COPYRIGHT © 2006 West Legal Studies in Business, a part of The Thomson Corporation. Thomson, the Star logo, and West Legal Studies in Business are trademarks used herein under license. West’s Business Law 10 th Edition Kenneth W. Clarkson, University of Miami Roger LeRoy Miller, Institute for University Studies, Arlington, Texas Gaylord A. Jentz, University of Texas, Austin, Emeritus Frank B. Cross, University of Texas, Austin CHAPTER 8 INTELLECTUAL PROPERTY 1

COPYRIGHT © 2006 West Legal Studies in Business, a part of The Thomson Corporation. Thomson, the Star logo, and West Legal Studies in Business are trademarks used herein under license. 2 Introduction Intellectual property (or “I.P.”) is becoming more important because the value of many corporations (e.g., Microsoft) is based primarily on I.P. Intellectual property (or “I.P.”) is becoming more important because the value of many corporations (e.g., Microsoft) is based primarily on I.P. Founders of America understood the value of I.P.: Article I § 8 authorizes Congress to “secur[e] for limited times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.” Founders of America understood the value of I.P.: Article I § 8 authorizes Congress to “secur[e] for limited times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.” Intellectual property (or “I.P.”) is becoming more important because the value of many corporations (e.g., Microsoft) is based primarily on I.P. Intellectual property (or “I.P.”) is becoming more important because the value of many corporations (e.g., Microsoft) is based primarily on I.P. Founders of America understood the value of I.P.: Article I § 8 authorizes Congress to “secur[e] for limited times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.” Founders of America understood the value of I.P.: Article I § 8 authorizes Congress to “secur[e] for limited times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.”

COPYRIGHT © 2006 West Legal Studies in Business, a part of The Thomson Corporation. Thomson, the Star logo, and West Legal Studies in Business are trademarks used herein under license. 3 Types of Intellectual Property Trademarks. Trademarks.  Service Marks.  Trade Dress. Patents. Patents. Copyrights. Copyrights. Cyberspace I.P. Cyberspace I.P. Trademarks. Trademarks.  Service Marks.  Trade Dress. Patents. Patents. Copyrights. Copyrights. Cyberspace I.P. Cyberspace I.P.

COPYRIGHT © 2006 West Legal Studies in Business, a part of The Thomson Corporation. Thomson, the Star logo, and West Legal Studies in Business are trademarks used herein under license. 4 §1: Trademarks and Related Property Distinctive mark, motto or device or emblem that a manufacturer stamps, prints or otherwise affixes to the goods it produces. Distinctive mark, motto or device or emblem that a manufacturer stamps, prints or otherwise affixes to the goods it produces. Distinguish product/service from goods of other manufacturers and merchants. Distinguish product/service from goods of other manufacturers and merchants. Avoids consumer confusion. Avoids consumer confusion. Case 8.1: The Coca Cola Co. v. The Koke Co. of America (1920). Case 8.1: The Coca Cola Co. v. The Koke Co. of America (1920). Distinctive mark, motto or device or emblem that a manufacturer stamps, prints or otherwise affixes to the goods it produces. Distinctive mark, motto or device or emblem that a manufacturer stamps, prints or otherwise affixes to the goods it produces. Distinguish product/service from goods of other manufacturers and merchants. Distinguish product/service from goods of other manufacturers and merchants. Avoids consumer confusion. Avoids consumer confusion. Case 8.1: The Coca Cola Co. v. The Koke Co. of America (1920). Case 8.1: The Coca Cola Co. v. The Koke Co. of America (1920).

