New Top Level Domain Name Application Period Opens: Will There Be Another as Successful as “.COM”?

By Jeffrey L. Michelman

The Internet Corporation for Assigned Names and Numbers (ICANN) opened the application window on January 12, 2012 for its New Generic Top Level Domain (gTLD) program. This process allows successful applicants to create their own equivalent of a “dot com.” For example .lawyer, .bookkeeper, .toyshop, .womansfashion, .investing, etc. Then the owner of that top level domain can choose to run its own domain registry business, such as Network Solutions or GoDaddy, and charge a fee to others wanting to use the new top level domain.

This move by ICANN could potentially raise the number of available gTLD domains from its current level to over 1,000 new options. Simply put, the Internet is changing and there are key dates all brand owners should keep in mind:

• April 12, 2012: New gTLD application window closes.
• Early May, 2012: Public Application Information will be posted to ICANN’s website.
• From April through November: Application Review, Initial Evaluation and an Objection Filing period will occur.

Brand owners should not ignore what is going on in the Domain Name game and lose a competitive advantage in the Internet marketplace. Businesses would be foolish to fail to review the posted applications to monitor for possible infringement or any other potential competitive harm. The should discuss the findings with counsel to identify the harm and develop a remedy.

Any dispute resolution proceedings must be based upon a complaint brought by one of the following four types of entities, and filed with the specific organization contracted to handle the dispute:

1. String Confusion Objections – objector must be a current TLD operator or gTLD applicant in the same round
2. Legal Rights Objections – objector must be a legal rights owner whose rights are being infringed
3. Limited Public Interest - objections may be filed by any member of the public
4. Community Objections – objector must be an established institution clearly defined with a community

• October, 2012: ICANN expects to release the details and procedures for trademark owners to file their registered marks within the Trademark Clearinghouse.
• Early 2013: Timeframe for first new registries to go live.

Now is the time to determine whether your business could be helped by having a new generic top level domain attached to your URL — and whether you could get it if you do want it.

If you and counsel believe the new gTLD is worth it, get that application on file quickly to meet the April cut-off date.

Lastly, be sure to schedule a prompt review of the new gTLDs so timely objections can be filed.

Posted by Attorney Jeffrey L. Michelman, who concentrates his practice on Trademarks and Copyright matters as well as e-Commerce and Social Media issues.

02/7/12 1:15 PM

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New Top Level Domain Name Application Period Opens: Will There Be Another as Successful as “.COM”?

Protecting Against the Overseas Theft of Trade Secrets

By Marcia Swihart Orgill

Part of a series on issues related to Manufacturers, Distributors and International Trade

The overseas theft of trade secrets is a major concern of companies with business operations outside of the United States. A recent decision by the Court of Appeals for the Federal Circuit provides U.S. companies with a new weapon to protect against trade secret misappropriation that occurs completely outside the United States. While welcome news for U.S. businesses, it is important that they remain vigilant in developing and implementing preventive measures for the international protection of their trade secrets.

In TianRui Group Co., et al. v. ITC et al., 661 F.3d 1322 (Fed Cir. Oct 11, 2011), the U.S. Court of Appeals for the Federal Circuit held that the U.S. International Trade Commission (ITC) has the authority to exclude imports of products into the United States that are manufactured outside the United States using a misappropriated trade secret process, even when the misappropriation occurs outside the United States and there are no goods being manufactured in the U.S. using the protected process.

The Court held that in determining whether a trade secret has been misappropriated, the ITC should apply U.S. federal common law of trade secret misappropriation rather than the law of any particular U.S. state or of the country where the misappropriation occurred. The application of federal common law in actions brought before the ITC involving the overseas theft of trade secrets will make it easier in many cases for U.S. companies to prove the theft of their trade secrets, because proving trade secret misappropriation is generally more difficult under the laws of many other countries.

The holding in TianRui has no bearing on the sale or importation of goods outside the United States that were manufactured using misappropriated trade secrets of a U.S. manufacturer. Consequently, U.S. companies will still need to think globally when adopting trade secret protection measures.

The definition of what constitutes a trade secret and the elements for proving trade secret misappropriation vary from country to country. Additionally, there are regional competition laws that affect trade secret protection. Taking into account these laws when drafting confidentiality and non-compete provision is necessary to ensure trade secret protection and the enforceability of the provisions or agreements. Post-employment restrictive covenants need to be drafted to take into account the relevant statutory and judicial law, because if they are drafted too broadly they will be unenforceable.

In many countries a post-employment non-compete clause is not valid unless there is separate compensation for the restrictive covenant (e.g., China and Germany). In other countries, non-compete agreements are prima facie void on public policy grounds, and therefore, particular care is required when drafting a non-competition agreement in order to ensure that it will be considered reasonable under the applicable country’s laws.  

