Open Source: IT, IP & Business

August 16, 2008 – 11:11 am

I signed up to talk at BARcamp Chicago on August 16 about Intellectual Property (IP) Law and Open Source. Just before summer, I had been invited to speak for a software user group and put up a blog post on IP and Open Source. That earlier speech spanned the categories of IP: Patents, Trademarks, Copyrights, and Trade Secrets; and Licensing aspects including the framework of Open Source Software (OSS).

Current Presentation

For BARcamp, I wanted to tighten and extend the coverage of IP and Open Source in software development. Through conversations within the information technology (IT) community of Chicago and beyond, a few themes developed. One focal point is on helping, rather than assuming, audience familiarity with the cornerstone concepts of software IP within Open Source licensing. On the basics, we may refer to my earlier post and readers may wish to look there if any question exists about the correctness of John Hasler’s replies in this exchange yesterday from the newsgroups, where we understand RMS to mean Richard M. Stallman. A start from considerations at ground level may benefit attendees and readers more than a deep dive into legal categorization or complexity. At the same time, a number of recent legal and business developments have clamored for attention, so I am in turn adding coverage of current headline-grabbers. My talk is structured around IP and business considerations in Open Source.

IT - Software

Technological interests guide many of our businesses. Further overlap in our backgrounds may come from engineering and science degrees as well as programming experience — for me: C++ (ECE & CS) and Fortran (ME). We share some experience in programming with high-level, assembly, and machine languages; study of operating systems; plus use of modeling, testing, and design tools in computer architecture, systems integration, and semiconductor chip fabrication.

Technology coupled with business is embedded in my work. Abstraction layers, object-orientation, pipelining, handoffs, and workarounds are concepts I also carry into legal practice. With a pull toward innovation’s overlap with law and business, I help innovators and businesspeople handle commercial contexts and valued concepts. For Open Source licensing and other IP transactions, an understanding of relevant technology is useful in crafting, negotiating, and interpreting the controlling language.

We know Open Source is attracting attention and financing from businesses of all sizes. This is also supported by comments from Rich Wellner in the newsgroups on Wednesday. Even my blog runs on an Open Source platform. What’s new in technology and promising in business catches my attention. Information technology for many of us is a tool as well as the subject matter of business transactions.

Big Blue & Linux®

Bob Sutor spoke (1.7MB) this month at LinuxWorld® about IBM’s vision to help build a dynamic, integrated, and intelligent e-business infrastructure through support of the Linux® Open Source, Unix-type operating system. Big Blue (IBM) is seeking help from the technology community at large and a wide adoption of open standards. Sutor’s prediction calls for “Green” (environmentally friendly) support of Open Source because of energy savings from server consolidation, virtualization, load balancing, and efficiency in resources management.

IP - Intellectual Property Law

Remember levels of abstraction and object-orientation? The IP of Open Source in various ways resembles a view that something is protected –yes, first protected and then given freedom– without looking too closely inside the IP box, where expansive licensing terms broaden the prospective coverage. Rather than sound a Chicken Little alarm, I will note some practical approaches and details so you may understand uncertainty exists and have a trigger for talking further when/whether/how preparation may make sense for you.

Under the Open Source IP Hood - Drilling Down to Uncertainty

Copyright protects software as an original work of authorship. The copyright owner generally has exclusive rights and abilities to authorize others to exercise the rights of reproduction, distribution, public performance, and display. The copyright protects against a copy that amounts to an unauthorized, substantially similar work.

The software code’s form of expression, not the idea behind the code, is protected. As stated in 17 U.S.C. § 102(b):

In no case does copyright protection for an original work of authorship extend to any idea, procedure, process, system, method of operation, concept, principle, or discovery, regardless of the form in which it is described, explained, illustrated, or embodied in such work.

Protection of the idea, while unavailable through Copyright alone, could be pursued through one or more of Licensing, Patents, and/or Trade Secrets.

Open Source relies on Copyright plus Licensing for protection and permission. In various situations, businesses may coordinate an approach to employ Open Source Licensing –permissions– in tandem with Proprietary mechanisms –rights– (including Patents and/or Trade Secrets). In Open Source “free” refers to freedom, not price. People who redistribute free software are encouraged to charge as much as they wish or can.

Derivative Work

The copyright owner’s rights extend to the preparation of derivative works, 17 U.S.C. § 101. The full spectrum of what constitutes, and perhaps more importantly what does not constitute, a derivative work is unsettled. In the newsgroups last Sunday, Hyman Rosen offered his opinion in defining derivative works.

Licensing

A prominent class of free software licenses is the GNU General Public License (GPL) including its versions 2 and 3 (GPLv2 and GPLv3). The open source aspect is the source code must be made available. You can charge any fee you wish for distributing a copy of the software, with a pricing limitation that the fee to download the source code cannot be greater than the fee to download the binary file. After someone pays your fee, they are free under GPLv2 or GPLv3 to release the software to the public with or without a fee.

Following are the most widely used Open Source licenses. Sutor predicted these licenses would continue to dominate over 90% of the Open Source projects during the next decade.

In case you are wondering about the difference between GPL and LGPL, the GPL makes a library available for free programs only, and the Lesser GPL (LGPL) permits use of the library in proprietary programs.

Expression is One of a Plural Set

The principle that copyrights protect only expressions, and not ideas, is often referred to as the idea-expression dichotomy. Under the merger doctrine in the US, copyright protection is unavailable for the expression of an idea where the expression is so intimately tied to the idea that little possible variation remains for expression of the same idea.

Analysis

A helpful view is how a judge (Jon Newman in 1999) had commented about sorting out Copyright protection for particular software.

Legal Milestone - Jacobsen v. Katzer

On Wednesday, as a big boost to Open Source, the Federal Circuit in Jacobsen v. Katzer (Fed. Cir. August 13, 2008) supported enforcement of Open Source licensing terms under Copyright.

Copyright holders who engage in open source licensing have the right to control the modification and distribution of copyrighted material.

Endorsement of Open Source Model

Like Big Blue, the court recognized:

Open Source software projects invite computer programmers from around the world to view software code and make changes and improvements to it. Through such collaboration, software programs can often be written and debugged faster and at lower cost than if the copyright holder were required to do all of the work independently. In exchange and in consideration for this collaborative work, the copyright holder permits users to copy, modify and distribute the software code subject to conditions that serve to protect downstream users and to keep the code accessible.

The court stated:

The lack of money changing hands in open source licensing should not be presumed to mean that there is no economic consideration, however. There are substantial benefits, including economic benefits, to the creation and distribution of copyrighted works under public licenses that range far beyond traditional license royalties. For example, program creators may generate market share for their programs by providing certain components free of charge. Similarly, a programmer or company may increase its national or international reputation by incubating open source projects. Improvement to a product can come rapidly and free of charge from an expert not even known to the copyright holder.

Court’s Reasoning

The court characterized the heart of the argument:

Generally, a copyright owner who grants a nonexclusive license to use his copyrighted material waives his right to sue the licensee for copyright infringement and can sue only for breach of contract. If, however, a license is limited in scope and the licensee acts outside the scope, the licensor can bring an action for copyright infringement.

The court’s flow in reasoning follows.

The Artistic License states on its face that the document creates conditions: The intent of this document is to state the conditions under which a Package may be copied. The Artistic License also uses the traditional language of conditions by noting that the rights to copy, modify, and distribute are granted provided that the conditions are met….

The conditions set forth in the Artistic License are vital to enable the copyright holder to retain the ability to benefit from the work of downstream users….

