IP Law in 60 Seconds

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There are basically four types of intellectual property: patents, copyrights, trademarks, and trade secrets.

Here is a very brief summary of each:

A patent is the right “to exclude others from making, using, offering for sale, or selling the invention throughout the [particular country by which the patent is granted] or importing the invention into [that country]” for a limited time in exchange for public disclosure of the invention when the patent is granted. See United States Patent and Trademark Office. The purpose of this power is to promote the public disclosure of inventions, and consequently, the advancement of science. There are different types of patents, but most often people think of patents as protecting a physical invention, such as the motorized ice cream cone (in the above image).

A copyright is the right to prevent others for a limited time from reproducing, publicly performing, publicly displaying, distributing, and making “derivative works” (i.e., a work based on an existing work) of “original works of authorship fixed in a tangible medium of expression . . . including, literary, dramatic, musical, and artistic works, such as poetry, novels, movies, songs, computer software, and architecture. Copyright does not protect facts, ideas, systems, or methods of operation, although it may protect the way these things are expressed.” See United States Copyright Office FAQs. Although copyrights exist from the moment the work is fixed in a tangible medium, registration provides additional protections, most notably, the possibility of “statutory damages” (a way to obtain damages without proof of actual loss) and attorneys’ fees. This blog post is an example of something that is copyrighted, as is the photograph above.

A trademark is any word, symbol, or combination of words and symbols used to identify the source of goods or products in commerce (read, “your brand”). See Mark My Words . . . Trademark Basics. Trademark law (the Lanham Act, as well as state laws) protects trademarks – whether they are registered or not (registration provides additional protections) – so that consumers are free from confusion about what they are buying. As a federal judge, quoting Neil Young’s “Hey, Hey, My, My” once described trademark law, “You pay for this but they give you that.” In short, trademark law prevents anyone from using any word, symbol, or combination of words and symbols, that is confusingly similar to someone else’s trademark. For that reason, trademarks can last forever. Example of trademarks are Ebay’s logo (above) and the Coca Cola logo (see the can below).

A trade secret is any information with commercial or economic value that is not widely known and is kept secret. It can be virtually any type of information, including customer lists, business strategies, technical data, computer programs, and other things, and can last forever. See Terms of Art . . . What is a Trade Secret? Given that trade secrets must be confidential, they are not registered anywhere. The classic example is the secret formula to Coca Cola.

Top 100 Law Blogs

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This post is a bit unusual for me. It is not about substantive law. It’s not about Fair Competition Law issues in the news. It’s not even my own analysis. Rather, it is a list – by a different blog (The Delaware Employment Law Blog) of the top 100 employment law blogs.

The reason that I am writing this post is two-fold. First, the list is well done (and avoids me trying to recreate the wheel). Second, the blog is an excellent employment law blog. And, third, I agree with that blog’s general approach to sharing information – including links to other blogs that may be of interest to readers.

Here is the link: Top 100 Employment Law Blogs. Enjoy the sharing.

Trade Secret Statistics

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We spend lots of time on this blog discussing trade secret protection. To give some context, I thought it might be helpful to have a few statistics:

Trade secret and related noncompete cases have more than doubled over the past decade, according to my admittedly-unscientific “back-of-the-envelope” calculation. See here (including imbedded links).

Data theft costs firms (on average) $2,000,000 annually, according to research conducted by Symantec. See here.

In over 85% of trade secret cases, the alleged misappropriator was someone the trade secret owner knew – either an employee or a business partner.  See here.

More than half of ex-employees admit to stealing company data, according to a February 2009 study by the Ponemon Institute.  See here.

Some good sources of privacy and data breaches are: Privacy Rights Clearinghouse and their Chronology of Data Security Breaches 2005-Present; PC World’s Data Protection

(Note, for future reference, the links to some of these websites in our “Helpful Links” section.)

And, of course, relevance of the picture? (The odds are against you, statistically speaking. Yes, that was a clue.)

ABA Top 100 Blawgs – We made it!

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We need your help…

We are pleased to announce that we were selected by the ABA for inclusion in its top 100 Blawgs. The list was compiled by the editors based on their personal favorites.

Now, from that group, they will select the top blog in each of the categories. That selection will be made by a vote. If you don’t mind, I would be most appreciative if you would vote for this blog. (While you’re looking (and hopefully voting), another bl0g that you might enjoy, which is in the “Law Biz” category, is The Client Revolution.)

To vote, you need to register (sorry – but it’s painless!). You can go directly to the page to vote by clicking HERE to VOTE. (If Fair Competition Law blog doesn’t show up for some reason, it’s in the category “In Labor.”) You can register on that page or first click here to register:  REGISTER.
Thanks!!

How can we help?

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Earlier this month, I tried something a bit different. Doing a take-off on what I do in the last class of the Trade Secrets and Restrictive Covenants course that I teach at Boston University School of Law, I pointed out (perhaps the obvious) that this blog is for you. Accordingly, I asked you to tell me what you would like to read about. As I said in the post, as long as it falls within the subject of Fair Competition Law, I’ll post on it.

So, I am reiterating my offer. 

Please feel free to let me know what we should cover here. You can post a comment to this or email us at info@beckreed.com.

I look forward to your suggestions.

 Thank you!!

Tell Us

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I am trying something a bit different. It’s a take-off on what I do in my last class in the Trade Secrets and Restrictive Covenants course I teach at Boston University School of Law. So, here it goes…

This blog is for you. While I enjoy writing it, and will continue to post on things that I think are relevant, timely, or just important to know, in the end, it’s all designed to make it interesting and informative for the readers.

With that in mind, what would you like to read about? As long as it falls within the subject of Fair Competition Law, I’ll post on it. Tell us.

