On May 11, 2016, the Defend Trade Secrets Act (DTSA) of 2016 was signed into law. The DTSA was unanimously passed in the Senate and ratified in the House by a vote of 410-2. The DTSA became immediately effective for all trade secret misappropriations occurring after the date of enactment. The DTSA is an addition to the Economic Espionage Act (18 U.S.C. §1831 et seq.), the 1996 federal criminal trade secrets statute. Prior to enactment of the DTSA, only the government could prosecute trade secret misappropriation at the federal level. Private civil actions, on the other hand, could only be brought in state court, likely under a version of the Uniform Trade Secrets Acts, which has been adopted by 48 states. The DTSA now enables private parties to file civil actions for trade secret misappropriation in federal district court. In large part, the DTSA mirrors the Uniform Trade Secrets Act. What is a Trade Secret? A “trade secret” is defined in the Act as “all forms and types of financial, business, scientific, technical, economic, or engineering information, including patterns, plans, compilations, program devices, formulas, designs, prototypes, methods, techniques, processes, procedures, programs, or codes, whether tangible or intangible, and whether or how stored, compiled, or memorialized physically, electronically, graphically, photographically, or in writing if—(A) the owner thereof has taken reasonable measures to keep such information secret; and (B) the information derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable through proper means by, the another person who can obtain economic value from the disclosure or use of the information.” In other words, there are two key components to whether something is a “trade secret”: (1) it is something that a company has taken steps to keep secret; and (2) the company derives value from the secret. Classic examples are the formulas for Coca-Cola and KFC Original Recipe. DTSA Continued on Page 6 Safe Harbor Continued on Page 5 Defend Trade Secrets Act becomes law Copyright Office launches mandatory “Safe Harbor” agent registration system Effective December 1, 2016, the U.S. Copyright Office will require online service providers (any website that accepts external usergenerated content without modification) to register a designated agent to receive notices from copyright owners that such content infringes a copyright (“take-down notices”). This registration system is mandatory and replaces the prior system where service providers filed paper forms with the Copyright Office. An agent designation is required for the service provider to take advantage of the immunity from copyright infringement claims provided under the Digital Millennium Copyright Act (the so-called “safe harbor”). The new system is searchable, requires the registration to be renewed every three years, and significantly lowers the cost for registering, amending, or renewing the registration. The Digital Millennium Copyright Act (DMCA) provides that copyright owners may notify online service providers who have stored alleged infringing content from external users on their websites (for example, unauthorized photos, videos, or songs) to request that the service provider remove or disable that material. For DMCA purposes, a “service provider” is “a provider of online services or network access, or the operator of facilities therefor, including an entity offering the transmission, routing, or providing of connections for digital online communications, between or among points specified by a user, of material of the user’s choosing, without modification to the content of the material as sent or received.” YouTube and Pinterest are well-known service providers under this definition, but any website that accepts third-party usergenerated content without modifications (including an interactive blog) can be a service provider. Safe Harbors If the online service provider has designated an agent to receive such so-called “take-down” notices in the manner required by the DMCA, the service provider who complies with the copyright owner’s notice cannot be accused of copyright infringement for storing user-generated content on its website. The service provider is said to have a “safe harbor.” For example, Google was reported to handle over 75 million DMCA take-down notices per month. Intellectual Property Newsletter Vol. 1, 2017 ARNSTEIN & LEHR INTELLECTUAL PROPERTY NEWSLETTER | VOL. 2, 2015 2 WWW.ARNSTEIN.COM “Selfie” copyright does not belong to monkey that took it When is a photographer not the “author” of a photograph for copyright purposes? According to a federal judge in San Francisco, when the photographer is a monkey. Sometime in 2011, a crested macaque monkey living on the island of Sulawesi, Indonesia, used the camera of nature photographer David Slater to take a number of self-portraits, which became famous as the “Monkey Selfies.” Slater claimed to be the author and the copyright owner of the Monkey Selfies and selfpublished a book through Blurb, Inc. containing copies of the photographs. Slater’s company, Wildlife Personalities, Ltd., also claimed an authorship interest in the Monkey Selfies, through ownership of the U.K. copyright. In 2015, People for the Ethical Treatment of Animals (“PETA”) and primatologist Antje Engelhardt of the Macaca Nigra Project brought suit against Slater for copyright infringement, as “Next Friends” for a male macaque named “Naruto,” in the U.S. District Court for