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Intellectual Property
University of Wyoming School of Law
Wilson, Matthew J.

Intellectual Property Outline
Professor Wilson Spring 2010
 
I.       Introduction
a.      Philosophical Perspective
                                                              i.      Property rights over information – Information that usually occupies no physical space.
                                                            ii.      We are giving property rights over an intangible object. 
                                                          iii.      While physical manifestations can be destroyed – the idea behind the trademark, or a song, or a chemical formula cannot be destroyed.
                                                          iv.      Theories of Protection
i.        It is an investment made by those who create these ideas.
ii.       If you do not protect these ideas once they are created no one will invest to make up these ideas.
iii.      BUT…Reverse of this is that by protecting these ideas you are also restricting the dissemination of ideas.
iv.     Incentive is the necessary evil of intellectual property, without it you would not have the optimal creation, while this incentive will price some people out of the market it is still needed.
v.       The incentive/dissemination trade-off of intellectual property. – Utilitarian philosophy – cost/benefit, optimums economic benefits etc.
vi.     Locke’s Labor theory – take something out of nature mix it with your labor it is your property.
vii.    Under this theory when a farmer plants crops he has a right to them not from an incentive standpoint but because these crops have become an extension of him – his work becomes him.
viii. Hettinger – The laborer should be only allowed the value of what they added – spilling soup into the ocean does not give you the right to the entire ocean. Value of rights vs. effort put in.
ix.     Absolutist view – the creator is solely responsible for the work no one is harmed if the work is withheld from society – What you don’t know can’t hurt you.
x.       Gordon challenges with her reliance argument – sometimes the public is worse off if a creations is offered and then removed than it would have been had the creation never been made. (Is this really a challenge – how can there be reliance if the author completely withholds?)
xi.     Utilitarian vs. Natural Rights –
1.       Natural Rights inventor is entitled to the fruits of his labor.
2.       Utilitarian – inventor is secondary consideration; the principal objective is to enrich society.
b.      Overview of Intellectual Property
 
