Will Your Mock Trial Get You Sued?

Perhaps. The United States Patent and Trademark Office has granted Patent Number 6,607,389 for Systems and Methods for Making Jury Selection Determinations. The patent covers questioning a venire of potential mock jurors, striking some for cause and others on preemptory challenges and trying the case to both the stricken and non-stricken mock jurors. It is difficult to believe no one ever did this prior to December 3, 2000, but that is apparently what the Patent and Trademark Office has been led to believe. Watch yourself though. Although the patent may indeed be invalid as relating to subject matter that was in the prior art (public domain), prior to 2000, but given the average attorney fees of one and a half million per side for patent cases, you may not want to be the test case trying to invalidate this patent.

Limit Your Online Liability

One of the primary benefits of doing business online is scalability. You devise something that works and simply replicate it to reap increased profits. One of the seldom discussed dangers of online activity is the scalability of liability. In the bricks and mortar world each transaction is typically a little different. The transactions also come at a much slower pace. The benefit is that if you inadvertently do something with the potential of getting you in legal trouble, you can stop the hemorrhaging before it gets out of hand and repair the damage associated with the limited number of transactions. Online, liability expands with the rate of transactions. Often the transactions are so fast and numerous, that by the time you are aware there is a problem, the damages are astronomical.

If the liability is too large, there may be nothing you can do to protect your business, but there is something you can do to protect your personal assets from being taken. By incorporating, or forming a Limited Liability Company, you may be able to drastically decrease your exposure for much less time and money than you might think. Another advantage relates to the on-going existence of the company. If an owner of the company dies or wishes to sell their interest, the corporation can continue to exist and do business. If an owner of a Sole Proprietorship or Partnership dies, generally the business or partnership also terminates. For more information on protecting your personal assets from your business liabilities, contact Rush Nigut or take a look at his Small Business Formation Package.

ROCA Your World

ROCA, or Reverse Online Class Action, Lawsuits have been one of my major pet peeves for some time now. What is a ROCA Lawsuit? A ROCA lawsuit is one which involves: 1) allegedly illegal online activity; 2) very little initial investigation; 3) sweeping threat letters to the owner of the computer demanding large damages; and 4) cripplingly litigation costs in the event the damages are not paid. ROCA suits, like the Record Industry Association of America suits against music downloaders and DirecTV suits against purchasers of descramblers have exploded in the past few years.

It used to be that plaintiffs who felt they had been wronged in small amounts, by a large number of people decried the judicial system. The plodding pace and exorbitant cost of federal court litigation made it cost prohibitive to sue any of the defendants. ROCA has turned that philosophy on its head. The time and cost involved have not changed, and in fact, have gotten worse, but plaintiffs now use that to their advantage. In the past if you sent a letter to someone demanding three thousand dollars not to take them to federal court, they would likely toss the letter without even a response. They knew you were not going to spend eighty thousand dollars to collect three.

To overcome that problem, plaintiffs with a large number of similarly positioned defendants take an assembly line approach. They send the first letter, the plaintiff ignores it, and then they spend the eighty thousand dollars to get the three. In the process, the small defendant also spends eighty thousand on attorney fees. If the defendant cannot spend the eighty thousand on attorney fees, they typically get slapped with an astronomical judgment which often includes payment of both sides’ attorney fees.

Sure, the defendant may get stuck paying out more than the judgment and may even get stuck with problems collecting from a bankrupt defendant, but they can take solace in the fact that the next five thousand defendants, having seen the carnage wreaked upon the first defendant, readily pony up the three thousand dollars in response to the letter.

Often, after the first lawsuit, attorneys are only tangentially involved, with the bulk of the collection efforts accomplished by “investigators” paid a commission on payments collected. Ironically, the defendants causing most of the harm are far too savvy to get caught in the net. They know that the Plaintiffs can only afford to do limited investigation on each case. Sadly, a large percentage of people receiving the letters are either not the actual perpetrator (someone else was using their computer or credit card), had no idea what they were doing was wrong, or were too unsophisticated to use the illegal device they purchased.

