Hey, Can I Use your Netflix Password? – What the Ninth Circuit’s Interpretation of the Computer Fraud and Abuse Act Means For Password Sharing

The practice of password sharing has received a lot of attention this past year. Some media reports have suggested that using a friend or family member’s Netflix or HBO Go password without having an account yourself could land you in a federal prison as a violation of the Computer Fraud and Abuse Act (“CFAA”). These reports are based largely on two decisions by the Ninth Circuit Court of Appeals: United States v. Nosal (“Nosal”) and Facebook, Inc. v. Power Ventures, Inc. (“Power Ventures”). But what do these decisions really mean for password sharing? Should you be worried about going to prison if you use a family or friend’s Netflix or HBO Go password? Probably not. (Although password sharing could still be problem, just not a go directly to jail, do not pass go problem.)  Here's why:

United States v. Nosal – Using a shared password most likely won’t violate the CFAA under Nosal for three reasons:

(1) Nosal involved a conspiracy between the defendant and several others to gain access to a proprietary database by using a shared password in order to steal trade secrets for a competing business. This kind of commercial password sharing bears little resemblance to the act of using a Netflix or HBO Go password obtained from a family or friend so that you can binge watch the latest season of House of Cards or Game of Thrones. In applying the law, facts matter and the greater the difference between two factual scenarios the less likely a court decision governing one situation will apply in another factually distinct situation.

(2) the legal rule set forth in Nosal is simply incompatible with the kind of recreational password sharing so prevalent today. The court in Nosal set forth the following rule: an employee violates the CFAA if such an employee “knowingly and with intent to defraud” his or her employer uses a computer “when [his or her] employer has rescinded permission to access the computer and the [employee] uses the computer anyway.” In other words, “once authorization to access a computer has been affirmatively revoked, the user cannot sidestep the statute by going through the back door and accessing the computer through a third party.” The Nosal rule, more often than not, simply does not work in the context of Netflix or HBO Go password sharing, specifically:

(i) the online video service providers generally do not affirmatively revoke a password recipient’s access to the service (this could be through a cease and desist letter or otherwise). In fact, Netflix knows its users share passwords and finds the practice positive from a business standpoint.

(ii) The password recipient is generally not an employee of the online service provider. And,

(iii) a recipient of a shared Netflix password is generally not using the password to steal trade secrets or other confidential information (unless you're watching the X-Files).

(3) subjecting Netflix or HBO Go shared password users to sanctions under the CFAA would be inconsistent with the purpose of the CFAA and the intent Congress had when passing it. The CFAA was enacted by Congress to “deter[] and punish[] certain ‘high-tech’ crimes,” and “to penalize thefts of property via computer that occur as part of a scheme to defraud.” This is exactly the type of conduct the defendant in Nosal was involved in. He accessed his former employer’s proprietary database without authorization (authorization that had been explicitly revoked) in order to steal trade secrets. Using a shared password obtained from a family or friend to watch TV shows and movies on Netflix is not the type of “high-tech crime” Congress intended to deter and punish under the CFAA.

Facebook, Inc. v. Power Ventures, Inc. – Like Nosal, Power Ventures does not impose criminal liability for recreational use of a shared password.

Power Ventures was a social media aggregation company that provided its users a platform in which they could manage all their social media accounts from one place. In order to do this with respect to Facebook, Power Ventures asked its users for permission to access Facebook through their Facebook accounts. Once armed with this permission, Power Ventures accessed its users' Facebook accounts in order to provide its users with its all-in-one social media service. The court found Power Ventures liable under the CFAA because, despite receiving permission from Facebook users to access their Facebook accounts, Power Ventures continued to access Facebook’s systems after Facebook explicitly revoked the permission Power Ventures needed to access its systems. 

While Power Ventures did involve user-level access authorization to a computer system without access authorization from the system's owner (like using a shared password to access a service you do not have an account for), the holding of Power Ventures does not appear to directly apply to the recreational sharing and use of a Netflix or HBO Go password. Power Ventures was liable under the CFAA because it continued to access Facebook’s systems after Facebook sent it a cease and desist letter demanding that it stop doing so. Since online service providers like Netflix do not generally send users of shared passwords cease and desist letters, accessing one of these TV-viewing services with a shared password is probably not a violation of the CFAA.

Moreover, the court in Power Ventures held that “a violation of the terms of use of a website – without more – cannot be the basis for liability under the CFAA.” Thus, even if the use of a shared password is seen as a breach of a website’s terms of use, such a breach does not in and of itself create a violation of the CFAA.

It is therefore highly unlikely that the CFAA could (or would) be used to criminally prosecute someone who used a friend or family member’s password purely for personal entertainment purposes. However, this is not to say that using someone else’s password for personal use without having an account yourself is permitted under other laws, it just won’t land you in a federal prison.*

*However, you should never use your consumer Netflix, HBO, cable, DirecTV or other video service for commercial purposes, such as showing a movie or TV show in your restaurant.  THAT can get you in boatloads of expensive trouble.

Warning to Inventors: Failure to Follow Obscure USPTO Rules Can Kill Your Patent Application

As any patent attorney will tell you, you need to keep your invention confidential until you file a patent application. But what some patent attorneys might not tell you is that requesting post-filing confidentiality for your patent application can have serious adverse consequences, even killing your application entirely under certain circumstances.

