Living a White Collar Quarantine? - Pay it Forward!

Last week the New York Times published a piece titled “White Collar Quarantine” that struck me as something many in Boulder are experiencing, myself included. I’ve had conversations over the last few weeks about this dynamic. Conversations about how in a town where the true extent of our affluence is often forgotten, and in a company where our day to work process barely flinched, the stay at home orders seem more like an extended staycation.  My neighbor told me that it felt like God gave us a time out. I’ll be the first to admit it has been nice at times. Mixed feelings for sure. Part fear, part blessing, and part guilt. Two weeks ago, I couldn’t find toilet paper, but I was able to buy free-range pork chops and Kobe beef for a backyard bar-b-que.  I’m the poster child for the White Collar Quarantine. Not so much for the restaurant and other small business workers who aren’t able to so easily continue to work or for which their businesses were ordered to shut down. Many volunteer opportunities have shut down too in light of the ordered limitations on gatherings.  How do we pay it forward for these folks?

Love Local - Help Save Your Favorites

This pandemic is unprecedented and scary for sure.  Unprecedented not just in its effects but in the speed at which it shifted our lives, the economy, and our perceptions about the future.  Three weeks ago, our firm was discussing how strong our first quarter financials were looking and anticipating the same trajectory for the foreseeable future.  As a law firm, our numbers will somewhat lag the near-instantaneous nature of this slowdown, and we won’t be able to see the financial impact for some months (scary in itself).  In the meantime, it is hard to sit in our comfy homes with nearly every amenity available at the click of a mouse while so much of our community is on the front lines or still trying to scrape by to serve the rest of us.  So while our balance sheet is still in decent shape, our firm announced our own “mini-stimulus” for our staff. No strings attached, but it was done with the stated preference to use it to help support those restaurants and businesses in our communities that they would hate to see go out of business.   At the end of this article is a list of the establishments that came to mind across our team, but there are many, many more, and there are many local efforts to do the same. Many of these businesses are close to our main office in Boulder, but many others are in each of our neighboring communities.

Some Silver Linings and a Note to Our Clients

In this dark cloud of the COVID-19 crisis, there has been another more personal silver lining for our practice; remote working has given us a glimpse of each other’s everyday lives.  While all are equipped to work remotely, many of our team members do not have dedicated office space in their homes. I have met my team’s families, kids, pets, seen into their home lives, and perhaps even learned a little more about what motivates them and excites them - just by using video calls.  Perhaps the now forbidden nature of in-person contact has enticed us all to want that more, and I find myself reaching out on video more than I might have done in a typical day to day setting.  

I have found it refreshing to be able to work remotely more, step away from my desk when I need to, plan my hours, and plot tasks in a way that fosters creativity in a different way. At Neugeboren O’Dowd, we have never had prescribed hours, have always been 100% remote-capable, and implemented unlimited time off several years ago.  As long as tasks are handled, we can work in ways that suit us from day to day. However, right now, because being remote is mandated, I sense a growing ease that working from home is a viable scenario for more people.

We, as a team, have accomplished the same amount of work over the last few weeks from home as we would have sitting in an office building.  I am seriously starting to wonder if - when the pandemic is over - companies will re-evaluate the need for office space, or at least re-evaluate the extent needed.

Related article: My Brush With Big-Law Burnout 

Embracing Technology

Our entire staff has always been enabled to work remotely; it is, and always has been, part of our firm’s ethos. We have always embraced technology and made sure that our team members have everything they need to complete their tasks successfully from the comfort of their homes or on the road.

As Intellectual Property specialists, we deal with technology, branding, and marketing companies as clients, so everyone we work with is very used to electronic communications and are savvy with technology. We have clients and associates in other states and other countries, so we have always depended on the electronic world to communicate with them. When we engage new clients, we tell them that we are 100% electronic, as much as we can be. We joke that if you get something in the physical mail from us, it's either because it's an original document that you need to keep safe, or something's gone wrong!

The technology that we use for our remote work has morphed over the years and upgraded and changed over time. Still, we have always had the ability to work remotely via a laptop or desktop computer. We have encryption and network security in place to allow each of our team members to securely and quickly log in to our servers and to access our system.  

We are not a huge firm, so we do not utilize applications such as Slack or Microsoft Teams; these apps are too big a hammer for the number of people we have and would only create more work and inefficiencies for our staff. We are, however, very communicative. Because our office is relatively small, we typically did not use Zoom, Google Hangouts or UberConference to talk to each other too much, until now. Just this past week, we had our first office Zoom meeting with everybody on the screen - everybody logged on, no one had problems, and it worked well.  If the Coronavirus has proven anything, it is the need to learn technology and embrace remote working for almost every business. 

During this pandemic, nothing has changed for our clients or us in terms of the work we do. We are fully functional and our docketing and other systems are 100% online and accessible.  Aside from some “can I get a bigger monitor” requests, switching to remote work was a matter of flipping a switch and locking the office doors on our way out. Kudos to Bernadette Barrett, Rene Roskam, and RMTT for keeping things up to date and processes in place to make it so seamless.

Related article: What Lawyers and Clients Need to Know About the Use of Artificial Intelligence 

Not every firm was able to make this transition so easily, so here are a few suggestions to make this scenario  more routine:

Tips To A Successful Remote Work Life

  • It is helpful to create physical boundaries for your workspace. I think it's important to have a way to physically distinguish work from play and home, and make sure the rest of the folks in your household respect that. Treat it like work, at least for certain designated hours of the day.
  • Physically, you have to take care of yourself, exercise, and eat well. If you can’t go to the gym, bring the gym to you - get some weights or take a walk outside. 
  • Continue to have interpersonal relationships. If you are a leader in a company, reach out to your team to say hi and check in on how they are doing and see how you can help. 
  • Take care of yourself; shower, shave, comb your hair, put on a nice shirt. Just make yourself feel like you're working.
  • Reach out to clients and check-in, show them you are thinking about them, and let them know you are still fully functional, and can help them in some way. Now is the time to be more personal with your clients and maybe forego the business talk.
  • Embrace technology. If you're someone who is maybe a little bit afraid of that or timid of it, this is the perfect time to lean in and make sure you understand how to use it. It's an opportunity for folks who may not be as comfortable with technology to thrive and learn to be an expert.

