Twitter has long had problems with the issue of fake accounts created by celebrity impersonators.  The latest victim in this case was Tony La Russa, a well known manager for Major League Baseball who currently manages the St. Louis Cardinals.  On May 6, 2009, Mr. La Russa filed suit against Twitter in the Superior Court of California, County of San Francisco, claiming that someone was using a false account under his name to post updates, known as "tweets," containing comments which he alleged were false, derogatory and demeaning.  He further alleged damage to his reputation, the goodwill in his mark, and mental anguish and emotional distress. 

The Complaint includes a screen shot of a tweet stating “Lost 2 out of 3, but we made it out of Chicago without one drunk driving incident or dead pitcher… I’d call that an I-55 series."

While there sometimes is little a company can do to prevent unauthorized user accounts, the legal risk can be mitigated by implementing a policy to deal with unauthorized accounts.  This policy can be detailed in the company’s terms of service.  Further, the company should adhere to its policies in response to any complaints.   

Allen M. Lee  Mr. Lee’s practice focuses on business, corporate and intellectual property matters, including the creation, protection and exploitation of intellectual property assets.  He counsels clients on business formation, general corporate matters, trademark, copyright, trade secret, patent, licensing, internet and domain name issues, among other things.  For more information contact: Allen M. Lee, a Professional Law Corporation, Tel: (650) 254-0758, Fax: (650) 967-1851, Email: allen@allenmlee.com, Internet: www.allenmlee.com.

On June 1, the U.S. Supreme Court granted review of the case In re Bilski, 545 F.3d 943, 88 U.S.P.Q.2d 1385 (Fed. Cir. 2008).  This was the landmark decision issued on October 30, 2008 by the U.S. Court of Appeals for the Federal Circuit which set forth a test requiring that a patentable process either be tied to a machine or apparatus or involve a transformation of one thing into something else (see May 21, 2009 blog entry for a discussion of In re Bilski).  A ruling isn’t expected until sometime next year.  

Allen M. Lee  Mr. Lee’s practice focuses on business, corporate and intellectual property matters, including the creation, protection and exploitation of intellectual property assets.  He counsels clients on business formation, general corporate matters, trademark, copyright, trade secret, patent, licensing, internet and domain name issues, among other things.  For more information contact: Allen M. Lee, a Professional Law Corporation, Tel: (650) 254-0758, Fax: (650) 967-1851, Email: allen@allenmlee.com, Internet: www.allenmlee.com.

One question I often get asked is whether a business method can be patented.  Prior to 1998, the U.S. Patent and Trademark Office (“PTO”) rarely granted patents for methods of doing business under the reasoning that most business methods were abstract ideas and thus did not qualify under one of the five statutory categories of patentable subject matter under 35 U.S.C. § 101.  In 1998, the Federal Circuit held in State Street Bank & Trust Co. v. Signature Financial Group, Inc., 149 F.3d 1368 (Fed. Cir. 1998) that a business method is patentable so long as "it produces a useful, concrete and tangible result."  This decision opened the door to a tidal wave of more than 15,000 business-method patents.  However, in the seminal case In re Bilski, 545 F.3d 943, 88 U.S.P.Q.2d 1385 (Fed. Cir. 2008), the Federal Circuit overruled State Street, holding that a claimed process is patent-eligible under § 101 if: (1) it is tied to a particular machine or apparatus, or (2) it transforms a particular article into a different state or thing.  This test is known as the “machine-or-transformation test.”

To provide some context for the Court’s decision, the patent laws provide for only five statutory categories of patentable subject matter: processes, machines, manufactures, compositions of matter, and any new and useful improvement thereof.  In interpreting these categories, the Supreme Court has broadly stated that Congress intended anything under the sun that is made by humans to be patentable except for fundamental principles, which the Court defined as “laws of nature, natural phenomena, [or] abstract ideas,”  Diehr, 450 U.S. at 185.  While a claim drawn to a fundamental principle is unpatentable, "an application of a law of nature or mathematical formula to a known structure or process may well be deserving of patent protection."  Id. at 187.  Accordingly, courts draw a distinction between claims that seek to pre-empt the use of a fundamental principle, on the one hand, and claims that seek only to foreclose others from using a particular application of that fundamental principle, on the other.    

