978-1305575080 Chapter 9 Solution Manual

Chapter 9

INTELLECTUAL PROPERTY RIGHTS AND THE INTERNET

RESTATEMENT

A trademark is a word, name, symbol, device or combination of these used to identify a product. If these are

used to identify a service, it is called a service mark. Trademark and service marks can be registered to protect

their exclusive identification of a product. An infringement of a trademark occurs when a trademark is used

without authorization.

Trade dress is a product’s total image including the overall packaging and the product’s look. Infringement of

trade dress occurs when a look creates confusion among the products.

The legal remedies available for infringement include an injunction to stop the unauthorized use. Owners of a

trademark must take action to prevent unauthorized use or risk losing the exclusivity of the mark.

Patents are exclusive rights given to inventors and include protections for process, machine or composition of

matter (utility patents), protections for new and nonobvious ornamental features (design patents), and asexual

reproduction of new plants (plant patents). The exclusive rights to use of the patent range from 14-20 years.

Trade secrets are formulae, devices or compilations of information used in business that provide advantage over

competitors. Owners must take precautions in protecting their trade secrets and should have employees sign

nondisclosure agreements.

these programs may require licensing agreements for their use. Semiconductor chips enjoy specific statutory

protections afforded by application and consisting of exclusive rights.

STUDENT LEARNING OUTCOMES

LO.1: Explain the spectrum of distinctiveness used to classify trademarks and explain why distinctiveness is

important.

LO.2: Explain how courts determine whether there is a likelihood of confusion between trademarks.

LO.3: Explain how personal names can acquire trademark protection.

LO.4: List the remedies available for improper use of trademarks.

LO.5: Explain the difference between trademark infringement and trademark dilution.

LO.7: Explain the “new and not obvious” requirement necessary to obtain a patent.

LO.8: Explain what constitutes a trade secret and what steps a company must take to insure protection.

LO.9: Explain the extent of protection provided owners of software.

INSTRUCTOR’S INSIGHTS

Break the chapter down into five components – related Learning Outcomes are indicated in ( ):

1. What are the legal rights associated with trademark and service marks?

Explain what types of marks can be registered (LO.1)

Explain the likelihood of confusion factors (LO.2)

Provide the purpose and duration of trademarks

3. What are patents and what protections do they carry? (LO.7)

4. What business information is protected by law?

Define trade secrets

5. What intellectual property protections exist for computer software and mask works?

Explain patent protections for computer programs (LO.9)

CHAPTER OUTLINE

I. What are the Legal Rights Associated with Trademark and Service Marks?

A. Trademark (goods) or service mark (service) defined

B. Register on Principal Register

1. Exclusive after 5 years

C. International Registration

1. Madrid System of International Registration of Marks (the Madrid Protocol)

D. Registrable marks

1. Coined, fanciful or arbitrary names – e.g., Exxon; Kodak

2. Suggestive term – Coppertone

CASE BRIEF: Harley-Davidson, Inc. v. Grottanelli

164 F.3d 806 (2d Cir. 1999)

FACTS: Grottanelli was using the Harley-Davidson term “hog” in the description of his products and also

used a symbol similar to the Harley-Davidson bar-and-shield trademark. The lower court

enjoined their use and Grottanelli appealed.

ISSUE: Had Grottanelli appropriated the Harley-Davidson trademark?

REASONING: The term “hog” comes from “Harley Owners’ Group”, which was not registered until 1987. Prior

to that time and after, motorcycle owners and dealers referred to cycles as hog and its use had

become generic.

DISCUSSION POINTS: Have the students use the Harley-Davidson, Inc. v. Grottanelli case to discuss

appropriation of trademarks.

E. Remedies for infringement

F. Owner of mark/dress must enforce right or risk losing its trade status and exclusively

3. E.g., aspirin, thermos, cellophane – evolving danger: rollerblade in-line skates

G. Trade dress

1. Product’s total image and look of packaging

H. Limited Lanham Protection of product design

1. The “Knockoff” problem: copies of furniture designs, sweater designs and notebook designs

2. “Distinctive” designs are protected only if they have obtained a secondary meaning (Wal-Mart

I. Internet domain and trademark rights

1. Registration of domain names – e.g., “amazon.com”, “priceline.com”

3. Cybersquatters

a. Set up domain names that are identical and confusing or use famous person’s name

4. Federal Anticybersquatting Consumer Protection Act (1999)

a. Prohibits cyber squatting

b. Provides injunctive relief

5. Can use service to see if name is taken

6. Internet Corporation for Assigned Names and Numbers (ICANN)

a. Fast-track arbitration on domain names

1. Life of the creator plus 50 years (1976)

D. Protects creator of

1. Writings – books and periodicals

2. Music

1. Can license work

1. Fair use allowed

2. Questions to determine whether there is fair use

a. Purpose of work

b. Nature of work

c. Nature of use

1. Employees develop sites – belong to company

CASE BRIEF: Cariou v. Prince

714 F. 3d 694 (2d Cir. 2013)

Cariou’s book, Yes Rasta. Prince’s works were displayed in an exhibit entitled Canal Zone at

the Gagosian Museum. Prince’s Canal Zone series consisted of thirty pieces, twenty-nine of

which contain altered photos from Yes Rasta. The district court found that Prince’s work was

infringing and not entitled to a fair use defense because he was not commenting on the

photographs or some aspect of popular cultural related to the photographs.