Love Local

During this time, it is even more critical to support your local businesses, and our team here at NOD would like to give a shout out to our local favorites and go-to places that we want to see for years to come.  All of these are doing takeout or delivery orders still or will sell a gift card for use later. Especially if you find yourself in a white collar quarantine, visit your own local spot and help pay it forward a bit!

North Side Tavern - Broomfield

Early Bird Restaurant - Westminster

The Hungry Toad - Boulder

Truman’s Barber Shop - Boulder

Nepal Cuisine - Boulder

Gondolier Italian Eatery - Boulder

Caffe Sole - Boulder

Rebecca’s Apothecary - Boulder

Sushi Zanmai - Boulder

New Moon Bakery & Cafe - Nederland

Ruthie’s Boardwalk Social - Boulder

Cacciatore at Heller’s Kitchen - Fort Collins

Falafel King - Boulder

One Boulder Fitness - Boulder

Ted’s Montana Grill - Westminster

Big Mac and Little Lus - Westminster

Zoe’s Kitchen - Boulder

Cyclhops and Oskar Blues - Longmont/Lyons

Cannon Mine Coffee - Lafayette

Upslope Brewing Company - Boulder

Front Range Brewing Company - Lafayette

Southern Sun/Under The Sun - Boulder

Ozo Coffee - Boulder

Picas - Boulder

The Dugout Grill - Erie

Panang Thai Cuisine - Lafayette

Beleza Coffee - Boulder

Little Brazil - Lakewood

CrossFit Profectus - Broomfield

Mod Market - Boulder

Busaba Thai - Louisville

Boss Lady Pizza - Boulder

My Ramen & Izakaya - Boulder

Village Coffee Shop - Boulder

 

Sign up for our newsletter here to get the best of our blogs and news straight to your inbox.

 


Taylor Swift, Big Machine and Audible: The Battle over Copyright Control

Taylor Swift, Big Machine and Audible: The Battle over Copyright Control

It's an intriguing tale that has garnered a tremendous amount of public attention. A beloved young singer named Taylor Swift is in an epic battle to wrest control of her music back from the intriguingly named Big Machine, now owned by the famed manager, Scooter Braun. 

Emotions have run high as Swift and her fans mourn the loss of her music and berate Braun and company for their heartlessness. With Swift's encouragement, some fans began doxxing Braun and others, while Braun says he has received threats from Taylor Swift fans. Big Machine has even put out a statement suggesting that Swift has gone too far with her public battle. 

Drama aside, though, this is a straight-up copyright issue. 

Braun quietly bought Big Machine and the rights to Swift's first six albums last year. Swift was furious and has waged a very public battle with Braun over those rights. 

Who Owns the Copyright?

Swift did initially own the copyright to her works. Ownership of a copyright, of course, always goes to the author of the copyrighted work, in this case the music itself and the performance rights surrounding those works. 

That is until the author chooses to sell or assign those rights. This is precisely what Swift did, just like many up and coming artists in search of the career support that a big label can provide. 

Even when she was in a good position with Big Machine, Swift would not have been able to perform her works at a concert, or even at a birthday party without the permission of the true copyright owner, Big Machine. They owned the copyright, and she would be performing those copyrighted works. She's admittedly beholden to the owner of the copyright for the duration of that agreement.

The fact that Swift is no longer happy with the deal she signed does not make that contract go away. 

Related: Eminem, Meet the Supreme Court of the United States

The Right to Hold (and to Sell) 

Copyrights aren’t just about the right to copy a work of art or a song. There are quite a few “exclusive” rights assigned to the general umbrella of copyright law. These include: 

  • The right to reproduce or the right to make copies of a protected work.
  • Distribution rights or the right to sell or otherwise distribute copies to the public. These could be books or recordings, for example.  
  • The right to create derivative works or adaptations, which includes the right to prepare new works based on the protected work.
  • The right to perform and display the work. These include the right to perform protected work, such as a play or a song, or to display a work of art. 

The copyright holder can choose to sell all or part of any of these rights to someone else, which is essentially what Swift did. Copyright law also allows the copyright holder to license these rights to someone else for a fee. 

Every time anyone performs or uses a Swift song from one of the six albums he owns, Braun and Big Machine presumably earn a licensing fee. 

Related: Yes, You Need a Registered Copyright

Rights and Revenue

There are two critical copyrights in the music industry. The first is songwriting copyright, which belongs to whoever wrote the music and lyrics. This right generally covers the revenue received from:

  • Performance royalties for live performances of the song 
  • Mechanical license royalties which are fees paid for every copy made of the song 
  • Synchronization fees for synching the song to a movie for example 

The second piece is the sound recording copyright, which includes: 

  • Digital and physical record sales revenue 
  • Master-use license fees if, for example, the song is used in a movie. 

We don't know the exact details of Swift's contract, but it is likely that in return for signing away her copyright, she received promotion and recording benefits from Big Machine. When Scooter Braun arrived and bought out Big Machine, and along with it, the rights to Swift's music, the singer decided she didn't like the contract anymore. Hindsight is 20/20, but unfortunately for Swift, that is not how copyright law works. According to news reports Swift hasn’t ever challenged the legitimacy of the contract she signed.  She just wanted to renegotiate the terms after the fact.