Your best defense in avoiding being the “victim” of a ROCA suit? Knowing the law and what is and what is not illegal online. If you have any questions about what you can and cannot do online feel free to contact me through Brett Trout or for more information, check out Internet Laws Affecting Your Company

Apple Battle

Back in 1968, when the Beatles first started using their apple logo, they could hardly have anticipated the current battle taking shape with Apple Computer. Since that time, the Beatles spun off the apple logo to Apple Corps Ltd., as the record distribution end of the business. Steve Jobs began using his own apple logo in 1976 when he founded Apple Computer. In 1981, Apple Corps sued Apple Computer for trademark infringement. The parties later settled for $80,000 settlement and a promise from Apple Computer that it would steer clear of the music business

In 1989, three years after Apple Computer added audio recording to its computers, Apple Corps sued again, and settled again, this time for an estimated $26.5 Million. . The settlement Agreement gave Apple Corps the right to use “Apple” on
"creative works whose principal content is music", and gave
Apple Computer the right to use “Apple” on "goods or
services...used to reproduce, run, play or otherwise deliver such
content," but not on content distributed on physical media. ...

In September 2003 Apple Corps sued Apple Computer over the wildy popular iTunes and iPod asserting a violation of the 1991 Agreement. The trial begins tomorrow, at the High Court before Mr. Justice Mann, a justice well versed in music and computers and iPod owner of an iPod.

This case brings to the forefront the necessity of incorporating future technologies into present agreements. Although no one can predict the future, a skilled lawyer, versed in technology and intellectual property issues can make educated guesses about dividing up unforeseen markets. As Apple Corp and Apple Computers are finding out today, an ounce of anticipation can be worth tens of millions of dollars worth of cure. For information on how your company might benefit from anticipating future technology in present agreements, contact Brett Trout

“Nigga” please

For nearly one year now comedian/actor Damon Wayans has been trying to obtain a federal trademark registration on the word “nigga”. The problem is that federal law states federal trademark registration shall not be denied unless the proposed mark “consists of or comprises immoral, deceptive, or scandalous matter; or matter which may disparage or falsely suggest a connection with persons, living or dead, institutions, beliefs, or national symbols, or bring them into contempt, or disrepute.” What constitutes immoral, deceptive, or scandalous matter? What “disparages” a person?

Does it matter whether you are registering a term now, as in the case of “nigga” which has distinctly different connotations now, than it did one hundred years ago? Does it matter who is registering the trademark? The United States Patent and Trademark Office has just allowed the trademark “Dykes on Bikes.” An opposition has been filed to the trademark application, but the government apparently does not deem the term “dykes” as being immoral, deceptive, scandalous or disparaging in reference to homosexual women.

Would the ruling be the same if the KKK were registering the trademark as opposed to the San Francisco Women's Motorcycle Contingent? If so, if the registration depends upon the nature of the registrant, rather than the mark itself, would a registrant be able to assign the trademark to an entity that would not have been able to register the trademark directly? Would it be appropriate to pay a third party to register and assign a mark to you that you could not have registered yourself?

These recent trademark applications have turned the trademark examination process on its head. With individuals taking ownership of terms that have been thought disparaging in the past, it appears time for some new rules and new ways of thinking about what is and what is not, a trademark worthy of federal protection.

Of eBay, Infringement and World of Warcraft

24 year-old Brian Kopp of Bronson Florida has taken a page from his personal online gaming guide and attacked a real world behemoth. Kopp authored his own gaming guide entitled The Ultimate World of Warcraft Leveling & Gold Guide.

Kopp began selling the guide on eBay, but eBay repeatedly removed his auctions after complaints from Blizzard Entertainment, its parent company Vivendi Universal, and the Entertainment Software Association (ESA), owners of World of Warcraft intellectual property. Kopp responded that his guide did not infringe any intellectual property rights and the auctions were subsequently reinstated. After numerous complaints, however, eBay eventually terminated Kopp’s eBay account.