The United States Patent and Trademark Office (USPTO) maintains a stringent set of rules for patents. Overlooking one or more may cause serious consequences for your patent application. In some cases, failure to follow the rules may even result in you permanently losing the right to patent your invention. Once case in point arises when an application requests that the USPTO keep its patent application confidential and then files a foreign patent application for that invention.

Patent applications in the U.S. (and in many other countries) are confidential for the first 18 months after filing. Typically, they are published after the 18-month period. This allows applicants a year and a half of secrecy to develop a product covered by a patent application prior to the disclosure of their patent application on the USPTO website. During this 18-month period, the public can only obtain the title, inventors, application number, and filing date of an application, but not the substance of the application.

There is an option in the patent rules which allows applicants to delay publication of their patent applications until their patent applications are granted. Under this option, the invention is, typically kept confidential for a few years. However, this can only be done in cases where the applicant agrees not file for foreign patent protection based upon the U.S. patent application. According to the Paris Convention, applicants are allowed to wait until one year from the filing date of the U.S. patent application to file in foreign countries. But applicants who opt to keep their applications confidential until issuance are prohibited by law from taking advantage of this foreign filing provision unless they withdraw their non-disclosure requests in a timely manner.

I was told of a case in which a small U.S. company (less than 20 employees) applied for a patent, intending to manufacture a product for sale in the U.S. The applicant checked the box on its application requesting the non-publication option and thereby promising not to file an application for patent protection for the invention in any other country. This option was selected at filing, pursuant to USPTO rules.

About six months after filing, the owner of the company learned of an opportunity partner with a company in Canada that markets a similar product under which the U.S. company would and also use the Canadian company’s supplier to make inexpensive, quality parts. The supplier was in Mexico.

The U.S. company then filed patent applications to protect its invention in both Canada and Mexico. The company’s patent attorney later took steps to notify the USPTO of the foreign filings and to rescind the non-publication request well in advance of the publication date. However, the USPTO sent a notification to the patent attorney indicating that the notifications of the patent filings in Canada and Mexico were required to have been made within 45 days filing patent applications in those countries. Since the notice of the foreign filing was made more than 45 days after the foreign patent application files, the patent application was determined by the USPTO to have been abandoned, forfeiting patent protection in the U.S. for the company’s invention.

There can be harsh consequences of violating even an obscure USPTO rule. This ruling was a lesson to the inexperienced patent attorney and should serve as a cautionary tale to inventors everywhere.

The following statutory and regulatory provisions apply to this matter: 35 U.S.C. 122(b)(2)(B); Manual of Patent Examining Procedure” (MPEP), Section 1123.

 * * *

Employee Non-Competition Agreements Survive in Massachusetts. . . At Least for Now

In a stroke of good fortune for companies that rely on non-competition agreements to protect their intellectual property, the Massachusetts legislature failed to pass a final version of pending legislation that could have gutted such agreements. On Sunday night, the clock ran out on the 2016 legislative session without final passage of the non-compete reform bill (H. 4434) that many observers expected to pass this session. This is good news for companies that want to use non-compete agreements to protect their trade secrets and good will because the Senate version would have almost entirely eliminated the value to companies of employee non-compete agreements. Differences between the House and Senate versions – as discussed here on July 17 –  appear to have been too large to overcome in the 17 days between when the Senate passed the bill and the end of the session. According to the Boston Globe the biggest sticking points related to the length of employment restrictions and the amount of the “garden leave” that employers would be required to pay former employees during the non-compete period.

Although the bill is dead for this year, the legislature may take it up again when the 2017 legislative session starts. Bills like this one where there is widespread support in both houses for different versions often pop back up in a new session with an even greater chance of passing.  So while companies who rely on non-competes were granted a temporary reprieve, they may need to look to other options in their long-term intellectual-property protection strategies.

Massachusetts Senate Votes for Near-Elimination of Employee Non-Competition Agreements

Yesterday — three weeks after the Massachusetts House of Representatives passed a bill that would severely restrict non-competition agreements — the Massachusetts Senate approved its version of the legislation, which would impose even more severe restrictions on non-competes. The Senate’s version makes the bill much more favorable for employees, and might even go so far as to make the employee non-compete agreements almost worthless from an employer’s perspective. The Senate’s changes include: (1) reducing the time that a worker can be prohibited from competing from a year to three months; (2) increasing how much a worker has to be paid during the restricted period; (3) preventing judicial reformation of non-competes that are overly restrictive (instead requiring courts to throw them out); (4) and further limiting the types of employees who can be subject to non-competes.

Just Three Months of Protection

The Senate version reduces the length of time that an employee can be prohibited from working for a competitor from one year to only three months, which is probably too short period of time to be of much value to most employers.  An employee could leave at the beginning of June take the summer off, while still being fully paid by his old employer, and start up a new job in September.  While that would be a great deal for the employee, it is hard to see much benefit for employers.  The Senate did accept the House’s extension of restrictions to two years when the employee steals from the employer or breached a fiduciary trust to the employer, providing at least some value if an employee acts badly.

No More Judicial Flexibility

In the past when a Court has found a non-compete to be too limiting, it has had the ability to “blue-line” the agreement, making it more reasonable, rather than throwing the whole thing out.  While the version passed by the House would continue this judicial flexibility, the Senate version would require courts to throw out overly broad noncompetition agreements.  This is a return to how the bill was originally written, and, as discussed in my last post on this bill, would remove a huge advantage and safety net from employers. Prohibiting reformation means that employers only get one bite at the apple to get the agreement right forcing them to guess how much restriction a court will find to be reasonable. If they include too much protection, they get none at all.

