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The Laughable Non-Disclosure Agreement

Summary: Update Non-Disclosure Agreements (NDAs) to match the new digital reality. Businesses should be proactive to address outdated provisions in NDAs before problems occur.

Remember the olden days of fax machines? You’d receive a fax with a long disclaimer at the bottom, saying something like, “This fax may contain super-secret information which could endanger our company, our world, and even our universe, if it should fall into the wrong hands. If you receive this fax by accident, you must immediately return the fax to the sender, or we will send our goons to find and severely punish you.” The question is, how many people actually read and complied with these statements? Probably not many.

Faxes have now mostly given way to e-mail, and the “return” language has usually been replaced by “destroy” language along the lines of “If you receive this e-mail by accident, you must immediately destroy any printed copies by placing them in a safe and then dropping the safe into a volcano. Then throw your hard drive into the volcano for good measure.” But how effective is such language?

This brings me to a recent question by a company that’s been a client of this firm for many years. We had drafted a template Non-Disclosure Agreement (“NDA”) for them years ago, using language typical for that time. After the parties’ relationship ends, or within a specific timeframe, the NDA calls for the recipient of the confidential information to return it to the discloser. Now that information is generally transmitted digitally, rather than on paper, the client asked how to comply with the obligations created under these old NDAs. Good question!

The answer for existing NDAs is that the parties should desirably communicate before there are problems. My advice would be for the recipient to offer an addendum to the previous NDA, in which the parties mutually agree that it’s okay when physical copies of the confidential information have been returned by the recipient, and/or that digital copies have been destroyed, and if there are backup copies created in the recipient’s ordinary course of business, that they have not been accessed – and will never be accessed – in violation of the NDA.

Most NDAs that we currently prepare require that tangible versions of confidential information be returned, and that electronic versions be destroyed, and that the recipient certify this in writing. Some versions provide for an audit of these actions.

We also contemplate suggesting language regarding backups, so that an innocent party is not burned in the event of litigation. Imagine the exchange:

Mean Lawyer: “Didn’t you certify that you returned or destroyed this confidential information?”
Innocent Client: “Why yes, I did so right after volunteering at the homeless shelter and visiting my grandmother at the nursing home, like I always do.”
Mean Lawyer: “Then WHY did we find 1,000 copies of this super-secret confidential information scattered about on your backup drives and on 17 cloud services???”
Innocent Client: “Gulp!”

The takeaway: review your existing NDAs, to ensure that you’re not violating your obligations, and to ensure that your company’s confidential information isn’t scattered about. Contact us for advice (even by fax) before problems arise. It costs much less to prevent problems than to fix them!

Joshua D. Waterston, Esq.
Elman Technology Law, P.C.

Image credit: Topsecretsidebar.jpg, https://commons.wikimedia.org/w/index.php?title=File:Topsecretsidebar.jpg&oldid=187366443 (CC BY-SA 4.0)

Gerry Elman’s Temple Law School presentation on Patents and the Internet of Things

On April 3, 2018, Gerry was a guest lecturer at Temple Law School, on the topic of Patents and The Internet of Things. If you’re developing a Smart Technology, helping a company navigate the Internet of Things, or just curious about the subject, check out his slideshow.

To download this presentation, please complete the form below to provide or update your contact information. Then you’ll see a link immediately below, which you can click on to download a digital copy of the presentation in PDF format. We’ll add you to our mailing list to share information about events and other news which we think would be of interest.

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Happy New Year 2018

As 2017 winds down, we at Elman Technology Law wish you a very Merry Christmas and a New Year full of health, happiness, and success. 2017 was full of noteworthy events, and we thought we’d highlight a few items that especially affect our clients. For decades we’ve had the privilege of offering calendars with images from historic patents. We regret that our supplier has discontinued them for 2018. To our friends who have, through the years, accorded them an honored place on their walls, we share your pain.

Photo credit: "The Slants" performing at a 1st Amendment Society concert, by Grundick, via Flickr

Photo credit: “The Slants” performing at a 1st Amendment Society concert, by Grundick, via Flickr

What’s In a Name?