…The copyright holder here expressly stated the terms upon which the right to modify and distribute the material depended and invited direct contact if a downloader wished to negotiate other terms. These restrictions were both clear and necessary to accomplish the objectives of the open source licensing collaboration, including economic benefit….

…

…The clear language of the Artistic License creates conditions to protect the economic rights at issue in the granting of a public license. These conditions govern the rights to modify and distribute the computer programs and files included in the downloadable software package. The attribution and modification transparency requirements directly serve to drive traffic to the open source incubation page and to inform downstream users of the project, which is a significant economic goal of the copyright holder that the law will enforce. Through this controlled spread of information, the copyright holder gains creative collaborators to the open source project; by requiring that changes made by downstream users be visible to the copyright holder and others, the copyright holder learns about the uses for his software and gains others’ knowledge that can be used to advance future software releases.

The Buzz

From Jay Lyman:

The ruling, which centered on the Artistic License, made it clear that regardless of whether software is open source or proprietary, its creators have a right to attach requirements and conditions that govern its use and distribution. So to those who have argued that the GPL or other open source licenses might be thrown out of court, there is now more concrete proof. Open source software and its licensing are not some strange legal realm. Instead, GPL and other open source licenses base much of their meaning on existing, accepted laws, particularly U.S. copyright law and with GPLv3, international copyrig[h]t law.

From Mark Radcliffe:

The CAFC reversed the District Court’s decision and its reasoning is very helpful for the open source community. The court found that the limitations in the Artistic License were “conditions” on the scope of the license and, thus, Katzer was liable for copyright infringement (as well as breach of contract). The CAFC noted that the Artistic License imposed its obligations through the use of the words “provided that” which is generally viewed as imposing a condition. Although the reasoning is limited to the Artistic License and the interpretation of each open source license will depend on the wording of its provisions, this decision is a welcome change to the District Court decision.

From Tim Lee:

[T]he appeals court seemed to understand that reciprocity lay at the heart of free software licenses. Just as traditional software firms thrive on the exchange of code for money, free software projects thrive on the exchange of code for code.

From Jason Haislmaier:

For those companies that have elected not to comply with open source licenses or, as is the case with many companies, have chosen to remain unaware of the open source software licenses to which they may be subject, Jacobsen should be all the incentive that is necessary to adopt and implement a sound open source license compliance program.

Red Hat Instructive Point

Switching gears to drive to an instructive point about licensing terminology in Open Source, let’s touch briefly on a patent infringement settlement (1MB) reached by the Open Source company Red Hat. Digging through the details, Red Hat’s own press draws attention to the definitions and interconnections of terminology, including the expansive “Derivative.”

Red Hat Patent Litigation Backgrounder

First, I will lay out Red Hat’s brief summary of the litigation.

The lawsuit was originally filed by Firestar Software, Inc. (“Firestar”) in 2006 in federal court in the Eastern District of Texas (Civil Action No. 2-06CV-258). It alleged violation of U.S. Patent No. 6,101,502 (“’502 patent”), which relates to a method for interfacing an object-oriented software application with a relational database to facilitate access to the relational database. Firestar contended that Hibernate, a JBoss product, infringed the ‘502 patent. Red Hat denied that allegation and vigorously contested the claim.

Next, Red Hat’s summary of the outcome.

Red Hat ha[s] settled a patent infringement case with an agreement that was significant in fashioning a new model for protection for the open source community. In the agreement, we obtained coverage not only for Red Hat, but also for upstream and downstream members of the community involved in developing, using, modifying, and distributing code included in Red Hat’s products and in the community projects that Red Hat sponsors, including Fedora. We demonstrated that it is possible to satisfy the letter and spirit of GPL licensing in resolving patent litigation.

In addition, Red Hat highlights use of broadening language in the settlement license.

This already-broad class of software is then expanded further by the definitions of Red Hat Derivative and Combination Products, which include software derived from code distributed under a “Red Hat Brand” (which is broadly defined), and combinations of such code with other code. Because this includes downstream derivatives and combinations based on projects developed upstream from Red Hat, JBoss, and Fedora, it covers not only software distributed by us, but also software from such projects that is distributed by our competitors such as Novell and Sun Microsystems under their own brands.

Sample “Derivative” Red Hat Broadening Language

Our selected lesson centers on Item 1.5 in the settlement agreement definitions:

“Derivative” means any derivative work or any other product, process, service, or code that is based on another product, process, service, or code.

Lesson

The recommendation relates to going beyond the language of Copyright law to fashion a meaning and coverage as desired. Here, “derivative” is stated as “any” derivative work “or” alternative terms plus an ending clause fleshing out an expansive “based on another product, process, service, or code.”

Business

Commercial Open Source solution providers are well-served to shift the focus from producers to consumers. The Open Source Think Tank in February highlighted that commercial Open Source is being driven by customers rather than the community, as a divergence from the past. The expectations of commercial customers are the same regardless whether the solution is proprietary/closed or Open Source.

  • Industry-standard licensing terms
  • Comprehensive support offerings
  • Training
  • Consulting

Bright Lines

In June, Bruce Perens shared insights:

The key is knowing how to draw bright lines between different parts of the system. That’s a legal term, and in this case it means a line between the Free Software and the rest of the system, that is “bright” in that the two pieces are very well separated, and there is no dispute that one could be a derivative work of the other, or infringes on the other in any way. All of the Free Software goes on one side of that line, and all of the lock-down stuff on the other side.
…
…But today, the job of engineers is to build derivative works by combining units of intellectual property owned by third parties. That’s not what they’re trained for, and it’s a mine-field of potential litigation for every company that puts software in its products - whether or not that software includes Open Source. Without an effective partnership between legal and engineering, your company walks that mine-field every day.

Financial Engineering

Another area of interest involves IP for the financial services industry.

Text Copyright © 2008 Bob Brill

Posted in GNU General Public License (”GPL”), GPLv2, GPLv3, business method patent, business sense, copyright derivative works, copyright licensing, copyright merger doctrine, copyright substantial similarity, financial engineering, idea-expression dichotomy, open source software, original work of authorship, patents, proprietary software, trade secrets | Comments

Technology Policy Panel Discussion

July 16, 2008 – 11:41 pm

I received a request to help write a summary of the panel discussion from the Illinois Technology Partnership Kick-Off Policy Luncheon on July 16, 2008 for inclusion in The May Report.  My takeaway notes are structured around the speakers.

Maura O’Hara, Executive Director of the Illinois Venture Capital Association (IVCA), spoke about successes in asking for a level playing field for investment in Illinois.

  • educate legislators on the positive economic impact of venture capitalists (VCs)
    • 75% of dollars from a VC investment goes to payroll
  • follow legislation and advocate/litigate pro-Illinois fund positions
    • lobby in Illinois at state level only, not federal level
    • seek to avoid excessive requirements on VC investments
    • previously defensive and reactive
    • currently proactive
      • getting to know legislators
      • participation during drafting of legislation
  • never ask State of Illinois for money or favoritism for investment
    • premise is the Illinois technology industry can compete
    • state pension staff limited
      • prefer large single investment
      • encouragement needed to consider the many smaller funds in Illinois
  • VCs tend to keep quiet when the VCs have identified a good sector
    • seek exponential returns such as from information technology
    • in energy area
      • concentrate on saving energy from existing sources
      • development of technology for generating energy from different sources requires a greater investment and possibly a different type of investor than VC
  • Engineering schools can elevate local workforce by evaluating curricula to deliver skill sets greater aligned with desires of technology companies

Bret Swanson, Senior Fellow and Director of the Center for Global Innovation at the Progress and Freedom Foundation, spoke about movement to an entrepreneurial, knowledge-based economy.

