‘A Brink of Invention’ Claim

Claims based on alleged breaches of invention assignment agreements rest fundamentally on state laws and, significantly, on state trial courts’ determinations of fact.

In Ikaria, Inc. v. Frederick J. Montgomery, No. 2015AP568, plaintiff-appellant Ikaria advances a ‘brink of invention’ theory that employees left Ikaria immediately before they were about to come upon an invention under the scope of Ikaria’s invention assignment clause with them. (Had they stayed, and completed their invention while under Ikaria’s employ, the rights to their invention would have resided with their employer.)

Brink of invention claims, naturally, rest on how much an employee had achieved prior to his or her departure. They’re fact-intensive. The argument as a claim makes sense, I think, because others may naturally wonder: why did employees leave when they did?

Here’s the employer’s claim, from the appellate opinion, paragraph 26:

What this leaves we will call Ikaria’s “brink-of-invention” argument. Ikaria argues that the defendants breached the implied duty of good faith by allegedly intentionally timing their resignations to occur when the defendants, as Ikaria puts it, were on “the brink of completing their inventions, so that they could evade a narrow reading of the Invention Assignment Clause.”

To advance successfully a claim like this, Ikaria would need two things under Wisconsin Law:

(1) to show that “the defendants not only conceived of all four inventions after the employee-defendants had resigned, but that these conceptions-of-invention were based on “substantial work” that the defendants “performed post-Ikaria”


(2) for the appellate court to disregard that “Ikaria effectively asks us to reweigh witness credibility and the evidence generally and override factual inferences drawn by the circuit court. However, as stated above, we are obligated to view the evidence in the light most favorable to the circuit court’s fact finding, including its credibility determinations, and there was a factual basis for the circuit court to reject the brink-of-invention notion.”

(Paragraphs 28, 29.)

In Ikaria, one sees that an appellate court may decline consideration of a factual determination about a ‘brink-of-invention’ departure by relying on a trial court’s prior factual assessment.

Appellate slip opinion, below:

Download (PDF, 381KB)

Apple Escalates

From the New York Times, on Apple’s probably response to the FBI’s current attempt to gain access to an iPhone’s data:

WASHINGTON — Apple engineers have begun developing new security measures that would make it impossible for the government to break into a locked iPhone using methods similar to those now at the center of a court fight in California, according to people close to the company and security experts.

If Apple succeeds in upgrading its security — and experts say it almost surely will — the company will create a significant technical challenge for law enforcement agencies, even if the Obama administration wins its fight over access to data stored on an iPhone used by one of the killers in last year’s San Bernardino, Calif., rampage. If the Federal Bureau of Investigation wanted to get into a phone in the future, it would need a new way to do so. That would most likely prompt a new cycle of court fights and, yet again, more technical fixes by Apple.

SeeApple Is Said to Be Trying to Make It Harder to Hack iPhones.

Stephen Witt’s ‘How Music Got Free’

There’s really no American who hasn’t felt the effects of digital technology. The last generation has transformed media, and the law has been – and still is – racing to catch up.

What, however, do we remember accurately even of changes that have swept all around us?

Above, I’ve embedded a Reason.tv interview with Stephen Witt, author of How Music Got Free: The End of an Industry, the Turn of the Century, and the Patient Zero of Piracy.

His book is a recounting of a tale we may know only in part, and only imperfectly.

The interview is well worth watching, and Witt’s book well worth reading.

Entrepreneurial Bookseller Goes Back to the U.S. Supreme Court

Supap Kirtsaeng won a victory at the U.S. Supreme Court in 2013, and now he’s heading back to seek attorneys’ fees. Here’s the background:

Supap Kirtsaeng built himself a business on eBay buying textbooks in Asia and reselling them to students in the US. That practice made him the target of a copyright lawsuit by John Wiley & Sons, a large textbook company that didn’t like Kirtsaeng undercutting their US prices. Lawyers for Wiley said that they should control the right to import their copyrighted works.

Kirtsaeng won a resounding victory in 2013, when the Supreme Court said he was protected by the first-sale doctrine. He’d bought the books legally and could resell them, even if that involved moving the books across the border.

See, Supreme Court takes up copyright case over resold textbooks—again @ Ars Technica.

