Spring 2004 - State Bar Of Georgia

TECHNOLOGY LAW
Section Newsletter, State Bar of Georgia
Spring 2004
Technology Law Section To Launch New Website
By the close of the first quarter of 2004, the Technology Law Section will be launching a revamped Section website at
www.computerbar.org. As the "preview" picture below demonstrates, the newly-redesigned website will have an all-new
"look and feel", and will provide section members with instant, easy access to Section-related information.
The Section would like to extend its sincerest gratitude to Stephen Combs, Section Webmaster, for his hard work in
making the new website a reality.
All Section members are encouraged to visit the new website once it goes "live" for up-to-date news on the latest Section
happenings, general information of interest to Section members, and links to Section publications such as this Newsletter.
Visit the Technology Law Section website at www.computerbar.org
Technology Law
Technology Law Section
Ann K. Moceyunas
Section Chair
[email protected]
404-252-0598
Janine Anthony Bowen
Section Vice Chair
McKenna, Long & Aldridge, LLP
[email protected]
404-527-4000
Suellen W. Bergman
Section Secretary
Powell, Goldstein, Frazer & Murphy
[email protected]
404-572-6705
L. Kent Webb
Chair Emeritus
Womble Carlyle Sandridge & Rice, PLLC
[email protected]
404-572-2707
Michael K. Stewart
Section Newsletter Editor
Friend, Hudak & Harris, LLP
[email protected]
770-399-9500
Stephen B. Combs
Webmaster
Morris, Manning & Martin, LLP
[email protected]
404-495-3655
Johanna Merrill
Section Liaison
State Bar of Georgia
[email protected]
404-527-8774
Technology Law is published four times per year
(quarterly) by the Technology Law Section of
the State Bar of Georgia, 104 Marietta Street,
N.W., Atlanta, GA 30303. Opinions and
conclusions expressed in articles herein are those
of their authors and are not necessarily those of
the Section.
Copyright © 2004 Technology Law Section
of the State Bar of Georgia. All rights reserved.
Spring 2004
Editor’s Notes By Michael K. Stewart
Thank you for taking the time to peruse the Spring 2004 issue of the
Technology Law Section Newsletter.
The past few months have been a busy and exciting time for the Section.
Even a cursory review of this issue of the Newsletter demonstrates that the
Section has spent considerable time and energy over the past few months
planning and executing various events and initiatives to maintain the
Section's reputation as one of the most active - and innovative - sections of
the Georgia Bar. In the past several months, the Section has hosted a wellreceived CLE regarding cyber-crimes, and, as the cover story to this issue
illustrates, prepared to launch a newly-redesigned website that should be
informative and useful to all Section Members. In addition, the Executive
Committee has started planning several technology law-related events for
2004, including an upcoming CLE regarding recent relevant developments
in the European Union (March), a "Technology Showcase" (covering
issues regarding emergent technologies) (April), and the annual
Technology Law Institute (tentatively September/October). In addition,
the Section has remained active in technology-related community outreach
programs such as Tech Corps Georgia. Despite all of these other Sectionrelated activities, busy Section Members have continued to contribute
outstanding articles for publication in this Newsletter.
Technology licensing continues to be a cornerstone of not only most
technology-based industries generally, but also of many of our practices as
technology lawyers. In this issue, Todd McClelland provides an
informative, yet practical, overview of issues relating to the development
and use of open source software, while Robert Mercer analyzes a recent case
which may cause some practitioners to rethink the stability of their licensee
client's rights under the Bankruptcy Code. In addition, Stephen Combs
(our Section Webmaster) has contributed a useful article analyzing the
potential impact of the recent CAN-SPAM Act on law firm marketing
practices. As always, the Section is grateful to Scott Petty, Dennis
Gerschick and Ron Jackson for their regular contributions regarding issues
in intellectual property law, the venture capital industry, and Georgia
legislative activity, respectively, and to David Lilenfeld for his recap of the
Section's cyber-crimes CLE. Thanks again to all of our contributors for
their hard work on this issue of the Newsletter.
To recognize the contributions made by Section
Members to the Newsletter, the Executive Committee
has begun nominating one article from each issue of the
Newsletter for publication in the Georgia Bar Journal.
Of the contributions received for this issue of the
Newsletter, the Executive Committee has nominated
Stephen Combs' article for this honor. The Executive
Committee extends its congratulations to Stephen.
Until next time, thanks and best regards.
Michael K. Stewart is an Associate with Friend, Hudak & Harris, LLP, where he advises clients on technology, intellectual property and Ecommerce-related issues. Mr. Stewart earned his J.D., magna cum laude, from the University of Georgia in 1998, and he earned a B.A. in History
from Emory University in 1990. Mr. Stewart may be reached at (770) 399-9500 or via e-mail at [email protected].
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Technology Law
Spring 2004
The Impact of the CAN-SS PAM ACT on Law Firm Marketing
Practices and Client Communications By Stephen B. Combs
Introduction
On January 1, 2004, a federal law known as the “Controlling the Assault of Non-Solicited Pornography and Marketing
Act” or “CAN-SPAM Act” of 2003 (the “Act”) became effective.1 The Act regulates unsolicited commercial e-mail
and imposes civil and criminal penalties for failure to comply with the Act. The Act potentially affects the way each
member of the legal profession sends out e-mails.
This article outlines the requirements of the Act and provides suggestions to attorneys that communicate using e-mail
with their clients. Attorneys must be particularly aware of the Act since it impacts all e-mails sent by attorneys to
clients or others that are related to marketing activities.
Overview of Act
The Act defines a “commercial e-mail message” as any e-mail message, the “primary purpose” of which is the
advertisement or promotion of a commercial product or service. Many e-mails sent by attorneys are not directly
related to a client matter, and thus will likely be deemed to fall within this category of regulated communications.
Examples include e-mails related to:
!
Invitations to group lunches on specific topics;
!
Client advisories on legal developments;
!
Newsletters in electronic form; and
!
Invitations to free seminars.
The Act includes an exception for “transactional or relationship” messages as discussed below in Part III. However,
there is no exception for commercial e-mail relating to pre-existing business relationships. Even communications to
existing clients must comply with the requirements of the Act if the “primary purpose” of the e-mail is commercial.
The Federal Trade Commission (FTC) will issue regulations defining the relevant criteria for determining the
primary purpose of an e-mail not later than December 31, 2004.
Unless prior affirmative consent to receive e-mail communications has been received from a proposed recipient of
commercial e-mail, the Act requires all such e-mail to: (a) provide a “clear and conspicuous” identification that the
message is an “advertisement” or “solicitation;” (b) provide “clear and conspicuous” notice of the recipient’s opportunity
to opt out of further e-mails from the sender; and (c) specify a valid “physical postal address” for the sender.
Most clients of an attorney will not have “opt-ed in” to receive commercial e-mail messages, and therefore, the above
requirements will apply. Of particular importance is the requirement to identify e-mail as an “advertisement” or
“solicitation.” While there are currently no regulations requiring a “clear and conspicuous” subject line, attorneys
may need to consider using “ADV” or similar disclaimers for their marketing communications. The Act directs the
FTC to submit to Congress “a report, within 18 months after [January 1,2004], that sets forth a plan for requiring
commercial electronic mail to be identifiable from its subject line, by means of compliance with Internet Engineering
1 The "Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003," or the "CAN-SPAM Act of 2003," S. 877, 108th Cong.
(2003), found at http://www.spamlaws.com/federal/108s877.html.
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Technology Law
Spring 2004
Task Force Standards, the use of the characters ‘ADV’ in the subject line, or other comparable identifier, or an
explanation of any concerns the [FTC] has that cause the [FTC] to recommend against the plan.” Interestingly,
Congress has reserved for itself (and not the FTC) the right to designate the nature and location of any specific
disclaimer. It is clear that Congress took such steps to avoid, at least for the present, a regulatory framework that
would allow ISPs or end users to easily filter e-mail.
Transactional or Relationship Exception
The Act includes certain exceptions to the commercial e-mail restrictions discussed above in Part II. The exception
relevant to attorney communications applies to e-mails sent “to facilitate, complete, or confirm a commercial
transaction that the recipient has previously agreed to enter into with the sender.” As applied to attorney
communications, the exception is very narrow. Obviously, attorneys can communicate with clients regarding
attorney-client matters. However, attorneys may need to limit sending general communications related to
marketing events or possibly even legal developments, if such communication falls outside the scope of a current
matter handled by a client.
Additional Considerations
The Act requires that opt-out requests be honored within ten business days of their receipt. If any attorney receives
information from a recipient of an e-mail that the recipient no longer desires to receive e-mail communications from
the attorney, such attorney must comply with the request. For attorneys at firms with multiple attorneys and offices,
the administration of opt-out requests can be significant. Since the firm will likely be deemed the “sender” of the email under the Act, any opt-out request will likely apply to all attorneys at a firm.
How Law Firms Can Respond
I
nterested in contributing an article?
Do you have ideas for focus topics?
Comments or suggestions?
Please contact:
Michael K. Stewart
Editor
(770) 399-9500
[email protected]
Important Note
The Executive Committee will nominate
one article from each issue of the
Newsletter for submission to the Georgia
Bar Journal for publication. As such,
contributing an article to the Newsletter is
a not only a great opportunity to get your
name in front of other members of the
Technology Law Section, but may also
result in your article being read by
practitioners of all types throughout the
State of Georgia and beyond.
Attorneys can respond to this new regulatory environment
by shifting to an opt-in strategy whereby clients will
“affirmatively consent,” as required the Act, to receive
commercial e-mail. Methods to implement such opt-in
strategies include adding an opt-in page on a website or
using written marketing materials with opt-in instructions.
The client engagement letter also offers an opportunity for
an attorney to disclose what e-mail offerings are available to
the client.
Stephen B. Combs is an Associate in the
Technology Law Group at Morris, Manning
& Martin, LLP, where he practices
technology, intellectual property and Internet
law. He earned his J.D. from Emory
University in 1996 after receiving a B.S. in
Finance from Florida State University. Mr.
Combs may be reached at 404-495-3655
or [email protected].
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Technology Law
Spring 2004
Open Source: Aggressive Management is the Key
If you have been following technology news lately you
have probably heard of an operating system called
“Linux” that is challenging the market dominance
enjoyed by UNIX and software from other
proprietary software vendors. Unlike most
commercial software, Linux is open source, meaning
that it is developed and distributed under a license that
permits its users to freely copy, modify and distribute
the software, including the underlying source code.
Linux is not developed or owned by any single
company or individual. Rather, it has evolved through
the collaborative efforts of programmers, independent
and corporate, around the world, each retaining rights
to their contribution.
