LICENSING INTELLECTUAL PROPERTY
Professor Jorda December 11, 1996
This is a three-hour, open-book exam (four and one-half hours for certain foreign students). You may consult the course materials as well as any other materials. Yet, your examination must be your own work. Do not discuss it with other students.
Write your answers in the blue books supplied, but please use only one side of the page and observe the margins. Please write or print as legibly as possible.
Grading will be anonymous; please do not put your name on anything you turn in. BE SURE YOUR EXAM NUMBER IS ON EACH BLUE BOOK YOU TURN IN.
Water Closet Communications, Inc. ("WCC") is a large manufacturer of cell-phone handsets. It manufactures those cell-phone handsets that incorporate a microprocessor (computer-on-a-chip) and special signal processing software. WCC wants to improve its latest version of its cell-phone software, but does not have enough software engineering resources to get this job done before its next product needs to be ready for the market.
WCC decides to enter into a software development agreement with Rock of Sages WonderLand ("RoSWL") to make the modifications to the existing cell-phone software. As WCC is about to enter into the agreement with RoSWL to create the software, WCC discovers that RoSWL is not itself (i.e., through its own employees) going to create at least some of the modified software. RoSWL, in addition to using its own employees, intends to use the services of Jennifer "Jen the Wiz" Wizard. "Jen the Wiz," a brilliant but eccentric software genius, who once was an employee of RoSWL, but now lives in a tree-house just north of Eugene, Oregon, has been engaged under a contract with RoSWL to provide her services to RoSWL to create some portions of the modified software.
1. As in-house Intellectual Property Law Counsel to WCC, what do you have to do to insure that WCC will be the owner of the Copyright rights in this modified cell-phone software as a "work-made-for-hire" under the U.S. Copyright Law (assuming that the software is within one of the categories listed in the definition of a work-for-hire)? [5 Points]
2. What are the requirements for a contract to establish ownership of the Copyright rights in the modified software in WCC as a work-made-for-hire)? [5 Points]
3. If it is not possible, for some reason, to make WCC the owner of the Copyright rights in the software, by virtue of the fact that the software would be created as a work-made-for-hire, how else can WCC acquire ownership? What disadvantage is there in obtaining ownership this way, as opposed to obtaining it as a work-made-for-hire? [5 Points]
Kamm Breweries of Mishawaka, Indiana has, for over 50 years, produced and marketed beer and ale in kegs, bottles and cans in the area of the U.S. east of the Mississippi. Kamm is now preparing to introduce a new product into its line Ñ malt liquor, to be called "Kamm's Volt."
Kamm's advertising department has proposed that the marketing campaign take a colonial theme. Working with the company's package design department, it has designed the Volt can to resemble a pewter ale mug. The wall of the can slopes slightly inward from the base, and a cut-out handle, designed to be pulled out and back from the wall of the can, is a stylized version of a common pewter mug handle. The can is pewter-colored and bears a red oval emblem with the imprinted word, "Volt," predominant and, beneath it, the phrase, "Kamm's Volt Ñ Always Good for a Jolt."
The top of the container is designed to be removed easily by an action consisting of grasping and pulling upwards on an attached aluminum loop. Unlike the pull-out tab employed on other beer, ale and malt liquor cans, which affords only a narrow opening, the entire top would be removed to enable drinking directly from the mouth of the can. The advertising executives hope that, aside from fitting into the mug concept, this new design will win new customers by making drinking easier. Their theory is that one effect of the new design will be to curtail the amount of air taken in with swigs from the can, consequently reducing the incident of a syndrome known in the trade as "beer drinker's burp."
One reason the concept of making the entire top removable had not previously been employed by others is that, whenever it was attempted, the resulting can was too weak to contain the pressure required for storage of beer, ale or malt liquor. To employ this new form of top without sacrificing the container's strength and capacity to retain the necessary pressure, Kamm's package design department, after considerable experimentation, arrived at a new method of container construction, accomplishing a significant advance in the can manufacturing art.
Having taken steps to avail itself of every available form of IP protection in the U.S., Kamm is interested in licensing a Denver-based brewer to manufacture and distribute Volt malt liquor in the new pewter mug container in the area west of the Mississippi. Representing Kamm, what kinds of clauses would you try to incorporate into the licensing agreement? [20 Points]
ABC Inc. brought suit against XYZ Corp. and Jane Doe for patent infringement. Doe had invented a certain fabric and a method for producing it while she was an employee of OPZ Co. In connection with the filing of a patent application on her invention, Doe (1) assigned all right, title and interest in her patent rights to OPZ for one dollar and other valuable consideration, and (2) signed a Declaration and Power of Attorney stating her belief in the patentability of her invention.
Subsequently, Doe left the employ of OPZ and founded XYZ and competed with OPZ, which changed its name to ABC. In their response to ABC's complaint, XYZ raised several defenses alleging that the patent in suit was invalid. ABC filed a motion that these defenses be stricken.
How should the court rule on this motion and why? [15 Points]
1. Discuss the possibility of licensing pending patent applications. What's behind the question as to whether pending patent applications can be licensed? If you conclude that patent applications can be licensed, what's the rationale for doing so? [4 Points]
2. What are the customary exceptions to the confidentiality obligations in secrecy agreements or trade secret licenses? [4 Points]
3. What is the rationale behind quality control provisions in trademark licenses, and what are the necessary elements and steps of a quality control policy and procedure? [4 Points]
4. What are "grantbacks" and "grantforwards" and what is their status from an antitrust/patent misuse standpoint? [4 Points]
5. What is a simple test for determining the existence of IP misuse? Giving an example of IP misuse, indicate how this IP misuse can be rectified? What is the effect of such rectification and as of when is it effective? [4 Points]
Ñ END OF EXAMINATION Ñ