The key inquiry behind the Bilski test is whether the patent on the business-method would allow the patentee to pre-empt substantially all uses of that fundamental principle. If so, the claim is not drawn to patent-eligible subject matter.  Hence, the machine-or-transformation test.  A claimed process involving a fundamental principle that uses a particular machine or apparatus would not pre-empt uses of the principle that do not also use the specified machine or apparatus in the manner claimed.  And a claimed process that transforms a particular article to a specified different state or thing by applying a fundamental principle would not pre-empt the use of the principle to transform any other article, to transform the same article but in a manner not covered by the claim, or to do anything other than transform the specified article. 

In Bilski, Applicants filed a patent application for a method of hedging risks in commodities trading.  The method claimed involved selling options on a commodity at a fixed price, then reducing the risk of price fluctuations by making a second set of hedging transactions at a second price.   The Court found that applicant’s process did not satisfy the machine-or-transformation test.  First, Applicant’s method did not require a computer nor was it limited by any specific apparatus.  Second, Applicant’s method failed to transform any article to a different state or thing.  Applicant’s process encompassed only the exchange of options, which are simply legal rights to purchase some commodity at a given price in a given time period, and were not representative of physical objects or substances.

Bilski is the latest in a series of decisions that have limited the scope of patentability.   Patent practitioners expect more to come. 

Allen M. Lee  Mr. Lee’s practice focuses on business, corporate and intellectual property matters, including the creation, protection and exploitation of intellectual property assets.  He counsels clients on business formation, general corporate matters, trademark, copyright, trade secret, patent, licensing, internet and domain name issues, among other things.  For more information contact: Allen M. Lee, a Professional Law Corporation, Tel: (650) 254-0758, Fax: (650) 967-1851, Email: allen@allenmlee.com, Internet: www.allenmlee.com.

This is a great article by Rafe Needlem on some common legal mistakes many web 2.0 start-ups make.

http://news.cnet.com/8301-17939_109-9782365-2.html  

Topics covered:

1. Ignoring the rules of Safe Harbor (for copyright infringement claims)

2. Ignoring the Terms of Service chain

3. Falling for a sob story (privacy violations)

4. Keeping your data forever (data retention policies)

5. Being open to kids (violating COPPA, the Children's Online Privacy Protection Act)

6.  Expanding into print (staying within Section 230 of the Communications Decency Act)

7. Ignoring the bribes you have to pay (beware of patent trolls; this advice also applies to trademark trolls)

8. Cooperating with the police (keep your attorney on speed dial)

9. Thinking you are in the clear ("no matter how hard you try to stay clean, You're probably doing something wrong already")

Allen M. Lee  Mr. Lee’s practice focuses on business, corporate and intellectual property matters, including the creation, protection and exploitation of intellectual property assets.  He counsels clients on business formation, general corporate matters, trademark, copyright, trade secret, patent, licensing, internet and domain name issues, among other things.  For more information contact: Allen M. Lee, a Professional Law Corporation, Tel: (650) 254-0758, Fax: (650) 967-1851, Email: allen@allenmlee.com, Internet: www.allenmlee.com.

I previously wrote about the legal woes of NebuAd, who had had been sued for various privacy violations stemming from its use of deep packet inspection technology to track the web surfing habits of the customers of its affiliated ISPs.  NebuAd used this data to deliver customized ads based on the consumers’ internet activities.  In an interesting turn of events, NebuAd stated in a court filing this week that it was essentially going out of business after laying off virtually all of its employees and closing its office in Redwood City, CA.  At its height, NebuAd had employed over 60 people.  Apparently, NebuAd’s partners abandoned interest in NebuAd’s business model after Congress initiated hearings into NebuAd’s practices. 

Allen M. Lee  Mr. Lee’s practice focuses on business, corporate and intellectual property matters, including the creation, protection and exploitation of intellectual property assets.  He counsels clients on business formation, general corporate matters, trademark, copyright, trade secret, patent, licensing, internet and domain name issues, among other things.  For more information contact: Allen M. Lee, a Professional Law Corporation, Tel: (650) 254-0758, Fax: (650) 967-1851, Email: allen@allenmlee.com, Internet: www.allenmlee.com.

