Introduction to Intellectual Property Outline

INTRODUCTION TO INTELLECTUAL PROPERTY HOUWELING FALL 2016
 
 
INTRODUCTION
 
Con. Art. 1, Sec. 8, Cl. 8: “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 Writing and Discoveries.”
 
 
 
THEMES:
 
Tragedy of the Commons: things not given protection often return to the public domain
Can have undercultivation: lack of incentive to create because others can copy without costs
Possible to have overuse problem (trademark), but usually not because non-rivalrous; overuse will not
exhaust resources because anyone can use without diminishing value
 
Rationales for IP Law
Utilitarian/Economic Incentive: dominates in US
Constitutional Basis: Art I, Section 8, Clause 8: Congress has power to “promote the Progress of Science and useful Arts”: exclusive rights for socially beneficial creation against copiers by ensuring that creators don’t have to compete in the market with copiers
Policy: costly for public access and future creation, not clear how much protection is needed to incentivize – other incentives exist beyond getting paid; can stifle creativity, can give monopolies, may limit competition unfairly, prices to consumers increase
Primary purpose: not to reward authors, but for greater good
Natural Rights/Labor-Dessert Theory (John Locke): rewarding authors: just rewards for labor
Justifies property rights based on natural right to fruit of one’s labor
Less utilitarian, more moral justification
Policy: difficulty of allocating property rights to reflect labor contributed (often building on something that came before), proviso that “as much and as good” should be left to others (imposing limits may be problematic); sometimes public worse off if can’t take advantage of a creation
Personhood Theory (Hegel): IP as extension of self; respect for personhood
Property as necessary for human flourishing
If something close to you (ex: wedding ring), deserve some protection; worth more than money (more European theory)
Policy: concept of authorship contested (difficult to measure whether it’s a real claim); corporate creativity (people create, but corporation and non-human owns); infringers may also have authorship/personhood interests
Others: liberty, free expression, democratic participation, distributive justice, access to knowledge
 
IP as Intersection of Laws: antitrust, constitutional law, international law, technological protections
 
TRADE SECRET
 
TRADE SECRET: POLICY FUNDAMENTALS
ASK
1. Valuable Information?
2. Not generally known/readily accessible?
3. Reasonable efforts?
4. Misappropriation? Depends on how information was acquired/used – agreement or disclosure with knowledge of confidential nature?
 
Background:
Protects valuable, secret information where the holder of the information has taken reasonable precautions to
maintain secrecy and the defendant acquired or used the information wrongfully (can’t be known or readily
available: different from patent)
Generally governed by state law, but now also new federal law (Uniform Trade Secrets Act: majority of states
have adopted)
Defend Trade Secrets Act of 2016: New federal law enacted in 2016; substance largely mirrors UTSA (more detail on “improper means”); provides for ex parte seizure remedy in extraordinary circumstances (where “necessary to prevent the propagation of dissemination of the trade secret”; danger of disclosure unless all products seized); whistleblower protection; does not preempt state law (choice of law and venue for Ps)
 
Policy:
Like economic incentive rationale (natural rights/benefit of investment): we want to
Protect people’s rights to invention; commercial morality (discourage bad business practices involving spying and stealing); encourage investment in information; varies competition in the market; privatizes costs (keeping secret instead of relying on courts); self-help
Combination of property and tort theory (property of P and wrongdoing/behavior of D)
Limited protection: can co-exist with stronger protection of patent
Limited applicability: not useful for some types of innovation (ex: if nature of invention is revealed on
outside of the product)
 
Duration:
Trade secrets can last indefinitely: as long as it remains a secret and reasonable precautions are taken. This doesn’t serve the constitution’s limited times provision well, but trade secret is primarily governed by state law, and not Congress, so doesn’t need to comply with the provision.
Some congressional laws: Economic Espionage Act, but probably about commerce clause
 
TRADE SECRET: SUBJECT MATTER
 
Uniform Trade Secrets Act § 1: (4) “Trade Secret” means information, including a formula, pattern,
compilation, program, device, method, technique or process that: (i) derives independent economic value, actual or potential, (valuable) from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use (secret)
(iii) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy
 
Elements of Trade Secrecy
(1) Information: formula, pattern, compilation, program, device, method, technique, process
(2) Valuable: economically, actual or potential
Expended effort to protect the secret (subjective belief that the secret exists); Has not communicated it to the wider public (generally unknown to the public/industry); limited disclosures made to further economic benefits; expert testimony that modifications were unknown in industry; costs to produce indicates value, fact that it was stolen indicates it was valuable, made reasonable efforts to protect indicates value
(3) Secret: not absolute though (limited disclosure allowed)
Can’t be generally known or readily ascertainable: UTSA note – information is readily ascertainable if it is available in trade journals, reference books, or published materials. Nature of a product lends itself to being readily copies as soon as it is available on the market.
Disclosure: e.g., publication, sale of product from which secret is apparent
Ends trade secret protection if information becomes generally known or readily ascertainable by proper means (UTSA standard)
Limited disclosure allowed: if for own economic purposes (nondisclosure and confidential contracts are better)
Application: Metallurgical Industries: P, through zinc recovery process, contracted with X, P modified; employees of X took info to new company D → Evidence of “secret”: expert testimony that modifications were “unknown . . . in the industry.” Efforts to keep secret, subjective belief “suggests that secret exists.” Nondisclosure agreements (tried to keep it a secret). But, also disclosed to others. It was a limited disclosure though – for own economic purposes.
Application: recipes – can sometimes be protected, depends on how D gets (reverse engineering okay) and how much disclosed
(4) Reasonable Efforts to Maintain Secrecy: protected against misappropriation
Purpose: requires evidence of other elements (took step to ensure the TS); requires evidence of improper acts by Ds and to prevent windfall for lazy Ps (ex. breaching of NDA/improper mean to get information); gives notice of secret to D
Cost/benefit analysis: Courts recognize that a balance is needed between Ps expending costs to protect fully and what should be successfully protected (factual question)
Application: Rockwell Graphics: printing presses, drawings kept in vault, employees required to sign in/out, etc. → perfect security is not optimum security; remanded to see if enough
Have people sign confidentiality agreements
Application: 3 ingredient cocktail, bartenders told to keep secret, mix away from customers, experts say can tell. → Valuable? Yes, but degree of investment small (not much incentive); reasonable efforts? Yes – although could do more (nondisclosure agreements, but okay). Secret? Easily known/any bartender could figure out. Under UTSA: not protected as trade secret unless bribing or improperly found out because nature of product itself lends self to readily copied
 
TRADE SECRET: OWNERS’ RIGHTS AND INFRINGEMENT
 
For Infringement: need (1) trade secret (analysis above) and (2) D used/acquired wrongfully
 
Misappropriation
For infringement, D must have misappropriated: acquired or used the