Dead and Buried

LimeWire died this week. Enjoined out of existence like Napster, Grokster and Aimster before it. Its legacy is that it helped fuel contempt for the copyright law in a substantial segment of the population.

 Here’s what you will see if you go to the LimeWire site.

Legal Notice
This is an official notice that LimeWire is under a court-ordered injunction to stop distributing and supporting its file-sharing software. Downloading or sharing copyrighted content without authorization is illegal.


Good.
 

No Secrets in IP Litigation

One of the things that seems to surprise and offend many IP litigants is the invasiveness of discovery under the Federal Rules of Civil Procedure. Parties often are surprised to learn how much they must disclose about their business in discovery. Understandably, they are offended when their adversary is given the opportunity to inspect sensitive business information, particularly product development and financial information.

Agreed upon protective orders often provide a measure of comfort by limiting the number of people who will have access to the disclosed information, but they are a double edged sword. Once a protective order is in place, one can almost guarantee that arguments that disclosure of possibly relevant evidence should not occur because of the secrecy of the material will fail.

A recent opinion that illustrates the point comes from a patent case in the Northern District of Illinois, Jab Distributors v. London Luxury. Jab sought discovery of London Luxury’s sales and financial information pertaining to the allegedly infringing product. London Luxury opposed production of such information generated prior to the time Jab began marking its product with the patent number, on the ground that such information was irrelevant because London Luxury could not recover damages prior to marking, and on ground that disclosure to a competitor would be harmful.

The court required production. It found that the profitability of the infringing product pre-marking would inform the calculation of a reasonable license fee (a measure of damages), and also relevant to the alleged obviousness of the patent. The Court rejected London Luxury’s argument that disclosure would be inappropriate because the information in question was the subject of a confidentiality agreement with a third party, and held that the protective order, which included an “attorneys eyes only” provision, provided adequate safeguards against disclosure of sensitive information to a competitor. The court noted that London Luxury offered only attorney argument and failed to submit sworn declarations or affidavits explaining the need for secrecy.

The take-away here is that parties involved in litigation should be aware of the presumptive expansiveness of federal court discovery, and that they will be fighting a steep uphill battles to keep even sensitive competitive information from their adversaries. If there is information that should not be disclosed, parties should first determine whether a suitable protective order can provide adequate protection. If so, more often than not courts are receptive to those. If not, parties should prepare early to resist disclosure and provide the best possible admissible evidence of the need for secrecy, but be aware that the odds are against them.
 

IP Rules the World

Interesting article in the New York Times this morning reports that Silicon Valley companies in the business of developing solar panels have been beaten to market by the Chinese, and that the Chinese are driving down prices and margins while the U.S. companies are struggling to gain enough efficiencies to enable them to compete. The article quotes the CEO of one of the U.S. companies, Innovalight: “How do you fight against enormous subsidies, low-interest loans, cheap labor and scale and a government strategy to make you No. 1 in solar?” The obvious answer he gives: “Innovation will be the heart of the U.S. strategy, and although it might not create the same scale, we’re exporting well-protected technology to China and creating well-paying jobs here.”

Recent news on the domestic “well-protected technology” front is less encouraging than one would hope, however. The USPTO reports on its Data Visualization Center that the average time a patent remains pending is nearly three years (35.3 months), and there is a backlog of nearly three quarters of a million patents. If no new patents were to be filed, the USPTO estimates that it would take approximately 26 months to issue a first office action for every one. The USPTO aspires to reduce the average time a patent remains pending to 20 months. That would be much better, but is it good enough for the heart of our strategy?
 

Innovation In Connecticut

I attended the Connecticut Technology Council’s Innovation and Entrepreneurship Summit last week.  It was very well-run, and offers a great chance for investors to see a lot of interesting new companies in only a few hours, and for the new companies to practice their elevator pitches. I was able to meet a number of the CTC’s 2010 Top 100 Tech Companies To Watch.

Some of the more interesting companies included: Natural State Research, a Stamford Company with technology that converts plastic into a clean-burning fuel that can be used in existing internal combustion engines; Aquasent, a company formed by three UConn professors that has pretty interesting technology for underwater computer networking, licensed from UConn; and Spot On Networks, which sells wireless Internet access to large residential developments.  A personal favorite was MoxMe!, which has Google and Facebook applications that allow one to integrate children’s school and athletic calendars with one’s own. MoxMe! could theoretically make it possible for me to keep track of which kid needs to be at which field, when.