Full Pay During the Non-Competition Period

Under current law, employers do not need to pay a former employee while a non-compete is in effect. The House version of the bill would require employers to pay “garden leave” equal to at least half the employee’s salary during the time in which the employee is prohibited from working for a competitor. The Senate version increases this amount to the employee’s full salary.  In other words, an employer would need to pay its former employee his or her highest annualized salary in the last two years for the duration of the non-compete, unless the employee stole from the company or otherwise breached a fiduciary duty to it. This applies even if the former employee is working and drawing a salary during this time (though not, of course, in breach of the non-compete). The House version also had a way for employers to avoid paying garden leave by negotiating alternative compensation, but the Senate version requires any such negotiated replacement compensation to be at least as much as the garden leave would be.

Two New Administrative Requirements

The Senate version also includes two new burdensome administrative requirements: (1) an employer must notify a departing employee within 10 days of the termination of employment that it intends to enforce the non-compete or the non-compete is voided; and (2) the non-compete must be reviewed with the employee at least every five years. The notice of intent to enforce requirement appears to replace a provision in the House version that would have allowed the employer to opt out of paying garden leave if they decided not to enforce the agreement or if the employment restriction was found unenforceable.  The Senate version counter-intuitively seems to exclude the employer from having an opt out if the employee steals from the employer or breaches a fiduciary duty to the employer because the notice requirement does not apply in those situations.

Non-Competes Limited to Top Employees (and Not Independent Contractors)

With all of these limitations, it is unlikely that most employees would bother to ask their employees to sign non-competes. But even if they want to, they will be prohibited under the Senate version from entering into non-competes with most employees, as it only permits non-competes with employees who makes at least twice the weekly average wage in Massachusetts.  Employees who are not classified as an exempt worker under the federal Fair Labor Standards Act (i.e. hourly workers) could also not be subject to non-competes regardless of how much they make. The Senate version also prohibits non-compete agreements with independent contractors.  (In any event, the idea of having a non-compete with an independent contract seems a little strange because one of the criteria that is used to determine whether a worker is an independent contractor under Massachusetts law is whether the worker is free to provide services to anyone wishing to use those services.)

Two More Nails in the Non-Compete Coffin

If the Senate draft had not already made non-competes unappetizing enough to employers, it also includes provisions prohibiting contractual provisions that penalize an employee for challenging or defending against enforcement of a non-compete agreement and prohibiting advance waiver of employee rights under the law.

Not the End of the Story

Now that the Senate has passed its version of employee non-compete legislation, the two versions will have to be reconciled into a single version that can be passed by both houses. This will be done by six legislators, three from each house. It will require quick action to get the two versions reconciled in time to pass the bill this year because the legislature ends its session on July 28.  Of course, if the legislature fails to enact a new non-compete law, the old one will remain in effect. Employers who rely on non-competes to protect their intellectual property should consider contacting their legislators to ask them to support modifying some of the more draconian provisions of the bill or simply to oppose it altogether.  Watch this space for further updates.

Legislative Update: Employee Noncompetition Agreement Reform

Yesterday, the Massachusetts House of Representatives unanimously passed a major reform of employee non-compete agreements. The bill is much more employee-friendly than existing law, although the version passed by the House is more employer-friendly than earlier drafts. The bottom line is that the bill would continue to allow non-competes in Massachusetts (some had proposed doing away with them entirely, as California did), but would restrict them to one year and impose additional burdens on employers while the non-compete was in effect. So what does it do, who does it cover, and what happens next?

What does it do?

Perhaps the most controversial and biggest change contained in the bill is that under it an employer would have to pay an employee during the non-competition period, up to a maximum of one year, at least 50% the employee’s highest annual salary from the last two years. This provision, called the “garden leave” clause, is meant to ensure that employees actually get some compensation for signing noncompetition agreements. An amendment this week allowed employers to avoid paying garden leave money if the employer decides not to enforce the agreement. This is a major improvement to the bill because it lets employers off the hook if at the end of the employment they decide to release the employee from all noncompetition obligations, allowing the employee to go to work for a competitor immediately. This provision will likely have the effect of causing some employers to release employees to work for competitors, which would give those employees a better chance of working where they want. Another recent change to the legislation is that employers and employees can mutually agree to replace the garden leave clause with some other sort of compensation, but there still must be some form of compensation for entering into a non-compete.

Keeping with the trend of trying to protect employees, the bill requires that employers inform potential employees of the need to sign a noncompetition agreement when the employer makes the formal job offer or 10 days before the job begins, whichever comes first. This provision is intended to protect employees from the difficult situation in which an employee quits their current job for a new job and then finds out that the new job comes with an unacceptable noncompetition agreement. The bill also requires that noncompetition agreements include a notice that the employee has the right to consult an attorney before signing the agreement. As a practical matter, many employees will likely not take advantage of the opportunity to consult with a lawyer before signing, but those who do may benefit from a better understanding of how the non-compete and other provisions of the agreement will affect them.

Perhaps the biggest change in the current draft from the previous drafts is that the current version allows judges to reform noncompetition agreements that are too broad through a process called “blue-lining.” Judges have authority to blue line non-competes under existing Massachusetts law, but the earlier versions of the bill would have required judges to throw out the entire non-competition agreement if it contained an overly-broad provision. Allowing reformation is a huge advantage to employers because it allows employers to draft broad restrictions without as much fear that their agreements will be invalidated by a court down the road.

