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Intellectual Property
Washington & Lee University School of Law
Fairfield, Joshua AT

IP Outline-Fairfield Fall 2011
                                                                                                                                                                                                           A.            The Sources and Limits of IP Law
The US Constitution           
·         Art 1, Sec. 8: Congress has the power to (3) regulate Commerce and (8) promote the progress of Science and useful arts (by securing limited times for exclusive rights)
·         Art 6: The Constitution is the supreme Law of the Land
Eldred v. Ashcroft
·         Mickey Mouse Protection Act
·         Economic argument for this kind of protection (giving 70 years)→ Encourage the potential copyright holder
·         There is not much to the individual incentive but there is something to be said for the systemic argument
·         Quid-pro-quo argument → We don't have to give you any rights but if we give you any rights, what are you going to give us in return
·         Holding: Congress was within its authority and did not transgress constitutional limitations when it extended Copyright Terms for future and existing Copyrights
·         BLL: The constitutional grant to congress to promote science and arts. Permits congress to do so for limited times, fighting question in Eldred. Was it a violation of the constitutional requirement of limited times when congress extruded the time for 20 years.  The court said this is a political question that congress gets to set the limited time it wants. Congress has a loophole to create perpetual copyrights
                                                                                                                  B.            The Nature and Functions of IP Law
1.      Copyright Law
·         Adam Smith: Rejected the idea of an unfettered natural right to publish works but supported some limited form of protection
·         Bentham: Agreed with the idea of a copyright, because of incentives. Only a competitive market can deter imitation
·         Maccaulay: Wanted a supply of good books, and writers must be paid and the best way is through copyrights which should last no longer than is necessary (because monopoly is evil)
·         Arrow: The free market has no effective mechanism for getting users to join and share costs of productions.
o   If society withholds property rights, the price producers can charge will be small ad incentives to produce more will diminish
o   If society confers property rights, prices will rise and information will reach a smaller population.
o   Information and entertainment are costly to produce but cheap to distribute
·         Government subsidies? Public taxes?
·         Demsetz: the deficiencies of private property rights are less baleful than the hazards of public intervention. Prices signal consumer preference and channel private investment in the right direction. Private property rights reveal information about consumer preferences, information that government subsidies can imperfectly collect.
·         Breyer: copyright is needed as an incentive to produce and distribute creative works.
o   Even without copyrights the original producer has a head start to make a profit
·         Tyerman: retailers will wait to stock a later copy of the book for the prospect of greater profit.
o   Without copyrights no producer can make profits to finance production and sale of their work.
·         Quality: because copyright does not protect ideas or other elements of creativity there is incentive then to come up with new ways of expressing old ideas
2.      Patent Law
To Promote the Progress of Useful Arts
·         Statutory criteria for issuance of patents, examination and conformance.
·         Incentive to research, development, and innovation
·         1. Incentive to invent:  possibility of reward to the inventor and supporters. Time and risk in research and development
·         2. Patent system stimulates the investment of additional capital for further development. In return the right to exclude
·         3. Protection allows for early public disclosure of technological information
·         4. Promotes beneficial exchange of products, services, and information across boundaries.
Fritz Machlup: Economic review of the Patent System
·         Patents give exclusive rights to secure profit
·         Patents are granted on inventions that would not have been made without a patent system → better products
·         Others say consumers shouldn't have to pay, and that patents hold down production and efficient use of resources
·         Competition among research teams:
o   To be the first to find the patentable solution, or a better product
§  Not fair that a competitor is barred from using his invention after doing hard work
o   To find an alternative solution to the same problem (after a competitor has found the solution)
§  Learning to do something in another way when we already have a solution is not a rational allocation of resources
o   To find and patent all possible alternative solutions (after having found the solution)
§  Wasted talent
o   Serendipity: happy and unexpected discoveries by accident
·         Value of: Patents to their owners, society, the patent system to society, inventions to users, inventions to society, patent-induced inventions to society
3.      Trademark Law
The Economies of Trademarks
·         Trademarks: 1. Facilitate and enhance consumer decisions and 2. Create incentives to produce quality products.
