Wednesday, June 16, 2010
Monday, June 14, 2010
Occasionally I find myself laughing with delight at the foibles of trade secret law, where quite often it is actually the case that a serious, dour, pale attorney stalks raging down the halls in Brooks Brothers’ finest screaming imprecations about someone who has had the gall — the actual gall! — to attempt to misappropriate his client’s most treasured secret, be it the formula to Coca Cola (guarded under lock and key since 1894), KFC’s 11- herbs-and-spices recipe (handwritten by Col. Sanders some 70 years ago), or the seemingly mundane client list for a real estate brokerage. The latest case to hit the headlines reads like a bad mystery —Thomas’ English Muffins Claims Rival Baker Stole Secret To “Nooks-and-Crannies” Formula!!!
A trade secret, of course, is loosely defined as any formula, pattern, device or compilation of information used by a company that is unknown to others andgives the company a competitive advantage. Examples come in many shapes and sizes, and include such things as unpatented inventions; future product designs and research; non-public company documents such as blueprints, laboratory notebooks and training manuals; marketing, purchasing, planning and customer information; and financial, accounting, recruiting and legal information. Basically, any information that a company finds exceptionally useful and deems “Top Secret” may qualify for trade secret status — with certain caveats. If someone outside the coterie of top level employees with access already knows your secret, of course, it’s not really a secret at all, and (as you might expect) you cannot retroactively go back and make it one. Once the cat’s out of the bag, the horse is out of the barn, the bird has flown the coop, etcetera . . . it’s bye-bye trade secret. Similarly, if you fail to take adequate measures to protect the secret, or are so boastful and clumsy as to actually tell someone else the secret, then you lose all trade secret protection. Given that some secrets are worth billions, one can see the attraction of those espionage thrillers where the secret agent seduces a corporate employee and pumps them for information or spontaneously befriends the loner lab geek and then gets them so intoxicated they blurt out every secret they ever knew. While real life may not mimic fiction quite at the level suggested by Clive Owens’ secret agent romp inDuplicity, rest assured that there are plenty of industrial spies lurking in corporate hallways, going through the rubbish at 5:00 a.m. hoping to find a scrap worth millions.
Although I mention the Thomas’ English Muffin case partially in jest, as it seems somewhat ludicrous that the internal consistency of a muffin could, in fact, constitute a trade secret, it does raise the question of just what you can take with you as a departing employee. Say you’ve been there for ten years and know the operation inside and out, know how to mix a muffin in your sleep, know what temperature the muffins need to be baked at, and for how long, and how long they need to cool before being bagged. You know it so well you don’t even have to think about it anymore. But now you’ve been offered a great job down the street at an independent bakery that wants to bring muffins to the masses — what do you do? Do you pretend you don’t know how to make a muffin? Just what information is an ex-employee allowed to use? The answer, as eloquently expressed by Judge Shadur in Fleming Sales Co. v. Bailey, 611 F. Supp. 507, 514-15 (N.D. Ill. 1985) is this:
Such information [as] comprises general skills and knowledge acquired in the course of employment. Those are things an employee is free to take and to use in later pursuits, especially if they do not take the form of written records, compilations or analyses. Any other rule would force a departing employee to perform a prefrontal lobotomy on himself or herself. It would disserve the free market goal of maximizing available resources to foster competition…. [I]t would not strike a proper balance between the purposes of trade secret laws and the strong policy in favor of fair and vigorous business competition.
So, no frontal lobotomy required. I hope that puts your minds at ease as much as it did mine. You can still bake a muffin, though if you land at a competitor you should know that — even if you refrain from using the magic mixing machine and never even think about the almost-mystical nook-and-cranny formula — you are still likely to be sued. No matter how innocent your muffins might be, in the end, it’s all about the dough.
Friday, June 4, 2010
I am an lawyer primarily engaged in intellectual property and complex commercial litigation in California. My practice has evolved significantly since my graduation from Northwestern in 1995. While my initial focus was on bank fraud and tax fraud in federal court, over the years that has slowly evolved to focus on fraud in all its aspects, and led me to trade secret misappropriation and the inevitable disputes between companies and their former employees regarding copyright and patent ownership. By virtue of being in the right place at the right time — the Bay Area in 2000 — I became involved in a series of intellectual property cases involving theft of trade secrets, parody as a defense to copyright infringement, and a novel application of the the unfair competition laws to internet search engine optimization. As I have became more exposed to various aspects of intellectual property law over the last decade, my practice has come to have a high-tech slant; even where the issues bear something in common with my original practice, it is now fraud tied to the question of whether software has been developed independently or not, and theft of ideas rather than of money.
