Category Archives: Licensing

Court rules that copyright “first sale” doctrine does not apply to pre-installed software that was licensed to OEMs

In United States copyright law, the “first sale” doctrine allows the purchaser of a lawfully-made copy of a copyrighted work to  transfer the copy by a subsequent sale, rental, or other means.  The first sale doctrine originated in a 1908 Supreme Court decision, and it is codified at 17 U.S.C. 109(d).

In a recent decision from the U.S. District Court for the Northern District of California, the court ruled that the first sale doctrine did not apply to copies of software that are pre-installed on a computer and sold by the original equipment manufacturer with the computer itself.  In Adobe Systems v Hoops Enterprise LLC (N.D. Cal. Feb. 1, 2012), the court considered the case of a company that bought computer hardware from Dell and Hewlett-Packard and resold OEM-installed Adobe software on eBay, separate and apart from the hardware.

The court indicated that the key question was whether the Adobe software was sold or licensed to the OEM computer manufacturers.  If it were a sale, then the first sale doctrine could apply.  However, if it were a license, then the first sale doctrine would not apply based on the precedent of Vernor v. Autodesk, Inc. (9th Cir. 2010).

Adobe did enter into license agreements with the OEMs, but the defendants argued that those agreements did not create significant restrictions on transfer, nor did they impose notable use restrictions, and Adobe did not retain sufficient control over the copies, so the agreements were effectively sale agreements rather than license agreements.  The court disagreed, noting that there were “significant distribution restrictions” in the license agreements.

Penn State University announces IP policy shift; will allow industry ownership of sponsored research

According to a recent report by Keystone Edge,  Penn State University has announced a major shift in its policies relating to research projects that are sponsored by private industry.  Instead of the typical arrangement where the university retains ownership of intellectual property rights resulting from sponsored research, Penn State will entertain proposals in which the industry sponsor will own all intellectual property rights in the research.  The university expects to implement this policy starting in late 2012.

Penn State appears to be the first major research institution to propose such a policy. The university formally considered the proposal in a May 31, 2011 internal memorandum.  Penn State’s Vice President of Research Henry (“Hank”) Foley confirmed the new policy in a recent interview with Keystone Edge.

IAM Licensing 250 Released

Each year Intellectual Asset Management (IAM) magazine publishes the IAM Licensing 250: The World’s Leading Patent and Technology Licensing Practitioners.  This week IAM announced the release of the 2011 edition of the IAM Licensing 250.  According to IAM:

The second edition of a unique guide that names top patent and technology licensing practitioners in 25 key jurisdictions has been released today.  IAM Licensing 250: The World’s Leading Patent and Technology Licensing Practitioners is the only research-based publication that names both lawyers and patent attorneys working in this increasingly important area of legal practice.

In order to find the individuals and firms named today, Intellectual Asset Management (IAM) magazine undertook an extensive four-month research process.  A team of experienced researchers spoke with hundreds of licensing professionals in face-to-face and telephone interviews, as well as via email exchanges. They provided in-depth information on their individual practices, recent work and other firms and individuals that stood out for their expertise in patent and technology licensing in the jurisdictions covered in this publication. The final selection process was based on the comments received.

The IAM Licensing 250 is available on the IAM website via this link.  My law firm (Pepper Hamilton) and I are proud to be profiled in the 2011 edition (available to registered IAM users here.)

Does a patent license include related patents?

According to a recent Federal Circuit decision, the answer is “yes” if the related patent is a continuation of the licensed patent (and so long as the license agreement does not expressly say otherwise).

In General Protecht Group, Inc. v. Leviton Manufacturing Group, Inc. (Fed. Cir. July 8, 2011), the appellants sought to enforce a settlement agreement in which Leviton granted certain companies a covenant not to sue under U.S. Patents 6,246,558 and 6,864,766.  (The patents relate to ground fault circuit interrupters.)  Leviton had filed a complaint with the International Trade Commission (ITC) against the appellants.  The ITC complaint accused the infringers of violating U.S. Patents 7,463,124 and 7,764,151, which are continuations of the patents licensed under the settlement agreement.

The Federal Circuit refused to allow Leviton to proceed, noting that Continue reading

Everyone understands what a “sale” is, right? Well . . .

The shortest contracts often create the largest disputes.  A recent article from Ron Morris of The American Entrepreneur very effectively illustrates what can go awry when two parties rush to sign an agreement.  If the parties have not ensured that the critical terms are clearly defined, costly disagreements can result.  In particular, payment terms – and the conditions that trigger a payment — must be clearly defined to avoid misunderstandings.

For example, in a license agreement the licensor may consider a payment obligation as triggered when the licensee’s customer agrees to purchase a licensed product.   The licensee, however, will want to defer the payment obligation until it actually receives payment from its customer.   Simple terms such as “sale”, “revenues”, or — as Ron notes in his article, “referral” —  can be interpreted very differently depending on what side of the agreement you are on.

Often, contracting parties can avoid issues like this if, before signing, they each ask a third party who is experienced with contracts — a lawyer, a contracts administrator, or another experienced person — to carefully read the agreement and identify terms that can be subject to different interpretations.  The time and expense put into carefully drafting a contract — even a relatively simple one — can avoid much more costly issues down the road.

For the full text of Ron Morris’ article, click here.

US Department of Energy challenge offers energy entrepreneurs $1,000 licenses to national laboratory technology

This week U.S Secretary of Energy Steven Chu announced a new program that is intended to encourage entrepreneurship and new energy technologies.  The Department of Energy owns 17 national laboratories around the country.  Each national laboratory performs research in a broad spectrum of energy-related fields. 

