Tuesday, November 13, 2018

At Will Employees in California Need Not Comply With Non-Solicitation Covenants

Ordinarily, an employment case does not contain aspects of IP law. But in a very broad sense, some employers view their employees as a form of IP. That is, the employer expends resources to train the employee and the employee acquires valuable business knowledge through on-the-job experience. The employee develops connections with customers and gains insight into business operations. 

In some sense, the employer views the employee as containing intellectual value for the business. And in this light, it is not unusual that some employers prefer that former employees not solicit current employees to engage in a competing business enterprise. Indeed, some employers may require employees to agree to non-solicitation clauses in employment agreements, thereby prohibiting former employees from soliciting current employees for a period of time.

Such non-solicitation clauses are no longer permitted in California. That state's Court of Appeals recently determined that non-solicitation agreements in the employment context are invalid. Specifically, non-solicitation clauses in at-will employment agreements are not enforceable in California. 

In AMN Healthcare, Inc. v. Aya Healthcare Services, Inc. (11/1/18 CA4/1), the court held that a contract provision prohibiting the solicitation of an at-will employee is barred by the California Business and Professional Code sections 16600 through 16602. "Section 16600 expresses California's strong public policy of protecting the right of its citizens to pursue any lawful employment and enterprise of their choice."

Accordingly, any company doing business in California should be aware that contract clauses prohibiting solicitation of its at-will employees can no longer be relied upon to maintain ownership and control of its employees' knowledge, experience and customer connections.

Wednesday, October 31, 2018

John Adams

"In my many years, I have come to a conclusion that one useless man is a shame, two is a law firm, and three or more is a Congress." (Attributed to John Adams in the 1969 musical 1776)

Tuesday, October 30, 2018

U.S. Trademark Filings Require Enhanced Security

The U.S. trademark office recently posted a notice concerning the potential for trademark hijacking of pending trademark applications. It is very easy for an unauthorized third party to pose as a trademark applicant or an authorized correspondent and enter non-approved filings in a pending application. As the PTO explains:

Unauthorized changes have been made to a number of active trademark applications and registrations. These changes may be part of a scheme to register the marks of others on third-party “brand registries.” Unauthorized parties have filed forms through our Trademark Electronic Application System (TEAS) to make these changes. 

It is interesting to note that the USPTO provides much greater security on the patent side than on the trademark side. When an applicant files a new patent application, the PTO will issue a randomly generated four digit confirmation code to the filer for use with future filings. The lack of the correct four digit code prevents an unauthorized person from making a filing in a pending patent file.

But the PTO does not provide any sort of confirmation code for new trademark filings.

If the PTO uses this type of enhanced security on the patent side, then why won't it use this same type of enhanced security on the trademark side? Why doesn't the PTO give a new trademark filer a similar type of confirmation code for use in subsequent filings to the same pending application? And since the PTO is obviously aware that unauthorized persons are seeking to hijack pending trademark applications, the failure to provide the same type of enhanced security regimen to trademark filers that it gives to patent filers makes little sense.

Monday, October 29, 2018

The PTO Is Watching For Trademark File Hijacking

The U.S. trademark office is vigilant in seeking to reduce fraud in trademark filings--both internal fraud by filers and external fraud by outside parties.

Concerning unauthorized external filings to active trademark applications and registrations, the PTO is watching to prevent unauthorized changes that are tantamount to hijacking. The PTO's watch-dog activity is described in its newly published policy statement

One form of hijacking pertains to a filing by an unauthorized third party seeking to change the ownership, correspondent or attorney for a pending trademark application. And why would a third party seek to do this? Perhaps to serve as a spring board to registration of the trademark with "brand registries" such as Amazon.

For example, as to Amazon's brand registry service--
Brand Registry gives you more control over Amazon product pages that use your brand name, so customers are more likely to see the correct information associated with your brand
In an effort to counter this attempted hijacking of the PTO's active trademarks files, the PTO watches for what it believes to be unauthorized filings and notifies the current correspondent and lawyer of the recent third party filing.

The PTO explains--
Unauthorized changes have been made to a number of active trademark applications and registrations. These changes may be part of a scheme to register the marks of others on third-party “brand registries.” Unauthorized parties have filed forms through our Trademark Electronic Application System (TEAS) to make these changes. Although these instances affect a small percentage of total applications and registrations, we want to make sure our customers are aware of the problem as we work to resolve it.
It's a dirty world out there! Be vigilant about protecting your trademark from attempted hijacking schemes.

Statutory Annotations Are NOT Copyrightable

It has long been held that legislative enactments--statutes--are not protectable by copyright, although non-official statutory annotations created by non-government entities can be copyrightable. Now, the Eleventh Circuit's recent decision has determined that statutory annotations created by a legislature legislative committee is not copyrightable.

In the Eleventh Circuit's October 19, 2018 decision in the Code Revision Commission case, the court states that when the Georgia legislature creates official statutory annotations pursuant to "sovereign power on behalf of the people of Georgia," the annotations "are attributable to the constructive authorship of the People." 

"The resulting work is intrinsically public domain material, belonging to the People, and, as such, must be free for publication by all."

More on Copyright Fair Use

Fair Use under the U.S. Copyright Act is nebulous and a playground for expensive litigation. The most recent case in point is the Eleventh Circuit's second remand of Cambridge University Press against the Georgia university system. You will recall that professors at the Georgia university system copied portions of published academic texts and distributed the digital excerpts to students. The publishers sued for copyright infringement. The university system claimed fair use. 

The trial court reviewed the four-pronged statutory test for fair use. As to factor three--the amount and substantiality of the portion used in relation to the copyrighted work as a whole--the trial court determined among other things that the professors needed to copy excerpts into the course materials since the cost of the published books was so expensive. Indeed, the marginal cost of distributing digital copies was nil compared to the cost of purchasing a hard copy book.

The Eleventh Circuit's opinion of October 19, 2018 instructs that the cost of the unpaid copyrighted use is not a component of fair use analysis.
This provision of the Act does not direct courts to consider the price of the unpaid use. If it did, then the district court's reasoning could tilt the third factor in favor of fair use even in cases of extensive verbatim copying.
Just because a user of copyrighted work can save money through non-permitted digital copying and distribution does not justify a finding of fair use.