AN OVERVIEW of NON-PATENT INTELLECTUAL PROPERTY By

AN OVERVIEW OF NON-PATENT INTELLECTUAL PROPERTY

James B. Harrison Esq. Wood & Lamping LLP 600 Vine Street, Suite 2500, Cincinnati, Ohio 45202 Ph: (513) 852-6047 Fax: (513) 419-6447 Email: [email protected]

Rayan F. Coutinho, Ph.D., Esq. Wood & Lamping LLP 600 Vine Street, Suite 2500, Cincinnati, Ohio 45202 Ph: (513) 852-6030 Fax: (513) 419-6430 Email: [email protected]

Introduction

Intellectual property laws in the United States are divided into at least three main groups: (1) patent law, (2) trademark and unfair competition law, and (3) copyright law. The body of law that protects your company’s logo is trademark and unfair competition law. In the United States, intellectual property is largely governed by federal law. However, each state has some limited protections for certain types of intellectual property as well. Each type of intellectual property has its own set of rights, requirements, and rules about what is in the public domain, or not eligible for protection. Most entrepreneurs have a basic understanding of each of these categories of intellectual property. Today, however, protection of intellectual property increasingly cuts across categorical lines. For example, if you are a manufacturer of CAM/CAD software, you should at least be aware of the interactions between trade secret, copyright, trademarks, patent, and antitrust areas of the law. This article provides an overview of the various categories of intellectual property.

 Trademark

Trademarks and service marks are words, names, symbols, or devices used by manufacturers of goods and providers of services to identify their goods and services, and to distinguish their goods and services from goods manufactured and sold by others. A registration may be obtained at the USPTO or in the Secretary of State’s office of each state. Unlike federal registrations, state registrations do not require use in interstate commerce. A federal registration gives the holder certain legal rights and remedies when others attempt to use a mark that is identical or similar to the registered mark. Although, a state registration does not provide the comprehensive rights and remedies of a federal registration, it serves as a deterrent to others planning to use the mark. Trademark registrations are valid for ten years if properly documented, and can be renewed indefinitely under appropriate conditions.

 Patent

Patent law provides a limited monopoly for new and inventive products, processes, and designs. To be eligible for patent protection, the invention must be a significant improvement over the prior art, or in legal terms, new, useful, and non-obvious. Patents are issued only by the United States Patent and Trademark Office (USPTO). A patent is not granted if the invention was patented or described in a printed publication in the United States or a foreign country more than one year before the application date, or if the invention was in public use or on sale in the United States for more than one year before the application date. U.S. patent protection lasts for twenty years. A patent owner has the right to exclude others from making, using or selling the patented invention in the United States during the term of the patent.

 Copyright

Copyright law protects “original works of authorship” such as literary works, musical works, dramatic works, pantomimes and choreographic works, pictorial, and graphic works, motion pictures and other audiovisual works, and sound recordings. A copyright owner has five

exclusive rights: (a) reproduction, (b) modification, (c) distribution, (d) public performance, and (e) public display. Registration is optional and not required because rights arise automatically when an original work of authorship is fixed in a tangible medium of expression. A registration may be obtained at Copyright Office of the Library of Congress. Registered copyrights are entitled to greater remedies if infringed. In general, copyright protection now lasts for seventy years after the author's death, but under certain circumstances the time is shorter. Some defenses to copyright infringement are: (a) fair use, (b) work is in the public domain, (c) work is factual or an idea.

 Trade Secret

Trade secret law protects any valuable information, not generally known, that has been kept secret by its owner. A generally used definition for trade secret is "information, including a formula, pattern, compilation, program, device, method, technique, or process that derives independent economic value from not being generally known and not being readily ascertainable and is subject to reasonable efforts to maintain secrecy." State law governs protection of trade secrets. No registration is required because trade secret protection automatically attaches when the information is kept secret by the owner. A trade secret owner has the right to keep others from misappropriating and using the trade secret. Some defenses to a claim of misappropriation include independent research and reverse engineering.

 Other Laws

Each state has other laws related to intellectual property. For example, the right to publicity gives an individual the right to control his name, face, image, or voice for commercial purposes. Defamation law (libel and slander) protects an individual against the dissemination of falsehoods about him or her or his or her business. The law of unfair competition is primarily comprised of torts that cause an economic injury to a business, through a deceptive or wrongful business practice.

