Copyright and Trademark – Professor John Kettle – Fall 2017
3 objectives under IP law: –> enrich society with products, entertainment, and literature
protect creator (author/inventor) –> if we protect they will continue to create b/c they make money
Protect publisher/investor –> person who is going to put the money up, b/c the creator most likely won’t have it.
Enrich/protect the consumer –> public
The Overall Goal –> Investor will invest, creator will continue to create and the consumer will be enriched with whatever is produced.
Constitutional Origins of IP Law
Article I, § 8, clause 3, “Trademark Law” –> “Congress shall have the power to regulate Commerce with Foreign Nations, and among the several states”
Article I, § 8, clause 8, “Copyright & Patent Law” –> “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
I. State/ Common Law Intellectual Property
1) Rights in Undeveloped Ideas
RULE: To successfully claim misappropriation, idea must be generally novel.
Sellers v ABC (1982) – (Geraldo Rivera/Elvis case) p. 37
Seller claimed misappropriation, stating that ABC and Rivera used his idea without compensation. Specifically, Sellers pitched a theory of Elvis’ death (conspiracy theory of murder) to ABC who ended up doing a feature on Elvis’ death but did not mention Sellers theory. There was a copyright agreement between them re: the idea.
HELD: Elements of misappropriation were NOT met. ps theory was not novel, nor sufficiently concrete to give rise to a cause of action. Furthermore, Sellers’ theory wasn’t even specifically used, so there wasn’t any misappropriation of his idea.
Elements of Misappropriation
Novel Idea-(the standard differs, NY says need to be novel to recipient, because novelty takes the place of consideration in the K, the idea becomes the value)
Concrete Form –> has to be written, and detailed enough that someone would know how to act upon it.
D uses ps idea (the most common defense D claim is that they did not use p idea)
p has expectation of $$$
Note: –>CA has largest amount of misappropriation claims, so there are idea submission programs
Idea Submission (the 4 general scenarios)
X submits her idea to Y upon Y’s express solicitation
X informs Y that she would like to submit an idea of possible value to Y and Y does nothing to block the submission.
X thrusts upon Y a full disclosure of her idea before Y has the opportunity to block the submission
X makes no submission at all but charges that Y has copied her idea.
2) Protection of Ideas
Theories of Recovery (levels of proof vary depending of theory of recovery)
Express K in writing –> limited level of novel necessary (Damages based on compensation mentioned in K)
Implied K –> “the law will imply a promise” but to do so court will examine the Relationship between parties –> Has the submitter shown confidential relationship with the recipient (this inferentially implies contractual relationship because confidentially implies that submitter did Not want to divest her rights and recipient aware means he understood not to publish without consent or compensation) (Damages based on presumed amount of payment of reasonable value of idea)
Quasi K –> highest level of novelty (pet rock is novel) and some proof of unjust enrichment on part of recipient. (Damages measured by level of unjust enrichment –> actual profit from the use of idea).
Tort of Conversion –> convert someone else’s property into your own, but Courts don’t really do this much and it’s the hardest to recover under.
Breach of Confidentiality (Fiduciary Duty)
Courts vary by j° –> the question often becomes who is it novel to? The person receiving the idea OR to society?
NY says if it is novel to the recipient then it is novel – the novelty becomes the consideration, especially if it is in writing. In a quasi contract – ideas must be very novel in order to force the user to pay for the idea. One of the highest novelty standards.
CA approaches it from a services rendered approach –> When you submit an idea you are doing a service for that company – so it is easier to collect. Some states require the idea submitter to be a professional inventor/submitter, b/c they are preferred over amateurs. Note the HOLLYWOOD connection here in the easier method of enforcing an obligation.
RULE: An Idea must be NOVEL and CONCRETE especially w/o an express K.
Luddecke v Chevrolet Motor (1934) – (Tilted Chevy case) p.44
A Chevy is sagging & П tells Chevy their heavy parts are all on the wrong side, and wants to submit his idea. Letters back and forth, and tells them what his solution would be, but he never sends them the requested drawings. Chevy’s new model incorporates some of p ideas
Holding: Chevy is not liable for incorporating into its product generalized suggestions made regarding its product. Ideas must be novel and specific. Here, Chevy requested for more concrete form, such as drawings, but p did not provide idea in concrete form. A common-sense idea relating to a product in a generalized way is not novel. p’s suggestion was the logical solution of re-distributing weight is not novel. p did NOT obtain proprietary interest in idea sufficient to form basis of implied K. Expectation of payment is not enough, because was NOT in express agreement.