The open source movement is basically a community
of individuals who feel that software users should have
access to source code and should have the freedom to
copy, modify and distribute the software they license.
It is important to note that OSS is not “freeware,” nor
has it been released into the public domain. Richard
Stallman, the founder of the Free Software
Foundation, has a memorable way of making this point
saying that you should think of free in the sense of
“‘free speech,’ not as in ‘free beer.’”1
The objectives of the open source movement are
accomplished by subjecting software to a license that
requires that the end user be provided with or given
access to the source code for the software and that the
end user be allowed to change that source code for their
own purposes. Thus, licensees are generally given broad
rights to freely copy, modify and distribute the software.
Notwithstanding the grant of such broad rights, and
contrary to its reference as “free,” distributors may
charge any amount for their distribution of OSS
programs. However, when software source code is
distributed separately from its object code, open source
licenses typically protect source code availability by
limiting distributors to charging only for the actual cost
of distribution of the source code.
The broad rights that open source licenses confer upon
open source licensees, such as Linux users, are
balanced with reciprocal conditions that obligate the
licensee who chooses to become a licensor to distribute
the open source software (OSS), or a derivative
thereof, under the same open source license. This
aspect of open source licenses can have an unexpected
and sobering impact on distributors who do not
approach OSS with a well-planned strategy already in
place and who intend to distribute OSS as a part of
their own proprietary software offering. In addition to
these concerns, because of the community
development approach that is common to OSS, OSS is
inherently ripe for concerns that third party
intellectual property may be contributed to the open
source project without its owner’s consent.
b.
The GPL.
There are many different flavors of OSS licenses.
Some of the most commonly encountered OSS
licenses include the GNU General Public License
(GPL), the Berkeley Software Distribution (BSD)
License, the Apache Software License, the “Lesser”
General Public License (LGPL), and the Mozilla
Public License.2 The GPL, published and copyrighted
by the Free Software Foundation3, is one of the most
common and frequently discussed OSS licenses, and is
therefore the focus of this article.
This article provides a brief introduction to open
source licenses, discusses some of the pitfalls that
come with licensing and using OSS, and provides
practical pointers for those who are new to dealing
with OSS.
1. OSS Licensing and the GPL
a.
By Todd S. McClelland
Licensing Basics.
1 The Free Software Definition, http://www.fsf.org/philosophy/free-sw.html.
2 The Open Source Initiative Web site at http://www.opensource.org is a useful source of information on what defines "open source" software
and provides useful references and information on the numerous open source licenses in use today.
3 For more information on the Free Software Foundation, see http://www.fsf.org.
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Technology Law
Spring 2004
obligation to pass on the same freedoms, via the same
open source license, to downstream end users of either
the original OSS or any derivatives thereof. Where a
software developer desires to maintain the ability to
distribute its proprietary software under a proprietary
license, however, great care must be taken to avoid
integration of OSS such that a derivative work is
created, and this is not necessarily an easy task.
Like other OSS licenses, the GPL grants licensees the
right to copy, modify, and distribute OSS source code
so long as the licensee includes a copyright notice and
disclaimer of warranties. Importantly, licensees
receive no warranties or indemnities against any type
of intellectual property infringement in the source
code, but the GPL does permit the licensor to offer its
own warranty or indemnity protection.
If a GPL licensee chooses to modify and distribute the
OSS or otherwise make and distribute a “derivative”
of the OSS, then the GPL requires the licensee to
make the source code for those OSS derivatives
available to any end users who receive its object code.
The GPL does not, however, require licensees to
distribute their derivatives of the OSS object code—
this is entirely the licensee’s choice. This is a frequent
misunderstanding for those new to the OSS world.
Also, software developed for use with the OSS, but
that does not qualify as a derivative of the OSS, may
be distributed with the OSS under a separate
proprietary license.
2. Upstream Intellectual Property Issues
One of the issues raised by the OSS community
development process is how OSS end users assure
themselves that parties who previously worked on the
OSS did not create intellectual property issues that
might be asserted against the end user. The GPL, for
example, restricts upstream developers from enforcing
their intellectual property rights against downstream
licensees in certain respects. Parties not privy to the
GPL, however, are not necessarily restricted from
enforcing their intellectual property rights against
those downstream end users. For example, if someone
prior to the current end user made changes to the OSS
code that infringe on a third party’s patent, the patent
holder could assert claims against the end user, even
though the end user had no knowledge of the patent
infringement.5
Separating code that may remain proprietary from
code that is subject to the GPL can be complicated
because it may be difficult to determine what code
does or does not qualify as a derivative under the GPL.
Licensees who have the slightest inclination to
develop proprietary software for use with OSS code
should consider these issues well in advance of any
development efforts to avoid subjecting their
proprietary code to the GPL. Among the issues to
consider are the extent of use of OSS libraries,
whether the software (particularly the modules and
drivers in the Linux kernel space, if applicable) is
statically or dynamically loaded, the nature of any
connections and interfaces with OSS, and other
factors bearing on the extent of use and interaction
with the OSS.4
The risk that third parties may enforce their patent
and other intellectual property rights against
unsuspecting end users is not unique to OSS. Many
commercial software developers have strict processes
in place to screen their proprietary code to guard
against the inclusion of third party software.
Although these processes may be somewhat useful in
preventing copyright infringement claims and trade
secret misappropriation claims, they may be of little
use in guarding against patent infringement claims.
Accordingly, end users choosing between open source
and proprietary software are well advised to consider
the upstream intellectual property issues raised by
OSS, but should keep the risk in perspective.
The open source model will likely continue to thrive
because of the freedom that is granted to OSS
licensees. However, with this freedom comes an
4 See Jason B. Wacha, Open Source, Free Software and the General Public License, 20 No. 3 Computer and Internet Law 20, 23 (2003).
5 As discussed in the next section, since SCO started threatening to sue Linux users, a number of companies (e.g., Red Hat, HP, and Novell)
have started to offer warranties and indemnities to ease customer concerns.
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Technology Law
Spring 2004
3. Open Source Management Issues
Any organization considering the procurement and
use of OSS should have a well-developed strategy in
place to manage its internal use and any distribution to
avoid the issues addressed above and other issues
unique to OSS. The process for developing and
managing such a plan can be very complex and
requires considerable advance planning. The points
that follow are a sampling of points that should be
considered as a part of this process. These points are
not, however, exhaustive of all issues that should be
addressed, and are only intended to stimulate initial
planning and discussion.
!
!
!
Many open source applications can be obtained
from a variety of sources and vendors. Linux, for
example, can be obtained for free via Internet
download, or as part of a refined distribution
from reputable vendors like Red Hat or SuSE
who typically charge a fee for their distribution.
Although the Internet option may initially be
cheaper, open source vendors will typically
distribute a product that is easier to implement
and can provide installation and customization
services when needed. Accordingly, the benefits
of obtaining OSS at no costs should be weighed
against the benefits of having a vendor who can
provide additional services and, in some
instances, contractual protections.
As a part of any open source procurement, counsel
should determine which software licenses are
applicable to the OSS. Many OSS distributions
contain multiple open source and proprietary
licenses. Thus, counsel should thoroughly
investigate any OSS procurement to make sure that
the user’s rights and obligations are fully
understood.
!
If the user has decided to obtain OSS through a
vendor, rather than doing a self-install, users are
well advised to investigate the vendor’s
reputation and their financial viability. It is also
advisable to use open source vendors who have a
good reputation in the open source community.
A vendor who works well with the open source
community may be able to better influence
development of the software.
!
Users should determine whether the vendor
screens the OSS it obtains from the open source
community. Because intellectual property noninfringement warranties and performance
warranties are typically not provided by vendors,
a screening process will help reduce the risk that
the software will work improperly and may
reduce the risk of a third party intellectual
property infringement claim.
!
In light of the upstream intellectual property
issues addressed above, and if OSS is obtained
from a vendor, users should consider negotiating
for an intellectual property non-infringement
warranty and intellectual property infringement
indemnity. If a vendor is willing to offer this
warranty and indemnity, then counsel should
consider whether the vendor has sufficient
financial resources to stand behind its
obligations. Of course, a vendor that commonly
offers these warranties and indemnities will have
multiple obligations to satisfy if a third party
emerges to enforce its intellectual property rights.
Todd S. McClelland is an associate in the Atlanta office of Alston
& Bird. He received his B.ME from Georgia Institute of
Technology in 1994 and his J.D. from Florida State University in
1998. Mr. McClelland may be reached at (404) 881-4789 or at
[email protected].
Mr McClelland wishes to note that the
views expressed in this article are those of
the author and not of Alston & Bird or
any of its clients or potential clients.
Consider whether OSS will be used strictly as an
internal product or whether it will be used for
development purposes. In either case, consider
restricting use of the source code to only those
with a need for the code, and who have been
adequately educated on the licenses that apply.
As noted above, inadvertent inclusion of OSS
could potentially subject proprietary code to an
open source license.
7
Technology Law
Legislative Update
Spring 2004
By Ronald V. Jackson
Introduction
The 2004 session of the General Assembly convened on January 12, 2004 and, as of this writing, 30 "legislative days"1 remain
in the 40-day legislative session. Before the session concludes, the legislature will approve a mid-year supplemental
appropriations bill to maintain a balanced budget for fiscal year (FY) 2004 (ending June 30, 2004) and an appropriations bill
to balance the state's $16 billion budget for FY 2005. Although the state's monthly revenues continue to increase, Governor
Perdue reduced the FY 2004 revenue estimate by $500 million and proposed budget cuts throughout state government for
FY 2005. Amidst this challenge, the members of the General Assembly must also address funding for various state
programs and initiatives such as education, transportation, and healthcare while eyeing November, when all 236 members
must run for re-election.
Nevertheless, at least some technology and telecommunications-related issues will come before the General Assembly
during the 2004 session. In his state of the state address, Governor Perdue proposed a FY 2005 budget increase in
bonded funding -- up to $46 million from $24 million -- for construction and expansion at Georgia's technical colleges.
Governor Perdue also pledged to contribute state funds of up to $45 million, over the next several years, toward a
Nanotechnology Research Center to be located at Georgia Tech. Various technology-related bills that were
introduced during the 2003 session -- including SB 38, the Georgia Database Protection and Economic Development
Act, and several bills seeking to protect children from exploitation through the Internet2 or limit exposure to
pornographic material in schools and libraries3 -- are again before various House and Senate Committees. Meanwhile,
the following technology-related bills were introduced during the first 9 days of the 2004 session.
SB 400/HB 1070: Levi's Call: Georgia's Amber Alert Program
At the beginning of this year's session, Governor Perdue's Administration introduced identical legislation in the House and
Senate -- HB 1070 and SB 400 -- that would provide immunity from civil damages to a broadcaster participating in Levi's
Call: Georgia's Amber Alert Program when broadcasting a missing child alert issued by the program. On January 27th, the
Senate passed the Senate Judiciary Committee's substitute version of SB 400.