TRADEMARKS

a. Overview

b. Trademark, Service Mark, Trade Name

Section 45 of the Lanham Act defines a trademark as “any word, name, symbol, or device, or combination thereof … used by a person … to identify and distinguish his or her goods, including a unique product, from those manufactured or sold by others and to indicate the source of the goods, even if that source is unknown.” The only difference between a trademark and a service mark is that a trademark identifies goods while a service mark identifies services. The same law applies to both. The concept of trademarks and service marks is different from the concept of trade names. A trade name is basically your company name. A trade name may function as a trademark or service mark if it serves as a “source identifier.” A simple example may help clarify these concepts. BIG MAC® is a trademark for burgers. MCDONALD’S is a trade name when used to identify the business but when used to designate the source of BIG MAC®, MCDONALD’SSM may serve as a service mark for restaurant services. When I refer to the term “mark” in this article, it means trademark or service mark, but not trade name.

c. Do You Need To Register?

The answer is “no” but “yes.” You do not need to register your mark with the United States Patent and Trademark Office (“USPTO”) or the Ohio Secretary of State’s Office to be protected. Trademark rights commence at the instant the mark is first used in commerce. That said, a registration with the USPTO is very highly recommended. A state trademark or service mark registration although obtainable, is of limited value. There are several advantages if the mark is federally registered. Infringement of a federally registered trademark or service mark may be tried in federal court. Federal registration of a trademark or service mark constitutes constructive notice of the registrant’s trademark ownership throughout the country. Federal registration creates a rebuttable presumption that: (a) the mark is valid; (2) the mark is registered; (c) the registrant owns the mark; and (d) the registrant has the exclusive right to use the mark in commerce or in connection with the goods and services specified in the certificate. Also, a federally registered trademark may become “incontestable” five years after its registration, thereby limiting the defenses that may be raised in future infringement actions.

d. What Does TM, SM, or ® Mean?

Use of these symbols puts the world on notice, that the mark is your intellectual property. If your mark is not registered or is in the process of registration, use of the ™ symbol (for trademarks) or SM symbol (for servicemarks) is recommended. An example of such use would be TRADEMARKTM. The use of the ® symbol is not permitted until the United States Patent and Trademark Office (USPTO) has granted a Certificate of Registration. Once the Certificate of Registration is obtained, you should replace the TM or SM with ®.

e. Does The Mark Have To Be A Word?

The answer is no. While an overwhelming number of trademarks are usually word marks, there are six types of marks that can form the subject matter of trademarks: word marks, design marks, trade dress, sound marks and fragrance marks. Protectable word marks include nicknames, foreign words, slogans, abbreviations etc. Design marks are protected only if they

create a separate commercial impression. Thus, a design that is merely ornamental e.g. writing on a t-shirt is not protected. Trade dress is a broad concept that encompasses product configuration, product features, and packaging. For example, décor of a restaurant may be protected under this concept if it is understood as a source identifier. An individual color or combination of colors may be protectable as a trademark. Similarly, unique, different, or distinctive sounds may be protected as a trademark. Other sounds may be protected upon making a showing of what is known as “secondary meaning.” Some examples of sound marks include those of Intel® and NBC®. Finally, a particular distinctive fragrance used to identify the source of a product may be protected as a trademark. However, if the fragrance is an inherent attribute or natural characteristic of the product e.g. perfumes, colognes, or scented household products, then such a fragrance is considered functional and is not protected.

f. How Strong Is My Mark?

If you already have a trademark or service mark, or if you are contemplating the adoption of a new mark, you can evaluate the strength of your existing or proposed mark using the principles that follow to determine the degree of protection afforded to it under the law. If your mark is functional then it is not protected. E.g. an application for the registration for bright orange color for pay telephones designed to be visible to passing motorists was denied registration. A product feature is functional and cannot serve as a trademark if the feature is essential to the use or purpose of the article or if it affects the cost or quality of the article, i.e. if exclusive use of the feature would put competitors at a significant non-reputation related disadvantage.

