cloud computing: intellectual property legal...

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Cloud Computing: Cloud Computing: Intellectual Property Legal IssuesProtecting IP Rights and Mitigating Infringement Risks in Virtual Storage and Applications

T d ’ f l f

1pm Eastern | 12pm Central | 11am Mountain | 10am Pacific

WEDNESDAY, OCTOBER 12, 2011

Today’s faculty features:

Peter H. Kang, Partner, Sidley Austin, Palo Alto, Calif.

Brian E. Mitchell, Attorney, Mitchell + Company, San Francisco

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Cloud Computing: Intellectual Property Legal IssuesIntellectual Property Legal Issues

Protecting IP Rights and Mitigating Infringement Risks in Virtual Storage and Applications

Strafford Publishing WebinarWednesday, October 12, 2011 – 10 a.m. (PDT)Wednesday, October 12, 2011 10 a.m. (PDT)

Presented By

Brian E. Mitchell, Esq., Mitchell+Company

and

Peter H. Kang, Esq., Sidley Austin LLPg, q , y

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Cloud Computing: IP & Legal IssuesFACULTYFACULTY

• Brian E. Mitchell, Founding Partner, Mitchell + Company Law Offices, San Francisco, CA– Brian Mitchell handles patent copyright trade secret and trademark matters Brian Mitchell handles patent, copyright, trade secret, and trademark matters.

He is an expert at mastering the intersection between technology and the law, and has handled matters involving a wide range of products and technological areas, including hardware and software for mobile devices, consumer electronics, and telecommunications, as well as Internet, e-commerce, and b i th d t t H i tl l L t i L t S t Cl business method patents. He is currently also a Lecturer in Law at Santa Clara University Law School. J.D., University of San Francisco; B.A., Cal. State University at Sacramento.

• Peter H. Kang, Partner, Sidley Austin LLP, Palo Alto, CA– Peter Kang counsels and litigates in all areas of intellectual property law,

including patent, trade secret, trademark, and copyright law. His practice focuses on representing clients in patent lawsuits, complex commercial and technology litigation, trade secret disputes, and copyright/trademark suits. He also represents clients in IP licensing and complex business/technology also represents clients in IP licensing and complex business/technology transactions. He has been recognized for his work in IP by The Legal 500, IFLR1000, Asia Law & Practice, and Northern California Super Lawyers. J.D. (cum laude) Georgetown University Law Center; B.S. and B.A., Stanford University.

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BEIJING BRUSSELS CHICAGO DALLAS FRANKFURT GENEVA HONG KONG LONDON LOS ANGELES NEW YORK PALO ALTO SAN FRANCISCO SHANGHAI SINGAPORE SYDNEY TOKYO WASHINGTON, D.C.

Cloud Computing: Intellectual Property Legal IssuesIntellectual Property Legal Issues

PART ONEStrafford Publishing Webinarg

Wednesday, October 12, 2011

Peter H. Kang

Cloud Computing & Legal/IP Issues

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WHAT IS THE CLOUD• “When people talk about cloud computing, they’re

talking just about taking some stuff, putting it outside the firewall and perhaps putting it on servers that the firewall, and perhaps putting it on servers that are also shared or storage systems.”

• Microsoft CEO Steve Ballmer

• “The interesting thing about cloud computing is that we’ve redefined cloud computing to include everything that we already do. I can’t think of y g yanything that isn’t cloud computing with all of these announcements…. I don’t understand what we would do differently in the light of cloud computing other y g p gthan change the wording of some of our ads.”

• Oracle CEO Larry Ellison

“It’s become the ph ase d jo " • “It’s become the phrase du jour." • Gartner Senior Analyst Ben Pring

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DEFINING CLOUD COMPUTING

Marc Andreesen described the cloud as “a smart, complex, powerful computing system in the sky p , p p g y ythat people can just plug into.”

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Defining Cloud Computing

• NIST defines “cloud computing” as “a model for enabling convenient on demand network access to a enabling convenient, on-demand network access to a shared pool of configurable computing resources (e.g., networks, servers, storage, applications, and

i ) th t b idl i i d d l d services) that can be rapidly provisioned and released with minimal management effort or service provider interaction.”

