The Software IP Report

Service by E-mail

Internet scofflaws often operate anonymously or under pseudonyms, and frequently provide false addresses, making them difficult to locate and serve.  This has led some courts to allow service via e-mail, a helpful tool to remember in the often frustrating battle against the anonymity of cyber squatters, domain name infringers, and the like. For example, in Kohler v. DomainJet, 2012 U.S. Dist. LEXIS 28888, No. 11-cv-1767 (S.D. Cal. March 5, 2012), the plaintiffs filed a complaint alleging claims under the Anticybersquatting Consumer Protection Act and the Lanham Act against a defendant corporation, an individual defendant, and Does 1-10.  Plaintiffs’ private investigator established that addresses in the United States and China associated with the defendants were nonexistent or invalid.  However, Plaintiffs had communicated with one of the defendants using an e-mail address that was also used to register domain names that were the subject of the complaint. Under Federal Rule of Civil Procedure 4(e)(1), the court was to look to California law to determine permitted manners of service.  Under California law (like the law of many other states), service could be made by publication or “in a manner which is reasonably calculated to give actual notice to the party to be served.” … Read More »Service by E-mail

Must an Offer to License Be Reasonable and Non-Discriminatory?

What does a patent owner have to do to meet a requirement of a standards setting organization (SSO) that license terms be reasonable and non-discriminatory (RAND)?  Does the patent owner simply need to be willing to license on RAND terms, or does the patent owner have to include RAND terms in its initial offer?  In the continuing patent battle between Microsoft and Motorola, the court recently held that this question must be answered according to principles of contract interpretation applied to the governing SSO policies.  Because the parties failed to brief the law of contract interpretation, the court denied parts of Microsoft’s summary judgment motion seeking findings that (1) Motorola was obligated to offer RAND terms to SSOs’ third party beneficiaries, and (2) Motorola’s offer to Microsoft to license standards-essential patents violated Motorola’s RAND obligations.  Microsoft v. Motorola, No. C10-1823JLR (W.D. Wash. Feb. 27, 2012). Courts, litigants, and commentators (see this recent post on the PatentlyO blog, for example) have for some time pondered the question of what it means for patent license terms to be RAND (or, sometimes, fair, reasonable and non-discriminatory).  This opinion is interesting not because it moves the patent world any closer to understanding what RAND means… Read More »Must an Offer to License Be Reasonable and Non-Discriminatory?

Clickwrap Agreement Is Binding (But Arbitration Provision Is Not)

A “clickwrap” agreement can form a binding contract even when all agreement terms are not included in the document to which the user assents, and the user must access other documents to be informed of the entire contract. Grosvenor v. Qwest Corp., 2012 U.S. Dist. LEXIS 23472, Civil Action No. 09-cv-02848-MSK-KMT (D. Colo. Feb. 23, 2012). However, an arbitration provision was not enforceable where the agreement provided that the licensor could change the arbitration provision without prior notice to the other party. Facts Plaintiff Grosvenor purchased Internet service from defendant Qwest, which subsequently raised its rates for the service. To sign up for the Internet service, Grosvenor accessed a disk provided by Qwest. Before programs on the disc were installed, and Internet service provided, Grosvenor was required to review and accept legal agreements provided in a scroll box. The agreements in the scroll box made no mention of arbitration. However, above the scroll box was the following statement: “Please read the terms including arbitration and limits on Qwest liability at (‘Qwest Agreement’) that governs your use and Qwest’s provision of the service(s) and equipment you ordered from the list below.” After Grosvenor’s Internet service was established, Qwest sent him… Read More »Clickwrap Agreement Is Binding (But Arbitration Provision Is Not)

