The IP Beacon, March 2015

03/17/2015

The IP Beacon is a Haynes and Boone Newsletter highlighting current issues in Intellectual Property Law. Articles featured in the March 2015 issue include:

CFAA Claims by Software Vendors for Unauthorized Access to Their Licensed Software on Their Clients' Computers

Can a software vendor assert a Computer Fraud and Abuse Act ("CFAA," 18 U.S.C. § 1030) claim against a third-party end-user for unauthorized access to the vendor's licensed software operating on the vendor's client's computers? In other words, does the vendor have a viable CFAA claim if it does not own the accessed computers, but access nonetheless violates the terms of the vendor's software license agreement? The cases discussed in this article show that such a claim might stand provided that the client did not authorize the access. This question is of import to software vendors who stand to lose revenue from the unauthorized use of their licensed products. This problem is especially significant when the licensed software is used by third-parties, as in the case of an Internet application accessible to a broad public for a fee, as this first case illustrates.

Target Consumer Class Action Survives Motion to Dismiss

Consumers that filed a class action against Target Corporation following the company's 2013 payment card breach have survived a motion to dismiss. The ruling - announced just before the holidays - comes on the heels of the court's decision allowing payment card issuing banks to proceed with their claims against Target and is a significant development in an issue frequently presented to federal courts regarding when and how data breach plaintiffs can plausibly plead facts that establish injury-in-fact giving rise to standing.

A "Crumby" Decision Confuses Trademark Law for Rejected Licenses in Chapter 11 Cases

A recent decision by a New Jersey bankruptcy court scrambles the law regarding rejected trademark licenses. Crumbs was a multi-location bakery that also licensed its trademarks and trade secrets to third parties. In July of 2014 Crumbs filed a Chapter 11 reorganization case and in August of 2014 the court entered an order selling substantially all of the assets of Crumbs to LFAC free and clear of liens, claims, encumbrances, and interests. LFAC did not purchase the licenses, which were initially to be rejected by Crumbs pursuant to § 365 of the Bankruptcy Code. When it was asserted that the licensees could elect to retain their rights under § 365(n), Crumbs withdrew the rejection, but the parties sought a determination by the court of their respective rights.

Fifth Circuit Finds Insurance Coverage for Copyright Infringement under CGL Policies

The Fifth Circuit Court of Appeals has determined that houses built based on infringing designs constitute an "advertisement" as that term was defined under Commercial General Liability ("CGL") policies issued by Mid-Continent Casualty Company and the policies therefore provide coverage for the copyright infringement. See Mid-Continent Cas. Co. v. Kipp Flores Architects, L.L.C., No. 14-50649 (5th Cir. filed Feb. 26, 2015).


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