Changes in Global Privacy Affect Small Business Too

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Changes in Global Privacy Affect Small Business Too

In case you missed it, on October 6, 2015 the Court of Justice of the European Union (CJEU) issued a long-awaited privacy ruling in the case involving Maximilian Schrems, the Ireland Data Protection Authority (DPA) and Facebook. Back in 2000, the EU Commission decided that personal data sent to US organizations that sign up to the Safe Harbor scheme is adequately protected. Safe Harbor organizations self-certify compliance with certain privacy principles, and the scheme is enforced by the US FTC.


Simply put, Schrems sued to prohibit transfer of his personal data from Facebook Ireland to Facebook in the U.S. due to widely perceived flaws in U.S. data protection following the Edward Snowden NSA revelations.

Why it Matters

Over 5,000 U.S. companies “self-certify” under Safe Harbor, and their European partners and customers rely on Safe Harbor for data transfers into the U.S. The decision may impact many small to medium sized business who use social media for marketing and business development, as well as businesses that use cloud-based services for gathering, processing and sharing data. Transfers of Personally Identifiable Information (PII) from the EU to the U.S must either be authorized by national data protection authorities, or be able to rely on one of the legal exceptions.

Although the Safe Harbor companies publicly committed to apply the Safe Harbor Privacy Principles to the personal data they brought into the U.S. (and some companies passed these commitments on to other entities under Onward Transfer agreements), companies that disregard those commitments, with regard to either stored data or new data transfers, could expose itself to FTC enforcement against “unfair or deceptive practices” or judicial complaints based on U.S. contract, fraud, or tort law, as well as to enforcement in the EU – such as complaints before labor tribunals, courts, and data protection authorities.

Don’t Panic, Yet

While the decision is likely to have a significant impact on the transfer of personal data from the EU to U.S. recipients, EU leaders say it’s not time to panic yet. Experts have pointed out the alternative legal bases for transatlantic data transfers that exist, such as contracts, Binding Corporate Rules or actual, express consent. Many businesses may be able to use these methods and continue their transatlantic data transfers.

Domestic Developments

At the same time, California leads the U.S. in enacting new privacy legislation. Last week California passed legislation that may equate to what the EU wants to see on the federal level. According to §1546.1 b) of CalECPA any government entity must have a warrant, wiretap order, order of electronic reader or a subpoena if they want to compel any individual or a service provider to disclose information stored on their devices (mobile phones, computer, tablets, tv, servers you name it). §1546.1 c) states that government agencies cannot access, either physically or remotely, a device unless they have a warrant, wiretap order, consent of the authorized possessor of the device, if the government in good faith, believes there is an emergency that could jeopardize someone’s life or physical integrity (in which case they’ll have to get a warrant within 3 days later) or in case the devices are confiscated from inmates in state prisons.

Concerned about whether your business is at risk for violating EU data protection rules? Don’t be. We offer a FREE, no-obligation one (1) hour consultation to identify potential issues. The professionals at the Adler Law Group can help you review, enhance and adopt standardized contracts and implement methodologies for approaching these challenges by setting objectives, determining scope, allocating resources, and developing agreements that will efficiently and effective manage risks, while keeping pace with the business.

Please call: (866) 734-2568, click:, or write: David @

Using Copyright To Protect Fashion Designs

A recent case from the 6th Circuit Court of Appeals examined the question “Are the stripes, chevrons, zigzags, and color blocks that adorn most cheerleading uniforms sufficiently creative to be protected under US Copyright law?” The case, Varsity Brands et al. v. Star Athletica, No. 14-5237 (6th Cir. 2015), involves a lawsuit between competing suppliers of cheerleading uniforms and “warm-ups.” Plaintiff Varsity, claimed that defendant Star had copied protectable elements of it’s uniform designs. The District court agreed with Star, but the Court of Appeals reversed. The case holds important lessons for creative professionals seeking to protect their original work in an increasingly completive environment where “knock-offs” and copycat designers are all too common.

