Watson Rounds focuses on several major components in its comprehensive business counseling strategy: contract preparation, asset protection strategies, dispute resolution and litigation. Each circumstance is different requiring specialized consultation and analysis. Not all of the matters identified below apply in every circumstance. They are being offered as examples only. It is important that you consult counsel before embarking upon any venture or entering into a contract or complicated transaction.

Contract Preparation
Preparing contracts for your business is a very intricate process that takes not only legal knowhow but knowledge of the specificrelationships the business entity will be engaged in.

      •Key employee contracts
Employee contracts for small businesses are extremely important and need to be drafted properly. There are basic pointers required in the agreement related to the positions requirements and responsibilities. There are also details in the contract that will prevent the company from being sued and keep the employee comfortable in the work-place environment. Examples of what should go into an employee contract are:
o Employees job responsibilities
o Compensation packages
o Performance reviews
o Pay increases
o Rights of employee and employer
o Nondisclosure agreement

For more information on creating an employee contract for a small business, read the Watson Rounds blog here.

      •Vendor relationships
Vendor relationship management is a part of a business strategy that incorporates a set of tools, technologies and services. They are then marketed and managed with vendors. The vendors, in turn, will benefit from the incorporated tools, technologies and services that were provided to them. When a vendor or company benefits, their customers benefit as well and are happier and have a better chance of becoming a return customer.

Watson Rounds helps businesses get the most out of vendor relationships while making sure all the legal attributes are in the necessary contracts and are clearly stated to avoid any legal problems down the road.

      •Mergers and acquisitions

Mergers between companies can be extremely tricky, especially when two sides are figuring out legal issues like copyrights, trademarks, employees, assets, etc. Each party involved is looking to protect their best interest and because those interests may conflict, it is important to have legal counsel available to help clients navigate those conflicts.

Asset Protection Strategies
Asset protection is more or less a set of legal techniques that protect and shield many, or all, of your business assets from liability. Watson Rounds helps create the strategy behind how the business is established or formed and that helps construct the proper structure of the asset protection plan.

Dispute Resolution
Dispute resolution is an alternative to going to court with your dispute. Two parties usually will settle out of court using a legal third party, like Watson Rounds. In alternative dispute resolution, the dispute is solved in one of two ways:
• Arbitration – the disagreeing parties agree to a decision made by an independent third party
• Mediation – the third party arranges a settlement between the two sides

Litigation
Watson Rounds does a lot of work in civil litigation and dispute resolution. There are multiple topics which give rise to litigation; some of the topics Watson Rounds has addressed recently are in the areas of product liability, trade secrets, intellectual property, shareholder disputes, contract enforcement and termination, employment discrimination, breach of fiduciary duties, and civil RICO .

For more information on litigation, read the Watson Rounds blog here.

When creating a website, there are major factors that need to be examined before pulling items from other sites. These are the five exclusive rights given to copyright owners under the Copyright Act. If a person infringes upon these rights, by taking information lawfully not theirs, a copyright infringement lawsuit can be filed. These five exclusive rights are for the owner of a copyrighted work:

1. The right to reproduce the copyrighted work

2. The right to prepare derivative works based upon the work

3. The right to distribute copies of the work to the public

4. The right to perform the copyrighted work publically

5. The right to display the copyrighted work publically

Of these rights, the most important is arguably the right of reproduction. This is where a lot of website owners get in trouble. This right includes and goes past the simple copy and pasting of text. It includes intellectual property such as the copying of a computer software program or design comps, as well as putting a song on your website without permission from the copyrighted party. Infringement of copyright laws can end in a lawsuit, and ultimately the loss of significant finances.

The Fair Use Statute in the Copyright Act

The rights of American citizens brought forth by the Declaration of Independence have come as a rebuttal in many copyright infringement lawsuits. From these basic rights came the Fair Use Statute used to challenge many lawsuits. The Fair Use Statute protects work done for news, reviews, teaching and research. The Fair Use Statute is part of the Copyright Act and covers four factors that must be met in order for the content to be used without the owner’s consent.

