LAN ERNICK COM 2016 FALL SYMPOSIUM Identifying … WERNICK lecture...Ohio Uniform trade secrets act...

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Copyright © 2016 Alan S. Wernick. www.Wernick.com. All rights reserved. 1

2016 FALL SYMPOSIUM

Identifying and Protecting Intellectual Property for the

Professional Advisor

ALAN S. WERNICK*ATTORNEY AT LAW*ADMITTEDTO PRACTICE IN IL, NY, OH, & DC

T. 614‐463‐1400 & 847‐786‐1005E. [email protected]

COPYRIGHT © 2016 ALAN S. WERNICK. WWW.WERNICK.COM. ALL RIGHTS RESERVED. 1

20160919 COPYRIGHT © 2016 ALAN S. WERNICK. WWW.WERNICK.COM. ALL RIGHTS RESERVED. 2

The information contained in this presentation isintended to alert you to some of the legal issuesconcerning the topics presented. The analysis ofthe law for each particular situation depends on avariety of factors, therefore, you are stronglyadvised to engage knowledgeable legal counselto assess and help minimize your legal liabilitiesbased on the particular requirements of yourorganization. Like any presentation or article,this is not meant to be used as a substitute forknowledgeable legal counsel.

NOTICE

COPYRIGHT © 2016 ALAN S. WERNICK. WWW.WERNICK.COM. ALL RIGHTS RESERVED.

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20160919 COPYRIGHT © 2016 ALAN S. WERNICK. WWW.WERNICK.COM. ALL RIGHTS RESERVED. 3

Legal Topology of Data

Copyright

Trademarks

Trade Secrets

Patents

Contracts

Licenses

Torts

Negligence

Privacy

Regulatory Compliance

OVERVIEW

1. Identifying intellectual property assets.

2.Protecting intellectual property assets.

3.Privacy and Cybersecurity – PII Risks.


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TOPICS

1. Identifying intellectual property assets:

Copyrights.Patents.

Trademarks. Trade secrets.


COPYRIGHTS


What are copyrights? Federal statute: Title 17, U.S. Code. Protects the form of expression, not the idea. Protects “original works of authorship,” including literary, dramatic, musical, artistic, and certain other intellectual works. Copyright protection is available to both published and unpublished works.

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COPYRIGHTS


Copyright owner has the exclusive right to do, and to authorize others to do, the following: Reproduce the work in copies or phonorecords.Prepare derivative works based upon the work.Distribute copies or phonorecords of the work to the public by sale or other transfer of ownership, or by rental, lease, or lending.

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COPYRIGHTS


Copyrights owner has the exclusive right to do, and to authorize other to do, the following (continued): Perform the work publicly, in the case of literary, musical, dramatic, and

choreographic works, pantomimes, and motion pictures and other audiovisual works.

Display the work publicly, in the case of literary, musical, dramatic, and choreographic works, pantomimes, and pictorial, graphic, or sculptural works, including the individual images of a motion picture or other audiovisual work.

Perform the work publicly (in the case of sound recordings*) by means of a digital audio transmission.

*Sound recordings are defined in the law as “works that result from the fixation of a series of musical, spoken, or other sounds, but not including the sounds accompanying a motion picture or other audiovisual work.”

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COPYRIGHTS


Examples of copyrighted works MAY include: Marketing brochure.Advertisement.Guide to financial services.Content on a website.Articles on financial services.

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COPYRIGHTS


Distinguish between “copy” and “contents.”(Note, this will be on the quiz....)

Example:DVD or CD‐ROM = copyComputer software, movie, songs, or books recorded on DVD or CD‐ROM = contents

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COPYRIGHTS


First Sale Doctrine (one reason the copy vs. contents distinction is important)

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TRADEMARKS


What are trademarks? Trademarks identify source of origin of goods and services. A trademark is generally a word, phrase, symbol, design, sound, or color, or a combination thereof, that identifies and distinguishes the source of the goods of one party from those of others. A service mark is the same as a trademark, except that it identifies and distinguishes the source of a service rather than goods. For the purposes of this presentation, “trademark,” “service mark,” and “mark” refer to both trademarks and service marks.