  • Pace of change measured by annual Internet growth computed at 58%
    • Technological enablers related to Moore’s law
    • YouTube is having 10 hours of video uploaded per minute
    • Bandwidth usage:  home video, online gaming & virtual worlds
    • Year 2015 is projected to have a zettabyte (ZB) of Internet traffic
  • States with a public policy that is flexible and entrepreneurial will win and drive job growth
  • Need incentives to build infrastructure for access by all citizens
    • Worldwide most people access Internet by mobile phone, which may be route for currently underserved communities
    • Avoid short-sighted regulation
  • Midwest needs advantage of better policy to make up for history of technology business successes on the Coasts
  • Entrepreneurs should think how to “waste” (exploit) the coming increases in bandwidth
    • 3G -> 4G, cloud computing over mobile devices

Text Copyright © 2008 Bob Brill

Posted in business sense, public policy | Comments

Intellectual Property in an Open Source World

June 11, 2008 – 2:01 pm

The JoomlaChicago Software Community Group asked me to speak about intellectual property (”IP”) law.  The organization of my presentation aims to hone an understanding of the fundamental categories of IP, and move into licensing aspects.  The materials may be helpful to you for shining light around corners.

Trade Secret

Economically advantageous and self-preserved secret.  Protection is against breach of confidence for wrongful disclosure or misappropriation.  Potentially unlimited duration countered with possible instantaneous termination.  Competitors may proceed upon honestly and lawfully discovering or developing the same information, spelling the end of that trade secret information.  In the event of violation of a duty of confidence, recourse would be available against the individual or entity that disseminated the information in violation of the duty, although the cat would be out of the bag as far as the previous secrecy with respect to law-abiding others.

Balcony View

A trade secret protects valuable and secret information that provides an economic advantage.  The trade secret owner self-administers the trade secret protection.  There is no government agency to which you apply to obtain a trade secret.  Instead, the trade secret owner takes reasonable measures to keep the information secret.  A famous example of a trade secret is the formula for Coca-Cola®.

Mezzanine Level

Trade secrets fall under state law or common law.  The Uniform Trade Secrets Act (”UTSA”) has been adopted in nearly all the US.  Trade secrets may include formulas, patterns, compilations, programs, devices, methods, techniques, or processes.  A trade secret is information that derives independent economic value from not being generally known by other persons, and from not being readily and properly ascertainable by them.  Were others to have disclosure or use of the trade secret information, they could obtain actual or potential economic value.  The owner needs to take efforts that are reasonable under the circumstances to maintain the secrecy.

Patent

35 U.S.C. § 101 defines patentable utility inventions.  Whoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent therefor upon meeting conditions and requirements.  An invention needs to be new, useful, and nonobvious.  Infringement occurs if an accused device or process meets each limitation of a patent claim, literally or under the doctrine of equivalents, where available. For more, see my posts on claim construction, the doctrine of equivalents, and prosecution history estoppel.

Lightening Rod/Bug - Friendly Confines

A patent mouthful:  a national government issued right on an idea usually obtained through fees to a patent lawyer translated into individualized sculpting of rights within a layered process and context capable of economic and political polarization.  For more, see my posts on claim amendments, patent prosecution techniques and coordination, and US and international priority dates for provisional applications and public accessibility.  Upon successful issuance, the utility patent term is generally twenty years from its priority filing date, with payment of maintenance fees.

Better Mousetrap

A utility patent grants the right to exclude others from making, using, offering for sale, selling, or importing an invention as defined by the patent claims. The word “exclude” is significant. To illustrate the meaning of “exclude” let’s walk through a simple example. For the moment, we will put aside the technical requirements for patentability of utility inventions.

Say your competitor patents a drinking container. Next, your business patents the improvement of adding a handle to the drinking container. Your patent would not give you absolute clearance to make the handle added to the drinking container. You may need permission from your competitor because your competitor has patented the broad concept of the drinking container. If your competitor wanted to make the improvement of the handle added to the drinking container, your competitor may need permission from you.

Bob's Cup and Mug © 2008 Bob Brill 

A third party who wants to make the improvement of the handle added to the drinking container may need permission from you, and may need permission from your competitor. You and your competitor could independently decide whether to seek enforcement of each of your patents, including whether to grant or refuse permission. If either you or your competitor seeks enforcement and refuses permission, the third party may be forced to design around the patent. When your competitor’s patent expires, you would no longer need permission from your competitor to make the handle added to the drinking container.

Business Tool

The introduction of patents above speaks to opportunities, permissions, and conditions all around.  The tone highlights the patent owner can decide which if any fights to pick when going on offense.  The patent owner in general has its hand on the flow control valve whether to fund or otherwise invest in litigation attorney fees and costs for a particular occasion and target.   A potential exists to assert a technological advantage over competitors and/or exact an inflow of funds as licensing fees.

On defense, whether as a passive or aggressive patent holder, your patent can provide a deterrent against a competitor seeking to enforce its patent against you.  For example, cross-licensing provides a less-costly dispute resolution mechanism.  Even better, your competitor’s ship and dry powder may simply pass in the night whilst seeking a weaker opponent.  For more, see my posts on patent portfolios and competitive advantage.

Copyright

A copyright protects an original work of authorship.  The copyright protects against a copy that amounts to an unauthorized, substantially similar work.  Copyright protects the form of expression.  Copyright does not protect the subject matter that is expressed, 17 U.S.C. § 102(b).

For example, say you copyright a description of a machine.  You could describe the shape of the machine.  You could describe the inner workings of the machine.  Your copyright would not prevent someone from using your description to make the machine.  Your copyright would not prevent someone from writing their own description of the machine.  If you wanted protection for the technology of the machine, you could look to patents.

Rights for You and over Others

Under US law, copyrights cover original literary, dramatic, musical, artistic, software, and other intellectual works of authorship.  Copyright protects both published and unpublished works.  The copyright owner generally has exclusive rights and abilities to authorize others to exercise the rights of reproduction, distribution, public performance, and display.

The principle that copyrights protect only expressions, and not ideas, is often referred to as the idea-expression dichotomy.  Under the merger doctrine in the US, copyright protection is unavailable for the expression of an idea where the expression is so intimately tied to the idea that little possible variation remains for expression of the same idea.

The first fixation of the work in a tangible medium automatically secures the copyright, though registration may be desirable for additional reasons including enforcement.  Using the symbol © or word “copyright” with the year of publication and name of the copyright owner helps provide affirmative notice that the author intends the work to have copyright protection.  You may be interested that 17 U.S.C. § 105 eliminates copyright protection for any work of the US Government, though it can receive and hold copyrights transferred to it.

Under 17 U.S.C. § 302, copyright generally endures for the life of the author plus 70 years after the author’s death.  In the case of an anonymous work, a pseudonymous work, or a work made for hire, the copyright endures for a term of 95 years from the year of its first publication, or a term of 120 years from the year of its creation, whichever expires first.

Under the first-sale doctrine or exhaustion rule of 17 U.S.C. § 109(a), the purchaser as owner of a particular copy of a copyrighted work can resell that copy.  As you may sense, copyright enforcement for software can be complex.  Continuing our intended topics, we can move on, as I list the following sample links for more: scenes à faire, permissible reverse engineering, enforcement, abstraction-filtration-comparison analysis and approach.

Fair Use

Fair Use provides an exception to copyright infringement, 17 U.S.C. § 107.  Purposes such as criticism, comment, news reporting, teaching, scholarship, or research may be allowed.  The Fair Use factors consider:

(1) the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes;

(2) the nature of the copyrighted work;

(3) the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and

(4) the effect of the use upon the potential market for or value of the copyrighted work.

