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PRK Legal Updates

New Legislation On Unemployment Insurance Requested By ESD

New changes to the unemployment insurance system could mean additional unemployment insurance taxes and expanded reporting requirements for employers and business owners in Washington.

The scope of persons covered by the law has been expanded. Previously, unemployment insurance for business owners and officers was not automatic. These individuals had to explicitly opt in and pay the unemployment insurance tax in order to obtain coverage. With the passage of Senate Bill 5373, employee-owners and officers are automatically covered and thus must pay the unemployment insurance tax unless they are eligible to opt out and explicitly do so.

Limited types of individuals are allowed to opt out of coverage. Certain officers of a public company, up to eight officers of private corporations, or any officers if all of the officers of a family owned company are related by blood within the third degree of marriage may opt out of unemployment insurance coverage. Officers of private corporations must exercise substantial control in the management of the corporation to be eligible to opt out. For public companies, the officers must have substantial control in management, must be a shareholder of the corporation, and their primary responsibilities must not include manual labor.

In addition, reporting requirements have been expanded. Employers (which, though broadly defined, exclude corporations where all personal services are performed only by bona fide corporate officers) must now report the social security numbers of their employees along with the employee’s full name and the total hours worked by each worker. The employer must also report the names, social security numbers, mailing addresses and telephone numbers of each owner, partner, member or corporate officer. The reporting requirement is even more rigorous for corporations; which require reports on the ownership interests of all corporate officers (in categories of 0%, less than 10% or more than 10%). Furthermore, corporations must report any changes in the percentage of each officer’s interests. The failure to comply with these reporting requirements could result in penalties.

This new legislation was requested by the Employment Security Division to combat abuses of the system, according to Jill Will, the legislative liaison at ESD. The previous system provided incentives for companies to classify most of their employees as “officers” in order to avoid paying ESD tax. After termination, many of those “officers” who were previously exempt would then claim coverage even if their companies failed to pay the tax. ESD claims the new system and reporting requirements allow ESD to identify each employee, track their election and payment of taxes, and avoid further abuses of the system.

You can find a full text of the changes at

http://www.leg.wa.gov/pub/billinfo/2007-08/Pdf/Bills/Session%20Law%202007/5373-S.SL.pdf

and an official summary of the changes at

http://www.leg.wa.gov/pub/billinfo/2007-08/Pdf/Bill%20Reports/Senate%20Final/5373-S.FBR.pdf.

New Washington Law Prohibits Employment Discrimination Against Veterans

Employers in Washington State should make themselves aware of a new law, passed by the Legislature and signed into law by Governor Gregoire in May, which protects veterans from discrimination in employment, housing, and public accommodations. The new protections added to the Washington Law Against Discrimination (WLAD) give the Washington State Human Rights Commission (WSHRC) jurisdiction over discrimination based on "honorably discharged veteran or military status." The WLAD applies to any employer of eight or more persons in the State of Washington. Prior to the new law, the WLAD prohibited discrimination on the basis of race, color, creed, national origin, sex, sexual orientation, including gender expression/ identity, marital status, age (over 40), the presence of any sensory, mental, or physical disability, the use of a trained dog guide or service animal by a person with a disability, retaliation for opposing an unfair practice, filing a whistleblower complaint with the Washington State Auditor, or filing a nursing home abuse complaint. The new law adds "honorably discharged veteran or military status" to the list of bases upon which employers may not discriminate in employment, including hiring, job conditions, pay, benefits, or termination.

With the large number of veterans returning from Iraq, Afghanistan, and other places where the American military serve, the Legislature felt it important to protect their rights to jobs, places to live, and services. The WLAD already protects many veterans on the basis of disability: some returning veterans from Iraq and Afghanistan have head or brain injuries or post-traumatic stress disorder, and employers cannot discriminate against these individuals on the basis of such disabilities. Until now, however, other veterans returning home from Iraq and Afghanistan were not specifically protected from discrimination under the WLAD. According to the WSHRC, the new law is intended to address those unscrupulous employers, housing providers, and public accommodations that have harmful, preconceived, and stereotyped notions about veterans and people serving in the military.

