If the terms of use of accepted by clickwrap agreement, the E-SIGN Act generally provides that such agreement cannot be denied legal effect solely because the agreement is in electronic form.  If the terms of use are passive and you are relying on a browsewrap agreement, the law is unclear and certain terms may not be enforceable.  To ensure enforceability of your terms of use, you should consider using a clickwrap agreement rather than a browsewrap agreement.
–Nicole J. Harrell

The Supreme Court determined that Section 109(a) of the Copyright Act says nothing about geography and permits the first sale doctrine to apply to copies manufactured abroad with the copyright owner’s permission. The Supreme Court held that a nongeographical reading of Section 109(a) was in keeping with (a) the historical and contemporary statutory context, (b) the canon of statutory interpretation that “when a statute covers an issue previously governed by the common law,” it is presumed that “Congress intended to retain the substance of the common law”; and (c) basic constitutional copyright objectives. A lawful owner of a copy of a copyrighted work manufactured abroad can bring that copy into the United States and sell it without obtaining permission from the copyright owner. –Kristan B. Burch

Specifically, in patent infringement cases, the weight given to a plaintiff’s choice of forum may diminish if plaintiff is a “non-practicing entity” and its sole activity in the forum is the enforcement of its intellectual property rights.  The Eastern District of Virginia has defined a “non-practicing entity” as an entity that “does not research and develop new technology, but rather acquires patents, licenses the technology, and sues alleged infringers.”  Id. at 995. The narrow reach of this “non-practicing entity” definition can be seen in a recent opinion issued by a Norfolk district court.  The district court held that even where an entity had only one employee, no formal office location (outside of the employee’s residence), and did not engage in any manufacturing activities in the forum, substantial weight should still be given to plaintiff’s choice of forum since the entity’s sole employee was “actively engaged in . . . research and development operations [within the forum] on a full-time basis.” Virginia Innovation Sciences Inc. v. Samsung Electronics Co. Ltd., No. 2:12cv548, 2013 U.S. Dist. LEXIS 31626  (Davis) (E.D. Va. March 6, 2013).  Therefore, before choosing to file in the Eastern District of Virginia, a plaintiff should consider whether its chosen forum has significant contacts with the underlying action – while keeping in mind that these contacts need not be as extensive as a formal manufacturing operation but must include something more than the mere enforcement of intellectual property rights.  
–Lauren Tallent Rogers

First, assuming the prospective franchise will have a place of business in Virginia, the prospective franchisee should ensure that its chosen franchisor is properly registered to offer franchises within Virginia.  This information is available on-line at the Virginia State Corporation Commission Retail Franchise Division website. 

A franchisor that is not properly registered to offer franchises for sale within the Commonwealth of Virginia presents a major red flag.  Not only will the sale of the franchise be illegal, and therefore potentially voidable by the prospective franchisee, but, more importantly, failure to register reveals either franchisor ignorance of pertinent franchise laws, or its conscious disregard of those laws.  (While the franchisor could be in the process of registering its franchise offering with the Commonwealth of Virginia, a prospective franchisee should confirm this with both the franchisor and with the State Corporation Commission Retail Franchise Division.  Moreover, the franchisor should not provide a prospective Virginia franchisee with a Franchise Disclosure Document before it has been properly registered with the Commonwealth of Virginia).

For further information regarding this topic, or to discuss potential actions to take upon learning your chosen franchisor is not properly registered in Virginia, please contact Stephen E. Story at (757) 624-3257 or sestory@kaufcan.com. — Stephen E. Story

The problem is that the copyright in any creative work is owned by the person who does the creating, unless their copyright is effectively transferred to the party who paid them to do it.  Even though the agreed price for the work is paid to the creator, unless the copyright in the work is effectively transferred to the buyer, the right to reproduce the work for later use and benefit will remain with the creator.  With employees this is not a problem, because copyright law provides for ownership by their employers of the copyrights in works created by them in the course of employment.  But the problem exists for all works created by freelancers and other independent contractors.

