TECHNOLOGY, OUTSOURCING, AND COMMERCIAL TRANSACTIONS
NEWS FOR LAWYERS AND SOURCING PROFESSIONALS

Protecting intellectual property rights is a critical component to the success of a technology company. In order for a tech company to determine how to protect its intellectual property, the company should understand how the key intellectual property rights work. In this Part 1 of a three-part series, we discuss how patent, copyright, and trade secret ownership works in the United States if there is no agreement in place to allocate these rights.

Patents

Patents are a right to exclude others from using a technology for a limited period of time. In exchange for these rights, the patent holder must disclose the invention in the patent. Without an agreement in place to state the ownership of an invention that is patented, the following applies:

  • Sole Ownership. In general, the inventor owns the right to patent the invention, regardless of the type of technology. This is the case even when the inventor is an employee who created an invention within the scope of employment
  • Joint Ownership. Occurs when there is more than one inventor (employee from Company A and employee from Company B, for example) or rights have been assigned to more than one person or entity. Even a small percentage ownership or minor contribution results in joint ownership right in the patent. Any owner may exploit a patent either by licensing to a third party or practicing the patent without permission of or accounting of profits to any other owner
  • Enforcement. All owners must participate in an enforcement claim. Therefore, if a company jointly owns a patent and wants to file an infringement claim against a third party, all other owners must also agree to file the claim

In Part 1 of this two-part series, we discussed some of the Federal Aviation Administration (FAA) requirements for commercial use of unmanned aerial vehicles (also known as UAVs or drones). In this Part 2, we discuss some of the other considerations that commercial drone operators must consider, including privacy laws, local regulation, and certain business considerations.

Drones and Privacy Laws

At present, there are no federal laws specifically regulating drone use and privacy. The FAA was tasked with drafting a comprehensive rule for drone use. Some have interpreted the FAA’s mandate to include a requirement to implement privacy protections. The FAA, however, has taken the position that it is a safety regulator and privacy issues are outside its authority. In the meantime, the National Telecommunications and Information Administration (NTIA) worked with various stakeholders in 2016 to publish its Voluntary Best Practices of UAS Privacy, Transparency and Accountability. These best practices are specific to drone use and are not a legal standard. Nonetheless, drone operators should be aware of potential liabilities for violating any policies they adopt that go beyond the minimum legal standards.

Unmanned aerial vehicles (UAVs)—popularly known as drones—have enormous possibilities for use in the business world. In fact, the drone market is expected to exceed $12 billion by 2021. The small size, maneuverability, and ability to carry various types of recording or sensory devices makes drones attractive for many types of commercial use from delivery services, such as Amazon’s First Prime Air Delivery service  to managing inventory by using drones with RFID sensors and managing agriculture. However, any company considering the commercial use of drones should be aware of the evolving legal landscape regarding their use. How a company plans to use a drone will help determine the legal requirements that must be met.

The California Supreme Court adopted a more stringent test on April 30 to distinguish between independent contractors and employees. This new test applies to claims based on California’s Industrial Welfare Commission Wage Orders, and is more stringent than the prior standard.

For more details on this new ruling, read the LawFlash.

California was one of the first states to allow autonomous vehicles (self-driving cars) to be tested on public roads. On April 2, 2018, the state began allowing self-driving cars without a driver in the vehicle to be tested on public roads. Before these new regulations, California only allowed autonomous vehicles to be tested on public roads with an approved driver.

Senators Edward Markey and Richard Blumenthal introduced a new privacy rights bill on April 10 titled “Customer Online Notification for Stopping Edge-provider Network Transgressions” (CONSENT Act). The CONSENT Act’s obligations would apply to entities known as edge providers who provide services through a software program (including a mobile application) or over the internet (1) that require its customers to subscribe to or maintain an account to obtain services; (2) that require a customer to purchase services; (3) through which a customer performs searches; or (4) through which a customer provides sensitive customer proprietary information.

The CONSENT Act would require the Federal Trade Commission (FTC) to promulgate regulations to protect the privacy of customers of edge providers within one year of passage of the CONSENT Act that would take effect within 180 days of such promulgation. Specifically, the CONSENT Act stipulates that such FTC regulations must

The Russian Parliament on April 12 approved at a first hearing a new draft law aimed at owners of public networks. This latest bill in a series of legislation on internet-related activities and services would create new obligations on any internet resources with more than 100,000 users in Russia per day that allow enrolled users to post or exchange electronic messages.

For more details on this new proposed legislation, read the LawFlash here.

April showers bring…Morgan Lewis’s Annual Technology May-rathon. Our annual series of presentations and webcasts, known as the Technology May-rathon, runs the entire month of May. Industry leaders from a variety of technology-focused practices will present on certain technologies, providing lawyers with critical understanding of the technologies that impact our work. The presentations and webcasts will also focus on legal developments and key topics resulting from innovative technologies.

Below are just a few examples of the presentations that are part of the 2018 Technology May-rathon. Be sure to check back for the most up-to-date information as more events are added.

For more information or to register, visit the full listing of events here.

It is easy to skim over your contracts’ insurance provisions or simply defer to risk experts, but here are a few questions you might want to consider the next time you review the insurance section of a contract.

  1. How do your indemnification and other risk allocation provisions interact with your insurance provisions? The proper allocation of risk in your contract is the first step. Indemnities, warranties, and similar provisions contractually allocate liability between the parties. That liability will exist regardless of whether the other party maintains insurance. If a contractually-allocated liability arises, the next question is whether the liable party has the financial wherewithal to fulfill its obligations. That is where the assets of the liable party and its insurance come into play. Requiring insurance helps to ensure the liable party will have the money to deliver on its contractual promise to satisfy the liabilities allocated to it in the contract. Watch as the other side may try to limit its obligation to indemnify you to the extent that its insurance policies cover the incident or costs in question. You may want to push back as this could unfairly limit your protection or cause a delay in receiving payment even if the insurance policy ends up covering such costs. The other side may also seek to limit its liability to amounts actually recovered from its insurance company. This should be rejected as the other side is maintaining insurance to help it satisfy its contractual liabilities, not to put a limit on them.

It is important to periodically review form agreements to ensure that the provisions that were favorable or represented your company’s position in the past continue to accurately protect your company’s interests.

At the Tech & Sourcing @ Morgan Lewis blog, we have given tips on drafting nondisclosure agreements (NDAs) in the past. In this post, we revisit some of those key considerations and expand upon additional items to bear in mind as you review your company’s NDAs.