by Lee Gesmer | Jun 19, 2007 | Technology
When I began to practice in the area of technology law area in the early 1980s one of the issues we often brought up with clients was the need to get clear ownership assignment of their technology. We wrote articles about this, spoke on the topic, and generally beat the subject to death in publications and seminars.
It’s surprising (but not too surprising) that seemingly sophisticated businessmen still don’t focus on this.
Two cases we recently settled are illustrative of this issue.
In the first case, a start-up company hired a part-time/consultant level programmer. He ultimately became an “employee,” but the company allegedly failed to fulfill some of the obligations in his employment agreement, and failed to treat him as an employee in all respects, raising an issue as to whether he truly became an “employee” for legal purposes. In any event, even under the best of circumstances, some of the programming he did occurred before he became an “employee.”
After the programmer left the company under unpleasant circumstances, he claimed ownership of the software. Following substantial and expensive litigation our firm was brought into the case and we successfully settled it shortly thereafter (based on the ongoing costs of the litigation and our assessment of the risks to our client). The settlement included a full assignment by the programmer, but it cost the client a great deal of money (for a start-up) in fees, settlement monies, and time away from the client’s core business. The client had a very strong argument that, regardless of the plaintiff’s status as a consultant or an employee, his actions had created an implied, unrestricted perpetual license. However, even if the client had won on this theory (after summary judgment motions and possibly a trial), there still would have been uncertainty over the client’s ability to transfer ownership of the software product, either through a direct sale of the software or a sale of the company. The legal uncertainties associated with this issue were what led to the settlement. The price: $200,000 for settlement alone.
In the second case a well-established client (new to our firm), experienced almost exactly the same situation. Here, the programmer had been “leased” to our client by a small employment agency. After the programmer quit, the agency (not the programmer) claimed ownership or co-ownership of the software developed by their employee. Our client had failed to enter into an agreement with the agency assigning ownership of work performed by agency employees to our client. The price, reached in settlement before suit was filed: $300,000 in settlement monies.
Between these two clients, this was $500,000 in wasted money, not to mention legal fees, costs and time away from their businesses, which adds substantially to this cost.
Remember: If you own a company that develops intellectual property, get a written assignment of ownership from everyone who develops intellectual property for you. The assignment should include copyright, patent and trade secret rights. It’s that easy.
by Lee Gesmer | Jun 6, 2007 | Miscellaneous
A few months ago I wrote a blog entry titled “Jury Trials In Massachusetts – “Not”
Today I received an email/promotion from the ABA promoting some IP books and treatises. The email also contained these statistics. Since they come from the ABA IP Litigation Committee, I give them a high degree of reliability:
Number of IP cases filed in 2002: 7,445
Number resolved by trial verdict: 140
That’s 1.9% of IP cases filed in 2002 resolved by trial verdict. The balance were either decided on summary judgment or settlement. Discouraging for lawyers who like to get into court, to say the least. No one can forsee the future, but it would surprise me if this trend reverses itself in the lifetime of anyone reading this post. Civil trials have become too expensive and too risky to “go the distance”. Society is rapidly coming up with ways to avoid trials in the commercial context: arbitration, mediation, better contracts and agreements to start with, higher sophistication among decision makers, and the realization that litigation is often a losers game for both side.
by Lee Gesmer | Jan 30, 2007 | Copyright
Bill Patry, Senior Copyright Counsel at Google (how’s that for a great job), emailed me and asked me to mention the publication of his new copyright treatise, Patry on Copyright.
I like the fact that Mr. Patry said this about his 5,800-plus page, $1500 treatise: “ The book is also chock full of wikipedia references, anecdotes, riffs on logic, congitive linguistics, etc. It is many books in one.”
Although I haven’t seen this treatise yet, I hope that it is a change from Nimmer on Copyright, which is so densely academic as to often be unusable by practitioners. Somehow, I doubt that we’ll ever see Nimmer referencing Wikipedia.
I would also add that it may be time for the intellectual property fathers of the 20th century, whose treatises have become so calcified and entrenched with the courts that it’s hard for anyone to compete with them, to make some room for the next generation. After all, Melville Nimmer died in 1985, and his treatise is now edited by his son, David Nimmer. Roger Milgrim (Milgrim on Trade Secrets) , Donald Chisum (Chisum on Patents) and Thomas McCarthy (McCarthy on Trademarks) are in their 60s. Bill Patry, by comparison, is only in his mid-50s. And, he has a blog. And, a sense of humor.
