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Chapter 7
56
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
7
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
Chapter 7
58
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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60
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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64
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.
