News and commentary about a dad’s big oops is fair use. Proud dad, Kali Kanongataa, accidently live streamed a video of his partner giving birth to their son. The video went viral. As often happens in the world of viral videos, Kanongataa’s video gave rise to a commentary by the media. Much of the commentary involved showing short clips from the 45 minute video. Kanongataa sued ABC, NBC, Yahoo and COED Media for copyright infringement. The judge dismissed the case on the basis of fair use. But, it didn’t stop there. The judge ordered Kanongataa to pay the defendants’ attorney’s fees. The judge said, "no reasonable lawyer with any familiarity with the law of copyright" would have filed the cases.

WHY YOU SHOULD KNOW THIS. Copyright infringement is the unauthorized use of the works of another. Fair use is a defense to copyright infringement. Fair use is a necessary component of copyright law because it protects uses that are essential to open dialog and creativity. A fair use analysis isn’t always simple or straightforward. But using small clips of a video for news or commentary falls squarely within the parameters of fair use. This case points out that no matter how aggrieved one may feel about the use of their content, rushing into court without an objective fair use analysis can cost a plaintiff far more than the embarrassment of a viral video.

Similar trademarks can co-exist with the blessing of the TTAB. Bras for Cause, Iowa, Inc. tried to register BRAS FOR THE CAUSE for charitable fundraising services. Soroptimist International of Glendale California, CA opposed registration because it wanted to register BRAS FOR A CAUSE for the same types of services. In the end, the parties settled allowing each party to use their marks. The opposition proceeding became a concurrent use proceeding. At first, TTAB refused to accept the concurrent use agreement because of concerns that the parties would be offering similar services in potentially overlapping geographic territories. This would lead to marketplace confusion. The parties submitted a revised agreement that staked out their territories so there would be no overlap. TTAB accepted the revised agreement and both parties were allowed to proceed with restricted registrations.

WHY YOU SHOULD KNOW THIS. Federal trademark law provides nationwide protection for a trademark; even if the trademark isn’t used everywhere in the U.S. As this case demonstrates, sometimes parties with the same or similar trademarks can stake out their territory and still get registrations. However, TTAB doesn’t rubber stamp these agreements. Trademark law still has an interest in minimizing confusion in the market place. So, concurrent use agreements have to be carefully drafted to make sure that the risk to confusion is relatively small.

No matter how right you are, you need to register a copyright before filing suit. Section 411(a) of the Copyright Act requires registration of a copyright before bringing suit. Federal Circuits are split on how to interpret this. Some circuits say filing an application is enough. Other circuits say the plain language of the statute requires actual registration. In Fourth Estate Public Benefit Corporation v. Wall-Street.com, LLC, the Eleventh Circuit Court of Appeals went with registration means registration. Wall-Street licensed content from Fourth Estate. After the license expired, Wall-Street continued to post Fourth Estate’s content without permission. Fourth Estate applied for registration and then filed suit before the works were actually registered. In affirming the dismissal of the suit, the Eleventh Circuit focused on the fact that the Copyright Office had to examine the application before registration. So filing the application can never be enough.

WHY YOU SHOULD KNOW THIS. As often happens, Fourth Estate probably didn’t have a mechanism to regularly register its copyrights. Although the application process is pretty straightforward and the Copyright Office fees are very affordable ($35 to $55 per application), many businesses see copyright registration as a “nice to have” instead of a “need to have”. If a copyright owner doesn’t have regular application process, what should the owner do when an infringement occurs? The Copyright Office has a special handling process where for a filing fee of $800, it will expedite a decision regarding registration. The usual registration process can take several months to complete. The special handling process takes one to three weeks.

The unauthorized use of someone else’s subscription password can result in multi-million dollar liability. eVestment Alliance LLC offers a subscription to its trade secret protected database of investment products and performance data. An eVestment subscriber hired Compass iTech LLC to help analyze the eVestment’s data. Compass then used the subscriber’s password about 3,000 times to download information from eVestment’s database for its own benefit. eVestment discovered the activity and shut off access to the database. Compass sued for defamation and unfair trade practices. eVestment counterclaimed. eVestment was granted summary judgment on all of Compass’ claims. On eVestment’s counterclaim, a jury found that Compass deliberately misappropriated eVestment’s trade secrets and violated the Computer Fraud and Abuse Act. The jury awarded eVestment $2.5 million in compensatory damages and $1.2 million in punitive damages.

