A recently-acquired client is one of three inventors of a device that received a U.S. patent. She asked me whether she can freely license to an LLC owned by two of the inventors the right to manufacture products covered by the license. I replied “yes” – here’s why.
35 U.S.C. Section 262 says:
In the absence of any agreement to the contrary, each of the joint owners of a patent may make, use, offer to sell, or sell the patented invention within the United States, or import the patented invention into the United States, without the consent of and without accounting to the other owners.
In other words, each of the co-inventors, who jointly own the patent, can exploit the patent as she sees fit - and she need not share any profits with the other patent owners.
Furthermore, each inventor can assign or license to third parties her right to exploit the patent, thus my client can grant to her LLC a license to manufacture products covered by the patent without financial obligation to the other inventors.
Please note that this is different from situations involving jointly-owned copyrights, where profits earned by one owner must be shared with the others (see I’m One of Several Authors – Who Owns the Copyright?).
Dana H. Shultz, Attorney at Law +1 510 547-0545 dana [at] danashultz [dot] com
This blog does not provide legal advice and does not create an attorney-client relationship. If you need legal advice, please contact a lawyer directly.
In Blue Nile v. Ideal Diamond Solutions, the U.S. District Court for the Western District of Washington held that co-defendant Larry Chasin, founder and an officer of defendant IDS, was personally liable for infringement of plaintiff Blue Nile’s copyrighted images, even though Chasin claimed he had no role in putting infringing images on websites and he did not know the images were infringing.
Blue Nile is an online jewelry and diamond retailer. Chasin founded and operated IDS to create websites for brick-and-mortar jewelers to help them compete online. The websites included some of Blue Nile’s copyrighted images.
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California is well-known for enforcing non-compete provisions only under narrowly-defined circumstances. A recent case in the United States District Court for the Northern District of California (Richmond Technologies v. Aumtech Business Solutions) illustrates that protection of trade secrets can be one of those circumstances.
Jennifer Polito, a former employee of plaintiff Richmond Technologies (which does business as ePayware), started working for defendant Aumtech. ePayware brought suit, alleging that Ms. Polito misappropriated ePayware’s source code, license keys and customer list to help Aumtech compete against ePayware.
Previously, ePayware and Aumtech had entered into a Confidentiality and Non-Disclosure Agreement that contained a provision by which Aumtech agreed not to compete with ePayware “with similar product and or Service using its technology” for a period of one year.
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I have written, on several occasions, about the importance of assigning copyrights (and other intellectual property rights) when work is done by an independent contractor. (See, e.g., Independent Contractors: How to Assign Copyrights.) Sometimes, however – as suggested in a comment to What is a Derivative Work, and Why should I Care? – it is appropriate not to assign all rights.
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A client sells high-quality collectibles manufactured from authentic sports-related materials (game-used balls, uniforms, arena flooring, stadium seats, etc.). The company ensures that all materials are licensed by the applicable university or professional sports organizations so it can use the organizations’ names and trademarks in promotional activities. Some competitors do not pay for the required licenses, however – and one of these recently was caught as the result of a Groupon promotion.
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I recently realized that I have referred to copyright infringement in quite a few posts, but I neglected to define that term. It is time to correct that oversight.
Generally, copyright infringement occurs when a copyrighted work is reproduced, distributed, performed, publicly displayed, or made into a derivative work without the permission of the copyright owner – i.e., in violation of the copyright owner’s exclusive rights.
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In an interview in today’s San Francisco Chronicle (“Rod Beckstrom, CEO of ICANN, talks about new domain names“), the CEO of the Internet Corporation for Assigned Names and Numbers stated that ICANN will create a global marks database to help protect trademark owners against cybersquatting.
The database will be developed in conjunction with ICANN’s forthcoming implementation new generic top-level domains (gTLDs). ICANN CEO Rod Beckstrom is quoted in the Chron article as saying (emphasis added):
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Marcel Duchamp's derivative work of Leonardo's Mona Lisa
On occasion I am asked about the extent to which a new work can incorporate elements of a pre-existing work without infringing the pre-existing work’s copyright. To answer such a question, one must understand derivative works.
17 U.S.C. Section 101 says (emphasis added):
A “derivative work” is a work based upon one or more preexisting works, such as a translation, musical arrangement, dramatization, fictionalization, motion picture version, sound recording, art reproduction, abridgment, condensation, or any other form in which a work may be recast, transformed, or adapted. A work consisting of editorial revisions, annotations, elaborations, or other modifications which, as a whole, represent an original work of authorship, is a “derivative work”.
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In How to Defeat a Cybersquatter, I wrote about ICANN’s Uniform Domain Name Dispute Resolution Policy. The UDRP provides a quick, inexpensive way to recover a domain name from a cybersquatter (someone who has obtained a domain name that is the same as, or confusingly similar to, a trademark or service mark that you own). However, if you want to recover money, you will have to go to court.
Before proceeding further, let me be clear: I think lawsuits should be avoided whenever possible. As a trial lawyer told me many years ago, “Litigation is a terrible way to run a business.” Unfortunately, litigation sometimes is necessary.
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Many startups have software developed offshore to save money. There is good reason to be concerned, however, about loss of money or, even worse, loss of intellectual property when a developer is located half-way around the world. This post discusses ways to minimize those concerns.
I recommend the following:
- Ensure that the agreement with your overseas developer assigns all rights to the software (including all intellectual property rights) to you.
- Don’t send your “family jewels” offshore. For any portion of the development that requires disclosure of your most important trade secrets, use a local developer.
- Time deliverables and payments such that you never will be too severely financially exposed. If your relationship with the developer sours, you can go somewhere else without a catastrophic financial loss.
If you take care of these three points properly, everything else should be pretty routine.
Photo credit: Rajesh Sundaram via stock.xchng
Dana H. Shultz, Attorney at Law +1 510 547-0545 dana [at] danashultz [dot] com
This blog does not provide legal advice and does not create an attorney-client relationship. If you need legal advice, please contact a lawyer directly.
Dana Shultz is a business-savvy lawyer located in Northern California's San Francisco Bay Area (in the East Bay, near Oakland) who has in-depth knowledge of law, business, technology, and the needs of startup and early-stage companies.