Intellectual Property & Internet Matters: Licensing, Protections, Disputes, Internet Technologies & Related Agreements

Intellectual Property Related Agreements and Disclosures, including:

• IP Licensing Agreements
  • Patents
  • Trademark
  • Copyright
  • Trade Secret
• IP Assignment Agreements
  • Asset-Purchased IP Assignments
  • Founder’s IP Assignment Agreement

Intellectual Property Protections, including:

• Protecting Trade Secret
• Trademark and Servicemark Registration
• Copyright Filing

Intellectual Property Disputes, including:

• Trade Secrets
• Trademarks
• Patents

Matters Unique to Technology and Internet Related Clients: Agreements, Disclosures & Considerations

• Website Development Agreements
• Website Hosting Agreements
• Agreement to use 3rd-Party Content Online
• Proprietary Information Agreement
• Special Technology Licensing Agreements
• Shrinkwrap and Download License Agreements
• Software Development Agreements
• Software Consulting Agreements
  
• Software Distribution Agreements
• Software and Internet Use Policies
  • Electronic Communication Policy
  • Copyrightable Works Policy
    
  • Electronic Mail Policy
  • Business Email Communication Policy
  • Use of Social Media Policy
• Consumer privacy concerns
  • Permanence and replicability of information online
  • Compliance with California Online Privacy Protection Act of 2003 and other relevant law
• Forming Valid Contracts Online
  • Electronic and Digital Signatures
    • Electronic Signatures in Global and National Commerce Act (e-sign)
  • Uniform Electronic Transactions Act
• Online Fraud Risk and Considerations
• Special IP Considerations

Intellectual Property Related Agreements and Disclosures

Well-protected IP assets can, in many cases, be a firm’s most valuable property, especially where the firm’s operations depend largely on that intellectual property. However, the value of that intellectual property extends significantly beyond the day-to-day operations of a business. Both in terms of building additional revenue streams and increasing the valuation of a firm in the case of a purchase or merger, properly-utilized intellectual property assets can significantly add to the bottom line. That being said, intellectual property is an asset particularly susceptible to inappropriate and unauthorized use, and when that occurs, much of the value of that IP may be depleted.

Via well-executed intellectual property licensing agreements and intellectual property assignment agreements, firms can fully take advantage of the value in their IP assets while still remaining protected from potential infringements.

Below, please find more detailed descriptions of IP Licensing and Assignment Agreements.

Intellectual Property Licensing Agreements

For those firms with a proprietary advantage to doing business—whether that advantage takes the form of a new technology, extensive expertise, or simply owning the exclusive patent or trademark rights to something—intellectual property licensing can be an excellent way to increase revenues. Particularly where the firm has not or has no interest in establishing a recognizable brand name, or to carry out the variety of marketing, sales, and distribution functions that might entail, IP licensing can often be the entirety of a firm’s business. Conversely, where the firm does hope to establish its name brand in the future but may need a capital infusion earlier in its life cycle, the firm may choose to license its intellectual property in the short-term, often either regionally or in some other restricted manner.

Finally, a licensing agreement can be a great way to expand an existing brand into new markets. Where a firm does not have the capacity to penetrate a certain market but does have the ability to license its IP to a regional distributor or manufacturer, the firm may be able to expand its brand significantly while spending appreciably less than it would have operating alone. However, though there are substantial potential benefits to IP licensing, there are also several drawbacks. Particularly where a firm hopes to build-up a name brand for itself in the future and has chosen to utilize IP licensing to grow the brand in the short-term, that firm has, to a large extent, placed its well-being in the hands of a third party.

For example, a start-up beverage firm has created a new, patented way to create a much more caffeine-dense form of soda. However, the firm does not have the marketing or distribution abilities or expertise to enter the competitive carbonated beverage market, so it decides to license its recipe to an already-existing beverage manufacturer. This manufacturer can likely help get the product to market faster and has the resources to better support the product from a marketing standpoint; however, that manufacturer does not have the same interest in the success of that product as does the licensing firm. That manufacturer may have several brands under its umbrella, and the success of one of those (particularly a new product to the market) is not going to make or break that manufacturer. To the start-up beverage firm, though, the success of that brand is critical.

