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Intellectual Property
St. Johns University School of Law
Subotnik, Eva E.

Intro to Intellectual Property

Eva Subotnik

Fall 2011

1) TRADE SECRET

Underlying theory

Freedom of contract; protection against unfair means of competition

Source of law

State statute; common law

Subject matter

Formula; pattern; compilation; program; device; method; technique; process

Standard for protection

Info not generally known or available; reasonable efforts to maintain secrecy; commercial value

Scope of protection

Protection against misappropriation– acquisition by improper means or authorized disclosure

Period of protection

Until becomes public knowledge

Disclosure

Loss of protection [unless sub rosa]

Rights of others

Independent discovery; reverse engineering

Costs of protection

Security expenses; personnel dissatisfaction; litigation costs

Licensing and assignment

Complicated by inherent nature of bargaining [seller wants guarantee before disclosure; buyer wants to know what is offered]

Remedies

Civil suit for misappropriation, conversion, unjust enrichment, breach of K, damages & injunctive relief; criminal prosecution for theft

2) PATENT

Underlying theory

Limited monopoly to encourage production of utilitarian works in exchange for immediate disclosure and ultimate enrichment of public domain

Source of law

Patent Act [federal]

Subject matter

Process, machine, manufacture, or composition of matter; plants [asexually reproducing]; designs— excluding laws of nature, natural substances, printed matter, mental steps

Standard for protection

Novelty; non-obviousness; and utility [distinctiveness for plant patents; ornamentality for design patents]

Scope of protection

Exclusive rights to make, use, sell innovation as limited by contribution to art; extends to “equivalents”

Period of protection

20 years from filing [utility]; extension up to 5 years for drugs, medical devices and additives; 14 years [design]

Disclosure

Right to patent lost if inventor delays too long after publishing before filing application; full disclosure is required as part of \ application; notice of patent is required for damages

Rights of others

Only if licensed; can request reexamination of patent by Patent Office

Cost 2 protect

Filing; issue; and maintenance fees; litigation costs

Licensing and assignment

Encouraged by completeness of property rights, subject to antitrust constraints

Remedies

damages & injunctive relief; attorneys’ fees

3) COPYRIGHT

Underlying theory

Limited (although relatively long-lived) monopoly to encourage authorship of expressive works; developed initially as means of promoting publishing

Source of law

Copyright Act (federal)

Subject matter

Literary, musical, choreographic, dramatic & artistic works as well as computer software and aesthetic elements of useful articles limited by idea/expression dichotomy (no protection for ideas, systems, methods, procedures); no protection for facts/research

Standard for protection

Originality; authorship; fixation in tangible medium

Scope of protection

Rights of performance, display, reproduction, derivative works; limited protection for attribution and integrity afforded some works of visual art; protection against circumvention of technical protection measures

Period of protection

Life of author + 70 years; “works for hire”: minimum of 95 years after publication or 120 years after creation

Disclosure

© notice and publication no longer required, but confers certain benefits

Rights of others

Fair use; compulsory licensing for musical compositions, cable TV, et al.; independent creation

Costs of protection

None (protection attaches upon fixation); publication requires notice; suit requires registration; litigation costs

Licensing and assignment

Assignor has termination right b/w 36th and 41st years following transfer

Remedies

Injunction against further infringement; destruction of infringing article; damages (actual or profits); statutory ($200-$150,000 damages within court discretion); attorney fees (within court discretion); criminal prosecution

4) TRADEMARK/DRESS

Underlying theory

Perpetual protection for distinctive nonfunctional names and dress in order to improve quality of information in marketplace

Source of law

Lanham Act (federal); common law (unfair competition)

Subject matter

Trademarks; service marks; certification marks; collective marks [Toy Manufacturers of America]; trade dress; no protection for functional features, descriptive terms, geographic names, misleading aspects, “generic” name [thermos]

Standard for protection

Distinctiveness; secondary meaning [for descriptive and geographic marks]; use in commerce [minimal]; famous mark [for dilution purposes]

Scope of protection

Exclusive rights in US; likelihood of confusion; false designation of origin; dilution (for famous marks)

