Chapter 8: Intellectual Property and Internet Law Copyright © 2009 South-Western Legal Studies in Business, a part of South-Western Cengage Learning. Jentz

Chapter 8: Intellectual Property Chapter 8: Intellectual Property and Internet Lawand Internet Law

Copyright © 2009 South-Western Legal Studies in Business,

a part of South-Western Cengage Learning.

Jentz Miller Cross

BUSINESS LAW BUSINESS LAW Alternate Edition 11Alternate Edition 11ththEd.Ed.



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Introduction Introduction

Intellectual property (or “I.P.”) is becoming Intellectual property (or “I.P.”) is becoming more important because the value of many more important because the value of many corporations (e.g., Microsoft) is based corporations (e.g., Microsoft) is based primarily on I.P. primarily on I.P.

Founders of America understood the value Founders of America understood the value of I.P.: Article I § 8 authorizes Congress to of I.P.: Article I § 8 authorizes Congress to “secur[e] for limited times to Authors and “secur[e] for limited times to Authors and Inventors the exclusive Right to their Inventors the exclusive Right to their respective Writings and Discoveries.”respective Writings and Discoveries.”



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Types of Intellectual Types of Intellectual PropertyProperty

Trademarks.Trademarks.– Service Marks.Service Marks.– Trade Dress.Trade Dress.

Patents.Patents. Copyrights.Copyrights. Cyberspace I.P.Cyberspace I.P.



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§1: §1: Trademarks and Trademarks and Related PropertyRelated Property

DistinDistincctive mark, motto or device or tive mark, motto or device or emblem that a manufacturer stamps, emblem that a manufacturer stamps, prints or otheprints or otherrwise affixes to the goods it wise affixes to the goods it producesproduces..

Distinguish Distinguish product/service from goods of product/service from goods of other manufacturers and merchants.other manufacturers and merchants.

Avoids consumer confusion.Avoids consumer confusion. CASE 8.1CASE 8.1 The Coca Cola Co. v. The The Coca Cola Co. v. The

Koke Co. of AmericaKoke Co. of America (1920). (1920).



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Statutory Protection Statutory Protection of Trademarksof Trademarks

Lanham Trademark ActLanham Trademark Act (1946) creates (1946) creates incentives for incentives for companiescompanies to invest to invest; ; prevents unjust enrichmentprevents unjust enrichment of companies of companies who infringe.who infringe.

Federal Trademark Dilution ActFederal Trademark Dilution Act (1995) (1995) creates cause of action regardless of creates cause of action regardless of competition or confusion based on a competition or confusion based on a “similar” mark.“similar” mark.



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Trademark RegistrationTrademark Registration

Register with U.S. Patent Trademark Register with U.S. Patent Trademark Office (www.uspto.gov) if:Office (www.uspto.gov) if:– Mark is currently in commerce; orMark is currently in commerce; or

– Applicant intends to put it into Applicant intends to put it into commerce within 6 months.commerce within 6 months.

– Registration allows use of “®” symbol.Registration allows use of “®” symbol.



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Trademark InfringementTrademark Infringement

Whenever a trademark is copied or used, Whenever a trademark is copied or used, intentionally or unintentionally, there is intentionally or unintentionally, there is infringement.infringement.

Trademark owner has cause of action Trademark owner has cause of action against infringer,unless trademark is a against infringer,unless trademark is a “generic” term.“generic” term.

Lanham Act designed to prevent Lanham Act designed to prevent consumer confusion about similar marks.consumer confusion about similar marks.



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Distinctiveness of MarkDistinctiveness of Mark Trademark must be sufficiently distinct.Trademark must be sufficiently distinct. ‘‘Strong’ Marks:Strong’ Marks:

– Fanciful.Fanciful.– Arbitrary.Arbitrary.– Suggestive marks.Suggestive marks.

Secondary Meaning.Secondary Meaning.– CASE 8.2 CASE 8.2 Menashe v. V Secret Catalogue, Menashe v. V Secret Catalogue,

Inc.Inc. (2006). (2006).

Generic Terms: escalator, aspirin.Generic Terms: escalator, aspirin.



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Trade DressTrade Dress

Refers to the image and overall Refers to the image and overall appearance of the product or service: appearance of the product or service: distinctive décor at a restaurant product distinctive décor at a restaurant product names, or packaging. names, or packaging.

Same protection as trademark.Same protection as trademark. Issue is consumer confusion.Issue is consumer confusion.



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Service, Certification, and Service, Certification, and Collective MarksCollective Marks

Similar to trademark but used to Similar to trademark but used to distinguish services of one distinguish services of one person/company from another.person/company from another.

Titles and character names used in media Titles and character names used in media are frequently registered as service marks.are frequently registered as service marks.



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Counterfeit GoodsCounterfeit Goods

Importation of goods that bear a fake Importation of goods that bear a fake (counterfeit) trademark damages U.S. (counterfeit) trademark damages U.S. businesses and may present serious businesses and may present serious health risks (nutritional supplements and health risks (nutritional supplements and drugs).drugs).