Swift’s Options

Swift does have some recourse. According to the singer, her original contract with Big Machine allows her to begin re-recording songs from her first five albums starting in November of next year. Essentially this means she can re-record her songs, presumably with some unique twist to them, and then release those new recordings to compete with the original recordings now owned by Braun. Of course, this could create a whole new set of problems, including some confusion among her fanbase. 

Understand What You're Selling

The lesson here? Know what your rights are, and know exactly what you are signing away. Just because it doesn't seem right that a popular recording artist like Taylor Swift does not own the right to her songs, it doesn't negate a valid contract. 

Understand What You're Buying

In another example, the seven major book publishers who recently launched a copyright infringement case against Amazon's Audible service knew exactly what rights they signed away.  

HarperCollins Publishers, Penguin Random House, Hachette Book Group, Simon & Schuster, and Macmillan Publishers, all members of the American Association of Publishers (AAP) filed the suit in reaction to Audible Captions, a machine learning tool that adds computer-generated text to some of its audiobooks. The project, launched in partnership with U.S. high schools, would allow listeners to read the generated text alongside the narration. 

Text is Text

However, according to the publishers and authors whose works are affected, Audible is purportedly basing their new service on their prior license, which only relates to the ability to “perform” the audiobooks of these works. This type of license is separate from the licenses offered for printed books and eBooks and was limited in scope to this type of use. 

Since Audible only secured the license for voice recording and playback, the publishers are contesting their use under the existing license. On the other hand, because AI was generating the text on the fly, Audible seemed to suggest that it was more similar to audio than to print. 

After arguing that this was a contractual rather than a copyright dispute and attempting to have the case thrown out of court, Audible recently announced that it had settled the suit. 

In fact, Audible capitulated. According to the AAP, Audible will seek permission from any AAP Members in good standing with the AAP before adding Audible Captions to their works. 

Both the Taylor Swift and Audible cases are at heart, straightforward copyright disputes. However, both illustrate the critical importance of understanding all of the rights that fall under copyright law. This is crucial information for both sellers and buyers. 


Wells Fargo Was Ordered To Pay USAA $200 Million But They Might Only Be The First Of Many

This fall, a jury ordered Wells Fargo to pay USAA $200 million for infringing on patents relating to mobile image capture technology. Judging by even more recent "Wells Fargo must pay a fine" news, their patent issues may be the least of their concerns, but it will not likely be the end of the story here. 

In one sense, this is a very typical patent case. A company owns IP, and another company is infringing it. The owner wants compensation.

What makes this case unique is how ubiquitous the technology involved is. And that means the case has enormous financial and business ramifications for any companies currently using it. 

Revolutionizing Mobile Bank Deposits

Mobile image capture technology was developed a while ago and was the leading edge in terms of where the developers of that technology thought commercial aspects of it could go. And they were right. It was basic image recognition technology that was able to take a picture of something, in this case, a check, and translate that into data to electronically deposit that check. 

Today, virtually every smartphone banking app uses this technology. You never have to go to a bank. It's brilliant. Each of my kids uses it, so it must be cool.

This technology quickly went from obscurity to an absolute necessity for a bank to even compete for customers. But the rush to get on board with this technology may have caused others to bypass even nominal due diligence. No one seemed to investigate to see whether the technology was patented, and if what they were doing with it, was proper. It is a common phenomenon with a lot of upstart, fast-growing technology companies.

Collaboration, Trade Secrets and Lawsuits

Another interesting aspect of this case is that USAA had collaboratively developed that technology with another company called Mitek over twenty years ago. During the course of that relationship, USAA alleged trade secret misappropriation against Mitek and Mitek originally counter sued USAA based on the use of the Mitek technology. While that caused its own back and forth in the courts, the parties eventually settled, and USAA ended up with the patent rights. 

Related: Pitfalls to Avoid When Collaborating on Intellectual Property

As soon as USAA established ownership, they began to litigate. After all, they are a banking company, and that technology is crucial to that industry.

The Risk for Banks and Banking Companies

Fast forward a few years, and this presents a considerable risk for patent damages because, one, every bank is using it. Every single bank. That risk is exacerbated because damages are usually calculated on a transactional basis for this type of technology. Every time someone uses it, it's another act that counts toward a damages calculation. 

There are millions of these transactions every day. Even if the value of using that technology is only pennies per transaction, it adds up. $200 million was a jury verdict awarded to USAA. That's one bank. So how many banks are there in this country or around the world using this technology? The implications are enormous. 

The good news for these banks is that USAA doesn’t seem to be trying to corner the market and be the only bank that can use this functionality. Instead, they want other companies to license it from them. Behind the scenes, they've been engaged in what they describe as reasonable licensing negotiations with other banks so that they can get some royalties from the use of the technology while not outright prohibiting others from utilizing it.

USAA did send cease-and-desist letters to Wells Fargo and other banks offering to license the technology, but when those were ignored, they decided to sue Wells Fargo. This is likely because it is a big bank with many damages attached due to the volume of the transactions they do. 

Litigation is expensive, and often these cases are settled before they ever get to court. But Wells Fargo didn't back down, and USAA took it to a jury trial. And that jury awarded USAA $200 million. It's difficult to know for sure why Wells Fargo chose to fight. They may have believed in good faith that they had not infringed on USAA's patents. Since it is one of the bigger banks, unwinding the technology would have been complicated. 

On the other hand, a non-infringement finding would have changed the landscape for everyone. And in that case, if all the other banks used the same technology that Wells Fargo uses, there's a good argument to say that no one else would be infringing either. 

Instead, it blew up for everybody. It would be interesting to see if there was any behind the scenes collaboration between Wells Fargo and other big banks that received cease and desists, to come up with a joint defense. It would have benefitted everybody if that technology was found invalid, or it was found not to cover the products they were using.