While there may be some cases in which the party who paid to have something created for them by someone else can prove from surrounding circumstances that they own the copyright because the thing created was a “work made for hire,” the only truly safe course of action is to obtain a written agreement that the work is a work made for hire, and/or an explicit assignment of the creator’s copyright in the work.  Because not all creative materials fit within the finite definition of things that can be works made for hire under the Copyright Act, it is prudent in every case to include appropriate transfer language in the agreement covering the engagement to create the work.  A very short agreement can be used to tend to this concern, and it is one of those cases where an ounce of prevention is truly worth a pound of cure.   –Robert E. Smartschan

The case has a long and tortuous history of repeated decisions and remands.  To simplify things, the U.S. Patent and Trademark Office has been awarding patents on human genes for almost 30 years, but opponents of Myriad Genetics Inc.’s patents on two genes linked to increased risk of breast and ovarian cancer say patent protection should not be given to something that can be found inside the human body. The lead lawyer argued:

Finding a new use for a product of nature, if you don’t change the product of nature, is not patentable. If I find a new way of taking gold and making earrings out of it, that doesn’t entitle me to a patent on gold. If I find a new way of using lead, it doesn’t entitle me to a patent on lead…Allowing companies like Myriad to patent human genes or parts of human genes will slow down or cripple lifesaving medical research like in the battle against breast cancer…

But Myraid argued that without the ability to recoup their investment through the profits that patents bring, breakthrough scientific discoveries needed to combat all kinds of medical problems will not happen; simply put, without patent protection, these companies will not invest the vast resources needed to unlock the secrets of genes and DNA.  Myriad has used its patents to develop its BRCA analysis test that looks for mutations on the breast cancer predisposition gene, or BRCA. Those mutations are associated with much greater risks of breast and ovarian cancer and Myriad sells the only BRCA gene test.

The Federal Circuit, the appeals court that has exclusive jurisdiction over patents, twice ruled that the genes can be patented.  The Court held that since the isolated DNA has a “markedly different chemical structure” from DNA within the body, it is patentable.  The Supreme Court was clearly troubled by tension created in patenting things that exist in nature and denying patents to companies that invest vast amounts of time, resources and research in isolating such DNA.  The Court is expected to rule later this summer.  Stay Tuned.

Stephen E. Noona is the head of Kaufman & Canoles’ Trial Section and Co-chair of its Intellectual Property Law and Franchising Practice Group.  He has been counsel in hundreds of intellectual property cases in federal courts across the nation, including over ninety (95) patent cases in the Eastern District and is Fellow in the American College of Trial Lawyers. He regularly appears before the judges in all four Divisions of the Eastern District on intellectual property matters of all kinds. –Stephen E. Noona

Disney filed a motion in limine of its own and attempted to convince the district court that the USPTO’s expert was not skilled in the art.  Disney argued that in order to be “skilled in the art” of software development, the expert must have “been someone who could develop web-based software and was part of the web software development community” at the time of the invention. Id. at *24.  The Alexandria district court did not agree with Disney and explained that although “an expert must be qualified to testify about what a person with ordinary skill in the art must have understood at the time of the invention, [] the expert’s knowledge of that may have come later.”  Id. at *26 (internal citations omitted).  Last, Disney filed a second motion in limine and argued the USPTO should be precluded from offering certain exhibits at trial since the articles they sought to offer were published after the time of invention.  The district court again rejected Disney’s argument and explained that “the state of art around the time of the invention is relevant to the obviousness analysis” and “publications published after the date of invention have long been allowed ‘as evidence of the state of art existing on the filing date of the application.’”  Id. at *32-33 (emphasis added) (internal citations omitted).