COPYRIGHT © 2006 West Legal Studies in Business, a part of The Thomson Corporation. Thomson, the Star logo, and West Legal Studies in Business are trademarks used herein under license. 5 Statutory Protection of Trademarks Lanham Trademark Act (1946) creates incentives for companies to invest; prevents unjust enrichment of companies who infringe. Lanham Trademark Act (1946) creates incentives for companies to invest; prevents unjust enrichment of companies who infringe. Federal Trademark Dilution Act (1995) creates cause of action regardless of competition or confusion based on a “similar” mark. Federal Trademark Dilution Act (1995) creates cause of action regardless of competition or confusion based on a “similar” mark. Lanham Trademark Act (1946) creates incentives for companies to invest; prevents unjust enrichment of companies who infringe. Lanham Trademark Act (1946) creates incentives for companies to invest; prevents unjust enrichment of companies who infringe. Federal Trademark Dilution Act (1995) creates cause of action regardless of competition or confusion based on a “similar” mark. Federal Trademark Dilution Act (1995) creates cause of action regardless of competition or confusion based on a “similar” mark.

COPYRIGHT © 2006 West Legal Studies in Business, a part of The Thomson Corporation. Thomson, the Star logo, and West Legal Studies in Business are trademarks used herein under license. 6 Trademark Registration Register with U.S. Patent Trademark Office ( if: Register with U.S. Patent Trademark Office ( if:  Mark is currently in commerce; or  Applicant intends to put it into commerce within 6 months.  Registration allows use of “®” symbol. Register with U.S. Patent Trademark Office ( if: Register with U.S. Patent Trademark Office ( if:  Mark is currently in commerce; or  Applicant intends to put it into commerce within 6 months.  Registration allows use of “®” symbol.

COPYRIGHT © 2006 West Legal Studies in Business, a part of The Thomson Corporation. Thomson, the Star logo, and West Legal Studies in Business are trademarks used herein under license. 7 Trademark Infringement Whenever a trademark is copied or used, intentionally or unintentionally, there is infringement. Whenever a trademark is copied or used, intentionally or unintentionally, there is infringement. Trademark owner has cause of action against infringer,unless trademark is a “generic” term. Trademark owner has cause of action against infringer,unless trademark is a “generic” term. Lanham Act designed to prevent consumer confusion about similar marks. Lanham Act designed to prevent consumer confusion about similar marks. Whenever a trademark is copied or used, intentionally or unintentionally, there is infringement. Whenever a trademark is copied or used, intentionally or unintentionally, there is infringement. Trademark owner has cause of action against infringer,unless trademark is a “generic” term. Trademark owner has cause of action against infringer,unless trademark is a “generic” term. Lanham Act designed to prevent consumer confusion about similar marks. Lanham Act designed to prevent consumer confusion about similar marks.

COPYRIGHT © 2006 West Legal Studies in Business, a part of The Thomson Corporation. Thomson, the Star logo, and West Legal Studies in Business are trademarks used herein under license. 8 Distinctiveness of Mark Trademark must be sufficiently distinct. Trademark must be sufficiently distinct. ‘Strong’ Marks: ‘Strong’ Marks:  Fanciful.  Arbitrary.  Suggestive marks. Secondary Meaning. Secondary Meaning. Generic Terms: escalator, aspirin. Generic Terms: escalator, aspirin. Trademark must be sufficiently distinct. Trademark must be sufficiently distinct. ‘Strong’ Marks: ‘Strong’ Marks:  Fanciful.  Arbitrary.  Suggestive marks. Secondary Meaning. Secondary Meaning. Generic Terms: escalator, aspirin. Generic Terms: escalator, aspirin.

COPYRIGHT © 2006 West Legal Studies in Business, a part of The Thomson Corporation. Thomson, the Star logo, and West Legal Studies in Business are trademarks used herein under license. 9 Trade Dress Refers to the image and overall appearance of the product or service: distinctive décor at a restaurant product names, or packaging. Refers to the image and overall appearance of the product or service: distinctive décor at a restaurant product names, or packaging. Same protection as trademark. Same protection as trademark. Issue is consumer confusion. Issue is consumer confusion. Refers to the image and overall appearance of the product or service: distinctive décor at a restaurant product names, or packaging. Refers to the image and overall appearance of the product or service: distinctive décor at a restaurant product names, or packaging. Same protection as trademark. Same protection as trademark. Issue is consumer confusion. Issue is consumer confusion.