WHY YOU SHOULD KNOW THIS. Compass’ first mistake was to use someone else’s password as mechanism for unauthorized access to a competitor’s protected trade secrets. Compass’ second mistake was to race to the courthouse and file suit on a very shaky foundation. As Compass learned, a subscription to a database grants a limited right to use it under certain terms and conditions. Using someone else’s password doesn’t give you any rights. And if you use the password in order to unfairly compete with a competitor, the competitor may be able to get a multi-million dollar judgment against you. Of course, eVestment’s success resulted from carefully protecting its database with reasonable measures to restrict access to its trade secrets.

Consider a typical retirement plan sponsored by a private employer. The employer is a fiduciary to the plan along with employees who individually serve as trustees or members of the plan’s investment or retirement committee.

The employer may (should!) have concerns about the liability associated with its fiduciary status. Let’s say you are the person asked by the employer to look into this matter.

There are a number of steps you might take to protect plan fiduciaries from liability. One thing you might consider is engaging an investment advisor to act as a co-fiduciary along with the in-house staff responsible for the plan. But let’s say you take another step and engage an “investment manager” to take on “all” responsibility for plan investments. In this case, the hired investment manager actually makes all decisions about plan investment and, as a “discretionary” advisor, only notifies the employer afterwards as to specific investment transactions.

At this point, in-house fiduciaries are exempt from liability for the specific investment decisions made by the investment manager. But are the in-house fiduciaries completely off the hook?

A recent federal district court decision, Perez v. WPN Corp, et al., elaborates on what in-house fiduciaries are required to do in exactly this situation. The court holds that the plan fiduciaries who appoint the investment manager are still responsible for “monitoring” the investment manager’s performance. This duty includes adopting routine monitoring procedures, following those procedures, reviewing the results of the monitoring procedures and, most important, taking any action required to correct any performance deficiencies of the investment manager. So, whether you pick an investment advisor to act as a co-fiduciary or an investment manager to make all the decisions on plan investments, in-house fiduciaries still need to review the conduct of these professionals and take action when necessary.

The Takeaways:

1. There’s no risk-free way to put your retirement plan on autopilot. Having quality service providers is a good idea but they cannot relieve you, your company or your other in-house fiduciaries from all responsibility for investment and administrative decisions.
2. Some financial advisory firms charge extra to act as “investment managers.” You may find that the “extra protection” afforded by this arrangement is not really worth the additional expense.
3. Consider other alternatives to mitigate fiduciary liability. This may include steps like adopting a suitable investment policy statement or obtaining fiduciary insurance. Other possibilities are outlined in “Your Fiduciary Duty – And What to Do About It” that can be viewed here.

The denizens of Bikini Bottom could be confused by a real Krusty Krab restaurant. Viewers of the cartoon, SpongeBob SquarePants, are familiar with the underwater (and, of course, fictional) eatery, The Krusty Krab. When IJR Investments, LLC wanted to register the trademark, “The Krusty Krab”, for a dry land real restaurant, Viacom International, Inc., sued for trademark infringement, unfair competition and other causes of action. IJR argued that Viacom never registered the trademark and Viacom only has a fictional restaurant. So, IJR argued, it was free to use the name. The court rejected IJR’s arguments. The court looked at Viacom’s use of the name. It appeared in 166 out of 203 SpongeBob episodes over the 17 year run of SpongeBob. There were 2 successful movies and substantial merchandizing. Viacom’s substantial use for 2 decades established that the name acquired secondary meaning in the minds of consumers. Thus, Viacom had established enforceable common law rights in the name. The court entered judgment in favor of Viacom on its trademark and unfair competition claims.

WHY YOU SHOULD KNOW THIS. This case demonstrates how a trademark owner can establish rights in a common law trademark; even if the trademark relates to a fictional product. Here’s a list that is not, by any means, exhaustive: (1) Active, continuous use of the trademark over a span of time; (2) Large advertising and promotional budget; (3) Active merchandising; and (4) Licensing of the trademark. Note, however, that rights in a common law trademark can be restricted to the geographic location in which they are used.