• The cloud model defined by NIST is multi-dimensional and composed of

five essential characteristics – five essential characteristics,

– three service models, and

– four deployment models.ou dep oy e t ode s

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• The five essential characteristics of the cloud model developed by NIST are: developed by NIST are:

– 1) on-demand self-service;

– 2) broad network access; 2) broad network access;

– 3) resource pooling;

– 4) rapid elasticity; and

– 5) measured service

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• Deployment models as defined by NIST:

– 1) Public Cloud (Gmail);

– 2) Private Cloud (or Virtual Private Could) (Cerelink);

3) Community Cloud (Google Gov Cloud); – 3) Community Cloud (Google Gov Cloud);

– 4) Hybrid Cloud (surge computing – Rackspace)

• Service models as defined by NIST: Service models as defined by NIST:

– 1) Software as a Service (SaaS – Salesforce.com);

– 2) Platform as a Service (PaaS – BestBuy’s Giftag running on Google App Engine);

– 3) Infrastructure as a Service (IaaS – Amazon Elastic Computing Cloud (EC2))p g ( ))

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Cloud Computing – Salient Features

• Third party control and access to datadata

• Lack of transparencyLack of transparency

• No geography in the cloud –borderless

• Potential multiple copies of data • Potential multiple copies of data dispersed in the cloud

• Surge computing14

Potential IP Issue: Patents and the Cloud

• Patent Infringement Issues

• Divided Infringement

• Extraterritoriality• Extraterritoriality

• Investigating and proving infringement

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• Divided Infringement and Extraterritoriality

• “Ordinarily, whether an infringing activity under section 271(a) occurs within the United States can be determined without difficulty. This case presents an y padded degree of complexity, however, in that: (1) the “patented invention” is not one single device, but rather a system comprising multiple distinct at e a syste co p s g u t p e d st ctcomponents or a method with multiple distinct steps; and (2) the nature of those components or steps permits their function and use to be separated from permits their function and use to be separated from their physical location.”

• RIM v. NTP, 418 F.3d 1282 (Fed. Cir. 2005)

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• In RIM, part of the claimed email system was in Canada

• Customers of Blackberry were in the U.S.• Customers of Blackberry were in the U.S.

• Federal Circuit held that “use” of the system occurred in the U.S. and thus the system/apparatus claims were infringed

• Court held that method/process claims were not infringed as a matter of lawinfringed as a matter of law

• “a process cannot be used ‘within’ the United States as required by section 271(a) unless each of the steps is q y ( ) pperformed within this country.”

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• In RIM, part of the method was performed by RIM, not customers in the U.S.

• Federal Circuit held that there was no “sale”, “offer to sell”, “importation”, or 271(f)-(g) infringement of the method/process claims as a matter of law

• “RIM's performance of at least some of the recited steps of the asserted method claims as a service for its customers cannot be considered to be selling or offering to sell the g ginvention covered by the asserted method claims. The sale or offer to sell handheld devices is not, in and of itself, enough. Thus, we conclude as a matter of law that RIM did not sell or offer to sell the invention covered by NTP's ymethod claims within the United States.”

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• Divided Infringement

• “This court therefore holds as a matter of Federal Circuit law that there can only be joint infringement when there is an agency relationship between the parties who perform the method steps or when one party is contractually obligated to the other to perform the steps. “p p

– Akamai Techs., Inc. v. Limelight Networks, Inc., – F.3d–, 2010 U.S. App. LEXIS 25825 at 13-18 (Fed. Cir. Dec. 20, 2010)20, 2010)

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Potential IP Issue: Patents and the Cloud• Patent Portfolio Development - 10 versus 750

• Business Method (Bilski) issues

• “[T]his court also will not presume to define ‘abstract’ beyond the recognition that this abstract beyond the recognition that this disqualifying characteristic should exhibit itself so manifest as to override the broad statutory categories of eligible subject matter and the statutory context that directs primary attentions on the patentability criteria of the rest of the o t e pate tab ty c te a o t e est o t ePatent Act.”– Research Corp. Techs., Inc. v. Microsoft Corp., - F.3d - ,

2010 U S App LEXIS 24984 at 17 18 (Fed Cir Dec 2010 U.S. App. LEXIS 24984, at 17-18 (Fed. Cir. Dec. 8, 2010) (internal citations omitted).