COPYRIGHT © 2006 West Legal Studies in Business, a part of The Thomson Corporation. Thomson, the Star logo, and West Legal Studies in Business are trademarks used herein under license. 10 Service, Certification, and Collective Marks Similar to trademark but used to distinguish services of one person/company from another. Similar to trademark but used to distinguish services of one person/company from another. Titles and character names used in media are frequently registered as service marks. Titles and character names used in media are frequently registered as service marks. Similar to trademark but used to distinguish services of one person/company from another. Similar to trademark but used to distinguish services of one person/company from another. Titles and character names used in media are frequently registered as service marks. Titles and character names used in media are frequently registered as service marks.

COPYRIGHT © 2006 West Legal Studies in Business, a part of The Thomson Corporation. Thomson, the Star logo, and West Legal Studies in Business are trademarks used herein under license. 11 Trade Names Trademarks apply to products: e.g., Pepsi-Cola®. Trademarks apply to products: e.g., Pepsi-Cola®. Trade name applies to companies and are protected by federal law as well. Trade name applies to companies and are protected by federal law as well.  Example: Safeway®. Trademarks apply to products: e.g., Pepsi-Cola®. Trademarks apply to products: e.g., Pepsi-Cola®. Trade name applies to companies and are protected by federal law as well. Trade name applies to companies and are protected by federal law as well.  Example: Safeway®.

COPYRIGHT © 2006 West Legal Studies in Business, a part of The Thomson Corporation. Thomson, the Star logo, and West Legal Studies in Business are trademarks used herein under license. 12 § 2: Cyber Marks Online trademarks. Online trademarks. Domain Names: Domain Names:  Conflicts: ICANN, WIPO. Anti-Cybersquatting Consumer Protection Act (1999) amended the Lanham Act. Anti-Cybersquatting Consumer Protection Act (1999) amended the Lanham Act. Online trademarks. Online trademarks. Domain Names: Domain Names:  Conflicts: ICANN, WIPO. Anti-Cybersquatting Consumer Protection Act (1999) amended the Lanham Act. Anti-Cybersquatting Consumer Protection Act (1999) amended the Lanham Act.

COPYRIGHT © 2006 West Legal Studies in Business, a part of The Thomson Corporation. Thomson, the Star logo, and West Legal Studies in Business are trademarks used herein under license. 13 Cyber Marks Meta Tags. Meta Tags.  Case 8.2: Playboy Enterprises v. Welles (2002). Dilution in the Online World. Dilution in the Online World.  Candyland.com. Licensing allows use of trademark. Licensing allows use of trademark. Meta Tags. Meta Tags.  Case 8.2: Playboy Enterprises v. Welles (2002). Dilution in the Online World. Dilution in the Online World.  Candyland.com. Licensing allows use of trademark. Licensing allows use of trademark.

COPYRIGHT © 2006 West Legal Studies in Business, a part of The Thomson Corporation. Thomson, the Star logo, and West Legal Studies in Business are trademarks used herein under license. 14 §3: Patents Exclusive federal grant from U.S. Patent and Trademark Office to make, use and sell an invention for 20 years. Exclusive federal grant from U.S. Patent and Trademark Office to make, use and sell an invention for 20 years. Patent Infringement. Patent Infringement. Patents for Software are now available. Patents for Software are now available. Patents for Business Processes. Patents for Business Processes.  State Street Bank & Trust Co. v. Signature Financial Group, Inc. (1998). Exclusive federal grant from U.S. Patent and Trademark Office to make, use and sell an invention for 20 years. Exclusive federal grant from U.S. Patent and Trademark Office to make, use and sell an invention for 20 years. Patent Infringement. Patent Infringement. Patents for Software are now available. Patents for Software are now available. Patents for Business Processes. Patents for Business Processes.  State Street Bank & Trust Co. v. Signature Financial Group, Inc. (1998).