My practice is not limited to intellectual property, however, and involves a number of different areas of law. For example, ten years ago I offered to lend a hand in an environmental case, which I have now had the pleasure of trying twice, and which is still active (and currently up on appeal). Another example — I recently defended a hedge fund and its principal in a self-dealing case brought by the Commodity Futures Trading Commission. So while this particular blog is dedicated to intellectual property, and the subject is dear to me, other unrelated topics may appear on these pages from time to time, since in law — as in life — variety provides the spice that relieves us from monotony.
Friday, May 28, 2010
The RIAA has now sued or threatened to sue more than 28,000 people in the United States, in most cases extracting settlements of several thousand dollars from college students, housewives, and families with precocious preteens who downloaded music from Grokster, Kazaa, LimeWire, or BearShare. In many cases the infractions alleged are minimal (e.g., 5 songs) but the damages sought are not. The litigation strategy is intended to create the public perception that even the smallest infraction will be prosecuted and even the most naive teenager will be punished. The lawsuits are clearly not brought to win damages – suing unemployed college students has never been a winner on the Mensa list of ways to make a buck. Obviously, the real intent behind the lawsuits is to strike fear into the hearts of everyone contemplating file-sharing, to instill the thought in the back of your mind that you could be next. What the RIAA wants is for you to pause before downloading, remember the litigation horror stories, and delete LimeWire from your desktop. If you remember that RIAA lawyers are so aggressive they will not hesitate to sue your deceased grandmother, perhaps that will deter you from your illicit quest to download “I Wanna Know What Love Is” for free.
Though the RIAA’s litigation strategy apparently has a certain surface appeal to music industry egos, in real life the RIAA’s rigid litigation model has not yielded meaningful results. Apart from alienating the general public and creating an enormous amount of superfluous litigation for the courts’ already overcrowded dockets, the results have been abysmal. The RIAA has failed to discourage file-sharing, and created an underground file-sharing community that — like Ninja assassins — quietly creep up out of nowhere and download billions of songs on ever-changing platforms. Every time a file-sharing company gets big enough to be noticed and sued by the RIAA, it is replaced by yet another start-up providing exactly the same service at a new location, with better cloaking technology. While the industry can sue LimeWire, Pirate Bay, Napster, and all and sundry for all they’re worth, eventually a compromise is going to have to be made. The “we’ll sue you into the ground” business model is not working, is not good business, and is quite possibly not good law — just yesterday the 16 year old cheerleader who got sued for downloading 37 songs and was ordered to pay $27,750 filed a Petition for Certiorari with the Supreme Court asking the court to overturn the decision against her on the (frankly quite believable) grounds that she didn’t realize that file-sharing was against the law.
Monday, May 24, 2010
Several weeks ago YouTube announced that it was taking down all the parody videos of Hitler’s explosive speech to his general staff — in which Bruno Ganz channels the ghost of Hitler and does a compelling embodiment of instantaneous psychotic rage — based on claims by the creators of the film Downfall that the viral spoofs infringed their copyright in the film. Although this was, and is, rather controversial (see criticism here), the elimination of the video clips was not undertaken with anything like German efficiency, and many of the clips remain up and running, including perhaps the best clip of them all — the one where Hitler bitterly complains about all his videos being rudely yanked from the airwaves and lambasts Constantin Film AG as an ungrateful upstart conspiring against him.
Frankly, faux Hitler may have a point. Since the spate of video spoofs first appeared on the web, rentals of Downfall have dramatically increased, moving the film out of the “it was nominated for an award but now you can’t find it” category into a late-night Blockbuster favorite. Given the intrinsically dour nature of the film (which is about Hitler’s last days), one could reasonably conclude that the YouTube publicity resuscitated a film that had only been seen by (approximately) four Germans since its release in 2005.