Senate Bill 5123, signed by the Governor on April 21, 2007, will become effective on July 21, 2007.

Two US Supreme Court Rulings Yesterday Were Favorable For Defendants In Patent Law Suits

Microsoft Corp. v AT&T Corp

Sending Master Copies of Software Abroad For Copying

In Microsoft Corp. v. AT&T Corp1 the US Supreme Court held that Microsoft did not infringe a US patent when it supplied master software abroad that was copied and loaded onto computers by foreign manufacturers, thereby resulting in an allegedly infringing computer. More specifically, AT&T alleged that under a Section 271(f) of the US Patent Act, Microsoft should be liable for infringing AT&T’s US patent directed toward a computer used to encode and compress recorded speech when Microsoft provided master software to foreign manufacturers that was copied then installed on computers, thereby resulting in an apparatus that would infringe under US law. The copying and installation occurred outside the United States, however, Section 271(f) refers to liability under US law for actively inducing such combining of components overseas under specific circumstances.

Section 271(f) of the US Patent Act provides, in part, that a party infringes a US patent when it “supplies [abroad]… from the United States… a substantial portion of the components” to be combined abroad in a manner that would infringe a US patent if the combination occurred domestically, provided that the party does so “in such manner as to actively induce the combination…outside of the United States.” However, in the present case, the Supreme Court held that since Microsoft did not supply the copies of software installed by the foreign manufactures, but instead, only the master, Microsoft did not supply the “components” and therefore did not infringe under Section 271(f).2

The court asked “Does Microsoft's liability extend to computers made in another country when loaded with Windows software copied abroad from a master disk or electronic transmission dispatched by Microsoft from the United States?” and responded to its own inquiry with “Our answer is ‘No.’”3

Perhaps it is reasonable say that providing a master copy of software is like providing a “blueprint” (as alluded to in the Supreme Court opinion) of the components, and not the components themselves, which is not sufficient to support infringement under Section 271(f).

KSR International Co. v. Teleflex, Inc.

Patent Invalidity Based on Obviousness

In KSR International Co. v. Teleflex, Inc.4,Teleflex had sued KSR for patent infringement, asserting that KSR's pedal system for a truck infringed a patent for which Telefex was the exclusive licensee. KSR countered that the asserted claim of the patent was invalid under Section 103 of the Patent Act, for being obvious at the time the invention was made. KSR obtained a favorable judgment of invalidity, which was reversed at the appellate court level, and eventually reached the Supreme Court. The Supreme Court found in KSR’s favor again yesterday.

Among the significant questions addressed by the US Supreme Court on appeal by KSR was whether the lower appellate court, the Federal Circuit Court of Appeals, had appropriately applied a strict “TSM” (teaching, suggestion, motivation) test when determining whether a combination patent is obvious, and therefore invalid. The case law of the Court of Appeals has attempted to provide a more predictable test for obviousness (an inherently subjective question) in applying the TSM test rigidly. The TSM test requires one seeking to invalidate a patent based on an assertion of obviousness to provide evidence of prior art teaching, suggestion or motivation to make the combination at the time of the invention. The Supreme Court noted that although it considered the test helpful, such tests “need not become rigid and mandatory formulas. If it is so applied, the TSM test is incompatible with this Court's precedents.” Rigid application of the TSM test is arguably favorable to patent holders by creating obstacles in invalidating patents based on obviousness. Without explicitly holding so, the Supreme Court appeared to support a more flexible approach to determinations of obviousness, such that efforts to make the analysis more predictable may be said to remain elusive.

1 Microsoft Corp. v. AT&T Corp, 2007 U.S. LEXIS 4744 (U.S.. 2007).

2 2007 U.S. LEXIS 4744, 3.

3 2007 U.S. LEXIS 4744, 11.