Related: Software Patents: "That's Where All the Action Is" 

The Case for Negotiation

There is strong evidence to show that USAA was not in it to truly exclude others, although that's one of the rights they have with an issued patent.

If you've got a patent that legitimately covers such critical core technology to an industry, there's probably a result valuable to you that doesn't also offend everybody. So you might be able to request a nominal, reasonable royalty. This might have been the test case for everyone involved, including USAA. 

They may have decided they needed to prove the patent was valid and was infringed upon. 

I believe we can now expect everybody else to fall in line and avoid litigating this again. They are all using the same product. It might also be possible to design around it, and this is something some users may be attempting. But this may even drag out for a while with the other potential infringers, and that is a risky move given the size of the settlement against Wells Fargo. 

If my client were bank number two on USAA's list, I'd mitigate the risk and encourage them to negotiate.  

Leaving the result to a jury isn’t always worth the financial or business risk, as Wells Fargo discovered.


Trademarking College Athletes: Making Money While Bowling in College

Trademarking College Athletes: Making Money While Bowling in College

A historic rule change by the National College Athletic Association (NCAA) will create a brand-new playing field for student-athletes by giving them control over the profits they generate.  

Sound crazy?  Or is it brilliant? It's probably a little of both. And as the father of a college athlete, I’m more than a little intrigued.  I’m also concerned that it will encourage our students to focus less on their education, despite the underlying unfairness that the rule change is addressing in the current system.

In September 2019, California passed a law that effectively allows student-athletes to profit from endorsements and the use of their likeness. Over two dozen states are considering similar legislation, including most recently Colorado. This impending patchwork of regulations has put pressure on the NCAA to reconsider its prohibition on student-athletes profiting from their fame and notoriety. 

Although they have not yet announced concrete changes, the NCAA has signaled that it is beginning the process and will likely allow its student-athletes to own their IP and profit from it at some point in the near future. 

Part of the reasoning behind the prior prohibition on allowing athletes to profit from their fame was to emphasize the student part of the student-athlete.  The no-profit rule was designed to avoid the athlete entering into the professional realm while they are still pursuing a degree. The intent was that everything should be done so as to favor their education and athletics should provide an opportunity for that education, not an alternative to that education.

In the past, profits from a student athlete's likeness belonged to their school. For Division 1 athletes in high profile sports such as football and basketball, that translates to a lot of money and a full ride to the college for every athlete on that team. In fact there are only six sports where all the scholarships are full ride. These so-called head-count sports are football, men and women's basketball, and women's gymnastics, volleyball, and tennis. This change is an acknowledgement that these schools are profiting tremendously from these athletes. And even though high profile student-athletes receive scholarships, they don't come anywhere near what schools are making off of their athlete's fame.

But compare that to all of the other less prominent sports like track and field, where the number of scholarships available are much less and often divided among the many members of the team.  For instance, women’s Division 1 track and field programs are allowed to offer 18 scholarships per year. The men’s side only gets 12.6. Divide that by 4-5 years of athletes at the school at any given time and somewhere around 40-50 athletes on the squad (cross country is combined with the track and field athletes) and that works out to around 0.1 tuition scholarships per athlete if everyone on the team is given something.  The math gets worse for other sports. Bowling and Fencing only get 5 scholarships. Even in these sports though, the superstars are usually given much more of the pie so most of the athletes are given nothing in terms of an athletic scholarship, yet still need to commit 20-25 hours a week (if not more) to training, travel and competition. Now the whole, “athletics is an opportunity for an education” doesn’t make as much sense.  And the prospect of making a few extra bucks for all of that work, well that sounds pretty good . . .

College Athletic Scholarship Limits

Cereal Boxes and Scholarships

For athletes in high profile sports, this means they can engage in talent contracts with advertisers to appear on cereal boxes and video games and in magazine articles and social media. They can also accept endorsements and make money off of their own fame, just like any other athlete or celebrity might be able to do. For some of the more well-known student-athletes in high profile sports like football and basketball, this could potentially mean millions of dollars. And athletes who might otherwise be “one and done” with their college career, may just stay in school longer.

Related: What Tom Brady, LeBron James & Ohio State University Can Teach You About Advanced Trademark Laws

The new rules could impact athletes in less high-profile sports as well. My daughter is a Division One runner. She receives little in the way of an athletic scholarship, but she's still subject to all NCAA rules. She puts in that same amount of time for the benefit of the team and the team uses her likeness on its own social media accounts and recruiting collateral.  It would be great if she could have an Instagram account on the side that chronicles her running and her experiences as an athlete, while creating some revenue as well. The current rules prohibit all of that.

There are ingenious ways to monetize social media presence now that could help athletes like my daughter pay for their education. It doesn't have to be about an endorsement from Nike or Gatorade.

Keeping the Focus on Education

The NCAA rules were put in place originally to ensure that student-athletes focused on school, and there is an argument that allowing students to profit will reduce the focus on getting an education. 

This conversation is not necessarily about millions of dollars a year. It could be a few thousand dollars a year for clicks on Instagram or Snapchat. Students could become Instagram influencers just because of what they're doing in a minor sport. That could help pay for college, especially in sports where there's not a full-ride scholarship for every athlete. 

Related: Hashtags, Memes, and Emojis: The Landscape of #IP on Social Media

In the major sports like football and basketball, everyone is on a scholarship. Many other athletes in sports like running and swimming and fencing, however, get nothing. This rule change has significant potential to get these athletes through college debt free (or at least debt reduced) and get a better education, rather than it becoming a job and an alternative to school.