Tuesday, May 11, 2010
Monday, May 10, 2010
If you have ever read any space opera or even been a casual observer of sci-fi on television (e.g., Star Trek), you will be familiar with the idea that one of the advances civilization finally managed to accomplish with the advent of advanced computing capabilities was the information net, where all human knowledge, information, science, art, literature, media, news, and data was collected, stored, and backed up in multiple locations — so many locations, in fact, that it was almost alive in the ever-growing cloud of data that was accessible to all with a mere click of their mouse, com unit, or other fanciful device dreamed up by the minds of the legends of science fiction. Those of a certain age may recall the late, great Isaac Asimov’s Foundation Series, as well as other seminal entries in the field by the other two giants of science fiction, Robert A. Heinlein (Stranger In A Strange Land) and Arthur C. Clarke (Childhood’s End), whose dreams of what the future held for humanity have in many respects come true, as space travel, personal computers, hand-held communication devices, tasers, AI, solar power, electric cars, and even energy bar have in many respects become commonplaces that we take for granted. Recently, part of the information legacy predicted by these authors and others has started to come true, as the advent of the e-reader has made it (or started to make it) a winning proposition for books to be published electronically, so that a true e-library is possible. The current iterations are in flux, but the respective plans of Project Gutenberg and Google Books to digitize the entire catalog of all available novels, plays, stories, biographies, poems, tomes, treatises, and arcana are a huge step in the direction of allowing the public to freely access humanity’s cultural legacy.
If you’ve never taken a look at what you can read for free, check out Project Gutenberg. Over 30,000 titles are available at the click of a mouse, including works by F. Scott Fitzgerald, Saki, and many many many other acclaimed writers. And soon Google will be adding 4 million more titles for your reading pleasure. Better upgrade your RAM.
Monday, April 19, 2010
Putting Ken aside, Barbie is a cultural icon, and she looms large in the American imagination. If you have daughters under the age of ten, you will invariably have been subjected to Barbie-mania at your local Toys ‘R’ Us, where your options include not just Handicapped Barbie or Bilingual Spanish Teacher Barbie, but Hard Rock Café Barbie, Star Trek Barbie, Harley Davidson Barbie (Ken has a ponytail and wears leathers), and Top Model Barbie, to name a few. Having not entered a Toys ‘R’ Us since approximately 1976 myself, I was astounded to find some 50 different Barbies on display, including ceremonial Barbies eerily reminiscent of the porcelain dolls collected by childless spinsters.
Recently, of course, Barbie made headlines with her huge trademark infringement victory over the Bratz dolls franchise, which shut down the Bratz and garnered a cool extra $100 million for Barbie after the jury decided the Bratz were bastard offspring created by Carter Bryant when he worked for Mattel. Though this is a far cry from the $1.8 billion sought by Barbie, you have to conclude that big sister won this round.
Litigation hasn’t always gone Barbie’s way, however. As is the case with many a top model, controversy is a staple of Barbie’s diet, and sometimes the results are hard to swallow. You may recall the humorous prank in 1993 when a group calling itself the “Barbie Liberation Organization” modified Barbie dolls by giving them the voice box of a talking G.I. Joe doll, and secretly returned the dolls to the shelves of toy stores. Parents and children were surprised when they purchased Barbie dolls that uttered phrases such as “Eat lead, Cobra!” and “Vengeance is mine!” That vexed Barbie, and preyed on her mind for years, so when the Danish-Norwegian pop-dance group Aqua released a song called “Barbie Girl” in 1997 which contained lyrics such as “You can brush my hair / Undress me everywhere” and made other obvious references to Barbie, Barbie threw a hissy fit and sued MCA Records for trademark infringement and – if you can believe it – defamation. The case wended its way through federal court until finally, in 2002, Judge Alex Kozinski ruled that the song was protected as a parody under the First Amendment, and famously advised the parties to “chill.” This was a rough period in Barbie’s life, where the world seemed to turn its fickle back on her as it does so often with celebrity favorites – see, e.g., Britney, Lindsay – and every time Barbie took steps to protect her image it seemed as if she got slapped down by the legal system and ridiculed by the media. While “Barbie Girl” was being blasted through the airwaves on what seemed like the radio of every car in America, a Utah artist named Forsythe had the audacity to publish unflattering photos of Barbie.