Stop Counterfeiting in Manufactured Stop Counterfeiting in Manufactured Goods Act (2006). Penalties:Goods Act (2006). Penalties:– Up to $2 million and 10 years in prison.Up to $2 million and 10 years in prison.



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Trade NamesTrade Names

Trademarks apply to products: e.g., Pepsi-Trademarks apply to products: e.g., Pepsi-Cola®.Cola®.

Trade name applies to companies and are Trade name applies to companies and are protected by federal law as well.protected by federal law as well.– Example: Safeway®.Example: Safeway®.



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§ 2: Cyber Marks§ 2: Cyber Marks

Online trademarks.Online trademarks. Domain Names: www.westlaw.com Domain Names: www.westlaw.com

– Conflicts: ICANN, WIPO.Conflicts: ICANN, WIPO.

Anti-Cybersquatting Consumer Anti-Cybersquatting Consumer Protection Act (1999) amended the Protection Act (1999) amended the Lanham Act.Lanham Act.



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Cyber MarksCyber Marks

Meta Tags.Meta Tags.– Playboy Enterprises v. WellesPlayboy Enterprises v. Welles (2002). (2002).

Dilution in the Online World.Dilution in the Online World.– Candyland.com.Candyland.com.

Licensing allows use of trademark.Licensing allows use of trademark.



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§3: §3: PatentsPatents

Exclusive federal grant from U.S. Patent Exclusive federal grant from U.S. Patent and Trademark Office to make, use and and Trademark Office to make, use and sell an invention for 20 years.sell an invention for 20 years.

Must be “novel, useful, and not obvious” in Must be “novel, useful, and not obvious” in light of current technology.light of current technology.

– CASE 8.3 CASE 8.3 KSR International Co. v. KSR International Co. v. Teleflex, Inc.Teleflex, Inc. (2007). (2007).



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PatentsPatents

First person to invent, not file, gets protection.First person to invent, not file, gets protection. Searchable database at Searchable database at www.pto.govwww.pto.gov What is patentable? Almost anything except: (1) What is patentable? Almost anything except: (1)

laws of nature, (2) natural phenomenon, (3) laws of nature, (2) natural phenomenon, (3) abstract ideas. abstract ideas.

Patents for Software are now available.Patents for Software are now available. Patents for Business Processes.Patents for Business Processes.

– State Street Bank & Trust Co. v. Signature Financial State Street Bank & Trust Co. v. Signature Financial Group, Inc.Group, Inc. (1998). (1998).



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Patent InfringementPatent Infringement

Patent Infringement.Patent Infringement.– Is a tort.Is a tort.– May occur even though product is not May occur even though product is not

identical.identical.– Under U.S. law no patent infringement occurs Under U.S. law no patent infringement occurs

when a patented product is made or sold in when a patented product is made or sold in another country. (AT&T vs. Microsoft, 2007).another country. (AT&T vs. Microsoft, 2007).

Remedies: injunction, royalties, lost profits.Remedies: injunction, royalties, lost profits.



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§4: §4: CopyrightsCopyrights

Automatic protection after 1978.Automatic protection after 1978. Intangible property right to author for her Intangible property right to author for her

life plus 70 years.life plus 70 years.– For publishing houses, copyright expires 95 For publishing houses, copyright expires 95

years from publication or 120 years from years from publication or 120 years from creation, whichever is first.creation, whichever is first.

Works can be protected by registration at Works can be protected by registration at U.S. Copyright Office U.S. Copyright Office ((www.loc.gov/copyrightwww.loc.gov/copyright/)./).



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Copyrights: What Copyrights: What is Protected Expression? is Protected Expression?

Can only copyright the expression of an Can only copyright the expression of an idea, not the idea itself (Section 102).idea, not the idea itself (Section 102).

Work must be original and fixed in a Work must be original and fixed in a durable medium: durable medium: literary, musical, literary, musical, choreographical and dramatic works, choreographical and dramatic works, pictoral, graphic and sculptures, films/ pictoral, graphic and sculptures, films/ audiovisual/ TV/ sounds, computer audiovisual/ TV/ sounds, computer software and archsoftware and archiitectural planstectural plans..



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Compilations of facts are copyrightable but Compilations of facts are copyrightable but the compilation must be “original.”the compilation must be “original.”– See, Bellsouth Advertising & Publishing Co. v. See, Bellsouth Advertising & Publishing Co. v.

Donnelley Information Publishing, Inc.Donnelley Information Publishing, Inc. (1993). (1993).

““Works Made For Hire”.Works Made For Hire”.– Unless agreed otherwise, the authorship of Unless agreed otherwise, the authorship of

works created by an employee within the works created by an employee within the scope of employment, remains with the scope of employment, remains with the employer.employer.

Copyrights: What Copyrights: What is Protected Expression? is Protected Expression?



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Copyright InfringementCopyright Infringement Copyright Infringement: whenever unauthorized Copyright Infringement: whenever unauthorized

copying occurs.copying occurs.– Damages: actual to criminal prosecution.Damages: actual to criminal prosecution.

