One area of an employee agreement that can be over-looked, or perhaps misunderstood, is intellectual property, according to a post by John E. Munro on the website of Harness, Dickey & Pierce. Intellectual property, however, can be one of the most valuable assets of a company and should not be glossed over.

In the post, Munro discusses three provisions of an employee agreement that may be missing or could use a tune-up.

These are: the present invention assignment clause, the invention assignment carve-out, and a whistleblower provision.

Read the article.

Morgan, Lewis & Bockius lawyers, writing in the firm’s Tech & Sourcing blog, discuss the typical ways that parties can use contracts to determine intellectual property ownership.

“In the context of negotiating an agreement where intellectual property rights are addressed, most parties will readily agree that those intellectual property rights owned by a party before the effective date of the agreement or developed outside of the agreement (commonly referred to as background rights) should be owned by that party,” write Vito Petretti and Cindy L. Dole.

Their article discusses the common allocations of foreground IP rights.

Read the article.

Morgan Lewis authors, writing in the firm’s Tech & Sourcing blog, discuss how patent, copyright, and trade secret ownership works in the United States if there is no agreement in place to allocate these rights.

Fitch, Even, Tabin & Flannery LLP will present a free webinar, “Advanced Obviousness Analysis: Understanding the Reasonable Expectation of Success Doctrine,” featuring Fitch Even attorneys David A. Gosse and Margaret “Peggy” Wojkowski.

The event will be on Thursday, May 31, 2018, at 9:00 am PDT / 10:00 am MDT / 11:00 am CDT / 12 noon EDT.

When an invention combines previously known features, non-obviousness turns on whether the person having ordinary skill in the art would have a reason to make the combination. This analysis requires considering whether the ordinarily skilled person would have a reasonable expectation of success in combining the known features, the firm said in a release.

Recent Federal Circuit cases provide guidance in successfully arguing for patentability under this doctrine and establish that it applies even when obviousness is asserted based on a single reference. Successfully arguing obviousness in patent prosecution, post-issuance proceedings, and district court litigation depends on this analysis with increasing frequency.

In addition to discussing applicable cases, the event will explore these issues:
• When do circumstances favor arguing reasonable expectation of success at the PTAB and during patent examination?
• What types of evidence are helpful or needed to support the arguments?
• How can patents be drafted to establish that skilled persons would not have expected success by modifying the known art?

Register for the webinar.

Bloomberg Law reports that the U.S. Supreme Court upheld an administrative review system that has helped Google Inc., Apple Inc. and other companies invalidate hundreds of issued patents.

The 7-2 court found that a U.S. Patent and Trademark Office review board that critics call a patent “death squad” wasn’t unconstitutionally wielding powers that belong to the courts.

Reporters Greg Stohr and Susan Decker provide background: “Silicon Valley companies have used the system as a less-expensive way to ward off demands for royalties, particularly from patent owners derided as “trolls” because they don’t use their patents to make products. Drugmakers and independent inventors complain that it unfairly upends what they thought were established property rights.”

Read the Bloomberg article.

In a recent Initial Determination, an administrative law judge ruled that a patent owner did not have standing to sue without joining a third party to which certain rights had been transferred, reports Jones Day.

Daniel Kazhdan and Blaney Harper discuss Certain Audio Processing Hardware, Software, and Products Containing the Same.

Andrea Electronics Corp filed a complaint asserting that a number of companies, including Apple Inc., infringed its patents by importing certain products. It was undisputed that Andrea held formal title of the patents, but Apple argued that Andrea did not hold “all substantial rights in the patents-in-suit,” as required by Diamond Coating Technologies, LLC v. Hyundai Motor America.

Read the article.

Fitch, Even, Tabin & Flannery LLP will present a free webinar, “Avoiding Prosecution Churn: When Ex Parte PTAB Appeals Make Dollars and Sense,” featuring Fitch Even partner Thomas F. Lebens and Anticipat founder Trent Ostler.

The event will be Wednesday, March 21, 2018 , at 9 am PDT / 10 am MDT / 11 am CDT / 12 noon EDT.

