Intellectual Property Legal Issues Protecting IP Rights and Mitigating Infringement Risks in Virtual Storage and Applications

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Presenting a live 90‐minute webinar with interactive Q&A

Cloud Computing:

Cloud Computing:

Intellectual Property Legal Issues

Protecting IP Rights and Mitigating Infringement Risks in Virtual Storage and Applications

T d ’ f l f

1pm Eastern | 12pm Central | 11am Mountain | 10am Pacific

WEDNESDAY, OCTOBER 12, 2011

Today’s faculty features: Peter H. Kang, Partner, Sidley Austin, Palo Alto, Calif. Brian E. Mitchell, Attorney, Mitchell + Company, San Francisco

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Cloud Computing:

Intellectual Property Legal Issues

Protecting IP Rights and Mitigating Infringement Risks in Virtual Storage and Applications

Strafford Publishing Webinar

Wednesday, October 12, 2011 – 10 a.m. (PDT) Wednesday, October 12, 2011 10 a.m. (PDT)

Presented By

Brian E. Mitchell, Esq., Mitchell+Company and

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Cloud Computing: IP & Legal Issues

FACULTY FACULTY

• Brian E. Mitchell, Founding Partner, Mitchell + Company Law Offices, San Francisco, CA

– Brian Mitchell handles patent copyright trade secret and trademark matters Brian Mitchell handles patent, copyright, trade secret, and trademark matters. He is an expert at mastering the intersection between technology and the law, and has handled matters involving a wide range of products and technological areas, including hardware and software for mobile devices, consumer

electronics, and telecommunications, as well as Internet, e-commerce, and b i th d t t H i tl l L t i L t S t Cl business method patents. He is currently also a Lecturer in Law at Santa Clara University Law School. J.D., University of San Francisco; B.A., Cal. State

University at Sacramento.

• Peter H. Kang, Partner, Sidley Austin LLP, Palo Alto, CA

– Peter Kang counsels and litigates in all areas of intellectual property law, including patent, trade secret, trademark, and copyright law. His practice focuses on representing clients in patent lawsuits, complex commercial and technology litigation, trade secret disputes, and copyright/trademark suits. He also represents clients in IP licensing and complex business/technology

also represents clients in IP licensing and complex business/technology transactions. He has been recognized for his work in IP by The Legal 500,

IFLR1000, Asia Law & Practice, and Northern California Super Lawyers. J.D.

(cum laude) Georgetown University Law Center; B.S. and B.A., Stanford University.

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Cloud Computing:

Intellectual Property Legal Issues

PART ONE

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WHAT IS THE CLOUD

• “When people talk about cloud computing, they’re

talking just about taking some stuff, putting it outside the firewall and perhaps putting it on servers that

the firewall, and perhaps putting it on servers that are also shared or storage systems.”

• Microsoft CEO Steve Ballmer

• “The interesting thing about cloud computing is that we’ve redefined cloud computing to include

everything that we already do. I can’t think of y g y

anything that isn’t cloud computing with all of these announcements…. I don’t understand what we would do differently in the light of cloud computing other y g p g

than change the wording of some of our ads.”

• Oracle CEO Larry Ellison

“It’s become the ph ase d jo " • “It’s become the phrase du jour."

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DEFINING CLOUD COMPUTING

Marc Andreesen described the cloud as “a smart, complex, powerful computing system in the sky p , p p g y y that people can just plug into.”

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Defining Cloud Computing

• NIST defines “cloud computing” as “a model for

enabling convenient on demand network access to a enabling convenient, on-demand network access to a shared pool of configurable computing resources

(e.g., networks, servers, storage, applications, and i ) th t b idl i i d d l d services) that can be rapidly provisioned and released with minimal management effort or service provider interaction.”