The federal CAN-SPAM Act of 2003, 15 U.S.C. § 7701, went into effect January 1, 2004.  This law provides that commercial email (1) must not contain false or misleading header information; (ii) must not contain deceptive subject lines, (iii) must provide recipients an opt-out method, (iv) must be identified as an advertisement, and (v) must include the sender's valid physical postal address.  15 U.S.C. § 7701 et seq.   By its terms, the CAN-SPAM Act explicitly preempts state law regulating commercial emails except to the extent such laws “prohibits falsity or deception in any portion of a commercial electronic mail message or information attached thereto.”  15 U.S.C. § 7707(b).  Since the passage of the CAN-SPAM Act, the extent to which the Act preempts California state anti-spam laws has been uncertain. 

Since 1998, California has had its own laws regulating commercial emails.  California’s anti-spam law is generally considered the most restrictive anti-spam statute in the nation, prohibiting all unsolicited commercial email unless the sender has a pre-existing business relationship with the recipient, or the recipient provides direct consent.  Cal. Bus. & Prof. Code §§ 17529-17529.9.

The question of federal preemption became a little more settled with the California Superior Court’s recent decision in Hypertouch v. ValueClick, LC081000 (Los Angeles Superior Court filed April 3, 2008), which held that the CAN-SPAM Act does indeed preempt state law unless there was actual fraud or deception by the defendants.   In this case, internet service provider Hypertouch brought suit under California’s anti-spam law against ValueClick and its affiliates for allegedly sending 45,000 spam emails to Hypertouch’s customers.  On May 4, the Court granted summary judgment in favor of the defendants,  stating that "because plaintiffs cannot establish any of the traditional fraud elements for even a single asserted email, CAN-SPAM's preemption clause mandates dismissal of (the) claims.”  Hypertouch’s attorneys hope to appeal the decision.     

This is probably the first ruling by a California court concerning the preemption of state anti-spam statutes.  Thus far, federal trial courts in California and other states have reached different conclusions on this issue.  Until the law becomes more settled, commercial advertisers should be cautious about sending unsolicited commercial email to customers in California and other states.

Allen M. Lee  Mr. Lee’s practice focuses on business, corporate and intellectual property matters, including the creation, protection and exploitation of intellectual property assets.  He counsels clients on business formation, general corporate matters, trademark, copyright, trade secret, patent, licensing, internet and domain name issues, among other things.  For more information contact: Allen M. Lee, a Professional Law Corporation, Tel: (650) 254-0758, Fax: (650) 967-1851, Email: allen@allenmlee.com, Internet: www.allenmlee.com.

In August 2008, the law firm of Jones Day brought a trademark infringement action against BlockShopper.com, a real estate news website, for linking to the bios of two attorneys on the Jones Day website.  Jones Day’s legal theory was that BlockShopper's linking would trick readers into thinking that Jones Day was affiliated with BlockShopper.  In late January, BlockShopper settled with Jones Day, and the suit was later dismissed. 

BlockShopper had originally vowed to fight on to the end of the case, and many legal experts agree that had the case gone to trial, BlockShopper most likely would have won.  It is questionable whether the Jones Day’s lawsuit had any merit.  For Jones Day’s linking claim to be actionable, BlockShopper’s linking would have to had created a likelihood of confusion, mistake or deception as to the affiliation, connection or association of BlockShopper with Jones Day, or as to the origin, sponsorship or approval of Jones Day’s services by BlockShopper.  However, most would agree that BlockShopper’s allegedly infringing links were not unusual.  As one blogger puts it, BlockShopper did “nothing more than follow standard Web linking procedure that practically every website on earth follows,” and “no reasonable consumer with any experience with the Internet could possibly be confused by this practice.”  BlockShopper’s only error was in crossing a 2,300 attorney strong law firm that as Judge Darrah described to BlockShopper at the outset of the case,  is just too big a law firm that you cannot afford to fight in litigation. 

Without question, BlockShopper settled purely as a business decision.  Surveys by the AIPLA have consistently found that trademark cases typically cost hundreds of thousands of dollars just to reach the summary judgment stage.  In all likelihood, BlockShopper probably spent $110,000 just to reach settlement, and was potentially facing expenses in the neighborhood of $300,000 to $400,000 to make it through trial. 