This is because the NCAA does a great job of keeping the focus on the student and not just the athlete. You can’t play if you’re not keeping up academically. There are tutors and organizations available to help ensure student success. Most athletes from lower tier sports are not going professional, so they have more of an incentive to stay in school. These rule changes could help these students with extra income but also help promote their sports. 

A Bit of Madness Before the Genius 

There are likely to be disputes, and as with any other IP owner new to the game, student-athletes will likely make mistakes. It may commercialize college sports more than they are now. And there are likely to be agents and other professionals involved in the process.  Maybe even an IP attorney. Hopefully my daughter knows where to find a good one . . . 

The new NCAA rules are not in place yet. However, the NCAA has essentially declared that they intend to let athletes do this across the three different levels of divisions in NCAA sports. It remains to be seen what they might put in place and how it is rolled out. 

There will probably be a little chaos while rules are tested and everything gets figured out. In the end though, this could be a great move that will help less prominent athletes pay for their schooling and provide an incentive to keep high profile athletes in school. 


A New Plaintiff on the Patent Front: The U.S. Government vs. Gilead

A New Plaintiff on the Patent Front: The U.S. Government vs. Gilead

President Trump has a reputation for unorthodox approaches. His administration's foray into patent enforcement is no exception.  

In November, the Trump Administration launched a lawsuit against pharmaceutical giant Gilead for violating the government's patent that covers the composition behind Truvada, an HIV "miracle" drug that has proved over 96% successful in preventing the onset of AIDs. 

There is nothing unusual about the case in the legal sense. The patent complaint generally offers up the same issues that any patent infringement case would. It was filed in a federal district court. All the stakes are the same.

It is a straightforward patent case except for one thing: the U.S. Government almost never asserts their patents. 

Of course, that was before. This is now.

Unusual Behavior

The Department of Health and Human Services, like many government departments, is heavily involved in research and development. All of these organizations employ inventors, engineers, and scientists who invent things. They normally file patent applications for these inventions, and as a result, the government owns numerous patents. The same applies to other governmental bodies as well. Universities, for example, have the same types of rights. 

Private companies use these government patents all the time, generally with a licensing fee. The unusual part about the Gilead case is that the negotiations for licensing this technology went sour. The government took the step, a very significant step, of enforcing their I.P. rights through a patent litigation lawsuit.

Any party who owns a patent has the discretion as to whether and when to file a lawsuit if someone is infringing upon their patents. None of this is out of the ordinary. What is unusual is that the government has decided to sue a private company. This isn't illegal, nor does it violate some unwritten code. The government just usually prefers not to assert its patents. 

A Perfect Storm 

The Trump administration has been vocal about its focus on prescription drug issues and prices, and they've also decided to focus on the HIV epidemic as well. This case came along and it was like the perfect storm. 

Related: The Politics of Intellectual Property

Gilead had initially marketed Truvada as a treatment for HIV infection. Still, government-sponsored research soon revealed that the drug was extremely effective at thwarting the onset of AIDs in HIV-infected patients. Gilead sold the drug as an AIDs prevention drug but refused to pay a licensing fee for using the government's prior patented technology. 

The government then took Gilead to court for patent infringement. 

The Aftermath

The fallout from the lawsuit could be far-reaching. For Gilead, millions in lost revenue is at stake. The company recently announced it had created a new, improved version of Truvada. Truvada is reaching the end of its protection cycle and will soon face generic competition.

The latest version of the drug could result in nearly twenty more years of protected status for the company and greatly enhance their profits. However, the government is claiming that the new drug also infringes on its patent. 

For people living with HIV, it could be a matter of life or death. The drug costs patients $20,000 per year or $50-$60 per day. This cost causes some patients to reduce their dosage and increase their risk and simply puts Truvada out of reach for many. If the government wins its suit, the drug could become far less costly and far more accessible to the vulnerable community in need of it most. 

It is unlikely that the government is looking for a cash payout from the lawsuit. Another $20,000 in royalties means nothing to a budget the size of the U.S. government. Instead, they may be hoping to force Gilead to reduce the prices of Truvada and the newer spinoff version of the drug. 

There's a massive amount of public pressure now on Gilead to do the right thing. And the lawsuit is generating a lot more attention than might typically be generated by a case like this.

And that is where it gets even more interesting from a socio-political perspective. The communities most affected by the AIDs crisis and who will most benefit if the government wins its fight against Gilead, are, let’s face it, unlikely also to be Trump supporters. His administration isn't getting much credit for this fight. 

In addition to the impact on HIV sufferers and Gilead, this lawsuit could have a huge impact on the entire pharmaceutical industry. There's a new sheriff in town. Pharmaceutical companies may not have as much leverage in patent negotiations as they are used to having. There may also be concern that the government is going to make a habit of this type of lawsuit. Anytime a ground-breaking therapy comes out, it could require companies to do more diligence regarding the rights held by the government. Or it might require a rethinking of the existing philosophy that we don’t need to worry when the government owns the patent, because it won't sue us. 

That's all changed.

Related: If Insulin is Patented, How Did Colorado Cap the Price?  

With the government acting more like a private company would, concerns won't be limited to the pharmaceutical industry. Government research and development is all over the place. So, it could literally be any other industry. Other industry giants are probably looking at this case and considering how wary of the U.S. government patents they should be now. 

The U.S. Government just became a powerful new player on the IP front.


AI and the Next Frontier in Healthcare and Patent Law

In 2018, Medtronic put the world’s first automatic closed-loop insulin pump and continuous glucose monitoring system on the market. For people living with Type I diabetes, like me, it was game-changing. It’s the closest thing to an artificial pancreas that I’ve ever seen.  My average blood sugar levels came down 20% in 4 months after I started using it. Like I said, game-changing.

