Introduction to Intellectual Property
The University of Texas School of Law
Professor Tony Reese
Fall 2005
I. State Unfair Competition Law & Federal Trademark Law
Background Reading
The Nature and Functions of Intellectual Property Law
Information as private property.
Information suffers problem of appropriability. It is intangible, and difficult to appropriate value of information without disclosing it. Solution to this is to grant property rights.
Information is indivisible – once produced, may be used infinite times without additional production costs. Property rights negate social benefit of indivisibility – unrestricted public access.
Policy Concerns:
Big idea of class – copying of ideas. Main tradeoff is incentives vs. access.
Pros of copying ideas: more inspiration, adaptation, and creation of ideas from wider distribution of ideas; free and wide access to ideas promotes education; free copying means lower barriers to distribution of ideas, which might mean more incentive to create.
Cons of copying ideas: less incentive to create ideas if they can be easily copied (stolen?); less brand name recognition and reliability; if cost of copying is less than the cost of creation, we copying might substitute for creation – bad.
Baseline rule: Ideas are free for everyone to use and copy. IP law is just exceptions to this principle.
b. The Sources and Limits of Intellectual Property Law
a. Federal jurisdiction: Under 28 USC § 1338, fed’l courts have jurisdiction over claims arising under patent, copyright, and trademark law. Fed’l jurisdiction is exclusive for patent and copyright cases.
b. Arising under. Well-pleaded complaint test – Does complaint plead all elements necessary for relief expressly provided by the federal statute or require construction of the statute?
i. Trademarks claims can be brought in federal or state court
ii. Suits for patent or copyright infringement can only be brought in federal court
a. E.g., Suit for patent infringement: there is federal -j-.
b. Breach of patent license: no federal -j-.
c. Supplemental jurisdiction: 28 USC § 1367 creates fed’l supplemental jurisdiction for related claims forming same case or controversy. State law governs in resolving the state claim.
State Law Rights in Undeveloped Ideas
Rights in Undeveloped Ideas
Generally.
Definition: “Undeveloped idea” – An idea that has not been physically manifested such that it could be protected by IP under copyright, trademark, or patent law (but it hasn’t been developed yet)
E.g.: Idea that Elvis’ death relates to drugs.
b. Baseline rule: Ideas are free for everyone to use, not protected as property against theft.
i. Policy: Encourage development and not just the conception of ideas;
ii. Policy: Administrative ease – It’s easier to mark the scope of rights in developed ideas, and it’s hard to show that an undeveloped idea originated with just one person;
iii. Policy: Undeveloped ideas are like building blocks – access is more important than incentive.
2. Standards for undeveloped ideas to be protectable.
a. Novelty. The idea must not be common or generally known. This is different
ii. Typically loser claims (almost never win). Property rights are against entire world, so this is broad protection and sparingly granted. And may not even survive §301 preemption, b/c no extra element of time-sensitive nature of the idea. NBA.
b. Unjust enrichment (quasi-contract).
i. Requires undeveloped idea to be
1. Absolutely novel; and
2. Concrete.
ii. This theory grants rights against those:
1. Who unjustly benefit; and
2. For whom disgorgement of the benefit is fair.
E.g., D must consent to having idea told to it. If it was forced on D, no fairness in making D pay up.
Typically loser claims. But the theory worked in Matarese (patentable idea, D’s promise of compensation, D’s subsequent use of the idea, lack of compensation).
Breach of contract. Easier to win, b/c the right that is being enforced is only against one party, she who agreed. Four elements:
Express or implied-in-fact contract wherein D promised P to pay for the idea;
To find an implied-in-fact contract, look to the trade custom or parties’ course of dealing. Also, P’s confidential relationship w/ D is good evidence of an implied-in-fact contract—it implies lack of intent to divest rights w/o payment.
