San Jose Business Lawyers Blog

Articles Posted in Start-Ups & Financing

With the United States having an extraordinarily robust economy and the highest level of consumer spending in the world, many non-U.S. resident foreign nationals are justifiably interested in starting a business in the United States, but are not sure whether it is possible or where to begin. Fortunately, it certainly is possible, and in some cases, may even be accomplished without setting foot within the U.S. Below are some of the steps required for a foreign national who is not a U.S. resident to start a business.

Choose the state in which you wish to start your business

One of the first things that non-U.S. residents should understand about starting a business in the U.S. is that each state has its own laws regulating the way businesses are formed, the way they operate, and their tax treatment. While these laws tend to be very similar, there are often significant and nuanced differences that may have a significant impact on your ability to conduct business from overseas as well as your ability to minimize your tax liability.

Choose your business entity

Another aspect of starting a business in the United States of which non-resident aliens should be aware are the multitude of business entities under which one could potentially operate. These options often include the following:

  • Partnerships
  • S-Corporations
  • C-Corporations
  • Limited Liability Companies

These options have significant differences as well as certain advantages and disadvantages of which entrepreneurs should be aware. As a result, it is highly advisable to speak with a lawyer who is familiar with business entity formation in the United States prior to filing any paperwork.

Designate a person or entity as a registered agent

Most jurisdictions require that a business entity have a registered agent in the state. The registered agent acts as the person or party that can accept any official communication directed at the company.

Obtain a Federal Employer Identification Number (EIN)

In order to conduct business in the United States, your company will need to obtain an Employer Identification Number, or EIN, from the Internal Revenue Service. This number will allow your business to open bank accounts and file tax returns within the United States.  In many cases, obtaining an EIN can be complicated for foreign nationals, but there are often several ways in which an attorney can help expedite and streamline the process.

Open a business bank account

In some ways, this can be the most onerous steps of starting a business in the United States from overseas. In many instances, banks require a person wishing to open a bank account to be physically present at the time the bank account is opened, which can be difficult or even impossible for certain people who wish to start a business in the United States. Fortunately, there are often several options that may allow a business owner to operate without a U.S. bank account or open one without the cost and time associated with coming to the United States. An attorney familiar with business formation will be able to advise you as to your options based on your specific situation.

Starting a business in the United States or expanding an existing venture into the U.S. market can be a lucrative endeavor. While certainly possible, there are often many hurdles to overcome, and it can be extremely helpful for foreign nationals to navigate the process of starting a United States business with the help of an attorney. As experienced business formation lawyers, we have the skill and knowledge required to get your business up and running as soon as possible. To discuss your legal matter with one of our lawyers, call Structure Law Group, LLP today at 408-441-7500 or send us an email through our online contact form.

Every new business venture starts as an idea – where many entrepreneurs go off-course is in the implementation and execution of that idea. One of the most important aspects of starting a new business is establishing the business in a way that is compliance with the relevant rules and regulations in your state.

There are many different steps you may need to take to legally form your business to ensure that you comply with relevant laws in California, though the exact steps applicable to you will depend on the nature of your business goals. Consulting with an experienced business attorney can help you make all necessary decisions and ensure that you follow through with every required legal step to start operations on the right foot. Some of the steps that are essential to starting every new business are discussed below.

Choose a business entity

Deciding on a business entity is one of the most important choices an entrepreneur can make. There are many different choices, each with its own implications for taxes, owner liability, and more. Examples of business entities include:

  • Corporation
  • Limited liability company
  • Partnership
  • Sole proprietorship 

There are many considerations in order to choose the type of entity that will allow your particular type of business to thrive the most. Such considerations include the formalities and expenses involved in formation, legal requirements to maintain the business entity, how you will be taxed, levels of personal liability, as well as others. 

Choose a business name

Another highly important decision is what to name your business. The right business name can help or impede your business’s success, as the name affects your branding, customer recognition, and online presence. You must first ensure that the name you choose is available and, if so, an attorney can help you reserve the name and finally officially register the name to you. 