the Northern District of California in San Francisco. Defendants filed motions to dismiss. On January 28, 2016, Judge William Orrick dismissed the case, finding that Naruto did not have standing to sue under the Copyright Act because animals cannot be “authors” and therefore cannot own copyrights. PETA contended that the “highly intelligent” Naruto was accustomed to seeing cameras, observing humans handling cameras, hearing camera mechanisms in action, and seeing them being used by humans for his entire life, as the reservation where he lives is next to a human village visited by tourists and photographers. Therefore, PETA argued, Naruto understood what he was doing when he manipulated Slater’s unattended camera to take the Monkey Selfies and was the author of those photographs. PETA asserted that Slater, by claiming to be the author of those photographs and selling copies of the images for profit, was an infringer of Naruto’s copyrights. PETA requested that defendants be enjoined from further publication of the photos and that Naruto be awarded the defendants’ profits from sale of the photos, to be administered and protected by the Next Friends on Naruto’s behalf. PETA wants the funds used “for the benefit of Naruto, his family, and his community, including the preservation of their habitat.” Although the U.S. Court of Appeals for the Ninth Circuit has previously stated in Cetacean Cmty. v. Bush that a “statutorily authorized suit in the name of an animal” can constitute a “case or controversy,” Slater argued that Naruto’s claim could only survive if the monkey established statutory standing under the Copyright Act, meaning a particular plaintiff was granted a right to sue by the specific statute under which suit was brought. Judge Orrick required that Congress plainly express a clear intention to authorize animals to sue under the Copyright Act, which he found they had not done. The U.S. Copyright Act requires that an original work of authorship must be fixed in a “tangible medium of expression.” That fixing must be done “by or under the authority of the author.” Because the Act does not define “author” or “works of authorship,” PETA argued that the Act has “no definitional limitation” preventing animals from authoring copyrightable works Slater countered that the Act does not expressly confer any rights on animals. Although PETA contended that refusing to grant Naruto a copyright “would depart from well-established norms,” Judge Orrick found no case that defined “authors” to include animals, and that there was no mention of animals anywhere in the Copyright Act, only references to “persons” or “human beings.” The judge relied on the Cetacean decision, where the Ninth Circuit examined the Endangered Species Act, Marine Mammal Protection Act, and National Environmental Policy Act and concluded that none of those statutes “intended to take the extraordinary step of authorizing animals as well as people and legal entities to sue.” Judge Orrick also relied on the (non-binding) Compendium of U.S. Copyright Office Practices (3d Ed. December 2014), which states in § 306 that the work of authorship must be created by a human being to be copyrightable, and provides in § 313.2 examples of ineligible works of nature, animals, or plants lacking human authorship. The first such example of noncopyrightable work is “A photograph taken by a monkey.” To PETA’s argument that disqualifying Naruto as an author is “antithetical” to the “tremendous [public] interest in animal art,” the judge indicated that was an argument to be made to Congress and the President, not to him. Although he dismissed the complaint, he granted PETA leave to file an amended complaint within 20 days (by February 18, 2016). In dismissing PETA’s complaint, Judge Orrick did not rule that Slater owned the copyrights in the Monkey Selfies. That issue is front and center in Slater’s claim that Wikimedia Foundation violated his copyright by posting some of the images to its public domain site, Wikimedia Commons. Wikimedia contends that the photos are in the public domain because they were taken by an animal and not a person. Slater issued a press release through his Facebook account about winning the PETA case. In response to comments by Facebook fans, he said that he intends to sue Wikimedia for ruining his licensing program for the Monkey Selfies. Slater has taken the position that he owns the copyright because he was the “intellect behind the photos,” that he set up the tripod on which the camera rested, provided settings, and held the tripod during the shoot, while the monkey merely pressed the shutter control. As a sidelight, Blurb, owner of the website where Slater selfpublished his book, contended in its motion to dismiss the case ARNSTEIN & LEHR INTELLECTUAL PROPERTY NEWSLETTER | VOL. 1, 2017 3 Scam Continued on Page 5 As often as we warn clients about unscrupulous companies that prey on trademark owners using notices and invoices that appear to come from government agencies, these worldwide scams continue to reap large quantities of fraudulent proceeds. The U.S. Patent and Trademark Office (USPTO) works in a variety of ways to alert the public to these non-official solicitations. Every Office Action from a trademark examiner contains a warning and a link to the “Non-USPTO Solicitations” page, and every issued trademark registration certificate arrives with a similar warning on bright orange paper. The Non-USPTO Solicitations page contains the