ISSUE: Do the thirty works by appropriation artist, Richard Prince, that altered and incorporated various

REASONING: After looking at the works side-by-side, the court found that Prince’s work added something new

to Cariou’s photographs and that the Canal Zone works were transformative. Looking at each

of the four use factors, the court found that the transformative nature of Prince’s work

derivative works? Compare the Cariou case with Kienitz v. Sconnie Nation LLC.

The Court of Appeals for the Seventh Circuit rejected the concept of transformative

use. Michael Kienitz photographed the mayor of Madison, Wisconsin, Paul Soglin.

With Kienitz’s permission, the mayor posted the photograph online. That year, Mayor

of the plaintiff’s photograph. Relying on the Second Circuit’s reasoning in Cariou, the

merely supersedes the objects of the original creation, or whether and to what extent it

is “transformative,” altering the original with new expression, meaning, or message.

The more transformative the new work, the less will be the significance of other factors,

3. Have to grapple with First Amendment issues in fair use

a. Parody is still possible

H. Secondary liability for infringement

DISCUSSION POINTS: Ethics & The Law

Patenting Genes?

The USPTO and the many courts had held that isolated genes are patent-eligible. Discuss the balance the

Supreme Court seeks to strike between the incentive to invest in research and need to maintain the free flow of

information.

1. Passed in 1998 to prevent pirating of software, recordings, etc. through circumvention of encryption

devices

2. Safe Harbor for ISPs

a. No actual knowledge of infringing

III. What are Patents and What Protections Do They Carry?

A. Types of patents

1. Utility patents: for processes, machines, manufacture or composition of matter (17 years)

B. Must mark product as patented; cannot be “obvious”

C. Patent gives owner exclusive right to make, use, sell or import

CASE BRIEF: Diamond v. Chakrabarty

447 U.S. 303 (1980)

FACTS: Chakrabarty was a microbiologist. He found a way of creating a bacterium that would break

down crude oil. This could not be done by any bacterial that exist naturally. His discovery had

ISSUE: Was Chakrabarty entitled to a patent?

RESONING: Discovering a way to produce a living organism that is not found in nature is within the

protection of the patent laws. The fact that this kind of invention was not known when the patent

D. Patents and the Internet

1. Business methods – patentable

CASE BRIEF: Alice Corporation Pty. Ltd. v. CLS Bank International

134 S. Ct. 2347 (2014)

FACTS: Alice Corporation is the assignee of several patents that manage certain forms of financial

risk. The patent purports to invent a system of managing “risk related to specified, yet

unknown, future events.”

ISSUE: Is a patent to manage risk for unknown future events patent-eligible or is it an ineligible

abstract idea?

HOLDING: In determining whether a software program is patent eligible, courts will assess: (1) whether

REASONING: The claims involve an abstract idea involving intermediate settlement. Using a generic

computer implementation does not transform the abstract idea into a patent-eligible invention.

E. Infringement

CASE BRIEF: eBay, Inc. v. MercExchange, LLC

547 U.S. 388 (2006)

FACTS: eBay and its subsidiary half.com operate popular Internet Web sites that allow private sellers to

list goods they wish to sell at either an auction or a fixed price (its “Buy it Now” feature).

MercExchange, LLC sought to license its business method patent to eBay, but no agreement

ISSUE: Did eBay’s use of MercExchange’s patented business method warrant a permanent injunction?

REASONING: The traditional four-factor test applied by courts of equity when considering whether to award

permanent injunctive relief to a prevailing plaintiff applies to disputes arising under the Patent

Act. That test requires a plaintiff to demonstrate that (1) it has suffered an irreparable injury, (2)

IV. What Business Information is Protected by Law?

A. Trade secrets

1. Formula, device, or compilation of information used in one’s business to provide competitive

advantage

2. Customer lists

B. Loss of protection

C. Owner must take steps to protect trade secrets: defensive measures

1. Keep information close at hand

2. Place employees under covenants not to disclose

CASE BRIEF: Hallmark Cards, Inc. v. Monitor Clipper Partners

758 F. 3d 1051 (8th Cir. 2014)

FACTS: Hallmark Cards hired a consultant to do market research and required the company to sign

a confidentiality agreement. The consultant gave the PowerPoint presentations representing its

market research for Hallmark to a closely associated private equity firm, Clipper. Clipper

purchased a greeting card company that competed with Hallmark.