Barbie’s lawyers got aggressive with Forsythe – who claimed that Barbie was the symbol of everything that was wrong with our consumer society – but the embattled star again lost in federal court and was ordered to pay Forsythe $1.8 million.
The late 90s and early years of the new century saw Barbie’s market share erode, her influence on pre-teens fade, and she appeared on her way to a senescence heralded by her long-overdue breakup with Ken. With the Bratz victory breathing life back into Barbie’s career, however, she has little need to concern herself with either the competition or the sound and fury of the artistic community. Barbie is once again firmly ensconced in her role as Queen of the Dolls, and can magnanimously ignore backhanded compliments such as the 2011 Altered Barbie competition, where artists vie to show Barbie in all her multifaceted glory.
These days, such things are simply beneath her notice.
Wednesday, April 7, 2010
A few years ago Julian Dibbell wrote a book called Play Money — Or, How I Quit My Day Job And Made Millions Trading Virtual Loot, which detailed the year he spent trying to win a bet with himself. The bet: that he could make more money by killing trolls and demons (or making armor) in Ultima Online than he ever had as a writer. Quirky concept, I agree, but the more you look into it the more interesting the idea gets, especially when you realize that the gold pieces used as currency by Ultima Online and other massively multiplayer online games (e.g., World of Warcraft, Eve Online or Lord of the Rings Online) are actually traded online in the same way that say, Brazil’s currency (the real) is. And many of the currencies from virtual worlds are more stable than those circulated by certain South American regimes.
There are a number of legal issues from virtual worlds that have superficial interest or — perhaps better stated — create the equivalent of cocktail party chatter for the intellectual property crowd. For example, in many online worlds you may chose to be an honorable member of the Thieves Guild, in which case it is perfectly acceptable for you to wander the world breaking into houses and stealing jewels and gold and artifacts — you’re a thief, after all, so it’s basically your job to act in this fashion — whereupon you can trade these items for something else in virtual reality (e.g., food, weapons, a horse, a house, etc.), or if you managed to get your hands on something truly exceptional you can simply list it on eBay and sell it for real dollars. So you’re stealing from people in virtual reality, fencing the goods on eBay, and pocketing the cash in your PayPal account, all tax free, since the IRS has no idea how to value what you’re doing. And did I mention it’s all perfectly legal?
Apart from the idea of a currency exchange (which makes sense when you realize that more than 10,000,000 people play World of Warcraft regularly, and many other MMOGs have over a million subscribers), these online worlds are rapidly changing the way intellectual property law works. Intellectual property, of course, deals with intangible assets, and thus dovetails perfectly with the concept of intangible worlds. Recently, though, the questions asked have been real brain twisters. For example, who owns the rights to your avatar — the “you” you created – in the online world? What if you upload a real photograph of yourself to the game server and the character you are playing actually bears your face — which you can actually do in Tiger Woods PGA Tour 10? What if the user agreement you signed (by clicking “I agree” when you logged on for the first time) says that all intellectual property in the game, including anything you create while using the game, remains the property of the corporation that owns the game? Who owns your avatar now? Most people never even read the user agreement, of course, but does the fact that it’s mandatory that you agree in order to play the game mean that it’s a contract of adhesion and can be voided, or does it mean you foolishly gave up your intellectual property rights in exchange for the privilege of being a half-elf ranger wandering the forests of Elfheim during the 22 hours a week you play the game?
If this sounds too theoretical, note that last year Taser International sued Second Life for trademark infringement because characters were using, and selling, virtual replicas of tasers in the game. Sounds silly, doesn’t it, until you find out that people pay $100 million to Linden Labs every year to buy Linden dollars so that they can clothe and feed their avatars in Second Life, and that the virtual reality gray market generates about $6 billion in revenue annually. And then someone tells you that Ben Folds Five actually did a live concert in Second Life (and you couldn’t hear it unless your avatar bought a ticket and attended), and Judge Richard Posner of the Seventh Circuit Court of Appeals has given lectures in Second Life, and Coke, Pepsi, Gap, Versace, Porsche, McDonald’s and all the other corporate sponsors are sniffing around figuring out how to protect and capitalize on their trademarks in these realms. Somehow, the more you look at it, the less silly it seems. Where real money stands to be made by playing with Monopoly money, the law perks up its ears and starts paying attention.
