COPYRIGHT © 2011 South-Western/Cengage Learning. 1 Click your mouse anywhere on the screen to advance the text in each slide. After the starburst appears, click a blue triangle to move to the next slide or previous slide.

COPYRIGHT © 2011 South-Western/Cengage Learning. 2 Quote of the Day “One of the greatest pains to human nature is the pain of a new idea.” Walter Bagehot, English economist and journalist

COPYRIGHT © 2011 South-Western/Cengage Learning. 3 Nature of Intellectual Property  Unlike other types of property, intellectual property has little economic value unless it is used by many.  The problem lies in the fact that intellectual property is typically expensive to produce, but cheap to transmit, giving more profit to those who do less work.  The government protects producers of intellectual property through patents and copyrights.

COPYRIGHT © 2011 South-Western/Cengage Learning. 4 Patents  A patent is a grant by the government that permits the inventor exclusive use of an invention for 20 years (or 14 years in the case of design patents).  A patent is not available solely for an idea, but only for its tangible application.  Patents are not available for laws of nature, scientific principles, or mathematical formulas and algorithms.

COPYRIGHT © 2011 South-Western/Cengage Learning. 5 Utility Patent  This is the basic type of patent. It is available to those who invent or significantly improve a: Mechanical invention Electrical invention Chemical invention Process Machine Composition of matter

COPYRIGHT © 2011 South-Western/Cengage Learning. 6 Other Patents  Design Patent – protects the appearance, but not the function of an item.  Plant Patent – protects a newly created plant, provided that the inventor can reproduce it asexually (through grafting, for example).

COPYRIGHT © 2011 South-Western/Cengage Learning. 7 Requirements for a Patent  To obtain a patent, the new invention must be: Novel – not known or used in this country and not published anywhere. Nonobvious – cannot be an obvious way to do something. Useful – must have some application, even if not commercially practical.

COPYRIGHT © 2011 South-Western/Cengage Learning. 8 Patent Application & Issuance  Priority Between Two Inventors – generally, the person first to invent and use the product is given the patent, even over an earlier filer.  Prior Sale – must apply for a patent within one year of selling the product.  Provisional Patent Application – a shorter, cheaper way to file for a patent temporarily, to determine if the invention is commercially practical.

COPYRIGHT © 2011 South-Western/Cengage Learning. 9 Duration of a Patent  Patents are valid for 20 years from the date of filing the application.  Design patents are only good for 14 years from the date of issuance.  Infringement A patent holder has exclusive rights to use the invention during the terms of the patent.

COPYRIGHT © 2011 South-Western/Cengage Learning. 10 International Patent Treaties  The Paris Convention for the Protection of Industrial Property – requires each member country to grant citizens of other member countries the same rights under patent laws that its own citizens enjoy.  The Patent Law Treaty – requires that countries use the same standards for the form and content of patent applications.

COPYRIGHT © 2011 South-Western/Cengage Learning. 11 Copyrights  The holder of a copyright owns the particular tangible expression of an idea, but not the underlying idea or method of operation.  A work is automatically copyrighted once it is in tangible form. Registration with the Copyright Office of the Library of Congress is necessary only if the holder brings suit to enforce the copyright. Use of the copyright symbol (©) is optional, but often recommended to make ownership clear.

COPYRIGHT © 2011 South-Western/Cengage Learning. 12 Copyrights  The Copyright Act protects literature, music, drama, choreography, pictures, sculpture, movies, recordings, and architectural works.  Currently, copyrights are valid until 70 years after the death of the work’s only or last living author. In the case of works owned by a corporation, the copyright lasts 95 years from publication or 120 years from creation.

COPYRIGHT © 2011 South-Western/Cengage Learning. 13 Infringement  To prove a violation, the plaintiff must present evidence that the work was original and that either: The infringer actually copied the work, or That the infringer had access to the original and the two works are substantially similar.  A court may: Prohibit the infringer from further violations, Destroy infringing material, and Require the infringer to pay damages.

COPYRIGHT © 2011 South-Western/Cengage Learning. 14 Fair Use  The doctrine of fair use permits limited use of copyrighted material without permission of the author for purposes such as criticism, comment, news reporting, scholarship, or research. The court held that parody is a fair use of copyrighted material as long as the use of the original is not excessive. Downloads of music files from the Internet (as with Napster or MP3.com) is NOT within the bounds of fair use.

COPYRIGHT © 2011 South-Western/Cengage Learning. 15 Fair Use (cont’d)  Linking of Web Sites Does linking another web site to yours violate the copyright holder of the other site? (Still under consideration by courts.)  Digital Music and Movies In most cases, downloading music and movies without paying a royalty to the copyright owner infringes on their copyright  No Electronic Theft Act Provides for criminal penalties for the reproduction or distribution of copyrighted material with a value of over $1000, even if the offender has no profit motive.

