Chapter 5

• Intellectual Property

• What is intellectual property?

• Why are trademarks and patents protected by law?

• What laws protects authors’ rights in works they produce?

• What are trade secrets, and what laws offer protection for this form of intellectual property?

• What steps have been taken to protect intellectual property rights in the digital age?

Learning Objectives

• Intellectual Property: property resulting from intellectual and/or creative processes

• Books

• Computer software

• Movies

• Music– Article I, Section 8 of the Constitution – authorized Congress to

“promote the progress of science and the useful arts by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries”

– Ownership of I.P. is strategically important in the global economy.

Forms of Intellectual Property

PatentPatent: a grant from the government that gives an inventor exclusive rights to an invention

• Acquired: file a patent application with the U.S. Patent and Trademark Office

• Duration: 20 years from date of application (design, 14 years)

• Remedy for Infringement: money damages, including royalties and lost profits, attorney fees

» Triple damages ($$$ x 3) for intentional infringements.

• Patents – given a number (#) by the U.S. Patent and Trademark Office

• File vs. invent– Bell verses Gray versus Antonio Meucci

– http://www.loc.gov/rr/scitech/mysteries/telephone.html

Historical Inventions

• http://www.crf-usa.org/bill-of-rights-in-action/bria-23-4-a-the-origins-of-patent-and-copyright-law

• http://online.wsj.com/article/SB10000872396390444358404577609810658082898.html#printMode%3D%26project%3DAPPLESAMSUNGVERDICT%26articleTabs%3Dinteractive

CopyrightCopyright: : right of an author or originator of a literary or artistic work or other production that falls within a specified category to have the exclusive use of that work for a given period of time.

• Acquired: Automatic (once the work or creation is put in tangible form) (how to prove?)(poor man’s copyright)

• Only the expression of an idea, not the idea itself can be protected by Copyright

• Duration: life of author plus 70 years; publishers 95 years after the date of publication or 120 years after creation (which ever comes first)

Copyright (continued)

– Remedy for Infringement: Actual damages plus profits received by the party who infringed OR statutory damages under the Copyright Act plus costs and attorney’s fees in either situation

• Copyright: Copyright Act enacted in 1976

– Compilation of facts vs. facts

Royalties – monies paid for the use of copyrighted material

Derivatives• A typical example of a derivative work received for

registration in the Copyright Office is one that is primarily a new work but incorporates some previously published material.

• This previously published material makes the work a derivative work under the copyright law. To be copyrightable, a derivative work must be different enough from the original to be regarded as a "new work" or must contain a substantial amount of new material.

• Making minor changes or additions of little substance to a preexisting work will not qualify the work as a new version for copyright purposes.

• ******* In parody, the transformativeness is the new insight that readers, listeners, or viewers gain from the parodic treatment of the original work

• Fair use – may use certain copyrighted info for things such as non-profit educational endeavors, “small” amount in context of the whole, the use does not diminish copyright value and/or…the use of the copyrighted information is to promote the progress of science and useful arts

yearbook – lyric versus entire song

What symbol shows copyright? ©

• Fair Use Doctrine – may use copyrighted material for criticism (including parody), comment, news, teaching purposes, academic endeavors or research.

Factors to consider for Fair Use

• 1. purpose and character of the use…commercial or non profit educational

• 2. nature of the work…(ex. Sienfeld (Trivia book)…not facts but creative episodes)

• 3. how much is being used?

• 4. effect upon potential market for or value of copyrighted work

TrademarkTrademark any distinctive word, name, symbol, or device (image or appearance) or combination that an entity uses to distinguish its goods distinguish its goods or servicesservices from those of others.

The owner has the exclusive right to use that mark.

• Acquired Acquired – based on common law, ownership was created by the useuse of the mark. RegistrationRegistration with the appropriate federal or state office gives notice gives notice and is permitted if the mark is currently in use or will be within the next six months.

Three Elements must be met to sue:• 1) Goodwill owned by a trader • 2) Misrepresentation• 3) Damage to goodwill

• TM – unregistered• R - registered

– DurationDuration: Unlimited as long as it is use. To continue notice by registration, owner must renew by filing between the 5th and 6th years and every10th thereafter

– Remedy For Infringement:Remedy For Infringement: Injunction prohibiting future use of the mark. Actual damages plus profits received by those who infringed (can be increase under Lanham Act). DestructionDestruction of articles that were infringed. Plus costs and attorney’s fees.

– CASE 5.1: The Coca-Cola Co. v. Koke Co. of America (1920).

• TrademarksTrademarks: registered with state or federal government.

– Once registered, the business may use the ®

– May sue if infringed upon

– Need not be registered to sue (except in federal court)

• Strong MarksStrong Marks

Fanciful, arbitrary (Nike Swoosh, Apple)or suggestive (Coppertone) trademarks are the strongest

• made up or no literal connection (Holiday Inn, Magic Kingdom )• Cannot be common phrases, Paris Hilton’s “That’s hot!” denied

• SecondarySecondary MeaningMeaning: descriptive terms, geographic terms or

personal names DO NOT receive protection under the law UNTIL they acquire a secondary meaning. (London Fog, Holiday Inn)

• Generic TermsGeneric Terms: : no protection and ifif a word becomes “generic” no longer will be protected. (tissue, aspirin, linoleum)

• Service Marks:Service Marks: marks used in the service industry

(McDonald’s, Starbucks, H&R Block)

• Certification Marks:Certification Marks: stating something other than the owner’s description of the product

• Trade Names:Trade Names: protection for a business name (goodwill) (may be protected as trade marks if it is the same name as the product)

• Trade Dress:Trade Dress: image or overall appearance of a product (the arches, Starbuck’s Storefront)

• LicensingLicensing: an agreement to use another’s trademark (NIKE logo on college sport uniforms)

• Lanham Act – 1946

– Protect manufacturers from losing business to rival companies using confusingly similar trademarks with “similar” or “related goods”

Amended in 1995

• Federal Trademark Dilution Act Federal Trademark Dilution Act

No longer had to be related or similar goods

Hasbro v. Internet Entertainment Group Candyland Case

• Trade Secret:Trade Secret: Any information a business possesses and that gives the business an advantage over competitors (Coca Cola formula), lists (databases of customers), patterns, plans, processes, programs

•How Acquired? Through the originality and development of the information and processes that constitute the business secret and are unknown to othersunknown to others.

– McDonald’s “special sauce”

– Popeye’s Batter Recipe

– Intel’s chip manufacturing technique

– Goldman Sachs’ client list

Trade SecretsTrade Secrets–DurationDuration – Unlimited, so long as not revealed to others. Once revealed they are no longer trade secrets

–Remedy for Infringement Remedy for Infringement – Money damages for misappropriation (the Uniform Trade Secrets Act also permits punitive damages if willfull) plus costs and attorney fees