names of companies of which the USPTO is aware that make their solicitations mimic the look of official government documents rather than the look of a typical commercial or legal solicitation. They emphasize official government data like the USPTO application serial California men plead guilty to $1.66 million trademark scam number, the registration number, the International Class(es), filing dates, and other information that is publicly available from USPTO records. Many refer to other government agencies and sections of the U.S. Code. Most require “fees” to be paid. Clicking on the company name provides an image of that entity’s solicitation. Applicants and registrants have paid these private companies, believing that they were paying required fees to the USPTO. The USPTO also cooperates with the U.S. Department of Justice, the Federal Trade Commission, and the U.S. Postal Inspection Service to fight the problem. As reported on December 21, 2016, in the “Director’s Forum: A Blog from USPTO’s Leadership,” the Justice Department recently obtained guilty pleas from two California men involved in a mass-mailing scam targeting trademark applicants. Artashes Darbinyan and Orbel Hakobyan admitted stealing about $1.66 million from 4,446 trademark registrants and applicants using companies called Trademark Compliance Center (TCC) and Trademark Compliance Office (TCO). As reported by the Justice Department on December 12, 2016, Darbinyan pleaded guilty to one count of mail fraud and one count of conspiracy to launder money and Hakobyan pleaded guilty to one count of conspiracy to launder money. Darbinyan admitted that he used TCC and TCO to run a mass-mailing scam in which he fraudulently offered to monitor an applicant’s trademark for infringing marks and to register the trademark with U.S. Customs and Border Protection (which legitimately screens imports for infringing trademark uses). He charged $385 but never registered any of the trademarks for customers who paid the fee. He also concealed his control over the scam companies by illegally using the identities of third parties to open account at virtual office centers in the Washington, D.C. area. Those centers forwarded the victims’ payments to other virtual office centers in the Los Angeles area. Darbinyan then used the same false identities to open bank accounts at Wells Fargo through which the proceeds of the scam were laundered. He also worked to avoid detection by paying the virtual office fees with money orders, and used bogus e-mail accounts, prepaid wireless modems, and frequently mobile phone numbers. Hakobyan admitted that he helped launder about $1.29 million of the scam proceeds by depositing the victims’ checks into the bank accounts opened under false names, misrepresenting his identity to withdraw the funds, and using the money to purchase gold. A third man, alleged to be a former manager of the Wells Fargo branch used by Darbinyan and Hakobyan, has been indicted for conspiracy to commit money laundering, concealing money laundering, making false bank entries, and witness tampering. that PETA was suing on behalf of the wrong monkey because “Naruto” doesn’t exist and PETA has no proof that “he” took the photos. Naruto is allegedly male and Slater’s book describes the monkey who took the photos as “Ella,” a female macaque. Judge Orrick did not consider that issue in his opinion. U.S. law encourages federal judges to allow a complaint to be amended unless the complaint defects could not possibly be cured. It is difficult to see how PETA could have amended its complaint to overcome the standing hurdle when Judge Orrick so completely rejected the rights of animals to standing under the Copyright Act, but the judge chose not to bar them from trying. Naruto/PETA filed a notice of appeal to the U.S. Court of Appeals for the Ninth Circuit, which has not yet ruled on the matter. So far, as Slater’s attorney wrote in his motion to dismiss, “Monkey see, monkey sue is not good law – at least not in the Ninth Circuit.” Although the case has brought notoriety to Slater (and the macaque tribe) and amusement to court watchers, there is serious money involved in this dispute and potential future disputes involving non-human created works. If artificial intelligence progresses to the point where computers or other machines create artistic works, it appears that they, too, would be barred from claiming a copyright in those works. In addition to photographs taken by monkeys, the Copyright Office Compendium relied on by Judge Orrick also rejects the copyrightability of murals painted by elephants, songs authored by the Holy Spirit (or other works purportedly created by divine or supernatural beings), and works produced by a machine without any creative input or intervention from a human author. Unless public opinion changes greatly, the likelihood of the U.S. Congress amending the Copyright Act to give author status in such circumstances is low. Sources: Naruto v. Slater, Case No. 15-cv-4324 (N.D. Cal. 2016) http://www.djsphotography.co.uk/Tropical%20Forests/ Sulawesi%20Macaques.htm 4 WWW.ARNSTEIN.COM Smoke signals from specimen of use support trademark registration refusal In a precedential opinion, the Trademark Trial and Appeal Board (TTAB, an administrative arm of the U.S. Patent and Trademark Office) affirmed the trademark examiner’s refusal to register HERBAL ACCESS for retail store services featuring “herbs.” Although the application did not mention marijuana