““Fair Use”: Section 107Fair Use”: Section 107 of the Copyright Act of the Copyright Act provides for exception to liability from provides for exception to liability from reproduction of copyright under the the “fair use” reproduction of copyright under the the “fair use” doctrine when material is used for criticism, doctrine when material is used for criticism, comment, news, criticism, teaching, research.comment, news, criticism, teaching, research.– CASE 8.4 CASE 8.4 Leadsinger, Inc. v. BMG Music Leadsinger, Inc. v. BMG Music

PublishingPublishing (2008). (2008).



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Copyright Protection for Copyright Protection for SoftwareSoftware

Computer Software Copyright Act (1980).Computer Software Copyright Act (1980).– Classifies computer software as a “literary Classifies computer software as a “literary

work.” work.” • Apple Computer, Inc. v. Franklin Computer Co.Apple Computer, Inc. v. Franklin Computer Co.

(1983).(1983).

Courts generally do not apply copyright Courts generally do not apply copyright protection to the “look and feel” of a protection to the “look and feel” of a computer program.computer program.



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§ 5: Copyrights in § 5: Copyrights in Digital InformationDigital Information

Based on the Copyright Act of 1976.Based on the Copyright Act of 1976. Much of the content on the internet Much of the content on the internet

consists of copyrighted I.P.consists of copyrighted I.P.– Infringement may occur when a song (or any Infringement may occur when a song (or any

part of it) is copied or downloaded into a part of it) is copied or downloaded into a computer.computer.



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Digital Copyrights: Digital Copyrights: Further DevelopmentsFurther Developments

No Electronic Theft Act (1997). No Electronic Theft Act (1997). – Extends criminal liability for piracy of Extends criminal liability for piracy of

copyrighted materials—even if no profit.copyrighted materials—even if no profit.

– Also modified the ‘fair use’ exception to Also modified the ‘fair use’ exception to prevent unauthorized copies of music, prevent unauthorized copies of music, books, or movies for personal use.books, or movies for personal use.



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Digital Millennium Copyright Act Digital Millennium Copyright Act (1998).(1998).– Provides civil and criminal penalties to Provides civil and criminal penalties to

circumvent encryption software (like circumvent encryption software (like DVD).DVD).

– Limits ISP liability for subscriber act.Limits ISP liability for subscriber act.– ‘‘Fair Use’ Exceptions for Libraries, universities Fair Use’ Exceptions for Libraries, universities

and others.and others.

Digital Copyrights: Digital Copyrights: Further DevelopmentsFurther Developments



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Digital Copyrights:Digital Copyrights:MP3 and File Sharing MP3 and File Sharing

TechnologyTechnology Peer to Peer (P2P) Networking.Peer to Peer (P2P) Networking.

– Music sharing (Napster, Kazaa, Gnutella).Music sharing (Napster, Kazaa, Gnutella).– Music storage and vicarious liability.Music storage and vicarious liability.

The The GROKSTERGROKSTER case extended vicarious case extended vicarious liability to companies that create/distribute liability to companies that create/distribute P2P software.P2P software.



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§6: §6: Trade SecretsTrade Secrets

Business process or information that Business process or information that cannot or should not be patented, cannot or should not be patented, copyrighted or trademarked.copyrighted or trademarked.

Can include: customer lists, plans, Can include: customer lists, plans, research, formulae, pricing information, research, formulae, pricing information, marketing techniques.marketing techniques.

Also protection from competitors.Also protection from competitors. Uniform Trade Secrets Act (1979).Uniform Trade Secrets Act (1979).



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Trade SecretsTrade Secrets

Hacking into a competitor’s computer may Hacking into a competitor’s computer may be criminal.be criminal.

Economic Espionage Act (1996).Economic Espionage Act (1996). Trade Secrets in Cyberspace.Trade Secrets in Cyberspace.



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§7: §7: International Protection International Protection for Intellectual Propertyfor Intellectual Property

Berne Convention (WIPO).Berne Convention (WIPO).– Every country who signed the agreement must Every country who signed the agreement must

recognize, recognize, e.g.,e.g., an American author’s copyright. No an American author’s copyright. No notice is required. notice is required.

– More safeguards against infringement on the web. More safeguards against infringement on the web. – World Intellectual Property Organization (WIPO) World Intellectual Property Organization (WIPO)

Copyright Treaty 1996.Copyright Treaty 1996. TRIPS Agreement of 1994.TRIPS Agreement of 1994.

– Created the World Trade Organization.Created the World Trade Organization.– Each member country must include in its domestic Each member country must include in its domestic

laws broad I.P. protection and enforcement laws broad I.P. protection and enforcement measures.measures.



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Madrid Protocol.Madrid Protocol.– Signed by sixty-one countries, including U.S. Signed by sixty-one countries, including U.S.

in 2003.in 2003.– Allows a single country can apply for Allows a single country can apply for

simultaneous trademark protection in all simultaneous trademark protection in all member countries. member countries.

§7: International Protection §7: International Protection for Intellectual Propertyfor Intellectual Property

Documents

Chapter 8: Intellectual Property and Internet Law Copyright © 2009 South-Western Legal Studies in Business, a part of South-Western Cengage Learning. Jentz