Law and Intellectual Property Memorandum - Essay Example

Law and Intellectual Property Memorandum RE: Possible liability in the case of Mr. Ben Kenobi’s pictures being used by Jedi on a website hosted by Emperor, and competitors gaining access to Jedi’s secret formula on Empire’s data servers. Question Presented What is the possible liability in the case of Jedi using Mr. Kenobi’s pictures on a website hosted by Emperor, when Jedi purchased the pictures in good faith from a third party and Mr. Kenobi can prove that the pictures are his? Moreover, what is the possible liability in the case of Jedi’s competitors obtaining Jedi’s secret formula through Empire’s data servers, since Emperor assured Jedi that the sensitivity of the data will be taken care of? Brief Answer Yes, Mr. Kenobi is entitled to a fair royalty from Jedi and he also could seek a court injunction requiring his pictures to be removed from Jedi’s website until the royalty is received. Since i) Mr. Kenobi can prove that the pictures are his and ii) Jedi did digitally copy the pictures intentionally by deliberately uploading them onto Emperor’s server, this constitutes primary infringement. No, Mr. Kenobi is not entitled to any damages or royalties from Emperor. Since Empire is only providing a hosting service for Jedi’s website, Emperor did not directly nor intentionally copy the pictures, it simply received a copy of the pictures from Jedi through the rendering of a hosting service. This only constitutes secondary infringement and there was no intent to copy. Probably, Empire is liable to Jedi for the fair market value of the secret formula, unless specific damages had been outlined in the contract between them. Since Empire did not copy the information directly, it does not constitute primary infringement. Although it did inadvertently provide the means for others to do so, Empire did not have any intent of copying, therefore it does not constitute secondary infringement either. However, the data was explicitly labeled as confidential by Jedi and Empire was negligent in protecting the confidentiality of the data. Yes, Jedi is entitled to a fair royalty from its competitors for use of their unregistered design right and could also seek a court injunction to not only prevent the further illegal use of their secret formula, but also have all products where their secret formula was illegally used recalled until the royalty is received. Statement of Facts This office is considering possible liability between Jedi, Emperor and Mr. Kenobi. Jedi has posted on its website (hosted by Empire) pictures reputed to belong to Mr. Kenobi. Despite Mr. Kenobi having threatened to sue both Jedi and Empire unless the pictures are removed, the pictures have remained on the website. This office is also considering possible liability between Emperor and Jedi. Although Jedi’s CEO had specified to Empire’s CEO that their data was sensitive, Mr. Maul and his team have incorrectly configured security permissions, resulting in 27 other Empire customers gaining access to data in Jedi’s account, including Jedi’s secret formula for their Light Saber Ultra-Pro shoes. This formula has been published shortly after on over 5,000 websites, and Jedi’s competitors have already begun manufacturing shoes using Jedi’s secret formula. Discussion It is unlikely that Mr. Kenobi will be awarded any damages, royalties or other compensation from Empire. Indeed, in order for such an award to be made, it must be established that i) Mr. Kenobi is the rightful owner of the rights to the pictures and that ii) the pictures have been copied by Empire without Mr. Kenobi’s permission or consent. While it is claimed that Mr. Kenobi can prove that the pictures are his, since Empire has also been involved in an involuntary breach of confidentiality regarding sensitive data belonging to Jedi (who uploaded the pictures), this raises the question of the legitimacy of Mr. Kenobi’s claim: are the pictures truly the property of Mr. Kenobi or is he fraudulently claiming the pictures to be his after illegally obtaining them from Jedi’s website hosted by Empire. This legal opinion is based on the assumption that the pictures are the legitimate property of Mr. Kenobi. Although the pictures have been copied onto Empire’s data servers by Jedi, the Electronic Commerce (EC Directive) Regulations 2002 reg 17 would hold Empire harmless and immune to prosecution provided that Empire i) did not instigate or request the copying of the pictures, ii) did not select to whom the pictures would be sent, iii) did not select or edit the contents of the picture, iv) only copied the pictures for the process of transferring them and v) did not retain the copy of the pictures for longer than is necessary for transferring them. Since the pictures were uploaded by Jedi onto Empire’s data servers and that Empire served solely in the capacity of provider of hosting services, Empire will not be liable to Mr. Kenobi. It is very likely that Mr. Kenobi will be awarded a fair royalty from Jedi or that he will successfully obtain a court injunction forcing the removal of the pictures from Jedi’s website. Indeed, all that would need to be established is the ownership of the pictures (see above) and the act of copying, and it cannot be refuted that Jedi copied Mr. Kenobi’s pictures as those pictures are still on Jedi’s website. Although Jedi purchased the pictures from a third party, it cannot be assumed that any license for commercial use was implied or that the third party even had the right to sell Mr. Kenobi’s pictures. It is very likely that Jedi will be awarded fair market value of their secret formula from Empire. Indeed, the damages sustained by Jedi through the negligence of Empire are irrefutable, since Jedi’s competitors have not only obtained Jedi’s secret formula, but are using it in their own products. Despite Jedi’s CEO having informed Empire’s CEO of the sensitive nature of the data uploaded to Empire’s data servers, Mr. Maul and his team have improperly configured security permissions on Empire’s data centers. It is assumed that Mr. Maul and his team are employees or contractors acting under the influence or control of Empire, therefore Empire itself has been negligent in exerting due diligence to keep Jedi’s secret formula confidential. If the service contract between Jedi and Empire specify damages for breach of confidentiality, then those damages will take preeminence. If not, although Jedi’s competitors have gladly accepted Jedi’s secret formula at no cost, at what cost would they have been willing to purchase Jedi’s secret formula? This should be the amount of the award. It is also very likely that Jedi will be successful in enforcing it’s unregistered design right, because all that is required is for Jedi to prove that i) it owns the rights to the secret formula and that ii) it’s competitors copied it. Since it can be assumed that i) Jedi can provide sufficient evidence that it developed the secret formula and therefore owns it and that ii) it is obvious that Jedi’s competitors have copied Jedi’s secret formula in their products, Jedi will then be able, at its discretion, to require payment of a fair royalty from all competitors who have used the secret formula, or alternatively obtain an injunction not only preventing the further illegal use of their secret formula, but also forcing the recall of all competitor products in which its secret formula has been used. Although the users and websites who originally gained access to and published Jedi’s secret formula have been the agents which have ultimately allowed Jedi’s competitors to obtain Jedi’s secret formula, publishing a secret formula does not constitute infringement of an unregistered design right unless the formula itself has been copyrighted or all rights have been reserved: it is the usage of the secret formula which constitutes primary infringement. It should be noted that a judgment ordering the payment of a fair royalty from Jedi’s competitors and a judgment ordering Empire to pay fair market value to Jedi for the secret formula are mutually exclusive, since either settlement would constitute full restitution. References The Electronic Commerce (EC Directive) Regulations 2002 SI 2002/2013 reg 17. Read More