There is no singular, national privacy or data security law or standard in the United States. Rather, privacy and data security in the U.S. is governed by hundreds of laws as well as numerous policies and procedures enacted by big tech and various financial and health care institutions.

Among the most active states in the area of privacy is California, with more than two dozen privacy and data security laws on the books (with more incoming). As is often the case, where California leads, the nation follows.

Where We Are At

The California Consumer Privacy Act of 2018 (CCPA), went it effect on January 1, 2020. Essentially, this law established three fundamental rights for residents of California and how businesses handle their personal and private information. Companies that fail to comply with CCPA can be fined by the California Attorney General.

Under CCPA, Californians have the right . . .  

• To learn what information companies have collected about them, the category of companies they’ve disclosed it to, and/or where the information was obtained;
• To demand that companies delete their information (in most circumstances);
• To restrict companies from selling their information.  

While the CCPA technically covers only people living in California, a number of companies across the country have elected to operate under these standards nationwide. Similarly, other states are using the CCPA as a guide for enacting their own legislation, much like the CCPA used the European Union’s General Data Protection Regulation (GDPR) as a guide.

What We’ll Be Focused on in 2022

In November 2020, California voters passed Proposition 24, the California Privacy Rights Act (CPRA) of 2020), which will go into effect January 1, 2023. This new law will replace and amend certain portions of the CCPA.

Highlights include:

• Establishment of the California Privacy Protection Agency to implement and enforce the new law. Specifics are few on exactly how the agency will operate and what its authority will be compared to the Attorney General’s office. However, we do know that, per the CPRA, the agency will be governed by “a five-member board, including the chairperson” and that “the chairperson and one member of the board shall be appointed by the Governor. The Attorney General, Senate Rules Committee, and Speaker of the Assembly shall each appoint one member.”
• The CPRA also adds and defines a new category of consumer information it calls “sensitive personal information.” Due to the sensitive nature of this data, the CPRA will require companies to employ greater levels of data protection and will restrict what companies can do with it.
• Many of the consumer privacy rights originally codified under CCPA are expanded by the CPRA, including not only the right to opt-out of third-party sales of your data but also the right to opt out of the sharing of your data; extending the window covered by right-to-know requests; extending the scope of right-to-delete requests to include third parties who bought or received the consumer’s data; offering additional ways for consumers to have their data transferred to others; and further clarifying conditions which must be met when dealing with the personal data of individuals under 16 years of age.
• CPRA also creates several new consumer rights, namely the right of consumers to request companies correct inaccurate personal information, the right to restrict the use and disclosure of their “sensitive personal information” in certain circumstances, and rights to learn about a company’ automated decision-making processes (such as consumer profiling) and to opt-out of such processes.
• The CPRA also changes the definition that determines which businesses need to comply with the law based on the volume of data a company buys, sells, or shares and the percent of its revenue that is derives by selling or sharing consumer data. Under the new definition, some businesses (especially small- to medium-sized businesses) may no longer be covered by CPRA, while others might now be.
• The CPRA expands the definition of personal information that can be actionable under the law if a business’s failure to implement reasonable security procedures and practices results in their personal information being exposed to hackers.
• The CPRA also makes law several elements found in the GDPR, specifically around data minimization, purpose limitation, and storage limitation. Under CPRA, businesses must reasonably limit the personal information it collects to only what is necessary to achieve the purpose for which it is collected in the first place and retain that personal information for the least amount of time necessary to fulfill the purpose for which it was collected.

What It Means for You

“Many California residents and companies doing business in California will rightfully be paying close attention to how the CPRA gets implemented and how it will impact them once it goes into effect,” explains Eric Ludwig, whose California-based law firm, Ludwig APC, specializes in intellectual property, data privacy matters, and business litigation around the globe. “Companies will need to carefully consider where they are today in terms of complying with the existing CCPA and where they’ll need to be 12 months from now under CPRA . . . and create a roadmap to get them there.”

A good first step, says Ludwig, is to begin working with certified privacy experts, such as Ludwig APC, to explore various options and approaches to ensure compliance with the new law.

Protect Your Product. Your Business. Your Privacy. Your Dreams.

Contact Eric Ludwig today for a free, one-hour consultation to discuss how your company can develop a proactive ransomware strategy.
(619) 929-0873 | consultation@ludwigiplaw.com

Define and Assign Inventor Rights Ahead of Time

In business and in life, there’s really no way to prevent a motivated adversary from trying to do you harm. Plain and simple, if someone wants to create a stir, he or she can do so by leveling claims and accusations, whether warranted or not.