As far as the specific terms of a licensing agreement are concerned, there is a large degree of freedom available to the parties when drafting an agreement. A license may be limited or restricted in most any manner, and restrictions can be customized to best suit a given situation. For example, a firm may license a technology to a third party. Depending on the needs of the firm and the licensee, the license agreement may limit the use of that technology to a specific time period, number of uses, particular scope of use restrictions, disclosure requirements, or anything else the parties desire.

Licensing agreements can be highly beneficial arrangements for all parties involved. However, due to the nature of the agreement, they can also be particularly dangerous for the licensing party. In these situations, we at Neek Law Firm like to sit down with a client and carefully discuss the pros and cons of a licensing strategy, taking into consideration the client’s goals and desires at each step of the process. Once we have a solid understanding of a client’s business aspirations and future strategy, we can help to construct a cohesive licensing contract that addresses all those factors most important to our client.

Intellectual Property Assignment Agreements

Similar to an intellectual property licensing agreement, an assignment agreement functionally effects the transfer of one’s rights to intellectual property from one party to another. However, unlike a licensing agreement, which can substantially limit the use of the license, an assignment generally represents a complete transfer of one party’s IP interest to another; the party that initially owned that interest retains no ownership after the closing of the agreement. Whereas a licensing agreement transfers only the right to use certain intellectual property, an IP assignment actually involves the transfer of title between parties. It does not involve the intricacies relating to usage limitations that a licensing agreement may require, but the assignment agreement has one distinguishing feature that creates its own set of challenges: finality. A licensing agreement usually exists for a specific term; however, an assignment is generally permanent. Thus, many of the concerns normally associated with the sale of stock, real estate, or a business come into play (including underwriting, title matters, and third-party consents).

Founder’s IP Assignment Agreement

Often, an IP assignment takes place in the context of a founder’s stock purchase agreement. If, for example, a founding member of a firm decides to leave, that firm (or any third party that may be buying the founder’s ownership stake) will want to ensure that any of that founder’s interest in the firm’s intellectual property are transferred. In this case, it is particularly important that the founder’s IP rights are fully transferred to the new ownership entity; those IP rights are a substantial portion of what the new ownership invested in.

Intellectual Property Protections

Intellectual property, in some form or another, is often a firm’s most prized and valuable asset. However, that value can disappear very quickly if the intellectual property is not adequately protected. Each type of intellectual property (including inventions, written works, software codes, logos, slogans, and even secret processes) has its own unique IP protection requirements, each with a multitude of specific concerns depending on the facts of a given scenario. At Neek Law Firm, we help clients identify the best way to guard their IP assets and to maximize revenues through licensing and joint-ventures.

Please find below more in-depth explanations of the various types of intellectual property protections:

Trade Secret Protections

Trade secret protection is one of the more robust forms of intellectual property safeguards. Unlike patents and copyrights, which have finite life spans, trade secret protection lasts indefinitely so long as the firm makes legitimate efforts to protect that information. Instead of filing a patent, copyright, or trademark, trade secret protection simply involves keeping important information a secret. For example, a firm may have a new, proprietary way to brew coffee. This process is the firm’s primary competitive advantage over rivals, and may be the main reason why the business has successfully grown and has been able to fend off competition. If the secret brewing method was to be released to the public, the competition could start brewing in the same way, and the firm would lose its competitive advantage. For a firm such as this, the entirety of the business is based on that competitive advantage, and losing it may be devastating.

Especially in the case of start-ups, which are often particularly dependent on a singular trade secret, Neek Law Firm can truly add value to a business by helping to secure its trade secrets. Moreover, making sure the proper protections are in place is not simply a matter of protecting a secret; it is also a matter of business growth. For example, if a start-up was looking for venture capital funding, any potential VC investors will want evidence that trade secrets are adequately protected before investing. By taking the effort to adequately protect trade secrets in advance, a start-up can place itself in a position for sustainable, long-term growth from the beginning. Moreover, after having helped secure trade secrets, Neek Law Firm can assist those start-ups in properly structuring their businesses in preparation of investments, as well as drafting any financing or acquisition agreements necessary–thereby providing clients with comprehensive, start-to-finish legal service.

