As I reported on the Silicon Valley Software Law Blog, Mozilla, Reddit, Word Press, Boing Boing and the English language version of Wikipedia have confirmed that they will participate in the blackout.

In addition, Politico is now reporting that Google will be joining in tomorrow’s protest, but will not be participating in the Internet blackout. Instead, Google will reportedly be posting a link on its homepage explaining its opposition to the Stop Online Piracy Act and the Protect IP Act.

The nonprofit organization Fight for the Future has posted a comprehensive list of the participants who have currently committed to tomorrow’s online strike.

In case you have not been following the SOPA controversy, the purpose for tomorrow’s blackout is to express online opposition to the proposed SOPA legislation. I discussed the controversy in the Silicon Valley Software Law Blog as follows:

In case you are wondering what my position is on the issue, I am absolutely against infringement but am very concerned about the potential impact of this bill. As I wrote in the Silicon Valley Software Law Blog:

For any companies interested in supporting tomorrow’s protest by participating in the blackout, you still have time to get involved. Wired.com has republished Google’s recommendations for how to participate in the blackout in a “web-friendly” way. Fight for the Future has also published instructions on its website on how to get involved.

In my recent blog posting on the California Biotech Law Blog, I raised concerns about whether or not this bill was really good for the biotech industry. As you might expect, my concerns about the bill go beyond its effect on the biotech community–my concerns are relevant to the Silicon Valley start-up community as well.

It has yet to be seen as to whether or not the legislation will really improve the operations of the USPTO as promised, but the passage of this legislation has an immediate effect on inventors and start-ups, who now have to race to gather the capital necessary to file a patent on their invention, so that they can ensure that they are the first to file a patent on the invention. Like many who work with start-ups, I worry that this hurdle will now discourage innovation, particularly in these challenging economic times, since investors and loans are so difficult to come by. Why make the effort to invent at all if it is going to be such a challenge to protect your invention?

In truth, despite my concerns about this new legislation, I have faith that Silicon Valley entrepreneurs will overcome this hurdle as they do so many others. The Silicon Valley is a resilient place where people are used to overcoming challenges and setbacks. However, I remain puzzled as to why Congress chose to finally pass this bill, which had been introduced and debated by many prior Congresses. Why impose this new hurdle on inventors at this point in history during this economic crisis? Shouldn’t our policy be to encourage innovation at every opportunity so that we can get new businesses going that create new jobs? Placing new hurdles on cash-strapped inventors and start-ups in this economy just seems to defy common sense.

To see the full text of the American Invents Act of 2011, click here.

In my recent posting to the Silicon Valley Software Law Blog, I report on this new move and what it should signal to all companies–even the start-ups and sole proprietorships–selling on the App Store.

The bottom line: if you are distributing an application on the Apple App Store which links to a website where you offer additional products for sale, you should definitely take note of today’s news and anticipate what it will mean for your business. Clearly, large companies doing business on the Apple App Store are concerned about the impact that these new policies are going to have on their profits. If they are concerned, you should be too.

Our latest blog will address legal issues of interest to members of Silicon Valley’s software industry.

The purpose of the new blog is to enable the firm to focus on the narrow topic of software legal issues while continuing to cover the broader topic of IP licensing issues on this blog.

If you have an interest in software legal issues, I encourage you to check out the Silicon Valley Software Law Blog.

Most are a little disappointed to learn that ideas alone are not something that you can protect with an IP filing.

So, if ideas alone are not protectable, how exactly does an entrepreneur protect an idea long enough to get it off the ground?

My first piece of advice to entrepreneurs who call me with this issue is that they need to procure a well-written nondisclosure agreement, and use it with any friends, family, or business contacts that they share their idea with. Of course, I always caution them that the best form of protection is not to share confidential information in the first place, and if they do have to share confidential information, to keep the sharing to an absolute minimum. But certainly, to the extent they need to discuss their ideas with anyone else, the discussion needs to be covered by a nondisclosure agreement.

My second piece of advice is to make certain that anyone they hire to develop anything at all for them related to their idea needs to assign all their rights in whatever is developed to him/her or his/her company. The mistake I see entrepreneurs make over and over again is that they think payment amounts to a transfer of ownership rights. This is far from the case. If you pay for development and there is no assignment of rights to you, then the contractor will own the rights in what was developed.