The good news is that the parties settled their trade secret litigation. The bad news is the release language in the settlement agreement. Security Camera Warehouse, Inc. sued Bowman, one of its former owners, for trade secret misappropriation. During the settlement negotiations, unbeknownst to Security Camera, Bowman still had access to Security Camera’s servers and downloaded Security Camera’s trade secrets. After the parties signed a settlement agreement, Bowman set up a new company and competed with Security Camera using the information he took during settlement negotiations. Security Camera brought a second suit against Bowman for trade secret misappropriation. The court held that Security Camera’s claims were barred by the release in the settlement agreement from the first case. The language specifically released Bowman from any claims that Security Camera may have in the future based on events that occurred before the execution of the settlement agreement.

WHY YOU SHOULD KNOW THIS. The troubling part of this decision is that Bowman apparently committed trade secret misappropriation while seeking to settle with Security Camera. So Bowman knew a material fact that he withheld from Security Camera. Perhaps the judge should have addressed this situation before coming to his decision. Be that as it may, there are several options to avoid this outcome. First, include representations and warranties in the settlement agreement where defendant affirmatively states that he is not in possession of any trade secrets belonging to the plaintiff. Second, include a requirement that the defendant destroy or return all copies of the trade secret (digital or otherwise) and provide an affidavit confirming compliance. Third, and most importantly, do not release unknown future claims.

A Star Trek and Dr. Seuss mashup will Live Long and Prosper. Comics legend, Ty Templeton, and Star Trek’s “Trouble with Tribbles Episode” writer, David Gerrold, collaborated on a comic called “Oh, The Places You'll Boldly Go.” The comic mashed Dr. Seuss-like drawings and dialogue with Star Trek characters. The Dr. Seuss Estate sent Templeton and Gerrold a cease and desist letter citing trademark and copyright infringement. This resulted in Kickstarter shutting down the campaign to fund the development of the comic. Litigation ensued. Victory goes to Templeton and Gerrold. A California court ruled against Dr. Seuss on the trademark claim. The court held that Templeton and Gerrold’s use of the Dr. Seuss trademarks was ‘nominative fair use’. Although the court didn’t rule yet on the copyright claims, the court indicated that the use of Dr. Seuss’ copyrighted works was sufficiently transformative to be fair use.

WHY YOU SHOULD KNOW THIS. Fair use can be a defense to both trademark and copyright infringement. For trademarks, ‘nominative fair use’ means using the trademark of another in a non-commercial manner. In creative works, such as this one, the comic uses the trademark only to reference Dr. Seuss’ goods and services and not to sell a competing product or confuse the public as to the source of the products. For copyrights, fair use in a creative work is an important element in parody. A proper parody uses a source work in a completely new or unexpected way. This is referred to as “transformative use”. Caution. There’s always a fine line between fair use and infringing use. When in doubt, get an attorney’s opinion.

My advertising injury may not be your advertising injury. Many general business insurance policies cover defense of claims for ‘advertising injury.’ But what does that mean exactly? This comes up when the insured is sued for IP infringement and tenders the defense to the insurance company. Then the insurance company refuses to defend the claim because it doesn’t fit into the definition of advertising injury. In recent cases, the courts were able to give some guidance on how to analyze the duty to defend "advertising injury". Here are a few examples. In Diamond State Insurance v. 21 Century, the court held that defendant’s false and misleading statements in telephone calls to its competitor’s customers fell within the definition of advertising injury. In Sentry Insurance v. Provide Commerce Inc., the court held that the defendant’s use of Google search terms to redirect users to a competitor’s website could conceivably fall within the definition of advertising injury. In Mid-Continent Cas. Co. v. Kipp Flores Architects LLC, the court held that claims for copyright infringement stemming from an advertising idea were covered. In Sentinel Insurance Co. Ltd. v. ITD, the court held that claims of trade secret misappropriation do not fall within the definition of advertising injury.

WHY YOU SHOULD KNOW THIS. Insurance policies are written to "giveth" and then "taketh away". They give coverage and then list exclusions from coverage. All insurance policies should be carefully reviewed. If the extent of coverage is unclear, an insurance professional or counsel familiar with insurance coverage should be consulted. If potential litigation isn’t covered, the business owner should inquire about the costs of a rider for additional coverage. It wouldn’t hurt to also ask whether opinions of counsel or changes in business methods can help reduce premiums. IP litigation is costly and time consuming. So the premiums might be worth the additional coverage.