Whether a plaintiff’s mark qualifies for trademark protection is determined by where the mark falls along the established spectrum of distinctiveness. Putative trademarks may either: (1) be inherently distinctive or (2) acquire distinctiveness through secondary meaning. Within these two basic categories are sub-categories that form the complete spectrum of distinctiveness of marks. Arrayed in ascending order roughly reflecting their eligibility to trademark status and the degree of protection afforded, the categories are: (1) generic terms; (2) descriptive; (3) suggestive; (4) arbitrary or fanciful.

A generic or common descriptive term is one which is commonly used as the name or description of a kind of goods, e.g. Book, newspaper, and is not entitled to trademark protection under any circumstances. A trademark is descriptive “if it describes the intended purpose, function, or use of the goods; the size of the goods; the class of users of the goods; a desirable characteristic of the goods; or the end effect on the user.” Examples of descriptive terms include home-market.com for internet referral service targeting home owners and e-fashion for electronic retailing services via the internet. A suggestive term suggests rather than describes an ingredient or characteristic of the goods and requires the observer or listener to use imagination and perception to determine the nature of the goods. An example of a suggestive term is the money store for money lending services. A fanciful mark is a combination of letters or other symbols signifying nothing other than the product or service to which the mark has been assigned e.g. Exxon, Kodak. Arbitrary marks have significance in everyday life, but the thing it normally signifies is unrelated to the product or service to which the mark is attached. E.g. Camel for cigarettes or apple for computers.

g. Overview of Registration Process

A state trademark or service mark registration although obtainable, is of limited value. A state registration is generally recommended only if the mark is going to be used solely in that state and will not be used in interstate commerce. However, a state trademark registration may be beneficial if a federal registration is not contemplated at the present time because that registration will show up in search results at the United States Patent and Trademark Office (“USPTO”).

Trademark rights commence at the instant the mark is first used in commerce. Prior to registration, it is desirable to use the ™ symbol on the mark as soon as the use commences. The use of the ® symbol is not permitted until the USPTO has granted a Certificate of Registration.

Prior to actually expending the client’s funds in filing a trademark application, we urge all our clients to consider a basic “kickoff” search followed by a full trademark availability search. The first search is conducted on our Westlaw or Lexis Nexis systems and involves the following databases: (1) federal trademark registrations; (2) federal trademark applications; (3) 50 state trademark registrations; (4) internet search engines such as Google® and Yahoo!® Such a search is useful for making a preliminary determination as to whether someone has already obtained the mark you desire. If the mark is already taken, much time and money can be saved. If however, the preliminary search does not reveal such a conflict, a full trademark availability search is conducted on commercial databases using an external search service. Please note however, that no search can guarantee that all potential conflicting marks will be revealed. The USPTO will conduct its own search. It is usually advisable to conduct a trademark or service mark conflict search prior to adopting the mark unless the mark has been in use for a very long time. This conflict search may disclose prior use of the same or similar marks for related goods or services and thus prevent confusion, claims of infringement, and litigation. Such a conflict search typically costs up to $500.00 and could be considerably lower depending on the number of conflicting marks revealed. On the other hand, the cost of such a search could be higher if your mark contains design elements as well.

In general, if a mark is available, there are two ways in which a trademark application may be filed: (1) use based; and (2) intent-to-use based. The use based application is available if actual use in commerce has already begun. The application must indicate the date of first use in commerce and include specimens showing the mark in use on the product or service. On the other hand, if an applicant is planning to begin using the mark in the near future, it is possible to file an application based on a bona fide intent to use the mark in commerce at a later date and thus secure a filing date to preserve the applicant’s rights.

The government filing fee required by the USPTO for each federal trademark application is presently $ 275 – 375 for each class of goods or services depending on whether electronic or paper filing is chosen. Additional classes of goods or services will require additional government filing fees of $ 275 – 375 per class per mark. The USPTO permits only one mark per application. The legal fees to prepare and file each application depend on the hourly rate of the attorney working on the application. We will need your assistance in electronically signing the applications.

Once an application is on file, the USPTO will typically take around 6-9 months to respond. If the USPTO decides the application meets all substantive and procedural requirements and is entitled to registration, the application will be published for opposition in the Official Gazette. In the event that the USPTO determines that there is a formality issue or that the mark is not entitled to registration on substantive grounds, an Office Action will be issued stating the reasons. An applicant is entitled to a maximum of two Office Actions. After a final Office Action, the applicant is limited to an appeal or compliance with the USPTO’s specifications in the Office Actions. The cost of responding to the Office Actions or appealing is billed at the normal hourly rates.

