Intellectual Property

Chapter 9

What is Intellectual Property?

• Different from personal property

• It is “the work of the human mind”

• Examples: Books, paintings, computer software, music, inventions

• Expensive and time consuming to create

• Easy to copy

• Once copied can be used by millions

What’s the Big Deal? (Two sides to the story)

1. When intellectual property is shared freely (at no charge), the creators of that property are not compensated. They feel this is unfair and costs them billions annually. ($51 billion in 2009)

• For every $100 of legitimate software sold, another $75 worth is pirated (copied illegally)

• To protect themselves, inventors in the U.S. in 2009 filed for more than 483,000 patents

• Human genes are even patented!

2. On the other hand, when intellectual property is shared freely, society is enriched and no one company has a monopoly on intellectual property

Rick James or MC Hammer?

• In 1981, Rick James wrote and recorded Super Freak

• In 1990, MC Hammer had a big hit with Can't Touch This

• Here’s what happened when that came out:

James against the Hammer

Copyright

• If you hold the “copyright” to intellectual property, it means you have “the exclusive right” to use it. No one else has that right unless you grant them permission.

• In copyright cases, the plaintiff must prove:• That he/she owned the copyright for the

intellectual property• That the defendant copied the

intellectual property

Bridgeport Music v UMG Recordings

• George Clinton’s “Atomic Dog”

• PublicAnnouncement’s “D.O.G. in Me”

• Was this a case of copyright infringement?

• Who won?

Copyright Law

• Copyright holder controls the right to reproduce and distribute

• Ideas that are “fixed in a tangible medium of expression”-photos, paintings, music, movies, computer programs-can be copyrighted.

• Rights are held for 70 years beyond the author’s life.

• Work must be signed, dated and have the copyright symbol.

• Register with the Federal Copyright Office to protect if sued

Fair Use• The “fair use” defense is commonly used in

cases of copyright infringement

• Fair use is based on the notion that the free flow of ideas at times requires quoting or otherwise borrowing from a copyrighted work.

• Examples of fair use: Critics reviewing books, news reporters using video clips, teachers making copies of articles to use in the classroom.

Sony v Tenenbaum

• Who was the plaintiff? The defendant?

• Why was the defendant sued?

• Is it “fair use” when you copy something for free but then don’t resell it or use it for profit? Is every non-commercial use, fair use?

4 Factors in Fair Use

1 Why was the material copied? i.e., To make money? To educate without making money? For criticism, comment, news reporting, research? The copying must benefit the public.

2 What is the nature of the work? Is it a book? Poem? Music?

3 How much was copied compared to the whole original work?

4 What effect does it have on the market for the original work? (Will people still buy the original work or does the copy take its place?)

Using the 4 Factors Analysis:

In Sony v Tenenbaum• Why were the songs copied? • For Tenenbaum and his friends to listen to for free, over and

over again.

• What is the nature of the work? • Music

• How much was copied compared to the whole original work? • Entire songs

• What was the effect on the potential market for the work?• People didn’t need to buy the songs because they already

had them when they got the copies. And those who choose to pay would probably soon switch to the free downloads.

Collective Copyrights• A copyright holder can license their rights to someone else to

reproduce and/or distribute the work.• Microsoft and Apple hold copyright for their operating systems. If a

software engineer wants to write a program to run on Windows he must pay Microsoft for a license to use its Windows code.

• A copyright holder can give up some of their rights in exchange for royalties-like when a songwriter receives a royalty every time his song is played on the radio

• Individual authors can retain their rights to their individual contributions of a “collective work”, ie newspapers, magazines, or our textbook, but the publisher holds the copyright in the overall work..the collective copyright.

• Example: Movies….individual musicians, screenwriters, cinematographers all make varied contributions but the movie studio holds the collective copyright. The composer of the score will retain her individual copyright to the music used in the film.

Public Domain

• Public domain-Material that is always freely usable by anyone, without permission.• Many times public domain material is public

domain because the copyright has expired or it never had a copyright.

• Examples: Grimm’s Fairytales, Pride and Prejudice, Alice in Wonderland, many of Charles Dickens’ novels.

