• IP BLAWG

    Spring 2017 Updates

    Beverly A. Berneman
    3/28/17

    In case you’re curious about what happened after, here’s an update from a previous post.

    IP Criminal Hall of Fame, Grand Prize Winner, the Prenda Law Firm (January 10, 2017). As you may recall, the Prenda Law Firm, created sham companies that invited illegal downloads of porn. Then they threatened expensive and embarrassing law suits if the infringers didn’t settle. John Steele, one of the masterminds of the disgraced Prenda Law Firm, and his partner, Paul Hansmeier were indicted in January 2017. On March 8, 2017, Steele pleaded guilty to all seven counts of conspiracy to commit mail fraud, wire fraud and money laundering. Court papers show that Steele and his co-defendant, Paul Hansmeier, made more than $6 million with their scheme. And, by the way, Steele and Hansmeier filmed some of their porn inventory themselves.

  • IP BLAWG

    The Intrepid Heroes of Copyright, Photographers

    Beverly A. Berneman
    3/21/17

    No group of artists suffers copyright infringement more than photographers. Professional and amateur photographers post their photos on the Internet to proudly display their work. Photographers have a hard time reigning in unauthorized uses of their photos. It’s hard to track unauthorized downloads, hard to find the downloaders and the damages are usually not pursuing given the costs of litigation. That’s why VHT, Inc.’s $8.3 million judgment against Zillow Group, Inc. deserves acknowledgement. VHT licenses its photos of properties that are for sale to real estate agents. The real estate agents have a license to post the photos for marketing purposes. Zillow’s infringement resulted from use of the photos outside the scope of the license in two ways. First, it left the photos on its website even after the properties were sold. Second, Zillow posted the photos on its “Diggs” website which provides home design and improvement services.

    WHY YOU SHOULD KNOW THIS. A license has scope and parameters. The licensor has a right to limit the uses of a work. Going beyond the scope of the license creates liability for infringement.

  • IP BLAWG

    NDA Judgment is Real Reality

    Beverly A. Berneman
    3/14/17

    When a virtual reality tech developer leaves, the real world intercedes. Zenimax, owned by programming guru John Carmack, worked with Palmer Luckey to improve his Oculus Rift virtual reality gaming device. Zenimax allowed Luckey access to its proprietary technology. Luckey signed a Non-Disclosure Agreement (NDA). Facebook bought Luckey’s company. Right after the sale, a group of Zenimax employees left to work with Luckey. Zenimax sued Luckey and his company seeking $4 billion for trade secret misappropriation, copyright infringement and trademark infringement. And, oh yes, breach of the NDA. After trial, the jury rejected all but the breach of the NDA claim and awarded $500 million to Zenimax.

    WHY YOU SHOULD KNOW THIS. The problems with protecting emerging technology may have played out in this case. Sometimes, the technology can’t be pigeonholed in a specific type of Intellectual Property. Zenimax didn’t take that risk and required a NDA. As Zenimax learned, the best time to anticipate protection is at the inception of the relationship. In other words, always have a written agreement with strong contractual provisions providing protection against the unauthorized sharing of information.

  • IP BLAWG

    Danish Enzyme Bites Chinese Dragon

    Beverly A. Berneman
    3/7/17

    The conventional wisdom is that in a foreign company v. Chinese company patent suit, the Chinese company will always win. Maybe not. Danish company, Novozymes, had patented an enzyme for use in bioenergy and beverages. Novozymes sued two Chinese companies, Shandong Longda Bio Products and Jiangsu Boli Bioproducts for patent infringement. Novozymes brought the case in China. After six years of litigation, the Supreme People’s Court entered judgment against the Chinese companies. Two things make this victory even sweeter. First, certain types of biotechnology are harder to support under Chinese patent rules than patent rules in the U.S. and Europe. Second, the Chinese government devotes significant resources to Chinese companies’ research and development in the area of biotechnology.

    WHY YOU SHOULD KNOW THIS. This result is not typical. That’s why it’s newsworthy. High tech innovation is always vulnerable to patent infringers who want to get there faster without the expense of research and development. Patent enforcement can be hard in foreign, and sometimes hostile, jurisdictions. For a company, patent enforcement problems can be a critical element when looking to expand into extraterritorial markets. If the Supreme People’s Court has started a trend towards protecting the patents of non-Chinese companies, new market expansion evaluations may change.

  • Benefits Bulletin

    401(k) Plan Trustees: How Do You Select And Monitor Investments?

    Andrew S. Williams
    3/3/17

    Many 401(k) plan sponsors have wisely selected investment professionals to assist in selecting the plan’s investment menu, typically a listing of various mutual funds. Other plan sponsors may allocate this duty to company officers and other key employees. In either case, the resident plan fiduciaries (the company officers and key employees who act on behalf of the sponsor as plan administrator or trustee) have a legal duty to “select and monitor” plan investments and, in the case of sponsors who have hired investment professionals – to monitor not only investment performance but also the performance of the investment professionals.

    So, how do you “select and monitor?”

    There’s only one hard and fast rule: Document what your investment-related decisions are and how you made them. But here are some guidelines on how to proceed:

    Selection

    • Investigate available investment providers. This may include banks, insurance companies, stockbrokers and mutual fund companies and their broad array of investment options. Then solicit specific information on several investment programs. This could be done in a standard format such as a request for proposal (RFP).
    • Analyze costs and investment characteristics of available investments and select the investment menu that offers diversified investment options at competitive prices. Remember, your plan is not “free” if your participants pay administrative costs through reduced returns on their plan investments. So, get a handle on this kind of indirect compensation (“revenue sharing”) and make sure you take it into account.

    Monitoring

    • The general requirement is endorsed by the Supreme Court in the Tibble opinion as a “separate” duty of a trustee to “monitor trust investments and remove imprudent ones.” You should review investment results on a periodic basis with a view towards replacing laggards in your plan’s investment array.
    • Compare investment results with criteria set out in your plan’s investment policy statement, or IPS (yes, having an IPS is a good idea). Also, document your decision-making process to prove that in-house plan fiduciaries have performed this duty.

    The Takeaway: Process, process, process! Just going through the procedure suggested above – and providing documentary proof – could satisfy an IRS or Department of Labor inquiry even if your plan has mediocre investment results.