Back in 2013, I published “Fashion Law: Protecting Brands and Designs,” an article in Landslide, the legal publication of the Intellectual Property section of the American Bar Association. The article is available here. Although the article addressed protection under Trademark and Patent, in addition to Copyright, one of the primary issues was and is when, if ever, can the design features incorporated into the design of a useful article be identified separately from, and exist independently of, the utilitarian aspects of the article?” The Varsity case provides useful insight and analysis on that question.

Are Fashion Designs Protectable Under Copyright?

The Varsity case answers with a resounding “yes.” First, although copyright protects creative works of authorship fixed in a tangible medium of expression (17 U.S.C. 102(a)), protection requires a certain amount of “originality.” Because so much of fashion design is derivative of what has come before, the hurdle for protection of fashion designs is the tension with §102(a)(5) of the Copyright Act. (17 U.S.C. 102(a)(5)) That section protects pictorial, graphic, and sculptural aspects of apparel if, and only to the extent that, the design features that can be identified separately from, and are capable of existing independently of, the utilitarian aspects of the article.” (17 U.S.C. 101) §

Courts have viewed this requirement as requiring either “physical separability” or “conceptual separability,” a test that they have struggled to pin down. However, courts that have addressed the issue in the case of designs of clothing have routinely viewed clothing utilitarian because they “cover the wearer’s body and protect the wearer from the elements.” Celebration Int’l, Inc. v. Chosun Int’l, Inc., 234 F. Supp. 2d 905, 912 (S.D. Ind. 2002) “Unlike a patent, a copyright gives no exclusive right to the art disclosed; protection is given only to the expression of the idea—not the idea itself.” Mazer v. Stein, 347 U.S. 201, 217 (1954)

Guidance For Lawyers That Advise Fashion Designers.

In order to help fashion designers protect their ideas, it is important to understand how the court evaluates the protect ability of design elements. The Court engaged in a lengthy examination of the various tests applied by different courts before adopting the widely used “hybrid” approach. According to the Court the best approach to determining whether a design is a copyrightable pictorial, graphic, or sculptural work is to ask a series of five questions from the Copyright Act: 1) is the design a pictorial, graphic, or sculptural work? 2) Is it a design of “an article having an intrinsic utilitarian function?” 3) What are the utilitarian aspects? 4) Can the viewer of the design identify “pictorial, graphic, or sculptural” features separately from the utilitarian aspects? and 5) Can those features exist independently? The Court added that the design process may also help determine whether a design feature is necessary to the design are or to the functionality.

Key Take Always From The Varsity Case.

First, Varsity started from a position of strength. It has registered it’s designs with the US Copyright Office. The Court gave strong deference to the Copyright Office. The lesson for designers is that it’s never too early to seek registration of your work.

Second, be mindful of the aesthetic versus functional distinction during the design process. Design elements that are required to make the item function as a garment will not be protectable.

What Marketers Need to Know About the FCC’s Recent TCPA Ruling

On July 10, 2015, the Federal Communications Commission (“FCC”) issued a Declaratory Ruling and Order (“Declaratory Ruling”) in response to 21 separate requests seeking clarification or other action on the Telephone Consumer Protection Act (“TCPA”). The Declaratory Ruling has implications for any entity that utilizes wireless phone numbers for contacting consumers. The most relevant highlights of the Declaratory Ruling are described below.

The TCPA makes it unlawful to make any call (other than a call made for emergency purposes or made with the prior express consent of the called party) using any automatic telephone dialing system (“ATDS”) or an artificial or prerecorded voice to any telephone number assigned to a cellular telephone service, or any service for which the called party is charged for the call.

First, just to clarify, this is not a “new federal law.” This Declaratory Ruling was issued by the FCC in response to requests seeking clarification on the TCPA.

1. The Ruling expands the meaning of ATDS (or “autodialer”) and requires a case-by-case determination of their inclusion within the reach of the TCPA.

