978-0134004006 Chapter 7 Lecture Note

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The Congress shall have the power…to promote the Progress of Science and useful

Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their

respective Writings and Discoveries.

Article I, Section 8, clause 8 of the U.S. Constitution

I. Teacher to Teacher Dialogue

scenario examples, not only to illustrate the rules of business torts and intellectual property, but

also to test students’ own ethical parameters.

I recommend going through the list of various forms of unfair competition and

giving some personal observations of cases involving those issues. For example, in the matter of

With regard to protection provided for intellectual property, I use examples to illustrate

find that it is worthwhile to review the underlying public policies behind giving these protections

in the first place. I talk about the notion of these rights acting as a form of public/private

topic that stimulates a lot of discussion. Starting from the U.S. Supreme Court decision in

Diamond v. Chakrabarty, which allowed patents to be issued for genetically engineered

INTELLECTUAL PROPERTY

AND CYBER PIRACY

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Intellectual Property and Cyber Piracy

benefit/burden dichotomy. The benefits of the statutory protection are accorded to those who

know how to use the statute on a continuing basis.

I also like to point out the situation surrounding several companies who have been issued

several patents for processes that were later declared obvious. They go after small companies for

II. Chapter Objectives

1. Describe the business tort of misappropriating a trade secret.

patent infringement.

4. Define trademark and service mark and describe the penalties for trademark infringement.

III. Key Question Checklist

 Is the area of the endeavor qualified for some particular form of legal protection, e.g.,

IV. Text Materials

Intellectual property rights have value to both businesses and individuals today. In the U.S., it has

Intellectual Property

Intellectual property is a term that describes property that is developed through an intellectual and

Trade Secret

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Trade secrets are the reasons behind many business’ successes, but many do not qualify to be

give statutory protection to trade secrets. State unfair competition laws allow for protection

Reverse Engineering – A competitor can lawfully discover a trade secret by performing reverse

Civil Trade Law: Misappropriation of a Trade Secret – Successful plaintiffs can recover the

Criminal Trade Law: Economic Espionage Act – The federal Economic Espionage Act of

1996 makes it a federal crime to steal another’s trade secrets, and was passed in 1996 as an

Ethics: Coca-Cola Employee Tries to Sell Trade Secret to Pepsi-Cola

Williams was a secretary in Coca-Cola’s global branding department and offered to sell

information on new markets and new products “to the highest bidder.” PepsiCo notified Coca-

Patents

The Federal Patent Statue, passed in 1952, is intended to provide an incentive for inventors to

Critical Legal Thinking – Inventors are provided patent protection to encourage them to invest

time, money, smarts, and resources into developing new inventions, some of which are very

U.S. Court of Appeals for the Federal Circuit – Created in 1982, this is a special federal

Patent Application – To obtain a patent, a patent application must be filed with the PTO in

Intellectual Property and Cyber Piracy

Subject Matter That Can Be Patented – Categories of patentable innovations recognized by

Requirements for Obtaining a Patent – Patents are issued for novel, useful, and non obvious

inventions, processes, designs, and living material, including plants and seeds, upon filing a

written application with, and review by, the U.S. Patent and Trademark Office.

risk of certain types of cancers.

Issue: Is a naturally occurring segment of DNA patent eligible?

Ethics Questions: This is an important discovery and one that will benefit mankind

monetary figure for compensation.

Patent Period – In 1995, in order to bring our system into harmony with WIPO, Congress

changed the patent law to make invention patents valid for 20 years and design patents for 14,

One-Year “on Sale” Doctrine – Under the public use doctrine, a patent may not be granted if the

invention was used by the public for one year prior to filing the application.

Provisional Patent Application – The American Inventors Protection Act reorganized the U.S.

Case 7.2 Patent: Alice Corporation v. CLS Bank International

134 S.Ct. 2347, 2014 U.S. Lexis 4303 (2014), Supreme Court of the United States

Facts: A corporation owns several patents which calculate settlement risk in particular

Decision: Patent ineligible.

Ethics Questions: Companies need to protect their competitive advantages and their applications

of shareholder resources and therefore, they like to have patent protection when possible.

Patent Infringement – If someone makes unauthorized use of another’s patent, the patent holder

such action in the future.

Design Patent – A party can obtain a design patent for the ornamental nonfunctional design of an

item. Design patents are valid for 14 years.

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films.

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

an injunction.

928 F.Supp.2d 1120, 2013 U.S. Dist. Lexis 30211 (2013), United States District Court for

Arizona

Decision: Yes.

Ethics Questions: It is a shame to think that a local establishment and its patrons cannot enjoy a

reproduction of an already well-known song. It seems un-American.

Inc.

134 S.Ct. 2498, 2014 U.S. Lexis 4496 (2014), Supreme Court of the United States

Facts: Aereo subscribers receive television programming over the Internet almost

simultaneously with the shows being broadcast over TV. ABC and other television broadcasters

sought an injunction.

reviews or criticism in scholarly or technical works, in parody or satires, for a news report or for

Intellectual Property and Cyber Piracy

proceeding.