1. The purpose and character of the use, including whether such use is of commercial nature or is for nonprofit educational purposes
2. The nature of the copyrighted work
3. The amount and substantiality of the portion used in relation to the copyrighted work as a whole
4. The effect of the use upon the potential market for or value of the copyrighted work

Examples of when fair use would be used are in reviews, a parody, quotes from a speech used in a news story or limited copy for academic purposes. Even though in some legal cases the end result is unclear, many courts will err on the side of the First Amendment and rule the copying of the information as fair use.

There are other concerns dealing with copyright infringement when creating a website. The ways in which intellectual property and physical items are developed and obtained causes a lot of copyright infringement. The items that many developers should look at are: 

• Developing text
• Obtaining images
• Developing HTML, Java Applets, JavaScripts, ActiveX scripts, etc.
• Domain names
• Trademark concerns

Whereas a full discussion on all these items could go on for pages, we’ll focus on the ones relevant to website development: domain names and obtaining images.

Domain Names

Creating a domain name, and protecting it, can be the most important detail in creating your website. First, figure out what kind of top level extension your site will have: .com, .net, .org, .gov, .edu. This should be based on the content you are sharing on your page. Then, search for your chosen domain name in case someone else has it. A trademark search will get this job done quickly. Sign up for the domain name using a number of hosts such as godaddy.com, InterNIC, etc. After this, register your trademark and purchase multiple domain names that are similar to yours so no one else can use it or its like.

 Obtaining Images

 Once an image is on someone’s hard drive, that image is protected under copyright law. The general rule is to not steal someone else’s images. There are certain images on the web that can be reused without expressed permission by the owner, but only for certain purposes (refer to fair use statute). The use of an image pulled from one website onto another commercial website would not be saved under the fair use statute and would indeed be labeled as infringement of copyright laws. To prevent lawsuits from happening, there are websites that have a database of pictures for multiple websites use for a charge. An example would be istockphotos.com.

 Patent infringement usually occurs when a certain company’s rights for a patent are about to expire. If another company wants the rights to the product, they can go to trial to get the rights. Teva wanted to create a generic version of the Evista osteoporosis treatment now, but the ruling went against them due to patent infringement laws.

 “Protection of intellectual property rights is extremely important to the biopharmaceutical industry and the patients we serve,” Lilly General Counsel Robert A. Armitage said in a statement. “We will continue to vigorously defend our rights, in order to support the development of the next generation of innovative medicines.” 

 Lily is facing patent expirations on three of its top-selling drugs by 2013. The three drugs in question accounted for more than 40% of Lily’s 2009 revenue.

• Antipsychotic Zeprexa (Lily’s best-selling drug) loses its patent in October 2011
• Antidepressant Cymbalta loses patent in 2013
• Insulin Humalog loses patent in 2013

 The development of new drugs is progressing slower than the company wants, so sticking with these patents of already established and profitable drugs is essential for the company to stay afloat.

 Teva Pharmaceutical Industries, Ltd. Responds

 Teva is standing strong against the patent suit saying that Lilly is using “obvious variations of known science”. The FDA gave Teva permission to create the generic version of Evista in March 2009 before the trial began. Company officials are not giving any comments on the patent trials decision.

Construction defects can range from water intrusion leading to mold and to mechanical and electrical malfunctions. The following is a question and answer piece to answer the most common concerns about construction defects.

The list was put together using multiple web sources as well as knowledge of insurance defense litigation experience from the attorneys here at Watson Rounds.

Q: What is a construction defect?
A: A construction defect is a problem in your home that can decrease the value of your home due to many factors (most of which circle around the house not being built to local building standards or building codes or the home being unlivable). Some defects, like water seepage, are obvious but many do not become evident until years after the home was built.