as one of the “herbs” being sold, applicant Morgan Brown’s specimen of use and web site home page contained enough evidence for the examiner to determine that he was indeed selling the federally banned substance. Brown does business in the State of Washington, where state law permits adults to possess one ounce of usable marijuana, 16 ounces of marijuana-infused product in solid form, and 72 ounces of marijuana-infused product in liquid form. However, federal law still bans under the Controlled Substances Act (CSA) the sale and use of marijuana and “paraphernalia” primarily intended or designed for use in ingesting or inhaling it. As long interpreted by the TTAB, the Lanham Act governing trademarks requires “lawful” use of the mark in commerce. A mark therefore cannot be registered for goods or services that are illegal under federal law, even if sale of the product or service is lawful under state law. However, a trademark examiner usually will not refuse registration based on unlawful use in commerce unless (1) a court or federal agency responsible for overseeing the applicant’s activity relevant to the application has found the applicant violated the relevant statute or regulation, or (2) the application-relevant activities involve a per se violation of federal law. For example, a TTAB judge found it “unthinkable” to register a mark for use on heroin. There were no findings of criminal activity against Brown, so the examiner relied instead on a per se violation of the CSA by Brown, involving the identification of services in the application, and proven by evidence outside the application that Brown’s retail store sells marijuana. The evidence was Brown’s specimen of use, featuring two photos of his store. The first photo showed a green cross (symbol of the organized medical marijuana industry) prominently displayed on a window, and the second photo showed a close-up of the shop door with the words HERBAL ACCESS next to the window. In addition, Brown’s home page at herbalaccess. com contained a picture of a marijuana plant with superimposed text inviting customers to “Call or stop by today and find out why people consider our marijuana to be the best of the best!” The web page also included a map showing the location of Brown’s store and the words “Marijuana For The Masses.” That evidence convinced the examiner that Brown was providing marijuana to customers of his store, a per se violation of the CSA, so the examiner refused registration of the mark. On appeal to the TTAB, Brown argued that there is nothing illegal about the sale of “herbs” under the CSA. However, he agreed that he “may also sell marijuana,” which is “admittedly illegal under the CSA.” He contended that there was no evidence of actual use of the trademark in connection with the sale of marijuana, but that the use was in connection with the legal herbs sold in his store. The TTAB concluded that the recitation of services in the application covers the services that Brown is actually engaged in, in violation of the CSA. The TTAB observed that the fact that the description also covers lawful use of the mark on legal herbs is not enough to permit registration of the mark. That interpretation is consistent with assessing the scope of the identification of goods and services in other contexts, such as whether a mark is descriptive. As the resulting registration is presumed to include all types of specific goods and services falling within the identification, the TTAB concluded that the examiner is permitted to consider evidence of how the applicant is actually using the mark to determine whether the mark is descriptive of any particular goods or services that fall into the identification. Thus, it was proper for the examiner to look at Brown’s specimen of use and web site to determine that the “herbs” in his description of services included marijuana, and to consider objective evidence that marijuana is an “herb.” The TTAB further noted that an applicant cannot evade a refusal to register by using generalized language that avoids the specific good or service that is the subject of the refusal. In this case, the generalized language “herbs” cannot hide the fact that marijuana is an herb and Brown sells marijuana. Brown’s use of HERBAL ACCESS in connection with selling a specific substance falling into the identification “herbs” and the CSA is an unlawful use. The examiner was correct to refuse registration of the mark. As the TTAB observed, it is not unusual for an examiner to request advertising or other materials outside the application to determine whether a mark is merely descriptive of the goods or services identified in the application. Refusal to provide such materials can result in abandonment of the application. It appears that the TTAB is approving similar requests to determine if an applicant is engaging in illegal activities in connection with use of the mark. The TTAB ducked the issues of (1) whether a mark for a product that is lawful under federal law but is banned under state law should be refused registration and (2) whether an unlawful use that federal authorities do not prosecute is sufficiently lawful to permit registration of the mark. Not widely known is that the USPTO has a “design code” for marijuana plants (05.13.09), used to administratively classify elements of trademarks containing designs. There is no legal impediment to including a picture of a marijuana plant in a registered trademark as long as the mark is