The fact that a work is unpublished shall not itself bar a finding of fair use if such finding is made upon consideration of all the above factors.

Derivative Works - Wild Card

With the potential magnitude of an exception that swallows the rule, the copyright owner’s rights extend to the preparation of derivative works, 17 U.S.C. § 101.  Really eye-popping is no consensus exists on the full spectrum of what constitutes, and perhaps more importantly what does not constitute, a derivative work.

Larry Rosen has offered insights on derivative works, copyrighted 2004.  Larry argues a new program that lacks use of the original program’s source code by modification, translation, or other changing thereof, would not constitute a derivative work.  Larry states derivative works would not encompass linking to library programs designed as such.  Larry also calls non-derivative the plugins and device drivers that are designed to be linked from off-the-shelf programs, even if looking at the source code helped accomplish the design.

Trademark

A trademark is a source identifier.  The trademark lets the public know the source of goods or services offered under the trademark.  Trademark protection may be pursued based on actual or intended use of the mark in commerce.

Likelihood of Confusion

The trademark prevents others from using confusingly similar trademarks to offer the same goods or services.  The trademark protects against others using a mark that is likely to cause consumer confusion as to the source, sponsorship, or approval of goods. For more on likelihood of confusion and identification of goods, see my post on trademark prosecution.

Registration and Use

The circle-R symbol signifies federal registration under US trademark law.  Irrespective of federal trademark prosecution, if any, the designations TM and SM are available for trademarks and service marks.  Such unregistered marks may have protection limited to the geographical area of use, or reasonably expected geographical areas of expansion.

Keep in mind that approval of a corporate name by the Secretary of State does not equate to trademark clearance.  Far from it:  state authorities prohibit identical use of corporate names.  That state agency’s comparison stops well short of the review for likelihood of consumer confusion considered under trademark law.

Looking internationally, the Madrid Protocol provides an overall, possible cost savings on filings such as where trademark protection is pursued and quickly approved in multiple countries.

Portfolios

As an example, McDonald’s trademark portfolio includes the word mark McDonald’s® and the design mark “the golden arches” for selling hamburgers and so on.  Burger King uses its own trademarks to sell hamburgers.  The hamburgers as a category have different trademarks well-advertised by their owners for the consumers to identify different sources for McDonald’s and Burger King’s hamburgers.  For more about trademark types, see my post on trademark portfolio creation.  Stepping back for a fuller view of the IP portfolio view:  if McDonald’s wanted to protect the technology of a grill used in making the hamburgers, or a special sauce used in preparing the hamburgers, McDonald’s could look to patents or trade secrets.

Domain Names

As a business pointer:  in this era of cybersquatting and typosquatting, you should consider locking in domain names on your desired trademarks early, at their modest costs.  You would prefer to cut out middlepersons who habitually review trademark office public records and squat on domain names, with their intention to seek an advantage and/or premium for getting your intended domain.

Licensing

An IP owner can retain ownership of the IP and grant a license to others for a selected subset of the rights.  The license can be exclusive to the grantee or non-exclusive.  In general, the terms and royalties may be negotiated.  Other times, little opportunity may be available for negotiation such as in a shrink-wrap license or end-user license agreement (EULA).

“Legal Fiction” of Software License

The software industry uses “the legal fiction that software is merely licensed” rather than sold, from comments by Tim Lee copyright 2008.  Tim cautioned “the terms of shrink-wrap licenses may not be legally binding” if software is characterized as sold rather than licensed in upcoming court decisions.  The context Tim described is software firms have used the “licensed, not sold” theory to discourage ”the market for used software” and restrict “reverse engineering that would otherwise be fair use under copyright law.”

Property

Property principles support the full enjoyment of a product by a purchaser.  Reverse engineering would be fine.  Excepted for obvious reasons, are anti-DRM (digital rights management) measures, discussed in the US Digital Millennium Copyright Act (DMCA) as copy-prevention systems and technical-protection measures.

Contract

A license is a contract, where in the US and many additional countries you can agree to things like a prohibition against reverse engineering.

Open Source - Freedom

Under Open Source Software (”OSS”) licensing, the source code is available with broad rights of software modification and distribution.  The OSS model speaks to permissions rather than the restrictions detailed in proprietary models, as I had earlier posted.  In OSS “free” refers to freedom, not price. People who redistribute free software are encouraged to charge as much as they wish or can.

Comparison of Open Source and Proprietary Licensed IP Rights
Trade Secret

OSS:  The source code is released, ending trade secret protection.

Proprietary:  Only compiled form of the software is released, not the source code.  Logic and architecture that remain hidden may be protected as trade secret.

Patent

OSS:  Conditional use of patented technology.

Proprietary:  Narrow patent license for running the software is limited to the licensed work.

Copyright

OSS:  Conditional, unlimited reproductions of the software and creation of derivative works.

Proprietary:  Narrow license for running the software limited to the licensed work, plus archival copy.  No further reproductions, nor distributions or derivative works.

Trademark

OSS:  Usually no discussion of trademarks; no expectation of rights.

Proprietary:  Restricted and strategic use when trademarks are addressed.

Comparison of Open Source Licensing and Other Non-Proprietary Models

OSS:

  • Consistent license terms
  • Fees may be charged for:
    • distributing copies of the software and the source code
    • providing warranties and supplemental services
  • Source code access

Freeware:

  • Inconsistent license terms
  • Available at no cost
  • Source code need not be provided

Public Domain:

  • No license terms; no IP rights; wide-open freedom
  • No cost
  • Source code need not be provided
Free Software Licenses

Licenses of free software intend to guarantee users the freedom to run, copy, distribute, study, reverse engineer, change, and improve the software.  A prominent class of free software licenses is the GNU General Public License (”GPL”) including its versions 2 and 3 (”GPLv2″ and “GPLv3″).  Just to be clear as already stated above, GPLv2 and GPLv3 endorse selling software for money.

The open source aspect is the source code must be made available.  You can charge any fee you wish for distributing a copy of the software, with a pricing limitation that the fee to download the source code cannot be greater than the fee to download the binary file.  After someone pays your fee, they are free under GPLv2 or GPLv3 to release the software to the public with or without a fee.

Under GPLv2

The software is copyrighted and licensed to give legal permission to copy, distribute, and/or modify the software.  With notice, the license applies to copies of the software and derivative works.  Upon publication or distribution, you must give recipients all the rights you have at no charge, and make sure the recipients have access to the source code and terms.  Note:  the license continues, for the whole work; this is not public domain material.

We can look at Joomla!™ as an exemplary Open Source Content Management System.  Joomla!™ is licensed under GPLv2, as stated in the Joomla!™ License FAQ which reaffirms the selling of extensions for profit.  Joomla!™ extensions include plugins, components, and modules.  To distribute a Joomla!™ extension, a license under GPLv2 or a GPLv2-compatible license is encouraged since GPLv3 is incompatible with GPLv2.  For more discussion centered on Joomla!™ see the worldwide and Chicago fora.

On GPLv2 at large, an interesting thread discusses a dual-licensing situation of some code released under both GPLv2 and a proprietary license.

Under GPLv3

The software in unmodified form and a work based on it are covered works.  Conveying, modifying, publishing, or propagating a work triggers the license.

Prohibitions, for example:

  • Disallows sublicensing, under GPLv3 § 2.3.
  • Anti-DRM:  circumvention of technological measures is favored, under GPLv3 § 3.2.
  • Atop the allowed selling to the recipient, the exercise of licensed rights by the recipient cannot require a fee, royalty, or other charge, under GPLv3 § 10.3.
  • Cannot initiate litigation or a cross-claim or counterclaim in a lawsuit alleging any patent claim is infringed by the licensed software, or any portion of it, also under GPLv3 § 10.3.