During the process of acquiring patent rights through the patent application process, applicants sometimes wish to seek review of rejections by an examiner. The formal mechanism for achieving this review is an ex parte appeal to the Patent Trial and Appeals Board (PTAB). Some patent practitioners avoid the ex parte review process, viewing it as lengthy and expensive. But, data and experiences recently compiled by an AIPLA subcommittee suggest that this conventional thinking may be incorrect. It turns out that pursuing an appeal can be a more attractive option than other patent prosecution procedures.

During this webinar, presenters will explore how the AIPLA findings may provide guidance on
• When to file ex parte PTAB appeals
• How often to file these appeals
• Which issues to choose to appeal

Additional topics will include
• USPTO incentives
• Working with the examiner
• Patent term adjustment
• Pre-appeal brief reviews
• Other relevant statistics

Register for the webinar.

In a blog post, DLA Piper partner Jeff Lehrer discusses some common commercial contract issues to watch out for as your company begins contracting with third parties and looks forward to the next venture round or potential acquisition.

He points out that it is important to address the critical intellectual property rights issues that will allow the protection of an idea in the commercial market.

Among the points he discusses: consider the impact that the agreement may have on the company’s ability to pursue subsequent contracting opportunities; commercial agreements must clearly allocate ownership of IP; ensure compliance with open source licenses; and avoid being on the hook for uncapped liability.

Read the article.

A recent written decision of the Patent Trial and Appeals Board sheds light on how the PTAB may treat common sense as used in obviousness arguments, reports Jones Day in its PTAB Litigation Blog.

Albert Liou discusses the recent case of Kranos Corporation v. Riddell, Inc., which involves the claimed invention of a sports helmet with a quick release connector for the faceguard. An important claim element was the “releasable coupler mechanism.”

“The Kranos decision teaches Petitioners to avoid relying only upon ‘common sense’ as a reason for combining references.” Liou writes. “Rather, an effective Petition should lead the PTAB to conclude that ‘common sense’ supports obviousness, after presenting the PTAB with a persuasive showing of why the elements or structure of one reference should be combined with those of another.”

Read the article.

ContractWorks will present a complimentary webinar, “Surviving the NDA Nightmare: Managing Legal & Logistical Problems,” on Thursday, February 22, 2018, at 11 AM PST.

The non-disclosure agreement is among the most crucial and the riskiest of all agreements handled by general counsel and their teams, ContractWorks says on its website. Webinar presenters will discuss how to overcome common challenges when working with NDAs, minimize legal and logistical problems associated with them and save on overall time spent managing the NDA process.

The webinar will cover:

• How to identify common and unforeseen risks in your NDAs
• How to mitigate the risks your NDAs carry
• How to utilize software to improve your process, save time, and enhance security

Anyone who is unable to participate in the live webinar may register anyway, and receive a recording after the webinar.

Register for the webinar.

Carlton Fields shareholder Eleanor M. Yost asks and answers the question: What is the difference between an employment agreement that says “I hereby assign inventions I create during my employment to my employer,” and one that says “I will assign inventions I create during my employment to my employer”?

The difference, she writes, is one word … and possibly millions of dollars.

The article on the firm’s website discusses a case from the U.S. Court of Appeals for the Federal Circuit that affirmed a decision that an employment agreement providing an employee “will assign” title to her inventions to her employer did not automatically transfer title or any related patent rights.

Read the article.

By Christopher Barnett
Scott & Scott LLP

In order to effectively manage their software usage and to mitigate compliance exposure, companies need to know how to gather and analyze information regarding their product usage. While some software products may have unique data-collection requirements that ordinarily would not be applicable for other products, usage levels for many products can be measured using a common set of reports that companies can prepare themselves to gather. The purpose of this and other posts in this series of blog entries is to give companies insight regarding how to gather those datasets and why that information is relevant to their licensing obligations.
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The backbone of deployment data for many products is a list of all devices in an IT environment capable of running or interacting with a licensed software product. This inventory should include all physical and virtual workstations and servers. In many cases, it also should include devices like thin clients that may not be capable of running installed copies of software, but that can be used to access software deployed in server environments. The list also should include information regarding the make and model of each device as well as the make, model and quantity of processors and processor cores for physical servers and virtualization hosts. (Note that information regarding virtualization environments will be discussed in a separate entry in this series.) Finally, in order to validate the completeness of the principal hardware inventory, it almost always is a good idea to obtain a secondary inventory from a source like Active Directory or an antivirus solution.