File the required documents

Each type of business entity will require the filing of different types of documents with the state to complete registration. Such documents may include Articles of Organization, Articles of Incorporation, Fictitious Name registration, tax applications, among others. In addition to the documents you must file with the state, you also need to draft operating agreements, bylaws, and other contracts that are needed to help your business run smoothly. 

Obtain any necessary licenses or permits

Depending on the type of business you are starting, you may require a variety of licenses or permits to begin operations. For example, you cannot provide certain professional services without first obtaining licenses to do so and you cannot produce and sell food or similar products without the proper health permits. You never want to risk sanctions for operating without the necessary licenses and permits and an attorney can help make sure you have all of your bases covered and are in compliance with all laws.

Contact Structure Law Group today to discuss your legal needs today

Overall, there are many steps you need to take to legally form your own business. However, after your business is formed, you can begin reaping the benefits of running your own company. At the Structure Law Group, our experienced business attorneys are committed to helping business owners succeed. If you are considering forming a company, call for a consultation at 408-441-7500 today.

According to IT research and advisory firm Gartner, worldwide software revenue totaled $407.3 billion in 2013. More and more players are trying to break into the software market, and the ease of delivery through the Internet has significantly lowered the barrier for entry for many smaller companies. Two of the main ways of delivering software to consumers are (1) licensing the software to the consumer for download on a device and (2) providing it as a subscription service through the cloud. Below is some basic information regarding these two models and the ways in which they differ.

For more information, contact the Structure Law Group to discuss your situation with one of our San Jose business law attorneys.

Software Licensing

When a consumer “purchases” a piece of software, he or she is actually purchasing a license to use the software, as the copyright holder retains ownership and the exclusive right to distribute the software. The software licensing model involves providing a consumer with a copy of the software for use. The software can be delivered via physical media, such as a CD-ROM disk or a USB drive, or for download over the Internet. Typically, the software is installed on a computer’s hard drive and run and operated locally. The software license can allow the consumer to install the software on one or more machines and the software purchase may also include access to services such as hosting or technical support.

The primary concerns involved in a software license, include: licensing rights, typically defined as the right to use a certain number of copies of the software at one or more locations; warranties; indemnification; and, upgrades and maintenance. Typically, these terms are provided by the owner or distributor of the software product. Typically, there is only one, up-front payment for the software program and a periodic maintenance fee for software maintenance (i.e., updates and upgrades).

Software as a Service (SaaS)

The software as a service (“SaaS”) model is different than traditional licensing in many important respects.  Fundamentally, software as a service operates by providing consumers access to software that is hosted “on the cloud,” meaning that it is accessible through an internet connection. The software program is contained on and used from a remote server, not on the subscriber’s hard drive. Generally, SaaS involves an ongoing subscription fee, but does not require consumers to purchase maintenance. These fees vary depending on the software program and the organization subscribing to use it. The provider maintains the software program so that, ideally, each time a user logs on to use a program the user is using the most recent version of the program containing all necessary updates and upgrades. Prominent providers of SaaS include Dropbox (storage), Workday (HR management) and SalesForce (CRM).

With respect to SaaS, the primary concern is access to the software program and maintenance, which terms are typically spelled out in the provider’s Service Level Agreement (“SLA”). In the SLA, the provider agrees to make the software program available to the subscriber without interruption during the subscription period, allowing for a minimal rate of error, and to provide all necessary updates and upgrades. If the subscriber is unable to gain access to the software program because the provider’s system is down for a period longer than that allowed in the SLA, then the provider is responsible for refunding a certain portion of the subscription fee.

Contact a Silicon Valley business attorney today to discuss your legal needs

Whether you are a seasoned software company or an entrepreneur considering bringing a new piece of software to market, sound legal advice is an integral part of your success. The lawyers of the Structure Law Group are skilled and experienced business lawyers who understand the unique needs of businesses that operate in the tech sector. To schedule a consultation with one of our attorneys, please call our office today at 408-441-7500. Prospective clients can also contact our office via email by submitting our online contact form.

When drafted properly, employee handbooks encourage open communication in the workplace, set employee expectations, and shield businesses from the financial burden of legal liability. Here are 3 reasons why your business should have an employee handbook.