ISSUE: Are PowerPoint presentations representing market research trade secrets?

REASONING: The information involved met the definition of trade secrets under state law. The information

had economic value to Hallmark. Although some of the information might have been stale when

D. Criminal sanctions: Industrial Espionage Act of 1996 – substantial fines for copying, downloading, etc.,

V. What Intellectually Property Protections Exist for Computer Software?

2. Applies whether written in ordinary language or machine language

software

C. Patent protection for computer programs

1. Same protections

D. Trade secrets

1. Employees taking software trade secrets to new employers

E. Restrictive licensing

1. Restrict transfers

F. Uniform Computer Information Transactions Act – uniform law governing the sale, licensing,

G. Semiconductor chip protection

1. Prevents piracy

2. Protect chip for 10 years – exclusive rights

ANSWERS TO QUESTIONS AND CASE PROBLEMS

1. International registration of marks. Under the Madrid Protocol, the Starbucks trademark is protected in China.

The fact that the Starbucks trademark is widely used in China coupled with the similarly of the design of

Xingbake cafes to Starbucks café designs and fact that Xingbake’s trademark is derived from the use of the

2. Cyberpiracy; ACPA’s safe harbor provision. The Anticybersquatting Consumer Protection Act’s purpose is

made manifest in its title. It is to protect consumers from confusingly similar or identical domain names to

existing trademarks, which are set up on the Internet for commercial gain. The ACPA is designed to deter

Maya HK cannot take advantage of the ACPA’s safe harbor provision based on the assertion that most

people who access the web site in China have not heard of CNN. In fact, the CNN mark has substantial

The totality of these facts indicate that Maya HK was in violation of the ACPA; and that because of its bad

Authors’ Note: As you get ready to study the law of contracts in subsequent chapters, you will learn that the

courts apply the terms of a contract, as written. You will also learn that it is important to read with care each

contract. Printed language on the photographer’s standard form contract giving the photographer the

4. Trademark infringement and dilution. Students should apply the likelihood of confusion factors to determine

which factors weigh in favor of each party. Lucasfilms’s mark “The Empire Strikes Back,” is registered for

5. Injunction against improper use of mark. Judgment for BAA. A person who has the right to use a mark may

enjoin a competitor from imitating the mark. Sullivan’s shirts were designed to take advantage of the Boston

6. Trademarks; secondary meaning. Judgment for Greenwich Bank & Trust. The Bank of Greenwich is incorrect

in its assertion that GB&T service mark is generic and not entitled to trademark protection. A “geographic”

7. Trademark infringement. In order to prevail in an action for trademark infringement, a party must establish

that it possesses a valid, legally protectable trademark and that the junior user’s mark is likely to cause

confusion as to the origin or sponsorship of the product. PRL proved it had a valid, legally protected

8. Patents. Diehr can’t patent the math formula, he can only patent a unique curing process. To the extent that

9. Trade secrets; proprietary information. It is not always controlling that many employees knew the information

– it is a question of whether Aries kept the information proprietary. In this case, Aries had taken appropriate

The line between idea and expression is not always easy to draw. If the idea of a jeweled bee pin can be

copied by another, the copy expressing the idea of a jeweled bee pin will look very much like the original

If the similarity of the subsequent expression bars the copying of the original idea, the net result is that the

subsequent copying of the idea would be prohibited. This in effect would give a patent protection to

11. Trade secrets; ethics and modern law. This case involves the ethical principles of integrity, fairness, and

doing no harm. The device was loaned to Zigan for the limited purpose of testing. Zigan was not acting

ethically when he used the product for something other than the purpose for which it was loaned. In addition

From the viewpoint of social forces, as discussed in Chapter 2, note how the social forces of protection of

property and protection from exploitation require that society have laws protecting trade secrets. Students

12. Trade dress infringement. Students can compare the trade dress of the products online. Courts use the same

likelihood of confusion factors for trade dress infringement that they use for trademark infringement. Do all

whether Texaco’s photocopying of the scientific journal articles was fair use, three of the four factors favor the

publishers. The first factor, purpose and character of use, favors the publishers because the purpose of

which in this case is scientific articles, favors Texaco. The third factor, the amount and substantiality of the

portion used, favors the publishers because Texaco copied the works in their entirety. The fourth factor, the

effect on the potential market or value of the work, favors the publishers because they have shown

substantial harm due to lost licensing revenue and lost subscription revenue. The Aggregate assessment is

was a derivative of The Column under 17 U.S.C. § 106(2). The court then had to determine the fair market

The parties disputed the award on the third category – unused stamps. The Postal Service received $5.4

million in revenue on unused stamps, as pure profit (from collectors). The court determined that a 10%

LAWFLIX

The Jerk (1979) (R)

Steve Martin, an imbecile, invents a special handle for eyeglasses which is mass marketed by a business man

management system for classroom use.