Select Page

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

Professor Jason Rantanen


Spring 2012


– Intellectual property is almost entirely statutory

“Intellectual property” is an umbrella term for property rights in intangibles

ELEMENTS of all IP theories:

1 subject matter- what is protected?

2 Acquisition/validity- how does inventor get the rights to invention

a What are his restrictions

3 Enforceable rights

a What are the requirements for infringement

4 Defenses

a Counter arguments to infringement

5 Remedies

a What damages are entitled

BASIC FRAMEWORK for IP law analysis

1) Identify form(s) of IP protection at issue

-trade secret (state statute)

-patent (U.S. Patent Act: 35 U.S.C.)

-copyright (U.S. Copyright Act: 17 U.S.C.)

-trademark (Lanham Act;: 15 U.S.C., some state law)

2) Analyze elements of each form of IP protection

-subject matter

-enforceable rights

IN CONTRAST to torts/contracts, the initial step in IP is much more categorical


I IP Theory: Why do we have IP Law?

1 John Locke – Labor Theory of Property

i Ownership of our body includes ownership of our labor

ii More effort made in creating our product, idea, the more claim of right we have to it

2 Personhood

i Property that has a lot of personal value attached to it; sentimental value

ii Value may be more to you than someone else

3 Jeremy Bentham: Utilitarian Approach

i Inventions/laws that produce a maximum social benefit

1 Provides best economic outcome

2 Utilitarian Basis of IP law

a IP as a means to an end

ii Ends

1 Rivalrous v Non-Rivalrous: public goods

a Rivalrous: Once one uses a public good it is difficult to prevent others from using it

i Livestock, land, agriculture

b Non-Rivalrous: No competition for the public good

i Defense, lighthouse, view of fireworks

2 Excludability v Non-excludability

a Excludability: once someone owns/uses something they want to exclude it from the public

i We exclude others form our land, or the cow on our land, by building fences

b Non-Excludability: public goods that cannot be prevented from public use

i Viewing foreworks

3 Ideas are non-rivalrous and non-excludable

a IP has same problems

b No incentive to produce or invest in ideas as a product if you cannot protect them from public use

c Ex) what protection do you have to enforce a copy store from stealing your images

i Contracts

ii Copyright laws

iii The Means: How do we…

1 Labor Theory on Photograph example

a Put own work, money, time into the photograph

b Difficult to apply labor standpoint to ownership rights because it is difficult to abstract the effort put into the picture

2 Personhood standpoint

a Have personal/sentimental ties to the picture that gives it more value to you than someone else

b Again difficult to apply:

i Different people have different evaluations of property

ii Subjectively difficult to prove who has more rights

1 Easy for someone to lie

3 Utilitarian approach:

a Encourage people to take more pictures and others to take pictures

i Maximizes utility; no need to steal

4 Without enforcement public goods are under protected and over consumed

a Books

i With no exclusion/protection anyone could copy a book and with no-rivalry there would be no way to compensate and encourage authors from writing more books

iv Constitution

1 Gives exclusive rights to authors and investors to their property law

a 4 basic property rights

i To alienate, transfer

ii To exclude

iii To possess

iv To use

2 To alleviate public goods problems

a Direct Government Funding

i Gives money to encourage art and research through grants

b Gov’t does the work

c Tax Incentives

i Subsidies: encourage R&D

d Prizes

i Monetary incentives

v Problems with the Utilitarian Basis of IP law

1 Containing private rights in ideas

a Monopolies

i Creates price distortions

b Reduced access to the IP

c Restriction on speech/expression

d Inhibition of future innovation/creation

2 Consumer Equilibrium and Monopolies

a Under CE; the higher the demand for the product the lower the marginal cost is to the consumer

i In a competitive market the prices stay lower, more production is made to gain a profit and more utility

ii Overall social benefit is large

b Under a monopoly the price is greatly increased from the marginal cost

i This decreases the social benefit of the product

1 Causes a loss in efficiency

a Leads to underproduction and underconsumption

2 Nobody will be able to benefit from the product because cost wise it is unattainable

vi IP Law Addresses These Problems

1 Length of term

a Ex) patents 20 yrs exclusive rights from application and then afterwards free for public use

2 Limits Scope of Protection

a Ex) copyright law is limited to the independent creation

3 Allows Rights to Others

a Patent: compulsory licensing

b Copyright: fair use

c Trademarks: descriptiveness

d Trade Secrets: reverse engineering allowed

4 Provides rules that make rights clearer


A Eligible/Protectable Subject Matter

-Almost all trade secret is a matter of state law

UNIFORM TRADE SECRETS ACT (UTSA) has been enacted by 40 states

*UTSA(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, 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 –AND-

(ii) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy

*UTSA(1)(1) and (1)(

f making reasonable efforts to maintain secrecy that was sufficient to justify summary judgment for the D?

○ Two conceptions of trade secret conception

● Tort Theory

● Desirability of deterring efforts from other firms stealing trade secrets; preventing people from doing bad acts: theft, misappropriation

■ How much effort are they willing to put in?

■ Greater P can show the efforts they made in keeping drawings a secret the greater it can disprove that D obtained drawing lawfully

● Utilitarian Theory

● Incentivize Innovation: Encourages companies to monetize their TS so they can make a profit and encourage innovation

■ Evidentiary significance: why would P have made such efforts to keep drawings a secret if they were not important

■ Remedial significance: D is obliged to keep the secret if

● He obtained it lawfully from another person who also obtained it lawfully

● He obtained it due to P abandoning it w/out restrictions

○ Ex) An employee of a Co has a valuable formula. He memorizes it and goes to a rival who uses it. Later it has been found the formula had been published. Is the employee liable?

● Under Tort Theory, YES

■ We want to deter others from stealing

● Under Utilitarian Theory, NO

■ Formula could already be obtained from a journal and does not incentivize the former employer to have kept it a TS

■ We do not want to give a windfall to the inventor when there is no real TS

Disclosure of Trade Secrets

● General Rule: No longer a Secret; Destroys its legal protection as a trade secret

○ Data General Corp (1971)

● A TS can be publicly disclosed by

○ Misappropriation

○ Shared on the internet

○ Former employee

○ Accidently left in plain view

Data General v Digital Comp

● P would probably only be allowed an injunction for the time it would take the D to properly be able to reverse engineer the product w/out the aid of the drawings

● This would be equivalent to the time a preliminary injunction would be properly granted although P has not provided sufficient evidence that it would ultimately succeed in proving they provided adequate precautions

● Why would P seek a preliminary injunction?

○ Harm is done once the TS is disclosed and others allowed to gain access

○ Preliminary injunction is difficult to gain; hard to prove, obtain

■ Must shows whether there was enough precautionary measures in maintaining secret