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Intellectual Property
West Virginia University School of Law
Olson, Dale P.

Intellectual Property


Fall 2012

Chapter 1: Introduction.

The philosophical bases for protection of private property are well entrenched in our culture. Examples include:

Common Law and Criminal Protections of private property from interference of others

The 5th amendment protects private property against takings by the government without just compensation.

Two Major Parts of Intellectual Property Survey Course

1) Philosophical bases for protection of intellectual property – and how those reasons differ from the justifications for real property

2) Comparative review of the principal modes of intellectual property protection (i.e. Patent, Copyright, Trademark/Trade Dress, and Trade Secret)

Philosophical Perspectives


Tangible Property – composed of atoms and physical things that can occupy only one place at any given time.

Possession of a physical thing is necessarily exclusive.

Intangible Property – primarily consist of ideas and can be used by another without depriving it from the original possessor.

The ‘nonrivalrous’ nature of ideas essentially moots the traditional economic justifications for real property.

As a result, other theories have been established.

Natural rights, and personhood justifications are often given.

In the US, a UTILITARIAN or ECONOMIC INCENTIVE FRAMEWORK theory provides justification for intangible property protection

Natural Rights

Based on John Locke’s “Labor-mixing” theory of property

“The “labor” of his body and the “work” of his hands, we may say, are properly his.

“For this “labor” being the unquestionable property of the laborer, no man by he can have a right to what that is once joined to, at least where there is enough, and as good left in the commons for others.”

Economic Incentive Perspective

Two Functions:

Promotion of New and improved works

Includes patents, copyright, and trade secrets

Ensuring the integrity of the marketplace (not investigated in this course)

Includes trademarks

Promoting Innovation and Creativity

“to Promote the Progress of Science and useful Arts”

The First Consideration is to give knowledge to the public for the benefit of all

“to afford greater encouragement to the production of literary [or artistic] works of lasting benefit to the world”

The second consideration is to reward the inventor/owner

The reasoning for an economic Philosophy behind patents and copyrights is based on the conviction that:

It is the best way to advance public welfare through the talents of authors and inventors in “Science and the useful Arts”

In a private market economy, individuals will not invest in an invention or creation unless the expected return from doing so exceeds the cost of doing so

This is easier to rely on with tangible property over “information”

Information has the characteristics of what economists call a “public good”-it may be “consumed” by many people without depletion, and it is difficult to identify those who are not paying

The wide dissemination of information may have particular effects on secondary markets (ex. Teaching everyone how to fish will have an effect on the number of fish available)

Other than just information, economists generally offer lighthouses and national defense as an example of a public good.

Benefit of Economic Incentive system

Provides incentive for inventors to invent and share their knowledge.

A major concern for innovators is whether they will have sufficient means to get an adequate return on their investment in research and development.

Costs of Economic Incentive system

Excluding others from using ideas of the inventor by definition limits the diffusion of those ideas and therefore prevents many people from benefiting from them.

Society at large can be harmed by intellectual property protection to the extent that it unnecessarily raises the cost of acquiring a product (through monopoly pricing by the right holder) and limits others from making further advances

The principal policy implication of this model is that the term of intellectual property protection should be calibrated to balance the incentive benefits of protection against the deadweight loss of monopoly pricing and the resulting limitation on dissemination.

Problem 1-3 (p. 31) Healthware

How to limit liability?

Identify similar companies, similar practices

Lawsuits in this area?

Disclaimer about medical conditions

Identify proprietary, what can be protected?

Web based program w. sheets

Calories lost/ exercise

Novel as in different, not in patent sense

Perhaps design patent but most likely nothing is patentable

Very expensive

~2 years until issue

be wary of software licenses

watch out for copyright of graphics used, get licenses

copyright could protect worksheets/graphics from exact duplication

but not systems or methods

Trademark that stands out, recognizable for marketing: Healthware(is combination of two ordinary words, not the best)

Tradedress of packaging

Written disclaimer for employees and for her employer on who owns what?

Partnership, silent partner, etc

One time rights for possible photographers/graphics designers

Do not talk about of idea with friend, may disclose idea

Get employees to sign nondisclosure agreement

Are there any agreements?

Needs to be in writing and be very clear

Who owns what?

Terms/conditions for using the program

Trade Secret




Underlying Theory

Freedom of contract; protection against unfair means of competition

Limited monopoly to encourage production of utilitarian works in exchange for immediate disclosure and ultimate enrichment of the public domain

Limited (although relatively long lived) monopoly to encourage the authorship of expressive works; developed initially as a means of promoting publishing

Perpetual protection for distinctive nonfunctional names and dress in order to improve the quality of information in the market place

Source of Law

State statute (e.g., Uniform Trade Secrets Act); common law

Patent Act (federal)

Copyright Act (federal); common law (limited)

Lanham Act (federal; common law (unfair competition)

Subject Matter

Originality; authorship; fixation in a tangible medium

Process, machine, manufacture, or composition of m

Licensing and Assignment

Complicated 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

Assignor has termination right between 36th and 41st years following transfer

No naked licenses (owner must monitor licensee); no sales of trademark “in gross”


Civil suit for misappropriation; damages (potentially treble) and injunctive relief; criminal prosecution for theft

Injunctive relief and damages (potentially treble); attorney fees (in exceptional cases)

Injunction against further infringement; destruction of infringing articles; damages (actual or profits); statutory ($200-150,000 damages within court’s discretion); attorney fees (within court’s discretion); criminal prosecution

Injunction; accounting for profits; damages (potentially treble); attorney fees (in exceptional cases); seizure and destruction of infringing goods; criminal prosecution for trafficking in counterfeit goods or services

Patent Law


Historical Tidbits

The term patent – from the latin ‘patere’ (to be open)-arose in Venice in the late fifteen century and referred to an open letter of privilege from the sovereign

Although Britain implemented policies to encourage the influx of patents and immigration of innovators, a reverse problem occurred as well, when it’s technological superiority began to leak overseas (including the American colonies (see Transatlantic Industrial Revolution; David Jeremy p.36-49 [1981]).

1836: patents are numbered from this date, published in the official gazette

1952: Section 103: Non-obviousness – removed flash of genius test

Before June 8, 1995: 17 years from issue or 20 years from filing date

On or after June 8, 1995: 20 years from filing date

Economic Incentive Theory

That inventions are public goods that are costly to make and that are difficult to control once they are released into the world

Absent protection inventors will not have sufficient incentive to invest in creating, developing, and marketing new products.

Patents provide a market driven incentive to invest in innovation, by allowing the inventor to appropriate the full economic rewards of his invention


Disclosure of inventions get returned to the public domain

Incentive for inventors

Requirements for Patentability (further discussed in later section)

Patentable Subject Matter

Utility (101)

Minimal obstacle, must be minimally useful.