Ways to improve a Breach of Confidentiality claim
Standard Approach –> Non – disclosure agreement (NDA)
Soft Approach –> shower with letters suggesting “I trust you will not make any use of this .” Make it that so every correspondence includes mentions of confidentiality Repeat, Repeat, Repeat.
RULE: K claim generally requires less novelty and originality than CL Misappropriation claim.
Nadel v Play by Play (2000) –> (spinning monkey case) p.50
p is a pro toy idea man. He has an idea for a spinning toy that sings. p wants to share idea with a company that manus toys. He sends a prototype, and they were supposed to send him some samples which p never got, nor did he get his prototype back. D then puts out toy with similar qualities, and claims they did not use his idea based on lack of novelty claim and that they never got his toy, which meanwhile was sitting on Ds desk.
Holding: Remanded. Under K law in NY, the novelty standard is “novelty to buyer,” so while an idea may be unoriginal, it may have particular value to the buyer and this is evident by willingness to enter into K. In contrast, a misappropriation claim requires that idea be novel and original in absolute terms, because this is a property law theory which only protects that which is not free and available to all.
The Nadel Test for Novelty
Generality v Specificity –> is it a general concept or one of specific application?
Commonality –> how many people are aware of the idea?
Uniqueness –> how different from ideas generally known?
commercial availability –> how available is the idea to the industry
Ink is still Wet ∆–> companies claim idea was yrs old, but in the end the evidence shows otherwise. (See Nadel).
WC Fields Case: Newark dude in the 1930’s submitted gag ideas to W.C. Fields. Fields asks for a few scripts gratis (due to nuisance suits) and then he might consider entering into a K. Ct. awards Newark dude the reasonable value of the ideas he submitted.
3) LIMITS ON PROTECTION
RULE: Even if idea does not receive patent and become publicly available and marketed, if express K was created prior to, royalties payments will continue to be enforced since already profited from first rights.
Aronson v Quick Point Co (1979) (keychain idea)
p had keychain idea. Agreement that if idea is patentable they will pay 5%, and if not 2.5%. Patent was not granted, so in K they agreed to pay the 2.5%, but after 14 yrs, ∆ wanted out of the agreement b/c anyone could make, use, and sell the product.
Holding: B/C it was express K and not in conflict with 3 goals of patent law, D had first-on-the market rights that was adequate consideration for the K. Failure to obtain a patent by an inventor will not preclude enforcement of a K paying royalties on the invention to the inventor. Fed patent law does not expressly preempt state laws regarding K.
3 Goals of Patent Law
To foster and reward invention
To promote disclosure & stimulate further invention
To assure that ideas in the public domain remain there for the free use of the public
As a recipient of ideas, you want to avoid litigation by:
setting up a process for submissions
only want the obligation to pay if u use the idea (K)
II. UNFAIR COMPETITION
Infringement which competes (incorporates continuum of deceptive conduct from passing off to ™ infringement, the injury being that consumers get a product different than the one they thought they were getting and producers lose sales they otherwise would have made).
Acts that fall w/in the realm Unfair Competition? (1) Passing Off, (2)Dilution of ™, (3) False Advertising, (4) Disparagement, (5) Misappropriation, (6) K Interference (tortious interference w/ K or economic adv), (7) Price Fixing, (8) Bribery, (9) Fraud — Unfair/Deceptive trade Practices, UDTPA, see consumer fraud act, (10) Right of Publicity, (11) Pirating
Unfair Competition Supplemented by BOTH State and Federal Law
Common Law/State law –> cause of action would lie, at C/L, if p could prove that D used p product to deceive consumers into thinking p was the source of the goods. INTENT TO DECIEVE is still major factor.
Federal Law/ Lanham Act –> enacted in 1946 created a federal law of unfair competition that parallels state unfair competition law. (States now have own ™ statutes as well)
§43(a) – general
§43(c) – Dilution –using the same name
§43(b) – Cyber-squatting–> buying domain names of famous mark, and holding onto it until u can sell it.
1) Passing off & Secondary Meaning
Passing off- act of falsely representing one’s own product as that of another in an attempt to deceive potential buyers.
Secondary Meaning- the trade meaning which may attach to a particular mark because its user has expended time and money in the promotion of the mark. A name has become so identified w/ a particular biz that it exclusively signifies only that one particular biz. p must prove that “the primary significance of the term in the minds of the public is NOT the product BUT the producer.” (DEFENSES-generic or dilution)
The Calculus of Passing Off
Unfair competition law seeks to protect BOTH producer & Consumer by protecting
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
is likely to confuse consumers into believing that the first user is the source of the goods.