As passed by the Senate, "broadcaster" is defined as any corporation or entity engaged in the business of broadcasting
video or audio programming through the public airwaves, by cable, by direct or indirect satellite transmissions "or by
any other means of communication." The bill broadly defines "broadcast" as the transmission of video or audio
programming by an electronic or other signal conducted by "radiowaves or microwaves, by wires, lines, coaxial cables,
wave guides or fiber optics, by satellite transmissions . . . or by any other means of communications." The immunity
from civil damages would apply to any broadcast or dissemination of information that is "substantially consistent
with the information transmitted by the Georgia Emergency Management Agency" ("GEMA") and that takes place
during an alert requested by GEMA and for a 2 hour period after the alert has ended or GEMA has informed the
broadcaster that the alert's content has changed. As set forth before the Judiciary Committee, this immunity would
only extend to an entity's broadcasting of the information contained within the alert and would not cover any editorial
or news content an entity may broadcast along with, or as a result of, the alert.
1 A "legislative day" is a day that the General Assembly is actually in session and not in "adjournment until a day certain" for committee
meetings, budget hearings, etc.
2 See SB 51 (seeking to amend the Computer Pornography and Child Exploitation Act of 1999); SB 124 (seeking to expand definition of computer
pornography and create the crime of Internet contact with a child); and SB 232 (seeking to create Internet Child Pornography Prevention Act).
3 See SB 52 (Childrens' Internet Protection Act (seeking to condition school funding for computers with Internet access upon adoption of Internet
safety policies).
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Technology Law
Spring 2004
SB 439 - Film Piracy: Criminal Reproduction and Sale of Recorded Material
Currently, O.C.G.A. § 16-8-60 generally prohibits, except for fair use, any person from transferring, or causing to be
transferred, any recorded sounds or visual images from any record, tape, film, disk or other article to another record,
tape, film, disk or other article without the consent of the owner of the master recording. SB 439 would create a new
Code section O.C.G.A. § 16-8-62 to provide for the new offense of film piracy to address instances in which a film is
not transferred from one disk to another, but is instead recorded by a member of the audience. Under SB 439, any
person who, without the consent of the "owner, operator, or lessee of an exhibition facility and of the licensor of the
motion picture", operates the recording function of an audiovisual recording device while a motion picture is being
exhibited would be guilty of film piracy -- a crime punishable by up to $5,000 or up to 12 months imprisonment.
Notably, SB 439 defines "audiovisual recording device" as "any device capable of recording or transmitting a motion
picture, or any part thereof, using any technology now known or later developed." Subsection (d) provides that
prosecution under this Code section would not preclude any other civil or criminal remedy available under the law.
Given recent reports about providing incentives for the motion picture industry to do business in Georgia, additional
legislation supported by the film industry may be seen in the near future.
SB 445 - Amend: Local Government Cable Fair Competition Act of 1999
In 1999, the General Assembly enacted the Local Government Cable Fair Competition Act in order to guard against
any county, municipality, or other political subdivision of the state providing cable service (i.e., a "public provider")
from discriminating against any private cable service provider also providing service in the municipality.
The Act currently requires such public providers to (a) prepare a 3-year projection of costs and revenues for the
proposed cable operations prior to providing service, (b) conduct at least one (1) public hearing prior to providing
service, (c) prepare and maintain records which record the full cost of providing the services and the source of capital
utilized to provide the service, (d) refrain from cross-subsidizing the cost of providing cable service or utilizing general
funds without reasonably accounting for such funds as a cost of providing service, (e) impute into its costs amounts for
applicable franchise fees, regulatory fees, and taxes as calculated for any private provider serving the same area, and (f)
provide service under the same regulations and requirements as are imposed upon private cable service-providers.
Under SB 445, public providers would have to obtain a franchise from the affiliated governmental entity before
providing cable services or information services. Currently, Georgia law does not address public providers’ provision
of information services, such as cable modem services. SB 445 defines "information services" as "the offering of a
capability for generating, acquiring, storing, transforming, processing, retrieving, utilizing, or making available
information via telecommunications." This bill also provides that such a franchise is not effective unless ratified by
a majority of voters. Public providers would also now be expressly prohibited from cross-subsidizing their operations
with the use of tax revenues, income from any municipal or county utility service, other sources, but would be
permitted to utilize general funds provided that a reasonable cost of such capital is accounted for as a cost of service.
Finally, public providers would have to maintain financial records showing the full cost accounting for services
provided during the previous fiscal year and financial projections for the next fiscal year and to file such records with
the county probate court within 90 days from the close of the fiscal year.
HB 1055 - Telecommunications: Audible Universal Information Access Services; Blind and Print Disabled Citizens
Pursuant to O.C.G.A. § 46-5-30, the Georgia Public Service Commission is charged with establishing, implementing,
and contracting for the administration and operation of statewide dual party telecommunications relay service to
ensure that physically impaired citizens have access to basic telecommunications services 24 hours per day. Under
HB 1055, the Commission would similarly be responsible for implementing and contracting for a statewide "audible
universal information access service" for "blind and otherwise print disabled citizens" to be operational no later
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Technology Law
Spring 2004
than July 1, 2005. If passed by the General Assembly,
the Commission will accept applications and bid
packages to administer and operate the audible
universal information access system.
Ronald V. Jackson is Legislative Aide to
the Senate Judiciary Committee of the
Georgia State Senate. Mr. Jackson is also
Of Counsel with the law firm of Gerry &
Sapronov LLP, where his practice
includes advising clients on matters
involving federal, state, and local
telecommunications law, regulation and
advocacy. Mr. Jackson earned his J.D
from the Emory University School of Law
in 1996, and he earned a B.A. in
History from Millsaps College in 1992.
In the next issue, I will share any further action taken
on the above-described legislation as well as any other
technology and telecommunications-related bills
addressed during the remainder of the 2004 session.
Summary of Winter Technology Law Luncheon
T
By David M. Lilenfeld
he Winter Technology Law Luncheon was held on December 9, 2003 at the Buckhead Club. The speakers were
Terry Parsons of Customer 1st Communications and Randy S. Chartash, Assistant United States Attorney
for the Northern District of Georgia.
Mr. Parsons is V.P. Business Development for Customer 1st Communications, "an Atlanta based provider of business
infrastructure products and solutions." Mr. Parsons' presentation, titled Digital Highway & the Emerging Electronic
Plague, included an overview of different types of electronic "plagues," such as malicious code (e.g., viruses, "Trojan
Horses," and worms) and malicious behavior (e.g., invasion, hoax, fraud and theft), as well as plague risk factors and
preventative measures.
Mr. Parsons reported that the most damaging plague is hacking, which costs the global economy an estimated $1.6
trillion annually, with $266 billion of that impacting the United States economy. He also explained that much of this
cost is not the result of misuse of information obtained by hackers, but rather for remediation and preventing future
hacking occurrences. Mr. Parsons gave one example of a mid-size company whose computer system was hacked and
the $200,000.00 remediation cost almost bankrupted the company. It was noted that, while the number of hacking
events continues to rise, the cost of remediation is rising at an even greater rate.
If you would like a copy of Mr. Parson's presentation, or to correspond with him on these topics, email him at [email protected].
The second speaker was Randy S. Chartash, Assistant United States Attorney for the Northern District of Georgia
and Chief of the Cyber Crimes Section. Mr. Chartash spoke about cyber crimes and corporate criminal liability. He
discussed in general the federal government's current prosecution of cyber crimes, including child pornography, fraud
and online sales of prescription drugs and controlled substances. Current technology-related criminal cases being
handled by Mr. Chartash's office also include counterfeit goods, including a well-publicized local case in which
multiple defendants were charged with manufacturing and distributing counterfeit and pirate compact discs (CDs),
audio cassette tapes, labels and trademarks. The counterfeit CDs and tapes include the music of a wide variety of
artists such as the Beastie Boys, Britney Spears, Marvin Gaye, Earth Wind & Fire and others. The gross retail market
value of the counterfeit goods in this case alone is estimated to be fifty million dollars.
Mr. Chartash reminded us that private sector attorneys are encouraged to report cyber and technology related crimes
to his office, and noted that such leads can give criminal prosecutions a "kick-start." He stated that theft of trade
secrets is the most frequently reported cyber crime and cautioned that they are typically, though not always, strictly
civil matters and not going to be criminally prosecuted.
This well attended luncheon provided unique and varied insights into the cyber and technology
related crimes. The Section thanks Mr. Parson and Mr. Chartash for their participation. We
encourage all Section members to attend upcoming quarterly luncheons.
David M. Lilenfeld practices technology and business litigation at Stokes Lazarus & Carmichael LLP in Atlanta. He
received his B.A. from Hunter College in 1993 and his J.D. from The Ohio State University College of Law in 1996 where
he was a member of The Ohio State Law Journal. Mr. Lilenfeld may be reached at (404) 352-1465 or at [email protected].
10
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Spring 2004
FTC Proposes Patent Law Reforms to Achieve a Balance between Competition and
Patent Protection
By W. Scott Petty
Here is a brief look at ten key proposals presented by
the FTC report.
R
eflecting the explosive growth of technology
over the past 25 years, the total number of patents
granted annually by the U.S. Patent & Trademark
Office has almost tripled since 1980. In today's
competitive environment, patent protection is
aggressively pursued by members of a broad range of
technology and services sectors. In recognition of this
expansion of patent protection for both technological
and business innovations, the Federal Trademark
Commission (FTC) and the U.S. Department of
Justice (DOJ) have recently completed an evaluation
of whether the scope of protection enjoyed by patent
owners has an anti-competitive impact upon
consumers and businesses. On October 28, 2003, the
FTC issued a report presenting a set of proposals for
reforming the U.S. patent system. The FTC's
proposals are based on information collected by the
FTC and DOJ at public hearings in 2002 and the FTC's
investigation into the evolving intersection of patent
and antitrust laws.
(1) Create a New Administrative Procedure at the
Patent Office to Allow Post-Grant Review of and
Opposition to Patents.
(2) Enact Legislation to Specify that Challenges to
the Validity of a Patent Are To Be Determined
Based on a "Preponderance of the Evidence"
Standard of Review by the Courts.
(3) Tighten Certain Legal Standards used to
Evaluate Whether a Patent is "Obvious."
(4) Provide Adequate Funding for the Patent Office.
(5) Modify Certain Patent Office Rules and
Implement Portions of the Patent Office's 21st
Century Strategic Plan.
(6) Consider Possible Harm to Competition Along with Other Possible Benefits and Costs Before Extending the Scope of Patentable Subject
Matter.
