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Intellectual Property

INTELLECTURAL PROPERTY (IP) CHECKLIST

It is important to develop, monitor and monetize your business’ intellectual property. Many times, it becomes its largest asset.

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            In dealing with companies, we find the following events are the necessary times to check in on your intellectual property, making sure that it is registered and protected.

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            Buynak Law operates a Business Compliance Program in which we review businesses (LLCs, Corporations, etc.) on a yearly basis. Reviewing the status of an entity’s intellectual property is part of that review.

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  1. Formation of your entity for ownership of the IP

  2. Funding and Reserves (should include IP costs/fees)

  3. IP Planning (copyrights, patents, trademarks, trade secrets, etc.) to have a plan for investors and financial institutions

  4. Clearance Letter (before operating use, offerings)

  5. Availability of intellectual property protection (e.g., trademarks)

  6. Anticipated Investors/Loans concerning IP

  7. Cease and Desist Letters (offering, operational start up)

  8. Assignments of IP

  9. Employees, Independent Contractors, Developers, etc. (naming the proper IP owner is important)

  10. Sale in All or Part of the Business (merger, acquisition)

  11. Sales of IP

 

                    DO NOT DEFER – your IP rights MAY be forfeited if not protected!

AVOIDING PRIVACY POLICY LITIGATION

The California Consumer Privacy Act of 2018 (CCPA) secured privacy rights for California consumers as of January 1, 2020. The courts are starting to adjudicate legal cases, mainly class actions, as the CCPA provides a private right of action to “any consumer who has nonencrypted and nonredacted personal information… or whose email address is subject to a unauthorized access and infiltration, theft or disclosure as a result of the business’s violation of the duty to implement and maintain reasonable security procedures and practices appropriate to the nature of the information.”

 

The CCPA secures privacy rights for California consumers, including:

 

•The right to know personal information a business collects about the consumer and how it is shared and used;

•The right to delete personal information that a business collects about the consumer;

•The right to opt-out of the sale of one’s personal information; and

•The right to non-discrimination in exercising one’s CCPA rights.

 

To enforce these rights, businesses can expect lawsuits, especially class-action suits, for infringement of these rights. Particularly, there are statutory (automatic) damages “in amounts not less than One Hundred Dollars ($100) and not greater than Seven Hundred Fifty Dollars ($750) per consumer per incident or actual damages, whichever is greater”.

 

Best practices-

 

•Have a privacy policy in place on your website or other communication with consumers; and

•If a data breach occurs, take immediate action as required by statute to notify consumers and to stop the activities underlining the breach through which data is being collected.

 

“Standing” to bring a case for data breaches under the CCPA is the current line of defense. In order to succeed in litigation; there is a need for damages and the Ninth Circuit Court of Appeals (the Federal court for our area) has issued decisions to indicate when a plaintiff has “standing” to proceed with a lawsuit under the CCPA. These cases are Krottner v. Starbucks, 628 Fed 3rd 1139 and more recently, Ree v. Zappos.com, Inc., 888 Fed 3rd 120. For data-breach standing, Zappos.com held that that occurs when (1) there is theft by outside hackers, (2) of highly sensitive personal information, (3) leading to the misuse of at least some named plaintiff’s personal information.

 

In evaluating this criteria, the recent case of Arifur Rahman v. Marriott, the California Central District Federal Court in Los Angeles, recently determined that the complainants “had not plausibly pled here that any of their more sensitive data… such as credit card information, passports, social security numbers… has fallen into the wrong hands. Without a breach of this type of sensitive information, plaintiff has not suffered an injury in fact and cannot meet the constitutional requirement of standing.”

 

Businesses should not rely on the court system, however. Please have a privacy policy for your business and systems that preclude a data-breach and/or adequately deal with it, but winning in court on these consumer cases cannot be assured. 


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TRADEMARK INFRINGEMENT (IP) – DON’T USE SOMEONE’S TRADEMARK; MISTAKES ARE COSTLY; YOUR PROFIT IS THE TRADEMARK OWNER’S GAIN. 

The U.S. Supreme Court just made it easier for a trademark owner to recover damages (including your profits) against an infringer. The past standard of “willful” use or infringement is NOT necessary; all that is necessary is that the infringement occurred and then it is up to the adjudicator as to the level of damages, including the possibility of treble damages. Damages include your profits, as those same sales/income should have gone to the trademark owner. When you start a business or use of trademark, logo, slogan, etc., check whatever you are going to use with the United States Patent & Trademark Office on their website or have us do the same. Don’t make a very costly mistake. If you are a trademark owner, it is still good practice to send a “cease & desist” letter as that might resolve the problem or if litigation is necessary, it will increase your damages. A “cease & desist” letter should be very thorough, including the requirement of certification under oath by the infringer that they have ceased use of the infringing slogan, logo, etc. and that all products carrying it have been destroyed. 


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TRADEMARK, PATENT AND COPYRIGHT REGISTRATIONS REQUIRE

SIGNIFICANT, SUBSTANTIAL HUMAN INVENTION; NOT AI

The United States administrative entities and courts are all aligned in requiring significant, substantial human (natural persons) involvement for issuance of a trademark, patent or copyright. AI systems can be supportive; they cannot be listed as an applicant. “Inventors” are to be natural persons, humans. Fed. Regs 10043.

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Trademarks and Patents. The United States Patent Trademark Office has issued guidelines on how to allow registrations of AI- assisted inventions. It followed an Executive Order of the Biden Administration issued on October 30, 2023 as well as the Federal Circuit’s case of Thaler v. Vidal, Thaler had tried to register an invention for a flickering light which was created by his AI system and was listed as the inventor, both of which the USPTO and court did not accept.

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Copyrights. The United State Copyright Office (USCO) has stated that “A work must have human authorship in order to be protected by copyrights”. Creative works with small portions created by AI may be protected if there is sufficient human authorship, however, the push in created by AI will be excluded from copyright protection.

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The legal system is attempting to keep up with the development of AI in many, many ways. Interestingly, the precedent for these determinations came from the United States Supreme Court case of Burrow-Giles Lithographic Company v. Sarony, 111 U.S. 53 (1884). We now have guidelines; they require significant and substantial human involvement in the process. One cannot simply put a term into an AI platform, such as ChatGPT , and then copyright the resulting product that the system provides. As a practice tip, please be sure to properly state the substantial human inventor’s involvement in the intellectual property developed; don’t follow the missteps of Dr. Thaler (from the case above), who ascribed everything to his AI system.

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