How have recent advancements in technology changed the intellectual property landscape for clients nationwide and around the world?
The IP landscape is constantly changing as technology advancements continue to shape the products and services consumers and businesses use and enjoy. Two decades ago, Napster and pirated MP3s disrupted and upended the music distribution model and, after copyright laws caught up and addressed online streaming, today’s music and video streaming platforms and revenue models emerged. Two years ago, the buzz was all about NFTs and what IP rights are implicated by digital content tied to a token on the blockchain, and I was busy doing NFT deals with celebrities and brand owners such as Katy Perry, Dionne Warwick and the World Poker Tour. While the NFT hype may be subsiding (except in the online game/metaverse space), the current buzz is now around Artificial Intelligence (AI) technologies, which appear be here to stay. While I have been advising clients on AI technologies and data licensing models for at least 5 years, the courts are just now starting to address the copyright and other implications from the use of existing content to train these AI models. The U.S. Copyright and Patent & Trademark Offices are not recognizing copyright protections for AI-generated images or patent rights for AI-created inventions. That view may be too narrow if human contributions and improvements are not recognized and cannot be protected and monetized.
What are the key considerations regarding the protecting and enforcement of IP rights relating to the development of new and emerging technology?
Each technology advancement brings its own unique challenges for innovators hoping to protect the fruits of their efforts and investment. As mentioned, it can take time for laws to catch up. In the interim, companies will need to use and rely on the traditional IP avenues (copyright, patent, trademark and trade secrets) to protect and enforce their IP rights in new technologies they are developing and planning to commercialize. As legal advisors, we have to be creative to fit new technologies into existing legal and contractual models. As an example, developers who use open source AI software tools to develop portions of their proprietary software codebase may not be able to obtain copyright protection for the overall software product if they are unable to separately identify the human and AI-created code, or the inventor for patent purposes. And even then, under current Copyright Office and PTO guidance, that still may not be enough. Trade secret protections (maintaining confidentiality where practical) will remain important as a fallback, but AI adopters need to be mindful that prompts and inputs into an AI tool are generally not confidential and could result in the loss of trade secret protection. In light of the lag time, or even inability to secure comprehensive legal protections for new technologies (e.g., with AI today), innovators will need to weigh the ramifications of lessened or no protection against being first to market and capturing a significant market share before others catch up. Companies (as technology developers and users) should also develop an AI Usage Policy for their employees and providers to limit the risk of improper usage in proprietary technologies as well as the risks associated with AI-generated content.
What is the scope and purpose of technology transfer agreements, and how can intellectual property rights be best protected for companies involved with licensing, distributing and commercializing new products and technology?
Written agreements, whether to document the development and acquisition of technology and IP rights, or to protect IP and technology in products that are being distributed and commercialized, are necessary and vital in order to obtain, protect and define the scope of the innovator’s IP and limit the rights provided to the customer. It is very important that companies have agreements with their service providers that include express assignments of all IP rights in work product and deliverables. Simply paying for the work is not enough to transfer ownership of the IP rights, as many companies have discovered. This is important not only for acquiring technology but also for marketing collateral, logos and website content. In addition to defining and retaining ownership rights, commercialization agreements need to include use restrictions, defined but limited warranty obligations and disclaimers, and limitations of liability that are appropriate for the nature of the products and services being provided as well as how they will be used. Indemnification from third party infringement and other claims is also important. Customers expect indemnification from the technology provider, but it is also important that the customer provide indemnification for its use of the product or service, which may implicate third party IP rights for user content processed using the product and privacy rights for user information being collected or processed by the customer.
What strategic measures can be taken for firms looking to commercialize their intellectual property?
Strategic IP planning needs to begin on day one, making sure that all IP rights utilized in the company’s products are owned or properly licensed. This involves having appropriate IP and confidentiality agreements in place with founders, employees, consultants and service providers who contribute to the development or improvement of the technology. Companies should have patent and IP policies for tracking internal product development to make sure that copyrights, patent rights and trademark rights that are important to the company’s current and future product strategies are appropriately documented and registered.
Providers and users of cloud services and SaaS solutions are facing ever increasing and changing privacy and legal issues in cloud computing, including new legal and security requirements and the risks of storing sensitive data in the cloud. What are the main challenges facing cloud companies?
When we began developing the first privacy policies for ecommerce companies over 20 years ago, they were simple disclosures of what information was being collected and how it would be used. Prior to special applicability laws such as HIPAA (patient information) and GLB (financial information), there were few statutes or regulations apart from some early FTC guidance based on existing consumer protection laws. Now, new statutes are being passed almost monthly, and cloud and web service providers need to consider multiple state laws as well as international privacy laws such as the GDPR. Privacy policies (and data use practices) need to address and comply with all of the applicable laws and need to be updated regularly as the laws change. As part of this overlapping patchwork of privacy and data security laws, there are increasing requirements for companies to implement sophisticated data security systems and protections designed to prevent data breaches, along with internal tracking, audit and other legal compliance measures. Typically, in addition to a broad compliance with law obligation, a separate data processing agreement is attached or signed along with each cloud service agreement, usually mandated by the customer’s internal policies. As SaaS and cloud services begin to incorporate AI capabilities and features into their service platforms, they need to have terms and conditions in place that cover or limit the use of AI, and similarly, customers require protections to be added to cloud services agreements to protect against potential liability from that usage.
About Michael Plumleigh
Michael Plumleigh is a partner and head of the IP & Tech Transactions practice at M&H LLP. Mike has been advising clients on intellectual property, technology and media matters for over 30 years, and offers the perspective of having worked in-house as well as serving as outside counsel for hundreds of technology, media and life science/biotech companies.
Mike has extensive experience advising early stage and established companies on complex corporate partnering, M&A, licensing and intellectual property transactions; AI data services, software license, SaaS and cloud services agreements; OEM and distribution channel agreements; product development, manufacture, supply and marketing agreements; branding, IP commercialization and portfolio management; and counseling on open source software, Internet digital media, export, and international privacy laws.
Prior to joining M&H, Mike was Director of Legal Affairs at Via Licensing Corp. (part of Dolby Labs), where he was responsible for the development and negotiation of standards-based patent licensing programs (patent pools), monetizing IP on behalf of many of the world’s largest electronics manufacturers and technology innovators. Prior to Via, Mike was Vice President, General Counsel and Secretary at Critical Path, Inc., a leading provider of mobile messaging and digital media solutions and services.
Before going in house, Mike was a partner and co-founder of the Technology Transactions and Privacy practice groups in the San Francisco office of Cooley LLP and a partner in the Technology Group at Brobeck Phleger & Harrison LLP.
Prior to pursuing law, Mike was a professional musician, performing and touring with the Buddy Rich and Harry James Orchestras, doing shows and recording work in Los Angeles, and engagements with jazz greats Clark Terry, Mel Tormé, Joe Williams and Louie Bellson. More recently Mike has performed with Jimmy Buffett, Kix Brooks, the Zak Brown Band, Steve Miller and Bob Weir.
About M&H LLP
M&H LLP is a premier corporate, employment and technology law boutique located in Silicon Valley and New York. M&H advises entrepreneurs, startups, investors, emerging growth and established technology, life science, clean tech, digital media and other companies at all stages of development.
Michael Plumleigh
Partner, M&H LLP
525 Middlefield Road, Suite 250
Menlo Park, CA 94025
Tel: 650.331.7005
Email: mplumleigh@mh-llp.com
https://mh-llp.com/attorneys/
michael-plumleigh/
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