The FTC's recommendations are presented in its
report, "To Promote Innovation: The Proper Balance of
Competition and Patent Law and Policy." (published on-line
at www.ftc.gov/opa/2003/10/cpreport.htm) With the
release of the FTC report, Timothy J. Muris, FTC
Chairman, announced that "Consumers and
innovators win when patents and competition policy
are aligned in the proper balance.
Although
questionable patents can harm competition and
innovation, valid patents work well with competition
to promote innovation. [The FTC report] analyzes
and makes recommendations for the patent system to
maintain the proper balance with competition."
(7) Require Publication of All Patent Applications
18 Months after Filing.
(8) Create Intervening or Prior User Rights to
Protect Parties from Infringement Allegations
that Rely on Certain Patent Claims First
Introduced in a Continuing or Other Similar
Application.
(9) Require, as a Predicate for Liability for Willful
Infringement, Either Actual, Written Notice of
Infringement from the Patentee, or Deliberate
Copying of the Patentee's Invention, Knowing it
to be Patented.
In its report, the FTC proposes a sweeping set of
legislative and administrative reforms of the U.S.
patent system. First, the FTC challenges the Patent
Office to improve patent quality and proposes a postgrant opposition proceeding to make it easier for a
party to challenge a patent's validity at the Patent
Office. Turning next to the courts, the FTC
recommends changing the judicial standard for
evaluating the validity of a patent from the current
"clear and convincing evidence" standard to a
"preponderance of the evidence" standard.
(10) Expand Consideration of Economic Learning
and Competition Policy Concerns in Patent Law
Decision-making.
The FTC prepared its report as a result of completing
a series of public hearing sessions, jointly sponsored by
the FTC and DOJ in February - June 2002, to examine
11
Technology Law
Spring 2004
issues arising from "Competition and Intellectual
Property Law and Policy in the Knowledge-Based
Economy." In these sessions, the FTC and DOJ asked
over 300 panelists from industry and academia to
address the implications of competition and patent law
and policy for innovation and other aspects of
consumer
welfare.
Participants
included
representatives from large and small businesses,
independent inventors, patent and antitrust
practitioners, and scholars of economics and patent and
antitrust law The FTC/DOJ sessions explored a
variety of issues, including: (i) the role of intellectual
property in fostering innovation; (ii) competitive
concerns arising from the scope and variety of patents
issued by the Patent Office; (iii) patent licensing and
industry standards; and (iv) the comparative
international treatment of these issues.
What prompted the FTC to tackle patent reform
issues? Companies are filing a steadily increasing
number of U.S. patent applications covering a variety
of technologies and inventive models for conducting
business. In view of an ever increasing number of
patents, critics have asserted that the Patent Office is
improperly
granting
patents
for
obvious
improvements to existing technologies and business
processes. Similarly, critics of business model patents
have loudly argued that the use of a computer to
implement well-known business practices on the
Internet is obvious and should not result in a patent
grant. No doubt aware of these criticisms, FTC
Chairman Muris announced at the outset of the FTC
investigation that his agency would specifically address
"overbroad" patents, including patents covering
business models and e-commerce applications.
W. Scott Petty, a Patent Attorney with King &
Spalding LLP, focuses on intellectual property
issues in the fields of computer software,
communications, and financial services. Scott
can be contacted by telephone at (404) 572-2888
or via electronic mail at [email protected].
Think that Your Licensee Client's Rights under Section 365(n)
of the Bankruptcy Code Are Safe? Think Again! 1
By Robert Mercer
One of the most important bankruptcy decisions of the year that could affect intellectual property licenses does
not even involve intellectual property. Instead, Precision Industries, Inc. v. Qualitech Steel SBQ, LLC2 involves a lessee
of real property, which lost its rights under section 365(h) of the Bankruptcy Code when the debtor/landlord sold
all of its assets including the subject real property in a bankruptcy auction. By way of background, section 365(h)
protects a tenant's right to retain possession of leased real property when a landlord files bankruptcy and rejects
the lease. In Precision Industries, the debtor/landlord did not reject the real property lease, which would have
triggered the tenant's right to retain possession of the property pursuant to section 365(h). Instead, the
debtor/landlord sold the real property free and clear of "interests" pursuant to section 363(f) of the Bankruptcy
1 The author gratefully acknowledges the assistance of Penn Nicholson, Scott Duma, Suellen Bergman, John Moore, and Iris Graham.
2 327 F.3d 537 (7th Cir. 2003).
12
Technology Law
Spring 2004
Code. Section 363(f) allows trustees and debtors to sell property free and clear of "interests." Typically, the
"interests" involved are liens, claims, and encumbrances. The Seventh Circuit in Precision Industries, however, held a
tenant's rights under section 365(h) of the Bankruptcy Code are nothing more than an "interest." Therefore, when
the debtor/landlord sold the real property free and clear of "interests" and the tenant did not object to the sale, the
tenant lost its section 365(h) rights. Consequently, the new owner of the real property - and not the tenant - was
entitled to possession of the real property.
Section 365(h) is similar to section 365(n), which protects a licensee's right to continue to use a license when a
licensor files bankruptcy and rejects the license. Because subsections 365(h) and 365(n) of the Bankruptcy Code
are similar and because licenses and leases are analogous, bankruptcy courts may apply the holding of Precision
Industries to intellectual property licenses with the result that intellectual property licensees -- like the tenant in
Precision Industries -- could lose their license rights if licensors file bankruptcy and sell their intellectual property in
a bankruptcy auction. In addition to explaining the reasoning of Precision Industries, this article offers suggestions
to counsel for intellectual property licensees to help protect their client's license rights.
1.
First and foremost, why should I, as a technology lawyer, be concerned about a case involving a lease?
Although Precision Industries involves a real property lease, its holding could apply equally to an intellectual
property license. To understand why, it is important to review the subsections of section 365 of the Bankruptcy
Code which protect real property lessees and intellectual property licensees. These two subsections, sections
365(h) and 365(n), are similar. While section 365(h) protects a tenant's right to retain possession of the real
property if the debtor/landlord rejects the lease in bankruptcy, section 365(n) protects an intellectual property
licensee's right to retain certain of its rights -- including the right to continue to use the license -- if the
debtor/licensor rejects3 the license in bankruptcy4. Indeed, when passing the Intellectual Property Licenses in
the Bankruptcy Act of 1988, Congress modeled section 365(n) on section 365(h)5 because intellectual property
licensees -- like real property tenants -- have difficulty obtaining cover.6 Moreover, in this very context, the
Seventh Circuit has noted that a license is analogous to a lease.7 Thus, because subsections 365(h) and 365(n) are
similar and because licenses and leases are analogous, bankruptcy courts may apply the reasoning of Precision
Industries to cases involving licenses.
3 Pursuant to section 365(a) of the Bankruptcy Code, with court approval, a debtor may reject a contract, including a license or a lease.
Ordinarily, upon rejection, the contract is terminated and the non-debtor party has a claim for contract rejection damages.
4
This article assumes that the leases and licenses discussed herein have been drafted to obtain all of the protections of subsections 365(h)
and (n), respectively. A discussion of such drafting, however, is beyond the scope of this article.
5
Section 365(n) "provides treatment of intellectual property licenses . . . in a manner that parallels generally the treatment of real
property leases in the existing provisions of section 365(h)(1)." S. Rep. No. 100-505 at *4.
6 "While intellectual property plays a unique role in technological and economic development, the problems associated with rejection of
executory contracts are common with other special forms of property, such as real property leases. In both real estate leases and intellectual
property licenses, the underlying property is unique. When the lessee or the licensee is threatened with loss of use of the property, it is
not possible to obtain cover from another source." S. Rep. No. 100-505 at *4.
7 FutureSource, LLC v. Reuters Ltd., 312 F.3d 281, 285 (7th Cir. 2002) (analogizing licenses to leases and holding that pursuant to section 363(f)
intellectual property could be sold free and clear of a licensee's rights). In light of FutureSource, Precision Industries is significant because
FutureSource does not discuss the interplay between section 363(f) and section 365(n).
13
Technology Law
2.
Spring 2004
What rights does section 365(n) of the Bankruptcy Code protect?
Congress enacted section 365(n) of the Bankruptcy Code in the Intellectual Property Licenses in Bankruptcy Act
in the wake of Lubrizol Enterprises, Inc. v. Richmond Metal Finishers, Inc.8 to help protect the rights of intellectual
property9 licensees when debtors/licensors move to reject such licenses.10 In the Lubrizol case, the Fourth Circuit
approved a debtor/licensor's rejection11 of a nonexclusive license of a metal coating technology. Such rejection
not only stripped the licensee of the right to rely upon the debtor to perform under the license, it also stripped the
licensee of the right to use the license. Pursuant to section 365(n) of the Bankruptcy Code, a licensee may elect to
retain its rights under the license and to gain access to escrowed source code. For instance, in the Lubrizol case, if
section 365(n) of the Bankruptcy Code was in effect at the time, the licensee could have elected to retain the right
to use the license for the metal coating technology.
3.
What happened in Precision Industries?
The most important thing to learn from Precision Industries is that a bankruptcy sale may strip a real property lessee
or an intellectual property license of its rights to possession of the real property or to use the license, respectively,
and that, when faced with this situation, a lessee or licensee should object to the sale. To get a better
understanding of the case, it is important to review what happened.
The Background
Before filing bankruptcy, Qualitech entered into a ten year lease of real property with Precision Industries, Inc.
("Precision"). Approximately one month later, Qualitech filed for bankruptcy and subsequently moved the
bankruptcy court for permission to sell substantially all of its assets. A group of Qualitech's senior prepetition
lenders (the "Lender Group") was the successful bidder at an auction based on a credit bid. After the auction, the
bankruptcy court entered an order approving the sale to the Lender Group pursuant to section 363(f) "free and clear
of all liens, claims, encumbrances, and interests" (the "Sale Order").12 Significantly, Precision had notice of the
hearing, but did not object to the entry of the order approving the sale.13 The Lender Group subsequently assigned
its interest in the assets to Qualitech Steel SBQ, LLC ("New Qualitech").
The Bankruptcy Court Rules in Favor of New Qualitech
There was subsequently a dispute between Precision and New Qualitech over possession of the real property.
Precision sued New Qualitech in federal district court to obtain possession of the real property. New Qualitech
moved pursuant to 28 U.S.C. § 157 for the district court to refer the case to the bankruptcy court.14 The district
8 756 F.2d 1043 (4th Cir. 1985).