Of course, “trying” to do harm and actually “doing” harm are two entirely different things. Smart business leaders take steps to protect their organizations through preventive measures, such as agreements that govern certain rights and responsibilities among parties. This often precludes situations from ever arising because parties to an agreement or a relationship know the “rules” ahead of time.

Should a situation arise, prudent business leaders also do their due diligence to refute any claims against them through expert research, fact-finding, and qualified legal representation. They know they while they can’t stop frivolous or inflammatory actions by others, they can beat those claims if the facts and the law are on their side.

When the Unthinkable Happens

In an earlier blog, How You Can Avoid the Nightmare of a Rogue Employee Stealing Your IP and Trade Secrets, we explored how one rogue employee quit and proceeded to cause major headaches for the former employer. In this case, written agreements were in place to document the nature of the company and the employee’s relationship, including a clear delineation of intellectual property and inventor rights and how they were assigned to the company. However, that didn’t stop said employee from stealing the company’s intellectual property and trade secrets upon exit while also blocking access to the company’s business and inventory systems, including company email.

“In the past couple of months, there have been significant developments in this ongoing situation,” explains Eric Ludwig, whose California-based law firm, Ludwig APC, represents the company in this matter. “The former employee retaliated by filing an application for a temporary restraining order (TRO) and preliminary injunction against the company from transferring any rights under any patents in question. From the outset, it was obvious to us, our client, and ultimately the judge, that the plaintiff had no standing in the matter, but that didn’t stop this disgruntled employee from making life difficult for our client, which was probably the chief motivation for this action all along.”

The TRO proved meritless, but that didn’t mean the company didn’t have to expend a lot of time, energy, and resources countering the claim.

“Temporary restraining orders are quite common in the intellectual property space, especially around inventors seeking to exert their rights as patent owners/inventors even though they have assigned those rights to their employers, or in this case former employer,” says Ludwig. “With our client, proper agreements were in place, so it was more of a scenario where someone had a desire to cause harm. Our approach was to put the complainant through the paces by presenting clear, irrefutable facts, which the judge agreed with.”

Whose Patent is It?

While companies cannot register as patent owners or inventors, they can be assigned patent rights to an invention. This is done when employees and independent contractors sign pre-invention assignment agreements with their employers. Essentially, these agreements set the stage for employees/independent contractors to transfer their invention rights—anything they conceive or develop—to their companies as a condition of their employment. To avoid gray areas, such as what happens when inventions are conceived after employees/independent contractors are no longer employed by a company, it’s critical that assignment agreements be as clear cut and specific as possible so that all parties protect their rights.

“In seeking a TRO, our rogue employee was attempting to backtrack and exert ownership rights that didn’t exist over a particular invention,” explains Ludwig. “Fortunately, the agreement in place was quite clear about what was covered and the time frame involved. As a result, we were able to expedite the proceedings and achieve a clear-cut, favorable ruling.”  

Get it In Writing

The need for pre-invention assignment agreements to be properly written and in place with employees and independent contractors is critical so companies can gain assignment rights for their research and development efforts and the inventions they fund.  

“As with most legal instruments, the devil is in the details,” says Ludwig. “Intellectual property law is complex and constantly changing. Litigation around IP issues is usually very time consuming and painstaking. It’s not something companies can take on themselves and find success. We strongly recommend companies retain law firms well-versed in business litigation and IP matters, like Ludwig APC, to help them properly prepare for and manage their high-risk, high-reward IP issues. Working with a firm like Ludwig APC can save companies major legal costs and avert undue stress.”

Protect Your Product. Your Business. Your Privacy. Your Dreams.

Contact Eric Ludwig today for a one-hour consultation to discuss your unique copyright, patent, trademark, business litigation, or other intellectual property issues.

(619) 929-0873 | consultation@ludwigiplaw.com

The shift from an economy based mainly on physical or “tangible” assets to one where the majority of economic value is derived from “intangible” assets has been a long time coming, a transition that was intensified by the coronavirus pandemic which saw companies spend big on remote and virtual ways of doing business.