4 KSR International Co. v. Teleflex, Inc. 2007 U.S. LEXIS 4745 (U.S. 2007)

	Value Service Commitment News & Announcements Articles & Updates Seminars & Workshops		PRK Legal Updates New Legislation On Unemployment Insurance Requested By ESD New changes to the unemployment insurance system could mean additional unemployment insurance taxes and expanded reporting requirements for employers and business owners in Washington. The scope of persons covered by the law has been expanded. Previously, unemployment insurance for business owners and officers was not automatic. These individuals had to explicitly opt in and pay the unemployment insurance tax in order to obtain coverage. With the passage of Senate Bill 5373, employee-owners and officers are automatically covered and thus must pay the unemployment insurance tax unless they are eligible to opt out and explicitly do so. Limited types of individuals are allowed to opt out of coverage. Certain officers of a public company, up to eight officers of private corporations, or any officers if all of the officers of a family owned company are related by blood within the third degree of marriage may opt out of unemployment insurance coverage. Officers of private corporations must exercise substantial control in the management of the corporation to be eligible to opt out. For public companies, the officers must have substantial control in management, must be a shareholder of the corporation, and their primary responsibilities must not include manual labor. In addition, reporting requirements have been expanded. Employers (which, though broadly defined, exclude corporations where all personal services are performed only by bona fide corporate officers) must now report the social security numbers of their employees along with the employee’s full name and the total hours worked by each worker. The employer must also report the names, social security numbers, mailing addresses and telephone numbers of each owner, partner, member or corporate officer. The reporting requirement is even more rigorous for corporations; which require reports on the ownership interests of all corporate officers (in categories of 0%, less than 10% or more than 10%). Furthermore, corporations must report any changes in the percentage of each officer’s interests. The failure to comply with these reporting requirements could result in penalties. This new legislation was requested by the Employment Security Division to combat abuses of the system, according to Jill Will, the legislative liaison at ESD. The previous system provided incentives for companies to classify most of their employees as “officers” in order to avoid paying ESD tax. After termination, many of those “officers” who were previously exempt would then claim coverage even if their companies failed to pay the tax. ESD claims the new system and reporting requirements allow ESD to identify each employee, track their election and payment of taxes, and avoid further abuses of the system. You can find a full text of the changes at http://www.leg.wa.gov/pub/billinfo/2007-08/Pdf/Bills/Session%20Law%202007/5373-S.SL.pdf and an official summary of the changes at http://www.leg.wa.gov/pub/billinfo/2007-08/Pdf/Bill%20Reports/Senate%20Final/5373-S.FBR.pdf. New Washington Law Prohibits Employment Discrimination Against Veterans Employers in Washington State should make themselves aware of a new law, passed by the Legislature and signed into law by Governor Gregoire in May, which protects veterans from discrimination in employment, housing, and public accommodations. The new protections added to the Washington Law Against Discrimination (WLAD) give the Washington State Human Rights Commission (WSHRC) jurisdiction over discrimination based on "honorably discharged veteran or military status." The WLAD applies to any employer of eight or more persons in the State of Washington. Prior to the new law, the WLAD prohibited discrimination on the basis of race, color, creed, national origin, sex, sexual orientation, including gender expression/ identity, marital status, age (over 40), the presence of any sensory, mental, or physical disability, the use of a trained dog guide or service animal by a person with a disability, retaliation for opposing an unfair practice, filing a whistleblower complaint with the Washington State Auditor, or filing a nursing home abuse complaint. The new law adds "honorably discharged veteran or military status" to the list of bases upon which employers may not discriminate in employment, including hiring, job conditions, pay, benefits, or termination. With the large number of veterans returning from Iraq, Afghanistan, and other places where the American military serve, the Legislature felt it important to protect their rights to jobs, places to live, and services. The WLAD already protects many veterans on the basis of disability: some returning veterans from Iraq and Afghanistan have head or brain injuries or post-traumatic stress disorder, and