1. Chapter 8: Intellectual Property and Internet Law Copyright © 2009 South-Western Legal Studies in Business, a part of South-Western Cengage Learning. Jentz Miller Cross BUSINESS LAW Alternate Edition 11 th Ed.

2. Copyright © 2009 South-Western Legal Studies in Business, a part of South-Western Cengage Learning. 2Introduction  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.”

3. Copyright © 2009 South-Western Legal Studies in Business, a part of South-Western Cengage Learning. 3 Types of Intellectual Property  Trademarks. –Service Marks. –Trade Dress.  Patents.  Copyrights.  Cyberspace I.P.

4. Copyright © 2009 South-Western Legal Studies in Business, a part of South-Western Cengage Learning. 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.  Distinguish product/service from goods of other manufacturers and merchants.  Avoids consumer confusion.  CASE 8.1 The Coca Cola Co. v. The Koke Co. of America (1920).

5. Copyright © 2009 South-Western Legal Studies in Business, a part of South-Western Cengage Learning. 5 Statutory Protection of Trademarks  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.

6. Copyright © 2009 South-Western Legal Studies in Business, a part of South-Western Cengage Learning. 6 Trademark Registration  Register with U.S. Patent Trademark Office (www.uspto.gov) if: –Mark is currently in commerce; or –Applicant intends to put it into commerce within 6 months. –Registration allows use of “®” symbol.

7. Copyright © 2009 South-Western Legal Studies in Business, a part of South-Western Cengage Learning. 7 Trademark 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.  Lanham Act designed to prevent consumer confusion about similar marks.

8. Copyright © 2009 South-Western Legal Studies in Business, a part of South-Western Cengage Learning. 8 Distinctiveness of Mark  Trademark must be sufficiently distinct.  ‘Strong’ Marks: –Fanciful. –Arbitrary. –Suggestive marks.  Secondary Meaning. –CASE 8.2 Menashe v. V Secret Catalogue, Inc. (2006).  Generic Terms: escalator, aspirin.

9. Copyright © 2009 South-Western Legal Studies in Business, a part of South-Western Cengage Learning. 9 Trade Dress  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.  Issue is consumer confusion.

10. Copyright © 2009 South-Western Legal Studies in Business, a part of South-Western Cengage Learning. 10 Service, Certification, and Collective Marks  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.

11. Copyright © 2009 South-Western Legal Studies in Business, a part of South-Western Cengage Learning. 11 Counterfeit Goods  Importation of goods that bear a fake (counterfeit) trademark damages U.S. businesses and may present serious health risks (nutritional supplements and drugs).  Stop Counterfeiting in Manufactured Goods Act (2006). Penalties: –Up to $2 million and 10 years in prison.

12. Copyright © 2009 South-Western Legal Studies in Business, a part of South-Western Cengage Learning. 12 Trade Names  Trademarks apply to products: e.g., Pepsi- Cola®.  Trade name applies to companies and are protected by federal law as well. –Example: Safeway®.

13. Copyright © 2009 South-Western Legal Studies in Business, a part of South-Western Cengage Learning. 13 § 2: Cyber Marks  Online trademarks.  Domain Names: www.westlaw.com –Conflicts: ICANN, WIPO.  Anti-Cybersquatting Consumer Protection Act (1999) amended the Lanham Act.

14. Copyright © 2009 South-Western Legal Studies in Business, a part of South-Western Cengage Learning. 14 Cyber Marks  Meta Tags. –Playboy Enterprises v. Welles (2002).  Dilution in the Online World. –Candyland.com.  Licensing allows use of trademark.

15. Copyright © 2009 South-Western Legal Studies in Business, a part of South-Western Cengage Learning. 15 §3: Patents  Exclusive federal grant from U.S. Patent and Trademark Office to make, use and sell an invention for 20 years.  Must be “novel, useful, and not obvious” in light of current technology. –CASE 8.3 KSR International Co. v. Teleflex, Inc. (2007).

16. Copyright © 2009 South-Western Legal Studies in Business, a part of South-Western Cengage Learning. 16Patents  First person to invent, not file, gets protection.  Searchable database at www.pto.gov  What is patentable? Almost anything except: (1) laws of nature, (2) natural phenomenon, (3) abstract ideas.  Patents for Software are now available.  Patents for Business Processes. –State Street Bank & Trust Co. v. Signature Financial Group, Inc. (1998).

17. Copyright © 2009 South-Western Legal Studies in Business, a part of South-Western Cengage Learning. 17 Patent Infringement  Patent Infringement. –Is a tort. –May occur even though product is not identical. –Under U.S. law no patent infringement occurs when a patented product is made or sold in another country. (AT&T vs. Microsoft, 2007).  Remedies: injunction, royalties, lost profits.

18. Copyright © 2009 South-Western Legal Studies in Business, a part of South-Western Cengage Learning. 18 §4: Copyrights  Automatic protection after 1978.  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 (www.loc.gov/copyright/).

19. Copyright © 2009 South-Western Legal Studies in Business, a part of South-Western Cengage Learning. 19 Copyrights: What is Protected Expression?  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.

20. Copyright © 2009 South-Western Legal Studies in Business, a part of South-Western Cengage Learning. 20  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”. –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?

21. Copyright © 2009 South-Western Legal Studies in Business, a part of South-Western Cengage Learning. 21 Copyright Infringement  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. –CASE 8.4 Leadsinger, Inc. v. BMG Music Publishing (2008).

22. Copyright © 2009 South-Western Legal Studies in Business, a part of South-Western Cengage Learning. 22 Copyright Protection for Software  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.

23. Copyright © 2009 South-Western Legal Studies in Business, a part of South-Western Cengage Learning. 23 § 5: Copyrights in Digital Information  Based on the Copyright Act of 1976.  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.

24. Copyright © 2009 South-Western Legal Studies in Business, a part of South-Western Cengage Learning. 24 Digital Copyrights: Further Developments  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.

25. Copyright © 2009 South-Western Legal Studies in Business, a part of South-Western Cengage Learning. 25  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

26. Copyright © 2009 South-Western Legal Studies in Business, a part of South-Western Cengage Learning. 26 Digital Copyrights: MP3 and File Sharing Technology  Peer to Peer (P2P) Networking. –Music sharing (Napster, Kazaa, Gnutella). –Music storage and vicarious liability.  The GROKSTER case extended vicarious liability to companies that create/distribute P2P software.

27. Copyright © 2009 South-Western Legal Studies in Business, a part of South-Western Cengage Learning. 27 §6: Trade Secrets  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.  Also protection from competitors.  Uniform Trade Secrets Act (1979).

28. Copyright © 2009 South-Western Legal Studies in Business, a part of South-Western Cengage Learning. 28 Trade Secrets  Hacking into a competitor’s computer may be criminal.  Economic Espionage Act (1996).  Trade Secrets in Cyberspace.

29. Copyright © 2009 South-Western Legal Studies in Business, a part of South-Western Cengage Learning. 29 §7: International Protection for Intellectual Property  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 1996.  TRIPS Agreement of 1994. –Created the World Trade Organization. –Each member country must include in its domestic laws broad I.P. protection and enforcement measures.

30. Copyright © 2009 South-Western Legal Studies in Business, a part of South-Western Cengage Learning. 30  Madrid Protocol. –Signed by sixty-one countries, including U.S. in 2003. –Allows a single country can apply for simultaneous trademark protection in all member countries. §7: International Protection for Intellectual Property