Trade Secret
Patent
Trademark/Dress
Copyright
Underlying Theory
Freedom of contract; protection against unfair means of competition
Limited monopoly to encourage production of utilitarian works in exchange for immediate enrichment of the public domain.
Perpetual protection for distinctive nonfunctional names and dress in order to improve the quality of information in the marketplace.
Limited (although relatively long-lived) monopoly to encourage the authorship of expressive works; developed initially as a means of promoting publishing
Source of Law
State Statute (Uniform Trade Secrets Act); Common Law
Patent act (Federal)
Lanham Act (federal); common law (unfair competition)
Copyright Act (federal); Common law (limited)
Subject Matter
Formulas, patterns, compilations, programs, devices, methods, techniques, and processes
Process, Machines, Manufacture or composition of matter; Plants (asexually reproducing); designs—excluding: Laws of nature, natural substances, business methods, printed matter (forms), mental steps
Trademarks; Service marks; certification marks (e.g. Good Housekeeping); collective marks (Toy Manufactures of America); Trade Dress (§ 43(a)); No Protection for functional features, descriptive names, misleading aspects, or “generic names” (Thermos)
Literary, musical, choreographic, dramatic and artistic works limited by idea/expression dichotomy (no protection for ideas, systems, methods, procedures); no protection for facts/research
Standard for Protection
1) Information not generally known or available
2) Reasonable Efforts to maintain secrecy
3) Commercial Value
1) Novelty
2) Non-Obviousness and utility (distinctiveness for plant patents; ornamentality for design patents)
1) Distinctiveness
2) Secondary meaning (for descriptive and geographic marks)
3) Use in commerce (minimal)
4) Famous mark (for dilution cases)
1) Originality;
2) Authorship;
3) Fixation in a tangible medium
Scope of Protection
Protection against misappropriation—acquisition by improper means or authorized disclosure
Exclusive right to make, use, sell innovation as limited by contribution to art; extends to “equivalents”
Exclusive rights in US; likelihood of confusion false designation of origin (§ 43(a)); dilution for famous marks
Rights of performance, display, reproduction, derivative works
Period for Protection
Until becomes public knowledge
20 years from filing (utility); extension up to 5 years for drugs, medical devices and additives; 14 years for design
Perpetual, subject to abandonment
Life of Author + 70 years; “works for hire”: minimum of 95 years after publication or 120 years after creation
Disclosure
Loss of Protection (unless sub rosa)
Right to patent lost if inventor delays too long after publishing before filing application; full disclosure is required as part of application; notice of patent required for damages
® Notice optional; establishes prima facie evidence of validity, constructive knowledge of registration, confers federal jurisdiction, becomes uncontestable after 5 years of continuous use, authorizes treble damages and attorney fees, and right to bar imports bearing infringing marks
© Notice and publication no longer required, but it does confer certain benefits
Rights of
Others
Independent Discovery; reverse engineering
Only if licensed; can request reexamination of patent by Patent and Trademark Office
Truthful reflection of source of product, fair and collateral use (e.g. comment)
Fair use; compulsory licensing for musical compositions, cable TV et al.; independent creation.
Costs of Protection
Security expenses; Personnel (as in employees) dissatisfaction; Litigation costs
Filing, issue, and maintenance fees; litigation costs
Registration search; marking product (optional – see above); litigation costs
None (protection attaches at fixation); publication requires notice; suit requires registration; litigation costs
Licensing and Assignment
Discouraged by inherent nature of bargaining (seller wants guarantee before disclosure; buyer wants to know what is offered)
Encouraged by completeness of property rights, subject to antitrust constraints
No naked licenses (owner must monitor licensee); no sales of trademark “in gross”
Assignor has termination right between 36th and 41st years (of notice given)
Remedies
Civil suit for misappropriation; conversion, unjust enrichment, breach of contract; Damages (potentially treble) and injunctive relief; criminal prosecution for theft
Injunctive relief and damages (potentially treble); attorneys fees (in exceptional cases)
Injunction; accounting for profits; damages (potentially treble); attorneys fees (in exceptional cases); seizure and destruction of infringing goods; criminal prosecution for trafficking in counterfeit goods or services
Injunction against further infringement; destruction of infringing articles; damages (actual or profits); statutory ($200-$100,000 damages within courts discretion); attorney fees (within court’s discretion); criminal prosecution
 
 
II.    Trade Secret Protection
a.      Introduction
                                                              i.      History
i.        Purpose: May be available in addition to other protection, such as ©. Discourages improper competitor conduct and assists states in maintaining “commercial morality.”
ii.      1939 Restatement of Torts §’s 757 and 758 – protected as a trade secret any information “used in one’s business” that gives its owner “an opportunity to obtain an advantage over competitors who do not know or use it,” so long as the information was a secret.
iii.    1979 – Uniform Trade Secrets Act (Amended in 1985)
                                                            ii.      Overview of Trade Secret Protection’
i.        A trade secret is information that had economic value from not being known or readily ascertainable by those who could gain value from its use or disclosure, and is the subject of reasonable security measures.
                                                          iii.      Theory of Trade Secrets (Why Protect)
i.        Recurrent Tensions/Themes
1.       Preventing Unfair competition vs. labor mobility
2.       Existence of a trade secret vs. punishing bad acts
ii.       Incentive to create
iii.      If find out the TS by proper means, like reverse engineering, then this is ok
iv.     Reverse Engineering is permitted because it encourages people not to waste resources by stealing info, but to try and figure out how it is done and bettering it.
v.       But…these sometimes conflict – granting property rights in a creation may hinder public access to it. Also, it may directly limit public access by permitting the owner of the rights to maintain a monopoly in the creation, and charge monopoly prices. To avoid this conflict, IP tries to balance the rights
vi.     The law allows you to trust your employees – w/o you cannot garner efficiency from your employees b/c you would not want give your employees all the information needed to perform efficiently.
1.       Outside protections against theft of secrets would dramatically increase thus increasing the cost of production thus increasing the cost to the consumer.
vii.    W/o Trade Secret law you might create an industry designed to steal secrets.
 