My third piece of advice: if your idea constitutes an invention, you need to hire a patent attorney right away and get a provisional patent filed on your invention. Please note: THIS STEP WILL BECOME INCREASINGLY CRITICAL IF PATENT REFORM IS PASSED, SINCE THE NEW PATENT BILL WOULD MAKE THE U.S. A FIRST TO FILE SYSTEM, and you will lose your rights to the invention if someone else files the patent first.

My fourth piece of advice: if you have created or developed or recorded in any way your ideas and you are not concerned about having them published at the Libary of Congress, then you will want to register a copyright to cover what you created/developed/or recorded, so that there is a record of ownership.

My fifth piece of advice: If you come up with a great name for your company or product, immediately do a thorough search of the name on the USPTO website and the web to see if anyone else is using that name, and if so, confirm whether or not they are using it to describe similar services or a similar product that could be confused with your business, product, or service. A common mistake that I run into with my practice is that entrepreneurs get their heart set on a particular name, and then find out months or years later that they are infringing on another company’s trademark and realize that they have to change the name(s) they have chosen. Not only is this a huge waste of money, but it’s also a huge waste of time, since you will have spent an extended period advertising a mark that you have to drop. It is much easier to simply confirm that you are not infringing from the start.

At some point, you will of course want to protect the mark you come up with, but I don’t recommend doing it immediately since there’s a minimal amount of risk that another entrepreneur in your same space will come up with the same mark at the same time you do. It is far more likely that you will select someone else’s mark than that you will lose your mark if you wait to file it until you can afford to do so.

Finally, my sixth piece of advice: you should not let people use your ideas except pursuant to a well-written agreement, even if the third party is simply “testing” or “evaluating” your product. Entrepreneurs tend to be educated on the need for filing patents, copyrights, and trademarks, and are generally willing to spend money on those filings; however, they often forget that the agreements are perhaps the most important piece of the puzzle to IP protection and either try to draft their own agreements based on contracts they find or in many cases, they simply forget to enter into an agreement altogether. It is a really bad idea to permit third parties to use your IP without having a well-written agreement to govern the relationship, particularly if you want to retain the value of your IP, even if the other side simply wants to evaluate the product or services It will pay to take the time to do things the right way–even if you have to spend a little more money up-front to get the work done.

In summary, an entrepreneur can protect his or her ideas–but just not directly as a particular IP filing. Thus, to protect the idea an entrepeneur has to examine the individual elements of the idea to determine how to protect each element. By utilizing a combination of nondisclosure agreements, copyright and trademark registrations, patent filings, and agreements, the entrepreneur can protect his or her ideas long enough to get them to market and start making money.

In other words, if someone hands you work that he or she created and no copyright assignment is made, then you typically are just going to receive a nonexclusive license to use the work created. However, if the license is not written, then the extent of your rights is technically unclear and not actually defined. Thus, your license could be terminated at any time.

So, what does this mean? It means that if you decide to repurpose the work that was created and use it in an alternative way, i.e. other than what was contemplated by the contractor, then you may be committing copyright infringement. Similarly, if you decide to create a derivative work of the original work which was created, well then you may be commiting copyright infringement as well, since only the owner of the IP in a work can authorize the creation of derivative works.

In the current economy, I see this issue come up quite often in terms of payment disputes. The buyer of the work decides not to pay the invoice for the work that was created but wants to continue using the work. Obviously, if you only have a license to use work and you breach that license by not paying for the work, then you are technically infringing the copyright of the creator if you continue to use the work after the dispute arises.

Thus, the best practice when you are hiring someone to create something for you–whether it is artwork, text, videos, designs, software code, music, or any other type of creative work–is to make certain you get a copyright assignment from that person BEFORE you pay him or her any money for his or her work. And, if you have a payment dispute with the person you hire, you need to resolve that dispute and you should stop using the work until a resolution has been reached which involves an assignment of copyright. And, of course, it’s always best to discuss your expectations with this person when you hire him or her rather than after he or she has already finished the project, as he or she is always going to be more willing to enter into a copyright assignment before starting the job rather than after the work has been concluded.

If your start-up is one of those businesses that is trying to cut corners in this recession, I would of course recommend that you at least pay the money to have an attorney review what you are filing before you file it.