The FCC does not distinguish between calls to wireless telephone numbers made by predicative dialers and calls made “when the equipment operates independently of such lists and software packages.” Recognizing the developments in technology, the FCC stated that an ATDS is defined by the basic capacity to dial numbers without human intervention.” “Capacity” does not exempt equipment that lacks the “present ability” to dial randomly or sequentially. Rejecting definitions that fit “only a narrow set of circumstances” in favor of broad definitions which reflect a legislative intent to accommodate the full range of telephone services and telemarketing practices,” the FCC believes that the TCPA covers capacity of a current configuration and potential functionalities.

As a result, the Ruling does not specify the “exact contours” of an autodialer. Therefore, there is no hard-and-fast rule to enable a business to easily determine compliance risks under the TCPA. The bigger – and still unresolved – questions is whether dialing systems that require human intervention are or are not autodialers. In fact, the FCC expressly rejected a request to adopt “human intervention” as the test to identify whether a dialer is an autodialer. Still open is the question of whether human intervention that will take equipment outside the scope of the autodialer definition.

2. The Ruling clarified issues related to calling “reassigned” wireless numbers: a “called party” is “the [current] subscriber, i.e., the consumer assigned the telephone number dialed and billed for the call, or the non-subscriber customary user of a telephone number included in a family or business calling plan” as opposed to the “intended recipient” or “intended called party.”

This is really about “consent” of the called party to receive a call/text message. Voluntarily providing a cell number has previously been held to constitute initial consent from the current subscriber or non-subscriber customary user of the phone, as of the time the call is made.

In the case of a number being reassigned, the FCC recognized that a service using an ATDS may not have actual knowledge that the number has been assigned. To address this, the Ruling provides that, so long as a caller does not have actual knowledge that the number has been reassigned, it may make one call to a reassigned number without liability. Note that the FCC stated that simply by placing a call to a reassigned wireless number, the caller has constructive notice that the number has been reassigned, and can incur TCPA liability for every non-compliant call placed thereafter. This conclusion was criticized by the two dissents who asserted that the one call standard would require callers “to do the impossible” (discern whether a number has been reassigned from a single call, without more).

2. The FCC reiterated that a called party may revoke consent at any time and through any reasonable means, and callers may not limit the manner in which revocation may occur. IV. Exceptions for Pro-Consumer Messages About Time-Sensitive Financial and Healthcare Issues

4. A one-time text immediately sent in response to a consumer’s request for information, such as a coupon to apply to an offer, does not violate the TCPA, however the Ruling casts doubt on whether Prior Express Written Consent can be established on the basis of a text opt-in response to an advertisement that contains the TCPA required disclosures.

Given the guidance and ambiguities from the FCC’s Declaratory Ruling, now would be a good time for marketing firms to review their phone and text message marketing polices:

  1. Review policies around the collection and use of phone numbers provided by consumers;
  1. Ensure that the processes for collecting phone numbers distinguishes between wireless and residential numbers, and have opt-out provisions in place to ensure that users of reassigned numbers are not wrongfully contacted;
  1. Review wireless number lists for currency and accuracy; and
  1. Review and assess messaging and marketing programs and vendors.

Should Google be forced to offer privacy apps? EU fight offers test

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Originally posted on Fortune:

An app maker called Disconnect thinks consumers have a right to block advertisers, including Google [fortune-stock symbol=”GOOG”], from tracking what they do on their phones. The search giant, unsurprisingly, doesn’t see it this way and has repeatedly thrown Disconnect out of its Google Play store—meaning Android users have no easy way to access the tool.

Now, the app maker has filed a complaint with the EU, arguing that Google’s behavior is anti-competitive. The outcome could determine whether large companies like Google and Apple should be obliged to distribute more pro-privacy tools on their platforms.

In case you’re unfamiliar, Disconnect works by blocking third party advertising and analytic services that lurk in the background when consumers visit an app or website (users can view what sites Disconnect is blocking, and whitelist them if they choose). The tool can also help webpages load faster thanks to less ad bulk.