Kopp responded with a Federal lawsuit , filed yesterday, demanding damages for lost sales, an injunction against any future interference with his auctions and a declaratory judgment that his guide is non-infringing. While it is rare for a small seller to sue such a large company, the lack of any clear rulings on such issues, combined with the relative ease of putting together such lawsuits will undoubtedly lead to more and more such litigation in the future.

Changing the Way the Game is Played

Sony, set to release its Playstation 3 this November, plans to introduce a free online gaming network. Although the network will have a paid premium subscription component for downloading games and additional content, the gamer-to-gamer aspect will be free. With over eighty-five percent of online Xbox 360 gamers downloading content, Sony hopes to change the way games are purchased, played and discussed. If the shift is effective, Sony will have some damage control to do with retailers who stand to lose Billions annually in lost game sales.

France too Free for Apple?

France is introducing legislation that would make it legal for consumers to defeat copy protections on music to allow the music to be played on multiple platforms. If the legislation passes, consumers would be able to download music from iTunes and play the music on non-apple players. The threat to Apple’s iPod market share may be just enough to cause Apple to pull its iTunes service out of France. This new legislation comes as happy news to consumers becoming more and more disgruntled with music they purchased, but cannot use on devices or computers of their choice.

As some will remember, back in 2002, Apple pulled the iPod off French shelves until a modified version could be produced for the French market which produced sounds less than 100 decibels, in keeping with French law.

Patent Office Streamlines Online Application Process

Patentees have long been able to file patent applications online. The old process was so much more complicated that hard copy filing however, that it was completely ignored by most inventors and law firms. In an effort to encourage online patent filing, the Patent Office has just introduced the new electronic filing system ( EFS-Web). According to the Patent Office, the new system offers online filers several advantages. EFS-Web works in conjunction with filers’ existing software provides for submission of documents using PDF files. The EFS-Web system also allows staff to file documents prepared and reviewed by patent attorneys. Patent filers can also now pay filing fees online.

While the new EFS-Web system will come as welcome news to patent attorneys, the system is probably still too complex and time consuming for individual or “one-time” filers. As before, the Patent Office still recommends individual inventors still seek the advice of a patent attorney for the preparation and filing of patent applications. Individual inventors will still see benefits of the new system in the form of quicker filings, earlier priority dates and more rapid access to their applications. Online EFS-Web patent filings are rapidly accessible through the existing Patent Application Information Retrieval (PAIR) system, allowing inventors and patent attorneys to confirm the accuracy and completeness of filings. EFS-Web also provides filers with an automatic electronic receipt.

Beware the Patent Troll?

What is a Patent Troll? A Patent Troll is an individual or entity with patents that earns money not through manufacturing the patented product or process, but by threatening other producers into licensing the patented technology. Patent Trolls rely on the very high cost of patent litigation (usually $1.5 Million dollars for each side) and low royalty demands to build their coffers. By steering clear of deep pocket infringers Patent Trolls make very lucrative profits. They key to being a successful Patent Troll is to convince the accused infringer that a lawsuit will be filed. Even if the accused infringer were to fight the lawsuit and win, there is very little likelihood that the accused infringer will ever recoup the huge attorney fees spent in its defense.

So why have Patent Trolls become such a problem recently? Two reasons. First, as Internet-related business method patents were just recently allowed by the Patent Office, the Patent Office had very little ammunition to strike down early Internet-related patents. Accordingly, the Patent Office granted many patents on old technology. These patents are bad, but few companies are willing to spend the $1.5 Million to invalidate them. Second, courts are very unfamiliar with patents in general and technology patents in particular. If a Patent Troll were to ply their system with basic mechanical patents, courts, understanding the basic technology, would be likely to kick out frivolous infringement lawsuits.

