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Overview Legal & IP Issues Relating to Cloud ComputingCloud Computing

Berkeley Center for Law & Technology T F b 15 2011Tues., Feb. 15, 2011

Peter H. Kang

Cloud Computing & Legal/IP IssuesCloud Computing & Legal/IP Issues

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What is the Cloud?What is the Cloud?

• “When people talk about cloud computing, they’re talking p p p g, y gjust about taking some stuff, putting it outside the firewall, and perhaps putting it on servers that are also shared or storage systems.”storage systems.

• Microsoft CEO Steve Ballmer

• “The interesting thing about cloud computing is that we’ve redefined cloud computing to include everything that we already do. I can’t think of anything that isn’t cloud computing with all of these announcements…. I don’t p gunderstand what we would do differently in the light of cloud computing other than change the wording of some of our ads ”our ads.

• Oracle CEO Larry Ellison

• “It’s become the phrase du jour." j• Gartner Senior Analyst Ben Pring

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Defining Cloud Computing

Marc Andreesen described the cloud as “a t l f l ti tsmart, complex, powerful computing system

in the sky that people can just plug into.”

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Defining Cloud ComputingDefining Cloud Computing

• NIST defines “cloud computing” as “a model for• NIST defines cloud computing as a model for enabling convenient, on-demand network access to a shared pool of configurable computing resources ( k l d(e.g., networks, servers, storage, applications, and services) that can be rapidly provisioned and released with minimal management effort or service providerwith minimal management effort or service provider interaction.”

• The cloud model defined by NIST is composed of five y pessential characteristics, three service models, and four deployment models.

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• The five essential characteristics of the cloud model• The five essential characteristics of the cloud model developed by NIST are:

– 1) on-demand self-service )

– 2) broad network access

– 3) resource pooling) p g

– 4) rapid elasticity

– 5) measured service)

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• Deployment models as defined by NIST:• Deployment models as defined by NIST:

– 1) Public Cloud (Gmail)

– 2) Private Cloud (or Virtual Private Could) (Cerelink)2) Private Cloud (or Virtual Private Could) (Cerelink)

– 3) Community Cloud (Google Gov Cloud)

– 4) Hybrid Cloud (surge computing – Rackspace)4) Hybrid Cloud (surge computing Rackspace)

• Service models as defined by NIST:

1) Software as a Service (SaaS Salesforce com)– 1) Software as a Service (SaaS – Salesforce.com)

– 2) Platform as a Service (PaaS – BestBuy’s Giftag running on Google App Engine) g g pp g )

– 3) Infrastructure as a Service (IaaS – Amazon Elastic Computing Cloud (EC2))

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Cloud Computing – Salient FeaturesCloud Computing Salient Features

Thi d t t l d t d t• Third party control and access to data

• Lack of transparencyp y

• No geography in the cloud – borderless

• Potential multiple copies of data dispersed in the cloud

• Surge computing

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Potential IP Issue: Patents and the CloudPotential IP Issue: Patents and the Cloud

• Infringement Issues• Infringement Issues

• Divided Infringementg

• Extraterritoriality

• Investigating and proving infringement

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• Divided Infringement and Extraterritoriality• Divided Infringement and Extraterritoriality

• “Ordinarily, whether an infringing activity under section 271(a) occurs within the United States can besection 271(a) occurs within the United States can be determined without difficulty. This case presents an added degree of complexity, however, in that: (1) the “patented invention” is not one single device butthe “patented invention” is not one single device, but rather a system comprising multiple distinct components or a method with multiple distinct steps; p p p ;and (2) the nature of those components or steps permits their function and use to be separated from their physical location ”their physical location.

• RIM v. NTP, 418 F.3d 1282 (Fed. Cir. 2005)

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• Divided Infringement and ExtraterritorialityDivided Infringement and Extraterritoriality

• In RIM, part of the claimed email system was in Canada

• Customers of Blackberry were in the U.S.