Another major change is that the bill would restrict noncompetition agreements to only one year in length unless the employee breaches a fiduciary duty to the company or steals from the company, in which case it can be up to two years in length.  Existing Massachusetts law allows non-competes to be up to two years in duration regardless of whether the employee breaches a fiduciary duty.

Who Does It Cover?

The bill covers agreements with employees and independent contractors who are residents of, or employed in, Massachusetts at the time of termination. The bill significantly narrows whom companies can make noncompetition agreements with by prohibiting agreements with several classes of employees, including employees who are terminated without cause and employees who are not exempt from federal wage and hour laws under the Fair Labor Standards Act (FLSA), e.g., employees paid by the hour. Noncompetition agreements are also unenforceable against students and children under the age of 18.

The termination without cause exclusion may be of concern to some employers, because it will prevent them from enforcing noncompetition agreements when they reduce their workforce for economic reasons. The exclusion of workers who are not exempt under FLSA is meant to prevent companies from applying noncompetition agreements to low-level employees who are not critical to the business.

What Comes Next?

The next step is for the bill to be considered by the Massachusetts State Senate, where it could be adopted in its current form, rejected, or (most likely) further amended. If the Senate does amend the bill, any differences between the House and Senate versions will have to be ironed out before the legislative session finishes at the end of July. There is strong support for the bill in both houses of the legislature, so we may actually see the bill passed this year. Governor Baker has not said if he supports or opposes the bill yet, so that is one potential stumbling block if there is not enough time to override a potential Governor’s veto. Stay tuned for more updates.

There's a Patented Invention on Donald Trump's Head!?!

There's been a lot of discussion recently regarding what's going on inside Donald Trump's head (and what is coming out of his mouth), including from President Obama (spoiler alert:  not a fan), but one breaking news story that has gotten less attention is that Patent No. WO 1989009551 A1 may be resting on his head. According to a Gawker report, the curious mass on Trump's cranium that appears to be a fuzzy bird's nest is actually a patented (and very expensive) hair weave. The good news for anyone who wants to look like "The Donald" is that the patent expired years ago (though it is not quite as out-of-date as his ideas*), so you can have fake Trump-style hair without fear of a lawsuit from the litigious presumptive Republican nominee. (On second thought, scratch that. Apparently, Trump does not need a viable cause of action to file a lawsuit.)

*Interestingly, "Trump Mediaeval" is an old-style serif typeface in addition to being an apt description of his attitude towards women.

Oracle v. Google: A Resounding Win for Software Developers? Not So Fast

            Many news outlets and publications are touting the Oracle v. Google jury verdict in favor of Google’s unlicensed use of Oracle’s APIs in its Android operating system as a resounding victory for all software developers that use APIs. However, a deeper look into the case and its potential effect on copyright law tells a much different story – one that ultimately cautions against adopting a carte blanche approach to using APIs without a license. Just because the fair use defense worked for Google does not mean it will work for you. As is often the case, when it comes to fair use – even after the Oracle v. Google verdict – the devil lies very much in the details.      

Oracle Wins Round 1: APIs Are Copyrightable.

            Oracle, after acquiring Sun Microsystems in 2010, filed suit against Google alleging copyright and patent infringement for Google’s use of Oracle’s Java APIs in its Android operating system. A jury found that Google infringed Oracle’s copyright in 37 Java API packages, but ultimately deadlocked on Google’s “fair use” defense that allows limited use of copyrighted material without the copyright owner’s permission under certain circumstances. Despite the jury verdict in favor of Oracle, the district court judge ruled that the Java APIs at issue were not copyrightable and found in favor of Google on Oracle’s copyright claims. Oracle subsequently appealed the lower court’s decision to the Federal Circuit. Upon review, the Federal Circuit agreed with Oracle – it held that APIs are legally entitled to copyright protection if they are:

a)     sufficiently creative, and

b)    capable of being expressed in multiple ways.

            Because (1) the Federal Circuit found that Oracle’s Java APIs were entitled to copyright protection and (2) Google admitted to using the relevant APIs without a license, the Federal Circuit sent the case back to the lower court for a trial on Google’s fair use defense.

Google Wins Round 2:  Fair Use Defense Prevails.

            In May 2016, after a two-week trial and testimony from the likes of Eric Schmidt (Ex-Google CEO), Andy Rubin (Android’s Chief Officer) and Safra Catz (Oracle CEO), a jury returned a verdict in favor of Google on its fair use defense. In the end, and if the verdict stands, Oracle will receive nothing for Google’s unlicensed use of its Java APIs in the Android operating system.

No Relief for Software Developers.

            Does this decision mean that software developers can now start using third-party APIs without permission? Not so fast. While the fair use defense worked for Google in this instance, a fair use defense is still very much a shot in the dark, and the verdict handed down in this case does nothing to change that reality. Because the fair use doctrine gives the jury tremendous discretion on what to consider when deciding what is or is not fair use (based on a four-factor balancing test involving the “purpose and character of the use,” “the nature of the copyrighted work,” the amount of the copyrighted work used, and the economic effect of the use on the copyright holder), it is very hard to predict what evidence a jury will consider the most important, especially when the evidence is set in the context of complex and abstract issues, like the ones involved in this case. The jury here could have just as easily found in favor of Oracle on the same evidence. Google and its team of lawyers just did a better job of presenting the evidence in a way the jury could easily digest and comprehend to come to the decision that it did: Google’s use of the Java APIs was “fair” under the circumstances.