9 Under the Bankruptcy Code, "intellectual property" includes patents, copyrights, trade secrets, and semi-conductor mask works, but does
not include trademarks, trade names, or service marks. 11 U.S.C. § 101(35A); Licensing by Paolo, Inc. v. Sinatra (In re Gucci), 126 F.3d 380, 394 (2d
Cir. 1997) (includes patents, copyrights, trade secrets, and semi-conductor mask works but excludes trademarks); In re HQ Global Holdings,
Inc., 290 B.R. 507, 512-13 (Bankr. D. Del. 2003) (franchisor's proprietary marks not intellectual property); In re Centura Software Corp., 281 B.R.
660, 669-70 (Bankr. N.D. Cal. 2002) (trademark not intellectual property); S. Rep. No. 100-505 at *5 ("The bill does not address the rejection
of executory trademark, trade name or service mark licenses by debtor-licensors.")
10 S. Rep. No. 100-505 at *2.
11 Pursuant to section 365(a) of the Bankruptcy Code, with court approval, a debtor may reject a contract. Ordinarily, upon rejection, the
contract is terminated and the non-debtor party has a claim for contract rejection damages.
12 327 F.3d at 541.
13 Id.
14 2001 WL 699881, *4 (S.D. Ind. 2001).
14
Technology Law
Spring 2004
court granted New Qualitech's motion and referred the case to the bankruptcy court.15 The bankruptcy court
found that the Sale Order extinguished Precision's lease and that, because Precision failed to object to the entry
of the Sale Order, Precision was barred from subsequently objecting to its terms.16
The District Court Reverses the Bankruptcy Court
On appeal to the district court, New Qualitech argued that, pursuant to section 363(f), the bankruptcy court may
authorize the sale of real property free and clear of the lessee's rights.17 According to New Qualitech, the
leasehold interest of Precision was simply an "interest" in the subject real property and, therefore, the Sale Order
- which provides that the assets are sold free and clear of all "interests" - divested Precision of such leasehold
interest. The district court rejected New Qualitech's argument because it reasoned that section 363(f) could not
trump a lessee's rights under section 365(h).18 In so ruling, the district court followed a long line of cases19 as well
as the leading bankruptcy treatise.20
The Seventh Circuit Holds Section 363(f) Trumps Section 365(h)
The Seventh Circuit reversed the district court. It reasoned that, based on Supreme Court precedent, the
definition of "interest" in BLACK'S LAW DICTIONARY, and lower court precedent, the phrase "any interest"
should be construed broadly to include a lease.21 Second, the court reasoned that, although generally sections 363
and 365 contain explicit limitations based on other code sections, no such limitation restricts a debtor's right to
sell real property pursuant to section 363(f) free and clear of a lessee's rights under section 365(h).22 Third, the
court noted that, by its own terms, section 365(h) applies to the debtor's rejection of a lease and does not apply to
"any and all events that threaten the lessee's possessory rights."23 Last, but most importantly, the Seventh Circuit
reasoned that section 363(e) protects the lessee's rights because lessees are entitled to "adequate protection" of their
leasehold interest.24
15 Id.
16 Id. at *5.
17 Section 363(f) provides in relevant part that property may be sold "free and clear of any interest in such property." 11 U.S.C. 363(f)
(emphasis added).
18 2001 WL 699881, * 14. Section 365(h) of the Bankruptcy Code gives real property lessees the right to remain in possession of the leased
property notwithstanding a debtor/lessor's rejection of the real property lease pursuant to section 365(a) of the Bankruptcy Code. 11 U.S.C.
§ 365(h)(1)(A)(ii).
19 See, e.g., In re Taylor, 198 B.R. 142, 165 (Bankr. S.C. 1996) ("Congress intended § 365(h) to control the rights of the landlord and the tenant
when the landlord files bankruptcy and that § 365(h) reflects a careful balance between the needs of the bankruptcy estate and the rights of
a tenant to the estate to which the tenant bargained."); In re Churchill Props., III, Ltd. P'ship, 197 B.R. 283, 288 (Bankr. N.D. Ill. 1996) (ruling
in favor of the lessee).
20 Lawrence P. King, Collier on Bankr. 365.10[1] (15th ed. rev. 2003) ("The rights of the licensee are not subject to the general right of a trustee
or debtor in possession to sell property free and clear of all encumbrances.")
21 Precision Indus., 327 F.3d at 545-46.
22 Id. at 547.
23 Id.
24 Id. at 547-48. Section 363(e) provides in relevant part that a bankruptcy court should prohibit or condition the sale of property, upon the
request of a part holding an interest in such property, on granting the interest holder adequate protection of its interest. 11 U.S.C. § 363(e).
15
Technology Law
Spring 2004
4. Assuming that a licensor files bankruptcy and attempts to sell intellectual property free and clear of your client's
rights under section 365(n) of the Bankruptcy Code, how can your client attempt to protect its interest?
a.
Argue that section 363(f) does not trump section 365(n).
Research has not revealed any case law discussing the intersection between sections 363(f) and 365(n).25 To make
this argument, therefore, one may look to analogous section 365(h) cases involving real property leases holding
that a bankruptcy sale free and clear of interests does not extinguish a lessee's interests.26 Furthermore, and
perhaps more importantly, licensees should argue that, even if Precision Industries was correctly decided with respect
to section 365(h), the same result should not apply with respect to section 365(n) because section 365(n) is broader
than section 365(h). In Precision Industries, the court relied on what it characterizes as the narrow scope of section
365(h):
But nothing in the express terms of section 365(h) suggests that it applies to any and
all events that threaten the lessee's possessory rights. Section 365(h) instead focuses on
a specific type of event-the rejection of an executory contract by the trustee or debtor
in possession-and spells out the rights of the parties affected by that event.27
As the Seventh Circuit points out, the tenant's rights under section 365(h) are triggered when there is a rejection
of the lease. Section 365(n), on the other hand, confers rights upon an intellectual property licensee before
rejection. Before rejection, upon written request, the debtor/licensor must, for instance, perform under the license
and not interfere with the licensee's use of the license.28 Thus, a licensee could argue that, unlike section 365(h),
section 365(n) does not focus exclusively on rejection and "applies to any and all events that threaten the
[licensee's] rights."
b.
Argue that the sale does not comply with section 363(f).
On appeal the lessee in Precision Industries conceded that the sale satisfied section 363(f) of the Bankruptcy
Code.29 Even assuming section 363(f) trumps section 365(n), to sell intellectual property free and clear of a
license, the debtor must meet one of the five alternative30 requirements of section 363(f).31 Although a discussion
25 The Seventh Circuit has held, however, that pursuant to section 363(f) of the Bankruptcy Code intellectual property may be sold free
and clear of a licensee's right in a license. FutureSource, 312 F.3d at 286 (reasoning that, because real property may be sold free and clear of
the "interest" of a lease, intellectual property may be sold free and clear of the "interest" of a license).
26 Taylor, 198 B.R. at 165 ("Congress intended § 365(h) to control the rights of the landlord and the tenant when the landlord files bankruptcy
and that § 365(h) reflects a careful balance between the needs of the bankruptcy estate and the rights of a tenant to the estate to which the
tenant bargained."); Churchill Properties, 197 B.R. at 288 (Bankr. N.D. Ill. 1996) (ruling in favor of the lessee) but see Cheslock-Bakker Assocs., Inc.
v. Kremer (In re Downtown Athletic Club of New York City, Inc.), 2000 WL 744126, *4 (S.D.N.Y. 2000) ("When the debtor-lessor sells property
subject to a lease free and clear of that lease pursuant to Section 363(f), the Court will not apply Section 365(h).")
27327 F.3d at 547.
28 11 U.S.C. § 365(n)(4)(A) and (B).
29 327 F.3d n.3 (New Qualitech asserted -- and Precision did not dispute - that one of the requirements of section 363(f) was satisfied).
30 Citicorp Homeowners Servs., Inc. v. Elliot (In re Elliot), 94 B.R. 343, 345 (E.D. Pa. 1988) (section 363(f) written in disjunctive; court may approve
sale "free and clear" provided at least one of the subsections is met).
31 (f) The trustee may sell property under subsection (b) or (c) of this section free and clear of any interest in such property of any entity
other than the estate, only if (1)
(2)
(3)
(4)
(5)
applicable nonbankruptcy law permits sale of such property free and clear of such interest;
such entity consents;
such interest is a lien and the price at which such property is to be sold is greater than the aggregate value of all liens on such property;
such interest is in bona fide dispute; or
such entity could be compelled, in a legal or equitable proceeding to accept a money satisfaction of such interest.
16
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Spring 2004
of all of the alternative requirements is beyond the scope of this article, the important thing to remember is that
it is the burden of the debtor/licensor to prove compliance with section 363(f) and that, if it fails to do so, the sale
will not be free and clear of the licensee's rights.32 Moreover, there are certain arguments a licensee will probably
encounter. First, with respect to the second alternative requirement, if the licensee timely objects to the sale
motion, any argument that it "consents" should fail.33 Second, with respect to the third alternative requirement,
the licensee should argue that the license is not a "lien."34 Last, with respect to the fourth alternative requirement,
the licensee should argue that the license is not subject to a "bona fide dispute."35
c.
Request adequate protection pursuant to section 363(e).
The most important lesson from Precision Industries is that intellectual property licensees must carefully monitor
licensors' bankruptcies, so they can protect their interests. Assuming that the holding from Precision Industries
applies to the sale of intellectual property free and clear of the licensee's rights under section 365(n) of the
Bankruptcy Code (i.e., assuming section 363(f) trumps section 365(n)), the licensee should request adequate
protection pursuant to section 363(e) of the Bankruptcy Code.36 The licensee should request the value of the loss
of use of the license from the proceeds of the sale as adequate protection. As a practical matter, the award of a
significant amount of adequate protection may encourage the licensor and the purchaser to negotiate with the
licensee. Adequate protection is only available, however, to those entities which request it.37 Thus, as with other
matters involving licenses in bankruptcy, it is important to monitor the status of the bankruptcy closely.38
5.
How can I improve the chances that I will receive notices, orders, motions, and other important pleadings?
To improve your chances of receiving a copy of relevant pleadings in a bankruptcy, you should file an entry of
appearance pursuant to Rule 9010(b) of the Federal Rules of Bankruptcy Procedure and a request for notices
pursuant to Rule 2002 of the Federal Rules of Bankruptcy Procedure. The appearance and request are usually
combined in one pleading. Further, if you have access to Pacer, you can review the bankruptcy docket over the
internet. To access the court's website you can visit http://www.lawdog.com/bkrcy/bksd.htm, which will give
you links to all of the bankruptcy courts in the United States. To visit the homepage for the United States
Bankruptcy Court for the Northern District of Georgia, click on http://www.ganb.uscourts.gov.
6. Assuming that your licensee client notifies you after a bankruptcy order has been entered that purports to
authorize the sale of the intellectual property free and clear of your client's license, what can you do?