·         Consumers can distinguish between goods, based on quality and on full features of products
·         Successful trademarks: depends on market conditions, the product, frequency of purchase, the ease of information diffusion, and the ability of recall of consumers, ability to identify with the product and the features can't change (stable market/high quality)
·         Concerning products consumed infrequently by the same individual → trademarks work in an indirect way, information must diffuse informally through friends or public information
                                                                                                                                                         C.            Policy Issues
4.      Monopoly/Economy
IP laws should balance…1. Rights and interests of originators: Protect their ideas and preserve incentive to create ideas with the; 2. Rights and interests of using public: Desire for indivisibility, unrestricted public access, in order to: Ensure widespread social benefit; Encourage cross-polinization of ideas, and; Discourage monopolies.
·         1. Promoting competition for monopoly is like fighting for peace (it looks contradictory)→ Seems crazy
o   BUT strong IP rights do incentivize peoples investment in those categories
·         2. Is there a secondary reason → content vs. technology (people can rely on these rights and invest) tension between protecting the first innovation and encouraging the next innovation
o   Origination in copyright, why don't we have a sweat of the brow doctrine?
§  Because that clogs up other people's ability to do the same
o   Noncommericial use → is really commercial
o   Content providers vs. Service providers
·         Incentive vs. Access → nobody will create and there will not be access (this is wrong but this is how the conversation goes)
o   Every time we cannot trade we cannot be wealthy, anytime you block a trade, God kills a kitten….
o   Promote competiton: Requires freest possible public access to new products, services, and expressive works
o   Incentive to create: granting of monopolives protects creators oppurtunities to recoup ther investment in the creative process and earna  profit and thus encrouages them to invest their time and efforts in the development of new products, services, and expressive owrks
·         Conflict:  Owners can prohibit competitors and/or the public from using the creation AND may indirectly limit public access by putting the owner of the rights in the posisiton to charge monopoly prices
·         Balance: Try and fi

features of a product in a way that causes customer confusion = not pre-empted
·         Direct pre-emption: fed law pre-empts state law if direct conflict = impossible to comply with both (not case w/ unfair competition b/c possible to comply with state unfair competition laws (don’t copy someone else’s unpatented articles) and fed patent law (don’t copy patented articles).
·         Misappropriation? State law may not be pre-empted. See Chi. Brd Trade
                                                                                                                                     A.            Rights in Undeveloped Ideas
Recovering for contract or property based claim for stealing idea requires showing:
1. The idea is Novel (original to P; innovative or creative; or both original to P and innovative in nature)
K→ novel to buyer; Misappropriation/Property Claims → Novel in absolute terms
Nadel factors: 1. Specificity or generality; 2. Commonality;  3. Uniqueness; 4. Commercial availability
2. The idea is in reasonably Concrete form
3. The D/buyer used the idea
·         Important factors: Industry custom & Confidential relationship b/w buyer and seller
Nadel v. Play-by-Play
·         Facts: Nadel showed the Monkey toy to Play-by-Play, PbP says they independently discovered it, and that it is unoriginal and non-novel. Claim for breach of contract, quasi-contract, and unfair competition
·         Rule: For Contract claims novelty to the buyer is enough for there to be consideration; For misappropriation originality and novelty in abstract terms is necessary
o   If something is unoriginal and not novel → buyer is assumed to have known about it
o   1. Specificity or generality; 2. Commonality;  3. Uniqueness; 4. Commercial availability
·         Holding: Novelty to buyer would be enough for consideration for the contract claims →There is an issue of material fact whether the idea was novelty to the buyer; BUT Misappropriation remanded to determine where it was an original or novel idea (in absolute terms)
                                                                                                                                              B.            Unfair Competition
·         Misrepresentation: (fake handbags) passing off ones product as another Coco Quinine
·         Misappropriation: of another's product and claims it as one's own   INS
1.      Misappropriation
Elements: 1. P investor time, money, skill or effort to create an intangible trade value; 2. D appropriated the trade value (at little or no cost); 3. P was injured (not ALWAYS a factor) Available even if no likelihood of confusion
·         BLL: Sweat of the brow doctrine: what I worked for you may not take→ the state tort of misappropriation has been adopted in 14 states, clustered around New York. (NOT a favored doctrine, most states have rejected it)
·         This is an example of the common law working out solutions to real problems, (fashion law)
·         Factors (vary by state)
o   Many courts: P and D must be in competition.  (But see Chicago Board of Trade (newspapers v. futures)
o   D copying P’s ideas on repeated basis. (See INS v. AP (stole stories everyday)
o   P is actually injured (some courts)