To prove access to confidential information, it is advisable for a company to require written acknowledgement of the receipt of company information from employees, consultants, subcontractors and any other third parties at the time of disclosure, as well as having these individuals sign confidentiality agreements. In some countries, having a signed confidentiality agreement is not sufficient to prove access to a trade secret.

As a result of the decision of the U.S. Court of Appeals for the Federal Circuit in TianRui, U.S. companies have a powerful enforcement mechanism to protect against the imports of competitor products into the United States if the foreign manufacturer engaged in conduct that constitutes an unfair trade practice under U.S. law.

However, when drafting confidentiality agreements, trade secret preventive measures and post-employment restrictive covenants, U.S. companies still need to consider carefully the statutory and judicial laws of the relevant foreign country and region.

Posted by Attorney Marcia S. Orgill. Orgill concentrates her practice in the area of business and personal taxation—especially complex domestic and international tax strategies.

01/31/12 9:41 AM

Intellectual Property, International, Manufacturing and Distribution | Comment (0) |

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Protecting Against the Overseas Theft of Trade Secrets

Is The New Patent Statute Patently Unfair to Small Business?

By Jeffrey L. Michelman

Politicians constantly speak of the small business entrepreneur as the backbone of America, and in fact many of our largest companies today started out as small businesses. Thus, it is surprising that the same politicians who boast of American small business would allow passage of “The America Invents Act.” It is likely to impact small businesses and certainly the individual garage/basement inventor in ways that the politicos haven’t yet considered.

Prior to this new Act, the law in the United States was that the first person to invent a new patentable product is the one who deserved to get the patent, thus giving that person the 20 years (from filing) a monopoly accorded to inventors who successfully achieved patents protection. This meant that there was time to do further research and development and prototype testing; there was time to raise money for achieving patent protection; and the small business owner had every opportunity to be first in line with rights to the monopoly granted under the patent statute. But now that standard has been changed by law. We are witnessing a transition from a first-to-invent system to a first-to-file system used in many foreign countries. Thus an inventor who races to the Patent and Trademark Office (PTO) to file an invention application may well be the one who successfully obtains the monopoly of patentability over a party who actually came up with the idea and invented the product first.

What’s the difference, you say. The difference is very plain to those who understand the patent system. Large corporations have in-house, or at their disposal, plenty of patent lawyers standing by ready to file for patents any new invention or twinkle in the eye of management that seems to be inventive and to get it on file quickly as a provisional patent application which requires limited filing of actual claim elements or filing as a full blown utility patent. The search for money in order to obtain patentability is not an issue for the large corporation. Thus by the time the small business entity perfects the invention and then seeks the money for the expense of patentability, the small business entity may lose in the battle for its place in line giving big business the opportunity to be successful in keeping the small business and, of course, others out of the marketplace once granted the monopoly.

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11/11/11 2:50 PM

Business Law, Emerging Business, Intellectual Property | Comment (0) |

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Is The New Patent Statute Patently Unfair to Small Business?

The Domain Name Game: Category 4 Internet Storm Warning for Business

By Jeffrey L. Michelman

October 28, 2011 is the Deadline to Protect Your Trademarks from the New .XXX Domain

In the Jurassic age of the Internet, it seemed that only some nerds (now mostly wealthy) understood the full potential of Internet commerce. Large and small businesses appeared to have failed to grasp the importance of web sites and a proper Domain Name for such sites as well as its use for email addresses. Both have blossomed across the world and become a gateway to new methods of selling products and promoting brand recognition and goodwill.

Unfortunately, many of the nerds became pirates, taking the names of big well known brands as their own Domain Names and then holding those names for ransom. For a fee the company that never thought or sought to register a Domain Name for itself found they had to hire counsel to get their names back.

In those days, the law was behind the technological advancements and (as with most things technical) failed to anticipate the problems for business. Rather we lawyers had to show the Federal and State legislatures as well as the courts what action was appropriate. Lawsuits flew from antique word processors and physically delivered to a court’s inbox.

How did such a thing happen in the tech savvy end of the last millennium? Simple, business failed to keep up with the developments in the Internet and its opportunities for new forms of commerce. And the lawyers who predicted dire consequences of this lack of attention went unheeded and unnoticed.

Today the cyberpiracy epidemic has dwindled to a trickle and filing lawsuits on line has become commonplace. There are a host of statutory prohibitions, remedies and even newly created quasi judicial bodies to battle the few pirates left sailing. One such entity created to “help promote the natural expansion of the net” is an international body known as the Internet Corporation for Assigned Names and Numbers, or ICANN.