3 Reasons Why Your Company Should Have an Employee Handbook

  1. Establish Your Company’s Character

An employee handbook allows you to set the tone of your company. Include language in line with your vision and values and take the opportunity to provide important historical information about your business. Include a code of conduct for your employees so they know what rules to follow and what behavior is unacceptable.

  1. Make Your Policies and Procedures Known

Employee handbooks are the perfect place to house workplace policies and procedures. Workers can reference a specific document for the duration of their employment and avoid miscommunication about expectations.  This will also provide you with protection from liability. Common items to include are safety procedures, attendance requirements, dress code, a social media policy and rules for internet usage on the job.  Be sure to review your employee handbook periodically so that you can add or amend policies and procedures as your business grows.

  1. Disclaimers

Distributing employee handbooks doesn’t just formally welcome employees to the company. When properly drafted, disclaimers contained within the employee handbook can nip potential litigation in the bud.  For instance, if your employees are at-will employees, clearly state that the handbook is not an employment contract.  If a terminated employee later threatens a “wrongful termination” suit, you’ll be in a better position to protect your business as long as the reason for the employee’s termination was legal.  An experienced Silicon Valley employment law attorney can help you draft the best disclaimers for your particular business.

If you have questions about items to include or the importance of employee handbooks, Structure Law Group’s experienced attorneys are on hand to help. Contact us today at 408-441-7500.


About Structure Law Group, LLP

Structure Law Group is a San Jose based law firm that serves its clients’ business, employment and real estate needs, including but not limited to business formations, debt and equity investments, employment agreements and handbooks, commercial leasing and purchases, commercial contracts and related litigation.

When starting a new business, one of the most important decisions that entrepreneurs must make is choosing the type of business entity under which they will operate. Many new businesses form as limited liability companies, or LLCs, as they combine the limited liability offered by corporations with the flexibility and favorable tax treatment of partnerships. The document that governs how an LLC operates is known as its “operating agreement.” While an LLC’s operating agreement does not need to be filed with the Secretary of State, it is still required that every LLC have one and that the document clearly lays out the rights and responsibilities of the company’s members.

It is highly advisable for anyone in the process of forming an LLC to consult with an attorney to ensure their operating agreement accurately represents the intent of the parties it affects and it contains the necessary provisions. Below is some information about a few of the basic issues any LLC’s operating agreement should address.

The LLC’s Ownership Structure – One of the most important issues that should be addressed in an operating agreement is the ownership of the company. Ownership can be determined either by allocating percentages or by issuing “units,” which are similar to stocks issued by a corporation. In the absence of provisions to the contrary, California’s default LLC rules will apply, which may or may not reflect the intent of the people forming the LLC.

Whether the LLC will be Member-Managed or Manager-Managed – Under the default rules, a California LLC is member-managed, meaning that the members of the LLC are responsible for the daily operations of the business. In manager-managed LLCs, on the other hand, management responsibilities are delegated to individuals who may or may not be members of the LLC.

How profits and losses will be distributed – Under California’s default rules, profits and losses are shared equally among the owners, regardless of their ownership percentage. As a result, it is important for any LLC in which the members do not intend to share profits and losses equally to address this issue in the operating agreement.

How the LLC will be dissolved – It is important to address how a business will be wrapped-up if and when that even occurs. In some cases, the certain parties may want to continue in business while others leave or members may wish to divide the assets in a way that differs from their respective ownership interests. Determining how these issues are handled ahead of time can avoid disputes at a later date.

Contact a San Jose startup law firm today to discuss your legal issues

Obtaining informed legal counsel in the early stages of forming a business can often be critical to the success of your project. In addition, making sure that the way that your business operates is defined from the start can often help avoid conflicts and potentially expensive litigation at a later date. The lawyers of the Structure Law Group understand the legal needs of new businesses and are dedicated to providing solution-based legal counsel and representation. To consult with one of our attorneys, call our office today at 408-441-7500 or send us an email through our online contact form.