So do I need a license to use a third-party API or not?

            So what does this all mean? Two things.  First, it means that APIs are subject to copyright protection.  Second, it means that software developers may under certain circumstances be able to use third-party APIs without permission under the fair use doctrine.  But this is a risky thing to do, since the way courts (and juries) interpret the fair use doctrine varies so widely.  And since you probably don’t want to end up in court (or paying a settlement), the wisest course of action is probably to get permission to use the APIs you need.

           If you would like more information on the fair use doctrine or want to discuss the particular issues facing your company, please give us a call at 617-841-2418 or email us at info@parkerkeough.com.

Welcome, Nathaniel!

We are pleased to announce that Nathaniel Lichtin has joined the firm. Nathaniel's practice focuses on environmental permitting, land use, zoning, intellectual property, and transactional drafting. Nathaniel's experience includes work for the Conservation Law Foundation, the Massachusetts Department of Environmental Protection, Judge Dolores Sloviter of the U.S. Third Circuit Court of Appeals, and the Massachusetts Chapter of the Sierra Club.

We are excited to have Nathaniel on our team!

Tom Brady Throws Deflategate Hail Mary

On May 22, New England Patriots quarterback Tom Brady appealed the decision of a panel of the U.S. Court of Appeals for the Second Circuit that reinstated his four-game suspension. Two big questions that many football fans have are (1) what happens next? And (2) will the decision be reversed? The answers lie in what are called standards of review and appellate procedure. The good news for Brady is that if he gets his case heard again the court will take a fresh look without giving deference to the previous decision. The bad news however outweighs the good because it will be tough for Brady to actually get his case heard again.

 While the underlying “Deflategate” scandal was about the deflation of footballs, the case is not. That’s because the courts are not permitted to overturn an arbitration decision just because they disagree with the factual determinations of the arbiter. A court overturning an arbitration decision is similar to an instant replay official overturning an on-field ruling: the on-field ruling stands unless a high standard of review is met.  The laws around collectively bargained arbitration provide one of the highest levels of deference in the law to the official that made the initial decision. The NFL can win the case even if the judges believe that Commissioner Goodell made the incorrect call, so long as Goodell’s behavior was “even arguably construing or applying the contract and acting within the scope of his authority and did not ignore the plain language of the contract.”

On appeal there are two main standards that govern review of a judicial decision. When the appeals court is looking at rulings related to facts it is required to offer deference to the previous judge. This would be like the league office reviewing a reply official’s decision and giving deference to the reply official’s decision. If, however, the appeals court is ruling on interpretations of law then the prior judge gets no deference, called de novo review in legal terminology, and the court replaces the prior judge as the sole replay official. Because everybody agrees on what happened during the hearing before Commissioner Goodell the only contested issue is did the facts meet the requirements for overturning an arbitrator’s decision, which is an interpretation of law. The panel of the appeals court therefore reviewed the decision de novo and replaced Judge Berman as the replay official. By a two to one vote the panel determined that Commissioner Goodell’s decision was valid. Judge Berman had found that the suspension was improper because there had not been proper notice to Brady that tampering with a football could result in a suspension, that Commissioner Goodell improperly excluded evidence, and that the NFL should have turned over more information the Brady’s legal team. The panel essentially found that Judge Berman was not sufficiently deferential to Commissioner Goodell and that the Commissioner’s decisions met the very low bar set for the behavior of arbitrators. As to whether any actual deflating occurred, the majority explicitly declined to take a position on that issue.

(1) So what happens next?

Brady doesn’t have the automatic right to further appeals. Now that he has requested that the full bench of the Second Circuit hear the case, the thirteen judges of the Second Circuit will decide if they want to re-hear the case that was decided by a panel of just three of them.  This is called an en banc hearing. If Brady persuades a majority of the judges on the court to re-hear the case en banc then the thirteen judges will replace the three-judge panel as the replay official reviewing Commissioner Goodell’s decision (the third set of replay officials to review the decision).  If Brady doesn’t get a hearing before the full court or if they grant a hearing and decide against him, he has one more chance. Let’s call it an onside kick. At that point, the only way for Brady to get his suspension overturned would be to persuade the United States Supreme Court to take his case. This is called requesting “cert” from the Supreme Court.

(2) Will Brady’s suspension be overturned?

The chances for Tom Brady getting a hearing are not very good. Only very occasionally do the judges agree to hold an en banc hearing and usually they agree to do so because there is an unclear area of law at issue that is extremely important or the panel decision does not conform to other decisions made by the Second Circuit Court of Appeals. While Brady’s team (his legal team, not the Patriots) has argued that there is conflict with decisions of other Circuit Courts, such a conflict is generally not enough to get en banc review.  Brady’s chances are even lower than they might otherwise be because the Second Circuit grants among the fewest en banc reviews of any federal appeals court. So the chances are, Brady’s Hail Mary pass for en banc review will end up in the dirt.

As for his final chance to win a reversal of his suspension, an on-side side kick for Supreme Court review, there are a couple things to consider. First, the Supreme Court only grants cert where there is a compelling legal issue. Overall, the Court grants cert about one percent of the time. By way of comparison, onside kicks in the NFL work about 16 percent of the time. It doesn’t help that the current Supreme Court is down a justice and has been less active in stepping into cases than usual. So the bottom line is that Patriots’ backup quarterback Jimmy Garoppolo will likely be taking the snap when the team opens their season on September 11 against the Cardinals in Phoenix.