Under the new program, energy entrepreneurs who want access to a DOE national laboratory technology can license up to three national lab patents for $1,000 each.  National laboratory patents are currently available for review in a database that is available on the DOE Technology Transfer Website.   Terms of the license have not yet been released, but the DOE plans to release a streamlined license agreement for all applicants to accept. 

To request a license, applicants must submit a business plan and identify the technology of interest.  The DOE will publish a license application form on its website, and will accept applications May 2 – December 15, 2011.

Update:  Since this post was originally published, the DOE issued a press release clarifying that the $1,000 only covers the up-front fee.  The licensee will still be required to pay royalties based on actual sales.  Royalty amounts and other commercial terms will be determined on a case-by-case basis, although the DOE’s standard license agreement form will simplify the process.  The $1,000 fee represents a discount of $10,000 – $50,000 from the DOE’s typical up-front demand.

Issues to consider when structuring medical device development and license agreements

Physicians often contract with medical device manufacturers to provide services relating to new technologies. For example, the doctor may help the manufacturer develop a new device, or the doctor may help test an existing device.  In the first situation, the physician may assign or license intellectual property to the manufacturer in exhange for payment.  In the second, the physician simply performs consulting services in exchange for a service fee.

In either situation, both parties should ensure that the arrangement complies with applicable laws such as the federal Anti-Kickback Statute and the Stark Act.  My colleague John Jones recently wrote an article on steps that physicans and manufacturers can take to reduce risk in these situations.  As John writes:

The federal Anti-Kickback Statute proscribes . . . remuneration in exchange for a patient referral [in certain situations].  Violations of the Anti-Kickback Statute can result in significant criminal penalties, civil penalties of up to $50,000 for each violation, as well as imprisonment. The primary concern for physician relationships with medical device manufacturers under the Anti-Kickback Statute is whether the compensation paid to the physician constitutes disguised remuneration for referrals.

The article originally appeared in the February 25, 2011 issue of Physicians News Digest, and the full text is also available on the Pepper Hamilton website.

Football and IP

This weekend’s Super Bowl provides an opportunity to review some of the past year’s interesting developments relating to the National Football League and intellectual property:

1.  Titlecraft v. NFL:  wooden Lombardi trophy replicas infringe NFL copyright.

In Titlecraft Inc. v. National Football League (D. Minn. Dec. 20, 2010) the NFL and NFL Properties sued Titlecraft, a manufacturer of custom wooden trophies.  Titlecraft made wooden replicas of the Vince Lombardi trophy.  The Lombardi trophy is a silver statue made by Tiffany & Co. that is awarded to each year’s Super Bowl champion; Titlecraft’s trophies were small wooden replicas that were sold to fantasy football leagues for honoring their own champions. 

Finding that (i) the NFL had a valid copyright registration for the Lombardi trophy; (ii) Titlecraft had access to the Lombardi trophy; and (iii) the two trophies were substantially similar, the court granted summary judgment for copyright infringement in favor of the NFL.  Although Titlecraft pointed to minor differences in size, angles, and texture, the court stated that “‘if it walks like a duck, quacks like a like and looks like a duck, it has got to be a duck’ – or in this case a copy.” 

2.  Who dat say dey gonna own dem trademarks?

When the New Orleans Saints reached the Super Bowl in 2010, the NFL sent cease-and-desist letters to several Louisiana merchants, demanding that they stop selling Continue reading

Issues to consider when deciding which affiliate will own a patent

Companies that have multiple affiliates may consider several options when deciding which corporate entity will own the organization’s patents.   Often, tax considerations and royalty structures are a driving factor in deciding whether an operating entity or a holding company will own the patents.

Before placing patent ownership in a holding company, patent holders should consider whether they are likely to enforce the patent against infringers.  If so, separation of the patent from the operating entity may limit the damages that patent holder can receive from the infringing entity.  The failure to document a license arrangement with affiliates also can limit damages.

This risk was highlighted in the recent case of Duhn Oil Inc. v. Cooper Cameron Corp. (E.D. Ca., Jan. 21, 2011).  In the case, Duhn Oil sued Cooper Cameron for patent infringement.  Although Duhn Oil was the patent holder, it had been acquired by Seaboard International, Inc.  After the acquisition, operations were transferred to Seaboard, and Duhn remained as a holding company for intellectual property and other assets.  Because Duhn was the patent holder but had no operations and no royalty-bearing license agreement, the court found that patent infringement caused Duhn no lost profits.

Faster Than the Speed of Law

In 1909, the Charles Dickens book Oliver Twist was first adapted to the silver screen as a silent film.  The film was distributed in 35 mm format, and it was most likely shown via Edison movie projectors in nickelodeons (movie theaters) around the country. 

The latest film version of Oliver Twist, released in 2005, had a few more distribution channels.  It premiered at the Toronto Film Festival, followed by a general release in theaters.  In 2006, it was released on DVD.  The DVD is available to rent from Netflix, Blockbuster, and other vendors.  The film has been broadcast on subscription-based television.  It can be viewed via the Internet on Amazon.com’s on-demand service.  Excerpts can be seen on YouTube.  The soundtrack is available on CD, as an MP3 download, or via streaming on services like Pandora.

Oh, and the original Oliver Twist novel is available as an audiobook; as an e-book in formats for the iPad, Kindle, Nook, and other e-readers; and also for free viewing on the web at various sites.

Do you think Charles Dickens’ attorneys thought of all of these possibilities when negotiating his book publishing contract?

In a recent article published in The Philadelphia Lawyer, my colleague Megan Kearney discusses how licensing law has often struggled to keep pace with ever-changing technologies.  More details and Megan’s full article are available here.