The term “intellectual property,” or “IP,” refers to intangible property that is the creation of a person’s mind. IP is given certain aspects of property rights by law. One way of looking at IP, is that it is the property right one possesses in information. McCarthy’s Encyclopedia of Intellectual Property defines “intellectual property as “an all-encompassing term used to designate as a group all of the following fields of law: patent, trademark, unfair competition, copyright, trade secret, moral rights, and the right of publicity.” For example, moral rights, also called the right of attribution, require that I attribute the quoted language to its source. Otherwise, I would not only be guilty of plagiarism, but also copyright infringement.


While intangible, intellectual property can be extremely valuable and in some cases may be a company’s sole asset. Some examples of the types of intellectual property that often has significant value include software code, techniques of manufacture, client lists, artistic works, works of authorship and formulas. For example, the Google search-engine algorithm and the recipe for Coca-Cola are each valuable forms of IP, the former being protected by a patent and the latter as a trade secret.

Intellectual property can be legally protected in several ways, including the use of legal instruments such as patents, copyrights, or trademarks. This area of law can be extremely complicated, so it is important for anyone seeking to protect their IP to discuss their options with an experienced attorney.

What to Consider When Licensing Intellectual Property?

Owners of IP, typically the creators or inventors of IP, have the exclusive right to profit from that IP. IP can be used in commercial products with only the right to use the internal IP components. In other cases, the owner of IP will license the IP for others to reproduce and distribute in third-party products. Some common examples of licensing include technology developers who intend to monetize their IP portfolios (e.g., Adobe, Oracle, Microsoft, Google); individual inventors who lack the resources to produce and commercialize a particular product (e.g., inventor of Spider-Man toy with shooting web);  and artists and authors who seek to monetize their works while retaining ownership rights.

Any licensing of intellectual property should take place through the execution of a written licensing agreement, which is a contract that should ideally define both parties’ rights and responsibilities. In a licensing agreement, the party granting the license is referred to as the “licensor,” and the party obtaining the license is referred to as the “licensee.” Some of the terms that should be included in any IP licensing agreement include the following:

  • The scope of the license – The “scope” of a license contains both the grant of a license to do certain things with the IP, such as use, reproduce, distribute, publicly display and publicly perform. That language typical to license agreements derives from the Copyright Act. The second part of the “scope” of a license contains the limitations on the license. Many licensing agreements limit the way in which a particular piece of IP may be used and limit the licensee’s right to resell or reproduce a product. Other limitations may include geography or the number of users.
  • The term of the license – The licensing agreement should clearly state for how long the license will be granted and whether the license is renewable or non-renewable.
  • Retention of ownership – A property drafted licensing agreement grants only a license right and all other rights, title and interest are reserved.
  • The allocation of revenue – A well-drafted license agreement should also outline the way that any revenue that is generated as a result of the license will be allocated. In some cases, the licensee pays a one-time licensing fee while, in others, recurring payments are included in the agreement.
  • Non-disclosure clauses – In many cases, the grant of a license to use intellectual property requires the licensor to disclose confidential information that, if disclosed, could have an impact on the intellectual property’s value. As a result, many licensing agreements contain non-disclosure clauses limiting the licensee’s ability to disclose information related to the IP.
  • Warranties – Licensing agreements may contain both express and implied warranties as well as warranty disclaimers.
  • Indemnification – The licensing agreement should clearly define the rights of indemnification for both the licensor and the licensee.
  • Choice of law – The law governing the licensing agreement will have a major impact on the interpretation and enforcement the agreement.

There are many other considerations that may arise when drafting a licensing agreement, so anyone who is considering licensing their intellectual property should discuss their circumstances with an experience IP licensing attorney as soon as possible.

The attorneys of the Structure Law Group are qualified to handle a broad range of issues related to business law, including intellectual property licensing, entity formation, employment law, mergers & acquisitions, and others. To schedule a consultation with one of our San Jose corporate attorneys, call our office today at 408-441-7500. Prospective clients who wish to send us an email can do so through our online contact form available here.

Last year, California legislators passed the Healthy Workplace Healthy Family Act of 2014, which provided the opportunity to accrue paid time off for sick leave to almost every California employee. The law allows qualifying employees who have worked at least 30 days to begin accrual and to use that sick time after 90 days of employment. The law covers temporary, part-time, and full-time employees with very few exceptions. Such exceptions only apply to certain employees with collective bargaining agreements, some air carrier employees, and in-home providers of supportive services.