The ability to sell assets free and clear of a license pursuant to section 363(f) is limited by the due process rights of
the licensee. Rule 6004 of the Federal Rules of Bankruptcy Procedure requires that a motion for the sale of property
free and clear of interests must be made in accordance with Rule 9014 of the Federal Rules of Bankruptcy Procedure.
32 Gonzales v. Beery (In re Beery), 295 B.R. 385, 397 (Bankr. D.N.M. 2003) (sale not free and clear of interest because of failure to meet burden
of establishing compliance with one of the five alternative requirements).
33 The failure to object, however, may constitute implied consent. FutureSource, 312 F.3d at 285-86.
34 Taylor, 198 B.R. at 160 (lease is not a lien).
35 Id. at 161-63 (lease not subject to a "bona fide dispute").
36 Precision Indus., 327 F.3d at 547-48 (adequate protection pursuant to section 363(e) can protect lessee's section 365(h) rights).
37 In re Kain, 86 B.R. 506, 512 (Bankr. W.D. Mich. 1988) ("Colloquially speaking, if you don't ask for it, you don't get it.")
38 Notice of a sale free and clear of "interests" pursuant to section 363(f) only requires twenty days notice, and bankruptcy courts may
shorten the time period even further. FED. R. BANKR. P. 2002(a)(2).
17
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Spring 2004
Rule 9014 of the Federal Rules of Bankruptcy Procedure requires that service of the motion must comply with Rule
7004 of the Federal Rules of Bankruptcy Procedure. Pursuant to that rule, service by first class mail is permitted,39
but the type of service depends on the type of licensee you represent. For example, if the licensee is a corporation,
the sale motion must be mailed as follows:
To the attention of an officer, a managing agent, or general agent, or to any other agent
authorized by appointment or by law to receive service of process and, if the agent is
one authorized by statute to receive service and the statute so requires, by also mailing
a copy to the defendant.40
It is unclear, however, whether generically addressing the envelope to an "officer, managing agent, or general
agent" is sufficient.41 Because sale motions are served on numerous parties, improper service is not uncommon.
Therefore, if your client is improperly served, it should move to seek relief from the sale order pursuant to Rule
60(b) of the Federal Rules of Civil Procedure, as incorporated by Rule 9024 of the Federal Rules of Bankruptcy
Procedure.42
In conclusion, the most important lesson from Precision Industries is that your licensee clients must be vigilant
whenever their licensors file bankruptcy because a bankruptcy sale can strip a licensee of its rights. This is
significant because of the lack of procedural protections available to the licensee. Unlike in litigation where the
licensee would receive a summons directed to it by name, in a bankruptcy sale the licensee may only receive a
copy of the sale motion, which may not mention its name at all or which may mention the licensee's name in the
middle of the motion or even in an exhibit. Furthermore, assuming that the licensee is on the service list, it will
be receiving numerous notices, pleadings, and motions, and it will be very difficult to distinguish them (which
may have no bearing on the license) from the sale motion (which may strip the licensee of its rights). For these
reasons, you should advise licensee clients to notify you promptly upon learning that their licensor filed
bankruptcy, and you should monitor the case closely.
Mr. Mercer practices bankruptcy law at the law firm of Powell,
Goldstein, Frazer & Murphy, LLP. He graduated from the
University of Georgia (B.A. 1993) and earned his law degree
from Mercer University (J.D. 1996). He may be reached at
(404) 572-6976 or by e-mail at [email protected].
39 FED. R. BANKR. P. 7004(b).
40 FED. R. BANKR. P. 7004(b)(3).
41 Compare In re Pittman Mech. Contractors, Inc., 180 B.R. 453, 454-57 (Bankr. E.D. Va. 1995) ("Attn: President or Corporate Officer" is
sufficient) with In re C.V.T.L. Transp., Inc., 254 B.R. 331, 332-34 (Bankr. M.D. Pa. 2000) ("officer, managing agent or general agent or to any
agent authorized by law to receive service of process upon Associates Commercial Corporation" is sufficient).
42 In re J.R. Winchells, Inc., 106 B.R. 384, 395 (Bankr. E.D. Pa. 1989) (vacating sale order authorizing the sale of the debtor's liquor license free
and clear of an IRS lien because debtor only served the special procedures staff for the IRS and not on the appropriate United States
attorney and the United States Attorney General in compliance with Rule 7004(b)(5)).
18
Technology Law
Spring 2004
Marketing Considerations for a Technology Company
By Dennis J. Gerschick, CPA, Attorney, CFA
In a prior article, I noted that successful companies usually have competent management in three areas: (1)
operations; (2) marketing; and (3) administrative/legal/accounting. My experience has been that many companies
focus on the first and third areas noted above and that many have poor management in the marketing area. Ineffective
marketing is often a reason for the failure of many technology companies. Having practiced as a CPA and lawyer, I
did not think of myself as a marketing expert and still don't. However, I have come to the conclusion that I think
about marketing far more than many executives running technology companies. I think several reasons explain the
lack of effective management in the marketing area.
First, many technology companies are founded and head by "technical gurus" who focus on the wonderful technology
they have created. They assume that everyone will recognize their brilliance and understand the advancement in
technology that they have pioneered. They assume the world will beat a path to their door to buy it; unfortunately,
that rarely happens.
Second, the challenge confronting technology companies is to consider how they get their technology from the
company to the end user. The challenge is so obvious and straightforward and yet many companies have not thought
it through. This involves a mental exercise that requires numerous questions to be addressed. For example, who will
buy the company's product? Why will they buy it? What price will they be willing to pay for it? Many early stage
technology companies have no idea who their potential customers are and have no viable plan regarding how to
contact potential customers.
Third, with truly new technology, there is little history to evaluate in order to gain insights about the future. If an
individual invented a new cola, that really tasted better than Coca Cola and Pepsi, they could at least review and
consider how Coca Cola and Pepsi market their product. They could also consider what niche of the market they
should try to target and what would be the most effective way to attack that market niche. For a new technology, the
market and market niches may not be so well defined. Some believe that great technology "sells itself." I don't buy
it.
Fourth, marketing involves elements that are both part science and part art. There is no formula to be followed.
There is no one correct way for every product to be marketed. Instead, creativity is important. Marketing also
involves dealing with nebulous concepts, which are not always clearly defined. What is "effective branding"? How
important is a company's name? Should the name give an indication of what the company does or should a nondescriptive name be used? There are dozens of issues to consider and address. Many companies are simply
overwhelmed. The result is they don't do much or they try to copy what competitors are doing. Is that the most
effective plan?
Again, I do not profess to be the "marketing guru" who has all of the answers. However, the first step in solving a
problem is to acknowledge there is a problem. One common glaring weakness of many technology companies is
ineffective marketing. A company can have the greatest technology in the world but if it doesn't know how to sell it,
the technology is virtually worthless. Most knowledgeable analysts do not attribute Microsoft's success to the quality
of its software. Instead, most attribute it to its marketing prowess.
Dennis Gerschick is an attorney, CPA and chartered financial analyst. Gerschick practiced law for 16 years
before starting a VC fund; Gerschick is President of VenCap Advisory Group, Inc., which is the general
partner of Vencap Opportunities Fund, L.P., a venture capital fund in Atlanta, Georgia. He can be reached
at 770-420-8460 and at [email protected].
19
Technology Law
Spring 2004
Highlights from the Executive Committee
[The Executive Committee was very active during the past several months, holding three meetings since
the publication deadline for the Winter 2004 Newsletter. Because it is the policy of the Technology Law
Section to keep all Section members informed as to the activities of the Executive Committee, highlights
for each of the three Executive Committee meetings are set forth below. - ED.]
********
Executive Committee Meeting Highlights
Meeting Date: November 5, 2003
By Suellen W. Bergman
Ann Moceyunas called the meeting to order and reviewed the minutes from the previous meeting (October 2, 2003).
Newsletter
Michael Stewart provided the newsletter update. As was decided at the previous meeting, the Executive Committee
will submit articles for the Georgia Bar Journal. James Aiken, Gary Saidman, and Dan Kent will review and decide
which articles will be nominated for submission to the Georgia Bar Journal. The committee noted that the Georgia
Bar Journal appears to favor articles dealing with Georgia law.
The focus topic for the next newsletter issue will be Technology Licensing. In the future, the newsletter focus topics
may include security and privacy, mergers and acquisitions, and international law. Michael Stewart requested
volunteers to provide a summary of the next quarterly meeting, which will be in December.
Quarterly Meeting
The Winter Quarterly Meeting will be December 9, 2003 at the Buckhead Club. Registration will commence at 11:30
a.m. and the program will be from 12:00 to 1:00 p.m. The speakers will be Terry Parsons (Customer 1st
Communications) and Randy Chartash (Assistant United State Attorney, Northern District of Georgia). Members
of the Technology Law Section will receive an e-mail and physical mail notification of this meeting.
Technology Law Institute
Ann Moceyunas provided a recap of the Technology Law Institute. Seventy-five (75) people attended and generally
provided positive feedback about the program, including positive comments about the facilities. The Executive
Committee discussed the possibility of making the Technology Law Institute a one day program in the future. One
highlight of the Technology Law Institute is that it raised over $1,100 for Tech Corps Georgia. Some suggestions for
next year included an opt-in form for sharing attendees' contact information and advertising the Institute in other
states. Ann Moceyunas noted that preparation for the next Institute will begin in January 2004.
Website
Stephen Combs, the new webmaster, will update the website soon; the Technology Law Section will continue to have
its own webpage and use the Georgia Bar Website link. Stephen will continue to use the same page names to maintain
the website's ranking in search engines. Executive Committee members provided suggestions for the website content,
functions, and look and feel (including not using frames); Stephen will circulate drafts of webpage screen shots at the
next Executive Committee meeting. The Executive Committee also discussed that a portion of the website be
password-protected for members. James Aiken will assist Stephen Combs on working on the website.
w w w. c o m p u t e r b a r. o r g
20
Technology Law
Spring 2004
Future Events
The Spring Quarterly Event will take place in March. Gary Saidman and Gaines Carter will organize this event,
which may highlight privacy, communication, and/or international issues.
The Technology Law Section will also have an event in April: The Technology Showcase. This will be a joint
program with the Intellectual Property Law Section of the State Bar of Georgia. The Executive Committee discussed
potential dates for this program in April and possible topics (including security and Privacy, Voice over IP, and
Adware, Spyware, and Gator). Executive Committee members also suggested speakers for this program. Chuck Ross
and Suellen Bergman will organize this program along with Todd McClelland of the Intellectual Property Law Section.
Ann Moceyunas spoke with Darrell Cohen of the Entertainment Law Section and the Technology Law Section may
do a social program with the Entertainment Law Section, including the possibility of a "movie night."
