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

Intellectual Property

Prof Subotnik

Fall 2014

What is Intellectual Property?

· How is IP different from traditional “property”?

o Property law = a system of rights and duties among people with respect to tangible things like real property or chattels

· Major theme for us: how does, and should, the law treat IP differently from traditional “property”?

· Trade Secret

· Patent

· Copyright

· Trademark

· What unites these different statutory and common law regimes?

Theoretical Foundations of IP

· E=mc

· Idea=how to build a better mousetrap

· (cant take back ideas)

· 1) nonexcludibility- once you have disseminated info, it is very hard to take it back

· 2) nonrivalrousness- can both know and use info at the same time without depleting its value

· = “Public Goods Problem” (the issue of free riding) (no 1 will pay 4 info when its available for free) (originator won’t bother to invest or create in ideas)

· We want inventors and creators, not just imitators and copycats

· Basic Idea of Intellectual Property- to solve the public goods problem by protecting ideas

· Utilitarian/”Incentive to Create”

· US Const Art 1 Sec 8:

o “The Congress shall have 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…”

· “The economic philosophy behind the clause empowering Congress to grant patents and copyrights is the conviction that it is the best way to advance public welfare in Science and the useful Arts.” Mazer v Stein 347 U.S. 201 (1954) [IPNTA, pg 11]

What Incentivizes Creation?

· Good Samaritan

· Reputation/Prestige

· Personal Need to Express Oneself/To Invent

· Curiosity

· Monetary

· Prizes

· Govt funding

· Problem- not going to create something only for someone to steal it (negates incentives)

· IP is market oriented

· Gives rights to make a product that the market wants

· Govt can only anticipate so much

· Exclusive rights to create a product that addresses needs in the market place

· Incentive to Invent/Create

o IP

o Non-monetary/Prestige/Reputation

o Prizes

o Government Funding

o Business Advantages (First-mover, Imitation costs)

· Costs of IP regime

o Staffing

o Creating barriers to the dispersion of knowledge (discourages improvement and cumulative innovation)

o Increased Prices/Monopoly concerns

o Suppression of Technology

· Balancing Act

o Social costs of limiting the diffusion of knowledge

o Vs

o Social benefits of providing economic incentives to create

o Balancing results in exceptions; defenses; and durational limitations to IP rights

· Utilitarian Justification for Trademark

o Consumer Search Costs/Integrity of the Marketplace

o “The purchaser’s problem of course, is to identify quality. The presence of people in the market who are willing to offer inferior goods tends to drive the market out of existence…Brand names not only indicate quality but also give the consumer a means of retaliation if the quality does not meet expectations…This ensures the prospective consumer of the quality of the product.” George A Akerlof, The Market for Lemons.

· Trademark law counteracts the “market for lemons”

· Non-Utilitarian Justifications for IP

· Natural Rights/Reward to Labor:

o “Every man has a property in his own person…The labor of his body, and the work of his hands, we may say, are properly his. Whatsoever then he removes out of the state that nature hath provided…he hath mixed his labor with…and thereby makes it his property…This labor being the unquestionable property of the laborer, no man but he can have a right to what that is once joined to, at least where there is enough and as good left in common for other.” (John Locke, Two Treatises on Government Sec 27)

· 2) “Personhood”:

o “One may gauge the strength or significance of someone’s relationship with an object by the kind of pain that would be occasioned by its loss…Not all object-loss is equally important. Some objects may approach the fungible end of the continuum so that the justification for protecting them as specially related to persons disappears…A few objects may be so close to the personal end of the continuum that no compensation could be just” (Margaret Redin Property and Parenthood)

The American System of Intellectual Property

· Trade Secret:

o Protects against misappropriation

o Protects Secret info of a corporation

· Paten

effort or money expended by P in developing the info

6) the ease or difficulty with which the info could be properly acquired or duplicated by others

Trade Secrets: Elements

· Elements of a Trade Secret Claim

o Protectable Subject Matter -> is it a Trade Secret?

§ Secret? Economically Valuable?

o Reasonable Secrecy Efforts

o Misappropriation

Reasonable Efforts to Maintain Secrecy

· What constitutes “reasonable” efforts to maintain secrecy?

o Rockwell Graphic Systems v DEV pg 49

· Why do we enforce reasonable secrecy efforts?

o Because it has economic value

o To prevent improper acquisition

o There is a sort of notice function that is served by the requirement of reasonable secrecy efforts (pg 52)

o Rockwell Contrasts with Electrocraft v Controlled Motion (Cmt 1 pg 53-54)

Reasonable Secrecy Precautions Companies Should Employ?

· Physical

o Locked vaults/rooms

o ID badges/keys

o Password-protected computers

o Restricted physical access

· Contractual

o Confidentiality provisions/NDAs

· Other forms of notice to employees/contractors that information is secret (marking documents “proprietary,” “confidential,” etc)

Reasonable Secrecy Precautions – Disclosure of the Trade Secret

· Public disclosure ends the term of protection

o Unlike patent and copyright no set “term” of protection for trade secrets

· When does use of secret in one’s business turn into “public disclosure”?

o Data General v Digital Computer Controls Inc (pg 58)

o Acts that destroy the secret:

§ Publication In academic/trade journal; Internet

§ Publication in patent

§ Selling commercial product that embodies the secret where secret is apparent from product itself (eg “self disclosing” invention like a safety pin)