Thus, this Disney tale is loaded with patent litigation lessons.  First, even in lawsuits challenging the USPTO’s patent application decision, new evidence will only be admitted if it complies with the Federal Rules of Civil Procedure and with any discovery deadlines the court imposes – the Eastern District of Virginia will not tolerate “gamesmanship” and unwarranted attempts to avoid deadlines.  Second, when choosing or challenging an expert, parties should remember that an expert’s “skill in the art” does not need to have been in existence at the time of the invention.  Instead, parties need only demonstrate that potential experts are currently qualified to testify as to what a person with ordinary skill in the art may have understood at the time of the invention.
–Lauren Tallent Rogers

Most adword disputes of this sort are fought between the party objecting to the use of its name by a competitor and Google, and are based on allegations of trademark misuse or infringement.  While outcomes in these cases have generally been favorable to Google, courts deciding them have found the Google adword activity to constitute trademark “use,” even where the trademark does not appear in the competitor’s ad triggered by the adword.

The Wisconsin case between the two law firms was different not only because Google was not a party to it, but because instead of being based on trademark law, the plaintiffs alleged that use of the Habush and Rottier names as adwords by Cannon & Dunphy constituted violations of a Wisconsin statute protecting individuals’ rights of privacy and publicity.  In fact, in its ruling favorable to Cannon & Dunphy, the court explicitly ruled that the adword activity did not constitute “use” of the individuals’ names for purposes of the Wisconsin statute. 

After waging this battle for more than three years, one might have expected the two Wisconsin trial firms to soldier on with an appeal to the state Supreme Court.  That may still happen, of course — but maybe not, considering that Google, Bing and Yahoo searches on the names Habush and Rottier on the day this posting was written did not show any results other than ones for the Habush, Habush & Rottier firm.  In other words, it appears that despite winning the day in court Cannon & Dunphy has discontinued its use of its competitors’ names as adwords on those search engines.  –Robert E. Smartschan

This type of scheme works well if the couple lives to a ripe old age and passes away within a short time of one other, without the survivor making any changes to the estate plan. However, this is not always the case. One spouse can predecease the other, leaving the survivor widowed for a number of years. The survivor may remarry and may have other children or gain other step-children. The relationship between the surviving spouse and the children of the deceased spouse may deteriorate or disappear. The surviving spouse’s biological children may spend significant time and energy caring for the survivor during the end of his or her lifetime, while the step-children keep their distance.

Obviously, there are a number of reasons, both good and bad, why a surviving spouse may desire to make a change to the original estate plan. Solely because the original wills or revocable trusts were mirror images of one another and were signed at the same time, is the survivor barred from changing the plan? Does the execution of reciprocal wills automatically create a binding contract between the spouses which prohibits the surviving spouse from changing the estate plan?

The Virginia Supreme Court addressed this issue recently in the case of Keith v. Lulofs. 283 Va. 768, 724 S.E.2d 695 (2012). In this case, a husband and wife executed mirror image wills in 1987 that left the entire estate to the surviving spouse and after the death of the second spouse, one-half to the husband’s son, Keith, and one-half to the wife’s daughter, Lulofs. The husband died in 1996 and the wife executed a new will, leaving her entire estate to her daughter, Lulofs. The Court held that “the language of “mirror image” wills is insufficient alone to form a contract” which would prevent the surviving spouse from modifying his or her estate plan. The Court explored the difference between contracts and wills, stating that “wills, unlike contracts, generally are unilaterally revocable and modifiable” because a testamentary disposition of assets is a gift. Although it is still possible for a contract to be established by implication based on the surrounding facts and circumstances, this requires clear and satisfactory proof of the contract.

The result of the Keith case makes sense. Not every couple who executes mirror image wills or trusts intends that those documents create a binding contract. For the couple who strongly desires to have an irrevocable estate plan in place, they have the option to execute an irrevocable trust or to memorialize the agreement with a separate contract. Furthermore, one spouse may provide for a surviving spouse and control the ultimate disposition of the remaining assets of his or her estate after both spouses are deceased by establishing a qualified terminable interest trust (QTIP), bypass/family trust or other form of trust that becomes irrevocable upon the death of the spouse creating the trust. Note, however, that this strategy only controls the assets of the one spouse, not the combined assets of both spouses. Regardless of the technique under consideration, the creation of an irrevocable estate plan should not be taken lightly, and the parties only should proceed after thorough consultation with an attorney.
–Sarah Messersmith