• The cloud model defined by NIST is multi-dimensional and composed of

five essential characteristics – five essential characteristics, – three service models, and – four deployment models.ou dep oy e t ode s

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Defining Cloud Computing

• The five essential characteristics of the cloud model developed by NIST are:

developed by NIST are:

– 1) on-demand self-service; – 2) broad network access; 2) broad network access; – 3) resource pooling;

– 4) rapid elasticity; and – 5) measured service

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Defining Cloud Computing

• Deployment models as defined by NIST:

– 1) Public Cloud (Gmail);

– 2) Private Cloud (or Virtual Private Could) (Cerelink); 3) Community Cloud (Google Gov Cloud);

– 3) Community Cloud (Google Gov Cloud);

– 4) Hybrid Cloud (surge computing – Rackspace)

• Service models as defined by NIST: Service models as defined by NIST:

– 1) Software as a Service (SaaS – Salesforce.com); – 2) Platform as a Service (PaaS – BestBuy’s Giftag

running on Google App Engine);

– 3) Infrastructure as a Service (IaaS – Amazon Elastic Computing Cloud (EC2))p g ( ))

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Cloud Computing – Salient Features

• Third party control and access to

data

• Lack of transparency

Lack of transparency

• No geography in the cloud –

borderless

• Potential multiple copies of data

dispersed in the cloud

• Surge computing

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Potential IP Issue: Patents and the Cloud

• Patent Infringement Issues

• Divided Infringement

• Extraterritoriality

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Potential IP Issue: Patents and the Cloud

• Divided Infringement and Extraterritoriality

• “Ordinarily, whether an infringing activity under

section 271(a) occurs within the United States can be determined without difficulty. This case presents an y p added degree of complexity, however, in that: (1) the “patented invention” is not one single device, but rather a system comprising multiple distinct at e a syste co p s g u t p e d st ct

components or a method with multiple distinct steps;

Ԝand (2) the nature of those components or steps permits their function and use to be separated from permits their function and use to be separated from their physical location.”

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Potential IP Issue: Patents and the Cloud

• In RIM, part of the claimed email system was in Canada • Customers of Blackberry were in the U.S.

• Customers of Blackberry were in the U.S.

• Federal Circuit held that “use” of the system occurred in

the U.S. and thus the system/apparatus claims were infringed

• Court held that method/process claims were not

infringed as a matter of law infringed as a matter of law

• “a process cannot be used ‘within’ the United States as

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Potential IP Issue: Patents and the Cloud

• In RIM, part of the method was performed by RIM, not

customers in the U.S.

• Federal Circuit held that there was no “sale”, “offer to

sell”, “importation”, or 271(f)-(g) infringement of the method/process claims as a matter of law

• “RIM's performance of at least some of the recited steps of

the asserted method claims as a service for its customers cannot be considered to be selling or offering to sell the g g

invention covered by the asserted method claims. The sale or offer to sell handheld devices is not, in and of itself,

enough. Thus, we conclude as a matter of law that RIM did not sell or offer to sell the invention covered by NTP's y method claims within the United States.”

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Potential IP Issue: Patents and the Cloud

• Divided Infringement

• “This court therefore holds as a matter of Federal Circuit law that there can only be joint infringement when there is an agency relationship between the parties who perform the method steps or when one party is contractually obligated to the other to

perform the steps. “

p p

– Akamai Techs., Inc. v. Limelight Networks, Inc., – F.3d –, 2010 U.S. App. LEXIS 25825 at 13-18 (Fed. Cir. Dec. 20, 2010)

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Potential IP Issue: Patents and the Cloud

• Patent Portfolio Development - 10 versus 750

• Business Method (Bilski) issues

• “[T]his court also will not presume to define ‘abstract’ beyond the recognition that this abstract beyond the recognition that this

disqualifying characteristic should exhibit itself so manifest as to override the broad statutory

categories of eligible subject matter and the

statutory context that directs primary attentions on the patentability criteria of the rest of the

o t e pate tab ty c te a o t e est o t e Patent Act.”

– Research Corp. Techs., Inc. v. Microsoft Corp., - F.3d - , 2010 U S App LEXIS 24984 at 17 18 (Fed Cir Dec 2010 U.S. App. LEXIS 24984, at 17-18 (Fed. Cir. Dec. 8, 2010) (internal citations omitted).

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Potential IP Issue: Patents and the Cloud

• Patent Portfolio Development - Claim Drafting

• “While acknowledging the difficulty of proving • While acknowledging the difficulty of proving

infringement of claims that must be infringed by multiple parties, this court has noted that such concerns ‘can usually be offset by proper claim concerns ‘can usually be offset by proper claim drafting. A patentee can usually structure a claim to capture infringement by a single

party.’... This court also observes that in

addition to initially structuring a claim to capture infringement by a single party, patentees may be infringement by a single party, patentees may be able to correct a claim that can only be infringed by multiple parties by seeking a reissue patent.”