b.      Subject Matter
                                                              i.      Example of Trade Secrets: customer lists, manufacturing methods, chemical process, formulas, computer code program, marketing data and strategies, blueprints for machines, etc.
                                                            ii.      Defining Trade Secrets
i.        UTSA Section 40-24-101(iv)
1.       Trade Secret means information, including a formula, pattern, compilation, program, device, method, technique, or process that:
                                                                                                                                      i.      (A) 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 eco

display, trade journal publications, advertising, or other carelessness can preclude protection
ii.       Have to have taken some reasonable measures to make sure that your TS were not publicly disclosed; does not have to be extraordinary efforts.
iii.      Effort to prevent theft or use of the idea by an employee.
iv.     Rockwell Graphic Systems, Inc v. DEV Industries (Replacement Parts)
1.       Rule of Law: Holders of trade secrets must take reasonable precautions to keep the secrets confidential.
1.      The ct defines TS in terms of what the TS owner did to try and keep it (information/idea) a TS.
2.      Facts – Piece parts for printing presses given to various vendors etc.
3.      Issue: Were there reasonable precautions taken by the owner?
4.      District Court decides on SJ that there were not reasonable precautions.
5.      Posner says the real question cost benefit analysis:
6.      While information was divulged was there an economic reasonable need to disclose the information?
7.      During that disclosure were reasonable preventative measures taken?
8.      The ct went thru the things that Rockwell did that showed that they tried to keep this a trade secret.
9.      Idea is that as long as there were reasonable efforts to keep it a trade secret, then do not have to use the very best means because then this would be a futile endeavor because lots of money would go to keeping it a secret, not creating stuff.
10. Companies have to weigh the costs vs. the benefits
                                                                                                                                      i.      Costs of precautions
i.        Fencing costs
ii.      Non-disclosure agreements
iii.    Loss of business
                                                                                                                                    ii.      Benefits of precautions
i.        Value of secrecy
ii.      Deterring, delaying, or excluding competitors
 
                                                          iv.      Disclosure of Trade Secret
1.      Protectable not for a certain number of years but until an event occurs- public disclosure of the secret.
2.      Disclosure Occurs thru:
i.        Publication,
ii.      Patent application,
iii.    Sell a commercial product that embodies that secret,
iv.    Disclosed by someone other than the trade secret owner, (can get relief if improper breach of duty but TS status is lost) (The number one way to lose a trade secret is to be forced to reveal it to the government. Not as a matter of law, but the government is full of leaky holes…)
v.      Inadvertent disclosure
vi.    Government agency requires disclosure to serve some other social purpose.
i.        Data General Corp v. Digital Computer Controls (Using a computer blueprint to make their own computers)
1.       Facts: Data sought an order preliminarily enjoining Digital from making use of claimed trade secrets allegedly contained in design drawings.
2.       Rule of Law: To prove violation of a trade secret, a plaintiff must demonstrate the existence of a trade secret, that the defendant improperly received the information in question in such a manner that its confidential nature should have been known, and that defendant proposes to misuse such information.
ii.      Why Not Apply For A Patent?
1.       Standards for patents are very high – they require novelty
2.       Trade secret just basically modifies an existing process it will not be able to be patented.
3.       Trade secrets have protective costs to keep it secret
4.       Patents have administrative costs – getting a patent lawyer – filing for patent – defending the patent if it is challenged.
5.       Limited window to patent your product – 1 year once you commercialize your trade secret.
6.       This is a tough choice and one for the businessman not the lawyer. The lawyer’s job is to let him know the options.
7.       Abandoned patent applications do not lose their trade secrecy – but successful patent applications BY LAW lose their trade secrecy.
8.       More can be protected as a trade secret then can be patented. Not all trade secrets are patented. Ex. Customer Lists
9.       Patents are limited as to the time it lasts – 20 years from date of application
 
c.       Misappropriation of Trade Secrets