In its five…

View original 507 more words

Five Best Ways to Protect Your Ideas


When I first meet a client, I am often asked “How can I protect my ideas?” While it may seem like a simple question, getting the answer right is often tricky. That’s because one can’t actually own an idea, in and of itself. Sounds confusing, I know. The five best ways to protect your ideas are 1) Identify, 2) Organize, 3) Register (or restrict), 4) Monitor, and 5) Enforce. This articles focuses on how to identify the best ways to protect your ideas.

Regardless of industry, Ideas are the keys to any successful business. While one cannot “own” an idea, one can protect one’s Intellectual Property rights that relate to the embodiment or manifestation of that idea. For example, Copyright, Patent, Trademark, Trade Secret and Publicity Rights are all forms of Intellectual Property rights that grant exclusive rights to the owner, both artistic and commercial.

Copyright protects works of creative artistic expression such as books, movies, audio-visual music, paintings, photographs, and importantly, software. Copyright protection requires that a work be “fixed” in tangible format (this includes electronic format) and gives the owner (called the “author”) of such works the exclusive rights to reproduce, distribute, publicly display, publicly perform, and modify a work for a certain period of time.

Patents (utility and design), Trademarks and Trade Secrets protect creative commercial expression sometimes known as “industrial properties,” as they are typically created and used for industrial or commercial purposes.

A Patent protects the invention or discovery of “any new and useful process, machine, article of manufacture, or composition of matter, or any new and useful improvement thereof.” A Patent gives the inventor “the right to exclude others from making, using, offering for sale, or selling” the invention in the United States or “importing” the invention into the United States for a period of time.

A Trademark is any word, name, symbol, or device, or any combination, used, or intended to be used, in commerce to identify and distinguish the goods of one manufacturer or seller from others, and to indicate the source of the goods. In short, a trademark is a brand name or logo that is a distinctive sign which is used to prevent confusion among products in the marketplace. A Trademark enjoys protection indefinitely, as long as it is being used.

An industrial design right protects the form of appearance, style or design of an industrial object from infringement.

A Trade Secret is an item of non-public information concerning the commercial practices or proprietary knowledge of a business. Public disclosure of trade secrets may sometimes be illegal. A Trade secret enjoys protection indefinitely, as long as it is being kept secret.

Some rights are “statutory” in that they exist because they are granted by the Constitution of the United States, e.g. Copyright and Patent. Other rights arise from “use,” e.g. Trademark and Trade Secret rights. Some arise under State law, e.g., Rights of Publicity. Not all types of intellectual property require registration in order to obtain, maintain or enforce one’s rights. However, registration is HIGHLY RECOMMENDED if available, is required in certain circumstances and, even when not required, registration often confers several benefits that enable enforcement, reduce the risk and costs of enforcement, and provide additional incentives and remedies for enforcement.

The term “Intellectual Property” denotes the specific legal rights described above, and not the intellectual work, concept or idea itself. Oftentimes, the largest value of a businesses can be traced to its intangible assets. Knowing how to identify intangible assets and understanding which Intellectual Property rights apply to these assets is critical to the ability to protect and commercialize one’s ideas. Therefore, great care should be given to maintaining and enhancing their power and value. Value can be increased through a carefully planned and executed strategy. Innovative companies that successfully leverage their Intellectual Property rights will stand to benefit most from the opportunities presented by the current economic marketplace and demand for innovation.


Focus | Vision | Perspective | Passion

Executives face a confusing and dynamic set of challenges ensuring their business remains legally compliant. Yet few can afford the highly-qualified and versatile legal staff needed to deal with today’s complex legal & regulatory environment.

Adler Law Group was created to provide clients with a competitive advantage by enabling them to leverage their intangible assets and creative content in a way that drives innovation and increases the overall value of the business.

For a FREE, no-obligation 1 hour consultation to learn the best ways to identify, protect and leverage your ideas, please call: (866) 734-2568, click:, or write: David @

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Why Every Trademark Owner Should Care About B&B Hardware

Does a Trademark Trial and Appeal Board (TTAB) decision that there is a likelihood of confusion between two trademarks prevent federal district court trademark litigation?