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Potential IP Issue: Patents and the Cloud• Patent Portfolio Development - Claim Drafting

• “While acknowledging the difficulty of proving • While acknowledging the difficulty of proving infringement of claims that must be infringed by multiple parties, this court has noted that such concerns ‘can usually be offset by proper claim concerns ‘can usually be offset by proper claim drafting. A patentee can usually structure a claim to capture infringement by a single party.’... This court also observes that in addition to initially structuring a claim to capture infringement by a single party, patentees may be infringement by a single party, patentees may be able to correct a claim that can only be infringed by multiple parties by seeking a reissue patent.”– Akamai, 2010 U.S. App. LEXIS 25825 at 23-24

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• 35 U.S.C. § 102(g): Conception/Reduction to Practice and “Territoriality”Practice and Territoriality

• “Reduction to practice in the United States requires that the invention be embodied in requires that the invention be embodied in tangible form in the United States, not simply reported.” Scott v. Koyama, 281 F.3d 1243, 1247 (Fed Cir 2002)) 1247 (Fed. Cir. 2002)).

• Hypothetical inventors in non-WTO countries i th l dusing the cloud

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• Inadvertent Prior Art

• Publication

Public knowledge• Public knowledge

• Impact of America Invents Act of 2011

• First to file

One year grace period for inventor disclosures• One year grace period for inventor disclosures

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Conclusions

• Cloud computing’s growth is rapid:

• $46B in 2008; $58B in 2009; approx $68B in 2010 (per approx. $68B in 2010 (per Gartner)

• IP issues will grow (10 vs. 750)

Additional Legal issues• Additional Legal issues

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THANK YOUPeter H. Kang, Esq.Sidley Austin LLP

1001 Page Mill Rd., Building 1, Palo Alto, CA [email protected]

www.sidley.com/kang_peter/

THANK YOU!


Copyright 2011© Peter H. Kang, Sidley Austin LLP. Notice: The materials presented herein are intended for the educational use and informational purposes of the seminar participants only and are not intended to and do not constitute educational use and informational purposes of the seminar participants only and are not intended to and do not constitute legal advice. Transmission of the information herein is not intended to create, and receipt does not constitute, an attorney-client relationship, and these materials are not intended to nor do they create an attorney-client relationship with Sidley Austin LLP. The materials presented are summaries of particular developments in the law and are not intended to be exhaustive discussions Because of their summary nature they should not be relied upon in reaching a conclusion in a exhaustive discussions. Because of their summary nature, they should not be relied upon in reaching a conclusion in a particular area. The views expressed herein are current, personal views, and should not be attributed to and do not necessarily represent the views of Sidley Austin LLP or any of the Firm’s former, present, or future clients. If you have a particular legal problem, please consult counsel. All rights reserved. [email protected]

Cloud Computing: Intellectual Property Legal

IssuesIssuesPART TWOBrian E. Mitchell

Mitchell + Company Law OfficesMitchell Company Law Offices

San Francisco, CA

IP Enforcement ChallengesIP Enforcement Challenges

• Jurisdictional IssuesJurisdictional Issues

• Subpoenas

• Privilege• Privilege

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Jurisdictional IssuesJurisdictional Issues

• Where does data actually physically reside?Where does data actually physically reside?

• Which government(s) and court(s) have jurisdiction over the data?

• Which party has responsibility for the data?

• Notice to the data owner of geographical issuesNotice to the data owner of geographical issues

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Jurisdictional Issues: International Data Protection LawsInternational Data Protection Laws

• Differing national data protection regimesg p g

• EU Data Protection Directive ‐ Prohibits transferring personal information to countries lacking same levelpersonal information to countries lacking same level of protection for EU residents (e.g., U.S.).

h l l l h• The Security Rule re Electronic Protected Health Information under the federal Health Insurance Portability and Accountability Act (HIPA))Portability and Accountability Act (HIPA))

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Potential Legal Issues: SubpoenasPotential Legal Issues: Subpoenas

• Potential issue with a third‐party subpoenaPotential issue with a third party subpoena served on a cloud service provider

• The cloud service provider has control over• The cloud service provider has control over the electronic data and client files

Th i ll ld d b b• Theoretically, could respond to a subpoena by producing documents, data, and information

hi h h li l i i l h bj ito which the client legitimately has objections

• Risk of overbroad disclosure and waiver

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Potential Legal Issue: PrivilegePotential Legal Issue: Privilege

• Customers’ attorney‐client communicationsCustomers attorney client communications may be electronically shared with their cloud service providers (and their subcontractors)service providers (and their subcontractors)

• Potential legal issue as to whether there is an argument for a finding of waiver of privilegeargument for a finding of waiver of privilege

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Trade SecretsTrade Secrets

• “‘Trade secret’ means information … that … is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.” Uniform Trade Secrets Act, § 1(4).

