Presenting a live 90‐minute webinar with interactive Q&A
Cloud Computing: Intellectual Property Legal Issues
Protecting IP Rights and Mitigating Infringement Risks in Virtual Storage and Applications
WEDNESDAY, OCTOBER 12, 2011
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T d ’ faculty
Today’s
f
l features:
f
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 Issues
Protecting IP Rights and Mitigating Infringement Risks in
Virtual Storage and Applications
Strafford Publishing Webinar
Wednesday, October 12, 2011 – 10 a.m. (PDT)
Presented By
Brian E. Mitchell, Esq., Mitchell+Company
and
g, Esq.,
q , Sidley
y Austin LLP
Peter H. Kang,
5
Cloud Computing: IP & Legal Issues
FACULTY
•
Brian E. Mitchell, Founding Partner, Mitchell + Company Law Offices, San
Francisco, CA
– Brian Mitchell handles patent
patent, copyright
copyright, trade secret,
secret and trademark matters.
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
business
method
th d patents.
t t
He
H is
i currently
tl also
l a Lecturer
L t
in
i Law
L
att Santa
S t Clara
Cl
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
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.
6
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 Issues
PART ONE
Strafford Publishing
g Webinar
Wednesday, October 12, 2011
Peter H. Kang
Cloud Computing & Legal/IP Issues
8
WHAT IS THE CLOUD
• “When people talk about cloud computing, they’re
talking just about taking some stuff, putting it outside
the firewall
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
y
g that we already
y do. I can’t think of
anything that isn’t cloud computing with all of these
announcements…. I don’t understand what we would
do differently
y in the light
g of cloud computing
p
g other
than change the wording of some of our ads.”
• Oracle CEO Larry Ellison
•
“It’s become the ph
phrase
ase d
du jour."
jo "
• Gartner Senior Analyst Ben Pring
9
DEFINING CLOUD COMPUTING
Marc Andreesen described the cloud as “a smart,
complex,
p ,p
powerful computing
p
g system
y
in the skyy
that people can just plug into.”
10
Defining Cloud Computing
• NIST defines “cloud computing” as “a model for
enabling convenient
convenient, on-demand
on demand network access to a
shared pool of configurable computing resources
(e.g., networks, servers, storage, applications, and
services)
i
) th
thatt can be
b rapidly
idl provisioned
i i
d and
d released
l
d
with minimal management effort or service provider
interaction.”
• The cloud model defined by NIST is multi-dimensional
and composed of
– five essential characteristics,
characteristics
– three service models, and
ou dep
deployment
oy e t models.
ode s
– four
11
Defining Cloud Computing
• The five essential characteristics of the cloud model
developed by NIST are:
– 1) on-demand self-service;
– 2) broad network access;
– 3) resource pooling;
– 4) rapid elasticity; and
– 5) measured service
12
Defining Cloud Computing
• Deployment models as defined by NIST:
– 1) Public Cloud (Gmail);
– 2) Private Cloud (or Virtual Private Could) (Cerelink);
– 3) Community Cloud (Google Gov Cloud);
– 4) Hybrid Cloud (surge computing – Rackspace)
• 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
p
g Cloud ((EC2))
))
Computing
13
Cloud Computing – Salient Features
• Third party control and access to
data
• Lack of transparency
• No geography in the cloud –
borderless
• Potential multiple copies of data
dispersed in the cloud
• Surge computing
14
Potential IP Issue: Patents and the Cloud
•
15
Patent Infringement Issues
•
Divided Infringement
•
Extraterritoriality
•
Investigating and proving infringement
Potential IP Issue: Patents and the Cloud
• Divided Infringement and Extraterritoriality
• “Ordinarily, whether an infringing activity under
section 271(a) occurs within the United States can be
determined without difficulty.
y This case presents
p
an
added degree of complexity, however, in that: (1)
the “patented invention” is not one single device, but
at e a system
syste comprising
co p s g multiple
u t p e distinct
d st ct
rather
components or a method with multiple distinct steps;
Ԝand (2) the nature of those components or steps
permits their function and use to be separated from
their physical location.”
• RIM v. NTP, 418 F.3d 1282 (Fed. Cir. 2005)
16
Potential IP Issue: Patents and the Cloud
•
Divided Infringement and Extraterritoriality
•
In RIM, part of the claimed email system was in Canada
•
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 law
•
17
“a process cannot be used ‘within’ the United States as
required
q
by
y section 271(a)
( ) unless each of the steps
p is
performed within this country.”
Potential IP Issue: Patents and the Cloud
•
Divided Infringement and Extraterritoriality
•
•
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
•
18
“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
g or offering
g to sell the
invention 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
y NTP's
did not sell or offer to sell the invention covered by
method claims within the United States.”
Potential IP Issue: Patents and the Cloud
•
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)
19
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’
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
o
t e patentability
pate tab ty criteria
c te a of
o the
t e rest
est of
o the
t e
Patent Act.”
– Research Corp. Techs., Inc. v. Microsoft Corp., - F.3d - ,
2010 U
U.S.
S App.
App LEXIS 24984,
24984 at 17-18
17 18 (Fed.
(Fed Cir.
Cir Dec.
Dec
8, 2010) (internal citations omitted).
20
Potential IP Issue: Patents and the Cloud
•
Patent Portfolio Development - Claim Drafting
• “While
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
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
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
21
Potential IP Issue: Patents and the Cloud
•
•
•
22
35 U.S.C. § 102(g): Conception/Reduction to
Practice and “Territoriality”
Territoriality
“Reduction to practice in the United States
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.
