Kettle Copyright & Trademark – F13
Intellectual Property Law in Context
I. The Sources and Limits of Intellectual Property Law
a. U.S. Constitution, Art. I, § 8, Cl. 8: “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.
b. U.S. Constitution, Art. I, § 8, Cl. 3: “Congress’ power to regulate Commerce with foreign Nations, and among the several states, and with the Indian Tribes”
i. This is the clause for federal trademark law
c. The U.S. Constitution’s Supremacy Clause establish that federal patent and copyright statutes preempt state laws.
i. Preemption – States cannot protect subject matter that comes within Congress’ Copyright-Patent power, but fails to qualify for federal protection
ii. § 301(a) of the Copyright act outlines preemption
iii. The balance of power over intellectual property has shifted from state to federal from the 1800’s to now, but newer forms of IP have arisen through state law
d. Eldred v. Ashcroft established that Congress was within its constitutional authority to place existing and future copyrights in parity and that they could prescribe the duration of copyrights.
e. Copyright Acts – History
i. 1970 Act: first copyright statute, term of 14 years from the date of publication, renewable for an additional 14 years if the author survived the first term. Applied to existing and future works.
ii. 1831 Act: expanded to 42 years (28 years from publication, renewable for an additional 14 years). It applied to existed and future works, but to qualify for the extension, the existing work must be in its initial copyright term at the time the act became effective.
iii. 1909 Act – 56 years (28 years from publication, renewable for an additional 28 years). Applied to existing and future works.
iv. 1976 Act [Effective: 1/1/1978]: altered method for computing federal copyright terms, protection lasted from work’s creation until 50 years after author’s death.
1. For works created by individual natural persons, protection runs from the work’s creation, and lasts until 50 years after the author’s death. [this aligned the U.S. with Berne]
2. For anonymous works, pseudonymous works, and works made for hire, the term was 75 years from the date of publication or 100 years from creation, whichever expired first.
3. The 1976 Act became effective on 1/1/1978, and governed all works not published by this date.
v. 1998 Act: Copyright Term Extension Act (CTEA, 1998): Also known as the Sonny Bono Act, legislation that enlarged the duration of copyrights for 20 years (70 years after the authors death). Applies to both existing and future copyrights.
1. For works created by individual natural persons, protection runs from the work’s creation, and lasts until 70 years after the author’s death.
2. For anonymous works, pseudonymous works, and works made for hire, the term was 95 years from the date of publication, or 120 years from creation (whichever expired first).
3. Everything was increased by 20 years. This standard harmonized the term with the term adopted by the European Union in 1993.
4. Applied to all works not published by 1/1/1978.
5. The Act was enacted on 10/27/1998.
f. The federal trade secret law is the Economic Espionage Act of 1998.
g. The federal right of publicity act is the Federal Trademark Act, § 43(a) [also known as 15 U.S.C. § 1125(a).
h. In the global community…
i. Paris Convention – for Patents/Trademarks
ii. Berne Convention (U.S. joined 03/1/1989) – for Copyrights, bars formalities as a condition to protection and requires:
1. National Treatment – each treaty member must protect creations of nationals of other treaty members on same terms that it protects creations of its own citizens
2. Minimum Standards – where the protection a country gives is less than what the treaty prescribes, the country must give foreign nationals no less than treaty standards
II. The Nature and Functions of Intellectual Property Law
a. Object of Intellectual Property Law
i. Ensures consumers a wide variety of intellectual goods at lowest price; achieves this by giving individuals property rights in information produced and economic incentive to produce (opportunity to profit from their creations)
b. IP Rights are freely alienable – the author/inventor can transfer his rights
c. Economic Problems of Intellectual Property Law
i. Inappropriability – the information has little value to the producer unless he can sell it, but selling it exposes it to competitors who can freely replicate it and sell it at a lower price than what the initial producer needs to recoup his investment
ii. Indivisibility – information is intangible; cannot be completely consumed, unlimited number of users can consume it without depletion
iii. Once the information is produced, it can benefit many users without imposing additional costs on the producer.
d. Public Policy Dilemma:
i. if society withholds property rights from creative work, the price that its producers can charge for access to it will begin to approach zero, their revenues will diminish and, with them, their incentives to produce more.
ii. However, if society confers property rights on creative works, prices will rise, and information produced will reach smaller, wealthier audiences, even though it might be that the work could be disseminated to everyone else at no additional cost.
e. The Patent System
i. Benefits
1. Incentive to invent by offering a reward to inventor – encourages expenditure of capital/time for research development
2. Stimulates investment of additional capital in further development and marketing of an invention – no one else can use, sell, make so inventor will invest money to increase public consumption of his product.