COPYRIGHT © 2006 West Legal Studies in Business, a part of The Thomson Corporation. Thomson, the Star logo, and West Legal Studies in Business are trademarks used herein under license. 15 §4: Copyrights Automatic protection after Automatic protection after Intangible property right to author for her life plus 70 years. Intangible property right to author for her life plus 70 years.  For publishing houses, copyright expires 95 years from publication or 120 years from creation, whichever is first. Works can be protected by registration at U.S. Copyright Office ( Works can be protected by registration at U.S. Copyright Office ( Automatic protection after Automatic protection after Intangible property right to author for her life plus 70 years. Intangible property right to author for her life plus 70 years.  For publishing houses, copyright expires 95 years from publication or 120 years from creation, whichever is first. Works can be protected by registration at U.S. Copyright Office ( Works can be protected by registration at U.S. Copyright Office (

COPYRIGHT © 2006 West Legal Studies in Business, a part of The Thomson Corporation. Thomson, the Star logo, and West Legal Studies in Business are trademarks used herein under license. 16 Copyrights: What is Protected Expression? Can only copyright the expression of an idea, not the idea itself (Section 102). Can only copyright the expression of an idea, not the idea itself (Section 102). Work must be original and fixed in a durable medium: literary, musical, choreographical and dramatic works, pictoral, graphic and sculptures, films/ audiovisual/ TV/ sounds, computer software and architectural plans. Work must be original and fixed in a durable medium: literary, musical, choreographical and dramatic works, pictoral, graphic and sculptures, films/ audiovisual/ TV/ sounds, computer software and architectural plans. Can only copyright the expression of an idea, not the idea itself (Section 102). Can only copyright the expression of an idea, not the idea itself (Section 102). Work must be original and fixed in a durable medium: literary, musical, choreographical and dramatic works, pictoral, graphic and sculptures, films/ audiovisual/ TV/ sounds, computer software and architectural plans. Work must be original and fixed in a durable medium: literary, musical, choreographical and dramatic works, pictoral, graphic and sculptures, films/ audiovisual/ TV/ sounds, computer software and architectural plans.

COPYRIGHT © 2006 West Legal Studies in Business, a part of The Thomson Corporation. Thomson, the Star logo, and West Legal Studies in Business are trademarks used herein under license. 17 Compilations of facts are copyrightable but the compilation must be “original.” Compilations of facts are copyrightable but the compilation must be “original.”  See, Bellsouth Advertising & Publishing Co. v. Donnelley Information Publishing, Inc. (1993). “Works Made For Hire”. “Works Made For Hire”.  Unless agreed otherwise, the authorship of works created by an employee within the scope of employment, remains with the employer. Compilations of facts are copyrightable but the compilation must be “original.” Compilations of facts are copyrightable but the compilation must be “original.”  See, Bellsouth Advertising & Publishing Co. v. Donnelley Information Publishing, Inc. (1993). “Works Made For Hire”. “Works Made For Hire”.  Unless agreed otherwise, the authorship of works created by an employee within the scope of employment, remains with the employer. Copyrights: What is Protected Expression?

COPYRIGHT © 2006 West Legal Studies in Business, a part of The Thomson Corporation. Thomson, the Star logo, and West Legal Studies in Business are trademarks used herein under license. 18 Copyright Infringement Copyright Infringement: whenever unauthorized copying occurs. Copyright Infringement: whenever unauthorized copying occurs.  Damages: actual to criminal prosecution. “Fair Use”: Section 107 of the Copyright Act provides for exception to liability from reproduction of copyright under the the “fair use” doctrine when material is used for criticism, comment, news, criticism, teaching, research. “Fair Use”: Section 107 of the Copyright Act provides for exception to liability from reproduction of copyright under the the “fair use” doctrine when material is used for criticism, comment, news, criticism, teaching, research. Copyright Infringement: whenever unauthorized copying occurs. Copyright Infringement: whenever unauthorized copying occurs.  Damages: actual to criminal prosecution. “Fair Use”: Section 107 of the Copyright Act provides for exception to liability from reproduction of copyright under the the “fair use” doctrine when material is used for criticism, comment, news, criticism, teaching, research. “Fair Use”: Section 107 of the Copyright Act provides for exception to liability from reproduction of copyright under the the “fair use” doctrine when material is used for criticism, comment, news, criticism, teaching, research.