Period of protection

Perpetual; Subject to abandonment

Disclosure

® notice optional; establishes prima facie evidence of validity, constructive knowledge of registration, confers federal jurisdiction, becomes incontestable after 5 years of continuous use, authorizes treble damages, attorney fees, and right to bar imports bearing infringing mark

Rights of others

Truthful reflection of source of product; fair and collateral use

Costs of protection

Registration search; marking product; litigation costs

Licensing and assignment

No naked licenses [owner must monitor licensee]; no sales of trademark “in gross”

Remedies

Injunction; accounting for profits; damages; attorney fees; seizure and destruction of infringing goods; criminal prosecution for trafficking in counterfeit goods or services

TRADE SECRET

5) Introduction

a) 2 conflicting interests: encourage investment in innovation v. restrict competition and, thus, restrain business and technological progress

i) Ideally would want legal system that could protect employer’s secrets while allowing employee mobility and dissemination of information through licensing

ii) Private protection comes at price: must rely on current & former employees to keep secrets; companies may not disclose to employees all info they need to know; inefficient physical security precautions; hire employees based on loyalty rather than productivity; prey on other companies rather than investing in innovation themselves

iii) Issues circumstances in which: employee can continue her business after departing employer, competitor may copy another’s publicly sold product, court will enforce K requiring that business info be kept confidential

6) Theories of trade secrets

a) Property theory [Utilitarian]

involved in business

extent of measures taken by claimant to guard secrecy of info

value of info to business and its competitors

amount of effort/money expended by business in developing info

ease or difficulty w/which info could be properly acquired or duplicated by others

Balancing act: too much protectionàsociety won’t get benefits; too littleàwon’t get innovation

TS= bargain between society and innovator [cost/benefit analysis]

10) Reasonable Efforts to Maintain Secrecy

a) What constitutes “reasonable efforts”?

i) Limiting access [look at degree and reasons]

(1) Password protection; record-keeping; badges; locked rooms

ii) Contractual [non-disclosure]

iii) Physical protection [locks, barriers, guards]

iv) Enforcement of policies in place

v) Set culture by talking about importance of secret and its protection

vi) D efforts to get secret

vii) How likely efforts are to maintain secrecy

b) “Reasonable” is question of fact for jury to decide

11) Greater precautions that holder took = lower probability that D obtained secret through wrongful act

a) More $ to protec secret, more holder demonstrates secret has real value deserving legal protection

b) P must show he took reasonable efforts and prove D obtained TS by wrongful act

12) Rockwell Graphic Systems v. DEV Industries [1991]- 2 employees left Rockwell to work for DEV, one was fired after removing piece part drawings from Rockwell’s plant. Rockwell kept piece part drawings in vault, building which housed vault being accessible only to authorized employees with identification. Drawings had to be signed out and returned, employees could make copies but those had to be destroyed once work was done. Vendors who produced parts were allowed to see piece part drawings but both vendors and employees had to sign confidentiality agreements. Vendors were also contractually required to return drawings once order has been filled but this requirement was not enforced by Rockwell as some vendors may need to fulfill more orders for same part in future. DEV was found to be in possession of 100 piece part drawings of Rockwell’s which Rockwell claims were TS. DEV could not come up with explanation of how they came into possession of P piece part drawings by legal means.

a) Issue: Did Rockwell sharing piece part drawings with vendors demonstrate that reasonable efforts to maintain secrecy were not made? à NO

i) Rule:

(1) Sharing secret with “limited number of outsiders for particular purpose” is not definitive evidence that reasonable efforts to maintain secrecy were not made.

(2) Reasonableness can almost never be decided upon summary judgmentà must go to jury

b) Reasoning:

i) Rockwell’s sharing of piece part drawings with vendors, which was necessary to efficient exploitation of trade secret, does not invalidate trade secrecy. It created duty of confidentiality

13) Misappropriation of Trade Secret

a) Not all uses of TS constitute misappropriation

i) Acquisition/use of TS is illegal by improper means OR involves breach of confidence

(1) Improper means: means which fall below generally accepted standards of commercial morality and reasonable conduct OR breach of confidence

(a) Theft, fraud, unauthorized interception of communications, inducement of or knowing participation in breach of confidence, and other means either wrongful in themselves or wrongful under circumstances of case