Posts Tagged: "contracts"

Question: how do you make money from a secret formula for a product that smells and tastes horrible and that no one wants? Answer: you make everyone believe they have a medical problem that only this stuff can solve. Back in 1879, Joseph Lawrence, a St. Louis doctor, was experimenting with surgical disinfectants. This was a new thing. In the 1860s, a British surgeon named Joseph Lister was the first to perform surgery antiseptically, using carbolic acid as a disinfectant. Inspired by Lister, Lawrence came up with a compound of alcohol and essential oils that seemed to kill whatever bugs it touched. To honor Lister (and presumably to take advantage of his fame), Lawrence named the concoction “Listerine.”

It continually amazes me that many business folks who negotiate tons of IP license agreements, fail to understand the difference between covenants, representations, and warranties that are “standard” in many such agreements.  Well, that is not too surprising.  What is very surprising, however, is that many of their lawyers fail to appreciate the differences as well!  Many think the terms are synonymous and thus use them interchangeably. They are not.  So, for those of you tired of faking the funk, here is some (either fresh or refresher) Contracts 101!

Where a contractual assignment of patent rights is not unequivocal the contract cannot defeat standing at the pleadings stage in a correction of inventorship action. A contract between two legal entities cannot assign the patent rights of a non-party, when the non-party signed the agreement on behalf of one of the entities and not for himself. A contract to develop and deliver software, absent express language conveying an assignment, does not imply a transfer of patent rights and does not create an implication that the developer was hired to invent.

The Federal Circuit has agreed to expeditiously hear an appeal from Dodocase VR, Inc. v. Merchsource, LLC No. 17cv7088 (N.D. Cal.) (“Dodocase”) in which the district court determined that a forum selection clause could not be overridden to allow a patent validity challenge at the PTO without breaching the contract containing the clause.  The court issued a preliminary injunction ordering the withdrawal of the petitions MerchSource had filed with the Patent Trial and Appeal Board (PTAB).  Dodocase at 24.  In its arguments, MerchSource strongly relied on the public’s interest in permitting the PTO to correct its mistakes.  This interest, however, was not found to outweigh the policy favoring enforcing parties’ agreed upon selection of a forum.  Id. at 17.

Esports is a truly global phenomenon, with some analysts estimating worldwide viewership at approximately 300 million, potentially rising to 500 million by 2020. With so many eyeballs on esports – and with so many of those eyeballs being in a millennial category that is young, affluent, globalized, and technologically-driven, but increasingly challenging for brands to engage with – esports presents an exciting opportunity for sponsors. And, as with any other sport, sponsorship can be a significant revenue generator for rights holders. But, intellectual property rights are complex in esports. When entering into an esports sponsorship arrangement, both rights holders (whether they be players, teams, tournament organizers or games publishers) and sponsors face many of the same issues that the parties to a deal in traditional sports do.

Facebook shut down the page 3 years ago after the owners of the page admitted that they sold camouflaged advertising. Facebook shut down the page without any prior notice 2 days after an article shed light on the sale of camouflaged advertising… The Court did hold that the Plaintiff breached the terms of use of Facebook, but this should not be regarded as a material breach of the contract.

Inselberg and Interactive filed a motion to dismiss Bisignano and First Data’s declaratory judgment claims and state court counterclaims, and moved to remand the action to state court. The district court agreed, finding that it lacked jurisdiction over Inselberg and Interactive’s claims that the assignment agreement was invalid. Those claims were based on questions of state law and did not depend on any federal issues or interpretations of federal law. First Data’s invalidity and infringement counterclaims were deemed “incidental and contingent” to Inselberg and Interactive’s ownerships claims and could not be resolved unless or until a state court determined that Inselberg and Interactive owned the patents. First Data and Bisignano appealed the district court’s dismissal of its claims and its order to remand.

The basement inventor is increasingly rare, although I am old enough (and lucky enough) to know several. Invention in the “real world” is often a messy, team effort of multiple inventors, employers, contracts, research agreements, and funding agreements. As the complexity of invention multiplies, so do opportunities for unintentionally losing or jeopardizing intellectual property rights… There is often more than meets the eye when it comes to ownership of inventions. The benefits of collaboration far outweigh the disadvantages. However, you can take steps to ensure a smooth collaboration by keeping a few legal principles in mind…

Employers should think twice before including the unenforceable provisions in employment contracts merely for their deterrent effect. Such a practice is risky. If an employer terminates an employee who refuses to sign an agreement that contains an unenforceable non-compete provision, such action would constitute a wrongful termination in violation of public policy and would entitle the employee to recover tort damages, including punitive damages, as well as economic damages… Given the strong protections against non-competes in California, it is too risky to require employees to sign employment agreements that contain these provisions. All employment agreements entered into with employees who live or work in California should be carefully reviewed to ensure compliance.

There are not many things an employer can do to prevent unfettered competition by a former employee. B&P Section 16600 states that “every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind is to that extent void.” The statute provides three exceptions, none of which apply to the typical employer/employee relationship: (1) a person who sells the goodwill of a business or sells substantially all of its operating assets may lawfully agree to refrain from carrying on a similar business; (2) a partner may, upon the anticipation of the partnership dissolution or disassociation from the partnership, lawfully agree not to carry on a similar business; and (3) any member of a limited liability company may lawfully agree not to carry on a similar business.

ZeniMax offers useful insights for enterprises seeking to maximize the benefits of NDAs while minimizing the time and effort needed to negotiate them… Most technology enterprises are well-acquainted with NDAs. On the positive side, they recognize the importance of entering into NDAs with outside parties before disclosing confidential information, whether in the context of discussions related to potential commercial transactions, funding, or joint R&D projects, or for other purposes, such as to support product-related investigations or certification activities. On the negative side, enterprises commonly associate the negotiation of NDAs with cumbersome paperwork, obstacles, and delay.

One of the most egregious reasons that states make non-compete agreements (NCAs) unenforceable remains the broadness of the agreements that for all practical purposes bans an individual from pursuing her profession of choice. For example, enforceable NCAs cannot have language that calls for a separated employee to have to sit out her chosen industry for an excessive time, according to legal professionals. And NCAs must remain rational and have a rationale. “Most states will enforce restrictive covenants like NCAs so long as such agreements are reasonable in time, area and line of business,” says Micah J. Longo, employment lawyer, The Longo Firm, P.A.

In the past, employers typically only needed to be concerned that confidentiality and non-compete clauses in their employment agreements may be challenged either by departing employees who want to work for a competitor or by a competing company attempting to hire an employee or former employee. That tide is changing as an increasing level of government scrutiny has been directed at these employee restrictive covenants. Recently, federal and state agencies have been challenging the enforceability of confidentiality provisions and non-competes that the agencies claim are not supported by legitimate business interests. Given this change-in-tide and the New Year, now is the perfect time for employers to engage counsel to review their confidentiality and non-compete provisions.

Disruptive innovation, like what we are seeing in the health care industry, often causes disruption elsewhere, and the legal landscape is no exception. The life cycle of digital health products and services — from conception to promotion — presents a unique set of legal challenges, and there is no one-size-fits-all approach to the matrix of issues facing these products. As a lawyer, these are the kind of projects that remind us of law school exams — lots of issues and, often, no clearly defined answers or solutions… This article explores some of those tools and why one might choose to pursue one or, in the more probable case, some combination of them.