A contributor grants a non-exclusive, worldwide, royalty-free patent license of its essential patent claims for the contents of its version of the software, under GPLv3 § 11.3.  If you grant a patent license to some parties receiving the software, then the patent license is automatically extended to all recipients of the covered work and works based on it, under GPLv3 § 11.6.

Considering both GPLv2 and GPLv3, an interesting thread discusses using non-GPL libraries therewith.

Exhaustion of Rights Coupled with License Effect

Further to the notes above on property and contract principles, patent and copyright laws share analogous concepts of exhaustion from the sale of a product.  In view of the software protection gains from licensing strengths, it is instructive to consider a decision by the US Supreme Court from Monday June 9, 2008 on a dispute over patent exhaustion and licensing.

Quanta Computer, Inc. v. LG Electronics, Inc., 553 U. S. ____ (2008)

LG Electronics licensed a patent portfolio to Intel.  The license permits Intel to manufacture and sell microprocessors and chipsets that use the patent portfolio.  The license stipulates that no license is granted to any third party for a combination of the licensed products with items, components, or the like acquired from a party other than LG Electronics or Intel.  The license also expressly left alone the effect of patent exhaustion that applies upon sale by LG Electronics or Intel, of the licensed products.  In a separate master agreement, Intel agreed to give written notice to its own customers that the license does not extend, expressly or by implication, to any product that the customer makes by combining an Intel product with any non-Intel product.

Patent Exhaustion

The longstanding doctrine of patent exhaustion provides that the initial authorized sale of a patented item terminates all patent rights to that item.  Quanta purchased microprocessors and chipsets from Intel and received the notice from Intel required by the master agreement.  Nonetheless, Quanta manufactured computers using Intel parts in combination with non-Intel memory and buses in ways that practice the patent portfolio.  In aligning the Quanta products with the patent portfolio, the Court traced the Intel products delivered to Quanta and ruled the incomplete articles from Intel substantially embodied the patent portfolio because the only step by Quanta necessary to practice the essential features is the application of common processes or the addition of standard parts.  With attention to the licensing aspects the Court held Intel’s sale of an article authorized by LG Electronics that substantially embodies the licensed patent portfolio, exhausts LG Electronics’ rights and prevents it from invoking patent law to control postsale, postpurchase use of the article by Quanta.

Language of the License

The license contained no restrictions on Intel’s right to sell its microprocessors and chipsets to purchasers who intend to combine them with non-Intel parts.  The master agreement required Intel to notify its customers against practicing the patent portfolio with non-Intel components, although that notice did not condition Intel’s license to sell its products embodying the patent portfolio.  Notwithstanding specific disclaimer in the license against third parties practicing the patents, the question of implied license to third parties is irrelevant because Quanta asserts its right to practice the patents based not on implied license but on exhaustion.  Exhaustion turns only on Intel’s own license to sell products practicing the patent portfolio.

Because Intel was authorized to sell its products to Quanta, the doctrine of patent exhaustion prevents LG Electronics from further asserting its patent rights with respect to the patents substantially embodied by those products.  The Court noted that the authorized nature of the sale to Quanta does not necessarily limit LG Electronics’ other contract rights.  For example, a breach-of-contract claim might be available even though exhaustion operates to eliminate patent damages.

Text Copyright © 2008 Bob Brill

Posted in GNU General Public License (”GPL”), GPLv2, GPLv3, Madrid Protocol, Uniform Trade Secrets Act (UTSA), breach of confidence, business sense, competitive advantage, copyright derivative works, copyright exhaustion, copyright fair use exception, copyright licensing, copyright merger doctrine, copyright registration, copyright substantial similarity, corporate names, cybersquatting, design trademark, first-sale doctrine, freeware, idea-expression dichotomy, identification of goods, likelihood of confusion, open source software, original work of authorship, patent enforcement, patent exhaustion, patent prosecution, patent-licensing, patentable subject matter, patenting incentives, proprietary software, public domain, trade secret misappropriation, trademark licensing, trademark portfolios, trademark registration, typosquatting, utility patent, word trademark, wrongful disclosure | Comments

“That’s an iPod®!”

May 17, 2008 – 11:08 pm

Trademarks are source identifiers, as in branding. Utility Patents and Trade Secrets protect ideas. Design Patents cover ornamental designs for functional items.  Copyrights protect expressions of ideas. A same object can be protected by one or more of these intellectual property “buckets.”

So long as use continues and the remaining requirements are met, trademarks have no expiration date, unlike patents and copyrights. Wouldn’t it be great to take an aesthetically-pleasing design implementation among a variety of available structures, and run it under trademark protection?

Plain Vanilla

Among the staples of working knowledge is Apple has products marketed under a family of iPod® trademarks.  The innards of a sample one of these trademarks are that it is a Word Mark “IPOD” on the goods:  “Portable and handheld digital electronic devices for recording, organizing, transmitting, manipulating, and reviewing text, data, and audio files; computer software for use in organizing, transmitting, manipulating, and reviewing text, data, and audio files on portable and handheld digital electronic devices.”  The current basis of the mark is an assertion of use under Section 1(a) (15 U.S.C. §1051(a)).  Sure, the meteoric sales are great, though the mechanics of registering the mark were unsurprising, leading to successful Trademark Registration Number 3089360 on May 9, 2006.

Black Raspberry Chip

How about that shape?  Wanna knockoff, bought from the product display counter of a peddler’s inner coat lining?  Hey, Apple contributed tasteful selection to the design.  Patents are also part of the protection strategy, though the additional snap deterrence against aesthetic theft would be beneficial.  Check out this trademark:

Design Mark of iPod® 

Apple originally filed the trademark application on July 10, 2006 as an assertion of use under Section 1(a) (15 U.S.C. §1051(a)) and then switched the basis to acquired distinctiveness under Section 2(f) (15 U.S.C. §1052(f)) upon review of remarks from the Trademark Examining Attorney.

Apple’s original application described the trademark as follows:  “The mark consists of the design of a portable and handheld digital electronic media device. The matter shown in broken lines, indicating the location of device connectors, is not part of the mark.”  In addition, Apple’s original application described the goods as follows:  “Portable and handheld digital electronic devices for recording, organizing, transmitting, manipulating, and reviewing text, data, image, and audio files.”

Digesting the Trademark Examining Attorney’s feedback, Apple amended the description of the mark to further detail the device as “comprised of a rectangular casing displaying circular and rectangular shapes therein arranged in an aesthetically pleasing manner.”  Keeping its silo intact for pursuit of trademark protection, Apple strove to distance its intended design mark from the notion of functionality, in contrast to patenting:

Although Applicant disagrees with the Examining Attorney’s conclusion that Applicant’s rectangular video screen design is functional, Applicant nevertheless enters the following disclaimer:

“No claim is made to the exclusive right to use ‘a rectangular shape for a video screen’ apart from the mark as shown.”

Since the Trademark Examining Attorney had found no conflicting marks, Apple seized the opportunity to advance its cause by loading in evidence of acquired distinctiveness of the design mark.  For example, the submitted Declarations of customers included statements such as:

For me, Apple’s distinctive clean and modern design distinguishes Apple’s goods from its competitors.

I am not aware of any competitors of Apple in the digital device market that use similarly arranged design elements in uncluttered arrangements similar to those of Apple’s iPod products.

In short order upon review of Apple’s responsive filing, the Trademark Examining Attorney approved Apple’s design mark for Publication on the Principal Register, following the usual Publication for Opposition, leading to successful Trademark Registration Number 3365816 on January 8, 2008.

