Chapter 6 - Intellectual Property 1

Chapter 6

Intellectual Property

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Chapter 6 - Intellectual Property 2

Chapter 6 - Objectives 1. Define intellectual property.2. Discuss copyrights, patents, and trade

secrets. 3. Define reverse engineering.4. Summarize the purpose of the Uniform

Computer Information Transactions Act. 5. Distinguish competitive intelligence from

industrial espionage. 6. Outline a strategy to protect your

organization from cybersquatting.

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Intellectual Property • Intellectual property includes works

of the mind such as art, books, films, formulae, inventions, music, and processes that are distinctive and that are “owned” or created by a single entity.

• Copyrights, patents, and trade secrets are used to protect intellectual property.

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Copyright • A copyright is a form of protection provided

by law that grants the authors of “original works of authorship in any tangible medium of expression, now known or later developed, from which they can be perceived, reproduced, or otherwise communicated, either directly or with the aid of machine or device, the exclusive right to distribute, display, perform, or reproduce the work in copies or to prepare derivative works base upon the work.”

• 1976 Copyright Act prevents others from reproducing the work for the authors life plus 70 years.

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Fair Use Doctrine • Four factors to determine whether a

copyright is a fair use:1. The purpose and character of the use

(e.g., is the use for commercial or nonprofit, educational purposes)

2. The nature of the copyrighted work3. The portion of the copyrighted work used4. The effect of the use upon the value of

the copyrighted work• Fair Dealing – Wikipedia

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Software Copyright Protection

• Software copyright is “tricky”.• To prove infringement, the

copyright holder must show a resemblance that could only be explained by copying.

• Developing a software package without prior knowledge is difficult to prove or disprove.

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Digital Millennium Copyright Act

• November 1998• To comply with the global

copyright protection treaty from the World Intellectual Property Organization - Part of the United Nations.

• Penalties of 5 years in prison and/or fines of up to $500,000.

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Legal Overview - DeCSS • Content Scramble System (CSS) is an

encryption-based security and authentication system used in DVDs.

• DeCSS software breaks the encoding system used in digital video disks.

• In 2000, eight movie studios sued 2600:” The Hacker Quarterly for posting the DeCSS program.

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Legal Overview – DeCSS (contd.)

• The Motion Picture Association of America filed injunctions to block the Internet distribution of DeCSS software.

• Courts ruled that unauthorized reverse engineering of the DVD system violated copyright and trade secret laws.

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Patents• A patent enables the inventor to take

legal action against those who, without the inventor’s permission, manufacture, use or sell the invention during the period of time the patent is in force.

• The United States Patent and Trademark Office reviews patent applications and issues patents to approved inventions.

• Patents in Canada

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Patented Invention • It must fall into one of five

statutory classes of things that can be patented.

• It must be useful.• It must be novel.• It must not be obvious to a person

having ordinary skill in the art to which said subject matter pertains.

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No Patent Protection • The U.S. Supreme Court has ruled

that there are three categories of subject matter for which one may not obtain patent protection:

1. Abstract ideas2. Laws of nature3. Natural phenomena

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Software Patents• Since the 1980s, the USPTO has

granted a large number of software-related patents. Examples include:– Applications and business software– Compilation and system software– Edit, control, and operating system

software

• Software patents – Canada

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Trade Secrets• The UTSA defines a trade secret as

“information, including a formula, pattern, compilation, program, device, method, technique, or process that:

1. Derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by persons who can obtain economic value from its disclosure or use

2. Is the subject of efforts that are reasonable under the circumstances to maintain its secrecy

• Trade Secrets – Canada

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Trade Secret • To qualify as a trade secret, the

secret must have1. Economic value2. Must not be readily ascertainable3. The trade secret owner must take

steps to maintain its secrecy

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Advantages of Trade Secrets

• No time limitations on the protection of trade secrets

• No need to file an application, make any disclosures, or otherwise disclose a trade secret to outsiders

• Patents are frequently ruled invalid by courts, meaning that the then-disclosed invention no longer has protection

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Nondisclosure & Non-compete• A nondisclosure clause requires

employees to refrain from revealing secrets that they learn at work.

• A non-compete agreement requires employees to not work for any competitors for a set period of time.

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Intellectual Property Issues• Reverse engineering is the process of

breaking something down in order to understand it, build a copy of it, or improve it.

• A compiler is a language translator that converts computer program statements into machine language that a computer can execute.

• A decompiler is a software tool that reverse reengineers a software application.

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Intellectual Property Issues • In 1999 the National

Commissioners on Uniform State Laws approved the Uniform Computer Information Transactions Act.

• The UCITA applies uniform legislation to software licensing issues.

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Organizations That Support UCITA

• Software and Information Industry Association

• Information companies like Microsoft and AOL

• Others (Caterpillar, Circuit City, insurance companies)

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Organizations That Oppose UCITA

• Association for Computing Machinery• Computer and Communications Industry

Association• Computer Professionals for Social

Responsibility• Digital Future Coalition• Electronic Frontier Foundation• International Communications Association• Society for Information Management

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UCITA• The UCITA defines a software

license as a contract that grants permission to access or use information subject to conditions set forth in the license.

1. Shrink-wrap 2. Click-on3. Active click wrap

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Competitive Intelligence

• The gathering of legally obtainable information that will help a company gain an advantage over its rivals.

• Competitive intelligence is not industrial espionage.

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Common Sources of Competitive Intelligence

• Annual reports• Quarterly reports• Press releases• Promotional

materials• Web site• Standard and

Poor’s stock report

• Dun & Bradstreet credit report

• Interviews with suppliers, customers, former employees

• Calls to customer service

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Intellectual Property Issues

• A trademark is anything that enables a consumer to differentiate one company’s products from another.– Trade Mark – Canada

“A trade-mark is a name, symbol, or slogan which identifies or distinguishes a business or a product from the businesses or products of others.”

• Cybersquatters are people who register domain names to which they have no connection in the hope of profiting from the legitimate trademark owner.

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Summary • Intellectual property refers to works of the

mind such as art, books, films, formulae, inventions, music, and processes.

• Copyrights, patents, and trade secrets provide a complex body of law regarding the ownership of intellectual property.

• Reverse engineering provides a means to gain access to information that another organization may have copyrighted or classified as a trade secret.

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Intellectual Property Issues• A decompiler is a software tool that

reverse reengineers a software application.

• The 1998 Digital Millennium Copyright Act explicitly outlaws technology that can defeat copyright protection devices, but permits reverse engineering encryption, interoperability, and computer security research.

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Summary • The UCITA is a controversial act that

would apply uniform legislation to software licensing issues.

• Competitive intelligence is not industrial espionage.

• To avoid cybersquatting problems, organizations register their trademarks as soon as they know them.

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Case 1- Napster

• Napster is a Web-based service founded in 1999 by Shawn Fanning. The goal is to provide music enthusiasts with an easy-to-use service for discovering and down loading music. The recording industry strongly objected to Napster.

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Case 2 - Lotus v. Borland

• The Lotus v. Borland lawsuit lasted over five years going all the way to the Supreme Court and set a precedent that clarified the limits of software copyright protection. The case dealt with the “look and feel” of software.