When to Apply Section 101? Federal Circuit Divided

Should a court should evaluate patent claims for statutory subject matter under 35 U.S.C. § 101 before or after considering validity based on prior art?  In MySpace, Inc. v. Graphon Corp., No. 2011-1149 (Fed. Cir. March 2, 2012), all panelists agreed on the invalidity of the software patent claims at issue.  However, the majority and dissenting opinions expose in stark relief the two sides of the evolving debate concerning how — and when — Section 101 analysis should be conducted in the wake of Bilski v.  Kappos. Judges Plager and Newman, in the majority, thought it proper to invalidate the patent claims as anticipated or obvious based on prior art.  Judge Mayer, on the other hand, agreed that the patent claims were invalid, but nonetheless sharply dissented, castigating the majority for not determining whether the patent claims recited statutory subject matter as a threshold test.   Background The four patents at issue claimed “various aspects of” an invention “that enabled a user to control the creation and classification of the user’s own database entry over a computer network such as the Internet.”  More than two years before the priority date of the patents-in-suit, the “Mother of all Bulletin Boards,” or “MBB,”… Read More »When to Apply Section 101? Federal Circuit Divided

Computer Fraud and Abuse Act: Unauthorized Access

Under what circumstances can an employee, having accessed a computer via means provided by an employer, be civilly liable to the employer under the Computer Fraud and Abuse Act for “unauthorized access” of the computer?  Courts are split on this question, as well as the standard for when an employee “exceeds authorized access” under the CFAA.  As two recent cases demonstrate, depending on the facts, and depending on the jurisdiction, an employer may have a cause of action under the CFAA when a rogue employee abuses the employer’s computer systems. Section (a)(2)(C): “exceeds authorized access” Section (a)(2)(C) of the CFAA imposes liability on anyone who “intentionally accesses a computer without authorization or exceeds authorized access, and thereby obtains . . . information from any protected computer.”  Section (a)(6) of the CFAA defines “exceeds authorized access” to mean “to access a computer with authorization and to use such access to obtain or alter information in the computer that the accesser is not entitled so to obtain or alter.” In Walsh Bishop Assoc., Inc. v. O’Brien, 2012 U.S. Dist. LEXIS 25219, Civil No. 11-2673 (D. Minn. Feb 28, 2012), the issue was whether the defendants had violated Section (a)(2)(C) of the CFAA. … Read More »Computer Fraud and Abuse Act: Unauthorized Access

Case Note: Reverse Engineering and Trade Secret Misappropriation

Reverse engineering of a proprietary computer program is not necessarily, and in this case was not, a misappropriation of trade secrets.  Aqua Connect, Inc. v. Code Rebel LLC, 2012 U.S. Dist. LEXIS 17962, No. CV 11-5764-RSWL (C.D. Cal. Feb 13, 2012). Facts In the words of the court: Plaintiff alleges that Movants downloaded a trial version of Plaintiff’s Aqua Connect Terminal Server software (“ACTS”) and subsequently reverse engineered ACTS in violation of the End User License Agreement (“EULA”), which Movants had to agree to in order to use the trial version of ACTS. Plaintiff alleges that Movants misappropriated the trade secrets within ACTS and used that information to create and distribute a competing  software product. Procedural Posture Defendant brought a motion to dismiss for failure to state a claim based on Federal Rule of Civil Procedure 12(b)(6). Result The court found that the plaintiff had “only pled that Movants acquired Plaintiff’s trade secret through ‘reverse engineering,’” and therefore “Plaintiff has not pled sufficient facts to support a cognizable trade secret misappropriation claim.” Analysis California’s version of the Uniform Trade Secrets Act “specifically states that ‘[r]everse engineering alone shall not be considered improper means’” of acquiring trade secret information. The fact… Read More »Case Note: Reverse Engineering and Trade Secret Misappropriation