Tuesday, March 23, 2010
Though the tale of what happened to the suitcase and its contents has been the subject of apocryphal rumors for the last eight decades, several years ago two interesting takes on the tale appeared in popular literature. The first, The Hemingway Papers by Vincent Cosgrove, takes this episode and embellishes it in a winning action-adventure novel. The second, MacDonald Harris’ Hemingway’s Suitcase takes the tale a step further and purports — within the confines of a story about finding the suitcase — to reproduce five of the missing Hemingway short stories.
Hemingway’s immediate reaction to the loss was just as once might expect — continued melancholia and a lingering sense of bitterness over the loss, which some critics have pointed to as the cause of his breakup with Hadley. In a 1923 letter to Ezra Pound, Hemingway wrote:
I suppose you heard about the loss of my Juvenalia? I went up to Paris last week to see what was left and found that Hadley had made the job compete by including all carbons, duplicates, etc. All that remains of my complete works are three pencil drafts of a bum poem which was later scrapped, some correspondence between John McClure and me, and some journalistic carbons. You, naturally, would say, “Good” etc. But don’t say it to me. I ain’t yet reached that mood.
Though it is unlikely that they would turn up at this late date, works by Hemingway have a strange way of appearing out of thin air every decade or so. In 2009 a “restored” edition of A Moveable Feast was released which includes additional material that was cut from previous versions; in 1998 the novel True At First Light — which had been under seal since the early 1970’s — was edited and released by Hemingway’s son Patrick; and in 1986 a much-abridged version of Garden of Eden (which had run to 800-pages in manuscript) was released by Scribner’s to mixed reviews. Perhaps 2011 will see the discovery of the suitcase in a ramshackle Paris attic that is being converted by a French Legionnaire’s grandson into condos for the new generation of American expats. To be true, the tale would have to be so over-the-top that it would make bad fiction cringe.
Wednesday, March 17, 2010
The timing of the suit could not be better — given Hollywood’s continuing fascination with superheroes, and the upcoming release of the first Captain America movie, the litigation theatrics should commence shortly. Stay tuned for further details, and be sure to check out Eriq Gardner’s article in the The Hollywood Reporter.
Wednesday, March 10, 2010
Thursday, March 4, 2010
Helene Hegemann is pushing the limits set by writers like James Joyce (the original Mr. Cut-and-Paste) by freely grabbing content from other writers — in some cases, entire scenes — and appropriating it for her own use. This pastiche or collage style of writing has pushed hot buttons in the ongoing debate about what constitutes copyright and plagiarism in literature. Some writers claim that the practice is so commonplace that it is simply part of the creative process — that the living inevitably borrow from the dead — and that it has been going on from time immemorial. Shakespeare, as any college literature student knows, borrowed heavily from other playwrights. Hamlet, for example, is very like Saxo Grammaticus’ Gesta Danorum; Romeo and Juliet is said to be based on Arthur Brooke’s narrative poem The Tragical History of Romeo and Juliet; and King Lear is based on the story of King Leir in Historia Regum Britanniae by Geoffrey of Monmouth. Borrowing plots in this way was common at the time, and after Shakespeare’s death playwrights promptly began borrowing from his works as well.
Several years ago, Jonathan Lethem wrote a brilliant article defending the use of “borrowing” by writers in their pursuit of new creation, arguing that creation itself necessarily calls upon the inchoate melange of what one has read over one’s life as an unconscious source of style, language, allegory, sentence structure, plot, and pacing, and that — in a sense — imitation is the sincerest form of flattery. But now writers such as Hegemann and David Shields — whose new novel “Reality Hunger” is built almost entirely of quotations from other writers and thinkers — are pushing the boundaries as to what is appropriate as borrowing, and casting the question of copyright infringement in a different light. When is it plagiarism and not merely exercise of artistic license for transformative purposes? When does fair use become foul? We’ve seen what has happened to the music industry as it has been pulled kicking and screaming into the future by DJs and artists who use sampling techniques to create their own unique sound, and it was only a matter of time before the issue jumped media to stodgy old print. But where is the line going to be drawn? I suspect that the answer does not lie in the simplistic question “To borrow, or not to borrow,” but rather in litigation reminiscent of Bleak House, which will leave everyone unhappy.