Copyright only protects the non-standard elements of an architectural plan. Architectural plans, by their nature, incorporate elements that have been in the public domain for centuries, such as doors, windows and types of rooms in a house. Copyright Law calls those standard elements “scènes à faire”. Home developers use a combination of standard elements to create floor plans. Sometimes, the developer comes up with a unique feature. When that happens, the developer has a copyright in the unique feature. The plaintiff in Design Basics LLC v. Lexington Homes, Inc., publishes home floor plans and licenses them on a retail basis. Design Basics sued Lexington Homes for copyright infringement of its floor plans. The 7th Circuit Court of Appeals affirmed summary judgment in Lexington Homes’ favor. The Court agreed with the District Court that a jury could not find that Lexington Homes’ plans were substantially similar to Design Basics’ plans. The graphic to the left illustrates the point by juxta positioning a Design Basics floor plan with a Lexington Homes floor plan. If you take the scènes à faire out of the equation, Design Basics seems to have very little protectable elements. But there’s more. The Court, in dicta, discussed Design Basics' litigation history and used the opportunity to criticize Intellectual Property trolls. As of April 2017, Design Basics had brought over 100 copyright infringement lawsuits. Design Basics trawled the Internet and paid employees to find "infringers". The Court expressed distaste for this type of wholesale litigation. The Court reproached plaintiffs, i.e. Intellectual Property trolls, who misuse the legal system by filing dubious lawsuits for the purpose of prompting settlements to avoid costly litigation.

WHY YOU SHOULD KNOW THIS. There are two lessons here. First, if you are in the business of producing works that have minimal copyright protection, the chances are that you are going to have little success in bringing infringement suits. Second, the Intellectual Property troll phenomenon is on the radar of many courts. The Design Basics opinion referenced scholarly articles, news media coverage and recent opinions deploring the abuse of the court system by Intellectual Property trolls. The best way to deal with Intellectual Property trolls is to stand up to them. It may be costly but settling with Intellectual Property trolls only encourages them.

The USPTO’s audit procedure sets up a ‘use it or lose it’ proposition. The owner of a registered trademark has to file a declaration of use between the 5th and 6th year after registration and then on every 10th anniversary of registration. The USPTO will conduct random audits of about 10% of the filed declarations of use. The USPTO’s audit system will maintain the integrity of the trademark registration system by insuring that a trademark is actually being used for the registered goods and services. If the trademark owner cannot provide sufficient specimens of use, the goods or services will be deleted from the trademark registration.

**WHY YOU SHOULD KNOW THIS. **Over time, a trademark owner may drop or develop new goods or services. When it comes time to file maintenance and renewal documents, the specimens of use will change too. A trademark owner can avoid audit problems by conducting a detailed review of their registrations before filing maintenance and renewal documents. If product lines or services are no longer being offered, the maintenance and renewal documents should reflect the changes.

Google avoided the ignominious fate of losing its trademark due to genericide. Trademark protection extinguishes when the trademark becomes interchangeable with the name of the product or service. This process is called “genericide”. Some famous examples of genericide are aspirin for pain reliever, cellophane for plastic wrap and thermos for a vacuum flask. Two people filed a proceeding with the Trademark Trial and Appeal Board (TTAB) to cancel the Google trademark due to it having become a generic word for searching on the Internet. The TTAB denied the cancellation and the plaintiffs appealed to the Ninth Circuit Court of Appeals. The Court affirmed the TTAB. The Court’s opinion stated that even though the public might use the term as a verb, the Google mark could still serve as a source identifier.

WHY YOU SHOULD KNOW THIS. When developing a brand, a company should set a policy for how a trademark will be used. Companies like Xerox and Kimberly-Clark zealously protect their brand names from genericide. Xerox’s policy requires references to “Xerox brand copiers”. Kimberly-Clark requires references to “Kleenex brand tissues”. Brand usage policies can also dictate consistent use of the color, size or content to make sure the brand sends a consistent message. No matter the size of the company or the fame of the brand, it’s never too early to set a branding policy.

You’re a successful business owner and you’d like to plan ahead. Professionals are urging you to prepare a “succession plan” – but you look at it as a retirement plan. Getting out of the daily grind might be nice, but giving up your life’s work and your legacy business? Maybe not so nice. No matter how they sugar coat it, “succession planning” looks like you’re calling it quits.

Whether they call it a succession plan, an exit plan or a retirement plan, it usually amounts to a transaction where you cash in your chips and your legacy business goes away. And, as soon as you sign that transaction document, you may no longer have any input in the conduct of your own business.