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TRADEMARKS


Trademarks may be protected by: Federal law (15 U.S. Code).State law (ORC §1329.54). Common law.

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TRADEMARKS


Examples of trademarks:

XEROX®

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TRADEMARKS


Examples of color as a trademark:Purple: Cadbury purple for chocolate products. Pink: Owens‐Corning “Think Pink” for fiberglass building insulation.

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TRADEMARKS


Examples of sound as a trademark:72349496 –NBC ‐ Entertainment ‐Chimes73270308 – Beneficial ‐ Insurance ‐" At Beneficial TOOT TOOT You're Good for More...“ 73553567 –MGM ‐ Entertainment ‐ Roaring Lion75326989 – Edgar Rice Burroughs, Inc. ‐ toy action figures ‐Tarzan yell

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TRADEMARKS


Trade Names, Top Level Domains (“TLDs”), & other names: Not every use of a word is a trademark.Trade names – identifies business entities in the marketplace. Corporate name.Assumed name.Fictitious name.

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TRADEMARKS


Trade names and trademarks are not the same in the eyes of the law. It depends on the use and the applicable law. Examples: Xerox Corporation – a trade name.Xerox® – a trademark when Xerox® is applied as a label on a copier sold by Xerox Corporation. Xerox® – a service mark when Xerox® is applied to the Xerox Corporation maintenance services for your Xerox® copier.

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TRADE SECRETS


What is a “trade secret?”

Restatement of Torts, §757 (1939) “Misappropriation of Trade Secrets.”A trade secret “may consist of any formula, pattern, device or compilation of information which is used in one's business, and which gives him an opportunity to obtain an advantage over competitors who do not know or use it.” (Emphasis added.)

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TRADE SECRETS


Uniform Trade Secrets Act ("UTSA") – adopted by the National Conference of Commissioners on Uniform State Laws.UTSA provides a relatively compact definition of misappropriation: (i) acquisition of a trade secret of another by a person who knows or has reason to know that the trade secret was acquired by improper means; or

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TRADE SECRETS


Uniform Trade Secrets Act ("UTSA") – adopted by the National Conference of Commissioners on Uniform State Laws.

UTSA provides a relatively compact definition of misappropriation (continued): (ii) disclosure or use of a trade secret of another without express or implied consent by a person who (A) used improper means to acquire knowledge of the trade secret; or (B) at the time of disclosure or use, knew or had reason to know that his knowledge of the trade

secret was (I) derived from or through a person who had utilized improper means to acquire it; (II) acquired under circumstances giving rise to a duty to maintain its secrecy or limit its use;

or (III) derived from or through a person who owed a duty to the person seeking relief to

maintain its secrecy or limit its use; or (C) before a material change of his [or her] position, knew or had reason to know that it was a

trade secret and that knowledge of it had been acquired by accident or mistake. UTSA is not adopted in every state.

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TRADE SECRETS


Ohio Uniform trade secrets act definitions – RC 1333.61(D): "Trade secret" means information, including the whole or any portion or phase of any scientific or technical information, design, process, procedure, formula, pattern, compilation, program, device, method, technique, or improvement, or any business information or plans, financial information, or listing of names, addresses, or telephone numbers, that satisfies both of the following:

(1) It derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use.

(2) It is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.

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TRADE SECRETS


NO SURPRISE: A TRADE SECRET MUST BE KEPT SECRET!