Trademark and Servicemark Protections

In addition to handling trade secret matters, Neek Law Firm also represents businesses in trademark matters. A trademark, or service mark in the case of a service-based business, is any word, name, symbol, image (or combination thereof) that serves to differentiate a given business in the eyes of its customers. This may be a logo, such as the iconic red and white Coca-Cola emblem, or simply the name of a firm, such as Microsoft or Zappos.com.

Like trade secret, a trademark does not need to be officially registered in order to exist. Under traditional common law, simply using a name or logo as a representation of a firm in the course of conducting business is enough to establish that a trademark exists. Often, this alone will be enough to ward off potential trademark infringers when and if a conflict arises.

That being said, there is a better way to maximize the likelihood of successfully protecting a trademark, and that is by officially registering that trademark with the federal government. This process first entails conducting a name search to ensure there are no already-filed trademarks that conflict with our client’s intended mark. We then file the relevant paperwork with the United States Patent and Trademark Office, which (assuming the trademark is approved) will then notify the public of the successful trademark application through its “Official Gazette.” If no one files an opposition to the trademark within 30 days, the trademark is approved.

However, during that 30-day waiting period, there may be substantial opposition to the trademark application–and this is where Neek Law Firm truly helps business owners add value to their brand. By forming a strong understanding of a client’s underlying business practices and our extensive knowledge in trademark law, we can assist clients in handling oppositions by other parties claiming rights to the trademark.

Copyright Protection

Unlike trade secret and trademark protection, copyright serves to protect any “original works of authorship fixed in any tangible medium of expression” (17 U.S.C.A. § 102). Generally speaking, this includes literary works, music, dramatic works, choreography, pictorial, graphic, or sculptured works, motion pictures, sound recordings, and architecture. Technically, a copyright does not need to be registered to exist; like trade secret and trademark, an owner of tangible content may create a copyright by taking some simple procedures–in this case, adequately displaying certain information on the “copyrighted” material.

However, unlike trade secret and trademark, failing to officially register a copyright significantly limits its effectiveness. Moreover, unlike the trademark registration process, registering a copyright can become quite complicated, and the law has a great deal of industry-specific regulations in place that need be taken into consideration when attempting to protect any copyrightable work. In general, to register a copyright, the owner of the work must submit a complete application to U.S. Register of Copyrights, the content of which varies slightly depending on whether the work is published or unpublished, whether the work was created within or outside of the United States, and whether the work was created by an individual or as part of a collective project. The U.S. Copyright Office will then make a ruling on whether to approve the copyright application. If the application is denied, it is generally due to the Copyright Office determining that the subject matter is not actually copyrightable material, that the applicant is not the rightful holder of the copyright, or for a variety of other reasons. In this case, there is a complicated two-step appeal process, which may or may not result in an approved copyright. Moreover, the appeal process can be pricey, and is best to be avoided if possible.

If one can created a copyright without officially registering, then, what is the purpose of registration? Why risk denial and the subsequent appeal processes? The answer is based in statute. Due partially to the United States’s participation in certain international copyright treaties along with the legislature’s desire to encourage registration, the vast majority of copyright infringement claims are barred from courts unless the copyright is registered. Thus, the unregistered copyright becomes fairly useless quite quickly.

For this reason, it is extremely important to file for registration of any potentially copyrightable materials, and to do so early on (in fact, the U.S. Copyright Office offers pre-registration of copyrightable works that are scheduled to be published in the near future). Doing so not only makes infringement-based civil lawsuits available, it drastically increases a copyright owner’s chances of success at trial. At Neek Law Firm, we understand the sensitive nature of the copyright application process, as well as the fact that most content-creators would much rather focus on creating content than dealing with the legal intricacies of copyright protection. We help clients prepare an application, taking time to address any potential grounds for denial. In doing so, we place clients in the best possible position to protect their copyrights moving forward–and to avoid costly and frustrating infringement issues in the future.