THE LEVEL OF PROOF CONTINUUM
A’s product –> descriptive and has no secondary meaning –> A must prove that
B palmed off goods and by words or deed deceived consumers as to source and
A must also show actual confusion by consumers.
A’s product –> common but has secondary meaning –> A must prove ONLY that
There is a likelihood that confusion that will result from B’s use of the symbol.
A’s product –> distinctive, non- descriptive symbol that is solely for the identification of A –> A can rely on
Presumption created in her favor that A, due to other alternative symbols, in choosing to use A’s was motivated by intent to deceive and was successful in doing so.
Actual identifiable symbols is NOT needed in above, JUST similarity–>the more similarity, the more probable a finding of intent to deceive.
A Name to be protected must be in ACTUAL USE, can NOT SAVE FOR LATER.
RULE: PASSING OFF –> although a product may not be “protectable” due to lack o
ding concern is whether social utility is better served by allowing or prohibiting appropriation. Whether they are competitors or not is consideration of several factors. Dow has expended much time, energy, $$ to achieve highly respected status. In context of stock market futures, any index can be used; giving Dow a monopoly on its 30 industrials will not stifle market. Doing so may encourage innovation by forcing experimentation. SAC- Dow Jones took facts and arranged them in a certain way. This SAC should be protected. Basically, Chicago should create their own, but they can’t because it has to be noted before they can use it, so Catch-22, Chicago has to pay DJ.
5) Personal Names and the Rights afforded to them
For names to be protectable, u must establish secondary meaning
Surnames – П whose name is common and has no secondary meaning must show:
that ∆s use of the name is part of an active “passing off” scheme AND
that consumers have actually been confused.
If Пs name has 2nd meaning, П need only show LOC
If Пs name is distinctive, and 2nd meaning is strong, cts will presume consumer deception & grant relief even absent proof of LOC.
To register a surname, you must:
Have a statement that the individual has licensed their name OR
If deceased, indicate so
***Secondary meaning – (1) it is no longer a noun AND (2) it is a source identifier. (Think Roy Rogers)
RULE: A name is NOT sacred, & will not be protected if doing so will create LOC & especially if done in bad faith.
David Findley v Findley (1966)
Two brothers' grandfather started this art galley business in Midwest. Grandfather dies, father continued business, and eventually each brother had branch. David Findley goes to NY on 57th Street. Prior to that, his brother, Wally, had business in Chicago. Wally then comes to NY on 57th. He sets up shop using Findley name next door. David had invested a lot into the name in NY and they both sell the same type of art, and there is a huge LOC.
HELD: An individual may be enjoined from using his own name in a biz if such use would lead to confusion w/ another biz. An individual has property interest in own name, but limited. No sacred right in name. Person’s name may not be used to appropriate goodwill of another business by causing confusion in public. Both galleries were adjacent and sold same art- LOC great. Narrow Injunction appropriate as remedy (Wally either change name or move to another part of NYC). ***David was first –> FITGTT!!! ***
LEVITTOWN –> When a founder leaves a company bearing his name, what are his rights? Mr. Levitt of Levittown sells business and trademark. Housing is either service mark (unique houses) or trademark (all the same). Several years later, tries to go into the biz again and uses his name, but the biz who bought him out is not happy about it. The court held he couldn’t highlight what he had done, but here, it might have been because he was so in the face about it. Court relied on confusion.
6) TradeDress, Design, Functionality
Beauty (protectable) v. Utility (not protectable)
Conceptually separable from the product
Likely to serve primarily as a designator of origin
Beauty is more likely to be protected
“F” Work – “Functionality” — good for ∆s b/c if nonfunctional, you can copy if not patented
Can copy functional aspects, if no patent, but not non-functional
(2) Economic Interests- Unfair Comp in the Competitive Plan
MARKETING – Crescent Tool v. Kilborn- Kilborn made wrenches possessing same basic shape & function as wrenches made by Crescent. No patent. Holding: a Jr. product may be marketed having same shape & function as Sr. product if no LOC as to w/c its purchasing. LOC necessary condition to enjoin Jr. A product similar in style & function not give rise to UC claim if no LOC. No confusion and Kilborn’s marketing suggested no confusion (diff name, diff packaging, did not market wrench as a “Crescent”). A Sr. product having no patent has no claim on a product’s style or function. Improper only when Jr. copies “nonfunctional” elements of Sr. that makes it distinctive.
Note: Non-functional items are protected wen 2nd meaning is shown.
Federal IP law Preempts State IP law:
There can be no state patent law.
No state can prevent the manufacturing of something patentable.