F d l Ci it h ld th t “ ” f th t d i• Federal Circuit held that “use” of the system occurred in the U.S. and thus the system/apparatus claims were infringed

• Court held that method/process claims were not infringed as a matter of law

• “a process cannot be used ‘within’ the United States as required by section 271(a) unless each of the steps is performed within this country ”performed within this country.

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• Divided Infringement and ExtraterritorialityDivided Infringement and Extraterritoriality

• In RIM, part of the method was performed by RIM, not customers in the U Scustomers in the U.S.

• Federal Circuit held that there was no “sale”, “offer to sell” “importation” or 271(f)-(g) infringement of thesell , importation , or 271(f)-(g) infringement of the method/process claims as a matter of law

• “RIM's performance of at least some of the recited steps of• RIM s performance of at least some of the recited steps of the asserted method claims as a service for its customers cannot be considered to be selling or offering to sell the invention covered by the asserted method claims. The sale yor offer to sell handheld devices is not, in and of itself, enough. Thus, we conclude as a matter of law that RIM did not sell or offer to sell the invention covered by NTP's method claims within the United States ”method claims within the United States.

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• Divided InfringementDivided Infringement

• “This court therefore holds as a matter of Federal Circuit law that there can only be joint infringement y j gwhen there is an agency relationship between the parties who perform the method steps or when one party is contractually obligated to the other toparty is contractually obligated to the other to perform the steps. “

• Akamai Techs., Inc. v. Limelight Networks, Inc., – F.3dAkamai Techs., Inc. v. Limelight Networks, Inc., F.3d –, 2010 U.S. App. LEXIS 25825 at 13-18 (Fed. Cir. Dec. 20, 2010)

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Potential IP Issue: Patents and the CloudPotential IP Issue: Patents and the Cloud• Patent Portfolio Development - 10 versus 750

• Business Method (Bilski) issues

• “[T]his court also will not presume to define• [T]his court also will not presume to define “abstract” beyond the recognition that this disqualifying characteristic should exhibit itself sodisqualifying characteristic should exhibit itself so manifest as to override the broad statutory categories of eligible subject matter and the statutory context that directs primary attentions on the patentability criteria of the rest of the Patent Act ”Patent Act.– Research Corp. Techs., Inc. v. Microsoft Corp., - F.3d - ,

2010 U.S. App. LEXIS 24984, at 17-18 (Fed. Cir. Dec.2010 U.S. App. LEXIS 24984, at 17 18 (Fed. Cir. Dec. 8, 2010) (internal citations omitted)

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Potential IP Issue: Patents and the CloudPotential IP Issue: Patents and the Cloud• Patent Portfolio Development - Claim Drafting

• “While acknowledging the difficulty of proving infringement of claims that must be infringed by

lti l ti thi t h t d th t hmultiple parties, this court has noted that such concerns ‘can usually be offset by proper claim drafting A patentee can usually structure adrafting. A patentee can usually structure a claim to capture infringement by a single party.’... This court also observes that in p yaddition to initially structuring a claim to capture infringement by a single party, patentees may be bl t t l i th t l b i f i dable to correct a claim that can only be infringed

by multiple parties by seeking a reissue patent.”Akamai 2010 U S App LEXIS 25825 at 23 24– Akamai, 2010 U.S. App. LEXIS 25825 at 23-24

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• 35 U S C § 102(g): Conception/Reduction to• 35 U.S.C. § 102(g): Conception/Reduction to Practice and “Territoriality”

“R d ti t ti i th U it d St t• “Reduction to practice in the United States requires that the invention be embodied in tangible form in the United States, not simply g , p yreported.” Scott v. Koyama, 281 F.3d 1243, 1247 (Fed. Cir. 2002))

• Hypothetical inventors in non-WTO countries using the cloud

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• Investigating infringement• Investigating infringement

• Rule 11 issues

• Proving infringement

• Extraterritorial discovery issues

• Hague convention

• Third party subpoena issues

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Potential Legal IssuesPotential Legal Issues

• Jurisdiction• Jurisdiction

• Where does data actually physically reside?

• Which government(s) and court(s) have jurisdiction over the data?