COPYRIGHT © 2011 South-Western/Cengage Learning. 16 Fair Use (cont’d)  The Family Entertainment and Copyright Act Makes it illegal to use a camcorder to film a movie in a theater and establishes criminal penalties for willful copyright infringement involving distribution of software, music or film on a computer network.  Digital Millennium Copyright Act Makes it illegal to delete copyright information, such as the author’s name, and then distribute the work via the internet. It is also illegal to circumvent encryption or scrambling devices. It is illegal to distribute tools and technologies used to circumvent encryption devices.

COPYRIGHT © 2011 South-Western/Cengage Learning. 17 Trademarks  A trademark is any combination of words and symbols that a business uses to distinguish products or services.  Types of Marks Trademarks—affixed to goods Service marks—identify services, not goods Certification marks—marks used by an organization to attest that products meet certain standards Collective marks—marks that identify members of an organization

COPYRIGHT © 2011 South-Western/Cengage Learning. 18 Ownership and Registration  First person to use a mark in trade owns it.  Registration is not necessary, but does have some advantages. Allows owner to use the ® symbol Makes trademark protection valid nationally Notifies public of its use, which makes challenges virtually moot Increases damage awards available Generally gives first right to use the trademark as an Internet domain name

COPYRIGHT © 2011 South-Western/Cengage Learning. 19 Valid Trademarks  To be valid, a trademark must be distinctive. Fanciful marks – made up words Arbitrary marks – existing words that otherwise have no tie to the product Suggestive marks – indirectly describe the product Trade dress – includes shape, size, color and texture, if it is unique to this product.  Marks with secondary meaning can be trademarks if they have been used so long that they are associated with a product in the public’s mind.

COPYRIGHT © 2011 South-Western/Cengage Learning. 20 Valid Trademarks  To be valid, a trademark cannot be: Too similar to an existing mark A generic word, such as “shoe” A descriptive word such as “crunchy” A person’s name alone Deceptive, scandalous or immoral  Sometimes a valid trademark loses its validity if it is used so much that it becomes a generic name. (Ex. Zipper, escalator, aspirin, linoleum, yo-yo)

COPYRIGHT © 2011 South-Western/Cengage Learning. 21 Infringement  To win an infringement suit, the trademark owner must show that the defendant’s trademark is likely to deceive customers about who made the product or provided the service.  Federal Trademark Dilution Act of 1995 The new statute prevents others from using a trademark in a way that dilutes its value. Even if the misuse does not confuse a consumer about the origin of a product, a trademark cannot be used by others.

COPYRIGHT © 2011 South-Western/Cengage Learning. 22 Domain Names  Internet addresses, (domain names), were originally assigned with no cost.  Now, domain names are bought and sold – sometimes for enormous amounts of money, and sometimes sold by people who originally registered those names for free.  If a domain name infringes on a registered trademark, the domain name will be suspended immediately if the trademark owner challenges it.

COPYRIGHT © 2011 South-Western/Cengage Learning. 23 Conflict over Domain Names  The Anticybersquatting Consumer Protection Act permits trademark owners and famous people to sue anyone who registers their name as a domain name in “bad faith.”  Domain names are now regulated by the Internet Corporation for Assigned Names and Numbers (ICANN), which also settles disputes by arbitration.

COPYRIGHT © 2011 South-Western/Cengage Learning. 24 International Laws  Some treaties and other agreements protect copyrights and trademarks worldwide. These include: Paris Convention Patent Cooperation Treaty Berne Convention WIPO Copyright Treaty Madrid Agreement Trademark Law Treaty

COPYRIGHT © 2011 South-Western/Cengage Learning. 25 Trade Secrets  A trade secret is a formula, device, process, method, or compilation of information that, used in business, gives the owner an advantage over competitors who do not know it.  To decide if something is a trade secret: How difficult was the information to obtain? Does it create an economic advantage? Does the company protect it?

COPYRIGHT © 2011 South-Western/Cengage Learning. 26 Stealing Trade Secrets  Anyone who misappropriates a trade secret is liable to its owner for: Actual damages Unjust enrichment, or A reasonable royalty  The Economic Espionage Act of 1996 This statute prohibits any attempt to steal trade secrets for the benefit of someone other than the owner, including for the benefit of any foreign government.

COPYRIGHT © 2011 South-Western/Cengage Learning. 27 “Intellectual property is a major source of economic prosperity and individual wealth. New ideas increase both productivity and pleasure. Where would we be without patented inventions, books, movies and computer software? ” “Intellectual property is a major source of economic prosperity and individual wealth. New ideas increase both productivity and pleasure. Where would we be without patented inventions, books, movies and computer software? ”