CHAPTER 7

INTELLECTUAL
PROPERTY AND
CYBER PIRACY

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 Basis for Intellectual Property
Protection in Constitution
• “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.”

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 Intellectual Property Rights

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 Trade Secrets

• Product formula, pattern, design,

compilation of data, customer list, or other
business secret.
• Many states have adopted the Uniform
Trade Secrets Act to give statutory
protection to trade secrets.

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 Trade Secrets (continued)

• State unfair competition laws allow owner

of trade secret to bring lawsuit for
misappropriation against anyone who
steals a trade secret.
• Defendant must have obtained the trade
secret through unlawful means.
– E.g., theft or bribery
– Reverse engineering not unlawful

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 Trade Secrets (continued)

• Owner is obliged to take all reasonable

precautions to prevent those secrets from
being discovered by others.
– E.g., locking doors, hiring security guards
• If owner fails to take precautions, the
secret is no longer subject to protection.

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 Trade Secrets (continued)

• Successful civil plaintiff can:

– Recover profits made by offender
– Recover damages
– Obtain injunction prohibiting offender from
divulging trade secret

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 Economic Espionage Act of 1996

• Federal crime for any person:

– To convert a trade secret to his or her
benefit or for the benefit of others,
– Knowing or intending that the act would
cause injury to the owner of the trade
secret.
• Includes computer espionage
• Severe criminal penalties

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 Federal Patent Statute

• Intended to provide incentive for inventors

to make their inventions public.
• Protects patented inventions from
infringement.
• Federal patent law is exclusive; no state
patent laws.

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 Federal Patent Statute (continued)

• Patents for inventions are valid for 20

years
• Design patents are valid for 14 years
• Patent term runs from date application
filed
• U.S. follows first-to-invent rule

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 Patent Applications

• Must contain a written description of

invention
• Must be filed with the U.S. PTO
• Patent will be assigned a patent number if
granted
• Any party can challenge the validity of a
patent or the issuance of one.

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 Patenting an Invention

• To be patented, an invention must be:

– Novel
– Useful
– Nonobvious
• Only certain subject matters can be
patented.

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 Patentable Subject Matter Includes:
• Machines
• Processes • Designs for an
article of
• Compositions of
manufacture
matter
• Asexually
• Improvements to:
reproduced plants
– Existing machines
– Processes • Living material
– Compositions of invented by a
matter person
– Business methods

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 One-Year “On Sale” Doctrine

• Public use doctrine

• Patents will not be granted if an invention
was in the public domain for one year prior
to application filing
• Forces inventors to file within proper time

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 American Inventors Protection Act

• Permits inventor to file provisional

application with PTO pending preparation
and filing of final and complete patent
application.
– Provisional rights granted for three months

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 American Inventors Protection Act
(continued)

• Requires PTO to either issue or deny a

patent within three years after filing of
application
• Provides that non-patent holders may
challenge a patent as overly broad
• Decisions of PTO appealed to U.S. Court
of Appeals

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 Patent Infringement
• Patent holders own exclusive rights to use and
exploit their patent.
• In case of unauthorized use, plaintiff may recover:
– Money damages equal to royalty rate
– Other damages, e.g., loss of customers
– Order for destruction of infringing items
– Injunction against infringer
– Treble damages for intentional infringement

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 Copyright Revision Act of 1976

• Protects work of authors and creative

persons.
• Only tangible writings are subject to
copyright registration and protection.
– E.g., books, periodicals, newspapers,
lectures, musical compositions, movies, radio
and TV productions, maps, paintings,
sculpture, photos, cartoons, MP3 files.