The purpose of a trademark is two-fold: to identify the owner or “source” of goods and services, and to prevent consumer confusion in the marketplace. Therefore, the test for trademark infringement under the Trademark Act of 1946 (Lanham Act), is whether use of a trademark is “likely to cause confusion” with an existing, registered mark. A person generally may neither use nor register a mark that would be “likely to cause confusion” with an existing trademark. If a person uses a mark that one believes is likely to cause confusion, the owner of the registered mark may sue in federal court for trademark infringement. 15 U.S.C. § 1114(1). If a person seeks to register a mark that is likely to cause confusion with an existing registered mark, the owner of the existing registered mark may oppose the registration of the new mark before the TTAB. 15 U.S.C. § 1052(d); see id. §§ 1063, 1067(a).

In B&B Hardware, Inc. v. Hargis Industries, Inc., 134 S. Ct. 2899 (US 2014), the United States Supreme Court was asked to decide whether the TTAB’s determination of a likelihood of confusion precludes a trademark litigant from re-litigating that issue in a federal court infringement action involving a likelihood of confusion element.

Plaintiff B&B Hardware Inc. (“B&B”) produced industrial fasteners for the aerospace industry under the mark SEALTIGHT since 1990. B&B’s SEALTIGHT mark was registered with the PTO in 1993. Subsequently, Hargis Industries, Inc. (“Hargis”) adopted the mark SEALTITE for its self-drilling, self-taping screws for use in the metal-building industry. Hargis applied to register SEALTITE with in 1996, but its application was initially refused due to the existence of B&B’s registration. Hargis then sought to cancel the B&B registration alleging that the B&B mark had been abandoned. However, prior to a final decision by the Board, B&B sued Hargis in U.S. District Court alleging infringement of its registered SEALTIGHT trademark.

A jury in the District Court found in favor of Hargis that there was no likelihood of confusion between the marks. The parties appealed to the Eighth Circuit which affirmed the District Court decision and the issue was ultimately taken by the U.S. Supreme Court.

Reversing the Circuit Court, the Supreme Court remanded the case for further proceedings, holding that a likelihood of confusion determination by the TTAB should have preclusive effect as long as the ordinary elements of issue preclusion are met and the usages of the marks are materially the same.

“Issue preclusion” or “res judicata” is an important concept for both fairness and judicial economy. Essentially, litigants should not get two bites at the same apple. In the past, the TTAB would suspend its proceedings if a case was simultaneously pending in District Court.

The key take away for trademark practitioners is strategic since trademark oppositions and cancellations do not result in a damages award or determination of infringement. Yet, its decisions can now be used as the basis for finding infringement in District Court where an adverse decision may have far-reaching effects.

Copyright Ownership in Software & Other Independent Contactors Agreements: Can Work-For-Hire” Be Retroactive?

Regardless of industry, intangible assets are often the greatest drivers of business opportunity and shareholder value. Companies increasingly recognize intellectual property rights are a critical part of the value of the total assets of the company. Great care should be given to maintaining and enhancing their power and value. Innovative companies that outsource the development of copyrightable works such as computer software, creative or media content and other “tangible” works with the expectation of owning both the resulting product and the underlying copyrights must be mindful of ownership risks.

Successfully leveraging copyright rights and assets is critical to the opportunities presented by the current economic environment. Yet, without clear ownership of copyright rights, a company can not exploit the exclusive rights it believes it owns. Under U.S. Copyright law, only the copyright owner has the exclusive right to reproduce, distribute, public display/perform and modify a work. This leads to the inevitable question: who owns the copyright to a work made for hire?

To be effective, agreements that assign ownership of copyrightable works must be in writing. It is not enough that the company or client may have commissioned and paid for the work. Written agreements that vest copyright ownership commonly appear in two forms. In the first, the developer of the work “assigns” his or her rights to the new owner. Under U.S. law, specific language of assignment must evidence the transfer.