Is there another way? Can you cash your chips, continue your legacy business and still have a hands-on role? Can you have your cake and eat it too? The answer for you very well may be “yes!”

An employee stock ownership plan (“ESOP”) may allow you to sell your business to your employees in a non-adversarial, tax-advantaged transaction and continue to manage operations by electing directors of your choosing. You can participate in the business as much or as little as you would like. Want to taper off over the next ten years or so? No problem!

In this way, ESOPs can treat the two major non-financial issues facing business owners “in transition”: the end of the business involvement of a lifetime, and the likely loss of the legacy business itself.

The Takeaway: If a business transition is in your future, make sure an ESOP purchase is on your short list.

Dan Aykroyd’s Crystal Head Vodka gets to keep its dress. Crystal Head Vodka’s maker, Globefull, Inc. brought a trade dress suit against Elements Spirits Inc. for copying its distinctive Day of the Dead inspired packaging on Element’s Kah Tequila. And then the 7 year odyssey began. Globefull lost the first jury trial. It appealed the denial of its motion for a new trial. The Ninth Circuit agreed that the trial was unfair because defense counsel had referenced similar litigation in Mexico in closing argument. Back in district court, Globefull lost its motion for preliminary injunction. But Globefull persevered. During the second trial, the owner of the elements was caught in a lie. At the previous trial, she testified she never heard of Crystal Head Vodka when she was developing Kah Tequila. In the second trial, the testimony of other witnesses contradicted that statement. The jury found in favor of Globefull on liability. The amount of damages will be set at a later date.

WHY YOU SHOULD KNOW THIS. Sometimes, litigation can feel like a never ending spiral of defeat. But, a party who is secure in its position and is willing to fight for it can win the day. Position security arises from preparation and follow through. For the preparation side, due diligence is a must so you don’t encounter unexpected surprises. On the follow through side, perseverance can win the day.

A repaired Rolex may not be a Rolex. In Trademark Law, the “First Sale Doctrine” allows a consumer who buys a trademarked item to resell it without having to pay a license fee. But there are limits. In Rolex Watch USA, Inc. v. Krishan Agarwal, the defendant refurbished Rolex watches and then resold under the trademarked name. When Rolex sued him for trademark infringement, Agarwal asserted the affirmative defense of the First Sale Doctrine. The court rejected the argument. The court examined the impact of the modifications on the original product. If the modifications create a new product, it can no longer be sold using the trademark. In this case, Agarwal replaced dials and bracelets that weren’t authentic Rolex items. Agarwal offered to include a disclaimer. But the court held that the disclaimer would be confusing because the refurbished watch was really a new product.

WHY YOU SHOULD KNOW THIS. A business can thrive on providing aftermarket enhancements, refurbishments or changes. However, when dealing with branded goods, the changes can go too far and then resale can result in exposure to liability.

Abstracts are nice in visual arts but not in patents. Before Alice Corp. v. CLS Bank International, about 30% of software patent applications were invalidated. After Alice, the statistic is up to about 80%. Another one just went down. In Clarilogic, Inc. FormFree Holdings Corp., the Federal Circuit Court of Appeals affirmed summary judgment for the plaintiff to invalidate the defendant’s patent for credit reporting software. The Court ruled that the software "is directed to the abstract idea of gathering financial information of potential borrowers." The patent used computers to automate a fundamental financial information process without identifying any particular algorithm engine.

WHY YOU SHOULD KNOW THIS. A software developer should ask two questions before pursuing a patent. First, am I developing something that automates a task a human can do manually? Second, can any computer do what I’m automating without my software? If the answer is yes to both questions, then a patent will probably not be issued. Of course, to be safe, always get an opinion from a patent attorney whose area of emphasis is in the software patent space.

A new law prohibits blocking negative reviews. On March 14, 2017, the Consumer Review Fairness Act of 2016 went into effect. The Act prohibits a company from using a ‘form contract’ to prohibit or restrict a person from posting a review, performance assessment, or other similar analysis of a company’s goods, services, or conduct. The Act also prohibits a company from requiring an individual to transfer intellectual property rights in the review or feedback to the company. Any form contract containing the prohibited language is void and can subject the company to a penalty or fee imposed by the Federal Trade Commission. The Act also creates a private right of action that can be brought by a State’s attorney general on behalf of the residents of the State.