How? Just email us at info@beckreed.com. Then, come back and look for a post.

I look forward to your suggestions.  Thank you!!

The “New No-Poach Agreement” is No More… Sort Of

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In October 2009, Computerworld published an article of mine entitled, “No-poach agreements: A new generation of restriction.” The article discussed a no-poach agreement used by several large high tech companies through which the companies (Adobe Systems, Inc., Apple Inc., Google Inc., Intel Corp., Intuit Inc. and Pixar) agreed not to solicit the other’s employees. Although this type of agreement can be used anywhere, it was apparently used by these companies as a way to circumvent the ban on noncompetes and other restrictive covenants in California.

Despite the location of companies that might enter such agreements, as I said in that article:

[T]he problem with no-poach agreements is potentially manifold. First, the agreements are likely to be held to the same standards as noncompete agreements. Specifically, a court is unlikely to enforce the agreement where it is not reasonable and necessary to protect both companies’ legitimate business interests. Second, particularly where the companies are dominant in their market, they could run afoul of antitrust laws (the laws that make it unlawful for some companies to engage in concerted anticompetitive activities). Accordingly, they must be carefully considered if there is a chance that the companies will be viewed as having violated these laws. Third, the agreement has the potential to be quite pernicious insofar as it may be entirely unknown to the employee. Accordingly, employees of both companies may be under restrictions of which they were unaware and to which they never agreed.

Well, the DOJ has now officially confirmed that the admonitions were well-founded. On September 24, 2010, the DOJ filed a lawsuit against the six companies, claiming that the agreement violated antitrust laws, and simultaneously proffered a settlement agreement for approval by the court.

According to the DOJ’s press release, “The proposed settlement, which . . . will be in effect for five years, . . . prohibits the companies from entering, maintaining or enforcing any agreement that in any way prevents any person from soliciting, cold calling, recruiting, or otherwise competing for employees. The companies will also implement compliance measures tailored to these practices.”

While the impact of the DOJ’s enforcement efforts beyond larger companies is questionable, all companies thinking of these types of agreements should take heed and give due consideration to the potential consequences.

Unfair Competition Basics: Terms of Art … What is a Trade Secret?

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There is an endless variety of types of trade secrets and confidential information. (On the question of the significance of the distinction, see Trade Secret or Confidential Information?, posted on June 4, 2010.)  At their core, trade secrets and confidential information are any secret information.  They may include customer and vendor information, products, product development, business strategy, financial information, customer or employee lists, technical data, design, pattern, formula, computer program, source code, object code, algorithm, subroutine, manual, product, specification, or plan for a new, revised or existing product, or any business plan, marketing, financial or sales order, or the present and future business or products.

On the other side of the equation, trade secrets do not include information or methods generally known within an industry. Thus, general concepts, combined with an employee’s talent, are not trade secrets – although public information acquired through extensive effort and not generally known without such efforts, can be a trade secret.  

Certain specific types of information have received particularized treatment, and are therefore worth highlighting. They are as follows:

Customer Lists/Information:  Customer lists can, but will not always, constitute protectable confidential information. While a naked customer list is not likely to be protected in the absence of special circumstances, the more information about the customers that is included in the list, the more likely it will be protected, provided that such information is maintained in confidence.  

Financial/Business Information:  General business information and routine data are not normally protectible, although specific information can be.

Software:  While software may be subject to other protections (copyright, in particular), it may also be protected as a trade secret.

Social Media, the New World?

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Each time a new technology rolls out, legal decisions follow. Social media is the latest. Remember the cyberstalker? How about Facebook’s lawsuit against Power.com? Or the class action against Facebook over its privacy settings?

The latest twist involves a case filed in the United States District Court for the District of Minnesota, TEKsystems, Inc. v. Hammernick, No 0:10-cv-0081. It is being heralded as the beginning of a brand new type of lawsuit – a new world of litigation.

The case boils down to a claim by an employer that the employee’s use of a social media site (LinkedIn) violated the employer’s rights. Who owns the employee’s “connections” (or contacts)?  Can the employee “connect” (or communicate through LinkedIn) with certain individuals without violating the employee’s restrictive covenants (a noncompete and a nonsolicitiation agreement).

While it may be true that the case is the first to raise the issue of the proper balance of employer/emplee rights in social media, the underlying issue is really nothing new.

Does your company issue Blackberries, iPhones, or other smartphones? How about laptops with Outlook? How many employees limit the contacts stored on those devices to business-only contacts? The balance of rights in the information about the contacts has been a regular issue in many post-employment disputes – as has the substance of texts and emails to former customers and colleagues.

To be clear, lest you think that this is purely a technology issue, anyone remember the Rolodex? (For those who don’t, look at the picture above.) With a Rolodex, you couldn’t just take a copy of your contacts – you had to physically remove the cards with the information about the contacts you considered to be your own, or worse, take the entire Rolodex. 

So, do you need to “disconnect” from people on LinkedIn or “de-friend” people on Facebook, the answer lies less in the technology and more in the underlying state law of trade secrets and restrictive covenants.

This brings us back to where we started: Is Social Media a New World? No. It’s just another example of “what’s old is new again.” Just as you updated your policies to include computers, Blackberries, iPhones, etc., update them to address social media.

Trade Secrets Hollywood Style

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Lawsuits over trade secrets typically involve things like customer lists, formulas, manufacturing processes, etc. Can the location of houses for use as movie sets be a trade secret? Yep. Well, at least that’s the claim made by a company in Hollywood. (Here’s an article about it from Reuters: Trade-secret war over Hollywood set locations.) We’ll have to wait to see what the court thinks.

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