Tools

Most companies use automated, software-based inventory tools in order to gather information regarding the hardware and software present in their IT environments. Using tools is not absolutely necessary – especially in very small environments – where a physical machine count, purchasing records, and change logs may provide sufficient information to allow a company to know what it owns. However, tool-based inventories almost always represent a best practice, since manually maintained reports should be audited against other data sources. Furthermore, it is typically much less practical to maintain a software inventory manually, and the tools used to gather software-installation data for an environment typically can provide all the information needed for a hardware inventory.

The tools used will vary depending on the types of software being run in the environment and on the way that the IT resources are configured. For example, an “agentless” tool – which consists of a centralized installation that uses communication protocols to remotely gather information from other machines on a network – may be the best choice for companies that have relatively simple networks with limited numbers of domain-administrator-level credentials that can be used to access all connected devices. Agentless tools usually are less expensive and easier to deploy than other kinds of solutions. Microsoft’s MAP Toolkit is a free, agentless tool and is one of the most widely used solutions for gathering information regarding Windows-based environments. Spiceworks is another, popular, agentless tool.

However, in some cases, an agentless tool may be a bad fit. Some environments may be based on global deployments residing within multiple different domains that do not share a common set of administrative credentials. Alternatively, it may be necessary for an environment to be highly segmented for security reasons, with that segmentation effectively preventing an agentless tool from gathering information from resources in other segments. In these circumstances, an “agent-based” tool – consisting of a centralized management console and multiple, small “agent” installations on each computer deployed within an environment – may be a better fit. In that scenario, the agents typically do a more thorough job of gathering information regarding the machines where they are installed and often can be used to remotely manage those machines in addition to simply gathering data. Furthermore, agent-based tools can take advantage of encryption technology and a wider variety of communication protocols to avoid the kinds of network-configuration obstacles that may prevent agentless tools from providing meaningful information. Unfortunately, all of that functionality comes at a cost, as agent-based tools often are much more expensive and much more difficult to successfully install and configure. Ivanti IT Asset Management (formerly known as LANDESK) is a very popular agent-based tool. IBM’s License Metric Tool is another well-known (perhaps infamous) agent-based tool that may be required for companies using certain kinds of IBM software in certain kinds of environments.

Some smaller companies may not want to invest the capital or resources to deploy an IT asset discovery tool but still may not want to rely on manually-maintained inventories. In those circumstances, it may be feasible to gather information using scripts or system queries that provide the same kind of information as automated tools, but via an ad hoc process. In Windows-based environments, PowerShell queries can deliver a wealth of information regarding machines residing with the same Active Directory architecture and also regarding the users accessing those machines. System queries also play an important role in environments running Oracle software. Oracle’s License Management Services (LMS) auditors have identified a number of “verified” third-party tools capable of gathering information useful for managing Oracle license compliance. However, the most common way to gather Oracle usage data (and the way preferred by Oracle LMS) is via a set of proprietary scripts and queries that are made available during an Oracle audit. Unfortunately, Oracle LMS does not make the full set of tools publicly available, though Oracle does offer a free Database Option and Management Pack Usage script here.

In addition to the primary discovery tool, companies also should identify a secondary source of information regarding the devices running within their networks. The purpose of this kind of secondary source is to provide a means to measure the completeness of the primary inventory. If there are machines identified in the secondary inventory that are not being captured by the primary inventory tool, then a company knows either that the secondary inventory is over-inclusive and needs to be cleaned up or (more critically) that the company needs to continue deploying or configuring the primary tool to capture all of the company’s computers. Given the limited purpose of the secondary inventory, it may consist of reporting out of a variety of different tools or systems and really needs to consist only of a list of machines and (preferably) the operating systems running on those machines. There are a number of Active Directory queries that can be used in order to generate such a list. Other possible sources of information are lists of machines managed by an anti-virus solution or lists of machines identified within procurement or change-management systems.

