November 2003

IP & IT law update: patent, copyright and software infringement

Patent case - browser plugin patent to be re-examined

In our last IP and IT law update, we reported on Microsoft's loss in a patent infringement action brought against the software behemoth in the USA.

The action was based on a US patent, which covers technology that enables small computer programs (aka "plug-ins" or "applets") to be embedded in web pages so that they may interact with web browsers such as Microsoft's Internet Explorer.

The jury awarded damages of US$520.6 million against Microsoft, causing an eruption of vocal complaints from industry participants and commentators, including WWW guru and W3C Director, Tim Berners-Lee. Many have pointed out that Microsoft's loss, if correct, may have extremely wide-reaching consequences for all websites which use plug-ins.

Media reports have recently covered announcements by the United States Patent and Trademark Office. Apparently, the USPTO has taken the unusual step of initiating an order for re-examination of the controversial patent, which is sure to please Microsoft and software users around the world.

Again, we won't comment on the underlying patent law, or the practices that allow these patents to be granted - that's an article in it's own right. But, if you are planning to implement, or have already implemented a transactional or 'interactive' web presence, then you should seek reassurance from your software developers so that you minimise the impact these software patent cases may have and avoid a potentially nasty infringement situation.

Copyright case - Australia hosts world's first suit vs. ISP

In a worlds first, the Australian Recording Industry Association has commenced legal action against an Internet Service Provider in relation to digital piracy allegations.

The action has been commenced against the registrant of a website (www.mp3s4free.net), Stephen Cooper, from whose site it is alleged visitors could access thousands of infringing copies including new release music.

The mp3s4free site is alleged to be one of the largest of its kind, and this may explain why ARIA is also suing Mr Cooper's ISP, E-Talk Communications trading as "ComCen Internet Services", which hosted the site.

As easy methods of reproducing digital content, and access to the Internet, become more and more pervasive, copyright owners have become increasingly exposed to infringement opportunities. Recently, we have seen a number of actions brought around the world as copyright owners are starting to respond to the threat of digital infringement.

Until now, ISPs have claimed they should not be liable in piracy cases, because of their lack of knowledge, about what data is being passed to and from their system by users, and particularly in the light of laws relating to privacy. They argue they are merely conduits for the traffic, and thus not liable. This case may set new standards for web-hosting businesses, and will be watched with interest by participants in Australia and throughout the world. If liability is found against ComCen, one likely consequence will be an increase in the prices charged by ISPs to their users; and this could affect all Australian businesses.

Software integration survey a timely reminder

We were not surprised to read media reports about software integration firm InterSystems' 2003 Australian Integration Survey. Respondents were from 149 large and medium sized companies in the government, manufacturing, financial services, technology and other industries. The results apparently show that one-third of the organisations surveyed had adopted or are implementing an Enterprise Application Integration (EAI) project, and just over one-third are in the planning stages of EAI or had it on their wish list. In summary, the responses indicated general dissatisfaction with data recovery times.

These results are a timely reminder that software development or implementation projects must be carefully managed in order to achieve positive business outcomes.

Some commonsense suggestions:

  • Don't sign anything unless you know what's in it

  • Put a contract in place before proceeding with work or services for (or from) an unrelated business - otherwise it ends up in the 'too hard' basket

  • Include the preferred contract form in tenders - it helps to flush out issues before they become a problem, and makes contractual negotiations post-tender quicker and cheaper.

  • Before signing, ensure all system requirements are clear, and all relevant stakeholders have signed off

  • If you are the customer, use your own trusted project manager - never rely on the supplier to manage your IT project - and try to skew payments to the end of the roll-out so that the supplier has incentive to finish the job because paying up-front increases the risk of a long and frustrating tail with a disinterested supplier.

  • Keep an eye on staff turnover and key project staff - they are crucial to success and can be difficult to replace mid-project

  • Escrow arrangements are fine, but you still need skills and expertise to continue a project whether internally or using another external developer

  • Take the opportunity to improve business processes when implementing new IT systems.

New report concludes that Australian businesses are ignorant about IP

A new report, co-authored by the Centre for Corporate Change at the Australian Graduate School of Management has concluded that Australian businesses risk being left behind unless they manage their intellectual property (IP) assets more effectively. The report is based on a survey of Australian organisations and three case studies (ANSTO, BHP Steel and Fosters), and suggests proper IP management requires business to implement six lessons:

  • Holistic approach encompassing corporate and legal context

  • Dedicated management and legal staff

  • Concerted attention at the very top of the organisation

  • Understanding world's best practice and worldwide monitoring

  • A culture of IP to pervade the organisation

  • Recognition and use of a mix of IP rights

To ensure that directors and managers comply with their statutory and other obligations, we recommend that these senior business personnel take an active approach to IP assets, with a clear understanding of all their obligations. This applies whether the manager is employed by a listed entity, a privately-held business, a hybrid joint venture - the legal structure is becoming less and less relevant as a determinant for the content of managers' obligations.

If your business needs to improve its treatment of these business assets, we suggest an IP asset audit and IP asset management program is a good way to start. One critical deliverable from this process is a detailed IP inventory for your business.

By developing and maintaining a detailed inventory of all relevant IP assets, it is easier to identify the relevant business assets, and to record efforts made to commercialise or protect an asset. This resource can be an invaluable aid when seeking to prevent losses and to support action against infringers.

In the context of an IP development project, whether it be a new EAI or a new corporate or product branding launch, close management of the project should be preceded by careful research and negotiations with stakeholders on key issues. Experience has shown that failure to take these steps means it is more likely that a project will go 'off the rails'.

Bartier Perry's specialist IT/IP lawyers access a deep reservoir of specialist industry knowledge and business acumen, and work closely with a number of our clients helping to identify, develop, commercialise and protect IP assets for business.

 

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