June, 2013: 4A's Patent Guidance Recommendation: Digital Functions, Patent Liability and the "Wayback Machine"
Monday, June 3, 2013 at 10:34AM The digital marketing landscape involves the development and use of software and software tools that may correlate or appear to correlate with patents that might be asserted by a patent holder.
Currently, the predominant industry operating model is for marketers to require control and rights to monetize agency developed work product; including digital, web and mobile functions. Given a client’s ability to ubiquitously use, control and repurpose agency work product beyond the initial agency developed executions, it is not surprising that the vast majority of patent assertion “troll” activity is targeted to marketers.
Marketers recognize that their control and monetization of digital functions entails the risk of potential patent assertions. Most marketers recognize the need to fully indemnify the agency and assume patent risk. However, due to the unpredictable nature of patent assertion entity activities, the agency-marketer ecosystem is being forced into a debate over indemnification responsibilities related to patent assertions.
4A's Guidance
Recent agency experiences with patent assertion matters have led the 4A's to a few patent guidance recommendations for agencies.
1) Agency responsibility for patent liability, if any, should require proportional and equitable sharing of costs, as well as time and use limitations.
The 4A's recommends that agencies should not indemnify clients for patent claims. However, in light of the uncertainties of the current patent landscape and in very limited circumstances related to the breadth and nature of a unique client relationship, if an agency decides to contribute to settlement of a patent infringement claim the agency should limit its contribution to an equitable and proportional share of the reasonable settlement cost, and the agency should further limit its contribution to settle patent assertions arising solely from use, prior to the receipt of the claim, of work product developed and produced entirely by the agency for specific client properties, and then only for a specific period of time and with respect to specified uses.
2) Document client's pre-existing digital features and functions
The 4A's recommends that agencies document the digital features and functions that each client has been using prior to beginning work so that if/when a patent assertion occurs the agency can determine and document when the client initiated use of the allegedly infringing function.
For more details, download the 4A's Patent Guidance Recommendation.
Guidance Summary
The 4A's recommends that agencies document client uses of digital functions before an engagement begins and structure any responsibility for patent-related costs (if any is to be assumed) based on equitable and proportional risk sharing that is based on the nature of the project in question with defined time and use limitations.
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Postscript: 4A's Patent Guidance and Information
4A's Patent Guidance
The purpose of this 4A's Patent Guidance Recommendation (the third of three patent guidance directives issued by the 4A's) is to alert 4A's members to the risks presented by patent infringement claims and to recommend changes to agency-client agreements to manage these risks.
Previous 4A's patent guidance can be accessed via the two links provided below:
- 4A's Agency Patent Risk Guidance | Indemnification and Limitations on Liability
- 4A's Guidance | Patent Infringement Risk Management
4A's Patent Information
The patent section of the 4A's website (The 4A's Patent Website) is an excellent source of marketing related patent information. The association urges members to monitor the 4A's patent website for patent information updates.
An example of recently posted relevant information that is available on the 4A's patent website is the Congressional Research Service's "Overview of the Patent Troll Debate". The report contains a good framework on the PAE problem and interesting discussion of possible patent regulation modification options. The CSR report is an excellent tool to use when discussing patent dynamics with clients. The CSR report Congressional Research Services: An Overview of the "Patent Trolls" Debate is available in the patent section of the 4A's website.