Registrants are required to file an Affidavit between the 5th and 6th anniversaries of the registration to demonstrate the mark is still in use. Similarly, on or before each 10th anniversary, the registrant must establish continuing use in order to obtain renewal of the registration. The government filing fee for these periodic filings is approximately $ 500 per class. You are entitled to terminate the application process at any time if obtaining the registration is no longer desired.

If you choose to register your trademark or service mark in Ohio alone or in addition to the federal registration, we will submit an application to the Ohio Secretary of State’s office. The government filing fee for the state registration is $125 and the office expedites applications for an additional $100. The state registration is effective for a term of 10 years and can be renewed up six months in advance of the expiration date. The government fee for the renewal is presently $25.

h. Making Proper Use Of Your Mark

i) Abandonment

A person or entity cannot warehouse potentially useful marks. The basic idea behind trademarks is to ensure free competition and to protect only marks that are being used in commerce. A trademark is deemed to be abandoned if its owner discontinues the use of the mark with an intent not to resume its use. Obviously, the intent to abandon is a very subjective and fact specific inquiry. Remember that non-use for three consecutive years is prima facie evidence of abandonment.

ii) Improper Licensing Or Assignment

If you recall, a trademark is a source identifier. If a trademark no longer serves its purpose of identifying the goods or services of a particular provider, the trademark may be cancelled. This usually occurs where the trademark is licensed to a third party such as a franchisee and there is inadequate quality control or supervision by the owner of the mark. Similarly, if the trademark owner assigns its rights in the mark in gross, without a corresponding sale of the assets associated with it, the trademark may be cancelled.

iii) Genericity

We have previously learned that a generic or common descriptive mark is one which is commonly used as the name or description of a kind of goods and is not entitled to trademark protection under any circumstances. An originally protected mark can become generic over time thereby losing its trademark protection. Some examples are THERMOS, ASPIRIN, CELLOPHANE, and FRISBEE. Other examples where the marks were almost lost were XEROX (Xeroxing is incorrectly used for denoting the act of photocopying) and KLEENEX (incorrectly used to refer to all facial tissues).

iv) Some Tips Regarding Usage

o Remember that trademarks are properly used as adjectives, not as nouns and verbs. For example, Pop-Tart brand breakfast pastry, Vaseline brand petroleum jelly, and Scotch brand adhesive tape are proper uses. On the other hand, “Tylenol relieves your headaches,” “Band- Aid heals wounds” and “he is xeroxing the documents for you” are improper uses of trademarks. Be careful in your advertising and marketing materials to ensure that you do not inadvertently send your mark down the genericity lane.

o The rendition of the mark should be consistent every time it is displayed i.e. the same font, style, color, spelling etc.

o When possible indicate in some way who owns the mark. For example, you can put at the bottom of your advertising brochure a caption similar to “Jeep® is a registered trademark of the DaimlerChrysler Corporation.”

o Set your trademark apart from adjacent text by the use of italics, initial caps, all caps, bold or quotation marks to contrast a trademark from a merely descriptive term. E.g. KLEENEX® tissues. o Give the public notice of your trademark rights. Use the symbol “®” or “Registered, U.S. Patent and Trademark Office,” or “Reg. U.S. Pat. & Tm. Off.” if your mark is registered. If the mark is not registered use “TM” or “SM” for trademark and service mark respectively. o Never use your mark in a plural format (e.g. “we are implementing RFC®s” is improper, “we are implementing RFC® products is proper”) or possessive noun format (e.g. “RFC®’s product platform” is improper, “RFC® product platform” is proper).

o Never use a trademark as a verb. For example, “Xerox® those documents” is improper, but “photocopy those documents on the Xerox® machine” is proper.

o Never fragment or abbreviate your trademark. For example, if the mark is “RFC MultiKlix®”, don’t use “MultiKlix” or “RFC” standing alone.

o Never hyphenate a trademark. For example “RFC MultiKlix®” is proper but “RFC- MultiKlix®” is improper.