Controlling diabetes is a lot of work. With the lows just as dangerous as the highs, diabetics must continuously monitor their blood glucose levels and regularly adjust their insulin levels. For most, these adjustments must be made several times a day and it can be a constant battle and distraction. In addition to monitoring glucose levels, people with diabetes must also monitor carbohydrate intake and exercise, which both impact glucose levels. When you have diabetes, you are never able to forget about it. 

Medtronic’s AI-driven insulin pump performs in many ways just like a fully functioning pancreas. It monitors and assesses glucose levels every five minutes and intuitively adjusts the amount of insulin it delivers twenty-four hours a day. It learns from your glucose trends and insulin delivery and makes adjustments to its delivery program along the way.  In short, it saves me from the burdens of constant monitoring and manual adjustments. 

It’s not just about diabetes. Artificial Intelligence (AI) is revolutionizing all aspects of health care. It fuels the wearable monitors that can alert us about everything from abnormal heart rates and respiration, to excessive UV exposure. The frontier for AI’s contribution to medicine is continually being pushed outward as new research and new patents are revealed. 

Patent Protection 

With new technology and new players continually entering the market, patent protection for AI driven medical technologies is even more critical than ever. Trade secret and copyright law can help protect programming code but patent protection will offer the broader protection that medical technology companies need. 

RELATED: What Lawyers and Clients Need to Know About the Use of Artificial Intelligence

Diagnostics

Much of the recent application of AI technologies has focused on its use in diagnostics. There are good reasons for this. It’s a lucrative field for AI companies and a costly one for healthcare practitioners in terms of potential errors and malpractice. 

The history of AI in diagnostics goes back to the 1950s when doctors first started using rudimentary computer systems to assist them in diagnosis. Today’s diagnostic AI, however, looks very different. Chatbots are leveraging complex algorithms, speech recognition, and learning from thousands of cases to help doctors choose the right medications and to help patients assess their symptoms. 

AI is helping to diagnose cancer, determine the size of tumors and assess the prognosis for patients. This saves time, a critical element in cancer treatment. For example, UT Southwestern researchers recently announced the development of software that leverages AI to recognize cancer cells from digital pathology images. With millions of cells in a single tissue sample, pathologists were previously limited to looking only at parts of a sample. The algorithms in this software promise to improve both speed and accuracy.  

This same speed and accuracy are also leveraged in laboratory analyses of fluids and tissues. Rare diseases can now be diagnosed worldwide through the use of facial recognition and big data using AI. 

Treatment 

Ensuring quicker and more accurate diagnoses is just one part of AI’s application in healthcare. It is also impacting patient treatment. 

Drug trials are time-consuming and costly. However, speed is essential in the highly competitive drug industry, just as it is for patients waiting for cures or relief from symptoms. AI can save time by streamlining the planning of clinical trials and through the quick processing of massive amounts of data. But AI isn’t just reducing time and saving money for pharmaceutical companies. AI is also improving clinical trials by providing researchers with analysis of potential participants and remote monitoring of participants’ adherence. With its ability to analyze tens of millions of genetic compounds in a single day, AI is leading breakthroughs in the treatment of major diseases, including Parkinson’s, Multiple Sclerosis and Ebola. 

Within hospitals, AI is driving innovations in triage, ensuring patients get timely treatment. Google’s DeepMind Health and IBM’s Watson are both engaged in improving patient’s experiences and outcomes. In hospital settings, these and other AI platforms help assess patients, track wait times and even determine the quickest ambulance routes. Hospitals are also partnering with companies such as GE to use AI to maximize operational flow and allow staff to see far more patients in much less time. 

Surgery 

Innovations in AI and robotics are also proving to be surgical game-changers. In 1985, surgeons employed a robot to awkwardly insert a biopsy needle into a patient. Thirty-five years later, surgeons conducted the first ever robotic eye surgery. In February of this year, Medtronic announced the first spinal surgery on a U.S. patient was performed using a combination of AI driven robotics and navigation developed by the company and a partner. In fact, last year alone, over 5,000 robots were employed in well over one million surgeries. 

Da Vinci was the first surgical robot to be approved by the FDA.  Its combination of cameras, surgical tools, analytics and robotic arms continues to be used for a variety of operations in hospitals throughout the U.S. Robots are used today in nearly every type of surgery, from orthopedics to heart surgery. 

Because it is often more precise, robotic surgery is also minimally invasive, resulting in less scarring and faster recoveries for patients. This precision also, for example, allows surgeons to target cancerous cells rather than regions of the body directly. 

AI is being used to stabilize physician’s hands and reduce tremors and to create virtual reality surgical theatres in which surgeons can test out procedures before they see the actual patient. It’s also driving microsurgeries and therapies. The Heartlander, for instance, is a miniature robot that enters the body through a tiny incision and can deliver treatment right on the surface of the heart. 

But the real power of robotic surgery lies in outcomes. Robotic surgeries are far less invasive, produce less scarring and studies are demonstrating that they can drastically reduce hospital stays. 

And for both patients and their doctors this new frontier is looking very promising.


Is Your Startup Making These Mistakes With Your IP?

When new companies are moving forward with a product at a rapid pace, some of the last things on their minds are details like patents, inventorship, and other intellectual property matters. Most times, however, these oversights can have dire legal consequences. Other times, they can lead some to take some crazy measures to cover up their missteps or protect their pocketbooks. Check out this story from my early days as a patent litigator.

In the very first patent infringement case that I worked on right out of law school, I represented the defendant in a case where the plaintiff’s CEO was caught falsifying his engineering notebooks in order to prevail in an inventorship and prior art dispute that was raised as a defense during the case. 

During discovery, we had the CEO’s original handwritten notebooks ink-date tested by forensic scientists to prove that they were doctored and he actually did not have exclusive rights to the technology. Turns out the ink used to create the notebook entries at issue was not manufactured until more than 10 years after he claimed he made the entries at issue (think old school meta data). . .The case only got crazier from there. 