Because the new law so widely affects California employers, all business owners should thoroughly familiarize themselves with it to avoid legal disputes or sanctions for noncompliance.

Basic requirements for employer compliance

The following are only some of the steps employers should take to comply with the new law that went into effect on July 1, 2015:

  • Provide adequate notice to employees upon hire of their right to paid sick leave, along with having easy to read posters on the subject in the workplace.
  • Allow employees to accrue at least one hour for every 30 hours worked up to an annual minimum of 24 hours or three full days of work, whichever is more based on an employee’s typical work day. Notify employees of any qualified caps on sick time accrual.
  • Approve reasonable requests to use paid sick time.
  • Regularly issue pay stubs or other documents that clearly state how much paid time off the employee has left.
  • Keep careful records regarding accrual and use for three years.
  • Never discriminate or retaliate against an employee for use of sick time. 

The above is a simplified explanation of employer responsibilities under the new law and every business owner should discuss all of the requirements with an experienced employment law attorney as soon as possible. 

New amendments to the law already passed

On July 13th, Governor Brown signed Assembly Bill 304, which amended certain provisions of the new sick leave law. These changes were effective immediately after signing, so every business owner with employees should be aware of the changes. Here is some brief information regarding some of these amendments:

  • Companies that already had a paid sick leave or PTO policy can be grandfathered in without changing their policies provided the policy meets certain requirements.
  • In order to be eligible for sick time accrual, an employee must work with the same employer for at least 30 days in the past year, while the original version of the law did not specify where the employee had to work.
  • Employers can use different accrual methods as long as the accrual happens at regular intervals and an employee can accrue at least 24 hours of PTO within 120 days.
  • Sick day use can be limited to either one calendar year, year of employment, or 12-month period.
  • Pay rate for sick time will be based on the pay period in which the PTO was used.

Though many employers recently made substantial changes to their sick time policies in preparation for the new law to take effect on July 1st, it is now a good idea to re-examine your policies to ensure compliance with all of the applicable amendments. 

Contact an experienced business and employment attorney for assistance today

When a new law goes into effect that widely affects employers and business owners across the state of California, it is only understandable that you may have questions and need some guidance to ensure that your business complies with the new law and any subsequent amendments. Because employment laws and regulations are constantly changing, it is always a good idea to have the assistance of a skilled business lawyer who can provide valuable advice and help prevent any future legal disputes with employees. If you have questions regarding the new paid sick leave law or any other legal matter, call the San Jose office of the Structure Law Group at 408-441-7500 for help today.

To make your business distinguishable, it’s important to focus on choosing and trademarking a business name early on; this is essential to securing ownership of your new company. Here are 3 steps to choosing the name of your business and protecting it under trademark law.


3 Steps for Trademarking a Business Name


  1. Pick a Name Category

A name has the power to invoke more than an image; it gives customers a feel for your culture, values and personality and provides for designation from where the goods or services originate. Your company name should fall into one of the following 4 categories:

  • Functional/Descriptive: A functional business name reminds consumers what the brand does. It should include more than just description of your trade. A name including your company’s function like, “Caterpillar Construction” tells customers exactly what your specialty is.
  • Invented: An invented company name can be catchy and draw a loyal following like “Google.” It can be fun and exciting, but make sure it accurately represents your brand or it will cause customer confusion. Avoid selecting a name that misrepresents the goods or services with which it is associated.
  • Evocative: Some of the most well-remembered business names evoke strong feelings or memories just by hearing the word (think Yahoo!) If you’re aiming for this kind of trademark, choose a word that’s strong and short for a memorable impact.
  • Experiential: An experiential name gives customers a full experience of the brand. Companies like these focus on selling a lifestyle in addition to a product or service. An example of this name is Magellan, the GPS and mapping service.
  1. Research Trademark Databases

After you decide what you want to communicate via your business name, you’ll have to trademark it to ensure ownership. It’s important to make sure the desired name isn’t the same or too similar from other existing companies.  A name that is too similar to an existing registered mark will be refused by the examining attorney based on being too “confusing” to consumers.  To research potential mark names, start by researching state and federal trademark databases.  If the name you choose is already selected by another company, you will likely have to select a new name.