o Make sure that the mark is affixed to a specific product or used in the provision of your services. It can’t be a source identifier if you don’t use it. o Avoid “naked licensing” i.e. don’t allow licensees to use your mark without restrictions. Not only does this jeopardize the strength and value of your mark, but the goodwill associated with it too. Make sure that a well written licensing agreement is used and any violations are strictly enforced. o Never combine your trademark with other company names or their products. For example, “RFC SystemCo” is improper. “RFC® products incorporate SystemCo® technology” would be a proper use.

i. Recognizing Infringement Of Your Mark and What To Do About It.

i) Likelihood of Confusion Standard

The general principles for recognizing infringement are the same regardless of whether the mark is registered or not and regardless of whether the registration is federal or state. Courts around the country use a standard called “likelihood of confusion” to determine whether one mark is infringing upon another mark. Basically, a trademark owner is permitted to enforce his or her trademark rights against any other person who is using the same or similar mark in a manner that is “likely to cause confusion” among consumers as to the source of origin of the mark. So, it is important to remember, that actual confusion is not required; it is only a factor in determining whether there is infringement.

Both state and federal courts apply the “likelihood of confusion” standard to determine whether there is infringement. Likelihood of confusion standard is satisfied if an appreciable number of ordinarily prudent purchasers are likely to be confused as to the source, sponsorship or affiliation of the defendant’s goods or services. Thus, it is not a merely possibility of confusion that matters; rather it must be a probability of confusion.

ii) Federal or State Court?

Generally, federal courts can hear the following types of cases involving trademarks: (1) actions alleging infringement of a federally registered trademark; (2) actions involving cancellation of a federally registered trademark; (3) actions involving unregistered trademarks; (4) actions involving state trademarks in which both parties are from different states and the amount in dispute exceeds $75,000.00; (5) actions in which the trademark issue is supplemental to another claim for which the federal court has jurisdiction. Generally, state courts can hear the following types of cases involving trademarks: (1) state trademark claims; (2) actions alleging infringement of a federally registered mark; and (3) actions involving unregistered trademarks.

iii) Factors Used In Determining Likelihood Of Confusion

Federal and state courts have used different factors in determining whether a “likelihood of confusion” between two marks exists. It must be noted that no single factor is dispositive and

depending on the facts and circumstances in a particular case, a court may assign different weights to each of the factors.

1. Similarity of the marks; 2. Similarity of the products and services; 3. Strength of the marks; 4. Marketing environment; 5. Consumer sophistication and care; 6. Presence of actual confusion; 7. Geographic use by the parties; 8. Likelihood of bridging the gap; 9. Consumer surveys; 10. Consumer testimony; 11. Dealer testimony; 12. Harm to reputation; 13. Presence of bad faith on part of the alleged infringer; 14. Any other factor a court may deem fit.

iv) Defenses

Obviously, the existence of a license, whether exclusive or nonexclusive, creates an affirmative defense to a claim for trademark infringement. The failure of the trademark owner to bring the action in court within the application statute of limitations is also an affirmative defense. Another strong defense is acquiescence. Acquiescence is generally found if: (1) the owner actively represented that it would not assert a right or claim; (2) delay between the owner’s representation and assertion of the right or claim is not excusable; and (3) the delay caused the alleged infringer undue prejudice. A similar defense is laches which is usually a little harder to prove. The laches defense applies when there has been a sufficient passage of time between the trademark owner’s knowledge of the infringement and the date when the owner brings the suit. As with acquiescence, prejudice to the defendant is also required. Other defenses that may be asserted by a defendant are: (1) unclean hands; (2) fraud in the procurement of registration or maintenance of the trademark by its owner; (3) state immunity; (4) preemption of state laws by federal law; (5) fair use by the alleged infringer; (6) first sale rule; (7) other statutory defenses; and (8) first amendment.

v) Remedies

Depending on whether the mark is registered or not registered federally and depending on the nature of defendant’s conduct i.e. whether it was willful infringement, a court may fashion one or a combination of the following types of remedies in an infringement action: (a) ex parte seizure of infringing goods; (b) injunctive relief; (c) defendant’s profits; (d) actual damages; (e) prejudgment interest; (f) corrective advertising; (g) monetary relief in counterfeiting cases; (h) punitive damages; (i) attorney fees; (j) court costs; (k) destruction of infringing goods; (l) judicial cancellation of a mark; (m) criminal penalties for trademark counterfeiting.