Text Copyright © 2008 Bob Brill

Posted in acquired distinctiveness Section 2(f), assertion of use Section 1(a), business sense, copyrights, counterfeit, design patent, design trademark, family of trademarks, trade secrets, utility patent, word trademark | Comments

Open Source and Proprietary Software on the Same Dance Floor

May 2, 2008 – 7:34 pm

From the Business Owner’s perspective, each of the various uses of software should map to the current and projected interests of the business.  To begin a non-exhaustive discussion of possibilities and details moving toward a sense of timing and business strategy, we can look at two sample categories:  Open Source Software (”OSS”) and Proprietary software.  We are interested in the rights to the code as expressions or technology.  While this may seem inherent, I mention it since branding value by Trademarks can be embraced by parties involved with both Open Source as well as Proprietary software.  More than a side note, this resonates a theme that different tools apply to different needs, including the Business Owner strategically selecting Open Source and Proprietary software for different roles.

In a general discussion, Open Source contrasts with a closed source nature of Proprietary software.  Open Source focuses on freedom.  A basic idea of Reciprocal Open Source licensing is you can use the code developed by others as long as you extend the courtesy onto others.  Open Source requires care in adherence to the terms of the license.  The GNU General Public License (”GPL”) is one class among a variety of examples.

In case you had a different impression, Open Source is a legal construct.  Open Source licensing depends on the Copyright laws and other Intellectual Property (”IP”) laws.  Proprietary software may also rely on Copyrights to protect the expression of the code, and proceed to Patents and Trade Secrets to protect the ideas implemented by the code.

Open Source may be viewed as beginning in the category of Copyrights.  Open Source uses licensing to delineate and perpetuate specific freedoms including treatment of Copyrights.  Various flavors of Open Source can and do extend beyond Copyrights into additional Proprietary areas.  The Open Source license flows with the code.  The legal relationship entered through the license is reflected in language like Free and Open Source Software (”FOSS”); Free, Libre and Open Source Software (”FLOSS”); and GNU, Licensed, Open Source Software (”GLOSS”).  The Open Source license spells out permissions of use, in contrast to restrictions of use traditionally found in Proprietary licensing.  Copyleft is a colorful term for the Reciprocal Open Source license that tends to attach more and more conditions.

The rights and obligations depend on the terms of the license.  In the case of Open Source, a particular license can prevent the Business Owner from Proprietary protection at a level dictated by the Open Source license.  In maintaining and advancing the business objectives, a review of Open Source software needs to extend to the available licensing forms.  The Business Owner should understand whether the particular license will serve the overall business.

The software can be attractive at a technical level, and potentially further desirable where packaged with an agreeable license.  In the spectrum of possible Open Source licenses, some effects ripple well outside the immediate technical solution provided by the Open Source software code.  Other licenses may allow skillful channeling of effects from the Open Source software to keep Proprietary protection as an option for other software.  The development or selection of code and adoption or compliance with applicable licenses, should mesh well with the targeted funds and upcoming business opportunities.  With this mindset, the Business Owner is well served to strategize the software code’s available rights and ramifications.

Text Copyright © 2008 Bob Brill

Posted in business sense, copyrights, open source software, patent-licensing, patents, proprietary software, trade secrets, trademarks | Comments

Repackaging the Business Method Claim for Patent Office Approval

April 19, 2008 – 9:30 pm

Understanding the interplay between successful patent application, rejection, and amendment helps the Patent Lawyer’s additional projects in counseling of Clients and Inventors.

Patent Office Procedure

In the US Patent and Trademark Office, each patent application is routed to a Patent Examiner familiar with the particular technical field.  Also based on the technology, issued patents are listed in corresponding Classes, helping their retrieval such as for rejection of subsequent patent applications.  Heightened attention is being paid to Technology Center 3600, which houses the Group Art Units of Patent Examiners assigned to business method patent applications.  Corresponding Class 705 is for issued patents on data processing:  financial, business practice, management, or cost/price determination.

NASDAQ Patent April 15, 2008

As a sample issued patent in Class 705, US Patent 7,359,877 entitled “Odd Lot Processing in Centralized Automated Market System” with listed assignee The Nasdaq Stock Market, Inc. issued last week on April 15, 2008.  The Group Art Unit was 3692 with technical specialty in Credit & Loan Processing, Banking/Funds Transfer.  The Subclasses are displayed on the patent in the following order 37, 35, 38, 40 within Class 705 for that same technical specialty in addition to Portfolio Management Trading/Matching.

Instructive Point

Scanning the prosecution history for instructive points, one may note on January 24, 2005 the Patent Examiner wrote to the Patent Lawyer that the filed claims were unpatentable as patent-ineligible subject matter, alongside other rejections.  The unpatentable subject matter rejection occurs under 35 U.S.C. §101.  I mention this to help bring home the point that a 101 rejection is fundamental, remedial:  “patenting 101.”  Please understand my colorful depiction of a 101 rejection does not mean the Patent Lawyer is immediately deemed a failure in the patenting effort.  Instead, a “101″ is painted on the Patent Office as a foothill before allowing any notion that a patent will result.

A workaround for the Patent Lawyer may be claim amendment to place the claim in satisfactory 101 form.  Without the subject matter being eligible, nothing else makes effective use of the Client’s budget.  Taking a further step back, the Patent Lawyer needs to lay the groundwork for such claim amendments in the original patent filing for the same reason that appeasement of the Patent Office is needed to advance prosecution of a patent application to issuance.  Scanning the horizon, the Patent Lawyer needs to prepare the original filing to support one or more desirable avenues of claim limitations.  That ability is important, and does depend upon the Patent Lawyer’s effectiveness in use of the Client’s budget in the original patent application preparation and filing.  To employ a straight claim amendment in the patent prosecution, the Patent Lawyer needs to rely on the originally-filed disclosure.

Lesson Taken

In the 101 rejection of the NASDAQ patent, the Patent Examiner provided guidance that the claim needs a practical application of an algorithm or idea that results in a useful, concrete, and tangible result, plus a technological enabler of same.  As a fix, the Patent Lawyer responded on July 27, 2005 with a claim amendment that placed a step of the claim “in a computer system” as a recitation of “the use of technology in the body of the claims.”  Were support lacking in the original patent application filing for “in a computer system,” then the claim limitation could not have been added.  Other claim amendments and rejections were raised and addressed over the years ultimately resulting in NASDAQ’s issued patent of last week.  Following is the issued claim 1:

A method for trading odd-lots of a security in an electronic market for trading securities, the method comprises:
            determining in a computer system whether an odd-lot exposure limit has been exceeded for a quoting market participant;
            routing a received odd-lot order for execution or delivery to the quoting market participant whose odd-lot exposure limit has not been exceeded and which is sufficient to satisfy execution of the order; and
            executing the order for quoting market participants that accept executions of orders or delivering the order for quoting market participants that accept deliveries of orders for execution.

Extrapolation

As with the 101 rejection and fix discussed in the context of NASDAQ’s patent, the Patent Lawyer does well to understand the precise rejection and then the applied workarounds that have been successful.  One wishes to apply the right tool for the right job.  One eye needs to be kept on the Patent Office and another eye on the Client’s business, to navigate the process for valuable prospective rights for the Client.  Keeping aware of the Patent Office at times is tied to the courts and legislatures, plus further politics and economies.  The Patent Office and in particular the authoritative Patent Examiner on the patent application, typically plays a monumental role as the frontline interface for any issuance of the patent.