• Which party has responsibility for the data

• Notice to the data owner of geographical issues

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Potential Legal Issue: I i l D P i LInternational Data Protection Laws

• Borderless-ness issue• Borderless ness issue

• Differing national data protection regimes

• EU Data Protection Directive - Prohibits transferring personal information to countries lacking same level p gof protection for EU residents (e.g., U.S.)

• The Security Rule re Electronic Protected Health• The Security Rule re Electronic Protected Health Information under the federal Health Insurance Portability and Accountability Act (HIPA)

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Potential Legal Issues: Contractual IssuesPotential Legal Issues: Contractual Issues

• Risk Management• Risk Management

• Third party outages

• Security breaches

• Basic service failures– The Dupuis Group, LLC v. Atticus Information Systems, Inc.;

Cloudworks (Jan. 20, 2011 LA County Superior Court)

Fi i l di l ti• Financial dissolutions

• Contractual obligations and bargaining power

• Discovery, regulatory compliance certifications, access and geographical issues

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Potential Legal Issues: DiscoveryPotential Legal Issues: Discovery

• Privilege:• Privilege: – Hybrid Cloud/Surge Computing model

– Waiver issues?Waiver issues?

• Custodian of Documents – cost/burden issuescost/burden issues

• Third party discovery

– Inadvertent production– Inadvertent production

– Relevance issues

– Subpoena response – burdens/obligations– Subpoena response – burdens/obligations

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Potential Legal Issue: e-DiscoveryPotential Legal Issue: e Discovery

• Data in the CloudData in the Cloud

• Preservation of data

• Duties/burdens?

• Contractual issues

• Logistics for access/collecting?Logistics for access/collecting?

• Spoliation risks?

• Location/Extraterritoriality?

• Metadata – FRCP 2622

Other IP Issues – Trade SecretsOther IP Issues Trade Secrets

• “‘Trade secret’ means information that• Trade secret means information … that … is the subject of efforts that are reasonable under the circumstances to reasonable under the circumstances to maintain its secrecy.”

U if T d S t A t § 1(4)• Uniform Trade Secrets Act, § 1(4)

• Third party access issuesThird party access issues

• Hybrid model/surge computing

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Other IP Issues – Trademarks and CopyrightsOther IP Issues Trademarks and Copyrights

• Trademark issues• Trademark issues

• Senior user in a particular geographic p g g pregion?

• Copyright issues• Copyright issues

• Extraterritoriality issuesExtraterritoriality issues

• Proof of infringement

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ConclusionsConclusions

• Cloud computing’s growth is rapid:• Cloud computing s growth is rapid:

• $46B in 2008; $58B in 2009; approx. $ ; $ ; pp$68B in 2010 (per Gartner)

IP i ill (10 750)• IP issues will grow (10 vs. 750)

• Legal issues grow as the sector grows• Legal issues grow as the sector grows

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Q&A and Wrap-UpQ&A and Wrap Up

• Comments from the audience• Comments from the audience

• Q&A• Q&A

• Final words• Final words

THANK YOU!26


THANK YOU

Peter H. Kang, Esq.Sidley Austin LLP (Palo Alto)

k @ [email protected]/kang_peter/


Copyright 2011© Peter H. Kang, Sidley Austin LLP. Notice: The materials presented herein are intended for the educational use and informational purposes of the seminar participants only and are not intended to and do not constitute legal advice. Transmission of the information herein is not intended to create, and receipt does not constitute, an attorney-legal advice. Transmission of the information herein is not intended to create, and receipt does not constitute, an attorneyclient relationship, and these materials are not intended to nor do they create an attorney-client relationship with Sidley Austin LLP. The materials presented are summaries of particular developments in the law and are not intended to be exhaustive discussions. Because of their summary nature, they should not be relied upon in reaching a conclusion in a particular area. The views expressed herein are current, personal views, and should not be attributed to and do not necessarily represent the views of Sidley Austin LLP or any of the Firm’s former, present, or future clients. If you have a particular legal problem, please consult counsel. All rights reserved. [email protected]