However, if you are too cash-strapped to pay more than the USPTO filing fees, then I have a few tips for you:

(1) If you are filing an application on a name rather than a logo, pay the extra money to have a designer stylize your name rather than filing the words of the name in black type. Many of the problems I see with do-it-yourself applications arise where entrepreneurs just file the application on words rather than the stylized words. In my experience, the stylized words are more likely to receive a trademark than the words alone.
(2) Do a search on the USPTO website for the words in the name individually and, where there is more than one word in your mark, do searches of the words in various combinations, and just pick the key words in the name and search those. If your mark is already in use, look at what it is in use for and decide how close the current use is to your use. If the uses are similar, it may be best to pick another mark. You should also do a search of any images in your mark on the USPTO website to see if there are any similar marks currently in use.
(3) Do not make up from “scratch” your description of the services that your mark will describe. Instead, find the Trademark Acceptable Identification of Goods and Services Manual on the USPTO website, and try to find an approved USPTO description that refers to your services. You will have to pay a filing fee with the USPTO for each class that you select, so I generally recommend that entrepreneurs pick initially the class that most closely describes the goods or services that the mark covers and then list as many of the approved descriptions in that class that describe your goods or services as possible. Then, after you have compiled a list of the approved descriptions, you should put them into a paragraph format that reads well.
(4) Put together an example of the mark’s use in commerce to submit as your “specimen” to the USPTO, and make certain that the example that you submit refers to the services listed in the description you just wrote. If you don’t have an example yet to submit, then you may need to file an “intent to use” form, which will cost you an extra $100 ultimately, but will give you some extra time to create your example.
(5) If the USPTO writes you about your mark after it is filed, find the name of the attorney who is writing you and pick up the phone and call him or her rather than filing responses that may not address the questions or concerns of the attorney. If, after calling the attorney at the USPTO, you still do not understand what you need to do to get your application through the USPTO, then at that point, you should solicit the assistance of an attorney. The USPTO gives you six months to respond to USPTO correspondence, so take the time to pull together the money to obtain further assistance; however, you should not wait to the very last minute to obtain further assistance.

The bottom line: trying to save money by doing your own trademark filing can backfire and result in your spending even more money to clean up what you did yourself, so it’s always best to at least have an attorney look over your application before you file it. However, if are too broke to do even that, following these steps should minimize your risk of wasting your filing fees or ultimately creating a more expensive headache for yourself.

You might ask: why do I discourage start-ups for granting equity to a developer? Well, nine times out of ten the start-up has never worked with the developer before when they call me. They are generally proposing equity because they do not have the money to pay for the developer’s services, and the developer usually wants a large percentage of the company. Also, I know from experience that most clients terminate their relationships with their first developer within the first year of starting their business, so the odds are high those same clients will be coming to me within a year asking how they should go about kicking the developer out of their company.

Going into business with anyone is a huge commitment, and it despite the fact entrepreneurs are accustomed to granting equity in lieu of paying cash for services, doing it immediately with someone you have never worked with is a tremendous risk.

So, what do I recommend instead?

I recommend that start-ups in the position of requiring development work and not having the cash to do it should consider drafting a collaboration agreement.

Why use a collaboration agreement structure instead? Well, you can still share the profits arising from the development work with the developer; however, you can do it in such a way that if the relationship does not work out on a long-term basis, you can get out of it by ceasing use of the work that was developed. In the alternative, if the developer proves to be an integral member of your team, you can always provide equity down the road after the developer has proven his or her worth to the business.

In case you are not familiar with the collaboration model, this model is one that is routinely used in the Silicon Valley to describe an arrangement between two individuals or companies who have decided to pursue some sort of business opportunity together but have elected not to set up a separate business entity or to provide equity in an existing company to do it. The agreement provides a framework by which the parties can work together, defining how expenses will be shared, how profits will be shared, and what services each party will perform within the framework. It also defines how disputes between the parties will be resolved, in order to prevent a breakdown of the collaboration when there is disagreement.

All in all, I think it is the perfect model for many cash-strapped entrepreneurs to consider when they want to hire a particular developer but lack the cash to pay the developer for the services. It certainly is much less risky than taking a leap of faith and granting a large amount of equity in a company to a developer they have never worked with, and it really accomplishes the same purpose if the relationship works out, which is to share the profits made from using the work that is developed.

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