[A] substantial element of secrecy must exist, so that, except by the use of improper means, there would be difficulty in acquiring the information. An exact definition of a trade secret is not possible. Some factors to be considered in determining whether given information is one's trade secret are: (1) the extent to which the information is known outside of his business; (2) the extent to which it is known by employees and others involved in his business; (3) the extent of measures taken by him to guard the secrecy of the information; (4) the value of the information to him and to his competitors; (5) the amount of effort or money expended by him in developing the information; (6) the ease or difficulty with which the information could be properly acquired or duplicated by others. §757 Comment (b).

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TRADE SECRETS


Examples of trade secrets may include:

Customer list.

Business plans. Financial information.

The secret formula to Coca Cola.

Google's proprietary search algorithm.

Mrs. Fields Chocolate Chip Cookies.

WD‐40.

Blackburne Baseball Rubbing Mud – for removing the sheen from baseballs (used in professional baseball).

Personally Identifiable Information (“PII”).

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PATENTS


What is a Patent?

Federal statute: Title 35, U.S. Code.

A patent for an invention is the grant of a property right to the inventor, issued by the United States Patent and Trademark Office.

Typically the term of a new patent is 20 years from the date on which the application for the patent was filed in the United States or, in special cases, from the date an earlier related application was filed, subject to the payment of maintenance fees.

U.S. patent grants are effective only within the United States, U.S. territories, and U.S. possessions. Under certain circumstances, patent term extensions or adjustments may be available.

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PATENTS


What is a Patent?

The patent grant confers upon the patent owner “the right to exclude others from making, using, offering for sale, or selling” the invention in the United States or “importing” the invention into the United States.

The patent grant is not the right to make, use, offer for sale, sell or import, rather it is the right to exclude others from making, using, offering for sale, selling or importing the invention.

Once a patent is issued, the patentee must enforce the patent without assistance from the USPTO.

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PATENTS


Types of patents:

1. Utility patents may be granted to anyone who invents or discovers any new and useful process, machine, article of manufacture, or composition of matter, or any new and useful improvement thereof;

2. Design patents may be granted to anyone who invents a new, original, and ornamental design for an article of manufacture; and

3. Plant patents may be granted to anyone who invents or discovers and asexually reproduces any distinct and new variety of plant.

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PATENTS


Patents require novelty and non‐obviousness.

Inventions cannot be patented if:

The claimed invention was patented, described in a printed publication, or in public use, on sale, or otherwise available to the public before the effective filing date of the claimed invention; or

The claimed invention was described in a patent issued [by the U.S.] or in an application for patent published or deemed published [by the U.S.], in which the patent or application, as the case may be, names another inventor and was effectively filed before the effective filing date of the claimed invention.

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PATENTS


America Invents Act (“AIA”) (2011)

Creates a race to the USPTO for being first to file.

Created a program to adjudicate the validity of business method patents after they have been granted, known as Covered Business Method Review, or CBMR.

Provisional Patent Applications

Provides a relatively inexpensive process to begin to secure patent rights while testing the market for the invention. Less expensive than a non‐provisional patent application.

Provides U.S. applicants parity with foreign applicants.

Provides the means to establish an early effective filing date in a patent application and permits the term “Patent Pending” to be applied in connection with the invention. Provisional applications may not be filed for design inventions.

Claims and oath or declaration are NOT required for provisional patent applications.20160919

PATENTS


Examples of patents may include:

Computer hardware (a physical invention).

Computer software (business process and methods). Very strict rules (See, Alice Corp. vs. CLS Bank International , U.S. Supreme Court, 2014 – broadly stating that inventions directed toward an “abstract idea” are patentable only when it is concretely grounded in an “inventive concept.”).

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TOPICS

2. Protecting intellectual property assets – Preventive. a. IP Audit. Purpose: to identify and quantify the IP

assets. i. Used as an input to developing an appropriate legal

strategy to protect and maximize the value of the IP assets.


INTELLECTUAL PROPERTY AUDIT


The IP audit as a risk management tool.Develop legal audit checklists based on the legal rights and the technologies.Gather input from C‐Suite, managers, and other employees.Quantify the legal rights in play in achieving the business objectives.Measure the performance and status of those legal rights in achieving the business objectives.