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Potential IP Issue: Patents and the Cloud

• 35 U.S.C. § 102(g): Conception/Reduction to

Practice and “Territoriality” Practice and Territoriality

• “Reduction to practice in the United States

requires that the invention be embodied in requires that the invention be embodied in

tangible form in the United States, not simply reported.” Scott v. Koyama, 281 F.3d 1243, 1247 (Fed Cir 2002))

1247 (Fed. Cir. 2002)).

• Hypothetical inventors in non-WTO countries

i th l d using the cloud

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Potential IP Issue: Patents and the Cloud

• Inadvertent Prior Art

• Publication

Public knowledge

• Public knowledge

• Impact of America Invents Act of 2011 • First to file

One year grace period for inventor disclosures

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Conclusions

•

Cloud computing’s growth is rapid:

•

$46B in 2008; $58B in 2009;

approx $68B in 2010 (per

approx. $68B in 2010 (per

Gartner)

•

IP issues will grow (10 vs. 750)

Additional Legal issues

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THANK YOU

Peter H. Kang, Esq. Sidley Austin LLP

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THANK YOU!

BEIJING BRUSSELS CHICAGO DALLAS FRANKFURT GENEVA HONG KONG LONDON LOS ANGELES NEW YORK PALO ALTO SAN FRANCISCO SHANGHAI SINGAPORE SYDNEY TOKYO WASHINGTON, D.C.

educational use and informational purposes of the seminar participants only and are not intended to and do not constitute educational use and informational purposes of the seminar participants only and are not intended to and do not constitute legal advice. Transmission of the information herein is not intended to create, and receipt does not constitute, an attorney-client relationship, and these materials are not intended to nor do they create an attorney-attorney-client relationship with Sidley Austin LLP. The materials presented are summaries of particular developments in the law and are not intended to be exhaustive discussions Because of their summary nature they should not be relied upon in reaching a conclusion in a exhaustive discussions. Because of their summary nature, they should not be relied upon in reaching a conclusion in a particular area. The views expressed herein are current, personal views, and should not be attributed to and do not

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Cloud

Computing:

Intellectual

Property

Legal

Issues

PART

TWO

Brian

E.

Mitchell

Mitchell + Company Law Offices

Mitchell

Company

Law

Offices

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IP Enforcement Challenges

IP

Enforcement

Challenges

• Jurisdictional IssuesJurisdictional Issues

• Subpoenas

• Privilege

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Jurisdictional Issues

Jurisdictional

Issues

• Where does data actually physically reside?Where does data actually physically reside?

• Which government(s) and court(s) have jurisdiction

over the data?

• Which party has responsibility for the data?

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Jurisdictional

Issues:

International Data Protection Laws

International

Data

Protection

Laws

• Differing national data protection regimesg p g

• EU Data Protection Directive ‐ Prohibits transferring

personal information to countries lacking same level personal information to countries lacking same level

of protection for EU residents (e.g., U.S.).

h l l l h

• The Security Rule re Electronic Protected Health

Information under the federal Health Insurance Portability and Accountability Act (HIPA))

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Potential Legal Issues: Subpoenas

Potential

Legal

Issues:

Subpoenas

•

Potential issue with a third

Potential

issue

with

a

third party

‐

party subpoena

subpoena

served

on

a

cloud

service

provider

•

The cloud service provider has control over

•

The

cloud

service

provider

has

control

over

the

electronic

data

and

client

files

Th

i ll

ld

d

b

•

Theoretically,

could

respond

to

a

subpoena

by

producing

documents,

data,

and

information

hi h h

li

l i i

l h

bj

i

to

which

the

client

legitimately

has

objections

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Potential Legal Issue: Privilege

Potential

Legal

Issue:

Privilege

•

Customers’ attorney

Customers

attorney client

‐

client communications

communications

may

be

electronically

shared

with

their

cloud

service providers (and their subcontractors)

service

providers

(and

their

subcontractors)

•

Potential

legal

issue

as

to

whether

there

is

an

argument for a finding of waiver of privilege

argument

for

a

finding

of

waiver

of

privilege

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Trade Secrets

Trade

Secrets

• “‘Trade secret’ means information … that … is the subject of

efforts that are reasonable under the circumstances to

maintain its secrecy.” Uniform Trade Secrets Act, § 1(4).