Next Meeting
MM
The next meeting of the Executive Committee will be held on December 2, 2003 at Morris, Manning & Martin at 7:30 a.m.
Executive Committee Meeting Highlights
Meeting Date: December 12, 2003
By Suellen W. Bergman
Ann Moceyunas called the meeting to order and reviewed the minutes from the previous meeting (November 5, 2003).
Newsletter Update
The Winter issue of the Newsletter should be out sometime next week. As a happy coincidence arising from the
nature of the submissions received, the issue has a cohesive "litigation" orientation.
The deadline for the next issue is January 30, 2004. The topic will be "Technology Licensing". Contact Michael
Stewart at [email protected] if you have suggestions for contributors from within your respective firms. While it
would be ideal to have at least one more article on technology licensing, articles on almost any technology-related
topic are welcomed. The next focus topic (due May 1, 2004) will most likely be information security/privacy.
John Livingstone's article on cost-allocation in electronic discovery was selected as the first newsletter article to be
nominated for publication in the Georgia Bar Journal. Thanks to Gary Saidman, James Aiken, and Dan Kent for
viewing the various submissions and selecting the article to be nominated.
David Lilenfeld volunteered to write a brief summary of the December 9, 2003 section event for the Newsletter.
Dennis Gerschick reported that he is running a bit short on venture-capital topics for his column. The Executive
Committee members provided suggestions for future column topics.
Winter Quarterly Meeting
The Winter Quarterly Meeting will be on December 9, 2003. Members have received e-mail and physical mail
notification of this event, and everything is set for it.
Website Update
Stephen Combs, the webmaster, has the user name and password for the website. The website currently has
information from 2003 on it (updated from the previous webmaster, Chuck Hollis). Stephen Combs spoke with a
21
Technology Law
Spring 2004
w w w. c o m p u t e r b a r. o r g
website developer and the website will have a new look and feel for the new year. Stephen Combs will coordinate
with Michael Stewart, the newsletter editor to announce the new website look via the newsletter. At the next
Executive Committee meeting, Stephen will discuss the launch date and the committee will review the design.
Spring Quarterly Event
Gary Saidman asked for feedback for a lunch or breakfast program and for historical attendance information
(regarding previous quarterly events). He will have more information for the committee at the next meeting.
Technology Showcase
The Technology Showcase will be a morning program on April 13, 2004 at Alston & Bird. Charlie
Hudak will speak regarding VOIP. The rest of the program will be determined next year, however,
at this point we do know that there will be two other topics. Chuck Ross, Suellen Bergman, and
Todd McClelland are coordinating this program and the Technology Law Section and the
Intellectual Property Law Section will co-sponsor it.
Volunteer Day
The most recent volunteer day was November 15, 2003 at Free Bytes. Volunteers included Rob Joseph and Stephen
Combs. Volunteers cleaned and organized many computers: they hauled away over 700 monitors, 650 computers,
and many keyboards and mice. This equipment comprised over approximately six years of inventory. The entire lot
was sold and Free Bytes received money for this equipment.
Ann Moceyunas led a discussion about increasing participation and volunteer days. The committee suggested that
volunteer days would be more popular if they involved a traditional view of legal advice and counseling and could
qualify as formal "pro bono" work at law firms. Ann Moceyunas will look into this and other ways to encourage
greater participation.
The next volunteer day is February 21, 2004, from 10:00 a.m. to 3:00 p.m. at TechCorps Georgia.
Next Meeting
The next meeting of the Executive Committee will be held on January 13, 2004 at 7:30 a.m.
at Womble Carlyle (One Atlantic Center).
Womble Carlyle Sandridge & Rice, PLLC
The Executive Committee
The Executive Committee is comprised of Section members who are interested in volunteering their time to plan
events for the section. The EC members who attended the December 2, 2003 meeting were: Ann Moceyunas, Chuck
Ross, David Lilenfeld, Dennis Gerschick, Gary Saidman, James Aiken, Megan Bosse, Ron Jackson, Stephen Combs, and
Suellen Bergman.
Suellen W. Bergman is an Associate in the Intellectual Property and Technology
Group at Powell, Goldstein, Frazer & Murphy, where she practices technology,
intellectual property, and Internet law. She earned her J.D., cum laude, from the
University of Georgia in 1996 after receiving a B.A. in Mathematics and a B.
A. in English Literature from Washington University in St. Louis, MO, in 1993.
Mrs. Bergman may be reached at 404-572-6705 or [email protected].
22
Technology Law
Spring 2004
Executive Committee Meeting Highlights
Meeting Date: January 13, 2004
By Michael K. Stewart
Ann Moceyunas, Section Chair, called the meeting to order and reviewed the minutes from the prior meeting (12-22003). In addition, Ann welcomed a new member to the Executive Committee, Charles Pellissier of Troutman
Sanders. Section Secretary Suellen Berman was unable to attend the meeting due to other commitments, so Michael
Stewart took the minutes in her absence.
Newsletter Update:
Michael Stewart, Newsletter Editor, informed the Executive Committee that the Spring 2004 Newsletter deadline
was January 30, 2004, with a projected publication date of mid to late February 2004. The focus of the issue is
"Technology Licensing", and Michael welcomed further articles on this topic for inclusion in the Newsletter. The
focus topic for the following issue will be "Information Security/Privacy", with a deadline of approximately May 1,
2004 and a publication date of late May 2004.
John Livingstone's article on electronic discovery has been submitted to the Georgia Bar Journal for consideration, at
the recommendation of the Executive Committee. Michael thanked Gary Saidman, Dan Kent, and James Aiken for
reviewing and judging all of the newsletter articles for recommendation to the Georgia Bar Journal. Ann Moceyunas
and Charles Pellissier will perform this task in connection with the Spring 2004 Newsletter.
Winter Quarterly Meeting
Ann Moceyunas reported on the Winter Quarterly Meeting, which focused on the topic of "Cyber Crimes." The event
was well received, with approximately 30 attendees. In connection with future events of this type, the Executive
Committee proposed generating a logistical "checklist" for use by coordinators and presenters to ensure smooth
operation of these presentations and to guard against unforeseen contingencies.
Upcoming Section Events
Gary Saidman and Gaines Carter are coordinating a March luncheon, with the tentative topic of "U.S.-EU Business
Transactions." The date and location are still pending, and may be subject to the schedules of the international
speakers Gary and Gaines are attempting to line up for this event.
In addition, Chuck Ross and Suellen Bergman sent a communication updating the Executive Committee on the
upcoming April 13 morning CLE, "Technology Showcase." This event will deal primarily with Voice over IP (VOIP)
and wireless issues. The program will be held at Alston & Bird and, to date, one speaker, Charles Hudak, is confirmed
to present. Chuck and Suellen are seeking additional speakers, to achieve a representative mix of both business and
legal perspectives.
Section Website
Stephen Combs, Section Webmaster, presented the Executive Committee with a "mock-up" of the format for the new
Section website, which was generally approved by the Executive Committee. Stephen noted that the website could
go live by the end of the first quarter, depending upon the timeliness of migration of data from the existing website
to the new format prepared by Stephen.
23
Technology Law
Spring 2004
Volunteer Activities
Ann Moceyunas reported on the most recent volunteer
event, where Section members assisted patrons of
TechCorps Georgia with refurbishing such patrons' own
computers. The next Volunteer Day will be held at
TechCorps Georgia on February 21, 2004 from 9:30 a.m. - 12:30 p.m.
Next Meeting
The next meeting of the Executive Committee will be held Tuesday, February 17, 2004, at 7:30 a.m. at the offices of
Arnall Golden Gregory. Topics to be discussed at the next meeting include planning the next Technology Law
Institute, tentatively scheduled for October, 2004.
The Executive Committee
The Executive Committee is comprised of members who are interested in volunteering their time to plan events for the
Section. The Executive Committee members who attended the January 13, 2004 meeting were: Ann Moceyunas, Michael
Stewart, Dennis Gerschick, James Aiken, Charles Pellissier, Stephen Combs, David Keating, and Guanming Fang.
The Executive Committee thanks James Aiken and the law firm of Womble Carlyle Sandridge & Rice for hosting
the January 13, 2004 Executive Committee meeting.
Michael K. Stewart is an Associate with Friend, Hudak & Harris, LLP, where he
advises clients on technology, intellectual property and E-commerce-related issues. Mr.
Stewart earned his J.D., magna cum laude, from the University of Georgia in 1998,
and he earned a B.A. in History from Emory University in 1990. Mr. Stewart may
be reached at (770) 399-9500 or via e-mail at [email protected].
The digital divide has many faces, too many of
them young. Help the Technology Law Section support
TECH CORPS Georgia.
Give your old pc.
Give your time.
Give your dollars.
www.techcorpsga.org A 501(c)(3) nonprofit bridging the
digital divide one pc at a time.
24
TECHNOLOGY LAW SECTION
Technology Law
Spring 2004
THE TECHNOLOGY LAW SECTION OF THE STATE BAR
GEORGIA AND I.C.L.E. PRESENT
OF
"Recent Developments in the European Union"
SPEAKER
Richard Kemp
Kemp Little LLP, Solicitors
MARCH 12, 2004
12 p.m. - 1:30 p.m.
Kilpatrick Stockton LLP
1100 Peachtree Street NW
Atlanta 30309
$20 - pre-registration
(on or before March 9)
$25 - on-site registration
(Space available basis. Please call to confirm.)
One CLE credit hour.
Lunch and CLE processing fee included in registration price.
To register, return this form, along with a check
made payable to the State Bar of Georgia, to:
Johanna Merrill
State Bar of Georgia
104 Marietta St, NW
Atlanta, GA 30303
404-527-8774 ph
Name: _______________________
Bar No.: _____________________
E-mail: ______________________
25
Technology Law
Spring 2004
Attention All Section Members!!!
The State Bar needs your email address!
We want to be able to send you section related
information such as newsletters and meeting notices in
a fast and efficient manner. If you have not yet
submitted your email address to the Bar's
Membership Department you may do so online or by
e-mailing [email protected].
Interested in joining the Technology Law Section?
Send your name, Bar number and address,
along with a $25 check made payable to the
State Bar of Georgia to:
TECHNOLOGY LAW
Section Newsletter, State Bar of Georgia
Spring 2003
WAYNE HODGES: GEORGIA TECH’S
EDTV
Table of Contents
Section Events and Announcements
By James Aiken
On January 9, 2003, the Mid-Year Meeting of the
TECHNOLOGY LAW
Summary of Mid-Year Meeting
Section Contacts
From the Chair
1
2
3
Technology Section was held during the State BarSection
of
Newsletter,
State Bar of Georgia
Summer 2003
Quarterly Meeting
3
Georgia Mid-Year Meeting at the Swiss Hotel, Atlanta.