not used in connection with the unlawful use or sale of marijuana, and there are a number of registrations for such marks. There is also no impediment to registering marks for goods or services covering the exercise of the right to free speech under the U.S. Constitution, such as providing an online directory information service featuring information ARNSTEIN & LEHR INTELLECTUAL PROPERTY NEWSLETTER | VOL. 1, 2017 5 Safe Harbor Continued from Page 1 To take advantage of the safe harbor provision, the service provider must designate an agent to receive take-down notices. Information about the agent must be made available on the service provider’s website and must also be registered with the U.S. Copyright Office. From 1998 to November 30, 2016, the information for the Copyright Office was required to be filed on a paper form, with payment of a $105 fee (plus $35 for each group of ten additional designations). The Copyright Office previously posted those designations as PDF files at http://www.copyright.gov/onlinesp/list/a_agents.html. Only about 23,000 designations were filed under that clumsy system. Copyright Office Registration Account Effective December 1, 2016, agent designations must be filed electronically using the Copyright Office’s new online system, with a fee of $6 per designation. If necessary, the designation may be amended at any time. It must be renewed every three years. The Copyright Office will send reminders of renewal dates to registrants. Service providers who previously filed the paper forms have until December 31, 2017 to re-register using the new system. Service providers who have not previously registered must do so as soon after December 1, 2016 as possible, using the new system exclusively. The Copyright Office developed the new system because of the large number of outdated designations and defunct service providers contained in the current system. To use the new system, a service provider must first create a free registration account with the Copyright Office, used to log into the system and register the provider and its designated agent. To register, the provider must choose a login ID and 12-character password, and provide the first and last name, position or title, organization, physical street mailing address (not a post office box), telephone number, and email address of two representatives to serve as the provider’s primary and secondary points of contact for communication with the Copyright Office and receipt of the automatically generated confirmation e-mails and notices. That information will not be made public and is not required to be listed on the provider’s website. The provider can hire a third party entity (such as a law firm or management company) to manage its agent designations. Registering the Designated Agent Once the account has been created, the provider can enter the information to designate its DMCA agent. That information will be a public record. The provider must supply its full legal name, physical street address (not a post office box), telephone number, e-mail address, alternate names it uses and the name, organization, physical mail address, telephone number, and e-mail address of its designated agent. It must also supply the agent’s organization, a physical address (which can be a post office box), telephone number, and e-mail address. “Alternate names” mean any names that members of the public would use to search for the provider, including all names under which the provider is doing business, all website names and addresses, software application names, and other commonly used names. The agent can be identified either as an individual (“Jane Doe”), a specific position or title (“Copyright Manager”), a department within the provider’s organization or within a third-party entity (“Copyright Compliance Department”), or a third-party entity generally (“ACME Takedown Service”). Only the designated agent’s information is required to be posted on the website. The registration must be renewed every three years. If it is amended prior to the end of the three-year period, the renewal clock is reset for a further three years. Failure to comply with these requirements results in an invalid safe harbor, which can expose the provider to suit for copyright infringement. Failure to re-register a previous paper registration will result in that registration expiring and becoming invalid after December 31, 2017. regarding medical marijuana creating an on-line community for registered users of marijuana to engage in social networking. Marks for goods or services connected to sale or use of marijuana have also been refused by the USPTO under the statutory provision barring scandalous, deceptive, immoral, or disparaging marks. That provision was recently held unconstitutional by a federal appeals court in the context of disparagement and will be decided by the U.S. Supreme Court in the near future. Source: In re Morgan Brown, Ser. No. 86/362,968 (TTAB July 14, 2016) We know that the USPTO will not send invoices to applicants and registrants, but our clients do not know this. We therefore warn our clients at regular intervals about these types of solicitations, so that they do not simply pass them along to their accounting departments for payment. The documents can look quite official and contain the terms “United States,” “Trademark,” “Patent,” “Registration,” “Office,” or “Agency.” Sources: Non-USPTO Solicitations page: https://www.uspto.gov/ trademarks-getting-started/non-uspto-solicitations USPTO blog post: https://www.uspto.gov/blog/director/ Justice Dept. news releases: https://www.justice.gov/opa/pr/californiaman-pleads-guilty-perpetrating-trademark-scam-and-moneylaundering https://www.justice.gov/opa/pr/former-wells-fargo-branch-managerand-two-others-charged-laundering-proceeds-trademark-scam Scam Continued from Page 3 6 WWW.ARNSTEIN.COM DTSA Continued from Page 1 What does the DTSA provide? An owner of a trade secret that has been m i s a p p r o p r i a t e d may bring a civil action if the trade secret is related to a product or service used in, or intended for use in, interstate or foreign commerce. Therefore, in order to proceed under the DTSA, the trade secret must be “related to a product or service used in, or intended for use in, interstate or foreign commerce.” In some circumstances, it may be that the product or service does not meet this requirement, so suit can only be brought in state court. There is also a statute of limitations of three years from the discovery of the misappropriation or from the time it should have been discovered by the exercise of reasonable diligence. Important provisions of the DTSA: Ex Parte Seizures: • An ex parte (without notice) civil seizure order may be sought in “extraordinary situations” with respect to “property necessary to prevent the propagation or dissemination of the trade secret that is the subject of the action.” Potential examples of such property may include computers, network hardware and digital storage media that were or could still be used by a defendant. • The requirements for an ex parte seizure order are similar to those for a temporary restraining order, i.e., such a seizure order may only be used where other equitable relief would be inadequate because it would be avoided or evaded by a defendant. A seizure order can only be issued upon proof of “immediate and irreparable injury” with equities balanced in favor of the plaintiff. The plaintiff must also establish a likelihood of success on the merits of the misappropriation claim. • To balance the potential harm to the defendant, the statute includes a number of procedural safeguards, including: (i) the seizure order must “provide for the narrowest seizure of property necessary” and must be executed by law enforcement officials (although technical experts may accompany); (ii) a bond sufficient to cover damages should the seizure turn out to be wrongful or excessive must be posted; (iii) the court must provide specific guidance to the officials executing the seizure that “clearly delineates” the scope of their authority and details how the seizure must be conducted; and (4) the hearing date related to any seizure must also take place within seven days. • If faced with an ex parte seizure order, the business team and/ or technical personnel should consult counsel immediately and take great care not to interfere with the execution of a seizure order. Developing a procedure if faced with an ex parte seizure order when law enforcement officials are at the company is too late. One should proactively develop internal and external response plans for properly handling the receipt of a seizure order. Injunctive Relief against a former employee: • An injunction may be granted to prevent any actual or threatened misappropriation. A concern with this is that it may be used by employers to prevent a departing employee from taking a job with a competitor. • Therefore, key limitations to the injunctive relief provision of the DTSA include that the injunction (1) cannot prevent a person from entering into an employment relationship, and that conditions placed on such employment shall be based on evidence of threatened misappropriation and not merely on the information the person knows; and (2) cannot otherwise conflict with an applicable State law prohibiting restraints on the practice of a lawful profession, trade, or business. • It is not stated what the “applicable State law” is. For example, is it the law of the state in which the action is brought, or is it the law of the state where the former employee is going? • In any event, this is a departure from the Uniform Trade Secrets Act, which permitted injunctions against “threatened misappropriation” without the aforementioned restrictions, because some feared that the “inevitable disclosure doctrine,” which has been expressly rejected in some states, might be used by federal judges to block an employee from taking a new job. Damages and Attorney’s Fees: • Damages for trade secret misappropriation are available in the form of actual losses to the plaintiff, and the value of any separate unjust enrichment on the part of a defendant. Alternatively, damages calculated based on a reasonable royalty for the unauthorized disclosure or use of the trade secret may be awarded. • Enhanced damages of up to two times damages otherwise awarded may be available for willful and malicious trade secret misappropriation. • Legal fees may be awarded to a prevailing party, either plaintiff or defendant, where a ARNSTEIN & LEHR INTELLECTUAL PROPERTY NEWSLETTER | VOL. 1, 2017 7 Visit us online at http://www.arnstein.com/practices/intellectual-property claim for misappropriation is made in bad faith, a motion for injunctive relief is opposed in bad faith, or the trade secret was “willfully and maliciously misappropriated.” Whistleblower Protection: • There is whistleblower immunity from divulging a trade secret when a person discloses