Text Copyright © 2008 Bob Brill

Posted in adequate disclosure, business method patent, business sense, claim amendment, financial engineering, financial services patent, patentable subject matter, proprietary software | Comments

Patent Prosecution - Live

March 30, 2008 – 1:23 pm

Say you experience Patent Office resistance to your “means” claim language reciting a computer-readable element.  What precious resources might you devote to consideration of options or continuing?  How about investing in the substitute language “instructions”?  The review process undertaken may influence your answer.  In this spirit, a non-exhaustive discussion of a sample workaround of claim language is presented.

Introduction

Patent prosecution involves interaction with the Patent Office after the filing of a patent application.  The prosecution of the patent application seeks to obtain allowance and issuance of a patent, often involving negotiation with a Patent Examiner over the patent claim language.  The major parts of the patent application in electrical, software, and mechanical technologies include a specification of detailed text with accompanying drawings together enabling practice of the invention, plus claims supported by the specification and drawings.  The claims define the prospective patent rights.

The language of the claims in part serves to distinguish the prior art.  In another aspect, the claim language serves to present the invention in a patent-eligible form, as patentable subject matter.  The Patent Examiner can raise objections and rejections such as to the claim language in view of the prior art, as well as over the subject matter sought to be claimed.  In response, the Patent Owner often through a Patent Lawyer might present arguments and/or claim amendments supportable by the patent application as filed.

Apparatus, system, method, process, and article claims are examples of claim types employable for prospective patent protection of software-related inventions.  A sample format among a variety of formats that has been employed is:  “means for performing a function”.  The “means” format may entail having sufficient disclosure in the specification and drawings of exemplary structure corresponding to the “means”.

Scenario

A Patent Owner entrusts a Patent Lawyer to conduct an Interview with a Patent Examiner who is handling a patent application.

Cast

Patent Owner:  Seeking patent protection.  Responsible for legal fees to the Patent Lawyer and government fees to the Patent Office.

Patent Lawyer:  Represents the Patent Owner before the Patent Office.  Sample constraints include time, budget, and directives.

Patent Examiner:  Substantive contact for examination in the Patent Office.  Sample variables include receptiveness and engageability from their past experiences that may have been positive, negative, or disjointed.

Workaround

In an Office Action, the Patent Examiner had rejected apparatus and article claims to a software-related invention as directed to unpatentable subject matter.  Only the article claims had the “means” format.  For illustrative purposes, the “means” workaround in the article claims is discussed; a different workaround arose for the apparatus claims, and for prior art rejection of all the claims, including method claims.  In the following illustrative claim amendments, additions are highlighted in ALL CAPS plus –dashes–, and deletions are highlighted with [bracketing].

[means ]–INSTRUCTIONS –in one or more computer-readable signal-bearing media for invoking a graphical user interface….

This substitution of –instructions– for “means” may appear straightforward.  Where “means” had already been rejected, it remained to be determined whether the Examiner would wish a more pronounced change in language or technical concept to gain approval.

Interview

The Interview between the Patent Examiner and Patent Lawyer skillfully undertaken allows an exchange of opinions and perspectives.  The Patent Lawyer may seek to reach a tipping point of collaborative dialog with the Patent Examiner.  Bald argument can be distracting, distancing, and derailing.  Sensitivity to the Patent Examiner’s potential postures of deferred consideration or silence helps the Patent Lawyer’s tactfulness.  Nurtured and rapid rapport, objection-handling, and elicitation of perspective from the Patent Examiner may promote the Patent Lawyer’s success.  Sizing up the situation, the Patent Lawyer may contemporaneously select a strategy and drive toward an agreement.

Arriving at an agreement on claim amendments gives greater confidence that resources subsequently invested in preparation and filing of a formal written Response to the Office Action would advance the prosecution.  The arrival at agreement can depend on two-way communication and active listening.  Probing for mutually acceptable language needs to operate within the rules of the patent process.  Abrupt changes occur in some years on specific rules, though a deep history transcends many areas.

The sample workaround of the “instructions” substitution met with agreement.  The pre-approval from the Examiner provided greater confidence in the next step.  Strategic steering of the dialog also provided prospectively greater alignment of the claim language with the Patent Owner’s business interests than might a claim strategy developed in isolation from sampling and feedback from the Patent Examiner.  The communication laid a path for the formal Response filing to be officially reviewed by the Patent Examiner.

Text Copyright © 2008 Bob Brill

Posted in adequate disclosure, business sense, claim amendment, examiner interview, means plus function, patentable subject matter, proprietary software | Comments

Trademarks in Major Languages

March 4, 2008 – 10:38 am

As an IP update on trademark practice, the doctrine of foreign equivalents was applied by the US Trademark Trial and Appeal Board (TTAB) to affirm an examining attorney’s refusal to register the mark PECORA NERA by an Italian corporation in view of the registered mark BLACK SHEEP.  In re Ing. Loro Piana & C.S.p.A., Serial No. 79014582 (November 7, 2007; non-precedential).
 
The identification of goods in the PECORA NERA trademark application included three classes, including International Class 25 for clothing items in common with the BLACK SHEEP registered mark.  Also, the PECORA NERA trademark application included a statement that “pecora nera” in Italian translated to “black sheep” in English.  In review of the PECORA NERA trademark application relative to the BLACK SHEEP registered mark, the TTAB found the scope of identified goods for PECORA NERA to include all pants, coats, vests and headwear/caps (since these overlapped the BLACK SHEEP identified goods) purchased by ordinary members of the general American public.
 
The TTAB affirmed the Section 2(d) (15 U.S.C. §1052(d)) refusal to register PECORA NERA under the doctrine of foreign equivalents.  The TTAB noted Italian is a common, major language in the world.  The TTAB took judicial notice of English/Italian dictionary definitions and found “Italian-speaking individuals in this country would be just as likely to ascribe the idiomatic meaning ['misfit'] to ‘pecora nera’ as they would the literal meaning.”  While the marks PECORA NERA and BLACK SHEEP differ in sound and appearance, the TTAB ruled “the identity in connotation (both literal and figurative) is sufficient to support a finding of likelihood of confusion, especially as used in connection with identical clothing items.”  So, the refusal in International Class 25 was affirmed, with the PECORA NERA trademark application left to proceed in other classes only.

December 6, 2007

Text Copyright © 2007 Bob Brill

Posted in identification of goods, likelihood of confusion, trademark foreign equivalents, word trademark | Comments

Patent Portfolio Incentives

March 4, 2008 – 10:36 am

I thought you may be interested in a summary about patent portfolios and incentives to patent owners, based on the paper “Patent Portfolios” by R. Polk Wagner and Gideon Parchomovsky of the University of Pennsylvania Law School (March 1, 2005) http://papers.ssrn.com/sol3/papers.cfm?abstract_id=582201#PaperDownload.

A patent portfolio is a collection of related patents held under common control. In contrast to stock portfolios, where broad diversification is typical, patent portfolios are focused within a technological field. Expertise about a technology or industry allows a patent portfolio owner to focus the collection of assets. Whether process-based, problem-based, or product-based, the unifying concept of patent portfolios is their aggregation of related patentable inventions in a coherent design and direction.

The scale features of portfolios allow a well-conceived patent portfolio to act as a “super patent”. By aggregating the individual value of a number of closely-related patents, the patent portfolio enables owners to realize power in the modern marketplace to a degree impossible using individual patents alone. The diversity features of patent portfolios reflect a purposeful combination of distinct-but-related individual patents. No single patent determines the complete value of the patent portfolio. By distributing the importance of the total portfolio across the constituent patents, a patent portfolio allows owners to hedge against the risk and uncertainty of innovation in the modern economy.