Intellectual Property Disputes

Generally speaking, our focus at Neek Law Firm is transactional matters; we set up and build companies, we assemble joint ventures, and handle all contract matters on behalf of our clients. However, as a firm grows and begins to hire more employees, not only does the complexity of running its business increase, so does the likelihood that confidential information is passed-on inappropriately. When this occurs, we at Neek Law Firm fight zealously to protect our client’s intellectual property rights. We believe in establishing lasting and mutually beneficial relationships with clients. In order to achieve that goal, we will do all in our power to protect a client’s IP rights.

Trade Secret Disputes and Important Considerations

More often than not, trade secret issues arise when an employee leaves one firm to go to another (or to start another) with the confidential knowledge he or she learned while at our client’s firm. For obvious reasons, this former employee poses a huge threat to our client’s company. If he or she was to share the secret processes learned while working for our client, it could destroy the business completely.

Trade secret issues may also occur when a firm decides to outsource part of its business, particularly when research and development (“R&D”) is involved. In this situation, the firm has to depend on a third party not to disclose the highly sensitive information that forms the basis of the firm’s competitive advantage. If that third party decides to turn around and sell that information to one of the firm’s competitors, the consequences to our client would be significant.

Luckily, the law offers substantial protection in such instances. Courts have consistently recognized a firm’s right to protect its intellectual property in the form of trade secret, but tend to do so only where the firm has made all the necessary efforts to protect that secret. For example, a court may look to:

• The extent to which the “secret” information is known to parties outside the firm
• The extent to which the “secret” information is known by various employees within the firm
• The extent to which the firm made legitimate attempts to safeguard the “secret” information
• The relative value of the “secret” information to the firm and its competition
• The level of effort and money spent by the firm in creating or developing the “secret” information
• How difficult or easy it would be to legitimately acquire or duplicate the “secret” information–sometimes referred to as “reverse engineering.”

These factors can be boiled down to a few fundamental questions: Does the “secret” information qualify as trade secret under the law? Did the firm which created the “secret information” do everything reasonably within its power to protect that secret? Did the defendant (firm that took the information) obtain the information wrongfully? If the answers to these questions are “yes,” then the firm that owns the trade secret usually has a right to recover. Particularly where the company now using the trade secret knowingly made use of that “stolen” information, the firm can most likely recover from both the person that stole the information as well as the business that used it. When this occurs, our experienced IP litigation team can step in and help ensure our clients are compensated adequately and businesses are restored.

That being said, the simplest (and most affordable) answer is to make sure employment agreements are properly drafted, fall within all applicable laws, and will bind any departing employees to silence regarding any information critical to the firm’s success. Perhaps the best way to achieve this goal is via a “non-disclosure” or “confidentiality” agreement. Though non-compete clauses are unenforceable in California (meaning that a client cannot contractually prevent a former employee from working in the same industry after working for the client), non-disclosure agreements are acceptable. These agreements functionally state that, after termination with the client, the former employee may not share any material information learned while at the client’s firm with any competitors or other third parties.

As one might imagine, these non-disclosure clauses, which are often found as a part of an employment agreement, can be very complex documents to draft. Moreover, there are a wide array of state, federal, and common laws that come into play when an IP dispute arises, some of which are in conflict with one another–litigation can get messy very quickly.

This is where the Neek Law Firm can truly help to protect a client’s business moving forward. By carefully reviewing any employment agreements to make sure our clients are adequately protected before entrusting any highly sensitive information to employees or outside consultants, we help them to avoid costly and frustrating litigation in the future. Moreover, depending on the specifics of a given incident, we at Neek Law Firm will often offer to handle an IP dispute on a contingency basis. In doing so, we can assist those clients who may not have substantial liquidity but do have significant value in the underlying intellectual property rights.

Patent

Patent infringement takes place when any unauthorized party “makes, uses, offers to sell, or sells any patented invention, within the United States or imports into the United States.” 35 U.S.C.A. § 271. Due to the nature of patents, which serve to protect (often complex) inventions, the patent application process can be quite complicated as compared to trademarks and copyrights. Not only do patents implicate a variety of international treaties to which the United States is a party, but each patent must pass through a stringent review by the U.S. Patent and Trademark Office. There may then be several correspondences between the applicant and the Patent Office, which then will rule on the acceptability of the application claims. The current average time from application to approval (or disapproval) is approximately 25 months.