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INTELLECTUAL PROPERTY AUDIT


Benefits of the IP Audit include: Inventory of your IP assets uncovered during the audit. Detailing the status of each of the IP assets. Identifying certain strengths and/or weaknesses regarding the IP assets in the inventory. Identifying IP internal processes and controls. Better management of the IP assets. Action items and suggested priorities concerning the IP assets. Providing a roadmap of actions to protect the IP assets and providing a follow‐up

methodology for each of the IP asset classes. Uncovering IP capable of being protected but not readily identified by the company. Help in making more informed IP investment and licensing decisions. Help in making IP maintenance decisions.

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TOPICS

2. Protecting intellectual property assets – Preventive. b. Registration & Remedies. i. Copyrights.

ii. Patents.

iii. Trademarks (federal and state).

iv. Trade Secrets. No registration, but very stringent protection requirements to create and to avoid loss.


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COPYRIGHTS – REGISTRATION & REMEDIES


While registration is not mandatory to obtain copyright protection, copyright registration is a relatively low cost.Statutory damages (17 U.S. Code §504) that may be available if copyrights are registered before the infringing act include: Where a court finds that infringement was committed willfully, the court in its discretion may increase the award of statutory damages to a sum of not more than $150,000. Attorneys’ fees.

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COPYRIGHTS – REGISTRATION & REMEDIES


Even without registration a copyright owner whose copyrights have been infringed may be entitled to: Injunctive relief. Actual damages and any additional profits of the infringer.

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TRADEMARKS – REGISTRATION & REMEDIES


Trademark registration provides public notice of trademark owner’s claim to the trademark. The amount of statutory damages (15 U.S.C. §1117(c)) for a mark registered in the USPTO can range from a low of $1,000 for innocent infringement to not more than $2,000,000 for willful infringement by a counterfeit mark. Injunctive relief.

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PATENTS – REGISTRATION & REMEDIES


Registration with the USPTO required in order to obtain benefits of patent registration.

Provides a right to sue anyone making or selling, without permission, the patent holder’s invention.

Provides priority over third parties attempting to import a similar invention from other countries that do not require registration.

If the court finds the infringer to have willfully infringed a patent, then the court may enhance the damages up to three times the actual damages. (35 U.S.C. §284).

Attorney fees available for an “exceptional case” (35 U.S.C. §285).20160919

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TRADE SECRETS – NO REGISTRATION


Trade secrets are not per se registered with any government or regulatory agency in order to gain protection or legal rights. Trade secrets are protected through appropriate contracts, processes, and procedures by the trade secrets owner. Remedies may include injunctive relief and monetary damages.

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TOPICS

4. PII Risks in Privacy and Cybersecurity. a. What types of personal identifying

information do most financial service professionals handle?

b. What are some steps the FSP should consider in mitigating risks of a data breach?


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COST OF A DATA BREACH –GLOBALLY


Ponemon Institute 2016 Cost of Data Breach Study: Global Analysis (June 2016) sponsored by IBM:

383 companies in 12 countries.

$4 million is the average total cost of data breach.

29% increase in total cost of data breach since 2013.

$158 is the average cost per lost or stolen record globally.

$221 is the average per capita cost of data breach in the U.S.

15% percent increase in per capita cost since 2013.

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COST OF A DATA BREACH –UNITED STATES


Ponemon Institute 2016 Cost of Data Breach Study: Global Analysis (June 2016) sponsored by IBM:

64 companies in the U.S.

$7.01 million is the average total cost of data breach in the U.S.

7% increase in total cost of data breach in the U.S.

$221 is the average per capita cost of data breach in the U.S.

2% percent increase in cost per lost or stolen record in the U.S.