The past six months have seen two landmark trademark decisions, both on the unconstitutionality of longstanding legal restrictions. In Matal v. Tam , a unanimous Supreme Court struck down a ban on the registration of “disparaging” trademarks. The case involved an Asian-American rock band named “The Slants” that was refused a registration because the term was a racial slur. The Supreme Court held that the Lanham Act provision at issue violated the First Amendment’s protection of free speech. Then, in December, the Court of Appeals for the Federal Circuit’s In re: Erik Brunetti decision opened the door for the word “Fuct” to become a registered trademark – despite the sound of the word being a vulgar term. It will be an interesting 2018 at the trademark office…

December 31 Deadline to Appoint a DMCA agent

Most of us are familiar with the Digital Millennium Copyright Act. The DMCA gained some notoriety in the fight against online piracy. It’s been an important tool to prevent unauthorized content from spreading across online platforms (Facebook, Twitter, Instagram, etc.). Websites and other “service providers” provide contact information for their DMCA agents, so that the author or owner of a creative work can send a DMCA take-down request to that person. The Copyright Office has recently moved to a new system, and requires that any service provider that previously designated an agent must submit an updated designation to the Copyright office by December 31. Our firm can handle this for you, and is also available to act as your designated agent, with a quick turnaround to meet this imminent deadline.

Can Tribes and State Universities Use Sovereign Immunity to Avoid Patent Invalidation?

Our firm’s recent e-mail newsletter described the efforts of a drug company to prevent its patents from being challenged at the Patent Trial and Appeal Board (PTAB) Allergan had transferred certain patents to St. Regis Mohawk Tribe and licensed them back, hoping to take advantage of the tribe’s sovereign immunity to block the inter-partes patent review process. That case is still unfolding in the courts and in Congress, but a recent court decision doesn’t bode well for patent owners who would blindly follow this path.

In a refreshing case of common-sense prevailing over convoluted legal maneuvers, efforts by the University of Minnesota (“UM”) to prevent PTAB inter-partes review, by claiming sovereign immunity, have failed. On December 19, an expanded PTAB panel, including the Chief Administrative Patent Judge, denied UM’s motion to dismiss a company’s request for inter-partes review of the patents. Though acknowledging that state universities are generally immune from inter-partes review, as arms of the state, the PTAB concluded that UM had waived its sovereign immunity under the Eleventh Amendment by filing an action in federal court alleging infringement of the patents at issue. This apparently was a bridge too far for the judges, since UM was obviously trying to have its cake and eat it too.

IoT Becomes the New Thread Stitching IP Together

In 2017, the Internet of Things came into its own. Everyday folks (not just techies or Intellectual Property lawyers) started talking about smart IoT devices: thermostats, lightbulbs, door locks and even smart clothing. On November 29th, I gave a webinar on Federal Guidelines for Security on the Internet of Things. To download a copy of my slideshow, see below.

This fall, I was privileged to be a speaker and mentor at the annual conference for the Industrial Fabrics Association International (“IFAI”) in New Orleans. I was impressed by the many innovations in smart fabrics that are just beginning to unfold. These IoT inventions will need multiple layers of IP protection, through patent, trademark, trade secret, and licensing efforts (and even copyright, after the Supreme Court’s 2017 decision that certain features of cheerleading uniforms can be protected by copyright). At the IFAI Expo I met Ben Carson, an entrepreneur who’s about to launch a social media and podcasting platform called IoClothes.  E-mail me for further information.

On a Personal Note

2017 brought some challenges for friends and family, but I’m pleased to share that we’re still doing well. Lois was very understanding as I traveled to different locales to speak and learn. I hope that you and yours are thriving.

Best wishes for health, happiness, and prosperity in 2018.

-Gerry

Elman Technology Law, P.C. is a boutique law firm in Media, Pennsylvania. We enable small to medium size businesses to effectively secure and manage their intellectual property portfolios for maximum business benefit – protecting, enforcing, and monetizing their rights. Our intellectual property services include patents, trademarks, copyrights, trade secrets and licensing. Our cyberlaw services include Internet business law and cybersecurity.


On November 29, 2017, Gerry gave a webinar on "Federal Guidelines for Security on the Internet of Things". IoT presents multiple opportunities and challenges in today's hyper-connected society. What will the future bring?

To download this presentation, please complete the form below to provide or update your contact information. Then you'll see a link immediately below, which you can click on to download a digital copy of the presentation in PDF format. We'll add you to our mailing list to share information about events and other news which we think would be of interest.