(Fed Cir.
Cir 2002)).
2002))
Hypothetical inventors in non-WTO countries
using
i
th
the cloud
l d
Potential IP Issue: Patents and the Cloud
23
•
Inadvertent Prior Art
•
Publication
•
Public knowledge
•
Impact of America Invents Act of 2011
•
First to file
•
One year grace period for inventor disclosures
Conclusions
•
Cloud computing’s growth is rapid:
•
24
$46B in 2008; $58B in 2009;
approx $68B in 2010 (per
approx.
Gartner)
•
IP issues will grow (10 vs. 750)
•
Additional Legal issues
BEIJING BRUSSELS CHICAGO DALLAS FRANKFURT GENEVA HONG KONG LONDON LOS ANGELES NEW YORK PALO ALTO SAN FRANCISCO SHANGHAI SINGAPORE SYDNEY TOKYO WASHINGTON, D.C.
THANK YOU
Peter H. Kang, Esq.
Sidley Austin LLP
1001 Page Mill Rd., Building 1, Palo Alto, CA 94304
pkang@sidley.com
www.sidley.com/kang_peter/
THANK YOU!
BEIJING BRUSSELS CHICAGO DALLAS FRANKFURT GENEVA HONG KONG LONDON LOS ANGELES NEW YORK PALO ALTO SAN FRANCISCO SHANGHAI SINGAPORE SYDNEY TOKYO WASHINGTON, D.C.
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
legal advice. Transmission of the information herein is not intended to create, and receipt does not constitute, an attorneyclient 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
discussions. Because of their summary nature
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. pkang@sidley.com
Cloud Computing: Intellectual Property Legal Issues
PART TWO
Brian E. Mitchell
Mitchell + Company Law Offices
Mitchell Company Law Offices
San Francisco, CA
IP Enforcement Challenges
IP Enforcement Challenges • Jurisdictional Issues
Jurisdictional Issues
• Subpoenas • Privilege
28
Jurisdictional Issues
Jurisdictional Issues
• Where
Where does data actually physically reside? 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 issues
• Notice to the data owner of geographical issues
29
Jurisdictional Issues: International Data Protection Laws
International Data Protection Laws
•
•
•
Differing national data protection regimes
g
p
g
EU Data Protection Directive ‐ Prohibits transferring personal information to countries lacking same level
personal information to countries lacking same level of protection for EU residents (e.g., U.S.).
The Security Rule re Electronic Protected Health h
l
l
lh
Information under the federal Health Insurance Portability and Accountability Act (HIPA))
Portability and Accountability Act (HIPA)) 30
Potential Legal Issues: Subpoenas
Potential Legal Issues: Subpoenas • Potential
Potential issue with a third
issue with a third‐party
party subpoena 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
• Theoretically, could respond to a subpoena by Th
i ll
ld
d
b
b
producing documents, data, and information to which the client legitimately has objections
hi h h li
l ii
l h
bj i
• Risk of overbroad disclosure and waiver
31
Potential Legal Issue: Privilege
Potential Legal Issue: Privilege • Customers’
Customers attorney
attorney‐client
client communications 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 privilege
argument for a finding of waiver of privilege
32
Trade Secrets
Trade 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
33
Trademark Issues
•
Conflicting Rights: An increasing number of g g
g
trademarks and trademark applications incorporating the term “cloud computing”
•
•
Will invariably lead to trademark issues relating to genericness, secondary meaning, and infringement/likelihood of confusion
infringement/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
34
Copyright Issues
py g
•
•
Potential legal question as to whether a work that g q
exists 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 Lawyers
Bonus Material: Use by Lawyers
• Lawyers
Lawyers are increasingly turning to cloud
are increasingly turning to cloud‐based
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 management, timekeeping, and billing (e.g.
k
d b ll (
Freshbooks).
36
Ethics/Security Concerns
Ethics/Security Concerns • Many state bars, bar associations, and the ABA are discussing y
,
,
g
ethics and security concerns
• One of an attorney's foremost duties is to protect client confidentiality. Some concern has been expressed about fid ti lit S
h b
d b t
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 encryption
as the cloud‐based services often employ encryption measures and multiple redundant backups. 37
Lawyer’ss Duties
Lawyer
Duties
• The
The ABA Commission on Ethic
ABA Commission on Ethic'ss “20/20
20/20 Working 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 Issues
Confidentiality Issues
• The
The ABA Commission has identified a number of 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. 39
Solution
• Most opinions and papers conclude that concerns are best addressed when, as stated by the ABA, b
dd
d h
d b h ABA
“Lawyers [ ] take reasonable precautions to ensure that their clients’ confidential information remains that their clients
confidential information remains
secure”
• As a further example, the Arizona Bar specifically As 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).
40
Solutions (Cont.)
Solutions (Cont.)
• However,
However, “Lawyers
Lawyers should be aware of limitations in 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
time, a periodic review of the reasonability of i di
i
f th
bilit f
security precautions may be necessary.” (Bar Opinion 09 04). 09‐04)
41
Conclusions
•
Cloud computing’ss growth is rapid:
Cloud computing
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
42
Q&A and Wrap‐Up
p p
•
Comments from the audience
Comments from the audience
•
Q&A
•
Final words
THANK YOU!
43
Brian E. Mitchell
Brian
E Mitchell
4 Embarcadero Center, Suite 1400
S
San Francisco, CA 94111
i
C 9
(415) 766‐3514 (Office)
(415) 402‐0058 (Facsimile)
brian mitchell@mcolawoffices com
brian.mitchell@mcolawoffices.com
44