KEEP IT SIMPLE: AVOID A COMPLICATED SOCIAL MEDIA POLICY FOR YOUR EMPLOYEE HANDBOOK

Introduction

There are some advantages to the use of social media such as Facebook, Twitter, and MySpace by employees. However, such use has also created a significant number of legal problems for employers. In addition to a decrease in employee productivity, there is a potential for legal liability from several sources, including breach of privacy, defamation, harassment, discrimination, copyright infringement and disclosure of confidential or privileged information. This concern has led to the incorporation of complicated and detailed social media policies into employee handbooks. Such policies create detailed descriptions for each technology on what an employee can or cannot do or say. Is there an alternative approach? We have been recommending to our clients a different concept - an approach where employees are treated as adults and are guided by basic concepts which could govern use of all technology, i.e. phone, internet, SMS, blogs and social media. Keeping it simple provides the employer with flexibility in dealing with undesirable situations. Examples of these concepts provided in this article can be tailored to your company’s needs.

Concepts To Guide Employees

1. Remember everything on the internet lives indefinitely. You have the personal and legal responsibility for your statements and actions. When in doubt, ask the designated person in the office before doing or saying something.

2. Do not speak on behalf of the employer unless you are authorized to do so. If not, authorized, then you may only speak as an individual providing his or her personal opinion. If authorized to speak on behalf of the employer, you must keep records of all online activities.

3. Confidentiality of employer information that is not a public record is paramount.

4. You should assume that every communication could be treated as a public record and could be revealed to a third party. Truth of identity and information is therefore important. Get your facts straight. Let subject matter experts respond to negative posts about the Community.

5. Give credit for authorship where it is due. Do not use copyrighted material, trademarks, or other content of third-parties without the necessary permission from the rights-holder. In order to avoid the appearance of official approval, use of employer’s trademarks and logos in social media, without prior written permission, is prohibited.

6. Be respectful of each person’s legal right to express their opinions, whether those opinions are complimentary or contradictory to yours. It is ok to disagree but please be polite.

7. Respect other employees’ right to privacy. Don’t share information about another employee’s opinions, beliefs, thoughts and emotions. Examples of frowned upon activities including

posting of pictures, audio and videos without the permission of those featured in them, public disclosure of private facts and the disclosure of information gained through unreasonable intrusion.

8. No social media during business hours unless it is within the scope of your work.

9. Do not conduct business communications, internal or external, using social media. For example, if an office colleague is your friend on Facebook, do not use the site’s email account to discuss work related matters. You must use your work email account.

10. No discussion about another employee’s, business partner’s or vendors’ performance should be conducted on social media.

11. Compliance with all applicable laws is necessary to avoid litigation and waste of taxpayer money. Never discuss anything to do with a pending legal matter or case without running it by the law director / solicitor.

12. Respect differences. Harassment, slurs, insults whether racial, sexual or religious are prohibited online just like they are prohibited in the workplace.

13. Any statement about a business or individual must be readily verifiable by means of a link to a reliable, neutral source with a reputation for fact checking and accuracy.

Conclusion

There is no law that requires an employer, private or public, to provide employees with technology related policies. However, such policies can serve as preventative medicine as well as good employment tools, and can serve to educate employees on your community’s policies on modern communication tools and the usage thereof in the workplace. Documented technology policies should be made part of your employee handbook. There are several benefits to creating, maintaining and updating your technology policies: (1) you can save time because they allow your administrative personnel to spend less time answering the same employee questions over and over again; (2) they help introduce new employees to the political subdivision and helps them get acquainted with the work culture in your community; (3) documented policies create a sense of fairness and equality and help avoid accusations of favoritism; (4) they may aid in the defense of employment claims brought by a disgruntled former employee; (5) they provide guidance to the management and administrative staff on dealing with employee problems related to technology.