Now, as legal problems were quieting down, this international power that directs Internet Domain Name usage has decided to stir up the pot with the issuance of two new policies that, if again unheeded by business, could cause as much upheaval, costs and litigation as occurred when Domain Names were new.

ICANN first approved a rapid and unprecedented policy allowing the expansion of the number of generic Top-Level Domains (gTLDs). Business owners by now are familiar with the .COM, .NET, .ORG, and .EDU specifically approved Top-Level Domains as well as those indicating a specific country. Domain registrants were free to register almost any sequence prior to the Top-Level Domain, but had few options when choosing a Top-Level Domain.

With ICANN’s new program, the Top-Level Domain Name space has been opened to allow the registration of nearly any combination of letters, including brands or other terms, such as .bank, .Lawyer, .plumber, .boeing, .nordstroms, .stlouis, etc. While the full impact of this expansion is uncertain, it is clear that regardless of their intent to participate in the new program, business owners will need to reevaluate the way they currently monitor and enforce their brands on the Internet.

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09/22/11 3:29 PM

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The Domain Name Game: Category 4 Internet Storm Warning for Business

Beware the Trojan Horse that is Social Media

By Ruth A. Binger

While establishing and maintaining an organizational presence on popular media websites and blogs (Facebook, LinkedIn, etc.), businesses need to be aware of the legend of Troy and its supposed downfall due to a Trojan Horse. Greek mythology states that Greek warriors concocted a scheme whereby they built a wooden horse and offered it as a gift to the Trojans. The Trojans, in their greed and arrogance, accepted the gift and brought it within their gates. Then, at night as the Trojans slept, the Greek warriors emerged from the belly of the Trojan horse and defeated the Trojans changing the course of a ten-year siege.

Today, a Trojan Horse is more often thought of as a destructive software program that disguises itself as a helpful application. Similarly, although social media may be helpful for your business, be aware what could be lying in the belly of that Trojan Horse.

Line Between Private vs. Public Blurred

According to the Socialnomics web site, Generation Y will outnumber baby boomers sometime this year and 90% of them have already joined an online social network. For many young people, and even 50 year-olds, the line between private and public has disappeared as they tweet, blog, text and share the minutiae of both their personal lives and everyone around them – including their employer. Social media users are under the mistaken assumption that they own the web content they are generating and can retrieve it and delete it if needed.

They are also under the mistaken impression that what they say is protected by some cocoon and that the content they generate is private. This is not true, as evidenced by a Detroit hospital worker who was terminated after she posted a comment on Facebook about a man she treated who was accused of killing a police officer. She was fired for violating strict patient privacy rules under the federal HIPAA law. A Massachusetts 54 year old high school teacher also learned this lesson when posting negative comments about her school community, students, and parents even though she had set the privacy setting on her Facebook account. Moreover, cases are clear that locking a profile from public access does not prevent discovery in litigation either.

Disclosure of Company Information at Risk

Given the fact that technology is moving so fast and disclosure is instantaneous, worldwide and permanent, companies need to train their employees on the dangers of purposeful or inadvertent disclosure of company information. What is at stake for the employer is the loss of confidential information and trade secrets, disclosure of protectable third party information or medical information, suits from other companies for disclosure of secrets, and discrimination suits. For instance, companies recruiting and hiring managers often use social media in order to obtain more information on a candidate than they otherwise could.

However, discrimination laws prohibit employers from making direct inquiries regarding gender, race and other protected factors in their hiring process. If a candidate is not hired, the employer could be subject to discrimination claims alleging that the decision was illegal and based on a protected characteristic. Some online companies, in fact, claim that the social media profiles they will sell you comply with discrimination laws. Similarly, doing social media checks on some employees but not others could also lead to issues. Unregulated monitoring of an employee’s online presence could also lead to privacy related claims. Finally, going to the other extreme, a manager providing a favorable recommendation for a terminated employee could wreck havoc on an employer’s defense in a discrimination suit.

Scrapers & Listening Companies

The information that online users share is not just among their friends but is unknowingly shared with Web tracking companies and advertisers as well. In fact, Facebook acknowledged that its popular application, FarmVille, had improperly shared identifying information about users and, in some cases, their friends with advertisers and Web tracking companies. Social networks are becoming the new public records. Scrapers and listening companies argue they are just being entrepreneurial in that they are only gathering information that is available online anyway- in effect USER BEWARE! U.S. Court rulings are contradictory with respect to scraping, the practice of retrieving data from output from other programs.

People search websites, including Intelius, Inc., offer services that include criminal background checks. “Date Check” promises details about prospective dates for $14.95. Bringing it back to your business, some outfits such as 80Legs.com will scrape a million Web pages for $101. In fact, one Utah company, Screen-scrapers.com, offers scraping software for free. Beware:  if your competitors are not buying your business, they may be stealing it from you by scraping your company.