For some amusing repartee between Patry and readers of The Volokh Conspiracy, click here.
by Lee Gesmer | Jan 24, 2007 | Business Lit. Session
At a Boston Bar Association lunch program today, Judge Allan Van Gestel informed the audience that he would not put himself on the “recall” list at the end of this year. In other words, at the age of 71 Judge Van Gestel will be retiring from the bench at the close of 2007, after running the session (with the help of some other Superior Court Judges) since its formation in 2000. For some background on the recall issue, click here.
It looks like Judge Gants (who has been the second judge in the BLS (“BLS2”) for the last year or so) has been groomed to take the helm of the BLS after Judge Van Gestel departs, although this is by no means a certainty. If Judge Gants does take over BLS1, it remains to be seen who will take his place in BLS2.
by Lee Gesmer | Dec 1, 2006 | Trademark
Lawyers love to have cases on the “cutting edge” – they thirst for it in law school, and brag about it when they get into practice. No law, no precedents, difficult issues? Bring it on! they say.
Clients, of course, feel exactly the opposite – no law, no precedents, no predictability? How is that possible?, they complain.
For the last few years Internet search engines have repeatedly found themselves astride this proverbial cutting edge. One of the “issues de jour” faced by the search industry is the sale of advertising triggered by trademarks owned by a competitor. Is it a violation of trademark law for Nissan to pay Google to have ads for Nissan appear when you search for Ford? (The last time I checked this actually occurred).
In evaluating legal challenges to this practice courts have focused on a somewhat narrow legal issue: is a search company’s sale of a company’s trademark as a keyword triggering third-party advertising “trademark use”? The answer to this question is critical because “trademark use” could give rise to legal claims, while its absence precludes them. This issue has confounded the courts, as several recent cases, summarized below, illustrate:
- In the recent case of 800-JR Cigar, Inc. v. Goto.com, Inc. the District Court of New Jersey ruled that Goto did make “trademark use” of JR’s “JR Cigar” trademark and allowed its claims for trademark infringement and dilution to proceed. Specifically, the Court held that Goto’s pay for priority search engine results made “trademark use” of JR’s marks in three ways: by selling the right to display competitive advertising in response to searches for JR’s trademarks, by ranking the paid competitors’ advertising ahead of the “natural” search results for JR’s marks, and through Goto’s “Search Term Suggestion Tool” which identified “JR Cigar” and JR’s other marks as effective search words and marketed them to competitors. In support of its holding, the Court relied on several decisions from other jurisdictions including the Eastern District of Virginia case of Government Employees Insurance Co. v. Google, Inc. and the Ninth Circuit decision in Playboy Enterprises, Inc. v. Netscape Commc’n Corp., both of which reached the same result with respect to “trademark use.”
- In another recently decided case involving similar facts, the Northern District of New York reached the opposition conclusion in Rescuecom Corp. v. Google, Inc. Here, the Court granted Google’s motion to dismiss Rescuecom’s trademark claims because Rescuecom could not show actionable “trademark use.” The Court made this finding after analyzing two of Google’s advertising practices: its use of the plaintiff’s “Rescuecom” trademark as a keyword initiating competitors’ advertising for a fee, and its “Keyword Suggestion Tool” that recommends to potential advertisers which keywords, including plaintiff’s mark, will yield the best results. Ultimately, the Court found that Google did not use Rescuecom’s mark in connection with any goods or services, a legal requirement for trademark claims, since Google’s use of the “Rescuecom” mark was strictly internal to Google’s computer systems and not displayed by Google in connection with its advertising practices. As support for its conclusion the Rescuecom Court relied on the Southern District of New York case of Merck & Co. Inc. v. Mediplan Health Consulting, Inc. and the Second Circuit decision in 1-800 Contacts v. WhenU.com, Inc.
Eventually, of course, a consensus opinion on this issue will emerge and this particular “cutting edge” of trademark law will become a thing of the past. Until then, companies that use search engine key word advertising (or whose competitors do so) need to remain aware of this issue.