COPYRIGHT © 2006 West Legal Studies in Business, a part of The Thomson Corporation. Thomson, the Star logo, and West Legal Studies in Business are trademarks used herein under license. 19 Copyright Protection for Software Computer Software Copyright Act (1980). Computer Software Copyright Act (1980).  Classifies computer software as a “literary work.” Apple Computer, Inc. v. Franklin Computer Co. (1983).Apple Computer, Inc. v. Franklin Computer Co. (1983). Courts generally do not apply copyright protection to the “look and feel” of a computer program. Courts generally do not apply copyright protection to the “look and feel” of a computer program. Computer Software Copyright Act (1980). Computer Software Copyright Act (1980).  Classifies computer software as a “literary work.” Apple Computer, Inc. v. Franklin Computer Co. (1983).Apple Computer, Inc. v. Franklin Computer Co. (1983). Courts generally do not apply copyright protection to the “look and feel” of a computer program. Courts generally do not apply copyright protection to the “look and feel” of a computer program.

COPYRIGHT © 2006 West Legal Studies in Business, a part of The Thomson Corporation. Thomson, the Star logo, and West Legal Studies in Business are trademarks used herein under license. 20 § 5: Copyrights in Digital Information Based on the Copyright Act of Based on the Copyright Act of Much of the content on the internet consists of copyrighted I.P. Much of the content on the internet consists of copyrighted I.P.  Infringement may occur when a song (or any part of it) is copied or downloaded into a computer.  Case 8.3: Bridgeport Music, Inc. v. Dimension Films, (2003). Based on the Copyright Act of Based on the Copyright Act of Much of the content on the internet consists of copyrighted I.P. Much of the content on the internet consists of copyrighted I.P.  Infringement may occur when a song (or any part of it) is copied or downloaded into a computer.  Case 8.3: Bridgeport Music, Inc. v. Dimension Films, (2003).

COPYRIGHT © 2006 West Legal Studies in Business, a part of The Thomson Corporation. Thomson, the Star logo, and West Legal Studies in Business are trademarks used herein under license. 21 Digital Copyrights: Further Developments No Electronic Theft Act (1997). No Electronic Theft Act (1997).  Extends criminal liability for piracy of copyrighted materials—even if no profit.  Also modified the ‘fair use’ exception to prevent unauthorized copies of music, books, or movies for personal use. No Electronic Theft Act (1997). No Electronic Theft Act (1997).  Extends criminal liability for piracy of copyrighted materials—even if no profit.  Also modified the ‘fair use’ exception to prevent unauthorized copies of music, books, or movies for personal use.

COPYRIGHT © 2006 West Legal Studies in Business, a part of The Thomson Corporation. Thomson, the Star logo, and West Legal Studies in Business are trademarks used herein under license. 22 Digital Millennium Copyright Act (1998). Digital Millennium Copyright Act (1998).  Provides civil and criminal penalties to circumvent encryption software (like DVD).  Limits ISP liability for subscriber act.  ‘Fair Use’ Exceptions for Libraries, universities and others. Digital Millennium Copyright Act (1998). Digital Millennium Copyright Act (1998).  Provides civil and criminal penalties to circumvent encryption software (like DVD).  Limits ISP liability for subscriber act.  ‘Fair Use’ Exceptions for Libraries, universities and others. Digital Copyrights: Further Developments