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Company Website:

* Street Address:

* City:

* State/Province:

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Phone:

Please check all options that apply:

To send a message, please use the following box. Keep in mind that no attorney-client relationship is created through this communication, and this communication is not confidential. For a confidential consultation, please call us at (610) 892-9942.

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Can Tribes and State Universities Use Sovereign Immunity to Avoid Patent Litigation?

You may have seen our firm’s recent e-mail regarding the efforts of a drug company to prevent its patents from being invalidated by the Patent Trial and Appeal Board (PTAB) Allergan had transferred certain patents to St. Regis Mohawk Tribe and licensed them back, hoping to take advantage of the tribe’s sovereign immunity to block the inter-partes patent review process. That case is still unfolding in the courts and in Congress, but a recent court decision doesn’t bode well for patent owners who would follow this path.

In a refreshing case of common-sense prevailing over convoluted legal maneuvers, the efforts of the University of Minnesota (“UM”) to prevent PTAB inter-partes review, by claiming sovereign immunity, have failed. On December 19, an expanded PTAB panel, including the Chief Administrative Patent Judge, denied UM’s motion to dismiss a company’s request for inter-partes review of the patents. Though acknowledging that state universities are generally immune from inter-partes review, as arms of the state, the PTAB concluded that UM had waived its sovereign immunity under the Eleventh Amendment by filing an action in federal court alleging infringement of the patents at issue. This apparently was a bridge too far for the judges, since UM was obviously trying to have its cake and eat it too.

While the facts involved in the tribal and state university litigation are not identical, the recent PTAB ruling may provide insight into how it will handle the claim of tribal immunity. If the PTAB finds that the transfer of assets to the tribe was a sham transaction (one made solely to avoid a legal proceeding), then it will likely be invalidated. It’s an interesting legal question. Stay tuned.

Gerry Elman on Federal Guidelines for Security on the Internet of Things

On November 29, 2017, Gerry Elman presented a webinar on Automobile security image, from National Highway Traffic Safety Administration. (2016, October). Cybersecurity best practices for modern vehicles. (Report No. DOT HS 812 333).“Federal Guidelines for Security on the Internet of Things (IoT)” as part of a panel discussing the topic of “DHS Framework and Principles for IoT Devices: What It Means to Your Company.”  Click here for more info.

Gerry’s section of the agenda:

  • US DHS issued Strategic Principles for Securing the Internet of Things 12 months ago.  This is important guidance, but without specifics or mandatory requirements.
    • It refers to the NIST framework for cybersecurity risk management as a comprehensive touchstone for organizational cyber risk management.
  • Compare with (and take account of) privacy and security requirements under HIPAA, which are enforced with million-dollar fines.
  • Various industries are subject to more specific guidance and regulation, e.g.
    • Medical devices under FDA regulation
    • Vehicles under DoT regulation
  • Standards organizations are developing consensus rules for certification, e.g. UL, ASTM, etc.

From the webinar description:

With the growth of the Internet-of-Things (IoT) comes not only opportunities and benefits for our society, but also substantial safety and economic risks. In an effort to combat these risks, the Department of Homeland Security (DHS) issued guidance underlining strategic principles for IoT device security. Though these principles are nonbinding and can be ignored by businesses at will, the guidance will likely influence the standard of reasonable security. IoT device manufacturers are expected to be vulnerable to scrutiny by regulators, the plaintiffs’ bar and the courts if they do not consider the DHS guidance.

In this Webcast, a panel of thought leaders and practitioners assembled by The Knowledge Group will provide an overview of the DHS’ Strategic Principles for Securing the Internet of Things and its potential impact to the standard of IoT cybersecurity. The speakers will offer best practices to adopt this guidance, thus, enabling businesses to create a responsible level of security for IoT devices and systems.

Key topics include:

  • DHS’ Strategic Principles for IoT: An Overview
  • Scope, Purpose, and Audience
  • Implications to IoT Security Standard
  • Best Practices on Strengthening IoT Security

Image credit: Automobile security image, from National Highway Traffic Safety Administration. (2016, October). Cybersecurity best practices for modern vehicles. (Report No. DOT HS 812 333).

2017 Martindale-Hubbell® Peer Review Rating of AV Preeminent® Gerry Elman has received a 2017 Martindale-Hubbell® Peer Review Rating of AV Preeminent®
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