And Who Says Entrepreneurs Don’t Care About IP?

Last night I had the pleasure of presenting a  “Crash Course” on Intellectual Property for Entrepreneurs at the University of Colorado here in Boulder.  The presentation was well attended (especially given that it was the night of our first real snow storm for the season here in Boulder) and the Q&A following the presentation really brought out some interesting concerns – not just about the interplay between IP and technology but involving content and new media IP issues as well.  Special thanks to Brad Bernthal from the Silicon Flatirons Center for Law, Technology and Entrepreneurship at CU for inviting me to give the presentation and organizing the event.

The presentation was part of a larger series of “Crash Course” events geared toward entrepreneurs sponsored by Silicon Flatirons.  You can access a list of current and future “Crash Courses” on the Silicon Flatirons web site.  Past topics have included angel and VC fund raising, marketing for early stage tech companies, and growing a business in the current uncertain economy.  I understand the folks at Silicon Flatirons are lining up more interesting topics in the near future.

The materials from my presentation are now available online. I encourage you to check them out and to visit the Silicon Flatirons site for more information on the ongoing “Crash Course” series.

Heading to New York?

I will be in New York on August 8th to speak on a panel at this year’s American Bar Association (ABA) Annual Meeting. The panel, titled “Life after GPLv3: New Developments in Open Source Software Licensing” is sponsored by the ABA Section of Intellectual Property Law and is being held at 2:00 PM on the 8th at the Waldorf-Astoria.

We have structured the panel as a series of brief presentations by the panelists followed by a general Q&A session on the presentations. While the title for the panel is a bit innocuous, the presentations will cover a variety of relevant open source topics, including: GPLv3 and the GPLv3 drafting process (including differences between GPLv2, GPLv3 and other open source licenses), open source patent concerns, legal strategies for using open source software in connection with proprietary software, and issues raised by open source software under the Sarbanes Oxley Act of 2002 and other corporate regulations.

My presentation will include a brief history and update on the “BusyBox lawsuits” brought over the last year by The Software Freedom Law Center (SFLC) on behalf of its clients Erik Andersen and Rob Landley (the two principal developers of the BusyBox open source utility) alleging copyright infringement based on a violation of version 2 of the GNU General Public License (GPL). I will be including information based both on my personal experience working with defendants in several of the BusyBox cases as well as discussions with others involved in the suits. Details on the panel and the other panelists are included below.

For those of you based in New York or headed to the ABA Annual Meeting, please let me know if you would be interested in getting together while I am in town.

2008 ABA Annual Meeting
Section of Intellectual Property Law

2:00 p.m. – 3:30 p.m.
CLE Program: Life after GPLv3: New Developments in Open Source Software Licensing.
co-sponsored by the Section of Science & Technology Law

The past year has seen significant legal developments concerning open source software licensing, most notably, the publication of the GPLv3 license, which is much more comprehensive than GPLv2 and attempts to address the changes in software law over the past 15 years, as well as initial efforts to enforce open source software license requirements in the courts. This panel will explore the new GPLv3 license, how it differs from GPLv2, the status of GPLv3 adoption and recent litigation concerning the enforcement of GPL and other open source license terms affecting GPLv3 or other open source license use.

Moderator
Sue Ross, Fulbright & Jaworski L.L.P., New York, NY

Speakers
Gabe Holloway, Leonard, Street and Deinard, Minneapolis, MN
Terry Ilardi, IBM Corporation, Armonk, NY
Jason Haislmaier, Holme Roberts & Owen LLP, Boulder, CO
Jim Markwith, Microsoft Corporation, Redmond, CA

Red Hat Settles with Firestar

News out of Boston that Red Hat has settled the long-running patent infringement lawsuit filed against it by Firestar Software and a later suit filed against the company by DataTern.

Filed on June 26, 2006, the lawsuit by Massachusetts-based software vendor Firestar Software, Inc. was brought against Red Hat in connection the Hibernate 3.0 software product acquired by Red Hat through its then-recent acquisition of JBoss. In the lawsuit, Firestar alleged that JBoss and Red Hat are infringing U.S. patent number 6,101,502 (issued on August 8, 2000) through their activities relating to Hibernate. While software patent infringement lawsuits had become increasingly frequent in the world of proprietary software at the time of the lawsuit, the suit was viewed as the first of its kind relating to a widely distributed open source software product.

The specific financial and other terms of the settlement were not disclosed. However, Red Hat indicates that the settlement includes broad terms covering “all software distributed under Red Hat’s brands.”  Of particular note, the settlement also protects all “upstream predecessor versions” as well.   In addition, Red Hat indicates that the settlement protects “derivative works of, or combination products using, the covered products from any patent claim based in any respect on the covered products.” Perhaps most importantly (for shareholder of Red Hat in particular), the company indicates that the settlement is sufficient to enable RedHat (and its users) to continue to distribute its open source software products in compliance with the terms of all applicable open source licenses.

In its press release on the settlement, Red Hat indicates that the settlements leave Red Hat with one remaining patent infringement suit against it — based on a complaint filed in October 2007 by IP Innovation LLC and Technology Licensing Corp, both subsidiaries of patent troll (er, “holding company”) Acacia Media.

Intellectual Property and Sarbanes-Oxley?

What does the Sarbanes-Oxley Act of 2002 (or “SOX”) have to do with intellectual property you ask? While these two topics have historically made for strange bedfellows, the importance of managing intellectual property assets and issues surrounding those assets under Sarbanes-Oxley is increasingly becoming a potential trap for the unwary.