Build Your IP Parachute

On April 7, we will be giving a presentation on intellectual property strategy, hosted by the Newton-Needham Chamber of Commerce.  We will discuss some of the IP issues that business leaders should be paying attention to, but many are not.  If you are able to make it on Thursday, we urge you to attend.  Friends of the firm can save $5 off the cost of the seminar by using the discount code "shop local" (the price with the discount is $5 for Chamber members and $15 for non-members).  REGISTER FOR THE SEMINAR BY CLICKING HERE.

Here are the details:

Build Your IP Parachute

Gaining Competitive Advantage and Building Company Value Through Strategic Use of Intellectual Property

7:30-9:00 a.m. (presentation to begin at 8:00 a.m.)

Chapelbridge Park at 55 Chapel Street in Nonantum

Members $10, non-members $20

Join the Chamber for a discussion with Attorneys Ken Parker, Shaun Keough and Lawrence Zale of Parker Keough, LLP and Cayley Bell, the CEO and Founder of JigTime, Inc., regarding how Trademarks, Copyrights, Patents, Trade Secrets, and other Intellectual Property (IP) can give you strategic advantages over your competitors. 

DID YOU KNOW?

  • For many companies, IP is their most valuable asset – and they do little or nothing to protect it.
  • Your company may have IP assets that you don’t even know about.
  • Your company may be losing rights and IP assets that can be saved with minimal cost and effort.
  • IP assets are often lost through poorly written contracts with employees, service providers, and independent contractors.
  • Your brand name may be vulnerable to use by competitors if you don’t take steps to protect it.
  • Strategic use of IP can help you reduce competition in the marketplace, increase your margin on sales, and reduce your potential liability with a few easy steps.
  • Most of the value of a small business is in its unique ideas and identity.

Attys. Parker, Keough, and Zale will answer questions regarding how to identify and protect your company’s IP and how to use it to your company’s advantage.  Mr. Bell will discuss his IP strategy and how it has generated value for his company.

Members of Parker Keough have provided IP counseling for small to mid-size businesses and nonprofits, including restaurants, retailers, service providers, and research organizations; leading companies, including GE, Tyco International, Oracle, Juniper Systems, ALSTOM Power, Inc., and BBA Remanufacturing; and nonprofits, including associations, schools, and universities.  Read more about Parker Keough at:  www.parkerkeough.com

Mr. Bell is breaking the mold in the entertainment app sector. His JigTime app recently won the coveted "Best Indie Beta" award at the 2016 MassDiGI Game Challenge. Read more about JigTime at:  www.jigtimeapp.com

Registration, light breakfast and networking will begin at 7:30 a.m., presentation will begin promptly at 8 a.m.  We hope to see you on Thursday!

REGISTER HERE

Fall Firm Update

This has been a busy season for our firm.  Here are a few highlights:

  • We are excited to have been joined by Larry Zale, a brilliant and talented intellectual property attorney.  Welcome, Larry!
  • After we won a jury trial in a trade secrets case in Bristol County Superior Court last May, the Court awarded our client a $671 thousand judgment in September.
  • Also, in September, we moved into our new office in Newton Highlands.
  • In October, we settled two other matters on very favorable terms, which we cannot discuss due to confidentiality provisions.
  • During this time, we have also helped a number of other businesses protect their intellectual property through agreements, trademark registrations, and the like.

As we head into Thanksgiving, we have a lot for which to be thankful.

Why Your Noncompetition Agreements Might Not Be Enforceable (And What You Can Do About It)

           If you are an employer in a highly competitive industry (and what industry isn’t highly competitive these days?) or if your company owns valuable intellectual property, you may have considered using noncompetition agreements – or maybe you already are.  Noncompetition agreements (“noncompetes” to their friends) can make a lot of business sense.  After all, if your top engineers walk out the door with the secret formula for making glow-in-the-dark asparagus and go to work for your biggest competitor down the street (the illuminated vegetable industry is vicious), you may want to be able to stop them from using your intellectual property.  (You might also have a claim for misappropriation of trade secrets, but a noncompete can give you broader protection.)

            So why not have all of your employees sign broad noncompetes that prohibit them from working for competitors after they leave your company?  Because under Massachusetts law, noncompetes must be narrowly tailored to be enforceable.  An overly broad noncompete would likely be thrown out by a court if you ever tried to enforce it (though Massachusetts courts can also do their own narrowing, if they chose to – but don’t count on it).  To be enforceable in Massachusetts, noncompetes (which can be separate documents or included in employment contracts) must at minimum be reasonable, and reasonableness depends largely on how the following three terms are drafted:

·      Duration – the amount of time an ex-employee is to be bound by a noncompete after their departure from your employ (Massachusetts courts generally frown on noncompetes with terms of more than a year);

·      Geographic Scope – where an ex-employee can and cannot compete (should be limited to the geographic area in which your company is doing business); and

·      Justification – the reason why the noncompete is necessary to you, the employer (it can’t just be to stifle competition – you need a legitimate business interest of which there are three – we’ll get to those in a minute).

            Whether the duration or the geographic scope of a noncompete is reasonable is largely a fact-based inquiry that requires a detailed look at the specific circumstances at hand (read:  judges do pretty much whatever they want with these, but the shorter the duration and the smaller the geographic area, the more likely it is to hold up). In terms of the justification for the noncompete, Massachusetts courts have made it clear that a noncompete will not be enforceable unless its objective is to protect an employer’s legitimate business interests, of which there are three:  (1) protecting confidential information, (2) protecting trade secrets, and (3) protecting good will. In other words, if your noncompete is not drafted to protect one or all of these interests, it is probably not enforceable.