After losing a multi-day evidentiary hearing to determine the admissibility of the notebooks, the judge in the civil case determined that the CEO (and others) had committed fraud on the Court and referred the issue to the U.S. Attorney for criminal prosecution. While attempting to flee the country, the CEO was arrested, his passport revoked, and he was thrown in jail while awaiting trial on the fraud charges. He lost and was sentenced to an extended jail term.  

But wait, it gets better. In a move straight out of a Hollywood drama, the CEO tried to hire a hitman while incarcerated to kill the judge in the underlying case. Unfortunately for the CEO — and fortunately for the judge — the prison contact he approached for the hit turned out to be a confidential informant to the FBI. Doh!  As far as I can tell he is still serving his initial 17-year prison sentence.

I know it is an extreme story, but it is a cautionary tale about the importance of protecting your IP from the get-go and paying attention to those often overlooked but legally impactful aspects of inventorship and ownership. Startup founders and entrepreneurs are often worried about the here and now. Being able to adapt and change with zero money is part of the startup philosophy. Meanwhile, intellectual property protection is more of a forward-looking, long-term vision. 

What are some of the issues that arise due to this disconnect? More importantly, how can you avoid making IP protection mistakes in your own startup? I’ll break down four common mistakes startups make with their intellectual property and how you can avoid them.

1. Missing Unextendable Deadlines

Say you’re in startup mode. You go through an accelerator, you tell the whole world about your great idea, you have a product and customers…but you haven’t filed a patent application. Nine months have passed. Soon, you won’t even have the chance to protect your IP, due to hard and fast deadlines that are embedded in the patent statutes. Once those deadlines pass, you can’t buy, lie, or muscle your way out of that situation and you seriously risk dedicating your invention to the public domain. No one — including you — will ever be able to patent it. 

For some startups, intellectual property protection doesn’t even come up until it’s a legal issue or an investor asks the inevitable question about whether you have already filed those applications. As some startups discover too late, there are very black-and-white deadlines within IP law that require you to protect your innovations by a certain date. If you fail to do so, you can’t ever get that chance back. 

Not sticking to deadlines for protecting your IP is one of the biggest mistakes that startup companies make.

2. Inventorship: Not Crediting the Right People 

In accelerator-style programs, lots of people with very philanthropic motivations come together to help young companies thrive. It is a hyper-collaborative environment. These mentors might casually mention an idea or a suggestion for tweaking your product over a cup of coffee and next thing you know, the startup founders run with an idea that was conceived by someone else. 

A version of this happened in another patent infringement litigation that I worked on some years back. During the development of our client’s technology, there were collaborative efforts between the company that owned the patent and an inventor who was part of another company. Originally, the company who filed the patent application acknowledged that the separate inventor contributed to the technology. They reached out to him to file the correct paperwork, but he hesitated, saying that he felt the idea wasn’t patentable and that he alone was the only inventor on the technology. While there are rules to specifically deal with this type of recalcitrant inventor situation, the company instead moved forward and filed the patent application on their own without attributing inventorship to this individual. 

Years after the patent issued, it was asserted against a number of companies in that industry including that same “other company.” The case was won based on the fact that the attorneys writing the patent application at the time had encouraged the company to not properly deal with the inventor and his statements about collaboration and inventorship. 

Inventorship is a legal definition and it’s very important to get it correct. So, if you file a patent application and the invention has contributions from others that are not listed as inventors on the patent, the patent can be held invalid and you can expose yourself as a company to ownership issues. Deal with these problems up front and it tends to be a matter of simple paperwork. Monkey with the rules for personal gain or to keep the cap table simple, you may lose your IP.

Related: Pitfalls to Avoid When Collaborating on Intellectual Property 

The proper inventors always need to be named, even if a collaborator or contributor isn’t part of the company — and yes, even if it’s just a mentor who mentioned an innovative idea over a cup of coffee. 

Now, I know what you’re thinking — does this mean that I can’t have coffee with someone to brainstorm? Do I need to credit everyone who provides even the slightest bit of input?

No, that doesn’t mean that at all. Ninety percent of these mentoring environments aren’t providing specific advice that could have legal implications later. Most of your discussions aren’t going to be about core technology or code functionality; they’re more likely to be about marketing or customers.

You only need to involve an outside individual like a mentor in your patent filing if they conceived of a critical idea associated with your invention and those concepts made it into the claims of your patent application. 

3. Looking for an Easy, Cheap Option

IP protection can also be a turn-off to some entrepreneurs or inventors because it is initially perceived as both expensive and time-consuming. Some startup founders tend to shy away from IP protection due to the cost or try to find a way to get IP protection for free. Some look for volunteers to provide IP services. 

Thankfully, there are new, more streamlined and inexpensive ways to get IP protection, particularly in the early phases of a company where all you may need is a simple provisional patent application and a single trademark application to cover the basics. You will likely still need to invest some of your own time but don’t be steered away just by the perceived financial costs.

Related: What Lawyers and Clients Need to Know About the Use of Artificial Intelligence

Inventors are often embedded in the day-to-day aspects of launching their company and getting it off the ground at a rapid pace. IP protection doesn’t interest them. Their attention, though, is crucial to ensure their IP is protected. 

4. Not Filing a Trademark Registration 

If you have a name for your company or key product, file a trademark application. There’s really no excuse not to. It’s cheap, it’s straightforward, and it only takes a moment of your time and you get a lot of benefits by having an early filing date for your brand. 

Related: Did You Get Punk’d By a Trademark Spammer or Patent Troll? 

Your Future Growth Is in Your IP

Being a startup is exciting and busy, but you need to keep your future in mind. Your IP is part of that. During the next phase of your company, when you're looking for money or talking to investors, they're going to want to know that this stuff was already taken care of. 

