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Intellectual Property
University of Iowa School of Law
Rantanen, Jason A.

091:286 Introduction to Intellectual Property Law
Spring 2012
Professor Rantanen
 
I.                  Introduction to Intellectual Property Law and Policy
 
A.    Introduction
 
·         Theories of IP Law
o   Labor Theory—Locke
§  We first and foremost have a property right in our own bodies
§  Also have a property right in our labors
§  When we add labor to something, we have property right in object
§  Places importance on amount of effort required
§  Modern IP law doesn’t emphasize this theory
·         Rights can be distributed among too many people who collaborated
·         Hard to measure two things
o   How much labor put in
o   Total value of the resulting product
·         Labor put in might not have yielded much result
 
o   Property and Personhood—Radin
§  Should protect IP because it is an intimate expression of oneself
§  There is a spectrum of fungible to personal
§  Can gauge strength of relationship with object/idea by pain occasioned with its loss
§  If an idea is solely used for commercial gain, then it doesn’t deserve as much protection
§  Difficult to use in a consistent way to evaluate rights
·         How to measure how closely something is valued?
§  Hegel’s Philosophy of Right (1820) contributed to Radin’s theory
 
o   Utilitarianism
§  Focus of modern IP law
§  Ideas are evaluated based on the utility (often economic) to society
·         Give rights to person who will make best use of discovery
§  Promotes positive laws that will promote consequences
 
§  IP analogy to public goods (e.g. lighthouses, national defense, fireworks displays)
·         Non-rivalrous
o   There is no competition for the consumption of good
o   Can all use it without diminishing it for others
·         Non-excludable
o   Difficult to exclude others from use of that good
·         Problems
o   Under-produced because there is less economic incentive to create them
o   IP has the same problem
o   Ideas are going to be under produced if nothing is done to protect them
 
§  Incentivization—primary goal
·         Should have rights for a period of time to make up R&D costs
§  Giving reward to inventor—secondary goal
§  Ordered Economic System
·         Reduces consumer confusion/ensuring marketplace integrity
§  Constitution is basis for Utilitarian Theory
·         Art. 1, Section 8, cl. 8
·         Seeks to secure exclusive rights for those to create
o   Usage rights
o   Right to alienate/transfer
o   Right to exclude others from using (particularly important for ideas)
o   Right to possess
·         Commerce clause (especially for TM) and state law sources (especially for trade secrets) contribute to authority of Art. 1, Section 8, cl. 8
 
o   Optimizing Innovation
§  Greatest utility obtained when there is competition
·         Result is that supply=demand and marginal cost=cost of sale
·         But no profit can then be made, so little incentive to create
·         If rights given to someone, they can make a profit
o   Benefit=encourages production
o   Downfall=less social benefit, efficiency loss, risk of monopoly
 
§  Means
·         Direct government funding
o   Grants
o   Centralized—government does the work
o   Tax incentives/subsidies for R&D
o   Prizes
·         Giving rights
o   Limit length of term for rights
§  Allows innovator to make up R&D costs
§  Prevents monopoly
o   Limit scope or breadth of protection
§  Allows others to build off innovations
o   Problems
§  Simultaneous invention
§  Making scope clear
§  Is our system justified?
·         No clear answer
·         But it has been workable thus far, still much innovation
 
o   Risks of Appropriation
§  Consultants for innovation
§  Employees
·         Beneficial to have contracts in place
·         Allow employees to be part owners
§  Consumers
§  Non-IP Solutions
·         End use license agreements
·         Requiring subscription, constant innovation
 
 
B.     Overview of Intellectual Property
·         Structure for each type of IP protection
o   Subject Matter
o   Acquisition/Validity
o   Enforcement
o   Defenses
o   Remedies
 
II.               Trade Secret Law
 
A.    Introduction and Defining Trade Secrets
 
·         Most rudimentary type of IP protection
·         Indefinite time period
·         Typically ex post rather than ex ante
·         Important to small companies since patenting is expensive
·         Litigation is very fact dependent and relatively straightforward, open-ended
o   No bright line rules
o   Case-by-case basis
 
·         Why protect?
o   To increase incentive for innovation
o   Deterrence
§  Free-riding is a moral wrong
§  Would be inefficient to encourage investment in stealing
§  Much money would be wasted on security measures
 
·         History
o   Might protect secret (like fish in planting) by claiming a talisman needed
o   Cause of action for “corrupting a servant” punishable by double damages
 
·         Three sources of law
o   UTSA
§  Arguably most important
§  Most states have adopted it in some form
o   Common law
o   Various Restatements
§  Torts
§  Unfair competition
§  More a summary of what all states do
 
·         Basic elements of claim
o   (1a) Trade secret
o   (1b) Take reasonable precautions
o   (2) Misappropriated
 
 
 
 
B.     The Contours of Secrecy and Disclosure
·         Trademarkable Subject Matter
o   (1) Information
o   (2) Valuable because it is secret
o   (3) Subject to reasonable efforts to keep secret
 
o   UTSA
§  “Trade secret” means information that satisfies (1) and (2)
§  Examples of “information”
·         Formulas (recipes or chemical)
·         Pattern (cutting metals, fabric, etc.)
·         Compilation (information gathered in database)
·         Program (software)
·         Method, technique, or process
§  First Requirement
·         (1) Derives independent ec

express or implied consent by a person who
§  (A) Used improper means to acquire knowledge of the trade secret; or
·         E.g. DuPont aerial photography
·         E.g. bribery, outright theft
§  (B) At the time of disclosure or use knew or had reason to know that his knowledge of the trade secret was
·         (I) derived from or through a person who has utilized improper means to acquire it;
o   E.g. the people who hired aerial photographers
·         (II) Acquired under circumstances giving rise to a duty to maintain its secrecy or limit its use; or
o   E.g. Ex-employees
·         (III) derived from or through a person who owed a duty to the person seeking relief to maintain its secrecy or limit its use; or
§  (C) Before a material change of his position, knew or had reason to know that it was a trade secret and that knowledge of it had been acquired by accident or mistake
·         E.g. Someone who accidentally emails a secret, realizes mistake, then sends another email telling the person not to use the information
 
o   When is use of another’s trade secret actionable?
§  (1) Improper means
·         E. I. DuPont deNemours & Co. v. Rolfe Christopher et al. (5th Cir. 1970) p. 66
o   Aerial photographers hired to take pictures
o   Unreasonable precautions would have to be taken to prevent this
o   Not illegal trespass, but purpose was to take detailed images for the purpose of stealing
·         Proper means (classified as a defense)
o   Reverse engineering
§  Kadant, Inc. v. Seeley Machine, Inc. (N.D.N.Y. 2003) p. 78
·         A former employee of plaintiff started making same products for defendant and claimed reverse engineering
·         Court looked at the fact that the products were simple and easy to engineer, so no improper means found
·         But using memorized trade secrets is actionable
o   Independent discovery
o   Observation of item in public display
o   Obtaining secret from public literature
 
§  (2) Breach of confidence
·         Easiest way to create confidential relationship is by contract
o   Contracts are not always practical
·         Smith v. Dravo Corp. (7th Cir. 1953) p. 71
o   Defendant obtained secrets in lawful way because he was looking to buy shipping container business
o   But instead of buying business, used lawfully obtained information in an unlawful way to copy information from patent applications, etc.