommending potential openings to the candidates based on skillsets and provides them automated resume feedback.

JobDiva registered the word JOBDIVA as a trademark for both computer services and recruiting services. When it petitioned the USPTO to cancel rival JobVite’s trademark registration, JobVite counterclaimed for cancellation of the JOBDIVA mark for recruiting services. The Trademark Trial and Appeal Board (“TTAB”) cancelled the registration as it pertained to those services (leaving the mark intact for software). The TTAB reasoned that it was insufficient for JobDiva to offer software that performed personnel placement and recruitment functions. To be engaged in the recruiting business, as opposed to the software business, JobDiva would have to offer personnel placement and recruitment services in addition to providing software.

On appeal, the Federal Circuit disagreed and sent the case back to the TTAB for further consideration.  The court held that what is required is a fact-intensive inquiry into likely consumer perception. “For example,” the court wrote:

in this case, the Board should consider the nature of the user’s interaction with JobDiva when using JobDiva’s software, as well as the location of the software host. If JobDiva sells its software to a customer who hosts the software on its own website and a third-party user’s interactions appear to be with the customer (as opposed to JobDiva), it is unlikely that the customer or the third-party user would associate the JOBDIVA mark with a service performed by JobDiva. But if the software is hosted on JobDiva’s website such that the user perceives direct interaction with JobDiva during operation of the software, a user might well associate JobDiva’s marks with personnel “placement and recruitment” services performed by JobDiva.

So, the important question seems to be: what services do your customers think you provide?

Clickwraps and Browsewraps: What’s the Difference?

Clickwrap and browsewrap agreements are documents typically used by website owners to mandate the terms on which users may access their websites. The difference between the two is the manner in which the user agrees to the terms. Clickwrap agreements require an overt act of consent by the user. Typically, the user must click a button to signify acceptance. Browsewrap agreements do not require any overt consent. Rather, the website owner posts the terms of use on the site and asks that users not access the site unless they agree to those terms.

Courts treat the two differently because of the difference in the manner in which the user accepts the terms. Clickwrap agreements are generally enforceable because the user’s click is an affirmative act indicating acceptance. The enforceability of browsewrap agreements depends on the prominence of the browsewrap terms. The more prominently the terms are displayed, the more likely a court will rule that users are bound because they must have seen the terms (or deliberately ignored them) and therefore a user’s continued use of the site demonstrates consent to the terms.

IP Licensing Checklist

Here is a general checklist of things to consider when licensing IP, in no particular order. If you spot any significant omissions, please comment.

1)    What precisely is being licensed?

2)    What will be the term of the license?

a)     any automatic renewal?

b)    options?

c)     fee changes in subsequent license periods?

d)    termination rights?

3)    What will be the fee?

a)     how calculated? flat fee? percentage of sales? gross or net?

b)    how often paid?

c)     what currency?

4)    What territory?

5)    Exclusive or non-exclusive?

6)    Licensee’s Rights and Duties

a)     Accounting

b)    Reporting

c)     Branding

d)    Training

e)     Updates

f)     Quality control

g)     Right to modify materials?

h)    Who owns licensee modifications?

i)      Any right to sublicense?

j)      Any right to assign license?

k)    Any sell off of any materials at the end of the term?

l)     Any minimum sales quota or other duty to exploit the IP?

m)  How will complaints be handled?

7)    Licensor’s Rights and Duties

a)     Warranties or Indemnities (duty to defend licensee?)

b)    Training

c)     Updates

d)    Provision of materials

e)     Trouble shooting?

f)     Right to inspect/monitor/approve product and/or marketing materials

8)    Choice of law, choice of forum, mediation or arbitration?

9)    IP registrations, how will they be handled?  Licensee acknowledges licensor’s IP?

10)  Who sues infringers?  If license is exclusive, will licensee have any right?

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