KEEP IT SIMPLE: BEST PRACTICES OF CONFIDENTIALITY IN THE DIGITAL WORKPLACE

Our clients routinely enter into agreements with their customers and licensors which include provisions related to confidentiality and ownership of intellectual property. Employees, vendors, freelancers or independent contractors of the client may be entrusted with confidential information, intellectual property and trade secrets concerning the client and its customers or licensors. The protection of such confidential information is critical to the continued success and protection of the client’s business. In addition to hurting the client’s or its customers’ business, unauthorized or inadvertent disclosure of certain types of information may be a violation of federal and state laws, including but not limited to securities laws and intellectual property laws. A breach of confidentiality will not only affect the client’s reputation and but may also cause financial losses to the client and its customers.

Rather than requiring employees to read every single contract negotiated by management, we have drafted a set of Best Practices for Confidentiality based on those contracts. These Best Practices are guidelines and do not in any way alter the employees’ obligations under any contract he/she may have with the client or a customer.

The first step is to define what you are trying to protect. This definition of “Confidential Information” is unique for each client. For example, we routinely include business strategies, financial information, studies, methodologies, processes, sales and marketing data in our definition. It is important to point out in such a definition that the guidelines also apply to any employer related activity that is undertaken at home or on personal computers and electronic devices.

The second step is to create some basic concepts and practices which will govern the handling of confidential information regardless of the medium i.e. in person, print or digital. Some of the concepts we have used for our clients are as follows:

1. Remind the employee that they have legal responsibility for their statements and actions.

2. Stress the importance of the confidentiality of the Confidential Information and define the purposes for which the Confidential Information may be used.

3. Create parameters for sharing or discussing the Confidential Information with third parties, family and friends.

4. Restrict dissemination or transfer of Confidential Information outside employer or client premises or downloading to person electronic devices without authorization.

5. Limit the media through which Confidential Information can be transmitted i.e. only through employer computers, email, phones and servers – no personal media.

6. Educate the employee on what to do when the disclosure of Confidential Information is compelled by a court of law, statute, regulation or by any rules of the relevant securities exchange.

7. Specify the consequences of disclosure of Confidential Information without authorization.

These Best Practices need to be tailored to your community’s or organization’s needs. Several of our clients now include these Best Practices in their employee handbook together with the Social Media Policy that was the subject of a prior article.

Recent Ohio Case Demonstrates That Your Community's Lack of Technology Policies Could Pose Employee Problems.

In Bowman v. Butler Township Board of Trustees, 185 Ohio App.3d 180 (2d Dist. Montgomery County 2009), a township firefighter appealed the termination of his employment for alleged malfeasance i.e. watching violent videos on township computers. The Court of Common Pleas affirmed the termination and the firefighter appealed. The Court of Appeals held that the township did not have a policy providing sufficient guidance as to what types of computer usage were acceptable or appropriate. The Township’s Code of Ethics which instructed township employees that they were “bound by the highest standards of morality” and that they should conduct themselves so as to not bring discredit upon the township was deemed to be vague and not clearly definable. In other words, the Court ruled that the township’s policies gave no guidance as to what types of content, violent or otherwise, made Internet or other media materials “inappropriate” or violated the “highest standards of morality.”

Documented technology policies should be made part of your employee handbook. There are several benefits to creating, maintaining and updating your technology policies: (1) you can save time because they allow your administrative personnel to spend less time answering the same employee questions over and over again; (2) they help introduce new employees to the political subdivision and helps them get acquainted with the work culture in your community; (3) documented policies create a sense of fairness and equality and help avoid accusations of favoritism; (4) they may aid in the defense of employment claims brought by a disgruntled former employee; (5) they provide guidance to the management and administrative staff on dealing with employee problems related to technology.

Technology policies should be consistent with everything contained in the employee manual, including other policies, and must be stated in unambiguous terms. Such policies must be tailored to the specific needs and circumstances of your community. They should not be copied from those adopted by other communities. Finally, technology policies must be updated to account for advances in technology implemented by your community, e.g. email, voicemail, blackberry, iPad, PDAs, increase in the number of employees since the last draft, changes in the law, and to update procedures to fix mistakes made in actual incidents.

WORK MADE FOR HIRE

The Copyright Act of 1976 provides that “[c]opyright in a work protected under this title vests initially in the author or authors of the work.” 17 U.S.C. §201(a). Generally, the author is the party who actually creates the work. 17 U.S.C. §102. However, if a work is made for hire, the employer or other person for whom the work was prepared is considered the author and owns the copyright.

