Protection of Intellectual Property in Cloud Computing

Cloud computing has been identified as one of the key priorities for chief information officers (CIO) in 2011, which carries on from a trend which has been growing over the past couple of years.

In the next four years Gartner expects 43 percent of companies to have the majority of their IT services on the cloud, or on software-as-as-service platforms, but data security issues remain.

IBM's 2010 Global IT Risk Study found 77 percent of firms believe their data is more difficult to protect on the cloud, with intellectual property being a key concern for those involved in sensitive markets.

The cloud raises a number of interesting questions with regard to intellectual property protection, both in terms of a business protecting its own ideas and the possibilities for unknowingly exploiting those of others, the theories surrounding which have not yet been tested.

Ownership of information

Much of the advice available surrounding the protection of intellectual property within the cloud focuses on creating a strong contract, ensuring a business retains the rights to all data stored within the remote servers.

In the Rights and Responsibilities for Cloud Computing, as created by the Gartner Global IT Council for Cloud Computing, it is stated: "Service consumers should retain ownership of, and the rights to use, their own data.

"The provider must specify what it can do with the consumer's data. Lack of clarity on this point can lead to costly legal battles."

It adds that in the event that the provider can no longer offer the cloud service a provision must be made determining what then occurs with the data.

Clear legislation in this area is something which Brad Smith, senior vice president and general counsel for Microsoft, called for recently.

In a speech published on the company's TechNet blog, Smith said government's must"develop more balanced and predictable rules governing cloud vendors to enhance legal certainty for cloud services."

He also called for legal clarification surrounding the movement of data across borders on the cloud and that legislation becomes "more results-oriented by ensuring that regulatory rules measure compliance against desired outcomes, rather than freezing in time the means by which an outcome is achieved."

Speaking at an industry event in Las Vegas, Nolan Goldberg, a patent and trade secret litigation attorney for Proskauer Rose LLP, recently also warned of the potential for cloud users to unwittingly infringe patents, claiming: "I think IP is going to be a huge barrier to cloud adoption."

He warned businesses could unknowingly use a service which infringes a patent, then find themselves liable for the act, saying this risk is not helped by the current lack of transparency within the cloud, Computer World UK reported.

Cablevision case

Although the case is now a couple of years old, the Cablevision case is seen by many as having important implications for intellectual property within the cloud.

In brief, the case centred around Cablevision's system of allowing consumers to record programmes then store them in a remote server, rather than a hard driver located within a set-top box like other services do.

A number of studios and producers took legal action against the company, arguing the RS-DVR system violated their copyright, as they believe Cablevision was making the copies rather than the customer, breaking exclusive reproduction rights, and then distributing them in violation of public performance rights.

The District Court ruled in favour of the studios, although this was reversed by the second circuit in what has been hailed as having major implications for those involved in cloud computing. The United States Court of Appeal declined to take on the case.

Commentators focused on how the ruling essentially allows for the creation of digital storage lockers where people can store their entertainment content.

James Burger, an attorney at Dow Lohnes PLLC, told Intellectual Property Watch, had the ruling been made against Cablevision, similar claims to those being made by the studios could have then been directed towards all companies storing entertainment content legally obtained by clients in the cloud.

As the use of cloud computing expands, it's likely there’ll be further cases testing how existing regulations surrounding intellectual property and copyright operate in the new landscape.

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First published on Legal IQ