Q: What causes a construction defect?
A: A construction defect can arise from a variety of factors, including:

• Improper soil analysis and preparation
• Site selection and planning
• Civil and structural engineering
• Negligent construction
• Defective building materials

Q: What are some of the most common types of construction defects?
A:The most common types of defects involved in litigation include:

• Mold
• Water issues
• Landscaping and soil
• Faulty drainage
• Foundation, floor, wall and roof cracks
• Dry rot
• Structural failure
• Heating and electrical issues

Q: How is a construction defect proved in court?
A: It depends on the defect. Patent defects are obvious in the home and easily proven in court. Whereas latent defects usually do not become noticeable until years after the home was built. A successful construction defect litigation claim relies on a lawyer’s use of testimony from experts who specialize in specific areas of construction. The experts investigate the defect, evaluate the cause and make recommendations for how to remedy the defects.  Lawyers then use legal arguments and expert testimony to prove patent and latent defects.

Q: Who is responsible for construction defects?
A: Generally, the responsibility lies with the general contractors, developers, the builders, subcontractors and material suppliers of residential structures. Architects, designers and other involved parties may also be responsible for construction defects.

Intellectual property is the concept of holding certain rights to different intangible assets such as:

• music
• literature
• art
• discoveries/inventions
• words/phrases
• symbols/text
• designs/pictures

These certain rights manifest themselves in the concepts of copyrights, trademarks, patents, design rights and trade secrets. For websites, trademarks and copyright infringement are the two intellectual property rights that are most commonly violated.

Trademarks

A website can be used as an extension of your business, or the basis of your entire business. Either way, the logo of your company should be clearly visable on the website. Registering your logo as the trademark of your company will prevent people from using the logo or discussing your company (while also using the logo as a graphic) without your consent. To make it clear that the logo is trademarked, add a legal disclaimer in the footer of your website stating the logo is registered.

Copyright

Everything on your website can be retained under the intellectual property rights of copyright law. Text, graphics, charts, and other material are copyrighted under the company. The only time you would not specifically hold the rights to these components is if you hired a graphic designer to use work he/she already copyrighted. If this is the case, write into the designer’s contract that the legal rights of the content put on your website go to you and your company. Remember, the expression of the ideas on the website is what is copyrightable, not the original idea. Once the designer puts his ideas onto your website, the copyright ownership is yours.

Dow Jones is accusing Briefing.com of taking their articles verbatim and republishing those minutes after Dow Jones put them online. They are currently demanding $10,000 per article copied. This infringement of copyright by Briefing.com has already been promised to stop by the web-based company, but Dow Jones is still asking for these extreme damages.

With the question of copyright infringement on over 100 articles and 70 headlines, Dow Jones is trying to make it clear that if “you’re going to take our content, we’re going to take action,” Dow Jones general counsel Jason Conti said.

Dow Jones is citing a 1999 federal appeals copyright infringement case in which a Japanese news corporation was held against similar accusations and charged $10,000 per article. The attorneys for Dow Jones are looking to uphold past precedence, but Briefing.com told the press they did nothing wrong and were simply using information from press releases and quotes that were distributed to the public.

What puts a spin on this infringement of copyright case is the CEO of Dow Jones parent company News. Corp. Rupert Murdoch. Murdoch, a well known media tycoon, is a noted adversary of free distribution of content over the web, and Briefing.com does not want to become a player in his game of legal precedents on the World Wide Web.

The attorneys at Watson Rounds have had multiple intellectual property cases in the California area dealing with the entertainment industry. Intellectual property rights in entertainment have been neglected in the examples of pirated movies, illegal downloading of music, and rouge websites. Because of this, entertainment trade groups, such as the Motion Picture Association of America have backed the government’s enforcement strategy and are pleased to see it enforced.

The entertainment industry is not the only business that has seen an influx of intellectual property cases. Software and pharmaceutical markets are also feeling the burn of online piracy, counterfeit goods and misuse of the Internet.

The 61-page report includes over 30 recommendations, including an interagency committee specifically dedicated to restricting fake drugs and medical products along with curbing intellectual property infringement.    

The country of focus for the Intellectual Property Enforcement Office, coordinated by Victoria Espinel, on international counterfeit and intellectual property infringement will be China. Last year’s U.S. Customs and Border Protection report said 79% of seized counterfeit goods came from China. 