With complex patents, however, courts are very reticent to kick out lawsuits covering technology with which they are unfamiliar. Accordingly, accused infringers are faced with the decision to pay a little to the Patent Troll or a lot to their attorneys. Faced with this proposition, most accused infringers pay the royalty fee.

What is being done about Patent Trolls? The Patent Reform Act is currently making its way through Congress. The Act contains limitations on the rights of patent holders who do not use their patented products to pursue those who do. This obviously will not stop the problem altogether, but it is a valuable first step.

Get sued for doing nothing

With the latest round of distributed denial-of-service (DDoS) attacks earlier this year, companies are looking into news ways to address the problem. As the actual hackers are often impossible to track down, companies are looking to hold home computer users liable for their part in these attacks.

In early 2006, hackers attacked over one thousand servers using “reflected” DDOS attacks. Like ordinary DDOS attacks the hackers hijacked unprotected third-party “zombie” computers to flood domain name system (DNS) servers with requests. Because many DNS servers are “recursive” if they do not have the requested information locally, they will search out the information from other sources. This recursive feature increases the destruction of the attack by orders of magnitude. Instead of providing and accurate address, the hacker provides the DNS server with a “spoofed” address of the intended victim, which results in the victim receiving a suffocating volume of traffic sufficient to shut down their website.

Since hackers are so difficult to locate, companies are now looking to the owners of these “zombie” computers for compensation. Zombie computers are computers infected with the DOS virus. The legal theory is that by not properly protecting their computers, owners of these zombie computers negligently facilitated the millions of dollars of damage associated with the attacks. Even thought this legal theory has not yet been tested in the courts, even a successful defense of such a lawsuit would likely cost tens of thousands, if not hundreds of thousands of dollars.

How can you avoid getting sued for doing nothing? Do something. Protect your computer from DOS viruses. At the very least, keep your antivirus and other software updated with the latest patches. Combine your firewall with an intrusion detection system to alert you of any strange activity. Finally, if you can, configure your router to actively weed out DDOS activity. Your system will run smoother and you will rest easier knowing your computer system is not setting you up for a financial nightmare.

Copyright, Plagiarism and The DaVinci Code

I have received a lot of questions on plagiarism and copyright infringement as a result of the ongoing court case over The Da Vinci Code and author Dan Brown. Just what is Dan Brown accused of doing? Michael Baigent and Richard Leigh, two of the authors of the book The Holy Blood and The Holy Grail accuse Dan Brown of infringing the copyright they hold in that book.

If the court finds Dan Brown indeed committed copyright infringement, he will likely have to pay Messrs. Biagent and Leigh a very large sum of money. If the court finds Dan Brown did not commit copyright infringement, he will likely have to pay nothing, even if Dan Brown committed plagiarism. So then, what is the difference between copyright infringement and plagiarism?

Plagiarism is presenting someone else’s work as your own. Copyright is the author’s right to reproduce an original work of authorship. Plagiarism is enforced by schools and academics; Copyright is enforced by courts. While copying The Da Vinci Code and publishing the copy as your own, would be both plagiarism and Copyright infringement, the two do not always overlap.

For instance, if you copied the Bible and presented it as your own, that would be plagiarism, since it involves claiming credit for something you did not do. This might get you kicked out of school, but would not constitute illegal copyright infringement, since there is no copyright on the Bible. Conversely, incorporating large, properly cited, excerpts from The Da Vinci Code in your own novel, would likely not constitute plagiarism, since you are not claiming the work as your own, but could constitute copyright infringement, since you are reproducing the copyrighted work without permission.

Plagiarism and copyright infringement both, however, require proof of access. The similarity between the original and accused books often circumstantially proves the second author had access to the work of the first. If you could though, prove that you had been trapped in a cave for the last ten years, with no access to the outside world, and that you coincidentally came up with The Da Vinci Code word for word, you could, ostensibly get your own copyright on the book and sell copies. This would not constitute either plagiarism or copyright infringement.

What is a Patent?