Moreover, patents have a finite lifespan. The government grants the applicant the exclusive right to that patent for a specified length of time (usually about twenty years from the date of application), and in exchange for doing so, the inventor provides the government with all of the details of the new invention in the form of a patent application. After the patent’s lifespan runs, the specifics of the invention become public knowledge, accessible by anyone. When this occurs, the original patent holder no longer has the substantial competitive advantage, and profiting from the formerly patented invention becomes increasingly difficult.

Therefore, unlike with trade secrets, trademarks, and copyrights, there is another consideration that both patent applicants and attorneys need to acutely aware of when dealing with patent disputes–speed. It is important to get a patent filed and protected, and to be ready to quickly and completely stop any potential infringers if a dispute ever arises. The less time spent fighting over the patent, the greater portion of the lifespan of that patent can be used making money.

At Neek Law Firm, we fully understand the need to streamline patent dispute resolutions. By actively engaging our clients’ businesses, taking the time to understand the specifics of a given company inside and out (including the specifics of the patent in question), our outside IP litigation team can help to resolve patent infringement cases in a quick and cost-effective manner. Our concern, first and foremost, is that our clients can enjoy the benefits of their patents for as long and as profitably as possible. It is with this mentality that we approach infringement cases, whether settled outside of court or carried through to litigation. Moreover, in select cases, we offer to take on patent disputes for our clients on a contingency basis, thereby catering to those start-up firms that may have substantial value in IP assets but not in cash.

Trademark and Servicemark

In the majority of cases, an officially registered trademark will be adequate protection for most firms, and is an extremely strong defense if a dispute ever arises. However, where a trademark is not officially registered (i.e. a common law trademark) disputes between businesses trying to make use of the same mark can become messy.

In determining whether a common law trademark exists and a party is entitled to protection from infringement, a court must decide if the potentially infringing party’s use of the phrase or imagery in question causes confusion in the minds of customers. In other words, if the customers of Company A recognize a specific logo, and Company B starts using a very similar logo, it may confuse Company A’s customers and damage Company A’s business. In determining if confusion exists, there are several issues that courts will look to, including:

• The strength and uniqueness of Company A’s trademark
• The degree of similarity between Company A’s trademark and Company B’s trademark
• The degree of similarity between the products or services provided by Company A and by Company B
• The likelihood that Company A’s business will overlap with Company B’s in the future, even if Company A does not currently operate in Company B’s industry
• Whether company B began using the trademark in bad faith (intentionally stole the trademark)
• The degree of sophistication of each firm’s customers–the less sophisticated the customer base, the greater likelihood of confusion
• The relative quality of Company A’s goods or services and Company B’s goods or services–if there is a large gap in quality or price, there is a greater chance of confusion
• Evidence of actual confusion on the part of Company A’s customers

In the case that a client finds himself in a “common law” trademark dispute such as the one described above, we at Neek Law Firm help to prepare a comprehensive case as to why they are the rightful trademark holder. This may include analyzing market share, investigating customer bases, discussing the client’s future plans for the business, and a comparison of the industries and product offerings by our client and by the potential infringer. Having done this analysis, we can develop a strong idea for the strengths and weaknesses of a given client’s trademark, and approach the dispute in such a way to maximize chances of success.

Where a firm holds a substantial portion of its value as goodwill (the dollar value given to name recognition and brand cache), its trademark is perhaps one of its biggest asset. Furthermore, where a firm provides relatively standardized or commoditized goods or services, name recognition may be the majority of the what separates the firm from its competition.

Regardless of a client’s industry or the products it sells, trademark protection is amongst the best ways for owners to safeguard their businesses in the long run. At Neek Law Firm, we ease this process as much as possible for our clients, while delivering high-quality results. Whether we’re filing a trademark, contesting a dispute, or handling subsequent third-party opposition to a trademark, we can tackle any trademark issues that may arise. Furthermore, by offering work on a contingency basis in select cases, Neek Law Firm helps to ensure that each and every one of our clients has access to the most robust legal assistance possible when facing any trademark dispute.