Make no mistake — 100% of the time you're going to get those questions from people wanting to put money in your company: “Have you filed patent applications? Have you filed trademark applications? Have you protected your IP?” If you can't answer yes, you're going to be scrambling to get it done. That's not a good situation for anybody.

Don’t fall victim to one of these potential mistakes. It might take you a little extra time, cost, or inconvenience to do the right thing. But when you have your IP protected properly from the beginning, your IP protection work should take a back burner for a while. You can breathe easier and sleep a little better, knowing you’re protected as you head into the next phase of your company. 


Tips to Protect Your IP as a Small Business or Startup

Tips to Protect Your IP as a Small Business or Startup

If you’re a small business and you hear the words “you need an attorney”, you likely envision buckets of money flying out the window. However, protecting your intellectual property as a small business, startup, or pre-funded company doesn’t have to be difficult or insanely costly. 

To make IP protection within reach as a small business, it comes down to a few smart tips. First, of course, is taking a proactive approach to protecting your innovations. Then, there are DIY measures that can save you money in filing patents and trademarks. Also crucial is finding the right IP attorneys that are proficient with and employ cost-saving systems (such as AI — more on that below) and pass those savings along to you. 

Take a Proactive Approach 

To minimize costs and time needed both now and down the road, you need to be proactive. Patents protect your ideas, not a finished product, so you may need to start working on your IP protection even before your company is formed. Beyond that, a lot of what you can do on an IP front can be done in advance. For example, a lot of companies don’t realize that they can file a trademark application before they are actually using the mark. That is something that can be done really quickly, right off the bat, and most times for a fixed cost. 

Being proactive rather than reactive keeps things running smoothly, and it makes IP protection less expensive. This foresightedness makes it easier for attorneys to control costs and give fixed prices that are of higher value to a client. 

If you were to instead come to your IP attorney and say, “I’ve been using this brand name for 10 months and we realized someone else just filed for the same mark,” guess what? That’s an emergency. In the patent world your IP becomes part of the public domain if not filed within a year of you starting to use it. So, in that same scenario you've only got a couple of months left before your IP is dedicated to the public. That’s a bigger emergency.

Naturally, that’s going to cost more. Your attorney has to drop what they’re doing, reformulate their plan and engage in more panicky back-and-forth with you.

When you take a proactive approach to protecting your IP, you take that frantic scenario out of the equation. You’re not putting out fires. You’re not reacting to potential bar dates coming up. 

Being proactive not only saves time and money. It also prepares you for investors. 

We commonly hear from clients that we talked to months before who come to us out of the blue and say that they’re in the middle of their Series A and their investors are asking if they’ve filed patent applications yet. 

Investors will always ask this. When investors and banks come at you, they want collateral. They want something to take a security interest in if they’re going to lend you money. In a smaller, early-stage company, especially those in the tech field where you don't really have any hard assets, the easiest thing to use is intellectual property for that collateral. 

You need to have patent and trademark applications filed with the trademark and patent office in order for someone to invest in your company. Every bank is going to require something like that. Every single one. You need to have that in place.

Basic IP DIY

Your attorney should empower you to do some of the basic IP legwork work yourself — tasks that will save you money if you do it ahead of meeting with an attorney. For example, if you’re preparing to file a patent, you can spend time doing your own prior art search. This can potentially save you thousands of dollars and even help you improve your innovation.

The same applies to determining whether you have the freedom to use your chosen company name. It sounds strange coming from a lawyer, but a simple Google search gives a good high-level first impression of whether a name is available for use as a trademark.  

Related: 5 Common Issues with DIY Trademarking  

Finding the Right IP Attorney

Ask about a firm’s package fee structures to see what they can do for you. Some firms will give you a package deal, for maybe one provisional application plus one trademark application. Lumping different projects together, even though they are distinct legal inquiries, can save time and money. If an attorney is willing to sit down one time and get all the information needed for your separate projects, that saves everyone time and results in lower fees.  

You want to find a firm that’s not just lowering costs and doing fixed fees, but also a firm that is taking advantage of modern, smart systems like the AI that Neugeboren O’Dowd uses (which I wrote about earlier). This allows your IP attorney to focus on the work product output instead. Look for a firm that’s using these types of systems and approaches to pass cost savings on to you. If you’re able to find one, you can get some key pieces of IP protection on file and in place for a fair, reasonable cost, and pretty quickly.

What If I’m Already in Hot Water?

Let’s say you, as a small company or startup, didn’t take a proactive approach to protecting your IP. Now you’re faced with a potential legal case tied to your IP. What can you do then? Are you sunk? 

The worst-case scenario in this instance would be if you’re a small company and you receive a cease and desist letter from a larger company or a patent troll, someone who is just asserting IP that they don't actually practice. Then come the difficult decisions.

Related: Are You Being Punk’d By a Trademark Spammer or Patent Troll?

The one thing you can do as a small company is an infringement analysis to make sure that what the plaintiff in that case is asserting is actually accurate. It takes little effort, especially if you discover that the assertion is inaccurate. Even though that might not make the risk of a litigation or lawsuit go away completely, at least you've looked into the claim and you have an answer for any type of investor or other party that is doing diligence to investigate your company. 

Or, if you do look at the claims and they may have some validity, then your patent attorney can help you tweak your product so you don’t include the key elements of another patent in that product. You basically “design around” another patent. 

However, just note that taking proactive measures like those discussed above is much cheaper than having to do a design around, but a design around can also be much cheaper than a litigation.

Ready to Get Started?

Protecting your IP as a small business or startup isn’t as hard as you may think it is. You can make sure your IP is safely protected with minimal fees and time when you’re proactive, you know what you can DIY, and when you have the right IP attorneys on your side.