Finding the right discovery tool for an IT environment can be a time-consuming and even expensive undertaking, but it is an important one. Most companies need to have a software-based tool for gathering the information required to maintain compliance with their license agreements. However, it also is important to keep in mind the fact that no tool is a silver bullet for compliance. All tools must be periodically tested on a regular basis to ensure that they are working properly. Furthermore, while many tools offer license-management functions, those functions face a dynamic obstacle in the form of software publishers’ ever-evolving license metrics and rules. In order to ensure compliance, it always is necessary to reconcile inventory data against the most current iteration of those rules, and that analysis may need to be a manual one.

Tom Petty
Image by musicentropy

A music publishing company has filed a lawsuit in California federal court that alleges that Spotify is using tens of thousands of popular songs without a license and compensation, reports Billboard.

Reporter Eriq Gardner writes that Wixen Music Publishing is seeking damages worth at least $1.6 billion plus injunctive relief.

The report says Wixen administers song compositions by Tom Petty, Zach De La Rocha and Tom Morello of Rage Against the Machine, The Black Keys’ Dan Auerbach, Steely Dan’s Donald Fagen, Weezer’s Rivers Cuomo, David Cassidy, Neil Young, Sonic Youth’s Kim Gordon, Stevie Nicks, and many others.

During 2017, Spotify was hit by lawsuits from some other songwriters.

Read the Billboard article.

Fitch, Even, Tabin & Flannery LLP has posted an on-demand webinar, “The Ubiquitous Problem of Inherency in Obviousness: Southwire Co. v. Cerro Wire, LLC,” featuring Fitch Even attorney Giles N. Turner.

Obviousness challenges tied to the doctrine of inherency can arise during various stages in the patent life cycle, including patent prosecution, post-issuance proceedings, and litigation, the firm says on its website. Despite how frequently these challenges occur, the law applicable in this area has been less than clear. While recent case law has helped to provide clarification, the Southwire case illustrates that overcoming inherency-based obviousness arguments does not always result in a win for the applicant or patentee.

The webinar explores these topics and more:

• The nature of obviousness contentions based on inherency
• Practice pointers in applying the doctrine of Southwire and other recent cases
• Hypothetical examples showing how to demonstrate patentability

A recording of the webinar will be available to view until Nov. 28, 2018.

Watch the on-demand webinar.

Marcus Evans Summits has announced the schedule for the 2018 Chief Litigation Officer Summit and IP Law Summit, both scheduled for March 11-13, 2018, a the Venetian in Las Vegas.

Both summits will feature networking, presentations and panel discussions.

“With our unique in-house platform, attendees have the ability to pre-select meetings with the delegates/vendors they would like to meet with. This way your agenda is tailored exactly to your needs and maximises your time there,” the company says in its invitation.

Get details about the summits.

By Christopher Barnett
Scott & Scott LLP

Many of our clients have been contacting us in recent weeks (mid-late 2017) regarding notices they received from Microsoft requesting an internal self-assessment of their license positions under their Services Provider License Agreements (SPLAs). Naturally, many of those clients have questions about that process and the ramifications of cooperating with Microsoft.

For those who may be unaware, SPLA is the principal licensing framework that Microsoft uses in order to enable online service providers to incorporate Microsoft’s software products in the solutions that those providers host for their customers over the Internet. Unlike traditional license agreements, which typically entail capital expenditures in order to acquire perpetual software licenses that can last longer than the term of the purchasing agreement, SPLA entails a monthly reporting model. Each month, service providers measure their usage of Microsoft products in their hosted environments, and they report that usage to authorized SPLA resellers. The resellers then generate invoices based on those reports, which the service providers typically pay as an operating expense.

