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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.
