Category Archives: Software

Do contractors help develop your software? Read this if you plan to sell or license it to others.

A recent decision from the United States District Court for the District of California could, if upheld, significantly limit companies’ ability to transfer its proprietary software unless the company has obtained an assignment from each and every developer.

In a decision published November 5, 2012 in Amaretto Ranch Breedables LLC v. Ozimals Inc., Ozimals argued that Amaretto Ranch infringed its copyright in software used in connection with the online virtual reality site Second Life. Amaretto Ranch filed a declaratory judgment action and argued that it could not infringe because Ozimals did not own the software. Three developers created the software, but only two of them had executed assignments in favor of Ozimals.

The court agreed with Amaretto Ranch’s argument and held that in order to transfer a copyright, all authors must agree to the assignment.  Otherwise, the attempted assignment is merely a non-exclusive license. Continue reading

Looks Like Tetris? Video Game Clones and Copyright Law

According to a recent study by Flurry Analytics, in the first two months of 2012 over 50% of all user app sessions on Android and iOS mobile devices involved video games.   GamesIndustry International recently reported that by 2017 global revenue from video game software is expected to grow to $70 billion by 2017.   With significant money and consumer interest in play, it’s not surprising that software developers are rushing to feed the gaming frenzy.  In some cases, game developers may be inspired by the world’s most successful mobile gaming apps like Tetris, Angry Birds, Bejeweled and many others.

However, a recent court decision warns that game developers must recognize that the difference between “inspiration” and “copying” may be subtle.  Falling into the wrong category can result in significant consequences.   Continue reading

The importance of including algorithms in software patents

The U.S. Court of Appeals for the Federal Circuit recently issued its second decision in the past month in which it found a software patent to be invalid for failure to disclose an algorithm that the software uses to perform its function.  In each case, the patents’ claims involved “means plus function” language such as the phrases “control means” and “access means”.
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Addressing privacy and security risks in cloud computing service contracts

As more businesses store and share data via third-party “cloud computing services”, privacy risks and Federal Trade Commission enforcement actions have also increased.  Many companies’ standard vendor services contracts are woefully inadequate to address these risks.  When contracting for cloud computing services, the contract should specifically describe data handling practices, security breach notification procedures, and data return requirements when the contract ends.

My colleagues Sharon Klein and Tabitha Sullivan recently wrote an article that includes tips and traps to consider when negotiating or drafting a cloud computing services contract.  As they note in the article:

The scope of the cloud computing services will impact the respective responsibilities of the vendor and the customer.  This contractual clarity is especially important given that most cloud computing vendors believe security of data is the customer’s responsibility, not theirs. . . .  The [customer's] contracting department should work closely with the IT department to identify the company’s specific requirements and incorporate appropriate provisions to ensure the company’s needs are met.

To view the full article on the Pepper Hamilton website, click here.

Open source software: when is it really “free”?

Free and open source software (FOSS) offers a free, time-saving solution to many software developers.  However, “free” does not always mean “without cost”.   As my colleague David Wormser wrote in a recent article:

[S]ometimes even “royalty free” can be too expensive.  FOSS almost invariably comes with strings attached. . . . Depending on the FOSS and the developer’s plans for it, complying with the applicable license may be relatively easy and painless.  But, if it a developer wants to avoid potentially serious consequences, it needs to take a systematic approach to managing the FOSS opportunity.

The legal challenges flow from the terms of the license agreements themselves. The license agreements are essential to the developer’s legal ability to use FOSS code. . . . Each license imposes a specific set of requirements and limitations on developers wanting to modify and/or redistribute the FOSS in question. Unfortunately, from the developer’s point of view, complying with the license can be complicated, particularly when the developer intends to use in a single software product FOSS from a variety of sources.

For Dave’s full article and recommendations on how best to manage the use of open source software in your company, click here.

Software Patent Statistics

Philip Brooks’ Patent Infringement Updates recently posted some useful statistics about the USPTO’s issuance of software patents, along with how frequently courts have declared software patents invalid over the last few years.  Interesting nuggets from the stats include:

The USPTO granted 752 software patents in 2006 — far more than in any other year.  However, in 2006, the U.S. Supreme Court began to question whether the USPTO was going to too far when granting software patents, as shown by Justice Breyer’s dissenting opinion in LabCorp v. Metabolite, Inc.  and Justice Kennedy’s concurring opinion in eBay, Inc. v. MercExchange, L.L.C.    

After all of this, the USPTO also began to more aggressively reject claims directed to software, and the number of software patents granted dipped to 707 in 2007.   The number held steady at 707 in 2008.

Federal Circuit addresses direct/contributory patent infringement liability for software

The Federal Circuit recently issued an opinion that refines certain standards for patent infringement.  In particular, the decision in Ricoh Company, Ltd. v Quanta Computer Inc., may limit the situations under which software can directly infringe a patented method, while increasing potential liability for contributory infringement for sellers of products containing infringing components.  Continue reading

Federal Circuit’s In re Bilski decision promises continued uncertainty for business method and software patents

On October 30, 2008, the US Court of Appeals for the Federal Circuit issued its long-awaited decision in In re Bilski, which was an appeal of the USPTO’s rejection of business method patent claims as non-eligible subject matter.  The decision rejected several prior tests for subject-matter eligibility and stated that a process is patent-eligible if “(1) it is tied to a particular machine or apparatus, or (2) it transforms a particular article into a different state or thing.

The most interesting part of the Court’s decision may be its express disavowal of being the final word on the patentability of business method and software patents.  The Court acknowledges the temporary nature of its decision, stating that: Continue reading

Federal Circuit holds that failure to comply with open source license terms also violates copyright law

A recent ruling from the US Court of Appeals for the Federal Circuit favors the ability of open source software developers to impose limits on distribution of the software by others.  Specifically, the decision confirms that open source developers can enjoin further use of the software – rather than simply seek damages for breach of license terms – when others violate the terms of the open source license. 

If you know what open source software is, you can skip to the next paragraph.  If not, here’s a bit of background:  Continue reading

Do you “license” or “sell” your software?

When a software license agreement imposes restrictions on transfer or resale of the software, is that restriction legally effective?  A recent decision from a district court in the state of Washington suggests that the answer may be “no” if the license governed a transfer of a physical copy (such as a CD) of the software and did not require the transferee to return the copy at the conclusion of the contract’s term. 

More on the court’s decision in Vernor v Autodesk follows below.  Continue reading