3. Encourages early public disclosure of tech information that otherwise might be kept secret, decreases likelihood of duplicative efforts.
4. Encourages international exchange of products and information.
5. Competitive Research – objectives of “race to the patent office”
a. First to find patentable solution to a problem posed by needs and preferences of consumers
b. After a competitor has found a solution, gotten the patent rights – alternative solution in order to be able to compete in the marketplace (“invent around the patent”)
c. Attempt to find all possible alternative solutions, even inferior, in order to block the competitor’s efforts to invent around the first patent
ii. Problems
1. Lost economic investment for inventor who lost the race
2. Is substitute invention a waste of time? Don’t we already have a solution to the problem? Shouldn’t inventors use their time to invent something NEW or is research just for research’s sake ok?
3. Alternative inventions aren’t as valuable as the original – inventive talent is wasted
4. Justification for “wasted effort” = serendipity! Might discover something new.
f. The Trademark system
i. Purpose
1. Facilitates and enhances consumer decisions
2. Creates incentives for firms to produce products of desirable qualities even when these are not observable before purchase, because the TM helps the consumer identify these unobservable features before they purchase the product
a. Information Asymmetry – Sellers have knowledge of unobservable features of a product that consumers do not.
b. Observable features can be imitated
c. If goods looked identical, consumers would only pick the one with “desirable qualities” by chance.
3. Provided to consumer in “summary form” – trademark is symbol that consumer identifies with a specific combination of features
ii. Trademark identifies a quality standard, specific features of a product – the variety of that product
iii. Success of Trademark in conveying to consumer the unobservable features of the product depends on:
1. Underlying market conditions,
2. The product,
3. Frequency of purchase,
4. Ease of information dissemination across consumers, and
5. Consumer’s reca
nsideration exchanged is grossly unequal.
b. Misappropriation Claim – you need general novelty, because property law does not protect against misappropriation of that which is freely available to everyone.
c. An idea may be so unoriginal or lacking in novelty generally that, as a matter of law, the buyer is deemed to have knowledge of the idea (and thus neither theory works).
3. Nadel v. Play-By-Play Toys & Novelties, Inc. [2nd Cir. 2000]: Plaintiff had idea for spinning/singing Tasmanian devil toy. Sent prototype to a toy manufacturing company, which was supposed to send him some samples. Plaintiff got neither samples nor prototype back. Parties had engaged in a pre-disclosure confidentiality agreement. Defendant then put out a similar toy and claimed that it did not misappropriate Plaintiff’s idea because allegedly they never got the prototype and that the idea was not novel. Court did find that there was an issue of material fact as to the novelty and remanded.
b. Theories of Recovery
i. Express Contract – With contract theories, novelty is the consideration
1. Best way to protect an idea
2. Degree of novelty required is less than other theories – novelty to the receiving party is sufficient – even if the idea is already in the marketplace
3. Novelty to the plaintiff = consideration for the contract
ii. Implied Contract – requires some novelty
1. Has the defendant paid for such ideas in the past?
2. Has the plaintiff normally been paid for his ideas?
3. Is there an industry custom for paying for such ideas?
iii. Quasi-Contract/Unjust Enrichment – requires highest level of novelty
1. Did the defendant receive a benefit for which equity and justice require him to pay?
2. The intent of the parties is not relevant.
iv. Conversion
1. Defendant took Plaintiff’s property
v. Fiduciary Relationship – Breach of Confidentiality
1. Plaintiff has the burden of showing existence of a confidential relationship
2. Courts generally do not look to novelty in these cases
II. Unfair Competition
a. Background
i. Any time a copyright or a trademark is infringed, it is unfair competition.
ii. Historically, Unfair Competition remained province of state law, while trademark became mainly the province of the federal law.
1. Unfair Competition is today both a supplement to federal trademark law and a significant doctrine in its own right.
2. State unfair competition law is an important source of restitutionary measures not recognized under federal law.
3. State Trademark and Unfair Competition Law (1989) compiles the trademark and unfair competition laws of all 50 states.
iii. Unfair Competition law seeks to protect both producers and consumers by protecting:
1. The first to use a name, brand or other symbol in connection with the sales of goods or services against another competitor whose subsequent use of the symbol confuses or is likely to confuse consumers into believing that the first user is the source of the goods.
iv. The Unfair Competition Restatement encompasses:
1. Passing Off
2. Trademark Infringement
3. Deceptive Advertising
4. Trade Secret Theft
5. Misappropriation
6. Infringement of the Rights of Publicity