What’s the issue, now? Although copyright law allows Kirtsaeng to receive attorneys’ fees, it’s not mandatory that he receive them (and it’s uncommon, generally, to receive attorneys’ fees in America). The district court and the Second Circuit Court of Appeals both denied Kirtsaeng’s request for fees, but he argues that he would have received them had he filed suit in another federal circuit.

He’s consequently claiming a circuit split, and asking the U.S. Supreme court to close that split by applying a uniform standard for all America (and of course, a uniform standard that would award attorney’s fees in his case).

See, also, the petition of Supap Kirtsaeng and the brief in opposition of John Wiley & Sons (contending that there’s no circuit split at all), both documents by way of the ScotusBlog.

Answering an Objection to the Language of Reddit’s Expanded Ban

In last week’s post, defending Reddit’s decision to expand its content ban, I promised that I’d answer an objection to that expanded content-restriction policy

The objection to that content policy comes from Gizmodo, in a post from Annalee Newitz entitled, Reddit Bans /r/Coontown For All the Wrong Reasons

Ms. Newitz, sensibly, isn’t opposed to a ban, for subreddits like /r/Rapingwomen or /r/Coontown; she feels that the content-restriction policy that CEO Steve Huffman promulgated amounts to a “terrible set of policies.” 

She contends that the new August restrictions were unnecessary, and that prior content restrictions would have allowed Reddit to ban like /r/Coontown because

Huffman could have banned /r/Coontown under the original set of rules, which state that Reddit can ban forums “that incite harm against others.” But because he wasn’t willing to admit that racism incites violence, he wound up inventing a crappy new rule — based on whether subreddits are “annoying” or “make Reddit worse” — that will actually do more harm than good.

Reddit made the right decision to ban /r/Coontown, but to base a policy against racist speech on the theory that it leads to violence is unnecessary, and puts a website in the business of contending for or against arguments of social science. 

A broader definition of what’s unacceptable, without a tie to inciting violence, assures that a private publisher’s freedom of act – in defense of its brand name, customer goodwill, etc. – will not require a link between speech and possible reader conduct.  Advising a private publisher-client to establish a content-restriction that requires a link between speech and violence would only limit a private publisher’s ability to act.  Publishers are not social scientists, nor need they be. 

There are, candidly, some derogatory terms that a private publisher – in this case, crucially, a private entity like Reddit –  might mish to limit that do not have a link to violence. 

That’s why Reddit’s latest content-restrictions, ones that allow a ban apart without a link to violence, are ones that I would have advised: they offer freedom of action to the publisher. 

It’s true, of course, that CEO Huffman might ban too much, but the need to maintain readership will act as a brake on his restrictions. 

In any event, none of this involves state action.  If private publishers limit too much, there are sure to be others that will spring up as alternative havens.  (That’s one reason state action is so different: one wouldn’t expect new governments to spring up in response to state censorship.)

A publisher-client’s best interests are served through flexible policies that afford discretion in implementation. 

That’s precisely what Reddit’s new content restrictions allow.

Reddit Wisely Expands Ban on Offensive Content

On July 16th, Reddit announced a ban on some offensive content, and a policy of concealing other content to prevent easy access of display to readers. This two-tiered approach to offensive content was novel, and a response to conflicting demands for an open forum and for a site free of racist posts, for example.

A few kinds of content, including child pornography or other patently illegal activities, were banned:

Anything illegal (i.e. things that are actually illegal, such as copyrighted material. Discussing illegal activities, such as drug use, is not illegal)
Publication of someone’s private and confidential information
Anything that incites harm or violence against an individual or group of people (it’s ok to say “I don’t like this group of people.” It’s not ok to say, “I’m going to kill this group of people.”)
Anything that harasses, bullies, or abuses an individual or group of people (these behaviors intimidate others into silence)[2]
Sexually suggestive content featuring minors

A second category wasn’t banned, but instead restricted:

Adult content must be flagged as NSFW (Not Safe For Work). Users must opt into seeing NSFW communities. This includes pornography, which is difficult to define, but you know it when you see it.
Similar to NSFW, another type of content that is difficult to define, but you know it when you see it, is the content that violates a common sense of decency. This classification will require a login, must be opted into, will not appear in search results or public listings, and will generate no revenue for Reddit.

