A story in yesterday's Wall Street Journal (via Bill Patry) illustrates how important it is for parties to a transaction to know what they're getting up-front.

Starting way back in the 1970s, Wal-Mart hired an outside company, Flagler Productions, to document various aspects of Wal-Mart's operations.  Flagler produced videos of Wal-Mart corporate officers and directors, "often in unguarded moments."  The original agreement to produce the videos was made with just a handshake, with apparently no written contract between the parties.  In total, Flagler produced over 15,000 tapes over the course of over 30 years.

In 2006, Wal-Mart stopped using Flagler.  As a result of losing this source of income, Flagler has now made its library of Wal-Mart video available to the public, and is seeking to sell its footage.  Needless to say, Wal-Mart isn't happy about this turn of events.

How could this happen?  In short, assuming there really is no written contract, Wal-Mart probably has no recourse.  This is because under copyright law, in the absence of a written agreement to the contrary, the copyright in works created by an independent contractor is generally held by the independent contractor (in this case Flagler), and not by the client (in this case Wal-Mart) who hired them to produce the works.  All the client gets is a non-exclusive license to use the produced work.

What this means here is that, under copyright law, Flagler is the owner of the videos, and is free to exploit the copyright in whatever way it sees fit.  Flagler has already begun placing clips of the videos on YouTube.  All this because Wal-Mart didn't get a written agreement up-front.

This situation all too frequently happens to businesses, simply because they don't realize that when they hire an independent contractor, they probably aren't getting the exclusive right to use that contractor's work unless they agree to that in writing up-front.  This can come up in situations from hiring someone to do your company's web design, to having a marketing firm prepare brochures or other promotional materials, or having a computer programmer write some custom software. 

Situations like these face businesses every day, which is why it's important to consult with competent intellectual property lawyers early on so you make sure not only that you get what you pay for, but that you know what you're getting.

As we reported earlier, Judge Cacheris took the parties' motions for summary judgment under advisement in the consolidated cases challenging the USPTO's claim and continuation rules.  Below is a summary of the hearing from our representative who was in attendance.

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The USPTO has now made available all prior editions of the Manual of Patent Examining Procedure on its website here.  This is great news for those who have ever had to try to track down a version of the MPEP that was more than about 10 years old, as they had not previously been easily accessible online.

We've just received word that the hearing on the motions for summary judgment in the consolidated cases challenging the USPTO's claim and continuation rules has concluded, and the motions have been taken under advisement.  So, no ruling from the bench today, and no hint as to when a ruling might be expected.

Late Friday, the parties filed their reply briefs in the cases challenging the USPTO's claim and continuation rules.  As with the parties' opposition filings, these briefs largely represent another repetition of the arguments raised in the parties motions for summary judgment.  The motions have now been fully briefed, and the hearing on the parties' motions is scheduled for Friday, February 8 at 10:00 EST.

In addition to news on this front, the Bush administration has sent a letter to Senator Leahy regarding the Patent Reform Act of 2007 (S. 1145).  While the administration supports several sections of the bill in principle, the administration does not support the bill as currently drafted, largely because of the damages apportionment portion (which has also been the most controversial).  Based on this position, it seems unlikely that the Patent Reform Act of 2007 will become law in its current form, as it would be unlikely there would be sufficient votes for a veto override.  As a result, look for the damages apportionment provision in the bill to be either substantially changed or scrapped during negotiations on a compromise version of the bill.  Update (2/5):  The final version of the Senate Judiciary Committee's report on S. 1145 can be found here.  Notably, this version includes "other" and minority views of committee members, and that section in particular is worth a look.  HT:  Patently-O via Patent Prospector.

Click below for links to the summary judgment filings in the lawsuits challenging the USPTO's claim and continuation rules, including the newly-filed reply briefs.

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The Patent Reform Act of 2007 (S. 1145) is now officially back on the radar.  It was recently placed on the Senate's calendar, and is likely to be considered by the full Senate sometime this month.  This has resulted in a corresponding increase in the lobbying efforts by those on both sides of the debate. 

Click below for more detail regarding the various lobbying efforts, as well as additional commentary on the bill.

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In a decision released today, the highest court in the EU, the European Court of Justice, ruled that under EU law, internet service providers (ISPs) are not required, in the course of a civil lawsuit, to disclose the identity of an individual subscriber associated with a particular IP address. 