Matters Unique to Technology and Internet Related Clients

Over the last twenty or so years, the Internet has transitioned from a “new technology” to a fundamental aspect of business and commerce, and the law has evolved to account for the special challenges associated with contracting and doing business online. Likewise, as digital data (in the form of software coding, website data, or proprietary information) has become the dominant form of information storage, the legal field has come to recognize and address the unique features (and challenges) that digital data presents.

Having a robust web presence and conducting business online has functionally become a necessity for nearly all firms, as is ensuring that appropriate security is in place to protect private information. However, particularly when conducting business over the Internet, many of the traditional means of determining matters such as jurisdiction and liability no longer apply. For example, when a firm operates online, there is usually no physical location where a customer can directly deal with the business in person–the majority of online transaction never involve the parties directly contacting one another at all.

While this may seem like an obvious statement, the implications are significant. Traditionally, jurisdiction for commercial transactions was based on physical location. However, when you place a product for sale online, a diverse group of customers from anywhere in the world might purchase that product, and then jurisdictional issues can become complicated. Likewise, because a business selling online will often have no direct contact with either its customers or other third-party affiliates, it becomes substantially easier for unscrupulous customers, affiliates, competitors, or even professional online criminals to take advantage of a business. With our extensive experience in the technology sector, we at Neek Law Firm help clients to avoid such pitfalls.

We help clients to structure agreements and develop policies for a variety of web and tech-based scenarios, including:

Website Development and Website Hosting Agreements

The proper development and maintenance of a website is critical to most clients. In order to assist clients in development of an initial website or subsequent upgrade in website features going forward, Neek Law Firm offers specialized development and hosting agreements, tailored to each client’s specific needs.

Valid Formation of Online Contracts

Certain consideration apply to contract formations, particular in online transactions such as proper electronic and digital signature procedures as well as compliance with the Uniform Electronic Transactions Act.

Proprietary Information Agreements, Agreements to Use 3rd-Party Content Online, Special Technology Licensing Agreements, & Shrinkwrap and Download Licensing Agreements

These agreements are designed to protect clients that either use online content from third parties or license content to third parties.

Software Development, Software Consulting, & Software Distribution Agreements

For those clients in either the business of developing and distributing software or software consulting, Neek Law Firm tailors agreements to address the special legal considerations that software brings into play.

Software and Internet Use Policies, including Electronic Communication Policy, Copyrightable Works Policy, Electronic Mail Policy, Business Email Communication Policy, and Use of Social Media Policy.

These various policies are designed to ensure that employees use a firm’s online assets responsibly and for the right purposes, in addition to protecting the firm against the inappropriate dissemination of information.

Consumer Privacy Concerns and Compliance, including compliance with the California Online Privacy Protection Act of 2003

Misuse of private consumer information is becoming an increasingly hot topic and great source of liability; as such, ensuring that a firm’s online practices are in compliance with any relevant law is crucial.

Online Fraud Risk and Considerations

There are countless fraud risks associated with operating businesses online. We help to ensure each of those risks is properly addressed, regardless of the specific project at hand.

Special Intellectual Property Considerations, including Digital Millennium Copyright Act Compliance and Source Code Escrow Agreements

As the law continues to grow to address the unique challenges of protecting intellectual property online, it is important that clientele remain aware of any unique challenges or features of protecting information online. Especially for firms licensing a piece of software, algorithm, or other digital and easily-replicable information, a Source Code Escrow Agreement can be a great way to enhance protection. In these agreements, a “source code”–the fundamental coding behind a piece of software–is held in escrow much like cash might be in a residential transaction, until the time at which the source code can be released to the relevant party (perhaps a buyer).

With unique knowledge of software and internet-based businesses, and experience in structuring agreements and ensuring legal compliance on behalf of such firms, Neek Law Firm can assist our clients in successfully creating a presence online–one of the best ways to drive business and increase revenues. Particularly for start-up clients, our expertise can make doing business online a substantially smoother process, thereby allowing clients to focus on growing their firms while spending less time on legal matters.