a trade secret to any federal, state or local government official or agency, or to any attorney, solely for the purpose of reporting or investigating a suspected violation of law, or when the disclosure is part of litigation and is filed under seal. • There is also whistleblower immunity when someone files an action based on employer retaliation for reporting a suspected violation of law. In this case, one may also disclose the trade secret to that person’s attorney and use it in court provided such filings are made under seal. Employer Requirements: • Companies should review and, if necessary, update their employment and confidentiality agreements and handbooks. • A company is only eligible to recover double damages and attorneys’ fees in trade secret litigation if it provides notice to an employee of the whistleblower and confidentiality provisions. The notice requirement may also be met by the employer providing the employee with a cross-reference to a policy document that sets forth the employer’s reporting policy for a suspected violation of law. • The term “employee” is defined broadly to include both traditional employees and independent contractors. • While the failure to include notice of whistleblower immunity bars the employer from seeking double damages and legal fees in an action against an employee who was not given notice, the DTSA does not otherwise penalize the employer. • Since many companies use a variety of agreements to protect confidential information, including employment agreements, standalone confidentiality and inventions agreements, and separation agreements as well as handbooks and policy statements, an immediate review of these documents for compliance should be performed. Source: Defend Trade Secrets Act of 2016, P.L. 114-153, May 11, 2016 The Trademark Trial and Appeal Board (the “Board”) of the U.S. Patent and Trademark Office hears applicant appeals from the final decisions of trademark examiners, and oppositions to trademark applications, concurrent use proceedings, and cancellation proceedings against trademark registrations. The proceedings are held on a paper record with oral arguments by counsel. Matters before the Board are governed by the Trademark Rules of Practice. Motions are decided by and hearings are held before panels of three administrative law judges. On April 4, 2016, the TTAB published in the Federal Register proposed amendments to the Rules of Practice for public comment by June 3, 2016. Those new rules were adopted on October 7, 2016, effective January 14, 2017. The amendments are the first major set of rule changes since 2007. They are intended to increase the efficiency of TTAB proceedings, adopt procedures to take advantage of technology improvements, import new discovery rules from the Federal Rules of Civil Procedure (which govern federal court practice), reflect precedential decisions of courts and the Board, alter the current deposition practice, and require electronic submission of all documents except in rare cases. The Board will apply the new rules to every pending case and every new case commenced on or after the effective date of the new rules. One controversial change is the right to present evidence by affidavit or declaration, subject to the adverse party’s right to cross-examine. A littlenoticed but potentially useful change is the opportunity to take oral depositions of foreign witnesses traveling in the U.S. in place of the cumbersome requirement to take their testimony by written questions. Application of the new proportionality discovery rules can be expected to spawn large numbers of motions by individuals or small companies responding to discovery by large companies, so it remains to be seen whether the Board will accomplish its plan to streamline discovery and speed up proceedings with these rules. Source: Vol. 81 Federal Register, p. 69950 (October 7, 2016). TTAB Adopts First Major Set of Rule Amendments Since 2007 8 WWW.ARNSTEIN.COM A R N S T E I N & L E H R L L P I S A M E M B E R O F THE INTERNATIONAL LAWYERS NET WORK This newsletter provides information on current legal issues. The information should not be construed as legal advice or opinion in particular situations or applications. © 2017 Arnstein & Lehr LLP. All rights reserved. 120 South Riverside Plaza • Suite 1200 Chicago, Illinois 60606-3910 Intellectual Property Newsletter Vol. 1, 2017 www.arnstein.com The Intellectual Property Practice Group counsels clients on matters related to the protection of trademarks, copyrights, domain names and trade secrets, including patent, trademark and copyright applications and litigation, rights of privacy and publicity, review of websites and advertising claims, and preparation and registration of contest and game promotion rules. CONTRIBUTORS: Mr. Kuo is a partner in the firm’s Chicago office. His practice encompasses a broad range of experience in intellectual property law, including patents, trademarks, unfair competition, copyrights, false advertising, and trade secrets. Joseph M. Kuo 312.876.7151 email@example.com Ms. Grubner is a partner in the firm’s Chicago office. She concentrates her practice on intellectual property, specializing in trademarks, copyrights, domain names, sweepstakes, contests, and game promotions. Judith L. Grubner 312.876.7885 firstname.lastname@example.org FLORIDA Boca Raton, Fort Lauderdale, Miami, West Palm Beach ILLINOIS Chicago, Springfield
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