Like all commercial Microsoft licensing agreements, SPLA gives Microsoft the right to conduct audits to verify that its products are being used (and reported) consistent with applicable licensing terms. In many cases, Microsoft designates third-party firms, such as KPMG, Deloitte or Pricewaterhouse, to gather the necessary inventory data and to prepare a report comparing the usage previously reported under SPLA against the deployments measured based on the audit data. Microsoft then reviews the auditors’ reports, and the audited companies then usually place supplemental license orders under their SPLAs in order to resolve any under-reporting identified through the audit process. For service providers with high volumes of monthly usage, the dollar amounts of those supplemental orders can be well into the millions of dollars.

Under most SPLAs, Microsoft has the express right to require its SPLA licensees to complete the self-assessment process in lieu of submitting to a “traditional” SPLA audit conducted according to the process described above. However, even if that right were not stated in the SPLA, we would recommend that our clients comply with the self-assessment process in an effort to avoid any more burdensome audit activity to be undertaken by a third-party auditor. The self-assessment process represents a much more favorable framework for verifying compliance with SPLA, for at least the following reasons:

• No deployment or usage information needs to be submitted to Microsoft. In most cases, the self-assessment process typically is completed when a licensee provides a signed, written certification confirming that it has completed an internal review and either (1) that all SPLA usage has been properly reported, or (2) that a supplemental report has been submitted in order to resolve any identified, past under-reporting. It usually is not necessary to provide Microsoft with any deployment counts or any further details regarding the results of the internal review.
• No under-reporting penalties appear to apply. The SPLA self-assessment notice message typically requires only that a licensee report additional license quantities to the reseller in order to resolve any past errors. In other SPLA audits, Microsoft has the right to apply a contractual penalty for any under-reporting, and that penalty typically consists of 25% markup over list SPLA prices. The self-assessment notice does not indicate that the contractual penalty would apply for any supplemental orders placed as a result of the self-assessment process.

We therefore ordinarily recommend that our clients cooperate with SPLA self-assessment requests.

In theory, the self-assessment process should mirror a SPLA licensee’s monthly reporting process. If the licensee has mature software asset management (SAM) processes in place, then each month it should be gathering and archiving all the data that it should require in order to confirm its usage of any Microsoft products installed in its environment. For that reason, a confident licensee in that position could sign and return the requested self-assessment certification immediately upon receiving the self-assessment request.

However, many licensees are not in that position, and for them, the self-assessment represents an excellent opportunity to assess and review their internal monthly reporting processes. We regularly work with SPLA licensees to conduct those sorts of initiatives, identifying tools that would be capable of gathering information relevant to licensing information as well as reports that should be generated and gathered each month in order to confirm usage levels. While the kinds of reporting used will vary, depending on the kinds of Microsoft products being licensed under SPLA, the typical set of reports includes the following:

• Hardware Inventory – One or more reports identifying all physical and virtual servers and the operating systems running on those machines.
• Software Inventory – One or more reports showing all Microsoft products installed on the computers identified in the hardware inventory.
• Virtualization Data – Reporting that maps virtual machines to their physical hosts and provides relevant information regarding those hosts’ hardware configurations.
• Active Directory – Reporting that identifies the computers included in the hosting domain(s) and also the user groups and accounts with access to those computers.
• Secondary Inventories – While not requested in every audit, Microsoft’s auditors also may ask for secondary data sources to validate the completeness of the device inventories generated from the other sources identified above. The list of devices from an anti-virus solution is a common request.

We also typically advise our clients to create and maintain archives of all reports gathered each month in order to support their SPLA reports, so that historical usage may be validated during any SPLA conducted in the future by one of Microsoft’s selected audit firms. Absent that kind of historical data repository, Microsoft’s auditors often attempt to extrapolate historical usage levels based on data collected during the audit – those extrapolated findings often are inaccurate and can result in inflated SPLA audit resolution demands from Microsoft.

Business leaders who receive self-assessment requests from Microsoft should work with their teams to determine their level of confidence regarding the monthly SPLA-reporting practices. If there is any doubt regarding the maturity of those practices, then the team should undertake an initiative to implement any appropriate improvements and, absent any unique concerns, to provide a timely response to the self-assessment request. If the team believes that it lacks any subject-matter expertise in order to complete that initiative, then it makes sense to engage a knowledgeable attorney to assist with the process.