• Any music published in the United States before 1923.

• What about eReaders? (Kindle, Nook) Are there restrictions against printing pages from there?

Digital Millennium Copyright Act

• Targets people who pirate software or anything that has a copyright

• Targets people who share the decryption software to enable others to pirate

• In Universal Studios v Corley• Universal Studios sued Corley (hacker) on the grounds of

copyright infringement because he was sharing code that decrypted DVDs so they could be copied.

• Corley’s defense was Free Speech of his decryption code because computer code is a language and should be shared freely.

• The court ruled in favor of Universal Studios stating that it doesn’t matter what language you use to steal (computer code or whatever), it’s still stealing, and the government has a substantial interest in preventing unauthorized access to copyright material.

Trademarks, Patents and Trade Secrets

• What is a trademark or logo? (Give examples)

• Can you copyright a trademark (the Nike “swoosh”)?

• Can you copyright a new invention?• Patent?

• Can you copyright your grandmother’s secret recipe for fried chicken?• Trade Secret?

Trademarks

• Trademarks are protected under the Lanham Trademark Act (1946)

• Trademarks are also protected under the Federal Trademark Dilution Act (1995)

• Both acts protect a company’s ownership rights to the name, logo, or symbol that identifies its products.

Infringing and/or Diluting a Trademark

• Infringing on trademark rights could involve:• a competitor using the trademark as its own and

confusing customers about the source of the product.• The competitor suggesting that the original owner of

the mark made an endorsement that it didn’t.

• Dilution could involve:• A competitor or even non-competitor doing something

to blur or tarnish a trademark by using the mark on a product that is different from the original product or that is more “shoddy” (poor quality) than the original product.

• Ralph Nader Commercial

Infringing and/or Diluting a Trademark

(contd)• MasterCard sued Nader for infringing

and diluting its trademark.

• MasterCard lost. Why?• Because the court found no infringement

-Viewers would not be confused into thinking MasterCard endorsed Nader.

• Also, the court found no “dilution” because it was a non-commercial use that could not harm MasterCard.

Patents

• Patents protect the rights of those who discover new inventions• Examples: hybrid corn, human genes,

Amazon.com’s “one-click checkout,” new pill to treat heart disease

• Patents are available to the inventor of something that is • New• Not obvious• Useful• Not in the excluded category (such as “products of

nature”)

Patents (contd)

• The patent gives the inventor a “complete monopoly” for a limited time (20 years) so no one else can use or profit from the invention without the inventor’s permission during that time.• Example: The patent application contains everything you need to

know to make the invention. So after the patent expires on the new pill to treat heart disease, all the information about it is available to the public and competitors can start making a less expensive pill or a generic pill. The 20 year time period gives the original manufacturer time to recover their R&D costs that they spent to invent the pill.

• Competitors can challenge the validity of a patent in court• Examples: Google challenging Yahoo; Apple challenging Motorola,

Assoc of Molecular Pathology v Myriad (breast cancer gene mutation)

• News report from Dec 2011 regarding Assoc of Molecular Pathology v Myriad

Trade Secrets

• What about your grandma’s secret recipe for fried chicken? (Or an example where more money is involved-Colonel Sander’s recipe for fried chicken)• If you built a business around this “secret” recipe

you could protect the recipe from being copied by doing one of 3 things:1. Writing down the recipe and getting a copyright

for it, but that wouldn’t really help because the secret could still get out. (“trade secret”)

2. File a patent for it, or3. Have it protected by the Uniform Trade Secrets Act

The Uniform Trade Secrets Act

• Protects trade secrets as long as that trade secret:1. Has some economic value because of

the fact that it’s secret, and2. The owner of the trade secret can

show that they’ve taken reasonable steps to keep it secret.

• Note: If someone figures out your recipe by trial and error, that is perfectly legal.

PepsiCo v Redmond

• Who are the plaintiffs? Defendant?

• What is the history of the case?

• What are the issues in the case?

• What was the decision of the court?

• Do you agree or disagree with that decision?

• What would/should Redmond do if he practiced:• Free Market Ethics?• Utilitarianism?• Deontology?• Virtue Ethics?• Virtue of Care?