  1. Register the Trademark

Trademarking a business name can be done in 3 ways. The first is to register the new trademark with the U.S. Patent and Trademark Office (USPTO).  The USPTO reviews trademark applications and determines whether each application meets the requirements necessary for federal registration.  This is the best way to secure the rights to your business name. You can also register by submitting to the state database or using the trademark in connection with selling goods and services.

As you navigate the process of forming your business, it’s important to comply with all state and federal regulations. For help obtaining licenses and permits, seek advice from an experienced attorney. Picking a category of business name, searching the trademark database and legally registering the trademark are all important steps to make when starting a business. For assistance in trademarking your company’s new name, contact your team at Structure Law Group today at 408-441-7500.


About Structure Law Group, LLP

Structure Law Group is a San Jose based law firm that serves its clients’ business, employment and real estate needs, including but not limited to business formations, debt and equity investments, employment agreements, commercial leasing and purchases, commercial contracts and related litigation.

Some of the world’s most successful companies started as partnerships. Microsoft, Apple, McDonald’s, Warner Bros., Ben & Jerry’s, and Google are only some examples of now corporate giants that began with only two people working together to start a business. Unfortunately, many partnerships do not work as well, often because of disputes between the partners. Many of these disputes may be avoided by simply drafting and signing a valid and appropriate partnership agreement at the beginning of operations. An experienced business attorney can help you identify which issues need to be addressed in your particular partnership arrangement.


The law does not require an agreement

Anytime two or more people begin business operations, they automatically have a partnership. Much like a sole proprietorship, a partnership requires no filings with the Secretary of State or other formalities in order to establish the business entity. If you do not have a partnership agreement and a dispute arises, you will have little control over how the dispute is resolved. In cases without an agreement in place, California law will govern the situation and not the wishes of the respective partners, which can be problematic in many cases. For example, California law allows each partner an equal say in the management of the business, as well as an equal share in profits. This would not be fair if one partner contributed substantially more time, effort, or money to the business than the other. Therefore, not only will a partnership agreement help to avoid misunderstandings in the first place, but may also lead to a fairer resolution of any legal issues.


Things to address in a partnership agreement

Once you decide to enact a partnership agreement, you should ensure that all appropriate and necessary provisions are included to fully protect the rights of the partners and avoid future disputes. Some common topics covered include the following:

  • What each partner will contribute
  • How profits, losses, and draws will be allocated
  • Rules for making decisions regarding the business
  • The roles, duties, and authority of each partner
  • How and when new partners can be added
  • What will happen if a partner wants to leave the business or upon the death of a partner
  • How disputes will be resolved

In order to best protect your partnership rights, you always want an agreement that is thoroughly drafted to cover all relevant topics. An experienced business lawyer can evaluate your situation and can draft, negotiate, and review partnership agreements. Please do not hesitate to contact the San Jose office of the Structure Law Group at 408-441-7500 to discuss how we can help you today.

At the end of June 2015, the Supreme Court of the United States (SCOTUS) published several opinions, including the highly-publicized decision that ruled all bans on same-sex marriage unconstitutional. While most of America was focused on the equal rights decision, there were two additional decisions regarding the use and protections of patents and copyrights that may be highly important to business owners and entrepreneurs.

Kimble v. Marvel Enterprises

Owners of patents may license their invention to others to use, to sell, to manufacture with, or to advertise for sale. In return for the license, the patent owner collects royalties. Some patent holders have long-lasting royalty agreements with companies that depend upon the technology to operate.

In 1964, the Supreme Court ruled in Brulotte v. Thys Co. that a patent holder should not be allowed to collect royalties after the patent had expired and that doing so would constitute unlawful misuse of a patent. This caused significant issues in existing royalty and licensing agreements that had to be renegotiated, as well as changed the way licensing agreements were set up in the future.

