Category Archives: Software

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