            Because noncompetes must be reasonable and that reasonableness depends in large part on a variety of factors – many of which are industry-specific and even job-specific – employers should avoid a “one-size fits all” approach when it comes to crafting noncompetes. Indeed, a noncompete deemed reasonable as to one employee may be unreasonable (and therefore unenforceable) as to another.

            If you are thinking about using noncompete agreements or are already using them and would like to know how Parker Keough LLP could help you craft enforceable noncompetes (or figure out whether you need them in the first place), please contact us at 617-841-2418 or by clicking the "Contact" link at the top of the page. And please pass the asparagus.

            

In Memory of Leonard Nimoy

Yesterday, we lost Leonard Nimoy.  Though a multi-talented actor, director, and photographer who played many roles having nothing to do with science fiction -- let alone Star Trek, Nimoy's memory is inseparably intertwined with the character for which he is best known.  It is a testament to the iconic nature of this character that there is no need to mention his name.

Leonard Nimoy wrote two memoirs with seemingly contradictory titles about the interconnectedness of his identity with that of this character:  "I am Not Spock" (1975) and "I am Spock" (1995).

It is not entirely clear how much of the character of Spock was the invention of Leonard Nimoy and how much of it was the creation of Gene Roddenberry.  Though Nimoy never claimed copyright ownership of the character, he was not merely an actor playing a part that had been written by others.  He was in many ways the creative force behind this character, not only for the elements he introduced (the Vulcan nerve pinch and the split-fingered Vulcan salute, among others), but also for the way he brought his own humanity to this alien character.

Without Nimoy in the role, Star Trek might not have lasted a single season, let alone the nearly half a century it has been with us.

Nimoy managed to show us a glimpse of the conflict within us all and our ability to rise above it.  For that reason and the wisdom for and self-control he showed us through this character, on this first day on which the world is without him, let us all aspire to be Spock.

What if Luke Skywaker were assimilated by the Borg?

For years, Lucasfilm not only allowed, but actively encouraged Star Wars fan fiction.  Similarly, Paramount encouraged Star Trek fan fiction.  But now that Disney owns the rights to Star Wars, what would happen if someone wrote a crossover fan fiction story in which Luke Skywalker got transported to the Star Trek universe (from a galaxy far, far, away) and assimilated by the Star Trek villains known as the Borg? Would Luke retain his Force powers? Would the other Borg acquire Force powers? Would the author of the story be sued for copyright infringement?

We don't know the answers to the first two questions, but the third one is examined in Ken's article on Gray Works, which was recently published in the Journal of Intellectual Property Law.  Read it here and find out how little anyone knows about this emerging area of copyright law.

And may long life and prosperity be with you.

Why the heck would you want to register a copyright?

People often ask us whether they should register their copyrights.  Actually that’s not true:  what they really ask is whether they should copyright things.  But as you’ll see in a minute, that’s the wrong question to ask.

In the old days, you didn’t get copyright protection unless you registered the copyright with the United States Copyright Office and observed a handful of other “formalities.”  But since the passage of the Copyright Act of 1976, the copyrighting process is automatic.  That’s right, the moment you produce (“fix it in a tangible form of expression” to use the language of the statute) a copyrightable (*** GIANT ASTERISK *** here that we will get to later) work (and by “work” we mean thing you produced that can be copyrighted – a “writing” according to the law, but it can be a song or a picture or a sculpture or a computer program or one of a host of other things) it is copyrighted!  Voila!  Done!  That’s all there is to it.  No application fees!  No complicated paperwork!  No lawyers!

So why in the world would you want to register a copyright if it is not required?   The simple answer is that in most cases, you probably don’t want to register your copyrighted works.  After all, you probably produce dozens if not hundreds of copyrighted works every day.  For example, every email you write that’s the least bit original is probably copyrighted!  Automatically the moment you save it or hit the send button!  (Yes, that’s right, electronic – intangible – messages are “tangible” for purposes of copyright law as far as the Supreme Court is concerned.  Isn’t this a great country!)  Unless you are Shakespeare, most of what you send out probably isn’t at great risk of being copied – at least not for commercial gain.  The reality is most of your copyrights are worthless.  Sorry about that.  The truth can hurt.

But some of what you produce is pretty good stuff.  So good, in fact, that you probably don’t want anyone to copy it – at least not without paying you first.  And maybe you don’t want your competition copying it at all.  Or you don’t want it to be copied without being credited.  These valuable copyrighted works might be worth registering.

“Hey wait a second,” you may be thinking.  “Three paragraphs ago you said that all these “tangible” works are automatically copyrighted.  So why should I pay a filing fee to the federal government (and possibly pay a lawyer to prepare a copyright application) when the work is already protected?”  The answer lies in how much protection you want.  Say someone copies your copyrighted work that you did not register.  You’re hopping mad.  You send them angry letters and demand that they stop copying your stuff, but they keep on doing it and thumb their nose at you for good measure.  What can you do about it?  Well, if the copyrighted work is not registered, the answer is not very much.  You can send them more angry letters.  You can badmouth them to your friends.  But you cannot sue them in federal court unless and until you have registered the copyright to the work they have infringed.

“WHAT?  You mean my stuff is copyrighted, but I can’t do anything to stop people from copying it if it is not registered?  A lot of good that does me!”  We hear you.  We feel your pain.