In the recent case of Kimble v. Marvel Enterprises, Stephen Kimble wanted to collect disputed royalty payments from Marvel for a Spider-man toy he patented in 1990. However, patents expire after 20 years, so both the district and appeals courts found that, under the Brulotte decision, Kimble was not entitled to any royalties since the patent expired in 2010. Kimble appealed, arguing that SCOTUS should overrule its previous decision and allow patent holders to continue to collect royalties after patent expiration. Ultimately, SCOTUS decided that the precedent from Brulotte would stand as Kimble did not present enough justification to overturn it. In particular, Kimble argued that the Court should use a “rule of reason” standard and analyze the anticompetitive effects of royalties following the expiration of a patent on a case-by-case basis. Kimble also argued that Brulotte stifled technological innovation. The Court disagreed on  both accounts, holding that Kimble failed to provide evidence sufficient to overturn longstanding precedent.

Oracle America, Inc. v. Google, Inc.

The second intellectual property case appealed to the Supreme Court involved software licensing. In 2007, Google introduced the new software development kit for Android phones utilizing its own versions of Java applications programming interfaces (APIs). Google did not have a formal license from the maker of Java, Sun Microsystems, to use the Java technologies. When Oracle subsequently purchased Sun Microsystems in 2010, Google and Oracle were unable to reach an agreement after protracted negotiations. Oracle then filed suit for patent and copyright infringement. The issue under appeal was limited to whether Google infringed Oracle’s copyrights in 37 packages of source code contained in the Java API. At trial, the jury brought back a verdict of copyright infringement against Google with respect to the 37 packages, but also determined that Google did not infringe on Oracle’s copyright with respect to eight decompiled security files. The jury deadlocked on the issue of fair use.

The district court set aside the jury’s verdict and determined that the Java API’s were not copyrightable. The district court argued that Google had written its own code under the Java API and that an API method or function itself was not original enough to warrant copyright protection, holding specifically that the expression of the code, which is copyrightable, and the function of the code, which is not copyrightable, had merged.

The Ninth Circuit reversed the district court’s decision, ruling that a “structure, sequence and organization” of an API could be protected by a copyright. Because the code could have been written in multiple ways at the time of its creation, the code is original and unique. The Ninth Circuit’s analysis differentiated between the copyright in the APIs and the infringing uses. Google argued that the code was not unique and it copied the code only because there was no other way to write it. The Ninth Circuit determined that whether the code could have been written in multiple ways is determined from the position of the creator at the time of creation, not the infringer at the time of infringement. Oracle presented sufficient evidence that at its inception the creators of Java had multiple ways to write the code. Second, whether the infringement is defensible, namely because the expression and function of the code had merged, is an affirmative defense and a separate question from whether the code is copyrightable.

The Ninth Circuit reversed the District Court’s decision and remanded the case for determination of the fair use issue. Google appealed to the Supreme Court on the central issue of copyright.

SCOTUS denied certiorari and, therefore, the decision of the Ninth Circuit stands. This is a curious result, because the Ninth Circuit’s opinion explained in detail that the circuit courts are split in their analysis of copyright under 17 USC 102(a) and infringement under 17 USC 102(b). Why the Supreme Court did not take the opportunity to interpret the Copyright Act and put an end to the circuit-split is unclear. Denials of writs of certiorari rarely come with explanations. It is unclear where the denial of review upholds the Ninth Circuit analysis, which clearly spelled out how the courts in the Ninth Circuit will analyze copyright and infringement, or leaves it for the circuit courts to figure out. In short, had this case been held in another circuit court it could have easily resulted in a different opinion, leaving makers of computer code with unclear results depending in which circuit the code is created.

The case will now return to the District Court for a determination of Google’s “fair use” defense. We are sure to see this case again as neither side appears ready to back down.

This is an important decision for any companies or individuals who are in the business of developing software or using third-party development tools embedded in proprietary programs. Prior to development, you should discuss any possible copyright, infringement and licensing issues with an experienced intellectual property attorney. At the Structure Law Group, our skilled IP attorneys regularly assist business these and other types of intellectual property matters. If you need any type of legal assistance with your business, call today at 408-441-7500 for help.