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PERSONAL IDENTIFYING INFORMATION(“PII”)


Examples of PII: Ohio Revised Code §1349.19: "Personal information" means an individual's name, consisting of the individual's first name or first initial and last name, in combination with and linked to any one or more of the following data elements, when the data elements are not encrypted, redacted, or altered by any method or technology in such a manner that the data elements are unreadable:

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Ohio Revised Code §1349.19(A)(7)(a):(i) Social security number;(ii) Driver's license number or state identification card number;(iii) Account number or credit or debit card number, in combination with and linked to any required security code, access code, or password that would permit access to an individual's financial account.

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Ohio Revised Code §1349.19(A)(7)(b): "Personal information" does not include publicly available information that is lawfully made available to the general public from federal, state, or local government records or any of the following media that are widely distributed:

(i) Any news, editorial, or advertising statement published in any bona fide newspaper, journal, or magazine, or broadcast over radio or television;

(ii) Any gathering or furnishing of information or news by any bona fide reporter, correspondent, or news bureau to news media described in division (A)(7)(b)(i) of this section;

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Ohio Revised Code §1349.19(A)(7)(b): "Personal information" does not include publicly available information that is lawfully made available to the general public from federal, state, or local government records or any of the following media that are widely distributed (continued):

(iii) Any publication designed for and distributed to members of any bona fide association or charitable or fraternal nonprofit corporation;

(iv) Any type of media similar in nature to any item, entity, or activity identified in division (A)(7)(b)(i), (ii), or (iii) of this section.

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Ohio Revised Code §1349.19(F)(1): A financial institution, trust company, or credit union or any affiliate of a financial institution, trust company, or credit union that is required by federal law, including, but not limited to, any federal statute, regulation, regulatory guidance, or other regulatory action, to notify its customers of an information security breach with respect to information about those customers and that is subject to examination by its functional government regulatory agency for compliance with the applicable federal law, is exempt from the requirements of this section.

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Depending upon the particular state’s law, PII includes, by way of example and not limitation, an individual’s first name or first initial and last name in combination with any one or more of the following data elements, when either the name or the data elements are not encrypted or redacted:

Social Security number Account number or credit or debit card number, or an account number or credit or debit card

number in combination with any required security code, access code, or password that would permit access to an individual’s financial account

Financial information Medical information Passport number Alien registration number Employer identification number Taxpayer identification number (other than the individual’s Social Security number)

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Depending upon the particular state’s law, PII includes, (continued):

Medicaid account number Food stamp account number Insurance policy numbers Utility account number Mother’s maiden name Employment history Biometric data including, without limitation, fingerprints, facial scan identifiers, voiceprint,

retina or iris image Deoxyribonucleic acid (DNA) profile Digitized or other electronic signature Any professional, occupational, recreational, or governmental license, certificate, permit, or

membership number20160919

TOP 10 CYBER SENSE RULES


1. Educate* a) Educate C‐Suite executives and management.

b) Educate employees.

c) Educate vendors.

*Bonus – Educate customers about cyber sense – helping customers protect themselves helps build trust and goodwill.

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2. Install updates upon receipt (or at least promptly).

3. Use strong passwords.

4. Encrypt the data.

5. Implement privacy by design for all software.

6. Salt the data.

7. Create/monitor data honey pots.

8. Do penetration testing.

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9. Plan for when the breach occurs. a) Table top exercises.

b) Written Information Security Program (“WISP”).

10.Trust & Verify. a) Contracts, e‐mails (e.g., attachments, links), etc.

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QUESTIONS?


ALAN S. WERNICK*ATTORNEY AT LAW

*ADMITTED TO PRACTICE IN IL, NY, OH, & DCOFFICE: 614‐463‐1400 & 847‐786‐1005

MOBILE: 847‐770‐1355E‐MAIL: [email protected]


LAN ERNICK COM 2016 FALL SYMPOSIUM Identifying … WERNICK lecture...Ohio Uniform trade secrets act...

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