Fitch, Even, Tabin & Flannery LLP will present a free webinar, “Presenting Alice-Friendly Patent Claims: Is McRo Worth a Second Look?,” featuring Fitch Even partner Steven G. Parmelee.

The event will be Wednesday, Oct. 25, 2017, at 9 am PDT / 10 am MDT / 11 am CDT / 12 noon EDT.

CLE credit has been approved for California, Illinois, and Nebraska. Other states may also award CLE credit upon attendee request. There is no fee to attend, but registration is required.

While the Federal Circuit has identified small precedential islands of relative safety, the court has yet to chart a veritable Northwest Passage through which one can safely navigate the risks and concerns presented by the Supreme Court’s Alice decision, the firm says on its website.

Or have they?

McRo, Inc. v. Bandai Namco Games America, Inc., et al. is sometimes considered for its rather tepid and, to date, somewhat inconsequential consideration of preemption issues. McRo’s analysis and holding regarding abstractness, however, is perhaps more valuable to those writing and prosecuting patent applications than has been generally acknowledged to date.

During this webinar, presenter Steve Parmelee will be explore these questions:
• Whether McRo presents a new two-step abstractness analysis that offers useful and practical opportunities
• If so, whether such an opportunity is “more than a drafting effort designed to monopolize the [abstract idea] itself”

He will also share these insights, among others:
• Anecdotal McRo prosecution experience at the USPTO
• Claim and specification drafting tips

Following the live event, a recording of the webinar will be available to view for one year at www.fitcheven.com.

Register for the webinar.

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New lawsuits are down — way down — in the mostly rural district that was once the national hotspot for patent disputes, reports Ars Technica, citing a study by IP litigation research company Lex Machina.

In a case called TC Heartland, in May, the Supreme Court sharply limited where patent owners can choose to file their lawsuits.

Joe Mullin writes that Lex Machina compared patent filings in the 90 days before the TC Heartland decision came down on May 22 to the 90-day period directly after the decision. Before the ruling, 377 patent lawsuits were filed in the Eastern District of Texas. After TC Heartland, just 129 cases were filed in a similar period.

“Much of that litigation seems to have moved to Delaware, where many national firms are incorporated due to favorable tax laws,” Mullin writes. “Delaware’s single judicial district had 153 patent lawsuits in the period before TC Heartland, but that shot up to 263 lawsuits in the period after the decision.”

Read the Ars Technica article.

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Texas trial attorney Clyde M. Siebman has earned selection as the Dallas/Fort Worth Lawyer of the Year for patent trials in the 2018 edition of The Best Lawyers in America. His selection is based on nominations from attorneys throughout the D/FW area, including the Eastern District cities of Plano and Sherman.

Siebman is the founder of Siebman, Burg, Phillips & Smith, LLP, which maintains offices in Plano, Sherman and the other Eastern District cities of Marshall and Tyler. He is Board Certified in Civil Trial Law by the Texas Board of Legal Specialization, and has appeared as counsel in more than 400 federal court cases during his career.

In addition to his patent litigation expertise, Siebman also is recognized in Best Lawyers for his extensive work in commercial litigation, copyright law, and trademark law. He was named D/FW’s top patent litigator after earning the highest overall ranking from other local trial attorneys who handle patent cases.

Read about the award.

Anderson Duff, writing for Revision Legal, discusses coexistence agreements, which are contracts whereby two trademark owners agree to use their similar marks, but agree to limitations.

“The purpose of the coexistence agreement is to set out the agreement of the disputing trademark owners about use of the marks,” he explains. “Most often, the coexistence agreement will limit the use of the similar marks to certain geographical territories or to certain types of good or products.”

He discusses the historic coexistence contract involving the trademarks “Sun-Maid” and “Sun-Kist.”

The article also explains the importance of careful drafting of coexistence agreements.

Read the article.