Net Ethics/Privacy Committee
4
The guest speaker at the meeting was Wayne Hodges,
Committee
5
EDITOR’SExec.
NOTE
: FocusHighlights
on Electronic Commerce
the Associate Vice President for Economic Development
Litigation Committee
6
and Technology Ventures (“EDTV”), the entity whichThis year is an Internet milestone: ten years ago software
For example, 30 million gold pieces on Ultima Online's Europa
Biotechnology Symposium
25
houses Georgia Tech’s economic development activities.
developers released Mosaic, the first browser to navigate the
Shard sold for US$550.00, and a large tower on the Atlantic Shard
Volunteer
Update
26
This
accelerated
the
development
of
the
It’s
not
all
“fun
and
games,”
though – this
World
Wide
Web.
sold
for
US$356.50.
Mr. Hodges presented the audience with a description
for 2003
26
Internet, andVolunteer
now onlineActivities
sales are commonplace.
Current retail
virtual e-commerce world is plagued by the same problems and
of EDTV’s roll in economic development in the Georgia
electronic commerce
demonstrate the Internet’s strength;
illegalities as the real world. In Tokyo, police arrested Ryusel
Join thefigures
Section
27
Tech community.
retail e-commerce sales for 2002 in the United States alone is
Sakano for illegally accessing an Internet game server, posing as the
TECHNOLOGY LAW
1
7
Calendar
of2 Events
estimated at $45.6
billion.
28
“owner” of a house that existed only in the game world, and selling
Section Newsletter,
State Bar of Georgia
Note
28
this virtual house to another Ultima Online game participant for
is legal Editor's
Mission . Mr. Hodges explained the EDTV’s mission
Some
disputes involving online sales are resolved using
50,000 Yen. Police said Sakano took advantage of the fact that
contract principles. For example, a small claims court
to
promote
entrepreneurial
development traditional
and
the game’s virtual gold pieces are traded via bulletin boards. In
Seattle ruled
that Amazon.com did not have to honor the sale
Articles
commercialization of technology. This mission datesin to
addition, in-game thievery has taken on a whole new meaning now
of an $849.99 television it mistakenly listed for sale for $99.99.
ANNUALthat
MEETING OF THE TECHNOLOGY LAW SECTION IPreceived
Due Diligence
7 a secondary, real currency market for Ultima Online items,
Georgia Tech’s original charter in 1885 which in part
The customer
a shipping date and confirmation email,
property and
pieces
has the
developed.
What was
once a crime
New Officers
forgold
2003
and
“Technical,
Business
and
provided that Georgia Tech’s purpose was to help
Quandary
9
but Amazon Cable
notifiedvs.
himDSL
of the
mistake and cancelled the order.
punishable only by the Ultima Online moderators may have
Legal Aspects of Wi-Fi”
The judge ruled
that
the
sale
was
not
complete
since
Amazon
had
Georgia make the transition to the industrial age.
Between Microsoft's Rock & HIPPA's Hard Place
11
become something that the authorities in the "real world" may
not yet charged the customer’s credit card and Amazon was
have to deal with more frequently in the very near future, since
Today EDTV is recognized as the home of much of entitled
the to rely
Employee
Monitoring
andstates
Internet
13
on its pricing
policy, which
that ifAbuse
an item’s
n Maygold
15,pieces
2003,
& be
Bird
LLP hosted
the“thief
2003
Annual
andAlston
items may
legitimately
stolen by
class”
entrepreneurial activity at Georgia Tech and also state
correct priceDocument
is higher than
its stated
price, Amazon
has the
Creation,
Retention
& Destruction
15
from other Law
characters
in the game
andmeeting,
then sold the
on the
Meeting ofcharacters
the Technology
Section.
At the
Section
discretion to Venture
cancel the Capital
order. Update
wide.
21
Internet for real dollars.
Fall 2003
8
9
3
TABLE OF CONTENTS
4
State Bar of Georgia
Technology Law Section
104 Marietta Street, NW
Atlanta, Georgia 30303
Section Events & Announcements
O
Annual Meeting
Editor's Note
Section Contacts
From the Chair
Join the Section
GA Law Update
Technology Law Institute
Volunteer Update
Section Event
Calendar of Events
5
elected new officers for the 2003-2004 fiscal year. The Section’s new
24
Enjoy this issue of Technology Law, which contains some articles
officers are:
So what does the
future of electronic
commerce
How about virtual
Intellectual
Property
Law hold?
Update
Players of the “virtual world” online role playing game
Mr. Hodges described e-commerce!
the
Structure of EDTV .
focusing on fascinating legal issues in the area of electronic
Ultima Online cause game characters they control to obtain “gold
structure of EDTV, which has an Economic
commerce
and which continues the Technology Law Section’s
Chair:
Ann K. Moceyunas
pieces,” the game currency, and property in the game arena over
time
electronic publication of its newsletter.
Development Institute, an Advanced Technology
through extended game play. Some players opt instead to purchase
Vicethe
Chair: Janine Anthony Bowen, McKenna Long & Aldridge, LLP
Development Center (“ATDC”), and VentureLab. gold
Mr.pieces or in-game property on e-Bay – for real US dollars.
Secretary: Suellen Bergman, Powell Goldstein Frazer & Murphy, LLP
Hodges’s presentation focused on the ATDC which
Suellen W. Bergman is an Associate in the Intellectual Property and Technology Group at Powell, Goldstein, Frazer &
helps Georgia entrepreneurs launch and build
Murphy, where she practices technology, intellectual property, and
Internet
law.
earned
her J.D.,
cum laude,
from
A highlight ofShethe
Annual
Meeting
was
a the
presentation on the wireless
technology companies and VentureLab which builds
University of Georgia in 1996 after receiving a B.A. in Mathematics
and a B.technology
A. in English popularly
Literature from
Washington
networking
referred
to as “Wi-Fi.” John Sweeney,
new companies and new commercial activities from
University in St. Louis, MO, in 1993. Mrs. Bergman may be reached
at 404-572-6705
[email protected].
Director
of ProductorStrategy
and Development for Scientific-Atlanta,
Georgia Tech innovations. The ATDC is a nationally
Inc., provided attendees with an overview of the technology of Wi-Fi.
1
recognized technology incubator that provides strategic
Mr. Sweeney’s presentation was followed by a discussion of the legal
Jim Paul, Mosaic Celebrates 10 Years, Australian IT, April 28, 2003.
2
business advice and connects member companies to the
http://www.census.gov/mrts/www/current.html.
implications of Wi-Fi, presented by Donald L. Hackney of Arnall
3
Monica Soto, Amazon Wins Small-Claims Fight over Price Mistake,
The Seattle
Times, Jan. 29, 2003.
people and resources they need to succeed. More than
Golden
Gregory,
Our speaker at the Mid Year Bar Meeting, Wayne
Hodges,
the LLP. (For additional information on the implications
4
Id.
of Wi-Fi communications
on an attorney’s ethical obligations, please see
100 technology companies have emerged for ATDC
5
Associate Vice President for Economic Development
and
Id.
6
Chuck
Ross’ article elsewhere in this issue.)
including Mindspring (now part of Earthlink).
Ventures,
and Kent
“Four yearsTechnology
after its launch,
Ultima Online
still is Webb,
growingSection
and has Chair.
more than 225,000 active players who spend an average of between 10 - 20 hours a
6
7
8
week immersed in the land of Britannia and the virtual world of Ultima Online.” http://www.origin.ea.com.
Based on e-Bay auctions in April, 2003, for auction item # 301757095
(30 million
gold)congratulates
and May, 2003, for auction
item #
3022755445
Tram).
The
Section
its new
officers.
In(Tower
addition,
1
2
3
3
16
18
20
24
28
28
Articles
Help Protect Licensee Rights
Recording Security Interests in IP
Legislative Update
W3C Adopts Royalty-Free Patent
Policy for IT
Do VC’s Squeeze out Entrepreneurs?
Net Ethics, Privacy & Information
Pros and Cons of .Pro
VOIP-Is Regulation Around the
Corner?
the Section
4
6
7
10
12
17
22
25
Dalibor Glavan, “Ultima Online” Hacker Arrested Over “Virtual
House” Sale,
www.xatnix.org/article2674.html.
T
ECHNOLOGY
Lsincerest
AW14, 2003,
TECHNOLOGY LAW
extends
its Feb.
thanks
to Messrs. Sweeney and Hackney for their
Join us on the web at www.computerbar.org
Id.
9
SPRING, 2003
informative
commentary regarding Wi-Fi and to Alston & Bird LLP for
hosting the 2003 Annual Meeting.
WI-FI: FCC REGULATIONS
How does it work?
Topology
47 C.F.R. Part 15
Access Point
Central communications point for wireless
devices
Wireless Client
Wireless adapter that enables a PC to
communicate with the LAN through an
access point
Internet
Access
Provider
High
Reprinted with permission of United Feature Syndicate, Inc. and United MediaSpeed
.
Data
Modem
WAN
Public Network
Wireless
Access
Point
•
LAN
Private Network
•
Cable/DSL Router
Use of spectrum is unlicensed
Systems can be installed anywhere without
regulatory approval
Wi-Fi devices are regulated under 47
C.F.R., Part 15
• §15.5: Operators of devices using
unauthorized spectrum do not have any
vested or recognizable right to continued
use of any given frequency by virtue of
prior registration or certification of
equipment
•
Firewall
DHCP Server
NAPT (NAT)
• Router connects the public
network (WAN) to the private
network (LAN)
• Provides firewall protection for the
LAN from the public Internet
• Manages IP address in the private
network
May 15, 2001
5
Visit the Technology Law Section website at www.computerbar.org
Technology Law Showcase
Come see some cool new gadgets; learn the
latest in Voice-over IP, Wireless, and Hot
Spots; and get CLE credit, too!
Come the morning of April 8, 2004
Location: Alston & Bird
26
Technology Law
Spring 2004
T
utoring
- Want to make a
little more commitment and a
real difference in a kid's life?
Volunteer to tutor high school kids
to take and pass the Georgia High
School Graduation Test or the GED
test on one Saturday a month for 3
months, starting in September.
For more information or to sign up, contact Ann Moceyunas,
Volunteer Coordinator at [email protected].
Calendar of Upcoming Events
Quarterly Technology Law Section Event
March 12, 2004
Kilpatrick Stockton LLP
Topic: "Recent Developments in the European Union"
Technology Showcase
April 13, 2004
Alston & Bird/One Atlantic Plaza
Deadline for contributions to Summer 2004 Newsletter
Focus on "Information Security/Privacy"
27
April 30, 2004