The numbers paint a convincing picture of what amounts to a 40-year transition. According to the 2019 Intangible Assets Financial Statement Impact Comparison Report from the Ponemon Institute, a Michigan-based, independent research firm, the value of intangible assets has skyrocketed during this period as a percentage of the overall value of the S&P 500.

• In 1975, 17% of the S&P 500’s then overall value of $715 billion was attributed to intangible assets.
• By 1985, intangibles accounted for some 32% of the S&P 500 value, while the figure rose to 68% by 1995. 
• In 2018, 84% of the S&P 500’s overall value of $25 trillion came from intangible assets.

“The 84% figure might actually be a little low today,” explains Eric Ludwig, whose California-based law firm, Ludwig APC, specializes in intellectual property, data privacy matters, and business litigation around the globe. “Throughout the pandemic, many businesses that relied primarily on physical assets, such as those in the hospitality and travel sectors, lost significant value, while companies active in digital and virtual market spaces did quite well . . . and continue to do so.”

Bricks and Mortar a Thing of the Past?

Clearly, the days of companies deriving most of their value from bricks and mortar assets such as buildings, land, vehicles, equipment, and concrete financial assets such as stocks, bonds, account receivables, and cash are in the rearview. Nowadays, non-physical assets that represent potential revenue are what comprise a company’s greatest value. These intangible assets include patents, copyrights, trademarks, trade secrets, know-how, goodwill, brand reputation, market influence, agreements with other businesses, human capital, non-competes, customer and vendor relationships, public rights, software, and client/vendor databases.

Think of top tier companies like Apple, Alphabet (Google’s parent), Microsoft, and Amazon. Now contrast them with the likes of Exxon, IBM, Mobil, and GE. Given the makeup of today’s marketplace, where intangible assets rule, it’s easy to see why today’s leading companies are the most valuable while those who have traditionally derived value from physical assets, manufacturing, and refinement processes are now what could best be described as belonging to a “second tier” of companies.

Protecting What’s Important

With so much riding on intangibles, more than ever companies must find ways to protect their assets. But unlike physical assets, intangibles can be difficult to value. They’re also difficult to insure. After all, just how do you go about placing a value on goodwill or brand reputation? Similarly, how do you insure something that’s intangible against intellectual property infringement?

First, it is possible to place monetary value on intangible assets—possible, but not easy. As you might suspect, opinions abound on the best approach, and none are an exact science.

• For example, one method is to subtract a firm’s book value from its market value to establish the overall value of its intangibles.
• Another is to determine the fair value of an intangible asset by estimating what it would cost to replace it with a similar intangible asset.

What almost all experts can agree on is the need for companies to work with external business asset evaluators to properly gauge value.

Protecting a company’s interest in its intangible assets is far more straightforward, at least for a subset of them that includes trademarks, patents, copyrights, and trade secrets. Registering these intangibles as intellectual property is commonplace. Doing so gives you greater standing in lawsuits should someone infringe on your rights or claim you’re infringing on theirs.

For other intangibles not covered by traditional intellectual property registration, protection often comes in the form of contract terms and insurance coverage (yes, they make insurance for that!). The types of intangibles covered by contract language and insurance include things like customer relationships, goodwill, employees and their know-how, and brand recognition.

• Companies can protect themselves and seek protection from others by including clauses in their contracts to indemnify them from infringement up to certain monetary levels (often in the millions of dollars) or entitle them to compensation from the other party should they infringe.   
• Intellectual property insurance is another option. For policyholders, it covers legal costs associated with pursuing intellectual property infringement or theft, plus legal costs for defending against accusations of infringement or theft.

Next Steps

“For the foreseeable future, or at least until the next big ‘revolution’ in business comes our way, the most successful companies will be those whose leaders are best able to adapt their business models to thrive within this new digital, intangible asset paradigm,” says Ludwig. “It’s an exciting time, but it won’t be easy. Globalization, the advent of sophisticated technologies, and the growth of remote workforces make many great things possible for today’s companies, but they also add numerous layers of complexity. We recommend companies work with intellectual property and business litigation experts such as Ludwig APC to explore various options and approaches for protecting their interests.”

Protect Your Product. Your Business. Your Privacy. Your Dreams.

Contact Eric Ludwig today for a free, one-hour consultation to discuss how your company can develop a strategy to protect both your tangible and intangible assets.
(619) 929-0873 | consultation@ludwigiplaw.com

All other things being equal, your intellectual property may be the one thing that gives you an advantage of competitors. As such, what are you doing to ensure IP is an important part of your business strategy?