Critical Legal Thinking – There really is no way to stop streaming. It might be a good idea for

the government to put together a special taskforce to examine this issue, though, it probably

Case 7.5 Fair Use: Faulkner Literary Rights, LLC v. Sony Pictures Classics, Inc.

953 F.Supp.2d 701, 2013 U.S. Dist. Lexis 100625 (2013), United States District Court for the

Northern District of Mississippi

court found, was eight seconds long.

Issue: Is the paraphrased quote fair use?

Decision: Yes.

Ethics Questions: Perhaps Sony could have donated something to a charity which supports

classic literature or something of the kind. This type of suit however is more about bringing out

infringement.

with penalties of up to one year in prison and $100,000 in fines.

Digital Law: DMCA

civil penalties, with few exceptions.

Trademark

Registration of a Mark – Trademarks are registered with the Patent and Trademark Office, and

are valid for ten years, and are renewable in ten-year increments.

Types of Marks – Trademarks, service marks, certification marks, and collective membership

Distinctiveness or Secondary Meaning – The mark must be distinctive or have acquired a

“secondary meaning.”

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Knockoff of Trademark Goods – Louis Vuitton

Ethics Questions – Counterfeiting is very prevalent and becoming more so particularly through

China. The defendants acted unethically and are stealing value from another company.

Diluting, Blurring, or Tarnishing Trademarks – The Federal Trademark Dilution Act of 1995

prevail in a dilution lawsuit.

Case 7.6 Dilution of a Trademark: V Secret Catalogue, Inc. and Victoria’s Secret Stores, Inc.

v. Moseley

605 F.3d 382, Web 2010 U.S. App. Lexis 10150 (2010), United States Court of Appeals for the

Sixth Circuit

of dilution by the senior mark. On remand, the U.S. District Court applied the new likelihood of

confusion test, found a presumption of tarnishment of the Victoria’s Secret mark that the

Moseleys failed to rebut, and held against the Moseleys. The Moseleys appealed to the U.S. Court

of Appeals.

that there is no real probability of tarnishment and did to do so. The Moseleys were probably

trading off of Victoria’s Secret famous name. The Moseleys behaved poorly in this situation.

V. Key Terms and Concepts

Intellectual Property and Cyber Piracy

 Berne Convention—In 1989, the United States signed the Berne Convention, an international

weakened.

 Certification mark—A mark that certifies that a seller of a product or service has met certain

license, and distribute the work.

recover damages and other remedies against the infringer.

year of creation or 95 years from the year of first publication, whichever is shorter. This is

commonly known by the bar as the “Disney Statute.”

 Design patent—A patent that may be obtained for the ornamental nonfunctional design of an

item.

of digital works.

 Dilution—Congress enacted the FTDA of 1995 to protect famous marks from dilution.

 Distinctive—Being unique and fabricated.

 Economic Espionage Act—A federal statute that makes it a crime for any person to convert a

trade secret for his or her own or another’s benefit, knowing or intending to cause injury to

the owners of the trade secret.

patent and protects patented inventions from infringement.

 Federal Trademark Dilution Act—A federal statute that protects famous marks from dilution,

erosion, blurring, or tarnishing.

 First-to-file rule—The United States now follows the first-to-file rule, the first person to file

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to file a patent application.

 Generic name—A term for a mark that has become a common term for a product line or type

of service and therefore has lost its trademark protection.

laws protect intellectual property rights from misappropriation and infringement.

manufacturers, sellers, or providers.

 Misappropriation of a trade secret—A successful plaintiff in a misappropriation of a trade

 Nonobvious—If an invention is nonobvious, it qualifies for a patent.

 One year “on sale” doctrine—A doctrine that says a patent may not be granted if the

invention was used by the public for more than one year prior to the filing of the patent

application.

Washington DC.

 Patent infringement—Unauthorized use of another’s patent. A patent holder may recover

 Patent pending—If a patent application is filed but a patent has not yet been issued, the

patent holder.

 ®—A symbol that is used to designate marks that have been registered with the U.S. Patent

and Trademark Office.

 Requirements for obtaining a patent—Novel, useful, and non-obvious.

 Reverse engineering—A competitor can lawfully discover a trade secret by performing

recipe).

 Secondary meaning—A brand name that has evolved from an ordinary term.

Intellectual Property and Cyber Piracy

associated with a service.

 Tangible writings—Only tangible writings, writings that can be physically seen, are subject

 Tarnishment—Tarnishment occurs where a famous mark is linked to products of inferior

associated with a product.

 Trademark Dilution Revision Act—Congress revised the FTDA when it enacted the

Trademark Dilution Revision Act of 2006. A plaintiff must only show that there is a

Application System (TEAS).

 Trademark infringement—Unauthorized use of another’s mark. The holder may recover

 Trade secret—A product formula, pattern, design, compilation of data, customer list, or other

business secret.

give statutory protection to trade secrets.

 U.S. Court of Appeals for the Federal Circuit—A special federal appeals court that hears

appeals from the Board of Patent Appeals and Interferences and federal court concerning

patent issues.