As a patent lawyer the first question people always ask is "What is a patent?" Okay, the first question they always ask is "Why would you wan to be a patent lawyer," but I typically ingore them and launch right in with a description of what a patent is. And today I selflessly share that discussion with you:

Patents protect inventions. Patentable inventions include new and useful processes, machines, manufactures or compositions of matter, as well as any new and useful improvement thereof. Patent protection is not available under either state or common law. Under federal patent law , an inventor can obtain the right to prevent others from making, using or selling a particular invention. While patents formerly remained in force for 17 years from the date of their issuance, patents now expire 20 years from the date of their filing. Bear in mind that a patent does not allow its holder to do anything, only to prevent others from utilizing the invention.
Patent protection is not available for all types of inventions. Patent law does not protect any ideas, any obvious combinations of pre-existing devices, illegal or immoral matter, pure research, or anything that is simply a novelty or curiosity. Items such as perpetual motion machines are summarily rejected by the United States Patent and Trademark Office.

Examples of patents can be found on the governmental web site, www.uspto.gov. Patents typically consist of a brief description of the background and pre-existing technology, a detailed description of the preferred embodiment of the invention, drawings and/or flowcharts associated with the invention, an abstract of the invention, and one or more claims. The claims are each a one-sentence description of the invention which, preferably, are broad enough to differentiate the invention over any pre-existing devices or obvious combination thereof. The claims, however, must be narrow enough so as not to include any extraneous matter, which would serve as a limitation to the enforceable scope of the patent.

If an infringer copies the functional elements of a patented device, they may be liable for infringement. To determine infringement, a court looks at a particular claim within the patent to determine if each element thereof, or its equivalent, can be found in the accused device. If the accused device does indeed include every element of the claim, the device infringes and the infringer is liable to the patent holder for associated damages. Regardless of the number of claims included within the patent, if the accused device infringes a single claim, the infringer is liable for the same amount of damages as if the infringer had infringed every claim of the patent. While it is infringement to make, use or sell a device which infringes a valid, non-expired patent, it is not an infringement to patent an otherwise infringing device.

As an example, if an inventor were to invent a chair and receive a patent thereon, a subsequent inventor could file and obtain a patent on a chair with arms. Neither the first patent owner nor the second patent owner could make the chair with arms without infringing the other’s patent. However, the parties could negotiate a cross-license where both parties pay each other a royalty in exchange for being allowed to manufacture the improved device. If an entity is found to have infringed a patent, the available remedies include an injunction, as well as the patent holder’s damages. In the case of willful infringement, treble damages and attorney fees may also be available.

Prior to 1998, it was generally thought that methods of doing business were not protectable under existing patent laws. However, in State Street Bank & Trust Co., v. Signature Financial Group, Inc., the Court of Appeals for the Federal Circuit on July 23, 1998, decided that “A (computer) programmed with … software … (is) statutory subject matter, even if the … result is expressed in numbers.”
Subsequent to that decision, business entities throughout the world have filed thousands of “business method” applications, many relating to Internet commerce, in hopes of obtaining exclusive rights to completing certain transactions online. Some of the most notable “business method” applications include those issued to Amazon.com for secure credit card processing, Priceline.com for reverse auctions, Lycos for its spider technology, and Cybergold for paying individuals to examine advertisements. Shortly after the State Street decision, the United States Patent and Trademark Office identified several problems with its existing patent application review process.

Typically, if an inventor files a patent application on a novel mousetrap, the Examiner accesses the mousetrap patent file and compares the new application against the existing technology. The problem associated with “business method” applications is that, prior to 1998, no such applications were allowed. Subsequent to 1998, when an Examiner received a patent application for such a “business method,” the Examiner attempted to access the associated “business method” patent file only to find no existing patents. There was no standardized method in place to examine existing technology outside of the Patent Office.