Intellectual property is present in every business. IP includes patents (representing innovation) and trade secrets (representing valuable confidential information), plus trademarks (representing your brand in the marketplace) and copyright (representing the creative expression of your brand).

IP comprises your company’s capacity to get things done, from the internal know-how of staff to the external products and services you offer in the marketplace. Successful companies are often those best able to leverage their IP to achieve short-, medium-, and long-term goals.

IP as a Business Strategy

When a company embraces an IP-driven market strategy, they do so to ensure their company remains at the forefront of innovation. Why is that important? In a recent GE study of 1,000 senior business executives from 12 countries, 95% of respondents rated innovation as the top factor driving competition.

Thus, innovation and intellectual property go hand-in-hand. Innovation is makes it possible for companies to continuously develop new ideas for products and services, which promotes greater employee job satisfaction, and encourages teamwork. Ultimately, this is what allows organizations to develop competitive advantages in the marketplace through the introduction of new IP.

Implementing an IP Strategy

One of the first steps for implementing an IP strategy is to conduct an IP INVENTORY of your company’s existing assets:

Patents

• Existing patents
• Pending applications
• Technology suitable for patent protection
• Duration/life of the IP

Trademarks

• Existing trademarks, service marks, or tradenames
• Existing registrations
• Pending applications

Copyrights

• Existing content and creative expression
• Art, photos, text, music, video, software code, etc.
• Existing/pending registrations
• Duration/life of the IP

Trade Secrets

• Existing confidential information that’s of value
• Historic and current measures to maintain secrecy

Next up is IDENTIFYING BARRIERS. What IP rights do other parties have that pose a challenge to bringing your product to market?

• Existing or related patents
• Similar trademarks or brands
• Protected content.

Once that’s done, you’ll want to assess what MIX OF IP is necessary for success? What are the right ingredients for your company?

• Some IP arises automatically from the day-to-day of doing business, such as copyrights and trademarks
• Some IP requires conscious designation by your company, such as trade secrets and maintaining confidentiality.
• Some IP requires government license, such as patents.

LONGEVITY OF THE IP also plays a key role because different forms of IP enjoy different lifespans. What is the life of your IP? For example, is it 20 Years (for patents) or life of the author plus 70 years (for copyrights)?

Perhaps most importantly, as you embark on an IP strategy, how will your company ACQUIRE AND MAINTAIN YOUR IP?

• Through innovation: your plan is to develop technology, methods, and content internally
• By license: you plan to partner with others for new or supplemental technology, methods, and content and license out what you have, license in what you need, and give away rights for long-term strategic reasons.
• Via litigation: you will be aggressive protecting your IP by using litigation to keep competitors and infringement in check.

Nature of Your IP Strategy

There are generally two approaches to implementing an IP strategy. You can be inclusive by involving others and fostering open innovation, or you can be exclusive and highly protective, which tends to cripple innovation. Given how senior business executives view innovation (see above), it’s plain to see that inclusive strategies tend to fall into the category of best practices.

To foster a collaborative environment when it comes to IP, these days many companies focus on the concept of open intellectual property , which presumes that when companies cooperate with technology transfer and the sharing and exchange of knowledge—all in pursuit of developing something new and patentable—everyone wins. It’s a complete 180 from traditional IP development where companies developed their products and technologies in secret.

Which is right for you, an open approach rather than restrictive? Total exclusion? Limited exclusion? Partial transfer of rights? Open and free access? What forms of IP might be available from third parties or in the public domain?

Seek Expert Advice

Before settling on an IP strategy for your company, know that IP Strategies tend to be high-risk, high-reward. As such, you must “come to the party” well-prepared, willing to spend time and money, and remain flexible.

“Intellectual property rights and laws are complex and everchanging, especially with the global nature of today’s marketplace,” explains Eric Ludwig, whose California-based law firm, Ludwig APC, specializes in IP, privacy matters, and business litigation around the globe. “We recommend companies that are considering IP strategies to differentiate themselves in the marketplace work with experts like us to explore the various options and approaches that might be right for their business goals.”

Protect Your Product. Your Business. Your Privacy. Your Dreams. Contact Eric Ludwig today for a free, one-hour consultation to discuss how to develop an intellectual property strategy for your business.
(619) 929-0873 | consultation@ludwigiplaw.com