employers cannot discriminate against these individuals on the basis of such disabilities. Until now, however, other veterans returning home from Iraq and Afghanistan were not specifically protected from discrimination under the WLAD. According to the WSHRC, the new law is intended to address those unscrupulous employers, housing providers, and public accommodations that have harmful, preconceived, and stereotyped notions about veterans and people serving in the military. Senate Bill 5123, signed by the Governor on April 21, 2007, will become effective on July 21, 2007. Two US Supreme Court Rulings Yesterday Were Favorable For Defendants In Patent Law Suits Microsoft Corp. v AT&T Corp Sending Master Copies of Software Abroad For Copying In Microsoft Corp. v. AT&T Corp1 the US Supreme Court held that Microsoft did not infringe a US patent when it supplied master software abroad that was copied and loaded onto computers by foreign manufacturers, thereby resulting in an allegedly infringing computer. More specifically, AT&T alleged that under a Section 271(f) of the US Patent Act, Microsoft should be liable for infringing AT&T’s US patent directed toward a computer used to encode and compress recorded speech when Microsoft provided master software to foreign manufacturers that was copied then installed on computers, thereby resulting in an apparatus that would infringe under US law. The copying and installation occurred outside the United States, however, Section 271(f) refers to liability under US law for actively inducing such combining of components overseas under specific circumstances. Section 271(f) of the US Patent Act provides, in part, that a party infringes a US patent when it “supplies [abroad]… from the United States… a substantial portion of the components” to be combined abroad in a manner that would infringe a US patent if the combination occurred domestically, provided that the party does so “in such manner as to actively induce the combination…outside of the United States.” However, in the present case, the Supreme Court held that since Microsoft did not supply the copies of software installed by the foreign manufactures, but instead, only the master, Microsoft did not supply the “components” and therefore did not infringe under Section 271(f).2 The court asked “Does Microsoft's liability extend to computers made in another country when loaded with Windows software copied abroad from a master disk or electronic transmission dispatched by Microsoft from the United States?” and responded to its own inquiry with “Our answer is ‘No.’”3 Perhaps it is reasonable say that providing a master copy of software is like providing a “blueprint” (as alluded to in the Supreme Court opinion) of the components, and not the components themselves, which is not sufficient to support infringement under Section 271(f). KSR International Co. v. Teleflex, Inc. Patent Invalidity Based on Obviousness In KSR International Co. v. Teleflex, Inc.4,Teleflex had sued KSR for patent infringement, asserting that KSR's pedal system for a truck infringed a patent for which Telefex was the exclusive licensee. KSR countered that the asserted claim of the patent was invalid under Section 103 of the Patent Act, for being obvious at the time the invention was made. KSR obtained a favorable judgment of invalidity, which was reversed at the appellate court level, and eventually reached the Supreme Court. The Supreme Court found in KSR’s favor again yesterday. Among the significant questions addressed by the US Supreme Court on appeal by KSR was whether the lower appellate court, the Federal Circuit Court of Appeals, had appropriately applied a strict “TSM” (teaching, suggestion, motivation) test when determining whether a combination patent is obvious, and therefore invalid. The case law of the Court of Appeals has attempted to provide a more predictable test for obviousness (an inherently subjective question) in applying the TSM test rigidly. The TSM test requires one seeking to invalidate a patent based on an assertion of obviousness to provide evidence of prior art teaching, suggestion or motivation to make the combination at the time of the invention. The Supreme Court noted that although it considered the test helpful, such tests “need not become rigid and mandatory formulas. If it is so applied, the TSM test is incompatible with this Court's precedents.” Rigid application of the TSM test is arguably favorable to patent holders by creating obstacles in invalidating patents based on obviousness. Without explicitly holding so, the Supreme Court appeared to support a more flexible approach to determinations of obviousness, such that efforts to make the analysis more predictable may be said to remain elusive. 1 Microsoft Corp. v. AT&T Corp, 2007 U.S. LEXIS 4744 (U.S.. 2007). 2 2007 U.S. LEXIS 4744, 3. 3 2007 U.S. LEXIS 4744, 11. 4 KSR International Co. v. Teleflex, Inc. 2007 U.S. LEXIS 4745 (U.S. 2007)



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