WHY YOU SHOULD KNOW THIS. The Act was obviously designed to stop a growing trend by companies to squelch negative feedback by contract. This would be a good time to revisit your terms of use for your website and any form contracts, policies or other standardized terms referring to user-posted reviews or similar content. Any clause prohibited by the act should be removed or amended so it doesn’t violate the act.

The common law trademark rights of an Antarctic marathon organizer got a chilly reception from the TTAB. Beginning in 1995, Marathon Tours, Inc. (“MTI”) organized sporadic cold weather marathons using the name “Antarctic Marathon”. Richard Donovan started his Antarctic marathon tours in 2006. Unlike MTI, Donovan’s tours were an annual event and have been well publicized and attended. When Donovan sought to register “Antarctic Ice Marathon and 100 k” and it’s graphic design, MTI opposed registration before the Trademark Trial and Appeal Board (“TTAB”) claiming prior common law rights. Everyone agreed that “Antarctic” and “Marathon” were descriptive words. So, for MTI to prevail, it would have to show that its use of “Antarctic Marathon” had acquired distinctiveness through continued use. All MTI could show was its sales and advertising, without context for the numbers, and four unsolicited articles from the media right before some events. The TTAB concluded that MTI failed to meet the burden of showing acquired distinctiveness and dismissed the opposition.

WHY YOU SHOULD KNOW THIS. A trademark owner can establish common law rights in a trademark by continued use in the market place. But when it comes to enforcing those common law rights against a registered trademark, the common law owner can experience an uphill battle. For any business that is not local in nature, federal trademark registration helps establish priority of use and protect the trademark owner from latecomers.

If your organization sponsors a 401(k) or other retirement plan, you or someone in your organization is a fiduciary to that plan. You may have hired a service provider to administer the plan (a third party administrator, or “TPA”), but the buck stops with your organization. This is because the fine print in your TPA’s service agreement says the official “Plan Administrator” is the employer, not the TPA. This means the employer has the ultimate responsibility for the plan’s ERISA compliance.

On the investment side, the plan’s trustee or investment committee will be a responsible plan fiduciary. The investment fiduciary must act with the care, skill, prudence and diligence of a prudent person “familiar with such matters.”

This is a prudent expert standard. So ask yourself, do the people making investment decisions for your plan have a financial or investment background? If not, you need to consider engaging a professional investment advisor to assist with investment decisions.

What does all this mean to you?

Plan fiduciaries do not have to make perfect decisions but they do need to exercise diligence in their deliberation on both administrative and investment matters. It is always advisable to document fiduciary deliberations as the best defense to a claim of fiduciary misconduct. Remember, good intentions never justify fiduciary misconduct including any inattention to fiduciary duties. As one federal judge put it: “A pure heart and an empty head are not an acceptable substitute for proper analysis.”

There are other steps that plan sponsors take to help their plan fiduciaries:

• Hire an investment advisor, adopt an investment policy statement – and follow it!
• Meet with your investment advisor at least annually to review plan investments – and document these discussions.
• Perform self-help compliance checkups for your plans using IRS and Department of Labor websites.
• Consider fiduciary insurance (that’s not the plan’s ERISA fidelity bond).
• Get professional help when you need it, and consider using independent legal counsel to assure the confidentiality of sensitive plan-related information.

The Takeaway: Take another look at the bullet points immediately above. Is there any good reason not to follow each of those protective steps?

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.

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.

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.

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.

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.

When all else fails, file for Chapter 11. ATopTech Inc., a software developer and Hampshire Group, Ltd., a menswear supplier, have some things in common. First, they both filed Chapter 11 bankruptcy to sell their assets. Second, Intellectual Property played a significant part in their cases. Their road to Chapter 11 was different, though. ATopTech lost a copyright action brought by Synopsys, Inc. and was facing a $30.4 million it had no hopes of paying. Hampshire Group owed $15 million to its creditors which included $7.4 million to its secured creditor, Salus Capital Partners. Hampshire Group’s primary assets are its trademarks.

**WHY YOU SHOULD KNOW THIS. **These cases show that bankruptcy can be an effective business tool when all else fails. For ATopTech, it’s a shield against the collection efforts of a judgment-creditor. For Hampshire Group, it’s a way to maximize its assets for the benefit of creditors. Intellectual Property is considered a general intangible for bankruptcy purposes. The value of general intangibles in a bankruptcy can fluctuate dramatically. The best test for value is what a willing buyer will pay for the assets. The bankruptcy sale process can help with maximizing the value.