A subreddit that was to be concealed was the astonishingly crude, inveterately racist subreddit /r/Coontown, to offer a sense of how offensive some of this content was.

How long would Reddit be able to keep some of these subreddits (even if concealed) in the name of free expression (although, of course, not on inapplicable First Amendment grounds)?

Not long: CEO Steve Huffman expanded the ban on August 5th. It’s impossible to see how Huffman could have done otherwise than ban /r/Coontown and subreddits of similar ilk, and expect Reddit to be a welcome destination for readers or corporations.

However well-intentioned Reddit’s July 16th desire to balance speech and decency, Reddit was never going to be able to balance the two without looking like (a less candid version of) Stormfront. Reddit a large concern needing and expecting a wide readership; concealing vile content was never going to satisfy expectations against racist trolls, etc.

I cannot think of a circumstance under which I would have advised Reddit to keep but conceal subreddits like /r/Coontown. A client is owed more than a mere assessment of what may be done; they’re owed a practical assessment as well as a black-letter one.

Steve Huffman made the right decision to discard these subreddits entirely.

Next: Answering an Objection to the Language of Reddit’s Expanded Ban.

(Some) Startups Can Lawfully Tweet to Test Investor Interest

Startups are now able to post a Twitter message about their stock or debt offering to gauge interest among potential investors, the U.S. Securities and Exchange Commission said this week. The announcement continues the SEC’s trend of warming up to social media, which began two years ago when it approved the use of posts on Facebook and Twitter to communicate corporate announcements such as earnings….

The SEC’s latest endorsement of social media only applies to companies looking to raise as much as $50 million a year. New small-business fundraising rules were approved in March, which increased the limit for capital raised to $50 million from $5 million to enjoy the perk of fewer required disclosures.

The changes were required under the 2012 Jumpstart Our Business Startups Act, which deregulated fundraising rules for small businesses. Firms that use Twitter to solicit investor interest must include a link to a required disclaimer that says the firm isn’t yet selling securities, the SEC said in this week’s announcement.

Via SEC Approves Tweeting by Startups to Test Investor Interest @ Bloomberg Business.

See, alsoJumpstart Our Business Startups (JOBS) Act @ SEC.gov

Others have tried, and now Facebook enters the workplace (formally) with Facebook@Work

At TechCrunch, Ingrid Lundgren reports on Facebook’s platform for businesses to create their own social networks.  She offers lots of useful detail, and correctly notes that some competing offerings in this space have failed (or just haven’t taken off):

About six months ago, we reported that Facebook was working on a new product aimed squarely at the enterprise market under the working title, “FB@Work.” Now that product is officially coming to light: today the company is launching new iOS and Android apps called “Facebook At Work,” along with a version of Facebook at Work accessible via its main website, which will let businesses create their own social networks amongst their employees that are built to look and act like Facebook itself.

(Facebook At Work is now available for download on iOS, and we’ll update with a links to the Andrid version once it’s live, though both are usable via a limited pilot to start with. Check out Josh’s follow-up story for more screenshots, details on privacy, and analysis.)

Employers can create separate log-ins for employees to use with their Work accounts, or users can link these up with their other profiles to access everything in one place.

The product puts Facebook head-to-head with the likes of Microsoft’s Yammer, Slack, Convo, Socialcast, and a huge number of others who are trying to tackle the “enterprise social network” space. Even LinkedIn conveniently let drop last night that it too was looking atbuilding a product for coworkers to communicate and share content (but not chat, as a LinkedIn spokesperson tells me). Not all of these have been a hit: Lars Rasmussen, the engineering director at Facebook who is heading up the project, had in his past once headed up one of the failed efforts at an enterprise social network, Google Wave….

“Facebook at Work’s strength is that we’ve spent ten years and incorporated feedback from 1 billion active users,” he says. “All of that is embedded now in the same product but adapted for different use cases.”

And it’s actually used by staff. “When Mark [Zuckerberg, the CEO] makes an announcement he just posts it on Facebook at Work,” Rasmussen says.

The whole post, Facebook Unveils Facebook At Work, Lets Businesses Create Their Own Social Networks @ TechCrunch, brims with detail.