Spross & Associates, PLLC

Use of Images

So you found an image on some website that you want to use.  It’s just a little image and you only want to use it once so you copy it.  If you do not have a license, you may have committed copyright infringement.  I am not going to go into all of the details of copyright infringement, but suffice it to say if you wanting to use the image in a commercial manner and you do not have a license, don’t use it.

 

Image owners have a right to enforce an unauthorized use of their copyright and the potential damages can be huge.  Getty Images is one company that is particularly active in enforcement of their copyright and they own millions of images that are used throughout all kinds of media.  The costs for a license can be relatively small; however, once you have used infringed someone’s copyright, all of a sudden the copyright owner can make larger demands.

 

So, take away that right click or ctrl c on the image and only use materials that you own or are properly licensed.  By the way, that ctrl c can be a problem with content too.  Also remember that the copyrighted material does not have to be marked.  It remains subject to copyright regardless of marking.

 

Trademarks - Classes and Specimens

The United States trademark office groups all trademarks into "buckets" that they call classes or classifications.  All classes are identified by a number which is determined by the trademark office in accordance with international treaties.  With most of our clients, we use (i) class 9 which includes, among other things, software; and (ii) class 42 which is used to classify, among other things, web services.

Once the class(es) are identified, a description of the goods and/or services that a trademark represents is drafted.  This is why when we are filing trademark applications, we ask for a 2-3 sentence description of what your mark stands for.  Using what is provided a description for what your mark represents is created.

After we have identified class(es) and goods/services description(s), we must receive proof of use.  This proof of use is referred to as a specimen.  A specimen must show use of the mark for each class that is filed.  For instance, a valid specimen in class 9 shows the mark actually being used on the software.  Just talking about the functionality of the software on a website will not work for class 9.  A valid specimen in class 42 is something that describes the services that are being provide, such as a website or a marketing slick.

The first use date is tied to which class(es) are filed .  This is the reason we cannot use the date of formation of a company.  The first use date has to be the date on which you started using the mark in commerce *and* in the class or classes that you file in.

Brian Spross & Tina Erales

Facebook Usernames and Trademarks

Most folks know that Facebook is allowing fanciful usernames starting at midnight on June 13, 2009.  If you have a registered trademark, you can submit that mark to Facebook to "reserve" your username for your company.  There is a very simple webform that requires the exact name of your trademark and the U.S. registration number.  I'm not certain what exactly Facebook does after the webform is submitted.  All I have received back so far is a canned email that says, "Thank you for your submission. If valid, we will process your request and contact you when reserved usernames are available for registration."  To be safe, you should register your user name too. 

What is the difference between ® and ™?

Everyone has seen them.  They are the ® and ™.  Just look on a can of Coke and you will see multiple ®.  Many times a newer product with have the ™.

 

The ® is known as a registered trademark.  It is used for a trademark that has been registered with the United States Patent and Trademark (“PTO”) office.  There is a process that involves filing a trademark application with the PTO.  When the application is approved, the use of the ® symbol may begin.

 

The ™ is used for an unregistered trademark.  This is used to denote common law protection of a trademark.  A trademark owner does not have to register their trademarks, but may rely on common law protection.  If someone has a trademark that they want protected they can use the ™ after the name.  For instance, we use the ™ for our trademark Diamond Docs™.

 

There are a couple of advantages to obtaining a registered trademark.  Among these are the following:

 

·         The ability to bring a lawsuit in federal court

·         A legal presumption of ownership in the trademark

 

One disadvantage of trademark registration is the cost of the application process.

Origin of Debugging

Okay, this is a little off topic, but I got a kick out of this.  The origin of the term "debugging" in the software world came from people physically removing insects from the first huge computers (remember ENIAC?).  Hence, "debugging".

Assignment of Deliverables Upon Payment

This is a topic that comes up quite a bit in negotiations with consultants.  The consultant wants the ownership of any deliverables or other intellectual property (IP) assigned upon payment and the customer wants the ownership assigned upon delivery or creation. 

 

If you are the consultant, having the IP assigned on payment is a huge hammer to hold when trying to collect payment.  If the customer does not pay, they will not have rights to the IP which can be very dangerous.  The customer usually does not have many obligations except payment and if they do not fulfill that obligation it is only fair that the customer does not get the fruits of the consultant’s labor.

 

On the other hand, as a customer, I will not have my IP rights tainted for any reason, including payment.  Tainted IP is a very dangerous problem for companies.  It can lead to acquisitions or funding falling apart or potential litigation problems.  The consultant has legal remedies for nonpayment (i.e. litigation); however, the customer is in a bind if their IP is tainted.

