Questions and Answers 4-27-2010
From Suffolk IP Licensing
Q1: I have conflicting notes on Securities Interests in Bankruptcy and how to file for those w/r to IP.
A1: Copyright: If filed copyright, with copyright office. If unfiled copyright, use UCC-1. Trade secret -- UCC-1. Patent, Trademark -- appear under current cases to be perfected via UCC-1, but should also be filed at the PTO.
Q2: Does exclusive licensee of trademark have standing for trademark dilution? -in my notes it is said that not.
A2: Correct, licensees of trademarks don't have standing to sue under trademark.
Q3: To protect software, can you put a clause in the license that says you are not allowed to reverse engineer? Is this anti-competition (violation of Antitrust laws)
A3: No reverse engineering clause are common and enforceable in copyright/trade secret agreements on the same basis as other contractual terms would be (see ProCD). I'm not sure what the point would be in a patent agreement. I could possibly think of situations where an antitrust claim could be made but it seems very unlikely in most circumstances.
Q4: Can you put an indemnification clause in a patent license? I have in my notes that you cannot and then later on that you can!
A4: Yes, but the scope of indemnification is problematic, as you probably don't want to assure the licensee that practicing the patented invention violates no other patent. Example: Color TV and B&W TV patents. Color TV patent holder would not want to assure licensee that practicing the patent would not infringe the B&W patent.
Q5: Could you please go over most favored licensee clauses? Is the licensor agreeing to zero royalties?
A5: The licensor is agreeing to provide to the licensee the best rate given to any third party licensee. Some court cases have interpreted that to mean settlements where a licensee is given a "free" license in exchange for dropping a claim could be considered to be granted for no payment, and thus taken into account. So, although the initial intention would not be to give a free license, it could have that effect.
Q6: On Class 5 page - there is a reference to "Products Approach v. Specific IP Approach" and then below there is a “magic words” table/box for statute language - can you please clarify how this table is being/should be applied in connection with the "approach" heading?
A6: When the “Product” approach is used, for example for a copyrighted product, the grant language is usually “use” as opposed to the statutory language; when the “IP” approach is used, for example with a specific patent, the grant language would more commonly track the statute.
Q7: With respect to the "royalty basis" what do you mean when you refer to “paid up”? My impression was that there is a difference between a License Payment [one time up front transactional fee, like buying software at Best Buy] or a Royalty Payment; and that within a "Royalty Payment" the license can be either a "Paid Up" Royalty License [a fixed #, based on forecasting of either % of sales or per-units sold] or a "Running" Royalty License [based on actual return of % of sales or per-units sold]? I am wondering if I've misunderstood this.
A7: As you have said, "Paid up" means not a running royalty, and would normally mean an up-front payment. License payment or royalty can be used interchangeably, although royalty would generally indicate a % of sales or per units.
Q8: What do you mean by “perpetual” and “time period” underneath “paid up” on Class 6 page – are paid up better suited for short term or limited licenses, not perpetual licenses?
A8: Paid up means paid up front, which generally would be for the entire term of the underlying intellectual property (perpetual) or for a limited time period such as monthly or annually (a subscription charge). The time payment for payment depends on the economics.
Q9: Can you explain the difference between a Transfer-of-Undivided-Interest versus a License
A9: Transfer of an undivided interest is a transfer of a property right; license is the right to use but no ownership is transferred. Admittedly, the distinction can become some unclear at some point.
Q10: And when exactly would a concern about accidental transfer of ownership manifest?
A10: Normally what I am referring to here is the possibility that you intended to license a product to a licensee but because of the wording of the agreement relating to future developments, the licensee owns the future developments, and thus (to a certain extent) has ownership right in your materials as they have evolved.
Q11: I have the below quote in my notes for GPL – and I'm confused, because what would you be distributing if you're not distributing source code or object code under the GPL? I might have misheard/mistyped this during class because it does not seem to “mesh” with everything that I've read: “Note: You only have to give people the source code if you give people the object code (or executable code – which is treated the same for these purposes) If you choose to not give them the object code, that is perfectly fine and you do not have to give them the source code
A11: Software comes in either source (people can read it) or object (machine can execute it but people can't read it) form. So if you are providing software to a person you have to choose to provide it in either one or the other form (or both). Normally, that would be your choice. The GPL limits that choice: it says it is fine to give the software to someone in source without giving them object, but if you give them object you must give them source. But, you only have the obligation to give them source if you have given them something (object) in the first place. There is no general obligation to give any who asks anything. So if you have given source and/or object to Fred, and Joe comes asking for the source you can say no. But if you have given object to Fred, and Fred asks, you must give Fred source also.
Q12: Can you please re-explain the situation under the “MySQL” hypothetical you gave us during the open source licensing class, where someone [it was unclear if it was website or another licensor] got a license under GPL for free, but then wanted to combine the open source software and sell it with other products, and sell it to them [website? Licensor? 3rd party?]. And then the website said, fine, you can purchase a commercial license from us and then sell under that.
A12: This is so-called “dual licensing”. As a copyright owner, MySQL can license its software to anyone on any terms. It starts by licensing the software to the world under the GPL. Everyone who can comply with the conditions of the GPL can use the software for free.
However, there may be users who would like to incorporate the software into proprietary products under their own licenses (not the GPL) in order to charge for the combination. They don't have appropriate rights under the GPL to do this because the GPL requires re-licensing that combination only under the GPL.
So that user can approach MySQL and request a commercial (i.e. proprietary license). MySQL as the owner of the copyright to he product can grant that license to the user.
More generally, any licensor of a non-exclusive license is free to use various forms of the license it grants to its customers. Some can be free; some can be for payment; etc. Having one form be GPL and another proprietary is merely an example of this.
Q13: Would this hypo just be applicable to GPL or all three OSL versions? [considering the different restrictions, especially with GPL]
A13: It is most relevant to the GPL, as the restrictions in the GPL would prevent a user from incorporating the software into a proprietary product. The restrictions in the BSD or MPL are much less onerous and could be used with a proprietary product, so although the strategy is available to the software owner, it is unlikely it would be pursued by the user.
Q14: Can you please explain how the Mozilla public license eliminates the “virus” concern of the GPL?
A14: It doesn't entirely, but does permit the combination of open source and commercial materials because it explicitly states (Section 3.7) “You may create a Larger Work by combining Covered Code with other code not governed by the terms of this License and distribute the Larger Work as a single product. In such a case, You must make sure the requirements of this License are fulfilled for the Covered Code.” The GPL does not offer that alternative.
Q15: Is it correct that Mozilla public license is the only OSL that can be used to license a Patent?
A15: No. First to clarify, open source licenses are not the best vehicle for patent licenses per se. Open source license are primarily for material otherwise protected by trade secrets and copyright, which may also have patent protection. A patent can be give status equivalent to open source software rights just by not asserting it (or by a “patent pledge” -- see for example http://www.ibm.com/ibm/licensing/patents/pledgedpatents.pdf.) The Mozilla Public License is one of many which include a specific patent license (including Eclipse Public License, Apache License v2). Others do not (BSD/GPLv2).
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