A portfolio owner is an attractive partner for companies dedicated to improving or extending existing technology. The strong market position established by a significant portfolio both improves the chances for success of follow-on products, as well as diminishes the likelihood of advancement when no agreement is reached. This marketplace advantage also gives the portfolio owner an improved position with respect to others in the product chain, such as suppliers and distributors.

Innovation is an uncertain business. Companies operating in an innovation-driven environment understand that future technological developments can make or break their research and development (R&D) efforts. Patent portfolios ameliorate the uncertainty by allowing owners to secure protections across a broader swath of the technological development path. Also, potential uncertainty about the validity and scope of particular patents further increases the benefits of patent portfolios.

In the modern innovation environment, the significant benefits of patent portfolios may explain the value gap of the so-called “patent paradox”. The addition of patents to a portfolio at some point yields diminishing returns, as the acquisition cost outweighs the marginal value. This inflection point occurs later than the marginal value of the patents would explain. An inverted link exists between patenting intensity and the average value of individual patents. While the isolated value of an additional patent declines, a portfolio strategy may increase in prominence and promote patenting intensity.

A major advantage conferred on portfolio owners is a reduced need for litigation to achieve marketplace ends. For accurate assessment of a company’s position within a certain industry, third parties need to examine the company’s patent portfolio as a whole. Simply accumulating patents is not enough to gain a strong defensive position. The scale and diversity features suggest that effective patent portfolios be carefully crafted affairs. On the one hand, the individual patents in a portfolio must be interrelated and concentrated in certain areas of research. On the other hand, the portfolio theory cautions against confinement to a single line of research or technology. The R&D division that succeeds in creating and maintaining a viable patent portfolio is a department with positive overall performance.

Owners of strong patent portfolios have an inherent advantage over competitors that hold a small number of individual patents. If portfolio strength correlates directly to company size, then one should expect large companies to play a dominant role in shaping the future of innovation. New entrants are more vulnerable to the threat of litigation and face a higher cost structure in producing additional innovation.

While patent portfolios give large companies an inherent advantage over smaller competitors, small and start-up companies will not disappear from the scene. Small companies will continue to innovate and thrive even in a portfolio-dominated environment for two principal reasons. First, small companies can develop innovations to complement and fill the gaps of the portfolios of large companies. Second, small companies can outperform established rivals by focusing their inventive efforts on disruptive technologies.

I hope this summary is helpful.

July 9, 2007

Text Copyright © 2007 Bob Brill

Posted in patent portfolios, patenting incentives | Comments

Sufficiently Publicly Accessible Disclosure Bars Invention

March 4, 2008 – 10:03 am

In In re Klopfenstein (Fed. Cir. August 18, 2004), the Federal Circuit held that a printed slide presentation was sufficiently publicly accessible to justify denial of a patent application under the “printed publication” bar, where over a year before the filing date the invention had been displayed for an extended period of time to members of the public having ordinary skill in the art without any restriction on their copying.

Klopfenstein had filed a patent application that disclosed methods of preparing foods comprising extruded soy cotyledon fiber (”SCF”).  Part of the disclosure was already known by those of ordinary skill in the art who worked with SCF, namely, that feeding mammals foods containing extruded SCF may help lower the serum cholesterol levels while raising the HDL cholesterol levels.  The purported novelty came from the disclosure that double extrusion increased this desired effect and yielded even stronger results.

An issue arose whether Klopfenstein’s printed slide presentations displayed to the public approximately two years before the patent application filing date had triggered the “printed publication” bar under 35 U.S.C. § 102(b):

35 U.S.C. 102 Conditions for patentability; novelty and loss of right to patent.

A person shall be entitled to a patent unless…(b) the invention was…described in a printed publication in this or a foreign country…, more than one year prior to the date of the application for patent in the United States.

The Patent Examiner asserted the presentations did constitute barring “printed publications” and rejected Klopfenstein’s patent claims as anticipated by the presentations or obvious in view of the presentations and other references.  Upon appeal by Klopfenstein, the Board of Patent Appeals and Interferences affirmed the decision of the Patent Examiner.  Klopfenstein then appealed to the Federal Circuit.

The Federal Circuit noted that the determinations whether references are “printed publications” under 35 U.S.C. § 102(b) involve case-by-case inquiries.  In reviewing the facts and circumstances surrounding Klopfenstein’s disclosures to the public, the Federal Circuit highlighted the presentations were:

  • prominently displayed for approximately three cumulative days
  • shown to a wide variety of viewers, a large subsection of whom possessed ordinary skill in the art of cereal chemistry and agriculture
    • American Association of Cereal Chemists meeting
    • Kansas State University’s Agriculture Experiment Station
  • shown with no stated expectation that the information would not be copied or reproduced
  • made up of fourteen separate slides:
    • a title slide; an acknowledgement slide; four slides that represented graphs and charts of experimental results; and eight slides that contained information presented in bullet point format, with no more than three bullet points to a slide, and no bullet point being longer than two concise sentences
  • not distributed to the public in the form of copies
  • not indexed in any database, catalog, or library

To resolve whether Klopfenstein’s temporarily displayed presentations that were neither distributed nor indexed were nonetheless made sufficiently publicly accessible to count as “printed publications” under § 102(b), the Federal Circuit considered the following factors:

  • length of time the display was exhibited, as an indication of the opportunity the public had to capture, process, and retain the information
  • expertise of the target audience, as an indication of how easily those who viewed the presentation could retain the displayed material
  • existence, or lack thereof, of reasonable expectations that the material displayed would not be copied
    • professional and behavioral norms may entitle a party to a reasonable expectation that the information displayed will not be copied, for example, helping to preserve incentives for inventors to participate in academic presentations or discussions
    • parties may take steps to prevent the public from copying temporarily posted information such as through license agreements, non-disclosure agreements, anti-copying software, or even a simple disclaimer informing members of the viewing public that no copying of the information will be allowed or countenanced
  • simplicity or ease with which the material displayed could have been copied

The Federal Circuit found the facts and circumstances surrounding Klopfenstein’s disclosures clearly demonstrated that the presentations were sufficiently publicly accessible to count as “printed publications” under 35 U.S.C. § 102(b).  The presentations were shown for an extended period of time to members of the public having ordinary skill in the art of the invention.  Those members of the public were not precluded from taking notes or even photographs of the presentations.  The simplicity of Klopfenstein’s presentations made it more likely that members of the public could learn the novelty by rote or taking notes adequate for later reproduction:

  • most of the eight informational slides were directed to the fact that extrusion desirably affected cholesterol levels, which was already known
  • only a few of the slides would have needed to have been copied to capture the novelty that double extrusion increases this effect

Therefore, ruled the Federal Circuit, Klopfenstein’s presentations constituted prior art appropriate for rejection of Klopfenstein’s patent claims.

Recommendations:

  • Have close coordination with counsel in protecting your rights to inventions and in reviewing potentially public disclosures in advance of patent application filing dates, including:
    • careful control of the public accessibility to disclosures
      • minimize the content to only what is necessary
      • limit the duration of exposure
    • notification in public presentations that no copying is permitted
    • upon discovery of unintentional public disclosures or public disclosures occurring without patent guidance, early review of the facts and circumstances surrounding the disclosure and the steps needed to protect prospective rights
  • To evaluate the enforceability of issued patent claims of interest to you:
    • attention must be given to the facts and circumstances surrounding any public disclosure of the invention in advance of the patent application filing date
    • keep in mind that many or all international patent rights may be lost upon the public disclosure of an invention any length of time, even less than one year, before a patent application filing date

August 31, 2004

Text Copyright © 2004 Bob Brill et al.

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