• A public disclosure of a valuable trade secret will destroy its value

• Potential legal issue raised by the sharing or distribution of confidential information with cloud service providers and subcontractors

• Issues with regards to inadvertent disclosure

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Trademark Issues

• Conflicting Rights: An increasing number of g g gtrademarks and trademark applications incorporating the term “cloud computing”

• Will invariably lead to trademark issues relating to genericness, secondary meaning, and infringement/likelihood of confusioninfringement/likelihood of confusion

• Priority: Difficulties determining the senior user in a particular geographic region when the trademark is used in the context of a cloud‐based service

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Copyright Issuespy g

• Potential legal question as to whether a work that g qexists solely in the cloud is sufficiently “fixed” in a tangible medium of expression for copyright purposes

• Extraterritoriality issues: For example, is copied computer software infringing US copyright law if it is stored on a cloud server overseas?

35

Bonus Material: Use by LawyersBonus Material: Use by Lawyers

• Lawyers are increasingly turning to cloud‐basedLawyers are increasingly turning to cloud based solutions

• Common examples include online data storage (e.g., p g ( g ,Dropbox), Internet‐based email (e.g., Gmail), and software as a service.

• SaaS commonly includes a variety of services such as law practice management applications, document

k d b ll (management, timekeeping, and billing (e.g.Freshbooks).

36

Ethics/Security ConcernsEthics/Security Concerns

• Many state bars, bar associations, and the ABA are discussing y , , gethics and security concerns

• One of an attorney's foremost duties is to protect client fid ti lit S h b d b tconfidentiality. Some concern has been expressed about

placing client files and other confidential information in the cloud.

• But counter argument: Files and other date stored in the cloud can be more secure than on a typical attorney's laptop, as the cloud based services often employ encryptionas the cloud‐based services often employ encryption measures and multiple redundant backups.

37

Lawyer’s DutiesLawyer s Duties

• The ABA Commission on Ethic's “20/20 WorkingThe ABA Commission on Ethic s 20/20 Working Group on the Implications of New Technologies” has identified three duties implicated by cloud computing

• Model Rules 1.1 (competency), 1.6 (duty of confidentiality), 1.15 (safeguarding client property)

38

Confidentiality IssuesConfidentiality Issues

• The ABA Commission has identified a number ofThe ABA Commission has identified a number of confidentiality issues with respect to lawyer’s use of the cloud.

• However, many of these issues exist in contexts independent of the cloud, including outsourcing and use of contract lawyers and staff.

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SolutionSolution• Most opinions and papers conclude that concerns

b dd d h d b h ABAare best addressed when, as stated by the ABA, “Lawyers [ ] take reasonable precautions to ensure that their clients’ confidential information remainsthat their clients confidential information remains secure”

• As a further example the Arizona Bar specificallyAs a further example, the Arizona Bar specifically gives its approval to cloud computing, so long as lawyers use reasonable precautions to safeguard client security and confidentiality. (Bar Opinion 09‐04).

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Solutions (Cont.)Solutions (Cont.)

• However, “Lawyers should be aware of limitations inHowever, Lawyers should be aware of limitations in their competence regarding online security measures and take appropriate actions to ensure that a competent review of the proposed security measures is conducted. As technology advances over ti i di i f th bilit ftime, a periodic review of the reasonability of security precautions may be necessary.” (Bar Opinion 09‐04)09 04).

41

Conclusions

• Cloud computing’s growth is rapid:Cloud computing s growth is rapid:

• $46B in 2008; $58B in 2009; approx. $68B in ( )2010 (per Gartner)

• IP issues will grow (10 vs 750)• IP issues will grow (10 vs. 750)

• Legal issues

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Q&A and Wrap‐Upp p

• Comments from the audience• Comments from the audience

• Q&A

• Final words

THANK YOU!THANK YOU!

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Brian E MitchellBrian E. Mitchell

4 Embarcadero Center, Suite 1400

S i C 9San Francisco, CA 94111

(415) 766‐3514 (Office)

(415) 402‐0058 (Facsimile)

brian mitchell@mcolawoffices [email protected]

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