Many software companies, in their zeal to create and commercialize their products, fail to consider the need to clearly establish ownership of software copyrights when using developers and programmers. This begs the question, can a company retroactively secure copyright to a work by later designating it as a “work made for hire?”

The Seventh Circuit first addressed the issue in Schiller v. Nordisco Corp., 969 F.2d 410 (7th Cir. 1992). The Court held that a “work made for hire” agreement must precede the creation of the work, because the writing requirement under the “work made for hire” doctrine is not merely a statute of frauds provision “designed to protect people against false claims of oral agreements.”

Under Community for Creative Non-Violence v. Reid, 490 U.S. 730, 109 S.Ct. 2166, 104 L.Ed.2d 811 (1989), a work is “made for hire” only if it falls in one or more of the categories of intellectual property enumerated in section 101(2), of was specially commissioned and the parties had signed a statement to that effect.

The requirement of a written statement regarding the copyright on a specially commissioned work is not merely a statute of frauds, although that is the purpose emphasized by the cases. It is not only designed to protect people against false claims although there is authority that it must be signed before suit is brought. The signed-statement requirement in section 101(2) makes the ownership of property rights in intellectual property clear and definite, so that such property will be readily marketable.

The creator (author) of the property is the owner, unless he is an employee creating the property within the scope of his employment or the parties have agreed in a writing signed by both that the person who commissioned the creation of the property is the owner. The writing must precede the creation of the property in order to serve its purpose of identifying the (noncreator) owner unequivocally. Assignment under 17 U.S.C. § 201(d), conveys both the copyrights and with them the right to sue for infringement of them. SAPC, Inc. v. Lotus Development Corp., 921 F.2d 360 (1st Cir.1990).

The sale of the physical embodiment of intellectual property does not “of itself” transfer the intellectual property. 17 U.S.C. § 202. Obviously when a software programmer sells a CD-ROM to a customer (or uploads a software program to a Web-based vendor of downloads) it does not mean to transfer the copyright in them so that the distributor could copy the software and sell the copies without paying anything to the programmer. An agreement that divides ownership in this way would be inefficient Penn Central Corp. v. U.S. Railroad Vest Corp., 955 F.2d 1158, 1160 (7th Cir.1992)).

A Company’s ownership of copyright in works created by independent contractors may be a lesser concern than a company’s ability to sue for infringement of that copyright. “[T]he right to claim copyright in a non-infringing derivative work arises by operation of law, not through authority from the copyright owner of the underlying work.” 71 NIMMER ON COPYRIGHT § 3.06, at 3-34.34. We have cited Nimmer with approval on this point.

On this point Liu v. Price Waterhouse LLP, 302 F.3d 749, 755 (7th Cir.2002) is instructive. Price Waterhouse owned the copyright to a computer-software program, and Yang, an employee, was asked to help recruit a Chinese computer programmer to increase the speed of the program. Price Waterhouse entered into a series of agreements with Yang that provided Price Waterhouse would own the intellectual-property rights to the improved software. When Yang refused to give Price Waterhouse the source code to the improved software Price Waterhouse sued for infringement (and won) because the owner of a copyrighted work has the exclusive right to control the preparation of derivative works, the owner could limit the derivative-work author’s intellectual-property rights in the contract, license, or agreement that authorized the production of the derivative work.

Although the right to claim copyright in a derivative work arises by operation of law—not by permission of the underlying copyright owner— the parties may alter this general rule by agreement.

Companies must take the necessary steps to protect their intellectual property rights in outsourced development of copyrightable works (whether computer software, entertainment content or other “works of authorship”). First, understand the legal requirement that an agreements addressing ownership of copyrights must be in writing. Second, if a company intends to be the copyright owner, ensure that the company uses a written agreement establishing ownership of the work. Third, ensure that written agreements include appropriate “work made for hire” provisions, so the company will own the copyright in the work and in all derivative works for the full life of the copyright. Lastly, evaluate existing intellectual property to ensure that ownership of intellectual property rights has been effectively transferred to the company.