Passed into law in 2001 in large response to the then-recent corporate corruption and fraud scandals involving the likes of Enron, WorldCom, HealthSouth, Tyco, Adelphia and others, Sarbanes-Oxley represents one of the most sweeping changes in U.S. securities laws in the past 70 years. In the wake of these scandals, SOX attempted to bolster investor confidence by increasing transparency and accountability in financial accounting involving public companies here in the U.S. SOX has proven, however, to be much more than a law addressing financial accounting. SOX is written broadly to trigger obligations with respect to any and all assets that have a material impact on the financial condition of a public company — including IP assets.  As intellectual property assets have come to comprise an increasingly more material part of the value of most all companies (not just “technology” companies, but all companies that rely on technology to conduct their day-to-day operations), intellectual property has come to play an ever more material role in the financial condition of those companies. As a result, intellectual property assets and the management of those assets and issues relating to those assets has (and will continue) to pose an increasingly more important issue with respect to SOX compliance (notably, even as to companies for which it has not posed an issue in the past). While the issue of SOX and IP will be front and center for public companies, even private companies that plan in the future to become publicly traded or that are planning an exit by merger or acquisition with a public company, should be wary of the potential risks posed by IP under SOX.

Earlier this week I covered this topic and discussed the growing importance of the management of intellectual property assets under Sarbanes-Oxley in a presentation at the 2008 Intellectual Property Institute in Denver. I had the pleasure of sharing the stage for the presentation with Dean Salter, one of my partners at Holme Roberts & Owen and truly the “dean” of the Denver securities law community. As usual when presenting with someone of Dean’s stature, I probably ended up taking away from the presentation just about as much as I contributed. The materials from the presentation are available online if you would like to read more about this topic. We will also be giving the presentation as a webinar later this year. Stay tuned for details.

Busy Box Settles Another Case

News today from the Federal District Court for the Southern District of New York that Eric Andersen and Rob Landley, the two principal developers of the BusyBox open source utility, have moved to voluntarily dismiss the case they brought again High-Gain Antennas alleging that High-Gain had violated the GNU General Public License (GPL) by distributing the Busy Box software without complying with the terms of the GPL. The dismissal itself was officially approved by Judge Leonard B. Sand on March 3, 2008. While no press release has yet been issued by the Software Freedom Law Center (SFLC) , the non-profit legal group that represented the Andersen and Landley in the case, the strong presumption in a situation such as this is that the dismissal signals that case against High-Gain Antenna has reach a settlement. To date Andersen and Landley have brought similar suits alleging violations of the GPL against Xterasys Corporation, High-Gain Antennas, and telecommunications giant Verizon Communications. A settlement in the case against High-Gain Antenna would mark the third such settlement leaving only the case against Verizon still pending.

While Busy Box and the SFLC have not brought another suit since filing their case against Verizon back on December 6, 2007, action in the Verizon case looks to be coming soon as Verizon currently has until March 14, 2008 to answer or otherwise respond to the complaint filed against them in the case. It remains to be seen if the case against Verizon will be settled out of court or continue beyond this date and become the first lawsuit alleging a violation of the GPL ever to go to trial in the U.S. Regardless, the cases brought by Busy Box remain significant in demonstrating that open source licensors have the will and the ability to successfully enforce the GPL against alleged violators in court, rather than limiting themselves to pursuing other means of enforcing violations outside of court. What changes these and any future cases drive in the open source license enforcement landscape and open source compliance largely remains to be seen, but for certain they are driving changes. For additional information on the previous settlements, please refer to my prior posts (here, here, here, here, and here).

Cert denied on In re Seagate

A quick update on a previous post regarding In re Seagate Technology LLC. In Seagate, the Court of Appeals for the Federal Circuit CAFC expressly overturned prior precedent and raised the standard for determining whether a patent infringement is willful from one requiring an “affirmative duty to exercise due care to determine whether or not [one] is infringing” if one is merely on “actual notice of another’s patent rights” to a far higher standard requiring “objective recklessness.” In doing so, the CAFC effectively raised the bar for a finding of willful patent infringement to a substantially higher level than the previous standard of mere negligence, thus making it more difficult for a patent holder to prove a claim for willful infringement.

While the decision on willful infringement in the Seagate case was significant (some even called it “seismic“), the Seagate case itself had been appealed to the U.S. Supreme Court, leaving the door open to a potential reversal or modification of the decision. However, on February 25th, the U.S. Supreme Court denied a petition to review the Seagate case (including the decision on willful infringement). While not carrying the same weight as an actual decision by the Supreme Court, the denial affectively serves to establish the standard of “objective recklessness” as the law of the land.

Many have gone so far as to say that this decision now removes the affirmative obligation that a patent infringement defendant have obtained an opinion from competent legal counsel before initiating possibly infringing activity. Whether this actually proves to be the legacy of Seagate still remains to be seen. However, at minimum, the decision by the Supreme Court cements Seagate as yet another step in the further judicial reform of patent laws here in the U.S.

For more information on the case, see Convolve Inc. v. Seagate Technology LLC (U.S., No. 07-656, review denied 2/25/08) .

IP “Crash Course” Online

Thanks to the sponsorship of Silicon Flatirons, TechStars, the Longmont Entrepreneurial Network (or “LEN” for short), and Colorado Capital Group we were able to put on a great Intellectual Property “Crash Course” for Entrepreneurs presentation at the end of last month before a standing-room-only crowd at the University of Colorado School of Law. Thanks to all of you who attended the event (especially those who had to sit in the aisles or stand during the presentation)!

As I mentioned during the event, the presentation was recorded. While I had hoped to have had the audio portion of the presentation online by now, we are still working to have the audio synchronized with the slides before posting. Since many of you have been (patiently) waiting for the presentation to be posted online, I have gone ahead and posted a copy of the slides to this site. I am hoping that this will suffice until we can get the audio synchronized and uploaded. Please stay tuned for the audio — and thank you for your patience. ;-)