What did Jones Day get out of this? Hard to say.  BlockShopper essentially agreed not to use embedded links to the law firm's website.  However, BlockShopper was still permitted to post the actual URLs.  BlockShopper reportedly offered to settle on these same terms at the outset of the litigation, but Jones Day persisted in several months’ worth of litigation only to accept the original settlement proposal.  If anything, one blogger characterized this case as a "new entry in the contest for grossest abuse of trademark law to suppress speech the plaintiff doesn't like.”

Allen M. Lee  Mr. Lee’s practice focuses on business, corporate and intellectual property matters, including the creation, protection and exploitation of intellectual property assets.  He counsels clients on business formation, general corporate matters, trademark, copyright, trade secret, patent, licensing, internet and domain name issues, among other things.  For more information contact: Allen M. Lee, a Professional Law Corporation, Tel: (650) 254-0758, Fax: (650) 967-1851, Email: allen@allenmlee.com, Internet: www.allenmlee.com.

U.S. Supreme Court Justice David Souter has announced that he will retire at the end of the Court’s term in June.   Souter, 69 years old, is the Court 105th justice.  He was appointed by President George H.W. Bush in 1990 in the hopes that he would be a solid conservative like his contemporary nominee, Justice Clarence Thomas.  However, Souter soon became a reliable moderate to liberal vote on the Court, joining in a ruling reaffirming a woman's right to an abortion in 1992, and dissenting in the 2000 decision Bush v. Gore that gave the White House to President George W. Bush.   One of his more controversial decisions was the 2005 case Kelo v. City of New London, Conn., an eminent domain case that gave cities the right to take land from homeowners to give to developers in the name of "public use."  President Barack Obama will now have his first opportunity to appoint a new justice to the high court.  If President Obama selects a moderate as expected, the ideological balance of the Court will not likely change.

Allen M. Lee  Mr. Lee’s practice focuses on business, corporate and intellectual property matters, including the creation, protection and exploitation of intellectual property assets.  He counsels clients on business formation, general corporate matters, trademark, copyright, trade secret, patent, licensing, internet and domain name issues, among other things.  For more information contact: Allen M. Lee, a Professional Law Corporation, Tel: (650) 254-0758, Fax: (650) 967-1851, Email: allen@allenmlee.com, Internet: www.allenmlee.com.

On or about April 17, 2009, the four founders of The Pirate Bay, one of the world’s largest bittorrent file-sharing websites, were found guilty by a Swedish court of violating Swedish copyright law.  The four defendants each received a sentence of a year in prison, and collectively ordered to pay 30 million Swedish crowns ($3.58 million).  Swedish prosecutors alleged that by financing, programming and administering the site, the four men promoted the infringement of property rights by the site’s users.  The Pirate Bay provided links to illegally-copied works and ran its own "trackers," which allows bittorrent clients to locate other peers running the same torrent of pirated materials.

Whether this verdict will deter illegal file-sharing is up to debate.  According to music analyst Mark Mulligan of research firm Forrester, “Every time you get rid of one, another bigger one pops up. Napster went, and then up came a whole host of others ... The problem of file-sharing just keeps growing year on year, and it's increasingly difficult for the industry to do anything about it.”  As a practical matter, websites that facilitate illegal downloads can simply move their operations to other countries with laxer copyright laws.     

Q:  What are the ramifications of modifying open source software such as GNU General Public Licensed code? What changes do I have to make to keep my code open source and what I can keep proprietary?

A.  With the GNU General Public License and many other open source licenses, if the open source code is modified such that a derivative work based on the original open source code is created, then the entire derivative work becomes subject to the open source license.  Similarly, if a portion of the open source code is incorporated into the proprietary code, then the entirety of the work may be subject to the open source license.  This has often been termed the “viral” nature of open source code.    

That being said, merely aggregating other works not based on the open source code with works based on the open source code doesn’t necessarily bring the whole work under the scope of the license. Proprietary and open source code software can be linked as long as the linking does not cause the product to be a single work.  Accordingly, people using open source components in their larger proprietary work will often integrate the open source components loosely so that they are “dynamically linked” when the product is operating but not “statically linked” such that they are booted up concurrently with the open source components as a single product.

Companies should make sure that open source code is not inadvertently included in their own proprietary code.  A  proactive best practices approach can help avert some of the problems and risks associated with open source software.