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 Registration of Copyrights

• Must be an original work

• Register with U.S.
Copyright Office
• Registration
– Permissive
– Voluntary
– Done at any time during term of
copyright
• Not required to use © or word “copyright”

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 Sonny Bono Copyright Term
Extension Act of 1998
• Grants copyright terms to:
– Individual Copyright Holder
• Life of author plus 70 years
– Corporate Copyright Holder
• The shorter of 95 years from the year of first
publication, or 120 years from the year of creation
• After copyright expires, work enters public
domain

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 Copyright Infringement

• Occurs when a party copies a substantial

and material part of the plaintiff’s
copyrighted work without permission.
• Successful plaintiff may recover:
– Profit
– Damages
– Order requiring impoundment and destruction
– Injunction

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 Contributory Copyright Infringement

• Secondary liability on parties who

knowingly contribute to another’s copyright
infringement.
– E.g., certain companies that provided free
music file-sharing software (Grokster and
StreamCast)

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 Fair Use Doctrine

• Copyright holder’s rights in the work not

absolute.
• Law permits certain limited unauthorized
use of copyrighted materials.
– E.g., quotation for review or criticism, use in
parody, reproduction of small part for
educational use.

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 NET Act

• Criminalizes copyright infringement

– Cannot willfully infringe copyright
– Retail value of copyrighted work must exceed
$1,000
– One year imprisonment
– Fines of up to $100,000

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 Digital Millennium Copyright Act
• Prohibits unauthorized access to copyrighted
digital works by circumventing wrapper or
encryption technology.
• Prohibits manufacturer and distribution of
methods for circumventing wrapper or
encryption technologies.
• Some exceptions allowed.
• Imposes both civil and criminal penalties.

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 Lanham Trademark Act

• Establishes the requirements for obtaining

a federal mark
• Protects marks from infringement
• Trademarks registered with PTO

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 Lanham Trademark Act (continued)

• Original registration of a mark is valid for 10

years.
– Can be renewed for unlimited number of
10-year periods.
• Registrant is entitled to use registered
trademark symbol ® in connection with
registered trademark or service mark.

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 Registration of Trademarks

• Mark may be registered if it has been

used in commerce
• Can be registered six months prior to use
– Will lose mark if not used within six months
• Mark may be opposed by third parties

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 Marks That Can Be Trademarked
• Trademark
– Distinctive mark, symbol, name, word,
motto, or device that identifies the goods of
a particular business.
• e.g., Xerox; Coca-Cola; Better Ingredients,
Better Pizza
• Service Mark
– Distinguishes the services of the holder
from those of its competitors.
• e.g., FedEx; The Friendly Skies; Big Brown

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 Marks That Can Be Trademarked
(continued)

• Certification Mark
– Certify that goods and services are of a
certain quality or originate from particular
geographical areas.
• e.g., “Florida” oranges, “Napa Valley” wines
• Collective Mark
– Used by cooperatives, associations, and
fraternal organizations.
• e.g., Boy Scouts of America

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 Marks That Cannot Be Registered

• Flag or coat of arms of the United States, any

state, municipality, or foreign nation.
• Marks that are immoral or scandalous.
• Geographical names standing alone.
• Surnames standing alone.
• Any mark that resembles a mark already
registered with the U.S. PTO.

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 Distinctiveness of a Mark

To qualify for federal protection,

• A mark must be distinctive – i.e., a brand name
that is unique and fabricated, or
• Have acquired a “secondary meaning”
– When an ordinary term has become a brand
name. E.g., “Just Do It,” “Sexy Little Things.”

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 Trademark Infringement

• Owner of a mark can sue a third party for

the unauthorized use of a mark.
• Owner must prove that:
– Defendant infringed the plaintiff’s mark by
using it in an unauthorized manner
– Use likely to cause confusion, mistake, or
deception

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 Trademark Infringement (continued)

• Successful plaintiff can recover:

– Profits
– Damages to business and reputation
• Possibility of treble damages for
intentional infringement
– Order for destruction
– Injunction

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 Generic Name

• 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.
• Name becomes descriptive rather than
distinctive.
– E.g., Laser, Escalator, Kerosene, Formica,
Frisbee, Yoyo, Raisin Bran.
– At risk: Google, Xerox, Rollerblade.

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 Federal Dilution Act of 1995

• Marks are a valuable property right that should

not be eroded, blurred, tarnished, or diluted in
any way by another.
• Protects famous marks from dilution.
• Use by other party is actionable if:
– It is commercial.
– It causes dilution of distinctive quality of mark
• E.g., someone other than Nike with domain
name, www.mynike.com

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