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Trademarks and Unfair Competition
University of Pennsylvania School of Law
Jordan, Kent A.

Prof. Kent Jordan
Fall 2010
I)       Competition
·         Restatement of Law (Third), chapter 1: The freedom to Compete, § 1. General Principles, see p. 31
·         The freedom to compete: The freedom to engage in business and to compete for the patronage of prospective customers is a fundamental premise of the of the free enterprise system. This freedom necessarily contemplates the probability of harm to the commercial relations of other participants in the market
·         CASE: International News Service v. Associated Press, Supreme Court 1918
–          In this landmark decision, the Supreme Court announced a “quasi-property” right in the dissemination of uncopyrightable information
–          At issue were news reports, published by AP one the East Coast, where they were copied by rival INS and relayed to INS’s Midwest and West Coast newspapers
–          According to the Supreme Court, the right might be effective against competitors, but not against the public at large
–          Because of the Court’s willingness to find unfair competition beyond the traditional context of “passing off”, INS has come to stand for a general common law property right against “misappropriation” of commercial value
·         CASE: Cheney Bros. v. Doris Silk Corp., Supreme Court 1930
–          The plaintiff, a corporation is a manufacturer of silks, which puts out each season many new patterns. They have only a short live and it is in practice impossible to secure design patents upon all of these under the Copyright Act. The defendant copied one of the popular designs
–          In the absence of some recognized right at common law, or under the statutes – and the plaintiff (Doris Silk Corp.) claims neither – a man’s property is limited to the chattels which embody his invention. Others may imitate these at their pleasure.
–          The INS-case does not cover this material
–          To set up a monopoly on the plan of a chattel’s structure gives the author a power which the Constitution allows only Congress to create
·         CASE: Sears, Roebuck & Co. v. Stiffel Co., Supreme Court 1964
·         The question in this case is whether a State’s unfair competition law can, consistently with the federal patent laws, impose liability for or prohibit the copying of an article which is protected by neither a federal patent nor a copyright. The respondent, Stiffel Company, secured design and mechanical patents on a “pole lamp”. Sears put on the market a substantially identical lamp.
–          The district court held Sears guilty of unfair competition. The Court of Appeals affirmed.
–          The Supreme Court granted certiorari to consider whether this use of State’s law of unfair competition is compatible with the federal patent law. Federal patent law is one of the enumerated powers of Congress = Supreme law
–          When the patent expires the monopoly created by it expires, too, and the right to make the article – including the right to make it in precisely the shape it carried when patented – passes to the public. Thus the patent system is one in which uniform federal standards are carefully used to promote invention while at the same time preserving free competition.
–          Consistently with the Supremacy Clause of the Constitution, no state could extend the life of a patent beyond its expiration date or give a patent on an article which lacked the level of invention required for federal patents
–          That Stiffel originated the pole lamp and made it popular is immaterial. Sharing in the goodwill of an article unprotected by patent or trade-mark is the exercise of a right possessed by all. To allow a State by use of its law of unfair competition to prevent the copying of an article which represents too slight an advance to be patented would be to permit the State to block off from the public something which federal law has said belongs to the public. When copying by Sears, Stiffel’s lamp was unpatented.
–          Of course there could be confusion as to who had manufactured these nearly identical articles. But that is not enough to support an injunction against copying or an ward of damages for copying that which the federal patent laws permit to be copied
–          Holding: When an article is unprotected by a patent or a copyright, state law may not forbid others to copy that article
·         CASE: Compco Corp. v. Day-Brite-Lighting Inc., Supreme Court 1964
–          A state of course has the power to impose liability upon those who, knowing that the public is relying upon an original manufacturer’s reputation for equality and integrity, deceive the public by palming off their copies as the original
–          Federal patent laws do not stand in the way of state law which requires those who make and sell copied to take precautions to identify their products as their own
·         CASE: Bonito Boats v. Thunder Craft Boats, Supreme Court 1989
–          Bonito, a boat manufacturer, sought to enjoin defendant’s use of a “direct molding process” to duplicate plaintiff’s unpatented boat hulls. Plaintiff invoked a Florida statute that made in unlawful for any person to use the direct molding process to duplicate for the purpose of sale any manufactured vessel hull or component part of a vessel made by another person without a written permission
–          Florida’s Supreme Court held that the statute conflicted with the federal patent law and was therefore invalid under the Supremacy Clause. The Supreme Court affirmed
–          We believe that the Florida statute so substantially impedes the public use of the otherwise unprotected design and utilitarian ideas embodied in unpatented boat hulls as to run afoul of the teaching of our decisions in Sears and Compco
–          At Sears make clear, States may place limited regulations on the use of unpatented designs in order to prevent consumer confusion. But the Florida statute offers protection beyond that available under the law of unfair competition or trade secret, without any showing of consumer confusion, or breach of trust or secrecy.
–          Like the interpretation of Illinois unfair competition law in Sears and Compo, the Florida statute represents a break with the tradition of peaceful coexistence between state market regulation and federal patent policy
II)    Trademarks
·         Although trademarks, copyrights and patents all concern intangible property rights and overlap to some extend, they differ from each other significantly.
–          Trademarks protect sources identifications (marks of trade)
–          Copyrights protect original literary and artistic expressions
–          Patents protect new and useful inventions
·         E.g. TV:
–          Trademark protection for the brand name of the TV in a cabinet
–          Copyright protection for the programs viewed on it
–          Utility patent to new and non-obvious functional features of the electric circuitry
–          Design patent to new, original and ornamental features of the cabinet

a)      What is a copyright
·         A copyright seeks to promote literary and artistic creativity by protecting, for a limited time, what the U.S. Constitution broadly calls the “writings” of “authors”
·         Copyrightable works include:
–          literary, musical and dramatic works
–          pantomime and choreographic works
–          pictorial, graphical and sculptural works
–          motion pictures and other audiovisual works
–          sound recordings
–          computer programs
–          certain architectural works
·         Copyright only protects particular expressions of ideas, not the ideas themselves
b)      Copyright owner’s rights
·         Exclusive rights to reproduce the work, to distribute, to display and perform the work, to make derivate works and to authorize others to do any of these things
c)      How copyright is obtained
·         The moment you have created and fixed a copyrightable work, it automatically enjoys copyright protection whether or not it has been published or registered
·         There is no state copyright protection
d)     Notice of claim to copyright
·         Even though no copyright notice is required, you may affix a statutory copyright notice to all publicly distributed copies of a work in a manner and location giving reasonable notice
·         The notice consists of (1) the symbol ©, (2) the year of first publication and (3) the name of the owner
e)      Copyright Registration
·         Possible in any published or unpublished work at any time during the period of copyright by depositing in the Copyright Office two complete copies of the best edition of the work
f)       How long a copyright lasts
·         Complex area, because it depends upon when the work was fist published and whether or not the copyright was federally registered or renewed
g)      Who own a copyright
·         The individual or joint authors of a work
·         But the employer or party commissioning a work automatically is deemed to be the “author” of a “work made for hire”
h)      What constitutes copyright infringement
·         Generally the unauthorized use or copying of the work, the unauthorized rental of a phonorecord or computer program
·         The federal law specified many activities not to be infringements (e.g. fair use such as criticism)
i)        International copyright protection
·         International treaties are particular important in the copyright field
·         The U.S. has copyright relations with approximately 160 countries, about 130 of which (including the U.S.) are members of the Berne Convention which provides for copyright protection meeting certain minimum standards
·         Many commercial important countries (including the U.S.) have ratified the Universal Copyright Convention (UCC)