“Works Made for Hire --- In the case of a work made for hire, the employer or other person for whom the work was prepared is considered the author for purposes of this title, and, unless the parties have expressly agreed otherwise in a written instrument signed by them, owns all of the rights comprised in the copyright.” 17 U.S.C. §201(b)

“A ‘work made for hire’ is -- (1) a work prepared by an employee within the scope of his or her employment; or (2) work specially ordered or commissioned for use as a contribution to a collective work, as a part of a motion picture or other audiovisual work, as a translation, as a supplementary work, as a compilation, as an instructional text, as a test, as answer material for a test, or as an atlas, if the parties expressly agree in a written instrument signed by them that the work shall be considered a work made for hire. For the purpose of the foregoing sentence, a "supplementary work" is a work prepared for publication as a secondary adjunct to a work by another author for the purpose of introducing, concluding, illustrating, explaining, revising, commenting upon, or assisting in the use of the other work, such as forewords, afterwords, pictorial illustrations, maps, charts, tables, editorial notes, musical arrangements, answer material for tests, bibliographies, appendixes, and indexes, and an "instructional text" is a literary, pictorial, or graphic work prepared for publication and with the purpose of use in systematic instructional activities.” 17 U.S.C. §101.

The rationale behind the ‘work for hire’ doctrine is that when an employer hires an employee to create a copyrightable work, the fruits of the employee’s endeavors properly belong to the employer. § 101 defines a “work made for hire” as either: (1) one prepared by an employee within the scope of his or her employment; or (2) one of the nine specified categories of specifically ordered or commissioned works, provided that the parties expressly agree in writing that the work is made for hire. To determine whether a work was "work made for hire", a court first determines whether the work was prepared by an employee or an independent contractor. After making that determination, the court applies the appropriate subsection of the statutory definition.

As regards (1), the Copyright Act of 1976 is devoid of any definitions for the terms “employee” or “scope of employment.” The United States Supreme Court resolved a conflict among various federal circuits regarding the term “employee” in Community for Creative Non- Violence (CCNV) v. Reid (1989), 490 US 730, 109 S.Ct. 2166. In that case, the CCNV entered into an oral agreement with Reid, a sculptor, to produce a statue dramatizing the plight of the homeless. Members of the CCNV visited Reid at his studio to check the progress,, to coordinate their construction of a base for the sculpture, and to impart suggestions and direction as to the sculpture’s configuration and appearance. After the work was delivered, and Reid paid, the parties filed competing copyright registration certificates and CCNV sued. The U.S. Supreme Court held that to determine whether a work is a "work made for hire", it is necessary to apply the general common law of agency to determine whether the work was prepared by an employee or an independent contractor. Applying such principles, the Court held that Reid was an independent contractor, rather than an employee because all relevant circumstances weighed heavily against finding an employment relationship. The Supreme Court in CCNV v. Reid stated that in order to determine whether a hired party is an employee under the general common law of agency, a court must consider factors such as:

1. the hiring party’s right to control the manner and means by which the work is accomplished; 2. the skill required to create the work; 3. the source of instrumentalities and tools; 4. the location of the work; 5. the duration of the relationship between the parties; 6. whether the hiring party has a right to assign additional projects to the hired party; 7. the extent of the hired party’s discretion over when an dhow long to work; 8. the method of payment; 9. the hired party’s role in hiring and paying assistants; 10. whether the work is part of the regular business of the hiring party; 11. whether the hiring party is in business; 12. the provision of employee benefits; and 13. the tax treatment of the hired party.

No single factor is determinative. Also, because the Supreme Court applied the common law of agency, additional factors from the Restatement (Second) of Agency, especially §220(2) setting forth a nonexhaustive list of facts relevant to determining whether a hired party is an employee may be applicable. The next step is to determine whether the work was within the scope of his employment. The Supreme Court in CCNV cited with approval Restatement (Second) of Agency 228, which provides that an employee’s conduct is within the scope of his or her employment if:

(1) it is of the kind of work he or she is employed to perform; (2) it occurs substantially within authorized time and space limits; and (3) it is actuated, at least in part, by a purpose to serve the employer.

This test is conjunctive, therefore all three elements must be proved.

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