The case arose out of an attempt by PROMUSICAE, a trade group representing the music industry in Spain and the rough equivalent the RIAA in the United States, to obtain the names and addresses of subscribers of the Spanish ISP Telefonica SA that were suspected of copyright infringement by sharing copyrighted songs via the peer-to-peer (P2P) network KaZaA.  The issues in this case are similar to those in the lawsuit campaign currently being conducted by the RIAA in the United States.  A Spanish court sought guidance from the Court of Justice on the question of whether various EU directives required Telefonica to disclose its subscribers' identities, even though Spanish law only authorizes such disclosure in criminal proceedings, matters of national defense, or public security.

In the decision, the Court stated:

[T]he answer to the national court's question must be that Directives 2000/31, 2001/29, 2004/48 and 2002/58 do not require the Member States to lay down, in a situation such as that in the main proceedings, an obligation to communicate personal data in order to ensure effective protection of copyright in the context of civil proceedings.

The decision left open the possibility that individual members of the EU could pass legislation permitting or requiring such disclosure, although such action would have to be on a country-by-country basis.  In fact, France is already exploring some alternatives to combat copyright infringement via P2P networks.

Hat tip:  How Appealing.

More media coverage is available from the AP, Reuters, and the BBC.

Update (1/30):  The EFF provides this report, including possible ramifications of the ruling. 

In a notice dated yesterday, the USPTO announced that it will begin enforcing compliance with 37 C.F.R. § 1.63(b)(3), which requires that inventor oaths include an acknowledgement of the duty to disclose information material to patentability under 37 C.F.R. § 1.56.  Oaths filed on or after June 1, 2008 will have to have the language from the rule, or the USPTO will reject the oath as defective.

The USPTO changed § 1.63 back in 1992, but has not enforced compliance with the changes, which were designed to track changes made to § 1.56.  In response to comments after the modification was promulgated, the USPTO arguably permitted the use of the older "material to the examination of the application in accordance with 1.56(a)" language sometimes used by practitioners.  The notice yesterday formally rescinded such permission, and compliance with the rule as written will be required June 1.  Note that for continuing applications (but not CIP applications) filed after June 1 that claim the benefit to an application filed before June 1, the "old" version of the oath will still be permitted, although it is good practice to just use the language required by the rule.  The USPTO also provides a form for this purpose (Form PTO/SB/01 or PTO/SB/01A), containing this language:

I acknowledge the duty to disclose information which is material to patentability as defined in 37 CFR 1.56, including for continuation-in-part applications, material information which became available between the filing date of the prior application and the national or PCT international filing date of the continuation-in-part application.

One would hope that this statement meets the requirements of § 1.63(b)(3).

The internet is abuzz with talk that the much-maligned Patent Reform Act of 2007 (H.R. 1908 & S. 1145) may be passed in some form this month.  A draft version of the Senate Judiciary Committee's report on the bill was released earlier this week, and while it does not contain any revised provisions, it does offer a fairly detailed description of the Senate version of the bill as it currently stands.  A finalized version of the report is expected to be released soon.  Once that happens, expect the lobbying from both sides to escalate again.

Patently-O takes note of an interesting provision in the conference report that would remove the residency requirement for Federal Circuit judges.  Currently, in order to serve on the Federal Circuit, one must live within 50 miles of Washington, DC, pursuant to 28 U.S.C. § 44; the Senate version of the Act would remove this restriction.

We'll continue to monitor the status of the bill, including any compromises that are made in an effort to secure its passage.

In a press release today, the USPTO announced it will be closed on December 24.  December 25 is, of course, a federal holiday, meaning the USPTO will be closed for four consecutive days.

From the release:

Any action or fee due on those days (or the preceding Saturday (December 22, 2007) or Sunday (December 23, 2007)) will be considered as timely for the purposes of, e.g., 15 U.S.C. §§ 1051(b), 1058, 1059, 1062(b), 1063, 1064, 1126(d), or 35 U.S.C. §§ 119, 120, 133 and 151, if the action is taken, or the fee paid, on the next succeeding business day on which the USPTO is open, that is, Wednesday, December 26, 2007.

Good news for those practitioners who might need a few extra days around Christmas to take action in a case.