Patentable Subject Matter: New Federal Circuit Case

Yet another post-Bilski pronouncement: the Federal Circuit has held that patent claims directed to “an investment tool designed to enable property owners to buy and sell properties without incurring tax liability” do not recite patentable subject matter under 35 U.S.C.  § 101.  Fort Properties v. American Master Lease, No. 2009-1242 (February 27, 2012). Background United States Patent No. 6,292,788 recites a method for taking advantage of exceptions to taxes on real estate transactions.  For example, independent claim 1 recites: A method of creating a real estate investment instrument adapted for performing tax-deferred exchanges comprising: aggregating real property to form a real estate portfolio; encumbering the property in the real estate portfolio with a master agreement; and creating a plurality of deedshares by dividing title in the real estate portfolio into a plurality of tenant-in-common deeds of at least one predetermined denomination, each of the plurality of deedshares subject to a provision in the master agreement for reaggregating the plurality of tenant-in-common deeds after a specified interval. Two other independent claims were “nearly identical to claim 1 — though claim 32 contains an additional limitation requiring a computer to ‘generate a plurality of deedshares.’”  The defendants moved for summary judgment on… Read More »Patentable Subject Matter: New Federal Circuit Case

Computer Fraud and Abuse Act: Civil Rights of Action Have an Uncertain Bar

Federal district courts have been split, and the courts of appeals thus far silent, on what allegation of “loss” a plaintiff must make to state a case under the Computer Fraud and Abuse Act.  18 U.S.C. § 1030.  The CFAA, a criminal statute barring unauthorized access of specified categories of computers, provides for a civil right of action for “[a]ny person who suffers damage or loss by reason of a violation of” the Act.  18 U.S.C. § 1030(g).  Thus, a claim under the CFAA can be a nice adjunct to many other causes of action, such as claims for copyright infringement and trade secret misappropriation.  However, at least two recent cases illustrate that the bar for plaintiffs under the CFAA is uncertain. Plaintiffs sometimes cannot plead or prove “damage” under the CFAA’s definition of that term.  18 U.S.C. § 1030(e)(8) (“Damage means any impairment to the integrity or availability of data, a program, a system, or information”).  Thus, courts turn to the CFAA’s definition “loss,” which is any reasonable cost to any victim, including the cost of responding to an offense, conducting a damage assessment, and restoring the data, program, system, or information to its condition prior to the offense,… Read More »Computer Fraud and Abuse Act: Civil Rights of Action Have an Uncertain Bar

Detroit Patent Office to Cover Software

Detroit is excited about the branch office of the United States Patent and Trademark Office opening downtown in July.  And with good reason.  Moreover, based on the USPTO’s recent job posting for people with computer backgrounds to serve as administrative law judges in Detroit, it appears that the Detroit Patent Office will go beyond the traditional mechanical and electrical disciplines usually associated with the auto industry.  True, that is where the USPTO is focused in hiring patent examiners for the new Detroit office, but Michigan has high tech companies of every stripe, pursuing all sorts of technological innovations.  And the auto industry itself is producing some amazing software innovations.  It is encouraging to see the USPTO’s actions reflect these facts.

Case Note: Copyright First Sale Doctrine

A California court recently reaffirmed the principle that a restrictive software license is not a “sale” for purposes of the federal copyright laws, and that the license could not be used to assert a defense to copyright infringement based on the first sale doctrine.  Adobe Systems Inc. v. Hoops Enterprise LLC, No. 4:10-cv-02769-CW (N.D. Cal., Feb. 1, 2012). Facts Adobe licensed so-called “OEM” software, i.e., software that, by the terms of its license, could only be used when bundled as part of a sale of hardware.  Defendants obtained OEM software that had had been unbundled.  They then marketed the software on eBay “package[d] with items such as a piece of photo paper, a blank DVD, or a media card reader, which Adobe had not authorized for bundling.”  Adobe’s agreements with the hardware manufacturers made clear that that “Adobe provides only licenses to the manufacturer and that the manufacturer ‘shall not at any stage have title to the physical property or the Intellectual Property in the Software Products.’” Procedural Posture Adobe moved for partial summary judgment on Defendants’ counterclaims of copyright misuse based on the first sale doctrine, as well as on Defendants’ affirmative defense invoking the first sale doctrine. Result “Because… Read More »Case Note: Copyright First Sale Doctrine