Bob Pisano, President and Interim CEO of the Motion Picture Association of America, Inc., said”This plan is an important step forward in combating intellectual property theft and protecting the millions of jobs and businesses that rely so heavily on copyrights, patents and trademarks and help drive the American economy.”

Apple is alleging that Kodak infringed upon two of its patents; a computer vision system for subject characterization, and modular digital image processing via an image processing chain with modifiable parameter controls. Basically, the two patents surround Kodak’s use of technology for the creation of digital still and video cameras.

The patent infringement suit from Apple came in mid-April, about 3 months after Kodak’s original patent infringement suit against Apple. Apple is asking that the products under scrutiny of patent infringement be banned from importation to the U.S. The ITC is looking into Apple’s claim and will decide if the products indeed should be blocked. However, a blocks could go against Apple since the ITC is also investigating the claim that Apple’s iPhone is using preview image technology patented by Kodak.

This is Apple’s most recent in a long line of patent infringement accusations. Just last week HTC, a Taiwanese company, filed a suit with the ITC seeks to immediately stop the importation of not just the iPhone, but also the iPad and iPod to be ceased immediately on the grounds of 5 patent infringement violations.

As a previous blog stated, multiple companies have filed patent infringement lawsuits against Apple in a relatively short amount of time. Most suits are still being discussed and it is unclear as to the effect on the American technology community the block of these products would have.

Watson Rounds is one of the sponsors for the NCET Entrepreneur Expo this year.  The firm was a sponsor last year and is looking forward to another great event this year.  Stop by our booth during the September 17, 2010 event located at the Atlantis Casino Resort Spa.  Watson Rounds is the perfect choice for all those entrepreneurs out there who need assistance with corporate formation, contract preparation, including key employee contracts, vendor relationships, mergers and acquisitions; asset protection strategies to protect and shelter the resources that help your business succeed; regulation compliance, dispute resolution, litigation, copyright and trademark services and litigation.

Non-obviousness is the term used in patent law that describes one of the requirements that an invention must meet to qualify for patentability. The obviousness law states that the invention being patented cannot be obvious; that is to say, it would not be obvious to a person having ordinary skill in the art (PHOSITA) to come up with the patented item. The standard for obviousness in patent law was recently discussed in the 2007 Supreme Court opinion of KSR vs. Teleflex.

The KSR Teleflex case was considered the furthest-reaching patent ruling in decades. Teleflex sued KSR International, claiming that one of KSR’s products infringed upon one of Teleflex’s patents. KSR said the combination of two elements used in Teleflex’s patents as obvious, which made the method and product non-patentable. The District Court ruled in favor of KSR, but the Court of Appeals for the Federal Circuit reversed the ruling. The case went all the way to the Supreme Court, which decided against the Federal Circuits ruling and held that the patent was in fact obvious.

The primary factors that convinced the Supreme Court to invalidate the patent had to do with PHOSTA and the application of the “teaching-suggestion-motivation” (TSM) test, as well as the Graham Factors.

The Graham Factors, shown below, are items looked at when a patent is being reviewed as to the obviousness of the patent.

• The scope and content of the prior art.
• The level of ordinary skill in the art.
• The differences between the claimed invention and the prior art.
• Objective evidence of non-obviousness.

In addition, the court outlined examples of factors that show “objective evidence of non-obviousness”. They are:

• Commercial success.
• Long-felt but unsolved needs.
• Failure of others.

The TSM test has been openly criticized but was formed originally to prevent hindsight bias. It requires a patent examiner (or accused infringer) to show there was something in the art that left a wide desirability for a solution to a problem to make the patent obvious. 

 The implications of this ruling are many and of great importance.  Here are some of them:

• This ruling made it easier for patents to be invalidated based on non-obviousness.
• The USPTO Board of Patent Appeals and Interferences (BPAI) is citing KSR in about 60% of its decisions related to obviousness.
• The cost and uncertainty of patent litigation was lowered.
• Makes it harder for software and other patent seekers to obtain a patent.