If you’re very clever and paying close attention, then you’ve probably just thought of a great way around these rules.  You may be thinking, “Aha, they said I can’t sue in federal court, but that’s okay.  Instead, I’ll just sue in state court.”  Sorry.  No such luck.  While you would be correct that most federal laws are enforceable in state courts, copyright law (and patent law and a few others) are ONLY enforceable in federal court.  So if your copyrighted work is not registered, you cannot sue the infringer.  But that is not the end of the story.

If you are even MORE clever, you have probably already thought of another solution.  “So what if I didn’t register my copyrighted works before,” you think.  “I’ll just wait until they have been infringed and then sue.  No need to waste time and money registering them until they have been infringed.”  If you think that, then you ARE clever. . . or at least right.  But you may be too clever for your own good.  Allow us to explain.

The good news is that you can go ahead and register a copyrighted work after it has been infringed and then sue the infringer in federal court.  But if you failed to register the copyrighted work before it is infringed (that is, before someone copied it without your permission), then you can only win in court actual damages that you can prove.  That means that if their copying was obnoxious and offensive but did not do you any actual economic harm (or at least no actual economic harm that you can prove in court), then you probably won’t actually win any money from them (but you’ll still have to pay your lawyer).  Of course, if you can prove damages, such as lost sales or royalties, then you can win those actual damages in court.  But if you had registered the copyright before it was infringed, you would be entitled not just to actual damages, but could chose instead to get “statutory” damages that you don’t have to prove.

“What the heck are statutory damages?” you ask.  Nope.  Statutory damages have nothing to do with damaging statues.  They are damages that are specified in the law or “statute” that governs a particular area, in this case copyright.  The Copyright Act specifies that if someone infringes your registered copyright, they are liable for damages of $750 to $30,000 for each and every work they infringe.  That means that if you are a photographer and someone posts your portfolio of 100 registered photos on the web without your permission, you could win $75,000 to $3,000,000.  Yes, that’s right.  Up to a cool three million dollars – even if the infringement cost you nothing.  Heck, the infringement could even have helped your business by giving you free publicity and you are still entitled to statutory damages.  Don’t believe us?  Check out 17 U.S. Code § 504, paragraph (c).  Go ahead.  Google it now.  We dare you.

But there’s more.  If you can prove that the infringement was committed “willfully,” the maximum amount of statutory damages for each copyrighted work infringed increases to $150,000.  Yes, that’s $150,000 for each copied photograph in our example.  So you could get as much as $15 million if someone willfully copies your 100 registered photos without permission.  Pretty crazy, eh?

The bottom line is that the effect of registering a copyright is to put the world on notice that they had better not mess with your copyrighted stuff.  So if you have produced something you care about or that is valuable to you, it might may sense to register its copyright. 

Sounds good, right?  You’re already thinking about all the stuff you’ve produced that other people have taken without giving you one red cent, let alone $15 million.  Hold on one second.  Remember that *** GIANT ASTERISK *** from the first paragraph?  It may stand in the way of your getting rich.  Not everything you produce can be copyrighted.  In order to be copyrighted, it must be a copyrightable subject matter.  Copyright protects the expression of an idea, not the underlying idea.  So you can’t copyright a fact, but you can copyright the way you explain that fact.

But even if it is copyrightable, it needs to pass three tests in order to be copyrighted.  First, it needs to be “fixed in a tangible medium of expression.”  If you don’t understand what that means, don’t worry.  No one does.  Just nod and scratch your chin and say, “It appears to be fixed in a tangible medium of expression” like you are Sherlock Homes explaining something to Watson.  And you will probably be right, because judges don’t know what it means either, so they will probably respond, “Brilliant, Holmes.”

Second, it must be original (not have been copyrighted by someone else or be in the public domain).  This one is pretty obvious.  How could you copyright something that someone else already wrote?  Try this:  “Dear U.S. Copyright Office, I demand that you approve my copyright registration for the complete works of Shakespeare, because he never copyrighted them and now they are ALL MINE!”  They won’t go for that because you didn’t donate enough to your Congressman.  So they will laugh at you.  Now, if Disney tried to register the copyright for the complete works of Shakespeare, it might merit serious consideration.  But the general idea is that you only get to copyright things that you produced.

Third, it must involve at least “minimal creativity.”  And by “minimal,” they mean none.  Well, almost none.  In a case called Feist Publications, Inc. v. Rural Telephone Service Co., the Supreme Court drew a line in the sand.  Two lower courts had held that a phone book could be copyrighted, but the Supreme Court overruled them, holding that listing facts in alphabetical order is not creative enough to merit copyright protection.  So if you make a list of facts in alphabetical order, your list is probably not subject to copyright protection.  Unless you write the list out in cute letters.  That would be plenty creative.  Or if you organized the facts in a more clever way.  That would be fine, too.

But just because you’ve got a registered copyright to a work you produced doesn’t necessarily mean you will win if you sue someone for infringing that copyright.  (“What the heck does infringing mean?”  Simple, it means copying or making a derivative work or transmitting or. . . um, let’s talk about this later, shall we?)  Why wouldn’t you win?  Because there are defenses to copyright infringement.  Two of our favorites are fair use and implied consent.  They mean exactly what they sound like.  NOT.  Each one probably merits a future blog post.  Or a stiff drink.

Okay, so now that you understand the basics of copyright registration, you want to copyright your company’s name?  Argh.  Next week we’ll talk trademark law.