• A public disclosure of a valuable trade secret will destroy its

value

• Potential legal issue raised by the sharing or distribution of

confidential information with cloud service providers and

subcontractors

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Trademark

Issues

• Conflicting Rights: An increasing number of g g g

trademarks and trademark applications incorporating the term “cloud computing”

• Will invariably lead to trademark issues relating to

genericness, secondary meaning, and

infringement/likelihood of confusion infringement/likelihood of confusion

• Priority: Difficulties determining the senior user in a

particular geographic region when the trademark is used

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Copyright

py g

Issues

• Potential legal question as to whether a work that g q exists solely in the cloud is sufficiently “fixed” in a tangible medium of expression for copyright purposes • Extraterritoriality issues: For example, is copied computer software infringing US copyright law if it is stored on a cloud server overseas

?

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Bonus Material: Use by Lawyers

Bonus

Material:

Use

by

Lawyers

• Lawyers are increasingly turning to cloud‐basedLawyers are increasingly turning to cloud based

solutions

• Common examples include online data storage (p g (e.g.g , ,

Dropbox), Internet‐based email (e.g., Gmail), and

software as a service. • SaaS commonly includes a variety of services such as law practice management applications, document k d b ll ( management, timekeeping, and billing (e.g. Freshbooks).

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Ethics/Security Concerns

Ethics/Security

Concerns

• Manyy state bars,, bar associations,, and the ABA are discussingg

ethics and security concerns

• One of an attorney's foremost duties is to protect client

fid ti lit S h b d b t

confidentiality. Some concern has been expressed about

placing client files and other confidential information in the

cloud.

• But counter argument: Files and other date stored in the

cloud can be more secure than on a typical attorney's laptop,

as the cloud based services often employ encryption as the cloud‐based services often employ encryption

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Lawyer’s Duties

Lawyer s

Duties

• The ABA Commission on Ethic's “20/20 WorkingThe ABA Commission on Ethic s 20/20 Working

Group on the Implications of New Technologies” has identified three duties implicated by cloud

computing

• Model Rules 1.1 (competency), 1.6 (duty of

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Confidentiality Issues

Confidentiality

Issues

• The ABA Commission has identified a number ofThe ABA Commission has identified a number of

confidentiality issues with respect to lawyer’s use of the cloud.

• However, many of these issues exist in contexts

independent of the cloud, including outsourcing and use of contract lawyers and staff.

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Solution

• Most opinions and papers conclude that concerns b dd d h d b h ABA are best addressed when, as stated by the ABA, “Lawyers [ ] take reasonable precautions to ensure that their clients’ confidential information remains

that their clients confidential information remains

secure”

• As a further example the Arizona Bar specificallyAs a further example, the Arizona Bar specifically

gives its approval to cloud computing, so long as lawyers use reasonable precautions to safeguard client security and confidentiality. (Bar Opinion 09‐ 04).

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Solutions (Cont.)

Solutions

(Cont.)

• However, “Lawyers should be aware of limitations inHowever, Lawyers should be aware of limitations in

their competence regarding online security measures and take appropriate actions to ensure that a competent review of the proposed security measures is conducted. As technology advances over ti i di i f th bilit f time, a periodic review of the reasonability of security precautions may be necessary.” (Bar Opinion 09‐04) 09 04).

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Conclusions

•

Cloud computing’s growth is rapid:

Cloud

computing s

growth

is

rapid:

•

$46B

in

2008;

$58B

in

2009;

approx.

$68B

in

(

)

2010

(per

Gartner)

•

IP issues will grow (10 vs 750)

•

IP

issues

will

grow

(10

vs.

750)

•

Legal

issues

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Q&A

and

Wrap

p p

‐

Up

•

Comments from the audience

•

Comments

from

the

audience

•

Q&A

•

Final

words

THANK YOU!

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Brian E Mitchell

Brian

E.

Mitchell

4

Embarcadero

Center,

Suite

1400

S

i

C 9

San

Francisco,

CA

94111

(415)

766

‐

3514

(Office)

(415)

402

‐

0058

(Facsimile)

brian mitchell@mcolawoffices com

brian.mitchell@mcolawoffices.com