COPYRIGHT © 2006 West Legal Studies in Business, a part of The Thomson Corporation. Thomson, the Star logo, and West Legal Studies in Business are trademarks used herein under license. 23 Digital Copyrights: MP3 and File Sharing Technology Peer to Peer (P2P) Networking. Peer to Peer (P2P) Networking.  Music sharing (Napster, Kazaa, Gnutella).  Music storage and vicarious liability.  Case 8.4: A & M Records v. Napster (2001). Court found Napster vicariously liable for copyright infringement by its users. New File Sharing Technologies. New File Sharing Technologies.  Morpheus and Kazaa. Peer to Peer (P2P) Networking. Peer to Peer (P2P) Networking.  Music sharing (Napster, Kazaa, Gnutella).  Music storage and vicarious liability.  Case 8.4: A & M Records v. Napster (2001). Court found Napster vicariously liable for copyright infringement by its users. New File Sharing Technologies. New File Sharing Technologies.  Morpheus and Kazaa.

COPYRIGHT © 2006 West Legal Studies in Business, a part of The Thomson Corporation. Thomson, the Star logo, and West Legal Studies in Business are trademarks used herein under license. 24 §6: Trade Secrets Business process or information that cannot or should not be patented, copyrighted or trademarked. Business process or information that cannot or should not be patented, copyrighted or trademarked. Can include: customer lists, plans, research, formulae, pricing information, marketing techniques. Can include: customer lists, plans, research, formulae, pricing information, marketing techniques. Also protection from competitors. Also protection from competitors. Uniform Trade Secrets Act (1979). Uniform Trade Secrets Act (1979). Business process or information that cannot or should not be patented, copyrighted or trademarked. Business process or information that cannot or should not be patented, copyrighted or trademarked. Can include: customer lists, plans, research, formulae, pricing information, marketing techniques. Can include: customer lists, plans, research, formulae, pricing information, marketing techniques. Also protection from competitors. Also protection from competitors. Uniform Trade Secrets Act (1979). Uniform Trade Secrets Act (1979).

COPYRIGHT © 2006 West Legal Studies in Business, a part of The Thomson Corporation. Thomson, the Star logo, and West Legal Studies in Business are trademarks used herein under license. 25 Trade Secrets Hacking into a competitor’s computer may be criminal. Hacking into a competitor’s computer may be criminal. Economic Espionage Act (1996). Economic Espionage Act (1996). Trade Secrets in Cyberspace. Trade Secrets in Cyberspace. Hacking into a competitor’s computer may be criminal. Hacking into a competitor’s computer may be criminal. Economic Espionage Act (1996). Economic Espionage Act (1996). Trade Secrets in Cyberspace. Trade Secrets in Cyberspace.

COPYRIGHT © 2006 West Legal Studies in Business, a part of The Thomson Corporation. Thomson, the Star logo, and West Legal Studies in Business are trademarks used herein under license. 26 §7: International Protection for Intellectual Property Berne Convention (WIPO). Berne Convention (WIPO).  Every country who signed the agreement must recognize, e.g., an American author’s copyright. No notice is required.  More safeguards against infringement on the web.  World Intellectual Property Organization (WIPO) Copyright Treaty TRIPS Agreement of TRIPS Agreement of  Created the World Trade Organization.  Each member country must include in its domestic laws broad I.P. protection and enforcement measures. Berne Convention (WIPO). Berne Convention (WIPO).  Every country who signed the agreement must recognize, e.g., an American author’s copyright. No notice is required.  More safeguards against infringement on the web.  World Intellectual Property Organization (WIPO) Copyright Treaty TRIPS Agreement of TRIPS Agreement of  Created the World Trade Organization.  Each member country must include in its domestic laws broad I.P. protection and enforcement measures.

COPYRIGHT © 2006 West Legal Studies in Business, a part of The Thomson Corporation. Thomson, the Star logo, and West Legal Studies in Business are trademarks used herein under license. 27 Madrid Protocol. Madrid Protocol.  Signed by sixty-one countries, including U.S. in  Allows a single country can apply for simultaneous trademark protection in all member countries. Madrid Protocol. Madrid Protocol.  Signed by sixty-one countries, including U.S. in  Allows a single country can apply for simultaneous trademark protection in all member countries. §7: International Protection for Intellectual Property