Why Your Attorney should Review NDAs

You receive multiple Nondisclosure Agreements (“NDAs”) for your business and they all look relatively the same; however, your attorney should review all of your NDAs because there are some dangers lurking.  You would think that NDAs would be uniform, but they are not.  Below are five things to look out for.

1. Residuals Clauses – These are clauses that say the Recipient can reuse what is retained in their unaided memory.  There are certainly situations where this is appropriate; however, they must be drafted properly.
2. Assignment – The famous one-way assignment where only one party can assign the agreement.  Do you really want your NDA assigned to your competitor?  That doesn’t make sense to me.
3. Independent Development Exclusion – Most NDAs have exclusions to what is confidential.  Many times, the “independent development” exclusion is left out.
4. Reverse Engineering – Did you know that by law reverse engineering is legal in certain circumstances?  Therefore, you need to have a contractual “no reverse engineering” provision.
5. Severability – There is some bad case law in my opinion that says if you do not have a severability provision in your NDA and one of the provisions is invalid, the whole NDA is invalid; therefore, you must have a severability clause.

The five items listed above are just a handful of things that your attorney looks for when reviewing NDAs.

Open Source Punch List

Below is a short list of some of the things to think about before releasing code to the open source community.  Please note that this is not an exhaustive list.

1. Who worked on the code/origin of the code (changes to existing code, received it from somewhere that you do not know, internally created)?

2. Is there anything in the code that is confidential?

3. Does the code contain any Company intellectual property or trade secrets?

4. Has the code been reviewed against standards/specifications, if applicable?

5. Has the code been reviewed for accuracy?

6. Has the code been reviewed for intellectual property issues and confidentiality?

7. Is there any reason not to release the code (competitive reason, etc.)?

8. Does this code need further reviewed?

 

 

 

 

 

Open Source in Deliverables

If you are a buyer of coding services, why should open source in the Deliverables concern you and what can you do to protect yourself?

 

Open source code in your deliverables can be a major problem.  It may open you up to potential intellectual property infringement actions or, during due diligence, it may torpedo an acquisition.

 

So, what do you do in your consulting agreements?

 

First, request a representation and warranty stating that there is no open source in the Deliverables.  More specifically, I like to say that there is no code that is governed by viral license agreements.

 

Second, I do not distinguish open source contained in the Deliverables from the Deliverables themselves.  When I ask for warranties and indemnification, they apply to “Deliverables” and everything included in those Deliverables.  That way, the consultant is on the hook for the entire Deliverable.

 

If the consultant is unwilling to provide the warranty and/or the indemnification, then I require that any open source and other third party code must be preapproved in writing before being included in a Deliverable.  Absent your written approval, the source code is treated as part of the Deliverable and, therefore, not excluded from the warranty or indemnity under any circumstances.  If open source is included in the Deliverables, make sure that you also get a copy of the applicable open source license and have it reviewed.

Data Security – Employees versus Contractors

These days with companies using more and more outsourced resources, there is always a concern with data security.  There is always the risk of individuals being bad actors, whether they are employees or contractors working for a third party.  These days most companies will not use stolen competitor data (and most of the time people can tell it was stolen).

If an employee of a company steals data and sells it/provides it to competitors, there are 2 types of remedies.  First under the Federal Economic Espionage Act of 1995, it is a potential criminal violation and can be punishable by jail time.  From a civil perspective, the company could sue the individual for the damages caused by the release of the data, which would include intellectual property infringement and breach of contract (assuming there is an executed confidentiality agreement or proprietary information agreement with the employee).  [side note – it is critical to have a confidentiality agreement/assignment agreement/proprietary information agreement with each employee] 

Unfortunately, for the company almost every individual is judgment proof.  For instance, let’s say the damage caused was $10mm.  There are very very few folks that could pay a $10mm judgment.

Contractor:  a contractor/contractor employee has the same confidentiality and IP obligation as an employee (as long as the appropriate documents are in place).  An individual that works for the company cannot take trade secrets and sell them/disclose them or they face criminal penalties.  In addition, the company is on the hook for their employees and subcontractors conduct.  Let’s say that there is a bad guy that takes the confidential information.  The company would be on the hook for the $10mm in damages indicated above.  Unlike individuals, companies many times can pay the judgments or they have insurance that may cover the damage.  The company whose information was disclosed has a shot at real recovery.

 

All this being said, the concern many companies have is someone “disappearing” with the confidential information or data in a foreign country and then selling or posting the information anonymously on the web.  They then argue it is much more difficult to track someone down in these countries (which it can be).

I personally do not see the risk as any greater or less with an outsourced resource rather than an employee (you are basically at risk of the bad actor in both cases) and I see the recourse/recovery as more favorable against a company, even if they have employees/subcontractors in foreign locations (as long as that company is in the United States and has assets).