Intellectual Property in the Cloud

As more businesses and organisations weigh up and embrace the stateless world of cloud computing, the legal ramifications of this activity are getting ever more closely scrutinised.

 

Businesses and governments have expressed enthusiasm to embrace cloud computing for a spectrum of reasons – enhanced service offerings, scalability and cost efficiency to name just a few.

 

But cloud – or Software as a Service (SaaS) - does not come without its complexities, as intellectual property legal practitioners and legislators are discovering.

 

The appetite is there. According to a 2009-2010 Microsoft survey measuring attitudes on cloud computing in the United States, 86 percent of business leaders were excited about its potential, but 90 percent voiced concerns about security, access and privacy of data.

However, a majority also believed the US government should establish laws, rules and policies for cloud computing.

 

Computing functions have changed radically in the last 50 years from big mainframes, to disconnected individual PCs 30 years ago, to PCs connected to the internet today. Cloud computing must first and foremost, be understood. 

“You have to start with an understanding of what we mean by cloud computing,” says Jule L. Sigall, Associate General Counsel, Copyright, in Microsoft’s Legal & Corporate Affairs department, where he leads the company’s copyright and trade secrets group.

 

“The main difference between what people are talking about with cloud versus the old world is this notion that the computing functions – the processing and activity - take place in this amorphous distributed place called ‘the cloud.’”

Of all the computing transitions, cloud represents the biggest paradigm shift away from existing delivery models, but it still contains challenges that can be solved through existing legal applications, Sigall says.
What happens to the rules when they’ve been written for a world where things get moved around among computers?

 

“Copyright is built for the distribution and making of copy that gets sent around in the marketplace,” he says.

“Much of the rules are built around that sort of world. The question is what happens when the software - which is protected by copyright - no longer gets scanned onto discs or put into files and downloaded onto individualised computers, and is hosted on the cloud where the functionality can be tapped into by a user remotely?”

 

Those obstacles represent the new legal paradigms in which businesses and governments must now operate – with difficult challenges around sensitive areas such as cross border issues, data protection, rights and usage, privacy and security and overall legal compliance. Transitioning legal precedence in the cloud crosses a variety of other areas.

“Patents, potentially trademarks too, are built for taking an invention and embodying it in a device, or a physical object that people can look at and play with and decide whether it’s infringing or not,” Sigall says. “What happens when the patent is embodied in a cloud-based programme, sitting behind a firewall and a login screen, somewhat out of view?”

 

One of the key differences of the functioning of cloud services is that trademark infringements can happen behind a wall.

 

Because you can put the functioning of the software behind a wall and control the way a user perceives and interacts with that software through an interface, suggests that trademark might become more important in the cloud. “How the user perceives your software is completely dependent on how that user interacts with that interface,” Sigall says.

 

“Will people try to compete by stealing parts of the interface from successful services and, therefore, lead us to ask should trademark law function to protect against unfair competition? 

 

“We don’t really have all the answers now, it does seem like if you’re going to launch a cloud service and monetise your technology in the cloud, you may look at the various IP doctrines differently to protect that investment.”

 

Sigall talks about adjusting various legal dials depending on the service and the investment.

 

Organisations “might be able to turn the dial down on copyright and turn the dial up on trademark” to make sure people don’t steal your interface.

 

“You might not have to worry about illegal copies of your software, as there are no copies - you’re in control in a pretty comprehensive way, so your piracy copyright realm can be turned down a bit.

 

“On patent: you can put important stuff you’ve built into the service away from everyone,” but the dial may be turned up on trade secrets as an IP doctrine.

 

Smaller software companies may be perceived to have the least clout in the cloud, but Sigall believes they have much to gain from its services, with cheaper computing functionality and variable offerings on a pay-as-you-use basis. “It’s much easier for services to launch on the cloud than it has been, there’s so much variation of what you can get access to, which will generally cut costs for a startup.”

 

But he adds that some form of IP and legal protection should be devised to allow these companies to recoup their investments and protect them against illicit and unfair competition from others.

 

Into those grey areas of legal doctrine, which small organisations dare not step, larger cloud operators have begun to design, through enhanced competition in the mobile arena, their own IP ecosystems.

“We’re seeing glimpses of it in cloud-based mobile services and apps stores that are being developed,” says Sigall.

“Windows Phone has one, Apple has one for the iPhone, Google has one for Android – we’re seeing companies creating entire IP ecosystems in apps stores where people are given the tools to develop copyrighted material.” Sigall says virtual IP systems will continue to develop, where the rules are built into the platform that decides who really has the right to put out an app and where someone might have to change their app to accommodate and respect the right.

 

He says: “You can have trademark law applied there, you can have copyright law, trademark law, patent law, open source related issues between apps, all played out in these ecosystems they are building.

“In many respects the space is so dynamic and fast moving, that developers who are really entrenched in this world will need an IP system that works for them.”

 

But are current laws relevant?