Bottom Line:  Companies & Users Beware

What is even more disturbing, is that the cyber-criminals who invade social networks to infiltrate your private computer are now invading your work and corporate computers as well. In short, Companies and Users Beware: Social Media can be a Trojan Horse.

11/10/10 1:00 PM

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Beware the Trojan Horse that is Social Media

Mergers and Sales – Trade Secrets & Confidential Information

By Ruth A. Binger

Who Owns the Salesperson’s LinkedIn Account?

Owners/shareholders own businesses for many reasons, including selling the business at a value higher than the investment cost. However, when a business owner goes to sell his or her business and attempts to obtain the highest price available, it is important to understand where the value of that business lies and how to maximize that value to any potential buyer.

In many instances, a significant part of the business’s value is found in the intellectual property possessed by the employees.

Part of that intellectual property is found in the trade secrets and confidential information that the company develops to provide its services and products faster, cheaper, and better over time. A very critical component is the customer networks that its sales/marketing people developed over time.

Who owns those networks, especially LinkedIn, and the data associated with them?

With the complete transparency, and to some degree, anonymity of the internet, the owner’s duty to protect the intellectual property of his or her business becomes even more heightened.

Contrary to the new oracles, there is no such thing as free – everything that is created takes energy. Salespeople can be slowed down by nonsoliciations/noncompetes.

Companies can insist on owning the cell phones and smart phones. However, companies need to think about protecting the data that its employees develop on its time or downloaded from company data networks into LinkedIn, smart phones, emails, etc. This can be done by adding language protecting trade secrets and confidential information in data networks to employment manuals and employment agreements.

Today, businesses are bombarded with messages exhorting the establishment and maintenance of an organizational presence on popular Social Media sites and blogs. The members of Facebook, the largest social-networking site, with nearly 500 million members, or 22 percent of all Internet users, spend more than 700 billion minutes a month on the site. LinkedIn has over 75 million members in 200 countries and a new member joins LinkedIn approximately every seconds.

Your employees and your customers are becoming interdependent, sharing your trade secrets and confidential information at times when they are not careful. In short, your customers and employees are quickly and forcibly dictating your business operations and professional exchanges by becoming purchasing agents, spies, scouts, product reviewers and technical consultants for each other.

In every LinkedIn account that is established at the urging of the Company for the purpose of employment, there resides a goldmine of names, email addresses and other valuable contacts and professional information.

LinkedIn’s position is that the account constitutes a contract between the employee and LinkedIn. There are no cases in the United States regarding this issue.

Employees proffer free speech arguments and contend that employee owns the LinkedIn account because it is part of their knowledge base and they are entitled to take those contacts with them throughout their career. Employers, in turn, argue that they paid the employee to develop the data, or paid more to hire a person with extensive data, and therefore anything developed on its time with its money is its property. English courts have ruled that Outlook address books amount to employer proprietary databases and belong to the employer.

So, what does a prudent owner do?

Create a policy that is placed in the employment manual or noncompete agreement that makes it clear that the Company makes a significant investment in establishing or increasing the employee’s network of business contacts, that such information is protected confidential information or trade secrets and it is not to be disclosed. State affirmatively that direct dial telephone numbers, email addresses and other contact details that are generated on Company time or are provided by the Company are Company property and must be returned to the Company and deleted at the conclusion of the employment relationship.

New Hires can bargain with respect to who is exempted from the noncompete/nonsoliciation agreement and what information is exempt from the confidentiality/trade secret policy. This is in accord with Missouri and most states’ trade secrets laws. This policy would also accord with a 2001 Australian case where the Court held in a nonsocial media context that when an employee copies a significant number of client contact details into a personal address book used in the course of her job, such confidential list belongs to the employer, and must be returned at the conclusion of employment.

Today, noncompete and nonsolicitation clauses are invaluable, but they are not enough. Owners and employers must exercise more self help methods and stay ahead of the game.

Just as it is critical for the owner/employer to own the cell phone/smart phone number, and not the employee, it is also critical to own the employer’s confidential data infrastructure built on the employer’s time. If and when you, the owner, sell the business, you want something to sell that is protectable. You do not want to become another version of Wall Street giant Merrill Lynch that purchased AXA’s Advest Brokerage unit for $400 million in 2005 and by 2006 found that 417 of its 505 brokers had jumped ship with its customers and contacts.

Social media continues to rewrite the value of your business and you need to effectively manage and direct it or you will give it all away.

09/1/10 6:00 AM

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Mergers and Sales – Trade Secrets & Confidential Information