Many such applications were summarily allowed, despite the inclusion of elements that had been in the public domain for many years. In an attempt to address the problem of business method applications issuing on public domain materials, the United States Patent and Trademark Office has adopted new protocols to more thoroughly examine such applications. These protocols appear to be eliminating the issuance of overly broad Internet related patents. They have not, however, retroactively eliminated any erroneously granted “overbroad” Internet patents. Additionally, these new protocols are slow and costly. Unfortunately, for many information technology related businesses, these new protocols have proven too expensive and time consuming. Either the business runs out of money before the process is completed, or the patent fails to issue before the technology is outdated. The United States Patent and Trademark Office is working to correct these deficiencies, but it is unlikely the process will be completely streamlined anytime soon.

If you have a “business method” you wish to protect, all is not lost. Even if your patent application gets bogged down in the Patent Office for several years or even if the Patent Office eventually denies your patent application, you still have a safe bet of maintaining “patent pending” status for several years. Depending on how you file your patent application, it is possible to keep the filing date and the contents of the patent application confidential. This makes it difficult for competitors to determine if your pending patent will issue tomorrow, or three years from now. This uncertainty may be just enough to slow down a competitor or deter the competitor from the market entirely. Business method patents can be very beneficial; they just require a little extra analysis to determine whether the potentially larger benefits outweigh the extra time and costs involved.

For more information, contact me at trout@bretttrout.com

Brett Trout

Beginning Thursday, March 16, 2006, from 8-10p.m. ET, American Inventors will get their chance to shine on national television. American Inventor, the new show from American Idol’s Simon Cowell seeks out America's best new invention. Embodying the quintessential American dream American Inventor offers one million dollars to the best idea.

National casting calls were held in seven major cities across the country, including Los Angeles, San Francisco, New York, Denver, Chicago, Washington DC and Atlanta. Thousands of inventors, of all ages, are vying for the title. Viewers will see the judges top picks of the best and wackiest.

While a pending United States patent application is not a requirement for appearing on the show, failure to obtain patent protection before disclosing your invention could cause the patent to become part of the public domain. Producers of the show encourage participants to seek advice of a registered patent attorney to determine whether or not to obtain patent protection for their ideas. For more information on patents, visit BrettTrout.com or check out Internet Laws Affecting Your Company.

Internet Laws Affecting Your Company

As an intellectual property attorney, I have worked with clients on all aspects of Internet related issues. From terms of use policies to software contracts to lawsuits one theme is common among all Internet related legal issues: an ounce of prevention is worth a pound of cure. Being cash poor, many small businesses avoid putting their legal affairs in order until a problem arises. Unfortunately, by that time it is often too late.

Fortunately, many of the issues affecting companies seeking to expand on the Internet are universal and can often be easily and inexpensively handled if addressed quickly enough. In advising individuals and small companies, I have found that identifying the issue is half the battle.
My book, Internet Laws Affecting Your Company address the most common legal issues small companies face on line. While it is no substitute for the advice of an attorney, Internet Laws Affecting Your Company can help guide you through the maze of most common online legal problems. Whether it is a security issue or a problem with a website developer, "Internet Laws Affecting Your Company" gives you the tools to keep your business on firm legal footing and out of the courtroom.

Each chapter highlights a specific legal issue using a simple, easy to read approach. Chapters highlight common problems facing your company, and provide quick and simple solutions to keep you out of harm’s way. Written in clear, easy to understand language, Internet Laws Affecting Your Company serves as a handy desk reference on how various laws impact your everyday business activities on the Internet. In many cases, a quick glance at this invaluable reference will prevent your company from becoming another one of the thousands of Internet casualties.

Human Resources Audits

What you do not know can hurt you; especially when it comes to employee lawsuits. Whether the monetary stakes are high or low, the bad publicity from an employee lawsuit can devastate a small business. Many small businesses choose to stick their head in the sand when it comes to properly addressing human resource issues. Without a proper legal foundation in place, when an issue does arise, it is often too late. A Human Resources Audit is an inexpensive tool to discover small problems before they become big ones. West Des Moines attorney Rush Nigut offers Human Resource Audits at a flat fee. More information is available online at small business human resources audits.