SCOTUS to Determine Whether Reselling Used Books is Copyright Violation

It may have been overshadowed by the drama and tragedy of hurricane Sandy this week, but the U.S. Supreme Court heard arguments on a case which may determine whether you will be able to sell a used book on eBay or other reseller web sites. In Kirtsaeng v. John Wiley & Sons, Inc., a student, through his family in Thailand, legally purchased books that were published there by a U.S. publishing house.  That publisher, like many others, publishes similar versions of their U.S. titles in foreign countries at cheaper prices.  After the student resold the books on eBay, the publishing company argued that his actions amounted to copyright infringement because the U.S. copyright laws give the owner of the copyright the exclusive right to import copies of a work from outside the United States.  The student argued that another provision of the copyright laws give a purchaser of a particular copy of a work "lawfully made under this title" of the copyright law the right to resell the book without getting the permission of the publisher.  The case could have a dramatic impact on e-commerce and online resale sites and is being closely watched by both sides.

The trial court and the Second Circuit Court of Appeals both sided with the publisher. The U.S. Supreme Court decision is expected by the end of its term in June, 2013.

Will Software Patents Destroy the Smartphone Industry?

I will admit it.  I am an Apple junkie.  Our house is home to two Macs, two iPhones, an iPad, and an iPod Touch (not to mention a few old devices gathering dust in a bin).  But I am also a bit torn on the patent battles that continue to rage between smartphone companies.  The iPhone, for example, completely revolutionized the mobile phone industry and all of the other device manufacturers "emulated" it.  If you don't believe me, check out this graphic.  But the headlines over lawsuits, injunctions, and other forms of legal maneuvering are becoming daily reading. Now it's about to get worse.  Apple was granted a number of patents this week that will only make the patent battles more absurd.  In particular, the United States Patent and Trademark Office granted a patent to Apple relating to the iPhone's graphical user interface for displaying electronic lists and documents, which, in particular, according to Patently Apple "covers UI modules covering blogging, email, telephone, camera, video player, calendar, browser, widgets, search, notes, maps and more importantly, a multi-touch interface."  If you thought the battles over software patents so far were ridiculous (and many serious people do), these new patents should bring it to a new level and keep patent lawyers salivating.

The Internet is getting bigger today. Big Time. Should you claim your share?

The day that we have talked about for more than two years is finally here.  ICANN - the non-profit corporation in charge of assigning domain names - is throwing open the doors and allowing a slew of new domain name naming conventions.  The Internet is about to get huge (er). Up until now, web sites were limited to such generic top-level domains (gTLDs) such as ".com", ".net", and ".org".  The group added more in the past few years including ".xxx", ".biz", and others, but now they are allowing customized gTLDs.  It could be a brand (.mcdonalds), an organization (.youthhockey), or just about anything else.  Approved applicants will maintain that gTLD and use it to host all of their company information, control who has access to the name, and even be able to sell space in the gTLD.

But before you jump to register ".thing", the registration process alone will cost you at least $185,000 plus the investment in maintaining your little slice of the web.  However, if you are a business or a group with the resources, it could be an invaluable new way to maintain your presence on the Internet.

Big Changes to Patent Law Coming. Is Innovation at Risk?

The U.S. House of Representatives and Senate have each passed similar versions of a bill that will make big changes to the patent system, with only conference committee changes standing in the way of it becoming law.  The America Invents Act makes several changes to the way patents are filed and protected, but the biggest one for small businesses and entrepreneurs is the change from the current "first to invent" system to a "first to file". Under the current system, if you invent a patentable invention, you have one year from the time you disclose it to file the necessary paperwork with the U.S. Patent and Trademark Office.  This time is typically spent improving the concept, working with collaborators, or speaking with investors who could help fund the project.  The new system takes away that "grace period" and gives to the first person to file the paperwork the right to patent the invention, regardless of whether they participated in the invention or not.

For example, an entrepreneur or small business might not have the necessary funds to file the patent on their invention in the first place (a patent can cost $15,000 or more to file).  If that inventor describes the invention to investors as it tries to raise the money, the investor would be able to file for the patent before the inventor had raised the money.  This will cause major changes to the way that entrepreneurs and investors interact with the investment community and would give a decided advantage to investors or corporations with deep pockets to trump the rights of individual inventors.  That will have the effect of stifling innovation rather than supporting it.

Any inventor or entrepreneur is going to have to reevaluate their processes and be much more careful with their intellectual property once this bill becomes law, which is expected in the near future.

Are Noncompetes Enforceable in Massachusetts?

I am often asked about noncompetition agreements and I have been thinking quite a bit about them recently, partly because of the continuing on-again-off-again talk in Massachusetts about changing the law regarding noncompetes, but also because of a recent issue that arose when one of my clients was threatened with a lawsuit over her new company by a competitor. Noncompetes are used by businesses in a variety of situations in order to protect a company's intellectual property or business interests and are entered into with employees, contractors, investors, vendors, and any other person or group who may have access to business secrets.  For example, as I described in a previous post:

In many states, parties can agree to restrict a former employee from working for certain competitors in a limited geographic area (for example, a baker who can’t work for any other bakeries within 20 miles for one year after termination).  Such non-compete agreements are generally enforceable if the duration and geographic limitation are reasonable.  The court aims to strike a balance between protecting legitimate business interests of the company with the ability of the employee to earn a living.

Regardless of the intent of the company, noncompetes face varying enforceability standards around the country.  California, for example, makes it simple:

Except as provided in this chapter, every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind is to that extent void.

Among the very limited exceptions is in the context of a sale of a business.  But otherwise, California allows any employee to leave employment to work for any other company or start a competing business of their own, provided they do not steal company trade secrets. Massachusetts on the other hand currently follows the reasonableness standard described above for determining enforceability, and is it ultimately in the hands of the court to determine what is reasonable based on the circumstances.  When used properly, noncompetes can be a very powerful and effective tool for businesses in protecting their competitive position.

Enter my client.  She did some limited freelance work for a company but was never hired as an employee.  She never signed an employment agreement, nor did she sign a noncompete, a non-disclosure, a non-solicitation, or any other type of agreement.  Therefore, she is not restricted from working for a competitor or establishing a competing business (despite the protestations of the company) because there was never an agreement to prevent her from doing so and Massachusetts will not infer an agreement where one did not exist.  Plus, even if there were an agreement, the non-compete must protect a legitimate business interest in order to be enforceable.  Ordinary competition is not considered a legitimate business interest in Massachusetts. While her competing business (and the numerous other similar businesses) may ultimately take away business from the company, she did not use any of the company's intellectual property or nonpublic information to establish the competitor, so the noncompete laws protect her right to start her own business.

I am curious to hear if you have run into a situation like this.  Is a noncompete currently holding you back from taking a new job?